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Following the surprise of a hung parliament, what are the implications of a minority Government for UK tech?

As with almost every major poll in the last two years, politicos across the board have been caught out yet again.

Despite a Conservative majority comfortably looking like the favourite outcome, the UK finds itself with a hung parliament as the Conservatives fall eight seats short of an outright majority. The Prime Minister will remain in post for now, supported by an agreement with the DUP, but here we look at what the election result means for UK tech.

Conservative manifesto ambitions

The Conservative manifesto contained an unprecedented focus on the digital economy devoting an entire chapter to the topic. There were some positives in there, particularly around public sector digital transformation and data ethics, however, it was also accompanied by strong interventionist language on various aspects of internet regulation. While the overall ambition to place digital at the heart of the new legislative agenda is welcome, techUK previously warned of the fine line between supporting a thriving digital nation and over reaching regulation that constrains the creativity of businesses and citizens.

The failure to secure a majority raises significant question marks over which parts of the Conservative manifesto the new minority Government will attempt to deliver on. The manifesto has been cited by many commentators and Conservative MPs as a significant factor in the failure to win a majority. As such, significant parts will be rowed back on to placate backbenchers and other parts will be watered down, or jettisoned altogether, in the attempt to get legislation through a hostile Parliament.

But where does this leave the digital agenda? In her speech on the steps of Downing Street the day after the General Election, the Prime Minister again reiterated her commitment to shut down the “safe spaces” for extremists. As one of the few policy commitments she mentioned in that speech, it seems safe to say she will be pursuing her online regulation agenda. This is indeed politically expedient as it is likely to gain support from large swathes of the House of Commons. No coincidence then that the PM has followed this up with briefing on her joint proposals with French President, Emmanuel Macron, to tackle online extremism. The sector is still getting to grips with the extensive new powers in the Investigatory Powers Act (the ink is still drying on the vellum) and companies are developing fuerther initiatives with the Home Office to tackle this most pressing of issues. Expect online safety to feature prominently in the coming weeks.

There is much speculation as to what the result will mean for the new Government’s Brexit approach. While the Remainers in the Conservative Party will feel emboldened, the key architects of the referendum, David Davis MP, Boris Johnson MP and Michael Gove MP, are all in the Cabinet. The tone has certainly softened but as long as the narrative remains fixed on limiting freedom of movement, a deal that keeps the UK in the Single Market remains unlikely. Remaining in the Customs Union may look more appealing, and is a known priority for the DUP, however, that would mean a considerable U-turn in closing off the UK’s ability to make its own trade deals (and the establishment of an entirely new Department for International Trade). There's the possibility for some softening but perhaps not as much as some Remainers may hope for.

The Conservative commitment to reduce immigration to the tens of thousands was repeated in its 2017 manifesto alongside a pledge to double the Immigration Skills Charge. There are rumours in The Times that the net migration target will be dropped but it remains to be seen. This is something the tech sector, along with many others, has called on the Government to drop. Tech is creating jobs faster than the UK can currently produce the talent to fill them. Unless we want to risk this talent going elsewhere, the new Government must commit to a flexible migration system that allows high-value sectors, such as tech,to keep growing.

techUK hopes to see the commitments on the digital transformation of government acted upon, many of which echo calls in techUK’s own manifesto, Inventing the Future. It’s vital that the new Government remains committed to the Smarter State agenda – with a growing population placing increased demands on public services, it’s the only state we can afford. Another positive development techUK urges the Government to continue with is the establishment of an independent Data Ethics Commission to help develop the norms that undeprin the responsible use of data. As data is the lifeblood of the digital economy, it is right to establish just such a body in the digital age. 

It is hard to give more specifics. Things will become clearer after the Queen's Speech, when we have a better sense of the Government's agenda, and we start to see how much trouble Parliament gives the minority Government. 

Interpreting the re-shuffle (see techUK’s reshuffle tracker here)

Theresa May has kept her re-shuffle to a minimum, with the vast majority of Cabinet members keeping their seats. The core digital economy ministers remain unchanged with Karen Bradley MP staying on as Secretary of State for Culture, Media and Sport and Matt Hancock MP as Minister for Digital and Culture. techUK looks forward to a continued working relationship with both ministers as they return to post.

Interestingly, there has been an almost complete ministerial reshuffle in the Department for Exiting the European Union. Leaver David Jones MP has been sacked while Lord Bridges has left voluntarily, and is replaced by Baroness Anelay. techUK enjoyed an effective working relationship with both and they have done significant work in hearing the sector’s concerns. While their departures do not mean starting all over again, it is clear that, in this most complex of briefs, any loss of institutional and sectoral knowledge mean some degree of ramping up for the successor. Negotiations start next week so techUK will be engaging with their successors immediately to ensure tech’s priorities on data flows, access to talent and maximum access to the Single Market remain top of the agenda. There has been much talk of a softer Brexit, but the EU will be determined to prove you cannot have “a la carte” access to the benefits of the EU without being a member. The new ministers will have a significant challenge ahead.

The public sector transformation brief is picked up by a new Minister for the Cabinet Office, Damian Green MP. The former Work and Pensions Secretary has considerable ministerial experience and his time at DWP will have made him aware of the importance of digital transformation in driving public sector efficiencies. However, he also takes on the role as First Secretary of State, a largely political role as the Prime Minister seeks a more consultative approach with her party. The new Cabinet Office Minister no doubt has the credentials to drive the digital transformation agenda but other responsibilities must not side track him from this vital brief.

Philip Hammond MP, widely tipped to be reshuffled before the election, remains in post and will be an important ally for tech during the tough negotiations ahead. Should the balance of power in the Cabinet shift, it is critical that the business voice is heard and this is where Hammond can play a key role, along with Greg Clark MP, who remains Business Secretary and will continue to oversee the Industrial Strategy.

An interesting move is the decision to appoint Brandon Lewis MP, who served under May at the Home Office, as Minister for Immigration and promote him to attend Cabinet. The symbolism seems clear – immigration is going nowhere but further up the agenda. Robert Goodwill MP has been moved sideways and takes over the skills brief from Robert Halfon MP, who is out.

The resignation of the Prime Minister’s closest advisors, accompanied by demands for a more inclusive approach to policy making from Conservative MPs, suggests a shift to more power held by the Cabinet. This could be significant if it creates more room for a variety of voices and ideas. However, it is less clear how decisions will be made - the balance of power within the Cabinet is yet to find its equilibrium and Mrs May will need to appoint new special advisers. 

The situation remains incredibly fluid and Parliament will have a far greater role to play than it has done for a long time. The Opposition will be emboldened and it will be important to ensure they are aware of the sector’s key priorities as we enter one of the most critical moments in the UK’s modern history. techUK remains clear, however, on the task at hand for the new Government – to deliver a modern and dynamic economy that works for everyone and in which everyone works. A roadmap for this ambition is set out in our manifesto, Inventing the Future, and this is what we will be calling on policymakers to deliver.

And what odds on another General Election by the end of the year, you say? The bookies are giving 2/1 but given the drama of the last two years, I wouldn’t bet the farm!

For further information contact Tom Morrison-Bell, Head of Public Affairs

T:  07834 126826   |   E:  tom.morrison-bell@techuk.org