Business and Trade Committee
Oral evidence: Industrial strategy, HC 727
Tuesday 4 March 2025
Ordered by the House of Commons to be published on 4 March 2025.
Watch the meeting
Members present: Liam Byrne (Chair); Antonia Bance; John Cooper; Sarah Edwards; Alison Griffiths; Charlie Maynard; Gregor Poynton; Rosie Wrighting; Matt Western.
Science, Innovation and Technology Committee member present: Chi Onwurah.
Questions 174 - 202
Witnesses
III: Peter Stephens, Director, UK Government Partnerships, ARM; Paul Morris, Head of Government Affairs, Vodafone; Antony Walker, Deputy CEO, techUK; Steve Brierley, Founder and CEO, Riverlane.
Examination of witnesses
Witnesses: Peter Stephens, Paul Morris, Antony Walker and Steve Brierley.
Chair: Welcome to this third panel in today’s Business and Trade Select Committee inquiry into industrial strategy. Thank you so much to our witnesses for joining us today as we look into opportunities around growth in the digital and technology sector.
Q174 Alison Griffiths: This question is to all of you. The Government’s No. 1 mission is to be the fastest-growing economy in the G7 by the end of their first term. How well do you think they are doing so far?
Peter Stephens: First of all, thank you very much for inviting us today. I have seen a lot of ambition, and I think the Government are doing very well in terms of statement of intent. I am excited to see the productive outputs of the AI opportunities action plan, with the focus on critical infrastructure and reframing that to include data centres to enable more investment on that front. We have a great ministerial team and a great set of civil servants. There has been a real sense of ambition within that.
We recognise that we exist within a really competitive landscape. I would recognise that we have a lot of work to do about how we can focus our energies, how we can make sure we are planning for the long term in terms of skills, how we can make sure that we are being competitive globally and then how we can strengthen that opportunity. There are things that we can do that are quite low-hanging-fruit opportunities, with regards to how we can improve our data collection within Government. I am happy to talk about that later but, as a start, I would say yes, with greater opportunities ahead.
Q175 Alison Griffiths: Mr Morris, what about for Vodafone?
Paul Morris: They have made a good start in terms of identifying some of the areas of challenge and some of the opportunities. The session today is to discuss the industrial strategy, which we are very supportive of. We are very optimistic about the future, because the technology that we are going to invest in to deliver a 5G network across the whole country—that is part of our guarantee for the merger with Three, which has nearly finished its competition process—means that we will invest £11 billion and deliver that network to all our constituencies—town, city and rural.
That being the case, there is a real opportunity for that technology to drive growth across the whole country. It is not like a railway track, where you have to wait until you finish building all of it before you can run a train. We can see benefits as we roll it out across the whole country. We are really excited about the future, and we really want the strategy to be a key enabler of that.
Q176 Alison Griffiths: Thank you. Antony, what about from a techUK, trade body perspective?
Antony Walker: Thank you for the opportunity to give evidence today. We recently did some polling of techUK members. We spoke to about 250 companies to get a sense of their current sentiment. Actually, they were remarkably positive. About 77% of businesses said they were optimistic about the UK tech sector. About 70% said they were optimistic about the UK economy. Interestingly, SMEs were a bit less optimistic than larger companies. I think SMEs are feeling the impact of some of the actions taken in the Budget towards the end of last year.
Broadly, the tech sector is an optimistic sector. It has grown significantly over the last decade. It now has a $1 trillion-plus valuation in the UK, and there is a real sense of optimism about what it can deliver in the future. Having said all of that, if you put the UK tech sector and the UK economy in the global context, that context is challenging for lots of reasons.
That makes the industrial strategy itself only more important if we are going to leverage the growth that the tech sector itself can deliver as a sector, but also, perhaps even more crucially, if we are going to leverage the growth that it can help support across the wider economy. That is very much the lens through which we look at the industrial strategy.
Q177 Alison Griffiths: That last point is the key to the whole thing, is it not? It sits across the entire economy. I believe you are speaking here on quantum. Is that right?
Steve Brierley: Yes, that is right. The good news is that I do not plan to explain quantum computing or to talk about cats that may or may not be alive or dead. For the purpose of this Committee, the important thing about quantum is that it is incredibly hot right now. We have had £1 billion of new investment over the last four years, but £300 million in new private capital coming into quantum. It looks like AI did five years ago.
From a policy perspective, what that means is that you can do in quantum today what you wish you had done five years ago in AI that would have meant the UK had a bigger slice of the pie today.
Q178 Alison Griffiths: Specifically on quantum, in your case, Steve, but more widely in digital technology—I would encourage you all to speak to your own sectors—what contribution do you think you will be able to make to the wider growth mission and the delivery of the industrial strategy?
Steve Brierley: Quantum will impact multiple pillars in the industrial strategy. It is a foundational technology. It will enable, in the life sciences sector, drugs to be designed on computers instead of discovered in laboratories.
Q179 Alison Griffiths: Is it worth, for the rest of the Committee, giving a very brief overview of what is special about quantum, just in case anyone is not aware of it?
Steve Brierley: Yes, absolutely. The world around us is quantum mechanical. The way atoms and proteins interact follows the equations of motion of quantum mechanics. Quantum computers solve those equations. That means we can solve chemistry. We can solve for new types of protein-drug interactions. We can find new catalysts to address climate change. It is a really transformational capability. If you look at other sectors, like aerospace, there is a really nice analogy. We have the equations of motions of flight and we have computers that can solve those equations. We do not discover flight anymore. We design aeroplanes.
Q180 Alison Griffiths: Why is now the moment that quantum will be able to make the leap that you were talking about AI having made in the last five years?
Steve Brierley: We have had two and a half decades of progress in developing quantum computers. You have seen breakthroughs this last year from multiple tech companies. That is really driving increased investment. We are at the point now where the central challenge is quantum error correction, which is the problem that Riverlane solves. This will enable a really rapid increase in the capability of the quantum computer, getting to the point where we can, for the first time, solve some of these really big challenges.
Q181 Alison Griffiths: Antony, do you want to comment more broadly?
Antony Walker: The opportunity of technology is vast. It goes from being right at the forefront of the newest emerging technologies, like quantum, all the way through to questions about how we get a small business that is not yet connected to the internet to start using IT and technology in a way that can really drive their productivity and make them more successful as a local business in their local community. The opportunities that technology presents are vast. They work right across this huge spectrum.
When we look at the UK as a whole, what we see is an economy with enormous strengths in technology, whether it is from leading-edge research or actually just having a consumer base of consumers who like technology, like using technology and tend to be quite early adopters of technology. We have a huge number of assets as an economy—assets that, frankly, lots of other economies around the world are very envious of.
We are in a global context where economies across the world are racing and competing to be world-leading digital, technology-led economies. We cannot be complacent about that. We have to think across the broad spectrum of things we need to do as an economy, as businesses, as Government and as public services to make sure we are at the forefront.
Q182 Alison Griffiths: What are those things?
Antony Walker: We have to make sure that we have the right investment coming in, whether that is public or private. We have to make sure that we have the right skills in place. We have to make sure that we have the world-leading infrastructure that we need. We need the right science base, but we also need the right legal framework and we need the right regulatory framework, to make sure there is trust and confidence in these new, emerging technologies.
I would add that we also need to work really constructively with our global partners. These are global technologies. Expertise is spread around the world, and we need to work constructively with other countries on how we drive that forward.
Q183 Alison Griffiths: What about from a Vodafone perspective?
Paul Morris: I mentioned that we are super-keen to roll this network out. Studies suggest that, if we get it right, it is worth over £150 billion to the UK economy by the end of the decade. It will catch us up because, at the moment, we are falling behind. We are about 22nd out of 25 European countries in terms of 5G availability, so we want to catch that up.
For those of you who noticed it—I obviously did—in the industrial strategy, there is a 5G ambition of geographic coverage to the majority of the population by 2030. We want to deliver that and then go beyond it. The key point then is, if we are going to build this network, how we use it to realise the economic value. That value can be in both the public and private sectors, in smaller or larger businesses.
Of course, it is not just sitting in our own sector, because we will be an enabler. I will be making the case for digital infrastructure today, because although we will enable all the technology you hear about today, it will then, crucially, enable all the other sectors as well. There is a key question about how we build this network and use it. We will probably talk a bit later about how we are struggling to build it at times, but the reality is, if we can use it well, we can really drive growth on the back of it.
Peter Stephens: ARM develops the IP and architecture that sits underneath lots of the world’s semiconductors. Since we started this meeting, about 1 million chips may have been made around the world that use ARM’s architecture in some way or another—I think there are about 30 billion a year. We underpin a lot of the world’s technology. ARM-based chips are found in many of the world’s smartphones and can be found also in a range of products, whether it is IoT devices, automotive infrastructure or other sectors.
The growth mission really links to our relationship with Cambridge. Cambridge has now become a globally recognised design semiconductor hub. If you get off the train at Station Road, at Cambridge, you will see the huge development of all the big tech firms that are now there.
Q184 Alison Griffiths: What is changing with this industrial strategy that was not already happening anyway?
Peter Stephens: It has given a lot around infrastructure. It is quite soon to tell. In terms of what we are seeing, it is that there is a lot more energy and a lot more emphasis on artificial intelligence. The link between semiconductors and AI needs to be better understood, in terms of the fact that this is an area of UK strength. We are seeing a wave of artificial intelligence around the world. The race for compute and sovereign compute represents an opportunity, and there is a way for the UK to lean into that.
Particularly on the industrial strategy, honestly, semiconductors were mentioned once in the Green Paper. That was disappointing, because they have a far more prominent role to be played there.
If you look at the work we are doing on skills, that is something that we represent a lot. It is basically what happens when you get 2,000 of the world’s brightest engineers and put them in a room together. That is what happens.
We are looking to see how we can develop more of this skillset. We have done a lot of work in this space, and we are seeing that uptake in the UK is less than it should be. We developed some resources for online learners and, of our 85,000 or so learners who are using the programmes and materials we create, about 4% are in the UK. These are areas we see as opportunities for growth. That is something we should do a bit more.
Q185 Alison Griffiths: On a scale from 0 to 10—so a one-word answer from each of you—how optimistic are you about the prospects for the UK economy over the next five to 10 years?
Steve Brierley: If we act quickly, it is a 10 but, if we are slow, then five.
Antony Walker: Seven.
Paul Morris: I will go for 10, if we adopt the technologies that we are all talking about today. Otherwise, it is an eight.
Peter Stephens: On agility, I would say eight.
Q186 Alison Griffiths: We are going to look at sector planning next. Which criteria would you use to judge the success of the Government’s forthcoming sector plan for the digital and technology sector? In which parts of the sector does the UK have a comparative advantage or the potential to build one?
Steve Brierley: The main thing I am looking for is speed. The time to act is now. We have had, in quantum, a very clear strategy for the last few years. The community has been widely consulted. Most people think this is a great plan. Now is the time to do it. I would be looking for that sense of urgency and that we are not going around another cycle of consulting. It is really just about making things happen.
Q187 Alison Griffiths: Antony, I would ask you particularly to answer, in addition, how the Government should decide which parts of the digital and technology sector it should be focusing on. We all know how many subsectors there are. Technically, there are nine, but there are a whole bunch of subsectors within that. Where should the Government be focusing their energy, to drive the growth?
Antony Walker: The Government are absolutely right to have put so much focus on AI. That is the transformational bit at the moment. The UK is extremely well placed, both in terms of the development of AI and the application of AI. The OBR has predicted that widespread use of AI could support raising productivity by half a percentage point by 2028-29. There are really significant opportunities quite close at hand. It would be wrong to just put all of your eggs in that one basket.
AI and quantum are intrinsically linked. AI and infrastructure are intrinsically linked. AI and skills are all intrinsically linked. When we look at this emerging sector plan, we will be looking at whether it is holistic and coherent. Is it looking at all the different factors that can have an impact on the success of the sector, not just in London and the south‑east of England, but across the UK? Does it provide a mechanism that can really be a spur to private investment, which is ultimately going to deliver all of these benefits?
Q188 Alison Griffiths: You could also argue that AI is the technology that sits across the different subsectors. If you took cyber versus cloud infrastructure, which are the actual sectors where you think, in this instance, that AI is going to have the most output?
Antony Walker: AI is the technology that plays across all of this. There are no limits to the potential for AI to drive innovation and transformation within sectors of the UK economy. There are other growth technologies that are really important. That might be something like quantum. We would resist saying, “Go and pick a winner. Pick one particular area.” The whole point of the plan that we are looking for is something that looks at all of the inputs that can support the sector as a whole.
Paul Morris: Certainly, digital infrastructure sometimes is the forgotten important child, if you like. It is assumed it will be there. The strategy itself in all the sectors needs to work with the industry to ensure that that is the case. It should not be naturally assumed, for example, when you build a new housing estate or even a new town, or a new railway or anything, that the digital infrastructure will be in place to do that.
That conversation needs to be much more sophisticated than it is today. I would like to see, within our own plan, thoughts around how we make it easier to build. There is a lot of discussion about how you build traditional infrastructure, and that is difficult. There needs to be more thought on digital as well. We are part of the discussion. Maybe we need to be more central, because it is quite hard to build digital infrastructure in the UK, like other infrastructure. That means planning and property law.
We should look at modernising the frameworks in which we operate, which are largely, in our world, still a bit 2G and 3G-ish. We have just turned off 3G, so it would be nice to catch up on the legislation and regulation. As I said, we need to think about how we help and encourage adoption of new technologies. That can be anything from smart procurement and procuring to innovate—maybe we need to do a bit more of that—to smart ways of encouraging, say, small businesses to do small things.
Just think about how we can encourage people to adopt, possibly with the odd incentive thrown in. That is how you get moving. It is quite hard to get people to adopt new technologies. There are ways of doing that cleverly, working with the industry, and that would be really helpful.
Peter Stephens: From my side, I just reiterate that I would be advocating for the importance of the semiconductor design specifically—that area within the supply chain of semiconductors which underpins all technology. That accounts for about two thirds of the UK value in the semiconductor industry.
You asked me about my level of optimism. Maybe it was blue-sky thinking, but I am going to downgrade it a little bit now. I am hopeful but, in terms of optimism, I have to be honest: the UK’s level of funding available for semiconductors is just not competitive relative to its peers. The US is $53 billion, the EU is €43 billion and then the UK is £1 billion across 10 years. That is just reality. I recognise the financial pressure that that brings, but that is just a challenge that we face. Of that $53 billion in the US, $11 billion is just on R&D.
Q189 Matt Western: Mr Morris, very briefly, I am interested to know your thoughts. I think you said the UK is 23 out of 25 on 5G. How do you explain that? Was it the lack of an industrial strategy? Why is that it we have such paucity of coverage, and what does this new industrial strategy need to do to bring us up to speed?
Paul Morris: We are okay on 4G. This is new. We have been performing fine on the new technology. If I had come to speak to you maybe 18 months or two years ago, I would have said that market structure in the UK has held us back. For example, we just did not have the scale to commit the £11 billion we want to invest in 5G, and the merger with Three will solve that problem. There was a market problem with scale for us to do that. That was part of the rationale for that merger. That was an issue.
The industrial strategy will not necessarily cover those sorts of areas. It might cover them, but that comes down to competition policy and competition policy being linked to growth, which I think the Government have been looking at. More generally, the industrial strategy itself should look at some of those areas I have just hinted at. Are we ensuring that we are making the best attempt to move quickly on the regulatory and policy structure, as well as incentives and procurement, to make sure that we are getting into common goals?
For example, if the ambition in the industrial strategy around 5G is where we want to go, what are we doing to ensure that that happens and that it is not just a roll-out of the technology, but an adoption of the technology? Adoption of the technology will drive productivity across the public and private sector, which should drive growth and better services. It will also not leave your constituents behind, for those of you in more rural areas, which has been a problem before, with them being potentially a bit left behind.
That is the sort of challenge for the industrial strategy, and that is why we think we can catch up quickly on 5G. We can do it quickly, because it is quite new technology and we are in a good place to do it. But, as I say, if we do not use it really smartly and get the industrial strategy to back that up, we will miss out on the full opportunity of it.
Q190 Sarah Edwards: I held a business roundtable in my constituency of Tamworth in December, and I asked people what opportunities they thought the Government could provide. One of the things they said was public procurement. That is something that is an opportunity but, at the moment, it is also a barrier, because a lot of SMEs have basically not been able to bid for contracts.
I was wondering what you thought about the opportunities for the Government now. They are citing public procurement as a means to drive growth. Where do you think those opportunities are, particularly when we think about supply chains and the fact that everything is connected?
Peter Stephens: On public procurement for SMEs, I am probably less able to comment. I am happy to pass over to others if they want to answer.
Antony Walker: Public procurement has long been seen as the holy grail of growth. It feels like an obvious win-win if you can align what you are buying with the companies that you are seeking to support, grow and so on. Significant progress has been made in trying to make public procurement frameworks more open and friendlier to SMEs, but the reality is that SMEs continue to struggle to compete in terms of public procurement.
Part of it can be that Government and the procurers themselves can be very risk-averse when it comes to working with smaller companies they are less used to working with. The relationship between larger companies and smaller companies can be very positive when larger companies bring smaller companies into their supply chains, to help them bid for bigger projects. Essentially, it is an area where Government need to continue to focus. It is difficult, but it can be fantastically enabling when you do create those opportunities for those smaller players to participate.
Paul Morris: Can I just add a point to that? The procurement regime probably has an opportunity to move to procuring to innovate, which basically means that you might have to spend a bit up front to save later.
I can give you an example. We sell technology that can help you manage your energy bill, through IoT technology. We did some research, which suggested that a mid-sized town or average-sized local authority could save £400,000 doing that. They could reduce their energy costs, which would be good for net zero.
The point is, if you do not have the money to buy that in the first place, you cannot get the benefit later on. It would pay for itself, generally speaking. There are examples, where, unless you are going to procure to innovate, you will basically procure for the cheapest option you have there. The trouble with that is that you may not get broader benefits. That is something that should be thought about. Part of the industrial strategy should look at that.
Antony knows more about SMEs. For SMEs, again, that would give you maybe more options. How do you ensure that technology can help SMEs and make the bureaucracy much easier to navigate? I know that the Government have some plans around that and are thinking about it. That is a change over time.
Steve Brierley: In a high-growth sector like quantum, procurement is a huge lever. The Government have actually been procuring things using existing mechanisms, things like SBRIs, and the leverage is roughly 10 to one in terms of private capital that is coming in. Every £1 that is spent is bringing in an additional £10 in private investment, because those companies can then show to their investors, “Hey, somebody is willing to buy this”—a first customer.
To make that work is challenging, because you do need to take a risk. You do have to buy something that perhaps will not work but, if you do, it can have a huge upside. The framework has to be right. The critical thing is timing. It has to be on a timescale that makes sense for a small business. You simply cannot wait around for two years for some long, lengthy process. You do not have the money to spend on the administrative burden. Lowering those costs, speeding things up and being willing to take a risk, perhaps within a suitable bucket, is really key.
Q191 Chi Onwurah: My question was regarding the things that drive the decisions that you make to invest and to grow, and where you make those decisions to invest and to grow. To make it very concrete, Steve, you will potentially be investing in the next generation of quantum. Paul, you will be investing in 6G—I hope you are investing in 6G. Peter, you will be looking to invest in the next generation of semiconductor design or design technology.
You are all based in the UK, but you are not necessarily headquartered in the UK. What are the key attributes and considerations that determine that investment decision, both at a worldwide level and at a UK regional level? Do you see those changing over the next few years?
Steve Brierley: I chose to found Riverlane in Cambridge and, as Peter was saying, it has become this global hub of chip design. They were the skills that we needed. The alternative places were Silicon Valley and Texas.
The reason I founded Riverlane in Cambridge was that the UK has had an amazing, effective industrial strategy in quantum. It started in 2014. There were big investments. That led to a substantial strength in the academic base and then a really smart approach of encouraging, through the Innovate UK programme, grants that helped companies spin out of universities. That has led to the UK now being second only to the US in terms of number of quantum companies and in terms of capital raised. That skills base and the ecosystem were really the key to choosing Cambridge.
Now we are a global company. Our customers are in the US and in Europe, primarily. We have an office in Boston, in the US. The reason we stay here will be long-term commitments, that stability of Government saying, “We are going to stick to this. We think it is great, and we have a 10-year plan to do this.” That is the key to keeping us here. In part, that is what other Governments are starting to do.
Q192 Chi Onwurah: Many quantum companies have moved abroad or been bought by foreign companies and, as a consequence, have moved abroad. Is that an option for you?
Steve Brierley: The opportunity is to build the next tech leader in the UK. We should do that here. The reason will be the skills base and long-term commitments.
Q193 Chi Onwurah: Those long-term commitments are by Government.
Steve Brierley: Yes.
Antony Walker: If I was to list the factors, they are very consistent with what Steve was just saying. One of our biggest advantages is that we already have strong clusters of excellence, whether that is in research or in companies. That has a hugely positive impact. That ecosystem is extremely important for the UK. It is rooted in our universities, ultimately, and our universities play a really fundamental role.
Access to skills, access to infrastructure, access to customers and partners, and that stable regulatory framework are all really vital. The one factor that tends to drive companies out of the UK is usually access to capital. This comes back to the constant theme today, which is about scale. What is happening across the globe in terms of the fast evolution of the sector is all about scale.
That is one of the areas where a lack of scale, in terms of capital available in the UK, means that companies tend to move abroad. They have access to deeper capital markets and investors who ultimately think they can make a faster return on the capital deployed in those other markets.
Q194 Chi Onwurah: Paul, is it access to capital?
Paul Morris: We were a start-up in Newbury about 40 years ago, and we are still British. We are based in Paddington and are also in Southwark. We are still here, and we are very proud of that.
For us, it is return on investment that is really important in markets so that you can make enough return to actually invest. That is very important. Having stability is important. Having the right policy and regulatory framework is as well.
There is a real opportunity within our sector to be a leader in the UK, because it all needs a bit of modernisation across the board, whatever country you are in. We talked a little about falling behind on 5G. The reality is that we have a real opportunity to lead here, if we get these levers right.
I have to say that you guys and Government being supportive, making vocal noises of support, is helpful as well. Do not underestimate that. The world is a bit shouty these days. Having people recognise the areas you need to work on, having an ambition in those areas and saying that publicly really helps. It makes people want to work with the UK Government, come up with solutions and invest in the UK as well. Those sort of things are very important to us.
Peter Stephens: For ARM, our greatest asset is our people. It is the most incredible technology being developed, but it is fundamentally about engineers and people who choose to live in Cambridge because that is where they live and their families live. It is a question of how we can make sure that Cambridge continues to be the headquarters that it is, supporting its growth on that front.
A lot of the work we are doing in the UK is around helping to identify the knowledge and skills we are looking for—the next generation to join our workforce. It comes down, fundamentally, to people. I have noticed, particularly in the last few months, countries starting to set specific targets within semiconductor ecosystems. I think Macron said 40,000 electrical engineers within the next five years. In Malaysia, it was 80,000. In India, it was 85,000.
The question is how we can make sure that we are competitive and that we have that right talent pool. Again, it comes back to how we are seeing the materials we have developed being used. This comes back to that collaboration from schools up to university level, so that we are seeing that pipeline and a diverse workforce. We recognise that only about 21% of electrical engineers in the UK are women, and that needs to be changed. We have a lot of work to do. It comes down to people, fundamentally.
Q195 Gregor Poynton: Mr Walker, I want to pick up on your point on capital, looking at mobilising capital and crowding in investment. I will perhaps start with you, Mr Stephens, if you do not mind. You mentioned the US $53 billion versus the UK’s £1 billion and there being only one mention in the industrial strategy. How do you think the Government should be crowding in investment, when we are seeing a vast amount more spent elsewhere?
Peter Stephens: The intention to focus on your strengths is right. The focus on how we can make sure there is consistency between trade policy and industrial policy is also right. There are things that do not cost very much that will help ease that.
A problem that we face is around processing timelines. If we want to do an export licence, recently it has taken two months to do that between the UK and India. If we were in the US, that timeline would be zero. There are things like that, which do not cost anything, that we can do quite quickly to help ease that burden.
Beyond that, there are a lot more opportunities. I would heavily emphasise the importance of R&D and the importance of skills. That is about long-term planning. Realistically, if you are looking at manufacturing, particularly in semiconductors, the cost of building fabs is astronomical—it is in the tens of billions of dollars. Unless you have the capacity to put that level of investment in, it is better to invest in the talent and in the people, where we have that rare skillset. That would be my focus.
One more point is, in terms of consistency and competitiveness, a lot of it comes down to those investment incentives. Those are things like the R&D tax credits and patent box, which are also really helpful.
Paul Morris: For us, a lot of our challenges are known. It is just whether we can get moving, to try to introduce some of the areas where we need change.
If I just focus on one thing to do with building infrastructure, I would hope that, in any planned changes, we are thinking about digital infrastructure within that and not just about building houses, which is incredibly important. Can we ensure that we can build the infrastructure that we need and we can do it once? That is a bit like, “Can we build a bit higher with a bit more kit on masts or rooftops?” That is identified, but can we go faster?
It is really important that it is a devolved matter and every nation has a slightly different approach—some better than others. Can we try to make that more similar across all nations, because there is benefit?
I will give you one specific. There is a property law change in our world, which is how we agree with landlords where we go on site. It was in the PSTI Act that was passed nearly three years ago. It would really help us to move quickly, to negotiate with landlords and to roll out 5G. We are still waiting for it to be implemented. I am just giving you that as an example of something that is already on the books, which just needs to come in so we can get moving. The quicker we build, the quicker we can get the benefits from building this infrastructure.
Q196 Gregor Poynton: Mr Walker and Mr Brierley, I have a slight variant on that. Mr Walker, you outlined well the challenges we face, particularly in start-ups getting capital. What should the Government be doing specifically there to try to help start-ups?
Antony Walker: There is quite a lot that the UK Government can do to support start-ups. Government, first of all, need to really focus on tech scale-ups, in particular, because they are a phenomenal growth engine. If you are looking for a part of the economy that can drive rapid growth quickly, then start with your highest growth potential companies. They would be scale-ups.
You could then look at how you can improve the operating environment for those companies. You can look at what you can do to try to improve the situation around access to capital, the Mansion House reforms and so on. You can look at where you can support them on skills. Also, there is potential to provide more of a concierge service for them, to help some of those very high growth potential companies navigate their way through regulation. They are often working at the intersection of different markets, which can throw up novel challenges and issues.
Overall, we need to recognise that we are competing against China, the US and the middle east, with huge sovereign wealth funds. The UK economy does not have massive levers to pull. Therefore, we have to be really smart about how we calibrate all of the smaller levers.
That is why the industrial strategy has to have this broad, holistic approach. You have to look at what you are doing on the supply side, as well as the demand side. You have to look at the incentives that you are putting in place for private sector investment into innovation. You have to look at the procurement piece. How can you use that to pull through investment? You have to really focus on the skills, both the very high-end skills, but also the basic, digital skills, to enable people to engage productively in a digital economy. We have to look at our whole approach to foreign direct investment and to trade.
Chair: It is a huge list.
Antony Walker: We have to do all these things. The positive thing is that that is what the industrial strategy is seeking to do.
Q197 Antonia Bance: Ending with you, Mr Walker, how optimistic are you about the Government’s ability to deliver the industrial strategy? An obsession of this Committee is whether Government Departments can work together effectively, so I would appreciate any comments on where you think the difficulties and the tensions might be.
Chair: We are playing a little game at the moment. Where 10 is “perfectly seamless” between different Departments and Departments and regulators, and one is “really very not seamless”, where is His Majesty’s Government today?
Antony Walker: We work very closely with almost all Government Departments.
Q198 Chair: How closely do they work with each other?
Antony Walker: There are times when we seem to have a better understanding of what each of them are doing than they have themselves. However, that is not to criticise. The Government have an extremely difficult job of trying to pull all these complex pieces together. Government are trying to move very fast in terms of moving from planning to action, which is critical.
We certainly are fairly inundated by requests for engagement, which is really positive, but there is a lot to do to get all of this working together. The industrial strategy council can play a really important, strategic role in looking at the overall direction, but I agree that the cross-departmental co-ordination is the hardest bit. It is the bit that we really want Government to focus on and work on.
Q199 Chair: If you were scoring them out of 10 at the moment, what would you give them?
Antony Walker: I am at about a six, but they are making progress.
Chair: There is room for improvement, then.
Antony Walker: Yes, absolutely. There is a huge amount to do, but Departments are working really hard, and I am encouraged by that.
Q200 Chair: Let us have one line on this from you, Mr Stephens.
Peter Stephens: I would say that they are, again, a six. The civil servants are great and fantastic to work with. But we do not make it easy for ourselves in terms of understanding the truth and the reality of the economy we are working with.
I am sorry to raise them, but SIC codes need to be updated. ARM’s business does not fit easily within a SIC code. If we think about it, you have either “engineering other” or “software development”, neither of which are perfect for us. However, if we were a goat herding company, then we would have our own SIC code. This is emblematic of the issue that we face: we are not capturing reality.
Q201 Chair: Steve, how joined up is this process?
Steve Brierley: DSIT is doing a great job in bringing together the quantum strategy. The challenge for quantum, though, is that it impacts so many different Departments. It is impacting defence. It is going to impact life sciences, advanced manufacturing and clean energy. It cuts across a lot of these pillars. The challenge then is whether everybody thinks it is someone else’s job to figure this out.
Q202 Chair: What would be your mark out of 10?
Steve Brierley: I am going to give DSIT a nine, because I do think they have done a great job, actually, of bringing things together.
Paul Morris: The civil servants we work with across DSIT, Treasury, the Department for Business and Trade and others are really super, if I am honest. We have worked really closely with them. Sometimes it is challenging and sometimes we work closely together. We try to find these sweet spots, where we both want to deliver. Ours is 5G roll-out.
We should not be surprised that Departments will have different priorities. The objective of the strategy, in part, must be, of course, to make Government priorities out of the strategy, so that when you get to Departments, they have to know that that is their priority. I am not going to mark them, but I would give DSIT a high mark. I would say that they have not sat the exam yet. The industrial strategy is the exam, and they need to sit that exam.
Chair: That is very diplomatic. We are out of time. That concludes this panel and that concludes this session.