When I heard George Osborne’s Budget speech last week there was a real feeling of excitement. The excitement was about the Chancellor’s bold commitment to “turn Britain into Europe’s technology centre.” To deliver on this the Chancellor said that the UK needs the best technology infrastructure. Faster broadband, improved mobile coverage and help for the creative industries. “That’s what a modern industrial policy looks like,” he told the House of Commons.
I am delighted to hear technology being given space in the budget and see the challenge of making the UK the tech centre of Europe. We could also see hints of changes to other policies that I have been challenging the government on for some time such as the ill-designed Carbon Reduction Commitment (CRC).
I agree with the Chancellor that a modern industrial policy must include the steps he outlined; however, I do not agree that what he announced is the finished article. A complete “modern industrial policy” must be thoroughly based on IT throughout and we are still not there yet in the UK.
Of course budgets are primarily about tax and spend decisions rather than creating a comprehensive industrial policy and general measures such as the cut in corporation tax and a fund to help entrepreneurs will be welcomed by ICT companies operating in the UK.
However, if the UK is going to forge ahead of its European rivals, and let’s not forget that the Chancellor said we shouldn’t be complacent in this ambition but also aim to match world leading countries such as South Korea and Singapore, then we need more than just investment in infrastructure and support for the creative industries. We must take some real action to optimise the full potential of the entire UK economy.
I have been pressing for the government to put productivity at the heart of its growth strategy. Figures from the Office of National Statistics show that the UK’s productivity growth is below the average of the G7 and the productivity gap with the US is now at its widest since the mid 1990s. Narrowing these gaps must be central to a modern industrial policy. I set out my company’s views and recommendations in a “ Bootstrap Recovery” report earlier this year and made five clear recommendations:
- Understand how different sectors are performing and develop sector specific action plans
- Continue to focus on improving public sector efficiency by harnessing technology
- Keep UK consumers at the forefront of technology adoption and innovation
- Ensure the UK maintains a strong technology sector that can support and underpin innovation
- Ensure a coherent policy framework to underpin technology enabled productivity growth
We need a business environment in which companies of all sizes will invest to grow. Part of this picture is R&D. Although the Chancellor said the government supports R&D in Britain rather than abroad, some of our larger member companies tell us that the UK does not woo R&D investment in the same way as other countries. We hope the R&D related measures in the budget indicate that the government recognises the fact that there is fierce global competition for R&D investment from the large companies who drive much of the innovation in the sector.
This government has made great play of its commitment to small and medium enterprises and there were a number of measures announced in the budget, including the National Loan Guarantee Scheme. SMEs make up around two thirds of Intellect’s membership and many of them have told us that access to finance is a major barrier to them growing.
Of course this is a problem for many SMEs. However, technology businesses that have attended our regional roundtable events with the Bank of England tell us that they believe the problem is worse for our industry because banks struggle to understand the business model of tech SMEs.
The economics of tech firms can be more difficult to evaluate than ‘bricks and mortar’ businesses. Many tech firms are also highly innovative, developing new products and services for new and untested markets. Too often funding organisations focus on the possible risk element of innovation rather than the potential reward.
The Chancellor made mention of the school reforms being driven by Michael Gove and although he did not specifically reference changes to the IT curriculum, I would say this is a critical change. I have been pressing to move IT teaching away from simply showing pupils how to use word processing or spreadsheet programmes, to a subject which focuses on computer science, to inspire and equip young people to join the technology sector or to take a technical approach to other sectors.
The Chancellor’s ambition to make the UK the tech centre of Europe is a major challenge but one which the technology industry believes is achievable. I see this as a call to arms and a great opportunity for companies large and small to help drive productivity across every sector, create wealth and jobs. I now want to see government engage with the industry and ensure the Budget measures are built on:
- To make the UK economy the best place for technology adoption in all sectors from finance to pharmaceutical. The government should apply the concept of ‘digital by default’ to all sectors. In every policy initiative the government should ask its officials “where is the ICT part of this?”
- To rebalance our economy so that we can grow by exporting services and high value products that the rest of the world needs. The Chancellor rightly said we need to be globally competitive and UK based technology companies have a track record of this but in particular the smaller companies need more help to export that success to new markets
- To deliver the social benefits that ICT can provide. We need to increase the pace at which the public sector is using IT to deliver services to everyone. We need to ensure that education practice moves faster to excite and engage our young people about technology and to give them the skills to become the population of tech savvy workers and entrepreneurs we need to grow our own businesses and attract investment from around the world. It is lamentable that leading technology players visiting the UK feel that they have to point out the shortcomings in education and skills we have been talking about for so long now.
This budget and other initiatives are a good start and I welcome that but I will be knocking on the doors at 10 and 11 Downing Street and asking them to deliver the rest of the ‘modern industrial policy’ that the UK needs.