Written Evidence Submitted by techUK
techUK welcomes the opportunity to provide written evidence to the Science and Technology Committee inquiry on ‘The role of technology, research and innovation in the COVID-19 recovery’.
techUK represents the companies and technologies that are defining today and the world that we will live in tomorrow. More than 850 companies are members of techUK, collectively they employ over 700,000 people, about half of all tech jobs in the UK tech sector. These companies range from innovative start-ups to leading FTSE 100 companies. The majority of our members are small and medium sized businesses.
COVID-19 is first and foremost a health crisis, however the health crisis has also precipitated an economic crisis. As we seek to build an economic recovery after the impact of COVID-19 techUK believes there is a key role for technology, research and innovation in enabling this, supporting an economic recovery that is strong and adaptable as we continue to navigate this global pandemic.
However, the recovery and how we approach it does not come in a vacuum. The impact of COVID-19 itself forced huge changes to society and the economy. This rapid and large-scale behavioural change has shed light on emerging trends in technology, research and innovation, that can be learned from and capitalised upon to enable and build the growth of an innovative, dynamic and resilient economy.
The following written response has been developed based on input from techUK members and builds on a previous response to this Committee’s inquiry on “UK Science, Research and Technology Capability and Influence in Global Disease Outbreaks”.
This response will address the questions raised by the Committee by providing input on three core themes:
techUK would be happy to provide the Committee with further information and oral evidence as the inquiry progresses or to expand on any of the points made in this submission.
In order to consider the impact of COVID-19 and the lessons that can be learned and taken forward into the recovery phase, techUK believe it is first important to consider the following:
How technology, research and innovation responded to the crisis to date:
From the beginning of the COVID-19 crisis, techUK has been working closely with its members to help support the industry through three key stages of the crisis. These are:
While it is understood that the focus of the Committee’s inquiry is the recovery phase of this strategy, and the role technology, research and innovation has to play in this phase, techUK believes to understand this fully we must explore the way in which technology and innovation has been used in the response and adaptation phases of the COVID-19 crisis, and consider what lessons could be learnt that can be taken into the recovery stage.
Response phase – Supporting the fight again the virus
In the immediate response to the COVID-19 pandemic tech companies and innovators large and small immediately stepped up to help support in the fight against the virus.
In particular people and resources were mobilised to build tools and technology to support the healthcare frontline. While the peak of infections passed, health and social care frontline staff continued continue to need the sector’s support and innovation.
The development of testing and tracing methods, design and production of ventilators, AI enabled protein folding to help develop treatments and vaccine development are all examples of how technology and innovation has been at the centre of efforts to combat the virus.
Cloud computing, broadband and data analytics also continued to play a central role in helping to reduce the reproduction rate of the virus as lockdown and social distancing continued.
For example, with businesses adopting new technologies and solutions to allow them to continue to operate under social distancing restrictions. According to app analytics firm SensorTower, business apps attracted 1.4 million new downloads across iOS and Play Store in the first week of January which has jumped to a staggering 6.7 million downloads in the first week of March. There was also a rise in the adoption and use of cloud based services (such as online video conferencing).
Zoom’s video conferencing software saw tremendous growth in March. According to Apptopia, Zoom registered 600,000 downloads on a single day in March compared to 343,000 the week before and just 90,000 downloads two months back.
Adaption phase – Keeping the economy and society digital together while physically apart
During the current adaption phase, the technology sector has been helping Government, businesses, civil society and individuals to adapt to the impact of lockdown and social distancing measures.
This has included ensuring the operational resilience of the nations digital and data infrastructure to help the nation stay connected. Cybersecurity companies have provided information on how to securely connect and scale remote workforces and remote education, as well as rapidly deployed technologies to governments and organisations to help them to do so.
Recovery phase – Rebuilding and reinvention
As we move into the recovery phase, techUK believe there is a key role for digital technologies and innovation driven R&D in supporting and enabling the rebuilding, recovery and reopening of our economy and society. Particularly in the following key areas:
These areas are explored in more detail below in this response.
The impact of the crisis on the technology, research and innovation sectors:
The Covid19 crisis has obviously has an impact on organisations focused on technology, research and innovation. As in other sectors and industries during lockdown organisations have had to find new ways of interacting, engaging and working with its staff, customers and partners. Those in the research and innovation community, as in the tech sector, have turned to technology to support this change with the use of collaborative online tools to help support and keep research and innovation projects moving.
The impact of COVID-19 is a very mixed picture across the technology sector itself. While the sector initially responded well to the outbreak, confidence and expectations of negative impacts have markedly increased. This is reflective of wider business sentiment indicated in evidence gathered by the ONS, CBI and others.
While there is generally a larger degree of resilience amongst the well-established parts of the market, some start-up/scale-ups as well as other high growth companies in the sector faced difficulty accessing Government support at the height of the crisis. While Government made changes and launched new schemes to address this, some companies are still struggling to attract finance from both public and private sources.
As many business leaders across the UK have had to rapidly develop and put in place online resources to enable staff to work away from the office, it is likely that lockdown could have had an impact on the development of research and innovation projects being conducted by universities and businesses.
For example, decreased physical access to non-critical laboratory spaces may have put a pause to many industry-led R&D activities and projects. For example, it has been suggested that research projects in the life sciences and medtech area have been affected. Supply chain disruptions and possible problems procuring equipment under COVID-19, may show to have a knock-on impact on R&D projects that were underway during the crisis. However, it is too early to understand the full impacts this may have had.
For firms that have experienced declining research output under COVID-19, it is possible that this could lead to questions being raised about the future scaling-up of these research activities, both internally and externally.
If firms have seen their research disrupted many may find it difficult to put forward a strong investment case and secure the funding, they need to take cutting-edge research to the next level. This is an issue where further consideration should be given and if this is seen to be happening where support from Government may be needed to ensure innovative, cutting edge research projects happening in the UK can continue at the level and scale seen before the COVID-19 crisis.
For example in supporting technological solutions that could help to ensure research projects can continue. For example such as AR and VR which can provide an opportunity to revolutionise how research and development is conducted and offering great opportunities for participation in innovative activities from across the country and the world.
Barriers to the commercial application of research have also emerged during the COVID-19 crisis. Particularly in sectors where firms have faced barriers to accessing study participants for clinical trials or market research.
It is possible that this will have limited their ability to test products and services in the real-world and could lead to long term impacts on the development of innovations in areas such as sustainable technology, where many of the barriers to commercial development and uptake are non-technical and behavioural.
There has also been anecdotal concerns raised by the scientific community and others about the long term impact of social distancing in the area of scientific research and innovation where ideas and breakthrough can come from face-to-face environments, such as the research lab, and more immediate collaboration.
However, social distancing has inhibited all types of innovation, for example, the work that was conducted between industry and universities to develop ventilators for the NHS during the pandemic and the partnerships created to use 3D printing for PPE are great examples of how technological research and innovation has been able to flourish during the current crisis.
These cases provide key examples and lessons which others could learn from when seeking to innovate under social distancing.
What lessons can be learnt from the pandemic so far:
Before focusing on the role of technology, research and innovation in supporting the recovery phase of COVID-19, it is important to pause and reflect on whether there are common trends and lessons that can be learnt previous economic downturns in the past that are relevant to the situation today.
Firstly, COVID-19 is an unprecedented situation in modern times. Its impact has been felt by every industry, sector and almost every part of the economy and society. This has required businesses and individuals to radically alter their behaviour on a massive scale and at extremely short notice.
The lockdown forced businesses and individuals to change the way they work, live and learn, buy and sell products and services, exchange information, use digital technologies as well as conduct research and development projects.
What we have seen during the response and adapt phase of COVID-19 has been a significant increase in the adoption, deployment and use of digital technologies. Not just by businesses but also by consumers with the rise in online video conferencing tools and contactless payments. In April the CEO of Microsoft Satya Nadella stated that there has been two years’ worth of digital transformation seen in only two months.
This has similarities to previous economic downturns. For example, following the 2007/08 crisis many businesses increased investment in IT and technological solutions to reduce costs and increase operational effectiveness and efficiencies.
It is likely as we move into the recovery phase of the COVID-19 crisis, and due to the unique nature of this crisis in particular that the use of digital technologies to support the delivery of products and services by organisations across both the public and private sector will accelerate at a great pace.
techUK has held a number of discussions with its members on the role of emerging, innovative and transformative technologies such as AI, AR/VR, RPA and Digital Identity in the UK’s post COVID-19 recovery. These engagements have also underscored the importance of cyber security in allowing businesses and researchers to have confidence in the digital transformations they are undertaking.
What has become clear from this engagement with tech sector companies is that organisations need to think now about areas where digital adoption can be accelerated in a secure way to enable and support flexible supply chains in the short-term and sustainable practices to mitigate consequences of the current situation in the long term.
Having the right digital infrastructure to do this was seen as key with connectivity being particularly crucial for emerging technology to work consistently across company needs as they change. Remote maintenance using AR technologies, for example, will rely on 5G and convergence between cloud and edge to render high-quality, real-time response. Further, the COVID-19 crisis has demonstrated that organisations need the ability to securely work remotely.
When looking at the impact of previous economic downturns on the technology sector, it is worth noting how significant financial crisis has led to the creation of new, innovative digital products and services. For example, it is widely reported that technology companies such as Slack and Uber emerged from the financial crisis of 2008. Also development in Cloud Computing services were seen in 2008 and 2009 with Microsoft launching Azure in 2008 and AWS introducing many of the services seen today in 2009 along with Google’s first Cloud offering. 
For the UK to ensure that it can become the home of post crisis innovation it will be vital to ensure that we have the right frameworks, innovation support, regulatory flexibility and business support to support new ideas and companies develop and thrive.
Given techUK’s role in representing the companies and technologies developing the technological products and services driving the UK’s digital economy and society as well as those conducting cutting edge research into the development of innovative emerging and transformational technologies, we believe we are well placed to respond to the Committee’s questions in this area. To do so we will touch on the following key issues:
How the technology sector and digitally driven research and innovation can support the UK’s economic recovery:
As one of the fastest growing parts of the economy the tech sector should be at the vanguard of the economic recovery. Particularly given that the wider economy will need to continue to digitise in order to deal with the likely ongoing requirement for social distancing measures. The following are specific areas where technology can support the post COVID-19 economic recovery:
The tech sector remains a growth engine for the UK economy. As the UK seeks to bounce back economically from COVID-19 the technology industry has a key role to play.
Prior to the outbreak of COVID-19 the UK tech sector was performing well, growing at six times the rate of the wider economy. DCMS figures show that the digital sector added £149 billion to the overall UK economy in 2018, accounting for 7.7% of the UK economy.
The UK tech sector is completing its transition from a start-up powerhouse to a country of later stage tech successes, with investment in larger scale-up tech companies continuing to break records and high growth in tech clusters across the country. Recent figures published by Tech Nation have also shown that investors are continuing to support UK tech companies. London based tech companies raised $4 billion in investment between January and June 2020. There figures indicate continued strength and optimism in the tech sector and how the tech sector can be a key asset to the UK in the recovery phase of this crisis.
In March 2020 Sir Martin Sorell predicted that the COVID-19 pandemic would “accelerate the digital revolution”. What we have seen during the response and adapt phase to COVID-19 has been an increase in the adoption, deployment and use of digital technologies. Technologies such as Cloud Computing, Data Centres, Cybersecurity, Broadband, RPA, Automation. 3D Printing and AI have supported organisations across all sectors and industries to continue to operate and to keep the economy going. Digital technologies have played a vital role in keeping companies and their customers digitally connected whilst physically apart.
As we look towards the future and what comes next, it is clear that digital technologies such as these and others, for example Digital Identity, will play a key role in the UK’s economic and social future.
It is important to think now about what role these and other technologies could play in the reopening and rebuilding of the UK’s economy and what measures and support may be needed to incentivise the uptake of new emerging technology in the recovery phase. This should include a conversation about the possible role of upskilling furloughed and newly unemployed workers to be able to support organisations in realising the full potential and value of the investment in digital technologies.
Not only is the UK technology sector a driver of economic growth and productivity, it is also a key creator of new jobs. Research published in September 2020 showed that during the COVID-19 pandemic there has been a 36% increase in job vacancies in the tech sector between June and September. The sector had the highest number of vacancies in August.
Tech sector jobs also tend to pay higher than average salaries and are not just restricted to London and the South East; Northern Ireland currently has the highest ratio of tech to non-tech vacancies.  However, the digital skills gap remains a key problem, techUK members consistently point to skills shortages as a major constraint on growth. Bridging this skills gap to ensure we have both the domestic and international talent needed to fil the increasing vacancies will be vital to supporting economic growth across the UK. As a driver of local regional economic growth
Digital capacity and capabilities in the regions should be strengthened so that communities, towns and cities across the country can benefit more equally from the digital economy. This should be a strong regional focus in planning for the recovery.
London and the South East has seen huge success in tech due to the networks, collaboration and partnerships created between highly talented, educated people and funders from the private sector. Replicating these networks to support already growing tech clusters across the country is seen by many local authorities and Devolved Governments as key to help mature their tech clusters. Also increasing the balance of highly innovative firms across the country could help to build a more resilient and highly productive economy that can achieve faster post-pandemic economic growth.
The Government should also seek to empower local authorities to grow their own local tech clusters by increasing local Challenge Funds, empowering local authorities to use their procurement budgets to create innovative local economies and building networks to encourage investment in nascent tech clusters across the UK through a GREAT style campaign. Underpinning all this, the UK Government should accelerate investment plans around high-quality digital infrastructure based on gigabit capable broadband and 5G, providing the resources needed to bring innovative research to market.
The BEIS R&D Roadmap is an important document that should be taken forward as a priority particularly to support local regional growth. The Roadmap aims to place R&D and innovation as a key plank not just of the UK’s future economic growth but as a central asset in supporting and enabling the levelling up agenda. This approach is welcomed and should be supported as a key enabler of the UK’s economic recovery.
A key priority for industry and government is ensuring that the UK’s post COVID recovery is one that supports the fight against climate change and the Government’s 2050 net zero targets. The technology sector can support the development of a sustainable, high innovation economy in the aftermath of COVID-19; one that can drive economic value to the UK.
techUK is calling on government to back the UK’s emerging digital climate tech sector, as new research reveals digital technologies already in the field could deliver a 15% increase in UK carbon emissions abatement by 2030 whilst adding £13.7bn Gross Value Added (GVA) to the UK. The research is outlined in a new report – How to make the UK a digital clean tech leader –was launched by techUK and Deloitte during London Tech Week.
Current and future possible challenges and barriers that could stand in the way:
If the full economic potential, benefits and value from digital technologies and innovation is to be fully realised there are a number of pre COVID-19, legacy challenges and barriers that have not gone away and must be addressed now to ensure we can move forward. These include:
We have seen how the adoption of digital technologies, tools and solutions can help businesses increase productivity and boost growth. Yet the reality is as we recover from this crisis there will likely be a reluctance or inability to invest in these technologies, just at a time when it is most needed to help boost the economy. Government should be starting now to think about what role they can play to incentivise the uptake of technology in the recovery phase, including newly unemployed workers.
It is important that the recovery is inclusive. The pandemic has highlighted the problem of digital exclusion and tackling digital exclusion will be critical to ensuring this inclusivity. We also should look to capitalise on the momentum of greater digital use and ensure we redouble our efforts to get SMEs to adopt digital solutions and double down on efforts to end digital exclusion and ensure strong digital connectivity across the UK. In particular we must ensure that there is support for innovative SMEs and start-ups which will play a critical role in the UK’s economic long-term recovery. The negative impacts of economic downturn have disproportionately affected the research and innovation activities of these smaller businesses, undermining one of the most critical drivers of UK productivity, economic growth, job creation and overall competitiveness.
Between June and August 2020 advertised roles in the digital and tech sectors have grown by 36%, there are now over 90,000 digital tech vacancies a week across the UK.
Salaries for the most in-demand digital and tech jobs increased by up to 15% between 2017 and 2019 and the availability of digital and tech jobs continue to grow across the UK. In Bristol, Cambridge, Edinburgh, Reading and Belfast, jobs in the tech sector account for 23% – 26% of all vacancies. Regionally, Northern Ireland has the highest ratio of tech to non-tech vacancies (23%).
Filling these roles is hugely important, increasing the number of digitally skilled applicants is key priority for tech companies. Without increasing the supply of skilled applicants to meet the demand for digital tech jobs it will be difficult to deliver the high skilled, high waged jobs across the country that are needed to support the recovery.
The UK Government already recognises this, in evidence provided to the House of Lords Select Committee on Democracy and Digital Technologies, the Minister for Digital and Culture Caroline Dinenage MP said that the Government estimates that the UK economy could forfeit as much as £141.5 billion in GDP growth if we fail to close the digital skills gap.
Unlocking the full power of data has never been more important to our economy and society. A national data vision and strategy for realising the full economic and social value of data is vital to driving social good, innovation, competition, economic growth, productivity and job creation. The recent publication of the Government’s National Data Strategy is an important step towards getting this right and ensuring the UK’s data driven economic future. Now is the time to get to work to build and realise the UK’s data-driven future. But we must get this right for organisations, business and citizens. The consultation on the National Data Strategy that has been launched is key to finding the right way forward for industry and citizens and techUK stands ready to help turn the strategy into a reality.
During COVID-19 there has been a significant uptick in cyber-attacks and an increased threat landscape with criminals using the disruption to target those working from home, and those engaging in sensitive research related to COVID-19.
During the response and adaption phase of the crisis techUK has been promoting advice and guidance from Government channels and from its members, focusing on supporting UK organisations and citizens to protect themselves during this period. However, as we look ahead to a future where increased digitisation and adoption of technology will be key to economic recovery and the online threat environment continues to evolve it will be even more vital that organisations and individuals remain protected from cyber security threats.
Cyber vigilance will be even more important moving forward as well as finding ways to support organisations to ensure they have in place policies, procedures and technological solutions that can protect their operations, activities and people from cyber threats online.
The COVID-19 crisis has highlighted the critical role that technology, research , innovation and R&D plays in enabling the UK to respond to immediate health risks and in laying the foundations for the UK’s economic recovery as well as positioning the UK as a global science and innovation superpower.
The crisis has stretched and tested the UK’s innovation system, but more importantly shown the true potential of the UK’s R&D, business and innovation communities when working as one. Highlighting how putting a strong emphasis on rapid problem solving and the fast development and commercialisation of solutions can bear significant results.
Historically the UK has been less effective at commercialising research and building links between business and educational institutions than other European countries. This issue of commercialisation extends beyond the tech sector and has been an issue raised by a variety of stakeholders. In short, the UK’s current R&D strategy is very good at supporting the “R” in R&D, but has lags behind in the development of that research into the creation of new market ready, products, services, solutions and companies.
Reorienting this is vital and begins at the publicly funded Government institutions at the core of the Government’s R&D strategy. To achieve this, the Government should make R&D tax credits more accessible to business, expand incentives for companies to invest in R&D and review the Industrial Strategy key challenges to focus on addressing specific bottlenecks to commercialisation ( e.g. the commercialisation of battery tech, the regulatory framework for self-driving cars and drones). These steps will help accelerate commercialisation and increase the attractiveness of the UK as innovation testbed all of which could lead to significant economic long-term growth.
If the UK is to become a science, research and innovation superpower to help drive forward the UK’s post COVID-19 recovery, it is vital that we make the UK a leading destination for the best and brightest in scientific research and innovation. To do this any future immigration system must work to attract talented people to the UK. techUK welcomes the Governments’ focus on attracting the best and the brightest through the reinstatement of the Graduate visa route which will ensure we retain talent that has studied in the country, commitment to the Global Talent visa, and the creation of the Office for Talent. Looking beyond the system itself, Government must ensure that people with the skills and talent that we need feel welcome in the UK. To keep the UK at the forefront of global innovation, we must ensure that the narrative around the UK’s openness is as positive as the policies that underpin it.
The full economic and social impact and value of innovative data driven digital technologies will not be fully realised unless there is trust and confidence in these innovations across the whole of society. Greater trust and confidence in the system and structures that underpin digital and data driven innovation will be key to driving adoption, take up and use of the next wave of innovative digital products and services which will play a key role in the UK’s economic growth.
For example, it is estimated that the adoption of Digital Identity technologies could boost UK GDP by up to 3%. Also, it is estimated that Artificial Intelligence technologies could add an additional £630 billion to the UK economy by 2035. It is important that we get the use of advanced digital technologies right for everyone across society, particularly as we emerge from COVDI-19. The good news is that the UK has a number of leading organisations in this area. Including the work being driven by the Centre for Data Ethics and Innovation (CDEI), the Ada Lovelace institute and the Information Commissioners Office (ICO).
The points below provide input to the Committee’s questions related to the effectiveness of Government support around research and innovation, the role of the BEIS R&D Roadmap and what more support the technology, research and innovation sectors may need going forward to play its role in the post COVID-19 recovery
Government support measures during the pandemic:
Throughout the pandemic so far, surveys of techUK members and the wider community have demonstrated just how important Government support measures have been to help businesses and individuals stay afloat. Many in our sector have relied on the Job Retention Scheme to support their workforce through the peak of the pandemic.
Also welcomed have been the steps taken to support and enabled business led innovation projects in response to COVID-19. The announcement in April 2020 by Innovate UK of £20 million funded competition for UK businesses to find innovate solutions to addressing issues raised by the outbreak was a great example of how government funding can support and encourage business driven research and innovation. The further announcement in May 2020 of an additional £20 million to the Fast Start Competition was seen in response to the record number of applications received with over 86000 proposals submitted to the original competition. This additional funding means that an additional 800 projects could be funded.
Funding delivered through Innovate UK grants and loans and the Future Fund equity loan have been a lifeline to high growth, innovative and R&D intensive businesses in the tech sector. techUK has been in contact with a number of members from whom these support systems have allowed them to keep the lights on and providing an essential cushion at the height of the pandemic.
Role of BEIS R&D Roadmap:
As we look ahead, techUK has welcomed the publication of the BEIS R&D Roadmap. The roadmap is an important step forward as it aims to place R&D and innovation as a key plank of the UK’s future economic growth and development plans and a central asset in supporting and enabling the levelling up agenda.
We agree with this approach. However, we feel that Government could still go further by seeking to better re-orientate the UK’s overall R&D strategy narrative so that it is more accessible, has a focus on place and sees growth and supporting economic activity across the whole of the UK as a key metric of success.
Government should also seek to work with industry to review what we classify as R&D. This should not just be bringing more business functions into the scope of R&D support but instead take a strategic look at what would be reasonably considered R&D in the modern economy.
For example, investment in the development of technologies and software across a range of sectors, investment by business in new research facilities and operational expenditure that supports R&D processes such as advanced data analytics and the use of AI driven tools. Doing so would not only help the Government’s hit 2.4% of GDP spent on R&D but would also likely have a number of behavioural and economic multiplier effects across the economy supporting the UK’s long-term economic growth, productivity and the creation of high wage, high skill jobs.
In response the Committee’s question on what short term measures the R&D Roadmap could take to support research and innovation at this time and as we move into recovery the following areas of focus are suggested as priority areas for further action by Government:
For example, the development of an up to date list, or online registry, of current, live research and innovation pilot projects, test beds and trials happening across the UK could become a key asset to the UK’s R&D ecosystem and could be a powerful way for companies, particularly SMEs, to identify and engage with R&D activities happening in their local area. This could become a catalyst for greater awareness, engagement and involvement in existing and current R&D activities for businesses of different sizes and sectors.
 techUK written evidence - UK Science, Research and Technology Capability and Influence in Global Disease Outbreaks.
 UK tech jobs bounce back after lockdown – tech nation
 UK tech jobs bounce back after lockdown – tech nation
 Select Committee on Democracy and Digital Technologies – oral evidence 12 May 2020