The UK public sector has already spent £573 million on artificial intelligence contracts in 2025, exceeding last year’s £468 million total, according to procurement analyst Tussell. Public bodies have awarded 192 contracts so far this year, reflecting fewer deals but higher-value awards as government deepens its commitment to AI-driven transformation.
Among the biggest recent contracts, National Highways awarded £35 million to Deloitte, while the Information Commissioner’s Office granted Capgemini more than £4.8 million. Local councils have collectively spent over £9 million on AI projects. In June and July alone, 35 contracts worth £88 million were signed.
The data shows steady growth since 2018, with a sharp acceleration following the rise of generative AI tools such as ChatGPT. Annual spending more than doubled between 2022 and 2023, rising from £212 million to £497 million. The largest single contract to date remains the Met Office’s £1 billion deal with Microsoft in 2021 for its ‘Supercomputing 2020+’ programme.
Prime Minister Sir Keir Starmer has pledged to “rewire” the UK through technology, aiming to save £45 billion annually by boosting civil service efficiency. AI investment reflects this agenda, with predictive analytics leading the way, accounting for 58 per cent of the £2.4 billion spent on AI between 2018 and late 2024. Other major applications include automation, natural language processing, image recognition and machine learning.
Key procuring bodies include the Met Office, Department for Science, Innovation and Technology, Department of Health, Home Office, Ministry of Defence and Department for Work and Pensions. Suppliers benefiting from the contracts include Microsoft, Palantir, Capgemini, HP, Serco and UiPath, which recently secured a £10 million deal with the DWP for robotic process automation.
These contracts are supported by broader government initiatives. The 2025 Spending Review allocated £3.25 billion for digital transformation and £1.2 billion to advance cross-cutting digital priorities. A memorandum of understanding with OpenAI is also set to expand AI infrastructure and integrate technologies into justice, defence and education.
“Artificial intelligence spend is only going to increase over the next months and years,” said Sean Williams, founder and CEO of AutogenAI. “Generative AI is a paradigm-shifting general purpose technology—like the printing press, electricity or the internet. This report shows the first stirrings of the change that is coming.” Despite rapid growth, AI contracts still account for just 2.5 per cent of the £134 billion spent on IT services and software since 2018, suggesting ample room for expansion. With strategic partnerships, targeted investment and strong policy backing, the UK is positioning itself as a leader in responsible AI adoption.
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