Home Estate Planning Spring Budget 2024: UK Silicon Valley dreams far off say tech bosses

Spring Budget 2024: UK Silicon Valley dreams far off say tech bosses

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“We’re on track to become the world’s next Silicon Valley,” declared chancellor Jeremy Hunt in his Spring Budget announcement on Wednesday.

Alongside a 2p cut to National Insurance and the introduction of a British ISA, the Budget revealed key policies for the UK’s tech industry, including increased funding for artificial intelligence (AI) and a £360m R&D package.

But some tech bosses have been left wanting, particularly as the UK still lags behind rival global leaders, including the US, China and Singapore.  

Steve Hare, chief executive of the FTSE 100 software firm Sage, said the £7.4m AI Upskilling Fund pilot – designed to help small to medium businesses (SMBs) develop AI skills – is “a starting point”.

“But the government missed the chance to fully support SMBs with their digitalisation journey and bring in measures like e-invoicing and tax incentives to improve investment in digital technology,” he said.

“We welcome the Chancellor’s ambition to turn the UK into the next Silicon Valley, but this dream cannot become a reality without a fully digitalised economy that all businesses can benefit from,” Hare added.

The Budget also included a previously announced £360m package to support research and development in sectors such as life sciences, automotive, and aerospace.

However, Lewis Liu, chief Of Eigen Technologies said he was “disappointed” that the government decided not to reverse the cuts to the UK’s “previously world-leading” R&D tax credits regime, which startups had been hoping for.

“These cuts act as a tax on founders and have already damaged the UK’s successful tech ecosystem that provides investment and high-paying jobs, and seriously undermines the Government’s ambition of making the UK a technology and science superpower by 2030,” he explained.

Hunt also said the government will double funding into the Alan Turing Institute, with an additional £100m over the next five years, while some £800m will go towards expanding the use of AI across the public sector to boost Britain’s dwindling productivity levels.

“But this alone is not enough,” said Allan Kaye, co-founder and managing director at Vespertec, a UK-based data centre infrastructure specialist, “If we want the UK to become the next AI superpower, or as Hunt put it ‘the world’s next Silicon Valley’, we need to see investment in the infrastructure required to support AI growth,” he added.

“This includes servers and the latest GPU architectures, as well as a network of data centres suitably equipped to handle the huge power budgets and heat dissipation associated with AI.

“By investing in homegrown talent, the government can ensure we have the suitable systems in place to capitalise on advances in the field and position the UK as the front-runner. We need to see this urgency mirrored in government action, and so far, the action taken has not gone far enough,” Kaye said.

Although it was anticipated that the chancellor would reverse changes to angel investor rules, Hunt’s Budget speech did not provide further details.

The raised income threshold for high-net-worth individuals had sparked fury among investors, potentially limiting support for small businesses, especially those led by women, individuals from minority backgrounds, and those outside London.

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