Small and Medium-sized Enterprises: AI Sector

Debate between Lord Walney and Lord Leong

Thursday 29th October 2026 Lords Chamber

[Lord Leong (Lab)]

I hear what the noble Lord, says but I say again that our £100 million R&D procurement scheme will help British start-ups develop innovative solutions to government challenges. We are making government a smarter, more accessible customer and creating procurement opportunities for smaller firms instead of favouring established suppliers. Through the sovereign AI fund, we are also supporting early start-up procurement, enabling innovative businesses to demonstrate that technologies generate revenue and attract private investment.

I encourage noble Lords to visit local university science and technology hubs and see innovative AI companies. I was up in Manchester yesterday and there I saw young people and exciting projects. Perhaps noble Lords could go out to university science parks and be encouraged by what is being developed in this country.

[Lord Walney (CB)]

My Lords, does the Minister agree that the Government’s support for, and adoption of, an open source AI framework could greatly reduce the barriers to entry for smaller firms and accelerate investment, particularly if this could be done in partnership with allied nations across the world?

[Lord Leong (Lab)]

I agree with the noble Lord. That is why the British Business Bank has £25.6 billion in financial capacity to support smarter and smaller businesses, including £4 billion in growth capital specifically for innovative research-intensive companies. The sovereign AI fund works alongside the bank, including co-investing in a company called Ineffable Intelligence, a London-based artificial intelligence research lab. Meanwhile, the National Wealth Fund, with £27.8 billion to deploy, is mobilising private investment in AI infrastructure, including a guaranteed £202 million to support various AI companies.

Artificial Intelligence: UK Preparedness

Debate between Lord Walney and Lord Leong

Thursday 22nd January 2026 Lords Chamber

[Lord Leong (Lab)]

My noble friend is spot-on. Small and medium-sized enterprises are vital to AI-driven growth. The Government are supporting SMEs through targeted innovation funding and access to test-based and digital adoption programmes, alongside partnerships with research institutions. By lowering barriers to experimentation, we enable smaller firms to enhance productivity and compete more effectively. This ensures that the economic benefits of AI are shared right across the United Kingdom, fostering a diverse and resilient digital economy throughout the United Kingdom.

[Lord Walney (CB)]

My Lords, with that in mind, will the Government think very carefully about regulating social media, as is a big concern for the Government and the House at the moment? Will they acknowledge the danger of setting up a system which could lock out innovation from precisely those smaller companies in favour of the giants in the States which can find their way through the regulatory system and get the exemptions that are being talked about in this House?

[Lord Leong (Lab)]

The noble Lord highlights a couple of issues. I mentioned earlier that we are investing to develop our own sovereign AI capability. We are setting up investment zones across the country, working with UK-based companies to scale up. As the noble Lord will know, AI has different stacks—the infrastructure layer, the data layer and the model layer. We must work with each level and steer the course between extremes. We must ensure that AI becomes an engine of national renewal, rather than the author of our own demise.