Baroness Lane-Fox of Soho (CB)

My Lords, I too thank the noble Lord, Lord Bridges, for securing this debate and for his masterful opening. I will be more modest than him in my remarks and direct my comments to just one number: that pesky 1%. As we have heard, that number is roughly the rate of productivity growth that the OBR assumes we will reach by the end of its forecast. As we know, it is one of the numbers on which the fiscal outlook turns. Higher productivity means higher wages, stronger tax receipts and more capacity to fund public services. Weak productivity means that every aspiration—better services, better jobs, lower taxes or lower borrowing—collides with the same hard constraint. We spend a great deal of time in this House debating how we divide up the economic pie, but we must help the pie grow faster. Every Chancellor will face increasingly miserable choices otherwise. Technology is not the only explanation for Britain’s productivity weaknesses, but investment in technology, and the ability to spread it rapidly through businesses and the public sector, is a vital part of the answer. I recently chaired the Mayor of London’s taskforce on AI and the future of work. Our starting point was that the future is not predetermined. AI is not a weather system rolling towards us that we merely observe; we still have choices. We can wait for disruption and deal with the consequences afterwards, or we can act early, shape the change and create opportunity from it. That distinction goes directly to our fiscal future. Successive PMs have assured us that Britain can produce the next great trillion-dollar AI company, and I for one very much hope that we can. But there is another race that matters just as much: can we get these technologies into the rest of the economy quickly enough to make Britain’s jobs more productive and fulfilling? AI sitting in a data centre is not productive, but AI used well in millions of workplaces might be. The latest ONS evidence gives us a glimpse of both the opportunity and the problem. Among businesses with more than 10 employees, reported AI use rose from around 12% in late 2023 to 35% in June this year, yet only one in 10 businesses using AI says that it is using it extensively or helpfully. That suggests that, in many cases, AI remains an add-on to existing work, rather than a chance to rethink what work is and how it is done. Having spent three years as president of the British Chambers of Commerce, I can say that SMEs are always at the forefront of my mind. The productivity revolution will not happen simply because another brilliant AI company opens up in King’s Cross; it will happen when a manufacturer in the Midlands, a hotel in Cornwall or an accountancy practice in Newcastle can use these tools to do things better and faster, increasing profits and increasing employment. My first ask of the Government is simple: do not treat the diffusion of AI through the economy, including in the public sector, as anything less than a national productivity mission every bit as important as the next invention at the frontier. We must help smaller firms to have the skills to use this new technology, redesign processes and build businesses around it. My second ask is to act earlier. One of our taskforce’s recommendations was an early-action system to spot changes in London’s labour market as they emerge, combining data with what employers and workers are seeing on the ground, as well as where opportunities are available. Its wider approach was to act early, shape change and create opportunity. We need the same discipline nationally. If we wait until somebody has lost their job before we think about retraining them, we have failed. Helping people move into new work is cheaper, more productive and far better than leaving them with the consequences of redundancy. Workers must not simply be the recipients of technological change. The people who do jobs understand best how technology could improve them. If we bring workers into the redesign of work, we are much more likely to use AI to augment people rather than simply removing them. I welcome the decision to put AI much closer to the centre of government, particularly with the recent appointment of the noble Lord, Lord Vallance, but AI will not rescue government systems and processes that do not work. Success must not be measured by whether Whitehall has an AI strategy; it will be measured by whether it becomes easier for a parent to obtain support, whether businesses spend less time navigating bureaucracy, and whether front-line public servants spend less time moving information between outdated systems. AI can make the Government more productive, but not by bolting new technology on to old and bad ways of working. We must start with the greatest points of friction, and then we must give good teams the freedom, tools and support to fix them. On Tuesday, I was lucky enough to see Demis Hassabis—as was the noble Baroness, Lady Batters, who I see is in her place. As noble Lords are well aware, he was the founder of DeepMind, and this week he received the Albert Medal from the RSA for his work. He is undoubtedly one of our greatest assets, and inevitably one of the most productive people on the planet. In his acceptance speech, Demis painted an optimistic and exciting vision of an AI future. He sees no reason to proceed with fear. But his caution was this: very few of us have an idea of what is coming, and we are not acting with enough creativity, imagination and urgency to make sure that the UK is in an advantageous position for the next decade. Let us heed Demis; let us be bolder. After all, the test over the next few years is, in some ways, remarkably simple: did that 1% go up?