What does 2023 hold for technology
Jo Dalton, Associate Director at Lodestone and former Political Secretary to Lord Tom Watson (during his time as Deputy Leader and Shadow SoS for DCMS), gives her take on the outlook for technology this year.
Having guided our clients through the turbulence of 2022, Lodestone’s team is well-placed to judge the key opportunities and threats likely to influence the year ahead. You can see other sectoral deep-dives in areas including education, health, energy and investment on our website.
The fast-paced and evolving nature of the tech sector makes drafting a note on what to expect for the whole year extremely difficult. The development of new technologies, industry announcements, party leader speeches and government reshuffles that have taken place in 2023 already convey both the opportunities that technology can bring to the UK and the threats in legislating it.
At the start of the year, both the Prime Minister and the Leader of the Opposition set out their plans for the year – Sunak described his “vision for a better future” focusing on technology and innovation as a means to drive economic growth.
Starmer described Labour’s 10-year project of national renewal with a long-term and mission-led approach to governing. He noted that working in tandem with business - start-ups, SMEs, and global corporates – was central to this vision.
Nowhere is this truer than in the tech sector. Our conversations with tech leaders and parliamentarians highlight one major and recurring theme: collaboration (or the worrying lack of it).
2023 is no doubt the year of tech legislation. Those of us keeping track are eagerly awaiting legislation on competition, data, online safety, financial services, wireless connectivity, the role of tech in the way we trade – the list goes on. Much like this note, our legislative system is playing catch-up to a sector which continues to evolve and innovate at an unbelievable pace.
And these innovations themselves deserve mention here. We have been talking about AI for years, but it feels like 2023 will be defined by the first real widespread application of its power. Following the launch of ChatGPT in November and now Bard, Google’s competitor to the Microsoft backed generative AI chatbot, which can hold convincing small talk, write an essay, and even pass a medical exam.
Global developments in quantum computing have kick-started the 21st-century equivalent of the Space Race, with China claiming to have made breakthroughs which would pose huge security risks to the West, prompting a renewed focus on the technology here in the UK. There are major environmental and supply chain issues associated with quantum and the hope is that through the ‘imminent’ release of the quantum strategy, some of these concerns will be addressed.
No one disagrees that technology and specifically the innovation and brilliance of the UK’s tech sector presents unparalleled opportunities for growth and resilience.
So what’s slowing us down?
In his recent speech, the Prime Minister emphasised the importance of putting innovation at the heart of everything. Saying the UK’s major challenges around jobs, wages, the NHS, reaching net zero and energy security will be solved by innovation and with this, growing the economy to make the UK “the most innovative economy in the world”.
Just a week or so later however, it was announced that £12m of Government funding would be pulled from Tech Nation (an industry body launched by David Cameron in 2011) and handed to Barclays Bank instead. Tech Nation was set up to bring investment to the UK’s tech start-ups and helped to bring thousands of workers to tech jobs in the UK through the UK’s global tech talent visa.
This announcement follows the closure of the Government’s ‘Help to Grow: Digital’ scheme which gave funding to SMEs to buy technology, cuts to R&D tax credits which have been used by companies that are leading in emerging technologies, and the scaling back of investment zones that were announced under Liz Truss.
This week’s reshuffle does, however, display some intent to take this seriously. A newly formed Department for Science, Innovation and Technology brings Government responsibility for our sector out of DCMS. The formation of an additional Department has long been advocated for by the sector, but the jury is still out on Michelle Donelan who remains the overseer of technology, as the Secretary of State for SIT. Donelan will take a ‘short maternity leave’ at some point in the coming weeks with her replacement not yet announced.
During the Leader of the Opposition’s New Year speech, the focus was on a smarter, more data-driven central government that works in collaboration with the public and private sectors to deliver results. Since then, Kier Starmer and the Shadow Chancellor, Rachel Reeves have continued to do the rounds, speaking in Davos at the World Economic Forum to reassure businesses that the economy would be in safe hands under Labour.
But the collaboration point still needs to be addressed.
From the Government, we’re hearing the right noises on supporting the growth potential of the sector but cuts to vital support mechanisms at the same time. And from Labour, we’re seeing broad-brush commitments to pro-business policies but no real detail, as of yet.
As we know is true of any sector, legislation which is drafted in a silo and apart from industry experts will never be effective, and we’re hearing a rallying call from the tech sector’s leaders to engage now before embarking on their mega-year of tech legislation.
The challenge
The UK’s rising economic challenges are often characterised by sustained levels of inflation and the soaring cost of living. However, for both of the UK’s main parties, the challenge remains to find a way to solve our decade-long productivity gap fuelled by skills and workforce shortages - and how to best use technology to our advantage without leaving anyone behind.
The need to reduce costs as economic growth decelerates around the world has been given as one of the main reasons given for the 150,000 layoffs from some of the world’s biggest tech companies. However, automation and AI, when used ethically and effectively, can help businesses (and our public services) to survive and even grow, despite a wider environment of economic chaos.
Balancing this tech evolution and the advent of automation with sustaining and creating jobs does however present a challenge. But as one tech-savvy peer said to me recently, ‘I’m sure the monks were terrified when they heard the first printing press had been invented, but we must provide the skills needed for an economy of the future, not just the one we have now.’
Parliamentarians and industry experts alike have been making this case to us over recent months and it sounds something like this: Re-skilling and upskilling the UK’s dormant workforce for jobs in the tech sector – at all levels – is the key to tackling productivity issues, driving growth, and ensuring everyone from across our society has the digital skills needed for the future world of work.
The shortage of skilled IT professionals in the UK poses a significant threat, not only to the tech sector, as businesses will struggle to recruit and retain employees with the necessary expertise to keep up with new technologies and trends. This of course could lead to not only a persistent stagnation in productivity terms but more worryingly to a decline in the homogenous development of new technologies like those listed above.
Digital exclusion remains a major concern, with 10 million people in the UK having insufficient digital skills to operate in today’s digital world and 2 million struggling to afford their internet bills. The Data Poverty APPG was set up in 2020, during the pandemic when a light was shone on the most vulnerable in society being cut off from vital services including online food shopping and banking, education, healthcare and government services. The Group was set up to eradicate data poverty in the UK and as the secretariat, we work closely with internet service providers, digital inclusion charities, education providers and Parliamentarians to make recommendations on policy that could be implemented to ensure technology is reaching everyone in society which will in turn, support economic growth.
Challenges are also presented by diversity, or in tech terms, the endless lack of it. These exciting emerging technologies may be able to function autonomously, but they are created by humans and therefore have human thinking, logic and bias baked into their core. Now more than ever the sector needs to attract diverse talent and fresh perspectives to not only ensure our AI isn’t prejudiced, but also to address our domestic skills shortage.
Here at Lodestone and through running the secretariat of the Parliamentary Internet, Communications and Technology Forum (PICTFOR), we spend a lot of time facilitating the collaboration of the tech sector, both amongst itself, and also with Parliament. 2023 will in no uncertain terms define the future of tech in the UK. The legislative agenda is being turbo-charged to keep pace with the sector, and now more than ever, those with insights, proposed interventions or feedback on drafted policy, need to make their voices heard.