Published by Rt Hon Matthew Hancock MP, Minister of State for Digital and Culture on 4 October 2016
- Our Work
- The Reformer Blog
1 August 2016
As a country, we can be proud of our creativity and ability to innovate. However, when it comes to translating those significant strengths into productivity and economic growth, we underperform.
The United Kingdom ranks second in the world global innovation index and is one of the leading digital nations on the planet, with the highest digital contribution to GDP of all European nations, as highlighted in the Digital Economy report. Despite this, since the recession, the country has experienced the second slowest growth rate amongst G7 countries. The UK faces a great challenge and needs to find a way to harness the potential offered by digitisation and technology.
Two thirds of people in the UK are working for businesses that are below the average productivity level of companies in the same industry and of similar size. The challenge, does not only affect businesses, it also has an impact on people’s lives. We’re now hearing that for the first time, the next generation will earn less over a lifetime than their predecessors, which doesn’t paint a picture of a particularly competitive nation.
In April 2015, Sir Charlie Mayfield and Sir Richard Lambert bought some of Britain’s most senior business leaders together, creating the Productivity Leadership Group, to discuss how businesses could solve the productivity problem. Since we have been working with government and industry to explore what practical actions they can take to share learning and secure improvements.
One thing has become very clear: digitisation is one of the biggest levers the UK has for improved productivity.
A couple of weeks ago, Matt Hancock MP, the newly appointed Minister for Digital Policy and I addressed an audience on this very topic. I’m sure that it’s no surprise, we were in firm agreement that now more than ever, we need to help “Britain reach our best future”. A future where the UK continues to compete at the top, with UK businesses able to achieve their full potential.
It’s about how we make all industries more productive through digitisation. The opportunity for the UK is tremendous; the Productivity Leadership Group equated that if we were able to improve productivity of our less productive companies by only 10 percent, we could achieve an extra £130 billion in gross value added (GVA) for the UK. That is the cost of 260 flagship hospitals or four times our current level of military spending. We are not going to get this type of improvement by focusing on driving efficiency from existing business models. Rather we need to embrace digitisation to create additional value for the economy from new products and services for a global market.
The Digital Economy report is not the first, and it certainly won’t be the last to reinforce the need for action and self-belief in the UK tech sector to help solve some of our greatest challenges. In the last few weeks alone we’ve seen rallying cries from some of the industry’s most influential – Baroness Martha Lane Fox called for us to “use the power of the Internet as a force not just for business growth, but social cohesion and growth”. Julian David, CEO of techUK emphasised that “The UK tech sector…will be vital to the UK’s success in a post Brexit world. There is now a national imperative to put a plan in place that allows the UK tech sector to power the UK back to growth”. I couldn’t agree more, there has never been a better time.
Phil Smith, Chairman, Cisco UK & Ireland