Tech entrepreneurs have called for the Chancellor to “change Britain’s ambition and appetite for risk” in his first Budget today.
In a video address ahead of the unveiling of his first fiscal plan alongside Prime Minister Andy Burham, John Healey pledged to provide “breathing space” to businesses and households.
He also promised to deliver long-term measures to “get energy costs down for good” and to “strengthen national security and our defences”.
“We’ll do all of this responsibly, sticking within tight fiscal rules, and make sure every pound is well invested,” he said.
However Steven Mendel and Laura Ashford, co-founders of Lateral – a private health insurance startup for active over-60s which featured on our recent InsurTech 50 ranking – want to see a more radical plan to back entrepreneurs.
“The Chancellor talks about backing entrepreneurs, but I’d like to know whether this Budget has done anything meaningful to change Britain’s ambition and appetite for risk,” they said.
“We’re asking people to take enormous personal and financial risks to build the businesses that will drive our future growth. Yet too often the incentives facing those same people seem designed to encourage them to work less, earn less and play it safe.”
Mendel is the former CEO and co-founder of ManyPets. He now serves as a non-executive director on the Many Group board and as chair of Bikmo.
His earlier career spans leadership positions at Close Brothers Wealth Management, Christie’s, Barclays Wealth, and consultancy work at McKinsey & Company.
“As a founder with two young children, I’ve experienced that contradiction first-hand. The £100,000 childcare threshold is a particularly stark example of a system that can penalise people for earning more,” he said.
“You can’t build a genuinely entrepreneurial economy through investment incentives alone. You have to make ambition and risk-taking financially viable for the experienced people you’re asking to take the leap.
“If we want more people to take entrepreneurial risks, we need to stop making the financially rational choice the least ambitious one. You can’t build a high-risk, high-growth economy with policies that encourage people to play it safe.”
Ashworth recently wrote for BusinessCloud on the reality of building a startup with a toddler and a baby.
On VCT and EIS investment, the Lateral co-founders said: “The UK does not have the deepest pools of venture capital in the world, but it has historically compensated with intelligent incentives that encourage private investors to back young, high-risk businesses. EIS, SEIS and VCTs are not loopholes: they are part of the financial infrastructure supporting British entrepreneurship.
“Reducing upfront VCT income-tax relief from 30% to 20% changes the risk-and-return calculation precisely when promising companies already face a shortage of growth capital. VCTs raised £918 million in the final year of the 30% rate, illustrating the amount of private money at stake.
“The Government should restore the 30% VCT rate and commit to long-term stability across VCT, EIS and SEIS. These investments ultimately support new companies, skilled employment and future tax revenues; weakening the incentive risks saving money today by sacrificing growth tomorrow.
“Britain cannot compete with America on the depth of its capital markets, so it must compete through intelligent incentives. Cutting VCT relief risks saving the Treasury money today while starving British growth businesses tomorrow.”
On R&D tax relief, they said: “R&D tax relief is designed to encourage companies to invest in innovation by reducing the effective cost of qualifying research and development. For many young businesses, its value depends not simply on the headline rate but on whether the rules and outcomes are clear, consistent and predictable.
“The sharp fall in the number of claims suggests that recent reforms and compliance requirements may be deterring businesses as well as tackling abuse. Fraud must be challenged, but legitimate companies should not face prolonged uncertainty over support on which they reasonably based investment and hiring decisions.
“HMRC should publish clearer information on enquiry times, rejection and appeal rates, and the reasons claims are challenged. The government should also give businesses greater certainty through clearer guidance and a more proportionate compliance process.”
Dame Anne Glover, CEO and co-founder of DeepTech VC firm Amadeus Capital Partners, had this to say on the Government’s package to ‘unlock the opportunities of AI in every postcode’ and scale home-grown AI firms.
“The Government’s commitment to AI is encouraging, and it is particularly welcome to see support for areas in which Britain has genuine strengths, including AI safety and security,” she said.
“The UK will not secure its position in the AI economy simply by becoming a more effective user of technologies developed elsewhere. Adoption, skills, infrastructure and procurement are all important, but Britain must also continue to invent and develop strategically important parts of the AI stack.
“We cannot compete with the US or China on scale, nor can we expect to achieve complete technological self-sufficiency. Our defence is innovation. However, there is an opportunity to become an indispensable international partner by leading in critical areas where the UK has genuine technical expertise, with AI safety and security among the strongest candidates.
“The test will be whether this package supports the creation and growth of innovative British AI companies, rather than focusing principally on the adoption of technologies owned elsewhere.
“The additional £60m for the Sovereign AI Fund and the £60m R&D procurement scheme are welcome. Innovative companies need more than research grants, they need growth capital and a first customer willing to put their technology to work in the real world. Public procurement does the second, and it is often the hardest step for deep tech founders.
“These sums are a great start, but the test will be whether this support helps UK companies keep their intellectual property, attract follow-on investment from private investors, and scale from Britain. Adoption will raise productivity, but innovation will create valuable companies, skilled jobs and lasting economic strength.”
Healey quit Sir Keir Starmer’s previous Government over the Treasury’s refusal to set out how it would lift spending on the military to 3% of GDP by 2030.
However in his maiden Budget today, he is expected to delay several major financial decisions until a Spending Review in 2027 – including plans for defence spending, reform taxes and cuts to the welfare bill.