Developing the future

26 June 2007

Spider Web Concept In less than three years time, more than half of UK GDP will be generated by people who create something from nothing, according to the 2007 Developing the Future (DtF) report launched today at the British Library.

The report, commissioned by Microsoft and co-sponsored by Intellect, the BCS and The City University, London, sets out the key challenges facing the UK as it evolves into a fully-fledged knowledge-based economy. The report also sets out a clear agenda for action to ensure the UK maintains its global competitiveness in the face of serious challenges.

The DtF report 2007 is the second in a series incorporating the views of over 20 organisations from government, academia, industry and the non-governmental organisation (NGO) sector.

It looks at how innovation, skills and globalisation are interacting to drive the future direction of the UK, especially in the technology and knowledge sectors. It also looks at how these areas underpin the wider UK economy.

The report reveals that the UK is in a strong position from which future economic and social prosperity can be delivered and that a genuine opportunity exists to build on the progress that has been made so far.

DtF 2007 shows that the rewards for addressing the key issues of skills, innovation and globalisation are significant - greater prosperity, greater job satisfaction, enhanced creativity and increased opportunities in people's professional and personal lives.

Some of the key drivers identified by the DtF report 2007 include:

  • The knowledge economy is the fastest growing part of the UK economy: It is expected that by 2010 the knowledge economy will contribute 50 per cent of UK gross domestic product (GDP).
  • Investment in the knowledge economy is strong: private sector investment of £127 billion a year on intangible assets (such as software development and R&D) now equals that of tangible assets (physical and material assets such as plant equipment and property).
  • Globalisation has the potential to be a force for good in the software economy: global markets will drive innovation in the UK if the challenges are met
  • London is a growing hub for innovation, with support from Silicon Fen, Thames Valley and Scotland’s Silicon Glen.

Gordon Frazer, managing director, Microsoft UK and vice president, Microsoft International, said: 'The DtF 2007 report paints a picture for the UK that is both exciting and inspiring but also profoundly challenging. In our very near future, the shape of the economy and society will have changed dramatically and I believe the UK has the potential to adapt to take advantage of these changes.'

Frazer added: 'This is a call to action for industry, academia and policy makers to make real changes that will drive continued prosperity in the UK. We have an opportunity to harness the innovation, talent and entrepreneurship that exists but we need to face up to some serious challenges first. Chief amongst these is filling the growing skills gap in the technology sector before it becomes chronic.'

The report identifies a number of significant challenges that the technology industry needs to address if these opportunities are to be grasped.  Primarily, these are emerging markets and skills shortages:

  • At current rates of growth China will overtake the UK in five years in the knowledge economy sector.
  • The IT industry faces a potential skills shortage: The UK’s IT industry is growing at five to eight times the national growth average, and around 150,000 entrants to the IT workforce are required each year. But between 2001 and 2006 there was a drop of 43 per cent in the number of students taking A-levels in computing. 
  • The IT industry is only 20 per cent female and currently only 17 per cent of those undertaking IT-related degree courses are women. In Scotland, only 15 per cent of the IT workforce is female.

Mike Rodd, director of external relation, British Computer Society said: 'This second DtF report has moved our understanding forward on the challenges and opportunities we collectively face. The UK is well positioned, but there are changes to the global economic environment that demand adaptation.

Globalisation in IT is not the death-knell that received wisdom portrays. In fact, globalisation could be the fuel in our economic engine. However that does not mean success is assured, or that the road will be easy.'

He added: 'Our participation in and leadership of the global knowledge economy pivots on the choices made now. As job roles change, continued education and skills development must be in place, particularly while the IT education pipeline is re-established. The challenge is to create the right frameworks for an agile workforce, capable of adapting to ever-changing demands for skills and knowledge.'

Tom Wills-Sandford, deputy director-general, Intellect commented: 'There is currently a trans-Atlantic innovation divide. The UK does not spawn start-ups and fast-growth new companies in the same way as Silicon Valley just because of a difference in business philosophy, as is often supposed.

It is as much to do with public sector attitudes to encouraging growth and innovation. Encouraging innovation will be key to the future success of the UK economy and we believe this report addresses some of the most important ways in which these challenges can be met.'

Andrew Tuson, The City University, London, senior lecturer and director of student recruitment, commented: 'The rewards for getting things right in the face of the challenges the DtF report 2007 raises, are huge: greater prosperity for all, a dynamic, inclusive IT profession that offers real challenge and job satisfaction, interesting and simulating school and university curricula, and a university sector that can provide world-class research and education in computing.'

The DtF report 2007 is a call to action for policy makers and the industry and includes a number of key recommendations (amongst others):

  • There is growing pressure on the UK government to reform the National Curriculum to allow students to study computing at GCSE level and a curriculum review of teaching computing and ICT in schools is required. Current GCSE ICT courses study the use of software and technology rather than the creation of software and technology. We need to find ways to inspire young people in computing in order to generate new recruits into the industry.
  • UK government should put in place some robust incentives for implementation of the skills agenda with particular emphasis on SMEs.
  • The IT industry should look to dramatically increase female recruitment in order to help fill the UK IT skills shortfall.

DtF report 2007