Budget 2023: What was said about tech?
While this year's annual Spring Budget aimed to help with the cost of living crisis, the chancellor also announced measures to support long-term economic growth
Jeremy Hunt's Spring Budget 2023 is making headlines for its effort in boosting childcare and pensions, though the chancellor also discussed ways the government planned to help the economy by cutting inflation and reducing public debt.
Calling it "a Budget for growth," Hunt said he would "remove obstacles that stop businesses investing," help people return to work and turn the UK into "a science and technology superpower."
The chancellor praised the UK's investment in "new industries that will shape the future," investments in science and technology and the country's advanced manufacturing and clean energy industries.
Let's take a look at what it all means for tech.
Budget 2023: What was said about tech?
While this year's annual Spring Budget aimed to help with the cost of living crisis, the chancellor also announced measures to support long-term economic growth
AI and quantum
The chancellor continued Conservative governments' support for 'big bang' technologies, announcing a £2.5 billion investment in quantum computing and legislative backing for artificial intelligence.
On AI, Hunt said the government is accepting all of Sir Patrick Vallance's recommendations, including establishing an AI sandbox to help innovators get products to market faster, and working with the Intellectual Property Office to provide clarity on IP rules to generative AI firms.
He added: "Because AI needs computing horsepower, I today commit around £900 million of funding to implement the recommendations in the independent Future of Compute Review for an exascale supercomputer. The power that AI's complex algorithms need can also be provided by quantum computing."
The Plan for Quantum is a 10-year programme more than doubling the current £1 billion National Quantum Technologies Programme.
The US and China currently dominate the quantum computing landscape, but the UK is ahead of other countries in Europe in its number of quantum start-ups.
The new Plan aims to boost the number of domestic quantum firms further, while also attracting them from overseas with investment support.
In addition, new training schemes will target scientists, engineers and technicians.
Finally, the chancellor announced an annual £1 million fund, named the Manchester Prize, to be awarded to the person or team doing the most ground-breaking AI research in the UK every year.
James Sanders, an analyst with CCS Insight, said, "The existing National Quantum Technologies programme has supported over 450 PhD candidates and nearly 50 startups... Increasing the size of the talent pool in quantum physics is a laudable goal, and efforts to design quantum hardware as well as the algorithms to run on it - which will impact material science, pharmaceutical, logistics and national security, among other fields - are areas of research which will greatly benefit from increased funding...
"That said, manufacturing of quantum hardware is reliant on international trade, as there are no Tier 1 fabrication plants in the UK suitable for manufacturing equipment needed for a quantum computer. This is an important factor in developing quantum hardware.
"Building such a facility would require a combination of private and public investment nearer in scale to the CHIPS Act in the US, though the benefits would likely extend to manufacturing classical CPUs, GPUs and AI/ML accelerators."
Budget 2023: What was said about tech?
While this year's annual Spring Budget aimed to help with the cost of living crisis, the chancellor also announced measures to support long-term economic growth
Investment
The chancellor has promised to create 12 investment zones - "Twelve potential Canary Wharves" - in eight areas around the country, with each to receive £80 million in funding.
The areas will centre around tech hubs near universities in England, with aim of accelerating research and development in the "most budding industries." There will also be "at least one" in Scotland, Wales and Northern Ireland.
The zones will be located in the East Midlands Mayoral Combined County Authority (proposed ); Greater Manchester Mayoral Combined Authority; Liverpool City Region Mayoral Combined Authority; the North East Mayoral Combined Authority (proposed); South Yorkshire Mayoral Combined Authority; Tees Valley Mayoral Combined Authority; West Midlands Mayoral Combined Authority; and the West Yorkshire Mayoral Combined Authority.
Notably these are all north of Birmingham, sure to please people who say that investment is too weighted to the south of the country.
Although the areas have been shortlisted, the government still has to agree the plans with various stakeholders - like individual local authorities and business groups - by the end of the year.
This plan builds on the one announced by short-lived chancellor Kwasi Kwarteng in September, when he said he wanted a national network of investment zones to boost business investment in the regions.
The package of incentives, which Hunt has said the government will fund for five years, are likely to include lower national insurance contributions for employers, lower business rates and more generous capital allowances on the purchase of new machinery and equipment, according to independent think tank The Institute for Government.
The rules for investment zones are not yet clear, though they may also include looser planning rules to erect commercial buildings and houses on the land.
Budget 2023: What was said about tech?
While this year's annual Spring Budget aimed to help with the cost of living crisis, the chancellor also announced measures to support long-term economic growth
Tax breaks
To encourage business investment outside of the new zones, the chancellor announced 100% first year capital allowances, meaning companies can deduct the full cost of certain equipment - including IT equipment - from their pre-tax profits.
The plan will last for the next three years, with plans to make it permanent "as soon as possible."
He made the announcement in the face of headwinds he himself created, as he also announced a rise in corporation tax from 19% to 25% (still the lowest in the G7), and an end to the 'super deduction' tax break from 2021.
That is despite potential rebellion from backbench MPs, including former Prime Ministers Liz Truss and Boris Johnson (despite the increase having initially been announced under his tenure).
The super deduction reduced a company's taxable revenue by 130% of the cost of new plant and machinery.
Because of the rise in corporation tax, the new capital allowances break is worth roughly the same, in cash terms, as the super deduction.
Budget 2023: What was said about tech?
While this year's annual Spring Budget aimed to help with the cost of living crisis, the chancellor also announced measures to support long-term economic growth
Labour supply
Hunt announced a slew of measures aimed at helping get people back to the workplace, as both public and private sector organisations struggle to recruit workers.
The first was help with UK childcare costs, which are among the highest in the world.
The provision of up to 30 hours of free childcare a week will be extended to all children from the age of nine months, in addition to the three- and four-year-olds it already covers.
While the government estimates the cost at £4 billion, the CBI estimates it could cost as much as £8.9 billion.
The plan will be introduced in stages, starting in April 2024 and rolling out to September 2025.
The government is also considering lowering child-to-staff ratios, with one carer for every five children rather than four in an effort to bring down costs. This would still be among the most restrictive in Europe, with only Germany and Finland at a similar level. Countries like France and Ireland allow up to 10 children per carer, and Denmark, Spain and Sweden have no legal limits.
There are also plans to increase the £646-a-month cap on support for parents on universal credit to £951 for one child, and from £1,108 to £1,630 for two children. Additionally, the chancellor announced the support would be paid up-front instead of parents having to claim it back.
Finally, Hunt announced higher requirements on those claiming benefits to look for work; and raised the final cap on pension pots, in an effort to encourage people to remain in the workforce for longer.