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Reshuffle 2020: Opening the doors to Boris Johnson’s new Cabinet
Reshuffle 2020: Opening the doors to Boris Johnson’s new Cabinet

Archive for October, 2018

Has the government hammed itself in with Budget 2018?

Politics is a process of managing competing priorities. Resource is notionally limited, so policy decisions are a case of choosing between trade-offs. We can increase NHS funding if we cut pension tax relief – but will that reduce the incentive to save and cost the state more in the long term? And, more importantly, what do our backbenchers, the main lobbies, and perhaps even the public think about it?

But this budget may be different. Government has so many competing priorities, so many policies it has already committed to, and so small a majority that there are no easy options.

Constrictions

The first issue for the Chancellor is timing. Even though it’s been brought forward from the usual November date the amount of uncertainty over the future of the British economy makes it very difficult to forecast. The figures Hammond is basing his Budget on may well be obsolete in two months’ time. We don’t know whether there will be a Brexit deal, the outcome of which is expected to have a huge impact on our economy. The Chancellor has talked about a “deal dividend”, which he doesn’t know if he can spend or not. He also doesn’t know whether he’s going to have to invest in infrastructure for a no deal, like turning the M26 into a lorry park or chartering ships to deliver food. This uncertainty means, while he’s pledged to only hold one fiscal event per year, it wouldn’t be too surprising to see a ‘beefed up’ Spring Statement in 2019 including more policy detail or decisions delayed until the Comprehensive Spending Review also due in 2019.

The timing doesn’t help with his second problem – the deep divisions between the government and its backbenchers on Brexit.  Hard Brexiteers are already rebelling in Parliament, causing the Offensive Weapons Bill (a relatively minor bill limiting the sale of acid and knives) to be repeatedly delayed as a show of strength. There is a suggestion the Finance Bill could be amended to limit government’s ability to provide extra funding to the EU, which it would have to do if the transition period was extended beyond the currently proposed two years. Chair of the European Research Group Jacob Rees Mogg has reiterated that the Budget is no longer a confidence vote so there’s no problem in voting against it (whether this is borne out in reality is another question). As well as concerns over Brexit, there is also the usual Conservative reticence towards tax rises – the last time the Chancellor tried to raise taxes he came off worse for wear and had to cancel the planned changes to NICs for the self-employed.

The DUP are also making threatening noises. DUP leader Arlene Foster refused to say whether her MPs would vote against the Budget despite being repeatedly asked, and the DUP abstained from a vote on the Agriculture Bill – considered a warning shot. Technically, voting against the Budget would break the confidence and supply arrangement agreed with the Conservatives in 2017 (and the state could ask for that £1 billion investment back),  but the DUP’s support for an unchanged union may be a greater driver. Either way, May hasn’t shown any indication of going back on her red line against a trade barrier between Northern Ireland and Britain so their support may be secured.

Finally, the economic elephant in the room is the end to austerity which Theresa May promised in her speech at Conservative Party conference. For this to be borne out in the facts, there will be pressure to cancel planned cuts or increase investment in government services over time – particularly when Hammond sets out the funding envelope for the Comprehensive Spending Review next year. Not to mention the Chancellor already has to find £20 billion for the NHS, keep in place the freeze on fuel duty, potentially invest £2 billion in Universal Credit to dampen criticism of the policy, and money for any of the pork barrel policies currently being circulated (here’s looking at you Scottish Tories, pushing for frozen whiskey tax).

Solutions

So how will he manage it? The issues in Parliament may mean it is death by a thousand cuts rather than a headline increase in income tax. People over 65 may have to start paying for National Insurance. Planned cuts to income tax may be scrapped, as cancelling a future policy is more palatable than a straight increase. There may be new taxes in areas where there is relative consensus, such as a on unrecyclable plastic or some more detail on the digital services tax Hammond threatened at party conference.

While Brexit uncertainty means this budget may not tell us much about the future state of the British finances, it will tell us a lot about government’s stability and power over its own backbenches, or lack thereof. In many ways it will be good practice for when the Brexit deal (if there is one) comes back to Parliament for its approval, because if there’s rebellion now you can bet there will be twice as much in the new year.

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Deal or no deal? Theresa May faces rebels as withdrawal agreement talks stall at “95 per cent” complete

Negotiations with the EU have stalled after Prime Minister Theresa May offered “nothing new,” according to the President of the European Parliament, in a presentation to EU leaders at the October summit on Brexit.

EU leaders decided not to call for a further summit in November as not enough progress had been made in negotiations, though reportedly stand ready to call an ad-hoc meeting if there is a breakthrough. They reiterated their confidence in Michel Barnier as Chief Negotiator for the bloc, while German Chancellor Angela Merkel told all EU countries to prepare for a no-deal Brexit.

At home, Theresa May faces the prospect of rebellion by members of the Conservative party after her proposal for an extended transition period of 33, rather than 21, months caused outrage amongst both pro-Brexit and pro-Remain MPs. The extended period had been designed to de-toxify concerns over the Northern Irish backstop – the provisions which will come into operation if Britain and the EU are not able to negotiate a full trade agreement during the transition period. However, this proved neither acceptable to Parliament nor to Ireland. Ireland will not accept a time-limited backstop.

To placate the members of the pro-Brexit wing of her party who have threatened to depose her in retaliation for what they see as an overly soft approach to negotiations, May has committed to four ‘mini red lines’ for a backstop agreement. Any backstop must contain:

May meanwhile has said the EU withdrawal agreement is “95 per cent” complete, with the backstop for the Irish border among the final details to be settled.

Irish news site RTE has today reported that the EU will offer a UK-wide customs union as a way around the Irish backstop issue, but it will have to be negotiated beyond the withdrawal agreement as a separate treaty. Such an agreement may not meet May’s first mini red line.

WA’s analysis

May’s mini red lines promised to the Commons yesterday, reportedly taken by the EU as a snub, and her position on the Irish backstop mean that unless either side gives ground there is little prospect of a Brexit deal being reached within current timeframes.

Only a backstop without a time limit will be acceptable to the Irish government, which has a veto over whether to accept the final withdrawal agreement as all EU countries must agree for it to pass. Indeed, the Irish Prime Minister has reiterated his commitment to this position today.

It is also doubtful the withdrawal agreement as it currently stands can pass a vote in Parliament. Labour has said it will only vote for a deal which keeps closer ties to the EU, such as the UK remaining in the customs agreement and single market. In addition, 44 backbench Conservatives are now members of Stand Up for Brexit, a campaign group whose pledges are incompatible with the Chequers agreement.

While there is still the possibility Britain and the EU will be able to reach an agreement acceptable to both sides, the latest developments increase the likelihood of a no-deal scenario.

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May be she can keep it up? The great survivor survives another crisis

One of Theresa May’s surprise talents as Prime Minister has been her ability to survive almost perpetual political crisis. Time and again we have seen pundits and politicians predict that she will be out the door within weeks, and yet, two years later, she’s still there.

After the latest EU Summit in Brussels passed without much progress being made, it seemed like this might finally be it for May. Not only had she failed to progress talks beyond the deadlock on the Irish border, she had also indicated that the UK would be willing to extend the transition period. The combination of these two announcements provoked outrage across the political spectrum, making May’s position uncertain once again. Against the backdrop of the march advocating for a second referendum, which was attended by an estimated 700,000 people, Brexiteers spent the weekend briefing against the Prime Minister, seemingly preparing for an imminent vote of no confidence.

High profile Brexiteers have continued to put pressure on May, arguing that her decision to propose an extension to the transition period amounts to a betrayal of the Brexit vote. Boris Johnson, never one to shy away from making such a suggestion, described the move as “a cheat and a fraud on those who voted leave” and announced he had joined Stand Up 4 Brexit, a group of 44 MPs campaigning for a “clean break” from the EU, including David Davis, Iain Duncan Smith and Priti Patel. Steve Baker, the man credited with orchestrating the strategy of the pro hard Brexit faction of MP’s, also seemed to be launching an attack on May, tabling an amendment to the Northern Ireland Bill that would require the Northern Irish Assembly to give approval to any Brexit deal that would treat Northern Ireland differently from the UK.

And yet, the Prime Minister seems to have pulled it off yet again. While on Monday morning, momentum seemed to be building against May, with threats not only of a no-confidence vote, alongside Brexiteers, and the DUP planning to begin to vote against government Bills as a means of undermining the Prime Minister. the threat later appeared to melt away. Baker withdrew his amendment, apparently overestimating the support he could expect to have on the day. Outrage over the violent imagery used by anonymous MPs against the Prime Minister united the majority of Parliament in sympathy for the Prime Minister. All this allowed her to deliver an update on negotiations to the House of Commons relatively unscathed.

How long May can keep this up remains to be seen. The 1922 Committee meet on Wednesday, always a risk for the Prime Minister, with an estimated 40 of the required 48 letters of no confidence submitted to Committee Chair Sir Graham Brady. Fears that the Prime Minister may resort to a softer Brexit over a no-deal may push yet more MPs to submit letters of no confidence in an attempt to trigger a leadership contest. It remains highly unlikely that there are enough Conservatives willing to vote against the Prime Minister to force her out, but there are other options available to those willing to undermine her yet further. Rumours that Brexiteers are planning to deliberately derail Bills as a show of strength have yet to materialise, but clearly have the government worried. The Offensive Weapons Bill, a rumoured target of Brexiteers, has been pulled from the parliamentary agenda for two weeks running.

Theresa May is the great survivor of British politics, but with her own MPs becoming increasingly disruptive as Brexit talks grow in urgency, her future in office looks increasingly uncertain. With the Budget less than a week away, she needs to maintain at least public unity among her backbenchers, while ensuring the continuation of the confidence and supply deal with the DUP. The Prime Minister may be in a less precarious position than she was at the weekend, but it is doubtful that speculation on the future of May’s position is over.

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Brexit, Boris and the Budget

Expectations could hardly have been lower going into the Conservative Party Conference. The Boris Johnson show promised to derail any carefully choreographed messaging from Number 10. The Tories themselves seemed desperately short of ideas, particularly following the radical ideas from Labour in Liverpool the previous week and Ministers ranging from Sam Gimyah to Liz Truss were queueing up to criticise the direction of the party. Yet despite all this, Theresa May has emerged in a stronger position and there were a number of policy announcements that appear to signal a change of strategy. May has successfully bought herself time with which to negotiate Brexit, but big questions remain about her long term future and that of the Conservative Party.

Confounding the expectations of some in her party, Theresa May delivered one of the most accomplished speeches as Prime Minister, setting out a new, more centrist policy direction for the party. Similar in theme to her first speech as Prime Minister, where she pledged to tackle the ‘burning injustices’ within British society, May set out a vision of an inclusive Tory party that would enforce a form of responsible capitalism. This serves a dual purpose. Firstly, it establishes Mayism as clearly separate from policy visions of Boris Johnson and others in the ERG. Secondly, it attempts to formulate an answer to the popular Labour policies that have developed as a result of voters feeling that the government is ignoring issues of inequality and the funding of public services. The positive reception to the speech will likely serve to quieten critics in the short term. However, May has not offered solutions to the Brexit negotiations that will please either wing of her party, and will need to find a resolution to the issue if she is to remain as party leader in the long term.

Housing is also likely to be high on the Budget agenda, after the housing crisis dominated the speech of several high-profile speakers, including Theresa May and Boris Johnson. Both had a similar message: that as the party of opportunity, the failure of young people to get on the housing ladder was a failure of the conservative message. May described the housing crisis as her domestic priority and laid out plans to scrap the cap on the amount councils can borrow to build new houses, but more will need to be done to address regional variation in both housing prices and housing availability if the Conservatives are to prove they can maintain a successful social agenda.

While it is clear that May has some new ideas, it will be down to Chancellor Phillip Hammond to find the money for them, suggesting that the Autumn Budget, due on the 29th October, will be one to watch. Hammond has a tricky challenge ahead of him, needing to follow through on his signature promise to eliminate the fiscal deficit, while finding the money to fund the promised NHS budget increase, and freeing up money for the Conservatives to implement the social spending needed to tackle the messages of Jeremy Corbyn. There are indications that some of this money will be found in the form of new taxes, particularly for sectors accused of not paying enough. In his speech, Hammond set out plans to increase taxes for large digital companies, calling for an international approach, but saying that the UK was willing to introduce its own taxes to tackle the problem. While this will likely be a popular measure, Hammond will need to do more to find additional spending money without alienating business or voters. The Spending Review next year will be the key test of whether the Prime Minister’s suggestion that austerity is over, is anything more than warm words.

While May outperformed expectations, the problems that have made her leadership so tenuous remain and will resurface in the coming weeks. Boris Johnson’s fringe speech was widely reported and popular with his pro-Brexit base. Stepping outside his usual Brexit comments to address the housing crisis and May’s record as Home Secretary, it is clear that Johnson is now attempting to position himself as a credible leadership candidate on more issues than just Brexit. This will do little to alter his relatively poor reputation within the parliamentary party but will, in the coming weeks, add to the pressure on May to drop the Chequers agreement. While she gave no indication that she will do so, it is significant that when referring to the UK’s Brexit proposal in her speech, May avoided using the term ‘Chequers’, instead only referring to the content of the proposals. This has been taken as a sign by some that May is altering her stance on Brexit, but it could be a simple rebranding of the agreement to focus on the content of the proposal, rather than the connotations for Brexiteers.

Despite all her promises of a new, centrist party message, May will only get the opportunity to act on her proposals if she can secure a Brexit that can at least pass a parliamentary vote. Finding a deal with the EU and selling it to her party will be no small task, to say nothing of the DUP, SNP and Labour, who have all made it clear that they will vote against any deal that does not align with their interests. A strong speech and promises of better days ahead will not be enough to preserve her position without measurable success in the next few months and clear progress on Brexit at the next EU Summit on 18th October.

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Looking beyond subsidy: does the Agriculture Bill miss the opportunity to innovate?

Working in the bubble of a city, it can be easy to forget that just under 70 per cent of the country is farmland. But the sector’s economic and political significance is large. While the industry is not one of the UK’s top employers, it still provides around 475,000 jobs directly, as well as supporting a further 30,000 indirectly. Last year it contributed £10.3 billion to the national economy in Gross Value Added terms (a rise of 20 per cent from 2016). It also plays a vital supporting role, providing 61 per cent of the raw materials for the wider UK agri-food industry, which is worth around £108 billion of GVA to the national economy and provides over 3.7 million jobs.

But the sector is facing significant challenges. Changes to industry methods from disruptive and emerging technologies promise to revolutionise how food is produced in the UK. Furthermore, the sector is facing a fundamental change in how it is regulated and funded post-Brexit.

For investors, the economics of the sector have been dictated by EU policy for decades. The Common Agricultural Policy (CAP) was described last year by MEP for South West England Molly Scott Cato, who is a substitute on the European Parliament Agriculture Committee as “unfit for purpose.” Its Direct Payments System, which pays income support based on the amount of land farmed, is unpopular among many in the farming community. Small farmers see it as rewarding land ownership rather than innovation and good farming, as it pays the most money to the largest landowners. In the UK, ten recipients receive 50 per cent of the total farming subsidies.

As the first example of major agricultural legislation introduced since 1947, and one of the first practical departmental bills to map policy for a post-Brexit UK, the Agriculture Bill is an attempt to address the way farming in the UK is subsidised and to take advantage of the demise of CAP. It seeks to shift the emphasis of subsidies away from land ownership, in favour of paying farmers for sustainable land management such as better air and water quality, improved soil health, higher animal welfare standards, public access to the countryside and measures to reduce flooding.

While the Bill provides an opportunity for the government to set out its vision for the future of agriculture in the UK, it also has the potential to put in place a regime as controversial as the CAP that is being replaced. Investors and potential investors in farming, agricultural land and associated assets will have to understand the implications it will have, as well as the details of a newly forged and unexplored system where payments are linked to outcomes.

Under current proposals, cuts to Direct Payments will begin in 2021 and continue until payments cease after 2027. These cuts will be introduced progressively, with annual payments of up to £30,000 cut by five per cent in the first year of the transition, while payments of £150,000 or more will fall by 25 per cent.

Payments will be delinked from farms themselves, allowing farmers to use payments to boost their pension pots rather than having to reinvest all the income. Environment, Food, and Rural Affairs Secretary Michael Gove MP has said this is a deliberate tactic to encourage older farmers to retire. The average age of a farmer has now risen to 59, and the shortage of viable farmland coming to market is driving up prices, creating barriers for new market entrants. Commentators have predicted the uncoupling of the payments from farms will eventually lead to a reduction in the price of land, with an increase in retirees leading more land to come to market.

Publication of the Bill provoked a concerned reaction from the industry, with many disappointed about its lack of vision and the neglect of wider related topics like food production, food market price volatility, free trade and access to labour.

At a Liberal Democrat Party Conference fringe event entitled “What should the UK’s future food policy look like?”, Ian Wright, CEO of the Food and Drink Federation, Elise Wach of the Institute of Development Studies and Stuart Roberts of the NFU all agreed the bill is a “missed opportunity for the whole food supply chain.”

Wright commented that the government significantly underestimated the role of food and farming for the UK economy and that it was “really important to see food and food policy as an arm of economic policy.” More vocally, Glyn Roberts of the Farmers Union of Wales has described the phasing out of the Direct Payments System before the economic consequences of Brexit are known as having “potentially catastrophic consequences for food production.”

Meetings between Environment Secretary Michael Gove and the industry since the initial unveiling of the legislation, have reportedly allayed some fears about the bill and the perceived lack of government vision, with Richard Griffiths, CEO of the British Poultry Council commenting that the bill was a “good first step.” However, the lack of wider vision or connection to broader economic issues in the bill may still prove an issue for some in the industry and limit what it is able to accomplish.

One area not included in the bill, but part of a newly prioritised workstream by DEFRA and a new £90 million fund from BEIS, is Smart Farming. The money provided by BEIS will help farmers and agricultural supply chain businesses to utilise robotics, AI and data science, and will help to develop solutions to issues within farming, such as land availability, unpredictable weather conditions, and poor supply chain management. New “challenge platforms” will bring together businesses and academics to tackle specific issues, and “innovation accelerators” will explore the commercial viability of new technologies.

There is much to interest investors keen on innovation in the UK’s urban agriculture industry, with new farming and food projects developing in the UK’s cities, particularly in London, around the use of hydroponic systems. These systems allow the growth of food products without soil or natural light, using blocks of porous material where the plants’ roots grow, and artificial lighting such as low-energy LEDs. Such systems overcome cities’ lack of space and allow growers to simulate any set of environmental conditions for food production they need. The new market in medicinal cannabis, which could potentially open up once regulations are changed to allow forms of the drug to be prescribed by doctors, could also see these types of spaces used to develop optimised marijuana farms in the UK’s cities.  The advances in this field of technology are abundant, with many companies looking for funding to scale new products or enter new areas.

Other examples of innovation include drone use to better assess crops’ performance across large farms, and enhancements so fertiliser and pesticides can be applied precisely to each plant to reduce over-use and wastage, improving the environment and saving on costs. Better monitoring of climate conditions can inform farmers’ sowing and harvesting plans. The benefits of automated and autonomous vehicles are also a potential game-changer for the industry, with combine harvesters, tractors and other farm machinery being able to operate independently.

The potential opportunities for businesses and investors in the industry are significant and potentially far greater than might be suggested by the Agriculture Bill as it stands. While subsidy and what will replace the Direct Payments System will be of obvious interest, it will be interesting to see what, if anything, will be added to the bill as it makes its way through Parliament that presents more niche opportunities, particularly if the bill is supplemented by further government publications to make up for what is perceived as lacking.

Speaking to the Grocer Magazine, NFU Director of Brexit Nick von Wesneholz neatly summarised the key problem with the Bill: “the key issue is not what the bill does, but what the current and future government does with it.”

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Why investors should start caring about what the government thinks of national security

When WA first wrote about these changes last month, the government’s proposals for competition regulation were flying under the radar. Thanks to a devastating report by John Fingleton, former Chief Executive of the Office of Fair Trading, they are now starting to get the attention they deserve. More wide ranging than the reforms introduced in June 2018, which allowed the government to intervene more easily in mergers affecting three specific sectors, these reforms represent a significant change to the way all investment will be conducted in the UK.

Under the new proposals, the Competition and Markets Authority (CMA) will be entirely removed from the process of investigating deals related to national security. Instead, an entirely new unit will be set up to deal with these cases, with the government estimating that over 200 cases will be reviewed on national security grounds every year. This would be a significant increase when compared to the current system, which has opened eight informal investigations on national security grounds since 2003.

The huge expected increase in caseload is driven by the changing scope of the government’s powers. Although the consultation specifies sectors where intervention is most likely (civil nuclear, communications, defence, energy and transport) any Secretary of State would have would have the power to call in any deal regardless of sector. In many cases this would be the Secretary of State for Business, Energy and Industrial Strategy, although the consultation also specifies that “government proposes using “the Senior Minister” in any legislation, which would be defined as covering Secretaries of State, the Chancellor and the Prime Minister”, meaning that any Senior Minister would be able to trigger a review, regardless of the sector it affected. Additionally, the changes would not only affect mergers and acquisitions, but would also give the government powers to intervene in investments, loans, and acquisitions of intellectual property rights, including copyright and patent rights, and physical property.

This amounts to a fundamental change in the way that UK approaches mergers and competition law, particularly foreign investment. While the changes will also affect UK based firms, by citing ‘national security’ as the reason for the changes, it is clear the government has foreign firms in mind when making the reforms. This could result in a reduction of foreign investment in the UK, as firms become deterred by the increased bureaucracy which acquisitions would have to negotiate, and the uncertainty generated by new rules and a new regulator. As Fingleton sets out, if this does deter foreign investment, then the general value of UK assets is likely to decline, meaning bad news for the wider industry too, particularly as Brexit continues to be at the forefront of some investors’ minds.

The proposals won’t just affect foreign investors, as the effect of the changes will be felt across the whole sector. Investors, faced with a new system and a new regulatory body, will have to navigate additional bureaucracy and new uncertainties regardless of where they are based and what sectors they are investing in. There is no word from government yet on when the results of the consultation will be announced, but investors should use the proposals as a signal of government intention and start to prepare. Increased awareness of the political mood across parliament, and among ‘Senior Ministers’ will become increasingly necessary as investors enter this new regulatory world.

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What does Hancock’s ‘tech revolution’ mean for health-tech and AI?

Given his well-publicised love of all things tech and digital, it comes as no surprise that Matt Hancock’s main priority as Health Secretary will be to overhaul technology in the NHS. Steeped in his family’s software company before entering politics, and driver of a much-praised digital government and economic strategies he seems, on paper, the ideal candidate for ushering in the ‘tech revolution’.

But Hancock will be equally aware of the challenge ahead, and that the dreaded fax machine has outlived many a Health Secretary. So, will his ambitious plans lead to a tech revolution in the NHS, or will the fax machine outlive him?

Last week Hancock unveiled “The future of healthcare: our vision for digital, data and technology in health and care” introducing minimum technical standards to ensure interoperability and upgradability in the NHS. Any system that fails to meet these new standards will be ‘phased out’, and any providers who do not adhere to the new principles will see their contracts terminated. No deadline for this phasing out has yet been given.

The DHSC also reaffirmed its commitment to delivering upon the AI and Data Grand Challenge set out in the Industrial Strategy to ‘use data, AI and innovation to transform the prevention, early diagnosis and treatment of diseases’. Just last month, health minister Lord O’Shaughnessy announced a ten point ‘code of conduct’ for AI intelligence and other data-driven technologies that encourages companies to protect patient data and seeks to ensure that only the best technologies are used by the NHS.

Under the changes, the use of ‘off-the-shelf’ technologies is encouraged, and CCGs and trusts will be free to buy whatever technology they need – so long as it is compliant with the principles. The DHSC said that “this should encourage competition on user experience and better tools for everyone”.

So far, so positive for healthtech and AI companies – especially for those who can meet the new standards. For new and emerging companies, that is unlikely to be a problem – it is older, more dated and less interoperable companies that are likely to suffer under the changes.

This is, of course, not the first time that a Health Minister has sought to upgrade NHS IT and tech. The doomed NHS National Programme for IT cost the tax payer nearly £10 billion before it was scrapped in 2013, one of a string of failed tech reforms.

Hancock is well aware of these failures and of the pressure to make his reforms succeed where the others did not. A key difference between the new changes and the previous attempts is the cost – so far, funding has been limited. Investment in the plans is unlikely to come out of the £20 billion announced earlier this year, and it is improbable that there will be any tech funding announced in next week’s Autumn Budget. In August, Hancock unveiled just £450 million of funding for new technology across the NHS. Alan Woodward, visiting Professor of Cyber Security at Surrey University pointed out that the funding would likely not go far in reality, saying: “Think about it per head, and what it could actually do”. The NHS spent £157 million on simply upgrading its systems to Windows 10.

This time around, reforms are less of a top-down, funded programme and more about making the market more accessible for new providers. Companies will need to show their worth and make a case for how their technology can make a substantial difference to the individual trusts. With the NHS endlessly battling its debts, a company that can highlight how its software can help to save money in the long-term will be an attractive prospect.

NHS trusts can also provide immense non-monetary value to tech companies. The NHS trove of patient data is often cited as one of its most valuable assets, and healthtech and AI companies are keen to access it to further develop technological solutions and diagnostic programmes. Partnerships like that of Google’s DeepMind and Moorfields Eye Hospital have enabled the development of software proven to be as accurate as world-leading eye experts in detecting over 50 different eye diseases.  The DHSC highlights DeepMind in its policy paper and describes it as technology that has “the potential to transform the way professionals carry out eye tests.”.

Moorfields is not paying DeepMind anything, but DeepMind is benefitting enormously from the partnership – through harvesting the patient data, it is designing and building diagnostic AI programmes that have the future potential to be adopted around the world.

With the DHSC increasingly cognisant of the importance of safe-guarding patient data, it is important for companies like DeepMind to provide reassurance they are adhering to the new guidelines. Whilst the lack of funding might initially seem discouraging for the healthtech and AI industry, there remain significant benefits and opportunities to working with the NHS and an ever more accessible environment to doing so. If companies create a compelling case for their value, efficiency and safety and if commissioners are receptive to change, the long-held dream of a technologically advanced NHS may just be realised.

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