Data Protection and Digital Information Bill

Lord Stevenson of Balmacara Excerpts

Committee stage
Wednesday 24th April 2024 Grand Committee

[Viscount Younger of Leckie (Con)]

Indeed, I think we are going back to the debates that we had on Monday. However, this chimes with a question from the noble Lord, Lord Clement-Jones, so it might be helpful briefly to rehearse what we are doing here and to be clear about the limitations and the checks and balances on the power that we are bringing forward.

As per paragraph 1(2) of Schedule 11 to the draft legislation, the DWP can use this power only for the purposes of checking whether someone is eligible for the benefit that they are receiving. In practice, this means that the DWP will request information only on specific criteria, which I laid out on Monday, linked to benefit eligibility rules, which, if met may—I emphasise “may”—indicate fraud or error. If accounts do not match these criteria, no data will be shared with the DWP. The effect of paragraphs 1 and 2 of the draft legislation is that the DWP can ask for data only where there is this three-way relationship between the DWP, the third party and the recipient of the payment. In addition, the DWP can ask for data only from third parties designated in secondary legislation, subject to the affirmative procedure. There are debates to come as further reassurance to your Lordships.

As per paragraph 4(2) of Schedule 11 to the draft legislation, the power does not allow the DWP to share personal information with third parties, which means that the power can be used only with third parties who are able to identify benefit recipients independently. Just to add further to this, we are obliged, under Article 5(1)(c) of the UK GDPR, to ask only for the minimum of information to serve our purposes. In accordance with the DWP’s existing commitments on the use of automation, no automatic benefit decisions will be taken based on any information supplied by third parties to the DWP. As I said earlier and on Monday, a human will always be involved in decision-making. I hope that helps.

[Lord Stevenson of Balmacara (Lab)]

I am sorry to interrupt the noble Viscount, but I just want to be clear about what he is saying in relation to the code of practice, which obviously is at the heart of this section of the debate, although there will be other things to come. Am I right that he said—obviously he has to cover himself—that there is a chance that the Report stage of this Bill might be entered into before we have sight of the draft code of practice? He makes the point that that is not an unusual occasion. I understand that—we have both served in Parliament long enough to know that that is the case—but this is clearly an issue on which the Committee has made very strong representations to the Government. Will he do what is in his power to make sure that we do not enter Report without seeing at least an early draft, if that is possible, of the code of practice?

[Viscount Younger of Leckie (Con)]

I will certainly take that back. I do not want to make any commitments today. I have already set out our stall as to where we are. I make the further point—I am perhaps repeating myself—that given the sensitivities that there clearly are, which I have been listening to carefully, it is important that this code of practice is developed at a pace that is right for what is needed, in bringing those involved along and making sure that it is right, secure, safe and with all the safeguards involved. It is quite a serious piece of work, as noble Lords would expect me to say. I will take that back. I will certainly not be able to guarantee to produce anything before Report, which may disappoint the noble Lord, but at least I have gone as far as I can. I hope that that is helpful.

[Lord Stevenson of Balmacara (Lab)]

I am grateful to the noble Viscount. This is just a thought, but we are happy to help, as we often have done in the past on other Bills. If there is any opportunity for us to be shown early drafts, to give some help and assurance to the noble Viscount that he is on the right track, I am sure that that would be accepted.

[Viscount Younger of Leckie (Con)]

I appreciate the tone of the noble Lord and, if there is anything that comes from behind me before I conclude my remarks, to be helpful, I will certainly do that.

Our debates on this measure have covered many issues. This group, as mentioned earlier, focuses primarily on the operational delivery of the power, so it would be quite good to move on. Just before I do, for the benefit of the noble Lord, Lord Anderson, in terms of the late introduction—his words—of this measure, as mentioned on Monday the DWP published a fraud plan in May 2022, where it outlined a number of new powers that it would seek to secure when parliamentary time allowed. In the parliamentary time available, DWP has prioritised our key third-party data-gathering measure, which will help it to tackle one of the largest causes of fraud and error in the welfare system. That is a short version of what I said on Monday, but I hope that it might be helpful.

Before I turn to the amendments, it might be helpful to set out how the legislation will frame the delivery of this measure. When we issue a request for data to a third party or, as it is set out, an account information notice or AIN, which is in the Bill, we can only ask it to provide data where it may help the DWP to establish whether benefits have been properly paid in accordance with the rules relating to those benefits. As mentioned earlier, this is defined clearly at paragraph 1(2) of the new schedule. This is where the data that DWP receives may signal—to use the word raised by the noble Lord, Lord Clement-Jones—potential fraud and error. The noble Lord asked for further clarification on that point. To be clear, a signal of fraud and error is where the rules of benefit eligibility appear not to be met. For example, this might be where a claimant has more capital than the benefit rules allow. As I made clear on Monday, all benefits and payments have rules that determine eligibility, which Parliament has agreed are the right rules in its consideration of other social security legislation. To issue an AIN, we must also have designated a third party in affirmative regulations, which need to be passed by both Houses.

As has been covered, we can also only request data from third parties where there is this relationship, which I will not repeat again and which I think the Committee will be familiar with. Our intention is to designate banks and financial institutions as the first third parties that we can approach, enabling us to request information on accounts only held in the UK. Just to clarify that point, we will not be able to request information on overseas accounts.

On the question raised by the noble Baroness, Lady Sherlock, on examples of non-financial organisations that the power could appropriately be used on, we will bring forward regulations to specify the data holders in scope. I hope that this is helpful. In the first instance, this will be, as mentioned, banks and financial institutions. The power also has potential use cases with other third parties, such as housing or childcare providers, but, just to reassure the Committee, this would be subject to further parliamentary approval.

Digital Markets, Competition and Consumers Bill

Lord Stevenson of Balmacara Excerpts

Committee stage
Wednesday 24th January 2024 Grand Committee

[Lord Lansley (Con)]

My Lords, I am grateful to the noble Lord, Lord Clement-Jones, for introducing Amendment 18A. On Monday, in the previous day of Committee, we looked at the list of conduct requirements—both the obligations placed on designated undertakings and the capacity to set conduct requirements preventing designated undertakings doing certain things. The noble Lord is asking whether we have covered the ground sufficiently, and so am I.

In Amendment 31, I come at it from the position that I took in earlier amendments, but I wanted to separate this out because it is in a different case. The train of thought is the same: to look at the detailed obligations included in the EU’s Digital Markets Act and to say that we are approaching it in what I hope is a better way that sets broader, more flexible definitions and looks to see how they will be implemented in detail by the Digital Markets Unit. That is fine; I am okay with that, but we need to be sure that the powers are there. For example, Amendment 18A is about whether the requirement to trade on fair and reasonable terms in Clause 20 comprises this power. It is a simple question: would it be possible for such conduct requirements to be included by the DMU under that heading?

Mine is a different one. In paragraph (6) of Article 5 of the Digital Markets Act, the European Union sets an obligation for gatekeepers—that is, its comparable reference to designated undertaking; in this sense it is dealing with platforms—that:

“The gatekeeper shall not directly or indirectly prevent or restrict business users or end users from raising any issue of non-compliance with the relevant Union or national law by the gatekeeper with any relevant public authority, including national courts, related to any practice of the gatekeeper”.


For our purposes, I have rendered that in the amendment as something slightly simpler in our language—that is to say, that an obligation may be placed on designated undertakings that they shall not seek

“directly or indirectly to prevent or restrict users or potential users of the relevant digital activity from raising issues of non-compliance with any conduct requirements with any relevant public authority”.

It is not just the CMA, of course; there may be others involved, such as the Information Commissioner and other public authorities.

For this purpose, I looked at the conduct requirements laid out in Clause 20 to find where this might be covered. I do not think it is covered by the material about complaints handling processes. This is not about whether you can make a complaint to the designated undertaking; this is about whether one is subject to the provision, as a user or potential user, such as an app seeking to complain about the non-compliance of a designated undertaking to the Digital Markets Unit. That is not the same as having a complaints process in place.

Do we think this could happen? Noble Lords will make their own judgments about that. All I am assuming is based on the fact that, for example, in April 2021, in the Judiciary Committee hearings on competition in app stores in the US Senate, Senator Klobuchar said, to paraphrase, that a lot of providers of apps were afraid to testify. They felt that it was going to hurt their business and they were going to get intimidated. So I am not having to invent the proposition that there may be a degree of intimidation between the providers of apps, for example, and the platforms that they wish to use.

In a sense, we do not actually need to know that it is happening to know that we should give the power to the Competition and Markets Authority to set conduct requirements as and when necessary to prevent such a thing happening. I do not think that it is comprised within the existing text of Clause 20.

I hope that my noble friend will take this one away, with a view to thinking positively about whether it is required to be added to the conduct requirements in Clause 20 at Report.

[Lord Stevenson of Balmacara (Lab)]

I am grateful to the noble Lords, Lord Clement-Jones and Lord Lansley, for raising this point. Clause 20 is very important, as has been mentioned, as it puts flesh on the bones of what we have been talking about for most of the first and half of the second day in Committee—which is whether we have in place the ability to deal with the important firms likely to be designated as SMS and the challenger firms. We have said before, and I am sure that we will repeat it, that this is a very innovative approach to regulating. We are very much trusting those who are appointed to take this forward with a great deal of power and not a lot of overarching scrutiny —or, if it is, it will be retrospective and not prospective.

Therefore, we have to understand that the CMA must have the ability to do all this and have the range of functions that are important. The noble Lord, Lord Clement- Jones, raised one in particular—a very important one to consumers—around seeing on the internet the goods of your dreams and then finding a payment system that siphons your money away but does not deliver the goods; that is not a palliative one for any Government to propose. I hope that the Minister has some reassuring words about the points raised by the noble Lord.

I had to read the amendment proposed by the noble Lord, Lord Lansley, three or four times to understand what he was getting at, so I am very grateful to him for his brief introduction. It was only on this occasion; normally, he is as a lucid as we would wish—and sometimes as pellucid. He raises a very subtle question about whether the measures that are not sufficiently exposed here will cover the question of those who have innovative lawyers thinking about ways in which they can avoid some of the very broad measures in Clause 20.

--- Later in debate ---

[Viscount Camrose (Con)]

I thank the noble Lord, Lord Clement-Jones, and my noble friend Lord Lansley for bringing these important amendments. It is enormously valuable and important to kick the tyres of Clause 20 and understand or assure ourselves that it works.

Amendment 18A, tabled by the noble Lord, Lord Clement-Jones, would create a new permitted type of conduct requirement, allowing the CMA to require an SMS firm to provide users with a way to pay for products and services that would provide consumer protection. I thank him for the amendment; it highlights the vital issue of ensuring that consumers are protected when using online marketplaces.

We feel that conduct requirements are already able to require that SMS firms have effective processes for handling complaints by and disputes with users or potential users. This will allow the CMA to intervene when competition issues arise in this area. My noble friend Lord Offord will be talking to the consumer provisions in Part 4 in a later sitting, and I will not tread on his toes here. However, those provisions put it beyond doubt that, where platforms promote or facilitate consumer transactions, they must act with professional diligence, in addition to more specific duties such as refraining from misleading omissions or actions or aggressive practices.

We recognise that public understanding of the requirements of professional diligence could be clearer, and we recently consulted on how price transparency and product information for consumers can be improved. The Government’s response to that consultation was published this morning, and, in the light of this, we will be undertaking further work with stakeholders to ensure that platforms’ obligations to consumers are more widely and easily understood. I would of course welcome the noble Lord’s input during that process.

Amendment 31, tabled by my noble friend Lord Lansley proposes to add a new permitted type of conduct requirement to deal with the issue of SMS firms attempting to stop third parties raising possible non-compliance with the CMA. I thank my noble friend for tabling this amendment and highlighting the importance of this issue, on which I have also received representation from affected firms.

Alongside information gathered through its own monitoring, the CMA will rely on information from third parties that will have direct knowledge of market conditions. It is therefore crucial that third parties have the confidence to speak to the regulator. I can provide assurances that the CMA will have strong powers to tackle discriminatory or unfair behaviour seeking to frustrate the regime or interfere with enforcement, where it occurs within the scope of a designated activity. Both conduct requirements and PCIs will be available to combat such behaviour, supported by the usual robust enforcement powers and penalties. I draw my noble friend’s attention specifically to Clause 20(3)(a), which, in addition to the conduct requirement

“on fair and reasonable terms”

in Clause 20(2)(a), can be used where relevant.

The CMA will also be able to intervene outside the designated activity, but not in an unconstrained way: it can use conduct requirements to prevent leveraging, or a PCI to address an adverse effect on competition in a designated activity.

Input from third parties will be crucial in ensuring the success of this regime. However, some stakeholders may have concerns about sharing information or experiences for fear of retaliation. The CMA has well- established processes for handling information and maintaining the anonymity of those providing evidence, whether informally or as part of an investigation. Recognising the importance of engagement, the CMA has also announced plans to expand this approach; for example, by establishing representative panels—one for consumers and civil society, and one for businesses and investors. This will facilitate input from third parties, which in turn will support the design and implementation of interventions.

I therefore hope that the noble Lord will feel able to withdraw his amendment.

[Lord Stevenson of Balmacara (Lab)]

The Minister mentioned in his address—I was grateful to him for doing so—that there was a recent announcement from the department about sneaky hidden fees or drip prices that are unavoidable, and the press report that I am reading says that they will be banned. Does not this bear directly on points made during this debate, and in particular on Clause 20? Does this mean that the Minister will bring forward amendments at a later stage?

[Viscount Camrose (Con)]

My preference would be to consider so doing once the Committee has had a chance to debate later sections of the Bill which go directly to consumers.

[Lord Stevenson of Balmacara (Lab)]

So it is not ruled out at this stage.

[Viscount Camrose (Con)]

I am ruling nothing out at this stage.

[Lord Stevenson of Balmacara (Lab)]

The Minister is very generous.

[Lord Clement-Jones (LD)]

My Lords, I think there is quite a lot of meat in what the Minister said just now, both in respect of the amendment in the name of the noble Lord, Lord Lansley, and my amendment.

I appreciate that we have a set of moving parts here, including the response to the consultation on smarter regulation, improving consumer price transparency and product information for consumers, which came out this morning.

The answer to the noble Lord, Lord Stevenson, was quite interesting. However, if what the Minister said about the conduct requirements in Clause 20 is to be put into effect, I suggest that he has to bring forward amendments on Report which reflect the response to the consultation. I do not think this can be done just as a sort of consumer protection at the back end of the Bill; it has to be about corporate conduct, and at the Clause 20 end of the Bill.

Obviously, we will all read the words of the Minister very carefully in Hansard. It is interesting. I have written down: “Why are we kicking the tyres on Clause 20?” As the noble Lord, Lord Stevenson, said, this is absolutely central to the Bill. Basically, it could not be more important; getting this clause right from the outset will be so important. This is why not only we but the CMA will be poring over this, to make sure that this wording absolutely gives it the powers that it needs.

I take the point of the noble Lord, Lord Stevenson. These are very important powers, and we have to make sure that they are used properly, but also, as the noble Lord, Lord Lansley, said, that the powers are there. Otherwise, what are we spending our time here in Committee doing, if we are going to put forward a Bill that is not fit for purpose? We have to make sure that we have those powers. I like what the Minister had to say in reference to the Clause 20(3)(a) provision. Again, when people look at Pepper v Hart and so on, that will be an important statement at the end of the day.

We have certainly managed to elicit quite a useful response from the Minister, but we want more. We want amendments coming down the track on Report which reflect some of the undertakings in the response to the consultation on consumer price transparency and product information for consumers.

The only other thing to say—exactly as the noble Lord, Lord Stevenson, has said—is that comments about the consultation are that it was half a loaf. There is a whole lot more to be said on drip pricing. We have a discussion coming down the track on that, and we will reserve our fire until then.

Online Safety (List of Overseas Regulators) Regulations 2024

Lord Stevenson of Balmacara Excerpts

Tuesday 16th January 2024 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for his introduction. We all welcome the fact that the Bill is now an Act, of course. In a sense, these regulations are the first swallow of spring. We have many more affirmative SIs to come, I have no doubt, along with the codes of conduct that will eventually come to us in their final form. Like the Minister, I very much hope that we will proceed at speed in how we implement the terms of the Act.

Although this SI looks quite narrow in what it is about, it raises the whole question of co-operation between regulators. It is not just going to be about Ofcom helping overseas regulators, as set out in the regulations, in what they do; obviously, the Communications Act provisions will be important as well. It would be useful if the Minister could give us an idea of the areas of co-operation between the regulators that he thinks would be particularly fruitful. For instance, relationships with the Irish regulator will be extremely important in understanding how the DSA is working for it. How might its redress mechanism work? The DSA has explicit redress mechanisms under it whereas we are going to be working towards that in future; that is quite a long way away.

As the Minister will recall, other aspects are still somewhat inchoate under the Act. There is the question of research, which is an important area. How is that working? How are the other regulators seeing it operate? There is also the app store aspect, the other area of the Act that is not quite there in the way that its other parts are. It would be useful if the Minister could give us an idea of the areas that Ofcom will be working on.

I very much welcome the Minister’s assurances about the use of personal data and the kind of information that will be available. I assume that this will be of some importance, and that these case studies will involve some of the category 1 platforms to be discussed between the regulators. They will be helpful in making sure that, on an international basis, we see conformity by these large platforms to the kinds of regulation that are being installed. Does the Minister have an idea about the scale of the exchange of information that will be required? Clearly, it will require some resource by Ofcom in making security absolutely certain and being able to deliver on the assurances that the Minister has given.

Finally, it would be interesting to hear from the Minister whether other candidates will be coming down the track. Clearly, this instrument sets out the key regulators. Might others come along that are a speck in the eye, or does the Minister think that we have pretty much settled who the key regulators are and that, for the moment, they will be the ones with which we will co-operate under the terms of this SI?

[Lord Stevenson of Balmacara (Lab)]

My Lords, I join the noble Lord, Lord Clement-Jones, in welcoming this SI, and I thank the Minister for his kind comments about the work that went into the Bill. I share with him our pleasure that it is now in force and up and running; this instrument is proof positive that it is indeed so. Like the noble Lord, Lord Clement-Jones, I have many questions about what is happening, but certainly no objections to what is proposed.

The helpful Explanatory Memorandum explains that the context for this instrument is

“the global nature of service providers”

and how they operate. In that sense, I recognise that there are some gaps as regards the areas from where difficulties and troubles might come. For instance, Poland and parts of the eastern European bloc are thought to be centres from which emanate quite a lot of damage and a certain amount of material that is almost certainly illegal, yet I see no reference to any organisation—maybe there is none—that might be able to help Ofcom explore what is happening there. I am also concerned about Canada, because it hosts the biggest—I think—pornography company in the world. Again, I would have thought it would be helpful to Ofcom to be able to contact a collaborative organisation in Canada to work with, but I do not see one in the list.

That leads me on to another, related point. There is, and has been for some time, a network of likeminded organisations with which Ofcom has worked well in the past. There is a list of them on its website. Not all of them are in the Government’s proposals before us, and I wonder whether that in any way reflects a clash of views by the Government. Perhaps the Minster will comment on why we do not see Korea or South Africa, for instance. I would have thought that at least those with which Ofcom has a good working relationship at the moment should have been close to appointment. Perhaps there is some sort of competition there or element that I am not aware of. Any light that could be shed on that would be helpful.

Paragraph 7.5 of the Explanatory Memorandum attached to the SI very helpfully specifies that these regulations have certain minimum standards by which they are judged—a point picked up by the noble Lord, Lord Clement-Jones. I felt they were very appropriate to the ones that the Minister mentioned, including the bespoke regulatory framework itself,

“whether its autonomy is protected in law; and whether the … jurisdiction that empowers them, upholds international human rights”.

These are all good things, and I am pleased to see them mentioned in the Explanatory Memorandum and referenced in his speech.

That raises the question: what happens if any of these organisations depart from these standards? Will another procedure or SI be required to remove them from the list, or would they just cease to be part of the group with which Ofcom discusses things? It would be helpful to have on the record some idea of what the procedure would be if that were required.

My last two points are relatively small. There is a hint that more regulators will be considered and brought forward. That is good; I think we are all in favour of more places, since, as has been said, this is a global issue. What is the timing of that, roughly? Perhaps we could have some speculative ideas about it.

Finally, as the noble Lord, Lord Clement-Jones, pointed out, this is the first of many SIs coming forward for consideration by the House. In Committee on the Bill, we discussed at length how Parliament could be involved. This SI is probably not a very good example of that, but in the codes of practice considerable work will be required by Parliament to make sure that the affirmative resolutions are properly researched and discussed.

The proposal we made, which was accepted by the noble Viscount’s colleague, the noble Lord, Lord Parkinson, was the Parkinson rule: that the statutory instruments would, in fact, be offered to the standing committees. I do not think that would have been necessary for this instrument; I just wonder whether that is still in progress and whether it is the Government’s intention to honour the idea announced at the Dispatch Box that the legwork for many of the substantial SIs that will come forward could be done with advantage by the committees, which would inform the debates required in both Houses before these instruments can be approved. I look forward to hearing from the noble Viscount whether that is likely to happen.

[Viscount Camrose (Con)]

As ever, I thank noble Lords for their valuable contributions to this debate. Needless to say, it is vital that we recognise the global nature of regulated service providers under the Online Safety Act. This SI will ensure that Ofcom can co-operate and share online safety information with specified overseas regulators where appropriate.

As set out, we will review on an ongoing basis whether it is desirable and appropriate to add further overseas regulators to the list. That is an ongoing activity. I anticipate that, as more and more jurisdictions enter the online safety regulation business, we will see an acceleration of the rate at which they can join on the lines we have set out.

I will now respond to some of the specific questions raised in the debate. The noble Lord, Lord Clement-Jones, asked about the types of information that Ofcom might share using this mechanism. The Government anticipate Ofcom being able to share information and co-operate with other regulators, which will lead to international regulatory co-operation, which is likely to reduce the regulatory burden on Ofcom, as well as international counterparts—for example, in relation to duties that are quite similar between regulators, such as duties to deal with illegal content. I anticipate that being a particular focus of their co-operative activities.

Positive benefits may also result from Ofcom supporting overseas regulators in carrying out their online safety regulatory functions and co-operating with relevant criminal investigations or proceedings. That co-operation might address a source of harm for UK users—for example, preventing malign actors disseminating suicide and self-harm content on regulated services.

Regarding the scale of the exchange, Ofcom itself would have discretion as to the scale of the information sharing that takes place through these provisions. However, it is likely to be beneficial to both Ofcom and its regulatory counterparts to engage in information exchange of this nature.

On the question from the noble Lord, Lord Stevenson, on why certain regulators have not been added, we will of course work closely with Ofcom and other stakeholders. He raised a number of interesting examples that would have been quite tempting to add to the list of criteria applied by us, which we, along with Ofcom, produced for the time being but on an ongoing basis. The intention is to review that to add other regulators that can add value in this way.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

Can I press the Minister on the point I made at the end? Will the generic approach to SIs in future be that they are offered to the standing and Select Committees of the two Houses before they are brought forward for consideration?

[Viscount Camrose (Con)]

I will commit to going away and thinking about that one, because I feel that is a broader question about parliamentary oversight of regulation in general—if I have understood right.

[Lord Stevenson of Balmacara (Lab)]

It certainly can be taken that way, but actually it was a rather narrow question. His colleague, the noble Lord, Lord Parkinson, gave a statement at the Dispatch Box that the Government would use their maximum efforts to ensure that the two Select Committees—the DSIT Select Committee in the Commons and the Communications and Digital Committee in the Lords—would have the chance to look at draft SIs before they came forward. It is certainly more work, and we do not want that, but it would make it much easier for the Houses to be able to respond positively and accurately as they go forward.

[Viscount Camrose (Con)]

I apologise to the noble Lord; I misunderstood. I very much see the value of this and will strain my sinews to deliver just that. Meanwhile, I commend these regulations to the Committee.

Design Right, Artist’s Resale Right and Copyright (Amendment) Regulations 2023

Lord Stevenson of Balmacara Excerpts

Monday 20th November 2023 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, it is a pleasure to follow the noble Earl, Lord Clancarty; I wholeheartedly agree with everything that he said. I should say from the outset that we on these Benches support both sets of regulations, which will, I hope, gladden the Minister’s heart as we start debating them.

There are, however, a number of points to be made in relation to them. I very much support what the noble Earl had to say about DACS, the not-for-profit visual artists’ rights management organisation. It recently helpfully published a report that highlights the pivotal role that artists’ resale rights play in supporting artists and the wider art market. As the noble Earl said, they have been somewhat controversial in the past, but, now that they have been included in trade agreements, I feel confident that they are now bolted fully into our intellectual and moral property rights. They are an absolutely vital source of income for many artists. The noble Earl talked about more than £120 million in ARR royalties, directly benefiting more than 6,000 artists and their heirs. Artists selling at the lower end of the art market benefit in particular from ARR: two-thirds of ARR payments in 2021 were less than £500 and 10% of artists received ARR royalties for the first time that year.

I will not repeat most of the rest of what the noble Earl had to say, just that I very much agree with a great deal of what he said. More than 90 countries worldwide have implemented some form of ARR legislation so we are in good company as regards what I see as this moral right. We have heard about the trade agreements; it would be useful to get from the Minister an idea of which agreements we have included this in. Christian Zimmermann, the CEO of DACS is definitely worth quoting. He said:

“The Artist’s Resale Right is more than a legislative mandate—it is a commitment to fairness, a recognition of the value of artists’ contributions, and an indispensable support for artists and their estates.”


The Minister may notice that I have used pounds sterling in my figures throughout so, naturally, I support that aspect of these regulations and, of course, the other aspects that are provided for in the regulations.

The Intellectual Property (Exhaustion of Rights) (Amendment) Regulations 2023 are, in many senses, a much weightier aspect of the regulations we are considering today. I am grateful to the Alliance for Intellectual Property and the British Brands Group for providing briefings and, indeed, their strong views on these issues. I know that the Minister will have heard many of their arguments in person but I want to put on record those views, with which, I should say, I and the All-Party Parliamentary Group for Intellectual Property strongly agree.

Members of both groups strongly consider that the status quo will deliver the strongest overall outcomes for shoppers, business and the UK economy. Following the UK’s departure from the EU, the UK Government now have control over the exhaustion regime. As the Alliance for Intellectual Property says, the importance of the decision on which exhaustion regime the Government choose cannot be underestimated. Although it seems a technical area of policy, it will have a real-life impact on businesses, consumers and regulatory authorities across the UK. Exhaustion regimes have the greatest impact on export-driven UK sectors as they underpin their ability to determine when, how and what goods to sell in international markets and at what price.

The noble Earl quoted the publishing sector. Industries of that kind are particularly successful at exporting; for example, the UK book sector derives 60% of its income from exports. We have heard that the Government have consulted on which regime the UK should select. In January 2022, the Government made an interim decision to select a UK+ regime that would maintain existing protections. As we have heard, this statutory instrument is being introduced by the Government relating to that interim decision. As the Minister said, though, the Government have not made a final decision on which regime to choose but are likely to announce their decision in the next few months. I hope that the Minister will give us some idea of the time in which he expects that decision to be made.

The British Brands Group believes that advice from officials is to make the interim decision permanent—at least, that is its impression—which would be widely welcomed. I want to take this opportunity to voice support for the interim decision and express concerns regarding any shift to an international regime that might arise in future. I am not going to explain what the alternatives are; I do not think I need to. National exhaustion is one alternative and international exhaustion is another; neither is practical nor attractive.

The current regime is regional exhaustion, an approach that has been working well for 50 years. Rights are exhausted once goods are placed on the UK or EU market, although they can be used to prevent the distribution of goods placed on markets outside those countries. This status quo operates well, as we know; it strikes us on these Benches and those organisations as proportionate, hence our strong support. The SI rightly provides for an IP exhaustion regime meaning that the holders of trademarks would not be able to object to the further distribution of their goods once they are placed on the market in the UK and the EU. They would, however, be able to object to imports from other countries.

The Government’s decision on the UK’s future exhaustion regime will be among the most important taken in relation to intellectual property policy during this Parliament. Its impact will affect businesses, consumers and regulatory authorities across the UK; as I have said, it will particularly affect export-driven UK sectors as it underpins their ability to determine how and what goods to sell in international markets and at what price.

Any shift to an international regime would also affect many of the UK’s leading design and branded goods companies. This would make it significantly more difficult to launch new products in countries around the world as those firms would not be able to vary pricing at launch for fear of those products re-entering the UK. A move to an international regime would also lead to consumer confusion since product and regulatory standards differ across countries internationally. Any “free for all” in parallel imports to the UK would undermine the UK’s product standards regulatory framework and would create uncertainty and confusion for the public.

Opponents of maintaining the status quo and supporters of an international regime suggest that there would be a reduction in pricing for consumers from an increase in parallel imports. Where parallel imports occur currently, in contravention of our regime, prices are not lower. As an example, you occasionally see bottles of Coca-Cola with foreign language labelling in some small shops but at the same pricing as compliant products.

We believe that the retail supply chain, including wholesalers and parallel importers, would therefore be the major beneficiary, rather than the UK public. The cost-benefit equation is likely to be between established creative industry sectors that find their home in the UK market but could choose to move elsewhere against a parallel import sector that does not currently exist and would not even need to be located on UK shores, nor to create UK jobs.

In summary, an international exhaustion regime would represent a significant policy shift away from innovation and growth. It would weaken competition, harm consumers and not help lower consumer prices, in our view. The SI as drafted sustains the current exhaustion regime until the Government confirm their long-term policy approach. The most recent government consultation identified no evidence at all to support a change in regime, so this debate is important.

I hope that the Minister, IPO and others in government resist calls for any change that could reduce IP rights holders’ ability to influence the distribution of their products in markets outside the EU and weaken their IP rights. A change in the UK’s trademark exhaustion regime would be a significant policy shift negatively affecting consumers, brand owners, UK exporters and public enforcement agencies, while not reducing inflation. I hope the Minister has got my message that this would not be a welcome change away from the current exhaustion regime.

[Lord Stevenson of Balmacara (Lab)]

I apologise for my slightly late arrival at the Committee. I hope that it was not noted too carefully, but we are doing two SIs as one group and I was here for the whole second part. I hope that that qualifies me to speak.

Also, it would be a terrible shame not to recapture the spirit of a few years ago, when a little group of three of four colleagues, including the noble Baroness, Lady Neville-Rolfe, debated a number of issues to do with intellectual property that came up at that time. It was interesting that a group from within the confines of Parliament then was able to get together and become quite expert at some of these issues. We had some very enjoyable debates and some of these issues have played out again today. Those who benefited from going on that journey gained a lot of knowledge and expertise, so I am not able to stun the Committee with some new insights; they have largely been covered by those who have built up their expertise from the same route that I have been on, so what I would say would be otiose.

I will congratulate both the noble Earl, Lord Clancarty, and the noble Lord, Lord Clement-Jones, for covering the points I would otherwise have made and piggyback on them to save the time of the Committee, which is a good thing.

However, it is interesting that we are still talking about issues that were live three or four years ago. I am sure the noble Baroness, Lady Neville-Rolfe, remembers them with some interest. We are still not clear what distinguishes our particular configuration of design rights. I still worry about those and hope that the department is working on a way forward with some of them. We had some clarity when we were thinking, within the EU context, of a way of trying to balance the difference between those which operated within the UK only and those that were being developed in Europe but were not able to go back to that. I do not think we quite got over the variations that can occur between the triad of patent, trademark and intellectual property in other forms, because they bump into each other. Although they have been dealt with rather well within these statutory instruments, there are occasions when they point in different directions and it is very hard to get a sense of the Government’s policy on them. There is still a need to do more work on that.

In turning to the SIs before us today, I want to raise a very narrow point on design right, ARR and copyright, from the Explanatory Memorandum. Although the noble Viscount touched on this in his introduction, he did not spend a lot of time on it. It is a question of broadly taking forward the arrangements that existed before we left the EU and making them slightly up to date as we go forward. I have no problem with the Design Right (Semiconductor Topographies) Regulations 1989, which were notably not mentioned by my two colleagues nor dealt with in any detail. That is a sensible move forward. We covered ARR and the copyright tribunal rules in some detail. That is a good change and an important way forward.

--- Later in debate ---

[Viscount Camrose (Con)]

My Lords, I very much thank the three noble Lords for their valuable and interesting contributions to this debate. As I said in opening, IP matters. The IP system exists to encourage innovation and the sharing of information, creativity and knowledge. It provides individuals and businesses with the confidence to invest their time, money and energy into developing something new. That is why the Government remain committed to a world-leading IP framework. We hope these regulations will ensure that the IP system continues to support innovation across the economy and will make some targeted changes to the benefit of our IP framework.

I shall respond to some of the important questions raised in the debate. The noble Earl, Lord Clancarty, asked about ARR. I thank him for his kind words and support for the changes to ARR in relation to the change of currency. He mentioned the benefits to smaller artists of the ARR regime and the noble Lord, Lord Clement-Jones, expressed similar support. Under that change, artists who continue to receive ARR payments will see an estimated average increase of around 7%, with the highest-value artworks obviously experiencing the largest increase. In addition, when UK inflation is taken into consideration, the minimum threshold resale price for ARR eligibility will actually be lower in real terms than when it was set in 2006.

The noble Earl and the noble Lord, Lord Clement-Jones, asked about government policy for ARR in free trade agreements and why ARR is not included in some negotiations; the noble Lord, Lord Stevenson, also touched on that matter. It is current government policy to support ARR globally via international fora as well as via UK free trade agreements. For example, in our recent free trade agreements with Australia and New Zealand we negotiated provisions to provide ARR on a reciprocal basis—that is, the UK will provide ARR royalties to Australian artists and vice versa.

Noble Lords asked about provisions in FTAs that are still being negotiated, specifically with India and Canada. They will forgive me if I cannot comment at this point on negotiations that have not yet concluded. Needless to say, I am happy to set out more information as it emerges on where we are with these or other free trade agreements.

I turn to the issue of exhaustion. I note the views of the noble Earl, Lord Clancarty, on the UK’s existing UK-plus exhaustion regime and on making the UK-plus regime permanent. As I think everybody in the Room agrees, this is an important matter. As the noble Earl is aware, the Government have consulted widely on it and continue to consider what the UK’s eventual IP exhaustion regime should be. Work to consider the decision on the UK’s future exhaustion regime is ongoing. We intend our future regime to strike the right balance between consumer choice and fair market pricing, protecting creators and promoting competition. The Government are aware that businesses would like certainty about future arrangements that will be affected by this decision. We will let stakeholders know the outcome of the policy decision in due course.

[Lord Stevenson of Balmacara (Lab)]

I think we all asked for a bit more detail than the Minister’s “in due course”. Could he be a bit more specific?

[Viscount Camrose (Con)]

Indeed. DSIT has been making representations to precisely that effect across government and that process is in train. I cannot provide a date for when it is going to be complete.

[Lord Stevenson of Balmacara (Lab)]

Could the Minister perhaps hint at what form it might take? Are we at the White Paper stage of the process or will it just be a statement that the issues are finished?

[Viscount Camrose (Con)]

Perhaps I had better write to all noble Lords present to say exactly what form that will take.

Semiconductors Manufacturing

Lord Stevenson of Balmacara Excerpts

Monday 18th September 2023 Lords Chamber

[Viscount Camrose (Con)]

The noble Lord raises, as ever, an interesting point, but to build an advanced silicon fab would, first of all, cost tens of billions of pounds. It would run into not only costs of operation but substantial risks of uncompetitive yields and, as we have seen several times historically, shifts in demand for semiconductors. I remind the House that, although 40% of the value chain of semiconductors is represented by manufacturing, 30% is represented by design. It makes sense that our strategy should build on the country’s strengths, particularly in design.

[Lord Stevenson of Balmacara (Lab)]

My Lords, may I follow up that point and ask a little more about the detail of who runs this strategy? In addition to the independent regulator, the CMA, there are, as I understand it, three government departments directly involved: the Cabinet Office, the Department for Business and Trade, and DSIT, as represented by the Minister. The focus of the third leg of the national strategy engages with export control, hostile takeovers and mergers. Who is in charge of that, and can the Minister explain it?

[Viscount Camrose (Con)]

Indeed I can, and I recognise the importance of the question around clarity between these various arms of government. The ownership of the semiconductor strategy sits squarely with DSIT. There is a range of Acts—to do with export controls and protection of investment from states seen to be hostile to us—that of course come under other departments, but overall ownership must sit, and continues to sit, within DSIT.

Counter Disinformation Unit

Lord Stevenson of Balmacara Excerpts

Tuesday 18th July 2023 Lords Chamber

[Viscount Camrose (Con)]

The CDU has not been deployed on any side of the small boats debate.

[Lord Stevenson of Balmacara (Lab)]

I accept the point made that the Counter Disinformation Unit sounds rather suspicious. The unit tracks narratives and trends using publicly available information. We all like a good story, so where can we find these narratives and trends. Are they published? Where is the unit established, and what is its budget and its staffing level?

[Viscount Camrose (Con)]

The unit is established within the Department for Science, Innovation and Technology. Its existence and mission, and indeed the legal basis for its activities, are posted on GOV.UK. Because the great majority of its activities are now directed at overseas state actors hostile to our interests, we do not share in a public forum any operational details pertaining to its activity, simply for fear of giving an advantage to our overseas adversaries. However, I recognise the importance and seriousness of the question. To that end, while I cannot in a public forum provide operational details, if the noble Lord or any other noble Lords would like an operational briefing, I would be happy to arrange that.