New AI Regulation Blueprint to Boost Innovation and Public Services in the UK

Published on October 21, 2025, by the Department for Science, Innovation and Technology and The Rt Hon Liz Kendall MP

Transforming the UK with AI Growth Labs

The UK government, led by Technology Secretary Liz Kendall, has unveiled a groundbreaking blueprint for AI regulation aimed at fostering innovation, reducing bureaucratic hurdles, and enhancing public services. Announced at the Times Tech Summit on October 21, 2025, this initiative introduces AI Growth Labs, controlled environments where businesses can test AI innovations under relaxed regulations with strict oversight.

Key Benefits of the AI Growth Labs

The AI Growth Labs are designed to deliver tangible benefits across multiple sectors, including:

• Healthcare: AI tools could streamline patient care, reduce NHS waiting times, and alleviate pressure on frontline staff.
• Housing: By leveraging AI, the approval process for housing developments, currently bogged down by 4,000-page applications and 18-month timelines, could be significantly accelerated, supporting the government’s goal of building 1.5 million new homes by the end of the current Parliament.
• Professional Services and Manufacturing: AI innovations in robotics and professional services could drive efficiency and global competitiveness.

How AI Growth Labs Work

AI Growth Labs, or regulatory sandboxes, allow temporary relaxation of specific regulations in controlled settings. These environments enable innovators to test AI products safely while maintaining strict oversight. Key features include:

• Time-Limited Testing: Regulations are adjusted for a set period under close supervision by tech and regulatory experts.
• Strong Safeguards: A strict licensing scheme ensures compliance, with potential fines for breaches or unacceptable risks.
• Exclusions: Consumer protection, safety provisions, fundamental rights, workers’ protections, and intellectual property rights remain non-negotiable.

Driving Economic Growth and Public Trust

The AI Growth Labs align with the government’s Plan for Change, aiming to boost economic growth and modernize public services. Currently, only 21% of UK firms use AI, but the OECD estimates that AI adoption could increase UK productivity by 1.3 percentage points annually, equivalent to £140 billion. By reducing regulatory bottlenecks, the initiative aims to accelerate AI adoption and position the UK as a global leader in responsible AI innovation.

Supporting Healthcare Innovation

A £1 million fund will support the Medicines and Healthcare products Regulatory Agency (MHRA) in piloting AI-assisted tools. These tools aim to enhance drug discovery, clinical trial assessments, and licensing processes while keeping human oversight central. This could lead to faster, more consistent healthcare solutions, improving patient outcomes.

Learning from Existing Sandboxes

The UK has a strong history of regulatory sandboxes, such as the Financial Conduct Authority’s 2016 fintech sandbox and the Digital Securities Sandbox, which have driven innovation in finance. Globally, countries like the EU, USA, Japan, Estonia, and Singapore have implemented AI sandboxes, and the UK aims to stay at the forefront of this trend.

Industry Support and Next Steps

The initiative has garnered widespread support from industry leaders:

“This call for evidence contemplates an agile approach to regulation, removing red-tape where it serves no purpose and breaking down silos between regulators.” – David Wakeling, Head of AI, A&O Shearman

“The AI Growth Lab addresses a critical challenge: enabling AI startups to launch innovative products without waiting years for regulatory clarity.” – Luther Lowe, Head of Public Policy, Y Combinator

The government will launch a public call for views to determine whether the AI Growth Labs should be managed in-house or by regulators. This collaborative approach will ensure the initiative meets the needs of businesses, regulators, and the public.

A Vision for the Future

Technology Secretary Liz Kendall emphasized the transformative potential of the initiative:

“This isn’t about cutting corners – it’s about fast-tracking responsible innovations that will improve lives and deliver real benefits.”

By fostering responsible AI development, the AI Growth Labs aim to modernize public services, drive economic growth, and position the UK as a global leader in AI innovation.