In his annual speech to Parliament, Gareth Davies, head of the National Audit Office, called for improvements in government IT procurement as part of a wider supplier management effort.
Overall, he estimated that the government could save as much as £8bn through efficiency gains by better use of competition. “Spending on IT services is an excellent example of where further efficiencies lie,” said Davies. “Maximising buying power in a market dominated by global giants is essential.”
He also urged policymakers to embed best practice across the wider public sector to secure further savings, and highlighted the failing inherent in “antiquated IT systems”. According to Davies, modernising government IT would improve the quality and shareability of data. Moving away from these legacy IT systems would also help to alleviate the pressure of recruiting and retaining scarce, in-demand skills.
“The challenge is vast,” he said. “In 2020, Defra estimated it would need to spend more than three-quarters of its digital budget maintaining ageing systems. The MoD in part relies on kit dating back to the Cold War for defence inventory management.”
As an example of the improvements that can be made by modernising legacy IT in government departments, Davies discussed the changes made in the Passport Office.
“Following our report on the backlog of new passports caused by the lifting of Covid-19 restrictions in 2022, the Passport Office has responded by improving customer contacts, building capacity to better manage demand, and continuing its digital transformation,” he said. “The customer experience is much improved, and the Passport Office is saving money by reducing ‘failure demand’.”
Davies added that such efficiency gains are possible across government. “The potential efficiency gains in services dependent on high volumes of data processing are enormous, with fewer, better-paid civil servants delivering more modern and responsive public services that waste less of their customers’ time, he said.”
Davies described data as one of three enablers of productivity in the public sector. “Consistent definitions, standards and, above all, quality are essential if citizens are to see service levels rise and costs fall,” he said, adding that without this, the government will fail in its ambitions to use AI to improve the efficiency of decision-making across departments. “Poor data will mean arriving at wrong answers, only faster.”
Innovation and evaluation is Davies’s second enabler to greater productivity in government, but, he said, creating an environment where this is encouraged, tested, evaluated and scaled up is challenging in government.
The third area for productivity improvements is in planning and spending. “The planning and spending framework can better support this drive for efficiency and productivity,” he said, adding that the planning and spending process should address personal and organisation incentives for high performance.
“Show staff that delivery skills are a route to career progression and success,” said Davies. “For the organisation or department, there’s a strong argument for retaining a share of savings to invest in further improvements.”