Backing scale-ups is key to getting the tech sector booming

Britain is on the cusp of becoming Europe’s unambiguous science and technological leader, creating a wave of new companies and unleashing a dramatic step change in wealth creation around the country – and with it a potential sharp uplift in economic growth. It is a 21st-century incarnation of the Industrial Revolution that Britain pioneered; contrary to the commonly held view, we remain as good at innovation as we ever were. Certainly this tech revolution needs better curating and its ecosystem of support turbocharging, but we should first acknowledge the extraordinary opportunity it represents.

One of the depressing dimensions of our national conversation is that this optimistic story scarcely surfaces. It is hardly in Reform’s interest to recognise economic success; its voter base, as Thursday’s election results vividly demonstrated, is heavily concentrated in those Brexit-voting parts of the country suffering stagnation and acute social distress. Deporting immigrants and economic closure is not the solution. The successful economy and society of the future rests on openness and embrace of the new.

Britain could create a £1tn tech sector by 2040, with inclusive, stakeholder and purpose-driven tech companies all round the country as a new model of capitalism. The foundations are being laid, along with the spillover effects of good jobs and wages that will follow. Dealroom reports that we possess about 800 young tech scale-ups with annual turnover above $25m, of which roughly a quarter have a turnover above $100m – and their numbers are growing exponentially. They already constitute two-fifths of all such companies in Europe. What is distinctive about these companies – the likes of Open Cosmos, Wayve, Raspberry Pi – is that these are now rooted here with proven technologies, and poised for great things.

They are spreading to all parts of the UK. Last year, young British companies were the recipients of record levels of venture capital investment: $24bn – more than in France, Germany, Italy, Spain and the Netherlands combined. Better still, recent figures released by tech consultancy RSM UK showed that new tech incorporations in the first three months of this year stood at an astonishing 17,000 – up 39% on the same quarter of 2025. Altogether, this is what a boom looks like.

The heart of a contemporary growth policy must, therefore, be to identify these proven scale-ups and put as much as possible behind them – billions more public and private capital, tax incentives, generous orders from government and larger companies alike, maximum access to EU markets, stronger universities and skill formation. This, however, can’t all be done from Whitehall: the international evidence shows that where support is integrated and coordinated locally, whether in Eindhoven, Gothenburg or Boston, the stronger the tech cluster. Britain should follow suit.

Simultaneously, everything must be done to keep the pipeline of new startups flowing, while ensuring that as many as possible stay in the UK as they mature – and do not sell out to the US. According to the Growth Trilogy reports by the thinktank Purposeful Company, which I co-chair, 1,700 scale-ups sold out in the past 15 years, with as much as £1tn of lost economic value. That cannot happen in the next 15.

Labour’s best-kept secret is that it is aware of the potential and has some of the beginnings of the necessary policies in place. The pensions bill will accelerate the creation of pension super funds eventually capable of investing in our tech base. The British Business Bank and National Wealth Fund have been equipped with low billions to the same end; last month a £500m Sovereign AI fund was established to seed British frontier companies – tiny but directionally right. There is even growing recognition that, especially in defence and security, we cannot carry on wantonly selling our tech jewels to the US.

For politicians with elan and self-confidence, this is a great story not only to tell but on which to build aggressively. Moreover, given the precariousness of Britain’s debt and deficit position, it’s the only growth game in town. There are no realistic borrow-and-spend options, any more than there are to cut taxes.

However Labour chooses to move after Thursday, this is an indispensable component. It offers political magic: a reason to hope.

Photograph by Simon Dawson/Bloomberg via Getty Images