Regulation in the UK a ‘web of complexity’ and harming innovation says think tank

A leading think tank has called for the government to create a ‘call-in’ power to overrule regulators’ decisions, warning that Britain’s approach to tech regulation is harming innovation and investment in the sector.

In a new report, right-leaning think tank Onward described the UK’s patchwork of “under-resourced” and “overstretched” regulators as spinning a “web of complexity” that is muffling the UK’s technological prowess.

Ben Greenstone, Onward policy fellow, argued that Britain could “unlock real, sustained growth” if it got regulation right.

However, he criticised the current approach, saying: “Too often regulators are too slow, they overreach and they over-complicate the landscape, making life a misery for innovators. Tinkering at the edges won’t cut it. Wholesale regulatory reform is needed if the Government wants to achieve its lofty growth ambitions,” he added.

Onward has called for a “radical rethink” of regulation, including the creation of a ‘call-in’ power for ministers to override regulators’ decisions. 

It urged the government to make the planned Regulatory Innovation Office a statutory entity, granting it the authority to compel regulators to coordinate their rules.

The report comes as the government is expected to announce further details on the Regulatory Innovation Office in October.

A government spokesperson said: “The Government recognises regulators face increasing challenges in dealing with the dramatic development of new technologies.

“Our new Regulatory Innovation Office will help the UK’s world-class innovators get on with delivering groundbreaking products and services which improve our lives and kickstart economic growth.”

The think tank also suggested that new tech regulations should periodically be updated to remain relevant.

It also proposed automatically exempting most small businesses and business-to-business products from emerging tech regulation.

Shadow tech secretary Andrew Griffith welcomed the report, saying: “Overzealous, short-sighted regulation has already raised concern for those in the AI sector in the EU, and there is material disquiet on this side of the channel that the new Government will take a similar approach. This must not be allowed to happen.”

But previous government initiatives, the report also argued, have fallen short.

Onward highlighted a £10m package intended to help regulators prepare for AI, which is being split between at least 13 regulators, likely leaving each with less than £1m – a figure that pales in comparison to the scale of their work.

For the Competition and Markets Authority (CMA), this sum amounts to less than one per cent of its annual budget.

Adding to the pressure, regulatory compliance is estimated to cost businesses as much as £70bn a year, and many regulators lack sufficient staff to manage increasing workloads.

A spokesperson for communications regulator Ofcom said: “With new online safety duties coming into force next year, we’ve recruited a wide range of experts as we put in place responsive rules based on the best available evidence, data and research.”

The CMA and Financial Conduct Authority both declined to comment.