How UK regulators are missing a chance to make the best of Brexit

The smell of fried pork permeates the kitchens of Hoxton Farms in east London and yet no pig was slaughtered to make the dish sizzling away on the hob. Thanks to advances in biotechnology, the meat on this pork belly is plant-based but the fat is identical to the real thing, only cultured from cells at the company’s office in a trendy block for life science start-ups.

Ed Steele, the mathematician who co-founded Hoxton Farms with synthetic biologist Max Jamilly in 2020, believes that lab-grown fat is the secret to creating tasty meat alternatives because, as the company’s website puts it, “the fat is where the flavour’s at”.

But there is just one snag, says Steele: obtaining regulatory approval for so-called novel foods in the UK has become dispiritingly long-winded. As a result, Hoxton Farms is now considering moving to the United States in order to start scaling up production.

“We’re very confident we will get approval from the US FDA [Food and Drug Administration], so we’re considering building our first manufacturing facility outside the UK,” Steele says. “That’s not what we want to do, but we need to do what’s best for the company.”

Things were not supposed to be like this. Since Brexit, the British government has been seeking to benefit from opportunities that come from being outside the EU’s cautious and cumbersome regulatory system, where approvals that cover 27 member states are slower than in countries such as the US and Singapore. The hope was that by being nimbler, the UK could steal a march on Europe, particularly in areas of emerging technologies where speed to market is a priority for investors.

Novel foods, which include a range of goods from alternative proteins like cultured meat and edible insects to cannabidiol (CBD) products and other supplements, such as algae and chia seeds, were a key target.

But a growing number of investors and industry experts share Steele’s frustration and warn that an alarming gap is emerging between the UK government’s stated ambitions and the capacity of regulators like the Food Standards Agency (FSA) to make it happen.

A cell culture technician feeds cells in the lab at Hoxton Farms. The company believes that lab-grown fat is the secret to creating tasty meat alternatives © Charlie Bibby/FT

Along with artificial intelligence and autonomous vehicles, the government singled out “gene editing and cultivated” meats in its Brexit Opportunities report of January 2022, promising to deliver “a distinct regulatory framework that provides an economic advantage”.

This was quickly followed by the Genetic Technology (Precision Breeding) Bill, that promised to “remove unnecessary barriers” inherited from the EU and “position the UK as the leading country in which to invest in agri-food research and innovation”.

The bill became law in March 2023, but so far it has not translated into action, according to Linus Pardoe, the UK policy manager at the Good Food Institute Europe, a non-profit think-tank that focuses on sustainable and novel foods.

Anthony Hopkins, head of policy at the British Society of Plant Breeders, says its members are still waiting to hear how the FSA would regulate gene-editing following a public consultation in 2023. “We need a system that approves quickly and gives people the confidence that if they do it they won’t encounter lots of bureaucracy or friction with the EU,” he adds. 

The bottleneck, according to Pardoe, is caused by regulators who are failing to compete in a global marketplace for talent and funds.

“There’s been a lot of interest since Brexit in the potential for the UK to have faster routes to market for alternative proteins like cultivated meat and animal-free dairy, but where this all cashes out is at the FSA,” he says. “The agency holds the pen.”

The most pressing challenge for the FSA, an independent government body that is responsible for all aspects of food safety, is a lack of resources.

Its annual budget was held flat for a third year at £113mn in the last Spending Review amounting to a real terms reduction in spending power of £35mn over that period as a result of higher than expected inflation, according to FT calculations. And while the agency says it has recruited 440 more staff since 2018, it only had 38 dedicated risk assessors considering applications for novel products out of a total staff of just over 1,500.

The result has been slow progress for industry: the FSA has managed to complete only 63 regulatory approvals out of the 450 applications lodged since the EU-UK trade deal came into force in January 2021, according to data from the agency. It also lists more than 1,500 other “incomplete applications” that are yet to join the approvals queue.

The decision gap has meant that the UK now often lags behind the US, Australia, Canada and New Zealand on approval times. For example, the Californian plant-based food manufacturer Impossible submitted applications to the FSA in March 2021 for the meat flavouring ingredient used in its eponymous plant-based burger. But three years later it is still waiting for approval for the soya-based haemoglobin, which has long since been cleared for sale in the US and Canada.

One of Hoxton Farm’s investors is Leo Ringer, the founding partner of Form Ventures, a venture capital fund that specialises in seed companies operating in areas with complex and novel regulations. He argues there are “three Rs” holding back UK ambitions.

“We suffer from a shortage of resources, rule changes, and risk appetite,” Ringer says, adding that this has a “chilling effect” on the industry. Global investors will continue to have doubts about backing companies in Britain when “UK regulators are still such a barrier to innovation”, he adds.

The government wants to ‘position the UK as the leading country in which to invest in agri-food research and innovation’ © Alamy Stock Photo

The broader challenges facing UK regulators after Brexit were outlined by the National Audit Office in a report in May 2022 that examined three major regulators — the Health and Safety Executive (HSE), the Competition and Markets Authority (CMA) and the FSA — and found that all three were “finding it a challenge to recruit the specialist skills they need in some key areas”. In the FSA’s case, toxicologists were in short supply.

More recently, the Tory peer Lord Richard Harrington singled out regulators in his October 2023 report for the Chancellor Jeremy Hunt into how to attract more foreign investment to the UK. During conversations with 165 businesses in five growth industries nominated by the government, including life sciences, Harrington said that business repeatedly brought up the shortcomings of regulators. “A consistent theme across all five growth sectors has been business perceptions that UK regulators are under-resourced,” he wrote. 

The failure to act on the opportunity to strip back time-consuming EU rules inherited from the UK’s membership of the bloc is another significant part of the problem, adds Pardoe of the Good Food Institute. Under the legacy EU rules, approvals for novel foods take at least 17 months once a formal application has been submitted, including up to a seven-month wait for authorisation from ministers. As a non-member, the UK could now change this, points out Pardoe, but still has not.

By contrast, says Steele at Hoxton Farms, a submission to the FDA in America is expected to take just a year. This is partly because the US regulator, unlike the EU and UK, allows companies to ask assessors detailed scientific questions and make necessary changes before submitting their final application — another rule change the UK could make now that it is outside the EU, but has not.

“Because the FDA is more willing to engage we know a lot more about what they are looking for, so we’re much more confident our US approval will come in a reasonable timeframe,” says Steele.

Rebecca Sudworth, director of policy at the FSA, says the regulator has made no secret of the fact that it needs “more resources across the whole system”.

Ed Steele, pictured with his Hoxton Farms co-founder Max Jamilly, says a submission to the US regulator takes a year, unlike the minimum 17 months for approval in the UK © Charlie Bibby/FT

While the FSA has had additional support for its new responsibilities since Brexit, it was still in the process of establishing the scale of the task, she adds. “If we have some more resource, we could go faster. But there are limits to that,” argues Sudworth, adding that reform was also needed to make the approval processes more efficient.

The FSA says it is proposing a reform to UK law to help streamline the system. This includes scrapping the secondary legislation required to get new products on to shelves, a layer of bureaucracy that does not exist in the EU system. In the EU, authorisation comes into force shortly after ministerial approval by being published on an official register.

Removing this red tape could reduce approval times by three to six months, says Sudworth.

Until the UK fixes, funds and speeds up its approval processes, its dreams of turning frontier technology sectors into thriving industries may be frustrated, says Andrew Bennett, policy lead at Form Ventures.

This is particularly true of the burgeoning cannabis industry which many hoped would benefit from the UK’s regulatory divergence from the EU.

In July 2022, a report from the all-party parliamentary group (APPG) for Cannabidiol products estimated that the UK’s cannabis industry could produce 594,000 new jobs and contribute over £5.5bn in annual tax revenue. With the correct regulation, the group argued, the UK could become “one of few lucrative worldwide hubs” for CBD products. 

But like other novel foods regulated by the FSA, manufacturers of products containing CBD — the non-psychoactive chemical found in cannabis which can be sold over the counter — have been hobbled by approval backlogs.

In 2019, CBD products became classed as novel foods, meaning they have to be approved by the FSA before they can be sold in the UK. The tighter controls were imposed following reports that some of the CBD products entering the market were not always what they claimed to be. 

Today, 11,500 of the products which were filed for approval in 2020 are still awaiting validation, according to the Cannabis Trades Association (CTA). “[Approximately] 40 per cent of the industry disappeared over the first two years of the FSA process,” says Marika Graham-Woods, executive director of the CTA. “They have failed the entire industry.”

The UK cannabis industry could produce 594,000 jobs and contribute £5.5bn in annual tax revenue, but 11,500 products have been awaiting validation since 2020 © Jason Alden/Bloomberg

The FSA says part of the reason for delays was that many of the applications had to be refiled because they were incomplete or required additional evidence. “Quite often companies don’t give us what we need to finish [our] risk assessment and then we have to enter into dialogue with them,” says Sudworth. “That can actually take quite some time.”

Nick Morland, chief executive of Tenacious Labs, which is the secretariat for the CBD APPG and provides reports, research and advice to the group, says that even though politicians had signed off on the recommendations, Whitehall was being too slow to enact new policies. “People signing off are saying ‘yes please’ but the people [who are supposed] to make it happen are just not getting it done,” he continues.

Morland adds that there is still a small window for the UK to become Europe’s centre for CBD trades — if it speeds up its processes. “No one has [established] an internationally credible regulatory regime,” he adds. “If the UK does that, companies will flood in.” 

However, the struggles of individual regulators raise a much broader question about the UK’s appetite for risk when it comes to novel technologies, according to John Fingleton, who sits on the board of UK Research and Innovation, a government funding body founded in 2018 to boost UK research and development.

Fingleton, the former boss of the now defunct Office of Fair Trading, argues that the narrative pushed by Brexiters — that the UK was being held back by “Brussels red tape” — was based on a myth.

“When we were EU members, we regulated more than other [member] countries. EU membership wasn’t the big obstacle, the problem was more fundamental — our approach to risk,” he says. “But we now do have more freedoms and we should exploit them.”

As part of its plans to maximise the benefits of Brexit — and realise the UK’s ambitions to become a science superpower — the government created the Regulators’ Pioneer Fund (RPF) in 2017, allocating small grants of £1mn or less to help regulators support business innovation. In 2019, it established a Regulatory Horizons Council to provide government advice on regulatory reform that would help the UK capitalise on the so-called “fourth industrial revolution”.

While industry has welcomed the schemes, the budgets to boost the capacity of regulators to bring the fruits of that research to market are tiny. Overall, the government spends £12.8bn a year on research and development funding.

The team at Space Forge, a Welsh satellite maker, which needed 11 separate regulatory approvals before getting clearance to launch © Space Forge

“Compared to the billions spent annually on upstream R&D, the budget for downstream regulators to help get these innovations to market is minimal,” says Ringer at Form Ventures, who proposed eventually increasing the Regulators’ Pioneer Fund to £100mn in a new report last week.

Pardoe at the Good Food Institute Europe also argues that, relatively speaking, even small sums of money can make a big difference to regulators, citing a recent injection of £10mn in the Medicines and Healthcare products Regulatory Agency (MHRA) that had helped to clear a backlog of applications for clinical trials, although many obstacles remain. “A lot of this comes down to funding,” he adds. “For the FSA we estimate £30mn would make a real difference.”

Injecting more money into regulators is only one solution. There have also been calls for greater centralisation in a fragmented landscape of regulation.

UKRI’s Fingleton points to Space Forge, a Welsh satellite maker, which he says needed 11 separate regulatory approvals before getting clearance to launch. He would like to see a cross-sector approach that puts emerging and novel technologies into an “economy-wide sandbox” with the legal authority to license new technologies, pooling the risks and avoiding the overcaution inherent in the current system. 

The UK’s opposition Labour party has pledged that, if elected, it would create a new Regulatory Innovation Office that will set strategic direction for regulators along with targets measured against its international peers. This would “make Britain the best place in the world to innovate by speeding up decisions and providing clear direction based on our modern industrial strategy”, the party said.

Industry and investors have become wearily familiar with such promises. The imperative now, says Ringer, the investor, is for government to actually deliver.

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