In her Spring Statement, Chancellor Rachel Reeves said government departments will reduce their administrative budgets by 15% by the end of the decade, adding that the savings on back-office functions will total at least £2.2bn per year by 2030.

Artificial intelligence (AI) has a strong presence in the Chancellor’s statement, with the government confirming the creation of a £3.25bn Transformation Fund to support the fundamental reform of public services, which it said will seize the opportunities of digital technology and AI, and transform frontline delivery to release savings for taxpayers over the long term. Among the areas receiving funding is £42m for three pioneering Department of Science, Innovation and Technology-led Frontier AI Exemplars. The Chancellor said these Exemplars will test and deploy AI applications to make government operations more efficient and effective, and improve outcomes for citizens by reducing unnecessary bureaucracy.

The government has previously said it wants to overhaul the UK’s regulatory system and fast-track planning decisions on major economic infrastructure projects. From an AI perspective, this potentially means planning permission for AI datacentres will be fast-tracked. Its AI Opportunities Action Plan sets out how AI will help drive efficiency and growth across the UK economy.

Among the areas where AI is being pushed is at the Ministry of Defence (MoD), where 10% of its procurement budget from next year is set to be spent on what the Chancellor’s statement refers to as “novel technologies”. These include dual use technologies, uncrewed and autonomous systems, and AI-enabled capabilities.

As part of these plans to introduce novel technologies to the MoD, £400m is being ring-fenced by UK Defence Innovation (UKDI), to enable innovative companies to engage in defence procurement with the MoD. UKDI’s role will be to drive significantly faster innovative procurement, and actively foster a strong UK defence technology sector.

In a bid to tackle wealthy tax avoiders and bring in £500m in unpaid taxes, HMRC will be overhauling its approach to offshore tax non-compliance by the wealthy. This will include recruiting experts in private sector wealth management and deploying AI and advanced analytics to help identify and challenge those who try to hide their wealth.

While the Chancellor’s statement discusses where AI will be deployed, Reeves failed to address legacy IT, which has been raised by the Public Accounts Committee as a major issue preventing the effective deployment of AI in the public sector. The PAC’s Use of AI in government report notes that AI relies on high-quality data to learn. However, according to DSIT, government data is often of poor quality and locked away in out-of-date legacy IT systems.

It’s not a surprise that AI features in the Chancellor’s plans for the economy. Jonathan Hardinges, chief strategy officer at data analytics consultancy GlobalData, said: “Having survived many downturns in business, the survival technique is always one of agility, and the ability to not just identify the challenge, but respond rapidly without being knee-jerk. There must be a strategic intent underlying how leaders in business respond to crises.”

Hardinges said AI can play a significant role in helping business leaders tackle the complex trading environment and geopolitical tension that currently exists. “We also have a plethora of tools at hand that help us innovate and work more effectively than we have done before,” he added.

“AI is the business leader’s secret weapon, but unless one understands how to use it strategically and effectively, businesses will be at the tail end of the upturn and struggle to survive in an increasingly competitive – albeit innovative – economic climate.”

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