Philip Hammond: AI will stoke productivity in government

Philip Hammond, chancellor of the exchequer, told a House of Lords select committee that artificial intelligence could stoke government productivity in areas of “low-level decision making”

Chancellor Philip Hammond has said the Treasury expects to see productivity improvements soon in government from the application of artificial intelligence (AI) to “low-level decision making”.

Hammond made the comments during a session of the House of Lords Economic Affairs Select Committee on 12 September. He was responding to a question from Conservative peer Dido Harding about the economic changes to come from “the rise of automation caused by artificial intelligence and machine learning”.

She asked: “Could you share what work the Treasury is doing to prepare us?” She also said the Brexit process might disrupt technology adoption, which “will not wait for our Brexit negotiations”.

Hammond responded that while “technology change has for most of my lifetime been imposed from outside” the UK, there is “a raft of technology being developed and commercialised in the UK” now.

He said young people will have to work longer and retrain at least once during their working lives because of technology change, and that the Department of Education is piloting different models to do so cost effectively.

“If the economy is to prosper after 29 March 2019, we have to focus on investment in economic growth,” he said. He referred to the UK’s relatively poor productivity performance, but said the country is well equipped for significant technological change. “We are digitally engaged and have a large services sector, so we are in a good place but must recognise the change coming.

“Government itself will be changed significantly by this technology. For example, the Bank of England is embracing new technologies like distributed ledger, and government is looking at how it can apply artificial intelligence to significant areas of government activity that involve relatively low-level decision making. These hold out, in the short term, the tantalising prospect of driving real productivity advancement in government processes.”

Read more about the UK government and AI

Later, in the same session, he said the British economy was, in his view, in fundamentally good shape at the beginning of 2016, before the Brexit vote. He added that the UK has some comparative advantage in the development of new technologies.

“We are significant players in a number of technologies that will be become more significant in the years to come – not just AI, but fintech, biotech and some materials technologies,” he said.

He also referred to “big data manipulation” and the internet of things, stating that foreign investors see Cambridge especially as a place is where the technologies underpinning IoT technology will be “developed and refined”.

Read more on Artificial intelligence, automation and robotics