Platforms for growth


This latest report from UK think tank the Centre for Policy Studies looks at how digital technologies can boost productivity.

22% of SMEs still don’t use digital platforms, such as Google, Facebook and LinkedIn, or software for digital accounting, HR, and customer relationship management, in their daily operations. This is despite over three-fifths (61%) of those that do agreeing that technology and digital platforms have helped their business to expand, and almost half (49%) saying it has allowed their businesses to compete more effectively against larger brands. Reaching new audiences’ was the single main reason why SMEs use digital platforms (chosen by 29% of respondents), followed by ‘interacting with customers’ (18%), ‘handling financial data’ (15%) and ‘low-cost advertising’ (13%). This report shows that technology and digital platforms have been crucial in boosting the performance and productivity of businesses. This is especially true for small and medium sized businesses (SMEs), which now account for 99.8% of all businesses in the UK. However, it warns that Britain is still not making the most of this opportunity – not least because of a failure to understand the full economic impact of the digital revolution.

The report, which will be launched today by the Minister for Small Business, Paul Scully MP, contains new polling and results of focus groups of SME owners and senior managers, carried out in the wake of the pandemic. The polling, by YouGov, shows that three-fifths (62%) of SMEs agree that without digital platforms, it would have been harder for them to operate during the pandemic, and 36 per cent now view digital platforms more favourably than before the lockdown. Demonstrating the increased digitisation of our economy, the value of e-commerce sales in the UK non-financial sector have increased by nearly 60% since 2009, and stood at around £688 billion in 2018. Amazon claims that SMEs using its platform achieved total export sales in excess of £2 billion in 2018. ‘Platforms for Growth’, written by CPS Business Researcher Eamonn Ives, argues that most SMEs rightly see the digital revolution as a net positive, and that the Government needs to ensure that the ‘long tail’ of less productive firms can take full advantage of the opportunities it offers.

The report, supported by Facebook, is part of the CPS’s ‘Going for Growth’ series, which explores how Government can help businesses to drive the post-Covid recovery. It calls for an urgent review of the Apprenticeship Levy to ensure employers use funds to invest in digital training that will deliver recognised productivity benefits for their businesses. Introducing tax breaks for self-funded training would also encourage more people to improve their digital literacy skills. To improve digital infrastructure, the report also highlights the need for flexibility around the height and width of 5G masts to increase connectivity, as well as a comprehensive new cyber security strategy to take effect after 2021 to provide reassurance for those who operate online.

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