The UK government's plans announced in the Autumn statement mark a change in direction. There is a new emphasis on investing to boost productivity at the expense of deficit reduction. The proposals offer welcome news for innovative businesses. We take a look at the proposals for support to technology and innovation across the UK - do they do enough?
Support for R&D
The government promises an additional £4.7bn in R&D support by 2021 – an increase of about 20% over current levels. This will include:
- A cross-disciplinary Industrial Strategy Challenge Fund to support academic/business collaborations. This will be managed by Innovate UK and the research councils through an evidence-based process.
- Additional funding to be allocated by UK Research and Innovation to support national excellence.
The government also promises a review of the tax environment to improve the UK’s international competitiveness as a base for research.
An extra £100m is promised for the Biomedical Catalyst.
Support for scale-up
Describing it as
“a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies rather than growing to scale”
the Chancellor promises investment of an additional £400 million in venture capital funds, through The British Business Bank. There will also be a review of barriers to access to long-term capital for growing businesses with private equity expert Sir Damon Buffini at the helm.
Some support for Fintech is promised with new expertise brought into government, an annual report on key metrics, a network of Fintech envoys and improvements to guidance on electronic ID verification.
Broadband and 5G connectivity
The Chancellor is aiming high - his ambition is:
"for the UK to be a world leader in 5G. That means a full-fibre network; a step-change in speed, security and reliability"
In more concrete terms, the government is promising a £1bn investment, including
- £400m for a new Digital Infrastructure Investment Fund, to be matched by private finance, for investment in new fibre networks. The aim is to offer full fibre broadband to many more homes and businesses, although replacing Britain’s ageing copper networks with fibre - tackling the "last mile", is a much bigger problem.
- 100% business rates relief for new full-fibre infrastructure.
- Funding to local areas to support investment in a “much bigger fibre ‘spine’ across the UK” aimed at meeting business and public sector demand.
- Funding a coordinated programme of integrated fibre and 5G trials.
- There is a continuing commitment to the Northern Powerhouse Investment Fund and Midlands Engine Investment Fund.
- The government accepts the recommendations of the National Infrastructure Commission’s report on a Cambridge-Milton Keynes-Oxford corridor. The report says that continuing success of the science and technology base across this region depends on a joined up strategy linking transport infrastructure and homes. The government has promised to spend £27m to fund the next stage of development work on the Oxford-Cambridge Expressway, and £10m in development funding for the central section of the East West Rail link.
- Science and Innovation Audits will be carried out in the following areas: Bioeconomy of the North of England; East of England; Innovation South; Glasgow Economic Leadership; Leeds City Region; Liverpool City Region +, Offshore Energy Consortium; and Oxfordshire Transformative Technologies.
- £390m is earmarked for vehicle technologies, including £100m for testing infrastructure for connected and autonomous vehicles.
Some support - but not enough?
Overall, there is plenty of positive news for research and innovative business. But there’s criticism too Michael Kitson, University Senior Lecturer in International Macroeconomics, Cambridge Judge Business School, calls the new investment
“a few piecemeal initiatives which are more symbolic than substantial”
and criticises the investment fund, at about 0.2% of GDP, as
"lagging behind the investment in innovation of most of its major industrialised peers".