Chancellor unveils plans to entice UK tech startups

The UK chancellor, John Healey, has unveiled the £100m Sovereign AI R&D Procurement Scheme to support British firms developing artificial intelligence (AI) for public sector projects that apply nationally. As part of the UK government’s expansion plans for computing infrastructure, the scheme aims to drive future national growth and help the country capture more of the economic and technological benefits of AI. The government hopes the scheme will help innovative British startups compete on a level playing field, no matter their size. Often, smaller companies are locked out of public contracts with national and local government due to their lack of turnover, cash reserves or track record compared to larger firms. The Sovereign AI R&D Procurement Scheme aims to remove such barriers, with upfront payments available where appropriate, giving more British founders early-stage funding to enable them to build and prove their technology. The government said successful companies will keep the AI models they create to enable them to continue to develop commercial products for customers both in the UK and globally. In a meeting of G20 finance ministers and central bank governors in North Carolina, Healey described the scheme as a “first of its kind competition, to ensure more of the benefits of AI are felt across the UK”. He said: “Britain is home to some of the most innovative AI companies in the world, and this government is backing them to start, scale and succeed here in the UK. As G20 countries seek to make the most of AI opportunities, I’m determined Britain has a lead role in harnessing this technology to drive more jobs, better public services, and growth that’s UK-wide.” The scheme is being launched with four competitions. The first covers productivity in the NHS. Working with the Department of Health and Social Care, the goal is to have British firms help in the delivery of the NHS 10-year health plan by developing AI systems that can automate workflows, coordinate care and support decision-making across health services. The second, led by the Department for Business, Innovation, Science and Trade and ARIA’s (Advanced Research + Invention Agency) Scaling Inference Lab, is supporting technologies that improve the efficiency of AI computing infrastructure. The government’s goal is to expand the UK’s public AI compute capacity while reducing costs for researchers and businesses. The third competition is for defence, where firms will be invited to work with the Ministry of Defence to develop technologies for secure data connectivity and frontier AI capabilities across defence systems. The final competition covers the security of agentic AI systems. In partnership with the National Cyber Security Centre , this challenge will support technologies that help organisations understand, manage and mitigate the risks associated with increasingly capable AI agents, helping unlock the safe adoption of AI across the economy. AI minister Kanishka Narayan said: “Every year, the British state spends billions procuring products and solutions tackling some of the most important challenges facing society – from health to our national defence. This first-of-its-kind scheme will open up these opportunities to the British AI innovators whose ideas could make the biggest difference, backing their businesses to grow here, and go on to win globally.” Commenting on the scheme, Sachin Agrawal, managing director for Zoho UK, said: “For the UK to become a global leader of AI innovation and regulation, then sovereign AI should sit at the heart of its strategy to ensure greater control over who has access to data and what they can do with it. This is also something clearly growing in demand and is likely to become more prevalent in all markets as the AI industry continues to mature, and AI systems become more autonomous.” Read more stories about AI startups UK’s Sovereign AI supports supercomputing and drug discovery AI startups : The UK government’s £500m Sovereign AI fund announces first cohort of startups backed to boost economic growth and national security. Liz Kendall talks up work with ‘middle power nations’ on sovereign tech : The technology secretary speaks about the importance of forging alliances to make UK tech more resilient to geopolitical pressure.