Making the most of digital spend

Eleonora Harwich

September 24, 2019 | @EleHrwch

Since the early 2000s, successive governments have sought to use digital technologies and data to deliver public service transformation and reform. Government spending on procuring digital services drastically increased from the approximately £87 million in 2013 to £1.7 billion in 2018.

The digital transformation of government has delivered benefits, such as the increased efficiency of processes and the reduction of errors, however, it has not delivered to the scale of the claims made about it. Research by both Reform and the National Audit Office have shown that the basics of “getting the right data in the right place at the right time” are still not in place.

This spending review workstream on digital public services will focus on three areas. First, it will look at establishing how much is being spent on digital. Second, it will look at the importance of creating and investing in a National Data Strategy to unlock the value of data held by public sector organisations. Finally, it will look at the digital skills gap within government.

How much does Government spend on digital?

The answer to this question is not straight forward. There is data on how much government spends on the procurement of digital services, which shows a sharp increase in expenditure between 2013 and 2018. Most of this spend can be attributed to central government as shown by the figure below. However, this is not all public sector spend on digital and data as some services are provided in-house. 

Figure 1: Expenditure on procurement of digital services by sector

Source: Reform calculations using G-Cloud sales, Digital Outcomes and Specialists sales and the Digital Services sales in Government Digital Service and Crown Commercial Service, Digital Marketplace sales, (webpage), 24 January 2019

Digital transformation and the better use of data within government have improved the efficiency and effectiveness of services, for example the reduction of fraud and error has saved approximately £300 million between 2016-2018. Nevertheless, government’s plans to transform the public sector through the better use of data and technology have not always been successful. It is therefore essential to examine how money is being spent on digital transformation to ensure that maximum value is delivered to the taxpayer.

National Data Strategy

The UK has stated its ambition to be at the forefront of the artificial intelligence and data race in its Industrial Strategy. Yet, as the NAO has argued, there are still “fundamental challenges around how to use and share data safely and appropriately” within the public sector. Most government departments do not treat data as a strategic asset, which means that there is little to no long-term investment in a national data infrastructure (see Figure 2). Without a solid infrastructure the public sector will not be able to truly harness the value of the data it holds.

Figure 2: The missing layer of data infrastructure

Source: Sarah Timmis, Luke Heselwood, Eleonora Harwich, Sharing the Benefits:How to use data effectively in the public sector, (Reform, 2018)

The Department for Digital, Culture, Media and Sports is currently undertaking work to build a coherent National Data Strategy which should be delivered in 2020. However, there has been no appreciation yet of its cost, or how to treat data as an asset. This stream of work will explore will set out to explore these questions and recommend a direction of travel for Government.

Digital workforce

There is a clear digital skills gap within the public sector. In 2017, it was found that people in digital, data and technology make up 3 per cent of the total Civil Service workforce. In addition, around 70 per cent of government organisations have 10 or fewer digital and technology leadership roles. It has been recognised that the public sector is lagging behind the private sector in terms of its digital capabilities. To bridge this gap government departments have developed their own strategies and programmes, such as the NHS Digital Academy or the Digital Voices programme in the Department of Work and Pensions. This stream will focus on estimating the spend of these digital skills programmes and recommend whether further investment is needed.

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