My top 3 suggestions to strengthen UK tech

As I mentioned in my last LinkedIn article, tech is one of the UK’s most resilient and fast-growing sectors, and the tech ecosystem employs nearly 5 million people across the UK today. Tech & Digital Britain must be a key part of the Government’s plan for sustainable growth, exporting earnings, Levelling Up and the acceleration towards a highly skilled, high wage economy.?

The UK tech’s track record is already impressive on the global stage. The UK is currently fourth in the world for tech investment at $40.8bn (￡32.6bn), having achieved a record year in 2021 and an increase of nearly 20x since 2011 in VC funding. The UK is also a world leader in producing tech ‘unicorns’ (companies valued at $1bn+) and has more unicorns than any other country in Europe, at 122.

But I believe the UK has the potential to become the most powerful tech and science superpower in the world. To achieve this, we need a holistic strategy encompassing skills, education, innovation, R&D, productivity, tax environment, public procurement policy, investment, diversity, positive immigration, and the narrative of the UK as a magnet of welcoming overseas talent and investment - to name a few factors.?

However, Digital Britain was not built in a day and this is not a mission that should be left to the market alone. We need a holistic, coherent plan shared between the tech industry, Government, education, investor groups, VCs and other key stakeholders to support segments where the UK has strong competitive advantage in order to become no. 1 or 2 globally in terms of investment, valuations, employment, unicorns, decacorns, centicorns and other key measures.?

The aspects that I cover in this blog highlight the most short-term imperatives for the UK to reach our full potential and become a global tech and science superpower. There has been good work done so far, but we must now go beyond following the great recommendations of the Lord Hill Review & Kalifa Review.?

Here are my three top of mind suggestions to strengthen the UK tech sector:

#1 We must change the narrative.

As stipulated by the Government and supported by business and civic leaders, we need a strong post-EU vision, and we must craft a narrative which highlights Britain as a magnet for technology in the world. A key part of this narrative is that immigration is strategically important to the UK economy, as it is linked to innovation and aspiration. Essentially, the UK’s new narrative needs to say: “The UK is welcoming and open, and tech is in our DNA. We are a global magnet for technology.” The greatness of the US economy and leadership in tech is evidenced with positive historic immigration.?

But creating this narrative won’t happen overnight. This is a long-term game. Silicon Valley was built over 30 years, and it’s taken a decade for UK tech to shift from a cluster of tech start-ups in East London (‘Silicon Roundabout’) to a truly national network of UK tech start-ups, scaleups and unicorns. The strength of London is important to inspire regions across the UK. It is not ‘either London or the regions’ - it is both.

The media will play a strong role in shifting the current narrative, along with the Government and the wider tech ecosystem. Together, we should be looking at strategic growth plans over the next decade, with cross-party support to create consistency of policy, narrative, and delivery.

#2 We must make structural changes with short and long-term plans.

This could include:?

• A coherent plan to improve UK productivity with a supportive tax environment. Many folks criticise Gordon Brown, but he oversaw an improvement in productivity and close the gap between the UK and our international competitors. As a FTSE50 CEO of the UK’s largest tech company, I disagreed with the Chancellor of the time on reducing corporation tax from 28% to 19%. I suggested there would be little positive impact in R&D, innovation or productivity, and this has proved to be the case as companies have used the tax savings to return dividends to pension funds and investors. In the Valley, we used to say, “Dividends are for Management Teams and Boards who have run out of ideas and strategies for growth”. With companies heading for market leadership, every dollar of profit should be invested for accelerating growth and superior capital returns. Successive governments have created the most supportive tax environment in the UK for start-ups and scale-ups with SEIS, EIS, R&D tax credits, etc. One ‘no cost’ easy gift from the Government would be to provide 10-year stability statement (with cross-party support) on the current package of tax incentives. R&D investment incentives will be key to helping the UK address the productivity gap.
• Following the recommendations of the recent SCRR report (13 July final) (publishing.service.gov.uk) . This is an excellent paper which focuses on secondary raises and further evolution required. It outlines the next phases of innovation post Hill/Kalifa reviews, and these recommendations should be implemented rapidly to evolve London as the preferred listing and lifetime destinations of UK, EU, and many international Tech companies and access to life-time funding.
• The next Chancellor should encourage a percentage (say 10%) for all the ￡3 trillion of UK pension funds to go to growth tech or alternative investments. This would be a seismic yet simple statement of intent to signal a shift to growth and the creation of global market tech leaders – a step towards seeing the UK with a $1 trillion company. This would be the first step to reducing the UK investor community from dividend addiction to shift towards growth.? It would also be a boost for the UK to lead the world on Net Zero Tech.

#3 We must improve our education system further.?

Finally, we must change the way we educate the younger generations and those in positions of power.?

Currently, we are struggling to hire skilled talent from top to bottom. Starting at the top, our Tech Boards across the UK, we need to replace the ‘City Grandees’ who have little domain knowledge, poor knowledge of what it takes to create a global market tech leader and no experience with knowledge workers who have genuine rare skills in product management, innovation, and software development.?

We need to build up technical and management skills across higher level education (like the Director’s College at Stanford University in the States). Even Oxford University, one of our best institutions, is offering hundreds of places for history vs 40 computer science places. We must maximise young people’s access to coding clubs and other technical courses across the UK education from primary school through to tertiary education.

In summary

There is no doubt that the UK’s tech ecosystem has long been heading in the right direction. In 2022, the UK tech ecosystem is valued at just under $1 trillion - that’s more than 17 times its value ten years ago in 2011.?

But I believe that the time is now for an over-arching plan. If we start by taking these three steps, and work together to strengthen UK tech, the UK has the potential not just to be a world leader in technology, but the most powerful tech and science superpower in the world per capita.