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Autumn Statement: Why Small Technology Firms Need A Boost

A few carefully positioned changes in the Autumn Statement could help the UK's entrepreneurial tech sector thrive.

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A few carefully positioned changes in the Autumn Statement could help the UK's entrepreneurial tech sector thrive.

Opinions

Autumn Statement: Why Small Technology Firms Need A Boost

A few carefully positioned changes in the Autumn Statement could help the UK's entrepreneurial tech sector thrive.

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Back in March, in what would turn out to be his final Budget, George Osborne celebrated “our nation of shopkeepers”, with a series of measures to support traditional small businesses. While tax breaks for hairdressers, plumbers and corner shops won headlines, there were slim pickings for digital enterprises operating very different business models.

Those tech entrepreneurs encouraged by Osborne’s promise of a “tax break for the digital age” were disappointed to learn he meant a £1,000 tax-free allowance for micropreneurs selling on Airbnb, rather than legislation to support future job-creators.

As Philip Hammond takes his turn with the famous red box this Wednesday, we’re calling for a different kind of small business Budget. A Budget for the UK’s coders, developers and innovators. A Budget to support the pioneers of whole new industries, playing a major part in our long-term global competitiveness. Let’s hope he’s listening.

From EU to eCommerce

During the EU referendum, members of the Leave campaign were vocal about the amount of money that could be reclaimed from EU charges. Now the vote has been cast and access to those funds are on the horizon, there may be scope to boost high-potential technology businesses.

As a rule, tech firms take longer to monetise than your average SME. They also have more growth potential. Cast your mind back to last year’s series of The Apprentice, in which Lord Sugar backed a plumbing firm over Vana Koutsomitis’ dating app.

Despite being recognised as the more lucrative concept, the app was discarded on account of the time it would take to become profitable.

smartphone user

There are plenty of billion-dollar apps, but as yet not many billion-dollar plumbing companies

Many tech business leaders will recognise this hockey-stick growth pattern (not to mention the reaction from traditional investors), and is just one reason why the upcoming Autumn Statement should designate funds to support small tech firms that show great promise.

If we can help these firms through the difficult first years, many more will go on to pay off – both in terms of jobs and tax revenues.

Contracts for coders

This year’s Autumn Statement holds particular significance, signalling the true beginning of the May era of British politics and setting the direction for a newly shaped UK economy outside the EU.

As such, there’s an opportunity for the new administration to prove its commitment to small tech businesses. One way of doing this could be to reserve a percentage of its technology contracts for small firms.

In September 2016, Ben Gummer, the new Minister for the Cabinet Office announced a ‘supplier standard’ to support collaborative relationships between the government and the tech industry. Most importantly, it aims to widen the scope of government contracting to include businesses of all size.

Hammond’s Autumn Statement should continue this good work by not only ring-fencing digital work for small tech firms, but also ensuring that the pitching process is realistically achievable for small businesses. Ridding the application process from red-tape and unnecessary admin could give time-poor small business owners a fair chance of successfully pitching for this public sector work.

red tape

Policy-makers should remove red tape from public sector pitches

In his speech, Gummer declared, “no matter how large or small your company is, this government is open for business.” I’d like to see this echoed in Wednesday’s Statement.

Tomorrow’s developers

In his address at the 2016 Conservative Party conference, Hammond left no doubts about his feelings towards developing technologies. “There is a once-in-a-generation opportunity for Britain to cement its role as a leader in tech innovation”, he said.

Now we need to see this worthy sentiment translated into investment. Technology programmes as part of compulsory education have been on the agenda ever since Michael Gove was the Education Secretary in 2013. Now’s the time for this to be put into action.

Significant investments are needed in tech education for children and young people and a clear signal from Hammond this week would be a step in the right direction. Funding beginner courses in computing, coding and design would help encourage the next wave of entrepreneurs and nurture the “tech hub” that Hammond has previously spoken about.

A walk down your local high street could lead you, like George Osborne, into thinking that we are in fact, “a nation of shopkeepers”. But our previously overlooked community of small technology businesses is rapidly developing: we are a nation of coders, developers and designers too.

Hammond has already recognised that Britain “is at the cutting edge of many of these new technologies” and Wednesday’s Autumn Statement will be a good indicator of his true commitment to tech now he’s in such a powerful position.

It’s time the Government formally appreciated that HTML5 and SQL are as important to our country as the mechanic’s spanner or the hairdresser’s scissors – just not quite as iconic. Yet.

Bivek Sharma is head of KPMG Small Business Accounting.

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Autumn Statement: Why Small Technology Firms Need A Boost

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