UK's digital strategy must account for Brexit, say MPs

Let a hundred disrupters bloom

The UK government must explain how its long-awaited new digital strategy will be impacted by the country's decision to leave the EU, a committee of MPs has said.

The Business, Innovation and Skills (BIS) Committee in the UK parliament made the call in a new report on the digital economy in which it also said there is a need to ensure UK regulations "promote productivity, innovation, and customer choice and protection" as a result of technological change. The government was expected to publish a digital strategy earlier this year, after consulting on its contents in the first few weeks of January, but has not yet done so.

The BIS Committee said the government should "explain how the digital strategy will be affected by the referendum result" and "needs to address the issue of whether businesses will be able to access the European single digital market, if they want to do so" in light of the vote to leave the EU.

"We recommend that the government sets out in its digital strategy the implications of withdrawal from the European Union, in reference to specific, current EU negotiations relating to the digital economy," the BIS Committee said. "The government must address this situation as soon as possible, to stop investor confidence further draining away, with firms relocating into other countries in Europe, to take advantage of the digital single market."

"We hope that the digital strategy will provide an overview of present and future government policy on the digital economy, which will be published as soon as possible, and in its reply the government must provide us with an update of any changes made to the strategy since it was originally written," the BIS Committee said.

"The government must also explain how the digital strategy will be affected by the referendum result. It should also set out in its reply and in the digital strategy a list of specific, current EU negotiations relating to the digital economy. At the forefront of the issues explained, the digital strategy must address head on the status of digitally-skilled workers from the European Union who currently work in the UK. The digital sector relies on skilled workforce from the European Union, and those individuals’ rights to remain in the country must be addressed, and at the earliest opportunity," it said.

In its report the BIS Committee said disruptive technologies are a spur for innovation and said the government must provide "future-proofed" regulations to allow for tech-based changes in markets.

"Regulation should be based on agreed principles, and also flexible enough to adjust to disruption," the Committee said. "It should, in our view, put the interests—in terms of quality, choice, cost and safety—of the consumer first, although not at the expense of employment rights. It should encourage innovation, new and existing players, choice and competition, in different sectors of the economy, regardless of the means of delivery or the infrastructure."

"There is a risk that regulation always lags behind technology and is seen as being in 'catch-up' mode. It should not seek to inhibit innovation or to protect business models that might be challenged by disruptive technologies or by digital business models. Indeed, it would be ludicrous to try to hold back the tide of technology. Not only is this impossible, it runs the risk of undermining this country’s future competitiveness and wealth-creation capacity," it said.

"Similarly, it must ensure that the legal avoidance of regulation is not the sole or primary source of competitive advantage; regulation must ensure fairness, to ensure that new disruptive businesses are not unfairly or unreasonably excluded from certain safeguards such as health and safety regulations," the Committee said.

The government should look further into whether platforms could act as "key players in the regulatory framework, ensuring that users are complying with current regulations, in order to reduce the risks posed to the public", it said.

The BIS Committee also said the government should seek to make sure that businesses, like technology companies, "are not compromised through the operation of the apprenticeship levy".

The largest employers in the UK will begin paying an 'apprenticeship levy' from April 2017 as part of government's plans to fund three million new apprenticeships over the next five years. Employers will have an opportunity to offset some of the cost of the levy – 0.5% on wage bills – where they fund their own apprenticeship places.

Copyright © 2016, is part of international law firm Pinsent Masons.

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