The UK Digital Strategy policy paper was published on 13 June 2022. It reconfirms the government’s intent to make the UK the best place in the world to start and grow a technology business and it seeks to outline this vision and the actions required to deliver it.
The hope is that the digital economy could grow the UK tech sector’s annual gross value added by an additional £41.5 billion by 2025, and create a further 678,000 jobs.
The key things that I noted from this policy paper were:-
The UK is attracting private capital
It is stated that £27.4bn private capital flowed into UK tech last year. This is a hugely impressive number and represents double the amount of the next best-placed territory, Germany. The aim is for more of this capital to lead to IPOs.
Enhanced tax incentives for R&D regarded as a key tool
As announced in the 2022 Spring statement the government has recognised that the Research and Development Expenditure Credit (RDEC) scheme generates more additional private R&D expenditure than the SME scheme. This should be seen as an opportunity to improve both schemes. Everyone wants to make sure that tax relief is effectively targeted and it’s hoped that this will see the RDEC rates boosted in the Autumn. This would certainly be a way to further stimulate private sector investment in UK R&D.
How is the government encouraging business investment in IP?
There wasn’t too much that was new or specific when it comes to IP. We would hope that there may be more to come that recognises the potential of IP to the UK economy generally and the digital sector in particular. We are seeing recognition of this in, for example, the digital chapter in trade agreements will cover IP and source code.
What are the mechanisms for funding and promoting innovation in the digital economy?
There is a renewed commitment to UKRI. Also the launch of a new fund structure – Long Term Asset Fund – which are broadly to be welcomed.
Delivering on rhetoric
The policy continued to speak to the current government agenda around leveling up and the UK’s skill gap. But it was much lighter on policy and action that would address these issues. We need to see some concrete action in these areas if the digital opportunity is to be grasped and delivered.
For example, we would agree on the need to improve commercialisation from Universities, we talk about this extensively in our University spinout report. But it feels like it’s time to move beyond the statement of intent and towards delivery.
As Chris Philp MP, Minister for Tech and the Digital Economy, says “The UK’s economic future, jobs, wage levels, prosperity, national security, cost of living, productivity, ability to compete globally and our geopolitical standing in the world are all reliant on continued and growing success in digital technology.” That being the case there isn’t a moment to lose.
Directionally, this is a welcome strategy but I fear that once again the power of intellectual property has been overlooked. We may make great strides on R&D investment and attracting great talent should this strategy work then slip back into what we are famous for, we create it then give it away.