Autumn Statement: Tax breaks and tech investment

Great news if you're a qubit

Jeremy Hunt delivered the Autumn Statement against a very similar economic background to last year's, despite falling inflation.

Growth remains soft, unemployment and the cost of living continue to climb and international war plagues the world stage.

There are, however, two significant changes. First, inflation has more than halved from last year's high; and second, Hunt was able to use this Statement to announce his own measures, rather than clearing up the mess left in the wake of Lis Truss/Kwasi Kwarteng's mini-budget.

Hunt said the government has taken "difficult decisions" to put the economy back on track, and insisted that the Conservatives have taken decisions "for the long term."

"Rather than a recession, the economy has grown... Our plan is working, but the work is not done."

So, what were the headline announcements for tech?

Tax cuts for all

A classic strategy for a party low in the polls approaching an election, Hunt announced a range of tax cuts for both citizens and corporations.

For companies, he made the 'full expensing' tax break he brought in this time last year permanent, allowing companies to deduct the full cost of certain equipment - including IT equipment - from their pre-tax profits. It had been set to expire in 2026.

Hunt also announced £4.5 billion in funding for green technology, with around £2 billion bookmarked for the car industry.

"Taken together we will increase business investment in the UK economy by around £20 billion a year over the next decade and get Britain growing," the chancellor said.

Boost for homegrown companies

One of the more interesting plans was a variant on the Kaufmann Foundation in the USA, which trains investors. The chancellor announced the Venture Capital Fellowship scheme, aimed at training a new generation of British investors to support the UK's science and technology landscape.

The hope is that a "modest" investment early on - the £3 million scheme will offer 20 places - can nurture specialist venture investors, who will do the same for UK tech.

The Department for Science, Innovation and Technology will develop the scheme, which follows a recommendation from the Council for Science and Technology. The council said the UK needs more tech investment if it is to realise the prime minister's goal of become a science and technology superpower.

A source at the DSIT said, "Too often, groundbreaking innovations in the UK remain purely academic or are snapped up by investors abroad.

"By boosting the pool of investors with deep knowledge of the science and tech sectors, we can unlock real financial firepower for the world-class innovation that is happening in the UK and build British-based industries in the technologies of the future."

The chancellor also announced £250 million for two successful bidders under the Long-term Investment for Technology and Science (LIFTS) initiative, which will provide "over a billion pounds of investment" from pension funds and other sources into UK science and technology companies.

Quantum and AI

Pre-announced on Tuesday, Mr Hunt plans a series of quantum supercomputing "moonshots," the most notable of which is the development of accessible, UK-based quantum computers capable of running 1 trillion operations by 2035.

Funding will also be earmarked for areas such as quantum sensors, imaging and financial trading systems. Government officials - but notably not the chancellor - say the funding will be in the region of £200 million - £300 million, and will be part of the £2.5 billion fund pledged for the 10-year national quantum investment roadmap in March.

Quantum computing has, to-date, languished at a foundational level as it relies on physical qubits. Earlier this year, Microsoft proposed adopting "reliable" logical qubits as an alternative to help scale quantum devices towards supercomputing. Notably, the company also mentioned building a quantum supercomputer within the next 10 years.

CEO of Quantum Motion James Palles-Dimmock, said the UK is "well placed to challenge the dominance of markets like the US" in quantum computing, which will help transform the country to a "tech-driven" economy. He added, "Credit to the government for its work in removing some of the barriers to execute on the strategy, such as agreements with the US and Australia and visa programmes so we can bring in skilled talent and getting the UK back into Horizon Europe. But there is still more needed to be done. It's worrying that the UK is excluded from some programmes under the European Chips Act and our national semiconductor strategy hasn't yet provided answers on how we're going to grow a thriving semiconductor industry, which goes hand in hand with a commercially successful quantum strategy."

Accenture managing director, Maynard Williams, said, "Next-generation technologies, for example quantum computing, are not only advanced and complex but require skills that are hard to find and in high demand. To bridge this gap between ambition and action, attention to skills - as well as infrastructure - will be key. Supercomputing certainly needs time to mature, but it's clear it will have a major role to play helping companies effectively transform modelling and reduce feedback loops, accelerating the likes of materials and energy innovation."

On the AI side, the chancellor announced a further £500 million to be invested over the next two financial years, in addition to the £900 million announced in the Spring Budget. The funding is intended to develop new foundation models and other advancements.

Computing says:

The Autumn Statement cut many things, from taxes to benefits, but not tech investments. The government has high ambitions for the sector and is committed to supporting its growth, which we welcome.

Can we blame the government for focusing that funding on 'big bang' tech like AI and quantum, and forgetting about the workhorses like data storage and cloud? Not really. Those mature technologies don't need extra investment and are already dominated by (mostly US) companies, while UK firms still have a chance to make a name for themselves in growth technologies.

However, it was disappointing to see little about extra training or approaches to close the skills gap: the vast gulf between supply and demand of UK tech workers. There was the already-announced plan to have all students continue to study maths until 18 - unlikely to increase the pool of computing graduates - and a few words about apprenticeships, but what is really needed is support all the way through the workforce; both for new joiners and career switchers. Support should be made more available to existing workers who want to retrain into a tech role, without an associated degree.