The UK’s Council for Science and Technology (CST) has written to the UK government’s Chancellor setting out five approaches to unlocking investment at scale, in both the private and public markets, that could accelerate the UK’s ambition to be a clean energy superpower and support the digital transformation of critical public services.
The letter, written by CST co-chairs Dame Angela McLean and Lord Browne of Madingley said that further action is needed to unlock the UK’s £4.6 trillion private and public insurance and pension fund assets. “This is critical to help address some of the scale up challenges that our innovative companies continue to face in becoming global champions,” they said.
The group said its advice to the government on how to unlock domestic capital, procurement and skills influenced the Long-term Investment for Technology and Science (LIFTS) scheme, the Science and Technology Venture Capital Fellowship, and government engagement with corporate investors.
Citing evidence provided by stakeholders, convened by the CST, from across the UK’s institutional investor sector, the letter sets out five suggestions:
• The Treasury and other department should accelerate efforts to support pension fund reforms to create more immediate options for scale-up capital.
• The Treasury should improve the connection between private and public markets to increase access to capital for innovative businesses and raise greater awareness of the diversity of options available to both investors and entrepreneurs across private market asset classes.
• The Department for Science, Innovation and Technology (DSIT) should work with other departments to support the development of specialist skills and to attract world-class international talent in capital allocation, procurement, operational management and policy making.
• DSIT and Cabinet Office should help create the critical national infrastructure needed to support the digital transformation of public services with the intelligent use of data and AI. This should include developing the specialist skills required across the public sector to procure relevant products and services to support innovation.
• Government should build awareness of investment opportunities and help unlock institutional finance.
For example, the group noted that the British Business Bank (BBB) has extended its activity at the scale-up stage through British Patient Capital and has made steps to crowd-in domestic scale up capital through the LIFT scheme. They said the BBB’s financial scale should now be increased to help drive the government’s growth mission and the proposed growth fund of funds should be launched as soon as possible.
The letter also notes that the UK is among the leading global locations for investment in innovation, adding: “Relative to our European neighbours, the UK has a leading position, with over 750 venture backed companies across the UK who have each scaled to generate more than $25 million in revenue."
It added: "This growing pipeline of innovative scale up companies has been built on the foundations of our broad and deep research and development (R&D) system; world-class scientific, engineering and technical talent; and an increasingly mature and successful venture capital sector."
Highlighting the Industrial Strategy consultation and the opportunity to create a coordinated approach for developing an investment plan, the group called for the Industrial Strategy and the Growth Mission Board to look to align government departments around one growth goal. This, the signatories said, would provide an opportunity for one government department to lead the coordination of a sustained and consistent convening programme, that includes not just key stakeholders in the regions and devolved administrations, but also citizens and savers.
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