The IT sector and all those work in it were thrown crumbs of cheer by the Chancellor in this week’s Budget announcement. Reductions in corporation tax, the creation of 10,000 new apprenticeships and a package of uplifts for small business were the main reasons for optimism.
Apprenticeships
The IT skills base will be strengthened by new measures aimed at training, skills and education. A government pledge to create 100,000 more places on work experience schemes is aimed to address the skills deficit, where the UK lags behind the US, Germany and France. Fewer than one on ten companies in the UK currently offers apprenticeships, a landscape that may alter with the 250,000 planned apprenticeships over the next four years.
Richard Nott of CWJobs said, "The most successful professionals are those that have a good understanding of the business environment as well as the requisite technical skills. Apprenticeships are an ideal way of giving the next generation of IT pros this kind of hands on experience and simultaneously tackling a potential skills gap to come from the increased tuition fees. I'm hoping to see the biggest and best tech brands mirror the government's commitment to apprenticeships with significant placement numbers and strong programmes."
E-skills, the national skills agency for the sector, welcomes the 10,000 higher level apprenticeships and the commitment to address barriers that prevent small business accessing apprenticeships. E-skills is currently working with employers to develop a suite of IT apprenticeship programmes that meet the needs of the sector.
Tax breaks
A surprise reduction of corporation tax may benefit IT workers in computer giants and those enterprises with in-house IT departments. Chancellor George Osborne bettered his promise of reducing tax on corporations by an extra percentage point, bringing it down to 26%. The extra money this frees up could flow into renewing IT infrastructures or other project that have been put on hold since the big squeeze.
The cut was a proclamation that ‘Britain is open for business’ declared Osborne. Many companies who put initiatives on hold during the downturn now have additional incentive to get new projects underway. “This is beneficial for the IT job market as highly skilled professionals are required to help manage growth initiatives and get key projects back on track,” said Neil Hedges, senior manager, of recruitment firm, Robert Half Technology.
R&D relief
In particular product development work may receive a boost following the extra tax relief that was announced for research and development work. Tax credits for product research have been raised from 175% to 200%, rising to a further 25% next year.
Specific regions that are home to software R&D hubs such the Cambridge Science Park set to gain most from the tax break. New investment flowing in from the venture capitalists will please and maybe create start-ups here who will be encouraged to hire tip flight computer science graduates for the work.
Funds for entrepreneurs
"We need new products and innovation if we’re going to compete in an increasingly high-tech economy, and businesses like mine will benefit from this tax break”, said Peter Gradwell founder of a comms management company. He was also heartened by the announcement that the Entrepreneurs Relief scheme is to be doubled to £10m from 6th April.
“If SMEs are going to be the growth-drivers to take us out of this economic climate, then business owners need to able to afford to employ more people and grow the business.” Gradwell started his business in 1998 while studying at university, and has since been named ‘one of the changing faces of IT’ by the Daily Telegraph.
Breaks for SMBs
The Chancellor also swept away a bunch of regulation and red tape that currently makes life even harder for entrepreneurs and owners of Britain’s small businesses. Charlie Cowan, CEO and founder of cloud service provider Keboko, said: "Having started my company last year, I'm pleased to see that the chancellor remove regulations costing firms around £350m.
"For many small businesses, the abundance of red tape, combined with the recession, has meant that business growth has been put on hold during the last few years,: there simply aren't enough hours in the day to focus on new business, alongside fee-earning activity and administrative tasks," said Cowan.
Missed opportunity
Not everyone is happy, however. Yesterday’s Budget announcement of 21 Enterprise Zones with free, super-fast broadband is a stimulus to industry and the IT and the digital sector, and funding for 12 university technical colleges can address the technology skills shortage, But these measures are in practice relatively modest, said the public sector IT professionals association, Socitm.
Socitm would like to have seen tax or other incentives for home and flexible working, which could save public the public purse whilst also helping reduce carbon. There are no incentives for public sector to invest in sustainable use of IT, for example green data centres, and no incentives for investment in digitally assisted communications to reduce travel costs and the economy’s carbon footprint.
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