Chancellor of the Exchequer Philip Hammond has outlined some of the Conservative government's fiscal policy in today's Autumn Statement, placing a keen emphasis on science, technology, startups, and 'productivity'.
Although it's unclear precisely what Hammond meant by productivity, he announced a £23 billion "national productivity investment fund" that will aim to foment a high-skill, high-wage and high living standard economy. There's every chance this will run parallel with the stated mission to boost the technology sector – a point in the Statement he was keen to emphasise.
Hammond said that Britain does not invest enough in innovation – and that the country will need to plug that gap with an extra £2 billion to be made available for research and development by 2021. This is likely to be cautiously welcomed, but it is also in contrast to the fact that EU grants will no longer be so readily available for academics working in post-Brexit Britain.
Hammond also laid out plans to commit £450 million for digital signalling on railways, and £390 million to "build a competitive advantage" in low-emission vehicles and connected autonomous vehicles. Again, this is likely to be welcome news to a degree – but there are problems with self-driving cars even the biggest hitters like Google are struggling to implement, so it is difficult to picture how much of an impact this money will have.
Additionally, Hammond committed to opening up 5G spectrum across the UK, and connecting homes and businesses through a fast "full-fibre" network.
Shaun Collins, CEO of telecommunications analyst house CCS Insight, said: "Any investment in the UK digital backbone is welcome, and the commitment to 5G is admirable. However, realistically 5G services are unlikely to be available before 2020 in the UK. This investment only offers a small step in that direction."
"High-quality broadband has become essential to support an increasingly digital workplace and home," he continued. "The UK has lagged behind other nations, and this has to be addressed quickly."
The government will also create a £400 million venture capital fund with the intent of incubating startups and growing them on British soil – Hammond said he wants startups to grow to scale, rather than to be sold off at the earliest opportunity, and so will launch a Treasury review into accessing capital.
Hammond later name-checked the acquisition of Cambridge-based chip design company ARM by Japanese conglomerate Softbank – seeming slightly at odds with his message about keeping technological success stories in Britain. ARM continues to operate in Cambridge but its valuable IP is now owned overseas. Despite this, he said the Softbank acquisition confirms the UK's ability to perform its role in technological progress.
There were also nods towards clamping down on tax evasion and avoidance – something the technology sector, and in particular big Silicon Valley players, have come under fire for. He claimed reforms here should bring £5 billion to the UK from April 2017, and will pursue "large businesses" which operate at a "substantial profit", but will also cut down on schemes that see large corporations taking advantage of their cross-border structures to manage tax liabilities.
The announcements were met with a welcome response from some corners of the technology industry. Tech UK, a lobby for technology businesses in Britain, said in a statement that the focus on backing tech and "unleashing a new wave of productivity is exactly the vision needed for an uncertain period ahead."
Charlotte Holloway, policy director at TechUK, said: "Investment in innovation is critical for driving tech-led growth and productivity, and it's great to see the £2 billion extra investment in R&D for new technologies by 2021, and a £23 billion productivity investment fund to give a focal point to the level of the UK's national ambition."
But there are other questions raised in the statement – the wider financial outlook was painted by critics of the government as a tacit admission of economic failure, said John McDonnell in his counter-statement.
Former digital minister and MP for Newcastle upon Tyne Central Chi Onwurah told Computerworld UK that the Statement seemed to miss the realities of technology impacting lives today.
"The Autumn Statement demonstrates the Chancellor knows it's important to talk as if he believes tech is important but that he doesn't understand why tech is important or how to deliver the environment tech needs," Onwurah said. "Cliches about innovation, some relatively minor but welcome new funds – though these may prove to be the promised replacements for European funding and not actually new money – but no industrial strategy and particularly no reference to skills."
"The National Productivity Investment Fund does not mention skills, which is stunningly short-sighted. Hammond seems to believe that tech is all about the future. He doesn't realise that it is right here, right now the enabling platform for key sectors and he needs to have a strategy for supporting and developing it."
And proposed changes to the IR35 self-employment tax laws were met with concern by the Association of Independent and the Self Employed. The new terms are designed, Hammond said, to crack down on tax avoidance from self employed workers.
In a statement, the IPSE's chief executive Chris Bryce said: "The Government must now justify this decision. It has chosen to ignore the advice of the business and freelance community. We want to know why. It would be totally justified for contractors to walk away from the public sector."
His comments chimed with Geoff Smith, MD for IT resourcing business Experis, who warned that significant changes to the ways contractors must pay their tax could risk further contributing to a post-Brexit skills gap that is already a reality.
"While HMRC's intentions to amend existing IR35 legislation in a bid to crack down on tax avoidance should be lauded, we're concerned about the impact that the change in regulation will have on the IT sector," Smith said. "In an industry where organisations are already struggling to find the right talent, there is a serious risk of 'brain drain', whereby projects could be ground to a halt until they find individuals willing and able to work under the new regulations."
"In fact, we wouldn't be surprised to see how such a change might encourage existing IT professionals to set their sights abroad to countries courting their talent in a post-Brexit world," Smith said.
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