King’s Speech (4th Day)

Lord Londesborough Excerpts

Monday 22nd July 2024 Lords Chamber

[Lord Londesborough (CB)]

My Lords, this may be my last opportunity to speak in a debate on the King’s Speech, given one Bill coming our way on which I will refrain from comment tonight. I will focus on Labour’s key mission of generating the highest sustained economic growth in the G7, with

“productivity growth in every part of the country”.

I am eagerly awaiting a strategy for productivity that matches that ambitious statement. If you try googling the term “UK productivity”, the next suggested word that pops up is “problem”, followed by “puzzle”. That sums it up rather well. Put bluntly, we have developed some bad habits. We produce too little, consume too much and borrow heavily to finance our deficits, with our national debt fast approaching £3 trillion. That is very bad news for an ageing population with a shrinking workforce. The critical measure, GDP per capita, has barely moved since the financial crisis, while our labour productivity, as we have heard, remains below that of the US, France and Germany and, importantly, has been so for decades.

Stagnant productivity does not just take growth; it blunts our competitive edge overseas—witness the last five years of declining exports. In business, it generally leads to zombie companies, distress takeovers or, worse, bankruptcy. My own experience of productivity stems from 30 years as an entrepreneur in the information space and 10 years advising and investing in start-ups and scale-ups. Indeed, my livelihood depended on the productivity of my staff, both here in the UK and overseas. Over those years I discovered that productivity is not just structural; it is cultural. It is crucial that in the UK we create a performance culture that runs across both public and private sector workforces. This requires leadership, smart management, astute recruitment, and relevant skills and training. Above all, it requires proper incentivisation of our workforce, rewarding performance and developing a stakeholder culture.

The UK has much to learn in this regard from the US and many countries across to Asia-Pacific, all of which are growing considerably faster than we are. I suggest that boosting productivity requires explicit targets rather than lofty mission statements. Why not be bold and set a GDP growth target of 3% per annum for the next five years? To achieve that, we would probably need to improve our worker productivity by 2% every year—not impossible if we set our minds to it and hold ourselves accountable.

I have yet to mention the classic drivers of productivity: higher levels of public and private investment, upgrading infrastructure, education, innovation and technology. All are highly relevant but mainly long-term projects, with a five to 25-year payback that requires huge levels of funding. The problem is that we have an immediate need to mind the productivity gap, and time is not on our side.

Time is not on my side either, so I will conclude by welcoming both Ministers to their new roles and asking them, as I did their predecessors, whether the Government will consider setting up a productivity council on a statutory footing that is permanent and not subject to political churn. This body would inform, co-ordinate, measure and evaluate policies that impact on private and public sector productivity across all departments. Its members, critically, would have had first-hand experience not only of what drives productivity but of what it takes to stick to targeted long-term measures.

Advanced Artificial Intelligence

Lord Londesborough Excerpts

Monday 24th July 2023 Lords Chamber

[Lord Londesborough (CB)]

My Lords, first, I salute my noble friend Lord Ravensdale for securing this much-overdue debate. AI is a huge and challenging subject, so my focus today will be limited to its potential economic impact. I refer to my interests as set out in the register as an adviser and investor in start-ups and early-stage ventures.

I must confess that, like the noble Viscount, Lord Colville, I was briefly tempted to outsource my AI speech to a chatbot to see if anybody noticed. I tested two large language models; within seconds, both delivered 500-word speeches, which were credible if somewhat generic. AGI—artificial general intelligence —will soon be able to write my speeches in my personal style, having scraped Hansard, and deliver it in my voice through natural language understanding, having analysed and processed my speeches on parliamentlive.tv, and with no hesitation, repetition or deviation.

Is it an exciting or alarming prospect that your Lordships might one day be replaced by “Peerbots” with deeper knowledge, higher productivity and lower running costs? This is the prospect for perhaps as many as 5 million workers in the UK over the next 10 years. That said, the UK economy is in dire need of AI to address low productivity and growth, and critical capacity constraints, most notably our workforce. The economy model of adding millions of low-skilled jobs, or making people work longer hours, is not sustainable. We have an ageing population, a shrinking workforce, record numbers of long-term sick and a health sector in perpetual crisis with unprecedented waiting lists. We need a qualitative, not quantitative, approach to economic growth and AI could play a critical role.

The UK’s productivity has been in the doldrums for almost 20 years, with output per hour well down on the levels in Germany, France, the US and many other countries. Forecasts on the economic impact of AI vary wildly, with some forecasting 20% to 30% rises in productivity, set against the disappearance of up to 30% of jobs. It is educated guesswork at this stage. Some predict that AI will lift GDP growth by an additional, but hugely significant, 2% per annum. A word of warning: we had similar expectations with the digital revolution. If you look back over the last 25 years, we have indeed witnessed extraordinary changes both as workers and consumers: the smartphone, e-commerce, automation, video communications, contactless payments, and working from home. However, in the decade leading to the pandemic, when GDP growth averaged a modest 1.8% per annum, 1.2% of that growth came from working longer hours, 0.5% came from capital investment and just 0.1% came from innovation and better working practices.

While AI looks set to have a transformative impact on our working practices, as the digital world has done, the big question remains over the net impact on economic growth. As with the digital economy, the risk is that AI may ultimately lead to a few dominant tech giants with huge market share, and further skew the distribution of wealth.

I appreciate that this will be a global dynamic largely beyond the control of our Government, but I conclude by asking the Minister two questions. First, how will the Government nurture a multiplicity of AI players in the UK rather than a dominant few? Secondly, mindful of the recent cuts in R&D tax credits in this year’s Budget, how will SMEs be incentivised to adopt and invest in AI technology to boost their productivity and competitive edge?