Regulating AI in the UK – Report Published
UKAI publishes the ‘Regulating AI in the UK’ report UKAI has issued a bold call to government for the artificial intelligence economy in the UK, urging immediate regulatory clarity to secure the UK’s position as a global leader in AI innovation. As the UK’s only AI trade association representing the whole AI economy, a new report warns that ambiguity around AI regulations is eroding business confidence, stifling investment, and holding back transformative services for customers across the UK. In a high-profile roundtable at the House of Lords, UKAI convened an influential mix of leaders from tech giants, startups, consumer brands, academia, and investors to chart a path for AI’s role in economic growth and social progress. The discussions revealed an urgent need for a regulatory framework that blends innovation-friendly policies with robust safeguards, striking a balance between the EU’s stringent rules and the US’s laissez-faire approach. “Burdening the AI sector with overregulation, underinvestment, or fear of the unknown isn’t just a missed opportunity – it’s a direct threat to Britain’s competitiveness on the global stage,” said Matt Warman, former AI Minister and UKAI Advisory Board member. The report, “Regulating AI in the UK,” outlines a vision for the UK to become the gold standard in AI regulation, with recommendations that include: AI Regulation Inquiry: A comprehensive investigation into the rapidly evolving AI landscape, emerging international policies, and the specific needs of UK businesses. Dedicated AI Governance: Suggestions include creating a standalone AI regulator, issuing clear guidance for SMEs, and appointing AI Officers (AIOs) to streamline governance. Ethical Seal of Approval: An industry-wide certification akin to B-Corp for companies adopting transparent, diverse, and inclusive AI practices. Educational Partnerships: Working with universities to create regulatory sandboxes and embedding AI-related technical and ethical training into education from an early age. As the Government prepares its long-awaited AI Opportunities Action Plan and the forthcoming AI Bill, UKAI positions itself as a key partner in shaping a forward-thinking, pragmatic regulatory framework. For industry insiders, academics, and policymakers, this report is more than a roadmap – it’s a rallying cry for Britain to seize the AI moment and establish itself as a beacon of global best practice. The full 30-page report, available to UKAI members, details actionable insights to ensure the UK’s AI sector thrives in a way that is fair, ethical, and economically impactful.
UKAI appoints advisory board
UKAI Welcomes Experts to Advisory Board Marking the next stage of its growth, UKAI is proud to announce the appointment of three founding members to its Advisory Board; former Shadow Secretary of State, Thangam Debbonaire, former Minister of State for AI, Matt Warman and digital expert Amir Malik. These well known figures from across the political spectrum, bring significant expertise and extensive networks in the AI sector and across government, ensuring that UKAI’s work is guided by strategic insight and informed by deep connections across policy and industry. The Advisory Board will play a crucial role in shaping UKAI’s vision, advising its executive team and amplifying its impact as it champions the UK’s AI sector. The current executive team comprises co-founders, Tim Flagg, Ben Howlett and Dominic Endicott who bring together the business, government and investor communities, respectively. Thangam Debbonaire was Labour Member of Parliament for Bristol West and Shadow Secretary of State for Culture, Media and Sport. Commenting on her appointment to the Advisory Board, Thangam said, “AI is a big part of our present and an even bigger part of our future, as individuals, as a country and as a world. I’m delighted to have been invited to join UKAI as an advisor, and help to make AI a force for good in our lives and the world.“ Matt Warman was the Conservative Member of Parliament for Boston and Skegness and was Minister of State at the Department of Digital, Media, Culture and Sport between 2022 and 2024. Highlighting the timeliness of UKAI’s launch, Matt said, “Britain’s on the cusp of an AI revolution – UKAI serves as a powerful voice for the industry to speak to government, investors and the public.” Amir Malik is Global Managing Director of Digital Transformation & AI at Alvarez and Marsal, specialising in the targeted application of AI and emerging technologies. Prior to A&M, Amir led Accenture’s Digital Transformation and Data-Driven Marketing practice and was formerly at Google and Microsoft. Speaking about the unique opportunity for the UK to lead in AI, Amir added, “By leveraging its heritage as a world leader in technology innovation, capitalising on its booming AI start up industry and underlining its reputation for pioneering regulatory fairness, the UK has the trifecta of capabilities required to lead the charge on AI.” Speaking at the UKAI event at the House of Lords earlier this week, Tim Flagg, COO of UKAI said, “I’m excited to welcome Thangam, Matt and Amir to the advisory board, bringing substantial expertise, insights and contacts to help us achieve those objectives.”
Does this Budget Unlock the UK’s Opportunity to Lead in AI?
“Overall, we welcome the £20 billion investment in the ‘growth industries of the future’ and the increased investment in education and apprenticeships, but it was disappointing not to have more detail about how this investment will support the Government’s AI Opportunities Action Plan. Regional investment is vital to put the AI sector at the heart of the future economic growth and social progress of the UK, but there was surprisingly little new investment in regional clusters, developing the physical and social infrastructure that is required.” Tim Flagg, COO, UKAI The UK is a global leader in AI, but we’re at a crossroads. Today’s budget set out the Government’s economic plan. As the voice of the AI sector, UKAI champions pro-AI, pro-business policies. We’ve analysed the budget and its impact on the AI sector. [UKAI members can schedule a full budget briefing]. 1. Economic Growth: Supporting SMEs The minimum wage for over 21s, known as the National Living Wage, will increase by 6.7% to £12.21 from April 2025. Employer’s National Insurance will increase from 13.8% to 15% from April 2025 and this will become payable at the lower threshold of £5,000 (previously £9,100). Many smaller businesses can claim the Employment Allowance on National Insurance, which the Government is increasing from £5,000 to £10,500. They estimate this means 865,000 small business employers won’t pay any national insurance at all, and one million are expected to pay the same as they did previously. What this means for the AI Sector Whilst the Government has tried to offset the increase of Employer’s National Insurance with the Employment Allowance, the increase in minimum wage will still be an additional cost to smaller AI businesses. The net result is making ‘offshoring’ more attractive for cash-strapped businesses that need additional resources to grow. 2. Skills & Education £6.7bn extra investment in schools. £300m extra for further education. Increase in the minimum wage for apprentices from £6.40 to £7.55. What this means the AI Sector There was very little detail in this Budget on where and how this investment will be allocated. This could be a valuable investment in the future talent that the country needs, particularly if there is a focus on the mathematical and technical skills required by our sector. The increase in minimum wage for apprentices is also welcomed: AI and technology specific apprenticeships are an important way to develop future talent with up-to-date skills. 3. Regional Development Greater control to regional mayors with ‘Integrated Settlements’ for Greater Manchester and the West Midlands. Allocation of funding (part of the £20bn for Innovation) to extend the Innovation Accelerators in West Midlands, Glasgow and Manchester. £500m to improve broadband connectivity across the country. What this means the AI Sector This signals the Government’s intent to see greater regional development. However, it was rather lacking in ambition and scope. We expected to see greater focus on building regional clusters around technology hubs, attracting further private sector investment and creating greater physical and social infrastructure, across more regions. 4. Innovation £20bn for the Growth Industries of the Future. Including £6.1bn for Engineering, Biotechnology and Medical Science Research England and £500m for Life Sciences. What this means the AI Sector It’s still quite unclear what will be included in this £20bn investment and how it will be allocated across different industries. Hopefully a significant proportion of this will be directed to the AI sector, beyond those in the Biotechnology and Medical Science sectors. 5. Investment Lower rate of Capital Gains Tax to increase by 80% (10% to 18%). Higher rate to increase by 20% (20% to 24%). Tax on carried interest, affecting private equity investors, will increase from 28% to 32% in April. What this means the AI Sector This will have an impact on both the angel investors and venture capitalists that fund many high growth businesses, potentially reducing their appetite for investment. These increased taxes will also be a consideration for business founders. Many scaling businesses have also indicated that this tax increase will make UK businesses less attractive when trying to attract senior global talent, because it will effectively mean that their stock-options are now worth less. 6. Absence of AI Industrial Strategy The Government has previously talked about putting AI at heart of its economic plans, so it was disappointing that there was a noticeable absence of AI specific investment, or the Government’s AI Opportunities Action Plan. We hope that further detail will be forthcoming on the £20bn investment in the ‘Growth Industries of the Future’, which will provide further clarity.
Invest in Social Infrastructure Alongside Physical Infrastructure
Invest in Social Infrastructure Alongside Physical Infrastructure UKAI welcomes yesterday’s announcement of a further £6.3 billion investment to build data centres across the UK from ServiceNow, CyrusOne, CloudHQ,CoreWeave. This follows the news back in April of Blackstone’s investment of £10 billion to build one of Europe’s largest data centres in Blyth and Amazon’s announcement in September that they will be investing £8 billion. These investments are testament to the hard work of successive governments in setting out the business case for the UK as a global leader in technological innovation, now and into the future. The new Labour government has underlined its commitment to supporting the technology ecosystem with a number of announcements, not least the imminent AI opportunities action plan. Investors are looking for certainty and the government’s announcement in August that they would speed up planning decisions to enable new infrastructure to be built has provided further reassurance: Confirmation of the Amazon investment came within weeks. Whilst these investments provide long term opportunities for businesses, UKAI believes that there is an even more important type of infrastructure, the social infrastructure. Of course there are a number of important phases to plan the development of these data centres and there are already a number of concerns around access to physical infrastructure (water, electricity, fibre) but it is time to start planning how we will connect these data centres to the local communities through skills, knowledge, training and jobs. We’re looking forward to seeing national and local government take the lead in bringing together universities, colleges, schools and communities in ‘clusters’ around these data centres. There is a massive opportunity to diffuse the skills, knowledge and capital from these new investments into the local communities. But, like the physical infrastructure, building the social infrastructure will take time and focus to plan and deliver. It’s time to start.
The UK government will launch The Regulatory Innovation Office to curb red tape and speed up public access to innovative solutions, based on emerging technology.
The UK government will launch The Regulatory Innovation Office to curb red tape and speed up public access to innovative solutions, based on emerging technology. Creating new legislation is one of the key levers that governments have to deliver their strategic plans. Whilst there are a number of different types of new legislation, businesses are often concerned when they hear about new regulations. The General Data Protection Regulation was a case in point as it required businesses to comply with a dizzying list of new regulations. Whilst larger businesses were able to hire teams of lawyers to advise them on GDPR compliance, smaller businesses struggled. SMEs have less money, less time and fewer resources and new legislation can cause significant friction, draining those precious resources and hindering growth. So, the government’s move to set up RIO is a welcomed move. It signals an understanding of the impact of current regulations and hints at a better appreciation of the need to create regulations that work for technology businesses. This requires regulation that is designed around the specifics of individual industry sectors (such as life sciences) or more broadly designed for the rapid evolution of emerging technologies. Setting up an office specifically for this purpose indicates not just the right direction of travel, but a deeper understanding of how technology businesses operate. For now RIO is focused on four industry sectors: Engineering biology, space, AI and digital in healthcare and autonomous technology. Hopefully, if it is successful the same process can be extended to cover more industry sectors. RIO has 3 important aims: To coordinate existing regulators more effectively, to identify regulations that act as barriers to business growth and then to propose updates, with input from businesses. But the real business benefit is providing certainty. Businesses are by nature ‘glass-half-full’ but they view regulations as major risks, with the potential for significant impact. Although much of the detail is missing, this initial announcement indicates that the government is using its resources to mitigate that risk.
US Investment Firm Blackstone to build one of Europe’s largest datacentres in Blyth, Northumbria.
US Investment Firm Blackstone to build one of Europe’s largest datacentres in Blyth, Northumbria. The announcement that Blackstone, a leading US investment firm, will invest £10bn to build a cutting-edge AI datacentre in Blyth, Northumberland, marks a transformative moment for both the region and the UK as a whole. This ambitious project, set to create over 4,000 jobs and establish one of Europe’s largest hyperscale AI datacentres, reflects Northumbria council’s proactive engagement with international investors and reinforces the UK’s global position of leadership in AI. It is a great example of government and investors collaborating to create net-new opportunities across the UK. The jobs created and the investment in local infrastructure will provide concrete examples of the sorts of benefits that the AI industry can produce, helping to build public trust and support. Alongside the construction of the datacentre, £110 million will be allocated to improve transport infrastructure and provide skills training to ensure the local workforce is prepared to participate in this rapidly evolving industry. Hopefully, further public and private investment will follow, creating social infrastructure, specifically skills and training, around the datacentre that will have a long lasting and transformative impact in Blyth, a traditionally industrial region. This announcement comes soon after the announcement that Amazon will be investing £8bn in new datacentres, and further reinforces the UK’s International Leadership in AI. The sheer scale of these investments positions the UK as a premier destination for AI development and is a significant win for Blyth, Northumberland, and the UK. Building the future of AI in the UK is underway. We look forward to hearing more about the government’s plans to encourage further investment in skills and training, to really make the most of these opportunities and lay the foundations for economic growth and continued leadership in AI.
The new government’s plan puts AI at the heart of UK economic growth
The new government’s plan puts AI at the heart of UK economic growth Yesterday, I had the privilege of meeting Feryal Clark MP, Parliamentary Under-Secretary of State for AI and Digital Government, to hear about the Government’s plans to put AI at the heart of economic growth in the UK. It was also an opportunity to raise some of the concerns that businesses have around the Government’s plans. Firstly, the Minister and her team were very impressive. They were keen to engage and they clearly recognise the importance of collaborating with businesses to find and implement the best solutions. They were happy to give credit to the previous Government for building the foundations, but it’s clear their plan is more ambitious and positive. The AI Opportunities Action Plan is now expected to be published in October. From our discussion, it sounds like this will be comprehensive and action oriented. We discussed a number of topics, but there were four key themes: Regulation: The concern of the group was that any new AI regulation should not stifle innovation, nor limit growth in a quagmire of red tape and compliance which disproportionately affect SMEs (e.g. GDPR). We highlighted the opportunity for the UK to position itself strategically between the EU and the US, also leveraging London’s dominant financial position, to reinforce the UK as a bridgehead into the EU, EMEA and other markets. Skills: Training and the provision of skills is essential to ensure that the benefits of AI are more fully ‘diffused’ across society. We talked about the difference between the technical skills required, alongside ensuring everyday people have the confidence to use AI tools to augment their daily tasks. Both are important for businesses, the former to build the software, the latter as consumers for the finished services. We need to make it easier for UK AI businesses to access and retain the best global talent, whilst also leveraging the UK’s unique assets in AI to retain our international competitiveness and open up more markets. Regional Development: Several members of the group wanted to understand how the Government planned to devolve AI outside of London. Several ideas were shared around partnerships with leading universities, building specialist centres of excellence and creating AI hubs around the new regional data centres. Government as a Customer: Ideas from the group ranged from using AI to increase speed of healthcare diagnosis, to transforming the planning processes. The Government seemed very receptive to discovering and scaling ideas, and working with innovative AI businesses to discover new solutions. For the Government to be engaging with, and using AI, improves the perception of AI, positioning it as a force for economic and social progress. The most important thing that the Government can do is to highlight the enormous opportunities, and build a more positive perception of AI across the UK. The previous Government brought together world leaders to talk about the threats: whilst important, this has only added to public anxiety around AI. Therefore, it was great to hear the new Government talk around the importance of building public trust in AI. The forthcoming AI Opportunities Action Plan sounds like it will provide a detailed roadmap and the Government seems open to ongoing feedback from the AI industry to deliver this roadmap. It is clear that businesses have an essential role to play and that the Government wants to hear ideas, feedback and solutions. This could be the beginning of something great.
