Chancellor Alistair Darling has announced almost no immediate help for the IT industry in his Budget today.
Funding for 20,000 higher education training places in science, technology, engineering and mathematics subjects and more support for small businesses and entrepreneurs, were among the few positive announcements for the industry.
System integrators and outsourcers can also expect to pick up work as the government proceeds with its plans to cut and reorganise back office operations and to move thousands of civil service jobs out of London. The Chancellor used the budget to reiterate his commitment to universal domestic broadband funded by a levy on fixed line telephones.
The funding for higher education places was instantly seized upon by David Cameron, Conservative party leader, who stated that it was originally a Tory proposal, of 10,000 places, and that it had been called “elitist” by Labour at the time. He called for an election in order to “put Labour out of its misery”.
The Chancellor instead insisted it was “vital” to bolster the economy by helping growing industries in the UK, including technology. There will be help for the UK computer games industry “similar to that provided to the film sector”, the Chancellor said, as well as investment in science sectors.
Darling announced a £2.5 billion package for small businesses as well as to “promote innovation and invest in national infrastructure”, and promised a cut in business rates for a year from October. There will be a £2 million tax threshold for entrepreneurs.
Infrastructure UK, an office created at the Pre-Budget Report last year, will publish a strategy document today detailing a new public investment bank controlling £2 billion in equity, to invest in green transport and sustainable energy.
The Chancellor reiterated that the 50 pence broadband tax will support the rollout of broadband to rural areas. The ongoing investments in ‘Digital Britain’ will support “thousands of businesses” and create “hundreds of thousands of new jobs”, he said.
The government has said it wants to bolster the technology industries, long cited by Labour as growth engines for the economy. The steps add to measures announced earlier this week for a £30 million web science institute, and an initiative to create shared services centres with commercial organisations.
A new space centre is also being created, with £40 million public investment, to further bolster the industry.
But no further details were announced on plans to cut £11 billion from public sector spending, including slashing £4 billion from back office and IT costs by 2012 to 2013, other than a statement by Darling that this would “go ahead as planned”. Some £600 million is expected to be cut from the floundering NHS National Programme for IT, but whether this will be realised in practice remains unclear.
Aside from IT, the Budget promised the abolition of stamp duty for first time buyers, continued taxing of heavy bank bonuses, and sticking to a one percentage point rise in National Insurance. The Chancellor said public sector net borrowing will hit £167 billion this year.