UK Quantum Community Worried About Labour’s Cuts to Deep Tech Funding

Insider Brief

• The Labour government’s withdrawal of £1.3 billion in funding for deep tech projects, initially promised by the Conservative government, has raised concerns about the UK’s leadership in quantum computing.
• Industry leaders warn that the funding cuts could push tech companies to seek investment overseas, potentially weakening the UK’s position in deep tech sectors.
• The decision underscores the importance of sustained government support, with trade bodies and entrepreneurs calling for new proposals to ensure the UK remains competitive in crucial technology industries.

The UK’s emerging quantum computing sector may face funding challenges following the Labour government’s decision to withdraw £1.3 billion in funding earmarked for quantum technology, artificial intelligence (AI) and other deep tech projects, according to industry leaders and several media outlets.

The funding, originally promised by the previous Conservative administration, was intended to bolster critical tech infrastructure, including an £800 million exascale supercomputer at Edinburgh University and £500 million for the AI Research Resource, media sources report. However, the Department for Science, Innovation and Technology (DSIT) has clarified that the funds were promised, but never officially allocated in the budget, the BBC reports.

Phasecraft, a leading quantum computing startup in the UK, is among those raising concerns. Co-founder Ashley Montanaro told Tech.EU that the decision could drive tech companies to seek investment and opportunities overseas.

“For businesses like ours, the stability of funding and confidence that it will be available once announced is pretty important,” Montanaro told Tech.EU. “I think you are seeing more and more companies like ours, who are setting up international offices and going where the level of support, excitement, and enthusiasm about quantum is commensurate with their ambitions.”

The previous Conservative government had pledged £2.5 billion over a decade as part of its quantum strategy, positioning the UK as a global leader in the field.

Montanaro told Tech.EU, “The UK government has been a massive supporter of quantum over many years. Clearly, we think this is a great thing for the UK.” However, the abrupt shift in policy under the new administration has sparked fears that the UK’s leadership in quantum technology could wane without continued government backing.

The impact of the funding cuts is expected to reverberate across the broader tech industry. Trade body techUK has criticized the decision, with a spokesperson stating that the UK risks “losing out” to other countries that are increasingly investing in deep tech sectors. Barney Hussey-Yeo, founder of a tech business, echoed these concerns in a post on X, warning that reducing investment could push more entrepreneurs to the US. Businessman Chris van der Kuyl described the government’s move as “idiotic,” according to the BBC.

Phasecraft’s response to the uncertain funding environment has been proactive. Earlier this year, the company established an office in Washington, D.C., to tap into the rich quantum talent pool in the United States. The new office, led by Steve Flammia, a former research scientist at Amazon, has already seen strong interest from quantum computing professionals. Montanaro noted that Phasecraft received over 50 job applications on the day it announced the US expansion, underscoring the high demand for specialized skills in the field.

“For some businesses, maybe 50 wouldn’t have been a huge number. But within quantum computing, it is pretty huge, because it’s an incredibly specialized field,” he said to Tech.EU.

Looking ahead, Montanaro said that Phasecraft is exploring further international expansion, with potential new offices in Europe and Australia.

“The US is a world center for quantum computing talent,” Montanaro told Tech.EU, indicating that Phasecraft’s global growth strategy would focus on areas with strong government and industry support for quantum technologies.

The Labour government’s decision to halt the funding has placed a spotlight on the importance of sustained investment in deep tech.

Montanaro added, “If the UK wants to continue to remain an absolute world leader in quantum, there is going to have to be some support for that by government.” With the tech industry calling for new proposals, the pressure is on the UK government to navigate these challenges and maintain the country’s position at the forefront of innovation.

If you’re a member of the UK quantum community and want to offer your opinion about the possible cut in funding, we’re compiling reaction. Send me an email at matt at thequantuminsider dot com