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At a fringe event on Monday hosted by lobby group Startup Coalition on the same drizzly Albert Dock hosting the main UK Labour Party conference in Liverpool, there was uncertainty in the air ahead of the government’s upcoming budget at the end of October.
One of the chief worries in the startup sector is that capital gains tax could rise — meaning entrepreneurs could keep less of their money from an exit. There are also concerns about the future of R&D tax credits and pitfalls in the current EMI stock options scheme.
One panellist said they know of startups which have been holding back on investment into certain areas of their businesses because “they’re waiting to see what happens in the budget”. Another said the “jury is out” on whether it’ll be positive for the UK’s tech sector. Many are reserving judgement until the end of next month.
Earlier in the day at the city’s Exhibition Centre, the government’s top tech minister Peter Kyle had delivered a speech to an audience at the main conference.
Over the course of seven or so minutes, he talked down the previous government, made a bad gag about the length of a former prime minister’s trousers, talked up the potential of AI to discover new medicines and digital tools to modernise the NHS and briefly mentioned the need to regulate new tech.
It wasn’t a speech full of detail. And it wouldn’t have done much to allay the anxieties of founders ahead of what Prime Minister Keir Starmer has said will likely be a “painful” Autumn budget. The government made no secret of what it says is a £22bn black hole in the country’s finances and the “difficult” decisions it will need to take to balance the books.
Those difficult decisions are already being made. In August the government announced it was axing £1.3bn in AI and tech funding — to loud groans from the country’s tech sector.
Elsewhere the government has come under criticism from startups who told Sifted they’ve been wrongly asked to pay back thousands of pounds in tax credits. There have also been reports that the UK could look to limit immigration for tech jobs, which techies tell Sifted would hurt the sector.
But it’s not all been negative.
On the more positive side, the EIS programme — which is designed to give tax breaks to investors who back new companies — has been extended for a decade. There are reports that the Mansion House compact — an idea introduced by the last government which could unlock billions of pounds of pension fund money to invest in startups — is also progressing. Many in the climate tech community are hopeful that the emergence of GB Energy (a state-owned company with an £8.3bn funding package and a mission to increase renewable energy generation) could spell opportunity for startups.
But while it’s not been quiet on the tech policy front for the past two and a half months, for many founders and investors, the biggest tell of Labour’s tech credentials are five weeks away, when the Autumn budget is announced.
In the meantime, readers, I want to hear from you. What are your concerns about possible capital gains tax increases? What impact do you think it would have on the startup ecosystem? Is anything else making you anxious? Or are you actually optimistic about the upcoming budget? Get in touch via kai@sifted.eu and let me know.
Read the orginal article: https://sifted.eu/articles/tech-dispatch-from-the-uk-labour-party-conference/
