Fiscal Outlook
Baroness Lane-Fox of Soho Excerpts(1 month, 3 weeks ago)
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Baroness Lane-Fox of Soho (CB)
My Lords, I too thank the noble Lord, Lord Bridges, for securing this debate and for his masterful opening. I will be more modest than him in my remarks and direct my comments to just one number: that pesky 1%. As we have heard, that number is roughly the rate of productivity growth that the OBR assumes we will reach by the end of its forecast. As we know, it is one of the numbers on which the fiscal outlook turns. Higher productivity means higher wages, stronger tax receipts and more capacity to fund public services. Weak productivity means that every aspiration—better services, better jobs, lower taxes or lower borrowing—collides with the same hard constraint. We spend a great deal of time in this House debating how we divide up the economic pie, but we must help the pie grow faster. Every Chancellor will face increasingly miserable choices otherwise.
Technology is not the only explanation for Britain’s productivity weaknesses, but investment in technology, and the ability to spread it rapidly through businesses and the public sector, is a vital part of the answer. I recently chaired the Mayor of London’s taskforce on AI and the future of work. Our starting point was that the future is not predetermined. AI is not a weather system rolling towards us that we merely observe; we still have choices. We can wait for disruption and deal with the consequences afterwards, or we can act early, shape the change and create opportunity from it. That distinction goes directly to our fiscal future.
Successive PMs have assured us that Britain can produce the next great trillion-dollar AI company, and I for one very much hope that we can. But there is another race that matters just as much: can we get these technologies into the rest of the economy quickly enough to make Britain’s jobs more productive and fulfilling? AI sitting in a data centre is not productive, but AI used well in millions of workplaces might be.
The latest ONS evidence gives us a glimpse of both the opportunity and the problem. Among businesses with more than 10 employees, reported AI use rose from around 12% in late 2023 to 35% in June this year, yet only one in 10 businesses using AI says that it is using it extensively or helpfully. That suggests that, in many cases, AI remains an add-on to existing work, rather than a chance to rethink what work is and how it is done. Having spent three years as president of the British Chambers of Commerce, I can say that SMEs are always at the forefront of my mind. The productivity revolution will not happen simply because another brilliant AI company opens up in King’s Cross; it will happen when a manufacturer in the Midlands, a hotel in Cornwall or an accountancy practice in Newcastle can use these tools to do things better and faster, increasing profits and increasing employment.
My first ask of the Government is simple: do not treat the diffusion of AI through the economy, including in the public sector, as anything less than a national productivity mission every bit as important as the next invention at the frontier. We must help smaller firms to have the skills to use this new technology, redesign processes and build businesses around it.
My second ask is to act earlier. One of our taskforce’s recommendations was an early-action system to spot changes in London’s labour market as they emerge, combining data with what employers and workers are seeing on the ground, as well as where opportunities are available. Its wider approach was to act early, shape change and create opportunity. We need the same discipline nationally. If we wait until somebody has lost their job before we think about retraining them, we have failed. Helping people move into new work is cheaper, more productive and far better than leaving them with the consequences of redundancy. Workers must not simply be the recipients of technological change. The people who do jobs understand best how technology could improve them. If we bring workers into the redesign of work, we are much more likely to use AI to augment people rather than simply removing them.
I welcome the decision to put AI much closer to the centre of government, particularly with the recent appointment of the noble Lord, Lord Vallance, but AI will not rescue government systems and processes that do not work. Success must not be measured by whether Whitehall has an AI strategy; it will be measured by whether it becomes easier for a parent to obtain support, whether businesses spend less time navigating bureaucracy, and whether front-line public servants spend less time moving information between outdated systems. AI can make the Government more productive, but not by bolting new technology on to old and bad ways of working. We must start with the greatest points of friction, and then we must give good teams the freedom, tools and support to fix them.
On Tuesday, I was lucky enough to see Demis Hassabis—as was the noble Baroness, Lady Batters, who I see is in her place. As noble Lords are well aware, he was the founder of DeepMind, and this week he received the Albert Medal from the RSA for his work. He is undoubtedly one of our greatest assets, and inevitably one of the most productive people on the planet. In his acceptance speech, Demis painted an optimistic and exciting vision of an AI future. He sees no reason to proceed with fear. But his caution was this: very few of us have an idea of what is coming, and we are not acting with enough creativity, imagination and urgency to make sure that the UK is in an advantageous position for the next decade. Let us heed Demis; let us be bolder. After all, the test over the next few years is, in some ways, remarkably simple: did that 1% go up?
Working From Home (Home-based Working Committee Report)
Baroness Lane-Fox of Soho Excerpts(4 months, 3 weeks ago)
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Baroness Lane-Fox of Soho (CB)
My Lords, I too thank the noble Baroness, Lady Scott, for her amazing, herculean efforts to pull together such a difficult subject. I start, however, by offering a data point that I am not sure would have surfaced in the research. I started a small karaoke chain, Lucky Voice, which I may have mentioned to your Lordships before; we have a few venues around London. A very strange thing happened in the resurgence when we came back after Covid. Suddenly, Sunday nights, which had been dead before, became extremely popular and one of our biggest nights in the week. We could only assume that it was because people felt as though it did not matter whether they had a terrible hangover when working at home. I am not sure whether that contributes positively or negatively to productivity, but I offer that small piece of data to noble Lords.
More seriously, I felt that I had to speak in this debate, for two main reasons. First, as a disabled person, working from home and the flexibility that it has given me has transformed my working life and gives me the flex and ability to manage my working in a way that I had never thought possible. I hope that, as the report so clearly lays out, we allow that for as many disabled people as possible.
Secondly, I had a very dear friend, now departed, named Dame Stephanie Shirley, who I do not think was mentioned in report but, as many people will know, really was the godmother of home working. She built a company in the late 1960s—all women, all working from home and doing things in the most extraordinary way. She showed that, with good leadership and good management, as many noble Lords have said, it really is possible to build an extraordinary business entirely with remote workers. The women working with her, the software engineers, were not doing easy-peasy software projects; they were building things such as the black box for Concorde or the Polaris submarine missile control panels. I was lucky enough to know her in her later life—she died two years ago—and she always said the same thing: “Why have we been so unimaginative in moving this on? How can it be that, in the late 1960s and early 1970s, we had these new models of working that enabled new categories of people to work, and yet we have not moved it on?”
Far be it from me to go against my great heroine, but I find that somewhat challenging. Despite being disabled and having had so many improvements in my own life from working, I wish to raise two concerns. They are in the report, but I would like to double down on them. The first is the anxiety I have about creating a separate class of working citizens, particularly among the disabled population. While it is miraculous to be able to be offered the opportunity to work, we all know that your career paths are formed by taps on the shoulder, someone seeing you in a meeting or someone actively being your mentor and being able to show you the opportunities that might arise. We also know that that is far harder if you are a disabled person full stop, let alone if you are a disabled person working from home. That can also be true for many other vulnerable categories.
In this new world of data that we are going to track, I really hope that we can track the impact on disabled people of working from home particularly, to see whether there are the same career progressions and promotions and the same economic uplift as for everybody else, as they deserve.
The second area has already been mentioned, but I want to make it explicit. This is London Tech Week; the reason I am wearing this ridiculous pink suit is that I am at so many events this week—it is completely manic. The buzz and the excitement, and of course the inevitable interest in AI, are just extraordinary. The Minister was there on Monday doing a splendid job of bigging up UK tech. However, the world that is described in the report looks back at the reflections that came out of Covid and designing the world of home working from that period. We should be thinking about the world as we approach the era of AI. I do not have the answers to that, but I think it is partly what the noble Baroness, Lady Manzoor, was talking about on connectivity.
To me, the biggest shift is going from a world where you have a set of skills in your job to one where you are going to be expected to constantly learn, and if you are not constantly learning you will be at a disadvantage. What does that look like in a world of flexible work, and how can we encourage companies to continue to help people learn to see the opportunities around them, especially if they are not in the office? That presents a whole new set of challenges, and in my opinion there has to be a rebasing: it cannot be just about your location. It has to be about where your learning is.
Economic Growth
Baroness Lane-Fox of Soho Excerpts(1 year, 9 months ago)
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Baroness Lane-Fox of Soho (CB)
My Lords, I thank the noble Lord, Lord Farmer, for instigating this important debate. I want to offer some practical solutions, with three different hats on.
The first hat that I wear is as an adviser to the digital centre of government. This week, we announced some big changes in how public services will be delivered in the next wave of what GOV.UK will look like. I mention it because one enormously important plank of this work is the opportunity to change the procurement processes in government—particularly in relation to the digital sector, but this applies across the whole of government. I believe deeply that if the Government were to take a more creative, innovative and urgent view of the procurement process, we could achieve an extremely interesting level of growth, particularly for our own industries that sometimes lose out to bigger US commercial sectors. Can the Minister please reflect on the procurement issues as he sees them? I know that Minister Gould has been working on these issues effectively as well.
My second hat is that of the president of the British Chambers of Commerce. Noble Lords will be aware that the chambers of commerce do quarterly reviews and that at the minute, those are pretty bleak, but in a spirit of collaboration with the Government, I note that the noble Lord, Lord Livermore, has met my colleagues at the British Chambers of Commerce. We have a long list of infrastructure projects that just need urgent decision-making today. They range from Sizewell C, which has not yet been given the official go-ahead—although I hear that that announcement might come very soon—through to the electrification of various railway lines and planning for offshore wind. It is not acceptable that projects that will enormously increase wealth, jobs and opportunities in local communities and economies are sitting for so long in planning decision inboxes. Has the Minister had time to reflect on that British Chambers of Commerce infrastructure list and might he be able to keep kicking the relevant departments? This is such an easy win for the country right now.
I will finish by talking about my final hat, which is perhaps the more unusual of the hats I wear. It is as co-founder of Lucky Voice, my karaoke chain of businesses, which I am sure many noble Lords have indulged in. It is a small and medium-sized business. We have venues around the UK and a couple overseas. It came from my idea that the Japanese have too much fun singing in private rooms by themselves and that we should be able to do it here in the UK. It is a hospitality business and not very big. It is run by a young colleague, who was elevated from where he joined to now running the business. I own it—full disclosure—but it is having a super tough time; no surprises there. I have been reflecting a lot on how I can best help that business. It is definitely not by trying to help at an operational level; that is normally when I cause total mayhem.
The thing that I come back to continually with the CEO is the intensity of the media headlines around our economy right now, which the noble Lord, Lord Farmer, reflected on in some of his comments. I do not want to get into a political debate about the justification for those headlines, but I think all of us would probably accept that we are in a dark place in terms of reporting on what is happening and the plans that are coming up over the next few months. Can the Government reflect on how, in the absence as yet of the industrial strategy, they will fill that void, because it really matters?
Every single day matters right now. I have seen that from the British Chambers of Commerce and our member businesses. I also see it every day at Lucky Voice. Consumer confidence is not there and when we ask our customers whether they have a difference in their finances, very often they do not. They are just scared about what this year might bring and do not want to go out and spend cash. I know that engaging in a media war is probably not top of the Minister’s agenda, but I urge him to think carefully about how we can fill the void, particularly in the absence of the forthcoming industrial strategy. Can I also, as a not very successful entrepreneur, urge on him that urgency really matters? Being seen to be urgent across the different spheres that I have tried to highlight would really make a difference.