The town that has TEN banking branches ... and that’s why it’s thriving

Financial Mail

BRITAIN’S top economist has called on the Government to spearhead a tech revolution for millions of firms, creating a ‘faster and smarter’ economy as the country fights its way back from the Covid-19 crisis.

Bank of England chief economist Andy Haldane – writing in his capacity as chairman of the Industrial Strategy Council – said a new blueprint must be drawn up with a raft of measures, including tax incentives and access to finance to feed an ‘appetite’ among firms to adopt new technology.

The surprise intervention – in a joint document prepared for The Mail on Sunday by Haldane and former John Lewis Partnership chairman Sir Charlie Mayfield – comes just weeks ahead of an expected Spending Review by Chancellor Rishi Sunak.

It is unusual for a senior official who also holds a high-ranking position at the Bank of England to make such broad-reaching policy recommendations.

Haldane, who sits on the Bank’s Monetary Policy Committee, and Mayfield want small and medium-sized companies to urgently adopt or update software across key areas such as accounting, HR, customer relationship management and marketing.

The paper says the economic recovery in July was ‘further and faster than anyone expected’ after the collapse in the second quarter.

But the writers say it is vital to seize ‘the opportunities, as well as the obvious challenges, of Covid’ and ‘technologically upgrade our businesses and our economy’.

UK business has been a ‘laggard’ in adopting new technology despite playing ‘a leading role’ in developing it, the paper says. ‘That is particularly true among the smaller and mid-sized businesses which employ nearly two thirds of people working in the UK. This explains why, despite rapid innovation, aggregate productivity among UK companies has flatlined for more than a decade.’ Haldane and Mayfield add: ‘Technology adoption needs to be at the heart of industrial policy. Levelling up the UK’s companies, through improved tech adoption, is an essential element of levelling up our regions.’

The paper – which the MoS has made available in full at thisismoney.co.uk – calls for ‘incentives for companies to make the right investment choices’ and to make it easier for them ‘to access finance to fund this investment’.

It also calls for support through advice shared by large corporations with smaller firms, through local ‘tech hubs’ and online. A survey of 500 small and medium firms released alongside the paper reveals one in eight are using systems more than a decade old and another third using systems six to ten years old. A third said they have acquired technology that has barely been used.

But the paper says the Covid crisis has presented a major opportunity because ‘rapid and radical technological adoption has been essential to the survival of many firms’.

Mayfield chairs Be The Business, a Government-backed organisation set up to solve Britain’s sluggish productivity largely by encouraging wider use of technology.

Its research has revealed adoption of new technology among businesses rose four times faster during the crisis than it did for the entirety of 2019. In many cases, firms were forced to act as they switched to working from home.

Mayfield said last night: ‘Business technology has not kept pace with consumer technology. It’s not just about Zoom and it’s not about AI and advanced technology.

‘It’s about wider adoption of pretty well-established tools that have been proven to improve growth of businesses that use them – accounting and HR software, CRM [customer relationship management] systems, online trading, export tools and really getting to grips with social media and marketing.’

But there had been resistance in the past from firms fearful of the disruption that implementing new technology can cause. ‘It’s hard work and it’s difficult,’ he said. Referring to John Lewis’s experiences implementing new IT systems since 2014, Mayfield said: ‘I have the scars on my back from a well-resourced business that has found tech adoption difficult. It costs a lot, took longer than planned and at the end of it all the benefits weren’t quite as clear as they were at the beginning.’

‘But I’ve no doubt we did the right thing. If we hadn’t, the business would be in a far worse position than if it hadn’t,’ added Mayfield, who left John Lewis earlier this year.

He said Be The Business was piloting ‘tech adoption labs’ across the country and large companies had offered ‘chief technology officers on demand’ to help firms cope.

‘We’ve got the template, we’ve got the playbook, we’ve got Britain’s best businesses and access to expertise – Cisco, Openreach, Amazon, Google. We are asking the Government to make this a priority for rebuilding the UK.’

He added: ‘Eat Out to Help Out has had a pretty dramatic impact on restaurants. What we need is a similar message for business leaders, something along the lines of “Tech Up to Grow Out”. It should become a fundamental part of the recovery.’