The digital age is changing everything: how we do business, play and live. It makes perfect sense that in the West Midlands, the birthplace of industry, the digital revolution is a huge priority.
As Mayor Andy Street puts it, digital is the 'golden thread across all industries' and this will provide new and secure existing jobs as we move through the 21st century. The next wave of change will be driven by 5G as it releases the true potential of the 'internet of things'. We also have the advance of ever smarter software as it leads to increasingly complex and effective artificial intelligence.Its current physical manifestation, automation, is about to usher in the era of autonomous vehicles and drones across our transport networks.
The impact of this is obviously significant in our region where manufacturing and automotive industries have deep roots and enduring economic importance. Tech and digital is currently the fifth largest sector in the West Midlands and forecast to deliver a 20 per cent rise in GVA from £5.7 billion to £7 billion over the next decade. Employment is expected to rise by nearly 14,000, from just over 70,000 to 84,000. But this actually underplays the impact of digital. It is more than a sector. It is a cross-cutting enabling competence. It is more than a sector. It is a cross-cutting enabling competence.
Every sector must become 'digital' if it is going to survive. All workforces will need to be innately digital, it's why upskilling/reskilling those currently in work and creating aspiration in the next generation will be essential. Reflecting this, in May this year the West Midlands produced the UK's first regional Local Industrial Strategy. It prioritises digital as pivotal to achieving higher productivity by exposing companies to new ideas, technologies, new management and business models and establishing new channels of market access.The challenge is now about how we bring this strategy to life. We live in an age where a high street florist considers itself a tech business and a hotel owner competes online with Airbnb which doesn't own or operate any physical assets.
Digital appears to be everywhere but yet there is still evidence of management reticence to embrace fully the digital opportunity. This clearly remains a stumbling block. Lloyds Bank has been charting the UK's digital readiness for the last five years and sees an £85 billion productivity gap which digital could close.It says 16 per cent of SMEs - some 655,000 businesses - have low digital capability. It estimates a “vast” economic benefit of £84.5 billion in turnover if these companies were to develop higher digital capability. The report identifies a lack of some or all of the five Basic Digital Skills as a major concern - communicating, transacting, problem solving, handling information and content, as well as being safe and legal online. Less than half (49 per cent) of SMEs in the West Midlands have all five Basic Digital Skills - the lowest of any region. We need to fix this urgently.Recent Government initiatives include investing £170 million into 12 new employer-led institutes of technology. These offer higher level technical education and are in part designed to funnel young people into skilled digital jobs. The West Midlands has secured two institutes at Solihull College & University Centre and Dudley College. They will work closely with universities, further education colleges and employers, including Microsoft, to provide training in a range of STEM (science, technology, engineering and manufacturing) subjects.There are other ways to access talent.
One pioneering programme is Digital INnov8ors which is creating new pathways to future employment for 16 to 19 year olds. The INnov8ors programme embraces the digital revolution as a democratising tool, crossing social divides to create opportunity for all to engage with employment opportunities.These young people use technology everyday - their devices are just an extension of who they are.Such digitally innate learners take the digital world for granted and yet often they have not been given the 'smart' skills to make them effective employees. Finding such ways to be fully inclusive will help us tackle the digital skills gap.
We recognise this at Innovation Birmingham. Our iCentrum building is not only a place of work but serves as a focal point to engage with digital communities. This includes bringing in school children to showcase what is happening in their own city and opening up the possibility of future opportunities in the industries of tomorrow to them. We have ambitious expansion plans in tandem with growth in the Midlands digital sector, including a new building called Enterprise Wharf which is set to open in 2021. We recognise that skills are integral to achieve our ambitions and those of the wider business community in the West Midlands, hence diversifying our community and accessing digital talent is a major plank in our own development plans.