Key facts
- Labour plans reforms to unlock pension fund investment into UK growth firms.
- The initiative aims to support homegrown AI champions and bolster the UK's global AI economy position.
- Ministers are adopting an interventionist approach to backing tech companies.
- A £1.1bn AI hardware package was announced at London Tech Week.
- The plan includes funding for specialist AI chips and a new national supercomputer.
Liz Kendall, the UK's Tech Secretary, is intensifying efforts to direct pension fund investments toward domestic technology startups. This initiative is part of a broader government strategy to foster homegrown innovation and secure the UK's position as a key player in the global artificial intelligence sector.
Kendall stated that the UK requires a "decisive shift" to support its AI champions and become an "indispensable partner" in the global AI economy. This push reflects an increasingly interventionist stance by ministers in backing British tech firms, with public sector investments already made in companies such as Wayve, Kraken, and Oxford Quantum Circuits.
Business Secretary Peter Kyle emphasized the need for the government to embrace greater risks with taxpayer-backed investments to retain fast-growing companies within the UK. He noted that the greater danger lies in allowing British firms to seek funding abroad. The government aims to leverage pension reforms, public investment, and new AI infrastructure spending to enable UK startups to scale domestically rather than relying on U.S. capital.
This strategy was highlighted during London Tech Week, where Keir Starmer unveiled a £1.1bn AI hardware package. This package includes provisions for purchasing specialized AI chips from British manufacturers and funding the development of a new national supercomputer in Edinburgh. The government seeks to avoid a repeat of past losses, such as Arm and Deepmind, which ultimately came under foreign ownership.
London continues to be an attractive hub for AI investment, with AMD committing £2bn to the UK and Nebius pledging £1.7bn for AI infrastructure. British AI startups have collectively raised over £8bn in venture funding this year.