The UK’s ongoing failure to hold onto and grow science and technology companies has now reached crisis point and is causing the UK economy to “bleed out” according to a House of Lords report.
The government risks acting too late to fix long-standing failures to retain and scale science businesses and reap the economic benefits of R&D in the UK. Instead, the enormous opportunities for technological and economic growth are slipping through its fingers, warns the report from the Science and Technology Committee of the House of Lords.
“The UK’s economy, particularly its science and technology sectors, is bleeding out,” the report Bleeding to death: the science and technology growth emergency, said: “The UK’s inability to retain economic benefits of its R&D is a fatal flaw to any growth strategy.
Lord Mair, chair of the House of Lords Science and Technology Committee, said a procession of promising science and technology companies have choosen to scale overseas rather than in the UK.
“The UK economy is simply not working, and the consequences are clear for all to see. If the UK is to arrest its decline, leadership and coordinated action is needed to rescue and strengthen its science and technology sector."
The report said the UK has a healthy and growing scene of start-ups and spin-outs, but has been less effective both in scaling up companies that start in the UK. Companies looking to scale up are hard-put to find late-stage capital and are often forced to seek funding overseas, typically in the US.
“The UK risks becoming an ‘incubator economy’ whose young, fastgrowing companies continually move abroad, taking much of the economic benefit in jobs and tax receipts with them,” the report warns.
The top 10 R&D spenders in the UK are AstraZeneca, GSK, HSBC, Lloyds Bank, Rolls-Royce, Unilever, BT, Shell, NatWest, and Reckitt Benckiser. Of these only AstraZeneca, GSK and HSBC are in the top 100 spenders globally and only AstraZeneca is in the top 20, the report said.
The government’s Modern Industrial Strategy, published in June, wants the UK to become one of the top three countries in the world in which to “create, invest in and scaleup a fast-growing technology business” - and for the UK to have “a trillion-dollar technology business” by 2035.
But as the report notes: “The most likely candidate to become the Government’s 'trillion-dollar tech company by 2035' probably already exists. The government must stop the bleeding: convince that company, and dozens of others looking overseas, that the best future for them is in the UK.”
The report sets out recommendations including:
- Creation of a new National Council for Science, Technology and Growth to coordinate efforts across government and broker compromises between departments. It should be modelled on the National Security Council.
- Reforms to ‘counter-productive’ visa policies for global talent.
- Government incentives for pension funds investing in UK science and technology companies.
- Reforms to public procurement, including a mandatory target for spending with innovative UK based SMEs
- Consolidation and scaling of public investment bodies including Innovate UK, the British Business Bank (BBB), and the National Wealth Fund (NWF).
- Changes to career structures to make it easier to move between academia, business and government.
- Incentivise ‘sensible’ risk-taking to support domestic innovation in government investment and procurement
SCI provided evidence to the committee, which you can read here.
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