AI is transforming local government, from streamlining services to cutting costs. But councils must balance efficiency with ethics, transparency, and citizen trust to ensure real, measurable benefits, says Matt Culpin, chief product officer at IEG Group.

At the beginning of this year, the Department for Science, Innovation and Technology (DSIT) released its AI opportunities action plan, which outlined how it could transform public service delivery and how citizens interact with government. But guidance on what this will look like exactly for local authorities is minimal. Many local authorities are already using AI tools effectively, but with pressure to increase adoption whilst still maintaining the trust and quality of service within the communities they serve, this may lead to some tough decisions.

There’s an overwhelming choice of AI tools available, and although the report goes some way to explaining the benefits, it’s still not clear which services will help and which will hinder. What are the different types of AI? How can they be applied and are they ethical? And most importantly, how can authorities make sure new AI initiatives deliver meaningful efficiency savings?

AI in Action: Enhancing local government services

AI assistants are already being used within local authority customer portals, allowing residents to ask questions, upload files or images, and receive real-time answers.

Integrated systems enable customers to raise service requests simply by asking questions in natural language rather than filling out lengthy forms. This approach can also be adapted for voice interfaces in the future, improving accessibility for all users.With service requests, each form must be carefully maintained, designed to work across devices, and understandable to residents who may not know the specific terminology used by the council. Typically, these forms trigger workflows that apply service-level rules, integrate with back-office systems, and route requests to the right teams.

Agentic AI can reduce reliance on online forms by enabling residents to interact through conversational interfaces that understand their intent. For example, instead of completing a long form to report an abandoned vehicle, a resident is able to simply describe the problem in everyday language, which the system interprets.

By adopting agentic AI in these ways, local authorities can modernise digital service delivery, reduce administrative burden, improve efficiency, and better meet residents’ expectations in an always-on, post-pandemic world.

Ethical Considerations in AI

As AI becomes increasingly embedded in public services, ethical considerations become critical. Ensuring AI is transparent, accountable, and fair is essential for maintaining public trust.

People need to understand how AI makes decisions, which means systems must be transparent and explainable, both to officials and to the public. While AI can help with decision-making, it shouldn’t replace human judgment entirely. AI must be tested to ensure it doesn’t favor one group over another, especially when it comes to marginalised communities. The data we train these systems on needs to reflect the diversity of the population so that everyone gets a fair outcome.

Privacy and data security matter too. Governments must follow regulations like GDPR, limit the amount of data collected, and ensure personal information is well-protected. Beyond the technical side, building public trust in AI is about open communication and bringing citizens into the conversation.

When people feel informed and involved, they’re more likely to see AI as a helpful tool rather than something to fear.

Barriers to adoption

Despite AI’s benefits, a major barrier to adoption in local government is concern over handling personal data. Councils are cautious about sensitive information being used to train third-party models or processed outside secure environments. Questions around storage, access, and repurposing create hesitancy, especially with cloud-based tools.

To address this, councils should seek explicit assurances that personal data stays within their Azure tenancy, isn’t used for public model training, and meets GDPR requirements. These commitments can be formalised in Data Protection Impact Assessments (DPIAs), clear terms of service, and documentation confirming data is processed only in the customer’s Azure region with tenant-isolated storage and compute.

AI’s Return on Investment (ROI)

While the potential of AI is vast, its value must be demonstrated in measurable terms. Local authorities can measure AI ROI by tracking cost savings, efficiency gains, and citizen satisfaction against clear benchmarks. Metrics like reduced processing times, automation savings, or improved revenue highlight value, while qualitative benefits like better citizen engagement and data-driven decisions add impact. Weighing these benefits against total costs, including implementation and maintenance, ensures AI projects meet both immediate and long-term goals.

AI’s ability to reduce manual work, streamline processes, and improve service delivery will continue to be crucial as budgets tighten and demand for public services grows.

The journey of AI in local government has only just begun. While challenges remain, the benefits of AI are already becoming clear in streamlining operations, improving service levels, and driving cost efficiencies. However, it is crucial that the entire public sector adopts AI ethically and responsibly to ensure it delivers value in a way that is fair, transparent, and accountable to the communities it serves.

If you found this article useful, then check out: 10 ways councils are using AI to transform public services.