July 26, 2016

Britain’s digital economy is a success story, but the Government must provide greater clarity on regulation and ensure it stays on track in light of the EU referendum result, the BIS Select Committee has found in a report on the Digital Economy.

The report describes the UK as a “digital leader” with “significant growth in the digital economy”.  However, the Committee calls on the Government to set out the implications of Britain’s withdrawal from the EU in its forthcoming Digital Strategy.

Issues that need addressing include the impact on UK tech firms employing digitally skilled EU migrants and access to the European single digital market for British-based companies, the Committee says.

The report also urges the Government to clarify regulation for “disruptive” technologies, such as Uber and Airbnb, so as to promote productivity, innovation and customer choice and protection, while safeguarding workers and ensuring fairness.

The report highlights how so-called “digital disruptor businesses” can get a competitive advantage because they often do not have to comply with the same regulations as the businesses they are disrupting.  Airbnb providers are not bound by the health and safety regulations of hotels, for example.

The Committee says regulation should be clarified to ensure fairness but that the Government should not necessarily seek to protect business models challenged by disruptive technologies.  Regulation should put the interests of consumers first, but not at the expense of employment rights, and encourage innovation, choice and competition, the Committee adds.

The report also recommends a more collaborative approach to regulation, with digital platforms having a role in the regulatory framework by being required to ensure that users are compliant with regulations and workers have reasonable employment conditions.

The publication of the Government’s Digital Strategy has been delayed by over six months.  The Committee urges the Government to set out the implications of Brexit in its Digital Strategy, with reference to specific, current negotiations relating to the digital economy.

The Committee says Ministers should also address fears that the UK’s position as a world leader in fintech is at risk because businesses based in Britain may look to relocate to another country in order to remain inside the EU.  To read the Committee’s news item and for a link to the report, click here.