David Willetts was Minister for Universities and Science 2010-2014.
This is the week many of the world’s tech investors and entrepreneurs pile in to London to spot the most exciting science and technologies and do deals. We are a vibrant global centre. Flows of Venture capital investment through the UK match the entire EU. We have more unicorns (private high tech companies worth more than $1b) than France and Germany combined. Our universities and their graduates generate ideas and technologies valued across the world.
Many of the investors will be coming over from the US. They often have a better understanding of the strengths of British science and tech than we do. When I was Science minister, I suggested that Imperial College should host a festival showcasing all their advances in biosciences to attract commercial investment. Half a dozen American VCs flew in from the West Coast – though no British financiers made the taxi journey from the City.
It is much better now, though there is further to go. They still say that an entrepreneur wanting to pitch for investment in the US should take their Chief Technology Officer, but if it is a pitch in the City take their Chief Finance Officer – the meeting is more likely to be focussed on cash flow forecasts three years out than about the significance of the technology.
Oliver Dean’s essay reminded us of the Conservative case for less intervention and less Government activity. He sets out the case for free markets and that is important – but it is only part of the story. The rise of the security agenda has transformed the debate and shifted what Conservative Governments do.
Oliver quotes Ronald Reagan. There is indeed a lot to learn from the American approach. But we should learn from what Conservatives actually do in America – which is often very different from what they say. American Republicans intervene a lot. But they don’t call it industrial strategy: they call it their security strategy. It is for the US to be at the forefront of every major technology. They do not want again another technology surprise like the Soviets launching Sputnik. So they intervene with tax credits, soft contracts and direct investment. I’ve met American tech entrepreneurs in the early stages of designing a new device who explain how it is financed: they have already sold the first year’s output to the DoD even though nothing has yet been made.
This approach does not just apply to classic military hard-ware. American Congressmen and security officials criticise us for not having a broad enough understanding of dual use technologies. The Congressional National Security Commission on Emerging Biotechnology, led by Republicans, is a powerful example of security thinking applied across the life sciences with a range of Government interventions.
This American approach has already had a big influence on British Conservative thinking, which has changed a lot over the past decade.
Here is an example. Back in 2010, in the early months of the Coalition, there was a political row about a plan to lend money to Sheffield Forgemasters who make very sophisticated speciality steel used in nuclear power stations and with security uses too. It was very controversial and many Conservatives opposed such an intervention.
And ten years later? In 2021 Sheffield Forgemasters was nationalised: it is now controlled by the MoD. That Conservative decision had minimum of attention or controversy. In 2024 the MoD bought Octric semiconductors to ensure a national supply of semiconductor components. Nationalisation is back – as an arm of security policy.
Part of the classic doctrine which Oliver Dean sets out was that Britain should have an open market for corporate control. That was what Conservative free marketeers thought was a key part of our economic model. The National Security and Investment Act 2021 changed all that with official scrutiny of a wide range of corporate takeovers for their security implications and the power for the Government to ban them if necessary.
The National Security Investment Fund was set up in 2018. It is a Government entity taking equity stakes in key technology companies which might have a security angle. It is based on the CIA’s In-Q-Tel VC fund.
To do all this kind of thing you need a cadre of public officials tracking a range of technologies and assessing their implications. Many of these technologies are emerging from our universities. Many start with public research grants – Conservative plans to cut research funding could jeopardise this model.
We easily assume the post war growth of government was driven by the welfare state. But post war Britain was, as David Edgerton has shown, above all a warfare state. Defence and security spending was the big driver. The pattern of public spending only got back to pre-War levels of “welfareness” in 1970. Some of those Conservative “wets” supposed to be irresponsibly growing the state were actually defence hawks trying to keep Britain’s global role.
I used to believe that Oliver Dean’s account was the whole story of the role of Government. Now I see that the very limited role of government was dependent on a security umbrella provided by the US who were themselves operating a very different model. Now we once again have to think about defence requirements, national capabilities and strategic strengths.
This is what Conservatives used to do. We are rediscovering that Conservative tradition.