The UK government has announced a new blueprint for AI regulation as part of its broader Plan for Change, setting out measures intended to boost innovation, streamline public services and enhance national productivity.
Unveiled by Technology Secretary Liz Kendall at the Times Tech Summit on 21 October 2025, the blueprint introduces the creation of AI Growth Labs — dedicated environments where organisations can test AI technologies in real-world conditions with temporary adjustments to existing regulations. The initiative is designed to cut bureaucracy while ensuring that innovation takes place safely and responsibly.
The Growth Labs will operate as regulatory sandboxes, where certain rules may be suspended or modified for a limited period under close supervision. These controlled environments will initially focus on key sectors, healthcare, professional services, transport and advanced manufacturing, enabling innovators to pilot AI solutions that can address real challenges while generating evidence on safety and impact.
By allowing AI developers to work more closely with regulators, the initiative seeks to reduce procedural barriers, encourage cross-sector collaboration and deliver tangible benefits such as shorter NHS waiting times, faster housing development approvals and enhanced professional service delivery.
The government envisions broad benefits across the public and private sectors. In healthcare, AI tools tested under the Growth Lab model could assist medical staff in improving patient care, cutting waiting lists and reducing the administrative burden on frontline workers.
Similarly, in housing and infrastructure, the use of AI to analyse complex planning documentation could significantly shorten decision-making times. A typical housing application, currently averaging 4,000 pages and taking up to 18 months for approval, could be accelerated, supporting the government’s ambition to build 1.5 million new homes by the end of the current Parliament.
At the Regional Investment Summit, the Chancellor also announced a set of pro-growth regulatory reforms, projected to save UK businesses nearly GBP 6 billion annually by 2029 through streamlined administrative processes. These measures form part of the government’s ongoing effort to build a regulatory framework that both protects the public and enables innovation to thrive.
To reinforce the safe and ethical use of AI, a GBP 1 million fund will support the Medicines and Healthcare products Regulatory Agency (“<span class="news-text_medium">MHRA</span>”) in developing AI-assisted tools. These systems are expected to enhance scientific assessment, accelerate drug discovery and improve the efficiency of clinical trial evaluations — while ensuring that human oversight remains central to all decision-making.
The proposed AI Growth Lab will not allow unrestricted experimentation. Instead, it will establish strict, time-limited parameters defining which regulations may be modified. Each testing programme will be governed by a licensing scheme and monitored by technology and regulatory experts, with the authority to halt projects and impose fines for non-compliance or emerging risks.
The UK’s approach draws on the success of previous regulatory sandboxes, such as the Financial Conduct Authority’s 2016 Fintech Sandbox, which became a global model for innovation-friendly regulation. Similar frameworks have since been adopted internationally, including in the EU, United States, Japan, Estonia and Singapore, to support responsible AI development.
Domestically, the Digital Securities Sandbox is already helping financial firms deploy Distributed Ledger Technology to enhance transaction efficiency and combat fraud. Other UK-based sandboxes, such as those led by the Information Commissioner’s Office, have enabled AI-driven advances in age verification (Yoti) and mental health support platforms (FlyingBinary).
Technology Secretary Liz Kendall emphasised that the reforms reflect a shift toward a more agile and responsive regulatory model:
<p class="news-text_emphasize">“To deliver national renewal, we need to overhaul the old approaches which have stifled enterprise and held back our innovators. This isn’t about cutting corners – it’s about fast-tracking responsible innovations that will improve lives and deliver real benefits.”</p>
The government will launch a public consultation on the AI Growth Lab proposals, including whether the initiative should be managed directly by the government or overseen by regulators.
With the OECD estimating that AI could increase UK productivity by up to 1.3 percentage points annually, equivalent to GBP 140 billion, the government sees the Growth Lab as a crucial step in unlocking AI’s economic potential.
Currently, only 21% of UK businesses use AI technologies. By providing a framework for responsible testing and regulatory reform, the AI Growth Lab aims to expand adoption, strengthen public trust and position the UK at the forefront of global AI governance and innovation.
