The UK tech industry’s reaction to the new Labour government’s first budget appeared mixed, as the Chancellor of the Exchequer Rachel Reeves announced several measures designed to “drive growth across the country.” These included £2bn and £1bn funding injections for the automotive and aerospace industries respectively to promote green tech innovation, £520m for the government’s new Life Sciences Innovative Manufacturing Fund and £500m to accelerate the rollout of 5G and superfast broadband throughout rural areas.
Investment in the UK’s tech sector will be part-funded by several tax rises, including an increase in the levy on capital gains. Some tech industry figures expressed wariness about how this might impact the overall growth of the sector, including Orgvue chief executive Oliver Shaw, who also criticised Reeves’ announcement of a rise in employer National Insurance Contributions (NICs). This, said Shaw, “will place a significant burden on employers, particularly those in the start-up and scale-up phases.”
R&D woes
Others criticised the lack of any announcements of funding injections for specific high-tech projects. “The distinct lack of investment in technology and AI is so disappointing, especially after the promised exascale supercomputer project was scrapped,” opined Michael Queenan, chief executive of Nephos Technologies. “Previously, the government has been reluctant to expand beyond their inner circle and work with experts from the private sector, but this is how we could become a technology superpower. The UK has plenty of industry experts, the government needs to tap into that to move this country forward.”
For his part, Civo’s Mark Boost cautiously welcomed the government’s commitment not to cut R&D tax relief. Even so, said the chief executive of the cloud computing upstart, “increasing employer national insurance may serve to hinder innovation from these players. Broader investment in the country must not come at the cost of tech companies that can put the UK on a level playing field with Silicon Valley.”
Taxing praise for budget
Others welcomed the introduction of measures in the budget to encourage the use of digital tools among small and medium-sized businesses (SMBs.) “Now, more than ever, SMBs need to leverage digital tools to boost productivity and profitability,” said Sage’s chief executive Steve Hare. “I’m encouraged by the Government’s commitment to the digital economy with initiatives like Making Tax Digital and e-invoicing. These are vital steps toward building a resilient, future-ready economy.”
Russell Gammon, chief solutions officer at Tax Systems, echoed this praise of the government’s investment in new taxation technologies. “Embracing technology to streamline financial processes for businesses will enable easy, efficient and accurate tax reporting. And the government seemingly agrees, with its announcement today that it will be modernising HMRC systems using technology in a bid to close the tax gap by ensuring everyone is paying the right amount of tax.”
