Chancellor George Osborne delivered his final budget yesterday afternoon, ahead of the general election next month. In his speech to Parliament, he unveiled a host of measures and investments that are designed to support the UK’s technology sector, but which ones are particularly relevant to startups?
Osborne said government will support sharing economy companies in the UK as part of wider plans to make the UK a global leader in the sharing economy sector. The government also published its much-anticipated response to the sharing economy report it commissioned Debbie Wosskow, CEO of Love Home Swap and founder of the Sharing Economy UK trade body, to do last year. In response to the report, government has pledged to support the sharing economy by: making it easier for individuals to sub-let their rooms and properties; allowing public sector employees to use sharing economy services; introducing new tax guidance for sharing economy companies; and piloting “Sharing Cities” in Leeds and Manchester.
While many UK citizens are in favour of sharing economy companies, particularly the giants coming out of Silicon Valley like Uber and Airbnb, there are many people, including black cab drivers, who don't like how disruptive they are.
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£11 million was allocated to building tech startup incubators in Manchester, Leeds and Sheffield. The move suggests the government is keen to accelerate the development of tech clusters across the UK, particularly those included in Nick Clegg’s so-called “TechNorth” region (his constituency is Sheffield), or Osborne's "Northern Powerhouse" region (his constituency is Tatton in Cheshire, a stone's throw from Manchester).
Some fear that the government is neglecting other prominent tech clusters in the North of England. Labour MP for Newcastle Chi Onwurah Tweeted: "Why does the Northern Power House initiative exclude Newcastle? Looks to be a Yorkshire - Lancashire initiative."
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Driverless cars and IoT
Government pledged to back driverless cars, the internet of things (IoT) and smart cities with £100 million. It's currently unclear how this money will be spent but Osborne said it was necessary if the UK is "to stay ahead in the race to driverless technology".
The UK is currently one of the leading players in the driverless car race because it has relatively relaxed legislation when it comes to putting driverless vehicles on the road compared to many other countries. However, there are other countries where significantly more money is being spent in this area, including the US, where tech behemoths like Google and Apple are both making strides.
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The government pledged to back bitcoin research with £10 million as part of the budget. In addition, the government also published a response to an independent review on digital currencies, which revealed anti-money laundering regulations will be introduced to digital currencies like bitcoin. Government said it plans to carry out further consultation before regulating digital currencies in the next parliament.
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The chancellor said all UK premises should have a 100Mbps connection but he did not reveal a timeline for this or reveal any details on how this would be delivered. He also pledged to allocate £600 million to clearing up spectrum for congested mobile networks, as well as free wifi in public libraries across England.
Significant investments in connectivity are essential if the UK is to keep pace with nations such as South Korea and Japan. Indeed, there are many fast-growing tech startups who have spoken out about poor connectivity in East London, which is at the heart of the UK's emerging technology scene.
Government will roll out an open banking API standard by the end of 2015 that will enable fintech startups to use bank data on behalf of consumers to deliver better services. There’s also the possibility that a new “regulatory sandbox” will be created by the Financial Conduct Authority (FCA) so that startups can test their technologies in a safe environment.
Disruptive tech review
A review will be held in the next Parliament looking at where regulation restricts innovation, including innovation coming from disruptive companies. This review should present a good opportunity for startups to say where they want government to cut red tape.
SEIS and EIS
Legislation is being scrapped that previously required startups to spend 70 percent of funds raised under SEIS (seed enterprise investment scheme) before they could receive investment through the EIS (enterprise investment scheme). At the same time, government announced it will introduce a £15 million cap on the amount of money startups can raise through SEIS and EIS.