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Industry and government must collaborate to drive the digital economy, says techUK CEO

Industry and government must work together to grow use of technology across the UK economy, according to techUK CEO Julian David

Tech companies need to help those outside the digital sector to increase productivity and adopt technologies, according to techUK CEO Julian David.

Speaking at the trade body’s annual Supercharging the Digital Economy event, he also called on government to do more to help drive digital infrastructure investment, skills and research and development (R&D).

One of the big challenges the country faces is Brexit, which David said means “we have to decide in the UK what are we going to do on our own standing to make the UK a great place for people to invest and succeed, and actually be a leader in the world economy.”

“That means it’s got to be digital, we’ve got to drive the digital economy. There is no choice,” he added.

The productivity challenge is huge, and the lack of adoption of technologies among UK businesses is costing billions of pounds.

A report by the Confederation of British Industry (CBI) last year found that “low take-up of readily available technologies and management best practices is driving the UK’s productivity problem”, but by reducing the inequality between firms’ productivity and technology adoption, that could add more than £100bn to UK gross value added (GVA). 

The digital sector is already doing well and growing much faster than any other industry, but “it could do more”, according to David.

“It could transform the other sectors,” he said, adding that although the productivity challenge doesn’t “exist for digital companies”, it’s a different picture outside of the sector.

Fewer than 20% of companies use software that can share information across their organisations, he said, adding that “it’s time now for all of us, including the government, to do something about this”.

Research has found that only 13% of all UK companies have adopted basic technologies such as using computers, internet, websites, e-purchasing and e-sales, David added.

This drive to increase technologies among businesses in the country was echoed by business secretary Greg Clark, who in a video address to the conference said small businesses lag behind in adopting basic technologies.  

Clark added that he is calling on big businesses to “help smaller companies learn the lessons from bigger companies” and help them take a first step towards their digital future.  

However, David said the government needs to accelerate the pace of investment in digital infrastructure. 

It has already promised that fibre-to-the-premises (FTTP) broadband connections will be made available to 15 million homes in the UK by 2025, and a full national FTTP network will be in place by 2033, but David added that policy needs to join up as well. 

“It is crazy that we increase the business rates of infrastructure if they go with fibre rather than the old copper. We can’t at the same time say put this stuff in and then say, ‘OK, now post more money’. It doesn’t make the investment case,” he said. 

When it comes to R&D, David added that more could be done. The government has currently set a target of 2.4% of GDP spend on R&D, which currently sits at 1.7%, but David said the UK needs to “up its game”. 

“Government needs to join itself up and to put the right measures in place,” he said, adding that it has to get up to date with tax credits for R&D, moving them into the cloud and AI world. 

Apprenticeships failings

He also used his speech to criticise the government’s apprenticeship scheme, which came into effect at the beginning of April 2017, and requires firms with a payroll worth more than £3m to contribute to the apprenticeship levy.    

The government hoped its new strategy would create three million apprenticeships by 2020 and said the new system should help to fund higher-quality science, technology, engineering and maths (Stem) apprenticeships. However, that has not exactly been the case. 

“We told them this isn’t going to work, it’s going to be terrible. They did it, it didn’t work and it was terrible,” said David. 

He added that research from the Open University found that by end of February 2018, only 8% of the levy paid by businesses was used for training, and while 15% of the budget is allocated to admin, “the rest of it is sitting in the chancellor’s pot”. 

“That’s got to change. We have got to get flexible, we’ve got to get business taking charge on training,” he said.

David also called on industry to stop becoming consumers of skills, and become producers of skills instead. “We should be producing skilled people who can go out and contribute to other businesses,” he said.

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