George Osborne announced an £11m investment in tech incubators in Manchester, Leeds and Sheffield during his Budget 2015 speech.
The government aims to nurture tech startups in the north west, as part of its mission to turn the north east and north west into a “northern powerhouse”.
As part of the investment, Sheffield Maker Hub will receive £3.5m to renovate a former Co-Op store in the Castlegate area; Leeds Future Labs will receive £3.7m to renovate a derelict police headquarters in Leeds, creating a six-floor incubator; and Manchester Forward Plan will receive £4m towards an eight-floor incubator in Federation House, located in Manchester’s Northern Quarter.
Announcements have also been made to provide funding to develop a financial technology (fintech) incubator in Leeds.
In February, the chancellor launched the Tech Nation report, which found that more than 170,000 people are now working in digital business in the north.
During his last budget speech before the May general election, the chancellor of the Exchequer, said: “We don’t pull the rest of the country up by pulling London down. Instead we will build on London’s success by building the northern powerhouse.
More tech-focused Budget announcements
- New measures to support scientific research and jobs in science and innovation.
- A range of measures to help support the growth of technology and digital government across the UK.
- Government Digital Service will have its remit extended to cover local authorities.
- Initiatives to encourage research into networking technologies, including the internet of things and 5G mobile networks.
“Our agreement with Greater Manchester on an elected mayor is the most exciting development in civic leadership for a generation – with the devolution of power over skills, transport and now health budgets.”
He also announced that Greater Manchester is now allowed to keep 100% of growth in local business rates.
“For where cities grow their economies through local initiatives, let me be clear, we will support and reward them. We will also offer the same business rates deal to Cambridge and the surrounding councils, and my door is open to other areas too,” he said, “for our ambition for a truly national recovery is not limited to building a northern powerhouse. We back, in full, the long-term economic plans we have for every region.”
Boosting the economy nationwide
In June 2014, Osborne called for a dialogue on boosting the UK’s regional economy by constructing Britain’s third high-speed rail line between Manchester and Leeds. The move was an attempt to address concerns that the economic recovery is failing to spread beyond Greater London.
But, according to Osborne, the announcement will not just be limited to the north.
“Over the past year, the north grew faster than the south. We are seeing a truly national recovery. And where is employment growing fastest? The north west. Where is a job being created every 10 minutes? The midlands. And which county has created more jobs than the whole of France? The great county of Yorkshire,” he said.
Setting out his Budget 2015 plans, he said: “We choose jobs. This Budget does more to back business and make work pay, so we create full employment. We choose the whole nation. The Budget makes new investments in manufacturing and science and the northern powerhouse for a truly national recovery. We choose responsibility. This Budget takes further action to support savers and pensioners. We choose aspiration. This Budget backs the self-employed, the small business owner and the homebuyer.”
Investing in UK tech sector
Commenting on the Budget, KPMG technology sector head Tudor Aw said: “The £11m investment to boost tech hubs and incubators throughout the UK is terrific news and a real boon to the sector. KPMG's recent Tech Monitor revealed that while tech startup activity is at all time high, it remains highly concentrated in London. It is critical that we do more to encourage tech hubs in other key cities and this investment is an important step towards this.
The £11m investment to boost tech hubs and incubators throughout the UK is terrific news and a real boon to the sector
Tudor Aw, KPMG
“Encouragingly, our research also shows that UK tech startups have a high two-year survival rate of 82%, much higher than the UK average of 76%, so this should be money well spent by the chancellor.”
The government also announced plans to make amendments to the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs), with the aim of offering more support for small and growing companies.
A cap will be introduced on total investment received under the tax-advantaged venture capital schemes of £15m, and £20 m for knowledge-intensive companies. The employees limit for knowledge-intensive companies will also be increased from 249 to 499.
More support for financial technology startups was also announced, with the unveiling of a “package of measures to further support competition in banking”. The package aims to set out a framework for “legitimate digital currency businesses” and aims to help tech startups gain access to banking data.
The Budget Book reveals that Innovate Finance will deliver its fintech regional strategy through a series of local partnerships. An initial partnership has already been created in Leeds, with others to follow in Manchester and Edinburgh by April, and in Newcastle, Bristol and other centres before the end of 2015.
Support for women in IT
The government also used the Budget to announce that The Government Equalities Office IT challenge fund will be extended for one year in 2015-16.
According to the Budget Book an additional fund of £1.1m will “support women to take their business online and take advantage of superfast broadband”.
During his speech, Osborne said: “The gender pay gap has never been smaller.”
UK economy making a comeback
According to Osborne, the UK will have the potential to overtake Germany in the next 15 years, to have the largest economy in Europe.
“Five years ago, that would have seemed hopelessly unrealistic; economic rescue was the limit of our horizons. Today, our goal is for Britain to become the most prosperous of any major economy in the world in the coming generation, with that prosperity widely shared across our country.”
He concluded: “We have provided clear decisive economic leadership – and from the depths Britain is returning. The share of national income taken up by debt – falling. The deficit down. Growth up. Jobs up. Living standards on the rise. Britain on the rise. This is the Budget for Britain. The Comeback Country.”
“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.”