UK government spent over £50m on digital response to Covid-19 pandemic

The UK government spent over £50m on digital and technology systems as part of its response to the Covid-19 coronavirus outbreak – but that figure is dwarfed by the decision to postpone reforms to IR35 tax rules that were due to affect huge numbers of IT contractors.

A report by the National Audit Office (NAO) says the government committed more than £124bn on its overall response to the pandemic up to 15 May – a figure that excludes any local spending by devolved nations or councils.

The NAO itemised digital systems spending of more than £50m, but did not break out the cost of IT updates needed to support wider programmes, such as developing websites for applying through HM Revenue & Customs for the various business and employment support initiatives. Therefore, the true digital investment is likely to be significantly higher.

NHSX, the digital strategy arm of the health service, spent £6m developing its contact-tracing app. The app is currently being trialled on the Isle of Wight, and further spending is likely after testing suggested that more time was needed to get the software ready for a nationwide roll-out.

Meanwhile, the Ministry of Justice spent £20m to enable greater use of video and audio systems to conduct court hearings. The video platform was made available for both magistrates’ and crown courts, with more than 100 courts being able to use the technology in the first phase of the roll-out.

The Cabinet Office spent £28m on the Gov.uk Verify digital identity system and a new service to track 1.5 million vulnerable people. Verify had a huge boost in sign-ups as a result of nearly two million people applying for Universal Credit, which relies on Verify for online identity verification.

The system was due to cease funding from April as part of a previously announced plan to target private sector investment, but the Treasury offered a lifeline with additional cash for a further 18 months.

In addition, the Treasury decided to postpone its reforms to IR35 tax rules for 12 months, to 1 April 2021, which meant a loss of £1.2bn in tax revenue, according to the NAO report. The controversial rule changes had already seen numerous large companies scale back or eliminate their use of IT contractors because of the extra bureaucracy that would be required to engage with off-payroll workers.

“The scale and nature of the Covid-19 pandemic and the government’s response is unprecedented in recent history,” said Gareth Davies, head of the NAO. “This report outlines the range of measures taken by government to date and where financial support has been targeted. It also forms the basis for a substantial programme of independent reports from the National Audit Office to Parliament and the public on how the money has been spent and the lessons learned.”

The report added: “Events are moving quickly and the UK government’s response to Covid-19 is evolving. The figures in this report are initial estimates of costs and our best understanding of the announced measures. Many costs are not yet final as the UK government’s response continues.”