£316m cut from public sector IT spending. Maybe. Sort of

The UK government claims it cut hundreds of millions from its annual spend last year. But do the figures really stand up?
Written by Jo Best, Contributor

Spending watchdog the National Audit Office (NAO) has cast its eye over the UK government's IT savings over the past year. While the government is on track to meet its planned savings targets, according to the NAO, questions remain about how reliable the figures are.

During the 2011-12 year, changes to the way IT spending is monitored and conducted--such as all IT projects over £5m being subjected to extra scrutiny, centralised procurement, and a greater use of shared ICT--were reported to have saved £354 million.

However, the NAO disregarded £38 million of the savings, saying that there was not clear evidence for their existence.

A further £66 million is described as "savings from spending stopped in the current financial year, but which may be submitted in future," according to the NAO's report (PDF) into the savings, published on Wednesday. These savings are likely to be as a result of the moratorium on ICT spending brought in by the coalition government, which saw projects worth over £1 million put on ice. Many of those projects were only temporarily delayed until the end of the moratorium, and were initiated toward the end of calendar 2012. Nonetheless, such projects have still been counted as savings.

The NAO has also flagged up a question of how accurate spending data was prior to 2011, raising a question on how accurately savings that compare 2011-12 with prior years can be. "Previously, we have reported that government has found it difficult to establish robust information about ICT spend," the NAO said--a problem that was only addressed in December 2011 after the Government Procurement Service established more reliable sources of data.

Concerns were also raised about how a high turnover of key staff in the Cabinet Office during 2011-12 affected the quality of data. "The Cabinet Office had insufficient data for us to validate that reported savings met our criteria. In particular, we had concerns that individual items were not always measured against a reasonable alternative spending amount, that there was some double counting with other initiatives, and that some claimed savings may not have resulted from actions by the Cabinet Office," the NAO said. The Cabinet Office is now working on getting better data for the 2012-13 year.

'Good start'

Taking the savings data at face value, however, central government has managed to save £316 million from its £6.9 billion--or around 4.7 percent.

While the figure is a good start, the Cabinet Office needs to get a better grasp on the effects of the savings, Amyas Morse, head of the National Audit Office, said in a statement:

"The Cabinet Office has made a good start on reducing spending on ICT by departments. However, it needs to develop a more comprehensive assessment of the impact and effectiveness of its ICT and procurement reform initiatives.

"The big challenge will be to move from savings initiatives to achieving digital transformation of the civil service and the public services it provides."

The NAO has now called for the Cabinet Office to set itself tougher targets on savings.

"The Cabinet Office should review targets for ICT savings across government to ensure they remain sufficiently stretching. Savings delivered so far have exceeded their targets. Lessons learned, combined with a more accurate estimate of future ICT spend, provide a stronger basis now than there was one year ago for setting stretching targets," the report said.

"Because ICT spending was so wasteful in the past, we also know that there is still a long way to go. We must accelerate the pace of change. That's why we are determined to fully open up government ICT to smaller, more innovative companies, and to embrace open-source technology," a Cabinet Office spokeswoman said.

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