Go ON UK – Written evidence (DSC0079)

About Go ON UK

Go ON UK is the UK’s Digital Skills Alliance. Our vision is to make the UK the world’s most digitally skilled nation by 2020. We want every individual, small business and charity to have the skills and confidence to benefit from online services and opportunities. To achieve this vision we need to inspire and support people and organisations to share their digital skills with others. We accomplish this through our cross-sector alliance of dedicated national, regional and local partners working across the UK to help bring basic online skills within everyone’s reach.

Our Board is composed of Chief Executives from Age UK, Argos, BBC, Big Lottery Fund, E.ON, EE, Lloyds Banking Group, the Post Office and TalkTalk – organisations whose collective networks offer us incredible reach into every high street and community in the UK. Go ON UK also co-Chairs the Government’s Digital Inclusion Delivery Board (alongside the Government Digital Service) with the objective of coordinating the 58 charities and businesses who have signed the UK Digital Inclusion Charter to build on Go ON UK’s partnership model to cut the number of people who are offline by 25% by 2016.

Since October last year Go ON UK has launched regional programmes in the North East, Northern Ireland and the North West with the support of over 750 local partner organisations designed to embed and expand the delivery basic online skills across public, private and third sector activity in those regions. We also champion and support organisations such as the Tinder Foundation, Digital Unite, public libraries, Chambers of Commerce and community groups who are already motivating and supporting people to improve their digital skills in communities across the UK.

In support of online enterprise, Go ON UK has launched its own SME Digital Capability Programme in partnership with the Department for Business, Skills and Innovation. We estimate that in the last year this initiative has inspired 300,000 SMEs to investigate online business opportunities, of which 5,500 have taken further action to transition towards transacting and marketing themselves online.

Go ON UK is also committed to working with partners to identify, collect and aggregate the latest qualitative and quantitative data and metrics on the socio-economic benefits of digital skills and inclusion to support the development and delivery of targeted evidenced-based policies and initiatives.

Response to Call for Evidence Questions

The changing technological landscape

1 What is the pace and change of the future digital technology landscape over the next five, 10 and 15 years? What are the leading innovations?

2. What are the main challenges for economic growth as the UK transitions to a knowledge-driven economy?

3. What is the employment impact on the UK’s labour market? What are the regional differences?

What lies ahead

Over the next 5-15 years New and emerging digital technologies, platforms and services, accessed across an increasingly hyper-connected and globalised information environment, will continue to exert a disruptive and transformative impact on every aspect of our lives. Innovations such as the Internet of Things, Big Data, Open Data, Online Education Resources, the digitisation of public services and the convergence of digital media delivery channels will all unlock a kaleidoscope of new opportunities, products and platforms with the capacity to transform the UK’s capability for future job creation, innovation, economic growth and competitiveness.

And yet, the UK’s potential to benefit from these emerging opportunities will be critically dependent on the ability of policy makers, businesses, charities and individuals to address the UK’s growing digital skills gap. Crucially, this involves tackling our well documented deficit of high level and intermediate digital skills – alongside ensuring that every business, charity and individual in the UK can achieve the basic level of digital skills they need to benefit from these new products, platforms and services.

Where we are now

Nearly 20% of the UK population (9.5 million people) do not have Basic Online Skills (46% of which are from less advantaged socio-economic groups). [1] According to the European Commission 90% of jobs will require basic digital skills by 2015[2], and recent research suggests that 25% of UK job opportunities are now only advertised online.[3] Without concrete steps to bridge the growing divide between the engaged and digitally literate majority and the disengaged and digitally excluded minority – the UK will continue to face serious challenges to its future prospects for economic growth, prosperity and innovation.

According to the 2013 OECD Survey of Adult Skills the number of adults aged 16-24 in England who failed the level 1 core digital skills test was double the number of 16-24 year olds in Germany and triple the number in France.[4] In the 25-34 age bracket three times more adults in England failed the basic test compared to adults in the Czech Republic and the number of adults scoring below the minimum standard in France was less than half the number of 25-34 year olds in England.[5]

It no longer makes any sense to see digital skills as a separate niche discipline reserved for technical experts or enthusiasts. Basic online skills have now become universal and essential components of the social, economic and political circulatory system of any effective modern society. A coordinated cross-sector approach to building basic digital skills is no longer merely an aspirational objective – but an urgent necessity.

The future is here – but not evenly distributed

In its 2012 Communication on Rethinking Education the European Commission set out the key challenges to be addressed by Member States in building skills for the 21st century. The Commission emphasised that “the first step must be that foundation or basic skills are achieved by all” as they represent “a gateway to employment and social inclusion.”[6] For the benefits of our increasingly hyper-connected digital society and economy to be both realised, exploited and evenly distributed we need to establish an underpinning foundation of basic online skills for all.

By way of illustration, the UK Government’s Information Economy Strategy published in June 2013 seeks to foster a wave of innovative UK start-ups generating new digital business models, products and services – and yet the potential UK market for these innovations will be limited to those who have the digital skills to access and use them. Similarly, the projected 1.8 billion[7] in cost savings scheduled to be unlocked by the digitalisation of public services under the Government’s Digital by Default Strategy will be highly unlikely to materialise unless more citizens possess the basic skills required to access and consume services through these digital channels. By the same token, the full economic value of the Government’s existing £1 billion investment in improving and upgrading the UK’s broadband infrastructure will surely be constrained without a corresponding increase in the number of citizens with the knowledge and understanding to take advantage of this new physical infrastructure.

The benefits of an inclusive information economy

Go ON UK firmly believes that inclusive access to Basic Online Skills is a key enabler for maximising the UK’s potential for future economic growth offered by digital technologies – a dividend which is estimated to be worth up to £63 billion[8] in additional annual GDP growth. This includes £18.8 billion[9] of economic value which would be unlocked by digitally empowering the UK SME sector. Recent research also demonstrates that businesses that make the most of digital opportunities perform better financially, have better growth prospects and have more confidence in the future of the UK economy.[10]

At a more granular level, Basic Online Skills represent a key enabler for individuals, both in terms of saving time and money, as well as enhanced access to new opportunities, services and platforms. A new return on investment survey from BT has identified that the value of Basic Online Skills and access to online services for individuals (who were previously offline) as £1,064 per year.[11] For those individuals who progress to more advanced digital skills (such as the daily use of ICT in their job) the average annual benefit is £3,568.[12] Further benefits include reduced isolation for older people, increased chances of employment (e.g. by applying for the 164,000 UK job vacancies[13] which are now only posted online) and enhanced access to information and services across a broad range of areas including health, consumer issues and finance. 

National and regional challenges for businesses and charities

The 2014 Lloyds Digital Business Index[14] produced in partnership with Go ON UK surveys some of the key indicators of digital maturity for organisations across the UK.  The report identifies that 75% of small businesses and charities are not investing in improving digital skills - and perhaps even more importantly that a third of business and charities believe that being online is not relevant to their day to day operations. This highlights that for many private and third sector organisations, the transition to knowledge-based economy will be particularly challenging without a sea change in current attitudes and behaviours towards the opportunities of the online world.

In terms of regional differences for the development of nurturing of digital industries going forward we look again to the Lloyds Digital Business Index mapping digital maturity and the prevalence of Basic Online Skills amongst SMEs and Charities. For businesses with Basic Online Skills we can see that regions such as the North West and the East Midlands are lagging behind, with 38% and 35% respectively. These are businesses and charities that lack the basic skills to safely and securely search, communicate and transact online. Conversely, London and the South East do the best defined by this metric. Similarly, the South East, South West and London also have the highest levels of business and charity digital maturity, whilst Northern Ireland, Scotland and Yorkshire & the Humber have the lowest.

The BBC Media Literacy Report[15] offers some insight into the level of digital skills among adults across the UK. The report shows that Yorkshire & Humber has the highest levels of adults (86%) possessing Basic Online Skills, whereas other regions such as Scotland and Northern Ireland are further behind scoring 70% and 77% respectively.

Indeed, the digital maturity of businesses and charities, as well as adult skill levels are reflected in the location choices of existing digital industries across the UK. The NIESR mapping of digital industries[16] shows significant clustering around London and the South East, with regions of significantly lower activity found in central Wales, parts of the North East, North West and Scotland.

Future workforce

4. What skills do future workers need in order for the UK to be globally competitive?

How do the digital skills required for technical roles compare to those needed by the wider workforce to operate in a digitally competitive environment? Can the current supply chain deliver this?

5. How are we teaching students in a way that inspires and prepares them for careers in the future workforce in occupations that may not yet exist, rather than the current one? How can this be improved?

6. How are schools preparing to deliver the new computing curriculum in an innovative way?

7. How can the education system develop creativity and social skills more effectively?

8. How does the current post-16 system inspire and equip students to pursue careers in the future workforce in occupations that may not yet exist? How can this be improved?

The challenges of a new educational paradigm

Since the dawn of the Internet twenty five years ago, digital information and communication technologies, fuelled by cheaper, faster computing power and an increasingly hyper-connected global network of people, machines, infrastructure and devices are continuing to have a transformative impact on the concept of education and skills. This new hyper-connected information environment continues to unleash recurring waves of innovation and creative destruction creating radical new business models, industries and jobs.

As the OECD noted in a landmark paper published over a decade ago – the role of education has increasingly become a double-edged sword.[17] As our societies and economies become progressively more knowledge-based the polarisation of opportunity between skilled and un-skilled individuals is set to grow exponentially, with rich rewards for those with the right aptitudes and skills and stiff penalties for those who find themselves without those capabilities. In this environment of permanent and accelerating innovation and invention, the days when schools and universities offered learners a portfolio of knowledge and skills which remained relatively up to date and relevant for the remainder of their lives are now definitively long gone. Instead the requirement for all individuals to continuously and iteratively update their skills and experience from “cradle-to-grave”[18] has become an ever more pressing and urgent necessity, which formal education systems have struggled to metabolise.

The renewed importance of lifelong learning in a digital age

Since the concept of lifelong learning was originally developed in the 1960s, its importance has been steadily and cumulatively recognised in international policy making circles.[19] And yet a 2014 EU consultation on future education and skills policy acknowledges that progress towards promoting the key competences for lifelong learning set out in the 2006 European Parliament and Council Recommendation which are “crucial for both employment and social inclusion” have been “disappointing”:[20]

“One in five European adults has only basic skills in literacy, one in four has basic numeracy skills and lacks the skills to effectively make use of ICT. This further stresses the need for lifelong learning and flexible learning pathways, which – at any point in time – would enable individuals to update and upgrade their skills.”

In this context Basic Online Skills are a critical enabler for broader access to today’s opportunities for lifelong learning. Familiarity with the basic competencies required to locate, access, exploit and share digital information, tools and resources, enable individuals to to embark on self-motivated and self-directed learning journeys in ways which were impossible a decade ago. These newfound opportunities are further amplified by the looming transformation of the global education landscape through the proliferation of Open Education Resources and Massive Open Online Courses (MOOCs). These new flexible digital learning channels simultaneously threaten to disrupt established educational institutions, whilst democratising access to knowledge and qualifications to anyone with the baseline threshold of Basic Online Skills to access these resources.

The link between Basic Online Skills and employability

Access to online resources and basic digital skills training offer disadvantaged individuals enhanced opportunities to increase their employability. This correlation is emphasised in the European Commission’s March 2013 Joint Research Centre Report on ICT and employability:

“. . .e-inclusion intermediaries play an important role in supporting those at risk of exclusion develop their digital literacy and employability . . . ICT skills can be seen as ‘gateway skills’ without which a person’s likelihood of finding employment would be significantly reduced. Moreover, ICT skills can also serve to enhance a person’s employability profile, particularly when combined with other skills and attributes, or as a catalyst for further skills development.”[21]

Indeed ICT skills are valuable not just because they improve future chances of employment, but also because they help increase the self-confidence of individuals, as well as expanding their opportunities to search and apply for suitable job vacancies online. As the European Commission’s Staff Working Document on demographic and social trends published in February 2013 illustrates:

“ICT skills have become crucial for the employability of individuals, supporting individual empowerment (development of self-confidence and self-efficacy) and the development of other skills, such as transversal skills (social networking, collaboration, problem-solving, language skills), job search skills, and e-learning skills. . . Moreover, ICT skills facilitate access to the labour market as they help people search for jobs more effectively and can reduce the duration of unemployment.”[22]

Go ON UK’s partnership model is specifically designed to empower local e-inclusion intermediaries and digital champions across local government, local businesses and local voluntary and community sector organisations to embed the provision of Basic Online Skills across all their customer-facing channels and share their digital skills with local communities.

The Adult Skills Budget needs a more substantive focus on basic digital skills

In 2015-16 the Adult Skills Budget, administered by the Skills Funding Agency, will allocate just over £2 billion[23] to support learners and employers - which represents a 19% reduction on current funding levels.[24]

The Skills Funding Agency’s 2012-13 Annual Report[25] states that its strategic direction is guided by two key Coalition Government Skills Strategy documents: Skills for Sustainable Growth (BIS 2010) and Rigour and Responsiveness in Skills (BIS/DfE 2013).

The 2010 BIS report[26] acknowledges in a section entitled “digital skills” that “using a computer and the internet are now basic skills for employability, and for many other aspects of learning and living.”  

Despite this encouraging start it is disappointing to note that the follow up strategy document[27] produced by BIS and the Department for Education in 2013 contains no references to digital skills throughout its 44 pages. Similarly the Skills Funding Agency 2013-16 Funding Statement[28] also has no references to digital skills, computer skills or online skills throughout its 60 pages.

We are falling behind mainstream EU approaches to basic digital skills

This represents a surprising disconnect from mainstream EU level policy thinking. For example the sixth pillar of the European Commission’s Digital Agenda for Europe, published in 2010 – Enhancing digital literacy, skills and inclusion – includes key actions for “Member States to implement by 2011 long-term e-skills and digital literacy policies and promote relevant incentives for SMEs and disadvantaged groups” (Action 66);[29] and for “Member States to mainstream e-learning in national policies for the modernisation of education and training…”(Action 68).[30]

Furthermore, the new EU Regulations which govern the priorities for the European Social Fund 2014-2020, Article 2, Section 2(b) call for “Enhancing the accessibility of, and use and quality of information and communication technologies through the development of digital literacy and e-learning, and investment in e-inclusion, e-skills and related entrepreneurial skills.”[31]

High level issues

• While reading, writing and numeracy are justifiably essential skills that dominate basic skills funding, the fact that basic online skills have effectively become the 4th pillar of literacy seems to be continually overlooked in this equation.
• The current Skills Funding Agency 2013-2016 funding statement refers to the importance of using ICT in innovative ways – but seems to ignore the importance of basic online skills and inclusion.
• Skills funding frameworks are increasingly moving to recognise that outcomes such as employment are equally as important as qualification completion. As digital skills will be a basic entry requirement for the vast majority of jobs going forward; these skills will clearly be key in successfully achieving these new funding outcomes.

Specific issues

• All current Adult Skills Budget apprenticeship frameworks include English and Maths as functional skills – but only some include digital skills.
• New Trailblazer apprenticeships standards make no mention of digital skills
• Current Adult Skills Budget delivery of short digital skills courses have been cut (any courses providing less than 15 credits are no longer fundable) and yet these are precisely the kinds of entry level qualifications which are urgently required to develop basic online skills.

Shared Language – demystifying and democratising Basic Online Skills

Much of the language used to articulate the benefits of digital skills and the online world can be alienating and off-putting to many of the people we most want to support and engage with.

In this context, Go ON UK and partners identified the importance of assessing which language most appeals (and which terms serve as barriers) to the 19%[32] of UK adults and 31%[33] of small businesses and charities without Basic Online Skills.

Based on recent research commissioned by Go ON UK and the BBC, we have developed an easy to adopt glossary of shared language, making it super simple for anyone or organisation to better communicate with these audiences.  As part of their Digital Skills Charter commitments, Go ON UK partners are now adopting the findings in their own communications plans.

Common Definition of Basic Online Skills

We have worked with key experts[34] in the fields of learning and technology to identity the Basic Online Skills required for every individual, business and charity to be confident and secure online.

For a full description and details of the individual categories please visit the Go ON UK Basic Online Skills page

Short- and medium-term support to the digital sector

9. How can the digital sector be supported in the short- and medium-term? What is the role for higher and vocational education, national colleges, industry, and industrial policy?

10. Is there a need for increased high skills immigration in the short-term? What are the implications of this?

11. Is there an inclusion agenda in relation to digital skills in the workplace? How are groups with protected characteristics such as older people, those with disabilities, and women, being engaged? How can this be improved?

12. What do the best local skills delivery models look like? What is the role for local Government, Local Enterprise Partnerships (LEPs) and the third sector?

The need for a holistic approach to the digital skills ecosystem

At an overarching strategic level, future industrial policy needs to take a holistic approach to the entire digital skills ecosystem – encompassing basic digital skills alongside intermediate and higher level capabilities. There needs to be wholesale recognition in future policy making that the future  supply of intermediate and higher level skills will be significantly dependent upon the number of learners who can access opportunities to develop basic digital skills today.

There needs to be more developed understanding of both the key interdependencies of the digital skills ecosystem (the way the learning conveyor belt from basic to intermediate to advanced skills functions) as well as the key distinctions between the different types and levels of skills required in different social and commercial circumstances. A recent report from a Digital Policy Alliance’s Working Group on 21st Century skills, Chaired by Lord Lucas noted that at one level the majority of jobs now require basic digital skills; on a second level over 50% of jobs need significant digital skills (for example editing a web page); whilst a third level of positions require the technical knowledge to “develop, install, maintain and secure” digital products and services.[35] Blurring these distinctions does not help us assess which digital skills are required under which circumstances – but ignoring their interdependencies also limits our ability to develop a comprehensive strategy.

Keeping up with the pace of innovation and change

It is also essential to remember that digital business models, platforms, products and services are currently evolving and innovating at an ever accelerating pace – which means that our definitions and categorisations of digital skills must not be too closely wedded to specific contemporary technologies, tools and applications. Given that what constitutes the basic threshold of digital capability which enables an individual or an organisation to participate in the digital world today may look radically different in just a few years – we must ensure that our definitions our capable of embracing future innovation and evolution. Instead our definition of basic online skills should be pegged to what the possession of core digital aptitudes allows a person to accomplish or achieve (as illustrated by our common definition of Basic Online Skills provided at the end of the last section).

With this in mind, Go ON UK continues to analyse and assess emerging digital skills frameworks to identify scope for iterative improvements and adaptations to its own methodology. A topical example of this is the European Commission’s Institute for Prospective Technological Studies DIGCOMP project. Last year this initiative published a report summarising its review of 15 international digital skills frameworks with the objective of establishing a common European framework for digital competencies which covers all skill levels. The resulting research paper developed a matrix which captures 21 separate digital competencies divided across 5 core skill areas and three levels of attainment (foundation, intermediate and advanced).[36] For the most part these core skill areas are aligned with Go ON UK’s current definition of Basic Online Skills – although we are currently investigating the opportunity to integrate two of the core competencies identified (problem solving and content creation) into a revised version of our definition.

Matching supply with demand for digital skills

Last year O2 published a report which analysed the Future Digital Skills Needs of the UK Economy. [37] The report estimates that the UK will need 745,000 additional workers with digital skills to meet rising demand from employers and fuel the UK economy over the 2013-2017 period - of which up to 182,000 could be supplied by new entrants (e.g. young people under 25 entering the workforce for the first time or retraining from other roles).[38] O2 projects that the loss of economic output associated with these unfilled job vacancies could amount to between £1.6 billion and £2.4 billion per year by 2017.[39] In contrast, the report suggests that if these vacancies were to be filled by domestic employees (as opposed to these growth opportunities being captured by non-UK companies, or UK companies outsourcing these functions overseas) then the additional output unlocked could add a further £11.18 billion per year by to our economy by 2017.

This example illustrates significant underperformance in the operation of the current UK market for digital skills. Based on these findings the report calls for increased support from business and industry in the successful delivery of digital education in schools, as well as greater collaboration between Government and businesses for digital skills exchange programmes and incentivise small digital businesses to offer young people work experience.[40]

Further steps to support a more effective matching of the supply and demand of digital skills include:

• Raising awareness among young people and school leavers of the multiple applications and opportunities associated with digital skills across all industries and sectors.
• Helping young people to identify the skills that they already have which are valuable in a commercial context. Creating and sharing content, running social media accounts, using apps and mobile services are now sought after skills for almost all business sectors. Younger job seekers should be supported in marketing these capabilities more effectively to employers.
• Enhanced dialogue between employers and educational institutions to provide students with links to the world of work, an understanding of the kinds of specific skills they require, and input from industry on current course content.
• Providing better information on how businesses can train and equip existing staff with the digital skills they need rather than outsourcing some of these functions to external suppliers – and highlighting how current public, private and third sector programmes and initiatives can assist in this area.

Case Study – Go ON UK’s local partnership model

At the heart of our partnership model is our belief that a shared problem needs a shared solution – and that the most effective way to deliver access to Basic Online Skills is through the engagement of cross-sector national, regional and local stakeholders with detailed knowledge the needs of their own communities. Our partnership model delivers a multiplier effect by creating a coordinated ecosystem of dedicated partners which offers a network for sharing and up-scaling innovative approaches and good practice Go ON UK offers local partner organisations a range of resources, communications support, propositions, campaign and marketing tools, incentives and practical local support.  These tools and resources can be tailored to local priorities and needs. Above all our objective is not to dictate a one size fits all solution, but instead to leverage the knowledge, expertise and resources across our diverse network to deliver access to Basic Online Skills to all individuals and organisations across the UK.

The Go ON UK regional partnership model implements a sequenced approach to super-charging Basic Online Skills which includes the following phases of activity:

• Engage – pre-engagement with local stakeholders and leaders committed to improving Basic Online Skills
• Promote – networking activities and events to recruit a wider ecosystem of local partners
• Embed & Enhance – establish regional steering group to enable local organisations to form delivery partnerships to deliver Basic Online Skills training
• Sustain – support existing partnerships with online digital champion resources available from DigitalSkills.com, maintain steering group oversight and review of partnership activities and deliver awards programme to recognise local successes

This model was initially successfully piloted in October 2011 during the Go ON Liverpool campaign which reduced the number of offline adults in the city by 55% in just 18 months. Building on the success of Go ON Liverpool, since October 2013 Go ON UK has rolled out this delivery model via regional programmes in the North East, Northern Ireland and the North West.

We also commissioned MTM London to conduct an independent evaluation[41] of the North East regional programme which is scheduled for publication in September 2014. The independent evaluation concluded that “The North East Pathfinder is valuable proof of concept for the Go ON UK cross-sector partnership model” whilst identifying key elements of success:[42]

The pathfinder was successful at mobilising a diverse group of partners behind the Basic Online Skills Agenda:

• All 12 local authorities signed the Digital Skills Charter
• Over 120 partners engaged in the pathfinder

There is evidence of successful and sustainable partnership forming and of the envisaged multiplier effect in action:

• 40+ partnerships formed to deliver Basic Online Skills
• Over 1,500 Digital Champions recruited
• 3,000 adults reached through Newcastle Central Library alone

In addition, the evaluation also identified a number of specific areas where the model could be refined to achieve even greater impact and supplied ten key recommendations – all of which have been implemented in the context of Go ON UK’s subsequent regional programmes in Northern Ireland and the North West.

Industry

13. What are the barriers for businesses, particularly small and medium enterprises (SMEs) preparing to operate in a knowledge-driven economy? How are these best overcome?

14. How can businesses help equip the workforce with new skills in a rapidly changing environment?

Purely analogue businesses operate at a disadvantage in a digital market place

According to Go ON UK research, although 92% of SMEs identify themselves as being online, 40% do not have a website and only 33% actually conduct online transactions (buy or sell products or services online). A 2013 report by the Federation of Small Businesses “The Digital Imperative: small businesses, technology and growth” quotes a study by McKinsey which identified that SMEs with a strong online presence grow more than twice as fast as those with no or minimal web presence, generate more than twice as much from exports and create twice as many new jobs.[43]

The overarching lesson is clear, organisations need to be online and invest in developing their digital capabilities if they wish to grow their customer base, access international markets or work with larger firms. In 2012 online sales in the UK reached £164 billion,[44] which indicates the scale of the missed opportunity for firms who aren’t transacting online.

A poverty of skills, awareness and aspiration

One of the key barriers preventing many SMEs from operating successfully in an increasingly digital market place, alongside a lack of digital skills, are that many firms continue to hold unenthusiastic attitudes towards digital business opportunities. The Lloyds Digital Business Index[45], a national survey of 2000 SMEs and charities found that one of the primary reasons for businesses attaining low levels of digital maturity was a belief that the Internet was irrelevant to their business model, that their core customers were not online - or that they felt that they were unprepared for the increased customer demands it would bring. Additional barriers include the cost of setting up, managing and maintaining a website, a lack of expertise and capacity in exploiting digital marketing/sales channels, as well as concerns that an online presence may provide intelligence on services and pricing information to competitors.

To successfully mitigate these barriers we need consider how better resources can be provided to educate SMEs on what their skills requirements are. 75% of SMEs and charities currently do not allocate any budget to developing digital skills, so while many of these organisations are looking for extra support and capacity in this area, 25% are not aware of which specific skills they need.[46] In addition, there is a need to raise awareness that the costs of establishing an online presence will usually be substantially offset by the future cost savings and increased profile, sales and revenue secured through digital channels. Furthermore, while advertising your services and prices will provide information to competitors – without an online presence most firms will be unable to successfully compete with rival businesses which are effectively marketing themselves and selling themselves online.

Further recommendations from the 2013 O2 report on the Future Digital Skills Needs of the UK Economy [47] highlight some useful approaches:

• Increased support to encourage greater numbers of digital start-up enterprises at a local level, particularly in local areas not currently well served by incubators or other support infrastructures
• Mentoring from established companies helping digital industry start-ups to grow and scale-up more quickly
• Local finance initiatives to help new digital start-ups and micro-businesses to establish themselves grow more quickly
• The development of stronger graduate-SME digital knowledge transfer partnerships

Go ON UK’s SME Digital Capability Programme

In 2012, a report from Booz & Co, “The Case for Universal Digitisation”, estimated that digitally empowering the UK SME sector could unlock economic gains of £18.8 billion.[48] In line with that assessment, the Government’s Information Economy Strategy, published in June 2013, includes a commitment to work in partnership with industry to assist the UK’s 1.6 million SMEs in making the transition towards transacting and marketing themselves online.

In support of this important objective, Go ON UK has launched its own SME Digital Capability Programme in partnership with the Department for Business, Skills and Innovation – designed to empower SMEs across the UK to capitalise on the time and cost savings associated with transacting online whilst maximising productivity and growth. We estimate that in the last year this initiative has inspired 300,000 SMEs to investigate online business opportunities, of which 5,500 have taken further action to transition towards transacting and marketing themselves online.

As the programme enters its second year, our focus will be on developing enhanced corporate partnerships and engineering a scalable digital incubation network for SMEs in collaboration with Local Enterprise Partnerships and Growth Hubs. This will include:

• Inspiring – General communications-led outreach to inspire business to take their first digital step, sharing of peer-to-peer and segmented content and explanation of business benefits, using targeted incentives where appropriate to encourage engagement.
• Educating – Explain the available options and provide choices for learning and sharing of best practice, use online and offline activities to guide the digital development of SME’s.
• Supporting – Signpost and support training and skills development, create modules for the specific enhancement of transactional skills and enable user-defined journies to acquire a range of advanced skills.
• Promoting – Promote case studies and tell peer-to-peer stories, encourage online community engagement to advocate, support and inspire action.

Infrastructure

15. Does the UK have a competitive infrastructure to support a knowledge-driven economy? How does the UK compare to other countries?

How long is a piece of string?

To an extent, the question of whether the UK has a sufficiently competitive digital infrastructure to support a knowledge-driven economy depends on your chosen point of reference. According to the 2014 European Broadband Scorecard produced by OFCOM[49] the UK compares favourably in terms of internet infrastructure, with 95% of all households having access to current generation broadband services – equal with the top five performing countries in the EU (France, Spain, Italy and Germany).

When it comes to superfast broadband, the UK also sees improved performance having significantly increased its coverage in recent years from 55-60% in the previous scorecard to 70-75% in the latest iteration. The UK now has the highest level of coverage of the top 5 EU countries, overtaking Germany which has 65-70% coverage.

However, a report[50] published in March 2014 by the campaign group Digital Business First claims that 10 million UK premises (homes and businesses) are currently unable to access superfast broadband services – limited to only standard broadband, or in some cases no broadband at all. In addition, wider international comparisons paint a slightly less complimentary picture in a context where the Korean Ministry of Science and Technology announced in January 2014 its plans to deliver a national 5G wireless network offering speeds of 1Gbps by December 2020.[51]

There is also a level of controversy over what constitutes standard broadband and superfast broadband. Current Government plans include providing all households in the UK with access to broadband with a download speed of at least 2Mbps, and 90% of the UK with superfast broadband (at least 24Mbps).[52] However, according to OFCOM’s 2014 Broadband Score card, the European Commission defines standard broadband speeds as between 144kbps and 30Mbps – and superfast broadband as over 30Mbps. This would imply that by European standards, the Government’s current minimum target for superfast broadband would still be defined as standard speed broadband!

Nevertheless, the requirement to delivery faster broadband speeds also need to be balanced against the anticipated and likely future usage and uptake of high bandwidth services among individuals and businesses across the UK. This is a particularly challenging task given the rapid pace of innovation and change affecting current digital business models, services as well as evolving consumer appetites and behaviours. Underestimating demand will risk a lack of connectivity which will put a brake on innovation and stifle economic growth. On the other hand, overestimating demand and over investing in infrastructure will result in scarce resources being diverted from other valuable policy objectives.

Access to infrastructure and digital skills – two sides of the same coin

In many ways Basic Online Skills and broadband infrastructure represent opposite sides of the digital inclusion coin – with a potentially interdependent and symbiotic relationship between these two variables in terms of fully unlocking the socio-economic benefits of digital inclusion. Possession of Basic Online Skills has limited value without access to digital devices and digital communications infrastructure (although public libraries, schools and other community providers play role in mitigating this). Similarly, access to digital devices and digital communications infrastructure yields a limited benefit when individuals and organisations lack the skills or the inclination to exploit these opportunities.

Interestingly, OFCOM’s latest Communications Market Report published on the 7th of August notes that in quarter one of 2014 the number of adults with household internet access in the UK reached 82%[53] - and just under fifth (19%[54]) with no household access). It is hard to imagine that the correlation between the 20% of UK adults who lack Basic Online Skills, and the 19% of those without household access to broadband is entirely coincidental. The report also notes that 82% of individuals who reported that they had no plans to get the internet at home in the next 12 months cited “lack of interest” as the primary factor for that decision (nearly two and a half times the number who cited cost or service availability as the key barrier).[55]

In Go ON UK’s experience of partnering with regional and local stakeholders to deliver access to Basic Online Skills – lack of interest is most frequently a proxy answer provided when an individual or organisation lacks the digital capabilities required to appreciate the wealth of opportunities the online world has to offer. In such instances, taking steps to demonstrate how digital skills can empower and enable them to accomplish personal, social and commercial objectives whilst demystifying their fears of the digital unknown represent powerful drivers for igniting interest and building motivation to acquire new skills and engage with the online world.

Suffice to say, delivering inclusive nation-wide access to Basic Online Skills, digital devices and broadband services and infrastructure represent an essential prerequisite if we are to establish the UK as a leading digital nation and enjoy the social and economic benefits associated with innovation, job creation and growth. Indeed, the latest report from the UK Digital Skills Taskforce highlights the critical importance of matching the Government’s £1 billion investment in improving the UK’s broadband infrastructure with a corresponding investment with digital skills and education:

“. . . extending broadband across the UK, to 95% of premises by 2017. Such a transition has been an   important step to strengthening the UK’s digital economy. However, the next stage must be to have a similar roll out of basic digital skills for all. It would be a considerable waste of that large investment if well over 10% of the population continue to lack the skills to take advantage of an improved physical digital infrastructure.” [56]

5 September 2014