Alistair Darling’s first budget as Chancellor of the Exchequer does not fill CIOs with hope according to Albert Ellis, CEO of professional recruitment and outsourcing provider Harvey Nash. Ellis said Darling’s budget lacked the technology vision of the Blair government’s, which heralded in major IT projects that have transformed the UK.
Commentators believe on the whole Darling missed an opportunity to put IT development for government bodies and corporations at the heart of the budget. Others see the new research and development tax credit scheme as a welcome boost for business leaders.
“It was a business as usual tax raising budget,” Ellis said, describing the speech as “written by PR people as a message to the public.”
Darling’s speech to the House of Commons discussed economic pressures, but Ellis said the pressure will be on house prices and high streets. Technology investment in the US, an economy also under pressure, is rising, albeit slowly. “The opportunity for CIOs and boards is to invest in technology as a way to reduce costs and gain competitive advantage during times of pressure,” he said.
Ellis was most concerned about the lack of a government IT agenda and the investment this will require. He said Tony Blair’s government “had a vision of Britain using technology to be more efficient and to interact with the public, which was massively important.” This lack of vision is the starkest difference between the Brown and Blair governments he said. “Darling has no vision of technology, it was a bland and boring budget.”
The Chancellor may feel technology has burnt his fingers of late following the data loss debacles at HMRC and other government departments, but Ellis said these mistakes should not detract from a vision for change. “There is a negative news flow about data loss, but data on paper can just as easily lost or placed in a black bag on the pavement. The medium of data, whether paper or technological is irrelevant,” he said.
David Marshall, group director for consultants Alma Consulting Group is more positive though, “This is certainly a step in the right direction towards both making the UK a hub of high tech research and development,” he said of the changed to the R&D tax credit enhancements announced by Darling. The Chancellor announced that large companies carrying out new technology R&D would receive higher tax incentives from HMRC. Tax credit enhancements rise to 175 percent for large companies from 150 percent, which means an organisation spending £100,000 on R&D will see a tax saving of £7,500.
Many political observers expected Darling to reverse proposed changes to the Capital Gains Tax and Non Dom Tax, but these did not appear. Ellis at Harvey Nash feels this is a missed opportunity for the Labour party, which will now lose the faith of business leaders. “It is a bad message,” he said, describing the two taxes as stifling entrepreneurship and putting London’s place as a global financial capital at risk. On non doms he said, “penalising this talent can only reduce the flow of highly skilled people into the UK economy.”