Report on UK tech cites testimony from Cambridge Judge

“The ‘failure to scale’ for UK technology companies is not new,” says the report published on 5 November. “It has been a deep-rooted problem. But we are in a new technological and geopolitical context, with the rise of AI and the fracturing of the old global order. Technological sovereignty – who owns and operates critical technologies – is more important than ever.

“The UK has seen a procession of promising science and technology companies moving overseas rather than scaling here. The UK’s inability to retain the economic benefits of its R&D (research and development) endeavour is a fatal flaw in any growth strategy,” the report says. “The UK risks becoming an ‘incubator economy’ whose young, fast-growing companies continually move abroad, taking much of the economic benefit in jobs and tax receipts with them.”

Sell less of the family silver report cited

Among interventions by David cited in the House of Lords report is a recent study (‘Selling less of the family silver’) by David and University of Cambridge Professor of Corporate Law and Governance Bobby Reddy, which argues in favour of revenue-backed rather than venture-backed companies in the UK. Such firms “often retain a greater level of founder control, and have ‘anchor customers’ domestically, which give the company significant repeat business in the UK and can therefore help retain these companies domestically”.

David also told the Lords that dual-class shares would be a way for UK founders to prevent the sale of their companies to foreign owners. He also proposed a rebalancing of overall government start-up and growth funding, drawing on lessons from the US and EU, arguing that programmes which provide contracts for R&D are far more appropriate for supporting start-ups than venture capital investment alone as it allows founders to retain greater control and build a significant UK business during the scale-up stage.

Failed policy over many governments

In his written evidence, David said there had been “25 years of bodged policy making” despite the personal commitments of successive Prime Ministers and Chancellors of the Exchequer. “In my view, the government machine lacks both the data and, for want of a better word, a brain to oversee the entire policy portfolio, do the analysis, explore options and monitor outcomes.”