Evidence for the Business and Trade Select Committee

Below is written evidence submitted by FutureDotNow to the Business and Trade Select Committee inquiry on AI, business and the future of the workforce, May 2026.

1. Introduction: FutureDotNow’s perspective

FutureDotNow is a UK charity working with employers, government and delivery partners to close the workforce essential digital skills gap. Our evidence draws on nationally recognised data, employer insight, and delivery level proof of concept programmes.

We strongly support the pace and direction of AI innovation and adoption in the UK. AI presents a significant opportunity to improve productivity, enhance job quality and support economic growth.

However, our evidence shows that the UK’s AI ambitions and productivity goals are at risk unless Government urgently addresses a more basic constraint: the fact that less than half of working age adults have the essential digital and AI foundations required for modern work.

In the near term, AI is largely augmentative rather than massively disruptive. But who benefits — and who is excluded — will be determined by foundational digital capability. This is where policy attention must urgently focus.

2. AI adoption depends on digital foundations

AI does not deliver productivity gains on its own. Productivity is realised when people can:

• work confidently with digital tools,
• adapt to new systems and workflows,
• handle information responsibly,
• and operate safely and legally online.

These capabilities are captured in the Essential Digital Skills Framework, which defines the 20 practical digital tasks that government and industry agree are the minimum baseline for work.

Yet today:

• Only 45%¹ of working age adults can complete all essential digital tasks for work.
• Around 22.4 million people (55% of the workforce) lack at least one of these essential skills.
• Capability levels are declining, not improving.

Recognising that AI is becoming embedded in everyday work, FutureDotNow has led work with employers, providers and government to recommend updates to the Essential Digital Skills Framework to explicitly reflect AI enabled workplaces. These updates treat AI not as a specialist or technical skill, but as an extension of essential digital capability, covering:

• AI literacy and understanding,
• communicating effectively with AI tools,
• critical evaluation of AI generated outputs,
• using AI safely, appropriately and ethically at work.

Without these foundations, AI adoption risks benefiting a minority while leaving large parts of the workforce behind.

3. Implications for business: uneven uptake and the SME challenge

AI adoption across UK business is already uneven. Our evidence shows that SMEs face particular constraints, not because they lack ambition, but because foundational workforce capability is often weak.
For many SMEs:

• productivity returns from technology investment are limited by staff confidence and capability,
•  the digital skills gap absorbs disproportionate management time,
• cyber, compliance and data handling risks are heightened when digital basics are missing.

FutureDotNow’s sector heat map analysis (see Annex) shows that:

• every major sector has a substantial essential digital skills gap;
• sectors with high SME density (including construction, retail, care, hospitality and logistics) show some of the largest gaps;
• even in digital intensive sectors, a significant minority of workers lack the full essentials baseline.

For SMEs, AI readiness is not primarily about advanced skills, but about whether staff can reliably use core systems, manage information and adapt to new tools. Without support, AI risks reinforcing productivity gaps between large firms and smaller businesses.

4. Evidence of what works: embedding essential digital and AI skills

FutureDotNow recently completed a DSIT funded proof of concept programme testing whether strengthening foundational digital and AI skills could improve workforce outcomes.

The programme embedded essential digital and AI related tasks into an existing employability programme (Restart), rather than creating new provision. AI was found to spark new curiosity in jobseekers, creating new interest and motivation to engage with technology.

The results were striking. Participants were twice as likely to enter work (26%) than those on the standard programme (14%). They also entered work more quickly.

Whilst relatively small scale, this demonstrates that small, targeted enhancements to existing programmes can deliver transformational outcomes – and can be scaled nationally.

5. Place based and regional implications

FutureDotNow’s place based heat map analysis (see annex) shows that:

• no region or nation of the UK has a majority of working age adults meeting the full essential digital skills baseline;
• the gap exists across England, Scotland, Wales and Northern Ireland;
• digital capability constraints often align with existing productivity and participation challenges.

This means AI policy cannot rely on “trickle down” adoption. Without foundational intervention, AI risks reinforcing regional inequalities rather than supporting levelling up and inclusive growth.

6. What Government should prioritise next

FutureDotNow recommends a foundational, scalable approach, aligned with existing policy direction and delivery systems:

1. TREAT ESSENTIAL DIGITAL SKILLS – INCLUDING FOUNDATIONAL AI SKILLS – AS THE BASELINE FOR AI READINESS Government should explicitly recognise the AI embedded Essential Digital Skills Framework as the minimum digital capability underpinning workforce AI adoption and productivity strategies.
2. EMBED FOUNDATIONAL AI SKILLS INTO EXISTING SYSTEMS, NOT SEPARATE PROGRAMMES
   Avoid stand alone AI skills schemes for the general workforce. Instead, embed the AI enabled digital essentials consistently across employability programmes, apprenticeships, adult skills pathways and SME productivity initiatives.
3. SUPPORT SMEs EXPLICITLY
   Ensure SME focused policies include practical routes to baseline and build workforce digital capability as part of digital transformation and AI adoption.
4. COORDINATE CROSS GOVERNMENT LEADERSHIP
   Strengthen alignment between DSIT, DWP, DBT, DfE/Skills England and the Cabinet Office to avoid fragmented, sub scale delivery.
5. MAKE PROGRESS MEASURABLE AND VISIBLE
   Use the Essential Digital Skills Framework to create a shared evidence base, improving targeting, accountability and value for money.

7. Conclusion

AI presents a major opportunity for the UK. In the near term it is more likely to augment work than replace it wholesale. But augmentation only delivers inclusive growth if all workers have the confidence and capability to engage with digital and AI tools.
If Government focuses solely on frontier technology and advanced skills, AI risks under delivering on productivity and widening inequalities. If it strengthens foundational digital and AI capability at scale, AI can become a shared productivity asset across regions, sectors and firm sizes.

8. Annexes

• Annex A: The Essential Digital Skills Framework and recommended AI Updates
• Annex B: FutureDotNow Essential Digital Skills Sector and Place heatmaps

9. References

1. Lloyds Bank Essential Digital Skills Report 2025.