Loading summary
Transcript70 lines
- [00:01]
Nick Clegg
Where is the intellectual energy from the left and the centre left? If you keep miscasting the past, you don't have the intellectual wherewithal to ask what you need to do next. Which is why they're now governing in this haphazard way. They've replaced policy with sanctimony. And if you replace policy with sanctimony, you don't produce better policy. This is where we're stuck at the moment. And certainly, and I, you know, I led a centre left party for eight years and the whole of Silicon Valley, not just Mark Zuckerberg, but all of you saw that in the inauguration, have decided to, rather than shut politics, they've decided to embrace at least MAGA politics for a whole bunch of reasons. Single biggest thing that drives their behaviour is competition with each other. And remember, the Brexit wars were basically a battle. It was a triumph of nostalgia over a claim of the future.
- [00:48]
Robert Peston
The economy was growing again. We were looking more competitive as a nation. And then we voted to leave the European Union.
- [00:57]
Host/Producer
We're delighted to say that this year, the rest is money is powered by Octopus Energy. So we're joined by its founder and CEO. Hello, Greg Jackson.
- [01:04]
Nick Clegg
Hiya, Greg.
- [01:05]
Host/Producer
You travelled with Prime Minister Keir Starmer
- [01:08]
Nick Clegg
on his latest trip to China.
- [01:10]
Host/Producer
Why?
- [01:10]
Greg Jackson
There's a lot of people who quite rightly think we're naive if we don't understand the threats we face from China. But it's equally naive not to understand that Chinese technologies can now transform so many industries. And if we don't understand what they're doing and find ways to work with them, we're going to get left behind. Look, the reality is it used to be about China stealing our secrets, but now their own investment in technologies means that Solar panels are 400 times cheaper than they were 40 years ago. Batteries for electric cars are 10 times cheaper than they were 12 years ago. If we can find ways to work with this, we can bring costs down for British people and that's gotta be a good thing.
- [01:50]
Nick Clegg
Greg, thank you very much.
- [01:51]
Host/Producer
Now, on with today's episode.
- [01:54]
Advertiser/Announcer
Study and play come together on a Windows 11 PC and. And for a limited time, college students get the best of both worlds. Get the unreal college deal. Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox game. Pass ultimate with a custom color Xbox wireless controller. Learn more@windows.com studentoffer while supplies last ends June 30th terms at aka Ms. CollegePC
- [02:25]
Nick Clegg
ready to soundtrack your summer with Red Bull Summer All Day Play, you choose a playlist that fits your summer vibe the best. Are you a festival fanatic, a deep end dj, a road dog or a trail mixer? Just add a song to your chosen playlist and put your summer on track. Red Bull Summer All Day Play. Red Bull gives you wings. Visit Red Bull.com BrightSummerAhead to learn more. See you this summer.
- [03:02]
Robert Peston
Hello and welcome to the Rest Is Money. With me, Robert Peston. Today I'm delighted to be joined here at the south by Southwest Tech conference in trendy East London. I'm joined by the former Deputy Prime Minister Nick Clegg. Also the former, I don't know, he's the right hand or left hand person of Mark Zuckerberg at Meta and we've had the most gripping conversation about why he left Meta. I think he was slightly more revealing about the circumstances and what he really thinks about Silicon Valley than I might have anticipated. But then the meat of what we talked about was this AI industrial and social revolution living through and whether the UK and Europe can compete, whether it's too late and how important it is to create tech champions in the UK and Europe if we're going to get our living standards up. So an absolutely fascinating conversation. Here's my conversation with Nick Clegg, former Deputy Prime Minister, former leader of the LEB Dams. I mean people describe you, I don't know if it's quite right as a sort of number two Meta left as Trump was taking power. It's weird that Zuckerberg moves into Trumpian mode. Liberal Democrat Nick Clegg leaves the company, as you say. I can't believe the events were connected.
- [04:34]
Nick Clegg
No, of course they were. I mean, so when I arrived in Silicon Valley, so Miriam and myself and our three boys, we moved, physically moved there in the autumn of 2018. It was a completely different time. It was Silicon Valley was still quite sort of, quite sort of happy, clappy, bit hippie, dippy, you know, very much left leaning for sure, for, for better or for worse. But crucially social media was a social thing. It was like about human beings. Fast forward to now and the whole of Silicon Valley, not just Mark Zuckerberg but the whole, all of you saw that in the inauguration, have decided to rather than shun politics, which is what they did for a long time in my view, sensibly they've decided to embrace least MAGA politics for a whole bunch of reasons, some no doubt high minded and some more self interested and crucially the product or certainly the product in the company I work for has changed utterly from being a sort of human centric product to one which is now much, much more about content, often synthetic content being algorithmically recommended to you. So absolutely no hard feelings or anything, but it just was like, just not, it was just a very good time after seven years for me to move on. I mean, to put it mildly, it was not exactly the kind of thing that appealed to me.
- [05:48]
Robert Peston
Making the case for it was going to become difficult.
- [05:51]
Nick Clegg
Well, I didn't even try actually. I tried to make the alternative case, which was that I think in the long run for these big monster companies, in as much as you care about their longevity, I think they for their own business interests. I'm not talking about my old life as a politics because I wasn't employed as a politician, but I actually just think as a sort of business person. I don't think it's sensible business to flip flop every time the political weather changes in Washington. In the US that is now it's particularly difficult for social media companies because in the us, which is quite different to here in the uk, people are totally split. I mean, about one half of the country thinks that companies like Meta actively censor and suppress their view of the world and another half who yell at them and say you're not censoring enough to keep us safe is a much more polarized debate there. And I think if you're sort of holding the ring in that kind of context, dealing with something as sensitive about speech and where speech moderation ends and free expression begins and so on, it's, it's, it's more sensible to try and you know, refrain from jumping into one political camp or, or another. I think you might be interested in this and I'm not sure if you pick this up in your conversations. In the US Silicon Valley is always susceptible to ludicrous hyperbole, often by the way, hyperbole which they then go and act upon, which for better or for worse. But they're not politicians. And oddly enough I was often in these conversations where I was the only person who'd ever been elected to anything. And what was so interesting at the time of the Trump 2 victory was the absolute self confident assertion from the most senior tech pros across Silicon Valley, which was, this was not an ordinary election, this was a paradigm shift, this was a turning of the page in the Republic. Everything was different after than compared to before and they need to adjust accordingly. And then I would say in a rather sort of world weary way, are you really sure. My experience is that the pendulum in politics, it might get more fragmented, it might, but it tends to keep swinging. And I thought, well, this is just not something I can help with. If they think that like the pendulum of politics has been arrested when it
- [08:02]
Robert Peston
comes to essentially how people are going to feel and think that they can't think further in than the next day,
- [08:09]
Nick Clegg
it is odd, but, but it's. By the way, it's. Well, it is odd actually. It's not that odd when you think about it. A lot of them are engineers, they build systems, they're innovators, they're incredibly competitive business people competitive with each other. The thing that was often forgotten outside the US and California is the single biggest thing that drives their behavior is competition with each other.
- [08:34]
Robert Peston
It's.
- [08:34]
Nick Clegg
By the way, it's human nature everywhere. I bet you'll compare yourself to your peers in the media.
- [08:38]
Robert Peston
You're right. I've always been so intrigued by these entrepreneurial characters who, for whom the money also their wealth is the score. I mean some of the reasons they become so monstrously wealthy is because obviously they accumulate wealth well beyond what any of them could actually use.
- [08:58]
Advertiser/Announcer
Right?
- [08:58]
Robert Peston
But they want to have more than the competitor.
- [09:02]
Nick Clegg
Actually funny enough, my experience, I don't. I mean if I say anything sort of forgiving about this much vilified industry, I'm sure people will yell at me. But I, I actually not sure if it's just money in the bank, am I going to be remembered in a thousand years time as the person who helped inhabit Mars? I mean literally, I think they do not. Do not underestimate the kind of almost loft it's by the way why they all have this sort of undergraduate fascination with ancient Rome. They want to live in a world where great men, and it's always men, do great things while the rest of us Lilliputian individuals, you know, scurry around in our, in, in the sort of lower divisions and, and for which then you know, statues are erected which will last for hundreds of years. That sort of almost legacy perspective drives their behavior much and we, we can mock it or whatever, but that, that drives the behavior much, much more than have I got an extra few billion compared to my competitor.
- [09:56]
Robert Peston
The power that comes with that kind of wealth is distorting democracy. There's no question about it.
- [10:01]
Nick Clegg
Let's remember we are. I personally think one of our problems, problems in this country is we've forgotten ambition. We're so jaded, we're so cynical, we're so fearful of anything new. Not Everything is, is, is, is rubbish. But I'm, but I was just making this contrast and one of the things I found very striking when I moved just individually personally from Westminster, which is a place as, you know, just enveloped in, suffocated in, sort of smothered by the past. And remember, the Brexit wars were basically a battle. It was a triumph of nostalgia over a claim of the future. When I then moved to California, which all looks as if it was built last Tuesday, the thing I found so refreshing was that everyone I was talking to were, were instead of arguing about conflicting claims on the past, which is what Westminster and the Brexit debate was about, were all competing with each other about rival claims to the future. And again, it's easy to kind of mock and titter because it can be so pompous and so lofty and so on, but there was actually something very energizing about being a. That just constantly worries about what comes next, not arguing about where we've come from. And I do think, look, we're a more ancient democracy and we're a country which obviously has gone through a huge number of changes over the last hundred years and so on and so forth, but I do think that fresh kind of start again ambition and zeal does generate extraordinary innovation.
- [11:28]
Robert Peston
I agree with that. And one of the things that I spent a lot of time actually agonizing about is how we create the ecosystem so that we can again have world leading companies. Now, you and I, similarish kind of generation. You will remember that in the late 90s, early 2000s, the UK had a significant number of the world's biggest companies. And now we more or less have zero.
- [12:03]
Advertiser/Announcer
Right.
- [12:04]
Robert Peston
I mean, AstraZeneca is periodically in the top 50 depending on what's happening to its share price. BP, if oil price is high for a period, looks as though it's a big company, but we've lost world leadership when it comes to so many industries. I think you and I agree about this. The most important industrial, economic, social revolution of our lives. I passionately believe that artificial intelligence is changing everything. I mean, one of the things you've been thinking about, talking about, in fact today is can Europe compete? And indeed can the UK compete? Where, in your view, are we and what more do we need to do? If you, if you think competing matters, which I do, yeah. What do we need to do?
- [12:54]
Nick Clegg
I think, by the way, there's a lot of breathlessness about AI. It's super important, very important technology, but it's not perfect current paradigm, which is the sort of. What's called, without getting too technical, that's transformer based probabilistic technology where you tokenize huge amounts of data and then you probabilistically, through a mathematical formula project what the next token response is to a human prompt. If that is the paradigm we're in at the moment. If you, if you. Again, we can claim whether we think about the right analogy or not, but if you assert that that's the equivalent to a new industrial revolution. Britain basically doesn't have a single steam engine of its own. We don't have a single. I mean France has got Mistral. That's basically about it in Europe. And we're not going to. Here's the key point. The American hyperscalers are now spending every five to six weeks on their own AI data infrastructure. What we as a nation spend on defense in a year. Yeah. So we're not going to. So the question then becomes what do you do instead? I think we've got some fantastic strengths. Our universities, our language, our culture of innovation. We've now got. I'm now involved in a venture investment. We've got actually very lively venture scene. You've got a very lively tech startup scene. What we're very bad at, very bad at is scaling stuff up.
- [14:10]
Robert Peston
So you're right that, you know, one of the things that we routinely do in the UK is we come up with brilliant ideas and they turn into businesses and then at just the moment where they might achieve world scale, they sell out, you know, notoriously DeepMind to Alphabet, arm to SoftBank and then listed on the, you know, U.S. stock Exchange. We've got right now some amazing young businesses. I mean there's this business Ineffable which is doing what's known as reinforced learning and is actually trying to make massive knowledge breakthroughs, not using large language models. It seems to be a very intriguing business and it's been valued already at multi billions. It's been in existence for literally a few weeks. David Silver, it's a David Silver business. You know, We've got this, Mr. Sarbis's new business, Isomorphic, which is, you know, cutting edge development of new medical treatments. Again, multibillion valuation in only a few months. These are British based businesses. Only a fraction of their finance however is coming directly from UK institutions which, which worries me.
- [15:31]
Nick Clegg
Yes. I think there are three things we probably need to do. One, if we're not going to build these transform models in a frame from scratch, double down on all what I call the post LLM innovation. That's likely to happen. The second thing I do is, and actually Tony Blair touched on this in his essay last week or whenever it was focus on deployment and adoption of AI. This is a game of scale. The sheer, the physics of AI is very, very expensive. It's expensive in energy, water, capital, compute, capacity, infrastructure. You need scale. And what we, we are just too small on our own. It's as simple as that. If you want to compete with China and America over the next decade, we have to find a way without reopening the Brexit debates of 2016, to create a tech, a tech single market.
- [16:21]
Robert Peston
But you're right, but you're absolutely right about that. Of course. Right. But there are two, you know, you've got to break that down. Right. So of course the fundamental reason why America leads the world in large language models AI is because it has the most important single market in the world. And that's been, you know, what, you know, why did America lead in investment banks? Because it's got an enormous domestic market, you know, why does it lead in so many other industries? You know, so, you know, but the paradox about Europe is, you know, obviously there's been an enormous cost to the EU leaving the European Union economically a big cost, but Europe itself has been nowhere. You know, yes, you're right. Mistral in France may be a second tier player over the, over the medium term. Right. But you only have to go back to the Draghi report about why Europe is not competing to realize that we're, you know, that Europe itself has to change and reform if it's going to be a player in these new industries.
- [17:38]
Nick Clegg
Hugely. And of course it's just immense. I mean I find it teeth gnashingly frustrating.
- [17:43]
Robert Peston
Yeah.
- [17:43]
Nick Clegg
To see this pretty, I mean it's not perfect. A pretty good plausible blueprint from Mario Draghi and Enrico Letter and basically it's just sort of gathering dust. It will, by the way, movement will come.
- [17:56]
Robert Peston
At what point will European leaders, including our own, have a panic attack about this and actually change?
- [18:03]
Nick Clegg
Well, that I think is actually the several trillion dollar question. My increasing fear is it might only happen after a major fiscal crisis because at the moment I don't understand why the body politic, whether it's here or in Paris or Berlin, does not respond much, much more radically. And again, I do think that sort of seems to me to be the background frustration that Tony Blair was channeling. The, you know, this is existential to us. We know most people know what they need to do. We need to become the sum of our Parts again in this part of the world, when I say it's not just the eu, it's Norway, Ukraine, maybe even parts of the Middle East. You need to, you need to, you need to create a sort of Eurovision approach to Europe. Maybe without Australia. We are big enough, we have enough talent. My experience, I don't know what you find is that an increasing number of politicians across the spectrum, oddly enough, I think the left and the center left is the most sort of out of step with this need. They don't really sort of, but I think a lot of people now understand that to develop that scale, to develop those deep liquid capital markets to get, we've got in this country got pension funds, amazing pension funds that don't invest either in Britain or crucially they don't invest despite signing up to something called the Mansion House Accord. They don't actually do what they've said they would do and invest. I think it was quite a small amount, 5 of their capital into a more risky asset, private equity, VC and so on. So if we have our, if our own pension funds are not prepared to put their money into really high growth
- [19:32]
Robert Peston
sectors, it is a national scandal. And you're right, and you're right. The way that the government is approaching this in my view is the wrong approach. What you have to do is create a regulatory framework in which these pensions feel empowered to take more risk. At the moment the regulatory framework, you know, broadly discourages all that.
- [19:54]
Nick Clegg
I bumped into Jeremy Hunt the other day, I think who quite rightly very proud of having I think brought the pension fund industry together for the so called Mansion House Accord where they signed up to making this commitment to minimal commitments. Well, I've done nothing basically or next to nothing, maybe a few have and funny enough we both reflected, though we were both I suppose, small l liberals of different hues and persuasions, so not generally the first kind of people to call for market intervention. I said I've come around to the view that if it requires some more heavy handed intervention to get the pension funds to actually help great British businesses to scale up to your point, it's this lack of so called scale up capital. There's another area which you, I'm not sure if you find this but if you go to France, what they did, I think it was under Francois Hollande, interesting enough, they basically swept together all their different pots of public money. It's very sort of French digit centralized approach. But on this instance they're often wrong. They might be right and they put it under the aegis of something called the bpi, the bonk, something, something, something. And it's basically a very big, large scale French investment entity into, into different asset classes. We instead have invented lots of different pots of money. So you've got a, you've got a few hundred million for. Was it sovereign AI, you've got a, you've got a wealth fund, you've got a British business and everyone's ticking their boxes in different ways. Everybody of course protects their patch. If scale is the issue, what you shouldn't be doing with chopping it up into lots of.
- [21:20]
Robert Peston
So I'm really worried about, you know, the government's approach to investing in these younger businesses. I mean we had actually, I thought a very impressive young minister on the podcast, Kanishka Narayan, who is the sort of tech science minister to Kyle, I have no doubt is really committed. He wants to be, you know, the Secretary of State who creates the conditions in which we do get in the UK a trillion pound or trillion dollar business. We're a million miles running a trillion dollar business at the moment. But that, he really wants to create that. So he said they talk the talk, right. But then look at sovereign AI, right. So it has put money into two businesses, ineffable and isomorphic. Look, it may be that the taxpayer ends up making a fortune out of these investments. Right. Isomorphic and ineffable. And if it does. But that is not the whole thing that government should be doing. What they should be doing is making a judgment about business that may be fresh out of a university. Is it going to get the finance at the right price to take it to the next stage? I'd like to see government taking real risk and we just don't. The problem is the treasury is always risk averse.
- [22:43]
Nick Clegg
Yeah, it's very odd. We do you almost exactly. So you. Instead of aggregating the money at scale, we chop it up. We apply very risk averse criteria to it when we should actually be using it to leverage greater risk otherwise might not be supported. And I agree with you. Just duplicating what over subscribed rounds, of course. I mean, listen, by the way, I get the political instinct and you want to be, you want to be a SO and you want to be able to sit around the cap table and sit around. But can I just say, you may mention something earlier which I. Is something which. Which I'm still wrestling with. You mentioned DeepMind and ARM. So these are two amazing British companies.
- [23:19]
Robert Peston
Yeah.
- [23:19]
Nick Clegg
Dennis's company and the company out of. Out of Cambridge, of course. Basically helped invent the, the smartphone revolution. And you said, well, but, but on the other hand, maybe that's, you know, like ARM is still domiciled here, its IP is still here. Sure, it's market is elsewhere, where it receives capital is elsewhere, but that's because America's a lot bigger than us and is always going to be. Demis Hassabis, much to his credit, is still here. He sold to Google because he couldn't find anyone to give him the compute capacity. And the reason I say that is not to rehearse all the arguments around that. But we shouldn't only conceive of sovereignty as either you stay only in the UK or you're no longer sovereign. If you want world beating companies, you're just going to. We're going to have to accept that we're going to be sharing them with the world.
- [24:05]
Robert Peston
Nick, there's so much we need to talk about, but we're just going to go to a quick break.
- [24:13]
Gary Lineker
Hi, this is Gary Lineker from Goal Hangers. The rest is football. This episode is brought to you by Wise. It's only when you start moving money between currencies that you really think about the exchange rate, the fee, and what might be hidden away in the small print. Whether you're living abroad, paying someone overseas, or just trying to manage your money across borders, you want a fair exchange rate, an easy transfer, and no surprises along the way. Wise keeps things simple. Wise is a smart way to move the currencies you need around the globe. It works in more than 160 countries and with over 40 currencies, most transfers arrive instantly. Wise uses the mid market exchange rate like the one you see on Google, with no markups or hidden fees. So when money needs to move, you can see the rate, know the fee and get on with it. Join millions saving billions on hidden fees by downloading the Wise app today. Be smart, get wise T's and C's apply.
- [25:10]
Host/Producer
Did you know about 1 in 3 people with plaque psoriasis may also develop psoriatic arthritis, which causes joint pain, stiffness and swelling. Does this sound like you listen to what it sounds like to be a million miles away? Trimfaia Gusoquiman, taken by injection, is a prescription medicine for adults with moderate to severe plaque psoriasis who may benefit from taking injections or pills or phototherapy. And for adults with active psoriatic arthritis, serious allergic reactions and increased risk of infections and liver problems may occur. Before treatment, your doctor should check you for infections and tuberculosis. Tell your doctor if you have an infection, flu like symptoms or if you need a vaccine, imagine. Imagine being a million miles away. Explore what's possible. Ask your doctor about Trimfaya. Tap this ad to learn more about Trimfire, including important safety information. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a 75 sponsored job credit at indeed.com podcast that's indeed.com podcast terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored
- [26:40]
Robert Peston
Jobs Just had a conversation with Mariana Matsukatu who I'm sure you'll have come across. Influential economist. She thinks the other thing that we ought to be doing more is recognizing when we create within our universities, publicly funded or within our research institutions, many of them publicly funded, incredible IP with commercial, huge commercial potential and making sure that some of that value just automatically is owned by all of us. And it would have to be via the state. So one of the things that is quite, I don't know how much of, of you know, essentially, you know, the isomorphic or the, the ineffable ip, you know, flows from university research. Probably not that much given you know, the, the more recent track record of, of, of Silver and sarbis. But there is a world, it seems to me, in which, you know, the state ought to be hanging on to just a share of some of these businesses as they are created.
- [27:52]
Nick Clegg
Well, I think, I think to be fair though, that's maybe why they put some money into exactly what you, I mean that, that would be the argument in favor. Look, I, I'm totally open to that. I, I probably, maybe because I spent 20 years in politics, I'm a little less enamored than Professor Matsukata is about the capacity of the state sometimes one of my sons is just about to start a PhD in quantum physics at Imperial and if you look at Imperial, they're really getting so much better now compared to 15 years ago or something. And so I look, I've got a lot of sympathy with that but the how you do that and who pulls the levers and makes the decisions is quite an important one actually. Competence does matter. But look, as a general directional thing. Totally, totally agree.
- [28:33]
Robert Peston
There's another argument which I'm sort of interested in. I'm interested in it, I suppose from a slightly different perspective from how it was put forward by the Nobel Prize winning economist Krugman. I don't know if you saw his. Stirred up a bit of controversy by not in a sense refuting the Draghi case, that one of the reasons our productivity, certainly in the UK and for most of the eu, not quite all of the eu, but most of you, has simply not grown in the way that it should have done, we would have wanted it to do since the financial crisis. Right. So I mean, productivity flatlining since then, living standards flatlining since then. But he made this very interesting point that actually living standards between Europe and the US are not as different as, as people often allege. A part of the reason for that is of course the success of businesses like Meta and Alphabet. And what they have done in essentially supplying services at cheaper and cheaper prices to European consumers is they have, they've in effect both, you know, increased the living standards of European consumers without all the sort of, you know, the research and the creation of these world leading companies. So in a sense, you know, I mean, it's sort of part of the vassal state problem that, you know, you know, this is not the way he put it, but it's the way I'm, I'm now thinking about it. If you're a European citizen, you think, well, you know, I'm doing all right. Why do I have to worry about, you know, essentially, you know, changing the whole way we tax and regulate because, you know, it's perfectly all right buying American services.
- [30:29]
Nick Clegg
You and I are both old enough to remember having to go down to telephone boxes with bags of 5p, 20p, 10p pieces to ring our boyfriends, girlfriends or whatever. Now you can speak to someone in a clear video signal on WhatsApp anywhere in the world for free. It's an extraordinary, extraordinary change, which often I think is undervalued. One of the reasons I was so interested in working in Silicon Valley, because I think they brought fantastic innovation which is enabled and empowered people to speak for themselves, to express themselves, to communicate with each other in a way which is almost without precedent. That's not really the quest that, that's not really the essay question. Do those technologies bring great benefits? Of course they do. The question is a slightly different one. It's not, they're not mutually exclusive is, but is the level of our dependency on American technology at every single level of the stack, from physical infrastructure to handsets to cloud computing to the apps, is that compatible with the kind of interests of our nation and our common continent at a time when clearly the transatlantic relationship is changing out of all recognition. So much of the. This is more your world than mine. So much of the debate, in my view is infantilized by this sort of silly media headline thing of just wanting to vilify all technology rather than actually think about it and just scare the living daylights out. Everybody sort of paralyzes everybody. So the politicians that run around in ever diminishing circles beating their chest and say, I'm going to do this, I'm going to do that. And the other. And not actually doing, which I think is, I really hope someone's doing this. Whitehall. What? In Whitehall, what you need to do in the case of the UK government is you need to sit down and take, put a cold towel over your head and think very carefully. And if I was still in government, I would have said to some of the best people in the Cabinet Office, I want you to come back to me over a month or two with a full analysis of all the different levels of the tech stack, from applications at the top, right through to, you know, base foundational infrastructure at the bottom. Cross analyze that with the functions of the state and society that you care about, from our hospitals to our intelligence services, from our kids to whatever, and then decide over the next 10 years where we feel the dependency on other technology, whether it's Chinese or American or others, needs to change and what we can do to build towards that. You don't need to do that with everything. I don't think we need to build our own mobile phones. I think don't we need to build our own social media apps? I definitely think you need to look at cloud computing. I definitely think clearly there are aspects of defense and intelligence where we need to have sort of air gap sovereignty.
- [32:54]
Robert Peston
I am a great optimist about the UK and the reason for that is we have had plenty of opportunity over the last 20 years to destroy our knowledge base in our universities and they are thriving.
- [33:06]
Nick Clegg
Right. It's partly because the sort of bien passant debate, the sort of broadsheet reading center left debate which still dominates the sort of media and political elite is all. It's the sort of Burnham stuff. All the, you know, the last 40 years has all been dreadful, or in the case of labor, everything was dreadful since we left government in 2010. It's such an infantile way of talking about tricky things about. I mean, boy do I know it. In the second half of the coalition was the last time, 12, 13, 14, 15, this country sustainably, quarter after quarter grew faster than anywhere else in the developed world. In 2014, we grew fast in the U.S. would you believe it? Every quarter.
- [33:42]
Robert Peston
As you can probably tell, you're triggering PTSD in me because it is the case that in 2014 into 2015, the economy was growing again. We were looking more competitive as a nation, and then we voted to leave the European Union.
- [34:02]
Nick Clegg
My point is an important one, which is that if you keep miscasting the part, and I think the left is doing that at the moment and vilifying everything on beastly fiscal decisions, you don't have the intellectual wherewithal to ask what you need to do next, which is why they're now governing in this haphazard way, because they spend all that. They've replaced policy with sanctimony. And if you replace policy with sanctimony, you don't produce better policy. This is where we're stuck at the moment, certainly. And I led a central left party for eight years. I just think we're stuck on the center left at the moment. It's why all the intellectual energy, and I really lament this is at the moment coming from the. From the right or even the far right. Where is the intellectual energy from the left and the center left. But they're so stuck in constantly, in sort of Old Testament terms, describing what's happened in the last 16 years or 40 years, take your pick. Instead of actually liberating themselves from that and saying what worked, what didn't worked, not being sort of morally sanctimonious about it, and what do we do next?
- [35:02]
Robert Peston
So there's one aspect of this which we haven't talked about. It's very much in the news as we speak, which is this whole related issue of government procurement. One of the things that. Actually, one of the things that's quite interesting about the period that you were in government is actually the share of procurement by government that went to British companies actually rose quite significantly. And it was a sort of deliberate strategy. It's fallen quite significantly in recent years. Again, if you look at America, you know, you know, you know, the idea that they would buy non.
- [35:49]
Nick Clegg
From.
- [35:50]
Robert Peston
From non American businesses is, Is absurd. So we obviously, you know, we need to encourage more British businesses, particularly, you know, in the areas we're talking about, AI and tech and all the rest of it. There is this massive controversy at the moment about Palantir American Company. The Science and Technology Committee of MPs have said that the NHS should end its contract with Palantir early because it argues that essentially the NHS will be too locked into Palantir to The detriment of potential British competitors. What do you think of arguments like that?
- [36:26]
Nick Clegg
Well, I think that argument, oddly enough, is a more compelling argument than I just don't like Peter Thiel or Alex Carpenter. And by the way, they, they do say things which I violently disagree with. But you can't just say I don't like that company finger in the air. I don't like the CEO or he said some D thing on a podcast. I actually think the point you just made is the key one, which is if you, I mean, I think Palantir call their, their, their core software application foundry and it's this, it's this clearly very effective software, enterprise software architecture which allows, whether it's the NHS or a company to, to meld the, the balkanized old data that they've got and make it usable and so on. And they've got a 20 year head start because to be fair to Thiel and Carp and these people, they understood 20 years ago that software as a service was going to be a big thing and we were asleep at the wheel. But the point is, I do think that's a legitimate question because these people don't come neutrally. They come with their architecture and their system. Now then, much cleverer people than me can adjudicate whether it's better than everybody else's, but it's, but of course it's just self evidently true that once you become dependent on that architecture, that's the nature of software systems, it becomes sticky, as they call it in Silicon Valley. It becomes a very sticky experience. And that would worry me particularly because I find it defies believe or sort of at least defies credibility in my view that particularly with AI innovations, companies like Palantir cannot be very much more quickly disrupted and challenged by AI powered software as a service or enterprise software rivals. Let's say you decided you wanted to go with, with an anthropic product. Anthropic is doing extremely well at the moment because it's stolen a march against OpenAI in the enterprise software space. They understood enterprise was where the market was. I honestly don't know. This is beyond my, my technical knowledge. But, but let's say you want to swap from Palantir to an anthropic product, never mind one that's based in Bristol or Manchester. I think it's a legitimate question to ask whether Palantir is likely making it so sticky. And, and the odd thing about Palantir as a company is that they keep saying whenever there's any controversy in British politics, oh, you shouldn't put ideology before productivity. And yet if you listen to their leaders, all they do all the time is put ideology before their products. Like make your mind up either.
- [38:46]
Robert Peston
You don't like just to sort of use the US Analogy, right. I mean I, you know, Palantir are absolutely immersed in our defense, you know, in the, in the Ministry of Defense. But again, you know, the department or nuts like or the Department of War in America. The idea that they would be buying the British equivalent, we just shouldn't. I mean, you know, it was something wrong.
- [39:10]
Nick Clegg
Someone told me the other day seems to be very, very well placed in the U.S. they said the Pentagon is now quietly saying to us pension funds go slow on investing in European weapons and arms manufacturers because they may turn against us one day.
- [39:26]
Robert Peston
You know, we should be encouraging the British equivalents of Palantir bidding for, you know, those defense and health contracts.
- [39:32]
Nick Clegg
Are we going to grow the British equivalent on Palantir? Back to our earlier conversation. If you have a market scale and crucially which we can fix, more risk capital at scale, whether it's through VC or whatever.
- [39:44]
Robert Peston
There's one final thing. We're almost of time. There's one other thing I want to. Because I want to take us back to the beginning. Trump has just announced that he wants to have all new, you know, AI essentially services vetted totally for a few weeks before they're released. Do you think that is because there are, there are two theories of this. One is it is taking the safety issue seriously or it's just another Trump thing of saying I want it first and I want to own it effectively.
- [40:16]
Nick Clegg
I think mixture of both and it's one of the most predictable things. When I left Silicon Valley, Silicon Valley was if you listen to the Mark Andreessens and David Sacks and the Chama, they could. The one thing which was utterly for Bolton in their sort of libertarian world of take the brakes off, don't constrain us, we hate all regulation was what they call pre release fetting. This was like the, the most vilified idea was that petty fogging bureaucrats and politicians would have a look at these models before they released and guess what? We've got now within what is a year and a half or so. So is. That's exactly. And he was totally inevitable. It was totally surprised. I remember saying to people in Silicon Valley, yeah, when Trump made this great flourish on his first day, I think or first week as president of scrapping Biden's executive order and I was in the White House with Biden and other tech leaders. I was the only, I was the rep, I was the only leader from Meta there when he signed the executive order. They're basically now bit by bit reassembling a version of the Biden exec. Because why? Because the more more powerful and versatile these technologies become, not just the question of whether they're dangerous or not, they want to know which is the driving animating force behind all of the behavior in, in the White House in Silicon Valley is how can they keep a persistent edge over their Chinese competitors? Because I tell you what, one thing we should be under no illusions about, they're losing that edge to the Chinese hand over fist. The Chinese are now leading on open sourcing AI technology around the world. So AI models around you go to Latin America, Africa, Asia, we don't see that here. But everyone's using open source, off the shelf, free Chinese models. You look at talent creation. The Chinese universities, in towns you never heard of the size of a medium sized European country, are churning out AI data scientists on a scale no one else is. Most of the people doing a lot of the deep research in Silicon Valley are actually of Chinese origin. That's right. They've got a much more coherent approach to energy, which is one of the most important ingredients in all this. So that's what's driving this. But you're absolutely right. It's just another classic example where all that sort of hyperbole that I, I witnessed when I just before I left Silica Valley, I, in a rather sort of grumpy, jaded sort of old man, sort of in the corner way, said, yeah, yeah, yeah, we'll see. And it's all the chickens are coming home to roost.
- [42:27]
Robert Peston
Yeah, well, there we go. I think at the moment where we recognize ourselves as two, you know, grumpy old men.
- [42:36]
Nick Clegg
You know, I remain young at heart. I know you do as well.
- [42:39]
Robert Peston
We do, we do. Nick, thank you so much for joining us. That was an absolutely fun, fascinating conversation. And that's it for this episode of the Rest is Money. Goodbye.
- [42:53]
Host/Producer
Your next chapter in healthcare starts at Carrington College's School of Nursing in Portland. Join us for our open house on Tuesday, January 13th from 4 to 7pm you'll tour our campus, see live demos, meet instructors and learn about our associate degree in nursing program that prepares you to become a registered nurse. Take the first step toward your nursing career. Save your spot now at Carrington Edu Events. For information on program outcomes, visit carrington. Edu Sci.
- [43:23]
Advertiser/Announcer
The right window treatments change everything. Your sleep, your privacy the way every room looks and feels. @blinds.com We've spent 30 years making it surprisingly simple to get exactly what your home needs. We've covered over 25 million windows and have 50,000 five star reviews to prove we deliver. Whether you DIY it or want a pro to handle everything from measure to install, we have you covered. Real Design professionals free samples, zero pressure right now get up to 45% off site wide plus get a free professional measure@blinds.com rules and restrictions apply.