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What's in Hammond's box? Autumn fallout for Britain's tech SMBs

Cash to update 'antiquated network infrastructure'

Phiip Hammond, photo via Shutterstock

The Government in its Autumn statement promised to invest £1bn on "digital infrastructure", an extra £2bn annually on UK R&D, and at least £400m on new venture capital funds through the British Business Bank, which it hopes will unlock a further £1bn in private finance for growing firms.

The National Productivity Investment Fund (NPIF) is to be targeted at three key areas considered to be critical for productivity, one being R&D. Between 2017-2018 and 2021-2022 an additional £4.7bn will be added to the R&D budget.

The Autumn Statement was big news for many Brexit-watchers awaiting some kind of industrial strategy, but how has it gone down among SMBs – the mainstay of the economy – in tech?

For Chris Evans, managing director of cloud services provider HighSpeed Office (hSo), the cash can't come soon enough. He told The Reg he'd noted a sharp slowdown in government tenders in telecoms and digital services after June's vote to leave the European Union.

Evans claimed that during the nine months running up to the referendum, tenders being issued to private sector firms were running at 815 per month – but in the five months since there have been just 652, a decline of 20 per cent.

He sees the uplift in spending as a clear opportunity for SMBs like his to gain more contracts at the expense of much larger players – hSo supplies network services to clients such as the NHS, Texas Instruments, and Britannia Hotels.

Evans reckoned that government departments, councils and agencies will now start spending, looking for greater efficiencies in general but also the kind of relatively low pricing offered by SMBs. In recent negotiations, Evans said: "We were 40 per cent cheaper than the incumbent."

Another area of opportunity is homeworking. According to Evans, SMBs in telecoms and collaboration can build services on top of the basic DSL connections that companies are rolling out in support of remote workforces.

The firm recently advised the MoD to install ducting during construction of a new 2,500-home estate – alongside water, gas and electricity – to ensure fibre-to-the-premise networking from the beginning, rather than digging up roads in future.

Urban telecoms network builders also stand to benefit as the Government announced 100 per cent business rates relief on new fibre.

CityFibre has announced its plan to now roll out dense, full-fibre networks in business parks across its 40-city UK footprint to reach more than 500 business parks. It's promised more than 22,000 SMEs stand to receive low-cost, gigabit-speed internet services.

The first parks targeted for upgrade are in existing projects in Coventry, Bristol and Peterborough. CityFibre's aim is to expand to 100 cities by 2025, which it reckons equates to fibre access for 60 per cent of the UK's businesses and 40 per cent of the UK's homes outside of London.

Chief executive Greg Mesch said it was now up to firms like his to deliver what he called a "new generation of connectivity" following "decades of underinvestment".

According to Mesh, dominant provider BT Openreach is running what he called an "antiquated network infrastructure" that was "strangling our nation's businesses".

Official figures show that barely half (46 per cent) of premises in SME-only postcodes had broadband connections with maximum speeds of less than 10Mb, 24 per cent had maximum speeds of less than 5Mb, and 12 per cent had maximum speeds of less than 2Mb.

The economic boost that high-speed connections can achieve has no better example than central Cornwall – between Redruth and Truro – where young digital companies such as currency exchange TorFX, eHealth software developers Ultramed, digital production house Sanders Studios and media firm Headforwards have created a whole new cluster labelled the "California of the UK".

According to Software Cornwall director Belinda Waldock, superfast broadband made that possible. Yet the majority of regions and rural towns are without it, and they are praying that the Autumn Statement funds will eventually give rise to entirely new clusters all around the UK.

The Autumn Statement struck a chord with the venture community too but the cloud of Brexit hung in the background especially on science and research.

Sue Staunton, partner and SME finance expert at James Cowper Kreston that financed many Oxford University spinout companies, reckoned No. 11 had continued a government trend of support for technology and innovation.

"It is the linking of that to the driving forward of the new concept of 'productivity' which the Autumn Statement takes as a key theme," she said.

However, with the UK's pending withdrawal from the EU and the loss of funding for joint UK-EU science projects, she noted: "The concern is whether this funding is genuinely there to build our innovation or whether it is there to replace what is currently received from the EU through such programmes as Horizon 2020."

Oxfordshire, meanwhile, was one of eight regions selected for a second wave of science and innovation audits announced in March.

The full line-up is Bioeconomy of the North of England; East of England; Innovation South; Glasgow Economic Leadership; Leeds City Region; Liverpool City Region; Offshore Energy Consortium; and Oxfordshire Transformative Technologies.

Designed to map out local research, innovation and infrastructure strengths across the UK, the audits are helping to identify and build on the potential of every region across the country by making sure investment is properly targeted and uncovering opportunities for businesses to tap into. Five areas were selected earlier this year in the first wave of the scheme.

If the Autumn Statement is a follow-on from Brexit, then it would seem one consequence is that, in the short term at least, the future is promising for Britain's tech SMBs and hotspots. ®

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