With Uber and Google now going head to head in the battle to develop driverless car technology, the spotlight has fallen once again on the concept of the Smart City.
There is no absolute definition of what a smart city is. But the broad idea is to use digital technologies to create more efficient, responsive, and liveable urban environments, where citizens can engage with all the services on offer in a flexible way. It’s an exciting vision, and the government has put considerable energy behind it (most recently backing a review into how the UK can make the best use of the Internet of Things). But there is a real danger that the UK smart city will remain just an ambition.
Smart cities are nothing new, but they are high up on various agendas because of the startling fact that, according to the Global Health Observatory, 54 per cent of the world’s population lives in urban areas, and that figure could reach 66 per cent by 2050 according to UN predictions. Today’s experience of London tells us that overcrowding, poverty and disenfranchisement are very real possibilities. But smart cities – where infrastructure and public services are underpinned by integrated, innovative technology – could bring a high quality of life to even the densest of populations.
But government plans for smart cities won’t attract the necessary investment to become a reality unless legal and regulatory systems keep pace with technological innovations.
My law firm asked 300 business leaders across technology companies, investment funds, banks and consultancies, as well as government officials, what they saw as the biggest obstacles to creating smart cities. Two major areas of concern leapt out from the report: funding and regulation.
These are inextricably linked: when we talk about developing smart cities, we are actually talking about investing in developing technologies that have little regulatory framework around them. The regulation that does exist is often hopelessly outdated. In other words, we are taking a huge leap of faith. Given the prize on offer, that’s no bad thing. But we – whether business or legislator – need to act quickly to make sure that smart cities don’t just happen, but happen in the right way.
The problem is that even relatively recent laws were designed for an offline world. That technology outpaces the law is a constant, but the speed of current technological development means that the gap is wider than ever. This is something that the government needs to address as a matter of priority. Here, we have a chance to make our laws ready for the future in a way that could place us at the forefront of smart city development, but that window will not remain open for long. If we fail to do this, we will not only lose the race to create truly smart cities, but our standing in the global economy will be endangered.
One of the most important areas of regulation is around privacy. This is key to persuading individuals to use smart city technology, much of which is predicated on the collection and analysis of personal information. Well-designed privacy rules are a must, as is incentivising individuals and communities to aid the adoption of these technologies. To achieve this, our respondents favoured matched funding for communities investing in smart city technology, tax breaks for individual early adopters, and the creation of a national smart technologies investment fund to invest alongside institutional investors. No small brief for the government that will take us up to 2020.
When it comes to funding, businesses want to see greater public-private collaboration; around three-quarters of respondents to our survey said that this was the most effective way to fund smart infrastructure programmes. With UK PFI in limbo, the government needs to act now to create public-private finance vehicles that are as innovative as smart city technology – but obviously more immediately practical. Businesses are clearly aware of the difficulties involved in doing this. A large majority of respondents said they expected government institutions to be the most active investors in smart city infrastructure, at least for the next three years.
It’s worth bearing in mind that no smart city is an island. The EU, in particular, has an important role to play in helping member states adopt smart city technology, particularly in establishing technological and sustainable construction standards. As they become smarter, it is also vital for cities to collaborate and share best practice, not only to be the best they can but also to avoid some of the grim development mistakes of the past. Exporting the UK’s expertise in smart cities is central to our future economic wellbeing.
I believe that the UK is in with a shouting chance of being a world leader in smart city development. But there is a lot to do before we even lay the first foundation stone.