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Industry’s failure to adopt new tech is exacerbating inequality, CBI warns

Business leaders’ failure to invest in new technology is driving down productivity and exacerbating income inequality, according to a new report from the CBI.

The confederation claims the productivity and income gaps between the UK’s highest and lowest performing companies have been widened by low uptake of new tech.

Carolyn Fairbairn, the director general of the CBI, said the UK needs more firms with the will to find and adopt tried and trusted technologies and management practices.

“The impact could be a £100bn plus uplift in the economy and a narrowing of income inequality by 5 per cent,” she said. “That would mean more opportunities for people and communities in every corner of the country.”

The report echoes calls made by Theresa May at the CBI’s annual conference earlier this month for businesses to up their spending on research and development (R&D).

She said that while the government has pledged additional funding for R&D, businesses in Britain were not contributing as much as those in rival economies.

“Today, for every £1 of government investment in R&D, British businesses invest around £1.70,” she said. “But in Germany, businesses invest around £2.40 and US businesses invest nearly £2.70.”

The CBI report also highlights the UK’s slow adoption of new tech in comparison to its European neighbours. In 2015, the proportion of UK firms adopting cloud computing was nearly 30 percentage points below Europe’s best performers, it found.

Meanwhile, the proportion of businesses with e-purchasing, Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) systems in the UK today is still below levels in Denmark in 2009, the CBI said.

Juergen Maier, CEO of Siemens UK, welcomed the report: “There is an emerging consensus amongst businesses, policy makers and academics that a key focus of UK’s industrial strategy needs to be on the digital technologies that will power the economy over the next decade.”

Phil Smith, chairman of Cisco UK & Ireland, also endorsed the report’s findings: “Today’s report from the CBI highlights the role that technology can play in addressing the UK’s productivity challenges, but at the moment we are simply not doing enough as nation. The fourth industrial revolution is a fabulous opportunity for the UK but only if we get our act together and get onto the front foot quickly.”