Mike Lynch on the UK’s post-Brexit opportunity in tech

With Brexit done, the COVID-19 vaccine being rolled out and the country playing host to the G7 Summit and COP26; 2021 marks the beginning of a new era for the UK.

If we are to succeed, this must be an era of technology and of innovation. All the signs suggest that the government understands this, and that the UK’s tech sector will be at the heart of its strategic vision for the future. Indeed, the Prime Minister stated as much when he unveiled the ‘New Deal for Britain’ in June last year, describing it as a critical imperative for the UK to become a science superpower.

I wholeheartedly agree with Mr Johnson’s sentiment. He is right to say that, ‘in the next 100 years the most successful societies will be the most innovative societies’. As we all know, we  are currently in the midst of the Fourth Industrial Revolution in which artificial intelligence, machine learning and the Holy Grail of quantum computing are radically changing the way we live and work, improving efficiency and encouraging innovation on a massive scale. Alongside these profound advancements in fundamental technology, we have seen significant shifts in the economic and geopolitical landscape, with the pandemic accelerating global trends that are changing the dynamics of power competition.

The game changing technologies developed in recent decades are now playing an ever more critical geopolitical role in what is an increasingly fragmented world. They are strategic assets, deployed by nation states as a means of asserting their Sovereignty. With Britain stepping into the unknown post- Brexit, it is more important than ever that our tech is leading the way.

We’re undoubtedly well-positioned to succeed. We have some of the finest science-academic institutions in the world, an outstanding tech base and our R&D is second to none. As someone who has built a billion-dollar tech company, I can tell you that you don’t go searching for fundamental tech innovators in Silicon Valley or Shenzhen. You come here, to the UK. Despite all this, our tech market remains disproportionately small, with only one 40-year-old technology company in the FTSE 100 – a poor reflection of the tech-driven economy we are striving to achieve. 

So how can the government deliver on its vision for the UK to become a science superpower? How can we ensure the year ahead heralds the beginning of a new dawn for the UK’s tech sector? And perhaps most crucially, what indicators should we look for in 2021 to ensure we’re on the right track?

First off, it is critically important that we seek to protect tech assets that are of national strategic importance. It is essential that uniform and frictionless mechanisms are mandated to protect and propel British conceived, developed and owned Intellectual Property from the lab to the global marketplace.

For too long British tech companies have been at the mercy of foreign capital. When they reach $300-400 million in value they are often snapped up and whisked overseas never to grace our shores or our exchequer again. Almost all of them, along with their people and innovations, have drawn heavily on the British taxpayer in development. Few reach maturity here in Britain to pay a proper return on that investment. The UK listing environment must adapt to the needs of fast-growing new economy companies. I am hopeful that Lord Hill’s review on listings, which is due in early 2021, will under line this and inject some urgency. These changes need to happen now. A couple of years down the line will be too late.

We must throw up a bulwark around our key technological assets with the same rigour as we do our critical national security and intelligence infrastructure – as our transatlantic and European partners are already doing.  We need our own version of protective powers in place as represented by the Committee on Foreign Investment in the United States (CFIUS). The second reading of the National Security and Investment Bill in December last year is an encouraging first step in this regard. Now we must ensure we don’t lose momentum.

In tandem, the government must also look to update and reform the regulatory markets, gearing them towards actively fostering investment opportunities, specifically with regards to new technologies. For example, regulation around insurance asset classes has to be shaken-up to enable rather than stymie innovations, from autonomous vehicles right through to quantum computing.

We should not be afraid of regulatory intervention. Indeed, if done correctly, it will help drive greater competition and foster innovation in Big Tech. The Competition and Markets Authority’s new pro-competition regime for digital markets, which will endeavour to place limits of the power of the tech giants through a legally binding code of conduct, pro-competitive interventions and enhanced merger rules, is a good example. But the Digital Markets Unit, the entity that has been proposed to implement this regulation, will only be effective if it is imbued with the necessary powers by parliament – an outcome that must be delivered sooner rather than later.

Post-Brexit, we have the freedom to move faster and go further in developing regulatory frameworks that allow fundamental technologies to flourish commercially in the UK. If these are at the heart of the government’s agenda for 2021, I have no doubt the UK will fulfil its goal of becoming a science superpower.