The cross-party group of MPs, which scrutinises technology policy, said if legislation is not introduced in the King's Speech in November, EU legislation is likely to take effect by default.
The report said: “Without a serious, rapid and effective effort to establish the right governance frameworks [...] other jurisdictions will steal a march and the frameworks that they lay down may become the default even if they are less effective than what the UK can offer.”
The committee identified 12 AI safety challenges the UK government must address, including the replacement of some jobs and what the economic impact of this will be.
Around half (49%) of workers said AI gave them concerns about job security in Microsoft’s global 2023 Work Trend Index Annual Report.
Other challenges include copyright, privacy and bias.
For example, if learning from biassed data, AI employment tools might associate women's names with traditionally female roles.
Sheila Flavell, chief operating officer (COO) of digital skills trainer FDM Group, said legislation around AI safety would affect the day-to-day lives of working people.
She said: "The tech has the capability to improve employee and customer experiences across all levels of businesses, but needs regulating. It is key we work on harnessing AI for good, and see its potential to mitigate the likes of biases in hiring, for example."
Flavell added that individual companies can begin to regulate their use of AI to limit possible harms.
She added: "Companies should work on creating internal policies and offer opportunities to educate their staff on internal and external AI usage. A one-size approach may not fit all business needs, so adapting where possible to enhance operations will set up businesses for success in the long run.”
The government published a whitepaper in March which promised to regulate AI. However, the whitepaper did not establish new regulation but called on regulators to apply existing rules.
This was criticised by Conservative MP David Davis who said the progress of AI must be slowed down until its dangers are better understood and regulated.
Read more: AI guaranteed to go wrong, says MP
Agreeing with an open letter signed by tech giants Steve Wozniak and Elon Musk, Davis argued no one fully understood the effects of advancing the technology, calling it "a profound risk to society and humanity".
He said: “If Wozniak, co-founder of Apple, doesn’t understand the scope of AI, what chance does a non-specialist governmental body have to regulate it properly?"
Davis said any form of workplace automation must be treated with caution, comparing the unchecked use of AI to the post office scandal, which saw over 700 workers wrongly prosecuted due to a faulty computer accounting system.
He argued we could face similar wide-scale miscarriages of justice if AI was left unchecked.