Interesting commentary on the state of AI and the Labour governments head in the sand approach to it.
However I am yet to be convinced of the Tories “Road to Damascus” conversion to cheap energy after 14 years of their rule delivered us the most expensive energy in the world …
Overnight, major US AI company, Anthropic, has been ordered by the Trump administration to deny foreigners access to its latest AI models. This is the kind of tech that Labour has spent all week telling British companies to make themselves dependent on via its AI Adoption Summit.
Let me set out why this is yet another example of how Labour’s TOTAL lack of preparedness for government has left the UK exposed (something I touched on with Matt Chorley on 5Live earlier this week)…
There is a whole dance going on right now in the States among and between these AI companies and the US government - that’s for separate comment on AI regulation, the sustainability of their underpinning commercial models and more. But amidst this, Labour’s combination of political naivety and economic failure has created a dependency problem that DSIT’s belated, frenetic barrage of announcements at London Tech Week is unlikely to solve any time soon.
Advances in tech were already making it more important for the UK economy to have high quality digital infrastructure - ultra fast internet, telecoms and cloud, reliable supply chains and so on.
The pandemic accelerated the trend. AI put it on speed.
It means that politicians need to be looking more seriously at who owns and controls the software, hardware and government systems on which Britain relies, what leverage our country can build in critical technologies and how we access or develop the best AI models.
Instead Labour spent its first year in office making all our economic fundamentals worse. Higher taxes, higher employment costs, higher regulation, higher energy costs, a total screw up on defence procurement where dual-use tech is vital to modern warfare, and the same old government contracting that sees players with massive lobbying operations favoured. All of this has weakened home grown enterprise and made us less attractive to international companies despite us having some of the best talent and most innovative start-ups in science, tech and security in the world.
It meant that by the time the US-UK tech summit rolled around a year later to puff out President Trump’s State visit, Labour Ministers were totally dazzled by big tech and its promise to provide positive investment headlines. (Remember this was the time when Deputy PM, Angela Rayner, and US Ambassador, Peter Mandelson, were both resigning from scandal and the Chinese spy case was collapsing.) Crazy investment pledges were being bandied around, many of which were repackaged existing deals or promises which received very little scrutiny despite Labour building policies like AI growth zones around them. Lo and behold some of the biggest deals have now been junked because UK energy costs are nuts and because some of these companies are struggling to make their own numbers work.
In the wider economy, companies were told ‘adopt, adopt, adopt’ when it comes to AI to stay up with any AI-enabled competitors. The promised ‘benefit’ would be a reduction in a ballooning payroll bill. Despite this, a lot of companies have struggled to get the productivity gains that have been billed from AI adoption. Many were told that was because they need to totally rewire their systems to maximise the benefits. But that rewiring makes them dependent on the kinds of AI models that President Trump has just restricted foreigners’ access to and whose token prices were already being jacked up (humans not so inefficient and expensive after all…).
This is not to deny the transformative potential of AI or its disruptive effect on the workforce and wider society. But as the initial AI mania begins to fade, the risks of Labour's approach are becoming clearer. Rather than using the strength of the wider economy to preserve choice and resilience, Labour doubled down on dependence on a small number of companies whose technologies are now becoming more expensive, more restricted and harder to access.
The penny half-dropped with some of their Ministers a few months ago. They started playing into the Mark Carney ‘middle powers’ speech, talking of British-first procurement and making noisy headlines against Musk and the like after realising that that the government had reduced its own own leverage on issues like social media regulation and more. A delayed launch came of a Sovereign AI Fund. A litany of announcements on chips and sovereignty flowed from London Tech Week. But this all risks being small beer when it comes to the scale of what is required, especially when the UK government stubbornly refuses to confront the fact that it has moved all the economic fundamentals in the wrong direction.
This is why the first priority of any incoming leader or government has to be on getting those fundamentals right. Kemi and the Shadow Cabinet have been relentlessly focused on policies to give our companies the tools to win - cheap energy, less red tape, lower taxes, an education pipeline that produces the talent we need, a Sovereign Defence Fund for dual-use technologies, pensions reform so that we see more money going into UK equities. It’s why I spent London Tech Week talking to the people and companies that understand the nature of the challenge, including techy details like the need for open architecture.
Is there a messiah coming this week from Makerfield in the form of Andy Burnham who understands the nature of the challenge? Forget it - the papers are today being briefed that Ed Miliband is his front runner to be Chancellor. There are more rounds of this chaos to go before this UK gets a government that recognises that without a strong economy, all else fails. Being ready for that moment is the project to which the Conservatives under Kemi are dedicated.