The Federation of Small Businesses (FSB) has called on the government's newly appointed AI minister, Kanishka Narayan, to prioritise support for small businesses, warning that concerns over trust and regulation are holding back wider adoption of artificial intelligence.
Publishing a new report, The Confidence Code: The Challenges and Opportunities of AI for Small Firms, the business group said Narayan's new Cabinet role presents an opportunity to boost productivity and economic growth by helping smaller firms embrace AI with confidence.
According to the report, AI adoption among small businesses has almost tripled since 2023, with 59 per cent of users reporting productivity gains and 24 per cent saying the technology has helped increase revenue. Businesses using AI reported an average revenue increase of three per cent.
However, the research also found that 92 per cent of small firms still have concerns about adopting AI, particularly around data security, copyright and liability.
More than a third (34 per cent) said better guidance on implementing AI would encourage them to adopt the technology, while 31 per cent said support to use AI legally, ethically and responsibly would help.
FSB estimates that wider and deeper adoption of AI by small businesses could add more than £42 billion to the UK economy each year.
To accelerate uptake, the organisation is urging the government to introduce a Responsible AI Essentials certification scheme, AI adoption vouchers, clearer guidance and training through an AI Skills Hub, and standardised AI model cards to improve transparency over how providers use business data and where responsibility lies if problems arise.
Tina McKenzie, policy chair at FSB, welcomed the government's decision to give the AI minister a Cabinet seat but said practical support would be essential if small businesses were to realise AI's full potential.
“It's great to see the new government taking AI seriously and recognising how important it's becoming to the economy,” she said.
“The technology is moving at pace, but too many are asking basic questions about data, copyright and liability, and they deserve clear answers.”
McKenzie said the AI minister had “a real opportunity” to make the UK “the best place in the world for small firms to adopt AI”, provided trust was placed at the centre of the government's approach.
“That means giving them clear answers on who owns AI-generated content, how their data will be used, and who is responsible when things go wrong,” she said. “They must have access to practical guidance and support to help them adopt AI safely and confidently.”
She added that getting the policy framework right would encourage more businesses to adopt AI and improve productivity, while failing to address trust issues risked holding back thousands of firms ready to take the next step.