Britain’s competition policy framework is changing. Earlier this year, the Government made a series of proposals for altering how the Competition and Markets Authority (CMA) operates. A public consultation on those proposals closed last month, and you can read our submission to it here. The King’s Speech announced the Competition Reform Bill, which will take these reforms forward.

While we were pulling together our initial response, we soon realised that awareness of the proposals was sorely lacking. When we got in touch with founders, investors and other key players in Britain’s entrepreneurship ecosystem, a worrying number replied to us saying this was the first they’d heard of the mooted changes. As such, we hope this article can go some way to redressing that.

Why policymakers are acting

In November 2024, the CMA set out its ‘4Ps’ approach, which would put improving the pace, predictability, proportionality and process at the heart of its work. Not long after, the Government issued its ‘Strategic Steer’ to the CMA, wherein it reiterated that “regulators have a key role to play in upholding and promoting the reputation of the UK as a centre for certain, proportionate and transparent regulation.”

To a large extent, the proposed changes can be understood against this backdrop. For both the CMA and the Government to make good on their intentions, the creation of new powers has evidently been deemed necessary.

It is also worth considering the changing business and technological landscape. Nobody can now ignore the dramatic impact artificial intelligence and algorithms are having on the economy — whether reinforcing the position of established firms, or allowing agile startups to scale rapidly. When technology is changing as radically as it currently is, it is only logical that the remit of regulators should be reviewed too.

What’s changing

The Government’s consultation spans a wide range of reforms, but four broad shifts stand out.

More discretion for the CMA

Decision-making within the CMA may become more centralised and discretionary. The Government consulted on abolishing the current panel system for Phase 2 investigations — wherein Phase 2 mergers are scrutinised by independent panel members operating separately from the CMA Board and from the staff who conducted the initial Phase 1 review. The consultation also proposed extending the timeframe for remedies to be agreed before moving on to Phase 2 investigation. The Bill did not give specifics on this but indicated that it will give businesses and the CMA more time at the early stages to engage and agree solutions. It further proposed replacing panel-led inquiry groups with committees drawn from the CMA Board itself.

The justification for this change is that it would increase accountability at board level, streamline processes and improve consistency. But there are fears that it may reduce the degree of outside expertise and independent challenge within the system, making it harder for businesses to anticipate how decisions will be made. To mitigate this, we believe merging parties should be granted the right to appeal adverse decisions on their merits and the right to access the CMA’s file on them. The Competition Reform Bill states that it will give the CMA Board “a role in decisions on mergers and market investigations” but does not confirm whether the panel system will be abolished.

Merging of the two-step system

The consultation proposed replacing the existing two-step market study and market investigation system with a more flexible, single-step review tool.

Currently, the CMA assesses whether there is an “adverse effect on consumers” in a market study and “adverse effect on competition” for market investigation. The consultation proposed merging the two into a single “adverse effect on consumers” test, which would allow the CMA to act in cases where the competition link is disputed but consumer harm is material. While adopting the lower threshold (for market study), the single tool could carry market-investigation remedial powers.

The Government committed to concluding most reviews within 18-24 months in the Competition Reform Bill, but did not clarify whether the replacement of the system would be the mechanism. In our response to the consultation, we pointed out that the 24-month baseline could increase uncertainty for businesses and recommended a shorter and more flexible timeframe combined with disciplined use of extensions.

Regular review of remedies

The consultation proposed a requirement for the CMA to consider sunset clauses on remedies and to review future remedies at least once every ten years. (Remedies are the corrective measures the CMA imposes after a market or merger investigation finds a competition problem.)

We think sunset clauses could ensure remedies remain proportionate and responsive to changing market conditions. For dynamic markets, such as AI or digital platforms, regular and proportional review of remedies is needed to ensure they don’t erect barriers for new entrants. We welcome the fact that the Competition Reform Bill commits to regularly reviewing all remedies placed on businesses and to concurrent regulators taking responsibility for ongoing remedies.

Algorithms in scope

The Government has proposed giving the CMA stronger powers to investigate how algorithmic systems operate in practice. As more startups build products around algorithms, scrutiny may increasingly extend into the design and deployment of core technologies.

Taken together, these reforms would see Britain’s overall competition regime adopt a more discretionary approach, and one that opens the door to more intervention. While we believe many of the proposed changes are well intentioned, we fear that they would render Britain a less attractive place in which to start, grow and invest in businesses.

How startups could be impacted

Why exits matter for founders

It is an all-too-common myth that successful entrepreneurs make their riches by bootstrapping a business and painstakingly seeing it through to being a profitable, money-making machine. Of course, some founders manage to do exactly that, and we applaud those who do. But for many more, the endgame is a little less romantic — to establish a promising startup with a deliberate intention to be acquired. That’s how most entrepreneurs and their early-stage investors make their returns. This is a feature, not a bug, and is the driver of innovation and economic growth that all startup hubs rely on.

This is why merger regimes matter. Even small shifts in how deals are assessed can have outsized effects upstream. If acquisitions become less predictable or harder to execute, investment invariably falls, as the likelihood of making a return declines. As such, capital becomes more difficult for companies to access, and the whole entrepreneurial ecosystem stutters.

The current consultation proposals would, we believe, increase uncertainty. The share-of-supply criteria and the material-influence criteria in the consultation proposals remain too broad to deliver real predictability and need to be addressed when the Bill is tabled. Separately, the Bill should clarify whether it adopts the proposed “adverse effect on consumers” test, which would broaden the scope for intervention and reduce predictability. Greater discretion for the CMA, combined with broader and more flexible intervention tools, would make it harder to anticipate which deals will be approved and on what basis.

It’s worth pointing out that a regime does not need to be blocking deals left, right and centre to change behaviour. What investors care about is predictability — and if they don’t think it’s there, they won’t be so ready and willing to back businesses. Over time, that can be enough to dampen acquisition activity and, with it, the dynamism of the startup ecosystem.

Operating under uncertainty

A country’s merger regime influences more than simply whether or not investors will cut cheques for startups. When regulators can consider a broad range of variables to establish jurisdiction over a merger, founders must be constantly aware of how they act. This can dictate decision-making on a day-to-day basis — determining, for example, whether or not they strike certain partnerships with other businesses, how they price their goods and services, if they’ll expand into new markets, and so on. Opportunities for growth may go unseized as a result.

Several of the proposed reforms risk increasing that burden on entrepreneurs. Broader legal tests would make it harder for businesses to anticipate when intervention is likely.

This is particularly acute in emerging sectors, where business models are novel and precedent is limited. A startup developing a new platform or AI-driven service may find it difficult to assess whether its conduct could later be subject to scrutiny.

From conduct to code

The consultation proposed an expansion of the CMA’s powers to investigate algorithms, which would mark a fundamental shift in competition policy, but was not included in the summary of the Competition Reform Bill.

Algorithms can shape market outcomes in powerful ways, and their importance will likely only increase over time. But it also raises difficult questions about the boundary between competition policy and conventional product regulation.

Traditionally, competition policy has focused exclusively on market structure and firm behaviour — including mergers, pricing and exclusionary conduct. Proposals to scrutinise algorithms in more detail, however, represent something altogether different.

For startups, the implications are significant. Many early-stage companies will rely on algorithmic systems as their core innovation. If those systems become subject to intensive scrutiny, the compliance burden may rise sharply. More importantly, the scope for experimentation may narrow, particularly in areas like AI where iteration and rapid deployment are central to progress.

There is a risk that, in attempting to regulate outcomes, policymakers inadvertently shape how products are designed in the first place. Beyond that, there is the more prosaic issue of compliance. Investigations could become a significant imposition on startups whose business depends on algorithms, further eroding Britain’s attractiveness as a place in which to operate such a business.

Getting the balance right

There is a credible case for updating Britain’s competition regime. Digital markets do present new challenges, and enforcement tools need to evolve accordingly. But reform should always be guided by an understanding of how business really works.

Predictability should be prioritised over discretion. Entrepreneurs and investors need to be able to reasonably anticipate how rules will be applied, particularly in fast-moving sectors.

Intervention should remain tightly focused on competition. Expanding the remit of competition policy to pursue broader social or economic goals risks diluting its effectiveness and increasing uncertainty.

And in areas like AI and algorithms, proportionality is essential. Scrutiny of any given technology must not come at the expense of experimentation at such a nascent stage, or end up placing an undue burden on businesses subject to investigations.

What next?

With a change of Prime Minister and reshuffling of ministers, the current legislative programme has been put on hold. Depending on the new legislative priorities of the incoming administration, it could shift its tone on competition or further tweak the Competition Reform Bill.

Make sure you are subscribed to all of our newsletters to keep abreast of further developments, and stay in touch to join future events.

Andy Burnham’s first moves as Prime Minister are leading the headlines today. He promised a 10-year plan to transform Britain with a “new political model and new economic model” focused on reindustrialisation and a rollback of privatisation.

Burnham appointed John Healey as Chancellor and folded the Department for Science, Innovation and Technology (DSIT) into the Department for Business, Innovation, Science and Trade (DBIST) and the Department for Digital, Culture, Media and Sport (DCMS). The Business Department will be absorbing the science and innovation briefs, while digital regulation and online safety briefs return to DCMS. While the tech sector has expressed concerns over the scrapping of DSIT, former Business Secretary and former Chair of the Science Select Committee Greg Clark said the reorganisation can break down silos and make the department more joined-up and effective.

Junior ministers have yet to be confirmed, but Tech Secretary Liz Kendall and Science Minister Lord Vallance have left the Government. Lord Vallance — formerly the Government’s Chief Scientific Adviser and himself a scientist — earned praise from the science and research community for his thorough grasp of the brief. As Science Minister, Vallance secured the largest ever R&D settlement — with DSIT’s Spending Review 2025 settlement officially billed by the department as a “record” allocation, rising from £13.9 billion in 2025-26 to £15.2 billion by 2029-30. His departure and the scrapping of DSIT lead to uncertainty over funding for R&D and scientific research (Paywall – Times Higher Education) in the next round of the spending review.

Burnham has reportedly been exploring (Paywall – Financial Times) a spending review this autumn. Both DBIST and DCMS face competing priorities with unprotected budgets (their budgets are not ringfenced like Health and Social Care’s), and the loss of a departmental Cabinet minister compounds the uncertainty over future R&D funding.

With Liz Kendall and Lord Vallance leaving the Government, AI Minister Kanishka Narayan is the only survivor from the now defunct DSIT. Narayan is well regarded across the tech sector. Matt Clifford has praised his grasp of the urgency behind the AI opportunity, while Ian Hogarth has said he is “hard-working, smart and cares”. Formerly Parliamentary Under-Secretary for AI and Online Safety, Narayan’s promotion to Minister of State for AI means he will get to focus solely on AI. He will be spanning the Cabinet Office and the expanded Business Department. Narayan will also oversee a new AI Taskforce to “drive the Government’s overall strategy on AI”, which reports to Downing Street and the Cabinet Office.

For the first time, the AI Minister will also be given a seat at the Cabinet table as a Minister of State even if he’s not heading up a department. Prime Ministers signal their priorities by inviting non-Cabinet ministers to attend the Cabinet. Keir Starmer had the International Development Minister attending the Cabinet as a consolation for not reinstating the Development Department, while Rishi Sunak had the Immigration Minister and Security Minister attending the Cabinet.

Jonathan Reynolds is back in his previous position as Business Secretary, but now with the Business Department absorbing the innovation and technology portfolio from DSIT. When Labour was first elected, Reynolds spoke at our launch for the Backing Breakthrough Businesses report in the House of Lords, where he acknowledged economic growth below the post-war trend and the need to break out of this pattern. He has built strong relationships with businesses during his previous tenure as Business Secretary and inherited goodwill from that tenure — with him returning to his old position, there is hope for some stability.

Whether the machinery of a merged department can match the profile DSIT held under a standalone Secretary of State remains to be seen, but Reynolds’s return at least gives the sector a minister the entrepreneurial community has already worked with, and some reason to expect continuity in how the brief is handled.

As London Tech Week draws to a close, we look at the Government’s flurry of announcements made during the week, covering the AI Adoption Summit, London Tech Week and the AI Hardware Plan.

Alongside a concierge service for scale-ups to navigate government regulations, procurement and hiring talent, and a visa fee reimbursement scheme worth up to £25,000 per year — which are most relevant to entrepreneurs — the Government has also announced legislation for AI Growth Labs, support for open-source AI and a new AI Economics Institute.

New scale-up support and visa fee reimbursements

As part of a package to support businesses to “start, scale and stay in the UK”, the Government announced a bespoke concierge service and new visa and talent measures.

The bespoke concierge service will offer a tiered support model for high-growth scale-ups to navigate regulations, finance, procurement, talent and other growth barriers — to be built with input from entrepreneurs and investors. The Government has launched a tender for a private sector partnership to run a pilot to strengthen the scale-up pipeline, but it is yet to be confirmed exactly how the service will be run.

The Government has also launched a Visa Fees Reimbursement Scheme for Scale-Ups, a grant scheme targeted at UK scale-ups in clean energy, life sciences, and digital and technologies sectors. Businesses can apply for funding up to £25,000 per year, with a maximum award of £5,000 for each international hire and their dependants. To qualify, a business must hold a valid UK visa sponsor licence, have an established UK presence, and meet the scale-up definition of over 20% average annual growth in employment or turnover over three years, starting from at least 10 employees. Eligible hires are limited to the Skilled Worker, Global Talent and Scale-Up visa routes. Funding is limited and will be allocated first-come, first-served, with applications open from 16 June 2026 until 1 March 2027. You can find the full eligibility criteria and application portal here.

The Government separately launched an Office for Investment fast-track referral for a UK Expansion Worker sponsor licence, for businesses that are already receiving ongoing support from the Office for Investment, which could shorten processing time to 10 working days from the 8-week standard.

In other news, the Business Secretary gave an interview to the Sunday Times (paywall), acknowledging the shallow private capital markets in the UK pushing businesses elsewhere and vowing to take more active equity stakes in fast-growing private firms.

Growth labs and regulatory sandboxes

As we covered in our Policy Update in May, the Government is pushing a Regulating for Growth Bill to modernise the UK’s regulatory system by strengthening the Growth Duty on regulators and creating cross-economy sandboxing powers — allowing existing rules to be temporarily relaxed. AI is one of several technologies, alongside medicines, autonomous maritime and defence technology, to which the sandboxing powers could apply.

On Monday, Chancellor Rachel Reeves announced that the Government will be legislating for AI Growth Labs this autumn. On top of that, she also launched the Advisory AI Growth Lab to bring together regulators to provide practical guidance on how “existing rules apply to emerging AI applications”. Its first focus will be legal services.

Meanwhile, a report from the Public Accounts Committee criticised HM Treasury for asking regulators to take more risks while failing to “articulate what risk appetite they expect from regulators” and “define growth in any detail beyond an increase in GDP”. The Committee recommended that departments provide strategic policy steers to regulators to clarify their risk appetites, acknowledge the trade-offs, and articulate how regulatory actions are expected to contribute to growth.

AI Hardware Plan

Announced with a funding package of £1.1 billion, the AI Hardware Plan was published by the Government on Monday. As part of the Government’s previous commitment to expand AI Research Resource (AIRR), it backed a new national AI supercomputer at the University of Edinburgh with £750 million, to be operational by 2030 and to join the AIRR with UK-designed chips intended as a crucial part. Of that £750 million, £400 million will equip the supercomputer with next-generation chips, including £150 million to buy inference chips from British firms this summer through an advance commitment — making the Government an early customer for domestic startups.

The Plan also created a £150 million fund for UK hardware companies through the British Business Bank, £120 million to fund a new AI Hardware Innovation Programme for companies to design and test novel chips (with at least £20 million expanding ARIA’s Scaling Inference Lab), and £80 million for skills, including undergraduate bursaries in electronic engineering and materials science, a Centre for Doctoral Training in Chip Design, and support for PhD students.

Institute created to study jobs and productivity

At the AI Adoption Summit, nearly 40 companies signed the AI Adoption Insights Agreement to share their insights on AI’s economic impact with the newly launched AI Economics Institute. The Institute will be modelled on the AI Security Institute (AISI), acting as a research group within government to model the impacts of AI on jobs and productivity. A working group with tech companies including Anthropic and OpenAI will be established by the end of June, as these companies pledged to collaborate with the Government on “responsible AI development”. The Institute will also work with government departments to explore the use of public sector data.

Government backing open-source AI

On Wednesday, the AI Minister Kanishka Narayan announced support for open-source AI developers, backing them with access to 160,000 GPU-hours via AIRR. Alongside this, the Government announced an Open-Source AI Builder Mentoring Scheme and a new Open-Source AI Dev Board. The Mentoring Scheme will pair hackathon winners with experts from the Government’s Incubator for AI, while the Dev Board, chaired by the AI Minister, will give ten UK-based developers a direct line into Government to influence the use and development of AI.

One year on: AI Growth Zones

In the One Year Update to the Digital and Technologies Sector Plan published on Wednesday, the Government laid out a timeline for the first AI Growth Zones becoming operational, with all currently announced zones operational by 2030. However, data centre developer Era4 on Tuesday criticised DSIT and NESO for delays in getting permission for it to access power from a nearby plant.

Guidance on robotics in the workplace

The AI Minister announced a new partnership between the Regulatory Innovation Office and the Health and Safety Executive to produce the first guidance on advanced robotics in the workplace. They will work with industry to deliver regulatory clarity for collaborative robots. This follows our roundtable with the Regulatory Innovation Office in May, in which founders said that pre-market guidance from the Health and Safety Executive would be valuable.

Make sure you are subscribed to all of our newsletters to keep abreast of further developments, and stay in touch to join future events.

The Entrepreneurs Network, in partnership with Mishcon de Reya, recently convened a roundtable bringing together founders scaling robotics companies and the Regulatory Innovation Office (RIO). The event was chaired by the Rt Hon. Lord Willetts, Chair of RIO, so that founders could share their experiences of scaling in Britain and inform the government’s approach to robotics regulation. While the conversation was under the Chatham House Rule, here we pull out some of the themes discussed.

A regulatory system that rewards inaction

A consistent thread throughout the discussion was that the UK’s regulatory architecture tends to actively discourage innovation. Founders described a system in which the entire burden of regulatory risk falls on the innovator. Under the Machinery Directive, companies developing novel robotic systems must self-certify that their products are safe before going to market. If something goes wrong, the regulator retrospectively scrutinises every decision the company made. There is no meaningful way to get advance clearance on whether an approach is reasonable. The result is structural conservatism. As one founder put it: “You’re just encouraged not to do things by the way the regulation is set up.”

This dynamic favours incumbents with deep pockets who can self-insure against regulatory risks, while startups are forced into a conservative posture that stifles precisely the kind of innovation the system should be enabling.

When founders were asked whether the Health and Safety Executive could provide pre-market guidance, the response was telling — nobody in the room knew how to access that support. If it exists, it needs far better publicity.

In contrast, the Maritime and Coastguard Agency was cited as a positive counterexample — an agency that had created a customer-facing, innovation-oriented engagement team, and in doing so had transformed the pace at which companies could work with the regulator.

Pre-market caution vs. post-market learning

A lively debate emerged over where regulatory scrutiny should sit. Drawing on experience in medical devices — a sector in which robotic systems routinely operate in close physical contact with patients and clinicians — one participant argued that the instinct to tighten pre-market approvals after safety scandals is deeply misguided. The real answer, they argued, is stronger post-market surveillance — continuous monitoring, iteration and improvement once a product is deployed in the real world:

“You cannot possibly predict all the things that will happen. The key is to have a regulatory regime that requires you to be continuously monitoring and improving when you’re deployed, rather than believing you can imagine the real world enough to stop bad things happening.”

Agricultural robotics was cited as a British success story of exactly this approach — light-touch regulation at entry, learning from real-world deployment, and fixing problems as they emerged. By contrast, heavy-handed pre-market regulation in California and parts of Europe had, in one participant’s words, “killed agricultural robotics on the vine.”

The additional advantage of post-market regulation, participants noted, is timing. By the time a company is selling products, it has more resources to devote to compliance — rather than being crushed by regulatory costs before it has any revenue at all.

What you call it matters more than what it does

One of the most striking observations came from a co-founder of a surgical robotics company whose product features robot arms that move autonomously near patients and clinicians. Their system is not classified as a robot under the Machinery Directive — it is a medical device. That single classification difference means the regulatory framework asks “how do we enable this dangerous thing to happen safely?” rather than “how do we prevent it?”

Colleagues from industrial robotics backgrounds, the participant said, are astonished by what the system permits simply because the product sits within a risk-benefit regulatory framework rather than a prohibition-oriented one. The implication for the wider robotics sector is significant — how a technology is categorised can matter more than how it actually works.

Similarly, several participants observed that robotic systems operating on road verges, pavements and other ambiguous spaces fall into regulatory gaps where no single body will claim jurisdiction. An autonomous litter-collection vehicle can operate freely behind a highway barrier, but the moment it reaches over to pick up rubbish from the verge — or where no barrier exists — it triggers the same regulatory requirements as a self-driving car, even though it will never enter a traffic lane. As one participant put it: “It’s almost like a designation problem. Nobody will take responsibility.”

Insurance

Insurance emerged as one of the most significant — and least discussed — barriers to scaling robotics in Britain. Several participants reported being unable to deploy robots commercially because they simply cannot get insured, or because the insurance market fails to make distinctions that the regulatory system itself has already drawn.

In warehouse robotics, a technology stalemate exists around safety sensors. Nearly all mobile robots in factories and warehouses use the same basic lidar sensor — a laser that detects objects at a guaranteed distance and triggers an emergency stop. It is not intelligent, but it is certifiable and insurable. Vision-based AI perception systems, which offer far greater capability, are almost impossible to get safety-certified because their probabilistic decision-making does not fit existing certification frameworks. Companies trying to sell vision-based alternatives are told by customers: we cannot get insurance without the laser. Innovation stalls.

Software, not steel

While participants differed on specifics, a broad consensus emerged that the UK cannot and should not try to compete on robotics hardware. China produced approximately 10,000 humanoid robots last year; the United States around 3,500; and the whole of Europe roughly 350. Hardware and mechatronics are rapidly becoming commoditised, with Asian manufacturers dominating on cost and scale.

Where Britain can compete, participants argued, is in software, AI and systems integration layers that make hardware useful. One founder described their vision of building a “spatial AI operating system” — navigational intelligence software that would run on every machine operating within factory and warehouse infrastructure, regardless of which manufacturer built the hardware. Another argued that the real value in humanoid robotics lies not in the metal but in the AI frameworks that control it: “Without software, a humanoid is nothing.”

Several participants observed that UK robotics companies tend to plateau at valuations of £10–15 million, selling a handful of expensive units per year, because the domestic market lacks the depth and the funding ecosystem lacks the patience for hardware-adjacent businesses. The gravitational pull towards the United States — for customers, capital and commercial viability — was described as near-inevitable once a company reaches a certain scale.

Data sovereignty and the Chinese hardware question

As Chinese-manufactured humanoid robots become the default hardware platform, participants raised significant concerns about data sovereignty and security. One participant drew an analogy with 3D printers purchased from China, where the manufacturing data is reportedly copied — and warned that the same dynamic could apply to humanoid robots operating in sensitive environments, capturing video and spatial data.

The group suggested that controlling the software layer is both the commercial strategy and the security strategy — but noted that no clear regulatory framework yet exists for certifying autonomous AI systems embedded in humanoid robots for human environments. Existing CE markings cover industrial robots in controlled settings; they do not address autonomous systems operating alongside people. The EU AI Act introduces relevant requirements, but how these interact with hardware certification remains unresolved.

Standards: essential but double-edged

The role of standards provoked nuanced debate. When a technology is established, standards provide clarity and enable market access. But for genuinely novel technologies — teleoperation with haptic feedback, vision-based autonomous navigation, multi-robot orchestration — existing standards can be actively unhelpful. A company that meets 90 per cent of a standard but cannot meet the remaining 10 per cent due to the nature of its technology is left in a worse position than if no standard existed, because it appears to be non-compliant with a standard it ought to meet.

Next steps

The underlying message was pragmatic rather than ideological. Britain has genuine strengths in robotics — world-class AI research, deep expertise in extreme environments, and a regulatory tradition that, at its best, is respected globally. But the system as currently configured rewards caution over action, favours incumbents over entrants, and leaves founders bearing risks that the regulatory architecture itself should be helping to manage. Until that system changes, it risks a gradual erosion of the UK’s position in a sector that every major economy now recognises as strategically critical.

This was produced in collaboration with Mishcon de Reya, an international law firm. Founders at the session told us how difficult it can be to reach the Health and Safety Executive (HSE) for pre-market guidance. In response, Mishcon de Reya is offering a complimentary 30-minute pop-up session with its regulatory specialists and the HSE, to discuss the challenges your organisation faces in navigating robotics regulation.

For entrepreneurs, the most relevant proposals are those affecting payment practices, regulation, competition policy, access to finance, trade with the EU, cyber security, immigration and digital public services.

Regular readers of our Policy Updates will be familiar with several of the measures announced today. We have already covered the Cyber Security and Resilience Bill, the Immigration White Paper, the Small Business Strategy and the Autumn Budget 2025 in previous editions. Today’s King’s Speech turns many of those proposals into concrete legislation.

In this Policy Update, we explain the bills most relevant to Britain’s entrepreneurial community and what they could mean in practice.

Late payments and cash flow

The Small Business Protections (Late Payments) Bill will introduce new rules on business-to-business payment practices. The Government says late payments cost the UK economy an estimated £11 billion each year and lead to the closure of 38 businesses every day. It also says the average business spends 86 hours a year chasing late invoices.

The Bill introduces a 60-day maximum payment term for large companies paying smaller suppliers, mandatory interest on late invoices at eight per cent above the Bank of England base rate and a time limit for raising invoice disputes.

It will also give the Small Business Commissioner new powers to investigate poor payment practices, adjudicate disputes and fine businesses that persistently pay suppliers late or fail to comply with the legislation. The Bill also includes targeted action in construction, including a ban on deducting and withholding retention payments under construction contracts.

For entrepreneurs, the practical significance is cash flow. Longer payment terms and delayed invoices can force smaller firms to use overdrafts, defer hiring or spend management time chasing money rather than winning customers.

Regulation and sandboxes

The Regulating for Growth Bill is intended to modernise the UK’s regulatory system and make it more responsive to new technologies and business models.

It has two main elements. First, it will strengthen the Growth Duty on regulators, giving bodies such as the Environment Agency, Natural England and the Health and Safety Executive a clearer statutory mandate to consider growth alongside their existing objectives. Ministers will also be able to issue strategic steers to define what growth means in specific regulatory contexts.

Second, the Bill will create cross-economy sandboxing powers. These will allow existing rules to be temporarily relaxed, under controlled conditions, so that businesses can test new products and technologies in real-world settings. If trials succeed, the changes could then be embedded permanently into law.

The Government cites potential uses in AI, medical devices, autonomous maritime technology and defence technology. For founders in highly regulated sectors, the main relevance is whether these powers create faster routes to test, prove and scale new products where existing rules were designed for older technologies or business models.

EU trade and market access

The European Partnership Bill will provide the legislative framework for implementing new agreements with the EU, including on food and drink, emissions trading and electricity.

The EU remains the UK’s largest trading partner, accounting for 46 per cent of total UK trade. The Government says the proposed food and drink agreement could add up to £5.1 billion a year to the economy and increase agricultural exports to the EU by 16 per cent. Combined with the emissions trading agreement, the Government estimates the total economic benefit could reach up to £9 billion.

For entrepreneurs trading with the EU, the key issue is whether the new framework reduces the administrative costs, border frictions and compliance burdens that have affected exporters and importers since Brexit.

Competition, mergers and the CMA

The Competition Reform Bill will make changes to how the Competition and Markets Authority operates, particularly on market investigations and merger control.

The Bill will give the CMA Board a role in decisions on mergers and market investigations, with the aim of making accountability clearer. It will also seek to make market reviews quicker and more focused. The Government says that, in most cases, reviews should take no longer than 18 to 24 months, with some completed sooner.

The Bill will also provide more clarity and flexibility in merger reviews, including by clarifying the tests the CMA uses to assess whether it has jurisdiction to investigate a merger. It will also give businesses and the CMA more time at the early stages of an investigation to engage and, where appropriate, agree solutions without moving to a longer in-depth review.

For entrepreneurs, this matters because competition policy can affect fundraising, acquisitions, exits and market entry.

Digital ID and right-to-work checks

The Digital Access to Services Bill will establish the legal framework for a national Digital ID system.

The Government says Digital ID will be free to access and will allow people to prove their identity across public services and parts of the wider economy. One of the first use cases will be digital right-to-work checks by the end of this Parliament.

The Bill will set out how Digital ID credentials can be created, issued, maintained, stored and verified. It will also include provisions on eligibility, public sector use and safeguards.

For entrepreneurs and employers, the main relevance is compliance. Right-to-work checks are a routine administrative requirement for businesses hiring staff. A functioning Digital ID system could change how employers verify workers’ eligibility and how individuals access services. The Bill will also matter to digital verification providers, identity companies and firms building services around public sector data and authentication.

Cyber security and resilience

As we covered in detail in our previous Policy Update, the Cyber Security and Resilience Bill will expand the scope of existing cyber security regulations to cover more parts of the digital economy, including managed IT providers, data centres and operators managing smart energy appliances.

Organisations in scope will need to report significant cyber incidents within 24 hours, followed by a full report within 72 hours. Enforcement will also be modernised, including tougher penalties linked to turnover.

For technology companies delivering cloud, SaaS, managed IT or other digital services to regulated sectors, the Bill could create new compliance obligations. It may also affect procurement, contracting and due diligence, as larger organisations seek assurance from suppliers about cyber resilience.

Immigration and international talent

The Immigration and Asylum Bill will bring into law reforms announced in the Government’s Restoring Order and Control statement in November 2025.

The Bill will create a single “core protection” model to replace existing forms of protection, tighten rules around Article 8 applications, establish a new independent appeals body and reform parts of the modern slavery framework.

For startups relying on international talent, the Bill itself is mainly relevant to the wider immigration system rather than specific skilled migration routes. However, as we highlighted in our Immigration White Paper Policy Update, the Government has also signalled reforms to the High Potential Individual, Innovator Founder and Global Talent visas. Those routes will be important for founders, researchers and highly skilled workers deciding whether to build or work in the UK.

Our research has found that 54 per cent of the UK’s fastest-growing businesses have at least one overseas-born founder. The detail of future talent-related immigration reforms will therefore matter for the UK’s startup ecosystem.

Other Bills of note

Several other bills announced today may also be relevant to entrepreneurs and investors.

The Enhancing Financial Services Bill will implement parts of the Chancellor’s Leeds Reforms, including changes to financial regulation, consumer redress, credit unions, SME lending and the Senior Managers and Certification Regime.

The Highways (Financing) Bill will introduce a regulated asset base model for major road infrastructure, with the Lower Thames Crossing expected to be the first scheme to use it.

The Energy Independence Bill includes measures on clean power, grid infrastructure, energy bills, home electrification, landlord energy efficiency obligations and the transition away from new oil, gas and coal licensing.

The Nuclear Regulation Bill will implement recommendations from the Nuclear Regulatory Review, with the aim of making nuclear regulation more proportionate, coordinated and outcomes-focused.

The Electricity Generator Levy Bill will increase the Electricity Generator Levy from 45 per cent to 55 per cent from 1 July 2026.

The Civil Aviation Bill will reform airport slots, support airport expansion, strengthen the Civil Aviation Authority’s consumer enforcement powers and support airspace modernisation.

The Steel Industry (Nationalisation) Bill will provide powers for the Government to nationalise steel undertakings where a public interest test is met, including in relation to national security, critical infrastructure and support for the economy.

What happens next

The King’s Speech sets out the Government’s legislative direction, but the detail will emerge as each bill is introduced and progresses through Parliament.

We will continue to track the measures most relevant to entrepreneurs, including how they affect regulation, access to finance, digital services, immigration, infrastructure, trade and the cost of doing business.

Make sure you are subscribed to all our newsletters to keep abreast of further developments, and stay in touch to let us know what obstacles you are facing.

The Entrepreneurs Network, in partnership with Mishcon de Reya, recently convened a private roundtable dinner between the Rt Hon Claire Coutinho MP, Shadow Secretary of State for Energy Security and Net Zero, and founders of startups trying to solve some of Britain’s thorniest energy problems. While the conversation was under the Chatham House Rule, here we pull out some of the themes that were discussed.

Britain’s energy system constrains its entrepreneurial ecosystem

While each participant had their own views, a broad consensus emerged around the idea that Britain’s current energy system often constrains its entrepreneurial ecosystem — and that failure to change course will only compound this further. Most straightforwardly, when businesses pay over the odds for energy, their competitiveness is eroded. For especially energy-intensive industries, it is not hyperbolic to state that high prices present an existential risk. Meanwhile, concerns over the reliability of supply are increasingly being factored into decision-making processes, which will likely have downstream consequences for all entrepreneurs.

Amid the fears, however, there was still plenty of optimism. Once a neglected issue, energy policy has shot to prominence of late. An increasing number of policymakers understand the importance of having a cheap and reliable energy system, and there is a growing body of ideas for how we deliver exactly that. To a large extent, we know what the problem is, and how to solve it. The question of doing so will be dependent more on sustained political will than anything else.

A grid that gets less productive as it grows

Several participants focused on the UK’s increasingly fragmented electricity grid. Wind, solar, gas and batteries are being layered on top of one another without sufficient integration, creating both technical and financial strain. As one participant succinctly put it:

“We’ve optimised for adding capacity, not for making the system work.”

One symptom of this is the growing scale of ‘constraint payments’ — money paid to generators to not produce electricity because the grid cannot handle their additional supply at a given point in time. Last year, constraint payments to wind farms hit a record £1.5 billion — a figure that looks set to only increase as more and more renewables are installed. Similarly, the costs of balancing grid frequency increase as traditional rotating power stations are replaced by inverter-based generation, which do not provide the inertia needed for grid stability. As demand for electricity grows overall due to the electrification of vehicles, heating and heavy industry, additional infrastructure will need to be built out — including, for example, hundreds of thousands of kilometres of cable.

The result is that the UK has some of the cleanest electricity in the world, but also some of the most expensive. That combination is increasingly a barrier to growth, particularly for energy-intensive industries, as well as being a burden on households. Participants questioned whether there might be other ways in which the UK could have a greater impact in tackling global climate change — such as by developing and exporting clean energy technologies — while also noting that it would be a dubious honour for Britain to set the example of being a global leader in decarbonisation, but only if it comes at the expense of economic growth.

Microdelays with macro consequences

Founders were particularly keen to discuss the institutional environment around energy infrastructure, and the bottlenecks they had experienced. Regulators and delivery bodies were described as risk-averse, fragmented and slow — with little internal incentive to approve new innovations, solutions or ways of operating.

Ofgem’s growth from a few hundred staff to several thousand was cited not as evidence of greater capability, but of procedural accumulation. The overlap of multiple bodies — such as Ofgem, the National Energy System Operator (NESO), the Climate Change Committee, the Low Carbon Contracts Company (LCCC), the National Infrastructure and Service Transformation Authority (NISTA) and others — also came in for criticism. All of these hold different levers, and often pull in different directions. Decision-making becomes slow, and ultimate responsibility is diffused.

This results in what one founder described as “zero-cost regulatory hurdles,” such as months waiting for simple sign-offs from Distribution Network Operators to approve a microgrid or connection change. While individually trivial, these delays stack up, deterring customers and even killing startups who need to operate on rapid cycles.

Participants noted that other countries, such as the United States, are far more responsive. There was widespread agreement that the problem is rooted in civil service culture and a failure to recognise that speed of response is itself an economic input.

Who policy is designed for

A recurring critique was that government energy policy primarily engages with firms seeking subsidies, rather than those seeking regulatory change. That dynamic favours incumbents with the capacity to navigate complex processes, and sidelines new entrants trying to build around the system’s constraints.

Some participants argued for a gradual shift away from government-procured energy, with fixed-rate contracts and socialised risk, toward a more merchant model where private actors bear risk and compete on cost. Done well, this could reduce long-run prices for consumers while sharpening incentives to build efficiently.

A broader point was institutional; policy should distinguish more clearly between supporting incumbents through subsidy, and supporting entrants through speed, clarity and permissionless innovation.

Coming demand shocks

Looking forward, a number of participants warned of a growing mismatch between government energy forecasts and the reality of AI-driven demand. Some even explained that they will be relocating from the UK as a direct result of energy constraints and costs. There was widespread agreement that if the UK is serious about having sovereign AI capabilities, it must confront its looming energy gap.

The US currently has far more compute capacity per capita than the UK. Catching up will require the system to absorb massive load growth — something largely absent from Clean Power 2030 assumptions. For some companies, the inability to secure firm power is already preventing capital deployment.

Energy costs matter. For data centres, power is the single largest operating expense. Several participants argued that building new unabated gas capacity — while politically awkward — may be a pragmatic way to provide reliable baseload power for AI in the medium term.

Nuclear options

Nuclear power was a key focus of the discussion for bolstering Britain’s power capacity. France’s experience — of 56 reactors built in under 30 years — stands in stark contrast to the UK’s, which has not connected a new reactor to the grid since 1995. Increasing nuclear capacity could help provide the additional baseload required.

While standardisation is widely accepted as key to reducing nuclear costs, regulatory requirements in Britain often force extensive redesign of proven technologies. The result is that the UK has become one of the most expensive places in the world to build new nuclear power stations.

Some firms are responding by exploring micro-modular reactors behind the meter, bypassing the grid altogether. This is an indicator of businesses’ lack of confidence in Britain’s energy system.

Re-ordering priorities

On solutions, there was broad agreement that energy policy needs a clearer hierarchy of objectives. Security and cost-effectiveness should be the first priority, with decarbonisation an important consideration rather than the sole organising principle.

Several argued that policy should focus more on moving people and industries onto the grid — in other words, electrifying heat, transport and industry — even if the generation mix is not yet entirely green. A usable, affordable grid builds public and industrial support in a way an expensive, brittle one does not.

What government does well and where it falls short

Participants were not uniformly negative. Renewed attention to nuclear in the Fingleton Review, for instance, was cited as an excellent example of the Government being able to diagnose a problem quickly and clearly — even if it remains to be seen whether tangible policy change will follow.

However, clear gaps remain — such as in planning and infrastructure policy, and the need to better distinguish between helping incumbents navigate subsidy regimes and helping entrants clear regulatory barriers.

The underlying message from the dinner was pragmatic rather than ideological. Britain lacks a system that rewards speed, integration and cost discipline, and which appreciates the scarcity of time for startups. Until that changes, the risk is not just higher bills, but a gradual erosion of the UK’s attractiveness as a place to build industries and to start and grow companies more broadly.

This was produced in collaboration with Mishcon de Reya, an international law firm.

We’ll be digging into things in more depth later in the week – so stay tuned by subscribing to our Friday newsletter, Perennial Gale, if you haven’t already.

On the Autumn Budget in general

Philip Salter, Founder of The Entrepreneurs Network said:

“Despite a challenging economic environment of sluggish growth, stagnant productivity and rising taxes, and a failure to deliver the fundamental tax reform the system desperately needs, this Budget includes targeted measures to support the UK’s entrepreneurial ecosystem that ambitious founders will welcome.

“Unlike the Chancellor’s first Budget, there were no significant unwelcome surprises, with a number of measures directly addressing founders’ priorities. The doubling of Employee Management Incentive allowances and the expansion of the Enterprise Investment Scheme stand out as a clear response from the Government to calls from entrepreneurs.

“Entrepreneurs will also welcome the Call for Evidence on supporting companies to start, scale and stay in the UK. But with our latest survey showing that more than a quarter of ambitious entrepreneurs are considering leaving the UK in the next 12 months, this focus couldn’t come soon enough.”

On the new UK Listing Relief

Eamonn Ives, Research Director at The Entrepreneurs Network said:

“Britain’s 0.5% Stamp Duty Reserve Tax that is paid when anyone buys shares in a UK-listed company is an international outlier and a relic of a bygone age. It depresses share prices, increases the cost of capital and adds friction to our beleaguered markets.

“A three-year SDRT holiday is therefore welcome, but given that most firms and investors operate on far longer time horizons than that, its overall effect will be muted. If the Government accepts the logic that SDRT is not fit for purpose, it should chart a course to abolish it entirely.”

On changes to EMI

Mann Virdee, Senior Researcher at The Entrepreneurs Network said:

“It’s encouraging to see that the Enterprise Management Incentive (EMI) is being expanded. Currently, a company can offer EMIs if it has both assets of £30 million or less, and fewer than 250 full-time employees. The Chancellor announced that the gross asset test is being quadrupled to £120 million, and the employee limit is being doubled to 500 employees. Doing so allows startups to attract and retain talent from larger companies when they don’t have the resources to compete on salaries.”

On public sector procurement driving innovation

Philip Salter, Founder of The Entrepreneurs Network said:

“Public sector procurement accounts for 15% of GDP – a massive economic lever that should be driving innovation. But it isn’t.

“The recent Procurement Act didn’t go nearly far enough to unlock this potential. That’s why it’s encouraging to see the Government revisit procurement reform in the Budget.

“While the devil will be in the detail and implementation, three initiatives show promise: expanding Advance Market Commitments to drive innovation, creating an Innovation Marketplace to fast-track innovative solutions, and appointing Procurement Innovation Champions across all departments.

“These measures suggest the government is starting to think creatively about how to harness procurement’s power.”

On the Nuclear Regulatory Review 2025

Eamonn Ives, Research Director at The Entrepreneurs Network said:

“Access to cheap, reliable energy is critical to future economic growth. Nuclear power should sit at the heart of Britain’s decarbonisation mission, but presently we have some of the highest construction costs in the world.

“Reforms set out this week by John Fingleton in the Nuclear Regulatory Review 2025 could slash costs and expedite gigawatts of additional clean power to the grid. If the Government is as serious about delivering growth and halting climate change as it says it is, it must accept the Review’s recommendations in full.”

On attracting and retaining talent

Mann Virdee, Senior Researcher at The Entrepreneurs Network said:

“As we recently revealed, 54% of the UK’s fastest-growing businesses have at least one founder – and often multiple – who was born overseas. High visa costs, together with slow processing times, are making Britain uncompetitive in the race for the world’s best and brightest researchers and entrepreneurs. As such, we are pleased to see the Government acknowledge the value of high-skilled immigration to the economy.

“The Budget reiterated that the Home Office will introduce reforms to the High Potential Individual, Innovator Founder, and Global Talent visas. We hope that these changes streamline access to top-tier talent in support of the UK’s modern Industrial Strategy.”

We recently convened a roundtable of founders and business advisers to talk candidly about R&D tax relief. Following the event, we put out a call for further evidence, which has been fed into this policy brief. What emerged was a plea for predictability, clarity and the kind of practical engagement that lets companies plan, hire and build.

“We can handle scrutiny. We can’t handle silence.”

The most repeated complaint we heard from entrepreneurs about R&D tax relief was the uncertainty involved. Founders made clear that while they can tolerate a robust check, they can’t operate with months of silence after submitting a claim or receiving a pre-decision letter. One roundtable participant, a software founder who has invested several years and millions of pounds into building a complex platform, put it starkly:

“We submitted in April and then heard nothing for months. If the cash isn’t coming, I need to take a loan or lay off engineers. I just need someone to tell me.”

Another founder, leading an energy and engineering group with dozens of patent applications, described a more existential version of the same problem:

“We passed two compliance checks, then HMRC changed its position. We’ve been told verbally they might claw back earlier years. If that happens, we’re finished.”

The operational point is simple: for early-stage businesses, R&D relief functions as a runway extender. Delays change hiring plans, push up financing costs and, in some cases, force companies to scale elsewhere.

Competent professionals

Several founders reported being told that caseworkers could not meet or speak with the company’s “competent professionals” – the engineers or scientists best placed to explain the advance sought. That stance sits awkwardly with the legal architecture of the regime, which explicitly relies on competent professionals to define the technological boundary and judge whether the work constitutes R&D. As another participant put it:

“Our projects are deeply technical. The only way to assess them is to talk to the people who did the work. Right now we’re told meetings aren’t possible – so decisions are made on desk notes by people who don’t build what we build.”

This experience echoes what the Chartered Institute of Taxation (CIOT) documented in a 2023 letter to HMRC: refusals to meet or speak to competent professionals; rapid, template-like determinations that “no R&D” occurred after minimal factual development; and technical missteps such as applying the wrong test (“could some other professional have done it?” instead of whether the solution was readily deducible). The net effect is a perception that valid claims are being rejected because the right conversation never happens.

More recent discussions with entrepreneurs and experts, though, hint at a modest improvement, with meetings becoming easier to organise than they have been at their worst. There is still room to go.

Procedural purgatory

A related pattern described around the table – and echoed strongly in the professional evidence – is the “pre-decision process that grinds to a halt.” In these cases, companies receive an initial indication that HMRC may not consider the activity to be R&D, sometimes with warnings about potential penalties, but then face long periods with little or no communication about whether the case is progressing.

Although HMRC ultimately issues a closure notice, the concern raised repeatedly was the lack of clarity and engagement during the long pause before a formal pre-decision notice arrives. Entrepreneurs sit in limbo, unable to understand the status of their claim or what further information, if any, is being reviewed. One founder described their experience:

“We can’t even escalate. There’s no phone number that reaches the person; just a generic inbox. You hear nothing for months and have no idea if the case is being looked at. It’s procedural purgatory.”

Everyone we spoke to accepted that HMRC must be able to challenge claims where there is doubt. But when a challenge is opened, claimants need regular communication – and a path to resolution – rather than prolonged silence.

The cost of time

Desk-based, correspondence-only enquiries cost startups dearly in wasted time. For a small team, compiling and re-compiling written answers, retrieving contracts and invoices (sometimes twice), and repeatedly translating complex work into “lay terms” is a non-trivial expense. One founder estimated they had sunk a week of CTO time to produce a report that was dismissed as insufficient without as much as a conversation. Another paid several thousands of pounds for professional support to draft their technical narrative, only to face additional rounds of requests duplicating what had already been supplied.

Nobody objected to providing evidence, but we repeatedly heard pleas for proportionality and proper dialogue: a one-hour call with the technical lead often resolves what several letters cannot.

Overseas subcontractors

Some participants at the roundtable raised a specific friction: work that must be done overseas because the relevant skills or facilities are not available in the UK. In principle, the rules contemplate this reality; in practice, founders fear that ticking the “overseas” box is a near-automatic enquiry ticket – and that the policy intention is not always reflected in caseworker practice. One founder of an innovative materials startup told us:

“We shortlisted UK partners first but none could handle what we needed. We then found specialists abroad. We’ve done the right thing – but now we’re worried the claim is at risk because it wasn’t all done here.”

In life sciences and cyber-security, for example, the labour market for scarce skills is global. Where work genuinely cannot be sourced domestically, it should be possible to claim within clear, published guardrails.

Interaction with other reliefs

While our focus was on R&D relief, founders repeatedly flagged how delays elsewhere in HMRC compound the problem. Enterprise Investment Scheme (EIS) certificates, which allow investors to claim tax relief, can take months to arrive. For founders raising in tranches, or for angel syndicates coordinating many small cheques, those delays push up the cost of capital and introduce further uncertainty. As a participant reflected:

“On paper, UK incentives are generous. In practice, the timing means the help often arrives after the crunch moments have passed.”

This interaction matters because, for many startups, R&D and EIS/SEIS are two sides of the same financing coin: one extends runway post-spend; the other unlocks the upfront capital that pays for the engineers.

Awareness and timing of ADR

From our conversations it appears many entrepreneurs are not aware that Alternative Dispute Resolution (ADR) is a viable mechanism for resolving an R&D dispute. In practice, ADR only becomes available once a case has reached genuine deadlock and a closure notice has been issued – meaning it cannot be accessed during the long period of back-and-forth following a pre-decision letter.

Professionals explained that HMRC rarely mentions ADR early in the process. Instead, companies are generally required to follow the full sequence of internal appeals: first appealing to the inspector, and then again to HMRC’s Solicitor’s Office. Only after these stages have been completed does ADR usually become available, and the ADR team is often unimpressed if a claimant tries to short-cut this route.

This structure forces firms through multiple rounds of correspondence, each adding delay and cost. While everyone agreed the process should be clearer from the outset – particularly around what the eventual resolution pathways look like – the reality is that under current rules there are no straightforward ways to access ADR any earlier.

What we’re seeing is systemic – and fixable

It bears repeating that none of this is an argument against compliance. Everyone we spoke with acknowledged the reality of dubious claims and the need for HMRC to act decisively where genuine fraud occurs. But the way compliance is executed matters. When reviews are conducted without dialogue, or when pre-decision letters aren’t followed by closure, or when penalty language appears before the facts are fully established, the collateral damage falls on the very firms the policy was designed to help.

The CIOT’s 2023 letter to HMRC’s compliance leadership details the same patterns founders described to us: a volume-compliance approach unsuited to technical assessments; inconsistent application of the rules; reluctance to meet; procedural confusion that leaves companies in limbo; and misapplication of penalty concepts that should be reserved for genuinely careless or deliberate behaviour. A House of Lords committee has raised allied concerns about the knowledge and approach of staff conducting R&D enquiries. The combination is corrosive to trust.

More than a service complaint

It would be easy to construe the points above as just “customer service” issues, but the stakes really are significant. R&D relief is one of the few policy levers that can touch every corner of the economy. It is meant to do something very specific for small, innovative firms: lengthen the cash runway during the period when the work is riskiest and revenues are not yet robust.

Unpredictability changes the proposition, turning usable capital into a lottery ticket. Rational founders price that risk in by hiring more slowly, deferring projects or locating part of their effort elsewhere. Over time, that behaviour change shows up in fewer claims because the perceived hassle or hazard outweighs the benefit.

What “good” would look like

Although this note is primarily a diagnosis, our conversations have surfaced a picture of what a workable regime would feel like from the founder side:

• Predictable timings – This should be from complete submission to cash or authorisation within a clear window (e.g. 90 days), with interest accruing automatically after that point and a named escalation route.

• Talk to a competent professional – Before a pre-decision letter is issued, the caseworker should speak to the person who actually did the work – or log clearly why that isn’t necessary.

• Decide and document – Where HMRC believes there is no qualifying R&D, they should issue a closure notice promptly so the company can seek statutory review or appeal.

• Use scientific gatekeepers for the science test – If HMRC’s concern is that caseworkers cannot reliably judge technological advance and uncertainty, bring in an arm’s-length panel for higher-value claims. Let HMRC focus on tax and fraud; let scientists and engineers advise on science and engineering.

• Make ADR a first-order option – Signpost Alternative Dispute Resolution at the moment of dispute, not months later.

• Be explicit on overseas inputs – Publish worked examples showing when overseas specialist work is acceptable (e.g. where skills demonstrably aren’t available here).

• Align EIS/SEIS timings – Introduce service-level standards and fast-track mechanisms within HMRC for processing EIS/SEIS advance assurance and compliance certificates, ensuring turnaround within a fixed timeframe.

None of these changes require the government to be softer on abuse. They simply require service discipline, better case allocation and greater involvement of technical expertise.

Conclusion

Everyone accepts that fraud must be tackled. Everyone accepts that public money requires scrutiny. What founders are asking for is that scrutiny be collaborative, timely and technically grounded. The UK does not need a brand-new scheme to get this right, simply one that works as advertised: with clear rules, consistent application, and rapid, reviewable decisions. That is how incentives on paper become engineers on payroll – and how the UK can remain a place where ambitious founders choose to build and innovate.

This was produced in collaboration with Buzzacott. For over 100 years, they’ve supported individuals, businesses, and not-for-profits with everything from audit and tax to financial planning, corporate finance, and business services, giving them the clarity to move forwards with confidence.

Today’s Policy Update is about the changes proposed by the Cyber Security and Resilience Bill (hereafter referred to as the CSRB). This legislation, in the Government’s own words, aims to “strengthen the UK’s cyber defences and build the resilience of our essential services, infrastructure, and digital services.” To better understand how it might impact Britain’s entrepreneurial community, we’ve partnered with Spark Legal and Policy Solutions – find out more about them at the bottom of the Policy Update.

Subscribe now

What is happening?

In July 2024, the Government announced the CSRB to modernise the UK’s existing Network and Information Systems Regulations 2018 by strengthening cyber defences and resilience across critical infrastructure and digital services. The proposed changes form part of the UK’s National Cyber Strategy, with the goal of reducing vulnerabilities and promoting a secure, resilient digital economy.

Why is this happening?

The NIS Regulations were implemented in 2018 to improve the cyber security of organisations providing critical services.1 Incidents such as Operation CloudHopper, which affected Managed Service Providers and many organisations simultaneously, have highlighted areas where the UK’s cyber laws may require updates to maintain the protection of vital services – such as electricity supply, healthcare services, water supply and transport infrastructure – and their supply chains.

What are the key proposed changes?

The CSRB proposes a number of changes, including:

• Expanded scope, with more sectors subject to regulations;

• Mandatory technical requirements;

• Incident reporting obligations;

• Expanded regulatory powers;

• Ransomware payment policy;

• Tougher penalties for non-compliance.

Who will these changes impact?

• Public sector and essential service providers, such as healthcare systems, utilities, and transport infrastructure, which will be subject to the strictest cyber security obligations;

• Digital service providers and technology firms, including Managed Service Providers, cloud platforms and SaaS companies, given their critical role in digital supply chains;

• Data centres and infrastructure operators, which will also fall under the new framework;

• Designated Critical Suppliers (DCS), a new category introduced by the CSRB for companies that may not be essential services themselves but provide critical support to those that are;

• The wider private sector, including non-designated businesses , which could be affected indirectly.

When will the changes take effect?

A detailed policy statement was published in April 2025, outlining the Government’s intentions and the scope of the reforms. The final legislation is expected to be formally introduced to Parliament between late 2025 and early 2026.

What’s next?

The CSRB will expand compliance expectations across the UK’s digital economy. For UK companies, especially those delivering cloud, SaaS, or IT services to regulated sectors, this means increased scrutiny, new reporting duties and rising pressure to adopt recognised frameworks such as Cyber Assessment Framework (CAF) or ISO 27001. More detailed information is available here.

Further details about the CSRB are expected to be announced in the coming months. At Spark, we support companies in navigating complex regulatory landscapes, whether through policy reviews, compliance assessments or tailored legal reports. Contact Spark for more information, and follow them on LinkedIn to stay informed about the latest developments surrounding the CSRB.

Disclaimer: This Policy Update is intended for informational purposes only and does not constitute legal advice. For the most accurate and up-to-date information, please contact Spark Legal and Policy Solutions.

Today’s Policy Update was published in partnership with Spark Legal and Policy, a supporter of The Entrepreneurs Network. If you’d like to learn more about how you can support our work, and potentially co-publish a future Policy Update, get in touch with us here.

Regular readers of our work will know that Britain’s 5.5 million small and medium-sized businesses (defined as any business that employs fewer than 250 people) make up the overwhelming majority of the total business population – fully 99.8% at the last count. They’re responsible for three fifths of total employment, or 16.6 million jobs in absolute terms. And they account for just over half (52%) of all private sector turnover – a staggering £2.8 trillion.

In short, small businesses are a big deal – and getting policy right here matters. Only by properly supporting our nation’s fledgling startups can we hope that they stand a chance of scaling into mature firms of a significant size.

In this Policy Update, we’ll go over some of the new ideas and more developed policies in the Strategy, and explain what they might mean for Britain’s entrepreneurial community.

Subscribe now

What’s inside?

Last call for late payments

Late payments cost the economy an estimated £11 billion a year and cause 38 businesses to close every single day.

New rules and powers will be introduced to clamp down on late payments – including stricter maximum payment terms, mandatory payment of interest on late invoices, fines against large companies who persistently pay their suppliers late and excluding suppliers who fail to pay promptly from large public sector contracts.

No stopping Start-up Loans

Start-up Loans are government-backed loans of up to £25,000 with a fixed interest rate of 6% per annum. Since 2012, more than £1 billion worth of loans have been issued, supporting over 100,000 new businesses.

The Small Business Strategy will allocate a further £1 billion to expand the Start-Up Loans programme to offer 69,000 loans with mentoring over the next four years.

Willing and ENABLE

The ENABLE Guarantee programme is run by the British Business Bank and is designed to encourage additional lending to smaller businesses by banks and non-bank financial institutions. It currently has live guarantee commitments supporting portfolios of around £1.8 billion.

The British Business Bank will receive a £3 billion boost for the programme, taking the total guarantee to £5 billion.

Everything in its right place

Despite a range of options for advice and support being on offer for British businesses, it’s not always clear how to access them or which might be the best choice for any given business.

The Small Business Strategy announces a new Business Growth Service – a website to act as a one-stop shop for businesses, pulling together various schemes and initiatives. It is already live, but will be developed further over the coming months.

Of import to exports

Exporting is a proven way to boost business productivity, but for many small firms it can be a daunting process to first get to grips with. Challenges include breaking into new markets and financing protection against contract risks.

UK Export Finance exists to help businesses overcome financial obstacles to exporting, and will see its capacity increased by £20 billion to a total of £80 billion. Through a new Export Insurance Product, the Government hopes to help 1,000 small businesses export for the first time by 2029.

What’s next

The Small Business Strategy finishes by setting out various staging posts for progress.

In 2025, it promises to: run a showcase for the Business Growth Service; respond to the Willow Review on decarbonising SMEs; work in partnership with SMEs to co-design changes to public procurement; support the creation of a Business Mentoring Council; and give a response to the e-invoicing consultation.

In 2026, legislation to tackle late payments will be drafted; the British Business Bank will roll out new programmes; and the Business Growth Service will continue to be developed.

Lastly, in 2027, a delivery update will be published – tracking progress against the Strategy’s various objectives.

As you might imagine, we’ll be keeping a close eye on how different aspects of the Strategy shape up, ensuring that Britain’s community of ambitious entrepreneurs really is being listened to in the corridors of power. Make sure you’re subscribed to all of our newsletters to keep abreast of further developments, and stay in touch to let us know what obstacles you might be facing.

While the pandemic is now thankfully a distant memory, we think there’s still value in formally communicating to our network about what’s going on in the policy world – and to that end, we’re firing up our Policy Updates once again. We’ll only send these when we think there is a timely, relevant update that impacts a majority of entrepreneurs in our network. Alongside the team at The Entrepreneurs Network, we will work with trusted experts – lawyers, accountants, academics, economists, consultants – on these updates. If you’re an expert and would like to be considered for inclusion, please drop us an email.

Subscribe now

Today’s Policy Update is about the changes proposed by the Immigration White Paper, which was unveiled last week. We know that many startups critically rely on international talent – from the staff they employ, to the people who found them, and the investors who back them. We’ve partnered with the law firm Kingsley Napley on this one – find out more about them at the bottom of the Policy Update.

Before we jump into the Policy Update, a couple of things to flag that are relevant to this issue:

• We’ve launched a survey that seeks the opinions of real entrepreneurs, and one of the questions asks how important immigration is to the startup ecosystem. If you’d like to make your voice heard, click here to fill it out;

• On 10 June we’re partnering with our friends at Oasis – a hub for international founders and investors in London – to host a networking meetup. Come along for an evening of drinks, conversation and community building – RSVP here.

  

The Immigration White Paper: what it means, why it’s happening, who it’ll impact and when it’ll take effect

What is happening?

The Government has published its long-awaited Immigration White Paper, which proposes significant changes to the immigration system. While these changes have not yet come into effect, they signal the Government’s future direction.

Why is this happening?

The White Paper is part of the Government’s plan to reduce net migration, incentivise investment in the domestic workforce, and ensure the immigration system supports key sectors aligned with the UK’s Industrial Strategy.

What are the key proposed changes?

The White Paper proposes a number of changes, including:

• Raising the required skill level (from RQF Level 3 to 6) and salary thresholds for Skilled Worker visas;

• Increasing the Immigration Skills Charge by 32%;

• Introducing a new Temporary Shortage List for lower-skilled roles which have long-term shortages, and where sponsors will be required to follow strategies in relation to training and engaging with the domestic workforce;

• Increasing the English language requirements;

• Extending the route to settlement by raising the usual qualifying period for settlement from five to ten years (importantly, it is currently uncertain whether the changes will apply to existing international workers already in the UK. Meeting newly proposed ‘earned’ settlement and citizenship points-based criteria will also shorten the qualifying period based on contributions to the economy and society);

• Reducing the duration of the Graduate visa to 18 months;

• Changing the Global Talent, High Potential Individual and Innovator Founder visa categories (among others) in an effort to increase the number of entrepreneurs and highly skilled talent arriving on dedicated routes.

Who will these changes impact?

• Startups and scaleups using the Skilled Worker route to hire international talent;

• Overseas workers already in the UK, including those on a track to settlement;

• International students and recent graduates of both British and top overseas universities;

• Employers relying on sponsoring lower-skilled (RQF Level 3-5) overseas workers;

• Sponsors hiring care workers and hospitality staff;

• Dependants of sponsored workers, especially where English is not their first language.

When will the changes take effect?

• The White Paper does not change the law yet – changes will be phased in throughout 2025 and 2026;

• Some new rules can be expected in the coming weeks, partly because the Home Office may seek to limit a rush of applications before the increase in Skilled Worker thresholds;

• Employers can still sponsor roles under current rules and should therefore accelerate applications, including where there is current eligibility for settlement or citizenship;

• Closure of new overseas care visa applications will begin later this year, with a transition period until 2028;

• Settlement changes are pending consultation and are expected to be rolled out in stages.

What next?

Further details on the changes are expected in the coming weeks and months. Aside from the White Paper, the UK is reportedly also closing in on a new Youth Mobility Scheme with the EU – which would enable young people freedom of movement to live and work in the UK.

Kingsley Napley’s immigration team is sending regular email alerts as soon as more information is obtained. If you would like to receive Kingsley Napley’s alerts, please sign up to their immigration mailing list here.

Disclaimer: This Policy Update is intended for informational purposes only and does not constitute legal advice. For the most accurate and up-to-date information, please contact Kingsley Napley for more.