Technology and R&D
During his hour-long speech, Hammond promised £500m support for 5G mobile networks, fibre broadband and artificial intelligence. He also pledged £540 to support the growth of the UKs electric vehicle infrastructure, a further £2.3bn allocated for investment in research and development and to double the Enterprise Investment Scheme (EIS) for “knowledge intensive” companies.
Steve Lindsey, CEO and founder of Lontra welcomed the Budget, saying: “We’re delighted the Chancellor has committed to backing British manufacturing, doubling EIS funding for high tech businesses such as our own. The UK is perfectly placed to lead the world in precision manufacturing. While treasury interventions such as Patent Box has provided limited support, we are glad the Chancellor recognises there is far more the Government can do to help bring inventions to market and establish our lead in the fourth industrial revolution. Investment on this scale is an opportunity to turbo boost UK manufacturing.”
However, Philippa Oldham, head of manufacturing at the Institution of Mechanical Engineers added: “The Institution welcomes the increased investment in research and development. However, this is still below that of our major competitors, such as Germany and USA.
“To ensure the UK’s manufacturing sector does not suffer any economic shock following the decision to withdraw from the EU, we need to increase both R&D investment and training of the national workforce and we welcome the announcement that the Government along with the CBI and TUC will be addressing the strategic workforce needs for this future.
“These efforts will help increase productivity and offer innovative products and services in what is becoming an increasing competitive global marketplace.”
Startups and small businesses
Post-Brexit, Hammond claimed that the UK will be in “the strongest position for decades” regarding the country becoming a world-leading research and innovation hub in which he wants to double the number of tech startups being founded to one every 30 minutes. To help, the VAT threshold for small business will remain at £85,000 for two years and rises in business rates are to be pegged to CPI measure of inflation, not higher RPI.
Mike Cherry, Federation of Small Businesses’ national chair, said: “Overall, this is a business-friendly Budget. The Chancellor’s vision for an inclusive economy includes a set of measures that will boost confidence across the small business community as they face extremely challenging trading conditions.
“1.5 million modest-earning small firms and the self-employed will be relieved that we have seen off a VAT tax grab that would have caused huge economic damage. Instead, FSB is ready to work with the Treasury to simplify an over-complicated tax that on average takes a business a whole week to administer every year.”
To encourage more children into tech and science careers in a bid to bridge the widening skills gap, the Chancellor declared a £40m teacher training fund for underperforming schools in England, worth £1,000 per teacher, 8,000 new computer science teachers to be recruited at cost of £84m and £600 will be paid to secondary schools and sixth-form colleges for each new pupil taking maths or further maths at A-level or core maths at an expected cost of £177m. Additionally, £20m has been earmarked to help colleges prepare for the new T-levels, a qualification in technical subjects to be phased in from 2018-2022.
Peter Finegold, head of education and skills, research and policy at the Institution of Mechanical Engineers, said: “We welcome the Chancellor’s measures designed to promote greater numeracy among young people. Mathematical skills will increasingly underpin our economy in the new industrial age, but research published by the Institution this week starkly illustrates a poor understanding that impedes the translation of maths and other STEM (science, technology, engineering and maths) subjects into career choices in engineering and technology.
“We call on Government to develop a school engineering and industry strategy so that pupils studying maths, science and DT will not have to wait until they are 16, or even older, to discover what engineering is, why it is and what it can lead to.
“The announcement of a £20m fund to prepare the further education sector for T-levels is welcome by the Institution and will help to bring about the inevitable change in culture and staff training needs that will ensure FE colleges have the capability to offer T-Levels of high quality.
“However, the Institution again urges that future focus should be towards addressing known skill shortage professions, such as engineering, with additional incentives for colleges and students to pursue careers in these professions.”
Summing up the mixed reactions to today’s Budget, John Hawksworth, chief economist at PwC said: “The Chancellor had to walk a narrow tightrope between maintaining fiscal prudence and responding to widespread pressure to ease austerity. He had to do this while facing significant cross-winds from downgrades in the OBR’s economic growth forecasts and consequent increases in projected public borrowing in the medium term that were slightly larger than we had expected.
“At first sight, the Chancellor just about managed to keep his balance, although the details will need further scrutiny over the coming days.”