What are the Key Takeaways of the AI Opportunities Action Plan for Public Sector Buyers and Suppliers?

In its very public hunt for growth, AI offers the UK government a tantalising possible solution to the productivity challenges that have plagued the UK for years.

As the third largest AI market in the world, the UK stands at a crossroads in the global AI landscape. With nations worldwide racing to harness the transformative power of AI, the UK government has developed the AI Opportunities Action Plan – a strategic framework designed to accelerate the nation’s capabilities in this critical area.

The comprehensive plan addresses multiple facets of AI development, from research infrastructure and computing resources to talent cultivation and practical applications across various sectors.

This prioritisation of AI technology is likely to have a significant impact on procurement, bringing with it the challenge of recruiting relevant talent into public sector organisations and meaning the responsibility for the delivery of AI within public services may be transferred onto suppliers.

This article examines the detail of the AI Opportunities Action Plan, exploring its objectives, key components and implications, as well as considering some recommended key actions for public sector buyers and suppliers to make this most of the opportunities arising from this new technology.

What is the AI Opportunities Action Plan?

The Action Plan represents the government’s strategic roadmap to maximising the full potential of AI, with the aim of driving economic growth, improving public services and establishing the UK as a global AI leader.

The plan takes a multifaceted approach, addressing both the foundational elements required for AI development (such as computing power and data infrastructure) and the practical applications of AI across various industries and government services.

Setting the stage for a future where AI plays a pivotal role across society, the plan outlines a series of recommendations and commitments designed to develop critical infrastructure, foster innovation, attract top talent, and create an environment conducive to AI-driven progress.

With the creation of the plan, the government recognises that AI is not merely a technological advancement but a transformative force with the potential to reshape how we work and looks to take the necessary steps to shape the AI revolution, rather than waiting to see how it shapes us.

Why has it been created?

The government is keen to capitalise on the potential of AI to increase productivity and revolutionise industries, ensuring that the UK remains at the cutting edge of AI research and application.

A key driving force behind the plan is economic growth. AI adoption has the potential to grow the UK economy by an additional £400bn by 2030 by enhancing innovation and productivity in the workplace. This will be a key factor in helping the government to achieve its ambitious economic target of achieving the highest sustained growth in the G7.

Global competitiveness is a key driver of the plan, as the UK risks falling behind the rapid advancements in AI already made – and continuing to be made – by the USA and China. To address this risk, the plan sets out the aim to leverage the UK’s existing strengths, such as its top universities, for AI research.

As well as driving growth, the plan envisions AI as a tool with significant potential to enhance public services and increase opportunities for citizens, seeking to take advantage of the possibilities it presents to drive improvements in areas such as healthcare and education.

What are the key focus areas?

Developing AI Infrastructure

The development of AI infrastructure is a central focus of the plan, backed by a ten-year investment commitment.

The UK’s AI computing infrastructure is categorised into three types – Sovereign Compute, Domestic Compute, and International Compute – and the plan focuses on expanding Sovereign Compute capacity, which is owned and/or allocated to the public sector.

Achieving this growth will involve developing state-of-the-art supercomputing facilities and ensuring continuity of access to AI compute for critical services, even in times of market disruption.

Expanding AI Research

As well as new infrastructure, the plan places a strong emphasis on investing in AI research, with the goal of expanding the capacity of the AI Research Resource (AIRR) by at least 20x by 2030. The research development areas include machine learning, natural language processing and computer vision.

A key element of investing in research is the proposed creation of a National Data Library that consolidates high-quality data sets, which will support AI researchers and developers in training their algorithms effectively.

Business Support

The government intends to support businesses in adopting AI technologies by providing access to digital infrastructure, as well as working closely with those looking to start-up and scale-up their businesses.

The plan states that the UK will need companies at the frontier of AI development to be its national champions and suggests that finding and strengthening these champions will need government intervention to nurture and develop these UK-based companies.

Alongside these key champions, the plan also identifies SMEs as a key part of the AI ecosystem, noting that a particular focus should be put on supporting SMEs and the unique challenges they face.

Upskilling the Workforce

The plan acknowledges the concerns about the impact of AI on employment, declaring that AI can be used to open up new opportunities in people’s working lives rather than just threatening them.

Nevertheless, recognising the need to manage this transition, the plan introduces initiatives to upskill and reskill workers, equipping the UK workforce with the skills and expertise needed to thrive in an AI-driven economy.

AI Growth Zones

To foster innovation and facilitate the accelerated build-out of AI data centres, the government will establish AI Growth Zones.

These will strategically leverage new compute capacity and create hubs to empower collaboration between academia, industry and government.

The Growth Zones could implement a streamlined planning approval process, helping to drive local regeneration and attract investment into areas with existing energy capacity, ready to support these power-hungry AI installations.

International Collaboration

The plan highlights the importance in promoting international collaboration, proposing international compute partnerships with friendly, like-minded countries to increase the types of compute capacity available to researchers and catalyse research collaborations.

Regulation and Safety

The plan addresses the regulatory and ethical challenges surrounding AI, calling for continued investment in the AI Safety Institute and the provision of a robust framework to ensure responsible AI development.

In addition to investing in pro-innovation regulation, the government will look to support the AI assurance ecosystem to build trust and increase the adoption of AI solutions.

What does this mean for public sector buying authorities/procurement teams?

The rise of publicly available AI presents a compelling opportunity for notoriously under-resourced public procurement teams to boost efficiency while maintaining – and even enhancing – service delivery.

The potential advantages of the AI Opportunities Action Plan for buyers include:

Increased efficiency – AI’s ability to automate tasks and optimise processes may enable significant cost savings and streamlined service delivery.
Data insights – AI could be used to analyse vast datasets to provide valuable insights, informing policy decisions and improving resource allocation.
Public service enhancements – AI technologies can allow the public sector to better serve citizens through enhancements such as smarter infrastructure management and more accessible personalised customer service, improving the services delivered to end-users.
Access to advanced, cost-effective AI solutions – the plan’s emphasis on providing compute resources at subsidised rates could translate to more affordable options for the public sector.
AI sourcing framework – the government’s commitment to developing a framework for sourcing AI by summer 2025 should mean a simplified procurement process.

However, the scale of change means buyers must tackle several new challenges emerging from the plan, and indeed the technology as a whole, including:

Skills gap – AI procurement may involve complex contractual arrangements and a requirement for new evaluation criteria, which is likely to exacerbate the skills gap faced by procurement teams as they try to secure the necessary expertise to manage AI projects.
Cost – implementing AI solutions may require significant investment and could strain public sector budgets even further, particularly for smaller organisations.
Keeping up with their supply base – suppliers are already quickly adopting AI to cut costs and boost output. Some buyers already report rejecting bids due to AI-generated tender responses that are nearly identical from different firms. Managing this carefully will be crucial to avoiding unintended consequences.
Regulatory concerns – buyers will need to stay on top of any regulatory complexities that arise from AI adoption, which could result in an increased compliance burden for procurement teams.
Vendor lock-in – buyers should be aware of the possible risk in early adoption of AI solutions from emerging UK-based suppliers, as this could lead to dependency on systems that may not scale or may be overtaken by international alternatives.
User trust – the successful implementation and uptake of AI solutions, particularly those focused on improving user services, will be dependent on building confidence in users.

What does this mean for public sector suppliers?

AI represents a once-in-a-generation shift in business, akin to the rise of the internet or microprocessor – yet with the potential for even greater impact. The AI Opportunities Action Plan offers suppliers to the public sector several major opportunities, including:

Increased market opportunities – suppliers offering AI-powered products and services will have opportunities to secure lucrative contracts and expand their market presence.
High demand for suppliers with relevant skills and experience – with limited experience in this field, those with a proven track record will be highly sought after, creating opportunities for expansion into new areas of the public sector.
Public-private partnerships – successful cooperation between the public and private sector is fundamental to the delivery of the plan, offering suppliers opportunities to collaborate with government organisations in the development of AI progress.
Support from government initiatives – suppliers could benefit from the provision of support and opportunities to innovate, such as the establishment of AI Growth Zones and access to digital infrastructure. In particular, UK-based suppliers may gain preferential access to subsidised resources and datasets, lowering barriers for entry to AI development.
Long-term investment – the plan’s long-term view and the government’s commitment to significant investment over ten years suggests a stable planning horizon for suppliers looking to develop their AI capabilities.

However, the plan also presents potential challenges for suppliers, including:

Increased competition – the growth of the AI sector is likely to intensify competition for public sector contracts, creating challenges for suppliers with little in the way of incumbency or a track record to establish credibility in the market.
Compliance challenges – suppliers will need to navigate evolving regulatory frameworks surrounding AI, which may require additional resource and expertise.
Pressure to innovate – rapid technological advancements in the AI field mean suppliers will need to continually invest in research and development to be able to offer cutting-edge solutions.
Integration issues – ensuring system compatibility and seamless integration will be crucial for successful deployment, but suppliers may face challenges in integrating their AI solutions with existing public sector systems and infrastructure.

Are there any other aspects to consider?

Data protection – the use of AI often involves processing large amounts of data, making robust data protection measures and compliance with privacy regulations essential – especially for public sector applications handling sensitive citizen data or information with national security implications.
Ethical consideration – there is a need to address issues of bias or discrimination in AI to ensure fairness, transparency and accountability, which will help in building public confidence in AI.
International collaboration – the UK’s success will depend on effective international collaboration to share knowledge, best practices and resources, although this may be complicated given the current political climate.
Risk management – the experimental nature of AI and the rapidly developing technology means a measured approach to AI adoption is best, to balance innovation with safe, controlled implementation.

Key actions for buyers

Develop a clear AI strategy that is aligned with organisational goals. This should outline the desired outcomes, resource requirements and implementation timelines for AI adoption projects.
Identify low-risk areas for AI implementation, in order to learn along the way whilst maintaining a long-term vision for transformation.
Engage with suppliers early to understand the latest AI technologies and solutions available and to communicate public sector needs to potential suppliers.
Invest in AI skills and training for procurement teams and collaborate across departments to accelerate learning and avoid duplication of effort.
Establish robust governance frameworks to manage AI procurement, deployment and monitoring, as well as prioritising ethical considerations, such as by establishing a review board or committee to help oversee the transparency and accountability of AI projects.
Engage with stakeholders and address their concerns to ensure public trust in the adoption of AI solutions.
Establish clear performance metrics to track the impact and evaluate the effectiveness of AI solutions.

Key actions for suppliers

Invest in research and development to offer innovative and competitive AI solutions.
When liaising with public sector buyers remember to proactively highlight the value of AI solutions in improving services and efficiency.
Prioritise data privacy and security through compliance with data privacy regulations and ensure that any ethical policies reflect those of buying organisations.
Focus on explainability and transparency in the development of AI solutions, which can enhance trust for clients and end-users.
Build demonstrable case studies and proof points to overcome limited track records and maintain a competitive edge in what is likely to be a hotly-contested market.
Stay informed about the latest AI developments and the evolving regulatory landscape, as continuous learning and adaptation will be crucial to staying competitive in a rapidly changing field.

The AI Opportunities Action Plan represents a significant step forward in the UK’s journey to become a global leader in AI development and application. The plan’s focus on computing infrastructure, research capabilities, data resources and talent development aims to address the key enablers of AI innovation, while recognising the challenges in building a thriving domestic AI ecosystem and becoming a driving force in the competitive international landscape.

This initiative presents both opportunities and challenges – buyers must quickly grasp a rapidly evolving technology landscape while ensuring responsible implementation of AI systems, and suppliers need to develop relevant capabilities and establish credibility in what is likely to be a highly competitive market.

By understanding the plan’s implications and taking proactive steps, buyers and suppliers can position themselves to effectively leverage the Action Plan and help shape the UK’s AI-driven future. Only time will reveal whether the plan will succeed in establishing the UK as a global AI leader, and indeed if AI can truly deliver the productivity and GDP boost the government seeks.