Technology and People: Deloitte Report

Lord Mendelsohn Excerpts

Wednesday 13th April 2016 Lords Chamber

[Lord Mendelsohn (Lab)]

First, I congratulate the noble Lord, Lord Borwick, on introducing this debate, He has been a very keen observer of developments in business and technology, and it is characteristic of him to introduce such an interesting topic to this House and to keep our attention on the challenges of the future. I also congratulate Deloitte not just on an excellent report but on encouraging this debate and keeping our attention on the challenges of the future. It has done an outstanding job in this and other reports.

Many will be familiar with the view expressed by Mao, when asked how he evaluated the French Revolution. He replied that it was too early to tell. Tonight, we are being asked to evaluate whether the Luddites actually have a point, some 200 years later. The question comes down to this: are today’s technological innovations like those of the past, which made obsolete some jobs but made new ones, or is there something about today that is markedly different? My noble friend Lord Giddens made a very good point in distinguishing between advances in some forms of science and technology, particularly consideration of the digital revolution and automation, and their likely impact. They raise questions that we may not be able to address with the same positive confidence that the report expresses.

The question is no longer: are machines getting so smart that we no longer need unskilled labour to operate them? Recently, the chief economist of the Bank of England, describing the results of a Bank of England study into the impact of technology on jobs, made a very worrying statement. He said:

“Technology appears to be resulting in faster, wider and deeper degrees of hollowing-out than in the past. Why? Because 20th century machines have substituted not just for manual human tasks, but cognitive ones too. The set of human skills machines could reproduce, at lower cost, has both widened and deepened”.

The numbers that he cites are stark: 15 million jobs at risk out of a total workforce of about 30 million. That presents a considerable challenge.

Change always causes concern, but this debate is important and useful because it requires us to consider carefully what we must do to make ourselves properly adaptable and how we address the future. Indeed, the challenges are not just about the impact on jobs but the overall impact on economic activity and how each part of society benefits or loses from it. It also raises profound challenges, such as long-term unemployment, economic consequences of ageing and democracy and even the challenges of what we will do with large amounts of leisure time.

We also know that technology has created a debate about widening inequality, and the spectacular rise of the top 1%—or even the top 10%, in a different evaluation—has caused great alarm. Many people ascribe this problem to technology. Technology seems to have an impact, but it is less than people expect. If we look at the evaluation of jobs in America, the number of technology jobs in the top percentages is quite small. Under 5% of workers in these areas are in the top 1% of earners. The evidence suggests that elite inequality is the result of the lack of open access and market competition in elite investment and labour markets. This helpfully reminds us that technology is not always to blame for every ill we have to face, but is also a sharp reminder that it may not be as much a part of the solution as we would hope.

So what should we do when we do not have the certainty that we would need to work out how we face the future? We have to invest in that which we know works and that which delivers adaptability.

We must consider two areas carefully. One is of course skills and the other is our investment in technology and science, as the noble Baroness, Lady Rock, ably explained during her oration. For the UK economy and workforce to continue benefiting from technology, investment in training, education and skills is vital.

The latest Deloitte report on technology and people does not provide a silver bullet to ensure that people, especially low-paid workers, and the development of technology grow together harmoniously, but it stresses the importance of skills, particularly in the context of an ever-more globalised economy. It is stated that:

“Technological growth, and the accompanying changes in business models, make the continuous adaptation of skill sets absolutely fundamental for successful participation in the labour market. More so than ever before, individuals that are not willing or able to do this will face being left behind”.

We also really need to invest in that where we are strong. We have an extraordinary science and technology base in this country. We have invested in it. I pay great tribute not just to the noble Lord, Lord Sainsbury, who did a tremendous job, but to this Government for continuing it.

I recently had the very great pleasure of going to Harwell, the laboratory in Oxford run by the Science and Technology Facilities Council. I saw the amazing facilities that we have there: the amazing Diamond Light Source producing a stream of electrons to create light 10 billion times brighter than the sun, to be able to look at anything from viruses to vaccines, a synchrotron creating a flow of neutrons for study of materials at the atomic scale. We have a world-leading facility: there are three facilities of that type in the world. There is a space centre providing for the most extraordinary achievements. We have great companies springing out of it and using the facilities to get better.

We have great ideas turning into great products. It is creating jobs. The fear is that the sort of jobs that we are creating—the technicians and other jobs supporting those areas—are not going to people who are educated or even born in this country. Recruitment is going far too much overseas because we have too few who have been directed into those areas. That is the challenge that we have now.

Finally, at the end of this excellent debate, we should doubly thank the noble Lord, Lord Borwick, and Deloitte for raising this debate. They have presented an interesting issue. The Luddites would probably ask the wrong questions and probably gave the wrong answer. It is our challenge to do better.