The UK National Audit Office (NAO) has called on the government to thoroughly verify its claim that artificial intelligence could save the public sector £45 billion annually before incorporating this figure into any policy frameworks.
Verification Urged Amidst Diverging Estimates
According to a July 20 report, the NAO urged ministers to subject the £45 billion savings estimate to rigorous stress-testing. This figure was first introduced in the Department for Science, Innovation and Technology’s "State of digital government review" in January 2025, which projected that digital transformation and AI might yield efficiencies of 4 to 7 percent of total public sector expenditure.
However, independent assessments suggest a significantly lower potential. Both the Institute for Government and the Ada Lovelace Institute have produced alternative forecasts ranging between £23.6 billion and £24 billion annually, about half of the government’s projection. The Science, Innovation and Technology Committee previously described the government's estimate as "worryingly optimistic" in June 2026.
The NAO report also highlights a structural shortfall: government departments have yet to develop full workforce transition plans linked to AI adoption. The watchdog emphasized the need for these departments to integrate digital transformation effects into their workforce strategies.
plus the ethical implications of automated decision-making in public services remain a concern. Errors in AI recommendations could have serious consequences, affecting citizens’ housing, healthcare, or legal status, which differs from private sector AI risks.
