Tag: Budget

Channel happy with the budget

nintchdbpict0003399380517His government might be staggering like a Glaswegian who was turned into a zombie on his way home after a seven day bender, but Philip Hammond’s  budget will be broadly welcomed by the Channel.

This is mostly because of the Chancellor’s decision to plough more cash into AI, broadband and 5G and increasing the numbers of computer science teachers.

For those who came in late, Hammond announced he is investing £500 million directly into tech for AI, 5G and full-fibre broadband and is backing it up with more investment into training a further 8,000 computer science teachers.

In his speech, the Chancellor said a tech business was founded in the country every hour, and its ambition was for that to become every half hour.

“So today we invest over £500m in a range of initiatives from Artificial Intelligence, to 5G and full fibre broadband”, said Hammond.

He added that it was also committed to improving the education system, “Computer science is also at the heart of this revolution”.

“So we’ll ensure that every secondary school pupil can study computing, by tripling the number of trained computer science teachers to 12,000″, he said.

KPMG UK, tech sector head Tudor Aw said that commitments to emerging technology such as 5G, AI and data science are to be applauded.

“It is important that core technology businesses are not forgotten in the chase for the next shiny toy. The UK has strengths in ‘old-school’ tech sub-sectors such as software, IT services and semiconductor technology”, he said.

Insight UK IT applications director said that AI was becoming fundamental to an organisations’ business strategy – particularly when it comes to managing changing customer expectations.

Resellers cautiously welcome the budget

gosborneResellers have cautiously welcomed some parts of the Budget, saying elements could help smaller businesses and the IT industry.

However, they have warned that by giving benefits and breaks to SMEs and start ups larger companies may find room for complaint.

The comments come as Chancellor George Osborne set out plans to drive the economy by offering SMEs reductions in National Insurance.

The latter was described as a “tax off jobs,” offering every company in the UK the option to take the first £2,000 pounds off their National Insurance bill.

Additionally, he said the Coalition will provide funding for any external advice companies needed.

According to Osborne, roughly 450,000 small businesses  could end up paying no jobs tax at all under the new outlines. He said that for those starting their own businesses and looking to employ staff, “a huge barrier would be removed” when the legislation passes next April.

Responding to the budget, a source at a large reseller told ChannelEye the £2,000 credit against employer’s NI contributions is “a great initiative” and “could also help start-ups too”.

“Not so good for bigger firms who may in the long run face competition from the up and coming businesses with smaller overheads offering cheaper IT services,” the source said.

Another added: “I suppose it’s good that the budget is proposing a cut in corporation tax and boosts for SMEs, however, whether that will pay off remains to be seen.”

Both resellers queried plans to hold off infrastructure plans until 2015, which the Chancellor hinted at when he claimed that, although the government planned to support the economy with the infrastructure it needs, he would only look at throwing £3 billion a year at broadband and mobile telephony investments from 2015 to 2016.

“The reduction in the growth outlook means there will be no new money for infrastructure until 2015/16,” this large reseller told us. “This means we are left in limbo as an economy. This will have a knock on effect on the IT sector, which thrives through new initiatives and businesses.”

The other added: “The Budget is more focused on helping smaller businesses, so surely delaying this could have a knock on effect on the economy”.

Unemployment rose during November 2012 to January

Jobcentre-plus-During the months of November 2012 to January 2013, unemployment rose, the Office of National Statistics (ONS) has said.

In its latest repor,t the organisation said the figures shot up by 7,000 to 2.52 million, compared to the previous three months.

The North East of England fared the worst with a top unemployment rate of 9.8 percent, while the East and South East of England saw the lowest figures with 6.6 percent.

Last month the organisation found that the number of people claiming Jobseeker’s Allowance fell by 1,500 to 1.54 million.

The number of unemployed women increased by 5000, while youths also suffered. Figures stood at 993000 unemployed 16 to 24-year-olds in the latest quarter, up by 48000 from the three months to October.

The ONS also revealed that average earnings for those in employment increased by 1.2 percent in the year to January.

Unison general secretary Dave Prentis said the latest figures showed that the government had “failed every single one of these [unemployed] people and it has failed our country.”

He said instead of the bedroom tax or cutting child benefit, the government could dramatically reduce the welfare bill by getting people back to work.

“The Government should use today’s Budget to take bold action to fuel growth. Taxing banking bonuses could provide vital funds to stop the jobs carnage in the public sector and provide the jobs and growth our economy so desperately needs,” he added.

Budget will have knock on effect on disties

ossyThe dreaded UK Budget could have a negative impact on margins in the industry, distributors have said.

With the UK teetering on the brink of a triple-dip recession and the country’s once-cherished AAA credit rating lost, the Budget, set to be announced on Wednesday is expected to bring bad news to businesses.

Chancellor George Osborne has already said the Budget will contain measures to “help those who aspire to work hard and get on” but would also set out the scale of further curbs on public spending from 2015.

Distributors have also suggested Osborne will once again announce rises in fuel as well as on metals, both factors that could cause ripples in the channel.

One told ChannelEye: “The budget is always a time everyone dreads. If we’re talking from a business perspective then there’s a lot that we can look forward to. Firstly is probably a rise in fuel costs, which of course will have a detrimental impact on our business, meaning we’ll have to raise costs for our customers.

“Components, especially those with certain metals will also rise, meaning suppliers will either have to raise their costs or, in an unlikely case, keep costs the same and risk smaller margins. Either way it’s not good,” he added.

Another distie also shared the same views, embellishing on the components that could be affected, telling ChannelEye: “Every year the budget has some impact on us and our clients. Some metals, be it iron or copper could be taxed at a higher price meaning suppliers will have to raise their costs having both a knock on effect on the channel and the consumer, who I imagine will also be facing more financial issues due to other parts of the budget.

“However, this may also drive more competition with suppliers trying to keep costs low. This means it’ll drive down lower prices which will affect our margins.”

Others were however, more concerned about fuel costs, claiming that this would be the
“biggest problem for [the industry],” as they just kept “rising and rising”.

“Possibly component prices but I don’t think this will have as much impact as petrol costs,” he told ChannelEye.

“Either way it’ll mean we, and clients will be putting prices up to ensure we keep to our profit margins.”

However, others were less concerned taking a more “Ce la vie” approach.
“It’s not all bad,” one said.

“Yes, there will be price hikes in fuel and components. But, this is all relative to the way inflation works. Everything is going up, it’s the way of the climate. I think people are almost expecting to having to pay more, whether that has a knock on effect on what they buy remains to be seen.”

BRC calls on Osborne to boost the high street

ossyThe British Retail Consortium (BRC) has laid down the gauntlet to George Osborne, urging him to use the budget to save the flagging high street.

The organisation has said that changes such as freezing business rates and cutting bureaucracy could go some way to helping the high street recover, after a tough couple of years.

Yesterday, a separate report by the Local Data Company (LDC) found that the percentage of empty shops in the country’s 650 most popular high streets nationally hit 14.2 percent – roughly 35,500 vacant properties – in December.

Analysts also warned that this number could rise as a result of big brands such as HMV and Jessops going into administration.

Now the BRC has waded into the ongoing crisis demanding that something is done. It said in a report, written in partnership with Oxford Economics, that the retail industry made an “essential contribution” to investment, jobs and growth.

However, operating costs within this industry have risen by a fifth since 2006 and it is centrally-driven costs that have risen most rapidly.

Costs of doing business are claimed to have increased by 21 percent to £20 billion since 2006, while annual operating costs have shot up by from £96 billion to £116 billion, the BRC said.

However, it pointed out that over the same period retailers sales values increased by just 12 percent meaning that the industry faced job losses and store closures.

In its submission, ahead of next month’s budget, the BRC has now said the Chancellor must intervene to support jobs and growth. It wants to see business rates frozen in April 2013 as well as utility bills cut, which the company said will help businesses stay on premesis.

A ‘One in, Two Out’ regulation, which is said to ensure any regulations being scrapped in one sector are replaced with new rules is also being pushed.

The organisation also wants to see a central coordination on implementation of the Portas Review recommendations.