Outdated Technology is Costing the Public Sector £45 Billion a Year

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• Outdated Technology is Costing the Public Sector £45 Billion a Year

06 February 2025

One in four digital systems used by central government are outdated, costing the public sector £45 billion in productivity savings.

This figure equates to paying for every primary school in the UK for a full year.

 

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The “State of Digital Government review” is an investigation into the efficiency of the government’s digital resources, which includes national security operations, HMRC systems and public facing services like the NHS app and online access to universal credit.

The report has found that a mixture of poor data infrastructure, underinvestment, over-reliance on expensive third-party contractors, and the use of outdated legacy technology systems is causing poor productivity and low public satisfaction.

 

Only Half of UK Public Services Have a Digital Channel

 

Compared to private sector norms, the UK is very much “under-digitised”, the report found. Around half of central government and NHS services still do not offer a digital pathway, with some services still relying on phone calls, emails, letters, and in-person visits. HMRC handles 100,000 daily calls, DVLA processes 45,000 letters every day, and Defra manages over 500 services accessed via paper-based forms.

 

Reliance on Decades-Old Legacy Technology

 

The government defines legacy technology as being based on an end-of-life product, out of support from the supplier, impossible to update, no longer cost-effective, or considered to be otherwise above the acceptable risk threshold. 

Around 28 per cent of central government’s technology estate is defined as legacy. That’s 10-70 per cent across police forces and around 10-50 per cent across NHS trusts. 

Some of these legacy tech systems are “red-rated” for reliability and security risk, due to a combination of security vulnerabilities, lack of support and inability to meet business requirements.

 

NHS Outages 

 

In 2024, 123 outages impacted NHS England, often forcing staff to fall back onto manual, paper-based processes. In October 2024, NHS Northamptonshire and Leicestershire had one major network incident every single week. 

The report states that the magnitude and impact of incidents across the public sector are not centrally captured.

 

Heavy Reliance on Outsourcing 

 

The report also found that, within the digital and data workforce, there are too many project managers and other non-technical employees in relation to technical specialists, relying heavily on third-party contractors.

In 2023, £26 billion was spent on public sector digital and data services. Of this, less than 20 per cent (around £5 billion) was on permanent public sector staff while 55 per cent (£14.5 billion) was spent on contractors, managed services providers, and IT consultants.

This issue is in part due to the technical skills gap amongst staff and the lack of competitive remuneration making it hard to recruit.

Picture: a photograph of a person typing on a laptop computer, with another laptop computer next to them. Image Credit: Unsplash

Article written by Ella Tansley | Published 06 February 2025

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