CBI Annual Conference 2016

22 November 2016

Ideas for building Britain’s prosperity from space science and robotics and connected cities were abuzz at this 2016’s CBI Annual Conference

“We need to be prepared to adapt and change,” Prime Minister Theresa May told delegates at the CBI Annual Conference 2016 on 21st November.

The Prime Minister pledged to make that possible with an extra £2bn a year in R&D funding by the end of this Parliament, while the CBI Annual Conference 2016 buzzed with innovative ideas and strategies for building Britain’s prosperity.

“We must use this opportunity to build a country where prosperity is shared,” said Theresa May, who highlighted the challenges business is facing in terms of both the inevitable uncertainty brought about by Brexit, and issues around public trust in business and politics. “We will do everything possible to make the UK outside the EU the best possible place to invest.

“But just as government needs to change its approach, business does, too,” she said. So that while she promised a “profoundly” pro-innovation tax system, she also set out plans for a Green Paper on executive pay and employee representation. She said much could be done to increase diversity on boards – although employee representation on boards would be voluntary.

Leader of the Opposition Jeremy Corbyn also challenged business to listen to workers more. In contrast to the Prime Minister’s pledge to keep corporation tax low, he called for higher corporation taxes.

There’s nothing anti-business about this agenda

“Labour want intervention for the common good. Government supporting business and giving you the tools you need to improve the wellbeing of our country. But we won’t stand back when there is injustice in the boardroom,” he said, calling as well for a greater focus on diversity throughout the workplace.

“We ask that you make your contribution to help the next generation of workers,” he told delegates. “In return we’ll clamp down on the people cheating the economy.

“The indicators of whether Britain is doing well shouldn’t just be growth, but whether we’re reducing inequality and poverty. We want everyone to share in prosperity,” he said.

Theresa May emphasised hers was a positive message: “There’s nothing anti-business about this agenda,” she reassured delegates. “Let us restore faith that capitalism can deliver a better future.”

“We believe in business,” she told the conference. “The entrepreneurs and the innovators who employ millions of people up and down this country - the basis for our prosperity. Together, we can meet this great national moment with a great national effort to seize the opportunities ahead and build a stronger, fairer Britain – a country that works for everyone.”

A new economy

“If you’re looking for a job, we’re hiring” Facebook vice-president EMEA Nicola Mendelsohn told delegates. The company is hiring 500 additional staff and plans to be 1,500 strong in London within the next year.

Growth in mobile usage and video have driven Facebook’s revenues, she said, with its mobile revenues rising from zero to 80 per cent over the past four years.

WPP founder and chief executive Sir Martin Sorrell emphasised the role social media and content generally will play in the future economy. WPP’s plans for technology investment are content-based: “Our biggest investment this year will be Google. The second biggest Sky. And the third would be Facebook. LinkedIn and Twitter have increased. Snapchat may become a third force after Google and Facebook.”

Sir Martin pointed to the power and responsibility content companies carry, citing fake news trends, where reports have been re-published across content platforms. “Google and Facebook have started to realise that they’re responsible for the content on their media,” he said.

Google UK president EMEA, business and operations, Matt Brittin also pointed to the role content platforms play in delivering prosperity. “We’re only successful in the UK because people are more successful when they use our products and services.”

Show off, wise up and speed up for a pace of change that will only increase

The UK has a great tradition of content and culture that people want to access digitally and, in the modern economy, everyone is a digital consumer, he said. “Those of us of a certain age grew up in a world where the only companies that could export were multinationals. Now anyone with a smartphone can become a ‘micronational’.”

Brittin offered a three-step plan for business: show off, wise up and speed up. Showing off is about being present online, he explained, not only from a marketing perspective but in order to understand the usefulness of digital. Wising up is about getting hold of the vast amounts of data – and therefore insight – that digital interactions generate. And speeding up is about being ready for a pace of change that will only increase, particularly in mobile.

Brittin said Google wants to inspire the next generation, claiming 80 per cent of businesses in Britain believe they could grow faster if they had better digital skills. To that end, Google is making five hours of free digital training available to everyone on the UK in 2017. “We need to connect with those people who feel marginalised by the way the world is moving,” he said.

The next generation

Attracting and retaining talent from around the world is the biggest challenge facing UK businesses, conference delegates voted in a poll - and hardware technologists speaking at the conference were as keen as Google to inspire and skill the next generation. “We don’t know where our grandchildren will work,” said Bristol Robotics Laboratory director, Professor Chris Melhuish. “We can’t just address the industries that are inexistence at the moment.”

“We’re opening a skills academy,” said BAE Systems managing director, future programmes and services Chris Allam, while Melhuish emphasised the role retraining staff to work with robotics had played in many of Bristol Robotics’ partners’ employee retention strategies.

“In the UK we have fewer start-ups in automation and robotics than almost any other country - and yet better education. We work with SMEs on education,” said BAE’s Allam. “We need more people doing that because the results are amazing.”

Last year I didn’t know we had a space agency. By December 2015, 30 million people had watched Tim Peake’s space launch

Education was a theme Jeremy Corbyn returned to: “We recognise and nurture talent wherever we can find it. Increasingly insecure work means people cannot plan for the future. Wages are low, hours are unpredictable and rent is too high” he said. “We’re committed to a comprehensive national education service.”

UK Space Agency (UKSA) chief executive Katherine Courtney stressed the importance of inspiration in encouraging young people to gain science and engineering skills. “Last year I didn’t know we had a space agency. By December 2015, 30 million people had watched Tim Peake’s space launch. I took my five year-old to meet an astronaut and he came home and said it was nice - but really nice to meet a real live robot.” ABB’s YuMi robot was on display after the day’s talks for conference delegates to share a similar experience.

Navigating the unknown

Space technology is supporting today’s business as well as that of the future. Britain’s planned new Spaceport is set to play an important role enabling larger numbers of satellite launches, which currently have an 18-month launch queue. Airbus Group UK president Paul Kahn explained the importance of satellites in weather observation, which influences 30 per cent of businesses, as well as 33,000 flights navigated every day, and data collection more widely.

“Joint EU and UK money has gone into the building of satellites that it would be sad to lose post-Brexit,” said UKSA’s Courtney. “But it will also be sad to lose the data that those satellites will supply. Countries inside the EU will have privileged access to that data, and that’s something we need to make sure we maintain.”

Collaboration and data access is not something the UK can afford to neglect, she explained. “It’s global. This week we’ve had images from a satellite launched in partnership with the Indian Space Agency. A global strategy is important for all of our industrial sectors, and a whole generation of science engineers and technologists.”

The YuMi robot is designed to work in collaboration with a human being

Sky News technology correspondent Tom Cheshire asked whether regulation can help the high-tech industries. “Beyond, safety, regulation isn’t really appropriate,” Bristol Robotics’ Melhuish said, while Deloitte UK senior partner and chief executive David Sproul said: “The customer will eventually impact what is successful and what fails. We need to go through that to get to the next phase. It’s easy to get concerned about the social impact, but that’s progress. We’re far better to embrace it and make sure we have the best ethics possible than try to make sure it doesn’t happen.”

ABB UK managing director Ian Funnell pointed out that robotics are not intended to replace humans, but to work effectively alongside them. “The YuMi robot is designed to work in collaboration with a human being, with robot doing a set of probably more repetitive tasks. It’s useful in production processes where it’s quicker than a human.”

“It’s easy to paint a dystopian future,” said John Lewis Partnership group development director Tom Athron. “But humans and machinery will always be better than humans or machinery.

“The safest way to manage data is just not to have any. That can’t be the answer. The challenge is to find a balance between not using the data at all and unlocking its value. Use it to put ideas in customers’ minds that reflect their needs,” he suggested.

Down to earth

Humans and machinery are transforming traditional industries such as banking. Barclays UK head of customer and client experience Matt Hammerstein said it’s a question of using the technology we already have such as databases to make the customer experience better.

But, said Atom Bank chief executive Mark Mullen, “The incumbents are never going to volunteer to open their data, so the regulator has an important role to play in creating competition and data security.”

“In the end customers get to decide. The internet allows greater speed, transparency and lower cost. That’s what it will come down to, to be successful.”

Data collected by the NHS and artificial intelligence project DeepMind will be used to help combat macular degeneration

Hays chief executive Alistair Cox described how data has developed recruitment: “The advent of the likes of LinkedIn was seen as the ultimate disintermediator. And yet we’ve combined these new tools and improved service, productivity and results. Partnering is only half of the story, though, and we’re now exploring how we can exploit different types of data, tapping into the Cloud for example.

Data collected by the NHS and Google’s artificial intelligence project DeepMind, now part of Alphabet Group, will be used to help combat macular degeneration, said Google’s Brittin. DeepMind is hosted in the King’s Cross Knowledge Quarter, one of the ways Google is investing in the UK’s future prosperity, Brittin said.

Investing in high-tech buildings and cities for business is crucial to future success, said Cisco International chief technology officer, UK and Ireland, Dr Alison Vincent. “Smart cities are the combination of the built environment with modern technology – digitising a city, connecting the city and providing open access to the data from that city.

She gave the example of Santander in Spain, where local governments pooled their budgets to try to improve experience of that city. They invested in sensors for parking, air and water quality to reduce commuting times and air pollution.

Tower Hamlets’ productivity is three times that of Blackpool

“The property industry has been behind, office environment has been pretty staid. Cities need to have the right built environment to encourage people to live and develop there. The buildings of today need to be innovative and smart. If we’re going to regenerate our cities, it’s important the whole space is really exciting and vibrant and absolutely connected,” said JLL UK chief executive Chris Ireland.

“Connectivity between cities will create labour pools for new cities of the future,” said CBI director-general Carolyn Fairbairn. “Productivity differences across the UK are too great – Tower Hamlets’ productivity is three times that of Blackpool.”

Mayor of Denver Michael B Hancock said: “When I became Mayor we have almost double digit unemployment. We hadn’t hired a police officer or fire fighter in 5 years. We’ve created 7000 new jobs in Denver.” That’s been the result of a commitment to the city and region, he said. “Transport is critical. Where you have it, you have vibrant economic stability.”

Jeremy Corbyn later said there was common ground between Labour and the CBI on the importance of infrastructure development.

Global challenge

Geography has been the second major factor in changes to WPP’s strategic plans, alongside a shift technological strategy, Sir Martin told conference delegates. “This may sound simplistic, but the first big change is geographical – 50 per cent of our revenues have changed from where they were 16 years ago. And in 16 years times I’m willing to bet it will have changed more than 50 per cent. Brexit is very important in this. The UK’s trading pattern is still very EU dominated,” he said.

CBI’s Fairbairn stressed the global importance of cities in economic growth “By 2025 we expect cities will account for 60 per cent of GDP. One of the things this means is that we have to think about who our competitors are – it’s not Manchester versus Leeds, its Manchester versus Marseilles.”

Those of us who want an open, tolerant and prosperous future must work together to achieve social and economic renewal

Jeremy Corbyn said: “CBI has called for measures to boost productivity for all regions. We couldn’t agree more.

“We now all face some of the biggest challenges of our time. There can be few bigger disruptions than Britain leaving the EU – a rejection of a political and economic system that hasn’t delivered for the majority. We’ve seen in Europe a corporate and political failure. Those of us who want an open, tolerant and prosperous future must work together to achieve social and economic renewal.”

Fairbairn summed up the optimistic mood of the conference: “We know and have heard powerful voices about how the economy is not working for everyone. I do believe we can narrow the gap.”

We know we’re living in extraordinarily uncertain times. But today has been a conversation about opportunity, it’s been optimistic, and it’s been about building on the extraordinary strengths of the UK – and it’s been profoundly about innovation.”

She said she was encouraged by the messages of partnership from the Prime Minister and Jeremy Corbyn. “It is going to be about a partnership between business and government in these next extraordinary few years.”