Budget is a 'Marmite' one for tech sector

As George Osborne unveils his Summer budget, which contains a few sweeteners for businesses, the jury is out on the benefits to the tech sector

Productivity was one of many buzzwords of George Osborne’s Budget, as he unveiled plans to help businesses employ more people and invest in the next generation of workers.

But noticeable by its absence was any mention of how technology is going to help the government achieve its aims.

Kicking off his Budget speech, Osborne said: “The British economy I report on today is fundamentally stronger than it was five years ago. We’re growing faster than any other major advanced economy. Our businesses have created two million more jobs, living standards are rising strongly and our long term economic plan is working. But the greatest mistake this country could make would be to think all our problems are solved.”

The chancellor unveiled a raft of measures that the Tories believe will address productivity issues, including investment in roads and transport and three million new apprenticeships to skill up the workforce of the future.

Osborne also claimed the government will run a budget surplus by 2019, with the deficit being reduced by around one per cent of GDP each year.

He said: “Productivity means building more roads, but it also means giving people the skills they need to secure a better job. It is to our national shame that we are almost the only advanced country in the world where the skills of our 16-24 year olds are no better than our 55-64 year olds.”

In good news for business, Osborne pledged to cut their National Insurance (NI) bill by another £1,000 from April 2016, with the employment allowance increasing from £2,000 to £3,000 – meaning small businesses will be able to employ four people full time on the national living wage, paying no NI at all.

A further boost for businesses saw the level of corporation tax set to be cut to 19 per cent in 2017, and 18 per cent in 2020. It is estimated that over one million businesses will benefit from this move.

Osborne said: “We’re giving businesses the lower taxes they can count on, to grow with confidence, invest with confidence and create jobs with confidence.”

And in a boost to devolution, he announced a £30m funding injection for Transport for the North (TfN), and he hinted that there was more to come.

“Today we go further in building the Northern Powerhouse,” he said. “I have reached agreement with the leaders of the 10 councils of Greater Manchester to devolve further powers to the city. We are working towards deals with the Sheffield and Liverpool City Regions and Leeds, West Yorkshire and partner authorities on far reaching devolution of power. Let’s put the power into the Northern Powerhouse.”

And for notorious tax avoiding firms, the chancellor said he would make sure international companies pay tax on profits diverted from the UK – not such good news for the likes of Google and Amazon.

For individuals the messages were also mixed, the 40 per cent tax threshold will increase from £42,385 in 2015/16 to £43,000 in 2016/17, but working age benefits including tax credits and local housing allowance will be frozen for four years.

The tax-free personal allowance will also increase to £11,000 in 2016/17, with an intent to increase this to £12,500 by 2020, benefitting millions of ordinary, and particularly lower paid workers.

However the main points of the budget received a mixed response from the tech industry with observers pointing out the marked lack of technology references.

Rakesh Harji, UK managing director of predictive analytics firm Blue Yonder, said technology could play a massive part in improving productivity.

“The thing the budget overlooks is that we live in the digital era. Technology can have a hugely significant impact in combatting this issue, increasing collaboraton, efficiencies and innovation," he explained.

"Moreover, 99 per cent of operational (vs strategic) decisions can and should be automated using machine learning, artificial intelligence and data science…. Technology has the power to create flexibility and allow for innovation which ultimately drives business growth – sometimes in the most unexpected areas of the business.”

Lawrence Jones, CEO of hosting firm UKFast, labelled it as a ‘non-tech’ budget.

“Digital infrastructure commitments were notable by their absence. Businesses are going to need something from the government if they are going to take a risk and make big investments in improving connectivity. I didn’t hear anything like that in this budget,” he said.

“This is the most non-tech Budget I’ve ever heard, and this is a government that claims to know what it’s talking about when it comes to encryption, which they’ve actually completely misunderstood as banning or weakening encryption would effectively end ecommerce in Britain. I just wonder why they have chosen to steer clear of all things tech and digital today,” Jones added.

“The government really have to do more to improve our IT infrastructure. I remember being in Hong Kong ten years ago and speaking to my wife on the phone as I went down an escalator to an underground. I warned her that the signal might go but, sure enough, it didn’t. The reach of their connectivity was better ten years ago than ours is now. We struggle to get decent Wi-Fi on public transport. It’s all well and good talking about improving transport, but we’re increasingly depending on the internet for business communication. It needs investment from the government and it needs it sooner rather than later.”