Lord Ashton of Hyde
Main Page: Lord Ashton of Hyde (Conservative - Excepted Hereditary)Digital Economy Bill
Lord Ashton of Hyde ExcerptsWednesday 29th March 2017
(7 years, 1 month ago)
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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.
Lord Ashton of Hyde
“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)
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.
Lord Ashton of Hyde
“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.”
Lord Ashton of Hyde
“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.”
Lord Ashton of Hyde
“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).”
Lord Ashton of Hyde
“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.”
Lord Ashton of Hyde
“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.”
Lord Ashton of Hyde
“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)
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.
Lord Ashton of Hyde
“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.”
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.
Lord Ashton of Hyde
“( ) sections (Guarantee of pension liabilities under Telecommunications Act 1984) and (Regulations under section (Guarantee of pension liabilities under Telecommunications Act 1984));”
Lord Ashton of Hyde
“( ) section (Provision of children’s programmes);”
Lord Ashton of Hyde
Lord Ashton of Hyde