The UK government is revamping how it funds artificial intelligence (AI) and digital projects, adopting a “test and learn” approach to streamline public sector innovation. Announced by Technology Secretary Peter Kyle and Chief Secretary to the Treasury Darren Jones, the reforms aim to cut wasteful spending, simplify bureaucratic approval processes, and accelerate the adoption of new technologies in public services.
The changes come after a government review found that complex spending processes have hindered the rollout of digital projects and AI experimentation. Many initiatives have been stalled due to outdated funding models, preventing promising technologies from being tested and scaled effectively.
Starting in April, the government will trial four new funding approaches, including “staged funding” inspired by the success of GOV.UK Chat, an experimental AI chatbot. This approach will provide small amounts of funding for AI prototypes, with additional support granted in stages based on demonstrated success. If early trials show promise, projects will receive increased funding to expand their impact on public services.
The reforms align with the government’s broader “Plan for Change,” which seeks to modernize public services by leveraging technology. The new funding model is expected to help businesses streamline administrative tasks, enhance police digital systems for crime prevention, and reduce wait times for NHS patients.
“Technology has immense potential to build public services that work for citizens,” said Kyle. “But a decades-old process has encouraged short-sighted thinking and outdated tech, while stopping crucial innovation before it even gets going. These changes ensure innovation is the default, giving AI innovators in government the freedom to chase an exciting idea and build prototypes almost immediately.”
The review also highlights concerns about outdated digital systems, with research showing that one in four central government systems are obsolete. In some departments, up to 70% of digital infrastructure is outdated, leading to costly maintenance expenses. These inefficiencies can result in taxpayers paying up to four times more than they would if systems were kept up to date.
Jones emphasized that modernizing digital government is crucial for efficiency and cost savings. “This government is determined that digital transformation of the state and our public services will deliver better outcomes for people and ensure every pound of taxpayers’ money is spent well,” he said.
The government will also introduce new outcome metrics and evaluation frameworks to ensure AI and digital projects provide measurable benefits. This initiative follows the publication of the “Blueprint for a Modern Digital Government,” which outlines plans to use technology to improve services, drive economic growth, and enhance public sector efficiency.
With this new strategy, the government hopes to position AI and digital innovation at the heart of service delivery, ensuring that technology is used effectively to benefit citizens and the economy.
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