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A new survey has found that 85% of UK AI firms deliver general AI tools rather than mission-driven solutions. (Photo: Shutterstock)
Most UK AI firms are not focused on solving specific problems, claims a new report from the Institute for Public Policy Research (IPPR), a London-based research institute. IPPR’s research, which analysed 3,256 AI companies, found that only 15% are developing solutions aimed at defined societal or sectoral challenges. The remaining 85% are offering generic AI applications such as business process automation, customer analytics, or content creation.
“AI progress continues to accelerate at an unprecedented pace and is poised to have a seismic impact on economy and society,” said IPPR AI head Carsten Jung. “The government has said it wants to ‘shape the AI revolution’ but currently much of AI innovation is generic and not focused on solving hard problems. Too many companies are focused on generic process improvements rather than coming up with new, better products. And too few innovations are aimed at solving big societal problems, such as public health and climate change. This quantity over quality, profit over purpose, speed over substance, approach is a huge missed opportunity.”
The report raises concerns about whether public funding is being used effectively. It notes that 22% of UK AI firms have received public funds, but few are directly supporting government priorities in health, transport, or climate. Most are focused on efficiency rather than innovation with social value.
In health, the second-largest AI sector after professional services, most firms focus on diagnostics and treatment. Just 12% of health-related AI targets prevention, which is widely seen as key to reducing long-term pressure on the NHS. The report found no firms focused on building integrated, community-based health systems.
A similar pattern is seen in the transport sector. Of the 211 firms working in transport AI, 91% focus on autonomous vehicles, logistics, or operational efficiency. Only 9% of firms are addressing access, sustainability, or travel integration, which are areas central to government climate and mobility goals.
£4bn investment not aligned with mission outcomes
The UK attracted just under $4bn in AI venture capital investment in 2024, ranking third globally behind the US and China. However, the report warns that this momentum is not translating into public benefit. Without stronger policy direction, the UK risks reinforcing commercial priorities over mission-driven goals.
AI deployment is also skewed towards a few sectors. Around 70% of firms operate in the knowledge economy, including IT, finance, and consulting. In contrast, only 15% of AI applications are focused on product innovation or research and development, limiting the potential for breakthrough change.
IPPR’s report also highlights a growing dependence on third-party AI models among respondents. Less than half of the firms surveyed said they develop proprietary systems. Most build their services using tools from companies such as OpenAI or Meta. This indicates that innovation is being driven more by deployment than by new model creation.
To address these gaps, IPPR recommends new policy mechanisms. It proposes setting up an AI tracking unit to monitor how AI is being applied across the economy. It also calls for breaking national policy missions into clear, actionable problem areas to guide grant-making and procurement.
The think tank also urges wider use of outcomes-based procurement, allowing government departments to reward firms developing solutions to specific challenges. Without these reforms, public investment may continue to support generic AI services with limited public value.
The report estimates that, with effective deployment, AI could contribute up to 13 per cent to GDP growth in the medium term. But to realise this, the UK must focus its innovation policies on problem-solving, not just scaling.
