Can AI Sandboxes Speed Up Growth and Public Services?

The UK government has announced a new blueprint for AI regulation that it says could quicken planning approvals, shorten NHS waiting times and ultimately, encourage business growth. The Technology Secretary Liz Kendall revealed the plan at the Times Tech Summit, introduces AI Growth Labs, controlled spaces where AI products can be tested under relaxed regulations.

These labs, also known as sandboxes, will allow businesses to trial their technologies in real world conditions while regulators monitor them. The goal here, is to remove unnecessary bureaucracy that slows innovation while keeping safety rules in place. The Department for Science, Innovation and Technology says the first sandboxes will look at sectors such as healthcare, professional services, transport and robotics in manufacturing.

The government believes that AI applications could make daily life faster and more efficient. AI could help doctors manage patient care more effectively and reduce the time spent on administrative work. It could also support local councils in assessing housing developments more efficiently. Currently, a single housing application can stretch to 4,000 pages and take up to 18 months to approve. Officials hope that AI systems could help meet the target of building 1.5 million new homes by the end of this Parliament.

The Chancellor also shared that reforms to the regulatory system could save UK businesses almost £6 billion a year by 2029. The AI Growth Lab, he said, would encourage more testing of responsible AI and help collect evidence on how AI affects both business and the public sector.

What Do Business Leaders Think?

Reaction from across the tech and investment world has been largely positive. Many see the initiative as a way to make the UK a leading hub for AI. David Wakeling, Head of AI at A&O Shearman, said the plan is “an agile approach to regulation, removing red tape where it serves no purpose and breaking down silos between regulators.” He added that such changes are “crucial for UK businesses, investors and capital providers to stay globally competitive.”

Leo Ringer, a partner at Form Ventures, added that sentiment, describing it as “a strong signal of ambition to ensure the UK is a world-leading place to start and scale an AI business.” He said that current frameworks were written before the rise of AI, and that “the sheer pace of tech progress means it’s no surprise they risk slowing down innovation and adoption.”

Other investors share this view. Paul Murphy from Lightspeed Venture Partners said the speed of regulation can determine where breakthrough companies grow, while Vinous Ali of the Start-Up Coalition said the government’s willingness to “take a leaf out of the startup manual” could be the key to faster innovation.

For many, the new framework is a chance for the UK to combine safety with speed. As Vishal Marria, CEO of Quantexa, explained, the Lab “has the potential to bridge world-class research and real-world application, helping organisations adopt AI responsibly and confidently.”

How Could This Affect Healthcare And Public Services?

Healthcare leaders have been particularly vocal about the benefits of modernising AI rules. Finn Stevenson, CEO of Flok Healthcare, said that while AI can “transform healthcare,” the current system forces regulators to apply rules designed for physical products to complex software. Updating those rules, he said, could make the UK a global destination for healthcare AI.

Startups like Apian are already showing what that might look like. Co-founder Dr Hammad Jeilani said the company’s autonomous robots help the NHS run logistics more efficiently so that “healthcare staff can dedicate more time to patient care.” He believes a cross-economy sandbox would allow innovators to safely test and scale similar ideas.

Genie AI’s co-founder Rafie Faruq said their legal automation platform could also benefit. The company wants to test autonomous legal agents that can draft and review documents, but doing so under current law could be seen as unauthorised legal practice. A sandbox, he said, would let them trial such services in live environments.

Can the UK Keep Up In The Global AI Race?

The AI Growth Lab speaks to the increased (and increasing) competition between nations to lead in AI. Dr Marc Warner, CEO of Faculty AI, said the UK’s AI sector is “growing 30 times faster than the rest of the economy,” but warned that success is not guaranteed. He said that removing red tape for safe testing is an important step in helping British startups grow.

Companies across sectors, from Graphcore to Octopus Energy, have voiced similar optimism. Octopus COO Jon J. Paull said that “outdated rules can too often slow progress,” and welcomed the Lab as a “safe, collaborative space” for innovation. Microsoft’s Hugh Milward also praised the initiative, calling it “an interesting and creative way” to support faster AI development.

Technology Secretary Liz Kendall said: “To deliver national renewal, we need to overhaul the old approaches which have stifled enterprise and held back our innovators.

“We want to remove the needless red tape that slows progress so we can drive growth and modernise the public services people rely on every day.

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