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techUK leads industry call to tackle Digital Capital gap

techUK publishes an in-depth analysis that identifies the role digital technology must play to safeguard the UK’s economic recovery and future prosperity.

Building the Future We Need – a UK-wide report and a series of seven national and regional reports – highlights the urgent need for the UK to increase its digital capabilities to tackle the immediate challenges brought on by the COVID-19 pandemic, in addition to ensuring an innovation-led economic recovery.

Visit techUK’s nations and regions hub to read:

The UK-wide report, Strengthening Local Digital Capital: For a Levelled-up Economy, lays out recommendations for digital technology to deliver a levelled-up economy. It highlights that policies must extend beyond the most obvious levers of broadband and digital skills to encompass issues such as digital adoption, data ecosystems, innovation funding, and investment and trade support – the set of capabilities identified by techUK that comprise an area’s Local Digital Capital.

Even partially addressing the digital capital gap by improving digital adoption and digital skills among SMEs would boost the UK’s economic output by as much as £145 billion, creating 2.7 million new jobs, and increase combined revenues among SMEs by £325 billion, according to Sage. Fully closing the gap could provide even further benefits.

Local Digital Capital

Much like the concept of human capital, each component of Local Digital Capital enables individuals, companies, and the public sector to interact and work more effectively – producing something of economic value. The strength of each of these inputs impacts the strength of the local ecosystem.

The following eight components were identified by techUK's research as the essential inputs necessary for an area to benefit from digital innovation:

  • Effective collaboration and coordination – across the public and private sectors
  • Digital skills for all – skillsets that encompass everything from basic computer and internet literacy to cutting-edge knowledge about AI and quantum computing
  • Digital adoption – the uptake of digital tech by firms of all sizes leads to gains in efficiency and productivity and allows for more innovation
  • Data ecosystems that unlock the economic and societal power of data securely and effectively, enabling collaboration to respond and openly innovate to solve common challenges
  • Digital infrastructure that provides high-quality, high-speed and resilient internet connections – essential for participating and thriving in our digitising economy and society
  • Sustained access to finance and investment for firms
  • Support for research and innovation to sustain growth and productivity increases
  • Increasing uptake of digital platforms and electronic processes to make it easier for smaller firms to export to new markets

The report found that individual efforts to strengthen the eight components of Local Digital Capital will only deliver incremental gains – significant transformation across the UK nations and regions requires implementation in their entirety given their mutual reinforcing nature.

Policy Recommendations

The report lays out recommendations to tackle the long-standing, structural problem of the UK’s Local Digital Capital gap. The recommendations are aimed at governments in Belfast, Cardiff, Edinburgh, and Whitehall, as well as business groups and public sector organisations across our nations and regions:

  1. Improve Collaboration and Coordination
    1. techUK will work with partners to create a framework to understand and audit the depth of Local Digital Capital in each area.
    2. Fund small teams to facilitate open collaboration and coordination across all organisations involved in building Local Digital Capital.
    3. Establish a Chief Digital Officer forum for nations and regions to support national collaboration.
  2. Build 21st Century Skills for an Inclusive Workforce
    1. Review the Apprenticeship Levy to expand its role into a broader skills and training levy.
    2. Support the creation of short modular digital skills courses accredited by employers to open accessible and affordable pathways for people looking to retrain for digital roles.
    3. Launch a commission on jobs and automation to understand the implications of automation for the UK’s nations and regions.
  3. Drive Digital Adoption
    1. Deliver digital adoption incentives for SMEs.
    2. Create a Chief Digital Officer (CDO) credit.
  4. Strengthen Data Ecosystems
    1. Government should undertake an analysis of regional data ecosystems to identify how they can be strengthened through the National Data Strategy.
    2. Continue support for the Ministry of Housing, Communities & Local Government (MHCLG) Local Digital Collaboration Unit and Local Digital Fund.
  5. Deliver Digital Infrastructure
    1. Keep to the Government’s manifesto commitment of universal gigabit connectivity by 2025 to ensure that businesses and families can take advantage of the technologies this enables.
    2. For both fixed Gigabit broadband and 5G, bring forward full package of barrier busting measures.
    3. Undertake a competitiveness study into the UK data centre market to preserve and grow our world leading status as an international hub for the data economy.
  6. Strengthen Finance and Investment
    1. Develop a UK funding strategy with an explicit aim to support growth outside London and the South East.
    2. Map and create a one-stop shop of information for UK start-ups and firms seeking investment.
    3. Incentivise investors to discover opportunities across the UK.
  7. Harness Research and Innovation
    1. Better align research and development (R&D) strategies with economic growth objectives.
    2. Further the focus on place by investing in innovation infrastructure across the country.
    3. Identify technology clusters and develop investment partnerships to build centres of excellence and lead in strategic technologies.  
  8. Secure Trade Support
    1. Central Government should seek to ensure that all future free trade agreements contain SME chapters.
    2. Central Government should target support to regions and nations most likely to need extra support to adapt to new trading conditions.
    3. Devolved Governments, Regional Mayors and local authorities should strengthen the role of export advocates and export champions.


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