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Budget 2020: 12 things for the Data & Marketing industry


The new Chancellor of the Exchequer, Rishi Sunak, today outlined the most spendthrift budget for 30 years. While a key portion focused on getting the UK economy through the coronavirus outbreak, there are a number of police proposals relevant to the data and marketing, digital, tech, finance, fintech industries.

In spite of being a central policy-focus for a number of years, there is not a single mention of AI, nor any specific announcements for the creative industries as a whole. Nonetheless, businesses in these fields will be affected by a number of proposals around startup loans, regulation and competition rules, market reviews and more.

1: Government response to coronavirus

some businesses will be concerned about reduced demand, potential disruptions to supply chains and export markets, and to their workforce during this temporary period. Therefore, the Budget announces a three-point plan to provide support for: public services, individuals and businesses.

Obviously the government's proposals to aid the economy through this time are welcome. Both employees and employers will need financial help to ensure their businesses can survive a 'temporary but significant' slump in the economy. More on that here.

2. Potential tax reliefs for R&D investment in data

Research & Development Expenditure Credit (RDEC) will increase from 12% to 13% from 1 April 2020 [...] There will be a consultation on whether expenditure on data and cloud computing should qualify for R&D tax credits.

R&D tax credits are great for encouraging businesses to invest in innovation. Businesses investing in R&D and helping to drive innovation in the economy. Extending this to data and cloud computing will encourage more businesses to try new things in this industry, boosting output and saving businesses money. The DMA will push hard for this to be extended for our industry.

3. Announcement of Digital Identity Unit

The government will work to create a digital identity market that makes it possible for people to prove things about themselves without showing paper documents. This will help make opening a bank account, claiming benefits or buying a house simpler, safer and quicker. More secure and cost-effective online transactions will also boost business and the digital economy.

Anything that safely simplifies the online space markedly increases its effectiveness and accessibility. This proposal should improve online safety & efficiency of transactions/provision of services, which is good for the innovation in the industry and wider economy.

4. Digital currencies discussion paper announcement

The government looks forward to the publication of the Bank of England’s discussion paper on a possible UK central bank digital currency (CBDC). The UK will continue to take a leading role in exploring digital currencies, and the wide-ranging opportunities and challenges they could bring.

The use of crypto and digital currencies is a largely untapped resource by government and the economy. Many large online businesses are exploring ideas in this space, and governments need to catch up. This paper could bring many opportunities for fintech & finance.

5. Former WorldPay CEO Ron Kalifa OBE to chair review of fintech economy

The government will support the UK’s world-leading fintech sector, along with the wider digital economy. The Budget announces a review of the UK fintech sector led by Ron Kalifa OBE to support growth and competitiveness in the sector.

As above, the true potential of fintech is yet to be realised, and work of governments to create nurturing (and well-regulated) environments for businesses to explore ideas in this space will be crucial for their success. The DMA's Value of Data fintech roundtable explored many of the issues that will be pivotal to the success of the industry and we will promote these to the review for consideration.

6. All 6 recommendations from Furman Review on competitiveness in digital markets will be adopted.

The government will accept all six of the Furman Review’s strategic recommendations for unlocking competition in digital markets. The government will consult on these in due course.

If implemented effectively, this is great news for counterbalancing monopolies; promoting better conduct; improving data portability and openness and regulating the digital economy.

7. The Competition and Markets Authority (CMA) will gain new powers to regulate competition in the Digital Economy

A new cross-regulator taskforce, based in the Competition and Markets Authority (CMA), will report to the government within six months on a pro-competitive regime for digital platform markets. [...] The government will also look at existing domestic or EU derived regulations that might hinder digital competition and entrench monopoly behaviours and will ensure that regulatory reforms applying to digital and tech businesses are pro-innovation and coherent.

As noted above, regulation of competition is needed in the online space. Proposals include the creation of pro-competition code of conduct for big businesses. This is good news for SMEs hoping to break into digital market but prevented to by ‘FANG’s & other big companies.

BUT businesses should be wary of the latter part of this announcement. It is imperative that the UK remain closely aligned to EU rules in the data economy going forward as this will help keep higher standards, market access and promote trust in the industry. More on that here.

8. The Government have signalled their continued commitment to Digital Services Tax

As announced at Budget 2018, the government will introduce a new 2% tax on the revenues certain digital businesses earn from 1 April 2020. This will ensure the amount of tax paid in the UK reflects the value these businesses derive from their interactions with, and the contributions of, an active user base.

In spite of opposition from the USA, the UK Government is going ahead with this tax. This will see big online social media companies taxed 2% to fund regulation & safety of the internet. Good news for all.

9. Digital Trade Network announced to promote UK companies promote in Asia.

The Budget announces £8 million for DIT and DCMS to pilot a Digital Trade Network in the Asia Pacific region, helping innovative UK companies to access opportunities in key markets.

While there is some speculation over the impacts of Brexit on the digital economy, most analysis predicts negative effects on size, productivity and output. Policies such as this will be welcome to counterbalance any negative effects of Brexit on the digital economy. The government should ensure any new immigration system allows for ease of movement between closely linked digital economies.

10. £5bn announced for better digital infrastructure to reach all areas of the country.

The government is committing £5 billion to support the rollout of gigabit-capable broadband in the most difficult to reach 20% of the country, so that all areas are able to benefit. This investment will level up connectivity across the UK, particularly in rural areas.

All areas of the country should have sufficient access to the internet and the digital economy. It is key for the survival of economies in rural locations and to deliver services equitably across the UK.

11. In Education and Skills, the Government will consult on how to spend the National Skills Fund, how to improve the Apprenticeship Levy & support T level in digital.

Funding will support T level routes being delivered from autumn 2021, including construction, digital, and health and science.

National Skills Fund – The government will consult widely in the spring on how to use the new National Skills Fund.

Apprenticeship Levy – The government will look at how to improve the working of the Apprenticeship Levy, to support large and small employers in meeting the long-term skills needs of the economy.

Some re-thinking needed is needed in the rollout on non-traditional education in digital and data skills, so all these developments are welcomed. Given the track record on delivery of these policies, we shan't be holding out that re-examination of these will shoot any silver bullets...

12. British Business Bank’s Start-Up Loans programme will be extended to end of 2022

The government will [extend] the funding of the British Business Bank’s Start-Up Loans programme to the end of 2021‑22, supporting up to 10,000 further entrepreneurs across the UK to access finance to start a business.

The UK's startup economy is one of the most vibrant in the world. Businesses in digital, marketing, data, tech, AI and beyond have been aided in starting in the UK, and it is right that this support continues.

The full 2020 Budget can be read here. For more information on these or wider Budget proposals, contact public affairs manager, Michael Sturrock.

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