Productivity? – Don’t Just Fund the Technology Phil! A response to the budget of the 22nd November 2017.

By Dr. Adam Hoare

The Organisation for Economic Co-operation and Development has downgraded its 2017 growth forecast for the UK to 1.5% from a 1.6% estimate made in September, making Britain the weakest economy in the G7. The office for budget responsibility had taken the rosy view that after 2008 UK productivity growth would return to previous levels of around 2% It has now admitted, after years of getting it wrong, that it is likely to sit around 1.3-1.5% until 2020. Last week’s budget reverberated with the recurring issue of low productivity growth. The solution presented was an industrial strategy. Something that had fallen out of favour as Government interference.

The announcements based on borrowing came thick and fast:

• Digital skills and startup funding to reinvigorate the UK’s waning productivity.
• £3 billion to cushion the landing of a potential hard Brexit, the chancellor said: “This Budget is about much more than Brexit. For the first time in decades Britain is genuinely at the forefront of this technological revolution. Not just in our universities and research institutes, but this time in the commercial development labs of our great companies, and on factory floors and business parks across this land. But we must invest to secure that bright future for Britain.”
• Last year’s £23 billion National Productivity Investment Fund was to provide £31 billion in funding over six years, compared to the originally planned five. R&D to receive another £2.3 billion investment, under the government’s Industrial Strategy aim to ramp up R&D spending to 2.4% of GDP.
• To double the number of tech startups founded in Britain with the goal to see one created every half an hour.
• A £10 million Regulators’ Pioneers Fund to help regulators find new ways to bring emerging tech – AI and 5G – to market.
• Tech City UK, to be rebranded as Tech Nation, a body with a remit to spend £21 million on developing the UK’s various startup hubs.
• In a bid to tackle the UK’s stark digital skills gap, the chancellor also outlined fresh cash to retrain people and provide a greater focus on maths and computing for children and teenagers.

The idea of a strategy and a long list of funding opportunities for new technology seems to overlook some very important evidence. Figures for various IT projects (some of the figures originating from the National Audit Office no less) demonstrate a persistent gap between the projected benefits and the reality:

• Child Support Agency – £500m estimated loss;
• DEFRA Rural Repayments Agency – £130m estimated loss;
• Inland Revenue NIHS – £3-4 billion estimated loss;
• Magistrates Court LIBRA – £232 million estimated loss;
• HM Prison Service C-NOMIS – £690 million estimated loss;
• Fire and Rescue FiReControl – £469 million estimated loss;
• NHS NPfIT – £20 billion estimated loss.

As we borrow money to fuel a technological “hail Mary pass,” it would seem a good time to think about why we fail to convert so many such passes to a touchdown. The Bayswater Institute has been extensively involved in embedding and evaluating digital technologies in health and social care over several decades. Over the last decade alone there have been hundreds of initiatives to improve productivity in care provision by elevating the use of technology to 21st century standards. Although there has not been an overall assessment of the impact of these initiatives the experience of care provision points to low impact from these initiatives. From seeing these projects from the inside, we have developed a level of understanding of why they struggle – and it is not the technology. Two things work against the use of technology in many of these scenarios:

1. The technology does not exist in isolation it is part of a system that involves the people using it and the people receiving services. If it does not work for them it is not productive.
2. Where there is an increase in productivity it usually means a single person can handle more work or the workforce can be reduced. This inevitably generates resistance.

Both of these challenges are rooted in social science and the interface between people and technology. Understanding these sociotechnical systems is essential in successfully capturing the benefits the technology can bring. Looking back over the announcements we cannot see where this is mentioned. Throwing money at the technology and expecting social transformation is an interesting approach but the evidence is – it has been done before and it will fail.

A third issue that recurs in productivity considerations. To know a system is more productive than it was before it must be measured in a meaningful way. This links back to point 1 above. If it works for the professional but not the citizen – it does not work. Hence, the outcomes of productivity must include social value and social impact otherwise public money is spent on making the system happy and the service recipient unhappy.

We spend much of our time providing summative evaluations of where the barriers and challenges are in technology projects that are trying to embed into practice. We have a special interest in formative evaluations of interventions where we can draw on our experience and anticipate some of the problems ahead of the development and have the opportunity to have an impact on the NAO estimated loss. If the focus remains on the technology and not the combined scoiotechnical system the return on investment is likely to be negative. The last thing that Phil wants.