UK-based Tech Companies

Edward Morello Excerpts

Wednesday 11th March 2026 Westminster Hall

[Edward Morello (West Dorset) (LD)]

It is an honour to serve under your chairship, Mr Betts. I congratulate the hon. Member for Bromley and Biggin Hill (Peter Fortune) on securing this important debate. I suspect that, at this point, I am in danger of labouring the points already made by other hon. Members, but I will persist. Perhaps it is a sign that we all know what needs to happen. I am sure the Minister will speak to those issues.

The UK tech sector employs more than 1.7 million people and contributes more than £150 billion to the UK economy. Our technology ecosystem has created more than 185 unicorn companies, which are start-up companies valued at more than £1 billion. I suspect that, at the end of this debate, a word cloud would have the word “ecosystem” as the largest word, but there is good reason for that.

Innovation does not happen on its own; it requires the right conditions, such as access to funding, clear regulation, market confidence, skilled workers and a Government who understand the importance of helping companies grow. That is particularly important for small and medium-sized businesses, which form the backbone of the UK economy. In the UK, there were 5.7 million SMEs, including 5.4 million microbusinesses, in 2025. Those companies often develop some of the most exciting ideas, but they also face the greatest challenges when trying to scale up.

One area where the UK has a huge opportunity is climate technology. As the chair of the all-party parliamentary group on ClimateTech, and having spent nearly a decade working in renewable energy finance before entering Parliament, I have seen how much potential this sector has. Between now and 2050, the world will need to remove 165 billion tonnes of carbon dioxide from the atmosphere, with annual removals reaching about 10 billion tonnes a year by the mid-century if we are to limit global warming to between 1.5°C and 2°C. The Intergovernmental Panel on Climate Change has made it clear that without carbon-removal technologies, those goals will not be met.

[Alison Taylor]

The hon. Member mentions a specific sector of the tech economy. Does he agree that tech companies do best when they are clustered together, particularly in innovation zones, so that they can share emerging knowledge and technologies, and link in with academia?

[Edward Morello]

I certainly agree that, if we want to become a market or world leader in a particular technology space, it is vital that we channel funding and support into those areas where we have the most opportunity and a competitive advantage.

Climate technology is not only an environmental priority, but a huge economic opportunity to lead a sector the world will need for decades to come. The UK’s greenhouse gas removal sector alone is now valued at £1.2 billion, with investment increasing by more than 39% in 2024—faster than the technology sector as a whole. According to analysis aligned with the Climate Change Committee’s seventh carbon budget, greenhouse gas removal technologies could support over 60,000 high-quality jobs in the UK by 2050. The Government have already taken some positive steps: funding for carbon capture and storage clusters, investment in innovation programmes, such as direct air capture and bioenergy carbon capture, and plans for new clean tech innovation challenges. Those are all important developments.

However, challenges remain, particularly when companies try to move from early innovation to large-scale deployment. Many climate technology companies face what is often called the valley of death. Early-stage funding can help to get ideas off the ground, but when companies reach pilot or demonstration stage, that funding often disappears. Data shows that although almost all seed-stage companies move forward, only one third successfully progress beyond series B investment. At that point, the technologies often require significant capital investment to scale, which requires the Government to project confidence to the sectors and investors. Without stronger support mechanisms, whether through the National Wealth Fund, the British Business Bank or other targeted policies, many promising technologies risk stalling before they ever reach market.

In other sectors, there is more the Government can do. A fantastic company called Sintela in Dorchester in my constituency develops advanced fibre-optic sensing systems capable of detecting movement and activity across long distances of infrastructure. The technology has applications in security, energy systems and environmental monitoring. Last year, the company secured orders from US Customs and Border Protection worth more than $90 million. That contract has now been expanded to $200 million through to 2028, which represents the largest contract globally for distributed fibre-optic sensing technology.

Small companies like Sintela can struggle to gain the same level of access to Government support and trade opportunities as larger firms. When business delegations travel abroad with Ministers or during state visits, the companies included are often the same large multinational businesses, but SMEs are often where some of the most exciting innovation is happening. If we want to support British tech companies properly, we must also ensure that small and medium-sized firms are included in trade missions, international delegations and export promotion.

The UK needs a clear long-term approach to science and technology. That includes raising research and development spending to 3.5% of GDP, investing in digital infrastructure, supporting local government capacity and ensuring that the benefits of technology are spread around the country. It also means continuing to invest in green technologies, which is essential if we are to tackle the climate crisis, while creating new industries and job opportunities. The UK has many of the ingredients needed for success: world-class universities, strong research institutions and an entrepreneurial technology sector. What we must do now is make sure that the environment is right for those companies to grow.

[Mr Clive Betts (in the Chair)]

We now come on to the Front Benchers. Everyone is entitled to at least 10 minutes, but I think you can work out that you have a little bit more if you want to take it.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)]

It is a pleasure to serve with you in the Chair, Mr Betts. I thank the hon. Member for Bromley and Biggin Hill (Peter Fortune) for securing this important debate on Government support for UK-based tech companies. I am grateful to him and to all other hon. Members across the Chamber for their contributions. They did a sterling job of showing that the UK is truly a buzzing tech economy in every single part of the country—right across the constituencies represented here and beyond.

This Government are committed to supporting the UK’s thriving tech ecosystem. We are proud to be home to the largest tech sector in Europe, valued at nearly £1 trillion. The success of UK-based technology firms benefits us all. These are some of the fastest growing parts of the economy and are already employing millions of people. The innovations they bring are delivering major benefits to people and communities right across the country, transforming everything from the way we work to how we manage our health.

Given the luxury of time, I propose to respond to each of the points raised by hon. Members. First, I very much appreciate the points on competition policy made by the hon. Member for Bromley and Biggin Hill, and shared by the shadow Minister, the hon. Member for Hornchurch and Upminster (Julia Lopez). Of course, I am reluctant to mention any specifics about the interventions, investigations or engagements the CMA is pursuing as an independent regulator. As the shadow Minister acknowledged, the commitments that the CMA has looked at could be quicker than a full conduct requirement process.

The CMA assures the Government that it continues to monitor firm compliance. If Apple and Google fail to meet their commitments, the CMA will consider the use of statutory powers to take further action. I am conscious that it has just finished consulting, as the shadow Minister mentioned, on the first set of remedies and commitments in the light of the designations of Google, in search, and Apple and Google, in mobile platform markets. I expect very soon to hear greater detail, as well as firm timelines, on that particular point.

The virtue of the previous Government’s digital markets regime is that it is flexible and proportionate, and allows for some remedies that are quicker, and others, where this is due, that are more robust. The Government expect that the CMA will act in line with its growth and competition mandate. Those two issues overlap much more than we often give the CMA credit for.

I will briefly take the opportunity to address the shadow Minister’s history of the UK tech sector over the last 14 years. Having been in that sector through part of that time, although I very much value the growth seen in the period, I am also conscious of the particular fact that drove me into politics: over that entire period—one of the most productive periods in global technology markets—no one growing up in this country ever saw a company go from zero to the global top 10; in the United States, in that same period, people saw eight out of those top 10 companies do that. The levels of capital investment and IT in this country were materially below that of the United States. When the shadow Minister talks about the benchmark as being European growth, I fear I have to say, given that it is ambition season among Conservative Front Benchers, that she might consider joining that and raising the ambition to being a global first, not just a European-relative first.

In that period, as the hon. Member for Bromley and Biggin Hill and the shadow Minister noted, power concentrated in the cloud market in particular and right across US big tech. It was clear to me at the time that the Government were much more focused on engagement with US big tech and exactly the trend that the shadow Minister described—the power concentrated in the cloud market.

The shadow Minister’s points on agentic AI are very well made. I will make sure that we think about that deeply and engage with the CMA on the implications for agentic AI, the possibility of bundling and the limited competition that might result.

My hon. Friend the Member for Caerphilly (Chris Evans) raised the virtues of the Welsh ecosystem. It is an ecosystem that I know and deeply value personally. I particularly value my hon. Friend’s advocacy for Academii, in his constituency. His point about clusters anchored by Welsh universities is really well made. As a Government, we have committed over £1.5 billion to the question of how research translates into commercialisation. I would be happy to engage further with him on any particular instances where the Government can do more, in his constituency and beyond.

My hon. Friend the Member for Leeds South West and Morley (Mark Sewards)—the AI MP—who is no longer in his place, made a similar and important point about Leeds’s Nexus hub. I have visited Leeds in this role, and I particularly value the contributions of Leeds’s tech sector to healthcare and financial services innovation.

The hon. Member for Tunbridge Wells (Mike Martin) made a deeply important point about procurement, which was shared by the Liberal Democrat spokesperson, the hon. Member for Harpenden and Berkhamsted (Victoria Collins). I have a particular interest in defence procurement that I hope to come to more fully in my speech.

The hon. Member for Tiverton and Minehead (Rachel Gilmour), who is no longer in her place, has always been a strong champion for family businesses in the contexts of technology and agriculture. I share her ambition for UK tech businesses to start, scale and stay here.

My hon. Friend the Member for Weston-super-Mare (Dan Aldridge) has deep experience, and is also no longer in his place—despite that experience. I agree with him that although our policy is often in a good place, there is a lot more for us to do to spread awareness of that policy. I would be happy to visit him, and others, to be a small part of spreading that awareness.

I thank my hon. Friend the Member for Paisley and Renfrewshire North (Alison Taylor) for her strong advocacy for the innovation zone, both prior to and subsequent to coming to this House. She has won £38.7 million for travel support in particular and transport support more generally in that innovation zone. I will say how excited I am about the historic growth in AI investment in the wider region, which I hope will create a series of opportunities for investment, and opportunities for young people growing up in and around Glasgow to take part in it.

My hon. Friend’s mention of photonics is deeply important. Photonics is not just a British strength but an increasingly important vector for national security strength globally in the semiconductor context. I am grateful to her for championing that subsector.

In response to the hon. Member for Strangford (Jim Shannon), I note that Northern Ireland is indeed close to my heart. I grew up visiting Northern Ireland and Belfast for lots of debating competitions. He will be glad to hear that, in this role, I was back in Northern Ireland at the artificial intelligence collaboration centre at Ulster University, seeing not just the world-leading cyber capabilities in Belfast and Northern Ireland but the transformational effect that Ulster University’s investments have had on the city by creating opportunities for young people. He will also be glad to hear that just this morning, I spent time with the Secretary of State for Northern Ireland talking about our shared ambition to do even more to support the cyber and AI sectors in Northern Ireland.

The points of the hon. Member for West Dorset (Edward Morello) about energy tech were well made. I feel very strongly that our plans on clean energy are best pursued if they make the most of AI and modern technology. I think that they are pursued with a deeper sense of building public consensus if we are able to show that our clean energy values align with our prosperity aspirations around AI and technology, not just domestically but through Britain’s ability to export lessons and technology to other places, and to move the needle on global climate change.

[Edward Morello]

Shortly before the debate, the Minister said he would like to visit Weston-super-Mare and other locations. I invite him to beautiful West Dorset to visit the fibre optics company Sintela, which is one of the UK’s biggest success stories.

[Kanishka Narayan]

I have a 100% record so far of committing to visits when asked. I do not want to set too much of a precedent, but given the numbers in the room, I would be happy to take the hon. Member up on his kind offer as well.

The hon. Member also made an important point about SME representation on trade missions; on the three international visits that I have been on—to the US, South Korea and India—we have been primarily focused on SMEs. If he has recommendations of firms that would benefit from such engagement, I would be keen to take him up on them—perhaps we can discuss that in West Dorset during my visit. On word clouds, which he mentioned—I know a thing or two about word clouds—he is right about the presence of the word “ecosystem”. I would add “deeply thriving” to that, because that is what Britain’s ecosystem is.

I am delighted to hear about the history of entrepreneurship in the family of the Liberal Democrat spokesperson, and I am keen on any lessons from her mother about Twitter engagement. I also share and value her ambition for more entrepreneurship; that dream is shared across the House as well. I will come to her five points, which I think the Government are equally focused on.

I will now set out some of the things that the Government are doing. As I mentioned, we start from a position of considerable global strength. Four of the world’s top 10 universities are in the UK, and we have a proud history of technological innovation, but there is clearly more to be done. That is why, in our modern industrial strategy, we set out the first dedicated plan to support the UK’s digital and technologies sector, alongside a separate plan for life sciences. For digital and technologies, we have focused on six frontier technologies with the greatest potential to drive growth: advanced connectivity, AI, cyber-security, engineering biology, quantum and semiconductors. By 2035, we want the UK to be one of the world’s top three places to create, invest and scale up a fast-growing technology business.

Building on the industrial strategy, we went further still at the 2025 autumn Budget. We set out a package of additional support for founders and innovators to start and scale businesses here in the UK, including reforms to Government procurement, tax and our public finance institutions. As the Chancellor made clear, the Government are backing the next generation of UK tech start-ups and entrepreneurs. These plans are about making sure that we are supporting our tech companies at every stage of their development.

A great tech company starts with an idea. That is why we are making a record public investment in R&D, with spending rising to £22.6 billion by 2029-30. We have one of the most generous R&D tax credit relief systems in the entire world, and I have personally heard testament to that from a series of founders in the UK ecosystem, not least in AI, over the past few weeks.

Through our industrial strategy, we are also making sure that investment is targeted to bring innovation to market, with £7 billion for innovative companies to scale and commercialise technological and scientific breakthroughs. To ensure that the benefits are felt right across the country, we are backing high-potential innovation clusters throughout the UK through programmes such as the local innovation partnerships fund.

Brilliant ideas alone, of course, are not enough to grow a business, so we are taking a whole-of-government approach to ensure that the right conditions are in place for businesses to reach their full potential. We are expanding the British Business Bank to give high-growth tech firms access to long-term scale-up capital. We are upskilling private investors to invest in deep tech through our science and technology venture capital fellowship programme. We are ensuring that firms have access to the best skills and talent through our £187 million TechFirst skills programme and we are hoping to attract the very best minds in the world through the Government’s global talent taskforce, as well as the £54 million global talent fund.

We are not stopping there. Across the board, we are looking at how we can use the Government’s levers to support our technology ecosystem. Part of that is about infrastructure, whether that is connecting people, businesses and universities through initiatives like the Oxford-to-Cambridge growth corridor, or funding the specialist infrastructure that tech companies need through the AI research resource and engineering biology scale-up infrastructure programmes.

It is also about regulations that help, not hinder, new products to reach the market. That is why we have set up the Regulatory Innovation Office, which has invested over £12.5 million already in helping regulators to adopt new tools and approaches. Sometimes it is challenging to bring new technologies to market, so we are also reforming how the Government procure technologies to lead the way and back British SMEs.

In the autumn Budget, we announced an advance market commitment, backed with £100 million of Government funding, to buy products from novel and promising UK chip companies—an important economic as well as national security focus—once they reach a high-performance benchmark. I know that the Ministry of Defence has committed to a significant budget allocation to novel technology procurement and I am keen to ensure that the design and process for that are as compelling as the scale of that ambition.

This debate is about UK-based businesses, but we must also recognise that we are part of a global market, with the huge opportunities that that offers. We are working hard with our international partners to boost collaboration and open new markets for innovative firms globally. We have agreed industrial strategy partnerships with France and Japan, have a Saudi-UK strategic partnership and an India-UK technology security initiative, and are pursuing deeper connections still with other key markets. Last autumn, the top US tech firms, mentioned across this debate, committed to investing £31 billion in the UK.

We are right across the things that matter to start-ups here in relation to capital: the force that is the BBB investing more; the National Wealth Fund investing more; a sovereign AI unit investing earlier; and the Mansion House pension fund reforms that are spurring greater investment. We are bringing capital to the service of British start-ups.

In the context of compute—a critical input for AI—both our AI growth zones programme and our AI research resource programme are ensuring that British companies are at the front of the queue when it comes to adequate compute for AI. When it comes to Government as a customer, the advance market commitment and the reforms that I mentioned in relation to the MOD aspire to that and to ensuring that the Government are the best partner that UK start-ups can benefit from.

When it comes to building a sense of community for talent in this country, the global talent taskforce, the global talent fund and, crucially, the enterprise management incentives scheme—now one of the world’s best tax incentive schemes for early-stage employees to have deep equity participation in start-ups—mean that Britain is at the front of the queue in convening a compelling community of tech talent. When it comes to clarity on regulation, the AI growth lab, the Regulatory Innovation Office reforms that I mentioned and the growth mandates for regulators mean that Britain is regulating dynamically —moving regulation at the pace of technological progress.

At the heart of all this is a culture that prizes innovation and that says to entrepreneurs that their success is our national success, and that their companies are national champions when they create jobs and invest in frontier innovation here. We are radically shifting Britain’s culture to being a culture of agency and innovation.

In that context, I am grateful to all Members across the House for their partnership in that mission. The UK’s exceptional technology sector is a key national asset. The steps that the Government are taking will ensure that UK-based tech companies thrive at every stage of their growth.