Government launches AI competition to help UK firms improve public services

The UK government has unveiled a £100 million competition aimed at encouraging British AI companies to help improve public services.

As part of the scheme, the government hopes to leverage AI to bolster NHS productivity, strengthen national security, improve cyber resilience, and expand computing infrastructure.

"Every year the British state spends billions procuring products and solutions tackling some of the most important challenges facing society - from health, to our national defence," said AI minister Kanishka Narayan.

"This first-of-its-kind scheme will open up these opportunities to the British AI innovators whose ideas could make the biggest difference, backing their businesses to grow here, and go on to win globally."

The plan is to give smaller firms upfront payments to make it easier for them to access public contracts with national and local governments. Downing Street noted these organizations often lack the turnover, cash reserves, and track record to compete with larger firms.

Under the terms of the project, they’ll be allowed to keep the intellectual property they create, helping them take their work beyond the pilot stage and develop commercial products for customers in the UK and around the world.

Broader AI ambitions

The project forms part of the Sovereign AI R&D Procurement Scheme and is kicking off with four specific challenges. For the first, firms will work with the Department of Health and Social Care to develop AI systems that can automate workflows, coordinate care and support decision-making across health services.

The second, led by the Department for Business, Innovation, Science and Trade and ARIA’s Scaling Inference Lab, will support technologies that improve the efficiency of AI computing infrastructure.

For the third, companies will work with the Ministry of Defence (MoD) to develop solutions that securely connect data and frontier AI capabilities across defence systems, strengthening operational effectiveness and supporting sovereign national security capabilities.

And the fourth, in partnership with the National Cyber Security Centre (NCSC), will support technologies that help organizations understand, manage, and mitigate the increasing risks created by the use of AI agents.

Support for UK startups

The government is concerned about the number of UK startups that fail to stick around as they scale, and hopes the scheme will help.

Last year, a report from the Founders Forum Group revealed that while AI startups accounted for 27% of all UK venture capital (VC) raised in 2024, many were struggling with access to capital and talent.

One-in-three said they were actively considering relocating their company's headquarters outside the UK.

"Britain is home to some of the most innovative AI companies in the world, and this government is backing them to start, scale and succeed here in the UK," said chancellor John Healey.

"As G20 countries seek to make the most of AI opportunities, I’m determined Britain has a lead role in harnessing this technology to drive more jobs, better public services, and growth that’s UK-wide."

The Chancellor also said that the UK now plans to open up the AI Economics Institute to international cooperation with G7 countries, focused on information and evidence sharing where it is in the national interest.

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