Spring Statement 2024: What does it mean for tech?

£800m to boost public sector productivity, and AI everywhere

Chancellor Jeremy Hunt unveiled a "Budget for long-term growth" on Wednesday, with headline measures including a 2p reduction in National Insurance contributions and the abolition of the "non-dom" tax for residents with permanent citizenship outside the UK.

Chancellor Jeremy Hunt unveiled a "Budget for long-term growth" on Wednesday, with headline measures including a 2p reduction in National Insurance contributions and the abolition of the "non-dom" tax for residents with permanent citizenship outside the UK.

It comes at a time when Government spending is falling, but the economy is expected to grow slightly (and we mean slightly - the OBR forecasts 0.8% GDP growth in 2024,) with inflation and interest rates both forecast to fall. It may also be the last big financial set piece before the general election.

The labour market remains tight with many businesses and public sector organisations struggling to find experienced staff.

What does it mean for tech

2022 and 2023 were uncertain for tech, with huge numbers of people made redundant, even as profits soared, a pattern that has continued into 2024. The rise of user-friendly AI caused many tech companies to pivot, redirecting internal teams to investigate AI and jettisoning some that did not fit the new paradigm. Tech companies were also caught up in trade wars between the US and China, and fallout from shooting wars in Ukraine and latterly Gaza.

Since the Autumn Statement 2023 we have seen plenty of policy announcements (National Semiconductor Strategy, AI funding) aimed at positioning UK tech advantageously for the coming age, but little practical information on how, or even when, funding will be allocated. And the funds themselves have generally been relatively paltry.

Today's budget put a little more meat on the bones.

Public sector

A headline announcement was £800 million to boost public sector productivity, focused on technology. The aim is to unlock £1.8 billion in benefits by 2029.

Several areas of the public sector will get a funding boost, including £230 million for the police; £170 million for the justice system; and an additional £17 million for the Department for Work and Pensions (DWP) to continue its modernisation programme. We recently interviewed DWP CIO Richard Corbridge about this programme, and you can read all about it next week.

The money for the police will go towards time-saving technology, like automated redaction of personal information or irrelevant faces captured on security and body-worn cameras.

Some of the funding will also go to AI, triaging calls to the non-emergency 101 number.

On that note, £34 million of the total will specifically be bookmarked for expanding the use of AI across government, making it easier to spot fraud and reduce workload for planning officers.

Some of that money will also go to the NHS, upgrading 100 MRI scanners in England with AI.

The justice system will look to digitise jury bundles, streamline probation decisions and provide officers with more robust data.

The main aim of the funding is to cut time spent on low-value tasks. Hunt said, "We shouldn't fall into the trap of thinking more spending buys us better public services. There is too much waste in the system and we want public servants to get back to doing what matters most: teaching our children, keeping us safe and treating us when we're sick."

Mark Boost, CEO of cloud company Civo, welcomed the Chancellor's commitment to put tech at the heart of the plan for growth "in principle". However, he wondered how much of that funding would benefit the domestic tech sector instead of flowing into the coffers of foreign tech giants.

"My fear is how many UK start-ups will actually see the benefits of these eye-catching funding announcements. The multiple tech projects in the £800 million public sector productivity package are of particular concern. Time and again I have experienced government tenders that essentially shut out tech providers that are not of the scale of the Big Tech ‘hyperscale' providers or other large operators. I saw nothing here to convince me that the same will not happen again."

Rupal Karia, country leader UK&I at data processing company Celonis, cautioned public sector against simply ripping out the old and replacing with the new in its search for productivity gains. Instead it should use analytics and process mining to make the most of what's already there. "With vast amounts of data departments not knowing where to start, the government needs to use technology which provides data-led insights."

The NHS

Hunt said it would cost £3.4 billion to modernise NHS IT systems, "but it helps unlock £35 billion of savings, 10 times that amount." With that in mind, he said, "I have decided to fund the NHS productivity plan in full."

Although there is little detail on what that looks like, the intent is to slash the time lost to outdated IT systems; use AI to cut down on bureaucracy and speed up the reading of MRI and CT scans; and digitise operating theatre processes to accommodate more surgeries. There will also be improvements to the NHS app and a new app specifically for NHS staff.

Rashik Parmar MBE, chief executive of BCS, The Chartered Institute for IT, said: "This level of investment in technology across the NHS and the police is vital to improve the quality and speed of the medical service and criminal investigation. But funding for AI must include investment in digital professionals - people - who will work with it and lead it at all levels. They need not just high degrees of competence, but an understanding of ethical principles, which are key when using automated technology that affects our lives, like processing patient data, or responding to emergency enquires."

Artificial intelligence

The chancellor announced a five-year package of funding worth £100 million for the Alan Turing Institute, the national body for data science and AI. That's roughly double the current funding.

The money will be spent on three main areas: healthcare, the environment and "strengthening defence and national security." Hunt said he hopes wider adoption of AI will boost productivity and the UK's global competitiveness.

The government announced an identical package of AI funding last month. It's safe to assume that's related to today's announcement, but government sources would not confirm it before the Spring Statement.

Alois Reitbauer, chief technology strategist at security company Dynatrace welcomed the boost. "The chancellor's commitment to double government funding for the Alan Turning institute over the next five years is yet further evidence that the UK is moving to position itself ahead of its neighbours as the destination for AI-led innovation in Europe," he said.

However, Erin Nicholson, global head of data protection and privacy at consultancy Thoughtworks, said funding should have been better targeted at infrastructure and education. The UK ranks highly in AI capabilities thanks to a consistent high calibre pool of tech talent, she noted, but, "to keep pace with this, the Spring Budget needed to include funding for data and AI education."

She added "The UK has work to do to educate the public on AI and its usage. Funding could have been allocated to add AI topics to the national curriculum to bridge the gap between understanding and awareness."

Tim Wright, partner and AI expert at law firm Fladgate was also concerned about the flow of talent: "One aspect to address would be to bring in joined up and thoughtful immigration policies which don't keep changing the rules in order to attract and retain global talent," he said.

Angel investors

It was heavily trailed that the chancellor would reverse his planned changes to angel investor rules which would have raised the income threshold to qualify as a high-net-worth individual to recieve investment protections under the Financial Promotion Order from £100,000 to £170,000. After a backlash and lobbying from tech companies and angel investor groups - particularly those which were women led and/or outside the M25, it was reported in various papers that Treasury sources indicated that these changes would be reversed.

That still might be the case, but the chancellor's speech did not contain details.

Tim Wright of Fladgate also called for improved conditions for investment, and for the government to prioritise key areas. The Chancellor should "improve the availability of tax credits and grants to encourage rebate sector R&D, and increase investment in developing infrastructure, perhaps through the creation of high performance computing clusters," he said.