Data Protection and Digital Information Bill

Lord Clement-Jones Excerpts

Committee stage
Monday 22nd April 2024 Grand Committee

There are a number of interesting models and proposals for addressing cookie fatigue out there. My sense is that the department and the regulator would be better off getting together and looking again at those models, possibly on the basis of widened consultation, and then regulating, rather than taking sweeping powers now on the promise that they may get it right in future. The Government have some serious questions to answer here. We are particularly supportive of the efforts of the noble Lord, Lord Lucas, and others to get a better quality of consultation before we take significant legislative steps forward.

[Lord Clement-Jones (LD)]

My Lords, I do not know how unusual this is, but we are on the same page across both sides of the Committee.

First, having signed the amendments by the noble Lord, Lord Lucas, I express my support for the first batch, Amendments 199 to 201, which are strongly supported by the Advertising Association and the Interactive Advertising Bureau for obvious reasons. The noble Lords, Lord Lucas and Lord Bassam, and the noble Viscount, Lord Chandos, have expressed why they are fundamental to advertising on the internet. Audience measurement is an important function, for media owners in particular, to determine the consumption of content and to price advertising space for advertisers.

I understand that the department, DSIT, has conceded that most of the use cases for audience measurement fit within the term “statistical purposes”. It is this area of performance that is so important. As the noble Lord, Lord Bassam, seemed to indicate, we may be within touching distance of agreement on that, but the Minister needs to be explicit about it so that the industry understands what the intent behind that clause really is. As a number of noble Lords have said, this is a specific and targeted exemption for audience measurement and performance cookies that limits the consent exemption for those purposes and, as such, should definitely be supported. I very much hope that, if the Minister cannot give the necessary assurance now, then, as a number of noble Lords have said, he will engage in further discussions.

Amendments 203, which I have signed, and 205 are extremely important too. Amendment 203, picked up clearly by the noble Lord, Lord Bassam, is potentially important; it could save an awful lot of aggravation for users on the internet. It is potentially game-changing given that, when we approach the same site—even Google—we have to keep clicking the cookie. I very much hope the Minister will see the sense in that because, if we are changing the EC regulations, we need to do something sensible and useful like that. It might even give the Bill a good name.

As all noble Lords have rightly said, the Secretary of State needs to think about the implementation of the regulations and what they will affect. Amendment 202 is fundamental and badly needed. You need only look at the list of those who are absolutely concerned about the centralisation of cookies: the Internet Advertising Bureau, the Advertising Association, the Data & Marketing Association, the Market Research Society, the News Media Association, the Incorporated Society of British Advertisers, the Association of Online Publishers and the Professional Publishers Association. I hope that the Government are in listening mode and will listen to their concerns.

As the PPA says, centralising cookie consent with browsers could cause consumers far more harm than good. The Secretary of State’s powers would override cookie consent relationships between individuals and specialist publishers, which the noble Lord, Lord Bassam, talked about in particular. As the PPA says, in all likelihood a significant number of internet users would not consent to cookies from the browser but would consent to cookies on the websites of publishers that they know and trust. If the Secretary of State were to use this power to enforce cookie centralisation, many publishing businesses would be forced to present consumers with paywalls in order to be financially sustainable. As the PPA says, this would lead to consumers missing the opportunity to access high-quality publishing content without having to pay a fee.

The PPA has made an extremely good case. This would amplify existing barriers to competition in the digital market. There are provisions in the DMCC Bill that would give powers to the CMA to address any problems, such as enforced data sharing from platforms to publishers, but centralising cookie consent would completely undermine the objectives of that legislation. It is clear that this Bill should be amended to withdraw the provisions giving the Secretary of State the power to introduce these centralised cookie controls. I very much hope that the Minister will have second thoughts, given the weight of opinion and the impact that the Secretary of State’s powers would have.

[Baroness Stowell of Beeston (Con)]

My Lords, if the Committee will indulge me, I was a little late arriving for the introduction to this group of amendments by my noble friend Lord Lucas, but I heard most of what he said and I will speak briefly. I am quite sympathetic to the arguments about the exemption being too tightly drawn and the advantage that this is likely to give the likes of Google and Meta in the advertising ecology. As the noble Lord, Lord Clement-Jones, said, a range of different trade bodies have raised concerns about this, certainly with me.

From my perspective, the other point of interest that I want to flag is that the Communications and Digital Committee is currently doing an inquiry into the future of news. As part of the evidence that we have taken in that inquiry, one of our witnesses from the news industry raised their concerns about a lack of joined-up thinking, as they described it, within government when it comes to various different bits of legislation in which there are measures that are inadvertently detrimental to the news or publishing industry because there has been no proper understanding or recognition of how the digital news environment is now so interconnected. Something like this, on cookies, could have quite a profound effect on the news and publishing industry, which we know is reliant on advertising and is increasingly feeling the pinch because the value that it gets from digital advertising is being squeezed all the time. I just wanted to reinforce the point, for the benefit of my noble friend the Minister, that concern about this is widespread and real.

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[Lord Bassam of Brighton (Lab)]

I am interested in the Minister’s point about the flexibility the Government see in this clause, but I am not sure who in the end has the responsibility to lead on that flexibility. Will it come from the commissioner or be driven by the Secretary of State’s considerations? The consultation duties seem very dependent on the commissioner’s view and I am not sure at what stage the Secretary of State would want to intervene to ensure that they have got this bit right. That is very important, because the balance is quite sophisticated.

[Lord Clement-Jones (LD)]

The Minister used the expression “when the evidence emerges”, as did the noble Viscount, Lord Camrose, in another context last week. I would have thought that these organisations know what they are about, and they have provided some pretty comprehensive evidence about the impact on their businesses. Is that not a pretty good reason for the Government to think that they might not have this set of provisions entirely right, quite apart from the other aspects of this group of amendments? If that evidence is not enough—I read out the list of organisations—the Government are more or less saying that they will not accept any evidence.

[Lord Harlech (Con)]

I thank both noble Lords for their interventions. On the point from the noble Lord, Lord Bassam, there is a trifecta of decision-making between the Secretary of State, the ICO and the organisations all working together. That is why there is a consultation requirement before using the power. On the point from the noble Lord, Lord Clement-Jones, it is a question of your point of view; we feel that we have done stakeholder engagement and believe that we have got the balance right between the needs of organisations—

[Lord Clement-Jones (LD)]

Will the Minister write and unpack exactly what the balance of opinion was? We are talking about pretty crucial stuff here. It is not always a question just of numbers; it is quite often a question of weighting the arguments. The Minister should write to us and tell us how they came to that conclusion, because the case was clearly being made during the consultation, but the Government have effectively ignored it.

[Lord Bassam of Brighton (Lab)]

In this tripartite geography that the noble Lord described, the power—

[Lord Clement-Jones (LD)]

It is a trifecta, actually—that is a betting term.

[Lord Bassam of Brighton (Lab)]

I am not a gambling man. It is an interesting term. The Minister is suggesting that power rests equally among those three elements but it does not. The Secretary of State is the all-powerful being and the commissioner is there to ensure that regulation works effectively. How will this operate in practice? There is no advisory body here; it is the Secretary of State having a discussion with the commissioner and then, on the balance of some of the consultation information that comes in, making a decision. That will not enable the sector, the market and those providers to be engaged.

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[Lord Harlech (Con)]

I thank noble Lords for those further points requesting clarification. On how we have come to this decision, I am happy to write to all noble Lords in the Committee. The noble Lord went in an interesting direction because, in the context of the rest of the Bill, so many of the amendments have been about protecting private users, but the noble Lord seems to be swaying more in favour of the advertisers here.

[Lord Clement-Jones (LD)]

My Lords, it is all about the relative importance and the weighting. Maybe that is a good illustration of where the Government are not getting their weighting correct for the beginning and this part of the Bill.

[Lord Harlech (Con)]

I take the noble Lord’s point. We are working with industry and will continue to do so. For the benefit of the Committee, we are, as I said, happy to write and explain the points of view, including those from Data: A New Direction. In response to the noble Lord, Lord Bassam, power ultimately lies with Parliament via the affirmative resolution procedure for the Secretary of State power.

I will go back to the amendments we were discussing. This regulation applies to complex and technical markets. The very reason we have taken a delegated power is so that the new exemptions can be carefully created in consultation with all affected stakeholders. As I explained, the Bill includes a requirement to consult the Information Commissioner, the Competition and Markets Authority and any other relevant stakeholders, which would include trade associations and consumers or web users.

Amendment 201 would widen the application of the “strictly necessary” exemption. Currently, it applies only to those purposes essential to provide the service requested by the user. Amendment 201 would extend this exemption so that it applies to the purposes considered essential to the website owner. We do not think this would be desirable, as it would reduce a user’s control over their privacy in a way that they might not expect.

For the reasons I have set out—and once again reaffirming the commitment to write to noble Lords on how the weighting was worked out—I hope my noble friend and the noble Baroness will not press their amendments.

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[Lord Kirkhope of Harrogate (Con)]

My Lords, I support Amendment 208A. I declare my interest as a solicitor but not one who has been directly involved with personal injury claims. This is an area of particular specialism that requires particular expertise and experience for it to be carried out to the best advantages of those who seek that help.

Looking back, I am concerned that this matter has been raised, in different fora, on a number of occasions. For instance, in 2016, the Telephone Preference Scheme opt-out was discussed when it was removed from the control of Ofcom to that of the ICO. At that point, there was a great opportunity for this matter to be dealt with. Indeed, a number of organisations, including personal injury lawyers, the Motor Accident Solicitors Society and others, said that it was vital to carry this out and that cold calling should be ended because of the pressures it placed on an awful lot of very vulnerable people.

Since 2016, things have got worse in one respect—although, perhaps, they are a little less bad in respect of telephone calling. It is a little while now since I was last told that I had just had a major accident in my car as I was sitting enjoying a glass of wine and not having such worries in my mind. Telephone cold calling seems to have diminished but pressures through social media contact, various scams and so on have increased dramatically. I have been told this by a number of my legal colleagues.

In 2023, the Government produced the UK’s Fraud Strategy. As I am sure noble Lords will know, when it was published, it specifically pursued the question of extending the ban on cold calling to personal injury cases; that was very important and included all servers. So, unless there is some relationship already in place—something where that is a defence, as it were, here—and a voluntary willingness on the part of those who suffer from personal injuries to be contacted by an organisation with which they already have a relationship, this is something that we should pursue very strongly indeed.

Although it is correct that the legal profession, and perhaps other professions, are banned from this procedure, on a regulatory or disciplinary basis, some of my colleagues in the profession are, in some cases, susceptible to financial and commercial challenges through these organisations, such that they would become—sometimes, almost inadvertently—part of the process. Therefore, I hope that, in passing such an amendment, we would give a clear sign to the Solicitors Regulation Authority and the Law Society that it underlines yet again that these practices are not acceptable to those members of the profession.

[Lord Clement-Jones (LD)]

My Lords, I support Amendment 208A. I am a recovering solicitor. Many moons ago, I gave public affairs advice to the Association of Personal Injury Lawyers, which is a fine organisation. I very much support its call and this amendment on that basis. I congratulate the noble Lord, Lord Leong, on his introduction to this amendment; he and the noble Lord, Lord Kirkhope, made a terrific case.

APIL took the trouble to commission research from YouGov, which showed that 38% of UK adults had received a cold call or text while 86% had a strong emotional response and were left feeling annoyed, angry, anxious, disgusted or upset. Therefore, the YouGov research reveals that almost all those who received a call supported a total ban on personal injury cold calls and text messages.

There is little for me to add but I am sorry that the noble Baroness, Lady Buscombe, is not with us—she has just exited the Room, which is unhappy timing because, in looking back at some of the discussions we have had in the House, I was about to quote her. During Report stage in the Lords on the Financial Guidance and Claims Bill, when she was a Minister, she told us:

“We know that cold calls continue and understand that more needs to be done truly to eradicate this problem. We have already committed to ban cold calls relating to pensions, and are minded to bring forward similar action in relation to the claims management industry. I have asked officials to consider the evidence for implementing a cold-calling ban in relation to claims management activities, and I am pleased to say that the Government are working through the detail of a ban on cold calling by claims management companies. There are complex issues to work through, including those relating, for example, to EU directives”;


of course, we do not have those any more. She went on to say:

“We would therefore like time to consider this important issue properly, and propose bringing forward a government amendment in the other place to meet the concerns of this House”.—[Official Report, 24/10/17; col. 861.]


How much time do the Government need? Talk about unfinished business. I know it is slightly unfair as you can unearth almost anything in Hansard but the fact is that this is bull’s eye. It is absolutely spot on on the part of APIL to have found this. I thought for one delirious minute that the noble Baroness, Lady Buscombe, was going to stand up and say, “Yes, I plead guilty. We never pursued this”.

[Lord Evans of Rainow (Con)]

I have texted the noble Baroness asking her to return as soon as possible so that she can listen to the noble Lord’s wise words.

[Lord Clement-Jones (LD)]

I am not going to carry on much longer. I know that that will be a grave disappointment but it makes the case, I think, that it is high time that the Government did something in this area. It is clearly hugely unpopular. We need to make sure that Amendment 208A is passed. If not now, when?

[Lord Harlech (Con)]

My Lords, I thank the noble Baroness, Lady Jones of Whitchurch, for tabling Amendment 208A and the noble Lord, Lord Leong, for moving it. This amendment would insert new Regulation 22A into the privacy and electronic communications regulations and would prohibit via email or text unsolicited approaches encouraging people to commence personal injury claims sent by, or on behalf of, claims management companies.

The Government agree that people should not receive unsolicited emails and texts from claims management companies encouraging them to make personal injury claims. I assure noble Lords that this is already unlawful under the existing regulations. Regulation 22(2) prohibits the sending of all unsolicited electronic communications direct marketing approaches—including, but not limited to, texts and emails—unless the recipient has previously consented to receiving the communication. Regulation 21A already bans live calling by claims management companies.

In the past year, the Information Commissioner has issued fines of more than £1.1 million to companies that have not adhered to the direct marketing rules. Clause 117 considerably increases the financial penalties that can be imposed for breaches of the rules, providing a further deterrent to rogue claims management and direct marketing organisations.

Amendments 211 and 215 relate to Clause 116 so I will address them together. Amendment 211 seeks to confirm that a provider of a public electronic communications service or network is not required to intercept or examine the content of any communication in order to comply with the new duty introduced by Clause 116. I assure the noble Baroness and the noble Lord that the duty is a duty to share information only. It merely requires providers to share any information that they already hold or gather through routine business activities and which may indicate suspicious unlawful direct marketing on their networks; it does not empower, authorise or compel a communications provider to intercept messages or listen to phone calls.

Should a communications provider become aware of information through its routine business activities that indicates that unlawful direct marketing activity may be taking place on its service or network, this duty simply requires it to share that information with the Information Commissioner. For example, a communications provider may receive complaints from its subscribers who have received numerous unsolicited direct marketing communications from a specific organisation. We know from the public consultation that people want action taken against nuisance calls and spam, and this duty will support that.

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[Baroness Jones of Whitchurch (Lab)]

My Lords, in moving Amendment 209, I will also speak to Amendment 210, and I thank the noble Lord, Lord Clement-Jones, for adding his support.

These amendments return to the major debate that we had on day 2 in Committee regarding direct marketing for the use of democratic engagement. It is fair to say that no-one was convinced by the Minister’s arguments about why that relaxation of the rules for political parties was necessary. We will no doubt return to that issue on Report, so I shall not repeat the arguments here. Meanwhile, Clause 113 leads into the democratic engagement provisions in the Bill and provides a soft opt-in for the use of electronic mail for direct marketing for charitable, political or other non-commercial activities when the data has been collected for other purposes.

As we made clear in the previous debate, we have not asked for these more relaxed rules about political electronic marketing. We believe that these provisions take us fundamentally in the wrong direction, acting against the interests of the electorate and risking damaging the already fragile level of trust between politicians and voters. However, we support extending the soft opt-in for charities and other non-commercial organisations. This is a measure that many charities have supported.

Of course, we want to encourage campaigning by charitable organisations to raise awareness of the critical issues of the day and encourage healthy debate, so extending their opportunities to use electronic marketing for this purpose could produce a healthy boost for civic engagement. This is what our amendments are hoping to achieve.

Therefore, our Amendments 209 and 210 would amend the wording of Clause 113 to remove the relaxation of the rules specifically for political parties and close the loophole by which some political parties may try to negate the provisions by describing themselves as non-commercial entities. We believe that this is the right way forward. Ideally, these amendments would be combined with the removal of the democratic engagement provisions in Clause 114 that we have already debated.

I hope noble Lords will see the sense of these proposals and that the Minister will agree to take these amendments away and rethink the whole proposition of Clauses 113 and 114. I beg to move.

[Lord Clement-Jones (LD)]

My Lords, tracking the provenance of Clause 113 has been a very interesting exercise. If we think that Clause 114 is pretty politically motivated, Clause 113 is likewise. These rules relating to the fact that political parties cannot avail themselves of the soft opt-in provision have been there since 2005. The Information Commissioner issued guidance on political campaigning, and it was brought within the rules. Subsequently, there has been a ruling in a tribunal case which confirmed that: the SNP was issued with an enforcement notice and the information tribunal dismissed the appeal.

The Conservative Party was fined in 2021 for sending emails to people who did not ask for them. Then, lo and behold, there was a Conservative Party submission to the House of Lords Democracy and Digital Technologies Committee in 2020, and that submission has been repeated on a number of occasions. I have been trying to track how many times the submission has been made by the Conservative Party. The submission makes it quite clear that there is frustration in the Conservative Party. I have the written evidence here. It says:

“We have a number of concerns about the Information Commissioner’s draft code”—


as it then was: it is now a full code—

“on the use of data for political campaigning. In the interests of transparency, I enclose a copy of the response that the Conservative Party sent to the consultation. I … particularly flag the potential chilling effect on long-standing practices of MPs and councillors from engaging with their local constituents”.

Now, exactly as the noble Baroness has said, I do not think there is any call from other political parties to change the rules. I have not seen any submissions from any other political party, so I would very much like to know why the Government have decided to favour the Conservative Party in these circumstances by changing the rules. It seems rather peculiar.

The guidance for personal data in political campaigning, which I read while preparing for this debate, seems to be admirably clear. It is quite long, but it is admirably clear, and I congratulate the ICO on tiptoeing through the tulips rather successfully. However, the fact is that we have very clear guidance and a very clear situation, and I entirely agree with the noble Baroness that we are wholly in favour of charities being able to avail themselves of the new provisions, but allowing political parties to do so is a bridge too far and, on that basis, I very much support the amendment.

[The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)]

My Lords, I thank the noble Baroness, Lady Jones, for Amendments 209 and 210, which would amend Clause 113 by removing electronic communications sent by political parties from the scope of the soft opt-in direct marketing rule. A similar rule to this already exists for commercial organisations so that they can message customers who have previously purchased goods or services about similar products without their express consent. However, the rule does not apply if a customer has opted out of receiving direct marketing material.

The Government consider that similar rules should apply to non-commercial organisations. Clause 113 therefore allows political parties, charities and other non-commercial organisations that have collected contact details from people who have expressed an interest in their objectives to send them direct marketing material without their express consent. If people do not want to receive political messaging, we have included several privacy safeguards around the soft opt-in measure that allow people to easily opt out of receiving further communications.

Support for a political party’s objectives could be demonstrated, for example, through a person’s attendance at a party conference or other event, or via a donation made to the party. In these circumstances, it seems perfectly reasonable for the party to reach out to that person again with direct marketing material, provided that the individual has not objected to receiving it. I reassure the Committee that no partisan advantage is intended via these measures.

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[Lord Clement-Jones (LD)]

My Lords, perhaps the Minister could elucidate exactly what is meant by “supporting the party’s objectives”. For instance, if we had a high street petition, would that be sufficient to grab their email address and start communicating with them?

[Viscount Camrose (Con)]

I suppose it would depend on the petition and who was raising it. If it were a petition raised or an activity supported by a particular party, that would indicate grounds for a soft opt-in, but of course anyone choosing not to receive these things could opt out either at the time or later, on receipt of the first item of material.

[Lord Clement-Jones (LD)]

So what the Minister is saying is that the solicitor, if you like, who is asking you to sign this petition does not have to say, “Do you mind if I use your email address or if we communicate with you in future?” The person who is signing has to say, “By the way, I may support this local campaign or petition, but you’re not going to send me any emails”. People need to beware, do they not?

[Viscount Camrose (Con)]

Indeed. Many such petitions are of course initiated by charitable organisations or other not-for-profits and they would equally benefit from the soft opt-in rule, but anyone under any of those circumstances who wished not to receive those communications could opt out either at the time or on receipt of the first communication on becoming aware that they were due to receive these. For those reasons, I hope that the noble Baroness will not press her amendments in relation to these provisions.

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[Baroness Buscombe (Con)]

It is important that my noble friend answers that question. The point is that if we find—I am sorry, I still speak as if I am involved with it, which I am not, but I promise noble Lords that I have spent so much time in this area. If the DWP finds that there is a link that needs pursuing then that obviously has to be opened up to some degree to find what is going on. Remember, the most important thing about this is that the right people get the right benefits. That is what the Government are trying to achieve.

[Lord Clement-Jones (LD)]

My Lords, I note that the DWP has been passed a parcel by the Department for Science, Innovation and Technology—and I am not at all surprised. I am sure it will be extremely grateful to have the noble Baroness, Lady Buscombe, riding to its defence today as well. Also, attendance at this debate demonstrates the sheer importance of this clause.

We on these Benches have made no secret that this is a bad Bill—but this is the worst clause in it, and that is saying something. It has caused civil society organisations and disability and welfare charities to rise as one against it, including organisations as disparate as UK Finance, mentioned by the noble Lord, Lord Davies, and the ICO itself. They have gone into print to say that, for this measure to be deemed a necessary and proportionate interference in people’s private lives, to be in accordance with the law and to satisfy relevant data protection requirements, legislative measures must be drafted sufficiently tightly—et cetera. They have issued a number of warnings about this. For a regulator to go into print is extremely unusual.

Of course, we also have Big Brother Watch and the Child Poverty Action Group—I pay tribute to the noble Baroness, Lady Lister—the National Survivor User Network, Disability Rights UK, the Greater Manchester Coalition of Disabled People and the Equality and Human Rights Commission. We have all received a huge number of briefings on this. This demonstrates the strong feelings, and the speeches today have demonstrated the strong feelings on this subject as well.

There have been a number of memorable phrases that noble Lords have used during their speeches. The noble Baroness, Lady Kidron, referred to a “government fishing expedition”. The noble Baroness, Lady Chakrabarti, called it “breathtaking in its scope”. I particularly appreciated the speech of the noble Lord, Lord Kamall, who said, “What happened to innocence?” In answer to the noble Baroness, Lady Buscombe, this is not “nuanced”: this is “Do you require suspicion or do you not?” That seems to me to be the essence of this.

I was in two minds about what the noble Lord, Lord Sikka, said. I absolutely agree with him that we need to attack the fat cats as much as we attack those who are much less advantaged. He said, more or less, “What is sauce for the goose is sauce for the gander”. The trouble is that I do not like the sauce. That was the problem with that particular argument. The noble Baroness, Lady Lister, talked about stigma. I absolutely agree. The noble Lord, Lord Vaux, more or less apologised for using the word “draconian” at Second Reading, but I thought the word “overreach” was extremely appropriate.

We have heard some powerful speeches against Clause 128. It is absolutely clear that it was slipped into the Bill alongside 239 other amendments on Report in the Commons. I apologise to the Committee, but clearly I need to add a number of points as well, simply to put on record what these Benches feel about this particular clause. It would introduce new powers, as we have heard, to force banks to monitor all bank accounts to find welfare recipients and people linked to those payments. We have heard that that potentially includes landlords and anyone who triggers potential fraud indicators, such as frequent travel or savings over a certain amount. We have seen that the impact assessment indicates that the Government’s intention is to “initially”—that is a weasel word—use the power in relation to universal credit, pension credit and employment support allowance. We have also heard that it could be applied to a much wider range of benefits, including pensions. The Government’s stated intent is to use the power in relation to bank accounts in the first instance, but the drafting is not limited to those organisations.

Of course, everyone shares the intent to make sure that fraudulent uses of public money are dealt with, but the point made throughout this debate is that the Government already have power to review the bank statements of welfare fraud suspects. Under current rules, the DWP is able to request bank account holders’ bank transaction details on a case-by-case basis if there are reasonable grounds to suspect fraud. That is the whole point. There are already multiple powers for this purpose, but I will not go through them because they were mentioned by other noble Lords.

This power would obviously amend the Social Security Administration Act to allow the DWP to access the personal data of welfare recipients by requiring the third party served with a notice, such as a bank or building society, to conduct mass monitoring without suspicion of fraudulent activity, as noble Lords have pointed out. Once issued, an account information notice requires the receiver to give the Secretary of State the names of the holders of the accounts. In order to do this, the bank would have to process the data of all bank account holders and run automated surveillance scanning for benefit recipients, as we have heard.

New paragraph 2(1)(b) states that an account information notice requires,

“other specified information relating to the holders of those accounts”,

and new paragraph 2(1)(c) refers to other connected information, “as may be specified”. This vague definition would allow an incredibly broad scope of information to be requested. The point is that the Government already have the power to investigate where there is suspicion of fraud. Indeed, the recently trumpeted prosecution of a number of individuals in respect of fraud amounting to £53.9 million demonstrates that. The headlines are in the Government’s own press release:

“Fraudsters behind £53.9 million benefits scam brought to justice in country’s largest benefit fraud case”.


So what is the DWP doing? It is not saying, “We’ve got the powers. We’ve found this amount of fraud”. No, it is saying, “We need far more power”. Why? There is absolutely no justification for that. No explanation is provided for how these new surveillance powers will be able to differentiate between different kinds of intentional fraud and accidental error.

We have heard about the possibility and probability of automated decision-making being needed here. I do not know what the Minister will say about that, but, if there will not be automated decision-making—that is concerning enough—if the DWP chooses to make these decisions through human intervention the scale of the operation will require a team so large that this will be an incredibly expensive endeavour, defeating the money-saving mandate underpinning this proposed new power, although, as a number of noble Lords have pointed out, we do not know from any impact assessment what the Government expect to gain from this power.

It is wholly inappropriate for the Government to order private banks, building societies and other societies and financial services to conduct mass algorithmic suspicionless surveillance and reporting of their account holders on behalf of the state in pursuit of these policy aims. It would be dangerous for everyone if the Government reversed the presumption of innocence. This level of financial intrusion and monitoring affecting millions of people is highly likely to result in serious mistakes and sets an incredibly dangerous precedent.

This level of auditing and insight into people’s private lives is a frightening level of government overreach, in the words of the noble Lord, Lord Vaux, more so for some of the most marginalised in society. This will allow disproportionate and intrusive surveillance of people in the welfare system. In its impact statement, the DWP says it will ensure that data will be

“transferred, received and stored safely”.

That is in contrast to the department’s track record of data security, particularly considering that it was recently reprimanded by the ICO for data leaks so serious that they were reported to risk the lives of survivors of domestic abuse. With no limitations set around the type of data the DWP can access, the impact could be even more obscure.

We have heard about the legal advice obtained by Big Brother Watch. It is clear that, on the basis that,

“the purpose of the new proposed powers is to carry out monitoring of bank accounts”

and that an account information notice can be issued

“where there are no ‘reasonable grounds’ for believing a particular individual has engaged in benefit fraud or has made any mistake in claiming benefits”,

this clause is defective. It also says that

“financial institutions would need to subject most if not all of their accountholders to algorithmic surveillance”;

that this measure

“will be used not just in relation to detection of fraud but also error”;

and that this measure

“would not be anchored in or constrained by anything like the same legal and regulatory framework”

as the Investigatory Powers Act. It concludes:

“The exercise of the financial surveillance/monitoring powers contained in the DPDIB, as currently envisaged, is likely to breach the Article 8 rights of the holders of bank accounts subject to such monitoring”


in order to comply. It is clear that we should scrap this clause in its entirety.

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[Viscount Younger of Leckie (Con)]

That is a fair challenge and I will certainly be coming on to that. I have in my speech some remarks and a much more limited reassurance for the noble Lord.

It is only when there is a signal of potential fraud or error that the DWP may undertake a further review, using our business-as-usual processes and existing powers—an important point. DWP will not share any personal information with third parties under this power, and only very limited data on accounts that indicate a potential risk of fraud or error will be shared with DWP in order to identify a claimant on our system. As I said earlier, I will say more about the limited aspects of this later in my remarks.

[Lord Clement-Jones (LD)]

I am sorry to interrupt the Minister, but will he be coming on to explain what these signals are? He is almost coming to a mid-point between innocence and suspicion called “signals”—is this a new concept in law? What are we talking about and where in all of Schedule 11 is the word “signal”?

[Viscount Younger of Leckie (Con)]

If the noble Lord will allow me, I would like to make some progress and I hope that this will come out in terms of what we may be seeking on a limited basis.

The first third parties that we will designate will be banks and other financial institutions, as the Committee is aware. We know that they hold existing data that will help to independently verify key eligibility factors for benefits.

This clause does not give DWP access to any bank accounts—a very important point—nor will it allow DWP to monitor how people spend their money or to receive sensitive information, such as medical records or data on opinions or beliefs.

As the noble Baroness, Lady Sherlock, mentioned—I want to try to answer one of her questions—this power cannot be used to suspend someone’s benefit. Cases that are flagged must be reviewed under existing processes and powers—business as usual, which I mentioned earlier—to determine whether incorrect payments are being made.

Our approach is not new. HMRC has long been using powers to request data at scale from banks on all taxpayers under Schedule 23 to the Finance Act 2011. Our approach carries similar safeguards. Tax fraud is no different from welfare fraud and should be treated similarly. This was a key point that the Prime Minister made only on Friday when he committed to bring DWP’s fraud and error powers more in line with those of HMRC. This is one clear area where we are seeking to do this.

This allows me to go on to very important points about safeguards. Not all the cases found through this power will be fraud. Some will be errors which the power will help to correct, preventing overpayment debt building up. Some cases may also have legitimate reasons for seemingly not meeting eligibility requirements, for example where claimants have certain compensation payments that are disregarded for benefit eligibility rules. In those cases, no further action will be taken. Our robust business-as-usual processes will ensure that all cases are dealt with appropriately.

Another question raised by the noble Lord, Lord Vaux, on safeguards was to do with the legislation. A key safeguard is that we cannot approach any third party either; there must be a three-way relationship with the department, the claimant and the third party. This safeguard will narrow the use of this power substantially and ensure that it is used proportionately, as these three-way relationships are limited, meaning that data cannot be gathered at scale from just any source for any purpose. Any third party we will want to get data from will need to be designated in affirmative regulations that noble Lords will have an opportunity to scrutinise. These regulations will be accompanied by a code of practice. We will be bringing that forward, and we will consult on the code before presenting it to Parliament—which answers a question raised by, I think, the noble Baroness, Lady Kidron.

The power also ensures that we can request only very limited data on benefit recipients. I think this addresses a point raised by the noble Lord, Lord Vaux. We must work with key third parties to define what is shared, but our expectation is that this would be a name and date of birth or a unique payment number, along with the eligibility criteria someone has matched against: for example, a benefit claimant who has more savings than the benefit rules would normally allow.

Outside controls will apply here, too. DWP already handles vast amounts of data, including personal data, and must adhere to the UK GDPR and the Data Protection Act 2018.

On the point, which again was raised during this debate, about the remarks made by the Information Commissioner’s Office and its updated report on this measure, published as Committee started and which the Committee may be aware of, I was pleased to see that the commissioner now acknowledges that the third-party data measure is in pursuit of a legitimate aim, stating:

“I understand and recognise the scale of the problem with benefit fraud and error that government is seeking to address and accept that the measure is in pursuit of a legitimate aim. I am not aware of any alternative, less intrusive, means of achieving the government’s stated policy intent based on their analysis”.


I think that is a significant point to make, and it is a point with which I very strongly agree.

[Lord Clement-Jones (LD)]

It is also worth pointing out that the paragraph I quoted follows immediately on that. That is the qualification that I quoted.

[Viscount Younger of Leckie (Con)]

Yes, I am aware of that. I think the noble Lord was alluding to the point about proportionality. I listened carefully and took note of that, but do not entirely agree with it. I hope that I can provide further reassurances, if not now then in the coming days and weeks. The point is that there is no other reasonable way to independently verify claimants’ eligibility for the payment that they are receiving.

I turn to the amendments raised, starting with the stand part notice from the noble Baronesses, Lady Kidron and Lady Chakrabarti, the noble Lord, Lord Anderson of Ipswich, who is not in his place, and the noble Lord, Lord Clement-Jones. They and my noble friend Lord Kamall, who is not in his place, interestingly, all made their case for removing the clause, of which I am well aware. However, for the reasons that I just set out, this clause should stand part of the Bill.

In raising her questions, the noble Baroness, Lady Kidron, made some comparisons with HMRC. There are appropriate safeguards in place for this data-gathering power, which will be included in the code of practice. The safeguards for this measure will be equivalent to those in place for the similar HMRC power which Parliament approved in the Finance Act 2011.

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[Viscount Younger of Leckie (Con)]

The noble Lord has set me quite a challenge at the Dispatch Box. It is out of scope of today’s session but, having said that, I will reflect on his question afterwards.

I am aware that time is marching on. My noble friend Lord Kamall asked about burdens on banks. We believe that the burdens on banks will be relatively low.

The noble Baroness, Lady Sherlock, made a number of points; I may have to write to her to expand on what I am about to say. Removing the requirement for third parties to provide legible copies of information means that DWP could receive the information but there is a risk that the information is not usable; that is my answer to her points. This could limit the data that DWP receives and prevent us utilising the power in full, which could in turn impact the savings due to be realised from this important measure.

I turn to the final amendments in this group, which were raised by the noble Baroness. They would place requirements on the Secretary of State to issue statements in the House and consult on the code of practice. We will talk more about the code of practice later on in this debate, and I have already made clear my firm opinions on it: we will take it forward and are already working on it. There will be a consultation that will, of course, allow anybody with an interest in this to give their views.

I turn to the number of statements that must be made in the House regarding the practical use of the measures before powers can commence, such as the role that artificial intelligence will play or assurances on any outsourcing of subsequent investigations. This is an important point to make and was raised by other Peers. I want to make it clear that this measure will be rolled out carefully and slowly through a “test and learn” approach from 2025, in conjunction with key third parties. To make these statements in the House would pre-empt the crucial “test and learn” period. I say again that discussions with the third parties are deep and detailed and we are already making progress; this point was made by the noble Lord, Lord Clement-Jones, on the link with banks and third parties.

Importantly, I assure the noble Baroness, Lady Sherlock, that we will not make any automated decisions off the back of this power; this was also raised by the noble Baroness, Lady Kidron. The final decision must and will always involve a human being—a human agent in these cases—and any signals of potential fraud or error will be looked at comprehensively. I am grateful for the remarks of my noble friend Lady Buscombe on this matter.

I know that I have not answered a number of questions. Perhaps I can do so in our debate on another group; otherwise, I certainly wish to answer them fully in a letter. I hope that I have explained clearly, from our perspective, why this power is so important; why it is the right power to take; and how we have carefully designed it, and continue to design it, with the key safeguards in mind. I strongly value the input from all those who have contributed today but I remain unconvinced that the proposed amendments are necessary and strengthen the power beyond the clear safeguards I have set out. With that, I hope that the noble Baroness will not press her opposition to Clause 128.

[Lord Clement-Jones (LD)]

I may have missed something, but can I just check that the Minister will deal with the matter of signals, which he mentioned at the beginning of his response? Will he deal with where that phrase comes from, what they are, whether they will be in the code, et cetera? There are a lot of questions around that. Does it amount to actual suspicion?

[Viscount Younger of Leckie (Con)]

Absolutely; I am keen to make sure that I answer on that. It may be possible to do so in the next group but, if not, I will certainly do so in the form of a precise letter—added to the larger letter that I suspect is coming the noble Lord’s way.

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[Lord Vaux of Harrowden (CB)]

My Lords, I was not intending to speak on this group, but another question occurs to me. We have been assuming throughout this that we are talking about requests of information to banks, but the Bill actually says that:

“The Secretary of State may give an account information notice to a person of a prescribed description”.


Could the Minister explain what that is?

[Lord Clement-Jones (LD)]

My Lords, I would of course much prefer Clause 128 not to stand part, but we were just privileged by a master class from the noble Baroness, Lady Sherlock. She talked about these being probing amendments, but I do not think that I have seen a schedule so expertly sliced and diced before. If those are probing, they are pretty lethal. I agree with so many of those elements. If we are to have provisions, those are the kinds of additions that we would want and the questions that we would want to ask about them. I very much hope that the Minister has lots of answers, especially for the noble Baroness, Lady Sherlock, but also for the other noble lords who have spoken.

[Viscount Younger of Leckie (Con)]

My Lords, the debate on this group has focused largely on the amendments from the noble Baroness, Lady Sherlock, regarding using powers only where there is a suspicion of fraud, making provisions so that information collected can be used only for the narrow purpose of determining overpayment, removing pension-age benefits from the scope of the powers and requiring approval from Parliament before the power can be used on specific working-age benefits.

I was going to go over the reason behind these measures once again, but I will not delay the Committee on why we are bringing them forward. I believe I did that at some length in the previous group, so I am going to turn to the amendments raised.

Narrowing these powers as suggested by the noble Baroness, with Amendments 220, 221, 222 and 222A, will leave us exposed to those who are deliberately aiming to defraud the welfare system and undermine the policy intent of this measure. In fact, taken together, these amendments would render the power unworkable and ineffective.

To restrict the power to cases where DWP already has a suspicion of fraud, as suggested by the noble Baroness, would defeat the purpose of this measure. The intent is to enable us to use data from third parties to independently check that benefit eligibility rules are being complied with. We use data from other sources to do this already. For example, we use data from HMRC to verify earnings in UC and check that the benefit eligibility rules are being complied with. Parliament has determined that, to be eligible for a benefit, certain rules and requirements must be met, and the Government have a responsibility to ensure that taxpayers’ money is spent responsibly. Therefore, the DWP should be able to utilise information from third parties to discharge that duty. This is an appropriate and proportionate response to a significant fraud and error challenge.

The noble Baroness, Lady Sherlock, also proposed that the power should be restricted such that it would not apply to persons who hold an account into which a benefit is paid on behalf of someone who cannot manage their own financial affairs—such persons are referred to as “appointees”. An appointee is a person who may be appointed by the Secretary of State to act on behalf of the benefit customer. Usually, the appointee becomes legally responsible for acting on the customer’s behalf in all matters related to the claim. It is also made clear to the appointee, in the documents that they sign, that we may get information about them or the person they are acting for from other parties, or for any other purposes that the law allows, to check the information they provide.

Under our proposed legislation, it is right to say that there may be some people who are not themselves benefit claimants but who have given a person permission to pay benefits into their bank account, who may be picked up in the data returned by third parties. Under the noble Baroness’s amendment, we would not be able to gather data on appointees, which would make the power unworkable, because third parties would not be able to distinguish between an individual managing their own benefit and an appointee. It also assumes that no fraud or error can occur in these cases, which is definitely wrong. I assure the noble Baroness that we handle such cases regularly and have robust existing processes for identifying appointees on our own database and for carefully handling cases of this nature.

The noble Baroness would also like to see the power—

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

I clearly cannot go far enough today, but, because this is important and we are in Committee, I need to give some further reassurances on where we are in the process in terms of filtering. If I may conclude my remarks, I will finish this particular point. This is all part of the test and learn, and I give some reassurance that we are working through these important issues in relation to appointees and landlords.

[Lord Clement-Jones (LD)]

It is precisely as the noble Baroness, Lady Kidron, said on the last group—this is a massive net. It feels as though this is so experimental that there is no certainty about how it will operate, and the powers are so broad that anything could be subject to it. It sounds extremely dangerous, and it is no wonder that everybody is so concerned.

[Viscount Younger of Leckie (Con)]

I do not agree with that. We have done quite a lot of business together across the Chamber. That is a slightly sweeping issue, because I have given some reassurance that we are already working with the third parties to make sure that we have robust processes in place. For instance, when we are talking about landlords, while it is possible that a landlord’s account may be matched under the measure, only minimum information will be provided by the third parties to enable my department to identify an individual within our own database. With all the data received, we will make further inquiries only where appropriate and where the information is relevant to the benefit claim. This is already part of our business-as-usual processes.

[Lord Clement-Jones (LD)]

My Lords, I am sorry to interrupt the Minister but, throughout these two groups, he has, in a sense, introduced wholly new concepts. We have “test and learn”, “filtering”—which sounds extraordinary—and “signals” but none seem to be in the black letter of the schedule, nor in the rest of the Bill. We have a set of intentions and we are meant to trust what the DWP is doing with these powers. Does the Minister not recognise that the Committee is clearly concerned about this? It needs tying down, whether we need to start from scratch and get rid of the clause or take on board the amendments put forward by the noble Baroness, Lady Sherlock. The uncertainty around this is massive.

Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2020

Lord Clement-Jones Excerpts

Monday 23rd March 2020 Grand Committee

[The Earl of Courtown (Con)]

My Lords, I am pleased to introduce this instrument, which was laid before the House on 2 March 2020. Subject to approval, the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2020 reflects the conclusions of this year’s annual review of the automatic enrolment earnings thresholds required by the Pensions Act 2008. The review considered the earnings trigger and the qualifying earnings band for the tax year 2020-2021.

The earnings trigger determines the point at which a qualifying worker becomes eligible to be automatically enrolled into a qualifying workplace pension. The qualifying earnings band determines the earnings upon which workers and employers pay contributions into a workplace pension. This order sets a new lower limit for the qualifying earnings band and is effective from 6 April 2020.

The earnings trigger is not changed within this order and remains at the level set in the automatic enrolment threshold review order of 2014-15, so no further provision is required. Similarly, the upper earnings limit is not changed within the order and remains at the level set in the automatic enrolment threshold review order of 2019-20, so no further provision is required. I am satisfied that the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2020 is compatible with the European Convention on Human Rights.

Today’s debate relates to a technical element of the automatic enrolment framework, which as a legal necessity we need to have in place for 6 April 2020. However, we are all too aware of the wider environment at this time impacting on automatic enrolment. There may be questions and concerns about the current and future position of automatic enrolment and pensions saving more generally, but noble Lords will understand that there is little I can tell them at this point on some of these matters.

As noble Lords will know, my right honourable friends the Prime Minister and the Chancellor have made it clear that the Government will do whatever it takes to support people affected by Covid-19. We have been clear in our intention that no one should be penalised for doing the right thing. These are rapidly developing circumstances; we continue to keep the situation under review and will keep Parliament updated accordingly.

In terms of the substance of this order, as signalled by the Minister’s Written Statement of 13 February 2020, this order will, as previously, align the lower and upper limits of the qualifying earnings band with the national insurance lower and upper earnings limits for the 2020-2021 tax year. The lower and upper limits are £6,240 and £50,000 respectively.

By continuing to align the qualifying earnings band limits with the national insurance thresholds, the changes relating to payroll systems are kept to a minimum. The purpose of this framework is to balance the need to encourage individuals to take personal responsibility for pensions saving with a sustainable compulsory minimum contribution level for all employers, mindful of the economic environment within which these changes are taking place. Setting the thresholds at these levels will also ensure that contribution levels continue to be meaningful for savers.

The order does not change the earnings trigger, which remains at £10,000 this year, in order to strike a balance between bringing in those for whom it makes economic sense to be saving into a pension with affordability for employers on the one hand and workers on the other. Individuals earning below the £10,000 earnings trigger but above the lower earnings threshold will still have the option to opt into a workplace pension and benefit from employer contributions, should they wish. Those earning below the lower earnings limit also have the option of being enrolled by their employers in a pension scheme.

The decisions to maintain the earnings trigger at £10,000 and maintain the alignment of the qualifying earnings band with those for national insurance contributions maintain simplicity and consistency. I commend this instrument to the Committee and beg to move.

[Lord Clement-Jones (LD)]

My Lords, I have always admired the versatility of the Deputy Chief Whip, and today is no exception. I thank him for his introduction. This is a rather important statutory instrument and there are a number of policy issues surrounding it. My heart sank when the Minister said that there is little he will be able tell us, I assume partly because he has no support from officials. I would be very happy for him to write in due course. The other thing he said that made my heart sink was that this is all about technical elements, which, as an understudy, I am not in a position to contest with him in any event.

The real essence of this is what the ABI has raised, because all of us support the scheme but want to see it go further. Both the ABI and the Women’s Budget Group said that we should look at the Wealth in Great Britain 2019 figures produced by the ONS, which show that among 65 to 70 year-olds, median private pension wealth is £164,700 for men and £17,300 for women. That is just over 10% of the private pension wealth of men. There is a considerable imbalance, to which I will return.

The success of auto-enrolment is clear, as the ABI points out, and the number of participating employees continues to increase. However, according to the ABI, if the lower age limit were reduced to 18 and the lower earnings limit removed, people could save another £2.6 billion annually. The change would demonstrate the importance of starting a savings habit early, given the powerful impact that early career contributions can have on the size of retirement savings. It points out that the Government committed to implementing these recommendations by the mid-2020s in the 2017 automatic enrolment review.

Furthermore, extending the coverage of auto-enrolment by reducing the earnings threshold to the NI primary would bring 480,000 people, mostly women, into pension saving, helping improve the gender pensions gap. As I have explained, the ONS figures on that gap are pretty dramatic. All else being equal, this deficit is set to continue, closing by only 3% by 2060. The suggestion of bringing forward that undertaking in the automatic enrolment review seems entirely apposite. I very much hope that the Minister will be able to give that commitment in the letter I know he will have to write after this debate.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for his introduction and echo the comments of the noble Lord, Lord Clement-Jones. Again, I will raise a number of issues so if the Minister would like to write a letter following this debate I would be more than happy to receive one.

The success of auto-enrolment is testament to the previous Labour Government, with tens of millions of workers saving for a pension under the scheme. In a recent report, the Pensions Regulator found that the overall proportion of eligible staff saving into a workplace pension was 87% in 2018. This has massively increased over recent years and decades. It also found that the largest increase in participation was from the youngest age groups. In the private sector, the largest increase was seen among 22 to 29 year-olds, increasing from 24% in 2012 to 84% in 2018.

We welcome the Government’s continued commitment to auto-enrolment but acknowledge that it is not perfect. Average contributions remain too low and, as the noble Lord, Lord Clement-Jones, said, the threshold too high. Department for Work and Pensions statistics show that, as a result of pensions inequality, 37% of female workers and 28% of black and minority ethnic workers are still not eligible for the scheme.

The exclusion of the self-employed from auto-enrolment also needs to be addressed. Some 15% of the workforce is now self-employed, but the numbers of such workers saving into a personal pension fell by a third between 2014 and 2018. With the current coronavirus crisis, the pressure on the self-employed will only increase, as we are seeing. I know that discussions are taking place around a number of possible changes to the Bill in the other place to try to protect the self-employed.

Today’s statutory instrument keeps the current earnings trigger of £10,000, and that is to remain into 2020-21. However, The People’s Pension found that, by reducing the trigger to £6,240, an additional 1.2 million people would be helped to save for their retirement. Why have the Government decided to keep the trigger at £10,000, given that it excludes some of the most vulnerable from saving into a pension scheme? The Explanatory Memorandum states:

“The Secretary of State decided not to consult on the amounts of the qualifying earnings band and earnings trigger for 2020/21”.


I understand that the Minister will need to write to me, but I ask: why not? Did the Secretary of State not want to take on board the concerns that the unions and others involved in this area were raising?

The Government have said that they will address issues with auto-enrolment, as the noble Lord, Lord Clement-Jones, said, by the mid-2020s, once it has bedded down. We would prefer that to be brought forward, especially given the many issues that will arise out of the current crisis. We see no reason for delay.

It is impossible to ignore the current national crisis of coronavirus. Are the Government looking into support for people who will be affected by a drop in their income over the coming months and years? That drop in income will have an effect on their pension. Are the Government also looking to develop long-term support for the defined benefit schemes, which will be massively affected by the market turmoil?

Video Recordings Act 1984 (Exempted Video Works) Regulations 2014

Lord Clement-Jones Excerpts

Monday 28th July 2014 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, I thank my noble friend for his introduction to the regulations. Over the past 30 years, the Video Recordings Act 1984 has certainly attracted parliamentary debate on a number of occasions. As noble Lords will recall, the Act had to be revived by a special Act in 2010 because of the then Government failing to notify the European Commission of the classification and labelling requirements of the Act.

I welcome these regulations but want to reflect briefly on the process by which they came about. Many of us present today were assured during the passage of the Digital Economy Bill that the situation of exempted works which contained unsuitable material would be dealt with by amendments to the Act. Indeed, we withdrew amendments on the basis that that would happen. Then the coalition Government came in and I asked an Oral Question about progress in March 2011, but it was made clear that the consultation had still not begun. Lack of an evidence base was cited as the reason.

In June 2013, my noble friend Lord Storey pursued the matter further in an Oral Question. The consultation had, it seemed, been completed and the intention to legislate had been recently announced but my noble friend Lord Gardiner said that definitions were still being formulated for violent sexual behaviour and swearing,

“so as to ensure that they identify all products that are unsuitable for younger children”.—[Official Report, 12/06/13; col. 1596.]

Finally, four and a half years after the passing of the Digital Economy Act, these regulations, which amend the 1984 Act, see the light of day. As I say, I warmly welcome the regulations, and the fact that they will fall within the BBFC classification regime, but how can we account for this snail’s pace of legislation when faced with such an important issue? How can we learn the lessons? Moreover, where are we with the original Digital Economy Act changes to the VRA regarding video games? Is it the case that certain sections still remain to be activated and amendments made? That certainly seems to be the case. If that is so, why?

My noble friend mentioned the online situation but, of course, that is on a voluntary basis. Will my noble friend explain the corresponding regimes that apply to videos and video games on the internet? I asked my noble friend Lord Gardiner a Question on this in March this year. Surely, is it not as important that online content is addressed, as physical product is under the VRA? Under voluntary arrangements, mobile operators are offering better protection and filtering against unsuitable content than wi-fi service providers. Is the DCMS capable of addressing this issue at any speed? How long must we wait before the Government review the situation? Can we not speed up the process and learn the lessons of the past?

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very interesting and important debate, although a relatively brief one. Many important points have been made to which I am sure the Minister will respond.

I broadly welcome the direction of travel represented by these regulations but have some questions and reservations which I am afraid are slightly at variance to those we have heard already. I worry a lot about restrictions being introduced on another creative activity even though I understand the dangers that may be exposed by that, but it is important that we bear that in mind.

First, we are exercising censorship of what may appear in front of people who wish to buy it, albeit it is obviously a restricted class, through a private company—the BBFC. I am not sure that we quite understand what the relationship between the BBFC and the Government is at the moment. It has changed a lot in the last 20 or 30 years since I was last involved in it. If the Minister has the information to hand, will he reflect on such matters as whether there is a formal memorandum between the Government and the BBFC in terms of their operations? Will the Government exercise control over the appointment of its board and other related matters? It is important to have that in context so that we understand the impact that these regulations may have. I have a general concern that the Government should not expropriate functions and responsibilities which should be exercised through Parliament to private corporations without providing serious reasons and explanations.

Of course, noble Lords will recollect that the 1984 Act was passed at a time of particular concern about videos. I think that the term “video nasty” was widely used. The regulations that were brought out were perhaps a reaction and, in some senses, account for why the BBFC is in its present form. However, times have moved on. As I will come to in a few minutes—and as referred to by other speakers—we have to be sure that what is being proposed now has a fitness and longevity that will be appropriate for the fast-changing nature of the technology which it is attempting to arrange.

I was glad to hear that the Government will be reviewing these regulations within three years. As the Minister said, that is a good thing, although a number of the points and questions raised by noble Lords already suggest that some of the issues are more important and might need more attention before then.

My first point, therefore, is about the status of the body that is being entrusted with the regulations that we are considering. My second point concerns the question of format. We are talking about video material in physical form. The impact, perversely, is largely on the purchasing decisions of people who are under 12, given that that, to a large extent, is the focus of the regulations. My personal view is that a very small number of citizens of this country who are 12 or under are going to be purchasing the videos we are talking about. I am interested to know whether the Minister has any figures relating to the likely impact on the market. If it is anything like what happens in my household, these children are much more adept at the virtual world and will be seeking out the information they wish and the material they want to watch in a non-physical form. We have talked about that issue; we still lack any real, credible strategy in relation to it. This particular set of regulations, although long promised and arriving at an interesting time, is in fact missing the boat in relation to where the majority of the viewing public are going to be—certainly those under 12.

My third point concerns the question that has been raised to some extent by the problem of the wording of the regulations, which seek in a curious way to specify the carve-out, not by putting down a simple principle about what would and would not be considered, but by listing in exhaustive detail the sort of things that would create a break across the various guidelines.

In its briefing for this meeting, the BBFC made it very clear that it was concerned that there was no blanket requirement that all video in physical form should be subject to BBFC review. It has a point and I would be interested to know on what basis the Minister has decided—I think I am right, but, again, I would be grateful if the Minister could confirm it—that the onus for submitting material to be classified will still lie with the producers of the material. Therefore it is possible that those who are producing material that perhaps is veering towards the boundary of the 12 certificate may take a view that the material does not fall within the new, enlarged carve-out. Would that constitute a defence in any court proceedings that might be brought forward as a result? The guidelines are only guidelines. The discrepancy between what the BBFC is saying and doing in practice and what is now going to be in the regulations in paragraphs (a) to (o) is going be a problem, not least because the BBFC—rightly so, although the timescale is slower than I would have liked—tries to keep in touch with the views of the public it is serving by carrying out triennial surveys and consultation with people about whether the guidelines it is currently using need to change and, if so, to what extent.

The regulations contain a set of statements, some of which, as has been said, seem to be rather loosely drafted. The noble Baroness raised the question of religion, but some of the drafting concerning sex and violence is equally culpable. Yet we will also have, by the time these regulations are in mid-flow, a new set of guidelines from the BBFC about where it thinks the boundaries of the 12 certificate are going to be. Can the Minister explain how we are going to reconcile that change?

It is perhaps not as important an issue in reducing the threshold from 18 and R18 to 12, but it is well known in the world of classification that, in Britain, we have an obsession with language, which is in stark contrast with, for example, the Nordic countries, which have a very different view of these matters. We are relatively relaxed about physical violence and a bit squeamish about explicit sexual activity, including sexual violence. It is almost the reverse situation in the Nordic countries. A lot of this will lie in education. The real remedy to this issue is making sure that parents take responsibility for what their children see and understand, and talk to them about what they do. To take examples from the list (a) to (o), how on earth are people to judge whether something includes,

“words or images intended or likely to convey a sexual message (ignoring words or images depicting any mild sexual behaviour)”—

a point picked up by the noble Baroness, Lady Howe? How are they to judge whether it affects,

“an animal that exists or has existed in real life”?

How far back do we want to go? The same goes for whether a human is being represented in proper description or in matchstick format. These can be very trivial or very difficult matters and should not take us away from the importance of making sure that children are not unreasonably exposed to images that they should not receive. On the other hand, I think that there are ways of doing it. It might have been better if the approach taken had been to try to work with what the BBFC has published as its principal guidelines without attempting to define them in a way that is bound to cause trouble.

Those were my three points, but as I said at the start of my speech, I am not against the direction of travel. I shall look forward to hearing the Minister’s response.

25th Anniversary of the World Wide Web

Lord Clement-Jones Excerpts

Thursday 16th January 2014 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I, too, congratulate the noble Baroness, Lady Lane-Fox, not only on opening this debate in such an inspiring way but on so successfully carrying out her role as the Government’s UK digital champion.

The use of the internet in the UK climbs inexorably. We celebrated the universality of the web at the Olympic opening ceremony with Sir Tim Berners-Lee tweeting, “This is for everyone”—a phrase mentioned by the noble Baroness—which was instantly spelled out in lights attached to the tablets on the seats of the 80,000 people in the audience. I absolutely share the noble Baroness’s concern to ensure that no one is excluded.

Having come to the web myself some 20 years ago, and now standing here with my iPad with all its apps, I still find the speed of developments since I first used the Netscape browser quite extraordinary. Sir Tim and the early pioneers of the web deserve huge recognition for setting the open and neutral standards that ensured the growth of the world wide web. However, the development of ethical safeguards and standards now needs to evolve at the same pace as the range of applications. The web is not some kind of foreign country where ordinary rules of conduct do not apply. We need an alignment of online and offline rights and protections. Freedom of expression is a vital principle that needs to be upheld both online and offline but it needs to be balanced with rights of privacy.

One commentator has said that Silicon Valley appears to regard privacy as a “marketable commodity”. The Government, through what we now know about their access to the Prism programme, appear to have a similar view. It is vital that we have maximum control over our own metadata. The UK’s ranking in the World Wide Web Foundation’s Web Index is reduced by concerns over the UK Government’s attitude to privacy rights. I hope that Communications Data Bill will not resurface in its previous form. Therefore, I welcome the campaign, the Web We Want, and the statement of 19 December co-ordinated by the foundation.

I also welcome the recognition by the Prime Minister and the Secretary of State for Culture, Media and Sport of the need for adequate filtering to protect young people from online abuse. However, as was discussed in this House only recently with the Online Safety Bill of the noble Baroness, Lady Howe, should we not be making filtering compulsory? Is it enough simply to leave it up to parents to make the choice about appropriate safety features?

There is concern about the content of online music videos, highlighted among others by Reg Bailey in his review into the commercialisation and sexualisation of children. The proposed amendment to the Video Recordings Act is designed to ensure that content presently exempt from classification but unsuitable and potentially harmful for younger children will in future require BBFC classification. However, it covers only hard copy video works. Should not online music videos containing sexual or explicit content be subject to the same age ratings and regulations? As my right honourable friend the Deputy Prime Minister has advocated, we also need better guidance for young people about the dangers of online pornography.

I also ask my perennial question to my noble friend the Minister. When can we expect full implementation of the Digital Economy Act 2010 or at least an alternative effective remedy to combat online copyright piracy? I look forward to the Minister’s reply.

Queen’s Speech

Lord Clement-Jones Excerpts

Tuesday 14th May 2013 Lords Chamber

[Lord Clement-Jones]

My Lords, I, too, start by congratulating our maiden speakers on three superb speeches. Today’s debate, focusing in part on health, education and welfare, is a chance to welcome warmly a number of key elements in the Queen’s Speech and the forthcoming legislative programme: the Care Bill, the Pensions Bill, the Marriage (Same Sex Couples) Bill and the carryover of the Children and Families Bill, which, as we have been reminded, contains the biggest overhaul of the SEN system in 30 years. On the other hand, in the health context, I very much hope that legislation for plain standardised packaging for tobacco products is not being kicked into the long grass despite clear evidence that it would have the desired impact.

I heard the negative commentary of the noble Lord, Lord Hunt, on the Queen’s Speech, but I do not think that Peter Oborne of the Telegraph is a notable supporter of the coalition and we should take notice when he described the Queen’s Speech as “sharp, dynamic and purposeful” and,

“a serious programme for government”.

Today, I want to speak about the issues affecting the creative and cultural industries and the tourism industry, which will need to be tackled by the DCMS, the Treasury and the Business Department if they are to fulfil their potential in growing our economy. The recent CEBR report for the Arts Council, mentioned in the lyrical maiden speech of the noble Lord, Lord Berkeley, on the economic impact of the arts and culture, strongly emphasised the link between the two sectors, with 42% of all tourism expenditure involving cultural engagement. In the case of both sectors, it is crucial to build on the Olympic legacy. Is it not a real tribute that Channel 4 won the BAFTA television award for sport and live events for its coverage of last year’s Paralympic Games?

As another aside on the Olympic legacy, rather less positive, there is now, after a long delay, a supplier recognition scheme in place, whereby, in general, suppliers are allowed to promote their work for the Olympics. Yet there are still areas, nine months after the event, not covered by the scheme. Many companies selling products such as lighting and audio-visual equipment are not able to publicise their involvement with London 2012. The value of the Olympic legacy for these businesses is being completely lost, and this is disgraceful.

Many of us have been impressed by the post-Olympics GREAT promotional campaign overseas, which has highlighted our creative and cultural sector for visitors. We are beginning to see real strategic co-operation between UKTI, VisitBritain, the Arts Council and the British Council, which is extremely welcome, but we need to do more to co-operate in squeezing out every bit of resource. The Australian tourism marketing budget in China, for example, is £13 million, while ours is a mere £1 million. It is extraordinary to consider that the impact of these two sectors—tourism and hospitality and the creative industries—sponsored by the DCMS, taken together and calculated by Oxford Economics and Nesta, amounts to some 20% of our GDP, delivers more than 5 million jobs and offers the strongest prospects of growth in employment over the coming years.

In this context, I want to mention the recent speech by my right honourable friend the Culture Secretary at the British Museum. I did not take it as a demonstration of some kind of Gradgrind utilitarian approach to the arts and culture. She was not insisting that all arts activity needs to be monetised. I took it as an understandably plaintive cry for support in her battle with the Treasury in its demand for more cuts in the service of deficit reduction. With perfect timing, we have had the CEBR report commissioned by the Arts Council on the contribution of the arts and culture, which makes it clear that, quite apart from their intrinsic value, they are very good value for money. Public funding of the arts can, in particular, help to diminish the economic risk of developing new productions, which can then go onto global success. Take the productions of the National Theatre’s “War Horse” and “Matilda” from the RSC, for example.

The Korean fashion entrepreneur Sung-Joo Kim, in an inspirational speech to an all-party group here in the Lords a couple of weeks ago, talked vividly of Britain’s future as a creative brain centre, in terms of our creative skills, allied to our archive, museum and gallery resources—now, of course, including the BBC’s Digital Public Space. There is no doubt that our future lies with our imagination, creativity and invention. We are pre-eminent in so many creative areas; the UK has the largest cultural economy in Europe, and the creative and cultural industries represent one of our economy’s greatest success stories. It was great to hear yesterday, for example, that the new “Star Wars” film will be made in the UK.

The Olympics showcased the social and economic value of intellectual property to the UK. We need to realise that our creativity, ideas and intellectual capital will increasingly drive our future prosperity. The recent Nesta Manifesto for the Creative Economy had some good recommendations, especially on the need for better measurement of the creative economy and the need to recognise and understand the economic connections between the arts and creative industries. However, at the end of the day the same old message is being delivered, as it was in the Hargreaves report, that copyright is an impediment to innovation and growth. Indeed, the Nesta report claims that term extension to copyright has weakened the ability of UK business to innovate; it equates copyright with regulation. This kind of attitude is spilling over into dealings with the EU. During a recent trip to Brussels, members of the All-Party Parliamentary Intellectual Property Group were greatly concerned by the apparent stance of the UK Government in appearing to support those in the Commission, notably DG Connect, which wishes to weaken copyright protection by the introduction of yet further exceptions beyond those contained in the current directive on copyright in the information society, such as over user-generated content. This is extraordinary, given the importance to our economy of the creative industries. It was a delight, therefore, to see the recent piece from the noble Lord, Lord Smith of Finsbury, on Music Tank, forcefully arguing the contrary.

I know that my noble friend Lord Younger intends to be a strong advocate for the value of intellectual property, but we need clear and concrete signals that the role of intellectual property as the foundation of our creative industries is appreciated by government. A vital step would be the implementation of the Digital Economy Act. If the Government are serious about the health of our creative sector, it seems extraordinary that we are still waiting for the issue of sharing of costs relating to notifications and appeals against the initial obligations code to be resolved by the Treasury three years after the passing of the Act. Nor has the DEA been activated in respect of public lending rights to on-site loans of audio books, e-books and so on.

Another strong signal needed from government is one in support of the creation of the copyright hub, which is a major initiative designed to streamline copyright licensing across the industry. I welcome the Government’s decision to give modest funding support to the development of the copyright hub, which will ensure that it comes into operation earlier than anticipated. I am delighted that, after a terrific campaign by the PRS and the music industry with support from government, the Global Repertoire Database has recently announced that it is locating its global headquarters in London. That is a triumph.

Also on the subject of intellectual property, I want to welcome the Intellectual Property Bill, which is focused on design rights and the introduction of the Unified Patent Court, which we will debate in more detail next week. We certainly need to consider extending the ambit of that to unregistered design and consider other aspects of it, such as providing for public lending right to cover remote e-lending, as recommended by the Sieghart report. I also welcome the consumer rights Bill.

Yesterday, my noble friend Lady Bonham-Carter made powerful points in her speech on two issues that impact heavily on the creative industries: education and skills and finance. I warmly support what she said, particularly over the necessity of implementing Darren Henley’s cultural education recommendations and in taking forward the Creative Industries Council’s recommendations on financing creative industries. I am pleasantly surprised to find that Creative England is now recognised to be playing a very important role.

I have very little time left to me, but I want to mention the enormous advantages that the UK has in its attractions for visiting tourists—yet it is often seen as the Cinderella sector. I hope that the Culture Secretary will, as recommended by industry representatives, agree to form across industry a hospitality and tourism council along the lines of the Creative Industries Council, to include government and industry leaders, jointly chaired by the Culture and Business Secretaries. Those two sectors are of huge significance to our future prosperity. I hope that the Government will take the necessary action so that the opportunities presented can be seized by all concerned.

Enterprise and Regulatory Reform Bill

Lord Clement-Jones Excerpts

Thursday 31st January 2013 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, in its 10th report of this parliamentary Session, the Delegated Powers and Regulatory Reform Committee considered that the exercise of a number of the powers in these provisions should be subject to the affirmative procedure, at least the first time that they are exercised. The amendments in this group take heed of this recommendation. I am pleased to say that, in fact, they go further by requiring that not just the first use of the powers but all uses be subject to the affirmative procedure. I trust that this additional, significant safeguard in the Bill gives due comfort and assurance to those who have expressed concerns about the exercise of these powers. I beg to move.

[Lord Clement-Jones]

My Lords, I shall say just a few words on the Minister’s very welcome amendments in response to the 10th report of the Delegated Powers and Regulatory Reform Committee. It is very interesting. The committee demonstrated the value of a collective memory, as it took us all back to the Digital Economy Act and the comments that it made at the time; it has been entirely consistent. It is good to see that the Government have responded. However, I wonder, especially in light of the fact that the Minister has confirmed that the affirmative process will be used for Clause 68, whether he will also confirm that the affirmative process will be used when the Hargreaves exceptions are introduced under the European Communities Act. The Minister has clearly stated that the Government will not be using Clause 66 when those exceptions are introduced; it will be purely for penalties. We very much welcome the assurance that the Minister gave on Monday. However, will he take the opportunity to confirm that the scrutiny process will be by the affirmative procedure of both Houses when those draft statutory instruments come under the ECA procedure?

[Lord Stevenson of Balmacara]

My Lords, we on this side will also be interested to hear the answer to that question, although I think I gathered from remarks made previously in Committee that that is the case. We will look forward to hearing about that. Other than that, we are very grateful to the Minister for bringing forward these amendments, which, as he says, go a step further than the DPRR Committee recommended, but are none the less welcome for that.

--- Later in debate ---

Debate on whether Clause 68 should stand part of the Bill.

[Lord Clement-Jones]

My Lords, I think we gave the issues a pretty good airing on Monday, so I will not tax the patience of the Committee for too long today. The Minister is well aware that there are many who think that we should align ourselves to the EU directive and that the extended collective licensing arrangements go well beyond where we should be at present, given that the digital hub could solve some of our problems.

The first thing I want to do is return the compliment to the Minister for the care and attention that he has given in his capacity as the Minister for Intellectual Property, and for listening to the arguments that have been made. I thank him particularly for his clarification and assurances and, latterly, for his letter which, although directed at the noble Lord, Lord Stevenson, seemed to encompass most of the questions that I had asked, so I was pretty satisfied with that way of dealing with things. In particular, I welcomed the assurances he gave about the ECL on Monday: the Government are clear that an opt-out must be as simple and as low-cost as possible for rights holders; and further safeguards to be drafted in the regulations will require the licensing body to set out the details of opt-out systems, why they are appropriate to meet the needs of rights holders and how it plans to publicise the scheme so that rights holders can opt out in advance. Moreover, the Secretary of State will be able to impose conditions on an authorisation relating to the opt-out if necessary. I found all that very reassuring.

Above all, I hope that the Minister recognises that many bodies and institutions—many of them represented by FOCAL and BAPLA—are still very unhappy about both ECL and orphan works. I hope he will continue to listen and engage with all those organisations. I also mention Stop43 in that context. There is certainly a very strong feeling that the impact assessment—particularly for orphan works, which have a range of 9 million to 91 million—is hardly credible as a business plan. I have made the point directly to officials that genealogy or genealogical services are not a great basis on which to work out a business plan. The Minister has answered many questions but there will be others coming down the track, such as whether the Copyright Tribunal is really suitable and exactly what a “diligent search” consists of, especially when there are several works by the same author. My wording might not have been as good as it should have been, but we were trying to get at the fact that care needs to be taken in respect of individual works and where there are multiple rights holders. What copyright items will be included in the definition of orphan works?

The EU directive does not include photographs, and for that very reason, photographers and the whole of that sector have become very exercised about the new provisions. Therefore, particular care needs to be taken in respect of that sector, as we heard from the noble Lord, Lord Greenway. I recognise that if the museums and universities and so on want to see ECL, then they have to justify how it is used and its impact on rights holders.

As regards ECL, the impact assessment states that the UK’s existing rights clearance system is complex, involving multiple users and rights holders seeking and granting permissions. Hargreaves recommended that it be simplified. Government intervention is required to introduce ECL as a tool for simplification. Is that not precisely what the copyright hub is designed to do? There is the concern very strongly held by foreign rights holders—I mentioned the letter from the US photographers to the Secretary of State—that they will have very inadequate means of monitoring what is happening in the UK.

There are many other questions and I do not want to prolong the session today. There is the whole question of what “substantial support” means for a collecting society in what the Minister said on Monday. What sums of money will be paid to copyright owners under ECL? What will be the duration of licences? Will ECL societies have the right to license just UK content or content from overseas? How will copyright owners know which of their works have been licensed, and so on? Considerable clarification is needed, not least that for the Association of Authors’ Agents. When we were talking about that, the Minister distinguished between certain warranties and other warranties. That was perfectly fair, but nevertheless clarity will be all when dealing with these matters.

The task of the Intellectual Property Minister, especially in these circumstances—holding the ring between different interests—is not easy, but I commend the newsletter from Victoria Espinel, who is the Intellectual Property Enforcement Coordinator in the States. As a statement of the balancing of intellectual property rights with innovation and growth, I cannot fault what she has said about the new United States-Russian Federation intellectual property rights action programme. How about that for a salient? She states:

“Strong IPR protection and enforcement are vital to promoting innovation and creativity by securing the rights of innovators and the creative community, attracting high-technology investment, and fostering the jobs necessary for long-term sustainable growth”.

That seems to me to balance very well the interests of all parties and I commend that to the Minister.

[Baroness Buscombe]

My Lords, I rise briefly to add a few words in support of everything that my noble friend has said thus far. I also want to refer to a letter addressed by the Minister to the noble Lord, Lord Stevenson, and thank the Minister because it addresses some of the questions which I raised in the Committee’s previous session.

The Minister and the Government agree that when licensing bodies operate ECL, they should do so transparently and should provide for fair treatment for non-member rights holders whose works are licensed through ECL. Any licensing body that wishes to operate a scheme will be required to have a code of practice that complies with the Government’s minimum standards for collecting societies. This will include specific protections for non-member rights holders. We welcome that statement and the statement about the applicability of UK ECL schemes for the use of works outside the UK. The Minister has said that the Government’s proposals would apply only to use within the UK. It is not possible to extend these provisions to other jurisdictions.

I thank the Minister for that but would just say that, where the Minister refers in response to a point raised by my noble friend Lord Clement-Jones about the operation of ECL in Nordic countries, while the Minister said that, since the 1960s, ECL has operated in the Nordic countries without challenge and is explicitly recognised in EU law, there is a difference. This is something to which we will have to give more thought between now and Report. In Nordic countries, the system operates against a background of legislation that guarantees remuneration for creators and the identification and integrity of works. I feel that we are making real progress on this Bill, and I support the Minister’s helpful responses to our concerns thus far.

Finally, I add my continuing concern in relation to photographers. A number of noble Lords spoke on this issue on Monday. It remains a serious concern, and it might be helpful if we could have more thought prior to Report about how the future viability of being a photographer in this digital age could be addressed in the Bill.

--- Later in debate ---

Moved by

[Lord Clement-Jones]

33: After Clause 68, insert the following new Clause—
“Greater protection for authors when assigning or licensing copyright
In paragraph 1(c) of Schedule 1 to the Unfair Contract Terms Act 1977, omit “copyright”.”

[Lord Clement-Jones]

Amendment 33 is inspired by the Creators’ Rights Alliance which feels that the contractual scales are very much weighted against it. I do not often make common cause with Consumer Focus but I am delighted that it supports the amendment. Its brief on the amendment puts the position rather well. It states that the Copyright, Designs and Patents Act 1988 makes creators the first owners of copyright, and that creators’ ability to assign or license their copyright to others is central to the overriding aim of copyright: that is, ensuring that creators benefit financially from their works. However, in the UK, creators frequently assign all their copyright for a one-off payment to intermediaries, such as publishers or record companies. Individual creators are frequently at a disadvantage when negotiating contracts with intermediaries, and some creators complain that they are unfairly pressured into assigning all their rights for a one-off payment.

The 2012 research of Consumer Focus found that 77% of British consumers expect that a fair share of the money they pay for music, films and e-books goes to the artists who created the work. The ability of the copyright system to ensure that creators receive a fair remuneration is central to public support for the principle of copyright. I agree with Consumer Focus that removing the copyright exclusion from the Unfair Contract Terms Act 1977 should be central to the Government’s efforts to build a fairer copyright system that supports economic growth and innovation. How about that, my Lords? Many creators work as freelancers or microbusinesses. They are the bedrock of the creative industries and deserve the protection provided by the Unfair Contract Terms Act. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, extended collective licensing requires fair contracts. People who work in the creative industries are already seeing intensified efforts by many publishers and other intermediaries to coerce individuals who are sole traders into signing away all rights to their work. Those who succumb to this blandishment would be deprived of the income that the ECL provisions in the Bill are supposed to offer. Therefore, the failure of the Bill to include measures to level the playing field for negotiation of contracts undermines the purposes of copyright in promoting fresh creativity. These are not just matters of concern to professional creators, vital though it is to the creative economy that the possibility of making a living as a professional creator is defended. Every citizen has an interest in enforceable creators’ rights and fair contracts now that so many people are publishing and broadcasting their own works through social media.

There is a well known example of the problems that this can cause. In late 2012, the Instagram online photo-hosting service attempted to impose a contract of terms of service that would allow the company to sell users’ photographs to advertisers. This was defeated only after alert users boycotted the service. Legislation will be required to ensure that the price of creativity is not an eternal vigilance which distracts from the work of creation.

The issue of unfair contracts typically arises in two circumstances: “take it or leave it” contracts presented by large businesses to sole-trader professional creators, who are informed that no negotiation will be contemplated; and “click-wrap” contracts offered to those, professional or amateur, who use online hosting services to store or share their creations in words, music or images.

Amendment 33 would bring contracts dealing with copyright works within the terms of the Unfair Contract Terms Act 1977. This would remove an inexplicable exemption and allow at least some challenge to the contracts being foisted on many creative members. I support the amendment.

--- Later in debate ---

[Lord Clement-Jones]

I thank my noble friend the Minister for that response. I think that is as good as it gets at this stage and I would very much like to meet him. The time has certainly come to look very carefully at this exclusion from the Unfair Contract Terms Act. There is a head of steam building up and it would be very useful to have that discussion. In the mean time, while looking forward to that discussion, I beg leave to withdraw the amendment.

Amendment 33 withdrawn.

--- Later in debate ---

[Baroness Buscombe]

My Lords, I thank the Minister for bringing forward the series of amendments in this group and for his explanation. Although the government changes to Schedule 21 are to be welcomed, I suggest that the Government could edge even closer towards improving the Bill yet further. Briefly, I should like to respond to the government amendments and then introduce those in my name; namely, Amendments 34 through to 51, excepting Amendment 49, which is in the next group.

Amendment 33A responds to the concerns of the 10th report from the Delegated Powers and Regulatory Reform Committee. Its concern, as we have already heard, was that the Bill will allow the requirements of the default code, enforced by penalties, to be imposed or revised without parliamentary scrutiny, given that failure to comply may lead to sanctions. Equally important as parliamentary scrutiny, in my view, is the fact that it is indispensable that the code criteria should be subject to consultation by interested, informed parties. That would be the effect of my Amendments 43 and 51.

I very much welcome the Minister adding his name to Amendment 46, which I tabled. That will help to ensure that the regulations must now set out the process for determining non-compliance, determining the type or size of the sanction and for providing a right of appeal. I also welcome Amendments 46A and 46B. As financial penalties will ultimately be borne by the collecting society’s members, fines should be imposed as a last resort. A right of appeal is essential. Also Amendments 50A, 51A and 51B are welcome additions to the Bill.

I turn to the series of amendments that I have tabled. Although the government amendments put forward are very welcome and a big step in the right direction, my amendments address separate issues which, with respect, still need to be considered. The purpose of these amendments is to provide even greater clarity in the Bill for Schedule 21, which would help to ensure that the Bill meets the stated aim of fostering successful self-regulation. The effect of the changes would be to reduce the considerable uncertainties surrounding future regulations because the powers currently provided for by this legislation are simply too vague, even with the Government’s latest amendments.

Collecting societies have invested considerable time and money in adopting and operating voluntary codes of conduct. PRS for Music introduced a voluntary code of practice for licensees as far back as 2009 and then one for its members in 2010. Many other collecting societies have followed suit. The British Copyright Council’s Principles for Collective Management Organisations’ Code of Conduct, known as the BCC principles, are important to reference here, as many of these codes of conduct for members and users comply with these guiding principles, which have at their heart a commitment to transparency, accountability and good governance. I suggest that those are all good Conservative principles.

These collecting society voluntary codes also have regard to the Government’s recently published minimum standards for collecting societies and, therefore, include an independent complaints review ombudsman. Independent adjudication of a complaint is obviously an important feature of any sensible self-regulatory system. Those BCC principles also include provision for an independent code review process. This first such review is intended to start in November 2013. In short, the principles of good self-regulation are established and are generally being operated successfully by collecting societies.

Amendments are necessary to the Bill to make the path from voluntary to statutory regulation much clearer than is currently outlined in the legislation. It is only reasonable, I suggest, to give businesses the certainty that they deserve. After all, it is a big step to move from self-regulation to underpinning with state regulation.

First, it should be clarified that the majority of the powers in Schedule 21 are exercisable only in a scenario where it has been adjudged through a fair, robust and transparent process that there has been an unremedied failure of self-regulation. The imposition of a statutory code, and/or any statutory appointment of an ombudsman or code reviewer, will lead to significant additional costs and potential exposure to penalties, and should therefore be imposed only when it is clear that self-regulation has failed. Collecting societies need to have visibility of what triggers the imposition of statutory regulation so that they are not left in the dark about whether they are close to or far from crossing the line.

Equally, given that collecting societies are already offering, or on the point of offering, ombudsman dispute-resolution services and providing for a code reviewer, the regulations should also make it plain under what circumstances the Secretary of State would appoint a statutory ombudsman or code reviewer. Amendments 34 and 50 serve to clarify the processes and specific circumstances that would enable the Secretary of State to impose such regulation.

Improvements to the Bill can also be made so that the penalties for non-compliance much clearer and more proportionate. This is why I am proposing Amendments 44, 45 and 48. The Bill provides for sanctions in case there is failure to abide by a code. These sanctions include financial penalties that may be imposed on directors and other personnel. The highest fine stated in the legislation is £50,000. Under the Companies Act 2006, penalties on individuals arise in relation to very specific failures. Codes of conduct are typically of a general nature. I therefore believe it is unacceptable to impose personal liability and financial penalties for undefined offences that are less specific than UK company law.

Let us remember that all collecting society revenues are distributed to members after management costs are deducted, and fines are therefore a direct penalty on the membership itself. Any fines would be paid for by the members of the collecting society. There is a strong argument that fines on societies should be imposed only as a last resort. Instead, it would be more sensible to provide appropriate help or assistance to a society that has been deemed to have failed, as opposed to simply punishment.

I have also tabled Amendments 35 to 42, which are effectively technical. Paragraph 3 refers to a licensing code ombudsman. Codes of practice typically govern a collecting society’s relationship with its members and its licensees. I propose that the phrase “licensing code” should be deleted because it is not appropriate.

Let me conclude by saying that we should not forget that compliance with regulation is costly; and, ultimately, the resources which are devoted to regulation must in effect be paid for by the creator members themselves. It is entirely reasonable that the penalties for non-compliance are clearly set out and proportionate. This Government support the principle of good self-regulation; they should therefore take this opportunity to do just that and reduce the uncertainties provided for by the current drafting.

[Lord Clement-Jones]

My Lords, I rise briefly to support my noble friend Lady Buscombe. In fact, while she mentioned good Conservative principles, I can pray in aid of self-regulation good Liberal principles. The essence of the issue is that these should be backstop powers, and as she said, we should be fostering successful self-regulation. It is important that there is as much transparency and clarity about these rules as there is in UK company law. Some of the sanctions could be just as high as those in UK company law and, of course, they will ultimately be borne by the collecting societies’ members, and a right of appeal is essential in those circumstances. I thought that my noble friend argued eloquently for why we should be aiming for that kind of regime.