As Brits, our natural inclination is to be self-deprecating. Talk things down. Even demonstrate a significant degree of scepticism. Sometimes, this is fair. But often it isn’t. When it comes to our tech sector’s prospects, it is arguably rather off the mark. Whichever political party forms the next government post-July 4th, they have a real opportunity to reshape the UK tech scene for the better.
We have some of the world’s best scientists, engineers, and business leaders here in the UK, who have emerged from a rich tech talent pool. Much of this stems from the academic prestige of our universities, with the UK boasting some of the premier academic institutions in the world. Coupled with a relatively stable economy, and great access to both the US and Europe, it’s why so many foreign companies lay down roots here.
What we now need is to add belief and ambition to the mix. This is how we create very firm foundations for science and technology prowess. Government’s role is critical. How we regulate and incentivise the tech industry and the wider economy at large is key for providing direction and encouragement to businesses nationwide.
Our Prime Minister said late last year that he wants to make the UK a “global science and technology superpower by 2030”, and the Technology Secretary said in January that the government is aiming to turn the UK into a “scaleup powerhouse”. Yet as it stands, UK spending on R&D as a percentage of our GDP lags behind the likes of the US, South Korea, and Germany, putting these pledges in jeopardy.
Rooms of coders are now our production lines, and data centres are our smoky factories.
What remains very clear is that we are in desperate need of an industrial strategy for the 21st century. The notion of an “industrial strategy” in recent times was almost a laughable phrase, with connotations of billowing clouds of smoke emerging from a gloomy skyline. But this is old thinking. Rooms of coders are now our production lines, and data centres are our smoky factories. A properly integrated industrial strategy is what will enable British technology startups to truly scale in the UK.
Having a science and technology strategy that is divorced from a robust industrial strategy leads to the situation we have today – i.e. great technology, but no monetisation. The consequences of this are plain to see, and they mean that we end up donating the UK’s expertise to overseas investors for them to make money.
This shouldn’t be thought of as a narrow problem that’s exclusive to UK tech either. Today, there are little to no new exciting, world leading companies IPO-ing on the FTSE. Even the established FTSE companies are considering moving their listings. Why? Because the FTSE is dull, and a dull stock market means poor valuations. It means analysts will move to wherever the excitement is and cover the vibrant markets, which will drain the FTSE further, and so this cycle continues.
But it doesn’t have to be this way. Companies like Apple, Microsoft, and Google have an enormous net positive impact on the US economy. Not only do they employ vast numbers of highly skilled people, but they also have a huge ecosystem of contractors and suppliers around them, multiplying the beneficial effects of a high skilled and high wage economy. These companies and ecosystems become the engine room of a nation’s GDP.
Government has, to some extent, been listening to business, and there have been some positive moves. Our pension money can now be invested in UK scaleups, there’s real impetus behind the British Growth Fund, and the British Business Bank was of course founded within the last decade.
What we’re lacking is boldness in our vision. China by contrast is impressive in their clarity. They have a five-year plan stating the extent of the support they will provide businesses, the industries they plan on doubling down on, and how they’re going to inject the different pots of money into said industries. This offers clear direction and a degree of ambition that provides businesses with the confidence to invest.
For example, UK grants are often spread out very thinly across a plethora of companies. Why can't the government be swashbuckling enough to say, let’s pick a handful, and provide those companies with the necessary funding to do something significant? Don’t get me wrong, approaching policy like this is a gamble. But in business, you fail fast. Pivot. And go again.
Natural conservatism has always been deeply entrenched in government policy in the UK when it comes to business. Legislators don’t want to get things wrong, rather than daring to be right. The individuals we elect should be bold enough to pick winners and not shy away from doing so for the UK to reclaim its industrial and technical pedigree once again.
