Enterprise Nation joins call on government for better small business digitisation support

Emma Jones, founder of Enterprise Nation, is among those to sign an open letter that calls on the government to boost growth through better support that helps small businesses to improve their digital skills.

The letter has been sent to business secretary Jonathan Reynolds and technology secretary Peter Kyle ahead of the government's upcoming Budget and Global Investment Summit.

Artificial intelligence is projected to boost UK GDP by up to 10.3% by 2030 and bring huge benefits for UK businesses with better productivity and efficiency gains. However, it will first be deployed through updates to business software already in use, meaning that if UK businesses are behind on basic digital adoption, they will soon be behind on AI adoption.

Better support for SME digitisation is something the government can get started on right away with practical interventions. The letter proposes:

• Appoint a single minister with responsibility for driving digitisation across the economy.

• Deliver a comprehensive digital adoption plan with clearly defined targets by 2030.

• Expand the Made Smarter Adoption programme to all sectors of the economy.

The letter has been organised by TechUK. As well as Enterprise Nation, it has been signed by representatives from Confederation of British Industry, Federation of Small Businesses, Intuit, Sage and Xero.

The full letter calling for better SME digitisation support

Dear Secretary of State for Science, Innovation and Technology, and Secretary of State for Business and Trade,

Ahead of the upcoming fiscal event and Global Investment Summit, we write to you to advocate for more SME digitisation support. This will aid the Government to achieve its five missions while addressing productivity challenges and enabling SMEs to unleash the benefits that technologies like AI bring.

The UK is home to some of the most innovative firms in the world and an attractive place to start and grow a business. We are ranked fourth on the Global Innovation Index 2023 and highest ranking G7/G20 economy. But the UK is experiencing a productivity problem, with the gap between the least and most productive firms in the UK is much bigger compared to other advanced economies.

This means a small number of businesses at the top of the curve are very productive, followed by less productive SMEs. Small businesses often have limited time and resources to spend on innovation, so incentives and support are vital to closing this gap.

Ensuring all businesses are equipped to take full advantage of digital technologies is essential enhancing the performance of SMEs as well as grow the UK's tech economy.

Analysis has shown that this could add up to £232 billion per annum to the economy, while at the same time improving the UK's resilience against economic shocks. Enterprise Nation's research reveals that adopting tech tools can save business owners an average of three and a half weeks per year. For some, the time savings are even more dramatic, with one in six users reporting a full seven weeks gained.

Beyond the productivity gains, technology adoption has a positive impact on workers and their wellbeing, with CBI analysis showing that people in digitally enabled workplaces are 51% more likely to have strong job satisfaction.

AI is projected to boost UK GDP by up to 10.3% by 2030 and bring huge benefits for UK businesses with better productivity and efficiency gains. AI is not only a tool exclusive to large or digitally intensive businesses, but an enabler of productivity and competitiveness for all businesses.

However, it will first be deployed through updates to in use business software, meaning that if UK businesses are behind on basic digital adoption, they will soon be behind on AI adoption as well. Enhancing SME digitisation support is crucial for securing our international competitiveness and fully capitalising on the economic opportunities that AI offers.

Ahead of the Global Investment Summit this Autumn, the UK has a chance to turbocharge its digitisation offer and the digital adoption needed to drive investment. This is vital to remain competitive with other OECD countries. Research from Be the Business indicates that while UK businesses prioritise management and technology adoption, their investment levels lag behind other G7 nations.

Despite 92% of SMEs acknowledging the importance of technology for their survival, they plan to increase technology investment by only 13%, which is below the European average of 18%. Support and incentives for SMEs to digitise are critical to closing this gap. Research from the Federation of Small Businesses also shows that 39% of SMEs would be encouraged to innovate if they had more information or support, and 30% identify cost as a top barrier to improving their products.

There are also positive benefits that better digitisation will bring to tax collection and reducing the tax gap. Digital records and digitising the way SMEs run and operate their business mean better oversight, and better efficiency in tax payments.

Better support for SME digitisation is something the Government can get started on right away with practical interventions. We propose:

• First, appoint a single minister with responsibility for driving digitisation across the economy, with a specific focus on micro and small businesses. Industry is already leading the way in supporting the digitisation of the economy, but to ensure all businesses reap the full benefits, the Government must act as the convenor to ensure delivery.

• Second, deliver a comprehensive digital adoption plan with clearly defined targets by 2030, with a focus on the right underpinning infrastructure, regulation and skills needed to succeed. This will provide the right signals and longer-term certainty for businesses, especially SMEs, with often limited headroom. This should include digitisation targets reinforced by incentives and support to drive up rates of tech adoption, using existing frameworks such as the European Commission's Digital Decade policy programme.

• Third, as previously advocated by techUK, the CBI and FSB, expand the Made Smarter Adoption programme to all sectors of the economy. The CBI estimate the fiscal cost of this measure to be £425 million annually. The expansion will support businesses with the advice and funding they need to adopt technologies and thrive. Private sector experience and knowledge will be key to the programme's successful expansion. Demonstrating the growth opportunity, the North West Made Smarter pilot programme injected up to £115m in GVA to the region and boosted productivity for 80% of SMEs who work with the scheme by up to 25%.

Industry is already leading the way in supporting SMEs to digitise and stand ready to support you in your mission to grow the economy, whilst placing digital technology at the heart of delivery on this.

Yours sincerely,

• Julian David, CEO, techUK

• Naomi Weir, director of innovation, Confederation of British Industry

• Clare Elsby, policy champion for innovation and technology, The Federation of Small Businesses

• Emma Jones CBE, founder, Enterprise Nation

• Ciarán Quilty, senior vice president, international, Intuit

• Steve Hare, CEO, Sage

• Alex von Schirmeister, managing director, UK and emerging markets, Xero