The UK must prepare for an on demand economy

Artificial intelligence is not simply improving productivity. It is restructuring the nature of work itself. Entire categories of white collar tasks are being automated or augmented at speed. Mustafa Suleyman, Chief Executive of Microsoft AI, has suggested that “most, if not all” white collar tasks could be automated within 18 months. Whether that timeline proves exact or not, the direction of travel is clear: job displacement is accelerating faster than expected – and this should concern the government.

If automation reduces employment across certain sectors, the economic consequences are not abstract. Unemployment costs the state twice. First through increased benefit payments. Second through lost income tax and National Insurance revenue. A shrinking tax base combined with rising welfare expenditure is fiscally unsustainable.

The UK government’s 2025 to 2030 skills strategy acknowledges the importance of workforce reform. The establishment of Skills England, alongside the proposed Growth and Skills Levy and the Lifelong Learning Entitlement, represents progress towards greater flexibility and lifelong learning.

These are important foundations.

But the strategy must now evolve beyond skills supply and confront a larger structural shift. Automation is reshaping employment

Technology cycles move faster than qualification cycles. AI models evolve in months. Cloud and data architectures update continuously. By the time traditional training programmes are designed and delivered at scale, elements may already be outdated.

At the same time, entry level pathways in some professional sectors are narrowing. Routine analysis, administrative processing and elements of coding, finance and legal research are increasingly automated. While new digital roles are emerging, they require specialist capability that cannot be retrained overnight.

If AI driven efficiency reduces headcount in certain functions, thousands more individuals may enter the job market over the coming years. Without intervention, this will place pressure on public finances and social cohesion.

The question is not whether technology will continue to advance. It will.

The question is whether government is designing a labour market architecture fit for this new reality.

Skills England must operate as more than a coordinating body. It should become a dynamic intelligence engine, working with industry in real time to anticipate emerging capability gaps before they become structural unemployment challenges.

A five-year static plan is insufficient in a market shifting quarterly.

Government must lead - now.

Across the private sector, a structural workforce shift is already underway. Organisations are moving towards blended models: a core permanent team supported by highly skilled specialists deployed for defined outcomes. AI engineers, data architects and cyber security experts are engaged on demand to deliver transformation, rather than added indefinitely to headcount.

This model increases agility, accelerates delivery and reduces long term cost exposure. It also reflects how many skilled professionals increasingly choose to work through portfolio careers and project-based engagements.

Government should not merely observe this shift. It should lead it.

Public sector transformation is often constrained by rigid workforce structures and lengthy procurement cycles. Yet, central and local government face urgent modernisation needs: digitising services, deploying AI responsibly, securing infrastructure and improving productivity.

To succeed, government must embrace on demand digital capability in the same way progressive private sector organisations have done.

This means creating a national ecosystem of on demand tech skills that allows public bodies and businesses to access vetted, outcome driven expertise quickly and transparently. Such an ecosystem would:

• Accelerate government modernisation

• Reduce reliance on high risk, long term transformation programmes

• Enable rapid redeployment of displaced professionals

• Support SMEs unable to afford permanent specialist hires

• Strengthen the UK’s competitiveness in AI and digital industries

Crucially, policy must recognise that employment itself is evolving. Not every high value contributor will work full time for one organisation across decades. Tax policy, accreditation models and labour frameworks must adapt to modular skills, portfolio careers and flexible deployment.

This is not about replacing permanent roles. It is about building resilience into the workforce and protecting the public finances from the shock of unmanaged disruption.

The current strategy lays foundations. But foundations alone will not shield the economy from technological acceleration.

The UK needs a plan for an economy that may increasingly operate on demand. One where skills are continuously refreshed. Where expertise can be deployed rapidly. Where government leads by example.

On demand tech capability is not simply a workforce trend. It is a lever for economic stability and national competitiveness.

If the state prepares now, it can turn automation from a fiscal risk into a productivity dividend.

If it does not, it risks being overtaken by the very technologies it seeks to harness.

This is a defining moment for the UK labour market and for public policy. The current government has a duty of care to act with urgency. This is an opportunity to lead decisively, but meaningful progress will require alignment and collaboration across all political parties, alongside business and technology leaders.

AI is not a distant concept. It is already shaping decisions, roles and opportunities across every sector. It has and will continue to impact each of us every day. We need to work together.