Driving technology adoption across the economy is the key to the success of the Industrial Strategy
techUK has responded to the Government’s consultation on its Industrial Strategy Green Paper setting out how by driving the growth of the tech sector and increasing technology adoption across the UK will be central to the success of the Government’s plans.
The tech sector is the United Kingdom’s modern economic success story, with the industry's contribution to the UK economy growing by 25% between 2010 and 2019, and now adding over £150 billion per year gross value added. Within this, techUK’s own members employ 1.1 million people and had a combined turnover of £329 billion in 2023 with an estimated annual growth rate of 10%.
The Industrial Strategy Green Paper rightly recognise the role of the tech sector in the UK economy, with ‘digital technologies’ being one of the eight key growth sectors identified in the document.
In its approach to assessing parts of the economy that should receive their own sector deals we were also pleased to see the Government set out its intention to take a range of measures into account. Not just the overall size and growth rate of particular business sectors but also assessing the role of foundational technologies and how these will contribute to the economy. This positions key technology sub-sectors such as semiconductors, AI and Quantum to win support from the Strategy.
Growing technology clusters as shown in techUK’s 2024 Local Digital Capital Index, has the potential to deliver significant benefits to local economies, through greater employment, higher paid jobs and the positive spillovers these create. Technology companies and clusters can be found right across the nations and regions, from semiconductors in South Wales to cyber security in the North East. By targeting specific sub sectors with their own growth plans and working with devolved Governments and mayors to support regional clusters, the industrial strategy has a key role to play in spurring growth across the United Kingdom.
How the Strategy can drive digital and AI adoption across the UK:
However, while there is a welcome focus on supporting specific high potential sectors the Strategy has much less of a focus on driving technology adoption across the economy.
The Green Paper correctly identifies the need to raise overall productivity as central to the Government’s growth objectives and it is vital that it does not underestimate, the role of technology adoption as a driver of this.
Technology has huge potential when it comes to supporting the wider economy in every part of the UK, including in helping address the UK’s longstanding economic issues of low productivity businesses and under investment.
UK SMEs have the potential to add an estimated £232 billion to the economy if they can raise their levels of digital adoption. Basic tools, including CRM systems, accounting systems and automated HR systems and much less widely used by UK businesses than our G7 counterparts, meaning these companies sell less and grow slower.
To reverse this techUK has called for the Government to set out a Digital Adoption Plan to look at how to use incentives such as regulation, capital reliefs and improving how HMRC works to increase digital adoption amongst SMEs. We are currently working through the Government’s Digital Adoption Taskforce to put forward an independent report on how to address this problem, and we hope to see a full response from the Government ahead of the publication of the industrial strategy.
As well as focusing efforts to digitise the UK SMEs we also need to ensure that at the highest performing end of the economy the UK is staying at the forefront of technology adoption, in particular when it comes to Artificial Intelligence.
Estimates suggest that AI could boost UK GDP by £550 billion by 2035, an equivalent to raising the annual growth rate by 2% a year, with many benefits concentrated in our most innovative business sectors, financial service, pharmaceuticals.
However, in order to seize the potential of AI to significantly drive UK economic growth, decisive action is required now. Hindering AI adoption would prove to be costly, with estimates suggesting that delayed widespread AI adoption by just five years could reduce AI’s economic impact by over £150 billion. If the UK does not take advantage of the benefits offered by AI, another country or countries will do so instead, and the UK economy and exchequer will miss out on the significant growth dividend offered by AI across the economy.
In light of the significant economic potential offered by AI adoption, the final Industrial Strategy must support the deployment of AI by reducing the barriers to uptake and deployment. For example, by making reforms to planning rules to speed up the construction of important digital infrastructure, working with businesses to tacking the shortage of digitally skilled workers, creating a permissive regulatory framework and taking action to bring down the highest energy costs in Europe.
Beyond this through the forthcoming Cross Government Review of Digital Technology the Government should work closely with businesses to understand any barriers to AI adoption and how these can be overcome, either through regulatory clarity or targeted support where this might be needed to increase adoption. techUK is already in contact with the review team to ensure we can contribute and will be leading our own work focused on AI adoption ahead of the publication of the Industrial Strategy.
As well as taking an increased focus on AI and digital technology adoption, the Industrial Strategy must ensure the UK’s digital economy is as resilient as possible, including through improved measures around cyber resilience. The Green Paper failed to mention cyber security once despite the attacks on key institutions that have plagued the UK in the last year. The UK itself is only as secure as its weakest point, and ensuring the UK has the cyber resilience necessary to face 21st century threats is not an optional extra, but essential for national security and resilience.
Going forward
techUK is glad to have contributed to what is the start of an important conversation about the future of the UK’s economy, which will ensure the UK Government and private sector are both pulling in the same direction. techUK, throughout the conversation, will be ensuring that the power of a partnership between the UK Government and the tech sector to boost growth and productivity is fully recognised in the final Industrial Strategy document.
You can click here for our full response to the Industrial Strategy Green Paper, where we delve further into the topics above and examine possible remedies for the current barriers to tech sector growth.
You can also read here the results of our Local Digital Capital Index 2024 to see how we can support regional tech clusters across the UK and the benefits these bring.
If you have any questions on this, please contact [email protected]
Neil Ross
Neil Ross
As Associate Director for Policy Neil leads on techUK's public policy work in the UK. In this role he regularly engages with UK and Devolved Government Ministers, senior civil servants and members of the UK’s Parliaments aiming to make the UK the best place to start, scale and develop a tech business.
Neil joined techUK in 2019 to lead on techUK’s input into the UK-EU Brexit trade deal negotiations and economic policy. Alongside his role leading techUK's public policy work Neil also acts as a spokesperson for techUK often appearing in the media and providing evidence to a range of Parliamentary committees.
In 2023 Neil was listed by the Politico newspaper as one of the '20 people who matter in UK tech' and has regularly been cited as a key industry figure shaping UK tech policy.
- Email:
- [email protected]
- Twitter:
- @neil13r
- Website:
- www.techuk.org/
- LinkedIn:
- https://www.linkedin.com/in/neilross13/
Margherita Certo
Margherita Certo
Margherita is the Head of Press and Media at techUK, working across all communications and marketing activities and acting as the point of contact for media enquiries.
Margherita works closely with the staff at techUK to communicate the issues that matter most to our members with the media.
Prior to joining techUK, Margherita worked in public relations across technology, public affairs, and charity, designing evidence-based strategic campaigns and building meaningful ties with key stakeholders.
- Email:
- [email protected]
- Phone:
- 07462 107214
Archie Breare
Archie Breare
Archie Breare joined techUK in September 2022 as the Telecoms Programme intern, and moved into the Policy and Public Affairs team as the Team Assistant in February 2023 and as Public Affairs Manager in September 2023
Before starting at techUK, Archie was a student at the University of Cambridge, completing an undergraduate degree in History and a master's degree in Modern British History.
In his spare time, he likes to read, discuss current affairs, and to try and persuade himself to cycle more.
