What Boris does next
How he can turbocharge Britain’s technology sector
After a month of just about managing to sidestep any career-ending gaffes, this weekend it looks like it is all over bar the final tallying of the votes. By the end of next week Boris Johnson will have finally moved into Number 10, and will have chosen a new chancellor as he assembles his administration. No doubt most of his time will be spent trying to finally resolve our torturous departure from the European Union. But it would be a fatal mistake to allow that to completely consume his premiership.
Instead, he should work out what kind of economy he wants to create for the 2020s. As mayor of London, Johnson oversaw the transformation of the capital into a major technology hub. He could do the same for the country as a whole. Like how? By ripping up absurd EU rules, by ditching planning laws, by embracing competitive deregulation, and by creating the most tax-friendly regime for the continent’s entrepreneurs. There is a huge opportunity for Britain to match the east coast of the United States and the west coast of China as one of the key tech hubs of the world – if Johnson has the vision to seize it.
With his slightly bumbling, old fashioned manner, Johnson is in many ways an unlikely champion of the technology industry.
No one would be very surprised if he still used a landline or listened to CDS. Yet his record as mayor – where, let’s remember he was responsible for 22pc of Britain’s GDP – suggests he instinctively understands how innovation can drive wealth creation.
Over that time, London started its transformation from a financial city into a technology centre, with far more billon-dollar-plus start-ups than any other European rival, and in sectors such as fintech even overtaking San Francisco. Sure, that was already starting to happen when he moved into City Hall. But as mayor he pushed it forwards.
As he becomes PM, Britain’s technology industry is already
growing at 4.6pc a year, according to the latest Tech Nation report, three times the rate of the rest of the economy. Even so, we can both accelerate that, and spread it more evenly across the country. Here are four places we could start.
First, use Brexit as an opportunity to break free of the EU’S increasingly ridiculous and hysterical clampdown on internet companies. It is not a coincidence that the major European economies, which led the world in the first and second industrial revolutions, are nowhere in the third. The EU has developed a closed, lobbyistdominated system of rule-making that protects incumbents and is hostile to innovation.
With its weird obsession with taxing, regulating and breaking up the world’s most dynamic, innovative companies it is getting worse all the time.
One priority would be getting rid of the GDPR rules that have led to a collapse in venture funding simply to cut back on some mildly irritating spam. But that is just the start.
If we leave with a deal, we should make it an absolute priority that we don’t allow Brussels to regulate the app economy in this country no matter how hard it tries.
If there is no deal, we should make sure that is never up for negotiating in any trade agreement.
The tech giants may eventually be harassed out of the rest of Europe, but their dynamism, investment and innovation should always be welcome in the UK.
Next, redesign our planning rules. In London, the building boom that Johnson encouraged created the kind of prestige, flexible office and work space the tech industry needs. We should repeat that nationally. Sometimes that will mean allowing a lot more building within cities. Sometimes it will mean ditching the green belts around London and the tech clusters that have grown up around university cities such as Oxford and Cambridge.
You wouldn’t arbitrarily put a cap on the growth of your most successful companies, so it doesn’t make much sense to cap the growth of our most successful technology hubs.
Create the right space, in the right places, and companies will arrive to fill it.
Third, deregulate competitively. From delivery drones, to flying taxis, to driverless cars, to lab-grown meats, robot teachers and vertical farms, there are plenty of fantastically exciting new industries just on the horizon. But it will need legislators and regulators who are willing to embrace change to let those businesses experiment and flourish. The EU will remain intent on banning everything until it is 100pc certain it works. Britain should do the opposite, and become a regulatory laboratory for innovation. That way, we will attract lots of investment, as well as giving our own entrepreneurs a head start on the rest of the world.
Finally, make the UK a destination for start-ups. The 10pc rate of capital gains tax for entrepreneurs is already one of the best deals in the world. But why not make a bold statement by cutting it to zero, and at the same time offer an automatic permanent visa for anyone starting a company with an investment of £50,000? It won’t cost much in lost tax revenue, and it will make the UK by far the most attractive place in Europe to launch a new business.
A maze of fiddly reliefs make direct comparisons tricky, but Germany has a headline rate of 25pc on anything you make from risking everything on a new business, and in France it is above 30pc. Zero dramatically beats that.
Johnson’s core task will be completing our departure from the EU, and minimising any damage that does to the economy, especially if there is no deal in place. And yet that will be a matter of survival. Beyond that, there needs to be a vision of how the economy can expand.
We won’t ever quite equal China and the US in technology – but with those four policies we could at least be in the same league.
‘As mayor of London, he oversaw the transformation of the capital into a major technology hub’