Britain will only get poorer, unless we start taking new ideas seriously

Telegraph

24-02-2025

Ralph Dinsley – aka Dinz – is a retired RAF battle manager from Alnwick, with a passion for Harley Davidson motorbikes, AC/DC and astrophysics. He is also one of our most intriguing entrepreneurs.
After becoming a military expert in tracking objects in space, Dinsley decided to share his expertise with private firms looking to operate in space. His startup 3S Northumbria helps firms to generally avoid polluting space and clean up after themselves (as the galactic gold rush begins, space junk is becoming a huge headache). It has just been poached by a US player, ExoAnalytic Solutions. The reason is gratingly predictable: 'To be honest, particularly post-Covid, I found that it's quite difficult to get hold of capital.'
Mr Dinsley's story strikes at the heart of the UK's stagnation rut. Millions of people – including a worrying chunk of the middle class – are stuck in low-paid, dead-end jobs as the cost of living rises.
True, the country is wrestling with inflation. But the broader problem is chronically low wages. And the core reason for that is that the country is hopeless at scaling its most promising firms into the kind of larger, global entities that create well-paid skilled work for the masses. The infuriatingly simple explanation for this is that firms can't find the cash they need to grow.
The problem is finicky but fixable. True, UK investors don't tend to share the American mindset that 'You won't get 1,000x return by investing in bakeries. You will by sending satellites into space.' Old-timers still stick to the mantra of never losing cash on a deal, but things are changing.
Some have started to pay attention, as a smattering of success stories – such as Arm and Synthesia – prove against the odds that it is possible for UK tech tiddlers to grow into global sharks. Now politicians need to pull their weight.
It would help if HMRC and the competition regulator did not mire growing companies and their investors in 'bureaucratic challenge'. And as Simon Menashy, a partner at MMC Ventures told me the Government needs to fix the R&D tax credits 'mess' and work faster to mobilise pension funds that can finance startup growth.
It is mortifying that the single most ruinous conundrum facing this country gets so little airtime. Politicians gabbled about the need for action after Google poached AI pioneer DeepMind in 2014 – and then moved on. But given that we are no longer all-consumed with Brexit or Covid, there are no more excuses.
It is partly Labour's fault that the country has tuned out of the 'growth stuff'. Keir Starmer had a golden chance to make economic progress his great quest. He and Rachel Reeves blew it with their doomsterism.
Labour technocrats can't seem to talk about the economy in a way that strikes a chord. One nugget that pollsters have picked up is that Labour's vision – of an active mission state turbo-charging the country in partnership with big business – has not landed. Voters think 'ordinary people' not the state creates growth.
The Right meanwhile drifts further from the problem. Reform is tapping discontent with the UK's addiction to low-skilled mass migration – a symptom but not the cause of Britain's trap. Kemi Badenoch is scornful of Labour's statism, but she has no vision of her own. She has retreated to her comfort zone of prattling about how diversity and inclusion wokery is bringing down the West. (Seriously?)
The deep failure of our leaders is infuriating. True, when the productivity puzzle emerged after the financial crash, politicians were blindsided by the fact that even the best economists were stumped.
Several years on, however, we have most of the threads; the country awaits a talented politician-storyteller to now weave them together. Hopefully they'll stress that we should approach the decline phenomenon not as a puzzle, but a magic trick. The saying goes that if you want to know a magician's secrets, don't be distracted by what they say; watch the hands instead.
From the 1980s until recently, the lips said: free markets, deregulation, Hayek, tax cuts, privatisation, globalisation. Meanwhile, the hands expanded state bureaucracy and welfare, increased taxes, nudged entrepreneurs away from the competitive real economy and into low-risk high-reward financial antics, and erected a regulatory regime that crushes people's dreams while propping up lazy incumbents. Britain is flailing not because free market Thatcherism ran rampant but because it has wasted away in the age of the regulatory state.
The world hegemon that is the United States has fared better because it has been able to bankroll a huge defence research sector, which birthed Silicon Valley.
But now it is also sputtering. Trump has threatened to slash the budget of the army. Silicon Valley has lost its mojo. The reason US investors now mine the UK is that they view us as an ideas factory uncorrupted by Californian groupthink.
Britain's big task now is to pick the pearls from the wreckage and forget the rest.
The question is how to talk about all this in a way that fires up even the most disengaged voters. Luckily the idea of backing cutting-edge startups is intuitive.
A Good Growth Foundation poll found that productivity – not GDP – is the growth measure that resonates most. Voters back an active state only insofar as it supports small businesses and everyday people.
We need a national movement to get behind people like Dinz. We also sorely need a national debate over the kind of innovation we want. Because so much recent tech has been spun out of defence research, preoccupied with things like communication and data.
Western progress has become weirdly distorted. The most modern basic appliance, the microwave, was invented just after the Second World War, yet we walk around with virtual portals to an alternate universe in our pockets. Soon AI-powered precision medicines may obliterate terminal cancer, but, amid growing antibiotic resistance, superbugs may become a common killer. This is fascinating, if chilling, stuff. We should talk about it more as a country.
We don't discuss stagnation enough. It has been eclipsed by other gripes. The most damning sign of decline is that we are no longer paying attention.