There is no good reason as to why the government departments are hosting their websites there, although there are many UK based businesses who would be interested in finding out.
The websites include the Jobcentre, the Pension Service, as well as others.
This may be a cheaper alternative to hosting in the UK, but we are probably only talking about a few pounds or so, and when the amount of money spent by the government and its departments is taken into consideration then there is nothing in it.
What this does do is undermine UK businesses that are struggling to cope with the credit crisis and could do with an opportunity to do business with the government.
Even if there was little profit in it, the prestige would give the business a lift.