It’s been exactly 24 hours since chancellor Philip Hammond delivered his Budget to Parliament, outlining his plans for boosting the country’s technology sector alongside proposals for tax, housing, travel and an overall update on the UK’s economic outlook.
During his speech, Hammond spoke about the need to secure Britain’s future at the forefront of a technology revolution and went on to note he’d like to see more tech businesses being founded here.
Hammond confirmed the government would be investing more than £500m across a range of sectors including AI, 5G and full-fibre broadband.
He also announced an additional £2.3bn worth of investment in R&D, an increase in R&D tax credit to 12%, extra funding to boost the number of students taking up maths at A-level, support for electric cars and a £300m boost to connect HS2 with rail improvements in the North of England.
Perhaps more importantly, though, Hammond confirmed the UK government would be stepping in if funding from the EU were to cease following Brexit.
“Today we’re publishing our ‘Action Plan’, to unlock over £20bn of new investment in UK scaleup businesses.
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“Including through a new fund in the British Business Bank, seeded with £2.5bn of public money,” the chancellor said.
‘Time for action’
Norris Koppel, the CEO of FinTech company Monese, said it was always good to hear promises of further funding being provided for the tech industry.
“To hear that any shortfall in funding that once came from the EU will also be replaced by the UK government will more than likely have made a fair few founders and UK-based investors relax,” Koppel added.
Although largely positive, the CEO went on to say that it was now time to see this in action.
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“If the chancellor wants to see a new tech business created every half hour, and a fair portion of these expanding and creating jobs, it’s likely the sector will need a further injection of capital much sooner than we might think.”
Leon Ifayemi, CEO and co-founder of PropTech startup SPCE, also spoke about the need to take things further.
“Hammond hailed the UK for being ‘at the forefront of a technological revolution’, yet his Budget had gaps in it, which punched holes in his rhetoric.
“On the one hand, investment in digital infrastructure, bringing forward Business Rates revisions, the extension of the National Productivity Investment Fund, £2.3bn investment in R&D, and improving maths and computer science education was welcome news for tech firms. However, his speech contained some policies that may hold back small businesses.”
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One such policy, Ifayemi added, was Hammond’s promise to “crackdown on EIS as tax shelter”. This, the entrepreneur explained, could ultimately result in many lower risk firms becoming exempt from EIS investment – potentially overshadowing the positive announcement that the government will double the EIS limit for knowledge-intensive companies.
“This crackdown is a step in the wrong direction and could hinder the effectiveness of a vital investment scheme.”
Overall, Ifayemi seemed largely unimpressed with Hammond’s proposals, claiming the chancellor had not gone far enough to support the existing batch of small technology firms based across the whole of the UK.
“There were undoubtedly positive steps forward; but dynamic tech startups and scaleups should have been bolstered by more directed policies to improve access to skills, investment and collaboration in the immediate future.”
Unsurprisingly, the government’s willingness to cover any potential gaps in funding in the aftermath of Brexit was well received by members of the UK technology community.
“The Patient Capital Review began the process of reforming investment in fast-growing companies, and we hope that the outcomes of the Action Plan will mirror this commitment to supporting our startups and scaleups. The UK is highly competitive as an international tech hub, but it will require the full support of the government and private sector to maintain this position,” he added.
Additionally, Shaw welcomed the government’s proposed investment in AI, fibre and digital skills and its desire to highlight these as priorities for the economy and as pressing concerns for the future of the UK’s workforce.
A short-sighted approach
Dr James Graves, CEO and founder of ZoneFox, agreed to an extent but claimed the government had failed to recognise the importance of cybersecurity for the country’s long-term future.
“Our digital society entails uniquely modern problems, not least of all the seemingly incessant data breaches, illustrated once again through the colossal Uber hack. Similarly contemporary solutions are a must; as such, the £500m announced to support AI-focused new businesses and the further £2.3bn for R&D will certainly help.
“However, in light of these myriad data breaches and consequent loss of public trust, there’s an unshakable sense that this Budget was a sorely missed opportunity to emphasise the importance of cybersecurity within the digital skills gap. Indeed, there was no explicit reference to cybersecurity at all, which is particularly shocking considering the near-daily headlines.
“Other vital details omitted include the upcoming GDPR legislation — funding boosts to new tech companies will be no good if these businesses fail to comply to GDPR standards, thanks to a lack of education and preparation,” Graves told UKTN.
Despite the government’s seeming efforts to boost the UK technology sector by way of funding specific verticals, it seems they’ve mostly missed a trick when it comes to cybersecurity and the handling of data.
So, while the Budget was not well-received by everyone, it may indeed mark a step in the right direction, even if some of the proposals are being branded somewhat short-sighted.