Regular contributor Philip Salter, founder at The Entrepreneurs Network, dissects the Sprint Statement; pulling out the key things every UK tech entrepreneur needs to know about.
It could be worse. The top-line figures from the Office of Budget Responsibility announced in the Spring Statement are less bad than was previously expected. Growth will be 1.4% this year, 0.1% higher than forecast, with the forecast for 2019 and 2020 unchanged at 1.3%. And the forecast for borrowing of £45.2bn in 2017-18 has been revised down from £49.9bn, which is equivalent to 2.2% of GDP. The Chancellor understandably put a positive spin on this.
However, keep your Brexit-compliant English Fizz on ice. As Paul Johnson from the Institute for Fiscal Studies – an organisation so respected for their views on the economy that their website crashed during the Statement from the demand of everyone wanting to know what they thought – tweeted: “To be clear – against a long term trend of at least 2% a year growth, after poor growth since 2008, and compared with growth across rest of OECD, these are not encouraging forecasts.”
Hammond promised to keep it brief, but there was still some announcements relevant to entrepreneurs and the tech industry. One thing we, at The Entrepreneurs Network, were particularly pleased with is his announcement of a review into how to help the least productive businesses catch up with the most productive. This is one of key policy questions of our time – or any time, for that matter, and it’s great to see this government gets it.
The Chancellor also announced a review into how to eliminate late payments to small businesses. This is a tricky issue to tackle – after all, many small businesses won’t want to damage their relationship with key customers – but it’s nevertheless critical for ensuring firms don’t go out of business due to avoidable cash flow problems, and so, reducing competition and growth across the economy.
Business owners owning or renting premises should be aware that the chancellor has brought forward the next business rates revaluation from 2022 to 2021. This is the right decision and in the short term will impact businesses in different areas of the country differently – crudely, those in the south can expect to pay more and those in the north can expect to pay less. In the long run though, renters should be aware that increases in business rates are mostly borne by the landlord, with increases in rates feeding through to lower rents.
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Access to talent – whether through the resident workforce or immigrants – is perhaps the number one issue impacting high-growth businesses. The government is aware of this, promising £500m for T-levels, £50m to help employers roll out placements for T-level students and £80m to support small businesses engaging apprenticeships. Perhaps unknown to many in the tech industry, there is a specific T-level in tech.
There is a growing school of thought in Silicon Valley – rife among entrepreneurs like PayPal’s Peter Thiel and influenced by academics like Robin Hanson and Bryan Caplan – that questions the value of a university education. The Thiel Fellowship even pays students under the age of 23 to avoid it and pursue other work, including starting a business and research. If these ideas take hold and employers start to look beyond the degree, T-levels in tech might take off.
As part of the £190m challenge fund, the Chancellor also announced £95m allocated for the first wave of funding to help roll out high-speed broadband to 13 local areas across the UK. Also in the digital realm, the Chancellor has promised the Government will look at how we transition to a cashless society – specifically, how to make sure people who need to pay with cash are able to do so.
Hammond delivered the spring statement he promised – one that wouldn’t move markets and startle businesses. He even made fun of his Eeyore image, claiming to be “positively Tigger-ish” in his outlook. However, the true test of this government will be how they manage Brexit, which the majority of business leaders still look upon with uncertainty, or otherwise ignored. Behind the politicking he will know that his reputation isn’t secured, and that, like that of his boss Theresa May, it’s intimately tied to the consequences or Brexit.