The UK Labour Party’s election manifesto sets out plans to lean into tech to improve the National Health Service (NHS) and support the green energy transition, increase funding into key industries and improve regulation — but it’s light on details of how it will specifically support the UK startup sector.
Many see the manifesto, released earlier today ahead of the July 4th election, as a blueprint for the next UK government — with Labour far ahead of the Conservative Party in the polls.
Labour’s manifesto does something the Conservative’s manifesto, released two days ago, doesn’t: it mentions the word ‘startup’ — albeit only once. The party’s proposal to increase tax on carried interest is also mentioned.
“There will need to be more meat on the bones over time — but the public sector tech and procurement vision is very ambitious, and there’s lots [on] ensuring we deliver on the promise of things like open finance and climate tech,” says Dom Hallas, executive director of startup lobby group Startup Coalition. “There are still open questions on talent and on the future of the VC market but overall it’s a very optimistic vision.”
Sifted has picked out the key Labour policies that could impact the UK’s tech sector.
No explicit mention of tax credits or EIS
While there’s no explicit mention of R&D tax credits for startups, the manifesto does say that the Labour party plans to “retain a permanent full expensing system for capital investment and the annual investment allowance for small business”.
The party isn’t expected to renege on the current R&D tax credit scheme, which was first launched in 2000 and allows founders to claim back part of the money they spend on R&D (including payroll, contractors, software and prototype materials) as tax relief or a cash credit.
Labour announced in a February report that it would “maintain the current structure and at least the current rates of R&D tax credits over the next parliament, while cracking down on fraudulent claims and those made in error”. It also said it would evaluate the impact of the R&D tax credit scheme on a sector-by-sector basis, starting with the life sciences industry.
Investment schemes like the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) tax incentive programmes — which are designed to give tax breaks to investors who back new companies, are also not mentioned in the party’s manifesto. In February, however, Labour said that it was committed to “protect[ing]” the EIS.
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Carried interest
One of the biggest concerns for VCs has been Labour’s proposed policy of increasing taxation on carried interest — a performance-based fee that’s paid to general partners (GPs) who manage a fund and broader investment teams responsible for VC and PE funds — which some say could negatively impact the UK’s investment landscape.
Tax on carried interest is only mentioned once on the costings page of the manifesto; it says that revenue from closing the carried interest tax loophole would raise £565m.
National Wealth Fund
Labour have said that they will establish a National Wealth fund to increase investment into key sectors in the UK.
Over the course of the next parliament, the fund would invest £7.3bn into ports and supply chains, new gigafactories, steel, deployment of carbon capture and manufacturing of green hydrogen.
“The fund will have a target of attracting three pounds of private investment for every one pound of public investment, creating jobs across the country,” the manifesto says.
Spinouts
The manifesto pledges to “work with universities to support spinouts” — but it doesn’t share any further details on how.
In the February report, the party said it wants to increase the number of spinouts coming out of universities and help them scale with better access to funding.
As part of that, the report said that the party will work with “universities to encourage them to offer spinouts a ‘founder-track’ option, one where the university takes a share of equity at or below 10 percent”.
Labour’s manifesto also lays out plans to scrap short funding cycles for key R&D institutes in favour of 10-year budgets that “allow meaningful partnerships with industry to keep the UK at the forefront of global innovation”.
Investing in climate tech
Labour says it’ll work with the private sector to “double onshore wind, triple solar power and quadruple offshore wind by 2030”.
To do that, it’ll invest in carbon capture and storage, hydrogen and marine energy, the manifesto says.
Tech for the NHS
The party wants to use AI to “transform the speed and accuracy of diagnostic services” within the NHS. It would also “embed a greater focus on prevention throughout the entire healthcare system and supporting services”, it says.
The manifesto also lays out plans to develop an “NHS innovation and adoption strategy” in England.
“This will include a plan for procurement, giving a clearer route to get products into the NHS coupled with reformed incentive structures to drive innovation and faster regulatory approval for new technology and medicines,” the manifesto says.
That could be good news for healthtech founders, who have previously complained about a lack of adoption pathways in the NHS — where the vast majority of the country’s health spend comes from.
Improving regulation
Labour lays out plans to create a new Regulatory Innovation Office — which it says will help regulators update regulation and speed up approval timelines.
“Labour will ensure the safe development and use of AI models by introducing binding regulation on the handful of companies developing the most powerful AI models and by banning the creation of sexually explicit deepfakes,” it says.
The party says it will also support tech like open banking and open finance by “ensuring a pro-innovation regulatory framework”.
Read the orginal article: https://sifted.eu/articles/labour-manifesto-2024/
