Peter Kyle pushes AI regulation changes to support UK businesses
Technology secretary Peter Kyle will use his speech at Mansion House tonight to urge UK regulators to adopt AI in a bid to cut approval times for businesses, as Britain seeks to keep pace in the global race for tech leadership.
Kyle is set to pledge £2.7m in government funding to help regulators trial AI systems across sectors including drones, aviation, nuclear power and clean energy, CityAM can reveal.
He argues the move could accelerate investment, reduce red tape and make the UK more attractive to fast-growing firms.
“Too often British innovators are waiting months for approvals whilst competitors overseas race ahead.This isn’t about cutting safety corners – it’s about smart regulation”, he will announce.
AI to cut delays
Funding will be allocated to five regulators, including Ofgem, the Civil Aviation Authority (CAA) and the Office for Nuclear Regulation.
Projects include using AI to analyse accident reports more quickly, build a “one-stop shop” for regulatory guidance, and test new approaches to nuclear waste management.
Kyle will also announce a “regulatory hackathon” scheduled for early 2026, designed to bring regulators and AI specialists together to design tools that could speed up approvals and reduce common application errors.
While business groups welcome efforts to modernise, some warn that the government risk overstating what AI could achieve.
Ben Bilsland, head of technology at RSM UK, argued: “Streamlining approvals is welcome, but there’s a danger of overselling what AI can deliver. Regulators need the resources and independence to use these tools responsibly”.
Google DeepMind chief Demis Hassabis has also previously urged policymakers to focus on “smart regulation” to build public trust.
“AI is the most important technology humanity is working on”, he said earlier this year. “We should be making sure we do it properly – in a way that’s safe, that gets public buy-in, and that unlocks economic value”.
Competitive pressure
The UK is already seeing a surge in tech activity, with government data showing 14,262 new firms launched in the second quarter of 2025, up 16 per cent year on year.
A Barclays survey last week found 62 per cent of executives saw the UK as a more attractive base for tech firms than Europe, and 60 per cent preferred it to the US.
Just last month, Kyle announced that the UK is positioned to “overtake America” in key areas of tech, as a new wave of regulatory reforms aims to fast-track innovation and attract investment across AI, fintech and biotech.
But regulatory compliance remains a sticking point, with more than a third of firms citing it as a drag on growth.
Analysts warn that Britain, while enjoying renewed momentum, risks slipping behind the US, China and Europe if it fails to combine speed with proper oversight.
Ben Bilsland, head of technology at RSM, also cautioned that looming tax reforms and possible changes to R&D incentives could dampen momentum if not managed carefully.
“The government will need to tread carefully to ensure the UK remains one of the best places in the world to start and grow a tech company”, he said.
As global competition intensifies, and calls grow for more coherent AI oversight, Kyle’s reforms mark a shift toward more assertive policy making.