As we recover from Covid-19 over the coming months and years, and head towards the next general election (and the local, county and Mayoral elections en route), Brexit and Corbyn will no longer be the dominant doorstep issues. Instead, protecting existing jobs and creating new ones, boosting wages, safeguarding living standards and driving economic renewal will be key if we are to retain our Blue Wall seats and protect our majority across the country.
To achieve these goals, we must boost productivity, strengthen our manufacturing base, and help SMEs, especially in our regions where our commitment to Level Up is the foundation of our One Nation approach. The best policy to deliver all these objectives is to invest in the Fourth Industrial Revolution (4IR), the new, advanced technologies that are already changing our economy from clean energy and advanced manufacturing to driverless vehicles and precision medicines, all driven by machine learning, Big Data and artificial intelligence (AI).
We must use this period of recovery to press the fast-forward button on helping our regions turbo charge their economies by adopting new technologies quickly. In partnership with local councils, Local Enterprise Partnerships (LEPs), Economic Development Zones (EDZs) and universities, the Government must support businesses, especially SMEs, to upgrade their technology to become more productive. This could accelerate processes that would have otherwise taken decades into a much shorter period. This means mothballing ageing diesel-powered machines and replacing them with green, AI-driven alternatives. It means automating production lines and replacing oldfashioned methods with more efficient, computer-driven processes. And it means abolishing paper records and fax machines and implementing state-of-the art ordering, stock control and delivery systems based in the cloud.
Today’s Government has an opportunity – and responsibility – to harness the 4IR for the benefit of communities across the country, including throughout the Blue Wall, as AI, Big Data and automation transform our economy and society beyond recognition. One Nation Conservatives should not allow the positive impact of the 4IR to be absent from any region or for its benefits to be inaccessible to any social group. We should not allow some regions to race ahead as they quickly adopt new technology whilst other regions fall behind, creating a new digital divide.
The 4IR will radically change how we work, regardless of sector or industry. The policy interventions needed to make a success of the 4IR in our regions and help our country recover from Covid-19 will be diverse, ranging from the installation of full-fibre broadband to every home and business to the local retention of business rates. However, new regional 4IR technology adoption funds, will be key.
EDZs and LEPs need to help our manufacturers and other tech-enabled businesses to adapt to the 4IR, for example by upgrading machinery, investing in new software, digitization or making their products in a more environmentally sustainable way to reduce their carbon footprint.
Only by rapidly adopting 4IR technologies and embedding them into everyday business life across every community and region can we ensure that these areas will not fall behind. Every Mayor, 16 EDZ and LEP should devise a regional Industrial Strategy that sets out how that region will embrace the 4IR; and then have access to a Government-backed Fund to disburse to local SMEs who wish to accelerate their adoption of technology to become more productive or green. The finance for regional 4IR technology adoption funds could come from the Industrial Strategy Challenge Fund or the new UK Shared Prosperity Fund which will include money previously earmarked for EU contributions.
We cannot expect the heavy industries of the past to return, but instead our focus should be on ensuring the new technologies of the future are exploited in every area of the country to create new jobs and rising skills levels in every community. The Liverpool City Region understand this, and have already taken the initiative. Their LEP have launched LCR 4.0, an ambitious plan to support manufacturing and advanced engineering organisations in the region by funding practical support to transform businesses through digital innovation. By helping traditional manufacturers upgrade their technology, they enable firms to stay in business and keep their workers employed by becoming more productive. A One Nation Conservative Government should fund more initiatives such as this.
The Government-backed, industry-led Made Smarter Review also recognised the need for regionally-focused advanced technology adoption funds. When the Review published its report on how UK manufacturing can maximise benefits from increasing adoption of digital technology, it funded a pilot programme in the North West that focused on providing finance and mentoring support for businesses to upgrade their technology. The pilot has been a success, and manufacturing trade body MakeUK agree that wider adoption efforts across the country should be based on this North West pilot approach.
12 Introducing new regional 4IR technology adoption funds would also solve several structural problems. Firstly, they are the right sized vehicle for targeting regional SMEs – larger than local councils but not as distant as Westminster-based Government departments. Encouraging digital adoption by SMEs is a big challenge and a labour-intensive process, as SMEs often do not have the expertise, time or knowledge to undertake digital transformation, even if they have identified this as a strategic necessity. SMEs can often be confused by the overlapping, uncoordinated patchwork of different programmes which emerge and recede when it comes to support for industrial digitalisation. The new 4IR technology adoption funds would provide a clear focal point and structure for regional tech adoption activity.
Secondly, the adoption-first nature of the Funds means they are perfectly pitched for SMEs who are serious about improving productivity rather than just pure innovation. Existing programmes such as Innovate UK funds often have limited scope, focused on research and innovation – adoption programmes are not generally supported. Moreover, the competition-based bidding structure tends not to work with SMEs. The effort required to bid, the bidding process itself and the 12 Some regions have already started to launch their own local technology adoption programmes, initiated by universities and LEPs. The Spark Fund, run by the University of Hull, supports SMEs in North and East Yorkshire who want to innovate by providing advice, mentoring and grants for innovative projects including for digitalisation and decarbonisation. In the Tees Valley, the Digital City programme supports local SMEs to adopt digital technology and techniques to improve productivity and efficiency. Run by Teesside University in association with a group of local authorities and funded by the European Regional Development Fund (ERDF), it also provides advice and grants to SMEs who want to embed digital ways of working. 17 lack of feedback on unsuccessful applications are often barriers to SME engagement. Adoption funds should have a simple, and automated if possible, processes to allocate grants.
Thirdly, many SMEs around the country are currently using ERDF money to fund tech adoption and industrial digitalisation activities. This is often the most suitable financing mechanism as it is regionally allocated (making it less competitive than Innovate UK funds) and sufficiently flexible in scope. ERDF funding will come to an end in the near term as Britain leaves the EU transition period and a funding gap will emerge. The gap should be filled by new regional 4IR technology adoption funds partially backed by the UK’s new Shared Prosperity Fund.
The impact of the 4IR needs to be handled strategically, with local authorities, mayors, EDZs and LEPs taking a long-term view of local employment patterns as machines replace workers, new businesses spring up in new industries such as 3D printing, and patterns of work change as remote-working enabled by technology increases. Every local council should task one of its Cabinet members with specific responsibility for the 4IR, and create a taskforce of local councillors and officers to devise a pro-active strategy to help their local economy benefit from the 4IR. This task force should then work with other local and regional economic bodies to implement and adopt technology.
Alongside regional 4IR technology adoption funds, LEPs should also launch regionally-focused Emerging Technologies Investment Funds. These would help our entrepreneurs develop and commercialise new inventions. This Fund would use public funds already allocated in the Industrial Strategy Challenge Fund, or the new Shared Prosperity Fund, to attract further private-sector coinvestment, creating a growing pool of capital to support our technology businesses.
By supporting the growth of 4IR businesses, the Fund will help entrepreneurs create new jobs. A similar fund created by Boris Johnson as London Mayor has worked successfully with £14 million of City Hall seed funding used to attract an additional £64 million of private co-investment. This model should be replicated in regions across the country. The Fund would also help unlock the long-term capital sitting in pension funds and local authority funds to invest in and commercialise our scientific discoveries, creating a vibrant science-based economy post-Brexit.
Recommendations
1. Use this period of recovery to press the fast-forward button on helping our regions turbo charge their economies by adopting new technologies quickly, ensuring the new technologies of the future are exploited in every area of the country to create new jobs and rising skills levels in every community.
2. Fund initiatives to help traditional manufacturers upgrade their technology, they enable firms to stay in business and keep their workers employed by becoming more productive.
3. Every Mayor, EDZ and LEP should devise a regional Industrial Strategy that sets out how that region will embrace the 4IR; and then have access to a Government-backed Fund to disburse to local SMEs who wish to accelerate their adoption of technology to become more productive or green.
4. Every local council should task one of its Cabinet members with specific responsibility for the 4IR, and create a taskforce of local councillors and officers to devise a pro-active strategy to help their local economy benefit from the 4IR
5. Introducing new regional 4IR technology adoption funds and regionally focused Emerging Technologies Investment Funds.