Thought for the day: Red tape and taxes are killing IT

British IT badly needs a boost, says Simon Moores

Simon Moores  

Legislation is stifling small IT businesses and damaging the UK IT industry in the process. Simon Moores wonders how to redress the balance.




Last week I was elected vice chairman of a relaunched Conservative Technology Forum (CTF), the president being Michael Fabricant, MP, who is also the shadow minister for economic affairs, and its chairman, Malcolm Harbour, MEP.

Throughout my 20 years in IT I have tried to remain apolitical, even as an advisor to the Office of the e-Envoy, but now I find myself assisting the shadow front bench in the preparation of policy and the materials needed to support technology-related debates in Parliament.

Just over a year ago, I realised that it would be nearly impossible for me to set up any of the small and successful IT businesses that I had done in the past. That favourite Microsoft word "agility" might be true of software but it no longer appears to be a commodity available to smaller IT companies.

Legislation, as my overworked friends tell me, makes running an SME a full-time burden, and the entrepreneurial flexibility that once made our IT sector a vibrant place to work has been all but suffocated by red tape -  a cumulative cost to business of £20.6bn according to the British Chamber of Commerce - with IR35 alone costing the economy £465m since 2000.

At the opposite end of the spectrum, there’s e-government and e-commerce and how "big" technology can be used to save money and not waste taxes in areas such as central government procurement and at local authority level, to improve services and not simply duplicate them.

My task is to come up with ideas and proposals and my well-known cynicism as a columnist may be an advantage. I’ve been asked to listen to businesses, both large and small, and invite those that are interested to join the CTF and map out proposals that might, one day, become policy if there is a change in government.

If you look back to the last decade, one of the foundations for the UK’s economic future was seen to be a strong IT services and software development sector. What worries me most in 2004 is how much of this will be left by the end of this decade?

I have seen three UK businesses with good, innovative technology go to the wall in the past 18 months and I see evidence of much of our software development leaking offshore. What does the future hold for the UK IT industry? Will innovation thrive and survive in the present political climate, or will we be relegated to the role of a channel for foreign-owned software, hardware and services businesses with our economic fortunes resting on decisions taken on the other side of the Atlantic?

Now that we are a triumphant broadband society, what are we going to do with the results beyond visiting each one of a thousand government websites? Can technology make a real and positive difference to the quality of life and the health of the economy instead of adding further to the layers of expensive bureaucracy and the speed at which jobs in the IT sector are being moved offshore? You tell me.

What do you think?

What must government do to help technology become innovative again?  Tell us in an e-mail >> reserves the right to edit and publish answers on the website. Please state if your answer is not for publication.

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 

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