The most upbeat speech of Keir Starmer’s time at No 10, with his embrace of artificial intelligence (AI), was aimed at lifting spirits during a torrid period in financial markets.
With the Treasury promising ruthless cuts to public spending to help balance the national accounts, a dose of optimism is required.
In the same way that John F. Kennedy once made racing to the moon his mission, the Labor Party is trying to boost AI in public services.
Britain’s need to assert its technological advantage is clear. It didn’t help matters that one of Rachel Reeves’ first decisions as chancellor was to cancel a project for a supercomputer at the University of Edinburgh.
The tension between what the Government can afford and the budget constraint is always present.
Starmer rightly points out that the UK has been and is a leader in AI research and adoption.
AI boost: Keir Starmer said artificial intelligence can be harnessed in three to four years and unlock £47bn in improved production
But there are questions about how much command and control the UK has over future developments when DeepMind is part of Google owner Alphabet and smart chip maker Arm Holdings is listed in New York and dominated by Japanese investment fund SoftBank.
If the Government is serious about AI and a lasting public-private partnership, it needs to invest cash.
The best way to do this would be to light the R&D rockets by raising spending to levels seen in the US and Israel, and use the tax system to shore up the UK’s advantage.
That should mean additional total spending on AI investment, allowing it to be charged to corporate tax and more generous tax relief for all research and development.
There are practical obstacles to Starmer’s initiative. AI could transform public services.
But the state sector’s ability to adopt new technology, except in a limited way, must be in doubt given past struggles with IT. This Government has committed to sacking the very consultants who could start the work.
Starmer is committed to harnessing NHS data and making it available to private enterprise. This raises privacy issues that will have to be wrestled with.
The Prime Minister did not explain how “maintaining control” can be balanced against making the NHS database available.
Starmer is certainly right to say that AI can be harnessed in three or four years and generate £47bn in improved production.
AI data centers consume a lot of energy, and new centers have the same energy needs as a city the size of Chicago. That’s why Google, Amazon, Microsoft and Meta are embracing nuclear energy.
In Britain, gas storage is poor and energy security is so weakened that the cold snap has virtually depleted supplies.
Energy Secretary Ed Miliband must stop criticizing windmills and give early approval to Rolls-Royce’s small modular reactors (SMR).
Abuse of confidence
Too often, when faced with activist investors seeking total control, long-term UK investors tend to get ahead and retail shareholders do nothing.
Surprisingly, Boaz Weinstein and his Saba Capital Management have awakened the City from its slumber.
Peel Hunt reveals that it is not just the ‘miserable seven’ investment funds in Saba’s sights, but that another 17, with varying discounts on the value of the assets, are next on the list.
Weinstein has identified a problem, but his proposals are unacceptable. Firing existing boards and replacing them with your own people with little knowledge of UK stocks is wrong, as Investec notes.
Even more astute is the effort to take control of asset management and set their own fees, almost certainly to the detriment of investors.
Weinstein identified a gap in the investment trust sector and could be doing large retail investors and big battalions a favor if the discounts are reduced. Retail shareholders must resist Saba’s efforts and ensure that profits do not go into the hands of an unscrupulous outsider.
heartbreak hotels
Reports that a beleaguered Government could be tempted by a tourist tax on hotel stays show how callous the Labor Party has become to business.
It is bad enough that the UK, alone among Europe’s tourist destinations, insists on charging VAT from visitors without any recovery.
The UK hospitality industry warns that a hotel tax would cost the ailing sector another £4 billion a year.
Another blow to Britain’s reputation as a welcoming place.
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