AI: Consultation on the use of artificial intelligence in government

The Local Government Association (LGA), Society for Innovation, Technology and Modernisation (Socitm), Society of Local Authority Chief Executives and Senior Managers (Solace), the London Office for Technology and Innovation (LOTI) and iNetwork provided a joint response to the Public Accounts Committee's call for evidence.

About us

The Local Government Association (LGA) is the national voice of local government. We are a politically led, cross-party membership organisation, representing English councils. Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.

The Society for Innovation, Technology and Modernisation (Socitm) is a membership organisation of more than 2,500 digital leaders engaged in innovation and modernisation of public services. Established for more than 30 years, our network combines to provide a strong voice, challenge convention, and inspire change in achieving better place-based outcomes for people, businesses, and communities.

The Society of Local Authority Chief Executive (Solace) is the UK’s leading membership network for public sector and local government professionals. We currently represent over 1600 members across the UK and have regional branches across the country which play host to a number of events such as regional development days, skills days, and networking opportunities.

London Office for Technology and Innovation (LOTI) LOTI is London local government’s innovation team. We help London borough councils and the GLA use innovation, data and technology to be high performing organisations, improve services and tackle London’s biggest challenges together. Founded in July 2019 with just 15 boroughs, LOTI’s record of delivery has led to its membership growing to include 28 boroughs, the Greater London Authority and London Councils. Today, it connects more than 1,000 local government colleagues online and in person, helping them to share knowledge, build capacity, run projects and influence change together.

iNetwork is a membership led partnership for local public sector based organisations. Established 20 years ago, we currently have over 120 members across the North West and Yorkshire and Humber. We have a strong collective voice empowered to confront the most pressing challenges in the local public sector to drive innovation and change to enhance service delivery for our residents, patients, tenants and service users.

Summary

Local government is a substantial part of the public sector, employing 1.32 million people and delivering vital services to residents with an annual budget of £121 billion. However, councils are facing significant financial and service demand pressures. Digital transformation, including the use of AI, is seen as a way to improve efficiency and service delivery in this challenging environment.

The LGA's recent survey indicates a positive outlook on AI adoption within local government with the potential to improve service delivery. 85% of responding councils reported that they are either already using AI or exploring its potential. Councils are utilising AI for various applications and in a range of service areas, including public-facing chatbots, caseworker assistants, image recognition for tasks like tackling fly-tipping, AI-powered sensors in adult social care, and tools for generating easy to read documents or translation services. Predictive analytics are also being explored to prevent falls and homelessness.

While staff productivity, service efficiency, and cost savings are AI's most commonly cited benefits, many councils acknowledge it's still too early to quantify the realised benefits. Further challenges remain, barriers to continued AI deployment in the sector include lack of funding, lack of staff skills, and lack of staff capacity.

There is a need for a coordinated approach to supporting AI innovation the public sector that includes local government. This includes ensuring local government has a seat at the table in national AI discussions and plays a role in shaping public sector AI guidance. Furthermore, there is a need for proportionate governance frameworks that consider each council's size, risk profile, and AI use case, acknowledging local government's complexity. Workforce training and skills development are crucial to effectively managing and utilising AI. Additionally, the potential threats posed by AI to local democracy, such as deepfakes, emphasise the need for support to address these risks.

Financial and holistic support for AI innovation is another key area. Our response proposes a centralised mechanism to deliver this support, including investment in technology, skills development, and access to independent technologist support. Developing local government-specific testbeds for high-risk AI applications and tackling legacy IT systems and data quality issues are priorities to support sector growth in the use of AI in line with the findings of the National Audit Office report.

Collective purchasing mechanisms for AI products and fostering competition in the AI market, particularly for small and medium-sized enterprises (SMEs), are important considerations. We welcome the development of the Department for Science, Innovation and Technology's (DSIT) AI Management Essentials standard but suggest it should be mandatory across public sector procurement. Additionally, we recommend exploring mandatory third-party verification of AI products rather than relying on vendor self-assessment.

Digital inclusion is another important aspect. AI can be a tool for promoting digital inclusion, for example by providing more accessible technologies for people with disabilities. However, we urge Government to make digital inclusion a strategic policy priority and actively collaborate with councils on how to deliver this work locally.

Overall, our response calls for a comprehensive approach to supporting AI innovation in local government. Investment, skills development, measures to address risks, promoting competition, and collaboration are all seen as crucial for councils to harness the potential of AI and deliver efficient, high-quality services to their communities.

Key recommendations

Local Government as a vital part of the public sector innovation ecosystem: Local government must be represented on public sector strategic boards, such as the implementation board for the AI strategy. Local government need their priorities and context to be understood and integrated into public sector guidance to reduce the likelihood of multiple pieces of guidance produced at public expense. Local government must also have equivalent access to training as civil servants. This will reduce duplication and save public funds.
Supporting local government innovation: Local government requires investment to innovate - both to explore the use of AI, and in readiness, particularly addressing legacy debt and strengthening data foundations. Access to technologist support is key in the context of capacity and capability gaps. This financial support would be best delivered through a centralised mechanism, such as a centre for local government digital or lab. Measures must be taken to ensure that support addresses the digital divide within the sector.
Procurement, assurance and open markets: The assurance ecosystem must be mature, foster trust in technology, be mandatory for suppliers and involve external verification elements rather than self-assessment. An enhanced role for Public Buying Organisations (PBOs), such as Crown Commercial Services and other local government led PBOs should be considered with consultation with local government information and cyber security specialists, to ensure this assurance is done centrally – saving resources and capacity for councils as buyers and vendors. To address concerns regarding market dominance by a few suppliers, more must be done to foster competition, particularly for SMEs, and local government is seen as a vital vehicle for making this happen.
Digital inclusion: As more services move online, and Government is encouraging the use of AI to improve productivity, digital inclusion must be considered a strategic policy priority, including the publication of a new Digital Inclusion Strategy, and more central funding is provided to remove barriers for digitally excluded residents. This is a vital part of fostering trust in digital and technology transformation.

Introduction and context

The LGA, Soctim, Solace, LOTI and iNetwork are pleased to respond to this call for evidence and have done so based on our engagement with councils. Since last year, we have been meeting as local government agencies to ensure that we are joined up on sector support on AI: sharing intelligence and understanding of risks and opportunities, reducing duplication where possible, and fostering collaboration for the benefit of councils in England. The LGA, Socitm and Solace developed local government positions last year: a response to the Government’s White Paper ‘A Pro Innovation Approach to AI Regulation’, and a submission to the Parliamentary Call for Evidence on Large Language Models.

Local government forms a significant part of the public sector, with £121billion annual spend [1] and a workforce of 1.32million [2] – second only to the NHS. Local Government is responsible for a range of vital services for people and businesses throughout the UK, interacting with every household in Britain at different points of the lifecycle. Services include support to the most vulnerable in our society through adult and children’s social care, and housing, as well as schools, licencing, business support, registrar services and planning. As such, local government are data rich environments.

In the context of increasing demand for services, and inflationary pressures, local government spending on all services combined was reduced by 10.4% between 2010/11 and 2019/20[3]. Councils already face severe budgetary constraints: in October the LGA estimated a funding gap of £4bn over the next two years. We welcome the additional £600million extra funding in 2024/25 funding announced in January, but a significant funding gap remains. This year also saw the sixth one-year settlement in a row for councils. Keeping councils on a financial drip feed in this way has led to the steady weakening of local services. Councils need greater funding certainty through multi-year settlements.

Councils are now at the start of a new financial year, and will face extreme and unprecedented cost and demand pressures which are placing significant pressures across all services, including those highly personalised services for our most vulnerable adults and children. Both revenue and capital sources of finance are under enormous strain and councils have had to find huge efficiencies to set budgets. Councils of all political colours are starting this financial year in a precarious position, and having to scale back or close a wide range of local services. In a recent survey of Chief Executives, the LGA found that 58% of councils stated the impact of this additional funding would be ‘small,’ and 85% of councils said they would still have to make cost savings to balance their 2024/25 budget[4]. The continued squeeze in public spending in the years ahead is a cause for concern for communities.

Digital transformation forms an integral part of cost savings measures to enhance productivity, and to support councils to continue to deliver high quality services for the communities they serve. The sector is therefore excited about the opportunities that AI promises within this challenging context if the risks can be effectively managed.

AI use in local government

The LGA recently surveyed councils in England to understand current AI usage, future plans, perceived risks and opportunities, and support needs.[5]

AI deployment and exploration

The survey indicated that there is a positive outlook on AI adoption within the sector, with 85% of respondents indicating they're either using AI or exploring its potential. Only 15% had not begun exploring AI capabilities. This strong interest suggests a sector receptive to innovation and eager to leverage AI.

Generative AI (70%) was the most common type deployed by councils that responded to the survey, followed by prescriptive (29%), predictive (22%), simulation (2%), and "other" (19%).[6] The majority of applications were for internal council functions like HR, administration, procurement, finance, and cybersecurity. Adult social care and children's social care were the next most popular areas for AI use.

Application of AI

Most respondents (63%) procured AI through external suppliers, while 26% developed tools in-house. Many who developed tools utilised existing options like Microsoft Copilot Studio or ChatGPT Enterprise to customise products for council use.

Governance of freely available tools on personal devices (ChatGPT3.5, Gemini, DALL-E) varied. A small minority of those who responded (4%) banned these tools on council devices, while most permitted their use with or without limitations. Some councils restricted these tools in favour of corporate options like Microsoft 365 Copilot due to data security and information governance concerns.

Use cases

Councils are innovatively exploring various applications for AI across different service areas, including:

Public-facing chatbots, for example in contact centres
AI assistants for caseworkers, for example in social care or housing
Image recognition to tackle fly-tipping and littering
AI-enabled sensors in adult social care
Generative AI tools for translation services and creating easy-read documents
Predictive analytics for falls prevention and homelessness prevention
Cleaning datasets and removing duplicates
Threat monitoring and cybersecurity (longstanding use)

The vast majority of respondents mentioned they are exploring or utilising Microsoft 365 Copilot to improve productivity and efficiency.

Benefits and opportunities

Staff productivity, service efficiency, and cost savings were the most commonly cited areas where respondents were already experiencing benefits from AI use, and where they see the biggest future potential[7]. However, several councils acknowledged it is still too early to quantify the realised benefits.

Readiness

Over half (53%) of respondents felt their council was very or fairly ready to adopt or continue to adopt AI in terms of technology (infrastructure, software, and cloud). This was followed by institutional culture (leadership and receptivity to change) at 45%, and policies and procedures (governance frameworks and risk management) at 37%. Workforce skills and expertise were identified as the biggest area of unpreparedness (72% not very or at all ready), followed by data availability, quality, and storage (68%). The three biggest barriers to AI deployment cited were lack of funding, lack of staff skills, and lack of staff capacity.

Governance

Risk assessments for AI in local government will vary depending on the specific use case. Even within the same use case, there may be variations across councils due to factors like council culture, local needs assessment, leadership direction, and existing risk matrices. This is evident in the differing approaches to staff access to large language models and other freely available generative AI tools.

Governance approaches for identified risks will depend on council size and existing governance structures. Currently, most councils manage AI use through existing policies (including information governance and data protection), existing boards (like data ethics boards), and measures like appointing a senior responsible owner and focusing on staff training and skills development. Some councils prefer issuing guidance over stricter usage policies. More mature councils have established AI boards for strategic oversight of AI products and applications, ensuring compliance with statutory duties like the Public Sector Equality Duty and UK GDPR.

Supplier governance

Many councils are currently auditing existing suppliers to assess AI use. Only 18% of survey respondents had a supplier policy or contract clauses requiring suppliers to declare AI use in service delivery to councils or residents. While 52% lacked such a policy or clause, 26% of those had informal discussions with suppliers during contract management.

AI support required

Local Government as an integral part of the public sector innovation ecosystem

Councils have a unique position within the public sector technological eco-system where – whilst holding information on every resident, exchanging data with nearly every branch of government, and enabling the economy in the places they serve – they have a pivotal role in driving forward technological progress in every part of the country.

Public sector governance

We understand from the National Audit Office (NAO) report that there are several public sector wide boards without representation from the wider public sector. Local government must be represented on strategic boards, including the AI Strategy Implementation Board.

Cross-societal risk monitoring

Both the Pro-Innovation Approach to AI and the Parliamentary Inquiry into Large Language Models propose a cross-societal risk register that is inputted to by various sectors and disciplines, with a collaborative approach taken for mitigations. Given local government proximity to communities and unique role in delivering vital local services, it’s crucial local government plays a key role in inputting into this process.

Public sector guidance

Local government priorities and needs must be factored into the production of public sector-wide guidance in recognition of their unique context, so the guidance can be truly public sector wide. Local government input should be sought at the development stage and in consultative workshops that take place.

Proportionate governance

Given that local government provides services to the most vulnerable in society, it’s inevitable and appropriate that councils will come under scrutiny in how they’re managing the associated risks with AI. If councils are to be able to realise the benefits and opportunities that AI provides given the challenges that exist within the sector, they must be supported to address those risks in an appropriate way relevant both to the use case and to the size and type of council. What is appropriate for one council, for example an AI scrutiny board, may not be appropriate for another council. Some risks and use cases will still require rigorous governance so if smaller councils don’t have the capacity or the capabilities, they may have to choose not to use AI and forego its positive impacts. Given the 317 different organisations with different risk assessments and local needs identified, local government provides a key testing ground for governance approaches with learning shared elsewhere in the public sector.

Clarity

Councils are navigating a cluttered and sometimes conflicting guidance and compliance space, and it’s challenging to understand how it all fits together to ensure the best outcomes for the communities councils serve.[8] More clarity and practical support on the guidance available and how it can be used would be helpful.

Workforce

It’s crucial that investment is made to equip public sector workforces with the necessary skills and knowledge to manage and utilise AI effectively, including being able to evaluate the ethical and privacy considerations for its use, and to effectively implement and challenge the AI. This could include online courses, workshops, or dedicated AI certifications for staff. The training available to civil servants should be made available to all public sector workers, including council staff. There needs to be long-term workforce planning and investment in digital and technology practitioners within the public sector. This could save considerable sums of money spent on consultants each year.

Electoral integrity and security

Despite local governments playing a crucial role in securing elections, the potential threats posed by Artificial Intelligence (AI) to local democracy haven't received enough attention. The ability of AI to generate deepfakes and synthetic media poses a significant threat. This fabricated content can create sophisticated cyber threats, spread misinformation, manipulate public opinion, exacerbate existing societal divisions, and ultimately erode trust in the democratic process. Whilst it is accepted that Local Government will never be the focus for the type of policy initiative needed to address these problems, the lack of clear progress nationally is also impacting the integrity of local elections; any new national initiatives must be considerate of local and regional democratic needs.

Supporting local government innovation

Given the unique challenges that exist in local government, and the constitutional setup of 317 independent organisations operating as one sector, support should be tailored to the local government context and delivered through a centralised mechanism. This support should be financial and holistic - including investment in the technology itself, but also in skills and access to technologist support that’s independent of suppliers. It’s important to note that local authorities operate at varying levels of digital maturity, with the resultant digital and data fragmentation leading to inefficiencies, duplicated efforts, inconsistent citizen services, and lower productivity levels.

Tying all these strands together into a centralised centre, lab or incubator for AI for local government would create coherence for local government whilst still respecting localism. The lab would de-risk innovation by providing centralized funding, technical expertise, and a controlled testing environment including support to the ethics and assurance processes like AI auditing, so empowering local authorities to explore solutions with high potential for scalability and transferability across the sector, leading to faster adoption of successful innovations. This approach would make it easier to share learning and innovations within local government with other parts of the public sector – something the Central Data and Digital Office (CDDO) is aspiring to do.[9]

Testbeds

Supporting the development of local government-specific testbeds, particularly for higher risk applications of AI that will create the most significant return – such as adult social care. These higher-risk use cases could be facilitated and undertaken under regulatory supervision to support compliance with data protection and the public sector equality duty.

Legacy debt and data foundations

In line with the NAO report findings, we agree that updating legacy systems and improving data quality and access is fundamental to exploiting AI opportunities. We know from our engagement with councils that the need to improve data quality remains a key challenge in ensuring AI readiness across the sector. Of note in the NAO report is the CDDO remediation plans to tackle legacy IT systems. Similar plans must be drawn up and financially supported for local government. The CDDO working with DLUHC and local government representative agencies could facilitate this with councils – with wide-ranging benefits not only for AI adoption but also in strengthening cyber resilience in the sector, and wider digital transformation in local government.

Collective procurement

Providing a mechanism for the collective purchasing of AI products that numerous councils could use – through a centre for local government digital services is vital. This would save public funds and foster collaboration between councils, and local government with other parts of the public sector. This could also ensure strong cyber security, data protection and ethical standards are created at a sector level. The i.AI in No.10 also provides an opportunity through the development of tools and products that can be utilised by the public sector. However, local government needs, priorities, and context must be factored into their pipeline.

Building public trust

Trust is earned over time through trustworthy, open practices which include transparent uses of AI and meaningful public engagement to understand public concerns and in co-designing solutions. Councils are the ‘frontline’ of public sector institutions when it comes to service delivery so councils must be supported with public engagement given the importance of facilitating public trust in the use of AI.

Procurement, assurance and open markets

There is a well-documented risk that AI provision is set to be dominated by a very small number of global technology companies[10]^.Market dominance and a lack of competition can lead to high costs with limited value, significant costs related to data sharing access such as APIs, a lack of improvements to the technology and service, and unsatisfactory security practices.[11] There has been significant upselling and marketing towards local government over the last year by companies selling AI products. Without sufficient skills across the sector and an immature assurance ecosystem regarding AI, there have been challenges in identifying genuinely beneficial products or in assuring the trustworthiness of products and vendors.

Open markets

To address concerns regarding market dominance by a handful of global companies, more must be done to foster competition, particularly for SMEs, and local government is considered a vital vehicle for making this happen. The Procurement Act provides a unique opportunity to foster the work of SMEs and work preventatively on market dominance.

Local government and anti-competitive practice

Government and the Competition and Markets Authority should be considering market dominance and anti-competitive practices more comprehensively, with consideration given to the long term impact on public finances and service delivery[12]. More should be done to understand the local government market challenges that already exist and how these interact with the AI ecosystem.

AI Management Essentials standard

We welcome the Department for Science, Innovation and Technology’s (DSIT) AI Management Essentials scheme being launched later this year. As a Government standard that’s built on existing international standards and aligned with the UK regulatory principles, this will provide clarity particularly if made mandatory across public sector procurement. If not made mandatory, councils will likely incur the same challenges experienced in cyber security resulting in a cluttered, duplicative and confusing space that fails to foster trustworthiness in supply chain security.

External verification

A challenging aspect of assurance in local government is that councils often have to undertake the assurance themselves, which results in multiple varying approaches to due diligence between councils, asking suppliers or vendors the same questions with no third-party assurance. It’s vital therefore to save capacity both of council officers, and vendors (particularly SMEs), that assurance has mandatory third-party verification, and this is trusted by public sector buyers.

Role of Public Buying Organisations (PBOs)

There’s also a vital role for PBOs such as Crown Commercial Services (CCS) and local government led organisations to undertake more assurance and verification on behalf of councils purchasing through their framework agreements to save capacity and time both of buyers and vendors. Standardised cyber and information security will also make it easier to assess like for like across competitors.

Assurance coherence

It’s crucial that the DSIT Management Essentials Scheme is aligned with broader DSIT initiatives, such as the software code of practice. This will also address concerns around AI capabilities in local government, ensuring that no money is lost to systems that aren’t fit for purpose.

Digital inclusion

Digital inclusion is the ability of individuals and communities to access, use, and benefit from digital technologies. In the context of local government, this means ensuring that all residents have the skills, knowledge, and infrastructure necessary to engage with online services and information. We live in an increasingly digital world, with banking, democratic functions, job applications, benefits and other public services increasingly being moved online. Digital skills, equipment and reliable digital connectivity are crucial to enable people to fully participate in society and engage in 21st century education and employment systems.

Councils play an important role in tackling digital exclusion. Councils know their communities best and have the responsibilities, relationships, and assets to play a key role in encouraging older, vulnerable, and disadvantaged households to get online. Functions, such as children’s services, adult social care, adult education, business support and libraries, all have contact with people who may be digitally excluded. Councils run initiatives to tackle digital exclusion such as offering programs that enhance digital literacy and refurbish used devices for residents in need, ensuring they have access to essential technology. Councils also have well established relationships with local voluntary and community sector organisations which are an effective channel to socially excluded groups.

The recent House of Lords Digital Committee report on digital exclusion found the Government does not have a ‘credible strategy’ for tackling digital exclusion and reinforces our findings that there is little strategic guidance to councils from Government on closing the digital divide.

AI can play a crucial role in promoting digital inclusion for example by providing more accessible and inclusive technologies for individuals with disabilities. Features such as voice recognition, text-to-speech, and image recognition that can help individuals with visual or hearing impairments hold significant promise for local government, with the potential to streamline processes, improve efficiency, and deliver better services. However, the more digital transformation that occurs without effective digital inclusion support, the more at risk residents are of being unable to access services and participate in their local communities. In the UK, there are an estimated 2.1 million offline adults, with 19% of universal credit recipients reporting “low” or “very low” digital capability[13]. A key benefit of reducing digital exclusion is productivity and economic growth,[14] with a reported potential of £1.4bn in efficiency savings and £483m in tax revenue in a digitally included society where everyone meets the essential digital skills.[15]

Role of local government

Councils play a key role in addressing digital inclusion in communities, particularly as they interact with the most vulnerable people in our society, however given the lack of a central government strategy on digital inclusion and prioritisation of this issue, councils are often carrying out this work unfunded.[16]

Strategic prioritisation

Government needs to make digital inclusion a strategic policy priority, with an updated central strategy. Government must collaborate with councils on how this work could be delivered locally given the access local government has to the most vulnerable in society.

References

[1] Local authority revenue expenditure and financing: 2023-24 budget, England - GOV.UK (www.gov.uk)

[2] QPSES - Q4 2023 - WORKING.xlsx (local.gov.uk)

[3] Local government finances: Impact on communities - House of Lords Library (parliament.uk)

[4] Councils warn of cuts to neighbourhood services – LGA survey | Local Government Association

[5] The survey had a 23% response rate that was largely representative of the sector both in council type and regional spread. It is likely that those who were most engaged in discussions regarding the potential of the use of AI were most likely to respond.

[6] Defined as perceptive AI, such as systems that recognise faces and fingerprints, or try and analyse images, audio or video, for example in the analysis of consultation responses or identifying car registration plates in the prevention of fly tipping. This includes sensing AI such as remote or continuous sensing through smart sensors; predictive AI, such as systems that try and make a prediction about an outcome for an individual, or try and assign people to appropriate service or system, for example predicting an outcome in services or assigning an adult social care treatment pathway; generative AI, such as systems that generate text or images, such as ChatGPT and DALL:E, and simulation AI, such as digital twins and agent based modelling.

[7] For more information on published cost savings, please see Swindon’s AWS case study on translation services and the development of their easy-read product, and regarding staff productivity - Microsoft’s case study using Barnsley of Microsoft 365 copilot.

[8] We recognise some of the great guidance that has been produced by central government and by leading research institutions, such as the Alan Turing Institute. We also welcome the collaboration with the Equality and Human Rights Commission and Information Commissioners Office on the development of compliance guidance for local government procurement processes. We are also convening spaces where councils can share impact assessments and good practice to avoid duplication and save precious capacity.

[9] There has been much discussion in the sector recently regarding a Local Government Digital Service, and what this could/should look like to support digital transformation in the sector. Whilst bigger than this proposal, this sandbox or lab could form a significant part of it. A centre for lcaol government digital could play a pivotal role in reducing the digital divide, addressing public sector reform, and promoting economic growth if local government is funded and empowered to be more innovative, technologically inclusive and sustainable.

[10] We note the Competition and Markets Authority recent update paper on risks associated with AI foundation models.

[11] Local Government uniquely already has several service areas where there is market dominance by a small number of suppliers. This includes planning, elections, adult and childrens social care case management systems, and in the delivery of revenues and benefits.

[12] The Parliamentary Inquiry into Large Language Models warned against a limited supplier LLM market and recommended fostering competition,particularly for UK SMEs. It also suggested collaboration between Government and the Competition and Markets Authority to achieve this. For more info, please see the LGA policy brief.

[13] 231122-lloyds-consumer-digital-index-2023-report.pdf (lloydsbank.com)

[14] House of Lords - Digital exclusion - Communications and Digital Committee (parliament.uk)

[15] The economic impact of digital inclusion in the UK (goodthingsfoundation.org)

[16] The role of councils in tackling digital exclusion | Local Government Association