Out-Law News 2 min. read

UK Budget 2024: vital role for tech and science recognised

The Budget announcement delivered by UK chancellor Jeremy Hunt on Wednesday recognises the central role that technology and scientific innovation can play in boosting productivity, investment and growth in the UK economy, an expert has said.

Sarah Cameron of Pinsent Masons, who specialises in technology law and contracts, said the potential of technology and scientific innovation was reflected in several of Hunt’s funding and policy announcements.

Cameron said: “The various announcements in the Budget, taken in the aggregate, demonstrate a well-founded belief in the potential for technology to improve productivity and greater investment in UK, and should hopefully serve to maintain or improve the UK’s reputation and standing in a highly competitive global tech market.”

Hunt pledged £3.4 billion of new money to support digital transformation in the NHS, identifying the potential of technologies such as AI and the power of data to reduce the time NHS staff spend on administrative tasks and improve patient access and services.

Hunt’s NHS funding pledge reflects a broader policy the Treasury has adopted in respect of its funding of proposals across public services. He cited figures from the Office for National Statistics that has estimated that productivity across public services is 5.9% below what it was prior to the Covid-19 pandemic.

Hunt said the Treasury will “prioritise proposals that deliver annual savings within five years equivalent to the total cost of the investment required” – and he pledged £800 million of funding beyond that earmarked for NHS digital transformation, much of which will be used to explore how technology can be used to deliver productivity savings. For example, £230m will go towards the piloting of technologies by the police – including testing the use of drones as “first responders”.

Funding for R&D in the automotive and aerospace sectors, totalling around £3bn, was also confirmed in the Budget. The funding will be available for five years from 2025. New funding was also confirmed in the field of UK life sciences, with £45m committed “to bolster medical charities’ life-saving research”.

Hunt also outlined measures designed to provide investment to UK science and technology companies from the UK’s financial system. Among other things, he confirmed the UK government would provide £250m of public funds under its Long-term Investment for Technology and Science (LIFTS) initiative, to support investment into UK science and technology companies. In total, with pensions capital also crowded in under the initiative, the government hopes that LIFTS will deliver more than £1bn of investment.

A new AI upskilling fund pilot, worth £7.4m, was also announced in the chancellor’s Budget. The Treasury confirmed that the money will be used to “help SMEs develop the AI skills of the future”. A new SME digital adoption taskforce is also be set up to “investigate how best to support the adoption of digital technology by SMEs in order to boost their productivity”, it said. Among other announcements on digital technology and AI, the government confirmed plans to invest up to £100m in the Turing Institute over the next five years.

The role for technological innovation in transforming the energy market in Britain was also recognised by Hunt. He pledged £120 million for the Green Industries Growth Accelerator (GIGA), to support expansion of low carbon manufacturing supply chains across the UK. He also confirmed progress towards the selection by Great British Nuclear of a potentially new and innovative form of nuclear power – small modular reactors (SMRs) – for funding.

Hunt also said that the government plans to publish draft legislation shortly that would extend the concept of ‘full expensing’ to leased assets. The government introduced a 100% upfront tax deduction for UK capital expenditure on plant and machinery last spring, which was made permanent in autumn 2023. Hunt said the move represented a “£10bn tax cut for businesses that gives the UK the most attractive investment tax regime of any large European or G7 country” and that the move had been welcomed by business leaders. The Treasury said the government hoped to extend full expensing to leased assets “when fiscal conditions allow”.

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