The House of Lords Communications and Digital Committee has raised a red flag about the future of the UK tech scene. Their latest report warns that the UK could turn into an “incubator economy” if it doesn’t do more to support tech startups.
The report is packed with insights from industry experts who stress a critical point: if the UK wants to compete with countries like the US, it needs to create a better environment for scaleup businesses. Barney Hussey-Yeo, the founder and CEO of Cleo AI, shared his concerns about the UK’s struggle to scale startups. He pointed out that it’s tough to list these companies and recognize their tech value, calling the UK “a terrible place to scale and list a business.”
Nick Poole, CEO of the video games body Ukie, echoed these feelings, stating that the UK rates poorly among the G7 when it comes to scaling games companies. The CBI also weighed in, warning that the UK must nurture scaleups and create the right setting for them to thrive. Without that, it risks stunted growth and less prosperity.
Further, the British Venture Capital and Private Equity Association pointed out that when companies move abroad, the UK loses out on vital opportunities—taking intellectual property and quality jobs with them. Oxford Science Enterprises added that unless immediate action is taken, the benefits of the unicorns we’re cultivating will trickle away to other countries, mainly the US.
The report criticizes the government’s approach as a series of “piecemeal” initiatives that fail to provide a clear route to funding for scaleups. The authors described the support system as a confusing “spaghetti” of well-meaning schemes, including financial reforms and tax incentives, which only adds more hurdles for businesses trying to grow.
Tina Stowell, chair of the committee, acknowledged that the government’s new AI opportunities action plan is a step in the right direction. However, she stressed that just having a plan won’t cut it. Actually driving change is essential to tackle barriers like limited infrastructure and low tech adoption. The creative tech sector also needs more focus, as it has immense potential for growth.
Stowell insisted that it’s crucial to simplify the array of support options available for scaleups. The current landscape is so complex that companies often need to hire consultants just to navigate it. The committee is urging the government to unite its industrial strategy and streamline public support for innovation. They recommend a commitment to effective AI implementation and a push for financial reform to facilitate growth.