A failure to lead the UK’s AI sector

Milo Constable at Slalom argues that AI absence in the UK Labour government’s first budget raises innovation concerns

 

Labour’s first budget in 14 years – billed as the most important in a generation – demonstrated a puzzling disconnect between talk and action when it comes to artificial intelligence (AI). Just weeks after the Prime Minister’s declaration on how AI could "drive growth, raise living standards and put money into people’s pockets," the technology’s near total absence from the budget raises serious questions about the Government’s commitment to technological innovation.

 

While there were subtle nods to technology programmes – notably through Rachel Reeves’ founding of Skills England and renewal of the regional Innovations Accelerator scheme – substantive detail was lacking on AI’s role in driving national renewal. This omission is striking: AI has the potential to revolutionise virtually every sector addressed in the budget.

 

The absence of concrete AI initiatives feels particularly acute given Reeves’ emphasis on making Government departments more efficient and the country more productive. While the new Office for Value for Money might help assess value, without robust technology solutions to create that value, its impact will be limited.

 

While it may be the case that the Government is waiting for the AI Opportunities Action Plan before announcing definitive action, this holding pattern risks putting Britain at a competitive disadvantage in an era where countries worldwide are racing to harness AI’s potential.

 

The plan for success

To course-correct this oversight there are a number of steps the Government can take. 

 

The Government should consider establishing a National AI Centre of Excellence (NAICoE). This public-private partnership, led by an experienced "AI Tzar," should focus on helping institutions effectively integrate AI solutions into daily operations. Additionally, the NAICoE would serve as a central body ensuring equitable AI implementation across the country.

 

Given that the UK possesses extraordinary AI capabilities, with over 1,350 AI-related businesses in London alone, in addition to the thriving hubs in Cambridge, Glasgow, and Manchester. The NAICoE could effectively bring these private sector innovators together with Government initiatives to further productivity across the country.

 

As an example, the NAICoE could partner with the new Office for Value for Money to drive AI-powered efficiencies across Government institutions. This collaboration would demonstrate immediate value while establishing best practices for wider adoption.

 

Additionally, statistics show that roughly 80% of AI projects fail today, primarily due to skills gaps, poor infrastructure or unclear ROI calculations. Rectifying this involves the NAICoE working with Skills England and other national bodies to nurture critical capabilities in AI engineering, prompt engineering, data engineering and product management.

 

Finally, with Capital Gains Tax rises potentially increasing the financial burden on SMEs, the Government must consider extending and expanding successful programs like the AI Upskilling Fund, which provided £7.4M in enablement training to SMEs earlier this year.

 

The path forward

No-one expects the PM or his cabinet to be “tech bros”, as Rishi Sunak termed it in the pre-Budget PMQs, but this shouldn’t translate into policy timidity. The absence of AI from the budget represents more than a missed opportunity – it signals a potential misunderstanding of AI’s fundamental role in shaping Britain’s economic future.

 

The upcoming AI Opportunities Action Plan represents a crucial moment for British innovation. To succeed, it must balance ambition with practicality, combining clear leadership through the NAICoE, with tangible support for businesses and public sector organisations.

 

The Government doesn’t need its leaders to be technology experts, but it does need them to recognise and act upon AI’s transformative potential. With the right framework of support, guidance, and incentives, Britain can still position itself at the forefront of the AI revolution. However, the window for action is closing. The longer the Government waits to embrace comprehensive AI policy, the harder it will become to catch up with global competitors.

 

Looking forward, the AI Opportunities Action Plan must serve as more than just another Government strategy document – it must be a decisive blueprint for making AI work for the UK, driving productivity, efficiency, and improved living standards across the nation. The question now is whether the Government will seize this opportunity to transform rhetoric into reality.

 

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Milo Constable is Strategy Principal at Slalom 

 

Main image courtesy of iStockPhoto.com and sasirin pamai