AI minister Kanishka Narayan has hinted at new measures in next week’s Budget, as the government considers tougher regulation of AI alongside plans to reduce Britain’s dependence on foreign technology.

Narayan said ministers must go beyond regulating AI and develop domestic technology to give Britain greater influence over how it is used.

Speaking on BBC’s Political Thinking podcast, he said the government needed to focus on “building capability and capacity in the state”, rather than simply “pulling the lever of regulation”.

“We need to build technology to defend ourselves and to grow ourselves so we have leverage internationally”, he said, warning that Britain was “currently totally reliant on other countries for essential bits of technology”.

Narayan also suggested that discussions with John Healey could lead to an AI announcement in Wednesday’s Budget, although he gave no further details.

It comes as ministers consider mandatory reporting of serious incidents involving autonomous AI systems and stronger powers to test advanced models before their release.

Britain has largely relied on existing regulators to oversee AI, unlike the European Union, which has introduced dedicated legislation.

“The fundamental thing is that the British public and democracy has to assert power rather than leave it to the tech bros and oligarchs”, Narayan said.

The intervention follows a warning from the government’s Council for Science and Technology that Britain risks becoming a “high value AI customer” unless it invests more heavily in domestic technology.

The government has established a £500m Sovereign AI Fund, although industry figures have questioned whether the investment is sufficient to compete with US tech behemoths.

Narayan also said that the government had spent £13,000 using advanced AI models to identify 500 previously unknown cybersecurity vulnerabilities across parts of the public sector.

He compared the tech’s potential economic impact to the Industrial Revolution, warning that Britain must avoid a similarly painful transition for workers.

It comes as Barclays announced plans to cut 5,000 jobs on Thursday, as part of a wider efficiency drive involving AI.