Concerns surge over the use of AI

AI use among small firms has nearly tripled in two years, according to Federation of Small Business (FSB) research.

However, with 92 per cent still raising concerns, issues around data, copyright and liability need to be addressed.

Unlocking wider AI adoption among small firms could add more than £4 billion to the UK economy each year – but fears around data, liability and copyright are holding many back, according to the FSB.

New research by the UK’s largest small business group shows that 55 per cent of small firms now using the technology, up from 20 per cent in 2023.

But concerns have surged too, with 92 per cent now worried about AI risks, compared to 2023’s 73 per cent.

These concerns include AI producing inaccurate responses, security and abuse of Intellectual Property (IP) rights.

There are also fears of exposure to legal liability or risk and uncertainty around using AI legally, ethically and responsibly.

And although fewer than one in ten said the technology helped reduce staff levels, 59 per cent reported productivity gains, 22 per cent said it helped them grow their business and 24 per cent reported higher revenues.

The average small business adopting AI also reported a three per cent increase in revenue – and increasing the depth of use could add more than £42bn to the UK economy each year.

FSB is now calling on the government to mandate standardised AI “model cards” so businesses can easily see what happens to their data, where it is stored, whether it is used to train AI models, who owns the outputs and who is responsible when things go wrong.

Some providers already publish this information, but not always in a consistent or easily accessible format.

FSB also wants small businesses to have greater protection over their data and intellectual property, including stronger enforcement against AI companies that use copyrighted content without permission when training AI models.

And it says there is a need to introduce rules on who is liable when AI tools make mistakes, giving businesses the confidence to adopt the technology.

It is calling for the introduction tax incentives to help small businesses invest in AI and other productivity-enhancing technologies.

Tina McKenzie, policy chair of the Federation of Small Businesses, said: “There is a healthy realism among small businesses when it comes to AI, and it’s encouraging to see so many already finding practical ways to use it to save time, improve productivity and grow.

“Business owners can see the potential, but they are also asking sensible questions about how their data is used, who is responsible when things go wrong, and how they can adopt the technology safely.

“It’s only natural that people want to know the rules of the road before they take the leap and begin using AI. Small firms are looking for the confidence and certainty to use it well.

“If we can provide that, the prize is enormous. AI has the potential to help small businesses work smarter, reach new customers, develop new products and compete more effectively, unlocking benefits not just for individual firms but for the wider economy too.”

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