Jeremy Hunt, Chancellor of the Exchequer. See end of the post for photo credit
The Greater Manchester mayoral region was the beneficiary of a number of top Budget announcements in last week’s Spring Budget by Chancellor Jeremy Hunt.
We’ve highlighted some key announcements and how they affect the tech sector in Greater Manchester and the North West as a whole.
Greater devolution funding
Known as a ‘Trailblazer’ deal, Mayor Andy Burham was given greater spending powers as part of the region’s devolution agreement, which will act as a blueprint for future devolution for other regions. He will be given more funding and spending powers over housing, transport, employment and skills. It also means that the region will be given a single pot of money and won’t have to apply for individual pots of funding from Whitehall, giving GMCA the power to decide where money needs to be spent.
Katie Gallagher, MD of Manchester Digital, said: “We welcome the news around Trailblazer powers for Combined Authorities in Greater Manchester. More local control of resources and responsibilities for skills funding presents a huge opportunity to harness the potential of learners and better align skills and talent to the needs of employers in growing and fast-moving sectors like tech.
“Given how important tech is to the future of the economy and the potential impact on regional economies, whatever mechanism is used to devolve funding into the regions it must make provision for expert and specialist support from regional tech clusters who understand the maturity of their clusters and where there are gaps that need funded interventions.”
AI and Quantum
The Chancellor also announced an annual £1m prize for the most ground-breaking research into Artificial Intelligence. It is named the Manchester Prize after ‘Baby’, the world's first stored-program computer, built at the University of Manchester in 1948.
On top of this, the National Quantum Strategy is designed to direct £2.5 billion of investments over 10 years to really drive the R&D and use of Quantum technologies in the UK. The Chancellor also announced £900m to set up an AI research resource and develop an "exascale" supercomputer.
Investment Zones
The Government committed to funding Investment Zones, an idea which was refined by the current Chancellor at his Autumn Statement and now describes ‘12 high-potential knowledge-intensive growth clusters across the UK’.
There will be four across Scotland, Wales and Northern Ireland; with eight in England, including Greater Manchester.
Each English investment zone ‘’will have access to interventions worth £80m’’ and will be tasked with driving growth of at least one of green industries; digital technologies; life sciences; creative industries and advanced manufacturing. The funding will be spent on skills, infrastructure, tax relief and business rates reduction.
Timescales are yet to be finalised, though the Government is keen to agree the first proposals by the summer and all Investment Zone proposals agreed by the end of the financial year, with funding expected to commence from April 2024.
Katie added, “Today’s announcement around Investment Zones has the potential to better enable collaboration between tech firms, industry and academic partners. We hope the design of these programmes will support innovative SMEs to collaborate and accelerate R&D.”
R&D Tax Credits
In the Autumn Statement, the Chancellor announced cuts to R&D tax credits used by tech startups. Since then, the industry has called for this to be reversed, as it would have a negative impact on the tech industry, particularly for early-stage and research-heavy startups. A survey by COADEC found that startups expected to lose 30-40% of what they currently receive.
In his speech, the Chancellor partially reversed the reduction in R&D tax credits by making provision for an enhanced credit for firms spending over 40% on R&D to be able to receive 27% relief. There is a further relief for some firms in Life sciences and creative industries of 34% - 39%.
Katie added, “The tech industry as a whole was hoping for more than a partial reversal of the previous reduction of R&D tax credits incentives to encourage SME innovation in a difficult economic climate. It’s of vital importance to allow early-stage startups and innovators to flourish and grow their companies.”
In conclusion…
While we welcome more funding for the tech sector, particularly in Greater Manchester, we would urge both the Chancellor and Manchester’s Mayor to ensure that funding and initiatives will support innovative SMEs and early stage startups who underpin our regional tech economy.
We want to see a true Levelling Up for the North West, which includes high quality, relevant and focussed support for our businesses, particularly the early-stage startup sector. High quality jobs in tech and digital can support social mobility but skills initiatives and pathways need to be more cohesive for both learners and employers. Investment in skills needs to be far more joined up and scaled to get the volume and quality of talent we need to grow the tech industry.
We look forward to working closely with the relevant bodies to support grassroots innovation and grow our important tech economy.
Image used with permission under Creative Commons Licence, from Parliament.uk.
