Legislate To Innovate: Sustaining The UK As An Innovation Economy After Brexit

Legislate To Innovate: Sustaining The UK As An Innovation Economy After Brexit

Britain has for centuries been a world centre for innovation. This has helped support our economy. Brexit provides us with a clear opportunity to ensure this continues. Post-Brexit, we can introduce differentiated business legislation that will support investments and innovations to help the country thrive.

Historically, English property law has been the cornerstone of this, of which patent law is a key part. For example, the patent system may have accelerated the Industrial Revolution. By allowing people to own and sell their inventions, it provided a financial incentive for innovation, making it attractive to people other than just the manufacturers (who wanted to save on labour cost).

In the modern world, policymakers can still hinder or facilitate economic growth through targeted legislation. A great illustration of this can be seen in the US state of Michigan. Recognising the investment that technology and automobile companies could bring, the state recently passed some of the most forward-looking bills for self-driving cars. There, cars can now be tested on public roads with no driver. In addition, they have gone a step further than states like Florida by legalizing ride-sharing in self-driving cars - surely an overt 'come hither' look at Uber and the investment dollars it could bring if it ran its innovation programme locally.

Once the UK has left the EU, there will considerably greater scope to set industrial policy in line with our own interests. In particular, the UK will not be subject to EU state aid rules, giving the UK government greater latitude in how it directs it resources. For example, it will be able to determine how to best incentivize car manufacturers to build and keep their plants here. Directed industrial policies could also help reduce the North-South divide should the government want to do more to encourage businesses to locate themselves further north, and bring with them jobs and wealth creation.

In the financial services industry, where I've worked for the past 22 years, the UK has always been a key player in innovation. Today, FinTechs have thrived in London's Silicon Roundabout with access to a large investor base, a strong pool of skilled talent, and the ability easily to tap into demand. The government has further supported the development of FinTech in the UK through the FCA's Project Innovate - making it easier for firms to test innovative products - and the Bank of England's FinTech Accelerator, which supports FinTechs developing innovations for central banking.

Similarly, in healthcare there is opportunity to accelerate technology innovation in the UK. On the surface, the socialised healthcare system makes the UK less attractive than somewhere like the US. But our need for efficient healthcare delivery is exactly why the government should help create accelerators, draft rules to encourage hubbing and make it easy for innovations to be developed and tested in the UK.

For example, if hospitals are the most expensive places to provide healthcare, and millions of people presenting at their A&E department could be treated elsewhere, then attracting more telemedicine innovators to the country would be a win-win-win for the UK economy, health system, and the companies themselves.

In retail, aviation, pharmaceuticals, energy, and other key industries, the UK can step up efforts to attract businesses looking to become digital and technology innovators. Currently, the government is helping through bodies like Innovate UK, which invests public money and that of its business partners in driving science and technology innovations. The country needs to continue in this vein but also increase its appetite for risk - such as through outright investment and tax and rate breaks - and put in place incentives to foster innovation hubs in line with innovation hubs like Silicon Valley and Tel Aviv, for example by introducing rules encouraging risk taking and not over-penalizing failures. Consideration should also be given to reviewing rules regarding ownership of patents and intellectual capital created by government and university-funded research.

There is also scope for the government to encourage the build and maintenance of the physical infrastructure which supports innovation. This could include the introduction of favourable rates in designated areas for start-ups or indeed for buildings which incubate start-ups. It could also include support to turn some of our disused industrial infrastructure like tunnels and mines into server farms - instead of mushroom (or cannabis) farms.

The diverse talent pool needed to create the innovations that drive will drive the UK economy in the future also needs to be nurtured. Currently, the country's world-class universities and research centres attract and generate high-quality talent, but restrictions on free movement following Brexit could temper this asset. Treading carefully and recognizing economic benefits from some types of immigration is vital.

The optimist in me believes that Brexit can provide a huge opportunity for UK businesses, while the pessimist worries that the dry subject of business legislation will fall by the wayside in face of headline-grabbing immigration issues. My hope is the imperative to provide jobs and a strong economy will prevail.

Close

What's Hot