Report finds legacy tech & budgets hinder UK public sector AI

A new report by Cavell Group and 8x8 has revealed significant challenges facing the UK public sector as it seeks to modernise technology, implement artificial intelligence (AI), and enhance citizen engagement amidst tightening budgets and persistent legacy systems.

The 2025 UK Public Sector CX Report, based on the responses of over 400 senior decision-makers across local government, housing, healthcare, and education, highlights ongoing reliance on traditional communication channels, concerns around fragmented digital platforms, and a continuing focus on cybersecurity and compliance.

According to the research, email (74%), phone (68%), and face-to-face interactions (66%) are still the most common channels for citizen contact, outpacing newer options such as social media (52%) and live chat portals (45%). The prevalence of these traditional methods underscores the challenges the sector faces in adapting to digital transformation goals set out in government policy, including the AI Action Plan and wider tech overhaul ambitions.

The report details widespread frustration among public sector staff regarding the proliferation of disconnected platforms, with 31% of respondents identifying platform sprawl as their most significant internal communication obstacle. Only a minority have moved towards integrated, all-in-one technical solutions.

AI and data integration remain key priorities, with 47% expecting government policies to push for greater AI use within three years, and 74% anticipating increased integration with other public sector bodies by 2030. However, the pace of digital adoption is not matching the expectations and requirements set out by government strategies.

Security and compliance continue to be at the forefront of public sector strategies. A third (33%) of leaders reported that AI adoption has intensified their focus on data protection, while 34% of respondents identified improving cybersecurity and compliance as their main strategic goal by 2030.

The findings were commented on by Jamie Snaddon, EMEA Managing Director at 8x8, who said: "More than 80% of respondents are currently changing or intending to change their contact center provider in the next two years. That means there's a chance to deliver a better future for public engagement for the majority – but the clock is ticking."

Operational concerns raised by leaders include long customer wait times, the need for citizens to repeat themselves in different interactions, poor call quality, lack of comprehensive data reporting, and insufficient training resources for staff. These challenges highlight a broader need for unified solutions to enhance both service delivery and staff experience.

Joe McStravick, Vice President, EMEA Sales at 8x8, addressed these issues: "Public sector organizations are telling us they're at a critical turning point. There's a clear appetite to improve citizen services as expectations around AI, data, and omnichannel engagement delivery increase. But for many, delivery of the tools, and training on their use, is not keeping pace – and that's often down to budgets."

The report also explores sector-specific challenges. In healthcare, top concerns revolve around data security, rising patient expectations, and the demands posed by evolving regulatory requirements. The sector is under particular pressure to improve integration with government IT systems and facilitate cloud migration.

In the education sector, issues include reliance on outdated collaboration tools, an absence of shared knowledge systems, student data security anxieties, and prohibitions on AI use. Email and phone communication are still dominant, reflecting broader hesitance towards rapid digital adoption.

Local government respondents cited the costs associated with digital transformation, poor network quality, and resistance to automation as significant barriers. Many prioritise transitioning to cloud-based contact centres as a strategic objective.

Among housing associations, leading challenges include fragmented communication channels, limited integration with external services, concerns regarding platform and system migrations, and the operational difficulties created by a dispersed frontline workforce. Many still rely on consumer messaging apps for frontline communication, with customer data security remaining a major issue.

Finbarr Begley, Senior Analyst at Cavell, noted: "While there is no shortage of ambition, the reality is that fragmentation, outdated technology, and security concerns are still widespread. The issue is budget, which means the path forward will demand strategic focus, better vendor partnerships, and a renewed investment in people and training. With the right platforms and policies, public sector organizations can not only meet rising expectations – they can exceed them, creating smarter, faster, and fairer services."

The report found 59% of public sector leaders view AI as the most transformative influence on contact centres by 2030, but most organisations are at the early stages of implementing AI at scale. While attention has been given to improving call routing, staff training, citizen engagement and self-service capabilities, concerns around infrastructure limitations, security, cloud migration, and regulatory compliance remain significant in decision-making processes.

Key criteria for selecting technology vendors include product functionality, brand reputation, and expertise in compliance and integration. The average timeframe for changing a contact centre provider across the sector was noted as one year and three months.

The report also highlighted the importance of unified customer experience (CX) platforms. Snaddon added: "These challenges speak to why unified CX matters more than ever. Public service teams want to deliver better outcomes, but fragmented systems and inconsistent citizen experiences hold them back. A single secure, AI-powered CX platform can give them the data, insights, and flexibility they need – whether that's streamlining calls, improving accessibility, or helping mobile teams stay connected in the field."

The survey forming the basis of the report was conducted by Cavell Group with 401 senior decision-makers from non-central government organisations across the UK in January 2025.