The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
My Lords, I am pleased to respond to this Question for Short Debate and I am thankful to the noble Lord, Lord Holmes, for initiating this debate, and for the wide variety of contributions made so concisely. It is such an important topic that if I fail to respond, I will of course follow up in writing.
The Government believe that AI has transformative potential for the UK: from scientific innovation and public sector reform, to increasing productivity to drive economic growth. To realise these benefits, we need to make sure that AI is used in a secure and controllable way. Our approach to regulation must enable innovation and protect our citizens from the risks that emerge as AI capabilities develop.
Recognising the point that noble Lords have made, that regulation and growth are not a trade-off, our regulating for growth Bill was announced last month in the King’s Speech. It is an example of how we will make the UK’s regulatory system fit for the future, so that it plays a full role in delivering growth and supporting innovation, including in AI, safely and sustainably. The Bill will create cross-economy sandboxing powers, so that businesses can test cutting-edge new products and technologies safely, prove what works, and then scale up delivery of these changes more quickly. That is how we regulate well and within a controlled environment.
As noble Lords have asked, we do believe that AI is a general-purpose technology with a wide range of applications, which is why the Government believe that most AI systems should be regulated at the point of use. Following the AI Opportunities Action Plan, the Government are committed to working with regulators to boost those capabilities. As a part of this, the Government issued letters to 19 regulators in January 2026, asking them to publish a plan setting out how they will enable safe AI-powered innovation. These regulators cover several high-potential sectors for AI innovation, including life sciences.
In addition, the Regulatory Innovation Office, which was launched in 2024, delivers targeted funding for regulatory experimentation through the regulators’ pioneer fund and the AI capability fund to support pilots, sandboxes and new regulatory pathways. For example, the MHRA is developing an AI-based tool to analyse drug-to-drug interactions in cardiovascular patients, and this will enable MHRA regulators to safely analyse the implications of proposed new drugs quickly and more effectively.
To respond to the question asked by the noble and learned Lord, Lord Thomas, we believe that AI in legal services is a multifaceted area and that a single AI regulator in legal services would risk duplicating existing regulatory functions, creating uncertainty. As I said, we have also written to the Legal Services Board asking for its plan on how to regulate AI safely.
As my noble friend Lady Antrobus mentioned, the issues of defence are complex. AI in defence is moving very fast. It is becoming a defining feature of modern warfare and, as she mentioned, a critical enabler of defence capability. We have an updated strategic approach to AI in defence, which reflects the more operational delivery-focused model. We are prioritising AI-enabled war-fighting advantage and enterprise transformation, strengthening governance and accountability, and ensuring that ambition is backed by the data, compute, skills and partnerships needed to scale at pace while taking a disciplined approach to frontier AI and maintaining robust standards. We also remain firmly committed to context-appropriate human involvement, which centres on humans as the accountable actors in the use of force. The role of any human intervention is therefore to ensure that responsibility and accountability are also clearly retained by people and not machines, to one of the important points my noble friend raised.
The noble Baroness, Lady Uddin, made a very important point about the fact that regulation does not happen without the context of the other measures we are taking to support the development of UK-based AI. We have launched our sovereign AI fund, supporting the development of AI capability here, as well as our support for the AI growth zones, as noble Lords will know. In addition, we are investing in the skills of people in this country. Effective regulation will only go hand in hand with a workforce, regulators and everybody being skilled to understand the risks and the judgments that have been taken day to day—including in media literacy, being able to take that discerning view about what people are seeing and consuming as part of media.
On the important points made about the fact that this is a global set of developments, and on the important role the UK has taken in the past and continues to take in shaping the passage of key international AI initiatives, we have indeed led on initiatives such as the Global Dialogue on AI Governance and the Independent International Scientific Panel on AI at the UN, and the Framework Convention on Artificial Intelligence in the Council of Europe. These are really important initiatives. Earlier this week I was at the OECD, where we as the UK were supporting the dissemination of principles for AI policy-making. It is very important that all countries apply regulation and policy effectively, as noble Lords have said. This is a globally developing set of initiatives.
Many noble Lords, including the noble Lords, Lord Harper, Lord Tarassenko and Lord Markham—and I heartily agree with them—mentioned the AI Security Institute. This is indeed an institute that the Government are proud of. It is world-leading and a centre of expertise, and has been analysing AI systems for two and half years. It is in an extremely unusual position globally, in that it has close collaboration with AI labs and has tested over 30 models to understand their potentially harmful capabilities. Leading industry players, including Anthropic and OpenAI, have made changes to strengthen AI model safeguards based on the institute’s findings.
This foundational research—to discover methods for building AI systems that are beneficial, reliable and aligned with human values—is essential, and these findings are shared with the Home Office, the NCSC and other national security organisations, enabling the UK to stay one step ahead of the risks brought by AI capabilities. We are committed to giving the institute the funding it needs through the spending review.
Noble Lords have highlighted the speed of development of AI models, and earlier this year Anthropic announced that Mythos represented a significant step-up in AI cyber capabilities. This is being monitored carefully by AISI and the NCSC, and they have published their findings on that. We have given further guidance to businesses and regulators on the measures that need to be taken to prevent and mitigate the risks of these further developments.
The noble Lord, Lord Taylor, mentioned the Cyber Security and Resilience (Network and Information Systems) Bill, which is moving to Report in the other place this month. It is designed to protect the services that the public rely on, and those regulations take an all-hazards risk-based approach that requires organisations to manage cyber security, physical security and broader operational risks, instead of specifying particular risks of technologies, in order to stay up to date and take into account further developments in technologies of the future.
I fear that I am not going to do justice to the topic of copyright.
Lord Harper (Con)
Just before the Minister sits down—we have seven minutes left before the debate runs out—can I ask her a question? My noble friend Lord Holmes drew attention to the Government’s original commitment to legislate for a cross-sector approach, and he referenced how the Government have now dropped that commitment. The only bit of legislation that the Government are doing is, as the Minister said, in the regulation for growth Bill, but I have not heard the Government explain why they have changed their approach from the one they originally set out. Can the Minister, in the seven minutes we have left, set out for noble Lords the reasons why the Government have done that? That would be helpful.
Baroness Lloyd of Effra (Lab)
Our view is that AI is a general-purpose technology with a wide range of applications, and also that regulators understand well the sectors they are regulating. They understand the risks that are present and understand, as many noble Lords have raised in the debate, the specific applications that AI is bringing, the potential risks to consumers and the nature of the competitive landscape—the balance between competition, incumbents and new entrants. That is the reason we are taking the approach to regulate at the point of use and using those regulatory frameworks.
We also already regulate AI in the UK—for example, in the Online Safety Act or under the GDPR—and, in some areas, across sectors. There are some areas in which legislation applies to the application of AI technologies.
Lord Holmes of Richmond (Con)
On that question of going domain-specific, what occurs in situations where there is a domain with no competent regulator? Similarly, how do the Government assure clarity, consistency and coherence of approach? As a citizen, you may come across AI—as noble Lords have rightly identified—in defence, education, health, tax and benefits. If you do not some sense of a guiding mind or horizontal direction, how can you possibly deliver consistency and clarity for people wherever they may come across AI?
Baroness Lloyd of Effra (Lab)
In all regulation, there is obviously a balance between consistency and context-specific, appropriate regulation. It is not always the case that consistency is the most appropriate or first-order principle. It may be that, as we have been discussing, there are many issues: a focus on growth, a focus on consumer protection or, for the energy markets in particular, a motivation towards decarbonisation. That is why the regulator, for whichever market we are talking about, is very well placed to look at how their objectives, as set out in their statutory duties, are best applied in the context of this new technology, which provides different functionalities and the opportunity for new innovation.
That is one reason we have also given these sandboxing powers. We realise that the current set of statutory frameworks was set up assuming that humans would always, for example, be in vehicles or crew vessels. We may need to adapt that in order to take account of the potential new innovations that AI brings, while doing so in a safe and secure way.