UK MPs Tell the Government to Act Like a Venture Capitalist

It is the sort of suggestion you would never expect from the people whose job is to keep government spending in check. Yet this week, the Public Accounts Committee said Britain’s science funding machine should start behaving more like a venture capital firm. Instead of just handing out grants, MPs argue the government should take equity stakes in the companies that grow out of taxpayer-funded research. When those firms hit it big, the public should get a slice of the pie.

The recommendation landed in a new committee report, described by The Register on 21 October 2026 after it was shared ahead of publication. Its target is UK Research and Innovation (UKRI), the body that distributes billions of pounds in research funding. According to the MPs, UKRI has been too cautious about protecting taxpayers’ interests: it funds the science, the companies cash in, and the taxpayer walks away with little more than a warm feeling. The committee wants that bargain rewritten.

Sir Geoffrey Clifton-Brown, who chairs the committee, was upfront about how odd the demand sounds. “It may strike followers of this Committee’s work that our call for government to take a less cautious approach to taking a direct stake in British innovation is an unusual one,” he said. “But we are a body dedicated to value for taxpayers’ money, not hoarding it. The nations currently leading the global tech race did not achieve their positions by avoiding more entrepreneurial policies. This is a simple case for the government of nothing ventured, nothing gained.”

The uncomfortable numbers behind the idea

The committee’s argument rests on a gap that has frustrated British policymakers for years. Per the Department for Science, Innovation and Technology, UK universities generate more spinouts and patents per pound of research funding than their US counterparts, yet Britain is far weaker at turning that output into thriving domestic companies.

British startups still struggle to raise the growth capital they need to scale without packing up and moving overseas. Meanwhile, universities have what the report calls a patchy record when it comes to making the most of their intellectual property. The result is a familiar British story: taxpayer money helps create something valuable, and the returns flow elsewhere.

UKRI has reportedly been reluctant to tighten its funding conditions, arguing tougher terms could put companies off. The committee rejected that reasoning. “This approach is far too cautious,” the MPs said, urging a review of standard funding terms, including whether equity stakes should become a more normal part of the deal.

What the government has already tried

UKRI gives AI startups free access to taxpayer-funded supercomputers, a perk that would cost early-stage firms a fortune commercially. The Department for Science, Innovation and Technology has also changed procurement rules to give British companies a better shot at supplying specialist AI chips worth around £400 million.

The British Business Bank has also been investing alongside pension funds, giving taxpayers an indirect stake in some of the businesses receiving support. The snag is that pulling more pension money into British tech has reportedly moved more slowly than ministers hoped, and MPs want UKRI to start checking whether its schemes genuinely help companies grow rather than just tallying money handed out.

The North-South funding divide refuses to close

One of the report’s sharpest passages concerns geography rather than finance. London, the South East and the East of England continue to receive half of all UKRI funding, despite years of promises to spread investment more evenly across the country.

The picture is not entirely bleak. The North’s share has reportedly improved from 12 to 20 percent over five years. But Clifton-Brown described the divide as “continuing and unacceptable,” warning that without deliberate targets, progress could easily slip backwards.

The committee is not impressed with the housekeeping either

The report also takes a hard look at how UKRI manages the projects already on its books. One example stands out: an airborne laboratory upgrade that UKRI abandoned after spending £46 million of its £49 million budget. Funding was cancelled five years after the upgrade decision, prompting MPs to ask why the plug had not been pulled sooner.

Elsewhere, around 45 percent of the Science and Technology Facilities Council’s estate is in unacceptable condition, and restoring university research infrastructure would cost an estimated £5.6 billion, according to the report. It also criticised UKRI over supercomputing, saying it failed to ensure a replacement for the ARCHER2 machine would be ready before the current one shuts down, leaving a reported 13-month gap.

The MPs paint a picture of an organisation skilled at spending money on innovation but weak at getting value back. The equity-stake proposal is their attempt to fix the second half of that equation.

Why this could actually work

When a venture capitalist writes a cheque, it takes a share of the upside. When UKRI writes one, it typically takes nothing, so the public bears the risk of frontier research while private investors capture the rewards.

A government that holds equity would also have sharper incentives: a reason to track a company’s progress, to help it find follow-on funding, and to fight to keep it in Britain. It changes the relationship from a one-off transaction into something closer to a partnership.

None of this is without risk, and critics will warn about bureaucrats picking winners. But the committee’s point is simpler. The taxpayer already funds the science. The question is whether the taxpayer should keep walking away empty-handed when the science pays off.

Frequently Asked Questions

What exactly is the Public Accounts Committee asking UKRI to do?

The committee wants UK Research and Innovation to review its funding terms and consider taking equity stakes in more companies that benefit from public research money. The idea is that taxpayers should share in the upside when publicly funded research turns into commercial success, rather than giving grants with no strings attached.

Why do MPs think Britain needs this change?

Per figures cited in the report, UK universities produce more spinouts and patents per pound of research funding than their US counterparts, but Britain is weaker at turning those ideas into successful domestic companies.

What else did the report criticise about UKRI?

It flagged regional inequality, with London, the South East and the East of England still receiving half of UKRI’s funding. It also criticised project management, including a cancelled airborne lab upgrade that cost £46 million of a £49 million budget and a 13-month gap expected between the ARCHER2 supercomputer and its replacement.