The upcoming Spending Review will show how bold the government is willing to be to deliver its growth mission.
After more than a decade of constrained budgets and chronic underinvestment, the demands for new spending are substantial. Every department has a case for more funding – and many of those cases are justified. But not everything can be funded. To govern is to choose.
This Spending Review cannot just be an exercise in balancing the books. What is needed everywhere is growth-enhancing investment.
Here are five areas that the government should be focused on, and ten specific cases for investment.
Unleashing Public-Sector Productivity
With tight budgets and growing service demands, the UK cannot afford to keep throwing more money at outdated delivery models. Artificial intelligence offers a powerful opportunity to free up staff time, improve service quality and reduce long-term costs. But real gains will only come with serious investment in infrastructure, capability and coordination.
The government has made a start. The “digital centre of government” is up and running. The AI Opportunities Action Plan lays out a sensible set of priorities. The Spring Budget earmarked £3.25 billion for transformation. But the ambition and scale still fall short of what’s needed. This Spending Review should go further – and faster.
1. Fund a bold AI rollout across the public-sector workforce.
AI is already being deployed in the private sector to automate routine work, deliver real-time insights and augment frontline staff. The public sector should be no different, as the government has already suggested. In The Potential Impact of AI on the Public-Sector Workforce, TBI estimates that investing £4 billion per year across the public sector could yield £11 billion in net annual savings by the end of this parliament – rising to £40 billion by 2040. The Spending Review should back a cross-government AI rollout plan, with targeted funding for tools, implementation support and service redesign, building on the principles set out in Governing in the Age of AI. Alongside central government services, this should include seed funding for a Devolved AI Service so local government can build the capability and capacity needed to unlock up to £8 billion in productivity gains for councils.
2. Invest in digital talent – including a network of National Data Librarians.
The government needs technologists, yet half of newly advertised digital roles in government go unfilled. The Spending Review should fund the commitment to benchmark public-sector digital and data salaries at 75 per cent of their private-sector equivalents. One crucial area of work that should be strengthened is data management. The government should support a new network of National Data Librarians, embedded across departments to support the emerging National Data Library. For less than £10 million a year, this would unlock better data use across the system and provide the foundation for AI-enabled reform.
Strengthening the Digital Backbone of the State
The government services of the future will rely on the right digital infrastructure across the public sector. The UK has made progress with GOV.UK Wallet, OneLogin, and efforts to improve interoperability between departments, but much of the system remains fragmented, outdated or underpowered. Many legacy systems are decades old and unable to support joined-up delivery or real-time decision-making.
The Health Foundation estimates that digitising the NHS could cost £21 billion. But that’s just one example. In this Spending Review, the government needs to show it is committed to completing that foundational work and taking the next steps to build a smarter, more integrated and responsive digital state.
3. Deliver a fully integrated digital ID for citizens and businesses.
A secure, interoperable digital-ID system should be a cornerstone of modern government. For citizens, it would streamline access to services, reduce fraud and enable more personalised and responsive support. TBI’s Economic Case for a UK Digital ID estimates the infrastructure would cost about £1 billion to build and £100 million per year to run – but could deliver £2 billion in annual savings once fully operational. This makes it a good candidate for the government’s existing £3.25 billion Transformation Fund. A Business Digital ID would provide every firm with a unique identifier and single access point for government services, cutting red tape, reducing compliance costs and enabling more tailored support. As we set out in A Pro-Growth Roadmap for Business-Tax Reform, this would be particularly valuable for small and medium-sized enterprises (SMEs), helping them access support they are often eligible for but unaware of.
4. Build dynamic digital infrastructure to support workers and businesses in the AI era.
AI has the potential to transform how people work and how firms do business. Labour-market churn is likely to rise as automation disrupts traditional roles and creates demand for new skills. The government’s role should be in building new systems to support transition. As we set out in The Impact of AI on the Labour Market, this includes early-warning tools to flag disruption, personalised retraining pathways, and AI-powered job-matching platforms to help workers move into growth sectors. At the same time, global trade is becoming more complex, shaped by both technological change and volatile geopolitics. We have called for a major upgrade to the UK’s trade-facilitation systems – including AI trade advisors, supply-chain data to streamline customs checks and blockchain-backed platforms to cut paperwork and delays – all aimed at making exports faster, simpler and cheaper, particularly for SMEs. One sign of the government’s ambition will be the paused Single Trade Window programme. Restarting it or backing a clear alternative would send a strong signal of intent.
Improving National Health to Improve National Wealth
Poor health is one of the main reasons for high levels of economic inactivity, with hundreds of thousands of people out of work due to long-term conditions. If the government is serious about raising living standards and boosting growth, it must treat health as an economic priority as well as a social one. That means funding not just the NHS’s physical infrastructure – including its £14 billion maintenance backlog – but also investing in digital systems, data platforms and innovative treatments.
5. Confirm funding for digital transformation, including the single patient record.
Delivering a modern, AI-enabled NHS will require better data infrastructure and digital tools across the system. The government has made two important commitments: £600 million for the new Health Data Research Service (closely resembling TBI’s recommendation of a National Data Trust), and the introduction of a national single patient record. Each now needs to be backed with the necessary funds. As TBI has set out, these initiatives will enable proactive care, more precise treatment and world-leading real-world evidence for research.
6. Invest in prevention – including a new service to “Protect Britain”.
Prevention is the only route to easing long-term pressure on the NHS and improving population health. As we argued in Moving from Cure to Prevention and The Economic Case for Protect Britain, the government should establish a new arm’s-length service dedicated to preventative care. It would sit alongside the NHS and deliver targeted interventions with clear economic payoffs – starting with more consistent delivery of proven treatments such as statins and accelerating the rollout of promising innovations such as anti-obesity medications, as described in our recent report. The Spending Review should provide the investment needed to turn prevention from ambition into delivery.
7. Fund digital community care, including intelligent navigation via the NHS App.
To support the shift from hospital to community care, patients need better tools to navigate the system. One of the most effective would be intelligent navigation embedded in the NHS App – a feature TBI has previously proposed. Using AI, this tool would guide patients to the most appropriate local service, support them in self-managing conditions and reduce unnecessary pressure on hospitals. It would also help unlock the potential of the NHS’s upcoming neighbourhood teams and expanded community pharmacy roles. The Spending Review should back this kind of digital infrastructure as part of a wider shift toward more accessible, decentralised care.
Investing in the UK’s Innovation Frontier
The UK has scientific depth and real strengths in research areas such as AI and life sciences, but its innovation system still lacks the institutions and infrastructure needed to consistently turn breakthroughs into economic advantage. This Spending Review should prioritise investment in the capabilities that can ensure British businesses are equipped to lead, not lag, in the technologies that will shape the global economy.
8. Seed Lovelace Labs: a new model for disruptive invention.
The UK needs public institutions designed for breakthrough science. For more than two years, TBI has advocated for the creation of Disruptive Invention Labs: long-term, interdisciplinary research institutes focused on solving hard problems and building new general-purpose technologies, as first proposed in A New National Purpose. The government should begin by establishing the Lovelace Society, a small founding unit with £2.5 million to scope opportunities and recruit initial leadership. Over time, a national network of labs could be backed by £200 million per year in core funding – enough to support two or three world-class institutes and a set of smaller affiliated labs.
9. Fund the curation of public datasets for science and innovation.
In the AI era, data is a strategic asset – and the UK public sector holds a vast quantity of it. But much of that data is underutilised, fragmented or poorly maintained. As part of delivering the AI Opportunities Action Plan, the government should fund the curation of high-value datasets for research, innovation and commercial use. Government capacity in this area is currently overstretched, with no clear home for the work. The government should fund an initial scoping unit of about five domain experts (these could be early-career scientists) within UK Sovereign AI. Their remit should be to identify the highest-value datasets and begin assembling consortiums of scientists to undertake the creation of these strategic datasets. The work could be seeded with £1 million of funding, with an expectation that the eventual capital investment to build datasets will be about £100 million of public investment, to be added to with private money.
Reinvigorating Strategic Investment in the Green Transition
The UK has set ambitious climate goals, but those ambitions will only be credible if matched by funding and delivery. The Spending Review is a chance to set out how the government plans to turn targets into outcomes – and how it will invest not just in meeting its commitments, but in using the net-zero transition to drive growth, innovation and resilience.
10. Fund clean power, climate tech and adaptation in a targeted way.
The government should use this Spending Review to set out how it will deliver clean power, including the role of GB Energy. It should also back the transformational technologies that will be essential to the UK’s energy future, such as protecting funding for carbon capture usage and storage, and supporting clean-tech innovation in areas such as small modular reactors, where public investment can help accelerate commercialisation and crowd in private capital. Adaptation must also be treated as a strategic economic priority. The economic costs of delay are mounting, and resilience planning must become a core component of national growth strategy. At the same time, government must be disciplined in how it allocates public funds. As set out in our recent report on industrial strategy, investment should be focused on sectors with genuine growth potential and where the UK has a comparative advantage. One test of that discipline will be how the government handles British Steel. The cost of stepping in to support the company is yet to be announced, and will need to be judged by the extent it represents a strategy for growth, rather than a dogged desire to stave off decline.
A Test of Intent
This Spending Review will be difficult. But even in tough times, there is scope to do a lot. Applied in the right way, government spending can provide the tools to build a stronger economy, better public services and a healthier, more productive country.
Making tough choices will be necessary. Making the right ones will be essential.