Communications firms get tax relief in Budget

Tax breaks to encourage universal next-generation broadband rollout by 2012

Darling: Tax relief will help broadband rollout

Alistair Darling announced tax relief for the communications sector to support £10bn of investment in the UK's broadband network in the Budget today.

The chancellor said he would double the main capital allowance rate to 40 per cent for this year.

"I am allocating extra funding for digital investment, to help to extend the broadband network to almost every community," said Darling.

"This will allow us to deliver the vision set out in the Digital Britain report – making sure everyone can benefit from this communications revolution and create thousands more skilled jobs."

The government provided a solid commitment in the Budget to pursue universal broadband access, at a speed of 2Mbit/s, by no later than 2012.

"This target will allow virtually everyone to experience the benefits of broadband, including the increasing delivery of public services online," says the Budget report.

"It will also offer advantages to UK businesses, both those located in areas that will benefit from the network upgrade and those that make use of online channels to engage with their customers."

Darling also announced the creation of a £750m strategic investment fund to help the country seize the opportunities ahead.

The fund will provide financial support for emerging digital technology firms, among others.

John Higgins, director general at Intellect, welcomed these measures but said they did not go far enough to promote broadband and protect new high-tech businesses.

"Next-generation broadband, the crucial new infrastructure demand of the 21st century so far, is given some necessary but nowhere near sufficient help," he said.

"And the case for a public-private partnership on the 3i model is put out for review at a time when high-tech startups, which could be the engines of future growth, risk perishing in the cold economic climate for lack of venture and risk capital."

"In both these cases the time for reviews is all but over and the time for action is here,” he added.

As part of the budget the government approved a super-fast broadband infrastructure across South Yorkshire.

The project has been developed by Yorkshire Forward in partnership with the four Local Authorities of Barnsley, Rotherham and Doncaster and Sheffield City Council, who together have attracted European, regional, local and private investment of over £90m.