UK software investment has provided chancellor Gordon
Brown a much needed additional boost in his attempt to raise the
nation’s productivity.
Today’s Financial Times reports that government
statisticians have admitted they had seriously understated the
contribution of software investment in the overall productivity
figures.
As a result, revisions in the way business investment in
software is measured will instantly boost figures for economic
output, business investment, and overall prosperity, reports the
FT.
The changes will raise future years’ gross domestic product
(GDP) by 1% - more than half the level of economic growth last
year. The change will also revise UK annual growth rates upwards by
almost 0.1% for all years going back to 1992.
The Office for National Statistics (ONS) said the value of
software developed within companies was five times higher than had
been first thought.
The ONS said its estimate for such investment in 2003 was likely
to rise from £2.5bn to £13bn.
ONS officials told the Financial Times that estimates
for software investment had been based on outdated assumptions
stemming from a Department of Trade and Industry survey of the
computer services industry between 1971 and 1991.
The new method will use current employment surveys to estimate
the number of people working in the software sector, along with
assumptions about how much of their time is sorting out present IT
problems versus developing new products.
The changes are likely to enter official statistics in summer
2007, said the FT.
The results will put the UK's total software investment on a par
with other countries and show that UK in-house software development
as a share of GDP is higher than in the US.
IT industry association Intellect said the Treasury should now
give the sector more prominence in its deliberations.