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Local government IT spending recovers after decline

28/07/14

Local government's IT spending grew last year after a decline in 2012, according to an authoritative market survey. The survey, by analysts TechMarketView, also reports that the UK public sector market for software and IT services (SITS) should be growing more than 50% faster than the private sector market by 2017.

Central government continues to dominate the public sector's SITS spending, the study shows, accounting for 43% of the market in 2013. As a result, Cabinet Office-driven Whitehall efficiency savings continue to have a major impact on the direction of the overallmarket. In 2013 this showed as "a mid single digit percentage decline" in the central government market. "Most affected were the large infrastructure services providers, which struggled to defend and maintain existing business in a changing procurement environment while also finding major new contracts a rarity, and heavily contested by new and old players alike."

Outside central government and defence the picture was more positive. "In local government, education, health and police the market performance was positive to varying degrees. Indeed the local government SITS market swung from a decline in 2012 to marginal growth last year, as both infrastructure outsourcing and application services activity picked up significantly." The police market showed the strongest growth at just over 13%.

One reason for optimism in the market is that a "race for change" in the public sector is on the cards. That race that has a finish line - or at least an interruption - in the 2015 general election. The election is already bringing uncertainty, for example in issues relating to data sharing. After the election analyst envisages "very little" change in terms of the general direction of travel. "The party in power will continue to drive down ICT running costs. All parties have also shown support for the public service digitisation; any difference is likely to be in the approach to achieving those aims."

Forecasts show a combined annual growth rate (CAGR) of 1.1% between 2013 and 2017. Growth will increase to 2.8% by 2017, the report predicts. "Indeed, over that period all subsectors bar central government will be able to boast a positive CAGR, despite continued austerity and the prospect of even tighter controls on spending."

Register: Library & Alerts

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