‘Too often it’s a case of UK begins, other countries cash in. That has to change. The UK has some great advantages when it comes to AI and creative tech’
The UK is in danger of becoming an “incubator economy”, where tech start-ups flourish only to be sold or relocated overseas, according to a warning from a House of Lords committee.
The Government has been urged to take immediate action to nurture innovative UK firms, including AI and creative tech start-ups, and assist them in their growth, as per a new report from the Lords Communications and Digital Committee.
Despite the Prime Minister’s ambition for the UK and London to be the “best place in the world to start and scale an AI business”, the Lords committee cautioned that businesses face substantial hurdles that hinder their expansion. These obstacles include restricted access to capital compared to other nations, difficulties in hiring sought-after tech talent, and a business and investment culture that can often be overly risk-averse, the report noted.
Released on Monday, the report warned: “The consequences of failure are significant. The UK risks being an ‘incubator economy’ for other nations, as innovative British technology firms pursue greater growth potential in other markets or seek acquisition by foreign companies.”
The report further cautioned that if this trend continues, it could result in diminished global competitiveness, weaker economic prospects, and a ‘brain drain’ of talented individuals at a time when technology is rapidly advancing.
The committee has issued a clarion call for the Government to “do better by doing less” advocating for a streamlining of the current cluttered array of initiatives aimed at aiding businesses, rather than piling on new ones. According to their report, this bewildering labyrinth of schemes might be more of an obstacle than an aid to innovation in certain domains.
Baroness Stowell, the chair of the House of Lords Communications and Digital Committee, minced no words: “Too often it’s a case of UK begins, other countries cash in. That has to change. The UK has some great advantages when it comes to AI and creative tech; a strong university sector undertaking ground-breaking research and generating commercial spin-outs, and a proud tradition of world-leading creative industries.
“These sectors have the potential to deliver the fast-paced economic growth the Government wants to achieve. But we have a real problem turning start-ups into scale-ups. Every UK unicorn that gallops overseas to list, or sells out to foreign investors, is a blow to UK PLC and our aspirations for growth.”
The report offers key strategic advice to the Government to support scale-ups effectively. It calls for the industrial strategy to present a “coherent, cross-sector vision” that aids technology scale-ups in stimulating economic progress, advocates the release of domestic growth capital, and encourages a conducive entrepreneurial environment that inspires founders to remain and expand their ventures within the UK.
Other suggestions put forward include maintaining investment in the creative industries and addressing obstacles hindering growth for UK AI companies.