Guildford, Surrey – 21 March 2012 - At 12.30pm today, Wednesday 21st March 2012, Chancellor George Osborne announced The Budget 2012. IT entrepreneur, Kate Craig-Wood and co-founder of cloud computing provider, Memset is impressed with some of the Chancellor’s ‘intentions’ but she spells out what exactly the government should put into place to deliver on their promises:
First, I am delighted that the Chancellor has stated an intent to make the UK Europe's technology centre. Now that the old "big three" of finance, retail and construction are floundering, technology really has the potential to become a major engine of growth for UK PLC. Cloud computing is a prime example; the UK already has something like a 10% global share of the market which is growing at over 20% per year and will be worth £25bn by 2015.
“I see a future where Britain has a triumvirate of export strengths; legal services, financial services and technological services - three areas with great synergies and ones in which we already excel.”
The promise of investment in faster broadband is very welcome - and necessary to achieve the above goal - but it needs to be more than words. Unfortunately the numbers he mentioned - £150 million to create "superconnected cities" - are out by at least an order of magnitude! We need a few billion pumped into broadband infrastructure to catch up with the rest of the world.
By contrast it enrages me that we are spending £40bn on white elephants like the high speed 2 rail link. Using the same metrics as were used to justify that project (mostly time savings), money spent on broadband would deliver £30 of benefit for every £1 spent - 10 times better than the train links return on investment! (source: Broadband Stakeholder Group) Further, 20-30% of Britons remain without access to broadband and they are generally among the most socio-economically deprived.
In summary, serious investment in network infrastructure would help the needy, rather than a minority of suits, save us all time (and therefore money) and stimulate innovation by providing British Internet / cloud services companies with a hot-bed of users to hone their products that can then be exported to the world!
I of course welcome the reduction in business tax and improved research and development allowances as well as well. They will help high-growth technology companies like mine fulfil their promise of driving economic prosperity; my brother and I (the owner-managers of Memset) leave most of the profits in our business in order to fund our growth - especially necessary given the banks' continuing reluctance to lend. By taxing those profits we leave in rather than what we take out government was stifling our growth, which in turn was reducing the rate at which we take on new staff and so forth.
As for loans to start new businesses and support for school leavers with apprenticeships, they are targeting the wrong areas! It is the established, proven technology businesses 10-250 employee range - the "gazelles" - that have the greatest potential for growth and exports. Due to scarcity of bank finance such firms are turning to venture capitalists who in turn almost always end up selling them to the US, depriving Britain of their goodness - we need more pressure on banks to share at least some of the risk with the owners.
We Need Highly Skilled Workers
As for apprenticeships, such firms are also in dire need of highly-skilled workers, not school leavers. We have to fight tooth-and-nail to get top-quality programmers and systems administrators which is hampering our ability to grow as fast as we would like (ie. we'd recruit more if we could find them!). It is true that we and our peer-group companies won't be employing school leavers (our minimum requirement is a 2:1 degree in a STEM subject), but encouraging universities to churn out more science and technology graduates will encourage our growth and in turn economic prosperity for all.
Finally, on a more personal note, as one of the much vilified "1%" I welcome the cut in top-rate income tax, but not purely for selfish reasons. At 50% it was at a level where my brother and I were genuinely starting to consider the merits of emigrating and taking the company with us. Britain cannot afford to alienate its golden geese for the sake of what is petty change in the grander scheme. 45% brings it just about under the pain threshold.