The most upbeat speech of Keir Starmer’s sojourn at No 10, with his embrace of artificial intelligence (AI), was intended to lift the spirits during a torrid period on financial markets.
With the Treasury pledging ruthless cuts in public spending to help balance the national books, a dose of optimism is called for.
In much the same way as John F Kennedy once made the race to the moon his mission, so Labour is seeking to turbo-charge AI in public services.
Britain’s need to drive home its tech advantage is evident. It wasn’t much helped when one of the first decisions of Rachel Reeves as Chancellor was to axe a project for a super-computer at Edinburgh University.
The tension between what the Government can afford and budgetary restraint is ever present.
Starmer rightly points out that the UK has been, and is, a leader in AI research and adoption.
AI drive: Keir Starmer said artificial intelligence can be harnessed in three or four years and unleash £47bn in enhanced output
But there are questions as to how much command and control the UK has over future development when DeepMind is part of Google owner Alphabet and smart chip maker Arm Holdings is quoted in New York and dominated by Japanese investment fund SoftBank.
If the Government was serious about AI and an enduring public-private partnership, it needs to put cash behind the clock.
The best way of doing this would be to switch on the R&D rocket burners by lifting spending to levels seen in the US and Israel, and to use the tax system to underpin UK advantage.
That should mean full-expensing-plus for AI investment, allowing it to be charged against corporation tax, and more generous tax allowances for all R&D.
There are practical obstacles to Starmer’s initiative. AI could transform public services.
But the capacity of the state sector to adopt new technology, except on a limited basis, must be in doubt given struggles in the past with IT. This Government is committed to axe the very consultants who could begin the job.
Starmer pledges to leverage NHS data and make it available to private enterprise. That raises privacy issues which will have to be wrestled with.
The Prime Minister failed to explain how ‘keeping control’ and making the NHS data base available can be balanced.
Doubtless Starmer is right in saying AI can be harnessed in three or four years and unleash £47billion in enhanced output.
Data centres for AI are energy hungry with new hubs having the same power needs as a city the size of Chicago. That’s why Google, Amazon, Microsoft and Meta are all embracing nuclear power.
In Britain, gas storage is poor and energy security so weakened that the cold snap all but drained supplies.
Energy Secretary Ed Miliband needs to stop tilting at windmills and give his early approval to Rolls-Royce small modular reactors (SMRs).
Betrayal of trust
Too often when faced with activist investors seeking full control, there is tendency for UK long investors to roll and retail shareholders to do nothing.
Remarkably Boaz Weinstein and his Saba Capital Management have aroused the City from its slumber.
Peel Hunt reveals it is not just the ‘miserable seven’ investment trusts in Saba’s sights but a further 17, with varying discounts to asset value, are next on the list.
Weinstein has identified an issue, but his proposals are unacceptable. Sacking existing boards and displacing them with his own people with little knowledge of UK equities is wrong, as Investec observes.
Even more cunning is the effort to seize asset management control and set its own fees, almost certainly to the detriment of investors.
Weinstein identified a lacuna in the investment trust sector and may be doing big battalion and retail investors a favour if discounts shrink. Retail shareholders must resist Saba’s efforts and make sure the gains do not go to an unscrupulous outsider.
Heartbreak hotels
Reports that a beleaguered Government might be tempted by a tourist tax on hotel stays show how insensitive to enterprise Labour has become.
It is bad enough that the UK, unique among Europe’s travel hotspots, insists on charging visitors VAT without any clawback.
UK hospitality warns that a hotel levy would cost a flailing sector another £4billion a year.
Another blow to Britain’s reputation as a welcoming place.
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