ALEX BRUMMER: Britain squanders its tech

Britain has the ingredients – including world-class research universities, a robust venture capital sector and fast improving training – to be a global leader in tech.

Yet the resulting mix never quite delivers in terms of growth.

The Government trumpets the UK’s triumph in creating the number three high tech sector on the planet behind the US and China with a combined value of £820billion and a record number of 144 ‘unicorns’ (firms worth at least $1billion). 

Tech sell-offs: The government trumpets the UK’s triumph in creating a record number of 144 ‘unicorns’ (firms worth $1bn). But the country has trouble taking them to the next stage

But the UK has trouble taking them to the next stage.

Israel too is brilliant at developing new tech and has been dubbed the ‘start-up’ nation. 

But with a population of just 8m and a tricky neighbourhood, it is not surprising that world class tech, such as navigation app Waze, ends up in Silicon Valley.

The UK has no such excuses. Arm was sold to Japanese investor Softbank. Fintech champion Worldpay (which began life at NatWest) is, after several multi-billion deals, part of US financial conglomerate Fidelity National. 

Satellite pioneer Inmarsat is set to be swallowed by US rival Viasat and Cambridge industrial software firm Aveva has been bought by France’s Schneider. 

Vodafone, pioneer in mobile telephony, is a global minnow. In spite of all Britain’s tech excellence, there is a lamentable failure to follow the tremendous example of the UK’s big pharma sector or create anything near a Silicon Valley giant.

Recent work by McKinsey suggests British firms are slow to adopt AI and digital technologies which could provide a productivity boost that would lift growth and real rewards for the workforce. 

At the core of the current Royal Mail and rail disputes is a Luddite response to industrial change.

Yet, as is evident from the new Elizabeth Line, when the latest software and electronics are embraced it can transform customer experience and outputs.

Bravo to the unicorns for creative thinking and innovation driving UK tech. Sadly, too much of the intellectual property escapes the nation’s grasp.

Due process

When Kwasi Kwarteng delivered his disastrous mini-Budget in September, all hell broke loose. 

The criticism from the political claque, the IMF and markets was that the then chancellor failed to submit his unfunded proposals to scrutiny by the independent Office for Budget Responsibility. Due process was not observed.

Wage deals in the public sector are governed by a similar independent process from the Pay Review Bodies.

The Institute for Government (IFG) describes them as non-department public boards that gather evidence and provide government with advice each year on rewards for public sector colleagues.

There is no requirement that ministers have to accept the advice, any more than OBR forecasts. This year, as the IFG points out, the Government accepted many of the recommendations, ranging from the Armed Forces to the NHS.

Admittedly, when the proposals were made, inflation was on the rise but had not reached double digits. 

The uplift of £1,400 for NHS staff on ‘agenda for change’ contracts, together with backdated rises of 4 per cent, might be considered mean. 

But that should not have been a green light for nurses or ambulance staff to take to the picket lines and potentially put lives in danger. 

The place for settling disputes is the arbitration body Acas. Demands by RCN leader Pat Cullen to ‘sit down’ with Rishi Sunak are out of order.

Public sympathy for nurses and ambulance crews (unlike railway workers) is a given. Bypassing due process is a recipe for chaos and political disorder, as Kwarteng and Liz Truss discovered. 

Unfunded wage deals, if not accompanied by productivity gains, raise borrowing and could lead to higher taxes and interest rates.

Setting sun

They do things differently in Japan, the land of negative interest rates and a debt to GDP ratio of 266 per cent (against the UK’s 90 per cent).

In a month when other major central banks raised short term rates by half-a-percentage point, departing Bank of Japan governor Haruhiko Kuroda increased the yield target on the ten-year bond from 0.25 per cent to 0.5 per cent. 

The move sent a shiver through the bond markets and the yen perked up.

The change will improve returns for banks and insurers and boost the currency. It is the lightest of touches on the tiller for a country which has lived with negative interest rates for six years. Sayonara.

This post first appeared on Dailymail.co.uk