Businesses and SMEs - Motion to Take Note

Part of the debate – in the House of Lords at 1:39 pm on 6th July 2017.

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Photo of Baroness Rock Baroness Rock Conservative 1:39 pm, 6th July 2017

My Lords, I, too, add my thanks to my noble friend Lord Leigh of Hurley for a very interesting and informative debate. We have heard many esteemed contributions as to how businesses can improve life chances and take responsibility for their own contribution to the communities in which they operate. I will focus on just two areas. The first is education and skills. Just as businesses must make a fair contribution to local infrastructure, so too must they contribute to the skills pipeline they rely on to get the right people to drive their business forward. Here we see a recurring theme. It is not enough for significant local employers to simply pay their corporation tax; they need to become more actively involved in the community.

Through the academy sponsorship programme, many are doing so. Take BAE Systems and the Furness Academy in Cumbria. BAE is the most significant employer in the region. What better way to demonstrate its commitment to the community than by sponsoring the local school—which, before BAE’s intervention and support, was failing? Or Siemens and Lincoln UTC, which specialises in engineering. Of course, Siemens could simply have relied solely on the state to deliver the school leavers it needs. Instead, it took responsibility, showed leadership and ultimately gave something back.

The other area I will focus on is perhaps more complex—that of technology. I applaud the noble Baroness, Lady Lane-Fox, for her profound speech and for her praise of Brent Hoberman and his outstanding Founders Factory. It is a fantastic organisation. I am proud of this Government’s record on fostering innovation through supporting start-ups, encouraging investment from angel investors and venture capital, and helping those businesses grow. The technology that emerges from these businesses has the power to improve life chances and foster prosperity.

Take fintech. By using apps or mobile banking, new providers can reach the financially excluded and the unbanked through advanced approaches to credit scoring and expanded networks that go beyond branches. This benefits the least well-off and helps them transition from being excluded from accessing mainstream products. Or take crowdfunding and the opportunities it continues to bring to small businesses to help them access finance to grow when they may have been turned down by high street lenders. But technology, as well as having the power to spread prosperity, also has the power to be hugely disruptive to communities, as old industries and jobs are swept aside by innovation. Here we must hope that our public policy can keep pace with technological change.

Take artificial intelligence. I find myself hugely honoured and excited to be a member of the ad hoc Select Committee on Artificial Intelligence. It is clear that on the one hand we need to capitalise on the opportunities that AI can bring. The Industrial Strategy Challenge Fund aims to bring together business with research to meet six of the industrial and societal challenges of our time. One of the six is robotics and AI. Accenture has estimated that AI could add in the region of £654 billion to the UK economy by 2035, and the Government are providing further support with the commissioning of an AI review led by Wendy Hall and Jérôme Pesenti, as well as a funding boost of £17.3 million from the Engineering and Physical Sciences Research Council to support the development of this technology in universities. This is the right approach, but we must use at least some of the economic dividend to ensure that those who become economically displaced by new technology have the chance to retrain so they can continue to contribute.

I have spoken in this House before about how technology has historically created more jobs in new sectors than those that have been lost in old ones. Indeed, a Deloitte report we debated here found that the number of technology managers had increased by a factor of 6.5 in the last 35 years to more than 300,000, and the number of programmers had increased threefold to just under 300,000. But we need so-called “skills activism” to make sure that all continue to benefit and that the life chances of those who work in these new technology-driven industries do not come at the expense of those they might be displacing.

To reiterate what my noble friend Lord Leigh said, business is quite often better placed to spread prosperity than government, through job creation and, in the examples I have mentioned, to foster the innovation and technology that can directly improve life chances. But such businesses must recognise that they do not do this in a vacuum. Just as they must contribute to the public policy that supplies their labour force, so they must also come to realise that it is for them as much as it is for government to support the workers and communities their activities may be displacing. That would truly represent business taking responsibility for improving life chances and fostering strong communities.