TL;DR

Cloudhouse’s State of Technical Debt 2025 report found that 84% of UK government organisations carry Windows technical debt. Three in five say legacy systems are already blocking AI adoption, while 45% report diverting innovation budgets to maintain ageing infrastructure.

Deep-rooted legacy reliance

Outdated IT systems continue to block artificial intelligence adoption and broader digital transformation across the UK public sector, according to research from Cloudhouse surveying 250 IT leaders across government, finance and manufacturing.

Government bodies operate within large, complex IT estates that are expensive to modernise. While 84% of government organisations reported Windows technical debt — slightly below manufacturing (92%) and finance (89%) — the figure still points to widespread reliance on ageing platforms maintained for service continuity at the cost of agility.

AI ambitions running into old infrastructure

As government departments push for AI-enabled services, integration with legacy systems has become a central obstacle. Three in five organisations said legacy platforms are already blocking AI adoption, with most reporting difficulty connecting AI tools to older infrastructure.

Skills gaps compound the problem. Most organisations said they lack the expertise needed to modernise legacy applications, reinforcing long-standing concerns about specialist legacy knowledge and cloud-native skills shortages in the public sector.

Around 45% of respondents said funding is being redirected from innovation to maintaining existing systems, slowing cloud migration and limiting investment in new digital capabilities. Nearly half reported facing compliance challenges during audits due to legacy IT, alongside increased downtime and greater cyber risk.

Looking forward

Most organisations surveyed plan to modernise within two years, though only a minority said these plans are fully funded — reflecting a persistent gap between intent and investment that characterises public sector transformation programmes. The report concludes that tackling technical debt requires ongoing, incremental modernisation rather than one-off system replacements, recognising it as a strategic challenge rather than a purely technical one.