Thames Valley Technology Sector

Lord Benyon Excerpts

Tuesday 17th March 2015 Westminster Hall

[Adam Afriyie (Windsor) (Con)]

Sir Edward, I am delighted to lead this debate under your watchful and noble eye—that is a prediction for the future, I hope. I am particularly delighted that the Backbench Business Committee has allowed this debate on Thames valley technology, because it seems to me that all the good things that we want for society in the future will be based on technology.

Let me explain what I mean. Whether we are talking about empowering citizens and voters with more information through the internet and online services; empowering consumers with lower prices, through greater access to competitive pricing on products and services; enriching the academic world, and enabling it to thrive through online access to research material and to coursework for students; driving economic growth through the creative industries; recreational activities such as gaming; more serious activities—business activities—relating to pretty much every area of our lives, including financial technology, banking services or business-to-business services, the digital world is at the heart of facilitating that growth.

As someone who came to Parliament from a technology background, building technology businesses both online and offline, I am not only fascinated by the developments taking place, but very cognisant of the benefits that they will bring for democracy, education and economic growth. Digitisation has the potential to bring new products to market, boost jobs and growth and transform the way we work. Even in this place, that transformation has started to happen, with Hansard online and with TheyWorkForYou, through which we are held to account for how long we speak, what we speak about and how we vote—not that that is a signal that I wish to speak for the full 90 minutes today, because I want to leave plenty of time for other hon. Members to intervene and make observations about their constituencies.

I am pleased that the Government have played a very positive role in encouraging and facilitating the digital sector and the creative industries, and in making digital Britain something that can be achieved in reality. As chairman of the Parliamentary Office of Science and Technology and of the parliamentary space committee, I have seen at first hand the strides that we have made in this Parliament, both within Parliament, with the use of scientific knowledge and of the digital, and in the wider economy. We have a thriving space industry and plans for driverless cars. The broadband roll-out is almost there; we hope that it will be there shortly. There is also the place of computing in the national curriculum. All those things show that the Government are helping to move the economy and society in the right direction. Nevertheless, there is some way to go to remove the obstacles that remain in the way of a fully digitised economy.

As the title of the debate suggests, I want us to stop and stare and focus on the Thames valley region. It includes my constituency of Windsor, which is at the forefront of digital innovation, but also areas across Berkshire, Oxfordshire and Buckinghamshire. Digital technologies and businesses have quite a large presence in my constituency, and I think that has been instrumental in some of the results that we have seen locally. Since 2010, unemployment is down by half and youth unemployment is down by two thirds. I think that that partly reflects the fact that 13% of businesses in the Windsor constituency are involved in information and communications technology industry activities, compared with the national average of about 8%. The number of enterprises operating in the tech sector in the Thames valley grew by 13% between 2011 and 2013, and the area boasts the second highest start-up rate outside London. Thames valley, Berkshire, is home to the offices of more than 200 Fortune 500 companies, including Konami, which relocated its European headquarters from Germany to the Windsor constituency last year, as well as 11 of the top 15 global software companies, so in the Thames valley, we really are a powerhouse.

[Richard Benyon (Newbury) (Con)]

I congratulate my hon. Friend on securing this important debate. Does he agree that more companies will move to the Thames valley when they can arrive at Heathrow and turn left? The new rail spur will be an enormous boost. It will bring 42,000 jobs to our region, when it happens. Is he, like me, dismayed that it is taking until 2021 for it to happen, and that Network Rail feels that it has to have a pre-consultation, a formal consultation, a post-consultation, and then a consultation on the planning permission? People in the Thames valley are looking at those kinds of delay with frustration, because they want these infrastructure projects to go ahead.

[Adam Afriyie]

My hon. Friend makes the point in a passionate way, and I wholeheartedly concur. Whether we are talking about Crossrail or the new link from Heathrow to mainline railway stations and the mainline network, these are arteries that will pump business, commuters and tourists into the Thames valley, and it is deeply frustrating that sometimes these projects take such a long time. Clearly, we have a planning framework. Perhaps the new Government will take a look at that. However, there is no doubt—I do not think that there is any controversy—about the benefits of having better rail links, better transport links generally and better broadband links to Berkshire and the Thames valley. That will make a huge difference and will add to the growth that we are seeing.

The wider Thames valley region can be seen as the largest technology cluster—I will come to clusters in a moment, because I am sure that you, Sir Edward, are fascinated by technology clusters—in Europe, with its unique blend of established technology corporates, innovative start-ups and small and medium-sized enterprises, which together account for 16% of all enterprises in the sub-region. That is double the national average, which stands at 8%. The proportion of people employed in the ICT sector is more than twice the national average in Windsor and Maidenhead.

The region is also home to world-class research facilities such as the university of Reading and the Atomic Weapons Establishment. The region is a natural fit for developing trends in ICT, such as big data and financial technology services. A new multimillion-pound world-class environmental science big data research and analysis centre is due to open at Reading university later this year.

Just last month, I visited an exciting new company in my constituency that is at the forefront of a sea change in the way finance is raised for property development. Proplend is a peer-to-peer lending site for property owners. It allows them to find alternative finance, and to circumvent the tightly controlled financial services industry, which in many cases is still too worried about the risk of lending to smaller clients because of the bureaucratic burden of doing so. That is not to say that the banks and the big corporates do not have a place among the new lenders, but for the first time in 100 years, we have seen new challenger banks begin to appear on high streets. That is pretty significant, because challenger banks are able to appear on the high street only because of the digitisation of banking. The overheads are so much lower and the ability to monitor, regulate and provide services is so much easier through technological means.

I was proud to be at the opening of a branch of Metro bank in Windsor in 2013. Metro bank is the first new high street bank in the UK for more than a century. Those types of financial innovation will help to transform the way we do business, but also, with access to the internet and digital technologies, we will be better able to educate our young people as well as our graduates, and we will be in a better position to enrich the lives of so many people.

With public services coming online at an ever-increasing rate, it is important that in areas such as Thames valley, Berkshire, and across the country, broadband roll-out continues rapidly. That is why I am glad that the Conservatives in leadership have made vital changes over the past few years. A personal favourite of mine was the decision to put computing at the heart of the national curriculum. When I was at school, computers were hardly in evidence. We had punch cards to do our maths tests in the mid-’70s, but that was about it. Now, ICT lessons are not just about learning how to use PowerPoint, a spreadsheet, a word processor or presentation software; they are more about the process of learning and analysis required to create programmes. The digital and technology worlds encourage that sort of analytical thinking, because in order to solve a problem, one has to understand it and be able to encode and systematise it. Such analytical thinking is incredibly helpful if we want to live in a society that is rational and able to solve its own problems.

This is probably a reflection of my age, but children now learn programming and coding of the sort that in my generation, one learned only after one had finished school and university. After I studied agricultural economics for my BSc, I was immediately attracted to the information technology industry, because I recognised the overwhelming power of the internet and the digital to accelerate economic growth and the social and economic developments that we want. That is why the new curriculum is important. The Government’s work to attract qualified teachers and retrain existing ones is also welcome.

The Government have identified eight great technologies to focus on, which include big data and the space industry. We often think of space as being like “Star Trek” and involving manned space flight, but there is more to it than that. I know from my time as shadow Science Minister many moons ago that the space industry has for many years achieved double-digit growth of 10%-plus. On average, for the past 10 or 15 years, it has experienced 7% to 8% growth per annum. Space is not just about exploration and “Star Trek”; it is about our mobile phones and our ability to communicate, to access broadband and to access public services.

[Richard Benyon]

My hon. Friend is making a powerful case. He is an agricultural economist by training, and farming is also affected by space. A farmer can now drill a field of corn using satellite technology, which requires less input—fewer sprays and fertilisers. That keeps our rivers cleaner. A different sort of person is required to come into the business. My hon. Friend is making a powerful case about education, but I am interested to know how he believes we can ensure that more people understand that some jobs that were once considered to be manual and functional now require a high degree of understanding about IT.

[Adam Afriyie]

Absolutely; the landscape, if I can put it in such a way, in agricultural businesses, estate management and farm management has changed enormously. Satellites and GPS guide some of the new combine harvesters and planting devices, and the digital world permeates almost every part of our lives. If we look at farming productivity across the world—some developing countries are one step ahead of the UK in this regard—we see that many of the newer farming technologies in use are based on the digital. Companies across the Thames valley are, and have been, instrumental in developing some of the devices and monitoring technology required for modern farming. There is a massive population explosion across the world; we are heading towards 7 billion people on the planet, of whom perhaps 64 million or 65 million will be the UK. They will all need to be fed, and the digital world and digital technologies will enable us to make the great leaps in productivity that will be required.

If we consider what it means to be a human being, our DNA is ultimately digital. Initiatives such as the human genome project, and the 100,000 genomes project in the NHS, will enable the world to make huge leaps forward in health care technology based on the digital world. I cannot overemphasise the importance of such new technology and development. As a Conservative, some people might expect me to be nervous about such dramatic and radical changes to the way in which we live. In fact, the digital is an evolutionary process. There are big leaps from one decade to the next, but every single process in technology is incremental.

As I have said, the Government have identified eight technologies on which to focus. I am particularly pleased about big data and space, because digital technologies in space allow us to monitor earth’s systems, so we can see where there is a forest fire or a tsunami and work out where emergency services need to be deployed. Clearly, those technologies have a military application as well. They also govern our mobile phones, broadband technology, GPS in our vehicles and so many other things.

I look forward to seeing the way in which big data will transform our public services. Government projects, many of them run from within the Thames valley, are already looking at and analysing all the data sets that the Government have at their disposal through public bodies, and working out whether those data contain patterns. We have recently had some debates about security, particularly in the light of the threat from ISIS and home-grown terrorist challenges. By looking at patterns of data, one can identify activity that may need to be looked into. Without digital development, it would be tricky to analyse those data.

ICT is not simply about business; it is also about research. The Government’s decision to protect the £4.6 billion science budget—I claim a small amount of credit for that from my time as shadow Minister—has helped to keep us ahead of the global curve in new developments when it comes to technology and the digital. It would have been easy after the last election, especially given the constrained financial situation in which we found ourselves, with a £160 billion deficit, to say, “Right, let’s cut the budget for science and research.” Thankfully, we refrained from doing so. I echo William Waldegrave, who said that even in straitened times, the two budgets that one must never cut are those for basic scientific research and for security. We must always take those matters seriously, and I am glad that the coalition Government have done so.

Thames Valley Berkshire local enterprise partnership has been instrumental in driving growth in technology. The LEP has established a Berkshire business growth hub to support and upskill small and medium-sized enterprises, and it will invest EU funds to fast-track the creation of the first ever science park in the region. I am always nervous about mentioning the EU, because doing so tends to lead to a fairly strong reaction. It is useful to gain EU funds in this case, however. We pay into the EU, so bidding for EU funds and getting them back to the UK is a jolly good thing to do.

[Richard Benyon]

I apologise for intervening yet again, but my hon. Friend has touched on the European single digital market, which is worth mentioning in this context. It can bring our constituents, particularly in the Thames valley, the benefit of a proper single market. That is what most of our constituents want from our relationship with the European Union.

[Adam Afriyie]

My hon. Friend makes a powerful point. I am beginning to suspect that he may be some sort of techno-geek, and that would really change the image that I have of him.

[Richard Benyon]

That idea would surprise my children.

[Adam Afriyie]

I am sure that it would. My hon. Friend brings me on to my next point, which is that although there may be many negatives to being members of the European Union, the single market is one of the great benefits. Our great challenge, particularly in the digital world—as I can see from the businesses in Windsor and across the Thames valley—is to ensure that competition continues and that there is a level playing field for the supply of goods and services through digital media. There are questions about whether some larger companies, search engines and suppliers of goods and services across the EU are in a monopolistic position. It is easy for us in this place sometimes to suspend our view that markets should be competitive because, somehow, digital is different, but digital is exactly the same as everything else albeit at a far more rapid pace. It is vital that Britain is part of a functioning single market that offers fair competition in both the digital and terrestrial worlds. We will never stand by and allow the manufacturer of a particular good or service to have 95% market share. In the same way, it is important that both the EU and the UK ensure that competition exists in the digital world so that people have a choice about where they get their goods and services online.

Thames Valley Berkshire is working with neighbouring LEPs to align resources behind the 5G innovation centre at the university of Surrey. In 2014, the LEP injected a significant amount of money, about £145,000, in Connect Thames Valley Tech—ConnectTVT—to identify and support at least 100 start-up companies by the end of 2015. New developments bring new challenges as well as opportunities, and some issues surrounding those new developments have rumbled on without a clear attempt to draw lines and clarify what the Government should be doing. I will highlight a handful of areas that an incoming Government will need to address in Thames valley, given the high presence of digital businesses and the high levels of economic growth and employment in the area. I am interested in the Minister’s comments, but these are not demands; they are observations. I recognise that, with the work that has already been done, there may be other areas to address.

An awful lot of our private data are out there held by commercial companies, the Government and the public sector, as well as on our home devices, iPhones and PCs. Do those data belong to us as citizens? Do they belong to the Government, God forbid? Do they belong to those private companies? Although many services, sites and businesses have good privacy statements covering people’s information when they access goods and services, I am not sure that many people read those privacy statements. It is important that, at some point, we know to whom those data belong. With the incredibly quick advance of digital, the data that we put on individual websites or applications can easily be spread and shared with all sorts of people whom we would not wish to have them.

A case in point might be 23andMe, which is an American service through which people can analyse their DNA. I had a go the other day, and it is fascinating. My results show that I am clearly not a superhuman, but I should hopefully live a relatively long time. If we are having our DNA analysed—our DNA is at the heart of whom and what we are—we need to be clear about who owns those data. If someone is processing our data, we need to know how long they are able to hold on to them and whether they are allowed to pass them on. Although the privacy statements and data-handling statements on such websites may be attractive, are we secure in the way in which those data are held, used and owned?

The second important area—I have touched on this already—is competition. We sometimes glaze over when people start talking about digital. We think it is all modern and trendy, and perhaps some of the principles that we hold dear in terrestrial marketing and businesses are not necessarily the same in the digital world, which is a strange place in which things happen quickly. With the permeation of digital throughout all our lives, it is more important than ever that the online economy is as competitive as the rest of the economy. Some good headway has been made, particularly with search engines, at European Union level, and I am glad that some of that regulation has rippled through to the UK. I am sure we could have done that ourselves but, given that the EU has done the work, it is good that the regulation has rippled through into our legislation. We must never forget that it is not just growing businesses or innovation but competition between businesses that drives down prices and spurs innovation. There may be more work to be done to ensure that we do not have any closed shops on the internet. We have had a challenge with our energy firms and, to be honest, many energy firms are now largely digital. They may supply some goods and services, but their main processes and main business are digital. We could learn some lessons from the apparent lack of competition within the energy markets.

Centrica, which is a fantastic business, employs hundreds of people across my Windsor constituency. I have been to see its trading floor and some of its operations, and it is striking that about 80% of those staff are in the digital world. They do not do much with gas and the supply of energy; they use programmes, algorithms and applications to supply goods and services. They are technicians, programmers and analysts; they are not gas workers in the traditional sense.

The third part of ensuring that Thames valley tech is healthy for the future is in addressing bureaucracy. Unforeseen obstacles created by old regulations often cause difficulties for businesses. We should encourage a technology neutral approach to disruptive innovation that provides a framework for “permissionless creativity.” The Minister is behind this country’s creative industries, and he has done an awful lot in his portfolio to ensure that those industries thrive, but we need to be clear that inventors, particularly in the digital world, should not be hampered by regulations that were never meant to govern what they do. There also needs to be clarity on intellectual property that allows inventors to profit from their products, and particularly from newer products and services that are being created day by day, week by week and month by month in the Thames valley and beyond. We also need to ensure that structures are in place so that corporations, particularly in the IT sector, are not able to hoard patents and hold up progress in those markets.

The fourth area is the concept of clusters. A lot of good work has been done on clusters. When I was shadow Minister, my right hon. Friend the Member for Havant (Mr Willetts) and I had a close look at the definition of a technology cluster. That issue faces the Thames valley head on. I read with great interest the “Tech Nation” report by Tech City, which was released just a few weeks ago. It is a fantastic report that canters through all areas of digital technology, including both the benefits and the challenges to the nation. One little area about which I am slightly concerned is the lack of clarity on the definition of a technology cluster. The report sometimes refers to Oxford, the Berkshire cluster or the Reading cluster, and in the not-too-distant future, if we are to take technology clusters seriously, we need a better working definition of what they are and of their benefits and disbenefits. On its own, the Thames valley might constitute the biggest technology cluster in the whole of Europe, which is a key point. From my understanding of the area—my Windsor constituency is very high tech—I think that Thames valley is the largest technology cluster in Europe, but the Government need to do a little more work on the definitions in terms of investments and enterprise zones.

The fifth and final point is that we cannot have a thriving technology cluster unless businesses and homes in the region have significant levels of broadband access. I am delighted that the Government will certainly meet their broadband roll-out targets in the Windsor constituency. The other day, I mentioned in a question on the Floor of the House that, in the past, my wife sometimes looked at me suspiciously because I was up very late at night fiddling around on the internet and she was wondering what I was up to. [Laughter.] Exactly. Then I simply point out that our broadband access is so slow that when I log into the House systems to do my constituency correspondence, it takes an awfully long time. Thankfully, a few weeks ago, superfast broadband rolled out to my area of Old Windsor, and now it is like lightning; I can go to bed at a reasonable hour. That is my excuse, anyway.

Access to superfast broadband is important. As my hon. Friend the Member for Newbury (Richard Benyon) pointed out, although farmers must log in online to get their rural farm payments, a huge number of farms throughout the United Kingdom do not have access to broadband, so they cannot. I would nudge the Minister on this issue, although I appreciate that we are now at the end of the coalition period and might need to wait several weeks to find out what happens next. An opportunity may well have been missed on this issue. We have been rolling out fibre, which is of course essential for the majority of households in this country, but if we want 100% superfast broadband coverage, it can be done within a few weeks.

I will explain how. Although we will reach 90% and potentially 95% coverage within the next couple of years, there are certain areas where it is not economically viable to install fibre 2 miles down a country track to get to two or three homes. However, we already have satellites that can give 30, 50 or 60 MB links straight from the skies. Ultimately, although the investment has been worth while and roll-out is pretty much on track—that is a great step forward, and I thank the coalition Government for it—we must open our minds in the next Parliament to achieving broadband roll-out to every part of the country using satellite broadband. I am a bit disappointed that we did not pursue that route more actively earlier. It is no deep criticism, however, because we are pretty much on track; I simply nudge the Minister in that direction, should he be in the same job after the election, as I hope he will be, although preferably as a right hon. Member. Is he a right hon. Member at the moment?