On 27 October, the United Kingdom’s Chancellor of the Exchequer, Rishi Sunak, announced the autumn Budget and spending review. This budget review sets out the British government’s spending plans for each department for the next three years. This year’s statement includes a range of investments in the tech ecosystem, such as digital skills, research and development (R&D), and digital health. We looked into the Budget to see what it means for small and medium-sized enterprises (SMEs), particularly app makers and internet of things (IoT) device manufacturers.

Health and connectivity

The government pledged £2.1 billion to support digital health technology over the next three years. With this investment, the government hopes to free up time for the staff of the National Health Service (NHS) by helping ‘hospitals and other care organisations be as connected and efficient as possible’. The UK has a vibrant SME health-tech sector, whose innovations can increase the NHS’ efficiency while keeping patient data safe. To maximise the return on this investment, we hope that the government allocates a portion of this funding specifically to health-tech SMEs.

Research and development

The government committed to increasing public investment in UK R&D to £20 billion by 2024-25, representing an increase of around a quarter in real terms. The goal of investing 1.1 per cent of gross domestic product (GDP) in R&D by 2024 will place the UK as one of the leading nations for R&D investment. This investment promise is encouraging for app developers and IoT businesses looking to launch, grow, and innovate in the UK.  Another welcome change is the planned expansion of the scope of R&D tax credits to include cloud computing and data costs. This adjustment acknowledges the tools that modern research uses.

Chancellor Sunak said the government will also support private R&D investment by increasing funding for core Innovate UK programmes, reaching circa £1 billion per year by 2024-25, over £300 million more per annum than in 2021-22. Some of our members already benefit from Innovate UK funding, so this is an exciting development.

AI, data, and skills

The government also announced more than £50 million to ensure ‘the UK continues to be a world-leader in its approach to digital technologies’. This commitment includes doubling AI and data scholarships and funding an agenda on data policy and digital identities. The budget review also pledged to advance an Online Safety Bill.

Total spending on digital skills will increase by £3.8 billion by 2024-25 (+42 per cent compared to 2019-20), the Chancellor announced. This increase includes a total investment of £554 million by 2024-25 to substantially boost retraining and upskilling opportunities for adults through funding courses for in-demand areas such as engineering and digital skills. Raising funding for digital skills is essential to support the technical talent of the future that app and connected device makers will require.

Digital infrastructure

The government promised to improve digital connectivity, continuing its landmark £5 billion investment in Project Gigabit to support the rollout of gigabit-capable broadband in hard-to-reach areas across the whole UK. Over the next three years, the government will also provide £180 million as part of its £500 million investment in the Shared Rural Network to deliver 4G mobile coverage to 95 per cent of the UK. Rural connectivity is extremely important as SME innovation happens everywhere, not just in the big cities. 4G connectivity aside, other issues are evolving with respect to internet connectivity. For example, around standard-essential patents (SEPs). While the government is working on a new legislative approach to SEPs, as detailed in the UK Innovation Strategy, addressing SEP licensing abuses is not specifically budgeted for in the Budget and spending review.

Helping SMEs grow through digitisation

Although already announced in the spring Budget, the government recommitted £196 million in 2024-25 for the Help to Grow schemes. Help to Grow aims to enable over 100,000 SMEs to boost their productivity through management training and support for digital adoption. In December, SMEs can access support through an online platform and vouchers, to help businesses with the costs of adopting new software.

Conclusion

While in some areas specifics and details are lacking, the autumn Budget and spending review addresses many of the most pertinent issues in the UK’s digital sectors today. We welcome the government’s investment pledges and look forward to working with policymakers to address additional issues that could stand in the way of the UK’s ambition to be a hub for innovation-driven growth.