Senior civil servants have reported that their organisations are facing significant financial pressures.
Three-quarters of senior civil servants who took part in a survey on public sector financial resilience described the financial pressure their organisation currently faces as “substantial, severe or critical”.
The finding of a sector under acute and sustained strain comes in research from software and IT services firm Civica, which has been produced in partnership with Civil Service World.
Of the central government officials reporting significant pressures, 11% described the situation as “critical”, meaning their organisation is either approaching or already in financial crisis. Some 28% described their organisation’s budget pressures as “severe”, with the implication that significant budget shortfalls exist that will require major service reductions.
Thirty-six percent of government officials responding to the survey described their organisation’s financial pressures as “substantial”, meaning that service changes and efficiencies are required – but that the situation is manageable.
Civica’s Public Sector Financial Resilience report says conditions that would have been considered exceptional two years ago are now routine and that financial strain has become a daily reality for frontline services. It warns that transformation cannot be delivered by people who are already “running on empty”.
The survey, which underpins the report, was conducted in December 2025 and January 2026 via Qualtrics and YouGov platforms, capturing responses from 607 public sector professionals across four sectors: local government, healthcare, education and central government.
The pattern of financial strain repeats across every sector in the study, but the pressure manifests differently for each. For example, in healthcare, 18% said their organisation is approaching or in financial crisis, the highest proportion among the four sectors.
All sectors said staff morale and wellbeing was named as the “top casualty” of the situation, with one in five civil servants picking this out.
The survey results also suggest that legacy IT infrastructure requiring expensive maintenance is a much bigger issue in central government than the other sectors, with 15% of civil servants describing this as the top financial challenge, compared to 6% in both local government and education, and 5% in healthcare.
Elsewhere, the survey finds that, in spite of significant investment in digital and AI programmes, there is limited evidence of benefits being realised.
Only 4% of respondents said the digital tools used in their organisation are “highly effective” (5% for central government leaders). Almost a quarter of leaders said they did not know how effective their digital investments are, weakening the case for further funding and smarter deployment (17% for central government leaders).
Just 3% of organisations reported being “fully ready” to scale digital solutions without reducing service quality (2% for central government), while 71% reported medium or low confidence in their data quality and governance (74% for central government).
For central government officials,digital skills and literacy were described as the leading barrier to digital progress,while funding was picked by the other sectors as the top barrier.
Civica chief executive officer Lee Perkins said the survey highlighted that the public sector is under the cosh.
“Financial resilience is no longer a future risk,” he said. “It is the defining challenge facing the public sector today. Without it, the ability to deliver quality services and value for citizens and to support communities quickly erodes. Our research shows pressure mounting on staff as digital ambition outpaces readiness. Technology, including AI, can help relieve that strain, but only when it is built on strong foundations including data, skills, integration and leadership confidence.”