Digital Economy Bill

Debate between Lord Keen of Elie and Lord Stevenson of Balmacara

Report: 2nd sitting (Hansard - continued): House of Lords
Monday 20th March 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

Briefly, the ground has been well covered by the noble Lords, Lord Foster and Lord Aberdare, and I have little to add. Three things strike me. I recalled in Committee that this was one of the areas where we had received the most external notifications and correspondence. It is still something that we need to take carefully. As has just been said, it is surprising that almost the entirety of the industry affected by the judgments of Ofcom have joined up to make the case.

Following on from both speeches, what is required is a statement from the noble and learned Lord. I am sure he is straining at the leash to give us all another compromise solution that will do the trick. He is shaking his head; maybe there are other things he has to cover as well. However, the situation seems to hinge on whether Article 4 of the EU directive applies sufficiently well after this Bill goes through, as before. Yet, as has been mentioned, there will be an opportunity, presumably in the great repeal Bill, to cover exactly this point. So what is the hurry?

[Lord Keen of Elie]

My Lords, I am obliged to noble Lords. As the noble Lord, Lord Stevenson, observed, there have been quite a lot of external communications on this. Indeed, I notice that the quotation that the noble Lord, Lord Foster, gave on my observations in Committee was identical to that quoted in a letter from Towerhouse LLP to the Department for Culture, Media and Sport on 17 March. Everybody seems to be singing from the same hymn book.

At present, Section 195 of the Communications Act 2003 requires that appeals against Ofcom’s regulatory decisions are decided by the Competition Appeal Tribunal on the merits. I shall come back to “on the merits” in more detail in a moment.

Appellants argue that appeals “on the merits” should allow for a bottom-up review of the decision, inviting the tribunal to substitute its own view for that of the regulator—in effect, two tiers doing the same thing. Appeals are therefore seen as an opportunity to rerun arguments that were considered and rejected by Ofcom in reaching its decision, or to put forward swathes of new evidence to persuade the tribunal to reach a different decision. Such appeals can lead to extremely lengthy and costly litigation, with extensive cross-examination of experts and witnesses. This depletes the regulator’s resources and means that other regulatory action by Ofcom is inevitably delayed, allowing for the potential for providers to frustrate the regulator with speculative or even spurious appeals, causing considerable uncertainty in the market and delay to other regulatory decisions.

The Government consider that appeals in the communications sector need to be rebalanced to ensure that Ofcom is held properly to account for its decisions, but also enabled to regulate in an effective and timely manner in the interests of citizens and consumers, as it is required to do. Clause 80 does just that; it requires that instead of merits appeals, the tribunal must decide appeals against Ofcom’s decisions by applying the same principles as would be applied by a court on a judicial review. Judicial review is generally a well-understood standard of review against which very significant decisions made by most public bodies are tested. Importantly, this will ensure that appeals are focused on identifying errors in Ofcom’s decisions, rather than simply seeking to persuade the tribunal to reach a different conclusion.

Those affected by Ofcom’s decisions will remain able to challenge them effectively. In Committee, the noble Lord, Lord Clement-Jones, said that judicial review was,

“solely concerned with whether the decision is unlawful in a technical sense—that is, was the correct process followed?”.—[Official Report, 8/2/17; col. 1734.]

I hope I can reassure him that this is simply not the case. First, appellants are able to argue that Ofcom’s decisions are based on material errors of fact or law. Material errors will therefore be identified and corrected in a judicial review process. Secondly, judicial review is a flexible standard of review, which allows the court to decide on the appropriate intensity of review according to the individual circumstances of the case. For example, there may be more intensive review processes in the context of matters pertaining to human rights. In particular, Ofcom has various statutory duties to ensure that its decisions are proportionate—in other words, that they go no further than is appropriate and necessary to attain a legitimate aim. In reviewing whether a decision is proportionate, the courts can carry out a closer and more rigorous review of the decision.

Of course, appeals in the communications sector are required to ensure that,

“the merits of the case are duly taken into account”,

as a matter of EU law under Article 4 of the EU framework directive. That will remain the case under a judicial review standard. I understand that there is uncertainty about the extent to which requirements in EU law may become a part of UK law after the United Kingdom leaves the EU, but that will be a matter for Parliament to determine when the great repeal Bill is introduced, as the noble Lord, Lord Stevenson, observed, and will be looked at in the context of the overall future regulatory framework for electronic communications, including the appeals regime, once the UK has left the EU.

A number of Ofcom’s regulatory decisions are already appealable only by way of judicial review, and the Court of Appeal confirmed as long ago as 2008 that judicial review is capable of taking account of the merits of the case, as required by EU law and, in particular, by Article 4 of the EU directive. Lord Justice Jacob in the Court of Appeal in the T-Mobile case in 2008 said that it,

“is inconceivable that Art. 4 in requiring an appeal which can duly take into account the merits, requires Member States to have in effect a fully equipped duplicate regulatory body waiting in the wings just for appeals. What is called for is an appeal body and no more, a body which can look into whether the regulator had got something material wrong”.

He also held that,

“there can be no doubt that just as JR was adapted because the Human Rights Act so required, so it can and must be adapted to comply with EU law and in particular Article 4 of the Directive”.

Indeed, in a more recent case involving judicial review and Article 4 in 2016, Mr Justice Cranston observed that, as the Competition Appeal Tribunal had said:

“Ofcom enjoys a margin of appreciation on issues which entail the exercise of its judgment”,


and that,

“the Tribunal should apply appropriate restraint”.

It is not a second-tier regulator, and the fact that it might have preferred to give different weight to various factors in the exercise of a regulatory judgment would not in itself provide a sufficient basis to set aside Ofcom’s determination. It should not interfere with Ofcom’s exercise of a judgment unless satisfied that it was wrong.

These are the relevant judicial review standards that will be applied in these circumstances. We do not want a complete retrial—if I can call it that—or a situation in which, at two levels, we begin at the beginning and end at the end with an entirely different opinion and approach to the evidence, and, perhaps, entirely new arguments being advanced evidentially in support of the merits of a case. That is a never-ending process and is not common to any other area of regulation by a public authority.

The judgments I have referred to have been considered in a number of subsequent cases and it is clear that a judicial review standard is consistent with the requirements of Article 4 of the framework directive. In these circumstances, it is not considered that there is any real need for this amendment. It is appropriate that we proceed with Clause 80 and I therefore invite the noble Lord to withdraw the amendment.

Sky and 21st Century Fox: Proposed Merger

Debate between Lord Keen of Elie and Lord Stevenson of Balmacara

Monday 6th March 2017 Lords Chamber

[Lord Keen of Elie]

I am obliged to the noble Lords, Lord Stevenson and Lord McNally, for their observations, and will seek to respond to some of the points they have raised. The noble Lord, Lord Stevenson, asked “whose court”, as he put it, deals with this quasi-judicial decision-making process. It will be for the Secretary of State to carry out that process, with the appropriate officials advising her. It will not involve other government departments or Ministers; it will be her decision and her decision alone that instructs this matter. I hope that reassures the noble Lord as to how the process will be carried on.

As for the corporate structures and the past involvement of News Corporation, as the Secretary of State indicated in the Statement, when we address the question of commitment to broadcasting standards, account will be taken of past breaches of those and of behaviour and corporate governance failures, including those relating to News Corporation.

Ofcom, of course, has a fit and proper person test, but that applies in respect of broadcasting licences rather than this issue. It is a different test to the one that will be considered with regard to the merger, but it is important to bear in mind that the same evidence may of course be relevant to both tests. As the Secretary of State set out in her letter, she considered that a number of relevant matters warranted further investigation, including facts that led to the Leveson inquiry, for example, and the question of corporate governance at the News of the World. It will be open to Ofcom to look at all relevant areas—none are being ruled out in this context. The ultimate question will be whether the bidder shows a genuine commitment to broadcasting standards, which will raise very real and relevant questions with regard to past behaviour.

The noble Lord, Lord McNally, asked whether we might be in danger of setting an unhealthy precedent, given the other tests that may be put before us in due course by other media outlets. With respect, I do not consider that this decision-making process involves the setting of precedents. Each of these proposals will be considered on its individual, stand-alone merits. I hope that provides some reassurance to noble Lords.

[Lord Stevenson of Balmacara]

Before the noble and learned Lord sits down, can I just quote back to him what he said only a few moments ago at the Dispatch Box?

“However, given this remains a quasi-judicial process in which I retain a decision-making role for the next 10 days, and potentially beyond, it would be inappropriate for me, or any other member of this government, to comment on the substantive merits of the case”.


Is there a slight variance with what he said there?

[Lord Keen of Elie]

There is no variance. It would not be appropriate for any member of the Government to comment on it, but the decision-making process will be by the Secretary of State.

Digital Economy Bill

Debate between Lord Keen of Elie and Lord Stevenson of Balmacara

Committee: 4th sitting (Hansard): House of Lords
Wednesday 8th February 2017 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, I am not a lawyer—I feel a bit uncomfortable joining this debate; I am sure there are issues it is much beyond my abilities to deal with. But I say to the Minister before he responds, the point made about the degree of concern in the industry is important. This is a big and complicated Bill with many different aspects. It reaches far into aspects of our digital world. This clause, however, is the one that has generated the largest number of responses and—to judge from the meetings I have had with people—the most anger.

In a sense, so what? If it is the right decision, it should go ahead. However, it is clear that there is a lot of support for the current situation, even though there are arguments against it. The point was made time and again that the existing arrangements seem to work well, so why are we changing them? The industry, as I said, is pretty well united against it. One or two are speaking up for it but they do not represent the majority of voices we have heard.

There is also a real danger that—particularly at a time of uncertainty over technological change and regulatory positioning—having a period when we deliberately create confusion and delay until the new guidelines, or baselines, are established, is probably not the best way of making progress. Uncertainty over a long period will affect investment, which is not what we want. So there are reasons for asking the Government to be very clear that this is the right way forward.

We all share the same wish: we want an efficient and trusted regulator that can deal with this complicated, fast-moving and complex area. But it would be quite improper to have a situation in which there was a very limited right of appeal on any case determined not to have been carried out correctly—not so much about the judicial aspects, but on the merits of the case; in other words, where the evidence does not support the decision that has been taken.

I do not understand quite what the difficulties are. I have looked back over comments made by the noble and learned Lord when he was Advocate-General for Scotland. He is on the record in a number of places and a quick search with an algorithm of some complexity, which I could not possibly describe, reveals him to have said several things about judicial oversight. As it has developed, he says, it has,

“provided us with a flexible standard of oversight, which in many senses is wide-ranging”.

However, judicial oversight is the issue and that is what we have to emphasise. He might like to reflect on that in relation to what has been said. There are other things—I will not quote them as I am sure he is embarrassed enough already, or perhaps not. But the issue needs bottoming out—there is a serious point at its heart. There are issues that will affect the whole nature of the business we are regulating in this manner which need to be resolved.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I am obliged to the noble Lord, Lord Clement-Jones, for raising this matter because it has generated a great deal of heat and debate in the context of the Bill. I appreciate the point made by the noble Lord, Lord Stevenson, with respect to the number of responses there have been. I just emphasise that judicial review is a form of judicial oversight, and a very effective one, but I will elaborate on that in a moment.

We are aware that the major telecoms operators in particular, and their agents, have lobbied vigorously and in detail on this point. Indeed, the noble Lord, Lord Clement-Jones, brought out many of the points that have been made by their agents in the course of that vigorous and detailed lobbying. I shall not go into the detail of Ofcom’s position on this. It has expressed its position very clearly and we understand it. What I would say is that there is no single position for all utility sectors, and both judicial review and appeals on the merits may be used in the same sector for different kinds of appeals. It is not a black and white situation.

The Government’s case is not that this change is needed to ensure consistency with other utility sectors but that the public interest will be best served in the communications sector by an appeals regime that focuses on errors which Ofcom is alleged to have made, rather than asking the court to reach a different conclusion. Let us remember that Ofcom is a qualified regulator and its decisions are entitled to respect. They are informed decisions and they are not irrational. They are not determined on the toss of a coin. That is why judicial review is an appropriate approach.

The noble Lord, Lord Clement-Jones, also talked about consumers. I find that interesting. Perhaps I may refer briefly to the Which? response to Clause 75. It sees this measure as one of the most important currently contained in the Digital Economy Bill, saying that it will give the regulator the power and confidence to take the necessary actions to protect consumer interests without fear of costly and lengthy litigation procedures. Introducing a judicial review standard for appeals in telecoms will mean that decisions made by Ofcom in the interest of consumers should be easier to implement and quicker to take effect. That is a reflection of Ofcom’s own view of the matter. This is not necessarily about coming to the aid of Ofcom but about recognising these matters from the perspective of the consumer. That is extremely important.

Currently, appeals brought under Sections 192 to 196 of the Communications Act against Ofcom’s regulatory decisions are decided “on the merits” by the Competition Appeal Tribunal. That exceeds and, as the noble Lord, Lord Clement-Jones, acknowledged, effectively gold-plates Article 4 of the EU framework directive, which requires that the merits of the case are duly taken into account in any appeal. That is not quite the wording of the proposed amendment.

The result of this over-implementation is an unnecessarily intensive and burdensome standard of review that can result in very lengthy and costly appeals litigation, which in turn can hinder timely and effective regulation. Some of the appeals that have taken place have done so over extraordinarily lengthy periods. Of course, the very large communications operators are in a position to fund that sort of appeal process. Clause 75 will change the standard of review so that the Competition Appeal Tribunal will decide appeals against Ofcom’s decisions by applying the same principles as would be applied by a court on an application for judicial review and, in particular, judicial review of other administrative actions. This will focus appeals on the key questions of the legality and reasonableness of Ofcom’s decision-making.

The noble Lord, Lord Stevenson, suggested that there might be cases in which there was simply no merit in a decision. If that was so, and if Ofcom proceeded without reliance on the facts of a particular case, that would be amenable to review under a judicial review standard.

Digital Economy Bill

Debate between Lord Keen of Elie and Lord Stevenson of Balmacara

Committee: 3rd sitting (Hansard - continued): House of Lords
Monday 6th February 2017 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, in an idle moment, a moment of complete frivolity, I looked up GOV.UK to check facts—I thought that would be a useful contribution to the debate. The date we have all been searching for is 1837: the General Register Office is part of Her Majesty’s Passport Office and contains records dating back to 1837. I thought that would be useful.

I beg to move Amendment 117A in my name. This stems from my period of service as chairman of a wonderful charity called StepChange, which deals with individual debt owed by ordinary people. In the time I was there—I resigned about two years ago—we had about 600,000 people a year contacting the telephone helpline or going online to try to seek solutions to their debt problems, so it is a very significant problem in British society and something we must take a great deal of care about. Most people who came to us were struggling with multiple debts; in other words, they owed money to a variety of different sources, ranging from local authorities, mobile phone companies, debt collection agencies, Revenue & Customs, payday lenders, utility companies and catalogue lenders—there is a very large number of them.

A median client would be aged about 45, female and owing about £20,000 to eight different creditors, so it is a significant problem that people get into. Within that, with a tremendous requirement now for debt advice, with lots of people struggling with debt, one worrying trend has been how bad central and local government have been in dealing with people, particularly those with multiple debts. A recent survey of about 1,000 StepChange clients found widespread aggressive enforcement from local authorities even when people were asking their authority for help. Clients were more than twice as likely to be threatened with court action or bailiffs than to be offered an affordable payment option. This is despite guidance being issued by central government about how debts should be treated.

Of course, what happens when people face strong demands, very often from central or local government, is that they tend to go to people who can lend them money quickly, probably from an existing credit line, almost certainly, until recently—but even today it is still happening—taking out a payday loan. They try to borrow more to try to pay back original debts and get themselves into a worse situation than they were before. The same survey asked clients to rate what their creditors had done to them and whether they treated them fairly or unfairly. I am afraid to say that public sector creditors came out very badly, occupying three of the top six places in the unfair treatment table. It is interesting to note that HMRC, for instance, scored no better than payday lenders, which the Government, through the FCA, have spent a lot of time trying to sort out over recent years.

That is the background of our concern. We welcome the provisions in the Bill to think again about how debts owed to the public sector are collected. In that light, these amendments are put forward for suggestion, they are probing amendments at this stage, and I hope that they will elicit a response, because it is not just StepChange, the debt charity, that has been concerned about this. Citizens Advice has also raised concern about public sector debt collection practices, finding that public sector creditors are,

“mostly out of step with financial services and utilities companies when it comes to setting affordable repayment rates, and that our clients can suffer detriment when public bodies have uncoordinated and inconsistent approaches to debt collections ... central government debt collection lags behind the higher standards expected of other creditors”.

This is focused on individuals who have problems with their debts, but of course there is a wider cost to society as a whole which, through relationship breakdown, homelessness and difficulties with maintaining concentration at work, et cetera, has been estimated at about £8 billion a year. The Bill contains clauses that relate to this and they seem to suggest that central government as a whole—but in this case HMRC—are thinking about how the data-sharing powers that are coming should be used to allow them to collect several debts at once, but also to do it in a slightly different way. I hope that is the case. We are back with our old friend, the code of practice, because what is said in the code of practice will determine whether this will work.

I have, then, four things I invite Ministers to respond to. First, Clause 45 is limited to departments that seek data-sharing powers and says only that they should “have regard to” the code of practice. This has, I think, been picked up in other amendments that we have considered today. It would be good if the code of practice were also embedded in a much stronger statutory provision, to give it real bite. We have seen examples of guidance—I mentioned one involving central government issuing guidance on council tax collection methods—but such guidance does not work, because it is non-binding and only advisory. If there is a code, it should be embedded in the statute and people affected by it should be able to refer back to it to make sure that it works properly.

Secondly, the public body itself must believe that this is the way in which it needs to operate. Within the amendments are a range of issues that central government bodies might pick up that would match the best practice in utilities, banks, credit cards and store cards—all of which have been through the cycle of trying to get money out of individuals who owe them and other people money, and have recognised that you have to deal with people with multiple debts in a completely different way from those who just owe money directly. That is gradually changing the way people operate. There is further to go, but it is a lesson that should be learned. I hope that the codes can be adapted to reflect that.

Thirdly—this may be too much of an ask, but it should be recognised—this Bill applies only to public bodies, and their creditors, when they are seeking to use the data-sharing powers. The problem is, of course, wider than the data-sharing powers. Problems with central and local government debt collections are widespread: practices need to be reformed and this is not likely to relate only to places where data sharing is used. The Government should think ahead about this and try to set out an understanding for all their agencies that poor debt-collection practices can harm the rate at which they get their money back and the time it takes, and it will also harm the financially vulnerable people. Taking account of that across all their practices would be a very good thing.

These amendments, therefore, try to raise those points, but there is one other thing that the Government should try to do, which is in the first amendment. It is to take a lesson from Scotland—I am sure that the noble and learned Lord from Scotland will wish to pick this up and think harder about it—where, when you have a private or a public debt and seek guidance from the state agency that operates that scheme, you are given statutory protection from excess charges and your interest rates are frozen, providing you stick to your debt repayment plan. That means that people get a breathing space, time to organise their finances, think about their budgets and work out what they are going to do, without the terrible pressure from those who are owed money to start repaying it. It is only when all those issues have been brought together, and an agreement reached between the creditors and the agency, that repayment begins. That has a very much higher rate of success than any other scheme. England lags way behind on this, and it would be no skin off the Treasury’s nose if it took a leaf out of the Scottish Government’s book and brought in their procedures—with a statutory breathing space that gave some hope to people who want to repay their debts but cannot do so because the practices are not as good.

[Lord Keen of Elie]

My Lords, I acknowledge the point made by the noble Lord, Lord Stevenson, that this is a significant issue, and I understand that this is a probing amendment to allow us to consider some of the wider issues that he has touched on in the debate.

Amendment 117A seeks to include in the Bill an additional purpose: to enable debt information to be shared under the powers provided by Clause 41. It seeks to state explicitly that debt data can be disclosed,

“for the purpose of helping individuals to manage their debts”.

There is also a reference to the breathing space, and I will come back to that point in a moment in response to the questions posed by the noble Lord.

In the first instance, we would venture that the amendment is not necessary. The provisions as drafted enable information to be shared,

“for the purposes of the taking of action in connection with debt owed to”,

a public authority or the Crown. This includes but is not limited to, for example, identifying or collecting debt. The provision is sufficiently broad to enable sharing for the purpose set out in this amendment. That is the position of the Government. The Government are considering the recommendations that have been made following work to look into the merits of introducing a breathing space for customers, which we are aware is available in other jurisdictions. While the Government are considering these recommendations, it would be premature to incorporate a reference to this initiative in the Bill at this time. I hope the noble Lord will accept that the matter is being looked at.

21st Century Fox Takeover Bid for Sky: Timetable

Debate between Lord Keen of Elie and Lord Stevenson of Balmacara

Tuesday 20th December 2016 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the noble and learned Lord for repeating the Answer to the UQ granted earlier in the other place. As I said last week—goodness, was it only last week?—the concerns of 2011 were not just about the serious wrongdoing uncovered by the phone-hacking scandal. They were also about the concentration of media power in fewer and fewer hands. I have no doubt that if this is referred, it will be referred successfully to the Secretary of State to act on the issues that have been raised.

More than 135,000 people have already signed an online petition calling for this bid to be referred, and the reasons for their concerns are the same as those which caused the previous bid to be abandoned in 2011. This all makes the kicking into touch of Leveson 2 and the suspension of authorisation of Section 40 look more than just a coincidence. I have two questions about process for the noble and learned Lord, which I hope will be sufficiently broad for him to be able to respond to despite his concerns about due process.

First, I note from his previous response that the Secretary of State will aim to take an initial decision on whether to intervene on public interest grounds within 10 working days of formal notification of a merger to the relevant authorities. Such formal notification has yet to be received, but it could happen—some would say it is highly likely to happen—over the holiday period. As there are a number of public holidays coming up, may I ask the noble and learned Lord to tell me precisely how many working days there are in the period of the Christmas Recess? To get him started with his calculation, I point out that the other place is not sitting tomorrow. If he needs more time to work this out, I am sure a letter would be sufficient, and I would be grateful if he could place it in the Library as well.

Secondly, there is the question of whether James and Rupert Murdoch—if they do acquire the balance of Sky—are fit and proper persons to be licence-holders of a regulated television service. The noble and learned Lord told the House last time that the Prime Minister had not discussed the bid at her recent New York meeting with Rupert Murdoch. He said—I think I paraphrase—that Mr Murdoch had apparently rolled up unannounced, something I am sure he is wont to do. Can we be assured that all such meetings with the parties are logged and published? Given that, last time round, it transpired that the then Secretary of State had set up a parallel, secret communications structure involving his special adviser and a similar person in News International, could the noble and learned Lord confirm for us who in the DCMS and elsewhere in Government have the authority to communicate with the parties? Will he publish a list of those so authorised, including civil servants and advisers, and put a copy in the Library?

[Lord Keen of Elie]

I am obliged to the noble Lord, Lord Stevenson. I do not have a calculation of working days over the Christmas vacation to hand, but I assure him that the 10-day period is a guidance period. It was originally formulated by the then DTI and will, if possible, be adhered to. If the noble Lord is seeking a precise calculation of working days over the Christmas period to the point when this House resumes, I will arrange for that calculation to be made and endeavour to ensure that it is set out in writing, with an appropriate copy being placed in the Library.

Regarding the fitness of persons who are to be involved in this matter, as I indicated on a previous occasion, the question of who is a fit and proper person is determined by Ofcom, pursuant to the Broadcasting Act 1990, albeit that one consideration that will arise under the 2002 Act is the Ofcom code of conduct in respect of broadcasting standards, as set out in the Communications Act 2003, and the need for a genuine commitment to adhere to those standards. I have no doubt that the Secretary of State will have regard to all relevant considerations when she comes to address the issue that she has to determine on a quasi-judicial basis.

There will be no question of special advisers being engaged in the process, and certainly not in the process of communication with any parties involved in this commercial transaction—of that—I can assure the noble Lord. That is not going to occur.

I am not aware of any further meetings scheduled between the Secretary of State and any of the parties to this transaction. If there were to be such a meeting, I have no doubt that notice of it would be given and a record kept.