What does a good #BrexIT look like?

Shortly after the referendum result I posted on the issue of government IT systems and the transition to the new EU relationship. Since then I’ve spoken to a lot of people in the UK and in the EU about the specific issues for the IT sectors. 

I don’t think that it will be a surprise that two issues come out every time. The first, and dominant issue, is access to skills and talent. The general flavour of comment I get is that there is no European economy that is large enough to be self-sufficient in all the skills required around IT. Indeed, the US companies investing in Europe put access to skills at the centre of their case. The US, a much larger economy, cannot itself be self-sufficient in IT skills. 

Within IT data protection, the new GDPR regulations due in 2018 seems to be the major problem. Two former colleagues have estimated that if regulatory equivalence is lost, then full separation of a UK cloud infrastructure from an EU infrastructure could add 6-8% on costs for their organisations on top of any currency movements.

Regulatory issues appear in each sector and often seem to have a combinatorial consequence adding to uncertainty. The most complex example explained to me yet is in pharmaceutical regulations. A new clinical trial, starting in 2017 probably will not reach licensing approval till post Brexit, so regulatory uncertainty is an issue. Given the sensitivity over patient data, the interaction between sectoral regulation and GDPR is far from trivial. 

Both issues have been well aired and there are active groups in these fields. I wish them well. 

What I have found rising up the agenda has been less debated, so I wish to focus on what I believe needs to be understood if Brexit is to be good for BrexIT. 

There appears to be a growing belief that trade deals can be done at a sectoral level. There are certain sectors which the UK believes are central to the new relationship.

Philip Hammond has stated that IT is one such sector. Agriculture, Pharmaceuticals and Automotive are also discussed with Financial Services being the biggest prize. 

With all Treaties, the devil is in the detail and it is important that there is a clear understanding of both principles and the unintended consequences of the detail as expressed.

I was reminded that in 1973, shortly after we joined the EEC that the first Arpanet Node outside the US was held up in customs because they couldn’t work out what it was for VAT purposes. 

Compared to the 1970s, the UK economy has moved from vertically integrated organisations working in well-defined sectors, to networks of supply chains and ecosystems of organisations working across national boundaries. Furthermore, I would argue that a modern economy is more innovation intensive than the early 70s. 

One former colleague was at a briefing on financial services - the event focussed on passporting rights. The inevitable question on how to balance freedom of movement with access to the single market was raised. The answers were pretty vague, but one possible interpretation was that bankers might be able to move freely, but not support staff. So, do finance IT people count as support staff? Is fintech FIN or TECH? Maybe fintech is a sector in its own right. 

There is plenty of scope here for a bureaucratic nightmare. An organisation with in-house IT may be dealt with in a different way to a company which outsources its IT, if the outsourcer is considered to be in a different sector to its client company. Writing schedules in such a way as to not distort market choices is incredibly difficult. 

We live in an interconnected world and IT has blurred boundaries between sectors in a way that is radically transformed from a 1970s economy. 

Which sector is a company like Alphabet/Google in? If the Autonomous Car, Search, NEST and other divisions are treated differently, then IT staff in each division could have different movement rights. 

My own suspicion is that, for multi sectoral organisations, the likelihood is that IT staff may be transferred to the division with greatest freedom of movement and then seconded back to other divisions. Ways will be found around whatever rules are put in place, that much is certain. Is that acceptable?

One challenging possibility is that the same technology imported/exported for similar purposes could be subject to separate rules. To illustrate, consider an AR/VR peripheral.

One company - say a game company - importing a device might do so as consumer tech, but another as an industrial device. If you think this absurd look at the issues around defence exports. Are night vision goggles defence related or not? 

The scope for dispute, let alone fraud is enormous. 

Which sector do you consider IoT technologies to be in? Are smart cities to be considered as architectural services or IT? What sector isn’t potentially disrupted by IoT? A few months ago, there was a slot on Farming Today (Radio 4) about the Internet of Peas, no less.

None of this is intended to be a commentary of the rights and wrongs of Brexit. The direction of travel has been set. The examples I have given are at the level at which the regulations will be written. I was exposed to the mind boggling complexity of non-tariff barriers to trade before the creation of the single market.

I gave an after-dinner speech at a conference for people engaged in “trade facilitation”. I was followed by a barn storming, wickedly hilarious speech. The topic was “the importation of hairbrushes”. Think Monty Python’s Cheese shop sketch, written by Kafka to the length of War and Peace. Talk to anyone who was involved in trade facilitation before the single market and the examples I’ve given are far from the most daunting. 

In 2017, once negotiations begin and the schedules are being established, it will be easy for the lofty principles to get lost in the minutiae. The difference between a good and a bad brexIT will be determined at this level of detail and more. 

One of my former colleagues gave me a good example of the potential problems downstream. He has recently reviewed the potential for autonomous vehicles in agriculture. It is suggested that in the mid-2020s that it might be possible to pick some vegetables without the need for seasonal labour. That potentially addresses one concern over restriction of freedom of movement in the medium term. 

However, if the sectoral agreements are concluded in advance of the technology both being available and technologically affordable, the risk is that potentials innovations are stifled by rules written to respect historical silos. Imagine a British company in autonomous agricultural vehicles in the mid 2020’s. It sources its engines from Germany, writes the software in the UK. It 3D prints parts in the UK from a Swiss design. It obtains sensors from France. System assembly and integration is done in the UK. How many sectoral agreements will cover this? 

So, for me, the real issue is to determine if these are abstract concerns or real problems. 

My suggestion is to frame this as a debate. 

Try this: ‘This house, considering the achievements of governments worldwide in achieving the full potential of IT, has no concerns over the UK government’s ability to negotiate an optimum settlement for post Brexit IT.’ 

Are you brave enough to argue FOR the proposition? 

If not, what do we need to do to secure the necessary changes in values and behaviours? Do we know what it is that WE want? What will Brexit mean for BrexIT?

Comments (5)

Leave Comment
  • 1
    Peter wrote on 8th Nov 2016

    > I was followed by a barn storming, wickedly hilarious speech. The topic was “the importation of hairbrushes”.

    Do you know of a video for this? Sounds like a good antidote to the next couple of days' news.

    Report Comment

  • 2
    chris yapp wrote on 8th Nov 2016

    Peter, sadly, this was before the world of YouTube el al.I do understand it is part of the transitional issues we all face. if someone does have the video i'd be grateful, but mobile phones didn't have the capability at the time

    Report Comment

  • 3
    Graham Coyne wrote on 17th Nov 2016

    Were the GDPR implemented in the UK, that implementation might remove some uncertainty from Brexit trade negotiations. Indeed, it may be possible to say to the EU: we'll take on board GPDR and a raft of other regulation in areas of employment, health & safety, finance etc. and so pave the way for trade negotiations. We need to make it easy for the EU to do business with us and to do our business across the EU.

    A side question, looking at data protection for individuals, is there such a thing as data anonymity in the age of Big Data? For example, when NHS-managed data is handed over to Google's Deepmind, what possible control might an individual have as to how their data might be used, abused or de-anonymised? Might GPDR deal with the myth of "implied consent"?

    Report Comment

  • 4
    Chris Yapp wrote on 18th Nov 2016

    Graham Coyne, The current position is as I understand it that UK will implement GDPR for May 2018. That deals with regulatory equivalence at Brexit. Your point about individuals is well made. If post Brexit the UK takes a different position from rEU, equivalence will be lost. I suspect that iomplied consent is one where there may be different attitudes among member states given their histories so the querstion really is how long will uncertainty remain. Think of it like this. If you were considering a 2017 investment to open a new facility early in 2018 and you were considering UK, Ireland and Sweden, what would you chose to minimise risk?

    Report Comment

  • 5
    David Martin wrote on 23rd Nov 2016

    I believe that the position over IT skills is being overplayed given other factors in the economy.
    The rise of Skype, webinar software, conference calls and cloud should mean the need for IT people to actually be in any given country is reducing.
    The wave of offshoring has come and I suggest is now more mature. Not everything is suitable for offshore but that is where management and innovation will come in. To make effective use of the IT people who are in the UK.
    So I do not think IT has a good case for an exception in the movement of people, in fact it should be leading the way saying that technology can be used to address the challenge.

    Report Comment

Post a comment

About the author
Chris is a technology and policy futurologist. Chris has been in the IT industry since 1980. His roles have spanned Honeywell, ICL, HP, Microsoft and Capgemini. He is a Fellow of the BCS and a Fellow of the RSA.

See all posts by Chris Yapp

Search this blog

August 2017
M
T
W
T
F
S
S
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31