Chancellor Jeremy Hunt said his Autumn Statement needed to tackle the cost of living crisis and rebuild the UK economy. This was the first fiscal event since March 2022 to be accompanied by a set of OBR Forecasts and took place amidst a challenging climate of high inflation.
The Chancellor also made bold statements around a need for better translating innovation into companies; and making the UK the ‘world’s next Silicon Valley’ by delivering post-Brexit supply-side reforms which mirror the success of the City of London in the 1980s regulatory ‘Big Bang’. Changes to R&D Tax Credits announced will be legislated for in the Autumn Finance Bill 2022, and the Government will consult on the design of a single scheme ahead of Budget 2023.
The Government is clear that this will include cloud computing and data as planned, and that R&D Tax Credits are to be considered as part of the total budget envelope for supporting R&D. As Beauhurst noted at the weekend, there is a risk that cuts to R&D tax credits for small companies may inhibit growth and investment at a time when this is badly needed.
We are also keen to hear further details on the Government’s plan for Investment Zones, which will now include universities as key partners. Ensuring that innovative digital businesses can be part of ensuring their success would surely allow Government to build on the models to drive place-based R&D such as the Innovate UK Launchpads, Innovation Accelerators and Strength in Places Programme. The UK Tech Cluster Group stands ready to advise on developing these proposals to ensure digital businesses across the country can help drive recovery from recession; building on our work to deliver on this at the grassroots with university partners in our communities.
Katie Gallagher, chair of the UK Tech Cluster Group and MD of Manchester Digital, said: “Despite the impending recession, the tech industry across the UK regions remains strong and vibrant. While it’s encouraging to see the ambition to become the ‘global Silicon Valley’ and a re-commitment to R&D, we know that supply-side regulatory reforms will only go so far and the Government needs to actively invest in programmes that will help.
‘’We desperately wanted to hear more commitments to help both the tech talent pathways to ease the ongoing skills crisis, as well as firm commitments to help early-stage start-ups which are imperative to growing our tech economy.
“We are eager to hear clarification on which part of the previous Northern Powerhouse and HS2 rail commitments will go ahead, as they will help our NW tech businesses recruit and do business.
“We welcome news around devolution, however, the regions and nations of the UK need even more freedom to make decisions for their own communities and businesses in order to drive innovation and growth that the UK so sorely needs.
“A change to how the Apprenticeship Levy works would have helped businesses unlock more funding to upskill existing staff and bring in new talent pipelines. There should be a huge focus on upskilling the UK workforce, as well as developing our talent pathways right from school age.
“Overall our tech and digital industry across the whole of the UK is strong and innovative, but is being held back by lack of joined-up-thinking around funding in people and skills, as well as ongoing Brexit fallout.”
Ben Shorrock, managing director at techSPARK in Bristol, said:
“It is clear today the UK is in for a rough ride economically; our tech communities right across the UK are the drivers of the innovation that will power us out of this recession. It’s encouraging to see good news like protecting the £20bn annual R&D budget, potentially unlocking capital from insurers and expanding SEIS all of which will support tech growth. However, it’s imperative that the government, when looking at reducing fraud doesn’t throw the baby out with the bathwater and stop our innovative businesses access schemes like R&D tax credits.”