The IT industry in the UK has bemoaned the lack of specific reference to technology in today's budget announcement, questioning whether the bold claims made in last year's budget were simply hot air.
In the 2012 budget, Chancellor George Osborne unveiled a series of incentives to support the UK’s technology industry, including cutting the tax on small businesses to 20 percent, funding ultra-fast broadband rollouts in the UK’s 10 largest cities, ensuring protection for the £100 million science budget and opening twenty four enterprise zones across England.
While today's budget showed that the government is willing to continue supporting start-ups and SMEs, with an extension to the Funding for Lending scheme and the announcement of £75 million of new funding for venture capital to support start-ups, no measures were announced to ensure that this credit flows to companies in the technology sector.
“More must be done to futureproof the UK’s position as a serious contender in the global race to be the world leader in tech and safeguard the progress of our high growth industries,” said Julian David, Director General of Intellect, the trade association for the UK tech sector.
“Despite representing 12 percent of GDP, the Chancellor failed to directly reference the UK’s tech sector. Tech start-ups and growing SMEs are the silicon coloured shoots of growth so needed by UK PLC. The Chancellor cannot afford to take this growth for granted.”
Matthew Finnie, CTO of cloud hosting firm Interoute echoed David's disappointment, claiming that in today’s Internet-focused world, encouraging the technology industry is key to economic growth and success.
“Last year we were inspired with the promise of incentives to support UK tech investment, and a vow to make the UK the tech centre of Europe. But George Osbourne was curiously quiet on this today, leaving us to wonder what has happened to last year’s bold claims?” he said.
Tim Patrick-Smith, CIO at ICT services provider Getronics, added that he would like to have seen specific measures around extending technology hubs outside of the capital, encouraging BYOD schemes, and greater cross-department strategic IT strategies that ensure technology is used to improve service delivery and provide joined-up services.
But KPMG's technology start-up lead, Tim Kay, said that technology companies have a lot to be grateful for in this year's budget, pointing to the new £2,000 employment allowance that will help companies overcome the hurdle of bringing staff onboard at critical points of their development.
“Along with the raft of changes and additions to SEIS (Seed Enterprise Investment Scheme), Corporation Tax, creative tax reliefs and additional funding, the UK must now be seen as having one of the most supportive sets of public policy in the world if you are a fast growing technology business,” said Kay.
However, Aynsley Damery, partner at accountancy firm Tayabali Tomlin said that a reduction in the main rate of Corporation Tax does little to help the vast majority of SMEs, and a reduction in the rate of employers national insurance would have been far preferable than a £2,000 allowance.
“We were looking for brave and innovative measures to support this sector – neither of which we got. Taxing the provision of jobs is not the way forward!” he told Techworld.
Kay added that the revised targets for government spending with SMEs will be welcomed, as technology companies in particular need to look not only to the debt and equity markets for funding but also to customers.
Osborne also announced that the government will abolish Stamp Tax on shares for companies listed on growth markets including the Alternative Investment Market (AIM) and the ISDX Growth Market from April 2014.
“The High Growth Segment from the London Stock Exchange in conjunction with the removal of Stamp Duty on AIM listed shares continues the drive to keep home grown businesses in the UK as they grow and look for finance,” said Kay.
No plans were announced to further develop the UK's communications infrastructure, although Osborne did reiterate the government's intention to give Britain the fastest broadband and mobile telephony in Europe. Infrastructure will be boosted by £3 billion a year from 2015-16, but no details have been released about where this money will go.
Richard Britton, CEO of CloudSense said the telecoms infrastructure in place today needs investment if the UK is to keep pace with the likes of Australia, which is committing considerable resources through their National Broadband Network.
“With a better digital infrastructure in place we could then see tech start-ups emerging right across the country rather than just in certain established pockets,” said Britton.