- A new report by ArvatoConnect finds digital transformation across the public sector is growing at scale, with more than half (56%) now delivering government-wide projects.
- However, as the UK government targets £14bn in efficiency savings, take-up trails the private sector and significant implementation gaps pose a risk to success, research finds.
- Research finds, alongside safety and security concerns around AI, resistance to change runs far higher in the sector than among private businesses.
Digital transformation is increasing across the UK’s public sector but an enduring ‘digital deficit’ could impact its ability to meet the government’s new efficiency savings target, according to new research by digital transformation specialist ArvatoConnect.
The UK government’s Spending Review, published in June, outlined its ambition to make £14bn in departmental savings by 2028/29 through the implementation of AI and other technologies.
In its annual survey studying local and central government’s approach to digital transformation, including AI implementation, ArvatoConnect found that more than half (56%) are now rolling out government-wide initiatives. Around a third (37%) were doing so 12 months ago – highlighting a 51% increase. Private sector uptake has increased from 32% to 76% in the same period.
Notably, the vast majority (91%) of respondents said they are confident that their digital transformation projects will achieve their objectives, with the most significant areas of focus being IT (cited by 85%), finance and admin (50%), HR (44%) and contact centres / citizen support lines (40%).
Despite this confidence rating – which has grown from 61% in 2024 – the findings point to an enduring ‘digital deficit’ that threatens to undermine any efficiency savings and the realisation of the government’s £14bn target. Indeed, ArvatoConnect’s research finds that departments across local and central government are failing to implement basic planning, process or impact measurements,
More than half (53%) of the organisations surveyed said they haven’t gathered end-user insight before making changes, and almost two-thirds (62%) haven’t sought feedback on how well new systems or technologies are delivering once in place. Almost three in five (58%) have failed to gain colleague buy-in for their project, while just under half (43%) haven’t trained employees on the new technologies and processes being rolled out.
Critically, almost half (44%) haven’t implemented any form of performance monitoring, with even more (53%) yet to set KPIs to track success.
The research comes as the UK continues to invest significantly in digital transformation, including the creation of new AI Growth Zones as part of the government’s AI Opportunities Action Plan. However, the research points to the need for regulatory guardrails, with firms deterred by potential risks in relation to AI. More than half (52%) cited concerns about the technology’s safety, security and ethical risks as the biggest barrier to successful rollout within their business.
Resistance to change (47%) was also raised as a significant barrier – ranking far more prominently than amongst private sector respondents (29%).
The findings are published in ArvatoConnect’s latest white paper, The UK Digital Transformation Report: From deficit to delivery.
James Towner, Chief Growth Officer at ArvatoConnect, said:
“The scale of digital transformation across the public sector is growing – but progress remains too fragmented to support the government’s £14bn efficiency ambition. Without urgent action to close critical gaps in planning, measurement and citizen engagement, departments risk falling well short of delivering the productivity gains AI and automation promise.
“We’re seeing positive intent and an expanding appetite for transformation, but intent alone won’t drive outcomes. Without putting the right foundational steps in place, there’s a real danger that siloed efforts, lack of buy-in and weak performance tracking will erode trust in these programmes and delay the benefits that citizens and civil servants need now.
“What’s equally critical is the way in which AI is implemented. Public sector leaders must think beyond the technology and take proactive steps to ensure its ethical, safe and transparent use. That means putting in place the right controls to encourage innovation, but avoid harmful outputs like hallucinations, bias or misinformation, and also building governance frameworks that protect both citizens from harm and departments from reputational and operational risk.
“This research gives us fresh insight into the landscape. And, more importantly, a renewed opportunity to close the gap between ambition and action.”
About the survey
The research was conducted on behalf of ArvatoConnect by Censuswide, among a sample of 200 local and central government, as well as private sector senior decision makers in customer experience, transformation or IT, in organisations currently engaged in digital transformation. The data was collected between 17th April and 22nd April 2025. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.
