The UK’s leading AI research institute has been told to make “significant” changes by its main source of taxpayer funding.

The warning comes after the Guardian revealed the board of the Alan Turing Institute was reminded of its legal duties last month by the charity watchdog after a whistleblower complaint.

The UK Research and Innovation (UKRI) body, which awarded the ATI a five-year, £100m funding package in 2024 – the institute’s largest single source of funds – said it had conducted a review of the institute and found it underperforming in terms of strategy and delivering value for money.

“The review concluded that overall strategic alignment and value for money are not yet satisfactory,” the UKRI said.

Last summer, the government made clear that it expected a strategic overhaul at the nominally independent organisation and indicated the need for management changes, adding that its funding could be reviewed. Its warning has been followed by changes at the top of the organisation.

The ATI’s chief executive, Jean Innes, stepped down in September, after a staff revolt added to the pressure, while chair Doug Gurr resigned this week after being appointed permanent chair of the UK’s competition watchdog.

Prof Charlotte Deane, who oversees the UKRI’s AI programme, said achieving the UK’s AI ambitions required institutions “that are focused, effective and aligned to national need”.

Announcing the outcome of the review, she added: “This review recognises the value and potential of the Alan Turing Institute, but also makes clear that significant change is needed in some areas.”

The review said the ATI had “strong foundations and clear evidence of scientific excellence” but needed a clear strategic focus and improved delivery.

The government made clear last year that it wants the ATI to focus on defence and national security, downgrading its work on health and the environment, which had been two of three core subjects for the institute.

Deane said the UKRI would now work with the institute and its new chief executive, George Williamson, who came from a government role that had a national security focus, to implement the review’s recommendations. These included strengthening governance and putting defence and security at the core of the ATI’s work. The institute carries out research with universities, the private sector and government bodies, while the UKRI invests £8bn a year into research and innovation in the UK.

A spokesperson for the ATI said the institute had tightened its focus and strengthened its governance but acknowledged it needed to go “faster and further.”

“Working with funders and partners, we will be even more ambitious about the role we can play for the UK, and we welcome the confirmation of our clear, single-purpose mission with national resilience, security and defence at its core,” said the spokesperson.