The government will announce a new data reform bill in the Queen’s Speech intended to allow the UK to deviate from EU privacy legislation, Sky News has learnt.

Industry representatives told Sky News they believe the UK could benefit from the reforms, but there are concerns that if done improperly they would ultimately cost the economy more than they deliver.

It comes as the Conservative Party wants to claim to have delivered a “Brexit dividend” ahead of the next general election, alongside an urgent need to raise GDP to address economic issues.

This was true when the reforms were first planned following the COVID-19 recession, but both needs are seen to be even more critical now with the Bank of England predicting a recession and a sharp rise in inflation to 10.25% by the end of this year.

There are fears if the reforms aren’t substantial enough then they won’t provide much of a boost to business, while if the UK departs from EU standards too greatly then it could lose its “data adequacy status” meaning businesses will face higher compliance costs when receiving data from the bloc.

What is happening and when?

The new bill will be announced in the Queen’s Speech next week, on Tuesday 10 May.

Shortly after the speech, within weeks Sky News understands, the government will publish its response to a consultation with businesses and civil society on the data protection reforms.

Westminster sources have told Sky News that the draft bill, which is one part of this wider package of data protection reforms, will be published in the summer.

The wider package includes scrapping cookie consent banners, although these are not actually covered by the General Data Protection Regulation (GDPR) but the UK’s Privacy and Electronic Communications Regulations.

The bill’s passage through parliament is likely to be marked by arguments over whether it risks compromising the UK’s data adequacy status.

Anticipating the risk of another battle in parliament, Number 10 promised at the end of January a Brexit Freedoms Bill that would at its core allow the government to change primarily legislation – such as the UK’s GDPR – without needing to win parliament’s approval. However this bill has not materialised.

What does business want?

In its response to the government’s consultation, industry body techUK praised “retaining the fundamental principles of the GDPR” which meant the UK could make practical changes to the regulation while not jeopardising data flows between the UK and EU.

Neil Ross, associate director for policy at techUK, said: “Developing a clearer, more trusted and innovation-enabling data governance system is one of the most obvious opportunities of Brexit.”

Mr Ross cautioned the need to “find the right balance between upholding citizens’ rights, allowing data to be reused for research and innovation, while also supporting global data flows”.

“However, the government will need to be bold and embrace these opportunities, otherwise risks only achieving half-hearted changes, and creating extra compliance for UK businesses without seizing any of the benefits for increasing UK R&D and innovation.”

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Almost all of the public responses from industry and civil society to the government’s consultation have stressed the importance of the UK retaining its adequacy status with the EU.

However there have been calls – particularly from Brexiteers within the Conservative Party – for the the UK to do away with adequacy entirely and instead favour data trades with other states with whom it is building trade agreements, including Japan and Singapore.

These calls were advanced in a report by the Taskforce on Innovation, Growth and Regulatory Reform – led by Sir Iain Duncan Smith – which focused “on those areas that could see change happen quickly and have an economic impact within the next few years”.

Losing adequacy could cost UK business £1.6bn

A report by the New Economics Foundation delivered what it said was a conservative estimate that if the UK were to lose its adequacy status that would increase business costs by at least £1.6bn over the next 10 years.

“And that’s just the increased compliance costs, we specifically excluded in our estimates the wider impacts around trade shifting… UK businesses starting to lose EU customers,” the report’s author Duncan McCann explained to Sky News.

“We had a meeting with the chief economist at DCMS after that [report was published],” he added. “She said she recognised the figures and they’re very close to DCMS’s internal estimates, which she never shared with us, obviously.”

A spokesperson for DCMS did not dispute this when it was raised by Sky News.

Mr McCann added: “What that means is that, by my calculations, there is no dividend to losing our data adequacy status.

“If we could reform the laws within and still retaining adequacy then there is a potential for a dividend. Although again, I think a lot of the issues, a lot of the benefit that the government raises is just around reducing compliance costs.

“The idea that doing that will unleash some kind of economic miracle – that the UK will suddenly become a hub for innovation – seems unlikely.

“Small tweaks to GDPR and the existing data protection regime just don’t seem enough to welcome in the kind of unregulated market that some people think could benefit AI and big data sets.”

A DCMS spokesperson did not respond to a request for comment.

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