There is a large gap between the demand for and supply of the digital specialists that government needs, and it is hard to get the right balance of in-house and outsourced skills. Government has been excessively reliant on outsourcing and has failed to retain sufficient in-house capability. The Central Digital and Data Office now has responsibility for government’s capability building strategy, but recognises government does not yet have the depth of experience needed to deliver across the full breadth of its digital portfolio. The demand for digital skills is increasing, not just in the public sector but also in the private sector and there are shortages in key areas such as architects and people who can lead delivery. We are concerned that despite its intent government is yet to make meaningful progress in overcoming long-standing challenges. It wishes to bring more digital activity in-house but faces a difficult external recruitment market. Specialists in scarce supply earn significantly more money in the private sector than the government is willing to pay, so it can be hard for the civil service to attract and retain them at appropriate levels. Recommendation: The Central Digital and Data Office should write to us, within 6 months, setting out how it intends to measure progress against its capability strategy, and annually thereafter to report what progress it has made against those metrics. 8 Challenges in implementing digital change 1 Leadership and capability