The Labour government in Britain is forging a new, cost-effective approach to artificial intelligence (AI) ahead of a critical autumn budget. In a decisive shift, the government is prioritizing the adoption of AI across the public sector over direct investment into the industry, a move that has sparked concern among tech leaders.
Since assuming office in July, Prime Minister Keir Starmer’s administration has been scrutinizing the financial implications of AI initiatives. One of its most notable decisions has been the cancellation of £1.3 billion ($1.72 billion) in planned investments initiated by the previous Conservative government. Among the cuts is an £800 million investment earmarked for the development of a supercomputer at the University of Edinburgh.
While £1.3 billion might seem modest in the grand scheme of global AI investment, this decision has sent ripples through the tech community. Critics argue that this move could signal a retreat from the UK’s commitment to fostering AI innovation. In stark contrast, France, which is quickly establishing itself as a European hub for generative AI, recently pledged €2.5 billion ($2.77 billion) to advance the technology within its borders.
Adding to the tension, the UK government is reportedly reconsidering plans to open a San Francisco office for its AI Safety Institute. Originally slated for a summer launch, this office was expected to hire staff at competitive market rates, with salaries estimated at over $100,000 per position.
A source close to the Department for Science, Innovation and Technology (DSIT) suggests that the Labour government’s move to distance itself from AI safety concerns—especially those surrounding existential risks—might be an effort to distinguish itself from the previous Conservative administration. “Labour always needs to somehow look different to the Tories, and reining in the AI safety stuff is an easy way to do that,” the source explained.
Reflecting this new direction, in July, Tech Minister Peter Kyle dismissed Nitarshan Rajkumar, one of the co-founders of the AI Safety Institute, from his role as a senior policy adviser. According to sources close to the DSIT, while it’s not uncommon for a new administration to appoint its own advisers, some industry insiders view Rajkumar’s removal as a misstep. Rajkumar himself announced his departure on X (formerly Twitter) but did not mention that his contract had been terminated.
Jordan Sullivan, a representative of the lobby group Startup Coalition, expressed his disappointment on X, stating, “Huge loss to the UK civil service. Just the sort of person we should be doing a huge amount to keep inside the tent.”
Amidst these developments, Labour has brought on board Matt Clifford, a tech entrepreneur and the chief organizer of last year’s AI Safety Summit under former Conservative Prime Minister Rishi Sunak, to draft a new AI strategy. Clifford is expected to deliver his plan in September, ahead of the government’s crucial Autumn Statement.
A government spokesperson affirmed its commitment to harnessing AI for growth and creating opportunities across the UK. However, Tech Minister Kyle is focusing on driving AI adoption within the public sector to enhance efficiency and reduce costs, a strategy that entails scaling back direct government investments in the AI industry.
Tackling AI: The Clock is Ticking
Last November, the UK made headlines by hosting the world’s first AI Safety Summit at Bletchley Park, attracting global leaders such as Kamala Harris and tech titans like Elon Musk and Sam Altman. The summit underscored growing concerns about the potential risks of AI, particularly after the public release of ChatGPT by OpenAI, backed by Microsoft, in November 2022. However, balancing these fears with the technology’s immense potential is crucial.
In a sign of its continued engagement with AI’s economic implications, DSIT has begun recruiting economists to model the widespread impact of AI on the UK, according to a job description seen by Reuters.
In a previously unreported meeting at Downing Street last week, Clifford convened with representatives from some of the world’s largest venture capital firms, including Index Ventures, Lightspeed Venture Partners, and Sequoia Capital, to discuss the government’s evolving AI strategy. The discussions primarily focused on how AI could be leveraged to improve public services, better support university spinout companies, and simplify the process for startups to hire talent from abroad.
“They didn’t give much away about where their thinking was at, beyond stressing that they only had a month to turn the review around,” one attendee noted.
As the government grapples with a £22 billion deficit in public finances, tough decisions are inevitable. Speaking to the Financial Times earlier this month, Kyle revealed that he is “gearing up for a bold approach.” He emphasized that the forthcoming AI action plan would outline Britain’s future computational needs and the government’s role in meeting them. However, some industry observers believe that the current administration may not be ambitious enough.
“I think Peter Kyle sees this [AI] as an easy source of savings,” said an attendee of the Downing Street meeting. “We’re witnessing a significant scaling back of ambition.”
As the Labour government races against the clock to finalize its AI strategy, the balance between cost-cutting and innovation will be crucial in determining the UK’s future role in the global AI landscape.
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