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Budget 2015: First look at the policies for technology

Chancellor George Osborne announced a range of Budget measures to help the growth of technology and digital government across the UK

The Chancellor, George Osborne, has delivered his final Budget before the 2015 general election – and has included a range of measures to help support the growth of technology and digital government across the UK.

Computer Weekly has also published more analysis of the key announcements - see panel below for links - but here is a quick first look at the highlights, extracted from the Treasury’s Budget Red Book:

Digital government 

The Government Digital Service (GDS) will be given an extended remit to work with local government for the first time, as promised recently by Cabinet Office minister Francis Maude. The Budget Book said: “Budget 2015 announces that the digital ambition will extend beyond central government and arms-length bodies, to consider local services. 

“HM Treasury, the Department for Communities and Local Government and the Government Digital Service will collaborate with partners in local government, as the sector develops a set of proposals that will enable more customer-focused, digitally-enabled and efficient local services in time to inform future budget allocations.”

Gov.UK Verify – the online identity assurance system developed by GDS – will be rolled out across all central government. The Budget Book said: “The Budget 2015 announces that, following a successful trial, the government will implement ‘Gov.UK Verify’ – a new way for people to prove their identity online when using government services – across central government. This means that departments will use the same tool for their digital services, reducing duplication.”

The planned Crown Hosting Service – due to be announced this week – will be set up as a joint venture to centralise non-cloud datacentre hosting requirements. The Budget Book said: “To prevent individual departments paying different amounts to either build their own datacentres or outsource this service, the government will create a joint venture to host departments’ non-cloud based servers, which could save up to £100m.”

As reported by Computer Weekly last September, the HM Revenue & Customs (HMRC) digital strategy will see the introduction of online personal tax accounts for individuals and businesses – but Osborne went a step further by announcing he will scrap annual tax returns as a result of better data held by HMRC. 

“Budget 2015 announces that the government will transform the tax system over the next Parliament by introducing digital tax accounts, removing the need for annual tax returns,” the Budget Book said. “By the end of the next Parliament, over 50 million individuals and small businesses will be able to see and manage their tax affairs online. [We will] introduce digital tax accounts for all five million small businesses and the first 10 million individuals by early 2016.”

The process for checking criminal records will be digitised, and opened up to third parties through the use of APIs: “The government will further improve and speed up the process of applying for criminal record checks by ensuring that the application process is digital by default and can be conducted online. The government will ensure that the process can be integrated into third-party services, including, as appropriate, sharing economy platforms, through an application programming interface (API).”

Broadband and mobile networks 

Some £600m will be spent to better co-ordinate spectrum to free up more frequencies for use by mobile networks. “Budget 2015 announces that the government will take a more strategic approach to managing public-sector spectrum,” said the Budget Book. “The government will implement a central management system, which will enable it to better prioritise spectrum management and maximise the economic value of public-sector spectrum.

“The government will provide up to £600m to support the delivery of the change of use of 700MHz spectrum, which will further enhance the UK’s mobile broadband connectivity. These funds will support the infrastructure costs of clearing the spectrum frequency, including support to consumers, where appropriate, and retuning broadcast transmitters to enable broadcasters to move into a lower frequency. 

Read more analysis of Budget 2015

A new government plan for digital communications has also been published. “To affirm its commitment to the long-term digital future of the UK, the government is publishing its Digital Communications Infrastructure Strategy, proposing how best to support market delivery,” said the Budget Book.

Osborne announced a commitment to build an ultrafast broadband capability across the UK – but gave few details about what this would mean in practice. “Supporting long-term investment in the UK’s digital communications infrastructure, including by setting out a new ambition that ultrafast broadband of at least 100Mbps should be available to nearly all UK premises,” said the Budget Book.

The minimum broadband service expected to be delivered to households will be increased from 2Mbps to 5Mbps, along with further help for satellite broadband services in rural areas: “The government will also take further action to support the delivery of broadband in rural areas, including looking to raise the Universal Service Obligation – the legal entitlement to a basic service – from dial-up speeds to 5Mbps broadband, and subsidising the costs of installing superfast capable satellite services.”

Support for tech startups 

A range of policies will provide further support for tech startups and entrepreneurs, particularly outside London in emerging tech clusters. Budget Book statements included:

“The government will implement a package of measures to improve the accessibility of R&D tax credits for smaller businesses, including producing new guidance aimed at smaller firms and setting out a roadmap for further improvements over the next two years.

“The government will support the development of innovative businesses across the north through an £11m investment in tech incubators in Manchester, Leeds and Sheffield. These tech incubators will create thriving local ecosystems by nurturing startups, fostering collaboration, and providing mentoring, learning and business support:

  • Sheffield ‘Maker Hub’ – £3.5m government investment to renovate a former Co-op department store in the Castlegate area.
  • Leeds ‘Future Labs’ – £3.7m government investment to renovate a derelict police headquarters in the heart of Leeds, creating a six-floor incubator.
  • Manchester ‘Forward Plan’ – £4m government investment towards an eight-floor incubator in Federation House, in Manchester’s Northern Quarter.
  • The government will also provide funding to develop a financial technology incubator in Leeds.”

Support also includes an examination of where regulations are preventing the use of emerging technologies and what can be done to break down those barriers. “The government will engage with business to determine where regulations inhibit innovation, including disruptive technologies, and develop a programme for addressing this in the next Parliament,” said the Budget Book.

Popular investment schemes to help with startup funding are being extended, it said: “The government will make amendments to the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) to ensure that the UK continues to offer significant and well-targeted support for investment into small and growing companies, in line with new EU rules. 

“[We will] introduce a cap on total investment received under the tax-advantaged venture capital schemes of £15m, increasing to £20m for knowledge-intensive companies. [We will] increase the employee limit for knowledge-intensive companies to 499 employees, from the current limit of 249 employees.”

There was a particular focus on supporting financial technology (fintech) startups – an area where the UK is a recognised world leader: “The government is determined to drive increased competition in the banking market, so that banks, alternative providers and fintech firms compete vigorously, on a level playing field, to win and retain customers. 

“Budget 2015 announces a package of measures to further support competition in banking, details of which have been published separately. The lead measures in this package set out the government’s approach to establishing a supportive framework for legitimate digital currency businesses and helping fintech firms gain access to banking data.

“The Financial Conduct Authority’s (FCA) Project Innovate will work with HM Treasury and the Prudential Regulation Authority (PRA) to investigate the feasibility of developing a regulatory ‘sandbox’ for financial services innovators. The FCA, working with the PRA, will also identify ways to support the adoption of new technologies to facilitate the delivery of regulatory requirements – so-called ‘regtech’.

“Innovate Finance has agreed to deliver its fintech regional strategy through a series of local partnerships. The first partnership has already been established in Leeds, and further partnerships will be established in Manchester and Edinburgh by April, and in Newcastle, Bristol and other centres before the end of the year.”

Plans for a standard API to allow new entrants into the banking sector to access data held by bigger rivals will also go ahead: “The government has confirmed its commitment to deliver an open API standard in UK banking and, working with the banking and fintech industries, set out a detailed framework for its design by the end of 2015. 

“This will enable fintech firms to make use of bank data on behalf of customers in a variety of helpful and creative ways, and ensure the UK remains at the forefront of developments in financial technology and innovation."

Internet of things 

The Chancellor recognised the economic opportunity for the UK of supporting developments in the internet of things, and related areas such as driverless cars and smart cities. The Budget Book said: “[There will be] £100m for research and development into intelligent mobility, which will focus on enhancing the development of driverless car technology and the systems required to implement and adopt the technology, such as telecommunications. 

“[There will be] £40m for demonstrator programmes, business incubator space and a research hub to develop applications for internet of things technologies in healthcare and social care, and smart cities… The government will support a competition to fund a smart cities demonstrator as part of the internet of things programme to trial and showcase these new technologies.”

Science, research and skills 

Osborne announced measures to support scientific research and jobs in science and innovation that will also benefit the technology sector, including: “Developing a more highly-skilled UK labour market by strengthening support for postgraduate research and apprenticeships, and setting out plans for further investment in the UK’s world-leading science and innovation base.

“The government will commit £400m to 2020-21 for the next round of funding for cutting-edge scientific infrastructure. The government will also provide further strategic science and innovation investments to make the UK a global leader in emerging markets and technologies, drawing on and supporting the UK’s existing world-class research base.

“Budget 2015 confirms that the government will invest a further £100m in cutting-edge research projects through the current UK Research Partnership Investment Fund round.”

There was even some help for women in business with their use of IT: “The Government Equalities Office IT challenge fund will be extended for one year in 2015-16,” the Budget Book said. “This additional funding of £1.1m will support women to take their business online and take advantage of superfast broadband.”

Sharing economy 

The government has recently expressed support for the so-called sharing economy – companies such as AirBnB and Uber, which use technology to share resources, such as spare rooms or cars. The Budget Book gave further details:

“This Budget announces a comprehensive package of measures that will break down barriers, create opportunities for sharing and unlock the potential of this dynamic and growing area. Building on the recommendations of the independent review of the sharing economy, the government will:

  • Make it easier for individuals to sub-let a room through its intention to legislate to prevent the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting or otherwise sharing space on a short-term basis, and consider extending this prohibition to statutory periodic tenancies.
  • Enable government employees to use sharing economy solutions to book accommodation and transport when travelling on official business, where this represents value for money.
  • Encourage local authorities to use their business rates discretionary relief powers to support the sharing economy, including shared workspaces and makerspaces.”

The Budget Book added: “The sharing economy presents an opportunity to drive local growth and deliver local public services more innovatively and efficiently. To demonstrate the benefits of the sharing economy, the government will launch two pilots in Leeds city region and Greater Manchester in 2015-16, to trial local sharing initiatives in the areas of shared transport, shared public space, and health and social care.”

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