Autumn Statement 2023: Fintech vs. Jeremy Hunt?

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In 2022, the UK chancellor of the exchequer Jeremy Hunt planned to “turn the United Kingdom into the world’s next Silicon Valley.” A year on, the Hunt’s Autumn Statement opened with a comment on how “the work is not done,” but the UK government would focus on “reducing debt; cutting tax and rewarding hard work; backing British business; building domestic and sustainable energy; and delivering world-class education.” Here are the policies put in place that are most relevant to the fintech industry:

  1. Investment into strategic manufacturing sectors – auto, aerospace, life sciences and clean energy – which are developing cutting edge technology and driving our transition to net zero.
  2. A new incubator for artificial intelligence to harness the potential of AI to improve lives and the delivery of public services.
  3. As part of the Edinburgh Reforms, the government will build a Smarter Regulatory Framework tailored to the UK by the end of the year.
  4. Support of Joe Garner’s independent review into the future of payments, repealing prescriptive EU-derived payments authentication rules to better prevent fraud, improve the customer payments experience, adopt an outcomes-based approach, and consider contactless limits.
  5. Unlock the full potential of Open Banking-enabled payments, seek to legislate in 2024 and publish a National Payments Vision next year, which will consider the role of the New Payments Architecture.
  6. UK government to exit shareholding in NatWest by 2025-2026 and explore options to launch a share sale to retail investors in the next 12 months.
  7. Build on the £2.5 billion 10-year National Quantum Strategy by publishing a set of missions, including a mission to have accessible, UK-based quantum computers capable of running 1 trillion operations by 2035.
  8. Develop a fellowship course targeting mid-career science and technology venture capital investors, like the Kauffman Fellowship in the US, to be operational in 2024.

Here’s a breakdown of the fintech sentiment around each policy announcement:

Clean energy, developing technology and driving the transition to net zero

Ahead of the announcement, Heather McKay, senior policy advisor, sustainable finance, E3G, said: “Net zero is agreed to be the ‘economic opportunity of the century’. However, kickstarting the UK’s economic growth engine requires vision and ambition. A government laser-focused on reducing household costs must look to maximise the opportunity for private investment. Without a UK net zero investment plan, the UK will fail to do either. With leading investors and businesses representing over £10 trillion AUM united in their call for a clear plan to get green investment flowing, all eyes are on the Autumn Statement and what the Chancellor will do to set off the green big bang.” 

Following the Autumn Statement, Dominic Rowles, lead ESG analyst, Hargreaves Lansdown, said: “While tax cuts took centre stage in Jeremy Hunt’s Autumn Statement, some efforts were made to enhance the government’s patchy record on sustainability. They are a welcome response to a series of recent policy shifts that seemed to pose serious challenges to the government's 2050 net zero target. Among the top commitments were an initiative to introduce a cash sweetener of up to £10,000 over 10 years for those living closest to new energy generation and transmission infrastructure. It’s hoped this plan will speed up planning approvals for new infrastructure projects, which have been beset with delays and increased costs in recent years. The Chancellor also restated his commitment to invest £4.5 billion between 2025 and 2030 in strategic manufacturing, which includes £2 billion for zero emission investments in the automotive sector, supporting the manufacturing, supply chain and development of zero emission vehicles. This could go some way to placating those automakers that needed to alter their investment plans when the government delayed plans to prohibit the sale of new combustion engine-powered cars in September. There will also be £960 million for a new green industries growth accelerator to support clean energy manufacturing including offshore wind, nuclear, carbon capture & storage and hydrogen.”


Harnessing the potential of AI to improve lives and the delivery of public services

Sarah-Jayne van Greune, chief operating officer, Payen & ILIXIUM, said: “It's great to see that Jeremy Hunt has promised an additional £500 million investment in artificial intelligence to ensure the UK is an AI powerhouse. That said, we need investment in all pockets of the UK. From Reading to Leeds and Birmingham to Basingstoke, companies up and down the country need to benefit from the investment. The UK has tech pioneers spanning the country that – with access to the right funding – will be able to pioneer solutions that will drive productivity beyond belief. AI, when ethically used, accelerates what humans are capable of. Computers can think and analyse faster and more accurately than people, taking onerous tasks onto their digital shoulders and leaving humans the time to be more creative. Yet, the investment should be equal across all of the UK if we’re to truly become an AI leader.”

Wayne Johnson, CEO and co-founder, Encompass Corporation, said: “Focus on supporting the UK’s innovation landscape would be a welcome inclusion in the Autumn Statement. It is important to see commitment to delivering on ambitious science and technology superpower aims that can support research and development, create jobs and cement the UK as a global technology leader. Attracting sustained investment, from Government, venture capitalists and tech incubators, remains key to the growth of the technology industry and helping to foster new innovative solutions, such as Generative AI, and maximise the potential of others that can drive the FinTech sector forward. Especially when considering issues such as fighting financial crime, the latest in technology has a central role to play, and leveraging Know Your Customer (KYC) process automation, for example, to deliver real time digital risk profiles can save institutions hours and ensure continuous compliance. It is vital that the UK shows continued commitment to the development and progress of innovation as it plays a crucial part in enabling financial services and wider industries to thrive, even in challenging economic times, while helping to cement the UK’s place as a leading financial hub.”


Building a Smarter Regulatory Framework

Ahead of the Autumn Statement, Tony Craddock, director general of The Payments Association, predicted that there would be five considerations to look out for. One of these was “a new approach to prioritising our nation’s investments in payment systems, led by the Payment Systems Regulator, based on immediate impact, return on investment and interoperability with international payment systems.” The other, was “the formation of a payments alliance focused on making the UK the leading ecosystem for payments innovation, involving government, users, regulators and industry players.”


Reviewing the future of payments, authentication rules, and fraud prevention

Published alongside the Chancellor's Autumn Statement, the independent review into the future of payments - led by Joe Garner, former CEO of Nationwide Building Society - calls for a national payments vision and strategy to simplify a well-developed but complex environment.

Says the report: “While the benefits of cards are greatly appreciated, we heard a high degree of dissatisfaction from merchants regarding what they perceive as increases in scheme fees since interchange fees were forcibly reduced by the regulators.” In addition to calling for an alternative, the report urges the Payment Systems Regulator complete its work investigating these card scheme fees. Garner also bemoaned the "clunky" nature of P2P bank transfers, which requires users to enter account numbers and sort codes.

In addition, Tide called for dramatic late payment intervention from the Chancellor. Oliver Prill, CEO, Tide, said: “Small businesses need the Chancellor to prioritise intervention on late payment laws. Late payments are stifling the cash-flow of small businesses across the UK, causing entrepreneurs to have sleepless nights and preventing them from investing in and growing their businesses. Ultimately, it can be the difference between thriving and failing. It’s estimated that 50,000 businesses a year fail because they are paid late, and by the government’s own estimates eradicating late payments could boost the economy by £2.5bn annually. Some of these issues are expected to be in the forthcoming Prompt Payment and Cash Flow Review which we welcome. But small businesses need action now. The smallest businesses are already facing a perfect storm of increasing costs, higher interest rates and wage inflation. For those with business premises, ending the current rate relief and the resulting hike in business rates will push them over the edge and add to the already increasing insolvency numbers (now at their highest levels since 2009 and at over 18,300 in the year to September). We urge the Chancellor to extend the rates relief and increase their chances of survival. An increase in the threshold at which small businesses start paying business rates would also be a real boost for the smallest of firms.”

Alongside this, Prill believes that fraud reimbursement rules will cause serious cash flow problems for small businesses. He added: “Scams, where victims are tricked into sending their money to fraudsters through push payments (APP Fraud), is a devastating form of financial crime, with £485 million lost in 2022 in the UK. We want to highlight that the new rules being brought in by the Payment Systems Regulator (PSR) next year will mean that financial institutions could delay payments to small businesses as they undergo review. Small businesses tend to be more sophisticated than consumers with ordinary bank accounts. They need their cashflow uninterrupted by reviews, investigations and other fraud prevention measures. We call on the Chancellor to work with the PSR to allow small businesses to opt out of the reimbursement regime, and with HMT, to reconsider their one-size-fits-all approach to fraud prevention. At Tide, we work tirelessly to educate our customers and are constantly improving and refining our processes and systems to combat APP Fraud. However, we urge the government to reconsider the detail, its implementation timeline and to step up the pressure on social media and telecommunications firms to play their part in fighting this awful crime.”

Leonardo Azevedo Mitchell Da Silva, head of public affairs, Teya, said: “The Future of Payments Report is right to acknowledge how the UK is almost unique in that merchants - and SMEs especially - have no established digital alternative to cards. But trying to build a ‘sustainable’ commercial model for Open Banking won’t fix this. It’s been the strategy for years and we haven’t seen sufficient movement. The first step towards an alternative payment method is actually meaningful action in the card market via the PSR investigations. We need to address the distorted incentives of incumbents when considering alternatives to cards and the fact that merchants currently can’t exert any competitive pressure on the dominant payment methods. Only then will all parties come to the table with the correct motivations to create a coherent National Payments Strategy for the UK.”


Unlocking Open Banking-enabled payments

Following the Autumn Statement, Richard Newman, director of corporate affairs, Open Banking Limited said: “Since launching the ‘Future of Payments’ earlier this summer, the Chancellor has focused in on giving consumers choice, and allowing them to choose how they spend their money. Today's announcements are another step in that direction. Open Banking will encourage market competition and consumer choice, whilst giving customers the ability to see how they spend their money in one place. Customer choice is at the heart of Open Banking. The Chancellor’s commitment to achieving Open Banking’s full potential will give consumers and businesses the power to access better rates and deals across a range of financial and non-financial products. We are ready to support the government deliver these benefits and give our citizens a better deal.


Exit shareholding in NatWest and explore options to launch a share sale to retail investors

Richard Berry, founder of, said: “The Chancellor wants investors to tell Sid again. But times have changed and Sid's unlikely to be listening, even to those who remember him. The privatisation of British Gas in the 1980s captured the public imagination because back then buying shares in an individual company was prohibitively expensive for smaller investors. Nowadays millions of people routinely invest directly in the stock market, and the average investor is far more sophisticated. The Chancellor’s plan is good news at least for fintech brokers, who will no doubt be upset about the lack of guidance in the Autumn Statement about fractional shares in ISAs. I’m sure the hefty commission they will charge the Government for selling its NatWest shares will help. But while the sale of the Government’s 39% stake in NatWest to retail investors will create plenty of headlines, the Chancellor shouldn’t count on a stampede of buyers. Nigel Farage might not be able to resist the chance to snap up shares in his former nemesis. But with retail investors enjoying so much choice now, the price the Government asks for its shares will be key. Plus, NatWest shares currently look like a dog of an investment to me. Although they did go up about 10% after the bank’s spectacular falling out with its vocal former customer, so if the bank’s board continues to make sensible decisions the shares may be worth a buy.”

Susannah Streeter, head of money and markets, Hargreaves Lansdown, said: “Giving retail investors a slice of ownership in NatWest is a welcome move given that they have been left out of previous sales, which have been reserved for institutional investors. This is a recurrent theme, retail investors are rarely offered the full suite of investing opportunities, so this would buck the trend. Further sales would again bring NatWest closer to full public ownership and would bring to a close crisis actions taken during the Great Financial Crisis. The government announced at the Spring Budget that it intended to fully exit the shareholding by 2025-2026, subject to market conditions and achieving value for money for taxpayers. But shares are down by almost a third since January, with a sharp fall prompted in October by some disappointing third quarter figures. Markets were expecting a dip in net interest margin as consumers moved from non/low interest-bearing accounts to higher rate longer-term products in search of better returns, but the pace of switching took markets by surprise.  NatWest isn't alone in facing this challenge. But as a more traditional bank, interest income is a big part of the pie. On a more positive note, provisions set aside for debt defaults were better than first thought and full-year guidance remains intact. At the current valuation the potential for returns, as some of present headwinds ease off, look attractive for both the business and existing and new shareholders.”

Building on the National Quantum Strategy

Dan Morgan, senior government affairs director for Europe & APAC, SecurityScorecard, said: “SecurityScorecard has expressed strong support for the UK's initiative to develop quantum supercomputing, as announced in Chancellor Jeremy Hunt's Autumn Statement. This strategic investment, earmarked between £200 million and £300 million as part of a larger £2.5 billion national quantum investment roadmap, is seen by SecurityScorecard as a crucial step in recognising and harnessing the power of quantum computing as a key national asset. The company underscores the significant impact this technology will have on enhancing the UK's cybersecurity capabilities. Quantum computing, with its unprecedented ability to process complex problems rapidly, is poised to play a pivotal role in national defense strategies. SecurityScorecard highlights the potential of this technology in fortifying the UK's defenses against increasingly sophisticated cyber threats, particularly in protecting sensitive data. This investment in quantum technology is not just about developing new computational methods; it represents a strategic move to position the UK as a leader in the global quantum technology arena. SecurityScorecard's endorsement of this initiative reflects the broader industry perspective on the importance of quantum computing in national security and technological leadership. The advancement of quantum computing is expected to bring transformative changes, especially in cybersecurity, where traditional encryption methods may no longer suffice against the capabilities of quantum processing. The UK's commitment to this technological frontier is thus seen as a necessary and forward-looking approach to maintaining national security and technological dominance in the years to come.”


Developing a fellowship course targeting venture capital investors

Myles Milston, co-founder and CEO, Globacap, said“Today’s announcement means that a huge amount of extra capital will be available for VCs in the UK to invest in high-growth industries such as the tech sector. These VCs will then have to deploy this capital which means finding more investment opportunities, taking more risks and investing in more early-stage companies. Over time, this will be really positive for the startup and innovation ecosystem in the UK, enabling entrepreneurs to access funding earlier in the cycle and accelerate their businesses quicker, similar to how the VC landscape currently works in the US. Historically, investors like pension funds have battled with laborious, manual and time-consuming private market transactions which often take weeks or months. However, over the past decade, private markets have increased funding, boosted liquidity and embraced automation and technology, making them far more accessible and an attractive alternative to public markets. The UK is the number one tech hub in Europe by some margin, and number three in the world, boasting a tech sector with a combined market value of $1tn. Encouraging pension funds to invest in fast-growing tech firms will not only give the industry a boost, it also gives UK pensioners the opportunity to profit from UK tech innovation.”

Yoko Spirig, co-founder and CEO, Ledgy, said: “We are in the midst of a funding crunch, so early stage companies will welcome any new sources of capital, and it’s good that the government is addressing the funding gap in the tech industry, where London and the UK is still world-leading. However, it’s worth remembering that for UK companies, managing new pension fund investors may be quite different to traditional venture capital (VC) investor relations. VC investors are used to dealing with scaleups where the business model is higher risk. There are well-known examples of pension funds elsewhere in the world that have very strong early track records with early-stage companies, like Ontario Teachers’ Pension Plan. While it will need a real mindset shift from UK pension funds – which right now are 70% invested in bonds – to give scaling companies and founders the support they need, it’s definitely encouraging for the industry as a whole.”


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This content is contributed or sourced from third parties but has been subject to Finextra editorial review.