Treasury invests £63m in cloud services amid public sector overhaul
HM Treasury has spent more than £63.6m on cloud services over the past three years, showing a decisive shift toward fully cloud-based IT infrastructure.
The department has eliminated on-premise systems entirely, reflecting a broader digital transformation agenda across public spending and tax policy.
According to the State of Digital Government Review, around 60 per cent of public sector IT systems now operate in the cloud.
The Treasury’s move to a fully cloud-based model exemplifies how some departments are taking this shift to its furthest extent.
Recent data, revealed through an FOI, showed the Treasury’s cloud expenditure remained broadly stable, spending £21.4 million in 2022–2023, £21.9 million in 2023–2024, and £20.3 million in 2024–2025.
Notably, no funds were allocated to on-premise infrastructure during this period.
This investment follows the ministry’s launch of a procurement process for a cross-government data platform, designed to enhance transparency, performance monitoring, and interdepartmental collaboration.
Part of the Shared Services for Government (SSfG) programme, the platform aims to harmonise and analyse financial and operational data in near real-time, enabling a more responsive, data-driven government.
Rick Boyd, chief tech officer at AND Digital, said: “HM Treasury’s commitment to a cloud-only model reflects a wider shift in both public and private sectors. Cloud platforms offer flexibility, scalability, and enhanced security, which are vital for protecting essential services and maintaining public trust”.
Yet, he emphasised that technology alone is not enough: “Cloud adoption should be accompanied by a culture of innovation and adaptability. Without it, organisations risk under-utilising their investments. The right culture, combined with cloud and AI tools, allows departments to deliver more effective, citizen-focused services”.
Leadership and skills challenge
While infrastructure is improving, leadership and digital literacy remain key barriers.
Research from Granicus UK revealed that 25 per cent of public sector staff see digital literacy as a major gap, and 30 per cent highlight the need for training and development over the next three years.
Middle management and executive leadership were cited as obstacles to adopting AI and other emerging technologies.
The Tech UK ‘building the smarter state’ conference highlighted progress across central government, the NHS, and local authorities.
NHS England’s Digital Maturity Assessment has increased the proportion of boards with digital expertise from 45 per cent to 70 per cent over three years.
Emily Middleton, director general of government digital centre design, emphasised the importance of strong leadership at all levels: “Digital transformation requires engagement beyond IT teams. Boards, policy leads, and operational managers all need to be aligned to drive change”.
Yet, procurement data from Tussell showed that NHS entities now account for 23 per cent of public sector IT procurement, up from 19 per cent five years ago, while local authorities’ share has dropped to 1 per cent.
Prioritising innovation
Elswhere, some public sector organisations are experimenting with private-sector-inspired approaches.
The Metropolitan Police Service, for example, is rolling out a ‘precise policing’ model, using data to target enforcement resources efficiently.
Commissioner Mark Rowley emphasised learning from startups to adopt technology more rapidly and overcome bureaucratic barriers.
Meanwhile, Home Office chief digital officer Mark Thompson highlighted that many government services, like passport renewals and electronic travel authorisations, already operate at scale and sophistication comparable to leading commercial platforms.
However, research from Granicus showed that while 58 per cent of public sector staff report having the right digital tools, many acknowledge that they are not fully leveraged, limiting outcomes and return on investment.
While the public sector is investing heavily in technology, adopting new tools without addressing cultural and organisational factors risks underperformance.
“Digital transformation is not just about technology, it’s about people”, said Ian Roberts of Granicus UK. “Training and upskilling the workforce are essential to fully utilise the tools and platforms already in place”.
The Treasury’s cloud-first strategy offers a positive blueprint for other departments, demonstrating both the possibilities and the complexities of digital transformation.
While technical progress is evident, the ultimate measure of success will be how effectively these investments improve public services and outcomes for citizens.