The new Labour Government will pass into law a Digital Information and Smart Data Bill, as announced in the King’s Speech today (17 July), to “harness the power of data for economic growth”.
Under the previous Conservative Government, the Data Protection and Digital Information (DPDI) Bill, as it was known, had been progressing through Parliament, until a general election was called for 4 July by former Prime Minister Rishi Sunak.
According to trade association techUK, “a failure to agree a way forward between members of the House of Lords on controversial late amendments added by the Department for Work and Pensions (DWP) is what caused the [DPDI] Bill to fall”.
UK Prime Minister Keir Starmer
It meant that a newly-elected government would need to reintroduce the Bill.
Details of the Digital Information and Smart Data Bill have been published in the King’s Speech, which sets out the 40 bills that Prime Minister Keir Starmer’s government intends to pass into law.
In the King’s Speech, it states: “The Government wants to ensure we harness the power of data for economic growth, to support a modern digital government, and to improve people’s lives.”
The new Bill will give “statutory footing to three innovative uses of data that people can choose to participate in”, one of which is Digital Verification Services – including the “creation and adoption of secure and trusted digital identity products and services from certified providers” – while another is setting up Smart Data schemes.
The government has pointed to Open Banking as “the only active example of a regime that is comparable to a ‘Smart Data scheme’ – but needs a legislative framework to put it on a permanent footing, from which it can grow and expand”.
The King’s Speech stated: “By empowering consumers to share their data with sectors we also hope to encourage the economic growth we’ve seen from Open Banking, across the economy. This is crucial in markets where customer engagement is low, or where businesses hold more information and data than the customer.”
The UK data economy represents an estimated 6.9% of GDP, as of 2022, while data-enabled UK service exports accounted for 85% of total service exports in 2021, and were estimated to be worth £259 billion.
The value of data-enabled exports from the UK to the EU alone is estimated at £91 billion, according to official figures.
Industry reaction
The Open Banking, Open Finance and Smart Data ecosystem has responded positively to the new Digital Information and Smart Data Bill.
Gavin Starks, co-chair, Smart Data Council
“We are delighted to see the Smart Data agenda given such material support in the King’s Speech,” said Gavin Starks, co-chair of the Smart Data Council and chief executive officer of ib1.org.
“Smart Data will help underpin the delivery of the Government’s missions, by providing safe and secure ways of sharing data that open up innovation and reduce risks for both businesses and citizens.”
Starks added: “Developing Smart Data is a foundation of the future of building smart systems: from our net zero energy grid, to smart financial services that can meet the needs of everyone.”
Marion King, chair of Open Banking Limited (OBL), said that it welcomed confirmation from the Government that it will introduce a Digital Information and Smart Data Bill, which will set up Smart Data schemes.
“It’s great to see the Government prioritise important legislation that will transform the UK economy and improve people’s lives,” she said.
Henk Van Hulle, chief executive officer of OBL, added: “The future of Open Banking relies on a successful transition from the current competition remedy, to a long-term regulatory framework, which in turn relies on the proposed Smart Data powers.
“Prioritising this legislation will unlock further benefits for consumers and small businesses.”
Sonal Bomb, chief executive officer of TechnoXander
Sonal Bomb, chief executive officer and co-founder of TechnoXander, called the focus on the Bill in the King’s Speech “commendable”.
“A clear framework for data sharing, guided by the principles of consumer consent, can help develop innovative products which will deliver new opportunities for consumers and businesses alike,” she said.
“Add to it the Digital Verification Services, and the UK would have world-class digital identity products which will not only support secure data sharing, but also help with fraud prevention. TechnoXander welcomes the Labour Government’s plan to pass this crucial bill.”
Raidiam’s open futurist Marie Walker added that, with the Bill, the new government is “recognising the importance and potential of data-sharing ecosystems”.
“The implementation of Smart Data schemes is particularly promising, empowering consumers to securely share their data with authorised third-party providers, thereby fostering innovation and informed decision-making,” Walker said. “Secure, consented data sharing may have started in financial services, but shouldn’t end there. The necessary capabilities, expertise and motivation exist in the UK and it’s time to bring it to fruition.”
Janine Hirt, chief executive officer of Innovate Finance, said the legislation “will enable the UK to build on our initial innovations in Open Banking, extend it to Open Finance and enable digital verification”.
“This can power growth – with the potential to create £215 billion extra GDP over five years – and increase financial inclusion for all,” Hirt added.
On LinkedIn, Jack Wilson, TrueLayer’s vice president, policy and research, wrote: “Great to see the Data Protection & Digital Innovation Bill brought back (as the Digital Information and Smart Data Bill) in the King’s speech.
“This is key to getting UK Open Banking back on track and bridging the gap to Open Finance.”
Tom Burton, director of external affairs and public policy at GoCardless, said that the Bill “promises to boost investment by providing greater certainty about the future of Open banking, as well as opening up similar Smart Data schemes in new sectors”.
However, he added that “there’s no time to waste”. “The legislative process must begin without delay, and we hope MPs in Parliament will rally behind the Bill so that the UK economy can enjoy Open Banking’s true potential as quickly as possible,” Burton said.
Open Banking Expo UK and Europe has introduced two co-located shows for 2024 – the Smart Data Show and Open Finance Show. Find out more and register for the Smart Data Show here.
Further reading: Is the UK ready for a Smart Data economy?
