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A budget for smart cities?

The Chancellor also pledged further investment to address transport issues, including a £690 million competition for local authorities

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5G and full fibre broadband get a spring boost in Philip Hammond's budget
5G and full fibre broadband get a spring boost in Philip Hammond's budget

Chancellor Philip Hammond has pledged £270 million to help keep the UK at the forefront of disruptive technologies such as robotic systems, biotech and driverless vehicles.

 

Also potentially good news for those involved in smart city programmes in the Spring Budget is the £16 million for a new 5G mobile hub while the £200 million allocated for local projects to leverage private sector investment in full-fibre broadband networks should provide a welcome connectivity boosts in some areas.

 

Dan Bladen, CEO and co-founder of Chargifi, the London based wireless charging start-up described the £270m for robots, driverless cars and biotech as “a serious commitment” to the role of digital technologies within the industrial strategy.

 

“Disruptive digital technology is helping to build a more tech-enabled world which is great for both the electric and automated industries,” he said and added: “5G was a key theme at Mobile World Congress last week, along with a focus on IoT. Improved comprehensive connectivity is a key foundation of any IoT enabled business, so intentional exploration of this is very welcome. The fact that the Chancellor has said there is going to be a £16m investment in a 5G mobile technology hub is a step in the right direction and good news for the industry going forwards.”

 

There was a further commitment to addressing transport issues. The Chancellor announced £90 million for the North and £23 million for the Midlands from a £220 million fund that will address “pinchpoints” on the national road network. And of interest to those involved smart transport and similar urban initiatives will be the launch of a £690 million competition for local authorities across England to tackle urban congestion and “get local transport networks moving again”. Further details of this will be announced shortly.

 

Progress in the area of devolution will also hopefully empower the regions to make their cities smarter. In keeping with his pledge to bolster the regions and enable local areas to take control of their “economic destiny”, the Chancellor reminded us of the six city mayoral elections in May and informed the house that he has reached a deal with the Mayor of London on further devolution.

 

An agreement with the Greater London Authority and London Councils will include joint working to explore areas such as tackling congestion and a taskforce to explore piloting a new approach to funding infrastructure.

 

Progress towards city deals for Edinburgh and Swansea is also being made with “constructive” working with local partners and the Scottish and Welsh Governments.

 

Negotiations have also opened up for a city deal for Stirling and the government “looks forward” to considering proposals for a Tay Cities Deal and a North Wales Growth Deal.

 

Meanwhile, following the launch of the Northern Powerhouse Strategy in the Autumn Statement, the Chancellor said Midlands Engine Strategy would be published today which would address productivity barriers across the Midlands.

 

While several announcements have plenty of positive implications for the tech sector, it was also impossible to ignore the potential impact the tax and NI changes for the self-employed may have on smart innovation with entrepreneurs and burgeoning tech companies pivotal to the smart city movement.

 

Catherine Hall, head of tax for Mazars in the South East, said the intended 1 per cent increase in Class 4 National Insurance Contributions (NIC) in 2018 and again in 2019, coupled with the reduction in dividend tax free allowance from £5,000 to £2,000 from 2018, will have disappointed many entrepreneurs and business owners despite his pledge to make the UK the “best place in the world to start and grow a business”. She says they will increase the tax burden on entrepreneurs and the self-employed despite the abolition of Class 2 NIC in 2018.

 

“There were no new incentives to encourage investment or increase capital value,” she said. “It could have been worse as the Chancellor could potentially have gone further and removed or reduced the benefit of a number of existing tax incentives such as Entrepreneurs’ relief. While today’s Budget won’t be remembered for being business-friendly; we will be hoping to see greater support for growth and entrepreneurship in the Autumn Budget.”

 

At times, it was as if the Chancellor was giving to the UK’s entrepreneurs with one hand and taking with another though. He announced a £300 million fund for local authorities to help with business rates as well as a total of £435 in business rates relief for small businesses, which was welcomed by Bladen. “As the cost of businesses can be a crippling factor, especially for tech start-ups where the focus on R&D means that revenue and profits are longer term targets, such investment enables small businesses of all kinds to operate at a reasonable price and thus further stimulate the UK economy.”

 

Chris Bryce, chief executive of the self-employed and freelancer association, IPSE, said that when you look at the additional support offered for business rates it appears as if the Chancellor is supporting SMEs by hitting entrepreneurs and the smallest of businesses.

“Adding in the reduction in Dividend Tax allowance, whether you work as a sole trader or through a limited company you will be facing higher bills,” he said. “The Chancellor shouldn’t forget that growth in self-employment has driven our labour market in recent years and punitive rises in tax will make many people have second thoughts about striking out on their own.

“It’s entirely right for the Chancellor to look at taxation of the self-employed, but changes should only come after a thorough consultation with the business community, which has not taken place.”

 

 

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