How will Labour address UK's innovation challenges?

Industry experts are weighing in on how the UK Labour government might address the nation's innovation challenges.

Iain Butler, head of Buzzacott's R&D team, acknowledged the business community's favourable response to Labour's commitment to an Industrial Strategy but noted that improvements to the R&D tax credits scheme and grants are crucial.

He highlighted that frequent changes to the scheme, coupled with HMRC's stringent compliance checks, have deterred many businesses from pursuing valuable innovation funding.

"Many organisations feel that the scheme is too risky and are not comfortable using the cash credit provided by HMRC," Butler explained. He called for a return to a stable, well-defined scheme that businesses can rely on. Additionally, he urged for clearer rules on qualification for support, insisting that HMRC needs staff with a deeper understanding of technology or more straightforward rules to ensure fair and predictable application of funding criteria.

Butler also pointed out the issues with grant funding, noting that the current competitive process is highly oversubscribed and often delayed, which undermines startups' viability. He advocated for a review of the grant allocation process to provide more certainty for applicants meeting the criteria, suggesting potential reforms such as a first-come-first-served basis or guaranteed funding for eligible projects.

Ekaterina Almasque, General Partner at OpenOcean, weighed in on Labour's promise to invest GBP £100 million in quantum research, questioning whether such funding would suffice to bring quantum applications into the mainstream. "Government funding must flow, rather than trickle, into quantum research," Almasque remarked. She underscored that while the sum is significant, it falls short of the comprehensive support required to transform research into practical applications.

Almasque advocated for more decentralised funding initiatives across the UK to harness the potential of quantum startups. She emphasised the benefits of building hubs in cities like Birmingham and Glasgow, which could help in commercialising emerging quantum technologies developed by these cities' universities. Such an approach, she argued, would spread economic growth and foster dynamic startup ecosystems throughout the country.

Simon Wharton, founder of eCommerce consultancy PushON, expressed his optimism following Labour's victory in the election. "I am delighted with Labour's election victory," he commented. Wharton believes that the uncertainty surrounding leadership in recent years has stifled commerce, and that a competent team at the helm will boost confidence and stimulate spending. He emphasised the need for effective leadership with meaningful objectives, while noting that the Labour party's focus on achievable rather than exciting goals aligns with his own priorities for business and infrastructure investment.

Specifically, Wharton highlighted the importance of reliable transport infrastructure for his hybrid business model and praised Labour's appointments, notably James Timpson as Prisons Minister, as indicative of a forward-thinking approach. He envisions a steady first term for the new government, with market conditions gradually improving and growth accelerating by early 2025.

Wharton, Butler, and Almasque's insights collectively suggest a cautiously optimistic outlook for UK businesses under Labour's leadership. Their comments underscore the importance of stable, clear policies and comprehensive support mechanisms for innovation and infrastructure investment. The overall sentiment is that while Labour's initial steps are promising, sustained and well-directed efforts will be crucial for achieving long-term economic growth and technological advancement.