Philip Hammond, Spring Budget 2017

Budget 2017: big investment in 5G, superfast broadband, research and robots

Image credit: Reuters

Chancellor Philip Hammond has presented his 2017 Spring Budget, garnering a somewhat muted response to what has been perceived as a cautious, conservative package of announcements. There were no big surprises from 'Spreadsheet Phil', driven by his mantra of keeping the UK "living within its means".

The headline points were that UK growth is up this year, forecast to be 2 per cent in 2017. There will be a tax rise for self-employed people earning higher amounts, raising their National Insurance contributions to enable the government to trouser an additional £145 million in tax by 2021. The tax-free dividend allowance is dropping from £5,000 to £2,000 from April 2018. £435 million of business rate cuts will be made, including a £1,000 cut for the vast majority of pubs (over 90 per cent) and councils being given a £300 million fund to deliver “discretionary relief” to hard pressed firms in their areas.

An additional £2bn is being made available for adult social care, plus £100m for new triage programmes at English hospitals next winter. There will be funding for a further 110 new free schools on top of the existing 500, including new specialist maths schools. There will also be transport spending of £90 million for the North and £23 million for the Midlands to address pinch points on roads and a new £690 million competition for English councils to tackle urban congestion.

The Chancellor declared that this Budget provides a “strong, stable platform for Brexit”, with £350 million set aside for the Scottish Government, £200 million for the Welsh Government and £120 million for the Northern Ireland Executive. Hammond said this package was “demonstrating once again that we are stronger together in this great United Kingdom”.

The Chancellor told the Commons, “As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future; it provides a strong and stable platform for those negotiations. We are building the foundations of a stronger, fairer, more global Britain.”

Labour leader Jeremy Corbyn’s response was less effusive, describing the budget as being one of “utter complacency”, the daydreaming of a man hopelessly out of touch with the general population and mood of the nation. TUC general secretary Frances O'Grady added that, “The Chancellor missed the opportunity to get Britain match-fit for Brexit by investing in jobs and infrastructure.”

The education announcements, including the formalisation of ‘T-levels’ for technical qualificiations, were welcomed in some quarters, including by those in the engineering industry where highly skilled workers are always in great demand. However, professionals working in general education were dismayed by the Chancellor’s announcements, as Hammond confirmed the intention to pump hundreds of millions of pounds into creating new free schools.

“Our forthcoming Schools White Paper will ask universities and private schools to sponsor new free schools,” Hammond said. "It will remove the barriers that prevent more good faith-based free schools from opening. And it will enable the creation of new selective free schools, so that the most academically gifted children get specialist support to fulfil their potential.”

The reaction from the education sector was frosty at best, with NAHT general secretary Russell Hobby saying: “Chancellor Philip Hammond had a chance today to provide extra support for schools. He failed to take it, despite concerns raised by school leaders, governors and teachers across the country. Extra funding will be found to deliver more grammar schools, but nothing will be provided to existing schools. Schools are in a funding crisis now, and opening more free schools will do nothing to change that. Schools are being pushed beyond breaking point.”

Kevin Courtney, general secretary of the National Union of Teachers, said: “This budget is a complete dereliction of duty to our children and young people. The Chancellor knows full well that schools and sixth form colleges up and down the country are on their knees struggling to make ends meet.”

Beyond the broader financial pledges, there were announcements specific to engineering and technology interests.

There was £500 million to boost the UK science sector, with the £300 million previously announced fund to support the “brightest and best research talent”; £200 million for projects to leverage private-sector investment in super-fast fibre broadband networks; £16 million for a 5G hub and £270 million for robots reseach.

The £200 million investment in high-speed broadband was broadly welcomed by industry. Rufus Grig, chief technology and strategy officer at Maintel said: “Philip Hammond’s proposed investment in rural broadband is a huge step forward for all small businesses. However, it cannot stop there. More must be done to manage networking services for British companies if they are to compete on the global stage and drive our economy forward.

“Technology has the potential to replace physical workplace interaction in the future. This means real-time traffic on enterprise networks will continue to increase. Maintaining uptime and performance can have a real impact on any companies bottom-line.”

Andrew Ferguson, editor of thinkbroadband.com, welcomed the investment, but cautioned that, “The £200 million is a drop in the ocean compared to what is needed to deliver high levels of pure fibre coverage in the UK and while there is a chance that this money may kick start the spending of billions by commercial operators, it is more likely to be utilised by smaller rural operators who to date have struggled to raise funding on commercial markets.”

The government's strategy for 5G also came under scrutiny. Professor Will Stewart, vice-president of the IET, said: “The Budget investment in a 5G technology hub is welcome – as is the Government’s announcement today of a 5G strategy outlining an integrated approach to combining fibre and wireless networks to deliver 5G.

“It’s important to stress that the 5G investment announced today will not come anywhere close to bridging the investment gap needed to deliver 5G across the UK, so the Government strategy’s recognition that regulatory modernisation is needed to make the final bill of delivering 5G more affordable, for example by enabling operators to share networks, is pivotal.

“The biggest challenge for Government will be improving coverage for all, as 5G cannot transform what it doesn’t cover. And achieving universal coverage for the UK, outside high-capacity urban areas, will not be affordable or achievable without regulatory change.”

The IET has released a new guide, 5G Networks for Policy Makers, to help policy makers cut through the potentially confusing visions of 5G by identifying the policy levers that need to be pulled for the UK to roll out new 5G networks by 2020 and get them onto a track to make 5G transformational for the UK economy by 2025.

Industry response was positive, with Dr Li-Ke Huang, who works on 5G ‎research at Cobham Wireless, welcoming the Chancellor's news, saying, “Research and development centres in the UK are already actively involved in validating core 5G technologies and testing their performance – but we need continual investment to support its evolution, looking at everything from chipsets to network performance. The proposed government investment will help position the UK as a leader in 5G R&D, and provide the nation with a head start in the consequent race to bring the benefits of this technology to consumers and businesses.”

Jaime Fink, co-founder of Mimosa Networks, responded with cautious optimism, saying, “In order to keep pace with 5G trials and tests across the globe, the UK must also recognise fixed wireless as the most effective and efficient means of 5G delivery. The government investment and a focused programme for 5G development will enable the creation of an efficient digital infrastructure across the nation.”

“The government has committed to investment in a 5G future, which will be vital in order to support the increasing demand for high-speed internet applications. Telecoms service providers and R&D centres across the UK will now be exploring how they can commercialise the technology as rapidly and efficiently as possible.”

The Chancellor's £270m investment in robotics was also roundly applauded by those in relevant industries, as the Government aims to put the UK at the forefront of disruptive technologies.

“Some of the great robotics companies of the future are being launched by British entrepreneurs and the support announced in today's budget will to strengthen their impact and global competitiveness,” said Dominic Keen, founder of Britbots, the network of UK-based robotics start-ups. “We're currently seeing strong appetite from private investors to back locally-grown robotics businesses and this money will help bring even more interest in this space.”

Mark Skilton of Warwick Business School commented that: “The Internet of Things market worldwide will be worth around $700 billion in five years and will disrupt almost all industries. The UK post-Brexit has an urgent need to invest in critical national infrastructure, new skills and cultivate world-class leaders to respond to this huge digital shift.

“Today's Budget is a step in the right direction as it highlights robotics and artificial intelligence as vital technologies to compete in an automated world market. OECD studies predict machine intelligence will destroy jobs through automation, but it’s the nations that own this technology and can build new AI-driven economies that will thrive in the fourth industrial revolution.

“Laying the foundations to power this will include 5G that has gigabyte bandwidth to enable the smart homes, smart grid, smart cities and supply chains that will be arriving within the next five years.

“This requires a highly skilled workforce and the Budget investment in STEM and PhD research is welcome. The UK has a history of world class STEM expertise and PhD research that punches way above its weight and this investment is needed to maintain its competitiveness on the global stage.”

The investment in digital should have positive ramifications in other areas of the UK’s digital economy and also in tackling the digital skills gap.

Martin Moran, managing director international at analytics tracking tool InsideSales.com, commented: “Disruptive tech will be key to closing the productivity gap. The use of artificial intelligence has transformed many businesses and it has the potential to empower the nation’s workforce in the coming years.

“At the heart of this is tackling the digital skills gap challenge and we cannot expect the government to go it alone. Businesses and academics must work together to identify training needs. They need to create internship and job opportunities for people to advance their careers. Investment in training and regional devolution will help achieve this goal but more needs to be done.”

Meanwhile, UK citizens took to Twitter to express their own reactions to what one user called “this shambolic, pro-rich, anti-women Budget,” with others writing that, “this was a bad budget for small businesses, entrepreneurs and director-shareholders. No wonder Tories looked glum” and that the “Tories have launched unnecessary and foolish attack on enterprise and self employed”.

Perhaps the most withering comment was the blunt description by one wag that this was the “dullest budget in recent history”. Time will tell if Hammond's predilection for caution pays off.

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