The AI boom has thrown the UK a lifeline. There was a dearth of confidence and innovation, and a drought of life-giving investment appeared to have set in.
Then Gen-AI emerged – a cutting-edge technology that needed both academic expertise and the support of a developed financial services sector to bring to market – and it seemed the stars had aligned for the UK.
Suddenly, the UK was leading in something. Startups were completing billion-dollar fundraisers, and foreign investors weren’t laughing at the notion of putting their money into the country. They were queueing up to do so. The UK has borne the fruits of this boom, as its AI industry has gone on to become the envy of Europe.
You’d think that the new Labour government would do everything they could to keep the party going. You’d think.
Instead, the first indications appear to be that they want to turn the lights on, unplug the speakers, and tell everyone to go home.
First, they announced that they’d be shelving £1.3 billion of funding for projects, including the UK’s first next-gen supercomputer. Then, the first details of their narrow and vague proposed AI Bill seeped through to the industry.
These have not been the actions of a government dead set on driving growth through supporting one of the few industries in the UK that shows economic potential.
Confidence shaken
The impact the proposed £1.3 billion funding would have had cannot be understated.
The proposed funding was allocated with a focus on upscaling the UK’s digital research infrastructure – something the UK desperately needs to see happen if it wants to retain its position as a global leader in AI (The Turing Institute).
£500 million of the total budget was set to go towards the AI Research Resource and was expected to play a major role in driving AI innovation and research in the UK (Department for Science, Innovation & Technology), whilst £800 million was due to fund an exascale supercomputer, to be housed in the University of Edinburgh.
It was expected to drive breakthroughs in the development of AI and bolster the country’s ability to effectively develop and run large-scale AI models. However, while the UK has all the innovation and talent to generate the best startups, they’re often building on rotten foundations.
The breakneck pace of the development and growth of AI requires significant compute and data capabilities, which in turn requires significant investment. Compared to competitor nations, the UK’s computing infrastructure already looks neolithic, and this withdrawal of the proposed funding will do nothing to help the country break out of this perma-freeze.
The government’s U-turn is a major blow to the country’s blossoming AI industry and hands an advantage to the UK’s competitors such as France, Japan, Germany, and the US, all of which have already established AI compute capabilities.
The demand for compute will double in the next five years (The Turing Institute); without access to it, AI innovation will be stifled and development halted for sheer lack of power. The UK’s competitors like France, Japan, and Germany will all see this U-turn and smell blood in the water.
Knowing this, industry professionals can’t help but feel that the government has squandered an opportunity to help firms get ahead of the competition, placing them in a precarious position.
Knowing where we stand
The UK will now have to fight a little harder to win over the life-giving foreign direct investment that powers its AI industry.
The government should be reaching for the next tool in its shed: innovation-friendly regulation.
Leading the pack on robust AI legislation that still leaves plenty of room for innovation presents the perfect opportunity for the UK to win back the trust of AI firms and investors.
Implementing a comprehensive – but not overbearing – regulatory framework would reap substantial economic benefits for the industry. Establishing a clear set of guidelines and parameters for AI firms to follow would provide investors with a real sense of legal clarity.
Investors like certainty – something that’s been sorely lacking in the UK recently. Knowing the exact lay of land in UK AI allows them to confidently invest in its future. A supportive legal framework would provide confidence-boosting certainty for investors; with clearly set parameters and transparent regulatory practices, investors will feel assured that the UK’s AI industry is a viable market to invest in.
It would also have the added impact of fostering a sense of trust among potential consumers – a hurdle the AI industry is struggling to jump at the moment (ITIF). This, in turn, will benefit firms, allowing users to feel they can safely share their much-needed data with AI tools and platforms, fuelling innovation and growth in the AI industry.
Implementing comprehensive legal guidelines for the AI industry would benefit investors, consumers, and, of course, the AI startups themselves. However, from everything we’ve heard about the UK’s proposed AI Bill so far, there’s been little cause for celebration.
A missed opportunity
Early details of the proposed AI Bill are light on detail, and the few morsels dropping down from the big table are not encouraging.
According to Tech Secretary Peter Kyle, the government is eager to avoid implementing a wide-reaching “Christmas tree Bill” (Financial Times). However, in a bid to prevent a broad-focus piece of legislation, the government has swung from one extreme to another.
Adopting a remarkably narrow scope, the government’s AI Bill seems to be focused solely on general-purpose foundation models. In doing so, other models of AI, which form the majority of AI startups, are left in the lurch – unregulated and unsure of where the line is.
While the UK houses 30% of GenAI startups now (Inc), this could easily change if our competitors can get ahead of the curve by implementing a more coherent legal framework for AI. For as long as the UK remains a land clouded by uncertainty and inconsistent regulation, investment will flood into competitors.
Thankfully, the development of the UK’s AI Bill is still in its early stages—there’s still time for the government to head back to the drawing board.
Some practical inclusions in the proposed AI Bill include establishing firm guardrails where data is concerned to promote the safe sharing of data with AI firms, expanding out a regulatory sandbox where AI startups can engage real consumers without fear of legal repercussions, and more comprehensive details on how the government will cooperate with research and higher education institutions.
The UK’s AI sector has already proven that it can be a global player. It produces startups that have already upended markets, and it serves as a lightning rod of external capital that floods into the UK. But these successes are being undermined by successive government missteps.
Fortunately, there’s still time to backtrack. After scrapping some key projects, the government must signal that it remains a willing partner with the sector – and a more comprehensive AI Bill should be the first stage of this rapprochement.
