The Digital Economy Contents

2Measuring the digital economy

11.The digital economy is not a conventionally marketed economic activity, and GDP figures do not take account of economic benefits of the digital economy, such as time saved, increased choice, and lower cost of products. The Standard Industrial Classification (SIC) Codes also omit companies in business and domestic software, architectural activities, engineering, and engineering-related scientific and technical consulting.9 The Office for National Statistics said that “development and innovations in the digital arena mean more and more businesses are finding ways to become digital, and this in turn makes measuring the digital economy problematic”.10 Diane Coyle, Professor of Economics, Manchester University and fellow of the Office for National Statistics, told us that if the sharing economy cannot be measured, that has implications for other areas connected with the digital economic activity, such as regulation, taxation, and work benefits. She told us that “we really need to understand what people are doing so that we can help them do it more and grow this sector of the economy more”.11

12.The gaming industry is a sector within the digital economy not properly represented in official data. Jo Twist, CEO of Ukie (UK Interactive Entertainment), told us that the gaming industry “created no jobs and no economic value”, according to official statistics.12 Yet the gaming industry is the sixth largest consumer market in the world and globally estimated to be worth over £80 billion by next year.13 According to Jo Twist, as soon as the gaming industry has its own Standard Industrial Classification (SIC) codes that represents the gaming industry as a digital business, “we can shout loud and proud about that message”.14

13.Good policy making, tax policy and the allocation of resources require high-quality data. This does not exist at present in the digital economy, and policy making cannot therefore be reliably expected to support as much as possible the digital economy, one of the UK’s key drivers of improved productivity. The Government’s Digital Strategy should be informed by, and policy measures should be driven by, reliable data. We recognise the difficulty of measuring the digital economy, but the Government should look to the work of the Office of National Statistics, and explore ways of collecting real-time data in the digital economy, and ensure that established Standard Industrial Classification (SIC) codes are agreed and used, in different parts of the digital economy.

9 Jonathan Portes, The UK’s digital economy, September 2015

10 ONS, What defines the Digital Sector? October 2015.

11 Q 377

12 Q 413. The document Jo Twist was referring to was commissioned by Creative Scotland, and entitled “Economic Contribution Study: an approach to the economic assessment of the arts and creative industries in Scotland”, published in June 2012. It quoted official statistics from 2010, and stated “due to rounding of the gross value added (GVA) results, Computer Games is recorded as zero […] but the sector does not record GVA of less than £10 million”.

13 Q 405. Chris van der Kuyl told us that the gaming industry was not the sixth largest consumer market in the world, but the third: “If one looks at the top ten console games in the world, we are not sixth; we are third, I think, if you look at actual sales”.

14 Q 413

© Parliamentary copyright 2015

15 July 2016