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Digital Investment Could Create 700,000 UK Jobs

The LSE is calling on the government to invest in digital infrastructure to help escape the recession

Investing in new digital infrastructure such as broadband and smart grid technology could help generate up to 700,000 new jobs in the UK according to the London School of Economics.

In a report released this week, The UK’s Digital Road to Recovery, academics from the LSE have postulated that investing around £15bn in broadband, intelligent transport systems and smart grids, could be more worthwhile than simply developing the traditional physical infrastructure such as roads.

The LSE claims that investment in digital infrastructure is especially beneficial because technologies such as broadband help to enable new businesses and create new jobs beyond the immediate sector where the finances are delivered.

“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,” the report states.

The LSE believes that the UK government should push through the investment by a combination of direct spending, tax cuts and loosening regulations to encourage the private sector to follow suit.

“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,” said Jonathan Liebenau, reader in Technology Management at LSE.

The authors of the report also say that although the government went some way to encourage investment in green technologies and digital infrastructure in the recent Budget – more could be done.

“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,” said Robert Atkinson, president of the Information Technology and Innovation Foundation.

The report recommends investment in the following areas:

  • £5 billion on broadband networks (creating or retaining 280,000 jobs) with spending focused on getting broadband to unconnected areas, increasing network performance in low-speed areas (3 Mbps or less) and encouraging household take-up of broadband. Spurring more and higher speed broadband would boost business productivity.
  • £5 billion on intelligent transport systems (creating or retaining 188,000 jobs). ITS would also improve traffic flows through measures like adaptive traffic signals and electronic tolls and provide travellers with real-time traffic information, The report also finds that extra spending on ITS would deliver environmental benefits and make the country more productive.
  • £5 billion on developing a smart power grid (creating or retaining 235,000 jobs). By using two-way communication and sensors, the report argues, a smart grid will deliver power more efficiently and reliably. Houses could be fitted with smart meters which allow people to use electricity at cheaper times of day and which could work with smart fridges or washer-driers to perform high-energy cycles at times of low demand.

According to a pre-budget report from the National Endowment for Science, Technology and the Arts (Nesta), Attacking The Recession, the government should use the recession to reshape the economy around high growth areas such as digital media.

The report stated that unless investment in areas such as green technology, digital media and healthcare are addressed, the UK could lose around £44bn in potential revenues. “Failure to invest aggressively in growth sectors will not only cost an annual £44bn in lost revenue to British firms, it will also harm the UK’s global predominance in these sectors,” the report claims.