UK budget shows no understanding of IT, says industry

The UK IT industry has reacted coolly to the 2008 Budget, delivered by Chancellor Alistair Darling Wednesday.

Nick Kalisperas, director of the IT suppliers' group Intellect gave a qualified welcome to the government's move to grant more public sector contracts to small and medium-sized enterprises (SMEs) as a positive step, but thought more clarification was needed.

"Setting a target like 30 percent raises a range of questions about how it will be enforced, how SMEs will be encouraged to participate and how equitable it really will be. The chancellor today simply announced the creation of an advisory committee on SME access. We are waiting to hear who will sit on the committee.

"It is vital that not only a wide range of sectors, including technology are represented, but also that SMEs are consulted about what the practicalities of such an initiative and what they feel would really help them."

Kalisperas noted that Brown's Business Advisory Council, created last year, contained just one technology company when "the IT sector represents at least 10 percent of GDP."

Intellect represents over 800 technology companies of all sizes. "SMEs' access to public contracts has been a real issue, particularly in the NHS's National Programme for IT and Intellect has been working to improve the situation for smaller companies," he said.

Kalisperas blasted the government for failing to invest in technology education. "It smacks of a lack of appreciation of the real role of technology in the UK economy and is very disappointing," he said.

Investment in Britain's digital infrastructure was also absent from the Chancellor's statement, said Janice McGinn, research director, CIO Practice, at analyst the 451 Group.

"We need a clear government commitment to getting the UK's internet infrastructure on par with the rest of the world," she said. "Broadband capacity is limited and limiting business. High quality links are patchy. We can't compete with US, Japan and Singapore if we don't create an infrastructure that supports industrial strength e-commerce and web services."

The budget did set environmental targets and created tax breaks for businesses that implement technologies which reduce energy and water consumption. Darling announced that he is considering increasing the target for cutting carbon emissions from 60 percent by 2050, to 80 percent.

However analysts and green IT consultants said the government failed to realise IT's ability to help address climate change.

"The government had a great opportunity to push the role of IT in creating a more environmentally friendly Britain. It could have made it easier for UK start-ups in the green IT area get funding or tax breaks on new products," said Gartner research vice president Rakesh Kumar.

"The UK could become a centre of excellence in this area. We have huge datacentres that need help, investment banks with lots of money, a lot of brain power and a natural sympathy with environmental issues: A great recipe but a wasted opportunity."

David Elwen, director at green IT consultancy DMW went further, stating the budget does little to encourage businesses to adopt environmental initiatives and reduce their carbon footprint, particularly in their IT industry.

"It is disappointing that there was a lack of measures targeted specifically at the IT industry, including support for reducing the amount of equipment in data centers and increasing their energy efficiency. Optimising power consumption and reducing data center equipment levels can reduce both carbon emissions and costs. Surely the government can be more imaginative and constructive on this important issue," said Elwen.