‘Running towards change’ – government uses Budget to bet big on digital and data

A comprehensive round-up of a wide range of measures that commit more funding, create new bodies and programmes, and change the legislative landscape of public sector technology

Chancellor Philip Hammond claimed that “the world is on the brink of a technological revolution”  Credit: Jonathan Brady/PA Wire/PA Images

Chancellor Philip Hammond used the Budget to unveil a range of technology initiatives, with a focus on developing IT and science skills in both young people and the existing workforce, and investing in digital platforms and emerging technologies.

He presaged a number of digital- and data-themed announcements by pledging that the Conservative government is committed to embracing the technology of the future and, in the coming months and years, will “choose to run towards change”.

“The world is on the brink of a technological revolution that will transform the way we work and live, and change living standards for generations to come,” he said.

These comments preceded the unveiling of a range of initiatives – spanning the classroom to the boardroom – designed to boost Britons’ digital, and measures to invest in infrastructure, while tinkering with a tax system that Hammond admitted faces challenges in how it works with digital businesses.

Tax and legislation

  • The government is to invest a further £2.3bn in research and development, and will increase R&D tax credit from 11% to 12%. A total of £12.5bn a year will be spent on R&D by 2022, the government said.
  • The government has published a Position Paper detailing the challenges posed to the corporate tax system by the digital economy, and how it plans to combat them.
  • To combat online VAT fraud, the government is planning to introduce legislation under which HM Revenue and Customs can hold online marketplaces and those that sell through them jointly liable for VAT duties. Marketplaces will also be required to ensure traders display valid VAT numbers. The government will also issue a call for evidence on the possible implementation of a split-payment model.
  • A further call for evidence will ask for feedback on how digital platforms can do more to ensure their users comply with tax rules.
  • No business will be required to use the Making Tax Digital platform until April 2019 at the earliest, and “its scope will not be widened before the system has been shown to work well, and not before April 2020 at the earliest”.
  • HMRC will be given an extra £155m to invest in “additional resources and new technology”.
  • The government has said that it “wants to see fully self-driving cars, without a human operator, on UK roads by 2021”. It is to work on regulatory changes that would allow this to become a reality.
  • A £10m Regulators’ Pioneer fund will be launched to “help regulators to develop innovative approaches aimed at getting new products and services to market”.
  • The government will impose income tax on royalties related to UK sales that are paid into low-tax locations. This will raise £200m a year, the government believes.

Funding and investment

  • The Cabinet Office, which houses the Government Digital Service, is to receive a departmental resource budget of about £500m in the 2017/18 year, and about £300m in each of the two following years.
  • Some £70m of government money will be committed to tech innovation in 2018/19, with £75m allocated the following year.
  • A national productivity investment fund will put £25m into fibre and 5G infrastructure in 2017/18 then, in the following three years, £150m, £275m, and £290m.
  • The UK Games Fund will be given an extra £1m to enable it to be extended to 2020.
  • Some £30m will be invested in testing how artificial intelligence and machine learning can be used for online training in digital skills.
  • At a cost of £84m, the government will triple the number of secondary computer science teachers in the UK to 12,000.
  • Alongside innovation charity Nesta, the government will award £2.5m via a competition “to develop innovative open banking apps to support greater customer choice and flexibility”.
  • A £1.7bn fund will be dedicated to developing transport systems for urban areas. The money “will target projects which drive productivity by improving connectivity, reducing congestion, and utilising new mobility services and technology”.
  • Digital signalling will be installed in many train cabs at a cost of £84m.
  • A three-year GovTech fund of £20m will be available from 2018/19 to help public bodies invest in innovative technology.

New bodies and programmes

  • A Centre for Data Ethics and innovation is to be created, and will work with government, regulatory bodies, and representatives of industry to try and “ensure safe, ethical, and groundbreaking innovation in AI and data-driven technologies”.
  • The Tech City development in east London will be expanded into a UK-wide ‘Tech Nation’ project. Some £21m will be invested in creating sites in Cambridge, Bristol, Bath, Manchester, Newcastle, Leeds, Sheffield, Reading, Birmingham, Edinburgh, Glasgow, Belfast, and Cardiff. 
  • A Geospatial Commission is to be formed to help boost the digital economy, by opening up government-held location and mapping data.
  • The government will form a National Retraining Partnership with the Confederation of British Industry, and the Trades Union Congress. The body will initially focus on increasing digital skills among construction-industry workers.
  • A unit, dubbed GovTech Catalyst, will be incorporated into the Government Digital Services to “give businesses and innovators a clear access point to government… [and] help them navigate government, and collaborate to solve public sector challenges”.

You may have missed…

  • One in four cars owned by central government departments will be electric by 2022, the government has pledged
  • The government is to work on developing a “pioneering immersive technology for creative content”
  • Some £30m will be spent in 2017/18 on “digital railway enhancements”. This will be followed by £55m, £165m, and £285m in each of the following three years.

At the conclusion of his speech, Hammond once again pledged that the government will invest in the technology to ensure the UK’s future.

“I have set out a vision for Britain’s future, and a plan for delivering it… by investing in the technology and skills of the future, [and] by building the homes and infrastructure this country needs,” he said. “We resolve to look forwards not backwards, to build on the strengths of the British economy, to embrace change – not hide from it – and, together, build a Britain fit for the future.”

Sam Trendall

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