Chancellor Rishi Sunak has announced his 2021 Spring Budget, as the UK economy continues to recover from the financial effects of the Covid-19 pandemic. In the wake of the announcement, we take a look at what the announcement will mean for the tech sector in the UK.
A new fast-track visa
As recommended in the recent Kalifa Review of UK fintech, the Spring Budget 2021 included a new fast-track visa to fill the skills gap present within the sector post-Brexit. The visa is set to come with simplified bureaucracy for talent worldwide, and will look to boost fintech, as well as technology operations generally.
“The UK is a world leader in financial technology, and it’s important that we don’t allow the Covid-19 pandemic to disrupt this position as we slowly return towards normality,” said Wayne Johnson, CEO of Encompass.
“A new visa route for specialists could be a turning point, and really accelerate growth by allowing us to welcome new talent into the sector and benefit from a diverse pool of skills. As we enter what is hopefully the final act in this pandemic, the government and our financial services organisations must work together to build on the UK’s strengths by supporting innovative start-ups and ensuring organisations can access the finance and support that they need in order to succeed.
“We have seen a fast-paced evolution of the FinTech ecosystem, with fintechs becoming embedded across financial services. The UK’s regulatory approach to fintech continues to evolve to create the right environment for competition and growth, while supporting the need to respond to regulatory change.”
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Rafa Plantier, head of UK & Ireland at Tink, added: “The UK has always been a fintech pioneer and the driving force behind the legislation that ushered in the era of open banking. We must continue to nurture our start-up culture but, crucially, we must also give high growth UK firms access to the global talent they need to flourish internationally.
“To make this happen, it’s vital that not only should the UK have access to people with the right technical skills, but also to those who have spent time with ambitious, rapid growth businesses from around the world — and who can bring this experience to bear on the UK fintech sector.
“The new visa presents a golden opportunity for the UK to continue to trailblaze in fintech — encouraging entrepreneurialism, investment and growth. Doing this will ensure UK tech companies have access to the global market opportunities they deserve to foster innovation and to keep making waves in the fintech industry.”
Taxpayer Protection Force
Following the rise in Covid-related fraud, spanning emails and SMS messages, claiming to be from HMRC or PPE providers, the Spring Budget announced a new £100m task force dedicated to combating these attacks through 2021 and beyond.
The Taxpayer Protection Force is set to be staffed by over 1,250 HMRC operatives responsible for detecting and investigating fraudulent claims through schemes such as furlough and the Self Employment Income Support Scheme (SEISS). But Ivan Heard, global head of fraud solutions at Quantexa, said that the new initiative won’t be effective without an up-to-date approach to data analysis.
“The pandemic relief programs have unfortunately been targeted by both opportunistic and organised criminals,” said Heard. “HMRC investigators have a monumental task ahead – they will need to sift through an overwhelming volume of data in order to detect and stop the fraud. They will need to see how this data reflects circumstances in the real world and figure out which individuals and businesses the information points at – and how they can be stopped. With a holistic view of data, many of these fraud attempts could have been prevented.
“Human intelligence, however experienced the investigators, falls short of such a mammoth task, and the Government will no doubt look to automated anti-fraud technology in order to make sense and meaning out of the data. Government agencies using data-driven, analytical approaches to fraud prevention can discover risks and threats faster compared to traditional methods.
“We can expect to see a lot more headlines about fraud and abuse in the next 18 months as this taskforce reveals the true extent of the issue. Combining human and machine intelligence is the only way for the HMRC investigators to tackle this task and relieve the taxpayer of this burden.”
Free tech advice and training for businesses
In the lead-up to today’s announcement, the UK Government announced plans to introduce an online platform dedicated to providing free advice to businesses on using technology. According to the Treasury, the new tech support hub will “help businesses to save time, reduce costs, and reach more customers”.
Expanded upon during the 2021 Spring Budget, the Help to Grow scheme, worth £520 million, will look to aid SMEs to be more competitive while enhancing digital skills across the enterprise.
“Covid-19 and Brexit have created a tough environment for small businesses, so the Government’s Help to Grow scheme couldn’t have come at a better time,” said Pranav Sood, VP of small business at GoCardless.
“The widespread adoption of technology will fuel the next wave of growth in this sector and unlock significant gains in productivity.
“However, there are two major obstacles to achieving this. One is a lack of awareness of the tools and software available to help SMEs. The other is the sense of apprehension many businesses feel when it comes to integrating new technology into their day-to-day operations. The type of training proposed in the Government’s scheme should help to overcome these hurdles.
“Small businesses have big ambitions; for example, GoCardless data indicates half of our SMEs collect payments internationally. By identifying and selecting the right technology that fits their needs – often solutions that work straight out of the box – they can pursue their plans with more confidence, ultimately driving wider economic growth.”
Sridhar Iyengar, managing director, Europe at Zoho, added: “Technology will inevitably continue to aid businesses to communicate and function successfully, with most businesses likely to adjust operations to ‘hybrid’ working, with a part-office, part-remote working model, even after a full return to office is permitted.
“Although many organisations have invested heavily in new tech since the pandemic began, many company owners still lack the right tools needed to thrive for the long term under a remote, or hybrid working business model.
“Digital skills are also set to play a critical role in the recovery of the economy, so areas such as recruitment, training and support initiatives are important areas for the government to acknowledge.”
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Contactless spending limit to be raised to £100
Also among the new economic developments is the raising of the contactless spending limit from £45 to £100. Implemented under the Spring Budget in the wake of rising contactless payments during the pandemic, the change may not be rolled out until later in 2021.
Paul Marcantonio, executive director for UK & Western Europe at ECOMMPAY, says the raising in the limit will instil confidence across the retail sector, but the threat of fraud should also be considered.
“To bring customers into shops, the retail experience needs to be made as attractive and simple as possible,” said Marcantonio.
“Allowing consumers to spend more with a contactless card reduces a potential point of friction, making it easier for them to spend more. When combined with the relief on business rates on eligible retailers, this will help to rebuild the finances of many businesses.
“However, the policy isn’t without drawback. The raise will have a number of implications for security and fraud. The UK is already among the countries with the highest levels of fraud within the EU, and even if the number of fraud cases associated with stolen cards remain the same, the losses will increase as it’s now possible to spend more on a card.
“This increases the card’s attractiveness on the black market, and could lead to a further rise in related crime.”
Piers Dryden, partner and head of the technology sector at law firm Brabners, commented: “While the contactless payment limit increase may be met with some concerns around the increased risk of fraud, advances in biometric authentication and fingerprint-based security which certain banks are looking to add, and the benefits of faster and more hygienic transactions for more substantial retail activity, are compelling.”
