The UK could find £59bn of extra fiscal headroom through better use of emerging technologies, says Secretary of State for Science, Innovation and Technology Peter Kyle MP.

Speaking at a recent Labour Business Network Q&A at Chartered Accountants’ Hall, the then-shadow minister cited “startling” figures that were “buried quite deep” in last year’s autumn outlook from the Office for Budget Responsibility (OBR).

“If digital technology is diffused throughout the economy in the way that it’s used in parts of the economy at the moment – and we’re talking currently available technology, so artificial intelligence (AI) in its current state – it would increase national productivity by 0.5%,” Kyle said. “By year five, that would equate to moving fiscal headroom from £13bn to £72bn – if only the economy started adopting emerging technology and using it in the workplace.”

Mind the gap

With that and other opportunities in mind, Kyle said the Department for Science, Innovation and Technology (DSIT) would be spoken of “overtly” as an economic department.

The event, ‘Making the UK a Science Superpower’, heard that Labour’s leadership is “evangelical” on the point that DSIT should play a wider role across the economic spectrum. Covering everything from the space programme on one side to the continued rollout of 5G infrastructure on the other, DSIT’s remit also includes university research, life sciences and biomechanics. In parallel, it must address emerging technologies such as AI and fusion, as well as the entire landscape of technology investment and regulation.

“It’s an incredible opportunity,” Kyle said. “What we see is enormous potential. And we see that all of that potential is not being met. The government department that has been created to tap it has solid foundations – but we think it should be so much more.”

Senior corporate figures who attended the event heard that DSIT would also become a delivery department within government. “We’ve got to get the welfare state modernised,” Kyle said. “We have to have public services more responsive and reflective and using the technology that’s out there to transform the relationship that citizens and service users have with the public services themselves.”

In Kyle’s assessment, the wider the gap grows between people’s user experiences of the public services and other commercial offerings, such as travel and banking, the more vulnerable public services and the welfare state become.

Path of reform

Kyle pointed out that in the US, half of small businesses are currently using AI and other digital technologies in their operations. In the UK that figure is a quarter – and half of British companies have not yet considered how AI could be integrated into their business models.

For Kyle, that is not a criticism of UK businesses, but a huge opportunity. “Government can’t ‘do to’ British businesses,” he said. “But what it can do is create circumstances in which a partnership exists where new technology can be diffused.”

An attendee noted that one of the biggest sources of data on UK businesses is Companies House, which is currently on a path of reform. Kyle was asked whether Labour plans to maintain that path and whether it thinks that boosting data quality at Companies House could achieve synergies, such as supporting AI innovation. Kyle said that this is an area the party has been looking at – and it will publish its official AI strategy sometime before the summer. “You can’t have good AI without good data,” he said.

Another attendee sought Kyle’s views on potential alignment between any future UK AI regulations and those of the EU. Kyle said that he has been quite open about the need to legislate as there is currently “amazing” AI investment and company activity going on in the UK, so there should be no uncertainty among stakeholders about what to expect.

In terms of alignment, Kyle stressed that the UK must pay attention to what is happening in the US as well as the EU because both territories are in the process of legislating.

He noted: “As there’s no UK legislation requiring frontier activity to be tested – it’s all in a voluntary code – that makes the debate about AI very susceptible to talks about safety, rather than opportunity. I don’t think it’s an either/or. We should be able to have both of those conversations simultaneously.”