The UK government has launched a £100mn competition for domestic AI start-ups to improve public services, announced by Chancellor John Healey on Monday. The Sovereign AI R&D Procurement Scheme allows British start-ups to propose projects on NHS waiting lists, cyber security, and other priorities. Contracts range from £250,000 to £10mn, averaging £1mn to £3mn. Start-ups retain IP ownership while the government receives usage licences.

The initiative aims to counter reliance on US tech firms like Palantir and address political opposition to foreign government contracts. It follows criticism of Palantir's £330mn NHS contract due to its ties to former US President Donald Trump's immigration policies. Healey emphasized that smaller companies are often excluded from public contracts due to lack of turnover or reserves.

The scheme focuses on automating NHS workflows, expanding public AI capacity, collaborating with the Ministry of Defence, and mitigating AI risks. Projects must be beyond early research but need funding to prove capabilities. The £500mn Sovereign AI fund, established in April, does not require start-ups to remain in Britain as they grow.