As the nation gears up for its next general election, the UK tech sector is voicing its expectations for the incoming administration.
No matter the size of their company, industry leaders agree on one thing: the next government must take decisive action to ensure the UK remains a global leader in innovation and technology. They are calling for strategies to address a range of issues including tax incentives, post-Brexit challenges and digital skills.
One major focus was on the importance of R&D tax credits in driving innovation. Milan Patel, chief executive of London-listed online marketing company Dotdigital, told City A.M. that “government incentivisation in this bracket needs to be stronger to encourage investment and innovation and ensure the UK stays at the forefront of global technology.”
Patel also advocated for revitalising AIM, the London Stock Exchange’s market for smaller companies, to support the growth of ambitious tech firms and prevent them from being acquired by foreign entities.
He said the AIM market “is currently hamstrung by a lack of liquidity and unreasonably cheap valuations.
“The incoming government needs to be proactive and robust in introducing policy that will steer it back onto a positive trajectory. Without reform, there’s a good chance we’ll continue to see UK tech businesses being taken out by overseas companies and fewer IPOs to replace them,” Patel added.
In many cases, this has already happened. A total of 76 companies delisted from AIM in the last year, up 62 per cent from the 47 delistings in the previous year, research from UHY Hacker Young recently revealed.
In April, London software firm Gresham Technologies was bought out for just under £150m by an American private equity firm.
Like Patel, Gresham boss Ian Manocha warned that the UK’s world leading position in fintech could be “compromised” without favourable corporation tax policies.
Speaking to City A.M., Manocha said post-Brexit challenges are a concern too. “Placing our expertise into our European customer base has never been more difficult post Brexit now we can only have support staff on-site for three months.
“The next government would be wise to review the travel restrictions impacting fintechs that still require physical support on the ground,” he explained.
But Brexit also offers an opportunity to expand the “excellent” Enterprise Investment Scheme (EIS), which has encouraged early-stage investment and entrepreneurial growth, according to Richard Jeffery, chief executive of software company Activeops.
“EU pressure was reducing the scope and availability of the scheme,” he said. “It is a readily accessible way for Brexit to allow greater freedom to expand the scheme and drive investment in UK business.”
Like Patel and Manocha, Jeffery also called for an increase in entrepreneurs’ tax relief to stimulate business creation and drive economic growth.
Matthew Houlihan, senior director at US software firm Cisco, which has two central London offices, said a “major priority” should be continuing to position the UK as a leader in innovation, particularly in emerging technologies like AI and quantum computing.
“It should also be an excellent time to review approaches to essential aspects of the UK’s digitising economy such as digital skills, tech adoption support and approaches to security to ensure that the benefits of digital technologies can be felt by as many people across the country as possible,” he said.
Supporting digital skills development is “a fundamental issue that we need to fix,” especially among young people, agreed Steven Webb, UK chief technology and innovation officer at IT company Capgemini.
“There needs to be a focus on developing the right skills, driving collaboration, inclusivity, and a sense of community within the UK ecosystem.
He also pointed out that many UK tech and AI businesses say they find more collaboration opportunities abroad, particularly in places like San Francisco, than within the UK.
“With more peer networks, and access to mentors and investment, we will see much more home-grown innovation.”
Several entrepreneurs recently told City A.M. they would like to see increased government incentives and initiatives to foster a more diverse and inclusive tech ecosystem.
Erika Brodnock MBE, co-founder of coaching platform Kinhub, said the “number one” thing she is seeking from party manifestos are policies designed to boost the funding of female and diverse founders.