Over the last eight months, the UK public sector has poured more than half a billion pounds into AI contracts, outspending last year’s total by more than £100 million, despite awarding fewer deals. 

Fresh data from government procurement analyst Tussell shows that UK public bodies have doled out 192 contracts so far in 2025, adding up to £573 million, already far surpassing last year’s £468 million spent across 324 contracts.

According to Tussell’s AI Procurement Tracker, thirty-five new AI-tagged contracts were awarded over June and July alone, worth £88 million, including one of the biggest awards this year, a £35 million deal handed to Deloitte by National Highways. 

Other notable contracts from the past year include more than £4.8 million awarded to Capgemini by the Office of the Information Commissioner, and over £9 million allocated by local councils nationwide for various AI-related projects.

Tracking public sector AI spending since 2018, Tussell’s data shows that the value of AI-related contracts was steadily increasing before the Labour government’s much-publicised push to embed AI into every facet of British life.

While spending spiked in 2021 due to more than £1 billion awarded to Microsoft by the Met Office for its ten-year ‘Supercomputing 2020+’ plan, the figures suggest that it wasn’t until the introduction of ChatGPT that the public sector began turning to AI in earnest.

From 2022 to 2023, AI spending more than doubled from £212 million to £497 million, despite the number of contracts being relatively consistent. But while total costs and the number of awards have fluctuated in the years since, the data for 2025 indicates that Labour is serious in its desire to ‘rewire’ the country.

While the Met Office has spent by far the most of any public body on AI over the last decade, DSIT, the Department of Health, the Home Office, and the Ministry of Defence have all seen mega, multi-million pound contracts handed out to firms like HP, Serco and Palantir.

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Tussell data shows that these AI contracts run the gamut from data analysis, to automation, machine learning, image recognition, and Natural Language Processing research, although more than half of all public money has gone to predictive analytics, thanks again to that £1 billion plus Met Office procurement, which aims to improve weather forecasting.

Overall, UK public sector bodies have spent £3.45 billion on AI procurement since 2018, but while that sounds like, and is, a lot of public money, Tussell point out that this equates to just 2.5% of all the IT Services and Software contracts awarded over the same period, adding up to £134 billion.

Speaking to Tussell regarding the data, Sean Williams, founder and CEO of AutogenAI, said: “Artificial intelligence spend is only going to increase over the next months and years.

“Generative AI is a paradigm shifting general purpose technology – like the printing press, electricity or the internet. We are in the equivalent of 1995 for the internet with generative AI. Over the next decade it will transform entire tranches of government, business and society. This report shows the first stirrings of the change that is coming.”