Burnham, Healey and Reynolds: Britain's Growth Moment?

Chancellor of the Exchequer John Healey MP and Prime Minister Andy Burnham (Simon Dawson / No 10 Downing Street)

Yesterday, 21 July 2026, Lord William Hague, Chancellor of Oxford University and a former Leader of the Conservative Party and Foreign Secretary, used his column in The Times to argue that Britain is far from a lost cause: the country is not ungovernable, he writes, and there remains a route out of its current fiscal bind. His central point is that Britain's difficulty is one of conversion, not invention. But conversion is not only a fiscal or regulatory design question. It is a culture question, and it plays out in two places that policy alone cannot reach: how UK corporates behave when they have capital to deploy, and how international investors read Britain's political stability when deciding whether to commit for the long term.

John Healey, the newly appointed Chancellor, and Jonathan Reynolds, back at the newly expanded Business department - where I spent eight years on and off as a specialist, have a narrow window to address both. If they don't, the next ‘why did Britain build it and someone else own it’ story is already being written.

The diagnosis is right

Hague's Times column and his LinkedIn post the same day, present a genuinely useful frame for the new Chancellor: Britain doesn't have an innovation problem, it has a conversion and commercialisation problem. Arm, DeepMind and the steady stream of Oxford spinouts are the proof points. The country builds extraordinary science and then watches the commercial upside, and often outright ownership, migrate abroad. Hague's prescription borrows from international case studies of fiscal turnarounds and from Amir Hegazi's The UK Innovation Blueprint, which argues for aligning regulation, tax, visas, procurement and education around commercialisation rather than invention.

I do agree with his view. But, I'd go further on the prescription, because the piece stops at institutional architecture and doesn't touch the two variables that actually determine whether any of it works: what UK companies do with their own capital, and what the rest of the world believes about Britain's staying power.

What international investors actually see

Here's the part that doesn't make it into a column about fiscal architecture: Britain isn't actually short of capital interest. The UK closed 2025 with around $23.6 billion in venture capital investment, a 35% increase on the previous year and the second-highest total globally behind the United States, ahead of China, India and Germany. On paper, that's not a country the world has stopped believing in.

The trouble is where that capital comes from, and where the ownership ends up. Roughly 57 corporations globally launched new venture investment arms in 2025. The overwhelming majority came from Asian corporates, particularly in Japan, China and Korea, with Japanese heavyweights like Fujitsu, Mitsui Chemicals, TDK, Hitachi and Toyota all expanding existing funds on top of that. British corporates were largely absent from that list. When UK-invented technology needs a strategic corporate backer willing to write a long-duration, ownership-retaining cheque, the buyer is disproportionately not British. Imagine how that is perceived by UK innovators and entrepreneurs.

That's not investors losing confidence in the UK. It's UK corporates declining to show up for their own innovation base, while corporates from other economies are increasingly willing to. In fact, many international investors look at the UK as a shopping destination and this in itself creates an issue of job creation, scaling and risk to sovereignty, a critical issue in today’s growing multipolar world.

The culture Whitehall doesn't set

This is where I part company with a purely policy-architecture reading of the problem. The government can build the visa route, the procurement pathway, the regional cluster strategy, all of Hegazi's ten steps. None of it fixes a UK corporate sector that simply doesn't invest at the rate of its peers in other countries which invest in their homegrown innovation.

And the numbers are stark. Whole economy investment in the UK sat at around 18.9% of GDP through 2025, the lowest of any G7 nation, a position Britain has held for most of the last three decades. Strip it down to business investment by private companies specifically, and the IPPR's analysis puts the UK at 11.1% of GDP, against Japan's 18.2%, France's 12.7% and Germany's 12%. That gap compounds. Fewer machines, less R&D infrastructure, less risk capital in circulation, and fewer UK corporates willing to be the strategic investor of first resort for a UK-invented technology.

This is the layer which in my opinion we need to expand on, and it's the one I'd put in front of Healey and Reynolds first: British boards have not been culturally conditioned to treat venture-style investment in domestic innovation as a normal use of corporate balance sheets, the way their US and Japanese counterparts have. That's not a tax rate problem alone. It's a mindset problem, and mindset problems don't move because a minister gives a speech about them. They move when the economics and the right policy levers are re-engineered so that the culturally cautious choice and the commercially rational choice point in the same direction. And at the same time headlines should be the outcome of not the announcement, but the delivery and the difference that has been made.

Perception is policy

There's a second audience that we need to talk about: the international investors, sovereign wealth funds and family offices who decide, from a distance, whether Britain is a place to commit patient capital. They don't read Whitehall reshuffles the way Westminster and the UK media does. They read them as a volatility signal.

The last twelve months have given them plenty to read. A chancellor whose position became subject to open market speculation after a welfare rebellion, with gilt yields moving on the rumour before any policy even changed. An OBR fiscal risks report that pushed borrowing costs higher again in July. A prime ministerial change, a chancellor change, and a business department that's been reshuffled and partially dissolved and reformed within the space of two years, DSIT folded into Reynolds' new Department for Business, Innovation, Science and Trade, with AI policy now sitting with a dedicated minister inside that structure.

None of this is unusual by the standards of a functioning democracy managing a hard fiscal position. But for a sovereign wealth fund, a venture capital company or a corporate venture arm in Tokyo, Riyadh, Singapore or San Francisco weighing a ten-year commitment against a UK opportunity, institutional churn reads as risk premium. It raises their hurdle rate. It shortens their time horizon. It pushes them toward the safer, more legible bet, which is very often not Britain.

Perception, in other words, isn't the soft add-on to the economic argument. For long-duration capital, it's a pricing input.

What delivery, not another policy, would actually look like

Hague is right that this needs courage and multiple fronts moving together - something that is new and will require a new mindset for government. Yet, where I'd differ is on sequencing and mechanism, because in my experience running strategy for investors and governments across these exact corridors, the piece missing from most of this commentary is delivery, not more policy design. Remember, in today’s world audiences, whether the public, businesses or investors, care more about tangible and experienced delivery than yet another policy announcement,

On the economics:

• Incentive design for UK corporates, not new Treasury spend. A favourable tax treatment for corporate capital invested into UK-based venture and growth-stage companies is a nudge, not a subsidy programme. It doesn't require the borrowing headroom the OBR report has just made politically toxic, and it directly targets the 11.1%-of-GDP business investment gap rather than the debt position. This is precisely the kind of measure that should be able to move fast in Healey's first 100 days, because it doesn't compete with the fiscal tightening conversation, it sits alongside it.

• Use the DBT/DSIT merger as a clarity dividend, not just a cost-saving one. Reynolds now holds business, innovation, science and trade under one roof. For international investors, that's a signal that they will find genuinely useful; it collapses the ‘who do I actually call’ problem that has dogged UK inbound investment for years. Government should market that simplification explicitly to overseas capital rather than let it read only as a bureaucratic reshuffle.

• Regional specialisation with a demand signal attached. Hegazi's ‘smart regional specialisation’ point is correct, but it only works if procurement and public investment follow the same regional logic, giving each cluster an anchor customer, not just a strategy document.

On perception and positioning:

• Publish a roadmap that outlives one parliament. Long-duration capital needs long-duration signals. A cross-party commitment on the shape of innovation incentives, even a narrow one, would do more for investor confidence than any single Budget measure in October. Signals like reputation matter, because they create confidence.

• Continuity of ownership, visibly. Healey and Reynolds should be seen operating as a single voice on this, not as Treasury and DBT running separate tracks that international observers have to reconcile. The Office for Investment's job of finding capital that doesn't require government spend and the Treasury's fiscal caution are not in tension if the government says so clearly and often. Treasury has levers that they can use to give the UK business community confidence and freedom to invest in the UK.

• Tell this story where global capital actually reads it. The UK's innovation strengths get relentless domestic press coverage and comparatively little sustained presence in the international investment and corporate venturing press where allocators are actually forming their view of Britain. That's a solvable distribution problem, not a substance problem.

The signals I'd watch for

I've spent the better part of fifteen years sitting across the table from investors, sovereign funds and governments deciding whether Britain is a place to commit capital, across the Japan-UK, GCC-Europe and Southeast Asian corridors specifically. The pattern is consistent: Britain rarely loses on the quality of the science. It loses on the confidence that the science will still matter to the people who invented policy toward it in five years' time.

Hague is right to demand Healey see the big picture before the in-tray consumes him. My addition is that the big picture includes two things a Times column, however good, structurally can't fix from the outside: whether British boards are willing to invest in Britain the way Japanese and American boards invest in their own innovation and economies, and whether the world believes UK policy will hold still long enough to be worth backing. Get the incentive design right and make the continuity visible, and the conversion problem starts to close. Leave both to a change of personnel and a fresh policy document, and this becomes next year's column too.

We’ve been told that the public sector is bootstrapped and it needs to make efficiency savings. Fine. Then what this new government needs is an entrepreneurial mindset and culture that can unlock UK business and entrepreneurs to grow and commercialise their innovations and businesses.