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By | Mark Ballard 29th March 2006 12:26

MPs botch HCI rescue

Home computer tax break fixed

The tax break for people who buy home computers through their wage packet was scrapped last night, despite protests from businesses endangered by the short notice of its termination.

The Home Computing Initiative, which since its revision last year has provided home computers to half a million people through the payrolls of 1,250 firms, had enticed roughly 50 entrepreneurs to build businesses entirely round the scheme.

Last Wednesday's budget stated that the scheme would be axed on 6 April, giving business just 10 days to prepare for the shock. The House of Commons was divided over whether to ratify the idea, but did so after a vote by a majority of 66.

Arguments made in HCI's defence included the benefit it brought the economy by helping increase the computer skills of the work force.

"If one wanted a justification of the accusation that the Chancellor was an analogue politician in a digital age, the withdrawal of that form of relief would be it," Sir George Young, Conservative MP for Hampshire North West, told the house.

He summed up the frustration of the many businesses who had exploited the tax break and now faced the prospect of returning to the combative PC market, unaided.

"I cannot understand why, at two weeks' notice, against a background of the Department of Trade and Industry promoting the scheme on its website, it is suddenly to be withdrawn," he said.

"I hope that there might be second thoughts, and perhaps a postponement of the scheme for two years to allow the benefit to filter through," he added.

But it was not to be, even though many Conservative MPs stood with him after the order went out from shadow Chancellor George Osbourne yesterday to vote to keep the scheme.

Liberal Democrat treasury spokesman Vincent Cable had a quick round of spot the hypocrisy, which is so much more fun in the age of the internet, public relations and misinformation.

He noted a statement the Chancellor made in support of the home computer tax break in 1999, when he introduced it: "We hope [it] will encourage businesses to loan computers to their employees... there are real benefits to businesses, employees and the wider community."

That doesn't score any points though - it was like a lazy swing that sends the tennis ball into the net. There was not any great support for HCI as a means of encouraging people to buy home computers and, while a couple of MP's quoted irate constituents who ran businesses that had become reliant on the tax break, there was no campaign of any note in their support.

But the tax break was not designed for the benefit of entrepreneurs, it was intended to help poor families buy computers so they did not get left the wrong side of the digital divide.

It was left to Martin Horwood, Liberal Democrat MP for Cheltenham, to present the defence for HCI as a means of bridging the digital divide, which he couldn't do without name-dropping his old man, Don Horwood, who helped build the Colossus code-breaking computer during World War II, However, families least likely to be afford to buy home computers were excluded from the scheme. The same laws that protect their income with a minimum wage prevent their employers from deducting payments from their wage packets for "benefits in kind", such as home computers bought through HCI.

The government, said Des Browne, chief secretary to the Treasury, repeated the government's assertion that its tax resources could "better target" poorer people.

"The home computer initiative was never intended to subsidise those who can already afford computers," he said, adding that people had begun abusing the scheme by buying second computers and games consoles.

Now that's just greedy.®

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