A kick-start for infrastructure and innovation investment
This blog post was written by our Public Affairs team at Brands2Life.
If you missed last week’s overview of the Autumn Statement, you can find it here. Today we provide a deep dive into the key announcements for the tech sector and stakeholders’ reaction.
Many expected last week’s Autumn Statement to be a modest affair, but it actually included several big-ticket investment announcements for the tech sector. Chancellor Philip Hammond’s ambitions were loud and clear: to “build on our strengths in science and tech innovation” and “to borrow to kick-start a transformation in infrastructure and innovation investment”.
£23 billion boost for productivity
At the Statement’s heart was a new £23bn National Productivity Investment Fund (NPIF) to support the priority areas of R&D, digital communications, transport and housing. techUK’s Charlotte Holloway welcomed this “focus on backing tech and unleashing a new wave of productivity”, while Matt Clifford of Entrepreneur First praised it as a “‘once-in-a-generation’ opportunity” to invest in Britain’s future prosperity.
The Chancellor also spoke of driving collaboration and technology transfer between business and the science community, via a new Industrial Strategy Challenge Fund, modelled on the USA’s Defence Advanced Research Projects Agency. The proposal was welcomed by Research Councils UK, which had previously raised concerns over the impact of Brexit on science funding, and by the Director of the Campaign for Science and Engineering, Dr Sarah Main, as “the most significant investment in R&D I can remember”.
Helping start-ups, scale-up
A trend that ran throughout the Statement was Government looking to partner with the private sector to achieve shared goals. For the venture capital community this came in the form of £400m pledged through the British Business Bank to “help start-ups, scale-up”. Aiming to encourage a UK investment culture to challenge the US, the expectation is that it will unlock £1bn of new private investment, and a doubling of capacity to support exporters. While Russ Shaw of Tech London Advocates welcomed the move as “a really positive step”, others such as KPMG’s Patrick Imbach were more sceptical. “Do we think it’s a game-changer? No, we don’t. The reality is £400m is a drop in the ocean when you look at historic levels of investment into the UK start-up community”, he said.
Transport and digital infrastructure
And the physical backbone of the country wasn’t forgotten either. The Institute for Civil Engineers praised the Chancellor for “listening and acting on the advice of industry” for funding crucial high-value investment in transport and digital networks. Among a raft of local road and rail schemes were commitments to improve East-West railway links and create a tech “brain-belt” between Oxford and Cambridge – the first tangible moves towards a more interventionist Industrial Strategy.
Meanwhile digital infrastructure will receive more than £1bn to support the deployment of new fibre networks across the country and trail future 5G technology. Again, there was an emphasis on partnering with the private sector to achieve this in the form of providing businesses with an incentive, through a 100% business rates relief on fibre infrastructure from April 2017 to 2022.
While he gave to businesses with one hand, some of Hammond’s other announcements could impact them negatively. As he confirmed that corporation tax would fall to 17% by the end of the Parliament, we also learned of new restrictions on the ability to offset profits against carried forward losses. Less positively for some, the Government will consult on changes for non-resident companies, to bring them into the UK tax regime and limit corporate interest expense deductibility and loss relief rules.
A clear message
Talk from Government of “reforming capitalism” and a lack of certainty on Brexit has sent unease through business in recent weeks. Perhaps this was the Statement sent to ease their distress. More interventionist: yes, but with strong nods to the power of the markets and a general proposition of collaboration. The message was clear: the Government wants to be seen to be investing in a strong UK and post-Brexit future.
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