Reporting on Payment Practices and Performance Regulations 2017

Lord Stevenson of Balmacara Excerpts

Thursday 9th March 2017 Grand Committee

Those are a few brief questions, but I am very supportive of the regulations as part of a package of measures, which, broadly speaking, we also support.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I will follow closely the words of the noble Lord, Lord Foster. Like him, we accept that these are good regulations. They stem from a Bill that we spent a lot of time on in 2015, talking about small businesses and their problems. It is good to see the output in terms of large companies and large limited liability partnerships, and to see the detail. I support that.

Like the noble Lord, Lord Foster, I have a number of questions, which I am sure the Minister will be able to respond to. Where the noble Lord finished is where I would like to start. There is no mention in either set of regulations about the role of the Small Business Commissioner, and I find that very surprising. From the reports that are circulating about the appointment of the Small Business Commissioner, it is clear that the department sees that as being one of a package of measures that will implement the small business Bill. However, there seems to be no mention of it and no role for the commissioner in the regulations. Perhaps the Minister has an explanation for that.

Having said that, the second question that comes to mind is: what is the role of the Small Business Commissioner? The Minister was not in post when we discussed this in 2015, but I think he will have been briefed about the general feeling there was in Committee and on Report that the move to introduce the Small Business Commissioner—it was a major change by the Government, who had previously set their mind against it—was a good thing, but that the powers were lamentable given the case that had been made by the Federation of Small Businesses in particular, which, after all, might be expected to know a bit about the problems that small businesses face.

It is brave of the department to bring the chair of the FSB on to the appointments panel—that is a good sign. However, as far as I can understand from the press comments he has made, he is still worried that even though he is on the panel, the post is not going to be sufficiently empowered or resourced to do the job it has to. He does not think that it begins to tackle the problem referred to by the noble Lord, Lord Foster, of 50,000 small businesses going broke each year because they cannot get the money they are owed out of the larger companies. There is also the question of whether or not the will is there in the department to try to help shape the culture, rather than simply shine a light on current practices.

The Explanatory Memorandum to both instruments before us gives a little context about where all this has come from. The noble Lord, Lord Foster, mentioned one of those issues, the Prompt Payment Code, which has been heavily trailed by the Government and used as their only fig-leaf when we talked about this in Committee and on Report. However, it has proved to be a completely hopeless way of trying to achieve culture change. At the time that the Prompt Payment Code was being lauded, we had examples within this very House of major companies that were not even signed up to it, and many of those that had signed up had operating practices that would have made it impossible to stay in the code, and yet there was no apparent sanction as it is a voluntary organisation. The pay-to-stay scandal and the unilateral changing of payment arrangements from 30 days to 60 days to 90 days and all sorts of other things were going on in companies that should have been adhering to much higher standards. That is a clear example that the process does not work in practice. At least we now have a transparency arrangement, and I like a lot of the things that are included.

Delays always happen but I suspect that there is a bit of a story behind the way in which this has come out and around the engagement with both the major and the smaller companies in trying to find a way to make this work. Extraordinarily, but rightly in my view, the department has decided that the only way to get this to work in practice is to run its own website. It cannot rely on companies coming forward with material because it feels that that would be too difficult to interpret. Again, that is brave. I cannot say any more than that—I think it is terrific and I am sure that it is the right thing to do. Perhaps it opens up a new, aggressive policy chapter in BEIS, and it is actually going to do things that help businesses instead of just standing back and watching as they go under. However, I may be making the point a little too strongly.

The third thing I have to say is a compliment, which I rarely pay to BEIS and its officials because they are always in default on this. However, they have at last hit a common commencement date for these arrangements, and I am so pleased by that. However, it is extraordinary, is it not, and perhaps shines a different light on this area, when you discover that, uniquely, these are time-limited regulations, which is something I have never seen before. It is not so much a sunset clause but a total eclipse. We have the situation where these will come into force on 6 April 2017, which is great, and will then close on 6 April 2024 unless they are extended. There are substantial consultation arrangements around that, but it does not exactly send the message to small businesses that the Government are here to help and are on their side. The regulations are, at the very best, a pale imitation of where they want to get to, and are time-limited and will be withdrawn unless some future act of consultation comes through.

We welcome these instruments in so far as they go—it is exactly what the Government said they would do. They are late, but at least they are here. They will start very quickly and will be accompanied by an as yet unknown, but potentially powerful, person to take up some of the issues that are left undealt with here. With that, we support the instruments as they appear before us.

[Lord Prior of Brampton]

I thank both noble Lords for their broad support for the general thrust of this statutory instrument.

Potentially misleading or inaccurate information is a criminal offence punishable with a fine. Who is responsible for verifying the data? Our view is that the public nature of the data will ensure their accuracy. Businesses can raise their concerns directly with BEIS or the Small Business Commissioner. The whole thrust of this instrument is culture change. It is the reputational damage that firms will suffer, rather than the prospect of a criminal conviction, that will have the biggest impact on changing behaviour.

In terms of the scope and the companies caught by this, the definition of a large business for the purpose of having to make the disclosures is two of the following three: an annual turnover of £36 million; a balance sheet total of £18 million—I assume that that means net assets; and 250 employees. The noble Lord asked about a subsidiary of an overseas company—it could be a subsidiary of a domestic company, for that matter. As I understand it, this applies to companies or LLPs that are incorporated in this country. So I do not think that a small company over here that is a subsidiary in the US is captured by the instrument, but I will double-check that.

The noble Lord said that payment terms in the US were more typically 120 days rather than net monthly or 30 days but I am not sure that that is necessarily right. Also, we should be clear that in some big contracting industries, where there is delayed payment and that is negotiated upfront by suppliers, that is entirely legitimate. In their disclosures, big companies are perfectly entitled to say in their narrative that in their industry, a different payment schedule is typical. Where you have a long-term contract, which requires a different kind of financing, again, that can be disclosed and explained, and it will be perfectly legitimate. We are not saying that a longer period is necessarily worse than a short one; it very much depends on the industry. What is important is the transparency and a narrative around it.

Both noble Lords spoke about the appointment of the Small Business Commissioner. I understand that we will be appointing that individual during 2017. We launched the recruitment campaign on 12 February, with the intention of appointing later on in the year.

[Lord Prior of Brampton]

I just wanted to reassure the noble Lord that the process has started. As it started in February, that appointment will follow in due course.

I thank noble Lords for their contribution to the debate. The importance of transparency is clear. One economic reason that makes this statutory instrument so important is that for many small, particularly growing, companies, cash flow, rather than profit, is critical. Delayed payment terms can seriously undermine the ability of small companies to grow. I think that all parties in the Committee are apprised of that.

[Lord Stevenson of Balmacara]

It is true that the terms are important, but both the noble Lord, Lord Foster, and I were at pains to make the point that it is the reliance on the contract with a large company that causes the difficulty. It is difficult for individual small companies to challenge the payment terms they are first offered—particularly if, once they are in contract with the large company, it decides unilaterally to change them—because they need the business. The Minister said that he has worked in business before, and I have run small businesses. When you are waiting for that cheque to come and it does not and you cannot pay yourself, you cannot rip up the contract because you are so dependent on it. It is that defect—for which no powers are being given explicitly to the Small Business Commissioner—that lies at the heart of where we disagree with the Government’s approach. I am sure that this issue will be addressed, because the figures are now so open and clear that it has to be sorted: £26 billion is a stonkingly large figure. If we could sort that out and speed it up—although the Explanatory Memorandum does not go into this—a 0.25% reduction of the costs of organising small businesses raises something like £22 million. A small calculation of what that cash flow change would be changes the dynamics of the whole arrangement.

Police Intellectual Property Crime Unit

Lord Stevenson of Balmacara Excerpts

Tuesday 28th February 2017 Lords Chamber

[Noble Lords]

Oh!

[Lord Stevenson of Balmacara (Lab)]

Returning to the main subject, as I am sure the noble Lord is aware, the police intellectual property office is also responsible for the National Fraud Intelligence Bureau—also widely regarded as being a terrific service which we would be sad to lose if there were funding problems. I visited it as part of my secondment with the Metropolitan Police—a scheme that I recommend to all Members of the House as giving an insight into the way the police operate. However, this goes back to the Question from the noble Lord, Lord Clement-Jones. Without certainty as to funding, there will be very damaging implications for crime. This crime needs to be stopped at source and this is the main unit to do so.

[Lord Prior of Brampton]

The noble Lord makes a good point. Of course, certainty is very important, but I draw the House’s attention to the fact that the US Chamber of Commerce rates our IP enforcement as number one in the world, as does the Taylor Wessing global IP index. We are doing a great job, so let us not beat ourselves up too much about this. We need to resolve this uncertainty about funding but we are doing an excellent job.

Higher Education and Research Bill

Lord Stevenson of Balmacara Excerpts

Committee: 7th sitting (Hansard): House of Lords
Monday 30th January 2017 Lords Chamber

[Baroness Neville-Jones (Con)]

My Lords, a number of points have been raised in this group of amendments. I hope when he replies my noble friend the Minister will not lose sight of the extremely pertinent questions asked by the noble Lord, Lord Willis, about the ability of research councils to form partnerships and to do so without having to seek permission.

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very good, sharp little debate. I look forward to the Minister’s response. Given his previous background in your Lordships’ House as a spokesman on behalf of the Department of Health, presumably he will speak with a bit more direct experience than would otherwise be expected. It must be very clear that, whereas in the first two groups of amendments we were talking about the mechanics and he was able to guide us away from any suggestion that the Bill might be amended, he is now firmly up against the fact that the culture is sorted here, but the mechanics are not. We will have to look very hard at the points made, with some force, by all those who have spoken.

We have signed up to most of the amendments in this grouping and support the points made by the noble Lords, Lord Willis and Lord Sharkey. They made it absolutely clear that what we are talking about is completely different from desirable changes. It is about ensuring that the huge success we have seen in the development of research—particularly medical research, but it applies to other research councils—is wired into the structure. We must have an assurance from the Minister that that will be the case.

What was not said, but is available for those who have read the briefings, is that the current situation is also of concern to charities. They feel that they have been slightly taken for granted. If there had not been the change proposed here for UKRI they would probably have come forward with suggestions that they should have been brought in at this stage, if they had not been before, to the Medical Research Council and others. That is not a new initiative; it has been a bit of sand in the oyster for some time. It would be appropriate to do as they suggest. We have already been reminded that the Nurse review made it clear that charities felt that, given,

“the overlap in their interests with the Research Councils, it is important that strong contacts are developed and maintained between the Councils and the charitable sector”.

Indeed, Sir Paul, in the final section of his report, says:

“To facilitate such interactions and to ensure that proper knowledge and understanding of the entire UK research endeavour is maintained, I recommend particular care is paid to ensuring there are strong interactions between the charitable research sector and the Research Councils”.


That is a coded phrase, but it is fairly clear that his intention would be that charities, which make so much of a difference to what we are doing and bringing in patients—they have been doing this for so long and have so much experience to offer—should be hard-wired into what we are about.

Our Amendment 486A is subsidiary in a sense because the primary purpose of these amendments is to make sure that charities are involved going forward. One amendment, which we support, suggests that the mechanics of this should be done by continuing the arrangement that those charities which currently fund jointly with research councils should be able to do so and there should be nothing in the Bill to prevent that. We suggest that, in looking at this, the Government might also look at the question of making sure that the UKRI has that capacity as well and there is no problem in any legal framework about it. We support these amendments.

[Lord Prior of Brampton]

My Lords, this has been a really good short debate. I think we are all in huge agreement about the importance of the charitable sector. I recognise the figures given today: over the lifetime of this Parliament some £6 billion—I think that is what the noble Lord, Lord Sharkey, said—will go into research from charities. That is about £1.3 billion a year, which is huge. As the noble Lord said, it is bigger than the NIHR. We are all acutely aware that research money from charities is absolutely fundamental to our whole research effort in the UK. Even after the increase of £2 billion a year from the Government in 2020, which is a fantastic change, if you compare our research spending with other countries we are still low. We depend heavily on the charitable sector.

I share with all noble Lords the aspiration for UKRI to work harmoniously and productively with the charitable sector. That is why the recent advert for the UKRI board lists engaging with charities among members’ duties and welcomes applicants with experience of the charitable sector. UKRI board members will be recruited on the basis of experience and expertise from across the full range of interests of the UK’s research and innovation system. We are ensuring this happens through our current recruitment exercise. If noble Lords will find it agreeable, we will reflect on today’s debate and see whether we ought to stiffen up that language.

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[Lord Stevenson of Balmacara]

We have heard a number of variations on the theme of reflection. Before the noble Lord finishes, could he be clearer about whether he will seriously take this away and look at it with a view to coming back on Report or will he just sit and reflect on it? Noble Lords would be very grateful to know that.

[Lord Prior of Brampton]

I was under the impression that the word “reflection” has a parliamentary connotation and means more than just idly reflecting in the Bishops’ Bar after this debate, instead implying a serious discussion with colleagues and parliamentary draftsmen. Sometimes you can make amendments that satisfy the spirit of everything that has been discussed but they have unintended consequences which can have the opposite effect. When I use “reflect” now or later in this debate, I do so with serious intent.

Turning to Amendments 486A and 491 on partnering, raised by the noble Lord, Lord Sharkey, and the noble Baroness, Lady Morgan, with a third of university research income coming from links with business and charities, their contribution towards the UK research endeavour is clearly very significant. The councils continue to have an important role, encouraging links with universities and through forming their own direct partnerships. UKRI will continue this and ensure public, charitable and private investments in research are aligned to achieve maximum overall benefit. Noble Lords will have noted that UKRI has two specific powers to allow joint working: with the devolved Administrations and with the OfS. This is not just because these are important interactions; there are specific legal reasons why additional powers are necessary, for instance to allow Research England to continue to work with the devolved Administrations jointly on current UK-wide priorities, including developing the next research excellence framework.

In all other instances, however, I can reassure noble Lords that UKRI will not need specific provision to be able to work jointly with other bodies. I can absolutely reassure noble Lords that those partnerships between UKRI or its councils and the charitable research sector, not to mention other research funders, will be in no way impeded by the Bill. I can confirm the statement made by the UKRI chair, Sir John Kingman, in this respect. In fact, the Bill places a duty on UKRI to be as efficient, effective and economic as possible. It is difficult to envisage instances where collaborating with an appropriate funder from the charitable sector or elsewhere would not achieve these aims.

In conclusion, while I agree wholeheartedly with the spirit of this proposal and welcome the opportunity to recognise the important role of charity funders, no additions to the Bill are required to enable UKRI to work with other bodies or to ensure charity sector experience on the board. I ask the noble Lord to withdraw his amendment.

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[Lord Mackay of Clashfern]

I support the amendments proposed by the noble Lord, Lord Patel. I agree that consideration needs to be given to the points raised by the noble Lord, Lord Liddle, but one must not forget that there are regions of the United Kingdom south of the Scottish border which may require special attention.

I am hopeful that the reflection, which I am sure that we will have on these amendments, may result in good outcomes. Officials in the department have given me a copy of the application invitation to non-executive members of UKRI, which says:

“We welcome applicants with a range of experience from within the different nations of the UK, the charity sector, and with international experience”.

[Lord Stevenson of Balmacara]

My Lords, this has been a very interesting debate, and I am grateful to the noble Lord, Lord Patel, for introducing it so well, because he covered all the nuances. We have one amendment in this group, Amendment 500A, which complements the points that he was making. It reflects the need to make sure that Research England, in its functions, which would be very narrowly focused on England—including, of course, the north of England—could have the capacity to consult other bodies that perform the same functions in Scotland, Wales and Northern Ireland. That goes with the general grain of what is being discussed.

I have a fantasy that this area was probably dreamed up in the good old days before Brexit was on the horizon, in the confident assumption that there would be no separate Scotland—and certainly no separate Wales and Northern Ireland, if these issues are still in play, as I am sure they are. That reflects a relatively straightforward analysis of what had to be done to pay lip service to the need to ensure that those people not physically located in England were seen to have some influence on the levers that generated the money. But that is such a naive view of what is now such a complicated world that I wonder whether what is in the Bill is sufficient to take that trick. It is one area in which reflection will be required, as the noble and learned Lord hinted, because I do not think that what we have here will do.

I take it as axiomatic that UKRI is not a representative body and that there would be no advantage in making it so—so we are not talking about ensuring that the representation on it is in some way reflective of the various agencies and constituencies that need to be served by it. However, there are optical issues—it has to be seen to be representative in a way that would not have been the case two or three years ago. The idea that, as we heard from the letter of invitation, it has an acknowledgment of the need to recruit from people with obvious experience in an area will probably will not be sufficient. We are talking about the allocation of resources getting scarcer as we go forward, despite the Government’s reasonable largesse, in an environment where it would be very difficult for those bodies that have been funded to seek alternative matching funding. The institutions we are talking about are not all universities, because research is carried out outside the universities—although much less than in other European countries—in research institutes and similar places. Up until now these have been very reliant on external funding and, as we will hear in later amendments, they are feeling a cold wind coming. In this very complicated area we have to ensure that the funds will reach the institutions which are best able to provide the research services which UK plc is looking for and in a way that is seen to be fair.

We have not touched on the fairness issue. The noble Lord, Lord Patel, talked about the need for firewalls to make sure that the funding streams were not absorbed by other pressures and under other arrangements. That is probably a necessary but not sufficient condition and does not need to be in the Bill. However, the idea exists that England, because of the golden triangle effect, has a pre-eminent chance of getting all the funding and that, despite the way in which these funds will be allocated—through the Haldane principle and others—there will be enough room left for those who wish to make trouble about this in, say, Scotland or other places. This is a worry and it will need to be looked at very carefully before the Minister comes back. I do not have a solution to it, but we are not necessarily in the right place at the moment.

[Lord Prior of Brampton]

I thank the noble Lord, Lord Patel, for his speech at the beginning of this debate which helped identify some of the issues. First, I emphasise that UKRI, as a UK-wide body, has a built-in duty to work for the whole of the UK. The prospect of having people on the UKRI board from all parts of England, Scotland, Wales and Northern Ireland does not fill one with much joy. Secondly, I make it clear that these reforms will not affect current funding access for institutions in Wales, Scotland or Northern Ireland. In the other place, my honourable friend the Minister cited the Public Bill Committee evidence of the former vice-chancellor of the University of Dundee and current vice-chancellor of the University of Leeds, Sir Alan Langlands. I hope that noble Lords will permit me to echo that powerful evidence once more. Sir Alan said that,

“given the dynamics of devolution and the fact that essentially we are dealing with four different financial systems and four different policy frameworks, the one thing that has stuck together through all this has been the UK science and research community. The research councils, HEFCE and, indeed, BIS have played a hugely important part in that”.

As part of UKRI, the research councils and Innovate UK will continue to operate across the UK, funding projects through open competition on the basis of excellence, wherever it is found.

In answer to the question from the noble Lord, Lord Patel, on capital, the devolved Governments have a capital allocation direct from the Treasury as part of their block grant. Decisions on whether to allocate any of these funds on research or innovation are entirely for them: this will not change. Capital allocated by research councils, as a result of competitive processes, wherever the researchers are based across the UK, will continue to be delivered through the UKRI councils: this will not change. The Secretary of State, when making capital allocations for research, most recently through the capital road map, also makes an allocation for HE institutions to support the sustainability consequences of their relative success in winning research council funding. This process will not change, including the requirement for the devolved Governments to match-fund any allocation by the Secretary of State to the devolved funding councils.

On Amendment 501, I share the noble Lord’s desire that UKRI’s strategy should work for the whole of the UK. The strategy will be the product of a consultation with research and innovation institutions and bodies from across the UK. I also assure noble Lords that this consultation will of course incorporate the views of the devolved Governments. However, I disagree that this should be achieved by requiring the Secretary of State to formally consult with the devolved Governments on reserved UK government policy, which would undermine the whole devolution settlement.

I reassure the noble Lord, Lord Liddle, that we are putting in place extra protections for Research England. This reflects the provisions in the Further and Higher Education Act 1992, which places the same restriction on the Secretary of State in relation to HEFCE funding. The provision protects the academic freedom of institutions in respect of what is taught, what research is undertaken and who is employed. Likewise, I assure noble Lords that Research England will work closely with its devolved counterparts on matters of strategic interest—for example, on the research excellence framework. After discussions with the devolved Administrations, the Government passed a new clause in the other place, now Clause 107, to enable this joint working. Additionally, the current drafting of Clause 91 enables Research England to consult with its devolved equivalents, and we would fully expect it to do so whenever this was appropriate and valuable.

I turn to Amendment 502. UKRI must have flexibility to manage its funds to ensure best value for its resources and to meet our strategic aspirations for seamless administration of interdisciplinary research and joint research and innovation projects. Currently, allocations to funding bodies are discussed with the Treasury, which assesses any Barnett implications for the devolved Governments. This is not changed by the Bill. UKRI will also be bound by rules established for managing public money and a financial accountability and assurance framework which will be set up with the department. These arrangements do not constitute a reduction in current levels of parliamentary oversight. This amendment would place additional duties on Parliament to scrutinise even small variations in budgets that would be required in response to changes to project timelines or to support joint research and innovation projects, for example. This would not be a good use of Parliament’s time, and would hamper UKRI’s strategic agility by significantly slowing decision-making.

I urge noble Lords to consider the advice that the noble Lord, Lord Mandelson, offered at Second Reading:

“I urge UKRI not to be overly prescriptive about partitioning funds between its component parts. We need a system that allows partners to come together across STEM subjects, the humanities and social sciences, and with industry partners, to drive a research ecosystem which goes from blue-skies research to commercial application and impact”.—[Official Report, 6/12/16; col. 624.]


Noble Lords have raised concerns about Research England’s funding stream. I reassure them that the Secretary of State would not agree to UKRI viring money in such a way as to result in a net change in Research England’s stated budget over a full spending review period. This will be made clear in guidance to UKRI.

Amendment 504 would give an effective veto power to the devolved Governments on matters of reserved UK government policy. The power of direction is limited to financial matters and reflects existing powers. The Secretary of State may use it to deal swiftly with financial issues, and it is an essential safeguard to the over £6 billion of public money that UKRI will receive per annum. Since this power is intended to allow the Government to deal quickly with urgent financial matters, I further appeal to noble Lords that a restrictive and drawn-out process of consultation is not the right approach.

As regards Amendment 507, the Government will continue to work with the devolved Governments on research and innovation policy, as they do now. The Secretary of State, as a UK Minister, already has a duty to act in the best interests of the whole of the UK. The Government made an amendment in the other place to ensure that the Secretary of State, when appointing members to UKRI’s board, must have regard to the desirability of including at least one person with relevant experience in relation to at least one of Wales, Scotland and Northern Ireland. No such duty is currently in place regarding existing bodies with UK-wide remits. This strikes the right balance between ensuring relevant experience of research and innovation systems across the UK on UKRI’s board and giving the Secretary of State the flexibility to appoint the best people for these important roles. Here I assure the noble Lord, Lord Storey, that there will be a proper gender balance on the UKRI board. Further wording around the Secretary of State’s duties in this respect would damage this crucial flexibility. With these explanations and assurances I ask the noble Lord, Lord Patel, to withdraw his amendment.

Higher Education and Research Bill

Lord Stevenson of Balmacara Excerpts

Committee: 7th sitting (Hansard - continued): House of Lords
Monday 30th January 2017 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

483A: Clause 86, page 55, line 14, leave out subsection (2)

[Lord Stevenson of Balmacara (Lab)]

My Lords, this continues on the theme of uncertainties. I think that I can deal with the issue fairly quickly; at least that is my aspiration in moving the amendment. The starting point for this brief debate is Clause 86, which lists the seven current research councils and then adds Innovate UK and Research England. The intriguing statement is:

“The Secretary of State may by regulations amend”,


that list so as to,

“add or omit a Council, or … change the name of a Council … But the regulations may not omit, or change the name of, Innovate UK or Research England”.

Inevitably, the question that arises is: why is that? This is not in any sense an attempt to set in concrete the existing structures. These councils have come and gone and changed their names with dazzling frequency and I do not think that what we have before us, the seven currently dealing with the range of research that they do, will last for very long. But it is important to have an explanation from the Minister, perhaps by letter if he so chooses, of what consultation might be undertaken before the councils are changed—because there is a bit of a worry about the uncertainty.

[Lord Willetts]

The noble Lord has just made an assertion which I do not think is quite correct. After the research councils were created in 1965 by the Wilson Government, if someone who had participated in those debates at the time were to look at this list of research councils, they would indeed observe changes. However, it is not the case that they change frequently: rather, they have changed very slowly over time. For example, the Economic and Social Research Council was created in the 1980s and the Science and Technology Facilities Council more recently. But the noble Lord should recognise that there is some quite deep continuity here, which is important if we want to ensure that they remain stable entities in the new dispensation.

[Lord Stevenson of Balmacara]

That is a very kind intervention because I no longer need to give the second half of my speech, in which I would have stated that the names of the councils are only one aspect; the worry is that the work might change. That was the point I was seeking to make. I beg to move.

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[Lord Stevenson of Balmacara]

I am almost humbled to accept such a wonderful offer. I thank the Minister very much indeed and beg leave to withdraw the amendment.

Amendment 483A withdrawn.

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[Lord Mackay of Clashfern]

My Lords, this is a short but important point. Schedule 9 paragraph 8(1) states:

“UKRI may … appoint employees, and … make such other arrangements for the staffing of UKRI as it considers appropriate.


Sub-paragraph (2) states:

“The terms and conditions of appointment as employees are to be determined by UKRI with the approval of the Secretary of State”.


That is the general provision. However, there is an extraordinary provision in Clause 89. After listing the research councils—it is interesting that the arts and humanities are separate although the arts include humanities, although that does not matter too much—subsection (2) states:

“Arrangements under this section may, in particular, provide for the exercise by the Council concerned of UKRI’s functions under paragraph 8(1) and (2) of Schedule 9”—


those are the paragraphs I have just read—

“in relation to relevant specialist employees”.

In other words, the council is going to get, possibly, a chance to make arrangements in regard to relevant specialist employees. Who are these?

“A ‘relevant specialist employee’, in relation to a Council, means a researcher or scientist employed by UKRI to work in the field of activity of that Council”.


It is quite obvious that the term “scientist” is fairly ambiguous. For example, would it include a specialist doctor working for the MRC?

The other obvious question is whether this applies to technicians in laboratories. Is a technician a scientist? I would think they certainly are, but it cannot be taken as a certainty that the construction of the term “scientist” in this Bill would necessarily include a technician because sometimes we distinguish between them in the terminology. So far as researchers are concerned it is, vague in the extreme. Is a person who organises research but does not do any himself or herself qualify as a researcher? I thought that there must be some principle behind the selection of the terms “researcher” and “scientist”, and that is what my amendment ventures to suggest. It provides that, for a specialist employee,

“after ‘scientist’ insert ‘, or other person whose knowledge or experience is important to the operation of that Council”.

That is the only way to avoid ambiguity.

I have the impression from my discussions with the department that the general view is much in accordance with mine, but the officials seem to think that the terms “scientist” and “researcher” would include them all. I would like to say that they do not, but it is certainly not clear at all and I see no reason why it should not be. The easiest way to put it clearly is not to set out a list of all the people we can think of, because there would quite a number; rather, it is to set out the principle on which the relevant specialist employee as a characteristic is determined. That is what I have tried to do in my amendment, and I am happy to seek a better formulation if the Minister wishes it. I raised this point when I wrote to my noble friend’s predecessor and to the Minister in the Commons. I hope that we might be able to get an answer to this question tonight and I beg to move.

[Lord Stevenson of Balmacara]

My Lords, this is an interesting amendment and it has been well trailed since the noble and learned Lord made it clear in a couple of our Committee sittings that he intended to speak on this issue. We are glad finally to get the benefit of his words expressing concern about the current drafting and the need to unpick it. I think the Minister will be at a slight disadvantage because we have been making this point throughout the six days of our deliberations in Committee. We have tried to draw the attention of the noble Viscount to the fact that wherever there is an opportunity, in our view, for the Bill to inflect a sensibility within the structures and operations of the various bodies being established under the new architecture, towards an inclusive way of treating those employed within these structures, it has always been rebuffed. That might be too strong a word, but although it has been played back to us as something the noble Viscount would think about, we have not even managed to get him to reflect on it.

So the Minister is not able to take responsibility for the omissions of the earlier sittings of the Committee, but this is a great opportunity to pick up the point. Given that he has come from a department which must have responsibility for employees—indeed, in his last outing he was dealing with trade union reform and related issues—he will be well aware of the sensitivities that these matters can give rise to. He might want to reflect on the need to respond positively to the noble and learned Lord, who has made such a fine point.

[Lord Prior of Brampton]

My Lords, I am going to respond but I will have to let the noble Lord draw his own conclusions as to how positive the response is. My noble and learned friend Lord Mackay has raised an interesting point and I thank him for that. In the interests of discipline and autonomy, and respecting the Haldane principle, it is right that the council should have special delegated authority to appoint and to set terms and conditions for specialist academic and research staff within that council and its institutes. There are particular cases where it may be necessary for councils to directly appoint and set terms and conditions for scientists, researchers and other technical staff involved in a research endeavour. In such cases, authority to do so will be delegated to the councils, as per subsections (2) and (3). A relevant example is the Medical Research Council’s Laboratory of Molecular Biology in Cambridge. There is no intention to change such long-standing and effective relationships.

I am sympathetic to the concern raised by my noble and learned friend Lord Mackay and agree that there are many other persons whose expertise is of great importance to the successful operation of a research council. As such, I reassure noble Lords that the Bill enables the continuation of existing practice to hire staff. Such persons will become employees of the councils through UKRI. Therefore, I ask my noble and learned friend to withdraw the amendment.

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[Baroness O'Neill of Bengarve (CB)]

My Lords, I add my support to the amendment. It seems extraordinary to imagine the Office for Students unilaterally making a decision that an institution should have the power to award research degrees. Surely it is quite essential that a research organisation—particularly, in this case, UKRI—should be heavily involved. Equally, I do not think that UKRI can make the decision alone because it relates also to the capacity of university departments to receive and look after research students.

[Lord Stevenson of Balmacara]

My Lords, briefly, I put my name to this amendment because it raises quite a big issue in relation to the respective powers, which the noble and learned Lord explained very well. We have almost a surfeit of expertise around and it needs to be picked through very carefully. I invite the Minister to respond after due reflection, perhaps in writing, because this is something that we will need to come back to when we look again at the powers of the OfS on Report. This is not his current responsibility; it will probably be for the noble Viscount the Minister to respond.

This is a question of what powers the Secretary of State feels need to apply to which institution, not just in relation to the power to award research degrees—which is in itself an important decision—but in relation to, for instance, the quality of the teaching that might be involved.

We are hearing a lot about the way in which the department feels strongly that a measure must be introduced that will allow it to assess the quality of teaching. As far as we understand it, at the moment that is at an institutional level—although it will go down to departmental and, possibly, to course level. If it goes to course level, or even to departmental level, presumably it would be an imperfect measure if it did not also look at the research degrees that were awarded by that department or by the staff involved. We therefore have to know a lot more about this before we can make a decision about whether the powers are allocated correctly and whether the responsibilities lie in the right place. I look forward to having responses in due course.

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[Viscount Younger of Leckie (Con)]

My Lords, as this is the last group of amendments, most of which were not moved by the noble Lord, Lord Stevenson, I shall respond briefly and particularly take note of the general comments made by the noble Baroness, Lady Deech. I shall make a short concluding comment. If there are matters in this group of amendments that require some writing, I will write to all noble Lords and put a copy of such letters in the Library of the House.

I shall make some concluding comments about this quite long Committee stage. I record my appreciation of the whole Committee and of all noble Lords who have taken part in all the debates for the quality and constructive nature of the discussions we have been having in the past few weeks. I am very pleased that noble Lords recognise that Committee stage is about discussing the Bill, probing the detail and, importantly, giving all sides an opportunity to listen to other noble Lords’ points of view. As a result, noble Lords have not felt the need to divide the Committee beyond the first amendment on the first day. For that, I am grateful.

Now we have some time before the Bill enters its Report stage. The noble Lord, Lord Stevenson, has challenged me on the meaning of different verbs used on occasion by me on and around the word “reflect”. I hope I can leave a smile on his face—or perhaps not—by saying that I am actively working with my honourable friend in the other place, Jo Johnson, to reflect on these discussions and consider the best way forward. On a serious note, I hope the noble Lord and the noble Lords, Lord Watson and Lord Mendelsohn, realise that I have given much warmer words than that at certain points. In that spirit, I want to be sure that he understands that we are looking very carefully at Hansard and reflecting generally on all the debates. I am looking forward to Report. In the meantime, I would just say that I have very much appreciated the debates and look forward to future ones.

[Lord Stevenson of Balmacara]

My Lords, because of the invitation to reflect, I will take a slight liberty and make two points. The worst time of my life was when I occupied a post in the British film industry and was involved in trying to get decisions for funding for films. We were often engaged in trying to deal with larger, richer and often foreign bodies, which were prepared to tantalise us with the thought that they might invest in our films. It became well known in that process that the worst decision you could get was the slow maybe. I am afraid we are in that situation. The Minister has said that he is reflecting and thinking, but we have not been able to get clarity. It is easier to have a straight, “No, we are not taking this forward”, than it is to have variations on “thinking hard about” or reflecting. I appreciate the gesture that he has made, but it has been a bit of a frustrating period, and I am sure the noble and learned Lord, Lord Mackay, will also say that sometimes it has been very hard to understand where the Minister has wanted to get to with a particular issue because we did not get clarity about it.

However, that is all past. We are now into a period of calm waters, and perhaps we can pick up the threads of some of what we are doing and try to take forward the ideas for Report and possibly onwards from then. I hope that that will be a fruitful time, and I look forward to it.

[Baroness Deech]

My Lords, I am happy to withdraw the amendment, but given that this is such a massive Bill with so many unknowns in it, I and probably others will be calling on Report for some sort of post-legislative scrutiny and checking. However, for now, I beg leave to withdraw the amendment.

Brexit: Single Market and Workers’ Rights

Lord Stevenson of Balmacara Excerpts

Monday 16th January 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, why is it that I find it very difficult to believe every word that I have just heard from the Minister? It sounds great, and I am sure that parsnips are waiting to be buttered in order to benefit from that, but it is really not a very convincing argument from the party that brought forward the Trade Union Bill in the last Session. Is this not really about what we will be negotiating for? In its brilliant paper the TUC has no problem in setting out what the UK negotiating position should be—why can the Government not do so?

[Lord Prior of Brampton]

My Lords, I think the Prime Minister, in a speech tomorrow, will be setting out the strategic objectives of our negotiations and what we are trying to get out of the negotiations that will take place over the next two years. It would be foolish of me to speculate in any more detail today about what those objectives are.

Green Investment Bank

Lord Stevenson of Balmacara Excerpts

Thursday 12th January 2017 Lords Chamber

[Lord Prior of Brampton]

The Government’s commitment to the integrity of the Green Investment Bank was made clear by enshrining its five green, core purposes in the articles of association of the company and the assurance that, if the company wants to change those green purposes, it has to get the agreement of the independent trustees, of whom the noble Lord is one.

[Lord Stevenson of Balmacara (Lab)]

I welcome the noble Lord to his new Front Bench duties and look forward to working with him. The issue that has just been raised is important. Surely it is now clear that the trustees will be unable to prevent the green mission being changed, because the way that the deal is structured means they can be bypassed. Is it right that there will be no obligation on the new owners to continue investing in the UK, contrary to the requirements of the Act passed by this House?

[Lord Prior of Brampton]

On the latter question of whether the bank may invest overseas, I understand that it is already considering projects in India and east Africa. One purpose of introducing private capital into the Green Investment Bank is to give it more flexibility to develop the business in future.

Intellectual Property (Unjustified Threats) Bill [HL]

Lord Stevenson of Balmacara Excerpts

3rd reading (Hansard): House of Lords
Tuesday 13th December 2016 Lords Chamber

[The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)]

My Lords, before moving the Motion, I should like to take a moment to reflect on the Bill and to say thank you. This is a small Bill of limited scope, but we have taken steps to ensure that it will work effectively for businesses whether in physical or online environments. I want to record my thanks to the Law Commission for bringing its great expertise to this most technical of subjects. Along with the Scottish Law Commission, it played a key role in the development of the legislation.

This has been a delightful new experience for me. It gave an opportunity to see the benefit of the Law Commission special procedure, which ensured that there was both a wide-ranging debate on the key issues and a robust examination of the Bill. The evidence sessions in particular provided access to a rich seam of expertise, and the procedure, having worked as intended, has produced a Bill that is much the better for it. This is a valuable route for much-needed and uncontroversial reform, and the Law Commission has asked me to express its gratitude to the House for the time and care it has given to undertaking its work. That is perhaps code for our careful scrutiny and the amendments we made.

I should also like to take the opportunity to put on the record our thanks to the noble and learned Lord, Lord Saville of Newdigate, for his chairmanship of the Special Public Bill Committee, as well as our thanks to our excellent clerk. I am grateful to all noble Lords for their polite, considered and probing questions. In particular, I thank the noble Lord, Lord Stevenson of Balmacara, for his constructive approach, and the noble Baroness, Lady Bowles of Berkhamsted, for bringing her expertise to our deliberations. I also thank my noble friend Lady Wilcox, a former IP Minister, for her doughty championship of small businesses, along with our Whip, my noble friend Lady Mobarik.

Because of the structure of the Bill, we enjoyed not only the usual groups of amendments but vast families of amendments—a phrase coined by the noble Baroness, Lady Bowles—across the various IP rights. Some of these families were quite large and, like any family, not always easy for outsiders to understand. Some of the families also appeared to be happier than others, but I would observe that we successfully manoeuvred our way through all the complexities.

I finish by putting on the record my thanks to the Bill team, the Intellectual Property Office and my private office officials for their support throughout the process. I believe that the Bill is being sent to the other place in great shape. I beg to move.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I should like briefly to echo the words of the Minister. This Bill has been a good experience and a novel and, for me, different way of doing Bills—something we might learn from, in fact, as we go forward. The Minister said that there were families of amendments, which was certainly true; and we became a little family as we tried to deal with the rather odd way in which the Bill is organised. That was because, every time we looked at one area, we discovered that we would have to amend the Bill in every other clause as well. We were in some danger of extending the small coterie of your Lordships who actually like IP matters, but that is a danger which I think not many would survive.

Like the Minister, I thank all those who gave evidence both in writing and in person. It was a rich and interesting experience. The Special Public Bill Committee worked very hard, and I would particularly like to thank, in addition to our chairman, the noble and learned Lord, Lord Saville of Newdigate, the representatives from the Labour side, my noble friends Lord Plant of Highfield and Lord Hanworth, who served a noble part on the Committee. I also echo the Minister’s thanks to the Intellectual Property Office and the Law Commission. Lastly, I thank the Minister. She has been rather modest in saying that we had improved the Bill; actually, it was she who took on the burden of heavy lifting not only by daring to go back to her own department and other departments to get clearance for various things, but also by taking on, in full measure, the Law Commission itself—and winning.

[Lord Clement-Jones (LD)]

My Lords, I wish to intervene only briefly in the absence of my noble friend Lady Bowles of Berkhamsted. From the updates she has given me regularly and from reading Hansard, she certainly proved more than a match for the Law Commission in many respects, and indeed she helped to inform the Government as the Bill went through. I know she feels that the Bill is now in a much more satisfactory form than it was when it arrived, and I thank the Minister for the amendments that were made in the course of its passage.

Intellectual Property (Unjustified Threats) Bill [HL]

Lord Stevenson of Balmacara Excerpts

Report stage (Hansard): House of Lords
Wednesday 23rd November 2016 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I also thank the Minister and must declare my interests as a retired chartered and European patent attorney, former fellow of the Chartered Institute of Patent Attorneys and former representative before the European Patent Office and European Union Intellectual Property Office; and that my husband has residual income from our former practice, and that we are proprietors of a registered trademark. That all means that I have had to send and receive the sort of correspondence that the Bill is all about.

The Minister has proposed amendments in this group and elsewhere that touch on most of the points on which I tabled amendments and spoke in Committee. The only points not touched on at all concern the proposed new section defining actionable threats, and I have not tabled similar amendments again, as these were perhaps overly substantive for this stage of a Law Commission Bill. That is a pity but, nevertheless, I have had the opportunity to elaborate on those points in Committee for the public record, and people can take note of what will remain problems.

With regard to Amendments 1, 2 and 4 for patents and the corresponding changes to the clauses for trademarks and designs, I agree that the deletion of “solely”, and clarifying the examples, make the safe harbour that is intended for permitted communications clearer and the accidental triggering of threats provisions less likely. I need say no more on that. I am grateful for the other drafting amendments on numbering and with reference to pending rights, which I raised.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am sure we will find when we examine the fine print that there is probably a prohibition in the Companion on making the sorts of speeches we have been hearing. That makes me even more determined to make them. It is right that we should record that the special procedures we went through for the Bill, although recognisably a labour—no pun intended—have generated a very successful outcome. I join others in congratulating our chair, the noble and learned Lord, Lord Saville of Newdigate, who got us through some interesting and tricky evidence sessions with great expediency and, as was said, on time.

I also congratulate the Minister, whom I recall making her first appearance at the Dispatch Box on an intellectual property Bill—“flustered” is perhaps too strong a word, but it certainly was not her natural habitat. But the feathers have grown and the plumage has become much more sleek and groomed, and now we have somebody who is fully equipped to deal with all matters of intellectual property. As has been said, those of us who have been involved with intellectual property Bills before have had not much success in getting changes, but she has come back with a raft of improvements to the Bill. Against the Law Commission, as has been said, you can say no finer than that.

It was a pleasure having an expert member on the committee, the noble Baroness, Lady Bowles of Berkhamsted. It is always a bit of a worry when you see somebody on a committee who knows a lot about the subject, because you think they may dominate it. She was indeed very powerful in her contributions, but they were to a point and finely judged. We all learned and benefited from that.

We have done extremely well, and the Minister has achieved a great deal and kept us informed. We had a letter only this week explaining what the proposals were and how they fitted into her thinking, and I am happy to support them.

--- Later in debate ---

[Baroness Bowles of Berkhamsted]

My Lords, I again thank the Minister for these amendments. I welcome that “necessary” has been removed from the judge’s discretion provision by way of Amendment 3 and its family of amendments. It was a feature of our discussions with witnesses and in Committee that the court’s ability to exercise discretion was important and that the flavour should be that the judge can do what is reasonable in all the circumstances. This is reflected in the simple words “in the interests of justice” without what might have been an unusually high or inflexible hurdle of “necessary”.

On Amendment 6 and its corresponding family, we had significant discussion during evidence sessions relating to the status of take-down notices that are sent to digital platforms and then by the platforms on to vendors. Case law had left a bit of a limbo as to whether these are threats and, if they are, whether the defence that “all reasonable steps” have been taken to find the primary infringer is too high a hurdle, especially in the digital environment, where vendors may be in remote places and it is effectively impossible to trace who may truly be the primary infringer and the customer is, in effect, the importer. Did every lead have to be pursued or, if not, how many?

There is some assistance through the Minister’s amendment that deletes “all”. This makes the defence, if it is needed, a little easier, and the word “reasonable” still retains aspects of proportionality, so the test has not been made too light in other circumstances and can adapt.

However, the amendment does not solve the lacuna of whether a take-down notice is or is not a threat, with two interim judgments—Quads 4 Kids and then Cassie Creations—indicating it was an arguable point but not deciding. This is left, as I said, in limbo.

This is a substantive point—again, too substantive for this stage of a Law Commission Bill—and there is an opportunity to pursue issues relating to digital platforms in the Digital Economy Bill. On these Benches, we are interested in doing that for the status of take-down notices, among other things. I know the Minister can give no promises now but at least it, and how it originated, will be no surprise when the issue returns.

[Lord Stevenson of Balmacara]

My Lords, I want briefly to follow the noble and learned Lord, Lord Hope—my noble and learned kinsman—in expressing my thanks for the way in which these points have been taken, but perhaps I may add a little a gloss to what he said. The way he expressed it was that this is going to aid the generic judge in doing their job more efficiently than would otherwise be the case. However, it is worth recalling that the discussion we had in Committee on this—it was prompted by the evidence we received—turned on the fact that this is quite a key point in trying to perceive within the Bill the evolutionary steps that the Law Commission said existed, as this Bill provides a route forward from where we were in previous times to where we might be in the future in the possibility of establishing a more general tort in relation to business ethics and business behaviour, of which it is arguable that unjustified threats are a very unjustifiable part of the business environment. I know that the Minister shares my thinking on this and I agree with her that this is not the Bill in which to take these issues forward, but I think we both hope that there will be an opportunity to come back to this issue in some future legislation.

The point is an important one. If we see this piece of legislation as a step on a journey towards an alignment that is closer than is currently the case with the Paris convention 1883, we will be in a more satisfactory place to understand and perhaps plan forwards on how these things might happen. Whether that should be in the Digital Economy Bill, which is soon to arrive with us, we do not know, because it is not being dealt with in the Minister’s department any more. However, I am sure that she will take a close interest in it, particularly if the words “intellectual property” are flashed around. I am sure that she will be like a moth to the flame coming back to support us. In the interim, we support these amendments.

--- Later in debate ---

Moved by

[Lord Stevenson of Balmacara]

9: Clause 1, page 4, line 6, after “the” insert “specific”

[Lord Stevenson of Balmacara]

My Lords, I am grateful to the noble Baroness, Lady Bowles of Berkhamsted, for joining me in tabling this amendment and its parallel amendments in later parts of the Bill. I am sure that the Minister, when she comes to respond, will point out that, as phrased, the amendment does not achieve what I hope to draw out from her in the discussion. In that sense it is a probing amendment, which is probably inappropriate, but nevertheless it was the only way we could think of to get this thing up at this stage.

As the Minister said in Committee, the tactic of suing a professional adviser for making a threat has been used to disrupt negotiations and hamper legitimate client-adviser relationships. A professional adviser should not have to become personally involved in a threats action when they act only on behalf of their client. I accept that the Bill as drafted restricts the protection available to professional advisers to those who are regulated by a statutory regulatory body or entitled to legal professional privilege, but we already have in the Bill provisions under which the professional adviser may rely on the safe harbour provisions to avoid personal liability. Maybe there are other ways that other safeguards could be built into the Bill, such as when it is clear that the threat is speculative and when the principal and the adviser are clearly adopting a game of bluff with the alleged infringer, and so should, by rights, be at risk. I would certainly be happy to engage in discussions with the IPO and the Minister on this point if there was willingness to take it further.

I accept that exempting professional advisers from the threats provision has long been called for and that it would help stop game playing. However, to my mind this is a step too far. The Bill delivers an exemption that provides for the first time in English law that an agent would not be liable for following the specific instructions of his or her principal. I beg to move.

[Baroness Bowles of Berkhamsted]

My Lords, I tabled the amendment with the noble Lord, Lord Stevenson. I have a few additional comments that bear some relationship to what the effect of the word “specific” would be in this position.

The fact that advisers could themselves be liable has been, at least in some circumstances, a gatekeeper to check on the appropriateness of communications concerning infringement of intellectual property rights. It has also created other problems, hence the exemption that has been put forward in the Bill. We took evidence to establish that at least in the UK there are disciplinary provisions for wayward professionals, which assists in that gatekeeping, but here we are exempting advisers worldwide. I remain a little concerned as to whether the definition of “exempted adviser” is too widely drawn, but it seemed that there was another way to ensure some element of the gatekeeping is there to make sure the instructions to the adviser are specific.

An adviser overstepping the mark or not warning their client of the consequences of an unjustified threat could well be on the receiving end of a negligence action, but it is a bit grey as to what that instruction might need to be. Could it be a blanket instruction to “go get ‘em”, or to be trigger-happy without discussion about a whole portfolio of rights? The amendment aims to make it clear that specific, conscious instructions are needed, and that due care and attention to that takes place whoever and wherever the adviser may be. It also carries with it the flavour—this needs to be said and recorded—that the exempting of advisers is a particular exemption, not a “get out of jail free” card. Care still has to be taken over the composition and sending of letters or notices that allege infringement.

--- Later in debate ---

The solution provided by the Bill seems much clearer and more certain than trying to capture the concept of bluffing and so on. I can understand why some concerns have been expressed, but, in the light of the background I have set out as to why we have drafted the provision in the way that we have and the need for clarity, I hope that the noble Lord will feel able to withdraw the amendment.

[Lord Stevenson of Balmacara]

I thank those noble Lords who contributed to this short debate. It is right that we recognise that there are particularities in relation to in-house lawyers and I take the point made by the Minister that the exemption would be particularly useful for them. It does not get round the fact that this could easily be the thin end of the wedge. While that should not detract from the specifics of what we are discussing today, it would be odd if a very small part of a very small part of the law—while I in no sense diminish the contribution made by this Bill to the greater good—was to be adapted to allow this exemption, which then spread.

[Baroness Neville-Rolfe]

It may be clearer if I make one final point. My understanding is that the underlying law on agent liability is left undisturbed, so no precedent is being set here for other areas of law which concern agent-client relationships. I recall that being a concern expressed by the noble Lord, so perhaps my making that clear to the House will help him in agreeing to withdraw the amendment.

[Lord Stevenson of Balmacara]

Yes. The Minister anticipated exactly what I was going to say. We were all looking for some words of reassurance so that those who had to interpret the provisions later would be better informed. We have not had the chance to see the Explanatory Memorandum in that regard. Perhaps we could receive that in correspondence before the final stages of the Bill, so that I might be more satisfied. On that basis, I am happy to withdraw the amendment.

Amendment 9 withdrawn.

Intellectual Property (Unjustified Threats) Bill [HL]

Lord Stevenson of Balmacara Excerpts

Wednesday 9th November 2016 Other Business

[The Senior Deputy Speaker]

Yes, there will be a full Report stage on the Floor of the House and I think that it needs a unanimous vote. Are there any other comments?

[Lord Stevenson of Balmacara (Lab)]

Could you repeat that? Are you saying that even if there is a Division and an amendment is passed, it will not go forward to Report unless it is a unanimous vote?

[The Senior Deputy Speaker]

It will go forward to Report, but an amendment in this Committee will not be completely reversed unless there is unanimity.

[Lord Stevenson of Balmacara]

Sorry, I appreciate that this is new and uncharted territory, but we might as well get it right, otherwise we will tie ourselves up in knots. If it were an ordinary Bill and we were in Committee and passed an amendment by vote, the amendment would be inserted in the Bill and would be unlikely to be challenged by the Government on Report. But you have added that it would follow that arrangement only if it were a unanimous vote of this Committee, which does not seem to square with the idea that we stand in our places and provide—

[The Senior Deputy Speaker]

I will try to be as precise as possible—and so early on. I have the Companion to the Standing Orders and Section 8.133 says:

“An amendment agreed to on a vote in committee may not be reversed on report except with the unanimous agreement of the House”.

Is that clear now?

[Lord Stevenson of Balmacara]

As mud. So it goes through to Report stage and would not be challenged, but it could be challenged if it were unanimous on Report. That is what you read out.

[The Senior Deputy Speaker]

There is a difference between changing something and reversing it. Is that clear?

[Lord Stevenson of Balmacara]

You put me on the spot. No, it is not, but I think that I will live with it for the moment and we can work it out later.

[The Senior Deputy Speaker]

We could maybe provide tutorials hereafter. I ask Members to speak sitting down, because the cameras are not coping.

Clause 1: Patents

Amendment 1

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[Baroness Wilcox (Con)]

This is the point in the Bill where I think I can best make a contribution. The Intellectual Property (Unjustified Threats) Bill is legally satisfactory, but its difficulty lies in how it will operate in the real world. Specifically, for the many good changes that it contains to operate effectively, businesses must be fully aware of them and confident about their application. This is a problem particularly for SMEs, which often struggle to understand the complex law in the field of intellectual property. In the area of threats, it comes down to exactly what they can and cannot do and why.

The lack of engagement by SMEs with the Bill, especially an absence of written evidence, is a concerning indication of the difficulties that they face in the area. I have had my own SME and have personal experience of what it is like to receive an unexpected telephone call from a large company telling me that what I am doing is not quite right and that they would be happy to help me out and even to give me a payment for my trouble. So I understand the fact that most people running a small business are not reading all sorts of bits of paper to see what comes next for them. They cannot afford secretaries or legal fees while they are getting their businesses going. It is important for us to get small businesses going and up to that medium size where they are more secure and able to take the advice that they need.

I have one or two potential solutions that the Minister might like to think about. First, I would insert an amendment before Clause 7 reading: “Communication. The Intellectual Property Office shall take steps to ensure that the changes to the law relating to unjustified threats made by this Act are communicated to businesses in the United Kingdom, with a particular focus on communicating them to small and medium-sized enterprises in the United Kingdom”. This would be helpful, for example, in notifying businesses that professional advisers should no longer ask for indemnities to write to an alleged infringer or help them understand the permitted communication provisions of the Bill by setting out the examples listed.

A second solution might be the appointment of a champion for small businesses—we did this with the ombudsman for the grocery business. I am sure that the Minister does not want to find herself having to invent something, but if there is not good representation on the face of the Bill, the chances are that very little of it will feed down to small businesses. The appointment of a champion for small businesses in the field of intellectual property would be welcome. Such a champion could ensure that SMEs are fully aware of their rights and what they can and cannot do in the area of threats, and that big business could not exploit its superior understanding of intellectual property law to gain unfair advantages over SMEs.

Thirdly, a designated lead in the IPO to offer advice to small businesses about approaching and dealing with the threats provisions, while stopping short of offering actual legal advice, would also be welcome. I worked with the Intellectual Property Office when I was a Minister for Intellectual Property. Prior to that, back when I was running a small business, it was one telephone call I made to the Intellectual Property Office when I was told, “Sign nothing. Say nothing. We’ll send someone”. That is exactly the sort of help I would hope for. A small business that is approached or attacked by a large business would find that they could make a phone call and somebody would be there to answer.

[Lord Stevenson of Balmacara]

My Lords, I support the amendments introduced so well by the noble Baroness, Lady Bowles of Berkhamsted. There is very little that I need to add in terms of the general case—she made it very well. In the context of the remarks that we have just heard, a broader concern about the role of SMEs should carry weight in these debates. The anomaly of the omission of those commissioned by others who perhaps should know better is a point strongly made—the Lego example is rather a good one, even though we perhaps should not put it around too much in case people get ideas. The fact that such provision already exists elsewhere in statute suggests that, if we are trying in this Bill to level things up, this amendment and those consequential on it are very important. The amendment in the name of my noble friend Lord Hanworth is also worthy of consideration, although we will need to hear him speak to the other amendments in later groups to get a full picture of where he is coming from.

[The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)]

My Lords, on interests, I am the Intellectual Property Minister, and I have the pleasure today of speaking on behalf of the Government.

I am very grateful to the noble Baroness, Lady Bowles, for her comprehensive introduction to this large group of amendments. I am also grateful to my noble friend Lady Wilcox for her support for the Bill as whole and for the good work done by the Law Commission.

It is common ground, I think, that Section 70A and its equivalents set out the definition of an actionable threat. The sections replicate the existing exception whereby a threats action cannot be brought if the threat refers to a primary act of infringement. The existing statutory definitions of what is an infringing act lie at the heart of the threats provisions.

The amendments in this group would mean that threats to someone “commissioning” another person to carry out a specified primary act cannot trigger a threats action. Commissioning infringing goods is not an infringing act within the meaning of any of the existing statutory definitions. This is a key point. Treating commissioning as if it were infringement, for the purposes of the threats provisions, would be a highly significant change to the law. It would introduce a novel concept and create confusion in the law of threats and more generally.

Unjustified threats are those threats which are made in respect of invalid rights, or where there has been no infringement. Amendment 1 and its equivalents would remove any protection from unjustified threats for a particular class of people who are not actually infringers at all—that could easily include the SMEs we are concerned about, on which I will come back to my noble friend’s comments at the end—and, to me, that cannot be right.

The amendment would also have other unwelcome consequences. For example, there is the defence which is available to the threatener, if they can show that the infringement did in fact occur. That defence is made unworkable in these circumstances.

I am concerned that, as with Amendment 3, there is a risk that the amendment would have unintended consequences on the interpretation of IP provisions more widely—specifically, the provisions which define infringement. Furthermore, the meaning of what amounts to “commissioning” a primary act would only become clear after a substantial body of case law had been built up. I do not think that that would be acceptable or welcome to business.

I shall now move on to Amendment 20—with many thanks to the noble Viscount, Lord Hanworth, for his explanation—which relates to use of trade marks in an online environment. I do not agree that there is an inconsistency in the threats regime. The noble Baroness, Lady Bowles, suggested that infringement law could be aligned better for the rights, but that is a wider question, as we discussed, that relates not just to threats or this particular Bill. If the amendment is intended to ensure that “applying” a trade mark in an online environment is covered more explicitly as a primary act, then in my view this is unnecessary when the threats provisions are read in the wider context of the parent Act.

This Bill will insert the individual threats provisions into the existing framework for the relevant rights. While the provisions appear in isolation in this Bill, they must be read—as I have just said—in their wider context.

The relevant sections of the Trade Marks Act 1994 do not expressly require a sign to be in physical form. It is accepted that services may be offered online under a sign in electronic form, and this applies whether the sign is included in a listing or as an AdWord. Nor do they require that the sign must be physically applied to physical goods or their physical packaging. Where goods themselves are electronic, then it follows that the sign applied must also be electronic.

That is a long way of saying that changing the provisions in the Bill to set out expressly that the online application of a sign is covered is unnecessary and, as we discussed in some of the hearings, could cast doubt on an already settled view.

I turn finally to the position of small businesses, which was so well expounded by my noble friend Lady Wilcox. I do not think that a champion is a matter for this Law Commission Bill, although she and I had a good discussion about it. I believe, as I have said several times, that this will benefit smaller-sized businesses by helping them to gain access to justice at reasonable cost in order to enforce and make best use of their IP in the sort of circumstances that she was talking about.

I hope noble Lords will allow me to enlarge a little on the measures that government has taken to help SMEs, as I think that might help my noble friend. We heard in the evidence sessions from Mr Justice Birss about the benefits to SMEs of using the Intellectual Property Enterprise Court. Recent reforms made to the IPEC—in particular, the small claims track—help to level the IP playing field for SMEs that previously struggled with cost. The Government are fully supportive of the IP pro bono initiative, launched last month, which is designed to help small businesses and individuals who are involved in a dispute about IP. The IPO also undertakes a wide range of activities that are aimed at SMEs—partly as a legacy of the time when my noble friend was Minister—and geared to promote understanding, such as: the government-funded IP audit programme; the IP for business tools; and the IP finance toolkit. I make no apology for taking this opportunity to explain that.

Regarding the guidance on the Bill, the IPO has committed to publish business guidance 12 weeks before the new provisions come into effect. In addition, the IPO will implement a full communications plan, update the online tools, make presentations at outreach events—many of which are aimed at SMEs—update stakeholders who have signed up to receive updates and use social media channels to try and ensure that we take this opportunity to raise awareness of the changes. Actually, this is a good opportunity to expound the importance of IP. The IPO works tirelessly to increase awareness of IP and to provide guidance and education at every level. I am happy to commit the IPO to communicating to SMEs in a helpful way about the changes and benefits that will be brought by the Bill.

An important point is that we will ensure, as we did for the Consumer Rights Act, that the material is pitched at the right level. I have asked the IPO to road-test the guidance in draft with small business representatives. So we will have material suitably targeted for SMEs, but also communicate to the people who provide advice and support to these businesses, such as the patent library network, growth hubs and professional IP advisers. As IP Minister, I have tried to make sure that people understand IP a bit more and, with my noble friend’s assistance, I think that this Bill is an opportunity to do a bit more of that.

Coming back to the amendments, I believe that they would in fact complicate what is currently, as drafted, a clear and consistent definition, developed by the Law Commission, of what is and is not an infringing act. I therefore ask the noble Baroness to withdraw the amendment.

--- Later in debate ---

[Lord Lucas]

I want to ask a question, so that I understand things better. In the case of a box of Tesco own-brand cornflakes, is Tesco the primary infringer, or must the person who thinks that their patent is infringed write to Tesco to ask who the manufacturer is? In other words, must they ask who Tesco has commissioned to make the cornflakes for it?

[Lord Stevenson of Balmacara]

Luckily, I do not have to answer that, but we have expertise beyond parallel at the Minister’s end of the table.

I just want to support the points made by the noble Baroness, Lady Bowles of Berkhamsted. The question here is not so much whether this is an issue that we should take into account ab initio, which was slightly the case with the previous amendment, although I supported that as well; the support here comes because there was clear evidence from those whom we consulted that this issue needs further attention, and the noble Baroness has made that case very well. If we have gone to the trouble of taking evidence but then do not consider it and take it forward, that seems to be a slightly casual way of approaching things. I hope that we will take this point very seriously.

I also take the noble Baroness’s point that, if we were to amend the Act in the way that she suggests, this would reduce the impact on small and medium-sized enterprises and other organisations, because there were would be fewer court actions and more such matters would be dealt with in the right way, which is directly between the participants. So I support these amendments.

[Baroness Neville-Rolfe]

My Lords, I am grateful to the noble Baroness, Lady Bowles, for her comments which, it is fair to say, were wide-ranging. I will explain how I see things and then address the various amendments, to use her words, on their merits—I should say her “family” of amendments, which is a good new collective term that she has invented today.

It is crucial that the threats provisions encourage rights holders to communicate with the trade source of an infringement—that is agreed—and provide much-needed protection for secondary actors, such as retailers and customers. To facilitate this, the Bill sets out a clear statement of primary acts. Threats in respect of these primary acts, namely the manufacture or import of a product, in the case of patents, will not give rise to a threats action. To answer the point made by my noble friend Lord Lucas, the manufacturer of the cornflakes—to use his example—is the primary actor. The point has been made by my advisers that this assumes that they are patented cornflakes; I am not sure how likely that is in reality, but it is a fair point. I think that there are people, as we discussed during the evidence session, who are in both the primary and secondary markets.

As we have discussed in this Committee, the provisions make a distinction between primary actor, such as the manufacturer, and secondary actor, such as the distributer and retailer, or the person with that hat. This provides protection for secondary actors from being exposed to threats. They are less likely to be able to make an informed decision on whether the threat is actually justified. Secondary actors are more vulnerable to threats because of the fear that they will become embroiled in an infringement action that they cannot afford. As a consequence, mere threats can—and do—persuade secondary actors to move their custom elsewhere.

This group of amendments would introduce circumstances where threats in relation to secondary acts would not give rise to a threats action. This clearly starts to undermine, to my mind, the protection for those who should rightly be protected by the provisions before us. The first set of amendments, concerning where a person presents themselves as doing a primary act when they are not, would mean that a threat sent to a person who claims to do a primary act could not be the subject of a threats action. The rationale for the proposed amendment is that the rights holder may not find out that the recipient is not a primary actor until after the letter has been sent, and then only if the recipient draws back from previous statements.

The amendment introduces an exception to secondary actor protection that is based on a new concept—as the noble Baroness explained—of “claiming” to be a primary infringer. This is an inherently vague concept not found elsewhere in the main Acts for the rights concerned. It would be complex and very difficult to bring evidence to prove in court. A significant body of case law would be required before businesses would have clarity about what amounts to “claiming” to be a primary actor. There may be different views to the one that I took on whether satellite litigation might result, but it certainly seems possible and unfairness could result in any case. Critically, the amendment would undermine protection for retailers who inadvertently use ambiguous language. If a secondary actor somehow implies, even accidentally, that their product was made by them, then under this amendment they lose all protection from unjustified threats, which also seems unfair. Under the current drafting, rights holders can make threats that refer only to primary acts. These are not actionable, so that is one solution. If a rights holder is uncertain about whether a retailer is also a primary actor, they can use a permitted communication to seek clarification of the identity of the primary infringer, without the risk of a committing an actionable threat.

I turn to the second group of amendments, which extend what is a primary act—for example, the manufacture of a hair dryer whose patent is owned by the threatener—to include any products or processes having the same features. To continue the example of a hair dryer, it would be one which is not the same but is similar in all material respects. Where threats are made to a primary actor in respect of one product, it is correct to approach them. They are potentially the greatest risk to trade and the source of the alleged infringing. But if threats are made in relation to equivalent or similar products, where the same business is only a secondary actor, it should be possible—in my view—to bring a threats action. To remove this option would chip away at the principle of protection for the secondary actor, which is at the very heart of the threats provisions. Mark Bridgeway noted in his evidence session that asking secondary actors for undertakings to cease doing something for commercial purposes is expressly excluded from being a permitted purpose. Yet the effect of the amendment would be to allow this to happen.

The amendment would also make the provisions more, not less, complex. It would blur what is intended to be a clear line between what is and what is not actionable. In addition, the concept of “the same features” is very vague and I can foresee great uncertainty for business. The noble Lord, Lord Stevenson, rightly mentioned SMEs. For the reasons that I have stated, I believe that including the amendments would reduce clarity and, therefore, make the provisions more complex and advice potentially more expensive for SMEs. In reducing the protection for secondary actors, I fear that the amendment could open up SMEs to unjustified threats. I know that it is a very complex area but, for these reasons, I ask the noble Baroness to consider not pressing her amendments.

[Baroness Bowles of Berkhamsted]

Thank you. I am sure that the Minister will not be surprised to learn that I do not quite agree with her summary. I think we have to go back again to what threats actions are all about, which is stopping the rights holder from being unfairly oppressive about their rights. They are not about protecting secondary infringers at all costs—in particular, they are not about protecting secondary infringing acts simultaneously performed by somebody who is a primary infringer.

The relevant section that we are talking about is not about a secondary infringer; it is about a primary infringer who makes something for disposal—previously, prior to Cavity Trays, you wold be in this rather stupid position where you could say, “You can’t make that anymore”, but you could not tell them not to sell it. That is a rather difficult letter that you have to write when trying to sort out the case and make sure all the ends are tidied up. If somebody holds themselves out, or claims—“purports”—to be something, that is very strong; maybe it is accidental. Actually, retailers should have a certain amount of clarity about whether they are telling the truth about their product. If they claim that they are making it and they are not, that is probably wrong under trades descriptions. I do not see why they should mislead somebody and then avail themselves of an action that was really meant to stop the rights holder being unfair. You end up with the situation where a primary infringer is able to have a bite back at the rights holder through the unfortunate accident of the relevant clause relating to the secondary acts done by the primary infringer. That is a situation that is no better than the situation prior to the Cavity Trays case.

If I talk about,

“having the same features so far as is material to the alleged infringement”,

you may think that it is vague but it will be in every undertaking that is ever agreed to and that has gone through the court, or that is done when agreeing not to go through the court but to withdraw the action. Therefore, to force things to go to the court in order to get a satisfactory undertaking will not make things any better. It will make things very bad for SMEs, in particular. I do not think the wording is vague at all. It talks about,

“so far as is material to the alleged infringement”—

that is very tight. But if you wanted it that, having pursued somebody, they could paint it blue instead of red and you have to go all the way round the loop again, it will not resolve the action. It is not saying a completely different product; it is essentially—as far as the court would perceive it—exactly the same infringement. I just think it is wrong that one cannot utilise again these sorts of letters.

Again, I would like to find out what level of support there is—there is perhaps a bit more support verbally than there might be in a vote. We only need to test on one amendment.

[Lord Stevenson of Balmacara]

The noble Baroness is making some very good points on this issue, but I am sure that she is aware of the situation—if we vote on this amendment and she is unfortunate enough to lose it, she will not be able to bring this back on Report. Might she reflect on that before she pushes the matter?

[Baroness Bowles of Berkhamsted]

I hear what the noble Lord says; if he is advising that it might be better to think about my wording a little more carefully, then I may be prepared to accept his advice.

[Lord Stevenson of Balmacara]

I think on this occasion that may not be sufficient. You will need to withdraw it, I think.

[Baroness Bowles of Berkhamsted]

Okay, I will withdraw the amendment.

--- Later in debate ---

In trying to overcome this dilemma, I thought that if we inserted, “prima facie”, in front of “may”, it would have the sense of, “Well, in all normal circumstances, it is okay to say this, but if you find some extraordinary and egregious way to utilise it, then the court might decide that it takes a dim view of it, so it is best not to do it”. I apologise for using Latin, but I felt that it had the flavour that I wanted. I have to say, looking at it now, it might be better if the words, “may be” had been changed to “are”. I hope that that has cleared up the problems that we came across in looking at the language of that subsection. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I pay tribute to the noble Baroness, Lady Bowles of Berkhamsted, for her ability to expand such a wide range of interests within one group. The grouping has been necessary, but possibly not in the best interests of a focused series of discussions. It rebounds on the Minister to try to respond in like mind to whichever one of the very large number of points we could have picked up on. I am sure she is well prepared, but I will not trouble her too much because I will not range very widely on this. I do not need to repeat what has been said so eloquently.

I wanted to focus my remarks on Amendment 13, which, more by luck than good judgment, I managed to get my name down to. I support what was said here in the context of the evidence we had. If the Committee will recall, a lot of what we talked about with one or two colleagues who came and gave evidence was the question of whether the Bill could be seen as evolutionary in any sense, leading to a broader understanding of the nature of the regulatory structure within which business in the UK should be conducted. I do not wish to put words into the Minister’s mouth, but I think she is not unsympathetic to the idea that we should instil good ethics in the business community. I hope for her support later on, perhaps, on this point.

The narrow issue here is that the decision of the Law Commission after much discussion was to accept that, while there was a teleological approach to this area of law in the sense that, in time, a wider tort could be introduced because it would encompass this and other areas, and in the process allow us to engage more directly with the Paris convention—which is where we might have to seek a wider international relationship post Brexit—it was not the time to do that and it had not carried out the necessary consultations it would wish if that was indeed where Parliament wanted to go. If we are not going the whole way, was there a midpoint?

It was interesting to hear the evidence from Sir Robin Jacob in particular that new Section 70B(3), if he read and interpreted it correctly, provided a little bit of breadth of discretion to the courts when approaching the issues that the noble Baroness, Lady Bowles, mentioned. I am keen that that should be the case. I align myself entirely with the noble Baroness’s remarks on this. It would be unfortunate if the wording as it currently stands, with the word “necessary”, was seen by some as a barrier to the sort of thing we think is appropriate, which is that, on occasion, only in appropriate circumstances and only for good reason, the judges should have the right to take a wider view about some of the issues before them.

It would be helpful to get a sense from the Minister of whether she understands that. It may be that she cannot go as far as the proposal here, although the words “reasonable in all the circumstances” or “proportionate” that the noble Baroness would introduce, would be better than “necessary”. Perhaps the Minister could reflect a little on what she takes from the current wording. If, on reflection, we look at that in Hansard and think it probably takes us as far as we need to go, it may be sufficient to leave this. It is probably one of the key points in this Bill where we could be doing something rather wonderful in trying to move the whole way this is taken forward from a rather tight set of constraints to a much more open approach. That would be for the benefit of small businesses in particular, which cannot always necessarily see the narrow point and come forward with ideas that would make it easier for people to move forward with their business. I support the amendment.

[Baroness Neville-Rolfe]

My Lords, new Section 70B introduces a framework of “permitted communications”, which sets out clearly how a rights holder may communicate with a secondary actor without being at risk of a threats action. It is important to note that a request for this certainty came from businesses and legal professionals during the Law Commission’s work. I have listened to the points that have been made with great interest. I am rather a fan of Latin, which is a very politically incorrect thing to say. I did Latin A-level and was probably one of the last to do so—people do not study it much nowadays.

--- Later in debate ---

[Lord Stevenson of Balmacara]

They are not allowed to.

[Baroness Neville-Rolfe]

You learn a lot from the mistakes of the Romans in terms of public policy.

I shall start with Amendment 6 and its equivalents. One of the requirements for a permitted communication is that the specific part of the communication which relates to a threat is made for a “permitted purpose”. The phrase,

“so far as it contains information that relates to a threat”,

is there to limit properly the scope of the provision about permitted purposes. We believe that deleting the words “contains information that” would risk the test being read as meaning that the entire communication had to be made for a permitted purpose—even the parts which were not a threat. The current drafting was inserted precisely because stakeholders—the Law Society and CIPA—expressed concern about that result. The amendment would mean that the permitted communications provisions might not apply if a communication happened to contain harmless, extraneous material. The hurdle would be so onerous that the protection offered by the permitted communications provisions would not, or might not, be used. Those less experienced would also easily be caught out by adding additional material.

I move on to Amendment 7. For a communication to be permitted, the part of the communication which relates to a threat must be made solely for a permitted purpose. The term “solely” ensures that the part in question cannot also be made for a non-permitted purpose. We heard that the Law Society and others have been concerned that the word “solely” somehow imports a need to look at the motives of the sender, but I do not really see how that would come about. The motives of the sender are not a consideration under either the current law or the new provisions. I think that the noble Baroness disagreed but my view is that that is right. As Professor Sir Robin Jacob said when he gave evidence, litigating over what someone believed,

“just leads to applications for discovery and claims for privilege”.

That is a bit of a red light to me because it could mean more costly litigation.

The “permitted purposes” in the Bill are based closely on the current patent exceptions. The law in this regard is unchanged—it remains an objective test—and, in legal terminology, making a threat will remain a strict liability tort. The requirements clearly relate to assessing the purpose of the communication itself, based on its wording alone. The amendment therefore seeks to resolve an issue which simply does not exist.

Turning to Amendment 8, to my mind the non-exclusive list of examples of information which are necessary for a permitted purpose provides valuable clarity. It gives stakeholders the certainty they desire, making it possible for disputing parties to know how and what they may communicate effectively without risking litigation. The amendment seeks to undermine that certainty by adding a requirement that not only must the information be necessary but it must also be “proportionate”. The term casts doubt on whether a business can rely on the examples listed. This decreases the value of the guidance that paragraph (5) is meant to provide and which stakeholders asked to be spelt out.

Amendment 14 has a similar effect by saying that the examples given are only “prima facie” to be regarded as necessary information. In other words, these examples can be regarded as necessary information, which it is safe to convey, only until it is proven otherwise. Noble Lords can see that this will introduce considerable doubt for business about whether the examples can be relied on.

Both amendments raise many possibilities for how to assess whether a particular communication can safely be made. They risk both confusion and even satellite litigation, and the resulting uncertainty about what information can be communicated risks encouraging a return to the “sue first, talk later” approach, which we are trying to avoid. That goes against the direction of the Bill as a whole.

Finally, I will address Amendments 12 and 13. The noble Lord, Lord Stevenson, spoke to the latter. As I said, the Bill provides a list of permitted purposes in order to give the much-needed clarity and certainty that stakeholders have asked for. However, consultees also warned against being too prescriptive. For this reason, the courts have discretion to treat other purposes as permitted, but only if necessary in the interests of justice.

The requirement for something to be necessary in the interests of justice is in fact intentionally high, and it is expected that the discretion will be used sparingly. “In the interests of justice” is a familiar and steady concept to shape how the law develops. A new test of “reasonable in all the circumstances” could make it difficult to ensure that the law provides the required level of guidance and certainty. These amendments could provide the courts with a wider discretion to treat other purposes as permitted, and that could create uncertainty for users over what communications can safely be made. That is undesirable both for those wishing to enforce their rights and for secondary actors in receipt of a threat. It would make legal advice more complex and perhaps more costly and it could risk the erosion, over time, of the valuable protection for secondary actors which is at the heart of the threats provisions.

The noble Lord, Lord Stevenson, was making a wider point, but I do not think that we can tackle business ethics in this Bill. However, I agree that being responsible in business leads to better business, not only in the long term but in the shorter term.

I have listened to the debates about “solely” and “necessary”—we have now debated this over five sessions—and I can see that noble Lords share the same objective that we have, which is to ensure that this key area of the law operates in the best possible way and that these permitted communications work well. I cannot promise anything today but I, along with perhaps other noble Lords, will look at the Hansard report of the debate and I will consider carefully the various detailed points that have been made today. On that basis, I hope that the noble Baroness will feel able to withdraw the amendment.

Sharing Economy

Lord Stevenson of Balmacara Excerpts

Monday 17th October 2016 Lords Chamber

[Baroness Neville-Rolfe]

The noble Baroness is right that skills—especially digital skills—are important to our economy. We are extremely aware of that, including in the context of the Brexit discussions. I am sure she knows about all that we have done to ensure that we can get diverse digital skills from abroad, where that is appropriate, and to develop digital skills here in the UK, both through lifelong learning education and, more importantly, in schools, with computing now being part of the curriculum from five to 16.

[Lord Stevenson of Balmacara (Lab)]

My Lords, in the last Administration the noble Baroness was a Minister not just in BIS but in DCMS—a post that she has now had to give up, although I in no sense cast any aspersions on her very successful successor. Since that Administration, the creative economy has been moved back to DCMS and higher education has been carved out and sent back to DfE. Given that she talked about the industrial strategy that is coming, and that we are all looking forward to, what arrangements are going to be made to ensure that the work on that will not be restricted to BIS?

[Baroness Neville-Rolfe]

I can give the noble Lord that assurance. Obviously an industrial strategy has to be wide-ranging and, as I have said, key things such as the development of the digital economy and skills have to be at the heart of that. There is a Cabinet committee under the Prime Minister looking at the development of the industrial strategy, and that is bringing together the strands of work across Whitehall. There have been departmental changes; we have gathered energy—a major and important area—and I am trying to get to grips with its important challenges.