Chancellor Jeremy Hunt announced during his Spring Budget statement [on Wednesday] that the UK is on track to become a 'science and technology superpower'.
The Chancellor announced a host of incentives to attract technology businesses to the UK and make the UK the 'best place in Europe for companies to locate, invest and grow'.
Below we have set out the key tech-focused measures announced.
Research and Development (R&D) Investment
- British Patient Capital: Launched in June 2018, British Patient Capital has become the UK's largest domestic investor in venture and venture growth opportunities (providing funding for high-growth UK businesses including CyberSmart and Quantum Motion). The government has committed to extending the British Patient Capital programme for a further 10 years until 2033-34 and increasing its focus on R&D intensive industries, providing at least £3 billion in investment.
- R&D tax relief: A new higher rate of R&D tax relief for loss-making small and medium-sized enterprises (SMEs) is to be introduced from 1 April 2023, such that SMEs with qualifying revenue expenditure on R&D which exceeds 40% of their total tax deductible expenditure can qualify (on surrendering their qualifying losses) for a higher payable credit of £26 for every £100 of R&D expenditure. The payable credit for SME’s with less intensive R&D expenditure will be £18.60 for every £100 of qualifying expenditure. This should benefit the UK’s startup tech sector and other early-stage businesses with significant R&D expenditure.
- Full expensing: For more established business with qualifying capital expenditure on plant & machinery above the annual investment limit of £1 million, two new first year allowances are to be introduced for capital expenditure incurred on new plant & machinery after 1 April 2023. In particular, expenditure on “main rate” assets will qualify for a 100% first year allowance, giving full tax relief for the expenditure in year. This should give immediate tax relief for a wide range of capital expenditure and should benefit many companies in the tech sector.
Artificial Intelligence (AI)
- Exascale Computer:The government will invest in the region of £900 million to build an exascale supercomputer and to establish a new AI Research Resource, with initial investments starting this year. It is intended that these together, will provide significant compute capacity to the AI community and provide scientists with access to cutting-edge computing power.
- Manchester Prize:/ The government will award a £1 million prize every year to be called "the Manchester Prize" for the next 10 years to researchers that drive progress in critical areas of AI. The government also plans to establish a task force to help advise it on future strategy in this area.
Technologies Regulatory Reform
- The government has welcomed Sir Patrick Vallance’s review into pro-innovation regulation of digital technologies and accepted all of its recommendations. Published as part of the Spring Budget, Vallance requested that the UK government should work with regulators such as Ofcom, Information Commissioner's Office, the Competition and Markets Authority (CMA) and the Financial Conduct Authority to develop a sandbox for testing new AI systems. He also said that the UK government needed to have a clear policy position on the relationship between intellectual property law and generative AI to provide confidence to innovators and investors and facilitate greater industry access to public data. The acceptance has been a welcome reform.
- The government says it has now asked Sir Patrick to report on how regulators “can better support innovation".
- Quantum Technologies: Another key tech focus area of the government was quantum technologies. The government announced it will invest a total of £2.5 billion over 10 years, focusing on realising 4 goals: ensuring the UK is home to world-leading quantum science and engineering; supporting businesses through innovation funding opportunities and by providing access to world-leading R&D facilities; driving the use of quantum technologies in the UK; and creating a national and international regulatory framework.
- Innovation Accelerators Programme: The government has allocated £100 million funding for the Innovation Accelerators programme to 26 transformative R&D projects. This will accelerate the growth of 3 high-potential innovation clusters. This includes the Manchester Turing Innovation Hub led by the University of Manchester, 2 quantum projects in Glasgow led by the University of Glasgow and M-Squared Lasers Limited, and a project to accelerate new health and medical technologies led by the University of Birmingham.
Green technology and Net Zero
- Nuclear technology: With a focus on working to achieve net zero, the government also announced the launch of the Great British Nuclear (GBN) to address constraints in the nuclear market and support new nuclear builds. GBN will launch the first staged competition for Small Modular Reactors, which is expected to attract the best designs from both domestic and international vendors. The government’s ambition is to select the leading technologies by the end of this year and if demonstrated to be viable, co-fund this new technology in the UK. While the initial focus of GBN will be on Small Modular Reactors, further large Gigawatt-scale projects will also be considered subject to value for money, relevant approvals and technology readiness and maturity, to help deliver net zero.
- Carbon capture investment: The government will also provide up to £20 billion funding for early deployment of Carbon Capture, Usage and Storage (CCUS), to help meet the government’s climate commitments.
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