Chancellor Must Back Tech Innovation to Supercharge Economy

21 Nov 2016 03:34 PM

techUK calls for Autumn Statement focused on innovation for a highly dynamic economy.

Innovation is the key to growth. To make a success of Brexit, the UK needs to put itself at the forefront of innovation in the development and adoption of new technologies and new business models that will define the 21st Century. We are well positioned and need to be resolutely forward-looking, planning for the long-term and investing in our capability to be a more productive and more dynamic economy.

Both the Autumn Statement and next year’s Budget should focus on strengthening the UK’s innovation infrastructure for the long-term. From driving up investment in R&D to putting in place the conditions to enable the private sector to invest in the next generation of mobile and broadband services, the Government should be using its long term fiscal policy and new emerging Industrial Strategy to improve the ability of the economy to achieve sustained growth.

Commenting, Julian David, CEO, techUK said: “With his first Autumn statement, the Chancellor has the opportunity to spell out his intentions to create a highly-dynamic and innovation-led economy, which is open to international trade, talent and investment. Offering world-class connectivity, and building an environment of constant innovation and improvement across the UK is going to be key to making a success of Brexit.”

Specifically, techUK would like to see measures for:

Boosting Innovation Investment

• Progressively grow R&D spend as a proportion of GDP to 3% by 2025 through increased funding for Innovate UK. Expand R&D tax credits for firms researching and developing new products in the UK and widen the scope of the scheme to allow for more process innovation. Increase the level of the R&D tax credit under the Large Companies’ Scheme.
• Drive business investment – HM Treasury should undertake a comprehensive review of Capital Allowances Regime in light of technological change and ensure that it incentivise investments in digital transformation required to drive productivity growth across companies in all sectors.

World-leading Digital Communications Infrastructure

• Commit to establishing a more stable regulatory environment for communications infrastructure that encourages sustainable investment in next generation broadband and 5G wireless technologies.
• Announce a new broadband infrastructure investment fund giving infrastructure operators access to build new networks. We believe that there is appetite from private funds that the Government must leverage to provide the communications infrastructure the UK needs.
• Fund a world-leading test bed for new technology solutions so that the UK leads the charge in gigabit services on trains.

An Industrial Strategy with Digital at its Heart

• Establish a catalyst fund for Fourth Industrial Revolution (4IR) technologies based on driving innovation across convergent sectors.
• The Treasury should take this opportunity to supercharge the current smart city demonstrators in the UK, announcing another round of funding for large scale demonstrators. The current £10m funding commitment in Smart Cities for the CityVerve project has already leveraged an additional £6m investment from the private sector.
• In order to make good on the Government’s vision to be a global leader in Connected and Autonomous Vehicles, the Statement should build upon existing pilots and centres of excellence, and create of a federated virtual testing environment.

Unleashing a Global Britain That is Digital

• Dramatically scale funding for export support for tech companies to help new and existing exporters access new overseas markets.
• Strengthen the capacity of Department for International Trade to attract overseas investment and ensure that existing investors remain committed to the UK as the best place to locate, scale and invest in a tech business.
• Build major international network of UK Tech Hubs in key strategic markets, using the excellent model of the UK Tech Hub in Israel.

Skills and Talent for the Digital Age

• Scrap plans to introduce the immigration skills charge and postpone planned increases to Tier 2 minimum salary thresholds until a new smart immigration strategy has been developed that takes full account of the UK’s changing relationship with the European Union.
• Explore potential tax credits for investing in domestic digital skills initiatives and returner schemes to encourage people to return to the sector after a career break.
• Provide an additional £50m to support continual professional development for teachers in the delivery of the computing curriculum. This will be key for ensuring the next generation of young people have a positive experience which equips them for new roles.
• Support the scaling of local digital inclusion initiatives to ensure that all citizens across the UK are able to reap the benefits of digital. This will be key to ensuring that the new right to digital skills in the Digital Economy Bill is implemented.

Smart Energy for Global Britain

• Expand compensation provision for non-commodity energy costs to protect growth in energy efficient but intensive sectors, such as data centres.
• Upgrade the provisions of the Energy Technology List by increasing capital allowances and simplifying procedures. Review the Carbon Price Floor and maintain the freeze post 2020.

Building Capability for Policy-Making in a New Data Era

• Increase funding for the Information Commissioner’s Office to help UK businesses to prepare for implementation of the General Data Protection Regulation (GDPR) which will come into force before the UK leaves the European Union.

Digital Devolution as National Opportunity

• Digital transformation should be directly linked to devolution deals. Ensure a unified approach to build smart cities and smart communities.
• Increase funding for local government digital transformation, with a focus on leadership and capacity. Build on successes of Government Digital Service existing remit, such as the Verify project at local level.
• Expand the remit of the Digital Academy at the Government Digital Service to include local government. This will be key for ensuring there is a national coordination point to provide guidance and support capability-building for local authorities in achieving digital transformation.