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Chancellor confirms public funding, tax breaks for new fibre infrastructure.
In addition to confirming plans to spend more than £1 billion (€1.17 billion) on broadband infrastructure, the U.K. Chancellor of the Exchequer on Wednesday announced measures to stop promising tech start-ups from being acquired so easily.
In his Autumn Statement – an interim update to the government’s budget – Chancellor Philip Hammond said he will make £400 million of venture capital funding available via the British Business Bank, which he said will be used to unlock £1 billion of new capital for growing firms.
Earlier this year, Japanese telco Softbank acquired U.K.-based chip designer ARM for €28.8 billion. While not a start-up, for some, the acquisition of ARM by a foreign firm served to highlight the dearth of large U.K. tech companies.
"We are never going to grow a Facebook or a Google. Every time these businesses get to a certain size they get snapped up," said former business secretary Vince Cable, in an FT report in July.
Chancellor Hammond backed Softbank’s acquisition of ARM at the time, calling it a vote of confidence in British business.
However, he adopted a different tone in Wednesday’s Autumn Statement, telling Parliament that he wants to "tackle the longstanding problem of our fastest-growing technology firms being snapped-up by bigger companies, rather than growing to scale."
It remains to be seen whether the extra funds will make much of a difference though.
The majority of start-ups fail, even those that receive venture capital investment, so the government may end up being asked some difficult questions about what happened to the money. In addition, generally speaking, venture capitalists are not long-term investors, and a quick sale of a company in which they have invested – to anyone, regardless of where the buyer calls home – is usually the most logical exit strategy.
Meanwhile, the U.K. government also confirmed plans to spend more than £1 billion (€1.17 billion) to fund investment in fibre infrastructure and 5G technology.
The Treasury will set up a Digital Infrastructure Investment Fund, which will spend £400 million over the next four years, matched by private sector investment, on new fibre networks. £740 million will be provided to local councils to fund integrated fibre and 5G trials.
"My ambition…is for the U.K. to be a world leader in 5G," Hammond said.
In addition, from April, companies will receive 100% business rate relief on full fibre infrastructure for five years.
"This is an important announcement from the government – not least because it brings concerns about the U.K.’s digital infrastructure to the centre stage," said Simon Fletcher, CTO of Real Wireless.
"The encouraging deployment of more fibre is the right direction to take, but it’s worth stressing that these initiatives will only have a positive impact if they are accompanied by a supportive regulatory framework to make it easier for operators to roll out infrastructure when and where it’s needed," he said.
The government should also focus on plugging the country’s mobile notspots, Fletcher said, rather than get carried away with 5G, whatever that is.
"One third of mobile phone users, or 17 million people, across the U.K. report poor or no reception at home, and 28% of all rural areas in the U.K. remain without coverage. This has significant economic implications for people and for businesses," he said.
