UK Chancellor Rishi Sunak launched London Tech Week in the capital on 13 June: five days of events bringing together over 300 speakers and, according to the organizers, more than 20,000 delegates. The aim is to explore the next generation of technology innovation and how to achieve impactful innovation at scale.
Sunak said innovators’ success was “personal” for him, because he had “the privilege of living, studying, and working in California” – a bold opening for a man who earlier this year was criticized for holding a US green card while in Downing Street.
On living in the epicentre of US tech innovation, Sunak said:
That experience left a lasting mark on me. I lived and breathed the culture that was adventurous, optimistic, and forward-thinking. Willing to take risks, to be imaginative, to build new products, services, and businesses that could change the world.
And I see that culture here at home, too. I’ve been travelling a lot in the last few months, right across the UK. And wherever I go, I meet young people who are hungry, ambitious, unencumbered by timidity and orthodoxy.
Then he added:
The UK has Created more tech unicorns than any other country, bar the US and China. We have extraordinary, distinctive strengths in FinTech, life sciences, and creative industries.
This is true. According to April 2022 figures, the UK is currently home to 37 technology start-ups that are each valued at more than $1 billion, across a range of industries including artificial intelligence, FinTech, ecommerce, healthcare, genetics, and blockchain: more than in all of the EU.
There was more good news for the UK this week. According to the UK Digital Economy Council – a non-statutory advisory committee founded last year, with members from IBM, Amazon, Microsoft, Google, Accenture, and others – 950 UK companies have raised a combined £12.4 billion ($15.1 billion) in venture capital investment since January.
More than two thirds of that total (£8.6 billion/$10.4 billion) was raised in London, putting the capital in the top five VC destinations worldwide. While superficially impressive, the London-centric nature of investment isn’t such good news for the UK. In the US, for example, there are multimillion-dollar technology start-ups in roughly 80% of US states.
Our corporate and capital gains tax rates are internationally competitive. And we’re known around the world for our agile approach to regulation, which acts, where needed, to address concerns about large, dominant players, while backing innovation.
You can see that in our approach to financial regulation, where we’ve pioneered the regulatory sandbox, Open Banking, and now, an innovative framework for crypto and blockchain.
According to April figures from the Open Banking Implementation Entity (OBIE), half of the UK’s small businesses and over five and a half million consumers now use Open Banking enabled technology and services. That’s roughly one-fifth of the world’s Open Banking customers.
Stagflation and innovation
The UK is also home to “four of the world’s top 20 universities”, Sunak added. This isn’t true: it’s actually home to five; four are in the top 10: Oxford, ranked #2 behind MIT, Cambridge (#4), Imperial College London (#7), and UCL (equal #8). The fifth is the University of Edinburgh at #16, according to 2022 figures from Top Universities. Hopefully, Sunak will correct his statement to avoid angering the Scots.
Then Sunak struck a more serious note and said:
Perhaps the biggest question we face right now is where our future growth is going to come from.
The answer is innovation. Just look at our history. Over the last 50 years, innovation broadly defined and created around half of the UK’s productivity growth. But since the financial crisis, like many countries around the world, our rate of innovation does seem to have slowed. But I am confident that we can turn that round.
This was disingenuous in the extreme. Sunak can hardly claim innovation has slumped – with the implication that growth has followed suit – when he has just praised record investment, unicorns, and a start-up and technology culture second only to the US and China.
Stagflation is with us, and UK growth has certainly slowed in 2022. In May, the Bank of England forecast 0.1% growth in the second half of this year – the lowest in the G7. Many economists now believe that figure to be optimistic and that the UK is at high risk of falling into recession. The latest figures reveal that the economy contracted by 0.3% in April.
Aside from the cumulative impact of the pandemic, the dominant reason is clear to many: thinktank the Centre for European Reform, for example, has calculated that Brexit is “largely to blame” for a 5.2% shortfall in UK GDP (£31 billion/$37.7 billion). Whether or not this is true, it is absurd for the Chancellor to imply that a lack of innovation is pulling down the UK economy.
Another reason for falling growth and flatlining productivity is likely to be poor adoption of new technology, rather than a lack of innovation itself. For example, reports from the International Federation of Robotics (IFR.org) regularly show that UK adoption of robotics and automation in factories and other settings is among the lowest in the developed world. By contrast, South Korea has by far the world’s highest robot density, and yet has low human unemployment figures – roughly the same as the UK’s, in fact.
Nonetheless, Sunak added that the government plans to increase its own investment in R&D by almost 50%, putting Britain above Germany, France, Israel, Canada, Japan, and the US. Good news, and long overdue.
The Chancellor also formally announced The Future of Compute Review, an in-depth investigation of the UK’s high-performance computing needs, trailed in his Spring Statement.
It will be led by leading AI researcher, Zoubin Ghahramani, Professor of Information Engineering at the University of Cambridge and Vice President of Research at Google AI and Director of Google Brain.
Professor Ghahramani explained:
Advanced compute is fundamental to the UK’s national interest. This review will deliver a long-term plan for UK compute, enabling government, business, and academia to remain at the forefront of innovation and be prepared to fight the biggest challenges of this century.
Also launched at London Tech Week was a new strategy for using data to reshape health and social care.
The document aims to provide an “overarching narrative and action plan to address the current cultural, behavioural and structural barriers in the system, with the ultimate goal of having a health and care system that is underpinned by high-quality and readily available data”, according to an announcement from the government.
Meanwhile, Secretary of State for Digital, Culture, Media and Sport (DCMS), Nadine Dorries, arrived in an autonomous vehicle to launch the UK’s latest digital strategy at London Tech Week, hailing the UK as a “global tech superpower”. On 10 June, Dorries tweeted: "We cannot allow technology to distort democracy and compromise our free and fair society".
As always, the UK has much to celebrate when it comes to technology innovation, expertise, skill, and entrepreneurship. In many ways our imaginative, ambitious innovators are succeeding in spite of the prevailing economic climate, and not because of it.
What the British Government now needs to do is start being honest about where other problems lie. Innovation can help – of course it can – but honesty about the UK’s economic self-harm, which has increased costs and bureaucracy for thousands of businesses, needs to come first.