IT industry gives tentative thumbs up to Budget

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".

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