24 Mar 2021
by Max Chen

Help to Grow & the State of Digital Adoption in the UK

The COVID-19 pandemic was a catalyst for digital adoption across the UK, and the recently announced ‘Help to Grow: Digital’ scheme will help SMEs to adopt digital technology, boost their productivity, and the overall economic recovery from the COVID-19 pandemic.

The coronavirus pandemic and subsequent lockdowns have dramatically impacted businesses across the United Kingdom (UK), with ONS data from March 2021 showing that 24.2% of businesses had temporarily stopped trading, and 44.3% of businesses saw a decrease in turnover during the course of the COVID-19 pandemic so far.

Digital technologies have enabled businesses of all sizes to maintain continuity throughout the COVID-19 pandemic, and the pandemic has been the biggest driver of digital adoption in recent memory, particularly for small and medium-sized enterprises (SMEs). This is a watershed moment for digital adoption, as the pandemic and lockdowns have proven the case for digital transformation.

Surveys performed in July 2020 by the Centre for Economic Performance at the London School of Economics and Political Science demonstrate the dramatic impact of COVID on business performance, with 75% of those surveyed having moved to remote working and experiencing a 25% loss of revenue. However, from late March to late July 2020, more than 60% of firms took up new digital tech and management practices (beyond basic remote working solutions), and around 33% invested in new digital capabilities. Approximately 50% have also introduced new products or services—all prompted or accelerated by the COVID-19 pandemic.

Commonly adopted technologies and digital capabilities include:

  • Enterprise resource planning
  • Customer relationship management software
  • Remote working technology
  • Cloud computing
  • AI (chatbots, etc.)
  • E-commerce
  • Advanced analytics
  • Cyber security

This dramatic increase in digital adoption has brought significant benefits, from enabling remote or flexible working and supporting SMEs to continue to connect with customers throughout COVID-19 lockdowns by allowing them to sell online.

This increased agility and resilience has proven invaluable for many SMEs to help them adapt to the impacts of COVID-19. Research by Sage has shown the potential future benefits of increasing digital adoption projecting that by fulfilling the desire of SMEs to adopt new technologies SMEs could collectively add up to £325 billion in additional revenue, increase economic output by £145 billion due to productivity gains, and support 2.7 million jobs across the UK.

In addition to the benefits of economic and productivity growth, the process of adopting new digital technologies often leads to further innovation and adoption of new technologies. This makes it crucial that first-time adopters of digital technologies and services are provided with enough support to make their digital transformation journeys as smooth and easy as possible.

However, despite the adoption undertaken by businesses during the pandemic, there are numerous barriers to further digital adoption to be overcome. These include both macroeconomic uncertainties caused by the COVID-19 pandemic as well as Brexit, and financial constraints, particularly for smaller businesses.

techUK has long advocated for the uptake of digital technologies by businesses of all sizes, but particularly by SMEs, to boost revenue and growth by increasing efficiency and productivity.

The importance of digital adoption and tech-led economic growth featured heavily in techUK’s 2021 Budget Submission, which called for financial incentives to help SMEs adopt digital tech and services.

There have been some positive steps to supporting the adoption of digital tech and services by SMEs, with the recent announcement of the ‘Help to Grow’ scheme in the 2021 spring budget, as well as other programmes which have been offered across the UK.

The Scottish Government has included financial support for digital adoption as a component of its pandemic response. With the DigitalBoost programme, offering grants, digital consultants and online training. The Scottish Government recently provided an increased level of funding to help businesses take advantage of digital tech, providing over £20 million to help businesses adopt digital and build their digital capacity. This included a £10 million increase to the DigitalBoost programme. As of mid-January, more than 2,400 businesses had applied, this resulted in the fund pausing new applications due to oversubscriptions— clearly demonstrating the appetite among businesses of all sizes, but particularly SMEs, for financial support to adopt digital tech.

The North of Tyne Combined Authority, in North East England, last year committed to invest £10 million in boosting its digital economy—through investing in SMEs, providing digital skills training, and working to help start-ups and accelerator programmes. Additionally, techUK member Sage, which was born and bred in the North East, has been providing free training and software worth up to £1.4 million to up to 62,500 businesses in the region.

In the March 2021 budget, the Chancellor announced the £520 million ‘Help to Grow’ scheme, aimed at boosting productivity and innovation in SMEs across the whole of the UK. There are two components of the scheme, which broadly align with the policy interventions techUK has long been calling for. The first component, ‘Help to Grow: Management’ offers MBA-style management training to SMEs, while ‘Help to Grow: Digital’ provides SMEs with vouchers for discounted software and advice on how to best utilise it.

The ‘Help to Grow: Digital’ scheme is of significant interest to techUK, and we are working closely with government to represent the interests of our members and the tech sector, and further understand the details of the scheme and vendor eligibility requirements.

At the budget, the Chancellor announced:

  • A voucher, to provide a 50% discount on approved software, capped at a maximum value of £5,000.
  • For the initial launch of the scheme in the autumn, the approved software list is limited to three types: customer relationship management software (CRM), e-commerce, and accountancy.
  • Eligible SMEs need to employ between 5 and 249 employees, be registered at Companies House, have been trading for more than 12 months, and be purchasing the software for the first time.
  • All businesses will be able to access the free online advice platform.
  • The scheme’s official government campaign website can be found here and will be updated as more information becomes available.

To make the ‘Help to Grow: Digital’ scheme a success, it must meet the needs of the SMEs who are seeking to adopt technology, must be accessible to the providers of the best digital technologies and platforms, and must be marketed successfully to the businesses who need the support the most.

techUK is working closely with the UK Government, Scottish Government, and other national, regional, and local authorities to ensure that schemes such as these deliver the correct benefits for SMEs across the UK and contribute to our shared ambition to build a more productive and resilient economy in the wake of the COVID-19 pandemic.

Max Chen

Max Chen

Policy Manager, Digital Adoption, techUK

 

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Max Chen

Policy Manager for Digital Adoption, techUK

Max joined techUK in January 2020, supporting techUK’s general economic policy, digital adoption, and regional development work.

Prior to joining techUK, Max worked in the United States House of Representatives for a senior Democratic Member of Congress for a number of years, managing a broad policy portfolio but focusing primarily on healthcare, defence, and veterans policy.

Max holds an MSc in Public Policy from University College London and a B.A. in Political Science from the University of California, Berkeley.

Outside of work, Max enjoys riding motorbikes, photography, swimming, and travelling.

Email:
[email protected]
Phone:
07943640911

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