The fiscal plan announced yesterday by chancellor Rachel Reeves reveals that the Department for Science, Innovation and Technology will take a key role in helping direct government’s long-term tech financing
Yesterday’s budget outlined how the Department for Science, Innovation and Technology will build on its new remit as the digital centre of government by taking a key role in directing tech investments via the next spending review and supporting the transformation of corporate functions across government.
The new chancellor Rachel Reeves’s first budget also marked the conclusion of an initial spending review phase in which departmental funding settlements were set for the next financial year. This comes ahead of ‘phase 2’, which will encompass a full comprehensive spending review (CSR) to be concluded in the spring, in which Whitehall budgets will be allocated for at least the subsequent three years, up to 2028-29.
During preparations for the previous CSR exercise in 2021, the Central Digital and Data Office worked closely with HM Treasury to help ensure the necessary levels of financial backing for departments’ key technology programmes and operations.
With CDDO and its sister agencies now housed within DSIT as part of the Labour government’s reimagined ‘digital centre of government’, the tech department will play a key role in helping to direct investment via the upcoming long-term settlements in the second phase of the new government’s spending review.
The budget says: “DSIT will continue to drive towards a renewed strategy for digital transformation across the public sector to ensure that fundamental reforms in public services are prioritised and digital-led. This will inform a centralised and coherent approach to digital investment at phase 2 of the spending review.”
This remit of advising the Treasury will form part of DSIT’s ongoing wider role to “bring together work on the digital transformation of public services under one department… [and] drive forward the digital changes needed to maximise the potential of digital, data and technology to deliver for the British public”.
This will include delivering reform of government’s cross-departmental 13 functions: analysis; commercial and grants; communication; counter-fraud; debt; digital and data; finance; internal audit; legal; people; project delivery; property; and security.
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Supported by DSIT, these central groupings will be transformed as part of the ongoing rollout of government’s multibillion-pound shared services programme, in which five clusters will each implement a shared back-office software infrastructure.
The budget provides 2025-26 funding for DSIT to “invest £80m to support the transformation of corporate functions across government, to deliver more efficient, cost-effective and modern systems as part of government’s Shared Services Strategy”.
The department received a total settlement of £15.1bn for the next fiscal year, which the budget claims “is equivalent to an annual average real-terms growth rate of 6.5%” compared with 2023-24.
A large amount of this money is to be committed to supporting research and development – largely through arm’s-length bodies such as UK Research and Innovation and the national network of research councils.
The budget adds: “To create a stable environment for productive long-term partnerships with industry, the government will set 10-year budgets for key R&D activities [and] these will be set out as part of phase 2 of the spending review.”
The fiscal plan reiterates Labour’s manifesto commitment to establish a new National Data Library – a project that will be led by DSIT.
“This will provide simple, ethical and secure access to public data assets, giving researchers and businesses powerful insights that will drive growth and transform people’s quality of life through better public services and cutting-edge innovation, including AI,” the budget says.
Backing will also be provided for another recently announced initiative in which the new government has tasked the department with “establishing the new Regulatory Innovation Office which will reduce the burden of red tape, speeding up access to new technologies that improve people’s daily lives and unlock growth opportunities”.
