Newham Council needed £32m of savings as it entered 2025-26. It applied for exceptional financial support, and secured government permission to raise council tax above the legal cap of 4.99% to 8.99%.
Meanwhile, its Microsoft bill increased by 80.5% over three years, from £2.13m to £3.85m. Asked whether it has ever run a competitive procurement in which Microsoft could have lost, the council had no process to show.
Newham’s failure to run competitive tendering between strategic cloud and software suppliers hits starkly against a background of financial distress, but it is not unusual.
Computer Weekly analysed Freedom of Information (FoI) responses from 37 councils – provided by a source that requested anonymity – and found 32 had never run a competitive procurement in which an alternative platform could have won. Competition only took place between resellers of the identical Microsoft product, not between Microsoft and a competitive platform.
In this article, we outline the nature and extent of that pattern across a whole tier of government, and find that for up to £400m of budget spent, Microsoft was the default answer.
That all occurs as the Competition and Markets Authority (CMA) decides whether to designate Microsoft with strategic market status (SMS) under the Digital Markets, Competition and Consumers Act.
SMS status would bring powers to impose binding conduct requirements, mandate interoperability and restructure commercial arrangements across a software estate that touches an estimated 20 to 30 million organisational users in the UK.
The 29 councils that disclosed a usable 2025-26 figure spent £62,399,176 between them on Microsoft products – an average of £2.15m each. The biggest disclosed spend in the sample is Birmingham’s £4.32m, a figure it gave as a combined total with no year-by-year split. The biggest reported increase belongs to Newham (+£1.72m) and Lancashire (+£1.25m), which together account for 69% of the sample’s total three-year rise.
Scaled against core spending power – the government’s own measure of the funding a council has for its services – that extrapolates to a bill for English councils of roughly £281m a year, with a plausible range of £241m to £400m.
It is tempting to see a relationship between that spending and the financial distress that runs through the councils sampled. However, across the 11 councils that published both a single-year budget gap and comparable three-year spending, there is no relationship between the size of the gap and the direction of the Microsoft bill.
The two councils with the highest tax rises in the sample cut their Microsoft spending: Bradford 6.6% against a 9.99% rise, and Worcestershire 1.4% against 8.99%. What is true, and provable, is narrower and harder to dismiss. As many as nine of those 11 increased their Microsoft spending while carrying a published gap, and 10 of the 11 have never tested the platform.
The evidence base comprises 37 responses to FoI requests that asked 16 questions. These covered five broad areas designed to scrutinise local authority expenditure and governance. They begin by examining tendering history and procurement frameworks for productivity software before diving into detailed current spending, Enterprise Agreement expiry dates, and adoption timelines for specific cloud and AI tools like Microsoft Copilot.
The inquiry further evaluates internal oversight by asking about value-for-money assessments, supplier addition policies, cost benchmarking and contract publication. Finally, it investigates high-level engagement between IT leadership and Microsoft, the specifics of secured social value commitments, and broader IT budgets alongside cashable transformation savings.
Several of the responses arrived as image-only scans, so Computer Weekly OCRed them to make them machine-readable.
Also, comparisons need a common denominator, because a £30m hole in a London borough is not the same thing as a £30m hole in Bolton. So, budget gaps have been calculated as a share of core spending power, and the national figure scaled on the same basis. The sample skews towards larger, urban authorities and contains no shire districts, which is precisely why a mean-per-council extrapolation would overstate the national number.
