CHANCELLOR Philip Hammond has pledged a further £2bn for research and development, alongside £400m to support scale-ups, with fintech firms understood to be at the front of the queue.
Introducing the Autumn Statement to Parliament on Wednesday, the chancellor said that the innovation investments would ensure that the UK keeps on “leading the world in disruptive technology” despite confirmation that the economy will slow next year and borrowing will increase.
The £2bn innovation fund will be used to boost research, development and innovation as well as improving management skills in up-and-coming areas such as fintech, digital and life sciences.
Some fintech companies may also be able to benefit from the £400m Venture Capital investment fund which will be allocated through the British Business Bank (BBB).
“The news in today’s Autumn Statement – that an additional £400m long-term funding is being made available to the British Business Bank – is an important boost to the UK’s innovative, scale-up businesses embarking on their ambitious growth journeys,” said Keith Morgan, chief executive of the BBB.
“Our research indicates that there is a significant finance gap emerging beyond seed and early stage investment, which holds back high growth businesses from meeting their full potential. This additional finance will enable our Venture Capital Programme to broaden its support for later-stage investments and help to close this gap. It underlines our commitment to backing scale-up businesses whose growth can have a significant impact on employment and productivity.”
The BBB will invest alongside private investors into venture capital funds, with the first investments expected to take place by mid-year 2017.
However, against a backdrop of ongoing economic uncertainty, business leaders have called on the Chancellor to do more to help struggling businesses across the UK.
“There will need to be stronger fiscal interventions to boost the economy next year, with the prospect of weaker longer-term growth looming,” said Mike Cherry, national chairman at the Federation of Small Businesses. “Small firms want to grow, export, innovate, recruit and be more productive – and they need to know as soon as possible the framework they will operate in. Today’s moves to tighten conditions for the self-employed must also be followed up with help to give them parity in benefits so that the UK’s army of genuine self-employed people will continue to grow.”
The economic growth projection for 2017 has been revised from 2.2 per cent in March to 1.4 per cent, while the government expects to borrow £122bn more than it had originally planned, as a result of the Brexit vote.
The chancellor also announced that this would be the last Autumn Statement, saying that there was no need for major tax changes to be made twice a year. From 2017, the UK will have a Budget in the Autumn and a small Spring Statement.