Budget scorecard - Brown could do better

Computer Weekly

Chancellor Gordon Brown promised Tuesday's Budget would let Britain "meet and master a tide of technological change".


Computer Weekly

Chancellor Gordon Brown promised Tuesday's Budget would let Britain "meet and master a tide of technological change".

But the IT-friendly headline announcements masked some disappointments for industry professionals.

The chancellor offered 100% tax credits on IT and Web investment for small and medium-sized enterprises, tax credits on research and development, sweeping changes to the Capital Gains Tax regime and a boost for employee shareholding schemes.

All of this will be welcomed by the industry. However, John Higgins, director general of the Computing Services and Software Association was disappointed that the Chancellor failed to address a National Insurance liability for businesses that give staff share options. "This is a tax on growth," he said.

Brown also relaxed work permit requirements for foreign IT professionals. However, Philip Virgo, strategic advisor the Institute for the Management of Information Systems, was not enthusiastic about the move.

"It is basically a confession we can't train our own. The big question is what exactly the small print on IR35 is. Depending on what the final rules are, they could more than negate all the positive measures."

NHS IT managers reacted positively to the chancellor's announcement of £4.9bn extra funding for the health service. One IT manager from a health authority in the Midlands said money in the £1bn Modernisation Fund for IT sometimes ended up in non-IT projects. The cash boost could make this less likely.

John Serle, for the Society of IT Management, which represents local government IT chiefs, picked up on the same theme.

"It is nice to see the rhetoric being turned into reality," said Serle. "In the public sector the Government needs to use the extra money to provide a sustainable infrastructure that can drive down costs year-on-year. I want to see the £4bn targeted, rather than dissipated in what is a very hungry animal."

Budget highlights

  • Relaxation of rules on work permits for IT staff

  • SME tax credits of 100% for hardware, software and on-line infrastructure investment

  • R&D tax credits of 30% for SMEs

  • Employee shareholder schemes boosted with 10% capital gains rate

  • Investment in "small and growing businesses" above 5% held for four years, to attract 10% capital gains tax.

  • Read more on IT for small and medium-sized enterprises (SME)

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