129.This Chapter assesses the level of institutional challenge that the Government faces in its digital strategy, in terms of procurement frameworks and internal digital skill capabilities.
130.The 2017 Government Transformation Strategy set out an ambition to create “one of the most digitally skilled populations of civil servants in the world”.272 The strategy suggested that digital skills were a necessary part of transformation, as digital transformation could not happen without a “skilled body of civil servants who have deep expertise in digital, data and technology (DDaT)”.273 The link between digital skills and internal Government transformation was set out:
We will agree principles around which we can best organise digital, data and technology in departments. Digital, data and technology is a critical function within government but is less well-established than other Civil Service functions, such as human resources or finance. There are significant differences in capability across the public sector, often driven by the type of organisation (departments running transactions are generally more mature than policy making departments, for instance), which we need to recognise on departments’ common journeys to becoming fundamentally digital.274
131.The Cabinet Office outlined the key ways in which GDS was leading the Government strategy to retain the right people and skills, including:
Both Professor Helen Margetts, representing the Alan Turing Institute, and Professor Chris Johnson, representing the UK Computing Research Committee (UKCRC), emphasised the success of the Digital Skills Academy and were encouraged by the progress made.276 Professor Chris Johnson commended its progress: “up to last year, the GDS Academy had seen 7,500 people through its courses. By any assessment, that is a really creditable performance in a very short space of time.”277
The then Director General of GDS, Kevin Cunnington, also told us that GDS and the Government had made considerable, measurable progress. He explained that the creation of 38 job roles for the digital skills profession within Government had resulted in the Government being able to better measure competency and utilise appropriate pay scales and progression as incentives for employment.278
132.Despite this, evidence we received from PUBLIC and techUK suggested that although the Government had made progress in emphasising the importance of digital skills and implementing initiatives in Government to skill the workforce, it still struggled to find the right number and quality of digitally skilled employees.279 We were told by the Ministers and UKCloud that this was not a problem that was just specific to the UK Government, but a global issue. This view was shared by Cloud Kickers, an engineering consultancy, who told us that they were concerned that the global skills gap constrained development across the world.280 Professor Chris Johnson, UKCRC, agreed that this was not just specific to the UK Government.281 Oliver Dowden MP, Cabinet Office and Margot James MP, DCMS, explained that the Government recognised there was a wider digital skills shortage, and was taking action to make the gap smaller through training and digital skills education.282
133.Tom Loosemore, a former Deputy Director of GDS, argued that the Government remained an attractive place to work as:
those people are not always motivated by the high salary. They are motivated by hard problems, and Government has the hardest problems […] If you can continue to create bubbles of good culture, where people can do great work, entrusting empowered, humble teams, you will keep attracting brilliant talents.283
However, Mr Loosemore’s view ran counter to the findings of a 2015 Report by the NAO, The digital skills gap in Government, which explained that “funding and pay are seen as biggest challenges to developing capability and capacity […] fewer than half of respondents were positive about their organisation’s workforce plans”.284 The Minister for Implementation also recognised the challenges of competitive salary in the public sector: “clearly, across the whole Civil Service there are challenges in relation to pay”. He explained that the Government was taking action to re-examine pay scales in order to address this issue.285
134.PUBLIC was concerned that the shortage in digital skills might have a significant knock-on effect on the capacity of the UK Government in relation to innovation and transformation. They told us:
Skills–both digital skills but also skills required to work in a more dynamic, agile fashion–across the public sector remain far below what they should be, and various initiatives remain uncoordinated and under-powered to make a real difference.286
135.The view that the lack of digital skills in Government might have a considerable impact on the ability of the Government to digitally transform was shared by the NAO in 2015, after it conducted a Government wide survey on digital skills.287 This survey identified that the skills gap meant a “a risk of unsustainable cost reduction or service deterioration if government is unable to deliver transformation to any significant degree over the next 5 years.”288 In a 2017 Report, Digital transformation in government, the NAO pointed out the progress the Government had made to upskill employees, such as through its aim of training 3000 civil servants a year in the Digital Academies, the creation of 40 job roles across Government, and a review of pay grades. However it was too soon to see if this had had any impact.289 The 2016 Making a success of digital Government report from the IfG also concluded that the Government’s actions in skilling the workforce were proactive, but that it was too soon to see results and that “demand for staff continues to outstrip supply”.290
136.Tom Loosemore told us that his major concern was the retention of digitally skilled staff, as opposed to the ability of the Government to recruit.291 The IfG also alluded to this in its 2016 Report, explaining that pay and market conditions were still the biggest problem for the Government, as external, private companies tended to pay higher rates and therefore the best talent left the public sector. Kevin Cunnington told us that the current attrition rate, in March 2019, was 39%, but that most of the people who left GDS moved to work in other departments, and as such, the skills stayed within Government. In comparison, according to a recent Institute for Government Report, several London based Government departments lost about 20–25% of their staff every year.292 In the private sector, tech companies in general experience a fairly high attrition rate, of around 23% between 2013–2018, according to a recent survey by Hay Group.293
137.Matthew Gould, the previous Director General for Digital for DCMS, agreed that the Government faced a specific problem retaining digitally skilled employees, but suggested that the flow of staff between roles and departments should be viewed as a positive opportunity for Government. He compared the UK model to what he had seen in Israel. He explained:
They have a flow of people through Government agencies, academia and the economy. They cycle round and through them easily; there is relatively low friction in moving between different bits. I think that flow is helpful, so I would be wary of getting to a point where you regard people who move on as a tragedy. If you can get it right, it is a good thing.294
138.The Government, including GDS, has made good attempts to tackle the digital skills shortage, through academies, creating job roles and considering progression pay. Nonetheless, more action is needed to ensure that digital skills capabilities are sustainable and not significantly affected by turnover of staff that is an issue for the digital workforce in both the public and private sector.
139.The Government should publish a strategy by mid-2020 covering how it intends to make digital skills sustainable. It should also set out the ways in which it plans to continue to raise the skill levels of the Government workforce, ensuring that it is attracting and retaining the best and most digitally skilled employees as well as spreading best practice to staff working in roles which are predominantly non-digital.
140.Another factor which impacts the Government’s ability to transform is procurement. According to the 2015 Government Procurement Framework, the overriding procurement policy requirement is that all public procurement must be based on value for money.295 This is defined as “the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought”.296 The 2017 Government Transformation Strategy focused on creating the right tools for the Government to consolidate its procurement policy. It suggested that procurement and contracting would be:
141.We heard from GlobalData that IT procurement in Government had historically been an “oligopoly” of large IT contracts, which was causing a “stranglehold” of Government by these legacy technology providers.298 Furthermore, UKCloud told us that the Government had been locked into large IT contracts with firms that were “expensive and difficult to break”. Many, including the Cabinet Office and PUBLIC, felt that opening up contracts to SMEs would drive innovation and competition, and thus not only provide the Government with better value for money, but also allow innovative technology companies to help solve public sector problems.299
142.However, we were told by Simon Hansford, representing UKCloud, that Government procurements were very onerous and complex due to Government restrictions and technical complications such as legacy systems.300 To address challenges with procurement the Cabinet Office, prior to and after the 2017 Government Transformation Strategy, launched a number of ICT procurement initiatives. We cover some of these in the paragraphs that follow.
143.The UK Government G-Cloud was created by GDS in 2012 as an initiative targeted at making the procurement process easier for departments and its Agencies.301 The G-Cloud consisted of:
144.The Cabinet Office explained that, amongst other changes in its approach to IT procurement, the G-Cloud had led to significant savings. It estimated that GDS and the Crown Commercial Service (CCS) had saved £3.56billion between 2012 and 2015, and that the Digital Marketplace contributed toward a £725 million saving in 2016/17 alone.304 However, a Freedom of Information request by Computer Weekly showed that four out of five G-cloud buyers were failing to share their savings data with the Government, and as such, figures that were produced about G-Cloud savings may not be entirely accurate, as users are likely to “over-report good deals and under-report uncompetitive deals”.305
145.UKCloud Ltd praised G-Cloud, explaining that it had opened up digital procurement in Government to “new market entrants and SMEs”, resulting in “improved citizen interaction with Government”, a key aim of digitisation as outlined in paragraph 22 of this Report.306 They went on to explain that G-Cloud had “saved the taxpayer money, bolstered the UK’s burgeoning GovTech sector and had given Government a lever in its bid to break the stranglehold of its legacy technology suppliers”.307 techUK reiterated this view in its submission and told us that in a recent survey of GovTech SMEs the majority of respondents saw the G-Cloud as a useful means by which SMEs could access the public sector and it should therefore be seen as a success.308 It is worth noting that UKCloud and techUK have both benefitted commercially from the G-Cloud and Digital Marketplace. However, GlobalData, a technology advisory company which has not benefitted directly from the Government’s procurement initiatives was also positive about its impact.309
146.In the book Delivering on Digital, commissioned by Deloitte, William D. Eggers further praised G-Cloud as an exceptional example of good IT governance:
The store includes hundreds of suppliers who have been pre-evaluated and categorized, making it easy to find the right one for specific mission needs. Moreover, it has simplified the procurement process on both sides, giving suppliers one place to offer services and buyers one place to procure.310
147.We did not hear any evidence that suggested the Digital Marketplace or G-Cloud had been negative for digital transformation, although Simon Hansford, representing UKCloud and Professor Chris Johnson from UK Computing Research Committee, told us that the procurement process was still quite complicated, despite the introduction of the marketplace, and advocated that it should be simplified.311 Professor Johnson explained that there were still many platforms on which to access available procurements in the UK—for example, these included the Digital Marketplace, Public Contracts Scotland and eSourcing Northern Ireland—which made procurement complex and access to it inconsistent.312 In addition, Mr Hansford highlighted that the process was not transparent enough, as suppliers were not informed when a particular service was requested with the onus being on the Civil Service to draw the open bid to potential bidders’ attention.313 As such, he recommended that there should be more transparency and simplification of processes, and suppliers should be able to see what services were needed or be informed proactively which contracts were up for renewal, to encourage innovative SMEs and diverse companies to apply.314
148.PUBLIC, a digital transformation technology consultancy company, also took the view that current procurement policies limited the potential for Government technology-led reform:
Procurement systems remain inflexible and complex, with a culture of risk averseness and a “computer says no” mentality. The disconnect between what the Government says it wants from technology and its systems to buy new technology is profound.315
149.The NAO also criticised the Government’s procurement policy in 2017, concluding that although the Cabinet Office had made a “good start on reducing spending on ICT by departments”, it needed to do far more to develop an accurate assessment of the impact and effectiveness of its ICT and procurement reform initiatives.316 A 2015 NAO report, The digital skills gap in government, also pointed out that “procurement processes have the largest negative impact on obtaining external resources”.317 It identified that procurement lead times were the biggest barrier to the ability of the Government to access the necessary skills, followed by usability frameworks and payment thresholds. Thus it is clear that there is a link between the two institutional challenges that we are exploring in this Chapter—skills and procurement. This particular finding by the NAO was also made by Professor Chris Johnson, representing the UK Computing Research Committee, who argued that it would be advisable for highly skilled employees to be more embedded in the procurement process, as much of what the Government was trying to procure was complicated.318
150.SME procurement was seen as a particularly important key to unlocking digital transformation and therefore maximising the potential of digitisation. UKCloud and PUBLIC, among others, argued that it offered an opportunity for the Government to support small business and engage with smaller, more flexible organisations that could offer agility and innovation.319 In a roundtable that we hosted with SMEs and small GovTech companies (see Annex 1) we heard about the innovative ways that these organisations wanted to contribute to Government transformation, but they thought they were held back by procurement processes. Though it is possible for companies to find available contracts over £10,000 on the Government Contracts Finder website, there was a concern by tech companies that the information was scattered and hard to collate.320 Despite recognition of the value that SMEs could play in digital transformation, the British Computing Society told us that, generally, contracts for SMEs were very complex because of unclear procurement frameworks, specifically with a lack of existing documentation about how Government IT systems operated, which made “it incredibly difficult for SMEs to get involved or realistically even take the financial risk and illustrates one of the key differences between public and private sector.”321 UKCloud also shared this perspective, explaining that, for SMEs, procurement frameworks were time consuming and costly, scattered on different procurement platforms, and had no consistency on durations, terms or products and services.322
151.After the 2017 Government Transformation Strategy the GovTech Catalyst programme was launched in 2018 to support public sector organisations to find solutions to challenges through external tech companies that might not usually supply the Government.323 Public sector organisations submitted their problems and applied for their share of the £20million GovTech Fund awarded via competitions, which, if successful, then provided support to define, develop, test and access creative solutions to these complex problems. The Cabinet Office told us that the GovTech Catalyst programme provided an “easy way” for private sector companies and social enterprises to develop their technologies, working directly with the Government, and assisting them to make their technology available across the whole of the public sector once it has been developed.324
152.We heard mixed views on whether the GovTech Catalyst Programme had been a success. techUK explained that the GovTech Catalyst was “an important opportunity to spread the use of digital services across Government and promote the use of new technologies”,325 whilst Daniel Korski, the CEO of PUBLIC, explained that the GovTech Catalyst had spread the use of innovative technology in some great areas, including, for example, using artificial intelligence to detect Daesh imagery that promoted a jihadi message.326 Conversely, at the GovTech roundtable, we heard from several GovTech SMEs and start-ups who thought the GovTech Catalyst was a good idea but had found it too bureaucratic and process heavy, particularly given that the fund was quite small (the GovTech Catalyst expects to fund 15 challenges in total) (see Annex 1).
153.In terms of the funding allocated to the scheme, there were suggestions of diverging views on whether it was enough. The then Director General of GDS, Kevin Cunnington, for example perceived that the fund was the right size.327 While the Minister for Implementation did not question whether the size of the fund had been set at the right level initially, he suggested that more money for the GovTech Catalyst Fund would hopefully be agreed at the next spending round, as the “relatively small pot of money” had “now been used up”.328
154.The Government has introduced initiatives, such as G-Cloud, the Digital Marketplace and the GovTech Catalyst Fund, to try and open up digital/IT procurements to a broader pool of bidders. These have helped to partially overcome some barriers involved in procurement, including engagement with SMEs. However, further innovation in procurement is needed to encourage involvement from start-ups and SMEs so that their strengths can be drawn on to enable transformation.
155.The Crown Commercial Service should produce a consultation immediately on the accessibility of the current Government technology procurement framework, asking for input from start-ups and SMEs on how accessible the current framework is. The consultation process (including a public response from the Government) should be concluded by Spring 2020, alongside the publication of a Government technology procurement strategy. The Minister should then provide this Committee with an update on how these are working within 12 months of publication.
156.The Government should increase the funding pot for the GovTech Catalyst fund.
272 The Cabinet Office, Government Transformation Strategy, (February 2017) p 9
273 The Cabinet Office, Government Transformation Strategy, (February 2017) p 39
274 The Cabinet Office, Government Transformation Strategy, (February 2017) p 39
284 National Audit Office, “The digital skills gap in government”, (December 2015), p 30
287 National Audit Office, Digital skills gap in government , (December 2015)
288 National Audit Office, Digital skills gap in government, (December 2015), p 4.
289 National Audit Office, Digital transformation in government, (March 2017), para 3.16–3.18
290 Institute for Government, Making a success of digital government, (October 2016), p 24
292 Institute for Government, “Moving On: The costs of high staff turnover in the civil service”, (2019), p 4
293 viGlobal, “Tech industry battles highest attrition rate in the world – and it’s costly”, accessed 3rd July 2019
295 Crown Commercial Service, “Public procurement policy”, October 2015, last updated March 2018
296 Crown Commercial Service, “Public procurement policy”, October 2015, last updated March 2018
297 The Cabinet Office, Government Transformation Strategy, (February 2017) pp 44–46
302 An initial agreement between two parties on the future of their relationship, whilst acknowledging that the final agreement of their relationship has not yet been finalised.
303 Government Digital Service, “The G-Cloud framework on the Digital Marketplace”, September 2013, last updated July 2019
305 Caroline Donnelly, “Four in five G-Cloud buyers fail to share savings data with government, FOI response reveals”, Computer Weekly, September 2015.
310 William D. Eggers, Delivering on Digital: The Innovators and Technologies that are Transforming Government, Deloitte University Press, 2016, p 116
316 National Audit Office, The impact of government’s ICT savings initiatives, (January 2013), para 17
317 National Audit Office, The digital skills gap in government, (December 2015) p 30
320 GOV.UK, “Contracts Finder”, accessed 3 July 2019
323 Government Digital Service, “The GovTech Catalyst challenge process”, May 2018, last updated June 2019
Published: 10 July 2019