Why Procurement is Central to UK's AI-Driven Transformation

The UK government has unveiled an ambitious new plan to embed AI into public services, promising a decade of economic growth and innovation.

Announced on 13 January 2025, the plan builds on 50 key recommendations from the AI Opportunities Action Plan and aims to position the UK as a global leader in AI adoption.

Prime Minister Keir Starmer has committed to fast-tracking AI implementation across sectors, highlighting its potential to revolutionise everything from healthcare and education to infrastructure.

By addressing long-standing barriers and streamlining public procurement processes, the government hopes to unlock AI’s full potential for both economic growth and public service reform.

AI to transform public services 

AI is already making waves in the UK’s healthcare sector, with hospitals using the technology to improve care delivery.

Examples include AI tools that analyse pain levels in non-verbal patients, speed up breast cancer diagnoses and facilitate quicker hospital discharges.

These advancements are helping the government build an NHS fit for the future, as envisioned in the AI Opportunities Action Plan.

The government’s broader vision includes leveraging AI to transform other public services and infrastructure.

AI can streamline planning processes to accelerate construction projects, reduce administrative workloads for teachers so they can focus on teaching and even improve road maintenance by detecting potholes through AI-enabled cameras.

Economic growth is also a key focus. The International Monetary Fund (IMF) estimates that fully embracing AI could boost UK productivity by 1.5% annually, potentially adding £47bn (US$57.7bn) to the economy each year.

As the Prime Minister stated: "Our plan will make Britain the world leader.

"It will give the industry the foundation it needs and will turbocharge the Plan for Change. That means more jobs and investment in the UK, more money in people’s pockets and transformed public services."

Reforming procurement for AI innovation

One of the plan’s standout features is a major overhaul of public procurement processes, which are often seen as a barrier to innovation.

Public procurement in the UK typically allows local authorities, NHS trusts and utilities to act independently, resulting in fragmented adoption of new technologies. The action plan addresses this by encouraging a more coordinated national approach.

The government will adopt a "Scan > Pilot > Scale" model to speed up AI adoption. This approach aims to help start-ups navigate the complexities of public procurement while quickly scaling successful innovations. New measures include:

• Forming partnerships between government and AI developers to anticipate future needs.
• Launching light-touch procurement processes to develop prototypes and pilots.
• Using a multi-stage, gated process that compensates start-ups for progressing through procurement rounds.
• Creating a scaling service to help successful pilots achieve national rollout with central funding.
• Publishing "mission-focused national AI tenders" to streamline nationwide adoption and avoid excessive reliance on commercial frameworks.

The plan also calls for building scalable AI tech stacks to handle millions of citizen interactions and incorporating performance evaluations into contracts to ensure continuous improvement.

These reforms align with the government’s broader goal of fostering innovation. By prioritising outputs over inputs, the plan encourages solutions that improve outcomes rather than adhering to outdated service delivery models.

A national rallying cry for AI adoption

Experts from both the public and private sectors have welcomed the plan but stress that its success will depend on leadership and cultural change within the public sector.

Adolfo Hernandez, CEO of Capita, notes: "Keir Starmer gets this. He talks today of the job of government being to make sure the right conditions are there to allow innovation to flourish."

He highlights the need for more AI champions within government to overcome scepticism and drive adoption. He also advocates for small-scale trials, which allow for experimentation and adaptation without the risks associated with large-scale projects.

"Too often innovation is stifled by preconceptions about the way services are currently provided which leads to limits being placed on companies that seek to do things differently.

"Set targets for how you want to services to improve, not the way you want them delivered, and the scope for doing things more efficiently and effectively increases exponentially.

"It is important that the UK government seeks local partners as well as best-in-class global technology providers.

"At Capita, we believe that by working together with the ‘hyper-scalers’ such as Microsoft, AWS and Salesforce, we can marry the best of AI with the unique human challenges which public services also require. It’s not a question of technology or people; it’s both. It’s not homegrown versus global cutting edge; it’s a blend."

With the action plan in motion, the government aims to create a supportive environment for innovation while ensuring AI benefits citizens, taxpayers, and public sector employees alike.

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