4Leadership, Management and Digital Skills
Leadership and management skills
Why SME leadership and management matters
36.A range of studies and research indicate the importance and impact of good management and leadership for modern businesses and SMEs.122 Such skill sets include: commercial (e.g. marketing and serving of new offers); project management (e.g. logistics, organisations of events); financial (e.g. capital and cash flow management); strategic thinking (e.g. building internal leadership, coordinating sets of actions to fulfil new strategic objectives); and managerial (e.g. recruitment, training, retention and people management).123 Good business management skills are fundamental in helping SMEs to scale-up,124 expand internationally and to innovate.125 Research indicates that good management and leadership within SMEs can increase productivity, turnover and employment.126 For instance, one leadership and management programme aimed at SMEs run by Goldman Sachs 10,000 Small Businesses UK,127 has helped 1,400 businesses and reported that on average participants experienced a 22% increase in productivity after the programme.128
The leadership and management gap in UK SMEs and its impact
37.Studies have found that leadership and management skills are uneven across UK SMEs, with a ‘long tail’ of many small businesses not having the requisite skills to implement management best practices,129 though our predecessor Committee, the Business, Innovation and Skills (BIS) Select Committee, heard that weak management skills across the board were impacting on overall UK productivity.130 Research carried out by the Office for National Statistics (ONS) found that management and leadership skills are correlated to company size, with medium and large companies having higher skill levels than smaller ones.131
38.A survey carried out by the FSB in 2016, found that in the previous 12 months only a quarter of SME owners had undertaken specific management training, while roughly the same proportion had never undertaken such training.132 It also found that that only a fifth of SMEs had invested in external leadership and management training.133 Other evidence supports these findings,134 with particular deficiencies identified in human resource management,135 strategic management, project management and business planning.136 This is compounded by the fact that many managers within SMEs are promoted to management positions without any prior training.137 UK SME investment in line management training is also amongst the lowest in the OECD.138 The evidence suggests that such skills are correlated with higher productivity,139 and that management skills are higher among services industries than production industries, among larger firms than smaller firms, among foreign-owned firms than domestically-owned firms, and among non-family-owned businesses than family-owned businesses.140
39.We heard that bad management was a “significant barrier to growth”,141 and was to blame for 56% of business failures between 2011 and 2014,142 while good management could improve SME survival rates.143 It has also been cited as a reason for the low take-up of digital technology.144 More specifically, a lack of people management skills is also having a negative impact. Many SMEs lack an in-house capability to understand employment legislation,145 recruit and retain key staff and deal with performance issues and the training and development of staff.146 Small businesses are also less able to tackle mental health issues,147 and burnout resulting from a long-hours culture.148 In addition, several witnesses told us that many small business owners lack ambition to grow their businesses or do not appreciate the benefits of expanding, which could be addressed through better management and leadership training.149
Barriers to SMEs acquiring leadership and management skills
40.We found that there are several reasons why SMEs do not invest in leadership and management training. Many SMEs do not realise that they have an issue that needs addressing in the first place,150 or are unaware of the solutions and support that is available.151 This is because many SMEs lack the in-house capability to identify and articulate their management and leadership needs.152 We were also told that providers of advice on management and leadership training often found it difficult to demonstrate to often sceptical companies the utility in providing such training to experienced staff,153 which meant that there needed to be clear evidence that it could improve productivity when compared to other priorities.154 There is also a complex, confusing and time consuming landscape for small business to navigate to identify relevant training and if they are eligible for funding.155 Many SME owners and staff also lack the time to attend training because they are too busy working in their business.156 The costs of training are also a major barrier to SMEs, both for businesses and individual staff.157
Supporting SMEs to acquire leadership and management skills
41.There are a range of approaches to helping SMEs acquire leadership and management skills. For instance, we heard that offering bite-size chunks of learning, especially online, could address SME concerns over time and costs,158 and introduce SMEs to the wider benefits of management training.159 The Institute of Directors note the key role that LEPs and Growth Hubs can play in helping SMEs with day-to day issues, such as HR, tax and regulatory compliance, freeing them up to concentrate on management improvement, and helping them diagnose weaknesses and introducing them to relevant partners, consultants and training schemes.160 Many witnesses extolled the virtues of peer-to peer networks for spreading good management practices and knowledge,161 and advice on how to access the most relevant and cost-effective learning.162 Peer-to-peer networks can enhance leadership and management training by allowing it to be based in a business setting.163 Such networks, when part of a formal training programme, can continue after the programme finishes, providing further support,164 and allowing alumni to help support SMEs seeking training for the first time.165
Goldman Sachs 10,000 Small Businesses and peer-to-peer learning
42.One exemplar of this approach is provided by Goldman Sachs’ 10,000 Small Businesses UK programme, which seeks to help small business leaders build confidence in core business management areas and apply knowledge learnt directly and immediately back into their business, primarily to improve productivity.166 It is a 4-month programme fully funded by Goldman Sachs Foundation that includes 100 hours of teaching and support from UK universities, both online and in person, and 7 days of residential learning which are structured around peer-to-peer learning.167 A key feature of the Programme is its alumni network, which provides a forum for continuing peer-to-peer learning and networking. The Programme reports that SMEs that go through the course experience a 28% increase in productivity compared to other high growth SMEs and see marked improvements in exports, leadership and management, investment in businesses practices, digital adoption and innovation.168 Other similar programmes that use such a blended approach to management and leadership training also report impressive results.169 Many witnesses agreed that the Goldman Sachs’ programme was excellent, though it is questionable if such programmes could be more widely spread because of the cost.170
Government support for management and leadership training
43.The Government provides some support for leadership and management training. For instance, the Business Basics Fund, run by BEIS in partnership with Innovate UK, and part of the Government’s wider Industrial Strategy, helps businesses adopt management techniques.171 Most recently, as part of the 2018 Budget, the Government announced a £31m package aimed at improving leadership and management. This included the introduction of a new £11m Small Business Leadership Programme to deliver 2,000 places in its first year, and an ambition to train 10,000 per year by 2025.172 It also announced £20m to strengthen local networks to improve business management, the introduction of a mentoring programme for SMEs and a partnership between government, professional services firms, large banks and technology firms to help support SMEs to adopt new management practices and modern business tools.173 The Minister told us that the Government had decided to invest in peer-to-peer networks because it knew that it worked and because where small business had started up and got “straight into networking they have grown quicker and become more productive”.174 The Minister acknowledged that the Government had learnt a lot from the Goldman Sachs approach; however, she accepted that it was a challenge to reach more businesses to improve leadership and ambition and that the Government was trying to tailor its support to plug gaps.175
44.Poor management and leadership is a problem for far too many SMEs and is damaging their productivity and ability to grow. Often, this is because SMEs lack the time and financial resources to invest in relevant training, are unware of the benefits such training can deliver or suspect that it will not be directly relevant to their business. We welcome the Government’s recently announced £31m package of measures to help support SMEs improve their management skills and enable local networks where SMEs can learn from one another. However, the £11m of this funding assigned for management training will only reach up to 10,000 people a year. We recommend that the Government should set out immediately how it will track and report on the effectiveness of this package of measures. It should also examine how it can reach more companies. For instance, we recommend that it uses the lessons learnt from programmes such as those run by Goldman Sachs to produce scaleable offerings, such as bite-size online learning, which can address SME time and money constraints. This can be combined with local peer-to-peer networks which can enrich such learning. We also recommend that the Government introduces financial incentives, such as vouchers, as soon as possible to encourage SMEs to explore and then take-up management and leadership training.
Digital skills
Why digital skills matter
45.Digital skills are crucial for SMEs if they are to improve their productivity and especially if they want to scale up. Digital technologies can allow SMEs to improve their relationship with their customers through customer relationship management (CRM), improve and speed up accounting, resource planning and people management processes, delivering efficiencies, especially in terms of staff time.176 They can allow better access to and storage of data and information (e.g. cloud computing) and enhance its creation, modification and analysis.177 The use of cloud computing enables SMEs to reduce the need for on-site ICT staff support and upfront investment in ICT capital.178 Digital technology and digital skills can also allow SMEs to benefit from digital platforms, such as social media and online selling and payments,179 and emerging technologies such as artificial intelligence, robotics and 3-D printing.180 In addition, digital technology allows SMEs to improve market intelligence, increase local competitiveness and access global markets and knowledge networks at relatively low cost.181 However, the introduction of such technology needs to be accompanied by staff and management training and the introduction of business processes to ensure that digital technology is fully exploited.182 While all of the above are essential for all SMEs to remain competitive,183 they are imperative for those companies that want to scale up by enhancing their knowledge-based capital, such as research and development, and introducing new organisational processes.184
UK SMEs and the digital gap
46.There appears to be a sizeable digital gap for many UK SMEs. Despite clear evidence that better digital capability spurs growth, a quarter of SMEs do not consider digital skills or investment in digital technology to be important to the growth of their business.185 Many SMEs are limited by broadband speeds,186 and internal resources (e.g. people, training hardware and software) to absorb digital technology.187 In 2017, a survey found that nearly 2 million small businesses in the UK lacked basic digital skills and digital knowledge.188 The lack of these basic skills has resulted in around five million working hours every week being lost to SMEs in fixing everyday IT problems, such as printer issues and computer crashes.189 Some SMEs are also not exploiting the use of digital in identifying customers and what they want,190 automating production and enhancing human resource and finance processes,191 and many are not able to make use of cloud computing and remote server access.192 The adoption of digital technology by UK firms generally has generally been behind many other OECD economies; for instance it is not amongst the top players in adopting emerging ICT technologies.193 Micro-businesses in particular are not fully exploiting the potential of digital, both in the types of digital applications adopted and the numbers of digital processes they are adopting.194
Chart 6: Percentage of Micro-businesses adopting specific digital processes (2018)
[CRM (Customer Relationship Management); Web A/C (web-based accounting software); CAD (computer-aided design software); AI (artificial intelligence)]
Source: Enterprise Research Centre, State of small Business Britain Report 2018, (2018), p 30.
Chart 7: Percentage of Micro-businesses adopting one or more digital processes (2018)
Source: Enterprise Research Centre, State of small Business Britain Report 2018, (2018), p 31.
47.Though most SMEs provide some kind of digital skills training for their staff, about a half do not have a formal training plan or training budget for digital skills training, while three quarters of self-employed business people have no plan or budget to support training.195 SMEs are even less likely to invest in newer innovative technologies, such as AI, and the skills to exploit them, despite the UK being a world leader in developing them.196
Barriers to SME digital adoption
48.There a number of reasons why SMEs do not adopt digital technology. Many SMEs simply do not know about what is available, how it is being used by competitors and whether they are optimising the technology they do have.197 A survey carried out by the FSB in August 2017 found a range of other issues that inhibit SMEs becoming more digital.198
Chart 8: Top Five Barriers to SMEs becoming more Digital (Percentage of SMEs affected)
Source: Federation of Small Businesses, Learning the ropes: skills and training in small businesses, (December 2017), p. 33.
49.SMEs face even more specific barriers to adopting more innovative technology such as an ineffective and confused landscape of business support, ambiguity about what ‘good’ looks like and not enough incentives for uptake.199 They also face more general problems which affect all businesses, such as a skills shortage in advanced digital skills and a lack of common standards allowing different technologies to connect.200 However, SMEs, especially micro businesses, have fewer resources to overcome these problems and while bigger companies see digital technology as an opportunity to invest in, smaller ones can often see it as a threat.201
Overcoming digital barriers facing SMEs
50.A number of possible solutions can address the digital barriers facing SMEs. Several witnesses told us that there needed to be better collaboration between SMEs and innovative, science and research organisations if SMEs were to reskill and upskill staff,202 and make the most of new technologies such as AI, robotics and 5G.203 Help could also be given to SMEs through the use of inducements, such as vouchers from LEPs or Growth Hubs to introduce SMEs to digital solutions,204 and good signposting to digital resources and advice.205 We also heard that local business networks, involving LEPs, Growth Hubs and peer-to-peer forums played a key role in allowing business to learn from other businesses on what technology worked best and where advice and support could be accessed at both a national and local level.206 When such networks involved local business schools and universities, they could also help promote newer technologies.207
Government support for SMEs on digital skills and uptake
51.The Government has acknowledged that there is a problem with digital skills, and is currently consulting on a new national standard for basic digital skills, improvements to the publicly funded basic digital skills offer and the introduction of a national digital skill entitlement.208 The Minister drew attention to the Government’s National Retraining Scheme, which will receive £100 million to upskill workers.209 The Government has sought to improve digital spend on SMEs by encouraging their access to the Digital Marketplace, which allows public sector buyers to find technology or people to deliver digital projects. For instance, the Government has stated that SMEs have accessed almost half of public sector spend on digital since 2012 - over £1.9bn.210
52.The Government’s Industrial Strategy also includes several strands that focus on improving digital technology uptake. There is a commitment to invest in digital infrastructure in areas such as 5G and full-fibre networks,211 and in digital technologies such as Artificial Intelligence and data-driven processes.212 The Made Smarter Review has considered how UK manufacturing can maximise the benefits from increasing adoption of digital technology,213 and the Productivity Review is currently looking at how businesses more generally can embrace new technology.214 The Government’s New Business Basics Fund also is seeking to increase SME uptake of tried and tested technology.215 The Minister said that it was important that growth hubs, peer to-peer networks and private sector organisations could signpost SMEs to the support available. and that while it was Government’s responsibility to enable and help small businesses with digital skills there was also a responsibility for businesses themselves to use the tools and services available to access support.216
53.We support the Government’s efforts to improve digital skills in small businesses and its investment in digital infrastructure and welcome the central role of digital in its Industrial Strategy. However, too many SMEs do not possess basic digital skills and there is a danger that many will miss out on the benefits of new technologies, such as robotics, AI and 5G. This will reduce the ability of SMEs to be more productive and innovative, reach out to customers and access support, much of which is digital. It will also impact negatively on workers who need to reskill and upskill as the pace of technological change increases. The Government should ensure that digital skills are at the heart of local business support offered by LEPs, Growth hubs and business networks. Its recently announced funding for local business networks should include a focus on digital skills. It should continue to fund digital knowledge exchange forums and explore how financial incentives can help SMEs and their staff to invest in both basic digital skills and the adoption of new technologies and processes. The Government should also run an annual survey of SMEs to assess progress on improving SME digital capability and the effectiveness of its programmes, its funding and the local provision provided by LEPs and Growth Hubs.
122 See for example: OECD, Small, Medium, Strong. Trends in SME Performance and Business Conditions, (February 2017); OECD, Skills Development and Training in SMEs, (2013). The OECD’s dedicated SME and Entrepreneurship resources can be found at: http://www.oecd.org/industry/smes/.
123 See: OECD, Strengthening SMEs and Entrepreneurship for Productivity and Inclusive Growth: Issues Paper, (2018), p 19; Keith Sisson, Shaping the world of work - time for a UK jobs strategy, Warwick Business School, Warwick Papers in Industrial Relations no. 105, (October 2016);
124 OECD, Discussion Paper: Enabling SMEs to scale up, (February 2018), p 13.
125 See: ESRC, Evidence Briefing: Boosting UK productivity with SME growth, (May 2016)
126 See: SBP0015 Chartered Association of Business Schools; NIESR, The Impact of Management Practices on SME Performance, (March 2018); Nicholas Bloom et al, Management as a Technology?, Harvard Business School Working Paper, (October 2017); BEIS, Leadership and Management Skills in SMEs: Measuring Associations with Management Practice and Performance, (March 2015), p 9; Chartered Management Institute, Growing Your Small Business, (September 2015).
127 See, Goldman Sachs, 10,000 Small Businesses, (accessed 31 October 2018).
128 Goldman Sachs, Rethinking Productivity: A 2018 Survey of 10,000 Small Businesses UK graduates, (2018). See also SBP0032 Professor Richard Thorpe (Leeds University Business School). He notes that that evaluation of Lancaster University’s ten-month Leadership and Development (LEAD) programme for 251 SME owner managers showed average increases in sales turnover of 37.5% attributed to the programme and increases in employment, productivity and mind-set changes amongst the managers. SBP0015 Chartered association of Business Schools. CABS note similar results from the Small Business Charter Growth Voucher Programme, the Strathclyde Business School Growth Advantage Programme and the Cardiff School of Management 20Twenty Leadership Programme.
129 See:SBP0015 Chartered Association of Business Schools; SBP0032 Professor Richard Thorpe; BEIS, Leadership and Management Skills in SMEs: Measuring Associations with Management Practice and Performance, (March 2015);
130 BIS Select Committee, The Government’s Productivity Pan, (HC 466; February 2016), pp 15–15.
131 ONS, Management practices and productivity in British production and services industries - initial results from the Management and Expectations Survey: 2016, (April 2018). See also: ONS, Experimental data on the management practices of manufacturing businesses in Great Britain: 2016, (October 2016).
132 Federation of Small Businesses, Leading the way: boosting leadership and management in small firms: Discussion paper, (March 2016), p 9.
133 As above, p 10.
134 See: SBP0015 Chartered Association of Business Schools; Warwick Business School, Poor management skills hampering growth of SMEs, (May 2015); Chartered Management Institute, Growing Your Small Business, (2015).
135 See for example: SBP0009 Chartered Institute of Personnel and Development (CIPD); Warwick Business School, Poor management skills hampering growth of SMEs, (May 2015);
136 Q95 Andrew Wright (Leeds City Region LEP). He noted that in a survey carried out by the Leeds City Region LEP, 50% of SMEs did not have a business plan.
138 See for example: OECD, Small, Medium, Strong. Trends in SME Performance and Business Conditions, (February 2017); OECD, Skills Development and Training in SMEs, (2013
139 See for example: ONS, Management practices and productivity in British production and services industries - initial results from the Management and Expectations Survey: 2016, (April 2018); ONS, Management practices and productivity among manufacturing businesses in Great Britain: Experimental Estimates for 2015, (January 2017).
140 ONS, Management practices and productivity in British production and services industries - initial results from the Management and Expectations Survey: 2016, (April 2018).
141 SBP0033 Written evidence from the Tees Valley Combined Authority, including input from Teesside University.
142 See: SBP001 The Association of Accounting Technicians. See also: SBP0015 Chartered Association of Business Schools.
143 See SBP0003 British Academy of Management and Society for the Advancement of Management Studies; SBP001 The Association of Accounting Technicians. See also: SBP0015 Chartered Association of Business Schools
144 CBI, From Ostrich to Magpie: Increasing Business Take-up of Proven Ideas and Technologies, (November 2017), p 17.
145 Federation of Small Businesses, Leading the way: boosting leadership and management in small firms: Discussion paper, (March 2016), p 9.
146 See: SPB0030 Investors in People; Chartered Institute of Personnel and Development, Recruiting and developing talented people for SME growth, (2014).
147 Institute for Leadership and Management, SMEs worst for mental health support, (2017).
148 See for instance: Grenke, Is working long hours embedded into SME culture?, (March 2017);
149 See: Q155 and Q165 Angela Middleton (); Q181 Professor Tim Vorley (Sheffield University); Q182 Mike Cherry (Federation of Small Businesses); Q91 Ben Wilmott (CIPD).
151 Q79 David Willett (Open University).
153 See: SBP0029 Leeds City Region Enterprise Partnership West Yorkshire Combined Authority; SBP0033 Tees Valley Combined Authority, including input from Teesside University.
154 SBP0029 Leeds City Region Enterprise Partnership West Yorkshire Combined Authority. They note that many small businesses are particularly sceptical about Business MBAs and their relevance to the business challenges and opportunities. The Institute of Chartered Accountants in England and Wales also questioned whether there was an adequate definition of what constituted “good management training”, which made it difficult for SMEs to ascertain what skill mix they required (SBP0005).
156 See: Q203 (Professor Tim Vorley, Sheffield University); Q175 (Linda Edworthy, Tees Valley Authority); Q57 (Charlotte Keenan, Goldman Sachs); Q61 (Professor Paula Whitehouse, Aston Business School); SBP0017 Newable; IoD, Lifting the Long Tail: The Productivity Challenge through the Eyes of Small Business Leaders, (October 2018), p 18; Chartered Management Institute, Growing Your Small Business, (2015), p 25.
157 See SPB0023 Buckinghamshire Business First; SBP0033 Tees Valley Combined Authority, including input from Teesside University; SBP0010 Institute of Directors; ); IoD, Lifting the Long Tail: The Productivity Challenge through the Eyes of Small Business Leaders, (October 2018), p 18; Chartered Management Institute, Growing Your Small Business, (2015), p 25.
158 Q57 and Q58 David Willett (Open University).
159 Q58 and Q60 Ben Willmott (CIPD); Q140 Rana Harvey (Monster Group PLC)
160 IoD, Lifting the Long Tail: The Productivity Challenge through the Eyes of Small Business Leaders, (October 2018), p 24.
161 Q67 Professor Sarah Underwood (Leeds University); Q145 Andrew Wright (Leeds City Region LEP).
162 Q57 Professor Sarah Underwood (Leeds University); Q82 Charlotte Keenan (Goldman Sachs); Q122–124 Rana Harvey (Monster Group UK); SBP0032 Professor Richard Thorpe.
163 Q77 Charlotte Keenan (Goldman Sachs); Q81 David Willett (Open University).
164 Q81 Professor Sarah Underwood (Leeds University); Q82 Charlotte Keenan (Goldman Sachs). For example, they can support each other by sitting on each other’s boards and recruitment panels.
165 Q78 Charlotte Keenan (Goldman Sachs).
166 Goldman Sachs, 10,000 Small Businesses, (accessed 31 October 2018). The core areas include: technology; internationalisation; innovation; brand and resilience. They are delivered through 3 stages which cover issues such as businesses: defining their business proposition using financial information; identifying recruitment needs and improving business processes; enhancing their ability to grow; developing their leadership capability; identifying future funding needs; developing a business growth plan for peer review and their ability to strategically review their business.
167 As above.
168 Goldman Sachs, Building Small Business Britain, (2018), p 17. The Programme also reports that its graduates: grow revenue 25x faster than similar high-growth SMEs and 16x faster than UK businesses generally; grow jobs 23% faster than similar high-growth SMEs and 13% times faster than UK businesses generally. After graduating: 74% of participants increase training of staff; 71% take on external financing; 62% launch a new product or service; 97% are more effective leaders; 94% are more confident managing growth; 90% introduced new business processes; 84% use financial data more in decision-making.
169 See SBP0032 Professor Richard Thorpe (Leeds University Business School). He notes that that evaluation of Lancaster University’s ten-month Leadership and Development (LEAD) programme for 251 SME owner managers showed average increases in sales turnover of 37.5% attributed to the programme and increases in employment, productivity and mind-set changes amongst the managers. SBP0015 Chartered association of Business Schools. CABS note similar results from the Small Business Charter Growth Voucher Programme, the Strathclyde Business School Growth Advantage Programme and the Cardiff School of Management 20Twenty Leadership Programme.
170 Q136 Tony Danker, Be the Business.
171 BEIS, Government launches new fund to support small business growth, (June 2018).
172 HM Treasury, Budget 2018: Support for Business, (October 2018)
173 Letter from Kelly Tolhurst MP, Minister for Small Business, Consumers & Corporate Responsibility, (October 2018).
174 Q308 Kelly Tolhurst MP, Minister for Small Business, Consumers & Corporate Responsibility.
175 Q309 Kelly Tolhurst MP, Minister for Small Business, Consumers & Corporate Responsibility..
176 Enterprise Research Centre, State of small Business Britain Report 2018, (2018), p 30. Sage Group, for example, have estimated that digital tools could save SMEs on average 120 days a year if they digitalised their administrative processes (Sage Group (SBP0027)). See also: Federation of Small Businesses, Digital skills gap in small firms holding back productivity, (December 2017).
177 See: OECD, Strengthening SMEs and entrepreneurship for productivity and inclusive growth, (February 2018) p 12–13. Federation of Small Businesses, Digital skills gap in small firms holding back productivity, (December 2017).
178 OECD, Promoting Innovation in Established SMEs, (February 2018), p 6.
179 Science and Technology Committee, Digital Skills Crisis, (HC 270; June 2016), p 15.
180 See: Buckinghamshire Business First (SPB0023); Q196 (Professor Tim Vorley, Sheffield University); World Economic Forum, Technology and Innovation for the Future of Production: Accelerating Value Creation, (2017); BEIS, Made Smarter Review 2017, (November 2017), p 8; Hiscox, The future’s bright for SMEs that embrace automation, (August 2016).
181 See: OECD, Strengthening SMEs and entrepreneurship for productivity and inclusive growth, (February 2018) p 12–13; OECD Observer, Better policies for SMEs to scale up and go global, (2018).
182 OECD, Promoting Innovation in Established SMEs, (February 2018), p 5; Institute of Directors (SBP0010).
183 See Q57 David Willett (Open University). He noted that digital skills allowed SMEs to reskill and upskill their staff.
184 OECD, Enabling SMES to Scale Up, (February 2018), p 12.
185 Federation of Small Businesses, Digital skills gap in small firms holding back productivity, (December 2017). See also Q58 (Professor Paula Whitehouse, Aston Business School); BIS, Digital Capabilities in SMEs: Evidence Review and Re-survey of 2014 Small Business Survey respondents, (September 2015), p 6.
186 See for example: British Chambers of Commerce, Digital Economy Survey 2017, (March 2017). Ben Chapman, Quarter of UK businesses don’t have reliable broadband despite government pledges on ‘superfast’ internet, Independent, (March 2017). The BCC found that Smaller businesses were the most likely to suffer from unreliable broadband, with nearly a quarter (24%) of sole traders and 21% of micro-businesses reporting problems.
187 Institute of Directors (SBP0010). The ONS have found that though 86% of all businesses had internet access, smaller businesses had slower broadband speeds - while 62% of businesses with 1,000 employees or more had superfast broadband in 2016, only 5.8%of the smallest businesses did (ONS, E-Commerce and ICT Activity: 2016, (November 2017).
188 Lloyds Bank, UK Business Digital Index 2017, (2017). An FSB survey carried out om 2017 found that 26% of English business owners lacked confidence in their basic digital skills (Federation of Small Businesses, Digital skills gap in small firms holding back productivity, (December 2017)).
189 Information Age, UK small businesses are wasting time with IT problems, (March 2017).
190 ONS, E-Commerce and ICT Activity: 2016, (November 2017). The ONS notes that larger businesses make better use of website and social media to connect with their customers.
191 Sage Group (SBP0027). See also ONS, E-Commerce and ICT Activity: 2016, (November 2017). The ONS notes that smaller businesses see considerably fewer e-commerce sales than bigger companies.
192 See CBI, From Ostrich to Magpie: Increasing Business Take-up of Proven Ideas and Technologies, (November 2017), pp 14- 20; British Chambers of Commerce, Digital Economy Survey 2017, (March 2017).
193 See for example OECD, Science, Innovation and Technology Scorecard 2017, (2017). The OECD cites the following top players: US; Japan; South Korea; China; China Tapei; Germany; Sweden: France; Canada (p 20).
194 Enterprise Research Centre, State of small Business Britain Report 2018, (2018), pp 30–31. Sage Group also report that 45% of SMEs have not digitised their accounting processes and 60% have not digitised their HR processes Sage Group (SBP0027). A 2017 FSB Survey found that a fifth of English business owners surveyed believed that a lack of digital basic skills amongst their staff was holding their business back from increasing their digital and online presence (Federation of Small Businesses, Digital skills gap in small firms holding back productivity, (December 2017)).
195 Federation of Small Businesses, Digital skills gap in small firms holding back productivity, (December 2017), p 29.
196 BEIS, Made Smarter Review 2017, (November 2017), p 9–10.
197 Q115 Tony Danker (Be the Business).
198 Federation of Small Businesses, Digital skills gap in small firms holding back productivity, (December 2017), p 33. See also Enterprise Research Centre, State of small Business Britain Report 2018, (2018), p 33.
199 BEIS, Made Smarter Review 2017, (November 2017), p 9.
200 As above.
201 See Chris Barnard et al., The Road to the Digital Future of SMEs, IDC UK, (September 2017),
202 Q57 David Willett (Open University).
203 Buckinghamshire Business First (SPB0023). See also Q196 Professor Tim Vorley (Sheffield University).
204 Q110 Andrew Wright (Leeds City Region LEP). See also: IoD, Lifting the Long Tail: The Productivity Challenge through the Eyes of Small Business Leaders, (October 2018). The IoD suggested that LEPs and Growth Hubs could use free offers as a way to introduce SMEs to training and other forms of investment to improve productivity.
205 Q115 Ruby Peacock (FSB). 5G is the fifth generation of cellular mobile communications. It succeeds the 4G, 3G and 2G systems. 5G performance targets high data rate, reduced latency, energy saving, cost reduction, higher system capacity, and massive device connectivity.
206 Q108 Rana Harvey (Monster Group UK); Q145 Andrew Wright (Leeds City Region LEP).
207 Q74 and Q76 Paula Whitehouse (Aston Business School); Q78 Sarah Underwood (Leeds University).
208 DoE, Improving adult basic digital skills Government consultation, (October 2018). See also: BEIS, Industrial Strategy: Building a Britain fit for the future, (2017), pp 40–41. And pp 109–111.
209 Q285 Kelly Tolhurst MP, Parliamentary Under-Secretary of State, Minister for Small Business, Consumers and Corporate Responsibility. See: HM Treasury, Government support to boost skills and prosperity, (October 2018).
210 Crown Commercial Service, Cabinet Office and Government Digital Service, Almost half of government digital spend now goes to SMEs, (August 2018).
211 BEIS, Industrial Strategy: Building a Britain fit for the future, (2017), p 11, pp 128–131 and pp 151–156.
212 As above, p 36.
213 BEIS, Made Smarter Review, (November 2017). See also BEIS, Industrial Strategy: Building a Britain fit for the future, (2017), pp 205–6.
214 BEIS, Government review to help business embrace new technology and boost wages and profits, (May 2018). See also BEIS, Industrial Strategy: Building a Britain fit for the future, (2017), pp 157–159.
215 BEIS, Government launches new fund to support small business growth, (June 2018).
216 Qq 286–7 Kelly Tolhurst MP, Parliamentary Under-Secretary of State, Minister for Small Business, Consumers and Corporate Responsibility.
Published: 5 December 2018