IT industry supports Budget business relief

IT industry supports Budget business relief

But warns on public sector IT development

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The IT industry has given a thumbs-up to today’s Budget measures to support technology skills and IT businesses, but warned that the public sector needs its own technology assistance.

Chancellor George Osborne delivered a Budget that promised to create 50,000 new apprenticeships, including IT, and to slash corporation tax from 28 percent to 23 percent over the government term. Additionally, twenty one Enterprise Zones for new business will be created. But economic growth forecasts were revised shaply downwards.

Tola Sargeant, research director at analyst house TechMarketView, said the key messages for IT staff were around “the measures to make Britain a more attractive place to start, grow and finance a business”. The moves to encourage start-ups and entrepreneurs, and to boost technology and innovation, were “particularly welcome”, alongside further funding for apprenticeships and technical colleges.

David Clarke, chief executive at BCS, The Chartered Institute for IT, said: “I welcome the Government’s ambition to make Britain the place in the EU to start, finance and grow businesses. This focus on entrepreneurship, innovation, research and development provides a real opportunity for IT professionals."

Bindi Bhullar, director of HCL Technologies, also supported the training incentives. "The UK has long been known as a financial services hot spot, but it is great to see that this budget has not overlooked the wealth of technology talent available to investors and the efficiencies it can bring to businesses, particularly during a challenging economic climate."

Chris Ingle, consulting director at IDC, said businesses would be “concerned” about promises of a tougher visa system, as well as the reduced GDP forecast, but that IT companies will “welcome” the cut in corporation tax and increase in capital allowances.

“More focused measures such as investment in scientific centres such as Harwell and Daresbury send a positive signal for high performance computing,” he said, adding that changes to the intellectual property system and increased funding for a ‘green bank’ to support environmental industries could also be beneficial.

James Stevenson, UK, Ireland and South Africa president at IT supplier Citrix, supported the move to increase skills, but added that it was vital some of the expertise ended up in the public sector.

“As costs continue to come under scrutiny, skills development within government IT needs to be strengthened,” he said. “The public sector needs its ICT professionals to be equipped with strong technical knowledge, exemplary negotiation skills and the ability to build productive relationships with IT suppliers.”

Bhullar at HCL urged further change in the way the government buys IT, attacking the selection of dominant UK and US-based providers. “In order to carry out public sector reform, it is vital that public sector departments select a provider that is specialises in a certain area such as work flow automation or back office outsourcing. Only then will they be able to deliver the savings the public so badly need.”

The lower GDP forecasts threatened “slightly weaker demand for IT goods and services from the private sector”, according to Andrew Bartels, VP at Forrester.

But Neil Hedges, senior manager at recruitment firm Robert Half Technology, said the Budget would help drive some new IT spending. “What is particularly promising for the IT industry is the research and development tax credit for small business. Many companies who put initiatives on hold during the downturn now have additional incentive to get new projects underway.”

Ian Manocha, managing director, UK & Ireland, SAS urged businesses not to become reliant on government assistance. “Businesses need to look at what they’ve got, and innovate with it, rather than relying on government hand-outs, drives and initiatives that could last as long as an MP’s promise.”

Ahead of the Budget, industry association Intellect published a survey showing that three quarters of businesses fear the government does not understand how IT businesses will help deliver growth.

John Higgins, Intellect’s director general said: “Smart use of technology will drive growth. The IT and telecoms sector employs more than 1.5 million people in the UK and employment is forecast to grow at 2.1per cent per annum, nearly five times the UK average, over the next five years.

“Our view is that the Government has to do better in two areas: support for world class technology development and incentivising technology investment if the economy is to break through into growth.”

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