Budget 2021: The tech industry reacts

From 'music to our ears', to 'robbing Peter to pay Paul', here's what the sector thinks

Many of the measures outlined in Chancellor Rishi Sunak's Budget were telegraphed in advanced, meaning the tech industry has had some opportunity to digest them. Here is a selection of reactions.

A new £520 million Help to Grow scheme will offer up to 130,000 companies across the UK a digital and management boost.

Will help SMEs to upgrade their capabilities

"techUK particularly welcomes the creation of this scheme, which we called for, will help thousands of SMEs to upgrade their capabilities and create new highly skilled jobs across the UK. Research by techUK and our members have shown that this kind of support is in high demand and we stand ready to do our part to ensure this scheme is delivered successfully.

"The Chancellor has also listened to calls from the tech sector to enable the best and brightest talent to come to the UK through a new fast track visa scheme as well as supporting domestic retraining with additional financial support for both apprenticeships and traineeships." Julian David, CEO at trade organisation techUK.

Digitisation and cloud-based operational models are the way of the future

"It's good to see the government offering guidance and channelling resources towards a specific and sensible direction, rather than simply throwing money at businesses and hoping for the best.

"It's clear that digitisation and cloud-based operational models are the way of the future, and businesses that don't embrace this are going to have a difficult time competing in the post-Covid era. Finance decision makers in particular ought to use this ‘great pause' to reassess their business and payments strategy, ensuring that these are fully optimised for life beyond the lockdown," Darren Upson, VP small business Europe at fintech company Soldo.

A positive step

"The funding increase for digital skills, apprenticeships and trainees is a positive step and will go some way to both addressing the skills gap and the current levels of unemployment," Alan Laing, Managing director for UK & Ireland at enterprise software vendor IFS

It may wither on the vine because of insufficient funding.

‘The new Help to Grow scheme for small businesses is a good idea but may wither on the vine because of insufficient funding. Digital training for small businesses is an excellent concept. However, a reported budget of £520 million is a drop in the ocean compared to the sea of debt many fledgling businesses have accumulated during lockdown," David Jinks Head of consumer research at courier firm ParcelHero.

Beginning April 2021, the new 'super-deduction' will cut companies' tax bill by 25p for every pound they invest in new equipment. This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.

Missed opportunity

"We are standing on a brink of a potentially huge turning point towards a digital economy. Whilst the super deduction is a bold policy, it presents a massive missed opportunity to empower a digitally-led recovery. The scheme incentivises investment in physical assets like plant and machinery, but excludes investment in technology. We know that two-thirds of SMEs want to invest in technology, but 60% don't have the funds to do so right now. This seems counterintuitive in an age where digital needs to be front and centre of every business - and in a country like the UK where the vast majority of businesses are service-based," Paul Struthers, UK Managing Director of software vendor Sage.

Extend to cloud and AI

"The creation of a National Infrastructure Bank with a specific remit to support digital, a review of R&D tax reliefs and the new super-deduction will also help increase investment across the UK. However, we would strongly encourage that these schemes, including the Super-Deduction, are applicable to the needs of modern businesses who increasingly rely on intangible digital investments in cloud-computing, data and AI tools to boost growth," Julian David, CEO, techUK.

The £375 million UK-wide ‘Future Fund: Breakthrough' will invest in highly innovative companies such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million of funding.

Music to our ears

The Chancellor's announcement that the government is committed to supporting the technology and life sciences sectors in the UK, is naturally music to our ears. The commitments to attract ‘scientific superstars' to the UK via visa reforms and the intention to unlock pension funds to support innovative companies, are welcomed. In the UK we have great academia, a history of innovation and, importantly, a great funding eco-system but there is always room for improvement and the consultation to better understand how pension funds can be accessed to support this ecosystem will complement the great work already underway via the Enterprise Investment Scheme," Ian Warwick, Managing partner at Deepbridge Capital.

The government bounce back loans (BBLs) and coronavirus business interruption loan scheme (CBILS) are coming to an end, but the Treasury is launching a new loan scheme to run until the end of the year, offering loans of £25,000 - £10 million.

We're pleased to see the government prioritise

The BBLS and CBILS played instrumental roles in keeping many resilient SMEs alive and acted as important triage systems to identify and support viable businesses that needed credit, and we are pleased to see the government look beyond this triage phase and instead identify, prioritise and protect our most resilient individual business sectors and segments." Darren Upson, VP small business Europe, Soldo.

The rate of Corporation Tax will increase to 25 per cent. The increase will not take effect until 2023. Businesses with profits of £50,000 or less will continue to be taxed at 19 per cent and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25 per cent rate.

Robbing Peter to pay Paul

‘It was all-too obvious that, despite the £65 billion the Chancellor claims to be spending, there was not enough cash to splash to save many businesses. Today's Budget was a start, but much more needs to be done now to save independent local retailers and small manufacturers struggling with the double jeopardy of Brexit and Covid. High Street restaurants and pubs are now drinking in the last-chance saloon bar.

"The increased corporation tax will also do nothing to encourage European companies looking to create UK arms to maintain a relationship with Britain post-Brexit. The government has, on the one hand, introduced measures to help businesses but, on the other hand, raised their tax burden. It's simply robbing Peter to pay Paul, and increased corporation tax will do nothing to encourage European companies looking to create UK arms to maintain a relationship with Britain post-Brexit," David Jinks, Head of consumer research, ParcelHero.

The government is fast-tracking visa applications to attract highly skilled workers in a move aimed at boosting the FinTech sector.

The industry needs access to the very best talent

"In order to keep ahead of the game and cement the UK as a leading player in the global fintech sector, the industry needs access to the very best talent. While we welcome measures to enhance the stature of the UK among talented overseas tech specialists, we also support any policies which can provide young people in the UK access to employment opportunities in this exciting sector. This support should not be focused on London alone.

"We welcome the findings of the Kalifa Review, which recommended that focus is given to nurturing the high growth potential of fintech clusters across the UK," Adam Holden, CEO of compliance solutions software provider NorthRow.

A golden opportunity

"The new visa presents a golden opportunity for the UK to continue to trailblaze in fintech — encouraging entrepreneurialism, investment and growth. Doing this will ensure UK tech companies have access to the global market opportunities they deserve to foster innovation and to keep making waves in the fintech industry." Rafa Plantier, Head of UK & Ireland at open banking platform Tink.

The furlough scheme will be extended to end of September. There will be £5 billion in new Restart Grants - a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.

Positive, but there's an unexpected extra cost

‘Many jobs will be saved by the extension of the furlough scheme to the end of September, but the fear is that it is just postponing the inevitable for many more. The news that businesses will have to contribute 10 per cent of employees' salaries in July and 20 per cent in August and September is an unexpected extra cost, David Jinks, Head of consumer research, ParcelHero.

Incredibly encouraging

"The Government had little choice but to extend the business rates holiday, along with the furlough scheme and VAT cuts. Given the understandably cautious route out of lockdown, it is only right that businesses - particularly those within the hospitality, retail and leisure sectors - continue to receive financial aid.

"Positively, the Chancellor has realised that extending existing policies will only take business recovery so far. And so, he's gone further still, and it's incredibly encouraging to see a number of initiatives to help SMEs, including incentives to hire trainees and apprenticeships, a new visa system for people with high-level skills, and freezes on various taxes," Nic Redfern, UK finance director at financial comparison site NerdWallet.

Welcome relief

"The Chancellor has lived up to his promise by prioritising emergency support for UK businesses. Ongoing pressures caused by Covid-19, not to mention the additional challenges posed by Brexit, have meant that as many as 25 per cent of British companies fear they will not survive until the end of the year, according to a recent study by One World Express. So, the extension to the furlough scheme, coupled with reinforced support for the self-employed and prolonged VAT cuts, offers some welcome relief," Atul Bhakta, CEO of e-commerce company One World Express.

Green and cleantech

There will be £4 million made available for a biomass programme to identify ways to increase the production of green energy. Plans for at least £15 billion of green gilt issuance was also announced to finance projects to tackle climate change and other environmental challenges, fund important infrastructure investment and create green jobs across the UK. A new national infrastructure bank will open in Leeds with £12 billion capitalisation from the government.

Falling short

"The Chancellor has recognised the need to do more to realise our net zero ambitions and promote investment in cleaner energy and the circular economy - however, measures in this area fall far short of those needed to bring about the kind of change needed to hit our current sustainability targets.

"This budget should always have been focused on balancing the short and long-term needs of the country and economy, rather than balancing the books over the course of this parliament. Only time will tell whether the Chancellor has gone far enough, or whether internal party politics has hindered efforts to ‘build back better'," Alan Laing, Managing director for UK & Ireland at IFS.

"One area that is notably absent from today's budget is the circular economy. While the UK produces significant quantities of high value machinery and electric vehicles, some of the components for those products, like cobalt and nickel, have to be dug out of the earth elsewhere and imported. Instead of relying on imports of scarce natural resources, we should be placing more of a focus on recovering, reusing, and recycling those resources from assets already in circulation at the end of their life," Colin Elkins, VP manufacturing industries, IFS.

"As [electricity] usage surges with industry drawing more and more power from the grid and more electric vehicles (EVs) and coming in to use, we need to invest not just in charging infrastructure, but more in renewables, as well as improving our existing assets - until energy providers and the government fully understand the condition of their infrastructure, transformation will be an uphill struggle, and outages like those we've seen in Texas this year are a very real possibility for the UK,"Antony Bourne, SVP industries, IFS.