UK councils are betting big on AI, but complexity could swallow the returns

Artificial intelligence has gone from boardroom buzzword to a budget line item in UK local government.

Recent Freedom of Information (FOI) requests to some of the UK's largest city councils confirm AI spending is climbing year-on-year, with projections pointing to significant growth over the next two to three years.

Councils are investing in workflow automation, predictive analytics, and digital collaboration tools, all in pursuit of the efficiency gains that the UK government at Westminster is demanding.

On paper, the direction of travel makes sense. The Prime Minister has suggested that AI adoption could save the UK economy £45 billion annually, and public sector AI contract spending hit a record £1.17 billion in 2025 according to Tussell.

For local authorities under relentless pressure to deliver more with shrinking budgets, AI is a natural place to look for gains. But making those gains stick requires getting the foundations right first

The complexity trap is already open

The assumption underpinning most AI investment is straightforward: deploy the technology, automate the process, reap the savings. But in practice, the picture is often more nuanced. Many councils are layering AI tools on top of already fragmented technology estates, legacy systems that do not integrate, platforms that duplicate functionality, and data sitting in silos that no single team can access in full.

This is a challenge facing organizations of all kinds, not just local government. A recent global study into software complexity found that organizations lose seven percent of annual revenue to complexity, and that one pound in every five spent on software is effectively wasted - consumed by unused tools, failed implementations, and hidden costs. Scaled across the UK, this complexity tax amounts to £32 billion a year in lost productivity.

The same research found that employees lose an average of 6.8 hours per week navigating complexity, nearly a full working day spent wrestling with systems rather than serving the public. For council workers already stretched thin, that is time they simply cannot afford to lose.

More tools, more problems

The instinct when facing a new challenge is often to buy a new tool. But for business leaders who don't have a clear strategy for how that tool fits into existing infrastructure, this can lead to additional risks that end up compounding the problem. Employees end up toggling between disconnected platforms, copying data between systems, and spending their energy making sense of conflicting information rather than acting on it.

For example, 53% of organizations have not seen the expected return on their software investments, and 77% of implementations run longer than planned. When vendor support falls short, as 32% of respondents reported, IT management teams are left to troubleshoot alone, diverting resources away from the strategic work that actually moves services forward.

For councils, the stakes are particularly acute. For every pound spent on technology that ends up underdelivering, a pound spent on housing, social care, or frontline services is lost. With this, AI that adds layers of complexity creates problems with both IT and public accountability.

Governance first, technology second

FOI responses also reveal a mixed picture on strategic readiness. For example, some councils have published formal principles for responsible AI use, while others are still developing their approach. The danger in this is that without clear governance frameworks, AI deployments risk being unable to deliver a coordinated program that delivers measurable outcomes under one vision.

Local authorities that get this part right will be those that start with the problem rather than the product. Councils should be ready to ask what administrative bottlenecks are costing the most time? Where are residents waiting longest for answers? Which internal processes generate the most duplicated effort? AI should be the answer to a clearly defined question.

Simplicity as strategy

When looking across companies, the most effective technological implementations are often the kind that people barely notice. They work away in the background, and let staff focus on the work that requires human judgement, empathy, and expertise. For councils, that means prioritizing platforms that integrate with existing systems, that are quick to implement, and that deliver value in weeks rather than years.

It also means being ruthless about consolidation. If multiple tools do overlapping jobs, they are not adding capability, they are adding confusion. The organizations that will extract the most from AI are those willing to simplify before they scale.

The opportunity for local government bodies in the UK is genuine. AI can transform how councils allocate resources, engage with residents, and deliver services. But realizing that potential demands discipline. Councils must resist the urge to accumulate tools and instead focus on clarity of purpose, strength of governance, and simplicity of execution.

The alternative ends up being more spend, more systems and more complexity. It’s a trap that the UK economy is already paying £32 billion a year to learn about. The councils that prioritize simplicity over accumulation will be the ones that make AI work.

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