The UK chancellor delivered an underwhelming Spring Statement today, outlining a series of measures which directly impact the country’s digital and technology sectors.
Philip Hammond gave a generally upbeat outlook for the UK economy, noting it was expected to grow more strongly than previously predicted and lightly touching on the state of Brexit negotiations.
Interestingly, though, Hammond’s first mention of technology featured quite early on in his speech, when he spoke about the creation of new tech businesses being founded somewhere in the UK every hour. Hammond also mentioned London-founded apps such as TransferWise and CityMapper by name.
“We host the world’s most global city, and its international finance and professional services capital.
“Our companies are in the vanguard of the technological revolution.
“While our world-class universities are delivering the breakthrough discoveries and inventions that are powering it.
QVentures launches petition to increase tax reliefs
“British culture and talent reaches huge audiences across the globe.
“And our tech sector is attracting skills and capital from the four corners of the earth,” he said during his speech.
It’s not the first time Hammond has made a point of discussing technology and innovation, and his willingness to do so did not go unnoticed by some UK tech entrepreneurs.
‘Overlooking the North’
Dan Akers, co-founder of Leeds based tech startup LightStart apps told UKTN that he welcomed the chancellor’s remarks about “a couple of key apps” in the ecosystem and their role in driving growth across the sector.
Entrepreneur First announces cohort of deep tech companies
“From a technology point of view, though, there was close to zero mention of the North and the incredible growth that we are seeing in this area,” added Akers, before going on to highlight company’s growing need for funding outside of London alongside the requirement to boost infrastructure.
“The facilities that would genuinely help support growing, entrepreneurial businesses are simplified access to small to medium level funding as the current ‘small, medium, enterprise’ groupings don’t match requirements and also an improved transport infrastructure, especially across the so called ‘Northern Powerhouse’ cities.”
‘Tone deaf on productivity’
“The government made clear in its statement that it is looking to embrace technological change, which is no surprise given that the country’s sector is world leading and a new tech business is founded every hour.
Pruvo raises $1.1m seed funding round
“However, the Shadow Chancellor since announced that UK spending on AI is less than a tenth of US investment. Technology is turbocharging what humans are able to achieve and this will only continue as the future becomes more digital.”
Additionally, Turner went on to question whether the government was “truly dedicated” to AI and tech development, “as regardless of its claim to investigate how the least productive companies can catch up, without significant technological investment we risk worsening the productivity crisis”.
If the government failed to allow businesses to grasp the opportunities afforded by AI, the future of these companies would not be as bright as it could potentially be, argued Turner.
‘More action against late payments’
During his speech, Hammond touched on the government’s seeming willingness to eliminate the continuing scourge of late payments, which he described as a “key ask” from small businesses, which typically struggle with cash flow management issues.
Turner weighed in on this, too. “While it’s encouraging that Chancellor Philip Hammond has recognised the impact that late payments have on our small business economy, it’s disappointing that no further evidence on how the government will tackle this was shared in the Spring Statement.”
“It’s a problem that impacts eight in 10 SMBs and cash flow is the biggest killer of British small businesses,” he concluded.
‘Scaleups not startups’
Jonathan Simnett, director at Hampleton Partners – an international tech M&A advisory firm – said the chancellor was right to recognise the new entrepreneurial spirit that had arisen from societal changes and tech innovation, but urged the government to place a greater emphasis on scaleups as opposed to just startups.
“Too often the government – as in this Statement – conflates ‘entrepreneur’ with ‘startup’ and, yet again, too much attention being paid to very early-stage businesses with their high rate of failure rather than successful scaleups.
“Government could be doing much more to help the survivors thrive by increasing growth rates through encouraging mergers and acquisitions and rewarding those that both successfully sell and acquire in an agile ‘building block’ economy,” he concluded.
Lack of detail
“As a young business looking to scaleup in the months and years ahead, it’s a shame to see little substance in today’s Spring Statement. Hammond obviously does not want to rock the boat amidst ongoing Brexit negotiations and financial uncertainty. However, the UK’s huge collection of startups, who were rightly praised, will have hoped for new policies or initiatives to support their growth ambitions,” he added.
Patni went on to note that UK entrepreneurs were facing “countless small business issues”, which would have traditionally been covered in the annual Budget and Statement.
“But now tech leaders will have to wait until November before learning more about the direction the government will take to support them.”
Overlooking key business issues
“The Chancellor has certainly followed through with his intentions to ensure there is only one significant fiscal statement made by the government each year, with today’s Spring Statement something of a non-event.
“Despite the usual praise offered to the country’s tech startup community – one launches every hour somewhere in the UK, didn’t you know? – the speech offered little to help entrepreneurs or small businesses.”
Ifayemi acknowledged that Hammond had delivered some general reassurances about the state of the UK economy, but was mostly unhappy with the fact that some key business issues had been overlooked.
“Unfortunately, key issues facing startups and scaleups – such as access to skilled workers in the short-term and trade opportunities post-Brexit – have been left unaddressed. Such uncertainty cannot be good for entrepreneurs’ optimism, nor tech SMEs’ attempts to develop plans for long-term growth.”
Finally, Jonathan Richards, CEO of HR software platform breatheHR, welcomed the chancellor’s investment of £80m to help small firms take on apprentices, noting this was a “step towards helping to bridge the ever increasing skills gap our economy is facing”.
“However, with Hammond announcing that the UK has benefited from two of the strongest quarters for productivity growth in six years and the rate of borrowing is at its lowest levels since the financial crisis, an investment into SME should be higher on the agenda.
“There is still a great deal of uncertainty around Brexit making it a perfect time to invest in businesses whose key concerns are staying afloat and their bottom line. In addition, supporting small businesses to assess whether they have a robust way of measuring productivity or admit to having a problem at all will help continue this growth,” concluded Richards.
It seems Hammond’s objective of making the Spring Statement a non-event has been fulfilled. Despite the seemingly positive tone of his speech, it’s obvious UK tech entrepreneurs are still yearning for more attention and detail.