Budget 2020: Invest in tech to unleash Britain’s potential

9 Mar 2020 02:17 PM

The UK Government must invest in tech to accelerate growth, level up the country and tackle the climate emergency.

In its submission to the March 2020 Budget, ‘Fast Forward’ techUK sets out its proposals to achieve the Government’s aims of accelerating UK growth, levelling up the country, and taking on the climate emergency in order to unleash Britain’s potential.

Figures released by DCMS last month show that the tech sector continues to be one of the leading lights of the UK economy, growing 7.9% from 2017 to 2018, nearly six times faster than the economy as a whole and adding £149 billion overall. This equates to more than £400 million per day.

The submission sets out a number of proposals across three priorities for Government: accelerating UK growth, levelling up the country, and tackling the climate emergency.

Accelerating growth

Putting digital at the heart of business will lead to productivity gains. To achieve this the Government must:

• Secure £100 million for a digital adoption fund that will help over 100,000 UK businesses get their first foot on the digital ladder towards greater productivity.
• Create a digital business link of experienced programme managers to deliver digital upskilling advice to businesses across the country.
• Fund an ambitious clusters programme to match the world-leading enterprise zones found in China and Israel.

Levelling up the country

To make sure that the benefits of the Fourth Industrial Revolution are spread across the country, this Budget should contain plans to:

• Press ahead with  rollout of UK broadband infrastructure by setting out a road map to full fibre and unlocking investment by matching the 2029 business rate relief available in Scotland, in England.
• Fundamentally change the way we do research and development (R&D) through the creation of a UK ARPA, a high-risk, high-reward research agency to attract world-leading scientists and support a step change in the way the UK does research and science.

Tackling the climate emergency

This Government must be ambitious in its plans to use the power of technology to take on the climate crisis and allow the UK to secure a global comparative advantage in green tech. Progress towards this can be made by:

• Launching a new Centre for AI and Climate Change at the COP26 conference in Glasgow.
• Creating an energy route map to help the UK’s world-leading data centre sector decarbonise, making the UK the lead destination for green data, and supporting the rollout of e-vehicles across the country.

techUK CEO Julian David yesterday said:

“The new Chancellor has an opportunity, unlike any other in recent times, to be ambitious in accelerating UK growth, levelling up the country, and taking on the climate emergency.

“He must recognise tech has a fundamental role to play in solving all three of these, whether that be in addressing the UK’s deep-seated productivity problems, creating the infrastructure to enable the Fourth Industrial Revolution, or using powerful tools such as AI to decarbonise the economy and give the UK a global greentech comparative advantage.

“We also want this Government to be ambitious in the creation of a UK ARPA. This would be a welcome step to fundamentally challenge the way we do R&D in this country, putting booster rockets beneath the UK’s industrial strategy and expanding our capacity to develop generation-defining technologies at home.

“By following the suggestions set out in techUK’s budget submission, the new chancellor can achieve his aims and lay the groundwork for a prosperous new decade for people, society, the economy, and the planet.”

You can read the full suggestions in techUK’s budget submission here.

Headline proposals in the techUK budget submission ‘Fast Forward’:

Digitisation of SMEs and building tech clusters: techUK has set out a three-pronged approach based on a digital adoption fund, digital business links, and tech clusters. Each of the three seek to offer support to companies at different levels leverage tech to succeed.

• Digital Adoption Fund – the UK tends to be in the middle of the league table compared to its European competitors. For example, 42% of all UK enterprises buy cloud computing services; the equivalent figure in Finland is 65%, in Sweden 57%, and in Denmark 56%. techUK has proposed a relief fund of £100 million to help companies make initial purchases of cloud services, ERPs, CRMs and accountancy platforms to improve their businesses. The fund would allow over 100,000 businesses a 25% discount on these types of systems (approx. £3,500 p.a. for a license). Rates could be varied, and specific regions targeted.

Long tail productivity remains a persistent problem, limiting overall UK growth. We need an ambitious package such as this one which could put over 100,000 businesses on the digital ladder.

• Digital Business Link – aimed at more advanced businesses thinking about digital improvement. The programme will help businesses receive impartial advice from skilled programme managers tasked with improving digital uptake and productivity increases. techUK estimates the cost of running a network of sufficiently experienced ICT project managers across 38 Local Enterprise Partnership zones at around £10 million per year.

For established SMEs, using digital platforms can play a vital role in expanding their business. However, too few are taking it up. Just 18% of SMEs use digital platforms to export, for example. To allow business to use technology to scale, we need to offer them a place to go when they ask, ‘what can tech do to take my business to the next level?’

• Tech Clusters Pilot – both Israel and China have been hugely effective at developing enterprise zones that encourage co-habitation, knowledge sharing, and growth of businesses within specific industries. techUK believes the UK should seek to do the same with key technologies here in the UK, helping already leading businesses come together to build international centres of excellence. We believe clusters should blend regulatory tax benefits alongside dedicated Government support and guidance within the cluster. This is not about picking winners, but about supporting existing champions.

We already have impressive hubs, such as autonomous vehicle and battery development based in the West Midlands, and medtech and fintech solutions based in Edinburgh and Leeds. However, we need to be proactive in turning these into international centers of excellence, similar to the Beer-Sheva cybersecurity cluster in Israel.

A road map to full fibre and supporting investment: The Government has made ambitious commitments to rollout full fibre by 2025. We support these ambitions. However, to get there the Government must do two things:

• Present a full road map for the delivery of these pledges to build confidence in the timetables established and enable investors to make key decisions. This plan should be based on an ‘outside-in’ approach, where rural and less commercially viable areas are prioritised, and include the creation of a regulatory framework that will maximise private capital in the ‘final third’.
• Match the fibre rates exemption that exists in Scotland until 2029 in England to support long-term investment. [HT5] 

Full fibre and 5G are the essential building blocks of the digital economy. Without the delivery of this infrastructure there is a limit on what we can achieve for the UK digital economy.

ARPA: DARPA has powered much of the US’s tech success, with projects responsible for the development of generation-defining technologies for the internet to touch screens. To be successful a UK ARPA needs:

• People - APRA’s main resource will be its people, identifying a pipeline of excellent talent and demanding projects will be key to success. These world-class scientists should work on these demanding challenges for two to three years before spinning out into the private and research sectors.
• Size - ARPA needs to be small and light. It should not have a physical headquarters but be a panel of experts from Government and industry to identify challenges, along with talented project managers to ensure delivery.
• Culture - the real prize of ARPA is to challenge the way the UK does research, moving and creating acceptance for high-risk, high-reward approaches. To do this the agency must be kept separate from Government bodies to avoid managing out risk and ‘culture capture’.

techUK has a unique insight into ARPA with some of DARPA’s biggest partners in our membership. We want to work with Government to create a long-term shift in UK R&D and one which has a mission statement to put boosters under the UK’s industrial strategy.

Green tech solutions - Ahead of COP26 techUK has put forward a number of proposals to grow the green tech industry in the UK, as well as help the Government reach the net zero target:

• Builld on existing plans for an International Centre for AI and Climate Change, deploying the cutting edge UK AI indusrty to take on the climate emergency. The centre could be launched at COP26 in Glasgow.
• Develop an energy route map for data centres. techUK has set out comprehensive policies on supporting the greening of the data centre sector. The UK is already a leader here. Each new data centre contributes between £397 million and £436 million GVA per year to the UK economy. Ensuring the UK is the world host for green data will be important in creating a long-term comparative advantage in green tech.
• Provide extra support for e-vehicles, such as phased VAT reduction and scrappage schemes, particularly on LGVs and HGVs. Support for electric company cars and other lease and rental schemes will help grow the market for business and secondhand e-vehicles.

A joint study by BT and Accenture highlighted that with the right policy framework and climate leadership, digital technologies could support reductions of 50% of overall carbon emissions. Green tech is also a huge growth and export opportunity for the UK. Becoming a world-leader and exporter in green tech will allow us to hit the net zero target while maintaining a pro-growth agenda.