Technology and science firms received a boost in today’s Budget but entrepreneurs clamour for stronger action on the skills shortage from the Chancellor
New enterprise zones, digital entrepreneur “hubs”, improved R&D tax credits and extra support for exporters are to be introduced by the Government in a bid to spur innovation and accelerate growth among the nation’s small-and-medium-sized firms.
In his Budget address, Chancellor George Osborne has announced plans to extend eight existing enterprise zones, which include sites in Liverpool, Yorkshire, Manchester and Oxford.
Mr Osborne said that enterprise zones, which offer cheaper business rates, superfast broadband and lower levels of planning control, had already made a significant impact on the UK economy. These zones, first introduced in 2012, have attracted £2bn in private investment and created more than 12,500 jobs, he claimed.
The Government will create new enterprise zones in Blackpool and Plymouth to ensure that economic growth remains evenly spread across the regions.
The Government has also pledged £11m in funding for new technology entrepreneur hubs in Manchester, Leeds and Sheffield to help drive local growth. The aim is create new digital “clusters” to help UK entrepreneurs create the next Google or Facebook.
Firms that works in the science sector have also received a Budget boost, with £400m set aside for building ground-breaking scientific infrastructure in the UK.
Helping the technology and science sectors thrive is clearly a priority in this Budget, with £140m of investment available for creating “the cities of the future”.
The Government has budgeted £40m to invest in developing Internet of Things technologies, which allow devices to “talk” to one another without human interaction, focusing on healthcare, social care and smart cities, and a further £100m for driverless cars and other “intelligent mobility” innovations.
Growing firms that invest heavily in research and development (R&D) will benefit from a package of measures.
A survey of small-to-medium-sized enterprises (SMEs) in the UK by financial services firm KPMG earlier this year found that only 5pc had taken advantage of R&D tax credits. To increase take-up, the Government has used the Budget to pledge to raise awareness of the scheme over the next two years. The process of applying for these credits will also be streamlined.
To further accelerate the pace of innovation in the UK, the Government has announced plans to make ultrafast broadband available nationwide. No timeframe for this roll-out was announced, but the Chancellor asserted that he was “committed” to supporting the digital needs of UK small businesses.
Mobile broadband will also receive a £600m investment.
Digital businesses were not the only winners in today’s Budget. The Government plans to double its investment in British firms exporting to China by increasing resources at UK Trade & Investment (UKTI). “The Government is committed to improving economic ties with major emerging markets,” Mr Osborne said.
However, Phil Orford, chief executive of the Forum of Private Business, slammed the myopic focus on China. “We would like to have seen additional tax incentives to encourage a wider spectrum of smaller firms to consider trading overseas,” he said. “Further stimulus will be crucial if we are to remain on course to meet the UK’s ambitious export target of £1bn by 2020.”
The Government has also introduced a new Apprenticeship Voucher to help small firms take control of the recruitment and training of apprentices. This will take the form of a “cash contribution” towards the cost of training but no new funding has been made available. National Insurance Contributions for under-21s have also been abolished to help growing businesses who employ young people.
Ben Halford, boss of Surface Generation, a composite manufacturer based in Leicestershire employing 30 people, said that while the measures to help small firms employ apprentices and young people are welcome, the Budget has done nothing to address the biggest issue facing businesses – the lack of skills in the UK workforce .
“Every year, the UK faces a shortfall of more than 81,000 people with engineering skills in the workforce and this is threatening the country’s economic recovery,” he said. “This Budget’s tax breaks are paid for by exports. The country needs to double the number of entrants into engineering across all levels of qualification, but in the short-term it must be made easier for employers to recruit from outside of the EU.”
Many entrepreneurs felt that the Budget did not go far enough to support new and growing businesses.
According to Ami Shpiro, founder of London-based entrepreneur hub Innovation Warehouse: “The Government is right to try to encourage the creation of tech and enterprise zones across the country, but what we really need is more support for small businesses, more investment in education and skills, and an immigration policy that allows us to pick the best and brightest.
“High-speed broadband will prove vital to improving connectivity and driving productivity, which has increasingly been a problem in Britain,” he added. “It is essential we see more tech clusters emerge outside of London and the South East, just as investment in regional cities begins to grow.”
This article was written by Rebecca Burn-Callander Enterprise Editor from The Daily Telegraph and was legally licensed through the NewsCred publisher network.