The UK public sector technology market saw modest growth of just 1.8% in the 2021-22 financial year (FY), with a total spend of £20.1 billion, according to GlobalData’s latest market sizing for the UK public sector ICT market. The leading data and analytics company notes that the £355 million increase over FY 2020-21 is not enough to reverse five years of stagnant real-term growth despite the market growing in cash terms.

Robert Stoneman, Service Director for Public Sector at GlobalData, comments: “GlobalData’s latest market sizing establishes that the £20.1 billion market for ICT goods, services and staff has remained robust, if stagnant, in the face of three of the greatest challenges for a generation: long-term cuts to public sector spending, Brexit and the COVID-19 pandemic. Despite many organisations having to do more with less, it illustrates the fundamental importance of technology in tackling the major challenges facing public services, including current ones around inflation and the cost of living crisis.

“However, these challenges have prevented the market from growing in real terms, with spending still 3% lower than it was in FY 2016-17, accounting for inflation. This difference is even starker if £5.4 billion spent on ICT staff is excluded, with spending on goods and services alone 7% lower in FY 2021-22 compared to FY 2016-17, again adjusted for inflation.”

Though the market remains flat, some areas are benefitting from greater growth. Spending on cloud swelled by 29% in FY 2021-22 compared to the previous year, growing £486 million to £2.2 billion. Spending on services and ICT staff also grew, by 10.7% and 10.4%, respectively, over the same period. By contrast, telecom services and hardware spending fell by 9.9% and 5%, respectively.

Stoneman continues: “Despite the impact of the pandemic, we still see long-term trends dominating in the latest year’s spending data. Most notably, there has been a continued move towards the cloud, with an associated fall in on-premise infrastructure investment. There was also a return to normal for areas like notebooks, and servers/mainframes, both of which saw pandemic-related highs in FY 2020-21 as organisations beefed up their digital infrastructure, but fell 18.5% and 15.8%, respectively, in FY 2021-22.”

Central government remains by far the largest market within the public sector, accounting for £9.2 billion. This is larger than the next three sectors—education (£3.2 billion), local government (£2.9 billion) and healthcare (£2.8 billion)—combined.

Stoneman adds: “Large central government departments and agencies like the Home Office and HM Revenue and Customs remain the largest single customers within the public sector, though collectively education, local government and healthcare nearly matches the centre for ICT investment.”