10 January 2020

To tackle regional inequality, AI strategies need to go local

by Eleanor Shearer
Hull City skyline

Hull City skyline


On Thursday 12 December 2019, the UK saw an extraordinary reorienting of its political landscape. Across the North and the Midlands, constituencies that had been held by Labour – in some cases, since their creation – turned Tory. After such a big electoral shake-up, many are wondering whether the Conservatives will successfully consolidate the support of their new base after Brexit. The party’s ditching of austerity, as well as Boris Johnson’s announcement of plans for major investment in the North and the Midlands are signs that the government certainly want to keep the new Tory voters onside., In order to do this, we at Oxford Insights would argue that the Conservatives need to focus more on Artificial Intelligence (AI) to be successful in this endeavour.

AI is set to transform our economy and our politics. Automation will have a disruptive effect on the labour market, while at the same time new technologies present major economic opportunities due to their productivity-enhancing effects. AI tools can be used (and have been used) to make public services more efficient and more responsive to citizens’ needs. Back in July, we challenged a newly-elected Boris Johnson to make harnessing the opportunities of AI a priority. In this area, the UK would be starting from a place of strength: our Government AI Readiness Index ranked the UK first in the world in 2017, and second in 2019. The government has also shown a willingness, in recent years, to put AI on the agenda. In 2017, the government’s Industrial Strategy had the AI and data economy as one of the four ‘Grand Challenges’ for UK businesses to prioritise, and in 2018 it launched the Office for Artificial Intelligence. The Party’s 2019 manifesto also committed to a new £3billion National Skills fund to help train (and re-train) workers for a changing economy.

These are welcome steps, but issues remain. In particular, there are risks that, without a change of strategy, the economic and political benefits of AI, and the potential harms of automation and job losses, will not be equally distributed across different regions. The UK already has some of the worst regional inequality in the developed world, and the changes AI will bring could exacerbate this. Tech Nation’s 2019 report reveals that London and the South East alone attract two-thirds of all UK tech investment. Meanwhile, Future Advocacy’s study of automation reveals that the North and the Midlands will likely be the hardest hit by the disruptive effects of automation. With the Conservative centre of political gravity shifting towards the areas at risk of being left out of AI’s economic benefits, the new government must tackle the issue of AI-induced inequality head on. The solution lies in empowering local governments to create their own AI strategies, specific to their local needs.

At Oxford Insights, our work has taught us that local governments are going to be at the forefront of the AI revolution. They will be the first point of contact for many people feeling the ill-effects of labour market disruption. This makes it all the more important that they are prepared for how the future of work is changing. We produced one of the world’s first city-level AI and Future of Work Strategies, for the city of Stockton in the US. Our report estimated the sectors and locations in which Stockton was likely to be affected by automation, and highlighted some of the unique opportunities it had to benefit from the adoption of AI technologies.

However, there is more to mapping out an AI strategy than just planning for the ill-effects of automation. Local governments are often uniquely placed to take advantage of technological innovations to deliver public services. We recently partnered with the Development Bank of Latin America (CAF) to look at the emerging field of GovTech. For our forthcoming report on the GovTech ecosystem in Latin America, we spoke to a number of local experts in governments and in tech startups. Many agreed that local governments were often better placed to work with innovative startups that might struggle to scale their products to meet the needs of a national contract. The appetite is clearly present for councils to take advantage of new technologies, with the UK Local Government Association finding that 89% have transformed one of more of their services using digital or data solutions. We would like to see these trends continue, with local authorities using procurement practices to strategically boost innovation in their local economies.

Metropolitan or large borough councils should not be the only ones developing AI strategies. Smaller towns and rural areas will also feel the effects of automation, and unless they take the initiative too, they risk getting left behind. We must learn lessons from previous efforts to bridge regional divides and regenerate poorer parts of the country. For example, the Northern Powerhouse initiative has been criticised for being too focused on metropolitan areas such as Manchester, with smaller towns and rural areas getting ignored. The Greater Manchester Combined Authority, for example, produced a Digital Strategy for 2018-2020, and the Liverpool City Region Combined Authority produced a similar Digital and Creative Plan for 2018-2020. There is therefore a risk that, as the impact of AI on our economy grows, larger cities across the country will be better prepared to reap the rewards than smaller towns. Considering that it is in smaller towns like, Darlington, Redcar, and Stockton-on-Tees that the Conservatives made gains, with cities like Manchester remaining mostly Labour-held, these are the areas the central government must stand up for. Unless we want to compound the North-South axis of inequality with an urban-rural one, local authorities need to be proactive, not just reactive, in the face of technological change.

In order to achieve a future in which local authorities can develop their own AI strategies, the government must increase their funding. A Local Government Authority review found that local authorities will face a reduction to core funding this year of almost £16 billion over the preceding decade, and face a £7.8 billion funding gap by 2025. Without adequate funds, local authorities cannot conduct vital research into AI in their areas.

The government should also consider devolving more powers to authorities outside cities, giving councils the ability to more easily manage the transition to an AI age. With better funding and more autonomy, local authorities would be able to create the sort of forward-looking AI and Future of Work strategies that we facilitated in Stockton, CA. These strategies should be linked with those of the central government, as well as other nearby areas. In this way, the approach across the UK can be coordinated while also reflecting the distinctive challenges and opportunities in each area.

AI is going to have a transformative effect on the economy and on government at all levels. There is a risk that tech hubs in London, Manchester and other major cities will reap the rewards of this revolution, while other areas of the country are left behind. This will especially be true of smaller cities, towns and rural communities in the North and the Midlands. With these areas now the bedrock of the government’s majority, the Conservatives need to bear this risk in mind. Going forward, all areas of the UK should be given a say in their economic future, and a chance to set their own AI agenda. It is only by adopting a more inclusive, localised approach to AI-planning that we can prevent spiralling inequality. Let’s make the AI revolution work for everyone!


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