What the Election Could Mean for Your Business

With the General Election just around the corner, and the polls pointing suggesting that Sir Keir Starmer will soon be moving into Number 10, interesting times lie ahead for businesses in the UK. In this newsletter, we take a look at some key areas of regulation, including what is happening now, what might have been, and what could be depending upon which party emerges victorious after 4th July.

Online Safety

Considerable progress has already been made in the form of the Online Safety Act and Ofcom’s ongoing consultations on its draft codes and guidance. If re-elected, the Conservatives plan further action on online safety. They plan to ban smartphones in schools, consult on further parental controls over access to social media and build on the existing requirements for social media companies in the Online Safety Act.

Labour also intends to build on the foundations of the Online Safety Act, seeking to explore further measures to keep people safe online, particularly in the context of social media.

Regulating AI

The outgoing government has famously (or perhaps infamously) approached AI regulation with a notably light touch, particularly when compared to the EU AI Act, seeking to promote the UK as a leading AI development hub. This is despite the House of Commons technology committee previously recommending stronger AI regulation.

A private member’s bill, introduced by Lord Holmes in November 2023, sought to establish a regulatory framework for AI in the UK and included the establishment of an AI Authority, governed by a set of key principles. The proposed AI Authority would have played a valuable role in promoting responsible AI practices and in coordinating existing regulatory bodies. Further, businesses that developed, deployed, or used AI would have been required to appoint a designated AI officer, not unlike a data protection officer under the UK GDPR.

It is at the very least open to question whether or not the AI (Regulation) Bill would have become law, despite having cross-party support, but when Parliament was prorogued, the bill fell. Could it re-appear? Only time will tell.

Meanwhile, Labour are committed to supporting the development of UK’s AI sector. Additionally, the party will establish a National Data Library to consolidate existing research programs and facilitate the delivery of data-driven public services, all while upholding robust safeguards to ensure equitable benefits for the public.

Labour also seek to create a new Regulatory Innovation Office, bringing together existing functions across government. This office will help regulators update regulation, speed up approval timelines, and co-ordinate issues that span existing boundaries. It aims to ensure the safe development and use of AI models by introducing binding regulation on the companies developing the most powerful AI models.

Data Protection

Under the outgoing government, the Data Protection and Digital Information (No.2) Bill was making its way through Parliament. Designed to make changes to the Data Protection Act 2018, the UK GDPR, and the Privacy and Electronic Communications Regulations 2003, the Bill represented a significant set of post-Brexit reforms. There were also concerns in some quarters that the proposals could put the UK’s EU adequacy status at risk, thereby potentially complicating EU to UK transfers of personal data.

While it was expected that the Bill would receive Royal Assent this year, this was not to be. The Bill was not one of the pieces of legislation to make it through the wash-up period following the announcement of the General Election and has thus fallen.

In the event that the Conservatives win the election, it is likely that a very similar bill would be re-introduced. The bill also enjoyed cross-party support, and industry groups have been lobbying for data protection reform. It is therefore likely that data protection reform would also be on the agenda if Labour were to win the election. In the absence of specifics in the party’s manifesto, however, it remains to be seen how similar a possible Data Protection and Digital Information (No.3) Bill would be to its predecessor. For the time being, at least, businesses comfortable with the existing regime can lay to rest concerns about potential disruption to UK-EU relations over data protection.

Consumer Protection

One piece of legislation that did make it through the brief two day wash-up on 24th May was the Digital Market, Competition, and Consumers Act. In addition to strengthening the Competition and Markets Authority’s powers in respect of digital markets, competition, and consumer protection, the Act includes rules on subscription contracts, fake reviews, hidden fees, and unclear pricing.

The Act’s provisions covering subscription contracts impose a number of requirements on businesses including pre-contract information requirements; cooling off periods; renewal reminders; and termination rights. Such requirements potentially present a heavy burden for businesses, but according to the Government, will not come into force until spring 2026 at the earliest.

Save for some sector-specific matters, the manifestos are largely quiet on the topic of consumer protection, most likely due to the fact that much of the heavy lifting has already been accomplished with the passage of the DMCC Act. Interestingly, however, the Liberal Democrats have stated that they would require digital firms to provide short, clear versions of their terms and conditions to consumers, in particular setting out key points relating to individuals’ data and privacy. Given that many consumers gloss over detailed terms and conditions or fail to read them entirely, this is perhaps an idea that whichever party wins the election should consider implementing.