UK Autumn Statement protects healthcare and education, but will result in tough choices on priorities for public sector’s £19 billion annual ICT spend, says GlobalData

17 Nov, 2022 UK Autumn Statement protects healthcare and education, but will result in tough choices on priorities for public sector's £19 billion annual ICT spend, says GlobalData

Posted in Technology

Following UK Chancellor Jeremy Hunt's announcement of a mixture of tax rises and cuts to UK public spending totalling £55 billion as part of the 2022 Autumn Statement;

Robert Stoneman, Service Director at GlobalData, a leading data and analytics company, offers his view:

"This has laid bare stark divisions in public spending, where moving forward is barely enough to stand still in terms of public service delivery. Healthcare remains relatively well protected, with an extra £3.3 billion a year for the next two years, while schools will get an extra £2.3 billion a year as well. On top of this, there is a recommitment to spend at least 2% of GDP on defence.

"Yet, for everyone else, spending levels will remain set at levels outlined at the 2021 Spending Review, confirming real-term cuts in such a high inflation economy. It also confirms a divergence between spending priorities for the next two years, i.e., those before the next election in May 2024, and afterwards, with spending levels from 2025 set to grow at just 1% per year, which is more slowly than previously planned. Capital spending will also be frozen in cash-terms from then, meaning a real-terms cut.

"Public services are facing a perfect storm of challenges. A decade of austerity has already hollowed out many services, and a second round will bite harder now that there is less fiscal headroom to absorb cuts as in the past. With the wider cost-of-living crisis and demographic changes further increasing demand, organisations will have to grapple with where to prioritise funding next year, with a knock-on effect for spending on technology by public sector bodies.

"The UK public sector spends £19 billion on ICT goods, services and staff annually. Previous austerity measures have meant some sectors were able to increase investment compared to others. The real-terms protection to healthcare funding over the last 12 years led to an 11% rise in total ICT spending between the 2016-17 and 2020-21 financial years. This is the only part of the public sector to see any significant growth in ICT investment, with wider spending flatlining in real terms since 2016-17. The measures outlined in the Autumn Statement will, therefore, not dramatically change this picture."