UK Spending Review: Industry Reaction

The tech industry has reacted quickly to the UK Spending Review, delivered by Chancellor Rachel Reeves (pictured).

Among the announcements was a £2 billion for the government’s AI Action Plan to create jobs and investment in the UK.

John Gibson, chief commercial officer at AI firm Faculty, said AI can help plug funding and efficiency gaps within public services. “AI models are rapidly improving and starting to pass performance thresholds that make them serious tools to tackle these backlogs.

“Take mental health: 44 percent of disability benefit claimants do so for mental health reasons, and poor mental health costs UK employers £51 billion a year — over a quarter of the annual NHS budget. AI-driven mental health interventions could provide accessible support to millions of Britons currently underserved by the stretched NHS. 

“Generative AI alone could save the UK public sector up to £38 billion a year, freeing vital funds for other public priorities.”

£10 billion NHS tech investment

Reeves announced she is increasing the NHS technology budget by almost 50 percent, with £10 billion of investment to “bring our analogue health system into the digital age, including through the NHS app.”

In her speech, she described innovation as a “great British strength”, yet the biggest barrier to real progress remains outdated, analogue infrastructure.

Flann Horgan, head of healthcare sector at NTT DATA UK & Ireland, has worked closely with multiple NHS trusts, most recently The Royal Marsden.  He said: “You can’t build a digital NHS on analogue infrastructure.

“To get a return on the investment announced today, the government is looking to make digital the default across the NHS and not the exception.

“AI will be key to this, but it won’t be an easy feat to scale across the NHS without tackling siloed data and outdated systems. At The Royal Marsden, we’ve seen this at work: AI tools being deployed to help radiologists diagnose and monitor cancer progression with greater accuracy and speed.  This can be delivered, within real-world NHS constraints – when the right technical and clinical foundations were in place.

“Without these, AI risks becoming just another layer of complexity rather than a tool that genuinely improves care. Fortunately, the NHS Federated Data Platform is laying the groundwork for more intelligent, system-wide decisions. Meanwhile, the proposed £600 million investment from Keir Starmer and the Wellcome Trust in a National Health Data Research Service shows clear momentum for clinical research infrastructure. The challenge now is turning that momentum into meaningful change, so every trust can benefit from the same tools already transforming care in places like The Royal Marsden.”

Investment in local innovation needed to challenge Big Tech

Although tech appears to be a winner, Mark Boost, CEO of UK cloud provider Civo, said it’s more of a mixed bag than it might appear.

“An £86 billion funding promise makes tech one of the ‘winners’ of the spending review: what matters now is how that gets used.

“Local Innovation Partnership funds show promise. They could prove useful in ensuring local leaders share the national government’s enthusiasm for British tech, and make real progress in nurturing regional tech expertise across the country.

“However, this mustn’t detract from DSIT’s big-picture work. Smaller, local clusters of innovation should go hand in hand with a national digital strategy that prioritises security, sovereignty, and fair competition among British firms. Investing in resilient AI infrastructure must be a priority – otherwise, local innovators will remain beholden to Big Tech.”

Elsewhere, Daniel Pell, UK country manager at Workday noted the tough choices the government has been forced to make in the Spending Review.

“Improving the productivity of both government and businesses is essential in alleviating the financial pressures facing our public services and ensuring they remain affordable. Harnessing the benefits of AI can help government departments operate within their financial settlements and deliver the improved business performance needed to fund investments in public services in the future.”

Additionally, Alex Case, an ex-senior civil servant from The Cabinet Office and Number 10 and now government principal at software firm Pegasystems, also believes the tough fiscal situation has compelled HM Treasury to require unprotected spending departments to deliver significant savings in their operating budgets. These savings are on top of the spending cuts that many departments have made during and since the post-2010 austerity period.

“Clearly this puts many departments like the Home Office and Cabinet Office and those that have been hit hardest in previous spending rounds such as the Department for the Environment, Food, and Rural Affairs (Defra), under significant pressure to either cut services or to find efficiencies and to improve their productivity in the way they deliver those services.

“The more positive aspect here is that recent advances that have been made in the development of AI solutions and in particular in the area of AI-driven workflow automation mean that there is now a real possibility of spending departments being able to deliver not just incremental efficiency savings, but rather a step-change in the way that government services are delivered and the resources required to do so. There is now a very real opportunity to transform the way many government departments operate and to automate large parts of not just their back-office operations but also some of their citizen-facing functions.”

Automation, AI and open platforms improve delivery of public services

Finally, Jonny Williams, chief digital adviser – UK Public Sector at Red Hat, sees the impact of any investment dependent on building the digital infrastructure on open standards and human skills to multiply the impact of local breakthroughs into national success. 

“Open source can be a force multiplier for public R&D investment. It helps researchers, startups and government teams build on each other’s work, rather than starting from scratch. It turns isolated innovation into reusable solutions and brings the transparency and accountability needed to build public trust in AI,” he said.

“As the government seeks to manage civil service costs, the opportunity lies in redesigning how services work. Automation, AI and open platforms can reduce duplication and improve delivery across departments.”