Coventry city council has renewed its year-long pilot scheme with Trump-aligned tech firm Palantir for a second year, despite a backlash from staff and trade union members, information obtained under freedom of information (FOI) reveals.
The council had entered into an agreement with Palantir in February 2025, then costing £500,000 per year, to build a “strategic AI platform” to reduce the admin burden in the department, following a pilot scheme working with children’s services. The software had been aimed at helping to transcribe and summarise social workers’ records.
Speaking at the time, council chief executive Julie Nugent said that the contract aimed to “improve internal data integration and service delivery” and “explore the transformative opportunities of artificial intelligence”.
The deal came under review in late 2025 following a widespread backlash relating to Palantir’s work with the Israel Defense Forces (IDF) in Gaza and its contracts with US immigration authorities. Speaking at that point, a council spokesperson said that the work was “always an initial 12-month pilot project that was to be reviewed”.
The Labour-run council has now confirmed to the Nerve that it has “decided to extend its Strategic AI Platform contract for a further year following a comprehensive strategic review”, and signed a new agreement with Palantir at the start of February 2026.
However. critics have raised concerns about the potential for the misuse of data in the hands of Palantir, particularly when it comes to such sensitive datasets as those pertaining to child services. Labour MP Clive Lewis said: “When you outsource judgment about vulnerable children to a surveillance company, you are reaching into the very core of local democratic accountability. These are decisions that should be made by trained, experienced social workers embedded in their communities – not by an algorithm built by a firm whose first clients were spy agencies.”
A recent investigation by the Nerve revealed how, under a potential Reform government, the party would build a “Deportation Command”, integrating NHS, police, and financial data into a single surveillance database for the “relentless” deportation of “all illegal migrants in the UK”. Palantir has already said that, if Reform gained a “clear public mandate” to govern, the company would help facilitate this by allowing them access to NHS data.
‘This is exactly how these contracts work: low entry cost, rising dependency, eventual lock-in’
A council spokesperson told the Nerve: “The pilot demonstrated material potential for efficiencies by reducing administrative tasks for frontline staff, freeing up social workers and professionals to spend more time supporting Coventry residents. This work is an important part of our medium-term financial strategy to deliver savings and make our services more efficient.”
They added that the contract was “deliberately structured with annual decision points rather than a long-term commitment. This enables the council to review performance, value and risk each year and exit if standards are not met”. It said the next review point would be at the end of this calendar year.
The review process itself assessed four key areas, the council explained: strategic fit with the council's approach to AI; procurement compliance and governance; value for money and financial impact; and public affairs and stakeholder confidence.
In terms of value for money, the council anticipates savings, though the new cost for the year-long contract extension has significantly increased, to £750,000.
The Guardian reported at the time of the initial award that Richard Brown, the council’s cabinet member for finance, said that “AI is a valuable tool that has the potential to make the right changes”, but declined to comment when asked if Palantir’s contract would result in job losses at the council, with union bosses claiming it could be used to replace staff.
At the time of the initial work with Coventry coming under review, councillors, public sector workers and trade unionists expressed concerns, citing ethical impications about working with Palantir, in part arising from the company’s position as a supplier to the IDF while Israel stands accused of engaging in genocide, and for building software aiding the Trump administration’s aggressive Immigration and Customs Enforcement (ICE) deportation efforts.
Palantir has developed an array of tools to help ICE deport citizens, and the agency has used its products since 2011. As first reported by Wired, ICE paid Palantir $30m to create an “ImmigrationOS” platform, giving agents “near real-time” data that helps ICE choose who to deport, giving special priority to visa overstays. In 2024, Palantir and Israel signed a “strategic partnership” agreement to supply technology to help the Israeli government attack Palestinians, allegedly enabling Israel’s AI targeting systems in Gaza.
The Coventry deal marks Palantir’s first local authority work in over a decade. The company previously built an “intelligence hub” for Sunderland council in 2014 as part of a five-year efficiency drive. That contract was valued at £4.5m, and saw the company gain access to a vast amount of constituent data.
Coventry council told the Nerve, following the review, that “strong safeguards are in place” with regards to constituent data: “The council is data controller and retains full control over all data. No data is shared with third parties or used to train AI models. AI supports staff but does not replace professional judgment – there is no automated decision-making about residents.”
The move has brought an outcry from local councillors, Labour politicians, and the MP for Coventry South, Zarah Sultana.
Speaking to the Nerve, Sultana said: "Coventry city council's decision to renew its contract with Palantir is a betrayal of every resident in this city. This is a company that has helped ICE tear migrant families apart, generates kill lists for the Israeli military and is quietly embedding itself across our public institutions – including the NHS and Ministry of Defence. And our Labour-run council has chosen to hand them more public money.
Zarah Sultana, MP for Coventry South: 'At a time when local services are being cut, there is always money for a US tech giant with direct ties to Trump and Peter Thiel.' Photo: Jeff J Mitchell / Getty
“We fought to have this contract reviewed. Instead, they've doubled down. At a time when local services are being cut, there is always money for a US tech giant with direct ties to Trump and Peter Thiel. It is completely unacceptable.”
Green and Independent Alliance councillor Grace Lewis, who has been an outspoken critic of the deal, said she was “deeply concerned” about the contract renewal.
“This is not just about efficiency – it is about who controls our data, our services, and ultimately the direction of our public institutions.
“Councils are being sold a quick fix that risks long-term damage: job cuts, reduced accountability, and the quiet outsourcing of public infrastructure to a private tech giant. At a time when councils are under pressure – and locally the council has made cuts to essential services – the answer should not be handing more power and money to unaccountable tech corporations.”
The move from the council has prompted a new campaign, to “kick Palantir out of Coventry”, with both Sultana and Grace Lewis involved. The group is demanding “full transparency, democratic oversight, and public services run for people – not profit”.
Clive Lewis said of the updated contract: “Coventry council is now spending £750,000 a year to let Palantir sift through some of the most sensitive data in public life – children’s social services records. What began as a £500,000 ‘pilot’ has already grown by 50%, which is exactly how these contracts work: low entry cost, rising dependency, eventual lock-in … We should be asking why a Labour council is outsourcing child safeguarding decisions to an algorithm rather than investing in the social workers who actually protect families.”
Despite the public outcry, the review into the contract concluded that “continuing is the preferred option because the platform demonstrated material efficiency potential, was procured through an established public-sector framework (Crown Commercial Services), offers a competitive commercial position when benchmarked, and enables the council to maintain pace and build on progress made during the pilot rather than starting over with delay and rework”.
The council, in its response to questions put to it by the Nerve, also cited Palantir’s wide use across the public sector, including its work with the Ministry of Defence and NHS, describing the company as “a market leader”.
A Palantir spokesperson told the Nerve that the company was “excited to help Coventry city council harness AI to improve the services that they provide to the public”, adding that “the technology offers huge potential, such as enabling social workers and special educational needs professionals to spend less time on paperwork and more time directly supporting children who are vulnerable or have special needs. The signs so far are extremely promising, showing the potential for a significant reduction in the admin burden.”
While the new contract promises to drive efficiency and savings in the council by harnessing AI, critics are sceptical. Clive Lewis said: “Since 2010, tens of billions have been stripped from local authority budgets. That deliberate erosion created the perverse logic we see now – councils so hollowed-out that handing critical public functions to private tech firms gets dressed up as ‘efficiency’. This is not cost-cutting. It is the latest stage in a long pattern of allowing private capital to capture essential services – not to improve them, but to degrade them while extracting profit.”
“Our democracy is being hollowed out before our very eyes, one ‘efficiency saving’ at a time.”