Could the UK government’s AI plans bring more cash for private businesses?

For many small and medium-sized businesses (SMEs) in the UK, government contracts are still out of reach: Despite an increase in direct procurement spending with SMEs over the past six years, their share of overall public procurement has remained steady at around 20 percent, according to procurement data published by the British Chambers of Commerce and market intelligence firm Tussell this month.

According to Tussel’s analysis, the UK government spent £39.7 billion (roughly US$51.8 billion) with SMEs last year. Median earnings per SME have grown since 2020, from £25,000 ($32,800) to £32,000 ($41,800).

However, the bulk of procurement contracts (34 percent) were with local governments, while the central government only spent 11 percent of its procurement budget directly with SMEs.

AI as a silver bullet for the public sector

Meanwhile, some reports are arguing that changes in the UK political environment could increase government procurement in one particular area – artificial intelligence.

Since the new Labour government took power in June, former Labour Prime Minister Tony Blair has been urging it to introduce more technological innovations into public services, including AI, according to Politico.

The Tony Blair Institute for Global Change (TBI) says that integrating AI into the government could save up to £40 billion ($52.2 billion) annually. The think tank also believes introducing a digital ID could create about £2 billion ($2.6 billion) per year in extra fiscal space by cutting benefit fraud, simplifying tax procedures and offering more targeted support.

The AI plan is proving tempting for technology firms such as Oracle and Microsoft, some of which have partnerships with the Blair Institute, Politico notes.

Questions, however, are already being raised on whether it’s realistic to expect AI to solve all of the UK’s public sector problems. While organizations such as the UK government’s Central Digital and Data Office and independent AI research institute Ada Lovelace Institute agree that AI could help boost the public sector, they also offer different predictions for productivity gains from AI. Introducing new technological solutions could also come with a hefty price tag.

Still, the allure of AI as a silver bullet for fixing problems in the UK public sector could persist: In July, Chancellor Rachel Reeves announced that the country faces a £22 billion ($28.7 billion) black hole in the public finances.

Deloitte wins digital ID app contract

The UK’s digital public services agency has signed a new £42 million ($55 million) contract with Deloitte for supporting and improving the Gov.uk ID Check mobile app.

The Gov.uk ID Check allows users to confirm their identity while signing into government services with the country’s single-sign-on system One Login. It works by matching the users’ faces to their photo IDs.

The contract, signed by Deloitte and Government Digital Service, went into effect in late July and will last until July 2026. Deloitte will also be tasked with developing a new and strategic Gov.uk app for the Digital Identity program, according to trade publication UK Authority.

In April, Government Digital Service laid out its plans for One Login, including integrating the service with the country’s tax authority HM Revenue and Customs (HMRC). By the end of the fiscal year 2024-2025, the plan is to integrate 145 services.

Article Topics

AI  |  Deloitte  |  digital identity  |  procurement  |  UK