Digital skills crisis Contents


1.When Sir Tim Berners-Lee invented his distributed ‘information management system’ at CERN in 1989, no one anticipated the transformative impact of the digital revolution. In almost every aspect of our lives, we use digital products and services—in finance, health, education and entertainment. These products and services enrich our lives, opening up countless new opportunities: life-saving research innovations, access to knowledge and all sorts of ventures from grassroots campaigns to tech start-ups that begin in spare rooms only to emerge as ‘unicorn’ businesses.

2.We can be proud that the UK is already a global tech hub and a world leader in e-commerce: the online retail market accounted for 8.3% of GDP in 2010.1 If as a nation we want to secure our position as a digital world leader, we need to ensure that investment in infrastructure, skills and cyber-security keeps up not only with the exponential growth of the sector but also with its restless innovation and creativity. Digital skills have no single definition, but have been variously described to include a general ability to use existing computers and digital devices to access digital services, “digital authoring skills” such as coding and software engineering, and the ability to critically evaluate media and to make informed choices about content and information—“to navigate knowingly through the negative and positive elements of online activity and make informed choices about the content and services they use”.2 These skills are no longer sector specific. The rise of the Internet of Things, Big Data and robotics means that 65% of children entering primary school today will be working in roles that do not yet exist.3 This means that our education and training system—whether teaching the next generation or continuously upskilling the existing workforce—will need to be more agile if it is going to meet the challenge of future-proofing the workplace.

3.The UK will need 745,000 additional workers with digital skills to meet rising demand from employers between 2013 and 2017,4 and almost 90% of new jobs require digital skills to some degree. Some 72% of employers state that they are unwilling to interview candidates who do not have basic IT skills.5 As a result of emerging technologies, there is also a growing demand for high level digital skills in areas such as cyber-security, cloud and mobile computing and data analytics.

4.The Tinder Foundation have outlined six main benefits of widespread digital skills—earnings potential, employment, communications, transaction, time-saving and NHS cost savings.6 They calculate that over the next 10 years, an investment of £1.65 billion in skills and devices would reap benefits to both individuals and the Government of up to £14 billion.7 The Centre for Economic and Business Research estimate that providing basic digital skills for 790,000 people over the next year would realise £12 million a year in NHS cost savings and a further £31 million from fewer job-seeker benefit payments and higher income tax and NI receipts. For the individuals concerned, the benefits would amount to £314 million in terms of earnings, employment, transaction, communication and time saving gains.8

5.Basic digital skills are also a powerful social enabler, opening up opportunities for improvements in education, better health care services, connecting people to their communities more effectively and helping adults find work. Furthermore by increasing employment and giving small businesses the confidence to do more business online, digital skills can help boost the UK economy.9

6.Since 2010, the Government has provided £36 million to fund programmes “to help people gain the basic digital skills they need to access the benefits of being digital”. These programmes, it said, have helped more than 1.5 million people to develop their digital skills, and it anticipates that a further one million adults will be supported over the five years from 2014.10 The Government published a Digital Inclusion Strategy in 2014, setting out a two-year time frame to reduce the number of people digitally excluded by 25%. It identified four barriers: a lack of access to the internet, missing skills to be able to use the internet, a lack of motivation, and a lack of trust.11 The Strategy identified actions that government, private, public and voluntary sector stakeholders need to take to reduce digital exclusion:

7.The Government has identified a number of specific initiatives which bear on the digital skills agenda. In our Big Data Dilemma inquiry, it highlighted:

During our current Digital Skills Crisis inquiry, it added:

8.However, despite the Government’s initiatives and the demonstrated productivity benefits that digital skills offer, two-thirds of ‘datavore’ businesses report that they have struggled to fill at least one vacancy when trying to recruit analysts over a 12 month period,16 and 93% of tech companies find that a digital skills gap affects their commercial operations.17 Despite the vacancies, some 13% of computer science students are still unemployed six months after graduating.

9.As we seek to address the shortage in high level digital skills, digital exclusion remains stubbornly high with an estimated 23% (12.6 million) of the UK population lacking basic digital skills.18 Of these, 49% are disabled, 63% are over 75 and 60% have no formal education qualifications. A higher percentage of men have digital skills (80%) than women (74%).19 The Tinder Foundation have highlighted that an estimated 46% (5.8 million) have never used the internet at all.20 The digital skills gap is costing the UK economy an estimated £63 billion a year in the lost potential for additional GDP, and consumers who are not online are missing out on average savings of £560 a year.21

10.Age, gender and socio-economic status are factors that contribute to digital exclusion.22 An estimated 10% of the population may never be able to gain basic digital skills because of severe disabilities or poor literacy skills.23 Older people and the severely disabled are at particular risk of becoming digitally excluded.24 For disabled people, data from the Office for National Statistics (ONS) show that 50% of all digitally excluded people have a disability as defined by the Equality Act.25 As well as being more likely to have poor digital skills in general, disabled people are also more likely to have no access to the internet. According to the ONS, just 51% of people with a disability are internet users, compared to 84% of the general population.26

11.Some 4.5 million of the 12.6 million people in the UK who do not have basic digital skills are actually in work and therefore have employers who could help them develop their skills needs.27 Lloyds Banking Group’s most recent Business Digital Index survey showed that as many as 1.2 million small businesses in the UK lack basic digital skills. The economic and social case for investing to close the digital skills gap could not be clearer.

Our inquiry

12.The Government’s initiatives do not amount to a strategy. In February 2015, the Lords Select Committee on Digital Skills published a report calling for action in six areas, as follows:

The Lords Committee recommended that the Government develop “an ambitious Digital Agenda”, to be led by the Cabinet Office, reporting on progress by summer 2016. Their report described improvements needed to deliver these changes, though with few specific recommendations for implementation. The Government’s response to the Lords Committee in July 2015 promised details on the Government’s digital agenda in the autumn of that year, and suggested that it would be produced alongside or soon after the 2015 Spending Review.29

13.Subsequently, in our recent Big Data Dilemma report we highlighted a “digital skills crisis”.30 We described the risk of a growing data analytics skills gap as big data reaches further into the economy, and warned that “this not only has economic implications but also puts the quality and security of data at risk”.31 We decided to undertake our current inquiry on digital skills, under which the big data analytics discipline falls, to identify specific urgent actions needed to deliver the vision put forward by the Lords Committee a year ago. We have focused on the digital skills gap and its impact in two main areas: in the workplace and the role of higher education and apprenticeships (Chapter 2), and in schools (Chapter 3).

14.Our wider aim, however, has been to highlight issues that the Government should take into account in its forthcoming Digital Strategy (Chapter 4). During our Big Data Dilemma inquiry, Ed Vaizey told us in December 2015 that the Government’s Digital Strategy would be published towards the end of January 2016.32 The Government launched a consultation at the end of December 2015, seeking views on a ‘refreshed digital strategy’ which would focus on four themes: “unlocking digital growth, transforming government, transforming day to day life and building foundations”.33 With the Digital Strategy still not produced as we concluded our current inquiry, we expect the Government to take our report into account in the document it eventually publishes.

15.Digital exclusion has no place in 21st Century Britain. While the Government is to be commended for the actions taken so far to tackle aspects of the digital skills crisis, stubborn digital exclusion and systemic problems with digital education and training need to be addressed as a matter of urgency in the Government’s forthcoming Digital Strategy. In this report, we address the key areas which we believe the Digital Strategy must deliver to achieve the step change necessary to halt the digital skills crisis and bring an end to digital exclusion once and for all.

16.We have not addressed infrastructure issues such as access to the internet and the services it makes available because the Culture Media and Sport Committee is undertaking an inquiry into internet connectivity, and examining the measures needed to improve accessibility. Suffice to say, this infrastructure provides the cornerstone of our digital economy with connectivity playing a pivotal role in creating a digitally inclusive society. Superfast broadband services are available to 83% (24 million) of UK premises and 46% (13 million) are covered by 4G mobile services, but there are still areas where fast broadband services remain unavailable.34

17.We announced our inquiry in December 2015, and received 70 submissions and took oral evidence from 17 witnesses, including from academia, businesses, think tanks and education establishments, as well as Ed Vaizey MP (Minister of State for the Digital Economy) and Nick Gibb MP (Minister of State for Schools). We also visited Google Garage at Manchester Central Library (see Annex). We would like to thank everyone who contributed to the inquiry.

2 BCS DIG0001; Fujitsu DIG0006; Ofcom DIG0050.

3 World Economic Forum, How technology change the future of work (February 2016)

4 O2 and Development Economics, The Future Digital Skills Needs of the UK Economy (2013)

6 Tinder Foundation and GoON.UK, The economic impact of basic digital skills and inclusion in the UK (November 2015)

7 Tinder Foundation and GoON.UK, The economic impact of basic digital skills and inclusion in the UK (November 2015)

8 Department for Culture Media and Sport DIG0060 para52

9 Tinder Foundation and GoON.UK, The economic impact of basic digital skills and inclusion in the UK (November 2015)

10 Department for Culture Media and Sport DIG0060

11 Cabinet Office and Government Digital Service, Government Digital Inclusion Strategy (December 2014)

12 Cabinet Office and Government Digital Service, Government Digital Inclusion Strategy (December 2014)

13 Department for Business, Innovation & Skills and Department for Culture, Media & Sport, BIG0069

14 The Information Economy Council was set up by the Information Economy Strategy (June 2013)

15 Department for Culture, Media and Sport, DIG0060

16 Nesta DIG0048

17 techUK BIG0086

18 Ipsos Mori for GoON.UK and Lloyds Banking Group, Basic Digital skills UK report 2015, (October 2015)

19 Ibid

20 Q4

21 Strategy& (formerly Booz & Co), This is for everyone – the case for universal digitisation (November 2012)

23 Cabinet Office and Government Digital Service, Government Digital Inclusion Strategy (December 2014)

24 Cabinet Office and Government Digital Service, Government Digital Inclusion Strategy (December 2014)

25 Office for National Statistics, Statistical bulletin: Internet users 2015

26 Ibid

27 Q4

28 House of Lords, Make or break: the UK’s Digital Future (February 2015)

30 House of Commons Science and Technology Committee, The big data dilemma – Fourth report of session 2015–16 (February 2016)

32 Ibid, Q248

33 Department for Culture, Media and Sport, UK Digital Strategy – the next frontier in our digital revolution (29 December 2015)

34 Ofcom (DIG0050)

© Parliamentary copyright 2015

10 June 2016