The world watched on today as the Chancellor Rishi Sunak delivered a Budget like no other, plotting the course out of a year of unprecedented economic turmoil and giving a glimpse of what he envisages for a post-pandemic economy (full Budget here and overview here).
This Budget comes at a critical time for tech. The past 12 months have seen scaleups step up across society – health, education, net zero – and, despite the circumstances, we’ve seen investment and job creation continue their upwards ascent.
These high-growth companies can turbocharge the UK’s recovery and provide the building blocks of our future economy. This Budget shows promising commitment to harnessing their potential, while addressing some of the obstacles they face.
A new visa route for tech talent
Firstly, the announcement of a new elite, points-based visa route, including a fast-track scheme specifically for tech scaleups. This is deeply encouraging and based on a recommendation of the Fintech Strategic Review which Tech Nation recently partnered on. The new scheme looks set to remove the need for a ‘third-party endorsement’ or company sponsorship and generally simplify the process for tech talent to enter the UK and contribute to our flourishing ecosystem. We know that skills shortages exist across tech, so this intervention should help plug the gaps and maintain the sector’s growth.
And we know that tech visas are in high demand. Tech Nation’s Global Talent Visa has seen applications jump by 45% and 48% over the past two consecutive years. Visas are critical for encouraging founders to set up businesses in the UK and ensuring the sector can reap the benefits of international expertise. A welcome announcement and we’ll continue to work with HM Government to help make it fit for the future.
The best place to IPO
The UK has now created over 80 tech unicorns – almost three times as many as our nearest European rival, Germany – and has another 136 ‘futurecorns’ in the pipeline. However, to maintain our position at the front of the pack, we have to become an even more attractive country to list a company.
The Listings Review, strongly welcomed today by the Chancellor, should help lure the tech giants of tomorrow from overseas and ensure high-growth British companies don’t look elsewhere to IPO. One of the key recommendations is formalising the creation of dual-class share structures – key to ensuring tech founders retain greater control of the companies they’ve built.
In a bid to maintain global competitiveness, consultations are also being launched on R&D tax reliefs and Enterprise Management Incentives. As the business world evolves, our regulatory environment has to evolve to keep pace.
Future Fund: Breakthrough
Another key announcement is £375 million for the new Future Fund: Breakthrough, which builds on the success of the Future Fund. This new iteration should give investors and founders the capital and commitment they need to continue to grow and will be focussed on the most innovative, R&D-intensive businesses.
Last year the UK attracted a record $15 billion in venture capital funding, but regional inequalities persist: the probability of a tech firm getting equity funding is up to 50 per cent lower in nearly all regions outside London. We also know that deep tech and greentech companies are often at a disadvantage when it comes to accessing venture capital due to the considerably longer timescales they operate on. There is an opportunity now as we recover to use the new Future Fund: Breakthrough to begin to bridge these gaps.
Levelling up regional tech ecosystems
Tech can play a pivotal role in the government’s levelling up agenda, but addressing regional inequalities in investment and digital adoption is key. The proposed UK Infrastructure Bank set to be located in Leeds will invest in public and private projects across the country and be backed by an initial £12 billion of government money. It’s a promising recognition of the need to channel more support into the regions and should help local tech ecosystems to build sustainably.
A desire to support existing businesses across the UK to boost productivity and embrace digitalisation was also present. As part of the Help to Grow programme, SMEs will have access to free digital training and given a 50% discount on productivity-enhancing software, too. These businesses form the bedrock of local economies and so futureproofing their operations is vitally important.
Boosting digital skills
Upskilling and reskilling the workforce is essential for the jobs of the future. A new £2.9 billion Restart Scheme will launch this summer to provide tailored support to over 1 million unemployed people and help them find work. The Kickstart Scheme, which provides fully-subsidised jobs for young people at risk of long-term unemployment, was also emphasised, with 120,000 vacancies being created so far. As was the Lifetime Skills Guarantee, which gives adults the chance to build their skillset through fully-funded courses covering areas such as digital. Coupling these with other brilliant programmes such as Digital Boost and The Skills Toolkit shows the government is serious about addressing skills gaps faced by scaleups and reskilling in the face of automation.
The drive to Net Zero
The Chancellor also showed a commitment to driving towards our net zero targets – which we are delighted to see considering our industry-shaping Net Zero programme and work building the Tech Zero Pledge. The Budget outlines support for the development of green energy innovation schemes as part of the £1 billion Net Zero Innovation Portfolio, issuing of the UK’s first sovereign green bond and a new wave of investment into energy innovation. This includes £20 million for floating offshore wind tech and a £68 million competition for energy storage prototypes. Across the country, exciting greentech scaleups are beginning to reshape the market and reshape the world we live in, too. And their long-term objectives need to be met by long-term backing.
UK tech is critical to a swift recovery and for shaping the economy of the future. Tech Nation is excited to partner with the government on redrawing our economic roadmap and supercharging our vibrant, UK-wide tech sector via enhanced access to finance, talent, markets and customers. Scaleups will be the driving force in this process and this Budget demonstrates that the government backs our high-growth tech companies to build back better, faster and, most importantly, greener.