Budget will challenge us all, says IT industry

Prominent figures in the IT industry have delivered a mixed reaction to today’s Budget, alarmed by forthcoming project cuts but seeing opportunities for technology firms to help deliver efficiencies.

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Prominent figures in the IT industry have delivered a mixed reaction to today’s Budget, alarmed by forthcoming project cuts but seeing opportunities for technology firms to help deliver efficiencies.

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Industry body Intellect said the cuts would be “tough to meet” without hurting the front line. But a spokesperson added that “now is the time for the ICT industry to make robust business cases” that demonstrate technology “can be used to generate wider savings in the public sector”.

“Intellect will be taking this argument to government and feeding into Spending Review in the autumn,” the spokesperson said. Intellect said smaller suppliers would also welcome the changes to capital gains tax, allowing the first £5 million at the low rate.

Martyn Hart, chairman of the National Outsourcing Association, said the “drastic measures” for reducing the national deficit, including the departmental 25 percent budget cut, “should be warmly received by the private sector”.

The public sector cuts “should deliver positive growth opportunities” for suppliers , he said, because the outsourcing industry “is very well placed to help the government achieve its aims”. He welcomed the cut in corporation tax, albeit “modest”.

Dave Baldwin, managing director at IT services firm Getronics, urged the government to make savings by switching to a hosted desktop environment and cloud services. This would, he said, achieve “much-needed savings through leaner and more flexible services, instead of relying on rigid and costly on-site IT”.

Georgina O’Toole, research director at analyst house TechMarketView said it remained “clear” that cuts to IT spending are “high on the agenda”, even though decisions were delayed until the spending Review in October. With 25 percent cuts to departmental spending, government chief information officer John Suffolk “may not find convincing departments to adopt such changes as hard as before”, she said.

Nevertheless, the government may not stop projects as aggressively as the Conservatives promised before coming to power. O’Toole noted that “practical considerations” had forced a delay on abolishing the ContactPoint database of children, until suitable alternatives are found, as £227 million has already been spent.

The government was “finally getting to grips” with the high cost of contractors, who form part of the 20,000 external staff working for the government, O’Toole said.

Spending cuts had been inevitable and it was important to “restore confidence” in the economy, added Matthew Eatough, chief executive at procurement services firm BuyingTeam. But he encouraged the government to nurture the “entrepreneurial strength that has for so long defined British industry”.

Steps to foster innovation were welcomed by Intellect. “Focusing research and development tax credits on the high tech sector will stimulate the high tech economy and put the UK in a strong position in the global war for talent”, it said. “We believe R&D tax credits are vital to maintaining a strong IT and software sector and to stimulating inward investment.”

The cuts were “concerning” for IT firms, said Andy Burton, chairman of the Cloud Industry Forum, but he added that the CIF is “confident” that cloud computing – defined as the delivery of online IT services on a pay-as-you-use basis – will be a “tremendous enabler” to cut capital costs.

With a large burden on local councils to cut costs, Des Speed, chief executive at government-to-consumer communications firm Lagan Technologies, said that a great deal of the efforts on value for money “will need to be found through better processes and management systems”. He added that “there is a great deal more that can be done”.

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