Societal Impact of AI: Government Policy

(Limited Text - Ministerial Extracts only)

Wednesday 8th July 2026 Westminster Hall

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a real pleasure to speak in this debate. I am very grateful to my hon. Friend the Member for Poole (Neil Duncan-Jordan) for securing it, and I agree with many of his remarks and those made by other speakers. I particularly agree with his remarks about the New Contract initiative.

The UK’s AI sector has grown 23 times faster than the rest of our economy. We must ensure continued investment and the realisation of productivity gains from appropriate use, but we must also secure greater domestic control and resilience, and mitigate near and later-term risks from inappropriate use, if we are truly to become an innovation nation. I believe that we must change our approach to AI, and I want to spend the time that I have setting out the case for doing that.

Above all, we must seek sovereignty as if we actually mean it. Supporting UK niches, such as photonics and quantum, is key to sovereignty and to boosting growth from Southampton to Sheffield and from Belfast to Birmingham, but we must recognise how crucial access to frontier models is to our sovereignty. The recent debacle with Fable 5 and Mythos 5 only serves to underline that. The sovereign AI fund needs a clearer rationale. It should be developing UK companies and partnerships, and public stakes should genuinely put our people and our places first.

We must also work more concertedly with allies to develop joint sovereign capability. AI development needs to be part of an economic security reset with the EU, and we need to be able to participate in the Scaleup Europe Fund. Interestingly, Mistral AI’s chief executive recently claimed that the EU has at most two years to build its own AI or become permanently structurally dependent on the US or China. The UK must be included in that EU-level debate before it is too late.

Delivering stronger sovereign control and resilience also means the Government putting their money where their mouths are and supporting UK AI and UK partnership AI in procurement. All Departments should be assessed publicly on that, and the Competition and Markets Authority should be engaged on how to ensure more advanced market commitments to support our sovereignty. We can learn from other countries on that. Look at France, which recently dropped Palantir from its intelligence services. Of course I realise that changes cause disruption, but we cannot work purely on the basis of cost or short-term capability any more. We have to make assessments on the basis of control and resilience, given their significance for our national interest.

In public services, we must move beyond no, low and performative adoption to appropriate and transparent adoption that puts people and places first. It is critical that the UK can deploy sufficient compute to support those aspirations. I hope that the AI Energy Council can develop plans for a line delivery of renewable energy and data centre projects, as well as fixing difficult issues such as demand modulation to unblock additional capacity. There can genuinely be a win-win here, but for that and greater adoption to be achieved, I agree with what others have said: we have to face up to public concern about the risks. We need only look at what is happening in Scotland right now to see that.

First, on unemployment, half of all UK workers feel that they will lose their job to AI. From what I can see, there is very mixed evidence about that so far, beyond the field of software development. Pleased as I was to see the Early Careers Jobs Alliance and the AI adoption insights agreement from the Government, we must go further. Lessons should be learned from the consultation on the social media ban, “Growing up in the online world: a national consultation”.

I would like to see the Government launch a consultation on starting work in a world of AI, so that we can involve young people who are worried about that, gather their good ideas and show that the Government are engaging with that crucial issue. We should be doing far more in our schools and colleges to prepare our children.

[Adam Dance (Yeovil) (LD)]

AI is increasingly being used to make cutting-edge assistive technology for people with special educational needs and disabilities, but the industry is a bit of a wild west, and access for young people in areas such as Yeovil is uneven. Will the hon. Member join me in urging the Government to publish guidance for schools on best practices for AI assistive technology for SEND?

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[Anneliese Dodds]

The hon. Member raises a really important point, and it is part of a broader picture. My understanding is that something like only half of all schools have an appropriate AI policy. Simply saying to students, “Don’t use AI”, having an unorganised approach to it, or just taking a company’s word for it without a broader set of guidance and frameworks for deployment is not supporting our children and young people. Saying, “Just don’t use AI”, when we know children and young people are using it, is not fair to them, and will do a disservice to our economy in the future.

Our children and young people need to understand how AI works, as well as the risks of cognitive offloading and the negative impacts on social interaction from inappropriate use. I also want to see us encouraging international discussion in the OECD and the United Nations about taxation—taxation of permanent establishment, capital gains and the cost of human labour compared with tokens. That does not need to have an immediate impact; we could set a threshold of employment impact to trigger a token tax, for example. However, we cannot run away from this debate, especially given how much services dominate our economy.

Secondly, we have to engage with concerns about the safety of frontier models. As I said many months ago alongside the Centre for Countering Digital Hate, just regulating applications after harm has been done is unacceptable. Grok should not have been able to produce 3 million non-consensual nudified images in the first place. New York, California, Illinois and the EU have moved towards approaches requiring mandatory assessment of frontier models, and we should too. We should place the AI Security Institute on a statutory footing as a first step, and we should use our presidency of the G20 next year to reinvigorate global attempts at co-ordination, which started with the Bletchley conference but have effectively stalled since. We can work with EU countries to do that as well as with nations from India to Brazil.

Thirdly, and finally, although AI can release huge productivity gains, we have to recognise that unscrupulous and inappropriate use is already imposing huge costs too.

[Sir John Hayes]

I am interested in the right hon. Lady’s comment on productivity, because it is one of the prevailing macroeconomic challenges facing this Government and previous Governments, as the stalling of productivity has been a problem across western economies for a while. It is true that AI might help, but it could also harm. Equipping people with skills is critical to building productivity, and dependence on AI may actually undermine people’s confidence and their skills over time.

[Anneliese Dodds]

I absolutely agree. That phenomenon of so-called cognitive offloading and the lack of scaffolding in skills is a genuine concern. Equally, we see how rapidly and accurately AI can assess tumour scans, for example, working with human beings to deliver the highest possible quality of healthcare. I agree with my hon. Friend the Member for Camborne and Redruth (Perran Moon) about the potential there. We need to have a sensible approach to this issue.

I also want to mention some additional harms. We are now seeing ubiquitous slop on the internet, AI-enabled fraud and cyber-attacks, and the impact of AI summaries on local media use as well, so I want to see the CMA using its powers for competition-focused action on strategic market status services. I want the Government to adopt a maximalist approach to the “Watch this Space” White Paper, and I want us to stop treating bots as separate, because AI is increasingly going to be integral to our interface with the internet, as well as to so much else, so we need to adopt a safety-by-design approach to online regulation, and that needs to recognise the increasing ubiquity of AI.

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[The Parliamentary Secretary, Cabinet Office (Mr James Frith)]

It is a pleasure to serve under your chairship, Ms McVey. I congratulate my hon. Friend the Member for Poole (Neil Duncan-Jordan) on securing the debate, which speaks directly to the kind of country and society that we want to create for everyone we represent, and our friends and family—the type of country and society we want to live and thrive in.

The Government recognise that AI is, as Members have said, already changing our economy, the delivery of public services, our expectations of each other and the ways in which we interact and engage in debate. For me, it is not merely the latest thing, or the something new and shiny that is so attractive to politics and politicians; in my mind, it is equivalent to a new atmosphere in which we now all expect to feature and play our part. We see the potential of AI in everything from scientific discovery to better public services and stronger economic growth.

The Government have a clear responsibility to make sure that the change at the heart of this debate reinforces rather than weakens the fabric of our society. That includes standing up to big tech firms when we deem it necessary—examples will follow—when they facilitate harm to UK citizens. As so many Members have powerfully made the argument for, it also includes developing sovereign capability—determining what comes next and honing it for best benefit. As we bring this debate to a close, it is important that we continue to consider those questions. We must collectively decide how we build a better society in an AI-enabled world. AI must serve us, and not the other way round.

The Government recognise the pressure to internationally compete on AI. That means we need to actively shape the transition towards it to secure benefits for the UK while managing risk or, as my right hon. Friend the Member for Oxford East (Anneliese Dodds) put it, exert the domestic control that we need. That is why we are working hard to ensure that the UK has the capability, access and influence it needs in the technologies that will shape our economy, public services and national security. It is why we established the sovereign AI unit with £500 million to enable the Government to back promising UK firms. The UK already attracts the third highest private investment in AI.

[Luke Myer (Middlesbrough South and East Cleveland) (Lab)]

The Teesside region has the potential to bring nationally significant investment in new AI data centre infrastructure. We welcome that investment and we are open for business, but will the Minister commit to meet colleagues at the Ministry of Housing, Communities and Local Government to ensure that the governance arrangements around the Teesworks site attract business, rather than deter it?

[Mr Frith]

If I am considered worthy to meet in a few weeks’ time, I will be very happy to do so.

This is not about self-sufficiency or about turning away from trusted international partners; it is about ensuring that where the UK has genuine strengths—in research, talent, creativity and innovation—we can translate them into long-term economic benefit. Significant private investment is now flowing into areas that would have seemed like science fiction even a decade ago, including therapies that slow or reverse biological ageing and AI-accelerated drug discovery that could compress timelines for curing major diseases. If realised, such developments would profoundly reshape expectations of health, work and the role of the state. That is why the Government have already committed to ambitious plans to transform services and digitise government, as set out in the road map for modern digital government published earlier this year.

[Sir John Hayes]

I hear what the Minister says, but there are no specific laws governing the standards of AI, there is no dedicated regulator to deal with AI development, and there are no sanctions on companies that knowingly use AI for malevolent purposes. Those things are all needed now.

[Mr Frith]

The Government’s principle is to regulate at the time of deployment or at use. I understand the right hon. Gentleman’s argument, but it is important that we strike the right balance between innovation and regulation. Of course, as I will come on to discuss in more detail, where there have been examples of harm we must call that out and call in those who caused them.

The Government have already committed to ambitious plans to transform services. For a radiologist, that means access to the best tools for detecting cancer—tools that can save lives and cut waiting lists in our NHS. The public sector is where it is perhaps most crucial that the Government ensure that we embed frameworks, standards and guidance to ensure that AI is deployed in a way that is fair, transparent and accountable. We are doing so with the data and AI ethics framework, the AI playbook, and transparency standards that ensure the public can understand how systems are used.

We are also supporting UK firms that provide third-party AI-assurance ecosystems, demonstrating that AI systems are safe and reliable as well as creating new jobs. That is critical not just for risk management but for building businesses, building confidence in those deploying AI, and building trust in the systems we use. To the points that were made about the job market, AI has the potential to enhance job roles and the performance of each of us at work, but it is necessary and reasonable, as my hon. Friend the Member for Poole pointed out, to distinguish the jobs that are most at risk—those least likely to be enhanced and most likely to be replaced. That is a very reasonable proposition. We recognise that one of the primary areas where people will interact with AI is in the labour market.

To zone in on labour markets, and the issue of young people and entry-level jobs, an estimated 12.8% of all people aged 16 to 24 in the UK are not in education, employment or training. That goes well beyond data-entry or access-level jobs, or a potential shift of culture in relation to entry-level jobs. To date, there is little conclusive evidence that AI is reducing employment. However, the International Monetary Fund estimates that around 70% of UK workers are in exposed occupations. Around half of those exposed workers are in high complementary roles, where AI will enhance rather than replace their work.

The Government are committed to supporting the worker experience through the AI transition, and have a proud record of advancing workers’ rights. To that end, earlier this year the Government established the AI and the future of work unit, bringing together expertise from across Departments and industry to monitor how AI is affecting jobs, wages and opportunity in real time. We are putting in place the institutions, data and cross-Government co-ordination needed to ensure that AI transforms the labour market, that workers are supported and that opportunities are widely shared across society.

We are also investing in people, because the opportunities of AI will be realised only if the workforce are equipped to harness them. That is why we have launched one of the most ambitious skills programmes anywhere in the world. Our AI skills boost programme is already delivering results. In an answer given to the House last week, I referred to the early careers funding and work on curriculum reforms to come, such as an AI-inclusive GCSE in computing.

This is about ensuring that workers at every stage of their career, and whether in small businesses, large firms or public services, have the tools that they need to thrive in an AI-enabled economy. AI will have—is having—seismic impacts on our working lives and productivity, and we must embrace the democracy this gives us. We must democratise access to AI to ensure that communities across the country reap the benefits. Central to that effort is ensuring that support is delivered to the graduates and young people entering the world of work for the first time. Much has been made of the rising level of NEETs. Programmes such as TechLocal are creating new jobs, traineeships and professional training, while scholarships and fellowships are supporting the next generation of researchers and innovators.

Nobody is waiting 25 years to tackle the threats, however. AI harms are very real, and we do not sit idly by when it comes to tackling them. We are not standing still. The AI Security Institute is conducting world-leading research to understand the capabilities and impacts of advanced AI. In response to the generation of vile and degrading non-consensual sexual deepfakes on Grok earlier this year, the Prime Minister himself, and the Government, stood up to Grok and X and won that fight. We have criminalised the creation of non-consensual sexual deepfakes and legislated to require platforms to remove them. Separately, we have banned nudification apps and criminalised AI tools designed to create sexual abuse material, as well as learning the importance of sovereignty when considering the recent switching off of the latest Anthropic AI tool.

I was asked a specific question about the social media ban. I was a proud early adopter of the policy and I am pleased to say that it remains the Government’s intention to update the House before recess.

The UK is proactively responding to the AI revolution—we are shaping it. AI has extraordinary potential to improve healthcare, accelerate scientific discovery, personalise education, strengthen public services and drive economic growth. We will harness the opportunities across every region and community to shape UK society for the better for all.