Yesterday the Chancellor, George Osborne, gave his New Year economy speech. He made clear that a Conservative Government would be committed to continuing the current direction of travel after the 2015 General Election. That would mean no going back to “bad old habits”. In other words, the Government and the welfare system would be permanently smaller. As a result, Osborne made clear that Conservative policy would focus on more cuts (£17b this year, £20b next year and £25b across the two years thereafter). This would include a further £12b cut from the welfare budget in the first two years of the next parliament. He will ask Parliament to vote for a new charter for budget responsibility to stop people from shying away from committing to the numbers required to reduce the deficit.
In TechMarketView’s last UK public sector SITS market trends and forecasts report from the PublicSectorViews team (available to subscribers), we forecast a period through to 2016 defined by sector growth rates barely managing to nudge into positive growth territory; and by a central government (Whitehall) market remaining in negative growth territory throughout. Osborne’s latest speech does nothing to change our outlook for better or worse. Our view is that ICT has already been a core focus for the Cabinet Office Efficiency & Reform Group (E&RG). Anything that can be done to bring down ICT expenditure is being done. And the peak of major outsourcing contract retenders expected over the next couple will give the team more opportunities to pursue further cuts in ICT spend. All this has already been factored into our forecasts. And should the General Election result in a change in Government, we see no reason for the current direction of travel not to be maintained. As Osborne says, 2014 will be “the year of hard truths”. And as we have previously stated, ICT suppliers must accept the ‘new normal’ in terms of the way UK Government procures and manages ICT. Further cuts will merely mean a greater commitment to existing strategy.