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Chancellor Philip Hammond has announced plans to launch a review of the UK’s productivity gap, and has called on businesses to embrace digital technologies.
Speaking at the CBI annual dinner on 22 May, Hammond said the UK “must embrace digital technology” and invest in both skills and training, as he promised to upgrade the country’s digital infrastructure.
In October 2017, the government-sponsored Made Smarter review found that uptake of manufacturing automation in the UK was “disturbingly slow compared to most other developed nations”.
To combat this, Hammond said the government would “provide £20m for a pilot in the North West to support SME [small and medium-size enterprise] manufacturers to adopt industrial digital technologies, such as robotics and data analytics”.
“We are extending our backing for the Made Smarter digital manufacturing strategy,” he added. “Made Smarter will help to maintain our position as a global leader in the digital revolution.”
Last year, a CBI report highlighted the need for UK businesses to adopt existing technologies to bridge the country’s productivity and pay gap.
“Low take-up of readily available technologies and management best practices is driving the UK’s productivity problem,” it said.
“While the UK’s best-performing firms are highly innovative, best practice must reach a greater range of businesses, improving productivity through the adoption of technologies and ideas that are proven.”
Some of this will be achieved through infrastructure, with Hammond announcing a new target to have “full-fibre to the premises connections being available to 15 million premises” by 2035. However, he added that the UK government could not solve the nation’s productivity challenge on its own.
“It is not only about infrastructure and skills, it is also about management,” he said. “Britain, of course, has many world-leading companies with globally competitive productivity, but there are also far too many that could be doing a lot better.”
Hammond said that today (23 May), he will publish a “call for evidence into why some businesses aren’t keeping up and don’t learn from the best, seeking ideas for how government and industry can work together to help more firms realise their potential by taking best practice”.
He added: “In parallel with the call for evidence, I will announce with Greg Clark, the business secretary, further steps to boost firm-level productivity.”
The government is also investing £5.6m to help SMEs to adopt “modern management practices and simple digital technologies” through two pilot programmes run by the Productivity Leadership Group’s Be the Business movement.