The NHS and Ministry of Defence will be urged to buy British tech, as the government pins its hopes on the benefits of artificial intelligence to kickstart growth in the face of the Iran crisis, Treasury minister Spencer Livermore has said.
The chancellor, Rachel Reeves, will restate her economic strategy in a high profile lecture on Tuesday, just as rocketing 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 choices – to get closer to the EU, to strengthen regional policy in the Oxford-Cambridge corridor and by better connecting Northern cities; and to bet big on the benefits of AI.
On AI, Livermore said Reeves is keen to “set out the optimistic case”, despite growing fears about the potential impact of the technology for jobs, particularly among young people.
“There are massive opportunities here and I think that’s what we want to try to talk about,” he said. “Clearly we want to be one of the fastest adopters in the world.”
He added: “It’s really important that we talk about the huge opportunities for the economy and the amount of growth that we can get. And if we get more growth, then we’ll have more jobs.”
Labour has been criticised for its cosy relationships with US big tech firms such as the controversial Palantir, which has a contract with the NHS. Meanwhile, a recent Guardian analysis showed that AI deals announced with fanfare by the government over the past two years have not yet delivered concrete investment.
Livermore said ministers are keen to use government budgets to support homegrown tech firms, which are often excluded by bureaucracy or institutional caution. “The UK government is too slow to buy new technologies,” he said.
“We’re going to set up a rapid innovation procurement taskforce, outside the traditional procurement system. And we’re going to pilot that in defence and in health, so that we can get the state to buy new technologies quicker. And that is really exciting.”
He added: “If you think about AI and the speed with which technology is changing, we’re very rarely the first customer for those companies. That’s got to change.”
He also suggested Labour has become increasingly prepared to make the argument for a closer trading relationship with the EU – though without crossing its manifesto red lines, which included no free movement of people.
“The consequences of Brexit are showing to be worse even than people thought at the time. And I think this government does now have the confidence to be very honest about that, to confront that,” he said, calling for a “fact-based conversation” about the issue.
Challenged about the damage likely to be inflicted on the economy and public finances if the Middle East conflict proves prolonged, Livermore, who was an adviser to Gordon Brown in the New Labour years, insisted: “The fundamentals of the economy were strong, going into this uncertain period.”
Speaking before the latest official data showed zero GDP growth in January, he highlighted Reeves’s repair job on the public finances, and the cost of living measures in the budget.
“The spring forecast [on 3 March] was perfectly timed as a sort of backdrop to the strong fundamentals that we had going into the crisis – we had inflation lower than it otherwise would have been, because of the action we’d taken, gilt yields had been falling, we’d actually increased the amount of headroom in the spring forecast.
“So I know we’d take decisions which Rachel was fiercely criticised for in the previous two budgets, but were absolutely the right decisions.”
As a member of the “Iran Board” Reeves has set up inside the Treasury, he said ministers and officials are drawing up measures to ensure they are “equipped for whatever scenario comes our way”.
But Livermore insisted the crisis only reinforced the need for Reeves’s approach of “securonomics”, which he described as “an active and strategic state. And a state that has a point of view” – choosing which sectors and regions to back with public money, for example.
“Clearly, the impact in terms of the British economy will depend on the severity and the duration of this crisis, and no one knows what that is,” he conceded. “We are doing the right things in the Treasury to prepare.”