This week we released a briefing paper on the huge potential of the UK’s nascent drone industry, setting out reforms to unlock the sector’s £42bn forecast contribution to GDP.
You can read it here, read Dr Anton Howes’s article on it here, check out coverage in City AM here, sUAS News here, and ADS Advance here. And for the particularly time-pressed, read Anton’s Twitter thread here or our Twitter thread here.
I think this report is testament to the open mind with which we undertake our research. Going into it, I was expecting it would call for less regulation – after all, that’s the standard narrative you would get from an organisation whose job it is to represent entrepreneurs. However, after extensive conversations with entrepreneurs and investors in the space, Dr Anton Howes and Sam Dumitriu worked out that we actually need government intervention to make all recreational aircraft electronically visible to drones.
Drones and commercial manned aircraft are made visible to each other and to novel traffic control systems by small electronic devices that communicate their location to minimise the risk of collision. But the UK’s 20,000 recreational aircraft, which typically operate in the same airspace as drones, are not required to be electronically conspicuous. This is making the mass rollout of ‘beyond visual line of sight’ commercial drone applications unviable on safety grounds.
The cost of these devices is only £500 each, but current owners of recreational aircraft will understandably oppose this new regulation. Therefore, given the economic returns of drones taking off, we think the Government should foot the one-off £10 million bill to equip the UK’s recreational aircraft with electronic conspicuity devices.
On a Budget
On Wednesday, Rishi Sunak will deliver the Budget. We will be watching closely and have our analysis in a Policy Update about the impact it will have on entrepreneurs (sign up for our occasional ad hoc Policy Updates here).
Sam Dumitriu, our Research Director, has listed our top three budget asks. It could be a lot longer. After all, he has written two influential reports on Tax Reform – first for the APPG for Entrepreneurship and the second for the Adam Smith Institute on fixing the bias in the tax system against investment, with another on the way.
These two reports influenced the creation of the super-deduction, which allows entrepreneurs to write-off 120% of their investment costs as a corporate tax expense. However, the super-deduction will expire in 2023 at the same time Corporation Tax leaps to 25%. A long-term solution is needed. That’s why we call for the Chancellor to announce the creation of a permanent unlimited investment allowance – a policy known as full expensing.
We are also calling for the reform and replacement of business rates, with a shift to a Business Land Tax levied on commercial landlords: “This strengthens investment incentives while accelerating the adoption of greener tech. Like the Unlimited Investment Allowance, it would benefit capital-intensive businesses which are disproportionately outside London and the South East.” We are also calling for the modernisation of Enterprise Management Incentives (EMI) and R&D Tax Credits.
We also have also some thoughts on what we don’t want to see:
“At the past two budgets, there has been talk about hiking Capital Gains Tax to fund new spending. This would be a mistake and would undermine the UK’s startups. Entrepreneurs have already been hit by sharp restrictions on Entrepreneurs Relief. Further hikes risk chasing away international entrepreneurs, which is a problem when half of the UK’s fastest growing companies were founded by entrepreneurs born overseas.
It’d also be a mistake to create new taxes on online sales. This wouldn’t be levelling the playing field, but punishing SMEs who have used e-commerce to survive the pandemic. Selling goods online is one area where the UK is a leader, instead of penalising success the Government should look at how it can help even more businesses selling online.”
Given that the UK is already ranked just 22nd out of 37 OECD countries in the International Tax Competitiveness Index and set to fall even further, the pressure is on the Chancellor for a pro-growth Budget.
Hope of Land
Do you think the cost of housing and office space is holding back entrepreneurship? We do. To that end, we’ve just kicked off a new project to investigate this in more detail. The first step is a small roundtable in a few weeks to discuss this in more detail. If you’re an entrepreneur, investor or expert and want to get involved, drop me an email to find out more.
Female Founders Forum
On Tuesday afternoon we will launch our latest Female Founders Forum report in the House of Lords, which we partner on with Barclays. If a brand new report wasn't enough, we also have the scientist, writer and broadcaster, Baroness Susan Greenfield, CBE, FRCP, along to say a few words at the launch.
Advisers and Supporters will have already been invited, but can still just drop an email to events@tenentrepreneurs.org to confirm their attendance. Everyone else can request a place here, although places are very limited at this stage so apologies in advance if there isn’t room.
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