London Mayor Sadiq Khan has announced a £12 million investment to help small businesses across the capital adopt artificial intelligence (AI) and unlock new growth opportunities. The funding, which will be distributed as £4 million per year over three years, aims to provide practical support for businesses to enhance productivity and develop workforce skills through AI integration.
Low AI adoption among small businesses
According to City Hall, fewer than one in six small businesses currently use AI tools, despite the technology's potential to transform operations. The investment comes as businesses face increasing pressure to keep pace with rapid technological advancements. Government figures show that 80% of businesses neither use nor plan to use AI, while only 16% currently employ at least one AI technology. Just 5% have future adoption plans.
Mayor's vision for a fairer city
Mayor Khan emphasized the importance of ensuring all businesses benefit from AI opportunities. "We want every business to benefit from the opportunities AI can unlock," he said. "This investment will help thousands of SMEs adopt new technologies, boost productivity, create better jobs and drive growth across the capital. By backing businesses to innovate and equipping Londoners with the skills they need for the future, we can help build a fairer, more prosperous city for everyone."
Challenges and barriers to AI adoption
Despite the potential, many business owners remain uncertain about effective AI usage. Ethical concerns are reported as the biggest obstacle, followed by high costs and regulatory uncertainty. Misconceptions about AI also fuel hesitation. Claire Woods, founder of marketing agency Kennedy Woods, noted: "AI has the potential to be a game changer for SMEs, however I think there's still a lot of misinformation going around which is supporting the fear factor. Many business owners know they should be paying attention to AI, but they're not always sure how to integrate it within their business processes."
Education as a key opportunity
Woods stressed the importance of education: "The biggest opportunity in my opinion right now is education - we need to help people to have a clear understanding on how to use these tools effectively. What worries me most is seeing businesses adopt AI simply because everyone else is doing it. AI isn't the strategy; it's merely the tool. The real value with AI comes from having a clear plan for how it can help improve productivity, streamline processes and create more time to focus on growing the business."
The technology sector has welcomed the investment, arguing that AI can be transformative for small businesses if properly implemented. The funding will support businesses in integrating AI into daily operations, improving efficiency, developing new capabilities, and strengthening competitiveness.
