Spring Budget 2023: “We’re a long way from Startup Britain”

Nobody wants to live in a country where the government in power cheers the forecast that we’re not entering a technical recession. But that’s where we are.

To be fair, compared to the previous Government’s “disastrous” mini-Budget, startups will be encouraged by Jeremy Hunt’s Spring Budget. As is always the case, business owners of different sizes will be impacted differently, with this Government retaining its focus on high-tech, research-intensive startups and scaleups.

Just consider R&D tax credits. As previously announced, R&D Tax Credits are being scaled back significantly, causing much consternation in Britain’s tech community. The Treasury has offered something, but only for R&D intensive firms who spend over 40% on R&D.

Full expensing remains the best idea in politics you’ve never heard of

With better than expected predicted future tax returns, the Chancellor had cash to play with. The big announcement was full expensing.

It’s an idea that’s been pushed by economists across the political spectrum for years – everyone from Obama’s adviser Jason Furman, to Dan Neidle (more famous for recently bringing down Nadhim Zahawi over his tax affairs), to Sam Bowman (who back in 2017 described it as “the best idea in politics you’ve never heard of”), to our 2018 report with the All-Party Parliamentary Group for Entrepreneurship.

In essence, this will let businesses deduct the cost of most investments from their Corporation Tax bills straight away. Again, this won’t help every business, even though it’s something we back.

“12 potential Canary Wharfs”

The Chancellor wants to get cracking on building 12 potential Canary Wharfs across the UK, with the promise of tax breaks and subsidies. But the critical ingredient to make this a success will be bold planning policy – building quickly at density. In 1990, the regeneration kicked off with a 244m Canary Wharf skyscraper at One Canada Square – then Britain’s tallest building for two decades.

This is the sort of ambition we need to see if this policy is going to be a success.

Female founders will be encouraged by further support for childcare, but the scale of the problem will likely require further reforms if costs are going to be reduced. While slightly loosening ratios and the wraparound pathfinder scheme to support the expansion of school-based childcare provision either side of the school day may make a difference, the 30 hours a week of free childcare is unlikely to bring down costs without finding a way to increase supply.

No mention for micro businesses and startups

We’re a long way from Startup Britain – the Cameron-era campaign to help inspire and support new businesses in the UK. In the Budget documents, micro businesses don’t get a mention, nor do startups (apart from in relation to grants for new childminders), and small businesses get short shrift.

One minor exception is the promise to “collaborate with businesses and representative bodies to undertake a systematic review of tax guidance and forms for small business over the next 24 months to make it easier for small businesses to interact with the tax system as they set up and grow.” I’m not holding my breath for this – not least, because it shouldn’t take two years to fix.

Beyond business – but currently impacting business owners – Martin Lewis, ‘the peoples’ Prime Minister’, is “very pleased’ his campaign for energy bill support didn’t fall on deaf ears.

While it’s unlikely to unravel along the lines of Kwasi Kwarteng’s Budget, as experts have time to pour over the Budget documents there will no doubt be plenty missed in the necessary hot takes. And even if it does stand up to scrutiny, when it comes to the looming election, the Government will be judged on more than one Budget. Nevertheless, compared to last time round, I think business owners across the political spectrum can all agree that it could be worse.