The UK government talks a good game about buying British, but less than £1 in every £6 spent with its biggest technology suppliers goes to British firms, according to research exposing how much Whitehall relies on foreign tech. A report from the Institute for Public Policy Research (IPPR) found that while 42.5 percent of spending with the public sector's 150 largest technology suppliers appears to go to UK companies, that figure collapses to just 15.4 percent once you look beyond where those businesses happen to be headquartered. A UK headquarters doesn't necessarily make a company British. Some are owned from overseas, others have most of their staff abroad, and many simply resell technology from US giants such as Microsoft. In fact, 43 percent of the spending attributed to UK-headquartered suppliers goes to resellers. Bytes and Softcat alone account for around £2 billion, making them two of the three biggest recipients of public sector technology spending. Once researchers traced reseller contracts back to the companies behind the products, the US emerged as the biggest beneficiary, accounting for £9.2 billion of the £19.2 billion spent with the largest suppliers. And the money isn't exactly being spread around. Just 150 companies receive 83 percent of public sector technology spending, with the largest 15 accounting for almost half. Smaller suppliers aren't getting much of a look-in either, receiving just 12 percent of government technology spending compared with 27 percent of spending across government as a whole. Competition is another concern. According to IPPR, 89.9 percent of government IT contracts over the past 12 months had no published record of how many suppliers bid for the work, making it difficult to assess how competitive those procurements were. Things get murkier when AI enters the picture, naturally. Government spending records show relatively little money going directly to the likes of OpenAI and Anthropic, but that doesn't mean Whitehall isn't buying their technology. Much of it is bundled into existing cloud agreements, enterprise software licenses, and partnerships. One example is NHS England's rollout of Microsoft 365 Copilot to 505,000 staff, which IPPR says was carried out under a national licensing agreement signed in June 2023, before Copilot was even generally available. That means AI tools can reach hundreds of thousands of public sector workers through deals negotiated before those products were on the market, potentially leaving rival suppliers without an opportunity to compete. The report, Locked In: A Realist's Agenda for Digital Sovereignty, warns that Britain's dependence on American technology could become particularly troublesome if Washington restricts access to advanced AI systems. It points to recent US restrictions on Anthropic models and limits on early access for Britain's AI Security Institute as evidence that such concerns are no longer entirely hypothetical. The government has already committed £500 million to a Sovereign AI Fund, but researchers reckon throwing money at homegrown technology companies won't be enough to loosen Silicon Valley's grip. Instead, they want Whitehall to negotiate technology contracts as a single customer, make it easier to switch suppliers, and work with countries including France, Germany, Japan, and South Korea to secure access to advanced AI. Roa Powell, senior research fellow at IPPR, said: "But we cannot do it alone, and building domestic capability can't be our only bet. The UK should be working with other middle powers, pooling our buying power to shape markets and using shared leverage to secure access to frontier AI." Darren Jones MP, who wrote the report's foreword, made a similar argument, saying Britain should work with international allies rather than attempting to build everything itself. "We can change how the state buys technology, back industries where the UK has a genuine opportunity to lead the world, and shape markets – but we can't go it alone. We need to join with natural allies like France, Germany, Japan and Korea and make ourselves indispensable together," he said. Whitehall might have grand plans for digital sovereignty, but it's going to be a tough sell when so much of its technology comes from across the Atlantic. And with AI already bundled into software contracts worth billions, US tech giants aren't making it easy for the government to shop elsewhere. ®
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