The Prime Minister's goals for investing in Britain's digital infrastructure should include next-generation broadband and more venture capital
Prime Minister Gordon Brown has earmarked £18bn for investment to help UK Plc get through the economic downturn—and with only around £1bn spent so far there's still plenty of cash on the table. Speaking in an interview with The Observer, Brown revealed "digital infrastructure" is one area he's looking to invest in. But what are his options? Here we look at five tech investments that could help the UK weather the economic storm—and sail out the other side…
1—Switch on next generation broadband
Much head-scratching has been undertaken by politicians, analysts and industry suits about the issue of next generation broadband infrastructure in the UK, with our creaking copper wires having given us a laggard's reputation in the global broadband speed stakes.
Luckily, there are several solutions out there—which range from being very expensive to very, very, very expensive—which explains the private sector's reluctance to put its hand in its pocket and start ripping and replacing.
That said, last summer telco BT announced it will invest £1.5bn in deploying fibre to 10 million homes by 2010. But that still leaves plenty of UK households facing a fibreless future.
The government advisory group on broadband—the BSG—estimates the cost of a partial fibre deployment, taking superfast lines to the curbside cabinets, would cost an affordable £5.1bn.
The cost of a full fibre to the home deployment is still probably too steep for this fiscal stimulus—estimated at £28.8bn. That said, if the government were to commit a section of that sum, the private sector may be persuaded to add its own cash to the mix and the magic figure of £28.8bn may not be so unattainable after all.
Alternatively, the government could go for the budget FTTC option and then spend extra on next-gen wireless technologies to cover the last mile. This patchwork compromise of wired and wireless techs was recommended by a government-commissioned independent report into next-gen broadband in the UK.
As well as future proofing our national digital infrastructure, superfast broadband would also be able to give other next-gen technologies a leg up—for instance, smart metering could piggyback on the infrastructure.
2—Create a nation of techies
Skills shortages are a perennial issue for the UK IT sector—getting enough of the right skills seems to be a problem for many employers—which all too often are reluctant to help themselves by investing in training.
Recognising the importance of attracting new blood to the tech industry, the government gave the green light for a National Skills Academy for IT last year. The Academy's aims are on the modest side, however: it hopes to train 10,000 people in the first three years of operation.
Considering sector skills body e-skills UK calculates that more than 140,000 new IT and telecoms professionals are needed every year to meet the UK's demands, 3,333 new bodies annually is not even close to being enough. The Academy is being funded by £8m of government money, matched by the same level of private investment—so think how many more techies could be trained by a government investment of even a small portion of Brown's £17bn.
If the UK is to transform itself into a knowledge economy, tech skills are going to be essential, and are already increasingly a component of more and more jobs. Moreover as the downturn bites, and more people from other industry sectors are made redundant, reskilling and upskilling these workers to invest in a future tech workforce would surely be money well spent.
3—Become a VC
People don't stop having ideas in a downturn but the cash they need to get their start-ups off the ground dries up. That's where the government could step in to help, with measures such as tax breaks for UK-based tech start-ups, and grants supporting tech R&D work conducted on Blighty's soil.
The government is already seeking to establish a series of University Enterprise Networks in the hopes of nurturing homegrown entrepreneurs but hard cash is what's really needed to boost tech innovation and create the long term wealth associated with it—as seen in Silicon Valley.
Using the £17bn pot as a VC fund available for UK-based start-ups and entrepreneurs to bid for could be the radical move needed to encourage tech innovation.
The PM could then attach long term conditions to companies gaining cash—such as a commitment to staying in the UK, and establish programmes for start-ups to share their knowledge with the community by taking on interns and building relationships with universities and schools.
After all, the total amount of investment Silicon Valley attracted in 2007, for instance, was a mere $10bn—so £17bn could make a major difference to the fortunes of UK start-ups.
4—Encourage smarter working
A change in the law is already looming in April that will enable more UK workers to request the right to work flexibly but for the majority, flexible working is still the exception not the rule.
Nevertheless, the long term benefits of more flexible working are clear: a happier and more productive workforce, as well as one that is larger and more geographically dispersed.
And in tough economic times flexible working makes more sense than ever—it could help businesses to cut costs by enabling them to decentralise operations and reduce office space and expenditure.
To encourage more flexible working the government could offer grants to companies—to ensure they have the necessary tech infrastructure in place and the resources to manage a more dispersed workforce—and to employees to set up home offices.
5—Think of the webby kids
Last year the PM pledged £300m to pay for broadband connections, software and computers for children in around one million homes in low income and jobless families.
Statistics from the Office for National Statistics show internet access at home can mean the difference between a child getting a grade A and grade D GCSE. But a significant proportion of kids don't have the luxury of a home connection—figures released by Ofcom last year found 24 per cent of UK homes with children do not have web access.
According to 2001 Census data around a third of UK households contain dependent children—or around eight million homes. Even after the government hooks up the targeted one million homes via its existing programme there will still be around a million more that remain unconnected. Why not spend a little more to close this digital divide once and for all and pledge a home PC to every school-age child? Presumably the cost of such a tech investment would be along the lines of another £300m—leaving plenty of cash still to spend.
An alternative or complementary tech investment in this area would be to offer all schools grants to provide each child with a laptop—so kids can be guaranteed access to hardware in the classroom as well as at home.