Liz Truss has become the 56th Prime Minister of the UK and the third woman to hold the role. She succeeded Boris Johnson on 6 September after formal appointment by the Queen. As Truss takes office, she will be appointing her senior cabinet ministers; this includes Chancellor, Foreign Secretary, Home Secretary, and Defence Secretary. Other cabinet positions, including the Business Secretary and Digital Secretary, will be announced later.
Truss’ priorities include curbing inflation and growing the economy, amending or scrapping EU-derived regulation, and continuing to provide support for Ukraine. However, Truss faces several immediate challenges and hurdles in her new role as Prime Minister. She faces potential widespread industrial action in the health, transport, and public sectors, as well as retaliation from the EU-27 countries over her plan to suspend parts of the Brexit deal. She will also need to reunite the Conservative Party, split up by a bitter leadership contest in which most MPs backed Rishi Sunak instead. As a new prime minister, Truss may be tempted to call a snap election, but with the crises she faces and the reforms she wants to put forward, she may prefer to hold off on this.
One of her first set-piece tests will be announcing her plan for the energy crisis that is threatening large and small businesses as well as individuals. However, she has yet to announce what this plan will mean in practice or what the terms of support will be, and has already refused to carry out certain measures to alleviate the crisis, such as freezing the energy price cap.
The second big piece will be a Comprehensive Spending Review which sets out the government’s plans for public spending over the coming years, and so government departments will begin competing for new budgets.
An overview of some of the policy areas that Truss has pledged that are relevant to the technology sector can observed below.
Currently, Truss’ manifesto on tech appears slim as she was not overly vocal on what her tech policy priorities would be during her leadership campaign. However, when she held the position of International Trade Secretary, she was supportive of the tech sector. Truss highlighted that technology would be at the heart of the UK’s post-Brexit trade agreements and launched a future trade strategy for UK tech industry back in 2020.
Truss has spoken about the Online Safety Bill, highlighting the importance for the Bill to strike the right balance between the protection of free speech and the protection of under-eighteens from harm online. With Nadine Dorries’ resignation, the new Digital Secretary will face considerably pressure to amend the Online Safety Bill from Conservative backbenchers. It is therefore possible that limited changes will be observed in the Online Safety Bill.
Truss has pledged to limit the of technology exports to authoritarian regimes, including a crack-down on Chinese-owned companies, such as TikTok. Truss has also expressed views on her desire for “two internets”, one for teenagers and one for protecting adults’ free speech, and has vowed to crackdown on crime by wanting the police to “spend their time investigating real crimes, not Twitter rows and hurt feelings”.
Tax and the Economy
Truss has been vocal throughout the leadership campaign about her economic priority to cut taxes, which currently total £30 billion worth of tax cuts. She has considered cutting income tax and VAT as part of a range of options to tackle the cost-of-living crisis and has announced plans to reduce business tax rates to help smaller enterprises. Truss has also announced her intention to conduct a substantial review of current tax rates for families, carers, businesses, inheritance, and the self-employed.
Truss intends to reverse the increase in National Insurance that was introduced in April and has promised to cancel a scheduled rise in Corporation Tax. Under Truss’ leadership, it is possible that the UK could pull out of an international corporation tax deal agreed by Rishi Sunak to ‘stich-up’ global corporation tax rates at 15 percent.
In terms of energy prices, Truss has offered to provide support for the cost of energy bills, but she has yet to clarify what this support would be in practice. She has opposed any further windfall taxes on energy firms and is against a freeze in the energy price cap; however, more recent reports have suggested from insiders that some sort of freeze could be expected.
It can be expected that British foreign policy will remain mostly the same, given that Truss held the position of Foreign Secretary under Boris Johnson. However, Truss has also characterised herself as the ‘Brexit Delivery’ prime minister and has pledged to “unleash the full potential of Britain post-Brexit.”
Truss has vowed to review all EU-derived regulations by the end of 2023, and to scrap or amend any EU-derived measures deemed to be holding the City of London and the UK back. An example of this is the slashing of GDPR rules, which were mirrored upon the EU data protection regime, with the introduction of a new Data Protection and Digital Information Bill in July.
Truss’ ‘tough on Europe’ approach towards the EU is likely to cause friction with EU leaders; when asked about whether President Macron is an ally, Truss remarked that “the jury’s out, but if I become prime minister, I will judge him on deeds not words.” Truss also recently launched legal proceedings against the EU because the UK’s access to the Horizon Europe’s research and innovation funding programme has yet to be formalised by the EU.
Another important priority of Truss’ Brexit policy is the Northern Ireland protocol; Truss has announced her intention to scrap parts of the protocol. It has also been hinted that Truss may trigger Article 16, the emergency procedure clause of the protocol, soon after entering office, a move that will likely bring her into confrontation with the EU.
Lack of dependency on China
A final policy area that Truss has been vocal about throughout the leadership campaign is relations with China, and Truss’ desire to reduce the UK’s dependency on China. Truss’ approach towards China was evident throughout her time as International Trade Secretary, explicitly stating that while China is an important trading partner for the UK, Britain should not be strategically dependent on China. Now that Truss holds the position of prime minister, greater changes in the relationship between China and the UK could be observed.
Truss has prioritised the strengthening of economic ties across the Commonwealth through a ‘New Commonwealth Deal’ that will function as a bulwark to China. Similarly, Truss will look to expand the alternative to the Belt and Road Initiative with G7 counterparts to ensure that the UK (as well as other countries) is not strategically dependent on China.
Additionally, Truss has pledged to crack-down on Chinese-owned companies as part of a wider limit on the level of technology exports to authoritarian regimes. Truss also announced that she will update the UK’s Integrated Review of Security, Defence, Development and Foreign Policy, to include a new focus on Chinese and Russian aggression.
Liz Truss has been vocal about her goal of amending or scrapping EU-derived law by the end of 2023; however, for tech companies, this may create greater restrictions. It is preferable for companies to have national regulations that more-or-less follow a similar blueprint to other countries in the region. Having different regulatory frameworks may disrupt data flows as well as create new trade barriers between countries. In the case of the EU, large multinational companies could prefer to prioritise trade with the EU rather than the UK due to access to a larger market. Therefore, businesses should prioritise bringing an agenda to government on why it is in the UK’s best interest to stay roughly aligned with EU regulations.
Tech companies should focus on engagement with the new government, particularly in preparation for any major amendments to current legislation. An important example of this is the Online Safety Bill; should a new Minister be appointed that takes the Bill in a new direction, companies need to be prepared in case they now fall under the scope of regulation where they did not prior to the new government.
Finally, a ‘passive’ tech agenda can be expected while a new Minister is appointed and a new department is established, with the potential slowing of legislative processes and a lessened focus on introducing new digital strategies and policies.
Access Partnership is closely monitoring all development regarding the new government and other policies under Liz Truss and how they may affect our clients. For more information, contact Hannah Dawson or Michael Laughton.