The New Frontier - Your weekly science and innovation update - 27th July 2026

Orders take off, skills run short

The Farnborough Airshow delivered a vote of confidence in the aerospace and defence sectors. Aircraft and engine agreements announced during the airshow’s first three days were worth an estimated £62.7bn, of which £10.8bn could flow through to British industry.

The government brought its own contracts. A £708m extension to BAE Systems’ Future Combat Air System programme will support around 4,500 workers and a network of approximately 600 British companies and academic institutions. Around 90% of the jobs are outside London and the South East.

A separate £20m contract will see Lockheed Martin UK deliver a hypersonic target programme designed to support the development and testing of missile defence systems against advanced threats.  The contract will support jobs in Bedfordshire and 15 UK SMEs, who will benefit through the supply chain.

UKEF (the government's export credit agency) launched a £50bn defence export fund designed to support large-scale UK defence exports.

Finally, the government launched a new Defence SME Action Plan, opening opportunities for smaller businesses across the defence supply chain.

People are a scarce asset

Capital may be coming in, but skilled workers are not. Skills England and the Ministry of Defence estimate that employment in 14 priority occupations will increase by 53,000 between 2025 and 2035. A further 29,000 workers may need to be replaced as people leave their occupations. Twelve of those occupations are also priorities for other growth sectors. Rearmament will therefore sharpen the contest for engineers, technicians, and software specialists. Higher defence spending will intensify the contest. ADS estimates that defence spending equivalent to 3% of GDP could create 50,000 direct jobs by 2035, rising to 85,000 at 3.5%. It is estimated that 19.9% of UK defence roles are in R&D and 45.6% are STEM roles.

In response, the government has established a new Defence Universities Alliance that connects 35 institutions with the Ministry of Defence and the Armed Forces in fields such as cyber security, robotics, aerospace engineering, and advanced manufacturing. It sits within a £182m skills package, including £80m for 2,500 university and college places across 24 universities and £50m for five Defence Technical Excellence Colleges in Blackpool, Lincoln, Plymouth, Rotherham, and Yeovil.

The state continues to invest

Defence is part of a broader experiment in activist government. UK Export Finance, the British Business Bank, the National Wealth Fund, and Innovate UK have mobilised at least £50bn of financial support over two years, sustaining or supporting around 802,000 jobs. Their combined financing capacity has risen by more than £80bn since July 2024 to £193bn. It was also reported that the British Business Bank is now the UK’s most active venture investor.

Its Sovereign AI vehicle has joined private investors in funding CuspAI, a Cambridge company using artificial intelligence to discover new materials. CuspAI raised $450m this week at a $2.6bn valuation, backed by investors including Kleiner Perkins, NEA, Bezos Expeditions and the British state.

The logic is persuasive. Britain produces world-class research and promising companies but often struggles to finance them through the scale-up stage. Public capital may help bridge that gap. For real estate providers, tracking which companies receive government backing can offer an early indication of where expansion-led demand may emerge. An analysis of investments made over the past year by the British Business Bank, the Sovereign AI Fund, and the National Wealth Fund shows London leading by number of investments, followed by Bristol and Cambridge.

Moving the machinery

Andy Burnham has wasted little time reshaping Whitehall. Within 48 hours of entering Downing Street, his government abolished the Department for Science, Innovation and Technology (DSIT), transferring many of its responsibilities to an expanded business department. The expanded business department is also expected to be responsible for the Sovereign AI unit, UKRI and ARIA. Other technology and digital functions are expected to be shared between the Cabinet Office and the Department for Digital, Culture, Media and Sport. The stated aim is to bring science and technology policy closer to business, investment and the UK's wider industrial strategy. The key question is whether this new structure can successfully combine science and business policy without diluting the specialist focus and advocacy previously provided by DSIT.

On AI, the direction of travel is arguably clearer. Kanishka Narayan, formerly a junior AI minister, will attend Cabinet and hold a joint role spanning the Cabinet Office and the new Department for Business, Innovation, Science and Trade. His promotion signals that AI is moving from a technology policy issue to a central pillar of economic and government strategy. An AI Taskforce is also being established within the Prime Minister's Office and Cabinet Office, with responsibility for overseeing the government's overall AI agenda. Oversight of AI strategy, public-sector adoption and the AI Security Institute will move to the Cabinet Office, placing AI closer to the centre of government decision-making.

That centralisation reflects the government's ambitions. Shortly after his appointment, Narayan described AI as "likely the most significant technology in human history", arguing that it could help reindustrialise Britain, strengthen national security and transform public services. The message is clear: ministers increasingly view AI not simply as a technology sector, but as an economy-wide capability. While responsibilities are now spread across several departments, potentially creating blurred lines of accountability, the elevation of the AI portfolio suggests the technology will remain a political and economic priority.

The reaction from the technology sector has been swift. TechUK and the Startup Coalition described the reorganisation as "the wrong change at the wrong time". Matt Clifford, a former government AI adviser, called the move a "big mistake", while Ian Hogarth, chair of the AI Security Institute, warned that departmental restructurings can consume official attention for months and slow delivery.

The science community has taken a more measured view. The Royal Society has cautioned against allowing science to become subordinate to short-term business priorities, while engineering leaders have argued that closer alignment between research and industrial strategy could strengthen commercial outcomes.

In other news

• Researchers have started a 12-month trial of crop production 1.1km below ground at the Boulby Underground Laboratory near Whitby, testing whether disused mines could support commercially viable vertical farming.
• Airbus has become the anchor investor in a new €500m European defence and dual-use technology fund targeting around 20 growth-stage companies. It follows Lockheed Martin boosting its corporate VC fund.
• London-based Humanoid has raised $152m at a post-money valuation of $1.35bn to accelerate the development and commercial deployment of industrial robots.
• PitchBook data identifies 1,531 London AI companies employing at least 50 people, compared with 1,329 in San Francisco. Knight Frank Insight tracked 751,162 sq ft of AI-related office take-up in London during H1 2026, up from 197,258 sq ft over the same period in 2025. While headline transactions from Anthropic, OpenAI and Databricks drove some of the increase, activity was far from concentrated among a handful of occupiers. A total of 34 AI-sector deals completed during the first half of the year, highlighting growing demand from a broad range of AI businesses, from well-funded scale-ups to established frontier AI models expanding their footprint.
• Bristol Myers Squibb is expanding its collaboration with NVIDIA to build what it describes as the most powerful privately owned AI computing infrastructure in life sciences.
• The number of biotech’s acquired for at least $1bn this year has reached 37, surpassing the annual record of 35 set last year.