Prime Minister Keir Starmer is rallying Britain around artificial intelligence. At his party’s first investment summit, he called AI a key to economic progress, standing alongside former Google CEO Eric Schmidt.
He claimed AI is “an opportunity” Britain “needs to run towards.” Starmer’s administration plans to roll out public sector AI projects and legislation to regulate advanced models.
The Labour government says it has already landed £24 billion in AI and digital infrastructure investments. Science and Technology Secretary Peter Kyle says the UK now has a “competitive edge over the EU,” and he’s determined to maximize it.
But within the government and tech industry, there are doubts. Internal budget cuts and unclear early messaging raise questions about Labour’s commitment and capability.
Kyle canceled £1.3 billion in tech funding this summer, including £800 million for a national supercomputer in Edinburgh, claiming the previous government made the pledge without securing funds.
“I’ve inherited a terrible legacy,” he said. He insists future projects will be “fully funded and delivered on time,” but some in tech remain skeptical, especially with looming budget cuts next week.
Missing coherence, budget cuts, and confusion
For tech industry insiders, Labour’s AI push feels unfocused. The party initially included an AI bill in the King’s Speech, only to swap it out last minute for a cybersecurity bill after Kyle raised concerns about vulnerabilities left by the former government.
Kyle now says the change left a “false impression” that Labour had abandoned AI regulation, admitting he should have “communicated more sharply.”
The hesitation contrasts with Starmer’s predecessor, Rishi Sunak, who publicly pushed AI forward by organizing the first global summit on AI safety, even holding an on-stage conversation with Elon Musk.
Kyle says Labour’s upcoming AI bill will take voluntary industry pledges and make them mandatory, forcing AI developers to disclose certain capabilities and risks. His team is also creating a new government body to monitor and enforce these codes.
Labour is updating laws to simplify data center development, a crucial component of AI infrastructure. Investors were pleased with Starmer’s summit announcement of £6.3 billion in new computing facilities, but they want real progress – not just talk.
Labour’s tech agenda also includes a bill targeting the public sector. The new measure is designed to streamline data use across public databases, cutting red tape in areas like healthcare and policing. Labour says it could add £10 billion to the economy.
Yet, internal criticisms are surfacing. One Labour MP said they worry that national services face “foundational issues” in their digital networks.
Until those basic problems are fixed, AI’s public sector impact could be limited. The MP also emphasized the need to boost the private sector alongside public service AI.
Challenges from taxes, market conditions, and government policies
So Britain leads Europe in startup financing and hosts AI leaders routinely, but industry professionals warn that higher taxes and sluggish government support threaten its position. UK venture capital firms have invested $3.7 billion in AI so far in 2024, only a fraction of the US’s AI investment.
What’s worse, this year’s UK investment is down from $5.8 billion in 2021, according to PitchBook. Labour’s efforts to keep AI firms invested in the UK include building more data centers and relaxing regulatory barriers. But the real risk lies in the potential talent drain.
Limited acquisition opportunities and a slow-moving London stock market push startups to consider crossing the Atlantic. Investors are cautiously optimistic but need clearer action to avoid losing UK startups to the US.
Former Prime Minister Tony Blair has a similar stance, saying AI could save the UK £200 billion over the next five years if deployed wisely across public services. Yet, there’s tension here: while the Labour government is focusing on public sector AI, there are real fears that its private sector isn’t getting the backing it needs.
UK’s big push on AI regulations and international alliances
The UK took a big leap on October 1 by signing an international treaty on the safe use of AI, the first of its kind. The UK government has been waving the “pro-innovation” flag for AI, wanting to create an environment that’s both regulated and supportive.
This strategy focuses on teaming up with stakeholders and regulators, instead of slapping blanket bans on everything AI-related. To apparently back this, the government’s thrown in over £100 million to fuel AI innovation and build up regulatory frameworks.
Projections are placing the UK’s AI market at £200 billion by 2030. The potential is massive. There’s also a major push to make AI ethical and trustworthy.
The UK’s reportedly building an ethical framework that centers on transparency and accountability, guiding how existing laws interpret AI’s role in society.
While public trust in AI remains cautious, recent surveys show it’s gradually improving. Last November, the UK hosted the world’s first AI Safety Summit, bringing together leaders from 28 countries to hash out how to manage advanced AI risks. Out of this came the Bletchley Declaration, a pledge to work together on AI safety.
The UK is also teaming up with countries like the US, putting £9 million into the International Science Partnerships Fund to promote responsible AI development.
