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Giles Derrington

Head of policy - European exit, techUK

To build an economy “fit for future” we must focus on the present

In recent weeks you’ve heard a new phrase coming from Conservative politicians – “fit for the future”. It’s not yet as well-worn as George Osborne’s classic “winning the global race”, but when Philip Hammond stands up on Wednesday to deliver his budget the phrase is likely to get a good airing.

The tech industry is at the forefront of building that future. It is the fastest growing part of the economy, and more and more sectors are now seen as part of the digital economy. When it comes to the automotive industry, for example, the race for driverless cars means that competition is no longer just between the likes of Ford, Nissan and Volkswagen, but Google and Tesla too. In fact, the line between the ‘digital economy’ and the plain old ‘economy’ is now so blurred it could be fronted by Damon Albarn.

Yet, despite the rapid digitisation of our economy, many businesses, particularly the smallest, still lack even basic digital processes. Far from being fit for the future, too many businesses aren’t yet ready for the present. They have no ‘digital foundations’ on which they can build. As of 2015, only 50.1 per cent of UK businesses had a website. New advances, such as the use of the cloud to store data more cost efficiently, are only used by 49 per cent of all companies and 39 per cent of micro-businesses.

That’s why techUK laid out an urgent need to focus on demand-side measures to get small businesses to digitise in our Budget submission. This includes government providing leadership to help SMEs know where to look for technologies that would benefit their businesses. Often, a lack of technological expertise among purchasing managers drives ill-informed decisions. The government should also take a long hard look at the taxation treatment of new ways of working. Specifically, the tax treatment of subscription-based services, such as cloud storage space, compared to more traditional hardware models, where businesses own their own bespoke server.

Failure to digitise the bulk of smaller businesses that make up our economy has a real impact. These technologies are productivity drivers that can help lower business costs, unlocking an estimated £18.8 billion in revenue growth for SMEs. Even more importantly, these basic digital processes are required if businesses want to take advantage of further productivity boosting tech that is becoming readily available. The benefits of Artificial Intelligence and machine learning can’t be achieved if businesses haven’t already digitised their data meaning the UK risks falling even further behind if we don’t crack this wider digitisation challenge.

All this means that if the Chancellor really wants to build an economy ‘fit for the future’, he should start by focusing on the present, helping businesses build the digital foundations they need. With all the uncertainties of Brexit ahead, there is a need to lay the strong foundations our economy needs. Waiting until the next Budget would be too late.

So, during the Budget on Wednesday, techUK will be looking for a clear signal of the government’s commitment to digitising our economy. It could make a difference to the way millions of UK businesses operate, and to our whole economic future.

The great American Computer Scientist, Alan Kay, once said “the best way to predict the future is to invent it”. The UK tech sector will continue to be at the forefront of that invention, but it will be up to the Chancellor whether the UK truly embraces it.