The digital economy in the United Kingdom is a success story: the British economy has the highest percentage of gross domestic product attributed to the digital economy of all European nations; UK digital industries grew two and a half times as fast as the economy as a whole between 2003 and 2013; and the United Kingdom has the highest percentage of individual internet usage of any G7 economy. We recognise and endorse the Government’s support of the digital economy and we look forward to its Digital Strategy, even though this is now due to be published in the autumn of 2016, much later than expected.
Inevitably, there are difficulties measuring the digital economy because it is hard to define precisely: most businesses have some sort of digital presence, even if they do not trade or operate exclusively online. However, GDP figures do not take account of all the economic benefits of the digital economy, such as time saved, increased choice and lower cost of products. The Government should explore ways of collecting real-time data and of applying standard terminology and coding of activity, in order to measure accurately the digital contribution to levels of UK productivity, and to reflect this in policy making.
We recommend that the Government provides greater clarity on the regulation of the digital economy. The Department for Business, Innovation and Skills must be at the forefront of the regulation debate. It should explore new regulatory opportunities that exist within the digital framework and seek to ensure that appropriate regulations are in place to support and encourage innovative uses of technology, while protecting consumers and not disproportionately disadvantaging non-digital industries.
A more collaborative approach to regulation, involving users, should be explored by the Government. Digital platforms (the software or hardware of a site) could themselves become key players in the regulatory framework, required to ensure that users are complying with current regulations, and that workers using the platforms have reasonable employment conditions and are not vulnerable to exploitation.
The Government must outline what measures it is taking in the immediate future to support policies connected with the digital economy, in the light of the referendum on the UK’s membership of the European Union, and must ensure that the country’s digital economy remains successful and innovative.
15 July 2016