Rishi Sunak: What is the new prime minister’s tech track record?
Rishi Sunak, Britain’s latest prime minister, has often come across as a tech-friendly Conservative – and not just because of his proclivity for smart mugs and time spent studying at Stanford in the heart of Silicon Valley.
During his time campaigning for the Conservative Party leadership, and his tenure as chancellor of the exchequer under Boris Johnson, Sunak made his aspirations for boosting the UK’s tech standing clear – particularly when it comes to fintech.
This has earned Sunak a warm reception from the UK’s tech community. But what specific actions has Sunak taken to support UK tech during his time in politics?
Following a career in finance at firms including Goldman Sachs, Sunak spared no time in outlining a vision for UK fintech once he was named chancellor.
In 2020 Sunak requested that Ron Kalifa OBE conduct a review into the UK’s fintech sector. The Kalifa Review, published in February 2021, became an important moment for British fintech.
Sunak responded to the review positively, setting out proposals to advance British fintech in a speech given at Fintech Week in April 2021.
“The UK is already known for being at the forefront of innovation, but we need to go further,” Sunak said. “If we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.”
British fintech enjoyed a period of rapid growth during Sunak’s chancellorship, reaching a historic level of investment in 2021. However, an investment slowdown in 2022 for much of the sector suggests the sector will need support to maintain its momentum.
The Kalifa Review recommended incentives for promising fintech firms founded in the country to IPO in London, rather than following in the footsteps of many promising UK startups by listing in the US or being snapped up by overseas rivals.
Sunak agreed to launch consultations into how the UK can encourage firms to list in London, receiving suggestions from the Financial Conduct Authority (FCA).
While 2021 was a record year for UK tech IPOs, data from EY published earlier this year – during Sunak’s time as chancellor – found that 2022 was on track to be a disappointing year for listings on the London Stock Exchange amid worsening macroeconomic conditions.
Sunak has been a keen backer of Brexit and has said migration should be “controlled”. However, since the UK left the EU tech entrepreneurs have struggled to fill vacancies now that the pool of available talent has been reduced.
The Kalifa Review recommended a number of policies that the then-chancellor pledged to implement. These included the scaleup visa scheme to encourage foreign talent to come to the UK. While the decision was largely welcomed, the government received backlash from the Innovate Finance boss for delaying the process.
“We have heard repeatedly from fintech companies over the two days of IFGS, competition for top talent is fierce. Without easier routes, UK tech companies will miss out on hiring the best and brightest people from across the world,” Innovate Finance CEO Janine Hirt said back in April.
In August 2022, the government launched the scaleup visa in a move welcomed by the UK tech industry.
Towards the latter part of his time running the Treasury, Sunak outlined a plan to make the UK a “global cryptoasset hub”, promising new legislation to boost the nation’s position in the world of cryptocurrencies.
“It’s my ambition to make the UK a global hub for cryptoasset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” Sunak said in April.
Among the measures mentioned in his speech was the implementation of stablecoins – crypto tokens with values tied to other sources, typically fiat currencies – into the British payments framework.
The speech at the time seemed like a bold, if a little vague, endorsement of the incorporation of decentralised blockchain technology into traditional financial systems.
The global cryptoasset market, however, has since plummeted, with some experts calling the current period a “crypto winter”.
The department was relatively light on updates on its previously announced plan, save for a few statements affirming it remained keen on supporting UK crypto despite the crash.
Business incentives for tech firms
Another flagship policy of Sunak’s chancellorship was the research and development (R&D) tax credit plan. Sunak said during his time at the Treasury he wanted the UK’s R&D spending to increase in comparison to other developed nations to ensure innovative technology was being developed in the country.
Despite Sunak’s claimed passion for boosting British R&D spending through tax incentives, by the end of his time as chancellor, the country’s R&D spend was less than half of the average spend for OECD nations, leading some to question Sunak’s ambition.
Despite criticisms from some, the science and technology committee within the House of Lords in August, prior to Liz Truss’ victory in the first post-Johnson leadership contest, expressed support for Sunak’s R&D ambition, but warned the next government would have to live up to these promises.
Looking at Sunak’s voting record as an MP, he has typically been in favour of using government policy to support the growth of tech. When voting on whether to include digital services firms in business tax incentive plans, Sunak has consistently been in favour of these companies being eligible for these programmes.
Will Sunak be the tech-friendly leader the industry wants?
There are clear signs from Sunak’s record to give the UK’s tech community reason to be cautiously optimistic. Throughout his career, he has consistently spoken of the importance of supporting fintech and scientific innovation.
However, there is also a pattern of the results not fully living up to expectations. With tech visas and R&D, there are concerns the policies don’t go far enough or faced delays. With crypto, there is uncertainty over the future of policies he put in place (that Royal Mint NFT is nowhere to be seen).
This must, however, be considered in the context of an unprecedented period of instability in UK government and difficult global economic conditions. The UK’s tech industry is craving stability first and foremost, and will be watching closely to see if Sunak’s tech credentials meet expectations.