Derby City Council has launched the UK’s most extensive public sector AI transformation to date, pioneering voice and generative AI, boosting productivity, and delivering multimillion-pound savings.
Local authorities are facing unprecedented financial challenges as service demands increase while costs rise. For a decade, Derby City Council had been building a strong foundation of digital service improvements, and saw a pressing need for a smart, proactive response to these financial challenges. It was ready to take a leap forward and recognised an opportunity to address these challenges through emerging AI technology.
Through thorough assessment, its aim was to harness AI technology through a comprehensive transformation programme to enhance efficiency, optimise resources, help maintain service provisions and contribute towards funding gaps in a sustainable manner. This would become the most extensive public sector AI transformation in the UK - and a chance to form a replicable national blueprint.
Pioneering voice-AI adoption
Analysis showed that over 60 per cent of resident interactions occurred via telephone. From April 2023, working with technology partner, ICS.AI, Derby introduced two digital helpers – Darcie for customer services and Ali for Derby Homes’ housing enquiries on their respective websites and telephone switchboards. This established the UK’s first AI-powered 24/7 “digital front door” for a local authority - a significant step requiring careful consideration by politicians and officers.
This approach proved crucial to success. By demonstrating tangible improvements to service delivery, the Council built confidence among stakeholders for further innovation. The early results exceeded expectations, with call deflection rates far surpassing targets. It was a bold move to enhance service delivery, aiming to reduce admin and increase call centre capacity, freeing staff for complex cases requiring human intervention.
This success provided the foundation for a comprehensive assessment with extensive staff involvement across departments. Through 44 workshops involving over 100 staff members, the assessment identified 261 opportunities for AI implementation. The Council prioritised 54 use cases across five key service areas: adult social care, income and debt management, customer service, internal productivity, and children’s services.
Throughout this process, the Council maintained a methodical ‘hearts and minds’ approach. Bringing their workforce along was critical to success, involving extensive communication about AI’s purpose and emphasising that technology would augment rather than replace human roles, with agile development, continuous collaboration and a human-in-the-loop principle maintained throughout. This collaborative approach ensured technology addressed real operational challenges rather than being technology for technology’s sake.
Early on, the Council established robust governance structures, including an AI Compliance and Ethics Board – independently chaired by its Director of Corporate Governance, Procurement and Property – to ensure AI projects are implemented without bias or prejudice, with proper data protection impact assessments for each use case.
Results from the initial implementations exceeded expectations: Darcie and Ali processed 1.3m telephone calls and 88,000 web interactions, handling 2.2 million questions with a 44 per cent successful deflection rate. This reduced customer service call volumes by 40 per cent, allowing staff to focus on complex cases requiring human expertise.
Advancing to generative AI capabilities
In May 2025, Derby upgraded Darcie to incorporate generative AI technology – another UK local government first. Unlike the previous natural language processing system, generative AI creates contextually relevant content in response to queries, similar to the difference between a standard chatbot and ChatGPT.
This upgrade transformed Darcie into a sophisticated, multilingual platform. The digital helper now provides natural, human-like responses to queries about all Council services, including adult social care for the first time. Darcie can adapt sentiment, detect emotional cues like vulnerability and frustration to deliver more empathetic responses. It’s also now multilingual, offering support in Derby’s nine most common languages after English, enhancing accessibility and inclusion.
In the 50,000 calls handled since May, the deflection rate increased to 56 per cent, customer waiting times halved, and misdirected calls to the switchboard reduced by 85 per cent. Of course, the model is still learning, and the more queries it receives, the better it will continue to become at handling them.
The transformation now extends beyond customer service to other specialised areas.
All staff now have access to an internal “Staff Copilot”, called Perrie – a secure council-specific Chat-GPT like system providing significant productivity benefits. Unlike public AI tools, Perrie operates within the Council’s secure environment with proper governance controls and data protection safeguards. Staff use it for a wide range of tasks: drafting reports, analysing data, simplifying policies, and brainstorming solutions. It aims to boost resource efficiency by 40 per cent, saving users approximately an hour daily.
In adult social care, AI aims to support care package reviews while maintaining human oversight in all decisions. The Council is implementing an AI-driven transcription and documentation solution (SMART: Notes) for frontline staff, allowing practitioners to focus on human interaction rather than note-taking during assessments.
For income and debt management, the Council has deployed sophisticated AI-powered dashboards providing unified debt visibility across multiple systems, enabling more strategic and ethical collection approaches that distinguish between those who “can’t pay” versus those who “won’t pay”.
Delivering substantial financial benefits
Through these implementations, the Council has identified savings of £7.5m to date. £2m in adult social care, £900,000 in income and debt management, £1 million through the customer service AI front door, and additional savings through staff productivity improvements. It’s a powerful demonstration of how AI can remodel how the public sector operates.
Importantly, the Council maintains its commitment that AI should augment rather than replace human support. Complex and sensitive enquiries remain with experts, while technology manages routine interactions. This approach directs human expertise where it adds most value while reducing overall service delivery costs. Moreover, the unified AI platform approach, rather than siloed offerings, creates a more sustainable financial model for improved services.
AI transformation is an ongoing journey with future phases of council-wide innovation, including AI agents for automated task completion, enhanced data analytics and predictive capabilities, and a wider vision to make Derby a smart city through AI.
Local authorities nationwide face increasingly unsustainable service delivery models amid funding constraints. Derby’s journey demonstrates thoughtfully and systematically implemented AI can provide a viable path toward service sustainability.
