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Brown fails to deliver for IT

Mike Simons and Cliff Saran
Gordon Brown's Budget lived up to the expectations of the IT industry - offering little to kick start investment, no boost for broadband, no extra cash for e-government and, from next year, an additional 1% payroll tax.

The Communications Managers Association spoke for many when it described Brown's Budget as "a great missed opportunity".

Interim IT director Colin Beveridge told CW360.com: "The numbers quoted by Gordon Brown implied that recovery was going to be driven by the US and that we will sail along in slipstream. We needed something much more positive."

Brown did promise £420m for small companies to encourage online tax filing, but Martyn Hart, practice director for Mantix, the programme management company and chairman of the National Outsourcing Association, said that this would only be worthwhile if the UK's broadband infrastructure was in place and the Treasury's systems were up to the mark.

On Brown's plans for online filing, he said, "many small businesses may not be technically astute enough to use these services."

Hart criticised the Chancellor for not delivering any incentives to boost broadband uptake. "Big businesses will have [fast] digital networks, but they are dealing with small businesses that do not have broadband."

Brown promised changes to the tax regime on intellectual property, which are worth £200m and will benefit some software companies. This was in addition to tax credits for research and development spending that had already been announced in a pre-Budget statement.

"The tax credit sounds good, but we will have to look at the small print and see if there is a sting in the tail," said Beveridge. "But IR35, [the tax regime that hit contractors] came out in small print."

John Handby, chief executive of CIO Connect, the IT directors' organisation, found a ray of hope in the Chancellor's boost for training. "It is encouraging that Brown has put some money into skills. This is particularly important for IT," he told CW360.com.

Andy Humphreys, director of Firs way Computer Services, a small IT and networking company, was angry but not surprised about Brown's failure to abolish IR35.

"Gordon Brown has an almost schizophrenic attitude to small businesses," said Humphreys. "He has reduced the corporation tax rates for small businesses, while continuing to leave many of them uncertain whether they will pay tax under those rules or under a different set under IR35."

Brown promised substantial extra funds for health and social services, but made no reference to calls in a Treasury review of the NHS published today to ring fence IT spending. Nor was there any extra funding for e-government, despite mounting concern among local authority IT directors that Tony Blair's e-government targets were at severe risk from lack of cash.

Jim Haslam, vice-president of Socitm, the local authority IT directors' organisation, said: "This Budget is a considerable disappointment. It is a blow to all those in local government trying to champion the benefits of e-government. It reinforces the increasing perception that central government fails to recognise the importance of its own e-government agenda."

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