Digital brands tax, sharing government data and £500m tech fund: What marketers need to know from 2017 Autumn Statement

“We are on the brink of a technological revolution that will change the way we work and live and transform our living standards for generations to come. Either we embrace the future[….] or reject change and turn inwards to the failed and irrelevant dogmas of the past,” said Hammond in his Autumn Statement today (22 November).

“We have no doubts and choose the future and to run towards change, not away from it, and prepare our people to meet the challenges ahead.”

However, his positive outlook came against a bleak economic backdrop. Growth forecasts for 2017 were revised down to 1.5% in 2017 from 2% while its outlook for potential productivity growth was also slashed by 0.6% on average in the four years to 2021/22.

Spectators were quick to link sluggish growth to Brexit uncertainty and in a move to seemingly alleviate anxiety £3bn has been set aside for preparations to leave the EU, up from £700m previously allocated.

Major R&D and startup funding

But among the more positive updates to the budget was the commitment to double the number of new high-tech businesses that are founded in the UK. To do that, more than £500m will be invested “in a range of initiatives from artificial intelligence, to 5G and full fibre broadband”.

A further £2.3bn will be allocated for investment into research and development (R&D) and it plans to increase the R&D Tax credit to 12%. An ‘Action Plan’ published today outlined how it will unlock over £20bn of new investment in UK scale-up businesses.

Hammond also said there will be greater regulatory support around innovation with a “pioneers fund” while the government will also develop a strategy to open up its location data “to support economic growth” via a geo-spatial data commission.

“We stand ready to step in and replace EU investment fund lending if necessary,” he said.

The assurances to the UK’s digital and startup sectors were welcomed by the marketing industry.

“With the UK growth forecast having been slashed to 1.5%, this doom and gloom may cause most marketers to cut their budgets but it could be a real opportunity for a few to take some risks and do things that will break through – and give them an unfair share of voice in the market,” said Darin Brown, EMEA chief executive for Possible.

“Marry that with the £500m for 5G mobile networks, fibre broadband and artificial intelligence and we think smart marketers that invest in AI will truly leapfrog their competition.”

It was an opinion echoed by the Advertising Association, with chief executive Stephen Woodford declaring it “a great opportunity” to drive economic growth by targeting SMEs and supporting the increased R&D tax credit investment “through brilliant advertising that builds fame for all this new IP”.

Finally, funding to bring computer science into every school will see the number of specialist teachers tripled. This will be supported by a new national centre for computing and a “national retraining scheme for digital expertise”.

Chris Combemale, chief executive of the Direct Marketing Association praised this "critical" investment.

"If we don’t invest early, equipping young people with the numeracy skills they need to access jobs in our digital economy, we risk perpetuating the skills shortage that led us here," he said.

Self-driving cars on roads by 2021

As part of the government’s vision to lead this revolution, Hammond set out an ambition to allow driverless cars on British roads by 2021.

“There is no technology more symbolic of our time than driverless vehicles,” Hammond said.

Changes to the regulatory framework are in the pipeline while a National Infrastructure Commission (NIC) will launch an innovation prize to pilot ideas on how roads should adapt to support self-driving cars.

This has been met with mixed reviews, with Mark Curtis, co-founder and chief client officer at Accenture-owned design agency Fjord suggesting that while brands will be buoyed by the opportunities such innovation presents, greater thought needs to go into the ecosystem around a driverless car appearing on our roads.

He said: “For organisations and brands this offers the opportunity to create brand new services. What will you do when you’re in driverless cars? What kind of food and entertainment will you consume and where will you get it?

“That said, interactions between human and machine need careful thought, and this doesn’t just include what the drivers do. For example, how does a driverless car signal to pedestrians that it has seen them at a crossing point? And how can we understand what is going on in the mind of the machine – how will they speak to other cars on the road?

“We – as individuals, businesses and governments – must be kept accountable for how we safely introduce driverless cars into our society, and be transparent in how we communicate the decisions we make along the way.”

Clampdown on digital brands using tax loopholes

Plans are also underway to close loopholes that allow digital businesses to pay tax for UK sales in low tax jurisdictions.

Google, Amazon and Facebook have all been put in the spotlight for their tax practices in the UK in recent years and Hammond said there would be a clamp down in the UK until a global solution can be found.

From April 2019, royalties relating to UK sales from digital businesses that are paid to low tax jurisdictions will be subject to UK income tax in a move that’s expected to generate more than £200m in its first year.

“It doesn’t solve the problem but does send a signal of intention to find a long term solution to businesses that operate in out cyber-space,” said Hammond.

Focusing on the future to ease today’s concerns

The chancellor's unrelenting focus on “being fit for the future” despite so many uncertainties as a result of Brexit was not a coincidence.

“Again and again, he returned to phrases such as ‘we chose the future, we chose to run towards change and not away from it… to prepare people to meet the challenges ahead and not hide from them’,” said Chris Kreinczes, head of insight at consumer intelligence and trends forecasting agency Canvas8.

“It’s an important point about the messaging around the budget, so much is said about the power of nostalgia to elicit emotions, but references to the future remain powerful drivers – our evolution has been geared toward abstraction and envisioning moments yet to come. People have an innate drive to usher in a preferable story of what the future holds, the accompanying speech was very much geared towards eliciting such a response.”