British Chancellor Jeremy Hunt had a challenging job today with the release of his Autumn Statement - the fiscal plan for the UK economy, which will provide the framework for the nation’s spending priorities and plans under the current administration (depending on how long that lasts).
The last ‘mini-budget’ that the UK had was just a few weeks ago, under then Prime Minister Liz Truss’ watch, which saw the markets react so badly it ultimately led to her being kicked out of Downing Street.
With inflation rates at an all time high, a lasting recession looming, and interest rates on the rise, Hunt, serving under newly appointed Prime Minister Rishi Sunak, will be hoping that his attempt will calm markets and repair some of the damage done to the UK’s global reputation.
Opinion is split on Hunt’s ethos of being fiscally conservative during a recession - but the priority will have been to show that the UK has a ‘grown up’ approach to its finances, whilst not spooking the public too much so that they don’t stop spending all together. Equally, Hunt will want to show that he has a plan for growth.
Part of this plan for growth includes turning the UK into the ‘world’s next Silicon Valley’. Whilst that might sound like a good idea, there are two core problems with this. Firstly, the lack of detail. There were some comments about fostering Brexit opportunity and some prominent names have been assigned responsibilities, but this isn’t a comprehensive, measurable plan.
During Hunt’s speech today, he said:
We have a national genius for innovation. Britain is the land of Newton, Darwin, Fleming, Faraday, Franklin, Gilbert and Berners Lee.
The home of three of the world’s top 10 universities. The country with the largest life sciences, largest technology sectors in Europe.
21st century economies will be defined by new developments in artificial intelligence, quantum technologies and robotics. But we need to be better at turning world class innovation into world class companies.
So as a former entrepreneur, I had to get it in somewhere… I want to combine our technology and science brilliance with our formidable financial services to turn Britain into the world’s next Silicon Valley.
A repeating theme
And to be fair to Hunt, a comprehensive plan is not necessarily what the Autumn Statement is for. It’s typically a broad stroke plan for the nation. However, the real issue is that we have been here many, many times before.
This is nowhere near the first time a Chancellor or Prime Minister over the past ten years has declared their admiration for the US West Coast technology hub, practically drooling at the investment numbers and bro’ culture that they see across the pond. We have seen how the likes of Facebook and Google have been welcomed with open arms to the UK (and have actually picked up a couple of ex-politicians to add to their employee books).
If you go to GOV.UK - the British Government’s overarching website for communicating with the public - and search ‘Silicon Valley’, currently 4,227 results come up. That gives you an idea of how commonly the term us used across government comms, policy papers, announcements and press releases.
From Silicon Roundabout, a London-based initiative that was announced by Prime Minister David Cameron a number of years ago during the coalition government, to Boris Johnson’s more recent plans to make the UK a ‘tech and science superpower’, Britain is seemingly very envious of the US’s tech success.
We learned from the success of Nigel Lawson’s Big Bang in 1986 that smart regulatory reform can spur investment from all over the world.
So today, using our Brexit freedoms, I confirm the next step in our supply side transformation.
By the end of next year, we will decide and announce changes to EU regulations in our five growth industries: digital technology, life sciences, green industries, financial services and advanced manufacturing.
And I have asked the Chief Scientific Adviser Sir Patrick Vallance who did such a brilliant job in the pandemic, to lead new work on how we should change regulation to better support safe and fast introduction of new emerging technologies.
Hunt also pointed to new powers for the government’s recently created Digital Markets Unit - a watchdog that has confirmed plans to limit the powers of big tech. He added:
The second lesson of Nigel Lawson’s Big Bang is that the most important driver of global success is not tax subsidies but competition.
So we will legislate to give the Digital Markets Unit new powers to challenge monopolies and increase the competitive pressure to innovate.
To further spur competition, I have listened to requests from businesses and today I’m removing import tariffs on over 100 goods used by UK businesses in their production processes, from car seat parts to bicycle frames.
I will also change our approach to investment zones which will now focus on leveraging our research strengths, to help build clusters for our new growth industries.
To his credit, Hunt did confirm that the UK would not be slashing its R&D budget (which has been woefully underfunded in recent years, compared to the UK’s peers). Hunt said:
I have also heard some speculation that we might cut the research and development budget today. I believe that would be a profound mistake.
In 2017, we announced a target to invest 2.4% of our GDP in R & D and the latest ONS data suggests the UK is close to meeting that target.
I want to go further, so today I protect our entire research budget and confirm that we will increase public funding for R&D to £20 billion by 2024-5 as part of our mission to make the United Kingdom a science superpower.
The funny thing about Hunt (and his predecessors) continuing to focus on Silicon Valley, is that Britain seemingly seems less interested in working with its much closer partners (the EU) on research and innovation.
Just this week Britain announced a new deal with Switzerland to work together on research and innovation, as the UK is currently blocked from participating in the EU’s €95.5 billion Horizon programme (one of the largest in the world).
Although the UK was initially allowed continued access to Horizon under the terms of the Brexit deal, this was later rescinded after the UK sought to amend the Northern Ireland protocol, without using the official dispute-resolution system that was previously agreed. Legal action has been triggered by the EU and barriers on both sides are beginning to go up.
As such, the UK continues to admire Silicon Valley from afar. Hoping that it will somehow be able to replicate the success under a new wave of innovation that focuses on AI, robotics and quantum computing. That’s not impossible, the UK does have a lot going for it when it comes to science and research, but it needs a long-term, focused plan - something that has been impossible, given that we’ve had three Prime Ministers this year alone.
Instead we are often left with empty slogans and aspirations that are rehashed every year, where the government looks to Britain’s achievements of the past and assumes it can replicate them in the future. Assuming that it can simply become a Silicon Valley, without any sort of succinct plan to get there, has basically been the ‘plan’ for the past decade.