While the government makes optimistic noises over the reconstruction of Iraq’s economy, our own economy continues to suffer, although you wouldn’t know it from the chancellor’s budget speech.
I did a quick straw poll of friends in advance of this week’s budget, asking if they thought there had been any improvement in the fragility of the business climate over the past 12 months.
Sadly, I have not many friends left to ask. Four are out of business completely – administration or boot sale, one is thinking of giving up, a second has had a breakdown through overwork, two are struggling to stay afloat and one is not drawing a salary until matters improve.
These people aren’t all from big companies, they are typical SMEs with a turnover of anywhere between one and three million and with two of the failures hovering around the five million mark.
They might reflect on the words of CBI boss Digby Jones at last November’s eSummit in London, when he soundly ticked off the prime minister, deplored the "red tape burden of British business" and described the barrage of “new employment rights and regulations” as being “anti-competitive”.
Maybe I’m wrong in my judgment and perhaps the £4bn increase in National Insurance contributions, announced a year ago, will be as good for business as will the R&D tax credit and the simplification of VAT administration and UK Online?
Lord Sainsbury, parliamentary under-secretary of state for science and innovation at the DTI, must think so. After all, he’s just given the Labour Party £2m, so who am I - as a downmarket Asda customer - to criticise?
I accept that we have a better business and regulatory environment in the UK than most countries in the Organisation for Economic Co-operation & Development, but is that any reason, as Digby Jones has argued, to eliminate the flexibility of a labour market which has made us so successful, and to continue overloading us with the kind of red tape and persistent taxation that the French would be proud of?
Business is hurting and the IT business is hurting more than most. On a personal note, I don’t believe that government sees business as anything more than a convenient tax victim, and I was surprised to hear another friend, the chief executive of a public company in the IT sector, a generous donor and a staunch party supporter, show the first real signs of a crisis of confidence as he prepared to lay off up to 40% of his staff last year.
My message to Gordon Brown is that capital allowances and training incentives are not enough to revitalise what I see as a struggling IT industry or even a shuddering economy.
Nobody really believes that greater taxation of the middle classes and domestic business will lead to a noticeable improvement in public services. Nothing short of a revolution is likely to see our trains running on time or even at all these days, because it’s the malaise within management , not simply the endless demand for more public spending that lies at the heart of Britain’s problems.
Unless government wakes up to the accelerating failures in the IT sector, we won’t have much of one left by the end of this Parliament. The large global services players will have the field to themselves, but the smaller entrepreneurial companies with energy and imagination might be better off looking for a government grant to set up shop in Baghdad, as far away as possible from Gordon Brown and the reach of his business budget.
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Setting the world to rights with the collected thoughts and opinions of leading industry analyst Dr Simon Moores of Zentelligence.
Acting globally, Zentelligence (Research) advises governments, suppliers, business and the media on the evolution, application and delivery of leading-edge technologies and specialises in the areas of eGovernment and information security.
For further information on Zentelligence and its research, presentation and analyst services visit www.zentelligence.com
This was first published in April 2003