The Fourth Industrial Revolution Will Be A Defining Period For Our Economy

 

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I join colleagues in thanking the hon. Member for Havant (Mr Mak) and my hon. Friend the Member for Hove (Peter Kyle) for all their work to secure the debate. I declare an interest: for three years, from 2009 and 2012, I worked at the World Economic Forum.

The subject of today’s debate was the subject of this year’s Davos meeting: the fourth industrial revolution, an industrial revolution that will be characterised by new forms of renewable energy and the exponential outward expansion of technological innovations, driven by the internet. It is a revolution that will take place as we face severe challenges to our economic future: seemingly ever-increasing inequality; the worst productivity crisis and trade deficit in our country’s history; greatly reduced job security; over-concentration on London as the predominant source of wealth and growth, at the expense of other regions; and over-reliance on the services industries, with manufacturing accounting for an unprecedentedly low share of GDP. Manufacturing is crucial to broadly shared wealth, but we have seen manufacturing as a share of GDP drop from over 30% 40 years ago to under 10% now. That lies at the heart of many of the difficulties—the unbalanced nature of the British economy.​

In the aftermath of the EU referendum, each of those challenges is exacerbated by the uncertainty that our economy faces as we negotiate Brexit, given that we do not know what our trading relationship with our largest market will be, and likely will not know for some time. In that difficult context, the fourth industrial revolution, which will completely transform the way we live, will be a defining period for our economy. Will the technology at its heart, left unfettered, entrench the challenges we face, threatening jobs, driving inequality and reducing exportable products as the economy is further limited to services, and further place all the risks and insecurity of the economy on the worker; or will we use the fourth industrial revolution to transform and brighten our economic future for all our people? Can its fusion of digital technology, intelligence and connectivity shape a new economy, with new models of manufacturing, labour relations and skills development that create jobs, raise living standards and allow us to trade with the world in new ways?

Can creating this new economy help us realise our values in society and in our everyday lives?

The answer to those questions is what we make it. We must shape and lead the fourth industrial revolution so that it delivers the society and economy we want for people all across our country. That requires a Government with a vision of what a fourth industrial revolution must look like in order to deliver the outcomes we need and a Government who have an industrial strategy that helps us get there. It requires a Government who take action and take control of our future.

This will require a strategy and plan that rebuilds a new manufacturing sector based on the internet of things, and that creates world-leading products but also delivers a more sustainable form of labour relations. It will require us to take long-term decisions that back British ingenuity and ideas. It will require us matching or exceeding OECD levels of investment in research and development, which is the source of future growth and industry.

As part of this, we must continue Horizon 2020 funding, which does so much to catalyse university research and innovation and transform it into market products. The Government have currently promised to match Horizon funding until 2020, yet even in a fastest possible Brexit scenario that is only one year of matched funding. We must commit for much longer to give universities and innovators the confidence they need, especially in the face of Brexit-fuelled uncertainty, to develop the ideas and intellectual property that will inspire and drive our future in the fourth industrial revolution.

As well as providing this foundation for the catalysts of the fourth industrial revolution, Government must also protect its fruits: British IP, business, manufacturing and supply chains. We simply cannot afford to be hands-off and allow a world-class tech business such as ARM Holdings to be sold to the Japanese. We cannot run a successful, growing economy and secure the investment it needs if we allow our crown jewels to be sold off.

Just in the last year, I have seen the huge difference in impact between a hands-off approach to government and one that is active. The British steel industry, so ​important to my constituency, has been failed time again by our Government. The Government did not act to block the dumping of state-subsidised Chinese steel, when they could have done. The Government did not encourage investment or profitability by keeping a regressive business rates regime and uncompetitive energy prices. Yet when the Government and the state do step up to shape our future and provide a foundation for our success, British talent can deliver great results.

Kevin Hollinrake (Thirsk and Malton) (Con): The hon. Gentleman mentioned the sale of ARM Holdings to SoftBank. Yesterday we saw the announcement of Micro Focus, a UK business, buying a significant business of Hewlett Packard. Does he think that we should be able to buy businesses internationally, but not be able to sell them internationally?

Stephen Kinnock: In my view, we need to reform the Companies Act, placing a clear national interest clause and a method of monitoring and executing that clause, so that we move away from situations such as we saw with Pfizer attempting to take AstraZeneca. I am very thankful that the previous Leader of the Opposition did a great job in preventing that from happening, but it is very ad hoc and we need a national strategy to protect our national assets, particularly where they play such a key role in the research and development that drives the entire economy, and indeed the fourth industrial revolution.

In Aberavon, we have a remarkable company called SPECIFIC that works to turn buildings into power stations. It is developing steel-based coatings for buildings—roofs, walls, glass and so on—which can generate and store their own electricity, and it works. We already have an industrial site in Port Talbot that has been generating all its heat through solar power like this for three years. All of this is done thanks to a partnership between business, universities, industry and, yes, the state. The SPECIFIC project is a living, breathing example of the fourth industrial revolution in action, and it required the proactive support of Government. Without the support of Innovate UK, the EU and the Welsh Assembly Government, this project would not have got off the ground. We will be able to make every region of the UK a leader in the fourth industrial revolution only if the Government see building launch pads for our people and businesses as part of their role, in order to allow them to succeed.

I close by quoting my old boss at the World Economic Forum, Professor Klaus Schwab. He said:

“In its most pessimistic, dehumanized form, the Fourth Industrial Revolution may indeed have the potential to ‘robotize’ humanity and thus to deprive us of our heart and soul. But as a complement to the best parts of human nature—creativity, empathy, stewardship—it can also lift humanity into a new collective and moral consciousness based on a shared sense of destiny.”

That is the prize of the fourth industrial revolution, but only if we make it so.