2017 Autumn Budget presents an ambitious package for tech, but Brexit and growth forecast will weigh heavily on business.
This is definitely a fitness-boosting tech Budget but many will question if it’s enough to prepare the UK for the long uphill road ahead. It sets out a strong package of announcements for tech and innovation. Additional funding for 5G, AI, digital skills, retraining, connectivity on trains, high-value infrastructure and transforming cities sends the right signal about the ambition for the UK economy post-Brexit.
While the Chancellor has identified the right priorities, the overall economic forecast and tight spending constraints means that the amount of funding available is small relative to the growth potential of the sector.
Overall tech investment package
techUK welcomes the significant package of investment into the technologies of the future, including £500 million to support AI, broadband and 5G; £30 million for better connectivity on trains; £1.7 billion for the Transforming Cities Fund; and £1 billion to support high value infrastructure. The additional boost in R&D spending of £2.3 billion to set the UK on the path the to 2.4 per cent of GDP spend on research by 2027 echoes techUK’s call for a powerful signal of intent to build an innovation economy.
We have long been an advocate of the need to support scale-ups. Also welcome is the commitment to increasing patient capital, with £2.5 billion for a new National Investment Fund and increases in the Enterprise Investment Scheme investment limits are positive steps to support tech businesses grow and scale.
In an economy that is characterised by rapid technological innovation, it is vital that our regulators are able to keep pace. Therefore the announcement of the new Centre for data ethics and innovation (£9 million) and the Regulators’ Pioneer Fund (£10 million) which builds on the sandbox approach by the FCA to support fleet of foot effective regulation is welcomed. This will benefit consumers and businesses alike.
Open Data is food for innovation and steps to further the Government’s Open Data agenda will benefit industry and citizens alike. As data becomes openly available it is important that we also protect its quality and integrity. We therefore support a new Geospatial Data Commission, with funding of £80 million, to look at these issues in the round.
The OBR forecasts show the real impact of continuing failure to crack the UK’s productivity problem. techUK would have liked to have seen more demand side measures to boost productivity. Supporting small businesses across the country to digitise and take advantage new technologies is the best way to increase their productivity. That means real work to rebalance the tax system to support those purchasing subscription software and helping educate non-tech businesses on the values of digital tools to reduce costs.
Taxation in a digital age
The Chancellor is right that in a global economy, getting the tax system right will require a global approach. techUK continues to support the Government’s work for an international agreement on these issues and believes that the OECD is the best forum for addressing this issue.
Preparing for the future means investing in digital skills. Without tech talent the UK will not be at the forefront of tech innovations. techUK is pleased to see the Chancellor’s package of £100 million to expand teaching of computing in schools. We have been flagging the urgent need for additional funding since 2014.
The Chancellor is right to acknowledge the need for flexibility in the Apprenticeship Levy. Enabling companies to increase the scope of training available via Levy funds will allow training to meet the needs of new tech innovation.
The reality for many UK tech businesses is that the Budget measures announced today will not make up for the uncertainty created by Brexit. To really be ‘fit for the future’, tech businesses need to know what that future holds.
Putting money aside for a hard Brexit is pragmatic, but does not deflect from the urgent need for progress in the Brexit negotiations, including securing a transition deal on which businesses can make future investment decisions. This may not be in the Chancellor’s hands, but will determine whether the UK thrives or falters in the global, tech-led future, on the horizon.
This article was originally published here, and was reposted with permission.