The UK government has announced a series of major funding commitments to artificial intelligence (AI), automation and innovation as part of its 2025 Spending Review.
Delivering the Spending Review speech to Parliament on 11 June, chancellor Rachel Reeves confirmed that public R&D spending will rise to £22bn per year by 2029-30.
She also unveiled a new £2bn AI Action Plan, to be delivered through the UK Department for Science, Innovation and Technology (DSIT), alongside a substantial increase in capitalisation for the British Business Bank, taking its investment capacity to £25.6bn.
The AI Action Plan aims to scale the responsible deployment of AI across multiple high-value sectors, including manufacturing, health and defence. While its existence was announced earlier this year, this marks the first time a specific funding figure has been attached.
The chancellor described the plan as a core pillar of the government’s industrial renewal agenda, emphasising AI’s role in creating high-quality jobs and modernising key public services.
The Spending Review also includes a £10bn uplift in NHS technology funding, a £500m digitalisation programme at HMRC, and further support for the GOV.UK App and Wallet – investments expected to drive adoption of automation tools and AI-powered infrastructure across central government.
Additional reforms to civil service delivery include a planned 16% real-terms cut to departmental administration budgets by 2029–30, the relocation of 12,000 civil service roles outside London, and the development of new regional government hubs in York, Manchester and Darlington. A £50m digital transformation fund will support departments in training staff, automating workflows and reducing consultancy reliance.
Compared to the 2024 Autumn Budget, which sustained existing innovation frameworks such as Innovate UK and Horizon Europe re-entry, the 2025 review places stronger emphasis on applied innovation, public sector automation and regional delivery. For example:
- The £2bn AI plan is new and was not included in previous fiscal statements.
- NHS tech transformation funding has risen nearly 50%, from £6.7bn to £10bn.
- The British Business Bank has received a two-thirds uplift in investment capacity.
- Defence budgets now include £4bn for autonomous systems, as well as energy weapons and munitions investments.
- DSIT and the Advanced Research and Invention Agency (ARIA) both received further support, underscoring their role in high-risk, high-reward technology programmes.
The government also announced £100m to digitise England’s planning system, with a view to accelerating infrastructure deployment. For automation providers in construction tech, modular housing or site logistics, this could reduce barriers to entry and shorten deployment cycles.
The review’s cross-sector reach was broadly welcomed by industry bodies, though many emphasised the importance of forthcoming implementation strategies.
Kevin Craven, CEO of ADS Group, welcomed the boost for DSIT, ARIA and AI investment, calling the review “a welcome boost for businesses throughout the regions that are vital to UK prosperity.” However, he cautioned that clarity would be needed in the forthcoming Industrial Strategy to support “entrepreneurial and innovative sectors”.
Stephen Phipson, chief executive of Make UK, highlighted the need for urgent progress on energy costs and workforce readiness. “Industry needs a funded and joined-up long-term vision for stability and investment,” he said. “If the government delivers on these issues, it would be genuinely game-changing for UK manufacturing and technology.”
Dr Hilary Leevers, chief Eexecutive of EngineeringUK, said the chancellor’s commitment to £113bn in capital projects would create “tens of thousands of jobs in engineering and technology.” She welcomed the £1.2bn increase in training and apprenticeships, but emphasised the need for more STEM education investment and action on gender and socioeconomic access to technical careers.
Jennifer Townsend, partner at Knight Frank, said the government’s direction of travel was clear: “Science, technology and innovation are central to the UK’s growth ambitions.” She cited AI convergence with life sciences and healthtech as areas of global leadership for the UK, while noting “unresolved issues” around infrastructure gaps and commercialisation hurdles.
James Clark, AI and digital regulation partner at Spencer West LLP, noted that the AI Action Plan supports the UK’s sovereign ambitions but flagged key limitations: “The UK has a world-class AI incubator in its universities, but businesses still struggle to access scale-up capital and sustainable data infrastructure. The British Business Bank uplift and public sector adoption push are positive steps – but execution is everything.”
Despite the scale of ambition, several stakeholders noted key omissions from the review. There is no replacement for the “Made Smarter” programme, nor are there automation adoption incentives or procurement reforms specifically targeted at SMEs – particularly those in manufacturing, logistics or agriculture, where deployment costs remain high.
There was also limited detail on AI regulation timelines, ethical testing frameworks, or cross-border collaboration opportunities, despite the UK’s earlier leadership in convening global AI summits. For high-risk, safety-critical sectors such as autonomous mobility or aerial robotics, regulatory certainty remains a top priority.
With a 10-year Industrial Strategy and Infrastructure Plan expected in the coming months, stakeholders across the robotics and automation ecosystem are now focused on how the government intends to convert fiscal commitments into delivery.
While the overall tone of the Spending Review was one of urgency and opportunity, industry figures agree that the next phase must prioritise deployment frameworks, procurement access, workforce development and regulatory clarity to unlock meaningful growth.
Innovative applications of AI in retail and e-commerce, healthcare and pharmaceuticals, food and beverage, automotive, transport & logistics, and more will be celebrated at the Robotics & Automation Awards on 29 October 2025 at De Vere Grand Connaught Rooms in London. Visit www.roboticsandautomationawards.co.uk to learn more about this unmissable event for the UK’s robotics and automation sectors!
