Digital Economy Bill

Part of the debate – in the House of Commons at 2:16 pm on 13th September 2016.

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Photo of Iain Wright Iain Wright Chair, Business, Innovation and Skills Committee, Chair, Education, Skills and the Economy Sub-Committee 2:16 pm, 13th September 2016

As seems common these days with proposed business-related pieces of legislation, the Bill has several disconnected, disparate elements that come together purely for the purposes of providing and securing primary legislative time. Some elements could be positive, but several will prove problematic for the Government.

Part 1 of the Bill, which will bring in a universal service obligation for broadband, will certainly be welcomed by my constituents and not just those in rural areas such as the outlying villages of Dalton Piercy and Elwick, but in the urban part of the constituency. Mrs Miller made an important intervention earlier in which she said that many house builders are not future-proofing their stock. Some buildings and houses in my constituency that are less than 10 years have no broadband connection whatsoever, which seems ridiculous if we are trying to be a leading digital economy. I hope that the Bill’s USO provisions will address that, and I fully agree with what the Culture, Media and Sport Committee said when it agreed with the “compelling case” for establishing a broadband USO.

Part 3, in particular clause 26, which aligns online and offline copyright infringements, is another important step—there should be no distinction. I also welcome the importance that the Bill gives to intellectual property not only in the creative industries, but as a real driver of economic prosperity. Having a comparative advantage through IP is important.

Part 5 will be difficult for the Government to justify. Sharing data and using it as a means of driving forward economic prosperity is important, but the Government have muddied the waters following the sharing of NHS data that came up a couple of years ago. That is a worry.

The Bill contains no consideration of future technology. Blockchain technology has been mentioned before and I know that the Government are aware of it. Indeed, the Government Office for Science recently produced “Distributed Ledger Technology: beyond block chain” a report which features a foreword by the current Minister, Matt Hancock, and the former Minister, Mr Vaizey. The Government are thinking about that technology and it would have been good to get some degree of what that thinking looks like and how it translates into legislation.

As I hint at, however, it is not necessarily about what is in the Bill, but about what is not in it. This question needs to be posed: do the digital policy and the Bill enhance Britain’s comparative advantage in the global digital economy? Does the Bill fill any gaps that are holding our potential prosperity and supremacy in the digital economy back? Do its provisions provide a clear strategic vision to ensure that the UK remains the destination of choice for investment and for the attraction of talent and ideas?

In many respects, we come to this from a position of strength. The Business, Innovation and Skills Committee carried out an inquiry on the digital economy, producing a report in July. We found that the UK is one of the leading digital nations in the world: our economy has the highest percentage of GDP invested in the digital economy of all the European nations; and UK digital firms are growing at two and a half times the national average, and have been since 2003. This is a source of pride and strength, and I hope that the whole House can come together on it, but I do not think the Bill helps address key challenges.

The Bill’s First Reading was on 6 July, a mere fortnight after the country voted to leave the EU and a week before Mrs May became Prime Minister. Although the proposals were very much oven ready—indeed, the Bill had the name of the former Secretary of State, Mr Whittingdale on it—the Bill seems to be at odds with the two preoccupations facing the Government: exiting the EU; and producing a new industrial strategy.

Yesterday, the Minister attended, as did I, and indeed as did Nigel Huddleston, who is in his place, a round table meeting at the Google campus on the challenges facing the tech industry in light of Brexit. The Minister heard a tech entrepreneur saying that he is hoping to raise half a million pounds this year, with the aim of raising a further round of £3 million to £5 million next year. He said that potential investors are questioning whether the UK domestic market is large enough to justify funding here in the UK without sufficient access to the European single market. He said that he is facing pressure from investors to base his business in the US. The uncertainty arising from tech firms employing digitally skilled EU migrants and the issue of having full access to the European single digital market is causing uncertainty and disruption. There is a risk that other centres, such as Berlin, will take advantage of that uncertainty, to the detriment of emerging and growing innovative businesses and business models in this country. We could have led the EU on the EU digital single market—it could be made in our image—but, unfortunately I do not think that opportunity will be afforded to us. There are real concerns about access to that single market—I hope the Minister will provide as much clarity as possible on that—and about access to talent.

There is also a mismatch, or certainly a disconnect, between any sort of industrial strategy and digital strategy. As we heard at the Google campus yesterday, businesses and entrepreneurs want to see how the Prime Minister’s welcome rhetoric on industrial strategy translates into proper co-ordination, and how this will be aligned constructively with the digital strategy, which, I think the Minister will readily concede, is being hastily redrafted in light of events from 23 June onwards. A proper industrial strategy will need to have the implications of digitisation, technology and innovation running through all its activities and objectives. I appreciate that there is not necessarily a statutory need for such a pledge, although it is very clear that firms want to see clarity and a strategic vision—that is what they call for in the digital space.

As has been mentioned by my hon. Friend Chi Onwurah, the Bill also fails to address one of the biggest challenges facing a digital economy, and the changing structure of the workforce and the nature of work. Technology provides a massive opportunity for a more effective and efficient allocation of demand and supply of both labour and products, services and customers. Such disruption can be a positive thing, increasing quality, choice and service for the consumer. I want Britain to be the destination of choice for disruptive business models that help improve our prosperity. However, some platforms have shown that, far from increasing competition, some companies dominate markets and stifle or undermine competitors. Global in scale, these multinational companies often avoid national tax requirements, so that although they benefit from the social goods of public investment, such as education and infrastructure, they seek to minimise their payment to the public purse for that good.

Perhaps most concerning of all, platform companies are facilitating the rise of the “gig economy”, in which workers are reclassified as contractors and self-employed. That is not necessarily a bad thing—again, greater flexibility could be provided for workers—but these workers tend to have fewer rights to social benefits, to face greater insecurity, to have lower pay, to receive less training and to have poorer prospects of advancing in their career. Innovation should move people through the value chain, increasing their skills and wage levels. Instead, the digital economy seems for too many people to mean growing insecurity and a rush to the bottom in terms, conditions and pay.

There is a need to retrain and upskill throughout every worker’s life. A Digital Economy Bill is probably not the best or only place to consider this, but the ability of Government to maintain an appropriate regulatory regime in the face of such technology needs to be considered strategically, as does the impact of the gig economy. I know that the Minister has taken an interest in the sharing economy, but I hope he will also look at how technology and the changing world of work needs to be addressed. There are positive steps and positive provisions in this Bill, but it is rooted in the 20th century, whereas we should be thinking more about what is required for the 22nd century.