Does the UK's 'government-in-waiting' really plan a robot tax?

Chris Middleton Profile picture for user cmiddleton September 28, 2017
The headlines said robot tax, but the Labour Party leader's speech actually backed research that the UK must invest more in training its workers for an automated future.

Jeremy Corbyn, the left-wing leader of the UK's main opposition party in Parliament, this week used his speech to the party’s 2017 conference to call for a new industrial and education strategy to face :

the challenges of the future [that] go beyond the need to turn our backs on an economic model that has failed to invest in and upgrade our economy.

Further education, life-long learning, and a rebranded education system are part of the program Corbyn is suggesting if his party takes office and replaces the current Conservative/DUP alliance. He said:

Labour will build an education and training system from the cradle to the grave that empowers people. Not one that shackles them with debt. That’s why we will establish a National Education Service, which will include at its core free tuition for all college courses, technical, and vocational training so that no one is held back by costs and everyone has the chance to learn.

Corbyn, whose party did better than opinion polls had suggested in the last UK General Election and who could become Prime Minister,  proposed that state-owned investment banks would be the best way to push funding to every corner of the UK. With several retail and investment banks threatening to leave the UK in the run-up to Brexit, the idea may be timelier than his critics realise.

At least one international study supports the need for the UK to invest more from the center. As previously reported, the Global Innovation Index (GII), published annually by WIPO et al, backs Corbyn’s view that the UK is investing too little in both its education system and its central infrastructure. The UK is a long way down the global rankings in several key areas: 102nd out of 127 countries in capital formation around critical infrastructure programmes, for example.

Rise of the robots

Corbyn then turned his attention to automation, robotics, and AI, which the current government has identified as being among the ‘eight great technologies’ that are critical to economic prosperity. He said:

The tide of automation and technological change means re-training and management of the workforce must be centre-stage in the coming years.

We need urgently to face the challenge of automation: robotics that could make so much of contemporary work redundant. That is a threat in the hands of the greedy, but it’s a huge opportunity if it’s managed in the interests of society as a whole.

We won’t reap the full rewards of these great technological advances if they’re monopolised to pile up profits for a few. But if they’re publicly managed – to share the benefits – they can be the gateway for a new settlement between work and leisure. A springboard for expanded creativity and culture.

The phrase ‘publicly managed’ appears to refer to a proposed reset of the UK’s banking and investment systems: ethical investment, in other words, and a new form of mutually beneficial capitalism.

Far from being an old red rag for conservative bulls to charge at, the policy echoes the findings of several progressive reports, such as the RSA’s recent Age of Automation, which says that the burden of tax must shift from labour to capital in order to counter any socially destructive impacts of mass automation. Other robotics and AI studies have made similar recommendations.

Indeed, this is the flip side of the coin tossed by Reform earlier this year. The right-wing think tank suggested that mass automation would allow the public sector alone to shed 250,000 workers and force doctors, teachers, and nurses to compete for gig economy work via reverse auction (bid to work for less money).

So it is hard to argue with Corbyn’s claim that automation may be used to maximise benefits for the few when that scenario is spelled out in conservative analysts’ own reports, which even suggest that it would be a good thing.

And yet the papers do argue with the Labour leader, as is traditional in the UK’s politicised media landscape. 'Return of the Luddites,' shouted the right-slanting Daily Telegraph, ignoring Corbyn’s clearly stated support for applying automation in a way that benefits all of society. The implication of the Telegraph’s headline is perhaps that modernity demands that only the few should benefit.

En masse, the UK’s conservative press pushed the message that Corbyn is calling for a ‘robot tax’ to penalise companies that automate their workforces; indeed, it was suggested that Labour’s pre-speech briefings spun this line to the media. That may be true, but what Corbyn actually said on tax was very different:

When I’ve met business groups, I’ve been frank that we will invest in the education and skills of the workforce and we will invest in better infrastructure from energy to digital, but we are going to ask big business to pay a bit more tax.

So there are three explanations for the media claim that Corbyn is calling for a robot tax.

  • One, he is, but neglected to say so in a detailed, 6,000-word speech.
  • Two, Labour’s own spin doctors don’t understand the distinction between a robot tax and raising corporation tax to pay for life-long learning.
  • Three, the Conservative press have conflated two unrelated concepts in an attempt to alarm business leaders.

Any of these may be true.

But whichever is the case, the difference between raising corporation tax, and taxing a robot as if it were an employee – an idea supported by Bill Gates, the European Union, and others – should be obvious.

One shifts the onus onto the robot’s manufacturer, and the other onto their business customers. Conflating the two to suggest that Corbyn sees robots as the enemy is both unsupported by the text of his speech, and unhelpful to this debate.

Business leaders respond

In the event, the UK’s business leaders responded better to Corbyn’s speech than most of the mainstream press did, which suggests that Corbyn is ringing bells in some City towers, at least. The Confederation of British Industry (CBI) trade association said:

The CBI shares much of Labour's vision for a fairer society underpinned by good business. But without an open dialogue there is a risk that some of their policies could knock us into reverse gear.

The focus on research & development, infrastructure and education is encouraging, but artificially hiking wages and changing corporation tax could be investment dampeners, not drivers.

Labour is certainly laying out a new way forward and we urge them to iron out inconsistent messages – especially the relationship between state and industry – and clarify policies that are sometimes hard to see delivered and paid for.

Labour can be reassured that they do have a significant joint agenda with businesses of all sizes, which stand ready to ensure that the opposition's ideas deliver sustainable prosperity across the UK, and avoid the threat of an era of regressive industrial strategy.

So what did the tech industry think of Corbyn’s speech?

Earlier this year, techUK, the lobbyists for the UK  IT industry, called for a new industrial strategy in its own manifesto for change, along with a programme of life-long learning. On the face of it, therefore, Corbyn is simply backing their ideas. But in its own response to the Labour leader’s speech, techUK was oddly ambivalent. Deputy CEO, Antony Walker said

Jeremy Corbyn is right that there are huge benefits to society that can come through automation. From AI that can help improve diagnosis rates in the NHS to machine learning that can reduce time wasted on form filling in businesses. But if the UK wants to lead the way in harnessing this power we must be careful not to undermine the investment in digital technologies that will drive productivity and economic growth.

In fact, Corbyn simply said he wants broader, more ethical investment. Walker added:

All political parties should be thinking about how we handle the challenges to come from accelerated automation. But it is too soon to be making assumptions about its impact on either jobs or the tax base. Care needs to be taken not to put a tax on productivity growth that is so fundamental to raising living standards.

The challenges posed by automation cannot be solved by a short-term fix. Automation can and will lead to the creation of new jobs and industries. What is important is that UK workers have the skills and education needed to take advantage of those opportunities. That is why Labour is right to highlight the importance of improving investment in education and lifelong learning. This approach must take priority over-relying on taxation to slow the pace of change.

In other words: nice sentiment, Jeremy, but don’t ask us to pay more tax, says UK IT.

My take

One thing is certain: the UK must improve its education and infrastructure spending in global terms: no statistics say otherwise. It also needs to triple its R&D investments to remain competitive, post Brexit.

Meanwhile, if business is to be the sole beneficiary of both mass automation and a skilled workforce – while the gig economy leaves everyone else scrabbling for micro-payments – then raising corporation tax to help better educate the populace and give them a lifetime of opportunities is a sensible and just idea.

The alternative is raising taxes for everyone, including those who will be hardest hit by the ongoing application of 19th Century industrial thinking to 21st Century technology. Far from presenting an outdated vision, Corbyn is saying that the old strategy is no longer fit for purpose.

As I’ve said before, the core challenge in robotics and automation is actually very simple: what developers believe they are creating (assistive technologies for a better society, aka man plus machine), and what most customers think they are buying (a means to slash costs, remove workers, and force up productivity, aka man vs machine), are two completely different things.

More, Whitehall and the Bank of England appear to see the benefits as coming from the latter camp, as UK Robotics Week 2017 revealed earlier this year.

And despite the tendency of the digital world to enable flat, peer-to-peer, collaborative processes, the UK’s policymakers are trying to shoehorn the technologies into a top-down industrial strategy that was forged in an era of cotton mills and workhouses. Far from following that trend, Jeremy Corbyn is trying to break it. That’s a forward-looking policy, not a Luddite view.

But in the long run, he may have nothing to worry about when it comes to British workers being swept aside by an unholy alliance of machines and men in stove pipe hats: the UK is investing a pitiful amount of money in kickstarting the sector domestically, despite having identified it as being critical to future prosperity.

With a total central investment of just £300 million between 2016 and 2020, the UK is nowhere in global terms; Japan, for example, is investing $161 billion to create a “super-smart society”, while China is automating faster than any other country. Britain’s uptake of the technologies lags a long way behind most Western economies, such as Germany, France, and Sweden.

And that’s not all: according to the Science and Technology Select Committee (quoted in the RSA’s recent  automation report), 80% of the UK’s investment in robotics comes directly from the EU. With no strategy in place to replace that funding, the UK’s chance to be a world leader may already have gone.

HRTechWorld 2017 Amsterdam digsupport 590px
A grey colored placeholder image