The Public sector’s digital deficit: What’s holding it back?

The role of digital in the UK’s public sector is growing. Yet it pales in comparison to the private sector – hardly the best starting point to meet the Prime Minister’s ambition to turbocharge AI. It’s not the only unfavourable point of comparison: digital recruitment, retention, pay, and representation at senior levels all lag the private sector. Ahead of our webinar at Digital Leaders’ Public Sector AI Week, we’ll assess the problem below and look for answers.

Across the public sector workforce, including central government and agencies, the proportion of digital and data roles has doubled. Just 3% in 2021, the average is around 6% today¹. Despite this, some of the largest operational departments (MOD, HMRC, Home Office, DWP) average less, at around 5%². In local government, just 2% of employees are in digital or data roles³. For comparison, digital roles account for 8-12% of positions in regulated private sector industries. 

t's not merely a numbers problem. The public sector struggles to consistently attract and retain top digital and data talent. Compensation is below the private sector. A typical central government cyber specialist, for example, earns around 35% less than their private sector peers. Civil Service CISOs can expect to earn, on average, 40% less than their private sector counterparts. 

To compound the issue, public sector digital leaders are not well represented at executive level, often reporting lower in their organisations, relative to policy, operational delivery, and finance colleagues. 

A productivity problem:

The relative lack of digital and data expertise in the public sector is one of the reasons why public sector productivity remains such a hot topic. Since the pandemic (when everyone’s productivity fell off a cliff) the private sector has seen a 1.3% productivity uplift. The public sector is 5.7% less productive than the private sector, and remains 6.3% below 2019 levels⁴. 

While accepting that it’s not always easy to compare like-for-like productivity across the public and private sectors, it remains the case that, as the Government itself noted, high-performing private sector organisations achieve a ratio of 4:1 technical to non-technical roles in their permanent staff³. In the Civil Service, the current ratio is closer to 2:1. 

Answers in AI:

In January 2025, the Prime Minister announced his blueprint for a “decade of national renewal”. Achieved through AI, the blueprint extends beyond the public sector, yet harnessing AI to improve productivity across public services is a major element of it. 

Keir Starmer’s blueprint builds on the recommendations of the AI Opportunities Action Plan⁵, which states: “The public sector should rapidly pilot and scale AI products and services and encourage the private sector to do the same.”

Webinar: How AI can bridge the Public Sector's digital skills gap

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Opportunities identified include:

• Using AI assistants to carry out repetitive tasks, freeing up to 20% of workers’ time. 
• Drafting structured reports and forms with AI to cut final document production times by 20-80% in professional services. 

• Automated threat and anomaly detection, already being deployed by police forces, can help clean up social media. 

• AI assisted assessment and diagnosis has the potential to improve productivity in healthcare and educational settings. 
  
  

How to empower digital in the public sector:

The blueprint includes an ambition to build homegrown AI skills and talent, but what’s missing is the talent in volume now that can help embed the blueprint in the UK’s public sector. 

For that, the Government needs to do the following: 

1. Develop and work to an integrated cross-government workforce strategy: Without it, the public sector will continue to underestimate the specialist skills it needs, and this will prevent the Government realising its long-term productivity and efficiency gains. 
2. Increase digital recruitment: Recognise the under-utilisation of digital skills within the public sector to-date, and recruit the talent needed to be able to leverage AI tools effectively. It’s important that a significant number of these are ‘in-house’ hires. For too long, headcount restrictions intended to constrain spend have shifted cost and talent to third-party contractors, managed services and IT consultants, further degrading institutional knowledge.
3. Pay the going rate: Pay that is 35-40% below the private sector rate is unlikely to ever bring in the quality and volume of fresh talent required. And the talent that is brought in needs to see clear and attractive routes for progression.
4. Give digital a seat at the top table: With so much resting on leveraging digital technology, it’s long overdue that digital is represented at executive levels of the public sector. 

Public Sector AI Week:

It’s encouraging to see that at least some of the above is already happening. At the upcoming Public Sector AI Week, AND Digital will be part of the conversation to show how we are helping to drive innovation and excellence in the public sector. Join us online, 10 March, 13.00pm here. 

1. https://www.gov.uk/government/statistics/economic-estimates-employment-and-earnings-in-the-digital-sector-january-2023-to-december-2023/economic-estimates-employment-in-the-digital-sector-january-2023-to-december-2023
2. https://moderncivilservice.blog.gov.uk/2024/02/20/government-is-one-of-the-largest-employers-of-digital-and-data-professionals-in-the-uk/
3. Gov.UK – State of digital government review
4. IFS – The fiscal implications of public service productivity
5. AI opportunities action plan