Business and Trade

Kevin Hollinrake Excerpts

Thursday 20th July 2023 Ministerial Corrections

The following is an extract from the 11th sitting of the Digital Markets, Competition and Consumers Public Bill Committee on 29 June 2023.

[Kevin Hollinrake]

Of course, as part of my role, or my successor’s role if I move from this position back to the Back Benches or wherever, we regularly have meetings with the CMA to discuss its activities and where it is using its powers. Indeed, we write an annual letter to the CMA, which sets out where we expect its focus to lie.

[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 29 June 2023, Vol. 735, c. 283.]

Letter of correction from the Under-Secretary of State for Business and Trade, the hon. Member for Thirsk and Malton (Kevin Hollinrake).

An error has been identified in my contribution. The correct information should have been:

[Kevin Hollinrake]

Of course, as part of my role, or my successor’s role if I move from this position back to the Back Benches or wherever, we regularly have meetings with the CMA to discuss its activities and where it is using its powers. Indeed, we write a letter to the CMA, which sets out where we expect its focus to lie, and update this when required.

The following is an extract from the 13th sitting of the Digital Markets, Competition and Consumers Public Bill Committee on 4 July 2023.

[Kevin Hollinrake]

The provisions apply specifically to traders to consumers, not traders to businesses. On how we determine the exemptions, such as for magazines, delivery services, gyms, software and so on, a range of stakeholders, including regulators, businesses and consumer groups, developed the list and the scope of sectors that are exempt from the subscription measures.

[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 4 July 2023, Vol. 735, c. 344.]

Letter of correction from the Under-Secretary of State for Business and Trade, the hon. Member for Thirsk and Malton (Kevin Hollinrake).

An error has been identified in my contribution. The correct information should have been:

[Kevin Hollinrake]

The provisions apply specifically to traders to consumers, not traders to businesses. On how we determine the exemptions, a range of stakeholders, including regulators, businesses and consumer groups, developed the list and the scope of sectors that are exempt from the subscription measures.

The following is an extract from the 14th sitting of the Digital Markets, Competition and Consumers Public Bill Committee on 11 July 2023.

[Kevin Hollinrake]

The CEO and chair of the CMA regularly appear before the relevant Select Committee—five times as the hon. Member said. Most recently, they appeared before the House of Lords Communications and Digital Committee. Indeed, they meet me on a regular basis, and we also provide an annual strategic steer.

[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 11 July 2023, Vol. 736, c. 406.]

Letter of correction from the Under-Secretary of State for Business and Trade, the hon. Member for Thirsk and Malton (Kevin Hollinrake).

An error has been identified in my contribution. The correct information should have been:

[Kevin Hollinrake]

The CEO and chair of the CMA regularly appear before the relevant Select Committee—five times as the hon. Member said. Most recently, they appeared before the House of Lords Communications and Digital Committee. Indeed, they meet me on a regular basis, and we also provide a strategic steer.

Post Office Horizon IT Scandal: Compensation

Kevin Hollinrake Excerpts

Tuesday 18th July 2023 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on the interim report of the Post Office Horizon IT scandal inquiry relating to compensation.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I thank the right hon. Member for his question and his tireless campaigning on this issue. I am also grateful to Sir Wyn Williams for his work and for publishing his interim report. We will, of course, consider that properly in the coming days and provide a formal response to the House.

Sir Wyn’s report recaps the progress made in delivering compensation. He notes our repeated commitment, which I reiterate again, that that compensation should be full and fair. He notes allegations from some lawyers that there are impediments to providing such compensation, but says that he cannot see any legal reason why we cannot deliver our commitment. He is right, and that commitment will be delivered.

Sir Wyn’s first four recommendations deal with the advisory board, of which the right hon. Gentleman is a member. As he knows, the board was established at the instigation of my Department, and its composition and remit were extended as a result of discussions between Ministers, officials, himself and the rest of the board. It has already performed a very valuable service. Notably, its last meeting made recommendations about an appeals process independent of the Post Office. We are considering that recommendation and will reply in due course.

Sir Wyn also refers to the tax treatment of compensation payments. The right hon. Member will acknowledge that when we worked with him and the board on that matter, it resulted in £26 million of additional payments in the historic shortfall scheme, and exemptions from income tax, capital gains tax and national insurance contributions. Sir Wyn also suggests that we should legislate to extend the deadline for the group litigation order compensation scheme.

As we have stated, we will not let an arbitrary date stand in the way of paying full and fair compensation to postmasters. As compensation is being delivered under the sole authority of the Appropriation Act, spending on it is limited to a two-year window that closes in August next year. The Government are determined to deliver compensation by that date. That remains perfectly possible, but challenging. If it seems likely that we will not be able to compensate everyone in time, we shall of course consider legislation, as Sir Wyn recommends. I want to deliver by that date not for some legalistic reason, but in the interests of postmasters who have waited too long for justice.

[Mr Jones]

May I start by declaring an interest, as a member of the Horizon compensation advisory board? I thank the Minister for his remarks and for the positive and constructive approach with which he has addressed this issue. I also thank Sir Wyn and the inquiry for their ongoing work. I agree with many of Sir Wyn’s recommendations. I would be interested to know exactly when they will be responded to, especially because a lot of them were in the note that the advisory board sent to the Minister at the last meeting.

The three compensation schemes have become unwieldy, but the fundamental point is that equal and fair compensation has to be paid to all the people across the three schemes. I would be interested to know from the Minister when the recommendations will be addressed, particularly on extending the remit of the advisory board. I accept what he says: our aim—and certainly his—is to get compensation to people as quickly as possible.

The elephant in the room that needs to be addressed is the continued obstructive role of the Post Office. I found it remarkable that yesterday on BBC radio, the chief executive, Nick Read, said that the “sheer scale” of the problem has

“gone above and beyond anything that anybody could realistically expect”.

That begs the question of what he has been doing for the last four years and why he has been accepting bonuses for his and his management’s role in the inquiry.

The inquiry was stalled last week because again, the Post Office failed to disclose documents to it. When is this issue going to be dealt with? It either gets dealt with, or Nick Read and the entire board have to be sacked. The Minister knows, because he has met many of the people who are waiting for compensation, that they have gone through a lot. They need justice, and they need action. Ill-conceived comments from the present chief executive of the Post Office are rubbing salt in the wounds of the victims. Either he has to go, or something has to radically change at the Post Office.

[Kevin Hollinrake]

I am grateful to the right hon. Gentleman for his work. He is right to say that there are three schemes, which might be described as suboptimal. As Sir Wyn has said on this occasion and previous occasions, we are where we find ourselves, and we must push on. That is the easiest way and the best way to get compensation for those affected.

I referred in my initial remarks to the request that the right hon. Gentleman has made for an appeal mechanism. We are considering that carefully. I think he would acknowledge that whenever he has come to me with something that he thinks we should consider, we have always done that and are keen to deliver the mechanisms that the board requires.

The delays in disclosure were unacceptable, without question, and the Post Office has apologised for that. You are only as good as your last game, and the Post Office has to up its game; there is no doubt about it. We have a governance review into earlier issues around remuneration and the metrics regarding bonuses, which were found to be completely inappropriate. We are waiting for that report, which I should receive by the end of this month. We will take that under advisement, as we do any other evidence we receive about the operation of the board of the Post Office.

[Bob Blackman (Harrow East) (Con)]

I thank my hon. Friend for the update. Some 555 individuals have suffered incredible destitution and injustice for far too long. This has gone on for more than 20 years, and some people have died during this process. Will he ensure that the Post Office owns up to what it has done and that the individuals who were responsible for covering this up 20 years ago are brought to justice, rather than this leaving a stain on the reputations of the postmasters and postmistresses, who are totally innocent of any crime?

[Kevin Hollinrake]

I am grateful to my hon. Friend for his work on this issue. He is right: 62 people have passed away while awaiting compensation. It is simply unacceptable. My Department is looking at creative ways of accelerating the process of providing compensation to the victims.

I agree with my hon. Friend about the need for people to be held to account, and I spoke about that on a number of occasions from the Back Benches. It is right that people are held to account. It is also right that due process is followed. Sir Wyn Williams’s inquiry is there to identify what went wrong and why and who was responsible, and once that is done we should make a judgment about what happens to those people, but I am keen, like my hon. Friend, that people are held to account.

[Mr Speaker]

I call the shadow Minister.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Nine hundred prosecutions—all the postmasters involved have their own stories of dreams crushed, careers ruined, families destroyed, reputations smashed and lives lost. Innocent people have been bankrupted and imprisoned. This may well be the largest miscarriage of justice in our country’s history, and I pay tribute to Members on all sides of this House who have worked for justice, none more so than my right hon. Friend the Member for North Durham (Mr Jones). I also thank the advisory board and Sir Wyn for their work, as well as the Minister for the constructive approach he has taken on this issue to date.

However, as Sir Wyn’s interim report makes clear, the compensation schemes for postmasters are a mess. The commitment to give fair compensation should apply to all postmasters. Sir Wyn specifically recommends that terms of reference should enable the monitoring of individual cases. Can the Minister say that he will act on that recommendation, and when can we expect him to respond in full to the report’s recommendations, including maximising the use of the Horizon compensation advisory board and providing clarity about the tax status of compensation payments? Can he also provide a final figure for claims that have been made to the historical shortfall scheme and how much the Government anticipate the final compensation will cost?

I also ask the Minister what he is going to do about Post Office management. As the only shareholder in the Post Office, does his Department take responsibility for addressing those management issues? The leadership team accepted bonuses for their work on the inquiry, which is just unacceptable. When will the Minister deal with this? Sub-postmasters have had their lives ruined: they must be confident that lessons will be learned from those failures. Sadly, it seems that the Post Office has failed to do so.

[Kevin Hollinrake]

I add my thanks to the advisory board and the right hon. Member for North Durham, but also to Lord Arbuthnot—who is a tremendous campaigner in this area—and other individuals such as Professor Moorhead, who we were keen to include on the advisory board. I also thank campaigners on both sides of this House who made sure that the issue came to light and that action was taken to address these horrendous situations.

On individual cases, as I said to the right hon. Member for North Durham, we are looking at Sir Wyn’s recommendation. There is an appeals mechanism, and condition D of the terms of reference does not prevent us from looking to make sure that claims have been settled fairly and fully. That is something we are looking at and we will respond in due course. On the tax position, as I said earlier, we have provided an extra £26 million to address that. We are keen to make sure that not only all the settlements, but all the tax treatments of those settlements are fair across the board. On the totals for the historical shortfall scheme, we have made offers totalling over £100 million in value and £72.8 million has been accepted, so we have made good progress, but we are keen to make further progress on the remaining claims that are yet to be accepted.

On the Post Office management, there have been a number of unacceptable matters relating to what has happened in the governance of the Post Office. That is why we put in place a governance review, which is being conducted by a very competent legal firm. It is due to report by the end of this month. We will study that review carefully and respond accordingly.

[Karl MᶜCartney (Lincoln) (Con)]

The Minister in place at the moment will realise that former colleagues have stood at the Dispatch Box and given excuses. The procrastination from his Department has been terrible and the effects are ongoing. Fulsome and full compensation is to be welcomed, but the word that was missing from the Minister’s statement was “timely.” Therefore, the first part of my question is this: why two years? Why not two months or two weeks? Pay the compensation to the postmasters affected.

The second part of my question is about the senior management team. So far, they have got away with it. They need to be held to account, as do their IT consultants. When will something positively be done to bring those people to book?

[Kevin Hollinrake]

Again, I know my hon. Friend was one of the key campaigners on this particular issue. I cannot speak for previous Ministers—although I have a great regard for my immediate predecessor certainly—who have dealt with this issue. I have not seen any procrastination and we are driving this as quickly as possible within the Department.

On why not two weeks, rather than two years, settling compensation claims is complicated. It is about specific instances of pecuniary losses and non-pecuniary losses; it is complicated. We are keen to get that money out the door as quickly as possible and, as I have said, we are looking at creative ways to do that. I am just as ambitious as my hon. Friend is to get that money into the hands of the people who need it. There have been interim payments of around £20 million on both outstanding schemes—the GLO and overturned convictions schemes. Nevertheless, full and fair compensation is what we desire.

On people being held to account, I refer my hon. Friend to what I said earlier. We need to see the results of the inquiry—that is what Sir Wyn Williams is there for and we need to see the outcome of his inquiry—and, where he can identify blame, we are very keen to make sure those people are held to account.

[Mr Speaker]

I call the SNP spokesperson.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

I do not know where to start—there is so much—but here I go. The SNP welcomes Sir Wyn Williams’s interim report on compensation. His recommendations would go a huge way to ensuring that victims are fully and fairly compensated, and it is about time. The enhanced role for the Horizon compensation advisory board is welcome as well. But the question, as one hon. Member has already said, is: when is this all going to happen? I know the Minister cannot give us an answer to that today, but he updated something I had in my notes: it is now 62 claimants who have died without receiving full and fair compensation. We need to move this on.

Funnily enough, we had a meeting of the all-party parliamentary group on post offices this morning, at which the chief executive officer of Post Office Ltd appeared and answered some questions. The culture at Post Office Ltd has not changed since the new CEO took on his role in 2019. He promised to change the culture; he has not yet done so. We are mired in obfuscation still, and we cannot get to the truth of stuff because of the delay in providing evidence to Sir Wyn’s inquiry. Will the Minister agree to put pressure on the CEO to get this done?

[Kevin Hollinrake]

The hon. Lady is one of the Members of Parliament I engage with more often than not in this place and she does a fantastic job, not least in chairing the all-party parliamentary group on post offices, so I thank her for her work. I agree with everything she said about the pace of delivery, the quality of delivery from the Post Office and making sure it meets its obligations. We have this constantly under review and we are driving this issue. We are determined to look at creative ways to accelerate compensation for all those affected by this, so we can finally draw a line under the matter. I accept we will not draw a line under it until we have held people to account for what has gone wrong, so that is something we are extremely keen to do.

[James Sunderland (Bracknell) (Con)]

Where there has been such a grave miscarriage of justice, it strikes me that we should be pulling out all the stops to ensure that justice is done and in a timely fashion, so perhaps the Government might consider bringing criminal charges against the Post Office and its IT advisers as a way of accelerating the process.

[Kevin Hollinrake]

On pulling out all the stops, I could not agree more, and that is definitely what we are doing in the Department. My days are never without one or other post office issue, which is not the situation we want. On bringing forward criminal charges, of course the Government do not do that, but when our enforcement agencies determine that there have been criminal actions, wherever those criminal actions have emanated from, we would of course expect them to take action.

[Mr Speaker]

I call the Chair of the Business and Trade Committee.

--- Later in debate ---

[Darren Jones (Bristol North West) (Lab)]

The victims of the Post Office Horizon scandal should be fully compensated, so that they are put back into the position they would have been in had they not been a victim of this miscarriage of justice in the first place. The Minister has agreed with that statement from the Dispatch Box before, but it is not happening. Can I say that it is not a complicated process to be able to quantify their losses and to be able to compensate them fully? My Committee, I understand the advisory board and the statutory inquiry have suggested that one way to try to improve this is to remove the Post Office entirely from this process and to make it an independent process, properly budgeted, with the requirement to fully compensate the victims in the way I have described. Why will the Government not just do that?

[Kevin Hollinrake]

I thank the hon. Member for his work in challenging us in this area. I would probably push back a bit. It is complicated to assess loss. Both I and the right hon. Member for North Durham sat in on a long call with the HSS panel recently and some eminent lawyers gave us a lot of confidence that this was being done right, on an inquisitorial basis, but it is complicated to assess those losses. I would refer to Sir Wyn Williams’s comments. He basically says that we should carry on what we are doing. He would not necessarily have advised this route in the first place, but what he says now is that the best thing we can do is push on with the frameworks we have in place. There are three different schemes. We need to push them on more quickly of course and I am very keen to do that.

[Brendan Clarke-Smith (Bassetlaw) (Con)]

As a former post office counter clerk myself, I understand at first hand how the Horizon IT debacle had a devastating impact on postmasters, their families and their businesses. Will the Minister assure the House that lessons have been learned from this terrible case?

[Kevin Hollinrake]

Certainly, we have learned the lesson in this place to heed those warnings more quickly. I am sure the new management of the Post Office have seen what has gone wrong, and we are clearly keen to make sure it never happens again. I do not think we will be able to say we have learned the lessons and this will not happen again until we have received the final results of the inquiry and then decided what action can be taken against the individuals responsible, because that will be the ultimate deterrent in stopping these things happening again.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The significance of Sir Wyn bringing forward an interim report of this sort is something that should not be underestimated. I was with the hon. Member for Motherwell and Wishaw (Marion Fellows) in the APPG meeting this morning and it was clear that, as far as the chief executive of the Post Office is concerned, in dealing with historical matters such as this, he sees it as a major barrier to changing the culture within the Post Office. Whether that is a reason or an excuse remains to be seen, but he has to ensure that that barrier is removed so that there can be no further excuses about changing the culture.

[Kevin Hollinrake]

I agree, and we are determined to play our part in that of course. I was very grateful for the report and I have read the recommendations. Clearly, there is a lot of detail in the report that I want to study and consider fully, but I thought it was very helpful. I did not see anything in the recommendations I immediately objected to. As I say, I want to make a good study of those things, but a number of different processes have to take place. We have to give due process the time to do its work in making sure that we establish exactly what has gone on, so that we can put those matters right.

[Paul Howell (Sedgefield) (Con)]

I, like many others, have sub-postmasters who have suffered in this space. I would just like to thank Members across the House, most notably the Minister, his predecessor, my hon. Friend the Member for Sutton and Cheam (Paul Scully), the hon. Member for Bristol North West (Darren Jones)—I was on the Select Committee when we were particularly looking at this issue, and thank him for his time on that—and obviously the right hon. Member for North Durham (Mr Jones) for his energy there. Could I just reiterate what so many have said and ask the Minister to accelerate, with all energy, the payments to the victims, and will he please follow through on the consequences for the Post Office leadership and its IT consultants?

[Kevin Hollinrake]

I thank my hon. Friend for the points in his question, and we absolutely agree that we need to accelerate compensation payments. As I say, we have made significant progress on the HSS scheme. For the two other schemes—the GLO scheme and the overturned convictions scheme—we need to get those payments resolved as quickly as possible. There have been around £40 million of interim payments through those schemes, but the full and fair compensation—the final compensation—is where we need to get to. On holding people to account, he will have heard what I said earlier and I absolutely agree with him on that point.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

The report states that there are

“something like 230-250 late applications to be determined and that there may yet be significantly more”

late applications as well. Can the Minister confirm that those applications will be seriously considered and that those victims may be entitled to compensation? Can he provide an assessment as to whether the numbers I have quoted are accurate or are actually higher?

[Kevin Hollinrake]

The hon. Gentleman raises an interesting point, as does Sir Wyn Williams, and we are looking at that recommendation carefully. It is our intention that everybody who has been affected by this is fully and fairly compensated, and we will look at any further issues that might get in the way of that. We are keen to resolve those kinds of issues.

[Andrew Bridgen (North West Leicestershire) (Reclaim)]

I have been involved in the investigation into the Post Office Horizon scandal since my arrival in this House back in 2010, representing my constituents Mr and Mrs Rudkin. By 2014, following the investigation by Ron Warmington of forensic accountants Second Sight and his evidence, I knew that they had been wrongly convicted. The right hon. Member for North Durham (Mr Jones) knew and had evidence that they had been wrongly convicted. The Post Office had evidence that they had been wrongly convicted. Importantly, the Government had evidence that they had been wrongly convicted. Will the Minister explain why, more than nine years after we all knew they were innocent, they are still waiting for full, fair compensation and closure on this issue? They are the real victims in all this—the sub-postmasters.

[Kevin Hollinrake]

We certainly agree with that, and we should leave it to the Williams inquiry to establish who knew what when, and what could have been done earlier, and hold those people to account. Getting wider compensation out to those affected is the No. 1 priority, and the why, who and when is a secondary point to ensuring that people are fairly compensated. That is the No. 1 thing on my agenda, and I thank the hon. Gentleman for all his work on this issue over a number of years.

[Tonia Antoniazzi (Gower) (Lab)]

Will the Minister explain why Fujitsu, whose IT software is at the heart of this scandal, continues to win Government contracts, including a recent extension to a Post Office contract worth £42 million?

[Kevin Hollinrake]

Those decisions are made by others, not by me, so I cannot comment on those specific cases. The hon. Lady raises an interesting point. To be fair, in this country people are still innocent until proven guilty, and it is right that due process is followed and guilt established before we make decisions on how we treat companies or individuals down the line. Like me, she would like to see the full results of the Williams inquiry as soon as possible, so that we can determine blame.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

Decent, honest people—postmasters—have had their lives ruined and been put in prison, and they are now being made to wait years for justice and compensation. The public inquiry also exposed racism and discrimination at the Post Office’s Fujitsu-run IT help desk during the Horizon scandal. Will the Minister outline what the Government are doing with regard to the appropriateness of Fujitsu winning public contracts in future?

[Kevin Hollinrake]

I dealt with that question a second or two ago. It is right that the presumption of innocence is followed until proven otherwise, and the Williams inquiry is looking at Fujitsu’s role in this, as well as the roles of individuals in the Post Office and elsewhere. With regard to the document he refers to, clearly that is inappropriate, and the Post Office has apologised for it. That document, among others, forms part of the Horizon inquiry, which will need to establish the full facts before we decide what action to take.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Member for North Durham (Mr Jones) and others who have assiduously pursued this matter and doggedly ensured a Government response. I know of postmasters who have lost their shirts because of the dreadful scandal. While it might be acceptable to push the date back on paper, in reality that could mean more defaults on payments and loans, and further humiliation for those people who have been tarred as dishonest, when we all know them to be decent and honourable. Can something be done to ensure that those who need it the most now have access to their reparations, as that will help them on the road to recovery from the trauma that they are feeling at this moment in time?

--- Later in debate ---

[Kevin Hollinrake]

I am grateful to the hon. Gentleman for speaking out about this matter on a number of occasions. One of my constituents—Sam Harrison of Nawton near Helmsley—passed away prior to receiving full and fair compensation, and that situation should never have been allowed to happen. Interim payments are available, so some compensation is available. In the terrible situation where somebody has passed away, that compensation will still be paid to their estate. That is slim comfort of course, and the hon. Gentleman’s central point that we should get the money out the door as quickly as possible is one I totally agree with.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Some individuals who have already been compensated have been devastated to find that a significant portion of that money has gone straight to paying back creditors. They are then in the position of having to make a second compensation claim, suffering additional stress and anxiety. What talks have there been about ensuring that any payments made are sufficient to cover all expenses, as well as properly compensating individuals for their hardship and loss, without the need for additional claims?

[Kevin Hollinrake]

I am grateful to the hon. Lady for her question, and I am happy to look at any specific cases. If she is talking about those who are bankruptcy claimants, Sir Wyn in his report agrees with our view that insolvency practitioners should not be able to take a share of group litigation order compensation. We have taken advice from specialist counsel on how best to deal with that issue, and we will look to take further action on that in due course.

Strikes (Minimum Service Levels) Bill

Kevin Hollinrake Excerpts

Consideration of Lords message
Monday 17th July 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move, That this House disagrees with Lords amendment 2D.

This House has been asked these questions before and twice this House has said no with an overwhelming majority. We are asked to consider for a third time an amendment that significantly expands on previous versions that have already been rejected. Members of the other place referenced the report of the International Labour Organisation’s committee of experts as a reason to reconsider. However, I should note that this ground has already been well covered by both Houses. It was argued that Lords amendment 2D requires Ministers to do what the ILO is requesting: to undertake consultation when considering introducing regulations to implement minimum service levels. The Bill already requires Ministers to do just that, as they have done in undertaking public consultations on their intentions to bring forward minimum service levels to passenger rail services, ambulance services and fire and rescue services. Impact assessments were published alongside those consultations and final impact assessments will be published alongside the regulations the Government bring forward for approval in Parliament in due course.

My colleague Lord Callanan was right to say in the other place that the ILO did not say that the legislation was not compatible with ILO conventions. It simply said that it should be compatible and that we should ensure that it is. As stated in Parliament when introduced and throughout its passage, the Bill is compatible with the UK’s international obligations. The Government will continue to uphold their international obligations as the minimum service regulations are introduced.

Lords amendment 2D also seeks to ensure that the “reasonable steps” that unions should take to make sure that their members comply are considered as part of the consultations that are required before minimum service regulations are made. Members will recall that when this House last considered the Bill, I confirmed that the Government were willing to consider whether there was a case for providing further detail on the reasonable steps that unions must take under new section 234E to ensure that identified workers comply with a work notice given by an employer. In the light of the recommendations from the Joint Committee on Human Rights and points raised in both Houses during the Bill’s passage, the Government accept that further detail would give unions more legal certainty and foresight with regard to their obligations than the Bill provides in its current form. The Government will therefore introduce a statutory code of practice on the reasonable steps that must be taken, using existing powers under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992. These powers enable the Secretary of State to issue a code of practice to promote the improvement of industrial relations.

[Rachael Maskell (York Central) (Lab/Co-op)]

Will the Minister spell out exactly how trade unions are to comply with and enforce a code that is outwith their jurisdictions in making workers go into work?

[Kevin Hollinrake]

The code of practice will be consulted on so that all parties are clear about what the obligations of the unions will be. We expect them to be quite straightforward. They have been debated at length, along with various ideas about how this might operate.

[Rachael Maskell]

rose—

[Kevin Hollinrake]

I want to end my speech shortly, but I will give the hon. Lady one last chance to intervene.

[Rachael Maskell]

As has been pointed out on numerous occasions, the measures that the Minister is trying to introduce are outside the jurisdictions of trade unions, which therefore do not have the powers to implement them.

[Kevin Hollinrake]

As I have said, we intend to consult with all parties to make sure that they have a chance to comment on what reasonable obligations a union might be required to take. I think that it is pretty straightforward, and, indeed, unions will be familiar with the code of practice on picketing that was issued under section 203 of the 1992 Act. This code will be subject to statutory consultation, including consultation with ACAS, and to the approval of Parliament. The consultation will give trade unions, employers and any other interested parties an opportunity to contribute to practical guidance on the steps that a union must take in order to make it as practicable, durable and effective as possible.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

If the Minister is so willing to consult, why is he rejecting an amendment which confirms that there should be a consultation?

[Kevin Hollinrake]

We are not happy with a number of other parts of the amendment. We are proposing a measure that we have already proposed in earlier debates. It is, of course, up to those in the other place to decide how they take their amendments forward, but we believe that this is fair. We are satisfied that it is an effective way to provide for clarity, and that the individual consultations for specific minimum service levels in relevant services required by Lords amendment 2D are not needed. The real impact of the amendment would be a delay in the implementation of minimum service levels, given the additional and lengthy consultation and parliamentary requirements which we strongly suspect are its purpose. Unnecessary delays in the protection of the lives and livelihoods of those whom we have been elected to represent cannot be justified.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

--- Later in debate ---

[Richard Burgon (Leeds East) (Lab)]

The Minister has let the cat out of the bag in relation to the Government’s attitude to this dreadful Bill and to amendment 2D from the other place. The Minister objected to Lords amendment 2D because it would delay the implementation of the Bill. Let us be clear: the Bill makes history for all the wrong reasons. It is the biggest attack on the role of our trade unions in our democracy for many a long year. Why are the Government so desperate to rush the Bill through? One almost thinks they cannot stomach the idea of even a small delay because they want it to be presented at the Conservative party conference as a bit of red meat to the party faithful—classic anti-trade union politics and trade union bashing.

Let us think about where we are in terms of industrial relations. The Bill, which the Government do not want to consult on properly, comes shortly after over 100,000 nurses in this country voted to take strike action—the result in that recent ballot was that 84% of nurses who cast a vote did so to take strike action. However, because of the Government’s dreadful Trade Union Act 2016, an 84% vote in favour of strike action does not count, is worthless and does not result in strike action, because the turnout was 43%.

The Government helped drive down the turnout by not allowing people to vote by electronic ballot. The former Prime Minister, the right hon. Member for South West Norfolk (Elizabeth Truss), who made such a mess of this country in her short tenure, was elected by electronic ballot of Conservative party members. Not allowing people to vote by electronic means reveals the contempt the Government have for the biggest voluntary organisations in our society—the trade union movement. They will not even give workers in our country the modern dignity of being allowed to vote online or in the workplace.

The Government object to Lords amendment 2D and do not want to consult on it. Is that any wonder? The greater the consultation that takes place in relation to this abhorrent Bill, the more it becomes clear that the Bill is a complete offence. Let us be clear: the Bill, which the Government do not want to have a proper consultation on, requires trade unions to take reasonable steps to get their own members to break trade union picket lines. This Bill requires trade unions to completely change their function in our democratic society. It is the job of a trade union to persuade trade union members to honour a strike vote, not to break a strike. We see the hand of this authoritarian Government attempting to extend into our trade unions, trying to try to use them as a tool of the state to do the bidding of a Conservative Government, or the bidding of employers. The Bill is rotten and it is no wonder that the Government do not want to consult on it. Any fair-minded person, whatever their politics, would realise that that is not the function of trade unions in our society. We have heard Ministers boasting about how this will result in people being sacked if they do not comply with the requirement to go to work.

[Kevin Hollinrake]

indicated dissent.

--- Later in debate ---

[Mick Whitley (Birkenhead) (Lab)]

May I draw the attention of the House to my entry in the Register of Members’ Financial Interests?

The Lords have been set an unenviable task in attempting to amend a piece of legislation as ill-conceived as this one. As a lifelong opponent of the principle of an unelected second Chamber, I am surprised to find myself now commending the thoughtfulness and diligence that the other place has demonstrated in its many sittings concerning this legislation. It has been a breath of fresh air when compared with this Government’s recklessness in attempting to rush the Bill through Parliament.

I rise in support of Lords amendment 2D. Its purpose is simple: to ensure that perhaps the most significant piece of trade union legislation to be considered by this House in more than a century is subject to appropriate scrutiny before it is added to the statute book. I wish to repeat the comments that I made when we considered the Lords amendments on 22 May. I said that no number of amendments could ever salvage this Bill. It is rotten to the core. It targets a right that should be sacrosanct in any democracy—the right to withdraw our labour.

In sectors such as education and health, the provisions of the Bill will hobble the ability of working people to fight for the dignity and fairness that we all deserve in the workplace, and make the trade unions themselves unwilling accomplices in undermining the effectiveness of their own industrial action.

Worse still, in sectors such as air traffic control or nuclear decommissioning, minimum service regulations will, in effect, amount to a ban on taking any strike action at all. Ministers have repeatedly insisted that their policies towards the trade union movement conform with international standards and our treaty obligations. That was not the view taken by the High Court last week when it quashed the Government’s law allowing employers to bring in scab labour to break strikes. The court’s verdict was damning: that the Government’s approach was so unfair as to be “unlawful” and, indeed, “irrational”.

Despite the claims made by this Government that the International Labour Organisation supports minimum service standards, the director general of the ILO has made an unprecedented intervention in voicing his concern about the effects of the Bill on workers and of the Government’s strategy of imposing minimum service requirements on workers instead of encouraging them to be negotiated between unions and management.

Most embarrassingly of all for the Government, the Bill has been slammed by their own independent Regulatory Policy Committee as being not fit for purpose. The question that all of us should be asking is why the Bill was not withdrawn the moment the RPC slapped it with a red rating in February. Why are we still debating proposals that have been condemned by not only my friends in the trade union movement but a vast swathe of trade associations and the business community? Their verdict is astoundingly clear: they do not think the Bill will work. They are concerned, with good cause, that it will make industrial relations in this country worse. They simply do not want the Bill.

The answer is simple. The Government are aware of their impending electoral oblivion. They are intent on driving through reforms that will realise their decades-long dream of a world in which workers are stripped of all their rights and left helpless at the whims of their employers. It is about time for a little more candour from those on the Government Benches.

[Kevin Hollinrake]

I thank all Members for their contributions to the debate. I think that it is time to agree to disagree with some of the points that have been made by Opposition Members. The Bill is compatible with our international obligations, which the Government will continue to uphold. We have announced a new code of practice, which will provide the clarity that Opposition Members have been asking for throughout the Bill’s passage. I encourage the other place to take note of the strong view of this House, and that its will should be respected.

Question put, That this House disagrees with Lords amendment 2D.

Post Office Horizon IT Inquiry: Interim Report

Kevin Hollinrake Excerpts

Monday 17th July 2023 Written Statements

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

The Post Office Horizon IT Inquiry is led by retired high court judge Sir Wyn Williams who has over 28 years’ judicial experience. Sir Wyn is tasked with ensuring there is a public summary of the failings which occurred with the Horizon IT system at the Post Office leading to the prosecution and conviction of postmasters, with 86 having those convictions quashed to date, and the incorrect repayment of shortfalls by thousands more. The inquiry will look to establish a clear account of the implementation and historic failings of the system starting from its roll-out in the late 1990s.

Today the Post Office Horizon IT Inquiry has published an interim report, which has been laid before the House. The report can be found at: www.postofficehorizoninquiry.org.uk.

Government will review this report and consider how to respond to its content in due course.

I would like to thank Sir Wyn Williams and to everyone in his team for their ongoing work and commitment to delivering the inquiry’s work on these issues. It is vital that we establish the facts behind this scandal and learn the lessons so that something like this can never happen again.

[HCWS950]

Post Office Ltd: Management Culture

Kevin Hollinrake Excerpts

Thursday 13th July 2023 Westminster Hall

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

It is a pleasure to speak with you in the Chair, Sir George. I thank the hon. Member for Motherwell and Wishaw (Marion Fellows) for securing today’s important debate and for her constant work in this area on the all-party parliamentary group on post offices. It is always a delight to work with her in these areas. We share her passion for the post office network and the services that it provides to communities up and down the country.

A positive management culture is paramount for the health of any organisation, so I welcome today’s debate on the culture of the Post Office. As raised by the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier), culture is critical to any organisation. As Emerson once said,

“An institution is the lengthened shadow”

of a single person, so leadership is hugely important in this context.

The Horizon scandal has had a devastating impact on those affected and on Post Office itself. It has now rightly accepted that it got things very badly wrong. I thank all right hon. and hon. Members for all the work they have done in campaigning over many years, including the hon. Member for Motherwell and Wishaw, my hon. Friend the Member for Telford (Lucy Allan) and the right hon. Member for North Durham (Mr Jones). I also thank the noble Lord Arbuthnot, who is in the Gallery, and the many other people associated with this work, including the barrister Paul Marshall, the journalists Tom Witherow and Nick Wallis, Dan Neidle and, of course, Alan Bates and the 555 people who took the matter to court. We would not be here without them, and we are at least starting to put these matters right.

When the current chief executive of Post Office, Nick Read, started his job in September 2019, he made it clear that Post Office needed to apologise for the events of the past, fully address them and, of course, compensate those who suffered detriment. A key part of that will clearly be the restoration of trust between Post Office and postmasters. That is so important, because, as I said previously in other debates, there is no post office network without postmasters.

In December 2019, the parties to the group litigation order in Bates v. Post Office Ltd took part in a mediation session and issued a joint statement confirming Post Office’s commitment to resetting its relationship with postmasters. Since then, Post Office has appointed two non-executive director postmasters, who were elected by other postmasters, to the Post Office board. This ensures that postmasters’ voices are being heard at the highest level—something that I witnessed yesterday when I attended the board meeting at the company’s offices. It is crucial that senior management is cognisant of the impact that its strategies and changes will have on those who are on the frontline of delivering services. Post Office has also appointed a current postmaster to a new director role, who leads the day-to-day relationship with postmasters.

Alongside those appointments, Post Office has looked into operational matters to improve culture and trust between senior management, staff and postmasters. Improved training packages, and the hiring of more than 100 new area managers to provide dedicated local support, are examples of positive changes. On the Government’s part, I enjoy chairing our regular working-group meetings with Post Office and the National Federation of SubPostmasters, as I did yesterday, and I find them to be a useful forum to discuss the high-level issues affecting postmasters.

On compensation, it is right to say that in order to look to the future, Post Office must first address and learn from its past mistakes so that it can rebuild trust in the business. We are determined that postmasters affected by the Horizon scandal receive the compensation they deserve, and the Government are supporting Post Office with funding to deliver that.

The shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), challenged me on what the Government are doing to make sure that justice is delivered to those affected, and I am determined to make sure that we do everything possible in that regard. I am grateful to the right hon. Member for North Durham for his work on the advisory board, to which he referred. The board initially looked after just the GLO part of the scheme, but that was extended to all three schemes on the request of him and his colleagues on the board. I am delighted to see the work it is doing, and I am determined to give it what it needs to make sure that the schemes are fit for purpose and delivering outcomes as expected. Indeed, we expanded membership of the board to include, for example, Professor Moorhead, who has been a leading advocate in this area.

Although there is still work to do, good progress has been made across the different compensation schemes. For postmasters who were wrongfully convicted due to Horizon shortfalls, Post Office has to date paid out over £20.4 million in compensation. That includes initial interim payments to 81 individuals and, additionally, 65 partial settlements, top-up payments or hardship payments. Post Office has reached full and final settlement with four claimants, and will continue to process claims that are lodged as quickly as possible. The Horizon shortfall scheme, which was set up as part of the settlement in the 2019 group litigation case against Post Office, provides redress for postmasters who repaid shortfalls but were not convicted or part of the court case. Over 99% of the original claimants to the HSS have now received an offer, and the value of the offers is more than £100 million. A further £2.1 million has been offered to the 91 late claims that have been processed so far.

The hon. Member for Motherwell and Wishaw says she believes the claims have been settled at the lowest possible level. I do not accept that. The advisory board, including the right hon. Member for North Durham and the noble Lord Arbuthnot, and I attended a session with the HSS panel and the lawyers connected to that panel. It was clear to me, and I hope to other Members who attended that call, that the panel works on an inquisitorial basis, trying to identify any detriment, financial or otherwise, and to ensure compensation in full on those matters.

The group litigation order scheme is being delivered by my Department—the Department for Business and Trade—rather than the Post Office. It is always tragic to hear the many cases that relate to these issues. I have a constituent—Sam Harrison of Nawton, near Helmsley—who sadly passed away while waiting for her claim to be paid from the GLO. That is unacceptable, and we need to accelerate outstanding payments through all schemes. To date, the Department has paid out over £21 million in compensation, including through interim payments. We have received 18 claims. Across those areas, our priority is providing fair and swift compensation to those affected, so that postmasters achieve the justice they deserve. Indeed, we have made some adjustments to the scheme and to previous schemes, in terms of the tax treatment of the HSS. When the board has come to me on any matter, we have delivered on its suggestions.

[Mr Kevan Jones]

I would like to put on the record my thanks to the Minister and his predecessor, the hon. Member for Sutton and Cheam (Paul Scully), for the way in which they have approached the Horizon compensation scheme scandal. The board made some recommendations to the Minister at the last meeting. When will he be in a position to respond to those recommendations?

[Kevin Hollinrake]

I am keen to respond, as the right hon. Member knows, on a potential appeals process. I am looking at this carefully, and we will continue to engage on that, but we want to ensure that everything is fair and that people are confident in the process for getting the compensation they deserve. We want to ensure that the compensation is delivered on time. We have an August 2024 deadline, as the hon. Member for Motherwell and Wishaw mentioned. We are keen to deliver on that deadline and are looking again at further ways to expedite payments to all those still waiting.

On governance, Post Office Ltd is a public corporation, and as such its board retains responsibility for the strategic direction of the company.

[Lucy Allan]

This debate is about the culture of the Post Office, and we have raised issues around the bonus arrangement, non-disclosure of documents, and racism and the use of categories. Will my hon. Friend move on to discuss the points raised by hon. Members?

[Kevin Hollinrake]

I certainly will. This is all context to the issues that many people have raised around compensation, but I will certainly come on to those points.

Through the shareholder’s representative on the board, the Government oversee the Post Office’s corporate governance, strategy, performance and stewardship of its financial and other resources. The Post Office reports to the Government on key issues at the regular shareholder meeting. The hon. Members for Motherwell and Wishaw and for Paisley and Renfrewshire North (Gavin Newlands) asked about the future of the Post Office and our plan for it. We all recognise that post offices are a valuable social and economic asset for communities. They deliver essential services and play a key role on our high streets.

The hon. Member for Motherwell and Wishaw spoke about post offices being the front office of Government. We very much see them as the front office of Government, but we do not dictate to consumers how they access vital services. Many consumers look to acquire services in different ways. Many people renew their passports and driving licences online these days rather than at the post office, and we want to give them the convenience of doing that. That creates challenges for the sustainability of the Post Office and of individual branches. We have to acknowledge that. The Post Office is putting together its future plan, and we are working with it on things such as banking services and access to cash, which we have now legislated for. We are looking at whether the Post Office network is getting a fair share of the savings that the banks are making by closing branches and making the Post Office the first point of call for access to cash, for example.

[Marion Fellows]

I recognise what the Minister has done, and I acknowledge that more and more people are going digital, but post offices serve their communities. In communities with high levels of deprivation such as mine and others represented by hon. Members in this Chamber, we need post offices. The Government have to stop withdrawing contracts from them, as that prevents people from accessing those services.

[Kevin Hollinrake]

I am not aware of any withdrawal of services. There is a Driver and Vehicle Licensing Agency issue, and there is a negotiation between the Post Office and DVLA. It is absolutely right that postmasters get fair remuneration for those kinds of services; we agree on that.

On senior pay and bonuses, what happened with the setting of the metric, and the awarding of the bonus around it, was unacceptable. The Post Office’s internal investigation has reported, and the Government have commissioned a separate review of the governance around Post Office decisions. We have not sat on that; it has not reported back yet. One thing we all agree on is that we need to follow due process in our oversight of the Post Office. Our review is being led by Simmons & Simmons, and we expect it to report to me by the end of the month, and of course I will wait for that before taking action.

My hon. Friend the Member for Telford talked about the inquiry and disclosure. The Post Office apologised and has taken urgent steps to put things right. Its disclosure to the inquiry was clearly unacceptable. I am not aware of any breach of the Companies Act, but we will certainly look into that.

My hon. Friend and the hon. Members for Rutherglen and Hamilton West and for Paisley and Renfrewshire North all asked about matters pertaining to the inquiry— what happened, why it happened and who is responsible. When the inquiry reports and assigns blame, we should be able to take action against those responsible.

The Government are very supportive of the Post Office’s efforts to improve its culture and its relationship with postmasters, and to right the wrongdoings of the past. Despite the positive progress since 2019, there clearly are still many improvements to be made, and the Government will be watching closely to ensure they are properly implemented.

Draft Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023

Kevin Hollinrake Excerpts

Wednesday 12th July 2023 General Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move,

That the Committee has considered the draft Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023.

It is a pleasure to serve under your chairmanship, Mr Vickers. The purpose of this statutory instrument is to ensure that the Windsor framework, in respect of European Union directive 2014/34/EU, known as the ATEX directive, is properly implemented in Northern Ireland, and to introduce provisions regarding UK(NI) marking.

The ATEX directive aims to prevent equipment or protective systems from becoming sources of ignition in atmospheres that could be explosive if conditions lead to dangerous levels of flammable gases, mist or dust. Settings where these conditions could arise include petrol stations and a range of mainly industrial locations, such as mines, agricultural silos and chemical processing plants. ATEX-compliant handheld radios would, for example, be mandatory for safe communication in environments with potentially explosive atmospheres, where a spark could react with the air to cause an explosion.

There are separate GB and Northern Ireland regulations covering ATEX requirements. The Northern Ireland ATEX regulations—the Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017—were made by the Department for the Economy in Northern Ireland, with the Health and Safety Executive for Northern Ireland enforcing them. Currently the Northern Ireland ATEX regulations refer only to the EU market, which no longer includes Northern Ireland.

Conformity assessment bodies perform the vital role of assessing whether specified requirements relating to a product, process, system, person or body are fulfilled, carrying out calibration, testing, certification and inspection activities. For the ATEX directive, as for other directives, there is a system of mutual recognition of conformity assessment bodies, meaning that a given EU country recognises the results from a conformity assessment body located in another EU country.

This system of mutual recognition does not apply to UK conformity assessment bodies, which are now outside the EU. To address that, relying on a derogation in the framework, the UK previously legislated for a new UK(NI) marking to be applied in addition to the CE marking, where goods requiring mandatory third-party conformity assessment have been tested against EU requirements by a UK body. The UK(NI) marking applies when placing such products on the Northern Ireland market.

This instrument makes the necessary amendments to ensure that the Northern Ireland ATEX regulations reflect the fact that the UK has left the European Union. For example, it ensures that references to member states are replaced with an appropriate term that includes Northern Ireland—but not GB—and the European economic area states. It also ensures that information obligations on the UK to inform the Commission and member states apply only to information in respect of Northern Ireland and not the rest of the UK.

The instrument introduces new provisions on the UK(NI) marking into the Northern Ireland ATEX regulations. In line with the Windsor framework, a manufacturer that wants to supply an ATEX product for the Northern Ireland market will need to manufacture that product to EU requirements. If that product requires third-party conformity assessment under the relevant EU legislation, and if a UK conformity assessment body is used to do that, the manufacturer will be legally required to apply the UK(NI) indication, which must accompany the CE or other relevant conformity marking. Failure to comply with this new requirement will be a criminal offence in Northern Ireland. The Northern Ireland Department of Justice has confirmed that the new offence of failure to comply is consistent and proportionate and will not have a detrimental impact on the criminal justice system in Northern Ireland.

As a result of the additional UK(NI) marking requirements, some businesses may incur costs associated with familiarisation with the new requirements and the labelling itself. However, the impacts of these changes are expected to be very limited.

My officials in the Office for Product Safety and Standards will be providing online industry guidance to coincide with this instrument coming into force, to ensure that businesses have all the information they need on how to comply with the new requirements. They are also liaising with the Health and Safety Executive for Northern Ireland, which is responsible for enforcing the Northern Ireland ATEX regulations and ensuring that it has all the necessary information to do so.

In summary, this instrument is needed to ensure that the Windsor framework, with respect to the ATEX directive, is properly implemented in Northern Ireland. It does that by amending the Northern Ireland ATEX regulations to reflect the fact that the UK has left the EU and by introducing provisions on UK(NI) marking. I urge the Committee to approve this SI.

--- Later in debate ---

[Kevin Hollinrake]

I am grateful to the shadow Minister for her important points, and I thank the Committee for its consideration.

On the costs to businesses, the majority of businesses likely to be impacted are SMEs, with micro and small totalling 91% and medium being 8%. Prior UK CA changes were applicable to all businesses, so no business is likely to be impacted more than another.

On the impact assessment, according to the OPSS business population estimates in 2022, 5,445 businesses in the UK were subject to ATEX regulations. As that is an estimate, we provide a 10% upper and lower band, resulting in a high estimate of 5,900 businesses and a low estimate of 4,900. Firms would incur a familiarisation cost in the first year they were made aware of the changes. The cost is around £13,000.

On the points the hon. Lady raised about consultation, where there have been previous, similar instruments in this area, informal consultation did take place with a good cross-section of stakeholders, including trade associations and other industry representative bodies across the product areas covered by the instrument. Stakeholders were supportive of the need to maintain a functioning product safety and metrology regime on EU exit that mirrored the framework in operation the day before EU exit as closely as possible. As the hon. Lady rightly pointed out, an impact assessment has not been prepared for this SI, because measures resulting from the Windsor framework are out of scope of assessment.

To conclude, it is vital for the reasons I am about to summarise that this instrument comes into force in Northern Ireland. It is needed to properly implement the Windsor framework with respect to ATEX products. It achieves its main purpose by amending the Northern Ireland ATEX regulations to reflect the fact that the UK is no longer part of the EU and by introducing provisions on the UK(NI) marking, which will enable UK conformity assessment bodies to assess ATEX products for the Northern Ireland market and ensure conformity. The impact of the changes is likely to be very low for businesses and to be associated with familiarisation with the new UK(NI) marking requirements and the labelling itself. I am happy to commend this instrument to the Committee.

Question put and agreed to.

Companies House Public Targets 2023-24

Kevin Hollinrake Excerpts

Tuesday 11th July 2023 Written Statements

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I have set Companies House the following targets for the year 2023-24:

Remove in excess of 16,000 pieces of information relating to identity details and/or addresses used without permission, in order to minimise the risk of records kept by the registrars creating a false or misleading impression to members of the public.

Register of Overseas Entities: Issue financial penalties for non-compliance in cases that we have identified and prioritised.

Ninety-seven per cent of companies on the register have filed an up-to-date confirmation statement.

Digital services are available for a minimum of 99.5% of the time.

Eighty per cent of customers satisfied with Companies House.

Increase the resource in the operations and intelligence teams by up to 241 new posts to enable legislative reform.

Manage expenditure within budgetary limits and utilise central Government funding.

[HCWS926]

Digital Markets, Competition and Consumers Bill (Fourteenth sitting)

Kevin Hollinrake Excerpts

Committee stage
Tuesday 11th July 2023 Public Bill Committees

[The Chair]

Before we begin, I have a few reminders. Clearly, given the heat, please feel free to remove jackets. Please switch electronic devices to silent. No food or drink is permitted during the sitting, except for water. Any notes can be passed to Hansard colleagues.

Clause 283

Meaning of “ADR” and related terms

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move amendment 83, in clause 283, page 189, line 5, leave out subsection (9) and insert—

“(9) For the meaning of “exempt ADR provider” and “exempt redress scheme” see section 287.”

The amendment provides a signpost for the reader to clause 287, which identifies who are exempt ADR providers for the purposes of Chapter 4.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Government amendments 84 to 89.

Clauses 284 and 285 stand part.

Government amendments 90 and 91.

Clause 286 stand part.

[Kevin Hollinrake]

It is a pleasure to serve under your chairmanship on hopefully the last day of this Bill Committee, Dame Maria. Chapter 4 of part 4 of the Bill aims to strengthen the quality of alternative dispute resolution available to consumers. The chapter replaces EU-derived regulations on ADR with a stronger regime that requires ADR providers to be accredited. Clause 283 defines ADR, which includes mediation, arbitration, early neutral evaluation and action under an ombudsman scheme, and who is an ADR provider. It applies only where ADR is provided in the context of a consumer contract dispute.

Government amendment 83 makes a consequential change to clause 283 in connection with amendments to clause 287. Clause 284 defines consumer contracts and consumer contract disputes. Consumer contracts include suppliers of electricity, gas, water and heat. Government amendments 84 to 88 add references to Scottish and Northern Irish legislation in relation to the supply of those utilities, which were omitted on introduction. Government amendment 89 removes a superfluous definition. Clause 285 prohibits ADR providers from carrying out ADR unless they are accredited or acting for someone who is. That is subject to the exemptions provided in clause 287. It also prohibits ADR providers arranging for third parties to carry out ADR on their behalf unless their accreditation or exemption permits that.

Clause 286 restricts the fees that accredited ADR providers may charge consumers to fees approved by the Secretary of State and those that are published. That will prevent excessive fees and ensure transparency in fee charging. Government amendments 90 and 91 clarify that the limited conditions under which fees may be charged apply only to accredited ADR providers. I commend the clauses to the Committee.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Dame Maria. I thank the Minister for his opening remarks. This is an important part of the Bill. Clause 283 defines ADR and related terms for the purposes of the chapter. Part 4 makes accreditation of ADR providers compulsory unless an exception applies. It includes examples of ADR, such as mediation, arbitration, early neutral evaluation and action under an ombudsman scheme. In her evidence, Tracey Reilly from Consumer Scotland welcomed measures in the Bill as making it

“easier for consumers to seek redress through ADR systems that are appropriately regulated and standardised.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 36, Q49.]

We welcome the straightforward definitions, as well as the broader chapter, which will hopefully increase trust in and use of ADR services in disputes between businesses and consumers. The Government’s policy paper on ADR released in April highlights that

“46% of consumers using alternative dispute resolution had problems including concerns over the time the process took, customer service or a perception that the process favoured the business. 54% of cases took longer to resolve than the 3 months allowed—16% of consumers who went to court did so because the business refused to comply with a previous alternative dispute resolution decision.”

That demonstrates the scale of the challenge that we face in reforming ADR provisions so that they work for consumers. We welcome this chapter as a first step in seeking to meet that challenge.

As Graham Wynn, of the British Retail Consortium, noted in his evidence,

“the accreditation system and making sure that companies abide by what they are supposed to do in ADR is vital to have confidence in general.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 51, Q84.]

Not having a full assessment of ADR providers has been an issue with the current arrangements.

Amendment 83 provides a signpost to clause 287, which identifies who are the exempt ADR providers for the purposes of chapter 4. We recognise that this amendment provides greater clarity in the legislation.

Clause 284 defines other terms for the purposes of this chapter, and they include “Consumer contract” and “Consumer contract dispute”. We welcome these definitions, and we support amendments 84 to 89.

Clause 285 introduces provisions prohibiting a person from carrying out alternative dispute resolution in relation to a consumer contract dispute unless they are accredited or exempt, or acting under “special ADR arrangements”. The explanatory notes state:

“Special ADR arrangements are designed to cover ADR schemes under which the ADR is provided through persons who might, for instance, be styled as ‘case handlers’, ‘adjudicators’ or ‘ombudsmen’”—or women—

“who are employed, or engaged by, or on behalf of, an ADR provider running the scheme. In that case, the person providing the ADR would not need accreditation, so long as the ADR provider running the scheme is accredited or exempt and is permitted to make special ADR arrangements.”

We will need to ensure that there is clarity in distinction and that there is cover in terms of regulatory cover and also expectations of quality, and we recognise that this clarity about special ADR arrangements will be important for that purpose. This is a welcome clause, ensuring that ADR providers are accredited and not liable to act against the interest of a consumer seeking redress. With regard to the exemptions, I will make a few remarks on clause 287.

Clause 286 limits the fees that accredited ADR providers may charge consumers to those charged in accordance with provisions approved by the Secretary of State, and published in a way likely to come to the attention of consumers. Although the Opposition welcome the provisions limiting the fees that consumers can be charged, I would welcome the Minister expanding on this clause slightly. I would, for example, welcome further explanation of the process by which the fees will be approved by the Secretary of State, and their transparency. It is important that there is predictability, fairness, consistency and transparency for consumers when it comes to any fees around ADR, so it will be important to have clarity from the Minister in this regard.

Finally, we support amendments 90 and 91.

[Kevin Hollinrake]

Clearly, the Bill sets out the fact that ADR providers are restricted in what they can charge for. It is therefore very much the assumption that the fees that they charge will be fair and transparent; that is the basis of this. I am not sure what clarification the hon. Lady might be seeking other than on those particular points.

[Seema Malhotra]

This is more about ensuring that there is a fair process and that it is clear, so that we do not have a situation in which consumers are being charged more than they ought to be because there has not been clarity about the Government expectations as to how those fees will be set. I was just seeking clarity on that.

[Kevin Hollinrake]

I do not have anything further to add. Perhaps we can have a discussion about this offline.

Amendment 83 agreed to.

Clause 283, as amended, ordered to stand part of the Bill.

Clause 284

Other definitions

Amendments made: 84, in clause 284, page 189, line 34, leave out “(the gas code)” and insert “, or by section 12(1) or (2) of the Energy Act (Northern Ireland) 2011 (2011 c. 6),”.

The provisions of the Gas Act 1986 referred to in clause 284(3)(b) do not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.

Amendment 85, in clause 284, page 189, line 39, leave out “(the electricity code”) and insert “or by paragraph 3(1) or (2) of Schedule 6 to the Electricity (Northern Ireland) Order 1992 (S.I.1992/231 (N.I.1))”.

The provisions of the Electricity Act 1989 referred to in clause 284(3)(d) do not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.

Amendment 86, in clause 284, page 190, line 4, at end insert “or Part 2 of the Electricity (Northern Ireland) Order 1992”.

Part 1 of the Electricity Act 1989 does not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.

Amendment 87, in clause 284, page 190, line 6, at end insert “or Part 2 of the Gas (Northern Ireland) Order 1996 (S.I.1996/275 (N.I.2))”.

Part 1 of the Gas Act 1986 does not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.

Amendment 88, in clause 284, page 190, line 8, at end insert—

“(b) a person supplying water under a water services licence within the meaning of the Water Services etc. (Scotland) Act 2005 (asp 3), or

(c) a water undertaker within the meaning of the Water and Sewerage Services (Northern Ireland) Order 2006 (S.I.2006/3336 (N.I.21)).”

The definition of “water supplier” in Part 1 of the Water Industry Act 1991 only extends to England and Wales. This amendment would add references to the corresponding suppliers in Scotland and Northern Ireland. In the current text of the definition, the words after “means” will become paragraph (a).

Amendment 89, in clause 284, page 191, leave out line 4.—(Kevin Hollinrake.)

The amendment deletes an unnecessary word: the term “business” does not need to be defined as it is not used in Chapter 4 of Part 4 of the Bill.

Clause 284, as amended, ordered to stand part of the Bill.

Clause 285 ordered to stand part of the Bill.

Clause 286

Prohibitions relating to acting as ADR provider

Amendments made: 90, in clause 286, page 191, line 39, after “the” insert “accredited”.

This is a drafting amendment to clarify which ADR provider is referred to in clause 286(2)(a).

Amendment 91, in clause 286, page 192, line 4, after “the” insert “accredited”.—(Kevin Hollinrake.)

This is a drafting amendment to clarify which ADR provider is referred to in clause 286(2)(c).

Clause 286, as amended, ordered to stand part of the Bill.

Clause 287

Exempt ADR providers

[Kevin Hollinrake]

I beg to move amendment 92, in clause 287, page 192, line 11, leave out subsection (1) and insert—

“(1) In this Chapter—

“exempt ADR provider” means a person who—

(a) is listed (or of a description of persons listed) in Part 1 of Schedule 22, or

(b) is (when carrying out ADR or making special ADR arrangements) acting under or for the purposes of an exempt redress scheme;

“exempt redress scheme” means a scheme or other similar arrangement which is listed (or of a description listed) in Part 1A of Schedule 22.”

The amendment reflects the approach proposed by the government amendments to Schedule 22 to have two lists: Part 1 will list particular authorities (or descriptions of authorities) who are (if and to the extent they carry out ADR or make special ADR arrangements) exempt ADR providers. Part 1A will list “exempt redress schemes”. A person who carries out ADR or makes ADR arrangements under or for the purposes of an exempt redress scheme will be an exempt ADR provider.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 93 to 96.

Clause stand part.

Government amendments 108 to 111.

That schedule 22 be the Twenty-second schedule to the Bill.

[Kevin Hollinrake]

Clause 287 and schedule 22 exempt various bodies that, so far as they provide ADR, it is not considered appropriate to regulate, and also exempt ADR under statutory redress schemes regulated by other legislation. Clause 287 allows the exemptions to be reviewed and updated.

Government amendments 92 to 96 amend clause 287, and Government amendments 108 to 111 amend schedule 22. They distinguish more clearly between the two categories of exemption. They also add exemptions for the local government and social care ombudsman, the Independent Adjudicator for Higher Education, the Parliamentary Commissioner for Administration and redress schemes for social housing, lettings agencies and property management.

[Seema Malhotra]

Clause 287 introduces schedule 22 into the Bill, which sets out the persons exempt from ADR provisions. I will also make a few remarks on schedule 22. Clause 287 also introduces a provision for the Secretary of State to add or remove from the list of exemptions. I want to clarify with the Minister why this delegated power has been left to the negative procedure. There may be a good reason for that decision, but it would be helpful to understand that.

We support amendments 92 to 96; the Minister has spoken to them. Schedule 22 sets out the list of ADR providers exempt from the regulations. As the explanatory notes explain and the Minister said:

“These include persons or bodies providing, or administering, dispute resolution services which are regulated under other legislation, who are exempted in order to avoid duplication or conflict between statutory regimes”.

That is important because obviously we do not want to have over-regulation or confusion between different parts of statute.

I ask the Minister for assurances that consumers using exempt providers will be able to expect the same level of protection from those that are non-exempt ADR providers. We do not have time in Committee to go through all the comparable regulations that exempt providers will be subject to, but from a consumer perspective the expectation should be that the protections, in terms of expectations of service and the regulations, will be comparable. I would be grateful for the Minister’s confirmation of that, and an assurance that the analysis has been done, because legislation is passed at different times and we want to be sure of that consistency.

Amendment 108 alters the list of persons in part 1 of schedule 22. There are other changes within amendments 108 to 111. We have no issue with any of those amendments, and we support them.

[Kevin Hollinrake]

On the use of the negative procedure, we feel that these are technical and mechanical changes, just to ensure that the statute remains up to date and clear, and to prevent excessive use of parliamentary time. Clearly, ADR providers are regulated by other means. We see no duplication in their regulation. The Financial Ombudsman Service, for example, is already regulated and overseen by the Financial Conduct Authority. We think that it would be needless to duplicate that kind of oversight.

Amendment 92 agreed to.

Amendments made: 93, in clause 287, page 192, line 19, leave out subsection (3) and insert—

“(3) Regulations under subsection (2) may, in particular—

(a) provide for an entry in Part 1 of Schedule 22 to apply to a specified person or to any person of a specified description;

(b) provide for an entry in Part 1A of that Schedule to apply to a specified scheme or any scheme of a specified description;

(c) limit the scope of the exemption given to a person by virtue of an entry in Part 1 or IA of that Schedule, whether in relation to carrying out ADR or making special ADR arrangements (or both).”

This amendment clarifies the scope of the power to make regulations under clause 287(2). The effect of the exemption given to a person by an entry in Part 1 or 1A of Schedule may be limited, for example by reference to the purposes for which an otherwise prohibited activity is carried out or to the kinds of otherwise prohibited activity that are (or are not) exempt.

Amendment 94, in clause 287, page 192, line 34, leave out subsection (5) and insert—

“(5) Subject to any limitation on its scope provided for by Schedule 22—

(a) an exemption given to a person by virtue of an entry in Part 1 of that Schedule covers anything done by the person in the exercise of the person’s functions that would otherwise be prohibited, and

(b) an exemption given to a person by virtue of an entry in Part 1A of that Schedule covers anything done under or for the purposes of an exempted redress scheme that would otherwise be prohibited.”

The amendment clarifies the general scope of an exemption that will apply by default, unless there is provision in the Schedule for it to be more limited.

Amendment 95, in clause 287, page 192, line 37, after “section” insert

“—

‘prohibited’ means prohibited by section 285(1) or (2);”.

The amendment defines “prohibited” for the purposes of the clause by reference to clause 285.

Amendment 96, in clause 287, page 193, line 1, leave out subsection (8).—(Kevin Hollinrake.)

The amendment omits a subsection that is no longer needed as a result of the other government amendments to clause 287 and Schedule 22.

Clause 287, as amended, ordered to stand part of the Bill.

[Seema Malhotra]

On a point of order, Dame Maria. I would be grateful for your guidance. The Minister made some remarks in response to my questions and I did not get the chance to intervene on him. I know that we have moved on, so is it best that I write to him on the questions that he did not answer on comparable regulation?

--- Later in debate ---

[Kevin Hollinrake]

Clauses 288 to 292 and schedule 23 cover the accreditation process for ADR providers, which ensures that standards are high and providers perform well. Clause 288 covers the application process and application requirements, including fees, must be published.

Clause 289 covers the outcome of those applications. Applicants will be accredited only if they satisfy the accreditation criteria, which I will explain in the context of clause 292. The Secretary of State can reject, limit or impose conditions on an accreditation, and the applicant must be told why.

Government amendments 97, 98 and 99 clarify that, in extending a limited accreditation at a later date, the Secretary of State can impose new conditions or alter existing ones. Government amendment 100 provides that conditions can be imposed to make an ADR provider responsible for the acts of a third party carrying out ADR on its behalf.

Clause 290 sets out how non-compliant ADR providers can be suspended, or their accreditation limited or revoked. It contains safeguards, including the right for ADR providers to make representations before these sanctions are imposed. Clause 291 allows the Secretary of State to charge accredited ADR providers for the cost of their ongoing accreditation.

Government amendment 101 corrects a drafting error regarding those fee provisions. Clause 292 and schedule 23 specify the accreditation criteria. These encompass standards relating to accessibility, expertise, fairness, independence, impartiality and transparency. Clause 292 allows the criteria to be kept under review and, if necessary, modified.

Clause 293 empowers the Secretary of State to issue enforcement notices to ADR providers who operate without accreditation or violate key obligations. Non-compliance with that notice can be enforced as if it were a court order. The clause contains safeguards, including giving the ADR provider an opportunity to make representations before an enforcement notice is issued.

Clause 294 allows the Secretary of State to make regulations requiring ADR providers and others to provide information about ADR to the Secretary of State or publish it for consumer awareness. The clause limits the purposes for which the Secretary of State can require provision of information. Government amendments 102 to 105 ensure that those limits will apply if the Secretary of State’s functions are conferred on another person under clause 298.

Clause 295 allows the Secretary of State to direct ADR providers and regulators to provide information. This allows the provision of specific information from a person when circumstances require it.

Government amendment 106 removes a definition of data protection legislation that is not needed as it is defined elsewhere. Clause 296 allows the Secretary of State to publish or disclose information they hold in relation to this chapter, subject to data protection.

Government amendment 107 is a drafting improvement to recognise that clause 296 contains several disclosure powers. Clause 297 defines terms used in clauses 294 to 296.

Clause 298 allows regulations to confer functions on persons other than the Secretary of State. This might, for instance, be used to confer accreditation functions on a regulator within the sphere of its regulatory activities.

Clause 299 requires traders, when responding to a consumer contract complaint, to inform consumers about any ADR or dispute resolution arrangements in which that trader is required to participate. Clause 300 and schedule 24 revoke the EU-derived ADR regulations of 2015 and amend other legislation.

Government amendment 112 is a drafting amendment to ensure there is an accurate description of the content of paragraph 11 of schedule 5 to the Consumer Rights Act 2015. Clause 301 makes transitional arrangements, including to ensure that chapter 4 does not apply to ADR already in progress when it comes into force.

I hope that hon. Members will support Government amendments 97 to 107 and Government amendment 112. I commend the clauses and schedules to the Committee.

--- Later in debate ---

Government amendment 112 is a drafting amendment, and clause 301 is a technical clause. We support them both.

[Kevin Hollinrake]

The hon. Member for Feltham and Heston has raised a number of points for me to respond to. As an overarching point, we are moving from a voluntary to a mandatory system of ADR regulation, so we should not look at it as if we were starting from scratch. We are improving an existing system, which should give us some assurance that this is an improvement, not a step back from improving standards in this area.

One of the hon. Lady’s principal points was about the criteria that we apply for accrediting an ADR provider. They have to be kept high-level, because there are a wide variety of different providers, so it would be wrong to be too specific about the criteria we apply. However, clause 292 and schedule 23 both set out the principles behind what accreditation will look like at every scheme level, including standards on accessibility, expertise, fairness, independence, impartiality and transparency. Clause 292 will allow the criteria to be kept under review and to be modified if necessary and appropriate. On the public record, yes, there will be a list of ADR providers.

[Seema Malhotra]

I recognise what the Minister says about moving to a mandatory system and the improvements being made, which is why it is important that we do not leave gaps. However, I want to push him on my point about expertise.

[Kevin Hollinrake]

I will come to that. Criterion 3 in schedule 23 clearly sets out that a provider will be required to have the relevant expertise. Has the hon. Lady read that criterion?

[Seema Malhotra]

I have, and I quoted it to the Minister. What I asked him was how he will determine expertise, because in other legislation on ADR that we have debated, there has been some process. Have the providers been accredited? Is it based on experience? Do they have particular qualifications? Otherwise, expertise can be very subjective. That was the question I asked.

[Kevin Hollinrake]

And that was the question I answered. In response to the hon. Lady’s points, I said that the criteria have to be kept high-level. It would be wrong to be too specific about how we judge “expertise”, because of the wide variety of different ADR providers. What we all need to do is trust the process, which the Secretary of State oversees, of trying to make sure that each provider has the relevant expertise in each scheme area. As I said, there are schemes already in place that we are now putting under the mandatory regime. Of course, expertise will be judged on a scheme-by-scheme basis, but it is difficult to set out exactly what expertise we will require in any particular scheme, other than that we would expect the person to have the relevant experience and expertise.

--- Later in debate ---

[Kevin Hollinrake]

I am happy to continue the debate with the hon. Lady and to correspond with her on the matter.

There is a broader picture here, which I am trying to set out in my response to the hon. Lady. There will certainly be the public list of ADR providers that she referred to. Where people are most likely to find that list will be in dealing with a particular trader in a particular scheme, regarding the requirement set out in clause 299 for a trader responding to a consumer contract complaint to inform consumers about the ADR process. That is where we expect people to be most likely to find the ADR scheme available.

The hon. Lady asked how somebody can complain about ADR schemes. That ties in with a broader point about how we manage the whole process, and to other points that she made. People can, of course, complain directly to the Secretary of State if they are dissatisfied with an ADR provider. However, I think a complaint is more likely to come through other routes such as Citizens Advice, which is largely funded by the Government, through trading standards or through letters to Government Ministers from Members of this House; I often respond to such letters that raise concerns. That is how we build a picture of the efficacy or otherwise of a particular ADR scheme. We would expect that at that point, if there are a number of complaints about an ADR provider, the Secretary of State will intervene and use their capabilities under the Bill.

As the hon. Lady set out, the Bill provides for ADR providers to pay fees to cover the cost of processing applications and their ongoing accreditation. Under the existing accreditation regime, the Department for Business and Trade charges fees at a pro rata daily rate of £750. That is the context in which we expect fees to be set.

The hon. Lady asked what we will do about ADR providers who do not do the right thing and do not provide the proper service. Revocation is available to the Secretary of State. The accreditation criteria will ensure, among other things, that ADR providers meet standards of expertise, fairness and impartiality. If ADR providers do not meet those standards, their accreditation may be revoked or suspended, or additional conditions may be put in place to improve their performance. We have tackled the issue of sufficient expertise, on which we may agree to differ.

The hon. Lady raised clause 294, which allows the Secretary of State to make regulations requiring the provision of information about ADR. As clause 294 sets out, that can be for the benefit of consumers, but it can also be with regard to the operation of particular schemes. Again, that is a reason why the information might be requested. It might not be suitable for public consumption, or there could be other reasons, such as commercial sensitivity or data protection, why that information might not be published, but it can be published if the Secretary of State sees fit.

The hon. Lady referred to clause 298, which allows regulation to confer functions on persons other than the Secretary of State. That provision might be used, for instance, to confer accreditation functions on a regulator. It gives broad oversight of other areas of the ADR regime that are not directly covered by this legislation.

Question put and agreed to.

Clause 288 accordingly ordered to stand part of the Bill.

Clause 289

Determination of applications for accreditation or extension of accreditation

Amendments made: 97, in clause 289, page 195, line 3, leave out “as extended”.

This is a drafting amendment to make clear that new accreditation conditions imposed when extending an accreditation are not limited to any particular part of the extended accreditation.

Amendment 98, in clause 289, page 195, line 4, leave out “condition on the existing” and insert “existing condition on the”.

This amendment and Amendment 99 are drafting amendments to clarify which accreditation conditions can be varied or removed by the Secretary of State when extending an accreditation.

Amendment 99, in clause 289, page 195, line 21, leave out “condition on the existing” and insert “existing condition on the”.

See the member’s explanatory statement for Amendment 98.

Amendment 100, in clause 289, page 195, line 26, at end insert—

“(14) Where an accreditation covers the making of special ADR arrangements, conditions on the accreditation may be framed so as to secure that the accredited ADR provider is responsible for acts or omissions of other ADR providers who carry out ADR under special ADR arrangements made by the accredited ADR provider.”—(Kevin Hollinrake.)

This amendment would clarify that accreditation conditions can be worded so as to make an accredited ADR provider directly responsible for things done by another ADR provider who carries out ADR under special ADR arrangements made by the accredited provider under its accreditation. This could enable regulatory action under clause 290 or 293 to be taken against the accredited ADR provider in relation to acts of the other ADR provider.

Clause 289, as amended, ordered to stand part of the Bill.

Clause 290 ordered to stand part of the Bill.

Clause 291

Fees payable by accredited ADR providers

Amendment made: 101, in clause 291, page 197, line 9, leave out “potential applicants for accreditation” and insert “accredited ADR providers”.—(Kevin Hollinrake.)

The amendment would correct a mistake in clause 291(3) which should refer to accredited ADR providers, as they are the persons who pay fees under the clause.

Clause 291, as amended, ordered to stand part of the Bill.

Clause 292 ordered to stand part of the Bill.

Schedule 23 agreed to.

Clause 293 ordered to stand part of the Bill.

Clause 294

ADR information regulations

Amendments made: 102, in clause 294, page 199, line 1, after “(1)(a)” insert “or (b)”.

This amendment, with Amendments 103 to 105, would ensure that the power in subsection (1)(b) of clause 294 is subject to similar constraints to those currently provided for by subsection (3) in relation to the power in subsection (1)(a). The regulation making powers in clause 294(1) are not to be available for imposing requirements to provide information for purposes other than those set out in subsection (3)(a) to (c).

Amendment 103, in clause 294, page 199, line 3, leave out from “following” to end of line 4.

See the explanatory statement for Amendment 102.

Amendment 104, in clause 294, page 199, line 5, leave out

“provided to the Secretary of State”.

See the explanatory statement for Amendment 102.

Amendment 105, in clause 294, page 199, line 10, at end insert—

“(3A) It is immaterial for the purposes of subsection (3) whether the publication, monitoring or evaluation is carried out by the Secretary of State, by a person with functions conferred by regulations under section 298 or by any other person acting under arrangements made with that other person by the Secretary of State or a person with such functions.”—(Kevin Hollinrake.)

See the explanatory statement for Amendment 102.

Clause 294, as amended, ordered to stand part of the Bill.

Clause 295

ADR information directions

Amendment made: 106, in clause 295, page 200, line 13, leave out from “legislation” to end of line 14.—(Kevin Hollinrake.)

The amendment would omit words that unnecessarily duplicate a definition in clause 297(6).

Clause 295, as amended, ordered to stand part of the Bill.

Clause 296

Disclosure of ADR information by the Secretary of State

Amendment made: 107, in clause 296, page 200, line 35, leave out

“power conferred by this section is”

and insert

“powers conferred by this section are”.—(Kevin Hollinrake.)

The amendment would clarify that the words at the end of subsection (4) apply to both of the powers conferred by the clause.

Clause 296, as amended, ordered to stand part of the Bill.

Clauses 297 to 300 ordered to stand part of the Bill.

Schedule 24

Chapter 4 of Part 4: consequential amendments etc

Amendment made: 112, in schedule 24, page 360, line 22, leave out “duties and powers” and insert “legislation”.—(Kevin Hollinrake.)

This is a drafting amendment to ensure there is an accurate description of the content of paragraph 11 of Schedule 5 to the Consumer Rights Act 2015.

Schedule 24, as amended, agreed to.

Clause 301 ordered to stand part of the Bill.

Clause 302

Provision of investigative assistance to overseas regulators

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 303 to 308 stand part.

That schedule 25 be the Twenty-fifth schedule to the Bill.

[Kevin Hollinrake]

Chapter 1 of part 5 of the Bill enhances the UK’s ability to co-operate internationally on competition and consumer matters, as open and fair competition globally ensures the best opportunities for UK businesses and consumers. Clause 302 would introduce a new power for the Competition and Markets Authority and certain consumer protection regulators to provide investigative assistance to an overseas regulator. This power will apply to civil investigations or proceedings related to competition and digital markets and consumer protection.

The clause sets out three core requirements that must be met before investigative assistance is provided. First, the overseas regulator requesting assistance must be carrying out a function that corresponds to a function that the UK regulator has under UK law. Secondly, the UK regulator must assess whether it would be appropriate to provide the assistance requested by the overseas regulator, using the conditions set out in clause 304. Thirdly, the Secretary of State must have authorised the UK regulator to provide the assistance in accordance with clause 305.

Clause 303 sets out that the request must be made in writing by the overseas authority, describe the matter for which assistance is requested, and detail any potential penalties that might be imposed following the overseas investigation. Clause 304 provides a framework for UK authorities to assess whether it is appropriate to provide the investigative assistance requested by an overseas authority; it also sets out the circumstances in which a UK authority has no discretion and must reject an incoming request for investigative assistance—for example, if there is no reciprocity and no overriding public benefit to the UK in providing the assistance in any event.

Clause 305 outlines the factors that the Secretary of State must consider in deciding whether to approve a request for assistance. For example, the Secretary of State may reject a request for assistance where they consider that it would be more appropriate for any investigation to be carried out by the UK authority solely for its own purposes. Clause 306 requires the UK authority to notify the Secretary of State where it has received for assistance and considers it appropriate to provide the requested assistance.

Clause 307 places a duty on the CMA to publish guidance in connection with requests for investigative assistance and the provision of that assistance. Any regulator with the powers to provide investigative assistance must have regard to that guidance, which must be approved by the Secretary of State. Clause 308 and schedule 25 amend the existing legislative framework to ensure that the new investigative assistance regime slots in properly and runs smoothly. For example, the usual time limits for the CMA to be able to impose civil penalties for failures to comply with merger information notices would not work in cases where the CMA is providing assistance, so schedule 25 creates a bespoke time limit specifically for such cases.

[Seema Malhotra]

Clause 302 acts as a gateway to investigative assistance provisions. This is an important provision, enabling regulators in the UK to assist an overseas regulator. The Minister outlined the conditions under which the UK regulator may assist. We understand that the issues around consumer protection and competition must increasingly be dealt with internationally, because they are increasingly digital in nature and when they arise abroad can impact consumers here, as well as the other way around. As we have gone through these matters with short remarks today, my overall comment is that while we need this provision, the safeguards that might be needed and what is or is not to be published are less apparent.

--- Later in debate ---

Clause 308 introduces schedule 25 into the Bill, which amends other legislation in connection with the chapter. We welcome those technical provisions to ensure clarity and consistency throughout this and other related legislation. I look forward to the Minister’s response.

[Kevin Hollinrake]

There are just a couple of points to make, I think. On clause 302, the hon. Lady asked whether the police would be involved in any of the investigations. The clause sets out clearly that those are civil matters, not criminal matters. The overseas regulator requesting system is supposed to carry out a function that corresponds to a function that the UK regulator has under UK law.

[Seema Malhotra]

Either I was not clear, or the Minister mistook me. I was not talking about the police being involved. I was asking whether there are processes of sharing information akin to the way that information is shared with police, so that it can be done in more confidence. The question was about what will be known to those whose information may be shared, if there is that request.

--- Later in debate ---

[Kevin Hollinrake]

In the course of anybody’s work, if there is evidence of criminal activity, we would expect an enforcement agency or regulator to share that with the relevant enforcement authorities, including the police. Was that the point the hon. Member was trying to make?

[Seema Malhotra]

If I can put it a bit more simply, my question was about how the information will be shared, who will know that the information is being shared, and what that information is being shared about?

[Kevin Hollinrake]

If the hon. Lady has any further points that she wants clarified, perhaps she will write to me, as I am not quite sure what she is referring to.

The hon. Lady asked about safeguards and the considerations to be taken into account when agreeing to requests for assistance. The clauses provide significant safeguards with regard to the conditions that the authority itself needs to consider and, when it comes to the authorisation by a Secretary of State, consideration of appropriate protections, for example, around confidentiality and other considerations set out in the Bill.

Further details about the process and how investigative assistance will work in practice will be set out in detailed guidance. That is another point that the hon. Lady referred to—discussions between the regulator and the Secretary of State—that we expect to see in guidance. We expect the regulators and the Secretary of State to engage closely in considering whether to provide assistance. Guidance will be put in place and agreed between the regulators and the Secretary of State to set out how the measure will work in practice.

Question put and agreed to.

Clause 302 accordingly ordered to stand part of the Bill.

Clauses 303 to 308 ordered to stand part of the Bill.

Schedule 25 agreed to.

Clause 309

Disclosing information overseas

Question proposed, That the clause stand part of the Bill.

[Kevin Hollinrake]

Clause 309 provides clearer rules and more efficient gateways for information sharing between UK authorities and their overseas counterparts. The powers will apply to all UK public authorities covered by part 9 of the Enterprise Act 2002—primarily authorities with functions in connection with competition and consumer protection law. The existing overseas disclosure gateway in part 9 will be replaced with three new gateways. Under the first, a relevant UK authority may share information with an overseas authority for the joint purpose of facilitating both its own statutory functions and the functions of the overseas authority.

Under the second new gateway, a relevant UK authority can share information only to facilitate the functions of an overseas authority. When deciding whether to make a disclosure under the two gateways, the UK public authority will need to have regard to a number of factors, such as whether the laws and the practices of the other country can ensure that confidential information is appropriately stored and protected.

When deciding whether to make a disclosure to facilitate the functions of the overseas public authority only, the UK authority must give due regard to an additional layer of considerations. That includes whether the reason for the request is sufficiently serious to justify the disclosure of information. The Secretary of State will retain a power to modify, add to, or remove any of the considerations for each gateway. That is to ensure that the list of considerations remains balanced and appropriate.

There are restrictions that apply to the use and further disclosure of any information that is shared under the two gateways. The restrictions mean that, unless the disclosing authority provides its consent, information disclosed must not be used by the overseas authority for any purpose other than the one for which the information was originally disclosed; nor may the information be passed on to a third party. The Secretary of State will retain the existing power to prevent overseas disclosure of information if they consider the relevant proceedings or investigation would be more appropriately brought or carried out by authorities in the UK or in another country.

Finally, the clause introduces a new gateway for overseas disclosures by a UK public authority for the purposes of facilitating the terms of a designated co-operation arrangement. The Secretary of State will have a power to designate suitable co-operation arrangements in regulations if they are satisfied that they meet the safeguards set out in the legislation.

[Seema Malhotra]

I thank the Minister for his detailed remarks on clause 309. I will keep my remarks brief. I have concerns about some of the detail. The clause deals with disclosing information overseas. It will amend part 9 of the Enterprise Act by replacing the current overseas disclosure gateway in section 243 with new provisions governing the ability of the CMA and other UK public authorities to exchange information with overseas public authorities.

As the Minister outlined, there will be three new gateways that allow for overseas disclosures in defined circumstances, with safeguards to protect specified information. We welcome the clause. It will be important to see how it is taken forward in the guidance. It is important to have this provision in legislation, not least because tackling competition issues requires us to play an active role in global competition and consumer protection policy.

Question put and agreed to.

Clause 309 accordingly ordered to stand part of the Bill.

Clause 310

Duty of expedition on the CMA and sectoral regulators

--- Later in debate ---

[Kevin Hollinrake]

Clause 310 introduces a statutory duty of expedition in relation to the CMA’s competition and consumer law functions, including the functions relating to the new digital competition regime. Schedule 26 makes changes to the legislation that empower the sector regulators to exercise their concurrent competition powers so that they are under an equivalent duty when they do so. The new duty will require the CMA to have regard to the need for making a decision, or taking action, as soon as is reasonably practicable. It will apply to casework functions and decision making, but will exclude auxiliary functions such as the publication of guidance.

The impact of the new duty of expedition will vary on a case-by-case basis. For example, if a business asks for repeated extensions to deadlines for providing information, the duty will bolster the CMA’s ability to move the investigation along. The CMA will need to continue to ensure fair process and make evidence-based robust decisions. Parties will continue to have a right to appeal against decisions made by the CMA.

[Seema Malhotra]

The Minister has outlined the detail of the clause. Again, I will keep my remarks brief. Clause 310 would insert a new schedule into the Enterprise and Regulatory Reform Act 2013 to provide for a statutory duty of expedition in relation to specified CMA competition, consumer law and digital markets functions. The new provisions expand and replace the duty that previously applied in relation to the CMA’s functions. A new provision inserted by the clause specifies that, in making any decision or taking any action for the purposes of any of its functions within the new schedule, the CMA must have regard to the need to do so as soon as is reasonably practicable. That obligation would apply to all steps of the relevant investigatory, regulatory or enforcement process. The clause also introduces schedule 26, which imposes a duty of expedition on sectoral regulators in respect of their competition functions that are exercisable concurrently with the CMA. We support the schedule.

Question put and agreed to.

Clause 310 accordingly ordered to stand part of the Bill.

Schedule 26 agreed to.

Clause 311

Interpretation

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clauses 312 to 315 stand part.

[Kevin Hollinrake]

Clause 311 defines various terms used throughout the Bill, such as “digital content” and “firm”.

Clause 312 provides that expenditure incurred by the Secretary of State or CMA as a result of the Bill is to be met from funds provided by Parliament.

Clause 313 gives the Secretary of State a power by regulations to make any provision that is consequential on the Bill or any provision made under it. The power can be used to amend any legislation, but it is limited to primary legislation passed or made before the end of the parliamentary Session in which this Bill is passed. This limitation also applies to any secondary legislation made under the primary legislation.

Clause 314 makes further provision in relation to powers to make regulations under the Bill, including interpretative provisions about the relevant parliamentary procedures. This clause does not apply to commencement regulations.

Clause 315 sets out that the Bill will apply to England, Wales, Scotland and Northern Ireland.

[Alex Davies-Jones (Pontypridd) (Lab)]

As we know and as the Minister said, the clause sets out the meanings of various terms used in the Bill. Throughout the debates in Committee, we have raised fundamental questions on several points where we feel that the interpretation of the Bill requires further confirmation. I welcome the Minister’s clarity on a number of those issues. In the rest of the clauses in the group, we see clarity around financial provisions, regulation, extent and the short title—all as is fairly standard.

We all understand the need for this Bill and welcome many of the provisions. That is why Labour has been generally supportive as we have proceeded through Committee. I hope we can also agree that the measures in the Bill must come into force as soon as is reasonably possible. That is particularly important when we know that the digital markets unit has essentially been operating in shadow form for a number of years. It must be compelled to draw on the lessons learned and able to act meaningfully from day one. All things said, we obviously support this grouping, and we look forward to the Third Reading of the Bill before supporting its progression to the other place.

Question put and agreed to.

Clause 311 accordingly ordered to stand part of the Bill.

Clauses 312 to 315 ordered to stand part of the Bill.

Clause 316

Commencement

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

I beg to move amendment 136, in clause 316, page 221, line 25, at end insert—

“(3) Sections 245 to 273 come into force from April 2026.”

This amendment provides an explicit implementation period for the subscription contract provisions.

The amendment suggests the need for an explicit implementation period for the subscription contract provisions debated earlier in clauses 245 to 273. That comes about for several reasons. The Government say and Ministers tell us that they have consulted businesses, but I note that the Federation of Small Businesses has raised concerns about the provisions in the Bill, including timing and coverage, as have Sky and other larger organisations. There seems to be a concern that there is no specific time or date. In an earlier sitting, we heard the Minister tell us that some provisions would be immediate and some provisions would be for new contracts, not for existing contracts, but business organisations and representative organisations were unaware of the Government’s plans, despite the need to prepare to implement provisions and allow for the costs of new regulations to take effect on businesses.

Businesses have said that the Bill goes further than the Government’s initial consultation expected, including on things such as clauses 245 to 273 and reminders. I think that this correspondence went to all members of the Committee, but Sky suggests that

“measures have shifted away from a high level, principles-based approach”—

which was in the consultation initially—

“with government opting instead for highly prescriptive requirements on the face of the Bill itself. This change was made without any substantive consultation with businesses, despite the material difference such an approach makes to compliance and implementation costs.”

That is from Sky, which has 12,000 jobs focused on this issue, so it is in a better position than smaller companies to get on with that work. Its concern is that the Bill does not do what the Government said it would do, and that new costs will be imposed.

It is not just the FSB that has raised concerns about the costs. Sky said that the Government’s impact assessment suggests that the new requirements

“will cost UK business £400 million to set up and £1.2 billion in the first year alone.”

This is not a benign set of requirements in legislation; it is a costly endeavour. The amendment seeks to give UK businesses space to prepare to implement the provisions and absorb some of the costs, which would not have been in their business plans if they were set some time ago.

In an earlier sitting, I asked the Minister about the timeframe, and the amendment attempts to achieve some clarity about that. It would be good to hear how the Government will address the concerns of the business community, which has been surprised—let me put it that way—by what the Government have come forward with, in terms of the level of the measures, the fact that the requirements are on the face of the Bill, and the lack of a timeframe to prepare to deliver them.

I politely suggest that Ministers take a bit more time to work with the business community before the Bill goes any further to ensure UK businesses are ready, are not hit with further costs, and are prepared to implement the provisions of the Bill.

[Kevin Hollinrake]

I thank the hon. Gentleman for his amendment, which is very sensibly thought out. It proposes that the new rules for subscription contracts come into effect from April 2026. I very much admire his wish to balance the needs of businesses and consumers; that is exactly what we should be doing. Competitive markets that rely on business investment are good for consumers too, so there is a delicate balance to strike.

The hon. Gentleman seeks to ensure that businesses have clarity about the start date and know when the new rules will come into effect so they can make appropriate preparations. We have listened very closely to the needs of business. I met Sky and others that will be affected by the change to hear their concerns.

The hon. Gentleman said that the proposal goes further than other measures set out previously. They do not go as far as his Front-Bench colleagues would like them to go, in terms of cost to business. We believe we have struck the right balance.

Our opinion about notifications differs from that of the various providers that have made submissions. We think notifications are important because we want users to understand the contracts they are in and the methods of exiting them. The basic principle is that it should be as easy to exit a contract as it is to enter one. Some providers still want to require the customer to ring a call centre. We are having discussions, but we think we have struck a reasonable balance.

There are certainly issues relating to cooling-off periods, which the hon. Gentleman and I have discussed previously. We want to ensure that consumers cannot game the system by entering a contract, benefiting from it by downloading lots of information or content, watching it, and then cancelling without paying. We are dealing with that through secondary legislation.

The hon. Gentleman talks about the cost to business. Yes, there is a cost to business: the expectation is that the annual business impact will be about £170 million a year, but there are establishment costs too. It is not exactly a zero-sum game, because we want competition to develop through the provisions in the Bill. That will be good for consumers and businesses, so we believe there will be a net gain from this legislation. We want to ensure that consumers are treated fairly. Businesses should do well, but not at the expense of unfairly treated consumers. We seek to strike that balance.

[Neil Coyle]

If this is about balance and fairness, businesses are right to say that there is an annual reminder system for other regulated services, such as broadband and telephones. The Bill proposes a six-monthly reminder system for new services, so is the Minister saying that other services should be better regulated and that the reminder system should be more frequent to help consumers get fairness, or is he saying that businesses are being treated better in some circumstances than the Bill will allow? I am confused about which bit of Government policy he does not support in that domain.

[Kevin Hollinrake]

I think there are differences in different sectors, and the hon. Gentleman referred to things such as mobile phone contracts. Lots of people subscribe to things they do not know about, as set out in the impact assessments and the various different evidence we have had from different parties. There are differences, and we believe it is right to have slightly more frequent requirements, such as six-monthly notifications, but we are continuing to discuss these issues. Yesterday we met a representative of the media industry, who raised similar concerns, and we are listening to them. We certainly hope to strike the balance that the hon. Gentleman seeks, but we think it is wrong to put a commencement date on the face of the Bill, given that there is quite a lot of work to do to get it to pass through both Houses.

Again, the balance we need to strike must not delay the commencement of the Bill, because it will benefit consumers, and we are also making sure that stakeholders, including businesses, have time to understand and implement the new rules. We will continue to engage to make sure that both we and they fully understand the operationalised impact of the new rules. I hope the hon. Member will withdraw his amendment on the basis that we will keep those conversations ongoing.

--- Later in debate ---

[The Chair]

With this it will be convenient to discuss clause 317 stand part.

[Kevin Hollinrake]

Clause 316 makes provision regarding commencement of the Bill. Part 6 and powers to make regulations will commence at Royal Assent, and all other parts will commence by way of regulations made by the Secretary of State. Clause 317 establishes the short title.

[Alex Davies-Jones]

We have no further comments, Chair.

Question put and agreed to.

Clause 316 accordingly ordered to stand part of the Bill.

Clause 317 ordered to stand part of the Bill.

New Clause 1

Decision not to make final offer order

“(1) The CMA may decide not to make a final offer order in relation to the transaction where it has reasonable grounds to believe that there has been a material change of circumstances since the final offer initiation notice was given.

(2) For the purposes of this section and section 42(3) a material change of circumstances includes an agreement between the designated undertaking and the third party with respect to terms as to payment in relation to the transaction.

(3) Where the CMA decides not to make a final offer order, it must give a notice to that effect to the designated undertaking and the third party.

(4) The notice must include the reasonable grounds referred to in subsection (1).

(5) As soon as reasonably practicable after giving a notice under subsection (3), the CMA must publish a statement summarising the contents of the notice.”—(Kevin Hollinrake.)

This new clause, together with Amendment 10, ensures that the CMA can end the final offer mechanism without making a final offer order at any time after giving a final offer initiation notice. It would appear after clause 41.

Brought up, read the First and Second time, and added to the Bill.

New Clause 8

Limit on secondary ticketing

“(1) The Consumer Rights Act 2015 is amended as follows.

(2) After section 91 (prohibition on cancellation or blacklisting) insert—

‘91A Limit on secondary ticketing

(1) This section applies where a person (‘the seller’) re-sells a ticket for a recreational, sporting or cultural event in the United Kingdom through a secondary ticketing facility.

(2) The operator of the facility must—

(a) identify the maximum number of tickets available for a consumer to buy from the primary market for any event for which tickets are being re-sold through their facility; and

(b) check that the seller has not bought more tickets than they are permitted to buy as set out in subsection (2)(a) with the intention to re-sell, unless the seller provides proof that they have bought more tickets than they are permitted to buy from the primary market with the consent of the event organiser.

(3) The operator of the facility must not allow the seller or any associate of the seller to list more tickets for an event than can be bought by a consumer through the primary market.

(4) If the operator breaches its duties in subsections (2) and (3), they are jointly liable with the seller for enforcement action against them as set out in section 93’”.—(Seema Malhotra.)

This new clause would amend the Consumer Rights Act 2015 to introduce provisions banning sellers on secondary ticketing sites from selling more tickets than can be bought by consumers on the primary market.

Brought up, and read the First time.

--- Later in debate ---

[Seema Malhotra]

These new clauses all relate to the secondary ticketing market. In particular, they aim to further regulate the market in order to protect consumers in a sector where they are all too often left to fend for themselves. I do not plan to press these new clauses to a vote today, but I do want to speak to them. The Minister’s response will determine how we choose to move forward on Report or in further stages, because this is an important issue.

New clause 8 would amend the Consumer Rights Act 2015 to introduce provisions banning sellers on secondary ticketing sites from selling from more tickets than can be bought by consumers on the primary market. That is a direct recommendation from the CMA’s August 2021 “Secondary ticketing” report. The intent is simple: it would filter out sellers who have obtained tickets through the use of illegal bots with the intention to sell them on at a significantly inflated price. It would also reduce the risk of consumers being sold fake tickets.

New clause 9 would amend the Consumer Rights Act 2015 to impose a duty on secondary ticketing platforms to verify details from the sellers who use them. That would make it harder for bad actors who intend to scam or rip off consumers to use secondary ticketing platforms, as it would be far easier to track their details. That is also a direct recommendation from the CMA’s 2021 report. New clause 10 would introduce a requirement on the Secretary of State to produce a report on the merits of introducing a new regulatory function in the secondary ticketing sector, as recommended by the CMA in its report.

I will take a step back from the specifics of the new clauses to briefly address the broader picture of the secondary ticketing market, where consumers are continually ripped off or put at risk of falling victim to a scam. I am sure that many Committee members, and those who may be watching our proceedings, will have either had their own experiences or heard of constituents being ripped off or scammed for tickets to musical or sporting events. That is not to say that every person who resells on the secondary ticketing market is attempting to scam or rip off consumers—far from it. However, the Minister will know that when those scams and rip-offs occur, there is little in the way of enforcement against either the seller or the platforms that host and legitimise them.

The CMA’s 2021 report helpfully outlined the major areas of concern in the current secondary ticketing market. It said:

“We are concerned that some approaches used by professional resellers to buy up tickets may be illegal – involving committing fraud and/or breaching legislation introduced to prevent the bulk purchase of tickets using computer bots...Such illegal activity will reduce the number of tickets available at face value on the primary market – and increase the number of tickets advertised through secondary ticket platforms at significantly higher prices. The CMA often receives complaints about these practices but does not have the powers to tackle them.”

It went on to say:

“We are concerned that professional resellers may be i) speculatively advertising tickets that they do not own and ii) advertising tickets with inaccurate information about the ticket or the seller’s identity, which sellers are required to provide, by law, when listing tickets for sale. The CMA’s recent enforcement cases required viagogo and StubHub to put in place certain safeguards to ensure key information was gathered and displayed to consumers and that where such information was being displayed inaccurately this could be addressed. However, even if platforms comply in full with these obligations, speculative listings and inaccurate information may still appear if the resellers do not provide correct information to the platforms about themselves and/or the tickets they are listing.”

In each of those cases, there is a clear risk of consumer detriment, through being scammed or ripped off. As a result, the CMA in the same report made a series of recommendations to Government that would enable more robust enforcement in the sector. But shortly before the Bill was introduced, the Minister wrote to the CMA, stating that the Government would not adopt its recommendations. Specifically, and as part of what seems to be the quite weak rationale by the Government for not adopting those proposals, there was the suggestion that the conviction of just two ticket touts three years ago acts as a robust enough deterrent to bad actors. That seems more like the Government kicking the can down the road and failing to act in the interests of consumers, which was so powerfully highlighted by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) on Second Reading.

I urge the Government to consider seriously these new clauses. This need not be party political; in fact, it is far from that. They are direct recommendations from the CMA, given the work that it has done and that it does. It is a regulator whose judgment we all clearly and rightly value, considering the increased powers—and expectations for its work—granted in the Bill. The new clauses are cost free and would significantly increase the protections available to consumers using the secondary ticketing market in the UK—they would dramatically increase protections for all consumers. I look forward to the Minister’s response.

[Kevin Hollinrake]

Two of these new clauses seek to add further regulation on secondary ticketing and platforms. The third would provide for a report on the introduction of a new regulatory function for the secondary ticketing market, to be prepared within 12 months of the Bill receiving Royal Assent. I thank the hon. Member for these new clauses. I am also grateful for the work of her colleague, the hon. Member for Washington and Sunderland West, who has worked so hard in this space.

The new clauses reflect the recommendations made by the CMA in its secondary ticketing report from 2021, as the hon. Member for Feltham and Heston said. She also referred to our position, which we set out on 10 May 2023. At this point, it is too early, we believe, to bring forward further regulation on secondary ticketing.

One overarching point that I think it is fair to make here is that we should all encourage the primary market to do more to inhibit touting and report breaches of existing law. If anybody went to Glastonbury recently, they would have found great difficulty in—in fact, the impossibility of—selling on tickets, because they are limited to the person who bought the tickets in the first place, so it is clear that primary markets can do more to clamp down on secondary ticketing malpractice where it exists.

The Bill, under part 3, will itself give more powers to the CMA and other public enforcers to enforce existing consumer protection law, which includes legislation applicable to the secondary tickets sector. The shadow Minister referred to good work that is going on in this area, including existing laws. As she said, the National Trading Standards eCrime Team successfully prosecuted two ticket touts for fraud and consumer law breaches. They received prison sentences of four years and two and a half years and were subject to a £6.2 million confiscation order. Despite the imposition of additional regulation by the Breaching of Limits on Ticket Sales Regulations 2018, it is those general consumer protection law powers that the regulators have tended to use most effectively.

New clause 8 would make the platform liable where the number of tickets resold on a platform by an individual seller exceeded the maximum set by the event organiser in the primary market. It is already an offence to use automated software to buy more tickets for events than permitted, with a view to financial gain. If the rules are applied, there should be no need for further action on the secondary market, such as that proposed. However, we will work with the CMA to monitor the market and technological developments to assess whether the measure is both practical and necessary.

New clause 9 seeks to put a strict obligation on a secondary ticketing facility to verify certain information provided to it by a seller. The CMA acknowledges that placing a strict liability on platforms in this way would be an unprecedented step. Moreover, thanks to previous enforcement work of the CMA and others in the secondary ticketing market, choices and associated costs are more transparent than they were five years ago. Therefore, it is not clear to me that the proposal would amount to proportionate regulation.

--- Later in debate ---

[Seema Malhotra]

I beg to move, That the clause be read a Second time.

New clause 11 would introduce an annual reporting requirement on the CMA to report to Parliament on the operation of their functions under parts 2 and 3 of the Act, complementing the new clause debated earlier in Committee that would have introduced such a report in relation to part 1 of the Bill. Specifically, the report under new clause 11 would need to include the effectiveness of the operation of the CMA’s functions under parts 2 and 3 and the impact of the operation of those functions on maintaining competition in digital markets and on the enforcement of consumer protection law.

The report would have to be laid before both Houses of Parliament and be produced annually. The core principles behind the new clause—principles I would hope the Minister agrees with—are transparency and scrutiny. The legislation rightly confers significant powers on various regulatory bodies in the UK, not least the CMA. However, to ensure those powers are used as effectively and as fairly as possible, Parliament must be able to fully scrutinise their use and effectiveness in achieving their aims.

There is also the question of where the report goes and who scrutinises it on behalf of Parliament and the public. While I appreciate and recognise that the CMA will have frequent communication and contact with various Departments and Secretaries of State, opportunities for scrutiny are more disparate. With the former Regulatory Reform Committee being subsumed by the Business and Trade Committee, much of the opportunity for scrutiny is supposed to lie there. However, House of Commons Library research highlights that in the past five years, the CMA has appeared before the Committee just five times, and three times since 2021. The CMA does an incredibly significant job in our economy. While an average of one Select Committee appearance a year is appreciated, with the new functions granted by the Bill, one cannot help but feel that the oversight and scrutiny need to become more frequent and detailed to ensure parliamentarians and the public are as informed of the CMA’s work as possible.

I note the Regulatory Reform Group, made up of MPs from the Minister’s own party, has recently called for a cross-party Committee to oversee the performance of regulators and to offer a systematic appraisal of the UK’s regulators that cover key economic sectors. Its members are not the only ones concerned by the overall lack of transparency and scrutiny of the performance of regulators and competition authorities. There is a need for better mechanisms to allow issues to be identified earlier and reforms to be made.

Clearly, there is appetite in Parliament for further scrutiny of our regulators, not least the CMA. That is not to criticise the regulators in any way, but it is a reflection of their increased importance, our increased responsibility and the growing impact of their work in a digital economy, subject to that greater scrutiny. As a result, I hope the Minister agrees that parliamentary scrutiny of the kind that the new clause would provide is important for the effective operation of this new regulatory regime. I urge him to consider supporting the new clause—I know he has been sympathetic to similar clauses in earlier parts of the Bill—so that we see reports and discussion on the scrutiny measures of this House.

[Kevin Hollinrake]

I wholeheartedly agree that the CMA should be firmly accountable to Parliament across its digital competition and consumer functions. However, that is already the case. The CMA is already required to present an annual report to Parliament. That includes a survey of developments relating to its functions, assessments of its performance against its objectives and enforcement activity, and a summary of key decisions and financial expenditure. The CEO and chair of the CMA regularly appear before the relevant Select Committee—five times as the hon. Member said. Most recently, they appeared before the House of Lords Communications and Digital Committee. Indeed, they meet me on a regular basis, and we also provide an annual strategy steer.

In relation to the CMA’s new consumer direct enforcement functions under part 3 of the Bill, clause 193 gives the Secretary of State the power to request a report from the CMA from time to time on the effectiveness of interventions. Such a report must also be published by the CMA, so that it is available to parliamentarians and the public. I noted her points on the Regulatory Reform Group. I met Lord Tyrie and my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami). They made some interesting points, which I am sure the wider House will have heard. These matters should be kept under review, but for these reasons, I hope the hon. Lady will withdraw the new clause.

[Seema Malhotra]

I thank the Minister for his remarks. New clause 11 was inspired by new clauses with a similar purpose in the United Kingdom Internal Market Act 2020, so there is an important precedent. I will not press the new clause to a vote, but we will keep the matter under review. I take this opportunity to thank all the Clerks who have been involved in the Committee. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

[Kevin Hollinrake]

On a point of order, Dame Maria. I put on the record my thanks to all the Clerks and the many people who worked on the Bill, including all the officials and my private office, for doing a tremendous job. I thank Opposition Members for their constructive dialogue.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

Further to that point of order, Dame Maria. The Under-Secretary of State for Science, Innovation and Technology, the hon. Member for Sutton and Cheam agreed in our proceedings to send a letter and told the Committee that a letter had been sent. No letter has been received and no letter is in the Library. Will the Minister please send the letter as promised?

Digital Markets, Competition and Consumers Bill (Twelfth sitting)

Kevin Hollinrake Excerpts

Committee stage
Tuesday 4th July 2023 Public Bill Committees

[The Chair]

Okay, we will take it later. That is fine.

Clause 216 ordered to stand part of the Bill.

Clause 217

Prohibition of unfair commercial practices

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move amendment 71, in clause 217, page 146, line 5, leave out second “trader” and insert “person”.

This amendment ensures that the definition of “commercial practice” for the purposes of Chapter 1 of Part 4 of the Bill includes an act or omission by a trader relating to the promotion or supply of a consumer’s product to another consumer.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clauses 218 to 222 stand part.

[Kevin Hollinrake]

It is a pleasure to serve with you in the Chair, Mr McCabe.

Clause 217 sets out the unfair commercial practices that are prohibited. Those include misleading actions, misleading omissions, aggressive practices, contravention of the requirements of professional diligence, the omission of material information from an invitation to purchase, and the practices listed in schedule 18.

The clause also defines important terms for the purpose of this chapter, including “commercial practice”, “consumer” and “trader”. Commercial practice is defined as any act or omission by a trader relating to the promotion or supply of any trader’s product to a consumer or of a consumer’s product to another person. As such, a business providing a platform on which products are promoted or supplied may fall within the scope of this chapter.

Government amendment 71 is a technical amendment to clause 217. It ensures that the Bill reflects acts or omissions by traders that are currently covered by the Consumer Protection from Unfair Trading Regulations 2008, or the CPRs for short. It ensures that traders that enable private individuals to sell products to each other are within the scope of this chapter, reflecting the scope of current law.

Clause 218 defines and prohibits commercial practices that are misleading actions and restates the equivalent provisions from the CPRs. It protects consumers from traders who deceive through the provision of false and misleading information.

Clause 219 defines and prohibits commercial practices that are misleading omissions. It requires traders to provide consumers with the information they need in an up front, clear and timely manner to make an informed transactional decision.

Clause 220 defines and prohibits commercial practices that are aggressive and restates the equivalent provisions from the CPRs.

Clause 221 defines and prohibits commercial practices that contravene the requirements of professional diligence and restates the equivalent provisions from the CPRs. It requires that traders do not engage in practices that fall below the standard of skill and care they may be reasonably expected to have provided.

Clause 222 lists what information must be provided to consumers when a commercial practice is an invitation to purchase. The information is deemed material.

I hope hon. Members will support Government amendment 71, and I propose that clauses 217 to 222 stand part of the Bill.

[The Chair]

I call Neil Coyle.

--- Later in debate ---

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr McCabe.

Before we turn to the group led by amendment 118, I will make some brief remarks on clause 217 stand part and speak to Government amendment 71. Clause 217 sets out a general prohibition on unfair commercial practices. As the Minister has outlined, it defines commercial practice as

“any act or omission by a trader relating to the promotion or supply of—

the trader’s product to a consumer

another trader’s product to a consumer, or,

a consumer’s product to the trader or another trader”.

Subsection (4) introduces provisions outlining what constitutes an unfair commercial practice, which may include a misleading action, a misleading omission or an aggressive practice, and those are dealt with in the following clauses. In addition, the subsection states that a commercial practice is unfair if it is listed in schedule 18, which we will debate in detail shortly.

We welcome the clause as a necessary provision in prohibiting unfair commercial practice, and I reiterate that we look forward to working with the Minister, including in today’s debate. If there are ways in which we can improve the Bill, we are very happy to work collaboratively so that it is as robust as possible. The amendments tabled by my hon. Friend the Member for Bermondsey and Old Southwark in the light of our discussions with stakeholders will play an important part in those deliberations.

Amendment 71 ensures that the definition of commercial practice for the purposes of chapter 1 of part 4 of the Bill includes an act or omission by a trader relating to the promotion or supply of a consumer’s product to another consumer. We welcome this amendment, which importantly ensures that the actions of rogue traders still fall under the definition of commercial practice and supports the integrity of the regime.

Clause 218 introduces provisions defining commercial practices that are misleading actions. We welcome the clause, which provides a necessary definition of a misleading action, and support its inclusion in the Bill.

Clause 219 introduces a definition of commercial practices that count as misleading omissions. Under the clause, a misleading omission would constitute the omission of material information and information that the trader is required by another enactment to provide. As with clause 218, it is a common-sense, straightforward clause and we support it.

Clause 220 sets out how an aggressive practice could constitute harassment, coercion or undue influence. That can involve behaviour before a contract or purchase is made, but it can also occur after a transaction has taken place. We support the definition’s inclusion in the Bill, but I ask for clarification. I draw the Minister’s attention to subsection (3)(a), where the Bill states that

“‘coercion’ includes the use or threat of physical force”.

Does the Minister intend that coercion includes many other threats, be they financial or personal blackmail, to suggest just a couple? Is there a wider definition or guidance on interpretation that would be helpful in providing clarification for the consumer as well as for those making a decision under the clause? I would welcome clarity from the Minister on that.

Clause 221 defines commercial practices that contravene the requirements of professional diligence. That includes practices that fall short of the standard of skill and care that a trader may reasonably be expected to exercise towards consumers and that is commensurate in the trader’s field with honest market practice or the general principle of good faith. That is important for rooting out rogue traders who may not be qualified for their profession, whether they are builders, electricians or other experts. We welcome the definition.

Clause 222 sets out where a commercial practice would be considered to have omitted material information. Subsection (2) lists what would constitute an omission, including the main characteristics of a product, the business address and the delivery price, among other things. Although we support the list of omissions and welcome its inclusion in the Bill, elements of the clause could go further to provide more protection to consumers, as reflected in amendment 127, tabled by Opposition Front Benchers, and amendment 126, tabled by my hon. Friend the Member for Bermondsey and Old Southwark, which we will come to.

[Kevin Hollinrake]

I think there is just one key point that the hon. Lady asked me to address, which is about other types of coercion. Looking at the definition with regard to practices, clause 220 talks about “coercion or undue influence”. Under subsection (3),

“‘undue influence’ means exploiting a position of power in relation to consumers so as to apply pressure in any way”.

I think that covers the definition, as she requested.

Amendment 71 agreed to.

[Neil Coyle]

I beg to move amendment 118, in clause 217, page 146, line 11, at end insert—

“(c) a person marketing P’s goods for sale online.”

This amendment makes a person marketing goods online a trader, for the purposes of this Act.

--- Later in debate ---

I hope that we will hear something more concrete about when the product safety review will be published. The Minister will know that, as long as Ministers delay action on product safety in online marketplaces, and delay assistance to all stakeholders involved in keeping our consumers safe, their work is made harder. They need the strategy, and the direction that it will bring. The amendments, while not expediting the necessary Government action, would nevertheless provide extra safeguards in the meantime against unsafe products being sold on online marketplaces. It is important that the Government respond to the amendments, either today or during the course of the Bill, and particularly to the takedown power, which is very much needed.

[Kevin Hollinrake]

I appreciate the continued spaghetti western analogies. In my case, “Pale Rider” might be a more apt example, as obviously my demographics mean that I am pale, stale and male, but we are keen to ensure that we have a proper shoot-out with the people the hon. Member for Bermondsey and Old Southwark describes. I am totally onside with the vast majority of what he says. He knows we need to make sure we take the right kind of action in this area, and his amendments would add provisions related to product safety to regulate the sale of dangerous and counterfeit goods in online marketplaces. Existing UK product law is clear: all products must be safe, including those sold online. However, we recognise the challenge the growth of online marketplaces has created for how we deliver product safety in a global economy. I gently say to the hon. Gentleman: these are not just UK-based problems: this is a global problem. As he knows, marketplaces operate around the globe and other jurisdictions are also seeking to tackle the issue.

I hosted a roundtable with major online marketplaces in April and was clear that, in addition to their current duties, they must do much more to keep unsafe products off their sites, including removing third-party sellers who supply unsafe goods. That point was mentioned on Second Reading of the Online Sale of Goods (Safety) Bill, as the hon. Gentleman referenced just now. The Office for Product Safety and Standards, which I visited in Teddington, is following up with a programme of test purchases. There I saw at first hand some of the potential products sold online, such as toy magnets that do not comply with UK product standards. My hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon) has done fantastic campaigning in that area on button batteries. There is much we need to do. This is not just a consumer safety problem: it is about creating a fair and level playing field for UK retailers. The hon. Gentleman mentioned Argos and Amazon, but I would add our local high-street electrical stores, which have also been disadvantaged by online marketplaces being able to operate in the way they do.

[Neil Coyle]

I do not remember any western in which a sheriff held a roundtable. In terms of the outcome, what is the pace at which counterfeit or dangerous goods will be removed? That is the concern for consumers. Even if I buy something, discover that it is shoddy and report it through the process in the Bill, there is still a significant gap in time before something is taken off. The takedown power is crucial to prevent further hundreds, thousands or millions of that product being sold or marketed to people when it is known to be dangerous or faulty and could put lives at risk.

[Kevin Hollinrake]

I entirely agree. We do not think the marketplaces are going far enough. It is a key phrase that the likes of Amazon, Wish and so on just see themselves as marketplaces rather than distributors. Our point is that they are distributors. The key thing is making sure that is properly defined in law. The hon. Gentleman is right to point out some of the percentages. That is the work done by the OPSS, defining that between 60% and 80% of the products it sampled were unsafe. That is clearly and completely wrong.

[Neil Coyle]

There is no answer in that as to the timespan.

[Kevin Hollinrake]

I am coming to that.

[Neil Coyle]

The Minister is coming to it, but the takedown power is the crucial bit to do that and it is what the OPSS, which he refers to, says it wants.

[Kevin Hollinrake]

Perhaps if the hon. Gentleman allows me to go through my speech, I might be able to give some answers to his points. We are on exactly the same page on this and we have to get this right. He talks about getting the analysis right and raised a different analogy of where he considers we may have got that wrong in the past. It is important we get this right. From our perspective, the product safety route is the right way to do this. The whole product safety framework will be reformed, including online sales, and that holistic review of product safety, taking existing obligations into account—we believe there are distributor obligations—is the most appropriate vehicle for meeting concerns about unsafe goods sold online.

[Neil Coyle]

The shadow Minister also asked when the product safety review will take place.

[Kevin Hollinrake]

Very shortly. I just answered the shadow Minister; there is no prolonging this issue from my perspective. We are keen to get on with this but want to make sure the review is in the right place and the right shape when it happens. We want it to happen very soon.

The forthcoming consultation will include proposals to ensure that shopping online is as safe as on the high street and that there is a fairer playing field for law-abiding businesses. We anticipate publishing these proposals soon and look forward to continuing engagement with our stakeholders to inform and shape our proposals.

Amendment 124 would give powers to the Competition and Markets Authority and trading standards to require the removal of marketing material for counterfeit and dangerous products online. We believe, however, that extensive enforcement powers are already available. For example, when a trader markets misleading or faulty goods online, enforcers including the CMA and trading standards can apply to the court for an enforcement order to stop and prohibit the marketing and sale of the offending goods under part 3 of the Bill. [Interruption.] If the hon. Gentleman will let me get to the point where I think he wants me to get to, that will be the point made in the letter.

Part 3 of the Bill gives the CMA the power to impose an online interface order against the infringer or a third party. That type of order or notice may require the removal or alteration of online content on a website that gives access to or promotes the offending goods. The hon. Gentleman’s point was about similar powers for other enforcement bodies such as trading standards. As I said to him, however, in a letter that I think he received yesterday, that is something I am keen to explore, and will do so over the summer. I will give him a final chance to intervene, if he wants, and then I will conclude.

[Neil Coyle]

I am grateful to the Minister for giving way and for his reassurance that this will be looked at over the summer. As things stand, the Government are saying—the Minister has just said—that a product could cause a fire and potentially a fatality, but still the process would be to report it through a particular agency and possibly take court action, rather than what the regulators want to do and customers want to see, which is the take-down of the item to prevent any further dangerous incident or potential fatalities. I hope that the Minister gets to a point where that immediate power will be available.

[Kevin Hollinrake]

I totally understand the hon. Gentleman’s point, which is why I will look at it over the summer. It is not provided for in the Bill, but he makes a good point and I am keen to explore the options. We will come back to the House at some point to report what we will do in this space. I therefore very much hope that he will withdraw his amendments.

[Neil Coyle]

With that reassurance of looking at this further over the summer and to improve on where things stand, I will take the Minister at his word. The idea that we can support everything in a product safety review that will start we know not when feels a bit like missing the bus—or missing the stagecoach, to stick with the analogy. The powers need to be in the Bill to ensure that when the product safety review is done, the vehicle is already available to enable dangerous or counterfeit goods to be removed, but given his reassurance, I beg to ask to leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 217, as amended, ordered to stand part of the Bill.

Schedule 18

Commercial practices which are in all circumstances considered unfair

--- Later in debate ---

[Seema Malhotra]

That is fine. I have one line, but it can come later.

Amendment 68 would ban the practice of greenwashing. Making unsubstantiated claims about the sustainability of products and services would be an unfair commercial practice. Amendment 69 is consequential on amendment 68 and would require the Government to define which products and services can be labelled “sustainable”, and requires that the definition complies with international standards.

I support the principle of the amendments tabled and the arguments made. They are along the lines of the discussion that we had in Committee last week when I spoke to the issues around greenwashing, our standards and support for evidence. I asked the Minister what overall strategy he has to ensure that green claims are accurate and evidenced, and I asked that we have a strategy for the prevention of false claims as well as a mechanism for enforcement against them. As has been argued, that issue is on the increase, particularly for younger people.

Research has shown that those under 35 across the world make decisions about products, services and even their employment on how much they trust the information that they see in relation to sustainability and climate responsibility. If we do not tackle that issue, we will see a further increase in people misleadingly marketing products because they know that those issues drive consumer purchases. They have great influence on consumer purchases and decisions.

The Minister might refer to the green claims code introduced by the CMA. Important work has been done, but in the absence of any real leadership or strategy from the Government I want to ask the Minister whether they intend to put the green claims code, or its successor, on a statutory footing. Making sure that we have a robust legislative underpinning and strategy for such issues is increasingly important, because many stakeholders see a gap.

Greenwashing was also mentioned by consumer groups in the Committee’s evidence sessions. I would press the Minister on whether the Government have plans to introduce amendments on the issue, and to strengthen voluntary or other codes relating to green claims and expectations. In an increasingly green economy, consumers are at risk of falling victim to misleading green advertising, and legislation needs to catch up.

[Kevin Hollinrake]

Amendments 68 and 69 would add the practice of greenwashing to the list of banned practices in schedule 18, and would introduce a requirement for the Government to consult on the matter. I thank the hon. Member for Gordon for his amendments, and I absolutely agree that consumers should not be misled. I admire his commitment to recycling, which is admirable. I wondered whether I should touch on that, given the difficulties that the SNP has got into with its deposit return scheme, but—

[Richard Thomson]

I thank the Minister for that sideswipe, but it would be a great deal easier for the Scottish Government to comply with an English-designed scheme if that scheme was actually in existence for us to emulate. Absent our deposit return scheme, we are stuck with the recycling schemes that we have, and I wonder whether the Minister will get to the point.

[Kevin Hollinrake]

I was just referring to the hon. Gentleman’s point. I will briefly say that our perspective is that a nationwide scheme would be best for business.

Misleading consumers about the environmental qualities or impact of goods and services in a way that causes, or would likely cause, consumers to take a different decision is already against the law. Furthermore, under clause 187, when the CMA gives a provisional notice to a person in respect of an infringement of the unfair trading provisions, the CMA can require the respondent to provide evidence to substantiate the claims that they make to consumers. That meets the shadow Minister’s requirement. It is against the law to mislead, and as she says, the CMA’s draft guidance on sustainability agreements between businesses, which aim to ensure that environmental goals are achieved, will give greater clarity on these issues. Those interventions are already significant. The Government’s priority is to ensure that interventions support our environmental goals; we would then observe their impact before taking further steps. I hope the hon. Member will withdraw amendment 68 on that basis.

[Richard Thomson]

I am sorry to disappoint the Minister, but this is an issue of fundamental importance, and if I withdrew the amendment, it would be an opportunity missed. Of course, we could go through any number of proposed amendments to the Bill and say that there is already legislation in place that in some way tackles that issue. Of course it is true that there are measures on this issue, but there is still a proliferation of claims out there that have not been tackled by existing legislation. I know the Minister is a keen advocate for ensuring that markets work as effectively as they can, and for allowing markets to reach conclusions. The amendment is simply a tool that would allow Ministers to act in the interests of consumers. It would be a missed opportunity not to push it to a vote, and not to include it in the Bill.

Question put, That the amendment be made.

--- Later in debate ---

[Seema Malhotra]

I beg to move amendment 115, in schedule 18, page 343, line 2, at end insert—

“32 At any stage of a purchase process, presenting a price for a product which omits obligatory charges or fees (or an estimate thereof) which are payable by the majority of consumers, which are not revealed to the consumer until later in the purchase process.”

This amendment adds the practice of “drip-pricing”, a pricing technique in which traders advertise only part of a product’s price and reveal other obligatory charges later as the customer goes through the buying process, to the list of unfair commercial practices.

Amendment 115 would add the practice of drip pricing to the list of unfair commercial practices. Drip pricing is a pricing technique whereby traders advertise only part of a product’s price and reveal other obligatory charges later as the customer goes through the buying process. For example, an airline may advertise a flight abroad at a certain cost that does not include an obligatory seat charge. That is added only later in the purchasing process, by which point the consumer has already prepared to purchase the product and is less likely to stop the purchase. The argument that this practice should be included in the Bill was well documented during the Committee’s evidence sessions. The consumer group Which? stated:

“We think that drip pricing is another practice that is very harmful. There is a lot of evidence that that is the case, and it should be included on the face of the Bill.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 13, Q16.]

That sentiment was reflected in Committee by Citizens Advice, the National Consumers Federation and Consumer Scotland, all of which argued that schedule 18 could be improved by adding the practice of drip pricing. Which? provided evidence of consumer detriment in its written submission, which states:

“We know that in many online markets people overpay for products and services because only part of an item’s price is initially shown and the total amount to be paid is revealed only at the end of the buying process. For example, multiple hotel booking firms were shown to have failed to have displayed compulsory charges such as taxes, booking or resort fees in the headline price. However, while the use of these practices is common, the CMA has found its enforcement against drip pricing has been inhibited by the absence of an explicit ban.”

In its 2021 paper, “Reforming Competition and Consumer Policy”, the CMA notes:

“Drip pricing causes real detriment to consumers...Advertising of Prices market study concluded that of a series of different price framing practices, drip pricing was clearly the most harmful frame for consumers in terms of purchasing and search errors, and that raised levels of consumer learning did not fully mitigate issues with the practice. Lengthy transaction processes associated with drip pricing can ensure consumers gain a greater sense of ownership of a product and are less likely consider other offers once additional costs are revealed.”

It is clear that the introduction of drip pricing to the list of unfair commercial practices would be supported by consumer groups and the CMA, so I urge the Minister to consider supporting the amendment. I look forward to his response.

[Kevin Hollinrake]

I share the hon. Member’s concerns. That is why we commissioned research earlier this year, which we will publish shortly. It will detail how widespread and harmful the practice is. The Prime Minister has already said that we will gather evidence on what steps the Government should take to tackle drip pricing, so I think we are aligned in our commitment to tackling the issue.

One of the key challenges, which I do not think the hon. Lady addressed, is distinguishing drip pricing that is harmful or anti-competitive from practices that may offer greater value to the consumer—for example, a company offering optional extras such as faster postage or insurance. We will consult during the passage of the Bill on which elements of drip pricing might need tackling, and on whether further action is required. We believe it is important to conduct that exercise first, so that we have a proper, evidence-driven policy. I hope the hon. Member will withdraw the amendment.

[Seema Malhotra]

I thank the Minister for his comments. There are issues to consider in relation to the amendment, but I think the broad thrust of the argument for taking action is clear. The Minister says that the findings of the research will be published shortly; I am assuming that “shortly” is not in more than a year’s time. We need to clarify that with the Government. If shortly means shortly, however, then I would be grateful for confirmation that, on the basis of the research, the Minister intends to address drip pricing; that may determine the wording in the Bill. Can the Minister confirm that there is an intention to address the issue during the passage of the Bill, perhaps through a Government amendment? The Opposition are very willing to work with the Government on that.

[Kevin Hollinrake]

I am keen to make a commitment to work with the hon. Member on the issue, and to ensure that a measure is brought forward as quickly as possible. I cannot give a precise date, but it will be very shortly.

[Seema Malhotra]

On the basis that shortly means shortly, I am willing to withdraw the amendment. Will the Minister clarify that he expects the research to come forward before Report, so that we have time to look at it? That would be a good point at which to bring forward an amendment on the issue.

--- Later in debate ---

[Kevin Hollinrake]

I cannot say when Report will be, and I do not have the timetable for that, or for the consultation on the work that we may need to do on the issue. I cannot make that precise commitment, but we are very committed to delivering on drip pricing. As the hon. Member knows, the Prime Minister spoke on it, so I cannot imagine that there will be any undue delay.

[Seema Malhotra]

On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Neil Coyle]

My hon. Friend the Member for Feltham and Heston and the hon. Member for Gordon have already made some excellent points, so I will be brief.

Amendment 125 would add fake reviews to the list of banned practices. No customer should be hoodwinked by the deceitful practice of submitting a fake review. Fundamentally, many customers see fake reviews as fraud, which is the fastest-growing crime. Our police services are overstretched and sadly, under this Government, they do not have the resources to tackle fraud. The amendment examines alternative routes to securing action to tackle a problem that is leading to dangerous circumstances, as has been outlined.

Amendment 125 would provide a stronger power than the one proposed, and it has been called for by organisations representing British customers and responsible British businesses. It would be better for good business, better for customers and better for ensuring that standards were upheld. The charity Electrical Safety First, which is based in Bermondsey and Old Southwark, has said that in one of its investigations 93% of products bought from online marketplaces were unsafe—93%! In some significant part, that is down to fake reviews imposing a false legitimacy on goods. People buy because they believe other people have bought and have had an enjoyable experience or got the product they sought.

My hon. Friend the Member for Feltham and Heston has already provided examples of the need to protect consumers, and I draw the attention of the Committee these live examples, which are happening right now. “A portable heater” was on eBay and people were saying it was fine, but it had

“easy access to live parts with 240 volts running through the heating element, posing”

what ESF called

“an imminent risk to life.”

Another example is a

“‘water-proof’ extension lead… on Amazon.”

Guess what? There are

“no water-proof capabilities”

and this

“presents a significant risk of electric shock. This item has already been recalled as unsafe by the Office for Product Safety and Standards”.

A combination of the takedown power and the removal of fake reviews that claimed that these products were okay and good to use would be a significant step forward—one that, sadly, is not in the Bill.

One last example is the bargain beauty products—not something I buy often for myself—on eBay that had no fuse in the plugs. That is how dangerous they were. Those goods, known to be dangerous, are still online. Removing fake reviews might help to prevent people from buying such shoddy items, but removing the goods altogether should be the fundamental aim. I politely suggest that the Minister adds ESF and specific consumer groups such as Which? to his round of pending meetings, to ensure that the Bill is improved—and to tackle the problem that he previously acknowledged existed. He likened himself earlier to “Pale Rider”. He may think he is “Pale Rider”, but I am not convinced that he has turned up on a horse, or even on a pony. Given that there is no baron here, it is more as though he is on a rocking horse.

[Kevin Hollinrake]

I am not sure that I can take that analogy any further. I think we are all in agreement. They say that the art of originality is to remember what you have heard but forget where you heard it. The Opposition say that we are stealing their good ideas, but obviously we committed some time ago to taking action in this area. I am not averse to taking some of the good ideas that we hear from the Opposition from time to time, but we also have to ensure that we reject the many bad ideas we hear from them in debates.

The Government agree that legislation to tackle fake reviews should be strengthened. We anticipate doing so by adding to the list of banned practices. However, it is important to get the details of those proposals right. That includes defining what we mean by fake reviews and how “reasonable and proportionate” steps will be understood. Similarly, we want those rules to encompass the manipulation of reviews that may harm consumers, which also needs detailed work with stakeholders to define. For example, the issue is not just about people trying to boost reviews, as the hon. Member for Feltham and Heston stated; it is also to do with people removing negative reviews inappropriately, which might affect ratings on review sites. The Government will therefore be consulting on fake reviews during the passage of the Bill to ensure that these rules work as intended and are clear for businesses. We will be doing that shortly, in the autumn.

The hon. Member for Bermondsey and Old Southwark talked about ESF and Which?. I have spoken to both organisations and met them regularly. In fact, one of my first jobs in my ministerial role was to speak at an Electrical Safety First conference. On that note, I hope that hon. Members will withdraw their amendments.

[Seema Malhotra]

I am slightly disappointed by the Minister’s response; it does not sound as if there is anything other than long grass here. Significant groundwork has been done, both within Government and with stakeholders. Having another consultation in the autumn is like long grass: it is designed to spin things out until we reach 2025 and then there is something to add to the schedule. Unless the Minister wants to tell me that there is an intention to do more during the course of the Bill, we will be pushing this to a vote.

--- Later in debate ---

[Seema Malhotra]

Schedule 18 introduces a list of commercial practices that will automatically be considered unfair in all circumstances and will be prohibited. The list is long and comprehensive, and the Opposition welcome every practice listed, including a seller’s claiming to be a signatory to a code of conduct when they are not, falsely claiming that a product is able to prevent disease, providing inaccurate information about the availability of a product, and threatening a consumer if they do not buy a product.

However, we are concerned that there are significant omissions, which we addressed during our debates on the amendments. We will be happy to consider alternative wording, but we will continue to pursue additions that we believe would strengthen the Bill and its implementation. Nevertheless, we support the inclusion of this important schedule in the Bill.

[Kevin Hollinrake]

As has been said, the schedule protects consumers from the most prevalent and harmful commercial practices engaged in by deceitful traders. It largely replicates schedule 1 to the Consumer Protection from Unfair Trading Regulations 2008 and provides a list of 31 commercial practices that are banned in all circumstances due to their inherently unfair nature. Among those practices are operating pyramid promotional schemes, displaying trust marks without obtaining the necessary authorisation, and stating that a product can be legally sold when it cannot.

Question put and agreed to.

Schedule 18 accordingly agreed to.

Clauses 218 to 221 ordered to stand part of the Bill.

--- Later in debate ---

[Neil Coyle]

I have a few brief supplementary comments, further to the excellent speech of my hon. Friend the Member for Feltham and Heston. I just want to point out an anomaly and the problematic nature of the wording of the Bill, which I hope the Government will re-examine before they go further.

Amendment 126 would expand the definition of “invitation to purchase” to cases in which the information provided to a consumer covers the characteristics of a product, but not its price. That might sound counterintuitive, as it did to me when I first went through this with organisations, but it would expand the goods and services covered by the legislation. That is important, because the use of “price” in the wording of the Bill could prohibit action against a rogue trader. The existing wording might stop the Government meeting the aims that they are setting out to achieve.

The suggestion is that the specific requirement that the price be covered, if that is not the price paid, will potentially prevent action from being taken against a trader who deliberately advertises a price, but then changes it. An example might be where someone arranges for a person to come and fix a car part, a boiler or a pipe leak, and that person then arrives and says, “The product you’ve looked at online is not compatible with your boiler,”—or their fittings, their car or whatever it might be—“but guess what: I’ve got a different one in the van that’s a bit cheaper,” or a bit more expensive, “but will do the job better for you.”

By making a slight change to the wording of the Bill to remove the words “and its price” on page 150, amendment 126 would deal with that kind of rogue practice, which is out there and which has been raised by trading standards. The fear among the bodies that are trying to secure greater action against rogue traders is that the existing wording of the Bill allows wiggle room and will let the dodgy practices continue. I hope that airing that specific, possibly niche concern today will give us greater time to capture it and ensure that the Bill does not preclude action against rogue traders where specific prices are agreed up front but that is not the deal that takes place, because someone pays for a cheaper or even a more expensive alternative that does the same job.

Having flagged that concern, I hope that the Government will look again at the wording and at how they will meet their overall aim, which I support.

[Kevin Hollinrake]

It is an interesting point. We took the decision to strengthen the existing provisions in the Consumer Protection from Unfair Trading Regulations 2008 in relation to invitations to purchase by removing the need for enforcers to prove that the transactional decision test has been met. This significantly increases the criminal liability of unscrupulous traders.

Amendment 126 would expand the definition of an invitation to purchase still further to cases in which information about products is presented to consumers without a price shown. We are concerned that that would expand the definition too far. Moreover, other provisions in chapter 1 of the Bill will achieve a similar aim: they will prohibit traders from making misleading statements or omissions in respect of all commercial practices. We feel that that covers this issue. However, I am happy to have further conversations with the hon. Member for Bermondsey and Old Southwark, certainly based on the evidence he has received, which I am happy to look at.

Amendment 127 would require that information as to whether a third-party seller or online marketplace is a trader or a consumer be added to the list of material information in an invitation to purchase. We have the same aim. Clause 222(2)(c) will require

“the identity of the trader and the identity of any other person on whose behalf the trader is acting”

to be disclosed. Moreover, subsections (2)(d) and (e) will require a range of contact details to be provided to consumers about who they may be buying from.

Accordingly, I hope that hon. Members will not press their amendments.

[Seema Malhotra]

I thank the Minister for his comments. We still take the view that this needs to be tighter. In the light of his intentions, which we understand, we will take it away and look at it again. I do not want to lose our amendment, but we will not press it to a vote today. Perhaps we can come back to it at a future stage of the Bill.

[Seema Malhotra]

I beg to ask leave to withdraw amendment 127.

Amendment, by leave, withdrawn.

Clause 222 ordered to stand part of the Bill.

Clause 223

Public enforcement

Question proposed, That the clause stand part of the Bill.

[Kevin Hollinrake]

Clause 223 sets out who is responsible for enforcing the prohibition on unfair commercial practices. Trading standards have a duty to enforce the prohibitions in their areas across Great Britain. The Department for the Economy in Northern Ireland has a duty to enforce the prohibitions in Northern Ireland. The CMA has the power to enforce the prohibitions on a civil and criminal basis in the UK.

[Seema Malhotra]

We welcome clause 223. As the Minister states, it introduces provisions relating to the enforcement of the prohibition of unfair commercial practices, setting out how local weights and measures authorities—trading standards—will have a duty to enforce the prohibitions. The CMA will also have enforcement powers. We have talked several times in this Committee about the importance of trading standards in enforcing the regime. How involved have the CMA and trading standards been in the discussion around the powers in the Bill?

Is the Minister confident that local trading standards officers have the resources to enforce the regulations, especially after 13 years of what can only be described as a managed decline of local trading standards authorities, with local services facing a 52% reduction in service capacity under the Government’s watch since 2010? It is important to know that, because where increased expectations are coming through in legislation the question is whether there will be capacity to deliver on the new demands. I would be grateful for his response.

[Kevin Hollinrake]

I have meetings with the national teams of trading standards, and indeed the CMA, on a regular basis. We have had numerous discussions about the legislation, if the hon. Lady means her question broadly. Indeed, she was able to question some of those witnesses in the recent evidence sessions. Clearly, resources for trading standards are a matter for local authorities, not central Government. It is for local authorities to determine where those resources are committed.

Question put and agreed to.

Clause 223 accordingly ordered to stand part of the Bill.

Clause 224

Rights of redress

Question proposed, That the clause stand part of the Bill.

[Kevin Hollinrake]

Clause 224 sets out the conditions under which consumers may exercise redress rights. The main condition is that misleading actions or aggressive practices must play a significant factor in the consumer’s decision to make payment for the supply of a good or enter a contract. Without the clause, victims of rogue traders who engage in lies and aggressive selling practices would be left with no private right of redress.

--- Later in debate ---

[Seema Malhotra]

I am pleased to speak to amendment 114, which stands in my name and that of my hon. Friend the Member for Pontypridd. I will also make reference to amendment 67, tabled by the hon. Member for Gordon.

Amendment 114 would require that the Secretary of State prepare and lay before Parliament a report on the merits of introducing a consumer right to individual and collective redress through secondary legislation, as is the case in EU member states. Amendment 67 would ensure that the consumer rights to redress set out in secondary legislation cannot offer less protection than the Consumer Protection from Unfair Trading Regulations 2008. We support the principle of amendment 67, which would have a similar effect to amendment 114 by ensuring a more robust consumer right to redress.

More specifically on amendment 114, I refer the Minister to the written evidence of Which?, which notes that

“the Bill states that ‘Consumer Rights to Redress’ may be provided for in future secondary legislation, so it will give the Secretary of State powers to amend these rights. These rights are fundamentally important, as they include payment of damages when a trader misleads a consumer. We want assurances that they will not be downgraded as a result of this process, and a commitment from the Government to strengthen redress procedures when these new regulations are drafted.”

Amendment 114 would require a commitment from the Government to report on doing that, aiding the process of strengthening redress procedures when new regulations are drafted. I urge the Government to support amendments 114 and 67, and to ensure that consumer rights to redress are as strong as they can be, particularly in an increasingly digital economy.

[Kevin Hollinrake]

Amendments 67 and 114 deal with consumers’ private rights to redress. I agree with the hon. Members for Feltham and Heston and for Gordon that it is vital that consumers have robust private rights of redress.

Amendment 67 would limit changes by regulation to the consumer rights of redress to those that are equivalent to the remedies in the CPRs—the Consumer Protection from Unfair Trading Regulations 2008. The Bill includes powers to amend rights of redress. That could include how such rights are exercised; the powers could also be used to make those rights clearer and simpler. Those would be positive changes for consumers that might not meet the test of equivalence to the current regulations that the amendment would impose. We would like to retain the ability to exceed the existing private redress provisions, if appropriate, which may encourage more consumers to make use of these rights. The first regulations made using the power will be to create the new regime to replace the current private redress provisions in the CPRs. Accordingly, those regulations will be subject to parliamentary approval via the affirmative procedure, thereby providing for appropriate parliamentary oversight of use of the power.

I turn to amendment 114. The courts already have the power to make an enforcement order against an infringer, or to accept undertakings from them to provide redress to affected consumers, through the measures in part 3. Enforcers can also accept undertakings from infringers to provide redress to affected consumers. For example, in 2021 the CMA secured an undertaking from Teletext Holidays to pay over £7 million in outstanding refunds from package travel trips cancelled due to covid-19.

The Bill will make the power to require enhanced consumer measures directly available to the CMA. Consumers also already have individual private rights of redress. In the “Reforming competition and consumer policy” consultation, we consulted on whether to introduce a right for consumers to bring collective redress. Responses were mixed, with concerns raised about unintended consequences such as the creation of a claims culture and inadvertently disincentivising the bringing of proceedings by consumer groups.

The hon. Member for Feltham and Heston referred to the EU situation. The outcome, however, is similar to the desired situation under the EU’s directive on collective redress, which requires member states to designate entities, such as consumer organisations, that can bring actions for collective redress on consumers’ behalf. The EU does not mandate that member states introduce direct rights for individual consumers to bring an action for collective redress.

We will keep the evidence under review, but our priority is to embed the CMA direct enforcement regime and understand the impact that it makes. On that basis, I hope that hon. Members will not press their amendments.

[Richard Thomson]

With regret, I am not minded to withdraw amendment 67. I hear what the Minister says about how the Government may wish to go beyond existing levels of consumer protection. That is welcome where appropriate, but I do not see anything in the amendment that would prevent Ministers from doing that. The key element in the amendment is to capture a baseline level of protection, equivalent to what was in the 2008 regulations, to ensure that there is nothing that dips below that without a conscious decision to do so having been taken and debated. On the basis that there is nothing that would prevent the Government from enhancing the levels of protection at any time, I am keen to divide the Committee.

Question put, That the amendment be made.

Digital Markets, Competition and Consumers Bill (Thirteenth sitting)

Kevin Hollinrake Excerpts

Committee stage
Tuesday 4th July 2023 Public Bill Committees

[The Chair]

With this it will be convenient to discuss that clause 226 and 227 stand part.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

It is a pleasure to serve with you in the Chair, Dame Maria. Clause 225 enables the Secretary of State to make new regulations for consumers to have a right to unwind, a right to discount and a right to damages. The regulations may cover, among other things, how such rights are to be exercised and when damages are to be payable. Before these regulations are made, the existing private redress provisions set out in the Consumer Protection from Unfair Trading Regulations 2008 will continue to apply. The first use of the power will be subject to the affirmative procedure, ensuring appropriate parliamentary scrutiny.

Clause 226 sets out how consumers can exercise their right to redress and allows consumers to undertake civil court action. Any legal claim must be brought within the time limit for simple contracts that applies under the Limitation Act 1980. If successful, a consumer will then have the right to unwind, the right to a discount, or the right to damages.

Clause 227 outlines the relationship between consumers’ private redress rights and other claims that are related to the prohibited practices of misleading actions and aggressive practices. It states that a consumer is not prevented from pursuing a claim under a rule of law, equity, or other legislation, but they cannot recover compensation twice for the same conduct.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship today, Dame Maria. I thank the Minister for his opening remarks. He covered how clause 225 confers a power on the Secretary of State to make regulations providing rights of redress to consumers, including the right to unwind relevant contracts, receive a discount, receive damages and so on.

The Opposition support the clause and recognise the need for further provisions for rights of redress, but why is that being left to secondary legislation? Does the Minister know when the Secretary of State may exercise this power? There is a danger of further delay. Why is this a power, rather than a duty? Perhaps the Minister can come back on why it was decided that the legislation be set out in this way. I can understand that there may be some reason to allow for further provision, but one would have thought that some measures would be brought in earlier.

Clause 226 sets out how a consumer can enforce their rights to redress, and I thank the Minister for his comments on it. Specifically, it sets out how a consumer with the right to redress by virtue of the regulations would be able to enforce their rights through making a claim in the civil courts. In Scotland, proceedings could be brought before the sheriff or the Court of Session. We welcome this clause in ensuring consumers have swift access to means of redress.

We also support clause 227, which would have the effect of avoiding double compensation, which is a common-sense and welcome provision.

[The Chair]

For the avoidance of doubt, if anybody wants to remove their jacket, please feel free to do so. It is a little muggy in here.

[Kevin Hollinrake]

I am very grateful. I have just a couple of points. Obviously, no gap will occur because of this, because the existing provisions are still effective until the provisions are replaced by any provisions made by the regulations. The reason for doing it like that is to create more flexibility around different measures that might need to be introduced. The world of consumers, consumer behaviour and activity providing services for consumers and goods is changing rapidly, so it makes sense to take a more flexible approach.

Question put and agreed to.

Clause 225 accordingly ordered to stand part of the Bill.

Clauses 226 and 227 ordered to stand part of the Bill.

Clause 228

Inertia selling

Question proposed, That the clause stand part of the Bill.

[Kevin Hollinrake]

Clause 228 protects consumers against inertia selling, which occurs when traders send unsolicited products to consumers and then demand payment for the products or that the products be returned or safely stored. The clause provides clarity for consumers and traders, leaving no room for doubt. Consumers are exempt from any obligation to pay for the unrequested products, return them or store them safely. The lack of a response by a consumer to a trader does not mean that the consumer has agreed to pay for, return or store the product.

[Seema Malhotra]

The Minister has laid out the reasons for this clause, which we very much support. It is important to support consumers against inertia selling, and it is a real worry when we hear of cases where traders demand an immediate or deferred payment for the return or even the safekeeping of products that have been supplied but not solicited by the consumer. It is important that we clarify that consumers are not required to pay for products supplied unsolicited by the trader, so we support the clause.

Question put and agreed to.

Clause 228 accordingly ordered to stand part of the Bill.

Clause 229

Offences

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 72 and 73.

Clause 230 stand part.

Government amendments 74 to 77.

Clauses 231 to 233 stand part.

[Kevin Hollinrake]

Clause 229 sets out that it is a criminal offence for a trader to engage in a commercial practice that involves any of the following: misleading actions, misleading omissions, aggressive practices, any of the practices in the list of banned practices in schedule 18, save for those expressly excepted, and/or knowingly or recklessly engaging in a commercial practice that contravenes the requirements of professional diligence.

Clause 230 describes the defences that may be available to defendants charged with offences under clause 229. These are a defence of due diligence and an innocent publication defence. To avail of the due diligence defence, a defendant must prove that the offence was due to the act or omission of a third party or information provided by a third party. The innocent publication defence is available, in certain circumstances, to a defendant charged with a relevant offence that is alleged to have been committed by the publication of an advertisement.

Government amendments 72 and 73 preserve the current effect of existing consumer law by excluding contraventions of the requirements of professional diligence from the offences to which these defences apply.

Clause 231 sets out the rules on liability when a trader commits an offence as a result of an act or omission by another person, and when a body corporate commits an offence. It is a restatement of the same provision in the Consumer Protection from Unfair Trading Regulations 2008, or CPRs.

Government amendments 74 to 77 preserve the current effect of the CPRs. This means that contraventions of professional diligence are excluded from the offences to which the criminal liability of others applies.

Clause 232 sets out the penalty for offences. It is a restatement of the same provision from the CPRs.

Clause 233 sets out the time limit for prosecution. This is within three years of the offence taking place, or within one year of the discovery of the offence by the prosecutor, whichever is earlier. The time limit is the same as set out in the CPRs and enforcers will be familiar with their application.

I hope that the Committee will support Government amendments 72 to 77 and clauses 229 to 233.

--- Later in debate ---

[Kevin Hollinrake]

The banned practices to which the shadow Minister and I have referred are not currently subject to criminal liability, and we did not consider it appropriate to introduce new criminal offences.

On the “mistake or accident” defence, the defendant has an obligation to prove it was a mistake or an accident, which I think is a reasonable provision.

The timescales are replicated from the current timescales in the 2008 regulations, so there is nothing new here. We are pretty confident the timescales will be appropriate but, of course, we will continue to engage with the relevant enforcement bodies to make sure they are appropriate.

[Seema Malhotra]

How will the Minister know how many prosecutions are missed due to running out of time?

[Kevin Hollinrake]

We have continuing engagement with the various enforcement bodies, such as trading standards and the Competition and Markets Authority, through either officials or Ministers. If there were a problem, we are confident we would receive that feedback and be able to make a decision on how to act accordingly.

[Seema Malhotra]

rose—

[Seema Malhotra]

It was meant to be an intervention, but the Minister sat down.

[Kevin Hollinrake]

I have concluded my remarks.

Question put and agreed to.

Clause 229 accordingly ordered to stand part of the Bill.

Clause 230

Defence of due diligence and innocent publication

Amendments made: 72, clause 230, page 154, line 32, at end insert “subsection (1), (2), (3), (6) or (7) of”.

This amendment ensures that the defence provided for in clause 230(1) (defence of due diligence) does not apply in relation to an offence under clause 229(4) (offence of engaging in an unfair commercial practice which involves a contravention of the requirements of professional diligence). This replicates the current position under the Consumer Protection from Unfair Trading Regulations 2008.

Amendment 73, clause 230, page 155, line 5, after “under” insert “subsection (1), (2), (3), (6) or (7) of”.—(Kevin Hollinrake.)

This amendment ensures that the defence provided for in clause 230(3) (defence of innocent publication) does not apply in relation to an offence under clause 229(4) (offence of engaging in an unfair commercial practice which involves a contravention of the requirements of professional diligence). This replicates the current position under the Consumer Protection from Unfair Trading Regulations 2008.

Clause 230, as amended, ordered to stand part of the Bill.

Clause 231

Offences: criminal liability of others

Amendments made: 74, clause 231, page 155, line 30, after “under” insert “subsection (1), (2), (3), (6) or (7) of”.

This amendment ensures that the imposition of liability on another person does not apply in relation to an offence under clause 229(4) (offence of engaging in an unfair commercial practice which involves a contravention of the requirements of professional diligence). This replicates the current position under the Consumer Protection from Unfair Trading Regulations 2008.

Amendment 75, clause 231, page 155, line 31, leave out “section” and insert “subsection”.

This amendment is consequential on Amendment 74.

Amendment 76, clause 231, page 155, line 40, after “under” insert “subsection (1), (2), (3), (6) or (7) of”.

This amendment is consequential on Amendment 74.

Amendment 77, clause 231, page 155, line 41, leave out “section” and insert “subsection”.—(Kevin Hollinrake.)

This amendment is consequential on Amendment 74.

Clause 231, as amended, ordered to stand part of the Bill.

Clauses 232 and 233 ordered to stand part of the Bill.

Clause 234

Powers to amend this Chapter

[Seema Malhotra]

I beg to move amendment 129, in clause 234, page 157, line 30, leave out subsection (2).

This amendment would ensure that future “banned practices” are both criminal and civil breaches, reflecting their potential seriousness and putting them in line with all but two of the current banned practices.

This amendment would ensure that future banned practices are both criminal and civil breaches, reflecting their potential seriousness and putting them in line with almost all other current banned practices. As we understand it, under the legislation as drafted, any practice added later by the Secretary of State will not be subject to criminal enforcement. Perhaps the Minister can clarify that, because it is slightly unclear. Given that clause 234 is the means by which the Government are planning to take action on fake reviews, will the Minister confirm his intentions on penalties for breaches?

This is a straightforward amendment that seeks to ensure that future action against fake reviews, or any other unfair commercial practice, is just as robust as the action taken on the face of the Bill. I do not intend to press the amendment to a vote, but I would be grateful for a clarification from the Minister because, during the course of the Bill, we will want to understand the penalties and be clear about those for different practices.

[Kevin Hollinrake]

I thank the hon. Lady for her amendment and her remarks. She will be aware that, ordinarily, when criminal offences are created, it is important and beneficial for Parliament to have ample opportunity to scrutinise them. That is usually via primary legislation, rather than powers given to Government. There is, of course, nothing to prevent Members of Parliament from introducing primary legislation to criminalise specific practices in future, should the House consider it desirable to do so. In the meantime, any new practices added to schedule 18 will continue to benefit from the relevant civil penalties, as well as the greater deterrent effect that we expect from the considerable reforms that we are introducing.

On the penalties themselves, we will go much further than any UK Government have ever done before; we are empowering the courts and the CMA to impose fines of up to the higher of £300,000 or 10% of worldwide turnover for infringements of consumer-protection law.

--- Later in debate ---

[The Chair]

With this it will be convenient to discuss the following:

Clauses 235 to 242 stand part.

Government amendment 78.

Clauses 243 and 244 stand part.

[Kevin Hollinrake]

Clause 234 gives powers to the Secretary of State to amend this chapter. New regulations using the powers may not be made before consultation and will be subject to the affirmative procedure. For example, the power to amend the list of banned commercial practices in schedule 18 will allow the Government to respond more quickly to emerging consumer harms and ensure that appropriate levels of consumer protection are maintained.

The power to amend the list of information deemed to be material in an invitation to purchase means that we can ensure that consumers get the information that they need when they prepare to make a purchase. The power to amend the list of prohibited practices in clause 224(7) will enable the Government to extend private rights of redress to further commercial practices, such as misleading omissions. I hope that hon. Members will agree that it is critical to future-proof the Bill through these provisions, given the constantly evolving environment in which traders operate.

Clause 235 establishes that the Crown is not criminally liable for any infringement of the regulations. This does not affect the application of the regulations in relation to a person in public service of the Crown.

Clause 236 states that a contract or agreement is not void purely because of a breach of this chapter, except for cases where voiding of the contract arises as a result of a consumer exercising their right to redress.

Clause 237 defines “transactional decision”. This is an important and broad definition, which includes decisions before any purchase has taken place as well as decisions after a purchase has taken place.

Clause 238 defines an “average consumer”. It largely restates the equivalent provision from the Consumer Protection from Unfair Trading Regulations 2008.

Clause 239 defines “average consumer” in situations where a group of consumers are particularly vulnerable to a commercial practice. It recognises and makes explicit that consumers may be vulnerable for a range of reasons, including their age, health, credulity and circumstances.

Clause 240 defines “product” for the purposes of this chapter. A product can mean goods, services and digital content. That is important as it means consumers are protected from unfair trading practices when purchasing digital content from businesses online.

Clause 241 defines a range of other terms used in part 4, chapter 1 of the Bill. Clause 242 provides an index of defined terms in this chapter.

Clause 243 revokes the 2008 regulations and re-enacts their substance in part 4, chapter 1 of the Bill. It also makes a small number of consequential amendments to other UK legislation.

Government amendment 78 makes a minor consequential amendment to section 393 of the Communications Act 2003 to include part 4 of this Bill. That will enable Ofcom and the CMA to collaborate in relation to matters covered by part 4 in the same manner that they do for the consumer protection regulations.

Clause 244 sets out that the 2008 regulations will continue to apply to any unfair acts or omissions occurring before this Bill is enacted. The clause also provides that part 4A of the consumer protection regulations, which deals with private right of redress, will continue to apply until new regulations are made under this chapter. I hope hon. Members will accept amendment 78, and I commend the clauses to the Committee.

[Seema Malhotra]

Clause 234 introduces a provision allowing for the Secretary of State to amend the list of banned practices in schedule 18. The clause will be the route through which we may see later action on fake reviews. The Opposition welcome the flexibility this gives the regime and supports the clause, but I want to ask the Minister one question on changes that can be made.

We have talked about additions, but there is also the power to remove a practice from the schedule. We understand the principle and the importance of the flexibility to add practices, particularly considering the ever-increasing ways that rogue traders can mislead consumers in not only the digital economy, but in the real world. However, I would welcome clarity on the circumstances in which the Government would want to remove a practice from the list and, more importantly, the process it then uses to do so. Will it be subject to similar procedures? It would be helpful to understand that for the record.

Clause 235 exempts the Crown from criminal liability as a result of the provisions in this chapter but does not affect their application to persons in service of the Crown. Will the Minister clarity that Crown exemption?

--- Later in debate ---

Finally, we welcome clause 243 and we support amendment 78. Clause 244, which we also support, sets out how the chapter applies to an act or omission that occurs on or after the commencement date of the chapter.

[Kevin Hollinrake]

I think the hon. Lady asked two questions, and I missed the second one. While she is thinking about what the second question was, I will address the first one, which was about why we are establishing the power to delete practices from the banned list. That is because some practices may become redundant or have needless duplication that we need to avoid. For example, Parliament may choose to provide for regulation elsewhere to better address a particular service so that we do not get duplication. The power will require parliamentary approval through the affirmative procedure. As a consequence, there will be a requirement for us to consult on any such changes.

[Seema Malhotra]

I think the Minister was referring to my second question on the meaning of average consumers and vulnerable persons. Rather than wanting any changes, I wanted him to recognise that someone’s circumstances can lead to an over-assumption of their vulnerability, and an interpretation of that vulnerability can make it more difficult for those who really do know what they want, even though they are in those circumstances.

[Kevin Hollinrake]

The hon. Lady makes a very good point. Regulators play a part in this as well by ensuring that the average consumer is assessed correctly and that there is relevant assessment of any characteristics. Businesses can be challenged on the back of that to ensure that they do not exploit consumers, especially those who are vulnerable to a particular commercial practice.

Question put and agreed to.

Clause 234 accordingly ordered to stand part of the Bill.

Clauses 235 to 242 ordered to stand part of the Bill.

Clause 243

Consequential amendments etc relating to this Chapter

Amendment made: 78, in clause 243, page 161, line 21, at end insert—

“(3A) In section 393(5) of the Communications Act 2003 (exceptions to general restrictions on disclosure of information), after paragraph (r) insert—

‘(s) Chapter 1 of Part 4 of the Digital Markets, Competition and Consumers Act 2023.’”—(Kevin Hollinrake.)

This amendment enables OFCOM to disclose information to the CMA for the purpose of the CMA exercising its functions under Chapter 1 of Part 4 of the Bill in the same way that OFCOM may currently disclose information to the CMA for the purpose of the CMA exercising its functions under the Consumer Protection from Unfair Trading Regulations 2008.

Clause 243, as amended, ordered to stand part of the Bill.

Clause 244 ordered to stand part of the Bill.

Clause 245

Overview

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 246 and 247 stand part.

That schedule 19 be the Nineteenth schedule to the Bill.

[Kevin Hollinrake]

In chapter 2 of part 4 of the Bill, we are introducing measures to give consumers new rights over their subscription contracts, while ensuring that businesses are not overburdened by regulations. The measures are an important part of the Government’s commitment to help consumers have more control over their spending. Together, they will deliver £400 million in consumer benefits per year.

Clause 245 assists readers to navigate the chapter. Clause 246 provides a legal definition of a subscription contract.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

Can the Minister clarify from when the Government expect these specific clauses to be implemented?

[Kevin Hollinrake]

From the—first we have to get Royal Assent, of course—

[Neil Coyle]

With immediate effect?

[Kevin Hollinrake]

There may be some regulations to deploy after that. I can find out for definite if the hon. Gentleman gives me a few minutes. It is in the Bill, of course, so it should be pretty quick.

Clause 246 provides a legal definition of a subscription contract, which is principally one that automatically renews or continues so that a consumer continues to be liable for payments unless they end the contract. That includes contracts that are of fixed duration but can be ended earlier by the consumer. Contracts that offer a free or reduced-cost trial for a defined period and then revert to a higher cost are also in the scope of the chapter. It is critical that such contracts are included as calculations show that each year, around a quarter of consumers get rolled over accidentally from free or reduced-price trials.

Clause 247 provides for specific sectors and subscription contract types to be excluded from the chapter and those sectors are detailed in schedule 19. The sectors have been excluded because they are already subject to regulation and may be supervised by a specialist regulator. To apply the chapter to them would overburden them with regulation and trespass on the remit of a specialist regulator. It could also potentially create conflict between the regulation and legislation, particularly if the sectors already provide consumers with similar protections.

Sectors may also have been excluded on public policy grounds, such as the exclusion for childcare. The childcare sector, like many of the other excluded sectors, provides an essential service and these are not the type of contracts that we consider raise the risks commonly associated with a subscription trap. The exclusions in schedule 19 may need to change over time as the regulatory and legislative regimes for the excluded sectors change. That is why clause 247 ensures that the Secretary of State has the power to adapt the provisions through secondary legislation.

[Seema Malhotra]

Clause 245 provides an overview of this chapter, which centres around duties on traders in relation to subscription contracts and the rights of consumers if those duties are breached. The chapter also introduces further rights and protections for consumers in relation to subscription traps, specifically regarding the right to cancel contracts during cooling-off periods, and the information that must be made available to consumers.

We welcome the principles of the chapter and I note that before the Bill was bought before the House, the Labour party had already announced that we would legislate in government to tackle subscription traps and protect consumers, particularly in the light of the Conservative cost of living crisis, because we know that things have become worse for consumers. Any time the Government want to adopt a Labour proposal, we will welcome it. We have tabled some new clauses in this area, which I will come to later.

Let me start by welcoming the action on subscription traps taken by the Government so far in the Bill. As I said before, Citizens Advice estimates that £306 million a year is spent on unwanted subscriptions in the UK, so we need to act and, in that spirit, to work constructively with Ministers to ensure that the measures are as robust as possible.

Clause 246 defines the scope of subscription traps, which are defined as a business-to-consumer contract for the supply of goods, services and digital content that either auto-renews for an indefinite or fixed period or contains a free trial or specified reduced price for a specified period in the contract, after which time the contract renews and the consumer becomes automatically liable for payments. We welcome the definition and the important inclusion of subscriptions that start with a free trial, a technique that is commonly used. However, I want to press the Minister on subsection (1), which sets out that

“a subscription contract is a contract between a trader and a consumer”.

The Minister will probably have a straightforward answer on how business-to-business subscriptions are covered. There are plenty of instances where a business may pay for a subscription, so I would welcome assurances about how businesses are covered, particularly smaller businesses and those run by the self-employed.

--- Later in debate ---

Included in schedule 19 as excluded contracts are utility bills such as those for electricity, gas and heating, as well as medical prescriptions, insurance, rent payments and childcare, among others. We understand some of the reasons for those common-sense exclusions, but can the Minister tell us whether the Government have consulted relevant stakeholders on the exclusions? Were there any suggestions to include in the schedule contracts that have not made it into the Bill?

[Kevin Hollinrake]

I think the hon. Lady raised two points. The provisions apply specifically to traders to consumers, not traders to businesses. On how we determine the exemptions, such as for magazines, delivery services, gyms, software and so on, a range of stakeholders, including regulators, businesses and consumer groups, developed the list and the scope of sectors that are exempt from the subscription measures.[Official Report, 20 July 2023, Vol. 736, c. 13MC.]

Question put and agreed to.

Clause 245 accordingly ordered to stand part of the Bill.

Clause 246 and 247 ordered to stand part of the Bill.

Schedule 19

Excluded contracts

[Richard Thomson (Gordon) (SNP)]

I beg to move amendment 117, in schedule 19, page 349, line 39, at end insert—

“Non-commercial society lotteries

13 (1) A contract under which a lottery ticket or tickets are purchased for one or more non-commercial society lotteries.

(2) In sub-paragraph (1), “non-commercial society” has the meaning given by section 19 of the Gambling Act 2005, and “lottery ticket” has the meaning given by section 253 of that Act.”

This amendment seeks to exclude lottery tickets purchased for non-commercial society lotteries from the scope of the provisions on subscription contracts.

It is a pleasure to serve under your chairmanship, Dame Maria.

A few moments ago, I was encouraged to hear the Minister express a desire not to trespass on any of the specialist regulators, and I am delighted to say that that is exactly what the amendment is intended to achieve. I hope we can all agree that charity lotteries do an awful lot of good. They raise an awful lot of money, and they are fun. They are also already heavily regulated by the Gambling Commission. If the Gambling Commission does not fall under the category of specialist regulator, I am not entirely sure what does.

I raised this issue on Second Reading, but I was beaten to the punch by the right hon. Member for Calder Valley (Craig Whittaker), who said that subscription-based charity lotteries

“are already heavily regulated by the Gambling Commission”.—[Official Report, 17 May 2023; Vol. 732, c. 882.]

He wanted to see whether such lotteries could be removed from schedule 19, and the Minister committed to looking at the matter in detail. I do not know what the result of the Minister’s deliberations has been. I know that by the time the Under-Secretary of State for Science, Innovation and Technology was on his feet to sum up he was certain that it would fall outside the scope of the Bill. Despite his best efforts on that occasion, I have to say that some of the representatives of the charity lottery sector I have spoken to are not reassured.

There remains an uncertainty. For all the best intentions of Ministers, and whatever ends up in Hansard as a result of our discussions on Second Reading and today, the Bill contains significant ambiguity. In that regard, it is unclear in a way that it does not need to be. Amendment 117 would add charity lotteries to the list of excluded contracts in schedule 19, so it would remove any remaining doubt that they are excluded from the provision. They will therefore be able to continue under the legislative environment that the Government have already set for them, which seems to work quite successfully, and will be able to do so without having any additional inhibitors put in their way in collecting revenues from the public and their customers, and crucially in paying out to good causes, which I am sure that we have all seen the benefits of across our constituencies.

--- Later in debate ---

[Kevin Hollinrake]

The hon. Member for Gordon makes an excellent point. As he said, the point was raised on Second Reading. We appreciate the work that society lotteries do in terms of fundraising—that £400 million a year is vital for many good causes. It is certainly not our intention to capture society lotteries, including the national lottery, in this chapter of the legislation on subscription contracts. We are working with the society lottery sector to understand whether we need to further clarify the legislation to reflect that. I am sure that we will discuss the issue again during later stages of the Bill.

[Richard Thomson]

If the Minister can assure me that we will have that open dialogue, and that the Government will share the outcomes of their deliberations, at this stage I am content to withdraw the amendment, but I will return to it on Report, contingent on what he is able to say at that point. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 19 agreed to.

Clause 248

Pre-contract information

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss:

That schedule 20 be the Twentieth schedule to the Bill.

Clauses 249 to 253 stand part.

New clause 5—Contract renewal: option to opt in—

“(1) Before a trader enters into a subscription contract with a consumer where section 246(2) applies, the trader must ask the consumer whether they wish to opt into an arrangement under which the contract renews automatically at one or more of the following times—

(a) after a period of six months and every six months thereafter, or

(b) if the period between the consumer being charged for the first and second time is longer than six months, each time payment is due.

(2) If the consumer does not opt into such an arrangement, the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than 28 days before the renewal date.

(3) If the consumer has not—

(a) opted into an arrangement under subsection (1),

(b) given notification of the consumer’s intention to renew by the date specified under subsection (2), the contract will lapse on the renewal date.”

This new clause would allow the consumer to opt-out of their subscription auto-renewing every six months, or if the period between payments is longer than six months, before every payment. If the consumer does not opt-in of auto-renewal, they would be required to notify the trader manually if they wanted to renew.

New clause 6—Contract renewal: variable rate contracts—

“(1) Before a trader enters into a subscription contract with a consumer where section 246(3) applies, the trader must ask the consumer whether they wish to opt into an arrangement under which the contract renews automatically on the date the consumer becomes liable for the first charge or the first higher charge.

(2) If the consumer does not opt into an arrangement under subsection (1), the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than five days before the renewal date.

(3) The trader must also ask the consumer whether they wish to opt into an arrangement under which the contract renews automatically—

(a) after a period of either six months from the first charge or higher charge and every six months thereafter, or

(b) if the period between the consumer being charged for the first and second time is longer than six months, each time payment is due.

(4) If the consumer does not opt into an arrangement under subsection (3), the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than 28 days before the renewal date.

(5) If the consumer has not—

(a) opted into an arrangement under subsection (1) or subsection (3), or

(b) given notification of the consumer’s intention to renew by the date specified under (as the case may be) subsection (2) or subsection (4),

the contract will lapse on the next renewal date.”

This new clause would introduce an option for the consumer to opt out of their subscription auto-renewing after their free or discounted trial. Otherwise, they would have to notify the trader manually if they wanted to continue the subscription. It also introduces an option for the consumer to opt out of their subscription auto-renewing.

[Kevin Hollinrake]

Clause 248 places duties on the trader to provide the consumer with pre-contract information set out in schedule 20 before they enter a contract. All key pre-contract information must be given together to the consumer and separately from any other information. That is to ensure that it is not obscured by technical detail or marketing material and the consumer’s attention is focused on the information that they need to make an informed decision.

Clause 249 sets out obligations on the trader in concluding a contract, such as ensuring that the consumer expressly acknowledges their payment obligation if the contract is made online. That will ensure that consumers are fully aware of the contract they are entering.

[Giles Watling (Clacton) (Con)]

As the hon. Member for Gordon said, the national lottery has an amazing track record—£47 billion has been given to good causes over many years—and we do not want this great institution, of which we should all be proud, to be hamstrung by endless requirements such as reminder notices. Will the Minister table amendments to the Bill on reminder notices ahead of Report that would ensure that the national lottery is exempt, as intended?

[Kevin Hollinrake]

My hon. Friend is absolutely right that we do not intend to include national lotteries or society lotteries in this legislation. We are talking to those bodies to ensure that they are confident that that is the case. If we need to amend the Bill to do that, we will, but those conversations will continue. I am grateful to my hon. Friend for making that point.

Clause 250 requires traders to send reminder notices in certain instances. A reminder must be sent on the first occasion that a subscription renews, including when a free or low-cost trial is coming to an end. That will ensure that consumers know they will soon become liable for payments, or higher payments, and can decide whether they want to continue the contract.

[Neil Coyle]

The Minister says that clause 250 is relevant only in certain circumstances. Can he be clear that the Government’s intention is not for the provision to cover someone who has perhaps been a decades-long subscriber to, for example, Sky? I hate to pick a particular company, but it is for the purposes of the conversation—I am not a Sky subscriber. Is the Minister saying that, if a person had had a contract for a decade and was a regular viewer of sports channels, or whatever it might be, they would not be caught by the clause? The “certain circumstances” do not seem to be well understood by some businesses outside this building.

[Kevin Hollinrake]

We have had dialogue with Sky, and many other organisations have contacted us to clarify some points. A subscription contract with Sky would fall under the provisions. Sky may be concerned about certain things, in terms of cooling-off periods, but I have not had any feedback from Sky or others that they have concerns about these particular provisions, unless the hon. Gentleman wants to mention something specifically.

[Neil Coyle]

I think that Sky briefed quite widely—it briefed members of the Committee and beyond—that it thinks that it is caught by the provision and that it covers all contracts. I can understand that a person would be caught by the new provisions if they had a new contract where there was a discount, as my hon. Friend the Member for Feltham and Heston already pointed out, but to impose the condition retrospectively on business contracts that someone could have had for decades seems to place a new onus on existing business arrangements. The Government have avoided doing that in other legislation, and I wonder about the rationale. I picked Sky off the top of my head, but it is an organisation that is concerned.

[Kevin Hollinrake]

I did not quite understand the hon. Gentleman’s point when he first made it. I think he is saying that it covers existing contracts as well as new contracts. Is that his point, and can I come back to him on it?

[Neil Coyle]

Sure.

[Kevin Hollinrake]

After the first renewal reminder, consumers with a monthly renewing contract will be sent a reminder around the six-month mark. For contracts that renew less frequently than every six months, such as annual subscriptions, a reminder will generally be sent whenever the contract renews.

Clause 251 sets out the required timescales for serving reminder notices. Parts 1 and 2 of schedule 20 set out what pre-contract information traders must give to the consumer before they enter a contract. Part 3 of schedule 20 sets out the information that traders must include in a reminder notice.

I can address the point made by the hon. Member for Bermondsey and Old Southwark right now, if he would like: the subscription contract clauses will apply only to new contracts taken after chapter 2 comes into force. Reminder notices must include information on the forthcoming payment, including any increase since the last renewal. They must also include an indication of how long the consumer will be committed following renewal, and how to end the contract should the consumer wish to.

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[Neil Coyle]

I thank the Minister for giving way; he has been very generous. To be clear, is it the Government’s expectation that a subscription could be cancelled through a single communication from any device or social media platform? Over recent days, significant figures have tried to close bank accounts and other things by tweeting. Is it the Government’s expectation that this communication would come from a verified point of contact, such as an email address or phone number that the company holds? Otherwise, I could set up a Twitter account—or a Threads account, as we have seen this week—in the Minister’s name and then cancel his TV, or other, subscriptions.

[Kevin Hollinrake]

I may have misunderstood his point, but I think the example he gave was of a bank closing an account from Twitter. That is the other way around—that is the bank closing the account rather than the customer.

[Neil Coyle]

I was thinking of Laurence Fox.

[Kevin Hollinrake]

Okay, but I think clause 252 is clear that there must be a straightforward cancellation route for consumers to exit a contract. He appears to describe a convoluted route, but I did not quite understand it. Would he like to expand on his point?

[Neil Coyle]

Sorry if I was not clear. I thank the Minister for checking. Will it have to be from a single point of contact, such as a verified address, to protect the customer as well as the business? If I wanted to cancel a contract, would I have to use the email address or phone number that the company holds for me and not, as the Bill currently reads, a Facebook post or something that the business may not be able to confirm is mine? Does that help?

[Kevin Hollinrake]

I am not sure whether it does or not. I refer the hon. Gentleman to one of my earlier points: it is a straightforward cancellation route. What he describes to me is not a straightforward cancellation route. That is the key definition. We can have a discussion after this sitting.

Clause 253 requires a trader to send a notice confirming when the contract was, or will be, ended once they have been notified of cancellation by the consumer. This also applies where a consumer exercises a cancellation right under this chapter. The trader must provide this notice promptly, and on a durable medium, and refund consumers any overpayment for which they are no longer liable.

I now turn to new clauses 5 and 6, which I will address together. They propose that traders must obtain a consumer’s express agreement to an auto-renewing contract by the consumer’s active opt-in. Through new clause 5, when consumers sign up to a subscription contract, they would have to be given the option to choose whether their subscription auto-renews after six months. If they do not choose this auto-renewal option, the contract would end after six months unless the consumer expressly asks for it to continue.

New clause 6 would apply equivalent requirements to contracts that auto-renew after a free or low-cost trial and may also auto-renew again subsequently. The Government share the view that consumers must be able to avoid being trapped in unwanted subscriptions and ensure their hard-earned cash is spent only on subscriptions they actually want. However, we know that the majority of consumers enjoy the auto-renewing features of their subscription contracts and the convenience they provide.

Through these new clauses, if a consumer had not opted-in to an auto-renewing contract, but they decide they want to keep their subscription, they would have to repeatedly respond to emails or similar to continue their subscription, or risk it unintentionally lapsing. That risk could be multiplied across each subscription they hold. For that reason, the Government decided not to pursue that approach, which was supported by our public consultation.

It is also important to consider the burdens the changes could place on businesses. The measures would add significant regulatory costs to businesses as they adapt their business models to meet the proposals. We are confident that the approach we have taken strikes the right balance of ensuring consumers are able to exit their contracts at various points during their contract, as well as maintaining consumer convenience.

Furthermore, the existing clauses in this chapter already achieve much of the ambition of the amendments. As I set out earlier, clause 250 will ensure consumers are sent regular reminders about their subscription, including towards the end of a free or low-cost trial. These reminders will ensure that consumers have the right information at the right time to decide if they want to continue their contract, or cancel it.

In addition, through clause 252 we will ensure easy cancellation routes so that subscriptions are as easy to leave as they are to enter. Finally, the Bill enhances consumers’ existing cooling-off rights. Clause 256, which we will discuss shortly, introduces an extra 14-day cooling-off period after a free or low-cost trial, and at the 12-month mark when a longer-term contract auto-renews. That means that, if for any reason a consumer has not been able to take action to cancel before renewal, they have an extra chance to do so.

Together, those measures will ensure that consumers can make informed decisions about their subscription contract. They also make it easy to leave while avoiding creating additional steps for those who want to continue. I hope that reassures hon. Members that the Bill will enable consumers to manage their contracts effectively, and that they feel able to withdraw the amendments.

[Seema Malhotra]

Clause 248 introduces provisions requiring traders providing a subscription contract to give consumer information as set out in schedule 20, which I will say a few words on shortly.

We very much welcome this clause as necessary in ensuring consumers are as informed as they possibly can be before entering into a subscription contract. I just ask the Minister to expand on subsection (2) It sets out that the information must be provided

“as close in time to entering into the contract as is practicable”.

I would welcome clarification on that requirement. Under that provision, exactly when would the Minister expect a time as close to entering into the contract to be practicable?

Schedule 20 on pre-contract information and reminder notices sets out information that is required for traders to give to consumers before entering into a subscription contract. Among other things, it would require traders to provide information on how often payments will be taken, to provide consumers with a pro-rata cost per month, to state the minimum total amount for which a consumer would be liable under the contract, to outline how the consumer could exit the contract, and to provide a summary of the consumer’s right to cancel the contract and of the right to cancel the contract within a renewal cooling-off period. The schedule is necessary for giving consumers the chance to have that information before entering into a subscription contract. We welcome its inclusion in the Bill.

Clause 249 introduces provisions requiring traders to ensure that the final step consumers take when entering into an online contract involves the consumer expressly acknowledging that the contract imposes an obligation on them to make payments to the trader. This clause and clause 248 are vital in ensuring consumers are informed before choosing to enter into a subscription—a minimum requirement for ensuring effective consumer protection in this area.

The Opposition welcomes how, if the trader does not comply with that requirement, the consumer would not bound by the subscription contract. In addition, traders would be required to give consumers additional information on whether there are any restrictions on the delivery of the product to be supplied under the contract, and which means of payment would be accepted for the contract.

Clause 250 covers reminder notices. Alongside clause 251, it has the effect of requiring traders to issue written reminder notices to consumers explaining that a subscription contract is going to continue, and a renewal payment will fall due unless the consumer takes steps to end it. Those reminder notices would not need to be issued more frequently than once every six months, which we welcome as a timeframe allowing for informed consumers without causing undue annoyance. The first reminder notice must include the first renewal payment, for which the consumer will become liable under the contract, and each subsequent renewal payment. We welcome the clause, and I will further discuss ensuring that consumers are not locked into subscriptions in the provisions to come.

Clause 251 sets out the timing and content of the reminder notices. Under the clause, the reminder notice must be given to the consumer between three and five working days before the last cancellation date, meaning the last day on which the consumer can end the contract and avoid becoming liable for the next renewal payment. The Opposition welcome the timeframes, including that for a 12-month subscription contract, as giving the consumer sufficient time to decide whether they still want their subscription contract to continue and, if necessary, to cancel the contract before a renewal payment is due.

Clause 252 introduces provisions imposing on traders an obligation to put in place arrangements to enable consumers to end a subscription contract in a single communication and without having to take any unreasonable steps. The purpose of the clause is to prevent traders adopting practices that would deliberately hinder a consumer exercising their rights to exit a subscription contract. It is a welcome clause, which should tackle the practice of, as the explanatory notes set out, requiring consumers to phone a call centre, complete a long form, or complete a survey of their reasons for exiting—all those things are barriers to the consumer making the decision to exit the contract. Those are unnecessarily onerous cancelling terms, and could lead to consumers not cancelling a subscription when they need to. Sometimes that could also be because people are short of time or they may not be able to do everything in one moment.

It should be as easy to exit the contract as it is to enter it. Will the Minister expand on whether he is confident the provision will have the desired effect of stopping traders making it harder to leave a contract than to enter it? Does he think the provision goes far enough in ensuring there are not those undue hurdles?

Clause 253 relates to where the consumer has exercised a right to cancel and sets out a requirement on the trader. The trader is to give the consumer an end-of-contract notice acknowledging the request to cancel, which must be in writing and there must be a clear date when it is going to take place. The end of contract notice must be given within three working days after the day on which the consumer has given notice of cancellation, or, when the consumer notifies cancellation online, the trader must give the end of contract notice within 24 hours of cancellation. In addition, any overpayment received by the trader must be refunded to the consumer. We welcome the clause as providing greater transparency for the consumer throughout the cancellation process.

--- Later in debate ---

In circumstances such as that, the simple process of opting in or out of auto-renewing at the start of the contract would have enabled the consumer to easily opt out and, in doing so, saved them valuable funds. We want to get this issue sorted. I welcome the Minister’s response and again make the offer to work with us on this as we move forwards through the passage of the Bill.

[Kevin Hollinrake]

There are a few points to pick up on there. The shadow Minister wanted clarification on what “as soon as practicable” means. We expect traders to provide consumers with the relevant pre-contract information immediately before concluding the contract. If the contract is concluded online, that information should be provided during the online order process. If face to face, the trader should give that information before a contract is agreed.

The hon. Member for Bermondsey and Old Southwark raised a point about when the provisions will commence. We do not clearly have a set commencement date at this point in time, but we are keen to get these measures in place to protect consumers. We also recognise that there must be sufficient time for businesses to adapt, and we will engage with stakeholders, including the ones referred to by the hon. Gentleman, to ensure that an appropriate transition takes place. When cancelling or ending a contract, is a single tweet enough? I think that was the hon. Gentleman’s point. The ability of the consumer to end their contract by notifying the trader by any means is a safety net whereby consumers can always use the fall-back option of a simple notification if it is preferable or easier for them, particularly if the trader has failed to provide a clear route for consumers to end their contract.

Where necessary, the Government will provide further clarification in business guidance, which will obviously include discussions with stakeholders. However, as the provisions state, it is important that consumers notify a trader in a way that clearly communicates their intention to end the contract, which can be actioned by the trader. Hence this notification must be given in a sufficiently clear manner. I think it is fair to say that a sole tweet probably would not be sufficiently clear.

[Neil Coyle]

I think that last comment about a tweet not being sufficient would be welcomed by responsible businesses that just want to use the verified contact details.

The other point is perhaps a bit more worrying, Chair. We are quite well into this Bill Committee. There is an economic impact assessment. The Minister has said today that the measures would be implemented immediately, but has just corrected that in his final comment. The assessment set out here does not now include the cost to business of implementing these measures, because we do not have a start date. How can businesses plan to implement measures when they do not know their start date, and they do not know because the Minister is still clarifying what would be considered sufficient contact from a customer to close an account?

Do the Government intend to provide new impact assessments to reflect what the Minister has just said—?

[Kevin Hollinrake]

Is this a speech or an intervention?

[The Chair]

I think that I say that. [Laughter.]

[Neil Coyle]

When will the Government provide the right figures for what this will cost businesses in Britain?

[Kevin Hollinrake]

The assessment is set out. The impact assessment for businesses states a figure of £179 million, I think.

[Neil Coyle]

Will the Minister give way?

[Kevin Hollinrake]

No, I am not giving way, thank you very much, because I want to address the hon. Gentleman’s points.

Regarding when these provisions will commence, of course we do not know how quickly this legislation will pass through both Houses of Parliament. It will be subject to much debate, including by people such as the hon. Gentleman. However, I have said clearly that the Government will give guidance and work with stakeholders to make sure that they fully understand the provisions in this legislation and have time to prepare for them. That is what I said in my earlier remarks, so I think the hon. Gentleman is being a bit churlish in terms of that perspective, perhaps for political purposes. However, all the way through this legislation, we have been keen to strike a balance between what is right for consumers and right for businesses. That is a balance we intend to strike, because we fully recognise the needs of business as well as the needs of consumers.

Question put and agreed to.

Clause 248 accordingly ordered to stand part of the Bill.

Schedule 20 agreed to.

Clauses 249 to 253 ordered to stand part of the Bill.

Clause 254

Terms implied into contracts

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this, it will be convenient to discuss clause 255 stand part.

[Kevin Hollinrake]

Clause 254 sets out that a trader’s compliance with their main duties under this chapter is an implied term in every subscription contract. The clause is necessary as it gives the consumer access to legal remedies or defences to a claim by the trader where the trader has failed to comply with duties set out in this chapter.

Clause 255 gives consumers a right to cancel their contract if a trader fails to give the required key pre-contract information or reminder notices, or if their failure to provide an easy way of ending the contract means that a consumer remains trapped in their contract. Consumers who cancel their contract as a result of such breaches will be able to do so without penalty, and in prescribed circumstances may be entitled to a refund.

[Seema Malhotra]

Clause 254 sets out that the trader must comply with certain terms in every subscription contract they enter into, and various information is given about what is expected. We welcome the inclusion of clauses 254 and 255 in the Bill.

Question put and agreed to.

Clause 254 accordingly ordered to stand part of the Bill.

Clause 255 ordered to stand part of the Bill.

Clause 256

Right to cancel during cooling-off periods

[Giles Watling]

I beg to move amendment 113, in clause 256, page 170, line 22, leave out “any circumstances” and insert

“circumstances where the consumer has not yet made use of the goods or service provided under the contract”.

I had intended to withdraw this amendment, because I received assurances from the Minister that the Government will take this issue seriously. I tabled it because of concerns about the length of cooling-off periods. People can join a service, binge watch an entire series, resign, and then go back again and again. The Minister assured me about that, but I look forward to hearing his comments.

[Kevin Hollinrake]

I thank my hon. Friend for his amendment. He is absolutely right to draw attention to this issue.

The initial cooling-off period ensures that a consumer has 14 days to cancel after signing up if they change their mind or do not like the product. The renewal cooling-off period further strengthens consumers’ cancellation rights by giving them an additional 14-day window to cancel their contract later on in some circumstances.

My hon. Friend makes important points. Cancellation rights should be fair to businesses, of course. The aim of the measures in the Bill is to give consumers a window in which they can change their mind before taking on, or renewing, a contract for what can be a significant ongoing liability. We heard several examples of consumers who missed the end of their free trial by a short period, and were then committed to an expensive contract because they had not cancelled in time. However, my hon. Friend makes a good point because there are particular circumstances around the supply of digital streaming services that have to be taken into account to ensure the Bill is fair to businesses. We will engage with businesses, regulators and consumers to ensure that refund and return sales are fair and practical, and work across all sectors, including digital streaming. We intend to return to this issue in secondary legislation to ensure the provisions are fair to providers and the services they provide. I very much hope my hon. Friend feels able to withdraw his amendment. We will engage in further discussions in due course.

[Giles Watling]

I thank my hon. Friend for his reassuring comments. He says we will deal with this issue later when we come to secondary legislation, so I will not press the amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to consider clauses 257 to 259 stand part.

[Kevin Hollinrake]

Clauses 256 and 257 set out an initial cooling-off period, and, in some circumstances, a new renewal cooling-off period. They provide that the consumer can cancel any time after signing up until 14 days after receiving goods, or 14 days after the date of the contract for anything else, such as services or digital content. The renewal cooling off period will apply when a free or low-cost trial ends and the consumer becomes liable for payments or higher payments. It will also apply when a contract auto-renews to a new term of 12 months or longer.

Clause 258 requires traders to give consumers a cooling-off notice whenever a renewal cooling-off period applies. This information confirms that the contract has renewed and informs consumers of their right to cancel.

As I mentioned in relation to amendment 113, clause 259 creates a regulation-making power. The regulations may provide for conditions or restrictions on the exercise of a cancellation right. They will set out detailed rules on the consequences of cancellation for the consumer’s refund rights and any arrangements for goods to be returned to the trader.

Clause 259 also gives power for a cooling-off period to be extended in specified cases. The regulations will set clear expectations on traders and consumers, so that they know their respective rights and responsibilities when a consumer cancels their subscription contract. Government will work with a range of stakeholders in developing the regulations. Where we intend to make regulations containing rules extending a cooling-off period, we have committed in clause 259(5) to consult.

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[The Chair]

With this it will be convenient to discuss the following:

Clauses 261 and 262 stand part.

Amendment 128, in clause 263, page 175, line 40, leave out

“level 5 on the standard scale”

and insert—

“the statutory maximum;

(c) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine (or both).”

This amendment would make subscription traps offences “triable either way”, therefore bringing it in line with other similar offences in the Bill, for example for misleading actions.

Clause 263 stand part.

[Kevin Hollinrake]

The clause sets out that the trader commits an offence if they enter into an off-premises subscription contract and do not provide information about a consumer’s initial cooling-off cancellation right. Off-premises contracts mainly consist of contracts that are not concluded on the trader’s business premises and include situations such as doorstep selling.

In off-premises sales, the consumer is typically more vulnerable to poor trading practices. It is therefore necessary to make breach of this requirement an offence to act as an extra deterrent to rogue traders. That approach maintains consistency with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which stipulate that failure to provide required pre-contract information about cooling-off cancellation rights in the case of off-premises contracts is an offence.

Clause 261 provides a defence for a person charged with the offence set out in clause 260. That is to ensure that if an offence was committed due to the act or omission of a third party and without fault on the part of the person charged, they are not held criminally liable. The trader must prove that they exercised due diligence to avoid the offence being committed by themselves or another person under their control. Clause 262 sets out that an officer can be held criminally liable if an offence was committed by a company or other corporate body with the consent or connivance of that officer or due to their neglect. That is necessary to strengthen the deterrent effect of the offence and hold other responsible people accountable. Clause 263 sets out that traders who commit an offence contrary to clause 260(1) are liable to a fine.

Amendment 128 would allow traders to be prosecuted in both magistrates court and Crown court and increase potential penalties, including imprisonment, where traders do not inform consumers about their cancellation rights before entering off-premises subscription contracts. I appreciate that hon. Members wish to ensure that penalties are consistent with those elsewhere in the Bill. However, the penalties are designed to be consistent with those for failure to provide information about cancellation rights for off-premises contracts in the 2013 regulations, which currently govern all consumer contracts and will continue to govern other off-premises contracts. Consistency is important to ensure that breaches of equivalent rules are treated fairly and consistently, regardless of the type of contract. I therefore urge that the amendment be withdrawn.

[Seema Malhotra]

Clause 260 creates an offence where a trader fails to provide the relevant information on a consumer’s initial cooling-off cancellation rights before entering into an off-premises subscription contract. That contract is defined in subsection (5) and could include contracts concluded by door-to-door sellers or traders using temporary high street stands. It is a welcome clause and an important way of increasing consumer protection, ensuring that all kinds of subscription contracts and not just those entered into online are regulated under the chapter.

Clause 261 introduces a provision providing traders with a defence of due diligence to the offence laid out in clause 260. That defence enables the trader to prove that another person was responsible for the offence and that the trader took all steps to avoid committing the offence. While we recognise that it is important that traders have a right to a defence, I welcome the Minister’s assurances that this has been worked through and there is confidence that rogue traders will not be able to abuse that defence and argue their way out of criminal enforcement by claiming due diligence.

Clause 262 would establish direct liability for company officers for offences committed by the body corporate in circumstances where it is proven to have been committed with the consent or connivance of a company officer or neglect on their part. We welcome the clause.

Finally, clause 263 sets out how a person who commits an offence under clause 260 is liable on summary conviction to a fine. The Minister has outlined his response to that and it is helpful for me to briefly speak to amendment 128, tabled by myself and my hon. Friend the Member for Pontypridd. As is clear in the explanatory note, the amendment

“would make subscription traps offences ‘triable either way’, therefore bringing it in line with other similar offences in the Bill, for example for misleading actions.”

The Minister has outlined another way in which he sees that as being consistent with how penalties are applied.

We will not push the amendment to a vote. The most important thing is that there is consistency, and we will look again at what the Minister has said today.

[Kevin Hollinrake]

The hon. Lady asks me to address her point about the defence of due diligence. The defences listed in the clause are consistent with defences in other areas of the law, so we are comfortable that they strike the right balance.

Question put and agreed to.

Clause 260 accordingly ordered to stand part of the Bill.

Clauses 261 and 262 ordered to stand part of the Bill.

Clause 263 ordered to stand part of the Bill.

Clause 264

Information and notices: timing and burden of proof

[Kevin Hollinrake]

I beg to move amendment 79, in clause 264, page 176, line 31, after “period” insert “or date”.

This amendment corrects a drafting error.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clauses 265 to 271 stand part.

Government amendments 80 to 82.

Clauses 272 and 273 stand part.

[Kevin Hollinrake]

Clauses 264 to 273 set out how to determine when information or notices are deemed to have been given and where the burden of proof lies in any dispute. Clause 264 sets out how to determine whether a trader or consumer has taken action as required by this chapter, and who is responsible for proving that.

Government amendment 79 is a drafting amendment to ensure consistency across the affected subsection as to when a consumer is treated as having given notice of their desire to end or cancel their subscription contract. The amendment is important to ensure that the clause works as intended, and I hope Members agree that it necessary.

Clause 265 will ensure that any term in a subscription contract that conflicts with this chapter will have no legal effect. That includes any term that seeks to exclude or restrict a trader’s liability arising from the implied terms of this chapter. In cases specified in regulations under clause 269(1)(e), the clause will also prevent traders’ contract terms from allowing them to take a renewal payment before the day on which a subscription contract renews.

Clause 266 sets out that a consumer can seek legal remedies, other than those set out in the chapter, if a trader breaches a term of a subscription contract. They can claim those remedies, in addition to ones under this chapter, as long as they do not recover twice for the same loss.

Clause 267 ensures that the measures in the chapter will apply where a UK consumer and an overseas trader agree a contract governed by a foreign law if the contract has a close connection with the UK. Whether that is the case will depend on the circumstances, including whether the overseas-based trader targeted the consumer in the UK. That will ensure that traders cannot avoid providing UK consumers with the protections of this chapter simply by operating or structuring their operations overseas. The clause also makes it clear that the chapter applies only to new contracts and not to existing ones, reflecting the usual principle that new regulatory requirements should not operate retrospectively. Clause 268 sets out that this chapter applies to the Crown.

Clause 269 sets out the powers for the Secretary of State to make regulations in relation to a number of matters covered by this chapter, including regulations related to information and notices that traders must provide to consumers, arrangements traders must make to enable consumers to exit their contracts, and details regarding overpayments and refunds. Regulations may also restrict what notice period traders can require from consumers to end their contract. Most of the areas covered by this power involve matters of detail on which the Government will likely want to make different provision for different kinds of cases and contract models.

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[Seema Malhotra]

I welcome the speed with which we are moving through these clauses. Clause 264 specifies the timing and burden of proof for information and notices that are given under this chapter. For the electronic communication of notices or information, the clause makes it clear that delivery would be deemed instantaneous, even if the consumer does not receive the notice due to a reason beyond the trader’s control.

Subsection (6) specifies that in a dispute as to whether any information or notice has been given to the consumer, the burden of proof would be on the trader. We welcome that provision. However, under subsection (7), the burden of proof would be on the consumer in any dispute regarding whether a notice to end a contract or cancel it was sent to the trader, or with regard to the timing of that notice.

While the Opposition recognise the need for a balanced burden of proof, I draw the Minister’s attention to the written evidence submitted by consumer group Which?, which states in relation to subsection (7):

“We think this is unfair as it would create a disproportionate burden on consumers in situations where consumers cancel via means under the control of the trader. An example of this would be completing an online form, from the traders website, where no explicit confirmation has been given that the subscription has been cancelled.”

Can the Minister outline, for the benefit of the Committee, what will happen in such cases, where the consumer must cancel through a means that cannot be easily used or saved as evidence of cancellation? Does he not accept that in such circumstances, placing the burden of proof on the consumer is impractical, so there may need to be additional protections?

Amendment 79 corrects a drafting error, so we support it. Clause 265 introduces provisions such that any term in a contract contravening the regulations in this chapter has no legal effect. We welcome the clause ensuring that traders are unable to work their way around these regulations and therefore support its inclusion in the Bill.

Clause 266 clarifies that any rights the consumer may have under common law for breach of any term of a subscription contract are not limited by rights specified in this chapter. We welcome the clause ensuring that consumers are able to exercise both kinds of right in combination, providing ease for consumers.

Clause 267 introduces provisions regarding the application of this chapter. It sets out that if a trader were to choose the law of another country to govern a subscription contract but the contract has a close connection to the UK, chapter 2 would still apply. We welcome this common-sense clause, which enables the regime to be effectively enforced.

Under clause 268, the Crown would be bound by the provisions in chapter 2 but would not be criminally liable as a result. It would be helpful for the Minister to clarify what those circumstances might be, so that we can understand the provision more clearly.

Clause 269 grants the Secretary of State a delegated power to make regulations in relation to how and when information or a notice required to be given by traders to consumers under chapter 2 may or must be given, what information notices given under chapter 2 must contain, what arrangements a trader must make under clause 252 to enable consumers to end contracts, and when a consumer may exercise such a right, specifying the period in which a trader must refund an overpayment. While the Opposition recognise the need for this delegated power, it is not clear to us why these regulations are being left to secondary legislation and are not on the face of the Bill. I would be grateful if the Minister could clarify that and the reason for the regulations being subject to the negative procedure.

Clause 270 makes consequential amendments to the specified sections of the Consumer Rights Act 2015 and will ensure that information given to consumers as part of the pre-contract information required under chapter 2 is treated as a term of the contract. In effect, traders would not be able to make changes to the matters covered by this pre-contract information without the agreement of the consumer. We welcome that provision.

Clause 271 makes further consequential amendments to other legislation, and we support it. Clause 272 sets out general interpretations for this chapter, including definitions of “business”, “consumer”, “goods”, “trader” and “working day”. We support the clause and welcome its inclusion. Amendments 80 to 82 have the effect of expanding the definition of “durable medium” for the purposes of this chapter. We support these amendments. Clause 273 provides an index of defined expressions in the clause. It is self-explanatory, and we support it.

[Kevin Hollinrake]

The shadow Minister makes some fair points. In terms of the requirement for the consumer to prove cancellation, as she no doubt recognises, clause 6 contains obligations on the trader as well, to ensure that there is a burden of proof on them as to whether the information notice had been given by the trader to the consumer.

Clause 253 requires the trader to send an acknowledgment to the consumer that they received the notice to end the contract. We also address this in business and consumer guidance. This approach to burden of proof and the trader’s duty to confirm receipt of cancellation via their website is in line with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. Businesses and consumer advice bodies are familiar with those regulations, and traders should be used to complying with them.

There is no policy justification for emanations and servants of the Crown not to be bound by this chapter if they are entering a contract with consumers of the kind regulated by this chapter.

We will certainly work with businesses, regulators and consumer groups in developing the regulations under these chapters to ensure they are fair and proportionate, and to make sure that the arrangements for things like how traders issue reminder notices work for both parties.

Amendment 79 agreed to.

Clause 264, as amended, ordered to stand part of the Bill.

Clauses 265 to 271 ordered to stand part of the Bill.

Clause 272

Interpretation

Amendments made: 80, in clause 272, page 180, line 35, leave out “pre-contract”.

This is a drafting amendment to expand the definition of “durable medium”.

Amendment 81, in clause 272, page 181, line 1, leave out “pre-contract”.

This is a drafting amendment to expand the definition of “durable medium”.

Amendment 82, in clause 272, page 181, line 4, leave out “pre-contract”.—(Kevin Hollinrake.)

This is a drafting amendment to expand the definition of “durable medium”.

Clause 272, as amended, ordered to stand part of the Bill.

Clause 273 ordered to stand part of the Bill.

Clause 274

Meaning of “consumer savings scheme contract”

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 275 and 276 stand part.

That schedule 21 be the Twenty-first schedule to the Bill.

Clauses 277 to 282 stand part.

New clause 7—Regulation of consumer savings schemes—

“(1) The Secretary of State must by regulations establish a system under which the Financial Conduct Authority has responsibility for regulating consumer savings scheme contracts.

(2) Regulations under this section—

(a) must be made within six months of this Act being passed, and

(b) are subject to the affirmative procedure.

(3) In this section, a ‘consumer savings scheme contract’ has the meaning given in section 274.”.

This new clause would make the FCA, rather than local authorities, responsible for regulating consumer savings scheme contracts.

[Kevin Hollinrake]

Part 4, chapter 3 of the Bill introduces requirements that businesses operating consumer savings schemes such as Christmas savings clubs adequately protect consumers. Clause 274 defines consumer savings scheme contracts for the purposes of the Bill as including contracts that seek to incentivise members not to withdraw their money until a certain time.

Clause 275 sets out definitions. Clause 276 gives the Secretary of State the power to amend schedule 21 to exclude contracts or arrangements in specific sectors. That will ensure businesses are not subject to dual regulation and safeguards them from overburdensome or potentially contradictory regulations.

Schedule 21 provides a specific set of exclusions from the regulations for certain arrangements, including for small businesses with low-value schemes.

Clause 277 sets out that consumer savings schemes must be underpinned by arrangements covering the cost of refunding consumer payments in the event of the trader’s insolvency. It allows traders to choose trust arrangements or insurance. This is the heart of the regulations. Users of consumer savings schemes make payments in good faith expecting to be able to redeem their money at the end of the savings period, and these provisions will protect consumer payments and maintain confidence in the sector.

Clause 278 specifies the baseline requirements for traders choosing the insurance option. They include a requirement that it must be sufficient to return all moneys saved by scheme users not redeemed at the time of insolvency.

Clause 279 specifies minimum requirements for traders protecting payments via trust arrangements. Those requirements cover the protection of consumer moneys and also permitted uses of funds, ensuring they can only be used to supply the goods and services consumers signed up for.

Clause 280 places traders under a legal duty to convey certain information to a consumer about the protection mechanism used. That is necessary to ensure consumers can check their money is protected as required and know what to do if they need to reclaim it.

Clause 281 adds this part of the Bill to the Regulatory Enforcement and Sanctions Act 2008, which means that businesses with primary authority partnerships will be able to receive tailored advice, helping reduce the costs of compliance without reducing regulatory protections. Clause 282 defines certain terms in this part of the Bill.

--- Later in debate ---

[Seema Malhotra]

Clause 274 introduces the definition of a “consumer savings scheme contact” for the purposes of this chapter. Specifically, the clause defines it as a contract under which the consumer makes payments to a trader,

“the trader credits those payments to an account that is held by the trader for the consumer…and the payments credited to the consumer’s account provide a fund for the consumer to redeem as goods, services or digital content”.

The definition forms part of new provisions introduced by this chapter which are important for protecting consumers who use consumer savings schemes, and we welcome this. Clause 275 defines other terms used in this chapter—and in clause 274—and we welcome the further clarity this brings.

Clause 276 introduces schedule 21, which sets out arrangements that are excluded from the scope of a consumer savings scheme contract. It includes regulated financial services activities, arrangements for the supply of utilities, a contract between a consumer and a trader where the trader’s turnover is less than £1 million per year, childcare voucher schemes, and package holidays .

We welcome that exclusions might be necessary in cases where it is impractical for these regulations to apply. However, I would welcome some further clarification on paragraph 3 of the schedule to set out how contracts offered by small businesses are exempt. Is that in relation to wanting to have the right balance between smaller businesses and consumers? We obviously want to ensure that the consumer is as protected as possible in these contracts, so I would be grateful for a response from the Minister on that.

Clause 277—“insolvency protection requirement”—introduces provisions regarding the event of a trader’s insolvency and covering the costs of returning to the consumer any protected payments at the time of the insolvency. We do welcome that, and it is important in the context of record levels of insolvencies. It is a particularly unstable period, and it is important for consumers to have protections.

Clause 278 sets out what is understood to be an “appropriate policy” in the instance of a trader complying with the provisions in clause 277 by taking out an insurance policy. Under the Bill, an appropriate policy is one in which consumers are insured with cover for the refunding of prepayments held in the consumer’s account that have not been redeemed at the time of insolvency. The insurer must also be authorised by UK authorities. We welcome this clause, though I ask the Minister to expand on subsection (3), which requires the trader to

“meet the costs of arranging and maintaining an appropriate policy”

and explicitly inhibits traders passing that cost on to consumers.

I would be grateful for two things. First, will the Minister explain how we can be confident that the trader will not find a way to pass on this additional cost to the consumer? Secondly, will the Minister confirm how quickly, in the event of insolvency, consumers can expect to have their prepayment refunded? It would be helpful if he could clarify that. Does he feel that provision is tight enough in the Bill?

Clause 279 applies in circumstances where a trader complies with the insolvency protection requirements in clause 277 by using a trust arrangement. It sets out how it must ensure consumer prepayments are held in a trust located in the UK. The consumer’s prepayments must also be held in a trust until either the funds have been redeemed or the payments have been returned to the consumer. Similarly to clause 278, the Opposition welcome this clause as providing greater protections under consumer savings schemes in circumstances where the trader becomes insolvent.

I refer the Minister to subsection (7), which requires the cost of administering the trust to be paid for by the trader. Again, how will the Minister be able to safeguard against the trader passing this additional cost on to the consumer?

Clause 280 sets out the information requirements attached to this chapter. Specifically, it sets out that, within 30 working days of the consumer’s first payment into the savings scheme, the trader must provide:

“the name, address, telephone number and email address of the insurer or trustees responsible for protecting the consumer’s payments;

where insurance arrangements are in place, the policy number for the policy under which the consumer’s payments are protected;

where trust arrangements are in place, a copy of the trust deed under which the consumer’s payments are held.”

It is a welcome provision, but will the Minister expand on the 30-day time period? On what basis does the Minister believe that the trader would need 30 days to put these arrangements in place? Would these arrangements not happen automatically as soon as the consumer enters the scheme? That is an important question for ensuring that the consumer is informed of their protections.

Clause 281 would add chapter 3 of part 4 of the Bill to the list of enactments in schedule 3 of the Regulatory Enforcement and Sanctions Act 2008. We welcome the clause.

Clause 282 introduces definitions for the purposes of this chapter. Similarly, we welcome the clause in providing the transparency, consistency and clarity needed.

[Kevin Hollinrake]

The hon. Member for Bermondsey and Old Southwark thinks that trading standards is not the right body; the Government think that it is, and that position—of it not being the Financial Conduct Authority—is supported by the Law Commission. These are clearly not financial products. They are not defined as such in the relevant legislation.

Trading standards already has a business relationship with supermarkets. There is already a Primary Authority Supermarkets Group in the trading standards network; it therefore seems logical, given that supermarkets will probably be offering these kinds of services, that this should be handled by trading standards.

[Neil Coyle]

Why does the Minister think that the Chartered Trading Standards Institute does not want this responsibility?

[Kevin Hollinrake]

That is not the feedback that I have heard. I am very happy to see the information that the hon. Member has in front of him and to try to meet those concerns of the trading standards body. Trading standards is the most relevant body in our view; the hon. Gentleman may take a different view, and he is entitled to do so.

The shadow Minister mentioned small businesses. The small businesses that are excluded are those with an annual turnover of less than £1 million and collect less than an average of £10 a month from customers, so we do not see those as having the same potential detriment as with other, larger organisations.

As for traders passing on the costs of the insurance or the trust, they are clearly prohibited from doing so in this legislation. There is a requirement, as the hon. Lady will have seen, for the accounts of a relevant trader to be audited every three years; we would expect those checks to take place at that point to ensure that it was being done appropriately.

On payments being made, clearly that will be a case for either the insolvency practitioner or the insurance company, but we would expect that fees held in trust would be rapidly returned to people who were due to have their money returned. On the shadow Minister’s point about 30 days, well, it is

“before the end of 30…days”,

so the information may well be provided, as she would desire, much more quickly than that.

Question put and agreed to.

Clause 274 accordingly ordered to stand part of the Bill.

Clauses 275 and 276 ordered to stand part of the Bill.

Schedule 21 agreed to.

Clauses 277 to 282 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Mike Wood.)