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Data has potential to enhance UK economy and productivity, says government

Government paper sets out potential for data to drive economic value, and highlights series of challenges that need to be addressed to fully gain benefits

The government has set out a series of challenges to tackle so data-driven innovation can spur productivity and economic growth.

In a discussion paper, which will inform the development of the government’s national data strategy, the government highlighted the importance of data in underpinning international trade, fostering new products and processes and in “enabling entirely new business models”.  

The paper said data has a huge potential to drive the UK economy forward, but that there are serious challenges to overcome.  

Data analytics, it said, is still in “its relative infancy”, which means that sometimes the potential value of data isn’t recognised due to a lack of detailed evidence. It added that because data is “non-rivalrous”, it can be difficult to establish the rights to use and transfer data.

“By obscuring the true economic potential of data, these features can lead to a mismatch between those who hold potentially valuable data, and those innovative businesses and entrepreneurs with the skills and inclination to exploit significant data assets,” the paper said.

“Only where data is able to flow freely between economic actors will its true potential value be realised.”

Data ownership

The key challenges highlighted by the government include data ownership and personal data protection.

The paper said although some advocate for changing the law “more fundamentally” so individuals can have ownership rights of their personal data, it argues that this would lead to “substantial technical and legal challenges in seeking to value individual contributions of data”, especially because personal data can relate to more than one person.

It added that personal data is a huge source of economic and social value to businesses and consumers, and as technology is increasingly used to personalise user experiences, reliance on personal data is expected to increase.

“While this will bring significant opportunities for businesses and consumers, there are implications for privacy and data protection,” the paper said.

“Under the new data protection laws, consumers will be better able to ‘trade off’ what is known about them, against benefits like product recommendations and personalised services.”

The government believes that the data protection laws, such as the European Union (EU) General Data Protection Regulation (GDPR) and the Data Protection Act 2018 should not be seen as a barrier, but instead as an opportunity.  

“By building a strong data protection framework, the government hopes to build public confidence in the appropriate sharing of personal data for social and economic means,” the paper said, adding that in the long-term, public confidence on data sharing will increase the availability of data for businesses.

Public sector data

The government has done several pieces of work on opening up public sector data in the past few years, and has released more than 45,000 datasets so far.

One example is Transport for London’s (TfL) decision to open up transport data, which has led to app developers feasting on the data sets. The paper said that, according to a recent Deloitte study, the transport data now contributes up to £130m to the London economy.  

However, the paper added that data access should be seen as a spectrum, rather than “open” or “closed”.

“There may be instances in which it is appropriate to increase access to data, but where – as outlined above – it is inappropriate for that dataset to be made completely open,” it said.

“There may also be instances where the government wishes to retain control of valuable datasets that can be used for commercial purposes, in order to ensure that a fair proportion of the benefits derived from public data accrue back to the general public.”

It added that the government also plays a role in increasing data value through structuring and linking datasets.

Interoperability and standards were also highlighted as challenges, and the paper said the government plays a key role in driving standards forward. It highlighted the open banking regulation, which can encourage and enable data sharing in the banking sector.

“Increasing access to data in this way is expected to have a significant impact on competition in the future banking market, allowing consumers and small to medium-sized enterprises [SMEs] to access a range of new and innovative products that better meet their needs,” the paper said.

It added that the Data Protection Act has introduced the right to data portability, which could help drive common standards work on interoperability.

“The government will carefully consider how this right operates in practice across different sectors,” the paper said.

Looking to the future

The government’s recent data initiatives – such as the AI sector deal, the NHS digital innovation hubs and the GovTech challenge fund – will all form the foundations on its “strategic approach to data”.  

“The potential value of data for businesses raises particular opportunities and challenges when it comes to competition in the digital economy,” the paper said.

“Many stakeholders have expressed concern that the dominance of a few, key digital companies places significant restrictions on access to data, with potential adverse effects on competition across a whole range of sectors.

“However, data-driven innovation can also facilitate new forms of competition and disruption in markets that were previously dominated by only a few incumbents.”

The paper added that there are still several questions in terms of how to take advantage of the UK’s “unique strengths and capacity for data-driven innovation”, and that the challenges set out in the paper will drive forward the national data strategy.

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