Pulse of UK tech
Industry insights
The UK tech industry is a powerhouse, employing over three million people and boasting a combined market value of over $1tn, making it the largest in Europe.
The UK is home to 43 active unicorns and a thriving start-up community, with over 37,000 incorporations in the first three quarters of this year already.
However, to maintain this momentum, it’s essential that the UK remains an attractive place for tech entrepreneurs to thrive. With the right encouragement, a booming ecosystem of innovative tech companies could form the pillar of a vibrant UK economy of the future.
We asked UK tech leaders what support they wanted to see from the new Labour government.
What would you like to see from the Labour government in the autumn budget to support the growth of your tech company?
Initiatives to address the skills gap in the workforce
Changes to innovation tax reliefs that provide greater levels of funding for UK Tech companies
Direct funding and support for UK Tech companies
Reliefs and initiatives to encourage investment in UK tech companies
There was very little in the autumn budget to address the needs of UK tech companies.
An increase of £11.2bn on educational spend will be welcomed, but there was little detail in October on whether this spend would be directed at areas that directly address the tech skills gap. This spend applies to education, but there is a skills gap in adults that will need to be tackled to address the tech skills gap.
UK tech leaders will be relieved to see that Labour did not make meaningful changes to research and development (R&D) tax schemes. They may be concerned that increased HMRC bureaucracy and investigations, introduced with the objective of minimising tax fraud leads, will lead to even greater delays on legitimate claims.
of London HQ businesses submitted a claim which was originally approved, but later challenged by HMRC resulting in repayment.
While some sectors have been earmarked for direct funding as part of the government’s industrial strategy – tech leaders will want more. Founders and C-suites may seek some comfort in the fact that increases in Capital Gains Tax (CGT) were not as significant as initially expected. The UK retains the lowest CGT rates in Europe, which will encourage investment levels.
UK tech leaders may have hoped for some industry-specific reliefs or schemes – but very little was announced. However, these are the early stages of the government, which has been clear that there is more to come, including Professor Dame Angela McLean and Dr. Dave Smith leading a review on barriers to the adoption of transformative technologies. An Artificial Intelligence Opportunities Action plan is promised “shortly”.
What factor(s) do you think will have the biggest impact on improving confidence for UK technology businesses?
Tax incentives and other legislation to boost overseas investment into UK tech startups and scaleups
Simplify rules and increase innovation-linked funding and tax incentives
Simplify rules around skilled immigration for tech workers
Something around funds for training or upskilling?
Action on energy costs for tech firms
Small versus large have different priorities
As businesses scale, their priorities shift. Larger businesses have a clear focus on funding their growth with calls for tax incentives, access to funding and looking at ways to mitigate the cost of increasing amounts of energy consumption. Smaller businesses are looking for support around building and retaining their workforce. Access to productivity-boosting infrastructure, such as hyper-fast broadband, is key for these agile, high-growth businesses.
The drive for sustainability is a massive trend across UK tech. Smaller companies draw a clear line between their sustainability strategy and the power of businesses to grow while establishing their brand. With talent such a key priority for these businesses, it is no surprise to see that these business leaders see sustainability as a key factor to build their workforce.
Larger, more mature businesses take a more holistic approach. They see sustainability as a key challenge for society, recognising that their strategy must align with their business purpose for success. As these businesses scale, they are navigating the increasingly complex regulation and reporting in this area.
For businesses with a turnover of £2m-£49.99m, the brand value proposition was rated the most important area when considering sustainability-related practices. This was followed by strategies to attract and retain talent, as companies need to offer more than just renumeration to create a loyal workforce.
Which do you think is the primary driver behind your business implementing sustainability-related policies and practices?
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Turnover of £2m-£49.99m
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Turnover of £50m-£500m and above
It supports business growth, resilience and brand value
Everyone should contribute to positively impacting people and planet
It helps us to retain and recruit people
It aligns with our business purpose
Which do you think is the primary driver behind your business implementing sustainability-related policies and practices?
Turnover of £2m-£49.99m
It supports business growth, resilience and brand value
Everyone should contribute to positively impacting people and planet
It helps us to retain and recruit people
It aligns with our business purpose
Turnover of £50m-£500m and above
It supports business growth, resilience and brand value
Everyone should contribute to positively impacting people and planet
It helps us to retain and recruit people
It aligns with our business purpose