‘A mixed bag’: UK tech reacts to Budget 2023
The UK’s tech ecosystem has welcomed a raft of measures announced by Jeremy Hunt in the 2023 Spring Budget, but the chancellor is facing criticism from some quarters over “notable omissions” and policies they say do not go far enough.
On Wednesday Hunt outlined measures including a business expensing programme, confirmation of 12 regional investment zones, changes to R&D tax credits along with AI and quantum computing investment projects.
“Despite setbacks in the past year from government, the chancellor has today put the UK back on the pitch when it comes to the global competition for science and technology,” said Julian David, CEO of industry body techUK. “However, the job is not done.”
David said there were “notable omissions and frustrations” from the 2023 Budget, pointing to no update on the long-awaited semiconductor strategy.
Hunt’s decision to only partially reverse previous cuts to the R&D tax credit scheme has also been met with backlash from tech startups and SMEs.
“The changes to the research and development tax credit scheme are an example of giving with one hand while taking away with the other,” said Jonathan Prescott, partner and director at Manchester-based investor Praetura Ventures.
“By incentivising larger businesses more than the wider startup community, the Treasury risks undermining the chancellor’s vision to make the UK home to the next Silicon Valley.”
However, Gerard Grech, CEO of entrepreneur network Tech Nation, said the 2023 Budget is a “positive indication of the UK government’s commitment to becomin a science and technology superpower”.
“The recent intervention by both the government and the private sector to facilitate the sale of Silicon Valley Bank is a shining example of what can be achieved through collaboration between the private and public sector and a clear vision,” added Grech.
However, the goodwill that Hunt earned from the UK’s tech community for helping to prevent the collapse of Silicon Valley Bank’s UK arm is already fading.
Ritam Gandhi, founder and director of digital product agency Studio Graphene, said the 2023 Budget was a “mixed bag” and that Hunt “overlooked some key issues inhibiting innovation and growth”.
He added that measures to boost funding for scaling businesses were “kicked down the road to the Autumn Statement”.
There has been positive response, however, to the government’s extension of childcare support, which stakeholders say could help more women begin or stick with a career in tech.
Naomi Timperley, who sits on the board of Tech London Advocates Women in Tech and Women in Leeds Digital, thinks the extension of childcare provisions from nine months to four years is a “game changer” and should always have been in place.
The government’s investment of £2.5bn into quantum computing, spread over 10 years, allows the country to “reinforce its position” as a leader in the sector, said, Richard Murray, co-founder nad CEO of ORCA Computing.
“As the government recognises the huge potential that quantum can offer industries such as defence, healthcare, energy and finance, this funding gives us a chance to breakthrough commercially and lead the world in supplying scalable quantum computers that will change the face of computing.”
James Palles-Dimmock, CEO of Quantum Motion, said: “The UK is becoming a low-risk place to undertake high-risk ventures, largely as a result of world-leading research supported by government and successfully spun out of universities.”
However, Palles-Dimmock says that cross-border collaboration on quantum computing still needs to occur, with a focus on manufacturing and talent to advance the technology.
Starling Bank’s founder and CEO Anne Boden praised the measure to write off the full cost of IT equipment will “give businesses a significant incentive to invest and support additional job creation”.
“With the corporation tax increase also moving ahead, we’re delighted to see that the government will compensate for that by introducing a new enhanced capital allowance, which is a step in the right direction to stimulating business investment and getting the economy back on track,” said Tim Mills, managing partner at ACF Investors.
Increasing SEIS limits in April received support from investors across the UK and is a “huge significance for the ecosystem”, according to the Fred Soney, co-founder and partner of venture capital firm Haatch.
Not all criticised the partial reversal of R&D tax credit cuts, with Stuart Grant, CEO of Advanced Research Clusters, saying he was “delighted to see the government act in response” to the calls to change course.
Beyond the Golden Triangle
Whilst the government’s plan to create twelve regional investment zones has been widely approved by the UK tech community, the University of Southampton’s startup accelerator believes its local area has missed out.
Ben Clark, director of Future Worlds accelerator, University of Southampton, said: “It’s very concerning to see that the south coast has been left out. The South East, South West, and particularly Southampton, for example, is a leading source of innovation alongside the ‘Golden Triangle’, so this oversight is personally disappointing, yet unsurprising, to see.”
The UK managing director and CCO of GoCardless, Pat Phelan, said investment zones and policies to encourage people to return to work were “promising tactics to power up the economy”.
However, he said the UK needs to “push through” and implement changes announced last year to improve the Seed Enterprise Investment SCheme”.
Looking ahead to the Autumn Statement, Hunt teased he will return with measures to make the London Stock Exchange a “more attractive” location to IPO a company.
London has “multi-faceted” issues that need a “concerted and joined up series of measures” if it has any hope to compete with New York, said Mills.
The London Stock Exchange recently missed out with Cambridge chip designer Arm opting to list in the US despite lobbying from UK politicians.