Voters head to the polls in the UK general election today, with Labour widely tipped for a landslide victory after 14 years of Conservative rule.
But whoever leads in Westminster, UK businesses are crying out for stability – and that means taking decisive action to support them and the wider economy.
Key figures from tech companies and the startup/scaleup support ecosystem have told us what they hope to see from the next administration.
Growth funding
VenturePath – the UK’s scaleup investment community – is recommending targeted intervention from the new government in late 2024.
In an open letter signed by the likes of techUK, Beauhurst and Barclays – and BusinessCloud – it highlighted the technology sector’s role as a leveller across regions aiding productivity while creating jobs, wealth and tax.
However in 2023 less than 300 startups accessed venture capital funding in a Series A round – the first institutional investment.
“This lack of pipeline will stifle the UK’s ambition to be a global scaleup superpower,” it stated. “We are falling behind, as the world catches up with our lead.
“To remain globally competitive, the UK needs to better support these high potential scaleups and address the lack of access to growth funding to drastically increase the progression of UK tech startups to the scaleup phase. We need to create more venture-backed UK tech successes.”
The letter was signed by ecosystem partners, trade bodies, VCs, exited entrepreneurs, VC-backed founders and business support organisations.
“To remain globally competitive the UK needs to better support these potential scaleups and their high potential entrepreneurs. The new Government has the opportunity to make immediate gains here,” it continued.
“Investment success to scale up is a process. It’s learnable (and teachable). It’s repeatable. It’s proven by others who have gone before. We have reverse-engineered this path through venture to scaleup success.
“We must surface, select and support scaleups from across the UK, including those founded by under-represented groups. We can help VCs find and fund them faster and then celebrate UK scaleup success.”
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Data & privacy
techUK also joined the Data & Marketing Association to write to all political parties urging the next government to recommit to introducing critical data protection measures for UK businesses that were set to reform GDPR before the dissolution of Parliament.
In their open letter, signed by leading associations, think tanks and industry representatives, they urged the next government to reintroduce widely supported changes to UK data protection regulation.
Signing off the letter were Julian David, CEO at techUK; Chris Combemale, CEO at the Data & Marketing Association, and chair of the Business Advisory Group; Stephen Woodford, CEO of the Advertising Association; and Bojana Bellamy, president of the Centre for Information Policy Leadership.
“The next government has an opportunity to enact positive reform that strikes the right balance between encouraging innovation for economic and societal growth, while maintaining the high standards of personal data protection needed to build trust in the new digital age, so that the UK retains its adequacy determination with the European Union, which remains of utmost importance to businesses across all sectors,” it stated.
“Building on the momentum to reform the UK’s data regulatory framework is an excellent opportunity to demonstrate the government’s recognition of the importance of a regulatory environment that supports responsible innovation. This will give businesses the confidence to invest in the UK, positioning the country ahead of other jurisdictions.”
It calls for reforms that clarify how data can be better used to support scientific research and technology development in both the public and private sectors; legal certainty around the use of legitimate interests as a lawful basis for processing data; removal of consent requirements for non-intrusive uses of cookies and other identifiers; an updating of the law to enable the beneficial uptake of automated decision-making like AI, while maintaining strong safeguards; a more flexible international data transfers regime that will allow the UK to better manage data flows with other countries; modernisation of the Information Commissioner’s Office, to align its organisational structure with other UK regulators; plus legislation for Smart Data Schemes to be introduced in appropriate sectors, such as finance, transport, energy and home buying.
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Artificial intelligence
The UK hosted the first global artificial intelligence safety summit at Bletchley Park in November 2023 following the rapid rise of generative AIs such as ChatGPT.
Jeff Watkins, chief product and technology officer at CreateFuture, says the early attempt to lead the global debate on the safety issues surrounding fledgling AI tech has since morphed – ironically – into a more libertarian approach.
“The incoming government needs to enshrine a more definitive strategy as to how the UK will harness and regulate AI – a technology it’s played a huge part in pioneering over the years,” he says.
“This is no mean feat. Policymakers will have to balance the needs for private innovation and public safety, and ensure that the UK’s own flavour of AI is palatable for those trading blocks that have taken a more risk-averse legislative approach (see the EU AI Act).
“Given the rapid evolution of the technology, any new government will have one critical job: to ensure that the technology’s benefits can be harnessed for the public good, and not its exploitation.
“Whether we further embrace a sectoral approach to regulating the technology, which is the Conservatives’ preferred choice, or take a more centralised one, it’s imperative that the UK defines its approach and looks to strenuously uphold ethics and public safety.”
Kit Cox, CTO and founder of AI orchestration company Enate, says the lack of candidates with a STEM or technology background is a significant cause of concern.
“While our politicians often get where they are with great communication and persuasion skills, we need them to make informed decisions on regulating AI and ensuring its safety to ensure we can navigate what’s to come,” he explains.
“AI is poised to have a substantial economic impact in the next parliamentary term (barring widespread conflict). During this crucial period, a broader range of expertise, beyond just PPE graduates and lawyers, is essential to guide the country effectively.”
Watkins adds: “Long-term, sustainable growth won’t be achievable unless we rethink and invest in an educational system that is fit for purpose and more joined up with the present and future needs of industry.”
“As a priority, the new government needs to look carefully at how the current education system can be reshaped to provide many more individuals with the digital literacy, specialist tech and critical thinking skills that are needed to fill an ever-widening national skills gap.
“Incentivising collaboration between the academic, public and private sectors should also be a firm priority, whilst looking to dovetail educational and industrial strategies at key intersections.”
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Europe
Should Keir Starmer take over the premiership from Rishi Sunak, it seems that the UK will not seek a closer relationship with Brussels.
The Labour leader, who campaigned for Remain during the Brexit referendum – called by former Tory Prime Minister David Cameron – has insisted the UK will not rejoin either the European Union, the single market or the customs union within his lifetime.
However the policy small business owners would most like to see introduced by the next government is the easing of trade barriers with the EU, according to a survey from accountants and business advisors Moore UK.
It was closely followed by a cut in VAT then a cut in corporation tax.
Chair Matt Meadows says that many businesses are still struggling with trade barriers which have led to higher costs for those that rely on trade with EU customers, while others have ceased trading with the bloc altogether.
“Small business owners are looking to the next Prime Minister to make major changes to ease the enormous pressures they have faced since the last election,” he adds. “The cost of debt has pushed a lot of smaller businesses far too close to insolvency. A focus on economic growth should now be a priority.”
Tax
VAT was also high on the agenda in a poll run by small business comparison experts at Bionic.
Les Roberts, a business comparison expert, says respondents called for an overhaul of the current tax system.
“The general consensus from business owners was that the current system is overly complicated and isn’t designed to promote SME growth. The main changes the businesses want to see are more done about large corporations using tax loopholes; increasing or abolishing the VAT threshold to promote growth; increasing the tax-free dividend allowance; lowering corporation tax to 10%; removing or lowering National Insurance Contributions for employees; and a scrapping of IR35.
“The last few years have been tough, as we’ve lurched from one crisis to\ the next – Brexit, COVID, high energy prices, soaring inflation – all have taken their toll on Britain’s business population and the economy.
“If politicians really are serious about growing the economy, then improving conditions for these businesses should be at the front of mind when policy decisions are made.
“Giving those businesses the means to thrive and making sure people have enough money to spend on the products and services they provide would be a shot in the arm for the UK’s stagnant economy.”
FinTech
The FinTech industry is of strategic importance to the UK, with both major parties stressing its place in supporting the economy, as outlined in their manifestos.
Labour states that “financial services are one of Britain’s greatest success stories,” and pledged to “create the conditions to support innovation and growth in the sector, supporting new technology, including open banking and open finance and ensuring a pro-innovation regulatory framework”.
Henry Balani, global head of industry and regulatory affairs at Encompass Corporation, hails the party’s promise to create a new Regulatory Innovation Office to bring together existing innovation-related regulatory functions across government.
“This new Office needs to be embraced, to help regulators update regulation, improve approval timelines and coordinate regulatory issues to open up the arena for financial services organisations to safely grow,” he says.
“Innovation is undoubtedly key to economic growth, and this will only increase in significance. AI, in particular, is a priority for FinTech development and must be carefully considered as solutions develop fast.”
The Open Banking regulation introduced in 2018 by the Competition and Markets Authority mandates the UK’s largest banks to make their customer data available to third party providers, primarily FinTech firms, through secure application programming interfaces to create better financial products and services for consumers.
The Open Finance initiative is an extension of the Open Banking framework to include a wider range of financial products including mortgages, insurance products, pensions and investments.
“The overall goal is to create a competitive financial services market in the UK, bolstering the FinTech industry, and also linking back to economic growth aims, which should be paramount across activities,” continues Balani.
“Adequate R&D investment that boosts the sector’s future potential, such as into universities that conduct FinTech research, as well as supporting spinouts and startups, should be encouraged to sustain progress and ensure an industry that allows growth at every stage.
“A pro-collaboration mindset is always important to effectively engage the FinTech community, while continuing to promote innovation across the sector, and this will be key for the incoming government, which must back up ambitions with action in order to unlock the vast potential in front of us.”
DeepTech
DeepTech community TechWorks wants to see collaboration with industry at Cabinet level; capex support and/or R&D tax credits to allow successful chip companies to grow with the markets they serve, as well as strategic funding for these; incentives to strengthen UK supply chains and increase national resilience; and investment in skills.
“The outcome of the general election will significantly influence the direction of the UK’s tech landscape,” says CEO Charles Sturman.
“The UK, like many countries, finds itself in a difficult position today with strained budgets, lower productivity, and a significant trade deficit. However, we continue to demonstrate incredible innovation in science and technology through our universities and startups.
“This innovation can fuel growth and prosperity if we invest now to build productive business and supply chains, securing both our economic future and our national security.”
View from the United States
Conversations about investments in infrastructure, industrial strategies and tax are at the forefront of many of the parties’ economic policies.
Rupal Karia, country leader UK&I at New York-headquartered Celonis, says this is no surprise given continued stagnant growth, diminished living standards and scrutiny around inflation – but some of these suggested policies may also take years to have a genuine impact on the economy.
“The next government needs to channel a more immediate focus on removing inefficiencies within UK businesses, which both the private and public sector are being weighed down by,” he says.
“Process intelligence can make this a reality, providing organisations with data-based methods of generating positive impact at the top, the bottom and the green line.
“Delivering fast growth is tough, but in the meantime businesses can become leaner and more agile, gaining maximum value within their current processes. This allows greater efficiency, increases productivity and accelerates digital transformation – all of which will help the next government in achieving its economic goals.”
James Hall, VP & country manager, UK&I at Snowflake – founded in California and now headquartered in Montana – says investment in tech, particularly around AI, will be paramount to streamline services and enhance citizens’ lives.
“We expect to see chief AI officers hired across government departments, to ensure AI underlines the priorities in all the parties’ manifestos, while a foundational data strategy with governance at its core will help meet AI goals.
“An AI fund can also help promote public-private innovations and enable the commercialisation of data and assets globally through synthetic data.
“Regarding AI regulation, it would be beneficial to establish industry-specific rules, with particular attention paid to sectors like healthcare and pharmaceuticals and their unique needs… there needs to be more robust agreements established on the use of medical data, with internal investment to manage and protect this data.
“A dedicated office to oversee these initiatives would help to ensure that diverse voices are heard in shaping data and AI policies.”
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