Being part of the EU is vital to UK businesses, warns start-up CTO

The CTO of tech start-up Digital Shadows has spoken about the dangers of leaving the EU for UK businesses

The question of whether or not to remain a member of the European Union (EU) could have a knock-on effect on the health of the UK tech start-up scene. 

So claims James Chappell, founder and CTO of Digital Shadows, who has said remaining part of the EU is vital to business success. 

Speaking about the various advantages for start-ups based in the UK, Chappell warned against the potential ramifications if the country were to decide to leave the EU, citing a drop in skilled professionals and potential uncertainty around data protection laws.

"[The UK has] great connections with Europe in terms of sourcing talent from the EU without requiring a visa, and that gives us access to a much larger talent pool than we'd otherwise have," he said.

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"It's a really great environment to start a small business and to try to grow it."

During the Queen's speech this week, it was confirmed that the Conservatives are planning a referendum to re-evaluate Britain's membership in the EU. The House of Commons will reportedly vote on the legislative agenda next week, with the referendum to be held by 2017.

Commenting on some of the advantages that UK start-ups have over other tech companies set up in different countries, Chappell added: "The level of administration required to set up a business is definitely lower here in the UK. In the UK you're at an advantage from a time-zone perspective.

"One of the reasons the banking industry's done so well here is that you can cover so much of the world from this time-zone. It's just a very advantageous place to be."

The EU recently announced plans to build a single digital market, making it easier for start-ups to operate across Europe, but this could be lost should the UK cut ties.


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Earlier this month, techUK CEO Julian David urged the new government to focus on a smart and flexible immigration policy that would welcome more skilled workers into the UK across industries, rather than shutting out talent that could help the country to thrive.

"We're not talking about numbers here, we're talking about getting the right skills needed to grow the economy, be they plumbers or be they tech entrepreneurs or be they experienced large company people," David said. 

Chappell added: "The education here is pretty good, so there's a good talent pool within the UK. But, that said, we always need more, particularly in technology.

"One of the places we fall down a little bit at the moment is in some of our immigration policies we've had trouble hiring some people from outside the EU who are definitely in the skill shortage area, and that's slowed us up a bit."

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That said, the previous coalition government introduced many positive things that helped start-ups and small businesses to grow in the UK. Speaking about this, Chappell however expressed concern that leaving the EU as has long been discussed could have a negative impact on the good already achieved. 

"Broadly, I think a lot of the positive things will carry on... Following the dip in 2007, they did some stuff that really did help. I can't imagine they'll cancel a lot of what they set up.

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"If I'm totally honest about it there are probably a couple of concerns obviously Europe's one. As a start-up, being part of the European community is really important. I'd worry if that was affected in a big way. I'm not sure I agree with some business-leader statements that say the UK could fend for itself. It's a good opportunity for us to be part of Europe."

Anti-encryption legislation

Another much-discussed topic related to the government's plans is the potential for anti-encryption legislation, which is already making headlines in the US. Apple, Microsoft and Google are among the high profile companies pushing back against plans to open security backdoors with weaker encryption policies.

An open letter to the President re-stated that strong encryption is "the cornerstone of the modern information economy's security," and that weakening that would "undermine our economic security."

Prime Minister David Cameron has also spoken about the potential for encryption to be opened up for security services to access data, which Liberal Democrat MP Julian Huppert predicted could be "catastrophic" for UK businesses at the time of its announcement.

"The way that data privacy laws work will be quite interesting," Chappell said.

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"I think it's important that people have trust with investing in British businesses, giving people confidence that if you place a service with a business here in the UK, you can be confident that confidentiality is going to be respected and that information will remain safe and secure. It's a really important point."

He continued: "Again, I think we benefit from some of the European legislation in that sense and our data protection laws are quite good. I hope that continues to be the case."

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