Making Technological Change our Ally

Speech to the EEF Conference, Wednesday 24 February 2016

Automated systems: “The most profound change in industrial history”

I want to say how much I appreciate the invitation to address you this morning. Despite being the Deputy Leader of the party that forms the Official Opposition, I know that after two general election defeats, and my party languishing near 30 per cent in the polls, you didn’t have to invite me.

The fact that the EEF believes in open dialogue, truthful discussion and friendly relations with all parties is testament to the maturity of your leadership.

And that’s why I’ve rejected the usual policy briefing prepared by the party HQ that politicians usually bore audiences with at events like this.

Our researchers asked me to cover the Government’s abject failure to support manufacturing sectors like the steel industry, the underlying skills gap, and David Cameron’s reckless uncertainty over Europe.

But I’m not going to read that out. Well, not all of it anyway.

Your members have kindly given me their time as well as a check list of key issues they see as urgent on the national ‘to do’ list.

So I’ve returned their kindness by drafting my own speech. I’m going to explore some areas that may not be 2020 manifesto issues but are definitely 21st century problems we have to begin to address. If you find it dull, I’m afraid I’m wholly responsible.

That’s one of the few advantages to being in opposition. It affords one time to think, read, discuss and listen. And I am extremely grateful to the business leaders who took the time to share their concerns about the future.

Our discussions were incredibly helpful and while I haven’t got all the answers for you today, I want to share with you how the issues you raised with me will be addressed.

I have asked Angela Eagle — who heads up our policy development — to specifically look at a strand of work on business succession planning, for example.

And after our discussions I think we need to come up with some ideas about how engineering businesses can work more closely with our schools and our teachers. I think we can do far more to encourage our young people to pursue careers in manufacturing.

I was deeply impressed with the companies that run ‘industrial cadets’ programmes and have asked Lucy Powell our shadow secretary of state for education to see if the model can be scaled.

And you asked me about my position on Trident. I’m in favour of a continuous at sea nuclear deterrent. My party’s policy favours a continuous at sea nuclear deterrent. Our trade unions who represent the thousands of workers in the 450 companies who form the supply chain that make it are in favour of Trident.

You may have read that this view is not shared by all our MPs. But I have made it clear to David Cameron that if he honours his promise of a vote on Trident I will support it.

There are enough Labour MPs to guarantee that the vote is won. I know the PM is currently pre-occupied with the European Referendum but I happen to believe that the sooner this vote is tabled, the greater certainty we can give to industry, our allies and our enemies, that British Industry will deliver the Trident project in good time.

There are other items on that ‘to do’ list; An EEF member told me his company had just paid many millions of pounds for a piece of machinery and was now struggling to obtain visas for the people who are able to train his workforce how to use it.

I know immigration is a big political issue right now and I understand why. But anomalies like the one he described have to end. If it means a Home Office visa waiver for skilled technicians, then that is the right way forward.

A world of difference exists between employment agencies who employ cheap labour from abroad and responsible businesses who want to hire the right people with the right skills to grow their companies and grow our economy.

Many members shared their frustration about the ridiculous amount of time we have spent as a country debating the future of Heathrow. I have my own views. We all do. But for heaven’s sake can we please just have a decision on a third runway, one way or the other?

Taking decisions that matter is the one thing you can actually do in Government. It’s why politicians seek power to start with.

But after my visit to the EEF’s Technology Training Centre in November and the meeting I had with members last month I want to talk about change. The visit you hosted for Jeremy and me — he sends his best wishes by the way and the toolkit you gave him has pride of place in his office — that visit really helped my thinking.

To talk to those young apprentices in Birmingham about the challenges ahead of them in life and to talk with their tutors about the rapidly changing demands for their skills helped me understand what Government has to do.

Change in our technology, our society, our economy.

I start with a central premise:

That over the course of the next quarter of a century, nearly everything will be automated. This will be the most profound change in industrial history. We cannot halt the change but how we deal with its impact is down to all of us.

It is my belief that the decision for all of us in this room is simply this: As a society do we make technological change our ally or our enemy?

Just over twenty years ago, Tony Blair announced that under a Labour Government ‘every school would be connected to the ‘Information Superhighway’.

I remember standing and applauding. In 1995, it sounded like science fiction. Today it sounds laughable, when nearly every child in every school and every home is connected to the internet. My seven year old learnt to read playing a phonics game on an iPhone. It’s a thing of beauty to behold.

And my ten year old has access to more information in his pocket than the President of the United States had twenty years ago, standing in the White House Situation Room.

The impact has been huge, in just two decades.

You will have seen it in your own business. And you will know that the pace of change has been accelerating.

The manufacturers in this room know better than anyone how robotics and automation are affecting production methods. You know the real impact robots are having on your business.

It’s not the stuff of HG Wells. It’s happening in Tunbridge Wells.

Again, the speed is dizzying.

It’s not that long since we were amazed that a robot could beat a human at chess or assemble a car.

Now we barely notice.

Today, robots are not just making cars, robots are on the roads driving them.

Four US states have already issued licenses for driverless cars. Google are apparently soon to launch a fleet of driverless taxis.

By 2020, nearly every car manufacturer will be making driverless cars. A robot driving a car may sound daunting. Perhaps just as daunting as a horseless carriage sounded in 1890.

But a driverless car doesn’t get tired, or drink alcohol, or have blind spots, or get distracted while changing the radio channel. The prototypes have all proved dramatically safer than humans.

And what are the policy implications? Greater efficiency of our existing road networks, huge improvements to delivery times for the freight sector? Increased competition with the rail sector? But massive displacement of transport jobs. The policy outputs are endless.

And to understand the scale of the change to come we must learn from the history of technological change.

When the first machine age unleashed the stunning power of capitalism, the sheer productive forces of industrialisation, society was shaken like a kaleidoscope and the pieces never settled the same way again.

Our towns and cities are shaped by the industrial revolution.

The railways, so fiercely resisted by rural communities and landowners.

The great cities, with their town halls, libraries, galleries, museums, public statues and great squares.

Even the names — The Potteries, redolent of Wedgewood and Dalton, or my own home in the Black Country, with the heavy industries which fuelled a global empire. They said of the Black Country that it was ‘black by day and red by night’, as the mighty furnaces lit up the night sky.

This wave of industrialisation created great wealth, great philanthropy, and great advances in the human condition.

But it also created huge upheaval, vast misery.

Child labour. Infectious disease. Industrial injury. Fetid slums. Infant mortality. Whole districts of cities cut off from the mainstream, where no policeman would venture and children grew up without seeing the sun.

You can still see it now, in the streets of cities in Vietnam, Brazil or China.

It took an amalgam of municipal leadership, capitalist philanthropy and — dare I say it to this audience — the collective strength of workers to civilise the new economic landscape shaped by great technological advance.

And before we did there was great upheaval.

The Luddites were skilled textile workers who saw their livelihoods threatened by new stocking frames and power looms, so they organised secret societies, and smashed the new technology.

At one point there were more British soldiers deployed to deal with the Luddites than fighting Napoleon in the Peninsular War.

And history shows us that with every era of technological change, the social upheaval is greater and deeper.

Consider these previous waves of innovation and technology:

from the development of agriculture in the Neolithic era, when we stopped hunting and gathering and started to plant and grow, which led to the invention of the village,

to the impact of the railways and steam ships, which enabled vast populations to migrate across continents,

to the rise of the internet which creates borderless, virtual communities of billions, which shapes our ideas of democracy, politics and nationality.

The great lesson is that technological waves pick us up like pebbles on the shore, and place us down again in new patterns and shapes, without it being planned.

I know everyone in this room understands that. Over three quarters of you said UK manufacturers should be more proactive in adopting major new advances in technology to boost productivity, according to the report published by the EEF today.

But the technological revolution of our own times will bring as many challenges as benefits.

In their book The Second Machine Age, the authors suggest three patterns:

That technology is going to get better, faster, more brilliant. Computer processing power is changing everything.

The results will be beneficial for the vast mass of the global population, bringing knowledge, connections and consumer choice to billions. You can see this today across Africa and Asia.

But thirdly, it will bring what the authors call ‘thorny challenges’ for millions in jobs that won’t need to exist in a decade.

The contours of a new technological order are shifting before our eyes.

Deloitte has claimed that automation, though a net benefit to our economy, has removed 800,000 jobs since 2001.

And another report, again by Deloitte, said that 35% of today’s UK jobs have a high chance of being automated. That’s around 11million jobs.

So here’s my first challenge to you today.

Our society is starting to resemble an hour-glass, with room at the top for those with existing wealth and access to capital, and a wide, flat base of lower paid jobs that cannot be automated.

There is hollowing out of the middle — the jobs in retail, or high street banking for example.

A society of affluent leaders, and struggling workers, but little room in the middle and few chances for movement.

Automation will exacerbate that trend.

Because automated systems are not just driving cars. They are diagnosing diseases, writing annual reports, researching criminal cases in court, designing software, shifting and storing goods in warehouses, pouring our coffee.

When a robot can read a set of accounts, or a thousand emails, or a million phone records to discover a pattern in a fraud case, then why employ a lawyer to burn the midnight oil?

Will we need drivers to deliver our Amazon parcels or our Tesco groceries, when a driverless van or a drone can do it now?

Millions of people work in transportation worldwide. There are around 3.5 million truckers in the US alone. That’s a lot of potential robot displacement in a single industrial sector.

And this next wave of technological change will not just affect the industrial sectors traditionally held by skilled workers using their hands.

Richard and Daniel Susskind, father and son, have written a fascinating and challenging book — ‘The Future of the Professions’ — which argues that it’s the traditional professions which will bear the immediate impact of the rise of the machines.

Doctors, lawyers, pharmacists, engineers, academics, managers.

The authors point to the:

Industrialisation and digitisation of the professions.

The routinisation and commodification of the professions.

And thirdly, the demystification of the professions.

What does that mean?

It means: why will we need a GP, when a robot can read precisely the complexities of our physiologies and prescribe, manufacture and distribute the exact blends of medications we need.

Already there’s a ‘smart contact lens’ linked to your phone which can monitor blood-sugar levels for diabetics, without the need to prick a finger for blood.

It means why pay an accountant to do your taxes or run your accounts, when a personalised software package can do it for you?

It means that the roles of engineers and architects will change. You know this from the way that computer-aided engineering systems create, and test prototypes within seconds.

The authors also suggest that in 50 years, even management consultancy won’t exist as a profession. So it’s not all bad news.

And so the question for us today, is how to master this change, how to avoid the fate of previous generations, how to make change our ally, not our foe.

The answer, surely, is that we can’t leave it to fate.

Richard and Daniel Susskind put it well:

‘it is not simply that we can shape our own future; more than this, we believe that we ought to, from a moral point of view.’

This is the bit of the speech where I want to make a political case to you.

There are too many people who think they are powerless to act. They wrap their powerlessness up in economic and political libertarianism, and pray to the gods of the free market, and hope for the best.

Some even go as far as to blame the European Union.

They eschew any role for government, reject any notion of an Industrial Strategy, or support for companies to innovate and grow.

Some of those who hold this view even serve as Ministers of the Crown.

I have a different view. A very different view. And I’d like to challenge current Government orthodoxy.

There is a fundamental distinction I would like to draw, between the interests of Business and the interests of Capital.

Enterprise and hard work grow businesses that become employers, and contribute to the fabric of society in many ways, social and cultural, as well as through taxation.

Capital is a necessary element in economic activity, but slavish devotion to the re-creation of money for money’s sake will lead to a very dislocated and dysfunctional society when automated systems are doing most of the work.

We need to concentrate on how we grow an economy in which the value created and time saved by automation is shared more equally, and not used to enrich an already very wealthy and powerful elite.

The opportunities for leisure and cultural enrichment are enormous with all the time saved through automation, but will be lost if the fundamental model of the economy is not changed.

Here is a lesson my party needs to learn. I am determined to make sure we do. Labour needs to be on the side of the owner-managed business, the small and medium sized enterprises that form the lifeblood of the real economy, and mean it.

Just as the great capitalists of the last industrial revolution realised they needed to build homes and provide healthcare to their workers, so too will the business owners of the future have to adapt to a world where productivity is dramatically improved through automation.

And they’ll need the empowering state by their side, in partnership, to deal with the challenges.

Here’s another challenge to you. I don’t think our current difficulties are simply down to the aftermath of the banking crisis of 2008 and the downside of globalisation, as some would like you to believe.

The government is answering the wrong challenge if it frames its major policy responses in relation to the banking crisis alone. I believe that the issues relating to income polarisation, falling wages and job insecurity are as much about automation as they are about casino banking.

When Tony Blair made those predictions we couldn’t possibly begin to imagine the impact of the Information Superhighway. Yet the golden age of the knowledge economy has not yielded all that it promised.

And in particular the latest wave of digital innovation should concern all of us in government and enterprise. The effect of those big tech platforms has been to see huge amounts of cash going on the balance sheets of big tech companies, with very little investment in social infrastructure, education, skills and health.

The situation is worsened by the apparent inability of government to tax profits of tech giants like Google.

If I was running a small business in Britain today it would infuriate me that I was paying more tax than a Google.

So what are the remedies?

One of them is considered old fashioned.

I’m never sure whether this Government’s Ministers’ reluctance to utter the phrase ‘industrial strategy’ is due to their aversion to ‘strategy’ or to ‘industry’.

I believe in partnership. In government and industry and trade unions working together for the common good.

I believe we can make it in Britain.

I agree with Professor Kumar Bhattacharyya of the Warwick Manufacturing Group who says:

‘We have a great science base, a great technological base and great workers — given the right leadership and funding, we can hack it.’

We need, in short, a New Industrial Strategy, fit for the second machine age, fit for the epoch of drones, bots and artificial intelligence.

This New Industrial Strategy must address head-on the hour-glass economy, the future of the professions, the skills gap, the need to spread prosperity not concentrate it in fewer hands, and the threats as well as the potential of change.

None of that will be easy, but all of it is necessary if the UK is to claim its share of the benefits automation will bring.

ends