Responding the announcements on AI, devolution and funding from
the Chancellor of the Exchequer ahead of the Autumn Budget, Anna
Leach, Chief Economist at the Institute of Directors, said:
The government's announcements of £20.4bn in additional capital
for the National Wealth Fund and British Business Bank, greater
powers and funding for local leaders, reforms to public
investment appraisal and new support for AI represent welcome
progress towards an investment-led growth strategy. Together,
they address several important priorities in the Institute of
Directors' Budget submission.
We welcome the additional capital for the National Wealth Fund
and British Business Bank, which should help mobilise private
investment, bring forward infrastructure projects and improve
access to finance for growing businesses. The expansion of equity
financing and introduction of venture debt are particularly
encouraging for innovative firms seeking to scale. This approach
makes use of flexibilities in the government's fiscal framework
but could still add to market concerns over UK borrowing and
debt. Strong commercial discipline will be essential to ensure
that these investments generate appropriate financial returns and
genuinely additional private investment, rather than simply
increasing risks to the public balance sheet.
The devolution proposals are encouraging, particularly the move
towards more flexible local investment funding and the Green Book
reforms that will allow complementary investments in housing,
transport, skills and infrastructure to be assessed together. The
announcement of £150m to strengthen local institutional capacity
and capability is perhaps more important. Giving local leaders
greater financial resources and decision-making powers only
yields better outcomes if they have the knowledge, expertise and
institutions to deploy them effectively. This requires strong
analytical, financial and commercial skills, reliable local
economic data, meaningful, early and regular engagement with
businesses, and clear accountability for outcomes. The
government's recognition of the need to build these capabilities
is welcome, but further detail is needed on how they will be
developed and sustained. Without them, greater devolution risks
adding complexity and cost rather than delivering the
productivity gains and additional private investment it is
intended to unlock.
The AI package responds to several of our priorities. Additional
investment through the Sovereign AI Fund and R&D procurement
should help promising British AI companies commercialise their
innovations and scale, while the local AI partnerships recognise
the importance of supporting adoption across the wider business
population. We also welcome the investment in cyber resilience
and the AI Economics Institute's work to understand AI's economic
impacts. However, there remains a significant gap between
supporting cutting-edge AI innovation and helping businesses
throughout the economy realise its benefits. Our submission
called for a coherent national offer for SMEs, practical
sector-specific skills development including for business
leaders, stronger support for responsible AI governance and more
effective pathways from innovation to commercial deployment. The
£30m for local partnerships is a useful start, but the scale and
accessibility of support will be critical if AI is to deliver
widespread productivity gains.
Taken together, these announcements represent positive steps
towards improving the finance, institutions and infrastructure
supporting growth. But they represent only one side of the
equation. The government is embarking on significant
reorganisation of the state at a time when budgets are tightening
and in areas which are expected to deliver over a 10-15 year
horizon. The real test for this Budget will be whether it can
unleash animal spirits in the private sector in the here and now.
Recent announcements on regulation and reporting represent
helpful moves to remove costs. A competitive and predictable tax
system, proportionate regulation, manageable employment costs and
affordable energy remain the most important ingredients for
near-term growth. The Budget must give businesses the confidence
and incentive to invest, innovate and expand.
