UK Digital and Tech Industries

Leo Docherty 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.

--- Later in debate ---

[Leo Docherty (Aldershot) (Con)]

It is a pleasure to serve under your chairwomanship, Ms McDonagh. I am grateful to my hon. Friend the Member for St Albans (Mrs Main) for calling this important debate. I will talk briefly, but first I want to put in context the importance of the digital sector to our country’s economic output. We must bear in mind that the digital industries make up 4% of all employment and 7% of economic output, which is remarkable and represents remarkable growth in recent times.

One successful growth story is UKCloud, a very large company in my constituency. Just a few years ago, it was a start-up of six people. Under the amazing leadership of Simon Hansford, it has grown to now employ nearly 200 people. This month, it will take on another 50 employees. It has been remarkably successful, and it represents some of the recent explosive growth we have seen across the sector. As the name would suggest, UKCloud is a cloud storage business. It has successfully delivered cloud solutions for: central Government, including the Cabinet Office, the Home Office, the Ministry of Defence and other bodies of Government such as the Driver and Vehicle Licensing Agency and Her Majesty’s Revenue and Customs; many local authorities; health organisations; and other private businesses.

UKCloud’s unique offer is that it can scale up and compete with large multinationals. The offer is extremely cost-effective, so it can punch above its weight. That has come about as a direct result of the Government’s drive to open up cloud procurement through G-Cloud. I am sure the Minister will agree in her closing remarks that that has been a commendable success in encouraging British small and medium-sized enterprises to get into that space, punch above their weight and compete with the large multinationals.

Another significant thing about UKCloud is that it has a very important offer when it comes to national security. This year it is establishing a high-assurance cloud platform, which will basically be a secret facility known as UKCloudX. It will enable the Government to fulfil an important intelligence function, which is the ability to share intelligence across a number of different Government bodies and achieve the doctrinal intent of fusion. It is all very well when different intelligence agencies or bodies have information and intelligence, but unless they can share and fuse it in a highly secret manner, the intelligence cannot achieve its best effect in support of our national security.

UKCloudX is an important development, which has a direct impact on our national security at the highest level. I am delighted that that work will be taking place in Farnborough this year. No one in this room needs reminding of the importance of this country’s having a cutting-edge approach to the handling of intelligence and data, given the recent domestic challenges we have faced with our national security in Manchester with the atrocity just a year ago and the recent developments in Salisbury. UKCloud is playing an important role in our national security.

The other important aspect is data sovereignty. Due to recent developments, especially with regard to Facebook, which has already been mentioned today, the importance of the secure handling of data is clear to us all. Whether it is Government data or the personal data of citizens, the way that is handled and the total control we need to have over that to guarantee security are of the utmost importance. Data sovereignty should be a strand that runs through the Government’s approach to the industry as a whole, but particularly when it comes to the procurement of cloud storage facilities. I would be grateful for the Minister’s reassurance that when the Government consider procuring future cloud storage for their work, they will guard against any tendency to prefer US hyperscale offers—the big US providers—and instead prefer British SMEs, which not only offer 100% data sovereignty, but also offer the immediate economic benefit of the jobs and growth we have discussed today. I commend the Government for their attitude in terms of the G-Cloud, which has been a great success, but I would welcome the Minister’s reassurance on preferring UK SMEs in procurement.

Various invitations have been mentioned today. The Minister would not forgive me if I sat down without warmly extending an invitation to her to visit Farnborough and UKCloud. It is extremely convenient, being just off junction 4 of the M3. I am sure we can provide a very good lunch. I know she does not need that kind of incentive, however, because her commitment to her brief is such that she will want to see things at first hand. On that note, I conclude my remarks.