Budget 2012: Osborne Forgets The Needs Of Tech

George Osborne was always going to irk a lot of people today. From charging mansion-owning big-wigs more to scrapping tax breaks for over-65 pensioners, the Budget has peeved many. Just type #grannytax into a Twitter search and you’ll see how incredulous some are at the Coalition’s announcements.

From an IT viewpoint, there was nothing to get overly irate about. The science budget is to be protected at £100 million, the full list of “ultrafast” cities was revealed and a further £50 million is to go on better broadband in smaller cities. There was also a cut in corporation tax to 24 percent and tax on small businesses is to fall to 20 percent, which should act as a boon to the growing tech start-up scene here in the UK.

Reasons not to be cheerful

Yet whilst Osborne did not give us any reason to get angry, there were reasons to be a tad depressed. It wasn’t what he said, it’s what he didn’t say. Areas of the IT industry the Government has previously expressed interest in were apparently forgotten. First off, there were no financial pledges for the IT sector to drool over. Remember the £50 million for graphene research pledged by Osborne in October? There was nothing like that to titillate the techy types of Britain.
Nor was there anything to inspire manufacturers of technology. At the conclusion of last year’s Budget, Osborne left us with a genuinely fine piece of rhetoric. “We want the words ‘made in Britain’, ‘created in Britain’, ‘designed in Britain’, ‘invented in Britain’ to drive our nation forward,” he declared. “A Britain carried aloft by the march of the makers.” This time around, the makers were barely mentioned. Osborne certainly didn’t promise manufacturers any direct investment and initial reaction from the industry has been lukewarm.

“Whilst there are some helpful measures, they fail to send a strong enough signal to growing manufacturers that now is the time to bring forward their investment plans and to do it here,” said Terry Scuoler, chief executive of EEF, the manufacturers’ organisation. “The corporation tax cut is welcome but, on its own, it is not the silver bullet that will unlock the business investment our economy urgently needs.”

The “ultrafast” cities revelation was hardly inspiring either. Osborne didn’t care define ultrafast. Is it 100Mbps? 300Mbps? And whose infrastructure will be used to power this uber broadband? Will the Coalition be brave and open up competition to smaller players, or pander to incumbents like BT and Virgin? The government has to be clearer on what infrastructure investments entail and who will power them if it wants to get businesses excited.

City lover

More worryingly though, rural areas were again largely left out of Osborne’s broadband boasting. There was no talk of additional BDUK investment, nor was there any evident passion about innovative solutions such as white space or satellite to bring faster connections to the countryside. Such innovation appears to be the domain of private businesses, but it is unlikely they build on this with commercial investment if the government is not interested in helping out. A two-tier broadband Britain will be of benefit to no one, yet the consistent emphasis on providing for urbanised regions is pushing the UK in that direction. The City is not the only place to do business.

Just yesterday, former BT CTO Peter Cochrane warned about the pernicious effects of failing to invest further in broadband infrastructure. Cochrane said the money earmarked to supply for rural areas was not enough, insisting another £15 billion is needed to ensure the UK is no longer “back of the pack”.

Osborne wants to make Britain the technology capital of Europe. If he means it, the chancellor will have to address those forgotten in the Budget today.

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