Budget 2014: Where was focus on tech, says industry

George Osborne’s 2014 Budget has left many of those working across IT and technology disappointed after the Chancellor failed to go into details on new reforms and neglected certain issues altogether.

His plans includeopening a new big data institute in honour of World War II code breaker Alan Turing, as well creating 100,000 new apprenticeships and supporting the commercialising of next generation "wonder" material graphene.

Shortly after Osborne finished his speech to the House of Commons, Techworld was flooded with comments expressing dismay at the lack of prioritised investment for the technology and digital sector and the vagueness of the announcements that were made.

Duncan Higgins, a director at Virgin Media Business, said he was concerned at the lack of reference to digital technology in the Budget.

“To use Osborne’s words, if we want to 'outsmart the rest of the world', we need to be more switched on to the power of digital," said Higgins. "Given that Britain’s digital economy will be 10 percent of GDP by 2016, it's surprising that there was just one mention of the word 'technology' and no mention at all of 'digital' in the Chancellor’s Budget."

Meanwhile, Jonny Rose, founder of Croydon Tech City, said: “The Budget was curiously scant on detail regarding investing in Britain's burgeoning digital, tech & creative economy – be it in East London, Croydon Tech City or across the country. As one of the country's growth industries – that are actually producing a product, rather than services - that seemed like an oversight."

Others criticised the Chancellor's lack of vision in backing the right technologies.

Gary Calcott, technical product manager at software firm Progress, said: "Following on from his recent ‘Year of Code’ announcement, I’d have liked to have seen him providing resources that will ensure children of all ages are given 'hands on' access to ‘ease of use’ technology that can stimulate their interest in science and technology.

"For example, giving students the ability to build an application by using a simple ‘drag and drop’ interface is a great way of introducing them to the world of programming, without bogging them down in the complexity of having to learn a new programming language."

Also absent from the Chancellor's speech was any mention of cybersecurity, a threat that many businesses and governments around the world are struggling to deal with.

"If we are going to win this war, then real businesses must be encouraged and supported in implementing their own defences," said Rob Cotton, CEO at NCC Group. “I’d like to see real financial support to help businesses protect themselves – and the country. This will make a real difference to our levels of protection as a country and will send an important message to business leaders about how serious the threat is.”

However, start-ups, one of the major winners in last year's budget, are set to benefit in a number of areas, including newly introduced tax relief measures and the extension of the Seed Enterprise Investment Scheme (SEIS), which helps small early stage companies raise equity finance by offering tax relief to investors who subscribe to shares in higher risk small companies.

Dominic Preston, partner and UK innovation group leader at financial services firm, Grant Thornton, said: “The headline increase in R&D payable tax credit for loss making SMEs, from 11 percent to 14.5 percent, is a welcome boost for innovation businesses. This should act as an additional incentive for SMEs and their backers to drive forward R&D activities. However, looking at the economic analysis presented by HM Treasury, the net cost of this measure is only £55m over five years.

Ernst & Young suggested that the SMEs creating a buzz in places like Shoreditch in London, but not yet turning a profit, will benefit from the 14.5 percent cash credit, which will apply to all qualifying expenditure incurred after 1 April.

Caroline Artis, London senior partner at the global accountancy firm, added: "The extension [of the SEIS] should continue to encourage entrepreneurs and support the type of start-ups that Tech City already attracts and that Media City, recently backed by Boris Johnson, wants to attract," she said, claiming that SEIS has helped 1,600 companies raise over £135 million since April 2012 and the extra £60m of tax relief given today will be a great fillip for the industry.

However, not all start-ups were satisfied with tax breaks that were presented by Osborne today. Jan Quant, CEO of software firm Screendragon, pointed out that the £3 billion of export finance won't be of any use to many in the tech sector, as it really only supports those mid-sized businesses exporting physical stock and those businesses with plant and machinery.

Elsehwere, the plans to double the number of apprenticeships, introduce degree level apprenticeships, and extend grants for employers taking on apprentices, were welcomed by those across the IT and technology sectors.

Graham Hunter, a director at the global IT Trade Association, CompTIA, said: "Apprenticeships are vital for filling the IT gap. As a serious, vocational profession, they represent one of the best ways for young people to enter the profession and for employers to recruit talented people at low cost to themselves.

"However, places available are not the same as places filled, and low awareness of both sides of the potential of apprenticeships remains a problem. We would like to see a greater push to employers and students to communicate the value and respectability of these apprenticeships.

Meanwhile, the founding of the Alan Turing big data institute, to be housed within a UK university and backed with £42 million of public money, was also welcomed by many.

Adam Thilthorpe, director of professionalism at BCS, The Chartered Institute for IT, said: “The UK has been at the cutting edge of innovation and we believe this investment will provide the UK with the opportunity to regain its leading status as the nation to drive innovation and technology.”

However, Policy Exchange, a UK think tank, said that while the institute is a great idea, the government itself needs to make better use of big data.

Labour MP Chi Onwurah described today's Budget as "a series of adhoc announcements and re-announcements that does little to change the research, skills or ICT base of our country."

This story, "Budget 2014: Where was focus on tech, says industry" was originally published by Techworld.com.


Copyright © 2014 IDG Communications, Inc.

Shop Tech Products at Amazon