Today’s Autumn Statement contained good news for the tech and digital sector. The Chancellor showed in his first big set-piece speech on the economy that he understands some of the main drivers behind our industry. Here’s a summary of some of the key announcements.
At a time when the UK technology sector is particularly concerned about its ability to retain talent, it is gratifying to see the Government paying particular attention to the startup community with a number of measures.
”I am taking a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies, rather than growing to scale,” said Hammond.
The Treasury is to review the financial barriers that prevent many UK startups from scaling up, assisted by Damon Buffini, the former head of private equity firm Permira. The Government also said that it would step up procurement from small businesses, which could help many in the tech and digital sector. At the same time, there was welcome confirmation that the Government intends to reduce corporation tax to 17 per cent by 2020, making it one of the lowest tax rates in the developed world.
A number of measures should be particularly helpful to startups that are looking to scale up to become international businesses.
Venture Capital funding:
The Government said it would invest £400 million into Venture Capital Funds via the British Business Bank. This growth capital will unlock at least £1 billion from the venture capital community and enable startups to scale effectively in a globally competitive sector.
The UK has a thriving venture capital scene which is integral to the success of the tech and digital sector. This is a welcome boost from Government that will help the investors that are active here to prioritise funds for UK companies at a time when other European countries are stepping up their efforts to promote themselves to tech companies with global aspirations.
The Government will contribute £1 billion to assist the private sector investing in full-fibre broadband and to support trials of 5G mobile communications. Business rates relief for new full-fibre infrastructure for a five year period is also welcome.
The UK is already a digital nation in many ways, but far too many communities are still not receiving an adequate broadband speed, which can transform daily lives and help entrepreneurs to set up businesses in areas where creating jobs has been a challenge so we are extremely pleased to see this step.
R&D funding for Science & Tech:
A £2 billion fund to provide more tax relief for businesses and university departments that are spending money on research and development in key areas such as robotics and artificial intelligence will be established.
Science and innovation play a central role in many tech firms and in helping to create a modern, productive economy. These announcements give further details on the Government’s ambitious plans to bolster innovation spending, which amount to the largest increase since 1979. If the UK is to stay competitive globally, research and development is vital and we should aim to raise our overall level of R&D spend. This move will also help to calm fears that such funding would decline sharply with Brexit.
A £23 billion fund to boost productivity over five years is being developed, this will be available to some tech and digital businesses, particularly in the area of digital communications.
Measures to boost productivity are extremely welcome, but we would also like to see measures to plug the skills gap which are perhaps even more pressing for the tech sector. There was little directly to help companies invest in the training and skills building they need.
Transformational Tech Corridor:
The Chancellor announced investment in a new rail route between Oxford and Cambridge.
We have six of the best universities in the world in this country and establishing a quick rail route between the two oldest, Oxford and Cambridge, will help to increase the knowledge transfer between these two great centres of learning and research, that are both thriving tech hubs in their own right. Rightly, plans for much-needed investment in critical road infrastructure around the country will also help some of the UK’s fast-growing tech hubs outside the capital.
The Chancellor was right to highlight the productivity gap between London and the second and third biggest regional cities. With 1.56m people now working in the tech and digital sector in the UK, the importance of the tech and digital sector, and the innovation and research that supports it, can be seen in this raft of measures.
Gerard Grech, CEO of Tech City UK, said: “Philip Hammond demonstrated that he is actively listening to the needs of those in the tech community, who are busy working to build businesses that have the potential to be global winners, as well as transforming many of our traditional industries.”
“We welcome the Chancellor’s latest package of measures to enable startup growth through venture capital funding, to boost the infrastructure of the UK through 5G and fibre, a growth corridor between two of our best Universities and further funding for research and development.”
“The next key step is to ensure that all these initiatives from VC investment to R&D come together so that the UK’s position as a global leader in tech can be maintained and the country can continue to attract the best and brightest talent from around the world”
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