The Scene
LONDON — The UK needs a major overhaul to take advantage of technological advances, from modernizing Britain’s ailing rail network and creating regional innovation clusters to streamlining fintech licensing so it doesn’t take six months to get a response to an email.
That was the big takeaway from a recent private gathering of Labour party activists and industry experts to discuss what the newly elected government could do to put science and technology at the heart of its growth agenda.
Some of the suggestions would be easier to implement than others. Introducing a blanket 10-year visa for STEM graduates, for example, would be fiscally cheap but politically expensive, said Ewan Kirk, Entrepreneur in Residence at the University of Cambridge and a board director at BAE Systems.
But one of the biggest barriers, panelists agreed, is the lack of a culture of entrepreneurship, particularly on university campuses beyond the Golden Triangle of Oxford, Cambridge, and London.
“We might not necessarily like the politics or the personalities of all the great examples of entrepreneurs, and nor should we engage with them uncritically, but these figures are already planting the seeds of future businesses in the minds of millions of people,” said Labour MP and Chair of the Science, Innovation and Technology Select Committee Chi Onwurah.
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The importance of tech to Britain’s growth prospects might be one of the few things politicians on both sides of the political divide can agree on: In a rare moment of goodwill ahead of the Autumn Budget, the first fiscal policy outline by a Labour Chancellor of the Exchequer in nearly 15 years, outgoing Conservative Party leader Rishi Sunak urged Prime Minister Keir Starmer to “find his inner tech bro” and continue “to establish our country as the home of AI growth and innovation.”
The View From Tech Entrepreneurs
Corners of the British tech industry have already criticized the government for hiking the capital gains tax in its Autumn Budget, which some say will make the UK less attractive for startups.
But tech entrepreneurs Semafor spoke to said the furore over tax increases, which were less than expected, was a red herring.
“California has astronomical tax rates, and yet nearly all the world’s most innovative tech companies are founded there,” said Ed Brandler, the co-founder of fintech platform Two. “I think it’s a bad faith argument.”
Still, even up against structural disadvantages, the government could do more to grease the wheel for entrepreneurs.
For example, startups are already held up by the inflexibility of Britain’s labor market, so the government’s Employment Rights Bill — which seeks to give all workers bereavement, paternity, and parental leave from their first day on a job — should distinguish between smaller and larger companies, said Natasha Ratanshi-Stein, whose startup was recently acquired by a US company. (The UK government said that making exceptions for smaller firms would ultimately reduce their incentive to grow, and leave some workers without adequate protections.)
The UK does have a long history of being the “first mover” in fintech innovation, but Labour could do more to create conditions of trust for entrepreneurs, such as by investing as much in fraud prevention as they do in new technologies, said Nico Barawid, who worked for a fintech company in Silicon Valley and recently moved to London to found Tunic Pay. “Fighting the unintended consequences of technology should go part-and-parcel with that investment.”
Notable
- The idea that the UK lacks entrepreneurial spirit isn’t a new observation. For all its talent and capital, the tech scene is weighed down by a British aversion to risk-taking, Semafor’s Katyanna Quach wrote in July.
- Silicon Valley operates on the assumption of success, but being an aspiring tech entrepreneur in the UK feels like coming up against “an immune system fighting a foreign body” that makes people believe they’re destined to fail, the founder of Monzo argued in The Times of London ahead of the Autumn Budget.
- Comparisons between Silicon Valley and European innovation ecosystems may be unfair: Silicon Valley is the “Olympics” of the startup world, with companies that compete there having usually already passed certain “qualifying standards,” two academics argued in a research paper.