CBI: IT spend can boost productivity

UK manufacturers should look to greater IT investment to boost their productivity, according to the Confederation of British Industry.

Although leading UK manufacturers were world-class in the way they apply IT to improve performance, there was a long "tail" of UK producers that needed to look at their level of IT investment, said Nick Brayshaw, chairman of the CBI Manufacturing Council.

"There is already a lot of data showing that Britain is behind the US in its application of IT to boost productivity," he said. "When you look at the point of greatest divergence in productivity, it comes in total factor productivity, which includes technology investment."

He said much of the lack of IT investment was down to poor capital spending in the bulk of UK manufacturing. "If you look at the level of UK industrial investment, it has been woefully low. The US has much more focus on investment and productivity and gets the benefits from it."

Brayshaw called for tax breaks for capital investment in technology. The Treasury first introduced tax incentives for research and development spending in small businesses, then expanded the scheme to all businesses. "We would like to see a similar 'tax credit' scheme for capital allowances," he said.

Investment

IT investment in the UK is growing faster than in any other Western European country, with 4.2% growth expected in 2006, up from 3.5% in 2005, according to the 2006 report from the European Information Technology Observatory, which was published last week.

The report said the UK's IT growth is ahead of the US (3.9%) and Japan (1.1%), but behind the rest of the world, which includes China and India (6.8%). Britain has the third-highest per capita spend on IT, behind Sweden and Denmark.