Analysis of a comprehensive online survey of participants in the government’s Broadband Connection Voucher Scheme, carried out on behalf of the Greater London Authority by Adroit Economics, with support from Point Topic, The Fifth Sector and the University of Manchester, has revealed that London SMEs will generate £2bn of additional sales within the first 2 years of the scheme.
The analysis also suggests that 32,000 new jobs will be created, and more than £1bn of savings made, “making London’s voucher firms considerably more competitive and profitable.
The research shows that the combined sales increases and cost savings will represent £1.7bn of GVA (gross value added, the government’s preferred measure of economic wealth creation, effectively GDP minus taxes and subsidies), a 20% increase in the GVA of voucher firms as a whole.
Net benefits are estimated to be worth £430m in additional GVA, plus an additional 8,118 jobs.
The report claims that this will represent an economic return on investment of public funds into the scheme of £23.10 per £1 invested into the scheme, and a cost per job of £2,226.
Almost 450 firms took part in the survey, with just over 50% saying that faster broadband had had a transformational effect on their business.
The overall benefits mentioned included cost savings, saving of staff time, increased sales volumes, better skilled staff, and more productive home and mobile workers.
Average cost savings were estimated to be 4.8%, sales increases at 10.5%, and staff time savings, 6.1%.
For home and mobile workers, the increase in productivity was measured at 11.1%.
Dr Steve Sheppard, Managing Director of Adroit economics, commented “faster broadband is transformational for business and the economy”, adding that “the benefits to SMEs and resulting financial and economic impacts locally, regionally, and nationally of the use of faster broadband are high, representing the equivalent of a third of current turnover.”
“This is far higher than current global broadband literature suggests.”
Iain Bennett, MD of digital transformation agency The Fifth Sector, said that “the technology unleashes latent productivity”, and that the findings were “really important” at a time when “businesses and policy makers alike are striving to find new ways to boost economic performance, increase jobs and improve skills.”
CEO of Point Topic, who analyse and publish broadband data sets, Oliver Johnson concluded “we finally have some well researched, concrete and frankly very impressive inputs for business models around the country” and described high speed broadband as “cementing its place as a vital instrument in future growth.”
The bad news for entrepreneurs not already signed up to the scheme is that applications are now closed. The Broadband Connection Voucher Scheme ran from December 2013 until October 2015 – since April 2015 it has been funded by a £40m government challenge fund, which is now fully committed.
Around 55,000 vouchers were issued during the lifetime of the scheme; 37,000 since April last year. More than 770 suppliers won voucher business out of 864 registered suppliers, says the Connection Vouchers website.
The scheme is managed by Broadband Delivery UK (BDUK), a unit operating within the Department for Culture, Media and Sport. The benefits listed include increasing profits, improving customer experience, reducing software and hardware costs, enhancing communication and collaboration and future proofing businesses.
The government has said it is committed to providing super-fast broadband to 90% of the UK by early 2016, and 95% by the end of 2017. Current coverage is around 80% of the UK.
Interestingly, the BDUK says on GOV.UK that it “acts as the Broadband Competence Office to provide assistance with European funding for Broadband projects”, which includes the European Regional Development Fund (ERDF), and the European Agriculture Fund for Rural Development (EAFRD); the funds are actually distributed by other government departments.
Does the website need updating in the light of Brexit?
Despite the extremely strong results proffered by the survey, it seems entrepreneurs who didn’t get their timings right may end up accounting for the difference between the gross value added figures, and the net. In other words, existing scheme member’s gains, may very well represent their losses.
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