Internet of Business says
News sites are awash with the announcement that tech giants Apple, Amazon, and Google will be required to pay a new Digital Services Tax (DST) in the UK.
Whitehall aims to ensure that large digital services companies pay their fair share to the Exchequer by introducing a two percent tax on the revenues of search engines, social media platforms, and online marketplaces – echoing moves in Europe.
The levy will apply to groups that generate global revenues in excess of £500 million per annum, tackling a longstanding criticism of Big Tech companies’ knack for avoiding taxation – Amazon paid just £1.7 million in UK taxes in 2017, for example. By 2023, the DST is predicted to boost the Treasury’s coffers by over £400 million per year.
The headline story has meant that what Budget 2018 means for technology and innovation more broadly has been largely overlooked. Here’s all you need to know about how the government plans to support the latest in AI, IoT, and big data, across UK industry.
While Chancellor Philip Hammond may be tightening the previously free rein on the tech giants, the government has, on the whole, made strides to boost technology companies by cutting business taxes to stimulate investment, and has increased funding for the teaching of science and maths.
The government is also acting to ensure that businesses and consumers continue to benefit from new technologies, including asking chief economist to former US President Barack Obama, Jason Furman, to lead a review of competition in the digital economy. His experience in shaping government AI policy in the US could prove invaluable.
These efforts are underpinned by the government’s modern Industrial Strategy; the cornerstone of which is the National Productivity Investment Fund (NPIF), established in 2016 to provide additional capital investment in areas critical to productivity – including transportation, digital infrastructure, and R&D.
In the newly announced Budget, the government is going further, extending the NPIF by an extra year to 2023-24, and expanding it to £37 billion.
It also announced the next steps for the rollout of full fibre broadband nationwide, which will see funding for fibre and 5G increase from the £25 million seen in 2017-18, to £290 million in 2023-24.
The government set out its strategy to meet the goal of a nationwide full fibre network by 2033 in the Future Telecoms Infrastructure Review, published in July 2018. The Budget allocates £200 million from the NPIF to pilot approaches to deploying full fibre internet in rural locations.
As Internet of Business recently reported, the UK is placed at an underwhelming 30th in the world in average fixed-line broadband speeds, raising doubts as to whether £200 million is anywhere near sufficient to elevate the country’s standing.
This added NPIF budget also sees investment in next generation vehicles stepped up from £75 million in the 2017-18 budget, to £145 million in 2018-19.
The government claims its latest Budget sets out a vision for, “an economy driven by research and innovation,” and announces a further £1.6 billion for R&D funding:
The government is providing additional funding to support the Industrial Strategy Grand Challenges and secure the UK’s position as a world leader in new and emerging technologies, such as artificial intelligence (AI), nuclear fusion, and quantum computing.
To support the Industrial Strategy’s Future of Mobility Grand Challenge, £90 million from the NPIF will be allocated to the Transforming Cities Fund to create Future Mobility Zones. This will trial new transport modes, services, and digital payments and ticketing.
Manufacturing & innovation
With Brexit looming, many scientists fear what this will mean for the UK’s place in the European science community, which depends on the free movement of people and EU funding.
The Budget seeks to soften this blow by reinforcing the UK’s commitment to a strong environment for international scientific collaboration. Since 2016, the government has invested an additional £7 billion in research and development, the largest increase to R&D in 40 years:
“As part of this investment in R&D, the government will increase the Industrial Strategy Challenge Fund by £1.1 billion, supporting technologies of the future.”
- Up to £121 million for the Made Smarter initiative to support the transformation of manufacturing through digitally enabled technologies, such as the Internet of Things and virtual reality
- Up to £78 million for the Stephenson Challenge, supporting innovation in electric motor technology, making vehicles lighter and more efficient than ever before
The nascent quantum computing space promises to be the future of computing, breaking free from the limitations of binary digital electronic computers, based on transistors.
With this in mind, the government will invest a further £235 million to support the development and commercialisation of quantum technologies, including up to £70 million from the Industrial Strategy Challenge Fund, and £35 million to support a new national quantum computing centre.
These technologies will transform capabilities in computing, sensing, and communications, bringing promising new approaches to solving global problems such as disease and climate change.
“This investment is in addition to the government’s recent £80 million extension of the Quantum Technology Hubs and takes overall funding for the second phase of the UK’s world-leading National Quantum Technology Programme to £315 million.”
AI & data-driven innovation
In the shorter term, artificial intelligence is impacting on all areas of industry, giving rise to new technological, ethical, and legal challenges and opportunities. The government reiterated its commitment to the technology, which rests on its AI sector deal:
“The government has already taken action to ensure the UK is at the forefront of emerging digital technologies, including through the Industrial Strategy Artificial Intelligence (AI) and Data Grand Challenge, and an AI sector deal of up to £950 million.”
The Budget sets out the following next steps:
- The Office for AI and Government Digital Service (GDS) will review how government can use AI, automation and data in new ways to drive public sector productivity and wider economic benefits. This will feed into the innovation strategy being led by the Cabinet Office
- The Data Science Campus at the Office For National Statistics (ONS) and the GDS will conduct an audit of data science capability across the public sector, to make sure the UK public sector can realise the maximum benefits from data
- The Centre for Data Ethics and Innovation has been commissioned to study the use of data in shaping people’s online experiences, and the potential for bias in decisions made using algorithms
Silicon Valley companies have tempted many leading UK AI academics across the Atlantic with large salaries and research budgets. In a move to reverse this trend, and attract, retain and develop world-leading research talent, the government will invest up to £50 million in new Turing AI Fellowships to bring the best global researchers in AI to the UK, and £100 million in an international fellowship scheme.
These figures fall a little flat when viewed alongside MIT’s plans for a $1 billion AI college. The US technology institution’s scheme is just $300 million short of the value of the UK’s entire Sector Deal for AI.
Blockchains & catapults
The Budget also confirms a further £115 million funding for the Digital Catapult, to support entrepreneurs and businesses to access and adopt cutting-edge technologies. This builds on the £1 billion in long-term funding already committed to the broader network of Catapult centres located across the UK.
Digital Catapult is set to run a series of Distributed ledger technology (DLT) Field Labs, working with businesses, investors, and regulators in a range of areas, including in construction and the supply chain.
DLTs such as blockchain, offer a new way to record, protect, store and share information, transforming financial markets, supply chains and public services.
These field labs follow a damning report of cryptocurrencies by the UK government’s Treasury Committee in September, which called for greater regulation of the cryptocurrency ‘Wild West’, reassuring proponents of DLT that the government isn’t dismissing the technology entirely.
Budget 2018: A healthy picture?
While, the budget promises an extra £20.5 billion for the NHS over the next five years, the role technologies such as AI and robotics might play in that investment was surprisingly absent. This is despite the potential AI has to transform the National Health Service.
Otherwise though, the budget seems to be saying all the right things when it comes to the UK’s place in a rapidly evolving digital landscape.
While the words were spot on, the figures may appear lacklustre to many. Philip Hammond claims that Budget 2018 signals “the end of austerity”, yet spending plans for technology (and many other areas) suggest that he’s still reluctant to loosen the purse strings.
And, of course, Brexit may change everything.