Beyond yesterday’s Spending Review headlines lies a shared challenge for every part of government - how to deliver public sector reform and more responsive, innovative services with budget squeezes. In this blog, we will dig into what the Chancellor's announcement really means for frontline services and explore some practical steps you and your organisations can take to respond…
We’ve seen some clear winners and losers across the Spending Review:
- Defence was a central theme, with £600m rise in budget
- Greater Housing spending (£39bn allocated for social housing in England between 2026 and 2036) and focus on Transport (£15.6bn allocated between 2027 and 2031 outside London)
- Education remained a priority, with core schools budget reaching £69.5bn by 2029 and an extension of free school meals.
That said, there were two areas we expect lots of rapid change from in the near future; healthcare and immigration. Both of which have pressure to deliver at pace and drive efficiency.
Healthcare - delivering more for patients
- What was announced: The review sets aside £29bn, with a record £10bn for NHS technology and digital transformation by 2028–29, reflecting a nearly 50% rise from 2025–26. This move reinforces, rather than redefines, the government’s ongoing drive to make the NHS a digital-first health service.
- The impact: This huge investment creates immense pressure to deliver tangible results at pace. The risk is that the money is used to prop up legacy systems or goes into traditional service delivery models. Public expectation for tangible outcomes will be sky-high; the seamless digital experiences citizens encounter in their daily interactions with their retailers or banks will become the benchmark they expect from their GP surgery or hospital.
- What it really means: This can't just be about buying new technology. It must be about fundamentally rethinking how services are delivered. The focus should be on driving efficiency through standardisation by mapping and simplifying common clinical and admin pathways, from patient referrals to staff rostering. This will help build a solid foundation to leverage technology and AI effectively.
Immigration - efficient and effective delivery
- What was announced: The Home Office is set to have its overall day-to-day budget cut in real terms. However, despite this overall cut, the department has been given a targeted increase of £280 million a year by 2028-29 to be spent specifically on enhancing border security and cracking down on people-smuggling gangs.
- The impact: The announcement creates a dual pressure of finding significant savings in its core operations while simultaneously delivering on the politically sensitive, funded priorities of border security and reducing asylum-related costs.
- What it really means:
- Driving efficiency by focusing on compliance, continuing to standardise core services provided to other partners of government and its internal customers.
- Continuing to adopt an outcome and service-centric approach to spot ways to deliver differently, and supporting teams with adopting those changes throughout.
So what can government do to respond?
Whilst it’s less than 24 hours since the Spending Review, its impacts are guaranteed to be wide-reaching, with efficiency drives and many looking to AI to help. The question we have is how can you and your teams start to respond to this round of budget squeezes (after many in recent years) and still deliver better quality, innovative services? Below are some ideas for where to start:
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Take a ruthless approach to efficiency to drive value
By looking at internal processes with fresh eyes, where do things slow down? What do your customers truly value about the services you provide today? Where do hand-offs create errors and delays? These points of friction are your biggest enemies and your greatest opportunities. You need to prioritise, with laser focus, how to best simplify business processes in order to begin driving towards them.
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Moving services closer to citizens
By thinking boldly and differently to deliver more with less, you could deliver services through new delivery models in the community or locally. How can you reorganise internal teams or partnerships to deliver for the public?
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Innovation and embedding change
With a £3.25bn Transformation Fund for changing public services, including AI - a hugely hot topic right now - there is lots to be optimistic about. We believe that where there are established processes, ethical designs and considerations already in place, AI has huge potential. For example, using AI to support digital delivery through code review, testing, and automating decision-making can free up engineering and caseworking time to focus on the most complex and high-value work. Creating an environment to embrace innovation, new changes and experimentation within teams will help you adapt faster in the future.
The challenge is significant, but so is the opportunity to re-imagine and re-design how public services will look and feel for us all. At Clarasys, we help public sector teams rethink services, streamline operations, and embed change that lasts.
Get in touch to explore how we can help you respond with clarity and impact at info@clarasys.com.