Tax breaks for telcos, UK broadband funded by the BBC and a £750 million investment fund for digital and tech businesses were amongst the digital highlights in chancellor Alistair Darling’s Budget speech Wednesday. The speech put meat on the bone of the Digital Britain review, which has advocated 2Mbps UK-wide connectivity and is due to report finally this summer. That speed may seem paltry, but telcos may be reluctant to install even that in rural areas they consider commercially unviable…
– Broadband: Telco tax breaks?: To meet Digital Britain’s pledge, Darling promised “enhanced tax relief to support investment of £50 billion this year, including £10 billion of investment in the vitally important communications sector”. That sounds like a sweetener being offered to telcos, but as yet it’s unclear exactly what form that investment will take. Repeated attempts to find out more from Treasury officials have so far been unsuccessful which suggests that even they don’t have a firm idea yet.
– Broadband: from BBC switchover funds: Darling wants to allocate more toward broadband roll-out money from funds unspent in its Digital Switchover Help Scheme, which BBC is charged to operate to help people transition to digital TV. Though earmarked at £600 million by then culture secretary Tessa Jowell in 2006, the National Audit Office last year estimated £250 million would remain in the pot by 2012. The trust says it accepts the idea of universal broadband.
There was no talk of investment in the high-speed, next-generation networks that would really kick-start a digital UK, but Darling did say the government would review Ofcom’s powers as it tries to convince telcos to open their new nets to rivals following their investment.
– Investment fund: A £750 million new investment fund for technology and digital businesses will “provide financial support, focusing on emerging technologies and regionally important sectors”, particularly the new media hubs of Manchester and Leeds. Gordon Brown yesterday revealed (via BBC News) the money will be in the form of a government-backed lending bank. The government already runs the Enterprise Finance Guarantee Scheme, which organises loans to small and medium businesses from banks such as Royal Bank of Scotland – but this new money will specifically “provide the finance for more difficult and more risky start-ups for high-technology businesses of the future“.
More generally, Darling predicts that the UK economy will shrink by 3.5 percent this year and will grow 1.25 percent next year.