Hot on the heels of the recent action taken to facilitate the rescue of Silicon Valley Bank UK (which reportedly supported in the region of the 3,000 companies predominantly in the technology sector), the budget statement contains further evidence of UK government's drive to support the development of digital technologies, by reference to Sir Patrick Vallance's report "Pro-innovation Regulation of Technologies Review - Digital Technologies".
Its three main recommendations relate to (a) "supporting a step-change in the UK's regulatory approach to AI, (b) facilitating greater industry access to public data to help deliver the government’s public services transformation programme, and address pressing societal challenges; and (c) government signalling and leadership to focus regulator efforts on innovation in autonomous vehicles, drones, cyber security, and space and satellite technologies".
Interesting nuggets in the budget include:
- The well-trailed creation of 12 'Investment Zones' across the mayoral combined authorities in East Midlands, Manchester, Liverpool, the North East, South Yorkshire, Tees Valley, West Midlands and West Yorkshire, each with access to interventions worth £80m over five years as well as a tax incentive matching that available in Freeports. Investment Zones themselves have of course been subject to a bit of a back and forth recently. The brief history is that investment zones were introduced under the same name by Kwasi Kwarteng in the ‘Emergency Budget’ in September 2022. Following expressions of interest being submitted by October 2022, plans for Investment Zones appeared to be shelved by January 2023. Now back, the benefits have been scaled back such as the relaxed approach to environmental standards that were suggested under Liz Truss’s tenure. This scheme appears more targeted and considered, aligning neatly with the Levelling Up agenda and devolved councils with already elected mayors who very likely have a good idea of what they will commit to the plans that are to be submitted
- A ten-year initiative worth £2.5bn to back up the UK's Quantum Strategy – focussed on ensuring the UK is home to world-leading quantum science and engineering, providing access to world-leading R&D facilities and creating a national and international regulatory framework
- A plan to lead on the regulation of AI, Web3 and the metaverse
- The aim to create a cross-regulatory sandbox for AI businesses within six months to be led, it is suggested in Sir Patrick Vallance's report, through the convening powers of the Digital Regulatory Cooperation Forum (made up of four of the ten UK regulators whose purview covers digital business – Ofcom, ICO, CMA and FCA).
While containing ambitious objectives, much of the detail is to follow in future policy announcements which we'll need to watch closely. There is also a significant way to go in terms of the UK's global position in some of these areas - for instance, as far as access to powerful computing resource is concerned, the UK lies in 28th place in terms of the location of the most powerful supercomputers in the world. To close this gap, the budget contains a commitment (subject to the usual business case processes) to invest £900m to build an exascale supercomputer and establish a new AI research resource (with investments to start this year) – as recommended in the independent Future of Compute Review, published last week. Notably absent was a commitment to a strategy for semiconductors, which the sector is saying was a missed opportunity. So much work is needed in practice here and it must be hoped that any potential new government in the coming year or so would continue with these objectives.
Lastly and as far as the regulation of AI is concerned, the approach currently being taken by UK government differs from the more prescriptive direction of travel in the EU and the US. The UK's sectoral regulators to whom the next steps have been delegated will also need to be quick if the UK is to make good on its aspirations to lead in this space.
So, much to play for, but a lot to achieve in a very short period of time!