The government's £1.7 billion bid to modernise back-office systems across Whitehall faces a peculiar problem: the finance ministry that is bankrolling it remains reluctant to join.
HM Treasury has yet to make a firm commitment to joining the Matrix shared service cluster, in which the government plans to support eight departments with Workday cloud-based finance and HR software and shared services, according tothe National Audit Office's "Update on government shared services" report published today.
This is not a minor bureaucratic hesitation.The Matrix is one of five central government shared services clusters the government hopes might save it £1.8 billion over 15 years by moving 17 departments and 300 so-called arm's-length bodies onto their ERP and HR systems.HM Treasury provided significant funding for shared services during Spending Review 2025, allocating ringfenced funds to Matrix, whose business case seems to depend on HM Treasury joining.
The financial stakes are real.A sensitivity analysis from October last year modelled a reduction in the programme's Net Present Value from £185 million to £109 million. HM Treasury told the NAO that it disputed these calculations with Matrix and calculated the benefits to be significantly lower due to HM Treasury already using a modern ERP.
Why would Treasury balk?HM Treasury is a well-established user of Oracle's latest SaaS software for HR and finance in Oracle Fusion. Moving to Workday, selected by the Matrix cluster, would mean abandoning a system Treasury has customised to its needs.HM Treasury and the Department for Education, who currently have modern ERPs and are both in the Matrix cluster, have indicated they would welcome more information through the business case about likely costs for them before they assess that onboarding is feasible and value for money.
This reveals a genuine policy tension. From a centre-right perspective grounded in fiscal responsibility, it is reasonable to ask: should departments already running modern systems be forced to rip and replace them? That sounds expensive. Yet from another angle, the programme's entire logic depends on standardisation to deliver economies of scale. A government that pays for integration but exempts its treasury from joining creates obvious problems.
Prime Minster Keir Starmer has said all departments must join their allocated shared service clusters. Cabinet Office has stated that it does not consider departments' joining Shared Services optional, and that departments cannot make the decision to move or leave a cluster without assessing value for money across government, nor the impact on the business case.
The pragmatic reality sits somewhere between these positions.The NAO said HM Treasury had committed £1.15 billion to the shared services strategy since 2021. That investment signals genuine intent. Yet without full departmental buy-in, the business case underlying the entire strategy becomes fragile. History suggests this matters; previous shared services initiatives have struggled with inconsistent commitment from participating departments.
The best outcome would be for Treasury to conduct a thorough value-for-money assessment and make a clear decision either way. If joining Workday delivers net benefits across government, Treasury should join. If Treasury's analysis shows the costs outweigh benefits for the finance ministry specifically, and if those costs genuinely undermine the department's operational independence, that deserves serious consideration too. What cannot be sustained is funding a programme while remaining unwilling to commit to it. That is neither fiscally responsible nor fair to other departments facing their own implementation costs.
The watchdog's concern is justified.Buy-in from departments that are current cloud users is not clear, creating some uncertainty for the overall strategy. The government should resolve this quickly and transparently. A £1.7 billion modernisation effort needs the active support of all key stakeholders, especially the department responsible for managing public money.