The UK government has announced a £25 million challenge fund for artificial intelligence and cybersecurity innovators as part of a wider package to help domestic AI companies grow and strengthen the country’s digital defences.
The fund will sit within a £60 million National Cyber Shield programme, which will use AI to strengthen cybersecurity. The government also plans to explore a regulatory sandbox where companies can test AI-powered security tools for use across critical infrastructure, public services and industry.
The announcement, made by the Treasury ahead of the government’s forthcoming budget, includes an additional £60 million for the Sovereign AI Fund, which invests directly in promising UK AI companies. The fund will expand its focus to include physical and industrial AI, covering areas such as robotics, autonomous systems and advanced manufacturing.
A further £60 million will support the Sovereign AI Fund’s research and development procurement scheme, which backs solutions to public-sector challenges, including in healthcare and AI security. The government has not yet set out application details for the newly announced challenge fund.
The package also includes £15 million for an AI Challenge Prize, with its first award focused on using AI to address healthcare problems, and £18 million for a new Advanced Chip Design Academy to develop semiconductor skills and strengthen links between UK research and chip manufacturing.
Beyond business support, the government is committing £165 million to a National AI Biosecurity Initiative to use AI in detecting biological threats and improving preparedness. It will also provide an additional £120 million to the AI Security Institute for AI testing, research and technical standards.
The measures form part of the government’s effort to develop domestic AI capabilities, reduce reliance on overseas technology and expand the use of AI across businesses and public services.
For UK startups, the funding announcements could create opportunities in cybersecurity, industrial AI, healthcare and public-sector technology procurement. However, the measures have different delivery arrangements, and the announcement does not mean that all the funding is immediately available for applications.
The government has also announced £30 million to kick-start local AI partnerships involving councils, businesses, universities and colleges, with the aim of supporting adoption, local economic development and workforce skills.
