Analyst Comment: Why AI Efficiencies May Not Equal UK Government Savings
The UK Government recently announced that 20,000 civil servants have been using Microsoft 365 Copilot to assist with tasks such as drafting documents, summarising meetings, and personalising advice for jobseekers. The Government estimates that this could save about two weeks annually per civil servant, which aggregates to giving 1,130 people a full year back. This sounds promising and aligns with time-saving figures seen elsewhere in the public sector.
These time savings are hailed as part of the Government’s plan to modernise operations and achieve £45bn in savings. A rough estimate values the saved time for 1,130 civil servants at around £50 million. If scaled to the entire civil service, this could translate to roughly £1.25-1.5 billion annually. While this is a good start, it falls far short of the overall savings target.
But Here’s the Catch
Microsoft 365 Copilot is not free. The current annual list price is about £277.20 per user in the UK. For 20,000 civil servants, this adds up to over £5.5 million annually. For the entire civil service, with around 500,000 employees, the cost could reach £140 million. Despite the roughly 10x return on investment, this is a significant ongoing expense. Plus, future price increases are a risk.
More importantly, none of the £50 million estimated value from the pilot translates into actual cash savings. Time saved is additional capacity, not a direct reduction in spending. For these efficiencies to become real savings, they must lead to staff reductions. This is difficult and requires careful workforce planning—something not reflected in current initiatives.
Savings: Real or Imagined?
This pilot is just one part of the Government’s digital strategy. There is talk about AI automating up to two-thirds of the most junior civil servants’ tasks. However, this claim lacks evidence of feasibility. The Government itself acknowledges it has not assessed whether existing AI can automate those routine tasks. So, any anticipated savings from AI-driven automation remain speculative.
Planned Cuts and Technology
The Government does plan to reduce civil service headcount by 10,000 staff and aims for 10-15% cuts in departmental annual revenue spending. However, these workforce reductions appear disconnected from the technological improvements underway. Departments, the Treasury, and the Department for Science, Innovation and Technology (DSIT) seem to operate independently, without an integrated approach linking technology deployment with workforce strategy.
DSIT’s own methodology notes highlight that implementation must consider each organisation’s digital maturity. Yet, no evidence shows this local-level assessment or tailored strategy is currently in place.
Conclusion
What can be expected going forward? Organisations often cut staff first and then hope technology fills the gap. This might work for some services but risks overburdening others. Without a clear, coordinated plan combining research and development with workforce management, the Government’s £45 billion savings goal looks out of reach.
The technology shows promise, but effective change leadership and integration remain missing. More than investment in tools, success depends on strategy and execution that align technology use with real cost reductions.
For civil servants interested in practical AI training and how these tools can be used effectively within government roles, consider exploring tailored AI courses available at Complete AI Training.
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