Long reads

What does the General Election mean for Data Protection, Digital Markets, and AI Regulation Bills?

Chris Holmes

Chris Holmes

Peer, House of Lords

I started the year writing about three important new laws that were with us in the House of Lords: the Data Protection Bill, the Digital Markets Bill, and my own AI (Regulation) Bill.   

The Data Protection and Digital Information Bill covered many aspects of data protection law including enabling smart data/data sharing across government – key for extending open finance. The Digital Markets, Competition, and Consumer Bill was designed to enhance consumer rights and encourage competition in digital markets.

My private members bill – the Artificial Intelligence (Regulation) Bill was intended to push the government to consider practical aspects of regulating AI – how to boost regulatory capability, build public awareness and ensure that wherever copyrighted content is used to train LLMs that it is always used with consent, respect and remuneration.

Unfortunately, only one of these Bills made it through the ‘wash up’ process which follows the announcement of a General Election. The Digital Markets, Competition and Consumers Act is now law, receiving Royal Assent on 24 May. The other bills could not be completed and have fallen.

Getting a Private Members Bill into law is always an uphill struggle but I had been the beneficiary of good fortune so far – managing to get the bill through all the Lords stages. It was teed up and ready to go to the Commons when the PM announced the General Election and a frantic two days of wash up to complete and pass what laws could be squeezed into that time. The Data Protection Bill and the AI (Regulation) Bill were both dropped.

Ironically both Bills address regulatory areas that the EU is clearly leading on – with the GDPR and the EU AI Act. By default, we are focusing on becoming EU law compliant. My argument is that the UK can, and should, lead. We must take advantage of our common law tradition and develop principles-based outcomes-focused AI regulation that protects citizens and supports innovation.

Currently we are leaving AI regulation to voluntary initiatives from industry and overstretched (and under resourced) regulators such as the FCA/BoE/PRS/ICO incorporating AI into existing frameworks. It’s not enough and I am well aware that UK based organisations concerned with compliance are looking at the EU AI Act.

One of the provisions of my Bill – covered in clause 3 – concerns sandboxes. Fintech regulatory sandboxes, developed in the UK in 2016 were a huge success and are now replicated in well over 50 jurisdictions around the world. Sandboxes enable innovation in a safe, regulated, supported environment: real customers, real market, real innovations, collaborative, agile, and effective.

Last week the Hong Kong Monetary Authority announced they are setting up an AI sandbox to explore generative applications that could be developed for financial institutions. It’s a great move. We pioneered the concept, and we should be getting on with it.

The State Opening of Parliament is set for July 17.  We don’t yet know who will be writing the King’s speech – it may even include an AI Bill – but I will certainly be bringing my AI (Regulation) Bill back.  If it makes it into the top twenty-five of the private members bill ballot it will be included in the legislative programme.

The need to legislate is clear and my Bill enjoyed broad cross-party support. During House of Lords debates dedicated to my proposals the Liberal Democrat spokesman Lord Clement Jones said:

“There is clearly a fair wind around the House for the Bill, and I very much hope it progresses and we see the Government adopt it.”

Labour’s Lord Leong also offered support saying:

“I think it is clear that there is consensus about the need for some kind of AI regulation. The Bill sends an important message about the Government’s responsibility to acknowledge and address how AI affects people’s jobs, lives, data and privacy, in the rapidly changing technological environment in which we live.

“We support and welcome the principles behind the Bill, and we wish it well as it goes to the other place.”

In May, the Tony Blair Institute and AI Company Faculty published a report and recommendations on Governing in the Age of AI. They make the case for utilising AI to transform public services setting out the prize on offer for fully embracing AI to transform the state as a potential saving to the UK of up to £40 billion a year.

This is a huge opportunity, and I believe the one thing we have learned about regulating tech so far is that we need to lead rather than follow. We need to positively regulate AI in the UK, pro-innovation, pro-citizen rights, pro-consumer protection AI regulation, for all our AI futures.

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