On Friday (10 May), the House of Lords heard the third reading of the UK’s AI bill, moving it into the next stage of being heard in the House of Commons. 

The AI bill will establish a new body to ensure relevant existing regulators are properly taking account of AI in the country. However, some experts are concerned that the UK is not doing enough for companies to confidently integrate and develop the rapidly growing technology.

The move comes ahead of the second AI Safety Summit in Seoul next week, and two months after the EU AI Act passed in March.

The EU AI Act came into force on 13 March and has enforced a heavier process for regulating AI. The EU AI Act is based on a risk-based approach, classifying each AI application into three categories: unacceptable risk, high risk, and limited, minimal, or no risk.

Regulations restricting each AI system vary depending on its risk level. AI systems classified as having unacceptable risks are considered a threat to people, and these systems will be outright banned.

What is the UK AI bill?

Critics of the EU AI Act claim that its structure does not adequately reflect AI’s rapidly evolving nature, meaning that companies will have a much harder time innovating. The UK is trying to avoid this with its light touch approach to AI development and integration.

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Unlike other countries and regions, the UK has maintained that it is too early to legislate the use and development of AI and that doing so would be counterproductive. UK ministers have suggested that existing sectoral regulators are best placed to regulate AI.

If passed, the UK AI bill would create a new body called the AI Authority. This body will provide overall monitoring of the technology’s risks in the country while also ensuring existing regulators are aligned in AI safety. 

The AI bill represents the UK government’s plans to take a light touch approach to AI so as not to stifle innovation and investment in the UK. The government said there will be a time in the future when AI will need to be properly legislated. 

Laura Petrone, principal analyst at research company GlobalData, told Verdict that it is still uncertain what the new legislation will cover and when it will be released.

“What is clear is that, months after the government expressed its intent not to rush AI regulation, there is now increasing concern about the potential harm that large language models could cause,” Petrone said.

“The government proposal focuses on these most powerful models, with requirements from providers to share their algorithms with the government and provide evidence of safety testing,” she added.

Lord Chris Holmes, the government member who drafted the bill, said it represented a “unique opportunity for the UK”.

“We do not have to fear being in the first mover spotlight, the EU has taken that with its Act, in all its 892 pages,” Holmes said in the House of Lords in March.

“The US has had the executive order but is still yet to commit fully to this phase. The UK, with our common-law tradition, respected right around the world, has such an opportunity to legislate in a way that will be adaptive, versatile and able to develop through precedent and case law,” he added.

Will the UK AI bill do enough for businesses?

The UK’s approach has not been welcomed by everyone, and some are worried that the bill does not go far enough for UK businesses.

Veera Siivonen, CCO and partner at AI governance company Saidot claimed that the UK’s lack of clear legislation was having a negative impact on businesses.

“Without clear regulations, UK businesses have been left in limbo, unsure of how to proceed safely and effectively,” Siivonen told Verdict.

“The UK government’s preference for a light touch approach risks creating a regulatory vacuum that leaves consumers unprotected and industries unclear about compliance requirements,” she added. 

According to a January survey published by Deloitte, one-third of UK business leaders believe their company has a high or very high level of expertise in AI, and labelled their biggest concern as being able to comply with regulations.

“A well-defined regulatory framework is not just about setting restrictions on AI development; it’s about providing clarity and stability that can drive sustainable innovation,” Siivonen explained. 

“This is about safeguarding our netpositive technological future while promoting a competitive business environment,” she added.

Along with businesses, experts see the progress towards a clearer stance on AI regulation as crucial to future investment in the UK.

Crystal van Oosterom, AI venture partner at venture capital firm OpenOcean, believes that the AI bill represents a good opportunity for the UK to create a “supportive and attractive regulatory environment for startups”.

“It’s great to see the UK making progress in clarifying and formalising its regulatory stance towards AI,” Oosterom said.

“This clarity is crucial for both AI builders and adopters to confidently develop, invest in, and deploy AI,” she added.

As of May 2024, venture financing deals have soared in the UK compared to previous years, according to GlobalData’s deal database.

The value of UK venture financing deals totalled $1.4bn in 2024YTD, a significant increase over 2023, which saw deals total $654m.

In 2022, the value of deals in the country totalled $825m, a significant increase over four years prior, which saw deals total just $161m.

GlobalData forecasts that the overall AI market will be worth $909bn by 2030, having grown at a compound annual growth rate (CAGR) of 35% between 2022 and 2030.

Revenues in the GenAI space are expected to grow from $1.8bn in 2022 to $33bn in 2027 at a CAGR of 80%.