18 Nov 2022

View from Chancery Lane - Michael Moore digs deep to take a look at the growth priorities in the Autumn Statement

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The pitch had been well rolled, but its state of repair could not be disguised. Yesterday’s Autumn Statement revealed the holes in the UK’s public finances in all their glory. It made plain the uneven impact of the recent economic downturn. And it showed that it would take more than clever spin to deal with the consequences.

In actual fact the Chancellor’s delivery was pretty straight. After the political and economic traumas of September’s ‘maxi mini budget’, repudiated in clear terms by Mr Hunt in recent weeks and again on Thursday, this was the sober assessment, the reset. Taxes up, spending constrained; inflation high, growth in reverse, unemployment up. No rabbit to be found in the hat. For all the expectation management in advance, it was a hard listen. It doesn’t look much better in print.

But the clarity is a good thing and the markets were unruffled in their reaction. Aside from the tax and spend details, the focus on new growth themes was very important, a proper highlight. With the Prime Minister alongside him, the Chancellor paid homage to his predecessor-but-two’s Mais lecture earlier this year. Back then Mr Sunak had stressed the importance of people, capital and ideas in the quest for sustainable growth. Refracted through the new chancellor’s prism, these priorities showed up in hefty commitments on education (a rare recipient of increased expenditure), energy (a chance to lead the world in efficiency measures), infrastructure (including gigabit broadband) and innovation.

Innovation. It can mean a lot of things, but the Chancellor recognising its importance for growth is a welcome signal to the industry. How it is incentivised and regulated matters, too. Mr Hunt said “we need to be better at turning world class innovation into world class companies”. Our industry can already offer plenty of examples. But his sentiment is well aligned with the evidence we gave to the Treasury Select Committee during their venture capital inquiry earlier this year.

Offering real-world commitments, Mr Hunt pledged to protect government research budgets and to increase its R&D spend. The target to invest 2.4% of the UK’s GDP in R&D was kept. His talk of ‘smart regulation’ for areas like life sciences, digital technology and advanced manufacturing struck a chord, too. Our industry consistently delivers on the innovation agenda as it’s embedded in private capital’s DNA. And we will continue to highlight the role of both venture capital and private equity in this mission.

We have been arguing for some time that private capital will keep generating ‘public value’ across the country if the UK maintains a globally competitive investment environment for the industry. There was speculation ahead of this latest fiscal event that tax and spend measures might work against that aim. But our ‘licence to operate’ was largely unaffected by the Autumn Statement, so the industry can continue to deliver its side of the bargain and generate economic and social value in all parts of the country. This is a playing field we know well – we can now get on and roll the pitch ourselves.

 

Michael Moore
Director General, BVCA


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