Fourth Industrial Revolution

Tom Tugendhat Excerpts

Thursday 8th September 2016 Commons Chamber

[Tom Tugendhat (Tonbridge and Malling) (Con)]

I praise my hon. Friend for securing this extremely important debate. I suspect that we will come back to this subject many times in the coming decades, if not centuries.

Does my hon. Friend agree that one of the important things that we in the House need to begin to think about is a change to patent law? The UK has the principle that the first to file secures the rights. On that point about SMEs, does he agree that “first to invent” is surely the best way for securing a patent? If there is a wait for the first to file, we give an advantage to large companies that can afford to file many patents.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Mr Tugendhat, interventions are meant to be short. If you want to make a speech, I will put you on the list, but keep interventions short.

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[Tom Tugendhat (Tonbridge and Malling) (Con)]

Vielen Dank, Madam Deputy Speaker. I am delighted to be here and I thank you very much for making time for me to speak. I had intended to make only a brief comment, but the conversation this afternoon has inspired me to speak for a little longer. Many elements have been touched on, some of which took the theme from Voltaire that the Minister raised, and many of them are Panglossian. There is, however, a darker side to the fourth industrial revolution, and it relates to the element of protection.

I want to cover two areas of protection. The first is a legal one that will be obvious to many Members of the House, and it relates to the nature of patent law. The point of a patent is to do what Newton told us he did—namely, to stand on the shoulders of giants. It is to allow people to create ideas, to enjoy a monopoly on them for a brief period and to allow others, through knowing that secret, to build on it, thereby benefiting the whole of society. Patents are really important, and they will therefore be extraordinarily important in inspiring this next phase, the fourth industrial revolution. However, they will work only if they inspire those people who are actually coming up with the ideas to continue to do so.

The current system of patent law, not only in the UK but, sadly, in the United States, Europe and many other parts of the world, states that we will guarantee that monopoly for whatever the period is—it is usually about 20 years around the world—to the first person who hires a lawyer, goes to the patent office and registers his or her claim, thereby guaranteeing their rights for the future. I am afraid, however, that that is an error, and it is one that many countries make. We have done this because it sounds logical. It sounds sensible that the first person to register their claim should be the one to benefit, but it should be the first person to invent who benefits.

This might sound as though I am being casuistic. What is the difference, after all, between invention and filing, when all the inventor has to do is to hire a lawyer? Well, that is easy if you are a large company that has lawyers on tap and can afford these procedures. But what about the small companies? What about Google, when it started out in a garage a number of years ago? What about Apple, which started out in a garage 30-odd years ago? What about a small company such as Sir Torquil Norman’s vehicle company? Such companies come up with many ideas, but they do not know which will be of any value so they do not invest in the legal protection that their ideas deserve.

Instead, those small companies start talking about an idea to people who understand the industry and to potential investors. They try to attract interest in their idea. In doing so, without even thinking about it, they put their own rights at risk, because if someone else takes that idea and registers it, it is then theirs. The fact that the small company came up with it a day, a month, a year or 10 years beforehand—and can even prove that it did so—does not guarantee its claim. It is, after all, the first to file who gets the patent, not the first to invent. Given that we are now discussing technology that can be invented, as pointed out by the hon. Member for Hove (Peter Kyle), by those under-16—let alone by older apprentices—it is important to remember that their rights should not be diminished simply because they do not understand the finer points of patent law. I urge Her Majesty’s Government to look hard to see how we can adjust the law to protect all.

My second point is one that I wish I did not have to touch on and one on which this Government have rightly already done much: the protection of our nation’s right to develop ideas and not have them stolen by foreign companies or Governments or by those who simply seek to use commercial espionage—or state espionage—for commercial gain. I am pleased to see that the Government have already gone some way on this matter, but I urge them to go further.

The position that GCHQ holds today in the UK is essential, but it is not the position that it has held for the past 100 years. Over the past century, GCHQ has quite rightly guaranteed the signals intelligence of Her Majesty’s Government. It has protected our communications to our armed forces, our embassies and our friends. It has perhaps done something to ensure that we know a little bit about what is going on elsewhere. Now, however, GCHQ’s role is different or, rather, has expanded.

It would be right today not to think of GCHQ as an intelligence agency in the traditional sense, but rather more like the Royal Navy between the 18th and 20th centuries. Today, it is GCHQ that guarantees the economic routes of communication in exactly the same way as our battleships once did while guarding the strait of Malacca, ensuring that the coast of Africa was free of pirates, and keeping the Mediterranean free for trade from all nations. Today, those sea lanes are electronic highways and those ships are concrete and based in Cheltenham. The sailors, who are now coders, are no less essential to our economic future. As we talk about this fourth industrial revolution, it is vital to remember that we must think about the protection of ideas in all senses both legal and, sadly, through intelligence.

Thank you for giving me the time to speak, Madam Deputy Speaker. I must also pay tribute to my hon. Friend the Member for Havant (Mr Mak) and the hon. Member for Hove for arranging this debate.

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[Kevin Hollinrake]

My hon. Friend hits on one of my favourite topics: the culture of corporate obfuscation that we get from BT and its willingness to underinvest to maximise profitability. We absolutely need to get BT to up its game. I agree with Ofcom, which says that one solution is to open up the ducts and poles to other operators. Perhaps in future, when there are bidding rounds for Government investment, local authorities or the delivery authorities should themselves be held responsible for ensuring that third-party operators—smaller operators—get access to those ducts and poles in the local areas for which money has been committed.

The Government are supporting small businesses and innovations in many ways. As the Minister mentioned, there has been a 38% increase in investment in Innovate UK since 2010. Research and development tax credits have a hugely beneficial effect on companies that want to invest in new technologies. The enterprise investment scheme has unlocked investor capital for new start-up businesses and made such businesses possible on the back of these tax concessions. I support the retention and perhaps expansion of the concessions to make sure that we get new businesses to take advantage of these opportunities.

The failure rate for high-tech businesses is very high, but investors will countenance that because the rewards are also very high. Investors know that it is almost a winner-takes-all bet. They know that if they get it right, they can land themselves with an Amazon, a Google, an Uber, an Apple, or even a Rightmove or a Zoopla. In many sectors, there is either no competition or competition from just one other body, which puts those businesses in a hugely advantageous position.

In some areas of technology, business inevitably wins, and the other thing that will inevitably win is the machine. I spent my summer holidays reading a very interesting book by Matt Richtel called “A Deadly Wandering”, which talks about the ability of machines to multi-task. Richtel talks about the cocktail party effect. He describes a person in a conversation at a cocktail party. He says that it is not possible for them to listen to another conversation if they are truly engaged in their own conversation, as they can only do one thing at a time. Apparently, they can recognise their name being mentioned, but that is about it. Computers, on the other hand, can do millions of things at the same time, and they can do them better. A new computer called AlphaGo was built to try to beat the world champion of the game Go. That is not just a game of logic, but a game of intuition, yet the computer beat the world champion Lee Sedol five times in a row. The computer hones its own skills. So machines will win and big business will win.

The biggest worry I have about some of the businesses that will win in the future is their ability to dominate the entire supply chain. Uber is a good example. When it first came along, we saw it as just something that connected people who wanted a taxi with people who were taxi drivers. Uber has been clear that in the future it wants to be the taxi driver as well. In fact, it does not want any taxi drivers; it will have autonomous vehicles, and will no doubt link up with huge car manufacturers. Toyota, Nissan and other companies are looking at this. Uber will be end to end, taking away small business opportunities from taxi drivers, delivery drivers and HGV drivers.

[Tom Tugendhat]

My hon. Friend is making a persuasive point. There will be a challenge to not only small businesses, but large businesses. After all, if someone can hail a cab for nothing at all, why would they own a car?

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[Justin Madders (Ellesmere Port and Neston) (Lab)]

I congratulate the hon. Member for Havant (Mr Mak) and my hon. Friend the Member for Hove (Peter Kyle) on securing an important debate that has been very informative so far. I hope that it is a subject to which we will return many times in the future.

Before I talk a little about the future, I want to talk a little about the past. The title of this debate, the “Fourth Industrial Revolution”, evokes images of previous industrial revolutions, and of course the first, which began—whereabouts exactly has been the subject of some debate today. It has been romanticised. We should not forget the child labour, the decline in life expectancy, the exploitation and the unsafe practices that were all huge features of the early years of the industrial revolution. I am not suggesting for a minute that we are going to return to the days of the poorhouse, but history should act as a warning that change of the magnitude we saw in the first industrial revolution is not all positive, and we should be considering now how best to mitigate the negative impacts that a fourth industrial revolution may bring.

For as long as there have been technological innovations to ease the burden of physical labour, there have been dire warnings about the impact on jobs. Although the short-term impact of early automation was severe enough to lead to the Luddite riots of the early 1800s, in the main the dire predictions of what people such as John Maynard Keynes termed “technological unemployment” have proved to be unfounded. In the long run, technological innovation has always delivered more employment opportunities to the economy than it has taken away, but these processes have created winners as well as losers in the short term.

I for one am not prepared to take a chance that things will sort themselves out in 30 or 40 years. Unlike previous waves of industrial progress, this new wave of automation threatens jobs across the entire spectrum at a pace that is unprecedented and may well be impossible to keep up with. Studies by analysts such as Deloitte have predicted that 2.1 million jobs in wholesale and retail have a high chance of being automated in the next 20 years, and another 1.5 million jobs could be replaced in transport and storage in the same period. These sectors have seen considerable growth in the past few decades, but that now looks as though it could be dramatically reversed.

These predictions refer to the next 20 years, but change in some sectors will happen more quickly. For some, it has started already. There are plenty of examples, as we have heard in the debate today. We have also heard about trials by companies where the movement of all goods in a warehouse is performed by robots. We hear of driverless cars and of drones making deliveries, and in supermarkets the number of automated checkouts continues to increase.

[Tom Tugendhat]

The hon. Gentleman’s points are well made, but does he recognise that automation has lowered costs, which for so many of our constituents has been a blessing? The cost of television sets, food and any number of items in the home has dropped dramatically, meaning that people can enjoy so many more benefits of modern living than would have been possible even 50 years ago.

[Justin Madders]

Of course automation has increased people’s ability to purchase high-spec goods and has led to higher living standards and greater comfort, but we have to remember that to buy those goods, people need an income. That is where my concerns lie.

Not only are jobs at risk in retail and logistics, but the professions are in trouble as well. A raft of new legal tools has been launched which automate functions that were once the preserve of clerks and paralegals. Further analysis by Deloitte has shown that the UK has already lost 31,000 jobs in the legal sector to automation, with a further 114,000 jobs set to go in the next 20 years. One futurist predicts that accountancy and law will go from being respectable, well-paid professions to barely existing in a generation. Although many will no doubt view a reduction in the number of lawyers as a good thing, it is difficult to see how there will be anything other than a loss of skilled professional jobs over the coming decades, which will limit opportunity for future generations.

This is in line with some economists’ predictions of an increasing polarisation in the job market, with the gap between high-skilled and high-wage jobs and everyone else continuing to grow. This is a trend that we are already seeing, and it is likely to accelerate as a result of automation and the development of artificial intelligence. Now that we have a pretty good idea of what is coming down the track, it is time for an honest appraisal of whether enough new opportunities can be created to bridge what could be a gaping chasm in the job market, and how we prepare our children for what will be a markedly different economy from that of today.

These are questions that need to be answered sooner rather than later if we are to avoid unemployment rates that would make the 1980s seem like a golden age. I am sure some will say that that is a rather dramatic statement, but I fear that unless we start to ask ourselves some fundamental questions about how we organise our society, we risk the creation of an unbalanced and unsustainable economy where the majority will face a struggle just to survive, and the insecurity that many feel today will become chronic.

The rise in zero-hours contracts, which we have heard about again today, is another example of the increasing casualisation and disposability of the workforce. What about pensions? How will people save for their old age if the insecurity of their whole working life is such that they cannot be sure they will earn enough to put food on the table each week? Not having the certainty or sufficiency of income to enable people to plan for the future is only storing up problems for us all in the long term. I agree with my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) who said that there need to be clear regional strategies for investment if we are not to risk an unequal distribution of revolution and investment in our industries.

There are many ways these challenges could be tackled. In many ways, the availability of technology has already allowed us to change the way we work. We have seen a seeping of family life into work activity—the blurring of the lines between home and work life has already occurred. That could be a positive development, allowing people to work more flexibly, although there is a tendency at the moment for it to become a more convenient way of extending the working week. We are also going to see an increase in the flexibility of employment arrangements, as well as flexibility in the way we actually work. That will not necessarily be a good thing; it can lead to more exploitation, and I want this place to be challenging that exploitation now, rather than years down the line. A good start would be for the Government to start looking at implementing the Deane review on self-employment.

There are many ways we can look at this issue. A universal income has been talked about. We can reduce the number of working hours. We can change the way we view the world of work. This should be seen as a great opportunity to liberate people from their workplaces. Doing more of the same is not the way ahead for this country. I know that politicians tend to think in terms of four and five-year cycles, but if we can look beyond that, articulate a vision of what a fair and prosperous society would look like and then actually deliver that, we will have shown leadership that our country will benefit from for decades come.