Budget 2011: Winners and losers in tech

As the dust slowly settles on George Obsorne's Budget the technology industry has responded with a mixed reaction to the measures announced.

The government unveiled a series of initiatives designed to boost the economy, including a moratorium on "domestic regulations" for three years for startups and SMEs with 10 members of staff or fewer, as well as a reduction in corporation tax.

It also unveiled plans to create 21 enterprise zones that will offer reduced businesses rates and superfast broadband connections, and an increase in technical colleges that will offer training for workers to help meet the UK's skills shortage.

Quocirca analyst Clive Longbottom told V3.co.uk that the corporation tax reduction will be of far greater benefit to large enterprises than small firms owing to the split between the two levels of tax each pays to the government.

"Corporation tax drops by one per cent in April and then remains level [for SMEs] as opposed to the two per cent in April followed by further one per cents for the big guys," he said.

"As SMEs are the heart of the UK you'd think that the government would look at doing more for them."

Longbottom also questioned whether enterprise zones will be too bureaucratic to be of real use, and was sceptical that Osborne had delivered anything that will offer a real benefit to businesses.

"The enterprise zones introduce a layer of complexity in something that is already complex. If I wanted to set something up, I will now have all these groups vying for my time and taking up time in making me jump through hoops," he said.

"There may be more money available for big corporations due to tax being lowered, but nothing is really there to encourage the SME, or to help the tech vendors in dealing with the wider economic impacts that they are suffering from."

However, Neil Hedges, a senior manager at IT recruitment firm Robert Half Technology, was more positive and said that SMEs will benefit from the Budget in the areas of innovation and growth.

"What is particularly promising for the IT industry is the research and development tax credit for small business. Many companies who put initiatives on hold during the downturn now have additional incentives to get new projects underway," he said.

"In addition, tax breaks will free up cash flow and allow companies to invest in IT infrastructure. This is beneficial for the IT job market as highly skilled professionals are required to help manage growth initiatives and get key projects back on track."

Tom Wills-Sandford, deputy director general of Intellect, was also positive about many of the announcements, although he warned that the government should do more to promote the sector as a key economic growth area.

"We welcome the increase in R&D tax credits, commitment to help startups and SMEs, additional reduction to corporation tax and recognition of the need to develop a highly skilled and technically literate workforce," he said.

"However, we were surprised that ICT and digital technology was not acknowledged as one of the key drivers of growth, and urge the government to recognise that technology underpins all the growth industries named in the budget."

Wills-Sandford added that one way the government could do this is to ensure that any patent box scheme, whereby tax on profits is reduced if they derive from patents, would apply to the technology sector.