The government is placing a massive wager on artificial intelligence to transform public services and boost productivity—but is it putting its money where its mouth matters?
Sir Keir Starmer promises AI will revolutionize how Britain works: better public services, more jobs, cash back in citizens’ pockets, and brighter prospects for the next generation. Yet a Sky News investigation reveals the reality behind these bold claims may be more complicated than ministers suggest.
Analysis by consultancy firm Tussell shows government departments have committed over £3.35bn to AI contracts, infrastructure and services since 2018, when the technology first gained serious traction. The number of deals has climbed steadily year on year, painting a picture of growing—though perhaps misplaced—enthusiasm.
The Big Spenders and Surprising Gaps
The largest single commitment dwarfs everything else: a £1bn-plus contract between the Met Office and Microsoft to construct what’s billed as the world’s most powerful weather and climate forecasting supercomputer. Microsoft has also secured numerous smaller deals for its Copilot AI assistant across departments.
German transport technology firm Init secured the second-biggest contract—£259m with Transport for London. Meanwhile, US data analytics giant Palantir has accumulated 25 contracts worth £376m combined. Louis Mosley, Palantir’s UK chief, told Sky News the company helps junior doctors draft discharge summaries and enables intelligence officers to process information faster.
When challenged about concerns over big tech firms accessing citizen data, Mosley pushed back: “Those are very legitimate concerns, and they’re right to interrogate this, but Palantir is actually the answer to those problems. We are the way you keep data secure, and we are the way you make AI transparent and auditable.”
Perhaps most eyebrow-raising is what’s missing. Alphabet—Google’s parent company and a colossal AI investor—has secured just two government contracts worth a mere £2.5m.
The Departments Dragging Their Feet
When examined by department, the spending pattern reveals a troubling disconnect. Science and technology tops the list thanks to the Met Office supercomputer, followed by transport with the Init arrangement. But the government’s most data-heavy operations languish near the bottom.
The Treasury, which oversees tax collection, and the Department for Work and Pensions, which manages the benefits system, rank in the bottom three for AI spending. The DWP operates an annual IT budget exceeding £1bn, yet has spent less than £100m cumulatively on AI since 2018—a drop in the digital bucket.
Industry experts point to several culprits: short-term political thinking, shortage of IT expertise in government, and antiquated systems. Up to 60% of some government IT still runs on legacy technology—outdated versions that resist modernization.
Change Requires Courage
Mosley argues ministers must overcome institutional resistance. “What they’re saying publicly is what they’re saying privately, but the challenge is always a fear of change,” he explained. “Ministers need to be brave. They need to take on the system and tell them this is the way things need to work today. There is a lot of fear that tomorrow I’m going to have to do a different thing to what I was doing yesterday.”
The data suggests Britain’s AI transformation has barely scratched the surface. The government departments where automation could deliver the biggest savings—and serve citizens most effectively—remain largely untouched by the technology ministers champion so enthusiastically. Whether this represents cautious prudence or a costly missed opportunity, only time will tell.
