Budget 2012 Gives Connectivity Industry Boost


The budget was a difficult one for the Chancellor as he had to somehow balance the need for growth with the economic reality of today. That’s not to say there wasn’t some good news for the IT sector in the detail of the budget. The reduction in corporation tax from 26% to 24% from 1 April 2012, is to be broadly welcomed, as is the commitment of an additional £50m to fund a further ten super-connected cities, to complement the ten major cities announced in the autumn 2011 pre-budget statement.

There was also some welcome news for some of the country’s smallest businesses with the announcement that the government will aim to “radically change” the administration of tax for the UK’s smallest companies. The changes, based on original recommendations by the Office of Tax Simplification, would make filling in tax returns simpler for up to three million companies. Support for small firms and start-ups as regards to simplifying tax processing and consulting on grants will also undoubtedly help drive innovation within the technology sector, especially in the digital and creative industries.

On that point, it’s extremely encouraging to see that the video games, animation and high-end television industries are receiving specific support. The tax breaks are a similar idea to tax relief for the British film industry and could, according to Budget commentators, generate at least £350m per year by encouraging more “high-end” TV production in the UK, as well as an overall boost of around £1bn to the UK economy. Britain is undoubtedly becoming a leader in these areas and the halo effect on the wider creative sector will have greater benefits to the economy.

However, there are other sectors of the technology industry, though possibly not as exciting or glamorous, that are nevertheless helping the UK maintain its position as an innovator when it comes to technology; telecommunications is one of them and we need to ensure we support these businesses just as strongly.

Overall, the budget reinforced the Government’s strong belief in the power of connectivity and connected services to help boost business growth and overall productivity. I think broadly this is the right approach although there is also a need to ensure that British businesses are able to take full advantage of these faster networks and platforms safely and securely given the rapidly changing online threat environment.

Businesses are using technology to drive efficiencies, find new routes to market, increase new customer interaction and drive growth. They are taking advantage of the efficiency gains and cost benefits offered by innovations such as the rise of mobile devices, virtualisation and cloud computing.

This means the ongoing availability, resilience and security of the networks, systems and the technological devices they rely on is vital. It is also important that businesses are not possibly putting themselves, their information and intellectual property at risk by having to support legacy systems and processes that may not offer an appropriate level of protection given the increasingly sophisticated nature of online risks and threats.

How much can the Government influence this? That’s a complex question. One could argue that by reducing and simplifying the tax burden businesses will be able to free up more money to invest in new systems that can protect information which has fast become the life blood of large and small companies alike.

This budget sends a clear message that business growth is the key to economic recovery. Whether people agree or not, it’s a strong statement from the government. This sets a more positive tone; the government is saying: “Things are going to improve, and this is how.”

I think the IT sector can in the main be happy with the budget and it will be interesting to see if the creative sector receives the boost that will be expected after being specifically called out for support. For the wider IT community, it’s business as usual.

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Ilias Chantzos is Director of Symantec’s Government Relations and Public Affairs programmes for Europe, Middle East & Africa as well as the Asia Pacific and Japan regions. He is based in Brussels. Ilias represents Symantec before government bodies, national authorities and international organisations advising on public policy issues with particular regard to IT security and data risk management and availability. Prior to joining Symantec in 2004, Ilias worked as legal and policy officer in the Directorate General Information Society of the European Commission focusing on information security policy. Ilias holds a law degree from the University of Thessaloniki and a Masters degree in Computers and Communication Law from the University of London and is a member of the Athens Bar. He serves as a member of the Executive Board of AeA Europe and appointed member of the Permanent Stakeholders Group of ENISA.