Eight steps the Government is taking to turn the UK into a global services, digital and data hub

With the terms of the UK’s exit from the EU largely settled, the UK Government has begun to turn its attention to what it wishes to do with the powers that have been repatriated from the European Union. This blog explores the Government’s aspirations for the technology and digital sectors and its legislative plans to make the UK a global leader in this area.

The technology and digital sectors sit at the heart of the Government’s vision for the UK’s post-Brexit future. The Integrated Review of Security, Defence, Development and Foreign Policy contained a commitment to make the UK a science and technology superpower by 2030 by building on the country’s existing strengths and to establish the UK as a “global services, digital and data hub.” HM Treasury’s Plan for Growth, meanwhile, identified innovation as one of three key pillars of the UK’s future economic growth (the other two being skills and infrastructure). The Government will seek to reach these goals by creating a regulatory regime that is outcomes-focused, targeted and future-proof. The recent Benefits of Brexit paper outlined five new regulatory principles, which include a commitment to focus on “shaping and supporting the development of new technologies and creating new markets.” The Department for Digital, Culture, Media and Sport (DCMS), meanwhile, has released its Digital Regulation Plan which contains three principles specifically for digital regulation: to actively promote innovation, to achieve forward-looking and coherent outcomes, and to exploit opportunities and address challenges in the international arena.

While much of the detail is still being worked on, the UK’s intention to diverge from the EU’s regulatory approach in the digital and tech sphere is clear. Here are some of the key policy areas where companies should prepare for bespoke UK regulation.

1. Digital competition

DCMS and the Department for Business, Energy and Industrial Strategy (BEIS) are finalising the UK’s new ex-ante digital competition regime, following a recent consultation on the proposals. Under the plans, which seek to increase competition online, a new Digital Markets Unit (DMU) within the Competition and Markets Authority (CMA) will designate the biggest digital firms with Strategic Market Status (SMS). Their designated activities (such as online search) will be subject to interventions across three “pillars”: a code of conduct, pro-competitive interventions, and a more stringent mergers regime.

The Government is expected to publish its response to last year’s consultation over the next two months, and DCMS hopes to include a Digital Competition Bill in the next Queen’s Speech later this year.

2. Online safety

The Government wants to make the UK the safest place in the world to be online. DCMS and the Home Office are finalising the Online Safety Bill, following the publication of Parliament’s Joint Committee report on the draft bill in December 2021. The legislation will impose duties of care on providers of user-to-user and search services. All services in scope will be required to carry out risk assessments in relation to illegal content and put in place processes to minimise the presence of this content. Providers must assess whether the services are likely to be accessed by children and, if they are, must conduct a children’s risk assessment and take steps to prevent children encountering harmful content. The biggest in-scope providers face additional duties which include the production of annual transparency reports and, in the case of user-to-user services, additional safeguards against content that is harmful to adults. The Government is expected to introduce the Bill to Parliament during the current session.

3. Data

The UK Government has an ambition to turn the UK into a ‘data hub.’ This strategy comprises several strands, pulled together by the National Data Strategy (NDS). DCMS is finalising a series of reforms to the UK’s retained version of the General Data Protection Regulation (GDPR). As part of these reforms, the Government wants to reduce barriers to ‘responsible innovation’ by making it easier to share data, reduce compliance costs for businesses by introducing privacy management programmes, reform the UK’s alternative data transfer mechanisms and impose new duties on the Information Commissioner’s Office (ICO) to have regard to economic growth, innovation and competition. The UK is proposing to expand its current data adequacy agreements, and hopes to strike such deals with the United States, Australia, the Republic of Korea, Singapore, the Dubai International Finance Centre and Colombia.

4. Cyber security

The Product Security and Telecommunications Infrastructure Bill currently being considered by Parliament will introduce new cybersecurity requirements on manufacturers and sellers of internet-connected consumer devices, commonly referred to as the Internet of Things (IoT). The Government is consulting on an expansion and reform of the Network and Information Systems (NIS) Regulations and on embedding standards across the cyber profession by 2025. All this activity follows the publication of the UK’s Cyber Strategy in December 2021, which outlines the Government’s work to make the UK a “responsible and democratic cyber power.”

5. Digital identity

The Government believes that digital identity solutions will unlock improved user experience in the digital world, increase security, and boost economic growth. DCMS and Cabinet Office, via a cross-government Strategy Board, have developed principles to frame digital identity policy in the UK. These are: privacy, transparency, inclusivity, interoperability, proportionality, and good governance. These were used to develop the UK Digital Identity and Attributes Trust Framework, the latest version of which was published in August 2021. This framework has undergone alpha testing and is due to undergo beta testing this year. The Government is due to publish its proposals for the required legislative and governance frameworks this year, a necessary prerequisite for the full trust framework to go live.

6. Online advertising

Online advertising has gained greater attention from policymakers over recent years, for various reasons. The CMA’s market study into online platforms and digital advertising raised competition concerns regarding the industry, while the draft Online Safety Bill Joint Committee has called for paid-for advertising to be included in scope of the draft bill. Targeted adverts continue to be subject to political scrutiny, with many stakeholders in the UK and abroad, including the EU, calling for targeted advertising to be banned. DCMS Secretary of State Nadine Dorries confirmed in January that the Government will consult on its Online Advertising Programme in the spring. This programme will consider the entire regulatory framework, including the content, placement and targeting of online ads.

7. Artificial Intelligence (AI)

The recently released AI Strategy sets out a ten-year vision to make the UK ‘the best place to live and work with AI.’ It has three broad aims: to invest and plan for the long-term needs of the AI ecosystem, support the transition to an AI-enabled economy, and ensure the UK gets the national and international governance of AI technologies right. The strategy sets out a range of policies and initiatives to realise these aims, including an upcoming White Paper on AI regulation early this year, to be followed by legislation.

8. Mobility

The Government envisages mobility as a key area in which it can seek to gain a competitive advantage vis-à-vis the EU through more business-friendly regulation. Nevertheless, its plans in several areas are still at an early stage. In drones and urban aerial mobility, for example, the Government has yet to set out its approach for uncrewed traffic management (UTM), a key enabler of widespread drone delivery and air taxi services. The Government is also keen to position the UK as a leader in sustainable mobility. It is due to publish its Jet Zero Strategy for reaching net zero aviation emissions later this year, while the UK is set to ban the sale of new diesel and petrol vehicles from 2030. Improving public transport links is a key part of the Government’s plans for rebalancing the UK economy. To support the provision of more integrated transport solutions across the country, the Government is currently consulting on a possible Mobility-as-a-service (MaaS) code of practice.

While the final regulatory regime in many areas is still to be finalised, what is clear is that tech companies can expect a plethora of regulatory and legislative change in the UK over the coming months and years. This may bring challenges, but the Government’s ambition to create an innovation-friendly economy also provides great opportunities for companies to help the Government build that economy.

If you have any questions about digital and data policy, or are interested in an informal chat, please contact us at enquiries@inlinepolicy.com