20 January 2020

Boosting the internet economy is a great way to help level up Britain

By Daniel Dyball

The internet is an integral part of our daily lives, providing vital products and services, but most of us probably don’t realise just how much it contributes to our economy.

In fact, the internet sector accounts for almost 400,000 jobs, 80,000 businesses, and £45bn in Gross Value Added to the UK’s GDP.

New research released today by the Internet Association shows how a vibrant internet economy is contributing to communities up and down the country. Despite common perceptions that the internet sector is concentrated in London and the South East, the data show a very different story.

Take Pontypridd in Wales, which our research finds has the highest concentration of internet businesses in the UK, accounting for 13.4% of all local companies.

This is in part driven by a strong local ecosystem. The Centre of Excellence in Mobile and Emerging Technologies at the University of South Wales supports small businesses through access to funded research and development and the local 5 to 9 Club provides workshops on entrepreneurship. That focus on creating a thriving digital environment has helped local start-ups like Bring-it, a food delivery app, succeed.

But while our research shows encouraging signs of the internet sector growing strongly in areas outside London and the South East, there is still room for improvement.

The new government is committed to ‘levelling up’ so that every part of the UK feels the benefits of economic growth. Encouraging the internet sector to thrive is as good a place as any to start.

Improving digital skills in schools by embedding computer science subjects into the curriculum would be welcome. A wide-ranging approach to education on digital citizenship – working in partnership with industry – would also help boost the whole nation’s internet skills and literacy.

And we should encourage faster adoption of digital technology across the entire economy to help drive productivity and encourage innovation – by looking in particular at how the Apprenticeship Levy can be used to help upskill SMEs and help them grow.

Our approach to innovation needs a reboot, too. The UK currently spends 1.69% of GDP on R&D, well below the estimated EU average of 2.07%. R&D tax incentives can be a powerful tool, and the Government should increase the amount companies can spend on R&D tax free to boost digital investment and innovation.

Looking ahead to life outside the European Union, our future free trade agreements should have strong digital provisions that enable cross-border data flows, encourage vibrant e-commerce markets and facilitate digital exports.

The internet economy is flourishing in many parts of the UK, and we should be proud of that. But it will only be by adopting positive policies that the new government will ensure every corner of the UK benefits fully from the internet revolution.

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Daniel Dyball is Executive Director of the Internet Association