What’s become clear in recent years, since the result of the EU referendum in 2016, is that understanding the technology, data and skills implications surrounding Brexit will be key to the UK’s future success. The UK has been aligning itself closely with the EU for more than 45 years now, creating a complex web of intertwined systems and interdependencies. In addition, there is the issue of new border controls and problems around access to talent.
We at diginomica have been monitoring the situation closely, pouring over government white papers, speaking to civil servants and politicians about the potential impact, as well as seeking advice and insight from business leaders about the UK’s future in a post-Brexit world.
What has become clear is that there is a fundamental role that technology and data will play in ensuring that Brexit is a success. This is a theme that has run throughout the negotiation period, since the result of the referendum almost two years ago.
By way of an update on progress, Prime Minister Theresa May made a breakthrough in recent weeks, after the the terms of the ‘transition period’ were agreed with the EU, which will allow the UK to strike new trade deals, but keep the current arrangements with the trading bloc ongoing for a 21 month period to allow both sides some extra time to prepare.
The much debated ‘EU divorce bill’ has been decided, but the future trading relationship with the EU has yet to be agreed. A final deal will be put before parliament later this year, most likely in October.
Since the Brexit whirlwind began back in 2016, businesses have made it clear to the government that a data sharing agreement with the EU is a top priority - otherwise, companies on both sides of the Channel could face a cliff edge in terms of online trade.
Previously it has been said that the UK is hoping for data adequacy status upon leaving the European Union, which should mitigate the risks. Data adequacy is granted when the European Commission feels that a territory that is not part of the EU has data protection laws and practices that are aligned to the EU’s high standards. Currently ten countries have been granted the status, including Israel and New Zealand. The USA and Canada have only been deemed to be partially adequate, and the data sharing with the USA is governed by the 2016 Privacy Shield agreement.
However, Theresa May recently said she would be pushing for an agreement that goes beyond data adequacy and implied there would be a future role for the Information Commissioner’s Office at the table of the EU’s data decisions. She said:
We will need an arrangement for data protection.
I made this point in Munich in relation to our security relationship. But the free flow of data is also critical for both sides in any modern trading relationship too. The UK has exceptionally high standards of data protection. And we want to secure an agreement with the EU that provides the stability and confidence for EU and UK business and individuals to achieve our aims in maintaining and developing the UK’s strong trading and economic links with the EU.
That is why we will be seeking more than just an adequacy arrangement and want to see an appropriate ongoing role for the UK’s Information Commissioner’s Office. This will ensure UK businesses are effectively represented under the EU’s new ‘one stop shop’ mechanism for resolving data protection disputes.
Given the recent furore surrounding Facebook and attempts from both the EU and the British government to crackdown on inappropriate use of data, we agree that there is a common interest here to keep data interests as closely aligned as possible between the UK and the EU.
However, Theresa May has also explicitly stated that the UK will be leaving the EU Digital Single Market post-Brexit, which cause some conflict of interest. As EU member states become more closely aligned on digital issues and practices, if the UK is seen to diverge from this, problems may arise in the future.
Borders and new systems
Whichever way you look at it, Brexit is going to require a huge amount of time, spend and resources that will need to be put into new systems. For example, we heard recently how Defra, which has many of its systems hosted in the EU currently, and is impacted by many EU regulations, is rapidly prioritising which new systems will need to be in place once the transition period ends. There are huge risks here.
This will apply to many departments across Whitehall, which have been closely dealing with the EU for decades now and have systems tightly entwined with the trading bloc. The Government Digital Service has said it is working with departments to try and figure this out in a sensible way - but only recently advertised a post for a senior position to help manage this.
In addition, the House of Lords European Union Committee recently laid out the challenge facing government in terms of new IT. The Committee’s report provided a broad range of evidence for why a no deal is likely to be incredibly harmful to the UK. In particular, it notes that there is not enough time for the government to get the IT systems in place for a ‘cliff edge’ scenario and that industry is likely to be severely impacted by losing its current data sharing arrangements within the single market.
However, the critical focus on new systems will no doubt fall on the Home Office, which is having to consider how it manages borders in the future.
MPs on the Home Affairs Select Committee recently warned that the Home Office’s new IT systems to support immigration plans post-Brexit face high risks, particularly in light of the time constraints facing the department and its poor track record on developing systems.
The report raised serious questions about the Home Office’s ability to implement the systems and argued that delays to the government’s Immigration white paper, and its lack of clarity over on its post-Brexit immigration position, are creating anxiety for EU citizens in the UK.
Late last year a document was leaked to the press regarding the government’s plans for a future immigration system post-Brexit, which aims to be “digital, flexible and frictionless” for individuals and employers.
It said “a secure digital portal will enable employers and public service providers quickly to check the immigration status of an individual and take action if necessary.”
However, limited information has been provided since then about the plans.MPs on the Committee heard that Brexit will place increased demand on existing Home Office IT systems and new systems will need to be developed, including for the registration of EU nationals already in the UK and for those who arrive during transition.
The Home Office is already in the process of overhauling many of its digital platforms and existing paper-based processes.
Furthermore, the government has heavily implied in recent weeks that the solution to the problem of the Irish border will be down to innovative technology solutions, limiting risks to the Good Friday peace deal. However, experts have challenged this, stating that no matter how innovative the technology solution, there will still need to be some checks at the border, given that it’s regulation that allows for open borders, not just technology.
Finally, concerns have been raised again and again by the business and technology community about access to skills post-Brexit.
Antony Walker, deputy-CEO of technology trade association, techUK, recently highlighted that non-UK talent plays a “really important and significant role” in the digital sector. He said that talent currently employed in the sector from the EU is about 7-8%, but added that the net contribution has significantly increase in recent years as the sector has grown. Walker added that these are “highly skilled and talented people”, where 78% are educated to degree level, earning between £45,000 and £80,000.
Prominent voices in the tech community have also called for an immediate increase in the amount of Tier 2 visas that can be issued. The Tier 2 visa enables UK employers to employ skilled workers from outside of the European Economic Area and there is an annual limit of 20,700 visas that can be issued each year.
It was recently revealed that Britain, for the first time in seven years, hit its cap for issuing Tier 2 visas for a third month in a row in December, sparking concerns that this could be a long-term trend.
There is mounting evidence that EU workers are either leaving the UK, or are not coming to the UK to work in the numbers that they used to since the Brexit vote, making it harder for employers to fill skilled vacancies.
Given the assumption that freedom of movement and citizen rights for EU workers will end after we leave the European Union (or at least post any sort of transition period after March 2019) there is mounting concern that the skilled visa system needs to be reformed as soon as possible.
Russ Shaw, founder of Tech London Advocates, a a private sector led coalition of over 5,700 expert individuals from the tech sector and broader community, recently said that one of the things that the government can do right now is improve foreign workers’ access to visas and skilling up the nation in terms of digital skills. He said:
Things on my wish list that could be addressed now – we need to immediately look at the Tier-2 cap. 20,700 Tier-2 visas is simply not enough. I think we can do things like third party sponsorship of Tier-2 visas, so that we ensure that Tier-2 level is getting the right inflow of talent.
The second part is digital skills. How do we ensure that younger and older people are getting up-skilled, retrained, re-skilled, whatever you want to call it. From where I sit, there’s going to be a significant amount of job losses in low skilled areas. I use high street retail as an example. We are going to see hundreds of thousands of jobs disappear in the coming years.
The stakes are high and there is still plenty to do - with many roadblocks still in the way. However, whilst the Prime Minister and the government will be mostly focused on the future trading deal with the EU, they should not forget the importance of the above issues in making Brexit a success. This is the ‘boring detail’ that will help determine whether or not we prosper as a nation in the future. One year isn’t much time to get this right.