Select Committee on Digital Skills - Report of Session 2014–15

Make or Break: The UK’s Digital Future


Summary

This report is a call to action for the incoming Government in May 2015.

The world is being transformed by a series of profound technological changes dominated by digital—a ‘second machine age’. This is already having a significant impact on the UK; over the next two decades some economists have estimated that 35% of current jobs in the UK could become automated. Digital technology is changing all our lives, work, society and politics. It brings with it huge opportunities for the UK, but also significant risks.

This demands an ambitious approach which will secure the UK’s position as a digital leader. We recommend that the new Government establishes a single and cohesive Digital Agenda.

The potential value in doing so is significant; the Government estimated that the digital sector alone was worth an estimated £105 billion in gross value added to the UK in 2011. A report by the National Institute of Economic and Social Research in 2013, meanwhile, found that the size of the digital economy was almost double official estimates. Whatever the difficulties in quantifying the value, it is clear that digital is already a substantial driver for growth and will become much more so. Digital technology is transforming much more than just one sector of the economy—the whole economy has become digitised. It would therefore be a mistake to take the ‘digital sector’ as our sole focus of interest. Digital technology is pervasive across all aspects of life, so much so that the ‘digital economy’ is becoming synonymous with the national economy. The UK cannot afford to miss the opportunity or shirk the challenges this presents.

The impact of new digital technology is all encompassing—from public transport to agriculture and from household goods to financial services. Analysis of ‘Big Data’ is transforming healthcare and medicine, as well as consumer and public services. The 3D printing of organs assists surgeons, whilst robotic arms can be controlled by the mind. We are becoming more reliant on technologies for personal use—from social media and entertainment, to older people and those with long-term conditions now able to monitor their health from home.

Everyday activities—such as shopping, using a telephone and banking—increasingly require interaction with technology. Digital skills (the skills needed to interact with digital technologies) are now necessary life skills. Individuals and businesses alike will need skills to protect themselves online. It is not acceptable for any group to be excluded from access to digital technologies. We must aspire for the vast majority of the population to achieve the level of digital literacy needed to fully participate in society.

All of this will require universal access to the internet to engage with vital public and personal services. That is why we conclude that the Government should define the internet as a utility service, available for all to access and use.

Clusters of rapidly growing technology firms in London, Manchester, Edinburgh and other cities need producers of digital technology in sectors such as artificial intelligence, robotics, gaming and cybersecurity. There are, however, skill requirements that spread much further than these high-tech sectors. The entire workforce will need to embrace technological change and acquire new and differing levels of digital skills.

Digital technology will also challenge traditional methods of delivering education, meaning schools and teachers will have to adapt. New models of learning—such as increased online learning and employer-designed short courses—need to keep pace with evolving technology and digital change. Changing demands from firms, consumers, students and communities mean that apprenticeships, vocational qualifications and degrees need to deliver more general—and also specific—digital capabilities. Adults need more opportunities to learn throughout their lives to adjust to a world changing in ways as yet unknown. Education needs a greater emphasis on providing every citizen with adaptable digital skills. The incoming Government, devolved administrations and grant-giving bodies should agree an agenda of change for further and higher education that addresses the magnitude of the challenge; and re-examine investment in science and research.

There is widespread support for the expansion of apprenticeship programmes, but the UK’s interests and ambitions need increased scale. There are not enough apprenticeships in digital subjects or apprenticeship schemes with digital featuring as an important element of content. Apprenticeships need to be seen as a viable alternative to higher education and the more traditional education routes.

The UK enjoys similar advantages in this emerging digital age to those which it had in past paradigm shifts. We are known for our inventors and innovators, engineers and entrepreneurs, outstanding creative talents, educators and scientists. Current and previous Governments have already facilitated some important decisions. From investment in science and research facilities such as the Hartree Centre and the Rutherford Appleton laboratory, to Tech City UK in London and MediaCityUK in Salford, there has been a range of essential policy initiatives—but we can and should do more. The countries ranked higher than the UK (including Switzerland, Singapore, the USA, Finland, Germany, Japan, Hong Kong and the Netherlands) have invested heavily in digital ‘foundations’, including up-skilling the population in technical expertise and digital capability, and driving universal access and usage.

Policymakers are redefining the role of cities in rebalancing our economy and the widespread devolution of policies and resources are taking shape. Recent efforts have also focused on identifying and encouraging local specialisms and clusters. There is scope to foster world-leading technology clusters in a number of UK regions with the right encouragement and coordination from Government, working with leading regional bodies, businesses and universities. This could give the UK a real competitive advantage in the global economy.

There is, however, still a real concern that the UK will be left behind in this new digital era; we are at a tipping point. Digital businesses can locate anywhere in the world, and if we fail to provide the right conditions for them to flourish in the UK, we will become a branch economy, much less prosperous and influential than we could be. In the short time that we have conducted this inquiry there have been frequent reminders of the pace, scale and breadth of technological change in our daily lives. There have been numerous job losses in traditional industries and cyber-attacks on organisations ranging from US Central Command to Sony Pictures. Permission has been granted in the UK to test driverless cars, Amazon are experimenting with delivering packages via drones and Asda have installed 3D scanners and printers in high street supermarkets. These examples serve as reminders that change is accelerating and the entire population is affected by the digital revolution.

Since May 2014 in the UK, thousands of digital businesses have been started and many jobs created. At the same time there have been increasing numbers of initiatives from both within and outside the Government, with more reports, strategies and announcements. The engagement of the third sector has been particularly important. But as we heard repeatedly and consistently, all this activity needs joining up; with clear leadership from the centre.

The current Government and its predecessor were not idle, but their efforts have lacked sufficient coordination. Governments can make much happen: improve general and technical skill levels across the UK; apply our research and science to commercial applications; increase awareness of cybersecurity and online safety; and support clusters of technology emerging across the country. These must all be spelt out in the Digital Agenda. Sometimes the Government will need to convene, sometimes to champion or advocate, sometimes to explain, sometimes to reassure and sometimes to stand back. At times there will be a need for investment, although we recognise the constraints on public finances; at other times it will require the pooling and reallocation of resources. We are not calling for extra funding in all areas, but rather, the smarter use of existing money.

We need a proactive Government, able to coordinate and join-up initiatives across sectors, places and organisations, with enough ambition to address head-on the national culture change required to meet the new digital age. We need a Government that will put the change required at the top of its priority list, be restless about progress, and above all make sure that the narrow concerns of individual departments do not undermine the focus of the Government as a whole (as has happened frequently in the past). The Government will not be able to deliver on its own; it must facilitate partnerships across all sectors.

The UK is at a critical juncture. No one is certain where this transformation leads or ends, but it is fast moving and all-encompassing. The incoming Westminster Government with the devolved administrations must therefore give priority to promoting a cohesive Digital Agenda which ensures that the UK survives and thrives in these radical and increasingly competitive times. The new digital age offers huge opportunities as well as significant risks; it can make the UK, or break it.