Lords have suggested a series of amendments to one of the government’s flagship pieces of legislation around the UK technology industry, the Data (Use and Access) Bill.
Introduced to the House of Lords in October 2024 with sponsorship from the Department of Science, Innovation and Technology (SIT), the Bill focuses on how data can be delivered across various use cases.
It could have a lot of significance for how the UK AI sector develops at a crucial time in what has been called the ‘AI Space Race’, with the US and China being the global leaders. Some of its key goals are less relevant to the fields of tech, payments and fintech, focusing more on the arts, chiefly intellectual property.
‘Delusions of Silicon Valley’
However, the Bill has faced some criticisms in the House of Lords committee stage. Baroness Kidron, a crossbench peer (meanwhile she sits with no political party), has voiced some of the most vocal criticisms of the Bill. having proposed two amendments to the legislation alongside three other Lords.
“The government are doing this not because the current law does not protect intellectual property rights, nor because they do not understand the devastation it will cause, but because they are hooked on the delusion that the UK’s best interests and economic future align with those of Silicon Valley,” she said.
The Labour government, much like its Conservative predecessor, is banking heavily on the country’s tech and finance sectors to unlock growth. This has seen a condoning commitment to investment as well as multiple pieces of legislation around finance.
Open Banking in particular is something the government is keen to encourage adoption of, seeing it as essential to driving the UK economy forward and better streamlining payments for both businesses and consumers.
Some elements of its business policies have not been overly well received though. To support its investment plans for UK infrastructure, the government has raised taxes on businesses, leading to some concerns on the impact this could have on SMEs – this was referenced by Kidron.
“We have before us the most extraordinary sight of a Labour government transferring wealth directly from 2.4 million individual creatives, SMEs and UK brands on the promise of vague riches in the future,” she said.
The finance side
Financial services has also been mentioned by the Lords. Two amendments, 48A and 50A, were proposed around regulatory requirements, with the latter calling for a distinction between a ‘service message’ and a ‘ regulatory communication’.
Peers raised concerns that the Financial Conduct Authority (FCA) expects firms to communicate effectively with consumers, but that this may not be possible without adequate data access. Businesses should not be expected to take actions that are not possible due to legislation limiting data use and access, said Conservative peer Viscount Camrose.
“The government are aware that some financial services firms have raised concerns that the direct marketing rules in the privacy and electronic communications regulations prevent them supporting consumers in some instances,” said Labour’s Lord Valance of Balham.
“I appreciate the importance of the support that financial services firms provide to their customers to help them make informed decisions on matters such as their financial investments. The government and the FCA are working closely together to improve the support available to consumers.”
Peers remain confident in the abilities of the UK’s regulators, however, with both Conservative and Labour speaking generally positively about the work of the FCA on previous projects.
The FCA’s work on the regulatory sandbox, launched back in 2022, was highlighted as a particular accomplishment. Lord Holmes of Richmond – who regularly comments on UK fintech and tech legislation – stated in the Lords this week that “at their best, our regulators are the envy of the world”.
In the latest amended edition of the legislation, several provisions have been reiterated about the FCA’s agenda, especially regulatory tasks it may be assigned by HM Treasury.
The FCA may require financial services firms to comply with a predicted interface or participate in prescribed interface arrangements. The regulator may also set a levy on data holders or third party recipients, and could enforce penalties on companies which breach the act’s requirements.
Final reading
Following the report stage, the Data (Use and Access) Bill will now head for its third and final reading, where Lords will vote to reject or approve the legislation in its final form following the committee’s various amendments.
Should it be approved, it will mark a significant moment for Labour’s plans for the tech industry, which as noted above are central to its wider ambitions to foster British economic growth – which slowed at some points in 2024 before rebounding towards the end of last year.
However, it is clear many politicians still have reservations about the government’s intentions and what impact the bill will actually have. In her remarks, critical of both the government and the Conservative opposition, Baroness Kirdron accused the former of putting growth ‘front and centre’ without considering the impact on industries like the creative arts.
She remarked that “there is a role in our economy for AI, there is a role in our economy for companies headquartered elsewhere, there is a role in our economy for new AI models and there is an opportunity of growth in the combination of AI and creative industries. But this forced marriage, on slave terms, is not it”.