The UK government has announced a package of AI investments ahead of next week's Budget, with funding aimed at strengthening cyber security, supporting UK AI companies, developing chip technology and expanding AI skills across the country.

The chancellor John Healey's package will cover AI research, security and infrastructure, alongside measures to help businesses adopt AI and support public sector services.

The chancellor’s plans include £10 million per year to lead the UK’s work in understanding how AI will reshape jobs and industry and address concerns about AI’s replacement of jobs from workers across the country.

The government said it will invest £165 million in a new National AI Biosecurity Initiative. This includes £100 million for an AI Biosecurity Lab, which will use AI to detect and monitor biological threats, and £65 million to improve biosurveillance and develop medical countermeasures.

The lab will also receive up to £200 million in AI model credits from OpenAI and Anthropic, alongside partnerships with Google DeepMind and Basecamp Research.

The government added it will also provide an additional £120 million for the AI Security Institute to expand its research and testing of AI systems.

To strengthen cyber resilience, the chancellor's package includes £60 million for a National Cyber Shield, which intends to use agentic AI to improve the UK's cyber defences. The funding includes a £25 million challenge fund for UK AI and cyber security companies and a regulatory sandbox for AI-powered cyber security tools.

A further £70 million will fund a new National Exposure and Real-Time Vulnerability Centre, which will use AI to identify cyber vulnerabilities across critical infrastructure, the government said.

The government will also increase support for UK AI businesses. It will provide an additional £60 million for the Sovereign AI Fund to invest in UK AI companies, including businesses developing robotics, autonomous systems and industrial AI. Another £60 million will expand the Sovereign AI R&D Procurement Scheme to support AI projects in healthcare, security and safe AI adoption.

To strengthen semiconductor expertise, the government will invest £18 million in a UK Advanced Chip Design Academy in Edinburgh to develop advanced chip design skills and support research.

The package also includes funding to encourage AI adoption across the UK. The government will launch a £15 million AI Challenge Prize, with the first competition focusing on AI solutions for healthcare.

It will also provide £23 million over the next three years for the AI Economics Institute, which studies AI's impact on productivity, employment and economic growth. The institute will also support international research during the UK's G20 presidency next year.

Manchester will host a new National Cyber Security Centre AI Cyber Security Centre of Excellence to train government cyber security and AI specialists.

Local authorities will also receive £30 million to create AI partnerships that bring together councils, businesses, universities and colleges to support AI adoption, improve public services and develop local skills.

Chancellor John Healey said: “AI will transform daily life: every firm, community, hospital, school, and every aspect of our economy can benefit.

“I understand and share the concerns of working people, so I am setting out a distinctively British approach to AI, one that doesn't leave workers behind and defends our national interest, while ensuring the benefits of AI-enabled growth are felt right across the country.”

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