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The abolition of the Department for Science, Innovation and Technology is not the greatest threat to Britain’s technology sector
The new Labour prime minister, Andy Burnham, has entered into Number 10 without setting out a detailed position on closer alignment with EU rules. The astonishing speed of his rise, from by-election victory to becoming the nation’s prime minister in the space of a month, has spared Mr Burnham from the scrutiny of a prolonged leadership contest.
That does, however, leave one of the most important questions facing his government unanswered. Does the end of Sir Keir Starmer mean the end of Starmer’s policy of an ever-lesser Brexit? In the absence of a clear direction of policy, or indeed clear change, continuity is the safest assumption, ever more so as Mrs von der Leyen has made clear they share a commitment “to bringing the EU and the UK closer and closer.”
What is clear is that Mr Burnham’s government now has a choice to make. It can treat Britain’s technology sector as a strategic national asset, something to defend, encourage, and be given ample space to grow. Or it can allow one of our country’s few undisputed economic advantages to be stunted by the gravity of Brussels’ regulatory orbit.
We have already seen in the first few days of the Burnham ministry the abolition of the Department for Science, Innovation and Technology. Its responsibilities have been divided up by the newly-sized government departments of the Department for Business, Innovation, Science, and Trade, the Department for Digital, Culture, Media and Sport, and the new Office of the Prime Minister and Cabinet, which will assume responsibility for artificial intelligence. Kanishka Narayan, one of the previous Starmer ministry’s most competent ministers, continues in his post as AI minister with an elevation to Cabinet.
It can be argued that there is a case for this, in that bringing science and technology closer towards industrial strategy could help Britain turn more of its research base and capabilities into profitable start-ups and companies. Moving the AI Opportunities brief to be closer in proximity to the Prime Minister could give it more political focus and clout. Yet abolishing a department does not abolish the need within government policymaking for attention to be given to our future industries. At the very moment when AI, quantum computing, biotechnology, and advanced semiconductors are becoming instruments of national power and markers of global influence, the new Labour government has dismantled the very institution created to concentrate Whitehall’s constantly drifting attention upon them.
Britain begins from a position of strength when compared to our European neighbours. The UK is home to more than 17,000 venture-backed start-ups, with a combined valuation of $1.4 trillion, making ours the third largest technology economy in the world, behind only the US and China. Dealroom’s latest figures show that British start-ups attracted almost 40% of all European venture-capital funding last year. Our world-class universities, deep pools of capital, the English commercial legal system, global language, and dense clusters of researchers, founders and investors all combine to make Britain a hub for the technological sector. London, Cambridge, and Oxford are joined by growing tech sectors in Manchester, Bristol, Edinburgh, and Belfast. Brexit did not create these advantages, but it created the freedom to use them for our own gain.
That freedom is endangered less by one dramatic re-entry into the EU Single Market, and more by a gradual succession of modest-looking policy changes. The UK-EU reset is incrementalism in a diplomatic manner. First comes dynamic alignment on food and agricultural rules. Then comes alignment on emissions trading and, potentially, the European Union’s electricity market. Each step is presented as an isolated and technical solution to make the lives of ordinary Britons easier and the cost of living cheaper. No current agreement requires Britain to copy and paste the EU’s AI Act. The danger, however, is the precedent being established by Labour ministers that “friction” is best solved by following rules made elsewhere. Of course, what is friction in one’s eyes is economic sovereignty in another’s.
As AI grows ever more powerful in its abilities, demands for cross-border regulation will only intensify. Complex cyberattacks, sophisticated fraud, zombie AI agents, the increased chance of war through the removal of human error, to name a few threats on the rise. As these things grow in likelihood, Labour ministers will be told that Britain cannot regulate alone, and that we must regulate together in the spirit of solidarity in order to meet the moment.
The United Kingdom and the European Union already have their own unique approaches when it comes to AI regulation. The European Union has taken a more legalistic approach, with the AI Act being the world’s first comprehensive AI law, applying a common risk-based framework across all 27 member states of the European Union. The European Commission regards it as proof that the EU is a global leader in the field. Yet, that same proof risks EU member states being left behind as the EU becomes an entity that writes rules for technologies that are invented, financed, and commercialised elsewhere.
Britain has so far occupied the sensible middle ground, closer to a Goldilocks position, in that it has avoided attempting to govern every possible use of AI through one vast and overbearing statute of law. Instead, what we see is a system where specialist regulators deal with particular risks in their own fields, to then implement targeted regulation if a problem arises in medical, financial, or other applications of AI, that does not affect general use across the economy. This allows for Britain to be nimble where start-ups need breathing room to be able to experiment and learn from their mistakes. This is our advantage.
The European Union understands this full well, and what the possible implications are for it down the line. A faster and more agile regime across the Channel could mean that the capital which might have otherwise have gone into Parisian start-ups or AI companies in Munich, could end up going to British firms instead. Brussels does not need to be hostile towards Britain to curb that advantage, as it only needs to remind the Labour government, composed mostly of ministers who believed that Brexit would unleash economic Armageddon, that access to the European Single Market requires Britain to copy their rules.
It is not just that Brexit is anathema to most Labour ministers, it is that EU regulation often delivers the very politics that Labour itself prefers: The belief that economic and social problems, either in Britain or across Europe, are best managed through more regulations and rules. It delivers so at a distance, without Parliament, with the added effect that those who are against could be labelled as being against economic growth, as gaining more access to the European Single Market is synonymous with rectifying Brexit’s economic damage.
That is why technology, and specifically artificial intelligence, must be the red line. There are things in relation to AI that we should cooperate with international partners on, such as the criminal misuse of AI that does not respect borders, or how AI affects matters of war and peace. What we should not do is bind our hands as the world enters the Fourth Industrial Revolution all because our neighbours ask us to copy them in doing so.
Otherwise, the Museum of Lost British Industries may soon require yet another wing.
