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UK entrepreneurs being failed by lack of Government support

13 March 2013

The Government does not have a coherent strategy to support the commercialisation of technological innovation in the UK.

The Science and Technology Committee has warned that the Government is failing to secure the full economic benefits of our world-class science base.

Committee Chair Andrew Miller MP, said:

“The UK’s university and science sector is a global success, but the challenge for Government is how that world class academic research can be translated into commercial activity.

“Whilst we are encouraged by the work of the TSB and the Catapults, British entrepreneurs are being badly let down by a lack of access to financial support and a system that often forces them to sell out to private equity investors or larger foreign companies to get ideas off the ground.”

No innovation policy

Evidence shows that there is no coherent innovation policy and the Government does not have adequate mechanisms in place to leverage academic research into economic benefits. UK technology companies and entrepreneurs are effectively being forced to seek private equity investment.

This means that our small companies are too often bought up by larger overseas companies before they can develop into the medium sized enterprises that would produce substantial jobs and wealth in the UK.


Finance is a major obstacle to the commercialisation of technology in the UK. Regulation to de-risk pension funds has inadvertently closed off a patient source of capital for firms that need time to develop technologies.

Government grant funding is often highly bureaucratic to apply for and only enough to “get an idea off the ground”. And despite Government schemes to encourage bank lending to business, the Committee heard that banks were often requiring entrepreneurs to provide family homes as security to obtain these loans.

Andrew Miller MP, added:

“Equity investments have a place, but too many companies are forced into over-reliance on this route because other types of funding are unavailable.

“Pension funds used to be a source of patient capital for firms that needed time to bridge the so-called ‘valley of death’ and get new technologies to market, but regulation has changed the way they operate and restricted this sort of finance.

“The Government needs to look at how it can provide the infrastructure to support innovation by ensuring small technology firms have access to finance, facilities and advice.

“The new business development bank could help in this area and the Government should seek to develop the market in technology equities and ensure that the market has access to information that may change the perception of the relative risk of these equities.”

Coherent strategy

There needs to be a coherent strategy across the whole of UK industry to provide UK business with confidence in where they might expect Government support for the medium and long term—whether through fiscal policies or R&D focus.

The report calls on the Government to change the financial framework to incentivise more smaller companies to grow further independently, rather than sell out. And says that Ministers needs to make choices in terms of which sectors to prioritise when assisting R&D investment.

Public procurement

Public procurement—particularly in the areas of health and defence—should also be used to nurture technological innovation in the UK and support small and medium sized companies. Procurement decisions need to take into account issues other than simply cost.

The MPs believe it is critical for the future of bioscience in the UK, according to the report, that the Government ensures a significant proportion of NHS procurement budget is accessible by small innovative UK companies.

Defence spending also has potential to actively encourage innovation—although the MOD appears to be outsourcing procurement which may limit the scope to utilise the budget in this fashion.

Andrew Miller MP, concluded:

"The UK has terrific potential in its technology sector and science base, but small and medium sized businesses need better support to commercialise their ideas and get them to market.

"I hope the Government recognises that it needs to be more proactive if it wants to secure long term growth and competitiveness in the UK."

Further information

Image: iStockphoto