Three Big Ideas is our weekly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
In this week, Eamonn Ives highlights an innovation arms race going on in the food industry, Anastasia Bektimirova discusses revolving doors in the world of AI, and Philip Salter espouses the potential of pilots.
🍩 Eamonn Ives, Research Director
Christmas and the New Year period may have been a time of gastronomic excess for many, but – thanks to the continuing spread of novel appetite suppressant drugs – perhaps for fewer this time around than last. A recent paper studying how food habits changed in households with at least one GLP-1 (such as Ozempic or Wegovy) user found that grocery spending reduced “by approximately 6% within six months of adoption, with higher-income households reducing spending by nearly 9%.” Most of the fall in spending was explained by a radical reduction in calorie-dense, processed foods – including an “11% decline in savory snacks.”
Food brands who are threatened by demand drying up are not sitting idly by, however. As detailed in a New York Times long-read, companies are already developing ‘Ozempic-optimised’ product lines – playing up certain nutrients, like protein or fibre, or catering for other qualities that GLP-1 users find attractive, such as more convenient preparation and smaller portion sizes.
While innovation is usually only considered as a positive, it’s seldom a positive-sum game. As this example shows, one industry’s gain is very much another’s loss. But this process of creative destruction is rarely a single, isolated incident. More often than not, it triggers an innovation arms race as competing companies vie to respond to each other’s developments. Who will eventually win out in this instance is anyone’s guess – but what’s not up for debate is that this is the process of innovation, facilitated by flexible markets, being played out in real time.
🚪 Anastasia Bektimirova, Head of Science and Technology
Yesterday’s Lords Science and Technology Committee evidence session focused on the impact of immigration policy on science and universities. Naturally, the discussion touched on wider questions about the UK’s competitiveness as a destination for scientists and students. Speaking about AI research, Professor Alison Noble, Foreign Secretary at The Royal Society, said:
“The UK has a recognised strength in AI. We have some very good companies and a very strong ecosystem. I think that’s important for scientists as well. They might come in … and then a few years later, maybe go work in industry for a while, move around. This is what entrepreneurial-type scientists want to do, including people who are pure entrepreneurs as well. We are known for having a very active and very good environment for that. There is a concern about people going to work in industry, but if that’s where research is done in AI, then universities focus on other things. I’ve actually been around myself – my PhD was during the last wave of AI, so I’ve seen the whole circle of starting off, going through a winter and coming through again. So maybe I have a bit more balanced view on it. I think things go in cycles. But you don’t sit back when that happens – you decide as well, you work together, you have a strategy. I think that’s the important thing we need.”
An academia-industry revolving door drives innovation. The development of deep learning itself was a back-and-forth exchange. When renowned researchers like Geoffrey Hinton, formerly at Google, and Meta’s Yann LeCun left their university roles, what they gained from the vast resources of big tech companies continued to benefit academic researchers through their publications. Google’s Attention Is All You Need paper, laying out the theory behind transformer architecture, is one such example. We want to encourage cross-pollination of ideas, skills, and experience of working within various organisational structures.
For this reason, industry’s strengths shouldn’t breed complacency when it comes to ambition and capacity building in academia. Universities shouldn’t just sit back and “focus on other things” while industry advances AI research. Historically, AI innovation was academia-led, but now universities are being priced out. The work on large-scale AI models is increasingly out of reach for universities, largely due to high computing costs. Even though tech companies publish research papers, they are less transparent about the workings of their most advanced models, making resources for academia even more crucial. Resource constraints are not an exclusively UK issue – US universities don’t exactly match OpenAI’s compute capacity either. It’s not only about the science of AI itself but also application in other fields. It’s not uncommon to hear from PhD researchers and postdocs working on AI-driven biology who can’t access the compute they need. It’s particularly concerning to hear our talent compare their challenges to relatively easier compute access enjoyed by their peers stateside. What once seemed anecdotal stories now form a clear pattern.
The goal isn’t for academia to compete with industry but to work alongside it, each bringing their strengths to AI development and its applications. The timing or nature of cycles or disruptions are hard to forecast. What we can do is put strong foundations to ensure different parts of the AI ecosystem can thrive through them.
⚗️ Philip Salter, Founder
Eric Gilliam, writing for Asimov Press, argues that Edwin Cohn – a temperamental, entrepreneurial protein chemist at Harvard in the 1930s and 1940s – was one of the most underrated translational scientists of all time. Initially focused on pure research, Cohn’s lab was enlisted by the US military in 1940 to develop blood protein products to treat shock and blood loss. His team successfully created stable, concentrated human albumin, which was used extensively during the Second World War, including in the Normandy landings.
Cohn also demonstrated the pivotal role of pilot plants. Operated at a scale larger than lab experiments but smaller than full industrial production, these facilities replicate manufacturing processes so researchers can test methods under near-real-world conditions. By integrating a pilot plant into his Harvard lab, Cohn was able to scale production from laboratory experiments to 40-litre batches of plasma, develop manufacturing protocols for pharmaceutical companies, train industrial personnel (thereby ensuring smooth technology transfer), and rapidly produce enough material for clinical trials and battlefield use.
Gilliam thinks Cohn has something to teach us today about how pilot plants can accelerate both discovery and practical application. If more universities adopted the pilot plant model for challenges like producing synthetic blood or commercialising advanced materials – carbon nanotubes, graphene, aerogels, lithium-ion battery anodes – researchers could more quickly transition breakthroughs from the laboratory to the marketplace.
In 2024, The Entrepreneurs Network turned ten. Given that only around a third of businesses survive beyond a decade, perhaps we’re doing something right. Ultimately though, there is only one metric that matters: are we making the UK a better place than it would otherwise be for entrepreneurs? I’ll leave it to others to make that ultimate judgement, but as you’ll see below it’s not lack of effort – and our plans for the next year are even more ambitious. We hope you’ll remain part of our journey.
Unless something extraordinary happens in the next few days, the UK’s biggest political event of the year was July’s General Election. While we don’t take sides on politics – we do take a keen interest in policy. And there has been plenty of policy to get stuck into.
Most vocally, we got over 1,250 entrepreneurs to sign a letter against the negative impact that rumoured changes to Capital Gains Tax and Business Asset Disposal Relief would have. The Chancellor took note, but there is more work to do. As Richard Tyler wrote in The Times: Gordon Brown’s tax break for entrepreneurs survives — but for how long?
Back to Basics
Every year we release at least one wide-ranging report that aims to influence – or at least capture – the zeitgeist. In March, we released Building Blocks, which argued that the fundamentals of what makes for a competitive economy have been neglected for too long. We focused on four areas to fix: our chronic under-agglomeration, looming fiscal headaches, obstacles to innovation and a failure to fully harness domestic and international talent. There is still much to do on all four fronts, but the narrative that we and others have called for – fixing the foundations – has cut through.
Another wide-ranging report was June’s Backing Breakthrough Businesses, which was driven by our new Patron Steve Rigby through his leadership of the Private Business Commission. We launched it in Parliament with Jonathan Reynolds MP, Secretary of State for Business and Trade, and it picked up coverage in The Times and elsewhere, with many of the policy recommendations in train.
In September, our Research Director Eamonn Ives got to the core of small nuclear reactors in Small Wonders. As the report argues, abundant energy is crucial for economic growth, particularly with the rise of energy-intensive technologies like AI, and achieving climate goals requires significantly expanding clean generation.
Big Society
While entrepreneurship isn’t for everyone, we should aspire to live in a country where nobody faces social impediments when starting and growing a business.
We want to take everyone on this journey with us. Whether that’s the neurodivergent in March’s Neurodiverse Founders, the next generation in June’s Empowering the Future, the regions in September’s United Growth, or anyone no matter where they’re born in February’s Entrepreneurs Unwrapped.
As many of you will have seen, this week we launched Gaining Altitude in the House of Lords – the latest report from our Female Founders Forum. For this one we partnered with the Invest in Women Taskforce to better understand Britain’s female angel investor community around the UK. Yesterday, Hannah Bernard OBE set out in City A.M. what needs to be done.
Global Britain
We’ve long argued that if we are to remain competitive we must remain open to talent. In August’s Job Creators 2024, we reveal the proportion of founders behind Britain’s fastest-growing companies that were born overseas: 39%.
British companies also need to expand internationally. In December’s Towards A More Special Relationship we examined what challenges exist for British founders looking to do that in the US, and set out a clear raft of policy recommendations for the Government to address them.
Science Superpower
I’m delighted to announce that Anastasia Bektimirova has been promoted to become our Head of Science and Technology to build out our work portfolio in this area. Her main interests include AI policy, strategy and delivery of the National Data Library, research commercialisation, alongside broader topics related to the health of the UK’s R&D ecosystem. She is also thinking about how institutions can improve their delivery of national science and technology objectives. If you share these interests, reach out.
As such, we will be engaging with the Government as it is consulting on copyright and AI. We believe in a policy environment which enables responsible access to high-quality input needed to develop AI models in the UK, and have already set out some potential options in January’s Can the UK Become Competitive on Text-and-Data Mining for AI? We are keen to hear your thoughts on how the Government can strike the right balance. Feel free to drop Anastasia a line.
White Heat of Technology
This year we joined Substack. Check out our interviews with: Station F Director, Roxanne Varza; former DSIT Policy Adviser Ben Johnson; and ARC Accelerator Co-Founder Chris Fellingham. We also revived our Three Big Ideas series – where we and experts in our community pitch our weekly hot takes on things that have piqued our curiosity – and written up more digestible analysis about the research we publish.
Ten More Years
Last but certainly not least, I want to thank our Patrons, Advisers, Supporters, Corporate Partners, and event hosts. This includes everyone here, as well as American Express, Arbuthnot Latham, Barclays, Barclays Eagle Labs, Beauhurst, Blick Rothenberg, Bradshaw Advisory, Britain Remade, Enterprise Nation, Evelyn Partners, FieldHouse, Fora, Fragomen, Gatsby, Growth Hub Global, Jobbatical, Kingsley Napley, LSE IDEAS, MDRx, Milltown Partners, OakNorth, Octopus, Rathbones, Rigby Group, Sumer, UCL, University of Bristol, YBI, and almost certainly one or two I’m forgetting.
We can only do what we do with support from our partners. If you would like to help us deliver on our mission, support us here or book a time to chat over Zoom. We look forward to working with you.
Three Big Ideas is our weekly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
In this week, Philip Salter reflects on mirrored life, Anastasia Bektimirova discusses launching startups inside of government, and Eamonn Ives argues the case for paying CEOs like footballers.
🪞 Philip Salter, Founder
Those of a nervous disposition may want to look away now. Last week, a prominent article in Science warned of the potential creation of “mirrored” life – organisms composed of biomolecules with reversed chirality. These engineered microbes, theoretically invisible to our immune systems and natural predators, could spread unchecked, infect humans, devastate crops, and drive species to extinction.
Authored by a team that includes 16 members of national academies, two Nobel Laureates, and several pioneers who once aspired to create mirrored life, the article is supported by a 300-page technical report. For those lacking the time – or the requisite PhDs – turn instead to Asimov Press’s useful long read on the dangers. As it summarises: “A mirrored organism would use right-handed molecules everywhere a naturally-occurring organism uses left-handed ones, and vice versa. It could thus elude the typical chiral interactions by which microorganisms hunt their prey… Such mirrored invaders could theoretically spread across the Earth while evading the biological defenses that have evolved to check such threats.”
While the ability to create such life forms remains at least a decade away, the scientists urge proactive measures: prohibit their creation, regulate enabling technologies, and foster global, open dialogue. They point to existing precedents for responsible oversight, such as the Tianjin Biosecurity Guidelines, which guide the ethical and secure development of emerging biotechnologies.
While the science behind mirrored life is somewhat speculative – it’s far from idle speculation. Lessons from the nuclear era – during the Cuban Missile Crisis, the Stanislav Petrov Incident, and the Able Archer 83 exercise – remind us how close human ingenuity can come to catastrophe when risks are poorly managed.
Nevertheless, we should be prepared to reappraise this position. The other lesson of nuclear technology is that overly stringent regulations have massively held back civil applications of nuclear power. As Jason Crawford speculates, the risk-benefit calculation may shift over time. Future technologies could radically improve biocontainment, perhaps through isolated, robot-operated labs far from Earth, or advanced nanotechnology might allow for tighter ecological control. But that is speculative – given what we know now it’s that rare case where prohibition really is the best policy.
👾 Anastasia Bektimirova, Researcher
Applications have opened for the next cohort of the No10 Innovation Fellowship, which aims to bring innovators and original thinkers into the government. The programme’s intent is commendable, and it really is quite exciting to see what previous Fellows were tasked with.
The challenge lies in continuity. Is the government equipped for the long-term delivery of a disruptive new initiative or innovative ways of working put into motion by a Fellow brought in for 6-12 months? The key to genuine transformation is scale. Yet, many innovative projects are trapped in “pilotitus” – failing to reach their full potential.
To counter this, people with a similar outside-the-box mentality are needed inside the government for the long term to carry forward the original vision during implementation. Without this, an innovative idea conceived with great ambition risks being watered down to something rather conventional. In his new book On Leadership, Tony Blair writes that improving delivery capacity requires people “working with the system but not formed by it,” and calls to “treat policymaking not as a spasmodic response to the difficulty of the day but as an opportunity to go deep and make change which lasts: a change not a splash.”
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 Safety Institute – all remarkable examples of startups inside the government.
But despite the clear, lasting value that innovators bring, the system hasn’t always been good at keeping them. It is worthwhile for the government to reflect on why such thinkers and doers leave, and what changes are required to empower the “weirdos and misfits” who are instrumental to meaningful transformation.
⚽ Eamonn Ives, Research Director
No fewer than 88 companies have delisted or moved their primary listing from the London Stock Exchange in 2024 – putting it on track for its worst year since 2009. This languid performance has left many asking what can be done to avert the rot.
One answer offered up recently by Lord Michael Spencer is that we need to be comfortable paying the bosses of listed companies “like top-rate footballers” without worrying about triggering a backlash. I’m minded to agree – FTSE 100 bosses are paid about a third of their S&P 500 equivalents on average, and while a large part of that will be down to the US market being far more dynamic overall, it’s not unreasonable to think that remuneration is restrained this side of the Atlantic for fear of negative press. In addition, the less enticing we make it for bosses to manage UK-listed firms, the less likely it is we’ll get the sort of talent required to achieve economic success.
Managers matter, and we have a wealth of evidence to back it up. In study after study, economists have demonstrated the power of good management. To take a famous one from Nicholas Bloom, John Van Reenen and Erik Brynjolfsson, they found that management performance can explain differences in productivity between firms even more than R&D, employee skills and investment in IT can.
Meanwhile, having a respected individual at the helm can boost a company’s value by many, many multiples more than what they take home each year. When Apple’s visionary leader Steve Jobs quit, shares dipped by 3%, erasing billions in value; in contrast, when Steve Ballmer announced the end of his less-than-spectacular tenure as Microsoft CEO, shares in the tech giant jumped by 7.5%.
Of course, becoming intensely relaxed with people getting filthy rich – to re-coin a phrase – is only one part of the puzzle. Other policies, like ending Stamp Duty on shares, would likely be quicker routes to bolstering the attractiveness of the LSE. But for long-term success, maybe we really do need to look a little deeper – and begin to cheer our corporate bosses as we do our footballing idols.
For a government that came into office with the laudable if stretching ambition of making Britain the fastest growing economy in the G7, today’s growth figures do not make for pretty reading. I say growth figures, but they’d perhaps more accurately be described as contraction figures – with the economy as a whole shrinking by 0.1% in the month of October, mirroring September’s languid performance.
Of course, far from all of the blame lies with the new Government. They inherited a sluggish economy plagued by decades of cumulative underinvestment in the fundamental building blocks of prosperity. Turning the ship around will take time, and credit should be given to the commitment to shake up areas like planning policy, which we know have an outsized influence on growth.
But nor are the occupants of Numbers 10 and 11 Downing Street entirely without fault. Just this week, a number of stories splashed the concerns bosses continue to have following the most recent Budget. OakNorth founder Rishi Khosla warned that tax changes are already causing wealth creators to leave the country, while at a roundtable between the Chancellor and senior business leaders, reports say almost all were pessimistic about the year to come. If Labour are to hit their growth goal, something needs to give.
Never ones to sit on the sidelines in this debate, on Monday we launched our latest report. In Towards A More Special Relationship, supported by our Patron Steve Rigby, we examine how to strengthen the entrepreneurial ties between Britain and its old ally America (the economy of which, if you needed reminding, is up a healthy 2.8% on the year prior). The report saw us talk directly to entrepreneurs who’ve made the hop across the Atlantic, investors who’ve ploughed money into startups stateside, and other key players involved in the growth journeys of similar companies. As well as mapping out the benefits the US market presents, we were also interested in understanding the barriers that prevent those benefits from being seized – and how to subsequently dismantle them.
One of the common themes we heard from those we interviewed was that for all the preconceptions of America being the land of the free, finding a foothold in the US market can be a bureaucratic nightmare. Whether it’s getting insurance or navigating immigration frameworks, founders told us that the administrative aspect of expansion can be a more costly experience than you might imagine – both financially and time-wise. Efforts to simplify this could prove especially helpful for the growth of companies who spot an opportunity.
In terms of our recommendations to foster greater Anglo-American economic integration, we set our sights high. At the top of our list is an appeal for the Government to prioritise a free trade agreement (FTA) with the new US administration once President-elect Trump is sworn in next January. Though certainly ambitious, it would not be unthinkable – when he was last in the White House, Trump appeared keen to strike a deal, and five rounds of negotiations were undertaken in his final year in office. Rachel Reeves, meanwhile, has made a number of positive noises about one in recent weeks and months.
Rarely does a lever for growth quite like an FTA with the world’s biggest economy present itself, but if the Government can yank it, their objectives will be made all the easier. Here’s to hoping they manage to.
Action Stations
On Tuesday, my colleague Anastasia published her fascinating interview with Station F director Roxanne Varza. Among other things, the two discuss how Station F has become a focal point for the French startup scene, what trends European artificial intelligence legislation is setting in motion, and whether there are any policy lessons Britain can learn from across the Channel to boost its own entrepreneurial ecosystem. Highly recommended – all this and more can be found on our Substack.
Three Big Ideas is our weekly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
In this week, Philip Salter explores the gruesome if useful history of medical self-experimentation, Anastasia Bektimirova argues the case for enabling widespread adoption of AI, and Eamonn Ives discusses what lessons the cruise liner industry can teach us on dry land.
🧑⚕️ Philip Salter, Founder
My big idea this week comes from a visit to London’s Hunterian Museum, where we joined a free curator-led tour as part of an unconventional Christmas office party.
The museum, named after the 18th-century surgeon and anatomist John Hunter (1728–1793), features over 2,000 anatomical specimens from Hunter’s original collection. It also showcases surgical instruments, models, paintings, and archival material that trace the history of surgery – from ancient procedures to modern robot-assisted operations. It’s fascinating and gruesome in equal measure.
One thing’s for sure – you’ll leave the Huntarian grateful for the progress we’ve seen since Hunter’s time, with the modern miracles of anesthesia, antiseptic, antibiotics, and advanced imaging.
Hunter himself played a pivotal role in this journey of progress – he was a pioneer who transformed surgery from a craft into a science, emphasising the use of research, experimentation, and teaching. One notable experiment may have been on himself. He believed that syphilis and gonorrhea were caused by the same pathogen, so he reportedly deliberately inoculated himself with pus from a patient who had one of these conditions.
Hunter wasn’t the first nor last to experiment on himself. In a recent example, virologist Beata Halassy treated her own breast cancer with experimental oncolytic virotherapy (OVT). After undergoing a mastectomy and chemotherapy, she injected her tumor with viruses known to attack cancerous cells.
Other famous examples include Werner Forssmann, who pioneered cardiac catheterisation in 1929 by threading a catheter into his own heart, earning him the 1956 Nobel Prize in Physiology or Medicine. Similarly, Barry Marshall ingested Helicobacter pylori bacteria in 1984 to prove it caused stomach ulcers, a discovery that won him the 2005 Nobel Prize. And Daniel Bovet’s groundbreaking work on antihistamines and nervous system drugs earned him the Nobel Prize in 1957.
Such self-experimenting scientists may not be outliers. A paper found that half of the scientist respondents performed self-experiments, and roughly one-fifth had conducted serious self-experiments. And while concerns are raised around biologics injections, radiation exposure, and surgical implants, most scientists who responded thought self-experiments were valuable.
🧑💻 Anastasia Bektimirova, Researcher
To lead in capital-intensive areas of science and technology, countries need strategic discipline and focus. There is more than one way to approach this, and what might work for, say, semiconductors might not work for AI.
Eric Schmidt recently proposed his “playbook for a category of countries that have the capacity to do something meaningful with AI—that is, those with disproportionate capital or large enough domestic labour and consumer markets, plentiful talent and a high demand for AI…These countries should first find a niche somewhere along the AI value chain, from regulation to software to data centres. Britain, for example, is positioning itself as a leader in AI governance. Its AI Safety Institute gets ten times the funding of its American counterpart. Saudi Arabia launched a National Semiconductor Hub in June, focusing on simpler chips than those of market leaders. Ireland is making use of its clean-power abundance by building large data centres and shipping out processed data as a product.”
But the argument for countries to focus on isolated nodes misses a critical point about the economics of AI. Unlike industries where controlling key supply or value chain components can yield strategic advantage, the same logic doesn’t fully apply to AI. Its value is realised through application, adoption, and diffusion rather than concentration in one layer of the stack.
The AI Safety Institute is, in fact, a case in point. The previous government focused closely on AI safety, but not as an end in itself. Rishi Sunak told the AI Safety Summit last November that building a strong AI safety state capacity “will attract even more…new jobs and investment.” Unless AI is trusted, advancements, adoption and diffusion will be curtailed.
AI’s potential lies in how it integrates into and reshapes industries, R&D, and public service design and delivery. Countries should prioritise structural changes and downstream reform needed to create an environment that enables widespread AI adoption for these purposes and across industries, rather than focusing narrowly on dominating specific value and supply chain points.
🛳️ Eamonn Ives, Research Director
Regular readers will be painfully aware of how bad much of the Western world seems to have become at building things. Whether its homes, roads, rail lines or power stations, infrastructure is only being constructed with an increasingly heavy price tag, if it’s getting constructed at all. It is enormously refreshing, therefore, when a correction to this narrative presents itself – and in writer Michael Hopkins’ recent article for Works in Progress, I found one.
While we’ve stagnated elsewhere, in the world of cruise liners, it appears we’re merrily sailing along. “Since the SS Great Eastern in 1858,” Hopkins writes, “the gross tonnage of the largest passenger ships has grown an average of 1.59 percent per year.” He contrasts this to the growth rate of the height of tall buildings – which in America grew by an average of a mere 0.24% a year between the completion of the Empire State Building in 1931 and the One World Trade Center in 2020. Moreover, if you look at the data on passenger ship tonnage from the mid-1990s, the rise in size is borderline exponential.
Of course, building stuff on land faces different challenges to building stuff to float on the open ocean. But what the experience of ship manufacturing suggests is that we haven’t necessarily lost the fundamental ability to design and assemble big bits of infrastructure. Rather, there’s something else getting in our way – NIMBYs.
Three Big Ideas is our weekly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
In this week, Eamonn Ives discusses likening poor scientific research to dangerous lab equipment, Philip Salter writes about when governments act swiftly, and in a guest post, Patrick King of Reform think tank explains how the Civil Service Fast Stream can up its game.
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🧪 Eamonn Ives, Research Director
We owe a lot of our safety to the fruits of scientific research, but conducting that research isn’t always safe. Laboratories contain equipment which if used incorrectly or accidents occur can pose considerable risks. Relatedly, suppose some apparatus was even slightly faulty – whatever it was used to produce may end up not quite being what its operator intended.
In a recent commentary article, co-authors Jennifer Byrne and Adrian Barnett describe a more intangible, but no less real, hazard that scientists must contend with – an ‘unsafe’ research literature. They note that the universe of academic publications which informs researchers’ – and by extension all of our – understanding of the world is not always perfect. At best, bad research might see resources squandered as academics forlornly venture down rabbit holes. At worst, it has potentially serious consequences – for instance if it leads to drugs or medical practices that harm patients being approved.
Yet while a scientist can relatively easily flag broken lab equipment to their fellow colleagues, doing the same for ‘broken’ research is altogether more difficult. As Stuart Ritchie (who directed me to this commentary via his always excellent Science Fictions) has highlighted time and again, the process for retracting poor research is mind-meltingly bad. This keeps useless or actively dangerous findings alive for far longer than they ever should be.
Not all innovation can be traced back to the lab, but plenty can. If we’re to have a more innovative future, getting better at fixing each aspect of the research process is a must – and that includes how we weed out unsafe papers.
🚢 Philip Salter, Founder
At 1.28am, on 26 March this year, the container ship Dali struck one of the main piers of the Francis Scott Key Bridge across the Patapsco River in the Baltimore metropolitan area, causing it to collapse. Six people were killed in the catastrophe, and the wider economic impact of the closure of the waterway has been estimated at $15 million per day. Understandably, the public wanted the bridge rebuilt quickly.
As Aidan Mackenzie writes for The New Atlantic the government shifted gears, with planners announcing a relatively aggressive four-year timeline and an expedited regulatory process. Disaster responses offer a clear contrast to the way things are normally done, argues Mackenzie. He also cites the example of a bridge on I-95 in Northeast Philadelphia collapsing after a tanker truck caught fire in an underpass, halting traffic along the entire corridor. The highway was reopened to traffic just twelve days later, months ahead of most predictions. “Pennsylvania Governor Josh Shapiro used his disaster authority, suspending any law or regulation that would impede swift recovery. Construction crews, working around the clock, engineered and built a temporary road in less than a week.”
The gap between how states act in normal times and a crisis suggests that there is potential to considerably increase state efficiency. In the UK, we saw this most acutely in our response to COVID-19, where the Vaccine Taskforce expedited the development, production, and distribution of COVID-19 vaccines, upturning conventional wisdom of the time.
Not every infrastructure or public health challenge is a disaster of the sort cited above, but what these examples show is that we often already know what’s slowing us down. While calls to cut unnecessary regulations can feel like a tired trope, it’s a trope because it’s true, and it’s tired because it’s long overdue.
⏩ Patrick King, Senior Researcher, Reform think tank
When Whitehall succeeds, so too does the country – with benefits felt across public services but also by charities and the private sector. Take regulatory reform, for example, which through the announcement of a new ‘Regulatory Innovation Office’, the new Government has spotlighted as a key lever for innovation and economic growth. Or the structure of the tax system, which has well-rehearsed consequences for R&D, business confidence and investment, and the UK’s competitiveness on the global stage. These challenges are acutely felt by start-ups: often operating at the frontier of the emerging industries that will determine our economic future.
The talent Whitehall has access to is fundamental to its success. Often this involves bringing in people with expertise from outside of Government. But it’s also essential to recruit and develop the best officials – who can work seamlessly across policy and delivery, and effectively unlock barriers to growth and other policy goals.
With billions of pounds of economic output at stake, the pay of decision-makers is one of the last places we should be penny-pinching. Talent comes at a price, and government should be prepared to pay for it.
In a report we’ve published today, Joe Hill and I set out a new model for the Civil Service Fast Stream, which aims to get top graduates into government roles. Despite being badged as a way to recruit elite talent, it has lost this clear focus – both in terms of who it accepts, the training and development it offers, and in its pay and status compared to the leadership schemes of many companies in the private sector.
For entrepreneurialism and the economy to thrive, we need a Fast Stream – and Civil Service – that builds the knowledge and hard-edged skills required to develop effective policy. Of course, there’s no silver bullet; separate to this paper, Reform has outlined how Whitehall can improve the value for money of its spending, better implement AI in public services, and become more mission-led. But an overhaul of the Fast Stream – with more competitive pay and a revitalised development offer – will pay big, long-term dividends.
Yesterday, I went on Sky News to share my reaction to the headline news that net migration topped 906,000 last year.
I was asked, in part, because of the research we’ve undertaken on an important cohort of immigrants: the foreign-born founders of Britain’s fastest growing companies. This year we partnered with Fragomen to reveal that 39% of the fastest growing companies in the UK are started by an immigrant. This annual report serves as a reminder that immigrants are massively overrepresented when it comes to building Britain’s most impressive companies. We should celebrate this. Their openness to risk is Britain’s reward – evidenced by the jobs they create and the billions they pay in taxes.
But let’s step back from the apex. When it comes to broader business immigration, the Conservatives, after being relatively open post-Brexit, restricted immigration just before losing the election. This wasn’t just bad politics (at that point nobody cared and Labour now don’t need to do anything to see immigration decline), it will be bad for the economy. Oxford Migration Observatory estimates these changes will cost Britain £25 billion over ten years.
These restrictions are why immigration dropped by 20% in the 12 months to June, and why it now stands at 728,000. The last government also bumped up fees, with the health surcharge, for example, increasing from £624 to £1,035 per year in February. For a skilled worker to come to the UK for five years with their spouse and a dependent, the charges are now in the tens of thousands. Our fees are seven times those of Australia, twelve times Canada, and eighty-six times Germany. Yes, you read that right – eighty-six times!
Despite this, clearly public attitudes towards immigration have become more negative. However, if you dig a little deeper, the public is deeply conflicted. As Jonathan Thomas, Senior Fellow of the SMF, argues in a recent briefing paper: “A majority of the public may indicate a preference for lower numbers of immigrant workers into the UK overall, but often then struggle to name any particular sectors or roles where they would like to see this reduction happen in practice. In more recent times, despite increasing disquiet over overall immigration numbers in the UK, the sectors with by far the largest inflows and impact on those numbers – health and care – are exactly those where the public seem most relaxed and supportive of workers coming from overseas.”
Thomas recommends that the money raised through the Immigration Skills Charge is hypothecated to directly address skills gaps in the UK workforce, with billboards across the UK proclaiming the opportunities to access what would be a sizeable training pot. It sounds like the right approach to me.
I’m not here to make the case for every immigrant, but we all know businesses are crying out for talent. If we had the skills, mindset and work ethic in the domestic population Britain's businesses wouldn’t hesitate to snap them up. To be frank, the fact that the domestic workforce isn’t up to scratch is an ongoing government failure. After all, the government has a near-monopoly or is the main funder of the formal education most of us receive. While we have many ideas on how to address this, entrepreneurs growing businesses need talent immediately.
To be clear, I don’t doubt that there are parts of the system that could and should be tightened up. I back calls for more data on costs and benefits of the various routes. Nor do I doubt that there are complex challenges beyond the scope of business migration that need addressing. But we can’t lose sight of the fact that many of Britain’s best businesses are started by people born outside the UK; and all Britain’s most ambitious business owners – wherever they were born – need talent to compete internationally.
Task Masterminds
As many will already know, the Invest in Women Taskforce has exceeded its initial target of £250 million in capital raise for female founders. Barclays, M&G, the British Business Bank, Morgan Stanley, Visa Foundation, BGF and Aviva have committed capital to the ‘Invest in Women Taskforce’ investment pool.
A big congratulations to Hannah Bernard OBE, Head of Business Banking at Barclays and Serial entrepreneur Debbie Wosskow OBE for leading the charge. Now they’re looking for someone to manage the fund. So if you are a fund manager who can meet the objectives, visit the Taskforce’s website to find out more.
As a member of the Taskforce, I’m in awe of how quickly this has all happened – not least, given the political disruption of an election. If you scroll down you’ll see that we’re launching a report in the House of Lords with the Taskforce.
Butler’s Service
We have a new Adviser! Sarah-Jane Butler is an award-winning lawyer and serial entrepreneur. Along with fellow directors, she launched Farringford Legal in response to spotting a gap in the market for a new breed of law firm.
In her own words: “One of my personal ambitions is to make a meaningful impact on the entrepreneurial community by lending my voice and actions to campaigns that help SME businesses thrive in the UK.
“I admire how The Entrepreneurs Network has created an effective bridge between the business community and central Government. It ensures entrepreneurs have a platform to be heard and influence policy that fosters sustainable growth—a mission I strongly support.
“As a champion for female founders, I am particularly passionate about working with the Female Founders Forum. Their efforts to close the funding gap by encouraging investors to back female entrepreneurs align closely with my advocacy goals.”
Find out more about Sarah-Jane here, and learn more about becoming an Adviser here.
Waiting All Week
Small Business Saturday is back on 7 December. As I’m sure you know after years of amazing publicity, it’s an annual campaign to celebrate the nation’s fantastic 5.5 million small businesses.
The campaign is open to all small businesses across the UK, and it is completely free. Many team up to host events, offer promotions or simply use it as an opportunity to engage their customers.
A marketing pack is available from the Small Business Saturday website to help you get involved, and you can also register to be featured on the campaign’s Small Business Finder map.
Three Big Ideas is our weekly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
In this week, Anastasia Bektimirova ponders the possibility of an AI-powered social science revolution, Philip Salter contemplates competition policy, and in a guest post, Jeremy Driver, of Britain Remade, explains why Britain needs to extend the lifespan of its nuclear power plants.
⚛️ Jeremy Driver, Britain Remade
Britain used to be a nuclear superpower. The atom was first split in Britain. In 1956, Britain opened the world’s first full-scale commercial nuclear reactor. Less than ten years later, it had built 21 more. As late as 1965, Britain had more nuclear reactors than the rest of the world combined.
Yet Britain hasn’t completed a new nuclear power station in almost thirty years and most of our remaining fleet is set to be taken offline in the next few years. Only Sizewell B, which opened in 1995, is planned to stay online past 2028. With the delay of the new Hinkley Point C reactor, when Sizewell B closes for maintenance in 2029, Britain will have no nuclear power whatsoever on the grid for the first time in more than 70 years.
This would be bad for energy security, bad for household bills, and bad for climate change, pushing up the amount of unabated gas we burn to compensate. It also puts the Government’s target for a clean energy grid by 2030 at risk, with the recent report from the National Energy System Operator finding that this target requires there being between 3.6 GW and 4.1 GW of nuclear power on the grid.
But there is a solution. At Britain Remade we’re calling on the Government to safely extend the life of our existing fleet of Advanced Gas-cooled Reactors (AGRs). Our analysis shows that extending the use of just two of our AGRs, Heysham 2 and Torness power stations, and finishing just 1 unit of Hinkley Point C would provide 5.3 GW of clean nuclear power, preventing the release of 8.8 million tonnes of carbon into the atmosphere, equivalent to taking 1.8 million petrol cars off the road.
That’s why we’re pushing the government to follow in the footsteps of countries like France and the United States and make the obvious, sensible and safe decision to extend the lifespan of our existing nuclear reactors. If you agree with us, back our campaign.
👩💻 Anastasia Bektimirova, Researcher
I spent a fascinating couple of days last week at the events of the inaugural AI for Science Forum, co-hosted by Google DeepMind and The Royal Society. True to the spirit of open science, the organisers recorded and uploaded the Forum’s sessions here. The themes that kept on coming up were an evolving notion of what it means to be a scientist, multidisciplinarity, and the changing ways of organising science. But unambiguously, the keyword was: data – both as a bottleneck and an opportunity – for AI-driven scientific progress. As DeepMind’s VP of Science Pushmeet Kohli noted during his panel, “we have a path for discovery but a scarcity of input.”
This point holds for all fields but one – the social sciences. As Fabian Theis, Director of the Computational Biology Institute at TUM said, “we have all these different developed disciplines…they have datasets…but then they still see this [AI] as a bit of a mystic thing”. What is needed is “activation to embrace AI”. Later, the Government Chief Scientific Adviser Dame Angela McLean said, “it’s incredibly attractive to use these powerful tools to address natural science questions, but we should also be thinking how we can use these tools to completely revolutionise social sciences”. I couldn’t agree more, with the caveat that AI is not the only available hammer of this revolution.
Social sciences are not uniform. Certain fields and subfields are inherently more receptive to methodological innovation than others. Updating university social science curriculum to better align it with methodological frontiers can only go so far. The “digital revolution” in the social sciences, prompting increased use of computational research methods, has been around for a while, with uneven spread. This suggests that beyond methodological innovation, deeper shifts need to happen too. They may need to be more cultural in nature, which makes them harder to achieve or incentivise.
With the exception of certain technically advanced camps in traditionally quantitatively strong fields, such as economics and political science, AI as a research tool remains a largely untapped opportunity in the social sciences. DeepMind’s recent blog on AI for science is a telling sign. It is a brilliant read, thoroughly exploring AI opportunities and challenges across a wide spectrum of fields, but overlooks the social sciences, even though DeepMind itself has produced impressive work in this space. Many areas discussed in the piece, such as problem selection and interdisciplinarity, certainly apply to social science research, yet it doesn’t spell out the words social science once. Personally, having attended several events in recent months on the topic, I’m left with no doubt that the future of the AI-powered social science revolution is bright.
⚖️ Philip Salter, Founder
The prosaic world British regulatory reform has caught the attention of the US under the stunning headline (which deserves to be written out in full): Shock UK Regulatory Coup Gives Government Sweeping Control Over US Tech: London's digital markets, competition and consumers act gives regulators the power to stop any acquisition, anywhere, for basically any reason they want.
Ashley Rindsberg is dissecting the Digital Markets, Competition and Consumers (DMCC) Act which is coming into force and gives the Competition and Markets Authority (CMA) significant new powers. Despite the headline, this isn’t clickbait – Rindsberg has a point. More precisely, he has lots of points, but I want to focus on the one that really matters to entrepreneurs that I talk with.
As Rindsberg writes, “the DMCC gives the CMA broad new powers to intervene with mergers that target what it calls ‘killer acquisitions.’ While the language makes it sound as if only massively disruptive technologies fall into the category, the letter of the law reveals the opposite to be true. Instead, under the killer acquisition provision, the UK now has the ability to intervene in ‘no-increment’ mergers – i.e. deals that don’t increase the market share of either party, which can be manifestly non-competitive with each other.”
Back in 2021, we joined forces with the International Centre for Law and Economics to write a sober assessment paper on the risks of the DMU. Central to the argument in Conflicting Missions is that startups depend on acquisitions. While some don’t want to admit it, being bought is the main way entrepreneurs and venture capital investors are paid for their hard work and investment. The harder it is to sell your company, the harder it is to make a return. The paper cites empirical evidence that venture capital activity grows when countries enact pro-takeover laws, and declines when anti-takeover laws are introduced.
As our paper and Rindsberg’s article make clear – there is a huge amount of uncertainty about how this will play out. Entrepreneurs and investors are already burdened with enough of that.
All budgets have winners and losers. The most vocal on the wrong end of the latest one are those hit by the inheritance tax changes, and the CEOs of Britain’s biggest businesses who plan to cut jobs and investment due to hikes to National Insurance. For the latter, these National Insurance hikes add insult to injury – the injury being the Employment Rights Bill, which was introduced prior to the Budget.
The Bill isn’t set in stone – the Government is currently consulting on it – and given the huge blowback around the National Insurance rise, I expect those in power will be particularly alert to any critiques. After all, according to the Government’s own analysis, the planned reforms will cost businesses billions a year.
In our conversations with entrepreneurs, the biggest concern around the Bill seems to be the right to claim unfair dismissal against employers from day one. Currently, there is a two-year qualifying period. While there will be a less onerous process for earlier terminations due to capability, conduct, illegality or so forth, many business owners are worried.
As Daniel Pollard, employment partner at Charles Russell Speechlys, says: “The risk of hiring the wrong person may make employers more cautious which is not good for anybody. If the rules are too restrictive during the probationary period this will also act as a brake on recruitment and stop employers taking a punt on a candidate who might be an outlier.”
For entrepreneurs in the sharing economy, we’ve heard concerns about the restrictions around zero-hour contracts. While the Bill doesn’t ban them, it sets out complex rules requiring guaranteed hours. Neil Carberry, Chief Executive of the Recruitment and Employment Confederation says: “Far too much is made of zero-hour contracts as being imposed on workers when there is more than enough evidence that people want to work in different ways.” This reflects the findings of our report for the All-Party Parliamentary Group for Entrepreneurship on the Sharing Economy.
There’s much more besides – some of which is hard to get too worked up about, such as stopping ‘firing and rehiring’. But as it currently stands, there’s an awful lot in there that will render British businesses less agile. This article on 11 things you need to know about the Employment Rights Bill is a good place to start if you don’t know what might be coming down the line.
I write “might” because my sense is that the Government is open to striking a better balance. If you’re keen to have your say, but don’t want to or can’t respond directly, sign up here. We’ll be going out directly to our Members to feed into our submission.
Big Deal
This week was the tenth instalment of our Three Big Ideas series on our Substack. If you’ll forgive the self-promotion, I think it’s a cracker. We invited Jack Wiseman from Inference Magazine to make the case for Special Compute Zones that are rumoured to appear in Matt Clifford’s AI Opportunities Action Plan. I wrote about how the Annual Investment Allowance has distorted investment away from business spending on big data and AI. While our Research Director Eamonn Ives gives some sound advice to whoever becomes the Chair of the newly established Regulatory Innovation Office (applications close this Sunday).
Lilac Review
I’m on the board of the Lilac Review – an independent government-backed review dedicated to understanding the challenges and successes experienced by disabled entrepreneurs.
On a range of questions, we’re looking for the views of entrepreneurs with a disability. Your insights will contribute to a comprehensive report from the Lilac Review, set for release in May 2025. As a thank you, everyone who completes the survey will be entered into a draw to win one of two £250 prizes.
You can take the survey here. The Lilac Review is committed to making this survey accessible to all. If you’d prefer to complete the survey in a different format, please reach out at: hello@lilacreview.com.
The Lilac Review was spearheaded by Michelle Ovens CBE, whose tenacity on this topic is only beaten by her ambitions to move the agenda forward. If you want to support this policy area and don’t know Mich, drop me an email and I’ll make an introduction.
Founder Resilience
Building on last week’s newsletter, I wrote for Forbes about the importance of founder resilience. If this is something that matters to you, let me know and I’ll make an introduction to Christina Richardson, our Adviser and author of the report.
Three Big Ideas is our weekly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
In this week, Philip Salter writes about capital incentives slowing the diffusion of next-generation technologies, Eamonn Ives discusses ‘invisible graveyards’, and in a guest post, Jack Wiseman, of Inference Magazine, crunches the numbers on what Britain’s future electricity system should look like.
⚡ Jack Wiseman, Inference Magazine
Since 2012, the computational power used to train the largest AI models has grown 100 million-fold. This has become enormously energy intensive: the most recent model from Meta used an estimated 27 megawatts of power capacity, which is approximately the same power required for 88,000 UK households. Were trends to continue, by 2030, training the largest model would use more than twice the UK’s entire energy generation capacity.
But as things stand, no developer would choose to build an AI datacentre in the UK: it can take up to 15 years to get a grid connection, and, once connected, the UK’s industrial electricity prices are four times higher than in the US and 45% higher than in France.
To rectify this, Britain needs to increase its energy supply. We investigated two options for doing so: one using a combination of wind, solar, grid-scale batteries, and natural gas backup; the other solely with nuclear power. Our modelling suggests that nuclear route has significant advantages for environmental impact and safety. Not only would the cost-minimising allocation of renewables plus batteries and backup require over 200 square kilometres of contiguous land area per gigawatt, and colocation with an LNG import terminal, it would also have 40% higher carbon emissions, and lead to 27 times more ‘expected deaths’ than using nuclear power, based on historical patterns.
However, at present, building nuclear power in the UK is hard. Compared to South Korea, our reactors are 4.5 times more expensive and take at least twice as long to construct. In our diagnosis, this is a choice. We recommend the creation of Special Compute Zones, with an alternative planning and regulatory approval process for nuclear power, AI datacentres, and the transmission and networking infrastructure. If these reforms allowed UK projects to close the cost gap with South Korean reactors by two thirds, nuclear power would become 37% cheaper than an equivalent blend of renewable power for datacentres. With these changes, the UK can become the world’s best place to build the infrastructure for the Fourth Industrial Revolution.
☁️ Philip Salter, Founder
As Stian Westlake and Jonathan Haskel argued in the groundbreaking work Capitalism without Capital, modern economies are increasingly driven by intangible assets – such as research and development (R&D), software, branding, and organisational processes – rather than traditional tangible assets like machinery and buildings. A recent paper by Timothy DeStefano et al. hammers home the importance of policymakers understanding this point.
Investigating the UK’s Annual Investment Allowance (AIA), which allows firms to deduct the cost of capital investment against profits, the authors find that the tax break boosted tangible IT investments by, on average, 41.3% for hardware and 27.8% for software, but also slowed the adoption of cloud services by 17 percentage points.
As a blog on the paper states: “This is a significant distortion, given that 56% of firms used the cloud by the end of our study period. Crucially, the capital incentive also slowed the diffusion of other data-intensive technologies, reducing AI and big data adoption by 3 and 18 percentage points, respectively. These effects were particularly pronounced for small and medium-sized enterprises, precisely the firms most likely to benefit from cloud computing’s flexibility and variable cost structure.”
The capital incentive policy also dampened demand for data-analytics workers. Their back-of-the-envelope estimates suggest that in the absence of the AIA’s distortive effects big data adoption in the UK could have been 14% higher, and AI adoption 30% higher.
There are plenty of bad policies the Government could adopt in their efforts to try to get Britain’s businesses to adopt AI – and I’ve heard a lot of them from other business groups over recent months in meetings with Ministers – but here is a straightforward one. We’ve done this before. Alongside Startup Coalition we successfully made the case for including intangibles in R&D Tax credits. It’s time the AIA followed suit.
🪦 Eamonn Ives, Research Director
One of my favourite turns of phrase in public policy debates is ‘the invisible graveyard’. Though rather morbid, it tells an instructive tale. Originally coined by economist Alex Tabbarok, the invisible graveyard refers to all of the deaths that occur while a drug which could have prevented them is stuck waiting to be approved by regulators. The notion forces us to remember that a strategy of not taking risks is far from being risk-free in itself.
Invisible graveyards don’t just exist in pharmaceuticals either. We can apply the concept across a swath of sectors that are tightly regulated. Red tape that stifles nuclear energy means we burn much more fossil fuel than we might otherwise, heating up the planet and polluting the atmosphere. Our inability to swiftly legislate to permit autonomous vehicles on our roads means, as I wrote in an earlier Three Big Ideas issue, that more crashes happen. Rules that make it harder than necessary to put lab-grown meat on supermarket shelves are bad news for consumers, and even worse for chickens.
Note that none of this is to say that rules are bad in and of themselves. Rather, it’s an argument for regulators to always be mindful that, where a problem exists, insisting on making a possible solution as safe as is conceivably possible isn’t always a recipe for safety.
Currently, applications are still open to Chair the newly established Regulatory Innovation Office – which could be a gamechanger for pioneering tech in Britain. Whoever gets the gig, let’s hope they’re aware of the invisible graveyard, and do what they can to keep it as empty as possible.
We all know that entrepreneurs are the engine of economic growth. But they’re only human. Over the past decade at The Entrepreneurs Network, I’ve seen firsthand how the incredible role entrepreneurs play in society can come at a cost. Running a business puts unique – and sometimes profound – pressures on people.
That’s why I penned the foreword to Christina Richardson’s robust new report on the topic of founder resilience. Christina is an Adviser to the network, the Founder of Foundology and an Associate Professor in Entrepreneurship at UCL School of Management.
Founder Resilience Research 2024 draws on insights from hundreds of entrepreneurs, providing a comprehensive view of the obstacles founders face. As I write in my foreword:
“That 93% of founders report signs of mental health strain, with stress and anxiety levels five times higher than the UK national average, should be a wake-up call for us all. Despite 92% of founders expressing passion for their work, only a small fraction feel adequately supported. Just 43% feel they have a strong support system, especially as their ventures grow, and 76% report feelings of loneliness – a figure 50% higher than CEOs more generally. The personal cost of entrepreneurship is undeniable.”
But it’s not all doom and gloom. The report also outlines some of the solutions and sets out what founders with high resilience do.
Whatever lens you see it through – resilience, mental health, coping skills, self-care, mindfulness, wellness – clearly this stuff matters on a personal level to many of you reading this. But it also matters to our ecosystem as a whole. I wholeheartedly recommend the report for anyone who cares about this – feed your mind.
Mega Fun
In her first Mansion House speech, Rachel Reeves announced the creation of Canadian- and Australian style- “megafunds” through the consolidation of the defined contribution market and Local Government Pension Schemes.
It was nice to have some positive news for a change, so we helped pen and signed a letter with the Startup Coalition, the BioIndustry Association, techUK, UK Business Angels Association, Founders Forum Group, Tech Nation and UK Day One which broadly welcomed the announcement.
It would be remiss if I didn’t share the paragraph from the press release that raises some slight concerns: “Local economies will be boosted by the changes as each Administering Authority will be required to specify a target for the pool’s investment in their local economy, working in partnership with Local and Mayoral Combined Authorities to identify the best opportunities to support local growth. If each Administering Authority were to set a 5% target, that would secure £20 billion of investment in local communities.”
However, there is clearly wiggle room, and subsequent statements by Pensions Minister Emma Reynolds suggests the government isn’t looking to politicise investment: “She said the government will not tell pension fund managers they must invest more in private equity but due to the larger scale they will be able to invest in a ‘broader range of assets, and that’s what we see in Canada and Australia.’”
But just in case, I would direct them to the case of the University of Rochester. In the early 1970s, it had the third largest endowment in the US, after Harvard and the University of Texas. However, the administrators decided to invest locally in companies such as Kodak and Xerox, which suffered in the 1970s and 1980s. As a result, the university had to dramatically downsize in the mid-1990s. The insights from my 2020 post on sovereign wealth funds are as true now as they have always been.
In The Stars
We also welcome the Chancellor’s backing of PISCES, which has been a massively underreported innovation. It will offer new avenues for private companies and investors to trade shares. As Nick Graves, Partner at Burges Salmon, wrote: “Participating on PISCES will support companies to scale up and grow, providing liquidity, helping shareholders, including employee shareholders, to realise their gains, and providing an opportunity to companies to rationalise their shareholder base. Investors will gain better access to exciting companies while also benefiting from greater transparency and efficiency than available in private markets.”
Invest In Women
Last week the official members of the Invest in Women Taskforce (IWT) were announced. IWT is an industry-led, government-backed initiative with a mission to create the largest funding pot in the world for female investors, with a mandate to back female-powered businesses. The Taskforce has official support from Rachel Reeves and has welcomed Minister Gareth Thomas at the Department for Business and Trade.
I’m delighted to be on the Ecosystem Working Group, alongside Hannah Bernard and Juliet Gouldman from Barclays, Irene Graham from the Scale-Up Institute, Alex Daly from Arosa Capital / CIFE, and some other incredible champions of female entrepreneurship.
Before the end of the year, we’ll be releasing a report in the House of Lords with the IWT. We’ll provide more details next week, but join us for the chance of getting an earlier email invitation (until we start launching reports in football stadiums, demand will outstrip supply for these sorts of events).
Three Big Ideas is our weekly roundup of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
In this week, Eamonn Ives cautions against tariffs, Philip Salter digs into a new paper on the impact of AI, and Anastasia Bektimirova wonders how we can get better at commercialising research from the social sciences.
🚧 Eamonn Ives, Research Director
Donald – self-annointed ‘Tariff Man’ – Trump is returning to the White House. Central to his economic agenda for America is to introduce steep tariffs on imported goods. True to form, the exact details are sketchy, but Trump has suggested anything between 10-20%, and even higher rates for Mexico and China – 100%, 200%, or even 1,000% – which he blames for eroding America’s manufacturing base.
One of the most common justifications for tariffs is known as the ‘infant industry argument’ – which states that taxes on imports can keep out foreign competition, shield domestic companies, and therefore enable them to mature and one day become competitive. Tariffs should be thought of as the stabilisers you have on while you’re first learning to ride a bike, so this theory suggests.
With impeccable timing, however, a new working paper casts doubt on this idea. Authors Alexander Klein and Christopher M. Meissner studied the relationship between tariffs and labour productivity in US manufacturing between 1870 and 1909, and found that the former categorically reduced the latter. They also go further, and suggest that the reason this occurred was because tariffs generally enabled a greater number of smaller, less productive firms to stick around, which otherwise would have been competed out of existence – exactly the opposite of what fans of the infant industry argument tend to argue. Nobody celebrates small businesses going to the wall, but we’ve known for a while how important creative destruction is for economic growth.
One of the other more harmful aspects of tariffs is that they invariably induce other nations to follow suit with retaliatory tariffs – in other words a ‘trade war’. Whether in fashion or food or beyond, we have a tendency to copy our transatlantic counterparts. For the sake of the economy, let’s hope we draw the line at trade policy.
🧩 Anastasia Bektimirova, Researcher
I spent last Friday at the newly refurbished British Academy, where the space now blends tradition with modern ambition, as if reflecting a reimagining of social sciences and humanities themselves – the fields that the Academy has championed for a century. Fittingly, I was there for the reSHAPE conference. It showcased the achievements, opportunities, and challenges of turning research coming from social sciences, humanities and the arts (SHAPE) into impactful products and services, or deep social ventures, directly tackling societal problems. I shared some takeaways here.
There was a lot of talk about “changing the culture.” The rooms were buzzing with founders, academics, investors, and government officials eager to explore the frontiers of real-world SHAPE research impact. But, as one of the organisers told me, this relatively small group represented about 90% of the community – a sign that there is still some way to go until there is a bigger pipeline of strong (i.e. investable and scalable) commercialisation ideas coming from SHAPE research, and that the broader academic community needs to be taken on a journey.
The puzzle is: how? Questions, such as: “how to get academic researchers more interested in real-world questions?” or “how to get social science and humanities university departments to use the word ‘commercialisation’ less hesitantly?” don’t immediately strike me as ones for government policy to tackle. But I consistently hear the hope that the Government’s five missions being big strategic themes rather than specific disciplinary areas offer a good opportunity for the SHAPE research community to demonstrate its impact potential. The new R&D Missions Programme is a helpful signal, but social inertia is often a stumbling block for otherwise promising interventions.
One way to make targeted funding work is to diversify the forms of research output that funders ask for when awarding grants. As it stands, this could do with more ambition and outside-the-box thinking. Yesterday, the Advanced Research and Invention Agency (ARIA) CEO Ilan Gur told the Lords Science and Technology Committee that an ARIA programme would be considered a success if it produces a new capability that “would have changed the conversation globally about what’s possible or valuable in a space.” We need a similar ambition in how we approach the research impact of social sciences and humanities.
🧑🔬 Philip Salter, Founder
When Caleb Watney tweets “This is the best paper written so far about the impact of AI on scientific discovery”, it’s time to stop scrolling and start reading.
Artificial Intelligence, Scientific Discovery, and Product Innovation, by Aidan Toner-Rodgers finds that AI-assisted researchers discovered 44% more materials, leading to a 39% increase in patent filings and a 17% rise in product innovations. Critically, the use of AI seems to present an opportunity for more radical innovation, with the paper finding increased novelty in all stages of R&D.
As the paper states: “These effects are large. To put the rise in materials discovery in perspective, the lab’s research output per scientist declined by 4% over the preceding five years. This was despite the introduction of several computational tools designed to aid scientists. AI therefore appears to be a different class of technology, with impacts that are orders of magnitude greater than previous methods.”
While being mindful of these caveats, this could point the way to a new era of human progress. It also presents a challenge to individual scientists. Top-performing scientists benefited disproportionately, which would make many scientists redundant. And while it automates tedious tasks, the paper suggests AI may also reduce creativity and job satisfaction for scientists – or at least for the sort of people who currently become scientists.
Whatever the future holds for scientists, ultimately we shouldn’t forget one of Adam Smith’s great insights: “Consumption is the sole end and purpose of all production.” And on that front, things are looking bright.
Back in January, I wrote about how 2024 would be the year of democracy – with around half of the world’s adult population able to head to a ballot box. The US Presidential race was always going to be the most consequential election, and unless you’ve been living under a rock for the last few days, you’ll know by now that it was Donald J. Trump who emerged victorious.
The Republican firebrand will take charge of the biggest economy on the face of the Earth and the cradle of much of the world’s innovation. Whether you love him or loathe him, how Trump governs will matter acutely for businesses both inside and outside of America’s borders.
Signature policies like his promise to apply a blanket 10% import tariff on goods – and more for products coming from countries like China and Mexico – would hit firms that sell to the US hard. Fears that this may trigger a retaliatory global trade war are already rippling through growth forecasts and share prices of trade exposed businesses. If things get really bad, be braced for inflation taking off again, and interest rates increasing to try to tame it.
As America is Britain’s single largest trading partner, we must be particularly prepared. More than 40,000 British businesses shipped wares to the States in 2023, worth over £60 billion in value and equivalent to a third of all goods exports that left our shores. Some of these firms might be able to shoulder a drop off in sales, but others will surely need to pivot or perish.
One potential note of optimism on this front, however, is whether Trump’s return to the White House will revive the possibility of a UK-US trade deal being signed. In the final year of his first presidency, initial progress was made towards one – but talks collapsed after Joe Biden came to power, in part due to disagreements with the then Conservative Government’s approach to the Northern Ireland Protocol. Just this summer, the Chancellor Rachel Reeves hinted that she would be open to resuming negotiations. She emphatically should – and in the coming weeks we will be publishing a range of ideas for how the ‘Special Relationship’ can be made that bit more special for businesses on both sides of the Atlantic.
It would be dangerous, however, to think that our future economic success should be tied solely to the benevolence of our American counterparts. There is so much else that only we can, and must, do to fix the foundations of our own economy – from bringing down the costs of building new infrastructure, to improving our immigration system to attract more of the world’s brightest minds to help start and scale companies here in the UK rather than elsewhere. Our report Building Blocks offers a starter for ten for how to do that.
In Pieter Garicano’s excellent piece on ‘luxury rules’ he argues that many European countries have historically allowed themselves to make certain choices in recent decades on the assumption that other economies will always be there to bail them out – whether it’s the US supplying innovation like breakthrough technologies and security in the form of military guarantees, or countries such as Russia and China supplying commodities like cheap energy and manufactured goods. In today’s increasingly fragile world, marked by rising tensions or even outright war, the costs of these choices are coming home to roost. This isn’t to say the answer is to become economically insular – far from it – but rather that we need to be more discerning about the policies we adopt, and less complacent about the roots of economic growth.
A sober assessment of what sovereign capabilities we need and the steps required to build them is necessary now more than ever, as is thought about where collaboration with others can best support our national goals. (On this last point, I found James O’Malley’s latest blog particularly persuasive.)
If this sounds gloomy, that’s not my intention. Rather, it asserts that it’s on ourselves – nobody else – to turn things around. In a sense, that should give us hope. It doesn’t matter who occupies the White House or whatever else may be going on in other corners of the world. There are still plenty of problems to solve at home – problems which, if solved, would swiftly make our own economy a more dynamic, secure and prosperous place. But it’s on us to start making those choices.
Out of the Shadows
On Saturday, Kemi Badenoch became the new Leader of the Conservative Party, and with that of His Majesty’s Most Loyal Opposition too. Over the course of this week, she has been appointing a fresh Shadow Cabinet. Of particular note for Britain’s entrepreneurs will be Mel Stride, who was named as Shadow Chancellor, while Andrew Griffith takes up the mantle of Shadow Business and Trade Secretary. As a former Chair of the APPG for Entrepreneurship, of which we’re the Secretariat, we were delighted to see Alan Mak appointed as the Shadow Science, Innovation and Technology Secretary. You can find the full list of portfolios here; we look forward to constructively engaging with them all in months and years ahead.
