The Communications and Digital Committee has called on the government to do more to celebrate successful wealth creators and foster a culture where entrepreneurs are incentivised to stay in the UK.

The House of Lords (HoL) committee has published a report, AI and creative technology scaleups: less talk, more action, warning that the UK risked becoming an ‘incubator economy’.

This referred to an economy whereby innovative companies start up before moving to other markets or selling to foreign companies.

The report said that barriers to successful scaling up in the UK included limited access to capital compared to other nations, challenges in recruiting in-demand tech talent, and a business and investment culture that can be too risk averse.

It concluded that the government should not be complacent about the health of the UK’s scaleup scheme, and that its ambition of making the UK the best place to scale an AI business would need concerted effort and a mindset shift across the public sector.

Furthermore, the committee warned that a complicated ‘spaghetti’ of well-intentioned government schemes, including financial reforms, tax credits, investment incentives, and innovation-focused initiatives, were introducing further barriers and bureaucracy.

It called on the government to “do better by doing less”, by resisting the urge to launch new schemes and instead focus on consolidating and streamlining existing programmes.

Key recommendations set out in the report included: ensuring a joined-up industrial strategy; accelerating financial reforms; championing entrepreneurial success; streamlining public support for innovation; and committing to AI delivery.

“The UK has the potential to be a powerhouse of growth for AI and creative tech companies,” said inquiry chair, Baroness Stowell.

“However, we are at real risk of becoming an incubator economy instead, where UK start-ups develop innovative products and services before selling out or moving abroad, so other countries derive the economic benefit.

“Too often it’s a case of UK begins, other countries cash in. That has to change.

“The government must be ambitious in its approach for our brightest AI and creative tech scaleups, ensuring that the UK's most innovative companies receive the recognition and support they need and deserve.”

---