In this afternoon’s Budget announcement, chancellor Philip Hammond has announced the National Productivity Investment Fund has been extended for another year, and expanded to be worth more than £31bn.
Some £2.3bn extra will be allocated for research and development (R&D), £20bn for business investment, and £500m for projects like AI, 5G and broadband. In addition, the R&D tax credit will be increased to 12 per cent.
The move comes in response to the UK’s poor productivity figures. The Office of Budget Responsibility has downgraded the forecast for productivity growth and GDP – which is now expected to grow at 1.5 per cent in 2017 as opposed to two per cent.
“Regrettably, our productivity performance continues to disappoint,” said Hammond, claiming that investment in infrastructure and research will help rectify this.
Hammond initially announced the introduction of the new National Productivity Investment Fund in last year’s Autumn Statement.
The fund was launched to add £23bn in investment from 2017-28 to 2021-22, with spending targeted at areas critical for productivity, including housing, R&D and economic infrastructure.
The spending was originally earmarked for the following:
• £7.2 billion to support the construction of new homes, including spending by Housing Associations
• £4.7 billion to enhance the UK’s position as a world leader in science and innovation
• £2.6 billion to tackle congestion and ensure the UK’s transport networks are fit for the future
• £0.7 billion to support the market to roll out full-fibre connections and future 5G communications.
Responding to the increased productivity fund, Alan Laing, MD UK and Ireland at Sage, said: “We welcome the £500m investment into the UK’s technology sector, universities and R&D, but cannot overlook the need to invest in a wider understanding around bias and ethics to ensure that we are fully aware of how these technologies are being developed prior to applying them to our businesses.
“There is absolutely no need to fear AI if it is approached with the correct framework in mind, such as the ethics of code Sage produced.
“Sage research recently revealed public and business understanding of AI is optimistic: four out of every five people believe this technology has the potential to make their lives better.
“Technologies like AI have the power to augment human intelligence, support productivity growth and certainly will not displace jobs if we have flourishing economy.
“Almost 50 per cent of the UK population have no idea what AI fundamentally is, and therefore we must ensure that appropriate attention is paid to the need for investment in education and skills.
“Sage are focused on developing AI to support every business, therefore we need a much more diverse approach to skills development – every child should have the opportunity to experience AI, to help upskill the UK’s next wave of workers and entrepreneurs.”
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