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How can regulators tackle challenges through innovative uses of data?

Wed May 5, 2021
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In this blogpost, we highlight the active role regulators can play in supporting innovative uses of data to tackle priority challenges for society and economy. We also link to a summary of our ‘Innovation and the data economy: opportunities for UK regulators’ roundtable, which brought together representatives from regulators, government, and civil society to explore the role of data infrastructure in supporting responsible innovation, and how this can be harnessed by regulators for innovation and the data economy.

Data, regulators and innovation

Data is driving a revolution in society and the economy. Better access to data can give people and organisations the information they need to make better decisions, innovate, and tackle the complex challenges we face. These challenges include addressing the climate crisis, social equity, and improving health and wellbeing as we build back better following the Covid-19 pandemic. However, how data is used can also bring with it potential risks and harms that need to be understood and managed in an ethical and equitable way.

Regulators are in prime position to influence and catalyse how data is used in their sectors. Their responsibility to protect and support people, business and the environment gives them a unique opportunity to reshape the landscape in a way that benefits everyone. But doing so effectively will require an ambitious outlook that drives innovation, cooperation and engagement with partners from across society and economy. Successes such as the ICO Innovation Hub and the FCA Digital Sandbox have shown what is possible with data innovation by regulators, even when working with highly sensitive data – leading to the Kalifa Review recommending the creation of a ‘permanent digital sandbox’.

In March 2021, the Open Data Institute (ODI) partnered with the Better Regulation Executive (BRE) to convene a roundtable on ‘Innovation and the data economy: opportunities for UK regulators’. The aim of this roundtable was to bring together representatives from regulators, government, and civil society to explore the role of data infrastructure in supporting responsible innovation, and how regulators can harness this for innovation and the data economy.

You can read more about this roundtable in our event summary note below, along with a resource guide.

The benefits

Better access to data can impact regulated sectors in several ways. For example, it can:

  • Create specific regulatory impacts, like better services for customers or fairer access to businesses in tendering processes (such as Ofgem’s Offshore Transmission Regime).
  • Provide a powerful resource to support innovation, enable research or inform better decisions (such as the Environment Agency’s work to share data on flooding, or the MHRA project to create synthetic datasets for research purposes that accurately mirror symptoms, diagnoses, and treatments in genuine patients, but at reduced risk to patient privacy).
  • Monitor and assess regulations to ensure they are having the impact they were designed to achieve (such as monitoring equality in digital services).

Some regulated sectors have already demonstrated the benefits of better data infrastructure and data flows. ‘Smart Data’ has led the way with initiatives that enable customers to simply and securely share data about their use of different services like a current account or cell phone plan, creating opportunities for third parties to provide innovative services. Open banking has already shown that, in the UK, consumers could stand to gain £12bn over the course of a year through services that are more closely tailored to their needs, and similar initiatives are being pursued in finance, telecoms and energy.

The journey

For regulators, a critical step in realising the value of data is to recognise that data is a new form of infrastructure that they have a role in developing. Data infrastructure doesn’t just refer to data assets (like datasets, identifiers and registers) – equally important are the related data standards and technologies; policies and guidance; and the stewardship of data. Regulators can create and influence all of these components of data infrastructure in their sector’s ecosystem.

In order to be effective at this, regulators need to think about their strategy around data holistically, starting from within their own organisations and mapping the whole data ecosystem in their sector. Regulators are not all at the same level of data maturity in terms of their own institutional data infrastructure, and may not necessarily be at the same level of data maturity as other organisations in the sector that they regulate.

Without reaching a certain level of data maturity, it can be difficult for regulators to fulfil their potential to influence their sector’s data ecosystem to get better outcomes for innovation and for people and organisations. In our experience, there are three broad stages in the data maturity journey:

  • Discovery: Understanding what data should be collected and what its value is. Identifying internal stakeholders and the support they might need. Understanding the common problems that data could help to tackle and the barriers to exist around its use.
  • Setting a strategy and goals: Following best practice to set the overall data strategy for the organisation, including the goals and performance metrics. This would include data governance and assurance, risk analysis, and benchmarking of performance against similar organisations.
  • Implementation: Enacting the data strategy. This could include the adoption or development and implementation of data policies and data standards, taking on the role of a data institution, or providing guidance and training for internal stakeholders to strengthen the wider data ecosystems.

Working together

Often, the challenges society faces are not specific to any one sector, which means that the most innovative uses of data are found through cross-sectoral projects. For example, tackling climate change requires cooperation across several areas of society and economy – not just within the energy sector. Taking a wider view beyond the limits of their own sectors will allow regulators to unlock the full innovation potential of data. For example, the Regulatory Horizons Council has identified a number of priority areas where cross-governmental and regulatory cooperation could be applied such as healthcare, satellites, mobility, agriculture and biotechnology.

Other examples of regulators coming together to collaborate on areas of mutual importance include the Digital Regulation Cooperation Forum, which aims to support cooperation and coordination on online regulatory matters and enable responsive regulation of the UK digital economy; and the Regulators’ Pioneer Fund, which brings together regulators and the private sectors to collaborate in areas such low or zero carbon energy technologies.

Building trust between stakeholders is essential to give everyone the confidence needed to tackle common challenges. Multi-stakeholder engagement with both industry and civil society will be needed. Regulators are well positioned to lead this engagement, and to use their sectoral expertise and influence to take their sectors on the journey with them.

Next steps

These are exciting times for innovation in the data economy in the UK. The government has introduced several key policy initiatives to unlock the full value of data in the economy. For example, the Plan for Growth includes policies to build a world leading data economy. And DCMS, sponsor department for the National Data Strategy, has just commissioned a report by Frontier Economics which identifies a range of possible interventions by the government to increase availability of and access to data held by private companies and third sector organisations. Regulatory reform is also an active policy area for government, driven by the Better Regulation Executive (BRE), a new Taskforce on Innovation, Growth and Regulatory Reform (TIGRR) and other recent initiatives such as the Regulators’ Pioneer Fund, and the Regulatory Horizons Council.

At the ODI, we’ll be actively engaging with regulators in a number of ways, as follows:

  • Building on our work on data portability and potential use cases for consumers and providers, we’ll be working with the Smart Data team to explore how to support and incentivise innovation within Smart Data initiatives.
  • We’re looking into ways to assess the evidence for improving data access and data infrastructure in regulated sectors.
  • We are keen to convene regulators and the regulated to work in partnership.
  • We are also keen to work with regulators to help them audit their data maturity and map their data ecosystems to lead on unlocking innovation in their sectors, stimulating competition and delivering better services for consumers, using tools such as our Open data maturity model and Data landscape playbook.
  • We’d love to hear from regulators and the broader data community on where pro-innovation improvements could be made.

If you’re interested in this work and want to get involved or find out more, please get in touch.

Roundtable summary note

Read the roundtable summary note Read the 'Innovation and the data economy: opportunities for UK regulators' roundtable summary note