UK launches “£1 billion” Sector Deal for AI | Analysis

UK launches “£1 billion” Sector Deal for AI | Analysis

Internet of Business says

The UK has confirmed details of the new Sector Deal for Artificial Intelligence (AI), trailed in February at the Westminster e-Forum event on government AI policy, attended by Internet of Business.

The announcement matches £300 million of “new” public sector investment (see below) with up to £700 million from a range of private companies and academic partnerships, to create what is being billed as a £1 billion national programme.

AI has the potential to add up to £630 billion to the value of the UK economy by 2035, according to the government’s Industrial Strategy – which appears not to factor in any negative effects from Brexit.

Leaves on the line?

The Sector Deal was expected to be formally announced at the beginning of March, but was delayed for unknown reasons. One may have been because the government was waiting for the House of Lords report on AI, and another may have been so that enough private-sector deals could be put in place to present the programme as a £1 billion venture.

Either way, that delay means that the UK’s statement comes 24 hours after the European Commission said it was launching a €20 billion strategy to put AI at the centre of Europe’s economy, with a focus on sustainable, ethical investment. That the British government waited two months to make its official announcement must now be seen as an own goal by its forward-looking AI policymakers.

The UK has itself stated that it seeks a leadership position in ethical AI, in the wake of the Lords’ and the Parliamentary Select Committee on AI’s own review of the technology’s opportunities and challenges.

“Artificial intelligence is at the centre of our plans to make the UK the best place in the world to start and grow a digital business,” said culture secretary Matt Hancock, announcing the programme this morning. “We have a great track record… but there is so much more we can do.”

“As with all innovation there is also the potential for misuse which puts the whole sector under scrutiny and undermines public confidence,” added business secretary business secretary Greg Clark, singing from a different hymn sheet.

Going head to head

The subtext of this morning’s news is that the UK is now going head to head with Europe for dominance of the sector, where previously it has been a lead partner in research, and a beneficiary of European funding, knowledge, and skills.

The UK government said today that it will invest an additional £300 million in AI research as it seeks to fend off global competition from China, Japan, and the US, and in Europe from France and Germany.

As set out in our separate report on Europe’s AI programme, the global race for AI dominance is currently led by China, which is pouring billions of dollars into national technology programmes and startup investments; by Japan, which announced an investment of £161 billion in creating a “super smart society” as far back as 2016; and by the US, whose own technology corporations, such as IBM, Amazon, Facebook, Microsoft, Apple, Oracle, and Alphabet are themselves pouring billions of dollars into the technology, and refocusing their businesses on cognitive services and the Internet of Things (IoT).

The UK’s Sector Deal includes existing plans to establish a £9 million Centre for Data Ethics and Innovation, a promising venture that is intended to examine the impact of AI on employment, skills, education, and opportunity. In March, the Nuffield Foundation announced the formation of the Ada Lovelace Institute, which will complement the Centre’s work.

Accenture Technology’s AI Lead, Emma Kendrew, welcomed the ethical focus, saying, “Out of everything announced in today’s AI Sector Deal, one of the most significant is the Centre for Data Ethics. AI-driven operations are now becoming more common practice. It is already being trialled across hiring processes, medical practices, and even the criminal justice system.

“The new Centre will have a vital role in making sure that AI is ‘raised’ and deployed responsibly. As a world-first, it will ensure that the UK stays firmly pinned on the map as a top location for global businesses to invest in their AI efforts, as well as for homegrown talent to thrive.”

A social faux pas

The new Deal – following similar initiatives for Robotics and other technologies – is an extension of the 2017 AI review conducted by Professor Dame Wendy Hall and Jérôme Pesenti on behalf of the government. That document, ‘Growing the Artificial Intelligence industry in the UK’, was commissioned last Spring and published in the Autumn.

At the Westminster e-Forum event in February, Hall said of the challenge of paying the UK’s AI researchers, “I don’t know how we’re going to deal with the salary issue, but that’s another problem altogether. Because if you go to Australia, or Canada, or the States, professors there are already being paid more than the Prime Minster. So how do we attract them to come here? That’s an issue we need to sort out.”

Hall also revealed that much of the review had been conducted via WhatsApp over a two-month period, since her colleague – who was then CEO of Benevolent AI – was in New York. Ironically, Pesenti has since joined Facebook, as head of AI policy.

Asked about Pesenti’s career move, Hall laughed and said, “It’s ironic in terms of what we were trying to do with the review, which was all about job creation and economic growth and trying to keep that growth within the country. Erm, so… I won’t say anymore.”

Stimulating growth

Whitehall now hopes to stimulate private companies with its new investment programme, which will be channelled through the Engineering and Physical Sciences Research Council (EPSRC), while also oversees UK-RAS, the umbrella organisation for robotics and autonomous systems research.

However, while the funding may be new from the UK government, it’s unclear whether it is extra money in real terms, or is simply replacing lost central funding from the European Investment Bank and other sources. See our separate report for more on this.

Either way, the investments will be overseen by the Department for Digital, Culture, Media, and (for some reason also) Sport (DCMS), and the Department for Business, Energy and Industrial Strategy (BEIS).

In February, the government announced the establishment of a new Office for AI across both departments, led by Gila Sacks, director of digital and tech policy at DCMS, and Dr Rannia Leontaridi, director of Business Growth at BEIS.

It’s good to know that in a computer science sector that is 90 percent staffed by men, many of the UK’s senior AI and robotics policymakers are women, including Lucy Martin, head of robotics at EPSRC.

The Office has not published a timeline for when the new funding will be released. However, in February, it announced that the government was setting aside an immediate budget of £20 million across Whitehall to encourage all government departments, and the wider public sector, to deploy AI.

Speaking in February, DCMS’ Sacks said, “We really believe that the right governance, the right regulation, can make the UK the place to innovate by giving confidence to citizens and certainty, and clarity to investors and innovators.”

Rolls Royce solutions

Under the new Sector Deal a number of private companies have pledged their support. For example, Rolls-Royce is partnering with the Alan Turing Institute to explore how AI and analytics can be applied at scale to supply chains and predictive maintenance.

Global Brain, the Japanese venture capital group, will open a new headquarters in the UK, with plans to invest £35 million in startups. Meanwhile, another VC firm, Chrysalix, said it will also establish a European HQ in the UK, from which it plans to invest up to £110 million in AI and robotics.

The University of Cambridge also announced today that will be unveiling a new £10 million supercomputer to boost AI research.


Make no mistake, the new Sector Deal for AI – and the other programmes like it – is good news for the UK, despite the frustrating delay in the official announcement.

That squandered leadership opportunity – in mindshare terms, at least – now casts the UK in a catch-up role with a deal that sounds far less impressive, on the face of it, than Europe’s €20 billion programme, which includes at least five times more central funding (albeit shared across 25 participating nations).

Nevertheless, the promised inward investment from a range of private companies, including in academic partnerships, is especially good news and a signal vote of confidence in the UK. Granted, with some of that money coming from overseas VC sources, some of the long-term profits would seem to flow back to Japan and elsewhere, but that’s the global economy.

However, the investment should also be seen in the light of recent OECD figures about the future shape of the UK economy. They reveal an outflow of some £300 billion in foreign investment from the UK in 2017, compared with 2016, presumably because of Brexit fears. The OECD survey also shows that improving productivity is a must for the UK – alongside greater investment in R&D.

As we suggested in our European AI report yesterday, the new government funding on the table, while certainly not insignificant, is still small beans in global terms from one of the world’s leading economies. Compared with what China, Japan, the US, or a united Europe can throw at the AI challenge, it’s a small drop in a very big ocean.

As a result, the UK has to rely on the private sector to fill the gap. So far, evidence suggests it is doing just that – in AI investment, at least – which is no mean feat in the context of Brexit uncertainty. For that, the government should be congratulated.

But is it new money? Or has Whitehall finally noticed that over 80 percent of the UK’s central funding for technologies such as robotics and AI has come directly from Europe? Again, for more on that, please turn to yesterday’s report.

The UK needs hard investment funding, not smoke and mirrors. Let’s hope the Sector Deal means it has genuinely secured it. But compared with Europe’s announcement this week, it’s hard to avoid the impression that this is far too little, and two months too late.