Hello. It looks like you’re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Wednesday 13 November 2019

This is Part 4 of Tortoise’s election primer. Part 3 is here.

Gig economy

There is almost no prospect of the UK taking a tough line against the tech giants: outside the EU, we will be abiding by decisions made in Brussels and Washington. But it may be that UK policy will seek to address them indirectly. Uber is already facing resistance in London over its checks on drivers. Airbnb may hit its own problems, too: the app is blamed for wrecking towns with rentals and lets. The “gig economy”, which the “platform” apps have turbo-charged, is also a policy target.

The definitions here are tricky, but we can say that engagement in the gig economy is rising quickly. For example, a poll commissioned by the University of Hertfordshire found a steep rise – with almost 10 per cent of people aged 16 to 75 taking “gig” work.

When the definition was narrowed to those saying that they used an app to notify them when work was available, the proportion was reduced to 5.4 per cent.

This survey found that younger workers are by far the most likely to work in the gig economy. Nearly two thirds of “intensive” platform workers (those using platforms at least once a week) are aged between 16 and 34. In truth, though, these “platform” jobs are just a small part of the issue.

There are allied problems with so-called “zero-hours contracts”, which allow employers to cut staff with no notice, and a broader rise in self-employment.

This reflects differential tax treatment, in part. Some of the rise of self-employment allows people to side-step part of National Insurance. But some of it reflects a broader change in the labour market.

These jobs also create spillover problems – notably with respect to sickness pay, maternity and paternity rights, as well as pension rights. We want people to be well, to invest in their kids and save for retirement.

We also want good jobs. These jobs are also more precarious, attract less training, tend to involve poorer working conditions, and often have little or no capacity for progression.

There has been some movement: the so-called “Swedish derogation” has been abolished. This means agency workers are entitled to the same basic working and employment conditions as direct recruits of the same business after 12 continuous calendar weeks of employment.

The government is also committed to try to legislate to define the edges of where workers’ rights should kick in more generally: at the moment, the process is being done piecemeal by courts.

Platforms

All the main parties agree – at least in principle – on the need to reform the FAANGS (Facebook, Apple, Amazon, Netflix and Google). It’s just unclear how they intend to do it.

As a candidate, Boris Johnson promised to tax tech giants more heavily after years of them paying virtually nothing to the Treasury. But he has not set out any details. Tom Watson, then deputy leader of Labour, has been similarly vague, boasting that Labour would “rebalance the digital ecosystem towards the many, not the few”. For his part, Corbyn has proposed taxing the FAANGS so as to provide a guaranteed income for the BBC. By how much is, again, unclear.

The key problem is that international taxation rules are hopelessly out of date. They tie tax to physical presence, meaning that a Californian-based Google can sell ads in Britain through a Dublin-registered subsidiary without paying British corporation tax. Last year the Tories introduced a limited digital sales tax in an attempt to solve the problem, but it raised relative peanuts when compared to the tech platforms’ multi-billion revenues. Facebook, for example, paid £28 million in corporation tax last year on a record £1.6 billion in British sales.

Collective action is probably needed to combat the problem. Last month the OECD proposed a global shake-up of corporate taxation which would enable tech companies to be taxed based on where they actually made their profits. The OECD aims to find a “consensus solution” by the end of 2020, but such complex reforms have a way of running over.

More broadly, politicians remain torn about how to treat the big tech platforms. Should Britain strive to become the European hub for US investment? Or should it lead the way in regulating how such companies behave? Commercial opportunity is brushing up against a growing “techlash” of activism that is increasingly hostile to surveillance capitalism.

While mayor, Johnson strove to make London the world’s tech capital. In September he delivered a speech to the UN General Assembly warning that technology could bring “terrifying limbless chickens,” and unleash “pink-eyed terminators” to cull the human race.

Data

The General Data Protection Regulations came into British law last year, thoroughly toughening up laws governing how personal information is collected. But Elizabeth Denham, Britain’s information commissioner, has warned that the GDPR rules are an evolution rather than a revolution and that more steps need to be taken to ensure that citizens’ data is not abused.

A big area of debate going forward is AI. Some tech advocates say that GDPR should be amended to reduce its impact on AI technologies, warning that the failure to do so will consign Europe to second-tier status in the emerging AI economy. Others, such as Ms Denham’s office, are investigating AI as a matter as one of three key data priorities, after recognising its potential impact on private life. Internationally, 42 countries, including the US, UK and Japan, have promised to commit to common AI principles – including those governing how data is used.

Next year is also likely to see a backlash against facial recognition, which is currently subject to worryingly little regulation. In Britain, the country’s biometrics commissioner has urged the government to update its own laws in this area after it was revealed that a private developer had used facial recognition in London’s King’s Cross without asking for permission. The EU is also considering Europe-wide regulation to control what biometric data can be hoovered up.


Illustrations by Waldemar Stepien

To read Part 5 of this primer – Wealth – click here.

All our journalism is built to be shared. No walls here – as a member you have unlimited sharing