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Broadband connection voucher SMEs generate substantial ROI

London SMEs that received help in getting online through the government’s broadband connection voucher scheme in 2015 are generating much more money, according to a report

The combined increases in sales and cost savings generated by London-based small and medium enterprises (SMEs) that installed faster broadband connections under the government’s broadband connection voucher scheme will be worth £1.7bn in gross value add (GVA) to the economy over two years, according to new figures.

The Department for Culture, Media and Sport (DCMS)-backed broadband connection voucher scheme was open to SMEs in 50 towns and cities around the UK and was successful enough that it was wound up six months ahead of schedule in October 2015 after exhausting the funding set aside.

About 55,000 businesses took advantage of the scheme, which provided them with grants worth up to £3,000 to cover the cost of installing superfast broadband connections.

Statistics compiled for the Greater London Authority (GLA) have now shown that in the capital alone, SMEs are likely to generate £2bn in additional sales within 24 months, while saving just under £1bn and creating 32,000 new jobs.

The combined sales increases and cost savings represent a 20% increase in GVA, a measure of economic wealth creation similar to GDP minus taxes and subsidies. For the economy of London itself, this represents £430m in additional GVA and more than 10,000 new jobs over the first two-year period.

The GLA said this represented an extremely positive ROI on the scheme, generating nearly £24 for each £1 invested, and a cost per job of over £2,200.

Half of the respondents to the survey – which was carried out by economic development and regeneration consultancy Adroit Economics alongside digital agency The Fifth Sector, broadband market intelligence service Point Topic and the University of Manchester – said faster broadband had been “transformational” to their businesses.

“Upgrading to faster broadband brings significant financial benefits to SMEs and results in substantial economic uplift,” said Adroit managing director Steve Sheppard.

“The findings of this survey, its analysis and assessment, provide strong evidence that the benefits to SMEs and resulting financial and economic impacts locally, regionally and nationally of the use of faster broadband are high, representing the equivalent of a third of current turnover. This is far higher than current global broadband literature suggests.”

More productive workers

Voucher recipients said that besides cost savings and increased sales, they had seen staff time savings, improved staff skills and proficiency, and more productive home and mobile workers.

“Small businesses that adopt faster broadband see immediate changes in their way of working as people in the organisation seize on the opportunity to improve their skills and ‘work smarter’,” said Iain Bennett, managing director at The Fifth Sector.

“The technology unleashes latent productivity, which provides a lasting and growing benefit to the individuals and firms concerned – a really important finding at a time when businesses and policy-makers alike are striving to find new ways to boost economic performance, increase jobs and improve skills.”

Point Topic CEO Oliver Johnson said the data enhanced his organisation’s understanding of the benefits of business broadband, adding that it was helpful to have well-researched and concrete inputs for future business models.

“Long to medium term, it appears there is at least an order of magnitude more to be gained than many projections had forecast, and even short term there is a much stronger case for more bandwidth in business,” he said.

Read more on Telecoms networks and broadband communications

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