Government to create pathfinder programme for digital spend

The UK government plans to make a significant shift in how digital projects are funded, with the aim being to create funding models more suitable for a digital world.

As previously reported, the plans were announced yesterday (10 March) by science and technology secretary Peter Kyle, after the government completed a comprehensive performance review of digital spending.

The main outcome of the review was that the current funding model is “overly complex for many digital initiatives and experimental technologies, delaying decision-making and service delivery”.

According to the review, the current models for funding might be appropriate for large-scale digital programmes, but do not work for smaller or more innovative projects.

“In contrast to large-scale programmes, there are significant concerns that the level of detail required in business cases at the start of more innovative DDaT [digital, data and technology] initiatives – e.g. those involving generative AI – can often be too onerous or, in the worst cases, completely prohibitive,” the review said.

“In particular, future milestones and benefits can be too speculative to robustly provide the evidence required to permit funding, using the existing guidance and appraisal methods.”

The current level of detail required by HM Treasury in business cases for smaller programmes requiring modifications is too high, leading to inefficiency and delays, which is the opposite of what the Labour government is trying to achieve in its goal to reduce time to market.

“The evidence from interviewees suggests much of this appears to be driven by departmental internal assurance processes, which respondents often thought were excessive, rather than those mandated by HM Treasury or GDS [Government Digital Service],” the review said.

“This lack of proportionality in governance creates bottlenecks, leading to inefficiencies in resource allocation and project execution.”

As highlighted in a Public Accounts Committee hearing earlier this month, the government also lacks basic data on how much is being spent on technology contracts when it comes to mid-tier and small and medium-sized enterprises (SMEs).

The Department for Science, Innovation and Technology (DSIT) is currently working with HM Treasury look at all technology and digital expenditure to understand what it is spending on.

The aim is for the 2025 Spending Review to take a digital-first approach, which will include funding for a pathfinder programme to test and scale new funding models to enable faster approvals for new projects and greater budget flexibility for existing ones.

GDS and HM Treasury will establish four funding models as part of the programme. Two will be staged funding – one for live services, where the funding is based on performance against an agreed set of metrics, and another for innovative technologies, where projects will demonstrate progress through regular showcases.

The third will be an outcome-bases portfolio model, aiming to streamline resource allocation across various projects, and the fourth will be a model to address risk reduction in technical debt and cyber security, and create investment plans to address legacy systems.

Changes will also be made to the Green Book – the government’s guidance on options appraisal and evaluation – with supplementary guidance created to clarify how to apply Green Book principles when developing DDaT business cases with better evidence.

Departmental spending teams will be given targeted DDaT training and support to do so, with the aim of building capability and streamlining processes.

The pathfinders will be continually evaluated, and the government will produce annual reports on how implementing the review is coming along. The aim is that by the 2027 Spending Review, the pathfinder funding methods will be solidified as dedicated investment routes.

As reported previously by Computer Weekly, the government is also due to produce a sourcing strategy to create a more strategic approach to digital procurement.