Chancellor George Osborne's Budget was generally positive for those working in or selling technology, and offered more support to small businesses, according to the IT industry.
However, while the government was making the right steps for the industry, observers expressed some concerns over the level of funding on offer.
Osborne today insisted that the UK would become "Europe's technology centre", offering more support for "ultra-fast" broadband rollout, as well as for research and development, small businesses and entrepreneurs.
A call to arms for the industry
IT industry association Intellect described the Budget as "exactly the call to arms that we wanted to hear from the government".
But Julian David, the body's newly appointed director, added that in order "to turn this vision into a reality we will have to go much further than today's announcements on the creative industries and broadband and take some real action to optimise the full potential of the entire UK tech sector".
"We have to be world leaders not only in the creation of new technology but also its use and exploitation," he said, as well as capitalising on its "massive" export potential. "Across the economy we have to make the best use of the most up to date technology to reverse our declining productivity and boost our competitiveness."
David Clarke, chief executive at BCS, The Chartered Institute for IT, supported the broadband investment but said he "would have liked to have seen some tax help" for businesses looking to "invest more in using the right technology in the right way, in the same way as other countries".
"UK productivity has not yet returned to the levels we had four years ago and it is critical to UK growth going forward that we achieve this and more," he said.
Questions over Enterprise Zones
Phil Smith, UK chief executive at networking firm Cisco, praised the support for technology clusters, adding that "we need to foster the development of the British digital economy in order to fulfil its potential as a global technology hub. Measures outlined by the chancellor such as Enterprise finance expansion, investment in ultra-fast broadband and encouraging R&D in the UK play a critical part in this and are a positive sign of long term thinking to build a brilliant future for Britain."
Gary Stewart, director at IT and business change company, Xceed agreed, but said that "the determination to limit these schemes by location [in enterprise zones], company size or age continues to baffle".
"If the government wishes to galvanise growth up and down the country why would you seek to limit any business that could help achieve this goal?"
Stewart praised "the reduction in corporation tax and simplification of the tax system".
Phil Orford, director at small business body the Forum of Private Business, said he supported the measures to cut and simplify tax on firms.
"Reducing the top income tax rate to stimulate entrepreneurship and continuing to cut corporation tax are much-needed measures and we also welcome the concept of merging income tax and National Insurance as a first step in what looks to be long overdue reforms to the tax system for small firms," he said. But he added that "the Chancellor could have gone further to give businesses and the economy a bigger boost".
Opportunities for suppliers
Georgina O'Toole, director at analyst firm TechMarketView, said that the government's promises, to cut down on tax avoidance and simplify all tax processes, presented work opportunities for IT suppliers.
"The one way IT suppliers have found to balance out the reduction in the annual value of their largest contracts is by winning add-on business related to the implementation of new government policy," she said.
"This budget won't have disappointed in that sense, bringing plenty of scope for project work around, for example, tax avoidance and evasion, stamp duty, personal tax statements, corporation tax, and stamp duty".
The support for increased broadband and wifi coverage "is very welcome", according to Jan Duffy, EMEA research director at IDC. But she added that "with other cities in Europe already implementing fibre to the door, the broadband initiative could be outdated before it's completed".
But Morag Lucey, senior VP at Convergys Smart Revenue Solutions, criticised the level of funding in the broadband pledges.
"We are £1.1 billion short of reaching 'superfast' broadband for the UK, let alone 'ultrafast'. That will not make us competitive in Europe, let alone the rest of the world," she said. "What's more, it expects telecommunications providers to bridge this £1.1 billion broadband funding gap. This half-hearted approach to funding broadband infrastructure short-changes the British economy and British society."
"Against the backdrop of the £200 billion being invested in energy and transport infrastructure, funding from all public sources for broadband up to 2015 is likely to be smaller than government revenue from the digital dividend spectrum auction."
Matt Hawkins, managing director at Infrastructure and Connectivity Provider C4L, praised the support for broadband, particularly in rural areas "which are usually forgotten about when such investments are made". However, he said, local authorities would need to look for further business investment to fill any funding gaps.
For the investments to be successful, the government needed to explore "all available technologies for connecting communities, whether fibre connections, wireless transmission or even satellite broadband". He added: "Any connection needs to be both fast and reliable: there's no point in connecting remote areas if that connection can be just as easily severed."
Dana Pressman-Tobak, managing director at broadband firm Hyperoptic, added: "In order to compete in a global broadband arena the government needs to take a long term view and focus on encouraging broadband providers to adopt fibre-to-the-building models in cities. Anything less is not ideal."
Chris Hardy, regional director of UK public sector at McAfee warned that "increased connectivity and access to public services online", while important, "also presents new opportunities for cyber criminals, as more consumers access potentially unsecure networks".
"With such emphasis on super-connected cities and better online access for citizens, this promise must be delivered in line with a nation-wide education and awareness programme for safety online. It is not simply about defending government systems but also about the whole supply chain."
Video games industry given 'terrific' tax breaks
The video games industry, described as "brilliant" by the Chancellor in his Budget speech, was also promised tax breaks – a move roundly welcomed by that industry.
TIGA, the trade association representing the UK games industry, described the news as "terrific". The result would be increased "employment, innovation and investment in the sector".
Games tax relief was awarded in the previous Labour Government's final Budget in March 2010, but was dropped in the Conservative-Lib Dem coalition's first Budget, in June 2010.
Dr Richard Wilson, chief executive at TIGA, said: "Like a boxer knocked down by his opponent, we refused to accept defeat and kept getting back in the ring. This victory will benefit not just the UK games development and digital publishing sector but also the wider UK economy."
Games Tax Relief would generate and safeguard 4,661 direct and indirect jobs and £188 million in investment expenditure by studios; increase the games development sector's contribution to UK GDP by £283 million; and generate £172 million in new and protected tax receipts to HM Treasury, TIGA said. It would also cost only £96 million over five years, according to the body's estimates.
Simon Kilby, founder of video game marketplace Playr2.com, added: "Thank God the government has finally stepped up to the mark and realised that the UK video games industry could die a sorry death unless something is done to help growth. The fact of the matter is we're simply not competing with the likes of the USA when it comes to game development, and these tax credits are direly needed."
Osborne today described the Budget as one that "rewards work.... and unashamedly backs business".
But shadow minister for innovation and science, Chi Onwurah MP, said it was "devoid of the 'compelling vision' Vince Cable called for only last month".
"The Chancellor claims to have found £100 million for new science capital investment ,but that is nothing after slashing research capital spending by 50 percent. The additional £50 million for small cities' broadband is welcome but the two million people without access to decent broadband desperate to get online don't live in cities."
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