Digital Sector: Economic Contribution

Digital, Culture, Media and Sport – in the House of Commons at 12:00 am on 1st November 2018.

Alert me about debates like this

Photo of Leo Docherty Leo Docherty Conservative, Aldershot 12:00 am, 1st November 2018

What recent assessment he has made of the contribution of the digital sector to the UK economy.

Photo of Alan Mak Alan Mak Conservative, Havant

What recent assessment he has made of the contribution of the digital sector to the UK economy.

Photo of Margot James Margot James The Minister of State, Department for Culture, Media and Sport

The UK’s digital sector is a global powerhouse, and the most recent official statistics show that the sector has contributed over £116 billion to the UK economy and is growing faster than the average for the rest of the economy by two and a half times. From 2015 to 2016, the digital sector’s contribution increased by 5.8%.

Photo of Leo Docherty Leo Docherty Conservative, Aldershot

Does the Minister agree that the remarkable growth of UK digital companies—UKCloud in Farnborough in my constituency was the fastest growing tech company in the UK last year—shows that the digital sector is in rude health?

Photo of Margot James Margot James The Minister of State, Department for Culture, Media and Sport

I absolutely agree with my hon. Friend. Indeed, I visited UKCloud a few months ago and was extremely impressed by not just its fast growth but its innovation. The UK cloud sector is a strongly performing part of the overall digital sector. Earlier this year I spoke at the UK cloud awards and was very impressed by the success, innovation and growth potential of the cloud sector.

Photo of Alan Mak Alan Mak Conservative, Havant

Govtech is a growing part of the digital economy and it can help to boost public sector productivity. What steps can the Department take to help entrepreneurs and start-ups in this important tech sector?

Photo of Margot James Margot James The Minister of State, Department for Culture, Media and Sport

My hon. Friend puts his finger on an area of tech that will transform our country once it is unleashed through public services. We want to make it easier for Departments and public bodies to work with tech companies, including small and medium-sized enterprises. The Chancellor has announced that we will conduct an artificial intelligence review to examine how Government can make better use of AI to provide valuable services more efficiently.

Photo of Stephanie Peacock Stephanie Peacock Opposition Whip (Commons)

Ninety-five per cent. of respondents to my broadband survey are not happy with their service, which is not surprising, given that Barnsley’s broadband speeds are 20% slower than the national average. What are the Government doing to invest in broadband in the north?

Photo of Margot James Margot James The Minister of State, Department for Culture, Media and Sport

We are doing a huge amount through commercial operations, and the hon. Lady will find that things improve dramatically. Her constituency is only a few steps off the 95% average for access to superfast broadband. I advise her to make sure that people know that they have it. Approximately half the people who have access to superfast broadband do not take it up, because some of them do not realise it is there.

Photo of Meg Hillier Meg Hillier Chair, Public Accounts Committee

As well as fast broadband, small tech businesses in my constituency and across the country need the right people to make sure that they grow and continue contributing to the economy. What conversations is the Minister having with the Home Office about the negative impacts of the Government’s immigration policy on attracting and securing the right staff to grow these businesses?

Photo of Margot James Margot James The Minister of State, Department for Culture, Media and Sport

The hon. Lady will know that we have doubled the number of tier 1 exceptional talent visas to 2,000. We have also announced a start-up visa for entrepreneurs. The other side of the coin, of course, is the huge investment we are making in skills training for people who are already resident in her constituency.

Photo of Scott Mann Scott Mann Conservative, North Cornwall

What discussions has the Department had with the Cabinet Office about supporting tech start-ups with local and national Government procurement?

Photo of Margot James Margot James The Minister of State, Department for Culture, Media and Sport

We have a fantastic organisation, Tech Nation, with which we work closely to build the hubs around the country that directly support SMEs; the British Business Bank also does this and it is now starting a regional network of advisers for SMEs in tech.

Photo of Liam Byrne Liam Byrne Shadow Minister (Digital, Culture, Media and Sport) (Digital Economy)

The tech sector is important, but it is not yet a big enough contributor to the Treasury. Can the Minister tell us what percentage of sales will be paid in the new tax introduced by the Chancellor by the big five tech giants next year?

Photo of Margot James Margot James The Minister of State, Department for Culture, Media and Sport

My understanding of what the Chancellor announced in the Budget on Monday is that he will be introducing a digital sales tax approximating to 2% of digital turnover. I think the right hon. Gentleman can make his own calculations.

Photo of Liam Byrne Liam Byrne Shadow Minister (Digital, Culture, Media and Sport) (Digital Economy)

I can tell the Minister that, based on last year’s sales, next year the big five will be paying 0.01% of their sales in tax. That is the Treasury forecast in the Red Book, but even the Office for Budget Responsibility says that that is highly uncertain, and it will be outweighed by the cut in corporation tax to 17%. So is it not true that she has conspired with the Treasury to give a free pass to some of the wealthiest firms on earth?

Photo of Margot James Margot James The Minister of State, Department for Culture, Media and Sport

I have had no discussions with the Treasury on that matter. [Hon. Members: “What?”] No, I have not. The right hon. Gentleman has alleged that I have had discussions, which I have not. To answer his substantive point, the Treasury expects to raise £1.5 billion over the next four years; 2% is a start and he should know that other countries are planning to take action, but no country has yet done so. Therefore, I suggest that the UK is taking the lead on this. We hope for international action, which will land a bigger hit, but at this stage international action is not forthcoming so we are taking action unilaterally—