“To maintain the UK’s place as a leading tech ecosystem, it’s important that the government move swiftly to implement the Mansion House reforms to support innovative companies to access the capital they need to scaleup domestically and we encourage the government to explore other sources of investment held in UK financial institutions.
Continued investment in the UK’s AI sector, including through the Alan Turing Institute, is vital to support the development of emerging technologies and engineering that can help to address complex societal challenges. However, it’s crucial that this continued investment is delivered in a way that unlocks opportunities for innovation, skills development and economic success in all nations and regions across the UK, to ensure that advancements in AI engineering contribute to a more inclusive economy.”
– Prof Sir Jim McDonald GBE FREng FRSE, President of the Royal Academy of Engineering
The Chancellor could hardly be accused of creativity with his Spring Budget 2024 announcements. Most of the money went on a repeat of his Autumn tax cut; a further 2% cut to the main rate of national insurance contributions for employees and the self-employed. This is forecast to cost around £10bn in 2024-25. The public coffers are so sparse that not much was left for showstopper policies in other areas.
There was a bit of good news for select pockets of the UK creative sector, with proposals to enhance tax reliefs announced for:
- Independent films (i.e. those with a budget <£15m) will get Audio Visual Expenditure Credit (AVEC) of 53% (versus standard AVEC rate of 34% for film generally (expected to apply from 1 April 2024) .
- Visual effects spend, which could get AVEC of 39% (versus the standard 34% for film and high-end TV) from April 2025.
- Theatre, Orchestras, and Museums & Galleries which could benefit from enhanced, permanent tax relief under their own special regimes from 1 April 2025 of 40% (or 45% for touring productions and orchestras). The current rates are a little higher but was only ever intended as a temporary regime. A permanent regime is very welcome.
In addition, the Chancellor proposed partial business rates relief for eligible film studios (to be implemented as soon as possible).
This is all fine and dandy – it adds up to an additional expected subsidy of £1bn over the next five years – but there was no broader vision in evidence, and pickings were slim for innovation more generally. The video games industry will be disappointed that requests to make the new Video Games Expenditure Credit more generous have apparently been ignored.
There were a few tech and innovation announcements, including:
- A new £7.4 million AI Upskilling Fund pilot to help SMEs develop AI skills.
- £3.5 million to fund two new data pilots “to drive high quality AI in education and improve access to data in adult social care”.
- Up to £100 million investment in the Alan Turing Institute (which is the UK national institute for AI and data science) over the next five years.
- Launch of a consultation to seek views on how best to implement the Crypto-Asset Reporting Framework (which is an international initiative facilitating cooperation between tax authorities to cut down on evasion and non-compliance around crypto transactions).
Some of these initiatives complement the previously-announced ’SME Digital Adoption Taskforce‘ and ’AI Opportunity Forum’, all of which are trying to pitch the UK as at the forefront of new technology adoption. The hope is that this will boost British productivity and grow the economy. But compare the above numbers to the one-year impact of the NICs cut and the fuel duty freeze (£13bn next year alone). The Government believes – or at least purports to believe when an election looms – that tax cuts are a better way than investment to revive the British economy. Whether it is right in either electoral or economic terms, I guess we’ll find out soon enough.
“For the wider economy, it’s positive that we’ve seen generous support announced for other key growth sectors like clean energy, advanced manufacturing, digital tech, and life sciences. Now, we must keep pushing for equivalent strategic and substantial interventions for the creative and cultural sectors.
For us, this means committing to further investment to develop creative content and IP. It also means delivering the £270 million Arts Premium, as promised in the Conservative Party Manifesto in 2019, and committing to a full review of the investment landscape which will help catalyse more private finance into the sector.”
– Caroline Norbury OBE, Chief Executive of Creative UK
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