Government says IT boosts productivity by billions

Office of National Statistics to reflect the impact technology has on business

In a shift that could help firms to recognise more value in IT in the UK, The Office for National Statistics (ONS) has said it would revise its calculations to reflect the way software investment improves productivity, rather than simply assessing software as a cost.

Previous measurements of productivity were out by several billions of dollars each year because they were made using outmoded models, it added.

An article published by the ONS said the body is altering the way it assesses the role of commercial and, especially, in-house software in UK investment.

Under the new model, calculations indicate £8bn of software was purchased by UK firms in 2003, up from the £5.5bn previously estimated. Spending on in-house software was £13bn, up from £2.5bn. The new metrics also lift gross domestic product by one percent over the last 12 years.

The new measurements were welcomed by IT trade group Intellect, which said they underline the importance of technology in business investment.

“Intellect has long been calling on government to recognise the contribution which ICT makes to UK productivity, and has been voicing concern over what it considers to be the government’s use of economic measurements designed for ‘old economy’ needs,” said Beatrice Rogers, senior programme manager for the knowledge economy at Intellect.

Intellect plans to release its Knowledge Economy Index report next month.