The Channel logo

News

By | Kable 27th January 2011 07:30

Change to sustain public sector ICT spend

Spending to support cost cuts offsets cuts

Public sector investment on ICT is set to remain steady over the next five years in the face of the government's spending cuts.

New research by Kable shows that efforts to save costs in other areas and a redesign of many services will ensure that spending to support these will offset cuts in other areas.

UK public sector ICT overview and forecast to 2015-16 shows the sector is in the midst of a marginal decline, but that it is nothing like the scale of the wider spending cuts, and should be reversed to provide mild growth by the end of the period. The headline figures are for the total spend, estimated at £17.99bn for 2010-11, to slip to £17.75bn in the next financial year, followed by another mild decline in 2012-13; but that by 2015-16 it will rise to £18.27bn, showing an overall increase of 1.5 per cent.

The dynamic of the recovery is already at work. The cuts are affecting the spend on custom software, system integration and the associated consultancy and training services; but the effort to cut operational costs is helping to maintain, and in some cases increase spending on outsourcing and managed services.

Similar forces are at work in the rationalisation of infrastructure technology and investment in mobile working, both seen as sources of savings in the long term. The latter is even helping to maintain investment in hardware, with the spend on new mobile devices offsetting the pressure to increase the life cycles of PCs and printers.

While the cuts are the most high profile factor at work, there is also a widespread move to reform public services. They may be talked up as a radical departure from the course taken by the previous government, but they are driven by the same underlying forces and in some cases follow a similar path. They are also ambitious, which suggests they will take some time to realise and underpin further investment in ICT.

Spending outlooks vary for the different parts of the public sector. Local government is expected to lead the recovery as it will have to adapt quickly to the new scenario, taking the sector's total from £3.22bn in 2010-11 to £3.96bn in 2015-16. In addition, radical reforms in the health service are going to need a considerable investment in ICT, and the current dip in spending will soon be reversed.

By contrast, central government is currently under the greatest pressure and the most likely to consolidate its business, if not between the big departments, at least within them. While Whitehall may spend a little more on outsourcing, its overall ICT spend is forecast to fall and it is expected to be the last to come out of the decline only at the end of the five-year period. The recovery is also expected to be slow for defence, criminal justice and transport.

Stephen Roberts, Kable's research director, commented: "The overriding coalition priority is public service reform and the approach to suppliers has been tough but pragmatic.

"However, even with a clear roadmap, many public bodies lack the capacity for multiple change programmes. The data in this report can help suppliers to get the timing right and to link their offerings to each customer's pace and priorities."

This article was originally published at Kable.

Kable's GC weekly is a free email newsletter covering the latest news and analysis of public sector technology. To register click here.

comment icon Read 5 comments on this article alert Send corrections

Opinion

Microsoft Surface bomb
Killer whale

Chris Mellor

Firm cites 'low demand' plus 'abusers'

Tim Worstall

Or why the reversal of globalisation ain't gonna 'appen

Features

No, silly... he was the fall guy for years of Finnish folly
Fraud image
Frodo and the Ring
Microsoft's strategy is to make Store apps popular. Good luck with that