- 22nd November 2017
- Posted by: Edward Kirkby
- Category: Budget
The budget is less than 2 hours old, but we’ve delved into the red box to analyse how this will effect tech companies and startups.
There will undoubtedly be more information released over the next few days/weeks/months, but the announcements jumping out at us are as follows:
AI – The government will create a new Centre for Data Ethics and Innovation to enable and ensure safe, ethical and ground-breaking innovation in AI and data‑driven technologies. This world-first advisory body will work with government, regulators and industry to lay the foundations for AI adoption, which estimates suggest could benefit households across the UK by up to £2,300 per year by 2030, and increase GDP by 10%. The government will invest over £75 million to take forward key recommendations of the independent review on AI, including exploratory work to facilitate data access through ‘data trusts’. The government will create new AI fellowships, and initially fund 450 PhD researchers, to secure the UK’s leading position in the global AI market.
Regulators’ Pioneer Fund – To help unlock the potential of emerging technologies, the government will establish a new £10 million Regulators’ Pioneer Fund. This will help regulators to develop innovative approaches aimed at getting new products and services to market.
Tech Nation – To secure the UK’s world-leading position in digital innovation, the government will invest £21 million over the next 4 years to expand Tech City UK’s reach – to become ‘Tech Nation’ – and support regional tech companies and start-ups to fulfil their potential. Tech Nation will roll out a dedicated sector programme for leading UK tech specialisms, including AI and FinTech. Regional hubs will be located in: Cambridge, Bristol and Bath, Manchester, Newcastle, Leeds and Sheffield, Reading, Birmingham, Edinburgh and Glasgow, Belfast, and Cardiff.
UK Games Fund – The government will provide a further £1 million to extend the UK Games Fund until 2020, aiding access to finance and business support for early stage video game developers.
Geospatial data – The UK has some of the best geospatial data in the world, and much of it is held by public bodies. The potential economic value of this data is huge. To maximise the growth of the digital economy and consolidate the UK’s position as the best place to start and grow a digital business, the government will establish a new Geospatial Commission to provide strategic oversight to the various public bodies who hold this data. To further boost the digital economy, the government will work with the Ordnance Survey (OS) and the new Commission, by May 2018, to establish how to open up freely the OS Master Map data to UK-based small businesses in particular, under an Open Government Licence or through an alternative mechanism, while maintaining the OS’s strategic strengths. The Budget provides £40 million a year over the next two years to support this work.
Financing growth in innovative firms
The Budget announces an action plan to unlock over £20 billion of patient capital investment to finance growth in innovative firms over 10 years by:
- establishing a new £2.5 billion Investment Fund incubated in the British Business Bank with the intention to float or sell once it has established a track record. By co-investing with the private sector, a total of £7.5 billion of investment will be unlocked
- doubling the annual allowance for people investing in knowledge-intensive companies through the Enterprise Investment Scheme (EIS) and the annual investment those companies can receive through EIS and the Venture Capital Trust scheme, and introducing a new test to reduce the scope for and redirect low-risk investment, together unlocking over £7 billion of growth investment
- investing in a series of private sector fund of funds of scale. The British Business Bank will seed the first wave of investment with up to £500 million, unlocking double its investment in private capital. Up to three waves will be launched, supporting a total of up to £4 billion investment
- backing new and emerging fund managers through the British Business Bank’s established Enterprise Capital Fund programme, unlocking at least £1.5 billion of new investment
- backing overseas investment in UK venture capital through the Department for International Trade, expected to unlock £1 billion of investment
Research and development
Long-term support for science and innovation – Supporting the government’s ambition of increasing R&D investment in the economy to 2.4% of GDP by 2027, the Budget confirms that the £4.7 billion NPIF investment in science and innovation announced at Autumn Statement 2016 will grow by a further £2.3 billion of additional spending in 2021-22, taking total direct R&D spending to £12.5 billion per annum by 2021-22.
The Industrial Strategy White Paper will provide further detail on what this funding will support, including:
- support for our creative and digital industries by developing pioneering immersive technology for creative content, and launching a new AIand machine-learning programme targeted at the services sector
- £170 million for innovation to transform productivity in the construction sector
- new support to grow the next generation of research talent and ensure that the UK is able to attract and retain the best academic leaders globally
Research and development expenditure credit – The government will increase the rate of the R&D expenditure credit from 11% to 12% with effect from 1 January 2018. To provide businesses with the confidence to make R&D investment decisions, the government will also introduce a new Advanced Clearance Service for R&D expenditure credit claims.
To support its ambitions on innovation and R&D, the government is encouraging the best and the brightest international scientific and research talent to work in the UK. The government will: change immigration rules to enable world-leading scientists and researchers endorsed under the Tier 1 (Exceptional Talent) route to apply for settlement after three years; make it quicker for highly-skilled students to apply to work in the UK after finishing their degrees; and reduce red tape in hiring international researchers and members of established research teams, by relaxing the labour market test and allowing the UK’s research councils and other select organisations to sponsor researchers. This is alongside the expansion of the exceptional talent route, benefiting current and future leaders in the digital technology, science, arts and creative sectors.
For further information on the budget and the changes, please do not hesitate to get in touch.