It is easy to say the tech sector is important for the UK economy – it’s a statement few people would disagree with.

The real challenge for the new Labour administration, as it gets its teeth into implementing new policies, is that to have a thriving tech sector, the UK needs a thriving digitally skilled workforce.

Skills shortages have long been a feature of the technology industry, both in the UK and globally. Our Nash Squared Digital Leadership Report, which has been running for 25 years, routinely reports significant skills challenges that technology leaders say are holding them back. This spiked in the wake of the pandemic which created a massive need for digital skills. It has fallen back somewhat since - but still, in the 2023 survey 54% of digital leaders said that skills shortages were preventing their organisation from keeping up with the pace of change.

Digital skills aren’t only needed for specialist technology roles in the IT sector - they permeate almost every level of employment. When unveiling its digital strategy in 2022, the previous government observed that 80% of all jobs advertised in the UK require digital skills. Estimates suggest that the digital skills gap costs the UK economy as much as £63 billion in lost GDP.

Building on success including AI

So where should this new UK government focus its efforts? Firstly, it’s crucial that technology doesn’t become an area for ‘party politics’ with the government undoing or changing things simply because the current policy came from a party of a different colour. Where policy is good and proving successful, it should be maintained and built on.

One primary example of this is around the technology of the moment - AI. The previous government secured a real coup in holding its AI summit at Bletchley Park, which was attended by political and industry leaders from around the world. This established the UK on the world stage and gave us the potential to take a leadership position in terms of AI policy, security and governance.

Indeed, the UK has already become a strong hub for AI - home to a third of Europe’s AI start-ups, twice as many as any other European country according to the Department for Business and Trade (DBT). The UK now has a staggering 1,300 AI companies with a collective turnover of almost £1.47 billion.

Clearly, it should be a priority for the new government to continue this momentum and support AI development across the UK. This can be a game changer and wealth/employment creator long into the future.

Education and diversity of talent

AI is already here - but the talent of tomorrow is still growing up and moving through our education system. The key point here is that technology should be presented and talked about in line with what it actually is - a truly exciting, intrinsically relevant area that feeds into every aspect of business and society. It should attract young minds from all backgrounds, demographics and types - to create a truly diverse and inclusive talent pool.

However, this diversity is something that the industry also struggles with. The proportion of women in technology remains frustratingly low - just 14% of technology leaders and only around a quarter of the workforce as a whole in our latest Digital Leadership Report. Representation from those from ethnic minority backgrounds also seriously lags, at only around 25%. We have to change this - otherwise the talent pool will be too restricted to provide businesses with the flow and throughput they need.

A diverse workforce can bring so many benefits - as seen at Bletchley Park itself where, in 1945, fully three-quarters of the workforce were women. Diversity is part of our heritage and this is something we need to remember!

GCSEs and T Levels

An example of where things are not working is the Computer Science GCSE. This used to be called ICT but the name and the syllabus were overhauled a few years ago. A study by King’s College, London found that whereas 43% of those taking the ICT GCSE in 2015 were girls, there had been a “stark decline” to just 21% taking Computer Science in 2023 - with King’s concluding that this was because the syllabus had become narrower and more technical in scope.

We have to find ways of boosting diversity across all its forms. The way we talk about technology is crucial to attracting the talent we need - so let’s keep bringing out the dynamic, real-world applications of technology in everything around us and show young people that the opportunities are vast, whatever their individual strengths and skillsets. This is something I was delighted to be able to expand on when I was invited to speak at the Women and Work All-Party Parliamentary Group (APPG) last year.

One educational development from the previous government that commendably moved in the other direction, making technology more accessible, was the creation of T Levels including several in STEM and technology related areas. We are big supporters of T Levels at Nash Squared, and inputted to thinking around cyber security for one of the T Level modules. T Levels are more practical in their focus than A Levels and include an industry work placement.

They are a great innovation, but they have struggled in some instances to attract industry placements (a key feature of the course) and in the case of digital focused T Levels (Digital Business Services, and Digital Support Services) the proportion of girls being awarded their qualification in 2023/24 was similar to the proportion of girls already working in technology. In short, T Levels are not moving the gender diversity needle.

As a result, a priority for the new government should be to build on the excellent foundations that have been laid and look for ways for making T Levels even more effective.

Apprenticeships, training and upskilling

Diverse routes into technology are another key aspect, widening other pathways alongside the traditional university route. Apprenticeships and training programmes are an important part of this - and yet as most acknowledge, the existing Apprenticeships Levy system is not working as well as it could. Large amounts of the levy are returned to the Treasury each year unused.

I therefore welcome the new government’s proposal to widen the levy into a new Skills and Growth Levy that would give businesses more flexibility in the programmes they invest in. However, the devil will be in the detail. It will be up to the government to design any new scheme wisely to ensure maximum take-up. We also need to see adequate funding for later career training and upskilling (such as digital bootcamps) aimed at groups like mature returners to the workforce (parents, carers) and those simply looking to branch out in a new direction.

There is lots for the new government to aim at. In an arena as fast-moving as technology, there is no time to stand still. I hope that the government will move forward at pace to keep building our position in the technology of the future. As businesses, we also have a responsibility to engage and participate - so I call on business leaders to get involved and play their full part.

Crimson is part of Nash Squared, the leading global provider of talent and technology solutions.