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By | Kat Hall 26th November 2015 15:08

GDS £450m investment probably an 'accounting fudge' – gov IT analyst

Have we just been Rick rolled by Osbo?

Plans to pump an extra £450m for the Government Digital Service to fuel the "digital revolution" was the shock take-away announcement in George Osborne's Spending Review yesterday - from the perspective of technology spend at least.

It came as particularly unexpected as the body's top brass left en masse several months ago following reports that its budget was being slashed.

And to more sceptical observers it was a surprise because the GDS track record of "digital transformation" delivery in terms of channel shift remains highly questionable. Sources suggested that the new permanent secretary for the Cabinet Office John Manzoni was not a fan of the body.

But now George Osborne's Spending Review show is over, a more sober picture is emerging of what that is investment is likely to amount to. And it turns out that (spoiler alert) GDS probably isn't going to get all that extra cash after all.

Daniel Thornton, programme director at the Institute for Government, a charity designed to help the government become more efficient, noted that the Cabinet Office's separate Spending Review statement made no mention of the £450m figure.

"If you look at the Cabinet Office statement yesterday, their numbers are very different," he said.

Indeed, the Cabinet Office provided the figure of £282m "of resource funding and up to £90 million of capital funding by 2019 to 2020 for a series of cross-government digital and property programmes." This including GOV.UK Pay, a project already in development. Nowhere was the £450m figure mentioned.

"The figure of £282m given by the Cabinet Office looks reasonable; that amounts to a more moderate increase over four or five years," he said.

He said it is likely that the £450m figure is being accounted for by including an already-existing pot of cash within the scope of the GDS budget.

"The figure was received as a big success for digital. Well, maybe it is, but maybe it isn’t. We don’t know yet."

The Register contacted the Cabinet Office for clarity over the figure, but it has not responded.

Jessica Figueras, chief analyst at Kable Business Intelligence, an organisation that specialises in monitoring government IT, is more unconvinced by the figure.

"I don’t think getting any new money at all," she said. The 'new' funding is likely coming from the scaling up of GDS' online identity assurance programme Verify, which had previously been funded from the National Cyber Security programme, she said.

"Frankly I think it is an accounting fudge. The Cabinet Office press release made no mention of £450m anywhere: and that is something you'd expect them to shout about if they really were getting all that additional money."

The specific areas that are mentioned include the common technology platform, which she said was "nothing new", a mention of Government-as-a-platform but no details, and Verify.

"The costs for Verify were always planned to go up massively. In order to make digital happen they will have to pay up for Verify. If the costs don’t go up then it is not doing its job."

She said that for each transaction the government pays the identity provider 5p - so as more people use the system (which has had extremely sluggish take-up to date) the government ought to be spending more money on it.

But even if the figure amounts to a modest increase in budget for GDS, that in itself is still surprising outcome - as most folk were expecting to see dramatic cuts.

Certainly the government desperately needs to address its creaking and expensive IT. And perhaps with a clear strategy in place and a new leadership, that is something a re-designed GDS could help achieve. Thornton believes that there is an opportunity here, but that the risks of failure need to be mitigated against.

For example, he said the "making tax digital” savings have been rated as “highly uncertain” by the Office for Budgetary Responsibility. That is something particularly worth bearing in mind as Osborne said the government wants to "build one of the most digitally advanced tax administrations in the world."

It has also been suggested by sources that an approach focused on buying and reusing commodity IT, rather than an attempt to "build everything" could help the GDS unlock badly needed and yet-to-be realised savings.

As always the devil will be in the detail, with a strategy for digital due to be published early next year. But until then it would be wise to take any major investment claims in digital with a very large pinch of salt. ®

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