Debate on government support for UK-based tech companies

In November 2025 the House of Lords Science and Technology Committee published a report on what it called the science and technology growth emergency. The report argued that “decisive and speedy action across Government” is needed to support growth in the science and technology sector, and to enable promising companies to scale up in the UK rather than move overseas.

The report acknowledges that the “failure to scale” is not a new problem. For example, the House of Lords Communications and Digital Committee’s inquiry into AI and creative technology scale-ups warned of the risk of the UK being “an incubator economy for other nations, as innovative British technology firms pursue greater growth potential in other markets or seek acquisition by foreign companies”.

Government support for the tech sector

The government’s Industrial Strategy, published on 23 June 2025, sets out a 10-year plan to drive economic growth through eight sectors, known as the IS-8, with strong potential to raise productivity, support high-value employment and strengthen economic resilience.

One of these sectors is ‘digital and technologies’. As with the other IS-8 sectors, it has its own sector plan. The digital and technologies sector plan sets a headline ambition to make the UK “one of the top three places in the world to create, invest in, and scale-up a fast-growing technology business” by 2035. It sets out several measures that could benefit UK tech companies:

• R&D investment: The government expects research and development (R&D) spending to reach £22.6 billion a year by 2029-30. In addition, it expects R&D tax relief to support an estimated £56 billion of business R&D expenditure in 2029-30.
• Access to finance: The plan proposes improving access to finance through institutions such as the British Business Bank (BBB), the National Wealth Fund and the National Security Strategic Investment Fund. It committed an additional £4 billion of capital to support businesses in the IS-8 sectors, which will be invested through the BBB’s Industrial Strategy Growth Capital programme.
• Skills: The government says it will address skills shortages in the tech sector by expanding digital and STEM training and attracting skilled workers to the UK. Plans include funding digital and technology courses, introducing more flexible apprenticeships and short training courses and investing in specialist training through Technical Excellence Colleges.

The government summarised its approach to supporting businesses to start, scale up, and stay in the UK in its Entrepreneurship in the UK prospectus, published alongside the 2025 Autumn Budget.

General information about types of government support can be found in the Library briefing, Support for small businesses. Policy on research and development funding and the work of Innovate UK, the UK’s innovation agency, is described in the Library briefing, Research and development funding policy, 2019-2024.

Recommendations from the Lords Science and Technology Committee

The Science and Technology Committee’s report Bleeding to death: the science and technology growth emergency concluded that UK tech companies struggle to find the capital they need to scale up the UK, pointing to “fragmented and risk-averse” institutional investors (such as pension funds), lower stock market valuations compared to competitor markets, relatively small and complicated public investment institutions (such as the British Business Bank and National Wealth Fund), and “risk-averse and inflexible” government procurement.

The report made several recommendations, including:

• A National Council for Science, Technology and Growth, modelled on the National Security Council, to provide “strategic coherence” on efforts to break down barriers for UK tech companies.
• Reforms to encourage pension funds to invest in the UK, building on and strengthening the Mansion House Accord.
• Improving how public investment institutions operate, potentially consolidating them into a single body.
• Reforms to public procurement rules to enable the procurement of innovative, domestic solutions.
• Making it easier for people to move between academia, business, and government, so that those sectors each have better access to skills and networks.

In its January 2026 response to the committee (PDF), the government said that it would roll out a “cross-department approach to supporting scale-ups” by mid-2026:

This will focus on identifying and unblocking barriers to growth at pace, including procurement, access to finance and regulation, and providing easier access for companies into government. As part of this, DSIT will take a proactive approach to identifying strategically important frontier tech companies across its growth, investment and sovereignty agendas and will actively engage with these companies to support them to stay, scale and invest in the UK.

Further reading

• Scaleup Institute, Scaleup annual review 2025 (PDF), December 2025
• Confederation of British Industry, Innovation Investment: Firm foundations for growth, December 2025
• Royal Academy of Engineering, State of UK deep tech 2025, November 2025
• techUK, A policy stocktake: tech scale-ups, June 2025
• House of Lords Library, Science and technology’s contribution to the UK economy, October 2024
• Cambridge Industrial Innovation Policy, Does the UK’s scientific research translate into industrial success?, September 2024