The UK Government’s AI contracts have reached £573M

The UK government has so far invested a total of £573M ($770M) in AI-related projects up until July 15, 2025, significantly surpassing the amount invested in AI projects in the whole year of 2024. 

Government spending on artificial intelligence (AI) projects has already surpassed last year’s total, denoting an increased commitment to AI adoption within the UK.

The UK Government’s AI contracts have reached £573M

Figures compiled by the government procurement data provider, Tussell, show that contracts worth £573M have been awarded for AI-related projects so far in 2025, covering the period up to July 15. The amount surpasses the £468M ($628M) total for 2024, showing a sharp acceleration in public sector investment.

The definition of AI contracts is broad, encompassing projects related to generative AI, predictive and data analytics, image recognition, and automation.

The Starmer government has positioned AI as a tool to streamline bureaucracy and eliminate inefficiencies across government departments. In March, ministers said that the deployment of new technology would save the civil service at least £45B ($60B) annually, arguing that innovation would be essential to rebuilding public trust in institutions.

A Cabinet Office spokesperson agreed with this position, saying that “Sluggish, outdated systems have held back public services for too long — costing time, money and public trust. From improving services and cutting waste, AI is helping us build a smarter state.”

AI spending leads to major contracts and corporate winners

This year’s single largest award was a £234M ($314M) contract to the LGC Group, the scientific services company formerly known as the Laboratory of the Government Chemist. The deal covers research into a national measurement system.

Other major beneficiaries of government AI spending include some of the world’s largest technology firms. Since 2020, Microsoft has secured £1B ($1.34B) in total contract awards, making it the single largest corporate recipient. U.S. data analytics group Palantir follows with £374M ($502M), while Init Innovations in Transportation has received £259M ($347B).

Additional contract winners include Hewlett Packard Enterprise, which received £176M ($236M), Belfast-based software group Kainos, which received £65M ($87M), Capgemini with £50M ($67M), and UiPath, a Nasdaq-listed automation company, with £19M ($25.5M).

UiPath’s chief executive, Daniel Dines, said the Department for Work and Pensions (DWP) had become one of its largest public sector clients. Its most recent contract, worth £10M ($13M), extends through 2026 and focuses on boosting automation in the department.

The company also works with the Student Loans Company, NHS, Land Registry, and Scottish Police Authority.

“The public sector in the UK is much more agile than the European public sector,” Dines said, praising the Labour government for “pushing for efficiency.”

In July, the government also struck a strategic partnership with OpenAI, under which Sam Altman’s company will invest in the UK while providing AI technology for public services.

The UK government’s sharp pivot to AI has its critics, who often cite Palantir’s expanding role in digitizing NHS systems as a privacy risk in terms of allowing a U.S. data analytics company access to sensitive patient data.

A July report by Amnesty International UK criticized the DWP’s “unhealthy obsession” with AI in its reform of universal credit and disability payments, claiming that some claimants were being left in “bureaucratic limbo.”

Responding to such concerns, the DWP emphasized that safeguards are in place to ensure that data and technology are used lawfully and ethically.

“We want to improve the experience for everyone who needs to access and use our services, and technology plays an important part in that,” the department said.

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