The Budget – good or bad for the IT security industry?

For smaller players in the IT security industry, the good news is that the rise in capital gains tax was nowhere near as bad as previously expected.

A rise in CGT was inevitable, Infosecurity notes, as it was integral to the text of the coalition agreement between the Conservatives and Liberal Democrats – as well as of the LibDems' manifesto.

The actual CGT picture that has emerged is more complex and favourable to investors. CGT will stay the same for middle-income earners, namely those people earning less than the upper limit of the income tax rate band.

For higher earners, it will rise to 28% – a percentile that is far more modest that originally predicted.

Most importantly of all, Infosecurity notes, is the Chancellor's decision to implement the change from midnight last night, since it precludes a fire sale of IT and company investments by backers of the IT industry in general.

The optimism on CGT is not reflected elsewhere in the budget, however, as Tony Dyhouse, cybersecurity director of Digital Systems Knowledge Transfer Network, says that there wasn't a lot said in the budget about cybersecurity specifically.

But, he adds, this doesn't mean that cuts won't have an impact. Most companies and employees will now pay higher tax rates and, on top of the cuts the industry has already seen, the government is seeking an additional £17 billion of departmental budget cuts by 2015.

"All of which means less money to go around", he said, adding that people tend to overlook security at the best of times – and with less money available there is a risk that security will become increasingly ignored.

"But security is actually an excellent area for companies to save money through better use of budgets. Arguably the most effective measures for addressing security problems are training, education and awareness raising. These can all be achieved relatively cheaply", he went on to say.

According to Dyhouse, rather than big initiatives to develop next-generation security technologies, he says he would like to see security programmes – both public and private – focused on educating the public and employees about the value of data and the risks of its loss.

"With fewer resources to absorb errors, and hopefully a greater willingness of the ICO to issue fines for failure, we may even see companies and individuals waking up to the fact that they need to take security more seriously", he said.

According to the Digital Systems KTN cybersecurity expert, the support announced for entrepreneurs is also promising.

"Against a background of austerity, there will be more demand for cost-effective, innovative solutions, and hopefully academics and policy makers will work more closely with business to develop these. This could stimulate both economic growth and improvements in the area", he said.

"The coming years will be tough, but such environments have been known to lead to some of the most effective and innovative solutions. If we work together, share information, and educate those who need it, this could be one of those times", he added.

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