The following is an Executive Summary of a report developed by GQI about the UK’s National Quantum Technologies Programme that was just announced. GQI will have a full 38 page analysis with many more details available later this week. Click here to learn how to obtain the full report.

Executive Summary

The UK National Quantum Technologies Programme has been a globally pioneering initiative in the quantum sector due to its scope and explicit focus on translating research into commercial applications. It has influenced many subsequent initiatives around the globe. As we approach the 10th anniversary of its conception, the UK’s push for science and innovation driven success is entering a new phase. The UK government has announced plans to spend £2.5B over a 10 year continuation of its quantum programme. In an increasingly geopolitical arena, GQI feels the UK is an attractive quantum partner and investment destination.

For those considering investing in the UK’s quantum sector, partnering with it or simply wishing to learn lessons, GQI has prepared its own independent analysis of the programme and the government’s plans. A key starting point is the need to understand how it has evolved in parallel alongside UK policy science, innovation and industry, and the future outlook for the long-term stability of the policy.

Industrial Strategy

In 1964 Prime Minister Harold Wilson promised a new Britain forged in the “white heat of technology”. The experience was more mixed. Margaret Thatcher in the UK and Ronald Reagan in the US forged a new response to the challenges their economies faced based on a radically reduced role for the state in economic decision making. Industrial policy fell out of favor. 

Following the global financial crisis of 2008-09 many started to question whether an untrammeled belief in markets had gone too far. The rise of new global powers with quite different economic outlooks also challenged the western consensus. Despite the strength of basic science in the west, a ‘valley of death’ often faced innovators wanting to bring new technology to market.

Prime Minister David Cameron (2010-16) started to move the UK Conservative party back towards an active industrial policy. This period saw the conception and launch of the UK National Quantum Technologies Programme (NQTP). When Cameron foundered over Brexit, his successor, Theresa May (2016-19) enthusiastically extended this to a full scale industrial strategy. This period influenced the shaping of phase 2 of the programme. 

UK NQTP – the first ten years

Announced in 2013, NQTP Phase 1 (2014-2019) would ultimately spend some £385M to build the quantum sector in the UK. Four multi-disciplinary research hubs were established, each focussing on a different quantum sub-sector (computing, communications, imaging, sensing & metrology). Three skills and training hubs and two centers for doctoral training were created. Community building and outreach activities built awareness.

The UK NQTP was a notable inflection point for the quantum sector world wide. This was the first major nation state initiative to systematically target the development of a wide spectrum of quantum technologies; encouraging collaboration across academic, government, industry and end-use partners; and promoting a complete supply chain perspective. The UK NQTP helped motivate and shape the launch of the EU Quantum Flagship and the US National Quantum Initiative (NQI). Other national quantum programmes have followed in Canada, Germany, France, the Netherlands, Japan and many other countries.

Theresa May’s government was much distracted by the turmoil of negotiating the Brexit withdrawal agreement, so the shaping of NQTP Phase 2 (2019-2024) was noticeably bottom-up rather than politically driven. The work of the hubs continued. The National Quantum Computing Centre (NQCC) was established. Significant funding for industry-led consortia was provided by the Industrial Strategy Challenge Fund (ISCF). Overall government and related industrial spending of about £1B was projected for the 10 years of the programme.

With a year left to run, the result of the programme is a vibrant quantum ecosystem in the UK. This contains a strong mix of leading academic institutes, globally significant startups, SMEs and actively involved industrial majors (inc. BAE, BP, BT, Toshiba and others). 140 businesses have partnered with the programme, over 50 quantum startups have been created. In a sector where talent is widely recognised as a key bottleneck, the programme has funded over 470 PhD candidates. Progress in the UK often features in GQI’s Quantum Outlook reviews of leading quantum sector developments around the world

It would not be right to conclude that industrial policy always works. The UK NQTP has certainly not succeeded in every stretch objective it set for itself. But it has already been an outstanding success.

Scientific Superpower

Boris Johnson’s (2019-22) succeeded Theresa May claiming a popular mandate to ‘Get Brexit Done’. Johnson retreated from the concept of an ‘Industrial Strategy’. However he, and his influential chief adviser Dominic Cummingsm, were outspoken advocates of funding science and innovation as a key driver of long term economic success. The aspiration was to see Britain as a ‘scientific superpower’ and an ‘innovation nation’. This was still an environment in which the NQTP could feel comfortable.

Rishi Sunak took charge of the government just at the time when the next stage of the UK’s quantum plan needed to be finalized. Since the launch of the NQTP, and in no small measure inspired by it, quantum activities around the world have greatly accelerated. Activities in other disruptive technologies such as AI even more so.

The UK government’s new Science & Technology Framework and National Quantum Strategy is a striking re-commitment to quantum technology as a key future sector for the UK.

  • Focus is narrowed down to five critical technologies: AI, engineering biology, future telecommunications, semiconductors and quantum technologies. Quantum not only features, but is grouped with other areas of high complementarity and overlap.
  • Overall government R&D spending is increasing overall from £15B p.a. to £20B p.a. This creates significant headrooms for incremental funding to support the framework’s priorities.
  • ARIA, brings £800M of new funding for high-risk high-reward research programmes.. The next generation quantum sector can reasonably expect to compete for a significant portion of this.
  • Financial market regulatory changes are being introduced to unblock UK capital market funding for high growth tech businesses. This is timely for a quantum sector that has already seen several notable startups go abroad for funding.

UK NQTP – the next ten years

Within the context of the Science & Technology Framework and the 2023  budget statement, the government has published an updated National Quantum Strategy. This provides for an extension of the NQTP over two new five-year phases. £2.5B of public investment is planned  (2024-2034), with an aim to attract at least an additional £1B of private investment into the programme. 

  • The portfolio of quantum research hubs is being refreshed via a competitive EPSRC call for proposals.
  • Accelerator programmes will increase the pace of commercialization.
  • Mission-directed funding will target key goals; £70M has been allocated for for two initial priorities:
    • Quantum technologies for position, navigation & timing (GNSS denied-PNT).
    • Quantum computing testbeds to demonstrate quantum advantage by 2025.
  • Industry-led innovation funding to encourage R&D activity.
  • Training and talent programmes are being expanded.
    • Additional Centres for Doctoral training (to fund 1000 new PhD candidates).
    • Targeted actions to attract international talent.
  • Increased funding and prominence for the NQCC.
  • A focus on developing bilateral agreements with other leading quantum nations.

This more than doubles the programme’s previous rate of investment. The long term horizon promises stability upon which the research programme can build.

In quantum computing, the programme envisages continuing support for developments across a broad range of potential qubit technologies, and also in software, algorithms and applications. In sensing, the programme continues its distinctively broad focus (at least two hubs are envisaged) and with a strong flavor of integrated photonics. 

In quantum communications, a significant evolution in focus is underway. The strategic aim of the programme is now clearly set directly on networks for distributed entanglement. 

This resolves a major, long-standing point of misalignment within government. NQTP research has helped an initial generation of commercial products come to market for a new application in network security known as quantum key delivery (QKD). The NCSC has for many years been notably skeptical of this technology. An existing BT-led feasibility study for a UK National Quantum Network based on this approach is being completed. GQI expects this will now be evaluated on its own industry-led merits. The National Quantum Strategy clearly re-asserts the NCSC’s leadership role on the UK’s cyber security strategy.

GQI feels that it is no coincidence that details of the new National Quantum Strategy are emerging just days after the finalization of the next stage of the AUKUS pact. AUKUS already includes provisions from co-operation on quantum technology between what are already three leading quantum nations. (GNSS-denied PNT is good for many things, but submarines certainly feature high on the list). The NPL (UK) and NIST (US) have already signed a memorandum of understanding to deepen their collaboration in the field of quantum. The research direction of the UK programme now marries neatly with US priorities. GQI suspects this will make joint funding calls easier and more likely.

Key challenges and opportunities

There are naturally many challenges and opportunities ahead. For GQI, the following standout.

  • Horizon Europe & beyond – A ‘scientific superpower’ would naturally expect to participate in the EU’s €95B Horizon Europe research programme. But even as former obstacles to UK association recede, a fraught negotiation is expected over the appropriate fee for joining part-way through the 7 year programme. Deteriorating levels of UK-European collaboration over the last three years mean that the narrow cost-return case for the programme is not the no-brainer it once was, though the other benefits remain substantial. While some see the attraction of a ‘Plan B’ alternative, the academic community is yet to be convinced. The new National Quantum Strategy does not depend on participation in Horizon Europe, there are many strong quantum nations with which the UK could collaborate bilaterally, within and without the EU. The UK will be an attractive quantum partner.
  • Semiconductors – In response to growing global geopolitical tensions and supply chain vulnerabilities,western governments are now racing to promote the re-development of semiconductor fabrication facilities on their own shores. The US is investing $280B via the CHIPS and Science Act, The EU’s ‘CHIPS Act’ is set to mobilize €43B. These programmes include a provision for quantum-ready fabrication facilities.  In a subsidy race, these are rates that the UK acting alone cannot match. A Royal Academy of Engineering review temporarily parks this difficult question.
  • Capital markets – UK tech businesses have historically struggled to benefit fully from financing via London’s large capital markets. The Government is currently implementing regulatory reforms it hopes will unlock the very significant funding these markets can potentially provide.  Significant challenges remain in making a happy marriage between academic founders, venture capitalists and fund managers. Navigating waves of hype and investment winters is required. Due diligence faces unique challenges, and the risk profile of the large investments needed to scale up needs to be fully appreciated.
  • Clusters – Place matters. The UK already enjoys a world-class quantum cluster within the Cambridge-Oxford-London ‘Golden Triangle’. But emerging clusters, and the potential for clusters, exist elsewhere throughout the country. The National Quantum Strategy outlines that Glasgow and Edinburgh are set for significantly enhanced support. This is good for Scotland, but in GQI’s view also clearly merited by the strength of previous work and facilities in those centers. Other choices remain. Attractive clusters are a key way to attract serious inward investment beyond simply offering grants and tax breaks.
  • ARIA (Advanced Research and Invention Agency) – Is a potential major further source of dynamism for the UK R&D sector. There is an opportunity for the quantum sector to attract support from the new agency. This will require big ideas that extend rather than compete with the ambitions of existing programmes.
  • Q-Day – The world needs to prepare against the day when future quantum computers break the cryptographic codes upon which current cyber security depends. Data intercepted and stored today is already vulnerable to this threat. Most experts expect the road to build quantum computers sufficiently large to realize this threat to be long, and so the most likely Q-Day is often put between 2030-2040 (a range consistent with the wider research programme of the NQTP). However, for this purpose GQI emphasizes the need to focus on the reasonable worst case date, which we believe could be as soon as 2027.  This is not a matter narrowly for the NQTP, but for the UK’s wider strategy on migration to quantum-resistant post-quantum cryptography (PQC). The National Quantum Strategy reiterates the existing NCSC position. This strongly mirrors the US approach, which is targeted towards a Q-Day of 2035. Discussions have started amongst key UK regulators but remain at a painfully early stage. GQI foresees disruption when the market realizes a much earlier Q-Day is a realistic danger.  

Future stability?

A key attraction of the new ten-year NQTP is the promise of a stable base for the research programme. How likely is this to be delivered politically?

The Conservative party now trails the Labour Party by 25 points in opinion polls. With the next UK general election due in 2024, 14 years of Conservative rule is set to come to an end. 

GQI’s assessment is that this does not pose a threat to the UK’s growing quantum ecosystem. Kier Starmer’s Labour party has recently unveiled its own Industrial Strategy. The policy currently lacks detail (no doubt politically astute for an opposition so far ahead in the polls), but is clear in its desire to support ‘future success’ such as quantum (and others).  Its mission based approach to government commits to ‘securing the highest sustained growth in the G7’. These are parameters within which quantum proponents will find it easy to work. The desire to be a ‘clean tech superpower’ will not phase a sector that has become well versed in the many ways quantum technology can help.

March 15, 2023