Cutbacks set to overlook local govt ICT spend

Public sector investment in ICT will average out as about the same per year and resume growth again over the next five years, despite all the current focus on cuts.

That's the conclusion of public sector think tank Kable, which says between now and 2015/16, while we can expect to see a spending decline, it won't be as bad as feared.

Thus 2010/11 may see UK public sector ICT hitting £17.99 billion, before dipping in the next two years (to £17.75 billion then down slightly again in 2012/13) but that then things will pick up, with a 1.5% hike in 2015/16, to £18.27 billion.

The fluctuations will definitely have an impact on the way custom software, system integration and the associated consultancy and training services required is provisioned, suggests the analysis, on the one hand, "but the effort to cut operational costs is helping to maintain, and in some cases increase" spending on outsourcing and managed services on the other.

It says equivalent trends can be seen in things like a drive to rationalise infrastructure technology and more emphasis on mobile working, as public sector ICT leaders see both as sources of savings in the long term. 

Mobile is even sparking a modest revival of investment in hardware, with the spend on new mobile devices offsetting the pressure to further extend dependence to the full lifecycle of installed PCs or printers.

"While the cuts are the most high profile factor at work, there is also a widespread move to reform public services. They may be talked up as a radical departure from the course taken by the previous government, but they are driven by the same underlying forces and in some cases follow a similar path. They are also ambitious, which suggests they will take some time to realise and underpin further investment in ICT," it also notes.

Finally, look for an imbalance in investment in ICT for recovery across different parts of the public sector. Thus Kable says local government will lead the recovery as it will have to adapt quicker to the new scenario, taking the sector's total from £3.22 billion in 2010/11 to £3.96 billion in 2015/16. At the same time, radical reforms in the health service are going to need a considerable investment in NHS ICT, and the current dip in spending will soon be reversed.

By contrast, the central government camp is "currently under the greatest pressure and the most likely to consolidate its business, if not between the big departments, at least within them". 

So while Whitehall may spend a little more on outsourcing, its overall ICT spend is forecast to fall and it is expected to be the last to come out of the decline only at the end of the five-year period. 

The recovery is also expected to be slower in the Ministry of Defence, criminal justice and transport sectors.