UK Edition
Twice a year, leading up to the Autumn Statement and Budget, officials in HM Treasury supply a long list of “productivity improving” measures to the Chancellor. What is interesting is how little, year on year, this list changes. Transport investment, skills schemes and relatively fiddly tax incentives feature time and again.
I used to be one of those officials: I worked in HM Treasury for three years in the “Productivity Unit”. Our job was to study potential investments and problematic regulation to try and spot reforms that would improve the economic output per worker.
It is not surprising the Treasury is obsessed by productivity. When it comes to living standards, as the Nobel Prize-winning economist Paul Krugman said: “Productivity isn’t everything, but in the long run it is almost everything.”
Philip Hammond, the Chancellor, notes that the UK continues to lag in productivity behind European neighbours and the US. If we were as productive as Germany or the US, everyone could have a three-day weekend and still be as wealthy as we are today. But we have the opportunity not only to copy those countries, but leap-frog them; just as they leap-frogged us after we led the industrial revolution. Spending money on faster trains – particularly grand projects like HS2 – is not the answer. Everyone loves Japan’s bullet train; futuristic, fast, reliable and, as with much in Japan, immensely civilised. UK trains travel at a snail’s pace by comparison.
But given that most people are already working on the 7am service from London to Manchester, shaving another 30 minutes from the journey at a cost of £56bn feels like a wasteful extravagance in this age of austerity.
The new “modern industrial strategy” recently announced by Theresa May – which focused on innovation and new technologies – provides an opportunity to think again. The UK has real emerging strength in areas like artificial intelligence (AI), and we can exploit this not only to grow companies, but to make the whole country more productive.
Using AI to automate and speed up currently bureaucratic processes would be the easiest, cheapest and most effective way to improve productivity. I know this because in the last three years my company, ASI, has worked on over 120 commercial AI projects across a wide range of industries and sectors.
Efficiency improvements worth millions of pounds are common in projects that last for just a few months. For example, one of our data scientists created a model to better predict which trains were going to break down next, allowing the mechanics to proactively maintain them before they broke down.
Another example where AI can undoubtedly help improve productivity is in the civil service, where large numbers of clerical staff still spend their time checking forms or responding to routine emails and letters. Using AI, we can triage the high-risk applications for staff to examine more closely and automate the approval of the low-risk applications. AI is the perfect complement to well designed services that minimise the need for us to call or write to government in the first place. This would not only save money but allow people to be deployed on more complex (and more satisfying) work. In neither the public nor the private sector are we close to making the most of the productivity benefits that AI offers us today.
In the Government’s case, this is partly due to fears over the jobs AI will take away – and there is no doubt that AI could replace people in some roles. While this is often a good thing for productivity we cannot be blasé about this. Work is integral to our sense of purpose and identity, not just our financial need to cover our costs. It is not surprising there is fear of the machines.
We have been worried that robots are going to take away our jobs for the past 200 years, but our fear is misconceived for three reasons.
Firstly, if we do not invest in AI, other countries will leave us behind. We are in a global race, and it would be better for new jobs related to new technologies to be created in the UK than go elsewhere.
Secondly, while it is true that technological change can bring disruption (which firms and governments can help workers to manage), they also create new opportunities. Just over a quarter of all UK private-sector jobs are created by business creation and expansion, and destroyed by business failure every year. We are used to managing an extraordinary level of churn within our labour market. Moreover, free access to education and retraining has never been better.
And thirdly, social psychologists have long known that we humans are hardwired to worry more about potential losses than potential gains. It is no use saying “don’t worry” because we always will. But if we seize the initiative, we can become more confident.
At next year’s Budget it is important the Government invests where it will get the greatest bang for its buck. That means investments that lower costs, improve productivity and help British businesses. The application of artificial intelligence should be front and centre. In the 21st century, getting to work faster is not the only route to faster working.
Richard Sargeant is a director at ASI Data Science. He has worked in senior roles in the Government Digital Service, Google and HM Treasury
Artificial intelligence can make us smarter and faster