A CHANCELLOR MANUFACTURING The virtues of innovation and entrepreneurship are about as surprising as a defense minister praising the army. So entrepreneurs are forgiven for taking Budget Day shows with a pinch of salt. But Rishi Sunak’s October 27 address combined the warm words with action.
A number of programs will direct taxpayers’ money to the private sector. Government-backed British Business Bank is receiving Â£ 1.6 billion (US $ 2.2 billion) for its regional funds that provide debt and equity to start-ups. The Global Britain Investment Fund, which invests in life sciences, offshore wind power and automotive engineering, is growing by Â£ 1.4 billion. A further Â£ 150 million will go to a fund designed to address geographic disparities in early-stage access to equity.
All of this is dwarfed by the commitment to increase government spending on research and development (R&D) to Â£ 20 billion per year by the end of the 2024 legislature. Adjusted for inflation, this corresponds to an increase of around a quarter compared to the current level. It is urgently needed. Britain’s gross R&D Spending was 1.8% in 2019, compared to an average of 2.5% over the year OECD, a club of mostly rich countries. The biggest difference is on lackluster R&D UK private sector spending compared to its international competitors. However, the Treasury Department hopes that more public funding will also stimulate larger private investment.
The extra cash was an early warning against trying to get businesses to spend more at home. Of the 47.5 billion R&D For the companies that applied for tax breaks in 2019, the UK was only $ 25.9bn.Note that countries like America and Australia don’t offer similar discounts for tax breaks R&D When carried out abroad, the government promised “the facilities to innovate in the United Kingdom. “
The Chancellor not only promised cash, but also assured startup founders and their investors that long-held disputes would be dealt with. One of them is a cap on the fees that occupational pension schemes can pay to investment managers. Designed to protect retirement savings from excessive investment fees, it also limits pension systems’ ability to invest in things like infrastructure and businesses in their early stages because of the performance fees levied by venture capital funds. Tax officials will now discuss easing the cap.
Another is access to foreign talent, which is slated to be liberalized next spring. A new visa program will allow those with a job offer from a fast growing UK company to migrate with few conditions. A second makes graduates from top universities eligible for visas even if they have no job offer. It’s time for startup lobbyists to come up with a new wish list.
This article appeared in the UK section of the print version under the heading “Something ventured”.