Science and Technology: Economy

Lord Tarassenko Excerpts

Thursday 31st October 2024 Lords Chamber

[Lord Tarassenko (CB)]

My Lords, I declare an interest as a director of Oxford University Innovation. I thank the noble Viscount, Lord Stansgate, for securing this debate and for his thorough review of UK science and technology.

I was surprised, however, that there was no mention of the 2024 Nobel Prizes for Chemistry and Physics. Earlier this month, we celebrated the award of the Nobel Prize for Physics to Professor Geoff Hinton. The next day, we celebrated the award of the Nobel Prize for Chemistry to Sir Demis Hassabis. Both are home PhD students from British universities— Edinburgh and UCL. Both ended up working for the same US big-tech company, a company currently valued at $2 trillion.

What would it take for a deep-tech company to emerge from one of our research-intensive universities and become the UK’s first $1 trillion company? First, it would need a good supply of home PhD students. Unfortunately, there is mounting evidence that an unintended consequence of the rise in the undergraduate tuition fee to £9,000 is a loss of home PhD students in STEM subjects.

For example, from 2019 to 2022, there has been a decrease of 39% in the number of UK-domiciled computer science graduates in doctoral study 15 months after graduation. We know that the least well-off students graduate with the most debt; now it looks as though many students from disadvantaged backgrounds will no longer consider PhD study as a financially viable option. This trend must be reversed.

Secondly, the spinout ecosystem that exists around our research-intensive universities must be nurtured further, not only with human capital but with finance to start new companies, scale them and grow them. The £40 million over five years of proof-of-concept funding to seed new spinouts announced in yesterday’s Budget is welcome, but it should be targeted where it is needed—outside the golden triangle.

Thirdly, a coherent industrial strategy makes it more likely that the UK’s first trillion-dollar company will emerge by 2035. The UK on its own is not able to invest in all possible areas of science and technology. Even in my area, described as “digital and technologies” in the industrial strategy Green Paper, further choices will have to be made.

The House of Lords Select Committee report on large language models called for a “sovereign LLM capability”, but it would be pointless, because of the prohibitive costs, to compete with US big tech companies in training hyperscale LLMs such as GPT-4 or Gemini—other LLMs are also available. Instead, and this chimes in with the excellent maiden speech of the noble Baroness, Lady Freeman, we should be backing UK companies developing trustworthy AI using medium-scale LLMs and proprietary datasets, giving them privileged access to our sovereign data assets.

The final piece of the jigsaw is the scale-up funding available to British tech firms, which is still mostly missing. The target set by the Mansion House compact to have 10 of the UK’s largest pension funds invest 5% of their assets in private ventures needs to be met by 2030. If progress is also made on sorting out the issues highlighted in the Harrington report on foreign direct investment into the UK, there is a fighting chance that a British tech company, with its roots in one of our universities, will reach a trillion-dollar valuation within the next decade.