Spring Budget 2023: What does it mean for the tech sector?

Jeremy Hunt has delivered the Spring Budget 2023, and has put forward a plan to boost innovation and drive business investment for the UK’s tech sector. The Chancellor has accepted the recommendations from Sir Patrick Vallance’s review into pro-innovation regulation of digital technologies, published alongside Spring Budget today. The Chancellor has also announced twelve new investment zones in the north of England, Scotland, Wales and Northern Ireland; a £900 million boost to improve the UK’s AI sector with an AI Sandbox. But what does all this really mean? We asked a selection of experts from the UK tech sector.

Anne Boden, founder and CEO of Starling Bank – “London’s success as a fintech hub should enable it to spread the love – the wealth and jobs – throughout the UK, including to Greater Manchester and to Wales, both areas with a deep pool of tech talent. We’re pleased to see the Chancellor recognise this in his 12 new investment zones.”

“Everybody deserves a second, third or fourth chance in life. We already operate a form of returnership at Starling and have found that this helps us grow a diverse and inclusive team, while at the same time offering support to those returning to the workforce after an extended break. Everybody wins. We welcome the new scheme for over 50s introduced in this Budget.”

“Allowing companies to write off the full cost of qualifying plant and machinery, including IT equipment, will give businesses a significant incentive to invest and will support additional job creation.”

Reacting to the Chancellor’s technology and innovation strategy, Alisa DiCaprio, Chief Economist at R3 and former Chair of the FinTech Committee at the US Department of Commerce, comments:

“If London is to retain its status as a global hub for financial services, then technology must be at the heart of its strategy. Westminster has made welcome progress in creating the right environment for financial services to innovate with technology – such as its consultation on the digital pound and proposals to regulate crypto assets – but it is vital that the government maintains momentum and ensures good policy delivers world leading market conditions.

“We look forward to hearing more about the Treasury’s support for other fintech initiatives, like the FMI sandbox and accelerated settlement taskforce, to ensure the UK remains at the cutting edge of financial services innovation. With competition rising from Europe and elsewhere, harnessing transformative tools specific to empowering financial services, such as distributed ledger technology, is quickly becoming a central pillar of economic growth.”

Mike Randall, CEO, Simply Asset Finance, says: “Levelling up across the country will play a vital role for the UK economy’s growth. Since starting our company, we have witnessed first-hand how business investment has struggled to support growth over the past few years, with smaller firms often facing a raft of challenges when seeking vital funding. We welcome the Chancellor’s announcement of 12 new investment zones across the UK, which we hope will build profitable, competitive business opportunities across business hubs beyond the capital.”

Jamie Anderson, Chief Revenue Officer, Emburse: “The continuation of energy support schemes is the least the government can do, but it is still not enough when it comes to safeguarding the 78% of young people experiencing increased living costs, with many becoming increasingly isolated in attempts to make ends meet. With an excess of 8 million households affected by fuel poverty this year, the situation offers very little for those already living below the breadline.

“Public finances continue to be fragile, and businesses must keep their foot on the peddle when it comes to valuable employee care. Emburse’s latest survey found almost half of young workers want a company-paid card for their expenses due to that cost of living. Leadership must listen and put meaningful policies in place that make a difference to worker’s lives.

“Providing employees with company cards is also sensible given soaring cases of fraud, and businesses may be looking at millions of pounds of employee spend that shouldn’t be reimbursed due to poor spend management. Whilst businesses continue to brace against this economic maelstrom, internal errors can’t be overlooked, making it more important than ever for finance teams to gain access to deep-spend insights to future-proof and minimise wasteful spend. Leadership must assess and clearly communicate internal policies to ensure funds are allocated properly, to best service business needs and protect their workers.”

Pat Phelan, UK MD and Chief Customer Officer at GoCardless, said: “The Spring Budget introduced some welcome measures for consumers and promising tactics to power up the economy, from ‘returnerships’ to Investment Zones. But we didn’t hear much about a huge lever for growth, one which, after his efforts this weekend, the Chancellor clearly believes in: our ‘world-beating’ tech sector. In order to maintain our lead, we must grasp every opportunity to create the right environment for UK tech to thrive. There’s a lot to do but there are two opportunities to act on right now. First is pushing through the changes announced last year to improve the Seed Enterprise Investment Scheme. Second, we need to keep up momentum in open banking, which is at a critical juncture in its development and now used by over seven million people.”

Lily Megson, Policy Director of My Pension Expert, said: “Jeremy Hunt’s back-to-work budget statement held few surprises. The predicted policies aimed at driving people back into employment were all there. That said, consumers, still reeling from the soaring cost of living, were likely eager to hear the Chancellor lay out his plans to fix the economy, particularly his target audience – over 50s.

“As a historically undervalued demographic, yet one with a plethora of untapped talent, Hunt was right to look to over-50s to address economic inactivity. In today’s climate, retirement plans need to be flexible, and skills training and mid-life MOTs will allow people to adjust to the ever-changing work landscape.

“Likewise, abolishing the lifetime allowance is eye-catching – but it only affects the most affluent earners. Indeed, in the year leading up to April 2020, only 42,350 breached the allowance.

Comments from Joseph Calnan, Manager of Corporate FX Dealing at Moneycorp: “The Treasury’s failure to extend the Energy Bill Relief Scheme (EBRS) is a disappointing turn of events for SMEs. We already knew from the FSB that over 350,000 SMEs stood to downsize, restructure or close entirely if their energy bills reverted to the higher rates in April. But hot on the tails of a fresh wave of uncertainty from the SVB collapse, which has rattled the foundations of the UK’s SME ecosystem, this blow is going to be felt even more keenly.

“Factor in the accompanying rise in corporation tax and today’s budget becomes more disappointing still. Business insolvencies are already reaching levels not seen since the 2008 financial crisis and this could get worse if current conditions prevail. We saw from the swift intervention over the weekend that the Treasury is willing and capable of protecting UK plc, but today it appears to have regressed in that regard.”

Gerard Grech, CEO of Tech Nation, comments on Spring Budget: “Today’s budget is a positive indication of the UK Government’s commitment to becoming a Science and Technology Superpower. We welcome the measures aimed at supporting the UK tech industry, including the introduction of additional tax support for R&D and the announcements on an AI sandbox and ambitious Quantum investment which will generate investment in new industries, whilst protecting consumers and businesses.

As a nation uniquely positioned between two economic powerhouses, the US and the EU, we must harness innovative regulation that will enable us to propel ourselves as an international hub and leader for AI, Quantum Computing, and Deep Tech. This is a critical step towards creating a distinctive, value-driven tech ecosystem in the UK, setting us apart from other tech hubs.

We must build on momentum generated and continue to foster a culture of innovation and collaboration that empowers businesses to grow and succeed.

The recent intervention by both the government and the private sector to facilitate the sale of Silicon Valley Bank is a shining example of what can be achieved through collaboration between the private and public sector and a clear vision.”