Digital and Technology Policy: National Sovereignty

Baroness Lloyd of Effra Excerpts

Thursday 23rd July 2026 Lords Chamber

[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.