Chancellor George Osborne’s Autumn Statement 2014 began with the good news that the UK is the fastest growing economy in the G7, but it’s time to consider how these announcements will affect technology, business and the public sector.
Osborne intends to crack down on big businesses with an £8bn tax raid targeting banks and multinational technology companies artificially diverting UK profits overseas.
The Chancellor’s so-called “Google tax” intends to tackle tax avoidance rather than evading it and he claims it will raise £1bn from multinationals by placing a 25% tax on diverted profits.
However, the Confederation of British Industry (CBI) has warned against the UK going alone in such plans because the Organisations for Economic Cooperation and Development (OECD) has already been making plans to tackle the most aggressive schemes.
“International tax rules are in urgent need for updating, but the decision for the UK to go it alone, outside the OECD process, will be a concern for global businesses, and moving the goalposts on offsetting losses risks creating a worrying precedent,” claimed CBI director general John Cridland.
Besides cracking down on bigger firms taking advantage of tax-related loopholes, Osborne has set out to give smaller businesses a helping hand.
“While the FSB is delighted to see the double small business rate relief remain for another year, news that a full review of the outdated business rates system will happen is something we’ve long argued for,” Edmondson claimed.
“The current system is out of date and frankly needs to be put out to grass. It’s complicated, opaque, regressive and unresponsive to changes in economic conditions he added.
Osborne has also announced an increase in R&D (research and development) tax credit for small and medium businesses to 230% and 11% for large organisations.
“Innovation is key to growth and the government is right to encourage SMEs who invest in R&D through supercharged tax credits,” claimed Julian David, CEO of techUK, a representative body for digital companies and technologies.
David also claimed that the Chancellor has now made it clear that technology has a “fundamental” role to play the UK’s long-term economic future.
“The focus on skills, exports, science and infrastructure will all help the UK to compete successfully in the global digital economy,” the CEO said, but also said he feels that Osborne has missed some opportunities.
“The missed opportunity of today was the failure to provide greater backing of the UK as a world leader in the Internet of Things (IoT),” David claimed.
“This will be the next Internet revolution. Countries like China and India are now outpacing the UK in the race to seize this £4.6trn opportunity. We call on the government to look at this issue again,” he added.
There are also those who feel that Osborne has not done enough to address how technology and digital could be used to cut costs and improve public services.
“It had nothing for digital inclusion and very little for digital generally. There were some background investment measures, but there was nothing about digital as a great platform for innovation, for the economy and as a driver of government for everyone,” Onwurah claimed.
“There was a real omission of discussing digital as an investment for our future and there was absolutely no talk about how to use technology to redesign public services.
“[Osborne] could have talked about it in the context of the cuts still required,” she added.