Budget Fails To Live Up To IT Expectations

The first Budget since Britain officially went into recession today failed to live up to high expectations set by the UK IT industry.

Against a backdrop of 1.25 per cent growth forecast for 2010, the Chancellor Alistair Darling talked up the importance of the industry, allocating £10 billion of investment in what he called the “vitally important” communications sector.

Darling said some of this £10 billion would be allocated to extending broadband coverage nationally, as part of the government vision set out earlier this year in Lord Carter’s Digital Britain report.

“It is vital to ensure the entire country and economy benefits from the digital age,” Darling said.

He also pledged £405 million to encourage low-carbon energy and advanced green manufacturing technologies, as well as a £750-million Strategic Investment Fund to help emerging technologies and regionally important sectors.

IT is likely to also have a key role to play in plans outlined to cut public spending from 1.1 per cent of gross domestic product (GDP) next year to 0.7 per cent in 2011-2012.

At the same time, the Operational Efficiency Programme, also published today said shared services and outsourcing would be key to cutting £3.2 billion from the government’s annual IT and back-office expenditure.

Chris Gabriel, director of solutions at Logicalis had called for more direct local government IT investment to cut spending. But he said: “The Chancellor must now provide the capital funding and resources to allow IT managers in local government to deliver these savings through initiatives such as shared services and efficient data centres.”

John Higgins CBE, Director General at IT industry trade body, Intellect welcomed the Chancellor’s attempts to emphasise how key technology was to providing high-value jobs and future economic growth.

In particular, Higgins welcomed the action to fill in the remaining gaps in broadband provision and the new Strategic Investment Fund, as well as the action taken on trade credit insurance that he said would help local electronics and electrical retailers and the increase in First Year Capital Allowances to encourage business investment in communications, for example.

“But significant areas of blank canvas remain,” 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 Higgins said the case made for a review of public-private partnership based on the 3i model risked allowing high tech start-ups, who he said could be the “engines of future growth,” to “perish in the cold economic climate.”