Industrial Strategy

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IndustrialStrategyArtificial Intelligence Sector Deal

Industrial Strategy Artificial Intelligence Sector DealForewordThroughout history, there have been moments when theprogress of technology has taken great steps forward, whena combination of the right tools, a capacity for innovation,and sparks of ingenuity lead to breakthroughs that transformhow we live our lives.How we produce and processinformation is critical to innovation– and our methods of recording andcommunicating information havethemselves undergone great leaps.From the development of writing, toGutenberg’s printing press – whichadvanced the spread of knowledgeto the masses and ushered in theenlightenment and scientific revolution– to the first programmable digitalcomputer Colossus, the cost ofreproducing and communicatinginformation, or data, has fallen againand again. At the same time, tools forprocessing and making sense of largequantities of data have developedexponentially – with artificial intelligence(AI) representing the latest leap. Inthe same way that Gutenberg’s pressushered in a new era of growth, datadriven technologies such as AI willunderpin our future prosperity.There is no doubt that machine learningand AI is already improving peoples’lives, from intelligent personal assistantsthat can prepare us for changes in theweather, to systems that protect ourmoney from criminals, or devices that2offer medical advice from the comfortof our own home. And this is only thestart; the potential of AI is undeniable.Our next challenge will be to harnessthis technology to transform howwe diagnose diseases, manufacturegoods and build our homes.Using advanced algorithmic techniquessuch as ‘deep learning’, AI has thepotential to solve complex problemsfast, and in so doing, free up time andraise productivity. But we also needto make sure AI benefits everyone inthe UK, which is why – in addition tothis Sector Deal – the government isestablishing a Centre for Data Ethicsand Innovation to advise on theethical use of data, including for AI.The huge global opportunity AI presentsis why the Industrial Strategy WhitePaper identified AI and data as one offour Grand Challenges – in which the UKcan lead the world for years to come.The UK is well placed to do this. Weare already home to some of thebiggest names in the business suchas Deepmind, Swiftkey and Babylon.3

Industrial Strategy Artificial Intelligence Sector DealAnd it’s not just the establishedplayers – Kwiziq, Cleo and Mindtraceare examples of UK AI startupsleading the way in areas as diverseas education, personal finance andautonomous vehicles. Major establishedcompanies in the tech sector, but alsoincreasingly beyond, are using AI totune up their operations and services.To realise all the social and economicbenefits, we will need a strongpartnership between business,academia and government. Thissector deal establishes the beginningof that partnership. It responds tothe recommendations of the AIReview, Growing the AI Industry in theUK, led by Professor Dame WendyHall and Jérôme Pesenti, whicharticulated how the government andindustry can work together on skills,infrastructure and implement a longterm strategy for AI in the UK.We need to be strategic and focused:recognising the increasing convergenceof technologies and focusing on theareas where we can compete globally.While robotics, a complementarytechnology to AI, was outside the scopeof the AI Review, recommendationson the robotics industry have beenmade in the Robotics Review RAS2020, and in Made Smarter, a reviewon digitising the manufacturingindustry. Moving forwards, identifyingand making the most of thesesynergies will be crucial for success.A revolution in AI technology is alreadyemerging. If we act now, we can leadit from the front. But if we ‘wait andsee’ other countries will seize theadvantage. Together, we can make theUK a global leader in this technologythat will change all our lives.Rt Hon Greg Clark MPSecretary of State for Business,Energy and Industrial StrategyRt Hon Matt HancockSecretary of State for Digital,Culture, Media and SportProfessor Dame Wendy HallRegius Professor of Computer Science,the University of SouthamptonJérôme PesentiVice President of AI, Facebook45

Industrial Strategy at a glanceIndustrial Strategy Artificial Intelligence Sector DealWe will create an economy that boosts productivity and earningpower throughout the UKIndustrial Strategy is built on 5 foundationsIdeasthe world’s most innovative economyPeoplegood jobs and greater earning power for all5Infrastructurefoundations ofproductivitya major upgrade to the UK’s infrastructureBusiness environmentthe best place to start and grow a businessPlacesprosperous communities across the UKWe will set Grand Challenges to put the United Kingdomat the forefront of the industries of the future:6AI & Data EconomyWe will put the UK at theforefront of the artificialintelligence and data revolutionClean GrowthWe will maximise the advantagesfor UK industry from theglobal shift to clean growthFuture of MobilityWe will become a worldleader in the way people,goods and services moveAgeing SocietyWe will harness the power ofinnovation to help meet theneeds of an ageing societyKey policies include:Ideas Raise total research anddevelopment (R&D) investment to2.4 per cent of GDP by 2027 Increase the rate of R&DExpenditure Credit to 12 per cent Invest 725m in new IndustrialStrategy Challenge Fund programmesto capture the value of innovationPeople Establish a technical educationsystem that rivals the best in theworld to stand alongside our worldclass higher education system Invest 406m in skills, includingmaths, digital and technical education,helping to address the shortage ofscience, technology, engineeringand maths (STEM) skills Create a new National RetrainingScheme that supports people to gainnew skills as the economy changes,beginning with a 64m investmentfor digital and construction training.Infrastructure Increase the National ProductivityInvestment Fund to 31bn, supportinginvestments in transport, housingand digital infrastructure Support electric vehicles through 400m charging infrastructureinvestment and an extra 100mto extend the plug-in car grant Boost our digital infrastructure withover 1bn of public investment,including 176m for 5G and 200mfor local areas to encourage rollout of full-fibre networksBusiness Environment Launch and roll out Sector Deals –partnerships between governmentand industry aiming to increase sectorproductivity. The first Sector Deals arein life sciences, construction, artificialintelligence and the automotive sector Drive over 20bn of investment ininnovative and high potential businesses,including through establishing a new 2.5bn Investment Fund, incubatedin the British Business Bank Launch a review of the actions thatcould be most effective in improvingthe productivity and growth of smalland medium-sized businesses, includinghow to address what has been called the‘long tail’ of lower productivity firmsPlaces Agree Local Industrial Strategiesthat build on local strengths anddeliver on economic opportunities Create a new Transforming Citiesfund that will provide 1.7bn forintra-city transport. This will fundprojects that drive productivity byimproving connections withincity regionsAn independent Industrial Strategy Council will assess our progressand make recommendations to government.

Industrial Strategy Artificial Intelligence Sector DealExecutive summaryCreating an economy that harnesses artificial intelligence (AI)and big data is one of the great opportunities of our age.This Sector Deal is the firstcommitment from government andindustry to realise this technology’spotential, outlining a package ofup to 0.95bn of support for thesector, which includes government,industry and academic contributionsup to 603m in newly allocatedfunding, and up to 342m from withinexisting budgets, alongside 250mfor Connected and AutonomousVehicles. This support complementsand leverages some of the 1.7bnthat has been announced under thecross-sectoral Industrial StrategyChallenge Fund so far, with fivechallenges having AI componentsthat AI businesses will be able to bidinto through future competitions.This Sector Deal sets out actionsto promote the adoption and useof AI in the UK, and delivers on therecommendations of the independentAI review, Growing the AI industryin the UK, led by Professor DameWendy Hall and Jérôme Pesenti1.Their review, published in October2017, engaged widely with businesses,academia, investors and otherstakeholders on ways to boost theUK’s emerging AI sector at homeand across the world. It sets outproposals to improve the institutionsthat support AI in the United Kingdom,to build a skilled workforce, and to8stimulate access to data – collectivelythe lifeblood of any AI business.This Sector Deal reinforces the fivefoundations of the Industrial Strategy:ideas, people, infrastructure, thebusiness environment and places. Italso draws on the government’s DigitalStrategy, which focuses on reinforcingour strengths in telecoms, data andenterprise. A key ambition of theindustrial strategy is for the UK to bethe world’s most innovative economy– this Sector Deal aims to attract andretain both domestic and global AItalent; deliver major upgrades to ourdigital and data infrastructure; ensurethat the UK is the best place to startand grow an AI business; and contributeto communities’ prosperity by spreadingthe benefits of AI across the country.PeopleThe Industrial Strategy has peopleat its core: it is focused on creatinggood jobs and greater earning powerfor all people in the UK. To do this, wemust equip citizens for jobs shaped bynext generation technology. Growingthe AI industry in the UK outlined thefast-growing demand for expertise todevelop and apply AI technologies,and proposed ways to increase thesupply of skills at different levels.Building on these recommendationsand the commitments in the IndustrialStrategy and Digital Strategy to growscience, technology, engineering andmaths (STEM) and digital skills training,this Sector Deal sets out how thegovernment, universities and industrywill work together to greatly improvethe supply of skills. It also sets outhow we will attract the best, and mostdiverse, global AI talent to the UK.IdeasThe government set out a vision inthe Industrial Strategy to make the UKthe world’s most innovative economy.To achieve this, we are committing towork with the private sector to boostresearch and development (R&D)spending to 2.4 per cent by 2027,and 3 per cent over the longer term.This begins with a 725m investmentInfrastructurethrough the Industrial StrategyEnsuring the UK has the right digitalChallenge Fund competition, designedinfrastructure – both physical and,to capture the value of innovation bycrucially, data infrastructure – is critical commercialising a great idea in the labto meeting our ambition of leading theto a successful business. For example,world in AI. That is why, as part of ourone early commitment is our 210mIndustrial Strategy, we are investingChallenge on research into the earlyover 1bn to create a country withdiagnosis of chronic illness – including aworld class digital capabilities: from 5Gsubstantial investment in AI diagnosticsmobile networks to full-fibre broadband. techniques2. The use of AI is central toEqually important is the availability ofthis work, which includes programmesdata, which is required on a vast scaleapplying AI to raise output in sectorsto train machine learning systems.of the economy that have struggledThe government and public bodieswith productivity, from reducing cropare already leading the way in makingdisease in the agriculture sector, topublic datasets open and available. But delivering services digitally in the publicthere remain significant challengessector. We are seeing industry respondto sharing private sector datasets.to our commitment to AI innovationThrough this Sector Deal, we will tackle with investments in R&D in the UK,both the practical and cultural barrierssuch as those from major playersto sharing both publicly and privatelylike Beyond Limits and Element AI.held data. As part of this we will exploredata sharing frameworks such as DataBusiness EnvironmentTrusts – mechanisms where partiesOur intention is to be the best place tohave defined rights and responsibilities start and grow a business in the world.with respect to shared data – in order to With a new business starting up everyprotect sensitive data, facilitate access75 seconds in the UK, and a massiveto data, and ensure accountability. This increase in the finance available towill allow and ensure fair and equitableknowledge-intensive and innovativedata sharing between organisationsfirms – such as those developing AIin the private sector, and between– through the British Business Bank,the private and public sectors.we are in a strong starting position.9

Industrial Strategy Artificial Intelligence Sector DealAs at September 2017, over 350m3has been invested in 243 technologycompanies through the British BusinessBank’s venture capital programmes.AI is emerging in its own right as anascent industry with the potentialto raise the productivity of diversesectors and create entirely new jobs.To maximise this potential, this dealwill establish a new AI Council tobring together respected leaders inthe field from across academia andindustry; a new delivery body within thegovernment – the Office for ArtificialIntelligence – to support it; and a newCentre for Data Ethics and Innovation.The deal will also increase promotion ofAI businesses globally and take steps toattract AI entrepreneurs to the UK. Arecent report by Oxford Insights rankedthe UK top for government readiness toimplement AI, and these measures willallow us to capitalise on the UK’s worldclass R&D and tech entrepreneur base4.PlacesGrand ChallengeThe Industrial Strategy set out thegoal of helping communities prosperthroughout the UK. Growing the AIindustry in the UK outlined the thrivingAI ecosystem that already exists.London is the European capital of AI,while significant clusters exist in placessuch as Edinburgh, Belfast, Bristoland Cambridge. As important as thegrowth of these clusters of expertiseis, our ambition is for AI to be adoptedby businesses across the country.Growing the UK’s AI &data-driven economyThis deal will help businesses aroundthe UK to grow using AI, and issupported by the government’sbacking for the expansion of TechCity UK and Tech North into thenational network Tech Nation,alongside its Scale Up campaign. Atthe same time, we are expanding theacademic commitment to AI acrossthe UK as universities partner withThe Alan Turing Institute, the nationalinstitute for data science and AI.Case Study: QuantumBlack – from startup to scale-upQuantumBlack is a British techcompany using machine learningand artificial intelligence “in the wild”to help clients in the government,corporate, and third sectors increasetheir performance. The teams includedata engineers, data scientists, anddesigners. Now a British “scale-up”story, QuantumBlack has grown from10its early days in Formula One racing,where the three founders met, to350 technology experts in the UKhead office and also in Boston, Indiaand Australia. The thriving Londontech and talent scene, as well asthe UK’s leading universities, havebeen pivotal in this growth story.We are at the cusp of one of the most exciting times in our lives,and if we get our strategy for AI right, then we will be ableto reap the rewards for our economy for decades to come.The Industrial Strategy set out fourGrand Challenges where the UK mustact now to put itself at the forefrontof the industries that will shape ourfutures and have a transformativeimpact on society. Through theGrand Challenges we are committedto taking advantage of majorglobal trends, improving people’slives and working in partnershipwith business and academia.One of these is for the UK to maximisethe economic and societal benefitsof the current global technologicalrevolution. We recognise that AIwill transform the way we live andwork, from the way we diagnose andtreat cancer to the security of onlinetransactions. It can realise the potentialfor higher productivity and new jobs innearly every sector in every country.This Sector Deal will ensure weseize this global opportunity, and isfocused on the recommendationsput forward by Professor DameWendy Hall and Jérôme Pesenti topromote AI businesses in the UK.But we will go further, setting out avision of how the UK can respond to thebroader opportunities and challengesfor society posed by AI, including by: making the UK a global centrefor AI and data-driven innovationby investing in R&D, skills andregulatory innovation; supporting sectors to boosttheir productivity throughartificial intelligence and dataanalytics technologies; leading the world in the safe andethical use of data through anew Centre for Data Ethics andInnovation, and strengthening theUK’s cybersecurity capability; and helping people develop the skillsneeded for the jobs of the futurethrough investment in STEM skillsand computer science teachers, aswell as retraining and researching theimpact of automation across sectors.11

Industrial Strategy Artificial Intelligence Sector DealArtificialIntelligenceSector DealKey commitments12IdeasTo be the world’s most innovative economy.Government action to support AISupport AI innovation toraise productivity Invest up to 20m in the applicationof AI in the services sector throughthe Next Generation ServicesIndustrial Strategy Challenge. Thiswill include a network of InnovationResearch Centres and collaborativeR&D to develop new applications ofAI and data-driven technologies insectors such as law and insurance5. Invest 93m from the IndustrialStrategy Challenge Fund intothe robotics and AI in extremeenvironments programme, towardsthe research and development ofrobotics and AI technologies foruse in industries such as offshoreand nuclear energy, space and deepmining, with the aim of supportingsafer working practices for peoplein extreme environments thatcould prevent potential harmand increase productivity. The government will work withacademia, the broader researchcommunity, industry and end usersto integrate AI into future IndustrialStrategy Challenge Fund challenges.Stimulate uptake of AI, includingwithin the public sector Create a 20m GovTechFund, supported by a GovTechCatalyst, which will supporttech businesses to provide thegovernment with innovativesolutions for more efficientpublic services and stimulate theUK’s growing GovTech sector. Raise overall UK R&D intensityby raising total R&D spendingacross public and private sectorsto 2.4 per cent by 2027, and 3per cent over the longer term. Increase in the rate of the R&DExpenditure Credit from 11 per centto 12 per cent from January 2018.Research support for AI 300m has been allocated by theEngineering and Physical SciencesResearch Council (EPSRC) to fundresearch related to ‘data scienceand AI’ complementing the newcentres for doctoral training. 83m EPSRC funding for 159AI grants listed under theEPSRC Research Area ArtificialIntelligence Technologies. 42m EPSRC funding forthe Alan Turing Institute.13

Industrial Strategy Artificial Intelligence Sector DealIndustry action to support AIInvestments in the UK from AI powerhousesInvest in AI-related R&D to boost productivity Industry will provide match Up to 12m of anticipatedfunding for AI solutions acrossindustry funding to supportkey sectors: services, life sciences,the Next Generation Servicesagriculture and the public sector.Industrial Strategy Challenge. Recognise the UK’s strengths Commit to 69m of industryin AI by backing it as a countryfunding to support theto invest in, as seen throughdevelopment of robotics andrecent major investments.AI in extreme environments.BeyondLimitsBeyond Limits

Creating an economy that harnesses artificial intelligence (AI) and big data is one of the great opportunities of our age. This Sector Deal is the first commitment from government and industry to realise this technology’s potential, outlining a package of up to 0.95bn of support for the sector, which includes government, industry and academic contributions up to 603m in newly allocated .

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