Founder's Guide
to AI Policy and
Regulation

Top Tips for Founders

Tier 1: The Overview Copy link

State of Play Copy link

The headline: The UK is presenting itself as a "pro-innovation" jurisdiction for AI. With a burgeoning tech sector and a political focus on innovation and growth, the Government has so far taken a light-touch approach to AI regulation.

The context: As the world’s third most valuable startup ecosystem, the UK undeniably punches above its weight. Its tech sector is a particular bright spot in the economy, consistently ranked the best in Europe and the third best globally. Public investment in AI has been strong in recent years, with the Government committing £100m to launch its AI Safety Institute, as well facilitating significant inward investment in UK data centres. The new Government has committed to continuing this trend despite recently shelving what they considered to be unfunded spending commitments on AI investment made by the previous administration.

The rules: The foundation of the UK’s approach to regulating AI is the 2023 AI White Paper, essentially a policy guidance document that advocates for governing AI within existing regulatory frameworks rather than introducing AI-specific regulation (as the EU AI Act does).

What this means for founders Copy link

AI rules and principles will be set by the UK’s existing regulators (detailed below), rather than by a new, dedicated AI regulator. This means that founders need to navigate a variety of legislative frameworks and individual regulators when developing or deploying AI applications in the UK, depending on the use case and context they are deployed in. Founders can also benefit from the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme’s extension until 2035 - a sign of the Government’s commitment to investment into startups via tax-relief incentives.

Forward Look Copy link

The UK’s economic picture is a key determinant of the political direction of travel on AI policy. Copy link

The previous Conservative Government outlined a "pro-innovation" approach to AI regulation, preferring to wait and see how the rapidly-evolving technology would develop rather than intervene too soon with blanket rules and risk stifling its innovation potential.

We should prepare to see some changes to AI regulation under the Labour Government. Copy link

Although we don’t expect Labour to scrap the UK’s current sector-by-sector regulatory approach by bringing in blanket AI legislation, the Government is likely to change the regulatory picture over the coming months and years, for example by implementing the following:

Frontier AI regulation the Government has confirmed that it will introduce binding rules on frontier model developers, including an obligation to release their safety data. There is likely to be a period of consultation ahead of the introduction of formal legislation.
Regulatory Innovation Office (RIO) the Government has proposed setting up a regulator coordination mechanism, to provide a strategic steer to regulatory priorities and create a landscape better suited to overseeing innovative technologies.
Data protection reforms the Government has introduced the Data (Use and Access) Bill in Parliament on 23 October 2024 which brings in changes to the data protection regime. There are specific changes that founders may need to be aware of, for example on the use of personal data for scientific research, and clarifications around safeguards for solely automated decision-making (which is generally understood as AI-enabled decision-making).

AI adoption is rising up the political agenda. Copy link

The Government’s view is that the economic benefits of AI cannot be realised without a widespread diffusion of the technology. The AI Opportunities Action plan is set to provide an assessment of how the Government should best target its AI investments to maximise the benefits of AI to the UK economy.

Timelines Copy link

2024/5: Consultation on a draft AI Bill (focusing on frontier AI regulation) expected to be published.

2024/5: Parliamentary passage of the Data (Use and Access) Bill.

Tier 2: The Details Copy link

Policy and Legislative Landscape Copy link

INITIATIVE	DESCRIPTION
AI White Paper	The AI White Paper, published by the previous Government in March 2023 and updated in February 2024, sets out a light-touch approach to AI regulation. In practice, this means empowering individual regulators to oversee the use of AI within their respective remits (e.g. the Information Commissioner’s office would oversee data protection in AI development and deployment) rather than creating one central regulator or piece of legislation to govern the technology. To maintain a unified approach, the White Paper requires regulators’ AI workstreams to adhere to five principles: safety, security and robustness; appropriate transparency and explainability; fairness; accountability and governance; contestability and redress. How these principles are interpreted and enforced will be up to individual regulators to determine. In response to the White Paper, regulators have now started to publish their strategic approaches to AI. The White Paper also presents a roadmap towards new legislation to institute binding rules for the developers of "frontier" AI models (i.e. those with the most advanced and potentially risky capabilities).
Existing UK regulatory frameworks to consider	When AI products are developed using personal data, or when they are deployed, UK data protection legislation will need to be considered (e.g., Data Protection Act 2018) Consumer protection regulations to protect consumer rights when buying goods or services (Consumer Rights Act 2015; The Consumer Protection from Unfair Trading Regulations 2008) Copyright and intellectual property legislation that can affect what data you can use to train models used or developed in the UK (Copyright Design and Patents Act 1988) Sector-specific regulations for, eg., financial services (Financial Services and Markets Act 2000) Product-specific legislation (such as for electrical and electronic equipment or medical devices) may apply to AI-enabled products

Policymakers Copy link

NAME	DESCRIPTION
Department for Science, Innovation and Technology (DSIT)	Established to raise the profile of innovation and technology within Whitehall, DSIT’s priorities are to promote research and innovation (including by managing R&D budgets), to deliver physical and digital infrastructure, and to make the UK "the best place to start and grow a technology business". The Labour Government has pledged to make DSIT the "digital centre of Government" and both an "economic" and a "delivery" department, acting as a cross-Government coordinator for digitising public services and helping other Whitehall departments with digital aspects of their policy areas.
AI Safety Institute (AISI)	Embedded within DSIT, the AISI was established in November 2023 as a Government research organisation. The AISI’s mission is to advance publicly-beneficial research and monitoring on the risks associated with the most powerful models (so-called "frontier AI"), including in collaboration with international counterparts. It has a close partnership with the US AISI to jointly test advanced AI models, share research insights, model access and enable expert talent transfers.

Enforcers Copy link

NAME	DESCRIPTION
Information Commissioner’s Office (ICO)	The UK’s data protection authority oversees the regulation of personal and business data, as well as the UK’s international data adequacy relationships. Alongside its enforcement duties, the ICO offers best-practice guidance on ensuring AI systems are compliant with data protection laws and runs an innovation advice service (including a regulatory sandbox) to help businesses bring innovative, data-compliant products to market more quickly.
Competition and Markets Authority (CMA)	The UK’s competition and consumer protection regulator. It has the power to investigate - and block - mergers and partnerships, launch reviews and investigations into markets where there are competition concerns, and protect consumers from unfair trading practices. The full list of CMA cases and projects can be found here. AI Foundation Models review: an ongoing market review into competition concerns in the generative AI market. A further update is expected in Q3-4 2024. Strategic Approach to AI: sets out and updates on the CMA’s approach to AI as it relates to competition and consumers. See their recent decisions here.
Ofcom	Ofcom is the UK’s communications and online safety regulator, with particular responsibility for overseeing the UK’s new online safety regime, telecoms and broadcast. This gives it responsibility over the intersection of AI with these areas, including deepfakes, online fraud and misinformation. Strategic Approach to AI: Ofcom published its strategic approach to AI in March 2024, outlining its priority areas of focus for generative AI.
Financial Conduct Authority (FCA)	The FCA is the UK’s lead financial regulatory body. It has begun to explore the potential benefits and risks of using AI in financial services and how existing financial regulation would apply to AI. It also monitors the adoption of AI throughout the industry. Strategic Approach to AI: the FCA published an update on its AI workstreams in April 2024, outlining its existing approach and its plans for the next 12 months.
Digital Regulation Cooperation Forum (DRCF)	The DRCF provides a cross-regulator coordination function, making it easier for the four regulators listed above to collaborate more easily on potentially overlapping responsibilities in the digital regulation space. The aim of the DRCF is to facilitate joined-up thinking between regulators on important cross-cutting digital topics (including AI), and to provide one voice on the UK’s digital regulation landscape to foster a pro-innovation regulatory environment.

Innovation Champions Copy link

NAME	DESCRIPTION	FOUNDER FOCUS
ARIA	Established in January 2023, ARIA is a UK Government-linked R&D research funding agency. It operates independently to direct funding towards research programmes with potential for scientific or technological breakthroughs. The agency recently launched a programme focused on building a Safeguarded AI using a combination of scientific world models and mathematical proofs.	Check for funding calls related to Activation Partners or Opportunity Seeds. These provide founders and startups with opportunities for collaboration and funding.
Startup Coalition	Founded in 2010, the Startup Coalition (formerly known as Coadec) is an industry body for UK startups focused on campaigning to improve policy for tech startups and scaleups. The Startup Coalition is particularly vocal on issues related to access to talent, access to finances, startup friendly regulation, and accelerating innovation. The group has produced a more comprehensive document outlining its policy positions in The Startup Manifesto.	Join their community to help shape their narrative as they push tech-friendly policy and regulation
techUK	Founded in 2013 as the UK trade association, it brings together a network for innovation and collaboration across business, Government and other stakeholders "to provide a better future for people, society, the economy and the planet". They have a particular mission to ensure that the UK is the best country for tech companies to be based in.	Join their community to network with other tech founders and SMEs. Their New Government Hub is designed to help new MPs learn more about the tech sector.
UK Day One	Non-partisan think tank which aims to accelerate the UK’s growth and economic progress by crowd-sourcing innovative ideas from the science and tech community and bringing them into the policy landscape. They have recently released briefings on Bringing Science & Tech Talent to Government and UK Pensions: Funding the Future of UK Science and Technology.	Submit ideas for tech policies to inspire the policy briefings that they write.

Founder's Guide to AI Policy and Regulation