Productivity growth in the UK will continue to stall without the UK Government and industry action to tackle a digital skills deficit in small businesses, according to research from the Federation of Small Businesses (FSB).

The research found that over a quarter (26%) of business owners in England lack confidence in their basic digital skills and more than a fifth (22%) believe a lack of basic digital skills among their staff is holding them back from increasing their digital and online presence.

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The FSB warns that small firms will be left behind unless the National Retraining Scheme, announced in the Budget to boost digital capability, is designed with them in mind.

Despite clear evidence that better digital capability spurs growth, a quarter (25%) of small firms from the survey do not consider digital skills to be important to the growth of their business.

That is why the FSB believes demonstrating the benefits of digital to these firms will be critical.

Mike Cherry, FSB national chairman, said: “We know that embracing digital technology can help businesses in every sector to be more productive. Firms risk being left behind unless they have the skills to take advantage of technology to remain competitive and responsive to their customers.”

“We need to highlight the benefits of going digital and then make sure that small businesses and their staff can access basic digital skills training that meets their needs through initiatives like the National Retraining Scheme. If we can harness the digital potential of small firms, we stand a real chance of creating more world-beating businesses and boosting growth.”

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The digital skills gap is part of a wider skills challenge hitting small firms.

The research found a third (30%) of small businesses in England, which have tried to recruit in the year since the Brexit vote, have struggled to find workers to fill roles because of acute skills shortages. Skilled trade jobs, including electricians, IT engineers and construction workers are most affected as the labour market remains tightly squeezed.

Even within the workplace, there is a persistent skills gap problem, with half (46%) of small firms lacking full know-how among their staff.

“Productivity is being hampered by nagging skills shortages which are making recruitment a nightmare for small firms,” continued Cherry. “As the UK moves towards Brexit, a technical skills black hole threatens the economy. Small firms tell us that technical skills are crucial to the future growth of their businesses. The clock is ticking to tackle the ever-widening skills gap.”

Despite most small business owners providing some kind of skills training for themselves and their staff over the 12 month period, half (49%) do not have a formal training plan or budget. In addition, three quarters of self-employed have no plan or budget to support training.

The FSB believes a strategic approach to training is essential to support small business growth aspirations, so small businesses must know where to turn for help on this. Small firms say the main barriers to training are the fact that their staff are too busy (25%), training is too expensive (21%) or the type of training desired is not available locally (16%).

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“The twin pressures of rapid technological change and Brexit make upskilling the current workforce more important than ever,” said Cherry. “Small firms clearly recognise the value of providing training for themselves and their staff, but it can be a struggle to find the time and money, and in some cases even to find the right training locally. All Local Enterprise Partnerships (LEPs) should ensure that there is relevant, accessible training available to meet the needs of small businesses and the self-employed.

“What’s more, there’s a bigger problem with training among the self-employed who often find themselves so stretched that extra time away from the business can seem more like a burden than a benefit. The Government should encourage more people to train by offering tax breaks to self-employed who attend training to develop new skills, not just to refresh existing skills.”

However…

A new Fujitsu report of the UK public and businesses found that businesses are, in fact, confident their employees have the right skills to make the most of new technologies. Despite this, the majority of the public did not echo this confidence when it came to their own skills.

With the general public looking to businesses to drive Britain forward, businesses need to work harder to educate the nation of the benefit these changes can bring in the long run.

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“Technology is completely transforming Britain. For that to remain positive, technology companies must take responsibility and ensure innovation helps all people from all corners of the UK. From helping re-skill those displaced by technology – something 60% believe tech companies are responsible for – through to bolstering our cyber security, it is vital that technology lives up to its promise to positively impact the entire country”, said Rupal Karia, head of Commercial Sector, UK & Ireland, Fujitsu.

“To ensure the UK remains at the heart of digital transformation, companies need to take responsibility for educating people. It’s not enough to simply innovate and send a product out, businesses need to take responsibility for the impact it has and work harder to educate the nation on the benefits these changes can bring in the long run.”