Tech aspects of 2023 Budget

March 17, 2023

The Chancellor of the Exchequer has issued the 2023 Budget. This article sets out the aspects of interest to technology lawyers.

Regulation of Technologies Review

At the Autumn Statement 2022 the government asked Sir Patrick Vallance to lead the Pro-Innovation Regulation of Technologies Review. The government has now announced that it will be taking forward all Sir Patrick’s recommendations on the regulation of emerging digital technologies. These include:

  • a multi-regulator sandbox;
  • amending the Computer Misuse Act 1990 to include a statutory public interest defence;
  • announcing a clear policy position on the relationship between intellectual property law and generative AI to provide confidence to innovators and investors;
  • facilitating greater industry access to public data, and prioritising wider data sharing and linkage across the public sector;
  • bringing forward the Future of Transport Bill to unlock innovation across automated transport applications;
  • working with the Civil Aviation Authority to establish an operating standard for drones, moving away from relying on operators to prove they are safe;
  • the ICO should update its guidance to clarify when an organisation is a controller, joint controller or processor for processing activities relating to AI as a service;
  • in line with the Commons Science and Technology Select Committee’s recommendation in their report on the UK space strategy and UK satellite infrastructure, the UK government should implement a variable liability approach to granting licences by June 2023.

The report also said that the government should avoid regulating emerging digital technologies too early, to avoid the risk of stifling innovation.

The government has now asked Sir Patrick to report on how regulators can better support innovation, and the government’s new Chief Scientific Adviser, Professor Dame Angela McLean, will oversee future reviews into creative industries, advanced manufacturing, and the regulator growth duty.

Budget announcements

The UK government says that it will support growth in the sectors it considers key for the future: green industries; digital technologies; life sciences; creative industries and advanced manufacturing.

In addition, it says that further investment is needed in infrastructure for research and innovation. Powerful computing capability is essential to progress in AI research. However, the Future of Compute Review, which was published earlier in March, found that the UK’s AI community has immediate requirements for large-scale, accelerator-driven compute to remain internationally competitive. It said that urgent action is needed to bolster the UK’s compute infrastructure and create a world-class compute ecosystem.

The government is following two key recommendations of the Future of Compute Review: it will invest, subject to the usual business case processes, in the region of £900 million to build an exascale supercomputer and it will establish a new AI Research Resource.

The government says that recent developments in AI, such as the launch of ChatGPT and the announcement of Google Bard, have shown the powerful potential for technologies which are based upon foundation models, including large language models. The UK government will establish a taskforce to advance UK sovereign capability in foundation models, including large language models.

The government will award a £1 million prize every year for the next ten years to researchers that drive progress in critical areas of AI.

Quantum technologies are expected to have transformative and wide-ranging impacts, through the development of new types of computers, secure communications, and wider improvements to sensing, imaging and timing. The Quantum Strategy sets out a quantum research and innovation programme. The government will invest a total of £2.5 billion over 10 years, focusing on four goals: ensuring the UK is home to significant quantum science and engineering; supporting businesses through innovation funding opportunities and by providing access to high quality R&D facilities; driving the use of quantum technologies in the UK; and creating a national and international regulatory framework.

The government has allocated £100 million funding for the Innovation Accelerators programme to 26 transformative R&D projects. It has also committed to lead on the regulation of AI and on the future of web technology. The government will work to maximise the potential of Web3 and to spur UK growth and innovation, alongside empowering individuals to influence how their data is used, and managing downside risks to privacy, security and harms.