Smart energy: UK looks north for “new George and Robert Stephensons”
"To the future, gentlemen!"

Smart energy: UK looks north for “new George and Robert Stephensons”

The UK’s business secretary has praised the critical role of the ‘Northern powerhouse’ in new technologies, such as AI and sustainable energy, and announced details of a new Sector Deal for construction. Chris Middleton listened in.

UK business secretary Greg Clark used his appearance at the Northern Powerhouse Business Summit in NewcastleGateshead yesterday to set out the government’s vision of the North of England taking a lead in low-carbon technologies, sustainable energy, AI, and smart buildings.

The three-day event was part of this Summer’s Great Exhibition of the North, which is running until 9 September, showcasing Northern business, arts, history, and culture.

Clark said that the UK needs to find the “George and Robert Stephensons of the 21st Century” – the father and son engineers who helped pioneer steam locomotives and railways in the 19th Century, which were critical components of the Industrial Revolution. Both men were born and worked in Northumberland, just west of Newcastle.

“There is scarcely an industry anywhere in the world which will not be transformed by the application of AI, the advent of big data, the rise of electric cars, the invention of new medical technologies, or indeed the shift to clean growth,” said Clark, bringing his audience back to the present day.

“To those who are ready and willing to act, this time of unprecedented change offers unprecedented opportunities.”

Grand challenges

The business secretary set out the UK Industrial Strategy’s four ‘grand challenges’ in these areas: the growth of AI and data; the UK’s ageing society; the future of mobility; and the need for clean growth. For more on these issues, turn to our in-depth report on robotics and automation in smart cities.

“Looking to the future, a combination of falling costs and global commitments are creating new opportunities for British businesses to lead the world in the development, manufacture, and application of low-carbon technologies,” he said.

Worldwide, green building activity has doubled every three years for over a decade, explained Clark. “Of the more than $11 trillion of investment expected in global power in the next three decades, the vast majority – 86 percent – is expected to be in low carbon. And by 2040, electric vehicles could make up over half of global car sales, compared to one percent today.”

The government will be working with business to highlight these opportunities during the first ever annual Green Great Britain Week, starting on 15 October, he said.

But the opportunities aren’t just global or national, but regional and local too, Clark continued. “A report by IPPR North set out a vision for a Northern energy economy which could create 100,000 jobs by 2050.

“Indeed – with its unique natural resources, history of excellence in engineering, and deserved reputation for great universities, the North is uniquely placed to turn this vision into reality.”

Building smarter

The next challenge is to make the buildings we live and work in more efficient – a process that is “vitally important”, said Clark.

“Buildings account for around 30 percent of total emissions and around 40 percent of final energy consumption in the UK,” he explained. “We want to lead the world in designing and building safe, smart, energy efficient, affordable homes and commercial buildings.

“So our initial mission for the Clean Growth Grand Challenge, announced by the prime minister, is to halve the energy use of new buildings by 2030.”

Leading from the front

However, the public sector needs to lead by example on energy efficiency, he said. Accordingly, Clark announced that the government is publishing guidance on its Emissions Reductions Pledge 2020: a voluntary target of a 30 percent reduction in greenhouse gases by 2020-21, against a 2009-10 baseline.

“Clean growth is a real commercial opportunity,” he continued, “one that we hope to exploit as part of a series of Sector Deals. These are long-term partnerships between the government and industry on sector-specific issues to boost productivity, employment, innovation and skills.”

The Sector Deal for AI, announced earlier this year, brought together over £700 million in private investment with a government commitment to top that figure up to £1 billion. For more on this, turn to our in-depth report.

“I’m delighted to announce that we have agreed a construction Sector Deal, the centrepiece of which is a joint government-industry investment of around £420 million,” said Clark. “This is the biggest government investment in the sector for at least a decade, and will drive development of digital, manufacturing, and renewable energy technologies.”

But to really transform the sector, the UK needs to make sure that people have the skills they need to benefit from these technologies, he acknowledged. “The sector currently faces the twin challenge of equipping workers with these new skills, while also recruiting enough people with enough traditional skills to replace those who are leaving.

“To address this, the Sector Deal will deliver 50 new approved apprenticeship standards, increase the number of apprenticeship starts to 25,000, and co-ordinate how we promote construction careers.”

Finally, the Sector Deal will promote fair contractual and payment practices, he added, taking into account lessons learned from Carillion’s insolvency.

Plus: New body for the Northern Powerhouse

Local enterprise partnerships in the North of England will form a new body to support the government’s ambitions for the ‘Northern Powerhouse, said Northern Powerhouse Minister Jake Berry today (6 July).

The chairs of the 11 local enterprise partnerships (LEPs) in the region will sit on a newly formed, government-funded board called the NP11.

The board will act as a modern-day ‘Council for the North’ to work with and advise the government on issues such as how to increase productivity, overcome regional disparities in economic growth, and tackle the north-south divide.

Internet of Business says

The government’s focus on the North of England is welcome, at a time when London is positioning itself as the centre of so much technology innovation.

It’s particularly welcome when several recent reports on robotics, automation, and AI have suggested that inequality and job losses will most seriously affect those areas of the UK that have suffered from the loss of traditional industries, including the North of England and the Midlands.

Meanwhile, 2018 has seen countless government spokespeople say that the UK wants to lead – or is leading – the world in a broad range of technologies, including AI and robotics.

The UK’s talent and skill in these fields are not in doubt, nor is the country’s ambition, and any country that produced Ada Lovelace, Alan Turing, and Sir Tim Berners-Lee has a central place in the history of computer science. However, to succeed in these fields in global terms demands more than just talent and inspiring words – important though they are at a time when people are demanding clarity and vision.

Among other things, it demands world-class investment.

Invoking the Stephensons was a bold move to inspire a local audience – and a logical one. But at the same time it was risky, given their association with a bygone age of coal power, steam, and the UK’s industrial might before the 20th Century shifted the balance of power over the Atlantic.

Today, that balance appears to be moving eastwards, as the US battles China’s rising dominance. And in a sense, this is the real challenge facing the UK, as it detaches itself from Europe and tries to forge a new identity for a 21st Century that is all about data, robotics, analytics, automated transactions, and the Internet of Things.

China’s rapid growth to become the world’s second largest economy has seen it strip America’s lead from an economy that was 15 times larger 20 years ago to one that is just 1.5 times larger today. As such, Beijing now has the investment might to plough billions of dollars into AI, robotics, autonomous vehicles, and new building technologies. Plus it has a population that is four times larger than that of the US.

At the same time – as we explored in our robotics in smart cities report – Asia and Africa face very different challenges this century to those of the West: young people living in young cities, versus the West’s problem of ageing people living in ageing cities.

Where post-Brexit UK fits into this picture is a fascinating question. But one thing is certain: as a nation it can’t hope to compete with China in hard investment terms, given that, earlier this year, a single Chinese city launched an AI investment fund that will be 16 times larger than the entire Sector Deal for AI for the UK.

Meanwhile, the UK is unable to hothouse a Google, Apple, Amazon, Oracle, Dell, Cisco,, Facebook, Microsoft, or IBM within its borders, because the biggest English-speaking market by far is America. And in the US, tech investors have a high-risk portfolio mindset – they’re prepared to accept 50 failures if a single massive success emerges. The UK has a more conservative, risk-averse approach, which favours financial services and private equity.

Logic and realpolitik suggest that the UK should consider looking east as much as west for new partnerships and economic investment, but the iron rule of trade kicks in at this point: ‘trade halves as distance doubles’. In other words, elementary physics prevents a massive uptick of trade outside of Europe in traditional terms. But it doesn’t stop a trade in ideas and digital assets.

Detached from Europe and shackled to an unpredictable US that is threatening European partnerships and agreements of every kind, the UK needs to make up its mind about which century it belongs to: its own 19th Century past, the 20th Century of American dominance, or the 21st Century of data and automation.