There are reasons to be optimistic – if we could just address the digital skills shortfall

Settling into 2023 there is plenty to be gloomy about: the fall-out from the war in Ukraine, inflation, energy prices, the cost of living, strike disruption, BREXIT; the list goes on. It feels rather harder to find reasons to be cheerful, not least as there is a growing national obsession in Britain with talking ourselves down.?

So it is worth reminding ourselves that, while the UK has some particular challenges, we are hardly alone in our struggles. There remain plenty of reasons to be optimistic if we care to look for them. Realism and determination are far more valuable than negativity and pessimism. No matter what one might think of the substance of British Prime Minister Rushi Sunak’s New Year speech, it is hard to disagree with his call to: ‘reverse the creeping acceptance of a narrative of decline. Reject pessimism and fatalism.’?

As he stated, the UK has ‘world leading strengths in AI, life sciences, quantum, fintech, and green technology.’ There is much to celebrate and build upon. Atomico’s State of European Tech 2022 Report points to a 22% fall in UK technology investment last year ($36Bn down to $27.9Bn), one of the biggest falls in Europe. However, the report also highlights that the UK continues to attract significant investment and remains the best funded country in Europe, with 35% of the total investment over the last five years.

The Times offered further evidence on 21st?December, reporting that the UK still leads Europe for funding fast-growth technology businesses, raising over double the funds compared to second-placed France, with Germany further adrift in third.?

A key strand of Sunak’s speech was championing innovation: ‘the more we innovate, the more we grow…the most powerful way to achieve higher growth is to make the UK the most innovative economy in the world.’ It is hard to disagree with the spirit of his words and the UK has a pretty decent story to tell.

Despite large workforce layoffs among start-ups, Atomico reported that the UK has more start-ups than any other country in Europe, with 39,449 of the 160,000 total. Together with Ireland, the UK also has the greatest number of unicorns (118), ahead of Germany, Austria and Switzerland who collectively boast just 77.

None of this can be taken for granted and not surprisingly tech investment has slowed recently, but if we care to look, there is still plenty to shout about and build upon. All of that said, there is one huge barrier to innovation and growth – the dearth of digital skills in our workforce to power progress.

The challenge of attracting and retaining high quality staff has been made harder by the economic slowdown. While wage increases lag behind inflation, the cost to businesses has none the less increased. Digital roles will be particularly tough to fill.?

A couple of numbers to highlight the problem:

- Virgin Media O2 research indicates that the digital skills crisis is costing the UK economy ￡12.8Bn, with 31% of UK workers believing they were passed over for promotion or a pay rise due to a lack of digital skills.?

- A survey by AND Digital showed that 81% of UK managing directors felt that a lack of digital skills is negatively impacting their company.

No matter what statistics you look at or how you choose to interpret them the answer is the same. There are simply not enough people with the digital skills to feed the growth of our tech economy. And the situation is getting worse following the COVID pandemic which sparked an acceleration in digital transformation across the economy.?

Training is not keeping pace with demand. The UK schools and university system is not adapting fast enough to meet the requirement. The Chief Executive of Makers who train tech talent was quoted in The Times in December saying: ‘Computer science degrees have the lowest employability after six months of all UK degrees because they are not focused on work-based skills.’ This is a pretty damning indictment of our universities’ role in addressing the challenge and different answers are needed.

The UK is not alone in facing this digital skills shortage and in struggling to generate fresh skilled workforce; the US, Australia, Canada and our European friends are all in a similar boat. Yet the answer need not be too difficult. Entry level digital skills are not hard to attain. Unfortunately, many people assume that the digital economy is closed to them. It need not be.

The Australian digital skills company?WithYouWithMe?has made great inroads into the UK market through 2022, building on their proven success in the Far East and North America. Their particular focus is on assisting under-represented groups, such as veterans, women returning to the workplace and neuro-diverse to access the digital economy through aptitude testing and training. They are working across the private and public sector to assist employers secure high calibre and committed digital staff, as well as helping them upskill their existing workforce.

They are not alone and plenty of other firms are offering a range of approaches. Hopefully the education system will slowly catch up with the needs of today and tomorrow’s economic and social requirements. In the meantime, investment in companies that specialise in growing digital talent provides a fast and effective way through the current crisis.

Sunak’s speech offered encouragement that the Government recognises the importance of securing funding for entrepreneurial and fast-growth companies. And his aspiration to overhaul numeracy education is acknowledgement of the need to change education to support today’s workplace.?

However, the lukewarm political response to his comments perhaps evidences how few politicians in the UK (or the US or Australia) come from scientific, engineering or technology backgrounds, limiting the Government’s ability to introduce policies to exploit the pace of technological change or to address the digital shortfall.?

Tony Blair, who is a notable exception with a keen interest and understanding of technology, said on The News Agents podcast on 28th?November:?‘I’m obsessed today by the technology revolution and its implications for politics….If I was back in politics today, how you harness that revolution is the single biggest thing and it’s not really a part of our political debate here.’??No matter where you stand on Blair’s legacy, these are wise words to end with.