Just weeks after calling itself ‘unashamedly pro-tech’, the government has outlined an ambitious agenda for science, innovation and digital infrastructure. The Budget unveiled a series of big-ticket spending commitments in the innovation and digital policy space, many of which reflected CBI asks in our budget submission.
On R&D
With a series of announcements on R&D support, there were three major campaigning wins for businesses, which will enable them to continue innovating
- Major increases to public R&D funding with the Chancellor setting out plans to raise funding to £22bn by 2024-25. This will take direct public R&D support to 0.8% of GDP and is major step in putting the UK on course to reach the target of 2.4% spend by 2027. The CBI will now be looking to Spending Review to ensure additional funding supports business R&D all around the UK
- A commitment of £800m for the set-up of a UK ‘ARPA’ agency to fund high risk, high impact research (something the CBI called for all the way back in 2006). Detail on the design for the agency remain scarce but as plans are developed the CBI will continue to make the case that ARPA must be designed with the business community in mind – see our position paper for more
- Pledges to increase the rate of relief for the R&D tax credit to 13% and launch a consultation on qualifying costs. These measures were key asks in the CBI’s ‘Changing Nature of R&D report’ and have the potential to help improve the reach and extent of relief for businesses carrying out R&D. The launch of a consultation is key opportunity to ensure that modern R&D practices are being effectively supported and incentivised.
On digital infrastructure
Seamless digital connectivity is a business basic that is the foundation of an internationally competitive economy and will help businesses to adopt technology, embed flexible working and thrive. As the CBI called for in our digital infrastructure roadmap, Ready Set Connect, the government has:
- Confirmed £5bn investment to deliver gigabit broadband to the hardest-to-reach 20% of the UK and committed £510m for the Shared Rural Network, an ambitious partnership with business to deliver 4G coverage to 95% of the UK by 2026. Over the coming months the CBI will be working with government to unlock other barriers to investment, from planning law to wider business uptake.
On digital adoption, regulation and competition
Being competitive on the global stage means creating an environment which attracts global investment, helps all businesses adopt the latest digital technologies and regulation that keeps pace with a fast-moving landscape. In the Budget, we saw Government commitments to:
- Accept all six recommendations of the Furman Review on digital competition and consult on how to implement these ideas. Ideas include greater personal data mobility, stronger action on digital mergers and greater monitoring of AI to ensure it doesn’t lead to anti-competitive activity.
- Review existing regulations that might hinder digital competition and ensure that regulatory reforms applying to digital and tech businesses are pro-innovation and coherent, which the CBI called for in our response to government’s online harms white paper
- Create a Digital Markets Taskforce within the CMA which will report to government within the next six months on a pro-competitive regime for digital platform markets
- Invest an additional £5m in Be the Business to support small businesses to adopt the latest technology and improve their productivity.
Firms will welcome this focus on pro-innovation regulation, but as always the devil will be in the detail on any regulatory changes, particularly data sharing. The CBI will be consulting members on the forthcoming consultation and are set to meet the CMA’s new cross-regulator taskforce in the coming weeks.
What next?
Do get in touch with your thoughts and reactions to any of the innovation and digital announcements – with Ollie Diss for R&D and Susannah Odell for digital infrastructure, regulation and competition.
This month the CBI will be publishing our Innovation and Digital manifesto for government, outlining how the government can deliver on many of its budget announcements, and how to make the UK more globally competitive on innovation and the digital economy so keep your eyes peeled!