Autumn budget – What does it look like for the tech sector?
Two days ago the Chancellor Philip Hammond unveiled the Autumn budget, which showed strong signs of the Government’s support for the UK’s digital tech sector.
“A new tech business is funded every hour, and I want that to be every half hour, so today we invest over £500 million Philip Hammondin a range of initiatives from artificial intelligence to 5G and full-fibre broadband.” – Philip Hammond
Following a recent announcement by Theresa May of the Government’s pledge of £21m to build Tech Nation, advancing the significant work done by Tech City and Tech North, the unlocking of more funding is welcomed with open arms.
There are positive signs that the commitment to keeping the UK at the front of technology innovation will continue, with northern focused initiatives such as the £30m put into digitally transforming the Transpennine rail route helping to accelerate digital and physical growth supporting the economy.
Here’s a summary of the key announcements:
•Artificial intelligence, 5G and full fibre broadband are all of primary focus with a pledge of £500m ◦This investment falls in line with the Modern Industrial Strategy and the Digital Strategy published earlier this year.
•£540m to support the growth of electric cars, including more charging points: ◦Seen as the pathfinder for driverless cars, supporting electric cars will keep the UK’s automotive sector at the forefront of tech-led innovation.
•The support of pension funds used to finance of digital businesses: ◦The UK’s scaling digital businesses can often suffer from a gap in funding, this long-term finance option is attempting to solve that.
•Encouraging regulatory innovation via a Regulatory Pioneers Fund: ◦The FCA’s innovative approach which has been a huge boost to the fintech sector has been well received so far, however the Chancellor wants more regulators to work creatively with startups, so that the UK can remain the clear leader in digital innovation.
•EIS investment allowance doubled, for knowledge-intensive companies (startups): ◦The tech sector has hugely benefited from the SEIS and EIS schemes so far, so it’s great to see the EIS allowance doubled and will hopefully further accelerate the investment landscape.
•Patient Capital Review response unlocks £20 billion of new investment into UK scale-up businesses: ◦This is a firm commitment to ensuring that new long-term investment is available to fast-growing innovative firms over the next 10 years.
•Innovation is key: R&D gets a further £2.3m committed & R&D tax credits increased to 12%: ◦Previously an underinvested area compared to the UK’s competitors, it is great to see that the Government is attempting to accelerate innovation.
•The British Business Bank gets a boost – a new £2.5 billion fund: ◦Aimed at finding the UK’s next unicorn, this pot of money is to be dedicated to ensuring that a higher number of high-growth businesses have access to the capital they need.
What Yorkshire influencers had to say:
Graham Pearce, head of KPMG’s Telecoms, Media and Technology M&A north division commented “The Chancellor has characterised the budget as one that is “fit for the future”. In that context, it is hugely encouraging that the tech sector sits at the heart of that future.
Commitments to emerging technology such as 5G, AI and data science is to be applauded, but it is important that core technology businesses are not forgotten in the chase for the next shiny toy. In particular, the UK has strengths in ‘old-school’ tech sub-sectors such as software, IT services and semiconductor technology.
Tech investment should therefore be made in education, regulation, tax and other incentives to ensure our strength in the tech sector is broad-based and not just those areas that sit at the top of the latest hype curve.”
The Yorkshire Post also pointed out in a recent article that the budget is clearly not for Yorkshire, stating that “The Budget document says it all – six mentions for Leeds, and two for Sheffield compared to 13 and six respectively for Manchester and Liverpool which do now have directly-elected mayors.”
Despite the strong technology clusters within Yorkshire, namely fintech, healthtech and data analytics, there’s still little mention of the region. “If this doesn’t spur political, business and civic leaders from across this region to come up with a definitive devolution plan which empowers Yorkshire, then they will only have themselves to blame if future Budgets also pay ‘lip service’ to God’s own county.”
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