UK Industrial strategy: A bold vision scuppered by incompetence

OPINION While the British government wrestles with Brexit, it has announced more details of its plans to raise R&D investment to 2.4 percent of GDP, in line with its revamped industrial strategy.

Among the newly announced plans is funding of £79 million to build a new supercomputer in Edinburgh, the processing power of which will “contribute to discoveries in medicine, climate science, and aerospace”, said the government.

Whitehall also announced £45 million to support genetic and bioinformatics research in Cambridge, an £81 million investment in extreme photonics (state-of-the-art laser technology) at a national facility in Oxfordshire, and new commitments to support sustainable energy.

Over the past year, the government has made numerous policy announcements on sustainable energy, including support for zero emissions vehicles, electric bikes, green battery technologies, green number plates, and more, though it was criticised for cutting electric vehicle subsidies at the same time, suggesting a limited pot of money.

It’s clear that, to date, the government hasn’t backed its beliefs with enough cash. According to the Office for National Statistics’ most recent figures, the UK currently spends a lowly 1.69 percent of GDP on research and development, compared with an estimated EU average of 2.07 percent.

This places the UK 11th in Europe in terms of members’ percentage investments in developing new products and services, though it is third in Europe in terms of the financial outlay this represents.

By comparison, Japan’s investment in R&D, as a percentage of economic activity, is 3.1 percent, as is Sweden’s and Finland’s; Germany’s is 2.9 percent, the US’ is 2.7 percent, and China’s is 2.1 percent (and growing fast).

Meanwhile, South Korea, the world’s most automated country with the highest percentage of robots per 10,000 employees (its robot density) ploughs just under 4.3 percent of GDP back into new product development – over two-and-a-half times the percentage invested by the UK.

By most standards, then, the UK is lagging behind its major competitors, although its current status as the world’s fifth largest economy means that its R&D investment, in pure expenditure terms, places it eighth in the world, with France and Germany significantly ahead.

With Brexit looming – at the time of writing – the UK needs to invest far more in domestic innovation in order to stand alone on the world stage, if it wants to grow a new economy for the future in line with its industrial strategy.

The government is aware of this, but the fact that its long-overdue message about boosting R&D levels has been lost in all the Brexit noise represents a real problem for the UK, politically, technologically, and in terms of attracting inward investment and talent.

The UK economy continues to grow, said the Chancellor in his Spring Statement this month, in which he set out his new investments in infrastructure, technology, skills, and clean growth – albeit in the context of a decade of austerity via both central and local government cuts.

According to his statement, the government is focused on “keeping debt falling so as to not burden the next generation with financial problems”, but the government is actively pursuing a Brexit policy that will create new ones, according to the World Bank and the OECD.

Both organisations have said leaving the EU will have a negative impact on the UK economy, reducing it by anything from two to three percent, deepening to five percent in the medium term. This is a case of one big picture clashing with another, rather than a unified and realistic vision of future prosperity.

Whatever your political views and position on Europe, the government can fairly be accused of lacking coherence and competence, of being inward facing, and of failing to unify the population. Riven with infighting and political gamesmanship, the government is often said to lack real vision for the future. That last point, however, isn’t entirely true, at least when it comes to technology.

The UK’s revamped industrial strategy positions the UK for a future in which automation, robotics, digitisation, AI, machine learning, the Internet of Things, additive manufacturing, smart supply chains, autonomous transport, drones, blockchain, and other Industry 4.0 technologies, take centre stage. Alongside these, green energy, emissions-free vehicles, and the need for sustainable development are also set out in the government’s plans.

New sector deals for robotics, AI, and more, have underscored these proposals. For example, last year the government’s sector deal for AI matched £300 million of central investment with £700 million from private firms and organisations, to create a £1 billion package.
The problem is the message of the new industrial strategy, which positions robotics, AI, and the rest as “critical technologies” for economic prosperity, has been almost completely lost in the noise and infighting of Brexit. And it’s a message that could inspire businesses, investors, and – importantly – the general public, at a time when inspiration and future thinking are thin on the ground.

Even last year’s announcement of the new sector deal for AI was fumbled. It was known about for weeks in advance, but was finally sneaked out days after the EU announced its own €20 billion AI investment programme, making it look as though the UK was playing catchup again.

Meanwhile, the government has created a baffling, serpentine structure in which responsibility for technology policy and digital transformation is shared across countless different departments, with multiple organisations having clashing responsibilities on AI and data management.

One department alone – the Department for Digital, Culture, Media and (as BBC satire W1A memorably put it) ‘for some reason also Sport’ – has such a broad brief that it is unfit for purpose.

The impression with DCMS is that the government has lumped together things that it doesn’t believe are important enough – including culture and technology – to merit their own briefs. That’s an appalling state of affairs. It’s how messages get lost, how promising visions are scuppered, and how real opportunities to galvanise and unify people are wasted.

Political infighting worsens the government’s self-inflicted wounds. This week Health Secretary Matt Hancock – the former Digital Secretary – slammed Labour leader Jeremy Corbyn as a “loom-smashing Luddite” who wants to “tax robots” in a speech heralding a future of AI- and robotics-aided healthcare in the NHS.

In fact, Corbyn’s position on automation and Industry 4.0 technologies is remarkably similar to that of industry body techUK, in that he has simply called for the benefits of digitisation and automation to be shared fairly among all in society, backed by a programme of lifelong learning.

Gamesmanship, infighting, incompetence, and serpentine bureaucracy are the real restraining factors on the UK, together with levels of investment that are far from world class.

In 2016, this journalist attended a UK-Japan robotics and AI seminar at the Japanese Embassy in London. At that event, the UK announced plans to invest £200 million in robotics and AI by 2020 – an early indicator of the new industrial strategy. Moments later, a Japanese spokeswoman said that her government planned to invest £161 billion in the same timescale, in order to create what she called a “super smart” society.

For comparison, the UK pumped up to £1.16 trillion of public money into bailing out a banking system riddled with corruption, fraud, and cavalier practices.

Meanwhile, a 2017 report by the RSA, ‘The Age of Automation’, contained an uncomfortable statistic in its small print: well over 80 percent of the UK’s central investment in robotics and automation comes directly from the EU, it said. So, much of the ‘new money’ the government announces from time to time may simply be filling deep funding holes created by Brexit.

Until the UK starts behaving like the world’s fifth largest economy in terms of backing its industrial strategy with realistic levels of investment, it will be left circling in a mess of its own making.

Chris Middleton
Chris Middleton
Chris Middleton is one of the UK’s leading independent business and technology journalists, an acknowledged robotics expert, an experienced public speaker and conference host, the author of several books, and the editor of (and contributor to) more than 50 other books. Chris specialises in robotics, AI, the Internet of Things, and other Industry 4.0 technologies, such as blockchain. He has appeared several times on BBC1, ITN, Radio 2, Radio 5Live, Talk Radio, and BBC local radio discussing robots’ societal impacts, and has been quoted numerous times in the press, including in The Sun and the Evening Standard.

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