The following column was first published in City A.M on Monday 20 March, 2017. To see the original story click here.
In her first party conference speech as Prime Minister, Theresa May declared it was “time to remember the good that government can do”. Setting out a new approach to the role of the state, she rightly acknowledged that Whitehall doesn’t have all the answers but should instead be a proactive “force for good”.
That’s certainly the right approach when it comes to helping Britain lead the Fourth Industrial Revolution (4IR), as a new wave of technological breakthroughs is known. From advanced robotics, driverless cars and 3D printers to Amazon’s delivery drones, internet-connected household devices and nanotechnology, these innovations are transforming the way we live and work.
But as the 4IR accelerates, the flexibility of our regulatory framework is being tested as never before: new laws for driverless cars are before Parliament, while court judgments are reforming workers’ rights as the “gig economy” takes off. The role of government is also up for debate.
My view is clear: Britain can – and should – lead the 4IR, but this will only happen if the private sector plays the leading role, with government working as an enabler not a planner. We know the alternative is doomed to failure: in the 1970s, it meant propping up failing nationalised industries like British Leyland, “picking winners”, and sclerotic growth. In 2017, our approach must be different: smart state not big government.
Today’s launch of the new All-Party Parliamentary Group on the 4IR – by the chancellor himself – can ensure that happens. By connecting politicians to entrepreneurs, investors and businesses, this new group will become the focal point we need in Westminster to ensure policymakers adopt a pro-innovation, free market approach to modern industrial strategy. It will encourage government to focus on creating the conditions for innovation to thrive, setting out the direction of travel but not dictating the detail.
But policymakers must go further, and get behind three key policies that will accelerate Britain’s leadership of the 4IR.
First, the UK needs a new national investment fund to back 4IR innovations based on convergent, multiple technologies. The 4IR is characterised not by innovation in discrete sectors (such as agri-tech or energy which already benefit from special government funds) but by the convergence of multiple technologies, whether digital, biological or chemical.
A new 4IR fund, seeded by government through the Industrial Strategy Challenge Fund but co-funded (on at least a five times basis) by City institutions, pensions funds and businesses, will lock in private sector backing for the 4IR, helping launch, grow and commercialise more multiple-technology 4IR products. The City’s role is key, with its capital market expertise enabling global investors to invest in Britain’s 4IR success story. The LUTZ Pathfinder, the UK’s first autonomous vehicle, is a prime example of how public-private finance collaboration catalyses innovation.
Second, Brexit Britain must shelve the EU’s “precautionary principle” as part of the Great Repeal Bill. Enshrined in EU law, this is a risk management strategy, used widely by EU regulators, under which the burden is on inventors of new medicines, products and technologies to prove that their invention is not harmful where some risk exists, even if there is no scientific consensus to suggest that actual harm may occur. If in doubt: hold back; don’t innovate. It meant, for example, German chemical company BASF halting research on GM crops in Europe at a time when the continent could have become a world leader in crop technology.
Finally, government should carry out a Future Skills Review at the start of each parliament, taking a strategic look at what skills employers will need over the coming decade as new roles in new industries emerge. This review would help meet the private sector’s long-term needs in the same way the Strategic Defence and Security Review and the Comprehensive Spending Review already help the state plan defence and wider public expenditure.
If government is to be a force for good, it must be an enabler, a catalyst and a convener – not a planner, a picker, or a prop to failing industries. A smart state helps create new institutions and clusters, provides seed funding, and cuts back red tape – all making space for our entrepreneurs, startups and private sector to thrive and innovate. The new All-Party Group’s aim is to help policymakers stay on that path so government helps Britain lead the Fourth Industrial Revolution, just as we led the first.