Double dip for IT investment

Syscap lays blame for fall in business IT investment at door of banks

The lack of banks' specialist knowledge is behind a double dip in investment by UK companies in IT, according to IT finance provider Syscap.

The most recent figures, released by the Office of National Statistics in May, showed that between last year's Q4 and 2012's Q1, the amount businesses invested in IT fell by £393m, from £3.91bn to £3.52bn.

In comparison, the amount invested by UK businesses on the whole has been rising steadily since the start of 2011.

The 10 per cent decrease in IT investment by businesses is down to banks being uneasy about lending firms money to purchase IT equipment, according to Syscap chief executive Philip White.

He said: "Banks are traditionally uncomfortable with lending to businesses so that they can invest in IT equipment.

"Banks lack the specialist knowledge to assess the long-term value of IT equipment, and feel uneasy about providing loans against an asset they find hard to price."

In April, the cap on the Annual Investment Allowance, which allowed tax relief for companies investing in equipment, was reduced from £100,000 to £25,000, a move White argued makes it harder for IT companies to flourish.

"Scrapping that tax incentive is very unfortunately timed. More needs to be done to encourage UK businesses to invest more in IT, not less," he added.