Solving the £3bn problem

How payment solutions can help public sector clients deliver cost savings amid budget challenges

Following a recent announcement by UK Chancellor Rachel Reeves, public sector departments face a challenging financial landscape, with a £22 billion shortfall in public finances.

To navigate this deficit, all government departments are being asked to save £3 billion in the short term and deliver a 2% savings in back-office costs. As part of this, departmental budgets will be set three years in advance, allowing for more structured financial planning but also requiring immediate action to curb costs.

For public sector organisations reliant on IT infrastructure to function effectively, this presents both a challenge and an opportunity.

While it’s clear that refreshing IT systems can deliver substantial efficiency savings, it’s also evident that with the pressure to save, immediate investments in new systems may seem counterintuitive. However, there is a way forward: strategic payment solutions.

By offering public sector clients the flexibility to spread costs, achieve predictable budgets, and unlock much-needed back-office savings, these solutions can help departments meet financial targets without compromising on essential service delivery.

The role of IT in driving back-office savings

The efficiency of back-office functions is critical to the public sector’s ability to operate within shrinking budgets. Departments like health, education, and local government rely on a myriad of IT systems to manage everything from human resources to procurement and financial transactions. Legacy systems, however, are often costly to maintain and inefficient, contributing to the current financial burden

An upgrade to more modern IT infrastructure can yield significant cost savings through automation, better resource management, and reduced operational inefficiencies.

However, these upgrades come with an upfront cost – an expense many departments may hesitate to take on in the current financial climate, particularly with a £3 billion saving requirement looming over them.

This is where payment solutions can make a difference.

Buy now, spread the cost: Avoid the £3bn short-term problem

One of the most immediate concerns for public sector clients is finding the capital for investment in IT upgrades while also delivering short-term savings. Payment solutions, such as financing options that allow departments to spread the cost of new IT systems over several years, can alleviate this pressure.

Instead of making a significant one-time payment, departments can adopt a ‘buy now, pay later’ model that smooths the financial impact over time.

By spreading costs, departments can free up the necessary funds to make immediate investments in systems that will start delivering efficiency savings from day one. This approach also allows departments to avoid drastic service cuts or delays in upgrading systems, both of which could exacerbate operational inefficiencies and increase long-term costs.

For example, adopting Windows 11 and upgrading devices can unlock AI benefits for users driving staff efficiencies. By spreading payments, public sector clients can reap these benefits now, rather than waiting for budgets to be freed up in the future.

Unlock the back-office savings: Deliver the 2% efficiency target

The 2% back-office savings target set by the Chancellor presents a challenge, but modernising IT infrastructure offers one of the most effective ways to meet it. With integrated systems, departments can automate routine administrative tasks, improve data accuracy, and streamline workflows.

The result is a significant reduction in manual labour costs, fewer errors, and faster processing times – all contributing to meeting the 2% savings goal.

Payment solutions can help unlock these savings by allowing public sector organisations to invest in IT upgrades without upfront financial strain. For instance, a department could rationalise its server/storage footprint by upgrading to the latest technology with faster processing and greater energy efficiency this investment can reduce their current footprint by up to 75%, reducing costly office space and energy costs https://www.scc.com/server-refresh-model/

While these projects would traditionally require significant capital outlay, payment solutions enable departments to adopt the necessary technologies while keeping within their budget constraints.

By investing in these efficiency-driving technologies, departments can cut costs in the long term, achieving the 2% back-office savings while simultaneously improving service delivery and operational effectiveness.

Achieve predictable budgets: Align with three-year budget setting

A key feature of the new financial framework for public sector departments is the rolling three-year budget cycle. While this provides a more predictable financial planning window, it also means departments need to carefully balance their spending over this period to ensure they meet savings targets.

Payment solutions that offer predictable, fixed-cost arrangements over several years can help public sector clients align their IT investments with their long-term financial planning

By agreeing to a structured payment schedule, departments can budget more effectively and avoid unforeseen spikes in expenditure that might derail their financial goals. This level of predictability allows departments to continue making essential investments in IT infrastructure without compromising their ability to meet future financial targets.

Additionally, the ability to forecast IT costs over multiple years provides greater flexibility for departments to allocate funds where they are needed most, whether that’s frontline services or other critical areas of operations. Predictable payment models reduce the risk of budget overruns, ensuring departments remain compliant with government-set financial guidelines.

Payment solutions as a strategic tool for public sector savings

In light of the UK’s public sector financial challenges, IT services have a critical role to play in helping departments navigate this difficult terrain. Payment solutions offer a lifeline to public sector clients that need to refresh their IT infrastructure but are constrained by short-term savings targets and the need for longer-term financial predictability.

By spreading costs, unlocking back-office savings, and helping departments align with the new three-year budget cycle, payment solutions can ensure that public sector organisations achieve the efficiency gains they need while maintaining their service delivery standards.

With strategic investment in IT, driven by flexible payment options, the public sector can turn a challenging financial environment into an opportunity for greater efficiency, innovation, and long-term success.

In these difficult times, payment solutions offer not just a way to survive, but a way to thrive by making the most of every financial opportunity while delivering essential public services efficiently and cost-effectively.

Find out how SCC’s payment solutions can help you solve the £3bn problem by contacting our experts.