What did the 2021 Budget mean for the UK tech sector and COVID-19?
Posted on March 3, 2021 by Jonathan Symcox
Rishi Sunak’s second Budget, delivered a year after he became Chancellor, again attempts primarily to mitigate the impact of COVID-19.
As well as an extension of the furlough scheme, measures such as the Future Fund: Breakthrough initiative appear to show that technology is at the heart of the Chancellor’s vision for the UK economy.
So what did the tech sector make of the government’s fiscal plans?
Future Fund: Breakthrough initiative
A £375 million UK-wide ‘Future Fund: Breakthrough’ initiative will invest in highly innovative companies in life sciences and technology which are aiming to raise at least £20m of funding.
The government will take a stake in these scale-ups, with private venture capital matching its contribution.
“Technology lies at the heart of the Chancellor’s vision for the future of the UK economy,” said Roei Haberman, head of telco, media and technology at NTT DATA UK.
“The new fund to buy stakes in tech start-ups is a signal of government faith in technology as the lifeblood of innovation in the UK.
“It offers high-growth firms a chance to level up their ambitions, helping to secure the UK’s status as a global hub for tech jobs and opportunities.”
Evie Mulberry, MD at Astia, said: “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.”
Paramjit Uppal, CEO and Founder of AND Digital, said: “It’s encouraging to see initiatives to support the technology sector in today’s Budget.
“Matching public money with private sector venture capital through the Future Fund: Breakthrough will provide a catalyst for growth, supporting innovation and enable sustainable scaling up as the economy begins to recover.”
Jessica Rushworth, chief strategy and policy officer at Digital Catapult, said: “From developing social distancing tools, to immersive VR-based training for healthcare provision: it’s only right that the budget gave a nod to innovation after the tech industry’s resilience during the pandemic.
“Today’s proposals for a Future Fund: Breakthrough and Super-deduction tax relief could unlock invaluable capital for the sector, helping propel more deep tech companies in the UK to the next stage of their development.
“That said, these options are not a silver bullet to a prosperous future for tech. We need to ensure start-ups are being connected to the right experts to turn homegrown ideas into industrial products and solutions at scale.
“Only then can we put UK tech right at the centre of our plans for recovery.”
Liz O’Driscoll, head of innovation at Civica, said: “It’s great to see the Chancellor investing to support potentially world-beating UK tech companies.
The announcement of the new Future Fund: Breakthrough, will help UK tech organisations scale up to the next stage of development and allow the UK to continue to enjoy the reputation as a tech innovation hotspot that it deserves.
“The UK has a real opportunity to be world-leading in healthcare, education and housing. The government should encourage this R&D as part of the fund. By stimulating the wider innovation community, we can together develop technologies that can improve the lives of everyone in the UK.”
New overseas visa scheme
The new scheme will help start-ups and scale-ups source overseas talent.
“The UK has always been a FinTech pioneer and the driving force behind the legislation that ushered in the era of open banking,” said Rafa Plantier, head of UK & Ireland at open banking platform Tink.
“We must continue to nurture our start-up culture but, crucially, we must also give high–growth UK firms access to the global talent they need to flourish internationally. To make this happen, it’s vital that not only should the UK have access to people with the right technical skills, but also to those who have spent time with ambitious, rapid growth businesses from around the world — and who can bring this experience to bear on the UK FinTech sector.
“The new visa presents a golden opportunity for the UK to continue to trailblaze in FinTech — encouraging entrepreneurialism, investment and growth.”
Charlotte Crosswell, CEO of Innovate Finance, said: “We welcome the Chancellor’s announcement of a global talent visa route for innovative, high-growth firms – a key recommendation of the Kalifa Review.
“For many years, the FinTech sector has been calling for a swift and dynamic visa scheme that supports fast-growing companies to attract the talent they need to scale in the UK, and compete with our peers in other markets.”
Michael Kent, co-founder and chairman of FinTech Azimo and one of the founding members of Innovate Finance, added: “We welcome the Budget’s announcement of a UK visa scheme to help FinTech firms attract more mobile global talent following Brexit.
“Executed well, this will assist in widening the pool of digital human capital we need to help rebuild our economy and to help maintain the robustness of our multi–billion–pound FinTech sector.”
Help to Grow scheme
A new Help to Grow scheme will offer up to 130,000 companies across the UK a digital and management boost.
“I am confident that this moment marks the start of the modern-day roaring twenties,” said Cas Paton, CEO, OnBuy. “With the enhanced levels of financial and training support pledged by the government, I foresee a boom in the number of small businesses launching over the next year, and fast-growing firms like OnBuy accelerating even more quickly.
“The knock-on effect of this boom has the potential to be massive; increased employment, an uplift in spending, and a high energy performing economy to support the next generation of talent.
“The UK has always been hailed for its innovation and now we will be able to retain this position in the digital age and in a time of world economic recovery. We’ve seen leaps in technological and digital innovations from British businesses in the past five years and these now have the ability to rocket in size and profit.”
Furlough to be extended until end of September
The government will continue paying 80% of employees’ wages for hours they cannot work, with employers asked to contribute 10% in July and 20% in August and September.
“We are concerned that September will be too soon to withdraw crucial financial support,” said Oliver Prill, CEO of tech-enabled business bank Tide.
“With one in five small businesses expecting to make redundancies once the furlough scheme ends there will be huge pressure for small businesses to return to pre-COVID revenue levels in just a matter of months.
“Pulling the furlough scheme and all other financial support from under small businesses’ feet so soon may pose a real danger.
“We would urge the government to put SMEs at the heart of its building back better agenda. Accounting for around half of the economy, SMEs can make a substantial contribution from levelling up to NetZero and job creation.”
Simon Hansford, CEO at UKCloud, commented: “Rebuilding our economy will need more than a cash injection and will require investment in British businesses and the tech skills that power the digital economy, particularly for mid-sized businesses which have played to their strengths during the pandemic by staying agile and adapting to adverse market conditions.
“The power of tech within this story cannot be underestimated. The pandemic has shown the benefits to public services that can be driven when investment in these areas are combined.
“And, with meaningful reform plans in the pipeline for organisations like the NHS, there is so much social good that can be achieved when public services are fortified with investment in technology intended for social good.”
Contactless payment limit to rise to £100
Barely a year after the limit for contactless payments was raised from £30 to £45, the figure will rise again to £100 later this year.
However, businesses can decide themselves whether to accept this higher limit.
“The Chancellor’s newly announced £100 limit for contactless payments also offers a wealth of opportunities, diminishing the need for queueing space and enabling business to find new ways to delight the customer,” said Elle Nadal, director of marketing, EMEA at Iterable.
Incentive grants for apprenticeships
Incentive grants for apprenticeships will rise to £3,000, with £126m allocated for traineeships.
Claudia Harris, CEO of software bootcamp Makers, said: “The government’s increased boost for traineeships in England will help to get people back into work – and to explore different career options.
“Unemployment is at its highest level in years and the hardest hit will need support. By doubling the cash incentives for apprenticeship schemes for all new hires, of any age, the government will reach a lot more people.
“Apprenticeships – especially those that offer software engineering skills that are highly sought after, will ensure that trainees can find gainful employment – and the UK has a skilled workforce that can help rebuild the economy.”
Adrian Overall, CEO, CloudStratex, added: “The government has been clear that investment in infrastructure, skills, and innovation are key priorities, and the recently announced £126m boost for traineeships is to be clearly welcomed.
“Yet the Chancellor needs to pay specific attention to the fact that we are in the midst of a new era, which is characterised by astonishing advances in technology that are redefining how we live in the 21st Century. While tech is eliminating the need for some jobs, it is also creating a whole slew of new technical and digital specialisms that are essential for the UK’s future competitiveness.
“Unfortunately, 11.7 million people lack even the essential digital skills” needed just for day-to-day life online, according to Ipsos MORI. This is of great concern to UK plc and clearly needs to be addressed if we are to turbocharge Britain 2.0.
“That means specifically prioritising the uptake of digital skills by encouraging people from all backgrounds and age groups to pursue tech careers: a good place to start is by addressing the acute shortage of STEM subject teachers. We also need to place greater emphasis on ensuring equity in education.
“Finally, we must ensure students are committing to STEM subjects at an advance level. For example, 50% of girls take GCSE physics, yet only 22% of A level physics entrants are female. Figures such as this must change if we are to ensure a genuinely fair society.”