Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
Good afternoon, my Lords. As usual, I begin by reminding your Lordships that if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Data Protection and Digital Information Bill
Monday 15th April 2024
(7 months, 1 week ago)
Grand CommitteeRead Full debate Data Protection and Digital Information Bill 2022-23 View all Data Protection and Digital Information Bill 2022-23 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 30-IV(a) Amendment for Grand Committee (Supplementary to the Fourth Marshalled List) - (15 Apr 2024)
Lord Clement-Jones
“(a) the rule of law, respect for human rights and fundamental freedoms, relevant legislation, both general and sectoral, including concerning public security, defence, national security and criminal law and the access of public authorities to personal data, as well as the implementation of such legislation, data protection rules, professional rules and security measures, including rules for the onward transfer of personal data to another third country or international organisation which are complied with in that country or international organisation, case-law, as well as effective and enforceable data subject rights and effective administrative and judicial redress for the data subjects whose personal data are being transferred;(b) the existence and effective functioning of one or more independent supervisory authorities in the third country or to which an international organisation is subject, with responsibility for ensuring and enforcing compliance with the data protection rules, including adequate enforcement powers, for assisting and advising the data subjects in exercising their rights and for cooperation with the Commissioner; and(c) the international commitments the third country or international organisation concerned has entered into, or other obligations arising from legally binding conventions or instruments as well as from its participation in multilateral or regional systems, in particular in relation to the protection of personal data.”Member’s explanatory statement
This amendment changes the list of things that the Secretary of State must consider when deciding whether a third country provides an adequate level of protection for data subjects.
Lord Clement-Jones (LD)
Once more unto the breach, my Lords—as opposed to “my friends”.
I will also speak to Amendments 112 to 114, 116 and 130. New Article 45B(2) lists conditions that the Secretary of State must consider when deciding whether a third country provides an adequate level of protection for data subjects. It replaces the existing conditions in Article 45(2)(a) to (c) of the UK GDPR, removing important considerations such as the impact of a third country’s laws and practices in relation to national security, defence, public security, criminal law and public authority access to personal data on the level of protection provided to UK data subjects.
Despite this shorter list of conditions to consider, the Secretary of State is none the less required to be satisfied that a third country provides a level of protection that is not materially lower than the UK’s. It is plain that such an assessment cannot be made without considering the impact of these factors on the level of protection for UK data in a third country. It is therefore unclear why the amendment that the Government have made to Article 45 is necessary, beyond a desire for the Government to draw attention away from such contentious and complicated issues.
It may be that through rewriting Article 45 of the UK GDPR, the Government’s intention is that assimilated case law on international data transfers is no longer relevant. If that is the case, that would be a substantial risk for UK data adequacy. Importantly, new Article 45B(2) removes the reference to the need for an independent data protection regulator in the relevant jurisdiction. This, sadly, is consistent with the theme of diminishing the independence of the ICO, which is one of the major concerns in relation to the Bill, and it is also an area where the European Commission has expressed concern. The independence of the regulator is a key part of the EU data adequacy regime and is explicitly referenced in Article 8 of the Charter of Fundamental Rights, which guarantees the right to protection of personal data. Amendment 111 restores the original considerations that the Secretary of State must take into account.
Amendments 112 and 113 would remove the proposed powers in Schedules 5 and 6 of the Secretary of State to assess other countries’ suitability for international transfers of data, and place these on the new information commission instead. In the specific context of HIV—the provenance of these amendments is in the National AIDS Trust’s suggestions—it is unlikely that the Secretary of State or their departmental officials will have the specialist knowledge to assess whether there is a risk of harm to an individual by transferring data related to their HIV status to a third country. Given that the activities of government departments are political by their nature, the Secretary of State making these decisions related to the suitability of transfer to third countries may not be viewed as objective by individuals whose personal data is transferred. Many people living with HIV feel comfortable reporting breaches of data protection law in relation to their HIV status to the Information Commissioner’s Office due to its position as an independent regulator, so the National AIDS Trust and others recommend that the Bill places these regulatory powers on the new information commission created by the Bill instead, as this may inspire greater public confidence.
As regards Amendment 114, paragraph 5 of Schedule 5 should contain additional provisions to mandate annual review of the data protection test for each third country to which data is transferred internationally to ensure that the data protection regime in that third country is secure and that people’s personal data, such as their HIV status, will not be shared inappropriately. HIV is criminalised in many countries around the world, and the transfer to these countries of personal data such as an individual’s HIV status could put an individual living with HIV, their partner or their family members at real risk of harm. This is because HIV stigma is incredibly pronounced in many countries, which fosters a real risk of HIV-related violence. Amendment 114 would mandate this annual review.
As regards Amendment 116, new Article 47A(4) to (7) gives the Secretary of State a broad regulation-making power to designate new transfer mechanisms for personal data being sent to a third country in the absence of adequacy regulations. Controllers would be able to rely on these new mechanisms, alongside the existing mechanisms in Article 46 of the UK GDPR, to transfer data abroad. In order to designate new mechanisms, which could be based on mechanisms used in other jurisdictions, the Secretary of State must be satisfied that these are
“capable of securing that the data protection test set out in Article 46 is met”.
The Secretary of State must be satisfied that the transfer mechanism is capable of providing a level of protection for data subjects that is not materially lower than under the UK GDPR and the Data Protection Act. The Government have described this new regulation-making power as a way to future-proof the UK’s GDPR international transfers regime, but they have not been able to point to any transfer mechanisms in other countries that might be suitable to be recognised in UK law, and nor have they set out examples of how new transfer mechanisms might be created.
In addition to not having a clear rationale to take the power, it is not clear how the Secretary of State could be satisfied that a new mechanism is capable of providing the appropriate level of protection for data subjects. This test is meant to be a lower standard than the test for controllers seeking to rely on a transfer mechanism to transfer overseas, which requires them to consider that the mechanism provides the appropriate level of protection. It is not clear to us how the Secretary of State could be satisfied of a mechanism’s capability without having a clear sense of how it would be used by controllers in reality. That is the reason for Amendment 116.
As regards Amendment 130, Ministers have continued all the adequacy decisions that the EU had made in respect of third countries when the UK stopped being subject to EU treaties. The UK also conferred data adequacy on the EEA, but all this was done on a transitional basis. The Bill now seeks to continue those adequacy decisions, but no analysis appears to have been carried out as to whether these jurisdictions confer an adequate level of protection of personal data. This is not consistent with Section 17B(1) of the DPA 2018, which states that the Secretary of State must carry out a review of whether the relevant country that has been granted data adequacy continues to ensure an adequate level of protection, and that these reviews must be carried out at intervals of not more than four years.
In the EU, litigants have twice brought successful challenges against adequacy decisions. Those decisions were deemed unlawful and quashed by the European Court of Justice. It appears that this sort of challenge would not be possible in the UK because the adequacy decisions are being continued by the Bill and therefore through primary legislation. Any challenge to these adequacy decisions could result only in a declaration of incompatibility under the Human Rights Act; it could not be quashed by the UK courts. This is another example of how leaving the EU has diminished the rights of UK citizens compared with their EU counterparts.
As well as tabling those amendments, I support and have signed Amendment 115 in the names of the noble Lords, Lord Bethell and Lord Kirkhope, and I look forward to hearing their arguments in relation to it. In the meantime, I beg to move.
Lord Kirkhope of Harrogate (Con)
My Lords, I rise with some temerity. This is my first visit to this Committee to speak. I have popped in before and have been following it very carefully. The work going on here is enormously important.
I am speaking to Amendment 115, thanks to the indulgence of my noble friend Lord Bethell, who is the lead name on that amendment but has kindly suggested that I start the discussions. I also thank the noble Lord, Lord Clement-Jones, for his support. Amendment 115 has one clear objective and that is to prevent transfer of UK user data to jurisdictions where data rights cannot be enforced and there is no credible right of redress. The word “credible” is important in this amendment.
I thank my noble friend the Minister for his letter of 11 April, which he sent to us to try to mop up a number of issues. In particular, in one paragraph he referred to the question of adequacy, which may also touch on what the noble Lord, Lord Clement-Jones, has just said. The Secretary of State’s powers are also referred to, but I must ask: how, in a fast-moving or unique situation, can all the factors referred to in this long and comprehensive paragraph be considered?
The mechanisms of government and government departments must be thorough and in place to satisfactorily discharge what are, I think, somewhat grand intentions. I say that from a personal point of view, because I was one of those who drafted the European GDPR—another reason I am interested in discussing these matters today—and I was responsible for the adequacy decisions with third countries. The word “adequacy” matters very much in this group, in the same way that we were unable to use “adequacy” when we dealt with the United States and had to look at “equivalence”. Adequacy can work only if one is working to similar parameters. If one is constitutionally looking at different parameters, as is the case in the United States, then the word “equivalence” becomes much more relevant, because, although things cannot be quite the same in the way in which administration or regulation is carried out, if you have an equivalence situation, that can be acceptable and lead to an understanding of the adequacy which we are looking for in terms of others being involved.
I have a marvellous note here, which I am sure noble Lords have already talked about. It says that every day we generate 181 zettabytes of personal data. I am sure noble Lords are all aware of zettabytes, but I will clarify. One zettabyte is 1,000 exabytes—which perhaps makes it simpler to understand—or, if you like, 1 billion trillion bytes. One’s mind just has to get around this, but this is data on our movements, finances, health and families, from our cameras, phones, doorbells and, I am afraid, even from our refrigerators—though Lady Kirkhope refuses point blank to have any kind of detector on her fridge door that will tell anybody anything about us or what we eat. Increasingly, it is also data from our cars. Our every moment is recorded—information relating to everything from shopping preferences to personal fitness to our anxieties, even, as they are displayed or discussed. It is stored by companies that we entrust with that data and we have a right to expect that such sensitive and private data will be protected. Indeed, one of the core principles of data protection, as we all know, is accountability.
Article 79 of the UK GDPR and Section 167 of our Data Protection Act 2018 provide that UK users must have the right to effective judicial remedy in the event of a data protection breach. Article 79 says that
“each data subject shall have the right to an effective judicial remedy where he or she considers that his or her rights under this Regulation have been infringed as a result of the processing of his or her personal data in non-compliance with this Regulation”.
Lord Bethell (Con)
My Lords, I will speak to Amendment 115 in my name. I start by saying a huge thanks to the noble Lord, Lord Clement-Jones, and my noble friend Lord Kirkhope, who have put everything so well and persuasively that I have almost nothing else to say in support. I am looking forward to the Minister throwing in the towel and accepting all the measures as suggested. Noble Lords have really landed it well.
I shall not go through the principle behind my amendment because, frankly, its benefit is so self-evident and clear that it does not need to be rehearsed in great detail. What I want to get across is the absolute and paramount urgency of the Government adopting this measure or a similar one. This is a terrific Bill; I thank the Minister for all the work that he and his team have done on it. I sat through Second Reading, although I did not speak on that day, when the Minister gave a persuasive account of the Bill; we are grateful for that.
However, this is a massive gap. It is a huge lacuna in the provisions of a Bill called a data protection Bill. It is a well-known gap in British legislation—and, by the way, in the legislation of lots of other countries. We could try to wait for an international settlement—some kind of Bretton Woods of data—where all the countries of the world put their heads together and try to hammer out an international agreement on data. That would be a wonderful thing but there is no prospect whatever of it in sight, so the time has come for countries to start looking at their own unilateral arrangements on the international transfer of data.
We have sought to duck this commitment by stringing together a Heath Robinson set of arrangements around transfer risk arrestments and bilateral agreements with countries. This has worked to some extent—at least to the extent that there is a booming industry around data. We should not diminish that achievement but there are massive gaps and huge liabilities in that arrangement, as my noble friend Lord Kirkhope rightly described, particularly now that we are living in a new, polarised world where countries of concern deliberately seek to harvest our data for their own security needs.
There are three reasons why this has become not just a chronic issue that could perhaps be kicked down the road a bit but an acute issue that should be dealt with immediately in the Bill’s provisions. The first, which my noble friend hinted at, is the massive flood of new data coming our way. I had the privilege of having a look at a BYD car. It was absolutely awesome and, by the way, phenomenally cheap; if the Chinese taxpayer is okay with subsidising our cars, I would highly recommend them to everyone here. One feature of the car is a camera on the dashboard that looks straight at the driver’s face, including their emotional resonance; for instance, if you look weary, it will prompt you to stop and have a coffee. That is a lovely feature but it is also mapping your face for hours and hours every year and, potentially, conveying that information to the algorithmic artificial intelligence run by the CCP in China—something that causes me huge personal concern. Lady Kirkhope may be worried about her fridge but I am very worried about my potential car. I embrace the huge global growth of data exchanges and technology’s benefits for citizens, taxpayers and voters, but this must be done in a well-curated field. The internet of things, which, as many noble Lords will know, was invented by Charlie Parsons, is another aspect of this.
Secondly, the kind of data being exchanged is becoming increasingly sensitive. I have mentioned the video in the BYD car; genomics data is another area of grave concern. I have an associate fellowship at King’s College London’s Department of War Studies, looking specifically at bioweapons and the transfer of genomic data. Some of this is on the horizon; it is not of immediate use from a strategic and national security point of view today but the idea that there could be, as in a James Bond film, some way of targeting individuals with poisons based on their genomic make-up is not beyond imagination.
The idea that you could create generalised bioweapons around genomics or seek to influence people based in part on insight derived from their genomic information is definitely on the horizon. We know that because China is doing some of this already; in the west of China, it is able to identify members of the Uighur tribes. In fact, China can say to someone, “We’re calling you up because we know that you’re the cousin of someone who is in prison today”, and this has happened. How does China know that? It has done it through the genomic tracking in its databases. China’s domestic use of data, through the social checking of genomic data and financial transactions, is a very clear precedent for the kinds of things that could be applied to the data that we are sharing with such countries.
Thirdly, there is the sensitivity of what uses the data is being put to. The geopolitics of the world are changing considerably. We now have what the Americans call countries of concern that are going out of their way to harvest and collect data on our populations. It is a stated element of their national mission to acquire data that could be used for national security purposes. These are today’s rivals but, potentially, tomorrow’s enemies.
For those three reasons, I very much urge the Minister to think about ways in which provisions on the international transfer of data could be added to the Bill. Other countries are certainly looking at the same; on 28 February this year, President Biden issued executive order 14117, which in many ways echoes the themes of our Amendment 115. It says clearly that there is an “unacceptable risk” to US national security from the large sharing of data across borders and asks the DoJ to publish a “countries of concern” list. That list has already been published and the countries on it are as the Committee would expect. It also seeks to define priority data. In other words, it is a proportionate, thoughtful and sensible set of measures to try to bring some kind of guard-rail to an industry where data transfer is clearly of grave concern to Americans. It looks particularly at genomic and financial transaction data but it has the capacity to be a little broader.
I urge the Minister to consider that this is now the time for unilateral action by the British Government. As my noble friend Lord Kirkhope said, if we do not do that, we may find ourselves being left behind by the EU, including the Irish, by the Americans and so on. There is an important spill-over effect from Britain acting sensibly that will do something to inspire and prod others into action. It is totally inappropriate to continue this pretence that British citizens are having their data suitably protected by the kind of commercial contracts that they are signing, which have no kind of redress or legal standing in the country of destination.
Lastly, the commercial point is very important. For those of us who seek to champion an open, global internet and a free flow of data while facilitating investment in that important trade, we must curate and care for it in a way that instils trust and responsibility, otherwise the whole thing will be blown up and people will start pulling wires out of the back of machines.
Baroness Jones of Whitchurch (Lab)
My Lords, I am very grateful to the noble Lords, Lord Clement-Jones, Lord Bethell and Lord Kirkhope, for tabling these amendments and for enabling us to have a good debate on the robustness of the proposed international data rules, which are set out in Schedules 5 and 7. Incidentally, I do not share the enthusiasm expressed by the noble Lord, Lord Bethell, for the rest of the Bill, but on this issue we are in agreement—and perhaps the other issues are for debate some other time.
The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)
I welcome the Committee back after what I hope was a good Easter break for everybody. I thank all those noble Lords who, as ever, have spoken so powerfully in this debate.
I turn to Amendments 111 to 116 and 130. I thank noble Lords for their proposed amendments relating both to Schedule 5, which reforms the UK’s general processing regime for transferring personal data internationally and consolidates the relevant provisions in Chapter 5 of the UK GDPR, and to Schedule 7, which introduces consequential and transitional provisions associated with the reforms.
Amendment 111 seeks to revert to the current list of factors under the UK GDPR that the Secretary of State must consider when making data bridges. With respect, this more detailed list is not necessary as the Secretary of State must be satisfied that the standard of protection in the other country, viewed as a whole, is not materially lower than the standard of protection in the UK. Our new list of key factors is non-exhaustive. The UK courts will continue to be entitled to have regard to CJEU judgments if they choose to do so; ultimately, it will be for them to decide how much regard to have to any CJEU judgment on a similar matter.
I completely understand the strength of noble Lords’ concerns about ensuring that our EU adequacy decisions are maintained. This is also a priority for the UK Government, as I and my fellow Ministers have repeatedly made clear in public and on the Floor of the House. The UK is firmly committed to maintaining high data protection standards, now and in future. Protecting the privacy of individuals will continue to be a national priority. We will continue to operate a high-quality regime that promotes growth and innovation and underpins the trustworthy use of data.
Our reforms are underpinned by this commitment. We believe they are compatible with maintaining our data adequacy decisions from the EU. We have maintained a positive, ongoing dialogue with the EU to make sure that our reforms are understood. We will continue to engage with the European Commission at official and ministerial levels with a view to ensuring that our respective arrangements for the free flow of personal data can remain in place, which is in the best interests of both the UK and the EU.
We understand that Amendments 112 to 114 relate to representations made by the National AIDS Trust concerning the level of protection for special category data such as health data. We agree that the protection of people’s HIV status is vital. It is right that this is subject to extra protection, as is the case for all health data and special category data. As I have said before this Committee previously, we have met the National AIDS Trust to discuss the best solutions to the problems it has raised. As such, I hope that the noble Lord, Lord Clement-Jones, will agree not to press these amendments.
Lord Clement-Jones (LD)
Can the Minister just recap? He said that he met the trust then swiftly moved on without saying what solution he is proposing. Would he like to repeat that, or at least lift the veil slightly?
Viscount Camrose (Con)
The point I was making was only that we have met with it and will continue to do so in order to identify the best possible way to keep that critical data safe.
Lord Clement-Jones (LD)
The Minister is not suggesting a solution at the moment. Is it in the “too difficult” box?
Viscount Camrose (Con)
I doubt that it will be too difficult, but identifying and implementing the correct solution is the goal that we are pursuing, alongside our colleagues at the National AIDS Trust.
Lord Clement-Jones (LD)
I am sorry to keep interrogating the Minister, but that is quite an admission. The Minister says that there is a real problem, which is under discussion with the National AIDS Trust. At the moment the Government are proposing a significant amendment to both the GDPR and the DPA, and in this Committee they are not able to say that they have any kind of solution to the problem that has been identified. That is quite something.
Viscount Camrose (Con)
I am not sure I accept that it is “quite something”, in the noble Lord’s words. As and when the appropriate solution emerges, we will bring it forward—no doubt between Committee and Report.
On Amendment 115, we share the noble Lords’ feelings on the importance of redress for data subjects. That is why the Secretary of State must already consider the arrangements for redress for data subjects when making a data bridge. There is already an obligation for the Secretary of State to consult the ICO on these regulations. Similarly, when considering whether the data protection test is met before making a transfer subject to appropriate safeguards using Article 46, the Government expect that data exporters will also give consideration to relevant enforceable data subject rights and effective legal remedies for data subjects.
Our rules mean that companies that transfer UK personal data must uphold the high data protection standards we expect in this country. Otherwise, they face action from the ICO, which has powers to conduct investigations, issue fines and compel companies to take corrective action if they fail to comply. We will continue to monitor and mitigate a wide range of data security risks, regardless of provenance. If there is evidence of threats to our data, we will not hesitate to take the necessary action to protect our national security.
Baroness Jones of Whitchurch (Lab)
My Lords, we heard from the two noble Lords some concrete examples of where those data breaches are already occurring, and it does not appear to me that appropriate action has been taken. There seems to be a mismatch between what the Minister is saying about the processes and the day-to-day reality of what is happening now. That is our concern, and it is not clear how the Government are going to address it.
Lord Clement-Jones (LD)
My Lords, in a way the Minister is acknowledging that there is a watering down taking place, yet the Government seem fairly relaxed about seeing these issues. If something happens, the Government will do something or other, or the commissioner will. But the Government are proposing to water down Article 45, and that is the essence of what we are all talking about here. We are not satisfied with the current position, and watering down Article 45 will make it even worse; there will be more Yandexes.
Lord Bethell (Con)
The Minister mentioned prosecutions and legal redress in the UK from international data transfer breaches. Can he share some examples of that, maybe by letter? I am not aware of that being something with a long precedent.
Viscount Camrose (Con)
A number of important points were raised there. Yes, of course I will share—
Lord Kirkhope of Harrogate (Con)
I am sorry to interrupt my noble friend, but the point I made—this now follows on from other remarks—was that these requirements have been in place for a long time, and we are seeing abuses. Therefore, I was hoping that my noble friend would be able to offer changes in the Bill that would put more emphasis on dealing with these breaches. Otherwise, as has been said, we look as though we are going backwards, not forwards.
Viscount Camrose (Con)
As I said, a number of important points were raised there. First, I would not categorise the changes to Article 45 as watering down—they are intended to better focus the work of the ICO. Secondly, the important points raised with respect to Amendment 115 are points primarily relating to enforcement, and I will write to noble Lords setting out examples of where that enforcement has happened. I stress that the ICO is, as noble Lords have mentioned, an independent regulator that conducts the enforcement of this itself. What was described—I cannot judge for sure—certainly sounded like completely illegal infringements on the data privacy of those subjects. I am happy to look further into that and to write to noble Lords.
Amendment 116 seeks to remove a power allowing the Secretary of State to make regulations recognising additional transfer mechanisms. This power is necessary for the Government to react quickly to global trends and to ensure that UK businesses trading internationally are not held back. Furthermore, before using this power, the Secretary of State must be satisfied that the transfer mechanism is capable of meeting the new Article 46 data protection test. They are also required to consult with the Information Commissioner and such other persons felt appropriate. The affirmative resolution procedure will also ensure appropriate parliamentary scrutiny.
I reiterate that the UK Government’s assessment of the reforms in the Bill is that they are compatible with maintaining adequacy. We have been proactively engaging with the European Commission since the start of the Bill’s consultation process to ensure that it understands our reforms and that we have a positive, constructive relationship. Noble Lords will appreciate that it is important that officials have the ability to conduct candid discussions during the policy-making process. However, I would like to reassure noble Lords once again that the UK Government take the matter of retaining our adequacy decisions very seriously.
Finally, Amendment 130 pertains to EU exit transitional provisions in Schedule 21 to the Data Protection Act 2018, which provide that certain countries are currently deemed as adequate. These countries include the EU and EEA member states and those countries that the EU had found adequate at the time of the UK’s exit from the EU. Such countries are, and will continue to be, subject to ongoing monitoring. As is the case now, if the Secretary of State becomes aware of developments such as changes to legislation or specific practices that negatively impact data protection standards, the UK Government will engage with the relevant authorities and, where necessary, amend or revoke data bridge arrangements.
For these reasons, I hope noble Lords will not press their amendments.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for his response, but I am still absolutely baffled as to why the Government are doing what they are doing on Article 45. The Minister has not given any particular rationale. He has given a bit of a rationale for resisting the amendments, many of which try to make sure that Article 45 is fully effective, that these international transfers are properly scrutinised and that we remain data adequate.
By the way, I thought the noble Lord, Lord Kirkhope, made a splendid entry into our debate, so I hope that he stays on for a number of further amendments—what a début.
The only point on which I disagreed with the noble Lord, Lord Bethell—as the noble Baroness, Lady Jones, said—was when he said that this is a terrific Bill. It is a terrifying Bill, not a terrific one, as we have debated. There are so many worrying aspects—for example, that there is no solution yet for sensitive special category data and the whole issue of these contractual clauses. The Government seem almost to be saying that it is up to the companies to assess all this and whether a country in which they are doing business is data adequate. That cannot be right. They seem to be abrogating their responsibility for no good reason. What is the motive? Is it because they are so enthusiastic about transfer of data to other countries for business purposes that they are ignoring the rights of data subjects?
The Minister resisted describing this as watering down. Why get rid of the list of considerations that the Secretary of State needs to have so that they are just in the mix as something that may or may not be taken into consideration? In the existing article they are specified. It is quite a long list and the Government have chopped it back. What is the motive for that? It looks like data subjects’ rights are being curtailed. We were baffled by previous elements that the Government have introduced into the Bill, but this is probably the most baffling of all because of the real importance of this—its national security implications and the existing examples, such as Yandex, that we heard about from the noble Lord, Lord Kirkhope.
Of course we understand that there are nuances and that there is a difference between adequacy and equivalence. We have to be pragmatic sometimes, but the question of whether these countries having data transferred to them are adequate must be based on principle. This seems to me a prime candidate for Report. I am sure we will come back to it, but in the meantime I beg leave to withdraw.
Viscount Camrose
“(1) Section 72 (overview and interpretation) is amended as follows.(2) In subsection (1)(b)—(a) for “the special conditions that apply” substitute “additional conditions that apply in certain cases”, and(b) after “organisation” insert “(see section 73(4)(b))”.Member’s explanatory statement
This amendment is consequential on the amendment in my name inserting amendments of section 77 of the Data Protection Act 2018 into Schedule 6 to the Bill.
“(1A) Before subsection (1) insert—“(A1) This section applies in relation to a transfer of personal data to a third country or international organisation for a law enforcement purpose.””Member’s explanatory statement
See the explanatory statement to the amendment in my name to Schedule 6, page 213, line 22.
“(a) for the words before paragraph (a) substitute “The controller in relation to the transfer must secure that the transfer takes place only if—”,”Member’s explanatory statement
This amendment, and the amendment in my name to Schedule 6, page 213, line 20, make changes to reflect the fact that the duty to comply with the general principles in section 73 of the Data Protection Act 2018 falls on the controller by or on whose behalf the transfer is made.
“(3A) In subsection (4)—(a) after paragraph (a) (but before the final “or”) insert—“(aa) the intended recipient is a person in a third country who—(i) is not a person described in paragraph (a), but(ii) is a processor whose processing, on behalf of the controller, of the personal data transferred is governed by, or authorised in accordance with, a contract with the controller that complies with section 59,”, and(b) in paragraph (b)(i), for “other than a relevant authority” substitute “who is not a person described in paragraph (a) or (aa)”.” Member’s explanatory statement
This amendment inserts a further means of satisfying Condition 3 in section 73 of the Data Protection Act 2018 (conditions for international transfers of personal data by competent authorities for law enforcement purposes). Condition 3 relates to the intended recipient of the personal data.
Viscount Camrose
Member’s explanatory statement
This amendment provides that the controller’s duty to inform the Information Commissioner about international transfers of personal data made subject to appropriate safeguards does not apply where a transfer is made to a processor in reliance on paragraph (aa) of section 73(4) of the Data Protection Act 2018 (inserted by an amendment in my name).
Member’s explanatory statement
This amendment provides that the controller’s duty to document transfers that take place subject to appropriate safeguards does not apply where a transfer is made to a processor in reliance on paragraph (aa) of section 73(4) of the Data Protection Act 2018 (inserted by an amendment in my name).
“7A For the italic heading before section 77 substitute “Additional conditions”.7B (1) Section 77 (conditions for transfers of personal data to persons other than relevant authorities) is amended as follows.(2) For the heading substitute “Additional conditions for transfers in reliance on section 73(4)(b)”.(3) In subsection (6), for “other than a relevant authority” substitute “in reliance on section 73(4)(b)”.(4) In subsection (7)(a), for “other than a relevant authority” substitute “that takes place in reliance on section 73(4)(b)”.”Member’s explanatory statement
These amendments provide that section 77 of the Data Protection Act 2018 (conditions for certain transfers of personal data to overseas recipients other than relevant authorities) does not apply to transfers to overseas processors made in reliance on paragraph (aa) of section 73(4) of that Act (inserted by an amendment in my name).
“(1A) Before subsection (1) insert—“(A1) Subsections (1) to (6) apply where a transfer to which section 73 applies takes place other than in reliance on section 73(4)(aa).””Member’s explanatory statement
This amendment provides that a condition described in subsections (1) to (6) of section 78 of the Data Protection Act 2018 (subsequent transfers) does not need to be imposed where a transfer is made to an overseas processor in reliance on paragraph (aa) of section 73(4) of that Act (inserted by an amendment in my name).
“(za) omit “Where personal data is transferred in accordance with section 73,”,”Member’s explanatory statement
This amendment of section 78(1) of the Data Protection Act 2018 (subsequent transfers) is consequential on the amendment in my name inserting subsection (A1) of that section.
“(9) At the end insert—“(7) Where a transfer takes place in reliance on section 73(4)(aa), the transferring controller must make it a condition of the transfer that the data is only to be further transferred to a third country or international organisation where—(a) the terms of any relevant contract entered into, or authorisation given, by the transferring controller in accordance with section 59 are complied with, and(b) the further transfer satisfies the requirements in section 73(1).””Member’s explanatory statement
This amendment describes a condition that must be imposed where a transfer is made to an overseas processor in reliance on paragraph (aa) of section 73(4) of that Act (inserted by an amendment in my name).
Viscount Camrose
“6A In Article 46(2)(d) (transfers subject to appropriate safeguards: standard data protection clauses), after “Commissioner” insert “for the purposes of this Article”.”Member’s explanatory statement
This amendment is consequential on the amendment in my name inserting amendments of section 119A of the Data Protection Act 2018 into Schedule 7 to the Bill.
“16A In section 75 (transfers on the basis of appropriate safeguards), after subsection (7) (inserted by Schedule 6 to this Act) insert—(8)For provision about standard data protection clauses which the Commissioner considers are capable of securing that the data protection test in this section is met, see section 119A.16B In section 78A (law enforcement processing: national security exemption) (inserted by section 28 of this Act), in subsection (2)(e), after sub-paragraph (i) insert—(ia)section 119A (standard clauses for transfers to third countries);.17 (1) Section 119A (power of Information Commissioner to specify standard clauses for transfers to third countries etc providing appropriate safeguards) is amended as follows.(2) In subsection (1), for the words from “provide” to the end substitute “are capable of securing that the data protection test set out in Article 46 of the UK GDPR or section 75 of this Act (or both) is met in relation to transfers of personal data”.(3) In subsection (3), after paragraph (a) insert—“(aa) may make provision generally or in relation to types of transfer described in the document,”.”Member’s explanatory statement
This amendment enables the Information Commissioner to exercise the power under section 119A of the Data Protection Act 2018 (power to issue standard data protection clauses) to issue clauses for use in making transfers of personal data in reliance on section 75 of that Act (transfers subject to appropriate safeguards). It also makes consequential changes.
Viscount Camrose
Member’s explanatory statement
This amendment enables transitional provision in paragraph 30 of Schedule 7 to the Bill to be relied on in connection with transfers of personal data described in paragraph (aa) of section 73(4) of the Data Protection Act 2018 (inserted by an amendment in my name).
Lord Bethell
“Access to data for vetted researchers(1) Upon a reasoned request from the Information Commissioner, a data controller or processor that meets the requirements in subsection (9) must, within a reasonable period, as specified in the request, provide access to data to vetted researchers who meet the requirements in subsection (7), for the sole purpose of conducting research that contributes to the detection, identification and understanding of systemic risks of non-compliance with United Kingdom law that is upheld by one or more of the regulatory bodies, the Information Commissioner, the Competition and Markets Authority (CMA), the Office of Communications (Ofcom) and the Financial Conduct Authority (FCA).(2) Within 15 days following receipt of a request as referred to in subsection (1), the data controller or processor may request the Information Commissioner amend the request, where they consider that they are unable to give access to the data requested because one of the following two reasons—(a) they do not have access to the data;(b) giving access to the data would lead to significant vulnerabilities in the security of their service or the protection of confidential information, in particular trade secrets.(3) Requests for amendment under subsection (2) must contain proposals for one or more alternative means through which access may be provided to the requested data or other data which are appropriate and sufficient for the purpose of the request.(4) The Information Commissioner must decide on the request for amendment within 15 days and communicate to the data controller or processor its decision and, where relevant, the amended request and the new period to comply with the request. (5) Where the research request relates to United Kingdom law that is upheld by a different regulator, the Information Commissioner will notify the relevant regulator.(6) The data controller or processor must facilitate and provide access to data pursuant to subsections (1) and (4) through appropriate interfaces specified in the request, including online databases or application programming interfaces.(7) Upon a duly substantiated application from researchers, the Information Commissioner will grant such researchers the status of “vetted researchers” for the specific research referred to in the application and issue a reasoned request for data access to the data controller or processor pursuant to subsection (4), where the researchers demonstrate that they meet all of the following conditions—(a) they are affiliated to a research organisation;(b) they are independent from commercial interests;(c) their application discloses the funding of the research;(d) the intended research has demonstrated public interest and benefit;(e) they are capable of fulfilling the specific data security and confidentiality requirements corresponding to each request and to protect personal data, and they describe in their request the appropriate technical and organisational measures that they have put in place to this end;(f) their application demonstrates that their access to the data and the time frames requested are necessary for, and proportionate to, the purposes of their research, and that the expected results of that research will contribute to the purposes laid down in subsection (1);(g) the planned research activities will be carried out for the purposes laid down in subsection (1);(h) they have committed themselves to making their research results publicly available free of charge, within reasonable period after the completion of the research.(8) Data controllers and processors must give access without undue delay to data, including, where technically possible, to real-time data, provided that the data is publicly accessible in their online interface by researchers, including those affiliated to not for profit bodies, organisations and associations, who comply with the conditions set out in subsection (7)(b), (c), (d) and (e), and who use the data solely for performing research to advance the purposes set out in subsection (1) above.(9) A data controller or processor falls within the scope of subsection (1) if it has over 1 million service users or customers in the United Kingdom, if there is a large concentration of children on the service or if the researchers provide compelling evidence that the service is high risk.(10) The Information Commissioner must publish the technical conditions under which a data controller or processor must share data pursuant to subsections (1) and (4), including the application of data protection by design and default, and the purposes for which the data may be used.(11) The technical conditions under subsection (10) include the specific conditions under which such sharing of data with researchers may take place, as well as relevant objective indicators, procedures and, where necessary, independent advisory mechanisms in support of sharing of data, taking into account the rights and interests of the providers of data controllers and processors and the data subjects who use the service, including the protection of confidential information, in particular trade secrets, and maintaining the security of their service.” Member’s explanatory statement
This amendment mirrors the research provisions in the European Commission’s Digital Services Act and ensures that UK-based academic researchers are not put at a disadvantage when it comes to researching matters of public interest regarding whether the largest online services - including services most used by children - are safe, private and comply with UK law.
Lord Bethell (Con)
My Lords, the issue of access to data for researchers is very familiar to all those involved in debates on the Online Safety Bill, now an Act. The issue is relatively simple and I am not going to spell it out in great detail. I will leave it to others to give more concrete examples.
The issue is that in the tech industry, there is a vast amount of data about the effect of social media and the impact on consumers of the technologies, algorithms and content that are in circulation. But there is a blackout when it comes to academics, epidemiologists, journalists or even parliamentarians who are trying to have a dig around to understand what is happening. What is happening on extremism or child safety? What is happening with fraud or to our national security? What is the impact on children of hours and hours spent on YouTube, Facebook, Snapchat and all the other technologies that are now consuming billions of hours of our time?
In other walks of life, such as the finance and retail sectors, there are open platforms where regulators, researchers and even the public can have a peek at what is going on inside. This is not commercial access; instead, it is trying to understand the impact on society and individuals of these very important and influential technologies. That kind of transparency absolutely underpins trust in these systems. The data is essential to policy-making and the surveillance is key to security.
What I want to convey is a sense that there is a very straightforward solution to this. There is a precedent, already being rolled out in the EU, that creates a good framework. Amendment 135 has been thoroughly discussed with the department in previous debates on the Online Safety Bill, and I thank the Minister and the Secretary of State for a number of meetings with parliamentarians and civil society groups to go through it. The idea of creating a data access pathway that has attached to it a clear validation system that secures the independence and privacy of researchers is relatively straightforward. Oversight by the ICO is something that we all agree gives it a sense of credibility and straightforwardness.
I want to try to convey to the Minister the importance of moving on this, because it has been discussed over several years. The regulator is certainly a supporter of the principle: Melanie Dawes, the CEO of Ofcom, gave testimony during the Joint Committee on the Online Safety Bill in which she said it was one of the things she felt was weak about that Bill. She would like to have seen it strengthened up. It was therefore disappointing that there was not a chance to do that then, but there is a chance to do it now.
During the passage of the Online Safety Act, the Minister also made commitments from the Dispatch Box about returning to this subject during the passage of this Bill, so it feels like a good moment to be discussing this. There are 40 impressive civic society groups that have written in clear terms about the need for this, so there is a wide body of opinion in support. One reason why it is so urgent that we get this measure in the Bill—and do not kick the can down the road—is that it is currently getting harder and harder for researchers, academics and scientists to look into the impact of the actions of our technology companies.
Twitter/X has withdrawn almost all access to the kind of data that makes this research possible. Facebook has announced that it will be stopping the support of CrowdTangle, the very important facility it had created, which had become a very useful tool. The feedback from the Meta live content library that is its theoretical replacement has not been very positive; it is a clunky and awkward tool to use. TikTok is a total black box and we have no idea what is going on in there; and the action by Elon Musk against the Center for Countering Digital Hate, which he pursued in the courts over its analysis of data, gives a sense of the very aggressive tone from tech companies towards researchers who are trying to do what is widely considered to be very important work.
Baroness Kidron (CB)
My Lords, I support Amendment 135 in the name of the noble Lord, Lord Bethell, to which I have added my name. He set out our struggle during the passage of the Online Safety Bill, when we made several attempts to get something along these lines into the Bill. It is worth actually quoting the Minister, Paul Scully, who said at the Dispatch Box in the other place:
“we have made a commitment to explore this … further and report back to the House in due course on whether further measures to support researcher access to data are required and, if so, whether they could also be implemented through other legislation such as the Data Protection and Digital Information Bill”.—[Official Report, Commons, 12/9/23; col. 806.]
When the Minister responds, perhaps he could update the House on that commitment and explain why the Government decided not to address it in the Bill. Although the Bill proposes a lessening of the protections on the use of personal data for research done by commercial companies, including the development of products and marketing, it does nothing to enable public interest research.
I would like to add to the list that the noble Lord, Lord Bethell, started, because as well as Melanie Dawes, the CEO of Ofcom, so too the United States National Academy of Sciences, the Lancet commission, the UN advisory body on AI, the US Surgeon General, the Broadband Commission and the Australian eSafety Commissioner have all in the last few months called for greater access to independent research.
I ask the noble Viscount to explain the Government’s thinking in detail, and I really do hope that we do not get more “wait and see”, because it does not meet the need. We have already passed online safety legislation that requires evidence, and by denying access to independent researchers, we have a perverse situation in which the regulator has to turn to the companies it is regulating for the evidence to create their codes, which, as the noble Viscount will appreciate, is a formula for the tech companies to control the flow of evidence and unduly temper the intent of the legislation. I wish to make most of my remarks on that subject.
In Ofcom’s consultation on its illegal harms code, the disparity between the harms identified and Ofcom’s proposed code caused deep concern. Volume 4 states the following at paragraph 14.12 in relation to content moderation:
“We are not proposing to recommend some measures which may be effective in reducing risks of harm. This is principally due to currently limited evidence”.
Further reading of volume 4 confirms that the lack of evidence is the given reason for failing to recommend measures across a number of harms. Ofcom has identified harms for which it does not require mitigation. This is not what Parliament intended and spectacularly fails to deliver on the promises made by Ministers. Ofcom can use its information-gathering powers to build evidence on the efficacy required to take a bolder approach to measures but, although that is welcome, it is unsatisfactory for many reasons.
First, given the interconnectedness between privacy, safety, security and competition, regulatory standards cannot be developed in silo. We have a thriving academic community that can work across different risks and identify solutions across different parts of the tech ecosystem.
Secondly, a regulatory framework in which standards are determined exclusively through private dialogue between the regulator and the regulated does not have the necessary transparency and accountability to win public trust.
Thirdly, regulators are overstretched and under-resourced. Our academics stand ready and willing to work in the public interest and in accordance with the highest ethical standards in order to scrutinise and understand the data held so very closely by tech companies, but they need a legal basis to demand access.
Fourthly, if we are to maintain our academic institutions in a post-Brexit world, we need to offer UK academics the same support as those in Europe. Article 40(4) of the European Union’s Digital Services Act requires platforms to
“provide access to data to vetted researchers”
seeking to carry out
“research that contributes to the detection, identification and understanding of systemic risks in the Union, as set out pursuant to Article 34(1), and to the assessment of the adequacy, efficiency and impacts of the risk mitigation measures pursuant to Article 35”.
It will be a considerable loss to the UK academic sector if its European colleagues have access to data that it does not.
Fifthly, by insisting on evidence but not creating a critical pathway to secure it, the Government have created a situation in which the lack of evidence could mean that Ofcom’s codes are fixed at what the tech companies tell it is possible in spring 2024, and will always be backward-looking. There is considerable whistleblower evidence revealing measures that the companies could have taken but chose not to.
I have considerable personal experience of this. For example, it was nearly a decade ago that I told Facebook that direct messaging on children’s accounts was dangerous, yet only now are we beginning to see regulation reflecting that blindingly obvious fact. That is nearly a decade in which something could have been done by the company but was not, and of which the regulator will have no evidence.
Finally, as we discussed on day one in Committee, the Government have made it easier for commercial companies to use personal data for research by lowering the bar for the collection of data and expanding the concept of research, further building the asymmetry that has been mentioned in every group of amendments we have debated thus far. It may not be very parliamentary language, but it is crazy to pass legislation and then obstruct its implementation by insisting on evidence that you have made it impossible to gather.
I would be grateful if the Minister could answer the following questions when he responds. Is it the Government’s intention that Ofcom codes be based entirely on the current practice of tech companies and that the regulator can demand only mitigations that exist currently, as evidenced by those companies? Do the Government agree that whistleblowers, NGO experts and evidence from user experience can be taken by regulators as evidence of what could or should be done? What route do the Government advise Ofcom to take to mitigate identified risks for which there are no current measures in place? For example, should Ofcom describe the required outcome and leave it to the companies to determine how they mitigate the risk, should it suggest mitigations that have been developed but not tried—or is the real outcome of the OSA to identify risk and leave that risk in place?
Do the Government accept that EU research done under the auspices of the DSA should be automatically considered as an adequate basis for UK regulators where the concerns overlap with UK law? Will the new measures announced for testing and sandboxing of AI models allow for independent research, in which academics, independent of government or tech, will have access to data? Finally, what measures will the Government take to mitigate the impact on universities of a brain drain of academics to Europe, if we do not provide equivalent legislative support to enable them to access the data required to study online safety and privacy? If the Minister is unable to answer me from the Dispatch Box, perhaps he will agree to write to me and place his letter in the Library for other noble Lords to read.
Lord Clement-Jones (LD)
My Lords, there is little for me to say. The noble Lord, Lord Bethell, and the noble Baroness, Lady Kidron, have left no stone unturned in this debate. They introduced this amendment superbly, and I pay tribute to them and to Reset, which was with us all the way through the discussions on online harms at the Joint Committee on the draft Online Safety Bill, advocating for these important provisions.
As the noble Lord, Lord Bethell, said, there is a strong body of opinion out there. Insight from what might be called approved independent researchers would enable policy-making and regulatory innovation to keep pace with emerging trends and threats, which can span individual harms, matters of public safety and even national security. We have seen the kinds of harms taking place in social media, and it is absolutely vital that we understand what is happening under the bonnet of social media. It is crucial in detecting, identifying and understanding the systemic risks of online harms and non-compliance with law.
When we discussed the Online Safety Bill, it was a question of not just content but functionality. That was one of the key things. An awful lot of this research relates to that: how algorithms operate in amplifying content and some of the harms taking place on social media. The noble Lord, Lord Bethell, referred to X closing its API for researchers and Meta’s move to shut CrowdTangle. We are going into reverse, whereas we should be moving forward in a much more positive way. When the Online Safety Bill was discussed, we got the review from Ofcom, but we did not get the backup—the legislative power for Ofcom or the ICO to be able to authorise and accredit researchers to carry out the necessary research.
The Government’s response to date has been extremely disappointing, given the history behind this and the pressure and importance of this issue. This dates from discussions some way back, even before the Joint Committee met and heard the case for this kind of researcher access. This Bill is now the best vehicle by which to introduce a proper regime on access for researchers. As the noble Baroness, Lady Kidron, asked, why, having had ministerial assurances, are we not seeing further progress? Are we just going to wait until Ofcom produces its review, which will be at the tail end of a huge programme of work which it has to carry out in order to implement the Online Safety Act?
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the noble Lord, Lord Bethell, and his cosignatories for bringing this comprehensive amendment before us this afternoon. As we have heard, this is an issue that was debated at length in the Online Safety Act. It is, in effect, unfinished business. I pay tribute to the noble Lords who shepherded that Bill through the House so effectively. It is important that we tie up the ends of all the issues. The noble Lord made significant progress, but those issues that remain unresolved come, quite rightly, before us now, and this Bill is an appropriate vehicle for resolving those outstanding issues.
As has been said, the heart of the problem is that tech companies are hugely protective of the data they hold. They are reluctant to share it or to give any insight on how their data is farmed and stored. They get to decide what access is given, even when there are potentially illegal consequences, and they get to judge the risk levels of their actions without any independent oversight.
During the course of the Online Safety Bill, the issue was raised not only by noble Lords but by a range of respected academics and organisations representing civil society. They supported the cross-party initiative from Peers calling for more independent research, democratic oversight and accountability into online safety issues. In particular, as we have heard, colleagues identified a real need for approved researchers to check the risks of non-compliance in the regulated sectors of UK law by large tech companies—particularly those with large numbers of children accessing the services. This arose because of the increasing anecdotal evidence that children’s rights were being ignored or exploited. The noble Baroness, Lady Kidron, and the noble Lord, Lord Bethell, have given an excellent exposition of the potential and real harms that continue to be identified by the lack of regulatory action on these issues.
Like other noble Lords, I welcome this amendment. It is well-crafted, takes a holistic approach to the problem, makes the responsibilities of the large tech companies clear and establishes a systematic research base of vetted researchers to check compliance. It also creates important criteria for the authorisation of those vetted researchers: the research must be in the public interest, must be transparent, must be carried out by respected researchers, and must be free from commercial interests so that companies cannot mark their own homework. As has been said, it mirrors the provisions in the EU Digital Services Act and ensures comparable research opportunities. That is an opportunity for the UK to maintain its status as one of the top places in the world for expertise on the impact of online harms.
Since the Online Safety Act was passed, the Information Commissioner has been carrying out further work on the children’s code of practice. The latest update report says:
“There has been significant progress and many organisations have started to assess and mitigate the potential privacy risks to children on their platforms”.
That is all well and good but the ICO and other regulators are still reliant on the information provided by the tech companies on how their data is used and stored and how they mitigate risk. Their responsibilities would be made much easier if they had access to properly approved and vetted independent research information that could inform their decisions.
I am grateful to noble Lords for tabling this amendment. I hope that the Minister hears its urgency and necessity and that he can assure us that the Government intend to table a similar amendment on Report—as the noble Baroness, Lady Kidron, said, no more “wait and see”. The time has come to stop talking about this issue and take action. Like the noble Lord, Lord Clement-Jones, I was in awe of the questions that the noble Baroness came up with and do not envy the Minister in trying to answer them all. She asked whether, if necessary, it could be done via a letter but I think that the time has come on this and some other issues to roll up our sleeves, get round the table and thrash it out. We have waited too long for a solution and I am not sure that exchanges of letters will progress this in the way we would hope. I hope that the Minister will agree to convene some meetings of interested parties—maybe then we will make some real progress.
Viscount Camrose (Con)
My Lords, as ever, many thanks to all noble Lords who spoke in the debate.
Amendment 135, tabled by my noble friend Lord Bethell, would enable researchers to access data from data controllers and processors in relation to systemic risks to the UK and non-compliance with regulatory law. The regime would be overseen by the ICO. Let me take this opportunity to thank both my noble friend for the ongoing discussions we have had and the honourable Members in the other place who are also interested in this measure.
Following debates during the passage of the Online Safety Act, the Government have been undertaking further work in relation to access to data for online safety researchers. This work is ongoing and, as my noble friend Lord Bethell will be aware, the Government are having ongoing conversations on this issue. As he knows, the online safety regime is very broad and covers issues that have an impact on national security and fraud. I intend to write to the Committee with an update on this matter, setting out our progress ahead of Report, which should move us forward.
While we recognise the benefits of improving researchers’ access to data—for example, using data to better understand the impact of social media on users—this is a highly complex issue with several risks that are not currently well understood. Further analysis has reiterated the complexities of the issue. My noble friend will agree that it is vital that we get this right and that any policy interventions are grounded in the evidence base. For example, there are risks in relation to personal data protection, user consent and the disclosure of commercially sensitive information. Introducing a framework to give researchers access to data without better understanding these risks could have significant consequences for data security and commercially sensitive information, and could potentially destabilise any data access regime as it is implemented.
In the meantime, the Online Safety Act will improve the information available to researchers by empowering Ofcom to require major providers to publish a broad range of online safety information through annual transparency reports. Ofcom will also be able to appoint a skilled person to undertake a report to assess compliance or to develop its understanding of the risk of non-compliance and how to mitigate it. This may include the appointment of independent researchers as skilled persons. Further, Ofcom is required to conduct research into online harms and has the power to require companies to provide information to support this research activity.
Moving on to the amendment specifically, it is significantly broader than online safety and the EU’s parallel Digital Services Act regime. Any data controllers and processors would be in scope if they have more than 1 million UK users or customers, if there is a large concentration of child users or if the service is high-risk. This would include not just social media platforms but any organisation, including those in financial services, broadcasting and telecoms as well as any other large businesses. Although we are carefully considering international approaches to this issue, it is worth noting that much of the detail about how the data access provisions in the Digital Services Act will work in practice is yet to be determined. Any policy interventions in this space should be predicated on a robust evidence base, which we are in the process of developing.
The amendment would also enable researchers to access data to research systemic risks to compliance with any UK regulatory law that is upheld by the ICO, Ofcom, the Competition and Markets Authority, and the Financial Conduct Authority. The benefits and risks of such a broad regime are not understood and are likely to vary across sectors. It is also likely to be inappropriate for the ICO to be the sole regulator tasked with vetting researchers across the remits of the other regulators. The ICO may not have the necessary expertise to make this determination about areas of law that it does not regulate.
Ofcom already has the power to gather information that it requires for the purpose of exercising its online safety functions. This power applies to companies in scope of the duties and, where necessary, to other organisations or persons who may have relevant information. Ofcom can also issue information request notices to overseas companies as well as to UK-based companies. The amendment is also not clear about the different types of information that a researcher may want to access. It refers to a data controller and processors—concepts that relate to the processing of personal data under data protection law—yet researchers may also be interested in other kinds of data, such as information about a service’s systems and processes.
Although the Government continue to consider this issue—I look forward to setting out our progress between now and Report—for the reasons I have set out, I am not able to accept this amendment. I will certainly write to the Committee on this matter and to the noble Baroness, Lady Kidron, with a more detailed response to her questions—there were more than four of them, I think—in particular those about Ofcom.
Baroness Kidron (CB)
Perhaps I could encourage the Minister to say at least whether he is concerned that a lack of evidence might be impacting on the codes and powers that we have given to Ofcom in order to create the regime. I share his slight regret that Ofcom does not have this provision that is in front of us. It may be that more than one regulator needs access to research data but it is the independents that we are talking about. We are not talking about Ofcom doing things and the ICO doing things. We are talking about independent researchers doing things so that the evidence exists. I would like to hear just a little concern that the regime is suffering from a lack of evidence.
Viscount Camrose (Con)
I am thinking very carefully about how best to answer. Yes, I do share that concern. I will set this out in more detail when I write to the noble Baroness and will place that letter in the House of Lords Library. In the meantime, I hope that my noble friend will withdraw his amendment.
Lord Bethell (Con)
I am enormously grateful to the Minister for his response. However, it falls short of my hopes. Obviously, I have not seen the letter that he is going to send us, but I hope that the department will have taken on board the commitments made by previous Ministers during discussions on the Online Safety Bill and the very clear evidence that the situation is getting worse, not better.
Any hope that the tech companies would somehow have heard the debate in the House of Lords and that it would have occurred to them that they needed to step up to their responsibilities has, I am afraid, been dashed by their behaviours in the last 18 months. We have seen a serious withdrawal of existing data-sharing provisions. As we approach even more use of AI, the excitement of the metaverse, a massive escalation in the amount of data and the impact of their technologies on society, it is extremely sobering to think that there is almost no access to the black box of their data.
Lord Clement-Jones
Member’s explanatory statement
This amendment would ensure that “proportionality” continues to be considered by competent authorities when they are deciding whether national security exemptions apply to their processing for the purposes of law enforcement.
Lord Clement-Jones (LD)
That was a very good conclusion to the response from the noble Lord, Lord Bethell—urging a Minister to lean in. I have not heard that expression used in the House before, but it is excellent because, faced with a Home Office Minister, I am sure that is the kind of behaviour that we can expect imminently.
Last time we debated issues relating to national security and data protection, the noble Lord, Lord Ashton, was the responsible Minister and I had the support of the noble Lord, Lord Paddick. Now I have the Minister all to myself on Amendments 135A to 135E and the stand part notices on Clauses 28 to 30. These Benches believe that, as drafted, these clauses fall foul of the UK’s obligations under the ECHR, because they give the Home Secretary too broad a discretion and do not create sufficient safeguards to prevent their misuse.
Under the case law of the European Court of Human Rights, laws that give unfettered or overly broad discretion to the Government to interfere with privacy will violate the convention, because the laws must be sufficiently specific to prevent abuses of power. This means they must make sure that, any time they interfere with the privacy of people in the UK, they obey the law, have a goal that is legitimate in a democratic society and do only what is truly necessary to achieving that goal. The court has repeatedly stressed that this is what the rule of law means; it is an essential principle of democracy.
Despite multiple requests from MPs, and from Rights and Security International in particular, the Government have also failed to explain why they believe that these clauses are necessary to safeguard national security. So far, they have explained only why these new powers would be “helpful” or would ensure “greater efficiency”. Those justifications do not meet the standard that the ECHR requires when the Government want to interfere with our privacy. They are not entitled to do just anything that they find helpful.
Under Clause 28(7), the Home Secretary would be able to issue a national security certificate to tell the police that they do not need to comply with many important data protection laws and rules that they would otherwise have to obey. For instance, a national security certificate would give the police immunity when they commit crimes by using personal data illegally. It would also exempt them from certain provisions of the Freedom of Information Act 2000. The Bill would expand what counts as an intelligence service for the purposes of data protection law—again, at the Home Secretary’s wish. Clause 29 would allow the Home Secretary to issue a designation notice, allowing law enforcement bodies to take advantage of the more relaxed rules in the Data Protection Act 2018, otherwise designed for the intelligence agencies whenever they collaborate with the security services.
Both the amended approach to national security certificates and the new designation notice regime would be unaccountable. The courts would not be able to review what the Government are doing and Parliament might therefore never find out. National security certificates are unchallengeable before the courts, meaning that the police and the Home Secretary would be unaccountable if they abused those powers. If the Home Secretary says that the police need to use these increased—and, in our view, unnecessary—powers in relation to national security, his word will be final. This includes the power to commit crimes.
As regards designation notices, the Home Secretary is responsible for approving and reviewing their use. Only a person who is directly affected by a designation notice will be able to challenge it, yet the Home Secretary would have the power to keep the notice secret, in which case how could anybody know that the police had been snooping on their lives under this law?
Clauses 28 to 30 could, in our view, further violate the UK’s obligations under the Human Rights Act 1998 and the European Convention on Human Rights because they remove the courts’ role in reviewing how the Government use their surveillance power. The European Court of Human Rights has ruled in the past that large aspects of the law previously governing the UK’s surveillance powers were unlawful because they gave the Government too much discretion and lacked important safeguards to prevent misuse. Clauses 28 to 30 could be challenged on similar grounds, and the court has shown that it is willing to rule on these issues. These weaknesses in the law could also harm important relationships that the UK has with the EU as regards data adequacy, a subject that we will no doubt discuss in further depth later this week.
The Government argue that the clauses create a simplified legal framework that would improve the efficiency of police operations when working with the intelligence services. This is far from meeting the necessity standard under the ECHR.
The Government have frequently used the Fishmongers’ Hall and Manchester Arena attacks to support the idea that Clauses 28 to 30 are desirable. However, a difference in data protection regimes was not the issue in either case; instead, the problem centred around failures in offender management, along with a lack of communication between the intelligence services and local police. The Government have not explained how Clauses 28 to 30 would have prevented either incident or why they think these clauses are necessary to prevent whatever forms of violence the Government regard as most likely to occur in the future. The Government have had sufficient opportunity to date to explain the rationale for these clauses, yet they have so far failed to do so. For these reasons, we are of the view that Clauses 28 to 30 should not stand part of the Bill.
However, it is also worth putting down amendments to try to tease out additional aspects of these clauses, so Amendments 135A and 135D would put proportionality back in. It is not clear why the word “proportionality” has been taken out of the existing legislation. Similarly, Amendment 135B attempts to put back in the principles that should underpin decisions. Those are the most troubling changes, since they seem to allow for departure from basic data protection principles. These were the principles that the Government, during the passage of the Data Protection Act 2018, assured Parliament would always be secure. The noble Lord, Lord Ashton of Hyde, said:
“People will always have the right to ensure that the data held about them is fair and accurate, and consistent with the data protection principles”.—[Official Report, 10/10/17; col. 126.]
Thirdly, on the introduction of oversight by a judicial commissioner for Clause 28 certificates, now seems a good time to do that. During the passage of the Data Protection Act through Parliament, there was much debate over the Part 2 national security exemption for general processing in Section 26 and the national security certificates in Section 27. We expressed concern then but, sadly, the judicial commissioner role was not included. This is a timely moment to suggest that again.
Finally, on increasing the oversight of the Information Commissioner under Amendment 135E, I hope that this will be an opportunity for the Minister, despite the fact that I would prefer to see Clauses 28 to 30 not form part of the Bill, to explain in greater detail why they are constructed in the way they are and why the Home Office believes that it needs to amend the legislation in the way it proposes. I beg to move.
Lord Anderson of Ipswich (CB)
My Lords, I come to this topic rather late and without the star quality in this area that has today been attributed to the noble Lord, Lord Kirkhope. I acknowledge both the work of Justice in helping me to understand what Clause 28 does and the work of the noble Lord, Lord Clement-Jones, in formulating the probing amendments in this group. I echo his questions on Clause 28. I will focus on a few specific matters.
First, what is the difference between the existing formulation for restricting data protection rights “when necessary and proportionate” to protect national security and the new formulation,
“when required to safeguard national security”?
What is the purpose of that change? Does “required” mean the same as “necessary” or something different? Do the restrictions not need to be proportionate any more? If so, why? Could we have a practical example of what the change is likely to mean in practice?
Secondly, why is it necessary to expand the number of rights and obligations from which competent law enforcement authorities can be exempted for reasons of national security? I can understand why it may for national security reasons be necessary to restrict a person’s right to be informed, right of access to data or right to be notified of a data breach, as under the existing law, but Clause 28 would allow the disapplication of some very basic principles of data protection law—including, as I understand it, the right to have your data processed only for a specified, explicit and legitimate purpose, as well as the right to have decisions made about you not use solely automated methods.
Thirdly, as the noble Lord, Lord Clement-Jones, asked, why is it necessary to remove the powers of the Information Commissioner to investigate, to enter and inspect, and, where necessary, to issue notices? I appreciate that certificates will remain appealable to the Upper Tribunal by the person directly affected, applying judicial review principles, but that is surely not a substitute for review by the skilled and experienced ICO. Apart from anything else, the subject is unlikely even to know that they have been affected by the provisions, given that a certificate would exempt law enforcement from having to provide information to them. That is precisely why the oversight of a commissioner in the national security area is so important.
As for Clauses 29 and 30, I am as keen as anybody to improve the capabilities for the joint processing of data by the police and intelligence agencies. That was a major theme of the learning points from the London and Manchester attacks of 2017, which I helped to formulate in that year and on which I reported publicly in 2019. A joint processing regime certainly sounds like a good idea in principle but I would be grateful if the Minister could confirm which law enforcement competent authorities will be subject to this new regime. Are they limited to Counter Terrorism Policing and the National Crime Agency?
Lord Bassam of Brighton (Lab)
My Lords, we have heard some fine words from the noble Lord, Lord Clement-Jones, in putting the case for his Amendments 135A, 135B, 135C and 135D, which are grouped with the clause stand part debates. As he explained, they seek to test and probe why the Government have sought to extend the ability of the security and intelligence services to disapply basic data protection principles.
The new Government-drafted clause essentially, as well as disapplying current provisions, disapplies the rights of data subjects and the obligations placed on competent authorities and processors. The Explanatory Notes say that this is to create a regime that
“ensures that there is consistency in approach”.
Section 29 is designed to facilitate joint processing by the various agencies with a common regime. Like the noble Lord, Lord Anderson, I well understand why they might want to do that. The noble Lord, Lord Clement-Jones, has done the Committee a service in tabling these amendments because, as he said, during the passage of the 2018 Act assurances were given that law enforcement would always abide by basic data protection principles. On the face of it, that assurance no longer applies. Is this because it is inconvenient for the security and intelligence services? What are the Government seeking to do here?
Can the Minister explain from the Government’s perspective what has changed since 2018 that has led Ministers to conclude that those critical principles should be compromised? The amendments also seek to assert the importance of proportionality considerations when deciding whether national security exemptions apply. This principle is again raised in relation to the issuing of a national security certificate.
The noble Lord, Lord Clement-Jones, with Amendment 135E effectively poses the question of where the balance of oversight should rest. Should it be with the Secretary of State or the commissioner? All that new Clause 29 does is oblige the Secretary of State to consult the commissioner with the expectation that the commissioner then makes public a record of designation orders. However, it strips out quite a lot of the commissioner’s current roles and responsibilities. We should surely have something more convincing than that to guarantee transparency in the process. We on these Benches will take some convincing that the Government have got the right balance in regard to the interests of national security and the security services. Why, for instance, is Parliament being sidelined in the exercise of the Secretary of State’s powers? Did Ministers give any consideration to reporting duties and obligations so far as Parliament is concerned? If not, why not?
Labour does not want to see national security compromised in any way, nor do we want to undermine the essential and vital work that our intelligence services have to perform to protect us all. However, we must also ensure that we build confidence in our security and intelligence services by making them properly accountable, as the noble Lord, Lord Clement-Jones, argued, and that the checks and balances are sufficient and the right ones.
The noble Lord, Lord Anderson, got it right in questioning the change of language, and I want to better understand from the Minister what that really means. But why extend the range of exemptions? We could do with some specific reasons as to why that is being changed and why that is the case. Why has the Information Commissioner’s role been so fundamentally changed with regard to these clauses and the exemptions?
We will, as always, listen carefully to the Minister’s reply before we give further thought to this framework on Report, but we are very unhappy with the changes that are taking away some of the fundamental protections that were in place before, and we will need quite a lot of convincing on these government changes.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, I thank the noble Lord, Lord Clement-Jones, for his amendments and thank the other noble Lords who spoke in this short debate. These amendments seek to remove Clauses 28, 29 and 30 in their entirety, or, as an alternative, to make amendments to Clauses 28 and 29. I will first speak to Clause 28, and if I fail to answer any questions I will of course guarantee to write.
Clause 28 replaces the current provision under the law enforcement regime for the protection of national security data, with a revised version that mirrors the existing exemptions available to organisations operating under the UK GDPR and intelligence services regimes. It is also similar to what was available to law enforcement agencies under the 1998 Data Protection Act. It is essential that law enforcement agencies can properly protect data where required for national security reasons, and they should certainly be able to apply the same protections that are available to other organisations.
The noble Lord, Lord Clement-Jones, asked whether the exemption was in breach of a person’s Article 8 rights, but the national security exemption will permit law enforcement agencies to apply an exemption to the need to comply with certain parts of the law enforcement data protection regime, such as the data protection principles or the rights of the data subject. It is not a blanket exemption and it will be able to be applied only where this is required for the purposes of safeguarding national security—for instance, in order to prevent the tipping-off of a terror suspect. It can be applied only on a case-by-case basis. We do not, therefore, believe that the exemption breaches the right to privacy.
In terms of the Government taking away the right to lodge a complaint with the commissioner, that is not the case—the Government are not removing that right. Those rights are being consolidated under Clause 44 of this DPDI Bill. We are omitting Article 77 as Clause 44 will introduce provisions that allow a data subject to lodge a complaint with a controller.
In terms of how the subject themselves will know how to complain to the Information Commissioner, all organisations, including law enforcement agencies, are required to provide certain information to individuals, including their right to make a complaint to the Information Commissioner and, where applicable, the contact details of the organisation’s data protection officer or, in line with other amendments under the Bill, the organisation’s senior responsible individual, if they suspect that their personal information is being process unlawfully.
Amendments 135A and 135D seek to introduce a proportionality test in relation to the application of the national security exemption and the issuing of a ministerial certificate for law enforcement agencies operating under Part 3 of the Data Protection Act. The approach we propose is consistent with the similar exemptions for the UK GDPR and intelligence services, which all require a controller to evaluate on a case-by-case basis whether an exemption from a provision is required for the purpose of safeguarding national security.
Amendment 135B will remove the ability for law enforcement agencies to apply the national security exemption to data protection principles, whereas the approach we propose is consistent with the other data protection regimes and will provide for exemption from the data protection principles in Chapter 2—where required and on a case-by-case basis—but not from the requirement for processing to be lawful and the safeguards which apply to sensitive data.
The ability to disapply certain principles laid out in Chapter 2 is crucial for the efficacy of the national security exemption. This is evident in the UK GDPR and Part 4 exemption which disapplies similar principles. To remove the ability to apply the national security exemption to any of the data protection principles for law enforcement agencies only would undermine their ability to offer the same protections as those processing under the other data protection regimes.
Not all the principles laid out in Chapter 2 can be exempted from; for example, law enforcement agencies are still required to ensure that all processing is lawful and cannot exempt from the safeguards that apply to sensitive data. There are safeguards in place to ensure that the exemption is used correctly by law enforcement agencies. Where a data subject feels that the national security exemption has not been applied correctly, the legislation allows them to complain to the Information Commissioner and, ultimately, to the courts. Additionally, the reforms require law enforcement agencies to appoint a senior responsible individual whose tasks include monitoring compliance with the legislation.
Amendment 135C would make it a mandatory requirement for a certificate to be sought from and approved by a judicial commissioner whenever the national security exemption is to be invoked by law enforcement agencies only. This bureaucratic process does not apply to organisations processing under the other data protection regimes; forcing law enforcement agencies to apply for a certificate every time they need to apply the exemption would be unworkable as it would remove their ability to act quickly in relation to matters of national security. For these reasons, I hope that the noble Lord, Lord Clement-Jones, will not press his amendments.
On Clauses 29 and 30 of the Bill, currently, only the intelligence services can operate under Part 4 of the Data Protection Act. This means that, even when working together, the intelligence services and law enforcement cannot work on a single shared dataset but must instead transfer data back and forth, applying the provisions of their applicable data protection regimes, which creates significant friction. Removing barriers to joint working was flagged as a recommendation following the Manchester Arena inquiry, as was noted by the noble Lord, Lord Anderson, and following Fishmongers’ Hall, which also recommended closer working.
Clauses 29 and 30 enable qualifying competent authorities and an intelligence service jointly to process data under a single data protection regime in authorised, specific circumstances to safeguard national security. In order to jointly process data in this manner, the Secretary of State must issue a designation notice to authorise it. A notice can be granted only if the Secretary of State is satisfied that the processing is required for the purpose of safeguarding national security and following consultation with the ICO.
Amendment 135E would make the ICO the final arbiter of whether a designation notice is granted by requiring it to—
Lord Bassam of Brighton (Lab)
May I just intrude on the Minister’s flow? As I understand it, there is a possibility that relatives of the families affected by the Manchester Arena bombing will take to court matters relating to the operation of the security services, including relating to intelligence that it is felt they may have had prior to the bombing. How will this new regime, as set out in the Bill, affect the rights of those who may seek to hold the security services to account in the courts? Will their legal advisers ever be able to discover materials that might otherwise be exempt from public view?
Lord Sharpe of Epsom (Con)
That is a very good question but the noble Lord will understand that I am somewhat reluctant to pontificate about a potential forthcoming court case. I cannot really answer the question, I am afraid.
Lord Bassam of Brighton (Lab)
But understanding the impact on people’s rights is important in the context of this legislation.
Lord Sharpe of Epsom (Con)
As I say, it is a good question but I cannot comment further on that one. I will see whether there is anything that we can commit to in writing and have a further chat about this subject but I will leave it for now, if I may.
Amendment 135E would make the ICO the final arbiter of whether a designation notice is granted by requiring it to judge whether the notice is required for the purposes of the safeguarding of national security. It would be wholly inappropriate for the ICO to act as a judge of national security; that is not a function of the ICO in its capacity as regulator and should be reserved to the Secretary of State. As is generally the case with decisions by public bodies, the decision of the Secretary of State to grant a designation notice can be challenged legally; this is expressly provided for under new Section 82E, as is proposed to be included in the DPA by Clause 29.
On the subject of how a data subject is supposed to exercise their rights if they do not know that their data is being processed under a notice subject to Part 4, the ICO will publish designation notices as soon as is reasonably practical. Privacy information notices will also be updated if necessary to enable data subjects to identify a single point of contact should they wish to exercise their rights in relation to data that might be processed under a designation notice. This single point of contact will ease the process of exercising their data rights.
The noble Lord, Lord Anderson, asked which law enforcement agencies this will apply to. That will be set out separately in the subsequent affirmative SI. I cannot be more precise than that at the moment.
For these reasons, I hope that the noble Lord, Lord Clement-Jones, will be prepared to withdraw his amendment.
Lord Anderson of Ipswich (CB)
The Minister left us on a tantalising note. He was unable to say whether the law enforcement organisations affected by these clauses will be limited to Counter Terrorism Policing and the NCA or whether they will include others as well. I am rather at a loss to think who else might be included. Do we really have to wait for the affirmative regulations before we can be told about that? It seems pretty important. As the Minister knows well, there are quite a few precedents—following some recent ones—for extending to those bodies some of the privileges and powers that attach to the intelligence agencies. I suspect that a number of noble Lords might be quite alarmed if they felt that those powers or privileges were being extended more widely—certainly without knowing, or at least having some idea, in advance to whom they might be extended.
While I am on my feet and causing mischief for the Minister, may I return to the rather lawyerly question that I put to him? I do not think I had an answer about the formulation in new Section 78A, which talks about an exemption applying
“if exemption from the provision is required for the purposes of safeguarding national security”.
What does “required” mean? Does it simply mean the same as “necessary”—in which case, why not stick with that? Or does it mean something else? Does it mean that someone has required or requested it? It could be a pretty significant difference and this is a pretty significant ambiguity in the Bill. If the Minister is not willing to explain it now, perhaps he will feel able to write to us to explain exactly what is meant by replacing the well-worn phrase “necessary and proportionate” with “required”.
Lord Sharpe of Epsom (Con)
I thank the noble Lord for that. It is a lawyerly question and, as he knows, I am not a lawyer. With respect, I will endeavour to write and clarify on that point, as well as on his other good point about the sorts of authorities that we are talking about.
Lord Bassam of Brighton (Lab)
Perhaps the same correspondence could cover the point I raised as well.
Lord Clement-Jones (LD)
My Lords, I am immensely grateful to the noble Lords, Lord Anderson and Lord Bassam, for their interventions. In particular, given his background, if the noble Lord, Lord Anderson, has concerns about these clauses, we all ought to have concerns. I am grateful to the Minister for the extent of his unpacking—or attempted unpacking—of these clauses but I feel that we are on a slippery slope here. I feel some considerable unease about the widening of the disapplication of principles that we were assured were immutable only six years ago. I am worried about that.
We have had some reassurance about the right to transparency, perhaps when it is convenient that data subjects find out about what is happening. The right to challenge was also mentioned by the Minister but he has not really answered the question about whether the Home Office has looked seriously at the implications as far as the human rights convention is concerned, which is the reason for the stand part notice. The Minister did not address that matter at all; I do not know why. I am assuming that the Home Office has looked at the clauses in the light of the convention but, again, he did not talk about that.
The only assurance the Minister has really given is that it is all on a case-by-case basis. I do not think that that is much of a reassurance. On the proportionality point made by the noble Lord, Lord Anderson, I think that we are going to be agog in waiting for the Minister’s correspondence on that, but it is such a basic issue. There were two amendments specifically on proportionality but we have not really had a reply on that issue at all, in terms of why it should have been eliminated by the legislation. So a feeling of unease prevails. I do not even feel that the Minister has unpacked fully the issue of joint working; I think that the noble Lord, Lord Anderson, did that more. We need to know more about how that will operate.
The final point that the Minister made gave even greater concern—to think that there will be an SI setting out the bodies that will have the powers. We are probably slightly wiser than when we started out with this group of amendments, but only slightly and we are considerably more concerned. In the meantime, I beg leave to withdraw the amendment.
Viscount Camrose
Member's explanatory statement
This amendment adjusts the language of new section 82B(2) of the Data Protection Act 2018 to ensure that Article 3 of Regulation No 1182/71 (rules of interpretation regarding periods of time etc) will apply to it.
Baroness Morgan of Cotes
“Processing of data in relation to a case-file prepared by the police service for submission to the Crown Prosecution Service for a charging decisionIn the 2018 Act, after section 40 insert—“40A Processing of data in relation to a case-file prepared by the police service for submission to the Crown Prosecution Service for a charging decision(1) This section applies to a set of processing operations consisting of the preparation of a case-file by the police service for submission to the Crown Prosecution Service for a charging decision, the making of a charging decision by the Crown Prosecution Service, and the return of the case-file by the Crown Prosecution Service to the police service after a charging decision has been made.(2) The police service is not obliged to comply with the first data protection principle except insofar as that principle requires processing to be fair, or the third data protection principle, in preparing a case-file for submission to the Crown Prosecution Service for a charging decision. (3) The Crown Prosecution Service is not obliged to comply with the first data protection principle except insofar as that principle requires processing to be fair, or the third data protection principle, in making a charging decision on a case-file submitted for that purpose by the police service.(4) If the Crown Prosecution Service decides that a charge will not be pursued when it makes a charging decision on a case-file submitted for that purpose by the police service it must take all steps reasonably required to destroy and delete all copies of the case-file in its possession.(5) If the Crown Prosecution Service decides that a charge will be pursued when it makes a charging decision on a case-file submitted for that purpose by the police service it must return the case-file to the police service and take all steps reasonably required to destroy and delete all copies of the case-file in its possession.(6) Where the Crown Prosecution Service decides that a charge will be pursued when it makes a charging decision on a case-file submitted for that purpose by the police service and returns the case-file to the police service under subsection (5), the police service must comply with the first data protection principle and the third data protection principle in relation to any subsequent processing of the data contained in the case-file.(7) For the purposes of this section—(a) The police service means—(i) a constabulary maintained by virtue of an enactment; or(ii) subject to section 126 of the Criminal Justice and Public Order Act 1994 (prison staff not to be regarded as in police service), any other service whose members have the powers or privileges of a constable.(b) The preparation of, or preparing, a case-file by the police service for submission to the Crown Prosecution Service for a charging decision includes the submission of the file.(c) A case-file includes all information obtained by the police service for the purpose of preparing a case-file for submission to the Crown Prosecution Service for a charging decision.””Member's explanatory statement
This new Clause adjusts Section 40 of the Data Protection Act 2018 to exempt the police service and the Crown Prosecution Service from the first and third data protection principles contained within the 2018 Act so that they can share unredacted data with one another when making a charging decision.
Baroness Morgan of Cotes (Con)
My Lords, I shall speak to Amendment 137 in my name. I apologise to the Committee that I was unable to speak in the Second Reading debate on this Bill, which seems a long time ago now.
This is a discrete amendment designed to address an extremely burdensome and potentially unnecessary redaction exercise in relation to a situation where the police are preparing a case file for submission to the Crown Prosecution Service for a charging decision. The amendment was originally tabled in the House of Commons by Jane Hunt MP; both of us would like to thank the Police Federation of England and Wales for its assistance in briefing us in preparing the draft clause.
Perhaps it would be helpful to say by way of background that the existing data protection legislation requires our police forces to spend huge amounts of time and resources, first, in going through the information that has been gathered by investigating officers to identify every single item of personal data contained in that information; secondly, in deciding whether it is necessary or, in many cases, strictly necessary for the CPS to consider each item of personal data when making a charging decision; and, thirdly, in redacting every item of personal data that does not meet this test. I ask noble Lords to imagine, with things such as body cams being worn by the police, how much personal data is being collected these days every time officers respond to incidents. The police federation and the National Police Chiefs’ Council estimate that the national cost of this redaction exercise is approximately £5,642,900 per annum and that, since 1 January 2021, 365,000 policing hours have been consumed with this redaction exercise.
In his Budget last month, the Chancellor of the Exchequer asked for ideas to improve public sector productivity, so it will come as no surprise to the Minister that the Police Federation has rushed to submit this idea as one of those suggestions about how we might improve that productivity puzzle. I want to share one example of what this redaction requirement means in practice. This came from a detective constable in Suffolk who was attached to a regional crime unit. They said that the case they were involved with was
“a multi-million pound fraud offence from Suffolk with 115 victims. After a five year investigation two persons were charged (in Oct 2023) however, these charges would have been brought far sooner had the CPS not insisted that all used and unused material in the case be provided and redacted prior to the actual charges being brought. The redactions took six months to complete and at times both officers and civilian staff were deployed full time to accommodate”
this exercise. Due to the nature of the investigation, the victims in this case were elderly and some had, sadly, passed away over the years.
While the detective constable accepted that the investigation itself was lengthy, they
“were able to manage the expectations of the victims by providing routine updates on the progress of the case”.
However:
“It was more difficult to explain come early 2023 that documents in the case then had to be redacted before the CPS would allow us to charge the suspects. The fact that documents of varying sizes (some several pages in length) of the unused material had to be redacted prior to charge, when these documents may or not be served and ultimately would be served secondary to the used items is difficult to understand for the officers let alone explaining this to victims who are losing interest and respect for both the Police and CPS. Anyone would question why we were spending time redacting documents that MAY NEVER be served. It is … easy to say redact everything! In turn the additional months redacting affected the court process, delaying that also. Victims are questioning whether they will be alive to see”
the conclusion of the process. While the delay was
“not solely down to the redaction demands a more targeted redaction process after charge is more logical and cost effective for all”.
The redaction exercise is potentially unnecessary in the case of any given case file because the CPS decides to charge in approximately only 75% of cases. In the 25% of cases where the CPS decides not to charge, the unredacted file could simply be deleted by the CPS. Where the CPS decides to charge, the case file could then be returned to the police to carry out the redaction exercise before there is any risk of the file being disclosed to any person or body other than the CPS.
The simple and practical solution, as the Police Federation has put forward, is for the police to carry out the redaction exercise in relation to any given case file only after the CPS has taken the decision to charge. I should be clear that what is being proposed here does not remove any substantive protection of the personal data in question. It does not remove the obligation to review and redact the personal data contained in material in a case file; it simply provides for that review and redaction to be conducted by the police after, rather than before, a charging decision has been made by the CPS.
The law enforcement directive on which the relevant part of the Data Protection Act 2018 was based would have permitted this when that Act was passed. Part 3 of the 2018 Act implemented that directive and makes provision for data processing by “competent authorities”, including police forces and the Crown Prosecution Service, for defined “law enforcement purposes”. However, although recital 4 to the law enforcement directive emphasised:
“The free flow of personal data between competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences … should be facilitated while ensuring a high level of protection of personal data”,
Part 3 of the 2018 Act contains no provisions at all to facilitate the free flow of personal data between the police and the CPS.
The effect of the proposed new clause as set out in this amendment would be, first, to exempt the police from complying with the first data protection principle—except in so far as that principle requires processing to be fair—and from the third data protection principle, when the police are undertaking processing that consists of preparing for submission and submitting to the CPS a case file seeking a charging decision. Secondly, the amendment would exempt the CPS from the first and third data principles to the same extent when it makes that charging decision. Thirdly, it would require the CPS to return the case file to the police if a decision to charge is made, after which the data protection principles will apply in full to any subsequent processing.
I appreciate—particularly with the Minister here—that the Home Office is really in the driving seat here. We understand that the Home Office objections to this amendment seem to boil down to the belief that it will only partially resolve the problem, because the legal requirements around sharing of data are broader than just the first and third data principles, and that there are other relevant provisions not addressed by this drafting. It is of course absolutely open to the Minister and the Home Office to say that they support the broad principles of this draft clause, while suggesting that the drafting of this particular amendment should identify some other relevant provisions, and it would be helpful if they did that rather than just objecting to the whole amendment as put forward.
Lord Clement-Jones (LD)
My Lords, the noble Baroness, Lady Morgan, has done us a service by raising this issue. My question is about whether the advice given to date about redaction is accurate. I have not seen the Home Office’s guidance or counsel’s analysis. I have taken advice on the Police Federation’s case—I received an email and I was very interested in what it had to say, because we all want to make sure that the bureaucracy involved in charging and dealing with the CPS is as minimal as possible within the bounds of data protection law.
Section 35(2)(b) of the Data Protection Act simply requires the police to ensure that their processing is necessary for the performance of their tasks. You would have thought that sending an investigation file to the CPS to decide whether to charge a suspect seems necessary for the performance of that task. Some of that personal data may end up not being relevant to the charge or any trial, but that is a judgment for the CPS and the prosecutor. It does not mean, in the view of those I have consulted, that the file has to be redacted at vast taxpayer cost before the CPS or prosecutor have had a chance to see the investigation’s file. When you look at sensitive data, the test is “strictly necessary”, which is a higher test, but surely the answer to that must be that officers should collect this information only where they consider it relevant to the case. So this can be dealt with through protocols about data protection, which ensure that officers do not collect more sensitive data than is necessary for the purposes of the investigation.
Similarly, under Section 37, the question that the personal data must be adequate, relevant and not excessive in relation to the purpose for which it is processed should not be interpreted in such a way that this redaction exercise is required. If an officer thinks they need to collect the relevant information for the purpose of the investigation, that seems to me—and to those advising me—in broad terms to be sufficient to comply with the principle. Conversely, if officers are collecting too much data, the answer is that they should be trained to avoid doing this. If officers really are collecting more information than they should be, redactions cannot remedy the fact that the collection was unlawful in the first place. The solution seems to be to stop them collecting that data.
I assume—maybe I am completely wrong—that the Minister will utter “suitable guidance” in response to the noble Baroness’s amendment and say that there is no need to amend the legislation, but, if there is no need to do so, I hope that they revise the guidance, because the Police Federation and its members are clearly labouring under a misapprehension about the way the Act should be interpreted. It would be quite a serious matter if that has taken place for the last six years.
Lord Bassam of Brighton (Lab)
My Lords, we should be very grateful to the noble Baroness, Lady Morgan of Cotes, for her amendment. I listened very carefully to her line of argument and find much that we can support in the approach. In that context, we should also thank the Police Federation of England and Wales for a particularly useful and enlightening briefing paper.
We may well be suffering under the law of unintended consequences in this context; it seems to have hit quite hard and acted as a barrier to the sensible processing and transfer of data between two parts of the law enforcement machinery. It is quite interesting coming off the back of the previous debate, when we were discussing making the transfer of information and intelligence between different agencies easier and having a common approach. It is a very relevant discussion to have.
I do not think that the legislation, when it was originally drafted, could ever have been intended to work in the way the Police Federation has set out. The implementation of the Data Protection Act 2018, in so far as law enforcement agencies are concerned, is supposed to be guided by recital 4, which the noble Baroness read into the record and which makes good sense.
As the noble Baroness explained, the Police Federation’s argument that the DPA makes no provisions at all that are designed to facilitate, in effect, the free flow of information, that it should be able to hold all the relevant data prior to the charging decision being made by the CPS, and that redaction should take place only after a decision on charging has been made seems quite a sensible approach. As she argued, it would significantly lighten the burden on police investigating teams and enable the decision on charging to be more broadly informed.
So this is a piece of simplification that we can all support. The case has been made very well. If it helps speed up charging and policing processes, which I know the Government are very concerned about, as all Governments should be, it seems a sensible move—but this is the Home Office. We do not always expect the most sensible things to be delivered by that department, but we hope that they are.
Lord Sharpe of Epsom (Con)
I thank all noble Lords for their contributions—I think. I thank my noble friend Lady Morgan of Cotes for her amendment and for raising what is an important issue. Amendment 137 seeks to permit the police and the Crown Prosecution Service to share unredacted data with one another when making a charging decision. Perhaps to the surprise of the noble Lord, Lord Bassam, we agree: we must reduce the burden of redaction on the police. As my noble friend noted, this is very substantial and costly.
We welcome the intent of the amendment. However, as my noble friend has noted, we do not believe that, as drafted, it would achieve the stated aim. To fully remove it would require the amendment of more than just the Data Protection Act.
However, the Government are committed to reducing the burden on the police, but it is important that we get it right and that the solution is comprehensive. We consider that the objective which my noble friend is seeking would be better achieved through other means, including improved technology and new, simplified guidance to prevent overredaction, as all speakers, including the noble Lord, Lord Clement-Jones, noted.
The Home Office provided £960,000 of funding for text and audio-visual multimedia redaction in the 2023-24 financial year. Thanks to that funding, police forces have been able to procure automated text redaction tools, the trials of which have demonstrated that they could save up 80% of the time spent by the police on this redaction. Furthermore, in the latest Budget, the Chancellor announced an additional £230 million of funding for technology to boost police productivity. This will be used to develop, test and roll out automated audio-visual redaction tools, saving thousands more hours of police time. I would say to my noble friend that, as the technology improves, we hope that the need for it to be supervised by individuals will diminish.
I can also tell your Lordships’ House that officials from the Home Office have consulted with the Information Commissioner’s Office and have agreed that a significant proportion of the burden caused by existing pre-charge redaction processes could be reduced safely and lawfully within the current data protection framework in a way that will maintain standards and protections for individuals. We are, therefore, actively working to tackle this issue in the most appropriate way by exploring how we can significantly reduce the redaction burden at the pre-charge stage through process change within the existing legislative framework. This will involve creating simplified guidance and, obviously, the use of better technology.
Lord Clement-Jones (LD)
Is the Minister almost agreeing with some of my analysis in that case?
Lord Sharpe of Epsom (Con)
No, I think I was agreeing with my noble friend’s analysis.
Lord Sharpe of Epsom (Con)
I thank all noble Lords for their contributions. We acknowledge this particular problem and we are working to fix it. I would ask my noble friend to withdraw her amendment.
Baroness Morgan of Cotes (Con)
My Lords, I thank my noble friend the Minister for his response. I also thank the noble Lords, Lord Clement-Jones and Lord Bassam, for their support. I hope that those watching from outside will be heartened by what they have heard. I think there is general agreement that this problem should be simplified, and the burden taken off policing.
I am interested to hear about redaction but, with bodycams and images, as well as the mass amount of data on items such as mobile phones, it is complicated. My noble friend the Minister mentioned that the Home Office and the Information Commissioner’s Office were consulting with each other to reduce this pre-charge redaction burden. Perhaps he could write to me, or we could have a meeting to work it out. The challenge in all this is that we have a debate in which everybody agrees and then it all slows down again. Perhaps we can keep the momentum going by continuing discussions outside, involving the Police Federation as well. For now, I beg leave to withdraw the amendment.
Lord Clement-Jones
“(a) to monitor the application of GDPR, the applied GDPR and this Act, and ensure they are fully enforced with all due diligence;(b) to act upon receiving a complaint, to investigate, to the extent appropriate, the subject matter of the complaint, and to take steps to clarify unsubstantiated issues before dismissing the complaint.”Member’s explanatory statement
This amendment clarifies the statutory objective of the Commissioner by removing secondary objectives introduced by the Bill and clarifying role and responsibility of the Commissioner.
Lord Clement-Jones (LD)
My Lords, I will speak also to Amendment 140 and the submissions that Clauses 32 to 35 should not stand part. These amendments are designed to clarify the statutory objective of the new information commission; increase its arm’s-length relationship with the Government; allow effective judicial scrutiny of its regulatory function; allow not-for-profit organisations to lodge representative complaints; retain the Office of the Biometrics and Surveillance Camera Commissioner; and empower the Equality and Human Rights Commission to scrutinise the new information commission. The effective supervision and enforcement of data protection and the investigation and detection of offenders are crucial to achieve deterrence, prevent violations, maintain transparency and control options for redress against data misuse.
Baroness Kidron (CB)
My Lords, I will speak to Amendments 142, 143 and 150 in my name, and I thank other noble Lords for their support.
We have spent considerable time across the digital Bills—the online safety, digital markets and data Bills—talking about the speed at which industry moves and the corresponding need for a more agile regulatory system. Sadly, we have not really got to the root of what that might look like. In the meantime, we have to make sure that regulators and Governments are asked to fulfil their duties in a timely manner.
Amendment 142 puts a timeframe on the creation of codes under the Act at 18 months. Data protection is a mature area of regulatory oversight, and 18 months is a long time for people to wait for the benefits that accrue to them under legislation. Similarly, Amendment 143 ensures that the transition period from the code being set to it being implemented is no more than 12 months. Together, that creates a minimum of two and half years. In future legislation on digital matters, I would like to see a very different approach that starts with the outcome and gives companies 12 months to comply, in any way they like, to ensure that outcome. But while we remain in the world of statutory code creation, it must be bound by a timeframe.
I have seen time and again, after the passage of a Bill, Parliament and civil society move on, including Ministers and key officials—as well as those who work at the regulator—and codes lose their champions. It would be wonderful to imagine that matters progress as intended, but they do not. In the absence of champions, and without ongoing parliamentary scrutiny, codes can languish in the inboxes of people who have many calls on their time. Amendments 142 and 143 simply mirror what the Government agreed to in the OSA—it is a piece of good housekeeping to ensure continuity of attention.
I am conscious that I have spent most of my time highlighting areas where the Bill falls short, so I will take a moment to welcome the reporting provisions that the Government have put forward. Transparency is a critical aspect of effective oversight, and the introduction of an annual report on regulatory action would be a valuable source of information for all stakeholders with an interest in understanding the work of the ICO and its impact.
Amendment 150 proposes that those reporting obligations also include a requirement to provide details of all activities carried out by the Information Commissioner to support, strengthen and uphold the age-appropriate design code. It also proposes that, when meeting its general reporting obligations, it should provide the information separately for children. The ICO published an evaluation of the AADC as a one-off in March 2023 and its code strategy on 3 April this year. I recognise the effort that the commissioner has made towards transparency, and the timing of his report indicates that having reporting on children specifically is something that the ICO sees as relevant and useful. However, neither of those are sufficient in terms of the level of detail provided, the reporting cadence or the focus on impact rather than the efforts that the ICO has made.
There are many frustrations for those of us who spend our time advocating for children’s privacy and safety. Among them is having to try to extrapolate child-specific data from generalised reporting. When it is not reported separately, it is usually to hide inadequacies in the level of protection afforded to children. For example, none of the community guidelines enforcement reports published for Instagram, YouTube, TikTok or Snap provides a breakdown of the violation rate data by age group, even though this would provide valuable information for academics, Governments, legislators and NGOs. Amendment 150 would go some way to addressing this gap by ensuring that the ICO is required to break down its reporting for children.
Having been momentarily positive, I would like to put on the record my concerns about the following extract from the email that accompanied the ICO’s children’s code strategy of 2 April. Having set out the very major changes to companies that the code has ushered in and explained how the Information Commissioner would spend the next few months looking at default settings, geolocation, profiling, targeting children and protecting under-13s, the email goes on to say:
“With the ongoing passage of the bill, our strategy deliberately focusses in the near term on compliance with the current code. However, once we have more clarity on the final version of the bill we will of course look to publicly signal intentions about our work on implementation and children’s privacy into the rest of the year and beyond”.
The use of the phrase “current code”, and the fact that the ICO has decided it is necessary to put its long-term enforcement strategy on hold, contradict government assurances that standards will remain the same.
The email from the ICO arrived in my inbox on the same day as a report from the US Institute of Digital Media and Child Development, which was accompanied by an impact assessment on the UK’s age-appropriate design code. It stated:
“The Institute’s review identifies an unprecedented wave of … changes made across leading social media and digital platforms, including YouTube, TikTok, Snapchat, Instagram, Amazon Marketplace, and Google Search. The changes, aimed at fostering a safer, more secure, and age-appropriate online environment, underscore the crucial role of regulation in improving the digital landscape for children and teens”.
In June, the Digital Futures Commission will be publishing a similar report written by the ex-Deputy Information Commissioner, Steve Wood, which has similarly positive but much more detailed findings. Meanwhile, we hear the steady drumbeat of adoption of the code in South America, Australia and Asia, and in additional US states following California’s lead. Experts in both the US and here in the UK evidence that this is a regulation that works to make digital services safer and better for children.
I therefore have to ask the Minister once again why the Government are downgrading child protection. If he, or those in the Box advising him, are even slightly tempted to say that they are not, I ask that they reread the debates from the last two days in Committee, in which the Government removed the balancing test to automated decision-making and the Secretary of State’s powers were changed to have regard to children rather than to mandate child protections. The data impact assessment provisions have also been downgraded, among the other sleights of hand that diminish the AADC.
The ICO has gone on record to say that it has put its medium to long-term enforcement strategy on hold, and the Minister’s letter sent on the last day before recess says that the AADC will be updated to reflect the Bill. I would like nothing more than a proposal from the Government to put the AADC back on a firm footing. I echo the words said earlier by the noble Baroness, Lady Jones, that it is time to start talking and stop writing. I am afraid that, otherwise, I will be tabling amendments on Report that will test the appetite of the House for protecting children online. In the meantime, I hope the Minister will welcome and accept the very modest proposals in this group.
Baroness Harding of Winscombe (Con)
My Lords, as is so often the case on this subject, I support the noble Baroness, Lady Kidron, and the three amendments that I have added my name to: Amendments 142, 143 and 150. I will speak first to Amendments 142 and 143, and highlight a couple of issues that the noble Baroness, Lady Kidron, has already covered.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Kidron, for tabling these amendments and raising important points about the Information Commissioner’s independence and authority to carry out his role efficiently. The amendments from the noble Lord, Lord Clement-Jones, range widely, and I have to say that I have more sympathy with some of them than others.
I start by welcoming some of the things in the Bill—I am very pleased to be able to do this. It is important that we have an independent regulator that is properly accountable to Parliament, and this is vital for a properly functioning data protection regime. We welcome a number of the changes that have been made to the ICO’s role in the Bill. In particular, we think the move to have a board and a chief executive model, with His Majesty appointing the chair of the board, is the right way to go. We also welcome the strengthening of enforcement powers and the obligation to establish stakeholder panels to inform the content of codes of practice. The noble Baroness, Lady Kidron, also highlighted that.
However, we share the concern of the noble Lord, Lord Clement-Jones, about the Secretary of State’s requirement every three years to publish a statement of strategic priorities for the commissioner to consider, respond to and have regard to. We share his view, and that of many stakeholder groups, that this crosses the line into political involvement and exposes the ICO to unwarranted political direction and manipulation. We do not believe that this wording provides sufficient safeguards from that in its current form.
I have listened carefully to the explanation of the noble Lord, Lord Clement-Jones, of Amendment 138. I understand his concern, but we are going in a slightly different direction to him on this. We believe that the reality is that the ICO does not have the resources to investigate every complaint. He needs to apply a degree of strategic prioritisation in the public interest. I think that the original wording in the Bill, rather than the noble Lord’s amendment, achieved that objective more clearly.
Amendment 140, in the name of the noble Lord, Lord Clement-Jones, raises a significant point about businesses being given assured advice to ensure that they follow the procedures correctly, and we welcome that proposal. There is a role for leadership of the ICO in this regard. His proposal also addresses the Government’s concern that data controllers struggle to understand how they should be applying the rules. This is one of the reasons for many of the changes that we have considered up until now. I hope that the Minister will look favourably on this proposal and agree that we need to give more support to businesses in how they follow the procedures.
Finally, I have added my name to the amendment of the noble Baroness, Lady Kidron, which rightly puts a deadline on the production of any new codes of practice, and a deadline on the application of any transitional arrangements which apply in the meantime. We have started using the analogy of the codes losing their champions, and in general terms she is right. Therefore, it is useful to have a deadline, and that is important to ensure delivery. This seems eminently sensible, and I hope the Minister agrees with this too.
Amendment 150 from the noble Baroness, Lady Kidron, also requires the ICO annual report to spell out specifically the steps being taken to roll out the age-appropriate design code and to specifically uphold children’s data rights. Going back to the codes losing their champions, I am sure that the Minister got the message from the noble Baronesses, Lady Kidron and Lady Harding, that in this particular case, this is not going to happen, and that this code and the drive to deliver it will be with us for some time to come.
The noble Baroness, Lady Kidron, raised concerns about the approach of the ICO, which need to be addressed. We do not want a short-term approach but a longer-term approach, and we want some guarantees that the ICO is going to address some of the bigger issues that are being raised by the age-appropriate design code and other codes. Given the huge interest in the application of children’s data rights in this and other Bills, I am sure that the Information Commissioner will want to focus his report on his achievements in this space. Nevertheless, for the avoidance of doubt, it is useful to have it in the Bill as a specific obligation, and I hope the Minister agrees with the proposal.
We have a patchwork of amendments here. I am strongly in support of some; on others, perhaps the noble Lord and I can debate further outside this Room. In the meantime, I am interested to hear what the Minister has to say.
Viscount Camrose (Con)
I thank the noble Lord, Lord Clement-Jones, the noble Baroness, Lady Kidron, and other noble Lords who have tabled and signed amendments in this group. I also observe what a pleasure it is to be on a Committee with Batman and Robin—which I was not expecting to say, and which may be Hansard’s first mention of those two.
The reforms to the Information Commissioner’s Office within the Bill introduce a strategic framework of objectives and duties to provide context and clarity on the commissioner’s overarching objectives. The reforms also put best regulatory practice on to a statutory footing and bring the ICO’s responsibilities into line with that of other regulators.
With regard to Amendment 138, the principal objective upholds data protection in an outcomes-focused manner that highlights the discretion of the Information Commissioner in securing those objectives, while reinforcing the primacy of data protection. The requirement to promote trust and confidence in the use of data will encourage innovation across current and emerging technologies.
I turn now to the question of Clause 32 standing part. As part of our further reforms, the Secretary of State can prepare a statement of strategic priorities for data protection, which positions these aims within its wider policy agenda, thereby giving the commissioner helpful context for its activities. While the commissioner must take the statement into account when carrying out functions, they are not required to act in accordance with it. This means that the statement will not be used in a way to direct what the commissioner may and may not do when carrying out their functions.
Turning to Amendment 140, we believe that the commissioner should have full discretion to enforce data protection in an independent, flexible, risk-based and proportionate manner. This amendment would tie the hands of the regulator and force them to give binding advice and proactive assurance without necessarily full knowledge of the facts, undermining their regulatory enforcement role.
In response to the amendments concerning Clauses 33 to 35 standing part, I can say that we are introducing a series of measures to increase accountability, robustness and transparency in the codes of practice process, while safeguarding the Information Commissioner’s role. The requirements for impact assessments and panel of experts mean that the codes will consider the application to, and impact on, all potential use cases. Given that the codes will have the force of law, the Secretary of State must have the ability to give her or his comments. The Information Commissioner is required to consider but not to act on those comments, preserving the commissioner’s independence. It remains for Parliament to give approval for any statutory code produced.
Amendments 142 and 143 impose a requirement on the ICO to prepare codes and for the Secretary of State to lay them in Parliament as quickly as practicable. They also limit the time that transitional provisions can be in place to a maximum of 12 months. This could mean that drafting processes are truncated or valid concerns are overlooked to hit a statutory deadline, rather than the codes being considered properly to reflect the relevant perspectives.
Given the importance of ensuring that any new codes are robust, comprehensive and considered, we do not consider imposing time limits on the production of codes to be a useful tool.
Finally, Amendment 150—
Baroness Kidron (CB)
We had this debate during the passage of the Online Safety Act. In the end, we all agreed—the House, including the Government, came to the view—that two and a half years, which is 18 months plus a transition period, was an almost egregious amount of time considering the rate at which the digital world moves. So, to consider that more than two and a half years might be required seems a little bit strange.
Viscount Camrose (Con)
I absolutely recognise the need for speed, and my noble friend Lady Harding made this point very powerfully as well, but what we are trying to do is juggle that need with the need to go through the process properly to design these things well. Let me take it away and think about it more, to make sure that we have the right balancing point. I very much see the need; it is a question of the machinery that produces the right outcome in the right timing.
Baroness Kidron (CB)
Before the Minister sits down, I would very much welcome a meeting, as the noble Baroness, Lady Harding, suggested. I do not think it is useful for me to keep standing up and saying, “You are watering down the code”, and for the Minister to stand up and say, “Oh no, we’re not”. We are not in panto here, we are in Parliament, and it would be a fantastic use of all our time to sit down and work it out. I would like to believe that the Government are committed to data protection for children, because they have brought forward important legislation in this area. I would also like to believe that the Government are proud of a piece of legislation that has spread so far and wide—and been so impactful—and that they would not want to undermine it. On that basis, I ask the Minister to accede to the noble Baroness’s request.
Viscount Camrose (Con)
I am very happy to try to find a way forward on this. Let me think about how best to take this forward.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for his response and, in particular, for that exchange. There is a bit of a contrast here—the mood of the Committee is probably to go with the grain of these clauses and to see whether they can be improved, rather than throw out the idea of an information commission and revert to the ICO on the basis that perhaps the information commission is a more logical way of setting up a regulator. I am not sure that I personally agree, but I understand the reservations of the noble Baroness, Lady Jones, and I welcome her support on the aspect of the Secretary of State power.
We keep being reassured by the Minister, in all sorts of different ways. I am sure that the spirit is willing, but whether it is all in black and white is the big question. Where are the real safeguards? The proposals in this group from the noble Baroness, Lady Kidron, to which she has spoken to so well, along with the noble Baroness, Lady Harding, are very modest, to use the phrase from the noble Baroness, Lady Kidron. I hope those discussions will take place because they fit entirely with the architecture of the Bill, which the Government have set out, and it would be a huge reassurance to those who believe that the Bill is watering down data subject rights and is not strengthening children’s rights.
I am less reassured by other aspects of what the Minister had to say, particularly about the Secretary of State’s powers in relation to the codes. As the noble Baroness, Lady Kidron, said, we had a lot of discussion about that in relation to the Ofcom codes, under the Online Safety Bill, and I do not think we got very far on that either. Nevertheless, there is disquiet about whether the Secretary of State should have those powers. The Minister said that the ICO is not required to act in accordance with the advice of the Secretary of State so perhaps the Minister has provided a chink of light. In the meantime, I beg leave to withdraw the amendment.
Viscount Camrose
Member’s explanatory statement
This amendment adjusts the language of new section 120F(4) of the Data Protection Act 2018 to ensure that Article 3 of Regulation No 1182/71 (rules of interpretation regarding periods of time etc) will apply to it.
Viscount Camrose
“(3A) In section 205(2) (references to periods of time), after paragraph (za) insert—“(zb) section 120H(3) and (4);”Member’s explanatory statement
This amendment provides that Article 3 of Regulation No 1182/71 (rules of interpretation regarding periods of time etc) does not apply to new section 120H(3) and (4) of the Data Protection Act 2018.
Baroness Kidron
“Code of practice on EdTech(1) The Commissioner must prepare a code of practice in consultation with the Department for Education and in accordance with sections 33 and 34 of this Act which contains such guidance as the Commissioner considers appropriate on the processing of children's data by providers of EdTech services and products.(2) In addition, in preparing a code or amendments under this section, the Commissioner must—(a) have regard to—(i) children’s interests and fundamental rights and freedoms as set out in the United Nations Convention on the Rights of the Child and General Comment 25 on Children’s Rights in relation to the Digital Environment, and(ii) the fact that children are entitled to a higher standard of protection than adults with regard to their personal data as established in the 2018 Act;(b) consult with—(i) children,(ii) educators,(iii) parents,(iv) EdTech providers, and(v) persons who appear to the Commissioner to represent the interests of children.(3) EdTech Controllers or processors providing services or products to schools must comply with any such code and provide information on compliance to schools as part of the school’s procurement procedures.(4) Demonstrated adherence by an EdTech provider to the EdTech Code of Practice may be used by a school as a means of demonstrating compliance with their obligations as a data controller.(5) The Commissioner must prepare a report, in consultation with the EdTech industry, on the steps required to develop a certification scheme under Article 42 of the UK GDPR, to enable the industry to demonstrate the compliance of EdTech services and products with the UK GDPR, and conformity with the Age Appropriate Design Code of Practice and the EdTech Code of Practice.(6) In this section—“EdTech” means a service or product that digitise education functions including administration and management information systems, learning and assessment and safeguarding. They include services or products used within school settings and at home on the recommendation, advice or instruction of a school;“school” means a school that falls within the definition of school in section 14, 15 or 16 of Part 4 of Schedule 3 of the 2018 Act.”Member’s explanatory statement
This amendment proposes a statutory Code of Practice to provide guidance to companies that provide EdTech services and products. It aims to ensure that such companies meet their legal obligations under existing data protection law, protect children and empower schools.
Baroness Kidron (CB)
My Lords, Amendment 146 is in my name and those of the noble Lord, Lord Clement-Jones, and the noble Baronesses, Lady Harding and Lady Jones; I thank them all for their support. Before I set out the amendment that would provide a code of practice for edtech and why it is so urgently required, I thank the noble Baroness, Lady Barran, and officials in the Department for Education for their engagement on this issue. I hope the Minister can approach this issue with the same desire they have shown to fill the gap that it seeks to address.
A child does not have a choice about whether they go to school. For those who do not fall into the minority who are homeschooled or who, for a reason of health or development, fall outside the education system, it is compulsory. The reason I make this point at the outset is that, if school is compulsory, it must follow that a child should enjoy the same level of privacy and safety at school as they do in any other environment. Yet we have allowed a gap in our data legislation, meaning that a child’s data is unprotected at school and, at the same time, invested in an unregulated and uncertified edtech market to develop promises of learning outcomes that range from unsubstantiated to false.
Schools are keen to adopt new technologies and say that they feel pressure to do so. In both cases, they lack the knowledge and time to assess the privacy and safety risks of the technology products that they are being sold. Amendment 146 would enable children and schools to benefit from emerging technologies. It would reduce the burden on schools in ensuring compliance so that they can get on with the job of teaching our children in a safe, developmentally appropriate and rights-respecting environment, and it would deal with companies that fail to provide evidence for their products and routinely exploit the complexity of data protection law to children’s detriment. In sum, the amendment brings forward a code of conduct for edtech.
Subsections (1) and (2) would require the ICO to bring forward a data code for edtech and tech used in education settings. In doing so, the commissioner would be required to consider children’s fundamental rights, as set out in the Convention on the Rights of the Child, and their relevance to the digital world, as adopted by the Committee on the Rights of the Child in general comment 25 in 2021. The commissioner would have to consider the fact that children are legally entitled to a higher standard of protection in respect to their personal data than adults. In keeping with other data codes, the amendment also sets out whom the ICO must consult when preparing the code, including children, parents and teachers, as well as edtech companies.
Subsection (3) would require edtech companies to provide schools with transparent information about their data-processing practices and their impact on children. This is of particular importance because the department’s own consultation showed that schools are struggling to understand the implications of being a data controller and most often accept the default settings of products and services. Having a code of conduct would allow the Information Commissioner not only to set the standards in subsections (1) and (2) but to insist on the way that information is given in order to support schools to make the right choices for their pupils.
Subsection (4) would allow schools to use edtech providers’ adherence to the code as proof of fulfilling their own data protection duties. Once again, this would alleviate the burden on teachers and school leaders.
Subsection (5) would simply give the commissioner a role in supporting a certification scheme to enable the industry to demonstrate both the compliance of edtech services and products with the UK GDPR and conformity with the age-appropriate design code of practice and the edtech code of practice. The IEEE Standards Association and For Humanity have published certification standards for the AADC but they have not yet been approved by the ICO or UKAS standards. Subsection (5) would act as a catalyst, ensuring that the ICO and the certification partners work together efficiently. Ultimately, schools will respond better to certification than to pure data law.
If the edtech sector was formally in scope of the AADC and it was robustly applied, that would do some, though not all, of what the amendment seeks to do. But in 2018, Her Majesty’s Government, as they were then, made the decision that schools are responsible for children and that the AADC would be confusing. I am not sure whether the Government of the day did not understand the AADC. It requires companies to offer children privacy by design and default. Nothing in the code would have infringed—or will infringe—on a school’s safeguarding duties, but leaving schools out of scope leaves teachers or school data protection officers with vast responsibilities for wilfully leaky products that simply should not fall to them. Many in this House thought that the Government were wrong, and since then we have seen grand abuse of the gap that was created. This is an opportunity to put that error right.
Baroness Harding of Winscombe (Con)
My Lords, I rise once again in my Robin role to support the noble Baroness, Lady Kidron, on this amendment. We had a debate on 23 November last year that the noble Baroness brought on this very issue of edtech. Rather than repeat all the points that were made in that very useful debate, I point my noble friend the Minister to it.
I would just like to highlight a couple of quick points. First, in supporting this amendment, I am not anti-edtech in any way, shape or form. It is absolutely clear that technology can bring huge benefits to students of all ages but it is also clear that education is not unique. It is exactly like every other part of society: where technology brings benefit, it also brings substantial risk. We are learning the hard way that thinking that any element of society can mitigate the risks of technology without legal guard-rails is a mistake.
We have seen really clearly with the age-appropriate design code that commercial organisations operating under its purview changed the way they protected children’s data as a result of that code. The absence of the equivalent code for the edtech sector should show us clearly that we will not have had those same benefits. If we bring edtech into scope, either through this amendment or simply through extending the age-appropriate design code, I would hazard a strong guess that we would start to see very real improvements in the protection of children’s data.
In the debate on 23 November, I asked my noble friend the Minister, the noble Baroness, Lady Barran, why the age-appropriate design code did not include education. I am not an expert in education, by any stretch of the imagination. The answer I received was that it was okay because the keeping children safe in education framework covered edtech. Since that debate, I have had a chance to read that framework, and I cannot find a section in it that specifically addresses children’s data. There is lots of really important stuff in it, but there is no clearly signposted section in that regard. So even if all the work fell on schools, that framework on its own, as published on GOV.UK, does not seem to meet the standards of a framework for data protection for children in education. However, as the noble Baroness, Lady Kidron, said, this is not just about schools’ responsibility but the edtech companies’ responsibility, and it is clear that there is no section on that in the keeping children safe in education framework either.
The answer that we received last year in this House does not do justice to the real question: in the absence of a specific code—the age-appropriate design code or a specific edtech code—how can we be confident that there really are the guardrails, which we know we need to put in place in every sector, in this most precious and important sector, which is where we teach our children?
Lord Clement-Jones (LD)
My Lords, I am absolutely delighted to be able to support this amendment. Like the noble Baroness, Lady Harding, I am not anti-edtech at all. I did not take part in the debate last year. When I listen to the noble Baroness, Lady Kidron, and even having had the excellent A Blueprint for Education Data from the 5Rights Foundation and the Digital Futures for Children brief in support of a code of practice for education technology, I submit that it is chilling to hear what is happening as we speak with edtech in terms of extraction of data and not complying properly with data protection.
I got involved some years ago with the advisory board of the Institute for Ethical AI in Education, which Sir Anthony Seldon set up with Professor Rose Luckin and Priya Lakhani. Our intention was slightly broader—it was designed to create a framework for the use of AI specifically in education. Of course, one of the very important elements was the use of data, and the safe use of data, both by those procuring AI systems and by those developing them and selling them into schools. That was in 2020 and 2021, and we have not moved nearly far enough since that time. Obviously, this is data specific, because we are talking about the data protection Bill, but what is being proposed here would cure some of the issues that are staring us in the face.
As we have been briefed by Digital Futures for Children, and as the noble Baroness, Lady Kidron, emphasised, there is widespread invasion of children’s privacy in data collection. Sometimes there is little evidence to support the claimed learning benefits, while schools and parents lack the technical and legal expertise to understand what data is collected. As has been emphasised throughout the passage of this Bill, children deserve the highest standards of privacy and data protection—especially in education, of course.
From this direction, I wholly support what the noble Baroness, Lady Kidron, is proposing, so well supported by the noble Baroness, Lady Harding. Given that it again appears that the Government gave an undertaking to bring forward a suitable code of practice but have not done so, there is double reason to want to move forward on this during the passage of the Bill. We very much support Amendment 146 on that basis.
Baroness Jones of Whitchurch (Lab)
My Lords, I have added my name to Amendment 146 in the name of the noble Baroness, Lady Kidron, and I thank all noble Lords who have spoken.
These days, most children learn to swipe an iPad long before they learn to ride a bike. They are accessing the internet at ever younger ages on a multitude of devices. Children are choosing to spend more time online, browsing social media, playing games and using apps. However, we also force children to spend an increasing amount of time online for their education. A growing trend over the last decade or more, this escalated during the pandemic. Screen time at home became lesson time; it was a vital educational lifeline for many in lockdown.
Like other noble Lords, I am not against edtech, but the reality is that the necessary speed of the transition meant that insufficient regard was paid to children’s rights and the data practices of edtech. The noble Baroness, Lady Kidron, as ever, has given us a catalogue of abuses of children’s data which have already taken place in schools, so there is a degree of urgency about this, and Amendment 146 seeks to rectify the situation.
One in five UK internet users are children. Schools are assessing their work online; teachers are using online resources and recording enormous amounts of sensitive data about every pupil. Edtech companies have identified that such a large and captive population is potentially profitable. This amendment reinforces that children are also a vulnerable population and that we must safeguard their data and personal information on this basis. Their rights should not be traded in as the edtech companies chase profits.
The code of practice proposed in this amendment establishes standards for companies to follow, in line with the fundamental rights and freedoms as set out in the UN Convention on the Rights of the Child. It asserts that they are entitled to a higher degree of protection than adults in the digital realm. It would oblige the commissioner to prepare a code of practice which ensures this. It underlines that consultations with individuals and organisations who have the best interests of children at heart is vital, so that the enormous edtech companies cannot bamboozle already overstretched teachers and school leaders.
In education, data has always been processed from children in school. It is necessary for the school’s functioning and to monitor the educational development of individual children. Edtech is now becoming a permanent fixture in children’s schooling and education, but it is largely untested, unregulated and unaccountable. Currently, it is impossible to know what data is collected by edtech providers and how they are using it. This blurs the boundaries between the privacy-preserving and commercial parts of services profiting from children’s data.
Why is this important? First, education data can reveal particularly sensitive and protected characteristics about children: their ethnicity, religion, disability or health status. Such data can also be used to create algorithms that profile children and predict or assess their academic ability and performance; it could reinforce prejudice, create siloed populations or entrench low expectations. Secondly, there is a risk that data-profiling children can lead to deterministic outcomes, defining too early what subjects a child is good at, how creative they are and what they are interested in. Safeguards must be put in place in relation to the processing of children’s personal data in schools to protect those fundamental rights. Thirdly, of course, is money. Data is appreciating in value, resulting in market pressure for data to be collected, processed, shared and reused. Increasingly, such data processed from children in schools is facilitated by edtech, an already major and expanding sector with a projected value of £3.4 billion.
The growth of edtech’s use in schools is promoted by the Department for Education’s edtech strategy, which sets out a vision for edtech to be an
“inseparable thread woven throughout the processes of teaching and learning”.
Yet the strategy gives little weight to data protection beyond noting the importance of preventing data breaching. Tech giants have become the biggest companies in the world because they own data on us. Schoolchildren have little choice as to their involvement with these companies in the classroom, so we have a moral duty to ensure that they are protected, not commodified or exploited, when learning. It must be a priority for the Government to keep emerging technologies in education under regular review.
Equally important is that the ICO should invest in expertise specific to the domain of education. By regularly reviewing emerging technologies—those already in use and those proposed for use—in education, and their potential risks and impacts, such experts could provide clear and timely guidance for schools to protect individual children and entire cohorts. Amendment 146 would introduce a new code of practice on the processing and use of children’s data by edtech providers. It would also ensure that edtech met their legal obligations under the law, protected children’s data and empowered schools.
I was pleased to hear that the noble Baroness, Lady Kidron, has had constructive discussions with the Education Minister, the noble Baroness, Lady Barran. The way forward on this matter is some sort of joint work between the two departments. The noble Baroness, Lady Kidron, said that she hopes the Minister today will respond with equal positivity; he could start by supporting the principles of this amendment. Beyond that, I hope that he will agree to liaise with the Department for Education and embrace the noble Baroness’s request for more meetings to discuss this issue on a joint basis.
Viscount Camrose (Con)
I am grateful, as ever, to the noble Baroness, Lady Kidron, for both Amendment 146 and her continued work in championing the protection of children.
Let me start by saying that the Government strongly agree with the noble Baroness that all providers of edtech services must comply with the law when collecting and making decisions about the use of children’s data throughout the duration of their processing activities. That said, I respectfully submit that this amendment is not necessary, for the reasons I shall set out.
The ICO already has existing codes and guidance for children and has set out guidance about how the children’s code, data protection and e-privacy legislation apply to edtech providers. Although the Government recognise the value that ICO codes can have in promoting good practice and improving compliance, they do not consider that it would be appropriate to add these provisions to the Bill without further detailed consultation with the ICO and the organisations likely to be affected by them.
The guidance covers broad topics, including choosing a lawful basis for the processing; rules around information society services; targeting children with marketing; profiling children or making automated decisions about them; data sharing; children’s data rights; and exemptions relating to children’s data. Separately, as we have discussed throughout this debate, the age-appropriate design code deals specifically with the provision of online services likely to be accessed by children in the UK; this includes online edtech services. I am pleased to say that the Department for Education has begun discussions with commercial specialists to look at strengthening the contractual clauses relating to the procurement of edtech resources to ensure that they comply with the standards set out in the UK GDPR and the age-appropriate design code.
On the subject of requiring the ICO to develop a report with the edtech sector, with a view to creating a certification scheme and assessing compliance and conformity with data protection, we believe that such an approach should be at the discretion of the independent regulator.
The issues that have been raised in this very good, short debate are deeply important. Edtech is an issue that the Government are considering carefully—especially the Department for Education, given the increasing time spent online for education. I note that the DPA 2018 already contains a power for the Secretary of State to request new codes of practice, which could include one on edtech if the evidence warranted it. I would be happy to return to this in future but consider the amendment unnecessary at this time. For the reasons I have set out, I am not able to accept the amendment and hope that the noble Baroness will withdraw it.
Baroness Kidron (CB)
I thank everyone who spoke, particularly for making it absolutely clear that not one of us, including myself, is against edtech. We just want it to be fair and want the rules to be adequate.
I am particularly grateful to the noble Baroness, Lady Jones, for detailing what education data includes. It might feel as though it is just about someone’s exam results or something that might already be public but it can include things such as how often they go to see the nurse, what their parents’ immigration status is or whether they are late. There is a lot of information quite apart from this personalised education provision, to which the noble Baroness referred. In fact, we have a great deal of emerging evidence that it has no pedagogical background to it. There is also the question of huge investment right across the sector in things where we do not know what they are. I thank the noble Baroness for that.
As to the Minister’s response, I hope that he will forgive me for being disappointed. I am grateful to him for reminding us that the Secretary of State has that power under the DPA 2018. I would love for her to use that power but, so far, it has not been forthcoming. The evidence we saw from the freedom of information request is that the scheme the department wanted to put in place has been totally retracted—and clearly for resource reasons rather than because it is not needed. I find it quite surprising that the Minister can suggest that it is all gung ho here in the UK but that Germany, Holland, France, et cetera are being hysterical in regard to this issue. Each one of them has found it to be egregious.
Finally, the AADC applies only to internet society services; there is an exception for education. Where they are joint controllers, they are outsourcing the problems to the schools, which have no level of expertise in this and just take default settings. It is not good enough, I am afraid. I feel bound to say this: I understand the needs of parliamentary business, which puts just a handful of us in this Room to discuss things out of sight, but, if the Government are not willing to protect children’s data at school, when they are in loco parentis to our children, I am really bewildered as to what this Bill is for. Education is widely understood to be a social good but we are downgrading the data protections for children and rejecting every single positive move that anybody has made in Committee. I beg leave to withdraw my amendment but I will bring this back on Report.
Viscount Camrose
Member’s explanatory statement
This amendment adjusts the language of new paragraph 4(A2) of Schedule 16 to the Data Protection Act 2018 to ensure that Article 3 of Regulation No 1182/71 (rules of interpretation regarding periods of time etc) will apply to it.
Viscount Camrose
Member’s explanatory statement
This amendment adjusts the language of new section 164A(3) of the Data Protection Act 2018 to ensure that Article 3 of Regulation No 1182/71 (rules of interpretation regarding periods of time etc) will apply to it.
House of Lords
Death of a Former Member and a Member
The Lord Speaker (Lord McFall of Alcluith)
My Lords, I regret to inform the House of the death of the noble Lord, Lord Hoyle, on 6 April 2024. On behalf of the House, I extend our condolences to the noble Lord’s family and friends. I also regret to inform the House of the death of the noble Lord, Lord Rosser, on 10 April 2024. On behalf of the House, I extend our condolences to the noble Lord’s family and friends.
Steel: Port Talbot
(7 months, 1 week ago)
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Lord Roberts of Llandudno
To ask His Majesty’s Government what assessment they have made of the social impact of the Port Talbot steel works blast furnace’s closure on the surrounding communities.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, the Government recognise the impact of transforming the Port Talbot steelworks. This is why we have established a transition board with membership from the local authority, the Welsh Government and Tata. The board has £100 million of funding—£80 million from the UK Government and £20 million from Tata—for projects to support the communities affected. The UK Government are contributing £500 million towards Tata’s £1.25 billion investment, to ensure a sustainable future for Welsh steel and to safeguard up to 5,000 jobs.
Lord Roberts of Llandudno (LD)
I thank the Minister for those remarks, but can I have an answer to one question? What assurance have we that we have sufficient electricity to work the steel plants at full capacity? Without that, we could have large-scale unemployment. South Wales has known enough of that in the past. Also, our communities could be affected. I remember how many of our local organisations lost out because of previous unemployment, being unable to take part again. There will be all sorts of consequences if we do not have full-scale working plants, and that depends on full-scale electricity supply.
Lord Johnson of Lainston (Con)
I thank the noble Lord for that point and agree with him. This is why we have invested significantly in developing the Celtic Freeport as an anchor for floating offshore wind. It will be sufficient to provide a large portion of the power for these two new electric arc furnaces.
Lord Woodley (Lab)
My Lords, my union, Unite, last week voted to strike over Tata’s disastrous plan. The plan is an appalling act of industrial vandalism as far as we are concerned, with the loss of thousands of jobs devastating the local community and the local economy. As the Minister knows, Tata has other options, especially as Unite has secured a commitment from the Labour Party to invest £3 billion—not half a billion pounds—in UK steel. Will the Minister therefore urgently rethink the Government’s strategy and insist that Tata keeps at least one blast furnace going until the end of its life as a condition of investing any public money in this operation?
Lord Johnson of Lainston (Con)
I must respectfully disagree. This is a very sound plan to ensure that we have a future of steel-making not just in this country but in Wales. This plan will save 5,000 jobs. It will make the steel industry profitable and result in a crucial circular economy where we take our scrap metal and turn it into real steel rather than importing steel or ore from abroad. The Opposition are keen to copy the Conservative Party in so many of our policies, so I am surprised that in this instance they refuse to do so.
Lord Wigley (PC)
My Lords, does the Minister accept that there is an outstanding record of employee work in Port Talbot, and that there has not been a significant strike for 40 years there? In these circumstances, is it not outrageous that Tata should now threaten to take back the employees’ pension and redundancy packages to try to stop any industrial action? Is it not time that the Government got a grip on this to secure the future of this vital plant?
Lord Johnson of Lainston (Con)
I am grateful for that point. All of us in government are very sensitive to the people whose lives will be affected, which is why we are putting so much money into this process—£100 million in the transition board. I take this opportunity to thank Tata for its commitment to invest £1.25 billion in regenerating the area and renewing the British steel industry. I urge the unions to maintain their very strong record of good relationships, to not go on strike and to work with Tata, so that we can deliver what will be an incredible benefit for the area and the country.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I agree with all previous speakers that it would be an utter tragedy for steel-making to disappear from Port Talbot. However, does my noble friend agree that the only way of preserving a great British steel industry, and a green steel industry at that, is for the workers to work closely with Tata Steel, and for us to further green it using the offshore floating wind projects and with the potential of advanced modular reactors on site in Port Talbot?
Lord Johnson of Lainston (Con)
I thank my noble friend for that point, and she is absolutely right. If we look back six months or a year, there was very little future for steel-making in this country, and now we have one; we have a truly advanced manufacturing plan for this entire industry. This is something we should celebrate. It is a true industrial policy backed by government money, in partnership with the private sector, and supported by the extraordinary and brilliant talent of the people at Port Talbot.
Lord Fox (LD)
My Lords, the Minister will have noticed that the Prime Minister and the leader of the Opposition visited Barrow-in-Furness recently. The reason they went there, as he knows, is to see its submarine manufacturing process. Submarines need high-strength steel—the sort of steel that comes from blast furnaces and not from electric arc ones. Where will that steel come from? From which countries will we import it?
Lord Johnson of Lainston (Con)
It is very important that we have a strong defence basis; there is no question about that. The UK industry uses only about 1% of British steel. A quantity of the steel comes from Sheffield Forgemasters, which is owned by the Ministry of Defence. This plan will actually produce the right level of steel from recycled scrap, which is far more efficient for the environment, to enable us to provide for our defence needs.
Lord Naseby (Con)
My Lords, is my noble friend aware that the resources he has announced are enormously welcome? However, on the point the noble Lord, Lord Griffiths, made about electricity supply, there should be an absolute guarantee. His Majesty’s Government might consider using the site for one of our many nuclear reactors that we have talked about for the last 18 months. This would be a wonderful situation if that were included on this particular site.
Lord Johnson of Lainston (Con)
I am grateful to my noble friend for that comment. The possibility of advanced modular reactors or small modular reactors operating in conjunction with offshore wind was just mentioned. The key is to build a sustainable green steel industry. That is why the Government have put so much money and thought behind this extraordinary and very powerful revolutionary plan.
Baroness Blower (Lab)
My Lords, demand for steel is expected to grow tenfold in the coming years. With proper investment, the UK could again be the steel-making capital of Europe. Will the Minister consider changing the procurement rules to ensure that UK public contracts use 100% UK steel, which by itself would create and maintain hundreds, possibly thousands, of jobs?
Lord Johnson of Lainston (Con)
I am always wary of insisting on local content when it comes to procurement. We want the best possible value and choice for our consumers, so I am not sure that is the answer. The point is to create a steel industry that produces steel that everyone in the world—not simply customers in the United Kingdom—wants to buy at the right price.
Lord Bilimoria (CB)
My Lords, we should be very grateful for the investment that Tata has made in the United Kingdom, starting with Tata Steel and then Jaguar Land Rover. These are huge, risky investments. With the big free trade agreement between the UK and India about to be signed, we should back Tata and appreciate what it has done.
Lord Johnson of Lainston (Con)
I am extremely grateful to the noble Lord for making that point. The first visit of my colleague Minister Mak as a Minister in my department was to Port Talbot to meet Tata’s managers. They made it very clear that they want to manage the redundancy process as closely as possible and by using a voluntary scheme. They have a huge amount of interest in this country and have partnered with us by creating a giga-factory, which kick-started our EV car industry in a major way. I echo the noble Lord when I thank Tata for all it is doing with the United Kingdom.
Lord Leong (Lab)
My Lords, the Government’s decision to give £500 million to Tata means that 2,800 people will lose their jobs. These are desperate times. People are worried and angry. The Government’s negligence in the 1980s devastated industrial communities, and the scars of entrenched inequality are still evident today. The Port Talbot transition board has up to £100 million to invest in skills and regeneration. Seven months on, can the Minister tell your Lordships’ House if any of this has been spent and if the strategy for doing so will be set out?
Lord Johnson of Lainston (Con)
I am grateful to the noble Lord for his comments. I point out that the Conservatives have not been in government continuously since the 1980s; there was a prolonged period when Labour was in power. However, the next meeting of the transition board, on 27 April, will discuss exactly that: how will that £100 million be spent on local regeneration? The Government have also invested just under £800 million in the four city deals and £150 million in the Swansea Bay area. We are also investing significant tens of millions, nearly £60 million, in the offshore wind industry in the area, so we are definitely putting our money where our mouth is.
Lord West of Spithead (Lab)
My Lords, I will return to the question from the noble Lord, Lord Fox. What percentage of British steel will be used in the Dreadnought class, the AUKUS class submarines, Type 26s, Type 32s and fleet solid support ships? We need sovereign capability and resilience, and I have a feeling that we will be relying on France and other countries for quite a lot of this specialist steel.
Lord Johnson of Lainston (Con)
The noble Lord knows far more about building warships than I ever will. All I can say, as I said earlier, is that 1% of defence requirement is provided by UK steel. We believe that this plan will allow us to produce the necessary steel for all our industries, particularly as technology develops. I say again that this is truly a first-class plan to regenerate the area and create a green steel industry for the UK. We should celebrate it while putting in a huge amount of attention to detail to ensure that we mitigate for affecting people’s lives, as much as possible.
Schools and Colleges: Special Educational Needs
(7 months, 1 week ago)
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Lord Addington
To ask His Majesty’s Government what steps they are taking to ensure that, when meeting the needs of those with special educational needs in the school and college system, a legacy of training and knowledge is retained within those institutions.
Lord Addington (LD)
My Lords, I beg leave to ask the Question standing in my name in the Order Paper and remind the House of my declared interests.
The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)
My Lords, the SEND and alternative provision improvement plan aims to create enduring and inclusive cultures in our schools and colleges, by delivering training and knowledge to improve SEND support. We are delivering teacher training frameworks for greater SEND content, a new qualification for school SENCOs, the universal services programme, national standards, teacher training bursaries for specialist SEND teachers in further education and partnerships for inclusion of neurodiversity in schools.
Lord Addington (LD)
I thank the Minister for that reply. However, why do we not have a strategic plan to make sure that at least the most common special educational needs—I once again remind the House of my interest in dyslexia—are embedded within schools? We do not want to go through the process of parents having to spot that their child is struggling, but for the school to come to the parents and say, “You have a special educational need”, not the other way round. It is reckoned that over half of special educational needs are not spotted at school.
Baroness Barran (Con)
I would say two things to the noble Lord. First, we do not need a diagnosis for a child to be able to offer them support; it is important that a child gets support as quickly as possible. Secondly, our improvement plan is exactly the strategic plan that the noble Lord refers to.
Lord Lexden (Con)
My Lords, is it not the case that provision for special educational needs in our country would be greatly damaged by Labour’s proposed education tax? The party says it would exempt from the VAT charge those in independent schools with education, health and care plans, but there are some 100,000 in independent schools with special educational needs who lack such plans. How on earth would the state sector cope with the large number of special needs students in independent schools who would be forced to leave them, with grave damage to their education, by Labour’s education tax? I declare my interest as president of the Independent Schools Association.
Baroness Barran (Con)
My noble friend makes a very good point. As the House knows, the Government have invested very large amounts of money in increasing capacity for special school places, rising by over 60,000 places since 2010, but the sector is still using independent schools. It would put huge pressure particularly on those children and their parents.
Baroness Blower (Lab)
My Lords, does the Minister accept that, notwithstanding the list she gave in response to the first Question, the underfunding in our mainstream schools system means that there are many children in mainstream schools whose needs are not being met? Does she further accept that, occasionally, those children who get plans in primary school find it difficult to find a secondary school, because secondary schools can choose not to take children with plans, thus making them undesirable to schools because they know they cannot meet their needs?
Baroness Barran (Con)
The national funding formula is structured, as the noble Baroness is aware, to make sure that funding is targeted towards pupils who need additional support. In 2024-25, over £4.5 billion, or about 10% of the formula, is allocated according to deprivation factors, and £7.8 billion, almost 18%, will be allocated for additional needs factors. Both those elements correlate with the prevalence of SEND.
Baroness Bull (CB)
My Lords, the Minister will know that there are many thousands of individual special needs teachers who go that extra mile in meeting the very individual needs of young people with special needs. What is the department doing to ensure that, where people have come up with innovative ways to address needs, learning is both retained within the institution, as in the original Question, and shared with other schools across the sector?
Baroness Barran (Con)
That is precisely what we are aiming to do through our practitioner standards. The noble Baroness will be aware that we are starting with the biggest areas of additional needs: speech, language and communication; autism; and mental health and well-being. We have a twin approach; we partly have academic researchers looking at the evidence base, but we are also working very closely with practitioners to make sure we capture the best practice, and then publish and share it.
Baroness Thornhill (LD)
My Lords, at the heart of my noble friend’s Question was surely the issue of teacher retention. Workload pressure is cited as the number one reason for teachers leaving the profession. The Government currently have a Workload Reduction Taskforce, which in January published its Initial Recommendations. One of those really surprised me; it was to fully implement and strengthen the recommendations of the two previous reviews, held in 2016 and 2018. Could the Minister assure us that the DfE and Ofsted will at some point publish a joint response on their success in fulfilling these recommendations, as they agreed at the time, or what confidence can the profession have that the recommendations of this current task force will be taken on board?
Baroness Barran (Con)
I can genuinely reassure the noble Baroness that teacher workload and teacher retention are incredibly high up our list of priorities within the department. It is a central focus of the team. In addition to workload, it is critical that we equip our teachers with the skills, experience and confidence they need to deal with what they are facing in the classroom. That is why, for example, the inclusion of much more content on special educational needs and disabilities in initial training and the early careers framework is so important.
Baroness Twycross (Lab)
My Lords, pupils with special educational needs are more than four times more likely to develop a mental health problem than other people. This means that one in seven young people with a mental health difficulty will also have another special educational need. Given the huge and increasing backlog for mental health support in schools, will the Minister tell us whether the Government will support Labour’s plan to place a mental health professional in every school?
Baroness Barran (Con)
As the noble Baroness knows, the Government have an ambitious plan in terms of the creation and development of mental health support teams in schools. We estimate that, from April 2024, those support teams will cover 4.2 million children and young people, and we think that will rise to about half of all children and young people by spring next year. The challenge, which the noble Baroness will recognise, is to make sure that the demand for mental health practitioners is balanced between the health service, schools and other parts of the economy.
Lord Watts (Lab)
My Lords, children with special needs are expelled from popular schools and transferred to less performing schools. What will the Minister do to make sure that that situation is addressed so that schools are not allowed to dump their children on another school?
Baroness Barran (Con)
We have to be very careful about talking about dumping children. I have not met a school yet that behaves like that. I want to pick up on the point made by the noble Baroness, Lady Bull. Some of the best practice I have seen is where schools are establishing small units within the school campus for children with the most disruptive behaviour and only the best teachers in the school are allowed to teach in that unit, thereby sending a strong message about how they value those children.
Baroness Hughes of Stretford (Lab)
My Lords, according to the Government’s recent statistics, in only 49% of cases of children who have been assessed as needing an education, health and care plan are those plans produced within the 20-week statutory limit, leaving children, families and schools in limbo because they cannot access the funding required for the support the child needs. Can the Minister say what she is doing about this?
Baroness Barran (Con)
I thank the noble Baroness for her important question, which is at the centre of parents’ concerns as they worry about getting the right support for their children. We are testing a number of measures through the change programme to try to improve the quality, consistency and timeliness of the education, health and care plan process. I asked colleagues the question that the noble Baroness is asking me, and it is too early to share the learnings, but as soon as we can, I will be delighted to do so.
Police: Joe Anderson
(7 months, 1 week ago)
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Lord Heseltine
To ask His Majesty’s Government what assessment they have made of the conduct of the police in their treatment of Joe Anderson, who resigned as the Mayor of Liverpool in 2021.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, an investigation involving Mr Anderson remains ongoing and it would therefore be inappropriate to comment while that remains the case. The police are rightly independent of government and decisions concerning investigations are operational ones for the respective police forces to make.
Lord Heseltine (Non-Afl)
My Lords, the Mayor of Liverpool, Joe Anderson, was arrested on serious charges, including fraud and bribery. That was three years and four months ago. He lost his job, his reputation and his income. No charge has been made since then. Does my noble friend the Minister think that is justice?
Lord Sharpe of Epsom (Con)
My Lords, I am afraid I am unable to comment on whether this is justice or not. The fact is that the force has advised that this investigation remains ongoing and live. That includes ongoing investigation with the Crown Prosecution Service. By way of further context, Mr Anderson has previously challenged the decision to arrest him by way of judicial review, including with an appeal, and was unsuccessful in the courts. Since then, neither he nor anyone acting on his behalf has made a complaint to the police. However, the force has confirmed that it is seeking to conclude this investigation as expeditiously as possible.
Lord Woodley (Lab)
My Lords, it is a privilege to follow the noble Lord, Lord Heseltine—one of the few Tories whose reputation is still strong in the city of Liverpool, thanks to the work following the Toxteth riots all those decades ago. I declare an interest insomuch as Joe Anderson is a friend of mine. He is a man who—as has just been said—has been destroyed. His reputation has been completely and totally destroyed, and everything that goes with it, although he has not been charged with a single thing. It reminds me of Sir Cliff Richard. Do not start charging and making allegations across anywhere to anyone if you do not have proof and cannot substantiate what you say. It is an absolute disgrace what has happened to this man.
Lord Sharpe of Epsom (Con)
My Lords, that is not a question: it is a statement. However, I am going to be unable to develop my theme, which is that I am afraid that I cannot comment on ongoing investigations, as the House well understands.
Lord Alton of Liverpool (CB)
My Lords, we are not asking the noble Lord to comment on the investigation. Will he return to the question of justice, raised by the noble Lord, Lord Heseltine, and reflect on the words of the Liverpool-born Prime Minister William Gladstone, who said that
“justice delayed is justice denied”?
Is it not outrageous that, after all this time, this has been hanging over someone and their family? The expedition of this case is the issue that the noble Lord has raised, not whether it is right or wrong.
Secondly, as far as the politics of Liverpool is concerned, it does not help politics or good governance for a case to fester like this for so long, undoing some of the achievements of the noble Lord, Lord Heseltine, who, as Secretary of State for the Environment, came to the city of Liverpool in 1981 and said, rightly, that he did not know that conditions such as those existed in this country. He vowed to do something about it, working across the political divide. Anything that impedes those achievements would be a very negative thing for Liverpool and the country as a whole.
Lord Sharpe of Epsom (Con)
I hear what the noble Lord has to say on the subject, but I cannot comment on an ongoing investigation. The noble Lord is, in effect, inviting me to comment on the complexity of the investigation and various other operational aspects of it, in order to make a judgment as to whether it is delayed, denied or whatever. I cannot do that.
Lord Deben (Con)
My Lords, I remind the House of my business connections in Liverpool, but I must ask the Minister to come back to the general question of the longevity of this investigation. We have just had a Member of the other House who was under suspicion for two and a half years, unable to do his job, and then no case was held against him. I am sorry, but this is unacceptable. We really cannot have a justice system that punishes people, guilty or not guilty, without them knowing what the case is, what the charge is, or why it has been held up for so long. The police really do have to come to some conclusion rapidly.
Lord Sharpe of Epsom (Con)
My Lords, as I say, that may very well be the case in the majority of investigations. I cannot comment on the specifics of this one, not least because I do not know the specifics of this one. It would be completely inappropriate for me to do so. However, I will agree that, obviously, in general, investigations should be as speedy as possible.
Lord Addington (LD)
My Lords, does the Minister agree that there should be some maximum timeframe on this because, otherwise, it could go on for ever—and it looks like it is going to. Surely, there should be some point at which you know, at least, whether there is going to be further action taken against you.
Lord Sharpe of Epsom (Con)
I am afraid I do not agree with that. It depends very much on the complexity of the individual investigation. As I have said, the Merseyside police have confirmed that they intend to conclude it as expeditiously as possible. Beyond that, I can go no further.
Lord Ponsonby of Shulbrede (Lab)
My Lords, it is fitting that we are discussing police conduct today, 35 years, almost to the hour, since the Hillsborough disaster that killed 97 people. Today, the Labour Party has confirmed that it would introduce a Hillsborough law to ensure public authority accountability. Does the Minister agree that there is much more that we can do to achieve justice for those killed and to ensure that such a disaster never happens again?
Lord Sharpe of Epsom (Con)
I join the noble Lord in honouring those who died, of course; 35 years have passed since the tragedy and the impact continues to be devastating for many. The families have my sympathy. The families of the 97 have shown tremendous courage and determination and obviously their loved ones will not be forgotten. In his Statement to the other place on 6 December, the Lord Chancellor committed to a debate later this year on the Government’s response to the Bishop Jones report. It would be unwise of me to pre-empt that debate, so I shall say no more at this point.
Baroness D'Souza (CB)
My Lords, in view of the Minister’s repeated remarks, do I understand that he is saying that the Government have no role in influencing the police in their inquiries?
Lord McLoughlin (Con)
My Lords, while it is true that the Government should not be able to direct the police in inquiries such as this, as the noble Lord, Lord Heseltine, said, the amount of time that this man and his family have been under suspicion and under investigation, with rumours floating about, is not fair on any individual person, let alone a person who seeks to represent his community in high office, be it locally or nationally. We have seen far too many cases of inquiries—whether involving parliamentarians or local government officials—going on for far too long. The Government ought to have a look at this to see if something should not be done to put it right.
Lord Sharpe of Epsom (Con)
I absolutely hear what my noble friend has to say on the subject and I will, of course, take that comment back to the department.
Baroness Blower (Lab)
My Lords, does the Minister agree that, notwithstanding the fact that he cannot comment on an individual case or its complexity, it does a disservice to the police service to be seen to be taking quite so long over this case?
Lord Sharpe of Epsom (Con)
Again, I would prefer not to pass judgment on the quality of the investigation that the Merseyside police have done, as the noble Baroness is asking me to do. I really do not know what the complexity of this case is. I do not know why it has taken so long to resolve. I would assume that there are very strong operational reasons, given the obviously high-profile nature of the people involved.
Lord Dobbs (Con)
May I ask my noble friend about a case on which he can comment? It is that of a public figure: Ted Heath. I can sense—although I cannot see—him gritting his teeth even as I raise that name. The only reason Ted Heath was accused, with the most vicious accusations, is that he was a public figure, and a vulnerable public figure. He died years ago. Surely, this is a matter of public service that we should be doing in this House, and my noble friend would become a local hero in this House if he simply went away and told the Home Office that this would be settled once and for all and that, at last, Ted Heath’s name could be cleared.
Lord Sharpe of Epsom (Con)
Well, I hear what my noble friend has to say. He has heard what I have had to say on this subject on at least 20 occasions and, no doubt, I will be called back to the Dispatch Box to say it all again. As I said last time, I have gone back to the Home Office and we are looking into ways of perhaps answering the noble Lord’s question.
Lord Hunt of Wirral (Con)
My Lords, I speak as someone who is proud to have been brought up, and to have gone to school, in Toxteth, and who has a huge amount of respect for Joe Anderson and all that he achieved when he was mayor. Having listened to the various comments made on all sides of this House, I hope my noble friend the Minister will agree that we should ask: is there not a better way in which we can handle situations such as this? Citing the various examples that he has heard, could he perhaps give us the opportunity of coming back when he has reflected with his colleagues in the Home Office on the points that have been raised?
Lord Sharpe of Epsom (Con)
I thank my noble friend for that and I will of course reflect on the points that have been made. However, as I said in my earlier answer, it would be inappropriate for government to interfere with the organisational matters of the police.
Pandemic Preparedness
(7 months, 1 week ago)
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Baroness Deech
To ask His Majesty’s Government what is their state of preparedness for the next pandemic.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)
The Government continue to plan and prepare for a range of pandemic and emerging infectious disease scenarios. These include respiratory diseases such as flu and diseases spread by contact, vector-borne or through oral transmission. This built on lessons learned through Covid-19. We are working with partners to strengthen our pandemic preparedness and to build a flexible and scalable response that can be adapted to any threat that the health and social care system faces.
Baroness Deech (CB)
My Lords, that is not very reassuring. With all due respect to my noble and learned friend Lady Hallett, the remit that she has been handed is too wide, too deep, too long and too expensive, not least due to the lawyers. It seems to be looking backwards rather than forwards. We do not need to know who said what to whom in the middle of the night a few years ago; we need to know whether we have innovative vaccine labs, ventilators, the right medical staff, preparedness with PPE, supply lines and so on. I suggest to the Minister that either my noble and learned friend’s remit be cut down or he set up a quick and short inquiry, looking forward to the next pandemic, which could be with us within months. Sweden managed its inquiry in two years. This one will take too long.
Lord Markham (Con)
I totally agree with the noble Baroness. What I am interested in as a Health Minister is what lessons we can learn so that we are better prepared next time round. My understanding is that stage 1 is going to be reported in early summer, and that should give us some of those findings. I completely agree that that is what really matters.
Lord Browne of Ladyton (Lab)
My Lords, an international pandemic treaty and government policies from 2021 are currently being negotiated by the World Health Assembly, aimed at preparing for the next global health emergency and preventing a repeat of what South Africa called vaccine apartheid, where countries had vastly unequal access to vaccines and drugs. Next month, World Health Organization member states are expected to vote on the final text. Where do we stand on the key issue of pathogen access and benefit sharing? Do we stand on the side of the group for equity or with those rich countries that have suggested that such an approach would undermine their sovereignty?
Lord Markham (Con)
I think our record in this speaks for itself. I am very proud of the action that we took as a Government to make sure that the AstraZeneca vaccine was prepared quickly, put in arms quickly and offered all around the world on a not-for-profit basis very quickly. Action speaks louder than words, and that is something that we are well-prepared on. I have been involved in some of the conversations about world pandemic preparedness. There is action that we think we can take collectively as a world, but what we are not prepared to see happen is our sovereignty—the management of our health services—being ceded to other countries.
Lord Allan of Hallam (LD)
My Lords, procurement during the pandemic has left a bitter taste in the country. While many good citizens stepped up in the public interest, there are legitimate concerns that others were profiteering at that difficult time. Can the Minister give a firm commitment there would be no VIP fast lane if there were another pandemic? Are the Government putting in place a much more transparent emergency procurement system as part of their preparedness planning?
Lord Markham (Con)
I think it is understood and accepted that the VIP fast lane was not a good way of going ahead; lessons have definitely been learned. At the same time, I refer to the fact that 97% of all procurement fit the bill and worked very well. Yes, 3% did not and lessons need to be worked on, but we should remember that, in those extraordinary times, 97% was pretty good.
Lord Robathan (Con)
My Lords, my noble friend the Minister has talked about lessons learned. Is not one lesson that was learned the terrible impact that the lockdowns had on our economy and society, children’s mental health, cancer rates and so on? In future, can we make absolutely certain, before taking any drastic step like a lockdown, that we weigh up the costs and benefits of such a policy?
Lord Markham (Con)
Absolutely. To respond to both this question and the earlier question from the noble Baroness, Lady Deech, the other things I would like to see the inquiry look at are the lockdown and comparisons with countries such as Sweden, what lessons can be learned across the whole health system, the impact on the mental health of our children and a lot of the other areas that my noble friend mentioned.
Lord Patel (CB)
My Lords, the WHO has identified Nipah virus as a priority candidate for the next pandemic. It belongs to the same group of viruses as the measles virus. Fortunately, Oxford University has developed a vaccine that went into human trial last week. The lesson therefore is that we should identify the organisms that are likely to cause pandemics and be prepared ahead of time with the vaccines; several other candidates have also been identified. For that to happen, we require a global conglomerate to focus on development of vaccines. Do the Government have any plans to establish one?
Lord Markham (Con)
We definitely look to work closely with our colleagues, and I have spoken to my Health Minister counterparts on this. One of the lessons from the pandemic was that you also need to have your own capability. The work we have done on the100-day mission, and the strategic relationship we have entered into with Moderna—which can develop vaccines in as little as four to six weeks to answer some of those unknowns—is very powerful.
Baroness Wheeler (Lab)
My Lords, it is now two years since the UK Health Security Agency replaced Public Health England. As we await the Science and Technology Committee’s report on the threat caused by zoonotic diseases such as Covid, avian flu and Ebola, can the Minister update the House on the progress the agency is making in building resilience in these areas? It reported last year on global work on developing pandemic-fighting tools but not on the nitty-gritty needed to tackle underlying problems still hampering us, such as tackling widespread health inequalities, building systems for vaccine resistance and raising public awareness of the threats we all face.
Lord Markham (Con)
I thank the noble Baroness. The UKHSA has been working and there are four main areas we want to be responding on. First, there is the vaccine, and the 100-day mission is all about making sure that we have the vaccines quickly. We have 100 million vaccines prepositioned for flu and 250 million for other diseases. Secondly, there is the manufacturing scale-up. We have a fund in place so that we have UK domestic production capability to produce vaccines quickly. Thirdly, there is the stock of PPE, and, fourthly, there is the diagnostic capability. That is how the UK Health Security Agency is making sure we have all the bases covered.
Lord Hannay of Chiswick (CB)
My Lords, will the Minister turn again to the answer he gave to the noble Lord, Lord Browne of Ladyton, about the international aspects of this? Does he not accept that throwing in the slightly abusive reference to the word sovereignty is simply a kind of “get out of jail” card to ensure that, next time round, again, equitable distribution across the world will not be achieved?
Lord Markham (Con)
Excuse me, but I think we will find that Britain was a world leader in developing a vaccine and making it available all round the world on a not-for-profit basis. If any noble Lord can come up with examples where countries have done more than we have in this space, I would be delighted to hear them. I, for one, am proud of what we did.
The Lord Privy Seal (Lord True) (Con)
The noble Baroness knows better than to shout at another Member when other Members before her are also trying to get in to ask a question.
The Lord Bishop of Leeds
My Lords, do the Government have a preprepared communications plan for the eventuality of another pandemic—which could be next week, next year or whatever—so that it is not made up on the hoof? We remember that, in 2016, there was a big exercise in London which was forgotten about when we got to the actual pandemic. Are those provisions being put in now and preparations being made?
Lord Markham (Con)
That is all a part of what I referred to as having a toolkit for a flexible response. The problem always in these things is that you tend to fight the next war on what happened in the last one. We have to be careful in what we do and that we are not trying to fight the next pandemic on the last one, because inevitably it will be different. Having a flexible and scalable response, including communications, is vital.
Lord Turnberg (Lab)
My Lords, some years ago, when I was chairman of the Public Health Laboratory Service, we had 31 public health laboratories dotted around the country. Their role was to track and trace the sources of infections. We lost those in a review of the Public Health Laboratory Service, and I resigned as a result of that. What a loss that has been. What efforts are being made now to replace those laboratories which can do the track and trace that we desperately need?
Lord Markham (Con)
As the noble Lord mentions, one of the key pillars is having diagnostic capability. The noble Lord will be aware that, for the sequencing of all the different Covid strands, it was the UK that they were sent to because our diagnostic and sequencing ability is second to none. I am assured that that capability still exists and, with that, our ability to scale up diagnostic testing very quickly.
Victims and Prisoners Bill
Lord Roborough
That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 42, the Schedule, Clauses 43 to 62, Title.
Lord Roborough (Con)
I beg to move the Motion standing in the name of my noble and learned friend Lord Bellamy on the Order Paper.
Litigation Funding Agreements (Enforceability) Bill [HL]
Monday 15th April 2024
(7 months, 1 week ago)
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The Advocate-General for Scotland (Lord Stewart of Dirleton) (Con)
My Lords, the Litigation Funding Agreements (Enforceability) Bill will fulfil the Government’s commitment to address the impacts of the United Kingdom Supreme Court’s judgment in the case of the King on the application of PACCAR Incorporated and others v Competition Appeal Tribunal and others. The reference for the case is 2023 UKSC 28. It was handed down in July 2023. This case is colloquially known as PACCAR, taking the name of the lead applicants in the case.
First, I will address the judgment in question. It arose out of a claim against truck manufacturers regarding anti-competitive behaviour. The Supreme Court ruling rendered many third-party litigation funding agreements—LFAs—unenforceable by bringing them into scope of the regulatory regime for damages-based agreements, or DBAs. For the sake of brevity, I will refer from time to time to these vehicles by their initials.
The Supreme Court ruling has had a detrimental impact on access to justice and the attractiveness of this jurisdiction as a global hub for commercial litigation and arbitration. This is an important sector for the United Kingdom and so we must act now. Put simply, the Bill will restore the position that existed before the Supreme Court ruling in July 2023, which was that LFAs are not DBAs and hence are enforceable.
It will accomplish this by amending the definition of a DBA in Section 58AA(3)(a) of the Courts and Legal Services Act 1990. It will also ensure that claimants can continue to access litigation funding to bring big, complex cases against larger, better-resourced corporations which they could not otherwise afford.
The restoration of the previous funding position is needed urgently to reduce uncertainty for both the future of litigation funding and for LFAs that had been entered into previously. By rendering many existing LFAs unenforceable, the position post judgment risks undesirable satellite litigation, an increased burden on the courts, and creating an unfavourable market for litigation funding, which, in turn, threatens access to justice. I will go on to explain in more detail how the Bill operates, but first will address why it matters.
Third-party litigation funding plays a key role in enabling ordinary people and small and medium-sized enterprises to bring large, costly claims against better-resourced companies and institutions. Litigation funding agreements involve a third-party funder, typically an independent financial institution. The funder finances all or part of the legal costs of a claim, in return for a share of any damages awarded. Third-party litigation funding is a niche market, which operates typically in high-value commercial, arbitration or group litigation claims, including the types of claims brought in the Competition Appeal Tribunal.
A recent example of where an LFA was used is the Post Office Horizon case—Bates v the Post Office—which had the backing of a litigation funder. Some other examples of cases where LFAs have been used include equal pay cases; motorists bringing claims against car manufacturers over false diesel emissions; and consumers bringing claims against multinational companies regarding data breaches and data misuse.
In the United Kingdom Supreme Court judgment in PACCAR, the court held that LFAs between claimants and litigation funders which entitle the litigation funder to payment based on a percentage of the damages recovered from the losing party are DBAs—damages-based agreements—as defined in Section 58AA of the Courts and Legal Services Act 1990. The principal problem is that LFAs which fall within the definition of DBAs are subject to, but generally will not comply with, the DBA Regulations 2013, as was noted in the PACCAR judgment. As such, those LFAs are rendered unenforceable against the claimant.
For many claimants, LFAs are not just an important pathway to justice; they could be their only route to redress against well-resourced corporations with deep pockets. I have no doubt that all noble Lords will have been moved by the plight of the sub-postmasters affected by the Horizon scandal, and their impressive campaign for justice. It is just one example of the importance of third-party litigation funding. Alan Bates himself has noted that, as things stand today, since the Supreme Court judgment, the sub-postmasters would not be able to bring their claim had it arisen. That is why we must remove the risk and return to the position preceding the July 2023 judgment: promoting access to justice for ordinary people by making sure that it is not the preserve only of big business, powerful institutions and the moneyed few.
The new legislation, which will apply to all proceedings, will allow the Government to deliver a return to a funding regime which promotes access to justice, as well as enhance the competitiveness of the jurisdiction and the attractiveness of a thriving United Kingdom legal sector which contributes over £34 billion per annum to the UK economy.
I return to how the Bill achieves this. The Litigation Funding Agreements (Enforceability) Bill provides that LFAs are not damages-based agreements. It should be noted that the legislation applies and extends to England and Wales only. This restores the position in place before the July 2023 judgment, making affected LFAs enforceable once again and enabling ongoing and future claims to continue to be funded by LFAs.
The Bill contains two clauses. Clause 1 amends Section 58AA of the Courts and Legal Services Act 1990. Subsection (2) amends the definition of a DBA to provide that an agreement, to the extent that it is an LFA, is not a DBA. Subsection (3) defines an LFA for the purposes of section 58AA of the 1990 Act. Subsection (4) provides that the amendments are to be treated as always having had effect. The amendment only addresses the Supreme Court’s finding that LFAs are DBAs and does not seek to reverse the finding that litigation funders provide claims management services.
Clause 2 explains the extent, commencement and short title of the Bill. Subsection (1) provides the territorial extent of the Bill, expressing that the Bill extends to England and Wales only. Subsection (2) provides the commencement provision for the Bill. The Bill will be commenced upon the day of its passing. Subsection (3) gives the shortened title by which the Bill can be referred as upon passing. This is described as the Litigation Funding Agreements (Enforceability) Act 2024.
The Bill will have retrospective effect. The legality and propriety of the proposed retrospection, including its compatibility with the European Convention on Human Rights, has been considered carefully. The Bill will achieve the important policy objective of preserving the rights of individuals to challenge alleged breaches of the law. Access to justice is an essential component of the rule of law. If the Bill were prospective only, there would be uncertainty as to the enforceability of agreements entered into before the PACCAR judgment but where the claim is concluded after the Act comes into force. This could lead to undesirable satellite litigation, which would benefit no one.
Retrospective effect will also ensure that the contractual rights and obligations agreed under LFAs entered into before the Supreme Court’s judgment continue to have effect as intended. Early commencement will minimise the period of retrospection. These provisions will remove any uncertainty about the enforceability of LFAs in cases that have settled and enable litigation funders to continue to fund cases, including existing cases.
On retrospective effect, the noble Lord, Lord Macdonald of River Glaven KC, has raised a number of points for the Government to consider. I also acknowledge the engagement which I have had with my noble friend Lord Hodgson of Astley Abbotts in relation to wider risks which may arise in some circumstances out of third-party litigation funding. I first thank the noble Lord, Lord Macdonald, for sharing his expert views, and assure him that the Government will consider them in due course. In relation to the useful engagement which I have had with my noble friend Lord Hodgson, I will come on to discuss the ambit of a review of the matter which the Government have ordered.
There are a wide variety of views about litigation funding arrangements and how they should work. That is why, alongside legislative change, the Lord Chancellor has asked the Civil Justice Council—which is the body for overseeing and co-ordinating the modernisation of the civil justice system in England and Wales, under the chairmanship of the Master of the Rolls—to undertake a review of the third-party litigation funding market in England and Wales.
The review will consider questions raised during the discussions on the PACCAR judgment, including in your Lordships’ House, such as the need for greater safeguards for claimants, regulation of the sector and the possibility of caps on the returns made to funders. The CJC will publish its terms of reference and other related documents shortly. An interim report is due by this summer—2024—and a final report by the summer of 2025. The Government will consider the way forward following that final report.
By acting swiftly to restore the previous funding position via legislation, and investigating whether that position can be enhanced through a longer-term, forward-looking review, the Government will restore and improve a vital avenue to justice for all deserving claimants, not just those with the most resources. I submit that this is a much-needed Bill to address an important issue affecting access to justice. I beg to move.
Lord Mendelsohn (Lab)
My Lords, I feel like an amuse-bouche before such a distinguished group of lawyers who have yet to speak. I will raise a very small number of points which come from my experience in business and investment and which I think are relevant, but I of course defer to the greater legal understanding of others on these points.
First, we should be very proud of the legal services industry that we have here and its quality and importance. We should retain it as a central objective for any Government and for whatever we do. Secondly, access to justice is absolutely key and an essential principle. We have to do more to provide it across the country, whether in civil or even criminal matters. Access to justice is a real foundation, but we feel that there is probably a lot more for us all to do. Making sure that members of the public have access to those things is important, and the promise of litigation funding is a key part of that.
There are four points that are very important in the context of this debate. We have heard some of them previously, when looking at other times when we have used the courts or lawyers to seek justice for other people, whether it was for vibration white finger or other things. That always comes down to the question of whether the fees, costs, contingencies or arrangements are too onerous on the people most in need of being the beneficiaries of whatever compensation or arrangements come at the end. That remains a huge issue for us—and it is very hard to dodge that, looking at the number of funding arrangements from the LFAs and wondering whether things such as the multiple of capital versus the percentage of fees can achieve those outcomes.
Even in the Horizon matter, we are looking at the level of what is gained by those who are trying to access justice. I think that some of us feel that those issues remain, so those people still lack a sense of justice because of the sums and arrangements that were come to. The retrospective arrangements in this Bill mean that everything will be retained as it should have been, and I suspect that there will many cases where the onerous terms that had to be accepted by the litigants should be looked at in some way.
The second point is that this is a business model. As someone who has looked at the public quoted company—which is being approached to put money into these companies and which has been looked at recently—and the secondaries market in this area, I know that there are some major issues with how this is developing. That is common with any sector or business activities that develop; there are consequences to creating such businesses. There are also some unintended consequences: when we look at these sorts of prospectuses over the period in which they can be tracked, we can see an increase in the costs of law. So, while we are looking at increasing access to justice because of the costs of law, they are actually accelerators of costs in litigation.
So, for a variety of reasons, there are unintended consequences, but these are complex models. Even with funds that say they turn down 96% of the people who come before them, what struck me most is that this is a market that is mainly dominated by those who can afford it and who have money. It does not extend access to justice in the way we are thinking or the way in which the Government have presented it. They have shown no evidence to this effect.
It is a good way of de-risking legal exposure in litigation—whether by passing it off to an LFA or by getting the LFA and the lawyers to do conditional fee agreements that also place that risk in other places. The people accessing these funds and these arrangements are not those from whom the Minister says the foundation of this piece of legislation has come. Other people and entities can use it to de-risk their litigation. This is not to say it does not have that purpose—and, by the way, I do not have a problem with people de-risking their legal exposure by using these arrangements. That is perfectly fine.
Thirdly, we must not say we are doing this only in order to widen access to justice. It does not. It has not done so in quite the way we had hoped, even, for example, in the context of important cases such as Horizon. We have to think about what we do in order to make that happen.
In evaluating this Bill, it is important to consider the real issues, consequences and impacts. We have to focus on making sure that we properly identify which elements extend access to justice. In that regard, the Government are to be applauded for deciding to institute a review of the wider sector and its growth. This is very important. I am not entirely convinced that the CJC is the right vehicle for this, because it is about the development of an economic market with economic activity, actors and consequences. This is currently outside its scope, which I am keen should be extended. I look forward to the Minister’s further comments on that in due course.
Finally, I have no problem with rich people using litigation funding. I just have a real problem with us not being able to get access to justice for people who do not have it. In the review, we should be much clearer about the sorts of things that can be done to achieve this objective. This is not just about LFAs. Rollover agreements will not achieve it. If we truly believe in extending access to justice, we should think about supporting other funding mechanisms. If they have sufficient public benefit, perhaps they could be extended into other areas such as the charitable and philanthropic domain. In the context of this debate, let us take this as it really is: a massively growing, active economic market that will achieve many things, but will not exclusively achieve access to justice. We should consider how we do that.
Lord Thomas of Cwmgiedd (CB)
My Lords, I also welcome the Bill. It is an enormous achievement of the Lord Chancellor. We ought to be grateful that he has recognised there is a serious problem that needs to be addressed quickly and has brought forward the Bill. I am also particularly grateful to the Minister for the clear way in which he has explained it. It is important to concentrate on what this Bill does and then, subsequently, to look at some of the other issues.
In the last few years, litigation funding has become part of the way in which access to justice is obtained. In a moment, I will say a little more about this. It is important to realise that this is a worldwide market. Issues similar to ours have arisen in Australia and across the member states of the European Union. There is a massive growth in litigation about this form of funding in the United States. The scale of this industry can be seen. The current estimate of the revenue of litigation funders is approximately $17 billion.
I was surprised, I think like many, that the Supreme Court reached the decision that it did, because over the years people had realised there was a clear distinction between damages-based agreements and what litigation funding produced. So, although the Supreme Court by a majority, reversing the Court of Appeal, came to the view that the principles applicable to damages-based agreements should also apply to these, otherwise they were unlawful, it was following what has been perceived in some states, such as Alabama, North Carolina and Pennsylvania, as a degree of hostility to this industry.
Given that so many thought that this was an industry that produced access to justice, and many have acted in reliance on what they thought the law was, it is plainly right that the decision should be reversed with retrospective effect. If there are issues about that, they can no doubt be looked at subsequently, but it is plain that litigation funding does provide access to justice. One has only to look at the Horizon case, where the very complex proceedings before Mr Justice Fraser involved a lot of financing in relation to technical issues, at equal pay cases, or at some of the consumer actions that have been brought to see that litigation funding is essential.
I, like many, wish that we had legal aid. On many occasions I have spoken of the wish that HM Treasury would open its pockets or that we would devise some other scheme, but I am afraid I have been a wholly unsuccessful advocate and legal aid has declined. Therefore, when those who criticise this industry come to look at what should be done, they ought very much to bear in mind that we as a state, and most other states in the western world, are failing in providing access to justice because there is no legal aid, and this industry has come, to an extent, to the rescue.
I will come back to the social responsibilities of this industry in a moment, but it is not only about consumers. It is also very important that SMEs and other medium-sized companies, which were never within the scope of legal aid, also have access to litigation funding. I am sure that hardly anyone in this Chamber could possibly contemplate the risk of litigation. It is far too expensive. Access to justice is not something that is open to an individual in this country, unless he falls within the very narrow band of people who can get legal aid or whose wealth is to be measured in enormous terms, so it seems important to have a sense of realism that no real alternative has yet been devised to this form of providing access to justice, given the cost of litigation. However, I do not want to descend into the costs of litigation because that would be straying off the point of what the Bill seeks to do.
I have also been very grateful, when speaking on this issue on previous occasions, to His Majesty’s Opposition, the Liberal Democrats and my noble and learned friends on these Benches for the support they have given in getting this issue back and dealing with it speedily. But I wish to raise two points. As the Minister mentioned, the noble Lord, Lord Hodgson of Astley Abbotts, raised the question of regulation during the course of the debates. I too am delighted at what the Lord Chancellor has done in asking that this issue—the way in which these agreements operate—should be independently looked at.
The operation of litigation funding across many jurisdictions has been the subject of work by the European Law Institute. It established a working group and, by complete coincidence, Mrs Justice Cockerill, who at the time was the judge in charge of the commercial court, and Professor Susanne Augenhofer, were appointed as rapporteurs of this group. It is a project in which I am an assessor, so I have considerable knowledge of it, but to try to help progress this, the council of the European Law Institute has made available the core part of the report, which sets out the principles that have to be addressed, such as transparency, disclosure and whether there should be a cap. I am sure that this report, a copy of which I have provided to the Lord Chancellor and others, will give at least a head start.
This is not the time to go into the details of that. Although the noble Lord, Lord Mendelsohn, addressed many of the issues, those are really not the subject matter of this debate; however, it is essential that they be dealt with. If you look at what is happening in the United States of America and what has happened in Australia, it is plain that the issues that arise are real and need detailed consideration. I therefore very much hope that the work done by the European Law Institute, along with some of the papers written about the position in the United States, will give the group that is to consider this at least an understanding of the broad issues that have to be resolved and the principles and alternatives that should be put before Parliament for its consideration in due course.
It may be that regulation is one alternative. I personally think that regulation has not served us well in many areas. Self-regulation may be the better thing; or, simply agreeing some principles and leaving the courts to police what is effectively in front of them may be a way forward. However, this is not a matter for debate today. We need a proper report, and we will need legislation in the next Parliament to deal with this, because it is such an important issue. There is a huge amount of learning, and I think you will find that the work done by the European Law Institute in its report will be of great assistance.
Finally, I want to turn to one other issue that I think it right to mention. Many think that people make a lot of money out of litigation in one way or another. The proverbial jokes, the proverbial cartoons, do not have to be referred to—they are well in everyone’s minds. However, I want to point to the example of one of the litigation funders, which established a not-for-profit company that provided funds that could be used for litigation that would not be suitable for litigation funding but that raised broader important issues. As is mentioned in the register of interests, when the funds were provided, I gave some advice as to the many competing claims for this. But I do hope—and this is a plea to the litigation funding industry, and maybe to others who do very well out of litigation—that they look at what can be done by way of providing some assistance for small but very important cases that have wide implications, and that are not suitable for litigation funding, and whether some of the money that is made can be put into this kind of enterprise, which is so important not merely for the rule of law but for our society as a whole.
It is an illusion to think that people have access to justice in this country: most people simply do not. Those who do so well out of litigation ought maybe to put in the back of their minds doing something along these lines, for the greater good of our society. I firmly believe that others who are better advocates than me will find that HM Treasury is a very, very difficult place to go and ask for money for litigation.
Lord Arbuthnot of Edrom (Con)
My Lords, I declare my interest as a member of the Horizon Compensation Advisory Board. I am grateful to my noble friend the Minister, and to the Lord Chancellor, for securing a slot so quickly to right the consequences of the PACCAR judgment. I am impressed and surprised at the speed with which they have managed to do this. I am also grateful to my noble friend Lord Sandhurst, the noble Lord, Lord Carlile, and the noble and learned Lord, Lord Thomas—whom it is an honour to follow—for encouraging the Lord Chancellor in his speediness by moving amendments to an earlier piece of legislation.
I speak briefly to point out the sad fact that, until Alan Bates secured litigation funding in the Post Office Horizon scandal, the political process had completely failed him and other sub-postmasters. Although a substantial number of MPs, including a Cabinet Minister, Oliver Letwin, had gathered together to say that the concerns about the Post Office’s behaviour had to be independently examined, we got nowhere. Subsequently, Post Office Ministers said that they were lied to and MPs said the same thing. The turning point in the story was the fantastic judgment of Mr Justice Fraser, as he then was. I pay tribute to him. He succeeded in “blowing the bloody doors off” where the politicians had failed. That is why litigation funding is essential.
There will be questions about how litigation funding should work. Many of them will come up during this short Bill. For example, it is regrettable that the 555 sub-postmasters failed to recover their full costs from the Post Office. It was certainly regrettable that, out of a settlement of £57 million, after legal and litigation funding costs only £12 million found its way into the pockets of the sub-postmasters.
However, I do not say that the litigation funders were unfairly recompensed. They took the immense risk of taking on the country’s most trusted brand, the Post Office, which was backed by the bottomless purse of the taxpayer. That was a risk that needed a high pay-off if it succeeded, because it would have been ruinously expensive for the litigation funders if it had failed. We know, and we watched, how the Post Office did its best to spend the sub-postmasters into submission in a disgraceful display of legal bullying, so the litigation funders deserved their fees.
Yet the entire story must make us wonder whether there could be a better way. Litigation is slow and expensive. I found the comments of the noble Lord, Lord Mendelsohn, very interesting in this respect. Litigation funding must be one method of obtaining redress, but it should be considered alongside others, including the model of regulators-plus-ombudsmen recommended in various books by the chairman of the Horizon compensation advisory board, Professor Christopher Hodges, who is a friend of mine, with a properly regulated system of litigation funding that is subjected to what the noble and learned Lord, Lord Thomas, says. Regulation is needed, and with a stronger system of ombudsmen for the public sector, maybe we could avoid another Post Office scandal.
Lord Carlile of Berriew (CB)
My Lords, it is a tremendous privilege to follow the noble Lord, Lord Arbuthnot. He has shown, in his conduct in connection with the Horizon case, the courage, rigour and persistence that we all should aspire to and yet do not always achieve.
Like the noble Lord, I welcome this Bill. I have fond memories as a baby barrister of taking over preparing small cases that the noble Lord, Lord Thomas of Gresford, as he now is, was far too successful to deal with by then. I used to sit in the spare bedroom at home, very early in the morning, drafting pleadings in personal injury cases. Some of them were for the defendants—the employers or their insurers—but not a small number of them were for individuals who could get legal aid to bring those cases before the county court, where I often appeared to present them if the wicked insurers did not pay up. At the end of every quarter, as I am sure the noble Lord will remember, we used to receive a payment for our civil legal aid work, from which 10% was deducted because it was legal aid. Justice was obtained by very large numbers of people through that legal process, which obviously involved solicitors instructing us as well. It was another era, and I suspect we were far too successful in the work we did for claimants and legal aid became too expensive—but there we are. We have been left with the loss of legal aid for the bulk of such cases. Litigation funding is what has replaced it and it is here to stay. I was astonished by the PACCAR ruling, because it removed the enforceability at a stroke. I do not understand how it happened—and I have read the PACCAR judgment in the Supreme Court on several occasions. There we were, with those who were funding a lot of small cases not able to recover any costs when they won.
I also recall, much later in my life as a barrister, being what one might call a jobbing, part-time chairman of the Competition Appeal Tribunal under the rigorous but agreeable presidency of the noble and learned Lord, Lord Bellamy, when the CAT, on which I sat for 10 years, started to receive cases for bulk claimants. I now declare an interest, having been involved as an adviser in two such groups of cases that went before the Competition Appeal Tribunal. One group involved people who really could not afford to bring their own cases, but, taken together, the whole claim amounted to hundreds of millions of pounds. It is right that, where justice is on the side of such claimants, they should be able to bring their claims. Above all those commercial interests, it is right that people such as postmasters and postmistresses can recover damages.
There was a time in my life as a barrister when I used to do prosecutions for the Post Office on the Wales and Chester circuit, as it was then known. I do not know if I prosecuted any Horizon cases—I think not, because I took Silk a very long time ago and did not do it after that—but there was no doubt that, when instructions were presented to me as a prosecutor and when cases were presented to a court, there was a view that on financial matters the Post Office was infallible. It had a status which had an air of infallibility around it, and that has been proved to be horribly wrong. It is absolutely right that we should be supporting, in the right circumstances, those who will allow such cases to come to court. I very strongly support the principle behind the Bill and its very short provisions.
I want to express two lurking concerns, if I may, both of which have been dealt with in this debate already, so I will be brief. The first is that lawyers are regulated by statute but litigation funders are not. There is an organisation called the Association of Litigation Funders, but I have noticed that its 2018 code of practice has barely been mentioned in any publicity about this matter. My view is to welcome the CJC inquiry very strongly and that we should be prepared, if absolutely necessary, to provide statutory legislation for litigation funders—though I suspect from what I have seen that they will be willing to move voluntarily to a proper level of regulation, which is in some ways much better than statutory legislation because it is much more flexible.
Another point that has come to light came to my attention this morning, when I received a very large amount of information from an interested party, who I think instructed the noble Lord, Lord Macdonald—who has been mentioned and for whom I have immense regard—as legal counsel to provide an opinion on whether the Bill falls within the European Convention on Human Rights. The Minister has certified that it does and that it is in the Bill, which would not be here if it did not—except in the one case that we will be discussing tomorrow. I simply ask the Minister, at the appropriate time, which may not be this afternoon, whether he has had more than the three or four hours that I have had to consider what was presented to me by another person as very opportunistic lobbying, including the opinion of the noble Lord, Lord Macdonald, and whether he will advise the House on whether there are any ECHR problems.
I note that, at the end of his opinion, the noble Lord, Lord Macdonald, described the case against the ECHR as “arguable”. That was the word that he used, I suspect with great care. We have all used it from time to time in our legal lives, and it does not express the highest level of conviction. I am sure that the House would like to be sure that we are not, by accident, falling foul of the European convention, to which, in most respects at least—I cannot help saying this—the Government are devoted.
Lord Wolfson of Tredegar (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Carlile of Berriew, who made his points in his usual succinct style—notwithstanding that the usual channels, in what must be the paradigm case of the triumph of hope over experience, have allowed this debate between lawyers to proceed with no time limit whatever on speeches.
I begin by declaring my interest. I am a practising barrister in commercial and competition cases, which include cases where one party is supported by litigation funders; sometimes that is my client, and sometimes it is the other side.
As the House has heard, there is no doubt that third-party litigation funding is now and will remain part of our legal landscape. While this is not a debate about the merits of legal aid, there is no doubt that, in the real world, there is little prospect of a Government of any colour massively increasing the scope of civil legal aid. We must therefore be realistic about what will be in its place. Third-party litigation funding provides an important means to enable people to access justice, which is a fundamental part of the rule of law, and so to vindicate their legal right. That is the reality in the United Kingdom in 2024.
I remember doing cases where one party or the other—sometimes both—had to take out large loans or remortgage their home to fund legal costs, including the risk that they would lose and have to pay the legal costs of not only their side but the other side as well. This country usually has the “loser pays” system, which means that, if they lost, they could face financial ruin.
I therefore suggest that third-party litigation funding, together with the appropriate insurances that can be obtained, is a more attractive proposition for most litigants than taking out large loans, and therefore ought to be a more attractive proposition for society as well. As the noble and learned Lord, Lord Thomas of Cwmgiedd, explained, this is a worldwide market and an important one for the United Kingdom to remain a leader in. I suggest the real question is how we arrange our law to deal with the reality of such funding. That means we have to strike a balance: on the one hand, we want to provide access to justice, which is, as I say, an essential element of the rule of law; on the other, we do not want to see litigants given a raw deal by one-sided funding agreements, which mean that when they win, they can be left with very little.
However, it is perfectly right, as the noble Lord, Lord Arbuthnot, pointed out, to recognise that in many of these cases, the litigation funder is taking a very real risk. It is very easy after the event to say, “Oh, well that case was bound to win”. There is no such thing—I keep telling my clients this—as a case that is bound to win. Sometimes there are cases that are bound to lose, but that is a different matter. Therefore, we have to try to find a balance in this area. I very much welcome the review that the Lord Chancellor is setting up; I pay tribute to him for doing so. I hope and expect that this will be a cross-party endeavour.
PACCAR had the effect of treating many litigation funding arrangements as damages-based agreements—DBAs, as they are called in the vernacular—with the result that, unless they met the requirements of the DBA Regulations, they were unenforceable. I will not get into whether or not PACCAR was a surprising decision—I am reminded of one of AP Herbert’s “Misleading Cases”, in which losing counsel in the House of Lords seeks to avoid an order for costs on the basis that a decision of the House of Lords was an act of God, being something that no reasonable man could have predicted—but the fact is that PACCAR caused a real degree of consternation among litigation funders. It has also led to a huge amount of satellite litigation about funding agreements themselves, rather than the cases the funding agreements are there to support.
True it is that some funding agreements were renegotiated post PACCAR, so that instead of receiving a share of the damages—which is what caused the problem in PACCAR—the funder is instead paid an agreed multiple of its investment. There are, I understand, three cases of that type currently proceeding in the CAT—the Competition Appeal Tribunal. I think there are three; I am briefed in two, in one for the funded claimant and in the other for the defendant facing a funded claimant.
The fundamental point at issue is whether the decision in PACCAR should stand. The Government have concluded that it should not, and I broadly agree. I therefore support the Bill, which reverses the decision of the Supreme Court in PACCAR. As I say, that decision has been widely criticised.
I will make two other points. First, like the noble Lord, Lord Carlile of Berriew, I have my mind on other things happening this week. I gently note that this is a good example of the fact that Parliament is sovereign. There is nothing wrong with Parliament reversing a decision of the Supreme Court; ultimately it is for Parliament and not the courts to make the law in this or in any other area. The Bill is therefore perfectly constitutionally proper.
The second, and perhaps more substantive, point is this. I said that I broadly support the Bill, and I do. The reason for that slight note of caution—and it is a slight note—is that there is one issue I want to highlight. It is an issue which has been explained to me by people working in the area; it is not a matter relevant for any client for which I am acting.
The Bill as drafted restores the position ex ante—see Clause 1(4); it is retrospective in that regard. The phrase “retrospective legislation” is sometimes used to imply that the legislation is therefore, and necessarily, bad. That is not the case. The problem with retrospective legislation is not that it is bad in itself. It is that retrospective legislation should not, or at least should not without very good reason, disturb existing legal rights entered into on the faith of the law as it was.
I am concerned about the following sort of situation. Let us assume that someone had a funding agreement with funder A, which is then deemed to be unenforceable by PACCAR, so the litigant goes off and enters into a new funding agreement with funder B, which is PACCAR-compliant. The Bill, as I understand it, would revive the funding agreement with funder A and so leave the litigant with two funding agreements with two different funders on two different sets of terms. That is because the Bill operates retrospectively and does not cater for the fact that some litigants may have done all you could reasonably expect of them at the time; that is, going out to replace the unenforceable funding agreement with an enforceable funding agreement. I suggest that that does not make any sense and is not the intention of the Bill, although it seems to me, and, I think, to others, that that is what the Bill as drafted actually does. I have brought this to the attention of the Minister. I am grateful to him for his time in discussing the issue with me and to his officials for reaching out to discuss the matter with others. I am confident that a solution can be found to this perhaps niche, but none the less important, issue; otherwise, I support the Bill and look forward to participating in its further stages in your Lordships’ House.
Baroness Jones of Moulsecoomb (GP)
My Lords, it is always a pleasure to follow the noble Lord, Lord Wolfson, with his niche points. I keep finding myself in debates with lawyers. I must say, they have some very interesting anecdotes that we all listen to with great interest.
It is fair to say that I am deeply suspicious of everything that this Government bring to your Lordships’ House. All the legislation seems to me to be based on some at times quite cruel intentions. I am actually a little bit more suspicious of short Bills, especially those that come so quickly to this House. At first glance, the Bill does seem fairly simple. It restores the law to what it was less than a year ago and so is quite sensible, but the more one looks at it, the more it appears to be designed to protect the profits of hedge funds, sovereign wealth funds, banks and other backers of these litigation funding agreements, without any consideration of the impact that it will have on the claimants being funded.
One illustration of this is 555 sub-postmasters who were awarded compensation of £57 million against the Post Office for the Horizon scandal. It is reported that £46 million of that money was immediately payable to litigation funders. That seems an extraordinary amount: 80% of the damages awarded. I accept that it was a probably a very difficult case, but at the same time, the sub-postmasters were left with only £20,000 each, when their damages were estimated to be well over £100,000 each. In essence, they got 20% of the £100,000 they were really owed.
It makes you ask why any claimant would agree to put up so much of their compensation. The truth is that normal people cannot afford to take a case to court without such litigation funders. I have heard that we are stuck with this system and that legal aid is not likely to come back, but it seems that we have a particular lack. The noble Lord, Mendelsohn, put it quite well. If he was the amuse-bouche before the meal, perhaps I can be the mid-meal sorbet. Legal aid at least had the benefit of enabling everyone to get justice or to try to get justice. This system means that that is not true for everybody.
There is an inequality of arms in negotiations between a potential claimant and a litigation funder. Without robust regulation and protection for claimants, a litigation funder can reap huge profits by doing nothing other than provide funding for the claimant to take their case to court. One might say that there are dangers in that: of course there are, but this is a business and there are always dangers in business. This, to me, is a failure of successive Governments—just the current Government, which fail in so many ways, but also previous Labour and Liberal Democrat Governments, eroding legal aid and the state’s role in ensuring access to justice.
This litigation-funding business is now worth tens of billions of pounds, and it is a highly lucrative industry for those engaging in it. Legal aid and access to justice have been, essentially, privatised and turned into yet another arena for exploitation by hedge funds and financiers.
This Bill is also extremely lazy, because what the Government have done is choose between two options: do nothing or reverse the PACCAR judgment. They did not put any energy into thinking about a better solution: something that would help the majority of people, not just the few who get taken up by litigation funders. So I would say, “All right, it’s not awful, as some of the legislation is, but really it’s not very good”.
Lord Meston (CB)
My Lords, this Bill, and the Supreme Court decision which prompted it, have shone light on the somewhat arcane topic of third-party litigation funding. It is an area with which many legal practitioners frankly have little real familiarity, and with which most of the judiciary only have to deal from time to time. As stated in the Explanatory Notes to the Bill, third-party litigation funding is a niche market which typically operates in high-value claims. That is correct: it is less to do with individual smaller claims and little to do with filling gaps left by the loss of legal aid—on which I join my noble friend Lord Carlile in resisting the temptation to go down memory lane.
A rather cynical friend suggested to me that the speed with which this Bill has been produced shows how much money is at stake. However, in the shorter term, there is a need to limit the adverse consequences of the Supreme Court decision, hopefully including the need to avoid satellite litigation seeking to rectify or sever existing arrangements or to test out new arrangements trying to get round the effects of the Supreme Court decision. That is best achieved, as the Bill proposes, by stating the law to be what many people, including the losing party in the Supreme Court, said it was.
Additionally, there are clearly wider considerations and a need to preserve and improve established benefits of properly managed funding arrangements. If there are any significant concerns about commercial litigation funding, as suggested in a briefing paper that I received only today, they surely must predate the Supreme Court decision and are unlikely to be cured or made worse by this Bill.
Although the Long Title to the Bill will limit the extent of any permissible amendment, the passage of the Bill, distinguishing litigation funding agreements from damages-based agreements, should provide some opportunity to consider both types of arrangement.
Dealing specifically with damages-based agreements, these are governed by regulations made in 2013, about which, in a case in 2021, a member of the Court of Appeal said that nobody could pretend that those regulations represented the draftsman’s “finest hour”.
In a case in which I was recently involved, concerning only matrimonial property and finance, I was particularly concerned, and rather surprised, to see that the legal representative of the former wife had got her to sign what was called a damages-based agreement. The use and the terminology of such an agreement seemed quite out of place and inappropriate in matrimonial proceedings, particularly when there was no question of damages being awarded, but only allocation of the proceeds of sale of the modest family home.
However, in general, I understand that respectable practitioners favour damages-based agreements, which have advantages for both lawyer and client in sharing the litigation risks, with each doing only as well or badly as the other. In 2019, revised draft DBA regulations were produced and were, as I understand it, well received. If so, why have they been left in limbo and what is going to happen to those draft regulations now?
As to third-party funding arrangements, in an article in 2014, Professor Mulheron described the framework governing such arrangements as consisting of the 2014 code of conduct for litigation funders, its supervision by the Association of Litigation Funders, and sporadic judicial oversight of litigation funding agreements, with some unenacted legislation in the background for good measure. The experience of the subsequent 10 years does not indicate to a detached observer any consensus about whether, how and to what extent improvements can best be made.
During the Digital Markets, Competition and Consumers Bill in this House, an amendment proposing a requirement for the Government to review the litigation funding market and its regulation was not accepted by the Government. The Minister then explained that they were not blind to some of the challenges and opportunities to reform and improve the funding system. On that basis, the review by the Civil Justice Council has been commissioned. The Minister has answered the questions that I was going to ask today about the progress and scope of the review being undertaken. I am sure that it will be informed and assisted by the valuable work being done and the formulation of principles undertaken by the European Law Institute. In that context, it would also be instructive to learn what is happening in Scotland.
More generally, I suggest that what will be required will be clarity without overregulation: in particular, with the benefit of hindsight, regulation that does not give rise to the sorts of problems that needed resolution by the Supreme Court and then amending legislation, as we have with this Bill. Importantly, also, it should be regulation that does not hamper or restrict the funding market.
I assume there is no reliable statistical or other information to show how much British litigation is commercially funded by those who are not members of the Association of Litigation Funders. If regulation is to remain with no more than a light touch, it is all the more important that sufficient safeguards exist and are understood to protect the consumer—and important that, wherever possible, those who seek or who recommend funding arrangements are firmly guided towards members of the ALF and funders who adhere to their code of conduct.
In the area of law with which I am most familiar, statute provides that family proceedings cannot be subject to enforceable conditional fee agreements. That, together with the demise of legal aid and also the limited costs jurisdiction, makes the availability of bespoke third-party funding all the more important in financial remedy proceedings. It is not only in the wealthier family cases that funding options have to be explored. Sometimes, a bank loan or a loan from a relative or friend will suffice; but these can give rise to distracting arguments between the litigating parties about whether or not they are so-called “soft loans”.
I need hardly say how depressing it is for the judge at or near the final hearing to be told that the funding has dried up, so that one or other party will have to continue without representation. Typically, but not invariably, it is the wife in matrimonial proceedings, with only limited or illiquid funds, who most needs help, against a spouse with deeper pockets and with the means and motives to conceal assets and to frustrate disclosure and enforcement.
The family judiciary has welcomed the availability of funding arrangements to those who need or choose to use them. I therefore suggest that, in addition to referring the matter of litigation funding to the Civil Justice Council, it could be helpful to invite the views of the Family Justice Council, if only to confirm that no problems exist or are foreseen.
Finally, to return to the contents of the Bill before the House, in his recent article in the New Law Journal Professor Dominic Regan strongly welcomed the introduction of the Bill here and its succinct drafting. Indeed, he wrote:
“I will never again hear a bad word said about those old duffers in the other House”.
As none participating in this debate would admit to anything more than early late middle age, I suggest we return the compliment and should give the Bill a Second Reading.
Lord Sandhurst (Con)
My Lords, I rise, rather like the Arctic roll, to complete the speeches from the Floor. I congratulate the Government on moving swiftly and decisively to introduce the Bill. I congratulate the Minister too on his very clear opening. It has been a privilege to listen to today’s speeches, with many valuable insights that have opened our minds to a lot of issues that need to be addressed.
As we have heard, the Supreme Court’s decision in PACCAR rendered unenforceable third-party litigation agreements between claimants and third-party funders who finance litigation in return for the right to payment, usually set as a percentage of the damages. It was at once clear, as we know, after that decision on 19 July this year, that most current litigation funding agreements did not comply, and that it was very hard, if not impossible, to draft one that would comply. This, as we now know, has had serious ramifications for existing and future claims. It needed swift action, which is why we must all congratulate the Government on the course that they have taken.
It is interesting and important to remember that it has been government policy for at least 10 years, and in fact rather longer, to positively favour litigation funding agreements. I remind the House, as I have done previously, that the then Parliamentary Under-Secretary of State, the noble Baroness, Lady Neville-Rolfe, said in this House, in Committee on the then Consumer Rights Bill, on 3 November 2014 that
“there is a need for claimants to have the option of accessing third-party funding so as to allow those who do not have a large reserve of funds or those who cannot persuade a law firm to act pro bono to be able to bring a collective action case in order to ensure redress for consumers. Blocking access to such funding would result in a collective actions regime that is less effective”.—[Official Report, 3/11/14; col. GC 583.]
As we all know, the High Court group action by which the sub-postmasters obtained the critical findings exposing the defects in the Horizon system was possible only because they obtained very large sums of funding from litigation funders. After PACCAR, such litigants, and others like them, were left without the potential for an effective civil remedy. Group actions by individuals and smaller companies in the Competition Appeal Tribunal were at a stroke bereft of the means to litigate, and, as we know, so I shall not spend time on it here, that applied to other actions in the High Court.
Legal aid, as we have heard, is no longer available for claims of this sort or for any claims for damages, other than in clinical negligence and certain other categories, nor is it likely to be reintroduced. However, let us all remember that the promise of a property-owning democracy rings hollow if citizens do not have the opportunity to assert or defend rights through the legal system. The happy functioning of society requires that individuals have a reasonable opportunity to obtain legal remedies. The recovery of compensation and a judgment is not just about money; it is about redress. It is about an individual sense of fairness, of being valued by society, and of good name and reputation. The sub-postmasters epitomise that.
In the absence of legal remedies, much of the fabric that maintains our economic system is damaged or lost. The sense of individuals that we live in a society in which harm done falls to be recompensed, or that obligations made will be honoured, or that we will not be bullied by monopolists, is an important contribution to the individual’s sense of well-being and the value we place on the society in which we live. Concern to find funding mechanisms to achieve legal remedies for these individuals, and for smaller companies and the like, who do not have the resources to achieve this is a concern to preserve social value. It is the pursuit of the public interest. A market economy in which people do not have effective access to justice and cannot enforce their rights is not worthy of the name. The market, in turn, ceases to operate fairly or efficiently. I remind this House that, in December 2019, the Conservative Party’s election manifesto rightly included a commitment to access to justice for ordinary people.
Litigation funding agreements, whatever the complicated issues they bring, are an important plank of our justice system. For the reasons my noble friend the Minister has explained, there is an unusual retrospectivity provision. Like him, I believe it to be justifiable, but no doubt we shall have to look at it in Committee to see that it really works properly and fairly.
While congratulating the Government on the Bill, we must also ensure that defendants to claims funded by such funders are not going forward improperly harassed. We must ensure that payments recovered by the funder are reasonable for the risks involved and the money laid out. Successful claimants must be left with broadly fair recompense. Those issues are complex; they require difficult balancing arguments and it would be difficult to regulate or to manage, but they are not reasons for allowing the PACCAR decision to stand. This Bill is necessary.
Like other noble Lords, therefore, I applaud the Lord Chancellor for asking the Civil Justice Council to review the current operation of such agreements and to consider the need for further regulations and safeguards. This will ensure that those who provide such funding do so on an appropriate and fair basis. Funders must not be free to take excessive proportions of recoveries or harass defendants. I do not suggest that they do, but we must ensure that they do not going forward.
In this review process, I urge that proper attention is paid to a forthcoming report, of which we have heard, by the European Law Institute. The noble and learned Lord, Lord Thomas of Cwmgiedd, is an important member of the working party, of which he has spoken. I remind noble Lords that this project seeks to develop
“principles containing safeguards in order to provide an environment in which”
third-party litigation funding
“is allowed but balances the availability of the tool with the interests of claimants and defendants and a healthy litigation market”.
Finally, I agree with the noble Lord, Lord Meston, that the Government should look again at the draft Damages-Based Agreements Regulations 2019. They came in at the time when I was just finishing my practice before retirement. It was a mystery to practitioners at the time that, after all the work that had gone into them, they were never laid. We should look again at those. Looking forward, I commend this Bill to the House.
Lord Trevethin and Oaksey (CB)
My Lords, it is a pleasure to follow the noble Lord. I make precisely the same declaration of interest as did the noble Lord, Lord Wolfson. I occasionally advise funders and I quite frequently act in cases in which one party is funded and the other party is aggrieved by the existence of litigation funding.
I do not think anyone has spoken directly against the Bill, so I need not say too much, if anything, directly in support of it. I will just make one or two observations about the Bill and then, if I may, I will travel briefly off-piste and pick up some points made by the noble Lord, Lord Meston, about the DBA Regulations.
The reality, as a number of noble Lords have pointed out, is that there is no prospect of anything resembling a functioning legal aid system coming back into place. What follows from that is that there are very serious problems with access to justice in this country. Litigation funding unquestionably has its part to play.
In her very interesting—and, with respect, powerful—dissenting judgment in the Supreme Court PACCAR case, Lady Rose quoted an American judge:
“The realistic alternative to a class action is not 17m individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30”.
One could substitute $3,000 or even $30,000 for that sum; that is the reality. Without access to litigation funding, class actions or group actions—litigation of that type, which will sometimes be highly meritorious—simply cannot be brought.
One can test whether the practical consequences of the PACCAR decision are benign or malign by considering what probably would have happened if that decision had been handed down by the Supreme Court shortly before the litigation funders supporting Mr Bates and the other postmasters were going to take their case to trial, and shortly before a final decision had to be taken on the funding of that litigation. Almost certainly, the funders would have withdrawn. The Post Office, as one knows from what one has read about the history of that litigation and other matters, would have seized on that and sought to take advantage from it. Almost certainly, the proceedings would have been aborted. Mr Justice Fraser would never have handed down his masterful judgment and, to use the phrase of the noble Lord, Lord Arbuthnot, the doors would not have been blown off and the injustices which have horrified the country might have remained concealed. That suggests, I think, that the consequences of the PACCAR decision are not benign, and the Government are right to act in the way that they have.
I do not want to say any more about the merits of the Bill. I will make two points which involve travelling slightly off-piste. They build on what has already been said by the noble Lords, Lord Meston and Lord Sandhurst, about the 2013 DBA Regulations which were at the centre of the Supreme Court’s reasoning in the PACCAR case. Those regulations were put in place very shortly after the reforms founded on Sir Rupert Jackson’s report were enacted. Sir Rupert, in making significant changes to the conditional fee regime, strongly recommended that damages-based agreements should generally become lawful in this country. That recommendation was an important part of his overall approach to the reform of litigation in this country.
However, everyone, including the Ministry of Justice and just about every judge who has ever had to read the regulations, recognises that the 2013 regulations were badly drafted. In particular, they leave a very undesirable uncertainty about whether hybrid agreements involving an element of a damages-based agreement and an element of a more orthodox funding scheme are permissible. They leave a great deal of uncertainty as to what happens to the lawyers’ entitlement to remuneration if the client terminates the agreement in the course of the relevant litigation.
That is why the ministry instigated a review of the position, which led to the preparation of significantly better draft regulations by a group including Nick Bacon KC, a colleague of mine, who is a master in this field. There is no doubt that those draft regulations would represent a major improvement. If those draft regulations from 2019 had been put in place back then, we would not be having the current debate and there would be no PACCAR problem. Nick Bacon and his team spotted the difficulty that underlies the decision of the Supreme Court in PACCAR and drafted the new regulations to remove the relevant ambiguity and took litigation funding agreements outwith the scope of the DBA Regulations.
I am sorry to be mean to the Minister but, like the other Members of the House who spoke on the point, I would be very grateful if he were able to provide any further information or assurance as to the speed with which the ministry and the Government will move in the direction of reforming the DBA Regulations, as indicated.
My final point is a broader point about the way the Bill and the underlying regulations are structured. In this area, as in others, they operate in a completely binary way. They say that this agreement—a conditional fee agreement or a damages-based agreement—is either enforceable, if all the boxes and regulations have been ticked, or it is unenforceable. There is no middle ground whatever. There is nothing resembling the jurisdiction in the consumer credit legislation, which gives the court a power to hold that a consumer credit agreement is enforceable notwithstanding that there has been some technical non-compliance with the relevant regulations. Something of that sort would work well here because where there is the completely binary structure of enforceable or wholly unenforceable, there is trouble ahead: the stakes are raised much too high.
With this sort of structure, a party who shows that the relevant agreement is unenforceable stands to gain massively. A finding of that nature will close down the litigation and lead to a saving of millions, many of millions or hundreds of millions of pounds. You get very expensive, time-consuming, recondite satellite litigation which goes all the way to the Supreme Court and filters back down through the court system, causing judges to wrestle with difficult points. It is possible that all or most of that could be avoided if the scheme was structured so as to give the court the power to say, “Yes, this DBA or CFA is technically non-compliant with the regulations, but no detriment or prejudice has been caused and therefore we, the court, declare the relevant agreement to be enforceable”. That would be a better way forward.
Lord Marks of Henley-on-Thames (LD)
My Lords, rather repetitively, I suspect, I too declare an interest as a practising commercial barrister. I agree entirely with the observation of the noble Lord, Lord Wolfson, that litigation funding now forms part of the landscape of civil litigation both domestically and internationally.
I also pass on an apology from my noble friend Lady Brinton. She is not just my noble friend, but a non-lawyer, whose contribution would have been very welcome for that reason. Unfortunately, she has had to withdraw from the debate due to a family illness.
Like others, I broadly support the Bill and applaud the speed with which it has been introduced. That is because the unexpected decision of the Supreme Court—unexpected, I say, while hesitating to use the word “surprising” suggested and then withdrawn by the noble Lord, Lord Wolfson—in PACCAR has left us in an unsatisfactory position, with nearly all LFAs unenforceable on the basis that they generally do not comply with the DBA regulations applicable to damage-based agreements, as we have heard. The regulations date from 2013.
The Secretary of State’s Written Ministerial Statement of 4 March, announcing the intention to introduce this legislation, made a number of points—points which were also made and expanded upon in opening by the noble and learned Lord, Lord Stewart. The fundamental point made is that:
“Third-party litigation funding enables people to get funding to bring big and complex claims against bigger, better-resourced corporations”
than the claimants, which those claimants
“could not otherwise afford”.—[Official Report, Commons, 4/3/24; col. 31WS.]
I agree that this is the fundamental advantage of LFAs. I also agree with the points made by the noble Lord, Lord Mendelsohn, and the noble and learned Lord, Lord Thomas of Cwmgiedd, that LFAs add to the attractiveness of the United Kingdom as an international centre for commercial litigation and arbitration. It is highly significant that the legal sector brings in, on one estimate, £34 billion a year.
Where I slightly diverge from the Government’s position is where the noble and learned Lord made the point that the sub-postmasters’ claim was possible only with the backing of a litigation funder, without at the same time qualifying that statement by pointing out that the vast majority of the damages in that case went to the litigation funder and the lawyers. For many members of the public, that fact is bordering on the offensive. It is, however, certainly right that the postmasters were able to bring their case to court only because of the availability of litigation funding. I join with others in commending the endeavours of the noble Lord, Lord Arbuthnot, for the postmasters, and the success of those endeavours, for which they owe him a great deal. It was also made absolutely clear in the ITV programme “Mr Bates vs The Post Office” that the availability of litigation funding was crucial.
I also agree with the points made not only by the noble Lord, Lord Arbuthnot, but also by the noble Lord, Lord Wolfson, as to the magnitude of the risk regularly taken by litigation funders. One of the issues that we need to address, I suggest, is how to consider that risk without that risk and its effects damaging the actual recovery of the claimants in these cases.
The truth, as this debate has exposed, is that unregulated litigation funding leaves us caught in a bit of a jungle out there. We know that the Lord Chancellor shares that view. In his press release, also issued with the MoJ and the Courts & Tribunals Service, he said that the Government were
“considering options for a wider review of the sector and how third-party litigation funding is carried out”,
and it is entirely welcome that he has now initiated the process of such a review. The Minister has explained that the review of the whole litigation funding market has been ordered. That review could consider the need for increased regulation and for safeguards for people bringing claims to court, particularly given the growth of the sector over the last decade. For my part, I do not see why we should be left with uncertainty for long. I completely agree that we need a review, but there are some principles that we may be able to address now and in the later stages of the Bill—not necessarily by amendment, but by discussion and by formulating something approaching a way forward.
The traditional rules against champerty were founded on a distrust of investors, in effect, gambling on other people’s litigation. Despite the growth of litigation funding, the grounds for that distrust have not been entirely extinguished. On the other hand, they have to be balanced against the need to enable access to justice—a point that has been made. That is a need that, I suggest, can be met by a well-regulated and fully functioning system of private sector legal funding alongside a fully functioning legal aid system. I do not share the pessimism of the noble Lord, Lord Trevethin and Oaksey, that there is no future for legal aid. There are a number of areas where LFAs simply cannot replace legal aid; they are not suitable for a great deal of the litigation that used to be handled with the benefit of legal aid, but for which it is no longer available.
A great deal has been made of the 2013 DBA regulations. As the noble Lords, Lord Meston and Lord Trevethin and Oaksey, have reminded us, those regulations did not represent the finest hour of parliamentary draftsmen. Nevertheless, they sought to introduce—and did introduce—some controls and limits on what might be arranged between clients and, generally, their lawyers. That included: a definition of the circumstances in which the funder would be paid; definitions of the reasons for payment being transparent; excluding some classes of claims from such agreements; and, most importantly, limiting the overall percentages of damages that might be payable to funders. Those areas are important, and those regulations and the feelings behind them teach us some lessons. I was interested in the proposals apparently put forward by Nicholas Bacon KC for the proposed new regulations and to hear the description from the noble Lord, Trevethin and Oaksey, of those proposals.
But what we will have now, with this Bill, is no such helpful restrictions. Litigation funders have long argued, for reasons that they plainly find attractive, that the DBA restrictions do not apply to LFAs. That argument was rejected by the majority in the PACCAR case in the Supreme Court—undoubtedly doing, in effect, great damage to the structure of the whole sector in this country—but what we are left with has other weaknesses. Not only are there no limits on the percentages of overall recovery to be received by the funders, but there are no or very limited incentives, in a case in which the client is likely to win, for the funders to hold down the amount of costs and other fees that can be charged to the client’s account and very little control for the clients over the costs to which they might, ultimately, be exposed. That point was not made directly by the noble Lord, Lord Mendelsohn, but he alluded to similar points about the lack of control for clients over litigation funding.
Because of the requirements in Clause 1(4) that the provisions of the Bill are to be
“treated as always having had effect”,
there is the full retrospectivity alluded to by a number of speakers. That means that the avenues for challenging existing LFAs, where they exist, would probably be largely closed. I understand the Minister’s argument for retrospectivity—that it will restore the status quo pre-PACCAR—but it may, at the same time, undermine potential challenges that might have been made to existing LFAs.
The noble Lord, Lord Wolfson, raised what the noble Baroness, Lady Jones, might have called the “niche issue” about the interesting problem of litigants with overlapping LFAs. I see his point. It remains to be seen whether it would arise in practice.
I agree overwhelmingly with the point made by the noble Lord, Lord Sandhurst. The whole issue of retrospectivity and its effect will need to be carefully considered in Committee.
There are tricky areas in this Bill. It is interesting that the Competition Appeal Tribunal has developed a practical and flexible scheme for considering litigation funding agreements in assessing the ability of clients to fund costs of their own and meet potential adverse costs orders. There is much to be said for consideration of that scheme.
It would be wise to consider what amendments, if any, might improve this legislation. The need for regulation seems clear and I suggest that the overall balance of opinion in this Chamber today has been to the same effect.
I have some questions for the Minister about the review. I have no wish to pre-empt it by asking questions and seeking answers that might ultimately prove embarrassing for the Government. It would be interesting to know what areas the noble and learned Lord regards as important for the review to consider. What proposals for regulation would he see as being possible? What type of regulation would he consider to be within the review’s ambit? What limits, if any, would he foresee on the reward of litigation funders and how might they operate? When will we see the terms of reference of any review? Will it be open to consider alternatives to litigation funding, as has been suggested, particularly in cases against the Government where claimants face what has been called the “bottomless purse” of the taxpayer?
Lord Ponsonby of Shulbrede (Lab)
My Lords, I thank the noble and learned Lord for introducing this Bill, which we support.
First, I will set the wider scene. Third-party litigation funding in the UK has experienced a huge growth since 2010, highlighting the need for comprehensive oversight and regulation. Globally, it is worth more than £13 billion a year and it is on course to grow by 9% per annum for the next five years, taking it up to £20 billion a year.
The UK’s 15 largest litigation funders saw their balance sheet assets soar tenfold to £2.2 billion in the decade to 2022, while the number of funders operating in the UK has grown fourfold to 70—of which only 16 are members of the self-regulating industry body, the Association of Litigation Funders. I noted that the noble Lord, Lord Meston, questioned what proportion of the business goes to the regulated and to the non-regulated funders.
The industry is highly profitable. The insurance company Swiss Re has estimated that the average internal rate of return on personal injury cases from 2019 to 2021 ranged from 20% to 35%. For mass tort lawsuits, profits ranged from 20% to 25%.
The Litigation Funding Agreements (Enforceability) Bill would confirm in legislation that litigation funding agreements in England and Wales are not damages-based agreements. Thus, LFAs would once again not be subject to regulation under the Courts and Legal Services Act 1990 and the Damages-Based Agreement Regulations 2013—a return to the position that existed before July 2023, when the Supreme Court ruled that LFAs could be DBAs if the funder’s remuneration was based on a percentage of the damages recovered.
Prior to the Supreme Court ruling, LFAs and the litigation funding industry were self-regulated. DBAs are a type of no-win, no-fee agreement between a client and their representative—usually their lawyer or claims management company. DBAs must adhere to the statutory and regulatory requirements set out in the Courts and Legal Services Act 1990 and the Damages-Based Agreements Regulations 2013.
In July 2023, the Supreme Court ruled in the PACCAR case, which we have heard so much about, that LFAs could constitute DBAs if the funder’s remuneration was based on a percentage of the damages recovered. The Government and the litigation funding industry both expressed concern that many LFAs would be deemed unenforceable because they did not comply with the legislative requirements for DBAs. The Government said that this uncertainty risked impacting access to justice and could damage the attractiveness of the England and Wales jurisdiction for commercial litigation and arbitration.
The organisation Forward Global argues that the PACCAR judgment enables parties of LFAs prior to July 2023 to challenge these agreements in court. It argues that Clause 4 would stop sub-postmasters, who signed their LFA in March 2016, and other victims of “excessive” LFAs seeking justice. We believe that the Government must ensure that third-party funders have an appropriate and not excessive reward for the risk they take. This is of importance because excessive reward is usually at the cost of the successful claimant who has suffered the wrong.
Although the Bill itself does not expressly include any safeguards, with future safeguards or regulation of the litigation funding sector to be delayed until after the conclusion of the review by the Civil Justice Council, the Government say that the review is expected to
“expressly consider the need for further regulation or safeguards”.—[Official Report, 11/3/24; col. 1888.]
The noble and learned Lord the Minister gave an update on the progress of the review and when it is likely to report, but I did not pick up whether its terms of reference are available and would be available to Members taking part in discussions on the Bill.
During the recent passage of the Digital Markets, Competition and Consumers Bill, which is soon to have ping-pong, an amendment was proposed to require the Government to conduct a review of the litigation funding market and its regulation. The Government did not accept the amendment but, to quote the noble Lord, Lord Offord, did concede that they were
“not blind to some of the challenges and opportunities to reform and improve the funding system”.—[Official Report, 11/3/24; col. 1888.]
I think the noble Lord, Lord Meston, made this point as well.
The Association of Litigation Funders argues that Alan Bates, the lead claimant against the Post Office for the Horizon scandal, said that the backing of the litigation funders helped him and his colleagues to secure justice, expose the truth and clear their names and reputations. However, it seems that, based on Forward Global’s briefing, the funders arguably made an excessive profit. I take the point made by the noble Lord, Lord Arbuthnot, that there was very real risk in embarking on that litigation and that he believes that they did indeed deserve their fees but, as the noble Baroness, Lady Jones, argued, the sub-postmasters themselves are left with £20,000 each—a fraction of the total award. I think it was the noble Lord, Lord Marks, who said that, on first reading, those numbers look offensive and unfair to the sub-postmasters.
Speaking frankly, the suggestion by some that, if the Bill passes, it means that LFAs will escape regulation altogether is unconvincing. They should be regulated in their own right, but not by regulations that would not have been expected, by either side, to apply when the agreements were being drafted and which are generally agreed, as we have heard from a number of noble Lords, to be a dog’s dinner in drafting terms. We recognise the gravity of retrospective legislation, but without it there is no way to preserve all the agreements in cases that have now been concluded. The briefings I have received say that there is no actual problem here, because all live agreements can be renegotiated. However, it is the older agreements that would stand to damage the industry most, hence the need for the Bill.
There is also the separate issue, which has not been mentioned today, of transparency regarding who is funding the litigation. We have all had briefings, including me, from various groups saying that litigation is being used as a vehicle for circumventing international sanctions. This might be a satellite issue but it is still a real one, and I look forward to the Government addressing it.
As the noble and learned Lord, Lord Thomas, said, litigation funding arrangements raise issues that are worldwide. The issues are very similar, whether in continental Europe, the United States, Singapore or Australia, and they are covered by the Vienna-based European Law Institute, as he said. While it is not directly relevant to this Bill, the findings of that institute, and the work of the noble and learned Lord and Dame Sara Cockerill, will be of great interest and relevance. I accept his point that there is likely to be further legislation in this area within a relatively short time.
Today, we are concerned with the Bill before us. We support it and we are very conscious that most industry figures do so too. There have been comments such as this is the “beginning of the end” of the issues caused by the PACCAR ruling, and the Bill is “a great starting point” for removing these uncertainties. It is in that spirit that we support the Bill.
In conclusion, I want to reflect on my experience in business. I think I am one of three noble Lords who have taken part in this debate who is not, and never has been, a lawyer. I remember when I got promoted from engineer to chief executive, I had to start dealing with all the legal issues that came across my desk. I agree with the noble Lord, Lord Marks: it is a bit of a jungle out there. I was very grateful that my business partner was a lawyer; he managed to save me from some of the problems of managing a business. I listened very carefully to my noble friend Lord Mendelsohn when he went through the various benefits of litigation funding. I took two points from his speech. First, poorer individuals and organisations are not particularly benefiting from this way of funding. That is the political point, which I wholeheartedly endorse. The second point he made rang absolutely true for me, as a former chief executive: it is a way of managing risk. The business I ran was relatively wealthy, but we had unpredictable cash flows. Such arrangements were very beneficial, because anything can happen when you are running a business. De-risking and managing legal costs over a period of time was a very useful technique when actively running a business.
Having said that, we of course support the Bill, and I look forward to the Minister’s response to the various points that were raised.
Lord Stewart of Dirleton (Con)
My Lords, I am grateful to all those noble Lords who participated in this debate. I am grateful in particular to the noble Lords, Lord Ponsonby of Shulbrede and Lord Marks of Henley-on-Thames, from their Benches, for the broad support they are giving. But if a financial metaphor is not inappropriate in the circumstances, I do not take either of them to have issued the Government with a blank cheque as far as this legislation goes. If your Lordships are minded that a Committee of the whole House should be established to consider this Bill, as I will move, I look forward to your contributions, and those of the whole House, in giving the Bill the scrutiny it deserves.
The noble Lord, Lord Mendelsohn, opened the responses and in many ways set the parameters for the interesting debate that followed, setting up the question of access to justice and stressing from a historical perspective the medical legal cases arising out of the condition known as vibration white finger. That prompted me to recollect the importance of associations such as trade unions and others in providing legal assistance for their members when entering into costly litigation relating to the safety of the workplace.
It is quite correct that funding litigation is frightening for individuals and smaller companies who are contemplating it in defence of their right. It is for that reason that the Government have put forward this Bill to address the consequences of the PACCAR ruling. Legal Members of your Lordships’ House touched on that question, in particular the noble Lord, Lord Carlile of Berriew, and my noble friend Lord Wolfson of Tredegar. The noble Lord, Lord Carlile, referred to the surprising character of the judgment. Certainly, it took lots of people in the profession by surprise. It is to deal with the consequences of that decision that the Government tabled the Bill. I respectfully endorse the characterisation of the dissenting judgment by Lady Rose, which was put forward by the noble Lord, Lord Trevethin and Oaksey, as a powerful one.
The noble and learned Lord, Lord Thomas of Cwmgiedd, in a characteristically thoughtful analysis of the position, set forth what is accepted across the House with one exception—that there is no real alternative to funding of this sort in the litigation landscape as we currently find it. I do not wish to depress the House by saying that legal aid is dead. On civil cases in England and Wales, legal aid can be provided as an exceptional case funding measure, for matters out of scope where the failure to provide legal services would breach or likely breach a person’s ECHR rights. Where a matter is within legal scope or could be caught by exceptional case funding, the applicant must also pass a means and merits test.
The Ministry of Justice published the Government’s response to the means test review consultation exercise on 25 May 2023. That set out the detailed policy decisions underpinning the means test arrangement. The Government assess that their changes will increase the number of people eligible for civil legal aid in England and Wales by 2.5 million. Therefore, although there are concerns from Members across the House—particularly the noble Lords, Lord Mendelsohn, Lord Marks of Henley-on-Thames, Lord Trevethin and Oaksey, Lord Meston and Lord Carlile of Berriew, and my noble friend Lord Wolfson of Tredegar, and while legal aid will remain an important feature of how access to justice is delivered, it is the view of the Government and I think of the debate overall that we must take steps to address the necessity of third-party funding to permit access to justice for the sorts of persons, organisations and corporations which I have described.
The very interesting contribution by the noble Lord, Lord Trevethin and Oaksey, anticipated me in referring to the decision of the American judge who said that the alternative to class actions funded by funders of this sort was not 17 million individual actions but no actions at all because, as the noble Lord quoted, and as I am happy to repeat, only a lunatic or a fanatic would litigate over $30. The noble Lord also, along with my noble friend Lord Arbuthnot, put before the House a quote from “The Italian Job”. I wonder whether that is the first occasion when that particular work has been referred to in your Lordships’ counsels.
Both noble Lords—and my noble friend Lord Arbuthnot spoke with the immense moral authority that he carries with him as a result of his selfless and tireless work on behalf of the sub-postmasters—made important points about access to funding for litigation. As I quoted in opening the debate, the eponymous Mr Bates has referred to the importance of third-party litigation funding in enabling the process by which justice is arrived at to commence.
The noble and learned Lord, Lord Thomas of Cwmgiedd, referred to the manner in which, as all of us common lawyers know, definitions or concepts of enormous importance across the whole mighty edifice of the common law world can emerge from the least important-sounding or most apparently trivial causes, whether it be snails emerging from bottles of ginger beer in cafés in Paisley or other areas in which matters of huge import for the civil common law have arisen from small-scale disputes between parties.
All the noble Lords were united in their concern about the sums ultimately received by litigants and the potential sums realised by litigation funders. The best vehicle for discussion of this point will be the review by the Civil Justice Council to which reference has been made, but it is a problem of which the Government are acutely conscious.
I am grateful too for the contribution to the debate made by my noble friend Lord Wolfson of Tredegar and for his informed engagement with me at an earlier stage, to which he was good enough to refer your Lordships—an earlier stage before I rose to address the House this afternoon. I am grateful to him for his analysis of the concept of retrospection in legislation, as I am for his endorsement of the constitutional position in relation to Parliament being responsible for making law.
My noble friend Lord Sandhurst referred to the importance of maintaining a situation where defenders are not unduly harassed by litigations funded by third-party funders, and he was quite correct to make that point. I am sure that this is something that the review being carried out under the chairmanship of the Master of the Rolls will consider.
A number of specialist points were made during the debate. In relation to a series of questions posed by the noble Lord, Lord Marks of Henley-on-Thames, I look forward to engaging with the points that he made. In the first instance, I will write to him in relation to those specific points with which he concluded his submission, and I would like to do so against the basis of an understanding of the terms of reference of the forthcoming review. In relation to him and to the point echoed from the Opposition Front Bench by the noble Lord, Lord Ponsonby of Shulbrede, as your Lordships heard from me in opening, an interim report is expected in the summer; the terms of reference under which that report will be carried out will be published in due course.
The noble Baroness, Lady Jones of Moulsecoomb, expressed herself as suspicious of everything that comes out of the Government. I have to echo that by saying I am suspicious of everything that comes out of the Green Party. After all, I have to live in Scotland where we see the effects of government by the Green Party, and they are absurd where not actively malign.
Baroness Jones of Moulsecoomb (GP)
I am sorry for intervening. It is a separate Green Party. It actually disaffiliated itself because of me, and I feel strongly about it.
Lord Stewart of Dirleton (Con)
As always, the noble Baroness has fulfilled a valuable public service.
On the question from the noble Lord, Lord Meston, on the scope of the Bill, the view of the Public Bill Office confirms that this is a one-purpose Bill. Its scope is closely connected to the enforceability of litigation funding agreements and the Public Bill Office does not think that amendments relating to the wider category of damages-based agreements would be in scope, nor would more general issues relating to litigation funding. Again, I would be happy to revert to the noble Lord with further details on those points, as I learn them.
The noble Lord, Lord Meston, along with my noble friend Lord Sandhurst and the noble Lord, Lord Trevethin and Oaksey, also posed a question on the revision of the current DBA regulations. The Government will consider the timetable to make improvements to the DBA regulations without encouraging unnecessary litigation. Any revisions to the current regulations will be subject to a statutory consultation, which is set out in Section 58AA of the Courts and Legal Services Act 1990, and to an affirmative resolution, which is set out in Section 120 of the 1990 Act.
I apologise to any noble Lords whose valuable contributions to this interesting debate I may have overlooked. To sum up, I gauge the mood of your Lordships’ House as one of concern that access to the courts, the reputation of which the House is jealous of and grateful for, should not be artificially constrained. I also recognise noble Lords’ concerns that access to justice on behalf of a less well-funded party or individual should not come at the expense of excessive profits for those responsible for funding. In my own jurisdiction of Scotland, it is a matter of daily encouragement and inspiration to enter Parliament Hall in Edinburgh and pass the portrait of a notable lawyer, of whom it was said after his death that, while he lived, no poor man in Scotland wanted for a good lawyer. It is the aspiration of the whole House that that should apply today as much as it did in previous centuries. I hope that, ultimately, the Bill passes and that the House, as a whole, accepts that it is done with the intention of furthering that aspiration.
Economic Growth (Regulatory Functions) (Amendment) Order 2024
(7 months, 1 week ago)
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Lord Johnson of Lainston
That the draft Order laid before the House on 6 March be approved.
Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, I direct noble Lords to my register of interests. I do not believe I have any specific conflicts, but I am a shareholder in various companies and so on, and it is important for me to highlight that point at the start.
The Economic Growth (Regulatory Functions) (Amendment) Order 2024 and draft guidance, issued under Section 110(1) of the Deregulation Act 2015, were laid before the House on 6 March 2024. I am aware of the amendment that has been tabled, to which I will respond in due course. I also reassure the House that I have responded to the SLSC, following a submission from Wildlife and Countryside Link, which, again, I will cover in due course.
Regulators play a vital role in shaping the UK economy through the way in which they regulate. Regulators set strategies and make decisions that significantly affect the types, the scale and the locations of economic activity in important sectors of the economy. It is therefore critical that regulation is cognisant of the requirements of growth. Efficiencies from improved regulation can translate into lower input costs and higher economic growth overall. I will be publishing a White Paper shortly that addresses the relationship of regulation and growth in greater detail; I look forward to discussing that with many noble Lords in the future.
The instrument and guidance we are debating today relate to the growth duty, a duty that requires specified regulators to have regard to the desirability of promoting economic growth when exercising certain regulatory functions. The instrument extending the growth duty will support an increase in the productivity of our businesses, drive economic performance, and grow our economy. By extending the growth duty to Ofgem, Ofcom and Ofwat, we will ensure that these critical regulators have regard to the need to promote economic growth.
It is clear that regulators can affect growth through their policy decisions. However, regulators can also affect growth through the approach they take to regulation and the wider environment that they establish, including in their relationships with regulated businesses. A good regulatory environment, emerging from the attentive and responsive stewardship of an effective regulator, can create the conditions for business confidence and investment, sensible risk-taking and innovation.
The growth duty currently applies to more than 50 regulators and came into statutory effect alongside the relevant statutory guidance on 29 March 2017 under the Deregulation Act 2015. Currently, the growth duty does not apply to the Office of Communications, also known as Ofcom; the Office of Gas and Electricity Markets, Ofgem; and the Water Services Regulation Authority, Ofwat. This instrument will extend the duty to these three regulators. These regulators oversee industry sectors which alone account for 13% of annual private UK investment and around 4% of UK GDP.
In extending the growth duty, the department has also taken the opportunity to refresh the related statutory guidance, to provide greater clarity to support regulators in their application of and reporting against the growth duty. The refreshed guidance has identified “drivers of growth” and “behaviours of Smarter Regulation”, which will assist regulators to better support sustainable economic growth. I hope that noble Lords have had a chance to read the guidance, which is an extremely well-written document.
I will talk about some of the key drivers of economic growth. I will list them, if I may: innovation, infrastructure and investment, competition, skills, efficiency and productivity, trade, and—very importantly, please take note—environmental sustainability. I understand that there is a perception that the growth duty is in conflict with environmental duties or protection of the environment. I assure all noble Lords that nothing could be further from the truth. The refreshed growth duty statutory guidance sets out in the opening paragraph the importance of ensuring
“adequate protections for consumers and the environment”.
It goes on to state:
“Natural capital and the ecosystem”
in which we live
“are fundamental to economic growth”
and therefore need to be safeguarded for economic growth to be sustained. The growth duty does not legitimise non-compliance with other duties or objectives, and its purpose is not to achieve or pursue economic growth at the expense of necessary protections.
Together, the extension of the growth duty and revised guidance will support the positive shift in the way that regulation is delivered, driving growth and paving the way for businesses to start to grow. An economy that promotes growth is one which is better able to attract businesses to our shores, to innovate and to serve households, and delivers prosperity across our nation.
The extension of the growth duty expands the remit of what Ofgem, Ofcom and Ofwat should consider when exercising their regulatory functions. Requiring these regulators to consider the growth duty will empower them to consider other areas which may not be reflected or may be only partly reflected in their duties, such as promoting innovation or trade. The growth duty is not prescriptive. It does not mandate particular actions; nor does it create a hierarchy over existing regulatory duties. The draft statutory guidance is clear that it is for regulators to balance their duties. We recognise that decisions on growth will need to be carefully considered along with other duties. The Government have also committed to review the impact of the extension of this SI within the related impact assessment and will consider the impact and effectiveness of the growth duty on investment growth, the environment and other factors in detail at the committed review point.
The refreshed guidance outlines drivers of sustainable economic growth supported by case-study examples to provide clarity to regulators within scope of the duty and help them to promote growth. For the purposes of this debate, I refer noble Lords to the previous sets of guidance, which I found to be limited in terms of the sorts of ambitions that we have, particularly when it comes to making sure that regulators understand the balance of their different duties.
The guidance also identifies behaviours that contribute to good regulatory decision-making and smarter regulation. The purpose of the guidance is to assist regulators to give appropriate consideration to the potential impact of their decisions on economic growth within the sectors they directly regulate and the broader UK economy alongside or as part of consideration of their other statutory duties. Decisions on growth will involve consideration of a regulator’s other duties; for example, they may relate to environmental or consumer protection, and there may be a need to balance multiple objectives. As independent and experienced bodies, regulators are best placed to balance their decision-making in this regard, and the revised guidance intends to encourage transparency and accountability for growth across regulators, attracting investment and, we hope, creating jobs.
Before concluding, I turn briefly to the regret amendment in the name of the noble Baroness, Lady Bakewell of Hardington Mandeville. The amendment is concerned that the growth duty could impact Ofwat’s ability to take enforcement action against polluting companies. We are aware that water pollution levels are totally unacceptable, so we expect Ofwat to take the right decisions to protect our waterways. I reassure the House that it is not a case of growth versus the environment.
First, I confirm to the House that the growth duty does not, has not and will not legitimise non-compliance with existing protections and does not prevent Ofwat taking enforcement action. This includes environmental responsibilities and this is explicit in the revised statutory guidance. The purpose of the growth duty is to ensure that specified regulators consider the potential impact of their activities and decisions on economic growth alongside their other statutory duties. The statutory guidance is clear that this does not legitimise non-compliance with existing duties. Further, it specifically lists environmental sustainability as a driver of economic growth and reiterates that the Government are committed to the net-zero and environmental targets in the Climate Change Act 2008 and the Environment Act 2021. A well-protected and healthy population and environment lead to higher productivity and growth. Therefore, we consider that there is no tension between a regulator’s protection duties and the growth duty.
Secondly, the guidance does not in any way set restrictions on regulators about how their enforcement can and should operate. We can all agree that non-compliant activity or behaviour that undermines protections to the detriment of the environment needs to be appropriately dealt with by regulators. Regulators operate independently from the Government and are free to make enforcement decisions based on the evidence presented to them. The growth duty does not prevent any enforcement. I want to be clear that degradation of the environment does not support long-term growth, and it is not something that the growth duty seeks or permits.
In conclusion, this statutory instrument is necessary to ensure that the energy, water and communications sectors strive for maximum efficiency over a sustained period. A well-regulated system will deliver efficient outputs and drive economic growth and productivity. The refreshed guidance makes it clear that regulators should work with businesses on, among other things, the environment, trade, investment and skills to ensure sustainable medium to long-term economic growth. This ensures that current-day economic growth can be achieved without undermining the ability of future growth. Applying the growth duty to the regulators of the energy, water and communications sectors will help ensure an efficient system by encouraging pro-growth regulatory practices where these are compatible with existing duties. The refreshed growth-duty guidance will support regulators in their application of and reporting against this growth duty. The guidance will assist regulators in discharging their responsibilities under the growth duty and provide clarity for stakeholders as to what they should expect of regulators.
Amendment to the Motion
Baroness Bakewell of Hardington Mandeville
At end to insert “but this House regrets that the new growth duty imposed on Ofwat could seriously impact its ability to take enforcement action against polluting water companies, and further regrets the failure of the Government to prioritise the sanctioning of polluters and the cleanliness of waterways.”
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I thank the Minister for his introduction to the Economic Growth (Regulatory Functions) (Amendment) Order 2024 and the draft Growth Duty: Statutory Guidance Refresh which accompanies it. I congratulate him on his enthusiasm.
Economic growth is important, but not at any cost. Although interested in the work of Ofcom and Ofgem, I am speaking this evening only to the issues as they relate to Ofwat and the water industry. I am indebted to the Wildlife and Countryside Link for its briefing and to the Secondary Legislation Scrutiny Committee for drawing this to the attention of the House. It is certainly of great interest to the public.
Many of your Lordships have expressed concern over the state of our waterways, lakes and rivers for some time. The public are also very concerned about the level of pollution continually flowing into what was once sparkling, clear water in which fish and wildlife could thrive but is now stinking and discoloured. Ofwat has struggled to ensure that the water companies fulfil their duties to provide clean water and effective disposal of sewage.
During many debates, the issue has been raised of withholding dividend payment to shareholders and bonuses to chief executives and directors of polluting water companies as a means of getting them to realise that their duties extended to the public, as well as to their shareholders. Customers of water and sewerage companies are finding their bills increasing, but the quality of the water in our waterways is decreasing daily. This order makes it harder for Ofwat to take enforcement action against polluting water companies, as this could be construed as hindering the growth of those companies. This is something of a gift to the three opposition parties in this Chamber in the run-up to the general election.
My main purpose this evening is to press for this order to be withdrawn. If that is not successful, then I would wish for the accompanying draft statutory guidance to be significantly amended. Unless this happens, it is extremely likely that Ofwat will be hindered in its ability to tackle freshwater pollution and other sources of environmental harm, such as unsustainable levels of abstraction.
The order significantly shifts water regulation away from environmental considerations. Over recent years, as new data is collected, it is emerging that the level of freshwater pollution and unsustainable abstraction caused by water companies has reached an all-time high. There is strong public support and political call for tighter regulation of water companies to prevent further environmental harm.
We had seen Defra appearing to be responsive to this, echoed in the 2023 Plan for Water, which pledged
“to address sources of pollution, and boost our water supplies through more investment, tighter regulation, and more effective enforcement.”
That is good so far. However, the order we are debating this evening from the Department for Business and Trade moves in the opposite direction, towards lighter regulation, in the hope of boosting economic growth. The Minister makes a very good case for this. As the Wildlife and Countryside Link says:
“Framing non-economic regulation as a burden on business rarely spells good news for the environment.”
I have the overwhelming impression that Defra has been lent on by the DBT. Has the 25-year environment plan been shelved completely? It is difficult to equate the DBT imposition of a growth duty, which is designed to lighten the burden of regulation on the water industry, with Defra’s commitment to tighten regulation of the same industry. When asked by the Secondary Legislation Scrutiny Committee about this, the DBT responded that
“the growth duty will not take precedence over other duties”,
and the Minister has reiterated that this evening. However, I remain unpersuaded, as do others. Is regulation to be tightened to help protect the quality of the water in our chalk streams, lakes and rivers, or is it to be sacrificed to increase shareholder dividends? Can the Minister help us with this dichotomy?
The Duke of Wellington (CB)
This statutory instrument, despite the very expert way that it has been presented by the Minister, I believe could seriously inhibit the regulation of the water industry. I cannot help but echo a number of remarks made by the noble Baroness, Lady Bakewell; they are worth repeating.
Unfortunately, under current parliamentary procedures, it is not possible in either House of Parliament to amend secondary legislation. Having considered this and other similar issues, I urge both the Government and the Opposition to consider whether a better way cannot be found for Parliament to improve secondary legislation in the way that so often happens with primary legislation.
With regard to the order, I shall comment, like the noble Baroness, Lady Bakewell, only on the inclusion of Ofwat, the water regulator, in the scope of the order and the effect the order will have on the way that Ofwat operates as the financial regulator of the water companies. As everyone in this House knows, there is wide public concern about the continuing voluminous discharges of sewage into our rivers and on to our beaches. There have been many calls for tighter regulation. Even the Department for the Environment, Food and Rural Affairs pledges in its Plan for Water—which was published only a year ago, as has been mentioned—among other laudable objectives,
“tighter regulation, and more effective enforcement”.
However, this order, coming from a different department of state, proposes lighter regulation and less enforcement. The Minister continues to deny that, but I must quote directly from the draft statutory guidance, which says on page 26 that
“certain enforcement actions … can be particularly damaging to the growth. These include, for example … financial sanctions; and publicity … that harms public confidence”.
I suggest to the Minister that the failure to fine water companies and publicise gross discharges of sewage is far more likely to harm public confidence in the system of regulation of water company monopolies. We have to admit—again, despite the Minister’s enthusiastic proposal—that the order will cause Ofwat to hesitate before fining companies or taking enforcement action, for fear of being accused of limiting economic growth.
I have also read the impact assessment, published on 9 January and signed by the responsible Minister. Unfortunately, I could not read the signature, so I do not know who it was. Ah, it was the noble Lord, Lord Johnson—I am so sorry, it was signed by our Minister in the Lords. Again, I feel I have to quote from it. It says that
“the Gross Value Added … of the water sector has shown little long-run growth”.
I am sorry to say I think that phrase sums up how the Department for Business and Trade considers the water industry. It clearly does not believe that the water industry can generate economic value for the country, but the water industry can and should contribute to an improvement in the environment that we will pass on to our children and our grandchildren—and that has value, even if it cannot be measured by the Department for Business and Trade.
It is certainly the case that most businesses and the public at large want and expect a plentiful supply of clean water, fewer leaks from pipes and a huge reduction in discharges of sewage into our waterways. There is a strong argument, which in a sense the Minister has already deployed, and I am sure will continue to deploy, that less regulation will normally produce economic growth. That may indeed be true for many sectors of the economy, but a monopoly industry where there is no competition, and which is causing so much damage to the environment, needs more regulation and enforcement, not less. So I ask the Minister to discuss with his Secretary of State whether the order really should apply to Ofwat along with the other regulatory bodies within scope of the order. My conclusion is that this order as drafted really could further damage an already degraded aquatic environment.
Baroness Jones of Moulsecoomb (GP)
My Lords, it is a pleasure to follow the noble Duke, the Duke of Wellington. I speak at quite a lot of sewage rallies and in sewage debates and I always give him credit for leading the charge against the Government’s laissez-faire attitude to sewage. There is usually a slightly stunned silence that I am congratulating a Duke—but that is life.
We heard some very fine words in the opening statement about the environmental considerations not being affected and so on. I am really sorry, but it is nonsense. If you have growth, you are going to have environmental devastation. It is automatic; it happens everywhere. At the moment, we have torrents of sewage pouring into our rivers, on to our coastlines and into our chalk streams. But, instead of stopping it, this proposal aims to increase it; and instead of giving Ofwat tougher powers to regulate the water industry and turn off the tap of CEO bonuses and shareholder dividends, Ofwat is now being told that economic growth is more important than clean water.
Whenever this Government do anything, I always ask, “Who benefits?” Who benefits here, of course, are Conservative Party donors and the economic growth they are going to experience at our expense and, in this case, developers who provided almost one-third of Conservative Party funds for the previous decade. What the Government mean by “economic growth” is the ability of developers to build cheap, sell high and connect up a lot of new houses to sewerage systems that cannot even cope with existing demand without emptying the excess into our local rivers and streams.
The only way to ensure that new houses are connected to a modern, effective sewerage system is to have public ownership of water companies. The only way to ensure that our water bills are being used to build local sewers rather than offshore bank accounts is to have people in charge who work for the public good and not for private greed.
By asking Ofwat to consider economic growth, the Government are not asking it to make a judgment on whether that growth is desirable, yet a growth in pollution that requires millions to be spent on clearing it up is classed as economic growth. More money spent on medicines that fight off gastric diseases from polluted water is economic growth, as is money repeatedly spent on restocking the fish populations of rivers. Are we really saying to Ofwat that growth at any cost to the health of humans and nature is a desirable thing that it should promote?
Last year, this House defeated the Government’s attempt to allow developers to build new homes that would have added pollution to some of the most sensitive waterways in this country. From the Norfolk Broads to Devon, the Government hoped to let developers pass on the clean-up costs for pollution to local people paying their water bills. We in your Lordships’ House stopped them. I would have liked us to do the same today, but clearly it is not going to happen.
I know that I will be on the Opposition Benches pestering the next Government to change these rules back. It will not take legislation; it is something a Minister can do and I will expect them to do it. Back in 2021, when the Government stripped out the last of our amendments on stopping sewage in the Environment Bill, without timetables and targets, I said, Cassandra-like:
“This will come to haunt MPs”.—[Official Report, 9/11/21; col. 1161.]
As the noble Baroness, Lady Bakewell, mentioned earlier, this piece of legislation is a gift to the three opposition parties. At the rally I was at yesterday, all three opposition parties had a very sympathetic hearing, but, I am afraid, the Conservative MP had a very tough time, even though she was clearly very concerned about the issue. This Bill is a vote loser and the Government should remember that.
Lord Harris of Haringey (Lab)
My Lords, I am grateful to the Minister for his introduction to the order. I assume that one of the objectives it to try to bring some rationality to the different range of regulatory functions that exist between the different regulators. That is perhaps a laudable objective. But it is a missed opportunity in this case, as nothing is said in this order—nor has the Minister indicated that he would like to see this—about the regulators collectively trying to do what they can to ensure that the industries for which they are responsible operate so as to be resilient and able to deal with a variety of shocks. I declare my interest as chair of the National Preparedness Commission.
This is not just about environmental sustainability, although that is one element of it. It is about their ability as industries to respond to what may befall them. At a time of heightened international crisis—I appreciate that most noble Lords are here to discuss precisely that—it is extraordinary that the Government are not taking the opportunity to use the regulatory mechanisms to try to improve the ability of our critical national infrastructure to be resilient and to respond. I hope the Minister will be able to explain why the opportunity has not been taken to extend the remit to ensure that there is a broader definition—one not just about economic growth but promoting resilience. This has, for example, been taken on board by the UK Regulators Network as one of its longer-term strategic aims.
Lord Evans of Rainow (Con)
My Lords, I will take this opportunity to pause the current business on the SI so that the Leader of the House can repeat an Oral Statement taken in the House of Commons earlier today.
Baroness Williams of Trafford (Con)
My Lords, before we begin, it might be helpful for the House to know that the usual channels have extended the Back-Bench speaking time to 30 minutes.
Iran and Israel
(7 months, 1 week ago)
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The Lord Privy Seal (Lord True) (Con)
My Lords, I intend no inconvenience to the House and those taking part in the debate in coming to the Chamber at this time. I hope that it is understood that the position was agreed by the usual channels. I will repeat the Statement made by the Prime Minister. The Statement is as follows:
“Mr Speaker, before I start, I would like to express my deepest sympathy, and, I am sure, that of the whole House, on the death of your father. He was a true giant not just of this House but the other place too”.
I am not supposed to go aside from the Statement, but I think we would all agree with that.
“I also want to express my solidarity with our Australian friends after the horrific and senseless attacks in Sydney in recent days. Our thoughts are with all those affected.
On Saturday evening, Iran sought to plunge the Middle East into a new crisis. It launched a barrage of missiles and attack drones over Iraq and Jordan and towards Israel. The scale of the attack, and the fact that it was targeted directly at Israel, are without precedent. It was a reckless and dangerous escalation. If it had succeeded, the fallout for regional security and the toll on Israeli citizens would have been catastrophic. But it did not succeed.
In support of Israel’s own defensive action, the United Kingdom joined a US-led international effort, along with France and partners in the region, which intercepted almost all the missiles, saving lives in Israel and its neighbours. We had already sent additional RAF Typhoons to the region as part of our existing operations against Daesh in Iraq and Syria. I can confirm that our forces destroyed a number of Iranian drones. We also provided important intelligence, surveillance and reconnaissance support for our partners. Our pilots put themselves in harm’s way to protect the innocent and preserve peace and stability. I spoke to the RAF earlier today. They are the best of the best and I know the whole House will join me in expressing our gratitude.
With this attack, Iran has once again shown its true colours. It is intent on sowing chaos in its own backyard and on further destabilising the Middle East. Our aim is to support stability and security because it is right for the region and because, although the Middle East is thousands of miles away, it has a direct effect on our security and prosperity at home. We are working urgently with our allies to de-escalate the situation and prevent further bloodshed. We want to see calmer heads prevail, and we are directing all our diplomatic efforts to that end.
Yesterday I spoke to my fellow G7 leaders. We are united in our condemnation of this attack. We discussed further potential diplomatic measures, which we will be working together to co-ordinate in the coming days. I will also speak to Prime Minister Netanyahu later today to express our solidarity with Israel in the face of this attack, and to discuss how we can prevent further escalation. All sides must show restraint.
Our actions reflect our wider strategy in the Middle East, which I have set out in the House previously. I believe there are three vital steps to putting the region on to a better path. First, we must uphold regional security against hostile actors, including in the Red Sea, and we must ensure Israel’s security. That is non-negotiable and a fundamental condition for peace in the region. In the face of threats such as those we saw this weekend, Israel has our full support.
Secondly, we must invest more deeply in the two-state solution. That is what we have been doing over the past six months, including working closely with the Palestinian Authority, so that when the time comes, it can provide more effective governance for Gaza and the West Bank. It is significant that other regional partners actually helped to prevent a much worse attack over the weekend. It reminds us how important the attempts to normalise relations between Israel and its neighbours really are, and it holds out precious hope for the region.
Thirdly, the conflict in Gaza must end. Hamas, which is backed by Iran, started this war. It wanted not just to kill and murder but to destabilise the whole region. This weekend, it rejected the latest hostage deal, which offered a road to a ceasefire. It is Israel’s right, and its duty, to defeat the threat from Hamas terrorists and defend its security.
I want to be clear: nothing that has happened over the past 48 hours affects our position on Gaza. The appalling toll on civilians continues to grow: the hunger, the desperation and the loss of life on an awful scale. The whole country wants to see an end to the bloodshed, and to see more humanitarian support going in. The recent increase in aid flows is positive, but it is still not enough. We need to see new crossings open for longer to get in vital supplies.
I want to take this opportunity to pay tribute to the three British aid workers who were killed in Gaza: John Chapman, James Kirby and James Henderson. They were heroes. The children of Gaza whom they were risking their lives to feed need a humanitarian pause immediately, leading to a long-term sustainable ceasefire. That is the fastest way to get hostages out and aid in, and to stop the fighting. Israelis and Palestinians alike deserve to live in peace, dignity and security, and so do people across the entire region.
In conclusion, Saturday’s attack was the act not of a people but of a despotic regime, and it is emblematic of the dangers that we face today. The links between such regimes are growing. Tel Aviv was not the only target of Iranian drones on Saturday; Putin was also launching them at Kyiv and Kharkiv. Which was the sole voice speaking up for Iran yesterday, seeking to justify its actions? Russia.
The threats to stability are growing, not just in the Middle East but everywhere, and we are meeting those threats, time after time, with British forces at the forefront. It is why our pilots were in action this weekend. It is why they have been policing the skies above Iraq and Syria for a decade. It is why our sailors are defending freedom of navigation in the Red Sea against the reckless attacks of the Iran-backed Houthi militia. It is why our soldiers are on the ground in Kosovo, Estonia, Poland and elsewhere, and it is why we have led the way in backing Ukraine, and we will continue to back it for as long as it takes. When adversaries such as Russia or Iran threaten peace and prosperity, we will always stand in their way, ready to defend our values and our interests, shoulder to shoulder with our friends and our allies. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Baroness Smith of Basildon (Lab)
My Lords, I am grateful to the Lord Privy Seal for repeating what is a very important Statement.
At the outset, we associate ourselves with and thank the Prime Minister and the Lord Privy Seal for their genuine sympathy on the passing of our colleague from these Benches, Lord Doug Hoyle. His was a long life, well lived, and we join in the condolences of the Lord Speaker to his family. I hope noble Lords will accept that on these Benches today we also mourn the loss of another Labour colleague, Lord Richard Rosser, who served on our Front Bench for many years, including as a shadow Defence Minister. We also associate these Benches with the Prime Minister’s comments on the terrible attacks in Sydney.
The Prime Minister rightly described the British aid workers, John Chapman, James Kirby and James Henderson, who were killed in Gaza, as heroes. They lost their lives when all they wanted to do was to help others.
Iran’s actions over the weekend have, as Keir Starmer said in the other place,
“left the world a more dangerous place”.
There was clear intent to destabilise the region and fuel further tensions. Innocent civilians were targeted. It is right that these actions were swiftly condemned by the Prime Minister, the leader of the Opposition and much of the international community. We endorse the Prime Minister’s calls for restraint.
We also acknowledge the professionalism and bravery of our Armed Forces, both for their contribution to the weekend’s combined defensive action and for their ongoing work in the region. Given recent events, we welcome the decision to send additional RAF jets and refuelling tankers to bolster Operation Shader, the existing counter-Daesh operation in Iraq and Syria.
The repelling of Iran’s attack against Israel is important for several reasons. First, lives were saved, as 99% of the drones and missiles were intercepted. The attack failed. Secondly, Israel acted with strength and courage. Thirdly, the success of that defensive action gives hope that, with political will from the relevant parties, and with diplomatic support from partners, escalation can be avoided. The Foreign Secretary commented earlier that Israel should be
“smart as well as tough”.
The strength and courage that we have seen should now be harnessed to try to de-escalate action and tensions in the region.
Britain is resolute in our support for the collective security of Israel, Jordan and other partners in the region, and we urge every nation to proceed with restraint. The Prime Minister’s Statement is clear that, although the Middle East is thousands of miles away, it has a direct impact here at home, and we want to do all we can to prevent further bloodshed and conflict.
In the Statement, the Prime Minister said he had spoken to other G7 leaders and that “further potential diplomatic measures” had been discussed. Diplomacy is key to urging restraint, so we welcome those discussions. I do not know if the noble Lord the Lord Privy Seal can today say more about what actions might be expected in the coming days, given the urgency of the situation now faced. Can he confirm that the Government agree that, as a matter of principle, diplomatic premises must not be targeted and attacked?
With the Iranian regime sponsoring terrorism across the region and beyond, repressing its own population and supporting Putin’s war in Ukraine, are additional sanctions being planned? If so, how will they be enforced and their impact monitored?
Are the Government now considering proscribing the IRGC? What additional steps are being taken to limit the revolutionary guard’s ability to glorify terrorism here in the UK? I would be grateful, and it would be helpful to the House, if the Lord Privy Seal could say whether that is now being looked at.
Given Iran’s use of drones in the attack against Israel, what steps are we and our international partners taking to prevent the regime accessing western-made components?
We do not accept that there is justification at all for Iran’s attack on Israel, but we acknowledge the role that the ongoing war in Gaza has in driving regional tensions. We are now more than six months on from the dreadful Hamas terror attack, yet hostages remain separated from their families and thousands of innocent Palestinians have been killed or wounded. Many more have been displaced and more than a million people are on the brink of famine.
Over the recess period, there were some positive signs in relation to the flow of humanitarian aid into Gaza. I do not know whether the Lord Privy Seal is in a position to give us any current figures or an update on that, but could he outline what additional diplomatic and practical steps the Foreign Secretary and others are taking to ensure a continued scaling up of aid provision? He will be aware of the logistical challenges in getting aid to where it is desperately needed. UNRWA has the expertise and capability to do that, and Japan has now joined Canada and Australia in resuming payments. Can he say more about the Government’s intentions on aid distribution?
It is right that we condemn Iran’s actions and it is essential that we work with others to defend our allies in the region. It is right that we unite and seek the end of the conflict in Gaza to create a route to a sustainable peace through a two-state solution. Both the Prime Minister and the Foreign Secretary have spoken of support to the Palestinian Authority. Can the Lord Privy Seal outline what form that is likely to take and what co-operation we would expect and get from our allies? While we do these things, we must show restraint and urge others to do so as well. This is essential if we are to prevent greater violence, conflict, death and destruction.
Lord Newby (LD)
My Lords, I too thank the Leader of the House for repeating the Statement. I join the condolences that have been expressed to the family and friends of Lord Hoyle and Lord Rosser, both of whom were great servants of Parliament and this House. I also associate these Benches with the expression of solidarity that the Government gave to our Australian friends after the horrific attacks in Sydney.
Since the appalling attack on 7 October, one of the ever-present fears has been that the conflict would spread beyond Gaza to involve the wider region. Sadly, that is exactly what happened, from Hezbollah in Lebanon to the Houthis in the Red Sea, and now the first direct attack by the Iranian regime.
On last Saturday’s attack, we join the Prime Minister in expressing our gratitude to the RAF personnel who performed their role, as usual, so professionally and successfully. We support the Government in their work, in co-operation with international partners, to stand up for Israel’s security. We also support the Government’s priority, at this point, of seeking to de-escalate the situation and prevent further bloodshed. There is nothing to be gained by further retaliation on either side. We must hope that the pressure exerted by the UK, the US, EU member states and others on the Israeli Government and on Iran results in calmer heads prevailing.
The Government are right to seek to uphold regional security, including, as the Statement points out, in the Red Sea. Can the Minister inform the House about recent activity there? Has there been any increase in Houthi attacks in parallel with the Iranian strikes on Saturday? More generally, what has been the level of Houthi attacks on naval vessels and civilian shipping in the recent weeks since we last discussed the issue in your Lordships’ House?
It is of course right to seek a two-state solution for the benefit of both the Palestinian and Israeli people, but also for the stability that it would help bring to the wider region. In that respect, the Statement rather intriguingly refers to the involvement of “regional partners”, which it says
“helped prevent a much worse attack over the weekend”.
I realise that he may be unable to do so, but can the Leader of the House say anything further about what this actually involved?
It is depressing that it has so far proved impossible to negotiate a ceasefire in Gaza. Of course, we support all attempts to do so. In the meantime, the threat of famine continues to increase. Food shipments are also increasing, but at nowhere near a level to meet needs. Will the Government keep up the pressure to open up the additional routes by land and via Ashdod which the Israeli Government have promised, but which have so far failed to materialise, so that the threat of famine can finally be lifted?
The Statement rightly points out that Iranian drones were in action over the weekend not only in the Middle East but in Ukraine. The position there is desperately worrying and getting more so. Can the Minister update the House on the Government’s assessment of the likelihood of resumed military support from the US to Ukraine at a significant stage, particularly in the light of the Foreign Secretary’s recent visit to the United States?
There are a limited number of unilateral actions which the UK could take against Iran, but we could finally proscribe the Iranian Revolutionary Guard—a sponsor of terrorism across the region—as a terrorist organisation. Will the Government now do so?
It is clear that there is a large measure of agreement across the House about the nature of the crisis in Israel, Gaza and the wider Middle East, and about the broad approach needed to resolve it. Whether it is about strikes against the Houthi or the Royal Air Force’s action at the weekend, the convention that Parliament should have the opportunity—albeit retrospectively—to express its view formally when the UK takes military action has not been followed. We therefore urge the Government to have a debate, with a Commons vote, not least so that all the actors in the Middle East are absolutely clear about British resolve on this issue.
After Saturday’s attack, the prospect of a lasting peace in the Middle East looks further away than ever. For the UK, this must simply mean that our efforts to try to reach one are redoubled. The Government will have our full support in this endeavour.
Lord True (Con)
My Lords, I thank both the noble Baroness and the noble Lord for their responses. I will not be able to deal with specifics on some of the points they raised. As the noble Lord, Lord Newby, conceded, there are certain sensitivities over who does what in particular places and times, including—obviously—particular details of our own operational activities.
I thank both parties opposite and, by the way, I must add my own and our side’s sympathy for the loss of the noble Lord, Lord Rosser. I have indicated this privately to the noble Baroness opposite. He will be greatly missed on all Benches of this House. He was the ultimate exemplar of a courteous servant of your Lordships’ House.
The noble Baroness was quite right to say that one of the few encouraging aspects thus far is that it is clear that the Iranian action, unjustified as it was, was a failure. This does not mean that its gravity can be in any way underestimated—and nobody has suggested that. I echo the Prime Minister and others in calling for restraint on all sides. This is a grim and difficult situation, where all wish to avoid further escalation. It must not be forgotten that this whole grievous episode started with a merciless lack of restraint by the Hamas terrorists who burst into the homes of civilians and murdered women, children and old people in the most brutal and despicable manner. However much we deplore and rightly express concern about ongoing developments, we must never lose sight of the real naked horror of Hamas terrorism.
Both responses asked about sanctions, specifically on the IRGC. The Prime Minister touched a little on this in his Statement in the other place. I have said before, and it is true, that we have already sanctioned more than 400 Iranian individuals and entities, including the IRGC in its entirety for roles in weapons proliferation. The noble Lord, Lord Newby, rightly referred to the very disturbing evidence—there is a good deal of it—of co-operation between Iran and Russia in the deployment of weapons in the Ukrainian theatre.
The IRGC has been involved in fomenting regional conflicts, violating human rights and terrorism. We have introduced a new Iran sanctions regime to give us more extensive power to designate, and the National Security Act—I was asked about domestic security, which we take extraordinarily seriously—implements new measures to protect the British public, including new offences for espionage and foreign interference, and tougher powers to arrest and detain people suspected of involvement in state threats.
The option of proscription of the IRGC obviously remains open to us, but the British Government’s position remains that it is not helpful to speculate on whether a group is being considered for proscription. We recognise the threat from Iran. The police, security services and courts have all the tools they need to sanction, prosecute and mitigate those threats and, as I said, the IRGC is sanctioned in its entirety.
On sanctions more generally, following the welcome convening of the G7 by the Italian Government, for which we are grateful, it was agreed in the communiqué that
“we demand that Iran and its proxies cease their attacks, and we stand ready to take further measures now and in response to further destabilizing initiatives”.
Obviously, the most effective actions are those taken on an international basis.
I was asked about diplomatic activity. There has been a great deal of diplomatic activity, including the Prime Minister speaking to G7 leaders on Sunday when, as I just said, Iran’s attack was unequivocally condemned. We have expressed our full solidarity and support to Israel and its people, and the G7 reaffirmed its commitment to its security.
I recognise the other points made—the other side of the coin, as it were. We will also strengthen our co-operation to seek to end the crisis in Gaza, working towards an immediate and sustainable ceasefire, the release of hostages by Hamas—something it refuses to do—and increased humanitarian aid to Palestinians in need. Yesterday, the Foreign Secretary spoke to his Israeli and Iranian counterparts, expressing continued support to Israel and condemning the Iranian attack, making it clear that Iran must take immediate action to de-escalate. We will continue to make those efforts.
Humanitarian aid is vital. The UK’s humanitarian support this financial year stands at over £100 million and we are working with our international partners to develop that further. As the noble Lord, Lord Newby, said, Israel has committed to significant steps to increase the amount of aid getting to Gaza, including delivery of aid through the Port of Ashdod and the Erez checkpoint, increasing the number of aid trucks to at least 500 a day, increasing capacity through the Jordan land corridor, extending the opening hours of the Kerem Shalom crossing and approving more types of aid, including fuel to enable more bakeries to open and hospitals to function.
The UK has urged Israel to take these steps for a long time and they are welcome, but, although these commitments represent significant progress, I agree with the noble Lord that we must see further action to ensure more aid actually gets over the border, as the noble Baroness emphasised. The UK is calling on Israel to make progress on the following additional action: a major change in the conduct of hostilities to protect civilians and reform of the deconfliction mechanism to ensure the safety of aid workers. The situation in Gaza is dire. The entire population faces famine.
The Houthi attacks have continued, but shipping continues to go through the Red Sea and we will continue to protect that.
As far as Ukraine is concerned, I have little time to respond—I apologise for that—but the MoD remains fully engaged with industry allies and partners to ensure continuation of supply to Ukraine. If I have the opportunity, I will write to noble Lords setting out in detail some of the actions we are taking there.
I thank both parties opposite, and I urge restraint on all in this very difficult and dangerous situation.
Lord Craig of Radley (CB)
My Lords, the air defences were spectacularly successful and, for once, they rebutted that old air power adage, “The bomber will always get through”. However, will His Majesty’s Government heed the stark lesson for the air defences of the United Kingdom? Many weapons might be fired overnight by an aggressor, from land or sea, at the United Kingdom. What steps have the Government taken to protect London and the rest of the United Kingdom, to deter any serious attack, to retain our own air supremacy, and, indeed, to avoid facing defeat in a second Battle of Britain?
Lord True (Con)
I thank the noble and gallant Lord for his remarks and I repeat what I said about the role of the Royal Air Force. The defence of the realm remains, obviously, one of the prime duties and responsibilities of His Majesty’s Government. Defence spending has been increased substantially in the various reviews since 2020, and I can certainly assure the noble and gallant Lord that the most careful consideration has been given to the continuing air defence, of all types, of our United Kingdom.
Lord Wolfson of Tredegar (Con)
My Lords, on Saturday night, I experienced three emotions: fear, pride and hope—fear, because I have close family in Israel and I was worried for them and about them; pride, when I heard that our planes, with their brave pilots, had taken part in protecting Israel from Iranian attacks; and hope, when I heard that the royal air force of the Hashemite Kingdom of Jordan had also participated. Does my noble friend agree with me that that last point is absolutely key? If we want to see peace in the Middle East, which we all pray for and work for, we should be supporting those bilateral alliances between Israel and Jordan and Israel and Egypt, and multilateral groupings such as the Abraham accords, because that is the way, in the long run, to bring peace to this region. -
Lord True (Con)
My Lords, I certainly sympathise with my noble friend. I do not have the direct engagement that he does, but it so happens that, because of family reasons—some Members of the House will know that I have connections in Egypt—a number of members of my family are in the Middle East at the moment, so I do understand those personal feelings.
The fundamental point that my noble friend makes is absolutely right: ultimately, this great region of the world, the cradle of human culture and so much of our spiritual and historic strength, needs peace. It needs people who wish for peace, and the vast majority in that part of the world crave peace. The evil people who wish to unleash violence are in a minority—and, unfortunately, in powerful positions in some places. But I wholly agree with him that the evidence of growing understanding and friendship between Israel and partner nations in the Middle East is a great sign of hope in these times.
Lord West of Spithead (Lab)
My Lords, de-escalation is clearly in everyone’s interests, but that might well not happen. Last week, we saw the Iranians take down a neutral ship in the Strait of Hormuz. Basically, two of the world’s key maritime choke points are under threat. Have we discussed with the Americans deployment of the UK carrier? They are very stretched and have only one carrier in the region at the moment, and we need to cover both these choke points to be able to respond to the Houthis. Then, should things not de-escalate, we will have forces in place to assist in ensuring that shipping can move in that region.
Lord True (Con)
My Lords, again I will not comment on specific discussions as to deployment or strategic deployment. Obviously, we are already involved in the protective operations in the Red Sea. I know that the noble Lord loves to talk about the deployment or non-deployment of UK aircraft carriers. I am very proud of the world-leading Royal Navy, which remains a great service and hopefully will be an even greater service as we go forward. I am not going to discuss the potential deployment of HMS “Prince of Wales” in any particular place, but the aircraft carrier, as he knows, will be a part of combined exercises involving NATO forces in Steadfast Defender. Obviously, its availability is obvious, but deployment is a matter for another day.
Baroness Smith of Newnham (LD)
My Lords, the noble and gallant Lord, Lord Craig of Radley, has already talked about the brave pilots as part of Operation Shader and asked whether the United Kingdom is sufficiently defended. However, linked to the question asked by the noble Lord, Lord West, there is also a question about how much more naval deployment we might need in the Red Sea and the Strait of Hormuz. Our own service personnel have done a fantastic job, and we must pay them a great tribute. However, as we look to what is happening in the Middle East, do we not need to think about ensuring that we are increasing our defence positions to support trade continuing and to support our allies in the Middle East? I need to declare that I was in Israel as part of a parliamentary delegation just before Easter.
Lord True (Con)
I thank the noble Baroness. The Royal Navy is one of the top five in the world. Of course there is a need to defend our country and act co-operatively with other nations. The overall Ministry of Defence equipment plan for the next decade is £288 billion, including £41.5 billion for the Royal Navy. That will include a Dreadnought, Astute and AUKUS submarines, fleet support ships, ocean surveillance capability and Type 26, Type 31 and Type 32 frigates. As far as the RAF is concerned, the plan is that it should become increasingly a digitally empowered force. The future combat air system will provide us with sixth-generation fighter jet capability, building on what is currently provided by typhoons and the F35. We are in a close partnership with the Italian and Japanese Governments in relation to future fighter capacity.
Baroness Deech (CB)
My Lords, I would like the Minister to take the long view on this. First, in relation to Gaza, it must not be forgotten that this is happening against a history of nearly two millennia of persecution. There is no other people in the world who have been persecuted for so long and against whom there is a constant existential threat. Therefore, the priority in Gaza must be for Hamas to come out of the tunnels and hospitals and release the hostages if they have them, and then you get your ceasefire.
Secondly, with Iran—taking the long view—we seem to have forgotten the nuclear plan, the JCPOA. We have taken our eye off that. Iran is within minutes of getting nuclear capability and is mad enough to use it. We must return to sanctions. If the Government are not going to ban the IRGC, then at the very least visas should not be granted to those so-called clerics that go forwards and backwards between Tehran and London and foment trouble in London. So, please, let us remember the priorities in Gaza and, secondly, stop the flow of malevolent individuals into this country.
Lord True (Con)
My Lords, there is much to be desired in what the noble Baroness says. As a historian and someone with a sensitivity to all the genius of human culture, of course I understand what she says about the experience of the Jewish people. It is clear that Hamas cannot remain in charge in Gaza: the British Government have made that clear, and the Foreign Secretary has said that it is a requirement.
On her important remarks on Iranian nuclear ambitions—if there be such, and the objective observer suggests that there might be—there is no credible civilian justification for enrichment at the levels that the IAEA has reported in Iran. The British Government remain determined that Iran must never develop a nuclear weapon. We are considering next steps with our international partners and we are committed to using all diplomatic tools available to ensure Iran never develops a nuclear weapon, including using the snapback mechanism if necessary. These matters, as I said earlier, must be carried forward in co-operation with our international allies, and that is our diplomatic objective.
Lord Moore of Etchingham (Non-Afl)
My Lords, I am sure that no one in your Lordships’ House would advocate escalation, but I wonder whether protesting against the idea of escalation does not come a bit too easily to the lips of Israel’s allies. Should the Government not reflect that, if you were in Tehran today, you might be quite pleased that the immediate reaction of the western allies is to call for Israel to restrain itself, when Israel is not the problem. Is it not the case that we would not think in this way about an attack on any other country in the world? It would not be our immediate response to aggression against another country that we would urge the victim to do nothing.
Lord True (Con)
My Lords, that is a slight elision of what I have said from this Dispatch Box; indeed, I said that one must not forget where this whole matter began with the most atrocious eruption by terrorists into private and peaceful civilian life. The Government are absolutely clear that threats to destroy what some term the Zionist entity, the State of Israel, are wholly unacceptable and unforgivable, and can be no basis for any way of going forward to a long-term peaceful solution. We express our full solidarity and support to Israel and its people. We have reaffirmed our commitment to its security, and we condemn the Iranian action. But every human part of us would wish that somehow a road can be found to peace—and a road to peace must ultimately come from restraint and forgiveness. May all those involved see that.
Lord Polak (Con)
My Lords, I refer the House to my registered interest as president of Conservative Friends of Israel. I join the noble Baroness, Lady Smith, and the noble Lord, Lord Newby; I have countless times called for the proscription of the IRGC. All I can say to the Lord Privy Seal is: if not now, when?
A Jewish Chronicle investigation by journalist David Rose revealed that academics at a dozen UK universities were working alongside Iranian counterparts on drone research. As a result, on 23 June 2023—10 months ago—the Prime Minister announced an inquiry into these allegations that scientists at British universities have been helping Iran develop technology that could be used to upgrade its suicide drone programme. In light of the appalling Iranian attack on Israel, can I ask the Lord Privy Seal to write to me urgently with an update on this inquiry?
Lord True (Con)
Yes, I will do so. On my noble friend’s initial point about proscription, I did tell the House that the IRGC is sanctioned in its entirety. Also, if he looks at Hansard, he will see that I did say words about the consideration that is being given in international fora as to what further action might or might not be taken.
On UK universities, it is true that it appears that there has been co-operation on drone technology. My noble friend is right to say that the UK Government launched an investigation into such allegations. No universities were singled out when the investigation was announced.
We will not accept collaborations that compromise our national security. We have made our systems more robust, expanded the scope of the academic technology approval scheme to protect research from ever-changing global threats and refused applications where we have had concerns. We look at all allegations of suspected breaches of our sanctions policy. Under the new UAV trade prohibitions, it is illegal for a UK business, UK national or anyone in the UK not just to export UAVs and their components but to provide technical assistance, financial services, funds and brokering services. So I give my noble friend the assurance that this matter is being taken very seriously indeed.
Baroness Ritchie of Downpatrick (Lab)
My Lords, while the Government are absolutely right to condemn the attack on Israel by Iran and to place their emphasis on avoiding escalation of the conflict, I noted that the Lord Privy Seal referred to intensifying diplomatic efforts and that the Governments of Belgium, France and Germany summoned Iranian ambassadors to their places of work, so to speak. I therefore ask the Lord Privy Seal what consideration has been given by the UK Government to having immediate discussions with the Iranian ambassador in the UK to de-escalate tensions and get back to a situation in which we can forge peace, prosperity and an end to violence, particularly in Gaza. There is need for access of aid to the people there and, above all, to end all forms of conflict.
Lord True (Con)
My Lords, the Foreign Secretary spoke yesterday to both the Israeli and Iranian Foreign Secretaries. He expressed to both the United Kingdom’s continuing support for Israel and condemnation of the Iranian attack. The UK Government have already summoned the chargé d’affaires of the Iranian embassy to the Foreign Office to make it clear to the Iranian authorities that they must take meaningful action to halt their reckless behaviour. They have been left in no doubt as to where we stand.
Baroness Janke (LD)
My Lords, given the situation in Gaza that the Minister mentioned, where we have had lots of assurances that aid will be allowed in but very little action, and given that this is fuelling instability in the region, made worse by attacks on Palestinian villages in the West Bank, could the UK Government perhaps make some conditions on their unequivocal support for Israel? A lasting peace will happen only if both sides are willing to discuss it. At the moment, the already inflammatory situation and worsening, so would the UK consider making conditions on its support for Israel? The situation seems to be growing out of control and the humanitarian situation will make things even worse in Gaza if there is a famine and people are starving.
Lord True (Con)
My Lords, I have referred to the importance that we attach to humanitarian aid and said something of what we have discussed with the Israeli Government. However, the fundamental truth is that the Israeli Government have sought to deconflict wherever possible in relation to civilians, which is very hard in this brutal situation. It is the position of the British Government that Israel has every right to defend itself against the kinds of attacks that it has had and the further attack it had at the weekend.
Of course we wish to see restraint, but one simple step could be taken: Hamas could lay down its arms, drop its evil propaganda calling for the destruction of Israel and the killing of Jews, get out of Gaza and let the Palestinian people get on with their lives.
Baroness Stuart of Edgbaston (CB)
My Lords, like the noble Baroness, Lady Smith, I was in Israel a couple of weeks ago, and we actually saw the RAF flight that dropped aid over northern Gaza. One of the things, as the Lord Privy Seal has mentioned, is the ability to distribute the aid that is going in. We saw that it is going in, and there is some responsibility on Hamas to allow that aid to be properly distributed. Will the noble Lord assure the House that we are taking steps such that the aid that is going in should be recognised and that the conditions of hostage release have to be associated with any negotiations of a ceasefire and further support going in?
Lord True (Con)
I agree with the noble Baroness on the continued holding of hostages. It is never justifiable to take or hold hostages. I repeat that Hamas can end this by taking a whole series of actions. Interfering with, and indeed seeking to abscond with, aid is equally unacceptable. Obviously, we make every effort through our counterparties to ensure that that does not happen, but Hamas’ activities do not make the delivery of humanitarian aid easy.
Lord Forsyth of Drumlean (Con)
My Lords, I try to think of how I would feel about being told to exercise restraint, if I were living in Israel at the present time and had been subject to this attack, knowing that this evil regime, which has now come out into the light, supported these vile groups that were responsible for 7 October and other attacks. Of course, restraint is important. But I would also be worried that this evil regime is developing a nuclear capability. I very much welcome what my noble friend said—that efforts will be made internationally to deal with that—because no one in Israel can sleep safe in their bed at night knowing that this regime might have the capability of developing nuclear weapons. I think, with hindsight, that we have perhaps been a little less determined to deal with this problem, through sanctions and other matters, than we could have been.
I warmly welcome my noble friend’s Statement, which has exactly the right kind of balance and sensitivity that we have come to expect from him. But I think the points made by the noble Lord, Lord Moore, and the noble Baroness, Lady Deech, are very important.
Lord True (Con)
My Lords, I fully understand that, and can sympathise with that. I sympathise with it deeply. There is a wound there which cannot be removed, but ultimately we have to find a way for wounds to heal. They cannot heal while the kinds of actions being taken by Iran continue.
Dealing with Iran is a matter for international agreement. The question of how to deal with it has been going on since the original discussions between President Obama and the Iranian Government. Attempts were made under the present US Administration to table viable deals in relation to the Iranian nuclear programme in 2022, which would have returned Iran to full compliance with its commitments and returned the US to the deal. But Iran refused to seize that diplomatic opportunity in August 2022 to conclude such a deal, and although we remain committed to a diplomatic solution, I have to say that Iran’s actions over the past months have made the prospect of progress much more difficult, which informs the other comments I made earlier.
Lord Alton of Liverpool (CB)
My Lords, for highlighting the development of a nuclear capability in Iran and calling for the proscription of the IRGC, the Minister’s noble friend Lord Polak and I were sanctioned by the Iranian regime; therefore, it is not passing strange that we would press again about the proscription of the IRGC. However, can I ask specifically, first, about the 25 attempts over the past two years to kill British nationals or Iranians dissidents in this country, as recently as last month, leading to an Iranian dissident journalist bleeding on the streets of London and his three assailants able simply to leave this country immediately afterwards? How could that happen? Secondly, on the question of sanctions, companies that are making Shahed drones that are going to Moscow and then being used against Ukrainian civilians have western links. What are we doing to ensure that they are sanctioned? We look as though we are doing far too little in the face of a country that has aligned itself with North Korea, China and Russia in an axis that threatens the democracy and freedoms that we enjoy.
Lord True (Con)
My Lords, I agree with much that the noble Lord said. Indeed, he is right to say that since January 2022 we have identified at least 15 threats towards the lives of UK-based individuals. We are stepping up our response to Iranian regime activities. Last December, my noble friend Lord Cameron summoned Iran’s most senior diplomat to the Foreign Office in relation to reports of Iranian plots to kill two Iran International employees. We will not tolerate these kinds of threats. The Foreign Secretary reiterated to the Iranian Foreign Minister that these threats are unacceptable and must stop.
So far as drones and Russia and Ukraine are concerned, we have sanctioned 18 Iranian individuals and three entities for their involvement in the manufacture and transfer of drones used in Ukraine, as referred to briefly by the noble Lord, Lord Newby, adding to our existing sanctions on the Iranian drone programme. I referred to the illegality of assisting with these threats to our national security. At the Wassenaar Arrangement meeting in October last year, we called out Iran and Russia’s unacceptable collaboration in proliferating weapons, and as recently as last December we held Iran and Russia to account at the Security Council for this unacceptable collaboration, sharing evidence of the drones that Iran has provided to Russia to other Security Council members, and in meetings on Resolution 2231. We will continue to expose this rather desperate and, frankly, despicable alliance and to press this issue at the United Nations and elsewhere.
Lord Harris of Haringey (Lab)
My Lords, I refer to my interests in the register. I am grateful to the Lord Privy Seal for the comments that he has made. He has praised the Royal Air Force and the Royal Navy and, no doubt, he will get round to mentioning the Army in a moment. Is he not aware of the widespread feeling of disappointment that there was in our armed services about the failure to increase the defence budget in the recent financial statement? In the context of widening international tensions, not just in the Middle East but in Europe itself, and China’s threats against Taiwan, is he really satisfied that we are doing enough to prepare for some of the threats that might happen in terms of international relations? A specific point has been made about drones. Three years ago, I looked at the capacity of this country to respond to drone incursions. There was some good work being done, but it was still fairly narrow. What has been done in the intervening three years? Would we as a nation be able to deal with 300 incoming drones?
Lord True (Con)
My Lords, I am slightly saddened by the normally delightful noble Lord’s slightly jaundiced question. I referred to the Royal Navy and the Royal Air Force because I was asked about them, first by the noble Lord, Lord West of Spithead, and then by the noble and gallant Lord, Lord Stirrup. Of course, this Government support all the armed services. What the noble Lord left out of account is that in the spending review 2020, the MoD received an uplift of £24 billion in cash terms over four years, which was the biggest defence investment since the end of the Cold War. In 2023, we confirmed an additional £5 billion to the Ministry of Defence over two years and further funding has been cited.
We also expect, if you take into account the use of reserve funds, a further increase in spending on defence in 2024-25 over 2023-24. Some of the comparisons here are not actually comparing like for like. This Government remain committed to the long-term objective of spending at least 2.5% of GDP on defence, and the figure actually spent has been well over 2% in recent years.
Baroness Bennett of Manor Castle (GP)
My Lords, I am sure that the noble Lord will recall that an Iranian woman, Narges Mohammadi, received the Nobel Peace Prize last year for her efforts to fight for democracy and human rights in Iran. There has been a huge, brave effort on the part of many people in Iran—particularly women—to resist the misogynist, autocratic and theocratic regime. Will the Government seek to refer to the Iranian regime or the Iranian Government, rather than just using the word “Iran”, acknowledging the difference between the Iranian people and the Iranian Government or regime when speaking against their vicious attack on Israel and other actions?
Secondly, the Statement makes no reference to the Israeli attack on the Iranian embassy in Syria. That is unfortunate. Can the noble Lord reassure me that the Government are stressing to Israel the need to avoid escalatory actions, given the perilous current state of the region?
Lord True (Con)
My Lords, it was not actually an attack on the Iranian embassy in Syria. I am not sure whether that embassy is the embassy of the Iranian Government or the Iranian people, but the people who were caught in Syria, in whatever way we would like to describe it, were involved actively in warlike activities against the State of Israel and were encouraging terrorism.
However, I agree with what the noble Baroness said about the courage and heroism of the people in Iran, and particularly many Iranian women. One’s heart stirs when one sees the enormous courage of those people. I am often struck by how little opportunity we are given to see Iranian women when we see the serried ranks of the IRGC and others saluting the members of the Iranian regime who have been responsible for these deplorable events in the last few days.
Economic Growth (Regulatory Functions) (Amendment) Order 2024
(7 months, 1 week ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Fox (LD)
My Lords, the Minister is the latest government Minister to wade into the sewage debate, but having previously tried to crack a joke about wading into sewage, I will not do it again.
Having had that interlude, we have had a chance to reflect on some of the comments that the Minister made. Some of the tricks of good government are timing and self-awareness. Those two things are absent from the extremely maladroit introduction of this order. At the centre of it is the conflation of Ofgem, Ofcom and Ofwat. As we heard from the noble Duke, the Duke of Wellington, these are very different markets. The communications market and the energy market are distinctly different from the privatised regional monopoly system which is the water industry. Because of that, the role of the regulator is substantially different. The idea, for example, of causing competition in the water market is irrelevant—there is no competition in the water market. This puts into focus the problem that is central to this order: it is inappropriate in the markets that it is seeking to address. That is at the heart of what your Lordships have said today.
We look forward to the Minister’s White Paper on competition. When the Truss Administration had their brief flurry, a whole bunch of stuff was said about growth and the “anti-growth coalition”. I am sure the Minister is smarter than the people who were using that language then. The role of growth in amongst the role of regulation is an important issue; the Minister is right to have broached it. On its seeking to influence the water market at this time—coming back to timing—this is not the moment to seek to rein back on regulation. This is the moment when we need to target regulation in the places where it is quite clearly breaking down.
The Minister sought to calm us about the effect of growth on environmental enforcement. Again, the noble Duke gave the lie to that issue by very clearly pointing out what I was going to point out in this document: that the two are very much conflated.
I will suggest a hypothetical issue: I am a regulator. I am about to implement an environmental order. This will undoubtedly affect the growth prospects of some companies in the region. Am I now inhibited by this order? The answer is: it seems so. Moreover, can the companies that receive the downside of this environmental order take it to judicial review? I believe they can. The Minister can confirm that or otherwise. So, at the very least, the environmental order is delayed.
We do not have a problem with the water industry restricting growth; we have the opposite. I cite my home river, the River Wye, as evidence of that. The unrestrained growth of the poultry industry has killed part of that river—not polluted it or made it a little bit dirty but killed it biologically. That is the effect of unrestrained growth. We need the opposite of what the Minister is talking about.
With these thoughts, I am very pleased that my noble friend has brought this amendment, and I am pleased to hear the contributions of your Lordships today. I hope the Minister will stand up and say, “We will set this aside”. If he does not say that, I hope he will say that these rules will be rewritten to make sure that the number one priority for the water industry is to solve the environmental crisis that is currently in our midst.
Lord Leong (Lab)
My Lords, I thank the Minister for introducing the regulation and all noble Lords who have spoken. Every day, we hear of sewage dumping. On average, a sewage dumping event now takes place every two and a half minutes. The lack of investment in our water systems over the past 14 years is a scandal that is increasingly hard to ignore. Billions have been extracted in shareholder dividends and millions in bosses’ bonuses, all while delivering a deteriorating system.
During the passage of the Environment Act, Conservative MPs had the opportunity to support a Labour-backed amendment that would have brought an end to sewage dumping. Of course, they did not do so. We should be extracting sewage from water supplies, not extracting value in unjustified dividends and overleveraged debt. Let us imagine the economic growth, the skilled jobs and supply chains that could have been created if, instead, this money had been funnelled into developing creaking infrastructure, repairing and upgrading pipelines, and preparing for the predicted increase in demand and increasing rainfall.
The Labour Party has long been making the case for the increasingly urgent need to invest for the long term and to improve quality in the short and medium term. So on this issue we agree with the Government that bringing these three regulators within scope of the growth duty will help to ensure they consider how best to promote growth in their sectors.
However, making the changes required by this instrument will obviously require dedicated resources within Ofcom, Ofwat and Ofgem. As the amendment to the Motion makes clear, these regulators already have a lot on their plates, so can the Minister indicate how they are expected to juggle this as well? Are the Government confident that the regulators have the capacity to deliver to the full extent that the order demands?
Like the regulators, we want to support businesses and stimulate the vital investment needed to ensure a quality service to current and future consumers. For example, Labour’s plan to establish “GB Energy” would create half a million new skilled jobs in the industries of the future, rebuild the strength of our industrial heartlands and reduce energy costs and carbon pollution. Labour is already thinking ambitiously about the long-term future of this country.
Given that the Government’s order is about long-term growth, could the Minister explain over what timeline they expect to see the benefits of the change, and over what timeline they will be reviewing its impact?
As far as Ofcom is concerned, the growth duty will also not apply to its regulatory functions under Part 3 of the Enterprise Act 2002, which concern mergers. In particular, it will ensure that Ofcom is not required to consider other factors when providing advice to the Secretary of State on the public interest considerations on media merger cases. Can the Minister explain the reasoning for that very specific exception?
In this regulator’s sector in particular, many noble Lords will know that I am passionately interested in the enormous potential for growth in our telecoms industry, especially in AI, but the world will not wait for us. We risk missing out on exploiting the potential commercial benefits from our world-leading research base if we do not have a clear industrial strategy, if we do not encourage and invest in tech start-ups and scale-ups, and if we do not develop a serious regulatory presence alongside the USA and the EU as global standards are being established.
To conclude, we support bringing the three regulators within the scope of the growth duty, but we regret—who could not?—the failure of the Government to prioritise the sanctioning of polluters and the cleanliness of waterways. Just last month, rowers in the world-famous boat race, some of the fittest people in the nation, fell sick because of their exposure to the water in the Thames. I would be hard pushed to invent a metaphor more apt to sum up why this Government have so comprehensively failed—on regulation, on public health, for young people today and in investing in their tomorrows. Labour stands ready to deliver the decade of national renewal that this country self-evidently needs.
While we support the regulation, we acknowledge the amendment to the Motion tabled by the noble Baroness, Lady Bakewell. We must address the sanctions needed against short-term profiteering by the CEOs of utility companies enriching themselves. I look forward to the Minister’s response.
The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
My Lords, I am extremely grateful to all noble Lords for their participation in this debate. I particularly congratulate the noble Lord, Lord Leong, on what I thought was an excellent example of good rhetoric in terms of his parallels.
I shall cover some of the points in turn. I am happy to have further conversations with noble Lords about this important statutory instrument. I am grateful for the undertone of what I think the noble Lord, Lord Fox, was suggesting and the overtone of what the noble Lord, Lord Leong, was suggesting. Unfortunately, I did not hear a great deal of support from any other Member of the House; I am sorry to see that on my own Benches the enthusiasts of better regulation seem to have deserted me today.
Ultimately, the statutory guidance, which I will be happy to touch on in a few moments, is an important and useful document to help regulators by refreshing the statutory guidance that we already have. If noble Lords read the original document, as I suggested at the beginning of this debate, and compare it to what we have now, they will see that if you care about the economy, the environment and better outcomes then this is a far better document in terms of directing the regulators in how they perform and enact.
I also said—because this is a particular passion of mine—that this will enable us to have better regulation, not less regulation. This is about regulating in a better way for businesses, for the economy, for consumers and for this nation’s future growth. I said to my officials that I would like to avoid the topic of water and Ofwat and focus on the other 52 regulators and the opportunities this presents—but it is absolutely right, when we are looking at this broad waterfront of how we run our economy and how we regulate for our own safety, for trust in markets, for the consumer and for the environment, that we have this debate.
Lord Bellingham (Con)
I am grateful to the Minister for giving way, as I understand that it is not normal practice for Ministers to give way in a debate like this. I would be grateful if he would look again at the point made by the noble Lord, Lord Fox. I know a bit about the Wye Valley and the damage that has been done by the excessive number of nitrates going into the river. It was not so much that all those poultry producers were breaking the law; it was the sheer scale of those operations that was having such an impact. Could the Minister comment on that particular point?
Lord Johnson of Lainston (Con)
I am grateful to my noble friend for the intervention. I did not realise I did not have to give way; my newness to the House probably insisted that I did so.
What is important is that we were discussing the guidance on growth for 52 or 53 regulators. This is not a debate about the Wye Valley. I have heard what the noble Lord, Lord Fox, said about that situation. I understand that the Government have announced this week an action plan and full review. I am delighted that this is a good example of where there is cause and consequence.
I want to bring us back to the guidelines. It is important that a functioning economy allows all stakeholders to operate in it. Clearly, that is the whole principle. If there is one stakeholder that is dominating its universe through its own actions, that is unacceptable in terms of creating the trust and framework we need in the market.
I return, in conclusion, to what has been a very important debate. I hope it will continue to be an important debate. I stress again that in four years we will have a full review of the growth duty so that we can see how it has been successful. One of the questions asked was: how soon will we know whether it has been successful? I hope it will start to show economic growth, in some of the points I will come to in a moment, immediately. We will certainly do a review after four years. There will be an explicit focus on ensuring that areas such as the derogation of consumer rights, the environment, or whatever it may be, will clearly be included in this.
I will touch on two final points because it is good to have this on the record. Regulators should have regard to medium- and long-term growth—not necessarily short-term growth or the profitability of the actions of any one company—by ensuring that key policy decisions and strategic choices are informed by consideration of key drivers of economic growth. This may include, but is not limited to, innovation, infrastructure and investment, competition, skills, efficiency and productivity, trade, and environmental sustainability, which I have touched on before. That is very important because, if you are running a business, you want to produce phenomenal products for the future of our nation. All too often we have had issues with regulators and the Government being slow to regulate on the innovative products we need to make this economy successful, both for our health and the economy around that.
How many times have businesses come to noble Lords—not all of your Lordships will have been approached by businesses, but many will—to complain about the lack of transparency around the regulator’s decision-making or the timeliness of its response on permitting, or to suggest that international standards could be used or that our own standards could be improved on, or to ask for more skills in regulators or for regulators to help them be skilful? It is so important that we respond to this. I am aware of the comments made around the water industry, and I hope that, to some extent, I have reassured noble Lords that this in no way derogates our responsibilities and abilities to act.
The Duke of Wellington (CB)
The Minister has many times referred to the wording in the draft statutory guidance refresh, which I assume can still be amended. Therefore, I ask the Minister to comment on page 26, which I quoted earlier, where it says that
“certain enforcement actions … can be particularly damaging to the growth. These include, for example … financial sanctions; and publicity”.
Surely the Minister would agree, in view of what he said, very persuasively, that those words should be looked at again. They certainly will inhibit a regulator from enforcing financial sanctions.
Lord Johnson of Lainston (Con)
I am grateful to the noble Duke for those points. The relationship between the draft document and the formal document is a matter of moments before we finish the debate, so I do not think that is a possibility—but I am happy to be corrected by someone with better procedural knowledge of the House. I will deal with that in a moment, but I do not want to spend too much longer on this because I know that we want to move on.
I return to what this is about. As I say, there are 50 or so regulators covered by the statutory instrument. This is a refresh, so only three new regulators are affected, though there may be other smaller regulators that come into scope; fundamentally, it will be the main economic regulators that we have talked about. The rest of the regulators are covered by the existing statutory guidance, and the refresh improves on that. It is a very good thing, and I hope noble Lords will support us in this quest.
It is right that regulators—even the water regulator—should be pro-innovation, skilled and capable, business aware, proportionate, effective and responsive, and collaborative. I have had a number of businesses represent to me that too many regulators cross over each other and cause a great deal of confusion. They should be internationally aware, and they should be consistent, transparent and accountable. I do not see how any of us in this Chamber can suggest that these ambitions for the regulatory environment are not good. They should be reinforced. If we are to have a strong economy, we have to apply those decent, sensible, long-term economic criteria to the three main regulators.
I am happy to have further discussions as we head towards the White Paper around this. I am also happy to flag other points that noble Lords think will help in constructing a better regulatory framework to enable companies to flourish, consumers and the environment to be protected, and the overall economy of the country to see the necessary growth for the strength and wealth needed to protect our environment in the long term. I am grateful to all noble Lords for their contributions to the debate, and I commend the SI.
Baroness Bakewell of Hardington Mandeville (LD)
I thank the Minister for his response and all noble Lords for their contributions, especially the noble Duke, the Duke of Wellington, who has long been a champion of dealing with sewage overflow discharges and getting the water companies into a decent state. The economic growth of water companies will be achieved only when they invest in improving sewage overflows, ensuring developers separate surface water from foul wastewater, and when Ofwat is empowered to take stringent action against polluting water companies.
As I said earlier, my main purpose was to press for this order to be withdrawn—that was not successful—and then for the accompanying draft guidance to be significantly amended, especially as the noble Duke, the Duke of Wellington, has indicated. Growth in the water industry has a place, but regulators, especially Ofwat, must be able to take action against those water companies.
The Minister has mentioned the millions that have been returned to water customers as a result of fines, but this is paltry in comparison to the billions that have been paid to directors and shareholders of water companies, with no account taken of the sewage discharges into our waterways, instead of investing in improvements in infrastructure.
I and my colleagues on these Benches are naturally disappointed that the Minister is unable to agree to our reasonable request, and I feel certain that the public and others will be similarly disappointed. This is a matter about which I feel extremely strongly—so strongly that were it not for the fact that this is the first day back after the Recess, and that there are important votes tomorrow, I would have wished to divide the Chamber. However, I feel certain that we will be return to this issue before too long, perhaps when the White Paper is published. In the meantime, I beg leave to withdraw my regret amendment.
Growth Duty: Statutory Guidance Refresh
(7 months, 1 week ago)
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Lord Johnson of Lainston
That the draft Statutory Guidance laid before the House on 6 March be approved.
Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.