Reactions to the tech policies introduced by the chancellor in Wednesday’s Autumn Statement have been broadly positive from industry figures, although there are criticisms of some of the finer details.
A funding boost for AI compute access, an extension to the Venture Capital Trusts (VCT) and Enterprise Investment Scheme (EIS), positive reforms to research and development (R&D) tax credits and government-backed quantum projects, among other announcements, have gone down well with startups and investors.
“This statement has significant potential to boost investment from the tech sector,” said Julian David, CEO of the trade association techUK. “However, with low growth forecasts, there is no room for mistakes and no time to lose. The government needs to work at pace alongside the tech sector to put these policies into action and get growth going.”
R&D tax credit ‘better’ but ‘flawed’
Among the biggest highlights for tech startups was the announcement that R&D tax credit schemes, which provide financial relief for firms investing in new technologies, would be reformed into a single system with a lower entry threshold and a greater level of exemption.
This policy had been heavily called for by the tech sector and its inclusion came as a surprise to many. While it has been welcomed, many say the government should go further.
“While it’s not perfect, the compromise on a merged R&D tax credits scheme is long overdue and will hopefully give clarity to businesses that have been disrupted for years by so much chopping and changing,” said Philip Salter, founder of the Entrepreneurs Network.
Al Lakhani, CEO of cybersecurity firm IDEE, said the simplification to the scheme “has been a necessity for years” and “the chancellor was right to acknowledge this, albeit very briefly”.
“While we’d also have liked to see an increase in the investment limits, the clause extension at least provides some longer-term reassurance to investors in early-stage businesses,” said David Ovens, joint managing director at Archangels, an early-stage Scottish investor.
Protecting and expanding R&D tax credits was a policy championed heavily by the lobbying group Startup Coalition and its executive director, Dom Hallas.
Hallas said that “the scheme still has its flaws, but as a result of the chancellor’s action…it’s better than it would have been”.
Quantum missions need more capital
An announcement of further government funding to the quantum sector, following on from the release of the National Quantum Strategy in March, had been widely expected, leading to confusion from industry players when Hunt omitted references to quantum computing from his Wednesday speech.
The government did, however, publish the addition of “quantum missions” to the national strategy, outlining in clearer detail some of the broader goals for the technology.
“The government’s quantum missions report signals a critical step forward in the UK’s ability to develop a quantum-enabled economy,” said Gabriela Styf Sjöman, MD for research and networks strategy at BT.
Styf Sjöman said the missions, which include developing quantum computers capable of running one trillion operations by 2035, have “wide-ranging benefits” and would allow “industry, academia and investors to come together to make them a reality and signal the UK’s intent internationally”.
The missions gave the quantum industry further indication of the government’s ambition, however, according to Stuart Woods, COO of Quantum Exponential, there is “concern” with the “government’s financial commitments”.
“As it stands, it will struggle to translate visionary thinking to practical, implementable action,” he said. Woods claimed that, based on the level of support in the US for quantum, “adequately funding these missions could cost £25bn” – ten times that of the current funding pledge of £2.5bn.
Woods said it was “not practical” for the UK to pursue the status of world leader in quantum computing at the current level of government support.
AI compute must be spread
AI has been positioned at the heart of the UK’s tech superpower goals, so it came as no surprise to hear the chancellor announce a £500m funding package to scale access to AI compute.
The AI industry welcomed the policy. Marc Warner, CEO of Faculty AI, acknowledged the move is just “another step” on the “yellow brick road” to harnessing the benefits of the technology.
“AI is already at the heart of this country’s growth,” Warner said. “What’s crucial now for governments, businesses and individuals is to continue making good choices – and that means safe, connected, and human-first AI.”
For Sarah-Jayne van Greune, COO at fintech Payen, the AI investment was welcome, as long as the government ensures support is spread evenly.
“We need investment in all pockets of the UK. From Reading to Leeds and Birmingham to Basingstoke, companies up and down the country need to benefit from the investment.”
For some, the funding doesn’t go far enough.
“£500m is hardly a drop in the bucket compared to the billions of capital we have seen flowing to global AI businesses just in the past year,” said Tara Waters, partner and chief digital officer at the law firm Ashurst.
Extension ‘vital’ for EIS and VCT
The announcement that EIS and VCT tax break schemes would be extended to 2035 was well received by investors, who see it as a significant incentive to drive funding to high-growth UK businesses.
Nicholas Hyett, investment manager at Wealth Club, said the extension “removes uncertainty that has been lingering over the sector for some time”. According to Hyett, the previous expiry date may have put off new entrants and new investors, and by granting the extension, the government has secured a “crucial source of funding for the UK’s blossoming startup scene”.
First introduced in 1994, EIS has become a popular policy among investors and has for some played an important role in UK tech growth.
“For 30 years, the EIS has been a boon for early-stage companies, helping drive billions of pounds worth of investment into UK innovations,” said Moray Wright, CEO of Parkwalk Advisors.
Wright said the extension gives investors and startups the “certainty we’ve been needing”.
Kerry Baldwin, managing partner, IQ Capital, said she was “very pleased” to see the extension, adding that the schemes “play a vital role in unlocking capital for deeptech founders and early stage businesses across the UK”.
A ‘rediscovered sense of confidence’
Despite some grumbling – as is usually the case during a fiscal event – the broad reaction from the UK tech sector to Hunt’s Autumn Statement is one of confidence.
Russ Shaw, founder of Global Tech Advocates, described the Autumn Statement as a “progressive set of policies from a chancellor who continues to side with technology”.
Shaw added the government’s “recent prioritisation of the tech sector” has “imbued it with a rediscovered sense of confidence.”