Autumn Budget 2025

Lord Ranger of Northwood Excerpts

Thursday 4th December 2025 Lords Chamber

[Lord Ranger of Northwood (Con)]

My Lords, I also welcome the right reverend Prelate the Bishop of Portsmouth and congratulate him on his maiden speech, and I thank the Minister, the whole Front-Bench team and the team at the Treasury. It is hard work delivering a Budget, and it is hard work for many out there.

This morning, while I was at my son’s nativity play, I asked a fellow parent how the Budget landed for him—an investor, an entrepreneur, a wealth creator and an employer. He said: “The damage was done last year. This year, it is just on top. But at least they did not bring in the exit tax, so the option is still open to me”. So, there is some silver lining for some people.

I will focus on the sector that I have been focused on in industry and am focused on now, which is AI—something that is driving UK businesses. I have said it before, and I will say it again: UK AI businesses are booming. I refer to my registered interest as a co-founder of the Business AI Alliance community of over 170 businesses and independent experts, and as an adviser to AI businesses. From this perspective, on the surface, this Budget offers promise, but in truth, for UK AI SMEs, it falls short.

I recognise the comments from my noble friends Lady Penn and Lord Massey on the welcome changes to the expansion of the enterprise management incentives scheme, the boosted limits in the enterprise investment scheme and the improvements to the venture capital trust framework, which will help scaling businesses attract investment. The much-needed refocusing and pledges for support through UK Research and Innovation should broadly provide more support for innovation, including in sectors such as AI. Yet these measures, while helpful, in no way amount to the comprehensive, sustained support required, as the Prime Minister has said, to make the UK one of the great AI superpowers.

How does the Budget fail UK AI start-ups and SMEs in practice? First, the scale of funding is too small, scattered too thinly. The declared support for AI, for example through new growth zones, remains modest compared to the size of the task. The AI growth zones, while laudable in ambition, do not provide sector-wide grants, infrastructure investment or access to high-end compute for thousands of AI SMEs hoping to scale. Many promising AI firms will remain outside these zones, left to scrape by without meaningful support.

Secondly, there is a lack of targeted support for AI infrastructure and data-intensive needs. AI businesses, especially those working in machine learning with large language models and data analytics, need robust infrastructure, cloud compute, hardware, data access and high-performance chips. The Budget’s nod towards an advanced market commitment for AI chips is welcome on paper, but a one-off scheme, even up to £100 million, is insufficient. It does not guarantee access to the infrastructure every AI start-up needs to train models, run inference at scale or compete globally. I appreciate the difference in scale of the US, but the US CHIPS and Science Act offers over $52 billion of subsidies. Without long-term, large-scale investment in compute infrastructure, the UK risks forcing AI firms to rely on overseas providers, undermining sovereignty and cost-efficiency and costing local job creation.

Our tax incentives are too generic. While expanding EMI, EIS and VCT rules broadly helps, it does not address the unique challenges of AI SMEs. In short, the Budget offers shallow support scattered over a few nice-to-haves, but we need more serious commitment to build a thriving global AI industry in the UK. To be the player on the world stage we need to be, to attract global capital and to create high-paid, skilled jobs, we need more than promises and incremental support. We need a vision and we must be bold. A long-term fiscal strategy, at scale and to scale, is required.