UK unveils plans to cement tech leader status

In an effort for the UK to become a leader in technology and take advantage of Brexit freedoms, the Government has announced plans to increase investment, improve regulation and stimulate growth in technology and science, with a particular focus on artificial intelligence (''AI'') in the UK.  Amongst other things, these plans include regulatory reform, the commitment of up to £3.5 billion in investment in technology and science and have been set out in the newly released:

• 2023 Spring Budget;
• Vallance Report;
• Updated ICO guidance on AI & data protection; and
• the White Paper 'AI regulation: a pro-innovation approach'.

In recognition of the significant advancements and contributions made possible through the use of AI, the Government has credited AI as one of the five technologies of tomorrow in the UK Science and Technology Framework policy paper published on 6 March 2023.  In light of this, the White Paper 'AI regulation: a pro-innovation approach' (the "White Paper") saw the publication of the Government's proposed AI regulatory framework (the "Framework"), in line with the Government's National AI Strategy (the "Strategy") with a view to securing the UK's place as an AI superpower by 2030. Further details on the Framework can be found here. For further information about the AI White Paper and the UK approach to regulating AI technologies please refer to our blog post here.

The 2023 Spring Budget

The Spring Budget saw a focus on the development of technology and science in the UK, as the Government promised tax reforms, initiatives and regulatory reform with the Government accepting the recommendations in the Vallance Review.

Tax
From 1 April 2023 to 31 March 2026, companies will be able to write off the full cost of IT equipment, plant and machinery.  Research intensive Small and Medium Sized Enterprises will benefit from a higher rate of relief through a higher payable credit.

The Government is introducing the Audio-Visual Expenditure Credit, replacing the existing credits for film, high-end TV, animation and children’s TV.  The reforms will bring a higher rate of relief, with film and high-end TV attracting a credit rate of 34%.

Nuclear energy
To encourage private investment, nuclear power will be included in the green taxonomy. The Government has also announced its intention to launch Great British Nuclear, which will support nuclear new builds, initially focusing on Small Modular Reactors.

Medical technology (“Med-tech”)
The Chancellor has announced £10 million will be committed to developing a new vaccine regulatory model, with the potential to partner with international organisations, to enable rapid approval of vaccines.

AI
£900 million will be invested in the development of AI technology and an exascale computer. The Government is launching the “Manchester Prize” and will be awarding £1 million per year, over the next ten years, to researchers that drive progress in AI.

Quantum computing
The Chancellor has announced £2.5 billion will be committed, over the next ten years, to developing world leading quantum science and engineering in the UK and the development of research and development (“R&D”) facilities.

Investment zones
The Government is launching Investment Zones across the UK to develop green industries, digital technologies, life sciences, creative industries and advanced manufacturing.  Each zone will have access to £80 million in support, including tax reliefs and grant funding.

Pensions
British Patient Capital will receive at least £3 billion in investment, to focus on R&D for an additional ten years. The Government is launching the Long-term Investment for Technology and Science (“LIFTS”) to pool investments, particularly from Defined Contribution pension schemes, into innovation science and technology. The Local Government Pension Scheme will also be transferring its assets into pools to focus on innovative companies.

Innovation Accelerators
The Chancellor has committed £100 million to support the growth of innovation, research and development in 26 projects across the country.

Vallance report
The government is implementing the recommendations of the Vallance Review (please see further details below).

Vallance Report

March 2023 saw the publication of Sir Patrick Vallance's Pro-innovation Regulation of Technologies Review (the "Review"), which puts forward recommendations on regulatory challenges faced by digital technologies, particularly emerging technology, and the subsequent issuing of the Government's response to these recommendations.  Both publications are set out according to the following topics for each recommendation:

1. Multi-regulator AI sandbox:

• Review recommendation: The Government should work with regulators to develop a multi-regulator sandbox for AI to be in operation within the next six months.
• Government response: The Government will engage regulators to launch a new sandbox based on the features and principles set out in the Vallance Review.

2. Generative AI:

• Review recommendation: The Government should announce a clear policy position on the relationship between intellectual property law and generative AI to provide confidence to innovators and investors.
• Government response: The Intellectual Property Office (IPO) will publish a code of practice by summer 2023 to guide AI firms in the use of copyrighted work to train their models and balance this with protections for right holders in relation to generated outcomes.

3. Public data:

• Review recommendation: The Government should facilitate greater industry access to public data, and prioritise wider data sharing and linkage across the public sector, to help deliver the sector's transformation programme.
• Government response: By 2025, the Government aims to: (i) transform fifty of the top seventy five public services to facilitate greater industry access to public data; and (ii) create a Data Marketplace by to provide a single front door for government users to discover public sector data.

4. Future of Transport Bill:

• Review recommendation: The Government should bring forward the Future of Transport Bill to unlock innovation across automated transport applications.
• Government response: The Government aims to fulfil its promises as set out in the Connected & Automated Mobility 2025 paper published in August 2022 and will soon publish its response to the Future of Transport Regulatory Review consultation.

5. Drones:

• Review recommendation: The Government should work with the Civil Aviation Authority (CAA) to establish an operating standard for drones and amend Ofcom and the CAA's regulations on radio communications to allow the use of drones as radio repeaters to improve connectivity across rural areas.
• Government response: The Government is carrying out several projects which fulfil the recommendations in the Review, including the Future of Flight programme, establishing a Future of Flight Industry Group, encouraging the CAA to implement the Specific Operations Risk Assessment and launching CAELUS 2.

6. AI as a service:

• Review recommendation: The Information Commissioner’s Office (ICO) should update its guidance to clarify (i) the definitions of controller, joint controller or processor when using AI as a service (AIaaS); and (ii) when providers can reuse personal information to improve their models.
• Government response: The Government agrees with this recommendation in principle, whilst recognising that the ICO - an independent regulator with responsibility for this area - is best placed to determine how this recommendation should be taken forwards.

7. Space liability:

• Review recommendation: In line with previous technology reports, the government should implement a variable liability approach to granting licences by June 2023.
• Government response: The Government intends to hold a plenary session with the sector to outline the proposal on the variable limit approach at the end of March, ahead of a formal consultation on this and other liability and insurance matters in June.

8. Cyber security:

• Review recommendation: The Government should amend the Computer Misuse Act 1990 to include a statutory public interest defence to better protect cyber security researchers and professionals and to encourage innovation in this sector.
• Government response: The Home Office have a consultation and a programme of work in the pipeline that will enable the Government to move forwards in considering the merits and potential risks to reform

9. Broad approach:

• Review recommendation: The Government and regulators should continue to engage with industry on issues around safety, risk and benefits of innovation, and rapidly build capability and know-how to enable them to regulate the sector without stifling innovation.
• Government response: The Government recognises the need to set out a long-term strategic vision to support the promotion of emerging technologies, in line with its Plan for Digital Regulation and Digital Strategy. This approach is reflected in the Government's quantum strategy, also published today.

The ICO updates guidance on AI and data protection

In accordance with the Government’s plan to promote innovation, create better regulation and ensure the UK is a global AI superpower, the Information Commissioner’s Office ("ICO") has amended guidance on AI to provide greater clarity on compliance with the regulatory regime.

• The ICO has made additions to the chapter "What are the accountability and governance implications of AI?", providing greater clarity on the obligations and requirements when processing data using AI.
• The ICO has made additions to the chapter "How do we ensure transparency in AI" clarifying how the transparency principle relates to of AI.
• The ICO has provided additional sections "AI and inferences", "affinity groups" and "special category".
• A new chapter "What do we need to know about accuracy and statistical accuracy?" has been created to focus on the accuracy principle.
• The new guidance includes additional chapters entitled "What do we need to know about accuracy and statistical accuracy?" and "Annex A: Fairness in the AI lifecycle to clarify compliance with the principle of fairness".