Chancellor Philip Hammond’s 2018 Budget dishes out £1.6bn for ‘advanced’ tech and innovation

The 2018 Budget promises £1.6bn to fund “advanced technologies” such as artificial intelligence and quantum computing, £200m for rural broadband and £150m for tech fellowships, along with plans to impose a digital services tax for web giants

Chancellor Philip Hammond has pledged significant tech funding in the Autumn Budget, including £1.6bn for “advanced technologies” and funding to attract overseas tech talent.

Announcing the government’s 2018 Budget, Hammond said “scientific and technological discovery” was “pouring out” of the country’s universities and tech industry. He said the government would commit £1.6bn of new investment to support technology as set out in the modern industrial strategy, such as nuclear fusion and quantum computing.

The Budget red book said £235m would be invested to support the “development and commercialisation of quantum technologies”, including £70m from the Industrial Strategy Challenge Fund and £35m to create a national quantum computing centre. 

“These technologies will transform capabilities in computing, sensing and communications, bringing promising new approaches to solving global problems such as disease and climate change,” it said.

Hammond also slammed a 2% digital services tax on internet giants such as Amazon, Facebook and Google to ensure they make a fair contribution to funding public services.  

There is currently ongoing work to set out an international agreement, forcing the internet giants to pay tax on profits generated in EU member states, even if they do not have a physical presence there.

However, Hammond said progress on a global agreement was slow, and that it was not fair that digital platform businesses could generate substantial value in the UK but not pay tax.

“We cannot continue to talk forever,” he said, adding that the UK was imposing a digital services tax now, while it awaited the international deal.

The tax, which will come into force from April 2020, will only be applicable to firms with a global revenue of more than £500m a year, and should contribute £400m to the UK economy annually by 2022-23.

The Budget red book added that as part of the government’s commitment to research and development (R&D), it was increasing the Industrial Strategy Challenge Fund by £1.1bn, “supporting technologies of the future”.

This includes up to £121m “to support the transformation of manufacturing through digitally enabled technologies, such as the internet of things [IoT] and virtual reality”.

Hammond also pledged to increase the National Productivity Investment Fund (NPIF) to £38bn by 2023-24. £200m from the NPIF will be used to pilot “innovative approaches in deploying full-fibre internet in rural locations”, beginning with primary schools.

Hammond also confirmed that the government would roll out its IR35 regulations to the private sector, but said the roll-out would be “delayed until April 2020” and only cover large and medium-sized businesses.

“Small organisations will be exempt, minimising administrative burdens for the vast majority of engagers, and HMRC will provide support and guidance to medium and large organisations ahead of implementation,” the Budget red book said.

Apprenticeships and skills

The government’s apprenticeship scheme will also get an overhaul. The scheme, which came into effect at the beginning of April 2017, requires firms with a payroll worth more than £3m to contribute to the apprenticeship levy.

The government hoped the scheme would create three million apprenticeships by 2020 and said the new system should help to fund higher-quality science, technology, engineering and maths (Stem) apprenticeships. 

However, the funding has not been as successful as promised. Hammond used the 2018 Budget to announce that small businesses would only have to pay a 5% apprenticeship levy, rather than the standard 10%, as part of a £695m package to support apprenticeships.

The chancellor’s 2018 Budget also set out £150m in funding for technology fellowships to attract “overseas tech talent to our shores”.

“To attract, retain and develop world-leading research talent, the government will invest up to £50m in new Turing AI Fellowships to bring the best global researchers in AI to the UK, and £100m in an international fellowship scheme,” the Budget red book said.

Other tech announcements in the Budget included £20m to fund skills pilots and £12m over the next three years for cutting-edge fisheries technologies. 

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