How Can we Maximise AI’s Impact on the UK Economy?

28 July 2023 | Eleanor Lightbody

I was interested to read a recent report by Google highlighting AI’s potential impact on the UK economy. According to their projections, AI could create £400 billion in value for the UK economy by 2030 and create an additional £200 billion in additional revenue for public services. The report also predicts that AI will create new channels for revenue creation by freeing up some of the country’s most overworked public sector employees, including teachers and GPs. It said that AI could save over 700,000 hours of administrative work and free up £8 billion in public sector resources for other uses.

I have long held the opinion that the UK is incredibly well placed to be a leader in AI, but its economic impact has the potential to be stifled if we don’t take the right steps to facilitate and encourage its development. Google’s report notes that Britain’s share of global investment in R&D has fallen by a fifth since 2014. There are yet more indicators that the UK is not incentivising tech development – for instance, Cambridge-based chip manufacturer Arm’s recent decision to list in the US follows a string of world-leading, UK-born tech companies following the same path.

The report got me thinking about what steps the UK government can take to improve the UK’s overall appeal as a home for tech and ensure that AI powers our economy in the coming decades.

1. Encourage Forward-Thinking, Bold Regulation

AI is the strategic technology of the future, and that needs to be reflected in our laws and regulations. Post-Brexit, the UK has an opportunity to become an enabler of the next great technology revolution and move faster when it comes to a forward-thinking regulatory approach that encourages innovation.

Although it’s promising to see the government’s pro-innovation approach to AI regulation, I do have some reservations about the five principles intended to guide and form the development and use of AI. Specifically, the principle that demands ‘appropriate transparency and explainability.’ Just like the human brain’s method of decision-making, AI is not easily explainable. We should not allow overcaution or many commentators’ obsession to ‘get’ AI prevail over innovation. It will only stifle development and deprive of us realising the benefits of AI across sectors. Instead, we should develop flexible regulation which focuses on the data the AI is trained on and looks at industry or application-specific regulation. We can’t fall into the trap of trying too hard to get ‘under the hood’.

2. Close the AI Skills Gap

Only one in ten workers has the right AI skills to keep pace with AI’s current rate of development, with the digital skills gap costing the UK government £12.8bn. The UK government has responded by taking initial steps to improve accessibility to the AI sector by investing millions into scholarships for AI and data conversion courses in institutions of higher learning.

However, as the government continues to advocate STEM careers and university degrees, I fear that we are failing to address the tech skills gap from an early stage. Our efforts should start much earlier than university, focusing on educating young people around the following ideas: What does AI mean? What does it look like in the real world? How can I tell what is ‘real’ AI and what’s fake? Does AI pose any danger to me as a young person on the internet? How is it being used by people in the world of work today? People certainly don’t need to learn how to code complex technologies, but they do need to learn how to live and work effectively alongside them.

Interestingly, new research has suggested that women have felt the impact of recent tech layoffs more than men. Having AI integrated into everyday processes, companies across industries can continue to offer flexible working options and ensure that women continue to pursue careers in tech. In fact, we recently hosted a Women in Law breakfast which welcomed attendees from across the legal sector to connect and chat about their careers. Many of the attendees noted that AI’s ability to supplement their work and take on the more administrative tasks is essential for getting them back to work after having children, allowing them to focus on more rewarding tasks and ultimately giving them time back in their day.

3. Boost Start-Up Investment

If, as Google suggests, AI is set to injects billions into the UK economy, then that will start with young, innovative businesses attempting to bring novel technologies to market. In my reaction to the government’s Spring Budget, I noted that much more could be done to improve conditions for UK start-ups and SMEs looking to invest in R&D and attract investment. Too many innovative ideas and companies could fall by the wayside simply due to a lack of financial backing. Indeed, the government’s partial reversal to the R&D tax credit cuts announced in November is a small but welcome step towards ensuring better support for innovative, early-stage tech companies who may not be able to put a substantial portion of their budget in R&D. At Luminance, we firmly believe that R&D is the foundation of innovation and know that it is key to successfully bringing novel technologies to market. The government must keep working to build an environment where research-intensive companies are incentivised to invest in R&D. Indeed, the government must urgently prioritise extending support to smaller businesses playing a role in building the UK’s AI-driven economy.

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