Three giant tech challenges the UK’s new government faces right now

Labour leader Kier Starmer giving a speech in Wales on 3 July 2024 with the candidate for Carmarthenshire – Martha O'Neil – standing on his left and the Welsh first minister – Vaughan Gething – on his right. Behind him is a crowd of supporters, some holding banners with Labour slogans and the Welsh dragon.
(Image credit: Matthew Horwood / Stringer)

So that’s it – the new government (to nobody’s huge surprise) is a Labour one, the new prime minister is to be Keir Starmer and he has a five year parliament to turn his plans into reality.

So what does this mean for the tech industry?

Certainly, the UK’s tech strategy wasn’t mentioned all that much on the election trail and won’t have swayed many undecided voters even if it was. But smarter ways of using tech and new ways of encouraging innovation are going to be key to the new government’s core goals of getting the economy growing faster. Here’s what the new government is likely to do and the challenges it will face.

Making the UK a better place to build and grow tech companies

There’s long been a sense that the UK can do a better job of supporting tech startups. London has distinguished itself as a centre for fintech companies, but innovation is still concentrated too much in the south east of the UK.

Labour’s manifesto does make some gestures towards this: It’s formulating a new industrial strategy and promises to support the development of the AI sector – and remove planning barriers to new data centers. Similar moves for science and technology parks would be welcomed. It has also said it will work with universities to support spinouts and ensure startups have the access to finance. Making sure that happens across the country will be the key.

The UK spends around $20 billion a year on research and development (R&D). Making smarter use of that public investment could make a big difference. Labour’s manifesto says that it will scrap short funding cycles for key R&D institutions in favor of ten-year budgets, which should give businesses a bit more certainty when planning their own investments.

Innovation alone won’t help grow the economy, however. Innovations have to be turned into businesses that employ people and create profits – and pay tax. This is one of the biggest challenges for the UK; to scale businesses, which is hard enough, and then hold onto them.

Too many of these companies will relocate to New York or San Francisco to raise funds. Tech companies and others feel that they will be undervalued if they list in London. The UK needs to demonstrate that staying at home is a viable alternative for the most ambitious.

The last government did a good job of positioning the UK as a leader in AI safety. Labour’s manifesto talks more about ensuring the safe development and use of AI models by introducing binding regulation on the handful of companies developing the most powerful AI models. While that’s sensible, it will likely be hard to enforce in an international race for AI jobs and talent. Nevertheless, the next government needs to do an even better job of positioning the UK as one of the best places to build a tech business in the world.

Digital transformation is the only option for public services

Too many public services are creaking under the strain of legacy systems and diminishing budgets. Tech can’t fix everything, but it can boost productivity – if the government is willing to invest. A wholesale rethink and fundamental digital transformation across public services is needed.

As the Labour manifesto said of the NHS: “A system reliant on pagers and fax machines is not fit for this decade let alone the next.”

While there might be a little exaggeration in there (faxes were due to be phased out in 2020, even if there are probably still a few around) the fundamental point is true. NHS tech is too old and is an obstacle to productivity.

An incredible 13 million hours in doctors’ and nurses’ time lost to IT issues every year (the equivalent of 300,000 full time staff) There’s little point hiring more doctors if all they can do is stare at a PC that refuses to work. Labour has promised new MRI and CT scanners, but what is needed is a much bigger investment program to save money longer term.

The public sector needs to get much better at sharing best practice too.

I’ve spoken to local government CIOs who have found smart ways to use generative AI to cut the costs by using it to answer basic questions which would have otherwise required a call center agent. Wins like this need to be shared faster.

The Labour manifesto talks about the creation of a ‘National Data Library’ to bring together existing research programs and help deliver data-driven public services. There should be a presumption that change is needed fast.

New technology assisted ways of working will be key, too. While some in the last government thought that civil servants sitting at their desks was the most important measure of efficiency, the new government should embrace remote working. Indeed, the Conservative manifesto promised to move 25,000 more civil servants outside of London; the new government should do that and more. That can help spread high paying jobs more widely across the country and open them up to people who don’t want to be in a big city office or any office at all.

(STEM) education, education, education

Governments are limited to five-year terms, but their ambition needs to be much longer term. This new government should be looking out a decade or more in terms of aspirations for our young people.

Better education is one of the best ways of improving life outcomes and longer term improving the outlook for the country. Science, technology, engineering, and math (STEM) education continues to struggle, despite much focus on it already. The UK has a tech skills shortage, which is making all the other problems worse – making it easier for students to continue with their STEM education as long as possible is essential.


None of these challenges can be solved on the first day of a new government. Some of these problems have persisted for years or even decades and even fast action on these issues isn’t going to make an immediate difference. Fixes to some of this will take many years to filter through. However, if the new government makes some good decisions fast then by the time of the next election – and I’m sure some strategists will be thinking about it already – they could already be making a difference.

Solving our tech challenges might not be a priority in the first 100 days of a new administration but getting tech policy right will do much to support the next 100 years of prosperity for the UK.

Steve Ranger

Steve Ranger is an award-winning reporter and editor who writes about technology and business. Previously he was the editorial director at ZDNET and the editor of