Researchers from three Scottish universities suggest UK Government is over-subsidising tech firms which cannot grow.
Inconsistencies between the UK’s high-growth firms and Government policies in place to support have been highlighted in a report by researchers from three Scottish universities.
The report, Increasing ‘The Vital 6 Percent’: Designing Effective Public Policy to Support High Growth Firms, argues that both Westminster and Holyrood, the home of Scotland’s parliament, had been over-investing in tech firms – many of which the report suggests can’t grow – while skipping over firms with greater potential.
Researchers from St Andrews, Glasgow, and Stirling universities said that policy makers mistakenly believed high growth firms to be exclusively tech firms such as university spin-outs. It also underlined another alleged miscomprehension from Government that these firms where largely backed by venture or angel funding, suggesting that most were in fact supported through bank loans or retained earnings.
Report author Dr Ross Brown of the University of St Andrews said: “Our research clearly shows that there is a mismatch between the nature of high-growth firms and the policies which have been developed to support them. The vast majority of high-growth firms are in fact well-established firms from traditional business sectors and do not equate with the hypothetical ‘techie’ view of these firms. At present, through their interventions, policy makers may be over-subsidising technology-based firms who are incapable of growing. In the main, public policy is largely ineffective in this area which could be undermining economic growth.”
He added: “The UK has some fabulous growth-oriented firms (e.g. BrewDog and Skyscanner) but in the main these tend to be in consumer-oriented or service industries not R&D intensive sectors like life sciences. This is particularly the case for regions such as Northern Ireland and Scotland which have less well developed high-tech sectors than the south of England.”
The report can be found in full here.