UK Digital and Tech Industries

Anne Main Excerpts

Wednesday 18th April 2018 Westminster Hall

[Mrs Anne Main (St Albans) (Con)]

I beg to move,

That this House has considered the future of the UK digital and tech industries.

It is a pleasure to serve under your chairmanship, Ms McDonagh. This is an important debate on a sector of the economy that has been incredibly vital for this country and will become even more important in future. The UK’s history as a global leader in technological and digital innovation is well known. From the invention of the telephone by Alexander Graham Bell in the 1800s, and the creation of the television by John Logie Baird in the 1920s, to the relatively recent introduction of the world wide web in 1989 by Tim Berners-Lee, the UK has always been at the forefront of technological advancement for the rest of the world. Today we continue to see incredible innovation and growth across the country, which puts the UK at the forefront of global technological advancement.

The turnover of digital and tech business in the UK has reached £170 billion. That is an increase of £30 billion over the past five years alone. We should recognise that the digital sector is creating jobs twice as fast as the non-digital sector. It is important to note that this is not just a London-centric industry, as many seem to think it might be. We have seen incredible growth in this sector all across the UK. There are digital clusters thriving in Belfast, Edinburgh, Glasgow, Newcastle, Cardiff and many other places in the UK. In mentioning all those regions, I thought that people from them might feel urged to jump up and say so. [Interruption.] The hon. Member for Strangford (Jim Shannon) will save his ammunition for later. We should welcome the huge growth in the number of individuals setting up businesses online, many from their own homes.

One of the many benefits of the digital industry is to take advantage of the opportunities for business and trade that exist online: the ability for people across the country, and the world, to be connected at just the press of a button. The aim of my speech is to push the Government for assurances that, alongside the recent digital strategy, we will continue to invest and encourage this sector of the economy to grow and, crucially, strive to be world leaders in this industry—tech UK.

Imagination Technologies in my constituency is at the cutting edge of this exciting sector. I visited its offices a couple of weeks ago and witnessed at first hand some of its fascinating, advanced work on computer chips and artificial intelligence. As I am sure the Minister knows, Imagination was recently acquired by Canyon Bridge, a US venture capital firm, for close to $1 billion. That is $1 billion of confidence invested in the UK. It is the largest such investment in UK tech since the referendum, so “Project Fear” should be well and truly dead. That was a huge investment of confidence in my constituency.

I am sure that the Minister will welcome that investment and the massive vote of confidence in the UK tech industry, and I hope that she will visit Imagination to see for herself this jewel in the tech crown. I extended that invitation to the Prime Minister at lunchtime, and she thought it a bit of a deviation from her way to Carlisle. To save her from that deviation, I will say today that the Minister will be more than welcome to my constituency to see what the world can learn from St Albans.

There has been so much good news coming out of the tech industry in recent years and months. The UK ranked in the top three in KPMG’s 2018 global technology innovation report. The report detailed the record level of venture capital investment into UK tech firms, which totals $4 billion. That is more investment than the combined amounts in Germany, France, Spain and Ireland. The UK is mopping up more of that vital investment than those four countries combined. KPMG’s report also highlighted the strength not just in large tech firm investment and growth in the UK, but in the investment going into emerging UK tech firms. However, we cannot rest on our laurels. We must see the UK emerge as the No. 1 location for global tech innovation in the near future—not just in the top three, but No. 1.

[Leo Docherty (Aldershot) (Con)]

Does my hon. Friend agree that it is remarkable and commendable that 99.8% of all new digital firms are small and medium-sized enterprises, and that this is a reflection of the organic strength in this space in the UK?

[Mrs Main]

I absolutely agree. We are having to look to a model where the great big factories and industries of the past are not necessarily going to be the voice of the future. Many of these companies are set up in people’s bedrooms. Mark Zuckerberg might have a few issues of his own at the moment but, as he said, who would have thought three geeks in a bedroom would set up a company that would become so big? That is the future. Many of these companies start off small and then grow. That growth is part of the success, but also part of the issue that I want the Minister to address.

Funding Circle, a FinTech company founded in the UK, is another great example of success in the UK tech sector. Established in 2010, Funding Circle is now the world’s largest lending platform for small businesses and has offices across Europe and in the United States. In such a short space of time it has come to be a global leader. Lending from Funding Circle loans has supported the creation of approximately 80,000 jobs in the UK. It is a wonderful example of the thriving FinTech industry that we now have.

Across Europe, the UK is leading the way. The latest European digital city index ranked London as No. 1 for supporting digital entrepreneurs. The UK is also No. 1 across Europe for inward investment into the digital sector. We should be incredibly proud of that. As we look to the future, the Government must do everything they can to support the continued growth of this industry. That includes listening to its concerns and planning for potential regulation.

[Daniel Zeichner (Cambridge) (Lab)]

The hon. Lady is painting a very rosy picture of the current situation. I suspect that she will soon move on to some of the challenges. As a representative of a city that is a well-known tech hub, I will just ask: does she agree that many of the people who work in the tech sector come from other countries, particularly European Union countries, and that it is important that the Government bring forward their proposals on migration and immigration as soon as possible so that we get some certainty for the future?

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[Mrs Main]

I do agree with the hon. Gentleman about getting certainty on migration. Other companies I have spoken to recently say that they want to be able to bring in the brightest and the best. I absolutely understand that. Interestingly, many of the brightest and the best who are coming in, including Dr Li, who has taken over as the chief executive of Imagination Technologies, are from outside the European Union. Many are saying to me that they want a level playing field on the ability to bring in the brightest and the best, and not just because someone happens to have a blue passport. It is important that we recognise that this is a global industry with global resources that may wish to come to the UK.

I agree with the hon. Gentleman that we need to get our immigration strategy fit for purpose, but we also need to ensure that we have people in our own country who are entering the tech industry. Another company I visited in St Albans said that it was bringing in many highly qualified technicians. It had not employed a single person from the UK in the past three years. Why? Because it could not get them; they are in such demand. There are issues we need to address with ensuring that we are growing home talent for the future, as well as those around immigration. It is a double-sided issue that we need to be looking at.

These are some of the key priorities being raised by firms and trade associations in the industry. First, there is the adequacy agreement with the European Union as part of our future trading relationship. I do think that the future is rosy and bright, but no future, wherever we were, would not have its issues. The adequacy agreement is being asked for, and I would like the Minister’s views on that. The free flow of data between the UK and the rest of the EU is extremely important to both sides during the negotiations. It is so clearly in everyone’s interests for the flow of data to be unhindered, so that needs to be prioritised. I am sure it is being, but I would like to hear more about it from the Minister.

The implementation of the general data protection regulation in May and the Government’s commitment to the framework is encouraging and must help the case for the adequacy agreement to be reached. I would also be pleased to hear what further work the Government are doing to ensure that the adequacy agreement will be reached as we leave the European Union. There will be serious concern among the tech industry if it is not battened down as an agreement that everyone has confidence in when we leave.

Secondly, companies stress the importance of access to talent for their industry, which goes back to what the hon. Member for Cambridge (Daniel Zeichner) said. Of the 1.64 million jobs in the digital sector, about half a million are done by foreign-born employees. That means that half a million people are importing, so to speak, their talent into the UK tech industry. Even so, the industry demands more talent, which comes in through the tier 2 visa route, to support growing businesses that are looking for particular skills.

Many companies, including those in my constituency, report being extremely limited when trying to recruit talent from non-EU countries. This is a golden opportunity, despite Brexit being given a bad press—I hate the phrase “despite Brexit”—for us to craft an immigration policy that will not leave highly skilled jobs unfilled because of the difficulty of recruiting talented individuals from around the world.

As we leave the European Union, we will be able to set our own immigration policy, with fuller control over who can come into the country to work. The Government must ensure that any future immigration policy is agile and flexible to allow that international talent to come to the country and support growing industries, such as the tech sector. I would be glad to hear what preparations the Department has made to ensure that the tech sector can access that international talent after we leave the EU. Given that there are many small businesses in the tech sector, I would like to ensure that there is a conduit for their voices and concerns in future.

Finally, our education system is crucial to the future success of our tech and digital sectors. With the best will in the world, the brightest and best talent comes and wants to work in the UK tech sector, but I would also like our young people to want to join it—not to say it is not for them. It is important to welcome foreign talent, but we must grow our own.

Policy Exchange reported that 65% of today’s students will end up working in jobs that do not even exist yet—that is 65% of future jobs that we cannot even imagine. By 2022, 500,000 highly skilled workers will be needed to fill digital roles, which is three times the number of UK computer science graduates in the past 10 years. That shows the amount of upskilling we have to do and the need to make tech a sector that our young people go into. That huge mismatch must be addressed.

Educators must provide children and young adults in the UK with the skills and training needed for the jobs of the future. We need a curriculum fit for the future, access to teaching staff to inspire our young people, and careers guidance that narrows the gender gap. Women and girls can and do flourish in the tech industry, but we need greater encouragement. When I visited Imagination Technologies, I asked a lady there how many women go into that sort of industry and she said, “Not enough.” It is not enough.

I am encouraged by recent Government announcements about the digital strategy and the Department for Education’s announcement that a further £177 million will go into maths education, which is a crucial STEM subject for the jobs of the future. However, we need to do more to encourage our brightest and best to enter the world of teaching. Teaching is at the core; to get young people enthused and motivated, we must get the teachers in. There are some difficulties in recruiting teachers for certain subjects, and I would like to see a strategy to address that.

When I met Dr Li, the new chief executive of Imagination Technologies, he spoke about the significant support the industry receives in China. Rather cleverly, I said that we are in the top three, but China is No. 1. I will give hon. Members some reasons why—to say that the state is helping is to put it mildly. To promote talent in the industry and, crucially, to retain it, the Chinese Government provide subsidies for teaching tech subjects and offer financial incentives around pay and housing for those working in the sector. Although I am not advocating that approach, it shows that our competitors are determined to win the global tech race. They will not export their talent to other countries if they can possibly help it.

We need to ensure that tech UK is heading for the winning line, but with that exciting world of opportunity comes a dark side. Online security and safety are extremely important issues for the industry to deal with. The protection of the personal data that is being used by online companies is a current issue. For people to have confidence in the programs and applications they use, they need to know that their personal data is secure. I hope that the Government will continue to put pressure on companies to safeguard user data, and to consider how we can future-proof personal security and police industry behaviour.

UK businesses are increasingly subjected to cyber-security threats, which is another topical issue. A recent report by the National Cyber Security Centre found that more and more businesses are being threatened with data breaches, ransomware and cloud theft. Unfortunately, the criminals of this world—the malcontents and ne’er-do-wells—are one step ahead of the game. What are we doing to ensure that we are getting ahead of the game in cyber-security?

The growth of the internet of things, in which many household devices and other objects are interconnected, presents a worrying openness to hackers, as many of those devices lack even the most basic security defences. Some hon. Members will have seen the horrific case of a driverless car being hacked into. The idea that the machines could suddenly take over is horrific, but of course it is not the machines; it is the hackers behind the machines. The exploitation of data in attempts to influence other countries’ elections is another current topic.

As we migrate more of our lives into the digital world, we need to ensure that rogue companies and rogue states are prevented from corrupt or sinister behaviour. I hope that the Minister will touch on what the Government are doing to strengthen our cyber-security and to increase public awareness about safety in a high-tech world.

The industry has incredible potential. Some recent technological advancements are staggering and the UK is proudly at the forefront of that success. On my visit to Imagination Technologies, it was inspiring to hear from those in the industry about how technology will improve our lives in future. The ability for artificial intelligence and the internet of things to combine to assist with healthcare and care for the elderly is especially exciting. Wearable tech will enable the user to be notified of potential health irregularities and will be able to alert medical services when a user’s condition requires it. AI will also be able to help elderly people who need assistance with basic tasks, although there will never be a substitute for interaction with people.

To conclude, tech can improve our future lives in many ways: not just through healthcare or social connectivity, but by making everything in our lives easier. Tech UK is the future for us all. This country has an incredibly exciting digital industry and global Britain should strive to be not just in the top three, but No. 1.

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[Jim Shannon (Strangford) (DUP)]

It is a pleasure to serve under your chairmanship, Ms McDonagh, and to speak in this debate. I congratulate the hon. Member for St Albans (Mrs Main) on securing this debate and on passionately setting out the issues that we all subscribe to and wish to speak about.

The UK’s digital tech industry turned over an estimated £170 billion in 2015 and is growing at twice the rate of the rest of the economy. It is key to boosting the UK’s wider economy, making a contribution of £97 billion in 2015. The hon. Lady clearly set out the situation in relation to the digital tech industry. She was confident on the way forward and Brexit. I will be equally confident, and I also want to say a wee bit about what we have done back home, which has been excellent for job creation and for boosting our local economy.

The digital tech industry generated a further 85,000 jobs between 2014 and 2015, going from 1.56 million jobs to 1.64 million. It is creating jobs at double the rate of the rest of the economy. That indicates how important the sector is. All the contributions so far have mentioned that, and I am sure those who follow will do the same. Since 2012, there has been a 13% increase in the advertised salaries of digital tech posts, compared with only a 4% rise in those of non-digital jobs. Tech investment in the UK reached £6.8 billion in 2016, which is more than two times higher than any other European country and significantly more than its closest rival, France, which secured some £2.4 billion of investment. That is about a third as much, which indicates the strength of our digital tech industry.

“Tech Nation 2017” shows that the average advertised salary for digital tech jobs has now reached just over £50,000 a year, compared with £35,000 for the average non-digital salary, making it 44% higher than the national average. Again, not only are we creating jobs; we are creating well-paid jobs. Along with the well-paid jobs we have to provide the quality employee as well.

As a Northern Ireland MP, I look to the Minister, who I know has a particular interest in this subject, not just because she is a Minister but because she has a personal interest. I am sure the replies to our queries and questions will be positive, as I am sure the shadow Minister will think of some similar things to say as well. Tech City UK’s “Tech Nation 2016” report found that the digital and tech sector in Northern Ireland was burgeoning, and outside of London and the south-east made the largest contribution to the regional economy.

[Mrs Main]

The real purpose of this debate is to show that although London is key in many eyes, it is not a bar to young people finding work because they can find such high-paid jobs in their own areas, and that is really exciting.

[Jim Shannon]

The hon. Lady is absolutely right. It is tremendously exciting. I discussed it with Invest Northern Ireland, which was given the task of finding new jobs. One of the things that it was able to describe—I will come to this shortly—was the quality of graduates that we have in Northern Ireland, which is one of the attractions of Northern Ireland. The hon. Lady is absolutely right that people do not have to go to London to get a big wage. They go for different reasons, whatever they may be, but people can have a job back home and they can stay there. That is what it makes it so exciting.

In the words of my party colleague, Simon Hamilton, in his role as Economy Minister:

“From the North West Science Park in Londonderry through to the Enterprise Zone in Coleraine and down to Newry, the home of some of our leading high-tech companies, with Belfast— Europe’s leading destination city for new software development projects—at its heart, bit by bit we are building a Northern Ireland-wide tech industry that we can be proud of.”

That is what we are doing in Northern Ireland, and that is what we hope to continue over the next period of time.

In Belfast and other cities in Northern Ireland, global tech names such as Citi and Allstate, working in the sector with Silicon Valley firms such as BDNA, are all recognisable. Each of us here will speak passionately about our own constituencies, as the hon. Member for York Central (Rachael Maskell) did, and as other Members will as well. As MPs we love our constituencies and want to do the best for them, so the opportunities need to be there. Not only is our highly skilled workforce attracting global investment, but we have indigenous tech firms such as Kainos, Novosco and First Derivatives growing in size and becoming global leaders in our region of Northern Ireland. We can be excited about what is happening across the whole of the United Kingdom of Great Britain and Northern Ireland. As I often say to my hon. Friends in the Scottish National party, “Better together”: all the four regions doing all the same things together day by day and making things better for everyone, and we should continue to do that.

It is clear that much of our attraction is the skills base supported by international-standard research facilities, such as the Centre for Secure Information Technologies at Queen’s and Ulster’s Intelligent Systems Research Centre: education and big business working together. We have done that very well through Queen’s University. The Minister might respond to that because that is a key factor to our moving forward. We will have the education, the big business, the opportunities, the quality of graduates and all those things together. We have a range of support and programmes in place, such as StartPlanet NI and Propel, aimed in particular at early stage and high potential technology-based start-ups. Perhaps most crucially, we have a fast developing ecosystem including the likes of Catalyst Inc., Digital DNA and Immersive Tech NI, which combine to create a vibrant tech community across Northern Ireland.

Northern Ireland is consistently the top-performing region of the UK in national exams at age 16 and 18. The fact is that we have the graduates. People want to stay and the technical and digital firms want to invest because the skills base is there. We have the highest percentage of qualified IT professionals in the UK and Ireland, with more than 77% holding a degree-level qualification. I say respectfully to all the other regions that Northern Ireland as a region is leading the way—from a small base of 1.8 million people, we are up there with London and other parts of the United Kingdom. Some 77% of high school graduates, post A-level, go on to further and higher education compared with the UK average of 71%.

Government, industry and academia have implemented collaborative initiatives in training and education, such as cyber and data analytics academies, to ensure that the workforce continues to meet the needs of the global ICT industry with competitive salary costs, low employee attrition rates and lower operating costs, including low property costs. All those things make it attractive to come to Northern Ireland. Labour and property costs for a 200-person software development centre in Belfast are 36% less than in Dublin, 44% less than in London and 58% less than in New York. It is clear that we are an attractive place to do business and we must sell that more globally.

I will conclude with this, Ms McDonagh. I am conscious of time and there are two others to follow me. I read an interesting article in the Belfast Telegraph in which David Crozier, part of the commercial team at CSIT, was quoted. I want to cite his comments because it is important to have them on the record. He said:

“Belfast has a strong hi-tech industry as it is and cyber security is a subsection of that so you have transferable skills in terms of software engineering roles that can transfer over into cyber security. We’re working towards a target of about 5,000 jobs by 2026.”

While other sectors are facing uncertainty following Brexit, Mr Crozier is bullish about its impact on cyber-security investment:

“It’s really high-value stuff, companies have a demand for it globally and to a certain extent that does make it”—

I use these words; I know the hon. Member for St Albans will be happy—

“Brexit proof."

We are looking forward to good times.

“It’s not going to have a detrimental effect for sure, it may actually lead to more demand if you see a hardening of UK national positions around trade tariffs and those sort of things that’s naturally going to drive investment into types of technologies to protect sensitive information, sensitive networks. It possibly produces even greater opportunity.”

An industry that is yet again embracing the opportunity Brexit presents, an industry that is able to compete globally, is an industry that we must invest heavily into, and the benefits will be deeply beneficial. Brexit-proof: what could be a better reason than that?

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[Mrs Main]

I am delighted that the Minister is coming to St Albans. I shall be ruffling through the diary with Imagination Technologies. This debate was so valuable because, apart from the odd barb here and there, everybody was in agreement. I completely agree with the shadow Minister—I do not usually say such things—that broadband access is vital; it absolutely needs to be rolled out. We have to lose the concept that everything is London-centric. I am delighted that this is the way forward. This is the world of the future. I am pleased that so many colleagues took part in the debate. I thought their speeches were excellent. The hon. Member for York Central (Rachael Maskell) talked about learning online. We will have to have some new excuses to replace “The dog ate my homework” in a digital world.

Question put and agreed to.

Resolved,

That this House has considered the future of the UK digital and tech industries.