King’s Speech (4th Day)

Lord Drayson Excerpts

Monday 22nd July 2024 Lords Chamber

[Lord Drayson (Lab)]

Message received, Chief Whip.

My Lords, I add my congratulations to my noble friend Lord Vallance on his excellent maiden speech and his appointment as Science Minister. I look forward to him bringing his wealth of experience to the role and to our debates in this House. In my brief comments today, I wish to focus on wealth creation, and I draw the attention of the House to my business interests in the register.

My favourite painting in the Houses of Parliament is the one of “Queen Elizabeth I greeting her Merchant Adventurers”. It represents a wonderful evocation of the national importance of wealth creation and makes the point that creating wealth involves accepting risk in the pursuit of opportunity. That is what makes it an adventure. Today, that adventure means grasping the potential of science and technology to create wealth and drive economic growth, rewarding and celebrating people for being willing to work hard, take risks and make growth happen, celebrating not just the results of success but the very process of wealth creation itself.

The King’s Speech, setting out the Government’s mission to secure economic growth, and the Prime Minister’s commitment during the election to make wealth creation his number one priority, make it clear that this Government will champion wealth creation—that they stand by the side of the wealth creators, celebrating and motivating them to succeed.

I welcome the national wealth fund and the recently announced changes to the listing rules by the FCA that will come into effect next week. I also welcome my noble friend Lord Livermore’s new role, leading on growth in the Treasury, and I encourage him to move quickly to address the main problem holding back technology entrepreneurs from realising their full potential: lack of scale-up capital. We urgently need to increase the funding available so that our companies can get the capital they need to grow.

We need to stop the flow of equity investment out of the UK and get it flowing back into UK businesses. As of the end of June, UK equity funds have had 37 months of consecutive outflows, totalling more than £20 billion. The UK has the third largest pension market in the world, worth over £2 trillion, but—unlike other countries—we do not invest those assets in the UK. Our pension funds currently own only 2% of the UK market.

That wall of money exiting the UK has depressed valuations, starved companies of growth capital and dried up the UK market for IPOs. It has led to our companies being acquired at low prices, with the number of listed UK companies down by 20% in five years. We have lost many great companies, DeepMind, Arm, Solexa and Darktrace being just some high-profile examples. I therefore welcome the pension schemes Bill and the opportunity it brings to encourage our pension funds to consolidate and to invest in these UK companies to drive growth. We need to get our financial institutions back into the business of backing UK science and technology.

Because of our strong science base, we will create some of the most innovative companies in the world over the next 20 years, in life sciences, aerospace, clean energy and computer science. However, it is not enough to be good at the science and the start-ups—as we are—because we need to be good at scaling them up too. If we build the gigafactories, the server farms and the biolabs here, we will secure the highly paid jobs that go with them and the taxes to fund the public services we need. If we are prepared to grasp this opportunity, ensure growth capital is available, accept the risks and manage them well, we will once again become a wealthy nation. It can be done, and I am delighted that this Labour Government have the will and the plan to do it.