Peter Kyle sets UK AI investment plan as sector reaches £2.9bn in 2024

Private investment in British AI firms reached £2.9 billion in 2024, the highest level to date, announced by Technology Secretary Peter Kyle at Mansion House on 12 March. The sector’s contribution to the national economy has doubled, now estimated at £11.8 billion, up from £5.9 billion in 2023. An average deal size of £5.9 million reflects investors’ willingness to commit substantial sums to early-stage and scaling ventures, while employment in the sector exceeds 86,000 people nationwide. The government’s Plan for Change policy blueprint aims to sustain this momentum, with Kyle warning that swift regulatory and investment action is necessary to keep the UK competitive against the United States, the European Union, and China.

Peter Kyle announced the creation of a dedicated AI assurance industry, staffed by independent experts who will certify the trustworthiness of AI systems. A £11 million innovation fund will open in spring to develop tools that enhance safety, transparency, and accountability. A £2.7 million boost will be allocated to regulators to accelerate approvals in critical sectors, such as energy and aviation. Pilot projects already underway include Ofgem’s use of AI algorithms to fast-track clean-energy infrastructure approvals and the Civil Aviation Authority’s testing of machine-learning models for safety analysis of aircraft systems.

Data released by the government show that the number of AI firms in the Midlands, Yorkshire, Wales and the North West has doubled over the past three years, signalling a shift from a London‑centric model to a truly national growth engine. This decentralised spread reduces concentration risk, attracts a wider pool of talent and aligns investment, talent development and regulatory support across the country, thereby reinforcing the UK’s competitive edge in AI.

Chancellor Rachel Reeves has pledged to cut burdensome red tape to attract investment and drive growth. Helena Sans, head of tech, media and telecoms at Barclays Corporate Bank, notes that access to funding, global investor appetite and risk‑taking remain the most significant hurdles, even as confidence in Britain’s tech base grows. The Ada Lovelace Institute warns that the UK risks operating in a legislative void on facial recognition and AI oversight, adding urgency to the need for clear, forward-looking rules.