Oral answer (Lords) on Businesses: Technology - Apr 10

To ask Her Majesty’s Government what steps they are taking to ensure the attraction of the United Kingdom as a place to establish and scale businesses based on artificial intelligence, FinTech and distributed ledger technology.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and declare my interests as set out in the register.

My Lords, we are creating an attractive environment, building the foundations and skills, data and ethics to allow businesses based on AI to start and scale. It is encouraging to note that inward investment to the UK AI sector increased by 17% last year—more than the whole of Europe combined.

My Lords, there are obviously many factors involved, not least our excellent higher education institutions and our approach to immigration, to international students and to funding, to name just a few. Does my noble friend agree that we need to optimise all these factors and more if we are to realise this fantastic opportunity for companies to come here to start and scale in the UK?

My noble friend is quite right to draw attention to our strengths, particularly those in the university sector; for example, he will know that on a league table based on research we have three of the top 10 universities, which certainly makes it attractive for businesses to come to this country and for businesses here to upscale their businesses in AI. He pointed to other factors as well, but I assure him that the Government are doing their bit with the AI sector deal, which is worth some £1 billion to the sector—half from the Government and half from the industry—and I hope that we will see yet further support for it.

My Lords, before asking my question, I congratulate the noble Lord the Government Chief Whip on the achievement of his family business, Taylors Bulbs, in reaching the celebratory milestone of 100 years in business. My best wishes to him and his business for the next 100 years.

The noble Lord, Lord Holmes, is correct to identify and endorse huge commercial opportunities. However, a PwC report in 2017 highlighted that AI and wider automation could result in up to 30% of UK jobs being dispensable. Change can be painful. What steps are the department taking to ensure that all employees benefit from these developing technologies, such as by an improved leisure/work balance, and that AI does not simply lead to mass redundancies?

The noble Lord takes a depressingly pessimistic view of that PwC report. It pointed out that advances in that sector could lead to growth of £230 billion between now and 2030. That is to be welcomed. It also pointed out that jobs would disappear, but I think it went on, as did another report to which I referred the other day, to point to a very large number of new jobs in the sector, which would probably be more highly paid and more highly skilled and which we could provide in this country.

My Lords, will the Minister focus on the scale-up part of the Question? The British Business Bank is there to help the scale-up process. I understand that it loans about £2.5 billion through other institutions. How much of that money proportionately is going into the AI industries to help them scale up, and does he expect that proportion to increase or decrease?

My Lords, I cannot give any precise figures about how much is specifically targeted on the AI industry. The important point is to recognise, as did the PwC and other reports, what will happen in that industry: the advantages for it, how much it will grow and how well this country is doing. That is why I cited in my Answer the massive increase in inward investment—which is obviously an indication of what is happening to not only start-ups but scale-ups—of 17%, which is more than the rest of Europe combined.

My Lords, has my noble friend noticed that although the Opposition are complaining about the redundancies that will be caused by new technology, they are on the other hand complaining about the lack of productivity growth in this country, which will of course be achieved by the introduction of new technology?

As always, my noble friend makes a valid point. We will see new jobs, better jobs, greater productivity and a general growth in the sector.

My Lords, fintech is a great story for Britain. Later this month, we have the Innovate Finance FinTech summit marking the beginning of UK FinTech Week, but 42% of those working in the sector come from overseas. Does the Minister agree that access to this country for the young innovators from abroad is essential, and that we should have an immigration regime which permits them to come to this country?

My Lords, the noble Lord rightly points to the importance of the fintech sector and the fact that London is its leading world player. We shall have to look carefully to ensure that we can attract the right people not only from abroad but from the UK. That is why skills will be important. I am sure that my noble friend from the Home Office will have noticed what he had to say on bringing in people from overseas.

My Lords, I raise a slightly different aspect. We are ahead of most countries in the world on AI, particularly at our universities, but a large number of university courses are getting very full with Chinese students. Is there any concern about this vast number coming in, bearing in mind their input to a large number of other areas of high tech within our nation?

The noble Lord takes me slightly wider than the original Question. Again, it is a sign of the success of the university sector that it attracts people paying large fees into universities, to the benefit of those universities and of this country. I hope that universities will then be able to consider expanding those courses.

My Lords, is my noble friend aware of just how highly respected the UK artificial intelligence sector is around the world in not just research but application? It is generally trusted more than both China and the United States, and has a stronger digital industry than both Germany and France. Can the Government give something of a lead to this nascent industry through their procurement policies?

My Lords, that will certainly be considered. In one of my earlier answers I referred to the AI sector deal, but I can also refer to the fintech sector strategy launched a year ago by my right honourable friend the Chancellor. Again, it set out our commitment to that sector remaining the leading centre for fintech.