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UK manufacturers warn of digital infrastructure threat

February 8, 2016

Britain’s place at the forefront of the fourth industrial revolution is at risk through lack of Government planning for a world class digital infrastructure according to the body representing UK manufacturers.

The warning was made by EEF, the manufacturers’ organisation on the back of a survey showing that companies increasingly view Internet access as critical to their business and, are planning to invest more in Internet connect capital equipment over the next five years.

However, the survey also shows they are currently having to pay a premium to ensure high speed access and, looking forward, are fearful poor digital connectivity may prove a drag on future growth.

In response, EEF is urging Government to task the National Infrastructure Commission with outlining a plan that will see the UK consistently delivering internationally competitive internet access to businesses.

According to Lee Hopley, EEF Chief Economist, manufacturers need best in class provision if Britain is to take advantage of the next industrial revolution and government cannot afford to think it is job done. “While the quality of networks isn’t currently an issue, companies are paying inflated sums to have proper access and are fearful they will not have competitive access five years’ down the line,” she noted.

“Decisions taken now on Internet connectivity will have a critical bearing in the near future on whether or not Britain is a leading player in Industry 4.0. To date, most of the focus has been on future household internet access despite the economic returns from better internet connectivity being higher if businesses are prioritised.

The Government should urgently reverse this trend and come forward with concrete steps to ensure the UK has a modern business environment that enables us to outperform in the digital race.”

According to the survey, manufacturers are heavy users of the Internet with two-thirds saying investment in technology and innovation is a priority for them in 2016, while 91 per cent say a high speed Internet connection is as essential to business as electricity and water.

Furthermore, almost two-thirds plan to invest more in Internet-connected capital equipment in the next five years while over half of companies need access to online data from ‘the cloud’ every day. An equal number use Internet-connected sensors and automated machines at least once a week.

While the survey shows two-thirds of companies say their current connectivity needs are being met and half say their speed of upload and download is being met this comes at a cost. Almost half of companies say their connection costs have gone up in the last two years, whilst a quarter of small companies and half of medium size companies are paying over £5,000 per annum to gain proper access (this rises to 89 per cent for large companies).

In addition to cost, the survey also highlights concerns over future broadband provision with over half of companies saying their connection is not adequate for their expected needs over the next five years (only a third said it was). Over a third of companies disagree that compared to other countries the UK is at the forefront of internet connectivity while just a fifth agree.

In response, EEF is making the following recommendations of Government:

  1. Task the National Infrastructure Commission with assessing the UK’s digital infrastructure network and outline an investment path that will see the UK consistently delivering internationally competitive internet access to businesses
  2. Launch a review of competition for business broadband, with a particularly focus on leased lines, with the aim of getting the cost to businesses falling over this Parliament
  3. Ensure Innovate UK has the funding to work with industry to develop cluster networks of early adopters by easing the uptake of digital technologies across industrial supply chains, this should include supporting investment in physical industry 4.0 demonstrators
  4. Be proactive in pushing for full implementation of the digital single market in goods and services across the EU to deliver benefits for UK businesses

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