Ministers Double Down on AI and Tech to Drive Growth

The UK government has made a decisive bet that technology will power the next phase of economic growth, productivity and public sector reform.

With London Tech Week and the Spending Review both landing this week, Ministers put tech at the heart of their plans for government, and the future of the UK. From supercomputing to skills, and from digital government to AI in healthcare, the announcements signalled a serious intent to turn the UK into a leader in digital-led innovation and growth.

For the tech sector, it was a week of headlines and big numbers. The question is whether these investments mark a lasting shift or simply a moment of optimism, given ongoing fiscal constraints and the looming possibility of tax rises in the Autumn. 

AI, skills and global talent take centre stage

Speaking alongside NVIDIA’s CEO Jensen Huang at London Tech Week, the Prime Minister unveiled two new MOUs with the chipmaker, covering AI research and skills development. He also introduced Extract, a new AI tool built in-house using Google’s Gemini, designed to help local planning departments operate more efficiently, and support the government’s broader goals around increased housebuilding and infrastructure delivery.

Further research partnerships were announced to support AI in drug discovery and industrial applications. Alongside this, nearly £150 million will go to scholarships and bursaries in areas like AI, cyber security and computer science. A wider £1.2 billion package will be rolled out by 2028 to boost technical education and training, particularly for data and AI roles.

Changes to expand pathways into the UK for highly-skilled professionals, through the High Potential Individual, Global Talent and Innovator Founder visa schemes, also sought to reinforce the message that the UK remains open to top international talent.

Tech funding leads the way in the Spending Review

Later in the week, the Chancellor confirmed in her Spending Review that total public investment in innovation and R&D will reach £86bn by the end of the decade, peaking at more than £22.5bn in 2029/30. The Department for Science, Innovation and Technology (DSIT) will receive the lion’s share of this annual uplift (£15.2bn), making it one of the fastest growing departments in expenditure, and signalling the strategic importance this government places on tech and innovation.

The British Business Bank’s capital capacity will rise to £25.6 billion to support scaling firms, and almost £2 billion will be invested to grow the UK’s compute power twentyfold by 2030. This includes restarting the Edinburgh supercomputer project, which was controversially cancelled by the government last year.

The National Health Service also received a major investment boost. A new £10 billion fund will support technology and transformation across the NHS through to 2029, aiming to deliver significant productivity improvements and reform core services through digital platforms, AI, and automation.

Digital government reform backed by efficiency plans

Alongside the Spending Review, the Treasury published its Departmental Efficiency Plans, setting out how government departments will deliver total savings of £14 billion by 2029 through a mix of reform, automation, and digital investment. Every department will be expected to adopt AI, and DSIT will play a key coordinating role for digital reform across government.

To support this shift, the government has created a £3.25 billion Transformation Fund to modernise services and IT infrastructure. Priorities include the launch of the GOV.UK App and Wallet, greater self-service in HMRC, and shared digital services for internal government functions.

DSIT itself will adopt AI tools internally, reduce use of consultants and increase use of civil servants in technical roles. HMRC, DWP and the Ministry of Justice will expand their digital platforms and trial AI to improve case management and reduce overhead.

 

What this means for the tech economy

While the UK’s innovation investment is still dwarfed by global tech giants (Amazon alone spent more than $70 billion on R&D in 2022) this week’s announcements show clear direction. Sectors like defence, health, and education are being equipped to adopt new tools and systems that promise to unlock growth and reform.

The forthcoming industrial strategy, expected later this month, is likely to expand on this further, with technology playing a central role in future sectoral growth plans.

Looking ahead for business and investors

Tech came out of this week a clear political priority. The sector now has a bigger seat at the table, with new funding, partnerships and policy tools pointing toward a more innovation-driven economy.

But the fiscal position remains tight, and with growth increasingly elusive following weak GDP data in April, many expect that the Autumn Budget is likely to focus on revenue raising. The private sector will be watching closely to see how much momentum can be maintained.

Still, for software and tech industry leaders, this was a week worth noting. The UK government is building an investment case for tech. What comes next will determine if that case convinces.