Brexit may stymie British technological innovation

Chris Horn: Key challenge is to scale from domestic market to sell internationally

The UK has a long history of engineering invention and commercialisation, in part due to military exigencies. The world’s first tank was the UK’s Mk1, during the first World War. The first aircraft carrier with a full length flight deck was HMS Argus, in 1918.

The first television, albeit including mechanical parts, was demonstrated in 1926. The world's first jet engine was developed by Frank Whittle from 1930. The first full-electronic digital computer was the Colossus, in 1943 at Bletchley Park. The world's first compiled programming language was Autocode, invented at the University of Manchester in 1952.

That year also saw the introduction of the world’s first commercial jet airliner, the de Havilland Comet. In 1956, Calder Hall became the world’s first nuclear reactor to deliver commercial power into a national grid. Dolly the sheep was the world’s first cloned animal in 1996, a research result at the University of Edinburgh. In 1990, Acorn Computers in Cambridge morphed into ARM as a joint venture headquartered in Cambridge with both Apple and VLSI Technology (a US company). ARM’s chip designs have since become predominant across the globe in mobile phones and smart devices.

The UK has, however, been modestly successful in building world-class global companies despite the national propensity for innovation and discovery. Rolls Royce successfully took over the development of Frank Whittle’s jet engine in 1942. Tragic structural problems with the early versions of the Comet led to a redesign, which was then late to market, resulting in de Havilland being sold to Hawker Siddeley in 1962.

Design blueprints

The Colossus design blueprints and computers built were deliberately destroyed after the second World War, and their historical existence remained a state secret until the 1970s. The University of Manchester computer designs were commercialised via Ferranti, and subsequently incorporated by ICL, which in turn was sold to Japan’s Fujitsu in 1998.

The design of the magnox reactors at Calder Hall influenced the Windscale advanced gas cooled reactor, but commercial opportunities for a British nuclear industry faltered. The main influence of Dolly the sheep was the start of stem cell research, in which the UK remains a research leader but without major commercialisation to date. ARM was sold to Japan's SoftBank in 2016, and SoftBank has now announced plans to sell ARM to the US company Nvidia, subject to regulatory approval.

Can Brexit invigorate global technology leadership by the UK? Prime minister Boris Johnson and his adviser Dominic Cummings believe that once freed from state aid constraints designed to ensure a fair market across the European Union, then the Government of the UK will be able to directly and substantially fund promising young companies.

In proposing a major new government-funded national research agency in 2018, Cummings wrote that crazy ideas will be absolutely eligible, because the internet and quantum computing, as two examples, were also considered crazy before they entered the mainstream.

Some £100 million has already been earmarked for an experimental technology to extract carbon dioxide directly out of the air, to fight global warming. Critics assert that a stronger focus on home insulation measures would achieve much more at less commercial risk. About £400 million was invested in June 2020 into a bankrupt satellite broadband operator, with the apparent intent of trying to re-engineer its small, low Earth orbit, satellites into a global navigation system to complement the EU Galileo and US GPS systems.

Leakage of talent

Investing substantial taxpayer money into unproven privately-held companies will at least create demand for talent. Aptitude is a prerequisite for building global companies. In February, Johnson announced a global talent visa programme, to replace an older programme whose annual cap of just 2,000 visas had never been hit. But retention of skilled staff is a two-way street: if more attractive companies, more dynamic economies and healthier standards of living are apparent elsewhere, people relocate.

The UK must build globally successful companies and a vibrant economy or else it will leak talent overseas.

The core challenge for British technology companies has been scaling from the domestic market at home to sell internationally, particularly as the commonwealth was dismantled in favour of self-governance after the second World War. The 1970 Conservative manifesto under its then leader, Edward Heath, observed that higher national prosperity would result if there were a larger common market for British goods and services. Heath subsequently led the UK into the EU Common Market in January 1973.

Brexit may offer opportunities, but loss of barrier-free access to the EU market threatens the potential of British companies. China and the United States have slightly larger economies than the EU, but the UK's negotiating position as a relatively modest economy (about 14 per cent of the EU total) does not augur well for trade agreements which will accelerate British innovation.

Ursula von der Leyen, president of the European Commission, is promoting initiatives for EU sovereignty over key technologies against potential dominance from China and the US. In leaving the EU, the UK may paradoxically find its newly won economic sovereignty undermined elsewhere by strategically placed barriers to adopting foreign technologies.

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