The ‘Autumn Statement for Growth’ was announced recently by UK Chancellor, Jeremy Hunt.

Working closely within the start-up and scale-up ecosystem, we know many founders were eagerly awaiting to hear the government’s promises to UK citizens and business owners.

Nearly one week on, and after seeing the reaction from many start-ups and scale-ups, it’s clear how important this Autumn Statement was amidst the economic climate.

The underlying theme was the strengthening of the UK economy by reinvesting into growth efforts, particularly into start-ups and scale-ups across a broad set of industries.

Overall, the Chancellor announced that from a business perspective the UK government aims to make the country a more attractive destination for those seeking to list, support for SMEs to access global markets through UK Export Finance and changes to the heavily criticised R&D tax credit scheme for the tech industry.

But to ensure that businesses are thriving, individuals have to be financially stable too. Several measures were announced to try to ease the impact of the cost of living – including tax cuts for workers and additional support for the financially vulnerable – an area that many start-ups and scale ups in the fintech ecosystem are also trying to address.

So, let’s get into it. Here’s what went down in the Commons chamber and how this will impact the start-up and scale-up ecosystem over the coming year.

Improving the late payments culture in the UK

By setting an example from ‘the top’, any government contract will require evidence that the business pays invoices issued to them promptly. Late payments haunt many companies and are particularly challenging for younger businesses so, by encouraging this culture, it is sending a clear message to the working world as to how business should be conducted.

Start-ups and scale-ups rely on being paid on time to keep the running costs of the business going. Therefore late payments can hinder plans, ruin productivity, change the course of business relationships and even dampen morale if that trickles down to paying staff or other vendors.

Currently, government figures estimate there is more than £23.4bn currently owed in outstanding invoices to UK businesses, with small businesses spending an average of 3.6 hours a week chasing payment.

This is a sign that the government is fully aware of the issue, having not included this particular provision previously. It is welcome news to hear that such a prevalent issue – and one that the fintech industry has tried to help solve – has been taken seriously at government-level.

Unlocking the full potential of payments and legislating open banking

Cultivating a strong payments environment was firmly on the table.

With a total number of payments made in the UK increasing to 45.7 billion payments in 2022, compared with 40.4 billion payments in 2021, it is one of the fastest growing sectors, employing a vast amount of the UK workforce.

To facilitate this, the government is committed to unlocking the full potential of open banking-enabled payments.

With the launch of PDS3 earlier this year, which includes more extensive Strong Customer Authentication (SCA) regulations and stricter rules on access to payment systems and account information, this is in-line with what the fintech and finance industry has wanted for some time. This forces financial institutions, beyond the prominent establishments, to incorporate the new regulatory framework and encourage the adoption of open banking among consumers.

Start-ups and scale-ups in this particular sector will get a boost stemming from the official backing of the government regarding open banking. This will also create more awareness for non-financial businesses, many of whom use embedded finance services or banking-as-a-service providers to provide an elevated user experience. As a result, an increase in revenue and much needed publicity will support job creation and the ability to scale.

The state of the economy

Over the past twelve months, it has been no secret that investment into the tech industry has decreased. Investors were understandably worried in the current economic environment that taking on more risk would not be sustainable.

Fundamentally, the crux of the speech hinged on the state of the economy, with all eyes on the Chancellor’s announcement around the topic.

A few key points:

• Inflation is expected to fall by 2.8% by the end of 2024, down from 11.1%.
• The economy will grow by 0.6% this year and 0.7% the next year.
• GDP is also expected to grow 1.4% in 2025, 1.9% in 2026, 2% in 2027 and 1.7% in 2028.

Although the instability of the economy over the past three years has pained many founders, one of the positives that came out of it was the lesson of scaling up sustainably.

Pre-pandemic, moving at breakneck speed resulted in many of the big tech firms to make layoffs and cut costs across the board over the past twelve months.

These figures are promising and hopefully will translate into more opportunities for workers, businesses, founders and – in turn – help contribute to GDP. It should also give investors the confidence and incentive to start putting money back into start-ups and scale-ups, which takes us to our next point…

VC and Tech Investment

There were a four major highlights that directly benefit and impact start-ups and scale-ups:

1. The continued success of the Future Fund means that the government will issue £50 million of additional funding to the British Business Bank’s (BBB) Future Fund: Breakthrough programme, helping the UK’s most intensive R&D companies to scale up.
2. Simplification of the R&D Tax Credit, and investments of over £750m amidst a rocky year for founders and the previous R&D scheme.
3. Continued support through EIS and VCT for early-stage start-ups so that early-stage, innovative companies have the access to investment that it needs to thrive, the government will legislate to extend the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) to 2035.
4. The government agrees in principle with Lord Harrington’s headline recommendations for Foreign Direct Investment (FDI) and will establish a new Ministerial Investment Group, review investment grant processes, and increase resourcing for the Office for Investment, strengthening the UK’s world-class concierge service for investors.

Although the phrase can be overused and sometimes overstated, the UK really has been at the forefront of innovation for many years, especially in tech. To remain globally competitive, investment needs to increase, as does the government-backed funding that allows ideas to turn into reality – this is also something that the Smart Data Discovery Challenge (entries open until 8th December) hopes to support too.

About Seven Consultancy

It’s our mission to create purposeful customer-led communications that drive genuine impact for the partners we work with – whether that be shifting mindsets, raising awareness or scaling the business.

We work in partnership with our clients to reach their intended audiences through media and influencer engagement using insight, clear storytelling and creative, differentiated activity.

We are committed to supporting positive disruptors and purpose-led businesses, working in partnership with comms and marketing teams as an extension of their in-house team and achieving shared goals.

To find out more about us and how to work with our team get in touch info@seven-consultancy.com