Scotland's digital plan to move from "fragile to agile" economy - credible or (bag)pipe dream?

Stuart Lauchlan Profile picture for user slauchlan January 17, 2016
Summary:
Scotland's got grand plans to use digital to boost GDP by £13 billion, but is the foundation in place to make that more than another case of 'think of a number'?

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Bagpipe dream?

Scotland is set to appoint Chief Digital Officers (CDO) to every public body in a bid to boost the country’s economy by £13 billion, if the recommendations of a wide-ranging new report are take on board.

The Scottish Council for Development and Industry (SCDI), ScotlandIS, The Royal Society of Edinburgh and BT Scotland have between them come up with Digital Solutions to the Productivity Puzzle.

The study starts from the premise that:

Weak productivity is the key barrier to prosperity in the Scottish economy. Improving productivity in an increasingly competitive world means being at the forefront of innovation and continuous improvement. Digital technologies and digitally-enabled business models are magnifying the opportunities from innovation and the risks from lagging behind.

Businesses which do not become fully digitally engaged are likely to fall victim to competition from digital disruption - conversely companies at the leading edge of digital use are likely to gain significant market advantage as the world  becomes increasingly digitally engaged. Public services which do not become fully engaged face an unaffordable future – on the other hand bodies at the leading edge of digital use will be best-placed to meet the needs of society. All of this depends on population-wide digital access and skills.

To that end, the report makes a series of recommendations designed to boost Scotland’s chances of becoming a digital economy nation, with claims that GDP would rise from £4 billion to £17 billion by 2030.

Now, those who watched last year’s Scottish Independence Referendum closely may recall that when it comes to predictions around the economy and economic growth, there was, to say the least, some creative arithmetic going on all round. The slump in oil prices drove a tanker through then-leader of the Scottish National Party (SNP) Alex Salmond’s claims, for example.

In terms of a digital economy, there’s a long way to go. At last November’s National Economic Forum, Deputy First Minister John Swinney MSP highlighted the slow speed of digitalisation in the Scottish public sector as a problem that needs to be addressed.

Equally troubling is last year’s Digital Economy Business survey, based on a representative sample of 4,002 companies, which found that a mere three percent of surveyed companies could be described as ‘Digital Champions’ with only 0.2 per cent being ‘Digital Pioneers’. Meanwhile 81% were in the slow lane, classified as ‘Disconnected Doubters’ (13%), ‘Basic Browsers’ (38%) or ‘Tentative Techies’ (30%).

Think of a number?

So there’s a lot to do in 14 years to hit that £13 billion GDP increase. But leaving the ‘think of a number’ aspects to one side, there’s much of interest to be found in the report and its ‘to do’ list, which includes business transformation, data, skills and infrastructure to drive digital adoption across both the private and public sectors.

Top of the list is the appointment of a CDO for Scotland to progress Digital Scotland development from infrastructure to economic growth and public service improvements. The CDO should have:

a similar role to the Chief Scientific Advisor, who can have a foresight of trends, address immediate concerns and be a consumer champion. They should have a high profile, reporting to and advising the First Minister, and be able to challenge government, the public sector and industry at the most senior levels.

Among the other highlights:

  • Digital to become central to overall strategy and delivery in government, business and public services.
  • CDOs to be appointed across all public bodies.
  • The Scottish Government’s Digital Transformation Service to be mandated to work with all public bodies, not just central government.
  • Clear targets, to be measured in 2017 and 2020, to establish businesses in the upper end of the Digital Economy Maturity Index with all businesses in Scotland to be at “Enthusiastic Explorer” level or above.
  • Digital Champions should be appointed to all of Scottish Enterprise’s Industry Leadership Groups.
  • Businesses should be encouraged to consider appointing CDOs.
  • The creation of a Scottish Productivity Commission to provide independent research, advice and performance monitoring to government and all sectors, under the direction of the Council of Economic Advisers.
  • Everyone in Scotland should have access to a minimum broadband speed of 10Mbit/s and 4G mobile coverage, with ultra-fast broadband at 500Mbit/s and 5G mobile rolled out by 2025.
  • The development of a long-term, government-led framework to tackle public concerns about data sharing, with a lead partner appointed to make recommendations on access and utilization across data streams to drive productivity and innovation.

One particularly ambitious goal involves the formation of a recruitment drive to source, train and continually develop specialist teachers, with digital skills built-in to teacher training and in-service CPD for every teacher. The report notes:

The digital skills deficit in the future is likely to be less profound as the online generation become a greater proportion of the workforce. They will find it incongruous to be taught handwriting in the classroom while online in  the playground. However, there is concern these skills may not translate to those digital skills required for work. Skill levels can look good statistically, but utilisation is key.

With 90% of the 2020 workforce already in work, upskilling the existing general workforce is essential. The latest analysis suggests an additional £875m is required to deliver basic digital skills to everyone in the UK by 2020, over and above the capital expenditure required for infrastructure and devices. These skills will be required by the whole workforce whereas specific ICT services could decline as future working practises change.

There's a lot riding on this. The latest government figures show that Scotland's economy has now grown for 12 quarters in a row, but its latest 0.1% growth between July and September last year is behind the overall UK growth pecentage of 0.4%. Year-on-year Scottish growth was 1.7% compared to a UK number of 2.1%.

Ross Martin, SCDI Chief Executive, comments:

With economic headwinds strengthening, becoming a digital world-leader is essential if Scotland is to transition from a fragile to an agile economy.

Poor productivity performance compared to our pre-financial crash record and to many other economies has bedevilled the Scottish economy in recent years, holding back growth and prosperity. Substantial leaps in productivity are difficult for a developed economy to make, so it will be key to seize this opportunity to work smarter, innovate and internationalise by transforming Scotland into a fully digital nation.

My take

An ambitious agenda. Is it actually deliverable?

It’s all good and well talking about increased investment in infrastructure and closing the skills gap. But there’s a cultural issue here as well.

A recent Bank of Scotland Business Digital Index concluded that over 25% of Scottish organizations surveyed believe digital is irrelevant to them. That’s not a healthy foundation upon which to try to build a digital economy.

Scotland also needs to ensure that the ‘brain drain’ down to London slows down. The digital generation needs reasons to stay in Scotland and that means developing a digital business culture.

So, on paper, this reads well and I wish it well, especially the idea of getting CDOs entrenched right across the public sector.

But as Rabbie Burns put it:

The best laid schemes o' mice an' men
Gang aft a-gley
An’ lea'e us nought but grief an' pain
For promised joy.

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