Labour unveils plans to make UK global startup hub

The Labour Party has outlined tentative plans to “make Britain the high-growth, startup hub of the world”, with a deal with widening entry to capital and revamping the present tax reduction system for each entrepreneurs and buyers.

Published on 8 December, the Start-up, scale-up report – primarily based on intensive written proof from trade figures and conversations with greater than 120 roundtable contributors – has produced plenty of coverage suggestions for a way Labour can meet its ambition of constructing Britain the very best place to begin and develop a enterprise.

“We are at a post-Brexit crossroads,” stated shadow chancellor Rachel Reeves within the foreword, who commissioned the report in June. “We can proceed down the street of managed decline, falling behind our rivals, or we will draw on daring considering to propel us ahead.

“We can cling to the old ways, or we can apply ourselves with creativity, determination and common sense to shaping our future outside the European Union, while improving our trading relationships, including with our nearest neighbours. That calls for fresh thinking about regulation and planning, access to finance and strategic partnership with industry, so that we lead the way.”

Key suggestions embody: unlocking institutional funding and affected person capital by, for instance, utilizing pension funds to put money into high-growth corporations; reworking the British Business Bank (BBB) via higher operational independence; and additional reviewing how to make public procurement simpler for startups.

Regarding the tax system and the accessibility of public fairness markets, the report additional recommends that Labour commit to sustaining the incentives offered by the Seed Enterprise Investment Scheme (SEIS), the Enterprise Investment Scheme (EIS) and enterprise capital trusts (VCTs), whereas additionally reviewing whether or not the scope and scale of SEIS and EIS are ample.

The report suggests the UK ought to take a look at France’s Tibi funding scheme for inspiration, which makes use of the convening energy of presidency to deliver collectively non-public sector buyers to help high-growth corporations.

It provides that Labour must also preserve and construct on the analysis and improvement (R&D) tax credit score system and modernise the enterprise charges system in order that small, pre-profit corporations are usually not unduly burdened.

However, the precise particulars of what number of of those coverage suggestions would work are usually not clear, with the report saying that Labour ought to conduct additional critiques into plenty of areas, such because the efficiency of fairness markets, various tax schemes and alternatives for buyers, earlier than forming concrete insurance policies.

The report additionally notes that UK startups are disproportionately concentrated in London, which may be remedied partially by fostering clusters of startup exercise to assist increase innovation and development in different areas.

In June 2022, figures printed by Dealroom confirmed that UK tech startups and scaleups secured £12.4bn in enterprise capital (VC) funding within the first six months of the yr, however £8.6bn went to London-based startups.

By comparability, the subsequent two largest tech funding hubs within the UK had been Bristol and Oxford, which raised £220m and £248m, respectively.

“One key way of anchoring the development of such clusters is around universities,” stated the startup overview, declaring that that is beginning to occur with the Northern Gritstone alliance of Leeds, Manchester and Sheffield universities.

“Respondents noted that universities can play an important role as a finance hub for innovative firms and investors, even beyond their direct role in spawning startups,” it stated. “It was also noted that this role could be amplified where universities nearby to each other work together, sharing their networks and expertise.”

But it stated clusters of revolutionary corporations depend on a partnership between enterprise and authorities to achieve success, including: “Several respondents famous the dearth of regional authorities within the UK relative to comparable nations.

“Respondents suggested this can make it harder for policy-makers to tap into the unique strengths of different communities, or identify and overcome local barriers to growth.”

Speaking to Computer Weekly in October 2022, two VC fund managers stated the long run success of the UK’s tech sector is determined by its skill to type stronger regional ecosystems.

The report was authored by tech entrepreneur Tom Adeyoola, co-founder of Extend Ventures;  Julie Devonshire, director of the Entrepreneurship Institute at King’s College London; Lord Jim O’Neill, cross-bench peer and non-executive chairman of Northern Gritstone; and Alex Depledge, CEO and co-founder of Resi, the UK’s largest house enchancment platform.

They wrote within the report’s conclusion: “We want to do extra to make sure that this potential is totally realised. It isn’t any secret that the UK can do higher at unlocking institutional capital for funding in high-growth corporations, and this overview incorporates a set of suggestions aimed toward doing so.

“Similarly, there can be no doubt that we are not currently making the most of the talents of founders and innovators outside of London, nor of women founders or those from ethnic minorities. Addressing these shortcomings is another focus of the recommendations set out in this review. Closely linked to this are the recommendations that aim at making more of our university research, because doing so can drive forward self-sustaining economic development across the whole of the UK.”

They added: “We hope that the Labour Party takes forward these recommendations in full, and believe that doing so will help ensure that a future Labour government can achieve its stated mission to improve economic growth, increase productivity and, ultimately, raise living standards in every part of the UK.”