The Chancellor’s Autumn Statement was expected to be strategic, holding back the big tax cuts for the Spring Budget. However, the tech sector and regional economies saw some positive outcomes, mainly across further investment into AI and R&D tax credits to support startups and scale-ups.
Headline announcements also included a commitment to supply-side reforms with intention to increase productivity and growth and encourage business investment. There were a number of regional announcements for investment to support business growth, plus news around further devolved powers. Accompanying policy documents signal intention to deepen future devolution settlements for existing MCAs.
Katie Gallagher, managing director of Manchester Digital, said:
“There are quite a few positives to come out of today’s Autumn Statement announcements which will support our regional tech sector. These include a further £500m committed to fund more innovation centres for AI and simplified R&D Credits, as well as making full expensing permanent for all businesses.
“We also welcome the extra £50m funding over two years for apprentices in engineering and other high growth sectors. However, we believe that this must be accompanied by Apprenticeship Levy reform if we are to ensure that apprenticeships are successful, scalable and attractive to companies at all stages of growth.
“Overall, we would have liked to have seen more policies which enable all businesses and all workers to adopt digital technologies and opportunities for upskilling. Our region has a very strong tech sector, which with the right policies, can deliver an important boost to the local economy and create levers and opportunities to lift up the whole region.”
We have outlined the key announcements which affect the tech sector and our region below:
Digital and tech economy
R&D Tax Credits: The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024. Treasury will reduce the burden on loss-making firms from 25% to 19%, and the intensity threshold reduced from 40% to 30% for access to a new merged scheme – expected to benefit a further 5,000 SMEs
Mansion House Reforms: The Chancellor announced commitment to delivering on the Mansion house reforms to establish new investment vehicles which will support innovative Science and Technology companies. This includes establishing a new Growth Fund within the British Business Bank, to help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing benefits to pension savers.
EIS and VCT schemes are to be extended until 2035, and the Future Fund will receive an extra £50 million.
Compute: Building on the Compute Review and earlier investments in capacity, there will be £500m available over the next two years to create two new innovation centres; to accelerate more AI capacity and capability.
Spin-out Review: Following yesterdays’ publication of the University Spin-Out Review, the Government has committed £20 million to fund inter-disciplinary research, which may be attractive to innovative tech firms.
Creative industries: Government has launched a short consultation on Tax Relief in the Visual Effects industry.
Business taxes - Full expensing on investment for businesses made permanent, costing £11bn per year with an aim to increase incentives to invest.
Education and skills
Apprentices - £50m over two years to increase the number of apprentices in engineering and key growth sectors.
Regional announcements
Investment Zones: Government increased the tax relief timescales for existing Investment Zones and Freeports, and announced further Investment Zones in Greater Manchester (Bury), West Midlands and East Midlands. Investment Zones are also being extended to Wales and Scotland. Greater Manchester’s Investment Zone will focus on advanced manufacturing and materials across Manchester, Salford, Rochdale, Bury, Oldham and the wider city region, with anchor investment from First Graphene, Kadant, Werit and Hydrograph worth over £10 million.
Tax reliefs – Investment Zones and Freeports: will be extended from 5 years to 10 years in IZs and Freeports, and a new £150 million Investment Opportunity Fund will support them to secure specific business investment opportunities.
Devolution: Further Devolution Deals were announced in Hull and East Yorkshire; Lancashire; Greater Lincolnshire; and Cornwall. Alongside the Statement, HM Treasury introduced a ‘Level 4’ Devolution Framework (The Levelling up White Paper has three tiers), which identifies powers which Mayoral Combined Authorities may be able to draw down.
Levelling up Partnerships: have been extended to more places across the UK.
Manchester Digital works alongside national and regional Government to help develop policies which support and grow our regional tech economy. If you would like to get involved and find out more about our membership, visit: https://www.manchesterdigital.com/membership-benefits
