Chancellor Philip Hammond today outlined measures meant to ensure the UK stands at the forefront of 5G, while stopping UK startups being "snapped up" by larger rivals.
Delivering the Autumn Statement to the House of Commons, Hammond said he would invest more than 1 billion in developing a 5G infrastructure, invest 390 million in connected cars and other car initiatives, and 110 million for a "tech corridor" between Oxford and Cambridge.
The investment was announced against a backdrop of a forecast 122 billion drop in the UK's finances up to 2021 as compared to a forecast back in March, as a result of Brexit.
5G
While the government doesn't expect 5G to arrive much earlier than 2025 in the UK, it is preparing for it now in order to underpin the proliferation of Internet of Things devices expected to grow over the next few years.
"My ambition is for the UK to be a world leader in 5G," the chancellor said. "That means a full fibre network [and] a step change in speed, security, reliability. We will invest over 1 billion in our digital infrastructure to catalyse private investment in fibre networks and to support 5G trials."
Around 740 million is expected to be spent on 5G, including trials around the UK, such as at the 5G Innovation Centre at the University of Surrey, though local authorities will be able to bid for allocations of the cash.
CCS Insight analyst and CEO, Shaun Collins, said: "Any investment in the UK digital backbone is welcome and the commitment to 5G is admirable. However, realistically 5G services are unlikely to be available before 2020 in the UK. This investment only offers a small step in that direction."
Fintech firm WorldRemit's director of mobile partnerships, Alix Murphy, said the government should ensure people have basic 3G access first. "The government should prioritise spending this money where it matters most, on those 35% of Brits who are not even covered by basic 3G mobile broadband and struggle to get reasonable speeds," said Murphy.
Business fibre networks
Hammond also introduced a 100% business rates relief that will stretch over five years to cover to support a further roll-out of superfast broadband fibre to homes and businesses.
However, Ewan Taylor-Gibson, broadband expert at uSwitch.com, said parts of the UK are falling behind in terms of access to basic broadband speeds.
"Superfast fibre broadband is available to 90% of the UK, yet 20 of the UK's 42 biggest cities are registering actual average speeds of below 24Mbps. And three in 10 broadband users register actual speeds of less than 5Mbps, while just 10% log speeds of above 50Mbps," he said.
"These figures suggest barriers to the take-up of fibre must be brought down whilst infrastructure is improved - barriers that include the awareness of the availability of fibre and pricing. It is critical the government ensures that, with ultrafast broadband in its sights, those already struggling with poor speeds or no access to broadband at all are not left behind."
Turning startups into scale-ups
The government also wants to address the UK's startup industry's issue with not being able to scale, with a 400 million investment into venture capital funds through the British Business Bank that intends to unlock 1 billion of new finance for startups ready to scale.
Hammond said: "I am taking a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies, rather than growing to scale.
This is intended to mitigate fears over a loss of money from the European Investment Fund (EIF) post-Brexit, said techUK's policy director, Charlotte Holloway.
"Government has rightly taken action to mediate uncertainty arising on the European Investment Fund for start-ups and venture capital, by allocating 400 million into British Business Bank specifically for UK scaling tech companies," she said.
The EIF supported 144 UK private equity funds at the end of 2015, according to its own statistics, having invested 2.3 billion to trigger overall investment of 13.8 billion between 2011 and 2015.
Driverless cars, tech corridor, and R&D
TechUK hailed a 100 million commitment to developing an infrastructure for autonomous cars as helping to build on the UK's reputation as a tech leader.
Another 110 million will go towards building an Oxford to Cambridge expressway, which will function as a "tech corridor" that Hammond hopes will see the two universities share research.
Hammond confirmed an investment of up to 2 billion a year in science and technology R&D starting from next year until 2021, which was earlier announced by the Prime Minister.
He said: "As the pace of technology advances and competition from the rest of the world increases, we must build on our strengths in science and tech innovation to ensure the next generation of discoveries is made, developed and produced in Britain."
Mark van der Linden, UK country manager at Dropbox, said: "Research continues to be a global and collaborative process, so we hope today's 2 billion investment will help businesses and educational institutes increase the pace of innovation at home and abroad."
National Productivity Investment Fund
The government also outlined a 23 billion fund to address the UK's productivity gap - Whitehall's own statistics show the UK lagging behind the US and Germany by 20%.
TechUK's Holloway said: ""Investment in innovation is absolutely critical for driving tech-led growth and productivity, and it's great to see the 2bn extra investment in R&D for new technologies by 2021 and a 23 billion National Productivity Investment Fund to give a focal point to the level of the UK's national ambition."
Where was the skills investment?
Hammond didn't announce anything to close the huge gap between the number of skilled tech workers and the large number of vacancies for job roles like data scientists in the UK, which could increase further if the UK stops free movement with the EU after Brexit.
Analytics firm SAS's VP for northern Europe, Mark Wilkinson, said: "a lack of data skills is still holding back our workforce. The next generation requires a solid foundation in STEM skills that are crucial to developing a pool of analytically minded talent."
And Holloway added: "There was a real gap when it came to additional support for boosting the UK's digital skills."
Digital devolution
While Hammond touched on devolution, critics said the role of digital in developing local economies outside of London was left unexplored by the chancellor.
"There was a missed opportunity to ensure that the benefits of digital are at the heart of the government's devolution ambitions," said Holloway. "We will be looking to the government to reconsider these areas in the next budget."
Katie Gallagher, MD of independent trade association for digital businesses in the north west, Manchester Digital, added: "We will be working hard to ensure Manchester plays a part in these [5G] trials. The size of our city and the diversity of its neighbourhoods and the mix of businesses here makes us a perfect test bed for new technologies."
"We are in agreement with Hammond that for too long investment has been focused on London. We look forwards to hearing more detail on what this will mean for the North and specifically Manchester."
