4Automation and the Industrial Strategy
UK as a World Leader
28.There are a range of technologies where automation can improve productivity, work and life, and where the UK has the potential to excel. The Government has chosen in its Industrial Strategy to embrace AI and data as one of its four Grand Challenges, a move that witnesses from whom we heard supported.94 However, many of those who mentioned our AI prospects also highlighted our potential to lead in healthcare robotics and other parts of the service robotics sector.95 Although UK businesses are already delivering some world leading products, such as bionic arms from Bristol-based Open Bionics, for us to fully deliver on this potential, there will need to be a shift in how businesses and researchers are supported.96
29.Parliamentarians in the Japanese Diet singled out the UK’s university research base as a major strength and an area from which Japan can learn.97 The UK already has a range of centres of academic research and collaboration on automation, including Bristol Robotics Laboratory, the Edinburgh Centre for Robotics, Sheffield Robotics and Imperial College London. We examine the potential for UK research and innovation, including these institutions further in Chapter 5. The Committee visited Bristol Robotics Laboratory (BRL) in October 2018, where we met with academics and students, alongside the Mayor of the West of England, Tim Bowles, and saw first-hand their work on emerging technology. Rather than the established forms of automation seen on factory floors, BRL demonstrated work on wearable robotics, health and social care support solutions, connected and autonomous vehicles and swarm robotics.98 While a fleet of connected and autonomous vehicles could ultimately see the replacement of drivers, the majority of technologies we saw in development were collaborative and would support workers rather than replace them. By comparison, at the University of Tokyo’s Department of Mechano-Informatics in September 2018, we saw students and researchers focused on developing humanoid-style robots to undertake existing, currently difficult to replicate, repetitive tasks usually done by workers, such as picking and moving products or sorting items. This was part of a three-pronged approach to developing automation, focusing on labour support for workers, lifestyle support for older people, and household and care support for families.99
30.Comparing the fields of work undertaken by BRL, and the work by the other UK robotics centres from which we heard, there is a clear overlap with the Grand Challenges set out by the previous Government in its Industrial Strategy White Paper.100 Beyond AI and data, which underpin many new forms of automation, the grand challenge on the ageing society will benefit from new forms of medical, health and social care robotics, the grand challenge on the future of mobility requires connected and autonomous vehicles, while the grand challenge on clean growth will need to be supported by new technologies to support the delivery of low-carbon energy. However, the Industrial Strategy, as published in 2017, makes almost no reference to the potential for robotics. Developing the UK as a leader in service robotics has the potential to make a significant contribution to the delivery of the Government’s Grand Challenges. The Government should ensure that a UK Robot Strategy forms part of the Government’s Industrial Strategy, and that robotics is considered an integral part of all of the Grand Challenges it is pursuing.
Government Action
31.The UK’s potential as a world leader in automation depends on businesses being able to both develop new technologies and to commercialise these successes. Success stories of UK tech businesses, such as Cambridge-based semiconductor firm Arm Holdings, are often bought out by large multinationals, in Arm’s case the Japanese conglomerate SoftBank Group.101 Although the acquisition of successful UK companies is a welcome sign of business strength in the technology sector, the lack of large, successful British-owned success stories should be of concern to the Government.
32.The Government’s Industrial Strategy does include measures to support the UK’s technology sector as a whole, including the AI and data Grand Challenge, AI Sector Deal, and the creation of a Future Sectors team intended to consider how best to support emerging industries.102 While this approach has been seen as “moving in the right direction.”103 robotics and automation have only a handful of mentions in the Industrial Strategy White Paper, mostly about the need to prepare workers for an increase in these disruptive technologies,104 or the potential that these technologies have. The strategy lacks any actions or strategies on how risks can be managed or how automation can be exploited to benefit the UK.105 The lack of clear Government action to support robotics in the UK, despite the Industrial Strategy acknowledging that “UK innovators push boundaries” and the showcasing of an Ocado research project, suggests that the Government is not yet taking seriously the opportunities can offer.106 The lack of focus on automation, beyond AI, in the Government’s Industrial Strategy is a missed opportunity. Its absence strengths the case for a UK Robot Strategy, which supports British innovation as well as encouraging automation adoption. We recommend that a UK Robot Strategy includes actions that support UK automation businesses to grow and remain in the UK.
Industrial Strategy Challenge Fund
33.The only Industrial Strategy-linked commitment to support British automation businesses to date has been the announcement of a £93 million investment from the Industrial Strategy Challenge Fund (ISCF) into the “robots for a safer world challenge”.107 The ISCF is part of the Government’s attempt to increase research and development in spending to the 2015 OECD average of 2.4 per cent of GDP, albeit only by 2027, by supporting existing businesses in large or fast-growing markets.108 The challenge is intended to support British businesses working on automation to replace dangerous and difficult jobs109 in extreme environments, such as nuclear energy, offshore energy, deep mining and space.110
34.Robotics being developed with support from the ISCF include solutions that can entirely change how tasks are undertaken. Robots capable of inspecting and repairing underground pipes have the potential to reduce not only the number of gas or water leaks, but also the need for roadworks and disruption as part of repairs.111 During our inquiry we heard from Innovative Technology and Science Ltd (InnoTecUK), which has secured ICSF funding for their work on automated inspections of off-shore wind turbines.112 If successful, the RobFMS project funded by the ISCF could reduce the overall cost of offshore wind by £7/MWh.113 InnoTecUK is part of a trend of businesses working in this environment, where human inspection is either dangerous or impossible, and where the Government has chosen to support the sector with the use of the ISCF.114 Parliamentarians from the Japanese Diet highlighted to us their work on replacing difficult, dangerous and demanding work with automation, as a means to improve the quality of jobs available to Japanese workers, and to deal with the lack of workers willing to undertake the jobs. While the UK’s dominance in this field if far from guaranteed, Diet Members identified the UK’s successes, via the ISCF, in supporting research and innovation in this area and were considering how the Japanese Government can replicate this.115
35.From a proposed £2.4 billion investment into research and development over 5 years, the ISCF’s £93 million contribution to robotics is positive but small. It is a welcome first step that many of the projects invested in as part of the robots for a safer world challenge have been funded as part of the UK’s increasing support for low-carbon energy. By supporting these projects, the Government has been able to shape the R&D undertaken by British research institutions and businesses and develop our potential as a world leader in one area of robotics. We welcome the Government’s support, via the Industrial Strategy Challenge Fund, for reducing the number of dirty, dangerous and demanding jobs which workers may be required face while supporting clean growth. We recommend the Government should identify new areas of automation for further waves of Industrial Strategy Challenge funding and support British automation businesses to deliver the Grand Challenges.
Commercialising Innovation
36.The UK does have successful examples of automation businesses. Open Bionics, spun-out from Bristol Robotics Laboratory, is a world leader for bionic arms for human use.116 The Small Robot Company is developing agricultural robots is innovating to make farming more productive.117 Online retailer Ocado has partnered with robot designer and manufacturer Tharsus to automate its warehouses and sell its technology to retailers around the world.118 However, while businesses and universities and getting more adept at commercialisation, we heard from businesses and researchers at Bristol Robotics Laboratory that there remains a significant challenge in commercialising new technologies to bring them to market.119
Box 3: Ocado and Tharsus
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Ocado was founded in 2000 as an online grocery delivery business, initially in partnership with Waitrose.120 Identifying as both a retail company and a technology company, it initially bought in machinery from other firms, but increasingly uses almost entirely in-house developed technology for its automated warehouses to pick and pack groceries., and for an increased use of AI in its processes.121 Mark Richardson, Ocado’s Chief Operating Officer, told us that in recent years the balance between retail and technology has shifted towards the latter. Working together with smart machine and robot designer and manufacturer Tharsus, the business has been able to retain the intellectual property for its bespoke products and design them with a wider market in mind.122 This has allowed the company to negotiate exclusive deals to provide robotics solutions for retailers in France, Canada and the United States.123 As both a retailer and a technology company, Ocado has also begun collaborating with other businesses. In June this year it announced new partnerships and acquisitions in vertical farming—indoor farming undertaken across multiple layers—to utilise Ocado technology and provide products for retail customers.124 |
37.The challenge for British innovators to commercialise new technologies is not a new one. The House of Commons Science and Technology Committee examined this issue in 2013 and called for the Government to do more to support innovation.125 The transformation of the Technology Strategy Board into innovate UK, and the establishment of the UK Research and Innovation umbrella body has gone some way to meeting their recommendations for a more joined-up approach to supporting commercialisation. Similarly, Government support for the Catapult Network has remained and is welcome, although there has been little Government attention to the Catapults since a 2017 review identified both strengths and weaknesses of the network.126
38.For new areas of automation where the UK is or can be leading the world, we should be attracting funding to ensure commercial success. However, in the past two years the UK has managed to secure only around £250 million of venture capital (VC) funding for automation despite a total global investment of around £10 billion per year.127 While researchers are encouraged about the UK’s gradual growth in this area, we are not reaping the full potential of the 10-times increase in VC funding that global automation has attracted in the past two to three years.128 The work of incubators, accelerators and catapults, covered in Chamber 5, are going some way to rectify this and can do more, but there is more that the Government can do to support the industry to ensure we do not fall further behind in this key growth area.
39.There have been signs of action from Government before now. In 2014, RAS 2020, a Robotics and Automated Systems Strategy focused on stimulating growth in the sector, was launched.129 The following year the Government responded but with few firm commitments to act,130 and with agreed recommendations, such as the creation of a RAS Leadership Group eventually dropped entirely.131 In the last Parliament the Science and Technology Committee considered this issue and recommended the Government revive proposals for the Leadership Group and provide more support the industry.132 The Government agreed to consider support for the industry, including the best model of leadership, as part of the then forthcoming Industrial Strategy.133 Two and a half years on from this response and more than 18 months on from the publication of the Industrial Strategy, the Government has yet to show any sign of reconsidering industry engagement and leadership.
40.UK automation businesses and researchers are innovating but many are failing to attract large scale investment and successfully commercialise their work. The Government has repeatedly promised to do more to help, indeed the Minister for Business and Industry told us that the Government is keen to support the automation “in every way we can.”134 Researchers and businesses have been working together to examine support for the sector, but what is needed now is the promised Government support.135 Having ignored calls to build and support leadership for the automation sector, the Government now has a chance to rethink its attitude. Using the Sector Deals approach, on which it has focused the Industrial Strategy, the Government has a chance to bring together the industry, drive investment in the sector and demonstrate actual support for a sector in which we can be world leading. We recommend that the Government establish a robotics leadership group, co-chaired by a Minister and an industry leader, to bring together Government, business and academia in support of a Robotics Sector Deal.
Robot Taxes and Incentives
41.At the start of this inquiry, we sought evidence on proposals put forward by Bill Gates and others on the imposition of a robot tax to mitigate the impact of automation on workers.136 In both the written and oral evidence we received, there was no support for the idea, with opposition to the UK adopting a tax unliterally given our low rate of adoption (“A robot tax is only useful if there are robots to tax in the first place.”137) alongside a wider rejection of the negative impact that a robot tax anywhere would have on driving up productivity and therefore increasing living standards and traditional tax income.138 In his evidence to us, the Minister indicated that the Government too found the idea of a robot tax in current automation environment as “perverse”.139 We need more robots and not fewer. A tax on them would further discourage take up. We do not believe that a tax on robots is in the interest of businesses or workers in the UK.
42.Although the cost of automation has decreased, and the availability of more usable and affordable products has made it easier for businesses to adopt the technology, it remains the case that cost can still be prohibitive to many businesses. Companies who are reluctant to automate on cost grounds are not, in the most part, objecting to the principle of making such an investment, but instead are dealing with a finite ability to invest, either from retained earnings or external finance sources.140 Many of those who opposed a robot tax, including the Minister, promoted the need instead for incentives for automation that would tackle this problem.141 The Government has promoted its popular R&D tax credits and capital allowances for business investment as the means by which automation can be incentivised.142 However, we heard criticism from manufacturers such as Siemens and ABB that the current incentives are not specifically designed to encourage automation or innovation.143
43.During the Committee’s visit to Japan, we visited the Yaskawa Electric Corporation on Kyūshū. As a manufacturer of components for automation and of industrial robots themselves, the company told us that it received no direct Government support, but that the Japanese Government has created an environment that encourages and incentivises automation that ultimately benefits their business while also supporting national goals, such as the New Robot Strategy.144 Key to this incentivisation was a tax credit system that directly rewarded investment in robotics, stimulating demand for products. In support of this cross-party Members of the Diet and Government officials highlighted a shift towards support for SMEs and a new tax system that incentivised innovation and investment.145
44.The decision of the Japanese Government to incentivise robot adoption in a nation already far advanced, compared to the UK, should be a warning sign to the UK Government that more needs to be done here. While existing tax credits and allowances highlighted by the Minister are welcome, there was concern that they were “blunt instrument[s]” that do not encourage specific types of investment that would directly affect business productivity.146 This compares poorly to international examples such as the Industrie du Futur in France that targets support.147 As Vinous Ali of techUK explained in evidence to us, these forms of targeted incentives, which go beyond rewarding any capital expenditure, help to signpost technological solutions to businesses and boards who are less “tech-savvy”.148 The Minister indicated to us that the Government was considering incentives and going beyond just support for investing in machinery and towards a focus on future technologies.149 Incentivising business investment in productivity-boosting technologies such as automation should benefit both individual businesses and the economy as a whole. The UK’s lagging rate of automation adoption is undermining efforts to boost productivity and risks leaving Britain behind in the automation revolution. The Government should adopt measures which include prioritising SME adoption of automation. We recommend that the Government brings forward proposals in the next budget for a new tax incentive designed to encourage investment in new technology, such as automation and robotics.
Regulation
45.In Japan, we heard how the Government had created a regulatory sandbox system to ensure that new automated technology could be tested and rolled out with limited intervention from the state.150 NTT Data, working on self-driving cars to be trialled next year, highlighted to us the willingness of the Government to address regulation by supporting limited trials for its work. In the UK, there have been signs that the Government and regulators are willing to work with the automation industry to ensure that laws are fit for purpose, for example for legislating on the insurance of autonomous vehicles as part of the Autonomous and Electric Vehicle Act 2018 and dialogue between robotics businesses and nuclear and offshore energy regulators on licencing robots intended to work in difficult environments.151 The challenge of balancing innovation with public safety is one that the Government seems to be managing well to date.152
46.Those who gave evidence to us were satisfied that at present there were no significant regulatory barriers to the effective development and deployment of automation.153 The UK can be an attractive market for businesses wanting to test new technologies. Business leaders at Keizai Doyukai highlighted the enormous potential of the National Health Service as a testbed for medical and social care robotics if managed correctly.154
47.The regulatory environment for automation is currently working well in the interests of both businesses and the public. There is likely to be significant pressure on regulators and other public bodies to reconsider how automation is managed in light of rapid technological developments. We recommend that the Government ensures that regulators in industries likely to be impacted by automation have the necessary expertise to ensure that innovation is fostered among automation businesses, while maintaining public safety.
97 Private discussion with Japanese Diet Parliamentary Group on the Promotion of Robot Policy, see Annex
98 Bristol Robotics Laboratory hosts Commons select committee, University of the West of England Press Release, 26 October 2018
99 Private discussion with academics and students at University of Tokyo Graduate School of Information Science and Technology, Department of Mechano-Informatics, see Annex
100 Department for Business, Energy and Industrial Strategy, Industrial Strategy: building a Britain fit for the future, 27 November 2017 p 10
102 Department for Business, Energy and Industrial Strategy, Industrial Strategy: building a Britain fit for the future, 27 November 2017, p 212
104 Department for Business, Energy and Industrial Strategy, Industrial Strategy: building a Britain fit for the future, 27 November 2017, p 41 and pp 115–7
105 Department for Business, Energy and Industrial Strategy, Industrial Strategy: building a Britain fit for the future, 27 November 2017 pp 212–13,
106 Department for Business, Energy and Industrial Strategy, Industrial Strategy: building a Britain fit for the future, 27 November 2017, pp 36–37
107 GOV.UK, Robots for a safer world: Industrial Strategy Challenge Fund (accessed 9 July 2019)
108 HM Treasury, Autumn Budget 2017 Red Book, November 2017, p 44; and, Meeting the 2.4% target, Russell Group press release, 27 November 2018 (accessed 9 July 2019)
109 A translation of the Japanese concept of the 3Ks—kitani (汚い), kiken (危険), kitsui (きつい).
110 GOV.UK, Robots for a safer world: Industrial Strategy Challenge Fund (accessed 9 July 2019)
111 Robots to fix underground pipes and help cut roadworks, Department for Business, Energy and Industrial Strategy Press Release, 31 December 2018
112 Q61 [Avdelidis] and Robots to fix underground pipes and help cut roadworks, Department for Business, Energy and Industrial Strategy Press Release, 31 December 2018
113 Project Kick-off: RobFMS – The project’s consortium meet in Cambridge to kick-start this innovative project, InnoTecUK Press Release, 18 June 2018
115 Private discussion with Japanese Diet Parliamentary Group on the Promotion of Robot Policy, see Annex
117 Small Robot Company, Who Are We? (accessed 7 July 2019)
119 Private discussion at Bristol Robotics Lab, 25 October 2018
120 Ocado Group, Our Story So Far (accessed 7 July 2019)
123 Ocado shares rise 44% on news of Kroger tech deal, BBC News, 17 May 2018
124 Ocado Brings its Innovation and Automation Expertise to Sustainable Vertical Farming, Ocado Group Press Release, 10 June 2019
125 Science and Technology Committee, Bridging the valley of death: improving the commercialisation of research, Eighth Report of Session 2012–13, HC 348
126 EY, Catapult Network Review, 17 November 2017, pp 12–13
129 Q265 [Lane]; and, UK Sitting on a Robot Goldmine, Herriot-Watt University Press Release, 2 July 2014
130 Department for Business, Innovation and Skills, Letter from Greg Clark to Professor David Lane and Professor Rob Buckingham in response to the Robotics and Autonomous Systems Strategy, March 2015
131 Science and Technology Committee, Robotics and Artificial Intelligence, Fifth Report of Session 2016–17, HC 145, para 93
132 Science and Technology Committee, Robotics and Artificial Intelligence, Fifth Report of Session 2016–17, HC 145, para 99
133 Science and Technology Committee, Robotics and artificial intelligence: Government Response to the Committee’s Fifth Report of Session 2016–17, Fifth Special Report of Session 2016–17, HC 896, p 2
136 Bill Gates calls for income tax on robots, Financial Times, 19 February 2017
138 See, for example, GAMBICA (AFW0022); Institution of Mechanical Engineers (AFW0032); British Safety Council (AFW0035); Q21 [Holliday] Q261 [Prescott, Jennings, Lane]
140 EEF and Santander, EEF Investment Monitor 2017/18, 2018, p 17
144 The Headquarters for Japan’s Economic Revitalization, Japan’s Robot Strategy, February 2015
145 Private discussions with Japanese Government Departments and Japanese Diet Parliamentary Group on the Promotion of Robot Policy, see Annex
147 Qq39–40 [Holliday]; and, European Commission, Digital Transformation Monitor - France: Industrie du Futur, January 2017
150 Private discussion with Japanese Ministry for Economy, Trade and Industry, see Annex
154 Private discussion with Keizai Doyukai, Japanese Institute of Directors, see Annex
Published: 18 September 2019