AI: Is your business ready?

Artificial Intelligence (AI) is revolutionising our day-to-day lives at a rate quicker than any technology that has come before it. The rapid, emerging nature of AI technology is mirrored in the policy environment that governs it, which is constantly evolving in order to keep up. Despite it becoming ever-present in today’s society, a recent CBI Economics survey has found that just one-sixth (16%) of businesses have implemented AI in their operations, with the majority (58%) yet to embrace AI technology at all.

Businesses are therefore clearly struggling to understand, apply and make the most of AI. CBI Economics recently partnered with a leading UK energy provider to address this challenge – through detailed analysis and horizon-scanning we empowered them with a deeper understanding of the AI policy environment.

Where does the UK’s AI policy environment currently stand?

The 2023 AI Policy White Paper set out a light-touch, principles-based approach to regulating AI in the UK. Rather than creating a specific, overarching AI regulator, the UK framework will empower existing regulators to expand their remits and govern AI under five core principles:

1. Safety, security and robustness
2. Appropriate transparency and explainability
3. Fairness
4. Accountability and governance
5. Contestability and redress

This builds the foundations of a highly decentralised, non-interventionist policy environment that UK businesses can expect around AI. Regulation will be ‘context-specific’ – driven more broadly by uses and outcomes, as opposed to narrower AI technologies, businesses and sectors. While safety and public trust in AI are important, government’s main priority is to incentivise innovation and growth in the sector, as the Prime Minister has stressed that we ‘should not rush to regulate’ this technology.

How does our AI regulation landscape compare to the EU and the USA?

This regulation landscape is a far cry from the EU equivalent, chiming more with the approach in the USA to AI. The EU’s AI Act outlines a more static and interventionist framework, focussing on categorising AI systems by their risk level – ranging from ‘unacceptable’ to ‘minimum’. ‘Unacceptable’ risk AI technology is outright banned while ‘high’ risk systems will face legislation and obligations throughout their life cycle. This legislation will be enforced by a central European AI board alongside a network of AI regulators in each country, with penalties of up to €35m for non-compliance.

The US AI Bill of Rights sets out a far more light-touch approach to AI regulation, guided by five core principles that share a lot of similarity with the UK equivalent. Guidance in the USA – along with a more recent Executive Order – offers more detail than the UK though, via practical examples of regulation and policy for each principle.

How is the UK’s AI policy framework likely to change in the future?

The emerging, fast-moving nature of AI systems means that regulation will undoubtedly change a great deal over the coming months and years. Since publishing their White Paper, UK government released a consultation response in August 2023, which added a degree of centralised coordination to AI policy by committing to deliver certain key regulatory functions centrally. A second consultation response was published in recent weeks, focussed mainly on new initiatives and funding commitments – including £10m to ‘jumpstart regulators’ AI capabilities’ – rather than changes to existing regulation.

Looking further ahead beyond the 2024 General Election, it seems likely that both major parties will seek to continue these themes of light-touch, context-specific regulation. Labour’s pre-Manifesto rhetoric does however give some indication they may be slightly more willing to intervene in AI than their counterparts across the despatch box. National Policy Forum documents state AI regulation should ‘appropriately and proportionately’ mitigate potential harm, act quickly to set standards for safety, and explore whether regulators should also get involved with companies developing foundation models.

Empower your business to better understand the policy environment

Is your business affected by a policy area like this that you want a better understanding of? Are you in need of insight into how legislation and policy may change in the future, or beyond the General Election? CBI Economics tailored this analysis and horizon-scanning to benefit a large energy provider, exploring how the AI policy environment could impact their business, and the activity of their sector’s regulators in the AI space.

Drawing on the expertise of our specialist in-house policy teams and extensive research, CBI Economics have a long, successful track record in helping businesses navigate the ever-evolving policy landscape. From decarbonisation and competitiveness to technology and skills, we provide valuable, tailored insights in policy areas relevant to your organisation.

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