The House of Lords Science and Technology Committee has published the report, “Bleeding to Death: The Science and Technology Growth Emergency,” warning the government that the UK’s failure to retain and scale its science and technology companies has now reached a crisis point, causing the UK economy to bleed out.
The Committee has warned that without urgent and radical reform, the government risks acting too late to address long-standing failures to scale, retain the economic benefits of science and technology R&D in the UK.
Lord Mair, Chair of the House of Lords Science and Technology Committee, stated: “The UK has experienced sluggish productivity growth and near-flat real wages since the global financial crisis.
“Its inability to retain more of the economic benefits of its science and technology R&D endeavour is a fatal flaw in any growth strategy.”
He added: “While the issues facing the UK economy are grave, with decisive and speedy action from the Prime Minister and the Chancellor, our Committee believes challenges can be overcome.
“There is enormous potential to seize this moment of technological and geopolitical opportunity and catalyse the growth that the UK badly needs.”
Key conclusions and recommendations of the report
Clearer leadership from the Prime Minister and Chancellor
This would be achieved through a new high-level National Council for Science, Technology and Growth to drive through reforms supporting science and technology growth and the scale-up of UK companies.
Reforms to counterproductive visa policies for global talent
The Committee says a government serious about growth and wealth creation cannot keep in place costly visa barriers to the scientists and entrepreneurs it hopes to attract to the UK.
It says that when talented scientists and entrepreneurs want to move to the country, the UK should be rolling out the red carpet rather than red tape. Nor can it allow the life sciences industry to collapse because of short-term fiscal considerations.
Pension fund investment needs to be increased
The Committee highlights a substantial decline in domestic pension fund investment in the UK over the past few decades as a significant factor contributing to the economic malaise, as it leaves promising science and technology companies starved of capital for scale-up and forced to seek investment overseas.
Further and faster Mansion House Reforms
The Lords Committee strongly supports the Mansion House Reforms and calls for them to go further and faster. It suggests that the government consider mandating, and measures short of mandating, such as clawbacks on tax reliefs, to incentivise pension funds to invest in UK science and technology companies.
Consolidation of defined contribution pension funds, as well as the large number of Local Government pension funds, should be pursued vigorously.
Furthermore, investment in UK-based technology companies should be closely tracked to ensure the reforms are benefiting the sector.
Reforms to public procurement
The Committee recommends reforms to public procurement, including a mandatory target for Departments to spend with innovative UK-based SMEs, emulating the US SBIR Initiative.
Ministers need to empower their officials to take risks on new technologies and provide contracts to companies that can help them grow and establish a presence in the UK.
Scaling public investment bodies
The Committee argues that there is a strong case for consolidating and scaling public investment bodies, including Innovate UK, the British Business Bank (BBB), and the National Wealth Fund (NWF), into a single entity to compete with sovereign wealth funds overseas.
These bodies need to be significantly scaled up and reformed to establish a coherent and effective system for providing the domestic-scale capital and technological due diligence that is currently missing.
Easier movement between industry, academia and government
The Committee states that changes to career structures, pay, and incentives are necessary to facilitate easier movement between academia, business, and government, thereby ensuring that each sector has ready access to the skills and networks of the others.
Seizing the opportunities of science and technology R&D
Overall, the report encourages government and policymakers to seize more of the enormous opportunities for technological and economic growth that are currently slipping through their fingers.
Science, research, and innovation should now stand firmly at the centre of the government’s agenda for renewal.
It would position the UK not only to lead in discovery but to secure prosperity across all regions – making innovation a national mission.
