Performance Review of Digital Spend

Monday 10th March 2025 Written Statements

[The Chief Secretary to the Treasury (Darren Jones)]

The Government are committed to the digital transformation of public services and modernising the state. Successful digital transformation will improve user experience, help target support to the people who need it, and ensure sustainable public finances.

While to date, digital transformation has been incremental and lacked ministerial leadership, the Government’s comprehensive “Performance Review of Digital Spend” marks a step change, seeking to understand what barriers to reform are created by Government themselves and what steps can be taken to remove those barriers. This review was led jointly by HM Treasury and the Department for Science, Innovation and Technology.

The review highlighted significant challenges in how digital projects are funded, managed and tracked. Current processes can be overly complex for many digital initiatives and experimental technologies, delaying decision-making and service delivery. There is often insufficient funding for service maintenance and improvement, and financial pressures can mean that short-term savings are prioritised over long-term digital investments.

Many Departments face the dual burden of managing growing reliance on legacy IT systems while being constrained by funding models that prioritise the control of inputs rather than long-term strategic impact and delivery against outcomes. The absence of agreed-upon metrics to measure project outcomes also limits the ability to demonstrate value for money in digital spending.

The review also found that current approaches to policymaking can inadvertently narrow delivery choices early, limiting the range of options considered during investment appraisals and preventing a full exploration of potential solutions. Furthermore, misunderstood guidance and the unsuitable application of appraisal methods by Departments risks hindering digital investment.

The Government will take forward a number of important reforms to address these issues built on three key pillars:

testing alternative funding mechanisms;

enhanced training and guidance; and

improved outcomes metrics and evaluation.

Four new funding mechanisms, which focus on improving funding processes for innovative technologies such as AI, live digital services, portfolios and risk reduction respectively will be tested and scaled. Further details of each of these funding mechanisms is set out in the report. The Government’s aim is to test, iterate and institutionalise different approaches to both funding and evaluation of digital spend with a strong focus on demonstrating progress against outcome metrics in exchange for faster and more agile funding arrangements.

Targeted training for Departments and teams involved in the approvals process will focus on building better evidenced bids for spending reviews and on how to use agile funding approaches. New Green Book supplementary guidance for digital will be published to help Departments provide better evidence proposals. The Government are also taking a digital first approach to spending decisions in spending review 2025 to ensure that strategic judgements about the UK Government’s digital needs inform departmental allocations.

There will also be a strong focus on developing new and improved outcome metrics and robust evaluation plans for major digital programmes. These efforts will be enabled by a proactive support package provided by the Government Digital Service (GDS), National Infrastructure and Service Transformation Authority (NISTA), the Evaluation Task Force (ETF) and HM Treasury. Finally, strategic digital, data and technology priorities for new business case development will be agreed by Ministers at least six months before future spending reviews, to help ensure that decisions can be made on the basis of a more robust evidence base.

The report has been published on gov.uk at https://www.gov.uk/government/publications/performance-review-of-digital-spend and I have deposited a copy of the report in the Library of the House.

[HCWS511]