Commercial Payments Bill [HL]

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Tuesday 21st July 2026 Lords Chamber

Moved by

[Lord Thomas of Cwmgiedd]

19: Clause 3, page 7, line 23, at end insert “save that the Secretary of State must not specify in regulations which have or will continue to have effect after 1 April 2029 any contract of a description which relates to—
(a) the supply of any goods or services by a person in the United Kingdom to any person for use outside of the United Kingdom, or(b) the supply of any goods or services by a person outside the United Kingdom for use in the United Kingdom.”Member’s explanatory statement
This amendment would end the power under the regulations to exclude import and export trade contracts from the provisions of the Act, but do so only at a time which provides for ample familiarisation to make use of the Electronic Trade Documents Act 2023 and which coincides with the imposition of e-invoicing by HM Revenue and Customs.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I declare my interest as chairman of the board that advises the International Centre for Digital Trade and Innovation. I am grateful to the noble Lord, Lord Holmes, for his support in this, and for the time that the Minister and his officials afforded to discuss it.

I set out at Second Reading the background to this amendment and how it fits entirely with the implementation of the Electronic Trade Documents Act and our participation and lead in the international moves to move payments out of the 13th century, or modifications since then, into the 21st century. I am sure no one needs to be reminded how conservative—with a small “c”—processes in business are. They need something to move them, and what I propose would help to do so.

There can be no doubt that using electronic documents and payment systems is entirely consistent with the purpose of the Bill, in that it speeds up payment. If the system can be made to work for international trade, the Bill should not exclude international trade. We are at heart a nation of tradesmen and therefore we should be encouraging trade.

I spoke of the many advantages of the Bill, but there are only two that I need mention now. The first is that we are also, as the change in the name of the Minister’s department indicates, a nation intent on innovation. This is where I think, and I encourage people to see this, we are moving. The second is to mention that this is entirely consistent with the plans to move to e-invoicing on 1 April 2029. I mention that date because it is in the amendment.

I accept that we are not in a position today to make people pay within 30 or 60 days for international trade but there is no reason why we cannot do it in two years’ time, particularly with the new department. So the amendment is designed simply to leave the policy statement in the King’s Speech and the provision for making future regulations to exclude trade, as that is okay for now, but to set a withdrawal period. The Minister is bound to say, “You can trust us in the department. When things are ready, we’ll move there”, but unfortunately we all—businessmen particularly—need to be prodded. It took centuries for people to move away from using bills of lading in three sets rather than one, despite there being no earthly purpose to it. I therefore believe that we need something in the Bill to force the move to digitalisation. Now that the department has the word “innovation” in its name, let us hope that it can do that.

The Minister may not be terribly fired up by his officials to do this, and I will always welcome other suggestions, but we must have a policy for implementation. That is not my primary purpose but I hope that at least that could be offered as a consolation prize. I therefore beg to move.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my friend, the noble and learned Lord, Lord Thomas, and the excellent and eloquent way in which he introduced his amendment, which I was delighted to sign. As he rightly pointed out, this could be seen as the absolute premier DBIST amendment. It goes to the heart of what the department is. It has business and innovation at its very heart, and it would make complete sense for the department to pass it before Ministers have even changed the stationery in their various departmental boxes.

It was a pleasure to serve under the chairmanship of the noble and learned Lord as he chaired the Special Public Bill Committee on the then Electronic Trade Documents Bill. I variously described the Bill as

“the most important Bill that no one has ever heard of”.—[Official Report, 19/7/23; col. 2326.]

and the blockchain Bill that rightly never mentions blockchain. It was perfect in its two-page shortness—perfect, in that it never mentioned any specific technology. It merely set out criteria that any technology would have to meet to perfect an electronic trade document. When we talk about electronic trade documents, we are talking about economic, environmental and social benefits and, for the purposes of this Bill, payments efficiency and payments benefits.

The ability to combine everything in an electronic digital format is possible only because of the criteria that blockchain and distributed ledger technology allows to have a possessory document—that is, if you hold the document, you hold the goods. Only through those technologies is it possible to thus have those possessory documents in electronic form. This would be good for payment but it would also be good for UK trade. There is currently a huge trade finance deficit painfully suffered by many businesses already involved in trade but, perhaps even more significantly, by all those tens of thousands of businesses that currently do not trade internationally but could. The provisions in this amendment really highlight that opportunity.

As the amendment so clearly sets out, international trade should be within the purview of this Bill and, in many ways, this lays the groundwork for many of the technology amendments which we will come to later this evening. It makes the point about what is possible today without insisting that it has to be used and come into force on the date the statute comes into force. By being in the statute, with the time period as set out in the amendment, it states the case clearly. It provides the time for adoption but really speaks to the possibility and, largely, the economic opportunities for all those businesses, particularly small and micro-businesses, which could avail themselves of all the benefits of international trade.

--- Later in debate ---

[Lord Leong (Lab)]

I appreciate what the noble Lord has just said, but it is important that the scope of the Bill is targeted at UK businesses and small businesses. A commercial arrangement between a company based in the UK or a business based elsewhere is probably outside the scope of this Bill in that regard.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I thank everyone who has spoken in this short, slightly esoteric argument and on these interests. I simply say that I do not think that this issue will go away. First, the payment terms in the Bill are 60 days and in modern international trade that is a long time. I do not buy this argument that we would somehow lose competitiveness by having this here, certainly as regards imports. Secondly, it is important to stress that we are not tradesmen who trade with each other—say, between Wales and England and Scotland. We trade internationally and need to do everything to encourage us to trade. Thirdly, if we are to innovate, and this is an era of innovation, setting a good example will be a good thing.

I hear what the Minister says. I look forward to what the department will do to encourage it. If it will not do this, I might, if circumstances look providential, bring it back on Report to see whether the Minister can come up with some alternative in innovating because it is fair to say that it has been the department of innovation for only a day. I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

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[Baroness Kramer (LD)]

My Lords, my Amendment 81 in this group addresses a single issue. There is no possible way that the Small Business Commissioner can achieve his or her purpose without a strong whistleblowing framework incorporated into the office.

In this legislation, the commissioner is not even a prescribed person required to keep the disclosures of a whistleblower confidential. A complainant—someone raising an issue about wrong that they believe has been done to themselves—is very different from a whistleblower, who is identifying information which they believe demonstrates some form of bad practice, but they are not the victim of that practice and they are not bringing a complaint about themselves. That is one of the weaknesses in this legislation. Without those protections of being a prescribed person, even if the commissioner wants to keep an issue that she—later, it could be he—has discussed under wraps, all that will be subject to FOIs and subject access requests. Although there can be some redaction in those, it becomes extremely difficult when there is not a right of confidentiality.

Many suppliers who are paid late will be afraid to complain. That is simply a reality. They will be afraid to complain directly to the commissioner for fear of getting a reputation as troublemakers and losing future business. That is why the investigative powers of the commissioner are so important and such a significant part of the Bill. But in many cases, there is no way that the commissioner will be able to pursue an investigation without getting insider information. Insider information comes from whistleblowers, but very few will disclose the relevant information if it means the end of their careers and financial ruin.

The Bill presently offers no confidential route for a whistleblower and very little protection from detriment. An employee of a large company that is paying late, who speaks out to show that his or her employer is abusing payment rules and is consequently fired, can go to an employment tribunal. Some would say that is fine; that is the way to avoid retribution. He or she needs £40,000 to £50,000 to be able to get to a preliminary hearing. The case will not start for three years, because the tribunals are so backlogged. With appeals, even winning cases can take five to seven years. The word gets quickly around the industry, ensuring that the whistleblower cannot get another job. Some whistleblowers belong to trade unions. That trade union may well have an insurance agreement to pay for legal representation at the tribunal, but the terms of the insurance mean that the insurance company can withdraw if it decides the case is unlikely to succeed, or it can press for early settlement, which has the effect of silencing the content of the issue about which the whistleblowing was raised. Most insurance companies do one or the other; very rarely do they ever see a case through. For whistleblowers who are not employees—suppliers, associates, directors and competitors—there is not even the protection of the employment tribunal. There is absolutely nothing they can do to stop revenge and detriment.

The best investigators that we have in the finance and business sphere—HMRC, the SFO, the NCA and the CMA—all understand that whistleblowers are vital and have been strengthening their whistleblower framework, some of them very significantly, including with rewards. Most of their successful cases involve whistleblower-obtained evidence. The old trope that monitoring and supervision are sufficient has long been discredited. I would like to see an overarching office of the whistleblower sitting under the Cabinet Office, able to act as a hub with spokes going out to various people, including the Small Business Commissioner, but we are where we are and that does not exist.

I hope the Minister will look very seriously at the amendment I have put down and either accept it or come up with his own version. It provides for the Small Business Commissioner to have an office of the whistleblower within their purview. It provides a place for a whistleblower to make a disclosure that is protected and confidential, unless he or she gives permission for that disclosure to be made public—sometimes people will do that, particularly when taking a case to court. It provides for redress where the whistleblower suffers detriment. At the base of this, the commissioner would be a prescribed person and Parliament would receive annual reports. This is a missing element from the Bill and I hope that the Minister will address it, because, frankly, the effectiveness of the Bill will depend on there being an effective whistleblower route.

[Lord Thomas of Cwmgiedd (CB)]

I make one brief observation on Amendment 83. When one looks back at the last group of amendments and at this one, one sees that what is happening, in effect, is the creation of an entirely alternate system of dispute resolution—a new form of court or adjudication procedure. It is also apparent from the focus of the debate that this is not easy legislation to follow. I therefore think that, if one is to provide access to justice—that justice now being provided by the Small Business Commissioner—we must put the rights into ordinary language.

As experience showed in the 19th century, when the county courts were created—which had the same idea as all this—once you let lawyers in, you destroy them. It is imperative that lawyers do not become involved because it will destroy the system. It destroyed the county courts and it destroyed workmen’s compensation. Tribunals were created to get away from the lawyers. I will come back to this in a further amendment, but the key is to make procedure and law accessible without lawyers, or this system will not work.

[Lord Fox (LD)]

A lawyer steps up.

--- Later in debate ---

Taken together, these amendments would bring the right level of technology: purpose focused—not technology for technology’s sake, not a silver bullet in search of something where it could potentially be of some use, but clearly focused technologies—for the benefit of the commissioner, and through that, the benefits not least to small and micro-businesses. I look forward to the debate, and I beg to move.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I have one or two brief observations in support of the amendments, particularly Amendments 73 and 78 tabled by the noble Lord, Lord Holmes. First, it is critical that people are given an easy understanding of digital access to the system, but that is said in the context of the more important Amendment 78. I may have been slightly tendentious in what I said about getting lawyers out of the system, but we are likely to see much more being done in the system by artificial intelligence. At the moment, there is not a lot of public confidence in decisions on adjudication, on what are likely to be relatively simple things, being done by machine. However, that is coming. Worldwide—and I really mean worldwide—the courts are very concerned to look at the use of AI in being able to make decisions on a lot of areas.

But it is no use going down that route if there is not the public confidence, and that is why I think Amendment 78 is very important. Unless you are prepared to explain to the public what you are doing and how this is reliable, you will not get there. But I have absolutely no doubt that we are going that way. From looking at what is happening, a little bit in this country but much more elsewhere, we are into the route of AI being used to put arguments to the adjudicator, to respond to them and to distil the arguments into decision-making. It may be that this will produce the return to 1846—that is, the County Courts Act, which was meant to do what this Bill is trying to do now.

[Lord Fox (LD)]

My Lords, these amendments are very much of the style that I had expected, knowing that the noble Lord, Lord Holmes, was involved in the Bill, and he certainly made his arguments. To some extent I think there is a mixed thing here, with some of it mandating tools that the SBC could or should use. I do not think we need primary legislation to mandate that at all. I think the point that the noble and learned Lord made on Amendment 78 was slightly different from the one that the noble Lord, Lord Holmes, made. I may have misunderstood. But it is very important to know where AI is being used for decision-making and resolution. I think that was the point that the noble and learned Lord was making, and there I have complete agreement.

The use of distributed ledger is probably a very good idea. Do we need primary legislation to make or advise the SBC to use it? I am not sure. There is a mixed bag here, but the important element is that technology will change how the commissioner will approach her job and she needs to be financially and technically resourced in order to be able to address those changes and, I hope, to be one step ahead of them.

Financial Services and Markets Bill [HL]

Lord Thomas of Cwmgiedd Excerpts

2nd reading
Monday 8th June 2026 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I, too, welcome this Bill as an important step in strengthening the position of London in the world’s financial markets. However, I also pay tribute to the regulators, particularly the FCA, who have had to cope with markets that have changed enormously over the years that the FCA has been in existence. However, the fact that one extends praise to them does not mean that things do not need putting right.

There are two areas that I wish to address. The first is the problem of climate change, which has been so ably addressed by the noble Baronesses, Lady Hayman and Lady Northover. I agree completely with what they said. I want to underline the effect that this is having. There is litigation in almost every country in the world about the risks of climate change. Central banks and regulators worldwide are concerned about its impact. We must therefore ensure that this Bill is fit to deal with this problem and that regulation of the financial markets, because of what is involved for the longer term, deals properly with this area.

The second area is the control—I use that word deliberately—that Parliament should exercise over regulators and their accountability. In doing so, I declare my interest as chairman of the Financial Markets Law Committee, though I speak in an entirely personal capacity. One symptom of the current problem can be taken simply from the volume of litigation. We all suffer in this House from, and complain about, the thickness of the Bills and statutory instruments that we have to look at. Perhaps the problem of our age is being unable to express ourselves concisely enough. However, it is an extremely serious problem in the financial markets. Last year, the FCA produced 1,918 pages of regulatory instruments. The fact that so much legislation is being produced—the noble Lord, Lord Pitt-Watson, gave an illustration earlier of the change—shows that someone needs to hold the regulators accountable and ask why we need it all.

There are five points I would like to make. First, there is a serious problem with Clause 17 because of the weakening effect it has on transparency and proportionality and, as the noble Baroness, Lady Noakes, so clearly demonstrated, the more insidious impact it will have on the ability of this House to scrutinise Bills. We must increase scrutiny and outside control, because fundamental to any body that makes laws or, as in the case of the FCA, also enforces them, is accountability, and I think there is a plain lack of accountability.

Secondly, I accept, as the Treasury rightly points out, that expertise is required to draft the regulations. These transactions, when I look at them, are of immense complexity, and you really need to understand the market to draft them, but that does not mean that you do not need someone looking over your shoulder to see whether you are getting it right. It is very easy to see just trees and forget the wood. What I cannot understand is why the regulator is not happy for someone to look over what it is doing, because if things go wrong, it is a mighty source of comfort. There is no doubt we shall have another financial crisis in a way none of us can anticipate.

Thirdly, there is a wider issue as to the form of rules. We have got to a stage now where we produce very detailed rules, and we have to ask ourselves: is this the right approach? Compliance departments like detailed rules, because if you have detailed rules, all you have to do is go through them all—tick, tick, tick, tick—and you have complied with your obligations. But that should not be the test. The test should be: “Have you complied with the principles?” We are in danger of transferring to the regulator the risk that market participants should have in complying with the underlying principles and not merely with the tick-box exercises of dealing with rules. I pointed this out when, with a co-inspector in the system of inspections we used to have many years ago, we said that one of the problems with the whole Maxwell case was a tick-box mentality, and we must always remember that.

It is also necessary to point out that, if you have very clever people, and one of the regulator’s difficulties is that the people he supervises pay so much money, you can always use rules to justify what is done. It is worth turning up what happened in Enron. Time does not permit me to explain, but Enron is a classic case of applying rules to produce a result that was completely contrary to the underlying principles.

Fourthly, there is cost. The point is, very shortly made, long and complex rules are very expensive. Fifthly, there is consultation. It is very important that we look very carefully at the provisions in the Bill relating to consultations with the market. When drafting, it is very easy, as long experience has taught me, to overlook the obvious. We have to be very careful in what we permit the regulators to do without consultation with the market.

For those reasons, therefore, I very much hope we will scrutinise these two areas of the Bill in particular, and again I pay tribute to the noble Baroness, Lady Noakes, for the extraordinarily lucid explanation she gave of the problems with Part 3, Clause 17 in particular.

AI Regulation Bill

Lord Thomas of Cwmgiedd Excerpts

Thursday 4th June 2026 Grand Committee

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I also thank the noble Lord, Lord Holmes, for obtaining this debate, and more so for his singular and determined leadership and focus on this issue. The need is becoming even more urgent for the Government to end their current policy of “just wait and see”. They should go for an overall scheme and unified set of principles, preferably with a single regulator.

I agree with the noble Baroness, Lady Harding, that regulation is needed to underpin growth and development. Great though the common law is, on its own it is not enough. I illustrate this with reference to the legal sector, which, to the advantage of the United Kingdom, has a significant international lead at present. The sector is making major investment in AI, with real change to the way in which lawyers have trained and work is under way. This is now having a marked effect on the business of the courts and arbitration, and to the competitiveness of the industries it serves, particularly our leading financial services sector.

The issues that arise in the legal sector are many. To list but a few, they include confidentiality, transparency, integrity, copyright, automatic decision-making, protection from bias and discrimination, equal treatment, training, storage of data and ensuring the competitive market for AI. These are exactly the same as exist elsewhere and should be guided by a single set of principles with sectoral adjustment where necessary. Such a uniform set of principles is, in my view, essential to the maintenance of the leading edge of the legal sector in its international position in what is a fiercely competitive international market. There is much to be said for transnational regulation, but we should start it by our own set of principles.

Data (Use and Access) Bill [HL]

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Monday 16th December 2024 Grand Committee

[Baroness Jones of Whitchurch (Lab)]

Yes, it would be helpful if we could write and set that out in more detail. Obviously the ICO’s report is fairly recent, but I am sure he has considered how the enforcement would follow on from that. I am sure we can write and give more details.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I thank the Minister for her response. I wish to make three points. First, the critical question is: are our laws adequate to pass the adequacy test? Normally, when you go in for a legal test, you check that your own house is in order. I am therefore slightly disappointed by the response to Amendment 125. Normally one has the full-scale medical first, rather than waiting until you are found to be ill afterwards.

Secondly, I listened to what the Minister said about my Amendment 87 and the difference between what rights are protected by the charter and the much greater limitation of the ECHR, normally simply to do with the extent to which they apply horizontally to private individuals. I will look at her answer, but at first sight it does not seem right to me that, where you have fundamental rights, you move to a second stage of rights—namely, the rights under the Data Protection Act.

Thirdly, I want to comment on the whole concept of data communities and data trusts. This is an important area, and it takes me back to what I said last time: this legislation really needs trying to reduce to principles. I am going to throw out a challenge to the very learned people behind the Minister, particularly the lawyers: can they come up with something intelligible to the people who are going to do this?

This legislation is ghastly; I am sorry to say that, but it is. It imposes huge costs on SMEs—not to say on others, but they can probably afford it—and if you are going to get trust from people, you have to explain things in simple principles. My challenge to those behind the Minister is: can they draft a Clause 1 of the Bill to say, “The principles that underpin the Bill are as follows, and the courts are to interpret it in accordance with those principles”? That is my challenge—a challenge, as the noble Baroness, Lady Kidron, points out, to be ambitious and not to sit in a tepid bath. I beg leave to withdraw the amendment.

Amendment 87 withdrawn.

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[Baroness Kidron (CB)]

My Lords, I speak to Amendment 114 to which I have added my name. It is a very simple amendment that prevents controllers circumventing the duties for automated decision-making by adding trivial human elements to avoid the designation. So, as such, it is a very straightforward—and, I would have thought, uncontroversial—amendment. I really hope that the Government will find something in all our amendments to accept, and perhaps that is one such thing.

I am struck that previous speeches have referred to questions that I raised last week: what is the Bill for, who is it for and why is not dealing with a host of overlapping issues that cannot really be extrapolated one from another? In general, a bit like the noble Lord, Lord Holmes, I am very much with the spirit of all these amendments. They reflect the view of the Committee and the huge feeling of civil society—and many lawyers—that this sort of attack on Article 22 by Clause 80 downgrades UK data rights at a time when we do not understand the Government’s future plans and hear very little about protections. We hear about the excitements of AI, which I feel bound to say that we all share, but not at the expense of individuals.

I raise one last point in this group. I had hoped that the Minister would have indicated the Government’s openness to Amendment 88 last week, which proposed an overarching duty on controllers and processors to provide children with heightened protections. That seemed to me the most straightforward mechanism for ensuring that current standards were maintained and then threaded through new situations and technologies as they emerged. I put those two overarching amendments down on the understanding that Labour, when in opposition, was very much for this approach to children. We may need to bring back specific amendments, as we did throughout the Data Protection and Digital Information Bill, including Amendment 46 to that Bill, which sought to ensure

“that significant decisions that impact children cannot be made using automated processes unless they are in a child’s best interest”.

If the Minister does not support an overarching provision, can she indicate whether the Government would be more open to clause-specific carve-outs to protect children and uphold their rights?

[Lord Thomas of Cwmgiedd (CB)]

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

[Lord Kamall (Con)]

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

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

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

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

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

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

Data (Use and Access) Bill [HL]

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Tuesday 10th December 2024 Grand Committee

Moved by

[Lord Thomas of Cwmgiedd]

87: After Clause 72, insert the following new Clause—
“Application of the European Convention on Human Rights to the processing of personal data by private bodies(1) Where personal data is processed by any private body not subject to the obligations under the European Convention on Human Rights as enacted by the Human Rights Act 1998, that private body is to be treated as subject to the obligations under the Convention as if it were a public authority and must ensure that such processing is not incompatible with a Convention right. (2) If a private body fails to ensure that the processing of personal data is in accordance with subsection (1), the private body is liable to any person whose rights under the Convention are infringed as if it were a public authority,”Member's explanatory statement
This is a probing amendment to ensure for the purpose of equivalence that the processing of personal data by private bodies is subject to the ECHR on the same basis as public bodies.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, although it is a late hour, I want to make two or three points. I hope that I will be able to finish what I wish to say relatively quickly. It is important that in looking at the whole of this Bill we keep in mind two things. One is equivalence, and the other is the importance of the rights in the Bill and its protections being anchored in something ordinary people can understand. Unfortunately, I could not be here on the first day but having sat through most of today, I deeply worry about the unintelligibility of this whole legislative package. We are stuck with it for now, but I sincerely hope that this is the last Civil Service-produced Bill of this kind. We need radical new thinking, and I shall try to explore that when we look at automated decision-making—again, a bit that is far too complicated.

Amendment 87 specifically relates to equivalence, and I want to touch on Amendment 125. There is in what I intend to suggest a fix to the problem, if it really exists, that will also have the benefit of underpinning this legislation by rights that people understand and that are applicable not merely to the state but to private companies. The problem that seems to have arisen—there are byproducts of Brexit that from time to time surface—is the whole history of the way in which we left the European Community. We left initially under the withdrawal Act, leaving retained EU law. No doubt many of us remember the debates that took place. The then Government were wholly opposed to keeping the charter. In respect of the protection of people’s data being processed, that is probably acceptable on the basis that the rights of the charter had merged into ordinary retained EU law through the decisions of the Court of Justice of the European Union. All was relatively well until the retained Retained EU Law (Revocation and Reform) Act, which deleted most general EU retained law principles, including fundamental rights, from the UK statute book. What then happened, as I understand it, was that a fix to this problem was attempted by the Data Protection (Fundamental Rights and Freedoms) (Amendment) Regulations 2023, which tidied up the UK GDPR by making clear that any references to fundamental rights and freedoms were regarded as reference to convention rights within the meaning of the Human Rights Act.

For good and understandable reasons, the Human Rights Act applies to public authorities and in very limited circumstances to private bodies but not as a whole. That is accepted generally and certainly is accepted in the human rights memorandum in respect of this Bill. The difficulty with the Bill, therefore, is that the protections under the Human Rights Act apply only to public authorities but not to private authorities. Whereas, generally speaking, the way in which the Charter of Fundamental Rights operated was to protect, also on a horizontal basis, the processing or use of data by private companies.

This seems to cause two problems. First, it is critical that there is no doubt about this, and I look forward to hearing what the Minister has to say as to the view of the Government’s legal advisers as to whether there is a doubt. Secondly, the amendment goes to the second of the two objectives which we are trying to achieve, which is to instil an understanding of the principles so that the ordinary member of the public can have trust. I defy anyone, even the experts who drafted this, to think that this is intelligible to any ordinary human being. It is simply not. I am sorry to be so rude about it, but this is the epitome of legislation that is, because of its sheer complexity, impossible to understand.

Of course, it could be made a lot better by a short series of principles introduced in the Bill, the kind of thing we have been talking about at times today, with a short, introductory summary of what the rights are under the Bill. I hope consideration can be given to that, but that is not the purpose of my amendment. One purpose that I suggest as a fix to this—to both the point of dealing with rights in a way that people can understand and the point on equivalence—is a very simple application, for the purposes of data processing, of the rights and remedies under the Human Rights Act, extending it to private bodies. One could therefore properly point, in going through the way that the Bill operates, to fundamental rights that people understand which are applicable, not merely if a public authority is processing the data but to the processing of data by private bodies. That is what I wanted to say about Amendment 87.

I wanted to add a word of support, because it is closely allied to this on the equivalence point, to the amendment in the name of the noble Lord, Lord Clement-Jones, for whose support I am grateful in respect of Amendment 87. That relates to the need to have a thorough review of equivalence. Obviously, negotiations will take place, but it really is important that thorough attention is given to the adequacy of our legislation to ensure that there is no incompatibility with the EU regime so we do not get adequacy. Those are the two amendments to which I wished to speak in this group. There are two reasons why I feel it would be wrong for me to go on and deal with the others. Some are very narrow and some very broad, and it is probably easiest to listen to those who are speaking to those amendments in due course. On that basis, therefore, I beg to move.

[Baroness Kidron (CB)]

My Lords, I will speak to Amendments 139, 140 and 109A—which was a bit of a late entry this morning—in my name. I express my thanks to those who have co-signed them.

Data (Use and Access) Bill [HL]

Lord Thomas of Cwmgiedd Excerpts

2nd reading
Tuesday 19th November 2024 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I, too, welcome the Bill, but there is one matter we should have at the forefront of our minds as we work through it: that it must be implemented and carried through by SMEs and individuals. Regrettably—and I say this as a lawyer—lawyers have become far too expensive. We must appreciate the need to draft legislation and regulatory regimes that are as easy as possible to operate without the benefit of legal advice. If we cannot achieve that, it must be incumbent on the Government and the regulators to set out clearly what the position is, in a way that people can understand. We do not want our SMEs and individual traders to enter into operating under this new regime without being able to understand the law. I fear that this Bill, by its very length, is a good example of how we can overcomplicate things.

The second issue is the protection and transferability of data. The Minister, the noble Lord, Lord Markham, and the noble Baroness, Lady Kidron, have all spoken about the importance and value of data, its transferability and the need to balance correctly the protections and rights of the individual against the importance of being able to use it in research. I want to say a word about the contrasting positions we face in the transferability of data between us and the European Union, and the slightly more difficult and unpredictable situation that may arise between us and the United States. They are the same problem, but they may need addressing in different ways. On the first, I need to be slightly technical, but as the adequacy of our data regime is such an important issue, I hope that noble Lords will forgive me.

I am going to ask the Minister a question, but it is not for answer today; I think it will require a bit more than that. It takes us back to the battles and debates we have had over the last six years in relation to the manner of our withdrawal from the European Union. When we left the EU, we left in place retained EU law. We got rid of the charter, because it was said that all that mattered and was important was embodied in retained EU law. That was almost certainly right, but the problem that I believe has arisen—it is partly complicated by advice contained in the Government’s human rights memorandum attached to the Bill—arises from the effect of the Retained EU Law (Revocation and Reform) Act. I can hear, almost visibly, the sighs—“Are we back to that again?”—and I am so sorry to be dredging this up.

I have looked at various things—I am particularly grateful for the help I have had from Eleonor Duhs of Bates Wells—and I believe there is a problem we need to address. As data adequacy is so important, I will say a word about the detail. At the moment, I think we proceed on the assumption that the UK GDPR, with its numerous references to the data subject’s rights and freedoms, is adequate. The last Government, when dealing with the matter, passed the Data Protection (Fundamental Rights and Freedoms) (Amendment) Regulations, which said that all the many references in the UK GDPR to these rights are to be read as referring to

“the Convention rights within the meaning of the Human Rights Act”.

The difficulty that has arisen is in paragraph 47 of the Government’s human rights memorandum:

“Where processing is conducted by a public authority and engages a right under the ECHR, that authority must, in accordance with section 6 of the Human Rights Act 1998, ensure that such processing is not incompatible with a convention right”.


Then comes the important sentence:

“Where processing is conducted by a private body, that processing will not usually engage convention rights”.


The important point is that it is generally understood that, save in specific circumstances, the Human Rights Act applies only to state entities and not to private companies. If and where data is being processed by private entities, as the Bill and the market largely envisage, how are we to be sure that our references in the UK GDPR refer to the human rights convention but not to the charter? Having lost EU retained law, how are data privacy and data protections protected when processed by private companies?

I raise this point because it is important that we clarify it. If there is an issue, and I hope the Government will look at this carefully, we will need to amend the Bill to make sure that there can be no doubt that, where data is processed by private companies, the data rights are properly protected as they would have been if we had retained EU law, or if the charter applied. It is a very narrow point but one of fundamental importance as to the Human Rights Act being directed at state actors, by and large, and not private entities. I am sorry to take up a little time on this very general subject, but data protection is so important, and retaining our data adequacy status is, as I have learned over many years, essential to our industry.

We know that, provided we can get our law in order, there is no problem as regards the EU, I hope. We face a much more difficult problem with regard to data dealings with the United States. First, the law is much more complicated and developing at an enormous pace. It is partly federal and partly state. Of course, we have no idea—and I am not going to speculate, because speculation is pointless—what may happen under the new Administration in the United States. One thing we have learned from the EU, particularly the EU AI Act, is that legislating in terms that are hard can produce results that very quickly get out of date. It seems to me that we have to look constructively at finding a way to adapt our legislative framework to what happens in the United States as regards transferability and, more importantly, the protection of our data in respect of the very large American companies. How are we to do this? Do we give Ministers very broad statutory powers? There may, I regret to say, be a case for doing that. It is something that I do not favour. If Ministers are to have such broad statutory powers, how is that power to be made properly accountable to this House?

As the noble Baroness, Lady Kidron, demonstrated, there is no use delaying these decisions until we know what the US regime may be. Maybe the US regime, unlike the EU, will change very rapidly. Bureaucracy has some advantages when you are dealing with it from the outside, but someone who believes in constant change and turmoil is much more difficult to deal with from our legislative point of view. It is a very important aspect of this legislation that we look at how, in the transnational market in data, which is of immense value and importance to us, we protect the British public.

There are loads of other points that one could raise, but I will raise only one, to follow what has just been said. It is of fundamental importance that we examine automated decision-making with the greatest care. Some very good principles have been developed both in the United States, under the current regime, and in Europe. When a decision is made by a machine—that is a rather facile way of describing it; it is made as a result of an algorithmic process—how do we ensure that, first, there is some right to a human intervention and, secondly, and equally importantly, that the person affected understands why the decision has been made? The point that has just been made is very important, because when you get a decision from an individual, you normally have it accompanied by an understanding of the human, plus reasons. This is a very important part of the Bill; it is so important to give confidence about the way forward.

There are many other detailed points, but those are the three principal points I wanted to make. Let us keep it simple, look at the transnational aspects and look at automated decision-making.

Digital Markets, Competition and Consumers Bill

Lord Thomas of Cwmgiedd Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I will speak very briefly in relation to the amendments to deal with the problem of litigation funding.

I thank the Lord Chancellor and the Ministers on this Bill for what they have done to facilitate bringing forward comprehensive legislation because it is plainly much better addressed in one simple Bill. I express also my gratitude to the Opposition, particularly the noble Baroness, Lady Jones of Whitchurch, and the noble Lords, Lord Bassam and Lord Stevenson of Balmacara, for their help. On the Liberal Democrat Benches I thank the noble Lords, Lord Clement-Jones and Lord Fox. I also thank my colleagues who are not here to support me. This is something where the Lord Chancellor has been right. He has taken the right decision. Our task now is to get it through before any events derail legislation. Any help that I can give, I am more than willing to.

Digital Markets, Competition and Consumers Bill

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Wednesday 31st January 2024 Grand Committee

[Lord Thomas of Cwmgiedd (CB)]

I will follow what the noble Lord, Lord Sandhurst, said and not waste any time repeating the arguments he so eloquently put. I agree completely with his analysis of the mistaken decision of the Supreme Court in PACCAR, and with his explanation of why it is so disastrous for access to justice. I also agree with his analysis of why it is necessary to put forward the two amendments in his name, which I have had the privilege to co-sign, but I will go further and deal with the cases that cannot be covered.

I will underline the Horizon litigation. I do not think an awful lot of people really appreciate that the Horizon scandal, and the miscarriage of justice that occurred, would never have been uncovered if there had not been litigation funding to support Mr Bates and others when they brought their complicated action against a very wealthy body. In Mr Bates’s recent article in the Financial Times, noble Lords will see, from the perspective of someone seeking access to justice, why litigation funding is important. In it, he said:

“Combined with the strength and stubborn defiance of my colleagues, such financing allowed us to take our case from Fenny Compton Village Hall to the High Court, securing justice, exposing the truth and clearing our names and reputations”.


It is essential that we put ourselves in a position where, for the future, someone in his position—as well as, as the noble Lord, Lord Sandhurst, said, infected blood claims, the equal pay claims and all claims by SMEs and others, such as rugby players—falls not within the scope of these amendments but rather outside it.

We sought to put forward another amendment to amend Section 58AA(3)(a) of the Courts and Legal Services Act 1990, on “Damages-based agreements”. We wanted to add a paragraph that would have read:

“An agreement under which … the funder agrees to provide financial services or assistance in relation to … the provision of advocacy services or litigation services, or … costs that the funded party is ordered by a court or tribunal or in arbitration proceedings, or is otherwise legally obliged, to pay to any other party in relation to litigation; and … the recipient of financial services or assistance agrees to make a payment to the funder in specified circumstances is not a damages-based agreement”.


This would have contained a further provision dealing with the position that that was to be treated as “always having had effect”. As the noble Lord, Lord Sandhurst, said, this was ruled out of scope. I have written to say that, if this matter cannot be resolved, I intend presently to have recourse to the procedure set out in paragraph 8.67 of the Companion to the Standing Orders and ask the House to consider the issue of scope. I gather that this is a rare procedure—with my inexperience, I have never come across it—so why am I prepared to take us down this road? There are a number of reasons, but I will give three.

First, access to justice is a fundamental right, and although I would love us all to have legal aid and bring back the position that used to exist, the pockets of the Ministry of Justice are somewhat empty and it does not have the funds with which to restore that, nor can I see any incoming Government of whatever complexion having that funding either. Secondly, it simply cannot be right, because Magna Carta says we should give justice to all people, to say, “We will provide access to justice to those who fall within the definition of consumer or who can bring their claims before the CAT, but the rest of you, no”. Thirdly, there is an international aspect and, in touching on this, it may be helpful to the amendment put forward by the noble Lord, Lord Hodgson.

I declare an interest in that I sit on the advisory board to a group at the European Law Institute which is looking at the whole question of third-party funding. It is looking at it simply because this is a worldwide issue. It is a worldwide market. The concern I had in relation to making this change broader than in the current amendments is that I want our citizens to be able to benefit from that market and not to be excluded. It is quite clear that the market is enormous. The working group of the European Law Institute, which is chaired, coincidentally, by Mrs Justice Cockerill, who was Judge in Charge of the Commercial Court until last year, contains a number of academics and practitioners drawn from across the world, including America, where this is a problem, and a judge from Australia. It is being taken forward because there is felt to be a need to have a clear statement of principles because this is now such a large industry. It is really a matter for the noble Lord, Lord Hodgson, to consider further, but the kind of work being done—it is anticipated that this body will report towards the end of this year or the beginning of next—may provide principles that either can be used on a voluntary self-regulating basis or will enable regulators or legislators to put in place principles that should apply. This is a worldwide industry and I do not wish people in this country to be excluded from it.

Although I do not wish to invoke this procedure today, I very much hope that the department, together with the Ministry of Justice, will look at this issue and see how we can bring about access to justice for everyone, not just a few, because a technical point of this kind is totally beyond the comprehension of any member of the British public. In this House we should not act in such a way as not to give equal justice and access to that justice to all people.

Code of Practice on Reasonable Steps to be taken by a Trade Union (Minimum Service Levels)

Lord Thomas of Cwmgiedd Excerpts

Wednesday 6th December 2023 Lords Chamber

[Lord Sikka (Lab)]

My Lords, it is a pleasure to follow my noble friend Lord Hendy. I will ask the Minister to clarify a few things.

My noble friend already quoted some of paragraph 33 of the Code of Practice, which requires the picket supervisors or other trade union officials

“to use reasonable endeavours to ensure that picketers avoid … trying to persuade members who are identified on the work notice not to cross the picket line”.

However, the next paragraph states:

“Unions are not required to notify the picket supervisor of the names of union members identified in the work notice”.


So how exactly would they know who to stop? Will they have to wear strange hats, ties or jackets or some other way of identifying themselves? Those two paragraphs contradict each other.

That is not the only contradiction in the statutory instruments. Workers are being subjected to laws that do not apply to the withdrawal of capital, so the Government are not being even-handed at all. Companies can close facilities and sack workers without notice and without any vote by any stakeholder. Last year, P&O Ferries unlawfully sacked 800 people. The then Prime Minister openly said that that was unlawful. The chief executive of P&O Ferries came to a parliamentary committee and said that they knowingly broke the law, but no action whatever was taken. The Government are not even specifying the minimum levels of service for any government departments, monopoly service providers or companies. There are no minimum levels of service even for Ministers to answer Questions.

Why are the Government so anti-worker and one-sided? I am reminded of a great quote: “When tyranny becomes law, resistance becomes a duty”. I too shall vote for the fatal amendment and, if that fails, the regret amendment.

[Lord Thomas of Cwmgiedd (CB)]

Notices are often fraught with peril, so I want to know from the Minister what the employer is required to do when giving a notice. What is specified as to his means of communication? Is the means of communication employed by the employer to be communicated to the trade union, so that the trade union has some idea of what the employer thought was a means of bringing it to the attention of the employee? If this is to work, there must be a reasonable degree of co-operation.

[Lord Johnson of Lainston (Con)]

My Lords, I greatly thank all noble Lords who participated in this debate. I hope to clarify some key points, which are well labelled on the Government’s website and in the code.

I begin by thanking my noble friend Lady Noakes for her comments. This is a code, not a law. The whole point about this code is to enable unions to know how they can safely operate once they have taken reasonable steps to ensure that minimum service levels have been applied. The noble Lord, Lord Cromwell, mentioned that I came from a business background. He is correct and, from my point of view, this will provide welcome clarity to enable us to operate effectively. It does not impose anything or any type of activity: it simply makes recommendations. If you look at the concepts such as the template, that is the recommended template. It is not necessarily the template by which unions will have to operate. I would have thought that it would be very helpful for unions to have a template construction in that way to enable them to feel safe when they are communicating with their members.

I wish to raise something that I consider most valuable when debating this point and this code. Minimum service levels, as operated by the Act and structured by a useful guide such as this code, really—in my view and in the view of the Government—should be the last resort. The noble and learned Lord, Lord Thomas, made apparent the crucial point that it is through collaboration with employers, businesses and unions that we will have strong relations. The noble Lord, Lord Fox, also made that point. The timelines imposed by the Act and referred to in the code are quite short, but are designed to fit within the strike legislation, enabling a 14-day announcement of a strike, a seven-day turnaround for the work notices, and then further days to refine that.

The theory is that the employer and the unions will have done a great deal of work to prepare for the scenario so that effective work notices can be issued. It is not unreasonable for an employer and a union to be expected to collaborate very closely to ensure that this process can be as smooth as possible. At no point does this code, in any way, derogate the right to strike. It gives vital clarity on the relationship between the union and the employer. It actually goes further than that: it protects the rights of unions and the rights of the union members, so that they know where they stand.

A number of noble Lords raised points about reasonable steps, and they are just that. This has been quite well clarified by previous discussions in the sense that, so long as the union can prove that it has taken reasonable steps to ensure that the work notices are properly served and communication has taken place and that workers are not prevented from attending a work site, it can consider itself relatively safe when it comes to the process that may be placed on it in the courts by an employer. That is the whole point of the code: to make the unions feel safer and to ensure that an act around a strike can be properly orchestrated.

In conclusion, I ask for the support of this House. What we are discussing here is a code that will enable a great degree of welcome clarity and was called for by all sides on this debate. There have been a number of consultations to which the Government have responded, making changes to the code to bring to bear some of the very sensible points that were raised to ensure that it is reasonable, practical, fair and clear. It balances the unions’ and individuals’ rights to withhold their labour, while crucially providing minimum service levels so that the public can go about their business and the economy can sustain itself.