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SIT Committee urges Palantir exit in push to end US cloud grip
A Science, Innovation and Technology Committee report contains recommendations that would radically alter UK public sector IT, procurement and relationship with hyperscalers if adopted
MPs on the Science, Industry and Technology Committee have called for a “period of over-correction” to break the cycle of supplier lock-in and foster a domestic UK cloud ecosystem through mandatory re-competition and open source standards.
One notable measure recommended in the report – Rewiring the state: Delivering digital government – is that the UK government should exercise the break clause with Palantir and the Federated Data Platform (FDP) in the NHS and publish a fully costed exit plan by the end of 2026.
Elsewhere, the report highlights a “lack of competition” in government cloud spending, which totals about £10bn per year. It cites the March 2026 HM Revenue & Customs (HMRC) contract with Amazon Web Services (AWS) as a primary example of market failure. AWS was the sole bidder for the 10-year, £472m deal, despite concerns over restrictive licensing practices.
Meanwhile, the report recommends the establishment of a unit to monitor and disseminate digital government best practices from the European Union (EU), including how member states encourage the development of sovereign alternatives to incumbent providers.
Dangerous levels of lock-in
The report warns that the UK public sector’s heavy reliance on a small group of US-based technology providers – specifically Microsoft, AWS and Palantir – creates dangerous levels of supplier lock-in and systemic fragility.
The committee’s report argues that these dependencies, often driven by proprietary software and complex, opaque contracts, undermine competition, hinder innovation by small and medium-sized enterprises (SMEs), and expose the government to significant operational risks, including potential data access by the US under the Cloud Act.
To address such vulnerabilities, the committee recommends a comprehensive strategy to achieve “technology sovereignty” and that the government should prioritise open source alternatives and mandate that a defined percentage of procurement budgets go to UK-based startups.
Key interventions include exercising the break clause for the NHS FDP, implementing a rigorous cloud consumption dashboard to monitor supplier power, and legally requiring public bodies to favour open standards over proprietary systems to ensure the government retains the ability to make strategic choices independent of dominant incumbents.
Key recommendations in the report
Federated Data Platform: The government should commit to exercising the February 2027 break clause in the Palantir FDP contract and develop an in-house replacement or seek an alternative from UK-owned and UK-based providers, with a fully costed exit plan for the FDP published by the end of 2026.
Data access and transparency: The government must confirm the nature of Palantir’s access to patient data, the statutory basis for this authorisation, when and by whom it was authorised, and whether the information commissioner was consulted.
NHS single patient record: The government should prioritise using UK-owned and UK-based suppliers to develop and implement this and award all contracts through open and transparent procurement processes.
Ministry of Defence and Palantir: The government must set out the reasons for awarding a £240m Ministry of Defence contract to Palantir without a competitive tender process.
What is the Science, Innovation and Technology Committee?
The Science, Innovation and Technology Committee is a cross-party body of MPs tasked with scrutinising the expenditure, policy and administration of its parent department. Via formal inquiries, it gathers evidence from ministers, officials and experts to produce research-backed reports. While the committee’s findings are not legally binding, they serve as a powerful mechanism for parliamentary oversight and provide ammunition that can hold the government accountable for digital strategy.
The committee’s influence is exercised through mandatory government responses (usually within 60 days), public pressure and the ability to shift the national debate. Even when the government does not adopt specific recommendations, the committee’s oversight can lead to increased transparency, policy adjustments and internal reviews.
Procurement and SMEs: Central departments and public bodies should be required to spend a defined minimum percentage of their technology procurement budgets on products from UK-based and UK-owned startups and SMEs, with quarterly progress updates published.
Ending supplier lock-in: The Government Digital Service (GDS) should produce a strategy to end supplier lock-in, including targets for supplier diversification across departments and public bodies, with quarterly reporting.
Cloud consumption dashboard: The government’s promised cloud dashboard should include a breakdown of contract awards by company, their value, details of break clauses, specific licensing terms, and a value-for-money assessment.
All of Government cloud contract: The government should detail how this contract will prevent supplier lock-in, including its engagement with the Competition and Markets Authority (CMA) and how it will embed a pro-competition approach.
Technology sovereignty strategy: The government should define technology sovereignty. The definition should be reviewed annually, and it should set out how the government intends to support sovereign alternatives to incumbent providers.
Open source in the Procurement Act 2023: The government should use the update to this act to require public sector bodies to prioritise open source tools and technology over proprietary offerings.
Data access contingencies: The government should detail its contingencies for safeguarding citizens’ data should the US trigger data access provisions under the Cloud Act 2018, and share relevant impact assessments.
Monitor EU digital government initiatives: As part of the government’s “wider reset” in relations with the EU, DSIT should establish a unit to monitor and disseminate digital government best practice from, with a remit to engage with European Commission and member state-level bodies, in particular to focus on how the EU and member states develop sovereign alternative providers.
Industry reaction: Welcomed but measured
Nicky Stewart, senior advisor to the Open Cloud Coalition, said: “We agree with the need to reduce vendor lock-in across the public sector and to move towards a system that rewards choice, interoperability and fair competition for all providers.”
Conservative peer Lord Chris Holmes said: “This is an important report from the committee which the government must consider seriously and respond to. The most important recommendation is to increase competition in the UK cloud market. This is a critical question of resilience. The cloud concentration risk for the UK right now is beyond worrying. It is also a question of economic value and growth for UK business and a key consideration for any serious discussion around sovereign capability and capacity.”
Bill McCluggage, director of IT strategy and policy in the Cabinet Office and deputy government CIO from 2009 to 2012, said: “I applaud the committee’s thoroughness, but we need to be honest about what select committees actually do. They shine a light; they don’t drive change. This is Parliament holding the executive to account, not the government committing to act.
“With the current political pressures bearing down on the government, economic headwinds, a crowded legislative agenda, and an ever-present lobbying machine from the big tech players, I’d be really surprised if more than a handful of these recommendations make it into policy in any meaningful timeframe. We’ve seen this film before.”
Owen Sayers of Secon Solutions, an enterprise architect with more than 20 years’ experience in delivering national policing systems, said: “It’s the most radical set of recommendations I’ve seen in any Parliamentary report in 10 years. The title of the report clearly means they are laying out – or seeking to reset – government policy.
“I doubt the government can fully ignore it, but some of the measures – such as following Europe’s lead, which is very sensible right now in technical and compliance/derisking terms – might be hard for Whitehall and the government to stomach. Are they brave enough to take the recommendations and work through them to develop a new, more balanced and less US-centric policy? I seriously doubt it.”
