Digital Economy Bill

Lord Ashton of Hyde Excerpts

1st reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 31st January 2017 Lords Chamber

[Lord Inglewood (Con)]

My Lords, I join those who have spoken in support of these amendments. Like some other noble Lords, some weeks I come up from the country to your Lordships’ House. The shortcomings of the infrastructure in rural Cumbria, where I live, is far too frequently a topic of conversation.

As a number of noble Lords have said, connectivity is the crucial aspect here, because it is now part of the essential infrastructure of contemporary life. It is important that we look at this issue from the perspective of what people need, but the reality is that what we need today may not be what we need tomorrow. We have to try to bridge the gap between the digital haves and the digital have-nots, and we achieve that by looking at the issue in the way that I have just described. Therefore, I am not approaching this matter from a kind of nerdy, technical perspective. What matters is the result as much as the means by which you get there.

Over the years, there has been a lot of debate about whether a universal service obligation should be in our law and be statutorily enforceable. I had the good fortune to chair the Communications Committee, and a number of years ago, when we conducted an inquiry into broadband, we debated this issue at length. On that occasion we reached the conclusion that what mattered was the rollout and that it was quite conceivable that a USO would get in the way. With the benefit of hindsight, that was probably a mistake, and therefore it is interesting to see the provisions for such a legal obligation coming into our legislation.

However, at the end of the day I come back to where I started with all this, and it is why I will be interested to hear what the Minister has to say. It is not the detail but the result that matters here. We have got to move into a world where the digital divide is bridged. This is particularly important for areas in the country, and I speak from that perspective, but it is also true for a number of urban areas. We seriously deny people access to a whole range of commercial, and other, aspects of contemporary life if there is not adequate connectivity. As a number of your Lordships have said, we live in a country that is adopting a different approach to industry. It is crucial to appreciate that the key to increasing wealth creation in areas outside the south-east of England—which I think everyone agrees is desirable—is improving connectivity. That is the way, as noble Lords have said, to improve the potential of SMEs outside the south-east.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I am glad that we are at last able to start this very important Committee. I should immediately declare an interest, which is that I suffer at my home in the country from extremely bad broadband, although we are lucky enough to be able to use microwave technology to do something about this. In addition, last night when I tried to ring my wife from central London on my mobile telephone to complain how overworked I was, I was unable to get a signal. So, I can absolutely sympathise with my noble friends Lord Arbuthnot and Lord Inglewood; I recognise the problems, particularly for rural areas and SMEs, and the Government agree with quite a lot of what has been said in terms of aspirations. I think we will differ when we come to decide how the USO should be used to fulfil those aspirations, and exactly what its role is.

The Government have a clear digital agenda, and our ambition is for world-class digital connectivity. We are determined to ensure that the UK has the digital infrastructure that our businesses and citizens need both now and in the future. The Green Paper published on 23 January makes digital infrastructure a central pillar of the Government’s proposed industrial strategy and identifies good digital infrastructure as a driver of growth.

We support the spirit of Amendment 1, requiring that the universal service order should define a gigabit-speed broadband universal service obligation—or USO—delivered via full fibre to the premises. We differ in that we do not think that the broadband USO is the right tool to use at this stage in the development of the UK’s digital infrastructure market. To pick up on the point of the noble Lord, Lord Aberdare, the rationale for a USO is to prevent social and economic exclusion. It does this by ensuring that where the market does not deliver, a minimum set of communication services are made available, on request, to everyone, no matter where they live or work. In doing so, it takes account of the prevailing technologies enjoyed by the majority of people: the USO follows the market, it does not drive market change. The UK’s fibre market is at an early stage of development—currently only 2% of UK premises have full-fibre connection—so I do not think we have reached the stage where there is a case for introducing a gigabit-speed USO. It is not a prevailing technology used by the majority and it is not needed to prevent social and economic exclusion.

We do, however, agree that more extensive fibre connectivity is crucially important to the UK’s future digital growth. We are planning now for the networks that are going to be needed to ensure continued economic growth and development across the UK in both urban and rural areas. In the Autumn Statement we announced more than £1 billion to support digital infrastructure, targeted at supporting the rollout of full-fibre connections and future 5G communications. The Government are consulting on how we might further encourage full-fibre rollout.

Amendment 2, in the name of the noble Lord, Lord Fox, proposes a superfast broadband specification for the USO. This specification is, as the noble Lord said, in line with scenario 3 of Ofcom’s USO technical advice, which the Government commissioned to help inform the design of the USO. All the scenarios set out in Ofcom’s report are being given careful consideration. Once that work has been completed there will be a public consultation on the design of the USO and the specifications that will be included in the universal service order, including the minimum speed.

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[Baroness Byford]

My Lords, as someone who is not as well versed as some noble Lords with the technology, it always strikes me as strange that if you go abroad, wherever you are, you seem to be able to get access. What do they do that we do not? Are there lessons that we should be learning? Do they have a different system? How does it actually work? It seems ludicrous that we are going into such nitty-gritty when perhaps, over there, there is something that we are not even opening our minds to.

[Lord Ashton of Hyde]

My Lords, I am grateful for the contributions in this interesting and important debate. Amendment 6, in the name of the noble Lord, Lord Stevenson, seeks to include mobile coverage within the scope of the guidance on the broadband universal service obligation. The universal service directive currently provides the regulatory framework for a broadband USO and although, depending on the design of a broadband USO, there is scope for the USO connection to be provided using mobile technology such as 4G, the directive does not apply to mobile coverage.

I am afraid we do not currently consider there is a case for a USO for mobile. The Government have already secured significant progress to ensure mobile coverage across the whole of the UK through the licence obligations arising from the December 2014 agreement with the mobile network operators, which locked in £5 billion of investment to support the rollout plans. We want to hold the mobile operators’ feet to the fire, and noble Lords will be aware that Clause 10 will give the regulator, Ofcom, the power to issue hefty fines to mobile phone companies that fail to meet their licence obligations. The noble Lord, Lord Gordon, mentioned that it does not help if you are not getting a full mobile service, but it is a direct incentive, as is compensation. We are trying to achieve what he wants.

Amendment 19, in the name of the noble Lord, Lord Mendelsohn, seeks a licence variation to require roaming within networks where there is an intermittent or no signal, while Amendment 17 in the name of the noble Lord, Lord Gordon of Strathblane, would offer roaming as automatic compensation. I understand the frustrations of people whose mobile experience does not live up to their expectations, but although roaming appears to offer a quick fix, it would do more harm than good, undermining the incentive for operators to invest in new infrastructure. This is particularly important for areas that have no coverage from any provider at all, as there is no incentive to invest capital in a new mast if other operators simply piggy-back off your investment.

Noble Lords mentioned coverage in other countries— my noble friend Lady Byford mentioned travel abroad. The reason for that is there are international roaming agreements, which apply to a UK citizen travelling in Europe. However, it is offered on a fair-use basis, when tourists travel for a limited period of time. Details of a fair-use test to prevent abuse of roaming are being agreed in the EU at the moment.

Roaming was considered by the Government in 2014, but was rejected in favour of licence obligations to drive increased coverage by all mobile operators, which locked in the £5 billion investment I mentioned earlier. We are making progress: Ofcom’s Connected Nations 2016 report, which records progress to June 2016, shows that 99% of UK premises now have indoor voice coverage and 98% have indoor 3G or 4G data coverage. Our recent reforms to mobile planning laws in England, and the proposed reforms of the Electronic Communications Code which we will be talking about later, will support further investment and improvements in connectivity across the UK and reduce coverage not-spots. We are working to make it easier and cheaper for mobile companies to invest so that consumers benefit from good coverage and can receive it at low prices. Our measures are achieving this, and our future reforms will support this further, thereby delivering a better deal for consumers across the UK.

Noble Lords will also be aware of our commitment to being world leaders in 5G, as the noble Lord, Lord Gordon, suggested. That is why we announced over £1 billion of funding in the Autumn Statement to support the deployment of the next generation of digital infrastructure. We want to support investment, and not discourage it. The noble Lord, Lord Maxton, talked about his desire to see no masts at all and for the system to be based on satellites. I am not an expert on the technical side of this, but I think I am right in saying that for 5G, which is what we are aiming for, we are going to see more masts, I am afraid, or more transmitters attached to various edifices—we will talk about that later, I am sure—because they have shorter range and greater bandwidth. So I am afraid I do not think the bandwidth that is possible from satellites will enable what we have all talked about and what is required for the future.

[Lord Fox]

I am grateful that the Minister has brought up the matter of smaller and more populous transmissions for 5G, because one of the issues that he could consider when implementing this is to limit the amount of new ducting and work that needs to be done on our streets and in our towns. To enforce, or expect, the sharing of ducting across our towns—which is not necessarily forthcoming—would help us with that. Perhaps the Minister will consider that.

[Lord Ashton of Hyde]

An amendment on that issue may be considered later today. That, however, will be a little taster for later. I have, therefore, come to the end of my explanations and I hope that, with those reassuring words, the noble Lord will withdraw the amendment for the moment.

[Lord Stevenson of Balmacara]

That is not at all the impression the noble Lord has given. Again, we have seen a lack of ambition to solve some of the long-standing problems. The noble Baroness, Lady Byford, was right to draw attention to what happens when you go abroad: you get a completely different experience—you are regularly connected to a service that you have become used to and there are no questions about which mast to point at. Wherever you are you will get service. Why we cannot get that here, I do not understand.

On this issue, however, we will always come up against the fact that if we are to get a 5G service across the whole of the United Kingdom the current system will not work. The directive may provide convenient help in propping up the Government’s arguments at the moment but that will not be available in a couple of years’ time when 5G begins to roll out seriously. We will come back to this issue. If we are to get to more than 92% coverage—the sort of ambition in the Government’s own paper, Connected Future—we cannot stick with the current model, which clearly does not work. In the meantime, I beg leave to withdraw the amendment.

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[Lord Mendelsohn]

My Lords, I express our support for the amendment so ably produced by the noble Lord, Lord Fox. It is entirely consistent with Amendment 21, to which we shall come in the next group, and it provides a useful window on performance. In considering what the full report should look at, I just suggest that it would be useful if it considered upload speeds, outages and user experience. We talk far too often about what speeds are delivered to the home and not enough about the user experience; it would be very useful to include that in such a report.

[Lord Ashton of Hyde]

My Lords, Amendment 8 also relates to reviewing the delivery of broadband policy. We have spent some time discussing broadband policy and I do not wish to repeat myself by setting out the Government’s digital agenda again. We do not disagree with the urgency, and the noble Lord is right to mention it.

The amendment would require Ofcom to produce an annual report on progress in implementing the universal service obligation. We should remind ourselves that that is the point of this part. The amendment lists a number of areas that the report should cover, not all of which relate to the broadband USO. As noted previously, I agree that it will be crucial to monitor progress of this important consumer measure, but I think that it is reasonable that the reporting requirements should be decided once the design of the USO has been finalised, not before. This will be done following the consultation on the detailed design of the USO.

Some of the areas listed are already reported on by Ofcom. For example Ofcom’s Connected Nations report, which is published annually, already provides details of superfast broadband coverage and take-up, including the percentage of premises nationally connected via fibre. The length of time taken to repair lines is also monitored and reported on by Ofcom under its market review process. Ofcom also conducts mystery shopping exercises to check compliance with the broadband speed code of practice. Under Ofcom’s voluntary code of practice on broadband speeds, broadband providers agree to give clear information on broadband speeds to consumers when they consider or buy a home broadband service and provide redress when speed performance is low. Earlier, I mentioned the Advertising Standards Authority’s review.

The noble Lord, Lord Foster, mentioned take-up, as he did on Second Reading. We agree that that is an important issue. It is interesting that Ofcom’s report assumes an 80% take-up, which we will have to think about. We agree that it is important for the per-unit cost to reduce as it is rolled out. This will be one thing we can take into consideration in the consultation. He also mentioned the broadband voucher scheme. As I said earlier, the full fibre rollout consultation included the option of a further full fibre business voucher scheme alongside other options. We will publish the findings of the consultation and the next steps alongside the findings of the business broadband review.

Therefore, although we sympathise with the spirit of the amendment, we do not think it is the correct thing to do at the moment, before the decisions have been made, and I hope that the noble Lord will feel able to withdraw it.

[Lord Fox]

I must confess to being disappointed. The idea that because the service provider publishes some information to consumers, the point of the amendment is addressed, misses the point. Whatever else we have in our broadband service provision, it is not a free and fair market. It does not work as a market. The whole point that we are debating is that, if we were going to build this from scratch, we would not start from where we are now. I think it was the noble Lord, Lord Mendelsohn, who mentioned market correction. This is designed to enable us to maintain market correction of something that is not a market. We have deliberately created something that is completely agnostic as to what the universal service obligation should end up being, and it would be strengthened by the suggestions of the noble Lord, Lord Mendelsohn. I ask the Minister, in quiet reflection afterwards, to think again, but in the meantime, I beg leave to withdraw the amendment.

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[Lord Ashton of Hyde]

I am grateful to all noble Lords who have contributed. Amendment 12 would introduce a new clause to require that the rollout of the broadband USO be delivered on a fair and competitive basis. Under the EU universal service directive, the USO is delivered by one or more designated universal service providers. Designation of the provider or providers is a matter for Ofcom under Section 66 of the Communications Act 2003. The Act enables Ofcom to set out the procedure for designation in regulations, and Section 66(7) requires that this procedure must be efficient, objective and transparent, and not involve or give rise to undue discrimination against any person. Existing legislation therefore already provides for a fair and open process for the designation of a universal service provider, which meets the concerns of this amendment.

As noble Lords may be aware, in April last year Ofcom published a call for inputs, seeking views from industry and consumers on the design of the broadband USO. The majority of respondents shared Ofcom’s preference for a transparent and competitive designation process for the universal service provider. At the same time, however, few industry stakeholders expressed a desire to be designated as the provider of the broadband USO. In light of this, Ofcom’s USO technical advice, published on 16 December, explained that it considered that a more restricted process, whereby all providers are considered and an appropriate provider chosen, subject to a consultation process, was more likely than a competitive process which was unlikely to bring forward any interested providers. It also indicated that the most efficient outcome may be for BT and KCOM to be designated as universal service providers. This will be a matter for Ofcom to consider fully, once decisions are made on the detailed design of the broadband USO. I should, however, stress that the universal service provider is only able to recover from a USO fund in respect of an unfair net cost burden, as calculated by Ofcom, so the method of designation has no bearing on whether the designated provider is incentivised to deliver the USO in the most efficient way.

Amendment 13 would require the designated universal service providers to roll out in rural areas before deploying their networks in urban ones. I do not think this would be appropriate. There are, I know, more rural consumers struggling with slow broadband speeds, but I do not think that the needs of urban consumers are any different from those of rural ones in the same position. As such, they should be treated the same. The USO is being introduced specifically to target those areas where commercial providers have not provided, and are unlikely to provide, connectivity, be they rural or urban areas, and to confront social exclusion wherever it is located.

The noble Lord, Lord Mendelsohn, talked about the role of smaller suppliers in the BDUK superfast programme. Of course, smaller suppliers can successfully deliver infrastructure into communities in the hardest-to-reach parts of the UK. There are now 11 smaller suppliers contracted to deliver superfast broadband projects through BDUK’s programme. The noble Lord also asked why we do not introduce an outside-in rollout, like Germany. We agree that has been very successful but unfortunately it is not comparable to what is proposed under the USO. In Germany there is no USO, but a publicly funded rollout programme. It worked by giving the commercial sector the opportunity to roll out in more commercially viable urban areas. The USO is intended to target areas that are not commercially viable.

Amendment 20—I pay tribute to the noble Lord, Lord Mendelsohn, for his measured remarks about BT, which is a bit of a whipping boy here—would give the Secretary of State a power to direct Ofcom to begin the process of legally separating the Openreach division of BT. We do not think this power is necessary, since on 29 November last year Ofcom announced its intention to do that very thing, as the noble Lord, Lord Fox, mentioned. In answer to the question from my noble friend Lord Arbuthnot, I am afraid I do not know the details about the way it has been operating. I will check that and get back to him in writing. According to Ofcom, the only thing that can stop the process is if BT agrees a voluntary arrangement that meets all of the regulator’s requirements.

Furthermore, through its comprehensive digital communications review, which reported in February 2016, Ofcom examined closely the whole of the UK telecommunications market. It concluded that changes to the governance of Openreach could benefit competition and consumers, and consulted last summer on the form that these changes should take. Last November it announced its decision that legal separation was the way to go. Therefore, Ofcom has already carried out most of the actions set out in paragraph (2) of this amendment. If the Secretary of State were to use the power granted by this amendment to direct Ofcom in the manner described, the result would be repetition and delay due to the requirements of the clause.

Because Ofcom is an independent regulator—I can say to my noble friend Lady Byford that it is Ofcom that holds it to account—the Government do not wish to take a power to direct how it should carry out its duties. However, I can assure noble Lords that the Government are listening to Ofcom in case there is anything we can legitimately do to ensure that the changes the regulator has proposed can be carried out expeditiously. I will leave that there for the time being.

Amendment 21 would require local authorities to take steps to ensure that alternative suppliers are in place to meet the requirements of the broadband USO where they identify areas which do not receive this. It would also give local authorities the option of publishing data on broadband speeds in their area and the extent to which the broadband USO is being met.

If I have understood the intention, the first part of this new clause seems unnecessary, as the process for designating the universal service provider is intended to ensure that no operator would be excluded from being designated. It would be for operators themselves, either on a national or regional basis, to put themselves forward to be considered for designation by Ofcom. This is not something that local authorities would have a role in. If, on the other hand, the intention of the new clause is that local authorities should take a role in procuring alternative suppliers to deliver broadband to the same standard required by the USO, this would fall outside the USO measures in the Bill. Local authorities can, of course, carry out procurements to provide areas with superfast broadband through the UK’s national broadband scheme, and areas covered in this way will not need intervention under the USO.

The second part of the new clause is also unnecessary as local authorities already have the option to publish data about broadband speeds in their area without the need for this legislative provision. They would, in any case, rely on Ofcom data. Ofcom has extensive data-gathering powers and reports to the Government on the availability, take-up and use of broadband in its annual Connected Nations reports. The reports include data at local authority level. In future, once the USO has been introduced, the Connected Nations report will also provide a means of reporting on the broadband USO and whether it is effectively meeting the needs of consumers and businesses. Given those explanations, I hope the noble Lord will withdraw his amendment.

[Lord Mendelsohn]

I thank the Minister for his very full answer in relation to Amendment 12, but it was to a completely different question from the one I had posed, which was about having an objective, efficient and transparent process in establishing providers. His answer concerned delivering on obligations. He should take from the Committee the important message that there is great concern about the nature of the competitive market.

Turning to Amendment 13 and the outside-in approach taken in Germany, I was under the impression that, given the amount of money we have put behind this, we have a similar publicly funded rollout programme. Germany has gone for a different approach—its USO occurs later in the process—and will meet a much higher standard over time. This is one of our big competitive pressures in Europe. Such an approach still has merit because it is the one occasion when you can get the private sector to factor in reasonable infrastructure spend, which it is not doing at the moment.

I thank the Minister for saying that I have been fair-minded concerning Openreach. However, I am sorely tempted to lose that tag. He made the crucial point that if there is a voluntary agreement to meet the requirement, it can stave it off. As he will have seen in the extensive commentary on this issue over the past two weeks, there is great concern that that is exactly its intention and it will delay the process. That is why we have suggested that much swifter action be taken.

I confess that with Amendment 21, we shoehorned in something completely different that does not and cannot really fit within the USO. However, it does provide for effective support for the local and regional economies. We should look at this issue. This is a broader policy arrangement to try to solve some of the problems that we are running headlong into, because the structure of the market just will not service them in the long term and will not maintain our competitiveness. Frankly, when Chattanooga is choo-chooing along at such an incredible pace and we are falling behind, something needs to be done, and that is a bigger policy. I beg leave to withdraw the amendment.

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[Lord Ashton of Hyde]

My Lords, this is an important part of the Bill. The Electronic Communications Code is the regulatory framework underpinning agreements between site providers and electronic communications operators that wish to install and maintain digital communications infrastructure. The existing code was introduced in 1984 and has been subject to persistent criticism. It is widely perceived as unclear and outdated. The reforms before noble Lords today are the result of extensive research, consultation and collaboration with a diverse range of stakeholders and other government departments. This has included review by the Law Commission in 2012, followed by full government consultation in 2015, as well as the commissioning of independent economic research. We believe the reforms will ensure that communications operators are able to deliver the coverage and connectivity that UK consumers need.

Without making a Second Reading speech, I think we should bear in mind when considering the amendments and the Electronic Communications Code the views expressed in previous debates. Noble Lords have roundly condemned the speed and availability of mobile communications. We do want to reduce costs but we do not want to tear up existing arrangements. That is why they are prospective. It is important to say, as the noble Lord, Lord Aberdare, mentioned, that we expect most of the contracts to be consensual.

Amendment 23 seeks to introduce a statutory obligation on mobile network operators to invest any savings in improving geographical coverage. The reformed code introduces an essential package of reforms that will give rise to significant savings for industry. Our impact assessment estimates that the industry stands to save around £1 billion over a 20-year period. The Government agree that if reforms are to have real impact, savings must be invested in expanding network infrastructure. Mobile network operators have already made commitments to improve coverage and connectivity. These include the 2014 joint agreement to provide voice and text coverage across 90% of the UK’s geographical area by 2017. There is also a wide-scale industry rollout of 4G technology, led by Telefonica’s licence obligation to deliver to 98% of indoor premises 4G coverage by the end of 2017. This will amount to investment of close to £5 billion in UK infrastructure. However, that is just the beginning. We are confident that the revised code creates the right market incentives to secure real investment in digital communications infrastructure. As such, regulatory intervention to direct industry savings is not necessary.

Amendment 24 seeks to expand the category of persons who can be designated by Ofcom as a code operator under Section 106 of the Communications Act 2003. The amendment would allow a new category of specified persons to use the code to compulsorily acquire land and then offer it back to the market for digital communications use. The code’s purpose is to confer code rights on operators to install apparatus on land. A person whose purpose is only to acquire land to provide to other operators is, in effect, a statutory middleman and an unnecessary addition to the code. We believe that the amendment could reduce the availability of land in the market.

Amendment 25, in the name of my noble friend Lady Byford, seeks to remove the code right to obstruct or interfere with access to land. Naturally, when rolling out or maintaining physical infrastructure, it is sometimes necessary to temporarily interfere with access to land. However, the code makes it clear that an operator cannot obstruct access to land unless the occupier of that land agrees to it or the court so orders. This is a fundamental right to protect landowners’ rights of access, long established in the current code. Its retention was recommended by the Law Commission. To confirm, the previous code provided for a right to obstruct access to the site provider’s land, but not to obstruct other land without the written agreement of the occupier of the other land. The revised code continues this provision, but as with the rest of the revised code, more clearly sets out the code rights applicable to code operators.

My noble friend spoke to Amendments 39 and 40. I do not regard them as frivolous. Clearly a £250,000 combine, which is the sort of thing that will be driving around now, is not frivolous. Her amendments deal with the right to install overhead lines. The right to install overhead lines is subject to paragraph 74(3) of the code, which stipulates that the right to fly overhead lines will not apply if it,

“interferes with the carrying on of any business carried on on that land”.

As such, the Government consider that the code provides sufficient protection for landowners who may be affected by overhead lines, and therefore these amendments are not necessary. In answer to my noble friend’s question, the Law Commission’s consultation considered whether any changes were necessary, and it concluded that they were not. The Government have not received any evidence to suggest that they are.

I hope that in light of these explanations and reassurances, the noble Lord will withdraw his amendment.

[Lord Grantchester]

I thank the Minister for his reply. I am well aware of the areas he spoke to in terms of the objectives in the code. However, I am somewhat sceptical that the MNOs have a real case that costs are prohibitive. That has been the draconian whip behind a lot of the code’s provisions. I am even more sceptical that these cost savings will be spent on improvements to the geographical coverage of the rural and more remote areas of the UK. However, we understand what the Minister said.

On Amendment 24, it is somewhat puzzling that the Minister mentioned middlemen in the system. I understand that they are already present in the system in that they have often bought sites from rural landowners, to give them an up-front payment, in order to receive rents when they lease them out to the telecommunications industry. The middlemen in the system have real concerns. They provide a service to the mobile networks in some of their activities congregating sites so that they can introduce an agreed package rather than dealing with each site individually. We will look at the overall thrust of the Minister’s reply on that and, more pertinently, on the big group which is to come because it will all knit together in a more comprehensive package by the time we have finished our deliberations.

[Lord Ashton of Hyde]

It may be helpful if I say that these are fairly technical amendments, particularly those in the next very big group. It may help the noble Lord if we agree to allow him to think about some of my answers. He can read what I have said, and we can possibly meet before Report to discuss some of the technical aspects of things so that he does not feel it necessary to go through every single scintilla of difference in the Chamber.

[Lord Grantchester]

I beg leave to withdraw the amendment.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

2nd reading (Hansard): House of Lords
Tuesday 13th December 2016 Lords Chamber

Moved by

[Lord Ashton of Hyde]

That the Bill be read a second time.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, this Bill addresses a variety of areas where legislation needs to be updated for the digital age. It will ensure that the public are empowered to take full economic and social advantage of digital services. It will make the internet safer and enable the Government to harness digital platforms to make public services cheaper and better.

We are one of the leading digital economies in the world; however, our ambitions are not complete. In the recent Autumn Statement, the Chancellor of the Exchequer announced significant further infrastructure investment, including replacing copper networks with fibre. The Bill is a further statement of the Government’s ambition. It will help consumers to connect, provide them with skills training, protect children from online dangers, tackle nuisance calls and support the UK’s leading financial technology sector and other digital businesses.

More than 91% of premises can now receive a superfast broadband connection of at least 24 megabits per second. We are on track to reach 95% by the end of 2017. For the remaining few, we are working with industry to find the best possible options and have been trialling alternative technologies and approaches.

Part 1 of the Bill provides the broadband universal service obligation as a safety net, offering a minimum standard on which to develop improved connections for everyone. The minimum speed set will be enough for today’s needs but will be kept under review as our needs change.

Setting the right regulatory framework is only the first step to engaging consumers. We all need information about services that we can trust, allowing us easily to compare products. The Bill will enable Ofcom to deliver this, and there will be simpler and swifter service-provider switching. If things go wrong, consumers will automatically receive compensation for a failure to meet minimum standards for communications services. That will empower the consumer, increase competition and boost commerce.

Meeting this new demand for improved and better digital services requires a step-up in infrastructure. Part 2 delivers reforms to the Electronic Communications Code and spectrum regulation so that the best systems will be in place to create, distribute and monitor digital infrastructure across the country. Delivering the coverage and connectivity that UK consumers expect will depend upon a complex array of hardware, stretching across the country. Networks of masts, cables, wires, servers, routers and exchanges make electronic communications possible. The Electronic Communications Code must strike the right balance, not only between the interests of landowners and network operators but taking into account the wider benefits for the UK from having world-leading digital communications services. Following extensive consultation, the code has been updated to improve that balance and allow greater investment in infrastructure across the country.

Along with physical apparatus, the digital communications sector relies on radio spectrum for many wireless services, such as mobile phones and television. As an essential asset, it is vital that it is effectively managed and regulated. In a world where the number of digital devices requiring use of spectrum is increasing—now 4G, next 5G—we must ensure that not only is the best use made of what is a limited resource but that companies which hinder this process are duly brought to account. The Bill provides new tools for the smooth and reliable management of spectrum.

We take many protections that the state provides in the physical world for granted. The online world is another matter. We will defend freedom of expression on the internet but—as in the physical world—there must be certain boundaries and protections.

Following public consultation, Part 3 will require pornographic websites to have robust age-verification controls in place, with the British Board of Film Classification as the age-verification regulator. The BBFC will also regulate online pornographic material, using the same standards used to classify pornography distributed offline. The focus is on age verification, not the personal identification of adults, and means that children will be protected.

This was a Conservative Party manifesto commitment, and children’s charities have also identified that it is a real issue. NSPCC has been campaigning for action, having seen the consequences of a lack of regulation on children’s emotional and physical well-being. The Children’s Charities’ Coalition on Internet Safety said:

“Whilst it is true that most of the commercial pornography publishers acknowledge their sites are not meant for minors and say minors are not welcome on them, in practice they have done little or nothing to inhibit access by minors and it seems clear to us that they won’t unless and until they are compelled to do so by law or are otherwise highly incentivised. The Government’s approach effectively does both”.

This part of the Bill has received much scrutiny and interest in the other place and from the public. We have now included the power to require internet service providers to block websites that do not comply with the age-verification standards stipulated by the BBFC.

Internet service providers work with the Government in a number of ways, and we are pleased to see this good relationship continue in relation to the protection of children. The Government have received assurances from websites accounting for 70% of users that they will not only comply with the regulations but support them, which is encouraging and reassuring.

The legislation gives the regulator the necessary tools to deal with non-compliant providers. As part of that, we want pornographic sites to become compliant when faced with powers such as blocking. We are driving cultural change in the sector and demonstrating that we will not look the other way, but instead do everything we can to protect children.

Part 4 will bring parity between the online and offline worlds of copyright infringement. The maximum penalty for online copyright infringement is currently two years in prison. This will now be harmonised with the existing maximum sentence for copyright infringement at 10 years. This change follows extensive public consultation, and the Government remain committed to achieving the right balance between a well-functioning market and effective remedies for protecting intellectual property rights. We are also updating our copyright laws to reflect the fact that cable television is now a mainstream service, delivering a vast array of content beyond the public service channels.

The Bill is not just about encouraging consumers and businesses to grasp the digital age. It is equally about the digital transformation of government. This includes the delivery of better services thanks to more effective data sharing between public authorities. There will be many future benefits from the measures in the Bill. Some immediate ones include the potential to help an additional 750,000 fuel-poor households; making public authorities better informed when pursuing debts owed to the public sector—for example, in respect of individuals’ circumstances and ability to pay—and preventing post being sent to the families of deceased individuals.

The protection of data and transparency of its use lie at the heart of Part 5. The data-sharing powers may be used only for specific purposes. Unlawful disclosure of personal information received under the powers will be a criminal offence. Data sharing must be compliant with the Data Protection Act 1998 and the codes of practice accompanying the data-sharing powers must be consistent with the Information Commissioner’s statutory code of practice on data sharing.

Part 6 also contains provisions to make sure that our regulatory system is fit for purpose in the digital world. The Bill will ensure that Ofcom has the right powers for the effective regulation of harmful content on internet-provided television and radio broadcasts. This is to keep up to date with changing facilities and technologies used for broadcasting while ensuring the protection of the public. The Bill also improves the efficiency of the Ofcom appeals process so that it can keep pace with the rapid development of digital communications technology. We welcome the support of Citizens Advice, Three, TalkTalk and Which? for these reforms.

Part 6 makes changes to legislation to reflect the outcome of discussions with the BBC about changes to arrangements for free TV licences for those aged 75 and over. Although this has been much debated in this House, the BBC sought responsibility for this concession as part of its funding deal with the Government. Furthermore, the BBC has a history of handling licence fee-related issues sensitively and effectively. The latest BBC charter and framework agreement outlines Ofcom’s new role as the BBC’s regulator. Ofcom will monitor and review how well the BBC is meeting its mission and public purposes, regulate editorial standards, hold the BBC to account over market impacts and public value, and consider appeals. Ofcom needs to be able to carry out its new functions effectively. They include enforcing requests for information from third parties needed by Ofcom in regulating the BBC. Being able to access information about the market, and the market impact of BBC activities, will be absolutely crucial for Ofcom to do its job.

Another important provision relates to regulatory changes that will allow non-bank payment firms to have direct access to payment systems. This will be a fillip for our world-leading fintech ecosystem, and is another example of the Bill being focused on consumers. Part 6 additionally reflects the Government’s belief that digital skills are now as important as numeracy and literacy. In certain circumstances, digital skills qualifications will be free of charge to people aged 19 and over who do not already have a relevant qualification. This will mirror the approach taken for literacy and numeracy training. More than 10 million adults in England lack the basic digital skills needed to function effectively in today’s society, so this will open doors to many where they were previously tightly shut.

The Government have expressed an intention to table further amendments shortly. These additional clauses will include the delivery of a government manifesto commitment to assist public libraries in embracing the digital age by working with them to ensure remote access to e-books, without charge and with appropriate compensation for authors that enhances the public lending right scheme. There will also be an amendment to enshrine a legal requirement for subtitles, signing and audio description to be available for on-demand services. We will also bring forward an amendment to clarify that ISPs can continue to offer family-friendly filters, which give parents the power to protect their children from inappropriate material.

The digital landscape changes rapidly and profoundly. It is vital that our legislation is kept up to date. This is a big and wide-ranging Bill. Its aim is bold: to bring major change to the UK’s digital economy in infrastructure, consumer rights and opportunities, regulation, skills, safety, innovation, and intellectual property. The prize is great, and this country can be not merely a world leader in digital, but the world leader. I beg to move.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, the fact that this is a wide-ranging Bill is not surprising when you consider how the digital economy is transforming the world before us, and it has certainly been a wide-ranging debate. I thank all noble Lords for their contributions today, particularly those who have come to see me in the past week to discuss the legislation. Before the noble Lord, Lord Stevenson, asks me, as he usually does, I will of course write to those whom I fail to answer this evening, and there will be many of them, because I think there have been hundreds of questions.

Starting with the universal service obligation, broadband and connectivity, I think that there is clearly a strong consensus in the House that we need faster broadband and better mobile phone signals, especially in the less well-served rural parts of the country. The Government agree, and we have been working to achieve it. Only 8% of premises in the country have access to broadband at speeds of less than 24 megabits per second, and that number is likely to halve by the end of the year. The broadband USO provided by the Bill will be a safety net, should anyone need it, by 2020. I was grateful for the support of my noble friends Lord Baker and Lord Holmes and the noble Lords, Lord Gordon, Lord Whitty and Lord Young, for the broadband USO.

Many Peers, including the noble Lord, Lord Fox, my noble friend Lord Holmes, the noble Lords, Lord Mitchell and Lord Clement-Jones, and the noble Baroness, Lady Jones, queried whether a 10 megabits per second USO is sufficiently ambitious. It will be Ofcom that recommends the speed and provides the technical advice on upload, download, latency, and so on. The Government believe that 10 megabits per second should be the minimum speed but have ambition for more—so we agree there—as we complete the superfast delivery programme.

The Bill provides powers to review and to increase the speed. In fact, 10 megabits per second is adequate for most households and allows high-definition video streaming as well as simultaneous video calling and web browsing, according to the Ofcom Connected Nations report and the digital communications review in 2016. We have ambitions for the future, but we think that it is adequate for the safety net—and, speaking personally, I can tell you that, if you had 1.5 or 2 megabits per second broadband and you were given 10 megabits, you would think that it was a tremendous difference.

[Lord Young of Norwood Green]

But that is if you are given a true 10 megabits per second, is it not? The complaint so often is that you are told that that is what the speed is going to be, but they fail to deliver—so that is the important thing. It is delivery that counts.

[Lord Ashton of Hyde]

Yes, I quite agree—that is why I mentioned that Ofcom will provide technical details and advise on latency, upload, download and average speeds. The consultation paper is, I think, coming out at any minute.

The noble Baronesses, Lady Janke and Lady Byford, and the noble Lord, Lord Clement-Jones, asked whether there should be a social tariff in addition to the USO. Ofcom is reporting on possible approaches for a USO; the report will include consideration of measures to take account of those for whom affordability is an issue.

The Electronic Communications Code and infrastructure and apparatus and things like that were mentioned by the noble Lords, Lord Foster, Lord Aberdare, Lord Gordon and Lord Clement-Jones. In the interests of time, I am going to duck the interesting discussions of when a water tower is a communications mast and when it is apparatus. We will deal with those things a lot in Committee.

The noble Earl, Lord Lytton, was concerned about the new land valuation model in the ECC. We have consulted widely on this and employed experts to allow government to strike the right balance between landowner rights and the need for better digital communications. We expect the parties to negotiate a fair outcome. The code valuation applies only when parties cannot agree terms.

The noble Lord, Lord Foster, asked whether there should be a public record for when rights are granted over land under the ECC. The Law Commission considered this as part of its review of the code; the Government consulted on the issues subsequently and concluded that code operators should not be required to register their rights. This maintains the position under the existing code, but prospective buyers will be able to ascertain what code rights might apply to land by inspecting the land and making appropriate inquiries before the contract.

Several noble Lords, including the noble Lords, Lord Aberdare, Lord Clement-Jones, and others, talked about the change in the appeals mechanism for Ofcom. I have spent many happy hours in your Lordships’ House talking about the extent of judicial review and its applicability. We think that there is a wide consensus that reform is needed, and the Government believe that judicial review is the right remedy. Direct comparisons to other regulated sectors are helpful but, for example, where one sector has a full “on the merits” appeal, there is another example showing the opposite. This is because every regulatory regime is quite different from the next. Communications is currently the most litigated sector, and it is holding up reforms and investment and delaying consumer benefits. That is why we are forced to act—but I accept that we will probably spend some time on this issue in Committee.

Another thing that we might talk about, which was mentioned by the noble Lords, Lord Fox, Lord Mitchell and Lord Clement-Jones, was the position of Openreach. A number of noble Lords suggested that the way in which to reach a competitive and effective market in telecommunications is through the structural separation of Openreach from BT Group. Ofcom is the independent regulator for the sector and there is a process available for it to pursue structural separation, should it consider that necessary. We have made it clear that Ofcom should take whatever action it considers necessary and that structural separation remains an option.

Several noble Lords mentioned digital exclusion and digital skills. The Bill provides for free training for adults in basic digital skills, which was mentioned by many noble Lords. We have set up the Council for Digital Inclusion, which brings together leaders from business, charities and government to come up with innovative ways to help get everyone online. Some people cannot use online services independently. The Government Digital Service works with services to ensure that those people get the support that they need. More than £9.5 million has been spent by the DfE and the NHS since October 2014 to support almost 750,000 people to gain basic digital skills. The DfE will be investing a further £1.5 million in the remainder of this year to support 100,000 more.

My noble friend Lord Baker made an interesting speech, echoed to a certain extent by the noble Lord, Lord Puttnam, about the digital revolution, skills and employment. The noble Baroness, Lady Kidron, and the noble Lord, Lord Aberdare, mentioned this as well. We are establishing 15 routes to a technical education post-16, including engineering and manufacturing, digital health and construction. Students will be able to learn through an employment-based route—apprenticeships—or a college-based one that will ensure they can progress into employment or further study. For pre-16s, we will continue to equip schools to embed a knowledge-based curriculum as the cornerstone of an excellent academically rigorous education. We will continue to embed reforms to assessment and qualifications, including more robust and rigorous GCSEs, and the ambition that at least 90% of pupils in mainstream education enter GCSEs in maths and science. In 2016, 62,100 pupils entered for a computer science qualification, up from 33,500 in 2015.

Many noble Lords—the right reverend Prelate the Bishop of Chester, the noble Baronesses, Lady Howe, Lady Kidron and Lady Benjamin, the noble Lords, Lord Stevenson, Lord Storey, Lord Gordon, Lord Whitty and Lord Morrow, the noble Earl, Lord Erroll, and there may have been others—talked about and approved of the age-verification regime, at least to a certain extent. The Bill delivers on the manifesto commitment but there is always more to do and we think that is possible. I look forward to debating this in Committee. The noble Lord, Lord Stevenson, asked what oversight there will be of the BBFC to ensure that these powers are used responsibly. We are pleased that we are working with the BBFC; it has a strong track record as an independent regulator. We recognise that age verification brings challenges and we must provide the regulator with the framework to succeed. We are already working closely with it to implement this ambitious policy and it is not the case that the Government’s role will then be finalised. The Bill provides for the designation of funding of the regulator by the Secretary of State, who must be satisfied, for instance, that arrangements for appeals are being maintained. In the case of blocking, the regulator must inform the Secretary of State whenever it intends to notify an ISP.

The right reverend Prelate, the noble Baronesses, Lady Kidron and Lady Benjamin, and the noble Earl, Lord Erroll, asked a valid question about social media and Twitter. The Government believe that services, including Twitter, can be classified by regulators as ancillary service providers where they are enabling or facilitating the making available of pornographic or prohibited material. This means that they could be notified of commercial pornographers to whom they provide a service but this will not apply to material provided on a non-commercial basis.

The noble Baroness, Lady Howe, asked some very detailed questions about net neutrality and family filters which I am not going to answer today. First, I will read carefully what she said and will certainly write to her. We believe that family filters that can be turned off are permitted under EU regulation. To support providers, and for the avoidance of doubt, we will amend the Bill to confirm that providers may offer such filters. This will ensure that the current successful self-regulatory approach to family filters can continue.

ISPs are best placed to know what their customers want and we do not intend to lay down mandatory rules for family-filter provision. The current approach works well, engaging parents to think about online safety, but applying filters where parents do not engage. As far as public wi-fi is concerned, we believe that filters on many types of public wi-fi are likely to be compliant with EU regulation. Coffee shops, hotels and restaurants, for example, where the end-user is the proprietor, can turn filters on and off. I am afraid that noble Lords may not be surprised to hear that we do not think it is right to share legal advice on these matters.

There will be a lot of discussion on prohibited material in Committee. It is a complicated area. Free speech is vital but we must protect children from harm online as well as offline. We must do more to ensure that children cannot easily access sexual content which will distress them or harm their development, as has been mentioned. We do not allow children to buy pornographic material offline, and this material would not be classified for hard-copy distribution. The BBFC has a well-understood harm test and would not classify material that, for example, depicts non-consensual violent abuse against women, and it may not classify material which is in breach of the Obscene Publications Act, as clarified in guidance by the CPS. Prohibited material has always been within the regulatory framework of this Bill. We consider that having a lesser regime for prohibited material than lawful material would be unsustainable and undermine the age-verification regime. As I say, I am sure we will come back to this in Committee.

An important point was made with regard to sexual content and the need to look at sex education. We have taken steps to raise awareness of the risk to young people of exposure to harmful content online. E-safety is now covered at all key stages in the new computing curriculum, which was taught for the first time in September 2014. The Government agree that we need to look again at the case for further action on personal, social, health and economic education and sex education provision as a matter of priority, with particular consideration being given to improving quality and accessibility. We are carefully considering the request to update existing sex and relationship guidance.

Many have asked for the intellectual property reforms in the Bill for many years. We need to ensure that valuable assets are protected. My noble friend Lady Neville-Rolfe has been working hard to ensure that that is the case. I am grateful to my noble friend Lord Grade, the noble Lords, Lord Storey and Lord Macdonald, and my noble friend Lady Wilcox, who supported the Section 73 appeal. My noble friend Lady Wilcox asked what else we are doing to protect IP rights online. The Government’s strategy for IP enforcement published earlier this year, Protecting Creativity, Supporting Innovation: IP Enforcement 2020, outlines the breadth of activity the Government are taking to tackle IP infringement of all types online.

As regards the remuneration issue from the abolition of Section 73, the Government are not seeking to set any retransmission fee arrangements. These will be negotiated in the context of the existing “must offer/must carry” regulatory framework. This will mean there is likely to be some, albeit limited, value extracted in any future negotiations between public service broadcasters and Virgin Media. Coming to the—

[Lord Foster of Bath]

I am grateful to the Minister for giving way as it is late but this is a very important issue. I would be grateful for greater clarification of the Government’s position, bearing in mind that it was only in July of this year that, in responding to the balance of payments consultation, the Government said:

“Government therefore expects that there will continue to be no net payments between all platform operators and the PSBs”.

Has the Government’s position now changed?

[Lord Ashton of Hyde]

We think it should be left to the market to decide that. My noble friend Lord Grade and the noble Lords, Lord Foster, Lord Storey and Lord Macdonald, and probably others talked about the length of the transitional arrangements, and basically said that we should get on with it. The Intellectual Property Office has recently consulted on this, as is right and proper. The Government are considering the responses received and we will state our intentions on how this reform will be implemented shortly.

The noble Baroness, Lady Janke, asked about counterfeit electrical goods. The Government have committed in their recent IP enforcement strategy to develop a methodology for assessing the availability of and harm caused by counterfeits, which will of course include counterfeit electrical goods. Government officials regularly meet with major online retailers to help reduce the availability of counterfeits on their platforms and to help co-ordinate efforts with law enforcement to take action against sellers. In addition, as required by EU law, most online platforms already have routes to allow suspected IP-infringing content to be reported and promptly removed.

Data sharing is an important part of the Bill. The noble Baroness, Lady Janke, and the noble Lord, Lord Clement-Jones, expressed concern about bulk data sharing. Under the powers, data sharing must comply with the Data Protection Act. Information can be shared only for the specific purposes set out in the Bill, and only the minimum data required to achieve these purposes will be shared—a point reinforced in our draft codes of practice.

The noble Baroness, Lady Kidron, asked whether data would be shared without consent. Where possible, consent will be sought, but this is not always possible. These new powers are to allow government to reach out and help. We have given examples of reaching out to the fuel poor and to the vulnerable so that help and support can be offered rather than sought. These people may not have consented to data sharing, but that is partly because we often never know when we might need to help in future. We will, where appropriate, conduct privacy assessments and publish them, and we will always protect personal data under the Data Protection Act.

Several noble Lords raised the question of health data. As noble Lords appreciate, health data are of great value to research, as they address multiple complex issues that affect individuals, households and other purposes. However, great sensitivities are involved in how this is handled, which is why we are excluding the use of health and adult social care data from our powers until the recommendations of the National Data Guardian’s review have been implemented and public confidence in the way the health and care system uses confidential personal data can be demonstrated. I should mention that the Government support Jo Churchill MP’s Bill on the National Data Guardian, which has its Second Reading on Friday.

The BBC is an important part of the Bill and we have debated this as part of official business 18 times since last June—and I suspect we may do so again. When we scrutinised the new charter on 12 October, there was a consensus that enormous progress had been made. The charter has now been approved by Her Majesty the Queen and will soon be in force. The noble Lords, Lord Lester and Lord Stevenson, the noble Baroness, Lady Kidron, and the noble Viscount, Lord Colville, talked about the budget deal last year. This was part of a negotiation with the BBC that is complete. The BBC said only two weeks ago that,

“the overall funding settlement reached with the government provides the financial stability for a strong creative BBC”.

The BBC is clear that reopening the settlement would just create uncertainty and potentially leave it worse off.

With regard to the future process, let me be clear. The charter, for the first time, sets the timing for the BBC’s future financial settlements at once every five years. The charter also requires the BBC to provide data ahead of each licence fee settlement. The BBC will be able to use this to make its case, and the Government of the day will be able to consider that.

The noble Lords, Lord Lester and Lord Foster, mentioned the National Citizen Service charter. I agree that that was a royal charter and that it had a Bill, but we think that is different. I could go into the reasons, but undoubtedly we will talk about that in Committee, so I will not do so at this time.

[Lord Lester of Herne Hill]

I am very grateful to the Minister as the hour is late. I am sure he appreciates that I made it clear that I did not favour undoing the deal that had already been done. However, I am looking to the future. Will he be able to address in some form, before Committee, the reasons why the Government reject any statutory underpinning—if that is their position?

[Lord Ashton of Hyde]

That is their position and I certainly will do that. If that point was not in a specific question, I will certainly endeavour to address it. I expected the noble Lord to raise that point because he warned me during the debate on the BBC that it would be coming.

We are reaching the end of our time and there are still a few things that I could talk about. I will have to write to noble Lords about extending EPG prominence and about subtitles on on-demand and audio-visual services, which we are intending to bring in. A lot of noble Lords asked about ticket bots. We agree that there is a problem and that the Government should fix it. A series of round tables has been held at enforcement agencies and with the sector. The Government will give full consideration to what was said at those round tables, in Parliament and in the Waterson report on ticket bots and harvesting tickets.

I think that we have run out of time. I thank noble Lords for all their constructive and interesting comments on the Bill and I look forward to further discussions. It is clear that the Bill is complex but, despite all the seasonal jokes about its Christmas-tree appearance, I hope that your Lordships can take inspiration from Antony Gormley’s tree at the Connaught, which has not a single bauble upon it.

The Digital Economy Bill will support investment in digital infrastructure and support consumers and businesses in taking advantage of the opportunities of the digital economy. It will also enable the digital transformation of government. I commend the Bill to the House and ask your Lordships to give it a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Tuesday 31st January 2017 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, I have been a Member of your Lordships’ House for just 14 months, so I am relatively new. That probably explains my confusion as to what exactly happened to the previous string of amendments. I look forward to the Minister’s response to them, even though they appear to have been withdrawn at a later stage—but I am sure it is all very simple.

Another surprise is that I never thought I would hear a debate in which a spokesman on the Front Bench, in this case the noble Lord, Lord Grantchester, would appear to be singing the tune of the Country Landowners’ Association. I say openly to the Minister that, on these Benches, we are broadly supportive of the new Electronic Communications Code. The noble Lord, Lord Grantchester, is absolutely right to ask a number of questions about some of the details of it, and concerns have been raised about some aspects by a number of organisations. However, we believe it is vital that the new code is brought in quickly, because we want to see an expansion of the infrastructure that will enable us to deliver the increased connectivity that this country desperately needs.

I do not want to go through all the amendments in this group in the way that the noble Lord, Lord Grantchester, did. We look forward to the Minister going through them—and the previous ones—in a few minutes. However, I want to pick up one amendment. It is probably the one that has most surprised me—the lead amendment in this group, Amendment 26. The noble Lord, Lord Grantchester, acknowledged that this was a probing amendment. But, at the same time, he made it fairly clear that he was quite supportive of what was contained within it.

On these Benches, we believe that independent wireless infrastructure providers have benefited this country enormously by investing in the development of alternative structures—water towers, pylons and so on—to make them some of the most productive telecommunications facilities in the country and improve connectivity, not least in rural areas. Our real concern about Amendment 26 is that, if accepted, it could alter investment planning by independent infrastructure providers in a way that would curtail much of the development we want to see.

I believe the issue raised in Amendment 26 was adequately addressed in a letter that the Minister sent to many of us some time ago. For the benefit of Members who do not have the letter in front of them, he said:

“Code rights can only be obtained to install apparatus on, under or over land. Where operators have invested significantly in the physical apparatus that underpins coverage they should be able to achieve appropriate commercial returns. Alternative structures that have been adapted for the purpose of delivering network coverage are essential to connectivity and there will be cases where code rights do not apply”.


He said that questions had been asked,

“about whether code rights apply to various structures such as church steeples and water towers”—

and so on. But he goes on to make it very clear when he states:

“Whether a water tower has been adapted to the extent to which it can be considered to be electronic communications apparatus will depend on the specific circumstances of the adaptation … We have established a clear and robust legal framework within which parties can resolve matters by agreement and if necessary apply to courts to resolve any disagreements”.


That is very clear—we want to protect these sorts of developments because we do not want to attack the investment that we hope will be made in the future.

That position is exactly the same as the one taken by the Labour Party Front Bench when this issue was debated in another place. Louise Haigh said:

“We would also like to explore what consideration has been given to how we can ensure that independently-owned infrastructure can have a significant role in the sector and, if possible, make up a larger proportion of our infrastructure in line with the global market. The much-discussed difficulties of the broadband roll-out highlight the issues when infrastructure is owned by a private monopoly. We should seek to break up this market as much as possible. For that to happen, investment incentives for independent infrastructure need to be maintained”.—[Official Report, Commons, Digital Economy Bill Committee, 20/10/16; col. 165.]


I entirely agree with the Front Bench of the Labour Party in another place on this issue—but I confess that I am concerned and confused by the Labour Party Front Bench in this House. I look forward to hearing where the Minister stands on this.

Perhaps I may give the Minister notice that, having said that we are very supportive, on the next group of amendments we may have a slight disagreement—but we will have that debate a little later this evening.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, perhaps I can clear up one thing for the noble Lord. I have not been in this House much longer than he has but I was in the Whips’ Office for two years and I have a vague understanding of what is going on. The noble Lord, Lord Foster, obviously missed my thrilling answer on the last group but I responded to it and the House resumed before the Deputy Chairman called the amendment. Therefore, the amendments in that group were dealt with and we resumed the Committee stage of the Bill with the Front Bench withdrawing their amendment. That got us back to where we should be, which is with this group. Therefore, I think that everything is in order.

Amendment 26 seeks to alter the definition of electronic communications apparatus. I too was rather surprised by some of the things that the noble Lord, Lord Grantchester, said. I shall try to explain where we are on this subject, although I think that the noble Lord, Lord Foster, made my case for me. This is a fairly interesting proposal. I will take a look at what the noble Lord, Lord Grantchester, said in the cold light of day and we will obviously have discussions about it if necessary. I accept that he has made a long case, but I cannot answer it in complete detail today.

We have had many meetings with noble Lords on this subject and we have discussed whether various edifices such as water towers are apparatus. The Government are clear that the code should not interfere with incentives to invest in infrastructure. The reformed code makes a clear distinction between land and apparatus, and an operator cannot exercise code rights against another’s infrastructure. A building used solely for enclosing apparatus is appropriately defined as apparatus. This might include a small brick-built cabin that was part of a site. Permitting operators to secure compulsory access to such a building could encourage one operator to exploit another’s existing investments, and this would naturally create disincentives for future investments in digital communications infrastructure. Here, I agree with the noble Lord, Lord Foster.

Equally, a range of structures are adapted for use in providing a digital communications network. Whether a structure has been adapted so as to make the entire structure “apparatus”—rather than only part or none of it—is a question of fact and degree, having regard to what the parties have agreed, the nature of the installation and the extent of the adaption, as outlined in my letter. These are fact-sensitive questions that should be the proper subject of agreements and, if necessary, determination by the courts or tribunals. As such, I do not consider the amendment to be appropriate or necessary.

Amendment 29 seeks to do two things. It would ensure, first, that the assignor remains liable to the landowner and, secondly, that the assignee does not have the benefit of the assignment unless the landowner is given notice of it. We want to ensure flexibility for operators and continuity of service for consumers when companies go through mergers or restructuring. This amendment would frustrate that objective, which was based on the Law Commission’s recommendation that code agreements can be freely assigned. Further, the additional protection the amendment seeks to give the landowner is unnecessary: if no notice of assignment is given, the current drafting means that both the assignor and the assignee are liable to the landowner under the terms of the agreement, which is a substantial protection.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, I start with the noble Lord’s test of which of the two should be registered. The answer is none because we do not think we should have registration of these rights. However, I accept that there are many issues about the Law Commission, which I will investigate and come back to him because I do not have all the answers at the moment. I am not by that guaranteeing that we will accept the amendment but I accept that he has made some points that deserve a closer look before Report.

The amendment proposes to include a requirement for code agreements to be notified to the Land Registry. The noble Lord will not be surprised to know that we have not changed our opinion on this. We held a consultation on the code in February 2015 and one of the issues consulted on was land registration. We concluded then that code rights should not be subject to a requirement that they are registered. This reflects the position under the existing code, which the noble Lord mentioned, which has worked effectively since 1984 and avoids creating unnecessary administrative burden.

When buying land it is usual to inspect the physical property and to make inquiries before contract to establish what burdens may be on the land that are not registered rights. These include standard checks by purchasers and conveyancers which should identify whether there are any existing code rights over the property, in the same way that when a property is bought in other circumstances the onus is on the seller to inform, and that becomes part of the contract.

However, as I have said, I accept that the noble Lord has made extra points about the Law Commission and so, on the basis that I will look at those before Report, I hope he will be able to withdraw his amendment.

[Lord Foster of Bath]

I am grateful to the Minister for his helpful reply that he will look at the matter further. With that assurance, I beg leave to withdraw the amendment.

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

37: Schedule 1, page 113, line 15, leave out “or 59(8)”

--- Later in debate ---

[Lord Grantchester]

My Lords, I will move Amendment 44 and my noble friend Lord Stevenson will speak to Amendments 47 and 48. Paragraph 103 requires Ofcom to ensure the preparation of a code of practice as to behaviour regarding information in negotiations and operations under this schedule. Ofcom, new to this level of detail in this sector, has commenced that process and a working party is well advanced in drafting. It is clear that the Government set considerable store by the potential of these codes of practice to lubricate the operation of the statutory Electronic Communications Code in practice. By setting out expectations on behaviour and conduct, the codes of practice are intended to address concerns that many stakeholders expressed about the imbalance of power between operators, which are usually very large corporations, and those with an interest in the site on which the apparatus is sited, who may be individuals, small businesses or local authorities.

I am reminded of the Groceries Code Adjudicator, where the Government were resistant to introducing the power to fine transgressions, believing that reputational damage was enough. I am pleased to reflect that the Government reconsidered and, in that piece of legislation, allowed supermarkets to be fined for unfair practices.

There is also a parallel in the water industry. Written in the early 1900s, its guidance is still relevant and practical today. It is very largely ignored in practice, meaning that much work results in damage to property and business. The problems arise in part because of the strength of the water companies’ statutory powers and in part because the work is increasingly carried out by contractors and sub-contractors who are either not aware of the code of practice or whose contracts do not make reference to it. Breaches of the code of practice can only be taken to Ofwat, which will occasionally uphold a complaint and issue a minor financial penalty. In practice, few complaints are made to Ofwat, and as a result, it is not seen to be worth the effort involved.

I am concerned here that we draw lessons from both these codes as we try to decide how the Electronic Communications Code can operate effectively. In the communications industry, consumers already have the benefit of a referral to one or two ombudsman schemes if telecommunication companies do not deal with their complaints, but there is no parallel scheme in place for those whose land or buildings might be used or abused by telecommunications operators and their contractors.

With the model of the Groceries Code Adjudicator in mind from a sector with similar imbalances of power, our first proposed paragraph would provide for an adjudicator to hear complaints about breaches of the code of practice, with powers to make awards for restitution or penalties. Such a forum—especially if it is, as suggested, independent and accountable to the Secretary of State—would give all the more confidence that the code might be remembered so that it can, as intended, support better behaviour.

The second proposed paragraph would make compliance with the code a material consideration when awarding licences to a code operator or determining the grant or renewal of a code agreement. I suggest that the harder it is for these issues to be referred to independent resolution, the worse the operators will tend to behave. This perspective should also apply in this sector. I beg to move.

[Lord Ashton of Hyde]

My Lords, we are now in our final group on the Electronic Communications Code, so I will spare noble Lords further explanation of what the code seeks to achieve. Amendment 44 is similar to Amendment 41, which we recently discussed. It seeks to create a code adjudicator to examine breaches of the code of practice and impose sanctions. I repeat that I will examine what the noble Lord, Lord Grantchester, said. However, we do not consider that a costly and resource-intensive statutory code of practice and adjudicator are necessary, for the reasons that I outlined on the last but one group.

Amendments 47 and 48 relate to points made by—

[Lord Stevenson of Balmacara]

The Committee may have picked up that my noble friend was at pains to say that he was speaking only to Amendment 44 and that I would give a brief introduction to Amendment 47. I can almost anticipate what the Minister will say but I will still do that.

[Lord Ashton of Hyde]

Would you like to do that now, before I reply?

[Lord Stevenson of Balmacara]

The Clerk of the Parliaments has said that is all right, so obviously it is—he is the boss.

I will probably say what the Minister was about to say: that Amendments 47 and 48 are drawn from the reports of the Constitution Committee and the Delegated Powers and Regulatory Reform Committee. Both committees stated that they took a dim view of the way in which the powers expressed in Clause 6, on page 4, suggest that it would be possible for Ministers to make and pass secondary legislation that has not even been discussed with the Ministers of the devolved Assemblies and Parliaments. I would be grateful to hear what the Minister intends to do about that.

[Lord Ashton of Hyde]

My Lords, it was worth hearing what the noble Lord, Lord Stevenson, said before I replied to it—although he may not agree by the end. As he mentioned, these amendments relate to points made by the DPRRC and Constitution Committee reports. I will take this appropriate opportunity to thank the members of those committees. We will be responding in full shortly, before Report.

Any amendments to devolved legislation would be related to telecommunications legislation, which is a reserved area of competence. As a matter of good practice, officials would consult with the devolved Administrations if we intended to make changes to devolved legislation. This commitment to the principle of good communication is referenced in the memorandum of understanding between the UK Government and the devolved Administrations. We will of course provide a fuller response once we have completed consideration of the DPRRC and Constitution Committee reports.

As this is the final group on the Electronic Communications Code, I will take this opportunity to assure noble Lords that there will be further opportunities for interested parties to shape the way that the new code is implemented. As I have already mentioned, Ofcom will hold a full public consultation on the code of practice that it is developing. Industry representatives have also agreed to work with DCMS to develop an industry code of practice, covering matters such as best working practices. So I hope that in the light of this, the noble Lord will be able to withdraw his amendment tonight.

--- Later in debate ---

[Lord Stevenson of Balmacara]

I am sorry that we did not have the benefit of the contribution of the noble Baroness, Lady Byford. However, we have three amendments in this group. I will move Amendment 50 and speak to Amendments 51 and 52. These are small amendments that need not detain us long. They were drawn to our attention in correspondence with the Scottish Law Commission, which keeps a beady eye on your Lordships’ work. It has been a useful source of information and helpful advice on many matters, including these. It picks up relatively straightforward, rather minor but none the less important points.

This section of the Bill, on page 6 line 5, does not specify whether representations are to be oral or written. Amendments 50 and 51 suggest inserting the word “written”. Amendment 52 would ensure that the notices issued by Ofcom contain specifications about any right of appeal. At the moment there is silence on that. Clause 8 inserts a new section into the Wireless Telegraphy Act 2006 but it does not say how appeals should be made. It should do. I beg to move.

[Lord Ashton of Hyde]

My Lords, these amendments relate to Clause 8, which enables Ofcom to register dynamic spectrum access service providers. Amendments 50 and 51 require representations to Ofcom about, for example, a possible breach of a registration condition to be made in writing. We do not want to constrain people from making representations in other suitable ways. Having this flexibility could enable minor infringements to be dealt with swiftly by Ofcom where appropriate. It wants to keep this flexibility. We are therefore minded to disagree with these amendments.

Amendment 52 would require a right of appeal to be specified in any notification to a DSA provider about a contravention of its terms of registration. Ofcom is already required to give the provider the opportunity to make representations about a notification before it can make a confirmation decision under new Section 53G. Decisions taken by Ofcom under Section 53G are appealable. However, the right of any notified provider to appeal to the Competition Appeal Tribunal against a decision would depend on whether the appellant properly followed the tribunal’s rules. It is for the tribunal to decide whether it has jurisdiction to hear the appeal.

Ofcom’s other enforcement powers do not require it to notify a provider of the right to appeal to the tribunal. This is consistent with the approach taken by other regulators, for example, Ofgem and the Competition and Markets Authority. For that reason, I hope that the noble Lord will be able to withdraw his amendment tonight.

--- Later in debate ---

[Lord Fox (LD)]

As the noble Lord, Lord Stevenson, intimated, Amendment 54A comes out of the same concern, but takes a slightly different view of the problem, placing the onus on the Secretary of State rather than Ofcom. The noble Lord, Lord Mitchell, spoke about fixed and mobile convergence, and at the heart of the concern here is that we are not talking about two separate markets when we talk about broadband and wireless; with the approval of BT’s acquisition of EE, one player not only has a dominant position in fixed line but already has the lion’s share of the spectrum already allocated, at 42%. As the noble Lord, Lord Stevenson, has said, this may come up in a different place, but it is at the heart of concerns expressed here.

Clearly the two weaker players were not allowed to join together, so we have an asymmetry in the wireless market, with two strong players and two weaker operators, which adds to the imbalance of spectrum allocation. We should be aware that spectrum allocation imbalance can clearly affect prices. It could affect access and also the speed with which technologies are rolled out: a land bank, or the equivalent, could be created.

It seems that Ofcom has already recognised this issue and is seeking to limit access to one of the bandwidths—the 2.3 gigahertz—but has not covered bands in the 3.4 gigahertz range so the principle appears to have been acknowledged by Ofcom but the measure has not been fully thought through. In a sense, we are debating how much of a problem this is, given that Ofcom has acknowledged that it is a problem.

This is, therefore, also a probing amendment, and it would place a requirement on the Government, rather than Ofcom, to assess the situation and come back with a thorough review of whether this really is an issue. Clearly there is a perception, but we need to measure that perception and publish some sort of assessment of whether 30% is the right limit and, indeed, whether there is a problem at all. I therefore ask your Lordships to consider this as a way of teasing out issues that, if they are not dealt with now, will come back to haunt us much later.

[Lord Ashton of Hyde]

My Lords, these two amendments concern the allocation of spectrum for mobile telephone networks. There are two main issues: the percentage amount of the cap; and the role of Ofcom as opposed to the Secretary of State, as dealt with in the amendment of the noble Lord, Lord Fox.

First, on the amendment of the noble Lord, Lord Stevenson, the Government have released a considerable amount of spectrum for mobile broadband. Ofcom has just concluded a final consultation on rules for allocating it through an auction. The intention of the amendment—to ensure that Ofcom can enforce competition in the mobile market—is a worthy one. Ofcom already has the power to set appropriate rules for its spectrum licensing, taking due account of competition implications. Ofcom must award licences by processes that are open, objective, transparent and proportionate in what they are intended to achieve, without unduly discriminating against particular persons or a particular description of persons.

In principle, Ofcom could make a similar rule for its forthcoming auction to that proposed in the new clause. Indeed, it considered a number of possible spectrum caps in its consultation. The provision allows Ofcom to reject some possible results of the auction on competition grounds. Ofcom already has competition powers which would bear in such a situation. It also strikes us as unlikely that Ofcom, having determined appropriate rules for an auction, would immediately nullify the results.

Amendment 54A, from the noble Lord, Lord Fox, proposes that the Government commission an evaluation of the current usage and allocation of mobile spectrum. Ofcom already has a responsibility, when carrying out its functions, to consider competition issues and whether radio spectrum is being used efficiently. Ofcom considered many of these issues in its recent consultation on the forthcoming auction. In future, it may well wish to review the state of competition in the mobile market—perhaps on similar terms and to a similar timescale to those proposed by the noble Lord—but in our view, that is for Ofcom to decide.

Given those issues, it seems to me that the proposed new clauses do not help Ofcom to carry out its duties, and I hope that noble Lords will therefore agree not to press them.

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for his comments. I think we are trying to achieve much the same aim here. The judgment will be whether Ofcom has sufficient powers to achieve that shared objective. I will look carefully at what he said in Hansard but, in the meantime, I beg leave to withdraw the amendment.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Thursday 2nd February 2017 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

My Lords, we all share a common purpose in wanting the new age verification process in Part 3 to be robust, trusted and effective. It is of course vital that we put in place powers to protect children from viewing inappropriate pornographic material, and we have rehearsed the arguments as to why it is important many times before in the House. We therefore believe that there should be an overriding duty of care on internet service providers and ancillary service providers to keep children and young people safe when using these sites.

The details of how this duty should be applied need to be subject to further consultation, which is what our Amendment 54B seeks to achieve. However, more substantially, we are concerned about the scale and the scope of the regulatory functions in the Bill, which to our mind have not been thought through and were not given sufficient scrutiny in the Commons. This was not helped by the fact that substantial new clauses were added to the Bill late on in the process which considerably extend the powers of the age verification regulator. The result is that Part 3 feels very much like a work in progress, with many of the usual checks and balances unresolved.

This was identified by the Constitution Committee and the Delegated Powers and Regulatory Reform Committee which, as we know, raised a number of specific concerns that we will address in later amendments. By way of example, the Constitution Committee stated:

“We question whether the House can effectively scrutinise the Bill when its scrutiny is impeded by the absence from the face of the Bill of any detail about the operation of the proposed age-verification regime”.


We agree with that point and we have concerns about the whole regulatory structure as it is currently set out in Part 3. That is what Amendment 54D seeks to address.

The amendment in the name of the noble Baroness, Lady Howe, specifies that the regulator should be the British Board of Film Classification, and it has been widely assumed that it would take on a similar classification role for online to that which it already carries out for offline. But the new, expanded role set out in Part 3 has much more extensive powers to follow up those who fail to apply age verification filters with fines and ultimately with the blocking of their sites by internet service providers. We believe that these functions are separate and should be carried out by a separate regulator. Indeed, when we recently met the Minister, Matt Hancock, he said that Ofcom was in a better position than the BBFC to handle the financial penalties proposed.

In addition, there is a need to specify who will carry out appeals and to ensure that this is a separate, independent organisation and not one that is appointed by the regulator. This point was raised by the Delegated Powers Committee and again we have tabled separate amendments on it that will come up later. Finally, we would argue that there needs to be effective oversight and supervision of the new regime to ensure proper governance and value for money. Arguably, Ofcom rather than the Secretary of State should have a role in holding both the classification and the enforcement agencies to account, as well as reporting to Parliament from time to time on progress. But of course Ofcom cannot do everything, which is an additional reason why we believe that we need to take time to allocate the different layers of responsibilities correctly.

No doubt other noble Lords, like ourselves, have received over the past few weeks representations from many bodies providing internet service provision, payment and ancillary services. They have raised concerns about the new powers in the Bill and how they will work in practice. Indeed, one of the ISPs went as far as to say that it was so concerned that it was going to redraft the whole of Part 3—so there is a major concern about how the powers are to be allocated. This is why we believe that it is important to get this right by taking more time to consult on the role and functions of the regulator or regulators and to bring a clearer set of proposals back to both Houses. Amendment 54D would achieve this objective.

We believe that we need to take extra time to get this right. It should not be left to the Secretary of State and the eventual system for protecting children, which is something we all agree with, will be much more robust as a result. I beg to move.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, with the permission of the Committee, it may be helpful if I say a few words before other noble Lords make their contributions in order to help the rest of our debate on this part of the Bill and to put on record the Government’s position on a key issue that we will be debating today.

The BBFC is going to be given powers in the Bill to give notice to payment service providers and ancillary service providers under Clause 22 and to ISPs under Clause 23 of websites that have inadequate age verification as well as prohibited material. Many noble Lords have raised concerns with me about the scope of what amounts to “prohibited material”, so let me put on record what I have been telling those noble Lords in the many meetings we have had. The Government disagree that “prohibited material” should be excluded from the regulator’s powers. We must not unintentionally legitimise all types of pornographic content as long as age verification controls are in place. Extreme pornography can involve dangerous content. The current definition of “prohibited material” in the Bill would bring parity with the offline world—material that would not be classified by the BBFC, including material that is in breach of criminal law.

The Government’s intention is to protect children from harmful content. We have listened to the arguments that in doing so, the drafting of the Bill may have unintentionally extended the powers of the regulator too far. We all share a common goal of keeping children safe and the Government will ensure that, in achieving this aim, we have a proportionate and fair impact on others who enjoy the freedoms and equalities that are important to everyone. So I can commit that we will give this further consideration in order to reach a conclusion that this House agrees is a satisfactory way of meeting our aims of protecting children from harmful pornographic content. I will be very happy to discuss this with interested Peers before Report.

--- Later in debate ---

[The Earl of Erroll (CB)]

My Lords, I will make some brief points. First, on this set of amendments I am afraid I disagree with the noble Baroness: we must get on with this. It will not be perfect on day one but the sooner we get moving the better. We have talked about this for a very long time. That is why I am not really pro these amendments.

On Amendment 55, I agree entirely with my noble friend Lady Howe. She is absolutely right to spot this lacuna: the BBFC will look at this stuff and age verification, but who will enforce it? That is a problem and I was going to raise it later anyway. She was absolutely spot on there. My noble friend Lady Kidron was also absolutely spot on about these sites. Twitter could be classified as commercial because it takes money from pornography sites to promote them. I can get evidence of that. It would be difficult for it to say that it does not promote them.

Very quickly on what the Minister said, I was going to raise under the group starting with Amendment 57 the issue of including prohibited material with the age verification stuff. We should separate protecting children from protecting adults or it will confuse things. The big danger is that if we start using this to protect adults from stuff that they should not see—in other words, some of the adult prohibited material, of which there is quite a lot out there—we run the risk of challenges in court. Everything that the BBFC does not classify because it falls into certain categories is automatically prohibited material. It is not allowed to classify certain acts. I should probably not tell noble Lords about those now as they are pretty unpleasant but they are fairly prevalent in the hardcore pornography out there. If the pornography sites are blocked from supplying adults with what they want, they will just move offshore and get round this. If they do that, there will be no point in doing age verification and we will not protect our children. That will create the first major loophole in the entire thing.

I have this from the pornographers themselves. They know what they are doing. However, they are very happy—and would like—to protect children. If we leave them alone and argue through the Obscene Publications Act and other such things as to what they must stop adults seeing, they will help block children. They are very keen on that. Children just waste their time as they do not have money to spend. At the end of the day, the pornographers want to extract money from people.

I am advised that the real problem is that prohibited material includes content that would be refused a BBFC R18 certificate. The Crown Prosecution Service charging practice is apparently out of sync with recent obscenity case law in the courts. Most non-UK producers and distributors work on common global compliance standards based on Visa and Mastercard’s brand-protection guidelines. Maybe we should start to align with that. We should deal with that separately under the Obscene Publications Act. It will be very easy for the BBFC, the regulator or the enforcer to tell what does not have age verification on the front. That is yes/no—it is very simple. The trouble is that if we get into prohibited material, it will end up before the courts. We will have to go through court procedures and it will take much longer to block the sites. I would remove that from here. I shall leave my other comments to a later stage.

[Lord Ashton of Hyde]

My Lords, I am grateful for those contributions. They address some very important issues, some of which we will deal with now and some of which we will deal with later during the progress of the Bill. To start at the end, the noble Earl, Lord Erroll, made some interesting points regarding the statement that I made. We absolutely acknowledge some of them. I have listened to his suggestions. Our focus here is to protect children. That is what this Bill is for. That is what our manifesto commitment was. When he sees our suggestions, I hope that he will be able to contribute to the debate on Report—but I have noted everything he said.

The introduction of a new law requiring appropriate age verification measures for online pornography is a bold new step. It represents the first stage of ensuring that commercial providers of online pornographic material are rightly held responsible for what they provide and profit from.

Amendment 54B would require the regulator to publish guidance about the overarching duty of care on internet service providers and ancillary service providers, and their responsibility to ensure that all reasonable steps are taken to ensure the safety of a child or young person involved in activities or interaction for which the service provider is responsible. The purpose of our measures is to protect children from pornographic material. Seeking to stretch the framework further to regulate companies on a different basis risks the delivery of our aim. However, that is not to say that we want to ignore the issue. We take the issue of child safety online seriously and engage intensively with the industry through the UK Council for Child Internet Safety to ensure that robust protections are in place.

The Government expect industry to play a leading role in internet safety provisions, as it is best placed to offer safety and protection to children and young people. We know that it is already doing this and has default protections for under-18s, including the use of parental controls and tools to allow users to flag content, protect user privacy as well as educate users on staying safe with information and advice. We will have further opportunities to discuss the role of the industry, including social media and internet service provider filters, later in Committee.

Amendment 54D seeks to introduce a new clause with the requirement that the Secretary of State must consult on the role of the age verification regulator. The clause further seeks that the Secretary of State must lay before each House of Parliament a report on the results of the consultation and the Secretary of State’s conclusions, with any appointments to be subject to approval in each House. The introduction of the measures requiring appropriate age verification for online pornography follows public consultation. We asked about the powers that a regulator should have and there was strong support for a number of responsibilities that we have introduced. The passage of this Bill has provided an important opportunity for debate on this and we have seen the introduction of an important new blocking power for the regulator, which we shall discuss later.

We are grateful to the DPRRC and the Constitution Committee for their reports, which a number of noble Lords mentioned. They made a number of recommendations about the designation of the regulator and how the regulator should fulfil its role. We are carefully considering those and will publish our response before Report.

Amendment 55, in the name of the noble Baroness, Lady Howe, would specify that the Secretary of State is to designate the British Board of Film Classification as the age verification regulator. As the Committee will know, Clauses 17 and 18 provide for the designation of the regulator and we intend to designate the BBFC to carry out most—as the noble Baroness, Lady Howe, reminded us—of the functions of the regulator. Indeed, some noble Lords may have seen the BBFC’s recent presentation to the Children’s Media and the Arts APPG.

--- Later in debate ---

[Baroness Jones of Whitchurch]

My Lords, I thank the Minister for his opening statement and for his comments now, but I do not really feel that he addressed our concerns about the overarching architecture of the regulatory structure: where the power should lie, the detail of which regulator has which functions and so on, and whether there is a need for someone to oversee the whole regime.

I also thank the Minister for his offer of further discussions about this, but as a number of noble Lords have said, it is rather frustrating that the information and debate that we ought to be having here in Committee is being shifted backwards so that we will have it in correspondence or perhaps offline before Report. Normally, we would expect the government proposals to be in front of us here, so that we can debate them in detail. As the noble Baroness, Lady Byford, said, once again we find that the debates that we should be having in Committee are happening on Report, which makes it very frustrating for everybody involved. That also applies to the reports from the Delegated Powers Committee and the Constitution Committee. With respect, the Government have had those documents for several weeks now, and I would have thought it would have been possible to have given us a response as to how the Government intend to react to them before today’s debate. I find this whole process for considering Part 3 very frustrating. Notwithstanding that, I know that the Minister means well and I am sure we will all want to take up his offer of further discussions, if that is possible.

The noble Baroness, Lady Howe, made a very good point about who the other regulator will be, and I was not sure that the Minister really answered it. Again, if we are going to get down to putting in the Bill that the BBFC will have part of that function, it is right that we should also say who will have the other part of it; otherwise, the Bill is not going to make sense. So I have an ongoing sense of frustration. Some of the issues that a number of noble Lords have raised will spill into some of the discussions that we will have on other amendments and will no doubt come up several times, regrettably, although maybe that is just because of the way that we have structured some of the amendments.

I agree absolutely with the noble Baroness, Lady Kidron, that we need a much clearer definition of ancillary service providers. To the outside world, that is a non-phrase really, but it means either so much or so little, and we just need some clearer definition of what it means in terms of the responsibilities of social media providers. It may well be, as I think the noble Lord was suggesting, that some of them have different responsibilities from others, but we need that debate. It is a really important debate, since, as the noble Baroness was saying, children are accessing this material and there do not seem to be any real proposals in front of us for how we are going to get a grip on that. That is perhaps something that we can return to later as we debate other provisions in Part 3.

Finally, I think the Minister strayed into the whole issue of what is prohibited material. Again, we have amendments on that later and will return to it when those are discussed, but I thought that we had made more progress on that than the Minister is now suggesting. I know that a number of noble Lords had a meeting with Matt Hancock, the Minister, a couple of weeks ago, and I thought that we were edging towards a new form of words, but it does not seem that this is before us from what the Minister has said. So again, we have a level of frustration about this.

[Lord Ashton of Hyde]

Let me confirm that I hope we are edging towards some agreement; it is just that, as the noble Baroness will be aware, there are times when one can announce these things and there are times when one cannot. I agree with her that it is somewhat frustrating—in the same way that it is frustrating when, though we have had the Explanatory Memorandum since the Summer Recess, amendments appear at the last minute. It is a frustrating process.

[Baroness Jones of Whitchurch]

Well, this is because the discussion has gone on over the summer, with the Government and with other people. We have been seeking clarification, which we have not had, which is why we finally put down amendments. Anyway, this debate is going to continue, I think, through the course of Part 3. In the meantime, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, this has been an important and interesting debate—I can tell that by the number of Peers who are arriving to hear my response. I also appreciate very much the offer of help given by the noble Baroness, Lady Jones. I have listened carefully to the arguments and again I acknowledge that we are not able to give our answer on the DPRRC’s report, but as the noble Lord, Lord Clement-Jones, said, it is very important to get it right and we will produce the response soon.

The age verification regime was designed to provide a proportionate and practical response to the very real problem of the easy availability of internet pornography to children, and we need to bear that in mind when considering this issue. Amendments 55A, 69 and 229B are concerned with appeals. The BBFC has a strong track record in running the system of classification, including a two-stage appeals process which includes an appeal to an independent authority. We understand the desire to specify in detail in the Bill what an appeals process must look like for what is undoubtedly a serious matter, but we are satisfied that the BBFC is in a strong position to develop and administer a fit-for-purpose appeals process. Clause 17 specifies that the Secretary of State may not designate the regulator until satisfied that arrangements will be maintained by the regulator for appeals by the key persons involved in the regulatory framework, as set out in Clause 17(4)(a) to (e). As the noble Baroness, Lady Jones, said, the DPRRC has made some well-considered recommendations on appeals that we are considering and will be responding to before Report.

Amendments 54C, 56A and 62A provide that the Secretary of State must, in regulations made by statutory instrument, lay guidelines before each House of Parliament on different areas of the regulatory framework. The internet, as we all know, is a fast-changing area and the legislation has been drafted with the necessary flexibility to create a proportionate regulatory framework. For example, it will be for the regulator to publish guidance about ancillary service providers. I have also noted the recommendation of the DPRRC on these matters and I can assure noble Lords that we are considering it carefully before responding.

On the issue of ISP blocking, government Amendment 67 ensures that the regulator must not direct an ISP to block a non-compliant site should that be detrimental to national security, the prevention or detection of serious crime, or an offence listed in Schedule 3 to the Sexual Offences Act 2003. We believe that it is right that the actions of the regulator in seeking to protect children from pornographic content should not have unintended consequences for the work of law enforcement and the security and intelligence agencies in combating serious crime and protecting national security. I am confident that the industry will take a responsible position and therefore envisage that the regulator will need to use this power only sparingly. However, where it does need to be used, I would suggest that the regulator would never wish to be in a position where it might have an unintended impact on efforts to ensure public safety.

The provision provides an important safeguard for circumstances in which a site might form part of an investigation. The Government and the regulator will agree arrangements for how the deconfliction process will take place. This is an important step towards ensuring that the regulatory regime functions in a successful way and giving the regulator a framework in which to succeed.

Amendment 66 tabled in the name of the noble Lord, Lord Paddick, and other noble Lords brings forward blocking by court order. We recognise that providing the regulator with the power to direct internet service providers to block content is a serious step, but the conflicting views of noble Lords in the debate show that this is a difficult area to get right. We have always been clear that we want to build an effective regime. This is fundamentally different content to regimes where court orders are used. As I have said, and the noble Baroness, Lady Jones, agreed, we envisage that the regulator will need to use this power only sparingly. However, the cost and process of the court order procedure would place an undue burden on the system We know that the court order process for copyright, for example, is not without issues, and unlike copyright where the individual is seeking a court order, in this case there is a regulator with expertise in classification.

It is important to note that our regime is about encouraging compliance by the industry. Giving the regulator the power to direct internet service providers is the proportionate and right approach to ensuring that children are not inadvertently exposed to harmful pornographic material. With that explanation, I hope that the noble Baroness will withdraw her amendment.

[Baroness Jones of Whitchurch]

My Lords, I thank all noble Lords who have contributed to this discussion. I say to the noble Lord, Lord Morrow, that we are all trying to balance child protection and civil liberties; that is the issue we are trying to resolve. Indeed, there is no black-and-white answer and it may well be that we will need to have further discussions. But I remind noble Lords that the Delegated Powers Committee said that it considered it objectionable for an unspecified regulator—people have talked about it being the BBFC but I do not think it necessarily will be—to have so much power to impose fines and take other enforcement action. We need to look again at how we can ensure some other oversight of those powers. Amendment 66 would provide a legal structure for all that, and we still feel it would provide the certainty that does not exist under Clause 23. Further, it would provide a degree of independent oversight, which Clause 23 as it stands does not.

I say again that the ISPs caught in the middle of all of this are very concerned about the way Clause 23 is worded. They feel that they will be caught in the middle of legal battles, and it may well be that whatever we decide, these matters will end up in court anyway. Given that, the more legal clarity and specification we can put in the Bill, the better, because that will help everyone to understand their rights. Some noble Lords have also queried the appeals process, but it is important to spell out not only what that process should be, but that it should be independent. Again, our amendments seek to achieve that.

I know that the noble Lord has said that he wants to come back to this when the more detailed response to the Delegated Powers Committee’s report has been produced. I hope that our amendments have been helpful and that they may provide a working copy from which he can put his ideas together. In the meantime, I beg leave to withdraw the amendment.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Committee: 2nd sitting (Hansard - continued): House of Lords
Thursday 2nd February 2017 Lords Chamber

Finally, I have added my name to Amendment 237, tabled by the noble Baroness, Lady Benjamin, and we agree with the one-year implementation date. As we have already outlined, we feel there is a great deal of more work to be done in this Bill, both in primary and secondary legislation, but we agree that a one-year deadline would produce, on the one hand, space for this additional work to be done and, at the same time, provide reassurance of our ultimate determination to introduce what we hope would be a robust and detailed age verification system which would stand the test of time.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I am grateful to all noble Lords for bringing up these rather difficult points which we have to address. This highlights that trying to fulfil our manifesto commitment is much easier in some parts, but there are also some areas on the edges that we accept are difficult. I do not think we are going to achieve a 100% success ratio and we are cognisant of that.

I shall start by addressing some of the general points that noble Lords made before I get on to the specific details of the amendments. I apologise to the noble Lord, Lord Morrow, for not answering his questions asked at Second Reading. I wrote a long letter on 21 December and I missed out some of his points, although at the end I made an offer to all noble Lords to bring up anything that they wanted.

As far as porn sites overseas is concerned, and how we should enforce this new law against such websites and companies that are not based in the UK, the aim of our policy is to capture all commercial sites regardless of where they are based. Overseas providers will still be incentivised to comply by the elements of the scheme which will disrupt their income streams. ISP blocking powers greatly increase the chance of effectiveness of the whole regime—I will come on to that more in a minute. The regulator will have the power to identify and notify infringing sites and to enable payments providers to withdraw services under their existing terms and conditions. These already require merchants to act legally, both in the country they are based in and in the countries they serve.

It is of course possible that there will be cases where it is difficult to enforce a financial penalty—for example, in the case of websites with no UK presence, as identified by the noble Lord. Even in those cases, however, circumstances may change and the option to enforce will remain. For example, the location of a pornographer may change or enforcement regimes may evolve. The regulator has discretion to take a proportionate approach. What I do not understand, however, is why not even allowing the regulator to include foreign sites is an improvement.

The noble Lord, Lord Morrow, also talked about payment providers and ancillary service providers. I can inform noble Lords that we have had constructive discussions with payment providers and they have indicated that they will act under our regime. The noble Earl, Lord Erroll, confirmed that. There are ranges of potential ancillary service providers. In some cases, the existing terms and conditions will allow them to act when notified by the regulator. We believe that companies will take responsibility when enabling or facilitating the availability of pornography.

The noble Baroness, Lady Benjamin, talked about ancillary service providers that carry pornography not being blocked. The Bill strikes a balance. It is our belief that the key issue is the commercial providers who monetise pornography, attracting large numbers of underage visitors in the process. Like the noble Earl, Lord Erroll, we believe that dealing with the largest of these providers will be a great step towards a reduction in access by children.

The noble Lord, Lord Paddick, referred to content such as revenge porn. This was brought up again by the noble Baroness, Lady Jones. We are clear that abusive and threatening behaviour online is totally unacceptable. Legislation is in place to prosecute online abuse. In the case of revenge porn, Section 33 of the Criminal Justice and Courts Act 2015 created a new criminal offence of disclosing private sexual photographs or films without consent and with the intent to cause distress, so there is existing legislation. There is new legislation and old legislation that has been adapted to deal with that very problem.

I shall now come to the detail of the amendments. Clause 20 provides that the designated age verification regulator may impose a financial penalty where someone has breached the requirement to have age verification controls in place, has not complied with an information requirement or has not complied with an enforcement notice. Clause 20 allows the designated regulator to give an enforcement notice where someone has breached the requirement to have age verification controls in place.

Amendment 56 would reduce the regulator’s discretion by restricting its ability to apply financial penalties for a breach of the requirement to have age verification controls in place. It would remove the power to apply financial penalties to non-UK residents in breach of Clause 15(1). The Government’s view is that the regulator should have the flexibility to apply sanctions to persons who are non-compliant, regardless of where they are based. During the Government’s consultation on these measures, arguments were made over the potential difficulties of enforcement, especially on taking action against non-UK companies. We are clear, however, that a flexible approach that includes a number of options is needed. We accept that there may be difficulties in taking enforcement against companies based overseas. However, as I said, we should not restrict the options available to the regulator, which should be able to take a view on enforcement based on the particular facts of any given case.

The Government recognise that financial penalties may not be effective in every case. That is why we have included other options for the regulator. For example, the power enabling the age verification regulator to instruct ISPs to block content to sites that remain non-compliant greatly increases the effectiveness of the whole regime and of compliance by providers of pornography. Our regime is designed to ensure that financial penalties are not the only sanction; there is also the ability to disrupt non-compliant sites’ business models. But we should ensure the regime allows for both fines and enforcement notices as appropriate to the individual, regardless of where they are based.

Clause 22 is an important provision containing powers at the heart of the regime to enable the age verification regulator to notify payment service providers and ancillary service providers of non-compliant persons. Amendment 58 would make it mandatory for the age verification regulator to serve notice to any payment services provider or ancillary service provider under Clause 22(1) where it considers that a person is contravening the age verification requirements in Clause 15(1) or making prohibited material available on the internet to persons in the UK. We need to be careful to ensure that we do not constrain the BBFC, which is expert in this area and committed to its role as an AV regulator in carrying out the role in the most effective way. It is important that the regulator has the flexibility to take the most appropriate action depending on the facts of any given case.

Amendment 63, in the name of the noble Baroness, Lady Benjamin, would require the regulator to publish guidance under Clause 22(7), rather than having the discretion to do so. I realise that the Delegated Powers and Regulatory Reform Committee and the Constitution Committee have made recommendations about increasing the level of parliamentary oversight for this guidance. We have listened to and noted those concerns; we are carefully considering our response to the committees as a matter of priority. Again, as I have said, we will be able to outline that before Report. On the question the noble Baroness asked about who would be classed as an ancillary service provider, I will correct something she said. I think what I said was that the Government, under the legislation, believe that internet sites can be classified by the regulator as ancillary service providers— it is ultimately the regulator’s decision—where they are enabling or facilitating the making available of pornographic or prohibited material. If that is the case, it could be notified.

Amendment 65 would require payment services providers and ancillary service providers to block payments or cease services provided to the non-complying person where the regulator has given notice to the payment services provider or ancillary service provider under Clause 22(1). This approach represents a considerable change. We are quite clear that it is not necessary. It is important that the BBFC has the freedom to build effective working partnerships with payment service providers and ancillary service providers. As part of a proportionate system, it is not necessary for the BBFC to begin regulating those services. We think that the focus should rightly be on the providers of pornography.

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[Baroness Benjamin]

My Lords, I was very grateful to the Minister, Matt Hancock, and to the noble Lord, Lord Ashton, who met concerned parliamentarians to discuss the Government’s thinking about how to move forward on this issue. I look forward to seeing the wording around what will and will not be prohibited in order to ensure that the protections that apply offline also apply online. I believe that we need to build on the consensus in this House that children should be protected from harmful content online and I firmly believe that prohibited content is harmful to children.

The BBFC’s harm test under the Video Recordings Act, on which the definition of prohibited content is based, has proved to be an effective child protection standard offline with DVDs, and online with UK-regulated video-on-demand content. So I ask the Minister for an assurance that the Government remain committed to keeping prohibited content in the Bill. Most importantly, I ask the Minister to confirm that prohibited content will include content which covers simulated sexual abuse of child characters—and I stress sexual abuse in the widest sense, and not limited to rape and incest fantasies. I also want an assurance that the prohibited content I have set out covers not only realistic portrayals of children but CGI material. If this legislation is to be future-proofed, it is vital that CGI portrayals of child sex abuse are prohibited. I would welcome the Minister’s assurance that this will be the case.

This is not about freedom of speech, civil liberties, censorship or invasion of privacy; it is about the bigger case of putting children first, and of protecting and safeguarding our innocent children from harm. I often find myself in agreement with the Opposition Front Bench—but not on these amendments, which take too much risk with child safety. So I urge your Lordships to consider the implications very carefully before pursuing the wholesale removal of prohibited material from Clause 22.

[Lord Ashton of Hyde]

My Lords, this is an important debate, dealing not just with age verification but whether prohibited material should be included. I do not want to stand here and defend opposition amendments or put words into the mouth of the noble Baroness, Lady Jones, who can correct me if I am wrong, but I do not think that the object of the exercise was to completely get rid of prohibited material; it was to raise the extent to which the definitions may have exceeded what was originally intended. I say to the noble Lord, Lord Browne, and others that the point is that the current definition of prohibited material in the Bill allows the BBFC to consider content based on its existing hard-copy guidelines. We recognise that some think this goes too far and therefore we are continuing to listen to views on that. On the other hand, asking the regulator to consider only classifiable pornographic content creates the real risk that more extreme content will proliferate further.

I realise that it would have been easier if we had had a definition in front of us today. I know that we have discussed this with various noble Lords. The noble Lord, Lord Clement-Jones, is obviously teasing me because he knows that it takes time. As a lawyer, he will know that these issues are complex, and we have to make sure that all parts of government are happy with the wording. I shall repeat, for the benefit of the noble Baroness, Lady Benjamin, and other noble Lords, the important bits of what I said this morning. It is our intention to protect children from harmful content. Therefore, we have listened to the arguments that, in so doing, the drafting of the Bill may have unintentionally extended the powers of the regulator too far.

I committed this morning—and do so again—to giving this further consideration in order to reach a conclusion that this House agrees is a satisfactory way of meeting our aims of protecting children from harmful pornographic content. I repeat my offer to discuss this with interested Peers. I think that the noble Lord, Lord Browne, and the noble Baroness, Lady Howe, can be temporarily satisfied that we do not intend to get rid of prohibited material entirely. There is not much more to say at the moment, but we will come back to this on Report. In the meantime, I would be grateful if the noble Baroness would withdraw her amendment.

[Baroness Jones of Whitchurch]

I am grateful to the Minister. He is absolutely right and I am sorry if I did not make that clear. When we were proposing to take those words out, we were rather hoping that somebody would come up with a definition that would replace them—it was not just an attempt to take them out finally and for ever. It rather highlights the fact that we do not have another form of words to be working with today.

I do not envy the Minister in trying to balance all these different desires to get the wording right. We agree with the principle that offline and online should be dealt with on the same basis, but the problem is that in practice, what happens with offline material is not what is necessarily captured in the current legislation. That is the difficulty we are trying to grapple with. Our aim is to maintain the status quo. We do not want to ruffle any feathers or change anything. We want to make sure that what people can access online has the same checks and balances as offline has at the moment. The problem is the lack of a current substantial legal definition. As I said, there is a grey area, so we have to work our way through it. That is the difficulty.

As I said, I do not think that we should start redefining anything massively without a public consultation. People have talked about that and I agree. We are simply trying to protect the status quo so that adults who currently look at material can carry on looking at it—and this has nothing to do with child protection and children’s access to pornography. We need to understand what we are aiming for, but it is a question of getting the wording right. I am sure that the noble Lord will come up with something with which we can all agree in the medium term. In the meantime, I beg leave to withdraw the amendment.

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Moved by

[Lord Ashton of Hyde]

67: After Clause 23, insert the following new Clause—
“No power to give notice under section 23(1) where detrimental to national security etc
(1) Before giving a notice under section 23(1) requiring an internet service provider to—(a) take steps referred to in section 23(2)(c)(i), or(b) put in place arrangements referred to in section 23(2)(c)(ii),the regulator must consider whether the steps or arrangements would be likely to be detrimental to a matter mentioned in subsection (3).(2) The regulator may not give a notice under section 23(1) where it appears to the regulator that the steps or arrangements would be likely to be detrimental to any of those matters.(3) The matters are—(a) national security;(b) the prevention or detection of serious crime, within the meaning given in section 263(1) of the Investigatory Powers Act 2016;(c) the prevention or detection of an offence listed in Schedule 3 to the Sexual Offences Act 2003.”

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[Baroness Jones of Whitchurch]

I support the comments that have been made by a number of noble Lords. I think we all understand the need for particular care to protect the identity of those who are over 18 and legitimately want to access pornographic sites. Apart from anything else, as has been said, we must protect those individuals from blackmail threats.

In this respect, the age verification process has to be more rigorous in providing anonymity than other regulations where proof of credit card details may have sufficed, but may also have made identification of the individual all too easy. The noble Baroness, Lady Howe, is not in her place, but I understand that the site that does the gambling checks does it on the basis of credit card details. Clearly, that would not be appropriate in the context of the issues we are grappling with here.

Thankfully, as we have heard, the technology is catching up with the need and there are now new age verification provider sites that can carry out the age checks. I am grateful to the noble Earl, Lord Erroll, for explaining in some detail how that works; it is all very reassuring. I do not think I have anything else to add: we have a consensus that some such measure needs to be built into the legislation, and I hope the Minister will agree with us.

[Lord Ashton of Hyde]

My Lords, I am grateful to all noble Lords again, particularly the noble Earl, Lord Erroll, for the teach-in.

Amendment 68 calls for the regulator to approve age verification providers and to publish a code of practice with which those providers must comply. This was similar or identical to the amendment that was rejected in the other place in Committee and on Report. I am afraid that the Government do not consider this clause necessary. However, I can assure noble Lords that we approach this issue with the utmost seriousness.

Clause 15(3) already requires the regulator to publish guidance about the types of arrangements it will treat as being in compliance. As the noble Earl explained, the technology is with us and the providers of age verification controls will be subject to data protection laws. The BBFC is already in discussion with the Information Commissioner’s Office to ensure that best practice is observed. It has indicated that it will give the highest priority to ensuring that the guidance it issues reflects data protection standards. The Government and the BBFC are also in discussion with the Information Commissioner’s Office on privacy and data requirements to ensure that the appropriate guidance is issued, as they are experts in this field.

The Delegated Powers and Regulatory Reform Committee has additionally made a recommendation on the approach to the types of arrangements for making pornographic material available that the regulator will treat as complying with Clause 15(1). We are considering whether we can address those concerns and, as I said, will respond as soon as possible.

As the noble Earl explained, innovative age verification solutions are coming to market, and we want to ensure that the regulator is enabled to make a determination as to the sufficiency of different and new controls. As noble Lords know, there are existing privacy and data security protections provided by the Data Protection Act 1998, administered by the Information Commissioner’s Office. The Act established a framework for the protection of personal data, balancing the privacy rights of individuals with the legitimate needs of organisations to make use of such data. It ensures respect for individuals’ rights to privacy and keeps their personal information secure from abuse. The Act ensures that data are handled safely and securely. It is right therefore that we do not seek here to duplicate this legislative and regulatory framework. However, we agree that we must ensure that it is built into the age verification process in a meaningful way and, as I have said, we will provide a response to the DPRRC recommendation on this matter. In the meantime, I hope the noble Lord will withdraw the amendment.

[Lord Paddick]

My Lords, I am very grateful for noble Lords’ contributions to this short debate, particularly to the noble Earl, Lord Erroll, for illustrating how a system as set out in our amendment already exists. I join my noble friend Lord Clement-Jones in thanking the noble Earl for his work with the industry. I thank my noble friend Lady Benjamin for driving him on, apparently. I also thank the noble Baroness, Lady Jones of Whitchurch, for her support for the amendment.

The Minister said that the amendment was not necessary despite the Constitution Select Committee believing that such an amendment is necessary. On that basis, I cannot give an undertaking that we will not return to this issue on Report. However, at this stage, I beg leave to withdraw the amendment.

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[The Earl of Erroll]

My Lords, it has been suggested to me that this group of amendments could also be used in the code of practice and the safety responsibilities could also be drawn up to include non-age-verified pornography.

[Lord Ashton of Hyde]

My Lords, the Government take the harm caused by online abuse and harassment very seriously, and we will continue to invest in law enforcement capabilities to ensure that all online crime is dealt with properly.

Amendment 70 would require the Government to carry out a review of online abuse and lay a report before Parliament within six months of Royal Assent. We do not believe that it is necessary to include provision for a review in primary legislation. As part of the ending violence against women and girls strategy, we have established an official government working group to map out the current issues, prevalence, initiatives and barriers to addressing gendered online abuse and to produce an action plan.

We are absolutely clear that abusive and threatening behaviour is totally unacceptable in any form, either offline or online. As the Committee will be aware, any action that is illegal when committed offline is also illegal if committed online. Current legislation, some of which was passed before the digital age, has shown itself to be flexible and capable of catching and punishing offenders, whether their crimes were committed by digital means or otherwise. The Protection from Harassment Act 1997 was amended to introduce two new stalking offences to cover conduct that takes place online as well as offline. In addition, the Government will be introducing a new civil stalking protection order to protect victims further.

We will continue to take action where we find gaps in the legislation, just as we did with cyberstalking, harassment and the perpetrators of grossly offensive, obscene or menacing behaviour, and of course we introduced a new law making the fast-growing incidence of revenge porn a specific criminal offence.

The Law Commission recently consulted on including a review of the law covering online abuse as part of its 13th programme of law reform, which will launch later this year. It is expected to confirm with Ministers shortly which projects it proposes should be included.

We are also working to tackle online abuse in schools and have invested £1.6 million to fund a number of anti-bullying organisations.

In addition, we are working to improve the enforcement response to online abuse and harassment so that it can respond to changing technologies. The Home Office has also allocated £4.6 million for a digital transformation programme to equip forces with the tools to police the digital age effectively and to protect the victims of digital crime, including online abuse and harassment. Police and prosecutors evidence offences carried out digitally, non-digitally or both. The CPS Guidelines on Prosecuting Cases Involving Communications Sent via Social Media makes clear the range of criminal law which can be brought to bear on offences committed through social media. Moreover, from April 2015, police forces have been recording online instances of crimes, including stalking and harassment.

I shall talk about the next three amendments together, as they all cover the duties of social media sites. Amendment 71AA seeks to make it a requirement for all social media sites to carry out a safety impact assessment. Amendment 71AB seeks to require Ministers to issue a code of practice to ensure that commercial social media platform providers make a consistent and robust response to online abuse on their sites by identifying and assessing online abuse. Amendment 233A seeks to impose a duty on social media services to respond to reports posted on their sites of material which passes the criminal test—that is, that the content would, if published by other means or communicated in person, cause a criminal offence to be committed.

The Government expect social media and interactive services to have robust processes in place that can quickly address inappropriate content and abusive behaviour on their sites. On the point made by the noble Baroness, Lady O’Neill, it is incumbent on all social media companies to provide an effective means for users to report content and perform the actions that they say they will take to deal with this. We believe a statutory code of practice is unworkable because there is no one-size-fits-all solution. Dealing properly with inappropriate content and abuse will vary by service and incident. Technological considerations might differ by platform and as innovation develops. Users will benefit most if companies develop their own bespoke approach for reporting tools and in-house processes.

Social media companies take down content that is violent or incites violence if it breaches their terms and conditions. We expect them to inform the police where they identify significant threats or illegal activity happening on their sites. It is, however, extremely difficult to identify where the threat has come from and whether it is serious. We work closely with companies to flag terrorist-related content and have so far secured the voluntary removal of over 250,000 pieces of content since 2010.

I can assure the Committee that we share the sentiments expressed in these amendments. At the moment, though, they are not practical or necessary, so I hope on that basis noble Lords will not press their amendments.

[Baroness Jones of Whitchurch]

My Lords, first, I am grateful to the noble Baroness, Lady Janke, for stressing her point on enforcement. That is at the heart of the debate that we are having today. A lot of fine words are being said, but they are lacking the guts and enforcement to make any real change.

I am also grateful to the noble Baroness, Lady O’Neill, who quite rightly made the point that material does not consistently get taken down. That very much chimes with evidence that we have received as well. Luciana Berger MP has made the point that, even when a case of anti-Semitism was taken to court and the perpetrator was taken to jail, the site that they had created stayed up on social media and was still there for anyone to access—that cannot be right. It raises questions about the responsibility of social media sites and whether they are acting with enough responsibility and consistency.

I was really saddened by the Minister’s response this afternoon, because I felt there was a degree of complacency in what he said. I do not know how much more evidence he needs to realise that the current arrangements are not working. As we have been saying, children and adults are suffering. There does not seem to be a mechanism where, if you feel that you are being abused, threatened, or having vile things said about you on sites, you can get any consistent recourse to have the matter dealt with. People say, time and again, that social media sites and the police are not working together consistently. On some occasions social media sites take action, but then the police do not follow it up. Sometimes it is vice versa: the police get involved, but then the social media sites do not carry out their responsibilities. This needs another look at—whatever the level or structure for which that is appropriate.

I will not press my amendments today, but I will not give up on this issue. I say to the noble Lord—and it may be that we can have further discussions on this—that a more robust response is needed from the Government than we have had so far, so I hope we can carry on this discussion. I beg leave to withdraw my amendment.

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[Lord Paddick]

My Lords, I shall speak very briefly, as my name is on this amendment, to support what other noble Lords have said and echo the noble Baroness, Lady Jones of Whitchurch, in that we also tried to table a broader compulsory sex and relationship education amendment to the Bill but were told it was out of scope.

We have to address the fact that despite our best efforts young people, and indeed very young children, will be confronted with inappropriate images and inappropriate adult material on the internet, and they need to be taught how to respond. They need to be taught to turn it off immediately and to tell their parents about what is happening. Older children need to be told that the way in which actors in pornographic films treat each other is not the way that we expect our young people to treat each other.

[Lord Ashton of Hyde]

My Lords, I think we can all agree—and I certainly do—that this amendment has expressed very worthy concern about the safety of young people growing up in modern Britain today, and it is of great interest to many Members of this House and Members of the other place too.

As we have always said, age verification is not a panacea, and should certainly not be seen as the limit of child online protection activity in which the Government and key stakeholders are involved. Age verification controls are a part, but not all, of the approach to protecting children from potentially harmful content online. Education, awareness-raising with parents and carers, and equipping children with the resilience and tools to deal with their online experiences are critical. So I can agree with much of what the noble Lords, Lord Storey and Lord Paddick, and the noble Baroness, Lady Kidron, have said on this subject.

Keeping Children Safe in Education, the statutory guidance for schools and colleges on safeguarding children and safer recruitment, sets out that governing bodies and proprietors should ensure that children are taught about safeguarding, including online, through teaching and learning opportunities as part of providing a broad and balanced curriculum.

As my honourable friend the Minister of State for Vulnerable Children and Families, Edward Timpson, has said in previous debates during the passage of the Children and Social Work Bill, this Government heard the call for further action on improving the quality of PSHE provision in schools and we are fully committed to exploring all the options available. I understand that this will come up in the Report stage for that Bill in the other place, where the Government committed to providing an update to Parliament on the issue.

This Government are clear that to improve provision any change must be made in the right way with proper consideration of all the issues, including online safety. I assure the Committee that the Government are committed to handling this important matter well. We intend to work with stakeholders and listen to the voices of young people over the coming months. With that assurance, I hope the noble Baroness can withdraw her amendment.

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[Lord Arbuthnot of Edrom (Con)]

My Lords, the noble Lord, Lord Paddick, has just given the speech that I was rather expecting the noble Lord, Lord Stevenson, to give. The amendment suggests that the Government should be completely out of the running of the BBFC, yet in his very interesting and important remarks, the noble Lord, Lord Stevenson, said that he was a bit concerned that the Government should think it right for this private company, over which the Government have very little power, to have such responsibilities.

The noble Lord, Lord Stevenson, was right to say that the current position is that the BBFC appoints itself. The council of management is chosen from leading figures in the film industry; that council chooses the president and the director, and then they do this important work. If we are to change that, we need some evidence that either there is a risk of the Government interfering in these decisions or that these decisions are being got wrong in some respect. I am not aware that these decisions are being badly taken. As far as I can tell, the BBFC is doing a pretty good job, and until we are clear what regime we want to go to, I would rather leave the law as it is.

[Lord Ashton of Hyde]

My Lords, I am grateful to noble Lords who contributed to this brief debate, especially the noble Lord, Lord Stevenson, who demonstrated his long experience in the world of film trivia.

The BBFC is an independent, not-for-profit, non-governmental body which classifies films and videos. The BBFC operates a transparent, trusted classification regime based on years of expertise and published guidelines that reflect public opinion. It is self-financed through fees from industry for the work it carries out on classification. It protects children and other vulnerable groups from harm through its classification work, which is legally enforceable and empowers consumers, particularly parents and children, through content information and education. In addition, it is the independent regulator of content delivered via the UK’s mobile networks. Using the standards in the BBFC’s classification guidelines, content which would be age-rated 18 or R18 by the BBFC is placed behind access controls and internet filters to restrict access to that content by those under 18 on all non-age-verified phones.

Amendment 71A introduces a new clause which seeks to clarify the position of the BBFC as an organisation independent of the Government. This proposed new clause also seeks that all appointments made by the BBFC be subject to fair and open competition. I am afraid we do not agree with the noble Lord, Lord Stevenson, that it is necessary to make provision for the independence of the BBFC. The role of age-verification regulator will be one that the BBFC carries out alongside its other independent roles. We do not seek this requirement for its work under the Video Recordings Act, where BBFC officials are also designated by the Secretary of State via notification through Parliament.

The Bill sets out clearly the powers of the regulator, and where it is thought appropriate that the Secretary of State should have a role, this is made clear. For example, in relation to ISP blocking it will be important that the Government and the BBFC work together on a deconfliction process. The Bill provides for a parliamentary procedure for the designation of the regulator, as it is right that Parliament should have the opportunity to scrutinise this important appointment. As we have already covered, the DPRRC has made a recommendation on the designation of the regulator and I assure noble Lords that we are currently considering this carefully before responding.

The other requirement in this proposed new clause is that any appointments made by the BBFC should be subject to fair and open competition. The BBFC is an independent body, and it is not the place for government to set prescriptive guidelines on its recruitment practice in a Bill. The BBFC is a well-respected organisation, as my noble friend mentioned, and has unparalleled expertise in classifying content. I have every confidence the BBFC will deliver on its aims.

With that explanation, I hope the noble Lord will feel able to withdraw his amendment this afternoon.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Committee: 3rd sitting Hansard - continued): House of Lords
Monday 6th February 2017 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I declare my interest as a partner in the global insurance law firm DAC Beachcroft and as chair of the British Insurance Brokers’ Association, along with other interests set out in the register.

In speaking to Amendment 196A, I seek to address a small but important point on the operation of the Employers’ Liability Tracing Office, or ELTO. Colleagues may recall that I also raised this when we debated the Enterprise Bill in 2015. Although it has been grouped with amendments to Clause 30—I am happy to accept the grouping—it seeks to insert a new clause after Clause 65 in Chapter 6 of the Bill, which deals with Her Majesty’s Revenue and Customs.

In 2010, the Department for Work and Pensions identified the need for a tracing office, and ELTO was established in the same year. Sadly, former employees continue to contract industrial diseases, including cancer, due to workplace exposure many years earlier. All too often, the employer is no longer in existence by the time the disease is diagnosed. This was considered by our colleagues at the Department for Work and Pensions as a major obstacle to the former employees’ obtaining compensation.

ELTO was established, and the insurers are now required to provide to ELTO details of all employers’ liability policies that have been issued since April 2011. According to the information I have received, ELTO is working well. In the 11 months to the end of November last year, there were more than 178,000 successful searches of the Employers’ Liability Database, but it could be working better.

The piece of the jigsaw that is often missing is the employer’s PAYE reference number. This number is now used to identify an individual employer in the Pay as You Earn system. Each employer is given a unique reference number. If this unique reference number could be applied to the Employers’ Liability Database, it would make searches more accurate, as it would avoid problems of company names’ changing over time. Generally speaking, it would enable the correct employer to be traced.

One major obstacle is that by law ELTO is unable to gain this information under the Commissioners for Revenue and Customs Act 2005, which prevents HMRC from sharing information except in specified circumstances. Alternatives to primary legislation have already been explored with HMRC. Although we often think of employers as large companies, many are sole traders or family partnerships. For them, the reference number could well amount to personal data, which are rightly protected from general disclosure.

The measure, which I now understand is supported by ELTO and HMRC, is proportionate. HMRC has a ready-made database of these unique reference numbers to which ELTO could be given limited access. All ELTO needs is the reference number itself and the name and address of the employer as a cross check. The amendment would permit ELTO and HMRC to set up, at no cost to HMRC, a facility to share this limited information. It will help make the ELTO database fit for the future.

Many noble Lords will know that I have the honour to be an officer of a number of all-party groups, including not only the Occupational Safety and Health All-Party Group but also the All-Party Group on Insurance and Financial Services, so I should also declare those interests because this amendment is strongly supported by my colleagues on those groups.

This amendment would provide great benefit to employees, employers and insurers alike. I hope my noble friend the Minister will feel able to accept it.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I am grateful to all noble Lords who have spoken. It is refreshing that, after the debate that we have had on all the concerns and worries that noble Lords have on data sharing, we now hear proposals on how data sharing can benefit various groups. This is our ambition. This is why we set the Bill up as we did and also why the devolved Administrations are so supportive. The noble Lords, Lord Collins, Lord Kirkwood, Lord Storey, Lord Whitty and my noble friend Lord Hunt all made valuable suggestions. I will come to some of the reasons that we agree or disagree with them, but fundamentally the principle is exactly why we set the system up.

Amendment 81ZA, in the name of the noble Lord, Lord Collins, seeks to require the effective maintenance of the electoral register to be specified as an objective in regulations under the public service delivery power. Electoral registration officers already have extensive powers to seek access to information in public records, providing it is for the purpose of ensuring that electoral registers are as complete and accurate as possible. Under current provisions, they would not be able to seek access to other public records for the purposes of identity verification if an applicant’s details cannot be matched against DWP records or local data sources.

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Moved by

[Lord Ashton of Hyde]

83A: After Clause 32, insert the following new Clause—
“Disclosure of information to water and sewerage undertakers
(1) If the first and second conditions are met, a specified person may disclose information held by the person in connection with any of the person’s functions to— (a) a water or sewerage undertaker for an area which is wholly or mainly in England, or(b) a water or sewerage undertaker for an area which is wholly or mainly in Wales.(2) The first condition is that the disclosure is for the purpose of assisting people living in water poverty by—(a) reducing their water or sewerage costs,(b) improving efficiency in their use of water, or(c) improving their health or financial well-being.(3) The second condition is that the information is disclosed with the intention that it will be used by the undertaker in connection with provision in the undertaker’s charges scheme under section 143 of the Water Industry Act 1991 which is included in that scheme—(a) in compliance with regulations under section 143A of that Act which impose requirements within subsection (2)(d) of that section (power for regulations to require charges schemes to make special provision for particular classes of individual), or(b) by virtue of section 44 of the Flood and Water Management Act 2010 (social tariffs).(4) In the case of a person (“P”) who is a specified person merely because of providing services to a public authority, the reference in subsection (1) to the functions of a specified person is limited to the functions P exercises for that purpose.(5) For the purposes of this Chapter a person lives in water poverty if the person is a member of a household living on a lower income in a home which—(a) cannot be supplied with water at a reasonable cost, or(b) cannot be supplied with sewerage services at a reasonable cost.”

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Moved by

[Lord Ashton of Hyde]

83C: Clause 33, page 32, line 13, leave out “section 30, 31 or 32” and insert “any of sections 30 to (Disclosure of information by water and sewerage undertakers)”

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Committee: 3rd sitting (Hansard - continued): House of Lords
Monday 6th February 2017 Lords Chamber

Moved by

[Lord Ashton of Hyde]

106A: Clause 36, page 34, line 42, leave out “section 30, 31 or 32” and insert “any of sections 30 to (Disclosure of information by water and sewerage undertakers)”

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Moved by

[Lord Ashton of Hyde]

107A: Clause 36, page 35, line 5, leave out “section 30, 31 or 32” and insert “any of sections 30 to (Disclosure of information by water and sewerage undertakers)”

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Moved by

[Lord Ashton of Hyde]

112: Clause 38, page 37, line 36, leave out paragraphs (a) and (b) and insert—
“( ) a devolved Welsh authority as defined by section 157A of the Government of Wales Act 2006, or( ) a person providing services to a devolved Welsh authority as defined by that section.”

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Moved by

[Lord Ashton of Hyde]

118: Clause 42, page 42, line 29, leave out from “behaviour”” to end of line 31 and insert “means conduct that—
(a) is likely to cause harassment, alarm or distress to any person, or(b) is capable of causing nuisance or annoyance to a person in relation to that person’s occupation of residential premises.”

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Moved by

[Lord Ashton of Hyde]

120: Clause 42, page 43, line 10, leave out from “by” to end of line 11 and insert “any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016.”

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Moved by

[Lord Ashton of Hyde]

125: Clause 43, page 43, line 29, at end insert—
“( ) which is a protected disclosure for any of the purposes of the Employment Rights Act 1996 or the Employment Rights (Northern Ireland) Order 1996 (SI 1996/1919 (NI 16)),( ) consisting of the publication of information for the purposes of journalism, where the publication of the information is in the public interest,”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

128: Clause 43, page 43, line 34, leave out from “behaviour”” to end of line 36 and insert “means conduct that—
(a) is likely to cause harassment, alarm or distress to any person, or(b) is capable of causing nuisance or annoyance to a person in relation to that person’s occupation of residential premises.”

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Moved by

[Lord Ashton of Hyde]

129: Clause 44, page 44, line 16, leave out “(“P”)”

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Moved by

[Lord Ashton of Hyde]

136: Clause 48, page 48, line 25, leave out paragraphs (a) and (b) and insert—
“( ) a devolved Welsh authority as defined by section 157A of the Government of Wales Act 2006, or( ) a person providing services to a devolved Welsh authority as defined by that section.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

139: Clause 50, page 50, line 28, leave out from “behaviour”” to end of line 30 and insert “means conduct that—
(a) is likely to cause harassment, alarm or distress to any person, or(b) is capable of causing nuisance or annoyance to a person in relation to that person’s occupation of residential premises.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

145: Clause 51, page 51, line 27, at end insert—
“( ) which is a protected disclosure for any of the purposes of the Employment Rights Act 1996 or the Employment Rights (Northern Ireland) Order 1996 (SI 1996/1919 (NI 16)),( ) consisting of the publication of information for the purposes of journalism, where the publication of the information is in the public interest,”

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Moved by

[Lord Ashton of Hyde]

147: Clause 51, page 51, line 35, leave out from “behaviour”” to end of line 37 and insert “means conduct that—
(a) is likely to cause harassment, alarm or distress to any person, or(b) is capable of causing nuisance or annoyance to a person in relation to that person’s occupation of residential premises.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

148: Clause 52, page 52, line 19, leave out “(“P”)”

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Moved by

[Lord Ashton of Hyde]

153: Clause 56, page 56, line 22, leave out paragraphs (a) and (b) and insert—
“( ) a devolved Welsh authority as defined by section 157A of the Government of Wales Act 2006, or( ) a person providing services to a devolved Welsh authority as defined by that section.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

154: Clause 57, page 57, line 14, at end insert—
“( ) Information may be disclosed under subsection (5)(b)—(a) only with the consent of the Commissioners for Her Majesty’s Revenue and Customs, if it is information to which section 60 (2) applies;(b) only with the consent of the Welsh Revenue Authority, if it is information to which section (Information disclosed by the Welsh Revenue Authority)(5) applies;(c) only with the consent of Revenue Scotland, if it is information to which section (Information disclosed by Revenue Scotland)(5) applies.”

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Moved by

[Lord Ashton of Hyde]

155: Clause 57, page 57, leave out lines 27 to 30 and insert—
“( ) any person (including the public authority) who is involved in processing the information for disclosure under subsection (1);”

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, these amendments apply to the research power, and there is an additional amendment which applies to the statistics power. Together, they add clarity and strength to the set of robust safeguards that have been developed to facilitate the processing and safe disclosure of personal information provided by public authorities for research purposes. To encourage greater use of publicly held data for research in the public interest, it is important that everyone concerned can have confidence that personal information is appropriately protected, while at the same time researchers are able to interrogate the information to produce research findings that further the public interest. These amendments further help strike that balance.

The amendments fall into four categories. First, Amendment 155, to Clause 57(9), makes clear, for the avoidance of doubt, that a public authority that processes another public authority’s personal information must be accredited to do so, as well as to process its own information.

Secondly, Amendments 159 to 180 and Amendment 191 correct defects in the drafting of Clauses 59 and 60. The defect in each clause prevents persons who receive processed information from processors under Clause 57(1) disclosing that information at all if that information meets the wide definition in Clause 57(12), whereas it was always intended that researchers would be able to disclose the information that they receive under the power to other researchers for the purposes of peer review. The amendments also strengthen the unlawful disclosure provisions by adding a new offence which applies to disclosure of a defined category of personal information by a person who has received processed information under Clause 57(1). The information that is protected is consistent with Section 39 of the Statistics and Registration Service Act 2007. The amendments have been drafted in a way that will enable researchers to submit their findings for peer review and for publication in a similar way to current practice under that Act. These amendments have been developed with the assistance of the UK Statistics Authority, which has considerable expertise in this area.

Thirdly, Amendments 183 to 189 and Amendments 192 to 195 tidy up a drafting error by which the code of practice currently applies to the disclosure, holding or use of both personal information and information that is not, or never has been, personal. To apply the code or any other safeguards in this power to information that does not identify or risk identifying individuals would be unnecessarily bureaucratic.

Finally, Amendment 210 to new Section 53A supports devolved statistics by giving the UK Statistics Authority a mechanism to share information with its statistical counterparts in the devolved Administrations. In Northern Ireland, the principal statistical department is the Northern Ireland Statistics and Research Agency, or NISRA. Some of NISRA’s functions are held specifically by its parent department, the Department of Finance. Other statistical functions are held only by the Registrar-General for Northern Ireland. New Section 53A(2) does not currently list the Registrar-General for Northern Ireland as a devolved authority, meaning that UKSA cannot share information with NISRA relating to the Registrar-General’s statistical functions. This amendment resolves this difficulty by adding the Registrar-General for Northern Ireland to the definition of devolved authority in new Section 53A(2). I beg to move.

Amendment 155 agreed.

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Moved by

[Lord Ashton of Hyde]

157: Clause 58, page 58, line 11, leave out from “by” to end of line 12 and insert “any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016.”

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Moved by

[Lord Ashton of Hyde]

159: Clause 59, page 58, line 28, at end insert—
“(A1) Subsection (A2) applies to personal information—(a) in which the identity of a particular person is specified or from which the identity of a particular person can be deduced, whether from the information itself or from that information taken together with any other published information, and(b) which is received by a person (“P”) under section 57 (1)(disclosure for research purposes).(A2) Personal information to which this subsection applies may not be disclosed—(a) by P, or(b) by any other person who has received it directly or indirectly from P.(A3) Subsection (A2) does not apply to a disclosure—(a) to a person by whom the research referred to in section 57(1) is being or is to be carried out, or(b) by a person by whom such research is being or has been carried out—(i) for the purposes of enabling anything that is to be published as a result of the research to be reviewed before publication, and (ii) to a person who is accredited under section 62 as a person to whom such information may be disclosed for that purpose.”

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Moved by

[Lord Ashton of Hyde]

165: Clause 59, page 58, line 37, leave out “(including section 57(5))”

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Moved by

[Lord Ashton of Hyde]

169: Clause 59, page 59, line 5, after “criminal),” insert—
“( ) which is a protected disclosure for any of the purposes of the Employment Rights Act 1996 or the Employment Rights (Northern Ireland) Order 1996 (SI 1996/1919 (NI 16)),( ) consisting of the publication of information for the purposes of journalism, where the publication of the information is in the public interest,”

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Moved by

[Lord Ashton of Hyde]

174: Clause 60, page 59, line 41, at end insert—
“(A1) Subsection (A2) applies to personal information—(a) in which the identity of a particular person is specified or from which the identity of a particular person can be deduced, whether from the information itself or from that information taken together with any other published information, and(b) which—(i) is disclosed under section 57 (1)(disclosure for research purposes) by the Revenue and Customs, or(ii) is disclosed under section 57 (1) by a person other than the Revenue and Customs and is derived from information disclosed under section 57 (5) by the Revenue and Customs,and is received by a person (“P”) under section 57(1).(A2) Personal information to which this subsection applies may not be disclosed by P.(A3) Subsection (A2) does not apply to a disclosure—(a) to a person by whom the research referred to in section 57 (1) is being or is to be carried out, or(b) by a person by whom such research is being or has been carried out—(i) for the purposes of enabling anything that is to be published as a result of the research to be reviewed before publication, and(ii) to a person who is accredited under section 62 as a person to whom such information may be disclosed for that purpose.”

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Moved by

[Lord Ashton of Hyde]

181: After Clause 60, insert the following new Clause—
“Information disclosed by the Welsh Revenue Authority
(1) Subsection (2) applies to personal information—(a) in which the identity of a particular person is specified or from which the identity of a particular person can be deduced, whether from the information itself or from that information taken together with any other published information, and(b) which—(i) is disclosed under section 57 (1)(disclosure for research purposes) by the Welsh Revenue Authority, or (ii) is disclosed under section 57 (1) by a person other than the Welsh Revenue Authority and is derived from information disclosed under section 57 (5) by the Welsh Revenue Authority,and is received by a person (“P”) under section 57(1).(2) Personal information to which this subsection applies may not be disclosed by P.(3) Subsection (2) does not apply to a disclosure—(a) to a person by whom the research referred to in section 57 (1) is being or is to be carried out, or(b) by a person by whom such research is being or has been carried out—(i) for the purposes of enabling anything that is to be published as a result of the research to be reviewed before publication, and(ii) to a person who is accredited under section 62 as a person to whom such information may be disclosed for that purpose.(4) Subsection (5) applies to personal information which—(a) identifies a particular person, and(b) is disclosed by the Welsh Revenue Authority under section 57 (5)(disclosure for processing) and received by a person (“P”).(5) Personal information to which this subsection applies may not be disclosed—(a) by P, or(b) by any other person who has received it under section 57 (5).(6) Subsection (5) does not apply to a disclosure under section 57 (1).(7) Subsection (2) or (5) does not apply to a disclosure which is made with the consent of the Welsh Revenue Authority (which may be general or specific).(8) A person who contravenes subsection (2) or (5) is guilty of an offence.(9) It is a defence for a person charged with an offence under subsection (8) to prove that the person reasonably believed—(a) that the disclosure was lawful, or(b) that the information had already and lawfully been made available to the public.(10) A person who is guilty of an offence under subsection (8) is liable—(a) on summary conviction, to imprisonment for a term not exceeding 12 months, to a fine, or to both;(b) on conviction on indictment to imprisonment for a term not exceeding two years, to a fine or to both.(11) In the application of subsection (10)(a) to an offence committed before the coming into force of section 154(1) of the Criminal Justice Act 2003 the reference to 12 months is to be read as a reference to 6 months.”

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Moved by

[Lord Ashton of Hyde]

183: Clause 61, page 60, line 18, after “of” insert “personal”

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Moved by

[Lord Ashton of Hyde]

186: Clause 61, page 60, line 24, after “disclosing” insert “personal information”

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Moved by

[Lord Ashton of Hyde]

188: Clause 61, page 60, line 29, leave out “or (c)” and insert “, (c) or (ca)”

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Moved by

[Lord Ashton of Hyde]

191: Clause 62, page 61, line 18, at end insert—
“(ca) may accredit a person as a person to whom such information may be disclosed for the purposes of a review of the kind mentioned in section 59(A3)(b), 60(A3)(b), (Information disclosed by the Welsh Revenue Authority)(3)(b) or (Information disclosed by Revenue Scotland)(3)(b),”

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Moved by

[Lord Ashton of Hyde]

195: Clause 62, page 62, line 11, at end insert “, and
( ) a register of persons who are accredited under subsection (1)(ca).”

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Moved by

[Lord Ashton of Hyde]

197: Clause 67, page 65, line 15, leave out from “by” to “or” in line 16 and insert “any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016,”

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Moved by

[Lord Ashton of Hyde]

200: Clause 68, page 66, line 25, leave out from “by” to “or” in line 26 and insert “any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016,”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

210: Clause 69, page 72, line 23, at end insert “, or
( ) the Registrar General for Northern Ireland.”

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 8th February 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I am grateful to all noble Lords who have taken part in this debate and in particular to the noble Lord, Lord Lester. He mentioned that he remained optimistic. When he spoke to me outside the Chamber, he said that he was “pathetically optimistic”. I would prefer to say that he is “characteristically determined”. He has produced argument after argument, not only in the BBC charter renewal debates, but also at Second Reading. I fear I may disappoint him yet again. I am sad that some of his supporters are not here.

We return to an issue which we have debated at length as part of the recent discussions on the BBC’s royal charter which were completed last year. The new royal charter was sealed on 8 December. Amendments 217, 218, 219, 229A and 234, in the name of the noble Lord, Lord Lester, seek to constrain future BBC royal charters through statute. I note and acknowledge that the noble Lord has made a number of changes to his amendments in the areas of parliamentary votes over future charters and governance. I appreciate the thought he has put into this and the dialogue we have had so far. In a skilled way, he has set a number of questions, some of which I will try to answer. He is right to say that whether we should have statutory underpinning for the royal charter is an issue of principle. He asked whether statutory underpinning was possible and legitimate. As he knows full well, because he almost answered my question for me, I agree that it is possible, and sometimes legitimate—but not always.

There remain some very serious, potential dangers associated with the noble Lord’s amendments and we cannot, therefore, support them. These amendments restrain future royal charters and funding settlements. Let me talk about two specific examples where this is problematic. On the subject of appointments, these amendments hardwire a unitary board into legislation. While we may now believe that we have found the best solution to the BBC’s governance, it is not guaranteed that we will still believe this in 10 years. As the last 10 years have shown, while governance arrangements can be drawn up with the best of intentions, these can prove unsatisfactory in practice. The new charter replaces the BBC Trust, which has been widely regarded as a failed model, and it is right that we should be able to address this in future.

The noble Lord, Lord Wood, and other noble Lords, talked about the independence of the board. I cannot see that the structure that we have reached in the royal charter can be criticised in this respect. At the moment, there are 14 members of the board, including five non-execs appointed by the BBC, four executives appointed by the BBC and four members, one for each nation, who need to be approved by the devolved assemblies. The Government have hardly got undue influence there. They are all appointed following a fair and open competition. Candidates for the chair must have a pre-appointment hearing by the Culture, Media and Sport Committee. If a change in this composition were required, an Act of Parliament would have to be amended, with the party-political debate, tactical pressure and uncertain legislative timetable that this would entail. This is not the right vehicle to make sure that the BBC can be governed effectively. Charter review remains the right vehicle—one that affords ample opportunity for debate and consultation, but also one that allows for effective decision-making and, crucially, a negotiated agreement with the BBC.

The second serious problem concerns the part of the noble Lord’s amendment which specifies that the licence fee needs to rise in line with inflation, or at a rate greater than inflation if the board recommends this, in perpetuity. This provision is not in the licence fee payer’s best interest: it sets the wrong incentives for the BBC to continue to strive to be efficient and to provide the high-quality programming that audiences expect and deserve. The BBC should continue to make efforts to increase efficiency and value for money for its audiences. This is something that the licence fee payer should be able to expect. A guaranteed income which keeps on rising is not the way to ensure this.

Furthermore, we must remember that the licence fee is a tax. It should therefore be possible for the Government of the day to ask the BBC, as is the case for every other public body, to contribute to lightening the pressures on public spending or the taxpayer’s purse, if the circumstances require it or when public spending priorities change. The noble Viscount, Lord Colville, and the noble Lord, Lord Wood, referred to the so-called raid and the cut in the licence fee income. The licence fee has been frozen at £145.50 since 2010. We will end this freeze and increase the licence fee in line with inflation to 2021-22.

[Lord Birt]

Does the Minister agree that in future, in the event that the Government interfere, as they have done twice in recent years, and require the BBC to spend its licence funding in some other way, it would be appropriate for Parliament to discuss that before the measure goes forward?

[Lord Ashton of Hyde]

I will come to that. Of course, future Governments will have to make their own arrangements in negotiations with the BBC. The BBC licence fee is a tax. Of course, the Chancellor of the Exchequer and the elected Government have a say in how taxes are raised and spent.

[Lord Lester of Herne Hill]

The Minister has twice said that the licence fee is a tax. What is the basis of that? I would have thought that the licence fee is a service charge for a service provided to those who pay the licence. That does not sound like a tax. It is not imposed by the Treasury. It is a service fee. When I watch television, because I am old I no longer have to pay, for some reason—that is another matter—but I cannot understand how it can be regarded as a tax. By calling it a tax, surely the Minister is making a threat about future inroads into the BBC’s revenue.

[Lord Ashton of Hyde]

I certainly do not intend to make threats and I am hardly in a position to do so. I called it a tax because it is so classified by the Office for National Statistics. It is regarded officially as a tax.

The funding agreement announced last July included a number of measures which will increase the BBC’s income—for example, the closure of the iPlayer loophole and the increase of the licence fee with inflation. In combination with the transfer of funding for the over-75s concession, this means that the BBC will have a flat cash settlement to 2021-22, not a 20% cut. Indeed, the director-general said in July last year:

“The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC”.


The amendments in the name of the noble Lord, Lord Lester, would endanger the effectiveness with which the BBC can be governed, and weaken the incentives for the corporation to strive for excellence and efficiency, as well as public support for the BBC’s funding.

As noble Lords know, both Houses had many opportunities to shape the future of the BBC throughout the charter review, and the Government appreciate that valuable input. But we remain of the view that the royal charter in its current form has served the BBC extremely well over many decades. The BBC agrees. The BBC’s director-general, Tony Hall—the noble Lord, Lord Hall—has welcomed the new charter, saying that,

“we have the right outcome for the BBC and its role as a creative power for Britain. It lays the foundation for more great programmes and journalism”.

With that, I hope the noble Lord will withdraw his amendment.

[Lord Lester of Herne Hill]

I am grateful to the Minister for his reply. I am not at all surprised and I remain optimistic. What I shall now do is read very carefully all the points he has made, look at the amendments that we have been discussing, strip out anything which can reasonably be objected to in the opinion of the Government and those taking part in the debate, and come back to the matter on Report—

[Lord Ashton of Hyde]

If it is helpful, I am very happy to meet and discuss this.

[Lord Lester of Herne Hill]

What I am hoping will happen is that Lord Hall of Liverpool—the director-general—will meet Ministers himself. He has been quoted in particular ways now and I will not attribute any views to him, because that would jeopardise the independence of the BBC, but I very much hope that he will meet the Secretary of State and explain privately what he thinks about these issues. From my point of view, as a would-be midwife, all I am trying to do is create a framework of principles which do not have any of the detrimental effects that the Minister has pointed to. I will seek to do that, and I hope that it will not be necessary on Report to divide the House. I am optimistic enough to believe that a thinking, open-minded Government in discussion with the BBC could come up with some statutory underpinning that would give a framework of principles without these detrimental effects. On that basis, I shall withdraw this amendment and will not pursue others in the group.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, I am grateful to the noble Lords who tabled these amendments today, and in particular to the noble Lord, Lord Best, and the Communications Committee, which he chaired. I am also grateful for the contributions of the noble Lord, Lord Birt, and the noble Viscount, Lord Colville, on the future of the licence fee itself and how it may be arranged in the future, which is slightly separate from the debate we are having today about the process for doing it. I accept that, as technology changes, the way it is structured may have to be changed in the future. I hope we can have debates on that separately at some stage in the future. I am also grateful to the noble Lords, Lord Lester and Lord Stevenson, for their amendments.

Today we are debating a new nuance regarding the BBC licence fee. On a number of occasions, Members of the House have been clear that they would like to see an end to what some have called “midnight raids” on the BBC licence fee, and we have listened to that. The BBC’s new charter regularises the BBC’s future financial settlements for the first time, and the next one will be in five years’ time. In the meantime, there will be an inflation-linked increase.

The current charter also requires the BBC to provide data ahead of each licence fee settlement to inform the Government’s decision. It is, therefore, explicitly clear that the BBC will be able to make its case and the Government of the day will be able to consider that. It also follows that anyone with valuable views and thoughts on the subject, including noble Lords—many of whom I know have experience in these matters—can share these views with the Government when the time comes.

The noble Lord, Lord Best, suggests that Ofcom should recommend what the level of funding for the BBC should be, and he proposes further that there should be a public consultation on the appropriate level of funding. It is entirely appropriate that the assessment of the BBC’s funding needs and the subsequent level of the licence fee should remain a matter for the Secretary of State. As I said before, the licence fee is a tax paid by the licence fee payer, and taxation is a matter for the elected Government rather than an unelected regulator. It is right that the Government should have some responsibility for decisions that affect the tax bills of UK citizens, as I have set out before. We would be setting potentially odd incentives for the BBC’s regulator if—as the noble Lord, Lord Lester, pointed out—it would now also be called upon to make funding recommendations. The now-abolished trust model showed that mixing regulatory and strategic functions breeds confusion and conflicting incentives. The consensus has been that this has not worked and we do not want to recreate this model.

Ofcom needs to concentrate on regulating the BBC effectively. The noble Lords, Lord Lester and Lord Stevenson, have both proposed the establishment of an independent licence fee commission to make recommendations to the Secretary of State. We agree with the sentiment of independent advice. The Government stated in their White Paper, published last May, that they would consider taking independent advice at the next settlement should it be appropriate. However, that is a matter for the Government of the day. As with Ofcom, it would not be appropriate for an independent commission to make recommendations on level of taxation.

[Lord Lester of Herne Hill]

As I listen to the noble Lord, the problem arises when he says, “That would be a matter for the Government of the day”. All this is very interesting and relevant, but none of it is binding. Effectively, the Minister is putting forward perfectly reasonable ideas for the future, but none of them has any bite. None of them is binding unless Parliament makes it so. I am afraid it is a question of wriggling to find ways of avoiding any parliamentary underpinning at all. It is that which everyone who has spoken in this House, but one, believes to be wrong. Therefore we will have to come back to it on Report.

[Lord Ashton of Hyde]

I understand the point the noble Lord is making; he illustrated it right at the beginning of his speech in the previous debate. This is a matter of principle: whether we think statutory underpinning is the right mechanism for the royal charter for the BBC. I acknowledged to him that in some cases it might be, but I did not agree that it was appropriate for the BBC. I take his point and his due warning about Report. I agree it is relevant to this, but we have established that we have a disagreement on that point of principle. As for binding future Governments, of course we do not want to do that, and, in fact, we cannot.

The next question is that of public consultation on the settlement or the level of the licence fee. As noble Lords will appreciate, funding a public service is not a straightforward topic for public consultation. For example, the recent charter review found that almost 75% of the public consider the BBC’s programming to be of a high quality, but just 20% said that they would like to see the licence fee rise in line with inflation, thus helping the BBC maintain these high standards. Public consultation, therefore, needs to be approached with due sensitivity.

The BBC’s funding needs are a very complicated and technical issue, as we have seen at every licence fee settlement. The judgment about the overall package is a fine one. It should therefore remain for the elected Government to decide how to approach reaching an appropriate level of BBC funding in a detailed and extensive negotiation with the BBC. As I have said, this resulted in a position that the director-general has said is a strong deal for the BBC that gives it financial stability.

Finally, Amendment 223 seeks to remove the ability of the BBC to set age-related licence fee concessions in the future. I have already explained that the licence fee is a tax and it is right that the Government should retain the ability to determine the outline priorities of what it should be spent on. The BBC explicitly sought responsibility for the age-related licence fee concession. Removing the BBC’s ability to determine this policy—for which it will pay—simply prevents the BBC being the master of its own destiny. I believe it is particularly arbitrary to withdraw the BBC’s ability to set this concession without knowledge of what the overall funding package for the BBC will be at that future point. I do not believe that that is in the BBC’s interest, now or in the future. With those explanations I hope that, for the time being, the noble Lord will feel able to withdraw his amendment.

[Lord Best]

My Lords, I am extremely grateful to all noble Lords who have spoken, all of whom spoke in support of a change. I get the very strong impression that the Ofcom route, which is the one proposed in my amendment, would not find so much favour with your Lordships as the creation of a separate new licence fee commission. The independence of that body would be assured. I can see that some regulators do take an interest in the fees and charges made by the bodies that they regulate—it would not be entirely unheard of for Ofcom to have a view. However, I take the point that Ofcom is fully stretched with the duties that it already has. On balance, although everyone who spoke accepts that the current arrangements have been entirely unsatisfactory and that change is needed, the idea of a new body—which does not always find favour—might be the preferable route.

In response to the Minister, there is absolute agreement that the Secretary of State must take the final decision—that is not under dispute. It also should be clear that this should not be confused with the statutory underpinning of the royal charter, which we debated earlier. This is a one-off, separate issue relating to the licence fee. I am glad the Minister accepts that independent advice might be required. However, I think it is possible to bind future Governments, in the sense that putting a process in the Bill would ensure that the transparency that everyone seeks comes to pass and that proper public consultation and parliamentary scrutiny whenever the licence fee is reviewed, which will be five years from now, happens. It might be useful to come back to this later. For the moment, I beg leave to withdraw the amendment.

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[Lord Foster of Bath (LD)]

My Lords, I have much sympathy with the amendment moved by the noble Lord, Lord Stevenson, although I have some disagreements with it as well, which I will come to. As the noble Lord said, the new charter obligation commits the BBC to extending competition for radio production. It was my understanding that that proposal came directly from the BBC—that it was not, as the noble Lord suggested, imposed on but not necessarily resisted by BBC management. As he said, it may or may not have been rather more than the independent radio producers were expecting or had requested. The Committee would benefit from hearing from the Minister a little about the background to this part of the charter and agreement.

What is clear is that it has been agreed that from April 2017, over a six-year period, the BBC will open up 60% of relevant hours—that is non-news, news-related current affairs or repeats—to competition both from in-house and indie producers. That represents about 27,000 hours of programming per year being open to competition. Although it will not go as far as what is happening in television, it is a further development of the process that began right back in 1992, when the BBC voluntarily made 10% available to independent production. That has developed over a number of years. The 10% voluntary figure was made compulsory, we then saw further developments and eventually the “compete and compare” framework was introduced, designed to drive up standards, reduce costs and ensure continuous improvement in all areas of operation.

Of course, the 60% available for competition does not guarantee the independent sector extra commissions. Independent companies will obviously have to have sufficiently good ideas and be able to demonstrate a track record of producing sufficiently high-quality content. The independent sector, of about 150 relatively small companies spread right across the country, has a growing track record of producing high-quality content and helping to increase the range and diversity of content available to BBC radio services. They produce some great programmes that win awards, and since the guide price for radio production is the same for both in-house and external producers, there is no increase in the production cost to the BBC.

It is good to hear that the independent sector is increasingly involved in training the next generation of producers through training programmes and mentoring schemes, helping to improve diversity: around 60% of learners are women, 15% are from BAME backgrounds, and 5% are people with a disability. But we have to be alert, as the noble Lord, Lord Stevenson, suggested, to the impact these changes may have on the BBC and its own staff. They will certainly need increased levels of training and skills to negotiate, so that they can compete on a level playing field with the independents.

The review that is called for in the amendment is of course sensible, but we question whether it should take place quite as early in the process as recommended by the noble Lord, Lord Stevenson. The 60% target for competition does not come into full effect until the end of 2022, which should provide the independent sector with plenty of time to develop the scale and expertise to pitch to make more programmes. It also allows time for the BBC to retrain and restructure. But the BBC acknowledges that while greater competition should deliver greater efficiency in programme costs, increasing the number of commissions open to competition threefold will require a larger in-house commissioning team, and there is already a potential impact on other in-house staff. I understand that the BBC is already in discussions with staff and trade unions about that.

It would make sense to have a review, but it should perhaps take place at the midway point between Royal Assent and 31 December 2020. If we are to have such a review, we need to look at some other issues that may form part of it, not least the BBC’s commissioning process, to ensure that the developing competition between in-house and independents is truly fair. However, we support the broad principle of the proposed review.

[Lord Ashton of Hyde]

My Lords, I am grateful to the noble Lords, Lord Stevenson and Lord Foster, for their contributions. I start with something that has nothing to do with this. I point out to the noble Lord, Lord Stevenson, who said that I did not realise quite what was going on with the BBC because I only joined halfway through, that the BBC was debated 19 times before the BBC charter review in various different forms—so it certainly had an outing if not in quite the way that noble Lords might have wished.

Moving on to the amendments in this group, the amendment in the name of the noble Lord, Lord Stevenson, concerns the impact of the BBC’s new royal charter on radio production. There has been a lot of misinformation and confusion about this change, so I hope to set the record straight. In answer to the noble Lord, Lord Foster, the proposal for change originated from the BBC. It was well received by the Radio Independents Group, which had for a number of years been seeking to have more opportunities to bid for commissions from the BBC. Following negotiations between those two bodies, it was announced by the director of BBC Radio in June 2015. That agreement predated the publication of the BBC Green Paper.

Under the agreement, the BBC agreed to move from the current very limited quota-based arrangements to a new commissioning structure, opening up 60% of eligible hours to competition by 2022. This is a change that we strongly support, since it gives significant new opportunities to the growing independent radio production sector and gives BBC radio audiences access to the best ideas out there. But increasing the competition between independent and in-house productions does not guarantee, as the noble Lord, Lord Foster, reminded us, that the independent sector will receive more commissions. Companies will have to bid for work and BBC in-house staff will still be capable of winning. Unlike TV, there will still be, in effect, an in-house guarantee of 40% of all programmes, which reflects the BBC’s continuing importance to radio.

The new BBC charter sets a firm timescale for the implementation of this change. However, the timescale for the transition—by 2022—was set by the agreement between the BBC and the RIG in June 2015. It has to be for the BBC to consider the transitional arrangements in consultation with the independent production sector and to report on them as appropriate. These are operational matters for the BBC and it is not for us to have to report on them. The BBC already reports on a number of its production and commissioning outcomes across TV and radio and I am sure that it will continue to strive for transparency here. I do, however, acknowledge the concerns that the noble Lords, Lord Stevenson and Lord Foster, raised about the implications for BBC staff.

The changes are being introduced with a long transition and both the BBC and RIG are taking steps to ensure that the transition is as smooth as possible. The noble Lord, Lord Foster, talked about training. There is a strong ethos of training and diversity in the independent sector. For example, the next RIG offers a training programme that so far has provided training days to 1,089 individual learners, including a diversity mentoring scheme. Of the learners, 60% are women, 15% are BME and 5% are disabled. The RIG encourages its members to recruit from a diverse pool of candidates and also liaises with the BBC’s diversity team. It encourages its members to match the BBC’s employment conditions.

I am sure that both the BBC and the radio industry will pay close attention to the points raised by noble Lords today and take steps to ensure that the transition is handled as sensitively as possible. Fundamentally, though, this is about giving commissioners greater choice and ensuring that listeners have access to the best possible radio shows.

With that explanation, I hope that the noble Lord will be able to withdraw his amendment.

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[Lord Puttnam (Lab)]

My Lords, I rise to make two observations, one of which makes me feel very old. I worked with the then Prime Minister, Sir Harold Wilson, on looking at the whole issue of free-to-air sporting events in terms of where they penetrated and where they had to be retained. It is interesting to note that last week it was announced that the Six Nations competition is broadcast free to air not only to all the countries involved, but also has the largest live audience for any sport anywhere in the world. So there is no, as it were, collision between the appeal of a sport, the size of the arenas and the number of people attending the events, and the fact that these events are also available on free-to-air television. I sense that sometimes it feels like it might be a trade-off: you have to get the money in or you will not get a sufficient audience. The Six Nations competition is a classic example of something that succeeds at every level.

[Lord Ashton of Hyde]

My Lords, I thank the noble Lord, Lord Wood of Anfield, for moving this amendment and I hope that I can provide some reassurance to noble Lords. Indeed, I fear we may all be in danger of violently agreeing with each other. Listed sporting events is an issue we have discussed before. As the Minister for Culture made very clear in the other place, the current listed events regime is not under threat at this time and I confirm that we will not let it be under threat. I hope that that directly answers the question put to me by the noble Lord, Lord Wood, and I therefore do not believe that these amendments are needed at this time.

I submit that it would be particularly undesirable to act in the way that Amendment 224 suggests, because it would lock in the incumbents’ position, since the requirement to be watched by 90% of the population would narrow considerably the number of channels that could ever qualify. It would narrow it to channels which had already achieved mass appeal to audiences—and that is not a step we should take rashly. The requirement in Amendment 224A that channels qualify if they are capable of reaching the vast majority of the population and likely to achieve a significant audience is, I respectfully suggest—I would certainly never use the word “sloppy” of the noble Lord, Lord Gordon—perhaps too vague to provide a workable system. Ofcom would be forever subject to challenge by channels arguing over its assessment. It would create enormous flux in the regime, meaning that sports federations could not be sure whether the channels they were negotiating with met the qualifying conditions.

However, I assure the Committee that we are keeping this area under review and we will consider how we can best ensure that any risks can be managed successfully in future. To that effect, we will consider carefully before Report the issues raised and the contributions made by noble Lords today. With that commitment, I hope that both noble Lords will withdraw their amendments.

Amendment 224A (to Amendment 224) withdrawn.

[Lord Wood of Anfield]

My Lords, I thank noble Lords for that excellent short debate. I agree with much of what the noble Lord, Lord Gordon, said about the risks of a target—such risks definitely exist—but I also agree with other noble Lords that leaving it to Ofcom is probably not the best solution. There is definitely a need for some parliamentary clarity. Ofcom wants statutory clarity so that it can be a regulator in virtue of clear rules, rather than be thrown into the contentiousness that the judgments that this would require would embroil it in. So I think that the Ofcom route is not the best route forward.

I also agree with the noble Lord, Lord Wigley, that there are certain tough cases with any rules, in particular with the Welsh and Gaelic language carrying of live sporting events. In response to the Minister, I suppose I am 10% reassured and 90% not reassured at all. To say that noble Lords can be reassured that there is no threat is not really a reassurance, because the threat does not come from the Government’s intentions being in doubt.

[Lord Ashton of Hyde]

I think the noble Lord misunderstood me. I was trying to reassure him by saying that we will not let it be under threat.

[Lord Wood of Anfield]

I appreciate that and I am grateful for it, but I fear that it is under threat by virtue of technological change and changes in viewership—not because of changes in government policy. There is a threat emerging—one can see it in the graphs and the numbers—and it requires some pre-emptive thinking. There was a hint that maybe some pre-emptive thinking is going on behind closed doors on this, but it is just not true to say that there is no threat when all five PSB channels line up and say that the numbers suggest that not one of them will qualify under the existing rules by the end of the Parliament. They are either right or they are wrong—and if they are right, there is a problem.

[Lord Ashton of Hyde]

I am sorry to keep interrupting the noble Lord; what I said was that the regime is not under threat at this time.

[Lord Wood of Anfield]

Well, I take “this time” to be this Parliament: that is the one I am in, and by the end of it there seems to be a big problem brewing. So I suspect that we will come back to this later. But for the moment I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Grantchester (Lab)]

I support Amendment 225, tabled by the noble Lord, Lord Borwick, and thank him for introducing it. We on this side of the House would claim that it has our fingerprints all over it, as it was introduced and spoken to in the other place by our honourable friend Louise Haigh MP. We agree that people with hearing or sight disabilities should be able to watch catch-up or on-demand services in the same way as they can watch standard linear TV, whether on a traditional television or on a computer, tablet or mobile phone.

We agree that broadcasters have not made sufficient progress—with the exception of the BBC, which has 98% accessibility on iPlayer. I understand that 76% of the UK’s 90 on-demand providers still offer no subtitles at all, that 85% of Sky’s on-demand content via its set-top box is inaccessible, and that only 5% of Virgin Tivo on-demand services have subtitles. I understand that on linear TV 16% of content is watched with the subtitle option switched on. The noble Lord, Lord Borwick, may well be correct to say that other broadcasters are moving in the same direction as the BBC.

This service provision is critical for people with sight or hearing disabilities, who can feel isolated and socially excluded from family, friends and society in so many ways, especially with this new way of watching TV. In the other place the equivalent amendment was withdrawn following the Minister’s commitment to take action.

We are content that this amendment would enable the Government to introduce a statutory instrument to give Ofcom the powers to fix the exact level of the quota necessary, balancing the need to make content accessible with the cost to the industry. Following consultation, Ofcom can replicate the mechanisms used for linear TV, which works on a sliding scale that requires large broadcasters to provide access services on a higher percentage of their content than the smaller ones. Furthermore, Ofcom may cap the total cost of meeting those requirements at 1% of a broadcaster’s relevant turnover.

Two issues remain, both of which the noble Lord, Lord Clement-Jones, mentioned. Both were also raised by the Delegated Powers and Regulatory Reform Committee. First, the “appropriate regulatory authority” should be named on the face of the Bill. My understanding is that the 2003 Act has Ofcom as the default regulator unless an alternative is specified, and that Ofcom has the power to designate an alternative regulator. If the Minister can confirm that this is the position, and that the custom and practice of most modern enabling legislation is similar, we would understand that the recommendation of the Delegated Powers Committee might fall away.

Secondly, we would support that committee’s recommendation that the statutory instrument should be enacted through affirmative resolution, and not by the negative procedure. There are significant reasons why that should be so, which are not limited to mere detail and technical content.

The appropriate regulatory authority, Ofcom, will have significant powers to impose substantial financial penalties for any contravention. The regulations will impose important new statutory duties on broadcasters, which may be required to increase their provision over time. Of course, all this will attract significant public interest, and the interest of both Houses of Parliament. I am sure the Minister will also confirm that Ofcom will consult widely, most notably with organisations representing people with sight or hearing difficulties.

We understand that the Minister will be minded to accept the amendment, for which we are grateful to him. Has he had discussions with Ofcom, and can he give an indication of when Ofcom might undertake, and conclude, its consultation process? I would be grateful if he could tell us when he might expect that this provision could be enacted.

[Lord Ashton of Hyde]

My Lords, I too thank my noble friend Lord Borwick for tabling such a worthy amendment, which the Government are pleased to support. I also pass on the Government’s thanks to the Ewing Foundation and Action on Hearing Loss for bringing this important issue to our attention.

In recent years technology has changed the way we do things. Long gone are the days of a fixed phone line being the only way to make or receive a call, or having to sit in front of the square box in the corner to watch your favourite television show. In 2016 Ofcom reported that 93% of UK adults use a mobile phone; similarly, it is quite normal to watch TV at a time and on a device that suits. However, given the limited provision of subtitles, signing and audio description for on-demand services, a significant proportion of society is unfairly excluded from doing so.

The current statutory targets for subtitling, signing and audio description, collectively known as access services, on domestic linear broadcast TV channels cover 83 channels. That is over 90% of the audience share for broadcast TV. However, these targets are not duplicated for on-demand services. Over the years there has been an increase in the provision of access services—most notably, the number of service providers reporting subtitles increased from seven channels in 2013 to 22 channels in 2015—but there is room for improvement. Similarly, provision levels for audio description and sign language have remained disappointingly low, with little increase over the years.

The amendment will address this shortcoming, and the 116 on-demand service providers in the UK will be required to provide access services on their on-demand content. Through consultation with Ofcom, the industry and other stakeholders, the Government will determine the requirements that providers of on-demand programme services will be required to meet. We need to make sure that the requirement maximises the benefits to consumers while not presenting undue burdens to providers of on-demand services. Consultation will enable us to strike the correct balance. I can tell the noble Lord, Lord Grantchester, that officials are engaged in discussions with Ofcom. The aim is for statutory instruments to be put in place later this year.

In reply to the noble Lord, Lord Clement-Jones, I say that the Government have noted the three recommendations of the DPRRC on my noble friend Lord Borwick’s amendment. If the House agrees the amendment, the Government will consider any further changes that are necessary and will respond to the committee in time for Report. We will get back to the DPRRC on the second one on the appropriate regulatory authority to explain that Part 4A of the Communications Act 2003, into which the proposed new sections will be inserted, is already clear that Ofcom is the regulator unless it has appointed a separate body for that purpose. Accordingly, as it has not appointed any other body, it is the regulator, but the original drafting was simply intended to fit in with the existing structure of the Communications Act, which uses the phrase “appropriate regulatory authority” and defines that separately. This maintains consistency across legislation. We are following the advice of parliamentary counsel on that.

I accept that there are two other points. I expect to be able to respond to the committee in time for Report. We commend the amendment to the Committee.

Amendment 225 agreed.

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[Lord Foster of Bath]

My Lords, clearly there is a lot of agreement about your Lordships’ Communications Committee’s recommendation that we have a new, up-to-date, fit-for-purpose EPG regime, which may also take on board the suggestions of the noble Lord, Lord Puttnam. We desperately need it.

Many examples have already been given: the difficulty of finding CBeebies and CBBC under a large number of cartoons; the difficulty of finding the iPlayer or the ITV Player on the first page of an on-demand screen on a smart TV; the difficulty of finding indigenous language channels such as S4C or BBC Alba; and even not being able to find the EPG itself on a smart TV.

There is very clear evidence that EPG positioning really matters. I will give just one example to illustrate it. If you look at the percentage of viewership of CBeebies on Virgin, where it is high up on the EPG, the share is much higher than the viewership of exactly the same programmes on Sky, where it is much lower on the EPG.

However, the real reason for my intervention is simply, as the Minister is about to respond to the debate, to draw his attention to what one of his right honourable friends—the former Secretary of State for Culture, Media and Sport—said just in 2011:

“Position on the EPG will probably be the Government’s single most important lever in protecting our tradition of public service broadcasting”.—[Official Report, Commons, 8/9/11; col. 543.]


When the Minister responds, I hope he will bear in mind what his right honourable friend said.

[Lord Ashton of Hyde]

My Lords, I thank all noble Lords who contributed to the debate. I have to warn the noble Lord, Lord Wigley, that despite his very kind remarks I may not be so amenable. My speech may contain some upsetting content—we broadcasters have to issue warnings.

Amendment 226A would extend the prominence provisions that currently exist for linear channels to on-demand electronic programme services, which are the lists of on-demand services available for selection on television interfaces. This issue was debated at length in the other place, although I note that this amendment goes further in integrating new provisions into the existing statutory framework for both EPGs and the PSB prominence regime. But I believe that the key issue remains as it was.

The Minister reassured Members in the other place then—and I reassure the Committee today—that the Government gave this issue considerable thought during last year’s balance of payments consultation, the response to which was published in August last year. Our conclusion was—and we remain of the view—that we have not seen compelling evidence of harm to PSBs to date. Creating a new regulatory regime that defines the user interfaces or submenus that should be caught, particularly in a fast-moving technological landscape, is likely to be complex. At the time of consultation, Ministers were not convinced of the benefit of regulation that might extend to, for instance, smart TV manufacturers’ user interfaces, which are developed with a global market in mind. We therefore decided not to extend the EPG prominence regime for PSBs to on-demand.

When PSBs make excellent content, generally audiences will find that content. This is true of both catch-up and live content. For example, the BBC’s award-winning children’s services are much viewed by children throughout the UK. We do not believe that further protections are necessary to ensure that children find these services. A recurring theme in the debates on the Bill has been how much more competent children are than many adults in the digital world.

Furthermore, acting in this area is extremely complicated and the fact that the amendment spans more than a page demonstrates some of the difficulties inherent in legislating in this area. The technological landscape is shifting quickly and, with it, the business models of those who seek to cater to changing audience tastes. Detailed regulations about how exactly audiences need to be guided through menus cannot be the answer here. Regulations would be outdated as soon as they came into force.

Moreover, this amendment would give prominence to the PSBs’ on-demand programme services, which include not only the PSB content of the commercial PSBs, but also content originating from their non- PSB channels. If the intention was to put on-demand EPG prominence on the same footing as linear EPG prominence, this amendment goes far beyond what we have in place for linear TV. It is therefore, in our view, not justifiable.

With that explanation—and I appreciate that the noble Lord may not be happy—I hope that tonight he will withdraw his amendment.

[Lord Puttnam]

I am looking at the general duties of Ofcom and I am failing to understand in whose interests the Government are taking this position. It is very clear to me that the general duties of Ofcom are to further the interests of citizens and to further the interests of consumers. They do not include furthering the interests of manufacturers. Is the Minister saying that in fact the interests of manufacturers and suppliers are trumping the interests of the consumer and the citizen?

[Lord Ashton of Hyde]

No, what I am saying is that we do not see that there is compelling evidence of harm to PSBs.

[Lord Wood of Anfield]

My Lords, we have had various contributions across the House of excellent quality. We have the noble Lord, Lord Low, and the noble Baroness, Lady Benjamin, talking about children’s content; the noble Lord, Lord Wigley, and my noble friend Lord Hain talking about Welsh language provision; various comments about innovation and the future from the noble Viscount, Lord Colville, and the noble Baroness, Lady Bonham-Carter, and my noble friend Lord Puttnam.

For the sake of brevity, I will respond to the Minister directly. I am slightly confused by the logic of the Minister’s response. Either electronic programming guides work in pointing people towards PSB—and the general view is that they are absolutely crucial for audience share in traditional TV—or they do not. I find it difficult to know why the logic that has traditionally held for intervention to ensure that PSB content paid for by the public has pointers towards it should no longer apply in an age when viewing habits are changing. I totally accept that it is more complicated, but I do not understand why we should throw our hands up and say, “People will find good content”, when up to now, with linear TV, we have taken great strides to ensure that people are pointed towards the content that is funded by licence fee payers. I find that discrepancy between the two worlds quite baffling.

Secondly, it is not a new set of regulations that noble Lords are asking for; it is updating the existing set of regulations—which has pretty much worked okay, with the exception of children’s TV and a few other areas—into a new age. That will require some imagination and collaboration and thinking, but it is not ripping up everything and starting again that it is being asked for. So I am disappointed that the Minister has closed the door on thinking this through further. I will definitely think more about what to do and where to take this, but for the moment I beg leave to withdraw the amendment.

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

227: After Clause 84, insert the following new Clause—
“Internet filtersInternet filters
(1) A provider of an internet access service to an end-user may prevent or restrict access on the service to information, content, applications or services, for child protection or other purposes, if the action is in accordance with the terms on which the end-user uses the service.(2) This section does not affect whether a provider of an internet access service may prevent or restrict access to anything on the service in other circumstances.(3) In this section—“end-user” means an end-user of a public electronic communications service, within the meaning given by section 151(1) of the Communications Act 2003;“internet access service” has the meaning given by Article 2(2) of Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25th November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union.”

[Lord Ashton of Hyde]

My Lords, my right honourable friend the Minister of State for Digital and Culture announced on Report in the other place that we would bring forward this amendment on internet filters. As noble Lords are aware, EU regulation 2015/2120 on open internet access, or net neutrality, has created some uncertainty as to whether family-friendly filters currently offered by internet service providers and mobile network operators are compliant. The Government are clear that such filters are indeed compliant with EU regulation. However, for the avoidance of doubt, this amendment provides reassurance for UK ISPs and mobile network operators on this matter.

The amendment clarifies that internet service providers may restrict access to information, content, applications or services where that is in accordance with the terms of service agreed by the end user. The approach that the main providers of internet access services have taken towards filtering has been a huge success. The effect of this amendment is to support the current agreements and practice between users and their providers in respect of filtered services, whether at home, on mobile or on public wi-fi.

This amendment will underpin our commitment to keeping children safe online, by providing reassurance to providers that their filters are compliant with the EU regulation. Our objective is to support the current excellent voluntary system for family filters, and to ensure that it can continue in the most effective way to protect minors online. This amendment achieves that aim and I beg to move.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, both my noble friend Lady Benjamin and the noble Baroness, Lady Jones, are far more authoritative on this subject than I could possibly be. I just want to add our support from the Front Bench for these two amendments. The noble Baroness made an important point, which is that we very much hope that the amendments are effective in clarifying the situation. There is no absolute guarantee of that but they have a fair wind because of the nature of the voluntary system of family-friendly filters that they underpin. I very much hope we do not do too much “probing”—I think that is the word that the noble Baroness used—as we are just happy that we can continue with the same system as we had before. I also think my noble friend Lady Benjamin asked an important question regarding where the gaps are in terms of the smaller players.

[Lord Ashton of Hyde]

My Lords, I am grateful for the support from all noble Lords on this. I assure the noble Lord, Lord Clement-Jones, that I feel well and truly probed after this Committee stage.

We have a voluntary system that is going well, but I accept that the noble Baroness, Lady Benjamin, has a point in asking about the remaining amounts that are not covered. We might query the numbers that she is talking about. My information is that the latest figures from Ofcom and the industry indicate that around 95% of the UK fixed broadband market offers free network-level or device-level parental filters to their customers. The numbers are important but the principle is there—what are we doing about the providers that are not covered?

The remaining 5% are generally small internet service providers offering business-to-business or niche specialist services to more tech-savvy customers. Some small ISPs have a business model based very transparently on not filtering, for open-rights reasons. However, many of them already provide guidance to customers where appropriate on free device-based or network-level filter tools. Still, we recognise the concern to do everything we can to protect children online, and I am happy to say that after discussions with my officials last week or the week before, the Internet Services Providers’ Association has agreed to take further action to encourage its smaller members to consider online safety and filters. It is updating its code of practice and new member sign-up process to ensure that members consider offering filters to their customers, and issuing a guidance note to members on filters, signposting them to further help and support. So we have addressed that point. It is still on a voluntary basis so far, and we will continue to monitor how that is going.

Amendment 227 agreed.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Committee: 4th sitting (Hansard - continued): House of Lords
Wednesday 8th February 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, Amendment 229 addresses the important issue of children’s television, something that I know the House and this Committee rightly feel strongly about. I thank noble Lords for their speeches, in particular the noble Lord, Lord Gordon of Strathblane, for pointing out some of the problems, particularly that of advertising revenue for commercial PSBs. Children’s programming has been and remains a very important aspect of the UK’s public service broadcasting system. The provision of a range of high-quality children’s programming must be a priority for public service broadcasting. Ofcom has an oversight role for the system as a whole, and indeed has found that more than eight in 10 people think that the PSB system,

“provides a wide range of high quality and UK made programmes for children”.

The BBC, as has been mentioned by many noble Lords, remains a particularly strong provider of UK-originated children’s content. That is why the new BBC charter and framework agreement make it clear that Ofcom must have particular regard to setting requirements for key public service genres like children’s programming. But as many parents will know, children now consume content via an increasing range of platforms and providers. Ofcom has found that children are watching 25% less broadcast TV than they did five years ago. The Government therefore want to support the provision and plurality of children’s content.

As the noble Baroness, Lady Benjamin, has reminded us, we are going to pilot a contestable fund for underserved public service content, with children’s content a potential key area. We expect to see the commercial public service broadcasters work closely with the contestable fund and commission more children’s content. If this does not happen, the Government will be prepared to consider whether further action is needed. It is a pilot and we will have to see where it goes. Beyond that, the Government have also extended tax relief for animation and high-end TV programmes to UK children’s programmes because, as the noble Baroness, Lady Bonham-Carter, pointed out, we recognise the tremendous benefit to the economy of the creative industries. There are also other positive developments led by the market. An example which has been mentioned is that this year, Netflix will make its first British children’s programmes. I therefore believe that additional regulation in such a fast-developing area at this time is not in the interests of a diverse and vibrant children’s TV landscape in the UK.

With that explanation, I hope the noble Baroness feels able to withdraw her amendment.

[Baroness Benjamin]

My Lords, I thank the Minister for his response. I also thank all noble Lords who have supported this amendment, or partly supported it. I am especially grateful to my noble friend Lady Bonham-Carter and the noble Baroness, Lady Jones, for putting their names to the amendment and supporting it so strongly. However, I am rather disappointed with the line the Minister has taken, as this is an opportunity to put in place a robust piece of legislation that would guarantee the future of original content made in Britain, not just on the BBC but on commercial PSBs. They are doing their bit, yes; but I want to see that being sustainable and this amendment would ensure that that happens.

We do not need more cartoons and imported programmes, which is what the majority of commercial broadcasters are offering. What we need, what the children need, are quality, UK-produced programmes. Children’s productions have always made a huge contribution to the UK economy from their international sales. We need that to continue. We are not looking for huge amounts of investment from the commercial PSBs, just what the broadcasters feel, after discussion, that they can afford. They are doing so; I want them to continue to feel that they can afford to invest in children. I want a guarantee from them, but there is no guarantee—there is no framework for them to guarantee such a thing. As I said, Ofcom often finds itself in an impossible position on this issue and can sometimes look ineffective and inadequate, because even though it proves through research that more provision for children is needed from commercial PSBs, they cannot do anything about it, as the legislation prevents them doing so.

Throughout the passage of the Bill we have talked about safeguarding and protection. Well, this amendment is about safeguarding and protecting our children’s production sector and ensuring that it continues. The sentiments behind the amendment, which I believe are sensible and reasonable, are transparency and trust—it was in that spirit that I kept the Minister regularly informed. I also engaged with Ofcom and the commercial PSBs to discuss my amendment and I have been waiting anxiously to see how the Government would respond. I am rather disappointed with what the Minister has just said.

We do not know who might own public service companies in the near future or whether they will feel obliged to provide British content for our children. Therefore, I feel that we cannot and must not leave anything to chance. Also we cannot afford to waste precious time waiting to see how the market beds in and develops, as the Minister said, because it is highly unlikely that there will be another opportunity like this to return PSB children’s programming to tier 2 where it belongs and secure homemade programming for our children in the foreseeable future, rather than leave it languishing in tier 3 where we have seen it continue to decline over the past 10 years.

Throughout my 40 years working in children’s television I have personally witnessed the lasting legacy that British-made programmes have had on the nation’s children, who discovered themselves and their world. They knew they were loved, they felt special, because the programmes reflected their lives. We owe it to the generations to come to feel and experience that same thing. I am passionate and determined not to abandon our nation’s children and I hope that the Minister and the Government will walk that path with me by rethinking and reconsidering my amendment in more depth, as I cannot give an undertaking that we will not return to this issue on Report. However, at this stage, with a heavy heart, I beg leave to withdraw the amendment.

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[The Earl of Glasgow (LD)]

My Lords, I support Amendments 230 and 231, to which my noble friends Lord Clement-Jones and Lord Foster of Bath have put their names. I am very aware of the time, so I am going to be very brief. Most of what I wanted to say has already been said. The intention of the two amendments, as I understand them, is to help prevent fans who are keen to attend a concert, sporting event or popular West End show from being misled or ripped off when they buy their tickets from a secondary market on the internet.

The first choice, of course, is to buy tickets directly from the theatre, sporting venue or event organiser. This is known as the primary market, where people pay the advertised price and there should be no problem. But if someone has trouble getting tickets from a primary source they may find themselves resorting to one of the secondary market websites—StubHub and viagogo are two of the best known. The buyer is now in a sort of digital marketplace where buying and selling is the name of the game. If they are lucky they may find what they are looking for but still have to pay considerably more than the face value of the tickets. If they are very lucky, close to the date of the event, they may even have to pay less than the original price. None the less, they have entered a world where fraudsters and touts thrive.

Tickets for popular events may already have been bought up by groups that are only out to make a profit by reselling them. Sometimes many of the tickets have already been hoovered up by bots and offered at an extortionate price. Of course people can always refuse to buy them, but there are those who are want a ticket at any price. Mark McLaren of FanFair has stated that online event ticketing started as a great idea, has grown into a very big business and has now become no less than a racket.

These important amendments attempt to contain and control that racket. The Consumer Rights Act 2015 addresses the issue and tries to regulate those practices, but as my noble friend Lord Clement-Jones said, we seem to be having trouble in enforcing the law. One of the problems is that many of the secondary ticket websites are registered abroad. The recently commissioned Waterson report has made recommendations that should improve the situation, but even that report had to admit that this is a very complex issue, with a lot of potential loopholes. If my noble friend’s amendments can be agreed, that would be an important step in the right direction.

[Lord Ashton of Hyde]

My Lords, I too would, of course, like to pay tribute, on behalf of the Government, to Baroness Heyhoe Flint today. I agree that it is particularly appropriate that we should be discussing this subject today.

In 2015 this House acknowledged the complexity of online ticketing by including the requirement for a review of consumer protection measures relating to online secondary ticketing in the Consumer Rights Act 2015. Professor Michael Waterson conducted that review, and his independent report makes a number of points relevant to these amendments. I will come to the specific question asked by the noble Lord, Lord Clement-Jones, in a minute.

First, Professor Waterson does not recommend a ban on the secondary ticketing market, recognising instead its benefit to consumers. Amendment 231, in the name of the noble Lord, Lord Clement-Jones, on the unauthorised resale of tickets, could in effect ban the secondary ticketing market. There would be no obligation for organisers to approve a resale platform, or to accept returns. As a result there would be no outlet to recoup money for those who found they could not attend an event. Consumers could be left unable to sell any tickets they cannot use, other than through the black market. That would expose buyers and sellers to much greater risk of fraud than using the online secondary ticketing market, which has safeguards and guarantees built in.

Significant market intervention should be carefully considered and consistently applied. Professor Waterson calls for the existing provisions of the Consumer Rights Act to be enforced and tested. We should therefore welcome and await the outcome of the recently announced enforcement investigation by the Competition and Markets Authority.

[Lord Stevenson of Balmacara]

I am glad the Minister has mentioned the work of the CMA, but is he aware, as I hope he is, that the CMA enforcement activity was on the previous Act, not the current one? In other words, the undertakings it obtained related to previous legislation; it specifically did not and could not look at the situation post the Consumer Rights Act 2015 since it was not in force at the time they got those undertakings.

[Lord Ashton of Hyde]

I agree with the noble Lord on that. The fact is that the enforcement activity is under way. We think it would be the wrong time, but I hope later to be not entirely discouraging.

[Lord Clement-Jones]

I am sorry to press the Minister further even at this late hour, but I do not quite understand. Presumably there is a conclusion to the review of the enforcement activity by the CMA, saying whether the enforcement activity is adequate, effective or whatever. Is there a timescale associated with this CMA review?

[Lord Ashton of Hyde]

I am afraid I do not know what the timescale is. Obviously there will be a conclusion, but I do not know at the moment. I will find out and let the noble Lord know if it is possible to know that.

To add to the Act now while the investigation is under way would serve only to undermine it. We must allow the CMA to carry out its investigation without interfering with the law it seeks to enforce. To do so will simply provide further grounds for those being challenged to resist.

I also have some specific grounds on each of the individual amendments, but in view of the hour, if the noble Lord agrees, and in view of what I hope I will say to help him, if I omit those details on the individual ones we can move on. I understand the aim of these amendments—to ensure compliance with the Consumer Rights Act—but this is already under way and we must await the outcome.

On Amendment 230, concerning the use of ticketing bots, the offences set out in the Computer Misuse Act have broad application. Unauthorised use of a computerised ticketing system may give rise to breaches of that Act. We are of the view that it may also constitute an offence under the Fraud Act. Professor Waterson believed that such breaches need to be reported and investigated. He puts the onus on ticket vendors to guard against the harvesting of tickets by persons with no intention of attending the event. He called on the ticketing industry to do more to protect itself and, with government support, the new National Cyber Security Centre is in touch with ticketing organisations on cybersecurity.

Professor Waterson also stressed the importance of having an effective strategy that deters bot usage. For example, paperless options such as mobile phone ticketing, or a bank card doubling up as a ticket, can make it harder to carry out mass ticket purchasing. Notably, this strategy was employed for the sale of tickets to the musical “Hamilton” in London.

The Government understand the spirit in which these amendments are made and the Secretary of State recently held two round tables specifically on the issue of bots. While noting there are a number of industry-led solutions available, we recognise it is hugely frustrating for fans who miss out on tickets sold on the primary market only to see them disappear on the secondary ticketing market at sometimes hugely increased prices. That is why we will continue to reflect on what has been said by all noble Lords regarding the Government’s response to Professor Waterson’s report, which will be published very soon. Furthermore, we will continue to consider the specific issue of bots and whether there is scope for further government intervention in this area. I hope to be able to update your Lordships on this shortly. With that commitment, I hope noble Lords will feel able not to press their amendments.

[Lord Stevenson of Balmacara]

Glass half full or glass half empty? I am not quite sure what to make of that. Sometimes the Minister’s choice of words is helpful and informative, light is suddenly shone across the Table and we understand where he is going. I was a bit lost on that, but I think he was saying, “Hold on for a bit, and more will be revealed”. That is the first point. Waterson is clearly the key to it and the response will presumably set out some of the agenda we might want to pursue, either with the Government or separately, if we have to come back on Report.

It would be in everyone’s best interest if those key players who have been involved up to now could meet with the Minister, perhaps soon after the Recess, to try to hammer out what is and is not possible. Bills such as this do not come past very often. There is an opportunity to do something that will fit within the strictures of the Public Bill Office and therefore will be allowable. It would be an awful shame not to get the incremental changes that we think are necessary to fulfil the ambition behind the original Consumer Rights Act, the amendments and changes and the report of Professor Waterson. It would be to the benefit of fans who have called for it.

[Lord Ashton of Hyde]

Of course, as I said right at the beginning on day one, I am always open to meeting the noble Lord and other noble Lords. I am happy to do so. I think Report will be some weeks after the Recess, so we have some time.

[Lord Stevenson of Balmacara]

I am heartened by that and, on that basis, I beg leave to withdraw the amendment.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Report: 1st sitting: House of Lords
Wednesday 22nd February 2017 Lords Chamber

[Lord Mitchell (Non-Afl)]

My Lords, I too support these amendments. At each stage of the Bill in your Lordships’ House, I felt terribly frustrated by the Government’s lack of ambition. I said in Committee and on Second Reading that the gigabyte should be king. According to something I read a couple of days ago, in 10 years’ time 50 billion devices will be connected to the internet worldwide. This country will account for some 8% to 10% of that—4 billion or 5 billion devices. We have to have the gigabyte capability in this country to deal with such massive growth. The Government’s response to something so crucial to our nation’s development is meagre, and I hope they and the Minister will reconsider.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I thank the noble Lord, Lord Mendelsohn, for his attention and for meeting us. I also thank noble Lords from the Lib Dem Benches. We have had interesting discussions and I think that they have been beneficial on both sides. I will apply that to the rest of the day’s proceedings so that we do not waste time being nice to each other for the rest of the day.

Amendments 1 and 2 seek to include a series of additional specifications on the broadband universal service obligation, all of which were discussed in Committee. Noble Lords, during the course of the Bill and already today, have commented on the Government’s lack of ambition. Let me say straightaway that the Government share the ambition for widespread availability of fibre-to-the-premises connections. More extensive fibre connectivity is crucial to the UK’s future digital economic growth—we agree on that. But the UK’s fibre market is still at an early stage of development. The Government want to encourage the market to do more to deliver fibre as widely as possible and we are already taking steps to drive FTTP deployment. In the Autumn Statement we announced more than £1 billion to support digital infrastructure, targeted at supporting the rollout of full-fibre connections and future 5G communications. Where we differ crucially is that we believe that it would not be appropriate for the universal service order to include a target for FTTP connections. Let me be absolutely clear why this would be a mistake.

I remind noble Lords that the regulatory regime for electronic communications is shaped by four European directives, adopted in 2002 and implemented in this country through the Communications Act 2003. Amendments 1 and 2, if they are to achieve what the noble Lord, Lord Mendelsohn, and others are seeking, must be consistent with this legal framework: in particular, the universal service directive. I struggle to see how a target for a 2 gigabits per second USO could possibly be compliant with EU law. First, the purpose of universal service requirements in the EU directive is not to force the development of a nascent market, such as the UK’s fibre market, but to ensure that a baseline of services is made available to all users where market forces do not deliver this. The USO is a safety net to prevent social and economic exclusion, not a statement of ambition: we are setting the minimum, not the maximum. This amendment is upside down, placing a ceiling on ambition rather than acting as a safeguard for those less well served by communications providers.

Secondly, the EU directive requires us to consider cost. Universal fibre to everyone’s door will be expensive as FTTP coverage is currently low. According to Ofcom’s latest Connected Nations report, only approximately 1.7% of UK premises have access to FTTP services. So clearly it would be very expensive to address this in the short term.

The recitals to the universal service directive indicate that any change in the scope of universal service,

“should be subject to the twin test of services that become available to a substantial majority of the population, with a consequent risk of social exclusion for those that cannot afford them”.

I have already explained that fibre to the premises is available to less than 2% of UK premises. This is far from a technology available to a “substantial majority” of the population. Furthermore, under the directive, connections provided under a broadband USO should be capable of supporting,

“data communications, at data rates that are sufficient to permit functional Internet access, taking into account prevailing technologies used by the majority of subscribers and technological feasibility”.

It may perhaps be argued that a sensible level of universal service for today should nevertheless be delivered using only fibre to the premises so as to be future- proof. But again, this suggestion would not be compliant with EU law. The directive requires that universal service be implemented using,

“the most efficient and appropriate approach”,

which is also proportionate and minimises market distortions. To require fibre-to-the-premises connections capable of 2 gigabits per second would clearly not be the most efficient way of delivering for today’s needs and would in fact cost many billions of pounds.

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[Lord Ashton of Hyde]

My Lords, that was encouragingly short. I thank noble Lords for their amendments. The noble Baroness, Lady Janke, proposed that any broadband USO must require the provision of a social tariff for broadband services. As my noble friend Lady Buscombe noted in the debate in Committee, when Ofcom was commissioned to provide advice to the Government on the design of the broadband USO, we specifically asked it to consider a social tariff to ensure that the USO is affordable for all.

The Government are presently considering Ofcom’s technical analysis, which was published on 16 December, and will publish a consultation on the detailed design of the USO. In relation to a social tariff, Ofcom noted that a social tariff might be appropriate but did not provide any indication of the costs involved and said that more work is needed. I confirm to the noble Baroness that we are sympathetic to the need for a social tariff, but it is absolutely right that further work is done first. I will briefly explain why.

First, we have a highly competitive broadband sector that delivers low prices. Bargain-basement broadband is readily available in the UK, and many people on lower incomes do not use fixed lines for their connectivity needs, preferring to rely on mobile. The ONS reports that more people use mobile phones to access the internet than any other medium.

Secondly, social tariffs work by cross-subsidy. The majority of users who pay the standard rate subsidise the beneficiaries. It would be irresponsible to force these costs on to consumers before we knew how much they are.

Thirdly, if we want a social tariff, do we want to use the USO to deliver it? That would impose the cost on the universal service provider. It might be better, for example, that the social tariff be required from all providers. I would therefore be concerned if we included a specific requirement for this in primary legislation now. However, I hope the noble Baroness will be happy with the assurance that I have given on this. We do not want it to be a source of unnecessary risk at the moment.

I turn to Amendment 4 and the noble Lord’s encouraging words trying to lead me in the direction he wants. I am afraid that at the moment, for a variety of reasons, we do not think that there is a need for such a reporting requirement. In relation to paragraph (a) of his proposed new clause, as I noted in Committee, it will be crucial to monitor progress in implementing the broadband USO. It is an important consumer measure but the reporting requirements should be decided once the design of the USO has been finalised, and not before. That will be done later.

The matters covered in paragraphs (b) and (c), regarding the percentage of premises connected via fibre to the premises, are already reported annually through Ofcom’s Connected Nations report. Paragraph (d) proposes reporting on measures taken to increase take-up of superfast broadband. This would largely repeat current reporting by Ofcom and the DCMS’s annual report.

Paragraph (f) proposes annual reporting on the number of community schemes set up each year and the level of subsidy required to achieve this, but there is no government-led community broadband programme, so we do not think there is any point in this reporting requirement.

On paragraph (g), we agree that it is important to ensure that consumers know their rights, particularly when it comes to switching. The Bill includes a number of provisions aimed at making it easier for consumers to exercise those rights, from making explicit Ofcom’s powers to set switching conditions and to require payment of automatic compensation, through to easier access to the information needed to make better decisions. The Bill’s measures are testament to the Government’s ambition to ensure that consumers are informed and empowered.

Finally, I would add that the Government will be publishing a consumer Green Paper in the spring, which is almost upon us, which will review where markets may not be working for all. With that explanation, I would be grateful if the noble Baroness could withdraw her amendment.

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Moved by

[Lord Ashton of Hyde]

6: Schedule 1, page 107, line 41, at end insert—
“Code rights and land registration
13A_ Where an enactment requires interests, charges or other obligations affecting land to be registered, the provisions of this code about who is bound by a code right have effect whether or not that right is registered.”

[Lord Ashton of Hyde]

My Lords, the Committee debates afforded the opportunity to cover many areas of the Electronic Communications Code in detail and I and my officials have reflected further on the points raised. The government amendments tabled following this are intended to provide greater clarity and make it easier for the code to be applied in practice.

Amendment 6 concerns land registration. During the debate, the noble Lord, Lord Foster, drew our attention to the relationship between the code rights and land registration rules and questioned whether the revised code provided adequate clarity on this. Having revisited this area of the revised code as a result of this, and taking into account his helpful comments, we have now tabled Amendment 6. This amendment makes it clear that the code rights will bind site providers whether they are registered as part of an agreement—for example, a lease—with the Land Registry or not. This will ensure certainty for operators and landowners and support continuity of service for consumers.

Amendments 8 to 12 are about valuation. The noble Lord, Lord Grantchester, spoke in Committee of his concerns, and the concerns of stakeholders, that paragraph 23 of the revised code was not clear enough. Paragraph 23 sets out the basis on which the consideration for an agreement to confer code rights is to be assessed. I take this opportunity to thank the noble Lord, Lord Grantchester, for taking the time to meet me and discuss these comments further, and for the effort he has made to get to grips with this complex area. I also acknowledge the contributions made by the Royal Institution of Chartered Surveyors and the Central Association of Agricultural Valuers, which have provided invaluable assistance to officials in developing amendments that will address these concerns.

The Government are clear that landowners should be paid appropriately for allowing code operators to use their land. That is why the revised code requires a price to be paid for that use, rather than creating a system where the landowner solely receives compensation. However, the Government are equally clear that the public need for digital communications services is such that landowners, whoever they are, should not be able to extract additional value from the fact that their land is being used specifically for the provision or use of electronic communications networks. Paragraph 23 therefore introduces a “no scheme” basis of valuation which ensures that any such additional value is not taken into account when the value of a code agreement is assessed. The no scheme basis of valuation is central to the aims of these reforms, which are to deliver improved coverage and connectivity for UK consumers by making it easier and cheaper for digital communications providers to roll out their infrastructure. The amendments tabled here do not change the Government’s policy position.

Amendments 8 to 10, to new paragraph 23 in Schedule 1, provide that the market value of an agreement to confer code rights must be assessed on the basis of four clearly expressed assumptions. Their combined effect will ensure that operators do not pay elevated prices for using land to provide infrastructure and deliver electronic communications networks.

Amendments 11 and 12 make corresponding amendments to new paragraph 63 in Schedule 1, which deals with the valuation of Crown tidal land. This group also contains a number of minor technical amendments. Amendment 8 simply updates and corrects a cross-reference. Amendment 13 recognises that there is no property chamber of the First-tier Tribunal in Wales, so that code disputes in Wales can be dealt with only by the Upper Tribunal.

Finally, Amendments 15 and 16 are consequential on the devolution of the management functions of the Crown Estate commissioners to the Scottish Ministers under the Scotland Act 1998, as amended by the Scotland Act 2016. I will reply to the amendment in the name of the noble Lord, Lord Grantchester, after he has spoken to it, and beg to move Amendment 6.

[Lord Grantchester (Lab)]

My Lords, I thank the Minister and his team, especially Kellie Hurst, for meeting and looking at the difficulties around the communication code. The meetings were indeed very constructive, focusing on the issue of value. I am grateful to the Minister for his introductions to the amendments today and for his kind words.

In Committee, we wondered how far this code got the balance correct between property rights and the public benefit. We all recognised the public interest in accessing modern communication channels at as low a price as possible. The Government finalised their position, after representations from operators, to a further qualified use of market value, which resulted in a clouded understanding that might not have been helpful but for this clearer use of language now proposed. In references to the new code as being on a no-scheme basis, there had been interpretations that this imported a compulsory purchase compensation basis that gave rise to general misapprehensions about the code by parties with a compulsory purchase experience. The code is now clearer that value is based on agreement as reflected by market value, qualified by the public interest in references to a no scheme basis in that the disregard is of the use of the rights for the electronic communications network.

Amendments 6 and 7 are clarifications to new paragraph 13 in Schedule 1, as prompted by the noble Lord, Lord Foster, and technical corrections are to new paragraph 15.

Amendments 8, 9 and 10 to new paragraph 23 are the pertinent amendments, with further clarifications in Amendments 11 and 12 to new paragraph 63, which now makes clear that the core principle remains that the consideration is to be assessed as the market value of agreement conferring the code rights. It is not compensation for loss. That is then further defined in new paragraph 23(2) in Schedule 1 and interpreted and qualified in proposed new sub-paragraph (3A).

As the Minister said, proposed new sub-paragraph (3A), regarding market value, makes four assumptions that clear up the misapprehensions and misunderstandings brought to us and considered in Committee. Assumption 1 recognises that the code right is within the agreement and that everything under it is relevant, save the intended function for a network. Assumption 2 reflects the Government’s policy that the operator’s freedom to assign the agreement and its qualified freedoms to upgrade or share apparatus are to be disregarded. Following these two disregards, assumption 3 affirms that the code right in question is otherwise to be assessed as it is in the real world and not some hypothetical one. Assumption 4 follows the Law Commission’s report and recent government policy in assuming there is more than one suitable site available as a means to exclude perceptions of ransom value brought forward by operators, even though the definition and interpretation of market value excludes ransom value.

Amendments 11 and 12 translate what I said above to new paragraph 63 in Schedule 1 concerning Crown land, and Amendment 13 is a technical correction of new paragraph 94. We will all be grateful that there has been a lot of proofreading and for Amendments 15 and 16 regarding the transfer of duties to the Scottish Government. We are also very grateful that the Minister listened to the concerns we raised in Committee and, in re-examining the situation, recognised that improvements could be made. We are in agreement with the amendments and, like the Minister, I am grateful to the Royal Institution of Chartered Surveyors and the Central Association of Agricultural Valuers for their technical expertise, which helped to recognise misapprehensions and clarify our drafting. These amendments make a massive improvement.

It could be said that with these improvements there should be fewer disputes and therefore fewer problems concerning the code of practice to be drawn up between operators and site owners. Granted that this may well be the case, and that the Minister said in Committee that the large superstructure of an adjudicator’s office and staffing may be costly, cumbersome and unnecessary, anxieties nevertheless remain. Wide experience in other areas operating under a code of practice is that, where there is a wide disparity between the relative economic strengths of parties involved in an activity, market power tends to lead to abuses against the smaller party with the use of unfair practices and a transfer of business risk. As Ofcom is a regulator with little or no experience or much expertise in this area, Amendment 14 proposes that it appoint an expert independent adjudicator to rule on disputes brought under the code of practice.

It would be an error to assume that the new regime will immediately work without there being a hitch or problem in the operation of the new code. Parties acting under it must recognise that any code of practice has to be abided by and has teeth with which to enforce compliance, and must have confidence that they have recourse should they consider the code to have been breached. I welcome the Minister’s assurance in this respect.

[Lord Ashton of Hyde]

My Lords, I thank the noble Lord, Lord Grantchester, for explaining his amendment, which seeks to introduce a statutory regulation by Ofcom of the code of practice for the Electronic Communications Code and to create a code adjudicator to examine breaches of the code of practice and impose sanctions. The Government understand the need to ensure that the Ofcom code of practice has real impact on industry behaviour. The Electronic Communications Code will modernise the way digital communications are deployed, and it is essential in this new market that the legitimate interests of all parties are respected.

Under paragraph 102 of the revised Electronic Communications Code, Ofcom has a duty to develop and publish a code of practice. The development of this code must be in consultation with key stakeholders, including both industry representatives and landowner interest groups. This ensures that relevant parties have the opportunity to directly influence industry standards of best practice.

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Moved by

[Lord Ashton of Hyde]

7: Schedule 1, page 108, line 33, leave out “90(2)(b)” and insert “90(2)(a)”

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Moved by

[Lord Ashton of Hyde]

15: Schedule 1, page 160, line 22, after “Commissioners” insert “or the relevant person”

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[Lord Fox]

My Lords, I am fortunate to follow the noble Lord, Lord Stevenson, whose comprehensive support of his amendment means that I need say very little, but I will make a couple of points.

We have talked in various debates on the digital economy about how wireless and broadband are converging, but there is one area where we do not want them to converge. The paroxysms that we are putting ourselves through around the broadband issue are because of how broken that market is, and there is a firm danger that we may be sending the wireless market down the same route. As the noble Lord, Lord Stevenson, pointed out, we had an equitable spectrum distribution, but there is a clear and present danger that we will move even further from that equity, with two dominant players and two very small players. The purpose of this amendment is to work in advance of that, so that we will not subsequently be debating the brokenness of the wireless market as we have been, from time immemorial, in respect of the broadband market.

When this amendment was debated in Committee, the Minister’s response was very much about leaving Ofcom to choose. He hazarded that, from the Government’s point of view,

“it also strikes us as unlikely that Ofcom, having determined appropriate rules …, would immediately nullify the results”.—[Official Report, 31/1/16; col. 1196]

In other words, it is up to Ofcom to decide, and it is not going to decide on this issue. That actually makes this amendment more important, not less. Ofcom has clearly recognised that there is a potential issue here, and it has gone tentatively down the route of limiting access to the 2.3 gigahertz spectrum while completely ignoring the 3.4 gigahertz spectrum. I think that the case has been made by the noble Lord, Lord Stevenson, for us to take account of that in the Bill and, for that reason, I support the amendment.

[Lord Ashton of Hyde]

My Lords, I thank all noble Lords who have spoken on this technical but important subject. The intention behind the amendment is that Ofcom is able to ensure competition in the mobile market. It also proposes that the Government commission and evaluate the current usage and allocation of mobile spectrum.

As has been said, Ofcom already has the power to set appropriate rules for its spectrum licensing, taking due account of competition implications. Ofcom must award licences by processes that are open, objective, transparent and proportionate to what they are intended to achieve and not unduly discriminating against particular persons or a particular description of persons. It is important to remind ourselves that Ofcom has been given the position of regulator of the telecommunications market in the United Kingdom. It already has a duty, when carrying out its radio spectrum functions, to have regard to the desirability of promoting both competition in the provision of electromagnetic communications services and the efficient management of radio spectrum for wireless telegraphy.

Reviewing the state of competition in the mobile market falls clearly within Ofcom’s remit. It considered many of the issues outlined in the proposed new clause in its recent consultation on the forthcoming spectrum auction. This included a proposal to apply a cap of 255 megahertz on the amount of immediately useable spectrum that any one operator can buy. Ofcom believes that the UK mobile market is currently working well for consumers and businesses, with strong competition between mobile network operators. It considers it unlikely that any of the four mobile network operators would cease to be credible as a national supplier of mobile services in the next few years, even if they did not obtain any spectrum in the forthcoming auction. Additionally, more useable mobile spectrum, such as the 700 megahertz band, will be available in the future. The reality is that Ofcom has considered the competition issues in some detail. Not everyone agrees with its conclusions, and Ofcom will take that into account as part of its consideration of the consultation responses. However, it is for Ofcom as the regulator to take a view on these issues, and it has already done so.

The noble Lord, Lord Stevenson, asked whether the current divisions are optimum. Ofcom is obviously more expert than I am, and we think it is for Ofcom to opine on that. As I said, Ofcom proposes to set a cap of 255 megahertz on the immediately useable spectrum. It has explained that, as a result of this proposed cap, BT/EE would not be able to bid for spectrum in the 2.3 gigahertz band. The cap will prevent a worsening of the current extent of asymmetry in immediately useable spectrum. I think that that indicates its views and I am not going to contradict it.

In addition, if the Government felt that it was necessary to direct Ofcom to undertake a competition assessment, they could do so under Section 5 of the Wireless Telegraphy Act, and they did so in 2010 ahead of the 4G auction.

The noble Lord, Lord Maxton, asked how Virgin supply a mobile network through EE. I am informed that the answer is that Virgin sublet part of EE’s spectrum access.

Given that Ofcom is already able to, and does, take into account competition issues, I hope that the noble Lord will agree to withdraw this amendment.

[Lord Stevenson of Balmacara]

I gather that the right way to respond is to say that I am obliged to the Minister for his response. The issue is really about how fair the market is going to be to the three groups concerned. Obviously, the regulator has got to decide to ensure that there is fairness in relation to the individual companies involved; there has to be respect for the overall pricing and impact that it has. But the missing ingredient is the consumers, and how they will be affected by decisions that are taken. I sometimes wonder whether the regulator has the position of the consumer centrally in its focus when it does so.

I am also minded to reflect on the fact that, with the decision of the House to impose a different form of USO within the Bill, there may be implications for how Ofcom might have to operate in this market, and it may be sensible to give time for that to be reflected on and see how it works out as we move forward a little further.

--- Later in debate ---

[Baroness Janke]

My Lords, I have resubmitted this amendment because we consider this to be a matter of concern. As I have said, the large majority of these counterfeit goods are sold through internet portals and their sale has often resulted in fires and damage. They undermine well-known brands and are a great danger. It is no surprise that the Electrical Safety Council is drawing attention to this issue and wants the Government to address it.

When I previously raised this issue, the noble Baroness, Lady Buscombe, mentioned Operation Jasper and the trials that are being carried out with counterfeit goods. I have since learned that electrical goods are not included in this project and that is why I have resubmitted the amendment. We need some action on this problem. If the noble Lord or the noble Baroness can assure me that they will take this forward—perhaps meet with the Electrical Safety Council—and look at how progress can be made, I will be happy to withdraw the amendment. But the Government must consider taking action on what is an increasing danger and a growing problem. It is perpetrated through internet portals and the people who provide the online retailing must look at the problem too and take some responsibility. I beg to move.

[Lord Ashton of Hyde]

My Lords, I am grateful to the noble Baroness for waiting patiently for the last group of amendments. By the standards of our Committee deliberations, this is pretty reasonable—we have done well. I am also surprised that Opposition Members have been longing to give us delegated powers and allowing us to say “may” instead of “must”, which we have nobly resisted. But this amendment has gone back to a more traditional view, which is to make the Government formally review and report on sale of counterfeit electrical goods on the internet. We did, as the noble Baroness said, discuss this very issue in Committee and a similar amendment was withdrawn. Being serious, the sale of any type of counterfeit goods obviously has the potential to harm consumers and the economy and, importantly, damage traders who do business legitimately; and it often supports organised crime. As my noble friend Lady Buscombe said, the Government take this matter very seriously, which is why the Intellectual Property Office is committed to tackling counterfeiting of all kinds.

Since we discussed this issue in Committee, the IPO has continued to push forward with the work outlined in the Government’s IP enforcement strategy. Officials from the IPO have now met with representatives of all the main online sales platforms in the UK to discuss what steps they are taking to tackle the sale of counterfeit goods, as well as devices which may facilitate copyright infringement. I am reassured to hear from those conversations that the main online players in the UK all share our concern about this issue.

We have also made it very clear that we expect these platforms to continue to develop and improve the systems they have in place to tackle counterfeiting. They have given us details of a number of steps they are taking to do just that. This is an evolving area, with criminal behaviour and technology both changing as we go along, so we will continue to engage with those platforms and their equivalents in countries such as China to ensure that IP rights and the safety of consumers remain a priority across the board. As a separate work stream, police, trading standards and industry representatives have continued to work on Operation Jasper, tackling the sale of counterfeit goods via social media. This work has been ongoing for some time and is an excellent example of the value of the collaborative approach in this area.

In addition to this work, the IPO has now started to gather data for the next edition of the annual IP Crime Report. It will be published in September of this year and will contain the best available evidence on the scope and scale of counterfeiting in the UK, and will include material about the sale of electrical goods online. In the light of such work and the other elements of the strategy that we have discussed previously, in the Government’s view it is not necessary to have a statutory commitment to review and report on counterfeit electricals this time. The noble Baroness made a generous offer, and I hope I have done enough to persuade her to withdraw the amendment.

[Baroness Janke]

I thank the noble Lord for his response. Certainly, his comment that electrical products are specifically being taken into account is reassuring. Will he write to me indicating in what way those goods are being incorporated in the trials, as there is a huge difference between a counterfeit handbag and counterfeit electrical goods? Although the response I received previously stated that trials were going on, it did not deal specifically with electrical goods. If the Minister would be kind enough to provide information on that in a letter, I will happily withdraw the amendment.

[Lord Ashton of Hyde]

I am certainly happy to do that. I have a note on counterfeit electricals that I cannot read, so I will provide that information in writing.

[Baroness Janke]

I thank the noble Lord. I beg leave to withdraw the amendment.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Report: 2nd sitting (Hansard): House of Lords
Monday 20th March 2017 Lords Chamber

Moved by

[Lord Ashton of Hyde]

25B: Clause 15, page 18, line 7, leave out subsection (1) and insert—
“(1) A person contravenes this subsection if the person makes pornographic material available on the internet to persons in the United Kingdom on a commercial basis other than in a way that secures that, at any given time, the material is not normally accessible by persons under the age of 18.”

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, we now move in this wide-ranging Bill from the esoteric delights of the universal service obligation, dynamic spectrum access services and the Electronic Communications Code to a crucial area: namely, seeking to protect children online.

As we have said before, the introduction of a new law requiring appropriate age verification measures for online pornography is a bold new step, with many challenges. It ensures that commercial providers of pornographic material are rightly held responsible for what they provide and profit from. Commercial providers of online pornographic content provide an incredibly large amount of easily accessible content to UK users, with little or no protections to ensure that those accessing it are of an appropriate age. It is imperative that we retain controls on such material and, in this terribly sensitive area, aim to strike a balance between freedom of expression and protection of the young.

Perhaps the most sensitive challenge is how we approach material that would not be classified by the BBFC in the offline world. We have heard concerns from some quarters that the current definition of “prohibited material” may be going too far in the type of material that the regulator is able to sanction above and beyond the age verification requirements. We heard in Committee that this,

“would give the regulator extended powers of censorship beyond that originally envisaged in the Bill”,

that it would potentially set,

“new limits on consenting adults accessing pornography that is not harmful to themselves or others”,

and that,

“this is not the place to resolve these wider debates on adult consensual pornography”.—[Official Report, 2/2/17; cols. 1355-56.]

We agree. Our policy intent is child protection, not censorship. Our amendment redefines the scope, taking an approach based on the definition of an “extreme pornographic image” in the Criminal Justice and Immigration Act 2008. This captures grotesque sexual violence, including rape. We have thought long and hard about where we should draw the line. We have adopted two principles. First, as this measure is about protecting children, we do not want to create a new threshold for what adults can or cannot see. This is not the place for that debate. Secondly, we want to ensure that we do not allow the regulator to step on the toes of others involved in policing this territory.

The definition of an “extreme pornographic image” in the Criminal Justice and Immigration Act provides a good marker. I know that there are also concerns about sexual violence against women and other acts that do not meet the “extreme pornography” definition. We absolutely do not intend to create a regime that unintentionally legitimises all types of sexually explicit content as long as age verification controls are in place. We are most definitely not saying that material not allowed under other legislation is allowed if age verification is in place.

That is why government Amendment 25YV makes it absolutely clear that content behind age verification controls can still be subject to criminal sanctions provided by existing legislation: for example, the Obscene Publications Act. But we concede that there is unfinished business here. Having protected children, we still need to examine other online safety issues. As we will come to later in the debate, my department is leading cross-government work on an internet safety strategy that aims to make the UK the safest place in the world to go online. We want to understand more about the scope of the problem and identify where there are gaps in our current approach to tackling online harms.

We have heard the calls to provide the age verification regulator with powers to block criminal images involving children, as defined by the Coroners and Justice Act 2009. However, at the forefront of cross-government thinking on this was the need not to cut across the excellent work of the Internet Watch Foundation on child sexual abuse content, complicating the landscape and making it harder to effectively and efficiently protect children. It has never been the case that this regime would seek to regulate that child sexual abuse material. Fundamentally, we are dealing with different harms, with different responses, and it is right that they are treated separately.

With child sexual abuse material, the Government seek to ensure that it is eradicated at source: that content is not just blocked but actively taken down from the internet. Providing for the age verification regulator to simply block this material in the course of its work risks this. The BBFC and the IWF are in agreement that they do not wish the BBFC to take on the role of policing child sexual abuse material, or content likely to fall within this classification. The Internet Watch Foundation does a vital and difficult job and we should not seek to complicate that by conflating with age verification.

This is a sensitive subject and we know that we will never satisfy everyone. But I hope that I have convinced noble Lords that the position we have settled on is neither arbitrary nor a sop to one interest group or another. I commend the government amendments in this group.

--- Later in debate ---

[Baroness Kidron (CB)]

My Lords, I find myself very much in the same school as the right reverend Prelate in not understanding how we can justify a form of sexual violence by one group towards another. It is very upsetting. However, I want to raise a slightly different issue that I tried to raise in Committee. I suppose that it is covered by government Amendment 25B in that it refers to commercial providers. I keep feeling that we are missing the point here—missing the business model that is fuelling all this pornography. If the amendment were to refer to those who monetise pornography—that is, those who receive money from pornography—we could make a much cleaner sweep of this issue. I think that many noble Lords will have noticed this morning—

[Lord Ashton of Hyde]

My Lords, would it help the noble Baroness if I mentioned that later in the debate we will be talking about the definition of commercial providers?

[Baroness Kidron]

It certainly would. I beg the Minister’s pardon.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

My Lords, I am grateful to the Minister for introducing his amendments today. I am also grateful to the noble Lord, Lord Paddick, for bringing some clarity to what has been quite a complicated and emotional debate this afternoon. I urge noble Lords to look at Amendment 25YW in this group, which is in my name, because I believe that would take us some way through some of the dilemmas that we face this afternoon.

As has been said, these amendments arise from a dialogue we have been having over the last few weeks about the definition of “prohibited material” and “extreme pornography”. That arose as a result of late additions to the enforcement measures in the Commons, which meant that the Bill did not receive the scrutiny it deserved at that stage. Hence we have been scrambling to understand and to consider the new requirement for internet service providers not only to block sites that do not have age verification filters in place for children but also to block access to other illegal pornographic material. I agree with other noble Lords that it is very unfortunate that this has come at such a late stage and that we are trying to deal with this important issue so late in the process. We are all at a loss and have lacked something because of it.

Since then, several variations of wording have been taken from Acts that already exist and put forward as the best way of defining the new obligation. We find ourselves having to take a significant decision on which of these various options would best benefit the law going forward. All of them would benefit from further debate.

In this context, and given the sensitivities involved, we welcome the Government’s attempt to strike the right balance on this issue. Government Amendment 25YV is crucial in this regard. It is a short amendment that says:

“Nothing in this Part affects any prohibition or restriction in relation to pornographic material or extreme pornographic material, or powers in relation to such material, under another enactment or a rule of law”.


In other words, if pornographic material is illegal offline, it would also be illegal online. The amendment underlines that point. This is the parity between offline and online that many people have sought, and it echoes the position that the Minister spelled out when we met him recently. We support this approach because we believe that any definition of illegal material transposed into the Bill at this late stage should be based on current statutory definitions.

We also recognise the added challenge that the current legal definitions are not being applied consistently, and that the Crown Prosecution Service guidelines need to be updated—which is another issue that we have been debating this afternoon. Only then will we achieve that true parity in removing offline and online material. But we are firmly of the view that this disparity should be addressed separately, and thoroughly, in conjunction with the Home Office. We are also firmly of the view that today we should focus on the intent of this Bill, which is to introduce age verification processes to stop children under 18 from accessing pornography. The debate this afternoon has muddied the water, because that is very clearly the intent of this part of the Bill, and the way that the government amendments are set out achieves that very important aim.

This is a huge step forward and a key policy prize. It is something that not just the Government but all the main political parties have been committed to. There is no doubt that if it is implemented successfully—although that is a huge ask—there will not be the opportunities for children to access the illegal material that is concerning noble Lords today. I accept of course the point made by the noble Lord, Lord Browne, that this cannot be 100% watertight—none of these things can be. We are on a journey. I think it was one of the right reverend Prelates who said that children are very tech-savvy and we have to keep up with them. Of course we do, so this will not be 100%. But it is a massive step on a journey that will stop an awful lot of casual viewing by children of internet pornography.

That is why we believe that we should retain our focus on children—to prevent all damage to their relationships, self-esteem and mental health, and all the issues which, we understand, result from underage viewing of pornography, which we have debated repeatedly during the course of the Bill.

Of course, that is not to say that there are not other huge social issues about adults viewing violent or degrading pornography—and we all have our views on the level of acceptability of that. I resent the fact that some people think that I am in favour of a free for all, because that is certainly not my position. Some of the issues have been raised by noble Lords today, and of course it is right that they are debated and resolved in the public realm. I agree with the noble Lord, Lord Alton, that there needs to be a public debate. It has been lacking until this debate today, which I believe is the beginning rather than the end of a debate which should take place.

We welcome that debate, but we do not feel that amendments to change the definition of illegal pornographic material which adults can access online is appropriate for a part of a Bill that is intended for another purpose. We believe that this should be part of a wider debate which factors in such matters as our traditional tolerance towards consenting adults and the potential consequence of more online material being driven out of reach on to the unregulated dark web if we do not get the regulation right. In this context, we appreciate the opportunity which the Minister has proposed for a wider round-table debate on internet safety and will happily work with colleagues away from the Bill on how we can best deliver solutions to some of the wider concerns that have been expressed today.

In the meantime, we recognise that the definition of extreme pornography now proposed by the Government is not ideal. It may be only a backstop pending a fuller review of more appropriate wording. That is why our Amendment 25YW would require consultation on the definitions used in this part of the Bill and a report from the Secretary of State back to Parliament within 18 months. We think that that would be a real step forward.

Although we have sympathy with the amendment in the name of the noble and learned Baroness, Lady Butler-Sloss, we are concerned about the more prescriptive end of her review. We agree that there should be a review, but the very fact that she has already spelled out what the outcome should be causes us concern.

Our view remains that we should be looking for an updated definition based on something deliverable online and offline with equal strength. A number of definitions are out there—not just the definition of extreme pornography that we have been debating today. In other pieces of legislation there are other definitions. We need to do a job of work which is more than we can do today to consider all those definitions, consider what the Crown Prosecution Service can deliver in terms of taking action against people, and work on that basis.

I really hope that we can work together on this, because this has felt like a very divided debate. It is not; there is an enormous amount that we agree on. It is the tactics of how we go forward that we are struggling with.

In conclusion, we support the government amendments, as far as they go, but I hope that the Minister will be able to commit to a wider review with a deadline for reform—in conjunction with his Home Office colleagues, because we recognise that this goes wider than his department’s remit. I hope that noble Lords will look at our amendment and support it. I look forward to the Minister’s response.

[Lord Ashton of Hyde]

My Lords, this has been a wide-ranging debate and I find myself in a slightly uncomfortable position: I am taking issue with several of my noble friends but I very much agree with the noble Baroness, Lady Jones, and the noble Lord, Lord Paddick. If I may, I shall start with the amendments tabled by the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Jones, and then move on to our amendments and reply to some of the points that noble Lords have made.

Obviously, Amendment 25YD, in the name of the noble and learned Baroness, Lady Butler-Sloss, is dependent on the preceding government amendments being passed. It provides that, three years after the Act passes, the definition of “extreme pornographic material” will cease to have effect and will be replaced by a definition of material which would not be classified—in effect, the current definition of “prohibited material”.

The debate on this has been strong on both sides, and it is an interesting idea that we have considered. However, our aim with this Bill, as has been said by several noble Lords, is to protect children from accessing pornographic material. We are creating parity between the offline and the online worlds in protecting children from being able to access pornographic material. These are different and incomparable places, and this is the closest we can get on parity of content through the age verification regime. Subject to the Bill shortly gaining Royal Assent, to specify that this should happen in spring 2020 unless a review finds otherwise by spring 2019 is in our view unnecessarily restrictive. It presents a binary choice that predetermines the outcome of any review. We know this is a fast-moving environment, and we do not know what the landscape will look like in two years’ time. Forcing the legislation into doing something which restricts the response to how children are protected online could have unintended consequences.

What we are doing now is: through the guidance to the regulator, we are providing for the regulator to report annually on the effectiveness of the regime. This will provide the opportunity to review the regime and take any necessary action. This is a big step forward without precedent, and to focus on this one issue, which is undoubtedly important, risks being able to ensure that the regime as a whole is as effective as possible in the future at preventing children from accessing pornography online.

The amendment in the name of the noble Baroness, Lady Jones, seeks to introduce that the Secretary of State must produce a report on the impact and effectiveness of the regulatory framework provided for in this part and must consult on the definitions used within this part. The report must be laid 12 to 18 months after the powers come into force. We must aim to lay the groundwork for success before the powers are introduced, and the regulatory framework we are providing will do that. However, this will be a bold new regime with many challenges and it is right that the effectiveness of the regime is reviewed. That is why, as I have just said, through the guidance to the regulator we are providing for the regulator to report annually to the Secretary of State on the impact and effectiveness of the regime. Placing a formal requirement on the Secretary of State to do this is, in our opinion, unnecessary.

The Bill is neither the end nor the extent of our interest in child internet safety. The implementation of age verification will be watched closely from day one. We have consistently recognised the need to be flexible in our approach and this will remain the case in addressing any issues that may arise. This work forms part of our wider response to online safety, and the work that has begun in the internet safety strategy demonstrates our clear commitment to ensuring that people in the UK have a positive experience online. I shall come to that a bit later. With that explanation I hope noble Lords will not press their amendments in due course.

I turn now to replies to some of the points noble Lords made about the government amendments. I echo very much the remarks of the noble Lord, Lord Paddick. For those who have not participated before in this Bill’s process, it would be helpful to repeat some of the things he said about how we got here. In some ways it is a mischaracterisation—not malicious, I hasten to add, and maybe “misunderstanding” is a better word—that we are watering down the controls, as my noble friend Lord Farmer said, or that we slipped this in at the last minute.

As the noble Lord, Lord Paddick, said, the position we are in is because we have accepted amendments through the course of the Bill. It is a bit unfair of the noble and learned Baroness, Lady Butler-Sloss, to criticise the fact that this debate is happening so late in the day when the only reason we are having it is because we accepted the amendment in the House of Commons. The issues about where we go on what is effectively internet censorship were raised in Committee in this House. So we are discussing these things because noble Lords and Members of Parliament have changed the Bill as we went on. The one thing on which we all agree—and this has been confirmed all around the House—is that we want to address child online safety. One of the big advantages from this Bill is that, by getting effective age verification in place, we have made a huge step forward.

--- Later in debate ---

[Lord Mackay of Clashfern]

The noble Lord, Lord Paddick, said that the definition of prohibited material had become somewhat “suspect”—I think that was his word. Why is that? Is it a legal definition and why has it become suspect?

[Lord Ashton of Hyde]

It should not really be me answering that.

[Lord Mackay of Clashfern]

You accepted his way of putting it.

[Lord Ashton of Hyde]

The reason is that the CPS decides whether to prosecute on offences as it sees them. It has guidance, which has been around for some time. The fact is—and some noble Lords may not agree with this—that views have changed and the CPS does not always prosecute in line with its own guidance.

[A noble Lord]

Why?

[Lord Ashton of Hyde]

The reason it does not is because it has discretion in individual cases. Sometimes it thinks it is in the public interest to prosecute and sometimes it does not. When the noble Lord said that it is discredited, I think he means that the CPS does not always prosecute every situation in line with its own guidance. If I have misinterpreted what he said, I am sure he will be able to tell us.

[Lord Paddick]

The noble and learned Lord asked a good question. My understanding is that the definition of prohibited material which the British Board of Film Classification uses is supposed to incorporate all the different definitions in different laws about what is obscene and not acceptable. The fact is that, in regard to a number of elements of those laws, the Crown Prosecution Service no longer prosecutes people for possession of that material. The definition of prohibited material therefore includes material for which someone would never be prosecuted. To that extent, the definition of prohibited material has fallen into disrepute.

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

25C: Clause 15, page 18, line 11, leave out subsection (2)

[Lord Ashton of Hyde]

My Lords, these government amendments are primarily designed to address the concerns of the Delegated Powers and Regulatory Reform Committee. The committee’s first challenge is defining who exactly is in scope of the new age verification regime. Amendment 25D provides for the Secretary of State to make regulations on the circumstances in which persons should or should not be treated as making pornographic material available on a commercial basis. We have provided these in draft to aid understanding of how this power will be used and welcome views before a final version is subject to affirmative parliamentary procedure. The intention of the regulations is primarily to capture those who make money or benefit from making pornography available online, including making it available free of charge. It is not the intention to capture those sites, for example, that mostly contain non-pornographic content. However, it is the intention to cover those who, for example, market themselves as making available pornographic material and who may benefit from it.

Questions have rightly been asked about pornography on social media and our approach has been to not rule out specific platforms. In the regulations we are suggesting the scope should not include sites where an overwhelming majority of users are clearly not accessing to view pornography or where an overwhelming majority of the content is not pornographic in nature. We do not want to let anyone off the hook and where pornographic material is available but not within scope, it may be that the site will be enabling and facilitating the availability of commercial pornography and subject to an ancillary service provider notification. It will depend on the facts of any given case. Many social media sites already act responsibly. We will also look at the issue further as part of the cross-government work on the internet safety strategy that my department is leading. I will say more about this later.

We accept the committee’s argument for greater parliamentary scrutiny of who the regulator is. Amendment 25R would ensure that the first designation to be made for any given function is by the affirmative parliamentary process. As noble Lords will be aware, we have been working closely with the British Board of Film Classification as the intended regulator for much of the regulatory framework, including directing ISPs to block sites. We will come back to this in a later group, but let me say now that we have absolute confidence in the BBFC and will strongly resist anything that endangers the introduction of these important measures to protect children.

We have also addressed concerns that the regulator has too much flexibility in setting its own guidance. Amendment 25YQ provides for the Secretary of State to issue guidance to which the regulator must have regard, as is standard practice for statutory guidance. The regulator cannot choose to ignore this guidance. It provides direction to the regulator in a number of areas, including the important power of internet service provider level blocking. ISPs will be expected to take all reasonable steps to enact a notice from the regulator. We have circulated this guidance in draft. It is based on the many discussions and debates that have taken place over the previous months, but I stress that this is a draft, and we are now seeking views from parliamentarians and others before a final version is laid in Parliament.

In addition to the guidance to the regulator, we have also strengthened the requirements on the regulator in relation to the guidance it issues in Amendments 25YM and 25YA. The age verification regulator must publish guidance about the types of arrangements for making pornographic material available that the regulator will treat as being compliant and guidance about the circumstances in which it will treat services provided in the course of a business as enabling or facilitating the making available of pornographic material or prohibited material. Government believe that internet sites, including social media, can be classified by the regulator as an ancillary service provider, where they are enabling or facilitating the making available of pornographic or prohibited material. This would mean they could be notified of pornographers to whom they provide a service. This guidance will now be subject to an affirmative parliamentary procedure the first time that it is made, providing further opportunity for scrutiny.

Amendment 25M requires the Secretary of State to be satisfied that the intended appeals arrangements are “sufficiently independent” as part of the designation process and we provide further details on this issue in the draft guidance to the regulator, on which I will say more in a moment. Again, we will come back to this in a later group, but we are confident that further parliamentary scrutiny at the time of designation provides an appropriate time to ensure that the arrangements are right. I beg to move.

--- Later in debate ---

[Baroness Jones of Whitchurch]

My Lords, I am grateful to the Minister for explaining the thinking behind these many amendments. I have read them and think that I understand them but I am sure that he will correct me if my interpretation is wrong. They underline the considerable amount of additional work that is still to be done if we are to get a comprehensive age verification scheme properly up and running.

The Minister will know that the Delegated Powers and Regulatory Reform Committee was of the view that many of the details should be spelled out on the face of the Bill. For example, it expected details such as the definition of “commercial basis” and the identity of the regulator or regulators to be specified at this stage. However, the provision of this information, like many other details, has been put off by the Government to a later date, to be included in the guidelines to which the noble Lord has referred and to be discussed in further debates that will be taken under their auspices.

The DPRRC also requested that guidelines on how the financial penalties should operate should be brought before this House as an affirmative resolution. I remind the House of a particularly stark criticism that it wrote at the time. It said:

“We consider it objectionable as a matter of principle that a regulator, who is to be clothed with extensive powers to impose fines and take other enforcement action, should itself be able to specify how key concepts used in clause 15(1) are to be interpreted”.


I would be grateful if the Minister could justify why what seems to be a rather straightforward piece of advice from that committee has once again been rejected. As I understand the noble Lord’s amendment, it is the offer of a negative procedure that is now being put before us, which of course does not carry the same weight.

The amendments deal also with the provision for appeals, which again were debated at length in Committee. The Minister will know that the DPRRC recommended that a statutory right of appeal should be placed in the Bill. Again this advice seems to have been rejected by the Government and, instead, they are relying on a new formulation of words specifying that those hearing any appeal should be “sufficiently independent” of the age verification regulator. As we have heard, the detail of this “sufficiently independent” regime is spelled out in the draft guidance.

I have to say that we share the view of the noble Lord, Lord Paddick, that this really is not good enough. The guidelines specify that the independent appeals panel will effectively be appointed and funded by the regulator. However, we have tabled a separate amendment—Amendment 25P, which will come up in a later group—that specifies our belief that the appeals process should indeed be fully independent of the regulator. We believe that our amendment is more appropriate than that of the noble Lord, Lord Paddick. It would be helpful if the Minister could explain why the DPRRC’s advice on this matter has been rejected.

I return now to the overall package of government amendments in the group. As I have said, they seem to flag up a great deal of further work that will need to carry on outside the Bill. As it is worded, the Secretary of State will issue guidance to the regulator and the regulator will, in turn, issue guidance for approval to the Secretary of State. That seems a rather cosy arrangement of swapping guidelines back and forth, but it is not quite clear to me at what point Parliament will have the final say in all these matters.

Some of the outcomes will come before the House in the form of affirmative regulations but others will not. We do not yet know who the regulators will be, how the age verification regime will work, how the privacy checks will work, what the definition of “commercial activities” will be, how ancillary services will be defined and, crucially, we do not know how the internet service blocking system will work or what kind of fines will be imposed on those who fail to comply. Without wishing to overlay this, it all feels like a rather unsatisfactory piece of legislation. The amendments before us today and the guidelines that have recently been issued do little to reassure us that the Government really have got the detail of this in hand.

Regrettably, we feel that the Government are in danger of delegating far too many powers to the as yet unspecified regulator. This is an issue that we will return to in the next group of amendments. In the meantime, I look forward to hearing the Minister’s response on the points I have raised.

[Lord Ashton of Hyde]

My Lords, Amendment 25N in the name of the noble Lord, Lord Paddick, seeks to remove the word “sufficiently” from the appeals guidance. I will explain why we do not think that that is necessary.

The draft guidance to the regulator specifies that an appointments board engaged by the regulator must appoint an independent appeals board—independent of the regulator, government and the industries that are most likely to submit an appeal. The draft guidance explains that the members of the independent appeals board, appointed by the appointments board, should be appointed on terms and conditions that ensure their independence. Members should represent a broad spectrum of opinion and experience and be respected in their field. They should also be able to demonstrate a commitment to the standards of conduct set out in the Committee on Standards in Public Life’s The 7 Principles of Public Life. We agree that it is important that there is an independent, open, fair and transparent appeals process. Our amendment to the designation and guidance achieves this. It will deliver an appeals process that gives those affected recourse to an independent appeals panel which is not part of the regulatory body, and where the regulator has no say on who is a member and has no role in making the appeal decision.

Further parliamentary scrutiny at the time of designation will provide an opportunity to ensure that the arrangements are right. As part of the designation process, government Amendment 25Q requires the Secretary of State to lay before Parliament a statement of the reasons why she is satisfied that, for example, any person hearing an appeal will be sufficiently independent. Parliament will then have an opportunity to scrutinise this. In this case, “sufficiently independent” is an adequate description of a most robust appeals process. On that basis, I invite the noble Lord not to move his amendment.

I was somewhat taken aback by the noble Baroness’s criticism of our response to the DPRRC. We thought we had addressed—

[Lord Framlingham]

I hope I am right. I think Amendment 25N is in the next group.

[Lord Ashton of Hyde]

I am sorry, that has rather thrown me. I was saying that I was surprised by the noble Baroness. We think that we have agreed to the spirit of nearly all of the DPRRC amendments. We have not done everything to the letter but we have agreed to the spirit of its amendments. However, we have written back to the DPRRC about the classification of a regulator—which we will come to later—but that is purely because we are following other legislation.

[Baroness Jones of Whitchurch]

I specifically asked about the ability to impose fines and so on. That appears to be under a negative resolution in the government amendments.

[Lord Ashton of Hyde]

We have not designated the financial regulator. We will have to do that. I will check if it is under a negative resolution and undertake to write to the noble Baroness and talk to her about it. I cannot remember what it is, to be quite honest.

The point about the financial regulator—we will come to this in a later amendment—is that we have a disagreement about the extent to which the BBFC should carry out functions. The one thing that we are agreed on is that it should not carry out financial enforcement. We will talk later about what exactly it should and should not do. We have not yet designated who the financial enforcement regulator is—we will do that later—but we want to get the regime up and running before we decide.

The government amendments have addressed many of the points raised today and by other noble Lords during the passage of the Bill. They provide for greater parliamentary scrutiny, include affirmative procedures where there were none and provide greater clarity and direction to the regulator. The direction to the regulator will be laid before Parliament and we have invited noble Lords to contribute to that draft guidance. In all, that will give greater confidence that the measures will be in the best place possible to be successful. I beg to move.

Amendment 25C agreed.

Moved by

[Lord Ashton of Hyde]

25D: Clause 15, page 18, line 16, at end insert—
“(2A) The Secretary of State may make regulations specifying, for the purposes of this Part, circumstances in which material is or is not to be regarded as made available on a commercial basis.(2B) The regulations may, among other things, prescribe circumstances in which material made available free of charge is, or is not, to be regarded as made available on a commercial basis.(2C) Regulations under subsection (2A) may provide for circumstances to be treated as existing where it is reasonable to assume that they exist.”

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Moved by

[Lord Ashton of Hyde]

25G: Clause 16, page 18, line 38, before “means” insert “(except in the expression “extreme pornographic material”)”

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[The Earl of Erroll]

My Lords, this is an important point. Without enforcement, nothing will work. If you do not enforce age verification, no one will bother with it. For exactly the same reasons as the noble Lord, Lord Paddick, gave, I think that the notice and take-down—the blocking—is the only thing that will work. Fines will not work; it is probably a waste of time even trying them. The only thing that might work is to ask the credit card companies not to take payments for those sites, because they like to observe the law. I am concerned that the BBFC will not have resources to do this properly, but even if it goes elsewhere the BBFC should still be able to notify ISPs to block sites. That bit must certainly be enforced.

[Lord Ashton of Hyde]

My Lords, I am grateful to everyone who has spoken in this brief debate. The introduction of a new law requiring appropriate age verification measures for online pornography will help protect young people and children from potential harms from online pornography. It will also rightly hold commercial providers of online pornography responsible for the material they provide and profit from.

The Government of course take the protection of children and young people very seriously. To provide effective protection it is important that we have a robust regulatory system in place. These amendments seek to limit the scope of the regulatory functions that may be fulfilled by the BBFC by seeking the requirement that the same regulator must not be responsible for both identifying a non-compliant site and taking enforcement action against it. I shall first explain why, in identifying the BBFC as the preferred regulator, we think we have made the right choice.

The Government’s intention is that, subject to parliamentary approval, the BBFC will be the regulator responsible for identifying websites that do not have adequate age verification or are hosting extreme pornography, and then to give notice to the appropriate persons, be they payment service providers, ancillary service providers or ISPs. It is not intended that the BBFC will be designated as the regulator responsible for issuing financial penalties. That will be a role for a separate body, yet to be determined, but which will be approved by Parliament.

We are pleased to be working with the British Board of Film Classification as the intended age verification regulator, again subject to parliamentary approval. To respond to the remarks of the noble Baroness, Lady Jones, on structure, the BBFC is an independent, not-for-profit company that has a proven track record of interpreting and implementing legislation as the statutory authority for age rating videos under the Video Recordings Act. It has unparalleled expertise in classifying content and it is committed to delivering the aims of age verification. It is the expert on editorial judgments over pornographic and other content.

The BBFC has been classifying cinema films since it was set up in 1912 and videos and DVDs since the Video Recordings Act was passed in 1984. It continuously has to make judgments on classification, openly and transparently. These decisions relate to a multimillion-pound industry and are subject to challenge. The BBFC’s work with mobile network operators on the self-regulatory regime for mobile content is a good example of where it successfully sets content standards, implements them and adjudicates transparently and accountably.

The BBFC will not operate without oversight. It must have regard to the statutory guidance from the Secretary of State to the regulator. This will provide a further opportunity to ensure that the regulator fulfils its duties in the way Parliament sees fit. As I said earlier, we are seeking views on this guidance before a final version is laid. Ultimately, the regulator’s decision-making process will be subject to oversight by the courts as there is the possibility of challenge by way of judicial review. This prevents it acting arbitrarily.

In our view, these amendments are unnecessary for the following reasons. First, Clause 17 already enables the Government to designate a person, or any two persons or more jointly, as age verification regulators. The importance of getting this measure right means that the Government remain open-minded and retain flexibility as to how best to respond to changing circumstances. If the BBFC is proven to be unable to deliver certain regulatory functions the legislation has the flexibility to overcome these problems.

Secondly, splitting the regulatory functions in the Bill so that the same regulator cannot identify non-compliant sites and enforce against them unnecessarily creates a middleman in the process. The BBFC will have to give notice to a second regulator, which will then pass that notice on to an ISP or other appropriate body. This is just red tape for no benefit. It makes sense that the body that makes the original determination should also be responsible for notifying relevant parties affected by that determination and for ensuring that that notification action is effective in achieving compliance.

Thirdly, our ambition is to have the age verification regime in place by spring 2018. We are determined to stick to that timetable. The NSPCC has set out the scale of the problem we face and we need to get on with protecting children as quickly as we can. If we need to invent an additional regulator that can only delay the result.

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Moved by

[Lord Ashton of Hyde]

25L: Clause 17, page 19, line 48, leave out “this Part” and insert “—
(a) all of the functions of the age-verification regulator under this Part, or(b) any of those functions specified in the notice by which the designation is made.( ) Different persons may be designated for the purposes of different functions.”

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Moved by

[Lord Ashton of Hyde]

25M: Clause 17, page 20, line 8, leave out from “that” to end of line 9 and insert “—
(a) arrangements will be maintained by the age-verification regulator for appeals to which subsection (4A) applies, and(b) any person hearing an appeal under those arrangements will be sufficiently independent of the age-verification regulator.(4A) This subsection applies to appeals—”

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Moved by

[Lord Ashton of Hyde]

25Q: Clause 18, page 20, line 29, leave out subsection (1) and insert—
“(1) Where the Secretary of State proposes to make a designation under section 17, the Secretary of State must lay before both Houses of Parliament—(a) particulars of that proposed designation, and(b) a statement of the reasons why the Secretary of State is satisfied about the matters mentioned in section 17(4).”

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Moved by

[Lord Ashton of Hyde]

25T: Clause 21, page 23, line 24, at end insert—
“( ) The Secretary of State must lay before both Houses of Parliament the guidelines, and any revised guidelines, published under this section.”

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Moved by

[Lord Ashton of Hyde]

25U: Clause 22, page 23, line 44, leave out “prohibited” and insert “extreme pornographic”

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Moved by

[Lord Ashton of Hyde]

25YC: After Clause 22, insert the following new Clause—
“Meaning of extreme pornographic material
(1) In this Part “extreme pornographic material” means (subject to subsection (3)) material—(a) whose nature is such that it is reasonable to assume that it was produced solely or principally for the purposes of sexual arousal, and(b) which is extreme.(2) For the purposes of subsection (1)(b), material is extreme if—(a) its content is as described in section 63(7) or (7A) of the Criminal Justice and Immigration Act 2008, and(b) it is grossly offensive, disgusting or otherwise of an obscene character.(3) Material to which paragraphs (a) and (b) of subsection (1) apply is not “extreme pornographic material” if it is or was included in a classified video work, unless it is material to which subsection (4) applies.(4) This subsection applies to material—(a) which has been extracted from a classified video work, and(b) whose nature is such that it is reasonable to assume that it was extracted (with or without other material) solely or principally for the purposes of sexual arousal.(5) In this section—“classified video work” means a video work in respect of which the video works authority has issued a classification certificate;“video work” means a video work within the meaning of the Video Recordings Act 1984;“the video works authority” has the meaning given in section 16 ;“classification certificate” has the same meaning as in the Video Recordings Act 1984 (see section 7 of that Act);“material” means—(a) a still image or series of still images, with or without sound; or(b) a series of visual images shown as a moving picture, with or without sound.”

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Moved by

[Lord Ashton of Hyde]

25YE: Clause 23, page 25, line 6, leave out “prohibited” and insert “extreme pornographic”

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Moved by

[Lord Ashton of Hyde]

25YM: After Clause 24, insert the following new Clause—
“Guidance to be published by age-verification regulator
(1) Subject to the following provisions of this section, the age-verification regulator must publish, and revise from time to time—(a) guidance about the types of arrangements for making pornographic material available that the regulator will treat as complying with section 15(1); and(b) guidance for the purposes of section 22(1) and (6) about the circumstances in which it will treat services provided in the course of a business as enabling or facilitating the making available of pornographic material or extreme pornographic material.(2) Once the regulator has prepared a draft of guidance it proposes to publish under subsection (1)(a), it must submit the draft to the Secretary of State.(3) When draft guidance is submitted to the Secretary of State under subsection (2), the Secretary of State must lay that draft guidance before both Houses of Parliament.(4) Once the regulator has prepared a draft of guidance it proposes to publish under subsection (1)(b), it must submit the draft to the Secretary of State for approval.(5) When draft guidance is submitted to the Secretary of State under subsection (4), the Secretary of State may approve it either without modification or with such modifications as the Secretary of State decides should be made to it.(6) Once the Secretary of State has approved draft guidance under subsection (5), the Secretary of State must lay the following before both Houses of Parliament—(a) the draft guidance, incorporating any modifications the Secretary of State has decided should be made to it under that subsection, and(b) if the draft incorporates such modifications, a statement of the Secretary of State’s reasons for deciding that those modifications should be made. (7) If, within the period of 40 days beginning with the day on which draft guidance is laid before Parliament under subsection (3) or (6), either House resolves not to approve that draft guidance, the age-verification regulator must not publish guidance in the form of that draft.(8) If no such resolution is made within that period, the age-verification regulator must publish the guidance in the form of the draft laid before Parliament.(9) But subsection (11) applies, instead of subsections (7) and (8), in a case falling within subsection (10).(10) The cases falling within this subsection are—(a) the case where draft guidance is laid before Parliament under subsection (3) and no previous guidance has been published under subsection (1)(a) by the age-verification regulator; and(b) he case where draft guidance is laid before Parliament under subsection (6) and no previous guidance has been published under subsection (1)(b) by the age-verification regulator.(11) The regulator must not publish guidance in the form of the draft laid before Parliament unless the draft has been approved by a resolution of each House of Parliament.(12) Subsections (7) and (11) do not prevent new draft guidance from being laid before Parliament.(13) For the purposes of subsection (7)—(a) where draft guidance is laid before each House of Parliament on different days, the later day is to be taken as the day on which it was laid before both Houses, and(b) in reckoning any period of 40 days, no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.(14) References in this section to guidance and draft guidance include references to revised guidance and draft revised guidance.”

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[Baroness Jones of Whitchurch]

My Lords, I echo many of the concerns raised by the noble Lord, Lord Paddick. We added our name to a similar amendment in Committee and there was a broad degree of support for the principles that were expressed. The amendment returns to the essential need to protect the identity of those who are over 18 and legitimately want to access pornographic sites without having their personal details compromised in the age verification process.

The noble Earl, Lord Erroll, has been very helpful in explaining how the privacy systems would work, using a two-stage process to prove someone’s age and then giving them an encrypted token to use on adult sites. We agree with this model and would like to see it widely adopted. It assumes that age verification would be carried out by a separate age verification provider who has the specific technical skills to carry out these checks securely. However, we also agree that technology is moving on apace and that it would be a mistake to be too prescriptive. We believe that a code of practice, as set out in the amendment, would deliver the protections while allowing that to happen.

That brings us to the draft guidance on the regulator, which the Government published last week and which addresses the issue of privacy. We believe that of all the parts of the draft guidance, the section on privacy is indeed a step forward. It puts the onus on the regulator to work with the Information Commissioner’s Office to ensure that systems are in place to check a user’s privacy while having regard to the Data Protection Act. While we welcome that, we would also like it to address the need for users to have a choice of provider. Again, that is something that we debated at an earlier stage.

In addition, we have a continuing concern that the only provision for data protection breaches is for the ICO to be informed, rather than necessarily for it to act. I hope that the Minister will be able to reassure us that, if there are such breaches, they will indeed be followed up by action.

I hope that the Minister will be able to reassure us on these points. However, we feel that progress is being made on this subject. Depending on what the Minister is able to say in response, it may well be that we will ask the noble Lord, Lord Paddick, not to press the issue at this time.

[Lord Ashton of Hyde]

My Lords, I thank the noble Lord, Lord Paddick, and the noble Baroness, Lady Jones, and I thank the noble Earl, Lord Erroll, for his expertise in this area—age verification, I am talking about.

I have some sympathy with the noble Lord and the noble Baroness on this because we, too, have absolute desire for anonymity in these matters. So the Government have sympathy for the intention behind the amendments, but we feel that they go too far and that this amendment is therefore unnecessary. We have already made provisions to cover these concerns under government Amendment 25YQ, which provides that the Secretary of State may issue guidance to the regulator. I assure noble Lords that we approach this issue with the utmost seriousness. We have set out the draft guidance, which noble Lords have mentioned. It is of course draft guidance and, as we say at the beginning of it, we welcome comments—so perhaps some of the comments from today’s debate can be incorporated.

A person making pornographic material available on a commercial basis to persons in the United Kingdom must have an effective process in place to verify that a user is over 18. This age verification already takes place online, from the gambling industry to mobile phone content to purchasing age-protected goods. There are various ways to age-verify online, as the noble Earl explained, and, as the industry is developing rapidly, it is expected that new age verification technologies will develop over time.

Providers are innovating and providing choice to customers. We agree that the process of age verifying for adults should rightly be focused on the need to establish that the user is aged 18 or above, rather than seeking to identify the user. As I have said, age verification controls are already in place without the approval of the age verification providers. For example, licensed gambling sites are required to have age verification controls that are not subject to pre-approval by the regulator but must take account of data protection laws.

We recognise that pornography provides a unique challenge in this space, which is why we are ensuring that the measures in place are stronger than currently exist. As such, the draft guidance to the regulator—I am pleased that in this area at least the noble Baroness, Lady Jones, gave her qualified approval—sets out the detail of how this should be done. Rather than setting out a closed list of age verification arrangements, the regulator’s guidance should specify how it will assess in any given case that the requirements have been met.

The draft guidance, which was published last week, is clear that the process of age verifying for adults should be concerned only with the need to establish that the user is aged 18 or above, rather than seeking to identify the user. The privacy of adult users of pornographic sites must be maintained. We do not want the regulator to duplicate the role of the Information Commissioner’s Office, the UK’s independent body set up to uphold information rights. The draft guidance states:

“The process of age verifying for adults should be concerned only with the need to establish that the user is aged 18 or above, rather than seeking to identify the user. The privacy of adult users of pornographic sites should be maintained and the potential for fraud or misuse of personal data should be safeguarded … The role of the Regulator should be to focus on the ability of arrangements to verify whether someone is over 18 and should be assured that age verification arrangements will protect a user’s privacy”.


That is pretty clear, I think.

As also set out in our draft guidance, the age verification regulator should work with the ICO. The regulator should be clear in its guidance on the requirements that age verification services and online pornography providers will have regard to under data protection legislation and, furthermore, that a privacy-by-design approach should be taken, as recommended by the ICO.

It is right that we do not seek here to duplicate the existing legislative and regulatory framework, but we must ensure that they are built into the age verification process in a meaningful way. We have always been clear that adults should be able to access legal pornographic content and individuals should rightly be protected from unintended consequences when doing so. As I said, we have produced a draft of the Secretary of State’s guidance and are certainly happy to have further discussions ahead of the final version being laid.

[Baroness Thornton (Lab)]

Could I invite the Minister to be slightly less gentle with those supporting this amendment by saying not that it goes too far but that it is a wrecking amendment? It would drive a coach and horses through this legislation.

[Lord Ashton of Hyde]

I had not thought of that. I am absolutely sure that that was not the intention. However, in the meantime, I would like the noble Lord to withdraw his amendment.

[Lord Paddick]

My Lords, I thank in particular the noble Earl, Lord Erroll, for his support on this amendment and acknowledge the work that he is doing in this field. The noble Baroness, Lady Jones of Whitchurch, said she echoed many of our concerns—and in Committee, Labour Peers added their names to the amendment. It proposes a code of practice, the content of which would be specified in the Bill, but it would provide flexibility, in that it sets out only the minimum requirements of such a code.

The Minister said that the Information Commissioner’s Office is responsible for data protection, but the Information Commissioner’s Office is designed to ensure that people who voluntarily put their personal information into the internet are protected—and this is not a voluntary process. This is making it compulsory for anybody who wants to access adult material to give their personal data, which they would not otherwise have to do. We therefore think that the protections should be greater than those provided by the Information Commissioner’s Office.

As the Minister himself said, privacy is more important when it comes to accessing pornography than it is when accessing, for example, gambling sites. We are not reassured. The draft guidance that the Government have issued is only guidance that a regulator should have regard to; it does not have teeth at all. We therefore find both the draft guidance and the explanation given by the Minister inadequate for protecting the identities of those who seek age verification. I therefore wish to test the opinion of the House.

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[Lord Alton of Liverpool]

My Lords, I support the amendment proposed by the noble Baronesses, Lady Jones and Lady Janke, but also the remarks of my noble friend Lady Howe. I want to ask the Minister, when he comes to reply, about an issue that I raised in your Lordships’ House previously, and that is the issue of suicide sites on the internet. It concerns me that young people can be encouraged to visit those sites and take their own lives. Only a year ago I attended a school prize giving in a north-west school, and the headmaster told me when I arrived how a child in that school had taken their own life only the day before. As noble Lords can imagine, that was a terrible tragedy not only for the family but for the whole school, and it rather changed the atmosphere on that occasion. That child had been visiting one of the suicide sites on the internet, and the headmaster discovered that several other children had been doing the same.

It can be revenge porn or the kind of trolling to which the noble Baroness referred, the harassment of young women in particular, or the whipping up of xenophobia, racism or anti-Semitism, but it is right that there should be a code of practice, and we should get on with it. I hope that the Minister will tell us more about the Green Paper, what the framework will be for it and when we are going to start to look at these issues seriously.

[Lord Ashton of Hyde]

My Lords, I am grateful to all contributors on this important subject. We take the harm caused by online abuse and harassment very seriously. The measures that we have introduced in this Bill show that the Government are taking this seriously. I hope that I can offer some comfort in this area since we last discussed these two amendments in Committee.

Amendment 25YR seeks to require Ministers to issue a mandatory code of practice to ensure that commercial social media platform providers show a duty of care to ensure the safety of a child or young person using their service; to report and remove illegal posts on social media; prohibit and remove cyberbullying; and to undertake to work with the education profession and charities to provide children with digital safety skills. Amendment 33A seeks to impose a duty on “social media services” to respond to reports posted on their site of material which passes the “criminal test”, being that the content would, if published by other means or communicated in person, cause a criminal offence to be committed. I have two responses to these amendments—first, an explanation of the work that this Government have started to address these issues through our internet safety strategy; and, secondly, some fundamental concerns about their drafting.

The UK is leading the way in online safety, and will continue to do so, with the support of industry, parents, charities, academics, and other experts, and this is a firm priority for this Government. We have been absolutely clear that abusive and threatening behaviour is totally unacceptable in any form, online or offline. On 27 February, my department announced that it is leading cross-government work on an internet safety strategy which aims to make the UK the safest place in the world to go online for children and young people. This work will also address the abuse that women suffer online, as we look at trolling and other aggressive behaviour, including rape threats. We will ask experts, social media companies, tech firms, charities and young people themselves about online safety during a series of round tables later this month, and we will use these discussions to understand more about the scope of the problem and identify where there are gaps in our current approach to tackling online harms.

We will continue to consult closely with interested parties throughout the spring, including Members of this House with expertise in this area. Indeed, we have already invited several noble Lords to take part. A key part of this work will be to clearly set out the responsibilities of social media in respect of online safety as part of a Green Paper which will be published in June. Other priorities will include: how to help young people to avoid risks online; helping parents to face up to the dangers and discuss them with their children; and how technology can help provide solutions.

We have not ruled anything out at this stage, including a code of practice, but this is a complex field and to find the right solution we need to take the time to have a proper conversation with all the leading stakeholders. We would not want anything to prejudge the outcome of these discussions. We believe that this will result in a properly considered, comprehensive approach to online safety which stakeholders are fully signed up to, and one that will deliver the long-lasting protections that these amendments are seeking to secure.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Report: 2nd sitting (Hansard - continued): House of Lords
Monday 20th March 2017 Lords Chamber

Moved by

[Lord Ashton of Hyde]

25YYA: Clause 31, page 30, line 24, leave out “Chapter” and insert “section”

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Moved by

[Lord Ashton of Hyde]

25YYC: Clause 31, page 30, line 26, leave out subsection (3) and insert—
“(3) The appropriate national authority may by regulations amend Schedule (Public service delivery: specified persons for the purposes of section 31) so as to add, remove or modify an entry relating to a person or description of person.(3A) Regulations under subsection (3) may add an entry relating to a person or a description of person to Schedule (Public service delivery: specified persons for the purposes of section 31) only if—(a) the person is a public authority or (as the case may be) each person of that description is a public authority, or(b) the person provides services to a public authority or (as the case may be) each person of that description provides services to a public authority.”

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Moved by

[Lord Ashton of Hyde]

25YYE: Clause 31, page 30, line 33, leave out “(2)” and insert “(3)”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

26B: Clause 31, page 31, line 16, at end insert—
“( ) The third condition is that the objective has as its purpose the supporting of—(a) the delivery of a specified person’s functions, or(b) the administration, monitoring or enforcement of a specified person’s functions.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28AA: Clause 32, page 31, line 40, at end insert—
“( ) In this section and section 33 “specified person” means a person specified, or of a description specified, in Schedule (Public service delivery: specified persons for the purposes of sections 32 and 33).”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28AJ: Clause 34, page 33, line 8, at end insert—
“( ) In this section and section 35 “specified person” means a person specified, or of a description specified, in Schedule (Public service delivery: specified persons for the purposes of sections 34 and 35).”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28BG: Clause 39, page 36, line 38, at end insert—
“(6A) The relevant Minister may not issue the code of practice unless a draft of the code has been laid before, and approved by a resolution of, each House of Parliament.(6B) Before reissuing the code the relevant Minister must lay a draft of the code as proposed to be reissued before Parliament.(6C) The relevant Minister may not reissue the code if, within the 40-day period, either House of Parliament resolves not to approve it.(6D) In subsection (6C)“the 40 day period” means—(a) the period of 40 days beginning with the day on which the draft is laid before Parliament, or(b) if the draft is not laid before each House on the same day, the period of 40 days beginning with the later of the days on which it is laid before Parliament.(6E) For the purposes of subsection (6D) no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28BJ: Clause 39, page 37, line 2, at end insert—
“(8) In disclosing information under any of sections 31 to 35 , a person must have regard to the following codes of practice issued by the Information Commissioner under section 51(3) of the Data Protection Act 1998, so far as they apply to the information in question—(a) any code which makes provision about the identification and reduction of the risks to privacy of a proposal to disclose information;(b) any code which makes provision about the information to be provided to data subjects (within the meaning of that Act) about the use to be made of information collected from them.(9) The duty in subsection (8) does not affect any other requirement for the person to have regard to a code of practice in disclosing the information.”

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Moved by

[Lord Ashton of Hyde]

28BL: Clause 40, page 37, line 14, leave out subsection (3)

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Moved by

[Lord Ashton of Hyde]

28BN: Clause 40, page 37, line 19, leave out from “of” to first “this” in line 20 and insert “—
( ) regulations under section 31 (3) which amend Schedule (Public service delivery: specified persons for the purposes of section 31) so as to add an entry relating to a person or description of person,( ) regulations under section 32 (4)(za) which amend Schedule (Public service delivery: specified persons for the purposes of sections 32 and 33) so as to add an entry relating to a person or description of person, or( ) regulations under section 34 (3A)(a) which amend Schedule (Public service delivery: specified persons for the purposes of sections 34 and 35) so as to add an entry relating to a person or description of person,”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28BS: Clause 41, page 38, leave out line 32

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28CC: Clause 42, page 41, leave out lines 37 to 39 and insert—
“(6) The Registrar General may not issue the code of practice unless a draft of the code has been laid before, and approved by a resolution of, each House of Parliament.(7) Before reissuing the code the Registrar General must lay a draft of the code as proposed to be reissued before Parliament.(8) The Registrar General may not reissue the code if, within the 40-day period, either House of Parliament resolves not to approve it.(9) In subsection (8)“the 40 day period” means—(a) the period of 40 days beginning with the day on which the draft is laid before Parliament, or(b) if the draft is not laid before each House on the same day, the period of 40 days beginning with the later of the days on which it is laid before Parliament.(10) For the purposes of subsection (9) no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28CD: Clause 42, page 41, line 39, at end insert—
“(7) In disclosing information under section 19AA, a civil registration official must have regard to the following codes of practice issued by the Information Commissioner under section 51(3) of the Data Protection Act 1998, so far as they apply to the information in question—(a) any code which makes provision about the identification and reduction of the risks to privacy of a proposal to disclose information;(b) any code which makes provision about the information to be provided to data subjects (within the meaning of that Act) about the use to be made of information collected from them.(8) The duty in subsection (7) does not affect any other requirement for the civil registration official to have regard to a code of practice in disclosing the information.””

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28CH: Clause 44, page 42, line 30, leave out “specified person” and insert “public authority”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28DC: Clause 48, page 46, line 38, at end insert—
“(6A) The relevant Minister may not issue the code of practice unless a draft of the code has been laid before, and approved by a resolution of, each House of Parliament.(6B) Before reissuing the code the relevant Minister must lay a draft of the code as proposed to be reissued before Parliament. (6C) The relevant Minister may not reissue the code if, within the 40-day period, either House of Parliament resolves not to approve it.(6D) In subsection (6C)“the 40 day period” means—(a) the period of 40 days beginning with the day on which the draft is laid before Parliament, or(b) if the draft is not laid before each House on the same day, the period of 40 days beginning with the later of the days on which it is laid before Parliament.(6E) For the purposes of subsection (6D) no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28DK: Clause 50, page 48, line 34, leave out subsection (3)

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28DS: Clause 51, page 50, line 14, leave out “44(4) which specify” and insert “ 44(5) which add, modify or remove an entry relating to”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28DW: Clause 52, page 50, line 28, after “section” insert “and in Schedule (Specified persons for purposes of the fraud provisions)”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28EK: Clause 56, page 55, line 7, at end insert—
“(6A) The relevant Minister may not issue the code of practice unless a draft of the code has been laid before, and approved by a resolution of, each House of Parliament.(6B) Before reissuing the code the relevant Minister must lay a draft of the code as proposed to be reissued before Parliament.(6C) The relevant Minister may not reissue the code if, within the 40-day period, either House of Parliament resolves not to approve it.(6D) In subsection (6C)“the 40 day period” means—(a) the period of 40 days beginning with the day on which the draft is laid before Parliament, or(b) if the draft is not laid before each House on the same day, the period of 40 days beginning with the later of the days on which it is laid before Parliament.(6E) For the purposes of subsection (6D) no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28EN: Clause 57, page 55, line 37, at end insert—
“( ) The power in subsection (5) to amend this Chapter— (a) may be exercised for the purposes only of improving the effectiveness of the operation of the power in section 52 (1), and(b) may not be used to remove any of the safeguards relating to the use or disclosure of information in section 53 , 54 or 55 .”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28ES: Clause 58, page 56, line 46, leave out subsection (3)

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28FA: Clause 59, page 58, line 19, leave out “52(5) which specify” and insert “52(6) which add, modify or remove an entry relating to”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28FE: Clause 60, page 59, line 6, at beginning insert “subject to sections 63(5), 64(5) and 65(5)(information disclosed by tax authorities),”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28FG: Clause 62, page 61, line 1, leave out paragraph (b) and insert—
“( ) for the purposes of enabling anything that is to be published as a result of the research to be reviewed before publication, where the disclosure is made to a person who is accredited under section 67 as a person to whom such information may be disclosed for that purpose”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28FH: Clause 63, page 62, line 42, at end insert “, or
( ) by a person to whom the information is disclosed by virtue of subsection (3).”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28FK: Clause 64, page 63, line 39, at end insert “, or
( ) by a person to whom the information is disclosed by virtue of subsection (3).”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28FM: Clause 65, page 64, line 43, at end insert “, or
( ) by a person to whom the information is disclosed by virtue of subsection (3).”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28FT: Clause 66, page 66, line 17, at end insert—
“(8A) The Statistics Board may not issue the code of practice unless a draft of the code has been laid before, and approved by a resolution of, each House of Parliament.(8B) Before reissuing the code the Statistics Board must lay a draft of the code as proposed to be reissued before Parliament.(8C) The Statistics Board may not reissue the code if, within the 40-day period, either House of Parliament resolves not to approve it.(8D) In subsection (8C)“the 40 day period” means—(a) the period of 40 days beginning with the day on which the draft is laid before Parliament, or(b) if the draft is not laid before each House on the same day, the period of 40 days beginning with the later of the days on which it is laid before Parliament.(8E) For the purposes of subsection (8D) no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.”

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Moved by

[Lord Ashton of Hyde]

28FW: After Clause 70, insert the following new Clause—
“Disclosure of non-identifying information by the Welsh Revenue Authority
(1) A relevant official of the Welsh Revenue Authority may disclose relevant information to any person if— (a) the information is non-identifying information, and(b) the official thinks that the disclosure would be in the public interest.(2) Information is non-identifying information for the purposes of this section if—(a) it is not, and has never been, identifying information, or(b) it has been created by combining identifying information, but is not itself identifying information.(3) Information is identifying information for the purposes of this section if it relates to a person whose identity—(a) is specified in the information,(b) can be deduced from the information, or(c) can be deduced from the information taken together with any other information.(4) In this section—(a) “relevant official of the Welsh Revenue Authority” means a person within any of paragraphs (a) to (d) of section 17(2) of the Tax Collection and Management (Wales) Act 2016, and(b) “relevant information” means information which—(i) is held by the Welsh Revenue Authority in connection with its functions, or(ii) is held by a person to whom any of the functions of the Welsh Revenue Authority have been delegated in connection with those functions.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28GA: Clause 71, page 69, line 29, at end insert—
“( ) After subsection (4) insert—“(4A) In disclosing information under subsection (1), the Commissioners or an officer of Revenue and Customs must have regard to the following codes of practice issued by the Information Commissioner under section 51(3) of the Data Protection Act 1998, so far as they apply to the information in question—(a) any code which makes provision about the identification and reduction of the risks to privacy of a proposal to disclose information;(b) any code which makes provision about the information to be provided to data subjects (within the meaning of that Act) about the use to be made of information collected from them.(4B) The duty in subsection (4A) to have regard to a code of practice does not affect any other requirement for the Commissioners or an officer of Revenue and Customs to have regard to a code of practice under the Data Protection Act 1998 in disclosing the information.(4C) In determining how to comply with the duty in subsection (4A) the Commissioners or the officer of Revenue and Customs must have regard to any views of the Board which are communicated to the Commissioners or the officer.”

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Moved by

[Lord Ashton of Hyde]

28GC: Clause 72, page 70, line 18, at end insert—
“(7A) In disclosing information under subsection (1), a public authority must have regard to the following codes of practice issued by the Information Commissioner under section 51(3) of the Data Protection Act 1998, so far as they apply to the information in question—(a) any code which makes provision about the identification and reduction of the risks to privacy of a proposal to disclose information;(b) any code which makes provision about the information to be provided to data subjects (within the meaning of that Act) about the use to be made of information collected from them.(7B) The duty in subsection (7A) to have regard to a code of practice does not affect any other requirement for the public authority to have regard to a code of practice under the Data Protection Act 1998 in disclosing the information.(7C) In determining how to comply with the duty in subsection (4A) the public authority must have regard to any views of the Board which are communicated to the authority.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28GE: Clause 73, page 76, line 12, at end insert—
“(9A) The Board may not publish the original statement under this section unless a draft of the statement has been laid before, and approved by a resolution of, each House of Parliament.(9B) Before publishing a revised statement under this section the Board must lay a draft of the statement as proposed to be published before Parliament.(9C) The Board may not publish the revised statement if, within the 40-day period, either House of Parliament resolves not to approve it.(9D) In subsection (9C)“the 40 day period” means—(a) the period of 40 days beginning with the day on which the draft is laid before Parliament, or(b) if the draft is not laid before each House on the same day, the period of 40 days beginning with the later of the days on which it is laid before Parliament.(9E) For the purposes of subsection (9D) no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28GG: Clause 73, page 76, line 18, at end insert—
“(11) In exercising any of its functions under section 45B, 45C or 45D to require the disclosure of information, the Board must have regard to any code of practice issued by the Information Commissioner under section 51(3) of the Data Protection Act 1998 which makes provision about the identification and reduction of the risks to privacy of a proposal to disclose information, so far as the code applies to the information in question.(12) The duty in subsection (11) to have regard to a code of practice does not affect any other requirement for the Board to have regard to a code of practice under the Data Protection Act 1998 in exercising the function.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28GJ: Clause 73, page 77, line 26, at end insert—
“(5A) The Board may not publish the original code of practice under this section unless a draft of the code has been laid before, and approved by a resolution of, each House of Parliament.(5B) Before publishing a revised code of practice under this section the Board must lay a draft of the code as proposed to be published before Parliament.(5C) The Board may not publish the revised code of practice if, within the 40-day period, either House of Parliament resolves not to approve it.(5D) In subsection (5C)“the 40 day period” means—(a) the period of 40 days beginning with the day on which the draft is laid before Parliament, or(b) if the draft is not laid before each House on the same day, the period of 40 days beginning with the later of the days on which it is laid before Parliament.(5E) For the purposes of subsection (5D) no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.”

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

28GL: Clause 74, page 78, line 39, at end insert—
“(8A) In disclosing information under subsection (1), the Board must have regard to the following codes of practice issued by the Information Commissioner under section 51(3) of the Data Protection Act 1998, so far as they apply to the information in question—(a) any code which makes provision about the identification and reduction of the risks to privacy of a proposal to disclose information;(b) any code which makes provision about the information to be provided to data subjects (within the meaning of that Act) about the use to be made of information collected from them.(8B) The duty in subsection (8A) to have regard to a code of practice does not affect any other requirement for the Board to have regard to a code of practice under the Data Protection Act 1998 in disclosing the information.”

--- Later in debate ---

[Lord Wood of Anfield (Lab)]

I thank the noble Lord, Lord Inglewood. I think the principle of maintaining the independence of the BBC unites virtually everyone in this House. However, the question is: do we agree on what constitutes a challenge to that independence, and do we agree to provide extra protection to the BBC when the independence is under threat?

This amendment sets out concerns about three kinds of independence being compromised: editorial independence, operational independence and financial independence. As the debate in Committee showed, there are widespread concerns about independence of these three varieties being challenged in different ways. Therefore, I think the statements of intent and principles in the amendment of the noble Lord, Lord Inglewood, enjoy widespread support. I think most people would agree that they should govern the approach of the legislature and the Executive to the BBC. However, I wish to bring a couple of issues to the surface. Although the amendment raises these crucial principles, it also suggests the difficulty of using the power of the state to protect bodies outside the state against interference from the state.

I have two concerns in particular. First, there is a larger principle here of putting the independence of a major institution of British public life on a statutory footing. I am personally sympathetic towards that but it is a principle which deserves debate on its own terms, both as a principle and as applied to specific cases such as the NHS, which has been debated before, or the BBC. Secondly, what exactly constitutes independence—not simply politically but legally—needs clarification and precision. Imposing a duty on Ministers and other bodies to ensure that the BBC can operate independently opens the question of how that can be defined, both so that we can recognise it in the observance and the breach, and enforce it. Again, this is something that needs further debate and discussion.

The amendment touches on a cornerstone issue for the BBC and broadcasting policy and the ethos and integrity of public life more generally. However, it raises a broader issue which deserves a more lengthy proper scrutiny in future.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I am grateful to noble Lords for their remarks. In returning to this issue, I am sorry that the noble Lord, Lord Lester, is not here to speak to his amendment as we have debated this issue at length with him as part of the recent discussions on the BBC’s royal charter. We have debated it at Second Reading, in Committee and in other debates and Questions. The amendments that the noble Lord, Lord Lester, has tabled, and my noble friend Lord Inglewood has proposed, seek to constrain future royal charters for the BBC through statute. I should have said that I hope the noble Lord, Lord Lester, makes a speedy recovery and returns not to bring this subject up again but other subjects.

I note that, following the discussion we had in Committee, the noble Lord, Lord Lester, made a number of changes to his amendments proposed tonight in the areas of governance and funding. I appreciate the thought that he put into this and the dialogue that we have had on this so far. However, we still maintain that very serious risks are associated with the amendments and therefore we cannot support them.

As noble Lords will by now appreciate, the disagreement between the Government and those who tabled this amendment comes down, as the noble Lord, Lord Wood, said, to a matter of principle. Is the BBC best governed and protected through a charter or through a charter underpinned by legislation? I accept that there are instances where it is desirable and appropriate for a charter to be underpinned in statute but it is the Government’s view that this does not apply to the BBC.

Noble Lords may be interested to know that this is a discussion as old as the BBC itself—indeed, it is almost exactly 10 years older than the noble Lord, Lord Lester. When the then Postmaster-General announced in July 1926 that the BBC would be established through its first royal charter, he remarked that the new corporation would derive its authority from royal charter rather than from statute to make it clear to the public that it was not,

“a creature of Parliament and connected with political activity”.

In practical terms, noble Lords will appreciate that there is little difference between the effect of the BBC’s charter and its accompanying framework agreement and an Act of Parliament. Both are binding on the BBC and on Ministers. Article 3 of the current charter provides:

“The BBC must be independent in all matters concerning the fulfilment of its Mission and the promotion of the Public Purposes, particularly as regards editorial and creative decisions, the times and manner in which its output and services are supplied, and in the management of its affairs”.


That carries the same weight in a charter as it does in primary legislation, but in my view the latter option carries unacceptable risks to the independence of the BBC. From a practical point of view, amending an Act of Parliament in the event that a change is required—with all the party-political debate and pressure that that would entail and the uncertain legislative timetable—is not the right vehicle to make sure that the BBC can be governed effectively. Who can tell what political pressures will exist entirely unconnected to the detail of the BBC charter when the charter comes up for renewal?

Charter review remains the right vehicle. It affords an ample opportunity for debate and consultation but also allows for full consideration of all the connected and complex key issues, for effective decision-making and, crucially, for a negotiated agreement with the BBC.

Incidentally, I cannot resist mentioning that my noble friend Lord Inglewood referred to the Government as Dick Turpin in this case. I may be entirely unfamiliar with the story of Dick Turpin but I did not realise that he gave £3.7 billion annually to his victims.

Therefore, I submit that a statutory underpinning will leave the BBC under constant threat of change and monitoring what the Parliament of the day sees as the national interest. I fear that fellow parliamentarians, some of whom may not have my noble friend’s pure motives, will find it an irresistible temptation to tweak here and there, and, even with the best of intentions, we cannot expect the BBC to operate effectively and plan for its future in such circumstances.

I believe that this should be a matter for the Government of the day to decide ahead of the next charter review. The charter model has stood the test of time since 1926—through economic depressions, world war and huge technological change—to achieve what has been praised throughout the passage of this Bill as the BBC we have today. Given your Lordships’ ongoing interest and informed views, I am confident that the Government of the day will be minded to consider this carefully. With that explanation, I hope my noble friend will be able to withdraw his amendment.

[Lord Inglewood]

My Lords, I am very grateful to my noble friend for his very full response to the remarks that have been made on this amendment. He went to the heart of it at the outset when he said that he was opposed to the suggestion in the amendment because it would constrain the royal charter in the future. But that is precisely the reason why we moved the amendment. The mechanism of the royal charter enables the Government, in practice, to have a huge and relatively unscrutinised and uncontrolled ability to adapt and adjust the framework for the relationship they have with the BBC to their own preferred ends.

As I listened to my noble friend, it occurred to me that it was about 25 years ago that I stood at the Dispatch Box at which he was standing a moment ago, discussing the same issues. It crossed my mind—ignoble though it may be to say it—that almost the same speech could have been given to me to deliver all those years ago.

It is perhaps a mistake to simply assume that because something gives the impression of having worked reasonably well for 70 years—it may or may not have—it will continue to work equally well in the years to come. I look around the Chamber this evening and see that some of us are perhaps not quite yet 70 years old but heading that way—and that some may even have passed it. I am afraid that it is the nature of the human condition that when you get to 70 years old, you may not be as fit, spry and sharp as you were in years gone by. So it is not good enough to say that because it has worked well in the past—and it has worked only moderately well—it therefore follows, as night follows day, that you can extrapolate that it will work well indefinitely.

However, I was encouraged by the concluding remarks of my noble friend. He said that he was confident that Governments in the future would seriously consider the point that was being made. I think that is important. On any measure, we have just started a BBC charter and there is a bit of time until the next one comes into effect. While I think that it would have been desirable to have placed in the Bill the statutory provisions that are contained in the amendment, not to do so may not be fatal to the underlying project. Certainly this is something we ought to think carefully about in the hours and days to come—not least the noble Lords, Lord Lester and Lord Pannick, who have not had the advantage of listening to the remarks of my noble friend. Against that background, I beg leave to withdraw the amendment.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Report: 3rd sitting (Hansard): House of Lords
Wednesday 29th March 2017 Lords Chamber

[Lord Wood of Anfield (Lab)]

My Lords, I express the support of these Benches for the amendments of the noble Lord, Lord Best. I also support the intention behind the amendment of the noble Lord, Lord Lester.

It sounds obvious that the process of negotiating a charter and the process of setting a licence fee should be separated so that the licence fee is set at a level to ensure the BBC has the resources to do what the charter asks of it. However, those of us who have had some involvement in the process in the past know that this is not quite how it works. The connection between the two processes is indirect and shrouded in political pressures. As a result, the process of setting the licence fee is far too little about matching the funding of the BBC to its functions in the charter, and far too much about balancing a range of other considerations: the politics around the licence fee rate, interests of other broadcasters, and the temptation to smuggle government policy on to the BBC’s books—midnight raids et cetera. Governments of all varieties—Labour, Conservative, whatever—like to play the game of pumping up the tasks that go into the charter and clamping down on the licence fee needed to fund it. The result of all this is bad not just for the BBC but for all parties concerned. It is a bad deal for the BBC because it faces increasingly intolerable pressures to deliver what is expected of it, and threats to its operational autonomy and independence. It is bad for the Government because of a growing suspicion of unwarranted political interference in the BBC, and it is bad for licence fee payers because the process of allocating funds to charter functions is surrounded in opaqueness and devoid of transparency.

Therefore, we support the amendments of the noble Lord, Lord Best. We think they are based on sound principles—the independence of the process, consultation with the public, transparency of the contents of the deal and requiring the Secretary of State to be accountable for turning his back on or challenging the express will that comes out of consultation. We think this is a way of restoring the functionality and transparency of the licence fee setting process, and ensuring that the BBC can be funded to do what we all expect the foremost public service broadcaster to do.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, we return to an issue that I know interests a great many noble Lords: the funding of the BBC. I take this opportunity to remind noble Lords of what the Government have already committed to do to increase the transparency of the process whereby the funding of the BBC is decided. The BBC’s new charter regularises, for the first time, the timing of the BBC’s next financial settlement, which will be in five years’ time. The BBC has certainty over its funding for the next five years, having agreed a settlement with the Government whereby the licence fee will rise with inflation each and every year for the next five years.

On the amendment in the name of the noble Lord, Lord Best—in answer to his question, I accept that Amendments 32B and 32C are, if not consequential, linked—I make clear to the House how grateful the Government are for the contribution of the noble Lord and of your Lordships’ Communications Committee, which he chairs, throughout the charter review. Indeed, the Government accepted most of the committee’s recommendations for the new charter, such as making the next charter for a period of 11 years and the scope of the mid-term review.

The charter states that, in determining the funding settlement, the Secretary of State must assess the level of funding required for the effective fulfilment of the BBC’s mission and promotion of its public purposes, consider an assessment of the BBC’s commercial income and activities, and consult the BBC. For its part, the BBC is required to provide information and assistance to the Secretary of State ahead of the next licence fee settlement to inform the Secretary of State’s determination of that settlement. It is therefore explicit that the BBC will be able to make its case and the Government of the day will have to consider that case.

However, the Government also stated in their White Paper, published last May, that they would consider taking independent advice at the next settlement should it be appropriate. While that will be a matter for the Government of the day, the sentiment behind it is right and sensible. In answer to the noble Lord, Lord Maxton, the licence fee itself may well be a question for the next charter renewal—in which I think I can say I will not be involved. Taking independent advice is an important factor, and I take this opportunity to set out what this may include. The Government may, for example, wish to seek independent advice to inform their assessment of the data the BBC will provide. They may commission experts to consider the BBC’s likely commercial income for the coming years; the effect of population growth on licence fee revenue; the impact of sector changes on BBC funding needs; and, in turn, the impact of BBC funding on the wider sector.

The noble Lord, Lord Best, suggests that there should be a BBC licence fee commission. This is a departure from his amendment in Committee, which sought to give Ofcom a similar power, and I appreciate the thought he and other noble Lords have given this. However, at the risk of repeating myself, the licence fee is a tax, and the Government do not seek advice in this way for any other type of taxation. On the question of the licence fee being a tax, I know that not all noble Lords like this designation. However, we rely on the definition provided by the European System of Accounts, which is the system of national accounts used by the European Union. I will spare your Lordships more detail on this, which I could give. I reiterate that taxation is a matter for the elected Government. Only the Government have oversight of the balance of taxes from different sources; rates of tax are set, taking into consideration a range of factors, including wider economic considerations and spending decisions. It would therefore not be possible for an independent body to have oversight of the interaction between this tax rate and other tax burdens that the same group face.

Next, on public consultation on the appropriate level of funding for the BBC, I have already made my reservations clear on this aspect of the noble Lord’s amendments in Committee. Funding a public service is not a straightforward topic for public consultation. The BBC’s funding needs are a complicated and technical issue, as we have seen at every licence fee settlement—

[Lord Maxton]

Can the Minister tell the House what other form of taxation—I accept his definition that the licence fee is a tax—is not covered by the Freedom of Information Act?

[Lord Ashton of Hyde]

I do not quite know what the noble Lord means by taxes being covered by the Freedom of Information Act, but the BBC, as a public authority, is covered by that Act.

[Lord Maxton]

With all respect to the Minister, the BBC is not covered entirely by the Freedom of Information Act. The managerial side of it is covered by the Act but the part that concerns putting out programmes is not.

[Lord Ashton of Hyde]

I take the noble Lord’s word for that because he knows more about it than I do.

[Lord Inglewood]

The Minister said that the Government did not consult on taxes in the way that has been suggested. I put it to my noble friend that there is not another hypothecated tax like this, so there is no precedent one way or another for this set of circumstances.

[Lord Ashton of Hyde]

The point that I made was that, when setting taxes, the Government have to take account of the overall revenue raising, and this is just one element of revenue raising. I agree that whether it is a hypothecated tax is another question, but the point is that it is a tax and the Government do not consult on taxes.

Perhaps I may continue. I was talking about public consultation. The BBC’s funding needs are complicated and technical, as we have seen with every licence fee settlement, and agreeing the overall package is a finely balanced act. The requirement to ask the BBC for information and seek external advice is a sensible way of ensuring that Ministers’ decisions are well informed.

Despite what the noble Lord, Lord Best, said about consultations, the recent charter review found that, although almost 75% of the public consider the BBC’s programming to be high-quality, just 20% said that they would like to see the licence fee rise even in line with inflation, thereby helping the BBC to maintain those high standards. At the same time, the BBC also needs to become more efficient from reducing layers of management and property costs.

Public consultation needs to be approached with due sensitivity. It is right that decisions that balance the funding needs of the BBC and pressures on family budgets are taken by Ministers, who are accountable for those decisions, and that they are not decisions strongly influenced by an unelected new body. In answer to the noble Lord, Lord Pannick, the Government’s view is that it should therefore remain for the elected Government of the day to decide how to approach reaching an appropriate level of BBC funding in a detailed and extensive negotiation with the BBC. Despite the difficulties associated with the last licence fee settlement, as I have said, it resulted in what the noble Lord, Lord Hall, has said is a strong deal for the BBC, giving it financial stability, and we can see that the licence fee will rise for the next five years.

The noble Lord, Lord Lester, has tabled an amendment to put a duty on the Secretary of State to ensure that the BBC is funded to function effectively and independently as a public service broadcaster. I am pleased to see the noble Lord in the Chamber today—it was unfortunate that he was not able to participate in last week’s debate on his previous amendment. Without repeating myself unduly, I remind noble Lords that the Government remain of the view that the BBC is best governed through a royal charter. A statutory underpinning, however limited initially, would leave the BBC under a constant threat of change from what parliamentarians of the day might see as the “national interest”. Where a change might be genuinely required, the uncertain legislative timetable, party-political debate and pressure could all militate against resolving the issue at hand in an efficient manner.

[Lord Lester of Herne Hill]

The Minister has not answered my question, which was, quite simply, whether this Government—not one in five years’ time—accept that the Secretary of State has a duty, whether under the charter or otherwise, to ensure that the BBC is so funded as to function independently and effectively as a public service broadcaster.

[Lord Ashton of Hyde]

I was aware of the noble Lord’s question and was just about to come to it. The BBC charter already provides that the Secretary of State, in determining the funding settlement, must assess the level of funding required for the effective fulfilment of the mission and public purposes.

[Lord Lester of Herne Hill]

What does that answer mean? The charter does not say what I have just asked the Minister. Is he saying that, in looking at the charter, the Government accept this obligation and that it is embodied in the charter? If so, I welcome that. However, I am not clear whether the Government accept this duty or not. My final question, which no doubt he will come to, is this: please can I come and see the Culture Secretary with him?

[Lord Ashton of Hyde]

I think I can answer that to the noble Lord’s satisfaction. Yes, I will certainly talk to the Secretary of State and ask that the noble Lord can come and see him—with or without me, depending on his choice.

I do not want to dwell on this too much, but when we talk about sufficient funding and what the Secretary of State has a duty to do, of course the Secretary of State has a duty to abide by the royal charter in the same way that the BBC, the new unitary board and Ofcom do. I said:

“The Secretary of State, in determining a funding settlement, must … assess the level of funding required for effective fulfilment of the Mission and promotion of the Public Purposes”—


which is what the charter says. I agree that the Secretary of State must do what the charter says. I hope that answers the noble Lord’s question.

I will go further. The noble Lord’s amendment talks about the independence of the BBC, but Article 3 of the BBC’s charter already states:

“The BBC must be independent in all matters concerning the fulfilment of its Mission and the promotion of the Public Purposes, particularly as regards editorial and creative decisions, the times and manner in which its output and services are supplied, and in the management of its affairs”.


The question of enshrining parts of the BBC’s royal charter in statute should be a matter for the Government of the day to decide ahead of the next charter review. Given noble Lords’ ongoing interest and informed views, I am confident that the Government of the day will be minded to consider this carefully.

In summary, the Government have already increased the transparency of the way in which the BBC’s funding settlements are agreed. We have given the BBC stability by regularising the settlement period, which is now removed from the election cycle. The BBC will be required to provide information to the Secretary of State on its funding needs, and the Government of the day will consider taking independent advice. The licence fee is a tax and the Government do not consult on taxes. The amendments could have unintentional consequences in constraining the ability of the Government—

[Lord Pannick]

I am puzzled by what the Minister has said, because he is saying two incompatible things. He is telling the House that the Government are going to take advice, but on the other hand he is telling the House that, because this is a tax, it is not possible for the Government to take advice.

[Lord Ashton of Hyde]

With respect, I did not say that. I said that the Government would not consult on taxes. Of course the Government can take advice. The Government take advice on taxes every day, whether they have asked for it or not.

[Lord Birt]

The Minister said a moment ago that the Minister—in this case, the Secretary of State—must do as the charter says. I remind him that the charter before last said explicitly that the licence fee may not be used to fund the World Service. After the famous “night raid”, where the BBC was required to fund the World Service from the licence fee, the Secretary of State simply went to the Privy Council and changed the charter. He manifestly did not do what the charter required.

[Lord Ashton of Hyde]

I do not completely follow the noble Lord. If the charter was changed, presumably the Secretary of State did follow the charter.

[Lord Birt]

I am sorry if was not clear. The charter clearly said that the licence fee may not be used to fund the World Service. The Government then required that it should—and retrospectively changed the charter in the Privy Council.

[Lord Ashton of Hyde]

I agree that a retrospective change in legislation of the charter is never a happy process—but, in a purely technical sense, if the charter was changed then it was being followed. But I take the noble Lord’s point about that—and we will move on.

I have summarised the way that the funding deal has been changed to increase stability for the BBC. In light of all my remarks, I hope that noble Lords will allow the BBC to get on with its job under the agreed royal charter and therefore that the noble Lord will withdraw his amendment.

[Lord Best]

My Lords, I am grateful to the 10 noble Lords who spoke in support of my amendment. The only moderating voice was from the noble Lord, Lord Maxton—but even that, I think, was with approval as well. I will not reiterate the arguments that everybody brought forward. I thank the Minister for his response and accept that most of the recommendations from your Lordships’ Select Committee on Communications were adopted by the Government, which we were pleased about, including the 11-year period for the charter. But there is only a five-year period for the funding of the BBC, and, although there is certainty for five years, this is not entirely new. We had certainty over the freeze in the BBC licence fee for seven years prior to that.

The Minister stressed that the Government will “consider taking advice” and “may consult experts” on the various aspects of this. I had hoped that the Minister might pull the rabbit out of the hat and that we might have something more to show for the debate tonight than we have. I understand that the Government do not consult on taxes—although, as the noble Lord, Lord Inglewood, said, this is a particularly obscure kind of tax. It is 100% hypothecated and we do not have many of those. The Minister mentioned that it was a complicated issue. That is why an expert commission could be so useful. Public consultation might well produce an answer that there would be reluctance to increase the licence fee, but there would be better understanding if these matters were all out in the open and transparent before the public came to that view.

Although I am grateful to the Minister for explaining the position as is, it is not the position that these amendments would establish in the Bill and I would like to test the opinion of the House.

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Moved by

[Lord Ashton of Hyde]

33ZD: Clause 85, page 89, leave out lines 15 to 19 and insert—
“(3) The steps set out in subsections (4) to (6) must be taken before regulations are made under this section.(4) The Secretary of State must ask the appropriate regulatory authority to consult such persons as appear to the authority likely to be affected by regulations under this section, including—(a) providers of on-demand programme services, and(b) representatives of people with disabilities affecting their sight or hearing or both.(5) The appropriate regulatory authority must inform the Secretary of State of—(a) the outcome of the consultation, and(b) any other matters that they think should be taken into account by the Secretary of State for the purposes of the regulations.(6) Where OFCOM are not the appropriate regulatory authority, the Secretary of State must consult OFCOM.(7) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

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Moved by

[Lord Ashton of Hyde]

33ZF: Clause 85, page 90, line 42, at end insert—
“( ) In section 402(2)(a) (procedure for statutory instruments) after “411” insert “or regulations under section 368BC”.”

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[Lord Wigley (PC)]

I shall not repeat the comments that I made in Committee on this matter. I thank the noble Lord, Lord Wood, for introducing the amendment, which I certainly support. Two areas have been touched on already. The first is very close to my heart—the position of S4C in Wales and the Gaelic channel in Scotland. It is enough of a fight to try to ensure that there is language promotion and continuation without the struggles of going through reams of channels before reaching them. I accept entirely that some channels, such as Virgin, give the viewer an option to create their own priorities, but many viewers will either not have the drive or sometimes even the ability to use that facility in the way that it should be used. It may interest noble Lords to know that more people watch the Welsh language news on S4C than watch “Newsnight” in Wales. The language is thriving, but it needs to be equally accessible to the prime channels that are available on a UK basis.

My second point is on children. As a grandfather with five young grandchildren, I was amazed at the speed with which they could navigate their way to where the channels they wanted were located. But in doing so, they went through a whole plethora of other channels, which I was very glad that they skipped over quickly. We need to be able to help parents who need to safeguard their children from matters that they are too young to watch. For both those reasons, I very much support the amendment.

[Lord Ashton of Hyde]

My Lords, public service broadcasting prominence on the EPG is an issue that has come up at every stage of the Bill in this House, and Amendment 33ZG does so for this stage. The Government recognise the high-quality programming of our PSBs and their importance for maintaining the thriving and healthy UK broadcasting sector. We also recognise the strength of a mixed broadcasting ecology that features commercial broadcasters as well as commercial and non-commercial PSBs. We are showing our support for them in two ways that we have already debated: first, in the government amendment on listed events and, secondly, in our support of the noble Baroness, Lady Benjamin, in respect of children’s television. Thirdly, although this is not in the Bill, we have announced that Channel 4 will not be privatised.

Our clear policy of supporting PSBs is why the Government gave considerable thought to the issue of the EPG prominence regime during the balance of payments consultation, the response to which was published last year, before this Bill reached this House. Our conclusion was that we had not seen compelling evidence of harm to PSBs to date and we decided not to extend the EPG prominence regime for PSBs to their on-demand services. This absolutely remains our view, and is supported by evidence, such as the success and continued growth in the popularity of the BBC iPlayer, which has no prominence at all and saw a record 304.2 million requests for TV programmes in January 2017—double the rate of five years ago. After the iPlayer, what are the most watched on-demand services in the UK? The answer is the ITV Hub and All 4, neither of which are currently subject to prominence requirements.

Additionally, PSB on-demand players already occupy the most prominent positions in the on-demand sections of major TV platforms such as Sky and Virgin. Why is that? Platforms make them prominent because they need to react to viewers’ preferences. It takes, for example, a mere four clicks to get to the iPlayer from Sky Q’s home page. As I stated during the last debate, when PSBs make excellent content, audiences will find it, whether it be catch-up or live content. A good example is children’s PSB channels, of which many noble Lords have spoken. CBeebies and CBBC are the most watched children’s channels by a considerable distance—which shows that there are no problems for audiences in finding these channels. The content is easily accessible on demand within the iPlayer itself.

Micromanagement of how audiences need to be guided through menus and sub-menus cannot be the answer when the technological landscape is shifting quickly. The fact is that platform operators respond to consumer feedback and needs in developing their products; therefore future developments in the EPG will be customer driven, not driven through legislative change. Further, it has been suggested by technology companies that, if this requirement was enforced, it would create a need for bespoke products in the UK. For example, smart TV manufacturers’ user interfaces are developed with a global market in mind, but a separate product would need to be developed for the UK market.

Rather perversely, the amendment goes far beyond the prominence which Parliament has afforded to linear PSB channels, because it would give prominence to the PSBs’ on-demand programme services, which include not only PSB content from commercial PSBs but also content originating from their non-PSB portfolio channels. We do not think that that is justifiable.

I confirm to noble Lords and to viewers who have found the BBC Parliament channel—the noble Viscount, Lord Colville, mentioned this, too—that, if this amendment is not agreed, the existing PSB regime will remain as it is today. People will still be able to switch on their ordinary TVs and find BBC1 and BBC2 at the top. But, if it is agreed by the House, it will remove Ofcom’s discretion to require the prominence it considers appropriate for the linear regime; it will micromanage Ofcom’s guidance; it will extend PSB privileges to non-PSB content; and it will affect worldwide manufacturers, many of whom operate in the UK, putting up prices for UK consumers—all against a background where iPlayer, ITV Hub and All 4 are already the most watched on-demand services. I therefore hope that the noble Lord will withdraw his amendment.

[Lord Wood of Anfield]

I thank all noble Lords for an excellent short debate; I will respond very briefly. I thank the Minister for his response but I am afraid that it has made me even more determined to push this amendment through, because his response seemed to be based on the premise that supporting prominence for traditional linear TV watching is a principle that the Government support more strongly than ever, but that somehow the principle falls into abeyance when viewing habits and technology change; and that, in the new future, there will be no need for further prominence rules because the choice of consumers will somehow magically replace the need for the current PSB protections in the prominence rules for linear TV.

I do not understand why the emphasis on prominence, which has been a cross-party principle for a long time, is suddenly thrown out of the window when on-demand and more sophisticated technologies develop. So I am afraid that I do not find the Minister’s response at all satisfactory—and nor do I think that the threat of losing Ofcom’s existing powers has any empirical basis whatever, by the way. So I would like to test the opinion of the House.

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Moved by

[Lord Ashton of Hyde]

33ZH: After Clause 87, insert the following new Clause—
“Televising events of national interestTelevising events of national interest: power to amend qualifying conditions
In section 98 of the Broadcasting Act 1996 (categories of service), after subsection (5) insert—
“(5A) The Secretary of State may, by regulations made by statutory instrument, amend the percentage figure specified for the time being in subsection (2)(b).(5B) An amendment made by regulations under this section does not affect—(a) the validity of any contract entered into before the regulations came into force, or(b) the exercise of any rights acquired under such a contract.(5C) Regulations under subsection (5A) may make transitional, transitory or saving provision.(5D) A statutory instrument containing regulations under subsection (5A) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

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Moved by

[Lord Ashton of Hyde]

33ZJ: Before Clause 88, insert the following new Clause—
“Strategic priorities and provision of information
(1) After section 2 of the Communications Act 2003 insert—“Strategic priorities2A Statement of strategic priorities(1) The Secretary of State may designate a statement for the purposes of this section if the requirements set out in section 2C (consultation and parliamentary procedure) are satisfied. (2) The statement is a statement prepared by the Secretary of State that sets out strategic priorities of Her Majesty’s Government in the United Kingdom relating to—(a) telecommunications,(b) the management of the radio spectrum, and(c) postal services.(3) The statement may, among other things, set out particular outcomes identified with a view to achieving the strategic priorities.(4) This section does not restrict the Secretary of State’s powers under any other provision of this Act or any other enactment.(5) A statement designated under subsection (1) must be published in such manner as the Secretary of State considers appropriate.(6) A statement designated under subsection (1) may be amended (including by replacing the whole or a part of the statement with new content) by a subsequent statement designated under that subsection, and this section and sections 2B and 2C apply in relation to any such subsequent statement as in relation to the original statement.(7) Except as provided by subsection (8), no amendment may be made under subsection (6) within the period of 5 years beginning with the day on which a statement was most recently designated under subsection (1).(8) An earlier amendment may be made under subsection (6) if—(a) since that day—(i) a Parliamentary general election has taken place, or(ii) there has been a significant change in the policy of Her Majesty’s government affecting any matter mentioned in subsection (2)(a), (b) or (c), or(b) the Secretary of State considers that the statement, or any part of it, conflicts with any of OFCOM’s general duties (within the meaning of section 3).2B Duties of OFCOM in relation to strategic priorities(1) This section applies where a statement has been designated under section 2A(1).(2) OFCOM must have regard to the statement when carrying out—(a) their functions relating to telecommunications,(b) their functions under the enactments relating to the management of the radio spectrum, and(c) their functions relating to postal services.(3) OFCOM must within the period of 40 days beginning with the day on which the statement is designated, or such longer period as the Secretary of State may allow—(a) explain in writing what they propose to do in consequence of the statement, and(b) publish a copy of that explanation in such manner as OFCOM consider appropriate.(4) OFCOM must, as soon as practicable after the end of—(a) the period of 12 months beginning with the day on which the first statement is designated under section 2A(1), and(b) every subsequent period of 12 months,publish a review of what they have done during the period in question in consequence of the statement.2C Consultation and parliamentary procedure(1) This section sets out the requirements that must be satisfied in relation to a statement before the Secretary of State may designate it under section 2A. (2) The Secretary of State must consult the following on a draft of the statement—(a) OFCOM, and(b) such other persons as the Secretary of State considers appropriate.(3) The Secretary of State must allow OFCOM a period of at least 40 days to respond to any consultation under subsection (2)(a).(4) After that period has ended the Secretary of State—(a) must make any changes to the draft that appear to the Secretary of State to be necessary in view of responses to the consultation, and(b) must then lay the draft before Parliament.(5) The Secretary of State must then wait until the end of the 40-day period and may not designate the statement if, within that period, either House of Parliament resolves not to approve it.(6) “The 40-day period” is the period of 40 days beginning with the day on which the draft is laid before Parliament (or, if it is not laid before each House on the same day, the later of the days on which it is laid).(7) When calculating the 40-day period, ignore any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.”(2) After section 24 of that Act insert—“24A Provision of information before publication(1) OFCOM must provide the Secretary of State, at least 24 hours before publication, with any information that they propose to publish.(2) If exceptional circumstances make it impracticable to provide the information to the Secretary of State 24 hours before publication it must instead be provided to the Secretary of State as long before publication as is practicable.(3) Subsections (1) and (2) have effect in any particular case subject to any agreement made between the Secretary of State and OFCOM in that case.(4) The Secretary of State may by regulations specify descriptions of information in relation to which the duty under subsection (1) does not apply.(5) Before making regulations under subsection (4), the Secretary of State must consult OFCOM.(6) Information provided to the Secretary of State under this section may not be disclosed by the Secretary of State during the protected period, except to another Minister of the Crown.(7) A Minister of the Crown to whom the information is disclosed under subsection (6) may not disclose the information during the protected period to any other person.(8) A Minister of the Crown may not make any representations to OFCOM during the protected period that specify or describe changes that the Minister considers should be made to information that has been provided under this section when it is published.(9) In this section—“the protected period”, in relation to information provided to the Secretary of State under this section, means the period beginning with the provision of the information and ending when either of the following occurs—(a) OFCOM publish the information;(b) OFCOM inform the Secretary of State that they consent to the disclosure of the information; “Minister of the Crown” has the same meaning as in the Ministers of the Crown Act 1975.24B Provision of information to assist in formulation of policy(1) OFCOM may provide the Secretary of State with any information that they consider may assist the Secretary of State in the formulation of policy.(2) Information with respect to a particular business that has been obtained in the exercise of a power conferred by—(a) this Act,(b) the 1990 Act,(c) the 1996 Act,(d) the Wireless Telegraphy Act 2006, or(e) Part 3 of the Postal Services Act 2011,is not, so long as the business continues to be carried on, to be provided to the Secretary of State under this section without the consent of the person for the time being carrying on that business.”(3) The duty under subsection (1) of section 24A of that Act does not have effect until the day on which regulations made under subsection (4) of that section first come into force.(4) In section 393(6) of that Act (general restrictions on disclosure of information), after paragraph (a) insert—“(za) prevents the disclosure of information under section 24A or 24B;”.(5) In section 111(7) of the Wireless Telegraphy Act 2006 (general restrictions on disclosure of information), after paragraph (a) insert—“(aa) prevents the disclosure of information under section 24A or 24B of that Act;”.(6) In section 56 of the Postal Services Act 2011 (general restrictions on disclosure of information), after subsection (6) insert—“(6A) Nothing in this section prevents the disclosure of information under section 24A or 24B of the Communications Act 2003.”

[Lord Ashton of Hyde]

My Lords, during the passage of this Bill there has been debate on the state of the UK’s fibre networks, the ability to switch communication provider, the quality of business connectivity and other matters vital to our economic future such as the new broadband universal service obligation. These issues rely on the Government’s ability to formulate and implement policies effectively.

Amendment 33ZJ creates a new power for the Secretary of State to set a strategy and policy statement relating to telecommunications, the management of radio spectrum and postal services to which Ofcom, as the regulator, will have regard when carrying out its statutory duties. Ofcom’s media and broadcasting functions are not included in this power, which recognises the importance of media independence from government. This measure will allow the Government to establish a clear policy direction to ensure greater coherence in an increasingly complex and interlinked environment. These changes also strengthen the already strong existing partnership between Ofcom and the Government. Introducing a strategy and policy statement for Ofcom’s sectors brings it in line with the other regulators, Ofwat and Ofgem, and fulfils the Government’s commitments to better establish the policy framework for regulators, as laid out in the Principles for Economic Regulation 2011.

This new clause also provides for Ofcom to disclose information to the Secretary of State at least 24 hours in advance of publication where appropriate, and improves Ofcom’s general information-sharing powers. The new clause provides restrictions on disclosure to other persons, and representations cannot be made to Ofcom specifying changes to be made to any information provided.

The Government’s ability to create and deliver effective policies is supported by Ofcom’s expertise and research. In the past, even when it would have been beneficial for Ofcom to provide information, and it wanted to, it has been restricted by its existing statutory framework. This new clause supports the partnership between government and regulator by enabling early access to certain publications where that would be appropriate, and improving Ofcom’s ability to share information where it deems it to be supportive of policy development.

This amendment therefore improves the policy-making process while also introducing greater transparency in the working relationship between government and Ofcom by giving clarity to the respective roles and responsibilities. This will ensure that policy decisions are taken by government—accountable to Parliament—and Ofcom, independently of government, undertakes the detailed application of regulation.

Should this amendment be agreed, existing Clause 9, which provides for a statement of strategic priorities relating exclusively to the management of spectrum, will no longer be necessary and the Government will table an amendment at Third Reading to remove it. I beg to move.

[Lord Fox (LD)]

My Lords, as someone who has proposed amendments that go some way in this direction, I welcome this move, which in some part meets what we propose elsewhere. I have one question around the wording:

“OFCOM must have regard to the statement when carrying out”,


its related functions. What exactly does that mean? Is that language replicated exactly for Ofwat and Ofgem? How should that regard be manifested by Ofcom?

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[Lord Ashton of Hyde]

My Lords, I thank both noble Lords for their qualified support; I hope that by the time I have finished, it will be unambiguous. I anticipate that from the noble Lord, Lord Fox, in particular, because of course these were the principles for economic regulation introduced by Vince Cable when he was Secretary of State. I can confirm to both noble Lords that there is nothing sinister here. Of course, when we talk about the fact that Ofcom must have regard to a strategic policy statement when carrying out its duties, it absolutely does not override any of Ofcom’s existing general duties. It will continue to take decisions independently of government.

To allay any fears, there are further safeguards in this. A prior consultation must be run on the content of the SPS, which must include Ofcom and then be subject to parliamentary oversight. The implementation of a strategic policy statement does not change Ofcom’s statutory duties at all—it is just one of a number of things that Ofcom has already taken into account when exercising its duties. I therefore hope that the safeguards and my assurance give some comfort to noble Lords.

Amendment 33ZJ agreed.

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Moved by

[Lord Ashton of Hyde]

33ZL: After Clause 91, insert the following new Clause—
“Offence of breaching limits on ticket salesPower to create offence of breaching limits on internet and other ticket sales
(1) The Secretary of State may make regulations providing that it is an offence for a person in circumstances within subsection (2) to do an act within subsection (3). (2) Circumstances are within this subsection if each of the following applies—(a) tickets for a recreational, sporting or cultural event in the United Kingdom are offered for sale,(b) a purchase may be made wholly or partly by a process that the purchaser completes using an electronic communications network or an electronic communications service, and(c) the offer is subject to conditions that limit the number of tickets a purchaser may buy.(3) An act is within this subsection if it consists in using anything that enables or facilitates completion of any part of a process within subsection (2)(b) with intent to obtain tickets in excess of a limit imposed by conditions within subsection (2)(c).(4) The regulations may apply whether the offer is made, or anything is done to obtain tickets, in or outside the United Kingdom.(5) The regulations—(a) may be limited to particular circumstances within subsection (2), and to particular acts within subsection (3);(b) may provide for an offence to be subject to an exception or defence;(c) may make different provision for different areas.(6) The regulations must provide in England and Wales and Scotland for an offence to be triable only summarily.(7) The regulations may not provide for an offence to be punishable—(a) with imprisonment,(b) in Scotland, with a fine exceeding £50,000, or(c) in Northern Ireland, if tried summarily, with a fine exceeding the statutory maximum.(8) The power to make regulations under this section is exercisable by statutory instrument.(9) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.(10) In this section “electronic communications network” and “electronic communications service” have the meaning given by section 32 of the Communications Act 2003.”

[Lord Ashton of Hyde]

My Lords, I am grateful to the noble Lord, Lord Stevenson, for adding his name to this government amendment.

For many years this House has rightly been concerned about the operation of the secondary ticketing market. In 2015, as well as placing new rules in the Consumer Rights Act, noble Lords acknowledged the complexity of online ticketing by requiring a review of consumer protection measures relating to online secondary ticketing. Professor Michael Waterson conducted that review, which was published last year, and two weeks ago the Government published their response, accepting his recommendations in full. The report was warmly welcomed by both Houses, by industry and by consumer representatives, so we should not rush to lightly dismiss the specific recommendations it makes.

Since the review was published, the Competition and Markets Authority has launched an enforcement investigation into suspected breaches of consumer protection law in the online secondary ticket market. The Government have also encouraged the event ticketing industry to set up a project group to take forward the review’s recommendations, and have facilitated the sector’s participation in the joint industry-government Cyber-security Information Sharing Partnership. In addition, we will ensure that resources are made available to National Trading Standards and Trading Standards Scotland to support the upcoming enforcement work on secondary ticketing. We are also working with industry to raise consumer understanding of the ticketing market.

Government Amendment 33ZL forms a key element of our response to the Waterson review, and is intended to address an issue within the ticketing market about which there is widespread support for further action, including from Professor Waterson. The amendment will provide the power for government to introduce a criminal offence to address the use of bots to purchase tickets for a recreational, sporting or cultural event in excess of the maximum specified. The intended offence will apply only to tickets for events in the UK, although it will cover activity to obtain tickets that occurs outside the UK. We believe that the amendment is needed to clarify the law and put beyond doubt the illegality of this practice and the need to report it.

Further, with the new offence on the statute book, the Government will work with industry to enforce it. An offence is only worth having if criminal acts are reported. We have industry groups in place that are now willing and able to take action in partnership with our law enforcement agencies. I hope that this amendment will find favour with the House, and I beg to move.

[Lord Moynihan (Con)]

My Lords, I will speak to Amendments 33ZLZA, 33ZLZB, and 33ZLZC, which stand in my name.

I immediately thank the Minister for responding to a long-running campaign on the question of bots. I will say nothing further on that except that I am looking forward to the secondary legislation. His and the Government’s decision to bring forward action against bots is important and necessary. These are the modern-day ticket touts which sweep the market by using software when the likes of noble Lords and their families are trying to obtain tickets to go to an event. That is unethical and should be illegal, and I welcome the Government’s action on that. We need to make sure that we have good secondary legislation, and we look forward to it coming before the House.

On Amendment 33ZLZC, I will simply say that the reason I tabled this amendment is that it is important to respond to what the Minister said about the lack of enforcement. One way of dealing with the lack of enforcement in this area is to give event organisers the right to enforce the Act through civil action in the courts. This has the benefit of reducing the resources call on the police and/or trading standards, and it should be welcomed. It has certainly been called for by governing bodies of sport and promoters so that they can take action—because it is not in their interest, either, for people to be turned away because they have bought through the secondary market tickets that are counterfeit or illegal. I am unlikely to press that amendment to a vote, but I will be interested to see what the Minister says in response, because it seems to be a helpful suggestion by the governing bodies of sport to respond to this heinous issue.

The most important amendment that I am speaking to is Amendment 33ZLZA, which is fairly straightforward and common sense. Ed Sheeran’s manager appeared before the DCMS Select Committee last week, in the absence of one of the four major secondary market platforms, viagogo, which just did not show. He made the clear and important point that neither Ed Sheeran nor any of the top artists, nor any of the major sports events, all of which are heavily in demand, want to see their tickets counterfeited and people turned away at the door.

We did work on the Consumer Rights Bill to make sure that you got a ticket number, a row number, and a seat number, and to make sure that there were clear terms of reference on the face of the ticket. That should have been achieved and should be deliverable. We fought for but failed to get the ticket number—at the time we got the seat number, the row number and the block. The tickets for Ed Sheeran at the front do not have a block, a seat number or a row, because they are for the standing areas at the front of the concert. But if you have come down a long way and have brought your family down for this one event, you may be turned away at the door because you have no way of checking as a consumer that a ticket is valid.

The only way you can do it is to make sure that there is a unique reference number, which was originally printed on the ticket but has to be on the secondary market platform. It is not an unreasonable request—it does not say that the Horsham Dramatic Society has to put a unique reference number on the ticket. It simply says that where there originally was one, and where Ed Sheeran’s management team wanted one to protect loyal fans of Ed Sheeran who turn up, they should have the ability either to go online or to phone up and say, “Does this reference number accurately relate to a proper ticket and not a counterfeit ticket?”.

A number of these mass, modern-day touts sweep the market and say, as they do online for Ed Sheeran, “Your seat number is between 1 and 20”, and therefore they think that they have answered the question about the seat number. But the one thing they do not want is the honest supporter of a sporting event or a music fan having the ability to check whether their ticket is valid. This is the one amendment that would achieve that—and there would be no cost or difficulty. As far as the promoter of a sporting or music event is concerned, they are putting the seat number, the row number, the date and the event on the ticket. If there is an original, unique reference number, why not put that on as well to allow the true fan to check that it is not a counterfeit ticket before he spends a lot of money travelling to London with his family, for the sake of argument, to go to the O2?

The Minister said that he was concerned about this on three very simple grounds—but I think that there are answers to all three points. First, we obviously welcome the Waterson report, but Waterson stated, as did my noble friend, that he does not support any further significant changes to legislation at this time. However, by his own definition, these amendments are not significant. They do not ban or impose controls on the price; they merely tidy up gaps in the Consumer Rights Act regime, which Waterson endorses. So I believe it would be reasonable to suggest that the Government do, too, with their proposals for greater enforcement.

Secondly, the CMA review is under way but it is not about what might happen in this House tonight or in another place next week. The review and its inquiries are about the enforcement of existing legislation; they are not about possible changes in the future. If there were problems in the future, no doubt the CMA would consider having a further review. It is interesting that it would, by implication, support the measure this evening because it states:

“We also think that it is essential that those consumers who buy tickets from the secondary market are made aware if there is a risk that they will be turned away at the door”.


So, by implication, the CMA is in any event supportive of this proposal. However, that is not the point; the point is that, under statute and under its terms of reference, it is looking at existing legislation and not at new legislation.

Thirdly, when we debated this issue before, the European Union directive was much quoted as a reason for not being able to move forward—because we would be outside the scope of the European Union directive on consumer rights. I wrote to Brussels—not a usual habit of mine—in the following terms:

“Whether it would be in accordance with the EU Consumer Rights Directive for both primary and secondary market ticket sellers to have to provide a unique reference number on the tickets so that event organisers could track sales of tickets”.


The response was:

“Providing a unique reference number on the tickets is not regulated under the Consumer Rights Directive; therefore the Directive does not prevent this practice. National legislation could be relevant to this regard”.


Therefore, on all three grounds, I believe that common sense should prevail. We should look after the interests of the many people who are being ripped off by modern-day ticket touts and enable those individuals to have the right to enjoy a concert because they love either the music they want to listen to or the sporting event that they want to go to.

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[Lord Stevenson of Balmacara]

My Lords, I have been following the progress of this arrangement between all sides because the noble Lord, Lord Moynihan, and Lady Heyhoe Flint—who is terribly missed—the noble Lord, Lord Clement-Jones, and I have been doing this for about four years now. We are reaching the next stage. I do not think we are at the end of the track yet—there are still things that we would like to do—but we have reached an important stage and I should like to support what we are doing.

The issue is all about the rights of the promoters to organise the events that they want to and have control of them, and the rights of consumers who sign up to see these events to do so with the security and certainty that they will be able to see what they have paid for at reasonable prices. The Minister has said that what he has done with the bots amendment is to try to modernise the modern-day ticket touts. I absolutely agree with that. That is why I have signed up to his amendment. There were real difficulties getting this through, which I know because I have talked with the Bill team and the Minister about this. It is really good to see the amendment here today. We will support it and wish it well on its way.

However, the other amendments in this group, which we also support, should not be lost sight of and I hope very much that we will get some movement today. They stem from recommendations 4 and 5 of the Waterson review. They are in keeping with those and try to establish further what the Minister articulated when he introduced the original amendment: as well as having a good partnership with primary ticket sellers and the secondary market, it is really important that the law has a good relationship with consumers and event promoters. Only by providing additional transparency, which was requested in Amendment 33ZLZA—and possibly in the good suggestion that governing bodies get more power in Amendment 33ZLZC—will we begin to take the steps that will clean up this act.

We know from the police reports, from those who are active in this area and from talking to promoters that there is huge criminality and money laundering. There are issues that we really have to investigate. But at the heart of it stand consumers who cannot rely on the market providing them with the right choice and a fair one. This must stop. If the noble Lord wishes to take his amendment to a vote we will support him in the Lobby.

[Lord Ashton of Hyde]

My Lords, I am grateful to all noble Lords and I will try to be quick because I want to move on to the dinner break business. I pay tribute to my noble friend Lord Moynihan for his persistent campaigning on the subject. His work has influenced today’s government amendment, as has the work of other parliamentarians and particularly Nigel Adams MP and Sharon Hodgson MP.

Amendment 33ZLZA would amend the Consumer Rights Act 2015, by inserting a duty to provide the ticket reference or booking number when reselling tickets. This was specifically considered by Professor Waterson in his report. So I start by reminding noble Lords of the reasons that Professor Waterson gave for rejecting the same proposal that we now have before us in Amendment 33ZLZA. I refer to page 170 of his 226-page report. The first was cost. The amendment would require a system for the potential buyer to check a reference number, and in a manner that could be done quickly enough to facilitate internet sales. That requires infrastructure changes in both the primary and secondary market. The primary market would be asked to pay for changes to allow customers to authenticate tickets on the secondary market, for which they receive no additional income. Ultimately, the cost will be added to ticket prices.

Secondly, there is practicality. The secondary ticketing industry would need to establish a standard interface to enable cross-checking. There is strong competition between the platforms and no appropriate industry body to help bring such a system about. In such circumstances, it may be easier and possibly more productive for the secondary platforms simply to chase more exclusive authorised resale deals. Further, there is little evidence of there being the trust between the primary and secondary markets necessary to enable such verification.

Thirdly, my noble friend has mentioned the legal reasons. The EU consumer rights directive, which is the basis of the secondary ticketing information requirements in the Consumer Rights Act, prohibits member states going further in national law than the directive requires. My noble friend mentioned his telephone conversation with the European Commission. There are differences of opinion on the legal interpretation and clearly, at the very least, there may be litigation ahead if we go down this road.

The Government agree with Professor Waterson. We cannot see how Amendment 33ZLZA would actually benefit anyone. Even if those problems were overcome and the primary sellers would offer a consumer confirmation that a reference number was real, how do we know that the real ticket is available for sale? Might it have already been resold? Consumers who buy tickets online, only to be disappointed, will be even angrier having gone to the effort to “verify” yet still being left in the lurch.

Professor Waterson preaches caution in further legislating with good reason. Amendment 33ZLZA is untested and offers false hope. While ticket reference numbers do not offer a solution, we agree with the proposal to require consumers to be informed of the terms of resale. Indeed, we have already legislated to do just that in Section 90(3)(b) of the Consumer Rights Act. Rather than amending the Consumer Rights Act, we believe that the existing law should be tested.

The need for better enforcement was also the overwhelming view of those who gave evidence to the Culture, Media and Sport Select Committee last week, and the Competition and Markets Authority’s enforcement investigation is ongoing. In addition, National Trading Standards and Trading Standards Scotland have been tasked with investigating potential enforcement cases against sellers on secondary ticketing websites that do not comply with the legislation.

I turn to Amendment 33ZLZC. While injunctions are already possible, the amendment would introduce a new element into consumer law by seeking to shift the responsibility for enforcement to the primary ticket seller. This could risk putting an undue onus on event organisers regardless of their capacity to act because public enforcement bodies could use it as grounds to prioritise other areas for enforcement action. The amendment also requires us to trust primary sellers to self-regulate and self-enforce, yet to date the sector has often been too unwilling or unable to take action. There have been notable exceptions, but the strides that we are making, as I set out at the start of the debate, have been achieved by bringing together the parties, including law enforcement agencies, and we need to build on that.

Although Amendment 33ZLZB is similar to the one the Government have tabled on the use of bots, it goes further by attempting to ban the resale of tickets purchased by bots. I acknowledge my noble friend’s kind remarks along with those of the noble Lord, Lord Stevenson, so to save time I will not comment in detail as I understand that my noble friend is content with the government amendment.

In conclusion, the Government recognise that it is hugely frustrating for fans who miss out on tickets sold on the primary market only to see them appear on the secondary ticketing market at increased prices. The Government are acting—working with industry and law enforcement agencies. We need to let these developments grow and allow time to harvest the results of the legislation that we agreed in this House only two years ago. I would respectfully ask my noble friend to withdraw his amendments and noble Lords to support government Amendment 33ZL in their place.

Amendment 33ZL agreed.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Report: 3rd sitting (Hansard - continued): House of Lords
Wednesday 29th March 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I thank all noble Lords who have contributed to the debate. I will start by saying that the noble Baroness, Lady Howe, has been a consistently strong voice in this House in favour of protecting children online and we pay tribute to that. As noble Lords know, we introduced Clause 91 in Committee on the provision of family-friendly filters, clarifying that internet service providers may restrict access to information, content, applications or services where that is in accordance with the terms of service agreed by the end user. That clause gives a reassurance to providers that such filters are compliant with EU net neutrality regulations, so the debate on that has been had in this Bill.

The noble Lord, Lord Collins, my noble friend Lord McColl and the noble Baroness, Lady Benjamin, referred to the report of the House of Lords Communications Committee, Growing up with the internet, which was published on 21 March. The noble Baroness, Lady Benjamin, hopes that we will take careful note of it. She knows that we listen to her—she had an amendment accepted. Among the many recommendations in the report, there is a call for a mandatory default on filters set to a minimum standard to be a requirement made of all ISPs and mobile network operators. Of course I can confirm that we will consider the recommendations in the report carefully as part of our developing work on the new internet safety strategy, and we will respond to it formally in due course.

However, we believe that the current voluntary approach on filters works well and that a mandatory approach would run the risk of replacing the current user-friendly parental control tools with a more inflexible top-down system. As has been noted by several noble Lords, the Internet Service Providers’ Association, the trade body for the industry, is taking further action to encourage smaller ISPs to consider online safety issues and parental control filters for their customers where appropriate. But having said that, I can make the commitment that we will listen to what the committee has said on this subject and, as I say, we will respond in due course. This amendment would require Ofcom to report to the Secretary of State every two years on the number of internet access providers which do or do not offer filters and to describe the actions being undertaken by them in relation to child protection.

As noble Lords will know, in 2013 the previous Prime Minister announced our agreement with the big four ISPs—Sky, Virgin Media, BT and TalkTalk—that they would offer network-level family filters to all customers by the end of December 2014. Ofcom was asked to produce reports on this rollout and did so in four reports issued between January 2014 and December 2015 covering the detail on the provision of filters and child protection measures by the big four ISPs, covering 88% of the fixed broadband market. The vast majority of consumer-focused broadband is therefore a matter of public record. The Ofcom reports also cover data on take-up and usage by parents of these filters. The data are now updated annually in Ofcom’s Children and Parents: Media Use and Attitudes reports, which provide statistics on parental usage and awareness of filters and experience of online safety. In respect of ISPs other than the big four, which run into hundreds, the vast majority of these are SMEs and micro-businesses, as noble Lords may be aware, offering niche, specialist and business-to-business services to small subscriber bases.

With that in mind, it is not clear from the amendment how Ofcom would gather the information it would need to prepare the statutory reports. It is likely that Ofcom would need to identify and ask providers for this information. This would be a very big task for Ofcom as ISPs enter and leave the market constantly and there is no requirement for them to register with Ofcom. It would also be disproportionate for the majority of ISPs, most of which are not focused on the mainstream consumer market, to be asked to provide this information.

The information covered by the existing Ofcom reporting ensures that the most relevant data are sourced on the actual usage of filters by parents, without disproportionate costs or impact on SMEs and micro-businesses. A statutory approach could also unnecessarily limit the scope and focus of reporting moving forward, as technology and the market changes.

On that basis, we consider it more appropriate for Ofcom’s reporting to be on a non-statutory basis to allow greater flexibility. Therefore, I hope that in light of that the noble Baroness will withdraw her amendment.

[Baroness Howe of Idlicote]

My Lords, I am most grateful to all noble Lords who have taken part in this debate and raised all these extremely important issues, and to the Minister for setting out his views on what has been achieved and some of what he considers the danger of asking Ofcom to do rather more than at present, therefore perhaps limiting some of the other work. I would certainly like to see rather more progress being achieved, but on the other hand I understand the extent to which steps have been taken. In the circumstances I will not press the amendment further, but I hope that the Minister will keep the whole issue under review and let us know as and when he becomes even more satisfied with what has been achieved, remembering that at the back of all this it is the small users, such as the parents and children, who we are really concerned about protecting. Having said that, I will withdraw my amendment.

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Moved by

[Lord Ashton of Hyde]

33ZM: After Clause 92, insert the following new Clause—
“Regulations about charges payable to the Information Commissioner
(1) The Secretary of State may by regulations require data controllers to pay charges of an amount specified in the regulations to the Information Commissioner.(2) Regulations under subsection (1) may require a data controller to pay a charge regardless of whether the Information Commissioner has provided, or proposes to provide, a service to the data controller.(3) Regulations under subsection (1) may make provision about the time or times at which, or period or periods within which, a charge must be paid.(4) Regulations under subsection (1) may make provision—(a) for different charges to be payable in different cases;(b) for cases in which a discounted charge is payable;(c) for cases in which no charge is payable;(d) for cases in which a charge which has been paid is to be refunded.(5) The Secretary of State may by regulations make provision—(a) requiring a data controller to provide information to the Information Commissioner, or(b) enabling the Commissioner to require a data controller to provide information to the Commissioner,for either or both of the purposes mentioned in subsection (6).(6) Those purposes are—(a) determining whether a charge is payable by the data controller under regulations under subsection (1);(b) determining the amount of a charge payable by the data controller.(7) The provision that may be made under subsection (5)(a) includes, in particular, provision requiring a data controller to notify the Information Commissioner of a change in the data controller’s circumstances of a kind specified in the regulations. (8) In this section “data controller” means a person who, alone or jointly with others, determines the purposes and means of the processing of personal data.(9) In subsection (8) “personal data” means any information relating to an identified or identifiable individual.(10) For this purpose an individual is “identifiable” if the individual can be identified, directly or indirectly, in particular by reference to—(a) an identifier such as a name, an identification number, location data or an online identifier, or(b) one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of the individual.(11) Where the purposes and means of the processing of personal data are determined by or on behalf of the House of Commons or House of Lords, other than where they are determined by or on behalf of the Intelligence and Security Committee of Parliament, the data controller in respect of those data for the purposes of this section is the Corporate Officer of that House.”

[Lord Ashton of Hyde]

My Lords, the government amendments in this group seek to give the Secretary of State the power to make regulations introducing new charges to fund the regulatory functions of the Information Commissioner for data protection. The charges will replace the existing notification fees set out in regulations made under Sections 18 and 26 of the Data Protection Act 1998.

The amendments will also repeal Part 3 of the Data Protection Act, which imposes an obligation on data controllers to notify the Information Commissioner of certain types of data processing. The commissioner maintains a register of all data controllers. The General Data Protection Regulation removes the obligation on data controllers to notify the Commissioner, so it is necessary to repeal Part 3. The GDPR will become part of UK law on 25 May 2018.

The amendments seek to replicate the substance of the fee-raising powers in the Data Protection Act 1998. I can confirm that charges will continue to be based on the principle of full cost recovery and, in line with the current model, fee levels will be determined on size and turnover of organisation, but will also take account of the volume of personal data being processed by organisations to recognise the additional risk of a breach occurring when an organisation processes large volumes of sensitive personal data.

Although organisations will no longer be required to notify the Information Commissioner that they are processing personal data, they will continue to receive a range of services from the Information Commissioner’s Office in return for the charge. This includes good practice guidance on organisations’ obligations under the data protection framework and how to comply; online training videos; free voluntary audits of organisations’ data protection practices to support improved compliance; and advisory visits.

The Government have considered the DPRRC’s recommendations on these clauses and have responded. We agree with the committee that regulations made under the new charging powers should be subject to appropriate external consultation and parliamentary oversight. We will therefore bring forward an amendment at Third Reading to require the Secretary of State to consult,

“such representatives of persons likely to be affected by the regulations as the Secretary of State thinks appropriate and such other persons as the Secretary of State thinks appropriate”,

in addition to the Information Commissioner. We will also bring forward an amendment to require the Secretary of State to use the affirmative procedure when making regulations under the new power, except in the case of purely inflationary increases, where the negative procedure will apply.

We have considered carefully the committee’s recommendation to require the Secretary of State to ensure that the income from the charges does not exceed the reasonably anticipated costs of discharging the specified functions of the Information Commissioner and Secretary of State related to data protection. It is the Government’s view that the limited flexibility given in the government amendments is necessary, given rapid developments in the digital economy and to manage the inevitable period of transition as the ICO takes on additional responsibilities under the forthcoming general data protection regulation. The language used in the Government’s amendment mirrors that in the existing Data Protection Act. Parliament has not expressed any concerns about how the existing powers have been exercised and we believe that by subjecting each exercise of the power to the affirmative procedure, we are putting in place sufficient parliamentary safeguards to ensure the powers will be exercised in a rational and responsible way in the future. We therefore do not intend to table an amendment to address this recommendation. I beg to move.

Amendment 33ZN (to Amendment 33ZM)

Moved by

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[Lord Collins of Highbury]

I have tabled Amendment 33ZPA, which deals explicitly with the Delegated Powers Committee’s recommendation. As the Minister will know, immediately on seeing the government amendments I approached him and wanted a discussion, because I was anxious that items were suddenly being put in the Bill of which no mention had been made before. We had had amendments relating to the Government’s willingness to implement the GDPR and they were reluctant to address that issue in the Bill, but suddenly the GDPR was to come into force on 18 May and we needed time to ensure that charges could be properly accommodated. I was concerned that suddenly all this was happening. The Minister wrote to me after our meeting and I was happy to learn that the Delegated Powers Committee had come up with the same concerns as me.

I want to be clear that my amendment specifically picks up the words of the committee. This is not simply about covering costs—I am sure that the Minister will reassure us about that; it is also about creep. It is about whether the Government will ask the ICO to undertake other things for which charges will suddenly become applicable, as was referenced in the report. It cited,

“broadly similar legislation enabling the Government to prescribe enhanced court fees, which they are relying on to introduce large increases in probate fees”.

We know that the ICO wants to extend its powers—quite rightly in some respects—but it should not do so without proper parliamentary scrutiny. I want the Minister to give me a clear assurance that the specific example given by the committee will not be applicable in relation to these charges. The “limited flexibility” of which he spoke gives the Government much wider powers. Why do they need limited flexibility when they are introducing a charging regime to meet the requirements of the GDPR and the specified responsibilities of the ICO? If they are to go beyond that and say that they need wriggle room in the form of what are described as limited powers, Parliament deserves the opportunity properly to scrutinise such changes. I reserve the option of tabling amendments at Third Reading that bring forward the recommendations of the Delegated Powers Committee. I hope that the Minister can reassure me about the limited power or wriggle room that he says the Government need. I want to know why they need it.

[Lord Ashton of Hyde]

My Lords, I listened with interest and a certain amount of apprehension to this debate and the contributions made by noble Lords. As I said in my opening remarks, the Government intend to bring forward at Third Reading amendments to address the intentions of Amendments 33ZR, 33ZS, 33ZT and 33ZV tabled by the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Hamwee.

I listened to the arguments in support of Amendments 33ZN, 33ZP and 33ZPA. However, we need the existing flexibility in the government amendments because there is rapid development in the digital economy. That means that the role of the data protection regulator is continually evolving. We want to allow flexibility to manage the period of transition as the ICO takes on additional responsibilities under the forthcoming GDPR. For example, in our amendment we specifically refer to discounts to certain organisations.

I understand why noble Lords are worried about giving additional powers to the ICO. The noble Lord, Lord Collins, talked about “creep” on this. I reassure noble Lords that this will be on a full cost recovery basis and it is in line with the current charging regime, so the fees will be determined by the size and turnover of the organisation, as I said at the beginning. We will consult data controllers on the shape of the new regime before laying regulations to introduce new charges. I repeat that the new model will continue to be based on the full cost recovery principle. On parliamentary scrutiny, the affirmative procedure will allow that scrutiny in Parliament.

The other reason for this is that the ICO fees regime needs to be in place by 1 April, ahead of the GDPR. In advance of this, it will be necessary to consult organisations on the proposed fees levels and lay the fees regulations in sufficient time for the start of the 2018-19 financial year. We would not be able to do that in the third Session.

To answer the noble Lord, Lord Clement-Jones, on the language in the proposed new section, the nature of the ICO role is changing with the changes in electronic communications—for example, in the regulation on cookies. We need some flexibility without the restrictive language of the noble Lord’s amendment.

I hope noble Lords will agree that subjecting regulations made under these powers to consultation and the affirmative procedure offers the necessary safeguards to ensure the powers are used proportionately. I therefore respectfully ask that the noble Lord withdraws the amendment.

[Lord Collins of Highbury]

Bearing in mind the comments I made, would the Minister take the opportunity to meet me and other interested Peers before Third Reading so that we can be clear and reassured that those points are covered by the government amendments?

[Lord Ashton of Hyde]

It is always a pleasure to meet the noble Lord and I give that undertaking.

[Lord Clement-Jones]

My Lords, I thank the Minister for that undertaking, which would be extremely helpful and sensible in the circumstances. We will have rather a limited amount of business at Third Reading, no doubt in prime time. We might well want to take this issue forward if we have not had satisfactory discussions in the meantime. No doubt, that can take place early next week if Third Reading takes place on Wednesday.

[Lord Ashton of Hyde]

I am very happy to meet. Obviously, I make no commitments as to what will emerge from that meeting.

[Lord Clement-Jones]

My Lords, I would not expect the Minister to make commitments at this stage, just to listen to the arguments that we have already made and will no doubt make again in the meeting. I am very grateful to the Minister. We have Third Reading where we can—

[Lord Stevenson of Balmacara (Lab)]

I am abusing the system. I apologise for interrupting. I am grateful to the noble Lord for giving way. My question is directed at the Minister through the noble Lord, to maintain some semblance of protocol. I think the question my noble friend was trying to ask was, given that the Minister has committed to bringing back an amendment which covers much of the ground that has been discussed today, because there are issues he wishes to solidify, the assumption is that the points that have been raised may be raised again at Third Reading. He is not asking him to concede any additional work. I make it absolutely clear, because of the need for the clerks to be sure about this, that there will be a discussion at Third Reading on the substantive points that have been made so far.

[Lord Ashton of Hyde]

What the noble Lord, Lord Collins, asked me to do was to meet to discuss these issues before Third Reading. I agreed to meet him and the noble Lord, Lord Clement-Jones, if he wants to do that. I said that we were going to bring forward two amendments and we will continue to do that. I think it is the other one, where we have agreed not to do that, that he wants to talk about, but I am happy to talk about all of them. We will bring forward the two amendments at Third Reading. Obviously, I can make no commitment about any extra amendments but I am happy to talk about it.

[Lord Clement-Jones]

I completely understand that but, as the Minister is fully aware, because it is Third Reading, our ability to discuss is limited by the rules. But we could do it by way of an amendment to the Minister’s amendment. That is our assumption, I think, in the circumstances. On that basis, I am happy to withdraw Amendment 33ZN.

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Moved by

[Lord Ashton of Hyde]

33ZQ: After Clause 92, insert the following new Clause—
“Functions relating to regulations under section (Regulations about charges payable to the Information Commissioner)
(1) Before making regulations under section (Regulations about charges payable to the Information Commissioner)(1) or (5) the Secretary of State must consult the Information Commissioner.(2) In making regulations under section (Regulations about charges payable to the Information Commissioner)(1), the Secretary of State must have regard to the desirability of securing that the charges payable to the Information Commissioner under such regulations are sufficient to offset—(a) expenses incurred by the Commissioner in discharging the Commissioner’s functions— (i) under the Data Protection Act 1998,(ii) under or by virtue of the Privacy and Electronic Communications (EC Directive) Regulations 2003 (SI 2003/2426),(iii) under the General Data Protection Regulation,(iv) under regulations which implement the General Data Protection Regulation or the Criminal Data Directive,(v) by virtue of section (Regulations about charges payable to the Information Commissioner), and(vi) under this section,(b) any expenses of the Secretary of State in respect of the Commissioner so far as attributable to those functions,(c) to the extent that the Secretary of State considers appropriate, any deficit previously incurred (whether before or after the passing of this Act) in respect of the expenses mentioned in paragraph (a), and(d) to the extent that the Secretary of State considers appropriate, expenses incurred by the Secretary of State in respect of the inclusion of any officers or staff of the Commissioner in any scheme under section 1 of the Superannuation Act 1972.(3) In subsection (2)—“the Criminal Data Directive” means Directive (EU) 2016/680 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and on the free movement of such data, and repealing Council Framework Decision 2008/977/JHA;“the General Data Protection Regulation” means Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation).(4) The Secretary of State may from time to time require the Information Commissioner to provide information about the expenses referred to in subsection (2)(a).(5) The Information Commissioner must keep under review the working of regulations under section (Regulations about charges payable to the Information Commissioner)(1) or (5) and may from time to time submit proposals to the Secretary of State for amendments to be made to the regulations.(6) The Secretary of State must review the working of regulations under section (Regulations about charges payable to the Information Commissioner)(1) or (5)—(a) at the end of the period of five years beginning with the making of the first set of regulations under that section, and(b) at the end of each subsequent five year period.”

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Moved by

[Lord Ashton of Hyde]

33ZU: After Clause 92, insert the following new Clause—
“Supplementary provision relating to section (Regulations about charges payable to the Information Commissioner)
(1) Regulations under section (Regulations about charges payable to the Information Commissioner)(1) or (5) are to be made by statutory instrument.(2) A statutory instrument containing regulations under section (Regulations about charges payable to the Information Commissioner)(1) or (5) is to be laid before Parliament after being made.(3) Regulations under section (Regulations about charges payable to the Information Commissioner)(1) or (5)—(a) may make different provision for different purposes;(b) may make transitional, transitory or saving provision;(c) may make incidental, supplemental or consequential provision.(4) Regulations under section (Regulations about charges payable to the Information Commissioner)(1) or (5) may bind the Crown.(5) But regulations under section (Regulations about charges payable to the Information Commissioner)(1) or (5) may not apply to—(a) Her Majesty in Her private capacity,(b) Her Majesty in right of the Duchy of Lancaster, or(c) the Duke of Cornwall.(6) For the purposes of section (Regulations about charges payable to the Information Commissioner) each government department is to be treated as a person separate from any other government department.(7) In subsection (6)“government department” includes—(a) any part of the Scottish Administration;(b) a Northern Ireland department;(c) the Welsh Government;(d) any body or authority exercising statutory functions on behalf of the Crown.”

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Moved by

[Lord Ashton of Hyde]

33ZW: After Clause 92, insert the following new Clause—
“Amendments relating to section (Regulations about charges payable to the Information Commissioner)
(1) The Data Protection Act 1998 is amended in accordance with subsections (2) to (7).(2) Omit Part 3 (notification by data controllers).(3) In section 33A(1)(manual data held by public authorities) omit paragraph (e)(but not the “and” following that paragraph).(4) In section 71 (index of defined expressions) omit the entries relating to “address”, “fees regulations”, “notification requirements”, “prescribed” and “registrable particulars”.(5) In Part 2 of Schedule 1 (interpretation of the data protection principles) in paragraph 5 omit paragraph (b) and the “or” preceding that paragraph.(6) In Part 1 of Schedule 5 (the Information Commissioner) in paragraph 9(1)(destination of fees etc) after “the Freedom of Information Act 2000” insert “and all charges received by the Commissioner under regulations under section (Regulations about charges payable to the Information Commissioner) (1) of the Digital Economy Act 2017”.(7) In Schedule 14 (transitional provisions and savings) omit paragraph 2 (registration under Part 2 of the Data Protection Act 1984).(8) In regulation 5(3)(b) of the High Court Enforcement Officers Regulations 2004 (SI 2004/400)(application procedure) omit paragraph (iii). (9) In consequence of the repeal in subsection (2) the following are repealed or revoked—(a) section 71 of the Freedom of Information Act 2000;(b) in paragraph 6 of Schedule 2 to the Transfer of Functions (Miscellaneous) Order 2001 (SI 2001/3500)—(i) in sub-paragraph (1), paragraphs (h) to (m), and(ii) sub-paragraph (2);(c) in paragraph 9(1)(a) of Schedule 2 to the Secretary of State for Constitutional Affairs Order 2003 (SI 2003/1887), the words “16, 17, 22, 23, 25, 26,”;(d) Part 1 of Schedule 20 to the Coroners and Justice Act 2009;(e) paragraph 26 of Schedule 2 to the Transfer of Tribunal Functions Order 2010 (SI 2010/22).”

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Moved by

[Lord Ashton of Hyde]

33ZX: Before Schedule 4, insert the following new Schedule—
“PUBLIC SERVICE DELIVERY: SPECIFIED PERSONS FOR THE PURPOSES OF SECTION 311_ The Secretary of State for the Home Department.2_ The Secretary of State for Defence.3_ The Lord Chancellor.4_ The Secretary of State for Justice.5_ The Secretary of State for Education.6_ The Secretary of State for Business, Energy and Industrial Strategy.7_ The Secretary of State for Work and Pensions.8_ The Secretary of State for Communities and Local Government.9_ The Secretary of State for Culture, Media and Sport.10_ Her Majesty’s Revenue and Customs.11_ A county council in England.12_ A district council in England.13_ A London borough council.14_ A combined authority established under section 103 of the Local Democracy, Economic Development and Construction Act 2009.15_ The Common Council of the City of London in its capacity as a local authority.16_ The Council of the Isles of Scilly.17_ The Greater London Authority.18_ A metropolitan county fire and rescue authority.19_ The London Fire Commissioner.20_ A fire and rescue authority in England constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies.21_ A fire and rescue authority created by a scheme under section 4A of the Fire and Rescue Services Act 2004.22_ A chief officer of police for a police area in England and Wales.23_ The proprietor of a school within the meaning of the Education Act 1996.24_ The proprietor of an Academy within the meaning of that Act.25_ The responsible person in relation to an educational institution as defined by section 72(5) of the Education and Skills Act 2008 (other than a person within paragraph 23 or 24). 26_ The Gas and Electricity Markets Authority.27_ The Chief Land Registrar.28_ A person providing services in connection with a specified objective (within the meaning of section 31) to a specified person who is a public authority.”

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Moved by

[Lord Ashton of Hyde]

33ZYC: Before Schedule 4, insert the following new Schedule—
“SPECIFIED PERSONS FOR THE PURPOSES OF THE FRAUD PROVISIONS1_ The Secretary of State for the Home Department.2_ The Secretary of State for Defence.3_ The Lord Chancellor.4_ The Secretary of State for Justice.5_ The Secretary of State for Education.6_ The Secretary of State for Business, Energy and Industrial Strategy.7_ The Secretary of State for Work and Pensions.8_ The Secretary of State for Transport.9_ The Secretary of State for Communities and Local Government.10_ The Secretary of State for the Environment, Food and Rural Affairs.11_ The Secretary of State for International Development.12_ The Secretary of State for Culture, Media and Sport.13_ The Minister for the Cabinet Office.14_ Her Majesty’s Revenue and Customs.15_ The Export Credits Guarantee Department.16_ A county council in England.17_ A district council in England.18_ A London borough council.19_ The Common Council of the City of London in its capacity as a local authority.20_ The Council of the Isles of Scilly.21_ The Greater London Authority.22_ The Chief Land Registrar.23_ The Big Lottery Fund.24_ The Nuclear Decommissioning Authority.25_ The Environment Agency.26_ The Homes and Communities Agency.27_ The Higher Education Funding Council for England. 28_ The Historic Buildings and Monuments Commission for England.29_ The Student Loans Company.30_ The British Council.31_ The Arts Council of England.32_ The English Sports Council.33_ The Technology Strategy Board.34_ The Arts and Humanities Research Council.35_ The Medical Research Council.36_ The Natural Environment Research Council.37_ The Biotechnology and Biological Sciences Research Council.38_ The Economic and Social Research Council.39_ The Engineering and Physical Sciences Research Council.40_ The Science and Technology Facilities Council.41_ A person providing services to a specified person who is a public authority in respect of the taking of action in connection with fraud against a public authority.”

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Moved by

[Lord Ashton of Hyde]

33ZYE: After Clause 95, insert the following new Clause—
“Guarantee of pension liabilities under Telecommunications Act 1984Guarantee of pension liabilities under Telecommunications Act 1984
(1) The Secretary of State may make regulations modifying or supplementing section 68 of the Telecommunications Act 1984 (liability of Secretary of State in respect of British Telecommunications public limited company’s liabilities as successor for payment of pensions) in accordance with subsection (4).(2) Subsection (4) applies in relation to relevant employees of British Telecommunications public limited company (“BTplc”) becoming employees of another company (a “transferee”) in connection with any part of the undertaking of BTplc being transferred or outsourced (whether or not to the transferee).(3) Employees are relevant if the liability of BTplc for the payment of pensions which vested in it by virtue of section 60 of the Telecommunications Act 1984 included, immediately before the employees ceased to be employees of BTplc, liability for the payment of pensions to or in respect of those employees.(4) The regulations may provide for the Secretary of State (in addition to any liability apart from the regulations) to become liable—(a) on the winding up of BTplc, to discharge any outstanding liability of BTplc for the payment of pensions to or in respect of relevant employees of the transferee or a successor;(b) on the winding up of the transferee or a successor, to discharge any outstanding liability of the transferee or successor for the payment of pensions to or in respect of relevant employees.(5) The regulations may provide for any liability that the Secretary of State is liable to discharge under the regulations not to include liability arising by virtue of a person’s employment on or after a specified date, or by virtue of anything else occurring on or after a specified date. (6) The specified date must be not earlier than the date on which the regulations come into force.(7) The power to make regulations under this section is exercisable so as to—(a) make provision in relation to all cases or circumstances to which the power extends or in relation to specified cases or circumstances;(b) in particular, make provision in relation to all employees to whom the power extends or in relation to employees of a specified description;(c) make different provision for different purposes.(8) The regulations may—(a) amend section 68 of the Telecommunications Act 1984;(b) re-enact any provision of that section with or without modifications.(9) In this section references to the winding up of a company are references to—(a) the passing of a resolution, in accordance with the Insolvency Act 1986, for the voluntary winding up of the company, or(b) the making of an order for the winding up of the company by the court under that Act.(10) In this section—“specified” means specified in regulations under this section;“successor” means—(a) where relevant employees of a transferee become employees of another person, that person, and(b) where relevant employees of a successor within paragraph (a) or this paragraph become employees of another person, that person.”

[Lord Ashton of Hyde]

My Lords, Amendments 33ZYE and 33ZYF confer a power on the Secretary of State to modify Section 68 of the Telecommunications Act 1984, which put in place a Crown guarantee covering the BT pension scheme when BT was privatised. This is essential so that the Government can continue to guarantee the BT pension scheme liabilities relating to employees transferred to a separate Openreach.

This amendment is necessary following the announcement on 10 March of a voluntary deal between BT and Ofcom legally to separate BT and Openreach, making Openreach a wholly-owned subsidiary of BT. Ofcom has identified an issue concerning the Crown guarantee as a barrier to the implementation of that deal. This amendment removes that barrier.

When BT was privatised in 1984, the Government legislated that BT plc’s pension liabilities were subject to a Crown guarantee. This meant that government would stand behind the BT pension scheme if BT entered insolvent winding-up. However, if that legislation were to remain unamended, the protection of the Crown guarantee would be removed from BT pension scheme members who transferred to a separate Openreach.

The welfare of BT pension scheme members is a critical consideration for the separation deal. That is why this amendment will enable the Secretary of State to ensure that the Crown guarantee can continue to apply to the pensions of all the staff who benefited from it before separation. The Government are clear that maintaining existing pension protections for BT and Openreach employees is vital. We intend to use the power to do that. Dialogue and consultation with the trustee on the exact exercise of this power will therefore be crucial, and we will engage with it before and during the creation of the implementing regulations.

This power also ensures that the Government can respond to a range of potential outcomes. It would not be right to amend the Telecommunications Act 1984 directly at this stage, when many technical details of the transfer of employment to Openreach and the management of the BT pension scheme after separation are unknown or unclear. That is why we need to take a power so that we can get the detailed secondary legislation on the Crown guarantee right.

The power taken under this amendment has a comprehensive set of safeguards on its use, including a duty to consult appropriate stakeholders: the trustee of the BT pension scheme, the Pensions Regulator and the companies involved. The power may be exercised only with the consent of the Treasury, and a draft of the instrument must be laid before, and approved by resolutions in, both Houses of Parliament.

The separation of BT and Openreach lays the ground for a more competitive broadband market that will improve the speed and reliability of our nation’s broadband services to the benefit of businesses and consumers. Ofcom has also stated that separation will promote investment in next-generation full-fibre infrastructure, and I hope that noble Lords will join me in calling on BT to make that a reality and deliver the connectivity that our nation needs. Further, I hope noble Lords will support this necessary amendment so that Ofcom can implement a more separate Openreach without delay, and so that the welfare of all BT pension scheme members may be safeguarded. I beg to move.

Amendment 33ZYEA (to Amendment 33ZYE)

Moved by

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[Lord Mendelsohn (Lab)]

My Lords, this group of amendments addresses two crucial issues—first, the Crown guarantee on BT pensions and, secondly, the relationship between Openreach and BT. In relation to the Crown guarantee, I have added my name to Amendments 33ZYEA and 33ZYEB in the name of my noble friend Lady Drake. These Benches support her arguments completely, and I hope that the clear, comprehensive and compelling case that she made will receive a good reception across the whole House. I thank her for her excellent and assiduous work on this matter.

It is clear that these government amendments do not yet have the robustness that assures this House, and I think that my noble friend’s unequalled expertise has come up with an impressive formulation. I look forward to hearing the Minister respond to these issues and would wish to hear some specific reassurances, if he is not minded to accept her amendments. It is important that nothing weakens the covenant on pensions; it is extremely important that the Crown guarantee is carried across and that nothing undermines the responsibilities of the trustees in exercising their duties properly. It is a colossal task. BT has the second-worst-funded pension scheme in the world, according to the MSCI survey of 5,000 company pensions, second only to Du Pont, which is the subject of a merger which will make it better funded, so BT will become the worst-funded pension scheme in the world. In addition to uncertainties about the Crown guarantee, that will put trustees in an impossible position, if these amendments are not addressed as my noble friend suggested. The Government and all those concerned in this discussion should be in a position to confirm—as indeed Matthew Hancock, the Minister responsible, did in a meeting with Members of this House—that the proposed arrangements for the pension scheme should ensure long-term assurance to pension holders whether Openreach is legally or structurally separated.

This brings us to Amendment 33M in my name and that of my noble friend Lord Stevenson of Balmacara, which proposes the structural separation of Openreach. I will make a few very brief points to support this view. This is not a negative statement about BT, which is an excellent British company and one that we hope will continue to grow and thrive. There are many keen to criticise BT’s behaviour in relation to the supply of broadband but this must be properly balanced by the realities of the regulatory framework and policy context it was given to operate in and which has incentivised and guided its approach. It is slightly unfair to create such arrangements and then criticise someone for following them, and many of the criticisms of BT have been unfair and misdirected.

The differences between the benefits of legal and structural separation are important to note. Legal separation, which has been proposed by Ofcom, is where the upstream business is established as a separate legal entity within the wider group but remains under BT’s complete ownership. It includes functional separation with independent governance. There is a clear benefit to a regulator that would lend itself to suggesting this approach. It certainly makes the regulatory task of overseeing this arrangement much more economic. But having one place to look at is a benefit only for the regulator. The alternative is structural separation, where the vertically integrated operation is split with no significant common ownership and “line of business” restrictions to prevent them re-entering each other’s markets. There are some issues that people think are reasons to achieve separation, such as improvements to service levels, broadband speeds and end-customer services, but these are not dependent on separation.

BT has contributed massively to getting us to where we are now, where we have—in relative terms to international peers—availability of superfast average speeds and lowish prices. But the challenge is the future, and this is where investment needs to be higher. Crucially the UK is lagging in fibre to the premises; the majority of the network is either fibre to the cabinet or cable. The future will require us to commit to FTTP. Other solutions such as G.fast will not keep us as a leading nation. Structural separation is the only mechanism that can sufficiently address the investment issues, and this was the matter that Ofcom did not adequately address in its proposal. The legal separation does not address the problem that strategic decisions on investment will still be dependent on BT, even though I hope that it takes note of the Minister’s exhortation for it to do better.

Ofcom’s statement of reasons for its approach says that this will provide improved investment outcomes from new models of investment such as co-investment and risk sharing. But BT has never lacked access to capital, which is why even Ofcom acknowledges that this model will be reviewed in order to ensure that the new structure achieves its objectives. This is not an equivocal “may” or “could”, but an emphatic “must” and “should” be reviewed. I hope that the Minister can confirm that this will be done and a broad timetable for it.

Our concern is that policy is drifting and opportunities to ensure that we maintain a leading position in the new communications technologies are being weighed down by compromise, confusion and a terrible lack of clarity. It is surely better to provide leadership and certainty by choosing the only arrangement that will ensure the necessary level of investment to make our broadband fit for the future.

[Lord Ashton of Hyde]

My Lords, I thank the noble Baroness, Lady Drake, for the time and effort that she has put into examining this matter and meeting with me and my officials to explore the details. The noble Baroness is an expert in pension matters and we have all benefited from her advice, and I am very grateful. Government Amendment 33ZYE is explicitly designed to ensure the continuation of the Crown guarantee for those transferees from BT plc to a future Openreach or other successor company. Amendment 33ZYEA is a technical point and concerns the adequacy of the word “undertakings”. I believe that our existing wording on undertakings is sufficient and would cover any transfer of staff, including one that was consequential on the application of the TUPE regulations about the movement of activities from one company to another. The “activities”, suggested by the noble Baroness, if moved to another company, are part of the undertaking of BT.

We agree with the noble Baroness on the policy intent. We intend to cover all ways by which BT staff might be transferred to the new Openreach company, but technical detail is important here, and I will table a technical clarification for Third Reading.

Amendment 33ZYEB seeks to delete a subsection of the Government’s amendment that provides a power to vary the Crown guarantee. I understand the reasoning behind this amendment but want to remind noble Lords that the Government have been clear that we are providing a power to ensure that, following Openreach’s separation, the extent of protection afforded by the Crown guarantee is no less and no more than at present. I reassure noble Lords that nothing in the Bill or in the delegated powers it gives to the Secretary of State will change or alter the Crown guarantee to BT plc pension liabilities.

We have seen the documents published by BT and Ofcom that outline plans for a legally separate Openreach Ltd. On the basis of those, the Government fully intend to ensure that the Crown guarantee protection continues to be maintained for all current members of the BT pension scheme, including those who will become part of the wholly owned subsidiary Openreach Ltd. So, our clear intention is that the protection of the guarantee provided to BT pension scheme members should be maintained. That is why the power includes an ability to define that protection in secondary legislation so that it may be neither wider nor narrower than existing protections. However, until we see the detail of the agreement on Openreach separation, and how the liability for payments to the BT pension scheme will be divided between BT plc and the new Openreach, we cannot say that the power defined in new subsection (5) will not be required. In applying the Crown guarantee to the pension liabilities of the new company, we are creating new risks. There is the potential for unintended consequences, which concerns us particularly. This power helps guard against them, while enabling the Government to maintain Crown guarantee protections for pension scheme members in line with our clearly stated intention to do so.

New subsection (5) gives the power for the Secretary of State to consider whether to maintain the Crown guarantee for any staff who then move on to spin-off companies: for example, if part or all of Openreach were sold. I believe that the need for this power is clear. I reiterate that it is the Government’s intention to ensure that current members of the scheme who transfer to Openreach are certain that their pension rights will continue to be safeguarded by a Crown guarantee.

I turn now to Amendment 33M, which seeks to place obligations on the Secretary of State to direct Ofcom to begin the process of “legal and functional separation” of Openreach from BT plc. Functional separation of Openreach and BT has been in place since 2006 by means of undertakings that BT gave to Ofcom pursuant to the Enterprise Act 2002. On 10 March 2017, Ofcom and BT announced that they had agreed on a legal separation. By the end of this year “legal and functional separation”, as required by the noble Lord’s amendment, should have been achieved, according to Ofcom. On that basis, if the timetable set out in Amendment 33M were to be followed, separation would take much longer. Ofcom is currently consulting on the details of the transition to a legally separate Openreach. This consultation closes on 14 April and the timetable for completion should be achievable. Moreover, if Ofcom had to impose its decision on BT rather than having a voluntary agreement as now, the decision would have to be referred to the European Commission under the electronic communications framework directive. The remedy of separation has never been used before, so the timetable for a response from the Commission is unknown. It could be nine months or more. It is also possible that BT would appeal against forced separation, further delaying the process. A long delay would be likely to inhibit investment in the sector at a time when we all want to see great strides being made in the UK’s broadband coverage and quality.

The purpose of having our independent communications regulator, Ofcom, is to make exactly these assessments. It is Ofcom’s duty and role to take decisions and regulatory interventions on the strength of its expert analysis of competition in the market. As such, it is our view that it would not be appropriate for the Government to legislate in this way in view of the independence of Ofcom from government. It is therefore not necessary or right for government to legislate on this matter both because Ofcom can take such decisions and because it has already done so, specifically in respect of the separation of Openreach. With that explanation, I hope that the noble Baroness will withdraw the amendment.

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Moved by

[Lord Ashton of Hyde]

33ZYF: After Clause 95, insert the following new Clause—
“Regulations under section (Guarantee of pension liabilities under Telecommunications Act 1984)
(1) The power to make regulations under section (Guarantee of pension liabilities under Telecommunications Act 1984) is exercisable by statutory instrument.(2) That power is exercisable by the Secretary of State only with the consent of the Treasury.(3) A statutory instrument containing regulations under that section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.(4) Before making regulations under that section the Secretary of State must consult—(a) the Pensions Regulator;(b) BT plc;(c) the trustees of the BT Pensions Scheme;(d) any transferee or successor to which the regulations apply;(e) any other persons the Secretary of State considers it appropriate to consult.”

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[Baroness Janke]

My Lords, this amendment has already been debated. Although the assurances the Minister gave in the previous debate were very interesting and will bring forward some new issues and some reassurances, this is a very urgent matter and I would like to hear what he has to say. I therefore beg to move.

[Lord Ashton of Hyde]

My Lords, as the noble Baroness said, this has been debated. However, I will respond briefly. First, on 27 February the Government announced work on an internet safety strategy which aims to make the UK the safest place in the world for children and young people to go online. With the help of experts, social media companies, tech firms, charities and young people, we aim to publish a Green Paper in June. We need the time to do this.

Secondly, on 20 March this House agreed the amendment in the name of the noble Baroness, Lady Jones, on a code of practice for social media. The House has already debated this issue. To accept Amendment 33A would create overlap and duplication between the two amendments. It simply does not make sense to have agreement to both amendments.

Thirdly, defining “social media service” is difficult, but I regret that the noble Baroness’s definition is very wide, and therefore unworkable and disproportionate.

Finally, and perhaps most importantly, it should not be left to social media companies or their users to judge whether or not content is criminal.

However, we know that there is more to do and I give a firm commitment to the House that we will consider all available options through our internet safety strategy, which will be published in June, and that we will implement its proposals as quickly as possible.

[Baroness Janke]

I thank the Minister for his comments. The difference between this amendment and the one that he mentioned is that the previous amendment referred to children, whereas this amendment covers a much wider range of adults, particularly vulnerable adults and adults who are subject to bullying, criticism and unfair treatment on the internet.

Having heard what the Minister said, I look forward to the Green Paper and to participating in discussions on it. I hope that the Government see this as a very serious issue and that they are committed to doing something about it. Having said that, I beg leave to withdraw the amendment.

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Moved by

[Lord Ashton of Hyde]

34A: Clause 97, page 100, line 26, at end insert—
“( ) sections (Guarantee of pension liabilities under Telecommunications Act 1984) and (Regulations under section (Guarantee of pension liabilities under Telecommunications Act 1984));”

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Moved by

[Lord Ashton of Hyde]

35A: Clause 97, page 100, line 36, at end insert—
“( ) section (Provision of children’s programmes);”

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Moved by

[Lord Ashton of Hyde]

40: Clause 97, page 101, line 18, at end insert “or different areas”

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Moved by

[Lord Ashton of Hyde]

42: In the Title, line 4, after “data-sharing;” insert “to make provision in connection with section 68 of the Telecommunications Act 1984;”

Digital Economy Bill

Lord Ashton of Hyde Excerpts

3rd reading (Hansard): House of Lords
Wednesday 5th April 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, this is a technical amendment in the sense that it seeks to correct an error which seems to have been made inadvertently in the run-up to Report. As a result— for no particular purpose, these things just happen— Clause 3(1)(b) states,

“allow the end-user to switch (at no extra charge) to another provider”,

whereas it should state,

“allow the end-user to roam (at no extra charge) to another provider”.

Those noble Lords who are not conversant with the Bill may find these words rather strange and may feel that we are making a mountain out of a molehill. However, I assure the House that this is a significant change. The issue that we are trying to address—and the reason that I am spending a little time on this, although it is a technical amendment, and I know that the Minister would like to make a few remarks in response—is that there are in this country, despite the considerable investment, care and concern of those responsible for the infrastructure, a large number of what are called not-spots. These are places within which one’s mobile phone dies and one is unable to access anything, let alone the emergency services. The reasons for this are probably more complex than I need to go into at this stage, but in essence our amendment seeks to suggest that in areas of not-spots—not across the whole country—it might be feasible for those who have mobile phones with one provider to hook on to the signal provided by another, which would provide the roaming commonly found when one goes abroad but not in the UK. The counter-argument I am sure we will hear from the Minister is that this would interfere with the current arrangements for good competition which will drive forward much better and quicker coverage of the whole country, and that therefore our proposal is the wrong way to go. However, we beg to differ.

The wording of our previous amendment may have been deficient but, given the brilliant arguments put forward by my noble friend Lord Mendelsohn and our colleague on the Liberal Benches, the noble Lord, Lord Fox, we won a vote on this issue. We therefore seek to change “switch” to “roam”, as I said. I hope this will be accepted as a technical change and that the Government will accept the amendment. However, I have just been alerted to the possibility that the current wording may still be deficient and may require further action following Third Reading. Having had a quick word with the clerks, I am pretty confident that a simple cross-referencing issue is involved, and that that can be picked up as we go forward. However, we may have to return to that if we have ping-pong on the Bill. I beg to move.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I have just been informed by my noble and learned friend that all amendments lead to Rome. We accept that a genuine mistake was made in tabling the original amendment. Therefore, we will accept this amendment today. However, the Government have set out the arguments against requiring network operators to offer domestic roaming before, and I will try to be clearer this time as we did not have the opportunity to address those on Report. I will try to be brief.

First, domestic roaming is not mandated but it is not prohibited. Mobile networks could voluntarily enter into agreements with each other but they do not because it is costly and prevents them differentiating from competitors on the basis of coverage. As the noble Lord, Lord Stevenson, reminded us, the noble Lord, Lord Mendelsohn, told us on Report about the benefits he receives from his chosen provider, which permits roaming. This is, of course, a provider based outside the UK and the EU. However, he did not highlight the cost of that. The advertised price is £100 for one gigabyte of data and voice calls are £100 for 1,000 minutes, which is 10 times more expensive than the going rate for a standard domestic contract. That premium arises because operators have to pay other operators network access charges. Networks should be entitled to recover the cost of their investment. If one relies on another to provide coverage, it is only reasonable that fees should be paid, and those fees are of course passed on to the consumer.

Secondly, as the noble Lord, Lord Stevenson, anticipated, there is the question of the impact on investment. Our strategy has been to grow investment in infrastructure, and that has worked. It has locked in £5 billion of investment since 2014. Some 89% of UK premises are now covered by all four operators, and that percentage is growing. More importantly, this investment is closing not-spots. Ofcom forecasts that by the end of this year the number of not-spots will have more than halved since 2014. Roaming might make it easier for some people where only a single operator exists, subject to cost, but it does not do anything for those in not-spots. Extending coverage remains our priority and that needs investment.

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Moved by

[Lord Ashton of Hyde]

2: Clause 10, leave out Clause 10

[Lord Ashton of Hyde]

My Lords, this is a group of technical amendments to ensure that the legislation is as clear and consistent as possible.

Amendment 2 removes Clause 10, which creates a new power for the Secretary of State to set a statement of strategic priorities relating to the management of radio spectrum. On Report, Clause 104 was introduced, expanding this power to cover telecommunications and postal services, in addition to the management of radio spectrum. The introduction of this new provision means that Clause 10 is no longer necessary. I promised on Report to introduce this amendment at Third Reading.

Amendments 3 to 8 relate to the measures for age verification for online pornography. Amendments 3 and 6 remove clarificatory wording on,

“a means of accessing the internet”,

from Clause 16 and put it in Clause 23. Due to an earlier amendment, that phrase is no longer used in Clause 16 but it is still used in Clause 23, so the definition is moved to Clause 23.

Amendment 4 is one for aficionados of parliamentary drafting. It ensures that the Bill is consistent by aligning the wording of Clause 19(7)(a), which refers to,

“the House of Commons and the House of Lords”,

with the wording of Clause 27(13)(a), which refers to “each House of Parliament”. I think we will all sleep easier at night if that is consistent.

Amendment 5 clarifies that the regulator’s power to require information can be from internet service providers and any other person that the age-verification regulator believes to be involved, or to have been involved, in making pornographic material available on the internet on a commercial basis to persons in the United Kingdom.

Amendments 7 and 8 amend the definition of “video works authority” for the purposes of Clause 24, so that this includes the authority designated in respect of video games. This follows the approach to the extreme pornographic material provisions of the Criminal Justice and Immigration Act 2008.

Amendment 9 removes the provision for transitional, transitory and saving provisions in relation to the repeal of Section 73 of the Copyright, Designs and Patents Act 1988. This is a technical drafting amendment to ensure consistency between this clause and Clause 122 on commencement. I can confirm again to the House that Section 73 will be repealed without a transition period and that the Government will commence repeal without delay.

Turning to Amendment 12, I am very grateful to the noble Baroness, Lady Drake, for drawing my attention on Report to the need for complete clarity as to whom the Government are referring in the undertaking to be transferred from BT plc to a future Openreach Ltd. I accepted that a clear definition of the term “undertaking” was necessary and offered to come back with a government amendment at Third Reading to address this issue. Government Amendment 12 does this, making it clear that we define the term “undertaking” to include anything that may be the subject of a transfer or service provision change, whether or not the Transfer of Undertakings (Protection of Employment) Regulations —TUPE—apply. The intention is that all employees currently benefiting from the Crown guarantee will continue to do so if they transfer to Openreach Ltd. The Government consulted on the wording in advance of laying this technical amendment. I am grateful to the noble Baroness for assisting us, and to both BT plc and the trustee for confirming that this definition was satisfactory.

Amendments 13 to 17 relate to the Electronic Communications Code. Under the new code, an owner or occupier whose access to their land is obstructed by electronic communications apparatus without their agreement has the right to require the removal of that apparatus. Amendments 13 and 14 make it clear that this right arises only where the apparatus itself interferes with access, as opposed, for example, to a temporary obstruction by a vehicle.

Amendments 15, 16 and 17 merely correct minor omissions and referencing errors. I beg to move.

[Baroness Howe of Idlicote (CB)]

My Lords, I welcome these tidying-up amendments. I want to take the opportunity provided by this Third Reading debate to congratulate the Government once again on taking action to protect children from pornography on the internet through age verification. I shall be watching the implementation of Part 3 of the Bill closely. I would like also to put on record my thanks to the Minister for meeting with me to discuss adult content filters. I am very grateful also to noble Lords who supported my amendment at an earlier stage, highlighting the need to get a better understanding of the adult-content filtering approaches adopted by smaller ISPs that service homes with children: the noble Lords, Lord Collins of Highbury and Lord McColl of Dulwich, and the noble Baroness, Lady Benjamin.

Turning to the future, I am very much looking forward to the discussions on the Government’s Green Paper on internet safety and to their response to the Communications Committee’s report, Growing up with the Internet. Part 3 of this Bill is not the end of the story on children and internet safety.

Despite many positives, in comparing and contrasting the Bill that entered your Lordships’ House with the Bill as it now leaves, my response is one of sadness. The underlying principle of parity of content has been removed and the Bill is, in this respect, unquestionably weaker as a result.

In the first instance, the Bill entered your Lordships’ House properly applying the same adult content standard online as applied offline. It leaves your Lordships’ House saying that most material that the law does not accommodate for adults offline will be accommodated online behind age verification. Only the most violent pornography—that which is life-threatening or likely to result in severe injury to breast, anus and genitals—will be caught. Injury or severe injury to other parts of the body appear to be fine as long as they are not life-threatening. As the Bill leaves us, the message goes out loud and clear that violence against women—unless it is “grotesque”, to quote what the Minister said on Report—is, in some senses, acceptable.

In the second instance, the Bill entered your Lordships’ House properly applying the standard of zero tolerance to child sex abuse images, including non-photographic and animated child sex abuse images. Today it leaves your Lordship’s House with the relevant powers of the regulator deleted so that it can no longer take enforcement action against animated child sex abuse images that fall under the Coroners and Justice Act 2009. As such, the Bill goes out from us today proclaiming that non-photographic images of child sex abuse, including animated images, are worthy of accommodation as long as they are behind age verification.

As agreed, Third Reading is a time for tidying up. However, Part 3 of the Bill clearly requires further amendment so that the message can go out once again—as it did in the other place—that there is no place for normalising violence against women and no place for accommodating any form of child sex abuse. I hope that the other place will now rise to that challenge.

[Baroness Drake (Lab)]

My Lords, I, too, thank the noble Lord, Lord Ashton, for tabling Amendment 12, which gives greater clarity to the BT and Openreach employees covered by the provisions of Clause 119. The Government have also made clear their intention to engage fully with the BT pension scheme trustee and for that I am also grateful. I hope their discussions go well.

[Lord Ashton of Hyde]

My Lords, I am grateful for those comments. I take the point of the noble Baroness, Lady Howe, that there is still work to do. As she mentioned, the internet safety strategy Green Paper will be with us in June.

Amendment 2 agreed.

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Moved by

[Lord Ashton of Hyde]

3: Clause 16, page 20, line 1, leave out paragraph (b)

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Moved by

[Lord Ashton of Hyde]

4: Clause 19, page 23, line 10, leave out “the House of Commons and the House of Lords” and insert “each House of Parliament”

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Moved by

[Lord Ashton of Hyde]

5: Clause 20, page 23, line 26, leave out “a” and insert “any other”

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Moved by

[Lord Ashton of Hyde]

6: Clause 23, page 26, line 42, at end insert—
“(6) For the purposes of subsection (5)(b), a means of accessing the internet does not include a device or other equipment for doing so.”

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Moved by

[Lord Ashton of Hyde]

7: Clause 24, page 27, line 17, leave out “the” and insert “a”

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Moved by

[Lord Ashton of Hyde]

9: Clause 37, page 36, line 8, leave out subsections (3) to (5)

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Moved by

[Lord Ashton of Hyde]

10: Clause 113, page 124, line 3, at end insert—
“( ) such representatives of persons likely to be affected by the regulations as the Secretary of State thinks appropriate, and( ) such other persons as the Secretary of State thinks appropriate.”

[Lord Ashton of Hyde]

My Lords, the Government’s Amendments 10 and 11 acknowledge the DPRRC’s recommendations in relation to improved safeguards for the proposed charging regulations for the Information Commissioner. I committed to making these amendments on Report.

Amendment 10 will make it a requirement for the Secretary of State to consult,

“such representatives of persons likely to be affected by the regulations as the Secretary of State thinks appropriate, and … such other persons as the Secretary of State thinks appropriate”.

Amendment 11 will make it a requirement for the Secretary of State to use the affirmative procedure when making regulations under the new charging power, except for in cases of inflation increases, when the negative procedure will apply.

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Moved by

[Lord Ashton of Hyde]

11: Clause 114, page 125, line 6, leave out subsection (2) and insert—
“(2) A statutory instrument containing regulations under section 112(1) or (5) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament. (2A) Subsection (2) does not apply to a statutory instrument containing regulations which—(a) only make provision increasing a charge for which provision is made by previous regulations under section 112(1), and(b) do so to take account of an increase in the retail prices index since the previous regulations were made.(2B) Such a statutory instrument is subject to annulment in pursuance of a resolution of either House of Parliament.(2C) In subsection (2A) “the retail prices index” means—(a) the general index of retail prices (for all items) published by the Statistics Board, or(b) where that index is not published for a month, any substituted index or figures published by the Board.”

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Moved by

[Lord Ashton of Hyde]

12: Clause 119, page 128, line 42, at end insert—
““undertaking” includes anything that may be the subject of a transfer or service provision change, whether or not the Transfer of Undertakings (Protection of Employment) Regulations 2006 (S.I. 2006/246) apply.”

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Moved by

[Lord Ashton of Hyde]

13: Schedule 1, page 153, line 42, leave out “on, under or over other land” and insert “kept on, under or over other land in exercise of a right mentioned in paragraph 13(1),”

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Moved by

[Lord Ashton of Hyde]

16: Schedule 2, page 194, line 24, leave out “12” and insert “14”

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Moved by

[Lord Ashton of Hyde]

That the Bill do now pass.

[Lord Ashton of Hyde]

My Lords, in moving this Motion, I express grateful thanks to all noble Lords who have contributed to the Bill’s passage and shared their knowledge on the wide variety of subjects covered by it. It seems a long time since December, when we referred to Christmas tree Bills. As we now approach Easter, I express my gratitude to both Opposition Front Benches for their openness and co-operation, especially to the two ringmasters, if I may call them that, the noble Lords, Lord Stevenson and Lord Clement-Jones, but also to the other noble Lords: the noble Baronesses, Lady Jones, Lady Bonham-Carter and Lady Hamwee, and the noble Lords, Lord Mendelsohn, Lord Collins, Lord Grantchester, Lord Wood, Lord Foster, Lord Fox and Lord Paddick, all of whom have led on various parts of the Bill. I am very grateful to them.

Most importantly, I pay tribute to and thank Andrew Elliot, Patrick Whitehead and all the other members of the Bill team, and to my private office, Matt Hiorns and Martha London, who have shown tremendous resilience, patience and humour over the last four months while the Bill was in this House. I am very grateful to all of them. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, a few years ago I used to complain to my colleagues that I had drawn a short straw in the sense that many of my other colleagues were in departments that were constantly dealing with meaty legislation, while we shadowing the DCMS had to make do with the occasional debate and even sometimes a rather thin Question, usually organised by the indefatigable noble Earl, Lord Clancarty, from the Cross Benches. Is it a coincidence, I asked myself, that since the Minister took over the brief we have had not only the BBC royal charter to deal with, but three and a half Bills? The half was the Law Commission’s Intellectual Property (Unjustified Threats) Bill, which was a bit of a mixed bag between the DCMS and BEIS. It was really introduced under the last regime, but we have had to keep a close watching eye on it and on the other place, even though it was a Law Commission Bill. It is of course exhilarating to be at the very heart of public policy-making and it has been great fun, but it is also absolutely exhausting.

At pride of place in this canon of interesting Bills is the Digital Economy Bill. As the Minister said, it has generated a considerable amount of interest across the House. With its many disparate parts, it allowed the House to play a very full and important role as it scrutinised every clause and virtually every line, as it should. It is what we do and we do it well.

I thank the Minister, the noble Baroness, Lady Buscombe, and the noble and learned Lord, Lord Keen, for their very full participation in the Bill. They were engaged on all the issues. We were able to get hearings and discussions with them when we wanted them. I am only sorry that they had to stand down the Deputy Leader of the House on one amendment that was not moved. I am sure that he would have added considerably to the debate and given us a full hand of stars. The tone throughout has been one of unfailing courtesy. While the willingness to write to us on matters of detail was not up to the high standards set by the noble Viscount, Lord Younger, who is in his place—how could it be?—it is much appreciated. We also appreciated the direct involvement of the Minister in the other place, particularly on Part 3.

I believe the House should be willing to put on record exemplary service when it comes across it. I award this year’s prize for Bill support, if there is any justice in this world, to the Digital Economy Bill team, whose opening gambit of a neatly bound and very substantial pack of all the documents you could possibly want set the gold standard for work of this type. They were very helpful in letting us know what was going on, even when I suspect they would have rather remained silent. We appreciate that they were always willing to organise meetings, even on occasion tracking down Ministers who had gone AWOL.

My Front Bench team has been superb. I am very grateful to my noble friend Lady Jones of Whitchurch, who led on the difficult and ongoing work to do with age verification. My noble friend Lord Collins of Highbury relished the chance to lead on an issue—horseracing—unrelated to his usual stomping grounds, and coined the phrase “function creep”, which I am sure will be adorning your Lordships’ debates in years to come. My noble friend Lord Grantchester led on the rather dull, but it turns out rather rewarding, area of the electronic communications accord, which paid dividends in a number of amendments that we were able to secure. My noble friend Lord Mendelsohn, who I am sorry is not with us today, dealt very capably with the USO and related issues. My noble friend Lord Wood helped us with the amendments consequent on the BBC charter renewal.

Our legislative assistant, Nicola Jayawickreme, has been a class act and has kept us going with the background material so necessary for effective observation as well as dealing with the Public Bill Office and drafting so many amendments, even one on the day her flat was flooded and she had to move out all her belongings.

As I approach the end of my active Front-Bench responsibilities in your Lordships’ House, working on this Bill will be one of the memories I most cherish.

[Lord Ashton of Hyde]

My Lords, I should feel awful, but I neglected to mention my noble friend Lady Buscombe and my noble and learned friend Lord Keen, who helped enormously. I had written it down on my notes, but, as usual, I did not pay any attention to them. I want to pay tribute to them and thank them very much.

[Lord Clement-Jones]

My Lords, I am sure that they would have been mentioned fulsomely by other Benches as well. I have not laboured in the vineyard quite as much as the noble Lord, Lord Stevenson. I have not had multiple Bills simultaneously to deal with—and one can only admire that kind of stamina—but, still, the passing of this Bill carries a sense of relief given the variety of subject matter that we have had to deal with during the past few months. The Minister said that it was from Christmas to Easter; these Bills are seasonal in their nature.

We certainly have not achieved everything that we wanted, but I believe that the Bill is leaving this House in much better shape than that in which it arrived. As the noble Lord, Lord Stevenson, implied, it is certainly a very meaty Bill. It is also a disparate Bill, covering a huge range of issues most of which are unified only by the word “digital”. That was quite a challenge for all those who were trying to cover the whole subject matter of the Bill.

I want to thank my own colleagues, particularly my noble friends Lord Paddick, Lord Fox, Lord Foster, Lord Lester, Lord Storey, Lord Addington, Lady Bonham-Carter, Lady Hamwee, Lady Janke, Lady Benjamin and Lady Grender. I thank our adviser team, particularly Elizabeth Plummer, Rosie Shimell and Vinous Ali. I want also to thank the Opposition Front Bench—the indefatigable noble Lord, Lord Stevenson, the noble Baroness, Lady Jones, and the noble Lords, Lord Collins, Lord Wood and Lord Grantchester—for their collaborative approach. Of course, I thank many others on the Cross Benches, including the noble Lord, Lord Best, with his successful amendment, the noble Viscount, Lord Colville, and the noble Baroness, Lady Howe—indefatigable is too small a word for her.

Digital Economy Bill

Lord Ashton of Hyde Excerpts

Ping Pong (Hansard): House of Lords
Thursday 27th April 2017 Lords Chamber

Moved by

[Lord Ashton of Hyde]

That this House do not insist on its Amendment 1 and do agree with the Commons in their Amendments 1A, 1B and 1C in lieu.

Commons Amendments in lieu

1A: Page 1, line 12, at end insert “, but may not do so unless—
(a) it specifies the minimum download speed that must be provided by those connections and services, and
(b) the speed so specified is at least 10 megabits per second.”

1C: Page 2, line 23, at end insert—
“72B Broadband download speeds: duty to give direction under section 72A
(1) The Secretary of State must give OFCOM a direction under section 72A if—
(a) the universal service order specifies a minimum download speed for broadband connections and services and the speed so specified is less than 30 megabits per second, and
(b) it appears to the Secretary of State, on the basis of information published by OFCOM, that broadband connections or services that provide a minimum download speed of at least 30 megabits per second are subscribed to for use in at least 75% of premises in the United Kingdom.
(2) The direction—
(a) must require OFCOM to review and report to the Secretary of State on whether it would be appropriate for the universal service order to specify a higher minimum download speed, and
(b) may also require OFCOM to review and report to the Secretary of State on any other matter falling within section 72A(1).”

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, this Motion covers two areas where the other place has offered amendments in lieu of your Lordships’ amendments. Lords Amendment 1 on the universal service obligation challenged the Government to be more ambitious on universal digital connectivity. A broadband USO, set initially at 10 megabits per second, forms part of our plans to make sure nobody is digitally excluded. Lords Amendment 1 would have disrupted those plans. In our view, it would make the USO unworkable and, because of the risk of legal challenge, would lead to delays in implementation.

The USO can work only if it is legally robust and enforceable. EU law requires it to take into account technologies used by the majority of subscribers. Today, 30 megabits per second is enjoyed by fewer than 30%. Two gigabits per second is enjoyed by fewer than 1%. While we may have a majority taking up 30 megabits per second in a few years’ time, the Government want to implement the USO now and the Lords amendment would make this difficult to achieve.

I know that a key concern for many is that the whole country should be able to access superfast speeds of 30 megabits per second. We share that ambition. We have therefore proposed an amendment in lieu that a superfast USO will be reconsidered by Ofcom once 75% of premises across the UK subscribe to superfast broadband.

On Lords Amendment 2, the other place agreed with your Lordships’ concerns in relation to bill capping and proposed Amendment 2A in lieu. As with the Lords amendment, we provide that mobile phone service customers must have the opportunity to place a limit on their bill. Any limit set cannot be exceeded unless the customer agrees to this. Ofcom is given enforcement powers. The requirement placed on providers to ensure that customers can contact the emergency services will be unaffected.

The Government also reflected on the switching and roaming elements of Lords Amendment 2, but were not convinced of their merits. While it appears to be attractive, we do not believe that roaming is the right solution. I set out our reasons at Third Reading. With regards to switching, the Bill already goes further than the proposed amendment. The provision in the Bill, confirming Ofcom’s power to set a condition about switching, relates to operators of all telecom services, including fixed line, broadband and pay TV, not just mobile phones. I beg to move.

[Lord Fox (LD)]

My Lords, as someone who has renovated a Victorian house, I know one thing to be true. It is all very well stripping off the anaglypta and the woodchip, slapping on some Farrow & Ball, improving the coving and putting up a dado rail, but if you do not tackle the fundamentals you are pretty soon raising the floorboards again. It is the roof, the electricals and the plumbing that call you out. I had hoped that the Bill would tackle the fundamentals of the nation’s digital plumbing. I hoped that it would put in train a really revolutionary revolution for our digital network and enable the whole country to participate in the digital economy I believe the Bill sets out to achieve. I still hope that is true, but I have my doubts.

Without a requirement for a fast digital delivery and a date for the arrival of that fast digital network, we will struggle. The notion of having a 75% threshold of subscription is a tricky way of going about this. We will have to use the reporting requirements that Ofcom is now obliged to follow—that is a move forward—to get it to report on how it is driving broadband usage. We are using the commercial arms of the same companies being asked to deliver broadband to promote the use of broadband itself. We have a closed loop that does not necessarily have an incentive to drive up to the 75% threshold. I would be more confident in the progress of this country in delivering this network if there was not a dominant player that sits on a Victorian asset of copper wire which it wants to sweat, and quite understandably. It has to be up to the Government and Ofcom to drive their desire to really move forward. We are closing the door on a fresh, shiny new Bill which still smells of new paint, but, just as with my house, I cannot help thinking that we will be raising the floorboards on this issue time and again in Parliaments to come.

[Lord Stevenson of Balmacara (Lab)]

My Lords, we welcome the amendments in lieu in the Motion moved by the Minister. Having said that, I think we are at liberty also to regret that they do not go further.

The issue that we are dealing with here, which I think has been well picked up by the noble Lord who has just spoken, is that 59% of rural Britain has no proper access to the internet and large parts of the country have not-spots. It is a cause for major concern. The root of the problem is that, while a USO sounds good and is an effective way of getting across the argument that the service should be for everyone, the reality is that, unless there are sanctions to make sure that it happens and an incentive in terms of investment to make sure that the funding is available for it to take place at an appropriate time, it will never happen. It is therefore only part of the story.

The narrative that we are unfortunately locked into appears to be one where the Government were initially unwilling even to have anything in statute which provided a floor for the activity here—we now have that with this amendment, although it is a very low floor—but they do not yet have the aspiration, embodied in amendments that this House agreed, to get the speeds up and widen the coverage as quickly as they can. We are stuck in a situation where the spirit may be willing but the flesh is certainly very weak. We are not in a position where we can say that we will be able to look forward to this in an immediate future.

The root of the problem has another source, which is the reliance on the European Commission’s requirements in this area. The Government have made great play of this, but the only legislative framework under which Europe is operating here, which will fall away in 2019 if the new Government get their way, is that there should be non-binding guidance on what constitutes a universal service, yet the Government have chosen to interpret that as a limit on what they do rather than an opportunity to go further. While we welcome what is here, we do not think that the mechanics chosen will do the trick, particularly when Ofcom has recommended a faster basic speed and a cheaper way of doing it, which would be at 30 megabits per second. As we have just heard, we may be back looking at this in very short order.

On mobile bill capping, which will help consumers who get themselves in trouble with their bills, we are delighted that the Government have accepted the amendment made by the Lords at an earlier stage.

[Lord Ashton of Hyde]

My Lords, I am grateful for those remarks by noble Lords. The noble Lord, Lord Fox, talked about the fundamentals. They are what we have tried to address in this Bill to increase digital connectivity in the country. Measures in the Bill which have been accepted, on the Electronic Communications Code and those relating to spectrum, are part of that. The USO is slightly different. It was never intended to drive increased speeds. We have said separately that we share the ambition of the noble Lord to increase those and stated that we see fibre to the premises as the way forward, but the USO is there to tackle to social exclusion. I can reassure noble Lords that the response to Lords Amendment 1 is not about delaying superfast connectivity or pandering to the communications providers. To the contrary, it is because we do not want to be involved in protracted legal disputes. The fact is that the House can legislate for whatever speed it likes, but it will make a difference to people up and down the country only if it is implemented properly. That means that the Bill must be legally watertight and realistic.

Government Amendment 1A will put our money where our mouth is. As the noble Lord, Lord Stevenson, mentioned, we have now put in legislation that the broadband USO will be set at a minimum of 10 megabits per second and we will ensure that if the minimum has not already been raised to 30 megabits per second by the time take-up of superfast broadband has reached 75% of premises a review must be triggered. That is practical and, interestingly, will give this country the fastest USO in Europe. I hope we concentrate on the benefits we receive from this.

Motion A agreed.

Moved by

[Lord Ashton of Hyde]

That this House do not insist on its Amendment 2 and do agree with the Commons in their Amendment 2A in lieu.

Commons Amendment in lieu

2A: Page 88, line 10, at end insert the following new Clause—
“Billing limits for mobile phones
Billing limits for mobile phones
In Chapter 1 of Part 2 of the Communications Act 2003 (electronic communications networks and services) after section 124R insert—
“Billing limits for mobile phones
124S Mobile phone providers’ duty to enable billing limits to be applied
(1) The provider of a mobile phone service must not enter into a contract to provide the service unless the customer has been given an opportunity to specify a billing limit in the contract.
(2) In relation to a contract to provide a mobile phone service—
(a) a billing limit is a limit on the amount the customer may be charged for provision of the service in respect of each billing period, and
(b) a billing period is one of successive periods specified in the contract and together making up the period for which the contract remains in force.
(3) A contract to provide a mobile phone service must provide for the customer on reasonable notice at any time—
(a) to specify a billing limit if none is specified for the time being,
(b) to amend or remove a limit in respect of all billing periods or a specified billing period.
(4) In any billing period the provider must—
(a) so far as practicable, notify the customer in reasonable time if a limit is likely to be reached before the end of the period, and
(b) notify the customer as soon as practicable if a limit is reached before the end of the period.
(5) A limit may be exceeded in relation to a billing period only if the customer agrees after a notification under subsection (4)(a) or (b).
(6) If the provider continues to provide the service after a limit is reached, the customer’s use of the service does not constitute agreement to the limit being exceeded.
(7) The provider must give the customer confirmation in writing of—
(a) the decision made by the customer in accordance with subsection (1),
(b) any decision of the customer under provision made in accordance with subsection (3), and
(c) any agreement by the customer in accordance with subsection (5).
(8) This section applies to agreeing to extend a contract as it applies to entering into a contract, and in that case the reference in subsection (2)(b) to the period for which the contract remains in force is a reference to the period of the extension.
(9) Nothing in this section affects a provider’s duty to comply with requirements to enable calls to emergency services.
(10) In this section—
“customer” does not include a person who is a customer as a communications provider;
“mobile phone service” means an electronic communications service which is provided in the course of a business wholly or mainly so as to be available to members of the public for the purpose of communicating with others, or accessing data, by mobile phone.
124T Enforcement of duty to enable billing limits to be applied
(1) Sections 96A to 96C apply in relation to a contravention of a requirement under section 124S as they apply in relation to a contravention of a condition set under section 45, with the following modifications.
(2) Section 96A(2)(f) and (g) (OFCOM directions) do not apply.
(3) Section 96A(5) to (7) (action under the Competition Act 1998) do not apply.
(4) The amount of a penalty imposed under sections 96A to 96C, as applied by this section, other than a penalty falling within section 96B(4), is to be such amount not exceeding £2 million as OFCOM determine to be—
(a) appropriate; and
(b) proportionate to the contravention in respect of which it is imposed.””

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

That this House do not insist on its Amendment 40 and do agree with the Commons in their Amendments 40A and 40B in lieu.

Commons Amendments in lieu

40A: Page 88, line 10, at end insert the following new Clause—
“Code of practice for providers of online social media platforms
Code of practice for providers of online social media platforms
(1) The Secretary of State must issue a code of practice giving guidance to persons who provide online social media platforms for use by persons in the United Kingdom (“social media providers”).
(2) The guidance to be given is guidance about action it may be appropriate for providers to take against the use of the platforms they provide for conduct to which subsection (3) applies.
(3) This subsection applies to conduct which—
(a) is engaged in by a person online,
(b) is directed at an individual, and
(c) involves bullying or insulting the individual, or other behaviour likely to intimidate or humiliate the individual.
(4) But guidance under this section is not to affect how unlawful conduct is dealt with.
(5) A code of practice under this section must (subject to subsection (4)) include guidance to social media providers about the following action—
(a) maintaining arrangements to enable individuals to notify providers of the use of their platforms for conduct to which subsection (3) applies;
(b) maintaining processes for dealing with notifications;
(c) including provision on matters within paragraphs (a) and (b) in terms and conditions for using platforms;
(d) giving information to the public about action providers take against the use of their platforms for conduct to which subsection (3) applies.
(6) Before issuing a code of practice under this section, the Secretary of State must consult—
(a) those social media providers to whom the code is intended to give guidance, and
(b) such other persons as the Secretary of State considers it appropriate to consult.
(7) The Secretary of State must publish any code of practice issued under this section.
(8) A code of practice issued under this section may be revised from time to time by the Secretary of State, and references in this section to a code of practice include such a revised code.”

40B: Page 90, line 12, at end insert—
“( ) section (code of practice for providers of online social media platforms);”

[Lord Ashton of Hyde]

My Lords, I want again to start by saying that the Government accept and agree with the spirit of Lords Amendment 40, but, as drafted, it poses difficulties and risks unintended consequences. For example, it is not clear who would notify social media providers that content contravened existing legislation. The requirement to inform the police if notified that content contravenes any existing legislation could lead to unmanageable volumes of referrals to law enforcement. This would do little to increase public protection, making the code of practice unworkable.

The other place has offered Amendment 40A, which we believe will achieve a similar outcome by setting out the behaviour expected of social media companies while protecting users. As explained in the other place by my right honourable friend the Minister of State for Digital and Culture, good work is being done by some companies to prevent the use of platforms for illegal purposes, but we agree that more can be done by social media to tackle harmful conduct online, particularly bullying behaviour, which can have serious consequences.

Our intention is that the code will set out guidance on what social media providers should do in relation to conduct that is lawful but that is none the less distressing or upsetting. The intention is that the guidance in the legislation addresses companies proportionately. We believe that this code, together with the internet safety strategy, will result in a properly considered, comprehensive approach to online safety and deliver the long-lasting protections that this amendment seeks to secure. I beg to move.

[Lord Clement-Jones (LD)]

My Lords, I have no doubt that the noble Lord, Lord Stevenson, will want to give a more substantive response since this was fundamentally an opposition amendment, but it was supported strongly on these Benches. I accept that the Minister has tried to incorporate the spirit of the original amendment in this amendment coming from the Commons. He made a number of detailed points about objections to the drafting of the original amendment, but there is one thundering great hole in the amendment as brought forward by him, which is that there is no obligation on providers to comply with the code of practice once it comes into force. It is nakedly a voluntary code rather than any code that is able to be enforced by the Secretary of State. That is the major difference between the amendment that this House passed and that which has now come forward.

The Minister mentioned the internet safety strategy and the work being done on it. Many of us are convinced that when the work on that is done the need for an enforcement power in such a code of conduct will become clear. Will the Minister assure us that enforcement will be considered as part of the internet safety strategy and that, if the overwhelming body of evidence is that such a form of compliance is needed, the Government will come forward with amendments?

[Lord Collins of Highbury (Lab)]

My Lords, I will not delay the House but I want to repeat what the noble Lord, Lord Clement-Jones, has just said because the point about no enforcement and no sanctions is important. I recognise the words of the Minister in terms of reflecting the spirit and intent of our original amendment, and I think that that is what the government Motion now seeks to do. It will give notice to the social networks that failure to comply will result in further government action. Like the noble Lord, Lord Clement-Jones, I hope that the Minister will be able to respond positively, in particular on the internet strategy review.

In conclusion, our examination of these issues has been extremely good in the Lords both in Committee and on Report. We now have a clear policy which gives notice to the social networks that we want to ensure that proper standards are maintained and that action will be taken when evidence of abuse is found. It should not be a matter of days or weeks, which has been the case, before offensive material is taken down. We have seen evidence of the horrendous things that have been put up on social networks in the US and Thailand, so we want to ensure that the networks understand fully the gravity of the situation.

[Lord Ashton of Hyde]

My Lords, I am grateful for the remarks of noble Lords and I shall start by responding to the last comments made by the noble Lord, Lord Collins. I think that the social media companies are in absolutely no doubt about the Government’s determination to review what they do and make sure that they live up to their responsibilities. We are all agreed on that and we realise that even when something is technically lawful, it can be very damaging and unpleasant. Anything that sets out to humiliate people has no place in our society. I of course understand why some noble Lords are disappointed that the code of practice is not mandatory, but we should have confidence that it will make a difference if, as I have suggested, both we and the social media companies take it seriously. The code of practice will clearly set out our expectations of social media providers and it is in the interests of a site to be responsible with regard to online safety. It is critical for the future of sites that their users should trust them and that they protect the health of their brand.

I accept that there has been a lot of talk about the internet safety strategy. We have not ruled anything out of the strategy and we have heard the clear views of the House. I can say that we will consider carefully the points which have been raised in the development of the strategy and we will welcome contributions from noble Lords and other interested parties. I shall repeat: my department has absolutely taken on board the views of the House along with those of many other stakeholders in relation to social media companies and we will see what comes of that. The fact is that if this amendment is accepted, the code must and will be produced, and I am convinced that it will have a beneficial effect.

Motion C agreed.

Moved by

[Lord Ashton of Hyde]

That this House do not insist on its Amendments 237, 238 and 239, to which the Commons have disagreed for their Reason 237A.

Commons Reason

237A: Because the processes in place for determining the appropriate funding for the BBC are sufficient.

[Lord Ashton of Hyde]

My Lords, we return yet again to the issue of BBC funding, having debated it at length in Committee and on Report. Honourable Members in the other place have disagreed with the amendments that noble Lords inserted into the Bill at Report stage which sought to establish a BBC licence fee commission. The Government remain clear that they must have a free hand in determining the BBC’s overall funding deals and the level of the licence fee following negotiation with the BBC itself.

Noble Lords will appreciate that decisions on the level of the licence fee are a matter for the elected Government. Similarly, we are not convinced that consulting the public on the level of BBC funding is the right approach to determining its funding settlements. The BBC’s funding needs are a complicated and technical issue, and not one that lends itself easily to public consultation. Although the Government have persuaded honourable Members in the other place, we have listened to the concerns expressed by noble Lords about the process for setting the BBC’s funding settlement and about ensuring that the BBC has an appropriate level of funding. The new charter endorses the BBC’s mission and reaffirms the role and independence of the BBC in a much-changed and fast-changing media landscape.

The specific provisions in the BBC charter for setting the next funding settlement should also give some comfort to noble Lords who have concerns. We know exactly when the next funding period will commence. The Government will allow the BBC to make its case and will consider taking independent advice before reaching a final decision. Therefore in moving this Motion, I hope that those noble Lords who supported the noble Lord, Lord Best, at earlier stages will recognise that their efforts and their arguments on this matter have not been wasted. The Government are under no illusion that the next BBC funding settlement must be one that is carefully considered. There is no question of any so-called midnight raids when a five-year settlement which is inflation-protected has been agreed and everyone knows when the next settlement will begin.

I turn now to Motion E, relating to public service broadcasting prominence on the electronic programme guide, an issue which was much debated both in this House and in the other place. The Government have heard the strength of feeling on this issue. Although we have concluded that we can see no compelling evidence of harm to the PSBs, we recognise that this is a fast-moving technological landscape which needs to be kept under review, a point made clearly by the noble Lord, Lord Wood of Anfield, at Report stage. Amendment 242A will therefore place a new requirement on Ofcom to publish a report which looks at the ease of finding and accessing PSB content across all television platforms on both the linear and on-demand basis. The report will focus consumer pressure on the platform providers and TV manufacturers to improve the prominence of PSB on-demand services where this has been identified as an issue. We know that platform providers and TV manufacturers respond most strongly to consumer needs in developing their products and therefore developments in the EPG should be customer-driven.

The new duty will also impose an ongoing obligation on Ofcom to report and require it to review its EPG code by 1 December 2020, and to publish its first report on the ease of accessing and finding PSB content before then. As my right honourable friend the Minister of State for Digital and Culture made clear yesterday, if Ofcom’s report makes it clear that there is a problem in this area, one that can be fixed only by legislation, and assuming that the Government are returned in June, we will bring forward that legislation as soon as possible. That, I think, is why the Labour Front-Bench spokesman said that she was happy to support the government amendment. I beg to move.

[Lord Best (CB)]

My Lords, the three amendments which are the subject of Motion D came before your Lordships in the names of myself, the noble Baroness, Lady Bonham-Carter, and the noble Lords, Lord Inglewood and Lord Stevenson. They were passed by noble Lords with a thumping majority but they are now to be rejected with no alternative amendments in lieu.

The issue here concerns the process by which the BBC licence fee is determined. There has been extensive condemnation of the current process from the right honourable John Whittingdale when chairing the CMS Select Committee in the other place and Rona Fairhead, the chair of the BBC Trust, as well as from a range of organisations including the Voice of the Listener and Viewer, the NUJ, and of course our own Select Committee on Communications, which I have the honour of chairing, at least until the Dissolution of Parliament.

What everyone agrees is that the current process has meant the Secretary of State deciding on this vital matter in a most unsatisfactory way, behind locked doors and in secret, on a basis that has on the last two occasions involved freezing the fee for many years and the allocation of portions of it to a range of other purposes—so-called midnight raids—from broadband rollout to free licences for the over-75s. The amendments now to be rejected would not tie the hands of the Secretary of State, who would still make the determination, but the revised process would involve public and parliamentary consultation and expert advice from a specialist BBC licence fee commission.

--- Later in debate ---

The noble Lord, Lord Lester, is right that the time has come to think again about how we might want to protect in statute the organisations for which we have a great care. The first step on that might have protected us against the need to move in the direction of a BBC licence fee commission, which after all is not a new idea; it operated in 2005-06. It was successful, so successful in fact that it annoyed the Government of the day because it recommended too high a licence fee, but it did exactly what we wanted: it offered advice on a detailed examination of the case for what the BBC needed to fulfil its charter obligations. That is exactly what we were trying to do with that amendment, and I supported the one that came out of the Communications Committee. It was right at the time it was proposed. It was supported here—in the absence of the trump card, which is the change in the electoral cycle. If we do not get a commitment from the Government today that the whole question of timing will need to be looked at again, we are in a very bad place.

[Lord Ashton of Hyde]

My Lords, I am grateful for all noble Lords’ contributions. I will start with the noble Lord, Lord Best. I am grateful for the limited thanks he gave me. I give him unqualified thanks in return. We have talked about this for a long time, both in and out of the Chamber. The one thing I can say about the Government’s view on the BBC licence fee is that we have been entirely consistent.

I say to the noble Lord, Lord Lester, that in conversations over a period of time, both in and out of the Chamber, I have never given him any reason to expect that we would change our view on this. He said he was pathetically optimistic. I hope he remains optimistic in other things but we have been entirely consistent on this matter. As I explained at length, we do not believe that it is right for a tax to be consulted on.

I understand the issues and the strength of feeling in this House. That is why we have made some changes during the charter renewal process. We have outlined, as I said, that we have protected the funding for five years so that we will not have any so-called midnight raids. It is also protected from inflation, which it was not before. We have agreed that we will take in information and expert advice before the process goes ahead in five years’ time. I of course take the threat from the noble Lord, Lord Lester, about a Private Member’s Bill extremely seriously. I must assume that there is a possibility it will be forthcoming and I look forward to debating it with him. At the moment, I do not believe that our situation is likely to change but of course in 11 years’ time, it might. I do not think I will be involved in it at that time.

The noble Lord asked a number of questions about whether the Government will guarantee the independence of the BBC, agree not to top-slice the licence fee and adequately fund the BBC. The new charter endorses the role and independence of the BBC—and increases that independence in a number of ways—and this Government will of course live by the provisions of the royal charter, as far as the independence of the BBC is concerned. On funding, we have agreed to give it a five-year period and will ensure that it is properly funded for the future but a negotiation will take place at that time.

As for the point made by the noble Viscount, Lord Colville, about timing, Ofcom will get going when it feels it necessary. What we have done is to put an end date on that in our amendment, so that it will have to produce its report in about two and a half years’ time. That is a great advantage.

[Lord Lester of Herne Hill]

Did I understand the Minister to have given an assurance to the House just now that the Government regard themselves as under a duty to respect the independence of the BBC, and to provide sufficient funding to pursue its purposes as an independent public service broadcaster? If the answer to those questions is yes, I am extremely grateful and if the answer is no then I say to the Minister: power is delightful and absolute power is absolutely delightful but that should not be his motto.

[Lord Ashton of Hyde]

What I said was that we of course abide by what we have put in the royal charter, which mentions the independence of the BBC and enhances that independence from what came before. As far as funding is concerned, we have a five-year deal and the funding negotiation will go on but it is clearly not the Government’s desire to prevent the BBC carrying out its purposes. There will be a negotiation—this is a tax to provide for the BBC—and each five-year period will be taken on a separate basis.

The noble Lord, Lord Stevenson, referred to the next funding period and the election cycle. An 11-year cycle was carefully chosen to remove funding from the electoral cycle, I think at the suggestion of this House among others, and it is of course unfortunate that it has been changed by the absence of the fixed term. But the Fixed-term Parliaments Act is not a guarantee of a five-year Parliament—the provisions were written into the Act to make sure that that was the case. The new five-year settlement will be reached before the next election while the funding settlement is based on an 18-month to 24-month negotiation so, assuming the Parliament goes to the full five-year term, it would be in place before the election.

Fundamentally, a long charter allows the BBC to operate with greater certainty and with the freedom and confidence to deliver its objectives. It is also worth remembering that in the course of the BBC’s 100-year history, the charter renewal process has coincided with the electoral cycle on a number of occasions. Yet the process has always managed to conclude successfully, to ensure that the BBC can continue to thrive.

Moving on to the EPG, there was a suggestion that we should take a broad Henry VIII power. I think that the noble Lords, Lord Clement-Jones and Lord Stevenson, both mentioned this. It is an unusual situation where both Opposition Front Benches are asking—almost demanding—the Government to take a broad Henry VIII power. I would normally say that I probably agreed but in this case, the problem is that the power would have to be very broad and wide-ranging. Amendments could be necessary to the Communications Act 2003 and the Broadcasting Acts of 1990 and 1996. Depending on what Ofcom recommended, a wider amendment might be needed beyond traditional broadcasting legislation to other areas which we would not necessarily wish to capture, such as other online services. We think this is the best way forward.

The noble Lord, Lord Stevenson, also asked about our belief in public sector broadcasting. We have accepted the arguments from your Lordships’ House on listed events, to maintain them on our free-to-air channels, and from the noble Baroness, Lady Benjamin, on children’s TV to ensure the adequacy of provision. These are evidence of our support for PSBs.

I know that noble Lords were disappointed about the BBC licence fee. As I said, we were entirely consistent on this. The commitment that we and the Minister in the other place have made on EPG should be some comfort to those who were disappointed with our answers on this. As a result, I hope that they will be able to accept this amendment.

Motion D agreed.

Moved by

[Lord Ashton of Hyde]

That this House do not insist on its Amendment 242 and do agree with the Commons in their Amendment 242A in lieu.

Commons Amendment in lieu

242A: Page 83, line 38, at end insert the following new Clause—
“Electronic programme guides and public service channels
(1) After section 311 of the Communications Act 2003 insert—
“311A Report on electronic programme guides and public service channels
(1) It is the duty of OFCOM from time to time to prepare and publish a report dealing with—
(a) the provision by electronic programme guides of information about programmes—
(i) included in public service channels, or
(ii) provided by means of on-demand programme services by persons who also provide public service channels, and
(b) the facilities provided by such guides for the selection of, and access to, such programmes.
(2) When preparing the report OFCOM must consult such persons as appear to them appropriate.
(3) In this section “electronic programme guide” and “public service channel” have the same meanings as in section 310.”
(2) After publishing the first report under section 311A of the Communications Act 2003 OFCOM must review and revise the code drawn up by them under section 310 of that Act (code of practice for electronic programme guides).
(3) The revision of the code must be completed before 1 December 2020.
(4) Subsections (2) and (3) do not affect OFCOM’s duty under section 310 of that Act to review and revise the code from time to time.
(5) In this section “OFCOM” means the Office of Communications.””

--- Later in debate ---

Moved by

[Lord Ashton of Hyde]

That this House do agree with the Commons in their Amendment 246A.

Lords Amendment 246

246: After Clause 84, insert the following new Clause—
“Duty to provide information about tickets
Duty to provide information about tickets
In section 90 of the Consumer Rights Act 2015 (duty to provide information about tickets), after subsection (4)(d) insert—
“(e) the ticket reference or booking number;
(f) any specific condition attached to the resale of the ticket.””

246A: Line 5, leave out from “tickets),” to end of line 7 and insert “in subsection (4) omit “and” at the end of paragraph (c), and at the end of paragraph (d) insert “, and
(e) any unique ticket number that may help the buyer to identify the seat or standing area or its location.””

[Lord Ashton of Hyde]

My Lords, we recognise the good intentions behind the original amendment of the noble Lord, Lord Moynihan, and have accepted it, but we need to make some technical amendments. That is the purpose of Amendment 246A. The Government’s amendment clarifies that the reference number provided should refer to the unique ticket put up for resale and enable the buyer to identify the location of the ticket within the venue.

Our amendment also removes the provision requiring ticket sellers to provide,

“any specific condition attached to the resale of the ticket”.

Many noble Lords have asked me about this, so I want to put on record why. The Government are firmly of the view that, when a secondary ticket seller offers a ticket for sale, they must already give the buyer clear information about certain conditions attached to the ticket concerning resale. This provision is in Section 90(3)(b) of the Consumer Rights Act 2015. Duplication can add only confusion, whereas we want secondary ticket sellers to be absolutely clear on this point. This amendment is of course in addition to the government amendment which made buying tickets in excess of the maximum amount, using an automated bot, illegal. I beg to move.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, this marks another stage in the campaign led by the noble Lord, Lord Moynihan. It was led until her death by Lady Heyhoe Flint whom we all want to recognise because she played a huge part in this and her memory is still fresh today. Wherever she is playing cricket, I am sure she is scoring a hundred as we speak.

The noble Lord, Lord Clement-Jones, and the Minister mentioned bots. We should not ignore the fact that that will make a huge change to the secondary ticketing market. The solution the Bill team came up with is very creative, and I hope it works as well as they intend it to. A first step has been taken, and this will crack down on the worst excesses of secondary ticketing.

I hope the Minister will answer directly the question asked by the noble Lord, Lord Moynihan, about whether the conditions apply because they are not drafted quite like that in the original legislation.

In its original formulation, Amendment 246 simply inserted the words,

“and any unique ticket number”.

The final version before us states,

“any unique ticket number that may help the buyer to identify the seat or standing area or its location”.

That raises the question of what “may” means. Does it in some sense imply a voluntary obligation? If it does, it would be very unfortunate. Could somebody argue that they did not include the unique ticket number specified because in their view it did not help the buyer identify a seat or a standing area or its location? Or is it a variation on the word “must” so that it is a requirement that a ticket number that could help a buyer identify seats or standing areas or their location must be included? I will be grateful if when the Minister responds he will mention that.

[Lord Ashton of Hyde]

My Lords, I am very grateful to, especially, my noble friend Lord Moynihan and other noble Lords. We have to some extent overcome the great disappointment of the noble Lord, Lord Clement-Jones, on the previous group.

Noble Lords have been very clear in this debate that they want to see tougher action to deal with the serious problems in the secondary ticketing market, and the Government are taking action. That is why we have provided funding for National Trading Standards to take further enforcement action, as the noble Lord, Lord Clement-Jones, mentioned. We have facilitated the ticketing industry’s participation in joint industry-government cybersecurity networks, and the CMA has launched an enforcement investigation into suspected breaches of consumer protection law in the online secondary ticketing market. I am sure that the noble Lord, Lord Moynihan, and other noble Lords will continue to keep this issue under the spotlight, and we will make progress together on protecting consumers and supporting our national sporting and cultural assets.

The noble Lord, Lord Moynihan, asked a specific question about that. As my right honourable friend the Minister in the other place made clear, the Government are firmly of the view that, under the Consumer Rights Act, when a secondary ticket seller offers a ticket for sale they must give the buyer clear information about certain conditions attached to the ticket. We said the proposal was duplicative because that is what our advice told us. I would say in particular to my noble friend Lord Moynihan that the Explanatory Notes to the Consumer Rights Act 2015, referring to Section 90(3)(b), make clear that,

“the buyer must be given information about any restrictions that apply to the ticket”.

In respect of the following wording in the amendment,

“any unique ticket number that may help the buyer to identify the seat or standing area or its location”,

the noble Lord, Lord Stevenson, asked whether the “may” makes this voluntary. The answer is no, it is mandatory. This is technical language to link this to the previous subsection in Section 90 of the Consumer Rights Act. We have merely used the same language that was in there before. I hope that answers the question.

I reiterate what the noble Lord, Lord Clement-Jones, said about some of the advantages and gains that the Bill has had from your Lordships’ House and indeed from the opposition amendments and suggestions in the other place as well. I say this to acknowledge their input into it but also to show that we have been flexible in many things. We have made progress in areas suggested by the Opposition in both Houses: on the extension of public lending rights to e-books; on children’s television, as the noble Lord mentioned and as was proposed by the noble Baroness, Lady Benjamin; on the accessibility of on-demand services, including subtitles; on maintaining the capability to retain listed events, which was first tabled in the Commons; on bill limits for mobile phones, as we talked about earlier; on the code of practice for social media; on supporting the separation of BT from Openreach with the Crown guarantee amendment; on internet filters, which protect children; and on the review of the electronic programme guide, although not quite to the extent that some noble Lords wanted.

The Opposition have also supported things that will allow great advances in the digital economy, such as: the Electronic Communications Code, which is very technical but a crucial change; age verification for online pornography, where we listened and adjusted the regime to address the concerns of the Opposition; the extension of age verification for pornography on on-demand television, so that 18-certificate material is kept away from children; government data sharing, which will enable us to deliver better services to the vulnerable; and the repeal of Section 73 of the Copyright, Designs and Patents Act, which I think was accepted all round the House as a very good thing.

I mentioned my thanks to many noble Lords at Third Reading, and I repeat those, especially to the noble Lords, Lord Stevenson and Lord Clement-Jones, who headed their various and quite large teams in the House. I am very grateful to all those noble Lords.

Motion F agreed.