UK economy benefits by £20 for every £1 invested in broadband

by Mark Tyson on 14 November 2013, 13:15

Tags: UK Government

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A new report published today by the Department for Culture, Media & Sport reveals that for every £1 the Government invests in broadband, the UK economy benefits by £20. That’s a great return on any investment and great value for tax payers. The new report was put together by analysts SQW (with Cambridge Econometrics).

“What this report shows us is that as well as superfast broadband being good for economic growth it will make even more of a positive impact on the way we live, helping us work more productively and get online faster,” said Secretary of State for Culture, Media and Sport Maria Miller. “This investment in technology is vital for our future and will help Britain continue to compete in the global race and improve the way we live and work,” she added.

The UK Broadband Impact Study – Impact Report says that government investment in improving the UK’s broadband is retuned 20-fold. You can download the full study from here (PDF). Please note that the study doesn’t include any impacts associated with further interventions resulting from the Government’s announcements in July 2013 on extending superfast broadband to 95 per cent of premises by 2017.

Broadband use has grown to be a major part of many people’s business and home lives and makes a major impact on how we live; more people work from home, make money online, communicate, play games and watch their TV and movies online. Because internet use touches so many parts of our lives it must be the reason behind the “unusually high level of return for public funding” that was found.

As well as the quantified economic impacts charted above the UK Broadband Impact Study describes social and environmental impacts upon the UK. Socially it’s difficult for the researchers to quantify the “complex and changing nature of the interactions between people and technology”. However teleworking is expected to give workers a saving of about 60 million hours of leisure time per annum in the UK by 2024 – 10 million of those hours attributable to the government investments). Less commuting will also save households quite a lot of expense.

In environmental terms faster broadband tech will, by 2024, have the following estimated impacts:

  • Saving 2.3 billion kms in annual commuting (2 per cent of current total)
  • Saving 5.3 billion kms in annual business travel (9 per cent of current total)
  • Saving 1 billion kWh of electricity usage p.a.

Overall the UK should achieve 1.6 million tonnes of carbon dioxide equivalent (CO2e) savings per annum by 2024.

Also let’s not forget the speed of advance of faster mobile networks and alternative networking technologies, which should also have positive impacts on internet speeds across the country.



HEXUS Forums :: 23 Comments

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and £15 of that then goes back to mp`s expenses…..
so instead of ploughing 54 billion into HS2 which is estimated will return £2 for every £1 spent, they should divert that money to broadband instead.
I admit I haven't read the paper in full yet, but I've had a good skim of it and they're basically making a ten year modelled forecast based on five years of input data. So the whole thing probably needs taking with a pinch of salt.

So let's be clear. This doesn't say that “for every £1 the Government invests in broadband, the UK economy benefits by £20”. It says that in 2024, they estimate the total benefit to the UK economy will have accumulated to £20 for every £1 spent. It's still a good return, but it relies on a lot of assumptions and a very limited pool of source data. Also, whle it sounds very impressive, the figures are minimal in comparison to the total economy - 0.03 percentage points of the total increase up to 2024. Assuming a low economic growth of 2% per year for the next ten years, the actual contribution to growth will be around 0.15%

Also, it relies on increased teleworking and reduced business travel as a major driver for those improvements. That's going to require more than just faster broadband - it's going to require a major culture change. Employers are still suspicious of teleworking, and their employees having fast broadband at home isn't going to change that.

Did I say pinch of salt? I'll take a whole box, please…
A lot of ‘could’s. As Yahoo's new boss recently decided, a lot of people working from home are actually doing the square root of Sweet FA. Pretty much matches my analysys of -most- work from home VPN usage at places I've worked.
wasabi
… As Yahoo's new boss recently decided, a lot of people working from home are actually doing the square foot of Sweet FA. Pretty much matches my analysys of -most- work from home VPN usage at places I've worked.

OTOH, are you sure they're being more productive in the office? Just because people aren't necessarily very productive when working from home, doesn't mean it's not better than the alternative …