What the IT industry thinks of 2009 Budget

A plethora of policies affecting the technology industry were announced in the 2009 Budget, with mentions of high-tech green investment and broadband infrastructure highlighting the growing importance of IT in mainstream politics.

A plethora of policies affecting the technology industry were announced in the 2009 Budget, with mentions of high-tech green investment and broadband infrastructure highlighting the growing importance of IT in mainstream politics.

IT industry experts said there were a range of relevant announcements, but some of the longer term effects are as yet unclear.

The announcements came just a day after the government published the Operational Efficiency Programme which recommended spending £7.2bn a year less on IT through efficiency savings.

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Green technology investment was high on the agenda, with £750m earmarked for emerging technologies and £405m for advanced green manufacturing.

But Barry Murphy, partner and head of technology at PriceWaterhouseCoopers, said it was unclear how or when firms would see the benefits.

"There are a lot of headline announcements but I am not entirely sure what the delivery mechanism is for companies who will need the investment. There is recognition of our need to be at the forefront of a new knowledge economy, but I am not clear on exactly where the money will go."

Good news came in the form of a temporary increase in the main rate of capital allowances, which has been doubled to 40% for this year. This will be helpful for investment - including communications companies investing in broadband infrastructure - but some warn it may not be enough.

Philip Virgo, strategic advisor at the Institute for the Management of Information Systems, said, "I would call for 100% for two years, but at least this recognises the importance of capital allowances and it is better than nothing. This may cause people to bring forward investment they were planning anyway, but it is not enough to trigger things that would not otherwise happen. There is also a need to take a look at the valuations used for business rates."

As the recession continues, Alistair Darling looked at getting those who are struggling back into work. He pledged £1.7bn to help 16 and 17 year olds stay in education and get under-25s into a job or a training course.

Matthew Poyiadgi, European vice-president at CompTIA, the global IT industry trade association, said some of the money should be targeted at the technology sector, which has been languishing under a skills shortage for years.

"This is great news as long as it is targeted at sectors such as IT and technology that have an urgent need for new blood - and which has been highlighted in the budget as an area of high growth that warrants particular attention. Funds should be directed to this highly skilled sector; not only are we crying out for good people, but there is plenty of training available to get them started."

At the other end of the scale, high earners will be hit. Those earning enough will, from April 2010, be paying 50p on every pound over £150,000.

Finally, a push to improve broadband infrastructure is welcome to Denise Plumpton, director of information at the Highways Agency.

She said, "I was delighted to read of the commitment to ensure the entire country and economy benefits from the digital age and the extra funding for digital investment to help extend the broadband network and deliver the vision for Digital Britain, is really welcomed. It reinforces that ICT really has come of age in the public arena.

But the move was not enough for John Higgins, director general at Intellect. He said, "Next-generation broadband, the crucial new infrastructure demand of the 21st century so far, is given some necessary but nowhere near sufficient help. And the case for a public private partnership on the 3i model is put out for review, at a time when high-tech start-ups, who could be the engines of future growth, risk perishing in the cold economic climate for lack of venture and risk capital. In both of these cases the time for reviews is all but over and the time for action is here."

Photo © Rex Features

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