“What Should Be in the Budget to Promote Growth and Technology?”


“What Should Be in the March Budget 
to Promote Growth and Technology?”

 21st February 2012

 The Grand Committee Room, Westminster Hall, House of Commons

Download:  Note of Event: March 2012 Budget [PDF]

Download: Follow-Up Letter to the Chancellor [PDF]

 

Executive Summary

Although the technology sector is already a sizeable part of the British economy, the forum agreed that Government could take several steps to speed growth and increase the economic potential of ICT businesses. Universally accepted was the need to create a spirit of technological innovation, starting from a young age, in which both the opportunities and threats of digital life are well understood. Other key components of a good budgetary strategy would include lending, investment, employment, education, and regulatory flexibility.

You may find PDF downloads of the Note of Event and Letter to the Chancellor above; text versions are below.

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 Note of Event

The Chair, Stephen Mosley MP, opened the evening’s discussion with some fascinating figures: the IT and telecoms sectors create £81bn gross value to the national economy – 9% of overall GDP – and employ 1.5m people.

Sue Daley (UK & Ireland Government Affairs Manager, Symantec) said that while the use of new technologies often drive efficiencies and create growth opportunities, as technology develops so too do online risks. Finding ways to maintain and encourage the use of technology while also raising awareness of the importance of cyber security and how to use technology safely and securely were highlighted as key issues for further discussion.

Sue welcomed the recently published UK Cyber Security Strategy, in particular the strategy’s focus on government and industry partnership, as well as ways to support and encourage businesses to increase investment and take up cyber security measures.

Her suggestions for growth were:

1. Financial incentives for tech and tech security, similar to research and development credits, to support SMEs to invest in cyber security and educate employees about threats

2. Making available lending and investment to upgrade aging tech systems and software

3. Better investment in ICT in schools, including ways of being secure online

4. An enhanced strategy to encourage take up of cloud computing for a variety of purposes, including public procurement

Lord Richard Allan (Director of Policy in Europe, Facebook) then spoke, opening with the premise that ICT, particularly in comparison to the content sector, had not yet presented a coherent enough vision of its place, scale, and development potential for the economy.

He said the sector needed to confront the mistaken notion that parts of ICT, like social gaming, were “for entertainment only” and not actual businesses. Facebook, for instance, currently had 30m UK users, 16m of whom log on daily. In addition, Deloitte research found Facebook’s economic impact in the UK supports 35,000 jobs and boosts GDP by £2.2bn.

Lord Allan continued with three “big picture” ways in which ICT supports growth.

First, old businesses use new platforms to reach new markets. A community is made possible online, yielding economic activity.

Second, the digital sector feeds itself, creating new demand for platforms and devices throughout the value chain. This includes high-street phone and tech retail stores, and wireless chip production in places like Cambridge.

Third, new “apps” and services like Farmville and Spotify create new connections with resulting real-life economic activities.

He foresaw four ways in which the March budget could facilitate growth:

1. Government can stimulate the networked economy by providing more bandwidth and more infrastructure in more places

2. Regulators can adopt a lighter-touch regulatory footing to allow companies to “do the thing first” before having to comply with stifling regulations

3. Government can assist in funding and employment by encouraging later stages of venture capital funding (e.g. to nurture small businesses into medium-size businesses) and allowing for greater workforce mobility and global hiring.

4. Government can emphasise a diverse approach to skills education, particularly for youth, that encourages young people to develop their own products and be on the cutting edge

PICTFOR members were then invited to ask questions of the speakers. Topics included data protection, harmonisation of the single European market, piracy, the importance of diversity and gender balance, the geography of becoming a “smart city”, employment law and consultant contracting, government procurement strategy, and security demands.

 

Follow-Up Letter to the Chancellor

1 March 2012

Dear Chancellor,

We write to you today on behalf of the Parliamentary Internet and Communications Technology Forum, (PICTFOR). Together with leading CEOs and other key stakeholders, the Forum would like to submit for your consideration a series of recommendations for inclusion in your March Budget. We believe that these measures will create not only growth in the ICT sector, but also substantial knock-on benefits for productivity and innovation across the British economy.

PICTFOR is the lead parliamentary group in ICT. It is an Associate Parliamentary Group operating under official All Party Parliamentary Group rules. PICTFOR was established last year following the merger of the Digital Economy APPG and the Parliamentary Information Communications Technology Committee (PITCOM) which had been operating for 30 years prior to the merger. Our membership comprises Parliamentarians from both of the Houses and a range of technology companies.

Over the past month we have conducted two events focussed on how the March budget can stimulate economic growth for the ICT sector and the UK as a whole. The first event was a CEO Forum, which brought leaders at the highest levels of the UK ICT’s industry together with MPs and Peers. The second event was a speakers’ forum and question-and-answer session that included Lord Richard Allan of Facebook and Susan Daley of Symantec.

The overall conclusion was that ICT must be promoted by Government much more vigorously. Greater care was needed if the UK was to retain its skilled people in the sector, and this required improved education, greater investment, and improved incentives in lending, employment rules, and regulatory openness.

We ask you to please consider the following recommendation for the March budget.

1. Increase Government investment in broadband.  Government can stimulate the networked economy by providing greater bandwidth and infrastructure.

2. Increase Government investment in ICT in schools. Teaching standards and careers advice need improvement. Course content at schools and some universities is out-of-date. There is too much emphasis on the use of specific software packages rather than the underlying technology and innovative programming. A diverse approach to skills education is needed, particularly for youth, which encourages young people to develop their own products and be on the cutting edge.

3. Train and retain world class individuals: Presently, the UK has become a receiver of technology developed abroad which has slowed down the development of technology in the UK. We need to attract, train as well as retain highly skilled individuals by increasing Government investment in ICT apprenticeships. Government should also consider rewarding graduates who achieve a first class degree or 2.1 in Computer Science at university.

4. Develop a strategy to encourage take-up of ICT by SMEs and encourage their growth and development Government can assist in funding and employment by encouraging venture capital funding at later stages (e.g. to nurture small businesses into medium-size businesses) and allowing for greater workforce mobility and global hiring.

5. A statement from you emphasising the importance of ICT to the economy. The challenge for the Treasury is to deliver good project management in ICT via skilled contract and delivery managers.

Finally, we would very much appreciate it if you could provide a response covering the ways in which Treasury is working to enhance the ICT sector through the application of the above recommendations, which I will then be able to forward to the PICTFOR membership.

 

Yours sincerely,

 

Alun Michael MP

Chair of PICTFOR

Co-chair-CEO Forum

 

Stephen Mosley MP      

Vice Chair of PICTFOR

Chair of Speakers’ Forum

 

Graeme Hobbs

Co-chair- PICTFOR CEO Forum

Chairman, Motorola Solutions

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