Three Big Ideas #46

🚙 Eamonn Ives, Research Director

Last week, Waymo formally announced that from 2026 it would be offering Londoners the opportunity to be whisked around the capital in one of their autonomous vehicles. As someone who made a point of hailing a Waymo as soon as I possibly could when I last visited San Francisco, I could not be happier with this news.

In our very first instalment of Three Big Ideas, I explained how autonomous vehicles represent a much safer form of driving – “[t]he computers that control them don’t get aggressive, tired or drunk” – and how they could also pave the way to a radically more efficient transport network. But the recent announcement also gives me hope in another dimension.

When innovation goes right it doesn’t just bestow society with snazzy new goods and services. It also instils in people a technophilic mindset that a better world is possible. When things that were once impossible become an ordinary part of daily life, it forces us to wonder what other unimaginable advances stand to be made. In short, innovation – like entrepreneurship – is contagious.

With that in mind, the next logical question is what can be done to increase innovation’s virality. Of course, there are the obvious things – like governments ensuring regulations allow experimentation, or enabling immigrants who likely have novel perspectives to move easily to new countries.

Then there are the more overlooked things. In our report Blueprint for a New Great Exhibition, we made the case for reviving the 1851 Great Exhibition, which showcased the latest inventions from around the world, facilitating learning – and stimulating competition among nations to raise their respective games. A revamped Great Exhibition might be a chance for innovators to convene and demonstrate the latest in lab-grown foods, breakthrough materials, medical nanobots, and, yes, autonomous vehicles.

If innovation is a cycle that feeds on belief, then just making it more visible is one of the best forms of progress policy we have. Simply put, the future feels closer when it drives past you.

💫 Bella Rhodes, Policy Lead, Startup Coalition

Over at Startup Coalition, we have just launched a report looking at the Enterprise Management Incentive (EMI) scheme. EMI offers tax-advantaged share options to help startups compete with corporate giants for top talent. When you can’t match Big Tech salaries, equity is essential.

Our report found that EMI works brilliantly – until it doesn’t. Ninety-two per cent of employers say it meaningfully motivates employees, 82% say it helps attract talent they’d otherwise struggle to hire, and 85% believe staff motivation would suffer if options became less attractive. But the scheme is breaking at precisely the wrong moments.

Companies raising funding rounds – averaging £23 million for growth-stage deals and £31.5 million for AI firms – routinely breach EMI’s outdated £30 million asset cap in a single go. This creates a brutal tax cliff: they don’t graduate to another scheme, they’re simply locked out. While alternatives like a Company Share Option Plan exist, they’re not always suitable substitutes, leaving successful scaleups in a policy no-man’s land: too large for EMI, but not yet at scale to rely purely on cash compensation.

Meanwhile, with companies staying private longer (now 10-12 years to IPO), early employees are forced to either lose their options or face punitive tax treatment when the 10-year exercise window expires. Changes to HMRC guidance applied retroactively now prevent boards from extending opportunities for employees to access liquidity through secondary transactions. Long-serving employees are forced to choose between exercising early (paying huge upfront tax bills) or leaving the company. Their employers can’t help without jeopardising the entire scheme.

One of our key recommendations is an EMI Growth scheme. Rather than leaving successful companies stranded when they outgrow EMI, we should create a smooth graduation path – an ‘EMI Growth’ tier with higher thresholds (we suggest £500 million assets and 2,500 employees) that maintains tax advantages for scaling firms. This prevents companies scrambling to restructure equity compensation while closing critical hires, keeping Britain competitive when it matters most.

🔌 Ed Hezlet, Head of Energy, Centre for British Progress

Energy policy in the UK is facing a conundrum. Decarbonisation efforts to date have largely focused on cleaning up electricity generation, which accounted for nearly a quarter of Britain’s territorial emissions in 2004. Fast forward to 2024, and absolute emissions from the electricity sector had fallen by 78%, to just 10% of total emissions.

Unfortunately, the UK now has some of the highest electricity prices in the world. In 2024, the UK had the second-highest domestic electricity prices in the IEA and topped the charts with respect to industrial electricity costs. This is not only a barrier to growth in the UK but also stands in the way of consumers and businesses adopting decarbonising technologies like heat pumps and electric vehicles.

There is no silver bullet for solving this problem – electricity bills have become a complex array of different policy costs that have been layered up over time. Whilst some of these costs could be moved to general taxation, scope is limited with the UK’s already tight fiscal position.

One small lever to help the situation would be removing the Carbon Price Support (CPS), the UK’s second carbon cost for electricity generators, which sits alongside the UK Emissions Trading Scheme.

The CPS adds a carbon tax of £18 per tonne of carbon dioxide, which increases wholesale electricity prices by around £6.60 per megawatt-hour whenever a gas power station is the marginal generator in the wholesale electricity market.

Our research indicates that this tax increased electricity costs by around £1.6 billion in 2024, whilst only raising around £440 million in tax receipts for the government.

Whilst it is a small start, the UK needs to focus on reducing its electricity costs to more competitive levels – for the sake of households, businesses and the environment.

Three Big Ideas #45

⏳ Philip Salter, Founder

Back in 1999, a small group of British and American academics launched what would become one of the most enduring studies of its kind: the Global Entrepreneurship Monitor (GEM). A quarter of a century on, its 150,000-plus interviews each year across more than 120 economies give us a rare window into trends driving entrepreneurship across the world.

A couple of weeks ago, the Global Entrepreneurship Monitor UK National Report 2024/25 was launched. Despite the many challenges over the years, the UK is a far more entrepreneurial country than it was at the turn of the millennium. At last count, 36% of working-age adults are either running a new business or intend to start one within the next three years – the highest level since 1999. There has also been remarkable progress in who is starting businesses. Early-stage entrepreneurial activity by women has more than tripled since 2002, rising from just over 3.5% to 10% in 2024, while immigrants and ethnic minorities remain consistently among the most entrepreneurial groups in the UK.

It’s worth adding a note of caution. Entrepreneurship isn’t – or at least shouldn’t – be an end in itself. What matters is whether it leads to better outcomes – for founders and for society at large. Still, for policymakers (and for “policy recommenders” like us), it’s vital to have a firm grasp of the facts. Longitudinal studies like GEM are gold dust.

That’s why it was encouraging to see last month’s announcement that the Economic and Social Research Council (ESRC) will fund the Generation New Era study — a landmark project that will follow the lives of more than 30,000 babies born in 2026 through their early years, and potentially well beyond.

Britain’s landmark 1946, 1958 and 1970 cohort studies show how early life conditions shape later health and attainment, and how childhood poverty leaves lasting marks. They also reveal that intergenerational income mobility declined for those born in 1970 compared with 1958.

Internationally, landmark longitudinal studies have transformed our understanding of health and human development. The Framingham Heart Study, launched in 1948, was the first to show that heart disease isn’t an inevitable part of ageing but is driven by modifiable risk factors such as high blood pressure, cholesterol, smoking and obesity – insights that revolutionised preventive medicine. Likewise, Harvard’s Nurses’ Health Studies, which have followed more than 230,000 women across several cohorts since 1976, have demonstrated how lifestyle and diet shape long-term wellbeing.

If there’s a lesson for entrepreneurship policy, it’s that we still lack this kind of long-term evidence about the people who start businesses – who they are, what shapes their choices, and how their ventures affect both their lives and the wider economy. Perhaps it’s time to invest in longitudinal research that tracks entrepreneurs from the very start of their journeys – capturing not just whether they start businesses, but how those ventures evolve, what drives success or failure, and what lasting impact entrepreneurship has on individuals and communities.

🗓️ Eamonn Ives, Research Director

Across much of the world, the age at which companies decide to go public is trending steadily upwards. Few have done more to catalogue this than University of Florida’s Jay F. Ritter, whose carefully organised data on American IPOs over recent decades show that in the 1980s the median age of a company listing was just eight years old, while last year it had grown to 14. A similar trend can be seen in the United Kingdom, which partly explains why it now boasts one of the ‘oldest’ exchanges in the world – with centenarian companies responsible for a sizeable portion of the London Stock Exchange’s combined market cap.

Much ink has been spilled about the reasons for this increase. Fingers are quick to be pointed at the challenges involved in the process of listing, and then existing as a public company. The dulling effect of the Stamp Duty Reserve Tax, which levies a 0.5% tax on the purchase of shares, has also been singled out for criticism. Certainly, there is merit in these accusations, and the Government would do well to ease these burdens – as reports suggest they might be.

A more positive potential explanation, however, is that privately-held companies nowadays have a wider range of options for raising capital. From family offices, to more established VC firms, to sovereign wealth funds and private equity, promising startups are finding that they don’t necessarily have to turn to public markets to get the capital they need to grow. This will have other consequences for the economy that warrant consideration, but from the perspective of the individual entrepreneur, greater choice can only be a good thing.

In the past week, Beauty Tech Group joined the LSE with a £300 million IPO, while Princes Group and Shawbrook also announced plans to list there. This was enough for Bloomberg to declare that London had broken its ‘IPO drought’. While one swallow does not make a summer, three in quick succession should give ground for optimism that sunnier days are ahead. Whether that will be enough to reverse long-term trends, and help determined founders realise their IPO ambitions sooner rather than later remains to be seen; after all, Princes Group was originally founded all the way back in 1880.

♟️ Anastasia Bektimirova, Head of Science and Technology

Here’s a claim I keep coming back to: discovery is among the most important phases of any complex project. It’s also the one we struggle to give the right shape to, often ritualising it into paperwork that turns discovery into something defensive rather than inquisitive. By discovery I mean the process of figuring out what problem we’re actually solving, who is affected, which constraints are real, what trade-offs people will accept in practice, and what failure modes we should avoid. In policymaking, discovery is how you turn unknowns into choices. It’s also how you avoid designing for a world that doesn’t exist.

You’ll be familiar with how this often plays out in infrastructure projects. Dan Davies offers a good illustration of how our quasi-judicial system invites “the problem factory”: since a project can be derailed late on a narrow point, teams try to pre-empt every hypothetical, amplifying every perceived hazard, which can narrow options to solutions shaped by imagined vetoes. This looks more like optimising for surviving scrutiny rather than uncovering a workable bargain. Pre-emptive risk-aversion is discovery done backwards, which is also why it can underdeliver.

Here’s a thought experiment on what discovery might look like instead. Seb Krier’s new essay imagines that competent, personally aligned AI agents could lower the transaction costs that make early-stage bargaining so hard, such as finding affected parties, eliciting preferences, drafting options, stress-testing trade-offs and tracking commitments. It’s hard for people to reveal what they actually want and what they’d trade for it, so we end up with one-size-fits-all rules.

If agentic AI could lower those costs, more problems could be handled through bottom-up bargains rather than top-down approximations. Take a high-street resurfacing. What if instead of running a generic consultation, every household and shop would get a civic agent to express bounded choices (night works versus weekend closures, access windows, tolerable noise levels). The contractor would publish several concrete schedules with mitigations, agents would then aggregate responses and negotiate towards a feasible package – for example, trading later start times for guaranteed delivery windows. The few obligations that actually change behaviour, such as quiet machinery, acoustic screening or automatic compensation if access is breached would be escrowed, and a public compliance log would make monitoring straightforward. Instead of pre-emptiveness, we’d get early evidence about what people are happy to accept before decisions are made.

The essay is clear-eyed about the boundaries: default rights still matter, bad alignments would do harm, and none of this makes politics vanish. But the core claim that better, cheaper discovery through faster and broader participation could expand and improve the feasible set of options is worth noting. If tools like this can reliably lower the cost of discovery, we might spend less time defending paper universes and more time building in the real one.

Three Big Ideas #44

🧑‍⚖️ Eamonn Ives, Research Director

As our Adviser Sam Dumitriu details in his most recent report, legal obstacles represent a serious impediment to the development of new nuclear reactors in Britain. Anti-nuclear activists have weaponised lawsuits as a means to delay building, not only slowing down construction timelines, but also raising the risk premium nuclear developers face. Both of these facts increase overall costs – leaving consumers and businesses on the hook for higher electricity prices.

Of course, few would argue that developers should have carte blanche to steamroll through whichever projects they like. In a liberal democracy, it’s only right that there are opportunities for stakeholders to have their say. The operative question, therefore, is how to strike the right balance.

Since 1998, Britain has been a signatory to the Aarhus Convention – an international agreement which seeks to mediate disputes concerning environmental matters, such as those that may arise from the construction of new infrastructure. Article 9, Paragraph 4 of the Convention asserts that access to justice cannot be “prohibitively expensive,” though it does not explicitly state how signatories should enforce this. In Britain, we use cost caps, which limit the amount litigants have to pay if their challenge fails (contrary to the standard ‘loser pays’ rule in court, whereby successful defendants can claim their legal costs back from claimants). Since 2013, these cost caps have been set at £5,000 for individuals, and £10,000 for organisations (such as environmental groups).

Sam argues that we should raise the limits of these cost caps, or remove them altogether for repeatedly unsuccessful litigants. I’m minded to agree. While some grievances are doubtlessly valid, the trend of well-funded, organised groups lodging spurious objections to new developments simply to throw sand in the gears – safe in the knowledge that there’s a fixed upper limit on the cost of doing so – warrants a reappraisal of the current situation.

Where then should new cost caps be set? Well, linking them to inflation seems to me like a reasonable minimum starting point. This would bring individual caps up to just over £7,000, and organisation cost caps up to just over £14,000. Alternatively, a more common sense approach might be to follow the lead of almost all other signatories and simply afford judges the discretion to take each case as they come.

As we and many, many others have explained before, building more stuff is a quickfire way to grow the economy. But whether it’s new homes, new roads, new railways or new power stations, all kinds of infrastructure in Britain comes in over budget and over schedule – if it even gets built at all. There are plenty of levers the Government could pull on to help rectify this situation – and rethinking how it meets its Aarhus obligations ought to be one of them.

🎟️ Philip Salter, Founder

Donald Trump’s recent announcement on H-1B visas caused chaos in Silicon Valley. If his proposed $100,000 H-1B visa fee actually sticks, this will be just the beginning.

As David J. Bier argues, this hike would be prohibitively expensive for many companies hiring skilled foreign workers, driving tech out of the US, reducing innovation, lowering demand for American workers, and harming the broader economy by shrinking the supply of goods and services across many sectors. Lauren Gilbert agrees, highlighting the important point that universities and non-profits, which are exempt from the cap but operate on tight budgets, would be hit particularly hard.

Even if it gets struck down, the uncertainty presents an opportunity for the UK to capture some talent. That’s why it’s great to see our friends at Startup Coalition have published a letter calling on the government to seize the moment. It quotes our research, stating:

“Data from the Entrepreneurs Network shows that 39% of the UK’s 100 fastest-growing companies have foreign-born founders or co-founders. Companies like Wayve and Synthesia, which recently received recognition from NVIDIA’s founder Jensen Huang during his visit to London, demonstrate the transformative impact of international talent on our ecosystem.”

The letter calls for an immediate expansion of the Global Talent Fund, expedited processing for H-1B holders, one-on-one casework support from the Home Office, and updates to the Enterprise Management Incentive (EMI) scheme, all of which we back.

I would add another policy idea for public debate. As we set out in our report Passport to Progress, Canada offers work visas for migrants with H-1B visas in the US, piggybacking on American bureaucracy by interpreting their approval as a good enough indicator of talent. Like Canada, if we brought this in, the Government would want to cap it (to maintain control), but also bear in mind that not everyone accepted will move, which was the case for Canada.

Given that we know that high-skilled immigrants are drivers of innovation, and that H-1B holders consistently pay more in taxes than they receive in public benefits, if we can draw just a few thousand to the UK, it will be worth it.

💽 Anastasia Bektimirova, Head of Science and Technology

After the UK-US Tech Prosperity Deal was signed last Thursday, part of the innovation ecosystem gathered at the NVIDIA UK AI Celebration. The lights were bright and the numbers were big. NVIDIA CEO Jensen Huang had an Oprah Winfrey moment, announcing a £2 billion investment into AI startups by pointing to specific founders in the room, by name, and declaring he was investing in their next funding rounds.

You’ll be familiar with the sentiment that nights like this are all theatre. It’s true that you don’t build capacity with vibes alone, but you also can’t build it without them. The NVIDIA evening understood that and used theatre to do something policy can struggle to do on paper: place researchers, entrepreneurs and officials inside the same narrative and shift what feels possible. The Prime Minister and two Secretaries of State joining Huang on stage felt less like government “loving startups” in some generic sense, and more like a re-understanding of the strategic importance of having the capacity to build technologies, companies and innovation, with builders being placed inside the national story. This kind of theatre recruits talent, attracts capital and inspires confidence.

There was, inevitably, a degree of scepticism in the audience chatter after the speeches. Questions about economic stability and tax changes, about whether policy across departments will join up quickly enough to convert headlines into action, about energy costs, grid connections and skills on the ground, about who, exactly, will use all this compute infrastructure. It’s also true that some of what was said from that and other stages last week will materialise faster than other things. Those are fair points. In large part, domestic benefit will depend on adoption.

Against that backdrop, the Tony Blair Institute’s new report with Ipsos on public attitudes towards AI finds that while over half of the surveyed Britons report having used generative AI in the past year, 38% cite a lack of trust in AI-generated content as the biggest barrier to wider use. People are also more likely to see AI as a risk to the economy (39%) than an opportunity (20%).

Among other things, the report recommends government focus on demonstrating real-world benefits of AI and building public engagement. I agree with the thrust, and I’d add that government communications teams are already doing it reasonably well: most ministerial speeches and press releases frame AI through benefits people can feel – appointments booked faster, public services accessed easier, the planning system transformed to build more homes quicker – rather than technical capability metrics.

What the report perhaps underplays is that not every challenge requires a government intervention. While it’s fantastic that the Prime Minister is personally engaging with this agenda, the ecosystem itself needs to step up. When innovators can effectively articulate what their work delivers, they create the conditions for their own success. The theatre matters too – vibes are also part of the enabling infrastructure for everything else that follows.

Three Big Ideas #43

🌐 Philip Salter, Founder

As I write this, we are taking part in our annual trawl through Beauhurst’s proprietary data to work out the percentage of the UK’s fastest-growing companies that have a foreign-born founder, as part of our multi-year Job Creators project.

This year we’re teaming up with Kinglsey Napley, our longtime partners on immigration policy advocacy, and building out a set of policy recommendations to ensure that we have the visa routes to capture more of this small but incredible cohort of founders.

It’s no exaggeration to state that Britain’s entrepreneurial ecosystem has been built on the backs of these individuals who have actively chosen to make the UK their home. Foreign-born founders have been instrumental in innovating in everything from artificial intelligence (Synthesia) to avocados (Oddbox).

While immigration is an increasingly controversial issue, this sort of immigration isn’t. It’s why everyone from Prime Ministers downwards loves to cite our 2019 finding that half the fastest-growing companies in the UK have a foreign-born founder. I wouldn’t even be surprised to see Reform back it.

But as important as this tiny section of immigrants is, we shouldn’t fall into the trap of believing that Britain’s economy just needs entrepreneurs. Writing about the US – but with application here too – Jerusalem Demsas digs into this on her Substack, arguing that immigrants are also needed to build houses and infrastructure, which are critical for delivering economic growth.

To make this happen politically, Demsas makes the case for transfers to communities absorbing immigrants, building greater state capacity around immigration administration and funding assimilation projects. Whatever you think of her specific policy ideas, she is asking an important question: “will liberals confine ourselves to merely defending the Katalin Karikós of the world?”

⚙️ Anastasia Bektimirova, Head of Science and Technology

You know when a book suddenly becomes the conversation? That’s Dan Wang’s Breakneck: China's Quest to Engineer the Future right now. In my circle at least, it seems like every third person is reading it. To get a taste, there is a good Works in Progress interview with the author.

Wang’s central image of China as an “engineering state” that builds faster and bigger and the US as a “lawyerly society” mired in litigation and caution is an interesting framing. The contrast between Chinese and American infrastructure delivery is unquestionable, and his broader point that the US needs to rebuild industrial capability is right. Wang also doesn’t shy away from showing the costs of authoritarian control and bureaucratic paralysis. The book is well worth a read, especially for those less familiar with China’s modern history.

But the framing also risks flattening things. In his review of the book, Jonathon Sine notes the slipperiness of defining “engineering”. Many top Chinese leaders aren’t technical hands-on engineers but part of a “Leninist developmental state” class trained in ideology and party management, with all its features of centralised control, campaign-style governance and ideology-driven mobilisation. Michael Hill also argues that this better explains many of the policies Wang uses to typify the “engineering mindset,” such as the One Child Policy and Zero COVID. In fact, the share of Politburo members with undergraduate engineering degrees has fluctuated significantly: peaking at 70% in 2002, falling to 20% in 2017, and rising again to 33% by 2022. Ironically, as Sine points out, Xi Jinping’s PhD is actually in law. Similarly, the notion of a lawyer‑driven US may headline well, but doesn’t capture the democratic and institutional contexts where rights are the point, rather than procedure.

I also don’t buy that lawyers are quite the bottlenecks Wang makes them out to be. I know lawyers who are imaginative futurists or deeply involved in building with amazing foresight and contagious ambition. I doubt it’s really about credentials. Sometimes slowing things down to pressure-test risk and ask “What could go wrong here, and how hard is it to unwind?“ is what keeps a state governable. And to be clear, it’s not just lawyers who are qualified to do that.

The “engineers versus lawyers” frame prompts a broader question of how to build a government that combines capacity and expertise with pluralism. The challenge as I see it is how to regain our ability to build without opening the door to over‑engineered social control. This is less a matter of getting a specific quota of engineers or lawyers into government and more about the kinds of institutions that allow different strands of expertise to combine into action while enabling governing with care.

🛡️ Eamonn Ives, Research Director

If there’s one thing we’ve all had to learn – or perhaps re-learn – over the last few years, it’s that the first duty of a government is to protect its citizens. Following Russia’s full-scale invasion of Ukraine in 2022, virtually all European countries have doubled down on bolstering their nations’ defences – in rhetoric, spending, and other reforms. This week, the Ministry of Defence (MoD) published its new Defence Industrial Strategy, which sets out a series of changes to improve the relationship between the Armed Forces and Britain’s defence sector, and put us on a surer military footing.

As the Strategy notes, one area holding back innovation in the defence sector is our “Cold War-era procurement cycles,” which are characterised by “a ‘feast and famine’ approach to investment” that conspires against smaller and potentially more technologically innovative players. Aside from simply increasing the overall spending envelope that will be afforded to defence contractors – which will doubtlessly help plug gaps – the Strategy also notes how the recently established UK Defence Innovation (UKDI) will be empowered to accelerate cutting-edge capabilities.

If the language used to describe the new unit is anything to go by, defence tech entrepreneurs should be heartened. UKDI will be granted operational autonomy from the MoD, be encouraged to take risks and not be afraid of failing fast, and be headed up by a strong figurehead with the ability to coordinate with a range of Whitehall departments where necessary. Alongside this, the MoD itself will commit to “targeted regulatory sprints” in priority areas, to review where red tape is suffocating startups that are pioneering promising technologies. While, of course, the results remain to be seen, it’s hard to fault any of these pledges.

Entrepreneurs outside of the defence tech space would be forgiven for thinking that they are, at best, an indirect beneficiary of the new Strategy. But a theme running through the 112-page blueprint is the importance of developing dual-use technologies – and specifically, how more will be done to leverage military innovation for civilian applications. Many of us will be familiar with how the Internet, GPS, jet engines, drones – even canned food – can trace their origins back to times of warfare. Should all go to plan with the new Defence Industrial Strategy, we might just be adding to that list of useful everyday inventions.

Three Big Ideas #42

🚇 Eamonn Ives, Research Director

Fans of Monopoly will know that Old Kent Road is the cheapest square on the board. But under new proposals from the think tank Labour Together and campaign group YIMBY Alliance, its real-world value could change dramatically.

In a joint paper, the two groups argue for a new approach that would allow London to fund more of its own infrastructure rather than constantly going cap in hand to the Treasury. They use the extension of the Bakerloo line from Elephant and Castle down through the Old Kent Road and beyond as a case study, but the principles could apply equally well elsewhere across the capital – and to other big city regions such as Greater Manchester or Birmingham.

As their paper notes:

“When the public sector builds infrastructure or grants planning permission, it can lead to huge windfalls for existing landowners. Allowing a landowner to build housing on agricultural land in the South East can increase the value of the land by 100 times. But it is also businesses and homeowners. Commercial rents and house prices close to Crossrail stations rose faster than the London average after the project was announced. These windfall gains have nothing to do with entrepreneurship or risk-taking. They are the result of decisions and hard work by the public sector, and the public sector should retain much more of the value uplift to pay for infrastructure.”

There are plenty of models for making that happen. Paris has used a small payroll tax and a levy on tourism to fund upgrades to its Metro, which could be replicated here. The Mayor could also be given powers to require outer boroughs to build more homes along new routes, in exchange for a faster commute into central London.

With public finances under strain – and growing pressure on the government to splash cash outside the capital – it’s increasingly difficult for London to make the case for more handouts. But as I wrote last week, strong agglomerative effects represent one of the best ways to escape our economic doomspiral. To amplify agglomeration, we need to explore every option for funding the transport upgrades to keep the city moving. Proposals like those set out in Labour Together and YIMBY Alliance’s paper deserve to be taken seriously.

💳 Anastasia Bektimirova, Head of Science and Technology

Imagine everyone set aside a small monthly budget for articles, podcasts and videos. But instead of locking it into subscriptions, we put it in a programmable wallet, tell an AI agent what and whose taste we trust, and let it give tiny payments to what we read, watch and listen to. As content arrives, the agent evaluates it against our preferences and context: what we’ve recently consumed, what our network has paid attention to, what is timely or under-reported. When something resonates, the agent sends a micro‑tip to the creator, leaving a receipt that can validate and, if we choose, publicise our attention.

Daisy Alioto, co-founder and CEO of Dirt, an independent media outlet, sketched out this vision in a piece arguing that “the future of media is a bank”: spontaneous payments replacing set-rate subscriptions, autonomous agents trained on taste and empowered to tip, attention recorded not in clicks but in stablecoin transactions.

Speculative as it sounds, it could be a return to something magazines once did well. A recent wave of Condé Nast’s reminiscence reminds us that the miracle was not in the glossy paper, but rather in the system around it: editors serving as gatekeepers and readers as members of a scene. That era industrialised curation as a social technology and made status convertible into money through almost ritualised purchase.

Today, distribution is effectively infinite. Alioto’s proposal tries to rebuild the social architecture that magazines once provided but with the tools we now have and with less gatekeeping. The mechanism would let payment travel with attention and count as proof of support. Micro-tips become a record of taste, which is private by default, but shareable when you want. Agents learn what you like, how you value it, and distribute spending accordingly. Creators get small, frequent income streams instead of fixed subscriptions or volatile advertisement revenues. Since wallets are programmable, agents can also follow agents of others, so discovery flows through people you trust rather than a platform feed. In that world, attention is both a budget and a public signal.

🌎 Jessie May Green, Events and APPG for Entrepreneurship Coordinator

The COP30 Presidency recently announced the daily themes for this year’s global climate conference, which will take place in the Amazonian city of Belém, Brazil in November. To my joy, one of the themes is ‘Small and medium entrepreneurs’.

It makes sense – small and medium-sized enterprises represent a whopping 90% of businesses worldwide, make up half of the global economy, and produce half of global emissions. If we are to get a grip on rising temperatures, we can’t afford to leave SMEs out of the conversation. Not only in the sense that their emissions will have to fall, but also because many will be invaluable in providing innovative solutions to the challenge at hand.

On this front, the UNFCCC – the body responsible for organising the COP climate summits – has issued a call to action to accelerate its ‘Climate-Proofing SMEs’ campaign. Their aims are to: increase green finance from the full spectrum of financial institutions; ensure at least 30,000 SMEs have resources available to support them tackling emissions, from carbon footprinting tools to region-specific training; and – by COP30 – to see at least 150 large businesses actively engaging SMEs in their supply chain via long-term net zero programmes.

It is great to see SMEs coming to the forefront of climate conversations, and to see this supported by institutions in the UK. For example, the Centre for Climate Engagement at Hughes Hall, University of Cambridge, which is building a network of academic experts on SMEs and climate change. Hopefully, these efforts will combine to catalyse greater business participation at COP30 – participation that is so vital to climate adaptation and resilience.

Three Big Ideas #41

🕳️ Derin Kocer, Adviser

Since Labour returned to office, every fiscal event has focused on “filling the fiscal black hole.” As Philip wrote last week, the next one will be no different – except, if anything, the black hole only seems to be getting bigger. One obvious way to fill the gap is to raise the rate of VAT, or, more creatively, to broaden the base to which it applies. However, neither approach offers a sustainable long-term strategy to shore up Britain’s public finances.

The Treasury’s real problem isn’t a newly formed deficit — it is an enduring one. Spending has failed to normalise post‑pandemic. According to official estimates, public spending as a share of GDP for 2024-2025 will be at around 44.4%. Although this represents a significant fall from 2020, when the pandemic caused it to spike to 50%, it’s still well above the pre-pandemic levels. The IMF estimates that between 2015 and 2019, government spending averaged 39% of GDP annually. Meanwhile, our debt has also increased dramatically to over 100% of GDP and there is no plan to pay it down quickly. Under Tony Blair, Britain’s debt burden was under 40%.

Our fiscal situation stands in stark contrast to many of our European peers, whose finances returned to pre-pandemic norms more quickly. In Britain, meanwhile, numerous practices designed for the pandemic era were kept in place, which continue to contribute to the unusual and consistent rise in welfare spending. The stealth tax rises Reeves introduced since taking office have paid for these but have also made inflation and high interest rates stickier than elsewhere. We need to get back to normal if economic growth is the core mission.

Rachel Reeves cannot continue to rely on tax grabs to balance the books. She must also stand up to members of her own party and cut spending back to normal levels. It’s worth adding that the Conservatives should give them the ‘political headroom’ to do so, if they too are serious about sustainably fixing the ‘fiscal headroom’ problem every Chancellor has faced in the past decade.

🔭 Anastasia Bektimirova, Head of Science and Technology

I recently took part in two different foresight exercises. One was a simulation game that tasked participants, who role-played as governments, tech companies and scientists, to make constrained choices under uncertainty. Another one was a rapid scenario sprint that asked participants to judge how various shocks would shift the UK’s position across several AI-related strategic fronts. Both were valuable for surfacing trade-offs quickly, exposing coordination gaps and clarifying sequencing. They also shared a familiar limitation of strategic foresight work: generating narratives about the future, but not decision-grade evidence about how people are likely to behave inside it.

In many ways, policymaking, especially in emerging science and technology domains, is the disciplined management of uncertainty – turning incomplete information into choices that aim to protect and create public value. Governments often have to set rules before the behavioural and second-order effects of a technology are observable at scale. On their own, horizon scans and lists of risks and hopes don’t show how people will act within those futures. That requires a different kind of foresight.

A piece published in Nature last week calls this shift “science-fiction science.” The idea is to simulate plausible near-term futures and run controlled experiments inside them to measure attitudes and behaviours before norms and markets harden. Done well, this could offer evidence on how big the effect is, who it helps or harms and which mitigations work. Where this was attempted – most notably around autonomous vehicle ethics – research such as the Moral Machine project helped structure policy debates and, in places, legislation. Where this wasn’t the case – for example, genetically modified foods – public attitudes hardened before behavioural research caught up.

New tools make this approach ripe for experimentation. Take Google DeepMind’s Genie 3, released last week. It’s an example of world-model tooling that can generate interactive 3D environments from simple prompts that can be navigated in real time, with conditions adjustable on the go via a prompt. In theory, this could generate interactive, policy-relevant micro-worlds, lowering the cost of turning priority questions into experiments. That could make it feasible to prototype, for example, a busy high street to examine how delivery robots affect pedestrian behaviour, or a drone delivery corridor to assess noise tolerance and complaint behaviour. The standard of proof would still come from the protocol with clear hypotheses, representative samples, randomisation, incentives and transparent reporting.

Here’s a thought experiment on what an institutionalised version of this could look like. Create a small, cross-government experimental foresight lab that runs or commissions simulations for priority questions and curates the best results as shared benchmarks. Its mandate would be to pre-register hypotheses with policy teams, recruit representative cohorts, and publish effect sizes with uncertainty and distributional impact. It could then endorse high-quality studies as benchmarks, signalling national priorities so departments, regulators and procurement could optimise for them. This would keep foresight close to strategy and delivery, and let evidence travel across portfolios and survive political cycles.

🚀 George Patin, Intern

Over on The Generalist, their team have put together the 2025 edition of The Future 50: the most promising startups valued at or below $200M, as selected by over 200 investors, from all across the world.

One of the most striking things about this grouping is just how lean the teams are. The median team is only 26 people, with many at 15, 10 or even 4 core members. While most are very young companies, many nevertheless boast very impressive multiples of revenue per employee. This broadly tracks with Carta’s earlier report on startup hiring – founding teams are getting very lean indeed.

It is no coincidence that this is happening alongside the rise of vibe coding and better AI in general. Prototyping, early brand design, pitch decks, research — all speed up initial validation and let companies scale faster right away. We’ve already seen Lovable break every speed record to cross $100 million ARR in 8 months. The trend, it seems, is towards companies being spun up practically out of thin air, possibly as fast as a single day.

Policy, too, is gradually adapting to the new speed of startup scaling. The EU’s proposed 28th regime, a harmonised business framework across the entire Union, has now moved into consultation. A project of this magnitude is bound to be challenging, but the goal itself is simple: make company formation faster, compliance easier, and the overall flow smoother.

There is a lot to be said for reducing barriers to innovation. One need only look at Estonia, which Anastasia wrote about here last week, with its recent digital reforms and 10 unicorns to show for it. It isn’t merely removing legislation, either, but making it responsive and closely attuned to the needs of entrepreneurs. If policy is able to match the new pace enabled by emerging tech, we may very well see more Lovable-style stories in the near future.

Three Big Ideas #40

🇪🇪 Anastasia Bektimirova, Head of Science and Technology

It’s hard not to pause when you come across a public sector programme whose motto is “making illegal things legal.” That line belongs to Accelerate Estonia, an innovation lab in the country’s Ministry of Economic Affairs and Communications, set up to identify and fix regulatory barriers to innovation. I first came across it in a characteristically insightful episode of the Statecraft podcast, discussing Estonia’s digital state.

Accelerate Estonia helps businesses overcome obstacles by shaping policy and, where needed, proposing legislative changes, so innovative ideas can operate lawfully from Estonia rather than stalling in a sandbox or moving overseas. Applicants are filtered for a clear need for regulatory change, scalability potential, and a ready-to-pilot concept. The focus is explicitly B2B/B2C rather than selling to government. This model sets ambition (open a market) and backs it with the unglamorous mechanics that move the needle.

What stands out is the delivery discipline. Validation stage (1-3 months) tests whether there’s a genuine legislative issue, the likely economic impact, and whether the solution is mature enough to pilot. Definition stage (3-6 months) turns that diagnosis into a delivery plan: pinning down the rule change required, the pilot and impact analysis, stakeholders and budget, and the specific R&D value. Proof stage (6-18 months) is focused on execution – draft the amendment, run the pilot, carry out the public-private cooperation plan. Finally, the results/aftercare stage presents the amendment to relevant parts of government, communicates the newly opened market, concludes cooperation, and reports the R&D value.

The method has proven to work in various domains. In health, Accelerate Estonia and the Ministry of Social Affairs have taken a self-service pharmacy model to the finish line, with amendments to the Medicinal Products Act now being introduced so 24/7 automated dispensing can legally enter the market. In education, a pilot led to draft changes to the Basic School and Upper Secondary School Act to let schools procure teaching from external providers.

As the UK builds out the Regulatory Innovation Office, tasked with reducing the burden on businesses bringing new products and services to market by supporting regulators in updating rules and speeding up approvals, Accelerate Estonia could offer a lesson in how to operationalise it. In practice, that would likely mean pairing pilots with a relevant regulator from day one, running regulatory analysis alongside technical work, and defining ‘graduation’ as a safe, evidence-based rule change that opens a market.

🏗️ Philip Salter, Founder

Over on Slow Boring, Matthew Yglesias dishes out some useful policy advice to those looking to get more housing built in the US. Yglesias argues that campaigners shouldn’t ditch YIMBYism’s single‑issue focus while building out a broader, moderate urban reform coalition that links housing to public safety, transport and schools.

This strikes me as correct and more widely applicable. Whether you agree with them or not, the success of campaigns by the likes of the Living Wage Foundation, Migration Watch and the Campaign for Real Ale (CAMRA) testifies to the power of single‑issue focus (or perhaps monomania in some cases).

As a generalist, I’m grateful for single‑issue specialists – both the internal and external authors of our reports and, more broadly, those whose outside ideas we can adopt. For example, in our own work on planning reform – the topic of Yglesias’s article – we integrate ideas from specialists beyond our domain: Samuel Hughes and Ben Southwood on Street Votes; Paul Cheshire on the Green Belt; Ant Breach on change‑of‑use rules; and Tim Leunig on land auctions.Our added value is to make the case through the lens of entrepreneurship and to build a coalition of entrepreneurs who back these reforms.

I often quote the 33rd US president – “It is amazing what you can accomplish if you do not care who gets the credit” – especially when another organisation claims credit for something we’ve helped to make happen. But the truth is that we’re all part of an ecosystem that relies on coalitions to bring about the change we want to see in the world.

📈 Eamonn Ives, Research Director

For the last two weeks, there’s been a sentence from the latest chapter in Jason Crawford’s peerless Techno-Humanist Manifesto that I’ve struggled to shake from my head:

“[A]nnual growth rates in world GDP were less than a hundredth of a percent in the stone age, a fraction of a percent in the agricultural age, and single-digit percentage points in the industrial age. If this pattern continues, a fourth age would eventually produce sustained double-digit growth, meaning a world economy doubling time measured in years.”

If past performance is any guide, future economic revolutions will arrive faster than the last. We may now be at a point where people alive today could live through multiple eras in a single lifetime.

There are no prizes for guessing which technology is poised to usher in the next such one. Just as steam powered our transition from an agrarian to an industrial economy, artificial intelligence may do the same for cognitive work – potentially propelling us towards unimaginable levels of prosperity, as autonomous robots relieve us of countless tasks and AI helps unravel the mysteries of the universe.

Given the speed of recent AI breakthroughs, it’s easy to assume that its continuing advance is inevitable. But that would be a mistake. Every epoch defining technology has had to contend with political constraints and public scepticism – and these are forces that no model, no matter how advanced, can necessarily navigate alone.

We should expect plenty of ‘Red Flag Acts’ which curtail AI deployment in sensitive areas like autonomous vehicles, healthcare or criminal justice. And don’t forget – even centuries after agricultural mechanisation began, large parts of the world’s farming industry would be disappointingly familiar to our ancestors. The diffusion of innovation is seldom as smooth or swift as we might wish.

For all its transformative potential, AI’s impact will depend not just on computational power, but also conventional politics. Unless we grapple with that fact, the future may unfold more slowly – and unevenly – than many anticipate.

Three Big Ideas #39

🙎‍♀️ Eamonn Ives, Research Director

One of the longest-running research projects here at The Entrepreneurs Network is our Female Founders Forum. Through the Forum, we seek to encourage entrepreneurship among women in Britain, as well as highlighting the obstacles that hold them back – such as the gaping gender equity gap.

Data like this is critical ammunition for making the case that further change is required to give women entrepreneurs an equal shot at success compared to their male counterparts. Therefore, while their findings are far from positive, a new research paper from Camille Hebert, Emmanuel Yimfor and Heather Tookes, is a welcome contribution to the evidence base around the role of gender and startup financing.

In their dataset of venture capital-backed American companies, they not only find that women comprise just 13.3% of founders, but also that this figure actually shrinks to a mere 4% when looking at founders who have started three or more companies. This is perhaps counter to what one might expect, given that serial entrepreneurship is at least correlated with startup success.

Unfortunately, the bad news doesn’t end there. The authors’ analysis also reveals that:

“[W]omen serial founders are penalized with smaller VC deals following failures of their prior startups but they are not rewarded with larger deal sizes following past successes. By contrast, men are rewarded for their prior experiences as founders, regardless of whether their startups were failures or successes.”

And it gets worse still. They further identify a negative spillover effect that occurs when a female-founded startup fails in an investor’s portfolio – whereby the value of subsequent deals involving women-led companies falls by between 6.7-7.5 percentage points over the next five years.

What policymakers should make of all this is not straightforward. It points to the root cause being a more societal issue – whereby female founders are punished via a mixture of bias and stereotyping. Perhaps more than anything, changing that will require VCs themselves to ensure they are not – even unconsciously – discriminating against female founders.

An economy can hardly hope to fire on all cylinders if it doesn’t unleash the full potential of one half of its population. While stories of fantastic women-led businesses are becoming more common, data like these underscore just how much further we have to go.

🌱 Anastasia Bektimirova, Head of Science and Technology

Behind every spinout is a system that knows how to cultivate the entrepreneurial mindset in scientists. Massachusetts Institute of Technology (MIT) wouldn’t be the last place to look up to in that respect – its Technology Licensing Office handled 593 new invention disclosures in 2023 and supported 23 startups to spin out that year, adding to a total of nearly 600 spinouts since 2000.

Last week, Professor Dame Fiona Murray, Associate Dean of Innovation at MIT School of Management, told the House of Lords Science and Technology Committee what MIT gets right about preparing innovators. Entrepreneurship training is woven into the fabric of postgraduate programmes, sending a clear signal that launching a startup is a valued career path and rewarding academics for commercialisation in the tenure process. MIT also creates cross-disciplinary opportunities, such as bringing together STEM PhD candidates with business school students to focus on turning ideas into businesses.

This is part of undergraduate training too:

“…what our undergraduates, particularly our technical undergrads, find most interesting are the courses where we put interesting problems in front of them. They are doing engineering work or scientific work focused on a real problem, and we then wrap innovation education around it. What would it take to turn that into a real product? The education is a lot less about writing a business plan. We try to weave it into existing classes and a number of extracurricular things.”

Equally important is providing infrastructure support. Many deep tech founders spend their early funding – the first $5 million, according to Murray – replicating university equipment just to repeat the experiments. MIT has responded by opening its core facilities to alumni startups on easy terms and without IP reach-through. As she noted, “the government have paid for the equipment, so it is part of economic growth” – framing shared infrastructure as a smart use of public investment rather than university generosity.

When asked about the early signals of research with the potential for successful commercialisation, Murray pointed to two main characteristics: timing and people. The strongest ventures emerge when the scientific risk has been reduced but engineering challenges remain – essentially, the moment when science is proven but building a prototype requires additional work and funding. Equally important is having the right team: a motivated PhD or postdoc who is ready to lead the company, supported by a professor who believes in the idea but doesn’t try to run it. “Most professors are terrible CEOs,” she noted. Moderna exemplifies this model, where timing and team dynamics aligned with well-developed research. What matters is a small, aligned team with ambition, trust, and a well-timed leap.

💼 Florian Golser, Intern

Now encompassing over 1.7 million individuals in the UK alone, the gig economy has become one of the defining features of the modern world of work. On paper, this benefits both individuals and firms by better matching the supply and demand of labour, granting workers more opportunities to earn, and giving businesses that contract them greater flexibility. Academic evidence has even shown how gig work platforms can increase entrepreneurship, ultimately keeping markets dynamic in the long run.

Despite this, the rise of the gig economy is not without its critics. To be sure, even its biggest proponents would readily admit that the gig economy has drawbacks that may warrant further inspection. Due to the remote nature of many gig economy jobs, freelancers may face strong international competition, and thus be forced to accept lower wages. Most receive no benefits and nearly 500,000 earn too little to qualify for Statutory Sick Pay. Only gig workers with ‘employee’ status qualify for minimum wage, while those who are deemed self-employed – which remains the norm – are left with few legal protections to fall back on. While gig work can empower individuals to launch something of their own, further reforms could help to ensure the gig economy truly can serve as a springboard for genuine entrepreneurship.

One promising change would be the introduction of portable benefits – employment protections like sick pay or pension contributions that follow workers across jobs and platforms. This would preserve the flexibility that makes gig work attractive, while extending key advantages of traditional employment. Last Monday, Republican Senators in the US proposed a bill that would allow companies to offer benefits to gig workers without reclassifying them as employees. Although the scheme would be voluntary, it marks a step in the right direction – and is something that the UK should seriously consider replicating.

Alongside this, introducing targeted tax credits for freelancers – similar to schemes in most OECD countries – could help reduce financial barriers to self-improvement and entrepreneurial risk-taking. Currently, the self-employed cannot claim relief on training that develops new skills. According to a 2023 report by IPSE, 51% of freelancers undertake no training, and those who do spend an average of £828 – a figure that does not include the opportunity cost of time spent away from work. By removing this barrier, the government could help unlock entrepreneurship among its growing population of gig workers, and begin addressing the UK’s productivity gap.

Three Big Ideas #38

🗣 Philip Salter, Founder

As one of the world's best journalists covering innovation and entrepreneurship, I have a lot of time for John Thornhill, Innovation Editor of the Financial Times and founder of Sifted.

Reporting on our inaugural survey of entrepreneurs, he shares our key finding that just 4% of founders thought the government understood their needs as entrepreneurs, and only 19% were optimistic about the prospects for the economy over the next 12 months.

Thornhill writes approvingly about our efforts to change this, though he offers a piece of advice I would quibble with. He thinks, “raging against the government may be rather like complaining about the weather: fun but futile. Britain’s startups may have to hunker down and wait for the storm to pass.”

While there is a lot of wasted breath, I think a better piece of advice for founders is learning how to channel their rage. I would say this (I guess), but we and other organisations offer a platform for their voices to be heard and amplified. Governments don’t listen to every gripe, but if we can make a strong case that entrepreneurs are actually aggrieved, that it will negatively impact the economy and, potentially, as a consequence, their election prospects, they’re all ears.

We are seeing this play out around the proposed Employment Rights Bill, but I could cite countless examples. Indeed, entrepreneurs have changed the course of history, most notably in the 19th century, when northern manufacturers and businessmen like Richard Cobden and John Bright formed the Anti–Corn Law League, leading to the repeal of the Corn Laws, which set Britain firmly on the path towards free trade.

Margaret Mead was right: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”

🎛️ Anastasia Bektimirova, Head of Science and Technology

In Science and Politics by Ian Boyd (a former Chief Scientific Adviser at Defra), a comparison of science advice models caught my attention. Ian writes:

“...the British/American Model for a science advisory system…focusses on placing key scientists close to the seat of political power. It contrasts with what could be called the Continental Model of advice (because it is common in Europe). Advice, in that case, is most often delivered using a committee-based structure where scientists are asked questions from within the politics factory and they provide an answer often by consensus in the form of a committee report.”

Ian also suggests that legal systems may nudge countries towards one model or the other. In many civil-law jurisdictions, advisers can face personal liability if their guidance is judged negligent. For example, after the 2009 L’Aquila earthquake, Italian prosecutors initially charged government risk commission members for allegedly providing inadequate warnings to the public, though most were later acquitted on appeal. The case was still widely read as a warning to scientists everywhere. Such cases reinforce Europe’s tendency towards caution and collective, precautionary advice. Hence the EU’s long, committee-led deliberations on issues such as gene-edited crops, which are thorough and transparent, but often mired in regulatory limbo as member states disagree.

But while the binary is useful, reality proves messier and more interesting. Even the UK, often cited as the “scientist-in-the-room” model, has in practice stitched individual and collective channels together through a web of committees, the Council for Science and Technology (CST), SAGE for emergency response, and a network of Chief Scientific Advisers (CSAs) – all of whom pull in outside experts. The CST surfaces long-range, cross-departmental issues, departmental CSAs bring discipline-specific depth, and crisis response panels like SAGE mobilise outside expertise quickly. The system might appear personal but is underpinned by networks and committees that distribute expertise and responsibility.

Systems of science advice rarely rely on one model, and that’s a good thing. History shows that flexibility matters. On one hand, Thatcher’s personal science aide in No. 10 managed to steer a policy shift by convincing her to prioritise funding for curiosity-driven basic research over near-market projects – a move pushed through despite the scepticism of the government’s science committees at the time. On the other hand, when faced with a sensitive issue of embryonic research, Thatcher opted for an external committee to handle the evidence gathering and moral deliberation, rather than relying on a single adviser’s judgement.

Effective science advising requires not picking sides but mixing tools. Individual advisers deliver swift, agile, context-aware input, while wider expert groups provide legitimacy, depth and political resilience. The most successful approach is to treat each model as complementary, using each when it plays to its strengths, so that sound science advice finds its way into policy.

🏙️ Jessie May Green, Events and APPG for Entrepreneurship Coordinator

Inauspiciously, London Climate Action Week 2025 was sweltering. Heatwaves in June were once expected to occur every fifty years, and yet we’ve just had two in a single month. It quickly became clear that Britain’s infrastructure is simply not built to cope with the increase in out-of-the-ordinary weather, almost certainly brought on by anthropogenic climate change.

Warnings were issued to hospitals and care homes regarding the risk of heat stress in vulnerable patients, and Tube and rail users were prepped to expect disruptions due to high track temperatures. Bedfordshire Council even sent out road gritters to prevent melting tarmac, and London’s fire chief cited the risk of wildfires as ‘severe’.

The consequences of out-of-date infrastructure were clear when the London School of Hygiene and Tropical Medicine gave its prediction that the UK will experience the fifth-highest number of heat-related deaths out of all European countries between 30 June and 4 July 2025. Short-sightedness and underinvestment have fed this lack of preparedness in the UK for decades – but it’s not too late.

The good thing about London Climate Action Week co-occurring with this heatwave is that there were plenty of hopeful tales to cut through the disruption. Innovation is happening all over the country (and, indeed, the world) for the purpose of making UK towns and cities cleaner, greener, fairer, and cooler. For example, Fornax – finally making heat pumps affordable; NatureMetrics – enhancing nature monitoring using eDNA; and Glitch – a cyberbug bot that helps Londoners design their own biodiverse garden.

To support these innovators, we at The Entrepreneurs Network will continue to champion entrepreneurs to make the policy landscape as supportive as possible. If you are a climate tech founder and would like to discuss your experiences starting or scaling your business in the UK – please get in touch.

Three Big Ideas #37

🎉 Philip Salter, Founder

With news that Emma Jones CBE has been appointed as the new Small Business Commissioner, it’s time to return to one of my favourite questions: how can we get more expertise into the government? And, more importantly, how can we ensure they are able to deliver?

Over the years, Emma, who is a Patron of The Entrepreneurs Network, has always made the case for getting more entrepreneurs and innovators into government and public service more broadly, so it’s great to see her follow her own advice. Critically, Emma has already been involved in government, so knows how it works (and, more critically, how it doesn’t).

As Anastasia has written here before:

“Having innovative thinkers embedded in government as a norm also increases the chance of something exceptional emerging from within. When Pat McFadden outlined the idea of experts from tech companies doing “Tours of Duty”, it might have been interpreted as if no innovator had set foot in Whitehall before. This is not the case. For example, such individuals were critical to the creation of the Vaccine Taskforce, ARIA and AI [Security] Institute – all remarkable examples of startups inside the government.”

But we can go back even further – to the much-emulated Government Digital Service (GDS), which delivered the ground-breaking (at the time) single government website GOV.UK. In the case of GDS, success was driven by a mix of technologists and entrepreneurs: Mike Bracken – a seasoned digital transformation expert; Martha Lane Fox, co-founder of Lastminute.com; and Ian Watmore, an experienced civil servant with a technology and management background.

Alongside the positives, there are also lessons to be learned in the stalling of progress at GDS. The reasons for this are up for debate, but listening to those who built it is probably the best place to start.

🎲 Eamonn Ives, Research Director

Yesterday I attended a research symposium hosted by King’s College, London’s Centre for the Study of Governance and Society and the University of Texas at Austin’s Civitas Institute. Our watchword of the day was dynamism, and specifically how we can get more of it. As well as the usual (yet always critical) discussions about specific regulations that restrict businesses from innovating or high marginal tax rates that disincentivise risk-taking, attendees were also keen to probe some of the more ‘societal’ explanations for why dynamism may have stalled in the United Kingdom.

Executive Director of the Institute of Economic Affairs Tom Clougherty raised the point that our society is slowly but steadily getting older on average, and asked whether this translates into a politics that places more emphasis on stability than dynamism. I am minded to believe it does – one only has to think about recent debates over whether institutional investors like pension funds should be able to skew their allocations towards riskier but potentially higher reward asset classes such as venture capital to see this in action. Moreover, as Britain gets older, the state mechanically has to call upon a relatively smaller labour force to pay for more retirees, for a longer period of time – which necessitates higher taxes. And last but not least, I’d happily wager that age strongly correlates with plenty of forms of NIMBYism, perhaps the most pernicious enemy to a dynamic economy.

From increasing immigration to making it easier for families to form and have more children, there is no shortage of levers the government could pull on to try to make the country more youthful. While results won’t be instant, an interesting consequence may be that we become more comfortable with dynamism. Though that may trade-off some stability in the short term, if it means our economy is better equipped to adapt to a rapidly changing world, we may just find that dynamism and security are not as mutually exclusive as many might assume.

🥇 Anastasia Bektimirova, Head of Science and Technology

While most R&D flows through traditional grants, there are other funding mechanisms that work very differently. One of them is challenge prizes. For example, the Vesuvius Challenge offered $700,000 to anyone who could use AI to read ancient scrolls carbonised by Mount Vesuvius, and within months, a team of students had cracked 2,000-year-old texts that had been unreadable for centuries.

The efficacy of challenge prizes was a subject of discussion with two former DARPA directors during last week’s as ever insightful House of Lords Science and Technology Committee session. When asked about DARPA’s famous challenges, Dr Stefanie Tompkins highlighted the multiplication effect: “you have put down a $50,000 prize and you have a whole mass of other people each putting in $500,000 to win it. The multiplication is quite powerful.” DARPA’s 2004 autonomous vehicle challenge appeared to be a failure when no team finished more than 5% of the desert course, yet Stanford alone spent over $3 million chasing a $2 million prize, and the ripple effects include companies from Waymo to the countless startups.

A takeaway from the session is that challenges work as accelerators, not substitutes. As Dr Arati Prabhakar said: “challenges are, in my view, a terrible way to fund the underlying research.” She used the autonomous vehicle example to illustrate: “The self-driving car challenge was not how the AI for image recognition was developed, but that was key to that success. That research had to be funded.” Challenges excel as accelerators when the underlying science exists but application remains elusive, and when there are clear success criteria but multiple solution pathways. For example, DARPA’s AI Cyber Challenge asks whether humans partnered with AI can better defend against cyber threats, with Google, Microsoft, OpenAI, and Anthropic donating access to their latest models because they share the problem and want the solutions.

The multiplication effect runs deeper than just private investment. Challenges compress innovation timelines from decades to years through focused urgency. This urgency creates breakthrough thinking and lasting networks of innovators. Challenge alumni can go on to found companies, launch university programmes, and recruit from their competition networks. The result is an ecosystem effect where a relatively small initial investment can create compounding value for years.

But timing matters enormously. Both Dr Tomkins and Dr Parbhakar stressed that challenges fail when problems need sustained basic research or patient infrastructure investment, or tolerance for highly uncertain outcomes. They succeed when speed takes priority and when demonstration creates a validated proof-of-concept that reduces risk for follow-on funding. As Dr Prabhakar said, a key question is: “if you did it, would it lead to something that had outsized impact?”

Three Big Ideas #36

⚡ Eamonn Ives, Research Director

Detractors of renewable energy love to point out that wind and solar only generate power when the conditions are right. They’re not technically wrong, but the critique is increasingly outdated. Advances in battery technology mean that greater quantities of clean energy can be stored and discharged to the grid when wind speeds are low or the sun isn’t shining.

Batteries, however, aren’t the only innovative fix to renewable power’s stop-start nature. Smart technologies that easily allow people and businesses to adjust their power consumption to times when energy is abundant are gaining in popularity. In theory, they represent a handy way to smooth out imbalances in supply and demand. Yet, according to a new paper, smart technologies should not be seen as a panacea.

Researchers ran an experiment to investigate how people respond to ‘peak events’ – periods of high-energy demand, when electricity is expensive and users are rewarded for cutting back. One group in the study was given fully automated tech that reacted to peak events without them lifting a finger. Another used app-enabled devices requiring minimal effort. A third group made manual adjustments.

What the researchers found was striking:

“[H]ouseholds with passive, automated responses reduced consumption five times more than those required to take any action at all, even when the burden is greatly reduced via smart technology. The provision of enabling technologies alone made no difference in households’ responsiveness, as compared to a fully manual setting, when active participation was still required.”

Ultimately, they conclude that the “opportunity cost of time and effort – not technology limitations – may be the fundamental obstacle to unlocking electricity demand flexibility.” Thus, if smart technologies are to play a bigger role in decarbonising the grid, this study suggests that they’ll need to be clever enough not to count on their lazy human operators.

🌀 Anastasia Bektimirova, Head of Science and Technology

A study published in Nature last week mapped 25.8 million papers and 1.7 million patents and found a “pivot penalty”: the further a work strays from its author’s prior topics, the less likely it is to land in the top-5% of citations. Papers with the smallest pivots hit that bar 7.4% of the time, while the highest-pivot papers manage it 2.2%. The pattern holds across 93% of scientific sub-fields and has grown steeper over the past five decades. Even during the COVID-19 pandemic, when scientists pivoted en masse to address urgent needs, those who ventured furthest from their established expertise faced, on average, the same penalty despite working on high-demand research. The data suggest that when researchers pivot, they pay a price that remains even in moments when pivoting is most needed.

At first glance, the pivot penalty seems to pit deep expertise against exploratory breadth. But the paper also hints that the problem is institutional. Large pivots underperform partly because outsiders struggle to penetrate new audiences and lack the conventional combinations that editorial gatekeepers reward. Researchers who step outside their established niche may face subtle hurdles: specialised communities can be sceptical of outsiders, peer reviewers may judge cross-domain work more harshly, and funding mechanisms are frequently siloed. As the study notes, the design of research culture and incentives makes major shifts difficult – from the narrow specialisation of expertise to funding systems that reward staying in one’s lane.

A lot of R&D and policy thought these days goes into the diffusion of AI-driven methodologies across science fields. But while AI-mediated knowledge networks are redrawing the established borders, those legacy patterns may be depriving science of valuable cross-pollination. In many ways, AI tools can lower the barriers for fields to interact with each other, and the less-quantitative fields can start using quantitative methods more. And on a GO-Science panel where I participated last week, a big question was around how to effectively upskill scientists at different career stages for Science in the Age of AI. That would require pivoting for some.

Efforts may falter unless we lower the pivot penalty and make breadth a feature of modern scientific careers. First, the boundaries between disciplines should be made more permeable. For example, collaborations and researcher mobility across fields should be explicitly encouraged. Second, we could treat an academic career like an investment portfolio of specialisms to develop diverse skillsets without being penalised for not having a single hyper-specialised focus. Third, we need to broaden what counts as valuable output. Developing methodological tools and software that can be used by many across different fields should be treated as first-class research outputs and not as byproducts. Two-way industry-academia exchanges are also part of the mix. Steps like these could help create a research ecosystem ready to adapt and innovate.

🇺🇦 Eamonn Ives, Research Director

This morning I had the pleasure and the privilege of talking on a panel with an audience of inspirational Ukrainian founders as part of the UK-Ukraine TechBridge. We were tasked with answering the question of “why the UK?” As I walked over to the event in the drizzling rain I could think of at least one reason why not the UK. But fortunately many more to the contrary sprung to my mind.

Critically, I think many of the main draws for entrepreneurs to Britain are things that are hard to get right. Our dense concentration of elite universities, not just in the Golden Triangle, but dotted across the length and breadth of the country, could not be conjured out of thin air. Nor too could our allure to international talent be. Our deep capital markets may not rival those in the US, but they do stand head and shoulders above Europe’s. Similarly, our language, geography, currency and legal system are blessings that could not simply be legislated for overnight.

This is not to say that Britain has challenges to overcome. But those obstacles to growth that do exist are mostly well understood and are relatively solvable. Planning policy, for instance, should be liberalised to enable the construction of more homes in productive areas, more transport connections where they are needed, and more energy assets to power the economy. Meanwhile, the tax system should be streamlined – with punishing high marginal rates eliminated so that we never disincentivise economic activity wherever possible. Regulation of emerging industries like autonomous vehicles, drones, lab-grown meat and so on should embody the spirit of ‘permissionless innovation’ to allow innovative companies to use Britain as a test-bed to roll out groundbreaking technologies.

Of course, I’m not suggesting that any of these bottlenecks could be remedied overnight. But as problems go, these aren’t necessarily bad ones to have.

Three Big Ideas #35

🔄 Eamonn Ives, Research Director

Here at The Entrepreneurs Network, we spend a lot of time thinking about how to reduce barriers to entry for ambitious startups looking to shake up markets and take on established corporates. What we’re probably guilty of, however, is not spending as much time thinking about reducing barriers to exit. But a new working paper shows why it’s crucial, for those interested in boosting productivity, that the latter side of the equation gets sufficient attention.

Nobody actively wants to see individual firms fail, but it’s a fact of life that many will. For whatever reason, when companies do fall by the wayside, there are various motions to go through in terms of formally closing down. Depending on where you are in the world, this process can be relatively more or relatively less burdensome – in terms of things like costs that may need to be paid, or the time involved in actually shutting down.

In their paper, economists Shoumitro Chatterjee, Kala Krishna, Kalyani Padmakumar and Yingyan Zhao explain how Indian firms face particularly high barriers to exit – with the process of voluntary closure taking 4.3 years to complete on average, compared to 15 months in the UK, and 12 months in Singapore. This harms productivity by trapping resources in less productive firms (allocative inefficiency in economist-speak), and lowers incentives for new firms to enter by reducing expected profits.

As well as diagnosing the issue, Chatterjee et al. also test possible remedies. They look at what impact subsidies for both entry and exit may have on different economic outcomes. Altogether, they find that: “spending the same amount on reducing exit barriers raises value added by more, productivity by much more, though it raises employment by less.”

How generalisable the paper’s findings are is up for debate, but it nonetheless should serve as a timely reminder to anyone interested in increasing business dynamism. It’s critically important to think about what can be done to enable as many would-be firms to enter a market – and part of that includes thinking about what can be done to make it easier for existing firms to leave it.

🤖 Philip Salter, Founder

By 2028, Matt Yglesias thinks AI could dominate every other policy debate. Voters should demand that politicians can show real comprehension – not just the ability to reel off slogans – and policy experts must translate tech hype (or doom-mongering) into workable rules.

This probably requires more honesty about the way things look to be panning out:

“The productivity promise of self-driving trucks is very real, but the promise is that it will eliminate truck drivers’ jobs, which is going to be touchy. Lying to people won’t help.”

We’re still in the slow-burn phase of disruption, yet history – from the Luddites to the Plug riots – shows that social change can cause social unrest. Politicians therefore need to plan now for the first-order shocks: unemployment, a shrinking payroll-tax base, congestion from cheap autonomous travel, soaring power demand, and already-tight housing markets.

Yglesias offers concrete tools – congestion and carbon pricing, planning reform, and a shift from payroll to pollution taxes – to maximise AI’s upside and blunt its harms.

This isn’t to take away from optimism. Just as industrial-era governments leveraged new wealth to abolish things like child labour, an AI-rich society could well take this to another level, ending disease and ushering in a future of radical abundance. But the road will be rocky, and for this to go as smoothly as possible, we need an upgrade – not in technology, which is racing ahead, but in our political systems.

⛱️ Jessie May Green, Events and APPG for Entrepreneurship Coordinator

Wind turbines peppered the foothills of the Pyrenees where I used to live in France, and I always found them exceedingly beautiful; especially at sunset. However, this sentiment is not shared by all – wind farms have long been a notable nemesis of NIMBYs. So, it is against the odds that one 116-turbine site off the coast of East Sussex is now emerging as a tourist hotspot.

Brighton-based fishermen are venturing into the business of boat tours, for locals and tourists curious to get up close to the turbines themselves. Not only does this create jobs, it also gives opportunities for people to learn about renewable energy in an experiential way. As one tour operator put it:

“A lot of people don’t really understand what the farm does. They think it takes one turbine to power a kettle, but once you explain it to them, and they realise all that goes into it and what it does, they’re quite impressed.”

This story brings hope that, as well as catalysing progress towards a more secure energy future for Britain at the national level, renewable energy projects can also bring positive impacts at the local level.

This is not to say that the concerns of locals were never valid – there are always environmental impacts from projects like this, and careful and considered cost-benefit analyses are important. However, if concerns are with appearances only, perhaps it’s time to get introspective about what we consider ‘beautiful’ – and be open to the fact that this can change. In the words of one wind farm tourist:

“Rampion got a lot of bad press because some people hate the look of them [wind turbines]. But I think coming to see them up close might make people think, you know what, they're actually really beautiful, graceful and technically amazing.”

Three Big Ideas #34

🔬 Eamonn Ives, Research Director

We all know that a dog isn’t just for Christmas. Nor too – fresh academic evidence suggests – should R&D be, if firms investing in it want to stay innovative, that is. In a new paper, the authors assembled a rich dataset of 743 Irish firms, observed each year between 2012 and 2018. Among their results, they found that “persistent investment in R&D is critical for small firms to fully realise the innovation gains derived from the ‘learning effects’ and ‘success breeds success’ mechanisms.” In other words, it isn’t enough for a firm to suddenly decide that it can flip a magic R&D switch and have innovation follow as a result. Rather, it underscores the idea that innovation requires time, trial and error, and consistency to yield results.

That wasn’t the study’s only finding, however. They also examined the role of R&D ‘diversity’ in successful innovation – with diversity determined by how many ‘Research Priority Areas’ any given R&D spending was focused on. (Research Priority Areas are a list of 14 variables, developed by the Irish Government, and include things like Manufacturing Competitiveness, Innovation in Services and Business Processes and Data Analytics, Management, Security and Privacy.) Ultimately, what the authors found was that having a more diverse R&D portfolio led to lower innovation returns – as they put it, “higher R&D diversity can lead a firm to become the so-called ‘jack-of-all-trades, master of none’.”

What lessons can we take away from this? First, if firms are serious about innovation, they need to engage in it constantly – the effects of R&D spending appear to compound over time, and businesses hoping that a sudden spike in investment will yield returns may end up disappointed. Second, R&D spending also seems to be most effective when it is more targeted on a single problem.

Just this week, the Government announced the steps it was taking to move towards ten-year funding cycles for R&D – which, it says, “will better support the ability to form long-term partnerships with industry, build and develop skills and talent, and foster international collaborations.” While we shouldn’t take this as a given, the results of this latest paper should give us confidence that we’re headed in a better direction.

📦 Philip Salter, Founder

Tariffs make headlines, but they aren’t the only blockers to international trade. Non-tariff barriers are now the more significant barrier globally, with broader and often less visible negative impacts on trade, welfare, and economic efficiency.

For the UK, the lowest of the low-hanging fruit is reducing barriers with the European Union. A new paper from Aston University puts some numbers on the sectoral trade gains from Mutual Recognition of Conformity Assessment (MRCA). In other words, mutual recognition for testing (e.g., a lab checking that a toy’s paint contains no lead), inspection (e.g. an expert visiting a factory to see that fire-doors work), and certification (e.g. an accredited body issuing a formal certificate saying, “this toaster meets Regulation 123”).

The authors use bilateral trade data for 2010-2023 and a gravity model to find that clauses on Mutual Recognition of Conformity Assessment raise exports by about 9.8% on average. The gains are concentrated in sectors that rely heavily on third-party conformity assessment and that have high value per unit (for example, electrical machinery, general industrial machinery, dairy products and clothing), and can exceed 30-50% for some products.

There are a handful of areas where MRCAs would be a net negative – e.g. rail locomotives, where system-level safety approvals are not fully covered by MRCA, so firms live with two regimes yet lose the home-market preference they once enjoyed – but they are the exceptions that prove the rule.

The UK-EU trade deal is a great first step, but to really get trade flowing will require some further deep thinking and recognition.

🌐 Anastasia Bektimirova, Head of Science and Technology

If you spotted my X thread capturing some insights from a panel on science-based startups and entrepreneurial scientists at last week’s ARIA Summit, you caught just one slice of what made the whole event so interesting. Another panel – with Hayaatun Sillem (CEO of the Royal Academy of Engineering), Tom Kalil (CEO of Renaissance Philanthropy and former Deputy Director for Policy at the White House Office for Science and Technology under Presidents Clinton and Obama) and Dan Cole (ARIA’s Chief of Staff) – unpacked a tension in our innovation ecosystem: a system with specialised silos up against problems that often demand collaboration.

Since the Industrial Revolution, we’ve developed institutions that have become increasingly siloed. And, as Hayaatun noted, “we tend to have a real attachment” to that.

“We really prize the intellectual discovery end of the research and innovation ecosystem. And when you learn to cherish the application, deployment end, you realise you need all of those different groups to come together or you just can't achieve that… [Collaboration is] the only way we are going to solve the incredibly important and wicked problems that we face or exploit the exhilarating opportunities."

Tom observed that “the world has problems, but universities have departments,” and governments are organised along similar lines. These organisational boundaries exist for a reason – specialisation helps us cope with complexity – but crossing them isn’t costless, so there needs to be sufficient reason to do it.

The panel highlighted examples of effective cross-sector collaboration, with the COVID-19 pandemic as perhaps the most powerful recent case. When faced with an utterly compelling, shared goal, people can overcome hardwired resistance in remarkable ways. But a more challenging question is what happens “in peace time” – how do we maintain that collaborative spirit without a crisis driving us?

ARIA’s approach “ripped up the rule book,” which was described as an “utterly radical act.” Unlike traditional funders who often come with detailed specifications about who’s allowed to participate, ARIA doesn’t define people by career stage, experience, papers or patents. Instead, they focus on understanding “what you offer, what your motivations are” and consider individuals in the context of wider teams. ARIA-supported collaborations tend to involve such diverse expertise that traditional funding mechanisms struggle to support them. They also have a teaming platform which has already proven its value by bringing people together to spark collaborations that would be unlikely to happen otherwise.

A challenge ARIA faces is maintaining its distinctive approach while finding the right “docking interface” with the rest of the innovation ecosystem to ensure that its potential delivers real impact. I like to think about that challenge and ways to respond to it as another type of “product” that could come out of ARIA. If some approaches ARIA tries prove successful, they could become a model not just for ARIA, but for other science funding bodies, like the research councils, to adopt as well.

The panel closed with advice for anyone wanting to enable better collaboration in their own work. First, be mindful of who you’re spending time with – if everyone agrees with you, you’re probably missing out. Second, seek out your harshest critics as unexpected allies. And third, when tackling complex problems, think carefully about the minimum “coalition of the willing and able” needed to make progress: who needs to be involved, what steps they need to take, and how to make it as easy as possible for them to say yes.

Three Big Ideas #29

🎨 Eamonn Ives, Research Director

Last week, I hopped on a Eurostar to Brussels to attend the Lisbon Council’s Scaling Europe Summit. The headline act was Stripe’s President and Co-Founder John Collison, who, as an Irishman who’s done a pretty decent job of growing a company, is better placed than most to give his view on what countries this side of the Atlantic should be doing to close the scaleup gap with America.

During a panel session, he invoked a possibly apocryphal but definitely apt Pablo Picasso saying: “When art critics get together, they talk about form and structure and meaning. When artists get together, they talk about where you can buy cheap turpentine.” Rather than getting into the intricacies of paint thinner, however, Collison was making the point that founders should do more to ensure they’re heard when policymakers are trying to improve the business environment.

As someone who certainly falls more into the ‘art critic’ side of the equation in this extended metaphor, but who nonetheless wants to help ‘artists’ as much as possible, I wholeheartedly agree. When it comes to trying to boost the economy, too often people who are detached from the fundamental, nuts and bolts realities of running businesses wield the most influence. Too often, vague platitudes are confidently trotted out as solutions to knotty problems.

When I think of some of the best policy influencing we’ve done over the years, it has often come from founders talking us through exactly what banal rule or specific regulatory quirk is holding their business back. While it’s our job to devise the policy workaround, we won’t always know what needs to be worked around without founders telling us first. Put another way, if you think your turpentine can be made cheaper, don’t hesitate to get in touch.

🚆 Philip Salter, Founder

Like many Londoners, I’ve become a little too obsessed with a Live Tube Map built by Ben James. Its beauty lies, mostly, in its simplicity: showing exactly where every tube train is at any given time.

As Time Out reports: “Hover over the moving trains and a little information box pops up telling you the exact model of the train, where it’s going to and from, the percentage of its journey that it’s completed and the exact times (to the second) that it is expected at its next two or three stops.”

I’m old enough to remember printing off maps from the Transport for London (TfL) website to navigate around the city. Nowadays, the data underlying what was once a basic platform now powers a range of applications, including Citymapper, Moovit, Santander Cycle, and many others.

As much as I love the Live Tube Map – and as much as we should celebrate the success of TfL’s open data – it’s also a stark reminder of how much of our public data remains underutilised. The Head of Data for London, Greater London Authority sums it up well: “Unfortunately, some great projects still fail because we cannot share the data needed to solve the problem. Whether we are hampered by technical infrastructure, legal barriers, capability, capacity, or resourcing, that is still a wasted opportunity to improve the city and benefit Londoners.”

If we don’t act quickly we’ll fall further behind. Even Germany is moving towards the ‘public money, public data’ principle, potentially legislating to ensure all data collected with public funding should be made available for public use and benefit.

Unshackling public data will free public-spirited technologists and entrepreneurs to build services we didn’t even know we needed. If you have an idea for what you would like to build with government data let us know.

🌍 Jessie May Green, Events and APPG for Entrepreneurship Coordinator

Carbon credits were introduced with the Kyoto Protocol in 1997, inspired by the ‘cap-and-trade’ system for sulfur dioxide emissions that successfully tackled the US and Europe’s acid rain problem. In a carbon market, total greenhouse gas emissions are capped, and any party that comes in below their individual cap receives a ‘carbon credit’, which they are free to trade to a higher-emitting party that is exceeding their own cap.

The UN intended carbon credits to be a meaningful way for countries to voluntarily meet their climate targets, but new research by Carbon Market Watch has found that only one in 27 international carbon credits will likely represent a real emissions reduction. So, what’s going wrong here?

While in theory this presents an elegant and economically efficient way to decarbonise, a couple of problems crop up in practice. First, some parties are inappropriately granted credits based on questionable supporting evidence, and, second, others are guilty of ‘double counting’ – when both the credit-seller and the credit-buyer logs the emissions reduction, which misrepresents the overall change that has taken place.

Not only do Carbon Market Watch point out that historic carbon credits lack efficacy, they also warn that familiar flaws are set to persist in the new and improved framework. With the European Commission currently considering counting international carbon credits towards its 2040 climate goal, and with nearly two thirds (63%) of large UK businesses planning to use carbon credits to meet their own sustainability targets, this is important to know – and to fix.

Three Big Ideas #28

🇪🇺 Philip Salter, Founder

My colleague Eamonn was in Brussels yesterday for the launch of When Europe Scales, a very timely report offering practical policy recommendations to grow the European startup and scaleup ecosystem.

Today, I’ll touch on one of the 16 headline policy recommendations – to take a harmonised and competitive approach to stock option taxation:

“Retaining talent also requires a competitive tax environment, particularly in terms of the uniform treatment of stock options across member states. Harmonised taxation criteria across the EU are needed, and this should focus on taxing stock options at the time the stock is sold, not when the option is exercised. EU-Inc could provide the right framework to deliver this coordinated effort at EU level.”

This is a huge deal for startups. As last year’s EU Startup Nations Standards report set out, recognising stock options as capital rather than income, as well as avoiding double taxation are significant challenges. It’s also important to see harmonisation around the ability of startups to offer no voting rights, without which too many people can become involved in decision-making.

These ideas are downstream of work undertaken years ago when founders banded together to make the case for better stock option policies. But this is all taking too long. If anything good is going to come of Trump’s tariffs and broader turn against America’s long-term allies, it needs Europe to break down the regulatory barriers preventing a truly single market. Tear down these walls!

💷 Eamonn Ives, Research Director

For anyone invested in Britain’s economic future, last month’s growth forecasts made for sobering reading. Worse still, some were quick to note that our already modest projections for economic output will be spread across a growing population, due to continued immigration. That sounds like a double blow – low growth, diluted further by more people. 

But this framing deserves closer scrutiny. Yes, higher GDP per capita is generally better than lower GDP per capita – but it’s a crude proxy for changes in individual welfare. It’s influenced not just by how productive we are, but by who we count. When immigration increases the denominator, it’s easy to miss the effects on the overall composition, productivity, and dynamism of the economy.

Consider this: when someone moves to the UK to work as a cleaner or delivery driver, they don’t necessarily compete with the British-born lawyer or doctor – rather, they often complement them. By enabling higher-productivity people to work longer or more efficiently, lower-wage workers can boost total output. That’s comparative advantage at work, even if on the face of it GDP per capita goes down.

With this in mind, there’s a case for looking beyond GDP per capita to something like GDP per ‘native’ capita. I’ll be the first to admit, the phrasing makes me feel a little squeamish. But if immigration increases total output without dragging down natives’ earnings, that seems worth noting. After all, if what’s really driving the lower average is compositional change, not declining prosperity for existing residents, then some of the gloom may be misplaced.

It won’t resolve every debate, but it might just help us distinguish between real economic problems and statistical artifice.

🚀 Anastasia Bektimirova, Head of Science and Technology

How can we design aircraft that can reliably find thermals and wind shear, harvest energy from them, and interlace these into long, unpowered flight paths? As we explore the ocean as a new frontier, what high-value foods and materials could we sustainably cultivate? This is the flavour of questions that will be explored by the newly announced second cohort of Programme Directors at the Advanced Research and Invention Agency (ARIA). What makes this cohort different is that ARIA deliberately sought out entrepreneurial scientists who have successfully built ventures, communities and technologies that have left a mark on society. I enjoyed reading about the selection process here.

Each Programme Director is joining ARIA with one or two early areas of exploration, that they will shape before narrowing down and defining programmes more precisely. There is a lot to be excited about – from engineering biological energy to sculpting innate immunity. But I’ll be watching two of the emerging programmes particularly closely.

First, the Collective Intelligence Engine that could revolutionise how scientists navigate the research landscape. Discoveries often emerge from identifying new connections between studies across different disciplines. What if AI could map every scientific argument, instantly revealing valuable connections, contradictions, and gaps? This is what the programme aims to do by building a living knowledge engine. But beyond this, it leaves room for ARIA-shaped metascience questions. For example, how might AI restructure scientific disciplines, and what institutional changes would be needed once this happens? The answers to such questions could be as transformative as the technology itself, reshaping how we organise, fund, and evaluate scientific work in the age of AI-assisted discovery.

Second, the Extending Our Perception programme that focuses on computational systems that can simultaneously process multiple streams of data from advanced sensors far beyond what humans can perceive. This could transform healthcare by detecting diseases before symptoms appear, enable more precise environmental monitoring, or advance sustainable food production. Regular readers will remember that I wrote about this direction earlier, noting how multi-sensor integration would create strategic advantages by gaining a fundamentally different understanding of the world around us. This direction is one of those that could serve as a backbone for many more new ones – just imagine AI systems capable of processing multiple sensory and more conventional data streams simultaneously, revealing patterns and relationships that remain invisible to traditional analysis methods.

Three Big Ideas #27

🧮 Eamonn Ives, Research Director

Some norms in British politics – like elections always falling on a Thursday – have been around for generations. Others sometimes feel like they have been, but are actually very recent phenomena. The sacrosanct involvement of the Office for Budget Responsibility in Treasury decision-making is one such example. Despite only being set up in 2010, the OBR enjoys an extraordinarily privileged position, and wields immense power over the government of the day.

We saw that on full display last week when Rachel Reeves delivered her Spring Statement, and made painstakingly exact spending promises in order to meet her fiscal rules. After all was said and done, the Chancellor maintained precisely the same headroom – £9.93 billion, down to two decimal places – as she enjoyed after her October Budget last year.

A defender of the OBR would argue that its scrutiny keeps chancellors honest and Britain’s reputation in the markets sound (or at least, more sound than the case would be otherwise). But an interesting challenge from economists Pedro Serôdio and Rohan Shah which recently caught my eye argued that the OBR is falling short in certain respects, especially when it comes to forecasting the impact of medium- and long-term policy changes.

This is enormously important for the future of our economy. Some of the things that matter most for increasing growth are reforms that the OBR, in their analysis, is not well set up to model. Think here of changes to planning frameworks that could deepen labour markets by allowing more people to live in the most productive parts of the country.

As well as convincingly diagnosing the issue, Serôdio and Shah prescribe a solution. For very little investment in the grand scheme of things, they outline how to bolster the OBR’s talent pipeline and enable it to do a better job of forecasting policy changes, and thus strengthen the scope policymakers have to make meaningful reforms. I won’t try to forecast the benefit of doing so myself, but I’d bet the answer would be net positive.

🧩 Anastasia Bektimirova, Head of Science and Technology

Think about how we’ve traditionally organised our economy. We group similar activities into industries, divide work into job categories, and create companies around related products and services. These divisions make intuitive sense to us as humans. But AI systems don’t share our intuitions.

AI systems divide information into ‘tokens’ – discrete units based on statistical patterns, rather than human meaning. Unlike human categories based on meaning and function, tokenisation creates divisions based on what works computationally rather than what makes intuitive sense. As Nicklas Lundblad, DeepMind’s Senior Director of Policy and Strategic Advisor, writes in his blog, the tokenisation process is already reshaping major industries:

“Consider how digital platforms have restructured industries by tokenizing previously continuous experiences. Uber tokenized transportation into discrete, algorithmic units; Airbnb did the same for accommodation; TikTok for entertainment. Each platform succeeded by reconceptualizing an industry in terms that could be discretized, quantified, and optimized according to computational logic. I think this comes close to what Andreesen meant when he noted that software will ‘eat’ everything – but in order to do that it first needs to digest the world, into tokens.”

As tokenisation spreads, our traditional industry boundaries might blur in unpredictable ways. We can already see this in how companies like Amazon and Apple operate across what were once distinct sectors, following patterns that transcend standard categories.

What I find most interesting about this line of thought is implications for institutions. Our institutions are organised around human-meaningful categories that emerged in specific historical contexts. If tokenisation fundamentally reorganises economic activities, then institutions – which are “the humanly devised constraints that shape human interaction” – may misalign with economic reality.

New technologies have often demanded new institutional forms – for example, the industrial revolution created corporations and regulatory agencies. Similarly, institutions will likely need to be designed around the actual patterns of a tokenised economy – potentially cutting across traditional domains like healthcare, finance, and education to address newly visible patterns of risk and opportunity. The greatest challenge ahead may not be the technology itself, but reimagining our institutions for a world where the organisation of economic activity no longer follows the patterns we’ve built our social structures around.

🛰️ Jessie May Green, Events and APPG for Entrepreneurship Coordinator

You may have heard a lot about the clean energy transition, but have you ever wondered what it looks like? With the Global Renewables Watch – a partnership between The Nature Conservancy, Planet Labs and Microsoft’s AI for Good Lab – you need wonder no more. Together, they have mapped the spread of onshore wind and large-scale solar over time using advanced AI and high-resolution satellite imagery.

In this interactive article by The New York Times, you can visually explore how renewable energy capacity has grown over the last eight years. For instance, the US’ solar and wind capacity has nearly tripled, China has built more than 120,000 wind turbines – almost a third of the world’s total, and emerging economies like Turkey are beginning to fulfil their solar potential.

Despite this progress, still around three quarters of global greenhouse gas emissions are generated by energy use, and so cleaner energy infrastructure must continue to be rapidly scaled to mitigate further global warming. This will require a lot of land. If not done thoughtfully, the expansion of renewables could – ironically – cause a lot of environmental damage, not to mention human conflict.

That’s where ‘smart siting’ can come in – choosing wind and solar sites based on where they’ll have the fewest negative impacts. The Global Renewables Watch dataset is unique in that it captures trends over a period of time, not just snapshot moments, and tracks underlying development patterns, not just development. Thus, it can predict where renewables siting may cause tensions to flare up, and assist in producing alternative plans. Considering how conflict can impede action on climate change, this is no small matter.

With Microsoft providing the AI and platform technology, Planet Labs on the satellite imagery, and The Nature Conservancy bringing the expertise needed to analyse the trends, this is a stellar example of the importance of cross-sector collaboration on climate action. With all the doom and gloom reports about AI threatening the environment, it’s nice to remember the positives too.

Three Big Ideas #26

💸 Eamonn Ives, Research Director

While being interviewed by Laura Kuenssberg on Sunday, Rachel Reeves was asked whether there was any truth to the rumour that the Treasury is looking at junking the Digital Services Tax (DST). Her inability to deny it spoke volumes and raises the possibility of a not insignificant tax change being on the cards.

Introduced in 2020, the DST slaps a 2% tax on the revenues of large tech companies – like search engines, online platforms and marketplaces – and currently raises around £800 million a year. In order to be in scope for the DST, companies must make over £500 million a year from ‘digital activities’ and £25 million of that has to accrue from British users. In effect, this means that those who bear the (direct) brunt of the DST are invariably household American names like Amazon, Meta and Alphabet.

As implied by the Chancellor’s response when questioned, the Government sees this as an opportunity to barter with President Trump and potentially avoid being the victim of any new tariffs. We should absolutely use the prospect of scrapping the DST as a bargaining chip to not only dodge tariffs but also pave the way for a long-awaited trade deal between the UK and the US.

As the DST goes, it is an example par excellence of terrible tax policymaking in theory and in practice. By the way it effectively cherrypicks which firms it impacts, it violates the principle of neutrality. By the way in which it taxes revenues and not profits, it unfairly penalises low-margin or loss-making firms, potentially hampering productive investment which we desperately need more of. Meanwhile, the empirical evidence we have of the DST shows that those who do pay it simply pass on higher costs to users – such as advertisers on Google or small third-party sellers on Amazon.

Even if the motor of world trade was humming along nicely, canning the DST would still be in our own self-interest. This fact is only rendered more true if it could help us to negotiate closer economic ties with the world’s biggest economy at a time of heightened global tensions. In a strange way, simply having the ability to shelve the DST might be the best thing it achieves in its short life to date.

🤹‍♂️ Anastasia Bektimirova, Head of Science and Technology

A new essay by Joe Hill, Policy Director at Reform think tank, identifies ‘Everythingism’ as a pathology undermining effective policymaking. Joe writes:

“Governments try to advance their objectives through many different instruments – policies, legislation, economic measures, national infrastructure and public services. Not only do they struggle to prioritise between the objectives, but also to identify which instruments are best used to deliver those objectives.”

This creates a system that struggles to learn. When every policy is expected to optimise for growth, sustainability, social inclusion, regional balance, and other objectives simultaneously, it’s hard to isolate variables to determine which approaches work for which purposes.

I see a parallel with the scientific method here. Imagine running an experiment where you’re not allowed to control variables to establish correlations or causality. The same happens when every policy must serve every goal. Science advances through testing hypotheses and isolating variables; our policy approach assumes that the answers are known in advance. One system is designed to learn, the other pretends to already know.

The institutional culture that sustains Everythingism makes it difficult to overcome. Joe’s essay quotes Dame Angela McLean, the Government Chief Scientific Adviser, who contrasts the civil service’s aversion to disagreement with academic standards of challenge:

“It is very frequent in a civil service meeting that as somebody stands up the very first thing they will say is ‘I agree with everything that has been said’, and you are sat there thinking ‘well you can't have been listening then’.”

While I had previously noted Dame Angela’s observation on academia’s culture of disagreement at the expense of action, Joe points out how the civil service itself could benefit from the academic tradition of robust challenge. Everythingism thrives in conflict-averse environments – where policies can accumulate objectives because no one feels incentivised or empowered to question their compatibility or trade-offs.

The scientific community understands that progress often comes from focusing resources on specific questions rather than diffusing attention across every possible line of inquiry. We need a similar discipline in policymaking – recognising that when everything is a priority, nothing truly is. Joe’s diagnosis points to a clear prescription: we must recover the courage to prioritise, to match specific instruments to specific purposes, and to build institutions where honest, evidence-based disagreement is the expectation.

💧 Jessie May Green, Events and APPG for Entrepreneurship Coordinator

World Water Day last Friday shone the spotlight on innovators working to improve water security globally – from solar-powered desalination in Egypt, to mangrove forest restoration in India, to desertification reversal in Saudi Arabia. Looking at these arid landscapes, it seems absurd that we – in perpetually drizzly Britain – also face challenges when it comes to managing our water supplies.

You’d be forgiven for thinking this country is wet enough – our green fields and grey summers are all too convincing. But the truth is that we waste a lot of the water that falls on these lands, causing shortages in populous areas such as the South East of England, with huge economic impacts. As Public First’s Bertie Wnek comments on their recent report on the subject:

“Water availability is becoming a very serious issue, already constraining new commercial and housing development in parts of the country. Our research suggested 60,000 new homes could be blocked in the East and South East of England alone over the next five years. Worse still, the problem is most severe in some of our highest productivity areas, like the Oxford-Cambridge Arc, which recent Public First analysis - referenced by the Chancellor in February - suggests has the potential to contribute £78bn to our economy by 2035.”

Thus, there is plenty of need for innovation in this country, too. Some projects to watch that are currently in R&D include: Pipebots – tiny autonomous robots that inspect underground water pipes and repair damage; FreeOx – a hydrogen-based formula for water treatment; and ‘lightning in a jar’ – Anamad’s low-energy, lightning-inspired alternative to chlorination. Budding entrepreneurs in this area, let this be your inspiration!

Three Big Ideas #25

😷 Eamonn Ives, Research Director

This coming Sunday will mark half a decade since then Prime Minister Boris Johnson took to our television screens to announce the first nationwide lockdown in response to the escalating Covid-19 pandemic. To slow the spread of the disease, we were instructed to remain indoors and strictly minimise contact with other people. A number of other rules cropped up shortly thereafter – you might remember having to keep two meters apart, abiding by one-way systems and queuing for an eternity outside supermarkets.

Ask an economist and they might tell you that all of these interventions were essentially attempts to correct harmful externalities via ‘social coordination’. We were trying to control Covid-19 by deliberately altering our behaviour, and thus making it harder for it to pass from person to person. And while that might have at least partially worked to lower the rate of new infections, it could only ever be a temporary solution. What we required to truly defeat the virus was not social coordination but rather a technological breakthrough – in the form of a vaccine.

All of this is a long-winded introduction to say that I agree with Max Tabbarok when he asserts in his latest Substack that: “Economics should emphasize the importance of technology as a solution to externality problems and focus less on social coordination.”

He invokes many other areas where humanity has solved pressing and sometimes seemingly intractable social issues, not through individuals coming together and working out how to best manage the situation, but by inventing our way out of the situation in the first place. While social coordination can certainly be a stop-gap to urgent challenges, we should be reminded that genuine long-run progress typically comes from innovators devising technologies that allow us to break free from our current confines and live in a world controlled by us, not the other way around.

👨‍🏫 Anastasia Bektimirova, Head of Science and Technology

Times Higher Education (THE) published an article by Ilana Horwitz on her new book The Entrepreneurial Scholar, arguing that:

“Institutions are changing, and the definition of scholarly success is evolving. It is no longer enough to make minor contributions to arcane fields of knowledge. Scholars must make meaningful contributions to real challenges. They must make connections across disciplines and sectors. They must adapt and contribute to the uncertain world beyond the ivory tower. In short, they need to think entrepreneurially.”

I wholeheartedly endorse this spirit. Yet, looking at the comments under THE’s Chief Global Affairs Officer’s LinkedIn post about the article, I was struck by how quickly the concept of the entrepreneurial scholar can be misconstrued – conflated with commercialisation or abandonment of academic rigour.

It doesn’t mean to “forget about basic research,” as one commentator puts it. Nor does “seeing knowledge as a business,” as another one argues, imply “serving finance or business” at the expense of pursuing knowledge that drives advances. If anything, being an entrepreneurial scholar is about proactively building bridges between disciplines, seeking out more avenues to pursue research and make it actionable – whether for further scientific progress, to inform policy, or drive societal benefit through innovative products and services. The goal is to amplify the potential reach and impact of scholarly work, not make it less scientifically rigorous.

My gentle disagreement with the article, however, is with the point that “institutions are changing.” In reality, institutional conservatism within universities and research funders persists. For example, as I wrote earlier, even though the funding landscape is becoming more diverse, academic institutions continue to train scientists almost exclusively to succeed within the same conventional funding paths. This narrow approach reinforces the very system that alternative funders are trying to complement, creating a self-perpetuating cycle of institutional resistance to progress. The rhetoric of change often outpaces actual structural transformation.

🗽 Philip Salter, Founder

Richard Hanania draws a useful distinction between populism and elites in an article explaining why Donald Trump and Joe Rogan aren’t elites.

According to Hanania, elites are those who derive status from established cultural, political, or social institutions – cultivating esteem primarily among their peers rather than broad audiences. In contrast, populists place blame for societal problems on these elites, championing values that resonate with the masses but are disfavoured by institutional insiders (such as anti-wokeness, mysticism, and traditionalism), and gain status by appealing directly to large audiences rather than seeking elite validation.

Over time, the philosophy of classical liberalism has curbed many of the worst excesses of both, by emphasising pluralism, procedural fairness, meritocracy and individual rights. But as our current era demonstrates, this effort is never conclusively won.

This is why it’s great to see Eamonn (of this house) join forces with fellow liberal Callum Price, standing athwart recent history, yelling ‘Stop’. Their new venture, the Liberal Digest will bring together liberal voices who refuse to accept mediocrity, and to push back against the rising tide of populism.

Back in 2016, Matthew Parris’s defence of Britain’s Liberal Metropolitan Elite was more humorous than urgent. Nearly a decade on, his defence of the liberal elite was more sincere: “Liberals should stop beating ourselves up, stop whimpering about how we failed to address populist concerns, and face millions of good but deluded men and women with honest argument. They are wrong. We are right. We shall be proved right. Chins up.”

Ultimately, liberals – broadly defined – can be validated either by demonstrating that elite institutions effectively serve the public or by allowing populists to govern, thereby showing that they are the lesser of two evils. I know which path I would prefer.

Three Big Ideas #24

🦠 Eamonn Ives, Research Director

Scale insensitivity is one of the biggest failure modes in politics today. All too often, policymakers will inadequately assess the scale of an issue, and then craft a response that is either utterly underwhelming or extremely excessive. A paradigmatic example is the fixation of lawmakers to ban just about every form of disposable plastic to prevent ocean pollution, despite the fact that Europe – let alone the UK – contributes just 0.6% of total plastic waste that ends up in our seas.

One genuinely life-or-death problem that we have so far mustered a very much underwhelming response to is pathogens that spread through the air. As I learnt from Blueprint Biosecurity’s Richard Williamson’s piece for Works in Progress:

“Airborne infectious diseases remain one of humanity's biggest challenges: The COVID-19 pandemic has claimed an estimated 27 million lives. Tuberculosis kills 1.6 million people annually. One billion people are infected by influenza every year, leading to millions of serious illnesses and hundreds of thousands of deaths.”

Aside from the human tragedies behind these statistics, airborne diseases also pose enormous economic costs. Finding solutions to mitigating them would represent perhaps one of the highest impact things an individual could possibly be working on right now. Fortunately, Williamson points to an intervention that could be just that – far-UVC, a form of ultraviolet light which appears to be a powerful germicide while still being safe for humans. A watershed study of far-UVC showed that it can slash concentrations of airborne bacteria by 98.4%, equivalent to totally refreshing the air in a room 184 times every hour compared to standard ventilation.

One obstacle to the wider deployment of far-UVC systems is their cost, which can render them prohibitively expensive outside of specialist applications such as in hospitals. Just as I wrote before about the need to crack cheap air conditioning, bringing down the price of far-UVC also seems like a challenge where a brainy entrepreneur could do an inordinate amount of good in the world.

⛓️‍💥 Anastasia Bektimirova, Head of Science and Technology

In a report released today, the National Audit Office (NAO) finds that Britain’s Industrial Strategy is being held back by poor Whitehall coordination. It warns that the Department for Business and Trade (DBT), which is leading on the development and delivery of the Industrial Strategy, is finding it difficult to coordinate with the ten other relevant departments, citing immature relationships and limited evaluation capabilities. As the NAO puts it: “DBT faces challenges in its relationships with departments who view growth as integral to their own work and therefore have a different approach to growth and prioritisation in those sectors.”

This disconnect is causing “frustration” among businesses that are trying to navigate government support. This was illustrated at last week’s Business and Trade Committee evidence session by Steve Brierley, Founder and CEO of Riverlane, a Cambridge-based quantum computing company:

“DSIT [the Department for Science, Innovation and Technology] is doing a great job in bringing together the Quantum Strategy. The challenge with quantum though is that it impacts so many different departments – it’s impacting defence, life sciences, advanced manufacturing, clean energy – it cuts across a lot of these pillars. The challenge then is: does everyone think it’s someone else’s job to figure this out?”

These concerns are not new. Focusing specifically on meeting national science and technology objectives, a report I co-authored back in 2023 argued that the creation of DSIT was a positive step but insufficient without addressing broader coordination challenges. The report identified this as a critical factor in becoming a science superpower, recommending several solutions, including appointing a Permanent Secretary-level official to lead the National Science and Technology Council, giving the DSIT Secretary power to approve R&D spending across departments, moving universities from the Department for Education to DSIT, and establishing formal mechanisms to align regulatory bodies.

Today’s findings from the NAO are yet another warning sign that even well-designed strategies for specific technologies or sectors risk falling short of their potential to drive economic growth and meaningful innovation if there isn’t effective cross-government coordination. We need the government to not just create ambitious policies, but to rethink how it organises itself to deliver them effectively.

🌊 Jessie May Green, Researcher

Despite being a UK-based company, the pharmaceutical firm GSK has paused various activities relating to diversity, equity and inclusion (DEI) following Executive Orders from US President Donald Trump. Onlookers may reasonably wonder, will this set a precedent for other British businesses, even if they’re separated from America by thousands of miles of Atlantic Ocean?

Though not legally obligated, many British companies may be eager to please the new President due to the importance of the US market. Indeed, Emma Walmsley, GSK’s CEO, said they were obliged to make the changes given that the USA is their largest market and the US Government is their top customer.

Commenting to The Guardian, employment lawyer Sarah Tahamtani said: “I can’t imagine a situation where a UK employer would be bound by an executive order in the US.” However, Tahamtani notes that Trump’s orders could shift ‘the general mood’, potentially creating ripple effects that impact the way UK businesses approach DEI.

Thankfully, these decisions do ultimately lie with individual companies, not heads of state. I’m sure the founders reading this can attest to the benefits of a diverse workforce. Broadly speaking, CEOs tend to know what’s best for their staff – and it’s with them where responsibility should rest.

Three Big Ideas #23

🎭 Eamonn Ives, Research Director

On Monday, together with the Jobs Foundation, we hosted a discussion on what can be done to get Britain more excited about business. Unsurprisingly, the question of culture swiftly arose. Some in the room expressed the belief that Brits have developed an almost innate aversion to risk-taking, and that this can explain why countries like America have pulled ahead economically in recent decades.

I’m sympathetic to the line of reasoning. You hardly have to spend long in the US to know that it certainly feels right. But we should hold ourselves to a higher standard than mere gut instinct. A recent blog from Alex Chalmers takes a cooler look at the data, and convincingly argues that while cultural differences exist between our nations, they’re scarcely large enough to plausibly explain the gulf in economic outcomes.

Pleasingly, for someone in the business of influencing policy change, it turns out – surprise, surprise – that legislative choices really do matter. How we regulate employment, how we manage trade with our neighbours, how we govern innovative technologies and how we (dis)incentivise investment will all have more of a bearing on the long-run economic trajectory of a country than any minor population-level differences in attitudes that may exist towards to wealth creation.

On the same day that Alex published his piece, Patrick and John Collison issued their annual Stripe letter. It’s a characteristically insightful read but one part in particular leapt out at me: “The IMF recently measured a 2.5 percentage point annual gap between US and European productivity stemming from differences in allocative efficiency. [...] A 2.5 gap is huge: the difference between 1% and 3.5% GDP growth, for example, amounts to 22% versus 100% growth over just 20 years.” As they then note, disruption caused by new technologies like AI will pose challenges for labour markets all around the world – and those which can’t adapt to it will invariably lose out.

All of this is to say – culture’s important, but, at the margin, policy matters more. I think that should be encouraging, for if we can just tweak a few things here and there, large gains stand to be made.

🤝 Anastasia Bektimirova, Head of Science and Technology

In an interview published last week, Jacob Trefethen, who oversees Open Philanthropy’s science and science policy programmes, explained an overarching criterion behind much of the organisation’s grant-making: funding work in neglected fields to support scientists who would not otherwise receive funding from other sources.

The UK’s Advanced Research and Invention Agency (ARIA) operates with a similar philosophy of funding the work that is unlikely to be backed through other mechanisms – focusing on high-risk, potentially transformative research that traditional funding mechanisms shy away from. This includes, as ARIA’s Precision Neurotechnologies Programme Director Jacques Carolan recently noted, collaborations requiring such diverse expertise that traditional funding mechanisms struggle to support them.

These alternative funding cultures represent an amazing evolution in how we pursue scientific enterprise. Yet, their impact depends on a strong pipeline of ideas in a genre that challenges mainstream thinking – a pipeline our current academic system may not be adequately nurturing. Our academic institutions prioritise training scientists to succeed within conventional funding paradigms. PhD researchers learn to craft proposals that appeal to traditional grant committees, reinforcing the very system these alternative funders seek to complement. How often do early-career scientists receive guidance on pitching to unconventional funders? And perhaps most critically, how might research questions themselves evolve if scientists were trained to consider these alternative pathways from the outset?

Michael Nielsen and Kanjun Qiu captured this dilemma well in their 2022 essay A Vision of Metascience: “Scientists often apply for grants on the basis of what they believe is fundable, rather than with their best ideas. We’ve spoken with scientists who tell us ‘I know I can get funding for many fashionable-but-unimportant projects, but I can’t get funding for the work I think is most important’.” As with many ecosystems, diversity breeds resilience and innovation, while homogeneity and concentration make it difficult for best practices to spread. Our academic training should nurture researchers who can thrive within this increasingly diverse funding landscape.

🚫 Philip Salter, Founder

Over on X, Nando de Freitas has a post arguing for European countries to copy California by banning non-competes. Given the subject matter at hand, it’s clearly an idea worthy of consideration at the highest levels – something Nando evidently agrees with, given he tagged in Presidents and Prime Ministers alike.

As Evan Starr of the Economic Innovation Group reported last year, empirical evidence on the prevalence and harms of non-competes and their enforceability has grown.

The latest evidence suggests that non-compete agreements harm workers, small businesses, and consumers alike. Non-competes seem to suppress wages, reduce job opportunities, and limit competition in the labour market. Startups suffer, as non-compete enforcement reduces new firm entry, stifles innovation, and reinforces the dominance of large, established businesses.

Starr argues that the misallocation of talent, reduced knowledge spillovers, and lower levels of entrepreneurship outweigh any potential benefits. Companies face fewer incentives to innovate or improve efficiency, leading to stagnation in industries that could otherwise thrive.

In 2023, the UK Government consulted on this. Ultimately, the Government decided against mandatory compensation and a complete ban. Instead, they opted for a statutory limit of three months on non-compete clause durations (though this hasn’t really gone anywhere).

This may be a case of the Middle Ground Fallacy. As we argue on university spinouts, sometimes the radical idea is the right one.