Budget 2011: Wins for tech skills, R&D and superfast broadband

Osborne plans to make UK top European choice for start-ups...

Chancellor George Osborne's announcement of investment to support technology R&D and skills training has been broadly welcomed by the IT industry Photo: altogetherfool

Chancellor George Osborne has pledged new funding for technology research and training, and the creation of business parks offering access to superfast broadband.

Osborne said the measures set out in his budget speech would "make the UK the best place in Europe to start, finance and grow a business".

The government will designate 21 areas across the UK as Enterprise Zones, where the government will "provide support to ensure that superfast broadband is rolled out" and offer regulatory and tax breaks for businesses.

A Treasury spokeswoman said the government would support the rollout of superfast broadband to zones where high-speed internet access is "deemed to be necessary" by Local Enterprise Partnerships, decision-making bodies made up of local authorities and businesses.

She said this support could take a number of forms, including the government matching the investment that local businesses make in funding the rollout of superfast broadband.

The spokeswoman said that the "superfast broadband" would be at least as fast as 25Mbps but it is not clear whether the government support for broadband rollout in the zones will come from the £530m the government has already pledged to invest to support the rollout of broadband in the UK.

The zones will have a 100 per cent business rate discount worth up to £275,000 over a five-year period and be subject to simplified planning regulations to make it easier for those businesses to grow.

The first 11 of these zones will be established in London, Birmingham and Solihull, Leeds, Sheffield, Liverpool, Greater Manchester, the west of England, Tees Valley, the North East, the Black Country and an area falling under the Derby and Derbyshire with Nottingham and Nottinghamshire Local Enterprise Partnership.

Skills

Technology teaching for 11- to 19-year-olds will receive a boost from the establishment of 24 new University Technical Colleges by 2014.

Technology companies will help set the curriculum for the colleges to ensure skills meet business needs. IT will be one of the technical subjects taught at the colleges and students will be able to specialise in it from the age of 16 onwards.

The government will also create up to 50,000 apprenticeship places over the next four years and an extra 100,000 work placements for young people over the next two years.

Research

A total of £200m will be invested in creating new Technology and Innovation Centres - starting with a centre focused on high-value manufacturing - which will integrate the activities of a number of existing centres in Rotherham, Coventry, Strathclyde, Sedgefield, Redcar and Bristol.

The government will fund nine new university-based centres for innovative manufacturing by 2012 - whose areas of research will include intelligent automation.

An additional £100m will be invested in...

...science capital development in 2011-12 to provide facilities for the commercialisation of research, accommodation for innovative SMEs and new research capabilities.

The £100m will be invested in university campuses and business centres including Norwich Research Park and Babraham Research Campus in Cambridge, and the development of the International Space Innovation Centre in Oxfordshire.

Another measure aimed at boosting tech research includes increasing tax relief for R&D work carried out by SMEs to 200 per cent in 2011 and 225 per cent in 2012.

Start-ups

Start-up businesses will benefit from the rate of Enterprise Investment Scheme tax relief being increased to 30 per cent from April 2011 and the doubling of the lifetime limit on capital gains qualifying for Entrepreneurs' Relief.

Osborne also announced a moratorium exempting businesses with fewer than 10 employees and start-up businesses from new domestic regulation for three years from April 2011.

Overseas investors will also find it easier to establish businesses in the UK as a result of the Prospective Entrepreneur visa that the UK Border Agency (UKBA) will launch in April 2011.

Entrepreneur visas will allow investment partners to access the UK and the minimum investment thresholds will be reduced from £200,000 to £50,000 from specified sources. To simplify the visa application process the UKBA will process 100 per cent of visa applications online by the end of 2012.

Osborne announced a range of other tax and regulatory changes to save businesses' money and lessen the administrative burden on enterprise.

Tax changes included a two per cent cut in corporation tax from April 2011 to 26 per cent, falling to 23 per cent by 2014.

The government will also scrap proposals for specific regulations that would have cost business over £350m a year, including not bringing forward dual-discrimination rules.

Industry reaction

The announcements in today's budget received a largely positive response from industry bodies.

Tom Wills-Sandford, deputy director general of UK IT trade association Intellect, said in a statement: "There are a number of positive announcements for the technology sector, including the increase in R&D tax credits for SMEs, commitment to help start-ups and SMEs, additional reduction to corporation tax and recognition of the need to develop a highly skilled and technically literate workforce.

"However, we were surprised that ICT and digital technology were not acknowledged as one of the key drivers of growth and urge the government to recognise that technology underpins all the growth industries named in the budget."

David Clarke, CEO for the BCS, The Chartered Institute for IT, said in a statement: "I welcome the government's ambition to make Britain the place in the EU to start, finance and grow businesses. This focus on entrepreneurship, innovation, research and development provides a real opportunity for IT professionals."

Karen Price, CEO of IT skills body e-skills UK, welcomed the Chancellor's commitment in today's budget to fund high-tech innovation in science and high-value manufacturing.

"Technology is at the very heart of these high-growth sectors, which as a result rely heavily on highly skilled IT professionals able to exploit technology to drive cutting-edge innovation and ensure that the UK is a world leader in these areas," she said in a statement.