UK parliament probes the gap between innovation and exploitation

An inability to translate research results into innovative new businesses is a truly pan-European disease. 

The European Commission is trying to heal the EU with a new start-up and scale-up strategy, among other initiatives, while in the UK, the House of Lords (the parliament’s unelected upper chamber) is running an inquiry into the financing and scaling of UK science and technology.

“Our inquiry is aiming to investigate whether the UK has the right strategy to ensure that our brightest scientific ideas and technologies can scale and benefit the UK’s economy and public services,” said committee chair Robert Mair, launching the inquiry.

“We want to explore international comparisons and the policy levers that the government has at its disposal to try to fix the longstanding challenge of scaling technologies and companies here,” Mair said.

After a period gathering written evidence, the committee is now hearing evidence in person. On June 3, it convened a group of high-profile figures from the world of finance and industry, only to be told that the problem was money.

“The UK is not short of innovation, but short of capital,” said Jonathan Symonds, chairman of pharmaceutical giant GSK and a member of the government’s Capital Markets Industry Taskforce.

Saul Klein, managing partner with venture capital firm Phoenix Court and a member of the prime minister’s Council for Science and Technology, had a slightly different diagnosis: the money is there, but not the will.

“We have three trillion pounds in assets, and we are choosing not to invest them in the UK’s innovation economy,” he said.

Ian Merricks, founder of start-up accelerator VenturePath, agreed. “The capital is there, but companies are struggling to access it,” he said.

The UK government has spent decades trying to solve this problem, most recently with this year’s Mansion House Compact 2.0, which aims to unlock pension funds as a domestic source of growth capital. But so far, the flow of investment has not substantially increased.

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Irene Graham of the ScaleUp Institute, a non-profit backed by industry and the government, said access to skilled human resources is a further problem. But, government attempts at solving this, including through the introduction of a scale-up visa, have been largely ineffective.

The visa allows people to come to the UK to work for a fast-growing UK business, but hasn’t had the success the government had hoped for. 

“People are not aware [of it], so we need to increase awareness,” Graham said. “We also need to make sure it is designed for what it was meant to do, which is speed up the process, and it is not necessarily speeding up the process yet.”

A third area of concern is regulatory hurdles. According to Symmonds, the UK’s Capital Markets Industry Taskforce, which was established in 2022, has simplified the requirements that companies must meet to have their shares traded on a stock exchange. 

Fears of bureaucracy and overregulation in the UK have eased, but unless domestic markets begin to value start-ups more effectively, the "markets will always be more attractive in the US,” Symmonds said.