Budget Resolutions and Economic Situation

Stewart Malcolm McDonald Excerpts

Monday 20th March 2023 Commons Chamber

[Michelle Donelan]

I absolutely agree. That is exactly why the Prime Minister announced, just days ago, the establishment of a large language model taskforce to look at that and to ensure we can gain sovereignty in this particular area. Over the coming weeks, we will also publish the AI White Paper.

Earlier this month, I announced £110 million for AI technology missions. That funding, which we anticipate will be matched by equal private investment, will support the science behind some of the most important AI technologies of the future. We will also realise some of AI’s transformative applications, from reducing greenhouse gas emissions to increasing productivity in sectors such as agriculture, construction and transport.

Success in AI requires the UK to be a hub of the best and brightest AI minds in the world. We have already backed AI with £8 million to bring top talent into the UK. That is coming on top of £117 million in existing funding to create hundreds of new PhDs in AI research. In the Budget, the Chancellor took a further step forward with the announcement of the Manchester prize, which will back those harnessing the immense power of AI to break new ground.

The Chancellor also announced a staggering £900 million in funding for an exascale super-computer and a dedicated AI research resource, making the UK one of only a handful of countries in the world to have such a powerful computing facility. We are creating thousands of high-quality jobs and ensuring that the UK is going to be the home of the Al technologies that will directly help to address the priorities of the British public. These are not just jobs that will power our future; every single job will create these exciting fields—opportunities that will release the potential of thousands of talented people up and down the country.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

The Manchester-based physicist and Nobel prize winner Andre Geim has said that the top researchers around the world and in the UK are either not coming or looking to get out because living standards are so low; they can earn far better wages elsewhere. Does the Secretary of State not agree that all these aspirations, great though they are, will never be met so long as living standards in the UK fall well below those in other western European countries?

[Michelle Donelan]

I cannot believe the hon. Member is insisting on talking down our great nation. We are already attracting these people to our country. That is why we are third in the world when it comes to AI. That is why we are boosting that supply as well as growing our own talent.

The right skills, the right investment and the right infrastructure: these are the ingredients of a science and technology superpower, and perhaps nowhere is that more true than in our world-class research sector. In January, we launched the Advanced Research & Invention Agency, or ARIA—a new independent research body custom built to fund high-risk, high-reward scientific research, backed by £800 million in funding.

--- Later in debate ---

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

Thank you, Madam Deputy Speaker. It is a sign that God is shining on the House to see you back in the Chair—healthy and feisty as ever, I am sure. You will recall that, when I joined the House in May 2015, Conservative Members would regularly cheer the Chancellor and various Front-Bench Ministers when they uttered the words “long-term economic plan”. That was the No. 1 talking point of the Cameron Government, but of course, as we have seen since that Government left office, the Conservative party had no such thing. Indeed, it is somewhat telling that, in last week’s Budget, the Chancellor stood at the Dispatch Box, content to let the applause wash over him because

“the UK will not now enter a technical recession this year.”—[Official Report, 15 March 2023; Vol. 729, c. 833.]

Such is the mess that the Conservative party has created that it is managing to celebrate a slightly lower level of decline for the economy.

The Chancellor’s myopia is what worries me most, because he stood at the Dispatch Box like a sailor patching a leaky tap, not quite matching the moment in the way that one would expect from Britain’s Finance Minister. By stark contrast, the United States steams ahead with almost $400 billion of green subsidies to rewire its economy for the 21st century in the shape of the Inflation Reduction Act. The short-sightedness of this year’s Budget has instead condemned the United Kingdom to another year of falling living standards and slow economic decay. Closer to home, the European Union also announced bold and strategic plans in the shape of the Net Zero Industry Act, which will similarly mobilise billions and billions of euros to reshape the economy of the world’s largest single market so that it can produce at least 40% of the technology it needs in order to achieve its own climate and energy targets. While two of the world’s major economic powers set out plans to meet the moment, this Government instead celebrate—I quote again—that

“the UK will not now enter a technical recession this year.”

Rather than championing a bold economic plan to improve living and working conditions, the Chancellor—clearly unable to meet the moment—settled for tax breaks for research and development, urging us to cheer on his efforts to turn the UK into a life science superpower. While that aim is entirely laudable, and one that every single Member of the House could undoubtedly sign up to, the Chancellor needs to engage with the reality here in this country. As I mentioned earlier, the gulf between ambition and reality was summed up by the Manchester-based Nobel prize winner Andre Geim when he said that the reason that researchers are not staying in the UK or being attracted to the UK is the low living standards here. They can come here and suffer higher costs and lower salaries, or go elsewhere for better opportunities.

That neatly sums up the running theme of this Conservative Government, who seem oblivious to the fact that firms and institutions are made up of human beings—human beings who need modern public services, a healthy public realm, and a Government who can offer them the prospect of a bright future. What the reality looks like has been mentioned in this debate: to quote Torsten Bell from the Resolution Foundation,

“the worst parliament on record for living standards. By a country mile.”

The numbers were laid bare in today’s Financial Times. The Office for Budget Responsibility is predicting that UK households’ real income per person will still be below pre-pandemic levels in 2027-28, meaning hardly any improvement in living standards for the better part of 20 years. Jumana Saleheen, the chief economist at Vanguard Europe, has said that, on three key measures of living standards—household income, gross domestic product per capita, and real wages—

“we’ve seen stagnation over the last 15 years.”

According to the Office for National Statistics, average UK real household income is broadly unchanged since 2007. Paul Johnson, the director of the Institute for Fiscal Studies, has said:

“We are in the middle of a decade in which incomes are barely rising at all, with very feeble growth for two…decades.”

UK wages adjusted for inflation increased by 23% in the eight years to 2008, but fell by 5% in the following eight years, again according to the ONS.

Having the ambition to be a life science superpower is one thing. It is perfectly laudable, and all of us can agree and sign up to it. However, so long as we have living standards in this country that are grossly behind our western European counterparts—we have higher costs, higher prices, lower wages and a public realm that physically just does not work, if we are completely honest—the Government can completely forget being a superpower in anything other than a brain drain. If anything that Ministers have said from the Dispatch Box is to mean anything, they need to fix the living standards problem every household is dealing with.