Futile rally for HCI victims

Tax break's last stand

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Supporters of the Home Computer Initiative tax break will tonight stage a last ditch attempt to save those computer suppliers that depended on the scheme.

But The Register has learned that neither the Treasury, which scrapped the scheme, and the Department for Trade and Industry, which ran it, has any intention of resuscitating it.

Nevertheless, business backers in Parliament will also be seeking answers to questions about the decision during the second reading of the Finance Bill tonight, as it left hundreds of computer sellers high and dry without warning.

The demise of the scheme has reportedly sealed the fate of two HCI specialist resellers already, the latest reported in Computer Reseller News today, amid growing fears that many more could go belly up now the government subsidy has been cut.

There were 100 firms registered as members of the HCI Alliance, a trade association. About fifty of those were totally dependent on the tax break to sell computers.

Yet HCI was scrapped by a Treasury decision taken at the last possible moment before the budget last month. There was no consultation and no warning that would have helped suppliers look for alternative sources of income.

One HCI supplier, Bizapp, had spent half a million pounds developing software to help other firms sell computers with HCI tax-breaks. Rob Howes, Bizapp managing director, said he may have to face putting it into administration.

"That was my money I put in, earned and paid tax on," said Howes, whose last business selling software to City traders dried up after 9/11.

Over 100 MPs have been lobbied to back the firms that face bankruptcy after HCI's demise. One thing they want to know is what communication took place between the DTI and Treasury before HCI was scrapped.

The DTI was rumoured to have known nothing of the Treasury's decision to cut the tax break. Yet a DTI source told The Register that there had been high-level agreement; only civil service soldiers knew nothing.

An attempt by the Confederation of Business and Industry to persuade the Treasury to keep the tax break in place is unlikely to be given any credence. They have no agenda to promote the interests of the poor, said a source close to the scheme.

Indeed the DTI was told by the Treasury that there would "categorically" be no revival of HCI or its tax break.

Both departments are instead consulting with industry to find an alternative way to get computers into the homes of people who do not usually have access to them at work - the elderly, those on the minimum wage and the unemployed.

Although some low paid workers were benefiting from HCI, those on the minimum wage and those without salaries with the 1,250 participating employers were excluded by laws that protect their income from unscrupulous employers. A Low Pay Commission report released just days before the budget report that announced that HCI would be scrapped suggested there might be better ways to help the poor get computers.

HCI suppliers and representatives of the poor and those stuck on the wrong side of the digital divide will be meeting with the DTI next month to discuss alternatives.®

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