Brit politicians question Fujitsu's continued role in public sector contracts

Government IT spending doesn't follow the same fiscal rules as your basic household budget. It's not the case that the government has a finite pot of money to spend and when it's gone it's gone.

Because, when the UK government hands it out to the private sector, it gets the money back. All of it. Except, along the way, that money gets exchanged in lots and lots of transactions which the government skims parts off as VAT, Corporation Tax, Income Tax, NI contributions, various duties, plus a million other levies.

If the government "saved" money by choosing efficient suppliers with smaller headcounts and tighter cost controls it would cut off millions from the treasury coffers. Taxes which are desperately needed to cover the UK government's rising interest bill (debt is something like 95% of GDP as of 2025).

Huge behemoths like Fujitsu and Capgemini and IBM actually help to drive the UK economy in its ever more desperate drive for "growth" (i.e. greater tax revenue) and we can expect more, not less, wonga to be unloaded on them to provide crude "value" from which those precious taxes can be distilled back out.

Wouldn't an unspent, untaxed amount of money also come back to the government as private individuals spent it? Your model assumes that tax revenue is coming from a sector of the economy with low velocity of money.

I have heard this suggestion before in the context of overcoming suboptimal risk intolerance (like right after a crash) but for it to work you would have to derive the tax revenue somehow from people who were not spending money. That's one thing I've never understood about Keynesianism.

Surely this is wrong.

Government spending isn't immune from opportunity costs. If fewer players receive all the money to provide fewer more expensive goods and services, then revenue may be flowing through the national coffers but the money doesn't cover what the government wants to do.

Unless you forgot a /s, in which case (thumbs up).

While there is a kernel of economic truth in your comment (government spending stimulates activity), the logic breaks down by assuming:

- All spending is equally productive

- All tax comes back efficiently

- Big contractors = better fiscal outcomes

In reality, value-for-money, fiscal responsibility, and economic multipliers are more nuanced. More spending doesn't necessarily mean better outcomes; how it's spent matters enormously.

> Government IT spending doesn't follow the same fiscal rules as your basic household budget. It's not the case that the government has a finite pot of money to spend and when it's gone it's gone.

Assuming that government spending is inherently productive is a deeply flawed view. Every pound the UK government spends is a pound it had to tax, borrow, or inflate.

> when the UK government hands it out to the private sector, it gets the money back. All of it

If you were to look at the NHS's EPR procurement, you'd see hundreds of millions of pounds over a decade spent on American software.