In her Spring Statement, Chancellor Rachel Reeves announced that government departments will cut their administrative budgets by 15% by 2030, aiming for savings of at least £2.2 billion per year.
AI takes a central role in her plan, with the government launching a £3.25 billion Transformation Fund. This fund focuses on transforming public services through digital technology and AI to improve frontline delivery and save money for taxpayers in the long run. The statement also includes £42 million for three groundbreaking Frontier AI Exemplars led by the Department of Science, Innovation and Technology. These projects will test and implement AI applications to streamline government operations and minimize unnecessary bureaucracy.
The government aims to revamp the UK’s regulatory framework and speed up planning for major infrastructure projects, which could include fast-tracking planning permission for AI data centers. The AI Opportunities Action Plan outlines ways AI can boost efficiency and growth across the UK economy.
At the Ministry of Defence, 10% of the procurement budget from next year will focus on “novel technologies.” This includes dual-use tech, uncrewed systems, and AI-driven capabilities. To support this, UK Defence Innovation is setting aside £400 million to allow innovative companies to participate in defence procurement more easily, helping to speed up the acquisition of new technologies.
To tackle offshore tax evasion and bring in £500 million in unpaid taxes, HMRC plans to overhaul its approach to wealthy individuals. This includes hiring experts from the private sector and using AI and advanced analytics to uncover hidden wealth.
While AI is highlighted as a key tool, Reeves didn’t address the issue of outdated IT systems. The Public Accounts Committee has pointed this out as a major barrier to effectively implementing AI in the public sector. Inefficient data management holds back AI, as high-quality data is essential for its learning capabilities, yet much of the government’s data is stuck in legacy systems.
AI is indeed a crucial part of the economic strategy. Jonathan Hardinges, chief strategy officer at GlobalData, emphasized that adaptability is key for businesses facing downturns. He noted that AI can help leaders navigate the current complex trading environment and geopolitical issues. “Having AI as a tool is vital, but businesses must understand how to use it strategically. Otherwise, they risk falling behind in a competitive, innovative market,” he warned.