For Keir Starmer’s in-tray: what UK business needs now

So long, then, to the UK election, and with it, the ceaseless polling predictions of landslides, comfortable majorities, or even super majorities. For a nation, and for its vital small business and startup sector, the carousel of leadership changes that have typified the past few years has finally come to a halt, and our new prime minister is settling into his desk at Downing Street with a long list of challenges in front of him.

Even if there’s no throwback note declaring “I’m afraid there is no money” at the top of his in-tray, Keir Starmer will have a rogue’s gallery of competing priorities to work through. For the SME community, it’s a knife-edge moment waiting to see how Labour’s manifesto pledges evolve into a tangible plan of action.

Take AI, for instance. There’s broad acceptance that some form of top-down regulation is coming – and needed. But how will Starmer balance this against creating an encouraging environment of innovation and funding for AI startups? Will a continued pipeline of funding to traditional academic heartlands create super-zones of AI progress within the UK, or will there be a “levelling up” of early stage R&D opportunity up and down the nation? More importantly still, will sufficient access to capital, and a deft regulatory touch, mean that the UK has the chance to truly compete globally, and for the long term, in a field where the rules of the game are seemingly rewritten with every new ChatGPT release?

Some 58% of business leaders we surveyed told us that a change of government would be positive for their business. Now that wish has been granted, there’s a broad sense of a generational moment in the making, if the right opportunities are seized upon.

We’ve spoken to experts across multiple fields, to get their take on what Prime Minister Starmer needs to focus on most urgently, now that the election confetti has been swept away, and the real work begins.

“Help Gen Z to get rich, pursue passion projects and launch their own businesses”

The UK’s appetite for entrepreneurship is evident, particularly among the younger generations. Research from Shopify finds 16-24s and 25-34s in the UK are almost twice as likely to want to create their own company than the national average.

Generation Z are making radical, life-changing decisions to get rich, pursue passion projects and launch their own businesses. Labour’s manifesto statement to “pull up the shutters for Britain’s entrepreneurs” may have been a clever move to win the hearts of the younger generation – but it’s essential that the new government follows through on this.

Addressing the financial and regulatory obstacles is essential to unlocking a robust entrepreneurial ecosystem and unearthing the potential of Britain’s 10 million aspiring entrepreneurs to make positive change.

By providing better access to funding, reducing financial risks, and implementing supportive government policies, we can help reduce barriers to entry for prospective business owners and in doing so drive economic growth, innovation and employment for all.

Deann Evans, Managing Director, Shopify, EMEA

“Our immigration system needs urgent attention if the UK is to attract the best talent”

Our immigration system needs urgent attention. Hiring and growth simply happen elsewhere when tech founders can’t come to the UK to start a business or bring in overseas talent to fill domestic skill gaps. The UK has been fortunate in the past to attract top founders and tech workers, but the doors have gradually closed in recent years.

It’s vital that the government makes visas for the tech talent UK startups need more accessible and does not impose further restrictions.

On top of this, there’s been a greater than 30% cut in what UK tech founders can get from R&D tax credits in the last two years. We hear from frustrated founders every day that they want the changes to their most used innovation support scheme to be reversed.

The result of the cuts has been less innovation, lower tech employment and less growth. There are undoubtedly issues that HMRC is working to fix, but this is a distraction from the continuing loss of 30% from what legitimate UK founders used to get from R&D tax credits.

We must support these founders and convince the government that fraudulent claims from bad actors in the system can’t be a reason to cut the R&D relief to companies set to deliver the highest economic returns for the UK.

Sean Kane, Chair and Co-founder of F6S

“Ensure the UK is the best place in Europe to be a startup”

The UK is a small market on its own. We need to attract the best talent and drive into international markets for our companies to achieve scale.

We also need ensure they are properly funded for success. The new government has set ambitious goals for long term economic growth, but to achieve this, it must prioritise investment and support for innovative companies in the UK. The last few years have been a difficult period for the UK economy, and we have seen growing competition from technology hubs around the world and across Europe.

The market here still retains an edge in terms of scale, but it is something that will easily be lost unless a concerted effort is made to continue to ensure the UK is the best place in Europe to be a startup.

With other countries closing the gap through well thought through policies to support investment and entrepreneurship, not to mention scaling up, it is crucial for the new government to show its support for the UK’s technology ecosystem to retain its position.

Tim Mills, Managing Partner at ACF Investors

“Shift the current AI policy away from big tech and towards AI startups”

As AI founders, what we would like to see in the first 100 days of a Labour government is an explicit acknowledgement of yes, the challenges, but also the opportunities latent in the emerging AI industry.

We are specifically looking for the Labour government to take the best parts of current UK AI policy – which, unlike the EU, takes a methodical and cautious approach, continuing to build state capacity – while shifting the focus away from only big tech and flashy, very large scale models. Focusing instead on the AI startups, companies and models that make up the core of, and are building a sustainable and profitable AI economy.

Following the Tony Blair Institute’s suggestion of an AI Mission control, I have spoken to the body regarding the suggestion – previously quoted in startups.co.uk – to set up a single government access point for AI startups seeking to stay on the right side of legal and ethical issues.

This is especially important while we’re awaiting clear regulatory frameworks, thus supporting the nascent UK AI industry from the ground up, rather than primarily and only investing in the AI economy top-down.

Dr Roeland Decorte, President, AI Founders Association and Founder of Decorte Future Industries

“The UK should aim to become a global leader in creating an AI-skilled workforce”

The new UK government must urgently prioritise AI upskilling, integration, and innovation in both the private and public sectors. As the CEO of an AI consulting company, I see significant fear in non-tech sectors about adopting these solutions.

It’s crucial to bust myths about AI and communicate that these are just new tools designed to enhance efficiency and productivity. The UK should aim to become the European – or even global – leader in creating a highly skilled workforce equipped with AI knowledge.

Consider this: today, you wouldn’t hire someone who only knows how to use a typewriter but not Microsoft Word, or someone who uses a calculator but not Excel. Similarly, we need to teach people to use new AI tools instead of outdated solutions.

Empowering our workforce and companies to lead in AI adoption will show that many AI solutions are inexpensive, easy to use, and integrate seamlessly. Numerous highly effective AI tools require no prior technical knowledge yet yield incredible results.

We must also integrate education on these new solutions into school and university curricula immediately. This is the only way the UK can build a highly skilled workforce capable of competing and leading on the international stage.

The numbers speak for themselves: according to a McKinsey report, organisations that implemented AI solutions reported revenue increases of up to 20%, and 40% of companies reported cost reductions. These statistics highlight the substantial economic benefits that AI adoption can bring, underscoring the urgency for the UK to embrace these advances.

Ieva Balciute, Managing Director, 93Inc

“Labour needs to partner with innovative startups”

Artificial intelligence and other deeptech innovations have the potential to accelerate the UK’s transition to net zero.

However, it’s frustrating to see both the public and private sectors pump cash into flashy AI applications that are essentially wrappers around ChatGPT-style LLMs.

To justify billions in investment, the effort of the smartest minds, and the significant compute power, the impact of AI needs to be worth it.

Labour needs to partner with innovative startups and companies that are researching and developing new ways to create a sustainable future. Effective engagement with deeptech innovation has the potential to generate a significant, near-term impact on sustainability.

Having pledged to spend £100m on AI regulation to ensure big tech does not hold all the power, Labour also needs to focus on providing effective R&D support and stimulating private investment into promising companies in this space with relevant, real world applications.

Dominic Vergine, CEO and Founder of Monumo

“Being pro-worker and pro-business is a great strapline, but harder to deliver.”

The key issues that the Labour government needs to prioritise in the first 100 days are AI regulation and fiscal certainty – but the key question is what version of Labour are we going to get? Being pro-worker and pro-business is a great strapline, but harder to deliver.

They need to prioritise providing an easy environment for businesses to work across borders, both expanding into international markets and attracting talent to the UK. Close cooperation and alignment with big, near trading partners and markets in Europe are important and maintaining the UK as a top international destination for talented students and graduates is vital.

In addition, regulation – particularly around AI – needs to be a priority. Whilst the UK’s historic lighter touch across sectors would be welcome and help maintain competitiveness – there is a balance to be struck between the security and safety that comes with regulation versus the hindrance on innovation.

Labour’s promise to create a new Regulatory Innovation Office is an encouraging step to deal with the dramatic development of these new technologies – particularly with the rise of damaging deepfakes – but we need to ensure this isn’t to the detriment of innovation in the UK.

Daniel Jacob, Managing Partner at Marriott Harrison

“Workers haven’t been supported to build the vital skills they need in recent years”

SMEs are the lifeblood of the economy. But, from speaking to them, we know the challenges they’ve faced in recent years when it comes to skills and innovation. The new government vowed to support this in its election manifesto, and it will be crucial for the future of the economy that this is upheld.

In 2022, a government Employer Skills Survey reported that more than a third of employment vacancies were due to a lack of skills, qualifications or experience among applicants.

Workers haven’t been supported to build the vital skills they need in recent years, both for their own success and for the future of their industry.

The new government must prioritise skills and innovation, ensuring that they follow through on their promises to support SMEs, particularly in supporting new and emerging industries like the green economy to build the workforce of the future.

Businesses – particularly SMEs – also require new kinds of assistance to support innovation. Key to this will be in fostering a strong relationship between teaching, research and industry to allow each to inform the others’ progression.

The Liverpool City Region has already seen great success with the government-funded Horizons project which, led by Liverpool’s three universities, exists to support SMEs with the expertise, facilities, and funding needed to embrace innovation.

With a new government now in power, it is crucial it seeks to leverage the benefits that result from businesses and our leading research and development institutions working together.

Anthony Walker, Strategic Manager at Liverpool John Moores University

“Tackle our culture of exhaustion and anxiety”

In today’s high-pressure economy, employees are often pushed to their limits, making comprehensive mental health support in business and corporate wellness more critical than ever.

The shift must occur from a culture of exhaustion and anxiety to one of education, prevention and support. This involves integrating innovative therapies and resilience-building initiatives into the fabric of our businesses and society.

To underscore the importance of prevention over aftercare, consider this: in 2022/23, 17.1 million working days were lost due to stress, depression, or anxiety, costing the UK economy £28.3 billion annually. Furthermore, 76% of employees report moderate-to-high levels of stress, with 33% acknowledging that this stress negatively impacts their productivity.

If we want our workforce to excel, providing the necessary support systems is not just an option; it’s a necessity, and an investment that offers substantial returns in employee health, engagement, satisfaction, and overall economic success.

Tracey Hill, Founder of The Pause Effect

“Maintaining a strong environment for startups must be a core priority from day one”

With economic growth so pivotal to the new government’s plans, maintaining a strong environment for startups must be a core priority from day one. We look forward to working with the government to support entrepreneurs and innovators across the UK.

The EIS and the SEIS are responsible for £32 billion of investment into more than 56,000 startups and are at the heart of this world class entrepreneurial ecosystem. We are a world leader in ensuring startups have access to crucial investment, driving innovation, creating jobs and fuelling growth across the whole of the UK.

Christiana Stewart-Lockhart, Director General of the EIS Association

“Encourage startups to see the possibilities of thinking bigger”

As the enterprise investment scheme (EIS) marks its 30th birthday, it’s time for the new government to reform its rules, along with those for its junior version, the seed enterprise investment scheme (SEIS). By bringing the EIS and SEIS up to date, ministers can give life science start-ups the tools they need to help grow the economy and generate the taxes needed to fund public services.

One key reform would be allowing individuals to invest in an EIS fund that has the tax benefits of EIS, but can be invested more like traditional venture capital (VC). These funds could use convertible loan notes to speed up the process of investing in new spin-outs and startups with minimal paperwork.

This would enable investors to work with longer time horizons than a single tax year and help both investors and start-ups plan more effectively. Having co-founded and grown both Gemini Therapeutics Inc. in Boston and Invizius Ltd in Edinburgh, I’ve seen lessons we can learn from the American early venture capital market.

Making these changes to the EIS and SEIS rules would help entrepreneurs raise their ambitions, so that they’re aiming to build the next generation of $1 billion life sciences unicorns, instead of settling for £100m businesses.

This ambition also requires a change in mindset – encouraging startups to see the possibilities of thinking bigger by targeting investors in North America, Europe, and Asia from the outset, rather than focusing solely on local business angel syndicates.

Dr Andy Herbert, Co-founder of Invizius and Gemini Therapeutics

“Labour must keep the UK attractive to investors and entrepreneurs, while increasing tax receipts.”

To deliver the growth the country needs, it’s vital we don’t disincentivise entrepreneurship. This requires commitment to existing schemes, bold thinking about new ones, and defence against populist measures with unwanted secondary effects.

There was no mention of any changes to the EIS, SEIS and VCT tax schemes in Labour’s manifesto, but it’s important that these initiatives are maintained now Labour is in power, given the vital work they do in supporting UK innovation. We also need to see immediate improvements to the R&D tax credits scheme for SMEs, to ensure we stimulate tech innovation across the country.

Labour has said it will consult on changes to carried interest taxation. A change of this magnitude would be best only in conjunction with OECD countries, else we risk damaging the asset management industry, a bright spot of the UK economy.

Overall, Labour must ensure it finds equilibrium between keeping the UK attractive to investors and entrepreneurs while increasing tax receipts. If not, we may find that second order adverse effects of these policies – on growth, innovation and tax receipts – may outweigh any proposed gains.

Seb Wallace, Co-founder and Investment Director at Triple Point Ventures and fintech founder at Further

“Closing the carried interest loophole will be a huge blow for UK-based talent”

The Labour party has confirmed it will close the carried interest loophole, estimating this will raise an additional £565m to invest in public services.

This will be a huge blow for UK-based talent. The current system sees carried interest taxed at 28% which is roughly aligned with other countries, including the US. Those in favour of the proposal argue it is necessary to maintain fairness in the tax system and close loopholes. Those against it claim it will discourage investment into the UK and drive many companies to leave and go to the US.

The critical focus for Labour should be on striking the right balance between closing tax loopholes while ensuring the UK remains attractive for investment.

Tom Adcock, Tax Partner at Gravita

“Support the UK’s brightest minds and most innovative startups”

The UK does a fantastic job incubating ideas from the lab and giving them just enough funding to get them on the way to commercialisation. Yet, the support stops there.

Historically, the UK has tended to push to early success, then relax and direct funds elsewhere. This means eventually losing out to other countries – such as the US, Israel and Germany – who double down on the early homegrown success to ensure they can scale to become significant global players.

Whether it is through doubling down and spending more money backing success stories, or longer R&D funding cycles, the new government needs to address its support for the UK’s brightest minds and most innovative startups to stay competitive and at the forefront of global innovation.

Chris Ballance, CEO of Oxford Ionics

“We have a generational opportunity to invest in enablers for change”

The highly volatile market conditions, coupled with a carousel of prime ministers we’ve seen over the last few years, has led to increased instability without providing meaningful direction and leadership. We need the next government to act in the first 100 days to implement measures that acknowledge and nurture the importance of startups and SMEs as drivers of growth and prosperity.

Embracing innovative technologies and supporting them in scaling nationally and internationally will directly increase productivity and prosperity across the country. We have a generational opportunity to invest in enablers for change. A new paradigm is emerging – one that leverages AI and data infrastructure to securely and responsibly enable a sustainable future for the UK.

We must end the seedcorn investment in UK startups that are left to wither on the vine, while millions are wasted on white elephants, and broken siloed technologies, acquired at great expense which don’t benefit the UK taxpayer, our skills landscape or future growth. We want to see bolder policies, backed by intelligent strategies, and clear implementation pathways.

Ali Nicholl, Founding Member of IOTICS

“Gender pay gap reporting is in dire need of a total overhaul”

Labour’s intention to introduce disability and ethnicity pay gap reporting is broadly a good thing. But, existing gender pay gap reporting is in dire need of a total overhaul. To quote Bananarama, “It ain’t what you do, it’s the way that you do it”.

The required changes start with the terms. “Pay gap” is too close and easily conflated with “equal pay.” How about, instead, gender or ethnic representation?

The real power of a reworked methodology would be to steer organisations down a process that encouraged them to tell everyone who they are, not by an excessive use of percentages (some of which would be grossly misleading, statistically speaking), but by bringing it back to the people behind the numbers.

The opportunity of this new legislation is to allow organisations to describe what is both within and without their control. By this we mean societal, sectoral or geographical factors that may prevent or limit the hiring of talent into specific roles that are currently dominated by a single demographic.

Statements such as “Our gap is due to too many senior men and too many junior women” need to evaporate. In their place, what’s needed is a proper commentary on the challenges of talent attraction and retention, and policies that may stem the flow (equal parental leave, wider flexible working where possible).

Bad sectoral or peer comparisons can otherwise excuse a perceived lack of progress – as if reporting a few numbers is magically supposed to improve the lived experiences of your talent.

Anthony Horrigan, CEO, Spktral

“Increase support for female entrepreneurs”

The most recent government has been disjointed in introducing policies that foster the UK’s high-growth scene, so I’d like to see the new government truly listening to the sector, ensuring that the UK is a benign environment for entrepreneurs.

As well as this, I would like to see increased support for female entrepreneurs on the list of government priorities.

The new government needs to ensure they are not being performative towards female-owned businesses, and instead focus on turning words into action, for example, by encouraging corporates to buy more from these businesses.

Sarah Turner, Home Grown Ambassador and Angel Academe CEO

“Great British Energy could be a hub for innovation”

The generation of “Great British Energy” could be a hub for innovation and have enormous commercial potential.

The energy project provides an opportunity to capture the significant advances being made by academic institutions in respect of wind power, fusion energy and other “greener” sources. With the opportunity for funds to be circulated back into the energy infrastructure rather than filtered off for profits, there could be both substantial savings for consumers as well as the opportunity to fund continuous innovation in the energy and related sectors such as battery technology.

Labour’s manifesto commitment to increase investment from pension funds was light on detail. But the message is welcome, as releasing capital focussed on UK-based investments could be extremely valuable for the UK economy.

Now Labour is in power, it must work to ensure pension companies can help fill the funding gap between innovation and implementation, as well as engaging in “later stage” investments into established companies will be important in driving the innovation ecosystem.

David Holt, IP solicitor at full-service IP law firm Potter Clarkson

“If Labour delivers on its promise then we stand to see an influx of green jobs”

The Labour Government’s promise of Great British Energy offers the UK an enormous opportunity to regain its status as a leader on climate change.

It’s a bold policy, but if Labour delivers on its promise then we stand to see an influx of green jobs, opportunities for UK manufacturing and increased wealth from new innovations created in the UK.

Di Gilpin, CEO and Founder of Smart Green Shipping

“The North needs well-paid, high-skilled jobs.”

The North needs well-paid, high-skilled jobs. When that happens, UK plc wins. Infrastructure for a start-up ecosystem is critical. Initiatives such as the Sheffield’s Innovation Spine, Leeds’ Innovation Arc, Atom Valley in Manchester are going to form the backbone for tech ecosystems.

Those investments must be supported with greater connectivity and what that really needs is better rail services. Bringing together Leeds, Manchester, Liverpool and Sheffield creates an economic area to compete with the best in the world.

Across the country, a lack of growth and productivity means that the new government must focus on the narrative around what makes the UK attractive as an investment. Two winning characteristics are our world-class research and our entrepreneurialism.

Nineteen of the world’s top universities are in the UK, creating a world-class foundation of research, particularly in the areas of science and deep-tech. Despite this, the UK remains a long way behind the US in benefiting from the commercialisation of this activity. A consistent focus from government on supporting investment, infrastructure and connectivity in this area will pay benefits over the long term in creating a world-class uk plc.

Duncan Johnson, CEO, Northern Gritstone

“Leverage the tech talent that exists across the entire country”

The new government has a significant opportunity to leverage the tech talent that exists across the entire country, not just the golden triangle of London, Cambridge and Oxford. We have strong skill sets and a proud heritage of innovation nationwide, which is often overlooked.

We’re a nation of problem solvers and trailblazers, yet too often, we don’t have the backing to scale those ideas. Any new government has to address this and increase support for deep-tech companies and the emerging technology that will be of critical national importance today and in the future.

Now is the time for the new government to listen to the technology and science community and provide the essential funding needed for the UK, particularly in the semiconductor industry, to not just compete, but lead globally.

Nick New, CEO and Founder of Optalysys

“Make rail travel an affordable choice for businesses nationwide”

Transport has been the largest source of greenhouse gas emissions in the UK since 2016. In 2021, domestic travel produced 109 million tonnes of CO2 emissions, which is more than Bangladesh’s total emissions in the same year.

Over 50% of the UK’s emissions from transport came from private cars and taxis, whereas less than 1.5% came from rail travel. Everybody knows that taking the train instead of driving is better for the environment, but most businesses simply can not afford to do so.

In addition to the astronomical price of train travel, Britain’s railways are unreliable, with almost a third of trains in the first quarter of 2024 running late. Businesses cannot be expected to absorb the lost productivity due to rail delays. Instead, the next government should focus on reforming the broken franchise system to make rail travel the affordable, reliable and green choice for businesses nationwide.

Eleanor Akers, Director and Founder of Innovative Energy Consultants