Tech industry reacts to Spring Statement announcements

This funding will drive down the cost of running the public sector through the use of AI by enhancing productivity and streamlining operations. Through the use of AI to modernise the state and investing in cutting-edge technology for the Ministry of Defence, these measures aim to create a more efficient and effective public sector.

The UK is committed to becoming a defence industrial superpower by allocating a minimum of 10% of the defence budget to new technologies, including drones and AI-enabled systems. This investment will drive demand for highly skilled engineers and scientists while opening new business opportunities for UK tech firms and startups.

By accelerating the delivery of innovative technology to the front line, the government aims to strengthen national security while ensuring that small businesses across the UK have better access to Ministry of Defence contracts.

Stephanie Baxter, Head of Policy at the Institution of Engineering and Technology (IET), said: "We welcome the launch of UK Defence Innovation along with record investment in defence manufacturing to make the UK a Defence Industrial Superpower. The £400 million committed to the development and deployment of new technologies, including quantum and AI, has huge potential for the development of ground-breaking innovations in engineering and technology which can benefit the whole economy and wider society.

"However, we will not be able to become a secure, sustainable and resilient Defence Industrial Superpower without the highly skilled engineers and technologists who underpin the advanced manufacturing base. That is why it is critical that government also invests in the skills training and systems to ensure these new technologies are secure and resilient against vulnerabilities.”

Volodymyr Levykin, CEO and Founder, Skyrora said: “The Government’s newly announced defence innovation fund and commitment to the biggest defence spending increase since the end of the Cold War demonstrate where defence sits on the political agenda. However, now is the time for the UK to tap into the strength of its space sector to develop sovereign defence capabilities, if it is to truly become a defence industrial superpower. Any investment into space catalyses tech development, so investing more in defence (read space) speeds up innovation and the production process.

“Space is the great enabler between industries and the first battlefield for effective defence strategies. If the UK invests more in sovereign launch capabilities, we would not depend on third parties for satellite-based activities such as intelligence, reconnaissance and communications. Ultimately, more investment in defence should automatically mean more investment in space. In turn, we will foster greater innovation, boost the economy, and keep the nation safe.”

The announcement comes against the backdrop of economic turbulence and fiscal tightening with the Office for Budget Responsibility having recently The Office for Budget Responsibility recently halved its GDP growth forecast for the year from 2% to approximately 1%.

Prior to the announcement, Prime Minister Keir Starmer highlighted the vital role of technology and AI in enhancing public services and boosting efficiency.

Unveiling his vision for AI integration, he stated: "What we want to do is make this state more agile. We do think it should be leaner, and we think we can make better use of technology, AI, in how we provide public services."

He reiterated that AI will be key to transforming the public sector, driving efficiency and cost savings while maintaining high service standards.

Bank of England Governor Andrew Bailey has also weighed in on AI's role in economic recovery, comparing its potential impact to past technological revolutions. He stated that AI could significantly "lift growth rates and per capita national income," positioning it as a crucial tool in addressing the UK's productivity crisis and long-term economic stagnation.

Lee Myall, CEO of critical network infrastructure provider, Neos Networks said: “The government's commitment to developing the Oxford-Cambridge growth corridor is a vital step in cementing the UK’s position as a global leader in innovation. This region is home to world-class research, technology, and life sciences, in addition to existing and new data centre developments. It's encouraging to see the government commit once again to measures that will help accelerate its potential in the Spring Statement.

“However, to unlock the full value of these investments, the region must be supported by resilient, high-capacity connectivity. Fixed networks are the backbone of a thriving digital economy, ensuring businesses and research institutions across the corridor can collaborate, scale, and compete on a global stage. This region has not seen significant new core network infrastructure deployed in some time, and there’s a clear need for next-generation networks that connect the dots and provide the necessary capacity to meet future demands.

“To realise the ambition for the Oxford-Cambridge Arc there will need to be new network infrastructure projects to support this growth, connecting the UK’s new digital hubs. The government needs to recognise the criticality of robust and scalable connectivity in shaping the UK’s digital future and make every effort to foster competition and speed up deployment.”

Beatrice Barleon, Head of Policy and Public Affairs, EngineeringUK, responded to the Spring Statement: “The Chancellor’s recognition of the importance of investing in skills through a new training package for up to 60,000 new construction workers is welcome and essential to delivering on the Government’s growth mission, which is underpinned by plans to build 1.5 million homes and to strengthen the UK’s national security.

"EngineeringUK is calling on the Government to go further in the Spending Review and Autumn Budget later this year and look to address the financial barriers to technical and vocational entry routes into engineering and technology for all young people.

"Government must recognise its role in training the next generation and look to move towards a new model of directly funding apprenticeships for 16- to 18-year-olds to help reverse the decline in uptake of apprenticeships for this age group.

"Government must also look to invest in programmes and activities we know work in getting young people interested in careers in engineering & technology, and support the teachers that will help deliver them. We look to government to reverse recent cuts to Continuous Professional Development for STEM teachers and continue to support outreach programmes reaching into schools.

"The investment in construction training announced today is a positive step in the right direction, but this action needs to be replicated through investment across the full STEM skills pipeline.”

Image: Rachel Reeves Official Cabinet Portrait, July 2024 (Source: Wikipedia)