UK unveils $4.5bn quantum strategy in tech-friendly budget

Joseph Brookes
Senior Reporter

The UK government has announced it will invest billions into digital technologies, startups and R&D. The Spring budget includes commitments of £2.5 billion (AUD$4.55 billion) for quantum technologies alone to accompany a new national quantum strategy.

AI, supercomputing and innovation districts all got budget boosts as well, while a wider overhaul of technology regulations has been promised as the UK government pursues its goal to be the “most innovative economy in the world and a science and technology superpower”.

The Rishi Sunak government has also partly walked back planned cuts to R&D tax incentives, but startups and research heavy companies still now face a less generous scheme.

Australian tech groups say the innovation push in the UK demonstrates the global race to lead critical technology areas, and reiterated calls for a similar federal government investment in the May budget.

The UK Spring Budget handed down by Chancellor of the Exchequer Jeremy Hunt on Wednesday includes several investments in the “infrastructure for research and innovation” like quantum technologies and supercomputing.

£2.5 billion has been pledged over the next decade to support the goals of the UK National Quantum Strategy, also launched overnight.

The quantum commitment will fund research, support business with R&D facilities and uptake, and create a national and international regulatory framework, according to the new strategy.

It recognises quantum is in the midst of “global race” and is a “top priority” for the UK government because of the technologies’ impact on economic growth, health, sustainability, and national security and resilience.

The Australian government is still considering a draft national strategy for quantum it received in December, and is facing calls to make similar large investments to support its plan.

The UK budget also includes a £900 million commitment to build an exascale supercomputer and to establish a new AI Research Resource, with initial funding to start this year.

A new AI taskforce has also been established to advise ministers on AI and “advance UK sovereign capability in foundation models” like large language models.

The UK the government will also award a £1 million prize every year for the next 10 years to researchers that drive progress in critical areas of AI.

Australia’s AI funding and policy programs have either slowed or been reduced in the years since a national AI plan was announced, frustrating parts of the local sector.

Head of the Australian Information Industry Association (AIIA), Simon Bush, said the UK government funding of AI and quantum demonstrated the increasing competition around the world for critical technology leadership.

The digital technologies industry group is pushing the Albanese government to make a $1 billion investment in quantum research and technology over the next five years – equivalent to around half the money the UK government announced Tuesday.

The AIIA has also raised concerns with the slow roll out of AI funding in Australia, including the current action plan which is yet to launch key programs nearly two years since being announced.

Mr Bush said it would be disappointing not to see a significant funding commitment for both technologies in Australia’s May budget because quantum and AI will be “critical underpinnings of our modern digital economy for next 20 to 30 years”.

“We’ve got to invest in areas where we have global capability and skill [like] within areas of AI and quantum, and continue to invest in that sector in a very strategic way,” he told

“So it’s important that the government continues to fund this area.”

The Tech Council of Australia agreed the UK government support was another sign of “fierce global competition” for tech talent and investment.

“The commitments by the UK underline why it’s so important that Australia continues to improve its policy settings in areas like tax and investment, skills and regulation, so we can accelerate our competitive edge,” Tech Council chief executive Kate Pounder told

She said the tech industry group is encouraged by the Albanese government’s move to establish a $15 billion National Reconstruction Fund (NRF), which could eventually support quantum projects. But the group has also asked for a Quantum Industry Investment Program in its submission to the national strategy consultation.

The investment program would disperse funds to eligible start-ups commercialising quantum technology and could be up and running before the NRF.

“Governments around the world are now stepping up to invest billions, providing 90 per cent of total global investment in quantum in 2022, according to the World Economic Forum,” Ms Pounder said.

“This announcement from the UK highlights the importance of the National Reconstruction Fund, and passing the NRF Bill expediently.”

The UK budget also locked in a previous commitment to provide £100 million funding for the Innovation Accelerators program to 26 transformative R&D projects, including computer science, quantum and medtech.

Nearly a £1 billion will also go to setting up lower tax areas centred around university tech hubs in England, Scotland, Wales and Northern Ireland in an attempt to drive productivity in the regions.

On budget day, the UK government also confirmed it supports all the recommendations of a report into the regulation of emerging digital technologies, particularly AI, pledging to set up a regulatory sandbox for the technology.

The UK budget has faced criticism, however, because while it introduced an “enhanced” R&D credit, it did not reverse the recent cuts to R&D tax rebates that the tech sector had been hoping for.

The new credit is only for SMEs that spend 40 per cent or more of their total expenditure on R&D. These businesses will be able to claim a credit worth £27 for every £100 they spend.

“That means an eligible cancer drug company spending £2 million on research and development will receive over £500,000 to help them develop breakthrough treatments,” Chancellor Jeremy Hunt said in his budget speech.

“It is a £1.8 billion package of support helping 20,000 cutting edge companies who day by day are turning Britain into a science superpower.

UK startup groups say the changes still mean the companies will be worse off compared to the before the initial cut, with one describing it as an act of “appeasement” rather than progress.

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