In the Autumn Budget, Jeremy Hunt committed to invest £500mn in artificial intelligence over the next two years, adding to the £900mn already allocated in the Spring Budget.
Government support for innovation in UK tech is always welcome, and AI, which will have a powerful impact on the UK economy over the coming years, needs significant investment – particularly if we’re to keep up with international competition.
So why, as a tech entrepreneur, do I think this was the wrong approach? It’s not that I don’t welcome Government investment in innovation in the UK – it’s critical. However, the government shouldn’t be picking tech winners, especially not in areas that are already relatively well-funded.
Private investment in AI in the UK hit £3bn in 2022 – nearly double that in France, Germany, and the rest of Europe combined (City of London Corporation).
By selectively targeting their support for AI, the government runs the risk of crowding out private funding. The government’s roughly £1.5bn commitment to AI investment this year may do little more than simply displace the private funding that’s already streaming into the burgeoning technology.
Meanwhile, other vital areas of the tech sector have missed out on a prime opportunity for a much-needed investment – and innovation – boost.
The sentiment of this investment commitment is laudable, and it’s encouraging to see a government recognising and acting on the importance of UK tech innovation. But the commitment to AI in the Autumn Budget misses the mark.
The UK is a world-leading hub for research, scientific ingenuity, and engineering brilliance. It should be a hothouse for new, transformative technologies – or, specifically, ‘deeptech’, a class of technology based on innovation in science and engineering, of which AI is a key example.
But, as it stands, many deeptech projects and startups in the UK struggle to find sufficient funding. Investors, who are mandated to get returns on their investment, are put off by the high level of risk and long timeframes involved with deeptech innovation. Yet, with deeptech’s high investment risk also comes the potential for outsized impact.
The government – which uniquely lacks “investors” who often expect high returns with low risk – is uniquely placed to be bold here.
If any targeting of government support for tech is to be made, it should either be made into the infrastructure to support innovation and R&D, or it should be into areas that currently struggle to get funding.
The government can target support for high-risk, high-reward projects and technologies that have the potential to be the next transformative technology, but that investors tend to shy away from.
Alternatively, the government, hardly a node of scientific and technology expertise itself, could avoid targeting their support entirely.
They could, and likely should, have committed to invest this £1.5bn in the infrastructure that supports the entire tech sector.
This would support sector-wide innovation, in technologies from AI to carbon capture. It would support innovation in whatever technology comes down the track and enhance our ability to commercialise and benefit from current and future scientific breakthroughs – including in AI.
So, the sentiment of this investment commitment is laudable, and it’s encouraging to see a government recognising and acting on the importance of UK tech innovation. But the commitment to AI in the Autumn Budget misses the mark.
The government should be listening to tech startups, university spinouts, researchers, and graduates from across the tech sector to identify areas where there is a funding shortfall combined with the potential for significant societal and economic impact.
And they should be identifying the repeated stress points that could be addressed to catalyse cross-sector innovation. They should focus on investing in these areas – and less on chasing the latest headline-grabbing technology.
Let us not forget that when our current Prime Minister was Chancellor of the Exchequer two years ago, he was very keen to make the UK the global leader in cryptocurrencies… not an innovation policy which has aged well.
We should be ambitious, and not shy away from striving to be leaders in AI. But our tech sector goes far beyond AI, and we shouldn’t forget that.
Dr. Ewan Kirk is a technology entrepreneur, early-stage investor, and Founder of Cantab Capital Partners
