Low take-up of readily available technologies and management practices have fuelled the deep-seated productivity problems the UK has faced in recent decades. The striking productivity differences between businesses leads to variations in wages, opportunities and living standards for people across the UK. With the Budget now fast approaching and just a week since the Prime Minister laid down the challenge to UK business to invest more in innovation, the CBI has set out one of the single most effective routes to achieving just that – the diffusion of technology.
In a new report entitled ‘From Ostrich to Magpie’, the UK’s leading business group argues that, by encouraging more businesses to behave like ‘magpies’ – ie picking the best tried and tested technologies available – rather than ‘ostriches’, who are more stuck in their ways, the UK could reduce inequality between firms’ productivity and people’s pay. This could add over £100 billion to the UK’s economy and support a 5% reduction in income inequality.
Firms that fail to take up existing technologies and better management practices often struggle to embed new skills, export or allocate finance towards innovation.
The CBI argues that, for the first time, the Government should prioritise diffusion, ensuring that proven technologies (ie cloud, mobile technology, e-purchasing and cyber security) can reach more businesses through the new Industrial Strategy, funding local business support where and when needed.