Exiting the European Union (Consumer Protection)

Kelly Tolhurst Excerpts

Tuesday 2nd April 2019 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)]

I beg to move,

That the draft Geo-Blocking Regulation (Revocation) (EU Exit) Regulations 2019, which were laid before this House on 14 March, be approved.

The statutory instrument will revoke both EU regulation 2018/302 and the Geo-Blocking (Enforcement) Regulations 2018 in the event of the UK exiting the EU without a withdrawal agreement. This recognises that in the event of a no-deal exit from the EU, there will be no way to enforce effectively the geo-blocking regulation on behalf of UK consumers.

Geo-blocking is the term used to describe traders discriminating against customers on the basis of nationality or of the location of the customer. The EU’s geo-blocking regulation prohibits certain forms of geo-blocking, including through mandating access to all versions of a website in the EU, preventing discrimination between EU customers when distance shopping online or otherwise, and preventing discrimination in the payment terms accepted. This regulation came into force on 3 December 2018. The geo-blocking regulation does not apply to copyrighted online content, such as movies, e-books and video games.

The Geo-Blocking (Enforcement) Regulations 2018 enabled the domestic enforcement of the geo-blocking regulation. The regulations gave powers to certain regulators and acknowledged the right of customers to bring claims directly against infringing traders. These regulations came into force on the same day as the geo-blocking regulation. In the event of a no-deal exit from the EU, the geo-blocking regulation will be transposed directly into UK law, under the European Union (Withdrawal) Act 2018, as retained EU law. The Geo-Blocking (Enforcement) Regulations 2018 will also continue to have effect after a no-deal exit, unless revoked.

It is necessary to revoke both these pieces of legislation as it will not be possible to enforce effectively the geo-blocking regulation on behalf of UK customers after a no-deal exit from the EU. This is because EU regulators will no longer be obliged to bring action against businesses through EU mechanisms for cross-border co-operation; UK civil and commercial judgments would no longer be automatically enforced in EU member states and courts; and the UK Government cannot unilaterally enforce the geo-blocking regulation across the EU.

Given that geo-blocking cannot be enforced unilaterally by the UK across the EU in the event of a no deal, it is not possible to replicate the geo-blocking regulation’s benefits for UK consumers in domestic law. The provisions of the geo-blocking regulation do not apply to transactions occurring solely within one country. Therefore, there is no benefit to UK consumers in retaining a version of the geo-blocking regulation that applies only to the UK.

[Mr Jim Cunningham (Coventry South) (Lab)]

I have a genuine question: will the Minister tell us how we can protect the British consumer in that particular situation?

--- Later in debate ---

[Kelly Tolhurst]

We are debating a no-deal SI, and leaving the European Union means that the law is disapplied, so by leaving the European Union we are moving out of those protections.

Furthermore, if we do not revoke the geo-blocking regulation, it would result in a competitive disadvantage for UK traders. They would have to continue giving EU consumers preferential treatment, while EU traders would not need to do the same for UK customers. To avoid this, which is in the EU’s favour, we propose revoking the geo-blocking regulation in the UK.

The effect of this statutory instrument is simple. The retained EU law version of the geo-blocking regulation and the Geo-Blocking (Enforcement) Regulations 2018 will be revoked in the event of a no-deal exit from the EU. The substantive rules contained in the geo-blocking regulation will no longer have effect in the UK after that regulation is revoked. It is important to note, however, that this legislation will continue to operate in the EU. As such, UK businesses operating in EU markets will still have to comply with the EU regulation when dealing with EU consumers.

The changes made to schedule 13 to the Enterprise Act 2002 by the Geo-Blocking (Enforcement) Regulations 2018 were undone by a separate statutory instrument, the Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2019. Those regulations were debated and approved by the House on 30 January and were made on 6 February 2019.

The Geo-Blocking (Enforcement) Regulations 2018 enable the domestic enforcement of the geo-blocking regulation. They also provide for UK customers to bring claims directly against traders that breach the geo-blocking regulation. As the intention is to revoke the geo-blocking regulation in the UK and UK customers will not be able to rely on it thereafter, such provisions would serve no purpose.

A failure to revoke the geo-blocking regulation and the Geo-Blocking (Enforcement) Regulations 2018 would not preserve UK customers’ consumer rights. Those rights will in effect be lost if the UK leaves the EU without a deal. The only effect would be to continue to impose obligations on UK traders while providing no benefit to UK customers.

The subject matter of this statutory instrument is partially devolved to Scotland, Wales and Northern Ireland. The statutory instrument has been consented to by the Welsh and Scottish Administrations, and the Northern Ireland civil service was notified in line with the protocol agreement in place during the absence of the Northern Ireland Executive. I would like to take this opportunity warmly to thank the devolved Administrations and the Northern Ireland civil service for their ongoing co-operation.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

I rise as a former Chairman of the Subordinate Legislation Committee in the Scottish Parliament. The Minister has mentioned the co-operation at civil service level. May I have the safety of an assurance that there is similar co-operation at political level between those who handle statutory instruments in Westminster and those who do a similar thing in Holyrood?

[Kelly Tolhurst]

I would like to outline the fact that this was given political consent: the Minister in Scotland wrote to us to give his consent for the statutory instrument.

In conclusion, the statutory instrument simply recognises the practical effect of a no-deal exit from the EU. The Government are seeking to ensure that UK traders are not unfairly subject to rules that do not benefit UK customers.

--- Later in debate ---

[Kelly Tolhurst]

I thank all hon. Members who have contributed to the debate. Just to recap, the geo-blocking regulation is an EU regulation that came into effect on 3 December 2018. It is important to note that, up to the end of February, no claims had come forward to the Competition and Markets Authority. It does not apply to transactions that take place entirely within one EU member state.

The geo-blocking regulation prohibits certain forms of discrimination in the single market, specifically: blocking access to, or forced redirection away from, a website on the basis of an internet user’s location in the EU; discriminatory terms of access, which include but are not limited to price offered, on the basis of a customer’s location in the EU when selling goods delivered across a border but still within the EU, wholly online services, excluding copyright materials such as e-books, streamed movies, music and video games, or services delivered in a specific location, such as hotels and theme parks; discrimination in payment terms on the basis of a customer’s location.

The geo-blocking regulation could not function properly on a unilateral basis in a no-deal scenario. Effective enforcement outside the UK would be very difficult, because the UK would no longer operate within the EU’s consumer protection co-operation network or enforcement agencies. EU regulators would no longer be obliged to bring actions against businesses through EU mechanisms for cross-border co-operation. UK civil and commercial judgments, which were alluded to in the debate, would no longer be automatically enforced in the EU member state’s court, and the UK Government cannot unilaterally enforce the geo-blocking regulations throughout the EU without help from regulators in other member states.

Even if the geo-blocking regulations were not revoked, a no-deal exit from the EU would lead to a loss of protection for UK customers while imposing the same level of obligation for UK traders. The provisions of the geo-blocking regulation do not apply to transactions that occur solely within one country, so there is no benefit to retaining the version of the regulation that applies to the UK.

Let me outline the concerns relating to not revoking the EU regulation. EU consumers would receive preferential treatment in respect of UK traders, while UK consumers would be unlikely to receive any reciprocal benefits from EU traders. That is why we are proposing the revocation of the regulation. Revoking will preserve UK rights. It will not strip consumer rights, which will be lost in the event of a no-deal Brexit, but the regulation would continue to impose obligations on UK traders, with no benefits for UK consumers.

Let me answer some of the shadow Minister’s questions. He is concerned about the effect of this statutory instrument in a no-deal situation. I say to him: please support the Prime Minister’s withdrawal agreement. We have been extremely clear that we would like to uphold and maintain the highest standards of consumer protection in the UK. If we agree to the Prime Minister’s withdrawal agreement, we will be able to satisfy our ambition as a Government to maintain high consumer protections and to be able to enter into agreements and negotiations with the European Union so that we can maintain cross-border co-operation. That is what I would very much like to do. We should not only engage in the mutual exchange of information and evidence but work on a framework so that we can work collectively with the European Union on the wider detriment to consumers.

The shadow Minister asked about the impact assessment. He has rightly expressed concerns about impact assessments throughout the no-deal SI process. I have on many occasions tried to explain to him the reasoning behind what the Government have been doing in relation to some of these SIs. On this particular SI, we assessed the impact of the instrument to be de minimis because the costs are below £5 million. As the shadow Minister will know, that means that, in line with the better regulation framework, we did not need to carry out a full impact assessment. The assessment was that the maximum impact could be £1.2 million, based on around 75,000 businesses having to familiarise themselves with the new rules.

The shadow Minister also asked about consultation. On bringing forward this regulation, he wanted to know who we had spoken to and who we had engaged with. As he alluded to, we have consulted and spoken to business representative organisations, including the CBI, the Federation of Small Businesses, the British Retail Consortium, and the Association for UK Interactive Entertainment. The feedback was that they had no strong views on these regulations. However, we did publish a technical notice on 12 October 2018, which clearly laid out our plans for geo-blocking in the event of a no deal.

Let me re-emphasise a point. We have heard a lot today about a potential loss of rights for consumers. I have always been clear in any Committee in which I have spoken on bringing forward no-deal legislation that, whatever the outcome, we are both prepared for and committed to delivering on the high standard of consumer protections that we already have in the UK. We also have a track record of consumer protection in this country and of going above and beyond; in fact, many of the consumer protections in this country go further than those of the European Union.

[Drew Hendry]

The Minister says that this Government go further than many others. Can she therefore address the conundrum that I raised earlier: why are consumers in Scotland paying so much more for delivery, but being treated so badly compared with other consumers? Why is that still happening if what she is saying is a fact?

[Kelly Tolhurst]

I was going to come on to that, but I thank the hon. Gentleman for raising it. He and many of his colleagues—as well as many of my hon. Friends—have raised the issue of Scotland’s surcharges for parcel delivery. He will know that I have been working with the Consumer Protection Partnership to see how we can ensure fairness across the British Isles, but I must remind the House that we are talking about individual parcel organisations—as opposed to the Royal Mail—using these surcharges. However, it is true that many organisations are unable to use Royal Mail to distribute their products throughout the country. I remain committed to working with colleagues across the House to resolve this issue and to enable fairness for consumers right across the UK. He is right to raise it and I do take his point.

I just want to return to the point that I was making about consumers. If we want to make sure that we are able to enter into good agreements in terms of cross-border participation and consumer protection and to work with the European Union, my view is—and I will be clear about this—that we should vote for the withdrawal agreement. [Interruption.] Hon. Members reject a no-deal Brexit, but they are not prepared to support something that is on the table that would enable us immediately to have those conversations—

[David Linden]

rose—

[Kelly Tolhurst]

I will give way to the hon. Gentleman.

[David Linden]

When might we have the opportunity to vote for the withdrawal agreement again?

[Kelly Tolhurst]

Well, I hope that the hon. Gentleman is asking me that question because he wants to support me and my colleagues on the Government Benches. It is quite right that any responsible Government would prepare for a no deal, and that is exactly what we are doing. I must remind colleagues that this regulation came into force in December last year, and, where we have had to enforce it, there have not, as yet, been any complaints.

[Bill Esterson]

The hon. Lady demonstrates that she and I are in agreement about the benefits of geo-blocking and the current arrangements that we have as members of the EU. This regulation is about no-deal preparation, and we will lose those benefits if we leave with no deal. Perhaps she can tell the House what preparations she and her Department have made to ensure that, if we do manage to avoid no deal, there is a mutual recognition agreement that keeps these provisions in place.

[Kelly Tolhurst]

The hon. Gentleman’s question suggests that he is considering supporting the withdrawal agreement, because he is asking me about the preparations that we have made in the event of that happening. We have been quite clear that we have to agree the withdrawal agreement. As we have said in our technical notices, and as I have said in many SI Committees, we will be working with our neighbours to ensure that we are able to enter into mutual co-operation agreements if the withdrawal agreement is passed.

[Bill Wiggin (North Herefordshire) (Con)]

As the Minister was speaking, I was mulling over the point made by SNP Members about the greater charges for having things delivered to Scotland. I can understand their point; it does seem a little unfair. But has the Department had a chance to do the maths? Is it not clear that my constituents, who are contributing to the Barnett formula, are actually paying more than the people who are receiving goodies from Amazon, eBay or any of the other excellent retailers?

[Kelly Tolhurst]

I thank my hon. Friend for highlighting that particular point. I have made it clear that we need to get into a situation whereby we can enter into close co-operation on consumer enforcement. What happens on geo-blocking will depend on whether we leave the European Union with a deal, but we are here today to talk about a no-deal SI.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) has disappointed me by saying that he will not support the SI this afternoon. As I have outlined today, the very act of leaving the European Union without a deal would make the EU regulation redundant. It would be perverse for us to keep a regulation that would put UK traders at a disadvantage compared with EU traders.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

The Minister is talking about not disadvantaging UK consumers, which is a very laudable aim; that is what we all want. Does that mean that she will align with the European Union when it brings in a standard minimum expiration period of five years for gift cards?

[Kelly Tolhurst]

I remind the hon. Lady that we are already going above and beyond what the European Union is doing on many consumer protection matters. The UK is working on further protections. We will always be mindful of what is coming from the European Union, and we will always be minded to go further. I will ensure that UK consumers are protected as far as possible, and I will be looking into strengthening many measures in the near future.

[Patricia Gibson]

The Minister is being very generous with her time. Can I take from what she has just said that she is indeed going to bring in a five-year statutory expiration time for all gift cards? I have been urging her to do so and I have not quite had a yes. Has she given me a yes today?

[Kelly Tolhurst]

The hon. Lady will know that we are discussing an SI related to geo-blocking, not gift cards, but I am happy to talk to her about gift cards and to make her aware when we decide to move forward with any changes or improvements in that area. I assure her that I am absolutely committed to protecting consumers in this country, and this Government will be working hard to ensure that we do that whether or not we get a deal.

This statutory instrument simply recognises the practical effect of a no-deal exit from the EU, and it is important for ensuring that UK traders are not unfairly subjected to any rules. I am therefore disappointed with the hon. Member for Inverness, Nairn, Badenoch and Strathspey for saying that he will not support the draft regulations this afternoon. Failure to revoke the geo-blocking regulation would not preserve UK customers’ consumer rights, which would effectively be lost if the UK leaves the EU without a deal. The only effect of non-revocation would be to continue to impose obligations on UK traders while providing no benefits to UK customers. I therefore commend the draft regulations to the House.

Question put.

The House proceeded to a Division.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.