Businesses and SMEs - Motion to Take Note

Part of the debate – in the House of Lords at 12:38 pm on 6th July 2017.

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Photo of Baroness Lane-Fox of Soho Baroness Lane-Fox of Soho Crossbench 12:38 pm, 6th July 2017

I thank the noble Lord, Lord Leigh, for initiating this debate. I think that he would have liked to join me on a trip that I made to Newcastle in 2010. I was working as the digital inclusion champion for the UK, and I was spending a lot of time investigating places where young people particularly were learning new digital skills. This young man that I met on a very wet and rainy morning in Newcastle has stayed with me and sometimes sits on my shoulder when I feel as though I am becoming like white noise on this particular subject. He had been homeless, had had a terrible drug addiction and had ended up in a shelter, which encouraged him to go to a drop-in location to learn some new skills—not necessarily digital. He had learned to code but, more than that, he had learned how to make music online and had started a small business selling his music. He was confident that, with the amount of money he was now beginning to make, he would be able to move out of the accommodation he was in and rent somewhere nicer. A small story, perhaps, but to me a profound one. Some people, 10, 15 or 20 years ago, would not have believed that through the power of a click of a mouse you could give yourself so many more opportunities in life.

Perhaps this story touches me because I feel as though I have also had these incredibly lucky experiences. My life was somewhat unexpectedly transformed by technology when Brent and I started, nearly 20 years ago. To me, it felt then as though the great promise of this new technology would be its democratising and equalising power. To a degree, that has been true, but I would like to challenge both the Government and the sector that we have only just begun the job and we need to make sure that we finish it, in order for everyone in our country to enjoy the benefits of this amazing technology and the benefits that it can bring to individuals in enabling entrepreneurship and building business.

Many things are going incredibly successfully. Noble Lords might have seen the Tech Nation report from earlier this year giving details on both tech investment and new businesses in our country. This debate will apparently last around three hours, during which, if noble Lords stick to time, three new technology businesses will have been started in London alone. We now employ 1.5 million people in the technology sector and, last year, £7 billion of inward investment came into the sector, which seems extraordinary to me. When Brent and I were looking for funding for our first business, we had only one venture capitalist who would even consider investing in an online travel company. So there are many things that are going very well. Tech Nation estimates that there is a £56 billion opportunity if we can continue to create businesses at the rate that we have successfully achieved over the past two years. I make special mention of my co-founder Brent Hoberman, who has done a huge amount to increase the reach of the sector through his Founders Factory network. It has encouraged corporates to invest in start-ups and is truly matching the larger businesses with the new innovations and helping them to grow.

But we are a dislocated and divided country. There is no way that you could argue that these opportunities are available to all. If we look just at small and medium-sized businesses, and particularly at sole traders, of whom there are so many millions in the UK, 40% of those businesses have no digital skills at all—none—and a further 20% have only the most basic of skills. Some 78% of sole traders have no digital skills at all. I refuse to believe that this is not in direct correlation to our export numbers and productivity. We know that digital skilled workers are two times more productive than those without those skills—it is the difference between £103,000 of lifetime value and £50,000. This is a profoundly important situation for the UK—skills are endlessly talked about but not, I would argue, in the detail that we need. We must enable small and medium-sized businesses and sole traders to become the digital entrepreneurs of the future. I do not believe that all businesses need to be digital, but I certainly believe that, to have a successful business, you need to understand it.

I pose two challenges, first to my own sector and secondly to the Government. I was so happy to hear the noble Lord, Lord Leigh, mention Marks and Spencer. I served on the board and was part of those Plan A discussions, and was absolutely privileged to be part of the Plan A board—the subsidiary of the board that reported back. Those decisions did not feel complicated or difficult; it felt like good business, as the noble Lord said. The technology sector needs to take some lessons from Plan A and its forward thinking. I disagree, I am afraid, with the noble Baroness who cited the interesting ways in which the technology sector is becoming more diverse and encouraging more non-traditional business and charities to grow. I think that the sector needs to grow outwards much more, make bigger links into communities and do more to help on the issues that we face.

I argue that we need to have a digital sector that does not just demand things for itself but helps to make the whole country grow. Ask not what technology can do for you but what technology can do for your country, perhaps. I was somewhat dispirited after Brexit to see the tech sector come out with a list of lobbying claims for the Government—things that it demanded and needed—as opposed to thinking how this ultimate connectivity could help us as a country connect again and give more people opportunities in the sector that is the most rapidly growing part of our economy. Therefore, I believe that we must encourage the digital sector to do more to help small and medium-sized businesses grow their digital skills and help sole traders and more people such as the young man I encountered in Newcastle get the skills they need to move themselves up and obtain work which is profoundly important for them.

People love technology but are wary of it. We need to work hard to make sure that more people have access to the same opportunities that everybody in the sector enjoys, but we also need government to play its part. I am delighted to hear the Government’s rhetoric about ensuring that the UK is the best place to start a digital business. But how about making sure that it is the best place to have a business, and that every business has digital skills and is able to flourish in the modern age; or even better, making sure that it is the best place to start an ethical digital business? I believe that we can go further and with more detailed plans. I would be interested to hear from the Minister about specific plans for digital skills for small and medium-sized businesses, and whether there is an opportunity to create more of a cajoling role for government in encouraging existing technology companies to do more in their communities, perhaps through the digital charter.

We must encourage as many citizens as possible to become successful entrepreneurs. I am not a technology reductionist; I have just had the most incredible experience in my own life in relation to how technology can level the playing field. Literally sitting at a computer wherever you are, you can have an idea and export it around the world. These may be outlying examples, but we need them. We face so many crises in this country on so many levels, from climate change to the mass movement of peoples and how we are going to make the country feel connected again after the fractures of the last year. The internet does not have all the answers, but it certainly has some. Therefore, I encourage us to enable more of our citizens to enjoy these opportunities, not just people like me who are born with all the advantages.