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Productivity growth in the UK will continue to stall without Government and industry action to tackle a digital skills deficit in small businesses, according to new research from the Federation of Small Businesses (FSB).

The research finds that over a quarter (26%) of business owners in England lack confidence in their basic digital skills and more than a fifth (22%) believe a lack of basic digital skills among their staff is holding them back from increasing their digital and online presence.

FSB warns that small firms will be left behind unless the National Retraining Scheme, announced in the Budget to boost digital capability, is designed with them in mind.

Despite clear evidence that better digital capability spurs growth, a quarter (25%) of small firms do not consider digital skills to be important to the growth of their business. That is why FSB believes demonstrating the benefits of digital to these firms will be critical.

Mike Cherry, FSB National Chairman, said: “We know that embracing digital technology can help businesses in every sector to be more productive. Firms risk being left behind unless they have the skills to take advantage of technology to remain competitive and responsive to their customers.

“We need to highlight the benefits of going digital and then make sure that small businesses and their staff can access basic digital skills training that meets their needs through initiatives like the National Retraining Scheme. If we can harness the digital potential of small firms, we stand a real chance of creating more world-beating businesses and boosting growth”.

The digital skills gap is part of a wider skills challenge hitting small firms.

The research finds a third (30%) of small businesses in England, which have tried to recruit in the year since the Brexit vote, have struggled to find workers to fill roles because of acute skills shortages. Skilled trade jobs, including electricians, IT engineers and construction workers are most affected as the labour market remains tightly squeezed.

Even within the workplace, there is a persistent skills gap problem, with half (46%) of small firms lacking full know-how among their staff.

Despite most small business owners providing some kind of skills training for themselves and their staff over the 12 month period, half (49%) do not have a formal training plan or budget. In addition, three quarters of self-employed have no plan or budget to support training.

FSB believes a strategic approach to training is essential to support small business growth aspirations, so small businesses must know where to turn for help on this. Small firms say the main barriers to training are the fact that their staff are too busy (25%), training is too expensive (21%) or the type of training desired is not available locally (16%).

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