Speaking in the House of Commons, UK chancellor of the exchequer Jeremy Hunt said that Brexit “freedoms” could be leveraged to “turn Britain into the world’s next Silicon Valley.”
Mr Hunt highlighted artificial intelligence (AI), quantum technology and robotics as key areas he believes the UK could excel in. In his speech, he drew upon ‘lessons’ from a previous Conservative chancellor, Nigel Lawson, and highlighted four changes that he believes could support innovation and make the UK a major technology centre. These are:
– By the end 2022, the UK government plans to make changes to EU regulations in five growth industries: digital technology, life sciences, green industries, financial services, and advanced manufacturing. Mr Hunt suggested that these regulations changes will, helped by Sir Patrick Vallance, “support safe and fast introduction of new emerging technologies.”
– Legislating to give the Digital Markets Unit new powers “to challenge monopolies and increase the competitive pressure to innovate.” Mr Hunt believes this could help create a more favourable competitive environment for UK tech companies.
– Increasing funding for the UK’s nine catapults (nine leading technology and innovation centres) by 35 per cent and committing to the Project Gigabit ultrafast broadband roll-out with a view to maintaining the target of 85 per cent coverage by 2025. Project Gigabit ultrafast broadband is the project to connect up 7,000 more remote properties on UK’s Jurassic coastline with fast broadband by 2025.
– Reform of R&D tax reliefs to improve the effectiveness of how public money is spent.
Despite Mr Hunt’s ambition and optimism, tech, communications, and business commentators have been quick to highlight challenges to this vision becoming a reality. These include:
– The effects of the recession (which may last years) and the cost-of-living crisis.
– A predicted fall in GDP, rising unemployment (predicted by the Office for Budget Responsibility / OBR).
– A tech skills gap and 60,000 vacancies in the IT sector.
– A need to give investment help more equally across the country and to close the digital divide.
– Worries that cutting R&D tax credits for small businesses could adversely affect the UK’s most innovative start-ups.
– Concerns that the UK is lagging behind other countries in terms of fast broadband provision and the rollout of 5G, thereby affecting competitiveness.
What Does This Mean For Your Business?
Mr Hunt’s aim and vision to boost the UK’s technology industry and make it a tech centre has been welcomed by many but has echoes of previous pledges over many years to make this happen. The UK has suffered from a tech skills gap for many years and Brexit led to fears that skilled tech workers, many of whom came from overseas, would leave (which happened in many cases), leaving employers struggling to attract new skills compared to other countries. Mr Hunt’s speech highlighted his beliefs, however, that changes to regulations (which in reality, are unlikely to happen until the end of next year) and challenging monopolies could be a way to create a more favourable environment for tech innovation to flourish in the UK.
The idea of cutting R&D tax credits, however, appears to have the potential to be counter-productive to the aim of giving a boost to innovative small businesses. The recession, cost of living crisis, tech skills gap, and the UK lagging behind in terms of fast broadband provision and 5G rollout are very tough challenges that are hard to ignore and so it appears that there’s a lot of work to do to make the UK like ‘Silicon Valley’ although the ambition and the vision are welcomed.