EU Technological Sovereignty Package

Baroness Lloyd of Effra Excerpts

Monday 20th July 2026 Lords Chamber

[Lord Clement-Jones]

To ask His Majesty’s Government what assessment they have made of the EU’s technological sovereignty package; and what plans they have to introduce equivalent instruments to protect and promote the UK’s artificial intelligence capabilities.

[The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

We have undertaken an initial assessment and are working through a detailed assessment of the EU’s technological sovereignty package. This includes proposals on CADA and chips. Our current assessment is that the package presents both opportunities and risks to UK industry. We will continue to engage with industry and European partners as proposals evolve. For the UK, AI sovereignty means reducing overdependencies, strengthening resilience and backing British capability, including through the £1.1 billion AI hardware plan and our sovereign AI fund.

[Lord Clement-Jones (LD)]

My Lords, I declare an interest as a consultant to DLA Piper on AI policy and regulation. The EU’s Cloud and AI Development Act will set out a framework with sovereignty criteria for public sector procurement. The Government’s AI hardware plan, mentioned by the Minister, is welcome, but it contains no equivalent procurement-linked sovereignty framework. Given that the Government’s public procurement overwhelmingly relies on US hyperscalers, can the Minister commit to introducing a UK AI sovereignty assurance framework to ensure that public sector services and critical national infrastructure are nationally resilient?

[Baroness Lloyd of Effra (Lab)]

The Government have already set out their intention to use public sector buying power more strategically. The January 2025 blueprint for modern digital government noted that public sector organisations often contract locally and individually, limiting the impact of the £26 billion of annual technology spend, and committed to continue working on whole of public sector agreements. We are also developing the national cloud infrastructure programme, a strategic initiative to co-ordinate how the public sector buys cloud services. This programme will use the collective buying power of the whole of the public sector to secure better value for taxpayers, strengthen digital resilience and create new opportunities for British businesses.

[Baroness Neville-Rolfe (Con)]

My Lords, is the Minister concerned about the rising pre-eminence of China in AI, with several world-class developers now there and the rapid adoption of its low-cost models across, for example, emerging economies?

[Baroness Lloyd of Effra (Lab)]

Developments in AI are incredible in many respects. That only reinforces our belief that we need to invest in the UK, not just in digital infrastructure and hardware—for example, supporting UK businesses that have unique chip capabilities—but in upskilling people in the UK to adopt AI, so that we as a country can benefit from the productivity gains and that small and large businesses can adopt AI safely and securely.

[Baroness Foster of Aghadrumsee (Non-Afl)]

My Lords, I very much welcome that AI growth zones have been designated across the UK, although not in Northern Ireland. I am sure that the Minister agrees that that is disappointing. If His Majesty’s Government are looking at backing British capability, surely there should be resilience in Northern Ireland as well.

[Baroness Lloyd of Effra (Lab)]

Northern Ireland is an incredibly important region for us. It has, as the noble Baroness knows, very high levels of digital connectivity, which puts it in a great place. I know that it also benefits from a thriving and growing cyber security sector and is thus able to tap into many of the adjacent industries that are part of the AI economy as it grows. We are backing cyber businesses in Northern Ireland and supporting them to export and scale.

[Baroness Kidron (CB)]

My Lords, the EU’s tech sovereignty package recognises the importance of procurement in developing a wider sovereign technological regime. Yet, here in the UK, we are increasingly seeing extensive use of lock-in deals across Defence, Health, the Treasury and so on. Can the Minister say what actions the Government will take to prevent tech dependency when they offer public contracts to foreign-based firms to ensure that the UK retains the ultimate say over its policies across all departments?

[Baroness Lloyd of Effra (Lab)]

The noble Baroness highlights the importance of having clear guidance and a clear framework for the public sector as it makes various procurements. That is why, for example, we have published the Cloud Challenge Book 2026, which helps to identify how the public sector can strengthen resilience, improve competition and reduce unnecessary dependency on individual suppliers. That is part of our approach to cloud procurement for the whole of the public sector.

[The Lord Bishop of Hereford]

My Lords, technological sovereignty is not simply about developing domestic capabilities but about the values that guide their development. What steps are His Majesty’s Government taking to embed accountability, transparency and public oversight in technological development?

[Baroness Lloyd of Effra (Lab)]

Investments that are backed by, for example, the sovereign AI fund must of course abide by UK laws, including copyright laws. However, this also goes to the point about AI technology in terms of discerning values and the understanding of everybody, from children to workers to older populations, about how to safely adopt AI. The assurance market in AI is something that we are backing very strongly, so that people have real clarity about the underlying credentials of the AI that they use.

[Lord Markham (Con)]

My Lords, as someone who has experienced a few PM changes myself, I genuinely wish all the Ministers good luck and thank them for the work that they have done—I know how hard it is. Technological sovereignty ultimately depends not on where AI is regulated but on who owns the compute cloud infrastructure and frontier models. What proportion of government AI investment is building genuine UK-owned capability, rather than further increasing our dependence on overseas hyperscale cloud providers?

[Baroness Lloyd of Effra (Lab)]

The Government are taking the approach of reducing overreliance and building up our own capability. We welcome foreign investment, including in our AI growth zones, and the ability of UK companies and citizens to access the best technology available, whether it is in the UK or elsewhere. That is an important part of our being able to benefit from the developments in AI. However, I absolutely agree that AI compute is the engine behind every AI breakthrough. That is why we are investing up to £2 billion in public compute infrastructure to 2030, so that researchers, start-ups, SMEs and public services can have free access to the computing power they need to work at the frontier of AI.

[Baroness Gill (Lab)]

My Lords, the UK’s AI Security Institute does evaluate frontier models, but it lacks pre-market enforcement powers to block software releases. Pre-market enforcement would force developers to proactively prove that their models meet rigorous safety standards, such as we have for aviation, pharmaceuticals and medical devices. Are the Government open to setting a global standard for AI by backing upfront, rigorous safety evaluations?

[Baroness Lloyd of Effra (Lab)]

The AI Security Institute is one of the pre-eminent institutions in the UK in AI development and the transformations we are seeing. It works very closely with other AI security institutes. I think it was only two weeks back that it was meeting other similar institutions, developing common standards and approaches to assessment, which is one of the important ways that we keep a baseline across the globe for how we should appraise frontier models as they are developed.

[Viscount Colville of Culross (CB)]

My Lords, when the Government support a UK sovereign AI fund, will UK government investment be focused on models trained only on properly sourced and remunerated material?

[Baroness Lloyd of Effra (Lab)]

The AI sovereign fund invests in companies based in the UK. They must adhere to UK law, including UK copyright law, for those investments made in the UK.

[Lord Bellingham (Con)]

My Lords, following on from the question from my noble friend Lord Markham, will the new EU CADA rules block out UK-based infrastructure and cloud service providers?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

We are assessing and having detailed discussions with EU counterparts about exactly the implications of EU CADA for UK businesses. As I mentioned in my opening remarks, we continue to engage very closely because there are some risks to UK businesses, but our strong view is that the EU is stronger with the UK as a partner in these technological developments.