Digital reforms: Govt has mountain to climb but does not yet understand size of challenge

6 June 2025

PAC report highlights lack of skills and calls on Govt to better leverage its c.£14bn of annual buying power when dealing with digital technology suppliers.

Government’s ambitions for major digital reform exist alongside major challenges in the way of modernisation. In its report on government’s relationship with digital technology suppliers, the Public Accounts Committee (PAC) warns that the centre of government does not yet recognise the scale of reform required to address long-standing issues in digital procurement.

Past PAC reports have repeatedly identified failures in the delivery of government’s digital transformation projects causing large cost overruns (e.g. HM Prison & Probation Service’s handling of the electronic tagging programme). The report notes this is because government struggles to act as an ‘intelligent customer’ when procuring services. The PAC’s inquiry heard that while government plans to work on upskilling, capability and assurance across the wider civil service to address this problem, this was not a simple set of actions that would result in change overnight.

The Government Commercial Function (GCF) leads policy on how contracts are awarded to, and public money spent with, technology suppliers - with whom government spends at least £14bn every year. The report warns that it has only 15 people dedicated to the full-time management of technology suppliers. This is untenable, given the pace of digital technological change needed to adopt AI and the significant shift from legacy systems to modern replacements.

The report warns that government does not have sufficient skills to manage the depth and breadth of its digital commercial needs. While new Digital Commercial Centre of Excellence aims to fully harness the capability of digital and commercial functions, the report notes the Centre will have just 24 experts to undertake its roles, compared to 6,000 mainly general commercial people working across government. The PAC looks forward to evaluating government’s declared objective plan to upskilling these 6,000 staff in digital areas.

Another aim of the Centre of Excellence, and area of focus for the PAC’s report, is the leveraging of government's buying power with technology suppliers. Here the PAC finds that government underestimates how difficult it will be to consolidate its considerable c.£14bn annual spend of buying power across government. Historically, government has sought to exercise buying power through competition between technology suppliers. But the digital technology market is increasingly being dominated by a small number of very large suppliers, giving the government limited choice. The report calls for wide-ranging changes to how digital commercial activity is approached, which reflect the changing reality of technology markets, and bring clarity on how the centre of government and departments work together.

Chair comment

Sir Geoffrey Clifton-Brown MP, Chair of the Committee, said: “The government is talking a big game in digitally evolving Whitehall, but we are concerned that it is not yet fully cognizant of the pace at which it will need to adapt to keep up with the wider digital and AI revolution. Technological change was encompassed in the nineteenth century by electricity, the twentieth century by the internet, and in the twenty-first century, it will be by AI.

“Our Committee has long called for digital professionals to take their rightful place at the top table both in management and on the supervisory boards of Departments themselves, guiding and shaping key conversations on AI, cyber security, and overall policy delivery. How digital services are bought in from the private sector is the very foundation of this work. It is heartening to hear government beginning to aspire to excellence in this area, but it is vital that those at senior levels who understand the scale of what government faces communicate this with urgency to the wider mechanisms across Departments. Without reckoning with the reality on the ground which our report lays out, aspirations will not get government very far.

“Government ambitions exist in a context in which the field is littered with failed digital transformation projects which suffered from the same systemic issues – a lack of in-house skills, a lack of effective cross-governmental collaboration, a lack of future-proofed infrastructure. Our report provides a template for government on how to sharpen its approach to the challenges of a digital landscape that poses the twin challenges of the dominance of a few big players, and moment-by-moment change. Without seizing the opportunity to deliver the urgently needed reforms laid out in our report, government’s noble digital aspirations are likely to remain unfulfilled, and productivity improvements in the public sector will be delivered sub-optimally.”

Further information

Image: House of Commons