Faced with £40B budget hole, UK public sector commits £9B to Microsoft
(2025/08/07)
- Reference: 1754551806
- News link: https://www.theregister.co.uk/2025/08/07/uk_microsoft_spending/
- Source link:
The UK public sector expects to spend around £9 billion on Microsoft products and services over five years under its current contract.
Launched last autumn, the [1]Strategic Partnership Arrangement 2024 (SPA24) memorandum of understanding (MoU) took effect in November, allowing public bodies to use the buying power of the whole public sector under nationally negotiated discounts on specific Microsoft products.
At the time, the Crown Commercial Service (CCS) said it would offer "enhanced value across Microsoft's portfolio of products and services." Public bodies using the agreement might include schools, hospitals, councils, and fire services, for example.
[2]
In a Parliamentary answer last month, Georgia Gould MP revealed that £1.9 billion had been spent under SPA24 from its launch until the close of the 2024-25 financial year ending April 5, 2025.
[3]
[4]
"Through SPA24, approximately £1.9 billion has been spent on Microsoft software licences via third-party resellers in the financial year 2024/25. SPA24 enables all eligible UK public sector organizations to access discounted pricing on a range of Microsoft products," [5]she said .
However, a Cabinet Office spokesperson told The Register the answer would be updated to reflect the fact that the "£1.9 billion figure represents public sector spend through CCS agreements with Microsoft over the full 2024/25 financial year, including spend through the SPA24 and its predecessor DTA-21."
[6]
The Reg understands that spending through SPA24 is set to be stable, with similar patterns every year. The CCS expects a total of approximately £9 billion to be spent over the five years of the MoU, equating to around £1.9 billion each year. The CCS argued the agreement provides maximum commercial value to public sector bodies and removes barriers to growth across the public sector.
Public bodies will not use the agreement to buy from Microsoft directly; they are expected to buy via resellers, preferably through the [7]Technology Products and Associated Services 2 framework agreement – itself worth a maximum of £8 billion – although it is possible to use other frameworks. The MoU is not mandated and public sector bodies can choose not to use it. The CCS admitted it would be difficult to track spending outside the agreement.
The expected level of spending under the MoU was revealed as the government faces the prospect of more than £40 billion in tax rises or spending cuts in the autumn budget to meet its spending and borrowing plans. The National Institute of Economic and Social Research (NIESR) said that the government is set to miss its "stability rule" by £41.2 billion in the fiscal year 2029-30.
[8]UK's Ministry of Defence pins hopes on AI to stop the next massive email blunder
[9]Capgemini wins £107M HMRC extension – no competition needed
[10]UK government swoons over OpenAI in legally meaningless love-in
[11]Fujitsu sorry for Post Office horror – but still cashing big UK govt checks
With the MoU spanning the period of the current Labour government (2024-2029), it offers a stark reminder of the level of spending on Microsoft products, alternatives to which are available without a license fee in the form of open source software. The money could be spent on reducing public borrowing, or avoiding spending cuts and/or tax increases.
However, it is also possible that the pain of moving off Microsoft products – for users and technology teams – could exceed the benefits of replacing them, owing to their near-ubiquity in the market.
[12]
When it launched the MoU, the government said it could be used for strategic initiatives supporting its digital transformation, including the National Data Strategy, the Cloud First Policy, and the One Government Cloud Strategy, among others.
"SPA24 is aligned with this strategic approach by providing access to enhanced value to all eligible public sector organizations, when procuring digital products and services, which they use daily in the delivery of public services," the statement said.
Public sector organizations have already started buying using the MoU. For example, North Yorkshire Council was set to launch a £12 million competition for Microsoft resellers already on the preferred framework.
"This approach represents the best value for the Authority as pricing will be based upon the Strategic Partnership Arrangement (SPA 24) recently agreed by Crown Commercial Services," [13]a council report said [PDF].
The council has been asked to comment on whether it has considered FOSS alternatives to Microsoft.
For wider context on the Microsoft spending plan, the British government spent [14]£5.5 billion in capital funding on new school buildings in fiscal 2025 , down from £6.2 billion in the prior year. ®
Get our [15]Tech Resources
[1] https://www.crowncommercial.gov.uk/news/crown-commercial-service-signs-memorandum-understanding-microsoft-uk-spa24
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://members.parliament.uk/member/5001/writtenquestions#expand-1820926
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2022/04/21/ukgov_preps_the_tech_market/
[8] https://www.theregister.com/2025/08/06/mod_taps_aussie_ai_shop/
[9] https://www.theregister.com/2025/07/31/capgemini_hmrc_extension/
[10] https://www.theregister.com/2025/07/22/openai_to_help_fix_nhs/
[11] https://www.theregister.com/2025/07/17/fujitsu_govt_contracts/
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://edemocracy.northyorks.gov.uk/documents/s50830/2025-03-17%20-%20Report%20-%20Microsoft%20Licencing%20Partner%20Key%20Decision%20Report%202025.pdf
[14] https://www.s2e.org.uk/news/autumn-budget-2024
[15] https://whitepapers.theregister.com/
Launched last autumn, the [1]Strategic Partnership Arrangement 2024 (SPA24) memorandum of understanding (MoU) took effect in November, allowing public bodies to use the buying power of the whole public sector under nationally negotiated discounts on specific Microsoft products.
At the time, the Crown Commercial Service (CCS) said it would offer "enhanced value across Microsoft's portfolio of products and services." Public bodies using the agreement might include schools, hospitals, councils, and fire services, for example.
[2]
In a Parliamentary answer last month, Georgia Gould MP revealed that £1.9 billion had been spent under SPA24 from its launch until the close of the 2024-25 financial year ending April 5, 2025.
[3]
[4]
"Through SPA24, approximately £1.9 billion has been spent on Microsoft software licences via third-party resellers in the financial year 2024/25. SPA24 enables all eligible UK public sector organizations to access discounted pricing on a range of Microsoft products," [5]she said .
However, a Cabinet Office spokesperson told The Register the answer would be updated to reflect the fact that the "£1.9 billion figure represents public sector spend through CCS agreements with Microsoft over the full 2024/25 financial year, including spend through the SPA24 and its predecessor DTA-21."
[6]
The Reg understands that spending through SPA24 is set to be stable, with similar patterns every year. The CCS expects a total of approximately £9 billion to be spent over the five years of the MoU, equating to around £1.9 billion each year. The CCS argued the agreement provides maximum commercial value to public sector bodies and removes barriers to growth across the public sector.
Public bodies will not use the agreement to buy from Microsoft directly; they are expected to buy via resellers, preferably through the [7]Technology Products and Associated Services 2 framework agreement – itself worth a maximum of £8 billion – although it is possible to use other frameworks. The MoU is not mandated and public sector bodies can choose not to use it. The CCS admitted it would be difficult to track spending outside the agreement.
The expected level of spending under the MoU was revealed as the government faces the prospect of more than £40 billion in tax rises or spending cuts in the autumn budget to meet its spending and borrowing plans. The National Institute of Economic and Social Research (NIESR) said that the government is set to miss its "stability rule" by £41.2 billion in the fiscal year 2029-30.
[8]UK's Ministry of Defence pins hopes on AI to stop the next massive email blunder
[9]Capgemini wins £107M HMRC extension – no competition needed
[10]UK government swoons over OpenAI in legally meaningless love-in
[11]Fujitsu sorry for Post Office horror – but still cashing big UK govt checks
With the MoU spanning the period of the current Labour government (2024-2029), it offers a stark reminder of the level of spending on Microsoft products, alternatives to which are available without a license fee in the form of open source software. The money could be spent on reducing public borrowing, or avoiding spending cuts and/or tax increases.
However, it is also possible that the pain of moving off Microsoft products – for users and technology teams – could exceed the benefits of replacing them, owing to their near-ubiquity in the market.
[12]
When it launched the MoU, the government said it could be used for strategic initiatives supporting its digital transformation, including the National Data Strategy, the Cloud First Policy, and the One Government Cloud Strategy, among others.
"SPA24 is aligned with this strategic approach by providing access to enhanced value to all eligible public sector organizations, when procuring digital products and services, which they use daily in the delivery of public services," the statement said.
Public sector organizations have already started buying using the MoU. For example, North Yorkshire Council was set to launch a £12 million competition for Microsoft resellers already on the preferred framework.
"This approach represents the best value for the Authority as pricing will be based upon the Strategic Partnership Arrangement (SPA 24) recently agreed by Crown Commercial Services," [13]a council report said [PDF].
The council has been asked to comment on whether it has considered FOSS alternatives to Microsoft.
For wider context on the Microsoft spending plan, the British government spent [14]£5.5 billion in capital funding on new school buildings in fiscal 2025 , down from £6.2 billion in the prior year. ®
Get our [15]Tech Resources
[1] https://www.crowncommercial.gov.uk/news/crown-commercial-service-signs-memorandum-understanding-microsoft-uk-spa24
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://members.parliament.uk/member/5001/writtenquestions#expand-1820926
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2022/04/21/ukgov_preps_the_tech_market/
[8] https://www.theregister.com/2025/08/06/mod_taps_aussie_ai_shop/
[9] https://www.theregister.com/2025/07/31/capgemini_hmrc_extension/
[10] https://www.theregister.com/2025/07/22/openai_to_help_fix_nhs/
[11] https://www.theregister.com/2025/07/17/fujitsu_govt_contracts/
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aJR5O9JAbqbT_UXxyh7LKQAAAIs&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://edemocracy.northyorks.gov.uk/documents/s50830/2025-03-17%20-%20Report%20-%20Microsoft%20Licencing%20Partner%20Key%20Decision%20Report%202025.pdf
[14] https://www.s2e.org.uk/news/autumn-budget-2024
[15] https://whitepapers.theregister.com/
National Linux infrastructure development needed
Darkedge
FFS if the gov would spend a Billion on Linux based systems we could probably have a ERP system to beat Oracle without the lock in and drug dealer tactics, a NHS IT system to support hospitals and all their old equipment much more secure than the mess we have now and potentially a load of stuff to sell all over the world to avoid relying on the orange one's wims. But no that would require forward thinking and no backhanders.
Re: National Linux infrastructure development needed
Caver_Dave
I think that you are missing all the "dark patterns" that run through the NHS and other public bodies to protect the status quo.
For instance, I know a board member of a Hospitals Trust. She has a long list of what any sane person would call sensible improvements (time, money and patient care) to the way the Trust is organised and run.
She has to propose these one at a time and face months of opposition and negotiation with unions and often other board members.
She says that often she achieves only one successful change per year.
For an NHS IT System you also have to include dozens of other "interested parties" who could stretch any simple change over decades.
Public services in the UK are very broken.
A cojplete wastewaste of moneey
3arn0wl
Is this driven by idiocy, ignorance, political dogma cronyism or fear?
Re: A cojplete wastewaste of moneey
Wellyboot
Yes
UK public sector commits £9B to Microsoft
Pascal Monett
Of course. When you run out of money, the first thing you do is spend more.
If you're government, that is.
If you're a private individual, then you're accused of being a spendthrift and no bank is going to lend you the money,
But government doesn't care. It doesn't need a loan, it can raise taxes . . .
Hammy Havoc
Considering how much has been spaffed on projects that didn't produce any tangible results with money that goes offshore, £40bn is a drop in the bucket versus everything else.
Tarriffs.