Sir Keir Starmer says AI will improve public services, put money in your pocket, create jobs and improve your children’s future.

Politicians are betting the house on it – but how much are they actually spending? And on what?

Sky News asked consultancy Tussell, which analyses government contracts and spending, to help find out.

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AI is kind of a big deal for the prime minister. Pic: PA

Over £3.35bn is the overall spend by government departments on AI contracts, infrastructure and services, since the technology first really appeared on the scene in about 2018. The number of contracts has been going up each year.

The biggest by far is a 2021 contract by the Met Office with Microsoft to build the world’s most powerful weather and climate forecasting supercomputer, plus a few small contracts for departments to use its Copilot AI.

It’s worth more than £1bn overall.

Another big contract is for Init – the German public transport technology company – with Transport for London, worth £259m.

But this might be surprising: one of the smallest recipients is Alphabet.

The company behind Google, and a massive AI investor, has just two contracts with the Cabinet Office and the Ministry of Justice, worth £2.5m.

Fellow US firm Palantir has lots of smaller value contracts – 25 in total, worth £376m.

Its UK boss, Louis Mosley told Sky News that Palantir is helping junior doctors draft discharge summaries. And in defence, it helps intelligence officers collate information and process it more quickly.

Asked whether people were right to be concerned about big AI companies coming in and using their data, he replied: “Those are very legitimate concerns, and they’re right to interrogate this, but Palantir is actually the answer to those problems. We are the way you keep data secure, and we are the way you make AI transparent and auditable”.

‘Ministers need to be brave’

However, Mr Mosley said the government could go further.

“What they’re saying publicly is what they’re saying privately, but the challenge is always a fear of change,” he said.

“And in this case, you’ve got to embrace change. And ministers need to be brave. They need to take on the system and tell them this is the way things need to work today.

“There is a lot of fear that tomorrow I’m going to have to do a different thing to what I was doing yesterday.”

Who’s spending the most?

Sky News also looked at which departments have the biggest spending on AI. They are science and technology, which has the Met Office contract, and transport with the Init deal.

But the biggest, most data-intensive departments feature low down the table.

The Treasury, which encompasses the taxman, and the Department for Work and Pensions (DWP), which handles benefits, are in the bottom three.

The DWP has an annual IT budget of over a billion pounds a year, yet has spent less than £100m cumulatively since 2018 on AI.

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Industry insiders blame a short-term government mindset, lack of IT expertise and backwards technology – up to 60% of some bits of government are running on legacy, older versions, of IT.

The areas of government where a revolution could save us the most money appear largely as yet unexplored. The AI journey has barely begun.