Today’s Budget - Comment from CEO & Managing Partner, Edward Lewis, at CyXcel
October 2024 by Edward Lewis, CEO & Managing Partner at CyXcel
A statement from Edward Lewis, CEO & Managing Partner, CyXcel, a cyber security consultancy combining security, regulatory and legal expertise:
Chancellor Rachel Reeves’ latest budget provides a noteworthy boost to the UK’s science and technology sectors, setting aside over £20 billion to safeguard government investment in research and development. A significant portion of this, at least £6.1 billion, is earmarked specifically for core research areas like engineering, biotechnology, and medical science. This commitment reinforces the government’s intent to nurture high-growth industries, an important step for attracting global talent and potentially bolstering the tech and cyber sectors.
What This Means for Tech and Cyber Businesses
The increased funding for research and development presents a valuable opportunity for tech and cyber companies, especially those operating in or adjacent to areas of scientific research. This investment will likely fuel partnerships between tech firms, universities, and government research initiatives, opening doors for innovative projects and cutting-edge advancements. Companies in cybersecurity, for instance, may find synergies with government-backed research in data protection and quantum computing, while AI-driven tech businesses may benefit from developments in biotechnology or engineering that require robust data analytics and security infrastructure.
Talent Attraction and Retention in a Competitive Global Market
In addition to funding, this commitment to R&D signals to prospective talent that the UK is committed to remaining a global leader in innovation. For tech and cyber businesses vying to attract skilled professionals, especially in high-demand areas such as data science and machine learning, the government’s investment could enhance the UK’s reputation as an attractive destination for top-tier talent. This investment, coupled with Reeves’ move to inflation-link tax thresholds from 2028, offers a long-term perspective of stability and growth—both highly attractive to professionals seeking career longevity in a supportive, innovation-driven environment.
Navigating Increased National Insurance and Talent Competition
However, Reeves’ simultaneous decision to raise employer National Insurance contributions, combined with the drop in the NI threshold, still adds immediate pressure for smaller tech and cyber businesses and start-ups. For early-stage ventures operating on limited budgets, this funding for science and R&D may serve as a critical incentive, providing routes to collaboration and funding access that offset the sting of higher employment costs. As companies weigh these benefits, they may strategically lean into public-private partnerships, potentially mitigating the financial constraints imposed by the new NI policies while tapping into government-backed R&D pipelines.
Long-Term Stability and Strategic Advantage
This budget ultimately represents a nuanced strategy for fostering the tech and cyber sectors. On one hand, there’s the short-term challenge of increased NI contributions, particularly tough for small businesses. On the other, Reeves’ commitment to both inflation-adjusted tax thresholds and a robust R&D ecosystem provides a forward-looking roadmap for businesses and talent alike. Tech and cyber firms that leverage these research investments while adapting to employment cost pressures will be better positioned to thrive in a highly competitive, evolving market.
In summary, while the immediate costs of employment have risen, Reeves’ commitment to R&D investment and tax threshold adjustments from 2028 signals a positive trajectory for the UK’s tech landscape. By balancing fiscal prudence with strategic investment in science and technology, this budget provides a unique blend of opportunities and challenges, setting the stage for growth in high-impact sectors. For tech and cyber businesses, navigating this balance may mean doubling down on innovation, public-private partnerships, and long-term planning to fully capture the advantages of the UK’s evolving fiscal environment.