A group of UK MPs have warned that the country’s public sector faces significant challenges in AI adoption, and that implementing its plans in this area will be an uphill struggle for the government.

In a detailed report, the Public Accounts Committee (PAC) said: “Out of date tech and poor-quality data put public sector adoption at risk as public trust jeopardised over transparency in use of algorithms.”

In January, the government announced its own plans to unleash AI across the country in order to kickstart and deliver what it called “a decade of national renewal.” The so-called AI Opportunities Action Plan came with a promise to create more than 13,000 AI-related jobs across multiple sectors in the UK.

Prime Minister Keir Starmer said at the time that the plan “mainlines AI into the veins of this enterprising nation – revolutionizing our public services and putting more money in people’s back pockets.”

However, MPs within the PAC have now warned against being overambitious with what can really be achieved, and the time required to implement those plans. According to the PAC, “while AI has the potential to radically change public services, the scale of the task ahead in grasping these opportunities is concerningly great.”

The key challenge, according to the PAC’s report, is the poor quality of the data available within the UK public sector, and the fact that it is not easily accessible.

“Too often Government data are of poor quality, and often locked away in out-of-date, or ‘legacy’, IT systems, which are partially defined as “an end-of-life product, out of support from the supplier, [and] impossible to update,” the PAC says.  

No quick fix

The PAC report has also warned that it will require a significant amount of time and government funding to put things in order and pave the way for AI adoption by the public sector.

Other issues highlighted by the report include challenges around data remediation. The report says “a third of Government’s 72 highest-risk legacy systems still lack remediation funding.” MP’s have also criticised the lack of transparency within government departments, which they believe has led to a loss of trust by the public in the technology.

Furthermore, the report highlights the lack of competition in the UK’s AI supplier market. It says the market is currently dominated by a small number of large companies and that the government heavily relies on their services.

The UK public sector is also suffering from a severe shortage of staff with relevant digital skills. The report says “around half of roles advertised in civil service digital and data campaigns went unfilled in 2024.”

Finally, MPs have said they are not sure whether the Department for Science, Innovation and Technology (DSIT) has the capacity or the leverage to push AI adoption across the public sector, despite its recent plans for digital reform.

“The Committee’s report is calling for a senior digital officer to be embedded at the top table with senior management at every department, on the boards at each Department, and their respective agencies,” MPs have advised.

AI adoption by businesses

Whist the UK public sector struggles to keep up with and meet AI adoption targets, the government also has reasons to worry about how businesses in the country are reacting advances in technology.

Earlier this year, a new survey by by the Boston Consulting Group (BCG) revealed that 51% of businesses in the UK are planning to divert investment towards technologies such as AI, instead of hiring new staff. More than half of the firms surveyed by the BCG said they would higher fewer people. Also, 44% of those businesses said investing in AI was now a priority for them.

Those businesses also pointed to the UK government’s decision to increase national insurance contributions by employers as one of the major reasons for the shift in their approach.

According to experts quoted by the FT, the government was “increasing the costs of employing people in multiple ways simultaneously right at the point when AI cost-cutting possibilities emerge. It’s going to accelerate job cuts across the economy, no question.”

But despite that shift in approach, the BCG also warned, in a separate report last year, that “only 22% of companies have advanced beyond the proof-of-concept stage to generate some value” from their AI adoption.

While challenges remain, there is enough clear evidence that more and more businesses in the UK are starting to embark on their own AI adoption journey. According to some reports, “68% of large companies, 33% of medium-sized companies, and 15% of small companies have incorporated at least one AI technology.”

At present, the UK’s overall AI market is worth somewhere around £16 billion – £20 billion ($21-26 billion). But that figure, according to some estimates, could reach a staggering £1 trillion by 2035.