UK Tech Sector Budget 2021
The UK Spring 2021 Budget has been released, and many tech firms are overjoyed with the plans to boost tech across the UK
Chancellor Rishi Sunak announced his first budget just a few weeks after he became Chancellor, which was renowned for its generosity, his second budget, comes after his first year as Chancellor and months of financial turmoil caused by the second wave of COVID-19 infections and is understandably less generous. The 2021 Spring Budget unveils a range of new measures aimed at boosting both tech firms across varying stages development. “This government should be applauded for committing heavily to digital innovation as a route to the economic recovery and supporting jobs,” said Russ Shaw, founder of Tech London Advocates & Global Tech Advocates. The UK’s thriving tech sector rejoiced in Rishi Sunak’s spending plans laid out in the budget, with some saying that the chancellor was “backing tech in a big way”.
The two most notable points in the budget were the Visa Reforms and Future Fund, the latter is fast becoming known as a breakthrough initiative which appears to show that technology is at the heart of the Chancellor’s vision for the UK economy. Visa reforms aim to attract top talent, and include a new unsponsored points-based visa for science, research and tech workers, as well as an expansion of the existing visa programme for scale-ups and entrepreneurs. Futher included is a new fast-track visa to fill the skills gap present within the sector post-Brexit. The visa is set to come with simplified bureaucracy for talent worldwide, and will look to boost fintech, as well as technology operations generally.
Further on the 'future fund'; It is a £375 million UK-wide initiative that will invest in highly innovative companies in life sciences and technology who are aiming to raise at least £20m of funding, the government plans to take a stake in these scale-ups, with private venture capital matching its contribution. “The Chancellor’s commitment of £375m into fast-growing UK tech companies is welcome news as the government outlines its path out of the pandemic, especially as that sector is critical in terms of job creation."
“However, as the Future Fund: Breakthrough looks to match government money with private sector venture capital, we need a commitment that this investment fund is distributed to include businesses with diverse leadership teams."
“In 2020 less than 9% of venture capital was invested into companies that included women anywhere in the founding or leadership team, less than 2% was invested into women CEOs.
“Huge efforts have been made to bring attention to these woeful figures, which have been exacerbated by the pandemic. This is not a pipeline issue, these businesses are there to fund and I hope the government takes this into consideration when they assess which businesses to back.” said Evie Mulberry, a managing director at Astia.
Michael Niddam, a managing partner at Kamet Ventures, said: “We’re delighted to see the government continuing to back the UK’s sharpest entrepreneurs and invest in our thriving tech ecosystem with its announcement of the new Future Fund: Breakthrough.”
But he warned there would of course follow a “huge pressure” on the government to select startups that offer the most growth potential.
Some worry that government investment would unlikely deter tech founders from selling to foreign entities, Simon Arlington, partner at global tech-focused law firm Morrison & Foerster said “With cash-rich foreign investors looking to capitalise on a devalued pound, government investment is unlikely to deter founders from selling their businesses to entities in the US or Asia if the deal is right".
As previously noted, the UK government unveiled a new branch of visa reforms designed to attract top talent, including a new unsponsored points-based visa for science, research and tech workers, as well as an expansion of the existing visa programme for scale-ups and entrepreneurs. Many agree with Seema Farazi, UK and financial services immigration leader at EY, who feels that the government have taken a “decisive and affirmative step forward to position the UK as a leading hub for tech and fintech”. The points based immigration system was initially announced in January but Sunak was eager to make amendments by reducing the requirements migrants in selected fields will need to meet. These amendments have meant that highly skilled individuals in tech, science and research sectors can now enter the country without a sponsor, while a simplified system will be created for entrepreneurs looking to set up in the UK. Sunak skas the idea behind the reforms is to make the UK a "scientific superpower", a view that is supported by Daumantas Dvilinskas, a Co-founder of TransferGo who stated that “true innovation comes through diversity of thought and background, and as a migrant myself, the budget was missing this final piece: a reassurance to foreign talent that there is a home for them in the UK”.
Help to Grow
The budget also saw the announcement of the Help to Grow scheme, which received praise and appreciations from British tech firms, it is aimed at supporting smaller businesses, and includes free digital skills training as well as a 50% government contribution towards productivity software up to £5,000. The scheme has a £520m price tag and will allow for small and medium sized businesses to be eligible to access the funds which will support the provision of staff training and the purchase of software. Although the technology sector is unlikely to directly benefit as much as other sectors from the grants as most will already have invested in training and software, but they could play a role in developing and offering these services, but less directly, this move will help to contribute towards a more innovative and involved UK tech market.
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