Rishi Sunak’s Budget backs an era of optimism post Covid, driven by Science, Technology and Innovation
The Chancellor announced his ambition to establish an economy fit for a new age of optimism beyond Covid, boosted by science, technology and innovation, but with levelling up at the heart of this goal. Today’s budget saw a number of significant measures relevant to the Angel and early stage investment community.
Notably, as already announced this week, we were heartened by the Chancellor’s announcement of a £150m further boost to the British Business Bank Regional Angels Programme Co-Investment funds. This recognises the vital role that Angel Investment plays in supporting business innovation growth and the vital need to boost angel capacity in the regions, as a key part of the levelling up agenda. In addition, British Business Bank has been allocated a further £1.6bn levelling up funding to expand its regional investment funds beyond the Northern Power house and Midlands Engine and Cornwall/Scilly to develop further funds for the North East and South West as well as further new funds for Wales, Scotland and Northern Ireland.
The Chancellor emphasised the Government’s commitment to boosting Science Research and Technology and driving business led innovation as a core means to achieve a high wage, high-skilled and high productivity economy. This includes an increase in Public R&D investment to £20bn by 2024, increasing core science funding by £1.1bn and commitment to fully funding the Horizon Europe programme. Innovate UK’s budget will also be significantly increased making over £1bn available annually by 2024 to support grants for business-driven innovation which also offers vital leverage for Angel and VC investment.
The reform of R&D tax reliefs to make them fit for purpose was a further welcome announcement by expanding qualifying expenditure to include data and cloud computing costs and refocusing support towards UK-based innovation, aimed at improving compliance and addressing abuse of the system.
The need to attract further international investment and increase access to high skilled international talent was also identified as a core priority to back business driven innovation. Measures include a new £1.4 billion Global Britain Investment Fund to attract new investment including £354m to support new investment in lifesciences, manufacturing industries, offshore wind and zero emission vehicles. This is complemented by a new re-domiciliation regime making it easier for “Internationally mobile companies” to relocate to the UK bringing access to investment and skilled jobs.
Further details of the new Scale-up visa launching in spring 2022 were also announced to attract the brightest and best global talent to the UK to support fast-scaling companies. In addition, a new Global Talent Network was announced to bring highly skilled people to the UK in key science and technology sectors. These will be scouted from key tech talent hubs in the US and India with more hubs due to be identified.
A further welcome announcement was that the Government is going to consult on the removal of the Pension Charge Cap which restricts the ability of pension funds to deploy capital into VCs. This represents an important step in incentivizing UK institutional investors to back innovative companies and UKBAA will keep you informed of these developments.
Highlights from the Budget
- Increasing public investment in R&D to £20 billion per year by 2024-25, representing an increase of around a quarter in real terms over the Spending review period.
- That includes £5 billion on health R&D over the Spending review period, including for genomics and to support the life sciences industry.
- Reforming R&D tax reliefs by expanding qualifying expenditure to include data and cloud computing costs and refocusing support towards UK-based innovation, targeting abuse, and improving compliance.
- Increasing support for business-driven innovation, with funding for core Innovate UK programmes to reach around £1 billion per year by 2024-25.
- A new £1.4 billion Global Britain Investment Fund to support new investment in manufacturing industries across the UK, including offshore wind, zero emission vehicles and life sciences.
- A new re-domiciliation regime making it easier for companies to relocate to the UK bringing increased investment and skilled jobs.
- Scale-up visa in spring 2022 to attract the brightest and best global talent to the UK.
- New Global Talent Network to bring highly skilled people to the UK in key science and technology sectors.
- Delivered through the British Business Bank:
- Expanding the Regional Angels Programme by £150 million
- Expanded Regional Funds Recognising the success of the Bank’s dedicated Regional Funds, the Government has committed £1.6bn a next generation of funds. This will include
- £660m for the Northern Powerhouse Investment Fund, including an expansion into the North East of England
- £400m for the Midlands Engine Investment Fund [including £50m to top-up the existing fund to ensure no gap in provision]
- £200m to provide a new fund for businesses in the South West of England, building on the Cornwall and Isles of Scilly Fund.
- £150m to provide a new fund for Scottish businesses
- £130m to provide a new fund for Welsh businesses
- £70m to expand provision for businesses in Northern Ireland
- Extension of Recovery Loan Scheme to 30 June 2022, having already seen total funding of over £1bn offered to businesses by the scheme’s diverse range of accredited partners.
