Was Reeves’ UK Budget about Growth?
By Dr Nasira Bradley
Well, what can be said about the budget… It certainly was not a growth budget. Certainly not about helping grow our firms! At least not from what can be discerned so far.
Instead, it has focussed on supply-side of the human resource: creating a healthy and educated workforce. Although that focus deserves merit, how these sectors are reformed in parallel, will very much influence the outcome.
However, more of concern is that this has been funded through a tax burden on Business (an outcome that has less merit!) through changes to employer-NI, Agricultural property relief (APR) and Business Property relief – all of which could have a regressive impact on growth of SMEs and family firms. The very businesses that we should have wanted to encourage to grow and scale some of them into giant firms.
Why do we want giant firms? The figures listed below – speak for themselves.
- This significant tax burden budget is aiming to allocate £100 billion of public investment over 5 years on R&D, infrastructure and health, with £15 billion planned for 2025.
- In contrast, in 2022 , Alphabet (Googles parent company) had an annual R&D spend of nearly 28 billion Euros, Meta of 22 Billion Euros, Apple or Huawei both in the region of 19 Billion Euros!
We only have 2 British firms with somewhat significant R&D spends (listed in the Global Innovation scorecard 2022) with AstraZeneca, an offshoot of ICI, spent 7 Billion Euros and GSK spent 5 Billion euros in 2022. Two old British firms!
Where are the new British giants born over the last 50 years, like Google, Meta, Apple, Microsoft ? None.
It’s really critical – we need to grow our own firms, so that they invest the money, not the burden on taxpayers!!
So, the most important question is – is this budget going to use this £100 billion partially to grow its own firms ?
The risk is that the UK government will use this money to secure services , yielding a small number of local jobs, but essentially – will grow international firms! We need only look at the Bristol UK Supercomputer Isambard-AI £225 million funding awarded in 2023 . It offered contracts to HP Enterprise and Nvidia, but where were the British firms? This contrasts with 2010 US Exascale Supercomputer approach where Defence funded Nvidia, prior to GPU take-off!
We really need to take a leaf out of the US . The key is to not pick winners, not even pick sectors – just follow the US policy: using either department of defence military procurement tools or grants or DARPA – they support every potential technological firm that may be key in the future!
Let’s hope that this may be an option – as the UK government starts to flesh out its industrial strategy.
