Many innovators find it difficult to engage with government – whether that’s departments, regulators, or quasi-government bodies responsible for accreditation or industry standards. Yet engaging with these institutions is often essential to their success.

A common frustration was not knowing who to speak to or how to engage, particularly when dealing with systems that feel opaque or closed off. One innovator described a key process as simply “impenetrable”.

Innovators told us that the policy and regulatory landscape often appears designed or shaped for by larger, established players. Rules and procedures are frequently built around the scale, operating models or legacy systems of incumbent firms, making it much harder for newer, smaller, or more agile companies to compete.

Regulation was frequently cited as a barrier, particularly for those introducing new products or services. Many felt that existing rules are too prescriptive, focusing on detailed requirements rather than principles-based approaches that could offer more flexibility while still meeting safety or quality goals.

This rigidity can make it difficult to trial, adapt or scale innovative solutions – even when those solutions support the government’s wider policy ambitions.

While innovators welcome funding and support from government innovation programmes, they also highlighted significant frustrations. Support was often described as siloed, misaligned with other parts of government, or lacking the wraparound support needed to get innovations off the ground.

Some even found that while one part of government was encouraging innovation, another was acting as a blocker.

Sean’s business has developed a new product that doesn’t fit neatly within existing regulations and needs certification in order to scale and access government-funded retrofit schemes. Current policies, such as building regulations and subsidy specifications, are tailored to older technologies, making it hard to prove compliance without changing regulatory wording or funding criteria. Sean must resolve these issues quickly to secure further investment as backers are interested but won’t commit until regulatory hurdles are cleared.

It’s unclear who Sean’s team needs to speak to within government to resolve regulatory issues, and there’s no clear guidance available. Responsibility for cross-government solutions is fragmented, with no one body taking ownership when issues span departments. They’ve resorted to writing to ministers and received some replies, but the process is time-consuming and responses are inconsistent. Regular travel to London for meetings with policymakers is difficult, and while government consultations occasionally address relevant issues, they don’t have the time to engage properly despite having valuable insights. Day-to-day business takes priority, and they often feel out of the loop on policy changes. Government decisions seem disconnected from innovators, with limited communication or visibility.

Senior staff are spending significant time chasing government contacts and writing submissions which is time that could be better spent on core business priorities. This drains resources and affects investor confidence, with further funding on hold until key regulatory issues are resolved to prove the business model’s viability. Meanwhile, unresolved barriers are causing the company to lose market share to competitors, especially in overseas markets where similar regulatory challenges have been addressed more swiftly.

From their experience, Anya's team sees that the current market often results in poor outcomes for households due to sub-standard work and misaligned incentives for contractors. As they scale, they face competition from large incumbents who benefit from keeping regulatory frameworks and funding scheme designs unchanged. Their business spans multiple government funding schemes, each with separate structures and requirements, demanding significant resources to navigate and become eligible to deliver.

Government-funded retrofit schemes and procurement mechanisms are often designed around delivering specific solutions rather than focusing on end user outcomes, making it difficult for more innovative and flexible customer propositions to gain traction. There is no whistleblowing system to report bad actors, which makes it harder for innovators to challenge poor practice in the industry. Long-term policy and funding decisions tend to lock in existing ways of working, favouring incumbents. For example, regulations, standards and funding schemes often use terminology tied to specific technologies and contracting approaches, which restricts innovation and limits the entry of new business models.

Anya’s business faces restrictions on what they can offer consumers and how they develop new business models, as funding schemes and regulations limit flexibility. Competing with larger players is difficult due to the significant resources required to enter the market. They feel unable to compete on the quality of their work or the benefits to customers when the industry lacks effective regulation. They are a subtractor to larger established players, effectively meaning that challenging poor practice risks losing contracts. 

Their main priority is to get a new technology certified so it will be recognised for its positive impact on a domestic EPC when installed in UK homes. They need new UK product standards to allow valid comparisons between their product and existing technologies, which they believe outperforms current options and saves carbon. Although they were previously supported by a government innovation programme to develop the technology, the funding doesn’t cover support for navigating certifications and regulatory challenges, which will be critical.

Erin’s company faces significant challenges in navigating government agencies, with multiple bodies often not communicating or contradicting each other. After receiving government innovation funding to validate their technology, Erin now finds that a different team within the same department is blocking proposed changes to standards that would allow wider sales. Regulatory changes are slow and require numerous rounds of consultation, meeting officials, and campaigning for change, demanding the dedication of several full-time staff members.

Although they’ve received government innovation funds in the past, support has stopped at commercialisation, leaving them unable to secure funding for certification or testing. With no government recognition of their technology, they must pay hundreds of thousands of pounds for testing and certification to enter each market, with individual requirements for each. Meanwhile, government subsidies and grants are available for competing technologies, putting them at a disadvantage.

The high financial cost of applying for tests and certification, along with the significant staff resources required to manage certification, testing, and regulatory compliance across different markets, is a major burden. Meanwhile, they are losing market share to competitors, especially from overseas markets where regulatory issues have been resolved more quickly.

Paul's company has launched its product and is already serving a diverse customer base, including key commercial clients. They aim to scale the business, expand their customer base, and develop new features in the near future. The product involves managing a large number of relationships with external organisations, such as regulators, utility networks, and standards bodies, which the service handles on behalf of their customers.

Paul's team spends a significant amount of time navigating complex accreditation requirements and simplifying regulations for their service users – what we might call battling red tape. Much of their work revolves around enabling compliance with outdated or unnecessary processes from external regulators, making it easier for their customers to do their jobs. These regulations were not designed with digital technologies in mind, meaning the team struggles to prioritise the development of higher-value features for their users. In the organisations they interact with, there are often few processes in place to navigate regulations, timelines are uncertain, and they are not always seen as a priority. The decision-makers their service depends on, such as network companies and regulators, are inconsistent, with decisions often varying from person to person within the same organisation.

They are unable to offer higher-value products to customers that could significantly boost their productivity. The growth of the service and investor confidence in the business are being hindered by uncertainties around regulation and compliance with standards.