Distractions plague UK’s post-Brexit tech plan
LONDON — Post-Brexit Britain had big tech dreams but supporters fear they have been knocked-off course.
One of the promises of the U.K.’s vote to leave the European Union was that Britain could make itself more attractive to innovative digital companies by forging a new approach to key legislative challenges such as data privacy and digital competition.
Since the 2016 vote, officials have worked on plans — hailed by ministers as more “pro-growth and innovation-friendly” — to give the country an edge over European rivals.
But officials and industry warn that in three critical areas — new rules designed to encourage more investment in the tech sector from pension funds, the U.K.’s new digital competition regime and its approach to regulating data — Downing Street is in danger of taking its eye off the ball.
As the government finalizes the next phase of its legislative program, which it will announce May 10 at the formal opening of the next parliamentary session known as the Queen’s Speech, officials working on these areas and the lobbyists who seek to influence them fear their files will get squeezed out. They are battling a government distracted by war in Ukraine and its own domestic troubles, most notably the so-called Partygate scandal which has seen Prime Minister Boris Johnson and Chancellor Rishi Sunak both fined for breaking COVID rules by attending parties.
The plummeting fortune of Sunak, who has also come under fire over his wife’s tax status, is particularly problematic, insiders say, since he was widely seen as a key advocate for tech at the top of government.
Former Conservative leader Iain Duncan Smith, who the prime minister commissioned to come up with suggestions on how the U.K. can adjust its regulatory regime post-Brexit, said the problem is simply a lack of ambition.
“This has got to be done at a gallop rather than a walk. It’s too slow and it’s too unadventurous and it’s not bold enough,” he said.
A U.K. government spokesperson insisted claims key tech files will be delayed were “pure speculation.”
“We will set out our legislative program for the year in the forthcoming Queen’s Speech as is usual,” they said.
Officials in the U.K.’s Department for Digital, Culture, Media and Sport and industry leaders say Sunak’s Treasury has been a key ally in their quest to make the U.K. more tech-friendly.
Sunak, whose father-in-law, Narayana Murthy, founded of Indian IT services giant Infosys and who spent time in Silicon Valley while living in California, has been at the helm since 2020.
His state budgets have been seen as tech-friendly, in particular by floating a change to the rules governing many U.K. pension schemes to make it easier for funds to invest in illiquid assets, which can’t be quickly converted into cash, such as venture capital investments or carbon-free technology. Sunak has also proposed reforms to the stock exchange listing rules and visas for tech entrepreneurs, both of which have been welcomed by the sector.
“Rishi obviously has a strong understanding of how tech ecosystems work and that’s made a huge difference over the past several years,” Dom Hallas, executive director of the Coalition for a Digital Economy, said.
But officials working on tech policy in government, and some industry figures too, are eyeing Sunak’s fall from grace with concern.
“One of the things that I think is worrying is Sunak is in a very difficult position at the moment. We are just hoping he stays around really,” a government official working on tech policy said.
Industry figures already fear his bold proposals could be watered down elsewhere now he is no longer a leading light, citing news the Department for Work and Pensions has launched its own consultation on the pension fund reform, which some in industry fear will cause further delays.
A Treasury official insisted all of Johnson’s Cabinet are working together to “make sure our plans are both ambitious and deliverable.”
Competition for slots
In the digital department there is also concern that another key plank of Britain’s tech plan — a new digital competition regime — is not being taken seriously enough by No. 10 Downing Street.
Launched last July with a promise to “prevent abuses of power – unleashing a wave of innovation,” the new Digital Markets Unit was hailed in a dossier of post-Brexit benefits published by Boris Johnson in January as taking “a more flexible and targeted approach than the one being taken by the EU.”
The U.K.’s plans will endow the Digital Markets Unit, housed within the country’s Competition and Markets Authority, with new powers to tackle abusive practices by Big Tech giants, aimed at firms that have acquired a “strategic market status,” powers that before Brexit would have been Brussels’ domain. The measures are set to include legally-binding codes of conduct tailored to each platform, based on past abuses.
The EU’s Digital Markets Act, Brussels’ own answer to anti-competitive abuses by the world’s largest technology platforms, was recently adopted by the EU institutions. Pursuing more of a broad-brush approach, the new EU rules roll out a series of prohibitions and obligations for some of the world’s largest tech platforms, including the likes of Google, Meta, Apple and Amazon. However, it will likely be early 2024 before platforms will be forced to comply with the rules.
In the U.K., the digital and business departments, which are jointly responsible for the plan, are still locked in discussions with Johnson’s inner circle about when a digital competition bill will go through parliament, according to two officials familiar with the discussions.
Even if an announcement is made next month, officials fear it could be 2023 before MPs actually legislate.
No. 10 wants another piece of legislation, the digital department’s media bill which allows for the sale of publicly-owned broadcaster Channel 4, to be given priority, according to one official privy to discussions.
The sale of the channel is being seen by some as an unnecessary distraction designed to appease Tory MPs furious about lockdown-breaking parties in Downing Street at the height of the pandemic. Even the Conservative chair of the digital committee in the U.K. parliament, Julian Knight, questioned whether the government’s proposed sale of Channel 4 was being done in an act of “revenge” for “biased coverage” of Brexit.
“A delay to the competition bill would matter,” said Ben Greenstone, a former senior official in the digital department who now runs the consultancy Taso Advisory.
“If we accept that there is a desire to have a post-Brexit tech strategy, I think you can’t have said ‘we’re bringing forward all these world leading pieces of legislation on content, competition and data,’ and then pull your punches on competition just after the EU has landed theirs. It is a remarkably bad look.”
Former chair of the DCMS select committee, Damian Collins, has also pressed the government for action, writing last week in the Times that the government should pursue its plans for fairness in digital markets with more vigor.
U.K. media groups have meanwhile joined the push against further delays. Organizations including ITN, Channel 4, the BBC, and the News Media Association, recently wrote to the prime minister, highlighting the fact that “any delay to the legislation risks the U.K. slipping behind other jurisdictions.”
However, the plan for a new digital competition regime is not universally popular. One senior Conservative MP, who has followed discussions on the competition regime but did not want to go public with his “minority” concerns, urged caution, fearing the plans had not been properly thought through.
For their part, the Competition and Markets Authority, the U.K. body set to lead enforcement of the new powers afforded to the Digital Markets Unit, fears delays could expose the U.K.’s lack of progress in regulating digital markets when compared to its neighbors across the English channel, according to one official close to the matter.
“We are seeing progress in Europe in terms of adopting new rules for abusive practices in digital markets,” a U.K. official involved in the matter said. “People are starting to look at the U.K. and question why talk of the delays has emerged.”
“This wasn’t the vision for a post-Brexit Britain.”
One area where the digital department has scored a win is on its data plan — a data bill is expected to be given priority for parliamentary time in the Queen’s Speech next month.
But even here, there are fears Britain could fail to seize its post-Brexit advantage.
During much of 2020 and 2021, reforming the U.K.’s data protection regime was a pet project for Oliver Dowden, the U.K.’s former digital secretary, who spoke of unleashing innovation and killing annoying cookie pop-ups.
His successor, Nadine Dorries, has taken much less interest in the file, delegating much of the work to her junior minister, Julia Lopez. Without a vocal backer in Johnson’s cabinet, Britain’s data reform risks falling down the pecking order of the U.K. government’s priorities.
An announcement last month that the EU had struck a data pact with the U.S. also caught the U.K. flat-footed.
London had eyed a data deal with Washington as a priority — and a way to burnish its post-Brexit tech credentials to the world — but now finds itself playing catch up to Brussels.
With the sixth anniversary of Britain’s vote to leave the European Union approaching, the prime minister still has his work cut out to convince those following his post-Brexit tech policy that a digital dividend will be delivered anytime soon.
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