Industry is cautiously welcoming the UK government’s launch of the Regulatory Innovation Office (RIO), a new body which promises to “cut red tape” for startups and “frontier” high-growth technologies.
As a key part of Labour’s manifesto plans to court the technology industry to support economic growth, the RIO will sit within the Department for Science, Innovation and Tech (DSIT) and its creation will be overseen by science minister Patrick Vallance.
The RIO will initially focus on four areas: engineering biology, space, autonomous technology and AI and digital in healthcare. However, some tech leaders warn there will be challenges ahead and are urging Labour for further clarity.
DSIT says the regulator will “reduce the burden for businesses hoping to bring new products and services to the market for some of the UK’s fastest-growing sectors”. This could include AI-training software for surgeons, lab-grown meat or drones for business delivery. The regulator plans to achieve these aims by speeding up approval for new technologies and “work to continuously inform the government of regulatory barriers to innovation”.
What might the Regulatory Innovation Office mean for UK business?
Business associations, including TechUK and the British Private Equity & Venture Capital Association (BVCA), applauded the move.
Michael Moore, chief executive of the BVCA, described the launch as an “important step towards enhancing collaboration between industry and regulation” that could “help drive forward innovation across important and emerging sectors”.
“By streamlining outdated regulations and allowing current UK regulation to be more agile, we have the ability to unlock transformative opportunities for growth for the wider economy,” he says.
Neil Ross, policy director at TechUK, adds: “If we get this right, this could unleash billions of pounds of additional investment.”
But at this early stage, the shape of the RIO is uncertain and its direction will largely depend on who is appointed chair. There are some concerns it might function as an accelerator attached to a regulatory unit. Alternatively, as with the EU’s AI Office, it could be a centre of excellence designed to assist businesses in the application or deployment of frontier technologies that are in-line with best practice and regulation.
These questions are up in the air until the role is filled. Alex Kirkhope, partner in the commercial team at law firm Shoosmiths, says his clients are hoping for a steer in the regulatory environment but a light touch in terms of regulation.
If we get this right, this could unleash billions of pounds of additional investment
“Will the RIO be a voice for the scaleups, startups and emerging tech businesses within the UK? Is it going to be a champion to help them navigate the existing, complex regulatory landscapes? Because the only way those regulations are going to be unpicked or made more simple is by either removing existing regulation or adding certain exemptions,” he says.
Appointing someone who understands the broader business and regulatory landscape will be key. Kirkhope adds: “Without that, there are embedded interests within the existing regulators that won’t want to see their remit reduced.”
A significant challenge with a new body like the RIO will be in balancing its remit to reduce complexity, and source the correct expertise to do so, while also avoiding butting heads with existing regulators. This will be particularly tricky because the high-growth areas identified by DSIT, such as healthcare, are highly regulated.
“A lot of questions remain around introducing a new body that’s supposedly going to speed up regulatory decision-making,” Kirkhope adds. “It’s particularly challenging when you’re dealing with existing regulatory remits and cross-sector issues.”
Hopefully, he adds, the RIO will “rationalise rather than multiply” regulatory burdens.
How can government make the RIO a success for business?
The four growth areas identified by DSIT seem spot on, says Forbes McKenzie, CEO of McKenzie Intelligence Services, a company that provides business intelligence to insurers such as Zurich and Lloyd’s. “Although I’d like to see more software in there, the UK is good in the bio-engineering and medtech worlds, it makes absolute sense.”
“Support will be critical in downstream delivery – we’re really good as a nation at taking something and turning it into something of great value,” he says.
The RIO could also play a critical role in advocating for spinouts from institutions such as the University of Oxford, University of Cambridge and the University of Edinburgh.
“I would love to see the office be a champion of those businesses, giving them support and access to global marketplaces and investment programmes, whether that be through Enterprise Investment Schemes or R&D schemes,” suggests McKenzie.
Ongoing funding commitments, government buy-in essential for success
But in order to make the RIO a success, technologists and businesses agree that it must be properly funded, resourced and well connected.
It must have government buy-in but also the right team in place so that it can respond with agility to the latest trends and developments in innovation, says Moore, and it must also “provide certainty for founders and investors”.
Jeff Watkins, CTO at software design agency CreateFuture, adds that much care must be taken to ensure the office works closely with industry across all the fields it operates in.
Being a government body, Watkins says, there’s also a risk that some real-world challenges faced by startups are “lost in translation” or that they’re “homogenised to the point the regulation is not fit for purpose”.
Some analysts expect UK startup investment to grow next year, boosted by the extension of the Enterprise Investment Scheme and the Venture Capital Trust schemes into 2025. Watkins warns that the RIO could face “scalability challenges” that “limit its ability to iterate as quickly as required”, if analysts’ predictions prove true.
The biggest challenge for the regulator could be in balancing “just enough” oversight with the pace of innovation in tech, especially if unforeseen disruptors suddenly emerge, as seen with OpenAI’s generative AI platform ChatGPT.
“The RIO will need to find a way to build a strong coherence between the various existing regulatory bodies, as well as integrate any new ones,” Watkins says. “It will also need to follow UK-wide regulation in order to avoid drowning in red tape and legal jargon, particularly if the UK aligns more closely to the EU AI Act in the near future.”
While questions remain, the hope is that the new body could prove beneficial for cultivating frontier technology in the UK. All of the components are there but there is not yet sufficient detail. If that detail is carefully clarified and it delivers on its mission to truly cut red tape, says Ellen Keenan O’Malley, senior associate at law firm EIP, the RIO has “great potential”.
“Regulatory sandboxes have proven valuable for startups by ensuring compliance from the start and by fostering connections, knowledge sharing and investment,” she says. “If the ROI can offer similar benefits along with regulatory certainty, it will be advantageous for businesses. However, it remains to be seen how much it will truly accelerate the process of bringing technology to market.”
