I recently gave a talk at a meeting of members of The Entrepreneurs Network. This is slightly expanded version.

It’s pleasure to be in Entrepreneurial company tonight 

The Truss/Kwarteng paradise of  Britannia Unchained to unleash growth, growth growth has been showed up for what it it was. It didn’t outlast a lettuce.  I hope that with Rishi Sunak as PM we are at the end of the magical thinking era. 

I am always an optimist but I look forward to hearing whether you agree with Guy Hands who thinks we’re going to be the sick man of Europe. 

So I’m not going to talk at you too long and I’m certainly not going to get into detailed expenditure or taxation proposals!  That would be bound to get me into trouble.

And the first thing to remember is that policy is all very well but its results that matter and government can be the graveyard for good ideas, innovation and enterprise. You only have to read Kate Bingham’s recent book Long Shot  to understand how bureaucratic process can so easily be a killer of good intentions and effective outcomes.

The second is that we are in my view fighting a combination of factors including the effects of COVID Brexit, Austerity, and political instability to put it mildly. Mathew Syed in his Sunday Times column headlined that an “Irrational faith in the providence of Brexit has trapped adherents in cognitive dissonance and denial” . We need a frank appraisal of the impact of Brexit and fix the consequences where we can.

So our economic circumstances really do require prioritisation and clear thinking. 

What I would like to do is throw out a few thoughts for discussion on where the focus of government policy should be in order to grow our tech sector in general and AI development and adoption in particular.

The challenges include.

  • how can we convert academic success into entrepreneurship?
  • How can we increase the speed of business adoption of AI tech in the UK?
  • How can we best guard against future harms that AI could bring?

I am saying all this of course in the light of the Government’s grand 10 year plan “Make Britain a global AI superpower” published a year ago. 

Let’s briefly consider a number of key priority areas : 

  • The need for quality data 
  • Good regulation and standards which gain public trust
  • Jobs and Skills
  • International cooperation especially in R&D eg Horizon
  • Investment incentives
  • Infrastructure 

TechUk reported earlier this year at London Tech Week that UK start-up investment saw the biggest annual opening on record in 2022, with $11.3B raised by UKstart-ups in Q1, compared to $7.9b in Q1 2021.The UK is home to 122 unicorns, behind only the USand China for the creation of billion dollar tech companies, and first in Europe..

This is undoubtedly positive, especially considering the wider economic challenges the UK and the world face. However, with the UK economy forecasted to face a recession and an economic slowdown forecasted for 2023-2026, we cannot be complacent, 

Moreover as the Entrepreneurs Network point out in your recent paper making Britain the best place for AI Innovation, while the UK is a global leader in research, development and talent, the Tortoise Index ranks Government strategy – defined as financial and procedural investment into AI – only 13th internationally, which puts it behind Belgium. 

First of all if we are to have an AI growth Strategy there is  need for a quality data 

We need independent measures of platform business, their economic activity, growth rates, national and regional figures that can reveal hotspots of growth as well as cold spots for future investment and development.It seems that organisations such as the ONS don’t gather relevant data. It is difficult to develop a growth strategy for AI when the baseline from which to compare the growth isn’t available. 

We also need data that cover different dimensions of growth –there need to be quality measures – quality of jobs, income, service, work/life balance etc.

Good regulation and standards

Then we have the importance of certainty for business of clear regulation.progress on AI governance and regulation is important as well to restore  and retain Public Trust.. 

Regulation is not necessarily the enemy of innovation, it can in fact be the stimulus and be the key to gaining and retaining public trust around AI and its adoption 

One of the main areas of focus of our original AI Select Committee was the need to develop an appropriate ethical framework for the development and application of AI and we were early advocates for international agreement on the principles to be adopted. It has become clear that voluntary ethical guidelines however much they are widely shared, are not enough to guarantee ethical AI and gain trust. 

Some of the institutions envisaged as the core of AI development really are working well. The Turing for example is coordinating effectively such as through the new AI Standards Hub But CDEI has lost its way and not been given enough independence and the Office for AI has lost impetus. The Digital Catapult has considerable expertise and great potential but is underresourced.

A key development in the last two years has been the work done at international level in the Council of Europe, OECD,  UNESCO and EU towards putting these principles into practice . The only international forum where the government seem to want to make a real contribution however is the global partnership on AI GPAI

 If at minimum  we could agree international standards for AI Risk Assessment and Audit that would represent realm progress and give our developers real certainty. 

The UK’s National AI strategy accepts the fact that we need to prepare for AGI 

On the other hand despite little appetite in the business or the research communities they have now introduced a new a really unhelpful Bill  on major changes to the GDPR post Brexit and as a result we may have a less independent ICO which will put at risk the precious Data Adequacy ruling by the EU.

And above all despite their commitment to trustworthy AI, we still await the Government’s proposals on AI Governance in the forthcoming White Paper but there is a strong prediction that it will be mainly sectoral;/contextual and not in line with our EU partners or even extraordinarily the US.

At the very least we also need to be mindful that the extraterritoriality of the EU AI Act means a level of regulatory conformity will be required for the benefit of our developers and cross border business  

Jobs and Skills

Then of course we have the potential impact of AI on jobs and employment . A  report by Microsoft quoted  by TEN found that the UK is facing an AI skills shortage: only 17% of UK employees are being re-skilled for AI

We need to ensure that people have the opportunity to reskill and retrain to be able to adapt to the evolving labour market caused by AI. Every child should leave school with a basic sense of how AI works.

But the pace, scale and ambition of government action does not match the challenge facing many people working in the UK. The Skills and post 16  Education Act with its introduction of a Lifelong Loan Entitlement is a step in the right direction.I  welcome the renewed emphasis on Further Education and the new institutes of Technology.. but this isn’t ambitious enough.

The government refer to AI apprenticeships but Apprentice Levy reform is long overdue. The work of Local Digital Skills Partnerships and Digital Boot camps  is welcome but they are greatly under-resourced and only a patchwork. Careers advice and Adult education need a total revamp

We also need to attract foreign talent. Immigration has a positive impact on innovation.The new Global Talent visa seeks to attract leaders or potential leaders in various fields including digital technology.   This and changes the changes to the Innovator visa are welcome.

Broader digital literacy is crucial. We need to learn how to live and work alongside AI and a specific training scheme should be designed to support people to work alongside AI and automation, and to be able to maximise its potential

Given the current and imminently greater disruption in the job market we need to modernise employment rights to make them fit for the age of the AI driven ‘gig economy’, in particular by establishing a new ‘dependent contractor’ employment status in between employment and self-employment, with entitlements to basic rights such as minimum earnings levels, sick pay and holiday entitlement. 

Alongside this we shared the priority of the AI Council Roadmap for more diversity and inclusion in the AI workforce and we still need to see more progress in this area.

R & D support including International cooperation eg Horizon

Any industrial policy for AI needs to discuss the R & D and innovation context in which it is designed to sit.

The UK has/had a long-term target for UK R&D to reach 2.4% of GDP by 2027. In 2020 we had the very well-intentioned R & D Roadmap. Since then we have had the UK Innovation Strategy with its Vision 2035, the AI Strategy, the Lifesciences Vision, the Fintech Strategic Review, all it seems informed by the Integrated Review’s determination that we will have secured our status as a science and tech superpower by 2030.

So there is no shortage of roadmaps, reviews and strategies which lay out government policy in this landscape!

Lord Hague wrote a wise piece in the Times a little time ago. he said

“But the officials working on so many new strategies should be running down the corridors by now and told to come back only when they have some detailed plans that go far beyond expressing our ambitions”

When we wrote our AI reports in 2018 and 2020 it was clear to us that the UK remained attractive to international research talent. I am still very enthusiastic about the future of UK research & development, innovation and their commercial translation in the UK and want them to thrive for all our benefit

University R&  D remains important.There are strong concerns about the availability of research visas available for  entrance to universities research programmes and the failure to agree and the lack of access to EU Horizon research Council funding could have a huge impact. Plan B by the sound of it won’t give us anything like the same benefits. A number of Russell group universities such as imperial UCL and my own Queen Mary are now with finance partners building spin out funds. 

Additional funding could be provided to leading research universities to fund postgraduate scholarships in AI-related fields. .We should be seeking to make universities regional powerhouses tied in with the economic future of our city regions through university enterprise zones

We do nevertheless rank highly in the world of early-stage research and some late stage not least in AI, but it is in commercialisation- translational research and industrial R&D-where we continue to fall down.

The UK is a top nation in the global impact of its R&D, but not so effective at innovation, where it ranks 11th in the world in terms of knowledge diffusion and 27th for knowledge absorption, according to an October 2021 report by BEIS.

As Lord Willets is quoted as saying in a recent excellent HEPI paper (see how i quote tory peers!)  “Catching the wave: harnessing regional research and development to level up ‘We all know the problem– we have great universities and win Nobel Prizes, but we don’t do so well at commercialisation’.

Our research sponsoring bodies could be more generous in their funding, with less micromanagement, less keen digging up projects by the roots to see if they are growing. The creation of ARIA was an admission of the bureaucratic nature the current UKRI research funding system

 I welcome moves to extend R&D tax credits to investment in cloud computing infrastructure and data cost, but We need to bring in capital expenditure costs, such as those on plant and machinery for facilities engaging in R&D within scope as Tech UK have called for.I think we should now consider for AI investment something akin to the dedicated film tax credit for AI investment which has been so successful to date.

There needs to be more support for Catapults which have crucial roles as technology and innovation centre as the House of Lords Science and Technology Committee Report this year recommended

We could also emulate America’s seed fund- the SBIR and STTR programs which are at much great scale than our albeit successful UK Innovation and Science Seed Fund (UKI2S). And we need to expand the role of our low profile British Business bank 

Infrastructure

There has been so much government bravado in this area but is clear that the much trumpeted £5 billion announced last year  for Project Gigabit bringing gigabit coverage to the hardest to reach areas has not even been fully allocated and barely a penny has been spent. 

But the Government is still not achieving its objectives.

The latest Ofcom figures show it seems  that 90% of houses are covered by superfast broadband but the urban rural gap is still wide.

While some parts of the country are benefiting from high internet speeds, others have been left behind, The UK has nearly 5mn houses with more than three choices of ultrafast fibre optic broadband, while 10mn homes do not have a single option. According to the latest government data, in January 2022, 70 per cent of urban premises across the UK had access to gigabit-capable broadband, compared with 30 per cent of rural ones.

In fact urban areas now risk being overbuilt with fibre. In many towns and cities, at least three companies are digging to lay broadband fibre cables all targeting the same households, with some areas predicted to have six or seven such lines by the end of the decade. 

So are we now into a wild west for the laying of fibre optic cable Is this going to be like the Energy market with great numbers of companies going bust. 

So sadly even our infrastructure rollout is not very coherent! 

 

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