IT validated as economy fillip

Computing's leader article

Subtle changes to the way the government measures economic productivity do not, at first glance, appear to set the world alight.

But last week’s announcement from the Office of National Statistics (ONS) that the purchase and development of software will in future be recorded as investment rather than consumption is highly significant.

Not only will the changes add a whole percentage point to UK gross domestic product from the 1970s to 2005, they are also a step towards revisions that would, by taking better account of the impact of IT, bring us into the 21st century.

The measurements used to determine the size and growth of the UK economy are based on an outdated model that places manufacturing and heavy industries, rather than services, as the primary engine of wealth creation.

It is an approach that overlooks both the impact of IT within businesses and the growth of new industries, products and technologies.

To form a meaningful picture of our economic situation, and to ensure that the evidence informing policymaking is as valid as possible, the indicators need to be brought up to date.

Understanding of the importance of the issue is undoubtedly growing. The ONS changes on software are a clear step forward. And the Department of Trade and Industry is working on ways of measuring service innovations, which tend to be intangible and are therefore missed by traditional measurement criteria.

But, as always, changes require continued political commitment, informed discussion, and the necessary funding – none of which is easy to secure, least of all on a topic so apparently dry.

Economic measurements are the language in which our business world is described, and in doing so they establish its parameters.

There is little more worth spending money on. It is crucial we get them right, and Computing supports Intellect’s call for a firm commitment from the Treasury.