MPs call for post-Brexit digital plan - or risk UK's fintech success

Lynsey Barber
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The UK's position as a world leading centre for fintech is at risk if the government fails to address the issues facing the £20bn a year industry as a result of the vote to leave the EU, a leading group of MPs have warned.

The government must act now to stop investor confidence in the UK's tech and digital industries fizzling out and firms relocating elsewhere in Europe, MPs on the Business Innovation and Skills Committee have said, while steps must be taken so that British business can still take advantage of the EU's Digital Single Market (DSM).

In a scathing comment on the loss to the UK's standing as Europe's leading digital economy, MPs said the UK would now have to follow Europe's lead on the DSM, where the country could have led the way.

Read more: Here's how UK fintech's rallying action in a post-Brexit no-man's land

The group of MPs' formal conclusions from its investigation into the sector found:

"The decision to leave the European Union risks undermining the United Kingdom’s dominance in this policy area. We could have led on the Digital Single Market, but instead we will be having to follow. The government must address this situation, to stop investor confidence further draining away, with firms relocating into other countries in Europe to take advantage of the Digital Single Market.

It has also called for more joined-up thinking between different government departments when it comes to digital strategy, however, the issue of where this now lies has been thrown into the spotlight by Theresa May's departmental shake-up.

Responsibility for digital strategy was previously shared across the cabinet office, department for culture, media and sport (DCMS) and what was formerly the department for business, innovation and skills (Bis), however, there has yet to be any indication whether this will remain the same.

A large part of the government's digital drive has concerned skills, an area which now falls under the education department.

Recommendations for the UK digital economy

Urgently address the risk to the UK's status as a world leader in fintech to avoid it being eroded.

Publish the government's delayed digital strategy, to include the effect of Brexit and status of digital-skilled workers from the EU plus reasons for the delay.

"Future-proofing" public policy in the face of disruptive technologies.

Address whther the UK will have access to the digital single market.

Better co-ordination between government departments led by the minister for the digital economy.

Greater recognition of the gaming industry's contribution to the economy

Better measuremnet of the UK digital economy working with the Office of National Statistics (ONS).

In evidence to the committee, the former digital minister Ed Vaizey who was replaced by Matt Hancock in the reshuffle over the weekend, pointed to the difficulty of department silos.

"Education will have a big focus on digital learning; Health will have a big focus on how you make the health service more digital so that you can treat patients in the home; Transport will have a huge focus on digital both in terms of making the trains run better through to mobile on trains and driverless cars [ … ] and Energy in terms of smart meters. It is in almost any department. We need to think hard about how we join that up."

The committee recommends departments are joined up appropriately, and that the digital minister becomes a member of the cabinet.

Read more: Here's how the UK tech industry feels about Theresa May as PM

"Given the significance of the digital agenda for UK plc and to ensure that the strategy has sufficient weight in government, and its cross-departmental elements are appropriately joined up, we recommend that the digital economy minister attend Cabinet and a minister in each relevant department be identified as responsible for delivery of the government’s digital agenda."

The issues identified by the committee should be addressed in the government's official digital strategy, which is due to be published this summer after a six month delay.

"We look forward to publication of the digital strategy and urge the government to set out how it plans to build on Britain’s digital success post-Brexit," said the committee chair Iain Wright.

"This includes urgently addressing the concerns of tech companies who rely on the single market and high-skilled migrants from the EU."

Those in the tech industry have struck a note of cautious optimism with new Prime Minister Theresa May in charge, though the place of digital and technology policy on her agenda still remains largely unknown.

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