chancellor interview

Interview: Chancellor of the Exchequer Rishi Sunak on supporting the UK tech sector

Chancellor of the Exchequer Rishi Sunak is spearheading a Treasury initiative to reach out to leaders in the UK tech sector, such as CEOs, investors and startups, to better understand what the industry wants from the government in the post-Brexit world of “Global Britain”. In recent years, the government has established a variety of schemes…

Chancellor of the Exchequer Rishi Sunak is spearheading a Treasury initiative to reach out to leaders in the UK tech sector, such as CEOs, investors and startups, to better understand what the industry wants from the government in the post-Brexit world of “Global Britain”.

In recent years, the government has established a variety of schemes to support tech firms, including investments in research and development, funding for innovation, as well as backing infrastructure projects such and broadband and 5G. This has included taking equity stakes in innovative tech firms for the first time, as part of the Future Fund. Just this week, the Treasury announced that taxpayers now own parts of 158 such companies.

The Chancellor, a former economist, hedge fund manager and a Stanford MBA, has a close connection to the tech sector – his father-in-law, Narayana Murthy, was the founder of Indian IT services giant Infosys, and Sunak spent time in Silicon Valley while living in California.

On 14 September, Sunak hosted a new event, Treasury Connect, to meet tech leaders and discuss their needs. Computer Weekly was invited to put questions to Sunak as part of a “fireside chat” to open the event. To Sunak’s credit, we were allowed to ask whatever questions we wanted. Here we present the conversation with the Chancellor in full, covering topics such as government investment in tech, plans to reform UK data protection laws, the opportunities for tech in a post-Covid world, and the digital skills gap.

Supporting the UK tech sector

Computer Weekly: Chancellor, this is the first time you’ve done an event like this. You have, both politically and personally, a very close connection to the technology sector. What do you most hope to achieve from this session? What would you like these people to do differently as a result of coming here to listen to you?

Rishi Sunak: I think probably two things. One is hopefully it will demonstrate our commitment, not just to the industry, but also about the mindset we have when it comes to policymaking. Our approach has been that of a “startup Treasury”. We’re trying to think more creatively and innovatively about policymaking. And we had to do that a lot in the [Covid-19] crisis – the furlough scheme we conceived, designed and implemented with a phenomenal team of people in the space of days and weeks. And it’s that mindset in a crisis that I want to try and embed a bit more on how we think about things.

It’s not always easy in politics to do things, and then they don’t work out. All of you [in the audience] do that all the time. And that’s part of learning rather than failing – and that’s how we get better. So, hopefully, it conveys the fact that we think this is really important, we want to try and support [the tech sector]. And we’re willing to be innovative about how we do so.

The second thing out of today is, hopefully, we leave with a bit of a to-do list. And I’m saying to you, be honest, be challenging, be ambitious with us. I’d like to think we’re doing a lot already, but we can’t be complacent. Where there are things we should look at, that we think will be helpful, that I can afford to do in these slightly straitened times, we’re up for doing that. Because we know that [the tech sector’s] success is good for the country. And we want to learn from [the tech sector] about the things that we should have on our to-do list.

Making UK tech internationally competitive

CW: Not that many years ago, Computer Weekly would write an article before every Budget saying the government needs to invest in tech and digital, knowing there would be nothing forthcoming. We’re pleased that has changed. We’ve written about so many government schemes around R&D and innovation and startups, which everyone welcomes. You’re putting hundreds of millions into the sector, and that’s great.

And yet – when you look around the world, you see China, for example, putting billions of dollars into AI [artificial intelligence] alone, as well as many other areas of digital innovation. The US remains by far the biggest investor in homegrown tech firms – and both have the advantage of an enormous home market in which to grow those firms. How confident can you be that the investments you’re making in tech will be enough to make UK firms internationally competitive over the next decade?

RS: They are massive markets – and companies in those markets have the advantage of very large domestic markets. That is obviously a bit different here. But I don’t look at that as a barrier to our success, because there are plenty of things that we have going for us that they don’t. Fintech and life sciences are two areas where we are absolutely globally best in class. We’re lucky that financial services is something that the UK does really well, we have regulators that get that, and they, I think, are far more supportive of innovation than regulators in the US – I’m happy to be challenged on that, but I think that is the case. And that’s why fintech here has been an enormous success.

There are many different ways that people set up healthcare systems, but you’ve seen in this crisis, the way that we do genomic sequencing is world-leading. They didn’t do that in the US. They weren’t doing that in China. We do that here. And it’s a testament to the life sciences strength that we have. We’re not going to do everything at the same level that the US and China do. But, as with any business, we need to focus on the verticals where we can clearly do things at world-class levels. And there are plenty of opportunities for us to do that.

The foundation all of that is built on is people and ideas. If you look at the quality of what’s coming out of our universities, I don’t think that it is less good than any of those places – we have fantastic quality university research. And this [country] is a magnet for high-quality people in a way that I don’t think some of these other places are. That’s part of our island mentality. We’ve always been a very open country in an open economy. And our migration reforms that I announced in the Budget will cement that – this is a place where people from all over the world want to come because it’s a fantastic place to live and work. So I feel pretty optimistic that we can compete at that level with those guys. But I can’t change everything – I can’t change the weather between here and Palo Alto.

CW: So the message is: focus on the things that we’re really good at, rather than trying to be good at everything?

RS: I think that’s a good life lesson in any case, but yes.

Reforming data protection laws

CW: The government recently announced a major consultation on data protection – the consultation document alone is 146 pages, and it’s going to be a significant process. Nobody would claim that GDPR [General Data Protection Regulation] is perfect, nor that there isn’t scope for improving it. But the data adequacy deal we have with the EU ensures the free flow of data supporting about £90bn in digital trade. Since the consultation was announced, there’s been huge concern that it puts that data adequacy deal at serious risk. What reassurances can you give that this process won’t destroy our vital data adequacy status with the EU?

RS: I think there’s a lot of excitement about it. It’s the result of months, if not years of painstaking policy, work and engagement with many of you in this room and lots of others, for us to figure out, actually, we’re completely in charge of our data protection rules now. As any other country has done, it’s reasonable that we take a look at them ourselves. That’s what you elect us to do – not to outsource these decisions, and to figure out what the optimal path forward is.

There are plenty of countries that have adequacy decisions with the EU, that are sensible countries, whether it’s Switzerland, whether it’s Japan, whether it’s Canada, New Zealand, or more that don’t do GDPR. So first of all, the idea that you have to have GDPR to have data adequacy, I don’t think is right. There are demonstrably many other people that don’t. And as you acknowledge, there are lots of things that probably we think are a bit more in the box-ticking kind of approach to regulation in GDPR. Whereas, what we want to focus on is the substance – we want to protect individuals’ data, but we don’t want to inhibit innovation.

Our view is there are things that we can change that will be pro-innovation, while protecting rights and getting rid of some of the box-ticking, and will end up in a good place that is net positive for the UK as a whole. But we’ll look forward to getting [people’s] thoughts on it. But as I said, I think it strikes a sensible balance between those interests, and it’s entirely reasonable that we look at it afresh, given that it’s our job [as a government], essentially, and we shouldn’t just outsource these decisions to another party and inherit them and then not look at them.

CW: Is there an underlying objective that at the end of this process, while doing all the good things that you want to do, the aim is to keep that data adequacy deal with the EU? Or is there a feeling that maybe we can get away without it?

RS: In general, we always want to have a constructive approach to our EU friends. In financial services, which is my very specific responsibility, we have [the concept of] equivalence. The EU has chosen to not grant us equivalence in lots of different areas, for reasons that are known to them. It’s hard for me to understand why, because we left the EU with exactly the same regulations. And we want to, if anything, strengthen our regulatory approach here, but they’ve chosen to adopt a different approach. We’ve chosen to do the best thing for the UK. So we’ve made some unilateral equivalence decisions.

And then similar to what we are doing on the data side, we can figure out where are the advantages of the new freedoms we have in financial services. Whether it’s in things like insurance and solvency, whether it’s on the capital side for banks, whether it’s on listings reforms, whether it’s on wholesale capital markets – all things we can do to incrementally make financial services really competitive in the UK, while maintaining our reputation for being a great and safe and high-integrity place to do business. And I think that is the approach that we should have. But we’re not trying to poke an eye for the sake of it, we’re just trying to do the things that are in the best interest of the country.

The role of tech after Covid-19

CW: It’s fair to say that without technology, the economic and health impact of the pandemic would have been far greater. Just imagine if Covid had come along 10 years ago – there’s no way we would have had the capability for millions of people to suddenly work from home, or to support digital initiatives in the NHS. It’s shown the enormous positive benefit technology can have socially, as well as economically. Now, looking forward, with millions of people working from home instead of commuting, it could cut the ongoing cost of public transport; it could revitalise local high streets. Empty retail premises or even libraries could be repurposed as remote working hubs. Fewer people working in offices in cities could free up brownfield sites for affordable housing – all great opportunities for levelling up. We don’t see any evidence of that sort of strategic, long-term thinking from the government – looking at how we can digitally transform the UK at a societal level thanks to the opportunities of technology. Or is that statement wrong?

RS: That’s a really interesting thesis and it’s fair for us to reflect on it, but I’d say a couple of things. One is when it comes to how do we use technology to improve public services? It’s right to challenge us on that, and what have we learned from this crisis that we should embed for the future? We had to do things and quick, lots of things – and it turns out, some of them are probably sensible things in general that we should have been doing. It’s completely reasonable that all of you ask to make sure that your money is spent in the best possible way and goes as far as it can. If technology is part of the way to do that, we should be embracing that and driving that change. So I completely agree with that.

With regard to the reshaping of cities and offices and commuting patterns – I

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