At the end of last year, chancellor Rachel Reeves announced a crackdown on government ‘waste,’ instructing departments to deliver 5% efficiency savings to safeguard funding for key public services. The directive, part of a budget review concluding this June, has placed public sector organisations under mounting pressure to cut costs and streamline operations.
But is 5% ambitious enough — or could public services go much further?
Many outsourcing contracts already achieve savings well above 5%, even before implementing AI tools like large language models (LLMs). This raises an important question: is the government’s new AI Opportunities Action Plan — a roadmap for integrating AI into public services — aiming too low?
AI, underpinning areas like Robotic Process Automation (RPA), will undoubtedly drive this push for efficiency. Research from Boston Consulting Group shows that 51% of UK businesses are prioritising AI investments over hiring staff, fuelled by a growing pressure to deliver more for less.
It’s clear that both public and private sectors are recognising that achieving real efficiency gains calls for bold, transformative innovation, but this doesn’t mean overhauling everything at once. Instead, it’s about thinking big but making measured, manageable changes with the support of digital solutions.
The major shift in process automation is moving away from manually identifying specific processes or projects to automate. Instead, by using AI-powered analytics to review workflows and processes, we’re discovering significant improvement opportunities that manual checks might miss. With the right preparation at the outset, this approach allows organisations to unlock greater savings in the long term.
Humanising the digital, digitising the human
Undoubtedly, public sector organisations can drive significant efficiencies in their interactions with citizens by leveraging technologies such as AI, machine learning and RPA. AI can help analyse citizen data and streamline tasks, while next-generation chatbots can handle routine queries. This enables human agents to focus on more complex issues, bringing empathy, creativity and problem-solving to their interactions.
Augmenting agents by blending AI and the human touch can then enable what we call ‘humanising the digital and digitising the human’. It represents a hybrid approach where, for example, live speech AI analytics can provide helpful prompts or insights for agents, during conversations with citizens, while freeing up their time.
100% verification of quality assurance and using generative AI to summarise citizen interactions further boosts agent productivity, enhancing training and upskilling opportunities. AI tools like sentiment analysis and conversation analytics can also help agents identify vulnerable citizens and offer the appropriate level of support.
This approach is especially important when, according to our recent report, AI, Digital Transformation and Vulnerable Customers, nearly half (48%) of vulnerable individuals avoid organisations where services do not meet their needs, and 78% prefer speaking to a person when seeking assistance.
For this reason, CX managers must ensure AI supports, rather than replaces, human agents, so citizens receive the right care.
An insight-led approach to transformation
Departments must take a considered approach when implementing such technologies and strike the right balance between automation and the human touch. A proven plan is the ‘Four Ds’ framework.
Define key challenges in the citizen journey.
Design tailored solutions to address these issues.
Develop tools and processes that align with citizen needs.
And finally, deploy these solutions with continuous evaluation and improvement.
This approach ensures that transformation is rooted in a citizen-first mindset, creating solutions that enhance their experience.
Ultimately, achieving meaningful efficiency savings in the public sector isn’t just about cutting costs. It’s about embracing bold, transformative innovations that blend human expertise with AI. By leveraging the right technologies and finding the right balance, departments can exceed budgetary goals and provide personalised, high-quality services to citizens.
With the right foot forward, the 5% target is just the beginning.