It has become a tired trope among politicians to trumpet their ambitions to turn their city, region or country into the next Silicon Valley. The world is littered with failed, and futile, attempts to replicate the magic mix of entrepreneurial dynamism, financial adventurism and university- and government-led research brain power that has made Silicon Valley the world’s most dynamic innovation hotspot. Besides, it is not even clear that Silicon Valley still possesses the allure it once had thanks to the sharp markdowns of tech markets, the societal failings of Big Tech and the financial disasters of the crypto bros.
None of these considerations, however, stopped the UK’s chancellor Jeremy Hunt from proclaiming in his Autumn Statementthat he wanted Britain to become the next Silicon Valley. If by that, he simply meant he wanted Britain to become a more innovative and productive economy, then few would question his intent. It is now incumbent on him, and the rest of the government, to match their breezy rhetoric with focused action. Britain has a good story to tell about innovative tech start-ups. But there are at least four areas in which the government could help build on that success.
Almost every tech company in Britain is, first of all, screaming out for more skilled employees. But the country’s outmoded education system is not providing enough of them. As a report from the ScaleUp Institute highlighted this year, schools are failing to put enough resources into computer science. The number of computing teachers in England fell 17 per cent to 12,719 between 2013 and 2021. More than twice as many undergraduates study literae humaniores at Oxford university as computer science.
Companies often make up the talent shortfall by hiring tech workers from abroad. Skilled immigrants have made an enormous contribution to British enterprise and the government should make clear that it welcomes them. But some ministers have been doing their best to deter students and entrepreneurs by fuelling rancorous anti-immigration talk. According to the latest Gallup survey, Britain has now fallen to seventh in the rankings of desirable destinations, having consistently been second to the US in earlier polls.
Third, the government has made a big rhetorical commitment to turning Britain into a science superpower, promising to increase R&D spending to 2.4 per cent of gross domestic product. But that is the bare minimum needed to compete in the global economy. It still falls far short of countries such as Israel, South Korea and the US. Permanent exclusion from the EU’s €95bn Horizon research programme would devastate many UK-based science projects. And biotech start-ups are fuming that Hunt is scaling back R&D tax credits to smaller businesses.
The government needs to do more, finally, to incentivise growth capital to help scale promising start-ups. Over the past two decades, Britain has built Europe’s most vibrant venture capital industry but still lacks the financial firepower to turn national champions into global companies. Its bond-loving institutional funds should be encouraged to copy their Canadian counterparts and invest more in alternative equity assets.
For several years, France’s president Emmanuel Macron has been championing his country’s tech sector, providing far stiffer competition for the UK. Paris recently seized London’s crown as Europe’s most valuable stock market. That rivalry should provide further stimulus for Britain to double down on the successes of its own tech sector. The UK will never build another Silicon Valley. But it could yet produce its own powerful economic mix of research, technology, finance and creativity.