Ofsted has written off the entire £3.9 million it spent on software meant to replace its scheduling and case management system, after an external review found the stalled project was not worth reviving. The watchdog recorded a £3.1 million impairment of a software asset in its 2025-26 annual report and accounts, published this week. It followed an earlier £800,000 impairment of the same asset in 2024-25, which Ofsted confirmed covered work that would have needed redoing. Ofsted told Schools Week the two write-offs account for the full £3.9 million spent on the project before it was paused. ‘A different route’ The inspectorate paused the work in 2023-24, when it reallocated funding to support civil servant pay in the organisation after the Conservative government announced unfunded public sector pay rises. Ofsted confirmed the system was being built to replace the software it uses to schedule, case manage and support workflow across all its inspection and regulatory work. Its latest accounts for the financial year ending March 31, 2026, said an independent review had confirmed that restarting the work would not represent value for money due to “technology changes and evolved business requirements”. “We resumed work on the replacement system last year, starting with an external review to decide whether we would be best re-start the paused work or begin again with a different approach,” an Ofsted spokesperson said. “That review recommended we should go down a different route, leading to us needing to write this work off.” £400k office costs Ofsted’s accounts state that “elements of the work completed will inform future digital solutions”, though the watchdog did not specify what elements have been kept. A further £125,000 impairment was identified after the year end, which Ofsted judged immaterial and did not adjust for. Ofsted is required to report write-offs of more than £300,000. Its latest accounts also reported a £400,000 “fruitless payment” for three months of rent and running costs on a vacant London office, incurred after Ofsted relocated as part of a government programme to reduce civil service office space. Total losses reported by the inspectorate rose to £3.67 million across 68 cases in 2025-26, up from £54,000 across 50 cases the year before. The scrapped project is unrelated to Ofsted’s electronic evidence-gathering (EEG) system, the software inspectors use to record notes during inspections. ‘Digital modernisation’ Ofsted reiterated that it was considering replacing the EEG system, after long-running technical issues of lost data and freezing glitches when inspectors attempt to type their notes into the application. A spokesperson added: “We’re currently undertaking a programme of digital modernisation aimed at ensuring long-term and sustainable digital inspection tools, including evidence gathering tools. We don’t have any further update at this stage.” Ofsted’s digital and IT costs have climbed steadily since the pause. The organisation spent £6.4 million in 2023-24, rising to £7.2 million in 2024-25 and £9.6 million in 2025-26 — an increase of nearly a third in a year.