The UK will launch an “AI sandbox” to encourage groundbreaking research into artificial intelligence, the chancellor has announced, with millions of pounds in prize money up for grabs over the next decade.

Jeremy Hunt used his first budget to outline the early stages of a new “quantum strategy”, which forms part of the government’s ambition for the country to become a “science and technology superpower”.

Hunt announces ‘crowd pleasers’ – politics latest

That includes a programme to plough £2.5bn into quantum computing by 2033. These are far more powerful than conventional machines, harnessing quantum physics to store data and perform calculations – both key to AI.

“The power that AI’s complex algorithms need can be provided by quantum computing,” Mr Hunt told the Commons.

His so-called sandbox will trial faster approaches to help AI businesses get “cutting edge” products to market, with potential changes to rules around intellectual property so that they can access the material they require.

Innovators will compete for the Manchester Prize, with £1m up for grabs every year for the next decade.

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Mr Hunt has previously said he wants the UK to become “the next Silicon Valley”, the California home of some of the world’s biggest tech companies.

In a bid to encourage investment, the chancellor also announced an “enhanced credit” scheme to support scientific research and development.

He told MPs: “If a qualifying small or medium-sized business spends 40% or more of their total expenditure on R&D, they will be able to claim a credit worth £27 for every £100 they spend.”

The video game industry, meanwhile, will be handed an expenditure credit at a rate of 34%.

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