Full Fibre Broadband to Help Create 1.2 Million UK Jobs by 2025

The Centre for Economics & Business Research (CEBR) has updated their research to account for the impact of the “full fibre” broadband roll-out and more people working from home post-COVID19, which now assumes that 25% of the workforce could be working from home by 2025 and this may help to create 1.2 million jobs.

The original research was commissioned by Openreach (BT) and published last October 2019 (here). Broadly speaking that study estimated that connecting the whole of the UK to a Fibre-to-the-Premises (FTTP) broadband ISP network by the end of 2025 could cost £33.4bn (National Infrastructure Commission) but result in a £59bn economic boost, part of which would come from more people being able to work from home.

The CEBR estimated that full fibre deployment on its own could boost working from home by just over a million additional people, taking the share working more than 2 days a week from home in England and Wales up from 11.9% to 16.2%. But as a result of the COVID-19 crisis the organisation now believes that, come 2025, we might have about a quarter (25% or 6 million people) of the workforce working from home on any day.

“As an investment case it looks a no brainer, particularly as most of the investment will be paid for by the private sector, though I should declare an interest since Cebr has been employed by Openreach to research this,” said study author Douglas McWilliams.

Douglas McWilliams, CEBR, said:

“We estimate that this would cause the Flat White Economy to grow from £240 billion in 2019 to £430 billion in 2025, rising from 12.2% of GVA to 17.8%. Conservatively this could generate 1.2 million new jobs in the sector and around double that number in total once knock on effects are taken into account.”

At this point it’s worth explaining what Douglas means by the “Flat White Economy“, which is less a type of coffee and more a reflection of various digital based sectors. You can see below how the original forecast of 12.2% in Gross Value Added (GVA) has been created, although sadly the CEBR didn’t include an updated table for the revised figure of 17.8%.

The number of digitally based sectors has increased and the previous estimate for its size in 2019, using ONS statistics, was 12.2% of GVA (up from 7.6% in 2012) – making it comfortably “Britain’s biggest economic sector“, larger than manufacturing (9.6%), Finance (6.6%) Construction (6.2%) and Retail (5.2%). And it is still growing roughly twice as fast as the economy.

The GVA of the Flat White Economy in 2019

However the CEBR warns that taxes and regulations need to be such that they don’t discourage the UK from “continuing to be Europe’s digital centre.” A permissive immigration policy post-Brexit is also needed to ensure that telecoms operators can still access enough skilled labour (at present there’s a fair bit of strain in terms of finding enough skilled UK fibre engineers to build these new networks).

On the other hand we should warn that accurately gauging the economic impact of deploying faster broadband connectivity is notoriously difficult, not least since most businesses and consumers won’t be starting from a point of zero broadband connectivity. Faster speeds also tend to produce diminishing returns in terms of their economic impact, although some jobs like graphic design and broadcasting may benefit more than others.

Nevertheless a big reason for the change in remote working is that COVID-19 has forced many businesses to adapt to a different way of doing things, which when done properly can also be cheaper and more efficient. The CEBR are therefore tuning into the fact that, going forward, there will be a greater acceptance of working from home (i.e. it will become more common). Full fibre will help that.

Admittedly the focus on full fibre here is perhaps a bit too simplistic, since it also ignores the potential impact of things like ultrafast 5G mobile and Virgin Media’s deployment of 1Gbps capable DOCSIS 3.1 technology.