UK primed for 'AI take-off'

Sir Keir Starmer’s speech opening London Tech Week at Olympia on Monday was another demonstration of the government’s commitment to the transformative power of artificial intelligence, following January’s AI Opportunities Action Plan. The intentions were laudable, and the investments impressive, particularly in developing talent and skills. But one important element was missing from the government’s ambitious new AI initiatives – a strong digital infrastructure. 

The prime minister referred to AI’s central role in healthcare, social services and defence, and as a driver of economic growth. Rather than putting people out of work, the [UK tech] industry supports over 2 million jobs, and ‘in 2023 our AI sector grew 30 times faster than the rest of the economy’, he said. ‘The government is committing an extra £1bn of funding to scale up our compute power by a factor of 20… a huge increase in the size of Britain’s AI engine… means we can be an AI maker, not just an AI taker.’

This excellent soundbite echoed Harold Wilson’s ‘white heat of technology’ speech at the 1963 Labour party conference. Wilson talked about rapid developments in science and technology transforming society, and the need to harness a scientific revolution to stop the brain drain (to what later became Silicon Valley) and transform the economy.

Like Wilson, Starmer focused on training and education. He referenced the government’s new £187m TechFirst programme, with TechYouth giving students in every UK secondary school the chance to learn AI skills. 

A new government partnership with 11 major tech companies, including Nvidia, Microsoft, Google, Amazon, IBM and Salesforce, is planned to train 7.5 million workers (about 20% of the workforce) in essential AI skills. 

And AI is already in place to support the forthcoming planning legislation, which is designed to drive growth in housebuilding. Starmer, who believes ‘the security of having an affordable home is hugely important’ introduced Extract. This is a new AI tool that the government developed in-house to instantly digitise planning documents, saving councils money and speeding up planning decisions. This sounds great, but managing planning documentation is only the first small step towards building more affordable housing. 

Towards a digital infrastructure

But AI, the 21st century’s ‘white heat’, needs more than money and momentum. As Nvidia CEO Jensen Huang observed in the friendly (fireside?) chat with Starmer and minister for investment Poppy Gustafsson (pictured below) that followed, the UK is lacking the digital infrastructure it needs to support the government’s ambitious plans to use AI to improve public services and transform people’s lives. Huang said the UK had ‘one of the richest AI communities anywhere on the planet’. He praised its ‘Goldilocks’ position of having incredible AI research talent, the best universities, amazing start-ups like Deep Mind and the world’s third-largest AI venture capital ecosystem after the US and China. The UK AI ecosystem is ‘perfect for take-off’, he observed. ‘It’s just missing one thing. It is surprising this is the largest AI ecosystem in the world without its own infrastructure.’ 

But this is about to change and Huang reiterated his commitment to invest in the UK to ‘get the flywheel going’. To this end, Nvidia announced new partnerships with the UK government and financial regulators. These included collaborations with the Department for Science, Innovation and Technology and the Financial Conduct Authority on using AI in workflows, and the establishment of a UK Sovereign AI Industry Forum. 

He made the prediction ‘because to AI, every industry in the UK will soon be a tech industry’. In urging all sectors to apply tech and AI to their businesses, he observed that the UK is an envy of the world, thanks to its abundance of AI researchers, who are critical resources, and the increasing amount of investment supporting those entrepreneurs. 

Finally, Gustafsson asked Huang about the incredible speed of change. There is ‘only one way you can survive’ a technology that moves as fast as AI, and that’s by engaging with it, he responded. ‘You’ve got to get on that spaceship [so that] you’re travelling at the same speed… I would encourage everyone… to simply be engaged [with AI], from school kids to teachers, doctors, accountants, lawyers, researchers.’ 

All these announcements and partnerships show that the UK government is serious about AI transformation. However, the focus on infrastructure, training and education underlines that this is not a quick fix, particularly in respect of achieving broader digital literacy, and ensuring the workforce has the AI skills it will need in an AI-first future.  

Investments and exits

But there were mixed messages in terms of putting the UK at the centre of the AI revolution. Starmer talked about opening up new markets and attracting new investment to the UK. He highlighted global multi-billion-dollar AI-driven private credit firm Liquidity’s decision to open its European headquarters in London and invest £1.5bn in UK tech scale-ups over the next five years as ‘a vote of confidence in our AI Opportunities Action Plan’. However, two UK start-ups were acquired by US companies. Semiconductor manufacturer Alphwave was sold to Qualcomm for$2.4bn and quantum computing company Oxford Ionics was acquired for $1.1bn by IonQ which recently reported on its collaboration with Nvidia, Amazon and AstraZeneca on the use of quantum computing in small molecule drug development. 

After the session, I caught up with Spencer West partner James Klein who advises early-stage and scale-up tech businesses. He agreed with Huang that building the UK’s digital infrastructure will boost inward investment and M&A activity. ‘We certainly have the talent and a deep pool of capital to help companies scale and grow. The infrastructure (and computing power) is clearly lagging behind to enable the UK to keep firmly in the race with other parts of the world but we can undoubtedly catch up quickly given the other factors – the UK’s AI sector is allegedly growing 30x faster than the wider economy,’ he said. 

‘I do think the number/volume of funding rounds will continue to increase as many of the investments we are seeing are also coming from overseas into UK tech. Increased M&A activity will likely continue too.’ 

'We met with start-ups and discussed opportunities to support the firm in delivering its technology strategy. The number and diversity of start-ups, investors and international delegations and big tech brands at LTW is encouraging'

Eddie Twemlow, Burges Salmon

I saw very few legal, legal tech or lawtech exhibitors at London Tech Week’s main conference – although I may well have missed some as Olympia is a huge venue. The only legal tech speakers I saw on the programme were Eleanor Lightbody, CEO of Luminance, who discussed international expansion and Shruti Ajitsaria, partner at A&O Shearman who has been head of Fuse, its tech innovation space, since 2017 who spoke on a panel about regulation. 

While sponsors and exhibitors included representatives of multiple industries, including professional services, I only spotted three law firms. These were Law 365 – a law firm that supports technology businesses; Sprintlaw, a start-up showcaser whose lawyers work online to provide businesses with high-quality, cost-effective legal services; and Vanessa Ganguin Immigration Law, which advises innovators, start-ups and scale-ups on commercial and personal immigration. 

However, there were London Tech Week fringe events at law firms, including RPC and Burges Salmon, and law firm representatives – lawyers and business professionals – at the show at Olympia. I met Eddie Twemlow (head of technology) and Emma Dowden (chief operating officer) from Burges Salmon in the start-up area. Twemlow said: ‘The appearance of the prime minister at London Tech Week underlines the significance of AI and its impact across a broad range of sectors. Investment in skills and infrastructure will help the UK compete for global investment.’ 

He added: ‘We met with start-ups and discussed opportunities to support the firm in delivering its technology strategy. The number and diversity of start-ups, investors and international delegations and big tech brands at LTW is encouraging and demonstrates the level of confidence in the UK technology market.’

Dowden, meanwhile, alluded to her firm’s initiative: ‘Burges Salmon’s Emerging Companies team is a bespoke offering allowing high-growth businesses access to a top UK law firm at a price accessible to their point of growth. We support entrepreneurs and are hosting an event at our London office alongside the Department for Business and Trade as part of LTW.’