News analysis: Budget 2012

News 21 Mar, 2012

A boost to broadband is welcome, but has IT lost out to other industries in the Budget?

The Chancellor of the Exchequer, George Osborne confirmed a raft of rumoured changes to taxes and allowances in this year's Budget speech.

And as well as new Stamp Duty rates for expensive homes, an increased personal allowance of £9205, and a cut to the 45 per cent top rate of tax – effective from April 2013 – the Government also set out measures to boost business, and in particular, the digital economy.

As well as a plan to double the UK's exports, to £1 trillion, by the end of the decade, the Government plans to help London establish itself as a market for trading China's currency, to help pension funds put money into infrastructure, and boost airport capacity in southern England.

But it is the measures to boost the digital economy, and the measures around investment in smaller business, that are most likely to affect IT professionals.

In fact, the Chancellor went further than most ministers have in recent years, putting internet infrastructure on a par with road and rail. Few politicians have attached quite as much importance to technology since Tony Blair first talked about broadband Britain 10 years ago.

Of course, Blair's mooted £6bn of investment in IT failed to really deliver a Britain he described as a "technological powerhouse". Other countries, notably South Korea, the US and Sweden, have done better at developing their fixed internet infrastructure. And, although Osborne's commitment to increase the coverage of mobile networks in rural areas and along the road system is laudable, the UK continues to lag in other areas, not least the provision of 4G mobile services.

Pressure for 4G

Pressure to roll out 4G may well increase, now that more devices, and especially Eagle Eye, a company offering mobile services to retailers.

“The UK has a growing internet economy, and mobile technology plays a key part in this," Rothwell said.

"The promise of super-fast broadband and improved mobile phone coverage across the country is good news for the retail industry in particular. Mobile technology is having a huge impact on commerce and in the year to come, we’re going to see this continue as retailers find more sophisticated ways to use it.”

But whilst most people welcome the promise, there are doubts about the public sector's ability to deliver. "Investment and a push in broadband infrastructure is welcome, but needs to be distributed not centralized," says Rob Bamforth, of industry analysts Quocirca.

"We need to connect more, better ,not few at the best rate – raise the broadband minimum, not the headline top rates." And, he cautions, local authorities are ill-equipped to run wireless services or to become ISPs; Government sponsorship of a single network cold even have the opposite of the desired effect, and damage competition.

"It would be better to establish a metro wireless wholesaler, perhaps an Openreach for the skies," suggests Bamforth.