Digital Economy Bill

Lord Foster of Bath Excerpts

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

[Lord Foster of Bath (LD)]

My Lords, I too thank the Minister for introducing the Bill and for the early discussions he has had with us. As we have heard, it is a long Bill and, in some ways, a rather disappointing one, as it fails to address many of the issues needed to provide increased support for our amazing creative industries.

There are notable absences in the Bill which we hope may be covered by amendments in Committee—ideally, government amendments—addressing issues such as the online sale of counterfeit electrical goods; stronger action by search engines to deal with copyright infringing material and online piracy; and ensuring a level playing field in the next round of spectrum auctions. As the noble Lord, Lord Stevenson, asked, why are there no measures to tackle the mass buying-up of tickets for gigs and theatre performances by people who have no intention of attending the event but rather of reselling them at huge mark-ups and denying genuine fans the opportunity to see their heroes? This is often done using bots—web robots. They are illegal in New York and should be illegal in the United Kingdom.

Why, as we have also heard, has there been no updating of the listed events regime? With the continued changes in the way people receive television it is likely that, soon, no broadcaster will meet the current test. The listed events regime will become obsolete and we will have a free-for-all. Amendments are needed to ensure that the much-valued listed events regime remains fit for purpose.

As your Lordships Communications Committee has said, we also need a fit-for-purpose public service broadcasting prominence regime, with measures to change the rules regarding electronic programme guides. Surely we should no longer accept that, on the EPG listings of the main pay platforms, CBeebies and CBBC—with largely British-made original content—appear below listings for no fewer than 12 US cartoon channels. Similarly, the prominence rules should be developed to take account of the on-demand services from PSBs. For example, the BBC’s iPlayer should be guaranteed prominence on the first on-demand screen of any smart TV, and surely indigenous language services such as S4C and BBC Alba also need to be given greater prominence on new platforms. Yet the default on powering on the new Sky Q box is Sky’s “Top Picks”. It takes 15 clicks at present to get to BBC Alba, and PSB channels are also hard to access. As one disgruntled purchaser said,

“it’s something stupid like 7 button presses just to get the TV Guide to change channels!”.

We know why: Sky is directing viewers to its own material and away from that produced by the PSBs. Change is needed.

My noble friend Lord Lester will argue, with our support, that the Bill also provides the opportunity for Parliament to establish a set of conditions that any Government should meet when setting any future royal charter for the BBC. He will argue for statutory underpinning of the charter and will no doubt remind the Minister that such an approach is exactly the same as he recently introduced in your Lordships’ House with regard to the National Citizen Service Bill.

Despite omissions, there are many aspects of the Bill that we support. We welcome news of forthcoming amendments on, for example, e-lending. My noble friend Lord Fox will talk about broadband. We broadly support the plans for a universal service obligation, although we think the 10 megabits per second is hugely unambitious. We also support clamping down on poor service providers, an easier system of changing service provider and completing the 4G mobile rollout. However, the Minister is aware of my concern regarding poor take-up of high-speed broadband. When high-speed broadband is available, only around 30% opt for it. Unless we can improve this take-up rate, the huge benefits to individuals, businesses and the nation offered by superfast broadband will be lost. Government strategy concentrates almost exclusively on the development of superfast broadband structures. Far more needs to be done to drive up demand through skills training, marketing the benefits, addressing barriers such as cost, and by developing quality technology and content. With the welcome exception of Clause 87, the Bill is silent on all these issues. Tackling digital exclusion, not least of older and more vulnerable people, is not just a matter of structures. I hope the Minister agrees.

On these Benches we broadly support the new Electronic Communications Code, and I know from meetings with the Minister that he is now well versed in answering questions such as, “In what circumstances does a water tower or a church steeple constitute ‘land’ under the code?”. But does he agree that when code rights are granted over a piece of land, there needs to be a public record?

Rightly, there has been much debate on preventing access to pornography by under-18s. We share the Government’s objective but we have reservations about the security of data. My noble friend Lord Clement-Jones will describe how we believe it is possible to achieve the Government’s—and our—objective by using methods that anonymise the data.

We welcome bringing the maximum fine for online copyright infringement into line with that for physical copyright offences and welcome the repeal of Section 73 of the Copyright, Designs and Patents Act. Its purpose —to protect fledgling cable platforms—is no longer needed and is being used by parasitic services such as TVCatchup and FilmOn to livestream and monetise PSB content without permission. The ECJ case on this issue has rumbled on since 2007 and an update from the Minister would be helpful, but the repeal of Section 73 will provide a quicker solution.

In relation to the carriage of PSB channels on cable, a contractual agreement will be overseen by Ofcom. Does the Minister expect that such an agreement will lead to the payment of retransmission fees, and, if not, why not? There has been talk of a transitional period before the repeal of Section 73. On these Benches we believe that it should occur immediately after Royal Assent. Does the Minister share that view?

We are broadly supportive of Part 5, which deals with digital government. However, as my noble friend Lady Janke will amplify, we, like the BMA and many others, want assurances that the benefits are not to be achieved at the cost of confidentiality.

The Minister is well aware of our opposition to giving the BBC responsibility for the policy and the costs associated with free licences for the over-75s. This is a government social policy which should be determined by government and funded by government out of taxation. Although it was part of the licence fee settlement, we will still want to press on some of these issues—for example, to explore the options for the BBC to vary eligibility other than by age in Clause 77. For example, could the BBC use tax codes to ensure that those in receipt of pension credit still qualified for the concession but others paid tax on it? In such circumstances, would the Government be willing to reimburse to the BBC the tax revenues they receive?

We will also wish to explore aspects of the new powers that Ofcom has to regulate the BBC, not least in respect of distinctiveness. I know that my noble friend Lord Clement-Jones wishes to explore whether a middle way can be found in the plans to change the Ofcom appeals procedure from a merits-based to a judicial review-based system.

We have many hours of deliberation on the Bill ahead of us. I look forward to that deliberation and to the concessions that I hope we will gain from the Government.

--- Later in debate ---

[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.