NAO chief urges reforms for £20 billion public sector savings

Important to take 'calculated risks' and avoid 'IT mega projects'

The head of the UK's National Audit Office (NAO), Gareth Davies, has called on the government to embark on a programme to modernise IT systems, clamp down on fraud and avoid mega-projects, claiming it could save the public sector £20 billion.

In an interview with the Financial Times, Davies stressed the urgent need for the government to update its legacy IT systems, pointing out that several departments still rely on computers from the 1980s.

He said efficient use of technology is crucial for enhancing public services, citing a case in 2021 where a legacy system led to over £1 billion in state pension delays.

Davies painted a concerning picture, citing "out of date IT systems," "crumbling" infrastructure and growing "maintenance backlogs."

He recommended removing control of so-called mega-projects from individual government departments, and placing them under the central supervision of the Cabinet Office and Treasury.

The NAO chief outlined a multifaceted approach to unlock the estimated £20 billion in savings.

Overhauling public procurement processes could result in £7 billion in savings, he said, while clamping down on fraud could yield up to £10 billion. Tackling tax evasion and avoidance could generate another £6 billion for the public sector.

Davies urged the government to take calculated risks with IT projects, emphasising the importance of learning from past failures like the Post Office's Horizon scandal and the NHS's abandoned £12 billion+ National Programme for IT (both supplied by Fujitsu).

Drawing on industry wisdom, he advocated for a shift toward "dolphins, not whales" - a strategy that favours manageable, targeted IT projects over grandiose, high-risk endeavours that attempt to revolutionise entire systems.

While acknowledging challenges, Davies also pointed out success stories like the recent rapid upgrade of Passport Office IT. Improvement is possible, he said, with better management, procurement processes and updated IT systems.

The call for action comes on the heels of a December 2022 NAO report that highlighted the increasing cost of maintaining legacy IT services. The report, "Organising for Digital Delivery," revealed that nearly half of all technology expenditure across the government in 2019 was dedicated to maintaining outdated systems.

UK doubles investment in overseas cyber

At the same time as Davies made his recommendations, the government has reportedly doubled its spending on overseas cybersecurity projects.

Total spend reached £25 million in 2022-23, Cabinet Office minister Baroness Lucy Neville-Rolfe told the Financial Times.

The surge in spending is attributed to the "conflict, stability, and security fund," which the Cabinet Office oversees. The fund's growth reflects the increased need for international collaboration to enhance cyber resilience and fight cybercrime.

A recent example of the fund's use has been in providing financial support and expertise to Ukraine, to bolster its resistance against cyber threats from Russia. Efforts have also extended to regions such as Iraq, Georgia, the Indo-Pacific, the Commonwealth and Africa.

The overseas cybersecurity programmes are delivered by both national security officials and contracted firms like BAE Systems.

Alongside cybersecurity programmes, the fund supports initiatives addressing terrorism, drug smuggling, organised crime and peacekeeping efforts, with programmes funded in 90 countries last year.

The conflict, stability and security fund is set to undergo a significant overhaul in April, when it will be renamed the Integrated Security Fund. Neville-Rolfe said the fund's principles would remain the same, despite concerns from a cross-party committee warning about potential dilution of its identity.