‘Data Divide’ biggest barrier to Government’s AI plans says report

New analysis highlights the risk a ‘data divide’ in UK government poses to its AI plans if strong data foundations aren’t in place

 An analysis of government procurement spend on IT projects, including AI, has revealed a 72% surge since 2018, with the volume of AI-specific contracts also up over 1,000%. However, experts warn a lack of data readiness threatens to derail the UK’s ambitions to lead in AI.

The Bridging the Government Data Divide report from data and AI leader SAS, and public-procurement specialists Tussell, finds that departments are developing AI capability at pace, but a lack of data readiness is creating a “government data divide” - a term the report defines as the difference between the high-quality, shareable data needed to train and scale AI safely, and the fragmented, inconsistent and often siloed information many departments still rely on.

This year, the UK government has made artificial intelligence a pillar of its AI Opportunities Action Plan, Industrial Strategy and Digital and Technologies Sector Plan. Billions are being committed to make Britain a world leader in responsible, data-driven innovation and AI skills.

The analysis in the report reveals this commitment and spending has been building at pace for some time.  Government procurement spend on digital transformation projects has climbed from £11bn in 2018 to £18.9bn in 2024 - a 72% rise. AI contract awards in the same period have also increased by 1,085% including a 64% jump in 2024 alone.

The analysis also broke down departmental spend. The Department of Health and Social Care (DHSC) leads all departments in digital investment, spending £1.45bn in 2024 – almost £450mn more than the Home Office (£1.01bn) and the Department for Transport (£998mn). The Department for Work and Pensions (£976mn) and Defra (£499mn) follow, alongside major buyers such as the Metropolitan Police Service (£451mn), Department for Education (£429mn) and HM Treasury (£305mn).

Though the data demonstrates the ambition of successive governments to secure the UK’s place as a world leader in the use of AI, the report warns that investment alone will not determine the success of its plans. The greatest challenge now lies beneath, in the quality, accessibility and consistency of the data that powers AI systems.

“AI adoption in government is gaining real momentum,” said Dr Iain Brown, Head of AI & Data Science at SAS Northern Europe; “But our analysis shows that data quality and access remain the biggest barriers to scaling successfully - which puts the government at risk of a growing data divide.

“To deliver AI at a national scale, data must be treated as critical digital infrastructure: planned, governed and maintained with the same rigour as physical assets like transport or energy. Without it, our report suggests, billions in AI investment risk becoming a collection of pilots rather than a platform for service-wide progress that will benefit UK citizens.”

To build this infrastructure, SAS and Tussell’s analysis says there is a need for better data-sharing frameworks, higher-quality records and the safe creation of new, shareable datasets. One practical option is synthetic data, algorithmically generated information that mirrors the structure and statistical value of real data without exposing personal or classified details.

“Digital transformation is essential to reforming public services,” says Gus Tugendhat, founder of Tussell. “The strong rise in IT procurement spend since 2018 shows that successive governments get this and are investing accordingly.

“As this report demonstrates, however, a ‘government data divide’ is still an obstacle in the way of promoting much greater use of AI. Adoption of synthetic data would help to bridge this divide by enabling public sector teams to test, share and scale AI more safely. With clear AI governance and stronger data literacy, the UK government can seize the opportunities of AI to make public services work better for citizens.”

By also providing the first quantitative picture of how digital and AI capability varies across departments, the Bridging the Government Data Divide report offers a roadmap for action, showing where stronger data infrastructure and governance reform can have the greatest impact.

Dr Iain Brown adds; “As the government delivers on its AI and digital strategies, addressing the data divide will be critical to realising the UK’s vision for trusted, citizen-focused AI. Synthetic data as part of the approach gives the government a practical, safe way to accelerate that progress and ensure that public trust in the technology grows alongside public-sector innovation.”

The report concludes that closing the data divide is a key step in turning the UK’s AI ambition into long-term, measurable public sector value. Read Bridging the Government Data Divide report in full here.

ENDS

Methodology:

SAS commissioned Tussell to undertake an analysis of public sector spending in the UK. Data in this report is based on open procurement data from official sources aggregated, organised and augmented by Tussell. It includes published invoices and contracts. Some spend data may be limited due to differing transparency rules across departments and in devolved nations, and there are security and confidentiality restrictions on MOD spend data. Data is accurate as of the date of download (11th August 2025) and there may be spending gaps in 2024 because invoices have not yet been published.

About Tussell

Tussell is the market’s trusted source of insight on UK public procurement. Our online market intelligence platform helps companies to enhance their public sector business development, and public sector bodies to get better value from their procurement. Visit our website to learn more.