The Chancellor of the Exchequer, Philip Hammond MP, has delivered his 2019 Spring Statement.
TIGA, the network for games developers and digital publishers and the trade association representing the video games industry, has welcomed the Government’s commitments to ensuring the UK leads the world in science and technological revolution; assured funding to the British Business Bank; and further guidance over the allocation of Enterprise Investment Scheme funding.
Borrowing and Growing
OBR continue to assume – consistent with government policy at the time they finalised their forecast – that the UK will make an orderly departure from the EU on 29 March into a transition period that lasts to the end of 2020.
Based on this assumption, the OBR’s new forecast for GDP growth this year is 1.2 per cent, which is a decline on its previous estimate of 1.6 per cent.
The OBR predicts the UK economy will then grow 1.4 per cent in 2020, and 1.6 per cent in 2021, 2022 and 2023. These forecasts remain fairly similar to those published in November, offering a slight improvement for 2021 and 2022.
Public borrowing is forecast to increase from 22.8bn this financial year, to 29.3bn in 2019-20; descending to 21.2bn in 2020-21, 17.6bn in 2021-22, 14.4bn 2022-23 and 13.5bn in 2023-24.
During his oral statement to the House of Commons, the Chancellor also announced that if the UK leaves the EU with a deal and uncertainty is lifted, he will launch a ‘full three-year spending review’ before the summer break.
The Government has also announced the following:
Budget 2018 announced that the co-investment rate will be halved from 10% to 5%, and the amount employers can transfer to their supply chains would increase to 25%. These changes will now take effect from April 2019.
Access to finance and EU exit
The Government stands ready to deliver its commitment in all circumstances to provide additional funding to the British Business Bank for venture and growth capital, as we leave the European Union and our relationship with the European Investment Fund changes.
Tech and New economy
The Chancellor welcomed the Furman review, an independent review of competition in the digital economy, which has found that tech giants have become increasingly dominant. The Chancellor announced that the Government will respond later in the year to the review’s calls to update competition rules for the digital age – to open the market up and increase choice and innovation for consumers.
A summary of the review’s recommendations can be found here.
The final report of the independent review, titled ‘Unlocking digital competition, Report of the Digital Competition Expert Panel’, can be found here.
Science and Technology
Allocating over £200 million in cutting-edge infrastructure to support our world-leading scientists, innovators and industry, resulting in investment in R&D reaching 2.4% of GDP by 2027.
In the coming months, the Government will publish:
Enterprise Investment Scheme (EIS) approved funds guidelines
Draft guidelines for comment alongside draft legislation. The document will contain guidelines stating HMRC’s proposed policy and practice for approving funds. The legislation will include powers for HMRC to set appropriate conditions and approve funds.
International Research and Innovation Strategy
A strategy setting out the government’s ambition to ensure the UK retains its place as a global partner of choice for science and innovation collaboration. As a first step in implementing this, the government has launched an independent review to assess and make recommendations on our future frameworks for international collaboration.
The Augar review will be published shortly and will represent an important contribution to our overall plan for post-18 education. The Government will respond later in the year and are committed to returning technical and vocational skills to the heart of our education system, with the new T-level system on track to deliver the first three routes in 2020.
A press release from HM Treasury detailing the key announcements can be found online here.
The Chancellor’s Written Ministerial Statement can be found here.
TIGA’s Chief Executive Officer, Dr Richard Wilson OBE, said:
“TIGA welcomes the Government’s commitments to ensuring the UK leads the world in science and technological R&D. The UK is a world leader in tech industries and we want this to continue. However, UK expenditure on R&D lags behind many of our competitors: the latest OECD international comparison of R&D expenditure ranked the UK 5th in the G7 and 10th among EU nations in 2016.  It should be a priority for the UK Government to increase public investment in science, research and innovation, not least because there is a correlation between government investment and tax support for R&D, and the degree that business invests in R&D.
“The Government’s assured funding to the British Business Bank is also an important reassurance to businesses wanting to grow. Access to finance is a major challenge for many video games developers, with 38 per cent of respondents to TIGA’s 2017 business survey said that access to finance was holding back their business.
“We are also pleased the Government plan to publish improved guidelines for EIS funding. Some games developers have recently found difficulties securing funding through the EIS. We hope improved guidelines will help developers access funding and facilitate an increase in revenue, customer base and headcount.
“TIGA will continue to push for the introduction of a Video Games Investment Fund (VGIF). A GIF would improve developers’ access to finance, encourage the creation of new IP and strengthen the UK video games industry. The matched funding criteria would magnify investment and employment in the industry. The VGIF would also enhance productivity growth in the sector by catalysing investment in capital, skills and innovation
“We also want to see the Apprenticeship Levy reformed into a more general training levy, giving employers more scope to choose the educational pathways to suit their needs. This would help upskill current employees.”