Budget pressures and skills gap hampering councils’ digital transformation

Local councils across the UK are making headway in digitising services, but serious roadblocks such as budget constraints, outdated systems, and limited staff digital literacy are slowing progress, according to new research.

Civica’s Future of Local Government Report 2025 reveals that while the ambition to transform public service delivery through digital innovation is widespread, many councils are finding the journey far more complex than anticipated.

Key priorities, persistent barriers

The report identifies the top three digital priorities for UK councils in the coming year:

• Modernising outdated systems (51%)
• Enhancing the digital user experience for citizens (49%)
• Reducing operational costs (46%)

However, these priorities are being challenged by ongoing obstacles:

• 57% of councils cite financial restrictions as the primary barrier
• 43% are hampered by integration issues with legacy systems
• 40% report a lack of digital literacy among staff

Although cloud migration is gaining traction, with 43% of councils transitioning to cloud-based systems, and efforts to improve data quality (36%) are underway, the report finds that technology adoption alone won’t deliver meaningful transformation.

A striking 42% of councils are struggling with cross-departmental collaboration, limiting their ability to consolidate resources and align digital strategies. Meanwhile, only 34% have formed strategic partnerships with tech providers - presented as a missed opportunity to tap into external expertise and innovation.