MPs urge UK government to play venture capitalist with taxpayer-funded tech

Britain is funding the next generation of tech companies without making sure taxpayers get a slice of the action, MPs have warned.

In a new report shared with The Register ahead of publication, the Public Accounts Committee (PAC) has accused UK Research and Innovation (UKRI) of being overly cautious about protecting taxpayers' interests.

Rather than simply handing out grants, MPs want UKRI to consider taking equity stakes in more of the businesses it backs, giving the public a chance to cash in when those companies succeed.

According to the Department for Science, Innovation and Technology (DSIT), UK universities produce more spinouts and patents per pound of research funding than their US counterparts.

But Britain is less adept at cashing in on its inventions.

British startups still struggle to attract the investment needed to grow without moving overseas, while universities have a patchy record when it comes to exploiting their intellectual property.

UKRI, meanwhile, has been reluctant to impose tougher conditions on the research it funds, arguing that doing so could discourage companies from growing.

“This approach is far too cautious and we urge the Department to do much more to recover taxpayer's money when a successful company exploits research which the taxpayer, via UKRI, has paid for," the PAC said.

It wants UKRI to review its standard funding terms, including whether it should take equity stakes in more companies benefiting from public money.

Sir Geoffrey Clifton-Brown, chair of the PAC, acknowledged that calling for the government to behave more like a venture capitalist might seem an odd position for a committee normally concerned with keeping public spending in check.

"It may strike followers of this Committee's work that our call for government to take a less cautious approach to taking a direct stake in British innovation is an unusual one," he said.

"But we are a body dedicated to value for taxpayers' money, not hoarding it.

The nations currently leading the global tech race did not achieve their positions by avoiding more entrepreneurial policies.

This is a simple case for the government of nothing ventured, nothing gained." The government has made some effort to help British tech firms.