The government is stepping up efforts to channel more institutional money into British tech firms as ministers look to stop promising startups heading overseas for funding.

Tech secretary Liz Kendall announced that Labour would pursue reforms to unlock pension fund investment into UK growth firms, adding Britain needs to become an “indispensable partner” in the global AI economy.

The push comes as ministers adopt an increasingly interventionist approach to backing homegrown tech companies, with the public sector already taking stakes in firms like Wayve, Kraken and Oxford Quantum Circuits.

Kendall said the UK needed a “decisive shift” towards supporting domestic AI champions, while business secretary Peter Kyle separately argued the government must be willing to take bigger risks with taxpayer-backed investments to keep fast-growing firms in Britain.

Ministers take bigger role in backing UK tech

The latest push forms part of a broader plan revealed at London Tech Week, where Keir announced a £1.1bn AI hardware package, including plans to buy specialist AI chips from British companies and fund a new national supercomputer in Edinburgh.

Ministers have become increasingly vocal about preventing a repeat of past losses like Arm and Deepmind, both of which ultimately ended up under foreign ownership.

“We need to be more assertive, we need to take higher risk”, Kyle said this week, adding that the greater danger was allowing British firms to leave the country altogether.

The government hopes pension reforms, public investment and new AI infrastructure spending will help more UK startups scale domestically, rather than seeking capital in the US.

London continues to attract major AI investment, with AMD committing £2bn to the UK, Nebius pledging £1.7bn for AI infrastructure and British AI startups raising more than £8bn in venture funding so far this year.