Andy Burnham enters Downing Street today with his first industrial revolution, after reports that his government could scrap the department responsible for science, technology and funding that thousands of growing firms rely on.
According to a report by the Financial Times, officials have been asked to make plans to close the Department of Science, Innovation and Technology (DSIT) and transfer its functions to the Department of Business and Trade and the Department of Culture, Media and Sports.
A Labor source told the FT it “needs to be centralized and there is a sense that DSIT has not been firing on all cylinders”. The sector’s response has been very limited in communications.
For business owners, the stakes are more practical than presentations. DSIT supports UKRI, the funding body that sits on top of Innovate UK grants, and the Government Digital Service. Any restructuring will put the machinery behind those systems to change as firms are urged to adopt AI and invest in innovation.
Those concerns are at the heart of a letter sent to the new prime minister by Julian Harris, CEO at Tech UK, and Dom Hallas, executive director at the Startup Coalition, who called the proposal “the wrong change at the wrong time”.
“DSIT works because it brings researchers, AI experts, innovators and policy makers together in one department – one department that gives the technology sector clarity, speed and a government partner that understands the technology and manages the sector in Cabinet,” they wrote.
“Cutting off the work of DSIT like the world leading AI Safety Institute, Sovereign AI fund, GDS and UKRI will slow down at a time when speed is critical to economic growth and our global standing. It also sends a bad signal to a sector that is growing at 10% a year. So these reports are clear about the sector.
“We support your vision to bring growth to every postcode in Britain, and we want you to be able to harness the power of the technology sector to deliver on your ambitions to transform our economy and society for the better. To do that, we must use this time to strengthen technology leadership at the heart of government, not dismantle it.”
Matt Clifford, who has been working as an adviser on AI opportunities for Keir Starmer, was still confused. “This would be a big mistake,” he wrote to X. “Now is a critical time for technology as an economic and national security crisis. Tying our top science and technology officials to a reorg wastes time and energy that is much needed for the real thing.”
Labor MP Peter Fortune agreed, replying: “DSIT needs focus but it is important that we promote our excellent technology sector if we are to drive growth and innovation. Our AI sector (thanks Matt for all he has done) is amazing – but it could be even better. We need to show our willingness to lead.”
Not every inventor owns barriers. Commenting on LinkedIn, Atif Syed, founder of Wootzano, said: “It’s certainly a bold move, but let’s be honest – DSIT needs to be restructured to support low-tech businesses. I’m looking forward to seeing what will replace it and how the new management intends to support our sector.”
The row comes at an awkward time for a prime minister who has promised a “pro-business” government and has signaled moves on tax and business standards for high street companies. Whether he can win over British businessmen may depend in part on how he handles this first test.
His cabinet must be announced soon. The FT has reported that Jonathan Reynolds may return as business secretary, a role he handed over to Peter Kyle last autumn, while Shabana Mahmood and Ed Miliband are among those being tipped to replace the chancellor. Despite the DSIT threat, Burnham is thought to be planning to appoint an AI minister at Cabinet level.
For SMEs, the message from industry leaders is simple: no matter what the Whitehall wiring diagram ends up looking like, firms need to be clear about who is fighting for technology in government before grants, standards and AI policy go through a year of restructuring.
