The Chancellor’s Spending Review has reinforced the Government’s commitment to harnessing the power and opportunities presented by digital technologies and artificial intelligence.

While the Department of Health and Social Care and the Ministry of Defence received the largest funding increases, the push for digitalisation clearly underpins all announcements.

Key Announcements for the Tech Sector

The Department for Science, Innovation and Technology (DSIT) will see an increase in both its resource and capital spending. Most notably, £2 billion has been allocated for the implementation of the much-discussed AI Opportunities Action Plan, announced earlier this year. The plan could prove crucial in targeting key areas of technological growth for the Government.

The Government’s commitment to expanding the UK’s technological capabilities is also demonstrated in its £750 million investment in a new supercomputer to be set up at Edinburgh University. A renewed focus on improving digital skills is also evident in the £48 million allocated for the Tech Expert Programme to improve collaboration with universities to develop new AI courses and an investment of £160 million for TechFirst to ensure people have the right skills to participate in delivering technological change. As the world accelerates towards adopting digital technologies across all sectors, it is critical that both the current and future workforce have the necessary skills to adapt to this fast-changing landscape. Our recently published report, Skills in the Age of AI, outlines a set of practical steps by which vital AI and digital skills can be developed to ensure no one is left behind as the UK reaps the benefits of emerging technologies.

Tech startups and SMEs are a core component of the UK’s burgeoning tech sector, and the Chancellor’s decision to expand the investment funds available to the British Business Bank - one of the largest investors in startups and scaleups in the country - to £25.6 billion, should support these businesses to access the funds necessary to innovate, expand, and ultimately compete in global markets. After DSIT’s recent decision to set 10-year R&D budgets, British businesses are also likely to benefit from a record expansion in state funding for R&D to £22 billion by the end of the Spending Review.

More broadly, it is the cross-cutting emphasis on digitalisation that stands out. The £10 billion commitment, almost a 50% increase from 2025/26, for NHS technology and digital transformation is long overdue and will hopefully drive efficiency gains in healthcare delivery. It is positive to see the Government demonstrate a dedicated commitment to digitalisation; however, much will depend on how effectively the healthcare workforce can upskill and adapt to these new technologies both to alleviate existing pressures and to improve patient care.

How can the Government build on its tech investment plans?

While the funding and investment announcements are welcome, achieving the ambition to be a global leader in AI will require strong legislation and regulation. The opportunities AI presents are substantial, but investment must be accompanied by a robust legislative framework that builds public trust, safeguards data privacy, and accounts for potential risks.

The passage of the Data (Use and Access) Bill after months of back-and-forth between the Commons and the Lords is an indicator of the divisions that exist in Parliament and Whitehall over the UK’s role and responsibilities in an AI-driven world. The anticipated plans for a separate AI Bill will therefore merit close attention.

It remains to be seen how these investments will translate into action.