Chancellor Jeremy Hunt will deliver the Spring Statement on Wednesday and is expected to unveil measures that aim to mitigate recent economic headwinds.
The ongoing cost of living crisis and pay demands from public workers will likely be among the top concerns for Hunt in the mini-budget. However, the chancellor, fresh from securing political capital from the UK tech community for helping to prevent startup lender Silicon Valley Bank UK from going bust, still faces a list of pressing demands from the industry.
Ahead of the Spring Statement, UKTN has put together the top tech policies and changes that the industry will be keeping an eye on.
R&D tax credits
By far the loudest cries from the industry have been calls to backtrack on cuts to the R&D tax incentive policy, which were announced by the chancellor in the Autumn Statement.
The move saw reduced support for SMEs looking to gain access to tax incentives, whilst improving options for larger companies. You can read a full breakdown of the impact on startups here.
UK tech has been lobbying the government for months now to restore R&D support for SMEs to encourage the development of new technologies and up-and-coming businesses that can boost the economy.
The Treasury has been sent multiple open letters from startup advocacy groups pleading to protect R&D tax credits, which a survey from Coadec estimates will cost startups an average of £100,000.
The UK semiconductor industry has been calling for an action plan to protect and boost the country’s standing in the global sector. Pressure has been further added by recent funding legislation from the US and the EU that has created a fear of falling behind.
This pressure has been further exacerbated by the decision from SoftBank to list Cambridge-based microchip company Arm in New York over London, confirming fears that the UK was becoming less attractive for deep tech industries.
The industry has been working with the government to determine the best course of action. While the full publication of the long-awaited strategy is not expected to appear in the Spring Statement, industry sources say there may be an update on its progress or a funding amount provided.
Like R&D, the semiconductor strategy has been a major talking point between UK tech and the government, with figures including Hermann Hauser – who founded the company that would become Arm – and Tech London Advocates signing a letter highlighting the “urgency” of delivering the strategy.
London public market reform
Arm’s decision to list in New York was a major blow to London and is seen as representative of a wider issue with Britain’s public markets in competing with the US.
London advocates have been calling for a reform to the accounting rules required to be listed on the London Stock Exchange.
The Financial Times reported in March that two equity fund managers, Richard Buxton and David Cumming, were calling for an overhaul of pension accounting rules as a way of incentivising London-listed investments.
The managers said a rule that requires companies to hold pension deficits on their balance sheets needed to be removed to increase UK competitiveness.
The Financial Conduct Authority (FCA) came under some criticism following the Arm decision for having too strict financial reporting requirements, which may also receive some attention if the exchange is to be reformed to encourage tech listings in the Spring Statement. The FCA’s chief executive, Nikhil Rathi defended the regulator’s position in the situation, suggesting there were deeper problems with the London market that led to Arm’s decision.
Despite the initial dismissal of Liz Truss and Kwasi Kwarteng’s mini budget, Jeremy Hunt is expected to revive one of its key policies in a scaled back form.
The Investment Zone plan will provide government funding and tax incentives to 12 areas that the chancellor is looking to drive investment into. The zones will have reduced business rates and national insurance contribution requirements. It is the hope of the chancellor to support tech hubs based around universities to drive his tech superpower goal.
The project includes public financial support of almost £1bn spread between the zones, which will receive £80m in government backing.
Quantum funding boost
In another tech superpower measure, the Spring Statement is also expected to include widened financial support for the UK quantum computing industry, in the form of a £2.5bn programme to be spread over the next decade.
While the government has already made clear its aim to ensure British competitiveness in the rapidly growing industry, the new plan will boost the exiting public support for quantum by more than double.
The details of how the government will use the funds to support the industry, and what it will do beyond financial investment remain largely unknown.