The UK chancellor Rachel Reeves has revealed the spending review that outlines how much day-to-day funding government departments will receive until 2029.
The funding review revealed notable spending increases for artificial intelligence (AI), nuclear power, the modernisation of technology for the NHS, and defence.
However not all budgets for government departments will increase, and some departments will see their budgets cut. The last spending review was held during the Covid-19 pandemic and before that, back in 2015.
Spending review
The government departments that will see an increase are Science, Innovation and Technology (budget to rise 7.4 percent); Health and Social Care (up 2.8 percent); Justice (up 1.8 percent); Local Government (up 1.1 percent); Defence (up 0.7 percent); Education (up 0.7 percent); HM Revenue and Custom (up 0.7 percent); and Energy Security and Net Zero (up 0.5 percent).
But government departments including Culture, Media Sport; Housing; Home Office; Business and Trade; Environment, Food and Rural Affairs; Transport; and Foreign, Commonwealth and Development Office will see their budgets decline, with Transport and Foreign Office being particularly hard hit.
The chancellor revealed an extra £29 billion will be spent on the NHS, and is increasing the NHS technology budget by almost 50 percent, and £10bn to bring the “analogue health system into the digital age”.
The government commitment to nuclear power was reiterated, with £30bn allocated, of which £14.2bn will be spend at the Sizewell C nuclear power station in Suffolk.
Another £2.5bn will be invested in a new small modular reactor programme.
It comes the head of Amazon Web Services had in May said the UK needs more nuclear energy to power AI data centres.
Research and development funding for Science and Technology will go to a record high of £22bn a year by the end of the spending period.
AI investment
The chancellor also outlined a £2 billion investment into “home-grown AI”, as well as funding for training and upskilling.
Digital adoption expert WalkMe said if businesses don’t make it easy for employees to use AI tools at work, the £2 billion will bring little to no economic benefit.
“It’s great that the government is investing in developing AI skills, but our research reveals a stark disconnect between ambition and reality,” said Vivek Behl, VP Strategy at WalkMe. “The government and businesses expect Gen Z to embrace AI at work, but many of them feel overwhelmed, anxious, and unsupported. For employers, there is a risk that AI will become a source of stress, rather than a driver of productivity – and the government’s investment in AI skills will go to waste.”
“To realise the benefits AI can bring, organisations need to know exactly how employees are using AI – and any problems they run into,” said Behl.
“Without this insight, leaders can’t provide the support people need to succeed. Rather than layering complexity across multiple apps, businesses should focus on delivering a seamless, unified experience. Unless businesses focus on ‘digital adoption’ of AI tools in the workplace, the government’s AI Action Plan will not deliver the long-term economic impact it is expecting.”
