Digital Markets, Competition and Consumers Bill

Lord Lucas Excerpts

Committee stage
Wednesday 7th February 2024 Grand Committee

Moved by

[Lord Lucas]

168: Schedule 21, page 371, line 10, at end insert—
“12 A summary of the charges that the consumer may incur if they use the service during a cooling-off period but then cancel the contract.”Member’s explanatory statement
Alongside another amendment in the name of Lord Lucas, the purpose of this amendment is to focus discussion on how use of a subscription contract during a cooling-off period is charged for if the contract is cancelled within the cooling-off period, and the information that the trader must publish in that regard.

[Lord Lucas (Con)]

My Lords, in speaking to this amendment, I will also speak to Amendment 191, and in doing so declare my interest as the proprietor of the Good Schools Guide, an organisation that derives substantial income from subscription contracts, although we do not operate any automatic renewal of them.

The problem I am looking at, which certainly applies to us, is that within the cancellation period for a subscription such as ours, the purchaser can, if they so choose, get all the value they are ever going to get from a subscription. They can just go through the online service and print out everything that might possibly interest them, and then cancel. With other subscription services, the value is received more evenly through the contract, but ours can be focused at a particular time. Under those circumstances, a fair arrangement would be that if a consumer cancels and has received substantial value, they can be charged, on a basis set out beforehand, for the value they have actually had. I beg to move.

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[Lord Offord of Garvel (Con)]

The Box feels that the point has been covered—but I will write to noble Lords and cover it with them.

[Lord Lucas (Con)]

My Lords, I am grateful to my noble friend for his positive reply to my first amendment, where the use of a subscription during the cooling-off period is covered by the powers in the schedule. I was not clear about that on reading it, so it is good to know. As I understand it, nothing in the Bill would prevent a trader from saying to a person, “No, you cancelled a subscription before. I am not going to let you take out a new one.” There is no right of a person continually to enter into subscriptions with the intent to cancel. They can do it once and then they have been rumbled. That is my understanding. If I am wrong, I hope that my noble friend will correct me.

I should also be grateful if he gave me some guidance in relation to Amendment 192 on the meaning of “give” in Clause 264(1), which I do not see defined in any way. When the consumer has to be given a notice, does that imply that the consumer receives it? Email addresses go in and out of use. People change them. There can be blockages of various kinds on them, because some were paid for, or some may be limited by size. One could get into a situation where the trader may think that the person has done something and has sent out the notice but it has never got through, or it can get into someone’s spam trap or, as in this place, it can be blocked by someone else’s spam arrangements of which one would not have cognisance.

My interest in Amendment 192 is whether it would be fairer to do this by making sure that the notice had been received by having some acknowledgement from the subscriber. I cannot see, as an operator of a subscription service, that this is difficult to deal with—one just does not renew until one gets the confirmation, which is a click on the screen. That is not difficult to implement. If we just have “give” as a loose term in the clause, it will allow people to continue saying, “We told you but not in a way in which you are ever likely to notice”—as in The Hitchhiker’s Guide to the Galaxy. We should try to avoid that in the Bill, so I should like to see if it is possible to get something firmer by way of making sure that the consumer knows that they are renewing the contract. That said, I look forward to subsequent conversations with my noble friend and I beg leave to withdraw the amendment.

Amendment 168 withdrawn.

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[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken in this debate. We are grappling with some important issues at the heart of Part 4 of the Bill. This group of amendments follows on quite neatly from our earlier debate, and it gives me a chance to put the other side of the problem. I have to say, the noble Lord, Lord Black, seemed to downgrade the scale of the problem we foresee. He also seemed to suggest that most businesses mean well and do well, but there are other things at stake here, such as the issues many consumers experience. I am not talking about the publishing world when I say that.

I have two amendments in this group, Amendments 173 and 174. Both are designed to address the concerns raised by consumer groups, including Which? and Citizens Advice: the problems with automatic contract renewals, such as whether somebody has satisfied the original minimum term of a phone contract, or completed a free trial in signing up to a streaming service. As the noble Baroness, Lady Stowell, said, all too often consumers are not given sufficient notice to bring their contracts to an end without incurring additional charges, or find that they face a time-consuming and confusing cancellation process.

The noble Lord, Lord Black, said that the Government’s proposals are predicated on an erroneous assumption that consumers do not know what subscriptions they have. I take issue with that too. In the last year alone, people in the UK spent £500 million on subscriptions that auto-renewed without them realising, while unused or unwanted subscriptions cost people more than £306 million a year. The fact is that contracts are being renewed and prices increased with minimum notice and without clear opt-outs. Of course, this has more of an impact on marginal groups and those on low incomes.

We welcome the Government’s attempts to address these issues in Chapter 2, obviously, but we do not feel that these measures go far enough. Our Amendment 173 would allow the consumer to opt out of their subscription auto-renewing every six months, while Amendment 174 would allow the consumer to opt out of their subscription after a discounted trial. As has been said, the fact is that many people do not realise that they are entering into a long-term auto-renewing contract with a business or service, and it is often not in the interests of the trader to make that clear when the consumer signs up, or to help the consumer make a conscious decision to continue with the subscription once it is active. We need to ensure that the initial rush of enthusiasm for a purchase does not become a long-term financial burden.

In addition, the consumer may discover after a short time that the subscription does not live up to the hype they were sold when the contract was first signed. Again, we need to ensure that they can extract themselves, and their money, from paying for something they no longer want. Our amendments would achieve this, and I hope that noble Lords will consider supporting them.

I now turn to the amendments in the name of the noble Lord, Lord Black. He made an impassioned speech about the future of the publishing sector, and we have every sympathy with what he had to say. What is clear to me is that we are talking about two different things. I am concerned that the noble Lord is forming some generalised conclusions, when there is no one-size-fits-all answer. Our amendments address the types of subscription that trap consumers—he says he does not agree with that—into paying for something they may no longer want or need. The subscriptions in the publishing world that he described are long-term ones freely given to a magazine or newspaper. They are akin to loyalty or membership subscriptions, which create, if you like, group awareness and consciousness. Of course, the same can be said for charity subscriptions to the National Trust, for example—consumers taking out a subscription for altruistic reasons, a topic we debated when we discussed gift aid on Monday.

We do not want to sabotage those freely given regular payments. However, although we are sympathetic to the general case made by the noble Lord, we do not necessarily agree that the way forward is to remove the provisions from the Bill and give the Secretary of State the power to regulate on this instead. That could mean putting at risk the hard-won protections from subscription traps that are already in the Bill. Similarly, while we are open to further discussion on this point, we are not convinced that a default 12-month period would benefit consumers.

However, I agree with the noble Lord, Lord Black, in his Amendment 185, that the reference to notifying a business that a subscription should cease

“in a single communication”

is oblique and could cause genuine confusion as to whether and how the communication is received. Therefore, we urge the Minister to address this issue and find a new form of words. There are a number of different models to choose from, but the key consideration will be whether and how we design businesses following good digital design processes to make it clear that people can communicate in a clear way.

As we know, too many traders make cancelling a contract more difficult than it should be, whether by forbidding online cancellations, putting customers on hold for extended periods or having multi-step cancellation processes, where a user is steered towards retaining the services. Whether we end up with a prominent button on a website, a dedicated email address or some other system, we must ensure an appropriate balance to make it easier for consumers to cancel a contract. Traders should have an opportunity to retain customers, perhaps through price reductions, but customers should not be placed under undue pressure or have to go through half a dozen steps to extract themselves from a contract. If the Bill were to say more about some basic design principles, some of these issues might be overcome. We would certainly welcome further discussions on this issue.

Finally, I have added my name to Amendment 190, tabled by the noble Viscount, Lord Colville. I will speak on this only briefly. He makes an important point. We will return to this question of who owns our non-personal data and our right to have it returned once businesses no longer need it in much more detail on the data protection Bill. I hope to have a longer debate with him on that basis, but I hope that the Minister can provide some reassurance that the Government are prepared to act on this issue.

In our earlier discussions, we had a huge amount of consensus, but we have gone in opposite directions on this issue. I think that we all want the same thing but are finding different words to deliver it. If we were locked in a room for half a day, we could probably come up with a solution. It might be quicker than writing lots of letters, which the Minister might otherwise have to do. I hope that we can find a way through this. We are not being deliberately awkward, but it is important that we get this right. I look forward to the Minister’s response.

[Lord Lucas (Con)]

My Lords, I wanted to wait until the noble Baroness, Lady Jones, had spoken, because I wanted the chance to agree with her amendment, which raises the same question that I was raising in Amendment 192. Why do you have to be locked into these subs? Why can you not be asked to resubscribe, if that is what you want to do? Why can we not give consumers a right to approach things that way and get to know a product before they know that they want it every year?

I echo what my noble friend Lady Stowell of Beeston said on newspapers. I would want to get to know the Daily Telegraph well enough to know that I want to pay for it every day. To be able to buy it once a week would be nice, but that is not an offer at the moment. Allowing consumers to get used to a product benefits business. As the noble Baroness demonstrates in her amendment, it also benefits the consumer. It should not just be a year’s subscription or nothing. We should encourage businesses to provide something in between. We certainly should not make renewal the only option that businesses look for. We should make them earn that renewal by providing a good product for a year so that customers do not want to have to be bothered with renewing it every year. That is a situation that one happily gets into with a number of charities. You know that you want to support them. They provide a good service and you just let it tick over. I do not think that anyone should be entitled to that position. They have to earn it; they have to prove it. To have a system where you do not have to tie yourself in at the beginning is estimable.

That said, I have a great deal of sympathy for what my noble friend Lord Black said. I would prefer to see a lot of this in secondary legislation. I understand that when someone cancels a subscription, the business wants a chance to correspond with them and have an argument, although I find it a huge irritant in my relationship with a business when I suddenly discover that it would do business with me on much better terms but only if I threaten to withdraw. I wish it would value me as a continuing customer and offer me good terms, rather than only benefiting discontented customers.

I think that there is a lot of good in all the amendments in this group. I echo what the noble Baroness, Lady Jones, said about the amendment tabled by the noble Viscount, Lord Colville. I look forward to seeing that in the next Bill. I just draw his attention to the likes of Ancestry.com. Its business is the accumulation of everything that everyone has added to it. You subscribe to it, but all the time you are adding information that is then available to other people. Businesses should be allowed to retain the information that you have added, if that is appropriate. I can quite see that you might want your photographs returned from Flickr, but something like Ancestry or an app about building up information about history, ecology or whatever else it might be properly retains information that individuals have contributed and it ought to be possible for an app to have that in its terms.

[Lord Clement-Jones (LD)]

My Lords, I am glad to follow the noble Lord, Lord Lucas, because having supported a number of amendments in this group I saw harmony rather than discord. The noble Baroness, Lady Stowell, had it absolutely right: the provisions here are both too vague and too detailed. Where the Bill should be detailed, it is vague; where it is vague, it should be—and so on. That is the essence of it.

Between us, we have a pretty good idea—I hope that it does not involve sitting in a locked room thrashing this out—of what good looks like. That is the important thing. The problem is that in this group we are debating the beginning of a contract, the reminder and the termination in one fell swoop, so it is easy to misunderstand exactly what we are talking about. The amendments tabled by the noble Baroness, Lady Jones, are extremely good, because this is all about having information at the beginning of the contract. What you do not want is too much elaboration. As long as you know up front what to expect and the kind of contract that you going to enter into, that seems to me to a sensible way forward. It is about getting the basics right and I do not think that the Government have got the basics right.

Many people think that the process by which the original consumer regulations were put together was perfectly sensible, so I disagree with the noble Baroness about whether secondary legislation would be appropriate after consultation. I think that that would be a perfectly proper way forward, rather than this rather clunky way of doing it with secondary legislation and schedules setting out so much detail. That seems a rather extraordinary way of going forward. It also seems to clash somewhat with the Government’s reluctance in other areas. No doubt the noble Lord, Lord Holmes, will speak in the next group about a lack of regulation in certain quarters—which way is a matter of mutual interest. That seems a bit paradoxical. We have to get the basics right.

The noble Lord, Lord Vaizey, made an interesting speech. He was almost suggesting that there needs to be friction at the end of a contract so that there is an excuse to engage. I am not entirely convinced by that. Luckly, he did not put an amendment down, so I do not have to disagree with that at the end of the day.

The amendments tabled by the noble Lord, Lord Black, are sensible. There is an issue about how many communications a consumer sees, but the important amendment is the one regarding qualification of “by any means”. Clause 258 is pretty extraordinary. What if a trader gets a Twitter message but they are not on Twitter? How are we expected to accept a notice given “by any means”? The qualification suggested by the noble Lord seems entirely sensible.

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[Lord Lucas (Con)]

My Lords, I get the impression from my noble friend that this is not an area of the Bill that the Government want to move on, but I get the impression from the Committee that we would very much like to see some changes. I hope that, between now and Report, there may be some constructive conversations between me, my noble friends and noble Lords opposite to see whether we can make some consolidated suggestions to the Government that we need not argue about, so we can focus the argument on them.

[Lord Black of Brentwood (Con)]

I thank all noble Lords for what have proved to be good and constructive debates on both groups of amendments.

I say to the noble Baroness, Lady Jones, that I think we pretty much have a consensus. There may be some issues at the margins, but we all agree, partly because, as my noble friend Lord Vaizey said, we are not hostile to any of these intentions. We support the intentions, but we recognise that we need to support business while protecting customers. This is important because, in many ways, it goes to the heart of the creative economy and the media ecosystem. The key point that has come across from many of the excellent contributions today is that this is a rapidly evolving environment and, as my noble friend Lady Stowell said, a highly competitive one.

The whole question about digital subs is that they are a new model for the way businesses are operating. For many, that model is becoming business-critical and should therefore not be dealt with, with what the noble Lord, Lord Clement-Jones, rightly said is a blunt instrument. We should therefore not write things into the Bill that we will regret in subsequent days. I agree with a lot of what the noble Baroness, Lady Jones, said: of course there are some bad actors in this space. All we are saying is that we should not be putting into regulations things to deal just with those bad actors that would damage the much wider economy.

I hope that the Government will think again about a lot of these things. I am grateful to my noble friend the Minister for saying that we will continue discussions between now and Report. That is very important, as I think he will have the mood of the Grand Committee: that we will want to return to this area. In the meantime, I beg leave to withdraw the amendment.

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[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my noble friend, if not for the fact that it seems we are going backwards and forwards at the same time, which is always a good state be in. As this is the first time I have spoken on day six in Committee, I restate my technology interests, as set out in the register, as adviser to Boston Ltd.

My two amendments in this group are concerned with artificial intelligence. It is a truism, self-evident and barely in need of stating, that artificial intelligence is already impacting many aspects of our lives—as citizens, as consumers, as businesses and as a country—so it would seem timely to review all the relevant legislation to assess its competence to deal with the challenges, opportunities and risks that AI presents for us in all those roles and capacities. I shall say more on that next month.

Today, within the scope of this Bill, Amendment 199 suggests that all legislation concerned with consumer protection be reviewed to assess its competence to deal with the challenges, opportunities and risks inherent in artificial intelligence. It is clear that a number of the concepts and provisions within consumer protection legislation and regulation will be applicable and competent to deal with AI, but there is a huge gulf between what is currently set out in statute and what we require when it comes to making the best of what we could call this future now. I shall give just one example: if we consider how algorithms are set up simultaneously to push voraciously certain content while holding back other content, it is very difficult to see how consumer protection legislation is set up to deal with that challenge. That is but one specific example.

Amendment 200 goes to the question of consumer protection and the need to label all products and services where AI has been used or is built into that product or service so that the customer can know that and determine whether she or he wishes to avail herself or himself of that product or service. In no sense would this amendment require great burdens to be placed on business in bureaucracy, administration or cost. In many ways, this is yet another example of “set AI to solve an AI problem”, with human in the loop and human oversight always present.

I suggest that these two amendments, taken together, would enable the Bill to speak positively and in a timely manner on the opportunities, risks and threats to all of us, and to try to get the optimal deployment of AI in this context when it comes to consumer protection. I look forward to the Minister’s response.

[Lord Lucas (Con)]

My Lords, we move from a very new problem to a very old problem. My Amendment 215B asks that the Government restore to us the protection we used to have from double-glazing salesmen. There used to be a cooling-off period. That got swept away by EU regulations. Now that we have Brexit, we have the opportunity to give consumers back the protection that they once had. At the moment, double-glazing can claim to be made to the consumer’s specification but, actually, it is not. It is a standard product, and you just tweak it a bit. There is plenty of room when you are providing double glazing, fitted kitchens or anything like that to allow consumers proper time to step back and ask themselves whether they want to go in for such an expense and whether it is something they really want to do. We ought to restore that to consumers, there being no good reason not to.

[Lord Clement-Jones (LD)]

My Lords, I will speak first to Amendment 215C and then come to Amendment 202. I am very much indebted to the Fair Standards Alliance for raising the issue of standard-essential patents. I thought I knew a fair bit about intellectual property and the digital world, but I was in a state of relative ignorance when the world of standard-essential patents came to me. I have had quite an extensive briefing from the Fair Standards Alliance, which has revealed the importance of standard-essential patents, particularly in the context of competition and licensing.

These patents are necessary to implement an industry standard, such as for wifi or 5G. As the market is locked into a standard, to prevent abuse of the market power, SEP owners are required to license their SEPs on fair terms. Unfortunately, there is widespread abuse of this monopoly power by SEP holders that often, I am told, do not abide by their voluntary commitments and instead seek to abuse their market dominance to force product manufacturers to sign up to unfair terms. SEP holders are regularly seeking and securing excessive licence fees from technological innovators by leveraging the threat of injunctions, which forces firms in the UK either to accept high licence fees or to exit the market. This is to the detriment of those businesses and to the wider UK economy.

Most prospective licensees cannot afford the cost of litigation or exclusion from the UK market. The recent High Court decisions in InterDigital v Lenovo and Optis v Apple demonstrate how SEP owners exploit SMEs and make excessive royalty demands that only large, well-resourced litigants can afford to challenge. Apparently, the costs of the recent SEP licensing trial in the InterDigital case were over £31 million. That is pretty breathtaking, even to one with my background as a commercial lawyer.

The costs can be ruinous to many businesses. This tactic not only threatens innovation by UK businesses but represents a strategic risk for UK priorities, such as 5G infrastructure, diversification and smart energy network security, by limiting the competing players. The availability of injunctions for SEPs gives foreign SEP holders the ability to prevent others in the UK entering, succeeding and innovating in those markets.

The Government have been considering SEP reform— I noticed the Minister nodding vigorously, earlier—for several years and have received evidence showing the abuse that businesses in the UK face. The Intellectual Property Office’s SME survey suggests that UK businesses face excessive licence fees for SEPs. SMEs are concerned by the threat of market exclusion by court-ordered injunctions and a lack of transparency about the cost of and need for the SEPs being offered.

British companies are predominantly SEP licensees. The majority of SEPs are held by companies from China, the EU and the US, with no major SEP licensors based in the UK. This means that, when SEP holders hold up innovative UK manufacturers during licence negotiations and extract excessive licensing fees, they are taking value that would otherwise be available to fund further innovative developments in the UK and are increasing costs to UK consumers.

The UK’s innovative SMEs are especially affected across all sectors, as they cannot afford expensive legal battles against large, international SEP holders. As I said, the costs were over £31 million in the InterDigital case. The problem is widespread and the Government themselves have already accepted that SEPs are an issue; for instance, in their 5G Supply Chain Diversification Strategy of 2020 and in DSIT’s wireless infrastructure strategy last year. Recent High Court decisions have independently confirmed that position. A court determined that licence rates have been significantly lower than those demanded by the SEP holders. Our judges have concluded that SEP holders are able to exert significant unfair pressure to get the deal they want.

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In the context of music, labelling could simply be a requirement within the metadata to identify that music is AI-generated. Essentially, this would amend the Consumer Rights Act 2015. Using that as the parent Act underscores that there is a strong consumer protection dimension to labelling requirements for AI-generated music. Consumers should know whether music is AI or human-created before making an informed decision about whether they wish to engage with it. I commend that amendment and very much hope that the Minister will respond positively.

[Lord Lucas (Con)]

My Lords, to pick up the noble Lord, Lord Clement-Jones, on his two amendments, I can absolutely see where he is coming from on standard-essential patents. This reflects quite a long-term failure by successive Governments to support British participation in standards setting. If one looks at the history of the telecommunications industry from when I was young, when the British were dominant, to where they are now, which is nowhere, one of the great failures and one reason why things have not located or started in the UK has been that we have not committed sufficiently high-powered, consistent energy into standards setting. We have never quite been abreast of what is happening next or been the place where people want to locate a business. It is enormously important and I made a point on this in the Automated Vehicles Bill. It applies to a lot of technical areas and we must get behind standards setting.

In relation to Amendment 202 of the noble Lord, Lord Clement-Jones, how does one know how much is AI-generated? It is rather like asking how much of a Reynolds painting is by Reynolds. Did he just touch in the eyebrow and leave the rest to his servants? Does an AI grammar checker count as AI-generated content? If the AI has made suggestions of things that one might look at, is that AI-generated? I imagine that a lot of journalists now use AI to help fill out the column inches after a hard day’s doing something else. As the noble Lord knows, given his connections with academia, this is becoming common on both sides—the teachers and the taught—so what does finding a way in which to define “AI-generated” mean? Is it AI-supported or no involvement at all? Is it not using any of the tools at hand? This is a difficult concept to go at. Surely, at the end of the day, what matters with a piece of music is how good it is, not where it came from.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken. This truly is a miscellaneous group of amendments and I will add to the miscellany of all this, because my Amendment 215A addresses the ambiguity that arises from the current laws on marketing infant formula.

Perhaps I may briefly explain the background as to why this is before us today. The Infant Formula and Follow-on Formula (England) Regulations 2007 were designed to prevent supermarkets promoting infant formula over breastfeeding. They arose because, prior to that, aggressive marketing and advertising techniques had been used by the milk formula industry to mislead parents over the best way in which to feed their babies. The current rules state that infant formula should not be advertised or promoted in a shop. They also say that no coupons, special sales offers, discounts or gifts should be offered to mothers or their families.

Meanwhile, noble Lords will be aware that the cost of infant formula has risen recently and is a huge extra burden on families, who are particularly suffering in the cost of living crisis. It is estimated that the cost increased by 22% in the past year alone. But because of the current regulations, supermarkets still cannot accept vouchers, even those provided by food banks and local authorities to purchase that infant formula. There have therefore been calls for the marketing rules to be reviewed to allow, for example, retailers to accept loyalty points, grocery vouchers and store gift cards, as well as free vouchers, for infant formula.

Our amendment addresses the current ambiguity in the regulations and calls for a review to clarify the marketing rules and their impact on the pricing and affordability of infant formula. This Bill is seen as the best mechanism to get this review under way. I should stress that our aims are to clarify the law and to tackle the unfair pricing currently taking place. However, we want to ensure that parents remain protected from the aggressive advertising that has misled them in the past. I hope that noble Lords and the Minister will see the sense of this amendment.

On a completely different issue, I listened carefully to the noble Lord, Lord Lucas, about double- glazing. I agree that he made an important point. I did not know that there were still double-glazing salesmen, but he raised them so I am sure there must be. I agree with him that, if they still exist, they should be regulated.

I turn to a completely different issue again. I am grateful to the noble Lords, Lord Holmes and Lord Clement-Jones, for their amendments on AI. We look forward to debating the Private Member’s Bill of the noble Lord, Lord Holmes, on AI regulation in the coming weeks. These Benches take this issue hugely seriously. We recognise that AI has the potential to deliver life-changing benefits for working people, from early cancer diagnosis to relieving traffic congestion, but these benefits must be set firmly in new standards and new regulation to keep people safe and their data protected. The EU and the US are speeding ahead on this while the UK is dragging its heels, so we believe that new regulations on the control of AI are essential.

I listened carefully to the noble Lords. I do not disagree with what they are trying to achieve but I query whether this is the right place to pursue these amendments. The data protection Bill will come before the House shortly; that will give us a much greater opportunity to address the impact of AI on the lives of consumers and citizens. I hope that we will have a really detailed exploration of the protections needed in that Bill at that time. However, having listened to the noble Lord, Lord Clement-Jones, on music labelling just now, I realise that I cannot just pass this issue on to the data protection Bill in the way I wanted to, because he made an important point about the consumer issues arising. Again, I have some sympathy with the noble Lord, Lord Lucas, who challenged this and asked, “How can we know? What percentage of music is AI?”

[Lord Clement-Jones (LD)]

I entirely agree that it is a question to be asked. Of course, there is the general principle of transparency. If you look at the amendment, you will see that it talks about content “whether assisted or generated” by AI. It could be partly or wholly generated by AI but, in transparency terms, just the knowledge that at least some of the elements were created by AI is important. The consumer can then take it or leave it, basically. If they like the sound of AI music—believe me, some of it is pretty dreadful—that is fine, but it is an acquired taste.

[Lord Lucas (Con)]

Will we have musicians confessing on stage that the electronics under the stage are adjusting the sound of their voice?

[Lord Clement-Jones (LD)]

It all depends on how sober the audience is, I suspect.

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[Baroness Sheehan (LD)]

My Lords, I thank the noble Baroness, Lady Wheatcroft, for tabling this amendment, to which I have added my name, as I did to a similar amendment that she tabled to the Financial Services and Markets Bill. I apologise to the Committee for not being available to speak at Second Reading.

I put my name to this amendment because votes reporting is an important issue of openness and transparency that underpins good stewardship and good governance, without which the road to net zero and our nature goals becomes that much more chaotic. At this point I should declare my interest as a director of Peers for the Planet.

As things currently stand, at AGMs investment managers vote on behalf of the pension funds they manage on issues that pension savers may have concerns about. Some, if not most, savers would prefer to know what their money is signed up to, and they cannot easily find out what their money is supporting, nor can pension schemes. This is because there is zero meaningful onus on investment managers to report their actions in a full, timely and easily digestible format, and that is important as the noble Baroness, Lady Wheatcroft, highlighted. The outcome is that pension schemes do not have the information to inform their savers, and it is for this reason that the amendment has support from the Association of Member Nominated Trustees, which has £1 trillion of assets under management.

In the US, it is mandatory. There, voting at AGMs is a key tool in ensuring good corporate governance, good long-term investor returns and good economic outcomes more broadly. What assessment have the Government made of America’s way of including people in decisions made in their name about their money? Why is it that in a relatively light-touch regime that is doable, but here it is not? Why is it that UK investment managers can comply with US rules when they operate in the US but find it too burdensome to do it here? The Government say that they see the need for action, but we see no action year after year. This amendment would enable pension schemes and ultimately pension savers more effectively to hold their investment managers to account for action on climate and nature, as well as on other matters.

I fully support the noble Baroness, Lady Wheatcroft, in what she is aiming to do, and I add the support of the noble Baroness, Lady Altmann, who has put her name to the amendment. She asked me to convey her apologies to the Committee for not being present; she is not feeling well enough to have stayed to the current late hour.

I hope that once we hear from the Labour Party we will be able to say that the amendment has cross-party support.

[Lord Lucas (Con)]

My Lords, I very much support this amendment. We are a capitalist society, and capitalism relies on a return on capital being provided to the people who provide the capital. In that sense, our capital has become very concentrated in institutional hands. Decisions are taken by a cadre of fund managers, of whom I used to be one—well-paid people who thoroughly approve of people in industries being well paid, particularly senior managers. More and more of the profits of industry are diverted to the people running them and to the people running the investments in them, and the amount getting through to the individual investor becomes limited.

What is the force in any other direction? What is the motivation for people running a company to do more than please their fund managers? They do not have to have the interest of the individual owners at the end of this. In the end, this results in bad decisions being taken on the allocation of capital and on the flow of money within a corporation. These will not be in the interests of paying the pensions of the people whose money is invested in these companies.

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[Lord Clement-Jones (LD)]

My Lords, I will speak very briefly in support of the amendment in the name of the noble Baroness, Lady Jones.

It is unfortunate that this comes at the end of our debate rather than the beginning, as it is a really important aspect of it. We have been talking about the digital world throughout our six sessions, but it is increasingly apparent that the digital world cannot meet all the emotional needs of society. It is not the perfect substitute for everything that we do in person in the physical world—for our social, shopping and other needs. If we try to make it so, it will have considerable impact on mental health.

We must strive to keep a lively, prosperous physical world in front of us on the high street, as the noble Baroness outlined. Much of this talk about taxation is above my pay grade—you always get wrapped on the knuckles by your spokesperson if you start proposing tax reform or whatever it may be—but there is no doubt that my party certainly supports business rates reforms in a variety of different ways. It also believes that the settlement on the digital taxation side through the OECD agreements has been far too modest in its impact on the major digital players. The imbalance between physical and digital traders has been far too great and has advantaged the digital players far too much. I am in total sympathy with what the noble Baroness said.

[Lord Lucas (Con)]

My Lords, I entirely agree with the noble Lord, Lord Clement-Jones, on that last point. It is really important that we keep at the question of how we tax digital businesses. One can no longer rely on the Irish national statistics because they are so distorted by profit shifting, a lot of it from this country—profit going abroad and being taxed at a very low rate in Ireland when it should be taxed here.

I know that this is an international matter, but we absolutely must keep the pressure up. We are getting more and more digital, so we need to have an international tax system where profits are taxed where they arise and not where Governments wish to shift them to. I know that this is hard, but I am unimpressed by the progress that the world has made in this direction. I really hope that the Government will get behind the continued efforts on this. We suffer a great deal from it.

At the other end of the scale, the Government could also do a lot better. I am sure that my noble friends will remember that HMRC made a horrendous mess of VAT in the Channel Islands in the early 2000s. Whole businesses grew up in the Channel Islands on the idea that you could ship records out to them, then they would come back VAT-free to the person in the UK who bought them because the consignment was under a certain value.

HMRC eventually dealt with that, but now there is monstrous and recurring fraud through the likes of Amazon and eBay, involving “Chinese” sellers—there is no reason to think that they are of that nationality in particular, but they are certainly Far Eastern—who HMRC does not pursue. HMRC does not effectively collect the tax that is due. It says, “Oh, it’s too hard. Oh, it’s in lots of little bits. Oh, these people move around with great velocity”. Yes, they do, but by not collecting it, HMRC not only does not get the tax but damages the UK businesses that should be able to compete on a level playing field with those overseas sellers. It is delinquent; it is an issue at the root of HMCR that we have never managed to deal with effectively, but we really must.

It is so important that HMRC realises that it should focus not only on operational efficiency in terms of how much it costs to do things and whether it gets the money back that it is investing in this, or a sufficient multiplier of it, but on whether it is doing its bit for the structure of the UK economy and the ability of businesses to start and flourish here. I pay great credit to Retailers Against VAT Abuse Schemes, which has been active these last 20 years. I hope that it will eventually be successful, but golly, it could do with more help.

[Lord Offord of Garvel (Con)]

Once again, I am grateful to the noble Baroness, Lady Jones, for raising this important issue, and for the remarks of the noble Lord, Lord Clement-Jones, and my noble friend Lord Lucas.

The Government are wholeheartedly committed to protecting the country’s high streets and town centres, and supporting them as they adapt to changing consumer demands. Indeed, the Government revalued business rates in 2023, with the retail sector being the biggest beneficiary. We have also provided long-term investment in our high streets and small businesses, including £2.35 billion-worth of town deals, the £830 million future high streets fund and the £4.8 billion levelling up fund. New legislation in the Levelling-up and Regeneration Act 2023 will play an important role in reviving our high streets by introducing high street rental auctions, which will empower places to tackle decline by bringing vacant units back into use, and seek to increase co-operation between landlords and local authorities and make town centre tenancies more accessible and affordable for tenants, especially for SMEs, local businesses and community groups.

The Government also launched the new £2.5 million high street accelerators pilot programme, which will empower and incentivise local people to work in partnership to develop ambitious plans to reinvent the high streets so that they are fit for the future. Accelerators will bring residents, businesses and community organisations together with their local authorities to develop a long-term vision for revitalising high streets. The pilot will run in 10 areas across England until March 2025.

We consulted in 2022 on an online sales tax, and after careful consideration we decided not to introduce it. That decision reflected concerns raised on the risk of creating unfair outcomes and complexities in defining the boundaries between online and in-store retail, including click-and-collect orders. The Government therefore do propose to pursue further changes to business rates or sales tax at this time. I hope that the noble Baroness will feel sufficiently reassured to withdraw her amendment.