In September, Prime Minister Tony Blair finally launched Labour's ecommerce strategy. But despite the hype, the question remains as to whether or not the government can make a difference to the UK's online progress - and, in particular, whether we can close the gap on the US.
Blair's strategy, announced in the report 'ecommerce@its.best.uk', tackles subjects such as the cost of going online and greater training for small to medium sized businesses (SMEs). Underpinning this strategy is the appointment of a dedicated senior civil servant, e-envoy Alex Allan, who will assist DTi minister Patricia Hewitt in spearheading the crusade.
UK OK online
But do UK businesses need special envoys and ministers? Government delays, such as the long-awaited ecommerce bill, haven't delayed the creation of uk.com outside of government itself.
The UK has produced innovative Web businesses, such as Freeserve and QXL, and has performed well compared to major economic rivals, with the exception of the US.
IDC says the UK?s share of online revenues now stand at $1.4 billion (2.8 per cent of the worldwide share), second only to Germany in Europe, which earned $1.7 billion in 1998 (3.4 per cent). The US, meanwhile, earned $37.4 billion online last year (74 per cent).
UK consumers are ready to go online, too. Web usage as a proportion of the population is around 18 per cent, ahead of Japan, Germany and France, according to the Irish research organisation NUA. Again, only the US, with 37 per cent, and Sweden, with 41 per cent, are ahead.
Adam Daum, senior analyst at GartnerGroup, says: "The UK is right up there as far as issues such as consumer willingness to shop online go." But the problem remains that the US is so far ahead.
Maintaining a light regulatory touch, keeping infrastructure prices down and using government to drive the market are part of the answer. But some believe the key issue has little to do with government at all.
The real problem seems to be the lack of finance available to Internet businesses in the UK. One source of cash is for companies to list themselves on their national stock exchange to attract investor capital. But although the US now has 291 Internet companies listed on Nasdaq, there are just five listed on the London Stock Exchange.
Nothing ventured, nothing gained
Mike Lynch, founder and chief executive of knowledge management vendor Autonomy, attended the launch of Blair's strategy. He says the UK's Internet companies need raw cash: "The government is not addressing where the real problems are. In Britain, the venture capital market is tiny."
So it seems that the UK is in danger of falling into an trap similar to the one experienced by the UK's PC industry during the 1980s, where businesses such as Sinclair and Acorn were swept away by a US tidal wave. IDC says US online revenues will reach $409 billion by 2002, against the UK's $47.6 billion.
Plan of action
But there is scope for the government to take action. Blair has appointed what on paper looks like a good team - a lead minister in Hewitt, backed by civil servant Allan. Hewitt will act as spokesperson, lead a team of ministers from all departments to focus on ecommerce in their area, and present the delayed ecommunications bill along with the 60 recommendations contained in the report.
Allan will implement the policy set by a team of civil servants, dubbed 'Information Age Champions', across government. And, in an unusual step, both eminister and e-envoy will report directly to Number 10, thus bypassing normal government reporting structures and marginalising the department responsible for ecommerce - the DTi.
Industry doubts
But the government's track record in IT this year is poor, and the IT industry is dubious about whether it can deliver. Meanwhile, although David Svendsen, chairman of Microsoft UK, is enthusiastic about Blair's overall vision, he says: "Pivotal agenda items, such as the e-envoy, seem to have taken far too long and the government has to now just get on and do it."
Another worry is that Allan doesn't take up his post until January, and there are no structures in place to support his role.
If the UK is to become a nation of online shopkeepers instead of online consumers of US ebusinesses, heads need knocking together, and it's down to Hewitt and Allan to undertake that pivotal role.
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