Press play to listen to this article
Voiced by artificial intelligence.
— HSBC has acquired the U.K. arm of Silicon Valley Bank.
— Think tanks are beefing up their tech units as the next election approaches.
— The U.K. may be on the cusp of banning TikTok from government devices.
Good morning,
We’re coming to you a few minutes later this morning to cover the sale of Silicon Valley Bank U.K. We hope you had a more relaxing weekend than the officials, regulators, bankers and trade body leaders who worked all hours to get this deal done.
Get in touch with the team, Tom Bristow, Mark Scott and me, Annabelle Dickson, on email. You can also follow us on Twitter @NewsAnnabelle @TomSBristow @markscott82. Tom will be back in your inbox tomorrow morning.
AND BREATHE: In the last few minutes the British government has announced the banking giant HSBC has acquired the U.K. arm of the stricken Silicon Valley Bank. It is a big moment for both the science and technology industry, and Rishi Sunak’s ambitions to make the U.K. a technology and science superpower. It comes after round-the-clock crisis talks at the highest level of the U.K. government over the weekend.
Treasury words: In a statement released at 7 a.m. Chancellor Jeremy Hunt said: “Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order. HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.”
Devil in the detail: Those affected by the collapse of the bank, including the all-important supply chain and employees, who spent the weekend wondering if they would be able to pay their bills and staff wages, will be relieved that a solution has been found, and that depositors can access their cash as normal. But as the dust settles they will be looking to see what the terms of the takeover mean for their businesses.
Quick recap: The Treasury, industry, regulators and Bank of England have been in crisis mode since the sudden bank run and capital crisis at SVB in the U.S. last week. The bank was taken over by U.S. federal regulators, and the Bank of England announced on Friday that SVB UK was set to enter solvency too. The Times’ Katie Prescott has a nice piece about some of the British start-ups who would have been at risk from a collapse, with one warning a loss of cash could have prevented her business from bringing its product to market.
Moves to reassure: Coming a matter of weeks after Prime Minister Rishi Sunak announced plans for a standalone science and technology department, there have been serious worries about the impact on the industry, and the wider economy, in government. In a pre-budget broadcast round Chancellor Jeremy Hunt warned there was a “serious risk” to companies in the sector, and signaled very quickly he was willing to step-in. Prime Minister Rishi Sunak, a former banker and self-confessed tech enthusiast, also weighed in. Speaking to reporters as he crossed the Atlantic for a long-planned trip to the U.S. he said the Treasury was “making sure there is a solution that provides operational liquidity for people’s cash flow needs.”
Lobbying effort: What has been striking is just how efficiently and effectively the start-up sector mobilized. Tech founders quickly dashed off a letter to Hunt claiming there was an “existential threat” to the sector. By Saturday afternoon Science and Technology Secretary Michelle Donelan and Treasury minister Andrew Griffith were meeting industry figures for a virtual roundtable. A Treasury official told Morning Tech the cast list included representatives from UK Finance, Founders Forum, CFIT, Coadec, Tech Nation, Innovate Finance, Tech UK, Entrepreneur First, BVCA, Balderton, Zinc, BIO Association, Partner Augmentum and the FSB.
The next debate: The SVB saga will undoubtedly lead to plenty of soul searching about how to prevent a repeat in the future. Asked by reporters if he was satisfied Bank of England Governor Andrew Bailey was overseeing a robust regulatory environment for U.K. banks, Sunak replied: “Yes.” Shadow Chancellor Rachel Reeves gave a flavor of the tack the opposition might take in the days ahead. She told the BBC the collapse was a “wake-up call” that the U.K. had been over reliant on foreign capital for investment.
Cross-party support: The cross-party call for action has also been strong. Reeves was quickly out on the airwaves urging a swift announcement and suggesting “different answers” to the problem from the prospect of guarantees, to working with the U.S. government on a rescue.
Budget: The startup lobby has welcomed Whitehall’s response to the crisis so far. It gives ministers an opportunity to earn some good will ahead of the budget on Wednesday, when entrepreneurs find out if the Treasury will follow through with controversial plans to cut R&D tax credits.
Science and tech funding: The chancellor’s statement will also be a test of how serious No. 10 and the Treasury are about the new Department for Science, Tech and Innovation (DSIT). A senior DSIT official told Morning Tech they expected a “range of announcements and funding” to back the new science and tech framework. The long-awaited semiconductor strategy is imminent and would involve significant investment, so no surprises if that comes Wednesday too.
 |
MONDAY: The updated Integrated Review on defense and security is expected to be published. Look out for sections on cyber and the role of science and tech. DSIT Secretary Michelle Donelan to ask MPs to give more time to the Online Safety Bill.
TUESDAY: Ofcom chief executive Melanie Dawes will be questioned by MPs on the DCMS committee at 10 a.m. about the regulator’s work. NHS bosses will also be quizzed at 10 a.m. about digital transformation by the Health and Social Care Committee. In the afternoon the Lords’ Communications and Digital Committee continues its investigation into digital exclusion.
WEDNESDAY: Budget, budget, budget and more budget. But before all that, at 11.30 a.m. it is DSIT questions in the Commons. If you’re in Brussels visit the U.K. Innovation and Tech Show.
**A message from Google: As devices have become a daily part of growing up, it’s important that kids learn, play, and explore online without finding something they shouldn’t. To help, Google is turning SafeSearch on by default for people under 18 years old, so inappropriate content is automatically filtered out when they search online. Learn more.**
IDEAS FACTORIES: As Britain’s political parties mull their policies ahead of an election expected next year, and British lawmakers grapple with how to boost economic productivity, the think tank sector is hoping tech policy ideas catch their attention.
Beefing up: Over the past 12 months a raft of think tanks have hired dedicated science and technology point people, with a growing number of researchers now working on innovation issues from how to regulate artificial intelligence to what the U.K.’s research and development tax regime should look like.
Change Central: Politicians often see tech as a “side geeky issue,” Benedict Macon-Cooney, chief policy strategist at the Tony Blair Institute (TBI), told POLITICO’S Annabelle Dickson. It’s actually the “central change happening in the world today,” he added, explaining all of the institutes’ politics and policy teams work on tech.
Across SW1: The center-right think tank Onward, free market Adam Smith Institute and stalwart of SW1 policy wonk world, Centre for Policy Studies, are among those that have skilled up on tech in the last year. Read our report here.
TOUGHER US REGULATION: Bank lobbyists believe the U.S. Federal Reserve may now be encouraged to press ahead with tougher rules that it was just beginning to discuss before SVB’s meltdown, our colleagues in Washington report. The Biden administration has agreed to backstop all depositors for the bank’s U.S. entity.
CHINA HIT: News of SVB’s demise has also rocked China’s start-up and venture capital industry, the South China Morning Post reports.
META LAYOFFS: Facebook’s parent company is preparing to lay off 13 percent of its staff again this year, according to the Wall Street Journal.
TICK TOCK: The government is preparing to ban TikTok from official devices in light of a security review by GCHQ, the Sunday Times has reported. A government official did not dispute the report when asked by Morning Tech yesterday.
U-turn? DSIT Secretary Michelle Donelan previously told POLITICO that TikTok use was a matter of personal choice for UK officials – a line also aired by a spokesperson for the prime minister. But the guidance appears to have shifted following the review by the National Cyber Security Centre, a division of GCHQ. The Sunday Times said use of the app on personal devices in Whitehall won’t be banned, but that security guidance would be issued setting out the risks.
Falling in line: The move brings the UK in line with a number of other Western nations that have taken steps to restrict government access to the app. Our colleagues in Brussels have mapped out where European nations stand on the issue.
Fighting back: TikTok, whose parent company is headquartered in Beijing, has repeatedly said it doesn’t share data with China, pointing out that its data centers are located in other countries. As POLITICO’s Clothilde Goujard and Laura Kayali reported last week, the company is currently engaged in a counteroffensive to assuage European politicians’ fears over Chinese surveillance.
BIG JOB ALERT: The Government Office for Science is looking for a director to lead the organization. The salary is up to £93,000.
SCIENCE SUPERPOWER: Astronomer Martin Rees and economist Mariana Mazzucato are among leading names who have told the Sunday Times how Britain can be transformed into a science and tech superpower.
UK APP STORE PROBES: The Competition and Markets Authority set a May target to wrap up its initial investigation into Google’s requirement for some app developers to use Google Play Billing for in-app purchases which started last year. It also has a May goal for further analysis and review of its investigation into Apple’s app store, which began in 2021.
CHOOSING SIDES: POLITICO’S Pieter Haeck tells the story of how the Dutch turned on Chinese tech.
Morning Tech wouldn’t happen without Oscar Williams, Emma Anderson and Grace Stranger.
**A message from Google: When online family safety experts Internet Matters asked children about life online, three out of four said the internet was important for learning things they didn’t get taught in real life. Growing up online helps feed kids’ curiosity in ways only dreamed about even 10 years ago. But, naturally, parents worry about what their children might find on the internet. To help, Google has made SafeSearch the default setting for anyone under the age of 18 years old, so inappropriate content doesn’t show up in their searches. We also turn off Autoplay on YouTube, and filter access to apps on the Play Store. These new settings are one way Google is helping families be safer online. Learn more.**
