Labour’s focus on growth, growth, growth dominated its election campaign and most recently its first King’s Speech in the last 14 years. We saw the government acknowledging the potential of technology as a force for good to drive economic growth in the UK, exampled by the move to unblock two data centres almost immediately during Chancellor Rachel Reeves’s first speech.
The first 30 days of a Labour government are off to a promising start with growth and business investment being a clear priority. However, if the government is to deliver on any of its growth objectives and missions, it must get growth going.
In the short term, Labour can do that by doing everything possible to encourage investment. In the long term, Labour must address the underlying causes of the UK’s poor productivity. To deliver on both, the government will need to harness tech and digital innovation.
Infrastructure and industrial strategies
Positively, the new government has shown a big focus on infrastructure. The move to introduce a bill to accelerate the delivery of high-quality infrastructure is a welcome step forward. It will enhance national infrastructure over the next five years and provide opportunities for investment in new technologies.
Recognising the importance of the data centre industry is crucial, especially as its development will be critical to capitalising on AI’s potential. With the growth of AI, demand for compute can only increase exponentially as we all rely on data centre storage and processing power to run our daily lives and businesses.
At the same time, the new and refreshed Industrial Strategy allows technology businesses to play a central role in implementing the strategy for growth. We would like to see further details on how the industrial strategy supports the development of the artificial intelligence sector and removes planning barriers to new data centres.
Many of our members, such as telcos backed by private investment, understand the potential for even more private investment to be unleashed through infrastructure reforms and a joined-up industrial strategy that creates more incentives on both the supply side and the demand side.
Building a smarter state
Under Peter Kyle, the secretary of state for science, innovation and technology (DSIT), we have seen Labour take steps to “harness the power of science and technology, to fuel economic growth and transform our public services.”
The new Labour government announcement that DSIT is expanding in both scope and size by bringing together experts in data, digital and AI from the Government Digital Service, the Central Digital and Data Office, and the Incubator for AI to “unite efforts in the digital transformation of public services under one department” is a move forward. However, there will be lots of questions about how a new and relatively junior department can step up to this delivery challenge.
The Digital Information and Smart Data Bill is crucial to help realise this vision. The introduction of Digital ID and Smart data schemes will encourage the deployment of cutting-edge technology to improve the efficiency and capabilities of public services.
Employment and skills
Building on the manifesto’s promise to break down barriers to opportunities, Labour has pledged to reform the apprenticeship levy – something the tech sector has long called for.
In our UK Tech Plan, we emphasised that more can be done to support both employers and learners, including increasing the flexibility of the apprenticeship levy. We recommended reforming the apprenticeship levy into a broader skills and training levy and including in scope other forms of accredited training more closely aligned to the practical and operational realities of jobs. The broadening of the apprenticeship levy could consist of training provided in-house by companies and form part of the ‘off-the-job’ training requirements for apprentices.
Labour has committed to reforming the levy to a “growth and skills levy”, and now we need to ensure that it does not hinder the progression of apprenticeships but allows businesses to make full use of their levy funds.
The next 100 days
Looking ahead, there is still a huge amount of work that industry and government must undertake to realise the opportunities for growth stemming from the tech sector.
Labour has committed to establishing a Regulatory Innovation Office. The new body will only succeed if its regulatory model recognises our regulators’ strategic economic importance.
We also hope to see government departments undertake a consultative and evidence-based approach to digital regulation by bringing businesses together to have open and transparent dialogue. Our Seven Tech Priorities paper set out our call for a pro-growth framework for our regulators, and a Commercialisation of Tech Taskforce is adopted to help secure a new balance in how our economy works, ensuring that alongside protecting consumers, regulators must also seek to shepherd critical parts of the economy into the future. This is specifically immediate for issues such as any future AI regulation.
Fundamentally, we need to see greater government focus and encouragement for the adoption of a digital economy. Analysis by Sage has shown that if UK SMEs increased digital adoption, this could add an estimated £232bn to the economy while improving the UK’s resilience against economic shocks. At techUK, we’ve called for a comprehensive plan for digital adoption by 2030 and a network of connected hubs that will help bring the benefits of the tech sector to hard-to-reach communities and underrepresented groups. Additionally, these measures will create new tools and infrastructure, helping spread the opportunities of the tech sector to everyone.
With the chancellor’s ‘Growth Mission Boards’, starting to take shape, Labour must clearly articulate technology’s role in delivering the growth missions. However, in its first 30 days, the government’s King’s Speech was a positive signal to industry and investors.
Julian David is the CEO of techUK.
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