The Chancellor, Philip Hammond, was right to put the future economy and the fourth Industrial Revolution at the heart of government policy during his party conference speech this month. While the “4IR” as it’s sometimes dubbed, is still a relative unknown outside of specialist circles, mastering it holds the key to Britain’s continued economic success this century.
In Birmingham, Hammond described how “quietly and unnoticed” a growing group of entrepreneurs and scientists from home and abroad have been “turning Britain into a hub of tech innovation”. In recent years these leading minds have been operating under the radar; London-based DeepMind Technologies led the world in artificial intelligence (and became prominent only later when acquired by Google), while the University of Manchester quietly pioneered graphene, the ultra-strong, ultra-light wonder material.
This new technological age, characterised and accelerated by AI, hyper-connectivity and mass-automation, was the theme at the World Economic Forum’s annual meeting in Davos this year, underlining its global significance.
In Westminster, interest in the 4IR is growing too. In September, I led the first House of Commons debate on the topic, drawing cross-party interest. Rising stars Peter Kyle and Stephen Kinnock were among those who spoke from the Labour side. In the coming months, I will launch a new all-party parliamentary group (APPG) on 4IR, to allow MPs and peers to deepen their engagement with key industry figures and ministers as we set out on our mission to ensure Britain leads the way.
Fortunately, the signals from government have been positive. New business minister, Jesse Norman, responding for the government during my backbench debate, committed the UK to being at the forefront of 4IR; a few weeks later, the Chancellor cited 4IR as a way of “future-proofing the economy post-Brexit”. He committed additional funds for science and technology so we don’t miss what he called a “once-in-a-generation opportunity for Britain to cement its role as a leader in tech innovation”. While all of this certainly sows the seeds for mastering 4IR, we need to continue building a free enterprise, pro-innovation economy that backs our entrepreneurs, start-ups and new industries. In doing so, we can look to our history for inspiration, for Britain has a strong record of leading the world through technological change. Around 250 years ago Britain led the first Industrial Revolution, as engines and factories powered by coal and steam changed the world’s economic landscape. Britain’s manufactured goods were exported around the world, fuelling the nation’s economic growth at home and establishing our reputation as innovators abroad.
During the late 19th and mid 20th century, Alexander Graham Bell and Tim Berners-Lee respectively continued our tradition as the home of innovation during the subsequent two industrial revolutions, driven first by electricity and then the internet. More recently our leading entrepreneurs such as James Dyson continue to prove we still have the talent to produce world-class products based on innovative technology. Dyson is the blueprint for how SMEs can become bigger businesses and help Britain lead the fourth Industrial Revolution by driving economic growth. His radical ideas were initially shunned by mainstream retailers keen to hold on to existing relationships in the multimillion pound vacuum cleaner industry. But after winning over consumers Dyson has now morphed into a company which generated more than £1.5bn in revenue last year and employs 7,000 people, many of them in Malmesbury, Wiltshire.
Through my role as chairman of the APPG for entrepreneurship, I meet many businesspeople who aspire to follow the success of Dyson. It is these men and women who could be the British Bill Gates, Sergey Brin or Mark Zuckerberg. One of the functions of the APPG is to facilitate dialogue between entrepreneurs and government officials. This month, David Gauke, Chief Secretary to the Treasury, set out his views to APPG members on the role entrepreneurs and technology play in our economy. The government should continue its backing for innovation hubs such as TechCity and Canary Wharf’s fintech-focused Level39.
The Catapult network of regional innovation centres has also been a great success. These physical centres allow the very best UK businesses, scientists and engineers to work side by side on late-stage research and development projects, transforming high potential ideas into new products and services to generate economic growth. We need more of them across the country, including at least one in every strategic region of the UK. The Solent area, which includes my Havant constituency, is home to 1.3 million people and, according to figures from the Federation of Small Businesses, an estimated 50,000 companies, but has no Catapult Centre.
Similarly, Innovate UK, the government’s innovation arm, can also be given a stronger role to help foster more 4IR businesses. It is already doing an excellent job, helping to create 55,000 jobs since its launch in 2007. Better infrastructure will also help new firms to flourish especially in areas where traditional manufacturing is in decline. The government has already committed to “targeted public investment in high value infrastructure”, and is spending £13bn on transport improvements, including on high-speed trains as well as promising that 95 per cent of the country will have super-fast broadband by 2017.
These will all be points that I will include in my forthcoming policy pamphlet for the Free Enterprise Group of Conservative MPs, backed by the free-market think tank, the Institute of Economic Affairs. We have more work to do in order to make Britain the capital of the new 4IR world, but the Chancellor quite rightly pointed out in his speech that we have a number of strategic advantages, including a trusted legal system, an advantageous time zone, the English language and access to finance which put us in a strong position. Moreover, our universities are some of the most respected in the world and continue to be the place where innovation thrives. We also have the lowest corporation tax in the G20, making us more attractive still.
We must make the most of these considerable assets as we develop our 4IR economy, and build on our early success, rather than adopting an inward looking, anti-innovation approach. Throughout history, Britain has adopted a pro-innovation attitude to technological development. From farming mechanisation and domestic labour-saving devices to the City’s Big Bang, we did not allow fears about the future to stunt our economic and social progress. We soon realised the folly of requiring drivers of early cars to be preceded by a man carrying a red flag. We must adopt the same, forward thinking approach when it comes to the fourth Industrial Revolution.
Hammond himself warned that “this explosion creativity and innovation” could easily be “snuffed out by government policy”. So, as the new revolution accelerates, we can be confident that if we follow the lessons of history and have the support of government, Britain has the entrepreneurial spirit and talent to master the fourth Industrial Revolution in the same way in which we mastered the first.