On October 29th, “Fiscal” Phillip Hammond delivered his third budget as Chancellor of the Exchequer. While the 72-minute speech sent journalists into a frenzy, I was most interested in the impact it could have on the UK’s tech industry.
A time for tech
The Prime Minister recently said; “the UK is 100 percent committed to supporting the development and adoption of new technologies.” This may explain why this year’s famous red book had a section dedicated to cryptocurrencies and blockchain.
Upwards of £500m was invested in UK blockchain companies in 2017/18 and UK parliament has shown commitment to support the accelerated development of the digital economy through several government initiatives. In March, it established a crypto assets taskforce comprised of the Treasury, the Bank of England and the FCA exclusively to explore the risks and potential benefits of crypto assets.
What does it all mean?
This information age article does a great job of identifying every tech-related mention in the 2018 budget: from the £78 million now pledged to support innovation in electric motor technology, to a new £50 million per year fund designed to address challenges in areas such as public health and cyber security.
But what difference will these announcements actually make?
Look at artificial intelligence (AI). AI could transform the productivity and GDP potential of the UK landscape, but UK investment is still low compared to our European counterparts. Germany’s businesses are already 40% more focussed on building AI and Machine Learning into their strategies than UK businesses. So while the budget says The Office for AI and Government Digital Service (GDS) will review how government can use AI, automation and data to drive public sector productivity and wider economic benefits in 2018 – are we facing “too little too late?”
Then there is the elephant in the room; Philip Hammond’s grand idea to tax tech giants. His Digital Services Tax will act as a levy against social media platforms, internet marketplaces and search engines with a 2% tax rate against the sales large digital companies make in the UK.
I am all for big, profitable tech companies paying their share, but is 2% really enough to make a difference or will they simply relocate to somewhere more tax advantageous? Is introducing a new law – and navigating the complexities of this one – worth the incredible expenditure and work for what is likely to be a pretty small return?
While the government has impressed me somewhat by noticing the importance of tech investment (and in emerging technology areas at that!) I think the scale of investment needed is massively off track. I wonder if it will be too late to try and get it right next year.