The NHS and Ministry of Defense will be urged to buy British technology as the government pins its hopes on the benefits of artificial intelligence to boost growth in the face of the Iran crisis, Treasury Secretary Spencer Livermore has said.
Chancellor Rachel Reeves will reaffirm her economic strategy at a high-profile conference on Tuesday, just as soaring oil prices have raised fears of higher inflation and weaker growth.
Livermore, who works closely with Reeves on policy, said the chancellor will highlight three strategic options: moving closer to the EU, strengthening regional policy in the Oxford-Cambridge corridor and better connecting northern cities; and bet heavily on the benefits of AI.
On AI, Livermore said Reeves is willing to “make the optimistic case,” despite growing fears about the technology’s potential impact on jobs, particularly among young people.
“There are enormous opportunities here and I think that’s what we want to try to talk about,” he said. “We clearly want to be one of the fastest adopters in the world.”
He added: “It’s really important that we talk about the enormous opportunities for the economy and the amount of growth we can achieve. And if we get more growth, then we will have more jobs.”
The Labor Party has been criticized for its cozy relationships with big US tech companies, such as the controversial Palantir, which has a contract with the NHS. Meanwhile, a recent analysis by The Guardian showed that AI deals announced with fanfare by the government over the past two years have yet to lead to concrete investments.
Livermore said ministers are willing to use government budgets to support local tech companies, which are often excluded by bureaucracy or institutional caution. “The UK government is too slow to buy new technology,” he said.
“We’re going to create a rapid innovation procurement task force, outside of the traditional procurement system. And we’re going to pilot it in defense and health, so we can get the state to buy new technologies faster. And that’s really exciting.”
He added: “If you think about AI and the speed at which the technology is changing, we are rarely the first customer of those companies. That has to change.”
He also suggested that Labor is increasingly prepared to advocate for a closer trading relationship with the EU, although without crossing the red lines of its manifesto, which did not include the free movement of people.
“The consequences of Brexit are even worse than people thought at the time. And I think this government now has the confidence to be very honest about it, to deal with it,” he said, calling for a “fact-based conversation” on the issue.
Questioned about the damage likely to be inflicted on the economy and public finances if the Middle East conflict dragged on, Livermore, who was an adviser to Gordon Brown in the New Labor years, insisted: “The fundamentals of the economy were solid going into this uncertain period.”
Speaking before the latest official data showed zero GDP growth in January, he highlighted Reeves’ repair work on public finances and cost of living measures in the budget.
“The spring forecast (on March 3) was perfectly timed as a sort of backdrop to the strong fundamentals we had going into the crisis: we had lower inflation than we would have otherwise, because of the measures we had taken, bond yields had been falling, we had actually increased the headroom in the spring forecast.
“So I know that we would make decisions that Rachel was fiercely criticized for in the previous two budgets, but that were absolutely the right decisions.”
As a member of the “Iran Board” Reeves has created within the Treasury, he said ministers and officials are drawing up measures to ensure they are “equipped for any scenario that comes our way.”
But Livermore insisted that the crisis only reinforced the need for Reeves’ “securonomics” approach, which he described as “an active and strategic state. And a state that has a point of view”: choosing which sectors and regions to support with public money, for example.
“Clearly the impact in terms of the British economy will depend on the severity and duration of this crisis, and no one knows what that is,” he admitted. “We are doing the right thing at the Treasury to prepare.”
