English public sector IT spending reached £17.3 billion in 2022

More than double what it was five years ago

Although public IT investment has increased, it still lags behind the construction sector,

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Although public IT investment has increased, it still lags behind the construction sector,

England's share of spending on public sector IT has nearly doubled over the last five years, reaching approximately £17.3 billion in 2022, according to new analysis by procurement research firm Tussell.

The share of public expenditure on IT rose from 5% in 2021 to 10% in 2022, despite a 4% decline (£173 billion) in total UK government spending in England last year.

'There has never been a better time for IT companies to focus on the public sector,' Tussell said in its report.

Although public IT investment has increased, it still lags behind the construction sector, which accounts for the majority of government spending in England at 21%.

The UK was badly impacted by the pandemic in fiscal 2020/21, leading to a 28% increase in overall public expenditure to £181 billion. Emergency efforts to stop the spread of COVID-19 led to skyrocketing IT spend during the pandemic.

For example, the UK invested £37 billion on a contact tracking system and related IT infrastructure - although not all of that money has been spent. Other large-scale projects include a £9.3 billion overhaul to the voice and data network that supports ambulance, police, and fire personnel, known as the Emergency Service Network.

While government and public sector bodies continue to spend more money on IT each year, Tussell research from last year indicated that so-called 'tech titans' hold about 90% market share.

According to the research, public sector organisations increased their IT spending from £11.5 billion in 2020 to £12.6 billion in 2021. However, 89% of that money was split among the 150 biggest IT providers.

Many of the contracts - worth a combined total of more than £2.5 billion - were acquired via large frameworks.

The remaining £1.3 billion was split among 5,298 other IT vendors.

'If this trend continued into 2022 once all the data is in, then £9 in every £10 spent on IT in the public sector will go to one of these 150 companies'.

These 150 firms include companies like Capita and Atos, which top the list of public sector IT spending beneficiaries.

The top 10 also includes Computacenter, Capgemini, BT, Leidos, Fujitsu, Bytes Technology, Softcat and IBM.

However, the list of 150 firms also includes some quickly expanding SMEs that are capturing large slices of the market.