UK Chancellor Jeremy Hunt unveiled a range of measures yesterday, as part of his 2023 Autumn Statement, which ranged from overhauling tax credits to additional resource for AI projects.
Typically, during the Autumn Statement, the UK government updates Parliament on the state of the economy, and sometimes announces tax and spending decisions, which was certainly the case this year.
Announcing the statement in front of the House of Commons yesterday, Hunt claimed that the UK had turned a financial corner after making “difficult decisions” following his predecessor Kwasi Kwarteng’s disastrous “mini budget” in September 2022.
“Rather than a recession, the economy has grown… Our plan is working, but the work is not done,” Hunt said.
The UK’s independent watchdog, the Office for Budget Responsibility, tempered this statement somewhat, saying that while growth was better than expected this year, it has downgraded its forecasts for future years.
Nonetheless, Hunt claimed that his statement was “the biggest ever boost for businesses in modern times” and, given that there’s an election anticipated early next year, there were several sweeteners on offer to keep technology and enterprise happy.
Tax cuts
With a UK election expected to come within the next year, and the ruling Conservative Party struggling in the polls, Hunt announced several tax cuts impacting both people and corporations.
For companies, he made the ‘full expensing’ tax break he brought in last year permanent. This measure allows companies to deduct the full cost of new equipment — including IT and tech — from their pre-tax profits.
Hunt also announced £4.5 billion in funding for green technology, with around £2bn bookmarked for the car industry. A sum of £960 million of this is ring-fenced for a “green industries growth accelerator” focusing on renewable energy and carbon capture.
“Taken together we will increase business investment in the UK economy by around £20bn a year over the next decade and get Britain growing,” the Chancellor said.
AI agenda
The government has committed a further £500m over the next two years into innovation centres for AI. This brings the total planned investment into AI innovation to more than £1.5bn, following centres in Edinburgh and Bristol.
“When it comes to tech, we know that AI will be at the heart of any growth,” said Hunt. “I want to make sure our universities and startups have access to the compute they need.”
Earlier this month the government said it plans to triple the funding available for supercomputers supporting AI research to £300m.
Claire Trachet, CEO and founder of tech advisory firm Trachet, welcomed the announcement, saying: “The government’s continued commitment to strengthening the country’s position in artificial intelligence through a further £500m in funding for UK AI will enable tech firms to bring cutting-edge products to market faster and ensure that Britain doesn’t lose its spot as a leader in Europe for this sector.
“Following on from the success of supercomputing centres in Edinburgh and Bristol, the government are doubling down on their ambition to make the UK an AI powerhouse”.
However, managing director of digital transformation consultancy Infinum Jonathan Boakes warned that the investment into AI must come with clear guidelines to make sure that businesses benefit from adopting this new technology.
“The UK government’s allocation of £500m for AI powerhouses and a 25% tax deduction on IT expenditure shows strong support for tech innovation. But there’s huge concern that this investment might not be used wisely,” he said.
“Research shows 78% of UK businesses plan to invest in AI in the next year, but 73% feel unprepared for its integration. Success in the AI revolution demands more than just plugging gaps with cash. It requires strategic planning, workforce training, and expert collaboration to maximise the impact and prevent implementing AI for AI’s sake.
“While the financial boost is appreciated, it must come with clear guidelines and support from the Government to empower businesses in utilising it effectively.”
Quantum computing
Several new policies that were classed as part of the Autumn Statement were announced prior to the actual event. One of those trailed beforehand was a significant investment in quantum computing, which Hunt labelled as his “quantum missions”.
Among the quantum missions announced is a goal to have accessible, UK-based quantum computers capable of running one trillion operations by 2035.
How can businesses use quantum computing?
Other missions focus on funding quantum networks, medical applications, navigation, and sensors for infrastructure – with reports suggesting this will amount to £200-300m, as part of the £2.5bn National Quantum Strategy announced in the Spring Statement.
Quantum Motion founder and CEO, James Palles-Dimmock, praised the announcement of more funding for quantum projects, adding that the UK is “well placed to challenge the dominance of markets like the US in creating the giant technology brands of the future”.
“There is a lot to be celebrated in how the UK is being transformed into a tech-driven economy, with quantum computing at the forefront of this,” he added.
“Credit to the government for its work in removing some of the barriers to execute on the strategy, such as agreements with the US and Australia and visa programmes so we can bring in skilled talent and getting the UK back into Horizon Europe.
“But there is still more needed to be done. It’s worrying that the UK is excluded from some programmes under the European Chips Act and our national semiconductor strategy hasn’t yet provided answers on how we’re going to grow a thriving semiconductor industry, which goes hand in hand with a commercially successful quantum strategy.”
Start-ups and investment zones
Hunt announced new “investment zones” which will focus on green industries and advanced manufacturing, with the West Midlands, East Midlands, and Greater Manchester all named as new areas.
The “mini–Canary Wharfs” provide tax relief and other incentives to companies located in these zones. Hunt added that there will be an additional investment zone in Wrexham and Flintshire. West Yorkshire was unveiled as the UK’s third investment zone earlier this week, with a focus on health tech and life sciences.
Greg Hanson, SVP, EMEA and LATAM at data management expert Informatica, comments: “The budget offers tangible support that will power innovation for high-tech.
“Competition to become a top tech hub is fierce. But in a service-driven economy, technology offers a vital opportunity to differentiate and grow. Today’s announcements will be welcomed by many for helping to create a path that enables the UK to remain at the forefront of disruptive technologies and compete as a high-tech nation.”
Another move aimed at supporting start-ups and small businesses sees the tax rate for businesses not currently making a profit reduced from 25% to 19%. This aims to ease the financial burden on these companies, allowing them to invest more in growth and development, particularly those heavily involved in creating new technologies or improving existing ones.
“It’s encouraging to see the UK government prioritising investment into start-ups, scale-ups and spin-outs,” said Arran Dewar, executive director at SIS Ventures. “As the Chancellor has rightly said, innovation is the key to our future success as a nation.
“Within today’s broad package of investment for innovation, we’d also like to see further consideration given to prioritising investment for those ideas and businesses which are delivering positive impacts for people and planet, not just profit.
“Given some of the significant social and environmental challenges we are facing in the world today, business and science have a huge role to play in helping to find the solutions. Overall, however, the measures announced today should be received as welcome news for innovation in the UK.”