Parliamentary blockchain advocates have seized on a report described as ‘the most comprehensive overview ever’ of the UK blockchain industry to urge greater exploration of the technology across the public sector.
Fifteen UK government agencies,including the Department for Work and Pensions and Department for International Development, are involved in blockchain initiatives, according to the ‘Blockchain Industry in the UK Landscape Overview 2021: Companies, Investors, Influencers and Trends’ report.
As indicated by its title, the bulk of the report focuses on investor confidence in UK-based blockchain entrepreneurship – which is described as is ‘high and growing’. But the report also examines government and broader public sector interest in blockchain – a digital ledger of transactions distributed across a network (distributed ledger technology – DLT).
Martin Docherty-Hughes MP, chair of the All-Party Parliamentary Group on Blockchain, and Lord Holmes, a long-standing blockchain champion, have both endorsed the report and called for authorities to step up their engagement with blockchain’s possibilities.
“We need to look at distributed ledger technology as an asset in the delivery of public services. It represents a new opportunity for the creation of natively digital public services, building off a substantial policy framework,” said Docherty-Hughes.
“Blockchain for democratic government applications can improve public services, service delivery, and a public organisation’s capacity, potentially reimagining the social contract completely,” he added. “The flourishing blockchain ecosystem across the four nations, mapped in this report, needs to be supported and regulated by governments.”
Which 15 UK government ‘blockchain-friendly’ bodies are named in the report? Global Government Fintech lists them at the end of this article
Blockchain ‘already playing a powerful role’
Holmes, who authored a report four years ago entitled ‘Distributed Ledger Technology for public good’, urged politicians and decision-makers to “take a close look” at the report’s findings.
“We have an opportunity to take every tool of our new technologies to develop, deploy and distribute them for the public, common, economic, social and psychological good. We can do this. It is our choice,” Holmes said. “Whether reducing friction in international trade, addressing the climate change challenge, decentralising and democratising finance or providing financial assistance to individuals during Covid-19, blockchain is already playing a powerful role.”
“As I set out in my 2017 report, ultimately success will come down to leadership, collaboration and innovation. This overview demonstrates that we have what we need in the UK to enable local, national, and global transformation through such new technologies,” Holmes added.
One example of UK government involvement in blockchain is the Department for Business, Energy & Industrial Strategy (BEIS) and Office for Product Safety & Standards review, published last year, of the use of blockchain and other DLT to verify the provenance of goods.
In a panel discussion on 3 November to launch the report, Docherty-Hughes, who has been MP for West Dunbartonshire in Scotland since 2015, described a general “lack of awareness and knowledge about what the tech can actually do in public service delivery realm” and called for greater “leadership at the top of government”.
“I’m a fan of where the chancellor takes on the role of digitisation, that’s what we see in Estonia, because the chancellor controls the purse-strings,” Docherty-Hughes said. “In Scotland we have seen recently the cabinet secretary for finance also take on the role of digitisation and the digital agenda, and maybe hopefully the chancellor in Westminster will see that as an opportunity. I think that would show leadership at the top of government.”
GovTech blockchain investment ‘relatively small’
The 90-page report was produced by three London-based organisations: Big Innovation Centre, a technology consultancy and think-tank that is also secretariat for the APPG on Blockchain; Deep Knowledge Analytics, an analytics and consulting company; and Greengage, a London-based fintech company.
The analysis describes investment in blockchain ‘GovTech’ as ‘relatively small’, which, it argues, indicates how ‘there is still under-investment in public-purpose government sectors compared to the huge potential’. The government’s £20m (about $27.1m) GovTech Fund, announced in 2017 to support delivery of the Industrial Strategy by stimulating innovation (and which was made available from 2018-19 to 2020-21), ‘must catalyse some of these opportunities, but there is a need for more’, the report states.
The report also ranks British parliamentarians by their references to blockchain and DLT in parliamentary speeches since 2016. Lord Holmes is top with 29 mentions, followed by parliamentary under-secretary of state for housing and rough sleeping Eddie Hughes (Conservative Party – 21 references), who authored a report ‘Unlocking Blockchain: Embracing new technologies to drive efficiency and empower the citizen’ in 2018; next come shadow digital minister Chi Onwurah (Labour Party – 16 references); and economic secretary to the Treasury/City Minister John Glen (Conservative Party – 13 references).
The report and analysis breaks down on a company-by-company basis more than £1.6 billion (about $2.16bn)-worth of investment into UK blockchain companies, identifying and profiling 520 ‘blockchain-centric’ firms (of which 450 are based in London) across 18 blockchain sectors. Most investments in UK blockchain have been into fintech (17 per cent) and crypto trading (14 per cent) companies. Investment into GovTech (2.3 per cent) and InsurTech (1.7 per cent) is much lower.
Blockchain companies need to recognise that describing what they offer as “services”, as opposed to “products”, would likely be “critical” to success when making the case for the tech to public authorities, said Docherty-Hughes.
UK government agencies mentioned in the report
‘Blockchain-friendly’ governmental, regulatory and standardisation bodies that ‘create blockchain initiatives’:
- Centre for Data Ethics & Innovation (CDEI)
- Bank of England
- HM Treasury
- Financial Conduct Authority (FCA)
- Information Commissioner’s Office (ICO)
- Department for Business, Energy & Industrial Strategy
- Food Standards Agency
- City of London Corporation
- UK Research & Innovation (UKRI)
- Department for Work & Pensions
- Department for Environment, Food & Rural Affairs
- Department for International Development
- All-Party Parliamentary Group (APPG) on Blockchain (discussion forum, as distinct from being a government agency)
Source: ‘Blockchain Industry in the UK Landscape Overview 2021: Companies, Investors, Influencers and Trends’
‘Fintech has “almost infinite” potential for governments: Lord Holmes’ – our news story (3 March 2021) on a virtual panel discussion on the HM Treasury-commissioned Fintech Strategic Review