£2bn for UK tech, so why is public money still going to US cloud giants?

The government’s Industrial Strategy commits £2bn to power British AI, but we’re still relying on foreign cloud technology and hardware to power it, says Mark Boost

Labour’s new Industrial Strategy sends exactly the kind of long-term signal UK tech has been waiting for, with a bold £2bn pledge to power Artificial Intelligence (AI), new growth zones for advanced industries and a promise to rebuild economic strength on the back of innovation.

It is an agenda that puts AI along with the chips, computers and data centres it relies on, right at the heart of how Britain plans to compete on the world stage.

There is every reason to welcome this. The UK already punches above its weight in research and talent – and a focused national effort could well turn today’s promise into tomorrow’s global advantage. But digital sovereignty – meaning clear, secure control over the data and infrastructure critical to our economy – is still far from guaranteed.

The promise of sovereignty, still built on foreign infrastructure

There is no denying the innovation that has come out of Silicon Valley. Many of the breakthroughs fuelling today’s AI revolution started there, and strong ties with the US will always be essential for Britain’s tech sector. But we also need to be pragmatic about how much control we keep over the foundations of our own AI future.

Much of the cloud infrastructure set to underpin Britain’s AI ambitions is still operated by overseas hyperscalers. Under laws like the US Cloud Act, UK organisations’ data hosted on American platforms can be accessed by US authorities, even if the data is being hosted on UK soil. That means much of the data powering our AI models, or our running critical services, still sits largely outside of UK control. 

There is a clear appetite for this to change. Civo’s research found that most UK IT leaders now see data sovereignty as a strategic priority, recognising the need to future-proof their operations against geopolitical risk.

Beyond data, it’s about where growth and opportunity land

This isn’t only a question of data control. Since 2020, more than £15bn in UK software contracts have gone to US cloud giants, even as successive governments have set ambitions to grow local tech capability. If we don’t address this, billions of pounds in new investment may chiefly end up rewarding overseas companies, rather than strengthening our domestic economy, keeping the UK’s next industrial engine reliant on infrastructure we ultimately don’t govern.

The Sovereign AI Programme announced in Labour’s new strategy is a positive signal. But sovereignty can’t stop at software. If we’re serious about building resilience, we need to look hard at the underlying hardware used in data centres that keeps everything running.

It also means modernising procurement rules. Too often, outdated frameworks favour entrenched players over innovative UK firms, locking them out with rigid requirements that don’t reflect today’s dynamic tech landscape. Reform here would open the door for more local providers to support critical workloads, driving resilience, economic growth, and further supporting a sovereign UK tech ecosystem.

We don’t need to look far for inspiration. Across Europe, there’s a growing push to develop local capacity, not out of protectionism, but from a hard-headed desire to secure supply chains, protect data and foster healthy competition. The UK should see this not as a threat, but as a blueprint.

Ultimately, sovereignty isn’t about putting up barriers. It’s about making sure that when we invest in AI, we’re also investing in the security, reliability and long-term competitiveness of our economy. We have an extraordinary opportunity in front of us to build a world-class AI ecosystem on sovereign foundations. But we’ll only get there if we’re willing to match ambition with action.

Mark Boost is CEO at Civo