UK’s New Pro-innovation Approach to Regulating Digital Technologies

On 15 March 2023, the UK Government published, alongside its Spring Budget, a report on the Pro-innovation Regulation of Technologies Review (the “Report”). The Report was led by the government’s Chief Scientific Advisor and National Technology Officer, Sir Patrick Vallance, who was tasked with “bringing together the best minds to advise how the UK can better regulate emerging technologies, enabling their rapid and safe introduction.” In response, the UK Government has accepted all of the Report’s recommendations, and set out some next steps for their implementation.


The Report highlights key challenges with the current regulatory environment, noting that digital technologies combine distinct features, including powerful data processing capabilities, data analytics, horizontal integration and speed of global reach, which have outgrown existing fragmented and rigid regulatory rules.

To address these concerns, Sir Patrick Vallance calls for a more agile regulatory landscape for digital technologies, driven by the following three principles:

  1. Regulatory flexibility, particularly for emerging technologies;
  2. Experimentation and testing, to promote scaling and innovation; and
  3. International harmonisation, to enhance market access.

The Report includes nine specific recommendations in fields ranging from artificial intelligence (“AI”) to drones. We briefly consider the headline recommendations in turn below.

Headline recommendations

  1. Sandboxing

The Report recommends that the Government should work with regulators to develop a multi-regulator sandbox for AI to be in operation within the next six months. The Government wants to create a safe environment for companies to test their innovations without the fear of fines or liability.

The sandbox will also inform rule-making and bolster regulatory co-operation between the key regulators of the Digital Regulatory Cooperation Forum (the Office of Communications, the Information Commissioner’s Office, the Competition and Markets Authority and the Financial Conduct Authority). The Government plans to engage the key regulators immediately to prepare for the launch of the AI sandbox, with more detail to be provided in the forthcoming AI White Paper, due to be published in the coming weeks.

  1. Relationship between generative AI and intellectual property (“IP”) rights

The Report highlights that the relationship between on the one hand, generative AI, which creates content (such as text, images, music, speech, code or video) based on learning from existing content, and on the other hand the IP rights attached to such existing content, and AI-generated content, is currently unclear.

As such, the Report recommends developing a clear regulatory position on the relationship between IP rights and generative AI. The Government hopes that this would help to better position the UK to attract investment and innovation in this field, while showing leadership on the international scale and paving the way for the development of international standards.

To that end, the Government have tasked the Intellectual Property Office (the “IPO”) with producing a code of practice which will provide guidance on the lawful use of input IP (i.e., existing content), as well as protections for generative AI’s output IP (i.e., AI-generated content). To inform the code of practice, the IPO will consult with a group of AI firms and rights holders to identify and address barriers faced by users of data mining techniques when accessing copyright materials . If such a code of practice cannot be agreed between the AI and creative sectors, then appropriate legislation may follow.

  1. Data

The Report acknowledges that the Government and public sector bodies hold vast amounts of data, which, if made available both externally to the private sector and internally to other public sector bodies in a secure way, could significantly aid the development of new technologies and improvements to services.

To facilitate greater industry access to public data, and prioritise wider data sharing and linkage across the public sector, the Government is planning to deliver a so-called ‘Data Marketplace’ by 2025. The Data Marketplace will help the public sector to understand “what data is held where”, by providing a single platform for government users to source and use data held across various public bodies. The Government will also consider expanding this Data Marketplace to the private sector over the next 12 months.

  1. Future of transport

The Report notes that regulatory frameworks must adapt in order to keep pace with technological transformations in the transport sector such as self-driving cars, drones and autonomous shipping. The Department of Transport has already proposed a package of reforms to address this in the Future of Transport Bill which the Government is committed to bringing forward “when parliamentary time allows”. The Government’s response to its consultation on the Future of Transport Regulatory Review will be published in the coming weeks.

The bigger picture

While these recommendations are by no means trailblazing (for example, sandboxes are already widely used in finance, energy systems and data security, and the data access recommendations largely mirror the EU Data Governance Act), the UK Government has signalled its commitment to reforming the regulatory environment for emerging technologies.

The Report makes clear that this is just the beginning of what will likely be a deluge of proposed regulatory changes. Indeed, the Report forms a part of a broader political effort to change the UK’s regulatory framework post-Brexit. For example, the Online Safety Bill and the Data Protection and Digital Information Bill are currently making their ways through Parliament, and it is expected that the UK Digital Markets, Competition and Consumer Bill (which introduces changes to UK competition and consumer laws) will be published soon.

Additionally, upcoming government strategies, including the Quantum Strategy, Semiconductor Strategy, and the Emerging Technologies Regulation Review are on the horizon, and will likely provide further indications of how the Government will address these fast-moving sectors in the near future.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.