Changes to Help: to Grow Digital open the scheme to more small businesses
On Monday 25 July, The Department for Business Energy and Industrial Strategy (BEIS) announced that the Help to Grow: Digital scheme, a government initiative that provides free and impartial advice as well as a discount of up to £5,000 for SMEs to invest in productivity-enhanced software, will be subject to major changes. These include:
- An expansion of the eligibility threshold to cover businesses with less than five employees (before only SMEs with +5 employees were eligible). This will mean the number of SMEs able to apply is almost tripling in size, with up to 1.2 million UK businesses being eligible to access the initiative.
- The addition of e-Commerce software to the scheme (alongside the existing Customer Relationship Management and Accounting Software options) will support businesses to sell online and reach new markets.
- The introduction of a one-to-one advice service pilot for prospective SMEs. The aim is for this service to be in place for SMEs later this year.
BEIS will also relaunch applications for software providers to list their software on the scheme with a revised eligibility criteria, including an update of key definitions and will aim to introduce additional routes for SMEs to buy software using the scheme.
techUK and its members welcome these announcements, having actively advocated for an expansion of the Help to Grow: Digital scheme for it to become the true driver of digital adoption and productivity growth that it has the potential to be. These developments are a step in the right direction for more SMEs to be able to reap the benefits of digital adoption, however Government needs to be ambitious in further changes they propose to allow significantly more software options to be added to the scheme, providing more choices for SMEs.
Antony Walker, techUK’s deputy CEO, said:
“Help to Grow: Digital has proven to be an important addition to the government's support for UK businesses, with the potential to deliver real productivity change by supporting SMEs in adopting productivity-enhancing technologies such as CRM, Accounting, and now eCommerce.
techUK and our members welcome the announcement that now more SMEs will be able to reap the benefits of the scheme by lowering the eligibility criteria to include companies with fewer than five employees. These changes are certainly a step in the right direction towards meeting the goal of supporting 100,000 small businesses adopting technology that will empower them to succeed in a highly competitive and digitalised world”
How can the Help to Grow Digital Scheme be changed to incentivise more SMEs to adopt digital technologies in the UK?
The announced upgrades to the Help to Grow: Digital scheme are positive. However, the government can do more to support SMEs in fulfilling their desire for digital adoption. techUK believes that in order to grow, create jobs, generate investment, the government needs to accelerate the pace of digitalisation across businesses of all sizes, in all sectors and all over the UK.
Encouraging companies to invest in digital adoption and the skills to match these productivity-enhancing technologies will be key. Economic modelling shows that further £232 billion GVA per year could be unlocked through effective action by government to encourage digital adoption, illustrating how digital adoption can boost growth of the UK economy. To unlock this potential techUK recommends:
Continue expanding the Help to Grow: Digital scheme
There are still major improvements to be made to ensure this scheme is not a miss opportunity and that we can meet the target to supporting 100,000 SMEs to adopt digital technologies.
The relaunch of the scheme should aim to make the eligibility criteria for software more flexible. Requirments for software should be set in a way that if a product fits the essential criteria and functionalities of e-commerce, CRM, accounting (or any future product added), it should be listed into the scheme. Currently the eligibility criteria for listing software options is too strict and this has meant some popular software used by SMEs is not eligible. Reforming this criteria will give SMEs more choice.
Future changes should also include expanding the number of technologies the scheme covers, including Payroll, Human Resources (HR), Enterprise Resource Planning (ERP) and advanced communication and collaboration tools in the second wave. Future waves could also explore how Application Programming Interface (APIs) or microservices that can be integrated into the existing digital capability, can be introduced into the scheme.
BEIS should also aim to incorporate value added resellers into the scheme, including accountants who are seen by many SMEs as a trusted adviser when purchasing software.
Introducing a Digital Skills & Productivity Tax Credit
Although Help to Grow: Digital is a welcome initiative across the tech sector, it has some limitations. SMEs of different sizes have significantly different demands, with larger SMEs (100 + staff) requiring more complex and expensive solutions. While Help to Grow: Digital can support this kind of adoption, the £5000 voucher would have diminishing returns as the size of the SME and complexity of the software option increase.
Therefore, techUK recommends the government to introduce a Digital Skills & productivity Tax Credit to incentivise companies, particularly larger SMEs (100 + staff), to invest in training their workforce as well as to adopt productivity-enhancing technologies in their business models. This incentive could be deductible against retraining programmes and larger and more complex digital adoption projects.
Overall, the announced reforms to Help to Grow: Digital are welcomed by techUK and our members, and we look forward working with BEIS to deliver these and future changes that will allow the UK to meet the goal of supporting 100,000 small businesses in adopting technology, resulting in productivity gains and positive structural change for the UK economy.
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As Associate Director for Policy Neil leads techUK's domestic policy development in the UK. In this role he regularly engages with UK and Devolved Government Ministers, senior civil servants and members of the UK’s Parliaments with the aim of supporting government and industry to work together to make the UK the best place to start, scale and develop technology companies. Neil also acts as a spokersperson for techUK on UK policy in the media and at Parliamentary Committees.
Neil joined techUK in 2019 to lead on techUK’s input and engagement with Government on the UK-EU Brexit trade deal negotiations, as well as leading on economic policy. He has a background in the UK Parliament and in social research and holds a masters degree in Comparative Public Policy from the University of Edinburgh and an undergraduate degree in International Politics from City, University of London.
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Pablo Derpich is the Policy Manager for Economy and Innovation at techUK.
Before joining techUK, Pablo worked in Economic Policy research on the topics of innovation and development for governmental and non-governmental organisations (NGOs) in Latin America and the United Kingdom.
Pablo has a degree in Economics (BSc) from the University of Chile and an MPA in Digital Technologies and Policy at UCL Department of Science, Technology, Engineering and Public Policy (STEaPP).