Fortnightly politics column
Sara Kelly is your eyes, ears and voice in Brussels and Westminster. Every fortnight she brings you the latest insights on policy changes, legislation and lobbying.
Growth growth growth.
It’s important for your business, it’s important for your investors, and it’s important for the economy.
The state of the economy has been the hottest political topic over the last few years, and it’s likely that it will be a key focus of the next General Election in 2015.
And just as you would put together a business plan to demonstrate to investors how you see the best way to drive your startup to growth, the Government is putting together a series of ‘Industrial Strategies’.
Announced late last year by the Business Secretary, Vince Cable MP, these Industrial Strategies aim to set out the Government’s long-term approach to supporting industry.
This doesn’t mean the kind of 1970s-style support of “picking winners”, which saw successive Governments investing directly in companies and sometimes ended with them “picking losers”. Such an approach would be tricky nowadays, and as we know investing in startups is risky business (currently 50% of startup businesses fail within 3 years).
Luckily, they have learnt those lessons and are now working towards a long-term partnership with industry to ensure that they place precious resources properly, and give investors in those industries confidence.
8% of our GDP is generated through the internet
Industrial strategies for the aerospace, automotive, and defence sectors are already underway, and now the Government is looking to put together a strategy for digital, or the “Information Economy”.
The UK generates 8 per cent of our GDP, or £120 billion, through the Internet. That’s more than construction, healthcare, or education. Our internet-related economic activity is a higher percentage than any other G20 country. But emerging economies are closing in. So ensuring the UK continues to compete and grow in an area of strength is a sensible move.
The Government has identified the Information Economy as one of eleven sectors of strength and they’re looking at the key growth opportunities which fall under this where the UK does, or potentially could, excel. Provisionally these have been identified as e-commerce, cloud computing, M2M (or “Internet of Things”), big data and smart cities. However, they don’t consider this list exhaustive and expect other areas of opportunity to arise over the next few weeks.
As part of their strategy they’re looking at ways they can improve policy on areas like access to finance for businesses, procurement of Government contracts. The idea is that the consultation process will generate ideas for helping startups to compete, for example by improving or removing burdensome regulations that particularly affect our sector.
Act now to have your say on the information economy
This week sees the deadline for that consultation which calls for views from anybody in businesses operating in the Information Economy. And the document has some pretty open ended questions such as “What can Government and industry do to help UK companies take advantage of the opportunity of the online economy?”
This style of policy making is a refreshing change. If you’ve ever had experience with a consultation document, you’ll know that often we’re presented with a number of pre-drawn up proposals and asked to either like it or lump it. Needless to say this can put industry on the back foot and instinctively defensive. Open questions like the above allow us to present our views and experiences without voicing our opinion on a particular proposal and refining pros about devils in details.
But if the strategy is to be successful, and generate the intended growth in the Information Economy it needs to be ‘cross Government’. Internet policy and regulations that structure the way digital businesses can operate in the UK fall under the stewardship of a combination of Government departments. In 2012 alone policies that impacted tech startups came out of BIS, Department for Culture Media and Sport (DCMS), Ministry of Justice, Department for Education, and the Home Office. Not to mention a plethora of proposals coming out of Brussels too!
Other industrial strategies have been accused of being developed in departmental silos. The Government must ensure this doesn’t happen with the Information Economy strategy. If we’re trying to ensure businesses can develop growth using big data, but we’re not able to consider broadband provision (which falls under DCMS not BIS) or data centres being hit by the climate change levy (falls under the Department for Energy and Climate Change), then a strategy with such a blinkered view could prove ineffective.
It also needs to be supported by the Chancellor. While it may be too soon for this Information Economy strategy to influence next week’s budget, the Chancellor needs to make sure that future announcements Treasury line up with proposals in the Information Economy Strategy.
The Government wants to make sure the industrial strategies support the long-term future of the UK economy, and make sure businesses are able to start, finance, and grow a business. They need to ensure that they get these decisions right if the UK’s tech startup sector is to continue to contribute to growth in the economy.
Next week Sara will take part in a web debate as the budget takes place live on Tech City News