Today’s Spring Statement was, by design, lighter on policy than a normal fiscal event. Chancellor of the Exchequer Rachel Reeves has committed to just one major fiscal event – the Budget – each year. As a result, much of the real substance came in advance, with a series of measures announced last week to reduce the welfare budget by £5 billion and make the civil service more efficient. Alongside that was a squeeze on spending for unprotected government departments.
These decisions won’t have been made lightly, and some MPs on the Labour benches are clearly concerned. But the brutal political fact is that, while the government has a big majority and a mandate for change, the United Kingdom’s fiscal situation constrains what ministers can do. Following the Autumn Budget’s big boost to spending, the government has been compelled to deliver on its promises largely through redistribution – taking from one area to fund priorities elsewhere.
Prudent decisions on spending, many of which we heard today, are necessary. But they are not sufficient. Incumbents across the globe are struggling to maintain public support – and the government will be aware of the fate of its counterparts across Europe and beyond. A broader vision is required.
Over the past few years, the Tony Blair Institute for Global Change has set out how the UK can achieve a massive modernisation of government through technology. Today’s political reality requires a forward-thinking approach that integrates AI, data and digital identity into the fabric of public administration, putting science and tech at the heart of a new Reimagined State.
Governments are still running on systems built to manage, not to adapt – too often reactive, slow and disconnected. What’s needed isn’t just a more efficient bureaucracy, but a new operating model for the state: one that is modular, responsive and focused on delivering outcomes. Today’s findings from the Public Accounts Committee show the scale of the challenge in preparing our public services for the AI era – and the need to bring the best scientists and engineers into the top rungs of departments.
The £3.25 billion transformation fund announced today to invest in technology and encourage efficiencies is a good move. Our research shows that deploying existing technology across the UK government could unlock savings of up to £40 billion per year.
One of the core components in realising these gains is a digital-ID system, which can provide a secure, swift means of identification for those using public services, and reassurance for taxpayers that only those eligible are using them. It could also generate a net gain of about £2 billion per year for the Exchequer by helping to reduce benefit fraud, improve the efficiency of tax-revenue collection and better target welfare payments.
The government should also accelerate progress on implementing its manifesto commitment to create a National Data Library, making linked data quick and easy for those in government, academia and industry to find and use, providing the bedrock for transformed public services.
Alongside the welfare reforms announced today, the government should also do more to prevent people from becoming ill in the first place. Even a relatively basic form of digitally enabled preventative health care could lead to an extra 60,000 to 70,000 people in work per year once fully rolled out. This increase in employment could generate an extra £1.2 billion a year for the Exchequer by 2029 (and £2.1 billion by 2034) through higher tax revenues and lower benefit spending.
The government has also rightly recognised that simplifying planning procedures can boost economic growth. The Planning and Infrastructure Bill is promising: it is expected to boost GDP by 0.4 per cent over the coming decades, and is now complemented by a new £600 million fund to address shortages in skilled construction-linked trades. But these numbers are still relatively small for one of the government’s flagship policies, and more work will be needed to deliver the radical action necessary to get Britain building. There is more the bill could do to shift away from vague, case-by-case decisions and towards clear, rules-based planning. Further action is also needed to deal with endless stakeholder consultations and lengthy documentation, and to address the delays caused by environmental regulations.
Most importantly, the government should curb local vetoes. This means going further on removing councillor vetoes, including by using ministerial “call-in” powers to ensure that strategic projects are not blocked at the local level.
The government’s approach to cutting bureaucracy and boosting productivity by using technology to empower public servants is absolutely the right one. But tech adoption among the existing workforce is not enough. While plans to boost the number of digital and data experts in government are welcome, to truly reimagine the state, we need to attract the best scientists and engineers to lead the change. That means radically simplifying recruitment – with rapid hiring processes and exemptions from restrictive pay controls.
Some of these policies are already on the agenda for the government, for example through the AI Opportunities Action Plan. But instead of incremental improvements to existing structures, a more radical shift is needed.
The next phase must deliver a massively accelerated programme to effect structural reforms, pass key regulations and deploy necessary funding.
The Spending Review in June will be the next big test of the government’s desire to implement real change. It will demonstrate whether the tech-transformation agenda is fundamental to its delivery programme or not. Ministers clearly see the size of the challenge and have taken some bold decisions. But achieving better outcomes for the country by 2029 will require big changes.