To his credit, UK Chancellor Jeremy Hunt put the long-term interests of British business front and center in his Autumn Statement.
Most crucially, the government has announced that it will completely freeze spending. In 2017, Full costs were the best idea in politics you’ve never heard of; Today, the idea that you should let businesses deduct the cost of any investment they make from their corporate taxes is orthodoxy. As my colleague Derin Kocer explains: “Full spending gives businesses what they need: incentives for long-term investment. This permanent policy will provide certainty for investment and encourage businesses to upgrade the nation’s capital stock, boosting our productivity and unlocking new opportunities for entrepreneurs and innovators across the country.”
The UK offers generous tax breaks for investors in business companies. Entrepreneurs will also be particularly encouraged to see the sunset clause for the Enterprise Investment Scheme and Venture Capital Trusts, which have been such important drivers of UK start-ups, extended to 2035. This follows calls from EISA, the VCTA and more recently through the All-Party Parliamentary Group on Entrepreneurship Funding to flourish report.
In addition, the government has announced that it will accept all of its recommendations Independent Review of Spin-out Companies. Among these recommendations are calls for: academics and their institutions to agree spin-out agreements with purchase terms that avoid unnecessary negotiations; greater disclosure of agreements to increase transparency; and the ability for universities to use funding to cover the costs of university technology transfer offices.
Responding to the announcement, co-author of our most recent paper on spin-outs, Academic to Entrepreneur, Eamonn Ives, said: “Ensuring that as much of the research carried out in Britain’s universities as possible can be turned into dynamic companies will be essential to growing the economy and tackling problems such as climate change or an aging population us. In theory, the recommendations made in the Independent Review of Spin-outs represent a good first step in enabling academic entrepreneurs to create their own investable start-ups, but it remains to be seen how they work in practice. If problems persist, the government should not be afraid to go further in strengthening Britain’s landscape.”
The government also announced it will take forward the National Infrastructure Commission’s (NIC) recommendations in April on planning by implementing reforms to return Infrastructure Projects of National Importance status, which aim to strengthen the planning system’s ability to deliver better services for businesses. It will also outline plans for authorities to offer guaranteed accelerated decision-making dates for major developments in England for a fee, ensuring refunds are given when deadlines are missed and limiting the use of extension of time agreements.
As we have argued in Solid foundation, the UK’s inflexible planning system drives up the cost of housing, office space and lab space and severely limits our startup hotspots across the country. Britain’s rigid planning system makes new infrastructure and housing more expensive to build and longer to develop. This hurts businesses that can’t use it otherwise and denies opportunities to those who want to build it. Meanwhile, accumulation is limited as people cannot move to more productive areas to fulfill their potential. We therefore welcome incentives for local councils and other reforms to accelerate growth.
With the Office for Budget Responsibility’s growth forecasts slashed, Hunt was right to focus on Britain’s business as the key driver of future prosperity. It is a shame that this long-term thinking has not always been present in other budget announcements made over the last 13 years. With Brexit, the pandemic and crippling energy prices, the last few years have been incredibly difficult for entrepreneurs. As our latest Risk preparedness report with Mishcon de Reya showed, a significant proportion of entrepreneurs (39%) believe that the overall level of risk in the business environment is higher now than it was 12 months ago, and the same proportion (39%) believe that the level of risk will only increase in the coming period . year.
A point of good news is long overdue.