UK to modernise public sector with AI and digital to save £45bn annually

January 19, 2025 — Public sector workers in the UK are being hampered by outdated technology, leading to a staggering £45 billion annual loss in potential savings, a new report by the UK government reveals.

The report, backed by the Department for Science, Innovation and Technology, Ofgem, the Department for Energy Security and Net Zero, the National Energy System Operator, and MPs Ed Miliband and Peter Kyle, exposes an over-reliance on costly contractors, frequent outages, and increased vulnerability to cyber-attacks, putting vital public services at risk, a press relase by the UK government states.

Key findings include:

• £45 Billion Loss: Taxpayer-funded services are missing out on £45 billion in productivity savings due to outdated technology – enough to fund every primary school in the UK for a year.
• Limited Online Access: Nearly half of public services are inaccessible online, forcing citizens to spend excessive time applying for support in person.
• Paper-Based Systems: Many departments still rely heavily on paper-based systems, with some managing over 500 such services. This leads to slow response times and unnecessary burdens on both citizens and public sector workers.
• Lack of Interdepartmental Information Sharing: Patients with long-term conditions can be forced to interact with over 40 different services, often having to repeat their information due to a lack of data sharing between public bodies.
• Outdated Digital Systems: Over a quarter of central government digital systems are outdated, with some departments facing figures as high as 70%. This leads to increased maintenance costs and heightened security risks. NHS England alone experienced 123 critical service outages last year due to these issues.
• Over-reliance on Contractors: Weak salaries and headcount restrictions have led to an over-reliance on contractors, costing taxpayers £14.5 billion annually – three times more than employing civil servants.

According to the government press release, the report highlights specific examples of outdated practices, such as the requirement to register a death in person and the need for businesses to place physical newspaper adverts when purchasing a lorry.

Government Response: AI-Powered Solutions and Digital

To address these issues, the government is announcing a comprehensive overhaul of public sector technology, leveraging digital tools and AI to improve efficiency, save money, and enhance citizen experiences.

Two new AI tools are being introduced:

• ‘Connect’: This AI tool aims to expedite the connection of clean energy projects to the national grid, addressing significant delays and supporting the UK’s energy security ambitions. Developed with input from the Department for Energy, Security and Net Zero, Ofgem, and the National Energy System Operator, ‘Connect’ aims to streamline the grid connection process, currently facing a tenfold increase in applications over the last five years.
• ‘Scout’: This tool will help ensure major infrastructure projects are delivered on time and within budget by automatically analysing project documentation and identifying potential problems early on. It reduces manual processing time from hours to minutes.

Technology Secretary Peter Kyle stated, "Technology that sits at the foundation of our country has been left to wither and decay… There is a £45 billion jackpot for the public sector if we get technology adoption right."

These reforms, following the AI Opportunities Action Plan, aim to improve productivity, strengthen data usage, boost skills, and attract talent, ultimately delivering on the government’s Plan for Change. The government also plans to expand the Government Digital Service to identify and address cybersecurity vulnerabilities across the public sector. Energy Secretary Ed Miliband added that the "innovative use of AI could help us clean up the queue and slash waiting times to hook important energy projects up to the electricity grid".

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