Chancellor George Osborne has announced massive cuts to public-sector budgets in the government's spending review, with IT departments expected to both absorb the cuts and to help alleviate the effect of them.
The Comprehensive Spending Review, which has the aim of cutting billions of pounds from the £109bn UK budget deficit, will see 490,000 public-sector jobs go over four years, Osborne told parliament on Wednesday.
"Much of [the staff reduction] will be achieved through natural turnover, by leaving posts unfilled as they become vacant," said Osborne. "But... there will be some redundancies — up to the decisions of individual employers in the public sector. That is unavoidable when the country has run out of money."
With fewer civil servants, there will be less need for back office IT staff in Whitehall, according to industry expert Mark Kobayashi-Hillary. "Inevitably [the government] will cut back-office support," said Kobayashi. "With a third of departmental budgets going, IT will have to be in the firing line."
The administrative budgets of every main government department will be cut by a third, Osborne said. The Cabinet Office will see a reduction of £55m by 2014-15, while the Treasury is losing 33 percent. The Department for Business, Innovation and Skills (BIS), which oversees projects such as High-Performance Computing Wales, will be cut by £400m. Overall, BIS funding will fall by 7.1 percent per year until 2014-15, said Osborne.
On the other hand, IT departments are being called upon to deliver efficiency savings as part of the budget squeeze. The Department for Work and Pensions is expected to step up its use of online applications, with savings going to fund a new Work Programme introduced by Osborne. HM Revenue and Customs is targeted for squeezing more out of its IT resources, but is also getting a shot of investment.
"While the HM Revenue and Customs budget will be expected to find resource savings of 15 percent through the better use of new technology, greater efficiency and better IT contracts, we will be spending £900m more on targeting tax evasion and fraud," Osborne said.
Further afield, the BBC has been told to reduce its online spend, and the licence fee has been frozen for six years. However, the broadcaster is expected to contribute £530m over the next four years to fund the introduction of super-fast broadband in rural areas.
Many existing government projects are being renegotiated with suppliers. The government said in September that hundreds of IT projects are being scrutinised, to determine whether they should continue, be reduced in scope, or cut.
One project that is still going ahead is government CIO John Suffolk's plan to create a 'network of networks' called the Public Sector Network (PSN), according to Jeff Smith, the European head of product and marketing for telecoms firm Global Crossing.
"It might be spending new money, but it's spending new money out of old budgets," Smith told ZDNet UK. "The way you get that is collapsing the multiple different network services down — most departments currently have a separate voice and data network." According to Smith, whose company has a 6-7 percent share of the governmental converged services, hosted IP telephony, traditional telephony and data-networking markets, the government is "driving a usage-based model" that is centred on the cloud.
"Right now we're in the middle of framework negotiations with the government," Smith said. "We're already involved in a number of trials with government departments." He said the negotiations would be affected by Wednesday's review, but "on the positive side". Smith even saw a silver lining to the abolition of many quangos, arguing that the heavy reorganisation this involves provided a "challenge from a networking perspective".
"That's going to drive the need for change, regardless of whether you want to spend new money or not," Smith said. "When you cancel, move, migrate — that's the point of change [where] you go to a network where you can quite easily scale up or down."
A focus on greater efficiency will be good for the IT industry as a whole, according to to the British Computing Society (BCS).
"Technology is going to be critical to effective cost reduction and improved efficiency," said BCS chief executive David Clarke. "We are lucky that the UK has some of the smartest people in the world with regards to how technology can be applied to achieve these goals and therefore reduce the impact on our information society. I hope that the government will maximise the talent IT professionals have to offer in this respect."