AI spending vows should be good for business

The government knows AI can have a positive effect on public services and the economy, says Mark Ferguson

The importance being placed on AI and other technologies as drivers of UK economic growth is evident from funding commitments outlined in the Government’s annual Spending Review.

The pledges made by Chancellor Rachel Reeves will have implications for organisations that both develop and deploy AI solutions, for how UK-based technology companies and universities might innovate, and for the way public sector bodies will operate in future.

The review envisages more than £2 billion of public funds being used to implement the AI opportunities action plan that the government endorsed earlier this year. This, it said, will mean “a twentyfold expansion” of the capacity of the UK’s AI Research Resource, which was established under the previous government to provide so-called “super-computer” support for AI research.

The housing area for Edinburgh University's planned Exascale supercomputer

Up to £500 million will also be used on the creation of a new UK Sovereign AI Unit to help “support the emergence of national AI champions” in tandem with the British Business Bank, which itself is to get almost £3 billion in increased funding “to support companies to start, scale and grow in the UK”.

Another major technology-related funding commitment set out in the spending review is the up to £750 million pledged for a new supercomputer at Edinburgh University - described by the government as an asset that “will give scientists in all UK universities access to computational power that can be found in only a handful of other nations”.

In her announcement, Reeves further pledged £240 million for the AI Security Institute and at least £1 billion to support the scaling up of the Advanced Research and Invention Agency - which provides R&D funding for technological and scientific breakthroughs - as part of a wider £22 billion R&D funding commitment.

Another £1.9 billion was pledged for digital infrastructure, to ensure wider access to and speedier broadband connectivity, as part of wider infrastructure investment commitments. Further funding has also been pledged to support the use of AI in government as part of a broad efficiency drive.

The UK’s ability to produce its own AI infrastructure, data, and skilled workforce is important for the public sector for enabling focused research on the UK’s most critical priorities like healthcare and defence, and for supporting academics and start-ups with affordable resources to train AI models. It should also allow access to AI compute at times of disruption.

The Department for Science, Innovation and Technology is arguably the biggest winner among government departments from the chancellor’s spending review, with an average annual growth of 7.4% in day-to-day spending over the next five years, which outstrips every other departmental rise comfortably.

The government has spoken favourably since Day One about the positive impact that AI can have on public services and the economy, and based on the Spending Review pledges, it is putting its money where its mouth is.

Many of the details announced make good on the commitments made as part of the government’s response to the AI opportunities action plan in January, when it committed to accepting all 50 recommendations in the plan.

For businesses attention will now turn to the publication of the government's industrial strategy, which is expected to be published shortly, for further details on how digital and technologies can contribute as one of the eight growth-driving sectors.

Mark Ferguson, Head of Reputation, Crisis and Client Operations at Pinsent Masons​