Local authority spending on e-government is to remain healthy despite an end last year to central government subsidies, according to a new report released this week.

The study from public sector analysts Kable assessed 63 local councils and estimated overall spending on e-government projects will fall 27 percent per year up to 2009 as the budget for the next two years shrinks to £1.4bn. However, the report also estimated that other IT spending categories will contain funds that could be classified for e-government projects, while spending on customer-facing e-government projects will increase from £660m in 2006 to £709m in 2008.

Frank Moyer, CEO of IT services firm EzGov Europe, which commissioned the research, said that the spending outlook remained healthy and that the findings revealed a shift in the e-Government strategy at many councils.

"Previously spending was focused on getting as many services as possible online, but now only those with the best business cases will be funded," he said.

Moyer insisted that many local authorities are seeing a business case for e-government investments, particularly for currently inefficient processes such as benefit applications. "The councils know their budgets are going to be cut… and they can see the case for cutting costs through putting services online," he said.