Employment Rights Bill

Baroness Stowell of Beeston Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Garden of Frognal (LD)]

My Lords, I added my name to this amendment, which was tabled by the noble Baroness, Lady Wolf, but has been very ably spoken to by the noble Lord, Lord Aberdare. He and I tend to find ourselves in the same Lobbies for just about everything to do with apprenticeships.

We only very recently debated a Bill abolishing the Institute for Apprenticeships and Technical Education so that this amazing new body Skills England could emerge. We still know remarkably little about Skills England. It has a proud remit, but we do not yet know what it is going to perform.

As the noble Lord, Lord Aberdare, set out, this amendment is really important because there is a real problem in attracting youngsters into apprenticeships. An apprenticeship was always something for somebody starting out in a career, but the vagaries of the apprenticeship levy mean that they are increasingly being given to people mid-career, for advancing their careers. Unless there is more incentive to enable young people to access the workforce, we will be in an even more dire state. We have nearly a million NEETs now—young people not in education, employment or training—and, if they cannot access apprenticeships, that figure is only set to go up.

We know that, in other European countries, apprentices have a specific distinctive legal status, but they do not in the UK; they are simply employees who have received an apprenticeship learning contract. The Bill will apply to them all, whether they are an 18 year-old or a 50 year-old. This cannot be desirable. I beg the Government to look again at this, because it is hugely important that we do not deter employers from taking on youngsters.

I went with the social mobility committee up to Blackpool and The Fylde College recently, and we were talking to employers there who were already bemoaning the fact that it was incredibly difficult for them to take on apprentices. There was so much bureaucracy and burdensome stuff that they had to follow. They were all saying that, if this came in and if the apprentices had full employment rights from day 1, that would deter them even more. That really cannot be right, and I beg the Minister to listen to this amendment.

[Baroness Stowell of Beeston (Con)]

My Lords, I briefly add my support for Amendment 102 and will pick up on the comments of the noble Baroness, Lady Garden, on her committee’s recent visit to the Blackpool and The Fylde further education college. I declare an interest as a commissioner at the Social Mobility Commission, the chair of which is also the principal of the FE college that the committee went to visit. From the perspective of social mobility and the importance of apprenticeships, any measure that would deter the creation of quality apprenticeships that are successful is a bad one, and I therefore support this amendment.

[Lord Londesborough (CB)]

My Lords, I rise to speak to Amendment 102 in the name of my noble friend Lady Wolf of Dulwich and pitched so perfectly by my other noble friend Lord Aberdare—I realise that that sounds as though I only have two friends in this House, which I hope is not the case.

This amendment addresses a consequence of the Bill that will significantly reduce the willingness of employers to hire young people as apprentices—a consequence that I am sure was neither anticipated nor desired by the Government or indeed the Bill’s drafters, which is strange because this Government are acutely aware of the skills shortages facing this country and the need to address them. It was notable that, in introducing the Government’s new immigration strategy last week, both the Prime Minister and the Home Secretary emphasised the need to invest in skills so that the immigration system

“no longer ignores the millions of people who want the opportunity to train and contribute”.

They also highlighted that, in sectors like engineering, apprenticeships have “almost halved” in recent years.

We only very recently debated the Bill, now an Act, that abolishes the Institute for Apprenticeships and Technical Education. That change was not introduced because the Government are against apprenticeships; on the contrary, this is part of a reform that is creating a new integrated strategic body, Skills England, as we have heard, to meet, in its own words,

“the skills needs of the next decade across all regions”,

and apprenticeships are a central part of Skills England’s brief.

Young people do not need persuading of the value of apprenticeships. On the contrary, there is huge excess demand, as we have heard. Of those 17 to 18 year-olds who make a serious effort to find an apprenticeship, only 25% succeed. Young people typically start off on what are called intermediate apprenticeships, but these are in decline too, in absolute numbers and proportionally —crowded out by so-called higher apprenticeships, which are equivalent to university qualifications.

Today, more and more of our apprentices are older. Around half of apprenticeship starts now involve people over the age of 25. Critically, large numbers of older apprentices were already working for their employer before they became an apprentice. This is especially true of large employers who pay the apprenticeship levy, who account for a growing proportion of apprenticeships. So, if the Government are going to achieve their aims, we need to have far more openings for young apprentices —but there is a serious danger that the Bill will make large employers even more inclined to give apprenticeships to existing employees, with whose employment they take no risks, rather than hiring new young apprentices.

What about the young people who make up the growing number of NEETs? SMEs are the main employers of young apprentices and absolutely central to the economies of less-advantaged areas. But their apprenticeship recruitment has been plummeting. SME business owners complain that apprenticeships, as we have heard, have become more and more burdensome and bureaucratic, and just too expensive. So if, on top of this, young apprentices are entitled to full employee rights from day 1, many more employers, especially SMEs, will surely just walk away.

Taking on an untested person is always risky, and this Bill will make it much more so. In many other European countries, apprentices have a specific distinctive legal status. In the UK, they do not; they are simply any employees who have received an apprenticeship training contract. This Bill’s provisions will apply to them all, whether they are an 18 year-old training as an electrician or a 50 year-old on a leadership apprenticeship. These are the dangers of a one-size-fits-all approach, as I have already pointed out numerous times in Committee.

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[The Earl of Erroll (CB)]

Very briefly, because we are talking about the time periods here, you have to be very careful because accrued holiday goes into that, and if you do not give people notice before the holiday is up, you cannot get rid of them. So be careful: it should be three months or less, and actually you have to knock off another week or so. This is from experience.

The other thing is the headmaster issue. I know one small school which had terrible trouble because the headmaster was incompetent. He knew it, so he got depressed and went on permanent sick leave, and of course the school was then saddled with the costs. There are a lot of problems such as that. It would be nice to clean them up at the same time if we could, but I do not think it will happen in this Bill.

[Baroness Stowell of Beeston (Con)]

My Lords, I support the amendments in this group and endorse most of the arguments that have already been advanced. I will focus just briefly on tech scale-ups.

Noble Lords will, I hope, remember that the Communications and Digital Select Committee published a report just a few months ago on AI and Creative Technology Scaleups. These businesses are incredibly important to our economic growth. They represent the innovation that comes out of our universities and the talent that exists in this country, but they need a huge amount of support to get from being start-ups to scale-ups. However, if they are successful, the return that they then deliver to our economy is huge.

Our inquiry found that the UK is, in effect, an incubator economy. What we are seeing now is that increasingly the kinds of businesses that have the potential to turn into unicorns, or indeed become unicorns, are galloping away. They are doing so because of many things. Sometimes it is about access to capital growth and to highly competitive workforces. But one of the biggest challenges that we face is that our regime, whether it is regulatory or investment, is not supporting risk-taking. As my noble friend Lady Noakes said a moment ago, the measures in the Bill about day-one rights on unfair dismissal, along with many other things, are undermining risk takers.

As part of our inquiry—before the Bill was published—witnesses told us, in the context of hiring, that the costs of hiring and firing are already much higher in the UK than anywhere else, which is putting UK businesses at a disadvantage. In the context of the Bill and the day-one rights around unfair dismissal, the Startup Coalition, which represents the start-ups, talked in its briefing note about the chilling effect that these day-one rights around hiring and firing would have on start-ups, seriously undermining their potential for growth. TechUK, which represents tech businesses of all sizes, has raised a lot of concerns about some of these day-one rights, but in the context of unfair dismissal, one of its concerns, which I do not think we have heard much about so far, is the risk of fraudulent claims.

In the Government’s response to our report—while I am on my feet, I add a bit of advertising: the debate on the report is on Friday 13 June, so I urge any noble Lords who are interested in this to sign up and contribute—they referred a lot to their AI action plan and the forthcoming industrial strategy, saying that jobs will be “at the heart” of that strategy. If that is the case, I urge the Minister to think again in the context of what I have just argued. If jobs are to be at the heart of that strategy, and the Government are as keen to support tech scale-ups as they have declared themselves to be and have put this part of the economy centre stage in all their growth plans, but these kinds of measures are making it impossible or so difficult for these businesses to be willing to take the risks to hire in the way that they need to in order to scale, then the Government are introducing measures which are self-defeating and which will undermine their own objectives.

[Lord Fuller (Con)]

My Lords, I shall speak to Amendments 104, 105, 106 and 107, but particularly Amendments 107A and 108, relating to day-one rights.

Getting into work helps people make the best of their lives and reach their full potential. It is good for them and their families, and, of course, employment helps businesses and, through the taxes that everybody pays, helps sustain our state. You would expect that it was a core role of the state to incentivise the creation of jobs in pursuance of economic growth, personal fulfilment and a reduction in the costs of worklessness. It sounds so obvious, but the Government need to be reminded of those simple truths, because the facts are that the well-meaning and superficially attractive suggestion that employees should have full rights from day one is full of perverse consequences that will reduce the appetite to take on staff and will particularly benight those with few qualifications and limited experience. Furthermore, it does not reflect the way in which the economy is changing and the world of work is altering, as people choose to work in different ways.

Taking on new employees is not something that organisations do lightly. For the most part, there is an application and interview process, and we have heard about this from other noble Lords. For most employees, applying for and getting a new job is a well-trodden path, as someone builds a career, gains experience and seeks promotion. But that is not how it is for the part of the workforce that does not have formal qualifications. We have heard about ex-prisoners and people without experience or a strong track record in a particular field. People get on the ladder only when an employer takes a chance on them. The muddled thinking behind this Bill will result in the perverse outcome of increasing not only the cost of taking somebody on but the risk of getting it wrong. The consequence will be to make a business think twice before taking a chance on the person with limited experience, people at the beginning of their career, or those with an impaired employment record. These people need the greatest help.

It is not just the youngsters who may suffer from these well-meaning but counterproductive proposals. Many people prefer a portfolio of part-time jobs nowadays, because it suits their lifestyle. The facts are that the relationship between casual, agency and temporary work in the UK suits those engaged in it for a variety of reasons. The temporary agency, Adecco, tells me in a briefing that 79% of UK temporary and agency workers rate the flexibility it gives them most highly, and two-thirds say that temporary or part-time work helps their work-life balance.

Because much of the temporary work is variable and unpredictable, it is incompatible with some of those other day-one rights, such as the offering of guaranteed hours over a reference period. Some of the employment that might fall under this ambit is weather-dependent work—there is not much call for an ice-cream seller on a wet bank holiday weekend in a seaside town, for example. Seasonal work—harvesting, for example—often depends on the weather. It has been very dry recently, and harvest is going to be earlier this year. If you think about the reference period, there is more likely to be work up until 30 June, rather than in the normal quarter, which would have been the successive quarter reference period. There is casual work, such as waiting at a wedding or manning the turnstiles at a stadium concert or event, for example. All of these are temporary things, and it is going to be very difficult on day one for the employer to commit to some of these rights, because it is out of the employer’s control.

There is another perverse consequence that relates to the wider umbrella of agency and temporary work, such as supply teachers and supply nurses—I notice that the noble Baroness who was the chief nurse is no longer in her place—and locum and sickness cover, where the employee determines their availability, not the employer, as it suits them. We see that some of these rights are actually going to put the employee in a worse situation, because they are going to lose their bargaining power.

I will move on, because I am conscious of the time. All I will say is that codifying many of these things will make it harder for people to take advantage of temporary opportunities and will counterintuitively reduce their bargaining power, removing the labour market liquidity that makes the economy work for all parties, and particularly the taxpayer.

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The noble Baroness, Lady Neville-Rolfe, asked how this fitted in with our plans for economic growth. I say to the noble Baroness that we of course take that issue seriously. The UK is now the fastest-growing economy in the G7. Up against the backdrop of global uncertainty and the very poor economic inheritance from the previous Government, we are making the right choices in the national interest. Since the election, we have already made four interest-rate cuts, signed three international deals to boost trade, saved British Steel and given a pay rise to millions by increasing the minimum wage. We are putting more pounds in people’s pockets and living standards are growing at their fastest rate for two years.

[Baroness Stowell of Beeston (Con)]

Forgive me if I am pre-empting the Minister, but given that she has just responded to my noble friend on the question of economic growth, what is her reply to the issues I raised about the specifics in the context of tech scale-ups, which are a priority for the Government’s growth agenda? What is the impact of these measures on that particular industry?

Data (Use and Access) Bill [HL]

Baroness Stowell of Beeston Excerpts

Consideration of Commons amendments and / or reasons
Monday 12th May 2025 Lords Chamber

[Lord Berkeley of Knighton (CB)]

My Lords, the noble Lord, Lord Black, mentioned Beethoven. In declaring my interests as a composer, I should also mention that I have acted as an expert witness in cases of musical copyright. While doing that, I was asked by one of my learned friends, “What constitutes something that’s worthy of copyright?” I said, “Ba ba ba bom”. Why? Because that, in terms of the law, is a substantial idea. Just think what has been made of it ever since. The whole notion of copyright comes down to something valuable; it does not matter how long or how short it is. Creativity in the UK is already, I am afraid, in a somewhat parlous state and any erosion of copyright will add yet another cut to an already wounded body.

The Minister mentioned technology and, of course, we all use technology. We all want to use technology. The famous composers—wonderful songwriters, including Paul McCartney, Elton John and Sting—who have headed the letter to the Prime Minister, have all used technology to great effect. With the greatest respect, it is slightly insulting to say to them that we are pulling the shutters down because we want to know who is using our music. That cannot be something, intellectually, that holds water. People need to know how their music is being used. They have a right to know.

Why is this an important factor? Let me give the example, which I have mentioned once before in your Lordships’ House, of what happened with streaming. In other words, we have been bitten once already. In a way, I welcome opening music and the arts to the whole world through the internet, and streaming certainly does that, but what did it do? A very well-known musician, a top 10 artist, said to me the other day, “Where does all this money go? It doesn’t go to us”. If you ask Paul McCartney, Elton John or Sting how their royalties have changed over the years, they will tell you that they have gone down massively.

This is not just about famous musicians. Paul McCartney, Elton John and Sting would be the first to say that this is also about the little-known songwriters who at the moment make a pittance but are hoping to make something. Obviously, those famous names attract attention. It is quite right that they do and I am grateful for their support. However, there is also a whole other section, the contemporary classical music section, which I know supports the noble Baroness, Lady Kidron, as do writers, theatre directors and filmmakers. This is a very dangerous Bill if we cannot curtail this.

I am glad the Minister is listening and wants to help and wants to find a way through. If we do not make improvements to this, we could be short-changing something that brings an absolute fortune into the Treasury: not just a fortune in money but a fortune in joy. I have mentioned Paul McCartney, Elton John and Sting—think about what they have brought into people’s lives. Although my section, the contemporary classical section, may be less famous and less well known, those musicians too have a right to be heard. Their view is that, if you allow, for example, training—it is suggested that it might be okay to allow people to use our products in training—that is the thin end of the wedge.

When streaming came in, the record industry virtually disappeared. I know the manager of a classical record company who said to me, “Why would we want to record this piece? It’s already out there on the internet”. You have to think about what follows on from opening this world up. I think the Government are listening, and many noble Lords have pointed out exactly what the dangers are.

I certainly will support my noble friend Lady Kidron. She has done sterling work. We are not making a fuss about nothing. This is the thin end of the wedge and we have to try to curtail it now for the future of music—and indeed all the other arts—in this country.

[Baroness Stowell of Beeston (Con)]

I welcome the government additions made to the Bill in the Commons and endorse my noble friend Lord Camrose’s amendments, especially those relating to removing barriers to entry. It is vital that AI does not end up controlled by the same tech firms that dominate cloud, search and social media. This important new technology presents an opportunity for challenger firms and new markets to emerge, including affordable access to quality copyrighted data. Much of what I will say in a moment is very much with them in mind.

As to the amendment on transparency from the noble Baroness, Lady Kidron, she is right, in the context of copyright, to prioritise transparency. As I have argued before, whatever kind of solution is eventually adopted, opt out or opt in, transparency will be necessary for that solution to work.

The noble Baroness is also right to press the urgency of this. Content creators cannot afford to wait, so she has my support and my vote. Indeed, with the support of both the Conservative and Lib Dem Benches today, the Government could well be defeated. That would be most welcome. I am sure the Minister does not like me saying that, but that is my view.

That said, there are some aspects of the amendment from the noble Baroness, Lady Kidron, that may, at this juncture, be a little bit too prescriptive for primary legislation ahead of a policy decision on the solution for how to uphold copyright. I will focus briefly on what happens next if the Government are defeated tonight.

I strongly urge the Government not to do what they can: remove the clause that the noble Baroness would add to the Bill once it got back down the other end. Instead, what I urge the Government to do what they should: bring back an amendment in lieu. We all want a future for AI, where the creative industries and the tech sector—big and little tech—can be confident that the playing field for competition is fair and, when it comes to the use of copyrighted content, that they can strike mutually beneficial deals.

We may be a little way off from achieving that way forward, as is reflected in the Government’s additions to the Bill and the work they have promised over the next 12 months, but that work should not preclude the Government taking a power in the Bill to bring back secondary legislation to address transparency as soon as they have finished the work outlined in their Amendment 46. As other noble Lords have already argued, transparency is needed now and, as I have said, it will be relevant to whatever policy solution the Government decide on. So, a requirement on them to act in this area is not unreasonable.

From the perspective of content creators, who, it has to be said, may well be immensely powerful in ensuring that they get publicity and coverage of their cause, the future looks highly uncertain. So, a binding commitment with a deadline to bring forward transparency regulations at this juncture, while the Bill is going through Parliament, is reasonable if such a new clause is not overly prescriptive. That is what I would advise the Government to do next, assuming they are defeated tonight.

Employment Rights Bill

Baroness Stowell of Beeston Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

It is a time for a change of approach, and this Bill, together with a new industrial strategy which is being worked on, can help provide it. I call on the Opposition, probably in hope rather than expectation, to give it a fair wind.

[Baroness Stowell of Beeston (Con)]

My Lords, I am generally somewhat nervous about purpose clauses, but I can see the argument in the case of this Bill, because there is a lot of confusion about what it is trying to achieve. Indeed, it serves to highlight the incoherence of this Government’s approach to generating economic growth, because it places far too much of a burden on businesses and will deter them from innovating, recruiting and investing in skills training, which we know is so very important right now.

That is particularly pronounced within the tech sector, which is one of the Government’s priority sectors because it has the potential to drive a vast amount of growth, but it is also one where we need to do far more to encourage investment so that our homegrown tech firms can scale and compete around the world. We must not forget that investors have a choice as to where they invest, and they will not go to countries where the costs are higher.

Although it is not properly an interest to declare, it is perhaps worth reminding your Lordships that until very recently, I chaired the Communications and Digital Select Committee of your Lordships’ House, and during my term in the chair we looked at the tech sector quite a bit, as noble Lords would expect. Our final inquiry was about scaling up in AI and creative tech.

I am sure the Minister, who is also a DSIT Minister, has seen that techUK, the industry’s trade body, has this morning raised some genuine concerns about the Bill. Its website says:

“With no economic modelling underpinning these proposals, businesses are being asked to shoulder new burdens without a clear understanding of the impact. There is a growing risk that entrenched positions will lead to a worst-case outcome, one that stifles innovation and investment in jobs. This is counter to the government’s pro-growth mission. We urgently call for further discussion and refinement to ensure the Bill supports businesses and protects workers”.


Alongside techUK, the Startup Coalition, which focuses specifically on start-ups, says in its briefing note on the Bill that it is concerned that without careful tailoring, the barriers the Bill currently introduces into hiring and scaling at the early stages of business development could undermine the start-up ecosystem and the economic growth it drives.

I do not know whether I would have succeeded had I tried to do this, given what my noble friend said about the punctiliousness of the Table Office—and I would be interested to hear more from my noble friend about this—but I suggest that any purpose clause also refers to growth and competitiveness. When the Minister winds up, I would welcome her explanation of how this Bill supports the Government’s growth agenda.

I know, from talking to a range of tech firms and businesses from all sectors and of all sizes, that while they all support good employment practices and condemn those firms that do not uphold high standards—as do I—there is frustration that the good employers are paying the price, literally, for the poor conduct of the bad. For them, the Bill represents a desire by the Government to do something to them that makes it even harder for them to create the economic growth that the Government have promised the electorate and, indeed, their workers. Let us be clear: it is business, not government, that generates economic growth.

As I say, a purpose clause has some merit in the context of this Bill, but I would like growth and competitiveness to feature within it. If we were to do that in the purpose clause and get some agreement from the Minister up front today, that would help to shape the Bill as we go through Committee, so that it actually delivers on what I think it is trying to do: to ensure that there are good employment practices that support economic growth and competitiveness.

[Baroness O’Grady of Upper Holloway (Lab)]

My Lords, I admit that I am a little perplexed by Amendment 1, particularly in the light of the latest TUC-commissioned poll that was published last night. Not only is the Bill popular with the public, including a majority of Conservative and Reform voters, but, when they are faced with robust arguments against its key provisions, the Bill becomes even more popular with voters.

I am not sure that your Lordships or the public need this amendment to know that the Bill is about fairness, security and the right to an independent voice at work. The public are already well aware and, frankly, appalled that, under the previous Government, low pay and insecurity became mainstream in British working life. They want change.

Underlying this amendment—this might be my suspicious mind—is the worry that it is really about undermining the role of independent trade unions in representing workers’ interests. The ILO uses the term “workers’ organisations” for a reason. International law upholds the right to collective bargaining and freedom of association. Independent trade unions are workers’ best chance of getting their rights enforced and built on for better pay, safer workplaces, training opportunities and family-friendly hours, and they provide a democratic voice at work.

Without repeating the arguments from Second Reading, I encourage your Lordships to look at the evidence about just how far Britain has fallen behind other countries in employment protection, and how giving ordinary working people a stronger collective voice can help deliver more responsible businesses and a healthier and more equal society.

I encourage the noble Lord, Lord Fox, to cast his mind back to Labour’s introduction of a national minimum wage. He may remember that the Conservative Party and the business lobby said that a national minimum wage would cause mass unemployment and that businesses would collapse. In reality, the national minimum wage is now widely respected as one of Britain’s most successful policies. It has made a difference to millions of working lives in the teeth of opposition from the business lobby at the time. It is worth remembering that.

I end by saying that it is time to get on with and get behind the Bill, so that Britain takes the high road to improving business productivity by treating workers fairly, as human beings and not just commodities.

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[Baroness Stowell of Beeston (Con)]

My Lords, I was not going to speak on this group but the noble Lord, Lord Barber, has painted a horrific picture of the impact of zero hours on some workers. For some people I know who have been on the receiving end of zero-hours contracts, sometimes it has been even worse. I know of people who have been required to turn up at work at 4 am for a shift and been sent home again at 5 am, so I know how bad this is. However, my noble friend Lady Verma makes a strong argument as to why just removing all the measures, which would happen by virtue of the Bill, would also have a detrimental effect.

So far, I have not heard from those on the other side a response to the argument put forward by my noble friend Lord Wolfson, which is that we have to find a way forward on this matter that addresses the employment rights issue, which the Minister has said is the purpose of this legislation, but also allows business to deliver the kind of economic growth that the Government are also saying is the purpose of the Bill.

The noble Lord, Lord Empey, is not in his place at the moment, but we have to take heed of the point that he made in the debate on the first group: we should not be in a situation where this is a stand-off. Hopefully, through some responsiveness and empathy from the Minister, we will find ourselves in a position where the Bill will not have a detrimental effect on business but will address the worst work practices, as described by the noble Lord, Lord Barber.

[Lord Fox (LD)]

My Lords, I think I am allowed to come back in Committee. I want to respond to the noble Baroness, Lady Carberry, because I probably did not articulate terribly well what I was proposing. I certainly was articulating a right to request, but I was also assuming there would be an obligation to meet that request, given certain thresholds that the noble Lord, Lord Wolfson, was talking about. It would not be an option for the employer as long as the request was within those thresholds. I suspect that is not what the noble Baroness thought I was proposing, and I just wanted to set the record straight.

Data (Use and Access) Bill [HL]

Baroness Stowell of Beeston Excerpts

Committee stage
Monday 16th December 2024 Grand Committee

[Baroness Jones of Whitchurch (Lab)]

Of course I will write to the noble Lord. It will be within the ICO’s normal powers to make changes where he finds that they are necessary.

I move to Amendment 160, tabled by noble Lord, Lord Lucas, which seeks to create a new exemption for advertising performance cookies. There is a balance to strike between driving growth in the advertising, news and publishing sectors while ensuring that people retain choice and control over how their data is used. To exempt advertising measurement cookies, we would need to assess how intrusive these cookies are, including what they track and where data is sent. We have taken a delegated power so that exemptions to the prohibition can be added in future once evidence supports it, and we can devise appropriate safeguards to minimise privacy risks. In the meantime, we have been actively engaging with the advertising and publishing sectors on this issue and will continue to work with them to consider the potential use of the regulation-making power. I hope that the noble Lord will accept that this is work in progress.

Amendment 161, also from the noble Lord, Lord Lucas, aims to extend the soft opt-in rule under the privacy and electronic communications regulations to providers of auto-enrolment pension schemes. The soft opt-in rule removes the need for some commercial organisations to seek consent for direct marketing messages where there is an existing relationship between the organisation and the customer, provided the recipient did not object to receiving direct marketing messages when their contact details were collected.

The Government recognise that people auto-enrolled by their employers in workplace pension schemes may not have an existing relationship with their pension provider, so I understand the noble Lord’s motivations for this amendment. However, pension providers have opportunities to ask people to express their direct mail preferences, such as when the customer logs on to their account online. We are taking steps to improve the support available for pension holders through the joint Government and FCA advice guidance boundary review. The FCA will be seeking feedback on any interactions of proposals with direct marketing rules through that consultation process. Again, I hope the noble Lord will accept that this issue is under active consideration.

Amendment 162, tabled by the noble Lord, Lord Clement-Jones, would create an equivalent provision to the soft opt-in but for charities. It would enable a person to send electronic marketing without permission to people who have previously expressed an interest in their charitable objectives. The noble Lord will recall, and has done so, that the DPDI Bill included a provision similar to his amendment. The Government removed it from that Bill due to the concerns that it would increase direct marketing from political parties. I think we all accepted at the time that we did not want that to happen.

As the noble Lord said, his amendment is narrower because it focuses on communications for charitable purposes, but it could still increase the number of messages received by people who have previously expressed an interest in the work of charities. We are listening carefully to arguments for change in this area and will consider the points he raises, but I ask that he withdraws his amendment while we consider its potential impact further. We are happy to have further discussions on that.

[Baroness Stowell of Beeston (Con)]

I apologise to the Minister for intervening on her when I have not spoken earlier in this debate, but I was reassured by what she just said on Amendment 162. Remarks made by other noble Lords in this debate suggest both that members of the public might not object to charities having the same access rights as businesses and that the public do not necessarily draw a distinction between businesses and charities. As a former chairman of the Charity Commission, I can say that that is not what is generally found. People have an expectation of charities that differs from what they would expect by way of marketing from businesses. In considering this amendment, therefore, I urge the Minister to think carefully before deciding what action the Government should take.

[Baroness Jones of Whitchurch (Lab)]

I thank the noble Baroness very much for that very helpful intervention. If she has any more information about the view of the Charity Commission, we would obviously like to engage with that because we need to get this right. We want to make sure that individuals welcome and appreciate the information given to them, rather than it being something that could have a negative impact.

I think I have covered all the issues. I hope those explanations have been of some reassurance to noble Lords and that, as such, they are content not to press their amendments.

Generative AI: Intellectual Property Rights

Baroness Stowell of Beeston Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, shall we hear from the former Leader of the House next? Then we will hear from the Cross Benches.

[Baroness Stowell of Beeston (Con)]

I am very grateful to the noble Lord. Copyright clearly affects a lot of different sectors, but given the value of real-time news to the AI platforms, particularly in the production of services and products that they offer to consumers, what steps are the Government taking to ensure that there is a mutually beneficial deal between the platforms and news organisations, so that we can safeguard the content that will be so important to the continuing advancement of this technology?

[Baroness Jones of Whitchurch (Lab)]

The noble Baroness will know that there was an attempt to come to a voluntary agreement on this under the previous Government that would have been a way forward for both sectors. Unfortunately, that voluntary agreement did not work out, so the ball has bounced back into our court. The noble Baroness is absolutely right about journalism: if we do not have a vibrant journalistic bedrock for this society, we do not really have a democratic society; we need to know what is going on in the UK and the world. The noble Baroness is right that we need to protect journalists: we need to ensure that their work is rewarded and paid in the right way. We are working on this. I am sorry that I am beginning to sound a bit like a stuck record, but I assure noble Lords that we are working at pace to try to resolve these issues.

Digital Markets, Competition and Consumers Bill

Baroness Stowell of Beeston Excerpts

3rd reading
Tuesday 26th March 2024 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, I am here to speak to the amendments in this group which stand in the name of my noble friend Lord Offord of Garvel, and I am happy to update your Lordships’ House on the work that has taken place since our debates on Report to implement a regime to ban foreign state ownership of newspapers and news magazines. As I noted on Report, we have heard the strength of concerns expressed in Parliament, and from my noble friend Lady Stowell of Beeston in particular, about foreign state ownership of UK newspapers and news magazines.

His Majesty’s Government agree that the importance of these publications to our democracy cannot be overstated: newspapers have always been, and must continue to be, free to develop relationships with their readers and develop editorial lines supporting different positions. The plurality of views across different newspapers ensures that there is a wide range of views supporting a culture of argument, debate and challenge, which in turn contributes to a healthy democratic society.

His Majesty’s Government are therefore taking steps to preserve the freedom of the press, recognising the risks that foreign state ownership of, or control or influence over, the UK’s newspapers and news magazines could pose to democracy and to free speech. Foreign state ownership, if used to develop or control narratives which align with another state’s interests, may over time corrode trust in our media as a whole. That is why many countries already have laws limiting foreign state ownership, and why we are creating a new regime which will prevent foreign states having any stake in a UK newspaper or news magazine.

These amendments will amend the Enterprise Act 2002 to create a new foreign state intervention regime for newspapers and news magazines, I am delighted that my noble friend Lord Forsyth of Drumlean has put his name to Amendment 1, which leads the amendments in this group. Getting from a regret amendment on the Media Bill to joint signatures on this Bill in a matter of weeks is testament to the collaboration we have had across your Lordships’ House in our discussions, and I thank him for that.

Under the new regime, the Secretary of State will be obliged to give the Competition and Markets Authority a foreign state intervention notice where she has reasonable grounds to believe that a merger involving a UK newspaper or news magazine has given, or would give, a foreign state or a person associated with a foreign state ownership, influence or control. The CMA will be obliged to investigate and provide a report to the Secretary of State on the merger or potential merger. If it concludes that the merger has resulted or would result in a foreign state newspaper merger situation, the Secretary of State will be required by the statutory provisions to make an order to block or unwind the merger.

Our amendments expand the definition of “foreign power” to capture a wide variety of actors, including senior members of a foreign Government and officers of a governing political party acting in a private capacity. The legislation will also apply to mergers involving persons associated with a foreign power to ensure that we are capturing all possible ways in which a foreign state could seek control or influence over a UK newspaper or news magazine. Direct investment in newspapers of any size will be banned in future under this new regime.

It is, however, essential that these new measures do not have undesired effects in relation to wider business investment in UK media. We will therefore introduce an exemption for investments where the stake is below 5% of the total investment being made. This would apply to passive investments by established and pre-existing sovereign wealth funds, pension funds or similar.

We will introduce this threshold by regulations made under the affirmative procedure, giving noble Lords and Members in another place the opportunity to scrutinise the detailed proposals. We will bring these regulations forward after Royal Assent to this Bill. My colleagues and I would be very happy to engage with noble Lords as we do so.

I make it clear that the regime brought about by these amendments, and the exemption which will be provided for in secondary legislation, applies only to newspapers and news magazines in order to safeguard our free press from government involvement, whether domestic or foreign.

As I have set out before, we already have a robust media mergers regime, which enables the Secretary of State to intervene if she believes that public interest considerations are, or may be, relevant to a merger. This new foreign state ownership regime works in parallel and complements the existing regime. Our focus is not on foreign investment in the UK media sector in general but is targeted specifically —noble Lords have rightly made the distinction—at foreign state investment in newspapers and news magazines.

Of course, the Government remain committed to encouraging and supporting investment into the United Kingdom. We recognise that investors deploying capital into this country rely on the predictability and consistency of our regulatory regime. The UK remains one of the most open economies in the world, and investment is crucial to our plans for growth and jobs, and for our prosperity. The UK has the highest stock of foreign direct investment in Europe. The recent Global Investment Summit signalled investors’ confidence, with nearly £30 billion in investment commitments being made. These amendments will not change the UK’s investment potential. As I said, we are targeting foreign state investment in a narrow but important part of the UK market to safeguard the health of our democracy.

As I noted on Report,

“the Secretary of State is currently considering a live merger case under the Enterprise Act regime on which I cannot comment further today. With regard to any live case, if it is still ongoing when the changes come into effect, the Secretary of State will continue to follow the process set out in the existing regime and will also apply the new measures”.—[Official Report, 13/3/24; cols. 2042-43.]

In tandem, I can confirm to your Lordships’ House that we will be consulting on expanding the media mergers and the new media foreign state ownership regime to apply to online news websites. This will bring the regimes up to date in order to reflect modern news consumption habits and better protect the freedom of our media.

I am grateful to my noble friends Lady Stowell and Lord Forsyth, to the noble Lord, Lord Bassam, and to others opposite and from across the House for their constructive engagement and collaboration on these amendments. I hope that they will enjoy your Lordships’ support.

Finally, I will briefly mention Amendment 4, tabled by my noble friend Lord Offord, which is not related specifically to foreign state ownership of media enterprises, but which is part of this group. Amendment 4 is a minor and technical amendment relating to other amendments made by Schedule 4 to the Bill. It clarifies how certain sections of the Enterprise Act 2002 are applied for the purposes of deciding if a special merger situation has been created under the special public interest merger regime. I beg to move.

[Baroness Stowell of Beeston (Con)]

My Lords, I thank my noble friend and his officials for the time and attention they have given this matter since Report. I know that officials have worked very hard, including over weekends, so I am truly grateful to them. I also pay tribute to the Media Minister, Julia Lopez. When I first met her to discuss my amendment three weeks ago, she gripped the issue immediately. I believe it is because of her energy and support for the clear objective of protecting press freedom that the Government have got behind her in bringing forward amendments in such a short space of time. Julia Lopez deserves much credit.

On the Government’s amendments, for me, the best way to understand their proposed way forward is to see it in two stages. Stage 1 deals with the block to foreign powers owning, controlling or influencing UK news. Stage 2 is the exemption for investment in UK news from legitimate foreign state investment funds. Both those stages, or parts, are important to the sustainability of the UK news industry.

I support the Government’s amendments as they relate to stage 1, and noble Lords will see that I have not retabled my own amendment. I am satisfied that they are in line with the promises my noble friend made from the Dispatch Box two weeks ago. In my view, they deal with the legal uncertainty that the RedBird IMI-proposed deal to buy the Telegraph titles and the Spectator has exposed when it comes to the involvement of foreign powers in our news media. It is worth restating that, as concerning as the UAE financial backing via IMI in that case is, the issue is bigger than that one deal and is a matter of principle.

As I understand the government amendments and what my noble friend has just said, the Government have broadened the definition of “foreign power”, and any individual or entity now captured by that definition will be blocked completely from owning, controlling or influencing our newspapers or news magazines. These provisions will take effect immediately once the Bill receives Royal Assent. Once completed, stage 1, as I might describe it, protects press freedom from the control or influence of foreign powers. Stage 2, which provides the exemption for legitimate, indirect foreign state investment funds to make passive investments in our news industry, will be covered by secondary legislation to follow once the Bill is enacted.

This exemption is important for obvious reasons, as my noble friend has already said. The news industry needs investment just like any other, and we must not exclude perfectly legitimate foreign state investors such as sovereign wealth funds or state pension funds that are not directly government controlled. As I said on Report, foreign state investment funds such as the Norwegian sovereign fund already invest in some of our news organisations.

I think I heard my noble friend set out the Government’s commitment to the threshold for this category of foreign state investors in the news industry being set at 5%. It is worth reflecting on that, because, at 5%, it is still above the approach of such funds which typically invest around 1 to 2% in corporations within any sector, yet it is a lower threshold than what is permitted by the CMA to prevent material influence, reflecting the fact that we are seeking to prevent any foreign state influence in UK news. I welcome the 5% threshold.

Obviously, we have yet to see the details of the secondary legislation, and Parliament will have to scrutinise that carefully before it can be approved. I welcome my noble friend’s commitment to engage Parliament before those regulations are laid. I think I heard my noble friend correctly, but can he reassure me that my understanding is correct that any individual or entity blocked at stage 1 will not qualify for exemption at stage 2? In other words, the exemption at stage 2 is for an entirely different kind of entity from that which will be blocked at stage 1.

I am pleased that my noble friend has reminded the House that any live regulatory case will be captured by the new legislation once it is enacted, and I am also pleased that he has confirmed that foreign state ownership of online UK news websites will be dealt with swiftly, also via secondary legislation and the affirmative procedure, once the Government have completed their consultation. There remains the question of foreign state ownership of our commercial public sector broadcasters and other commercial UK news channels. That said, of course, there are some regulatory protections already in broadcasting because of the Ofcom licensing regime. It would none the less be helpful if my noble friend could say whether the department is reviewing policy in this area also.

In conclusion, I will make three simple points. First, none of these legislative changes affect general foreign investment in or ownership of UK newspapers or news magazines, which is and will remain very welcome. Secondly, the exemption for legitimate investment by foreign state investment funds is important to the financial sustainability of our news industry. Finally, just to be clear, the UK remains open for business in the same way it has always been. All that Parliament is doing by making these changes is ensuring that our fundamental principle of press freedom is not up for sale.

I look forward to my noble friend’s replies to my questions, and we will, of course, review the secondary legislation carefully once it is ready. But, overall, I commend my noble friend on the Government’s work in recent weeks and I thank him for it.

--- Later in debate ---

[Lord Forsyth of Drumlean (Con)]

Before my noble friend sits down, when can we expect the secondary legislation to appear?

[Baroness Stowell of Beeston (Con)]

Can I ask a question as well, to save the Minister from getting up several times? I do not think that he said anything about broadcasting. Where is the department on reviewing policy in that area?

[Lord Bassam of Brighton (Lab)]

Can the Minister also clarify the point about online publications? Will these be included within the statutory instrument?

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, I add my thanks to all noble Lords who have been involved in the diligent scrutiny we have given the Bill in recent months. The Digital Markets, Competition and Consumers Bill will drive innovation and deliver better outcomes for consumers by addressing barriers to competition in digital markets and tackling consumer rip-offs. I am very grateful to noble Lords for the dedication, attention and time that they have given to the Bill before your Lordships’ House.

I want to express my particular appreciation to Members on the Front Benches, including the noble Baroness, Lady Jones of Whitchurch, and the noble Lords, Lord Stevenson of Balmacara, Lord Bassam of Brighton, Lord Clement-Jones and Lord Fox, for the courteous and constructive manner in which they have engaged with me on the Bill. I wish to extend my sincere thanks to my noble friends Lady Stowell and Lady Harding of Winscombe, and to the noble Baroness, Lady Kidron, for their invaluable contributions and clarity of views both during the debate and outside it. I emphasise my gratitude to the noble Lords, Lord Faulks, Lord Tyrie, Lord Kamall, Lord Holmes of Richmond, Lord Lansley, Lord Vaizey of Didcot, and the noble Viscount, Lord Colville of Culross, for their detailed consideration of Part 1 of the Bill. I am very grateful to them all; they have asked important questions and given much time and energy to the Bill, and it is a better Bill for that.

My noble friend Lord Lindsay and the noble Baronesses, Lady Crawley, Lady Bakewell and Lady Hayman, have championed consumer issues, for which I am most grateful. I also pay tribute to the noble Baroness, Lady Bennett of Manor Castle, for raising the important issue of net zero.

On Report, the Government made a number of amendments to the Bill with regards to subscription contracts. I thank my noble friends Lord Black of Brentwood and Lord Lucas for their engagement and collaboration on these issues. I am also most grateful to my noble friend Lord Mendoza for his work in highlighting the Bill’s impact on the ability of charities to claim gift aid.

On the issue of foreign states acquiring UK news organisations, to which my noble friend Lord Parkinson has spoken, I again thank my noble friend Lady Stowell of Beeston and the noble Lords, Lord Forsyth of Drumlean and Lord Robertson of Port Ellen, who so passionately highlighted the principle of freedom of the press.

I conclude by recording my gratitude for the invaluable support and assistance of my noble friend Lord Camrose. I put on the record my thanks to the Bill team, my private office, and all the officials and lawyers in the Department for Business and Trade, the Department for Science, Innovation and Technology, and the Competition and Markets Authority, who have provided such thorough support and expertise. I beg to move that the Bill do now pass.

[Baroness Stowell of Beeston (Con)]

I hesitate to rise, because I realise I am probably testing the patience of the House, having already spoken in Third Reading. I just wanted to say a couple of things.

I thank my noble friends Lord Camrose and Lord Offord on the Front Bench for their work on this Bill. As they will know, this is legislation for which the Communications and Digital Committee has been calling for several years—it started under the chairmanship of my predecessor, my noble friend Lord Gilbert. It is something that I have been pleased to take a very active involvement in, and I am very pleased to support it passing.

As we think about what this Bill is trying to achieve and why, it is worth also remembering why we in the UK are forging a different path from the ones that Europe and the US are on. In the last few days, we have seen the US DoJ launch a major anti-trust lawsuit against Apple. In the EU, the Commission is taking serious measures against some of the big tech firms to make them comply with the spirit and letter of its new Digital Markets Act. Both situations have an ominous sense of being exactly the kind of lengthy legal battles that favour big tech, which we are trying to avoid.

The House has rightly voted on a number of measures to try to ensure that our regulation can work as it is meant to, in a timely, proportionate and less confrontational manner. That is what the Government are seeking to do with this legislation.

As the Bill leaves here and enters its final stage, I emphasise two measures from among the amendments passed by this House. First, the deadline for the Secretary of State to approve CMA guidance is key in keeping things on track and avoiding concerning delays. Secondly, if the Government and the Commons cannot accept the amendments to revert the appeals process on fines back to JR standard, I hope that my noble friends within government will consider putting a clarification in the Bill that the appeals process on fines cannot be changed in ways that undermine the JR standard or open up avenues for more expansive and protracted legal challenge.

That aside, I am grateful to the Government for bringing forward this important legislation. It will mark out our regulatory regime as different from those in other parts of the world that are having such a big impact—and not necessarily in good ways.

[Lord Clement-Jones (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Stowell. I agree with a huge amount of what she said.

I reiterate the welcome that we on these Benches gave to the Bill at Second Reading. We believe it is vital to tackle the dominance of big tech and to enhance the powers of our competition regulators to tackle it, in particular through the new flexible pro-competition powers and the ability to act ex ante and on an interim basis.

We were of the view, and still are, that the Bill needs strengthening in a number of respects. We have been particularly concerned about the countervailing benefits exemption under Clause 29. This must not be used by big tech as a major loophole to avoid regulatory action. A number of other aspects were inserted into the Bill on Report in the Commons about appeals standards and proportionality. During the passage of the Bill, we added a fourth amendment to ensure that the Secretary of State’s power to approve CMA guidance will not unduly delay the regime coming into effect.

As the noble Baroness, Lady Stowell, said, we are already seeing big tech take an aggressive approach to the EU Digital Markets Act. We therefore believe the Bill needs to be more robust in this respect. In this light, it is essential to retain the four key amendments passed on Report and that they are not reversed through ping-pong when the Bill returns to the Commons.

I thank both Ministers and the Bill team. They have shown great flexibility in a number of other areas, such as online trading standards powers, fake reviews, drip pricing, litigation, funding, cooling-off periods, subscriptions and, above all, press ownership, as we have seen today. They have been assiduous in their correspondence throughout the passage of the Bill, and I thank them very much for that, but in the crucial area of digital markets we have seen no signs of movement. This is regrettable and gives the impression that the Government are unwilling to move because of pressure from big tech. If the Government want to dispel that impression, they should agree with these amendments, which passed with such strong cross-party support on Report.

In closing, I thank a number of outside organisations that have been so helpful during the passage of the Bill—in particular, the Coalition for App Fairness, the Public Interest News Foundation, Which?, Preiskel & Co, Foxglove, the Open Markets Institute and the News Media Association. I also thank Sarah Pughe and Mohamed-Ali Souidi in our own Whips’ Office. Last, but certainly not least, I thank my noble friend Lord Fox for his support and—how shall I put it?—his interoperability.

Given the coalition of interest that has been steadily building across the House during the debates on the Online Safety Bill and now this Bill, I thank all noble Lords on other Benches who have made common cause and, consequently, had such a positive impact on the passage of this Bill. As with the Online Safety Act, this has been a real collaborative effort in a very complex area.

Digital Markets, Competition and Consumers Bill

Baroness Stowell of Beeston Excerpts

Report stage
Wednesday 13th March 2024 Lords Chamber

Moved by

[Baroness Stowell of Beeston]

67: After Clause 146, insert the following new Clause—
“Foreign power acquisition of news media organisations(1) A foreign power (as defined in section 32 of the National Security Act 2023) may not acquire a news media organisation or publisher of news in any form ("a publisher") where the publisher's primary place of business is in the United Kingdom, unless the conditions in subsections (2) to (4) are met.(2) Investigations by the CMA under sections 44 and 45 of the EA 2002 and by OFCOM under section 44A of the EA 2002 have been completed.(3) The Secretary of State has made and published their decision under section 54 of the EA 2002 stating that there are no competition-related or consumer-related concerns.(4) Where the conditions in subsections (2) and (3) are met, the Secretary of State must by regulations approve the acquisition.(5) Regulations under subsection (4) are subject to the affirmative procedure.”Member’s explanatory statement
This amendment would prevent the acquisition of a UK news media organisation by a foreign power without the approval of both Houses of Parliament, where competition or consumer-related concerns have been raised.

[Baroness Stowell of Beeston (Con)]

My Lords, I will also speak to the consequential Amendment 158 in my name. I thank noble Lords who have signed my amendment: my noble friend Lord Forsyth and the noble Lords, Lord Robertson of Port Ellen and Lord Anderson of Ipswich. I am grateful to them all for their support and expertise, which have been invaluable in getting us to this point. I am sorry that the noble Lord, Lord Anderson, is unable to be in the Chamber today because of other responsibilities overseas, but he has asked me to restate his support.

I am also grateful to my noble friend the Minister and Julia Lopez, his ministerial colleague in the other place, for their constructive and generous engagement with me on this matter over the past week. I have consciously not been in contact with the Secretary of State, Lucy Frazer, mindful of her current quasi-judicial responsibilities. I will return in a moment to what action the Government might take.

I am sure your Lordships agree that freedom of the press is fundamental to a functioning democracy. Freedom of the press means freedom from government: the freedom of the media to scrutinise and hold to account those of us in Parliament on behalf of the electorate, who get to choose who governs and every Government’s fate. Upholding that unbroken principle, which we have protected for centuries, is what has prevented any UK Government owning or controlling the press. It is surely inconceivable, then, that we would sanction a foreign Government or state power to do what no UK Government have ever done or would ever do.

I want to be clear that I have no problem with foreign businesses or individuals owning UK media organisations. Today’s foreign UK media owners are a large reason why we have a thriving media environment that is financially independent of government, and I recognise the importance and value to our economy of foreign inward investment to a range of different sectors. The stark difference between foreign businesses and foreign Governments is that if the latter were allowed to own our news media, it would raise big questions about foreign policy, editorial independence and the relationship between an outlet’s owners and its coverage.

We cannot ignore that public trust in news, Parliament and the political class has fallen significantly in recent years, and allowing foreign Governments to own such a critical and sensitive part of our nation would damage public confidence in all of us yet further if it was allowed to happen. Only yesterday, Lord Ashcroft published a poll showing that two-thirds of the British public do not support foreign government ownership of UK media. The same poll showed that this is not a partisan matter, with a similar percentage of voters who support all the major UK parties sharing the same view. The British people might not always love the British media and all that it does, but the principle of press freedom certainly matters to them. This principle is in jeopardy because of the proposed takeover of the Telegraph and Sunday Telegraph and the Spectator magazine by RedBird IMI, a fund that is 75% backed by the UAE.

The action taken to date by the Secretary of State for Digital, Culture, Media and Sport and the instructions she has issued to Ofcom and the Competition and Markets Authority to investigate the takeover are very welcome and demonstrate that the Government recognise the well-evidenced concerns about the potential for editorial influence and the risk of censorship by the UAE Government. My concern, which I know that many noble Lords and Members of the other place share, is not just about the potential acquisition of those important newspaper titles. This situation has exposed that in law there is nothing that clearly prohibits the acquisition of a UK news organisation by a foreign power or organisations under significant foreign government control. So although we are relying on the Culture Secretary to reach the right decision and uphold our press freedom, nothing in the current legal framework provides certainty that she can and will do so. This is particularly worrying at a time when some parts of the UK news media face significant economic challenges.

My amendment seeks to close that gap in the law. In simple terms, my amendment would prevent the acquisition of a UK news media organisation by a foreign Government or power without the explicit approval of Parliament. If passed, it would provide an additional and vital barrier of protection for press freedom in this country. The consequential Amendment 158 would ensure that the proposed new clause in Amendment 67 would take effect immediately that the Bill receives Royal Assent.

As I said, my noble friend the Minister and Julia Lopez, the excellent Media Minister, have devoted significant time for discussions with me since I tabled my amendment. I do not doubt their commitment to finding a way to provide the legal certainty that we are currently lacking, and I know that they and officials have been working very hard on this over the past week or so.

From our most recent discussions, I expect my noble friend the Minister to set out an alternative solution when he responds to this debate. I will listen carefully to what he has to say. I am not wedded to the detail of my amendment or the procedure that it sets out, and I will be pleased if the Government propose something that is better and tighter than what I have been able to bring forward. The only question for me is whether the Government’s way forward meets a clear and simple objective: preventing a foreign Government representative or foreign state-controlled entity owning or controlling our news media.

I will not pre-empt what my noble friend might say, nor how I might respond to what he says. However, to be clear, I will have no hesitation in pushing my amendment to a vote if necessary. But I think we all recognise the gravity of the matter before us—the Government included—and I am confident, from the reaction and strong support I have received from noble Lords around the House and from Members of another place, that there is a collective desire to meet that simple objective. Indeed, we must meet it, because if we do not, the freedom of our press is at stake. I beg to move.

[Lord Robertson of Port Ellen (Lab)]

My Lords, I added my name to this amendment, and I commend the noble Baroness, Lady Stowell, for the energy and effectiveness of her campaign. Just before the debate started, my mobile phone produced a Sky News newsflash, which said that, at 4 pm, the Government will make a decision to accept the basis of the noble Baroness’s amendment. That is a nice piece of news to get just before you stand up to speak.

I was delighted to join the noble Lords, Lord Anderson and Lord Forsyth, in adding my name to this. Unusually, we are on the same side of the argument, although at Question Time the noble Lord, Lord Forsyth, threw out some remarks that other Members of the House will not have recognised but which were designed as an insult to previous positions I have taken on other issues.

Yesterday, I was in Prague, the capital city of the Czech Republic, congratulating it on 25 years since its entry into the NATO alliance. I made the point, as many people at the conference did, that 25 years ago the Czech Republic joined NATO, having overthrown the communist system and regained freedom after all the years in serfdom to the Warsaw Pact and the Soviet Union. The point was made that freedom is not an abstract concept but something that is very clear and precise, and it includes free speech and a free press. That is why I believe that a very significant principle is involved at this point.

As the noble Baroness said, there is no provision in the legal framework of this country at the moment to prevent a foreign Government gaining control or ownership of our media outlets. To the vast majority of the public, that would seem to be outrageous. As Lord Ashcroft’s poll showed, the fact is that a large majority of the population do not agree with the idea of a foreign Government owning our media outlets. That should come as no surprise to anybody in this House or in the other place; it seems almost self-evident. Yet we do not have that legal provision, and we should.

--- Later in debate ---

[Lord Parkinson of Whitley Bay (Con)]

No, it is just to newspapers and periodical news magazines.

[Baroness Stowell of Beeston (Con)]

My Lords, I am very grateful to all noble Lords who have spoken for their support and for the powerful speeches that they have given, and I am very grateful to my noble friend for his clear and comprehensive explanation of the Government’s position, and their firm intention to bring back an amendment at Third Reading to address that simple objective that I outlined at the start of this debate.

Because my noble friend covered such a lot of ground and this is quite complex stuff, for the benefit of other noble Lords and anyone else following this debate, I shall play it back at him a little bit, perhaps in plainer English, if I may—although noble Lords must forgive me if some of it is not as plain as it would be if I was speaking outside the House.

What we have heard is that the Government will bring forward an amendment at Third Reading that will expand the definition of foreign power beyond that in the National Security Act to include individuals who might not otherwise be adequately captured. That is something that has been of particular interest and concern to some of the legal noble Lords who have been following and commenting on my amendment. The amendment will expand the definition of “newspaper” in the Enterprise Act to include news magazines explicitly. The amendment will give the Secretary of State a new power to issue a foreign state intervention notice if she is notified or becomes aware at any time of possible foreign state involvement to own, control or influence a newspaper or news magazine. Once her order is issued, the CMA must investigate and, if it establishes that it is a foreign state, as newly defined, any investment or takeover will be blocked—or, if the investment has already happened, the Secretary of State will have the power to unwind that investment. All that will come into force once the Bill gets Royal Assent, and it will apply to any live regulatory case alongside the existing procedure that the Secretary of State is following.

In addition, at Third Reading, the Government will bring forward an amendment to create secondary legislation, which will be subject to the affirmative procedure. Those regulations will define what kind of indirect foreign state entity might be allowed to make a passive investment, such as a sovereign wealth fund of a democratic state, and include a very low threshold below which such an entity could invest. The purpose of those regulations will be to preserve the opportunity of legitimate foreign investment in news media. For example—and I think that it helps to get an example to understand what we are talking about here—it has been pointed out to me that the Norwegian state investment fund has single digit investments in News Corp, Reach, which is also known as the Mirror Group, Paramount Global, which owns Channel 5, and Comcast, which owns Sky.

To me, what my noble friend has outlined today, on my simple interpretation of it, makes sense. I am very grateful to the Minister for emphasising the very low-level investment that the Government are considering for the secondary legislation that will come forward, but the precise percentage will matter. I know that he will not be able to commit now to bringing forward the regulations in draft at Third Reading, because there is a lot of work for officials to do between now and then, but I hope that he can commit to doing as much as he can at Third Reading to provide the detail that we will need to be properly satisfied that what then follows will meet all our concerns.

Digital Markets, Competition and Consumers Bill

Baroness Stowell of Beeston Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

[Lord Faulks (Non-Afl)]

My Lords, Amendments 13 and 35 are in my name and those of the noble Baronesses, Lady Stowell and Lady Jones of Whitchurch, and the noble Lord, Lord Clement-Jones.

The Bill has been welcomed across the House and it represents a crucial step forward in regulating the digital market. I pay tribute to the level of engagement that has taken place with Ministers and officials. We have had some excellent and well-informed debates in Grand Committee. However, good though this Bill is, it is capable of improvement. I refer to my interests in the register. I am not a competition lawyer, but I do have experience of judicial review and of the operation of the Human Rights Act. I was also chair of the Independent Review of Administrative Law, which reported a few years ago.

My Amendment 13 is concerned with the use in the Bill of the word “proportionate”. Despite some heavy lobbying of the Government by big tech, the right to appeal against an intervention by the CMA will engage the judicial review test, rather than a merits test, except as to penalty. Later amendments will probe the appeal test further.

The original adjective in the Bill was “appropriate”. The word “proportionate” replaced it at a late stage of the Bill’s progress through the Commons. Why? I am afraid I have yet to receive a satisfactory answer. In Grand Committee, the noble Lord, Lord Lansley, referred to a letter from the Minister about the change. However, it did nothing to allay concerns that the change was a response to lobbying by big tech.

According to one view, it is an innocuous change; indeed, one would expect an intervention to be proportionate. The word also has a reasonable legal pedigree: for example, you can defend yourself against attack providing your response is proportionate to the attack. Whether your response is proportionate will be a question of fact, or for a jury to decide.

Judicial review, however, is not primarily concerned with the facts of a decision but with the process whereby the decision is made. Classically, the courts got involved only if a decision was so unreasonable that no reasonable public body could have reached it. The scope of judicial review has expanded to include challenges based on, for example, irrationality or failure to take into account relevant considerations. There are other grounds, but all are concerned with how the decision is reached rather than whether the court agrees with the factual findings.

Since the enactment of the Human Rights Act, the concept of proportionality has entered the law in relation to judicial review, but only in limited circumstances. I will quote the most recent addition of De Smith’s Judicial Review, as I did in Committee, which is generally regarded as the leading textbook in this area:

“Domestic courts are required to review the proportionality of decisions and enactments in two main categories of case: cases involving prima facie infringements of Convention rights and cases involving EU law”.


There are those who think that proportionality should be the test in all cases of judicial review, but that is not the law.

I cannot immediately see why an appeal in the context of the Bill should involve a convention right, but they have a habit of appearing in all sorts of places. If convention rights are engaged, proportionality comes into the analysis anyway. I understand that the Government consider that an appeal may well involve A1P1—Article 1 of the first protocol of the ECHR—which is concerned with the arbitrary inference with property rights.

To speak of human rights in the context of enormous companies such as Google, Apple or Meta is certainly counterintuitive; I do not think that that is what the framers of the European convention had in mind after the Second World War. Last week, Apple was fined €1.8 billion under the European Union’s regulation on market abuse, and there is an appeal. That perhaps gives us an idea of the context of human rights in this area.

If—and this is a big “if”—the courts consider that the convention is engaged, there will be considerations of proportionality. Amendment 35, which I believe is consequential to Amendment 13, raises precisely the same point in a further context. In choosing to put the word “proportionality” into the legislation, a court might well conclude that Parliament had deliberately used the word to widen the scope of judicial review challenge, even when no convention right is engaged. For my part, that is a risk that I do not think should be taken. Your Lordships’ House is well aware of the expensive and time-consuming nature of appeals, which of course favour larger organisations with a large legal spend. The noble Lord, Lord Vaizey, spoke at Second Reading of long and expensive battles and death by lever arch files—although he did not quite put it that way. Large companies have the resources.

A proportionality test is far closer to an appeal on the facts than one based on conventional judicial review principles. The issue as to whether an intervention is proportionate or not gives the court much greater scope for looking at those facts at greater length and greater expense and with a more uncertain outcome. I would therefore much prefer to revert to the word “appropriate”, as was originally in the Bill, which does not carry the same legal charge and does not risk expanding the basis of appeal.

In the Media Bill, criticism has been made of the use of the word “appropriate”, but, as many judges have said before, context is everything, and here it is the right word. I look forward to hearing the Minister’s response and explanation behind the change in wording.

[Baroness Stowell of Beeston (Con)]

Now that my friend the noble Lord, Lord Faulks, has spoken, I am happy to stand, because I hoped that he would cover all the technical aspects of his amendment, to which I have put my name.

Before I turn to the amendment, at the start of Report it is worth me reminding noble Lords and my noble friends the Ministers of something, because there are an awful lot of amendments in this group and they cover quite a bit of ground. The Communications and Digital Select Committee, which I have the privilege to chair, endorsed the Digital Markets, Competition and Consumers Bill as it was introduced in the Commons. We held quite a few hearings on the Bill last year, which came after a long period of campaigning for this legislation, and so it was one that we cared deeply about. Indeed, we applauded the Government for striking the right, careful balance on some difficult issues covered in Part 1 of the Bill, especially the appeals process, the countervailing benefits and the leveraging principle.

--- Later in debate ---

[Viscount Camrose (Con)]

As ever, I start by thanking all noble Lords who spoke so compellingly during what has been a fascinating debate.

Amendments 13 and 35, tabled by the noble Lord, Lord Faulks, seek to remove the explicit statutory requirement for conduct requirements and PCIs to be proportionate. I appreciate that this is an issue about which many noble Lords have expressed themselves strongly, and I am grateful for the thoughtful discussions I have had with noble Lords about this, both in Committee and since. I thank my noble friends Lord Black, Lord Wolfson and Lady Stowell for their comments on this today.

We are, as has been observed, giving extensive new powers to the CMA. It is important therefore that we also include safeguards around those new powers. A proportionate approach to regulation supports a pro-innovation regulatory environment and investor confidence. That is why we have decided to make the requirement to act proportionately explicit in the Bill. This requirement reinforces the Government’s expectations on the CMA to design conduct requirements and PCIs to place as little burden as possible on firms while still effectively addressing competition issues. The Government’s view is that, for the vast majority of interventions, the DMU would have needed to ensure that they were proportionate even without this explicit provision, as Article 1 of Protocol 1 to the European Convention on Human Rights will apply to interventions that affect property rights of SMS firms, regardless of their size.

The proportionality provisions both make this explicit and ensure that it will apply in all cases, not just those where A1P1 applies, such as when future contracts are affected. The Government have considered case law about the standard of review when proportionality is under consideration by the CAT in competition cases. We do not share the view that the inclusion of these two requirements will raise the standard of review in a way that makes it materially easier for SMS firms to successfully challenge CMA decisions.

As my department has shared with the noble Lord, Lord Faulks, the CAT has held, in BAA v Competition Commission, that it must show particular restraint in second-guessing the CMA’s judgment, and also give a wide margin of appreciation to the CMA. The Supreme Court has also stressed the caution that appellate courts must take before overturning the expert economic judgments of the CMA. We remain of the view that the courts will accord respect to expert judgments of the competition regulator in relation to economic matters and will not seek to overturn DMU judgments lightly.

I hope and believe that all of us, regardless of which Benches we sit on, agree that the UK being a place of proportionate regulation, where it is attractive to start and grow businesses, should be an aim of the Bill. I hope the noble Lord and my noble friend agree and will not press their amendments.

Amendments 43, 44, 46, 52 and 51 from the noble Baroness, Lady Jones, seek to revert the appeals standard of digital markets penalties back to judicial review principles. As I outlined in Committee, the Government believe it is important that the CAT can consider the value of a fine and change it if necessary, as the penalties that the CMA can impose are likely to be significant. Parties should be able to have penalty decisions reviewed to ensure that they are fair and properly applied. Additionally, only the requirement to pay a penalty is automatically suspended on an appeal. Any other remedies put in place by the CMA would remain in place, addressing the competition harm right away. An SMS firm would be expected to comply with them regardless of the outcome of the penalty appeal.

Amendment 45 from my noble friend Lady Stowell seeks to clarify that only penalties, not the decision to impose the competition requirement or the decision that a breach has been made, would be heard on their merits. I appreciate that the intent of this amendment is to improve clarity, but we feel that its drafting does not currently address what I understand my noble friend seeks to achieve. It would currently address only breaches of conduct requirements and not PCIs or enforcement orders. Amendment 55, also from my noble friend—

[Baroness Stowell of Beeston (Con)]

I am grateful to my noble friend for giving way—I hope he will forgive me for interrupting him at a critical moment as he was about to say something about another of my amendments. He said that my Amendment 45 was inadequate because it did not cover sufficient bases. Would the Government consider it as a way forward if they were to expand it in a way that did cover all the bases?

[Viscount Camrose (Con)]

Yes, we very much understand the spirit and intent of the amendment, so I would be very happy to consider that if we could expand it to cover the bases, as my noble friend sets out.

Amendment 55, also from my noble friend, would remove the role of the Secretary of State in approving the CMA’s guidance on the regime and replace it with consultation with certain parliamentary committees. I agree with her that oversight of regulators by both government and Parliament is vital, but the Government have responsibility for the effectiveness of regulators and the policy framework that they operate in. As such, it is appropriate that the Secretary of State approves the guidance under which the CMA will deliver the regime. The CMA must already consult during the production of guidance and parliamentarians can respond to these consultations as they see fit. The Government therefore believe that this amendment is not necessary to permit parliamentary engagement with the drafting of guidance.

My noble friend Lady Stowell’s Amendment 57, also discussed in Committee, requires additional reporting from a number of regulators, including the CMA, on the impact of the digital markets regime on their activities. As each of these regulators already provides annual reporting to Parliament detailing its operations and effectiveness, we feel that additional reporting would be duplicative and create unnecessary administrative burden for regulators. The named regulators also participate in the Digital Regulation Cooperation Forum, which also produces reporting on digital regulatory issues.

Amendment 56 from my noble friend Lord Lansley would add a statutory timeframe to the approval of guidance by the Secretary of State, requiring a response within 40 days. I thank the noble Viscount, Lord Colville, the noble Baroness, Lady Kidron, and my noble friend Lord Black for their remarks and our conversations on this issue. While the Government agree that it is important that the approval of guidance takes place in a timely manner and are committed to the prompt implementation of the regime, we do not think it is necessary to amend the Bill to achieve this outcome. The Government are committed to the prompt implementation of the regime. The introduction of a deadline for the approval of guidance, while supporting this objective, could cut short productive discussion and reduce its quality.

Amendment 59, tabled by the noble Baroness, Lady Jones, introduces a duty on the CMA to further the interests of citizens as well as consumers when carrying out digital markets functions. I thank the noble Baroness, Lady Kidron, for her remarks on this. As I outlined in Committee, the Government believe that the CMA’s existing statutory duty provides the greatest clarity for the regime, people, businesses and the wider economy. The CMA already manages the interactions between competition in digital markets and wider policy on societal issues under its existing duty and through its work with the Digital Regulation Cooperation Forum.

For example, the CMA’s market study into online platforms and digital advertising considered press sustainability and media plurality among the broader social harms to consumers. The CMA and Ofcom have also published joint advice on how the new regime could govern the relationship between online platforms and news publishers.

The Bill incentivises close co-operation with key digital regulators through the explicit regulatory co-ordination provisions. The CMA will have a duty to consult Ofcom on any proposed interventions that might affect Ofcom’s competition functions for the sectors for which it has responsibility, such as broadcasting and telecoms. It would allow Ofcom to raise wider implications for media plurality.

The CMA has a clear mandate to act for the benefit of consumers in the broadest sense. The meaning of citizens in this context is unclear and risks reducing the clarity of the CMA’s core competition remit and its role in the wider regulatory landscape.

Amendment 49, in the name of the noble and learned Lord, Lord Etherton, would enable private actions relating to breaches of the digital markets regime to be brought on a collective basis. It would also require the Secretary of State to produce a report on other types of claims which might be brought on a collective basis. We commit to reviewing the provision of collective claims in a post-implementation review. It is likely they will play an important role in protecting individuals and incentivising compliance in time.

I agree that, in time, collective actions would also help increase access to redress, recognising the significant legal resources SMS firms will have at their disposal and the costs involved in bringing private actions. However, our view is that making further procedural provision for claims will not bring the best outcomes for consumers and businesses while the regime is bedding in. Consumers and small businesses will benefit most from a public-led enforcement approach.

Under the digital markets regime, the CMA—

--- Later in debate ---

[Lord Black of Brentwood (Con)]

My Lords, I refer to my entry in the register of interests. I will speak to my Amendment 34, the effect of which would be to allow the final offer mechanism to be initiated by the CMA after a conduct requirement of the type allowed under Clause 20(2)(a)—to

“trade on fair and reasonable terms”—

has first been breached and the other conditions in Clause 38 are met. This includes the condition that

“the CMA could not satisfactorily address the breach within a reasonable time frame by exercising any of its other digital markets functions”.

I am very grateful to noble Lords who have added their names to my amendment.

As I explained in Committee, I am concerned that the final offer mechanism must be a credible incentive to negotiate rather than such a distant prospect that the big tech firms can delay and frustrate enforcement. The whole point of the Bill is to reduce the limitless ability of big tech to leverage its huge market power and financial and legal clout. Yet, if Google or Meta believes that the FOM will never be reached, they will happily offer publishers and content creators suboptimal deals and elongate the negotiation process, and publishers—I think particularly of the hard-pressed local press—may well be compelled to accept suboptimal deals out of commercial necessity.

It is important to note that the amendment would not rush a publisher or platform into the FOM unnecessarily. If the CMA judges that its other enforcement mechanisms would bring a swift resolution to any dispute on commercial terms, it could proceed with those remedies. Therefore, the amendment seeks merely to give the CMA a wider range of tools at an earlier stage, rather than mandating which tools it should select.

We need only to look to Australia, the first country to introduce final offer arbitration, to see just how determined some firms are to avoid fair commercial deals for the trusted content that is the antidote to a new wave of AI-generated disinformation. Less than two weeks ago, Meta, with weary inevitability, announced that it would close Facebook’s news tab feature in Australia and would not renew any of the deals made with publishers after the news media bargaining code was put on to the statute book.

At a minimum, there must be assurances that the CMA will be able rapidly to move through the enforcement stages prior to the FOM, setting short deadlines for compliance and being ready to swiftly set new or more prescriptive conduct requirements of the type allowed in Clause 20(2)(a) if the initial requirements are inadequate.

We must also be sure that, under Clause 20(2)(a), the CMA will be able to require SMS firms to share information necessary for publishers to calculate the value of their content. Without this information, publishers will inevitably be at a severe disadvantage in initial negotiations, making it nigh on impossible for “fair and reasonable terms” to be agreed. In parts of the Bill dealing with the FOM itself, it is explicitly stated that the CMA can use an information notice to require an SMS firm to give information to the CMA, and for that information to be shared with a third party, such as a publisher. Although this precise mechanism may not be appropriate for negotiations outside the FOM, if the CMA’s conduct requirements were not able to encompass a requirement for the necessary information to be shared, we would end up in a situation where the FOM was the only means to facilitate “fair and reasonable” commercial terms. Robust reassurances on this matter from my noble friend the Minister would be most welcome; I am waiting to see whether he writes “robust” down.

Finally on my amendment, I note that although this legislation ultimately cannot prevent global monopolies denying their users access to all trusted news content, the conduct requirement in Clause 20(3)(a) prevents SMS firms

“applying discriminatory terms, conditions or policies”.

We must have clarity that the CMA would be able to use this requirement to prevent the withdrawal of a service by an SMS firm—including ending the hosting of news content—if it is done in a discriminatory manner. Such discriminatory behaviour could include the removal of news content from UK news publishers in an effort to avoid payment while promoting news content from English-language titles based in other jurisdictions. That must not happen. Again, I hope the Minister can provide reassurance.

I will say very briefly that I support Amendments 23 and 24, in the name of the noble Baroness, Lady Jones, which would reintroduce the indispensability standard to the countervailing benefits exemption. When the Bill was first published, the committee chaired by my noble friend Lady Stowell found that this exemption, as drafted, constituted a “proportionate backstop”, provided that the threshold for its use remained high, and stated explicitly that the Government should not lower the threshold.

We have been told by the Minister before that the changes made in the Commons do not lower the threshold but are an effort to add clarity. Yet, Cleary Gottlieb, a law firm which has represented Google in competition cases, has itself admitted that the new standard “is arguably lower”. Unfortunately, if these amendments are not adopted, it seems highly likely that the courts will reach the conclusion that Parliament explicitly moved away from one set of words to another, the clear implication being that it wishes to create a new and novel standard, and one which would seriously undermine the whole purpose of the legislation.

On the issue of precision, it is hard to see how a move away from a well-established and understood legal concept can add clarity in this area. Since its adoption in the Competition Act 1998, as my noble friend Lord Lansley said, the indispensability standard has been tested extensively, meaning that designated firms, third parties and the CMA alike would have a huge amount of precedent to draw on if it was reintroduced into the legislation. Why on earth would we tamper with that?

As my noble friend Lord Lansley’s amendments demonstrate, it is questionable whether the stand-alone exemption is necessary at all. Therefore, given that the changes made in the Commons may well have lowered the threshold required to access the exemption and the fact that they only reduced clarity—neither of which was the Government’s stated intention—there seems no sound policy reasons not to return Clause 29 to its original form, and I will support the amendments from the noble Baroness, Lady Jones.

[Baroness Stowell of Beeston (Con)]

My Lords, I assure noble Lords that, having spoken at length in the first group, I will be very brief in this group, not least because my noble friend Lord Black has made my argument for me on the countervailing benefits issue, which Amendment 23, in the name of the noble Baroness, Lady Jones, addresses. I support that amendment because, as my noble friend just said and as I referred to in my remarks on the first group, there were several issues in the Bill that your Lordships’ Communications and Digital Select Committee was clear were important and should not be changed, one of which was countervailing benefits. I therefore support the amendment, which would reverse what has been changed in the Bill back to its original wording. As has been said, we know from the evidence of the last few weeks since the Digital Markets Act has been in force in Europe, and other cases have been brought against some of the respective large tech firms, that those firms will take any and every opportunity there is to exploit potential weaknesses or loopholes in legislation. That is why it is important that the language remains in its original wording.

I also support my noble friend Lord Black’s remarks about his Amendment 34. I too look forward to my noble friend the Minister giving him some assurance in robust terms.

Digital Markets, Competition and Consumers Bill

Baroness Stowell of Beeston Excerpts

Committee stage
Wednesday 7th February 2024 Grand Committee

Working out the dividing line between personal and non-personal data is very complicated. I hope the Minister will agree that the solution will be to ensure that all the digital content created by the user during the subscription to the digital service should be retrieved and controlled by the user. As we know, digital companies can be ruthless with the way that they deal with consumers’ content. Only last December, Sony, the owner of Discovery, cancelled all the content bought by subscribers to PlayStation. Suddenly those subscribers found that the content that they had paid for had been deleted from their libraries and there was nothing they could do about it. I ask the Minister to take seriously my concerns over non-personal data not being covered at the termination of a contract. The aim of the Bill is to give protection to consumers of digital services. In this area, they are not protected, and that needs to change.

[Baroness Stowell of Beeston (Con)]

I have not been involved in Part 4 of the Bill and the Communications and Digital Select Committee did not include it in the work that we did to study the Bill last year, so I must say from the outset that I am speaking in a personal capacity.

Like other noble Lords who spoke on the previous group, I have received a lot of correspondence from various media and tech firms that rely on subscriptions as part of their business model. I am concerned on their behalf to guard against overly prescriptive measures which could threaten their sustainability, especially in such a competitive arena, which is why I have sought to familiarise myself with the Bill and have listened to what has been put forward. I should also declare that I am a vice-chair of the All-Party Parliamentary Group on Customer Service and take a keen interest in the frustrations people experience at the hands of service providers, especially when they feel that the channels of communication available to them for queries and complaints, or to cancel, are designed for the benefit of businesses, not their fee-paying customers on whom businesses rely for their income and survival.

In his response to the first group, my noble friend the Minister referred as an example to consumers who take out limited-time free or discounted subscriptions online and then get caught in full subscriptions which they cannot cancel unless they telephone a number that they have probably struggled to find online. Then, when they get through, they enter into a battle of wills with a telephone handler who just will not let them go. I have sympathy with that experience, having endured it, but if I do not want to stay, I make sure that I do not continue to subscribe. I also recognise that it is important for consumers to have a place to go to negotiate when they feel that they could get a better deal, as my noble friends Lord Black and Lord Vaizey identified. I will come back to that in a moment.

Having listened and looked at the Bill so far, my conclusion is that, concerned as I am to make sure that we get the right outcomes for consumers, I am not convinced by some of the solutions in the Bill. My noble friend Lord Black’s argument in favour of secondary legislation to address some of these issues has merit, as there appears to be significant and understandable concern from a range of subscription businesses about changes to the cooling-off period. There seem to me to be conflicting shifts in different directions—of both vague and detailed new methods for cancellation at the same time—in the Bill, so I think that more time to get this right could be justified.

I was struggling to follow what my noble friend the Minister said about consultations in response to the last group, but what is proposed does not seem that convincing to me when we are writing things into the Bill before completing the consultations necessary to get it right. What I do not want, as a result of the Bill becoming an Act, is consumers being irritated because of the frequency with which they start receiving computer- generated messages asking if they want to renew a contract or, perhaps worse, because they are no longer able to telephone a firm to threaten to cancel in order to negotiate better terms, if they no longer have that facility because of something else that has been offered to them.

Two basic things seem critical to me. The first is the guaranteed facility that if you subscribe online, you can cancel online. That is one of the most annoying things in what consumers feel at the moment. The second is that phone lines for customer service, whether the issue is a query, a complaint or somebody wanting to cancel something, have numbers that are readily available and that the lines themselves are staffed by people trained and equipped to assist individuals to the customer’s satisfaction—and for their benefit, not the benefit of the firms.

That is what we ought to be trying to achieve through this legislation and, at the moment, I am not convinced that that is where we will end up. I am not a business figure myself, but I know that the best way for any business or public service to succeed is for its customers to get the service they are paying for, to be treated with the respect they deserve and to be satisfied that they have got a fair deal as a result. I just feel that we are losing sight of this.

Perhaps I may finish with one small point about the proposed cooling-off measures. My noble friend Lord Vaizey ran through various examples of when a consumer might take out a subscription and take advantage of that subscription in a cooling-off period, without paying any fee at all. One of the examples he gave was of a consumer taking out a newspaper subscription to read just one article, or a day’s edition, for free. Clearly, that would be wrong. Journalism is expensive and the best of it cannot be done for free, but not everybody who wants to read a newspaper or an article wants to take out a subscription. To many consumers, subscriptions are another bill—and they do not want another bill. I urge all newspaper publishers to put in place, as soon as they can, a mechanism for consumers to buy just one day’s edition or 24 hours of access to the website, without them having to take out a monthly subscription.

[Lord Vaizey of Didcot (Con)]

My Lords, I support my noble friend Lord Black on his amendments and will respond to the excellent remarks made by my noble friend Lady Stowell. It is interesting how she ended her remarks, because I read in a free email newsletter this morning that, apparently, a lot of newspapers—led in fact by Will Lewis, who was obviously educated when he was at the Telegraph by my noble friend Lord Black —are looking at a mix of models now. Some people are saying that the freemium model, or free with ads, is dead but also that the subscription model may be dead, and that there will be a mix in how people can, effectively, find a way of paying for what is normally excellent content online from reputable brands. Things are developing, so perhaps my noble friend Lady Stowell is wrong to say that she does not have experience of business; clearly, she has an instinct for it. Anyway, I digress.

I must say that I have thoroughly enjoyed being in this Committee. What has emerged from the six days in Committee is that there are clear areas at which the Committee is asking the Government to look again, but not in a hostile way. This is about an element of detail, an element of getting it right and, funnily enough, an element of both the critique and the Government having exactly the same aims. As my noble friend Lady Stowell pointed out, we want to see a world where the consumer has absolutely clear rights and an easy customer experience in taking out a subscription and in cancelling it. At the same time, we do not want to burden businesses with too much bureaucracy, but to give them a chance to develop the flexibility to grow their business models in what remains a fast-changing environment. So, my noble friend Lord Black’s argument seems clear to me.

There is a paradox in my noble friend’s argument: we are asking the Government not to be prescriptive in one area while asking them to be more prescriptive in another. On the non-prescriptive part of the argument, my noble friend’s point is clear: it seems silly to put in primary legislation exactly how often a subscription business should remind a customer that their contract is coming up for renewal. The essence of customer service is for the business to get right its relationship with the customer, so long as it is under an obligation to remind the customer clearly that their contract is coming up for renewal and they are free not to renew it.

To flip the argument, on the cancellation methods, my noble friend is again right to say that the Bill words far too vaguely the way a consumer can cancel. I previously christened an amendment on appeals against decisions of the regulator the “Whac-A-Mole amendment”; I will now christen this amendment the “carrier pigeon amendment”. It is drafted in such a way that, in theory, I could cancel my subscription to the Times—which I would never do, obviously—by sending a carrier pigeon to News UK at London Bridge and say with a straight face that I had done it authentically.

There is, again, a happy medium. It should be very straightforward to cancel a subscription. Nobody wants the situation my noble friend Lady Stowell described, which does exist: having to find a telephone number—which is hidden—and contact a call centre, and then being given the runaround. I said at Second Reading that I had in fact done exactly that. I took out a subscription to a newspaper to read an article, but I could not cancel it. It was just my luck that I happened to know the chief executive of the newspaper, and I had to ring him and ask him to cancel it for me. That is obviously unacceptable. As a Conservative, I hesitate to suggest the creation of a quango, but there must be some way for a regulator to be aware of complaints and concerns about how an organisation is behaving, and to be able to intervene to make it clear that it is not operating within both the letter and the spirit of the law.

My noble friend’s amendments take account of the business needs of subscription businesses. I understand that people will fall on one side or the other of this argument. It is an interesting point that these businesses would like a way to engage with a departing customer, and they should be able to ask, “Why are you leaving? Can we tempt you to stay?” I spend quite a lot of my time unsubscribing from the endless emails and newsletters I have subscribed to, which tend to be free. Even then, particularly if you use a service such as Mailchimp, you are asked to fill in a little questionnaire on why you have decided to unsubscribe. It is not very onerous, and I understand—even though it is a slightly odd argument —why these businesses would want the opportunity to engage with a departing customer to gather information on what was wrong with their service and how they could improve it, or to provide an improved offer to tempt the customer to stay. Certainly, as we all know from having been lobbied, many of these businesses say that, often, the initial desire to cancel a subscription is based on an irritation with the service, which can be addressed once the customer gets in touch with the provider of the subscription service.

It is important to probe the Minister on both these issues in order to get clarity on the Government’s position, while also looking at some amendments that could genuinely improve the Bill.

Digital Markets, Competition and Consumers Bill

Baroness Stowell of Beeston Excerpts

Committee stage
Wednesday 31st January 2024 Grand Committee

While I am on my feet, it might help if I address some of the objections that Ministers would have heard to this amendment.

[Baroness Stowell of Beeston (Con)]

I am sorry to interrupt my noble friend—if he will allow me to call him that—who is making some incredibly important points. I know that he is a stickler for these things, but this was just about how much time we have and length of speeches. That is all. I am sure that he does not want to underplay the power of his argument.

[Lord Tyrie (Non-Afl)]

I have to ask the noble Baroness to bear with me for just a short while. I am being asked to speak to two amendments simultaneously, both of which are quite important, particularly the one that we are on now.

I said a moment ago that I would address some of the objections that Ministers may have heard from the department. One will have been that the CMA’s mission statement and underlying purpose implant a focus on consumers into its bloodstream. It is true that the consumer interest forms part of the CMA’s mission statement—it was found on the walls of its offices when I joined—but it is certainly not in its bloodstream. Few organisations with a responsibility to protect consumers have ever been more remote from consumers than the CMA. The intellectual framework behind the statute that it is trying to enforce is similarly abstract and technical. A consumer duty will put the consumers’ interests firmly into the CMA’s bloodstream.

A second argument against the duty that I think the Ministers will have heard will no doubt be that if the CMA takes action on competition, the consumer will always pick up the benefit. In its pure form, this is straight back to the Chicago school justification for competition policy—the approach rolled out across the world 25 years ago. A heap of academic work has now cast doubt on it. In any case, we do not need the academics, as the evidence is all around us that acting on competition alone has not been enough to stop a growth of consumer detriment and a rise in concentration ratios.

A third argument that no doubt will have been put to Ministers is that a consumer duty will get in the way of the Government’s growth objective, but that is based on the mistaken assumption that there is a trade-off between consumer protection and growth—between a healthy, functioning market with caveat emptor and a nanny state. One might characterise this as the free marketeer case against the consumer duty. I am a free marketeer. Many of our markets are not free at the moment; that is the problem. We have a massive and growing asymmetric power in many markets. Nudge, sludge, drip pricing, loyalty penalties and other rip-offs are on the rise everywhere. It is true that we can reduce these abuses by bringing more competition to these markets and that action is overdue, but it has not been strong enough so far to quell the detriment. On the contrary, abuses of market power, both digital and otherwise, have been growing.

The arguments for some form of consumer duty have been set out over the years by those at the sharp end of dealing with detriment for a very long time, not least the consumer groups. I recognise—this will be a relief to the noble Baroness—that the case I have put has touched on only a very small proportion of the arguments that they have developed in great detail over the years. I am strongly tempted, now I have been provoked, to supply her orally with a few of these, but I will resist the temptation. In any case, I have set out a summary of those arguments in numerous forms in writing in 2019-20, and then again just over two years ago. Not much has changed since then, so I will not rehearse those arguments, but I will end by summarising them.

First, a duty will greatly bolster and increase the effectiveness of the duty of expedition and the scope for interim measures that other parts of the Bill will give the CMA. The effect of all three acting together will be much greater than the sum of the parts. Secondly, it will facilitate a change of mindset that is essential for many of our competition regulators, including the CMA. The mindset of the last quarter of a century—that the CMA should restrict itself to acting directly only on competition—was a lot better than nothing, but it has also caused a lot of problems and been partly responsible for the rise in detriment that we can now see around us. Thirdly, a consumer duty will force the courts, particularly the CAT, to give the CMA more scope to act quickly and directly in the consumer interest. Fourthly, unlike most of what we are doing here, it would give us a better prospect of enabling the Government, of whatever political complexion, to have an opportunity to send a clear message to the public that they can expect powerful, independent bodies such as the CMA to act on their behalf.

[Lord Holmes of Richmond (Con)]

My Lord, it is a pleasure to follow the noble Lord, Lord Tyrie. The Committee certainly benefits from his expertise and experience and he is certainly never hypertrophic.

I shall speak briefly to my Amendment 106, which proposes a new clause entitled: “CMA permission for private enforcement claims”. It is a fairly simple and straightforward amendment and does exactly what the title says. Claimants have to seek permission from the CMA to bring private enforcement claims to the CAT or the High Court. The reason is clear. It is so that when we get to the end of our deliberations the operation of which forum, at what time and by whom is clear and does exactly what Parliament intended. Without this amendment there is potential to bring actions in various fora with different approaches at the same time, potentially muddying the waters and steaming up the windows and not bringing the clarity of procedure which we are seeking to achieve with the Bill.

It is a very clear amendment to have clarity and certainty about which forum at which time and to give the CMA the right to ensure that there is not muddying within the procedure, which is completely avoidable at this stage. I look forward to the Minister’s response.

[Baroness Stowell of Beeston (Con)]

I shall speak to Amendment 106 in the name of my noble friend Lord Holmes. Before I do, I should just reinforce my sincerity in saying that I think the noble Lord, Lord Tyrie, is making some really important points in his amendments. My concern was only to make sure that he did not lose us in his exposition, which was brilliant. I felt that some noble Lords were starting to drift away, and I did not think that was doing him any service. I want him to know that I am very interested and was tuned in the whole way through.

The reason I want to speak on Amendment 106 is that last week I raised the issue of private litigation and asked why the so-called Ofcom model had not been adopted for the Bill. Just to recap, I point out that the Ofcom model is a measure in the Communications Act which requires private litigants to seek Ofcom’s permission before making a claim to the courts or a tribunal. Its purpose is to avoid the regulator and the courts considering the same issues simultaneously and reaching conflicting findings, as my noble friend Lord Holmes has just colourfully described.

Since I raised this last week, I am very grateful for the Minister’s letter, which has been circulated to all Peers and is now in the Library, which outlined the Government’s reasoning for not adopting the measure in this digital markets regime for the CMA. As noble Lords will have seen from that letter, the Government argue that it would risk politicising the CMA because decisions about whether to approve someone taking a case to the tribunal or the courts would be appealable through judicial review, in the Government’s mind reducing certainty and clarity for stakeholders. They also argue that these issues are less prevalent for breaches of requirements imposed by Ofcom, as the primary route for redress is through the Communications Ombudsman and there is no equivalent function in the digital regime.

The Minister may make the same arguments in response to my noble friend Lord Holmes’s Amendment 106. The reason why I want to raise this again and am taking the opportunity today of doing so is because, even after getting his letter and having further conversations, I remain concerned that leaving the Bill as it stands threatens the participatory approach of the firms designated SMS, because it would disincentivise them to co-operate with the CMA. That participatory approach is critical to the success of the new regime and one of the ways in which it is considered better than the European model. It is also worth knowing that the Digital Markets Act—in other words, the European Commission’s version of this regime—includes a provision to avoid conflict between national courts and Commission rulings.