The latest ‘Economic impact of digital inclusion in the UK’ report, in partnership with Capita and the social change charity Good Things Foundation, has found that every £1 invested in building the essential digital skills of digitally excluded people, contributes £9.48 to the UK economy. 

The Centre for Economics and Business Research (Cebr) conducted the research, building on reports in 2015 and 2018, to understand more about the economic impact of investing in interventions to help digitally excluded people build their basic digital skills. 

The report comes at a time when the cost of living continues to rise, and a recession is looming. Two million households already struggle to afford internet access in the UK today, and this will only worsen, which poses a greater risk to those who already face inequality and additional pressure on their health, educational attainment, and work prospects. 

A narrower, but deeper digital divide

The latest findings show that significant progress has been made to close the digital divide, since the previous reports in 2015 and 2018. Cebr estimates the number of people without basic digital skills in the UK has fallen from 12.4 million at the end of 2019 to an estimated 10.6 million by the end of 2022. 

This reflects the hard work of citizens, communities, and the private, public and voluntary sectors, especially during the pandemic. However, more needs to be done, as although the digital divide may have narrowed, it has also deepened. Without further intervention in building basic digital skills, 5.8 million people are estimated to remain digitally excluded by the end of 2032, and 3.7 million of them will be aged 75 years or older.

From 2023 to 2032, 470,000 are expected to gain basic digital skills without intervention each year. Assuming that 750,000 will still lack or have lost their digital skills by the end of the 10-year period, an estimated 508,000 will still need extra support annually. Over the ten-year period, the estimated total costs of providing this support reaches £1,443 million, and the economic benefits accrue to £13,683 million.  

Improving lives and local government services by enhancing digital skills

A lack of digital skills negatively impacts a person’s life, leading to greater social isolation and less access to employment. It can also mean they lack a voice and visibility, as government services and democracy increasingly move online. By increasing digital skills, more people can confidently interact with these services which can save them time and money. The report found that interacting with government and financial services online is estimated to have a value of £3,906 million. People can also save an estimated £3,480 million by shopping online.

Of course, these benefits cannot be achieved without significant investment, but encouragingly value for money from investing in digital skills remains very high.  Benefits to the government are estimated to be £1,355 million through efficiency savings alone, plus £483 million in increased tax revenue. The NHS is expected to save an additional £899 million. 

It’s vital we ensure a level playing field and give all citizens the same opportunities to interact and contribute to their communities and society. To do this we need to help people within local government to do what they do best – build relationships with citizens. And importantly, it’s technology that can enable this to happen more frequently and more broadly. By using AI, automation & robotics, local authorities can transform their back-office processes and free more time for their people to support citizens as best they can. 

Automation, artificial intelligence and process improvement can all drastically reduce the need for human involvement in transactional tasks and free up to 40% capacity by creating bots to deal with repeatable tasks.

The impact of the coronavirus pandemic on digital skills

The coronavirus pandemic accelerated the adoption and application of digital technology which has been transformative for both people and businesses. This contributed to a fall in the number of people who require additional assistance to gain essential digital skills over the entire ten-year appraisal period, from 6.9 million in 2018 to 5.1 million.

During the pandemic many younger people improved their digital skills, as they had to adapt to online learning, and this significantly reduced the number of young people deemed to be without essential digital skills for life.

However, the number of people aged 75 and over without essential digital skills for life increased by 11% between 2019 and 2021.  So, although digital exclusion has reduced overall, the divide itself has worsened, with the most vulnerable lagging further behind.  

When it comes to employment, government organisations and businesses are keenly aware of the digital skills gap when trying to recruit skilled people to fill roles. Our findings show that supporting working-age adults to improve their digital skills and find employment would generate £2,719 million for corporates by enabling them to fill vacancies, and provide a total of £586 million in increased earnings, which can contribute to UK growth.

Since the pandemic, businesses are much more likely to embrace hybrid and flexible ways of working, enabling more employees to work from home. However, without sufficient digital skills, workers will have limited scope to take full advantage of this trend.

Improved digital skills for all

Achieving a digitally included society will not happen without strategic, coordinated action targeted at the people and places where need is greatest. We need to see digital inclusion strategies at all levels - from county councils to combined authorities. And Cebr’s analysis suggests that the most challenging stretch of the country’s digital inclusion journey lies ahead. If we are to achieve an inclusive recovery and ensure everyone has the opportunity to benefit from the digital world - we have to step up to this challenge.

Download a copy of the ‘Economic impact of digital inclusion in the UK’ report

Download the report

Find out more about the work we are doing with local authorities as part of the levelling up agenda:

Levelling up and placemaking

Written by

Paul Abraham

Paul Abraham

Paul Abraham, Managing Director at Capita

Paul leads the Capita Local Public Service Sector, supported by 2,300 colleagues who serve local government, housing and community health clients across the UK. Paul has a deep understanding of – and passion for – people, culture change, and organisational development. He has a strong public sector background, having held senior roles in Criminal Justice, Housing, and Local Government.

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