The government is preparing to take larger stakes in Britain’s fastest-growing companies as ministers ramp up Labour’s push to become a more active backer of private enterprise.
Business Secretary Peter Kyle signalled a significant shift in the government’s industrial strategy, with Whitehall increasingly focused on helping homegrown startups scale into multi-billion-pound businesses.
Kyle told The Sunday Times that the government’s approach would become bolder ahead of London Tech Week, arguing that greater risk-taking is essential to keeping successful technology companies on British soil.
“You are going to start to see us take more risks,” Kyle said. “I want us to be aggressively ambitious.”
Kyle made clear that government backing would come with a more hands-on partnership, adding: “This government isn’t going to sit aside from the businesses we are backing.”
The comments come as London re-establishes itself as Europe’s leading tech hub, overtaking Paris following a surge in artificial intelligence investment and a renewed influx of global capital.
According to Dealroom, startups in the capital raised $17.7bn last year, while AI investment almost doubled to $7bn as firms including OpenAI and Anthropic expanded their UK presence.
Despite that momentum, ministers remain frustrated by the UK’s track record of producing world-class companies only to see many of them scale or list elsewhere.
Cambridge chip designer Arm remains the most prominent example, having chosen to list in New York rather than London and now carrying a valuation of around $370bn.
Kyle’s vision would see Whitehall move beyond grants and tax incentives and instead become a more engaged investor, with recent commitments including a £25m investment into Kraken, the tech arm of Octopus Energy.
The government also made a £25m commitment through the British Business Bank into self-driving technology company Wayve, with officials reportedly intervening to help the firm navigate regulatory obstacles.
The approach reflects growing concern inside government that Britain excels at creating innovative companies but struggles to provide the capital needed for them to become genuine global champions.
Governments across Europe and North America have grown increasingly willing to deploy public money into strategically important sectors such as AI, clean technology, and defence, raising competitive pressure on the UK.
A survey published last week by TechUK found that 73 per cent of defence tech companies said market conditions had deteriorated over the past year, with nearly nine in ten reporting funding delays or reductions linked to uncertainty over government investment plans.
Government sources say ministers are also exploring a concierge-style service giving fast-growing companies a single point of contact inside Whitehall to help navigate regulation and secure support.