Government 'hindering knowledge economy'

Industry trade body Intellect claims the withdrawal of support for subsidised PCs is typical of the government's failure to encourage a knowledge economy

John Woodget, president of Intellect and managing director of Intel UK, has accused the government of failing to support the UK's knowledge economy.

Woodget cited the recent decision to cut funding for the Home Computing Initiative (HCI) as an example of the kind of mistakes the government is making in this area.

Speaking at the launch of an Intellect report, Navigating the New Economy, on Wednesday, Woodget said that much of the current government action around measuring and developing a knowledge-based economy in the UK was short-sighted and insufficient.

"The home computing initiative is indicative of the tactical thinking of the government. It is one small example but a very horrifying one," Woodget said.

The HCI allowed companies to loan PCs to staff as a tax-free benefit, with the fee deducted from their salary each month. But in the budget in March, Chancellor Gordon Brown scrapped the tax break. Businesses that loan PCs to their staff for personal use at home will now face a tax of up to £200 per employee as well as additional national insurance payments.

As well as highlighting the government's shortcomings over the HCI, Woodget also explained that the Navigating the New Economy report identifies the gaps in the government's measurement systems for calculating how well the UK is progressing from an asset-based to a knowledge-based economy.

"In order for the UK to lead we need measurements to give an accurate picture of where we are so we can make the right policy decisions," he said.

Intellect defines a knowledge economy as one "where the generation and use of knowledge has come to play the predominant role in the creation of national wealth".

Factors that can be used to measure how well the UK is progressing towards creating a knowledge economy include the abundance of creative skills, successful innovation, broadband availability, and the take-up of e-government services, according to Intellect.

Also speaking at the launch was Professor Jim Norton, senior policy adviser on e-business and e-government for the Institute of Directors. He said the IoD doubts whether government can actually do much to help develop the knowledge economy, but it could certainly help to stifle it if not properly informed. "Part of our interest here is making sure the government doesn't inhibit or block developments," Norton said.