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In Conversation with Tim Flagg (CEO of UKAI) : Sovereign AI Is Fundamental to the UK’s Future

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Tom: Hi, I’m Tom, CEO of Passion Labs, and welcome to the next episode of our In Conversation series.

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Today I’m joined by Tim Flagg from UKAI. We’ll be discussing the current state of AI in the UK, what “sovereign AI” really means, and what the future holds for our ecosystem. Tim, it’s great to have you here.

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Introducing Tim & UKAI

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Tim: Thanks, Tom. It’s great to be here.

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My background spans three main chapters. I started in marketing and advertising, then moved into startups, building businesses and working with emerging technologies. Over the past few years, I’ve focused on AI, not just building AI businesses, but building a trade body to represent them.

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UKAI was created to ensure AI businesses have a voice in shaping government policy. Initially, our focus was on companies building AI. But we quickly realised adoption is just as important. Organisations trying to integrate AI, shift their culture and build trust with customers.

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Today, UKAI represents over 230 members across the UK. We work closely with government while also connecting founders, investors and industry leaders to share knowledge and build partnerships.

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The UK’s Current Position in AI

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Tom: AI isn’t slowing down, it’s accelerating. Where is the UK right now? Where are we leading, and where are we lagging?

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Tim: Geopolitically, things have shifted dramatically. The US has moved further into deregulation. The EU has taken a more regulatory approach. That creates an opportunity for the UK to lead from the middle.

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We can help define responsible AI standards, not as a “policeman,” but as a standard-setter.

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The UK has a strong heritage in global standards: financial services, pharmaceuticals, governance. We can build on that.

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One idea we’re championing is a Responsible AI Trustmark — similar to a B Corp or Fairtrade label. It would allow consumers to identify companies that:

• Source data ethically
• Address bias and diversity in training
• Operate sustainably
• Build responsibly

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Trust will be critical.

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Talent & Investment: The Ecosystem Challenge

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Tom: We have world-class universities and startups — but many leave post-Series A. What needs to change?

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Tim: It comes down to two things:

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1. Talent

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• Attract global talent through visas.
• Develop domestic AI skills, not just technical skills, but everyday AI literacy.
• Improve AI education earlier in schools.

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If we can’t import talent, we must create it.

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2. Investment

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There’s significant capital in the UK (especially institutional money) but it doesn’t always flow into British AI businesses.

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Geopolitical volatility is shifting investor sentiment. This is an opportunity to redirect capital into UK innovation but we need to make the commercial case clearly and consistently.

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We also need better regional connectivity. Incredible work is happening in Newcastle, Leeds, Manchester but ecosystems are still fragmented.

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Sovereign AI: What Does It Really Mean?

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Tom: Let’s talk about sovereign AI. What does it actually mean and how fundamental is it?

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Tim: It’s fundamental.

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Initially, sovereign AI was framed around national security, ensuring we control our own infrastructure. But it’s broader than that.

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Sovereignty also means:

• Setting standards
• Defining responsible AI frameworks
• Owning innovation capability
• Retaining economic value

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Take data centres:

• Ark is building large-scale infrastructure.
• Deep Green is building modular data centres that heat buildings using excess compute energy.

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Both represent British innovation. Sovereignty isn’t just control, it’s innovation, sustainability, and ecosystem building.

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Government procurement is also critical. If UK companies can’t win NHS or public sector contracts, scaling becomes extremely difficult.

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Procurement reform may be one of the most powerful levers for sovereign capability.

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Public Trust & AI Adoption

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Tom: Outside the tech bubble, how does the public feel about AI?

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Tim: There’s a mix of anxiety and apathy.

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People worry about:

• Job displacement
• Fraud
• Negative press narratives

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At the same time, many don’t see AI as relevant to their daily lives.

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We need to:

• Invest in everyday AI skills
• Show practical benefits (budget planning, document summarisation, productivity tools)
• Showcase AI delivering public good

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Trust and familiarity must go hand in hand.

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Where Are the Risks?

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Tom: What could derail this momentum?

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Tim: Two major risks:

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1. Market Reset

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There may be a valuation reset in global AI markets, particularly in the US. If that happens, UK companies could actually benefit, provided we’ve built strong fundamentals.

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2. Loss of Public Trust

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If the public turns against AI, adoption slows. Without adoption, productivity gains stall.

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Responsible governance and visible ethical standards are essential to prevent that.

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Domain-Specific & Open Source Opportunities

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Tom: Should the UK compete with large US foundation models?

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Tim: Not directly.

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The opportunity lies in:

• Domain-specific models (law, finance, healthcare)
• Smaller, energy-efficient models
• Open-source ecosystems
• Culturally and contextually relevant systems

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Most users don’t need massive general-purpose models. They need focused, efficient systems.

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This is where the UK can lead.

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Green AI & Infrastructure

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One of the most exciting areas is green AI.

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The UK has the opportunity to build:

• Energy-efficient data centres
• Sustainable AI infrastructure
• Modular compute solutions
• Exportable green AI standards

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As global energy demands increase, countries will look for sustainable AI frameworks. The UK can build that expertise — and export it.

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The Five-Year Vision

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Tom: If we get this right, what does the UK AI landscape look like in five years?

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Tim: I’d like to see:

• Connected regional ecosystems
• Universities, investors, and businesses working in sync
• Strong devolved leadership in AI clusters
• Procurement unlocking scale
• The UK recognised globally as the leader in responsible AI

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We must become the place the world looks to for:

• Responsible AI standards
• Ethical frameworks
• Sustainable AI infrastructure
• Sovereign capability

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If we move quickly, the opportunity is there.

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Tom: Tim, thank you for joining us — and for the work UKAI is doing.

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Tim: Thank you. I’ve really enjoyed it.

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Watch the full conversation above and explore more insights from our In Conversation series.

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