Digital and Technology Policy: National Sovereignty
(3 weeks, 1 day ago)
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Baroness Kidron
That this House takes note of the impact of digital and technology policy on national sovereignty.
Baroness Kidron (CB)
My Lords, I am grateful to all noble Lords taking part in this debate. I pay particular tribute to the right reverend Prelate the Bishop of Oxford for his leadership in advocating for digital systems to reflect our ethics and values, who today makes his valedictory speech.
Anyone who has heard me speak about technology over the past 15 years could be forgiven for thinking that I do not much like it. Nothing could be further from the truth. I love what technology makes possible. I rely on it for my health; I use artificial intelligence every day; and I still marvel that I can speak face to face with people on the other side of the world as though they were in the room. My criticism has never been of what technology can do, but rather of the political and economic choices that we have allowed to shape its development.
Technology is not an independent force that arrives from nowhere. It reflects the interests, incentives and values of those who build it, finance it and control it. Technology now underpins every area of public and private life, so digital policy is no longer simply about innovation, information or efficiency. It is a constitutional issue that raises serious questions about sovereignty, including whether Governments retain the practical ability to govern in the interests of their own citizens. That is why I secured this debate. At heart, sovereignty is the capacity to choose. Sovereignty means that Parliament makes the laws, government governs, regulators regulate and courts enforce our law, and that Britain is free to pursue its national interest without coercion or dependence. Yet we have allowed that capacity to be eroded by the tech sector in four distinct ways.
First, we have surrendered political leverage: on copyright, where the Government put their proposed UK-US technology deal above our own copyright law— a deal that, incidentally, never materialised; on child safety, where, as the former Minister Jess Phillips observed, it took a year simply to persuade the Government just to threaten legislation, not to legislate; and on data protection, competition policy and consumer protection, and across government departments, where public lobbying and private pressure have urged officials not to upset the Americans.
That pressure is increasingly reinforced by an activist White House. We are threatened with sanctions for any policy that might impact on US tech. The US tech sector is uniquely concentrated in a small number of companies and beholden to the views of a small number of powerful funders who possess dual-class shares that give them total control. They tell us that Britain will be left behind, that innovation and growth depend on abandoning our own laws, or that complying with them is technically unfeasible. That is very hard to take from companies that promise immortality and colonies on Mars—the very same companies that insisted that age assurance, two-factor authentication and the right to be forgotten would break the internet. Backed by unprecedented wealth and unparalleled political access, they have exercised extraordinary influence over government policy.
Secondly, we have surrendered economic leverage. For years, we have tolerated economic arrangements that place British businesses at a structural disadvantage. Our high streets pay taxes that e-commerce does not, black taxis are subject to obligations while ride-hailing is not, hotels meet standards that short-term letting platforms do not—each is a transfer of wealth overseas. The Government have poured billions of pounds of public money into global technology companies, while British firms that employ people here, pay taxes here and invest here—and, importantly, train the next generation—struggle to gain a foothold in public procurement.
An investigation in last week’s London Review of Books describes how, after years of recruiting former officials and consultants with access to Ministers and senior decision-makers, Palantir secured its position at the heart of the NHS, culminating in a £330 million contract for its federated data platform. Many trusts either have chosen not to use it at all or regard it as inferior to cheaper alternatives. Leeds Teaching Hospitals NHS Trust warned that it would
“lose functionality rather than gain it”,
while NHS Greater Manchester said that its own system
“exceeds anything the FDP currently offers”.
The issue is not only quality or value of money but that, over time, the NHS will become bound to Palantir: it will continue to own its own data but will depend on Palantir’s software to use it. Similarly, the Ministry of Defence admits that replacing one of its Palantir systems
“would involve rebuild of the underlying data analytics architecture”.
That is not simply vendor lock-in; it is a strategic dependency at the heart of our national security. Choice exists in theory but increasingly disappears in practice. Palantir is not unique. Across Whitehall, the same pattern is emerging in cloud computing, enterprise software and artificial intelligence. Sovereignty is not simply the freedom to make a decision; it is the freedom to make a different decision in the future.
Thirdly, we have surrendered technological capability. Every procurement decision is also an investment decision. Buying technology elsewhere means investing in someone else’s industrial future rather than our own. I have spoken to sources in health, defence and policing, who all told me they had been forced to contract AWS because no UK cloud provider was considered financially secure. Yet when I asked whether the combined purchasing power of government could itself create financial resilience for a British provider, the answer was an unqualified yes. Parliament has already provided tools to the competition regulator to challenge entrenched digital market power. The problem is not legislative capacity but political strategy. Cloud computing is only one example. The same logic applies wherever government buys technology. Procurement does not simply purchase capability; it determines where future capability is built.
Fourthly, we have created strategic vulnerability: from Microsoft, which suspended services used by the chief prosecutor of the International Criminal Court and refused to answer questions from Police Scotland about where sensitive law enforcement data was being processed; to Elon Musk withdrawing Starlink access from Ukraine’s military operations; President Trump’s decision to limit access to AI models Fable and Mythos 5 to US nationals only; and this week’s news that an OpenAI agent has autonomously hacked Hugging Face, just weeks after OpenAI’s chief executive argued that frontier AI should be regulated under US leadership. The US has no such regulatory regime, and the risks are imminent.
Together, these reveal the problem of allowing critical public capacity to depend entirely on infrastructure controlled offshore. I fear that those who argue that Britain must wait for global agreement are whistling in the wind. History suggests that meaningful international regulation follows major incidents rather than prevents them. Meanwhile, across government, hospitals, schools, critical infrastructure, and security and intelligence communities, we are replacing technologies whose risks we broadly understand with systems whose capabilities and failures remain, at best, uncertain. A nation that depends on decisions beyond the reach of its own Parliament and Government and its own regulators and courts has, in practice, surrendered its sovereignty.
We have a new Government, and that is an opportunity to lead. Britain begins from a position of enormous strength. We have world-leading universities, exceptional scientists, some of the richest and most trusted datasets in the world in the NHS, the BBC, the Met Office and beyond, and institutions, such as the AI Security Institute, that have demonstrated international leadership. These are not simply public services; they are strategic national assets that we could capitalise on to drive prosperity and independence across some of the technology stack—from AI and quantum to specialist models, medical advances, infrastructure and even a new media environment.
During the passage of the Data (Use and Access) Bill, I argued that these unique datasets should be formally categorised as sovereign datasets. Those working at the frontier of artificial intelligence accept that high-quality data is the scarce resource of the future, but it is a resource that we have in abundance. That is why my noble friend Lord Tarassenko has repeatedly argued that Britain should develop a publicly supported foundation model, so that data generated by the British people continues to create value for Britain. The objective is not to build the world’s largest model. Systems that may or may not be sentient and that foment unemployment for half the world’s population, with no corresponding plan for humankind, are Silicon Valley’s vision, not ours. The objective is to build models that are responsible and trusted, trained on known data, capable of audit, secure by design and, most of all, tailored to the needs of British businesses, public services, legal frameworks and security requirements. A trusted AI ecosystem also requires robust systems of transparency that protect our national security and present an opportunity for licensing at scale.
Government must get off the fence. Companies that refuse to respect British intellectual property should not expect access to public contracts. Britain should create conditions for its intellectual property to be licensed and commercialised across the global economy.
It is time for government procurement to support British values and build national capability: a “sovereign as service” unit across government, promoting British business, including SMEs, enabling pre-authorised procurement and ensuring that public money develops future skills and capability. We want procurement that rewards openness, interoperability, competition and genuine exit strategies, so that the Government never again mistake convenience for resilience or political access for innovation. They should always ask, “Efficient for whom?”—not just whether savings are made but where value is created and where it stays, so that public spending strengthens regional and household prosperity, not simply the market cap of overseas firms. Above all, government contracts should go only to companies that commit to respecting British law.
Finally, we must transform sovereignty from a strapline into a measurable strategy. Ministers speak about reducing strategic dependence, increasing resilience and retaining leverage. They have spoken about building British capability and working with trusted partners. Yet in practice they have pursued the logic of dependence, buying, subsidising and valorising foreign technology, in the belief that being close to power is the same as exercising it. It is not.
I have been working with colleagues at the British Computer Society to develop a national sovereignty dashboard so that we have objective measures of resilience, dependency and capability. Governments already measure inflation, productivity, emissions and debt, because what gets measured gets managed. To ensure sovereignty, we must have a way of measuring it. France, Switzerland, India, Brazil, UAE and South Korea have all made sovereign decisions about aspects of their technology infrastructure. They are investing in their capability and simultaneously protecting their future security. For too long, our approach has been subservient to the lobbying trope that all but America and China are too late. In fact, the vast majority of the world’s population live outside those two superpowers, and tech multilateralism offers the UK a powerful role.
Sovereignty never meant doing everything ourselves; it means retaining the freedom choose now and to make another decision tomorrow. Sovereignty is not protectionism; it is statecraft. There is a different sovereign future available to Britain, built on capability, confidence, trusted systems, respectful partnerships and, above all, the capacity to choose. I beg to move.
Baroness Berger (Lab)
My Lords, we stand today at a moment of profound vulnerability for the United Kingdom. Our economic security, our national safety and even our long-term sovereignty are at massive risk because we do not yet host or own enough of our own computing infrastructure, our own cloud services or our own advanced AI capabilities. By relying so heavily on foreign businesses and Governments far from our shores, we leave ourselves exposed to the possibility of remote disablement, restriction or withdrawal of the very systems that our society, our public services and our businesses increasingly depend on.
Today, the UK relies almost entirely on American and Chinese companies for the most capable AI models. Recent events, including the United States restricting access to one of Anthropic’s most advanced systems, show how fragile that dependence is. In a world where AI increasingly underpins economic growth and national security, Britain must develop homegrown capabilities. Yes, we have a sovereign AI fund, but it is just a fraction of what our neighbours are pursuing. Other nations are already building sovereign AI systems at scale. The United States, China and the European Union are investing billions into domestic computing infrastructure, national-level model development and secure AI infrastructure. France has launched a sovereign AI initiative centred on national cloud and compute capacity, the UAE is developing its own frontier-led models, and countries such as Japan, South Korea and India are rapidly expanding state-backed AI ecosystems.
Here in the UK, we have one of the largest and richest bodies of public data anywhere in the world, not least from our NHS. As the cost of building capable AI systems continues to fall, we have a genuine opportunity to harness that data for ourselves, to help clinicians reach diagnoses faster, and to build public services that reflect our own standards and accountability, rather than simply adopting whatever the market happens to offer us.
But we must also confront the elephant in the room: leading AI companies are racing towards superintelligence, despite acknowledging that it could pose an existential threat to humanity. Sovereign AI is absolutely critical, but it is worth investing in only if other AI models can be kept under control. As we welcome our new Prime Minister, there is a danger that could overshadow all his important goals: the real possibility that advanced AI systems become uncontrollable. How the incoming leadership chooses to approach AI risk will shape our entire future.
Over 120 parliamentarians so far have called for superintelligent AI to be formally recognised as a national and global security threat. I am one of them. Simply put, the UK must lead an international agreement to prohibit the development of superintelligence until it can be proven safe. If we fail, every other ambition for our country risks being swept aside. The clock is ticking. Some AI systems already exceed human abilities in narrow domains, such as Google DeepMind’s AlphaFold. In June, the director of the US National Security Agency revealed that Anthropic’s Mythos model identified vulnerabilities in classified systems. This should be a wake-up call for every Government, including ours.
We are only just beginning to see a shift in the West towards an appetite for government action. At the recent G7 summit, Sam Altman of OpenAI and Sir Demis Hassabis of Google DeepMind both called for a US-led standards body to test the cutting-edge frontier AI models for national security threats. But there is no indication that this is actually coming—and there are agitators that we should all be aware of. It was only this week on X that President Trump’s former AI adviser, David Sacks, called for “permissionless innovation”.
Building more of our AI at home is vital to our security and our economy, but none of it will count for anything unless humans stay in charge. The day that someone builds a true superintelligence or we lose our grip on a powerful AI system, that sovereignty is gone. This week—in fact, just the other day—we witnessed a taste of what happens when humans lose control: the unintended and unprecedented accidental cyber attack by the new GPT-5.6 Sol and other models on the very platform that was hosting a test. Perhaps it should concern us all that that did not make some of the front pages of our newspapers.
This debate shines a spotlight on something vital for our country: that building sovereign AI capacity is absolutely essential. But, if any nation or company builds a true superintelligence without guardrails, that sovereignty disappears everywhere. We need urgent action to develop our own models to ensure that we have rapid investment in our own AI infrastructure for our economy, for our security and for our resilience. But we also need urgent action to prohibit the development of superintelligent AI until scientific consensus shows us that it can be made safe. The time to act is now.
Lord Howell of Guildford (Con)
My Lords, it is time for the formal and ritual congratulations to the noble Baroness, Kidron, not merely on starting the debate but for recognising her enormous energy, concentration and focus on the real issues, which I am glad we are debating now at the end of this term. Of course, the key issue is who holds power and how on earth, in the new conditions in which power is shifting all the time, we will maintain some control—the noble Baroness who has just spoken rightly reminded us of this—over areas that we can realistically control, rather than pursuing hopes and slogans that would only raise hopes when nothing can be done.
I say, incidentally, that the slogan “Take back control” is one of the silliest, most immature and most useless slogans that has been thrown into the political debate over the last decade or so. That is not the question; it gives us no guidance as to how on earth we establish the new powers, how we can contribute to them, or how we retain the areas where sovereignty has obviously been completely changed and partly dissolved from what existed 20, 30 or 40 years ago. Where does it lie now? It lies increasingly, as the noble Baroness, Lady Kidron, and others know perfectly well, with the great platforms—I am not sure whether it is the four American ones, the two or three Chinese ones or other platforms that are emerging. We try our best in some areas, but it is with the platforms that the power exists. The question is how on earth we are to identify areas where we can retain maximum influence internationally as well as retaining our own systems much more efficiently than we do.
As an example, the whole of world trade has changed beyond recognition in the last five years. It is now a seething mass of supply chains covering almost every product and a whole range of countries, usually with computers—and computers containing Chinese parts, at that. That requires a completely different approach to bilateral trade control than anything we have had before.
On energy links, people talk about independent energy in this country. Frankly, that makes absolutely no sense when you look at the technology of energy. All the major sources, both traditional, fossil fuel and new and renewable ones, are heavily dependent on international networks of enormous complexity. Even on our nuclear side—where I think we all, or most people, favour development—people think that if we can build enough large nuclear power stations, we will be all right. That is complete nonsense. It only requires one difficulty in a Korean nuclear power station, or in any part of any system, for the entire world network to be badly affected. If we are talking about electricity and trying to move towards an all-electric economy, we know that we depend on endless interconnectors, linkages and supplies that come only from being heavily dependent on elaborate networks to which we must contribute rather than dance around and try to avoid.
Defence and security are intensely linked, as never before. We say that we must spend more on defence, and of course we must, but what is this defence? Does it really exist? Are we in fact more vulnerable than ever, with strategic threats from hypersonic missiles? Someone pointed out the other day that the V2 came at the end of the Second World War. It was wildly inaccurate, but no one had any conceivable means of stopping it. We were completely defenceless against it. The only defence in the end was for the allied troops to overrun the launching stations and the factories where slave labour was manufacturing these things. That was the only solution. We have not really solved the international missile situation now. We are, in fact, still defenceless.
On the climate, we can do our bit, but CO2 does not obey national frontiers and borders, nor do its effects. This is an area where we obviously have to work entirely new systems and make them operative internationally. Otherwise, we will merely see the continuation of the rise in emissions, which is happening just as fast as it ever was despite all our efforts.
Then there are all the areas that the noble Baroness quite rightly mentioned, as well as inflation, pensions and pandemics. All these are globalised issues. My conclusion is, for the moment, quite simple: we need new, strong, multilateral institutions, which we do not have. In 1945, our brilliant people in America, Britain and other countries came together and created an entirely new international order with strong institutions. Today, that does not exist. I listen in vain to hear that real efforts are being put into restoring the respect and trust that these institutions must have—the UN, the IMF, the World Trade Organization, formerly GATT, the International Maritime Organization and courts of justice. The whole rule of law is being internationally flouted. If I have one wish, it is to hear that new energies are going into that area to provide a shell for what we have to do ourselves as a law-abiding country. A shell is essential because otherwise, without that shell, we shall have the same fate as a snail who proceeds without one. We all know what that is: they get gobbled up.
Baroness Stowell of Beeston (Con)
My Lords, I am grateful to the noble Baroness, Lady Kidron, for facilitating this debate on such an important topic. It is, as always, a pleasure to follow my noble friend, who makes such thoughtful contributions.
I want to concentrate on artificial intelligence. As I think we all know, alongside magnificent opportunities, it presents many risks. The greatest of those risks is not intelligence or what the technology can do, but the concentration of power in too few companies, in too few countries and, ultimately, in too few hands. We have seen the consequences—the noble Baroness, Lady Kidron, has talked about some of them—when digital markets become dominated by a small number of powerful platforms: reduced competition, weaker innovation and increased dependency.
The question, therefore, is not whether concentration of power matters—it plainly does—but how we respond. I share with many noble Lords the concern that the UK should not become dependent on a handful of foreign tech companies for critical digital capabilities, but I am not convinced that the answer is more regulation. The largest and most dominant frontier model developers benefit if Governments believe that only they can be allowed to develop safely the most powerful AI. They benefit from a resulting policy debate in which ever greater risks are assumed to require ever greater regulation. That, to me, is the real danger of regulatory capture. Regulation introduced in the name of safety can become a barrier to entry that protects today’s dominant platforms from tomorrow’s competitors.
Before we legislate, we should ask not only whether a risk is sufficiently real and significant to justify intervention—of course, this week’s OpenAI breakout cyber attack makes that question a live one—but whether the proposed intervention will strengthen competition or simply reinforce existing market power. The answer to concentration is competition. The open-weight foundation models are the greatest enabler of competition that AI has yet produced. They fundamentally change the economics of innovation by lowering the cost of deployment and entry—I refer noble Lords to an article in the Washington Post this week by Bill Gurley. These open models allow many more companies, including British start-ups, to build world-class AI applications without first having to spend billions training frontier models. Recent developments have demonstrated that this is no longer theoretical. The emergence of highly capable, low-cost open- foundation models, including from China, shows that cutting-edge AI is no longer confined to a handful of closed proprietary systems. We should welcome that, not because we wish to depend on China—we obviously do not—but because competition is the surest antidote to concentration of power.
Britain does not need to own a frontier model to achieve AI sovereignty. We need the freedom to choose between competing models, the ability to build on them and the capability to deploy them securely, on our terms, into our economy and public services. As I and many other noble Lords have argued before, Britain’s challenge has never been inventing technology; it has been scaling technology companies. Open-foundation models give more British firms the opportunity to compete, grow and retain strategic capability here, as in not bought or moved elsewhere. That is why competition policy matters and why, only where relevant and necessary, the CMA must use its powers in the Digital Markets, Competition and Consumers Act to ensure that AI markets remain open, competitive and capable of supporting new entrants.
Competition must of course go hand in hand with protection for creators, and the arrival of open foundation models makes getting copyright right more, not less, important. Creators should have the technological means to know when their work is being accessed, to decide whether and at what terms it may be used for AI training, and to receive fair compensation when it is. Measures such as the Private Member’s Bill that my right honourable friend Damian Hinds is introducing in another place about online software access and transparency point towards the kind of targeted transparency that can help achieve those objectives.
The UK has an opportunity to take a distinctive path, embracing open foundation models, protecting intellectual property, using our competition powers robustly and creating the best environment for AI companies to start, scale and compete. If sovereignty is our objective, competition, not concentration, must be our strategy, and competition in AI will depend on whether we embrace the technology that enables it, which will be open-weight foundation models.
Baroness Gill (Lab)
My Lords, my congratulations and gratitude go to the noble Baroness, Lady Kidron, for securing this debate. Though it feels like we have an almost weekly debate in your Lordships’ House on one aspect or another of AI, I think it is most welcome, given that this is one of the most concerning, unregulated areas that affects our daily lives, and is likely to remain so in the future. Nevertheless, there has been little debate about how our national sovereignty is being slowly eroded, in real time, by those who control our data, our infrastructure and our algorithms. Most worryingly, they are not bound by our laws. I believe we are standing at a critical crossroads.
As we have heard from noble Lords who spoke before me, not controlling our own digital destiny risks our becoming a digital colony of the American monopolies and being subject to powers who are, let us say, our fleeting friends. That is why I strongly welcome Prime Minister Burnham’s decision to bring the AI Minister, Kanishka Narayan, to the Cabinet table. This structural promotion signals and recognises that artificial intelligence is the very foundation of our future national security and public services, ensuring economic growth. However, while this is a welcome change, our defensive and regulatory framework remains dangerously behind the curve. Building fences for the large language models of today could mean being completely defenceless against the autonomous threats of tomorrow.
I agree with what the noble Baroness, Lady Stowell, said: yesterday, we heard about another example of AI moving rapidly from a contained tool to an agentic system that can actively operate across networks without any human intervention. The true threat to our national sovereignty is from the weaponisation of rogue, cross-border AI. Future frontier models will have the capability to bypass localised testing sandboxes, dynamically rewriting their own code to evade containment protocols. Once free, these models can act as borderless, self-replicating digital entities, infiltrating critical national infrastructure, military networks and private cloud storage across the globe. Just imagine if they were subverted by an adversarial foreign nation or cyber-criminal syndicate. These autonomous agents could execute co-ordinated, low-observable attacks on our financial systems and power grids without leaving a traditional digital footprint.
One of my hobby horses when we are talking about AI is how predatory bots are aggressively scraping valuable copyright content from UK website owners without their consent, starving our homegrown creative industries, a major contributor to our economy. True digital sovereignty requires us to protect our creators from intellectual property theft, to break up market monopolies and to build predictive and hardened defences.
I have a couple of questions for my noble friend the Minister. When will the Government issue a refreshed strategic steer to the CMA to reaffirm its independence and inject urgency into its enforcement, ensuring that it acts at a pace that matches the speed at which the AI stack is being monopolised? Secondly, will the Government explicitly rule out new copyright exceptions for AI and support legislative efforts to give UK content creators the legal certainty and transparency they need to block predatory scraping bots?
Lord Vaizey of Didcot (Con)
My Lords, I am grateful for the opportunity to take part in this debate, and I add to the plaudits directed at the noble Baroness, Lady Kidron, who has prosecuted her agenda on digital safety and digital rights for more than a decade with acute skill and has certainly moved the dial on many occasions. May I also say how pleased I am that the Minister has survived the reshuffle cull? As she knows, I had a small desire that she would move to the environment department, so that we could refer to her as Baroness Lloyd of Effra of Defra, but we will have to wait. And may I say how sad I am that the noble Baroness, Lady Chapman, has left the Government? She was an absolutely excellent Minister. I declare my interest as an adviser to Digital Futures, which deploys AI engineers into companies and assesses their AI capabilities.
In November, the House of Lords Science and Tech Committee described the UK tech economy as an incubator economy. More recently, Amanda Brock from OpenUK made the point that we should not seek, when we talk about AI sovereignty, to build the whole AI tech stack by ourselves. Somewhere between those two statements lies the way forward, because we are in an interconnected world: we cannot simply ignore the rest of the world, but we must do better than be the incubator economy we have been for so many years. We must support British companies to scale and grow in this area.
Let me make five recommendations to the Government. The first is obviously to invest in our infrastructure: to invest in the UK companies that are making the chips, building the data centres and investing in the cloud. I was lucky recently to meet a British company, Fractile, which makes chips. It is a British company, based between Bristol, London and Cambridge, and it has recently raised $200 million, but it plans to stay and grow in Britain. This is exactly the kind of company that we should be supporting. As for not building the stack ourselves, let us look at our competitive advantage, of which Fractile is a good example. It is in a very niche business and has identified a need for a particular chip to support large language models which uses less energy and generates less heat. It is this kind of small infrastructure play that can reap huge dividends for the UK AI economy and is exactly what we should be looking at. We should be looking at grid connections and at building British data centres.
I also echo the earlier comment about creating a national data sovereignty platform. It is absolutely right that one of our unique advantages in this space is the access we have to the data of British citizens, which should be handled carefully but which gives us an enormous advantage, particularly in areas such as the NHS.
The third way forward is to invest as much as possible. I am delighted that the Government have set up sovereign AI—it is only £500 million, but that is still a significant sum; it is less than the €5 billion that the EU has set aside, but we are just a small island—and the fund that has been set aside for AI hardware. I hope that the Minister will reassure us that that £500 million will be fully allocated to sovereign AI and clear up some of the confusion. Her colleague said yesterday that it was moving to DBIST, but I am now told that it is moving to the Cabinet Office. Some clarity on that would be useful.
I referred earlier to my work with Digital Futures. Skills are hugely important in this area. I gather that there are predicted to be around 900,000 vacancies in the tech economy in the next few years and there was a drop in engineering apprentices of some 42% over the last few years. A focus on building the skill economy that we so vitally need to support these industries is important.
Finally, my killer point is that the best way forward would be to abolish the government department that is laser-focused on science, innovation and technology, and to scatter its constituent parts across three different departments and No. 10. That would be a masterstroke, and would allow our civil servants to spend six months trying to sort out where on earth they are meant to be going, rather than implementing policy and delivering. The Minister will not be surprised that I have descended into my default state of facetiousness. The abolition of DSIT is a huge error, considering the urgency this agenda requires and that it has taken three years to get this department up and running and to find its feet. It was a beacon of excellence in Whitehall; many people in the tech economy are sad to see its demise.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the noble Baroness, Lady Kidron, for securing this debate and for a powerful and incisive introduction which rightly identified that what we are talking about today is a constitutional issue—among the many that the British state currently faces, which has a lot to do with the state of Britain today. Governments must be able to make decisions and laws for the good of the British people, not for the profits of a few foreign Governments or at the behest of a capricious foreign regime.
That is not what is happening in the digital area. As the noble Baroness outlined, and others have referred to, we see a situation where decisions are made once. A contract is awarded in a choice between two or maybe three giant companies out of the handful that might have put in for it. Then we are locked in, unable to go anywhere else because the costs of changing horses would be too great.
We must acknowledge that the UK has a terrible record on sovereignty. This is not an isolated issue, and here I respectfully entirely disagree with the noble Lord, Lord Howell. The slogan “Take back control” in the last decade showed that the public understood this problem very clearly. That concern was entirely misdirected—it was directed to the east when it perhaps should have been directed to the west—but none the less the public could see the problem that was arising. Another example which fits nicely with this is the issue of secret courts for ISDS—investor-state dispute settlement procedures. A study from April said that the UK was the worst among European countries in empowering this profoundly undemocratic procedure that stops Governments making decisions in the interests of their people.
Digital sovereignty is particularly important here because the digital realm has taken so much control over our lives, our data, our infrastructure and the very actions of our Government. Meanwhile, many of us are left behind. This is the reality; we are told how great these systems are, but tell that to someone trying to get a system to recognise that this is a photo of them and that it should therefore give them a card—yes, I am reflecting on a recent personal experience.
I will make two key points about who we have handed control to and the nature of that. For the first, I draw on the work of a Danish academic, Ali Rıza Taşkale, who has looked at the Silicon Valley tech bros—the owners of the handful of companies we are talking about that have such a place in the British state—and sees in them an attachment to a philosophy of reactionary futurism, or
“the deployment of science-fiction aesthetics to advance anti-democratic political projects”.
They explicitly set out that they want to engineer a return to an idealised, brutal past—19th-century frontier capitalism with radical individualism, unregulated markets and a rejection of democratic government, but armed with all the technology of the 21st century. This is a handful of men—they are all men—who have control over much of the operation of the British state and British society.
In many areas of the country now, as I canvass for the Green Party, I see Ring doorbell after Ring doorbell. Behind that door, I speak to NHS patients who are acutely aware that Palantir, which they know is a concern, very likely has control over their data and private details. We also see stacks of Amazon packaging waste—often beside, not inside, the bins because they will not fit in them.
To put this in the international context, these are individuals who operate in close, often obsequious, contact with the American regime. The noble Baroness, Lady Kidron, spoke about the “activist White House”. I want to put this in the context of a piece published in the Guardian yesterday by Robert B Shpiner about three speeches given in one day. The Secretary of State said that the counterterrorism architecture should be directed against left-wing political activists—peaceful people. He said that, if they claim that their human rights are being denied, anyone who believes them must be on their side. The White House deputy chief of staff spoke about “left-wing political terrorism”, suggested that you could tell who these people were by what they looked like, and said that any appeal to human rights must “fall on deaf ears”. Then, the American President called the American election system indefensible, claiming that a foreign power had control over it through digital means.
Let us think about the situation that we are in. I agree with the noble Lord, Lord Vaizey, that we cannot have autarchy in a digital world. But we must decide who we are lined up with and partnered with. Crucially, to come back to the point made by the noble Baroness, Lady Kidron, we must have the power to change our mind, to move and to not get locked in.
Baroness Verma (Con)
My Lords, I refer to my membership of a number of APPGs on digital inclusion. I also congratulate the noble Baroness, Lady Kidron, on securing this debate today. Like her, I am not against technology, AI or any of the platforms that exist. However, I worry about the numbers of people who remain excluded from being able to utilise it for their own knowledge and protection. That is why I wanted to speak in this debate.
A few days ago, I was watching a television programme about two types of intelligence: artificial intelligence and latent or civilizational intelligence, which we as human beings have had over centuries in our capacity to learn, to retain and to pass on. It made me think about this debate today. While we can talk about the wider implications of a few companies having such an impact on us in the UK and more widely, it made me think about it being a new form of colonisation across the world, one in which there is very little power in the hands of leaders who do not have access to the complex technologies that exist in only a very few countries on the planet. While we are very keen to cut down the time it takes to get answers, it also removes the ability for a large majority of people to be part of a debate in which they can fully question what is happening to them.
The role of government and Houses such as this is to scrutinise what we are going to deliver and lay out for the majority of the population of the country we serve. I felt quite helpless when I thought about the large part of our country that still has very little access to even basic technology—let alone trying to understand the complexities of artificial intelligence—all the companies that are going to utilise their platforms and our data, and the defence mechanisms that we hold individually but lose because suddenly we have abdicated our power to someone else.
If I step back a little and look at the wider context of why we are having this debate on policy for the digital and technological world, one of the things we should be mindful of is that while a small number of countries are in a mass race to be the most powerful, a large part of the planet remains in the slow lane. I call it colonisation because I could not think of another word for it, but I want us to look at history and what happens when power falls into the hands of the few. The majority’s ability to challenge that without the tools, knowledge or platform to voice their concerns suddenly becomes a difficult issue for me as a public servant in your Lordships’ House.
When I was listening to the opening remarks of the noble Baroness, Lady Kidron, I was trying to think of where I can navigate some of my fears about what is unfolding rapidly in front of us. While this technology fast lane has been going for some time, our resilience to stop and challenge it has developed very slowly. As I said up front, I have no problem with utilising technology, but I do not want technology to utilise me, and I have feeling that that is the path we are going down. It is frightening, because I work with communities that are so behind the curve on access to even the basics. Can the Minister say how we will secure our sovereignty when our duty is not only to the more than 60 million people in this country but to our place on the global platform? I do not think we have been vocal enough about making sure that, when we disagree with some of the actions taken on our behalf and of the many billions on the planet, we do not remove ourselves from the position of power we have always held, which is the convening power of being a voice for the majority.
Lord Moraes (Lab)
My Lords, I, too, welcome the initiative from the noble Baroness, Lady Kidron. I have just finished her book, and it is a good read, but I have only one niggle: I really gasp at the cost of hardbacks. Maybe I am stingy, but they told me it is a whole year or so until there is a paperback so more people can read it. That was just a thought—I digress and should get back to the point. I welcome my noble friend the Minister back to her place, and I am happy that she can continue her work in this important area.
Digital sovereignty means agency. It is such a profound thing: the capacity for we in this country to make choices about everything, from the online safety of our children to the smooth running of our economy. That is a vast area in which to have damaged sovereignty, or a sovereignty gap. Yet, we are now in the simple position whereby a handful of US firms own the digital infrastructure the UK economy runs on, including search browsers, the cloud, app distribution and business software. As my noble friend said, those same companies are now also monopolising the AI stack. In simple terms, this leaves UK firms, public services and consumers dependent on suppliers who are governed elsewhere. That is a very profound thing. We need to understand it, but the more difficult part is how we deal with that reality.
This process did not begin with this Government—it is of neither their making, nor the last Government’s, nor the Government before that. It began in one country in the 2010s, with another country slightly catching up. An extraordinary thing happened in the 2010s: the US tech companies determined that they would weaken oversight of the digital space and not have federal legislation. Today, there is the extraordinary position in the United States whereby there is no federal regulation, as the noble Baroness, Lady Kidron, said, or regulation at all in this space. I repeat that because it is hard to believe. It all exists at state level, with the weakened oversight of the Federal Trade Commission and all the other organs which are traditionally very powerful in American democracy. Congress has no say and does not want to have a say—that is a whole other debate. This reality affects our reality, because those are the organisations that exist in relation to our economy. This is a factual situation, and I want to get on to the issue of how we at least try to deal with this sovereignty gap.
I also want to mention what has happened to this country and its sovereignty in the digital space from that period up until today. We were in the European Union, which has a regulatory weakness. Unlike the United States and China, it does not have the digital infrastructure, and yet it is the best regulator we have globally—there are only three global regulators. When were in the EU, we had that benefit of not only EU legislation and regulation but the protection in court of limiting the cross-border transfers of our citizens, because that is what those companies are monetising. That is point of all this.
In the 2010s, I chaired the Facebook inquiry and I met Mark Zuckerberg. He literally said to us that GDPR is a great thing. He went to Congress and said so—you can see it on YouTube. He admitted that regulation was essential for human beings in the United States, China, here and all around the world. However, they determinedly went on an opposite path, and we are now left with this situation.
There are a number of things we can start doing, because we have to do something—there is no point in just throwing up our hands and saying that this is how it is going to be. I will suggest a couple of things. First, we have to understand what we can do as a country to re-establish that kind of sovereignty. They seem small things, but they are within our capacity. I ask a specific question of the Minister. Take Palantir, which at least everyone knows about. Palantir is trying to take health data, make a cross-border transfer to the United States and sell it. That is what it is doing, and why it is paying us very little for the contract. Even the public, and certainly those who work in the NHS, are aware that the systems are not even that good.
One of the things we need to do, which is within our capacity, is a cost-benefit analysis of the contracts we undertake, because there will be sovereignty issue to that. Are we actually doing that? Secondly, we need to be really clear about what is happening here and what we can do about the blockages. For example, the US CLOUD Act grants US authorities the power to request access to data held anywhere in the world from providers subject to US jurisdiction, with no legal requirement for providers to inform customers. The whole issue of the US CLOUD Act has been raised in Parliament, and I know the Minister in the other place has commented on it, but DSIT has not made any central assessments of what the US CLOUD Act is or what it is doing to our infrastructure and sovereignty. These are the kinds of questions we need to try to answer and make progress on.
Another area—very quickly—is EU alignment; we have safety in numbers if we align. We have good data adequacy agreements with Europe and the European Union. We do not have a good data adequacy agreement with the US, for obvious reasons. Can we at least align on regulatory aspects that help us in this country, and our sovereignty: not everything from the European Union, but at least those aspects where we can align with a data adequacy agreement to help our sovereignty position?
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to take part in this debate. In doing so, I declare my relevant technology interests as adviser to the Crown Estate and to Simmons & Simmons LLP.
I must start by congratulating my friend, the noble Baroness, Lady Kidron, on her brilliant and blistering introduction to this debate. The noble Baroness is having quite a month of it: this debate today, a new book out and a fantastic White Paper published just last week. I know it is only a matter of time—and quite right—before moviegoers will be treated to “Baroness Beeban: The Biopic”. I will be speaking with Christopher Nolan later today.
The departmental chairs have been rearranged. What does this mean, though, for digital sovereignty? Yesterday, the Minister, Jonathan Reynolds, described the new department as a “genuinely new beast”. Make of that what you will, but largely, the technology industry was dismayed that DSIT is no more. I ask the Minister: can they all be wrong?
We also have GDS on the move. Rather than being the positive, impactful, cross-departmental force, it will now be within DCMS, so it will be part of a department, giving a departmental view with a departmental Secretary of State, seeking to influence other different government departments. How will this play out?
Similarly, we have the separation of AI sovereignty and digital infrastructure, now relying on co-ordination where before we had effective oversight. How will this benefit digital sovereignty?
We have the AI Security Institute now responsible within that office for increasing take-up of technology across government. If you have the same group responsible for testing the tech and deploying and supplying the tech, ask anybody what the outcome will be and you will get a single—and in this context, unhelpful—answer. Add to that what is happening with AI IP and copyright and AI growth zones and you have quite a cocktail, none of which on the face of it seems to have an effective and laser focus on digital and AI sovereignty.
So, what do we require? As is always the case, I take your Lordships back to the three Cs: clarity, consistency and coherence of approach. It does not matter whether you are a citizen, creative, consumer, innovator or investor: it is about clarity, consistency and coherence. In the specific context of digital sovereignty, it is about definitions, dependencies and decisions. There are as many definitions of sovereignty as you care to take, but the Government need to pick one, stick to it and clearly and coherently communicate it.
On dependencies, what are the Government prepared to tolerate? We do not need to—nor could we—do full-stack sovereignty. But the truth of it is that no nation, not even the United States of America, nor China, has true, pure, full-stack sovereignty. It is not doable and it is not necessary. What is the risk profile that the Government are prepared to tolerate, and what do they say in terms of broad resilience? To govern is to choose: ultimately, these decisions have to be made.
We have heard variously from the Minister over debates and Oral Questions in your Lordships’ House that digital and AI are now across all domains. Nobody would disagree with that, but would that not suggest that we need a cross-departmental, cross-domain approach when it comes to our legislation and regulation? That is the approach being taken with the cyber Bill, and I agree with it—although it is deficient and absent in some serious areas, with no mention currently of AI, and we will be coming back to that in the September sitting. If it makes sense to have a cross-sector cyber Bill, surely it makes sense to have a cross-sector, cross-economy AI Bill.
For digital sovereignty and AI sovereignty we must think cross-sector and be principles-based and outcomes-focused, with inputs understood. Those principles include trust and transparency, inclusion and innovation, interoperability and an international outlook, accountability, assurance and accessibility. Many of those principles have been weakened by the recent changes to departmental responsibilities, and there needs to be that laser focus on clarity, consistency and coherence. Ultimately, digital sovereignty, AI sovereignty and data sovereignty are all essential elements, and we need to look at how we take an approach which enables, empowers and fundamentally allows all of us as citizens to say, with full throat, that our data, our decisions and our digital futures, together, are human-led, inclusive digital futures.
Baroness Uddin (Non-Afl)
My Lords, it is a pleasure to follow the noble Lord, Lord Holmes, and I thank him for all his work. Echoing all the praises, I, too, express my gratitude to my friend, the noble Baroness, Lady Kidron, for her very powerful leadership, including in this debate.
My contribution today is framed in the context of having organised numerous discussions and meetings in relation to the APPG on digital transformation, of which I declare my membership, and policy on technology as it affects society. In this context, sovereignty is a matter of national security, and promoting our national security is an absolute objective for all Members of the House of Lords and across the other House.
For their support, I acknowledge the Library briefing, ControlAI, and Tasmina Ahmed-Sheikh for her ambitious efforts in relation to advancing sovereign AI stack, which I will make some reference to later. I also thank Dowshan Humzah for his precious time, wisdom and foresight.
Sovereignty used to be visible: in borders, laws, currency and armed forces. Today, much of it is indiscernible: it sits in cloud contracts, chips, codes, data and algorithms. The question is not whether Britain can govern Britain; as the noble Baroness, Lady Kidron, said, it is whether Britain can still choose when the systems supporting our public services, businesses and families are designed, owned and operated elsewhere, outside our legal reach.
Digital sovereignty is therefore not technological isolation. Britain cannot, and need not, build every chip, cloud or frontier model, as has been said. It is about retaining the agency, capability and alternatives to act when circumstances change and to build the foundation of the economic power needed for public services, national security and statecraft itself.
Digital sovereignty shapes national sovereignty in at least three critical ways. The first is strategic autonomy, as has been repeated in this House. Can Britain continue to provide essential services, to protect sensitive data and to change direction if a supplier, another state or dominant monopolies dictate trade terms that are not acceptable to our national requirements and standards?
The second is economic resilience. Consider what plans are in place to improve investment that addresses British capability and expands skills and employment. Will these fast-paced developments leave us permanently renting access from elsewhere, which may endanger future-proofing the protection of national procurement? In this context, I refer to the work I have convened in the House on the Sovereign AI Power Index, which was developed by Tasmina Ahmed-Sheikh, a former MP. It is one disciplined way to measure whether our current trajectory will deliver real sovereignty.
The third is citizen protection and rights, especially those of our children. Can a citizen challenge an automated decision? Can a parent reach a competent human being? Can a child grow up without their attention, identity and vulnerability becoming somebody else’s commercial asset? Tasmina Ahmed-Sheikh’s Sovereign AI Power Index offers a system to measure whether investment is translating into genuine national capability, control and resilience.
Dowshan Humzah, a futurologist, technology practitioner and author, says that technology should be our servant, not our master—as it seems to be now. Yet, too often, digital transformation removes human competence, quality and kindness. Digitising a broken service does not transform it; it industrialises the failures. AI can make a good institution better, but it can also make a bad institution fail faster and more consistently, and with no one held accountable. There are sombre considerations ahead of us regarding the governance and accountability of major public services, including the criminal justice system, education and the autonomous use of weapons in warfare.
On daily matters, I ask the House to imagine two different UK parents in 2031 whose children use AI tutors at school. For one of those parents, the system is transparent, independently tested and subject to UK law. A teacher can explain its recommendations. That parent can challenge an error, and the school can change the supplier without losing the child’s history. Technology is serving the family and society. For the second parent, the child is labelled “low potential” by the system, and nobody can explain why or locally override it. The school is locked in, the data cannot easily be moved, and the human teacher becomes the administrator of the machine’s judgment, with a consequential impact on that child for many years. One parent is a citizen using technology; the other will be captured in a never-ending circle of machine-centric decisions that are difficult to challenge or manage.
In five years, AI agents may mediate education, employment, welfare, health and even warfare. In 10 years, AI will be the infrastructure of the state. In 20 years, today’s primary school children will be the workers, parents and leaders. The defaults we tolerate now—opacity, manipulation and dependency—may become the unwritten constitution of their digital lives.
Digital sovereignty is not about building walls; it is about keeping the keys to our own doors and ensuring that our children inherit them. It is about our children’s future. We cannot place our sovereign digital system in anyone else’s grasp, while we do everything we can to ensure—
Baroness Uddin (Non-Afl)
I am finishing. We must do everything we can to ensure that AI does not become sovereign over Britain. We cannot wait for others to determine the future of our citizens and our children.
Baroness Ramsey of Wall Heath (Lab)
I must ask the noble Baroness to conclude her remarks, please.
Baroness Uddin (Non-Afl)
We must invent it with honour and dignity for human lives.
Baroness Ramsey of Wall Heath (Lab)
My Lords, I remind some Members that the speaking time limit is six minutes for Back-Benchers. I urge all noble Lords to keep within that limit so that the debate may conclude within the time allowed, without cutting short the Minister’s remarks.
Lord Drayson (Lab)
My Lords, I declare my interests as a science entrepreneur and, in particular, my roles as chairman and shareholder in Locai Labs and Freevolt Technologies. I add my congratulations to the noble Baroness, Lady Kidron, on securing this debate and, frankly, her outstanding impact in campaigning against the harms of big tech, which were brilliantly set out in her recent book.
On tech sovereignty, the public are well ahead of Westminster. On AI, they are both alarmed and impatient. Polling published last month found that 80% of the UK public distrust our Government’s ability to control AI at all. The dependency they sense is real and structural. US hyperscalers dominate the UK cloud market. Despite us being a leading nation in AI science, the UK has failed to invest in the infrastructure needed to enable our science to scale a modern industry. It has allowed the infrastructure it does have to be controlled by US companies.
This risk is not hypothetical. Under the US CLOUD Act, American authorities can compel a US-owned provider to disclose data held anywhere in the world, including data held in its UK-resident data centres. Asked under oath by the French Senate whether he could guarantee that French citizens’ data would never be handed over, Microsoft France’s legal director answered: no. When Washington sanctioned officials of the International Criminal Court, its chief prosecutor lost his Microsoft email and a Canadian judge lost her Google and Amazon accounts. Yet in this Parliament we are still using Microsoft 365. Why? Government cloud spending runs at over £6 billion a year across the public sector, paying annual rents on infrastructure that we do not own and do not control.
These decisions to buy from big tech, rather than procuring from businesses owned and managed in the UK, are why we do not have a globally leading British-owned tech company resident in the UK. Either they have been sold, like DeepMind and Arm, to foreign companies, or they have moved offshore using the Delaware flip to access US capital. Your Lordships’ Science and Technology Committee reported in November that our failure to scale has reached “crisis point” and that our economy is “bleeding out” as a result.
The causes are three self-inflicted wounds: procurement that finds that the foreign big tech offer is the cheapest on the day and ignores the strategic cost of failing to build our own industry; capital markets that no longer finance our own companies, with London having shed some 800 listed companies since 2015; and UK pension funds holding as little as 4% of their capital in UK assets. When UK founders incorporate in Delaware, they are not being unpatriotic; they are just going where the capital is.
We already know how to solve this. When we name the capabilities that must be sustained onshore—such as designing and building nuclear submarines—sustained procurement, aligned with strategic sovereign clarity over decades, has meant that Barrow-in-Furness is world leading, and we export these submarines to our allies. This method works.
So I have three asks of the Minister. The first is to make UK government procurement seriously support the British tech sector. The Prime Minister has said he wants to reindustrialise Britain. That means ensuring that the billions currently spent with foreign-owned tech companies are spent at home. Will the Minister commit to creating a strategic sovereign list naming the digital capabilities this country will not outsource? The second is to turn the capital taps back towards Britain. Will the Government now mobilise our pension savings into UK businesses and UK infrastructure? We have the laws to do so. We just need to do it. The third is to buy open, not closed, systems. Germany, Denmark, France and others have moved public employees off Microsoft. Yes, that Microsoft Office 365 that we are all using comes under the US CLOUD Act. There are plenty of open-source alternatives we could be using. I know that some will say it is too difficult or there is no practical alternative to what we are doing but it is not true. Last week, Airbus announced that it is moving its systems off Amazon Web Services to the French provider Scaleway. If a company of that scale and complexity, regulated as it is to manufacture aircraft, can do it, we can do it.
This is not a question of capability but of will. By ensuring that the digital technology shaping our lives is built to our values, rather than somebody else’s, and that it respects the rights of creators, protects children, creates British jobs and pays UK taxes, we have an alternative.
Lord Ranger of Northwood (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Drayson. We share our views on the Science and Technology Committee. I know his passion and commitment for British technology. I also thank the noble Baroness, Lady Kidron, for securing this debate at this crucial time, and declare my interests in supporting British tech businesses VE3, Great Wave AI and Automated Analytics and as a co-founder of the Business AI Alliance.
Future generations will look back at this period of the 21st century as the moment we unlocked the next stage of human potential. Through our advancements in science and technology, we stand on the cusp of dramatically accelerating change in our lives, our societies and perhaps even our politics. In a relatively short time, we will see legions of driverless vehicles, flocks of flying taxis, oodles of agentic digital money, armies of personal robots, precision preventive medicine, and wearable and even bionic enhancements. I believe we shall solve some of the greatest challenges of our age. We shall redefine what we mean by work and leisure. We shall create, discover and travel further than we have ever travelled before, even to the stars.
This is all to come but at this still early stage of our technological evolution, we must think carefully about the foundations upon which these extraordinary achievements will be built. Beneath the excitement lies a rather traditional contest between nation states for technological supremacy. That brings me to the question before us today. What do we mean by national sovereignty in the digital age? For decades, we assumed that globalisation would diminish the importance of borders. That era is changing. We are witnessing the fragmentation of that globalised settlement. Economic security has become national security. Data has become a strategic asset. Artificial intelligence has become an instrument of geopolitical competition. Increasingly, political influence is exercised not only through Governments but through globally significant businesses that carry the strategic interests of their home nations. The United States has made its choice. China has made its choice. The question before us today is whether Britain is prepared to make ours.
Having spent much of my career working with some of the world’s largest tech businesses across multiple continents, I have seen first-hand that the relationship between Governments and global technology companies has become one of the defining features of modern statecraft. Their influence on investment, standards, infrastructure, talent and, increasingly, national resilience cannot be ignored. We know that sovereignty in the digital age is no longer simply about where our borders lie but about whether Britain possesses the capability and confidence to shape our own technological destiny rather than merely consume technologies designed elsewhere.
The choice is where our sensitive data resides, who builds critical infrastructure and how emerging technologies reflect our values and serve our national interests. Against this backdrop, I confess to finding it regrettable that at precisely the moment technology is becoming central to every aspect of government the Government have chosen to abolish the Department for Science, Innovation and Technology. Departments matter. Priorities matter. Institutional structures signal intent. Sovereignty is not achieved through talking about technology but by making clear strategic choices about where Britain will lead and where we will compete.
Are we truly prepared to back our world-leading universities and research institutions to provide the innovations that will define tomorrow’s economy? Are we prepared to ensure that our entrepreneurs and start-ups and scale-ups secure the investment they need to scale globally while remaining proudly British? Are we determined that the City of London will remain the world’s leading international financial centre in the age of digital assets, digital money and tokenised finance? Are we prepared to invest in sovereign capabilities that will determine our competitiveness for generations to come?
Digital sovereignty is not simply about artificial intelligence but about ensuring that British ideas become British industries and that British innovation creates British prosperity. Then British values will continue to shape the technologies that will shape the world. I do not believe that the nations that prosper in this century will have to invent and scale every technology. There will be those with the confidence and strategic clarity to decide which capabilities matter most to their national interest and then back those choices with conviction.
Britain has led great technological revolutions before, and history teaches us that success is never accidental. It requires clear political vision and enduring partnerships and structures between government, academia and industry. Above all, it requires the resolve to stay the course until the job is done. So let us be clear about the choices we make. I ask the Minister and the Government to define with confidence and ambition what British digital sovereignty means, not only to ourselves but to the rest of the world. Then we can measure and manage our sovereignty posture. If we can do that, Britain will not simply adapt to the technological age, we will play our full part in defining it.
Baroness Shields (Con)
My Lords, I too begin by thanking the noble Baroness, Lady Kidron, for once again bringing us together for this important conversation at a moment in time when AI is emerging as the operating system of all our lives.
In May, I cautioned this House that frontier AI systems were shaping our world, that we were being controlled by an extraordinarily narrow concentration of power, capital and data, and that most nations were not participating in that process but inheriting it. I return to that argument today because it is no longer a forecast. It is now a fact pattern. Frontier AI capability sits overwhelmingly in the hands of a few companies headquartered mainly in the United States and China. Every other nation participates by permission, not by right. That permission can be withdrawn arbitrarily in an instant.
We saw this explicitly on 12 June, when the US Department of Commerce directive forced Anthropic to suspend access to its most advanced model, Claude Fable, for foreign nationals worldwide, including its own foreign national researchers. They were unable to touch the model they had built because of the passport they held. Access was restored on 1 July. However, sovereignty was not.
The UK has no seat at the table. Taken together, this incident, along with this week’s reports of an autonomous AI agent powered by OpenAI models escaping its research sandbox and interacting with the Hugging Face open-source repository, illustrate a profound shift now under way. Our security institutions have been built on the assumption that agency is human. That assumption no longer holds. We are entering a world in which software agents will increasingly make decisions, negotiate with one another and act on behalf of people, companies and nations.
Both incidents report to the same underlying truth—sovereignty is not simply a function of computing power. It is a function of control over access, deployment and consequences, and that is where Britain’s real vulnerability lies.
This Motion is about policy, but we cannot make good policy the way we normally do, through debate, precedent and incremental regulatory convention, when the assumption that those conventions rest on is that intelligence and decision-making are exclusively human. That no longer holds. This is a new magnitude of change. It transforms both the nature of global competition and the meaning of sovereign control.
No single country can dominate every layer of the technology stack, and we should not delude ourselves. UK public investment measured in hundreds of millions can never compete with private capital measured in hundreds of billions. The strategic question for Britain is therefore not whether we can match the raw capability and scale of foreign frontier models but where our genuine advantage lies. Our specific strength is our vibrant British tech ecosystem—in the domain-specific models it is building; the physical systems it is creating, including advanced robotics and drones; and deep vertical applications, on which Britain already holds genuine competitive advantages.
There are risks in that domain as well. Just last week, Microsoft CEO Satya Nadella warned of what he calls a “reverse information paradox”. Organisations that plug directly into foreign frontier models are paying twice: once with their capital for access and again with their institutional knowledge, which they leak prompt by prompt. Palantir’s Alex Karp puts it more bluntly: he calls this losing your alpha—your core intellectual property handed to a competitor that never had to earn it. This reflects a broader shift in where strategic value now resides.
The AI frontier is also commoditising faster than anyone predicted. Intelligence is becoming a utility. Consequently, durable value and, with it, strategic risk have migrated to the layer that interfaces with our critical infrastructure, including our health service, energy grid, transportation and agriculture systems.
The Government’s role should be to set the gold standard by certifying the boundaries around critical infrastructure, ensuring that personal data is protected, data leakages are prevented and British intellectual property is defended. By certifying that protective layer to rigorous standards, we allow our tech ecosystem to flourish safely. We maintain sovereign control over our data, even when the underlying frontier models change, turning digital sovereignty into a competitive asset for British industry.
To achieve this, the Government’s immediate priority must be auditing our dependence on foreign frontier models and establishing strict procurement standards for data sovereignty. That is why I propose a special inquiry into AI power and sovereignty, focused on three non-negotiable pillars: national sovereignty, data sovereignty and cultural sovereignty. Beginning alongside the UK’s G20 presidency in 2027, it would bring together those who build the most advanced AI systems with those who govern them, identifying where Britain’s strategic autonomy is strong, where it is vulnerable and what can be done to protect it. The timing would lead this international conversation with authority at exactly the moment we assume this responsibility. Britain still has time to strengthen its strategic autonomy, but the window is closing. We must not wait until permission is withdrawn to discover what sovereignty was worth.
The Lord Bishop of Oxford (Valedictory Speech)
My Lords, it is a real honour to take part in this debate, and I join others in thanking the noble Baroness, Lady Kidron, for her penetrating analysis.
In the words of our new Prime Minister on the steps of Downing Street a few days ago:
“Britain needs to show the world that we can regain our stability once again”.
Stability is a deeply Christian virtue, as well as in many other world faiths. The psalms speak of God as a rock, our refuge and strength, and our very present help in times of trouble. The rule of Benedict, with his emphasis on stability and faithfulness, underpins many of our institutions, from schools, hospitals and universities to our great cathedrals.
In recent years, new technology has become one of the many factors at work in undermining our stability as a nation. There are many gains from technology, but as we know there are existential risks to mental health, our climate, cohesion, truth, relationships, community, patterns of work, the distribution of power—which affects every part of society—and the international order. The risks inherent in AI are, in part, a product of its accelerating speed of development. Many speak now, and the language has been properly used this afternoon, of a race to artificial general intelligence and frontier AI.
The speed of change and the significant power unleashed make this revolution distinct from other technical developments in the past, because there is a risk that the speed of change will itself undermine the very benefits that change brings. There is simply no time for public trust and confidence to grow, and we have heard of the growing public awareness of risk and the desire that something be done. Debate consistently lags behind the deployment of technology and public awareness. Institutions that give stability to society are undermined. New markets and new jobs have no time to grow where existing ones are superseded so rapidly. There is little time to build capacity in industry, local authorities and Governments internationally.
The acceleration we see at the moment is not inevitable but is almost entirely driven by commercial factors. The huge investment required to develop AI demands massive returns in a very short and contracting space of time. Every example of future scenario planning I have read identifies growing existential risk. We can identify the accelerators, but where are the brakes on AI development globally? Where are the constraints and the restraints for responsible AI which ensure that harms are mitigated, trust is built and benefits justly shared?
A responsible, balancing slowing down can and needs to come only from two sources. The first is the assertion of sovereignty by individual nations, and that assertion of sovereignty needs to be clear, ethically shaped and in the interests of our whole society. Sovereignty will always be a basket of different things—there are no absolutes—but sovereignty must be clearly expressed as a standard by which to measure each new development and each new investment, as others have clearly argued this afternoon. The United Kingdom does not yet have that clear standard and statement of intent. We need it urgently. What steps are the Government taking to make clear our position and our willingness to slow development to a manageable pace? The second source is the combined and collective power of nation states acting in concert. Again, the United Kingdom has a major role to play in drawing together a common approach. What steps are the Government taking to draw such a coalition together for the good of all?
I have been immensely grateful for the opportunity to serve in this house. From beginning to end, the experience has been a sharp learning curve. I have learned so much from colleagues in debate, including today, in APPGs and, in particular, in the Select Committee on AI and the Environment and Climate Change Committee. I am immensely grateful to the staff of the House, the doorkeepers and those who keep us safe. I record my thanks to my researcher, Simon Cross, and to Simon Stanley and Richard Chapman, of the Church of England’s parliamentary unit, for their expertise and wisdom.
The most important part of a building is its foundation. The most vital part of a boat in a storm is the keel, giving stability in the water. As the world navigates the transition to the age of artificial intelligence, we will need more than ever before the values and ethics of our common tradition, rooted in centuries of Christian faith and practice. AI can be a tool for the common good and a source of great benefit, but only if Governments remain sovereign. Does the Minister agree?
Lord Clement-Jones (LD)
My Lords, I declare an interest as a consultant to DLA Piper on AI policy and regulation and as chair of the board of the Authors’ Licensing Collecting Society. I join other noble Lords in congratulating the noble Baroness, Lady Lloyd, on her reappointment, but the bed of nails that is having a debate on the last day of term comes with it.
It is both a privilege and a sadness to follow the right reverend Prelate in his valedictory speech. Before turning to the substance of this debate, I hope that the House will allow me to say a brief word about him. He has, unusually, served both as a Bishop of Sheffield and of Oxford in this House, the latter for exactly 10 years this month. Bishop Steven has been an influential and instrumental voice on artificial intelligence in this House, a member of our original House of Lords Select Committee on AI and crucial in developing the principles for AI development set out by the committee. We just avoided designating them our 10 AI commandments.
He was a founding board member of the Centre for Data Ethics and Innovation, and is someone who has always put the ethical and human dimension of these technologies—dignity, trust, the value of work and human flourishing—first. He was a co-founder member of the House of Lords Select Committee on the Environment and Climate Change. He anticipated the NEETs and AI human flourishing debate by emphasising the importance of adequately preparing young people for changing economic and technological conditions by providing meaningful routes from education into work and ensuring that technological change does not undermine opportunities for younger generations.
It is fitting that his last contribution to this House should be in a debate on digital sovereignty, since the question he has pressed throughout his time here—whether we are shaping these technologies or being shaped by them—is precisely the question that this debate poses at a national and European level. With his insights, collaborative spirit, friendship, and enduring dedication to ethical innovation and policy-making, he will be greatly missed. I know I speak for all of us across the House in wishing him well and all best wishes for the future.
I am grateful to the noble Baroness, Lady Kidron, for securing this debate and for her superb introduction, and to all noble Lords who have spoken today. I congratulate the noble Lords, Lord Moraes and Lord Drayson, on their summer reading material. The debate has ranged widely, from infrastructure to intellectual property and from procurement to accountability, but a single thread runs through it: digital sovereignty is not an abstract concept but crucial for our economic, societal and security future.
The noble Baronesses, Lady Kidron, Lady Berger, Lady Gill and Lady Shields, reminded us of what the absence of that sovereignty looks like in practice. Last month, the US Government placed export controls on Anthropic’s newest models. President Trump gave the company less than 90 minutes to cut off non-US citizens. This restriction was lifted on 1 July, but this episode—and, potentially, the recent OpenAI episode mentioned by some of the noble Baronesses—shows that what we have built in this country is not technological independence but, in the AI Minister’s own phrase, a search for strategic leverage. However, leverage is not control. Karim Khan, chief prosecutor at the International Criminal Court, could tell us the same. Sanctioned in 2025, he lost his Microsoft 365 email account on the decision of a boardroom in Redmond, Washington state, not a court.
There is an economic cost to this dependency. The Competition and Markets Authority found that AWS and Microsoft hold 70% to 90% of our cloud market, as the noble Lord, Lord Drayson, said. This costs UK customers in the region of £500 million a year. The same is true of the rest of the AI stack. We are heavily dependent on US big tech. The noble Baroness, Lady Verma, used “colonisation” in this context. However, as the noble Baroness, Lady Uddin, said, this is not isolation and as the noble Baroness, Lady Shields, said, we need to determine where our advantages lie.
The noble Baroness, Lady Kidron, said that this persists not because of market failure alone but regulatory timidity. I believe very strongly in competition, but I part company with the noble Baroness, Lady Stowell, in that I believe strongly in regulation and competition. I agree with the possibilities of open-source and open-weight models. The CMA, with strong cross-party support, has the powers that it needs under the Digital Markets, Competition and Consumers Act, but only three designations as an SMS of big tech services have been made. The CMA declined to designate Amazon or Microsoft in cloud services as having strategic market status, despite strong recommendations from an independent inquiry. A requirement for Google to negotiate fair and reasonable payment terms with news publishers has been repeatedly delayed. A new strategic steer, which could be issued within weeks, directing the CMA towards binding remedies and reaffirming its independence, would cost nothing and require no legislation. Will the Minister commit the Government to that?
The noble Baronesses, Lady Berger and Lady Shields, and the noble Lords, Lord Vaizey, Lord Drayson and Lord Ranger, talked about data. The noble Lord, Lord Ranger, used the expression “data assets”. I agree that it is very much about exploiting the sovereign data assets that we have in the UK. It is not only about where the data sits. The security systems that protect our networks must read the data that they are guarding to do their job, so a residency promise does not get to the heart of the problem. Microsoft’s own European digital resilience commitment, a pledge to legally contest any order to suspend services here, may be welcome, but, as critics rightly call it, this is “sovereignty washing”. A contractual promise cannot override a foreign law. I very much agree with the noble Lord, Lord Moraes, in wanting answers in this respect.
The noble Baronesses, Lady Kidron and Lady Gill, touched on the importance of copyright. The noble Baroness, Lady Kidron, has already secured the Minister’s confirmation on the record in this House that the sovereign AI fund recipients must comply with UK copyright law. Yet she has called that assurance disingenuous, pointing out that some funded firms will not disclose whether their training data complies at all. We need transparency. I share that scepticism. Confirmation of compliance is not the same as verification of it. I would welcome the Minister’s assurance today that the difference is understood.
The noble Baronesses, Lady Kidron, Lady Bennett and Lady Sheilds, and the noble Lords, Lord Moraes and Lord Drayson, all raised the importance of procurement. In that context, many of them also mentioned Palantir. The Commons Science, Innovation and Technology Select Committee found that the Government was “worryingly comfortable” with dependence on a small number of providers and named Palantir specifically. The Financial Times has reported that the Ministry of Defence’s own data systems are now built on architecture that only Palantir is licensed to support—lock-in by design, not accident.
The noble Lord, Lord Moraes, drew an instructive comparison with Europe. On 3 June, the European Commission adopted what it explicitly called its “tech sovereignty package”. President von der Leyen was blunt:
“We cannot afford to depend on others for the technologies that keep our hospitals running, our energy grids stable and our services secure”.
Set against our own sovereign AI unit, I think the contrast is stark. The EU has a structured, published, cross-sectoral strategy; we do not.
Many noble Lords raised the question of accountability. Indeed, the noble Baronesses, Lady Kidron and Lady Bennett, referred to the “constitutional” issue. This is particularly the case with the prospect of artificial general intelligence and the reality of agentic AI. Sovereignty is hollow without this; we need a single or lead AI regulator, mandatory algorithmic impact assessments, an accountability for algorithms Act and a strict human-in-command standard. We need to ensure responsible AI through that, as the right reverend Prelate said.
I leave the Minister with two questions already put by several noble Lords, in different forms. First, will the Government publish a clear, measurable cross-departmental definition of digital sovereignty, addressing infrastructure, standards, data and procurement, which would replace the current fragmented approach? Secondly, will they commit to reporting annually to Parliament on our strategic dependency risk, as our allies in the EU, Japan and the United States are already doing?
Every procurement decision that embeds foreign dependency is an accumulation of strategic vulnerability. It is time to decide our digital future in Westminster, not Silicon Valley. As the noble Lord, Lord Drayson, said, it is a question of will, not capability. Like the noble Lords, Lord Vaizey and Lord Holmes, I am not convinced by the reorganisation of AI and tech structures in government. But with the new Government there is an opportunity for a new effective sovereignty policy. I very much hope that they take it.
Viscount Camrose (Con)
My Lords, I too thank the noble Baroness, Lady Kidron, for securing this important debate, and I thank all those who participated. It has been fascinating throughout and brilliant points have been made from all sides. I welcome the return of the Minister to her place. As ever, the reward for hard work turns out to be more hard work, but I certainly welcome the continuity and wish her well for the future. I add my own thanks and comments to those of the noble Lord, Lord Clement-Jones, to the right reverend Prelate the Bishop of Oxford. My dealings with him have always been a pleasure and he has shown true leadership on the subject of AI, in bringing the ethical dimension to our deliberations. He will be greatly missed.
I am delighted that we all recognise the growing importance of and the complex dynamics behind this debate. The risk of the erosion of Britain’s strategic position in digital technologies is real. The capacity of most nation states to shape their own digital future is far lower than we might imagine or wish. From critical national infrastructure to our public services, the need to strengthen our sovereign capability is both acute and growing in urgency.
The British Government need to be working towards a coherent holistic sovereignty strategy—one that assesses our strengths and weaknesses relative to the full range of sovereignty risks and that sets out a path to fortify our position. But, in a quandary familiar to noble Lords who take an interest in the cyber security Bill, we are trying to assess Britain’s digital sovereignty policy without the Government having first published a comprehensive digital sovereignty strategy. As of this week, we do not even know which ministry to ask for such a strategy.
I fully accept that Ministers have set out various measures, including the sovereign AI fund, the compute road map and some industrial strategy initiatives, but where is that overarching programme? Where is the White Paper that brings all these elements together? Where is the strategy and where is the explanation of how these disparate powers and initiatives fit within a broader holistic approach to protecting our digital economy and strategic resilience?
I turn now to the nature of the risk and some of the boundaries of our actions. I will not try to repeat or outdo the brilliant summary of those risks by the noble Baroness, Lady Kidron, but I offer a further refinement. The risks to sovereignty come in different forms but public discussion often focuses on the extreme end of the risk spectrum: the catastrophic loss of access to or control of our digital systems as a result of decisions made in other countries, which we have heard about from a number of noble Lords. But while we must constantly bear that risk in mind, there are a range of more probable, if lower-impact, risks that deserve more attention than they often receive.
We may find that, even while our systems continue to function, we lose access to the most advanced capabilities or cede control of our data. When our hospitals, energy systems, financial infrastructure and Armed Forces depend on technologies to which we lack genuine alternatives, we face the risk of strategic disadvantage. Of course, the further we fall behind, the more we risk depending on others for the innovations that confer competitive advantage.
I worry that we are edging towards strategic drift. We need clear answers to essential questions. Where is sovereignty genuinely essential, perhaps starting with defence and cyber, and how do we retain it? Where sovereignty is not achievable, how do we become indispensable? Where neither sovereignty nor indispensability are possible, how do we develop resilience? Perhaps when the Minister responds, she can explain how the Government intend to answer these questions, in addition to the excellent point about measuring the results of their intervention, made by the noble Baroness, Lady Kidron. Maybe the inquiry brilliantly proposed by my noble friend Lady Shields is the right step forward as we develop a holistic strategy.
I am sure many noble Lords will agree that the stakes are highest in artificial intelligence. The noble Baroness, Lady Berger, set that out clearly and well. At a certain level of artificial superintelligence, at which it becomes impossible to control, our species is in mortal danger. There is universal agreement that we must collaborate to protect ourselves against this. However, there is a level of AI beneath that, at which its developer attains permanently unassailable strategic, commercial and military advantage—the “winner takes all” model. We heard the leaders of the AI labs, and indeed the People’s Republic of China, earlier this month, calling for international safety collaboration and regulation while, behind closed doors, remaining in hot pursuit of those sovereign AI models that confer on them unprecedented power. The “winner takes all” dynamic in AI means that public commitments to safety measures, even if made sincerely, are systematically subordinated to the strategic imperative of technical advance.
This raises troubling questions about the adequacy of a strategy that relies primarily on inward investment from large, foreign, technology companies. As the previous Prime Minister’s approach prioritised short-term inward investment over long-term sovereign capability, will the new Government alter that calculus?
I suggest that there are available to us at least three levers to address the sovereignty problem. The first is the use of open-source and open-weight models, as my noble friend Lady Stowell set out so well and clearly, to build AI tools and, in so doing, to develop sovereign capability around building our applications from their foundations. This would not just reduce the costs of and time for development but also reduce the “winner takes all” incentives of the AI labs that are driving the AI industry towards what I might call a Darwinian oligopoly—and, eventually, monopoly—of sovereign solutions. Can the Minister confirm what proportion of the sovereign AI unit’s funding is directed towards open-source components of the AI stack?
The second lever is government procurement, as others have observed, both central and local. Here I should declare my interests, as set out in the register, in early-stage tech ventures. The state continues to be the largest technology buyer in the United Kingdom. We are very fortunate here in the range and technical accomplishment of our start-ups, but the state does not buy enough from our early-stage tech ventures. We often worry here, as my noble friend Lord Vaizey described, about how to convert more of our start-ups to scale-ups. A large part of the answer is for the state to be more open to being their customer. The noble Lord, Lord Drayson, set this out brilliantly. This creates credibility and cashflow for the start-up, and it brings innovation and productivity to the state. As they show us every day in the United States, it creates the sovereign technologies of the future. I refer noble Lords to Oracle, Palantir, SpaceX and many others, all of which started out through government procurement in the United States.
Will the Minister outline what proportion of government procurement in digital technologies is currently directed towards early-stage British tech ventures? What benchmark are the Government using to assess whether procurement is being deployed effectively in the service of sovereignty? I am going to accelerate to the end of my speech, otherwise the Whip will need to hurry me along. I have written too much, but I say briefly that better use of the digital markets Act is going to be the third lever, and I feel we should make more and greater use of that.
In conclusion, I ask the Government to provide as soon as possible a comprehensive digital sovereignty strategy, clear criteria for determining where Britain invests in direct sovereignty versus strategic leverage, a coherent procurement strategy aligned with sovereign and capability objectives, an explanation of how digital competition policy serves sovereignty rather than undermining it, and clarity on the data and copyright policy that preserves our strategic leverage. These seem to be critical and urgent questions. I, too, deeply regret that we no longer have a single front door to a ministry that can answer them all, and that those civil servants who could be focused on answering them will instead spend the coming months in a complex reorganisation.
The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
My Lords, I welcome the opportunity to respond to this debate and I, too, thank the noble Baroness, Lady Kidron, for bringing forward the discussion on this significant issue. Despite the fact that we discuss the important issues of AI once or possibly twice a week, I always find that noble Lords raise additional points for thought and reflection to discuss with colleagues afterwards. I will endeavour to respond to the points made today, and if I do not, I will follow up afterwards.
To respond immediately to the questions on the publication of a digital sovereignty strategy, we have heard this request from one of the committees and from your Lordships and are reflecting on it, but I cannot at this stage confirm that we will be publishing such a strategy as proposed by a number of your Lordships today.
This debate raises fundamental questions concerning our economy, society and national security. The question of how we ensure that the remarkable capabilities of modern technology work in the interests of society, support economic strength, protect citizens in the UK and around the world, and remain rooted in British values is incredibly important. As many noble Lords have mentioned today, the UK has huge strengths: subsea cable connectivity; telecoms companies investing in and connecting citizens throughout the UK; our world-leading universities; and incredible companies involved space, autonomous vehicles and chips.
As the noble Lord, Lord Howell of Guildford, reminded us, now more than ever, technology is a part of global supply chains that link the smartphones we use every day to critical minerals from all around the world. The Government are committed to ensuring that the UK has the right balance between access to the best technologies that global markets have to offer and ensuring our national growth, resilience and security.
In respect of AI, as many interventions have made clear today, a small number of global firms now underpin critical infrastructure, from cloud computing to advanced AI systems. In the light of this, the Government are focused on ensuring long-term resilience, security and control over critical systems. Our approach is about reducing overdependencies and increasing resilience in key national strategic priorities.
The UK believes that the extraordinary complexity of the critical technologies of the present and future, and the range of inputs needed to bring them to market, means it is unlikely that any single country could achieve independence, let alone dominance, across the entire supply chain. Therefore, there will be an inevitable and essential interdependence hardwired into the tech stack.
The noble Lord, Lord Ranger of Northwood, and others asked what our strategy is. It is not to dominate an entire technology but about developing world-leading research and industry in specific elements of the stack; ensuring that we have sufficient domestic capacity in key elements such as compute; and having a resilient, diversified set of relationships with allies to underpin reliable access to our wider supply chain needs. As part of this, in our modern industrial strategy’s Digital and Technologies Sector Plan, the Government set out the plan to back six frontier technologies that drive growth and support UK security and sovereignty. These are advanced connectivity technologies, AI, cyber security, engineering biology, quantum and semiconductors.
As many noble Lords, including the noble Lord, Lord Vaizey, the noble Baroness, Lady Uddin, and my noble friend Lord Drayson highlighted, we are also working to create the necessary conditions for innovative companies to grow and existing companies to adopt new technologies. The UK has a strong private capital ecosystem—the third largest in the world—but there is more that we can and should do to support companies to access the capital that they need. That is why we are expanding the British Business Bank so that high-growth tech firms can access the capital they need, doubling its annual investments to £2.5 billion and committing £5 billion to growth-stage funds.
As referenced by my noble friend Lord Drayson, the Pension Schemes Act will also drive consolidation in the pensions market and boost investment in UK plc. Through the Mansion House commitments and new British Business Bank vehicles, such as the British growth partnership and venture link, we are enabling pension funds to invest at scale in UK science and technology firms, supporting high-value jobs and innovation in the UK.
The UK has one of the fastest growing and most competitive AI sectors in the world. UK AI firms raised £6 billion in investment in 2025, with estimated GVA among dedicated AI firms nearly doubling to £2.2 billion in 2024.
In respect of the sovereign AI fund, which has £500 million, we are backing strategically important UK AI companies. I was asked about the specific areas. They are infrastructure, life sciences and AI assurance—apologies, I do not have the full list here when I thought I had—so that the UK has greater resilience and influence in a global AI economy. Alongside that, in response to my noble friend Lady Berger, there is £1 billion to expand the AI research resource 20 times by 2030, including £750 million for a new national supercomputer in Edinburgh, as well as the five AI growth zones and a £1.1 billion AI hardware plan, combining to make Britain an AI maker, not just an AI taker.
On the points and questions raised by the noble Baronesses, Lady Kidron and Lady Stowell of Beeston, and the noble Viscount, Lord Camrose, we are building non-language frontier models, such as Ineffable Intelligence, and we believe that the approach for language models can look different. The recently announced BOLD lab, based at the University of Oxford, will develop human-centred, resource-efficient AI systems that can operate safely and effectively in the real world. We are also backing the UK tech sector by committing up to £2 billion to establish the UK as a world leader in quantum, and we have made the world’s first commitment to procuring large-scale quantum computers in the early 2030s.
The noble Lord, Lord Vaizey, and the noble Baroness, Lady Verma, raised points about skills and digital inclusion. These are absolutely essential. We have published a digital inclusion action plan, we are investing £187 million in the TechFirst programme, and we are supporting companies to adopt AI so that we can be absolute users and shapers of AI as it is adopted, as well as in its development.
The noble Baroness, Lady Verma, raised important points about the rest of the world and ensuring that all countries contribute to the discussion on the future of AI adoption and AI governance. We are funding practical partnerships with the OECD, the African Union and south-east Asia to support responsible AI adoption, and we participated in the UN’s Geneva AI week, which encourages a role for the UN that promotes sharing science-based information.
The investment in UK companies, UK skills and UK infrastructure puts us in a good place. However, noble Lords raised legitimate concerns about the risks of AI. Where abuses of AI technology are happening and facilitating harm to UK citizens, we have shown that we will not shy away from taking on AI firms and acting decisively—for example, in our response to Grok’s generation of vile and degrading non-consensual sexual deepfakes earlier this year.
On cyber threats and the recent cyber incident referenced by my noble friends Lady Berger and Lady Gill, the cyber capabilities of leading AI systems are indeed advancing rapidly. The UK’s AI Security Institute, as part of its world-leading efforts to make frontier AI safer, is studying the behaviour seen in this incident of an AI system pursuing goals through unintended and unauthorised means. As AI capabilities evolve, it is important that everyone steps up their cyber defences. Ministers have written to UK businesses with clear and practical steps that they can take to do so. AISI continues to work with all labs to better understand AI capabilities and improve safeguards.
Many noble Lords raised the importance of British values and British culture in shaping the development of our technologies, and many asked specific questions around where we are in our approach to copyright. In March, recognising that the previous proposals on copyright did not command widespread support, we set out a new way forward. We want creators to have greater control over how their work is used, and we will take steps to drive best practice on transparency and the use of mechanisms available to creators to control their works online. We recognise that it is right that we value and protect human creativity by labelling content so that it is clear whether it has been made using AI. This will help inform people’s choices. We will also establish a taskforce to put forward proposals for government on best practice for labelling.
The noble Baroness, Lady Kidron, and others, raised questions about public datasets. The Government have launched a call for evidence on the marginal cost restriction on public sector data reuse, seeking views on whether charging for access to public sector data should be reformed to better support innovation, growth and public value. That call for evidence explores whether the current approach of charging for access to public sector data remains appropriate, including the potential impacts of greater cost recovery on data availability, reuse and investment.
Many noble Lords, including my noble friend Lord Moraes, asked about the Government’s strategy on data sovereignty. The Government’s approach is to ensure that the UK has the right balance between access to the benefits of international data flows and carefully protecting both personal and non-personal data. This is underpinned by data protection law, UK security standards and international obligations. We continue to monitor these trade-offs and seek the best balance for the UK. The department recently published a call for evidence, Data Flows You Can Trust, which seeks to gather views from the public and businesses on the approaches they would like to see the Government take in this space.
Many noble Lords raised our public sector, rightly highlighting the role of the Government in procurement and the role of the public sector in adoption. It is crucial that the public sector has access to the best technologies offered on the market, while also supporting UK industry to strengthen capabilities across key technologies. Across the public sector, we are embedding frameworks, standards and guidance to ensure that AI is deployed in a way that is fair, transparent and accountable. This includes the Data and AI Ethics Framework and sharing resources through the AI Knowledge Hub, such as the AI Playbook. The Algorithmic Transparency Recording Standard ensures that the public can understand how systems are used. This is critical not just for risk management but for building public trust in the systems we use.
The Government recognise that cloud services underpin many public services and that concentration in a small number of suppliers can create risks for resilience, competition and value for money. We are improving the visibility of cloud use, strengthening resilience standards and using procurement to secure better value, greater choice and stronger public services. The national cloud infrastructure programme is exploring how the Government can better co-ordinate the way they buy cloud services, work with industry and secure better outcomes for taxpayers. It aims to create genuine opportunities for a broader range of suppliers, including British firms and SMEs. The recently published Cloud Challenge Book supports work to help the public sector act as a more co-ordinated customer at national scale.
Noble Lords are right to highlight the importance of international co-operation and leadership and the vital role of the UK. The UK’s first digital standards strategy, released on 17 June, recognises the important role that digital standards play nationally and globally, from strengthening national security resilience to contributing to economic growth and the innovation behind technological development. We want to ensure that the international standards development ecosystem remains effective, efficient and responsive, and that the standards it develops reflect our society’s values and interests and deliver market benefit. We will continue working strongly with the G7, the OECD and other multilateral partners to shape the future of the governance and adoption of AI globally.
Noble Lords raised the centrality of technological developments for our war-fighting capability and in defence. The Defence Investment Plan sets out the programme of investment to support this in the UK, in particular—to the points raised by a number of noble Lords—its role in procurement and in supporting novel technologies. It clearly set out the proportions in the Defence Investment Plan that will be allocated to novel technologies.
I pay tribute to the right reverend Prelate the Bishop of Oxford for his work over many years, and in particular for my engagement with him in preparing for the debate instigated by the most reverend Primate the Archbishop of Canterbury on AI and society. It is worth remarking to noble Lords that I launched the OECD policy handbook only a few weeks ago. This was informed by the work of many of your Lordships over many years. So that impact will continue.
To conclude, the UK will not be a passive technology taker in this world. Our ambition is to shape how frontier technologies are built, trusted, deployed and governed, looking not inwards but outwards with others and on our terms. We will continue to collaborate closely with global partners in the multilateral system to maximise our reach, delivering UK tech priorities through the most suitable forms and scaling up achievements with our partners. We will continue to invest in infrastructure, digital skills and AI adoption for all. Those noble Lords who have not yet had the pleasure of meeting Minister Kanishka Narayan, who will have a seat at the Cabinet table, will be pleased that he brings clarity of focus and an extraordinary amount of energy to the role of bringing this together at the centre of government. If we can seize this transformative opportunity of technology in a way that puts society first and benefits citizens across the UK and globally, the prize for all of us is significant.
Baroness Kidron (CB)
My Lords, I start by disappointing the noble Lord, Lord Holmes: there will be no biopic about me, but Oxford University is currently building a “Baroness Bee” chatbot that might help my productivity. I apologise for the cost of the hardback book, but let me say that I have donated one to the Library; that is the importance of culture and sharing in our communities.
I am very often met with a level of surprise at the sophistication of this House on this subject. There are a lot of people inside and outside the technology sector who do not quite believe that there is such a depth of knowledge and passion—I mean that in the best possible way—on this subject. Today’s debate is indicative of that.
A number of noble Lords used the words “full stack”—we do not have enough capacity to do the full stack. Then I realised that I had written it down as “full-fat” sovereignty. I think we can all agree that we are not going to have full-fat sovereignty, but there were so many ideas in today’s debate that it adds up to a strategy. I say to the Minister, with deepest respect, that the list that she was asked to give us is a series of activities. Some of them are very important and some are very welcome, but it is not yet a strategy.
Across the House, there were only two disagreements. The first was on whether “Take back control” was a good slogan. I think we can leave that to one side. The other was on whether we should have open-weight models and regulation, or just open-weight models. We can probably walk forward on the basis that there is cross-party agreement that we desperately need an urgent strategy. Whether these responsibilities sit within DSIT or another department is ultimately a machinery of government question, but it cannot be the case that we wait for a strategy on sovereign tech. I absolutely agree with those who say that it goes beyond AI to all kinds of technology. Without a strategy, we cannot put into practice all the brilliant ideas that noble Lords have put forward today. I thank all noble Lords for their contributions.