The US Treasury is overhauling how it funds digital projects after a review exposed inefficiencies and mounting technical debt. New funding models aim to prioritize long-term impact over short-term cost-cutting, with a stronger focus on cybersecurity and outcome-driven investment.
The UK government is set to overhaul how it funds and manages digital projects after a review exposed inefficiencies. The Performance Review of Digital Spend, commissioned by the Chief Secretary to the Treasury, Darren Jones, calls for a major shift in public sector digital investment.
Digital transformation is now central to public service delivery. The review urges a move away from rigid, short-term cost-cutting in favour of a model that delivers long-term results. Whether these proposals bring lasting change remains uncertain.
For years, the Treasury has struggled to balance financial control with the need for innovation. The review highlights how departments prioritise immediate savings over sustained investment. This has led to mounting technical debt and sluggish digital progress.
Bureaucratic funding processes create further delays. Every digital project, regardless of size, faces the same scrutiny, slowing progress and discouraging investment. Ministers also lack reliable data to assess whether past spending has delivered measurable value.
Darren Jones acknowledged the issue, stating that the government must rethink digital project funding to avoid dependence on outdated systems.
The Treasury is introducing four new funding models to replace the rigid, one-size-fits-all approach. These include staged investment for new technologies, outcome-based financing for existing services, and a multi-year approach for broader digital transformation. Another stream will focus on tackling technical debt and improving cybersecurity.
Technology Secretary Peter Kyle said the changes will allow departments to move faster, with funding tied to results rather than projections. The aim is to foster innovation while reducing the risk of costly failures.
The review highlights a need for stronger digital expertise within government. The Treasury plans to introduce training and updated guidance to help departments develop well-supported proposals.
A revision to the Green Book will clarify how digital projects should be appraised, with a focus on using data more effectively to measure outcomes. Departments will be encouraged to take a flexible approach to funding and build stronger cases for long-term digital investment.
One of the biggest issues in digital transformation has been the lack of clear benchmarks for success. The Treasury will work with the Government Digital Service, National Infrastructure and Service Transformation Authority, and the Evaluation Task Force to develop new indicators that link spending to tangible outcomes.
These will include user experience, service efficiency, and management of technical debt. The government hopes that clearer performance tracking will encourage a more strategic approach to digital investment.
The proposals mark progress, but questions remain about how quickly these changes will take effect and whether they will be applied consistently. Institutionalising the new funding models by 2027 suggests a gradual transition, which may struggle to keep pace with technological advances.
Michael Adjei, Director of Systems Engineering at Illumio, warned against focusing too narrowly on new technology. He argued that investing in skills and regulatory frameworks is just as crucial as funding.
With the next Spending Review approaching, the Treasury must prove that these reforms will lead to more efficient and effective digital services.
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