UK government launches AI Growth Lab — and why it matters for SMEs
What is the AI Growth Lab?
The AI Growth Lab is an advisory body launched by DSIT to bring together UK regulators and help businesses — particularly SMEs — understand how existing regulations apply to AI. Rather than creating new rules, the Lab is designed to remove the confusion that arises when multiple regulators (the ICO, FCA, Ofcom, CMA, sector bodies) all have overlapping remits over AI.
The Lab launched on 8 June 2026 with legal services and conveyancing named as the first focus area. In this pilot, the ICO is working alongside the Council for Licensed Conveyancers (CLC), the Solicitors Regulation Authority (SRA), and the Legal Services Board (LSB) to give legal firms clear, practical answers on using AI responsibly.
What does it actually do?
The Lab operates as a cross-regulatory sandbox. Businesses in the focus sector can raise specific questions about AI use cases and receive coordinated guidance from all relevant regulators in one place, rather than seeking separate advice from each.
Critically, the Lab can also temporarily and conditionally relax specific regulatory rules for licensed firms testing AI deployments under supervision — on time-limited terms. Successful pilots can then be made permanent through secondary legislation.
This is significant for SMEs who have found it difficult to know which regulator to approach, or who have faced conflicting signals from different bodies about what is and is not permitted when using AI.
Which sectors are coming next?
DSIT has flagged the following sectors as priority areas for future Lab activity:
- Healthcare and medical services
- Professional services (beyond legal)
- Transport and logistics
- Advanced manufacturing
If your business operates in any of these sectors, it is worth tracking when applications open. The Lab is intended to spin up sector by sector through 2026 and 2027.
How does this interact with the EU AI Act?
The AI Growth Lab is a UK initiative and does not change EU AI Act obligations. If your business has EU customers or employees, the EU Act's requirements still apply regardless of any UK regulatory sandbox arrangements. However, for UK SMEs navigating both regimes simultaneously, the Lab represents an opportunity to get clarity on UK obligations without having to interpret overlapping regulatory guidance independently.
The ICO's involvement is particularly relevant — as the primary UK data protection regulator, any guidance the ICO produces through the Lab on AI use will be directly relevant to data protection compliance obligations that apply to virtually all businesses using AI.
- If your business is in legal services, the Lab is already active. Contact DSIT or your sector regulator for information on how to participate.
- If your sector is on the priority list, monitor DSIT and your sector regulator's announcements for when applications open.
- Regardless of sector, the Lab signals that the UK government's approach is sector-by-sector practical guidance rather than a single AI Act. Build your AI governance around the regulators that apply to your specific business — starting with the ICO for data protection.