Budget 2020: £5bn for full-fibre broadband and two per cent digital services tax to go ahead

Government to create UK equivalent of ARPA in technology investment push

The Chancellor of the Exchequer Rishi Sunak has, as expected, announced funding of £5 billion in his Budget today to support the nationwide roll-out of full-fibre broadband.

"We're going to build broadband, railway, roads - if the country needs it, we will build it. Today's Budget provides £5 billion to get gigabit-capable broadband into the hardest to reach places," said Sunak in his Budget speech to the House of Commons this afternoon.

"And [there will be] £510 million of new investment into the shared rural mobile phone network, which means that in the next five years 4G coverage will reach 95 per cent of the country."

Sunak also announced an investment of more than £900 million in research into nuclear fusion, space exploration and electric vehicles - and that the government planned to set-up a UK equivalent of US research agency ARPA.

"As we invest in ideas, we're also changing the way we fund science in this country. I can confirm that we will invest at least £800 million in a new blues-skies funding agency here in the UK, modelled on the extraordinary ARPA [Advanced Research Projects Agency] in the US," said Sunak.

We will invest at least £800 million in a new blues-skies funding agency here in the UK, modelled on the extraordinary ARPA in the US

Another £400 million of funding into "high quality research" will be poured into universities around the UK in a bid to help the rest of the country ‘level up' with London and the South East.

The technology sector should also benefit from an increase to the Research and Development Expenditure credit, which will go up from 12 per cent to 13 per cent.

However, the Budget was punctuated by a number of new taxes or tax increases, including changes to Entrepreneurs' Relief that, Sunak claimed, would raise £6 billion in tax over the next five years.

Perhaps more controversially - especially in view of the UK-US free trade agreement talks coming up - Sunak confirmed that the government would be pressing ahead with its proposed digital services tax, which is due to come into force in April.

This will largely affect major US-owned online companies, such as Facebook, Google and Amazon, with an additional two per cent levy on their UK revenues. HMRC calculates that it raise an extra £515 million in taxes by the end of fiscal 2025, although global talks are ongoing with regard to measures that could supercede this levy.

The US government led by President Trump has threatened to impose tariffs on French products in retaliation to a similar measure by the French government. The US government claims that these taxes have been designed to specifically target a small range of American companies.

Sunak also announced a number of schemes intended to help businesses deal with the economic fall-out from the COVID-19 coronavirus outbreak, including loan guarantees for small businesses, covering the cost of 14 days statutory sick pay for organisations with fewer than 250 employees, and extending the business rates retail discount in England to 100 per cent in 2020-21 for properties below the £51,000 rateable value.

The support comes as the World Health Organization finally declares a pandemic, after 121,000 in 118 countries have been diagnosed as infected with COVID-19, while more than 4,360 have died.

Sunak warned that up to one-fifth of the UK's working population could be off work at any one time in the very near future due to the virus, while supply chains across the world have already been disrupted. At the same time, he added, there will also likely be a fall in consumer spending.