The UK once led the world in a civilisation-changing Industrial Revolution. Today, the country is in the midst of relative economic stagnation characterised by poor economic growth, stunted GDP per capita growth, and a slowdown in worker productivity.
Despite this economic backdrop, the Government has been keen to portray the UK as home to a world-leading tech sector. Unfortunately, while there is some good news when it comes to the state of tech in the UK, it remains the case that the innovators, researchers, and entrepreneurs are often placed in the position of asking the Government for permission rather than forgiveness.
In my latest Centre for Policy Studies paper ‘Regulating for Growth‘, I argue that the Government should embrace what American technology policy analyst Adam Thierer calls ‘permissionless innovation‘ and engage in a regulatory reform programme that could provide the economic boost the UK so desperately needs.
Fortunately for the UK, it has a number of enviable comparative advantages. These include a disproportionately high number of elite academic institutions, a long-standing and respected legal system and a world-leading finance sector. The so-called ‘Golden Triangle’ of Oxford, Cambridge, and London is home to some of the world’s best academic talent and leading players in AI and life sciences.
Yet there are systemic problems. As American economist Tyler Cowen told attendees of the Centre for Policy Studies’ 2022 Margaret Thatcher Conference on Growth: ‘the problem is [the UK’s] biggest successes come in ideas production, and those are public goods. So, the nation – the United Kingdom – doesn’t actually benefit that much from them’. In addition, the British tech sector is an attractive acquisition target for foreign firms. One startup investor described the UK as a cheap ‘technology sweetie shop‘ for the rest of the world.
There is nothing wrong with American and Asian companies buying British firms or hiring talented British staff, but it should distress a Government that has made turning the UK into a global technology superpower one of its goals. Despite the Government’s rhetoric, a birds-eye view of recent British tech legislation and regulation would reveal an approach dedicated to policing the internet, bullying American technology companies and imposing more regulations on some of the world’s most innovative companies.
A better approach is one that puts regulators in straitjackets and ensures that they are dedicated only to preventing serious crime as well as likely and significant harms to life, limb, national security, the environment and critical infrastructure. Such an approach would be technologically agnostic, allowing for inventors and researchers to test products without needing permission from the Government. These researchers and inventors would be put in the position of asking for forgiveness rather than permission. In addition, the Government could establish a designated regulation minister to oversee more important regulatory changes such as a sunsetting scheme.
The UK is not in a position to compete with many of the world’s technology centres when it comes to size of companies, despite what the Chancellor might think. The United States is in a league of its own, with the market cap of Microsoft alone being hundreds of billions of pounds higher than the market cap of the entire FTSE 100.
However, a UK free from the European Union should be able to craft a regulatory scheme designed to boost innovation and growth by rolling out a red carpet to entrepreneurs, inventors and researchers while also that they play by sensible rules. Politicians and regulators just need to shift their mindsets and allow ideas to flourish.
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