Chancellor Rishi Sunak delivered his Autumn Budget speech in late October 2021, detailing the state of the economy, future spending plans and some changes to the tax system.
A number of the biggest announcements were designed to boost innovation, too. Here’s everything tech businesses need to know about Autumn Budget 2021.
Research & Development (R&D)
The Chancellor focused a good portion of his speech on R&D, starting with spending plans.
First, he committed to hitting the Government’s goal of getting its R&D spending to £22 billion by 2026/27 – by reaching at least £20bn by 2024/25, the last financial year of the current Parliament.
Sunak added that R&D as a percentage of GDP would reach 1.1% by 2024/25 – higher than Germany’s current 0.9% and the USA’s 0.7%, but woefully behind schedule if he’s going to hit his target of 2.4% by 2027.
The increased funding will go into a range of initiatives, including:
- increasing core science funding to £5.9bn per year by 2024/25
- establishing a new advanced research and invention agency with £800 million by 2025/26
- increasing Innovate UK’s annual budget to £1bn.
The Chancellor also announced changes to the way the R&D tax credit system works.
First, what counts as R&D is being expanded to include cloud computing and data costs to, as Sunak put it, “reflect how businesses conduct research in the modern world”.
He also announced the Government will “incentivise greater investment here at home”, given how, of the £47.5bn that R&D tax credits cost the Government in 2019, only £25.9bn was rewarded for research done in the UK.
“We’re subsidising billions of pounds of R&D that isn’t even happening here in the United Kingdom,” Sunak said.
However, he stopped short of explaining what exactly these incentives will be, while the full Autumn Budget report simply reads:
“The Government will refocus the reliefs towards innovation in the UK”.
Immigration and skills
The Chancellor also introduced measures to encourage innovation, firstly by announcing an overhaul to the UK visa system to attract the world’s best in science and tech.
In Spring 2022, the Government will launch ‘scale-up’, ‘high potential individual’ and ‘global business mobility’ visas to, as the full Budget document puts it, “attract highly skilled people and support inward investment”.
The Treasury is also increasing skills spending over the span of Parliament by £3.8bn – an increase of 42% – which will be used to:
- expand T Levels
- build new institutes of technology
- quadruple the number of spaces on skills boot camps
- increase funding for apprenticeships.
Digital health investment
Sunak also pledged £2.1bn over the next three years to support digital technology to connect hospitals and other care organisations.
This will be funded by the new 1.25% health and social care levy, along with an increase to the rates of dividend tax, which is expected to raise around £13bn per year.
The Budget reads:
“This will help hospitals and other care organisations be as connected and efficient as possible, freeing up valuable NHS staff time and ensuring the best care for patients wherever they are.”
It’s also the largest ever cash uplift for health R&D, which will hopefully help world-leading research to develop pioneering new treatments.
Talk to us about what other opportunities might be available for your technology in Autumn Budget 2021.