By now we’re sure you’ve seen the headline figures from yesterday’s Budget announcement, and established how they’ll affect your business and the wider industry. But what do others think?
First, a recap of the news most likely to have an impact on the IT industry. Chancellor George Osborne claims this budget is designed to make the UK the first choice in Europe to "start, finance and grow" a business.
To help that he announced the creation of 21 Enterprise Zones, areas where businesses will be offered access to superfast broadband and a 100% business rate discount. These zones will be established in Birmingham and Solihull, Leeds, Sheffield, Liverpool, Manchester and more. London will get one as well, with the Mayor choosing its location.
Osborne also announced a "moratorium exempting micro-businesses (fewer than 10 employees) and start-ups from new domestic regulation for three years," the Budget report says. The small business rate relief holiday will be extended by one year from 1 October 2011, Osborne announced.
The UK will also drop existing proposals for specific regulations which would have cost business over £350m a year.
The government will also reduce the main rate of corporation tax from 28% to 26% from April 2011, a move that Osborne hopes will convince the world’s biggest companies to set up home in the UK. The Chancellor also announced he would double the lifetime limit for Entrepreneurs Relief to £10m.
The University Technical Colleges programme will be expanded to create at least 24 new colleges. "Formed through partnerships between universities, colleges and businesses, University Technical Colleges will provide technical training opportunities for 11 to 19 year olds. The sponsors will help set curricula to match the needs of the local economy and of their sectors, provide high quality work placements, and allow the colleges to use their specialist facilities," the Budget said.
Although much of the emphasis was on helping entrepreneurs and start-ups, the measures don’t go far enough, according to Simon Schneider CEO of OmniCompete, the firm behind the recent Global Security Challenge.
"The Chancellor promised us a ‘Budget for growth’ and while there are certainly some positive initiatives, there is still a long way to go to help the UK’s tech start-ups and entrepreneurs," he said. "Whilst we applaud the announcement of ‘Start-up Britain’, enterprise zones, R&D tax credits and a cut in regulation – all of which will certainly go some way to help this and the next generation of technology entrepreneurs – this is just the first step on a long road. There is more to be done and now is the time to turn this aspirational budget into action."
"With some support from both the public and private sectors, our technology start-ups can and will become the high growth firms which the UK needs to be the catalyst that moves the country out of sluggish economic growth. No matter how much money the government or American technology companies pump into the east of London, touted as our answer to Silicon Valley, the initiative cannot succeed if more is not done to foster and support innovation from the ground up," Schneider concluded.
Bindi Bhullar, director of HCL Technologies, spoke of the positive impact on the technology industry. "The UK has long been known as a financial services hot spot, but it is great to see that this budget has not overlooked the wealth of technology talent available to investors and the efficiencies it can bring to businesses, particularly during a challenging economic climate," he said.
Another firm playing up the importance of technology’s role in helping growth was SAP. "George Osborne’s budget clearly states the government’s desires for Britain: stable and lasting growth and job prospects for future generations. Technology can play a crucial role in driving both – today’s budget goes some way to provide the foundations that will facilitate technological innovation, particularly from small businesses, following the announcement of further investment in Enterprise Zones and favourable adjustments to lending measures," said John Antunes, Director of SME and Channels for UK and Ireland, SAP.
Describing the Budget as a "mixed bag", Niki Dixon, head of Technology at Grant Thornton UK LLP, added: "With most of the tax changes already in the pipeline, much of the Chancellor’s good news is linked to tax rises that he has decided to shelve rather than reductions in the current regime. However, the announcement of significant improvement to both R&D tax credits and to investor relief will provide a welcome boost for early stage investment in the sector."
"The announcement of new Enterprise Zones should help high technology manufacturers outside the South East. The Zones are intended to encourage regeneration in deprived areas of the UK by offering enhanced tax reliefs to companies that invest in those areas. Whilst the announcement is welcome, it will not help the wider technology sector where investment has tended to focus on the South East," Dixon added.
