Can the AI Action Plan win the innovation race?

This week, prime minister Sir Keir Starmer threw his weight behind the UK’s ripening AI sector by unveiling the AI Opportunities Action Plan, a new ‘pro-growth’ strategy to harness the technology and improve productivity.

Led by tech entrepreneur Matt Clifford, the roadmap outlines plans to develop AI products and services for a digital transformation of the public sector. In a post on X on Monday, Clifford stated his belief that “AI is the single most powerful lever we have to achieve this”.

Whitehall has said it will lean on the UK startup and scaleup scene to action its plans. Industry leaders have praised its ambition, but some are asking whether the plan provides sufficient support to build an ecosystem that can rival the dominance of the US and China.

£14bn a “drop in the ocean”

The International Monetary Fund (IMF) has estimated that AI could add up to £47 billion a year, over the next decade, a statistic highlighted within the government’s AI blueprint.

The opportunities are clear. Equally evident, though, are the hurdles. Chris Mooney, partner at law firm Marriott Harrison, stresses that for the UK to become an AI superpower, “we need huge supercomputing power; huge amounts of data to train the AI systems; [and] huge numbers of people trained in developing and using AI systems.”

It’s an expensive wishlist. The government has so far committed £14bn to the plans, which will be used to fund a supercomputer as well as new ‘growth zones’ across the UK. Yet some have warned the amount is a drop in the ocean and that more funding will be needed.

“With businesses grappling with inflation, high interest rates, incoming National Insurance rises, more needs to be done to support adoption, particularly for smaller firms”, says Patrick Sullivan, Chairman of the Parliament Street think tank, adding, “14bn is a drop in the ocean”.

Research by Ayming UK, a consultancy specialising in innovation funding, finds that money is the greatest barrier to innovation for UK business, with 39% reporting it as a problem.

“UK needs founder talent”

Another challenge is the need for founder talent. With the UK economy largely stagnant, startup regions such as Old Street in east London have become less attractive as foreign-born founders and skilled tech workers head instead to more welcoming countries. 

The Innovator Founder Visa, a fast-tracked visa scheme for entrepreneurs setting up a business in the UK, has somewhat eased the problem. But visa restrictions introduced last year have simultaneously curbed hiring from abroad, weakening startup recruitment plans.

Sean Kane is co-founder and chairman of F6S, a global community of over five million startups. Kane tells Startups that, to hone AI talent, the government must ensure its plans benefit “a new generation of innovative startups”.

“World-beating AI founders build world-beating AI companies”, adds Kane. “To win the AI race, top startup founders must see the UK as best for funding, talent, taxes and regulation.”

That includes nurturing existing AI talent in the UK, of which there is plenty. Our 2025 Startups 100 Index features many pioneering AI startups that are already demonstrating world-leading technology, such as legal tool Robin AI and fitness software MAGIC AI.

Richard Robinson, CEO and co-founder of Robin AI, echoes Kane’s sentiments. “We are proud to be part of such a strong group of startups — the voices the government needs to listen to as it seeks to capitalise on AI and keep Britain at the front of the global AI race”.

“Regulation before innovation”

The issue of regulation looms in the background of every AI debate. Also this week, Starmer added fuel to the fire by announcing that the UK would “go its own way on regulation”.

The prime minister’s comments have raised concerns about how developers will train and progress their generative models without violating as-yet-undefined regulatory standards.

Chris Mooney says the UK’s “wait and see” approach to AI law was causing confusion. “Our experience of working with clients is that they find the current position uncertain”, he notes.

Breezing past the legal fine print could also spook customers, who need to embrace AI for the Action Plan to work. This week, a YouGov survey found that 40% of British adults currently have a negative or very negative perception of AI technology companies.

With industry leaders clamouring for legislation to solidify the AI Action Plan, the government might need to reconsider its aversion to red tape. “If the UK wants to take the lead on AI, it needs world-leading pro-innovation regulation,” Mooney affirms.