Chancellor sees technology as catalyst for recovery

Chancellor Alistair Darling today named technology as a key catalyst in the recovery of the economy, highlighting the high speed broadband roll out, efforts to improve the environment, and support for small businesses as the main boosts for the industry.

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Chancellor Alistair Darling today named technology as a key catalyst in the recovery of the economy, highlighting the high speed broadband rollout, efforts to improve the environment, and support for small businesses as the main boosts for the industry.

In a grim pre-Budget report that highlighted the economy was to shrink more than expected, by 4.75 percent this year, the Chancellor made little comment on plans to carve out over £7 billion from Whitehall’s operational costs.

The Chancellor said up to £5 billion could be saved through efficiency programmes, including £500 million from IT. He said it was “not the time for a spending review”, but to encourage departments to find their own savings. The government was “determined” to protect front line services, he said.

The report made light reference to NHS IT, in spite of the Chancellor's recent comments that the huge £12.7 billion National Programme for IT would have elements siphoned off.

Shadow chancellor George Osborne seized on this, calling efficiency claims “a bit rich from a government that has admitted it’s wasted practically £4 billion on the programme”.

The lack of any spending review showed the government was "not being honest" about the cuts needed, he said.

Today, a tax of 50 percent on bankers' bonuses over £25,000 was announced, and from 2011 a 0.5 percent rise in national insurance.

A new office, Infrastructure UK, will be created, it was reported this morning. It will decide which key programmes are to go ahead and to manage their investment, in the technology, water, energy, waste and transport sectors.

Darling said there was a “need” to invest in the technology industry, and said its growth would create “thousands” more jobs.

The technology sector, alongside other sectors, would be boosted by further investment in the Strategic Investment Fund for emerging businesses, alongside a £500 million capital investment fund for such companies. There will also be government funding for 10,000 short apprenticeships across industry for young people.

Alongside this, broader investment in improving the environment and the rollout of smart meters will require significant technology inputs and are expected to aid the technology sector.

The lack of detail on IT spending is likely to prompt further confusion.

On Sunday, the chancellor caused a media frenzy after he indicated that the £12.7 billion NHS National Programme, the world’s largest civilian IT scheme, was set to be scrapped. He told the BBC it was “something that I think we don’t need to go ahead with just now”. But health minister Andy Burnham leapt to the programme’s defence, saying that the government was only planning to cut back some undisclosed elements in order to save £600 million.

The confusion is set to continue, as there was no mention of the programme in today’s report, and the Department of Health has steadfastly refused to give further details on any re-scope.

The government has already announced a further £7.2 billion IT and operations cuts by 2013, with a 20 percent direct cut in public sector IT, amounting to £3.2 billion, with a further £4 billion savings in back office operations such as finance and human resources factored into the calculations. The chancellor made no mention of this in his speech today.

In the summer the Treasury Select Committee lambasted the government for claiming it could make a raft of effective cuts, when it failed to properly measure savings.

Process standardisation and the use of shared services form a large part of the Operational Efficiency Programme. IT projects exceeding departmental technology budgets would need sign-off from the government’s chief information officer John Suffolk, and all new schemes would have “starting gate” reviews, where the Office of Government Commerce assesses them “to prevent large scale IT projects being initiated with a low likelihood of success”. But no detail was given today.

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