Data (Use and Access) Bill [HL]

Lord Kamall Excerpts

Committee stage
Monday 16th December 2024 Grand Committee

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I rise briefly, first, to thank everyone who has spoken so eloquently about the importance of automated decision-making, in particular its importance to public trust and the importance of human intervention. The retrograde step of watering down Article 22 is to be deplored. I am therefore grateful to the noble Lord, Lord Clement-Jones, for putting forward that this part of the Bill should not stand part. Secondly, the specific amendment that I have laid seeks to retain the broader application of human intervention for automated decision-making where it is important. I can see no justification for that watering down, particularly when there is such uncertainty about the scope that AI may bring to what can be done by automated decision-making.

[Lord Kamall (Con)]

My Lords, in speaking to this group of amendments I must apologise to the Committee that, when I spoke last week, I forgot to mention my interests in the register, specifically as an unpaid adviser to the Startup Coalition. For Committee, noble Lords will realise that I have confined myself to amendments that may be relevant to our healthcare and improving that.

I will speak to Amendments 111 and 116 in the names of my noble friends Lord Camrose and Lord Markham, and Amendment 115 from my noble friend Lord Lucas and the noble Lords, Lord Clement-Jones and Lord Knight of Weymouth, as well as other amendments, including from my noble friend Lord Holmes—I will probably touch on most amendments in this group. To illustrate my concerns, I return to two personal experiences that I shared during debate on the Data Protection and Digital Information Bill. I apologise to noble Lords who have heard these examples previously, but they illustrate the points being made in discussing this group of amendments.

A few years ago, when I was supposed to be travelling to Strasbourg, my train to the airport got delayed. My staff picked me up, booked me a new flight and drove me to the airport. I got to the airport with my new boarding pass and scanned it to get into the gate area, but as I was about to get on the flight, I scanned my pass again and was not allowed on the flight. No one there could explain why, having been allowed through security, I was not allowed on the flight. To cut a long story short, after two hours of being gaslighted by four or five staff, with them not even saying that they could not explain things to me, I eventually had to return to the check-in desk—this was supposed to be avoided by all the automation—to ask what had happened. The airline claimed that it had sent me an email that day. The next day, it admitted that it had not sent me an email. It then explained what had happened by saying that a flag had gone off in its system. That was simply the explanation.

This illustrates the point about human intervention, but it is also about telling customers and others what happens when something goes wrong. The company clearly had not trained its staff in how to speak to customers or in transparency. Companies such as that airline get away with this sort of disgraceful behaviour all the time, but imagine if such technology were being used in the NHS. Imagine the same scenario: you turn up for an operation, and you scan your barcode to enter the hospital—possibly even the operating theatre—but you are denied access. There must be accountability, transparency and human intervention, and, in these instances, there has to be human intervention immediately. These things are critical.

I know that this Bill makes some sort of differentiation between more critical and less critical ADM, but let me illustrate my point with another example. A few years ago, I paid for an account with one of those whizzy fintech banks. Its slogan was: “We are here to make money work for everyone”. I downloaded the app and filled out the fields, then a message popped up telling me, “We will get back to you within 48 hours”. Two weeks later, I got a message on the app saying that I had been rejected and that, by law, the bank did not have to explain why. Once again, I ask noble Lords to imagine. Imagine Monzo’s technology being used on the NHS app, which many people currently use for repeat prescriptions or booking appointments. What would happen if you tried to book an appointment but you received a message saying, “Your appointment has been denied and, by law, we do not have to explain why”? I hope that we would have enough common sense to ensure that there is human intervention immediately.

I realise that the noble Lord, Lord Clement-Jones, has a Private Member’s Bill on this issue—I am sorry that I have not been able to take part in those debates—but, for this Bill, I hope that the two examples I have just shared illustrate the point that I know many noble Lords are trying to make in our debate on this group of amendments. I look forward to the response from the Minister.

[Viscount Camrose (Con)]

I thank all noble Lords who have spoken. I must confess that, of all the groups we are looking at today, I have been particularly looking forward to this one. I find this area absolutely fascinating.

Let me begin in that spirit by addressing an amendment in my name and that of my noble friend Lord Markham and I ask the Government and all noble Lords to give it considerable attention. Amendment 111 seeks to insert the five principles set out in the AI White Paper published by the previous Government and to require all those participating in ADM—indeed, all forms of AI—to have due regard for them. They are:

“safety, security and robustness, appropriate transparency and explainability, fairness, accountability and governance, and contestability and redress”.

These principles for safe AI are based on those originally developed with the OECD and have been the subject of extensive consultation. They have been refined and very positively received by developers, public sector organisations, private sector organisations and civil society. They offer real safeguards against the risks of AI while continuing to foster innovation.

I will briefly make three brief points to commend their inclusion in the Bill, as I have described. First, the Bill team has argued throughout that these principles are already addressed by the principles of data protection and so are covered in the Bill. There is overlap, of course, but I do not agree that they are equivalent. Data protection is a significant concern in AI but the risks and, indeed, the possibilities of AI go far further than data protection. We simply cannot entrust all our AI risks to data protection principles.

Secondly, I think the Government will point to their coming AI Bill and suggest that we should wait for that before we move significantly on AI. However, in practice all we have to go on about the Bill—I recognise that Ministers cannot describe much of it now—is that it will focus on the largest AI labs and the largest models. I assume it will place existing voluntary agreements on a statutory footing. In other words, we do not know when the Bill is coming, but this approach will allow a great many smaller AI fish to slip through the net. If we want to enshrine principles into law that cover all use of AI here, this may not quite be the only game in town, but it is certainly the only all-encompassing, holistic game in town likely to be positively impactful. I look forward to the Minister’s comments on this point.

Data (Use and Access) Bill [HL]

Lord Kamall Excerpts

Committee stage
Tuesday 10th December 2024 Grand Committee

[Baroness Kidron (CB)]

So is the noble Lord, Lord Clement-Jones. I withdrew my consent because I did not trust the system. I think that what both noble Lords have said about trust could be spread across the Bill as a whole.

We want to use our data well. We want it to benefit our public services. We want it to benefit UK plc and we want to make the world a better place, but not at the cost of individual data subjects and not at too great a cost. I add my voice to that. On the whole, I prefer systems that offer protections by design and default, as consent is a somewhat difficult concept. But, in as much as consent is a fundamental part of the current regulatory system and nothing in the Bill gets rid of it wholesale for some better system, it must be applied meaningfully. Amendments 79, 81 and 131 make clear what we mean by the term, ensure that the definition is consistent and clarify that it is not the intention of the Government to lessen the opportunity for meaningful consent. I, too, ask the Minister to confirm that it is not the Government’s intention to downgrade the concept of meaningful consent in the way that the noble Lord, Lord Stevenson, has set out.

[Lord Kamall (Con)]

My Lords, I support Amendment 71 and others in this group from the noble Lords, Lord Clement-Jones and Lord Stevenson. I apologise for not being able to speak at Second Reading. The noble Lord, Lord Clement-Jones, will remember that we took a deep interest in this issue when I was a Health Minister and the conversations that we had.

I had a concern at the time. We all know that the NHS needs to be digitised and that relevant health professionals need to be able to access relevant data when they need to, so that there is no need to be stuck with one doctor when you go to another part of the country. There are so many efficiencies that we could have in the system, as long as they are accessed by relevant and appropriate health professionals at the right time. But it is also important that patients have confidence in the system and that their personal data cannot be shared with commercial organisations without them knowing. As other noble Lords have said, this is an issue of trust.

For that reason, when I was in that position, I reached out to civil liberties organisations to understand their concerns. For example, medConfidential was very helpful and had conversations with DHSC and NHS officials. In fact, after those conversations, officials told me that its demands were reasonable and that some of the things being asked for were not that difficult to give and common sense.

I asked a Written Question of the noble Baroness’s ministerial colleague, the noble Baroness, Lady Merron, about whether patients will be informed of who has had access to their patient record, because that is important for confidence. The Answer I got back was that the Government were proposing a single unified health record. We all know that. She said that:

“Ensuring that patients’ confidential information remains protected and is seen only by those who need to see it will be a priority. Public engagement next month will help us understand what safeguards patients would want to see”.


Surely the fact that patients have opted out shows that they already have concerns and have raised them.

The NHS can build the best data system—or the federated data platform, as it is called—but without patient confidence it is simply a castle made of sand. As one of my heroes, Jimi Hendrix, once said, castles made of sand fall into the sea eventually. We do not want to see that with the federated data platform. We want to see a modernised system of healthcare digital records, allowing joined-up thinking on health and care right across a patient’s life. We should be able to use machine learning to analyse those valuable datasets to improve preventive care. But, for that to happen, the key has to be trust and patients being confident that their data is secure and used in the appropriate way. I look forward to the Minister’s response.

[Lord Holmes of Richmond (Con)]

My Lords, I support these amendments in the names of the noble Lords, Lord Stevenson and Lord Clement-Jones. It is a pleasure to follow the second ex-Health Minister this afternoon. In many ways, the arguments are just the same for health data as they are for all data. It is just that, understandably, it is at the sharpest end of this debate. Probably the most important point for everybody to realise, although it is espoused so often, is that there is no such thing as NHS data. It is a collection of the data of every citizen in this country, and it matters. Public trust matters significantly for all data but for health data in particular, because it goes so close to our identity—our very being.

Yet we know how to do public trust in this country. We know how to engage and have had significant success in public engagement decades ago. What we could do now with human-led technology-supported public engagement could be on such a positive and transformational scale. But, so far, there has been so little on this front. Let us not talk of NHS data; let us always come back to the fundamental principle encapsulated in this group of amendments and across so many of our discussions on the Bill. Does the Minister agree that it is about not NHS data but our data—our decisions—and, through that, if we get it right, our human-led digital futures?

--- Later in debate ---

[Baroness Kidron (CB)]

I am not suggesting that there is no legitimate interest for processing personal data without consent, but the legitimate interest assessment is a check and balance that ensures oversight and reduces the risk of overreach. It is a test, not a blocker, and does not in itself prevent processing if the balancing test determines that processing should go ahead. Amendment 85 illustrates this point in relation to vulnerable users. Given that a determination that a person is at risk would have far-reaching consequences for that person, the principles of fairness and accountability demand that those making the decision must follow a due process and that those subject to the decision are aware—if not in an emergency, certainly at some point in the proceedings.

In laying Amendment 86, the noble Lord, Lord Clement-Jones, raises an important question that I am keen to hear from Ministers on, namely, what is the Government’s plan for ensuring that a designation that an individual is vulnerable is monitored and removed when it is no longer appropriate? If a company or organisation has a legitimate interest in processing someone’s data considering the balancing interests of data subjects, it is free to do so. I ask the Minister again to give concrete examples of circumstances in which the current legitimate interest basis is insufficient, so that we understand the problem the Government are trying to solve.

At Second Reading, the Government’s curious defence of this new measure was the idea that organisations had concerns about whether they were doing the balancing test correctly, so the new measure is there to help, but perhaps the Minister can explain what benefits accrue from introducing the new measure that could not have been better achieved by the ICO providing more concrete guidance on the balancing test. Given that the measure is focused on the provision of public interest areas, such as national security and the detection of crime, how does the creation of the recognised legitimate interest help the majority of data controllers, rather than simply serving the interests of incumbents and/or government departments by removing an important check or balance?

Amendments 76, 83 and 90 seek to curb the power of the Secretary of State to override primary legislation and to modify key aspects of UK data protection law via statutory instrument. The proposed provisions in Clauses 70, 71 and 74 put one person in control, rather than Parliament. Elon Musk’s new role in the upcoming US Administration gives him legitimacy as an incoming officeholder in the Executive, but his new role is complicated by the fact that he is also CEO and majority shareholder of X. Like OpenAI, Google, Amazon, Palantir or any other tech behemoth, tech execs are not elected or bound to fulfil social goods or commitments, other than making a profit for their shareholders. They also fund many of the think tanks, reports and events in the political ecosystem, and there is a well-worn path of employment between industry, government and regulators.

No single person should be the carrier of that incredible burden. For now, Parliament is the only barrier in the increasingly confused picture of regulatory and political capture by the tech sector. We should fight to keep it that way.

[Lord Kamall (Con)]

My Lords, I support Amendment 74 from the noble Lords, Lord Scriven and Lord Clement-Jones, on excluding personal health data from being a recognised legitimate interest. I also support Amendment 78 on having a statement by the Secretary of State to recognise that legitimate interest and Amendments 83 and 90, which would remove powers from the Secretary of State to override primary legislation to modify data protection via an SI. There is not much to add to what I said on the previous group, so I will not repeat all the arguments made then. In simple terms, I repeat the necessity for trust—in health, particularly for patient trust. You do not gain trust simply by defining personal health data as a legitimate interest or by overriding primary legislation on the say-so of a Secretary of State, even if it is laid as a statutory instrument.

[Lord Cameron of Lochiel (Con)]

My Lords, I want to ask the Minister and the noble Lord, Lord Clement-Jones, in very general terms for their views on retrospectivity. Do they believe that the changes to data protection law in the Bill are intended to be applied to data already held at this time or will the new regime apply only to personal data collected going forwards from this point? I ask that specifically of data pertaining to children, from whom sensitive data has already been collected. Will the forthcoming changes to data protection law apply to such data that controllers and processors already hold, or will it apply only to data held going forward?

Medical Product Liability

Lord Kamall Excerpts

Wednesday 16th October 2024 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

My Lords, we have already done considerable work on this, and I pay tribute to the noble Baroness, Lady Cumberlege, for her original work on this, as well as now to the Patient Safety Commissioner. We are looking in detail at these issues and will continue to do so. I should make it clear, however, that should we make any changes to the legislation, it will require—as I understand it—primary legislation. It will not in any case be retrospective, so all we can do is look at products going forward. Obviously, patient safety is our primary concern and is absolutely at the forefront of our mind in taking these issues forward.

[Lord Kamall (Con)]

My Lords, in discussing patient safety, I pay tribute to my noble friend Lady Cumberlege for all her work on patient safety and medical devices over the years. I think noble Lords were very reassured to hear from the Minister that the Government are going to review the timeframe on medical product liability. Is she able to give us a bit more detail about that process, perhaps including timeframes, and what the process will entail, including consultation and who will be consulted?

Digital Markets, Competition and Consumers Bill

Lord Kamall Excerpts

Report stage
Wednesday 13th March 2024 Lords Chamber

Finally, I turn to News International. I admire Rupert Murdoch, but I must tell the House that, having been one of the independent members of the Times supervisory board for nine years—a similar structure to that proposed by the bidders for the Telegraph—we had no real power. If we do not pass this amendment, we will send out a signal that if, after Murdoch’s death perhaps, News International is put up for sale, any foreign Government —perhaps Qatar or even Russia—would then be welcome to buy another chunk of our newspapers. We must protect our newspapers from that threat.

[Lord Kamall (Con)]

My Lords, a number of principles have been spoken about. I believe firmly in the principle that no Government, British or foreign, should be allowed to own a UK media outlet. When my noble friend Lady Stowell asked me whether I would support her amendment I initially declined, because I told her it did not go far enough. I apologise for that, because, as my noble friend said, the UK Government do not own any media outlet; why, therefore, should any foreign Government be allowed to do so?

We should also be absolutely clear that this is not anti-foreigner sentiment. I and, I am sure, many other noble Lords have no objection to foreign private companies owning UK news media outlets. Indeed, in my years in the European Parliament we used to refer to the Financial Times as the in-house paper of the European Commission, only to find that it was owned by a Japanese company.

There are clearly some tricky issues here in drafting the relevant law that the clever lawyers will have to navigate. For example, it is well known that Chinese non-state-owned enterprises often have strong links to the leadership of the Chinese Communist Party. Indeed, some China analysts claim that there is little difference between the Chinese Government’s influence over state-owned and non-state-owned companies, so were a non-state-owned Chinese company to bid for a UK media outlet there would also be a number of questions. That is possibly a debate for another day.

In short, like many noble Lords, I am against any government ownership of UK media organisations, whether it be the UK Government or a foreign Government. For these reasons, I support Amendments 67 and 158 in the name of my noble friend Lady Stowell.

[Lord Clement-Jones (LD)]

My Lords, despite the shortness of this debate, we have had some very fine and inspiring speeches. We on these Benches wholly support the amendment moved by the noble Baroness, Lady Stowell. Indeed, like the noble Lord, Lord Robertson, I find it extraordinary that we do not have this already on the statute book. Given the importance of pluralism and freedom of speech in our media, the thought of foreign Governments impacting on our media in the way that is currently threatened seems quite extraordinary.

My main purpose is to associate myself with the remarks of the noble Lord, Lord Forsyth. When he moved his regret amendment, he talked about the ownership by the UAE of a UK quality newspaper. I have spent the last 10 years campaigning for the release of Ryan Cornelius from a Dubai jail. He was unjustly imprisoned on trumped-up fraud charges, and his sentence was arbitrarily extended by 20 years in 2018, just as he was due to be released. He now faces the prospect of many more years in jail. I am all too aware of the reality that lies behind the pleasant-looking tourist Dubai. Parliament should definitely have its say before a UK newspaper falls into the hands of such a Government. All this is a result of the activities of a member of the royal court of Dubai, so it very close to home in the UAE. Not only do we as a party on these Benches wholly support this amendment, but I personally feel very strongly about the need for it.

Digital Markets, Competition and Consumers Bill

Lord Kamall Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

[Baroness Kramer (LD)]

My Lords—

[Lord Kamall (Con)]

My Lords—

[Baroness Kramer (LD)]

Please.

[Lord Kamall (Con)]

I thank the noble Baroness. I am afraid that was the opposite of chivalry.

I want to speak to Amendment 153, tabled by the noble Lord, Lord Tyrie. He and I have had a number of conversations about this. I refer noble Lords to my interests as set out in the register. Having written about competition law at EU level and taken part in debates on competition issues in the European Parliament during my many years there, I was very torn between the merits appeal and the judicial review. I was tempted by the idea from my friend in the other place, the right honourable Robert Buckland, of possibly a time-limited merits appeal.

Many of us fell down on the side of judicial review because the small firms, the challenger firms, were asking for it. They believed that it was quicker and more effective. We hope that it will be. That is why many of us have supported this. But we have to ask: what if we are wrong? We do not have perfect information. What if judicial review takes longer than envisaged? Some noble Lords have said to me that the Joint Committee of Parliament that the noble Baroness, Lady Stowell, proposed would be much more effective in holding the CMA to account and ensuring that there is not a repetition of cases being restarted because they lost at JR. That argument has some merit.

However, we must take a step back and realise that, given that none of us has perfect information, we should be aware of the notion of unintended consequences. I have written about this a number of times over the years for think tanks. Often a well-intentioned government intervention that is supposed to make things better, which many people support at the time and that makes sense and looks like it will work does not turn out how it is supposed to but makes things worse.

In that spirit, I have been thinking about how we make better laws. How do we ensure that there are safeguards in place for unintended negative consequences? How do we make some redress to ensure that we change course, having thought that we were on the right course but having made things worse by not recognising the unintended consequences? In Committee, I said that I had considered tabling an amendment for a review after three or five years, or whatever. However, I am concerned that this would be seen as a loophole by the big companies, which would then hold off in order to show that JR was not working so that they could go back to merits appeal.

The noble Lord, Lord Tyrie, has solved that problem in many ways with Amendment 153. It is right that we have a review of all legislation to ensure that it has worked out as was intended and so that where there are unintended, unforeseen consequences, when it did not work as we had envisaged, we have those safeguards. A good way of doing that would be to have reviews of legislation such as the one that the noble Lord proposes here, to ensure that we could change course if it did not turn out how we intended.

I hope it will do. I hope judicial review will work. I hope it will be much quicker and we will have a much more competitive market. I hope the challengers will grow stronger, we will have more competition and see creative disruption and new challengers at every stage and consumers benefiting. Amendment 153 says, “Let’s make sure that we take stock to see whether legislation—particularly a Bill as important as this—works out as we want it to”. That is why I support Amendment 153.

Brexit: Benefits to Economy and Society

Lord Kamall Excerpts

Wednesday 6th March 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank the noble Lord. The major benefit that we must be better at communicating is certainly around our international trade. We all know that when the UK voted to join the Common Market in the 1970s, Europe accounted for one-third of global trade at that point. When we left in 2019 it was 16% of global trade, and the forecast is that it will be 9% in 2050. Putting aside the cultural, political or geographical issues, the British people have made a savvy business decision to tilt to where the trade is—the Indo-Pacific—and we should be better at communicating that to people.

[Lord Kamall (Con)]

My Lords, what does my noble friend the Minister make of the comments of High Representative Josep Borrell, effectively the EU’s Foreign Minister, who said:

“Europe is a garden … the rest of the world is a jungle”?


Does that not reveal an underlying neo-imperialist current that permeates the European Union in its relations with the world? Are we not better off not being part of this project of white European supremacy and superiority?

[Lord Offord of Garvel (Con)]

I thank my noble friend. This could get quite spicy. I will keep to trade. We have just joined the CPTPP—we need a new name for this trans-Pacific partnership. The last time I looked at the map, Britain was not anywhere near the Pacific Ocean. We managed to get America’s place in this group of 12 countries which have 15% of global GDP and 40% of the world’s middle-class consumers, who all want to buy goods that are made in Britain. We could not have done that deal while we were inside the EU. We are 95% of the way through negotiating with India. We could not have done that deal inside the EU. Trade is tilting towards the East and we need to be where the trade is.

Life Sciences Businesses

Lord Kamall Excerpts

Monday 26th February 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Baroness for her prompting. The Government have put more money into the MHRA, specifically for clinical trials, to assist all of our agencies to license more effectively and faster. As Minister for better regulation, it is part of my specific project to drive innovation. Clearly, this is not without risk, but, if we are to own the IP and lead the world, it is essential that we must go faster. That applies not just to the regulators but to government departments. We are working hard on this, but I appreciate the challenge.

[Lord Kamall (Con)]

My Lords, I refer to my interests, as set out in the register. When I was in the Department of Health, I had a meeting with a number of start-ups from the life sciences sector. They told me what wonderful products and services they had, but that they could not convince investors to invest in them. We looked at whether we could bring investors together with start-ups and scale-ups, so that they better understood each other—the companies could understand what the investors were asking for in returns and investors could understand the potential of these businesses. What progress has been made in bridging the gap between investors seeking to understand investing in the life sciences industries and those start-ups seeking to attract investment?

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for that point. This is very much the work of the Office for Life Sciences, the Department for Business and Trade, and the Office for Investment. We do a huge amount of work liaising with companies and investors. One of our missions is to get more life sciences funds established in the UK, so that we can, I hope, benefit from the home buyer. I was particularly pleased a few months ago to celebrate the opening of the Flagship Pioneering office in London, which is precisely that sort of life sciences fund. It was part of the incredible investment in companies such as Moderna. We want them here and they want to come to the UK. If we can encourage them to do this, it will have a huge advantage in bridging the gaps my noble friend mentioned.

Post Office Horizon Scandal: Racism

Lord Kamall Excerpts

Monday 19th February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank the noble Baroness. As I said, these are all issues that will be looked at. Sir Wyn Williams has complete authority to look into all these matters and he will be guided by the public interest—where this is clearly in the public interest—and also by the advisory committee, with the noble Lord, Lord Arbuthnot, and Mr Bates et cetera.

[Lord Kamall (Con)]

I refer noble Lords to my interests as set out in the register. I ask the Minister: does this not show one of the concerns that we should have about arm’s-length bodies, where they are supposed to be accountable but there are many questions over their accountability? They can act in this way but actually not be held responsible. I wonder whether that has wider lessons for who regulates the arm’s-length bodies and how they are accountable, not only to Parliament but to the British people.

[Lord Offord of Garvel (Con)]

I thank my noble friend for that. I have said at the Dispatch Box before that there will quite a lot of examination required following the Wyn Williams report. There are number of arm’s-length bodies that are set up to look like plcs but do not behave like plcs, largely because there has not been the challenge and the scrutiny typical of non-execs and from Ministers in terms of oversight. That is, I imagine, something which will be very much focused on following the Wyn Williams report.

Digital Markets, Competition and Consumers Bill

Lord Kamall Excerpts

Committee stage
Monday 29th January 2024 Grand Committee

[Lord Kamall (Con)]

My Lords, I wish to speak to this group of amendments. Other noble Lords have clearly made the case for the amendments in their names so I will try not to repeat what they have said.

Given that, I have three simple questions for my noble friend the Minister. First, having decided that appeals by firms should be decided not on merits in a court but by JR appeal, why have the Government now decided to allow this merits-based appeal on the size of the fine? I know that noble Lords have their own views on this, but I would like an answer and some clarity from the Government. Secondly, what evidence has come to light to persuade the Government to lay their amendments on this matter in the other place? Thirdly, how confident are the Government that, if a firm wins its merits-based appeal on the size of a financial penalty, this definitely will not give the firm a legal basis for challenging the reasons for the penalty and the conduct required by the CMA in the first place? I look forward to my noble friend the Minister’s responses to these three questions.

[Lord Clement-Jones (LD)]

My Lords, following this superb debate, I am worried about being able to add much to what has been said.

First, I want to pick up what the noble Lord, Lord Tyrie, said. As ever, I agree entirely with half of what he said, but the other half is rather more controversial. This seems to be a growing habit. Exactly as the noble Baroness, Lady Harding, said, if there is a solution to overreach, it must be through greater parliamentary scrutiny. The noble Baroness, Lady Stowell, also referred to this and we have amendments coming down the track on it. Going back to JR-plus for the majority of decisions to be made under the Bill would be a retrograde step.

--- Later in debate ---

It is quite a bumpy road ahead that we are going to try to travel through. I have named only three of a good number of obstacles. I very strongly support the attempt being made and very much hope that it will get an unusual degree of flexibility from the Government when we hear from them.

[Lord Kamall (Con)]

My Lords, I will speak to Amendment 81 in this group. I also wanted to speak to Amendment 77 in the previous group; I apologise that I was not here earlier to speak to it then.

I will refer to three notions from political science that may be relevant here. The first is that of the principal-agent theory and principal-agent problem. That is when a Government—namely, the principal—delegates authority to an agency. There is a huge body of work about delegating power to regulators, including the notion of agency slack, where the regulator does not act as was originally intended for a number of different reasons, raising the question of how you hold it accountable for that. Alternatively, it may perform very badly; for example, in some government departments there are concerns about arm’s-length bodies. How do we make sure that a poorly performing regulator is acting as it should have done in the first place?

The second notion is public choice theory. When people call for government intervention, they usually assume that officials and politicians are benign and will act in the public interest. Public choice theory suggests, however, that we must remember that individuals are also motivated by their own incentives and may act in their own self-interest at certain times—not because they are bad people, but because they are human. There are many cases of that; for example, with the housing market, most people agree that we need to build more houses, but many people just do not want their homes anywhere near those new houses. It is therefore very difficult in parts of the country for a candidate to stand up and campaign for more development because, according to public choice theory, they are acting in their own interest about wanting to get elected, even though they know that there should be more homes in the country. One of the fathers of public choice theory, James Buchanan, called it politics without the romance. It is when officials, who are well intentioned when the organisation starts up, just like politicians, suddenly do not act as was intended in the first place, because there are certain interests that conflict with each other. Therefore, how do we address that problem when it happens?

The third notion is the idea of unintended consequences. Given that we do not have complete knowledge, we should ask ourselves sometimes what happens if we are wrong. Are we absolutely sure that the JR appeals will prove a better way to achieve faster and more accurate decisions? We all support them, because many of the small challenger companies are asking us to do that—I have spoken in favour of them, as have many other noble Lords—but what if we find down the line that the appeals are taking longer, or that large companies are winning their appeals and the CMA has to start all over again? What if we find that it in fact takes longer than if we had gone to a time-limited merits appeal?

I considered laying an amendment asking for a review after three or five years, but I was worried about that, in case it became another loophole that large companies would use to undermine the JR appeals process, so I stood back. Another reason I did not do that was because the noble Lord, Lord Clement-Jones—I thank him for this—said to me, “You may well be right, but surely this should be about the accountability of the CMA to Parliament, and Parliament can question it on the issue of why some of the cases it is bringing are being lost on appeal”.

The other question that many of us politicians across the spectrum are asking is: who regulates the regulators? This comes from people right across the board. How do we make them accountable? I suggest that my noble friend Lady Stowell’s Amendment 81 addresses those three concerns. I hope that I have laid out the reasons why I support her amendment, notwithstanding some of the concerns raised by the noble Lord, Lord Tyrie.

I speak briefly to Amendment 82 in the name of the noble Lord, Lord Fox; he has raised an important issue. When I was in the European Parliament, we looked at digital regulation as well as financial regulation. I was told by many national European regulators, including those in the European Commission, and other global regulators that they had a huge amount of respect for UK regulators. Quite often, they would use what we did previously. For example, early telecoms regulators basically took what we did in the 1980s and replicated it across many countries in Europe.

I teach students about intergovernmental organisations. We can see that even the more technical intergovernmental organisations, some of which are over 100 years old, have now become more political. Companies and Governments are starting to influence soft power, as another noble Lord said. The EU, for example, wants to be the technical standard for regulation; China also wants to get involved in international bodies and to set the standards in its own interests—look at the debate over CDMA a few years ago. This is not just in the tech sector; we see its officials active in many intergovernmental organisations. I am not sure that the amendment tabled by the noble Lord, Lord Fox, is the right way to address these concerns, but he is certainly on to something and it deserves further consideration.

[Lord Clement-Jones (LD)]

My Lords, I am going to be extremely brief as the hour marches on: yes to Amendments 79 and 83. Most of the debate has been around Amendment 81 but I want to mention my noble friend’s Amendment 82 because the concept of lock-in is absolutely crucial. I am a big fan, particularly in the AI field, of trying to get common standards, whether it is NIST, IEEE or a number of them. The CMA’s role could be extremely helpful.

Of course, many other regulators are involved. That brings us into the landscape about which the noble Baroness, Lady Stowell, has—quite rightly—been so persistent over the course of the then Online Safety Bill and this Bill. She is pursuing something that quite a number of Select Committees, particularly her one, have been involved in: espousing the cause of a Joint Committee, as our Joint Committee previously did. It is going to be very interesting. I am a member of the Industry and Regulators Committee, which has been looking at the regulatory landscape.

These accountability, independence, resourcing and skills issues in the digital space are crucial, particularly for those of us in this Committee. For instance, the role of the DRCF and its accountability, which were raised by the noble Baroness, Lady Kidron, are extremely important. I very much liked what the noble Baroness, Lady Harding, said about us having talked about Ofcom before but that we are now talking about the CMA and will talk about the ICO very shortly; for me, AI brings a lot of that together, as it does for her.

So what is not to like about what I think is a rather cunning amendment? The noble Baroness gets more cunning through every Bill we get on to. The amendment is shaped in a way that is more parliamentary and gets through more eyes of needles than previously. I strongly commend it.

Digital Markets, Competition and Consumers Bill

Lord Kamall Excerpts

2nd reading
Tuesday 5th December 2023 Lords Chamber

[Lord Kamall (Con)]

My Lords, it is a great pleasure to follow my noble friend Lord Lansley. I do not say this because he is next to me and might heckle me, but because of some of the distinctions he made between rules, implementation of those rules and enforcement. I also thank my noble friends the Ministers and their officials, not only for the opening comments but for meeting with noble Lords last week, as well as the House of Lords Library and the various other organisations that have contacted us for their briefings, which have been very informative.

I refer noble Lords to my interests as laid out in the register, especially my roles on the advisory board of the Startup Coalition and as a non-executive director of the Department for Business and Trade, my work with a couple of think tanks that have published on competition issues, and others.

In some ways, I am not one of these people who is into instant gratification, but I remember being a member of the European Parliament in about the mid-2000s, when the EU Commission was considering the case of Microsoft. I remember being visited by lobbyists, including from Google, who were lobbying against Microsoft because they wanted to see a more competitive market. I remember telling them, “Just be careful what you wish for, because one day you might find other companies lobbying against you”. It has taken a long time, but it just shows how markets move. The other observation is how quickly these markets move—even definitions change. I am old enough to know when SMS actually meant text messaging; now it has a new meaning of “significant market status”.

At this stage I have only a series of questions, but before I raise them I would like to think about the matter at the heart of this debate, which is: how do markets really work? There are lots of debates about it. How do we react to markets where there are one or a few dominant firms? What do we do about dominant firms that compete not by seeking to offer the best product or service at the best price possible but by using their significant market power to block competitors?

I have to admit that, when learning economics in the past, I was fairly dissatisfied with some of the models that we were presented with. We were presented with a fairy tale of a perfect markets with perfect information—“If everyone had all this information, this is the way markets should work”. Then we were given a few variations—the oligopolistic market, the monopolistic market, the monosoponistic market, but they are not real markets—and then we were told by our economics tutor that actually markets do not work like that at all. There are market failures, and we need government intervention.

When I look at this from first principles, one of the views that I find attractive is the one that made me consider the hundreds, thousands, millions or billions of transactions that occur every day between willing buyers and willing sellers. It is the aggregate of these transactions that creates the spontaneous order of markets. Markets are not perfect, and there is imperfect and asymmetric information. Not everyone has the same information. Entrepreneurs are the key to these markets because they spot opportunities that others may not have spotted and they are prepared to take risks to take advantage of those opportunities and asymmetries, which the economist Israel Kirzner referred to as entrepreneurial alertness.

What happens is that, soon after, other firms enter the market and try to compete on quality of product, service or price. Governments from first principles can either get in the way or get out of the way. While I would prefer Governments to get out of the way as much as possible to allow thriving markets, there will be occasions where some of these new companies will become so large that they dominate the market. In these cases, we need to consider if and how regulations can provide a framework for competition and prevent abuse by dominant players.

I was very much taken by the comments of the noble Lord, Lord Knight, who eloquently gave examples of how companies that were once seen as entrepreneurial, exciting, new and whizzy are now abusing their significant market status. However, in considering the Bill we also have to consider how digital markets may be different from other markets, such as those for physical products, even though many physical products are sold online today. While a firm may be dominant in one part of the market—for example, on search or devices—it may not be dominant in another.

I have weighed up the advantages of judicial review versus merits-based decisions, and especially of getting the balance right between not punishing the big firms for being successful and innovative and their significant market status allowing them to become gatekeepers promoting their own products over rivals’ products or, as has been alleged, search engines and app stores imposing unreasonable charges. Like many noble Lords, I have come down on the side of judicial review, mainly to speed things up but also to avoid larger firms with their armies of lawyers delaying the process, which may lead to smaller competitors going out of business before the end of the case. However, we now see that firms can appeal this penalty of the judicial review process so, like other noble Lords, I ask the Minister to say how long the Government expect the appeal process to take. If a firm lodges an appeal, is there a danger that it may delay the main decision further? If a large firm wins a penalty, will it then have grounds to challenge the original decision delaying the remedy further? The Minister may well say that will not happen, and it would be reassuring to hear that from him at the Dispatch Box so we understand it.

Like other noble Lords, I am interested in the counter- vailing benefit exemption. What is the thinking behind the use of “countervailing” rather than “indispensable”? As many other noble Lords have said, it is legally defined. What extra does “countervailing duties” or “countervailing exemption” give to the Bill and what is the justification? Can the Minister assure noble Lords that “countervailing” will not act as a loophole for dominant firms to escape their responsibilities?

One of my other concerns more generally—I know it is shared by noble Lords from other parties across the House—is that over time Governments delegate responsibilities to agencies or regulators, as well as to international organisations. I teach politics, and one of the things we teach is principal agent theory, where a Government delegates authority to an agency or a regulator, but that regulator may pursue an agenda different from the one expected of it. There is real concern about accountability, but also about who regulates the regulator. That is why I welcome the comments by the noble Lord, Lord Tyrie, and my noble friend Lady Stowell about accountability to Parliament. Perhaps across the House noble Lords should pursue the solution of a committee.

I suspect that the proposed power in Part 1 for the Secretary of State to review CMA guidance may be a way to tackle this issue. I would like to hear the Minister’s justification for granting this power to the Secretary of State and whether this may slow down decisions, especially in a fast-moving market. Does the Secretary of State really need these powers? Will noble Lords have to propose a timeframe for these decisions to be made if there is no timeframe for quick decisions? I should add that I have met people who work for the CMA and have been impressed by their knowledge and their understanding of some of these deeper philosophical questions of markets and some of the trade-offs they have to consider. It is not an easy job to balance innovation, markets and concentration.

There are a couple of other things. I welcome the action on subscription traps. There is probably consensus across the House. It recently took me more than two hours and disconnected calls to leave the broadband company that I was with. When I went online to read customer forums, thinking I had been hard done by, I realised I was lucky. It was like the Monty Python sketch: “Two hours! That's absolutely nothing! You don't know hardship!” I saw one comment where someone said they tried so often that they gave up for one year and tried again the year later because it just was not worth it; they just were not getting through. We also read of dirty tricks by companies disconnecting calls or leaving customers to hang on for ages.

I understand that companies are desperate to hold on to their customers. I understand why customers looking to leave companies or end their subscription are redirected to customer retention teams. When I was a consultant to telecom firms, the figure we used was that the estimated cost of new customer acquisition was seven times that of customer retention—but you keep customers by offering a service that they are happy with and they are happy to pay the price for. You do not keep them by engaging in these dirty tricks. In 2021, the Government promised to make it easier to switch broadband provider—as easy as it is to switch mobile operator—with a so-called one-touch switching system, but broadband companies failed to meet the target April 2023 deadline. Will the Minister say when one-touch switching will come into effect? Perhaps noble Lords have to ask what more pressure we can put on the industry and the CMA to look into this delayed implementation. As my noble friend Lord Lansley said, we have the rules but how do we make sure they are enforced? Why are companies dragging their feet on one-touch switching?

A number of noble Lords have talked about the last issue I will talk about, which is the fact that we have all been contacted by charities. I will not go into details because they have already been laid out by others, but I think we would like a response from the Minister on charity subscriptions. I add one word of caution. Charities may also behave in a way to try to keep their subscribers or donors. Let us not give them a blanket exemption, but let us understand the issue that they are lobbying on.

Overall, like other noble Lords, I welcome the Bill. I look forward to hearing the Minister’s comments and answers to my questions. I look forward to working with my noble friends the Ministers and other noble Lords in creating the appropriate framework so that the UK continues to be a leading digital market for local and international firms.