David Cameron's high-tech hype

Silicon Marshes: good for Google. What about us?

The government wants to see a hi tech rival to Silicon Valley in London s east end

It's easy to mock the government's plans for Silicon Marshes, but that doesn't mean we shouldn't.

Here's a quick round-up of what's happening. East London will become a high-tech haven, with businesses getting a helping hand from Google, Facebook and other tech titans.

The government will review intellectual property laws to make them nicer, and there will be a visa programme enabling firms to bring in talented folks from other countries without worrying about immigration caps.

On paper it all sounds very impressive, if a bit naive. With the best will in the world, Shoreditch won't ever be Silicon Valley's mini-me as long as the UK remains one of the most highly taxed and most expensive countries on the planet – but when you look at it in a bit more detail there are some worrying questions.


First up, why London? The UK's a big place, but there's nothing in the high-tech plans for the rest of the country. I'm sure that's gone down well in Dundee, where the beleaguered games industry won tax breaks from Labour that were promptly cancelled by the ConDem coalition.

Secondly, intellectual property laws. In opposition, Nick Clegg railed against the Digital Economy Act, arguing that "it was too heavily weighted in favour of the big corporations". Clegg promised to abolish it and the Tories to amend it; the second they gained power they changed their minds.

Now, it seems, we're going to review our laws to make them more Google-friendly – including, it seems, our patent laws. The prospect of US-style software patents is a chilling one, with big firms using them to stifle competition and patent trolls effectively running legal extortion rackets.

This post on the patent mayhem surrounding Android should give you an idea of how crazy the US system has become.

Thirdly, there's the involvement of Facebook and Google. There's something disturbing about seeing the two online giants so close to government, because our government appears particularly bad at getting them to stick to the law.

A hub and a home

Still, it's nice that Google will create "an Innovation Hub in East London" and that Facebook "has agreed to create a permanent home in East London for their successful Developer Garage programme".

Do you know what would be even nicer? If Google and Facebook paid tax properly.

Both firms use – legal – tax avoidance schemes to avoid paying the taxes they should, with Google managing an effective tax rate of just 2.4%.

By channelling its UK revenues through Ireland, Google avoids an estimated £110 million per year in UK tax. Facebook is building a similar system of avoidance.

Google and Facebook aren't the only ones happy to help the UK's high-tech sector. David Cameron announced that "Vodafone has committed to bring its Vodafone Ventures investment fund to the capital".

That's the same Vodafone whose shops are currently being picketed over claims of massive tax avoidance. Campaigners say that an "unbelievable cave-in" by the taxman let the firm avoid paying a six billion-pound tax bill, although Vodafone denies the allegations.

Is it just me, or is there something horribly unethical about all of this? Having Google and Facebook throw Shoreditch a few crumbs while avoiding hundreds of millions, even billions of pounds in tax is a bit like someone stealing your dinner and then offering you a half-chewed chip.

Games industry group TIGA reckons that tax breaks for the videogames industry would create 3,500 jobs and bring in £200m for the treasury over five years.

If they're right, just imagine how many jobs could be created if the government's high tech heroes actually paid what they should.

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