UK snap election - time to set the record straight on digital

Profile picture for user ddpreez By Derek du Preez April 18, 2017
Prime Minister Theresa May’s unexpected decision to hold a snap general election in June brings uncertainty to an already complex post-Brexit world.

Theresa May
Credit: Tom Evans

Although we should no longer be shocked about political goings on, given recent global events, the Prime Minister’s announcement on Tuesday morning that she would be calling for a snap general election in June was certainly unexpected.

Mostly because Theresa May has repeatedly said she didn’t believe the next election would take place until 2020 - five years after the last one, as expected. However, May now claims that political divides in Westminster are causing upset to the Brexit process and that unity (or a large majority) is required.

Given the terrible polling figures for the opposition party, it’s obvious that the Prime Minister expects to win a huge amount of seats from Labour. Speaking outside Downing Street on Tuesday morning, May said:

I have only recently and reluctantly come to this conclusion. Since I became prime minister I've said there should be no election until 2020, but now I have concluded that the only way to guarantee certainty and security for the years ahead is to hold this election and seek your support for the decisions we must take.”

So we need a general election and we need one now. We have at this moment a one-off chance to get this done while the European Union agrees its negotiating position and before the detailed talks begin.

Whilst the general election (if approved) will be in just a couple of months time, and whilst a Conservative majority win is expected - this is politics in 2017 and anything could happen. So there is a certain amount of uncertainty being introduced to a nation that is already grappling with an incredibly complex Brexit process, which does have implications for digital. And it should be used as an opportunity to set a clear agenda for the coming years.

Potential problems

We at diginomica have already spent a great deal of time considering the implications of Brexit on digital - both at a national level in terms of the economy, as well as with regard to government technology buying. And this general election is about Brexit, where the winning party will have the mandate to proceed to its exit strategy. Some of primary concerns are as follows:

  • A free trade agreement (FTA) will need to cover both goods AND services, as digital trade falls under the latter. We sell more in services to the EU than we do in goods, but the EU sells more in goods to us than they do services. FTA’s usually are limited in their scope when it comes to services. So there’s a good chance the EU will want to focus on goods, and services will be sidelined.
  • Securing talent from the EU is critically important to the digital sector, which employs 25% of its workforce from member states. Closing the borders and putting in place new work visa systems could not only create bureaucracy for industry, but deter workers from seeing the UK as an attractive place to come and settle (if settling for extended periods is still an option).
  • The UK needs to secure a data flow agreement with the EU before the end of the Brexit negotiations, otherwise we face a cliff edge on the day we leave. However, it’s largely down to the European Commission if it considers the UK to be ‘data adequate’ and that the flow of data isn’t then restricted. It seems the UK wants to include this as part of the FTA agreement, but in reality it’s a one way decision by the EC.
  • The government’s industrial strategy has been ‘weakened’ by ignoring Brexit. The strategy focuses on creating world leading sectors (including digital), improving productivity, investing in infrastructure, developing skills and investing in science and research. MPs have said that ignoring Brexit in the strategy is a problem, given that the negotiations with Europe will likely have an impact on what can be achieved.
  • Concerns that the government’s digital and innovation agenda could be derailed, given that reports suggest that hundreds of outsourcing contracts could be automatically extended or renewed, which goes against current government policy.

techUK’s take

techUK is the leading lobby group for the technology sector in the UK and has played a central role in advising government on the impact Brexit negotiations could have on the digital sector.

CEO Julian David has said that the surprise election on the 8th June gives the political parties an opportunity to consider how a post-Brexit Britain could work to foster technology business. David is particularly focused on access to skills and education. He said:

This election comes at an extraordinarily important time for the UK’s digital economy. Tech businesses will be looking to the UK’s political parties to set out clear plans for how they intend to support economic stability and to keep the UK at the forefront of global technological innovation and digitisation.

Brexit will dominate the election campaign. It’s vital whoever wins secures a comprehensive Brexit deal that works for the tech sector. But our exit from the European Union is not the only issue at stake. The next government will need to demonstrate that it understands the needs of the UK’s most dynamic businesses by building a long-term industrial strategy, developing a new approach to skills and education fit for the 21st century and creating the right conditions for businesses and people to thrive across the UK.

Global technological innovation will bring huge changes over the next five years. The UK has the opportunity to be at the forefront of that change, driving and shaping the future in a way that works for all of its citizens right across the United Kingdom. The next government must harness the positive potential that tech can bring to people and communities across the UK.

TechMarketView’s take

Georgina O’Toole, research director over at analyst house TechMarketView, which has done work on the Brexit implications on the IT suppliers market, argues that more uncertainty is likely to be created (at least in the short term) as a result of the general election.

The ones to benefit from the greater uncertainty, however, are likely to be the outsourcing companies and the management consultants. O’Toole said:

At TechMarketView, we are just entering our next forecasting period. We are already factoring in the effects of Brexit, both positive (investment in ICT to support the post-Brexit world) and negative (uncertainty breeding delays, and resources – both budgets and people – being redirected to all-things Brexit). We are also already in the Purdah period for next month's local government elections. Now we must factor in the usual General Election ‘Purdah’ period, which usually starts six weeks prior, during which large or contentious projects or programmes will be delayed (most of which will be supported by digital), as well as yet more uncertainty – and hence caution – related to Brexit.

There are always opportunities that arise from these sorts of situations – in the run-up to the last General Election, for example, the large SITS incumbents to Government benefited from contract extensions and bolt-ons, and management consultancies talked of a pick-up pre-General Election (though a decline in demand as the new Government put its plans in place). But, overall, the story in UK public sector SITS was one of General Election disruption. This time, with Brexit complicating matters further, that disruption is likely to be all the greater.

My take

Whilst this general election does of course add more disruption and uncertainty to the already highly disruptive and uncertain political environment, what it also does is provide the parties seeking power to put forward a strong case for Digital Britain as we enter negotiations with the EU.

What are we going to do about access to skills, for which the technology heavily relies upon immigration for? What are we going to do about technical training and STEM subjects in school? How can Brexit be used as an opportunity to redefine the role of the civil service, with digital ambitions in mind? What is the government’s stance on increased automation and AI on the labour market?

These are questions that need answering and will greatly impact the future success of the UK.