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New IA Research Shows Big Benefits From UK Internet Economy, But Regional Differences

“The next government should make it a priority to ensure every corner of the UK equally shares the benefits that the internet brings to the economy and society. We believe that there is a fantastic opportunity for government and industry to work together to continue to boost the internet sector in the UK…”

Daniel Dyball, UK Executive Director

London, UK – New Research shows that the internet is driving the UK economy forward, but places like Workington – a key battleground at this election – risk falling even further behind the rest of the country.

  • The new regional figures, prepared by Internet Association, show that across the UK the internet industry creates hundreds of businesses and jobs. In the average constituency in the UK, the internet sector is responsible for 120 businesses and nearly 600 jobs.  This comes as national figures have shown that the internet sector provides 80,000 businesses, 400,000 jobs and £45 billion in Gross Value Added to UK GDP.
  • In some of the key northern seats that will decide this election, however, these numbers are much lower. While the internet sector is boosting communities across the UK, where pundits have identified ‘Workington Man’ to be the key voter at the General Election, there are just 20 businesses in the internet sector – the lowest proportion of businesses in England. With previous research by Internet Association also showing that jobs in the digital economy pay, on average, an extra £10,000 per annum, the new figures reveal the important work politicians will need to do to ensure constituencies like Workington share the full benefits of the internet revolution.
  • The figures also highlight a north-south divide. Just three of the top 40 English constituencies with the biggest economic contribution from the internet are located outside of London and the South East: Manchester Central (£420 million value added), Welwyn Hatfield (£172.4 million) and Leeds Central (£147.6 million). Cities of London and Westminster, by contrast, is the constituency with the highest value added contribution from the internet industry (£908.9 million).

Daniel Dyball, UK Executive Director at Internet Association, said: “The regional differences between London and the rest of the country are stark. The next government should make it a priority to ensure every corner of the UK equally shares the benefits that the internet brings to the economy and society. We believe that there is a fantastic opportunity for government and industry to work together to continue to boost the internet sector in the UK – and internet companies are committed to playing their part. An extra tax on the internet economy that would cost jobs and investment is not the answer.”

The new data comes as Internet Association launch their five point plan to help boost the internet industry’s contribution in the UK. The General Election brings with it an opportunity for the new government in December to partner with the internet industry and work together to deliver huge benefits to the economy and society in the UK. The plan calls on policymakers to:

1. Improve digital skills. The benefits of the internet will only be maximised if British people are given the skills to take full advantage. The government should ensure that all parts of society are able to participate and thrive in the digital economy. Scotland’s Digital Participation Charter provides a good model for industry, government and civil society collaboration to teach people digital skills. On education, the government should do more to embed computer science subjects into the curriculum, by making the teaching of coding in schools standard, for example.

2. Support take-up of technology by SMEs. Firms with an e-commerce function can expect to see sales increase at a faster rate than firms that do not trade online. However a third of SMEs don’t have a website, and forty per cent of sole traders have “low digital capability”. The government should encourage faster adoption of digital technology across the entire economy to boost productivity and encourage innovation. Targeted interventions like these can close the internet employment gap between Workington and Cities of London and Westminster.

3. Increase investment in innovation. The previous government’s Industrial Strategy set the goal of making the UK the most innovative country in the world by 2030. This is a positive step – but we now need to see progress on making that a reality. The UK spends 1.69% of GDP on R&D, which is below the EU’s provisional estimate of 2.07%. R&D tax incentives have proven a successful tool to date, and the government should increase the amount companies can spend on R&D tax free in order to encourage digital investment and innovation.

4. Enhance digital citizenship. As the internet becomes a greater part of people’s lives, the expectations for behaviour online should be the same as for behaviour offline. Internet companies have launched a number of digital civility initiatives, and the government should promote a wide-ranging approach to education on digital citizenship (including literacy and civility) – working in partnership with industry. This should include advice for industry on how digital literacy programmes can have the highest impact.

5. Champion digital trade. The internet enables British businesses to export. Cross-border data flows will be especially important in the future as an input into research and production processes. Any future trade agreements should have strong digital provisions that enable cross-border data flows, encourage vibrant e-commerce markets, and facilitate digital exports.

Daniel Dyball, UK Executive Director at Internet Association, continued: “We are firm believers in the benefits that technology brings to everyday life and the economy, and for the potential that internet innovation has to transform society for the better. Beyond the growth-driving policy agenda set out here, internet companies are committed to working with government to get the regulatory environment for the internet right in the UK.”

To read the full manifesto, click here.