UK tech sector reacts to Brexit

Tech industry must compensate for skills shortages and funding outside EU, says sector

European Commission

The UK's tech sector was left contemplating its future outside the EU after yesterday's vote for Brexit.

With a turnout of around 70 per cent, 52 per cent of voters opted to leave the EU in the referendum, compared to 48 per cent who wanted to remain.

With Prime Minister David Cameron resigning in October, a new government will negotiate the UK's exit from the EU, a process that will take two years.

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The outcome pushes the UK's tech sector into uncertainty, with access to the EU's digital single market of 500 million people and its talent pool both thrown into doubt.

However, leading tech organisations today urged the UK to double down on investing in the industry's growth and developing more homegrown talent to make up for a lack of EU investment and skills.

Julian David, CEO of industry trade body techUK, 70 per cent of whose 850 members voted to remain, told IT Pro: "There's a challenge here but there's also an opportunity. There's a whole job of work to be done on exactly what relationship we have with this huge marketplace on our doorstep. Never before has it been so essential to get this right."

Both techUK and BCS, the Chartered Institute for IT, said it was essential a new government works closely with the tech industry to negotiate good trade deals and ensure the UK's tech scene thrives.

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"We'll be talking to people across government but especially in the first instance the Department for Business and the Department for Culture, Media and Sport about what needs to be done and how we can help," said David Evans, director of policy and community at BCS.

David added: "People involved in the negotiations with the EU must be tech-savvy and work closely with the tech industry."

Others were quick to point out that it will be two years until the UK leaves the EU, meaning it will still benefit from membership in the interim.

Scott Dylan, MD of start-up workspace The Assembly in Manchester, tweeted: "#startups we might have voted out. But we're still part of the EU for a few years! You're likely to still get any funding applied for."

But legal experts urged tech firms not to wait to review their reliance on EU labour.

Joanne Hennessy, senior associate at Pinsent Masons law firm, said: "The worst case scenario is that a proportion of your workforce will have to leave the UK. If free movement is removed or restricted, it would become more difficult for employers to recruit from the EU and, potentially, retain the employment of existing EU nationals."

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She added that the consequences of freedom of movement could be dire for filling job roles in the UK, saying: "If free movement is ultimately removed, recruitment of EU nationals could be limited to skilled or highly skilled work only, mirroring the approach taken for non-EEA nationals."

Such an outcome could force the government to loosen its immigration reforms to get the skills the UK needs.

Those reforms recently landed businesses with a 1,000 charge for every foreign worker they employ, as well as incoming higher salary thresholds for people who wish to work in the UK.

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Hennessy said: "The government would also face pressure to review its shortage occupation list and potentially the salary thresholds, to recognise the impact a restriction on freedom of movement would have on industries already struggling with severe shortages."

Brian Spector, CEO of online privacy specialist Miracl, said a Brexit will impact his workforce.

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"We are a distributed organisation with employees based throughout Europe, and the prospect of having to apply for visas and fight our way through reams of red tape to access the highly-skilled workforce that's essential to our business, could really slow us down," he said.

No more EU funding

TechUK warned the UK might miss the injection of EU funding into the private sector, which accounted for 1.4 billion in 2013, according to the Treasury.

David said: "If that funding has been essential to developing a lot of things like excellence in data science and technological breakthroughs in Internet of Things, in smart communities and infrastructure, those things are now more important than ever. [The government] must make sure we have investment in that, however it comes."

EU funding for science research in the UK stood at 8.8 billion between 2007 and 2013, according to the Campaign for Science and Engineering (CaSE), with UK university research budgets, in particular, benefitting from EU funding.

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What is the future of the UK outside Europe?

UK app developer Apadmi's CEO, Matt Hunt, said: "With the impending Brexit, there is now a high level of risk and uncertainty over our future and questions are being asked as to how will we be able to build on our success and further grow without the support of the EU."

Some vendors are already looking outside Europe to try and ensure future success, with enterprise content management firm Alfresco now focused on the US.

CTO John Newton said: "At this point, we will also need to review expanding our position in the US market and growing outside the European Union." 

The Assembly's Dylan told IT Pro that the risks that the UK will exit the single market, and the impact on start-ups unable to recruit EU talent, will not become reality, adding: "To be honest, I think we'll have a turbulent few months but I have faith in Britain's ability to bounce back from challenges."

But the messages from trade body techUK and the BCS were clear that the UK must strive to make up for the loss of advantages of being in the EU, and work to negotiate the best deal for the sector with a new government.

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TechUK's David said: "The UK more than ever now must be a first class, world class digital nation. There's not going to be any benefits if the UK cannot be a high-skilled, technical and digital nation. We need to do a better job of building a whole tech scene across the UK."

BCS's Evans added: "The UK must be a leading nation for digital innovation, with citizens at the heart of our approach, and very much open to international business. To support this we need to ensure that the relationship we have with the EU is right around personal data and access to markets.

"It is absolutely essential that we support and grow our academic base in computing, foster industrial collaboration, and send a message out to the international academic computing community that we want to increase collaboration."

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