Tech sector left wanting after UK budget overlooks key industry concerns
The UK budget has been met with mixed reactions as Chancellor Rachel Reeves announced sweeping tax hikes for businesses, increased employment allowance, and heightened tech investment.
While critics suggest some moves threaten to hurt growth, particularly for small and medium-sized enterprises (SMEs), others promise more breathing room and greater access to resources.
Delivering the first Labour budget in 14 years, Reeves outlined the party’s commitment to driving growth while filling a £22 billion ‘black hole’ in government finances.
On the growth front, Reeves promised to boost digital infrastructure through a £500 million investment scheme, including ‘Project Gigabit’ and the ‘Shared Rural Network.’
She said £20 billion would be allocated to research and development, along with £500m of funding to the Department of Science, Technology and Innovation (DSIT).
Reeves also committed to using technology more effectively in government, such as to improve the HMRC’s systems.
Elsewhere, though, industry stakeholders raised concerns that the budget lacked any significant commitment to the UK tech scene. There was no specific mention of AI, for example, particularly odd given the current hype and the country’s stake in the industry.
“Given the Autumn budget’s focus on investing in industries of the future, AI must be at the forefront of this innovation,” said James Hall, VP and country manager for UK&I at Snowflake.
Hall noted that for the UK to “truly capitalize” on the country’s AI potential, the government must prioritize investments in data infrastructure.
“With the right resources, the UK can lead in offering responsible and effective AI applications. This will benefit both public services and the wider economy, helping to fuel smart industries and meet the growth goals set out by the Chancellor.”
Reeves missed the opportunity to invest in UK computing capabilities, according to Matt Harris, SVP and managing director for UKIMEA at HPE. Such capabilities are vital to the UK’s competitiveness and growth.
“A lack of investment now, at a time when the European Union, and nations such as US, China, Japan, are making extensive investments into their own computing and AI infrastructure, risks the UK’s ability to nurture and attract top talent, and to deliver innovation and breakthroughs in science and industry,” Harris said.
Nor was there any mention of cybersecurity, an aspect Jamie Moles, senior technical manager at ExtraHop, was keen to highlight. Moles argued this missing aspect raises concerns about the UK’s resilience – a topic that’s been of particular concern among both government and industry figures in recent months.
“Failing to prioritize cybersecurity weakens our defenses and leaves us vulnerable against increasingly sophisticated cyberattacks,” Moles said.
“Recent incidents like the Synnovis cyber attack affecting London hospitals has highlighted just how vulnerable essential services are, and how costly these weaknesses can be to public safety and trust,” he added.
Skills concerns
Though Reeves committed to publishing a ‘Get Britain Working’ whitepaper and establishing ‘Skills England’ to develop a better-skilled workforce, experts were left wanting.
CEO and co-founder of online car marketplace Motorway, Tom Leathes, bemoaned a lack of improved employee equity incentives which, according to him, is a topic rightly pushed by entrepreneurs looking to attract key talent.
He argued that better employee ownership schemes could help counter the headwind of rising employment costs.
“We need the government to deliver policies that not only incentivize founders to get started but also help them encourage the best talent to join them. I’m hoping to see the Government prioritize these points in the coming months as it sees tech founders’ reactions to the budget,” Leathes said.
“Without tackling this challenge head on, we risk the most driven entrepreneurs looking elsewhere to set up businesses and scale. We should be boosting the UK’s entrepreneurial drive, not hindering it,” he added.
CEO and co-founder at The Scalers, Emilien Coquard, echoed Leathes’ sentiments, saying businesses have already been struggling to access essential tech and engineering talent.
“New measures from the Government that could increase the cost of UK workers only hinder this process further and put pressure on already stretched budgets,” Coquard told ITPro.
“Open-minded and ambitious business leaders have already been leaning into the exceptional tech talent found globally to complement their UK headcount, and are likely to double-down on options that provide easier and more reliable access to critical talent that comes with greater cost certainty and without CAPEX risks, to realize growth ambitions in a challenging market,” he added.
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