Spending Review 2025: What’s in it for regulation

Spending Review 2025: What's in it for regulation?

As was widely anticipated, the 2025 Spending Review contained several headline announcements focused on tech, including a £2bn allocation for AI from 2026-27 to 2029-30 and up to £750m for "the UK's most powerful supercomputer".

With landmark investment in AI, cyber and compute, this Spending Review presents an unprecedented opportunity for the UK's regulatory system to demonstrate its adaptability and preparedness for new technologies by preparing for their expanded deployment. The Government have re-affirmed their commitment to the nation's tech sector, but as we know, the rewards of this are contingent on an agile and well-resourced regulatory system.

Highlights for Regulation

• The forthcoming Defence Industrial Strategy Sector Plan will contain "ambitious reforms" to contracting, regulation and procurement. This is alongside a pledge for defence spending to prioritise R&D and innovation, with the defence R&D budget set to be over £2bn in 2026-27. It is welcome to see the Government underpinning tech investment with corresponding regulatory reform, illustrating their awareness of the need for regulation to keep pace with technical innovation.
  
• Similarly, in conjunction with a £600m pledge to launch the world's first Health Data Research Service, the upcoming Life Sciences Sector Plan will outline measures to streamline regulation.
  
• Consistent with the Government's intent to cut the cost of regulation by 25% by the next Parliament, they have committed to investing in AI-enabled improvements to reduce the costs of regulation at the Department for Environment, Food and Rural Affairs.
  
• The National Data Library (NDL) was highlighted within the publication as a forthcoming measure to modernise the Government's relationship with its citizens. techUK looks forward to further detail on how this initiative will manifest and to working with DSIT on its development.
  
  The NDL is poised to bring far-reaching benefits across the tech sector, providing the resource for the pooling of the data, necessary to support innovation. This is particularly pertinent in light of the passage of the Data (Use and Access) Act, allowing the industry to harness the improvements to data sharing that it is set to facilitate.
  
  While further detail is still needed on how the NDL will be designed and implemented, it will be important that this work is carried out at pace and in close collaboration with industry.

In techUK's recent pro-growth regulation report, 'Evolving Digital Regulation for Growth and Innovation', we advanced 12 sector-specific opportunities to drive growth through regulatory reform. The increased investment in technology through the Spending Review represents a prime moment to seize these opportunities, in particular:

• A Health and Social Care AI Strategy: The Government has outlined a £10bn investment in NHS technology and transformation by 2028-29, which represents an almost 50% increase from 2025-26. In light of this announcement, we reiterate our recommendation for the introduction of a central AI strategy and guidance for the health and social care sector to provide clarity on governance roles and responsibilities for industry, the Government, regulatory bodies, health and care organisations, and staff. Such a strategy would provide the direction needed to maximise the value of this investment and to ensure any new technologies are deployed responsibly and sustainably.
  
• An AI Regulatory Framework: As aforementioned, this Spending Review presented landmark investment in AI uptake across Government Departments. As the Government themselves acknowledged in their King's Speech pledge to introduce an AI Regulation Bill, an appropriate and adaptable regulatory regime is critical to ensuring the transformative potential of AI is realised in a responsible and sustainable way. Within our report, we advanced three key priorities for an AI regulatory framework that preserves a vibrant AI ecosystem, which were: fair appointment of responsibility across the AI value chain; timely and expert institutional oversight; and, the adoption of a "whole-economy lens" to deployment.

With the final Industrial Strategy anticipated in the coming weeks, where regulation is poised to be a key area of focus, and off the back of HMT's Regulatory Action Plan, we can safely anticipate forthcoming reform to the UK's regulatory system. techUK's Digital Regulation Team would encourage the Government to ensure that this reform is governed by the growth mindset championed in our recent regulatory reform report, to ensure any changes align with their growth mission.