IT industry has mixed reaction to Budget

IT industry figures have expressed a mixed reaction to yesterday's Budget, in which Chancellor Alistair Darling announced little to assist the tech companies and users.

The most prominent step for technology will be the creation of 20,000 higher education places for science, technology and engineering studies.

The move was welcomed by sector skills body e-skills. "In the UK, there has been continued growth of IT & telecoms occupations despite the recession, and this relies on a constant stream of talented new recruits," said chief executive Karen Price.

"Technology employers are hoping that [the increased university places] will include explicit focus on Information Technology and Computing as well as maths and other sciences."

In addition to the announcement on places for study, the previously announced 50 pence broadband tax was confirmed.

There was also support for small and medium sized businesses, with a £2.5 billion fund to “promote innovation and invest in national infrastructure”, as well as a cut in business rates for a year from October.

The CBI, which called the Budget “clever” in political terms, said it welcomed the government’s “commitment to stimulating demand for [broadband] by providing state-run services over the internet”. It also said that teaching via the internet, and introducing online GP consultation, “could help deliver better-quality services for consumers, and save the taxpayer money”.

But Barry Murphy, UK technology leader at services firm PricewaterhouseCoopers, said the broadband tax would not necessarily bridge the digital divide. “It isn't about preventing the digital divide forming in the future, it's about correcting it now,” he said.

“Reaching out to the elderly and the disadvantaged should be a priority - working out why such people are not online and bringing them in to the digital fold. The geographically disadvantaged and the financially disadvantaged are effectively being hit doubly hard.”

Sebastien Lahtinen, co-founder of, said he was disappointed with the budget. "When you consider that Virgin Media are already able to deliver 50Mbps to half of the country today, with 100Mbps services expected to be available by the end of this year, and 200Mbps by the end of 2012, the promises made by both the government and opposition parties are quite underwhelming.

“Following Gordon Brown's speech on Monday about 100% coverage by 2020, we were expecting the budget to include something more than we had already heard from the government."

Earlier in the week, a £30 million web science institute was announced, alongside a £40 million national space centre. There will also be an initiative to create shared services centres with commercial organisations.

The CBI said it was “concerned” that the plan to create state-owned shared services companies “could actually backfire by preventing commercial companies from competing for contracts”.

“It would be better to create a level playing field to encourage competition and efficiency,” the organisation said.

But IT service providers are nevertheless expected to pitch for new work as the government relocates 15,000 civil servants outside London, and as it reorganises back office processes.

Lee Hull, director of public sector work at network and services provider Virgin Media Business, said that technology would support quality public services as the civil servants are relocated.

“Thanks to email, instant messenger, presence indicators and video conferencing, public sector teams will be able to collaborate and work as one regardless of their location," he said.

Chancellor Darling also said there would be support for the British computer games industry. Murphy at PwC said the industry had “long argued for support to stem the drift of talent and jobs”.

“The Chancellor aimed to make this year’s Budget more sensible than in years past, but the public sector too needs to become more sensible in its approach to service delivery, by reducing waste and streamlining activities,” said Jonathan Buckle, head of public sector at communications supplier Avaya.

He added that it was important to “ensure the public sector continues to be an attractive destination for qualified talent”, by “offering the tools that enable work-life balance, rather than simply paying lip service to it”.

Copyright © 2010 IDG Communications, Inc.

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