Digital Economy Dispatch #295 -- Rethought, Not Restructured: Britain's AI Strategy After DSIT

Since Monday I have been asked a version of the same question by clients, colleagues, and journalists: is scrapping the Department for Science, Innovation and Technology a disaster for British AI? My answer keeps disappointing people. The department was never the strategy. What matters is whether the new arrangement gives the centre of government the one thing DSIT never had, which is the power to make other departments buy and operate differently.

Let me be clear about the strength of the case against Andy Burnham's decision, because it is not a weak one. techUK and the Startup Coalition wrote to the incoming Prime Minister before the announcement, warning that dismantling DSIT was, in their words, "the wrong change at the wrong time". Matt Clifford, who advised Keir Starmer on AI opportunities, called it a mistake. Sarah Munby, the founding permanent secretary of DSIT, made the most substantive objection: the department's real value was in treating data, digital capability and AI as a single integrated problem rather than three separate ones. In the House of Lords, the crossbench peer Lionel Tarassenko put the cost in terms the sector understands, warning that a reorganisation of this kind takes a year and that "12 months is an eternity in AI".

Bryan Glick, editor-in-chief of Computer Weekly, has written the sharpest version of the critique, and I would encourage you to read it. His conclusion is that DSIT mattered because it existed, as a signal that government took technology seriously. That is a real argument, and I do not dismiss it. Investors, founders and international partners read structure as intent, and the signal sent this week was not a good one.

But notice what Glick's own piece concedes along the way. DSIT never functioned as a coherent department. It was poorly led. It gave up trying to recruit a chief digital officer and ended up folding the responsibility into the permanent secretary's job. At one point most of its senior digital leadership was in interim posts. A department whose defenders are reduced to arguing that its existence was the point has a problem that no machinery of government change was going to solve.

Where the Leverage Sits

The argument I have been making for two years, and the core of “Making AI Work for Britain”, is that the British state's AI problem is not visibility or ambition; it is buying power. Consolidate demand, diversify supply. Behave like a smart buyer rather than a grateful one. Design every contract for exit before you sign it. Become an intelligent user of AI.

None of that was ever within DSIT's remit. A mid-weight sponsor department can convene, publish, and cheer. It cannot tell the Ministry of Justice how to run a procurement, and it cannot make the Treasury attach conditions to a spending settlement. Demand consolidation is a Cabinet Office and Treasury function, or it is nothing at all.

Which is why my reaction to the detail of this week's changes is more complicated than the consensus. Responsibility for AI strategy, public sector AI adoption and the AI Security Institute is moving into the Cabinet Office, supported by a new AI taskforce and a prime ministerial adviser. Kanishka Narayan attends Cabinet as AI minister. Reported in isolation, that is the centre taking ownership of exactly the functions that need central authority. Baroness Anderson, responding for the government in the Lords, argued that science and technology should not sit in an isolated department but be embedded across Whitehall. On the narrow question of AI adoption, she is right, and the sector should be careful about arguing otherwise simply because it dislikes the messenger.

The genuinely damaging decision is a different one, and it has attracted less attention than it deserves. The Government Digital Service is going to the Department for Digital, Culture, Media and Sport, separated from the AI adoption agenda now sitting in the Cabinet Office. Raoul Ruparel of the BCG Centre for Growth called this strange, and that is generous. GDS is the closest thing Britain has to a working model of consolidated demand: common platforms, shared standards, a spend control that made departments justify duplication. Detaching that machinery from the AI programme, and parking it in a department with no historic grip on Whitehall spending, removes the delivery arm from the strategy at the precise moment the strategy claims to be about delivery.

Three Tests We Must Apply

So rather than argue about the org chart, I would judge this government against three questions over the next six months.

First, does the centre control the money? An AI taskforce with no authority over spend controls or Crown Commercial Service frameworks is a convening body with a new letterhead. If the Cabinet Office is serious, we will see AI conditions attached to departmental spending settlements.

Second, who now owns supply diversification? With sector sponsorship in the business department and buying power in the Cabinet Office, market shaping has no obvious home. The £500m Sovereign AI Fund already has governance split across two departments. Left unowned, the default outcome is a narrower supplier base dominated by three American hyperscalers, and nobody will have decided it.

Third, what gets signed while the furniture is being moved? This is the point I would most want a minister to answer. Reorganisations do not pause procurement. Contracts signed during an 18-month transition, when nobody is quite sure who approves what, will still be running in 2032. Silent lock-in does not wait for a machinery of government exercise to conclude, and exit-by-design is not a clause you can add retrospectively.

Where to Watch

The tech sector's response this week has been about status, job roles, and responsibilities. That is understandable and largely justified, but it is also the argument least likely to change anything, and it hands the government an easy reply about not seeing technology as an isolated issue.

The first Burnham Budget is expected between mid-October and late November. That, rather than the departmental map, is where we will find out whether AI has been elevated or quietly pushed into the long grass. If the Budget contains conditions on how departments buy AI, a named accountable owner for public sector adoption, and money attached to a published delivery record, then the centralisation was real. If it contains a restated ambition and another growth zone, we will know that AI got a chair at the Cabinet table and very little else.

A minister without a department needs a published mandate, a named senior official accountable for delivery, and a public record against which progress can be judged. Those are reasonable things to ask for, and asking for them is more useful than mourning a department that was not working. Britain has now restructured its AI machinery twice in three years without once rethinking what the strategy is actually for. The boxes have moved. The buying has not.

So, the broader question that arises is a practical one. If you sell to government, or buy on its behalf, or advise anyone who does: who is signing your next AI contract, and do they know yet who they report to? If the answer is unclear, that is not a Whitehall problem. It is your commercial risk, and it starts now.