The Chancellor’s Autumn Statement: Growth & Investment: How will the Chancellor’s Budget deliver for tech?
28 Oct 2024 04:19 PM
Looking ahead to the Chancellor’s Budget, techUK’s Head of Digital Economy dives into what techUK members should expect from the Labour Government’s first Budget in 14 years.
As we approach the Autumn Statement and corresponding Spending Review from the Chancellor, Rachel Reeves, there's a palpable sense of anticipation among members of the UK's technology sector. The anticipation is due to two reasons,
- the messaging around the current Budget has been mixed, sometimes attempting to brace the public and businesses for the worst while fixing the foundations of the public spending debts inherited by the previous Government, and other times focused on the golden opportunities ahead
- We have seen a huge amount of focus on tech both for the government’s growth plans, but also its reform agenda.
As a consequence, expectations are mixed and there is a sense that there will be both good and bad news.
The outlook for the tech sector ahead of the Budget:
Despite a difficult fiscal environment, the performance of the UK tech sector continues to be strong. According to Deloitte, Chief Finance Officers operating in the UK expect to raise spending on digital technology and assets such as software, IT and AI, both over the next 12 months and over a five-year time frame. This demonstrates that demand in technology market is holding up, which has been a continuous feature of the last few years and has been quite anti-cyclical, including during the pandemic.
By the Government’s own measurements, we now know that there are more than 3,000 AI companies in the UK, generating more than £10 billion in revenues, employing more than 60,000 people in AI related roles, and contributing £5.8 billion in Gross Value Added (GVA).
The case has been seen and heard on why technology should be seen as a partner on the road to accomplishing the Labour Government’s growth mission, due to its driving transformation and progress across every sector. The OBR says this has the potential to add £47 billion to the UK economy, through the accelerating the diffusion of new technologies across the economy and public services.
The sector welcomed the industrial strategy green paper, giving tech a dual focus as vertical and a horizontal, with room to add a bit of colour on how to encourage the adoption of digital and AI technologies across the economy.
Furthermore, players in the sector welcomed announcements made by the Chancellor on a pending consultation on e-invoicing, which can improve digitisation, increase productivity and reduce the tax gap, and the push to reform a Digital Transformation Roadmap for HMRC focused on improving customer services for businesses. This has long been called for techUK and is a particular focus in our R&D tax relief plan.
What we’re likely to see in the Budget:
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R&D Tax Credits: techUK members have called for reforms to the UK’s R&D tax relief in our R&D Tax Plan, which outlines steps to improve the performance of the UK’s R&D tax credit. The Government has already announced an expert review and further steps to improve the performance of HMRC and at the Budget we may get more details on how this applies to the R&D tax credit.
What techUK members will hope to see in the Spring Budget 2024:
At the upcoming Budget techUK members will not only want to see the Government take action to support the tech sectors’ ambitions for growth but also show how the plan to lift business investment.
As we know the business investment is crucial for the growth mission – therefore, in order to make this mission a reality, techUK members are hoping reforms that will help business invest at the heart of the Chancellor’s Budget. We believe this can be achieved in these specific areas:
What we might have to wait for after the Budget:
While we expect to see many announcements in the budget there are a few things which we think might have to wait until later.
techUK’s Growth Plan, which formed our response to the Budget consultation sets out outlines the strategic framework needed to drive innovation and sustain growth within the UK’s technology sector.
The forthcoming budget presents a pivotal opportunity to bolster the UK's position as a global tech powerhouse. By prioritising investments in digital adoption, digital infrastructure, R&D, and more, the government can lay a robust foundation for future growth and competitiveness. TechUK members are poised to leverage these opportunities, driving innovation, creating jobs, and advancing the digital agenda for the benefit of all.
Stay tuned for detailed insights and analysis as we unpack the implications of the Chancellor's budget for the technology industry.