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A new UK digital strategy and some legacy challenges – helping the UK innovate

(Image credit: Image source: Shutterstock/Wichy)

On 1st March the Culture Secretary launched a UK Digital Strategy aimed at creating a world-leading digital economy for the UK.

The goal, according to the announcement, was to put skills, infrastructure and innovation at the heart of new strategy to support Britain’s world-leading digital economy. The details included a new Digital Skills Partnership and pledges for millions of free digital training opportunities for the public. The aim is to back the digital sector to invest in the UK and included measures to help all sizes of businesses harness the productivity benefits of digital innovation.

The government’s flagship announcement promised over four million free digital skills training opportunities as part of the plan to make Britain “the best place in the world to start and grow a digital business and ensure our digital economy works for everyone”. The Digital Skills Partnership will see Government, business, charities and voluntary organisations working together to help people and businesses gain the right skills for the jobs in their area. The strategy includes commitments from banks to give training and coding lessons to businesses, the public and school children – all aimed at assisting the UK to improve general digital skills and cyber awareness. Even a well-known search engine has given a commitment of five hours of free digital skills for everyone, to help boost digital skills in seaside towns.

Experian’s research shows the UK still has some work to do when it comes to really making the most of this new pledge. The UK has a serious ‘digital divide’. The evidence suggests large parts of the country have been left behind in the digital world and this has a significant implication for businesses based in those well-defined areas as well.

In fact, Experian identified three levels of societal engagement with the digital world:

  • Left behind – The ‘Digital Dawdlers’: Around 7.5 million (15.6 per cent of the population) people are being left behind in the digital revolution, either because of old age and a lack of know-how or interest in new technology, or by the limited or slow provision of broadband in the places where they live.
  • Leading Edge - The ‘Digital Devotees’: About a third of people in the UK (32.4 per cent) fall into the leading edge users of digital technology. They have the most devices, spend more time on-line and use digital services for the widest range of activities.
  • Practical users - The ‘Day-to-Day Doers’: About half of the population (52 per cent) are defined as practical day-to-day users of the internet and digital services. Their use is characterised less by enthusiasm for the latest technology and the must have gadget, and more by a set of practical uses that benefit them on a daily basis.

Based on the analysis of UK residents, we can classify people into one of 11 distinct groups, as suggested by the uniting features shared by groups in the populace. These groups were termed 

Capital connections, Digital Frontier, Mobile City, First-Gen Parents, Aspirant Frontier, Online Escapists, Upmarket Browsers, Savvy Switchers, Cyber Commuters, Beyond Broadband, Tentative Elders.

What’s more, and of relevance to the government’s allocation of resources and training, it’s clear that the rural and seaside areas of the country are those, in the main, where the majority of residents fall into the ‘left behind’ categories.

Digital generations

What is interesting is that previous Experian research found that ‘Generation Z’ companies formed in the 21st century have played a significant role in driving the incorporated business population from 1.5 million in 2000 to 3.4 million to the end of 2014. The sectors experiencing the greatest growth were dominated by start-ups with few fixed assets and long-term liabilities. The vast majority of businesses started in the 21st century reported minimal share capital and no long term liabilities on their first annual accounts – 78 per cent had no long term liabilities, and 79 per cent had issued capital valued only from £1 to £100.

The number of companies operating in the web-tech sector increased by 237 per cent between 2000 and 2014. Web-tech companies accounted for 8.5 per cent of all start-ups since the turn of the millennium and are typical of many of the new knowledge and internet-based businesses.

Nearly half (44 per cent) of all companies in this sector are SOHOs, working from a small or home office. Of those formed since 2000, just 13 per cent had long-term liabilities on their first of accounts, 1.2 per cent had bank loans and 1.4 per cent had an overdraft. Nine out of 10 (88 per cent) were created with less than £10,000 worth of fixed assets, while 29 per cent of the assets held by these start-ups are in cash.

What this shows is that modern businesses, and especially those already in the digital industry are light, nimble and skilled. Government support will be especially useful to the ‘left behind’ consumer population who will be customers, and could become part of the workforce of digital businesses. 

Legacy infrastructure

A massive element in the UK digital divide is of course access to efficient internet. Businesses and public sector organisations need to think about what this means for them when it comes to communicating with their audiences. In the digitalised world, the customer journey is profoundly influenced which connected devices people are using, their level of digital engagement and attitudes towards technology in general. Businesses have to know what devices and channels their audience is using and tailor their comms accordingly. A one size fits all approach simply doesn’t work anymore.   

Experian previously discovered that certain organisations like banks and utility providers must adapt to serve the knowledge and internet-based start-ups which helped to double the business population from 2000 top 2014. Servicing the needs of these businesses described above is a challenge which must be met by banks and trade credit providers, which have traditionally lent to SMEs against fixed assets such as property and machinery. Utility providers are also among the service providers which will have to consider the needs of a small company without a dedicated business premises – as new digital businesses generally are.

Yet these businesses only thrive where they have access to skilled staff and effective infrastructure – hence the overlap with the map, above. Those left behind are not always left behind by choice or personal circumstances – many are served by inadequate broadband as well, which needs to be addressed as soon as possible to give every area the best chance of success in the digital world.

Max Firth, Managing Director - Business Information Services, Experian (opens in new tab)
Image source: Shutterstock/Wichy

Max Firth is the Managing Director - Business Information Services, Experian.