Budget 2015: In-depth industry reaction and analysis

Key Points

  • 2015 UK growth revised up to 2.5% by OBR
  • Chancellor pledges to end austerity by 2019/20
  • Tax free allowance to go up to £10,800 next year
  • New personal savings allowance for first £1,000 interest
  • A pledge of £40m to develop applications for the Internet of Things and Smart Cities.
  • Funding for wifi in public libraries and new national plan for ultra-fast broadband to nearly all homes in the country.
  • Digital tax systems to improve tax returns.
  • Investment into tidal energy

Following this afternoon's budget announcement from George Osbourne, several industry professionals have offered their thoughts and analysis:

IoT investment

Neil Crockett, CEO, Digital Catapult

“The Internet of Things (IoT) is a key area of growth for the UK's digital economy; a factor recognised by the Government with today's investment announcement.

"We are proud to be a partner in this project, enabling collaboration between innovators, organisations and academics who, together, can put the UK at the forefront of a new wave of business models that will make the UK more competitive and a better place to live. It means that the UK can be IoT leaders rather than just IoT consumers.”

Julian David, CEO of techUK

“Today’s Budget announcement demonstrates that tech is essential for ensuring the UK’s long-term economic success.

“The smart use of tech is fundamental for balancing the books, increasing productivity, creating new jobs and including and empowering people across the UK.

“By investing in infrastructure, innovation and entrepreneurship the government is driving growth, not just in tech, but across the whole UK economy.

“Combined with continued ambition for digital government, today’s package strengthens the UK’s position as a leading global digital economy.

“The UK is well placed to be a global leader in the development of the Internet of Things and the announcement of the £40 million investment will help accelerate the development of new innovative solutions for health, social care and smart cities.”

Broadband infrastructure

Greg Mesch, Chief Executive Officer, CityFibre

"The announcement today that the government will give further support to broadband underpins the importance of digital infrastructure to the UK economy.

"For too long, businesses across the country have struggled to grow and compete, suffocated by combination of both access infrastructure and lack of bandwidth. All the evidence shows that high-speed digital connectivity is essential to the success of a country.

"We welcome also the government’s ambition for ultrafast broadband, encouraging investment in faster connectivity to homes and businesses nationwide. However the target of at least 100 megabits per second is too low. As the British economy becomes more digitally based, it is vital that even faster Gigabit speeds are achieved.

"In infrastructure terms, the UK communications market is under performing, with one of the lowest shares of fibre-connected buildings in Europe, a result of a decade of underinvestment by BT. Investment in fibre infrastructure is critical for sustainable economic growth and future prosperity. Therefore, it is vital the government does all it can to encourage a competitive environment for fibre investment.

"CityFibre is one of the few companies that is both investing and building truly next generation ultrafast infrastructure with our rollout of UK Gigabit Cities. The CityFibre model is already stimulating ultrafast rollouts in York with the joint venture with Sky and TalkTalk and in Hull with Ultrafast dark fibre roll outs to mobile masts for Three and EE.

"A level playing field that enables the new generation of fibre infrastructure builders to invest in ultrafast broadband networks will generate greater levels of innovation, services, and GVA growth for towns and cities across the UK."

Digital tax systems

Andy Soanes, CTO of Bell Integration

“While taking the pain out of tax returns is a laudable aim, there will be a lot of people questioning whether it can be delivered successfully.

"The UK Government doesn’t have the best track record in this department: from initial problems around online tax returns, through to Universal Credit and the NHS National Programme for IT, there is an inglorious history of IT projects that have gone over-budget, over-time, and/or simply failed to deliver on what was promised.

"There have been numerous reasons given for these failures, from a more complex implementation than expected, to having to build on top of extremely complex legacy systems, to projects ploughing ahead with fashionable techniques and technologies simply because they are en vogue, rather than suitable.

"To avoid the same fate, those responsible must ensure they have full control over the project. This includes knowing exactly what they are capable of now; and exactly what they want, resisting the temptation for mission- or feature-creep as the project progresses. It includes knowing their limitations, and what skills they have or need to get the job done. And it includes retaining control of the project, rather than letting responsibility spill out among multiple consultants and contractors.

"If these measures can be followed, then we might still see the digital tax system deliver what it promises, when it says, within its budget.”

Krishnan Chatterjee, Global Head of the Digital taskforce at HCL Technologies

“Digitalisation is the future, so the announcement by the Government today around a new digital tax system is welcome news. However, it is no mean feat for a traditional organisation like HMRC to fully digitalise its processes.

"Key to success will be defining what the citizen experience around tax needs to be in the digital age. The challenge is that once this journey is embarked on – citizen expectations will continually keep getting redefined.

"Inculcating this culture of continuous innovation and change is perhaps going to be the largest challenge – the enablement of technology to redefine the starting point of a citizen experience focused tax system is relatively simpler.”

Michael Allen, Solutions VP at Dynatrace

“Building on the successes of the digital tax system to enable UK citizens to file their returns as they go rather than filling out an annual assessment is a major step in the right direction for HMRC. But it will also be complicated.

"We’ll be moving from a once a year process to a system that is connected to a host of other autonomous systems from employers, banks and accounting packages, all of which are pumping in real time data, which then has to be continuously processed to provide a daily accurate account status for individuals or businesses.

"These individuals and entities will regularly be logging in to understand their tax position and so workload will be less predictable and susceptible to performance challenges.

“In addition, even though it’s a major undertaking, a five-year delivery time is simply too slow for a digital business project. By the time the updated system arrives, user expectations and technology capabilities will have moved on significantly and it will almost certainly be behind the times.

“Going digital isn’t just about putting together an online service; it’s about increasing organisational agility and time-to-market, through the ability to respond quickly to changing user needs and rapidly evolving digital channels. As such, digital services need to be deployed incrementally through the DevOps approach, with IT development and business operations teams aligned, working side-by-side to build a clear understanding of what the user requirements and technological capabilities are.

"Without this approach, all we’ll end up with is an expensive and outdated tax returns system that isn’t fit for purpose and will likely need to go straight back to the drawing board for another refresh in five years’ time.”

Tidal energy investment

Zahl Limbuwala, CEO of Romonet

“The announcement is interesting and could make the UK a world-leader in tidal energy projects. However, the subsidies needed to get this project going are eye-watering, considerably greater than that for new nuclear.

"These subsidies are bound to be passed on the end user, emphasising the need for energy efficiency in the data centre sector, both for existing and future builds.'

“With energy representing up to 80 per cent of a data centre’s costs, cutting this number by any amount can result in huge savings. Investment and design decisions should be driven by this; for instance, how will altering the way in which air intakes operate change the Total Cost of Ownership of the data centre?

"Indeed, in some cases operational failures have turned out to actually reduce costs and energy use, by revealing systems that were ultimately unnecessary. Similarly, data centre power usage should take into account how much of the building will be standing empty.

"If a data centre never rises above 70 per cent capacity, or if it invests in cooling systems over and above what the servers inside demand, then a large proportion of its energy costs will be spent for little or no actual value. As a result, an organisation looking to reduce its energy bill first needs to look closer to home.

"Alternative energy sources are an essential part of the energy mix but the cost of developing these sources mean the data centre industry must remain fixated on squeezing every last kilowatt hour of efficiency out of their facilities.”