AI and Creative Technologies (Communications and Digital Committee Report)

Viscount Camrose Excerpts

Friday 13th June 2025 Lords Chamber

[Viscount Camrose (Con)]

My Lords, I declare my interests in early-stage technology ventures as set out in the register. I thank my noble friend Lady Stowell of Beeston for securing and leading this important and timely debate. I felt genuinely sad to be reminded that she will no longer be chairing this important and effective committee. I also congratulate warmly my newer noble friends Lord Evans and Lord Massey on their maiden speeches. I thought they were interesting, well argued and wholly well constructed for this debate that has been uniformly outstanding.

The noble Lord, Lord McNally, rightly quoted the “white heat of progress”, but I feel that AI is putting even that white heat into the shade. Whatever we are going to do, be it as organisations, as parliamentarians or as government, we are going to have to do it considerably faster than we are doing now. That raises important questions about how we can accelerate our pace and agility for coping with fast-moving new technologies. Needless to say, I agree with my noble friend Lady Stowell that the UK has the potential to be the powerhouse for growth for AI and tech companies. That is why it is essential for the Government to consider the recommendations made by this report.

There is no doubt that the UK has a deservedly strong reputation for start-ups. I am proud that the UK continues to lead in Europe on having the greatest number of unicorns. I share other noble Lords’ concerns about our competitors, particularly France, catching up with us, and we must be on our mettle. We must be acutely aware of the well-argued, well-founded concerns expressed by the committee that the UK is at risk of becoming an incubator economy. UK fintech unicorn Monzo is a prime example of this. Monzo was born and raised in London, but recent announcements indicate that it may choose to list in the US rather than on the UK stock market. It is a sad reflection that it does not feel confident that our markets are fit to support these scale-ups, and we must recognise that the UK is at grave risk of losing out to other nations.

Across the sector, we continue to see this issue highlighted. Oxford Science Enterprises—I echo the points raised by the noble Lord, Lord Tarassenko—has argued that without urgent action the US will benefit from the unicorns that we are building in the UK. The CEO of the video games industry body Ukie, Nick Poole, describes the UK as

“one of the worst places in the G7 to scale a games business”.

The CEO of Cleo AI, Barney Hussey-Yeo, has reported that the UK is

“a terrible place to scale and list a business”.

It is vital that we restore the appeal of London’s capital markets and remove the unnecessary barriers to growth. The recommendations put forward by the committee address some of the key challenges raised by industry. First, streamline innovation funds to provide a more clear, more comprehensive pathway of support for companies along their growth journey and remove some of the complexity that was referred to earlier. Secondly, accelerate financial reforms to ensure that they keep up with the whiter-than-white-heat rate of technological development. Thirdly, champion entrepreneurial success to celebrate and recognise the national contribution and achievement of successful British entrepreneurs; the wise words of the noble Baroness, Lady Lane-Fox, really resonated in that respect. Fourthly, the industrial strategy itself must provide a coherent, cross-sector vision for how tech scale-ups will be supported to drive economic growth. Fifthly, the Government must commit to AI delivery by removing obstacles to growth and supporting AI’s potential in government strategies. The AI Opportunities Action Plan is clearly a very important step—but a first step—on that journey. Finally, the Government should review their R&D tax credit schemes to include more support for the creative industries, which receive limited investment compared with other key growth sectors.

As noble Lords across the House are aware, when my party was in government we took steps to examine and try to grapple with the problem of addressing barriers to scaling up, through the 2014 Coutu report, the 2017 patient capital review and the 2021 Kalifa review of the UK’s fintech sector. Scaling up start-ups and creating an environment in which enterprises can flourish was a priority for the previous Government, as no doubt it is for this one. That was demonstrated through a range of business support programmes and government-backed financial support to encourage and boost start-ups through Help to Grow. I list these things not because I am claiming they were successful—obviously, if they had been as successful as we wanted, we would not need to be having this debate today—but there is an important step here: we must constantly learn from these programmes what went well, what we need to build on and how we can adapt as we go forward in future.

In government we took the view that AI regulation should be principles and outcome based due to the fast-moving nature of technology, and I was pleased to hear my noble friend Lord Holmes echo that point. I am also pleased that the Government have retained this view, and I am supportive of the approach that they have taken and adopted in this respect towards AI. I welcome the fact that the Government are keen to continue fostering innovation, scaling businesses and supporting emerging technologies. I welcome the Government’s expressed view, building on the foundation of the previous Government, that pensions reforms can channel investment into innovation-driven industries. The Government have committed to ensuring that the British Business Bank will effectively support companies to scale up in the industrial strategy, and I thank my noble friend Lord Willetts for his helpful account of how the various elements of that ending up in the British Business Bank might fit together.

We have heard a great deal recently in this Chamber about AI and copyright, but I will make one point here: we need to move faster towards a trusted marketplace for copyright licensing by AI. The perception—whatever one’s views of it—that AI labs can steal private property with impunity poisons people’s willingness to trust our tech sector and therefore limits growth. The Government’s planned timeline to address that, as I have said many times in these debates, is far too slow and needs to become more agile; it needs to move more quickly.

I close with a few questions for the Minister. As has been pointed out, there have been plenty of different points raised, so if the Minister prefers to respond to some of these in writing, she is very welcome to do so. First, the Government have rightly recognised the pivotal role of the creative technology sector and the challenges it faces. However, there has been no commitment thus far to reform the current definition of R&D tax reliefs to include more of the creative sector. What plans do the Government have to change that?

Secondly, before the election the Labour Party manifesto pledged to create an AI regulation Bill, a commitment that was repeated in the King’s Speech. However, I read in the Guardian that this Bill will not be introduced until the next Session of Parliament. Can the Minister confirm that the Bill has indeed been delayed and, if so, what were the factors behind that decision? Has the Bill’s scope broadened or otherwise changed? Does she share my concerns about the continued uncertainty that this creates, not just for the tech sector but for everyone who is a stakeholder of this tech sector—which, in practice, means everyone?

Thirdly and finally, does the Minister, agree that crypto—or, as I feel they should be called, digital—assets and tokenisation have very serious potential to remove market frictions and cut transaction costs? If so, how can we encourage their use, particularly to help scale-ups? In recent days we have seen the United States make very significant moves in this area. What do the Government make of those moves, and how do we plan to respond?