Expert comment: Salford experts respond to Chancellor’s proposals on regional growth, devolution and AI

Matthew Allen, Lecturer in Economics at the University of Salford, said:

“Overall, there are some positive elements in the proposals, particularly around regional investment and devolution. The £150m Northern scale-up fund is welcome, especially given the longstanding difficulties businesses outside London and the South East can face when trying to access finance to move from being successful start-ups into larger businesses. However, £150m spread across the whole of the North is relatively modest, so its success will really depend on how effectively it can leverage additional private investment.

"What is potentially more significant in the longer term are the proposals around fiscal devolution and changes to the Treasury’s Green Book. Giving mayoral authorities greater control over locally generated revenues could allow regions such as Greater Manchester to make investment decisions that better reflect their own economic priorities. Similarly, changing how government evaluates long-term investment could help address the historic problem whereby already more productive regions can find it easier to demonstrate the economic case for further investment.

"The wider economic context is important. We are talking about a growth strategy at a time when businesses are facing considerable pressures around costs and we are continuing to see significant job losses, including today’s announcement from Jaguar Land Rover and the substantial number of jobs lost across retail. The commitment to reduce regulatory burdens may therefore be welcomed by businesses, but it needs to be balanced against maintaining appropriate protections for workers and consumers.

"On whether the overall growth strategy is credible, I think the direction is credible, but the bigger question is whether the scale and implementation will be enough.

"Productivity, regional inequality and relatively weak levels of investment are structural problems that have developed over decades; they aren’t going to be solved by one fund or one set of announcements.

"Ultimately, people won’t judge a growth strategy simply by whether GDP increases. They’ll judge it by whether they can see that growth in their own lives, through secure employment, rising real wages, successful local businesses and improvements in living standards. That will be the real test of whether the strategy has worked.”

Dr Richard Whittle, Professor of AI and Public Policy at the University of Salford, said:

“The Chancellor’s framing of AI is very standard: a general-purpose technology, self-improving, doubling in capability every four months, and an opportunity Britain cannot afford to miss. In contrast to the previous government, though, he better positions the risk to the labour market, conceding that not even economists fully understand how adoption will affect workers, and he commits to better preparing us through the new AI Economics Institute.

"I am pleased to see reality hit, at least a little, here. AI won’t necessarily impact the labour force because of the forecast leaps, although if these actually happen the effects on workers will be significant. AI is having an impact because it is currently cheap, and our present cost-of-living and cost-of-doing-business crises mean that people are prepared to accept the accompanying reduction in AI quality if costs are reduced enough.

"This should have been the substance of the Chancellor’s speech, but it is hardly optimistic. AI will impact workers not because it’s good, but because it is cheap. AI doesn’t need to come close to being able to do a worker’s job as well as them in order to replace them.

"What is missing is AI resilience. The Chancellor speaks the language of AI readiness only. He wants to grasp the opportunity before we miss it. However, readiness is a poor metric of how a place will fare. What will decide the outcome is whether places, public services and households can absorb the shocks that adoption brings.

"The speech also misses AI pricing and dependency. The Chancellor notes that AI takes up resources but says nothing about the political economy of what those resources cost, nor about our dependence on a small number of frontier providers who set the price.

"Sovereign AI is part of the solution and it is good to see it brought up, but resilient organisations can negotiate, switch models, build in-house and effectively decide where they get value from AI. Our organisations are becoming increasingly dependent on volatile AI providers over whom we have little control. Can they say no when the price goes up, or does the immediate need for cost savings outweigh this future dependency? This is key to whether our organisations can get long-term value from AI, and it is the kind of analysis the Treasury should be modelling.

"This also goes to the arguments elsewhere in the speech around youth unemployment. If businesses wreck their talent pipeline by preferring AI over junior roles, they become dependent on that AI, even if prices go up.

"In terms of AI, the cost savings are only ever borrowed. If one has no control over prices, there is no reason why the long-term AI cost should not settle at the price of the labour it replaces.

"The Chancellor is right on caution, oversight and place. He needs to focus on resilience above readiness.”