Can AI save the public sector?

That narrative somewhat holds us back. There is a general risk of version in the public sector and some of that makes sense because there are serious human risks associated with deploying AI in these contexts. We are saying that nonetheless despite the fact that there hasn't been a problem of that sort, you understand the risk of version. Probably one of the most consequential technology decisions that the MOJ has made in years, if not decades, tested our technology, then told us they're building their own technology. The sort of the safety level is not just about, you know, which is better, which is safer. You have to hit this tipping point, I think, where people are so very, very reassured before they hit the accelerator pedal on it. Hello, welcome to the Rest is Money with me, Robert Preston. And with me, Steph McGovern. Now today we are talking about AI being used in council services. We've got the CEO of Beam on Alex Stephanie and he's really interesting because he's developed this business, which the tech of it is used by two thirds of councils to help them be more productive. So basically what this Beam technology does is it documents meetings and then it kind of powers advice and insights for those working in areas like working with helping people find jobs or helping people who are homeless, find somewhere to live. And those are the types of people who are dealing with lots of information being thrown at them and not much time to then process it all and write the correct documentation needed to get them on the right track. So it's basically doing all the admin work that often holds people back and it's a business that he's seen really grow and as I say two thirds of councils are using it. But what's interesting about talking to him, Robert, is the carry on is what I want to call it when it comes to trying to get central government to take on this innovative technology. That's exactly right. And, you know, we've talked so often on this podcast and ministers talk so often in public about how the productivity is going to be. And the productivity of the public sector could be massively improved by adopting new technology, especially AI. So talking to somebody at the cul face about how easy it is to sell AI to the government is definitely a conversation worth having. By the way, we also point out that, you know, when you are implementing a new technology, particularly artificial intelligence, there are risks and we have seen actually around the world over the last few years. You know, implementation, you know, for example, you know, in the state's facial recognition, I mean, we met lead to, you know, the wrong people being arrested in the Netherlands, the rollout of a particular set of algorithms, which was assessing whether or not people deserve to get certain kinds of benefits. And actually a lot of people lost money, they should have been given. So, you know, there are risks when it comes to rolling out AI, but there are also significant benefits. And so, you know, this interview is all about trying to assess whether the government is managing what will be an inevitable reengineering of the public sector, whether they are managing that in an optimal way. So here's Robert's interview with Alex, Stephanie, CEO of Beam. Our story is pretty unique. So we started out actually delivering frontline services ourselves with teams of case workers. We had councils all over the UK, chat GPT was out, and we realized, look, why don't we just make a technology that supports our teams to do all their documentation? That was what the infrastructure was built on in the first version. So they could record the meeting, press a button, and hey, presto, they've got a really accurate casenite. By this time the frontline team had manually written, I think about 600,000 casenites, right, typing them out, letter by letter. So very pleased to have this technology. And within a few weeks we could see that they were happier. Our friends and colleagues were cheerful to not have to do this type of manual work that none of them really resigned, you know, had signed up for. And they were also able to see far more people with all of the time that that liberated for them. And so we realized that this is enormously applicable to lots of other frontline teams. So we began supplying councils. Fast forward to today, two thirds of councils use our tech for their social care teams. And it's used for about 130,000 meetings every week. Essentially just, you know, it's a, it's a transcription service. So it creates very specific types of documentation. So we've produced around 2000 types of social services or frontline services documentation. But it does a whole bunch of other things as well. So it powers advice and insights using what we call a knowledge base of guidance or legislation that's relevant to that specific organization. We're also providing AI voice agents. So that means that say it's the middle of the night and that lady that we mentioned before has become homeless. She can phone a number at three in the morning and she can get advice there and then. Then what the technology does is it will assign the risk to that. And then when someone gets to work the next day, they can see OK, there's been 18 conversations overnight here are the two top priority ones. Here's a summary of what the situation is and they can get on the phone as soon as possible and and and moving forward. We're delighted to say that this year the rest is money is being powered by octopus energy and that means we get to welcome back the founder of octopus energy Greg Jackson. I'll see you all of it time for a quick fire question. What's the one bit of advice you give a young entrepreneur? Maybe it's stuff that people don't normally talk about. Don't be arrogant, but do be confident. Almost by definition as an entrepreneur, you're doing stuff that other people didn't think is going to work or they've discounted or dismissed. So you have to be confident to believe in your own ideas and your ability to deliver them. But you should still listen to everything else and learn from them and not be arrogant. I think that is the secret to be able to build something special but successful. Thank you for powering this episode of the rest is money. Particularly with sensitive notes of this sort, there's always going to be anxieties that it won't be perfect that there will be mistakes. How do you minimize those? Well, a few aspects to that. So the first thing is that this is not replacing frontline workers. So this is about augmenting frontline workers. So instead of having to create documentation from a blank piece of paper, they're able to get something out of the box within about three seconds of the meeting ending that's nine out of 10. And then they spend their time reviewing and improving that documentation where they see any potential from improvements. So you don't have any products of that sort that actually replace, you know, you're not in the business yet of creating agents of an AI sort that replace people. No, we're about augmenting very overstretched teams. So you can be almost anywhere in the world and you can be speaking to people in frontline services and realize that they are struggling to hire people. They're struggling to retain people. And that's because these jobs are often very difficult. It's really, really hard work. It's really stressful. They're often not tremendously well paid. And as discussed, they're often characterized by very high levels of administrative work. I think you said you're working with someone like 70% of local authorities. Do you yet have any contracts with central government? Not yet. So in terms of central government, what happened was some actual probation officers got in touch and said, this looks really great. We're smothered in paperwork and our jobs are really, really tough. Can we use it? So we did a pilot with the Ministry of Justice. Like most of these types of pilots, they're very lost making for the companies. So we knew that it would cost us well over 100,000 pounds, maybe 200,000 pounds to actually do this piece of work. So you do this at your own risk? We do that on risk and we also offer to provide the technology at cost as well. Why are you offering it at cost? We'd spent years trying to work with central government and we thought we really don't want cost to be any kind of barrier. So probation piloted this tech. There was a glowing assessment of it, which found that it was leading to a 70% reduction in time spent on admin. 100% of people found improvements in their documentation. While the pilot was ongoing, M.O.J. requested lots of pretty commercially sensitive documents about how our technology is structured and how we adopt and train people on it. They then told us that they're going to be building their own version of it and also going to be heavily involved in evaluating which one they preferred. And we were kind of worried that it wouldn't be a completely level playing field. To be honest, it felt a bit like they were marking their own homework and that maybe it wouldn't be fully objective. So I do remember when I was talking to David LaMia about it, he personally very energized. by the prospects of adopting AI to improve the efficiency of the justice system. In fact, he's now talking about it in terms of court reforms as you know. And I also remember when talking to his officials at the time that they absolutely insisted there was a level playing field between you and their internal team. I mean, I guess my point is just a more general point, which is this issue around, you know, there are definitely strong public policy reasons why you need to encourage, I'm not making a case for you, but just in general, you know, it really matters that procurement is a tool of industrial policy in this country. And that means using procurement to actually create a more vibrant growing tech sector. Well, I guess on that point of procurement, it is probably worth saying that there wasn't a procurement for the technology for probation officers. Probably one of the most consequential technology decisions that the MOJ has made in years if not decades, and they didn't go to procurement. I think it would have been a good, good idea if they had. So what was it that it was, if it wasn't to procurement, what the hell was it? They tested our technology. They then told us they're building their own technology. And then they told us that they wanted to use their technology, which still hasn't been rolled out widely. And we've tried to understand some fundamental things about how they chose their technology. Obviously, we spent, you know, the best part of a year working on it, and it lost a lot of money doing so. But ultimately, they don't answer the questions. We did have a meeting with them, which they cancelled at the last minute. So it's difficult to say how fair it was. One hopes it was, of course. Alex, tell us more to talk to you about. We're going to go to a quick break. But after that, we will really drill down into why there is so much resistance within the government to backing home-grown British tech talent. But it seems to me there is another issue, which when we talked about quite a lot of the podcast, which is, you know, we do have in this country a really very lively technological sector, mostly sort of small, medium, growing companies. And if you look at, you know, essentially faster growing economies across the world, one of their characteristics is that you have public sectors that are imaginative and creative in favoring successful local growing businesses. Actually, for years, the British government has talked about trying to procure from businesses like yours. But then in practice, it doesn't seem to happen. So, why is it in the end, do you think? I mean, you've done very well with local government. But why do you think central government, you know, routinely favors big tech, routinely favors the likes of Microsoft, for example. But a company like yours struggles to get a foot in the door. Very happy to speak to that. But maybe let's just take a step back and ask the question, you know, why does this matter? Which I think is, you know, not obvious always. And we are what you would call a GovTech company. Now I'm sure your listeners have heard of FinTech, we're GovTech. So what does that mean? It means that we supply largely government customers. Okay, we build technology for government customers. Now I think you want to have a vibrant GovTech sector for at least three reasons. You know, the first is that the more companies you have building technologies, ultimately the more competition and the greater likelihood that people who are delivering these crucial public services are going to have good technology. That's going to be driven by competition and everyone benefits when people have good technologies. Ultimately, we're paying taxes for that. The second reason is growth. Now GovTech is really interesting because what we're doing is fundamentally creating economic growth because we're a group of businesses, but we're also allowing the government to be more efficient to avoid new productivity. So you can think about GovTech as a kind of double whammy for growth. And that's why, you know, we need to really encourage the sector because growth is what's going to pay for our schools and hospitals and so on. And then the third reason is I think it's important that we have internal capabilities when it comes to these, you know, fundamental technologies and services. If we are, as you say, just relying on, you know, foreign built technologies that doesn't put us in a great position in the long run. And I think you'll write that it can feel as if UK technologies are not first choice. In fact, maybe they're not even second choice. But is it just because the officials who are in charge normally of the procurement process are just risk of us that, you know, broadly, it's quite hard. You know, if you're buying from Accenture or if you're buying from Microsoft, everybody knows the brand. It's sort of tried and tested. The risk of you being criticized for it going wrong, even if it does go wrong, is sort of minimal because then they'll say, bang, I'm a second. You know, I was either to know that, you know, this particular contract was going to go wrong given the reputation of the company. Is it just that they are just terrified of company like yours, which they've never heard of before failing and therefore they're not going to take the risk? On the one hand, you have politicians who authentically want UK AI champions. I have no reason to doubt that is the case for the Prime Minister and many other people and many, many people in civil service. So why isn't the Able effectively to push that down the chain into actual contracts? You're right that the reality of companies like us is sometimes that first choice is US tech. Second choice is let's build it ourselves. Third choice is, okay, if we must, let's work with a UK startup. Now why does that happen? I don't think it's a universal thing across the civil service, but I think that there are some pockets of the civil service that are just not on board with that. Is it that they resent the fact you're probably going to make a fair bit of money out of it? Is there an anti-commercial thing going on? It's difficult for me to know. If they'd chosen you, you could have rolled that out to their 9,000 probation officers, the ones who haven't got it at the moment. Yeah, they'd have it now, would they? Absolutely. Yes, they would have had it in weeks as it is millions of pounds of taxpayer money has been spent to replicate technology that already exists. But the main thing is that every single day that passes millions of pounds of taxpayer money is also squandered because people don't have modern technologies. You will have to ask them why they made that decision. I think we know more, we and every other company has absolutely no right to any government in contract. But what we all do need as a country is to make sure there's a level playing field so that the right decision is objectively and fairly made. By the way, I think it's also important to note that some of the time, it's exactly the right thing for the public sector to build their own technology. It's certainly not always the case that they should be relying on the private sector. In terms of what your technology can do, anybody who's used to go into a hospital recently or go and see a GP or indeed had a deal with the police, we still see in those organisations astonishingly clunky processes for making notes, taking witness statements or writing down the symptoms of a patient. Is your technologies in a sense flexible enough, inaccurate enough to be usable for law and order or health? Is that something you're looking at? Yes, so it's something we already do. Really our speciality is frontline services, so that covers all these types of things. We have hired people who are probation officers, work coaches who have left those professions because they were kind of didn't enjoy the reality of that work doing admin. So definitely, it's all about how you take this core technology and then how you tailor it to very specific workflows. We have just had a team of people flying around the US working with government bodies there in California or in Colorado to customize our technology to specific workflows. One of the things you see when you do this enough is that people are people to a degree. The services you would provide to an elderly isolated person in London are very similar to what you would provide in Paris or Boston or wherever. But there are all kinds of endless nuances in terms of rules, guidance, guidelines, etc. And so you have to heavily customize the technology. And so we use what's sometimes called a forward deployed engineering model where people will actually go inside of these organizations and really co-design the software with people doing the actual work. as you will. know with things like Claude, and Cursor, it's now becoming so much quicker and easier to actually build technology that is highly customized to partners. I'm just wondering if you've had any conversations here with the police service or with the NHS? We work with various different NHS trusts and we're also speaking to different police forces in the UK and Australia as well, but yeah, you're absolutely right, Robert, that this technology is very valuable to different frontline services. Employment services is another big area, so working with employment services. Those are often private companies that the government outsource to support their frontline teams. Do you have any data on how much more efficient and individual becomes, what the productivity gains are? So it would typically be around eight hours a week, so usually around-- So you save, so a typical person using your technology to record notes and create reports, they'd be saving about eight hours of admin per week. Yes, exactly, and that stuff, but it's also general workflow, so if they need to make a referral, write emails, anything to do with their sort of organising their time, getting advice, which they usually would have to do from a manager, they can now get support from the technology, they can ask it a question, and it will tell them what is the policy around this, within our organisation. So it's a whole load of, it's like a chatbot type thing where they can talk to it, and it can say, "I need an email for this. I need some advice on that," and the technology will give it to them. Just include numbers. This is like a 20% productivity gain freeing up of time, for what we all want more of, which is a public servant actually spending time with the patient, or hate the word customer in the context of the public sector, but basically spending time with people who actually need their services. That is such an enormous saving in the context of a government which is really struggling to fund public services at the moment. Are you surprised that this is not supposed to be an advert for you, but are you just surprised by how long it is taking to roll out these sorts of services throughout the public sector? It's been very swiftly adopted by councils. If you look around the world, are there public sectors which are well ahead of the UK? People always talk about Estonia, for example. Are there public sectors around the world which are way ahead of us in terms of digitising and improving productivity through the use of technology? I think overall the UK is doing reasonably well. I don't think there are many examples of governments that have raced ahead. I think that there is a general risk of version in the public sector, and some of that makes sense because there are serious human risks associated with deploying AI in these contexts. You don't want to necessarily be the first to roll out these types of technologies. But you're saying there are nonetheless despite the fact that there hasn't been a problem of that sort. You understand the risk of version. I think people are just nervous around risks that are less familiar. You see this in self-driving cars. Ultimately, if self-driving cars are profoundly safer, we know this, we have enough data, but people would still be more worried by getting killed by self-driving car, or one death would be disproportionately covered in the media. The safety level, which is better, which is safer, you have to hit this tipping point, I think, where people are so very, very reassured before they hit the accelerator pedal on it. But I think that the UK can go faster, can be a global leader in the deployment of AI in the public sector. I have not given up hope partly because the success we've had with local government. Our headquarters is still in London and we're still regularly talking to government. I hope that we'll roll out DWP and maybe we'll get an opportunity to provide our technology to the thousands of probation officers that still don't have any. We will have to see. I mean, particularly within frontline services and social services, we have a very proud legacy in the UK. If you go back to the beverage report and after the Second World War, we invented concepts and we rolled out programs that made an enormous difference for millions of people in the UK. By being copied around the world, for probably hundreds of millions of people around the world as well. If it was just one decision that a Prime Minister and Chancellor could take right now, that would make all the difference to, you know, I'm not sure I love the expression "Govtech" if I'm honest with you, but we know what you mean. It's a really main, put Britain at the forefront of "Govtech", what would it be? I think there's lots of stories of investments, you know, we've attracted five billion pounds for this, 10 billion pounds for that and so on. I think people are a little bit numb to these numbers that come at them all the time. I think what people need are stories and they need to see actual services that they use improving. The story that the Prime Minister by all accounts keeps coming back to is the story of how our technology is being used by social workers up and down the country. You mean your beams don't know? Being technology, yeah. From the awk knees to the Isle of White, it's being used all over the UK. And that is a good story because it's about how services are getting better for vulnerable people. And we need more stories. So I think, you know, what I would say to the government is things have been going somewhat slower than you probably wanted. It's probably time to roll up your sleeve and to try and take a look at why that has been happening. And to take probably a more active role in the procurement of these technologies and make sure that procurement is fair and fast and that the best possible technologies at the best possible prices are getting into the hands of people delivering public services. You know, one other thing I would say to that is that there is this narrative which is kind of procurement is broken and everyone knows it and everyone's trying to fix it. It's just taking time because it's so complicated and so on. I think that that narrative somewhat holds us back because the reality is that procurement may be broken for UK startups, but procurement is working beautifully for lots of incumbent interests. And so there are plenty of stakeholders that actually don't have the incentives to change a thing about the way that we buy technologies for the public sector. And I think we need to actually lean into that, accept that and work out how we change that if we want to, you know, be living in a country where we're getting the best technologies at the best prices to people you need them. Really good to see you. That was fascinating. Thank you so much. So that was my conversation with Alex Stephanie. And knowingly, Steph was doing something probably more exciting, although I did really enjoy that conversation. But nonetheless, you were there. You have, though, now listen to it. What did you make of it? What I found fascinating was what Alex has done with the business is clearly found a solution to a big problem in terms of productivity for people doing really important things. You know, we're talking about council workers who are trying to find people homes to try to find people jobs exactly what you and I always talk about in terms of getting economic prosperity and anything to improve the productivity of that seems like a no brain. And that's why loads of councils are using it. But what was interesting was the fact that central government are so reluctant. And it's as if, you know, the way Alex described it as, it's not even like it's these UK tech firms second in the line after the US ones. It's third after the government have had to go at themselves as if and that just feels counterproductive. And obviously there needs to be due diligence. So there isn't profiteering from tech companies and obviously all of that stands. But if the tech's already there, why would you waste time then trying to do it yourself? Just use what you've got there by a British company, which is providing jobs and, you know, money to the ex-Jekker. So that's what came to me is how does procurement work? Because Robert, we've heard Rachel Reeves only recently talk about how important it is to procure from UK companies and not let it just go broad, haven't we? Yeah, and that's precisely right. I mean, I last said we talked about her growth plan, her May's lecture. In that May's lecture, it actually had the following words. We want public procurement to become a launch pad for scale-ups. She means British scale-ups, British companies, not just to check for global incumbents. Now, that's be clear. Right now, if you talk to a small British AI company and you look at government procurement, you say they give a ton of money to Alphabet Google, they give a ton of money to Palantir, we really struggle to get in. And that was Alex Tefinis' message that, you know, he is finding it now easier to sell to governments outside the UK than to our own government, despite the fact that the Chancellor claims that she wants to favor businesses like his. But we have talked to the MOJ. to find out why they didn't in the end hire Beam and Stephanie. What did they say? Well, they sent a lengthy reply in classic right of reply style. So I'm just going to paraphrase it for you. But basically they're saying, and you won't be surprised to hear this, they build or buy tech based on value from relief to taxpayers. Good, that's what they should be doing. And they talk about Beam's involvement being limited to two small regionally run pilot projects, which they say were awarded through these proper law value contracts, both of which have now ended. And then they say that, you know, they're not required to carry on with Beam's technology after the pilot. And then they talk about how, but they do work openly with many UK small and medium-sized tech firms and site a couple of recent collaborations to do with counter drawn technology. But that is a classic example where, to me, there doesn't seem to be a credible reason not to have used Beam given, they still not using it in the way they were going to use that tech for probation offices now. Because as Alex said, it could be used now and be making a difference to those probation offices work now, rather than we're still waiting for whatever tech the government have created to roll out. To be clear, I think if you work in public procurement, it's a really difficult job. Yes. The thing though that has has worried me, and I'm not saying this is what happened in this case, but one of the things that, you know, over many, many, many years has worried me about procurement in this country is that when it comes to the final decision, if you are the accounting officer as it were, you go with the safe option. Because, you know, broadly, if you go with Microsoft, who's going to blame you if Microsoft doesn't quite work out because everybody buys Microsoft. And it's how do we create a culture within government? Because procurement is so important when it comes to actually encouraging homegrown businesses. All you have to do to understand that, right, is go and look at how anthropic, which is absolutely now the cutting edge of all AI development in America, right, has been, you know, in this extraordinary battle with the government about whether its services should be used by the Department of War over there. And it's a massive story, right? And, you know, anthropic in the end stuck to its gums and decided that it wasn't going to change how it operates to suit the Department of War. But my goodness, you got the, when you were following that story, you realized how important that contract was to this enormous growing business. And the thing the American governments always understand in the way that I don't think British governments understand is how the sponsoring procurement power of government can make all the difference between whether a company stays small or, you know, sometimes fails or becomes a world leader. And my God, they used their commissioning might to favor American businesses. And, you know, they do not favor British businesses. And we should see that. And we should therefore take the view in, in this country, right, if they are going to do patriotic procurement, we need to do more patriotic procurement here. And just to add to that, this is very much like the chat we had with Stephen Welton from the British business bank. And also separately, a chat we had with Patrick Valens as well, about taking risks with investments too. You know, like, yes, you're going to face scrutiny if those investments go bad. If you put money into a business, a British business, that doesn't do very well. Of course, you're going to get scrutiny. But you've got to take more risks if we want to create more richer businesses, hey, businesses that can scale up and become multinational companies. And that was a point made by them. It's that risk. It feels like in procurement. There's a problem with risk taking there too. Totally not blind risk, calculated risk. It's what this podcast is all about. Now, thanks for listening. And we'll see you again soon. Bye bye.