A new tech company is formed every hour in the UK, but Philip Hammond, the Chancellor of the Exchequer, wants to see a new startup formed every half hour, an ambition that we can get right behind.
After last week’s announcement on £21m of funding to create Tech Nation to build a national network of digital excellence and more visas for people with exceptional tech skills, the Chancellor gave further evidence that the Government is firmly backing the UK digital tech sector and innovation and science-led industries.
The Budget revealed new money for maths and computer science in schools and funding for new technologies including £75 million to take forward recommendations of the AI review. There was a commitment to invest in 5G and full fibre broadband and new money for digital skills training, as well as other measures to help bring more investors into the sector.
The Government’s response to the Patient Capital Review was also published, which set out measures to help catalyse investment into scaling companies and make sure the most innovative firms have access to long-term funding.
Here’s a summary of the key announcements:
- Committing an additional £2.3 billion to R&D & increasing R&D tax credits to 12%: a strong signal from Government that it wants to stimulate innovation and future proof the UK’s economy which we welcome because for too long the UK has under-invested on R&D compared to our competitors
- Commitment of £500m in a range of initiatives from artificial intelligence, to 5G and full fibre broadband: This is 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: Electric cars are seen as the pathfinder for driverless cars and will keep the UK’s automotive sector at the forefront of tech-led innovation
- Encouraging regulatory innovation via a Regulatory Pioneers Fund: The Financial Conduct Authority is already globally revered for its innovative approach, which has been a huge boost to the fintech sector, but the the Chancellor wants more regulators to work creatively with startups, so that the UK can remain the clear leader in digital innovation
- 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
- Creating a new £2.5 billion fund via the British Business Bank, which will be dedicated to ensuring that more fast growth businesses have access to the capital they need to become the next UK unicorn
- Helping pension funds to finance of digital businesses: with access to capital being a key issue for UK’s scaling digital businesses, we welcome this announcement to help them access long term finance
- Doubling EIS investment for knowledge-intensive companies (startups): doubling the cap of EIS relief for knowledge intensive companies sends a very positive signal to the tech sector that has benefited to such an extent from SEIS and EIS to date.
Some other important budget measures include:
- VAT threshold for small business to remain at £85,000 for two years
- Rises in business rates to be pegged to CPI measure of inflation, not higher RPI – which will save companies £2.3bn
- £30m to develop digital skills distance learning courses
- £35m for better connectivity on trains
- New Centre for Ethics and Innovation to examine the ethical impacts of artificial intelligence
- A new Geospatial Commission to develop a strategy for using the government’s location data and work with the Ordnance Survey to establish how to open up freely the OS MasterMap data to UK-based small businesses.
What we’ve got to say:
Maria Palmieri, Government Relations lead for Tech City UK, said: “Our world is changing fast and the tech and digital sectors in which we work are at the heart of those changes. We very much welcome the Chancellor’s recognition that to continue to be a leading contender in this global industry the UK must boost the maths and computer science skills of our children and young people.”
“The UK already has a world-leading position in many of the technologies that Philip Hammond singled out today, including artificial intelligence and driverless cars, but we must not lose our edge in these area. Committing funding to innovation and allowing increased EIS investment in knowledge-based companies is a strong message to the world that we intend to accelerate the growth of our tech-based sectors, which will help us to future-proof the whole British economy and provide high-quality, high-paying jobs across the whole of the UK.”
Gerard Grech, Chief Executive of Tech City UK: “Several constructive growth and funding initiatives as well as measures were announced by the Chancellor of the Exchequer in this year’s Budget – a lot of it based on direct feedback from businesses. We welcome the UK Government’s commitment to increasing its R&D to 2.4% of GDP over the next ten years, with the intention of increasing its global science and tech standing. While we welcome the Chancellor’s reassurance that the Government will replace EIF funding where necessary, the Government needs to try to resolve this situation quickly. EIF funding is essential to many transactions right across the early stage tech sector and without it deals could seize up – although today’s commitments by the British Business bank will go far to prepare the ground as the UK plans to exit the EU ”
Some useful links: