On 3 March 2021, HM Treasury published its Build Back Better policy paper along with the 2021 Budget.
The publication sets out the Government’s plans to support economic growth through significant investment.
The paper places a promising focus on UK creative and digital industries. According to the paper, ‘the digital and creative industry sectors are a major success story for the UK, and a critical driver of innovation and growth.’
The Government have committed to ‘work to ensure that these sectors can flourish by nurturing a safe, fair and open digital economy, growing more creative businesses around the country and building on our advantages in foundational technologies like AI, quantum computing and digital twins.’
The UK Government is increasing its investment in R&D, investing £14.6 billion in research and innovation grants and facilities next year alone. The investment comes as part of the Government’s drive to reach its target for total UK investment in R&D to reach 2.4% of GDP by 2027.
The policy paper highlights that R&D expenditure is currently concentrated in a small number of large firms based in particular regions of the UK. The Government has committed to redressing this balance, by ‘leveraging the capability of the UK’s geographically dispersed R&D assets, maximising the benefits of innovation for local economies, and building on local strengths.’
Finally, the paper highlights the value of R&D tax relief support. The Government has announced it will carry out a review of R&D tax reliefs, with a consultation published alongside the Budget. TIGA has called on the Government to increase Video Games Tax Relief from 25% to 32%.
The Government’s plan centres on three core pillars of growth: infrastructure, skills, and innovation. The Government’s objectives are summarised below.
Infrastructure:
- Stimulate short-term economic activity and drive long-term productivity improvements via record investment in broadband, roads, rail and cities, as part of our capital spending plans worth £100 billion next year.
- Connect people to opportunity via the UK-wide Levelling Up Fund and UK Shared Prosperity Fund, as well as the Towns Fund and High Street Fund, to invest in local areas.
- Help achieve net zero via £12 billion of funding for projects through the Ten Point Plan for a Green Industrial Revolution.
- Support investment through the new UK Infrastructure Bank which will ‘crowd-in’ private investment to accelerate our progress to net zero, helping to level up the UK. This will invest in local authority and private sector infrastructure projects, as well as providing an advisory function to help with the development and delivery of projects.
Skills
- Support productivity growth through high-quality skills and training: transforming Further Education through additional investment and reforming technical education to align the post16 technical education system with employer demand.
- Introduce the Lifetime Skills Guarantee to enable lifelong learning through free fully funded Level 3 courses, rolling out employer-led skills bootcamps, and introducing the Lifelong Loan Entitlement.
- Continue to focus on the quality of apprenticeships and take steps to improve the apprenticeship system for employers, through enabling the transfer of unspent levy funds and allowing employers to front load apprenticeship training.
Innovation
- Support and incentivise the development of the creative ideas and technologies that will shape the UK’s future high-growth, sustainable and secure economy.
- Support access to finance to help unleash innovation, including through reforms to address disincentives for pension funds to invest in high-growth companies, continued government support for start ups and scale ups through programmes such as British Patient Capital, and a new £375 million Future Fund: Breakthrough product to address the scale up gap for our most innovative businesses.
- Develop the regulatory system in a way that supports innovation.
- Attract the brightest and best people, boosting growth and driving the international competitiveness of the UK’s high-growth, innovative businesses.
- Support our small and medium-sized enterprises (SMEs) to grow through two new schemes to boost productivity: Help to Grow: Management, a new management training offer, and Help to Grow: Digital, a new scheme to help 100,000 SMEs save time and money by adopting productivity-enhancing software, transforming the way they do business. Build Back Better 13 our plan for growth Not all growth is created equal. The growth
The full policy paper, Build Back Better: our plan for growth, is available here.