The UK government has launched a £100 million fund aimed at supporting domestic artificial intelligence startups to develop solutions for health and other public services. Announced by Chancellor John Healey on the sidelines of the G20 finance ministers meeting in North Carolina, the initiative seeks to boost innovation while addressing rising concerns over the procurement of AI technology from foreign companies.

The Sovereign AI R&D Procurement Scheme invites British startups to submit proposals targeting key public sector challenges, including reducing NHS waiting times and enhancing cybersecurity across government agencies. Successful applicants will secure contracts ranging from £250,000 to £10 million, with the majority expected to receive funding in the £1 million to £3 million bracket.

Under the terms of the programme, startups will retain ownership of any intellectual property developed during their projects. The government will, however, acquire a licence to use the resulting data, services, and outputs, maintaining rights to implement the technologies within public sector operations.

Healey’s announcement coincides with heightened political scrutiny of government contracts granted to US-based software firm Palantir, which has faced criticism from some quarters for its role in UK public service procurement. At the G20 meeting, Bank of England Governor Andrew Bailey highlighted the broader concerns surrounding AI, emphasizing potential risks to cybersecurity and financial market stability.

The scheme reflects the UK government’s ambition to nurture homegrown AI capabilities and assert greater control over sensitive technologies deployed in public functions amid international competition and geopolitical tensions. Startups are expected to present innovative, scalable solutions that can directly impact public service delivery and security, aligning with national priorities in the evolving digital landscape.