The State of AI In The Public Sector

The Tusselle AI trucking spend report for 4th November 2025 highlights that public sector AI procurement in the UK has reached record highs, reflecting a surge in both contract value and interest in AI-driven logistics and operational solutions. This underscores an accelerating adoption of AI across government departments, with spending in 2025 alone surpassing previous years and total AI contract awards since 2018 exceeding £3.35 billion.

Public Sector Procurement Trends

• The report shows that 2025 is the biggest year on record for AI-related public sector contracts, with 366 awards by late October—a figure expected to rise further.

• Excluding outlier contracts (like the £1 billion deal with Microsoft in 2021), 2025 stands as the highest year for AI spend, reflecting strong government engagement in AI but a focus more on technical support than software procurement directly.

• Growth is especially prominent in areas like infrastructure, logistics, and operational automation, including trucking and transport, where AI is deployed to streamline processes and improve outcomes.

  
  

Insights on the State of AI

• Public sector trust and familiarity with AI are increasing, leading to long-term commitments to integrate AI into critical infrastructure such as logistics and fleet management.

• AI technologies are primarily adopted for operational efficiency, compliance, predictive maintenance, route optimisation, and fraud detection within trucking and supply chain management.

• Despite the growth, AI contracts account for only a small fraction (~2.5%) of the UK's public IT services and software spend since 2018, indicating significant headroom for further AI integration.

  
  

Implications for AI Maturity

• The surge in AI spending and contract volume signals a shift from piloting to operational deployment, with the public sector now actively embedding AI capabilities to drive logistics, compliance, sustainability, and digital transformation.

• The trend is expected to continue, with experts predicting sustained increases in AI procurement as government bodies build confidence and expertise in leveraging AI technologies for real-world impact.

• This rapid adoption is driving innovation, operational transparency, and efficiency improvements in public sector logistics—a critical testbed for large-scale AI benefits.

  
  

Overall, the Tusselle report demonstrates that the public sector is not only increasing its AI investment but is becoming more sophisticated in how these technologies are applied, particularly in complex sectors like trucking, where efficiency, compliance, and sustainability are paramount.