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Time to turn election promises into practical policies

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Britain’s new government needs to learn from countries such as China and India about the part aggressive investment in technologies like artificial intelligence can play in boosting industrial productivity.

The New Year is a time for fresh starts and effective planning for the months ahead. What issues should the UK's new government prioritise for 2020 if it is serious about triggering a modernisation in traditional industries and practices that will boost productivity across all regions of the UK? Not to mention helping position the country as an attractive proposition for foreign investment and an innovative hub that attracts and retains the best homegrown and global talent?

These have long been priorities, but perhaps never more so than now, situated as we are in a period of extreme disruption. Political instability, trade battles, Brexit, tech wars, a 5G fight and reports of “significant financial distress” have not created the most favourable climate for UK corporations. On top of this come the many challenges presented by changes in global climate. The need for businesses to be accountable, responsible and transparent requires fundamental shifts in their operations, reporting and wider company culture.

The government faces some tough challenges, which will only get tougher as we progress through the new decade. The last recession was ten years ago, but analysts and economists have predicted that we’re heading into another.

That’s the future – let’s get back to the now. More specifically, how the UK government can promote prosperity. This includes the need to focus on and invest in artificial intelligence and productivity, both of which garnered mentions in the Conservative manifesto in the December 2019 general election, a document whose policies promised to “unleash Britain’s potential.” AI was listed - alongside life sciences, clean energy, space, design, computing and robotics - as one of the areas in which “the UK can generate a commanding lead in the industries of the future” and on which the new administration will focus its efforts. Increased R&D funding also featured, as well as “investing in clusters around world-leading universities and spreading knowledge”.

Technologies with AI capabilities must be accessible to all businesses, not only the newer digital-first players. Just look at the companies listed in the S&P 500: over the next ten years we’ll see legacy corporations replaced by a growing number of tech firms. To keep up with the competition, all companies need to be thinking about how they can leverage new capabilities, such as AI, to become new leaders in whichever field they operate.

In terms of productivity, the Conservatives pledged to “invest thoughtfully and responsibly in infrastructure right across our country in order to increase productivity and wages.” Those were the promises made in the run-up to the election. It’s now time to focus attention on when and how these will become realities. It’s not only the Labour party that should be holding the government to account: UK business leaders, entrepreneurs, scientists, engineers, technologists and education and research institutes will also be keeping a close eye on its activities and policy announcements over the year ahead.

If these pledges are made realities in the future, the outlook will be promising. The reality at present, though, is less encouraging. Between April and June last year, productivity in the UK fell at its fastest annual pace in five years, according to the Office for National Statistics. This was followed in November by data which showed a stagnation in the UK’s productivity growth over the subsequent period to September. These findings highlighted the need for aggressive investment in research into advanced technologies, such as AI, which will be instrumental in improving productivity and solving the skills challenge hampering a number of UK industries. Manifesto pledges to deliver this should therefore have come as no surprise – these steps should have been a given, baseline commitments that are crucial to the future buoyancy of UK businesses.

It’s not just the UK that is feeling the effects of sluggish productivity levels. In November last year, the US Labor Department revealed that productivity of workers fell at a 0.3 per cent yearly rate between July and September, the largest decline in almost four years. The period also saw a gloomy forecast from the IMF, which announced that Euro zone economic growth would slow more than expected, due in large part to “anaemic growth” and “stagnation” in the economies of Germany and France, respectively.

This economic picture sits in stark contrast to that of other nations. Bloomberg has identified China and India as major drivers of growth over the next four years – the latter pushing the US into third place. Indonesia and Russia take the fourth and fifth spots, whilst the UK is expected to languish in fifteenth place.

I don’t, of course, expect the UK to take the top spot on the global stage. However, I do think it’s important that the Government continues to set – and adhere to – ambitious goals to fuel economic growth, boost productivity, and foster technological innovation. This is where investment in R&D comes in. Providing the funding for developing AI-capable business solutions will help make these tools more accessible to more companies. Furthering the UK’s prowess in the AI space also means equipping business leaders and employees with relevant training and digital skills, allowing organisations to capitalise on these technologies, augmenting human workforces and driving productivity growth.

The projected success of China and India can be partly attributed to just such actions. China increased its spending on R&D by a massive 70 per cent between 2012 and 2017, for instance, while India’s finance minister announced the establishment of a national centre for AI as part of the country’s 2019 budget plans. Britain must learn from the examples of markets such as these, and aggressively invest in technology to overcome productivity challenges. Recent findings from Tech Nation have revealed that the UK must also learn from the example of venture capitalists, who have shown significant confidence in the UK’s technology market. Venture capital funding for British start-ups grew 44 per cent to a record $13.2 billion in 2019, and since 2014 the UK has produced more than double the number of billion-dollar tech companies than any other European country. While this is an impressive feat, it’s important to remember this is someway short of the equivalent figure for the US, of some $116 billion.

Businesses, too, are well aware of the importance of investing in technology – and AI in particular – to promote and sustain productivity and growth. As part of a global study at the end of last year, IFS found that a massive 99 per cent of UK respondents plan to invest in AI, compared with just 80 per cent in North America and 83 per cent in mainland Europe.

Decision makers working with technology including enterprise resource planning, enterprise asset management and field service management highlighted how AI would predominantly be used to make existing workers more productive and add value to products and services. Rather than supplanting human workforces then – that age-old fear – AI is seen as a clear means of improving and augmenting employees’ management of business processes and operations.

What will this look like? In field service, for example, we’ll see near-full automation, whereby individual systems are tied together through an advanced AI, which seamlessly transitions from process to process – things like predictive maintenance, for instance, will be widespread. AI will also facilitate human-machine interactions (such as with chatbots or computer image processing), and automate complex, timely, or mundane processes, including in fields such as manufacturing. For businesses to reap the benefits of AI, solutions must be user-friendly and outcomes-based; even with investment in education and skills, we don’t expect all employees in all industries to be instantly AI literate. AI, robotic process automation and the internet of things, should all be wrapped into a single product that’s accessible for business users and delivers results (and therefore value) which are specific to the business in question.

The promises made in the government’s election manifesto - if delivered upon - will help encourage AI R&D and adoption. These promises are of course welcome, but what I find rather concerning is the timescale involved. The manifesto pledged that a Tory administration would turn its attention to “the great challenges of the future” by making “an unprecedented investment in science so we can strengthen research and build the foundations for the new industries of tomorrow.” However, this will only happen “once we have got Brexit done”. Getting Brexit done didn’t happen on 31 January 2020. It won’t even happen following the 11-month transition period. It’ll be an ongoing process over a number of years that will involve drawing up new regulations and trade deals, and establishing the UK as a new entity on the global stage.

There’s an opportunity for the UK to become a leader in AI and, by adopting AI-capable solutions, for workforces to work smarter, do their jobs better and derive value from the technology. Based on its manifesto pledges, the new government seems to acknowledge this. But what’s neglected is the importance of following through on these promises in the here and now. Instead of waiting until Brexit is ‘done’, we need to see action from government and businesses today. This will both help support our economy through the Brexit transition, and by boosting productivity, ensure that UK businesses are thriving tomorrow.

Alan Laing is managing director, UK & Ireland, for enterprise software supplier IFS.

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