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  1. Science & Tech
31 March 2017

Matt Warman MP on Governing the Digital Economy

By matt warman

We live in a period of unprecedented technological change – from Uber drivers’ new ways of working to fields that are in the near future likely to be worked even more by robots, the digital economy is more physical than ever. So what is government’s role in smoothing a huge transition, catalysing it and also protecting workforces from potentially unintended consequences?

It is an easy, if slightly lazy, trope to suggest that just because every previous industrial revolution has created jobs rather than destroyed them, so too will this fourth one. While it is likely to be true in the medium to long term, it may be a bumpy process in the immediate future. The path to tread surely sits somewhere between resisting the calls of a new generation of Luddites who want to see robots taxed and letting ‘progress’ run riot. To take a totally laissez faire approach risks fuelling a bubble that might not do the economy much good, while also storing up problems for the future that will only have to be fixed anyway once the dust has settled.

In the 70 years from the beginning of the industrial revolution that began in 1760, wages rose a measly 22 per cent, according to the Journal of Economic History. Much was going on at the time to muddy those figures, but it is as we think about today too. With some economists already claiming working age people in 1969 were better off than their equivalents today, there is plenty of evidence that regulators and policymakers need to tread carefully. And counter-intuitively, meanwhile, workers’ rights saw unprecedented improvements, alongside the beginning of the first notions of leisure time for workers as well as employers.

There are, therefore, a number of vital topics to address: how does government best foster growth, protect workers and promote industries that will make the most difference without falling into the trap of picking winners.

I do not think, as some do, that we lack the tools to tackle these challenges. Indeed, the changes are very often data driven, meaning they can be measured in more ways than ever before. That provides an opportunity to focus tightly on those issues that will make the most difference to Britain’s historic productivity challenges: rural robots should allow us to tackle food security, safety and a post-Brexit approach to unskilled migration; driverless vehicles and drones may yet show that congestion, safety and a host of other related issues can be tackled relatively quickly; digital taxation will challenge the nature of accountancy.

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What each of these examples reveals, however, is both that no profession is safe from the digital onslaught, and that in the intermediate period there will be some peculiar consequences. Amazon is often criticised for creating a host of hard, tedious jobs in warehouses where workers’ rights have been scrutinised at length. What those doing the scrutinising often ignore is that if Amazon (and others like it) could replace those human pickers and packers with robots of course they would. So might the best balance to strike be both to protect those workers like anybody else while also providing Amazon with incentives to invest in the research and development that encourages the building of those robots?

It is, indeed, in upskilling workers that the future lies – the successors of super-profitable companies such as Google, Apple and others will be the engines whose taxes fund the kind of investment in education that will need to be just as unprecedented as the changes through which we are living now.

Finally, therefore, a thought on that tax challenge: a global, searchable index of tax laws and regulations is not that far away. The assumption is that such a thing is in the interests of tax avoiders and those who make money from advising them. The reverse is of course the real case: how else can we encourage the kind of cooperation that means everybody fairly pays what is due other than by understanding what the complex interactions truly are, rather than leaving it to mere human beings to spot loopholes and then seek to close them? That, more than drones or driverless cars, will empower legislators to deliver the world for which we all so often campaign.

In January, Hewlett Packard Enterprise and the New Statesman convened a discussion on this topic with parliamentarians from each of the three main political parties and other experts.  This article is one of a series from three of the MPs who took part, with an introduction from James Johns of HPE and Labour MP, Angela Eagle’s view last week. Next week will be SNP MP, Calum Kerr’s take on how he responds to the challenges of governing the digital economy.