Analysis The UK woke up this morning to the prospect of a new government, but still faces legacy problems across technology projects, policy and investment.
In policy, there are the post-Brexit challenges of how to adapt data protection law, while there are new issues around how – or even whether – to legislate to address the looming AI revolution. In investment, the UK has big ambitions to be a world leader. In central government IT, the projects are too numerous to list. But there are red flags to watch out for – some of which have been flagged, literally, by Whitehall’s own projects watchdog.
Technology projects in the public sector
Starting with where your money goes, tax inspector HMRC faces a dual challenge. In July 2022, the company began searching for a vendor to support its legacy SAP tax collection system, with a total contract value of up to £400 million ($511 million). It currently relies on a “highly customized version of SAP ECC 6.0,” which was launched in 2005. SAP will end mainstream support for ECC 6.0 in 2027, less than a year after the proposed contract expires. In January 2022, the authority awarded Capgemini a systems support contract that expires at the end of 2024.
HMRC is also considering a challenging SAP overhaul to support its ERP system, including HR and finance. The body is leading a group of Whitehall departments including the Department for Transport (DfT) and the Department for Levelling Up, Housing and Communities (DLUHC) under the umbrella of the so-called Unity programme, which has already been given a “red” rating by the Infrastructure and Projects Authority (IPA). A red rating means that “successful delivery of the project appears unachievable.” The £500 million ($639 million) tender has already begun.
HMRC is one of the departments responsible for procuring SaaS ERP systems for central government departments as they move to the new software model set out in the 2021 Shared Services Strategy for Government.
In June last year, the Department for Work and Pensions (DWP) launched a procurement package worth up to £933.7 million ($1.2 billion) to lead a 12-year contract covering both software and systems integration services that will also support the Department for the Environment, Food and Rural Affairs (Defra), the Home Office (HO) and the Ministry of Justice (MoJ). The departments currently use various versions of Oracle, with the Home Office having already moved to the cloud with Oracle Fusion. In 2021, the MoJ cancelled its procurement plans for ERP to align with its new strategy.
In July last year, the Department for Science, Innovation & Technology (DSIT) – set to be established in February 2023 – launched a £215.6 million ($275 million) 10-year tender, with the option of a two-year extension, for a group of Whitehall departments and independent bodies. Dubbed “The Matrix”, it is the “toughest” of the five clusters, Alex Chisholm, permanent secretary and chief operating officer of the Cabinet Office, told MPs in January.
The other two clusters are Defence and Overseas, which include the Foreign, Commonwealth and Development Office, the Department for International Trade and other units.
Seasoned observers will know that running a single ERP project can be mind-bogglingly complex – say hello to Birmingham City Council – but managing a series of projects simultaneously while trying to keep budgets within the expectations of a government that promises to be frugal. Good luck with that.
Outside Whitehall, the public sector is rife with technological challenges, nowhere more so than in the NHS. Here, Prime Minister-elect Sir Keir Starmer has already said that “moving from an analogue system to a fully digital NHS … could completely transform the NHS and the way it operates, and save money.”
In the NHS, too, Labour must decide what to do with the deeply unpopular Federated Data Platform project. Palantir won the £330 million ($412 million) contract in controversial circumstances last November. The government awarded the seven-year deal after the US surveillance technology vendor won contracts worth a total of £60 million ($75 million) without any competition. Use cases it has already built will be handed over to the FDP.
Labour faces a dilemma: should they terminate the contract and find another way to collect data to improve the efficiency of the NHS, or should they build on what is already there, however uncomfortable some members of their own team may find that?
Policy decisions Labour must take
On technology policy, Labour will face some tough choices, as politicians like to say. The Data Protection and Digital Information (DPDI) Bill, which the Conservative government designed to diverge UK law from EU data protection law after Brexit, was among the parliamentary votes that were rejected due to a lack of time before the general election.
Experts have criticised the technology, warning that independent oversight of facial recognition is at risk, as the police minister plans to embed facial recognition in police forces.
Legal experts warn that plans to create new data protection laws will mean more work and costs for businesses, and could create challenges for data sharing between the EU and the UK.
Meanwhile, legislation governing the introduction of AI has been put on the back burner. The Conservative government has opted not to introduce new legislation specifically for AI, instead pledging £100 million ($125 million) to support regulators and researchers in dealing with the challenges of introducing the new technology fairly and preventing people from using it for shady purposes. The EU, however, has introduced direct AI legislation, which oversees the development, management and deployment of AI models.
With few Brexit supporters in government, Labour will have to decide whether it wants to adopt a more EU-style approach to AI and data protection, making it easier for companies to move data and develop technologies on both sides of the Channel.
Investments in science and technology
While Labour pledged not to raise taxes on working people or significantly expand government borrowing, it said it would invest £1.5 billion ($1.9 billion) in new gigafactories, £1 billion ($1.28 billion) in carbon capture technologies and £500 million ($639 million) to support green hydrogen manufacturers.
In information technology, the industrial strategy focuses on supporting the development of AI and removing barriers to planning new data centers, which have been blocked in some locations.
Elsewhere, Labour has inherited the brainchild of Brexit strategist Domminic Cummings. The £800 million ($1.02 billion) ARIA project promises blue-sky research with no specific, definable returns. Modeled on the US military innovation agency DARPA, it has been criticized for its slow start, though it is now up and running.
With its ill-defined targets, cutting Labour might seem like an easy task. But the party has indicated it will keep ARIA for now as it moves to ten-year funding cycles for R&D investment.
Conclusion
On data policy, Labour will be tempted to move cautiously towards the EU. Despite the passions surrounding Brexit, it is hard to see how the UK’s data protection laws will sway votes one way or the other. On technology investment, the plans seem laudable, but it remains uncertain whether they will stand the test of public spending decisions if the economy does not go to plan. It is public sector IT projects that will give Labour the hardest time. IT projects could be the graveyard of efficiency ambitions, especially as the leadership appears to have banked the savings already. There are dragons, Sir Keir. ®