If the UK doesn't get a move on, rival financial centres will 'leapfrog' and overtake the UK's lead in open banking, writes John Penrose.
At the start of the year, Chancellor Jeremy Hunt gave his first big speech about how he’s going to get Britain growing faster.
It was his first chance to present a vision for the future and to highlight the strengths of the UK economy, especially in areas like digital technology, AI, fintech, life sciences and green energy.
Yes, there is an immediate, urgent priority to bring down inflation, but growth is a long-term essential too.
And with the Government’s finances under huge strain after a pandemic and an energy crisis in quick succession, he won’t have much scope in his upcoming budget to get things moving by turning on the taps of Government spending.
So, with much less fiscal firepower than usual, supply-side reforms to unblock the arteries of our economy will be his main option for faster growth.
Fortunately, in 2021, I published a Government-commissioned report which has loads of precisely these types of ideas, so he will have plenty of options to choose from. It was called Power To The People and made about 30 recommendations on how to make Britain more internationally cutting-edge and competitive.
And just recently I’ve published an update called Unfinished Revolution which works out which of the original 30 ideas are still waiting to be done (the answer is ‘about half’) and adds a few new ones to reflect what’s changed because of the pandemic and war in Ukraine.
The biggest and most profound economic disruption is digitisation. Yes, there are obvious benefits as things become faster, cheaper and more convenient, but there are downsides too. We’ve got to work out how to handle huge new digital data monopolies and deal with the question of whether consumers and businesses understand the value of their data too.
The last time we updated our competition rules, firms like Amazon, Uber and Apple didn’t exist, so it’s good news that Government Ministers are planning to deal with the digital monopolies through a specialist unit in the Competition and Markets Authority too.
But the single most valuable and important change ought to be something called Smart Data, which could be a game changer if we handle it right.
Smart Data is about putting consumers and businesses directly in charge of their own data.
Think of it like this, the Government, banks, supermarkets, energy providers and pretty much any company or organisation we deal with day-to-day sit on lots of data about what we buy, how much we earn or where we like to travel.
Smart Data is about giving each of us the right to make our information portable.
A good example is open banking, a proven British success story that is helping millions of small businesses and consumers by transforming the way we pay for things, how we apply for credit and keeping on top of our finances.
Open banking has helped turbocharge our fintech industry even more. But why shouldn’t it be extended beyond banking and into “open everything” by including insurance, pensions, energy or online shopping too?
Key to all of this is a new piece of legislation, the upcoming Data Protection and Digital Information Bill. It’s a promising start, but it’s tentative: it won’t get us to open everything, because it doesn’t go far or fast enough.
Other countries aren’t standing still either. They’ve seen the phenomenal success of open banking and, unsurprisingly, they’d like some of what we’ve got too. If we don’t get a move on, they won’t just copy what we’ve done already; they’ll leapfrog and overtake us.
We have an opportunity to use this as a mechanism to make us more ambitious and move from open banking to ‘open everything’ as fast as possible.
If we do, it will maintain our global leadership, create thousands more valuable, world-beating UK-based start-up firms and mean the industries and skills of the future would be created right here.
When the Chancellor stands up to deliver his Spring Budget in Parliament next month, I’m sure he will be proud of the innovation in new and high-tech sectors of our economy. ‘Open Everything’ can and should be one of them.
17 March 2023
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