Turbocharging responsible innovation? What the government AI whitepaper means for the industry

The government has presented its latest innovation-focused whitepaper that proposes a regulatory model that will drive growth in the AI sector.

It’s hoped the plan will unleash the benefits of artificial intelligence. Thanks to ChatGPT and Google Bard, AI is the talk of the town in 2023. But, the AI industry contributed £3.7bn to the UK economy in 2022, and presently, over 50,000 people worldwide work in the AI industry.

The whitepaper is one of the puzzle pieces of the UK’s national AI strategy. Over the next 10 years, the government will seek to implement a framework that will position the UK as an AI global superpower.

Although the regulations haven’t been made into statute, the whitepaper proposes to:

• Avoid heavy-handed legislation so that AI innovation is not stifled
• Give responsibility to individual existing regulators as opposed to an overarching body, so AI can be developed in a context-specific manner for each industry
• Promptly draft rules for the use of AI to become a leading voice in the international conversation
• Nurture public trust in the use of AI

Michelle Donelan, Secretary of State for Science, Innovation and Technology, says “AI is no longer the stuff of science fiction, and the pace of AI development is staggering, so we need to have rules to make sure it is developed safely.”

However, with so much uncertainty revolving around controlling AI, is the whitepaper giving businesses confidence that the rules of the game will be fair and comprehensive?

Threat is in the eye of the beholder

The whitepaper is followed by the Pause Giant AI Experiments Open Letter, which calls on all AI labs to immediately pause the training of AI systems more powerful than ChatGPT-4, the latest ChatGPT generational update, for at least six months.

The open letter was signed by tech and business giants, including Elon Musk and engineers from Amazon, Meta, and Microsoft. The open letter warns of an out-of-control race to develop powerful digital minds that no one can understand, predict, or reliably control.

Instead, the signatories suggest that powerful AI systems should be developed only once there is confidence that their effects will be positive, and their risks manageable.

Meanwhile, the letter calls on AI developers to work with policymakers to dramatically accelerate development of robust AI governance systems. This is based on the assumption that, inevitably, AI will become mainstream in much of the economy.

Although the UK’s race to the AI policy top answers these concerns, it remains to be seen how lax the regulations will be in practice, and whether they will raise any new red flags.

Harnessing responsible innovation

However, to others like Andres Rindler, Managing Director of Private Equity at BCG, the whitepaper provides reassurance. “Avoiding giving responsibility for AI governance to a single regulator means businesses can really push for innovation and take a better approach, which will also maintain public trust.”

The UK is currently placing third in the world for AI research and development. It also is home to a third of Europe’s AI companies.

To the likes of Rindler, the UK’s past history in harnessing emerging technologies spells a good omen on how AI could potentially be absorbed into the economy’s fabric.

“We have a history of supporting innovation, and by harnessing the combination of current government ambition and possibilities afforded by the likes of AI, business leaders and innovators can help cement the tech industry’s position as the backbone of the UK’s future economy,” stresses Rindler.

Policy gaps

Whilst the whitepaper feels like a necessary step in the right direction as the AI craze continues to mount, business leaders think there are important gaps left to fill.

Peter Finnie, a patent attorney and partner at Potter Clarkson, says, “The government’s white paper on AI is lacking in many ways, and there’s one crucial element to AI and innovation that the government fails to address: intellectual property,”

“A quick search of the document for related terms shows it’s been given scant regard and appears as if the government has failed to carry out even basic due diligence on the likely impediments to regulating the industry.”

Intellectual property is a key tenet of the development of AI, as data is used for machine learning, protecting software, and developing algorithms to train AI systems.

Businesses at each stage of the AI lifecycle will have important commercial interests at each stage, which already is leading to disputes. For instance, Getty Images is suing the creators of AI art tool Stable Diffusion for scraping its content and violating copyright law.

“Disputes such as these will proliferate in the absence of clarity and, while the courts are very capable of applying our intellectual property law to the legal questions arising out of AI, the relationship between intellectual property and AI needs to be at the core of government policy”, explains Mark Nichols, Senior Associate at Potter Clarkson.

Who will be leading the AI charge?

Recent changes to the R&D Tax Relief Scheme, made in the spring budget, could have an impact on determining who the main players of AI innovation in the UK will be.

Although the repayable tax credit will remain at 14%, provided 40% of an SME’s total expenditure is R&D related, those that don’t meet this criteria will lose out on much needed funds for R&D.

In practice, for every £100 invested in R&D by SMEs that don’t meet the 40% requirement, £14.75 will be lost compared to the previous tax relief regime. Even those meeting the 40% threshold will still incur a loss of £6.38 for every £100.

This has the potential to hurt the diversity of business representation in the AI R&D field. That’s particularly worrying, considering the UK is hoping to charge forcefully ahead to become a technological innovation hub in the industry.

The whitepaper gives clues as to what an AI-filled future of the UK could look like. However, the precise margins are yet to be drawn, and plenty of questions continue to loom as both policymakers and business leaders try to navigate a new technological frontier.