The House of Lords Science and Technology Committee’s second report into the UK’s failure to retain and scale science and technology firms has described the government’s visa policies for global talent as “counter-productive”.

With the Trump administration’s $100,000 fee for high-skilled workers’ H1-B visa, the committee has urged the government to “roll out the red carpet” for talented scientists and entrepreneurs who want to come to the UK, rather than red tape.

Adrian Smith, president of the Royal Society, said the UK has a visa cost system, which is, on average, 17 times more expensive than in any other country. “It is insane,” he told the committee. “Again, it keeps going back to the lack of joined-up stuff across government. DSIT (the Department for Science, Innovation and Technology) will say, ‘We want global talent’, and the Home Office will say, ‘We will try to put you off’.”

The committee’s second report of the session, Bleeding to death: The science and technology growth emergency, highlights a continued failure of the UK to support a thriving science and technology ecosystem. The report warns that the UK has seen a procession of promising science and technology companies moving overseas rather than scaling here. Its inability to retain the economic benefits of its R&D endeavour is a fatal flaw in any growth strategy.

Robert Mair, chair of the House of Lords Science and Technology Committee, said: “The UK’s failure to scale its science and technology companies has reached a crisis point. We have witnessed a procession of promising science and technology companies choosing to scale overseas rather than in the UK.”

Risk-averse and inflexible government procurement is blamed by the report’s authors for shutting out small and medium-sized enterprises from government contracts. Combined with the lack of larger technology companies based in the UK that could provide contracts, the report found that startups often have no choice but to seek equity funding from overseas, which can lead to a loss of control over the company.

The report’s authors call for the government’s “laissez-faire approach to technological sovereignty” to change. “All too often, we have allowed promising UK science and technology companies and lucrative contracts to be acquired by overseas investors, especially in the US,” they said. “We must nurture and support these companies to remain here, anchoring them firmly into the structures of government, academia and commerce, and make it the obvious choice for them to grow in the UK.”

Labour’s Industrial Strategy aims to make the UK a digital leader. It sets out overarching targets for the UK to become the third-best place in the world to scale up a technology business, and to achieve the first trillion-dollar tech company in the UK by 2035.

To achieve this, the committee said there needs to be coordinated action across government departments and public bodies, including No 10, the Treasury, DSIT, the Department for Business and Trade, the Department for further Education, the Home Office, delivery departments, UKRI, Innovate UK, the British Business Bank, the National Wealth Fund, procurement authorities in government, and regulators.

“This coordination has proved difficult to achieve in the past, particularly when departments pull in contradictory directions,” the report’s authors warned.

Mair added: “The government will need to use every lever it has to support UK-based science and technology companies and entrepreneurs, and to encourage private investors to do the same. By unlocking institutional investment, changing the culture around innovation, and organising its efforts in procurement, public investment bodies and regulatory reform, the UK government can still stop the bleeding and reap enormous rewards for the nation.”

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