700,000 jobs from tech investment

Wednesday, May 06, 2009

A report has predicted that a £15bn investment in digital infrastructure could create or retain 700,000 jobs and revive the British economy.

The report estimated that if £15bn was invested into broadband networks, intelligent transport systems and a smart power grid, masses of job opportunities could be created. The report said half of the new job opportunities would be in small businesses and it would be an effective economic stimulus.

Breaking it down, the report recommended a £5bn investment in each network. For broadband infrastructure, the report estimated this would create or retain 280,500 jobs, as faster broadband would boost business productivity. Equal investment in smart power grids would create or retain 231,000 jobs. It would also allow the development of new greener technologies, including plug-in hybrid electric cars, and offer numerous business opportunities. Finally the same investment in intelligent transport systems would create or retain 188,500 jobs, with benefits being less carbon emissions and more productive businesses.

"Rising unemployment in the UK threatens the welfare of hundreds of thousands of individuals, and exacerbates the current economic crisis. Spurring investment in the UK's infrastructure is an effective immediate strategy to compensate for the downturn," the report said.

"The United Kingdom has made considerable efforts to be one of the leading nations in the production and utilisation of ICT; the current recession offers an opportunity to further, rather than undermine, those efforts."

It added that this ambition is consistent with the recent Budget as well as recent studies by the CBI, HM Treasury and the Department for Business, Enterprise and Regulatory Reform (BERR).

Addressing concerns that investing could bring too little too soon, the report said: "If the initiatives are designed properly, they can quickly spur a large number of investments — from deploying more and faster broadband networks to implementing intelligent transportation systems to rolling out advanced energy metering technologies (smart meters) - that are currently ripe for development."

The report said the extra investment would also improve general quality of life and the environment, for example by reducing traffic congestion and reducing household energy bills.

Investment in ICT would also be more effective at stimulating the economy than spending on roads, bridges and other forms of physical infrastructure, the report said. It reasoned that this is partly because many types of digital infrastructure create additional jobs outside their immediate sector by giving rise to new kinds of consumer and business activity and enabling new technologies – an effect known as the "network multiplier".

The report was produced by the London School of Economics and Political Science (LSE) and the Information Technology and Innovation Fund (ITIF) and supported by IBM.

Jonathan Liebenau, reader in technology management at LSE, said: "Our report shows that in this severe economic climate the right investment in ICT infrastructure would have a significant effect in creating jobs now and in stimulating productivity and innovation for the future."

Robert Atkinson, president of ITIF, said: "Nations that invest in ICT to transform fields like transportation and energy reap substantial long-term economic and social benefits. This report shows that these investments also have a short-term impact by producing the jobs and economic growth the UK needs to get out of the current recession."

To fund the increased investment, the report has recommended a mixture of direct spending, tax incentives and regulatory changes that spur increased private sector investment in these key parts of the digital infrastructure.

The report said the £15bn figure is purely speculative and has not recommended a specific amount for the government to invest. However, whilst applauding the government's support for green technologies in the Budget, it said government should go "further and faster".