Digital Markets, Competition and Consumers Bill

Lord Offord of Garvel Excerpts

Committee stage
Wednesday 31st January 2024 Grand Committee

Moved by

[Lord Offord of Garvel]

84: Clause 117, page 74, line 16, at end insert—
“(c) references to the supply, provision, acquisition or use of goods or services include the supply, provision, acquisition or use of digital content.”Member's explanatory statement
This amendment confirms that references to the supply, provision, acquisition or use of goods or services include the supply, provision, acquisition or use of digital content.

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[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken in this debate. I have added my name to Amendment 85 in the name of the noble Lord, Lord Clement-Jones. He raised an important point about the loss of exemplary damages which could otherwise be awarded for those involved in collective proceedings. In the cases that will be considered under these regulations there may be thousands of small businesses harmed, but only those which prove that harm was done and losses were incurred would be compensated, as the Bill stands. However, it may well be that smaller players cannot afford to take a case, so there needs to be an overarching remedy to ensure compliance with the law, otherwise the defendant may profit from their own wrongdoing. The noble Lord gave some powerful examples to illustrate that. An amendment along these lines should be considered to incentivise the defendants to uphold the rule of law.

The amendment in the name of the noble Lord, Lord Holmes, raises an interesting challenge about the oversight of claims. We agree that it is important that the regulators continue to have a say on the merits of private cases that go to court. They can already intervene in private actions by submitting written observations to the tribunal. The tribunal itself has a role in which it grants a collective proceedings order before a case can go ahead. However, in recent years there has been an increase in the number of private actions brought to court, often by litigation funding firms. These tend to focus on cases where the funders anticipate the largest returns.

In the meantime, the CMA is still trying to focus its public enforcement on cases that will generate the greatest strategic significance and the widest benefit, but its resources are being stretched as the scope of its enforcement power widens. We have to find the right balance between public and private actions to achieve the widest public benefit. We need to take into account the capacity of the Competition Appeal Tribunal to deal with the increased burden of cases. The noble Baroness, Lady Stowell, pointed out that there is a solution to this: the model that Ofcom already uses, which could be used in this case. There may be other solutions, but we need to find a way forward to get this balance right.

At a recent conference Sarah Cardell, the CEO of the CMA, said that the CMA sees public and private enforcement as two complementary parts of a single overall regime. We agree with this approach and, while we are sympathetic to the proposal of the noble Lord, Lord Holmes, we would like to consider the wider functioning of the CAT first.

This leads to the amendments of the noble Lord, Lord Tyrie, who raised significant issues about the workings of the Competition Appeal Tribunal. He obviously has first-hand knowledge of this issue, and I listened carefully to what he said. He shared with us a very deep understanding of the workings of the CAT and the challenges that it faces but, the more that I listened to him, the more that I felt that trying to resolve this with two amendments to this Bill did not seem the right way forward. It felt that this was a bigger issue for another day. Just as the noble Baroness, Lady Stowell, made a fantastic exposition about the issues at stake, I did not want to put my name to those amendments, as I felt that they were too superficial to address the issues that the noble Lord, Lord Tyrie, raised.

Having said that, it might be that a fundamental review of the CAT is necessary or that another way could be found to address this in the Bill. I hope that the Minister listened carefully to the noble Lord’s concern and can offer a way to progress the issues raised by him and others in the debate to ensure that they are addressed. I therefore look forward to the Minister’s response.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank noble Lords for their thoughtful amendments and considered remarks during this debate. I start by speaking to Amendments 85, 86 and 87 tabled by the noble Lord, Lord Clement-Jones, which would enable the CAT to award exemplary damages in collective proceedings.

Clause 125 amends the Competition Act 1998 to allow the courts and the Competition Appeal Tribunal to award exemplary damages in private competition claims involving individual claimants, but not in collective proceedings before it. The competition collective proceedings regime was introduced in 2015. This is an important mechanism allowing redress to be sought on behalf of large groups of customers. The bar on the availability of exemplary damages in collective actions was one of the many safeguards put in place when the Consumer Rights Act 2015 was enacted, to ensure a balanced system of collective actions before the CAT which will not lead to a culture of undue litigation and US-style class actions. These safeguards ensure that defendants are protected by avoiding vexatious and unmeritorious claims—or fishing expeditions—while allowing legitimate claims for redress to proceed, without defendants feeling pressurised to settle, despite the likelihood of a strong defence.

While Clause 125 reverses the complete ban on exemplary damages introduced by an EU directive in 2017, keeping the bar in place for collective proceedings before the Competition Appeal Tribunal remains appropriate for the same reasons that it was put in place when the regime was introduced in 2015. I thank the noble Lord and the noble Baroness, Lady Jones, for Amendment 85 and I hope that he feels reassured and comfortable in withdrawing it.

I turn to Amendment 106 on private enforcement, tabled by my noble friend Lord Holmes of Richmond. I thank him and my noble friend Lady Stowell for their contributions. This amendment would require complainants in private enforcement claims to obtain prior approval from the CMA to bring their cases in front of the CAT or High Court.

The ability to bring private enforcement claims through the CAT is an important mechanism for consumers to seek redress. This amendment would add an extra hurdle for claimants and might therefore reduce their ability to access redress and potentially limit their access to justice. Adopting an Ofcom-style approach would provide a very broad power to the CMA, which would unnecessarily add to the existing range of functions that it currently discharges. While this approach may exist in other jurisdictions, the complexity and size of competition private actions and the well-established jurisprudence of the CAT mean that it would not be appropriate in this context.

The CAT already has a specialised, well-established legal framework through which it manages cases, including certifying collective actions. This amendment would risk overcomplicating the existing framework and unnecessarily bring the CMA into highly complex and contentious litigation. I hope that my remarks have helped to address the concerns of my noble friend Lord Holmes of Richmond and that, as a consequence, he does not press his amendment.

I move now to the review of the CAT and the two amendments put down by the noble Lord, Lord Tyrie. Amendment 107A would require the Secretary of State to conduct and publish a review of the performance, governance and operation of the CAT. I thank him for his amendment and for the expertise and wisdom he brings to our debates. The CAT plays an important role in the UK’s competition regime and in providing avenues for consumers collectively to seek redress. It is right that we consider how the CAT operates to ensure that it effectively fulfils these important roles.

The CAT is already subject to significant review and scrutiny. Under the Competition Appeal Tribunal Rules 2015, which govern proceedings in front of the tribunal, the Secretary of State has a duty to review the CAT rules, including making an assessment of how the rules meet the objectives they are intended to achieve. Indeed, the Competition Appeal Tribunal Rules 2015 are currently under review following a post-implementation review in 2021. This process will ensure that the CAT continues to deliver first-class justice expeditiously.

The CAT is also in scope for the public bodies review programme, which assesses the governance, accountability, efficacy and efficiency of arm’s-length bodies. Moreover, the CAT is already subject to a variety of forms of scrutiny by Parliament and the Government. This includes laying its annual report and accounts before Parliament, ministerial appointments to the Competition Service board and regular ministerial oversight as part of departmental sponsorship arrangements.

Given the crucial role it plays in the competition system, it is right that the CAT is sponsored by the Department for Business and Trade. However, the DBT recognises the important commonalities with tribunals under the purview of the Ministry of Justice, and the CAT president and chairman are appointed by the Lord Chancellor through the judicial appointments process. We also continue to encourage the CAT to engage with its counterparts in other tribunals to continue to develop best operational practice. The scrutiny currently in place ensures that it continues to function effectively and deliver a world-class competition regime. For these reasons, I hope that the noble Lord will not move this amendment.

The noble Lord’s second amendment, Amendment 128ZA, concerns

“Economic interests of consumers duty”.


It would place a new duty on the CMA and the CAT when carrying out their functions to ensure that the economic interests of consumers and their protection from detriment are paramount. This amendment also places a duty of expedition on the CAT. The Government considered this issue when the noble Lord, Lord Tyrie, proposed such a duty in his recommendations to the BEIS Secretary of State in 2019 and concluded that this would not lead to improved consumer outcomes. There was no compelling evidence that an overarching consumer duty would allow the CMA to do anything it could not already achieve within its existing remit or that it would increase enforcement levels.

I thank the noble Lord for raising this important issue. We are in full agreement on the importance of protecting consumers, and the Bill stands testament to the Government’s commitment. The Bill will support consumers through new and improved rights, as well as enhanced powers for the CMA and the civil courts to enforce these rights. New measures will protect consumers’ hard-earned cash, boosting consumers’ rights so they have confidence in businesses and markets. However, we do not believe that placing a further statutory duty on the CMA is the right approach.

The CMA’s existing primary duty is to promote competition for the benefit of consumers. This places a clear, unambiguous and paramount duty on the CMA to deliver with consumer benefit as the end goal. We can see the impact of this work: in the three years to 2021-22, the CMA’s competition work delivered £2.1 billion in average annual consumer savings. This is important to the Government, and we have given the CMA a strategic steer to prioritise action in its discretionary activities that addresses cost of living challenges to deliver better value for businesses and individual consumers.

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[Lord Offord of Garvel (Con)]

I turn first to litigation funding and Amendments 88 and 89. I thank my noble friend Lord Sandhurst and the noble and learned Lord, Lord Thomas of Cwmgiedd, for their passionate and eloquent contributions on this important issue, both in this Room and outside.

On Amendments 88 and 89, tabled by my noble friend Lord Sandhurst, I thank him for tabling these two amendments and for giving Members the opportunity to discuss this important issue. It has offered the unique opportunity to hear from a number of noble Lords with unparalleled expertise on the UK’s legal system. As my noble friend outlined, these amendments would reverse the effect of the Supreme Court judgment in PACCAR for competition and consumer claims. This would remove the requirement for litigation finance agreements in these cases to comply with the damages-based agreements regulations.

To be clear, it is government policy to return to the pre-PACCAR position at the earliest legislative opportunity. We are committed to delivering that reversal for all the reasons that noble Lords rightly highlighted, there perhaps being no better example of the benefit of litigation funding than the case of the postmasters impacted by the Horizon scandal. That is why the Government acted within weeks of the Supreme Court’s judgment to mitigate its impact on live collective actions before the CAT.

I and my ministerial colleagues at the Ministry of Justice have been pleased to receive my noble friend’s representations regarding his amendments and the Government’s position on PACCAR. I recognise the efforts that he and colleagues have made, working within the scope of the Bill, to return proceedings in front of the CAT to their pre-PACCAR condition. However, any action taken through the Bill must be aligned with the Government’s intention to return to the pre-PACCAR position across the whole of the justice system, as publicly set out by the Lord Chancellor. I assure noble Lords that we and our colleagues in the Ministry of Justice are examining this matter urgently and considering the best possible way to achieve this objective. In the meantime, I ask my noble friend not to press his amendments, with the assurance that the Government will continue to work closely with him, ahead of Report, to identify opportunities to address his laudable concerns, within the scope of the Bill or elsewhere.

I turn to Amendment 89A on a review of the litigation funding industry, I thank my noble friend Lord Hodgson of Astley Abbotts for tabling this amendment and for his contribution to the debate in this Committee on this important issue. My noble friend raises some important considerations about the litigation funding sector. Ensuring that access to justice is maintained and properly managed is a critical issue, and I welcome this debate.

As my noble friend outlined, this amendment would require the Secretary of State to conduct a review of the application of litigation funding arrangements to competition and consumer law matters. My noble friend’s amendment sets out the factors that he believes such a review should consider. To be clear, although there has been much debate about litigation funding during the passage of the Bill, responsibility for litigation funding remains a matter for the Ministry of Justice. Although I appreciate the limited remit of this amendment, it is right that any review considers the application of litigation funding across the entire justice system.

On competition matters, I note that the CAT rules and guide to proceedings provide for significant scrutiny of funding agreements in collective proceedings, which are looked at as part of the tribunal’s consideration of whether it is just and reasonable for a person to act as a class representative. The CAT has also extensively considered the application of these rules, including in the light of the PACCAR ruling. Although this is not a matter for my department, I assure my noble friend that the Government are already considering options for a wider review of the litigation funding market and its regulation. The Civil Justice Council may be asked to undertake such a review, given the need to ensure access to justice and the attractiveness of the jurisdiction. Given its independence, it may be unhelpful to specify the scope and timing of such a review at this stage. However, I expect colleagues from the justice department to update this House once that review is agreed. To that end, I thank my noble friend Lord Hodgson and hope that he is sufficiently reassured not to move the amendment.

[Lord Sandhurst (Con)]

My Lords, I am very grateful for the words of my noble friend the Minister. I should perhaps say this in respect of what my noble friend Lord Hodgson had to say: I accepted at the beginning that it is time now for regulation. Funding has been around since at least 2003 and I know, because I acted as leading counsel—I have no interest now—for funders in the case of Arkin. It was, in effect, a failed competition case, and the question was whether it was lawful and so on. To cut a long story short, the Court of Appeal said that the agreement was perfectly lawful; the case having been lost, it ordered the funders to pay the defendant’s costs up to but not exceeding the amount that they had underwritten—a cap, known as the Arkin cap. It is not always followed, but that is the general rule. It may well be that it is time for a review.

I remind the Committee of something that I drew attention to in my Second Reading speech, namely the statement by the then Parliamentary Under-Secretary of State, my noble friend Lady Neville-Rolfe, in Committee on the Consumer Rights Bill on 3 November 2014. In respect of legal litigation funding agreements, as opposed to damages-based agreements, she said that

“there is a need for claimants to have the option of accessing third-party funding so as to allow those who do not have a large reserve of funds or those who cannot persuade a law firm to act pro bono to be able to bring a collective action case in order to ensure redress for consumers. Blocking access to such funding would result in a collective actions regime that is less effective … Restricting finance could also create a regime which was only accessible to large businesses. This would weaken private enforcement in competition law, which is of course not the Government’s wish or intention”.—[Official Report, 3/11/14; col. GC 583.]

I think that is enough said, in the light of my noble friend the Minister’s observations about my noble friend’s Amendment 89A. I am very grateful for what has been said by the Minister about my amendments. I say only this: something will have to be delivered by the time we get to Report, or it will be a very interesting day out in the main Chamber. I beg leave to withdraw my amendment.

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Moved by

[Lord Offord of Garvel]

90: Schedule 5, page 249, line 22, at end insert—
“(4) In subsection (7), after “(3)” insert “, (3A)”.8A (1) Section 40 (section 39: supplementary) is amended as follows.(2) In subsection (4), after “section 39(3)” insert “or (3A)”.(3) In subsection (5), before “or (4)” insert “, (3A)”.”Member's explanatory statement
This amendment would amend sections 39 and 40 of the Enterprise Act 2002 so that extensions under the new subsection (3A) of section 39 (inserted by paragraph 8(3) of Schedule 5 to the Bill) are treated in the same way as extensions under subsection (3) of that section.

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Moved by

[Lord Offord of Garvel]

91: Clause 130, page 80, line 24, leave out from “any” to end of line 26 and insert “subsection of section 39 may also be extended under any other subsection of that section.”;”
Member’s explanatory statement
This amendment would make it clear that a period extended under any subsection of section 39 of the Enterprise Act 2002 can also be extended under any other subsection of that section (rather than just specified subsections).

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Moved by

[Lord Offord of Garvel]

92: Clause 131, page 81, line 26, leave out from “any” to end of line 28 and insert “subsection of section 51 may also be extended under any other subsection of that section.”;”
Member’s explanatory statement
This amendment is for consistency with my amendment to Clause 130.

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Moved by

[Lord Offord of Garvel]

94: Schedule 9, page 270, line 10, after “daily rate,” insert “for each day”
Member’s explanatory statement
This amendment would clarify that references in 40A of the Competition Act 1998, as amended by this Schedule, to maximum amounts of daily penalties are maximums per day, not in total.

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Moved by

[Lord Offord of Garvel]

98: Schedule 10, page 283, line 24, after “daily rate,” insert “for each day”
Member’s explanatory statement
This amendment would clarify that references in new section 35B of the Competition Act 1998, inserted by this Schedule, to maximum amounts of daily penalties are maximums per day, not in total.

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Moved by

[Lord Offord of Garvel]

104: Schedule 13, page 303, line 7, at end insert—
“(za) omit “Regulations made by the Secretary of State under section 68A or”;”Member’s explanatory statement
This amendment, and my other amendment to this Schedule, are to take account of an amendment made by the Energy Act 2023 to section 124(5) of the Enterprise Act 2002 (which this Schedule also amends).

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We support these amendments. They have raised an important debate today and I hope that in his response the Minister will be able to say how the Government intend to take it forward.

[Lord Offord of Garvel (Con)]

My Lords, this group of amendments concerns package travel. I will address Amendment 108, along with Amendments 129, 136, 139, 141, 145 and 146. I thank the noble Lord, Lord Clement-Jones, for tabling them and the noble Lord, Lord Fox, for speaking to them so eloquently. These amendments cover the same theme: the use of third parties in contracts between consumers and traders.

I reassure the noble Lord that the protections sought in these amendments are mostly provided for in other parts of consumer law, which I will detail. For example, Clauses 224 and 226 prohibit traders using misleading information or aggressive practices. This prohibition would already cover situations involving a consumer’s decision on whether to use a third-party agent. Similarly, Amendments 145 and 146 seek to make clear in the legislation that a consumer enjoys consumer rights, whether they purchase from a trader directly or via a third-party agent. However, in either situation the contract is between the trader and the consumer, and therefore the consumer benefits from the relevant consumer rights. Amendment 146 focuses on the transactional decisions related to purchases from a trader. Whether the decision is carried out by the consumer themselves or a third party is not relevant. The consumer that the contract is with will receive the relevant consumer rights. The practical effect of Amendments 145 and 146 is already achieved through consumer law.

I shall record two instances in which these amendments would have an adverse and unintended effect and thus why the existing wording of consumer law is set out the way it is. Consumer protection requires a consumer-to-trader relationship for consumer rights to apply. If, as suggested in Amendments 108 and 129, the definition of a consumer were changed to include third-party agents, they would in effect also become consumers in the eyes of the law. That means that the consumer’s relationship with the agent would be classed as a consumer-to-consumer relationship instead. Should there be an issue between the consumer and the third-party agent, the consumer would then no longer benefit from the same consumer rights as ordinarily apply. The amendment suggested by the noble Lord would broaden a very established principle of consumer law with this unintended effect.

I shall conclude my response—including the matters raised by Amendment 136—with reference to travel agents and the sale of package travel holidays, as I believe that may have inspired some of the noble Lord’s amendments. This is a sector in which it is common for consumers to use agents on their behalf. I am aware that issues have arisen between online agents and flight operators. Ministers in my department were pleased to meet representatives from an online travel agent and an airline recently to understand the issues from all perspectives.

Through our markets regime, the Government have ensured that the CMA has significant powers to investigate and act if it finds that businesses are behaving anti- competitively in a market. It is right that those matters are for the CMA to determine itself.

Separately, the Department for Business and Trade carried out a call for evidence on the Package Travel and Linked Travel Arrangements Regulations 2018 during September-December 2023. Those rules set the consumer protection framework for package holidays. It is vital that consumer protections for package holidays, as a key consumer leisure activity and expense, provide strong protections and that regulations support consumers to access choice and a competitive market. I am pleased to confirm that we are now analysing a substantial volume of responses, including from consumer groups, package organisers and suppliers, such as airlines. The operation of airlines and travel agents is governed by PTRs and ATOL. Those are being reviewed. That is the appropriate way to consider these issues.

Given the noble Lord’s interest, once further analysis has been undertaken, I will be eager to share with him the Government’s response to that consultation. I hope that, in light of what I have set out, he will be comfortable to withdraw his amendments.

[Lord Fox (LD)]

I thank the Minister for his response and for his offer to look through the data, which we will be happy to pick up. I thank the noble Baroness, Lady Jones, for her support and for enlightening me on the intricacies of airline ticketing. I suggest that there may well be a new class Z, which she and I will get, where our luggage gets lost as a result of what we have been saying here today.

Central to the Minister’s response is that all this exists already in some form or other, or the words have not been quite crafted correctly. Saying that the existing protections are there belies the fact that there are problems today. If those existing protections were 100% where they should be, doing what they should, the noble Baroness and I would not be able to stand up and list the problems that exist. It behoves us and the Minister to talk between Committee and Report, including my noble friend Lord Clement-Jones, to set out where there are clear issues at the moment and where there could be changes, even if we did not use the words contained in these amendments.

There are problems, and it would help if the Minister acknowledged that. The existing wording and the use and interpretation of those laws is not solving those problems, so there is something to sort out here, one way or another. With that said, I beg leave to withdraw the amendment.

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[Lord Offord of Garvel (Con)]

My Lords, on this group of amendments on net zero and the collective interests of consumers, I thank the noble Baronesses, Lady Jones and Lady Bennett, for their Amendment 109, which would explicitly provide that consumers’ collective interests include avoiding any detrimental effects that they may incur by not reaching net-zero carbon emissions by 2050. I am grateful to the noble Baronesses for raising the important issue of protecting consumers during the transition to net zero. At present, where environmental issues arise, the court or enforcers already have the requisite powers to take action, including by tackling misleading green claims which affect consumers’ purchasing decisions. In addition, in its annual plan, the CMA listed

“helping to accelerate the UK’s transition to a net zero economy”

as one of its priorities.

We are already making strong progress towards net zero by 2050. The UK has reduced its emissions further and faster than any other major economy. To that end, we feel that there are sufficient measures already in place to protect consumers during the transition to net zero. I hope that the noble Baroness, Lady Jones, will feel sufficiently reassured to withdraw her amendment.

On the right to repair, I thank my noble friend Lord Holmes and the noble Baroness, Lady Hayman, for their Amendments 128A, 145A and 201 and, in the latter case, for our recent discussion on the issue, where we had much of a meeting of minds.

The Consumer Protection from Unfair Trading Regulations 2008 are being restated in the Bill and prohibit unfair commercial practices. These include misleading actions which are likely to affect a consumer’s decision-making, so consumers are already protected from misleading statements made by traders on the availability of spare parts. Furthermore, there is a range of activity across government presently which support the aims of the proposed amendments, which in summary focus on sustainability and ensuring that products are repaired, where feasible.

The Department for Energy Security and Net Zero’s eco-design initiative aims to encourage the uptake of products which use less energy, resources and materials through product-specific regulations. The Department for Environment, Food and Rural Affairs is responsible for waste and resources policies, including preventing waste occurring in the first place. Both departments work with the DBT to ensure that, over their lifetime, products use less energy. This ultimately saves carbon, reduces waste and helps households and businesses to reduce their energy bills.

New and updated eco-design measures introduced in summer 2021 have, for the first time, included requirements for manufacturers to make spare parts available and replaceable with commonly available tools, as well as to provide information to professional repairers to assist with repairs. These new requirements cover dishwashers, washing machines and washer-dryers, refrigeration appliances, televisions and other electronic displays. The measures will help to establish a “right to repair” for consumers, as part of a more resource-efficient economy. Defra has recently set out aims in its new waste prevention programme to move to a circular economy by keeping goods in circulation for as long as possible and at their highest value. This includes increasing the reuse, repair and remanufacture of goods. We are consulting now on reforms to the Waste Electrical and Electronic Equipment Regulations and will consult later this year on reforms to the batteries regulations. We have also launched a separate call for evidence on reforms to the WEEE regulations to seek views on how they can further support the circular economy by incentivising more sustainable product design and higher levels of reuse of electrical products.

Further, from 29 April 2024, the new product security regulatory regime will require manufacturers to publish information on the minimum length of time that security updates will be provided for consumer connectable products. However, mandating a minimum security update period before the impact of these measures is known could run the risk of imposing obligations on businesses disproportionate to a product’s lifespan and any associated security benefits. The Government have committed to a post-implementation review of these new measures to understand their impact before any further action is considered.

Similarly, adding rights to repairability to consumer law now will oblige retailers to pre-emptively seek information from the manufacturers of products that they sell. More work is required before this is suitable for the Government to ask. In the meantime, it would mean greater costs and a reduction in choice for consumers. It may also have implications for our WTO and international treaty compliance, as it would constitute a new technical barrier to trade about which we would need first to notify and consult partners.

[Lord Fox (LD)]

I welcome what the Minister says, in some respects. Will the issue of updating electrical and electronic products be part of that review, too? In other Bills, we have discussed who has the obligation to maintain software updates for equipment from the perspective of safety as well as longevity. I hope that the review takes that into consideration, too.

[Lord Offord of Garvel (Con)]

I thank the noble Lord, Lord Fox, for that. There is a lot of information, and it is reasonable that I write to the noble Lord about the gamut of the consultation that is going on. As I said in response to the noble Baroness, Lady Hayman, a lot of consultation work is going on in the two main departments—business and Defra. It is therefore only fair that we spell that out, and we are happy to do so.

To finish what I was saying, I hope, on the basis of what I have said and those assurances, that noble Lords will not press their amendments.

I turn now to Amendment 134, on greenwashing, for which I am grateful to the noble Baronesses, Lady Jones of Whitchurch, Lady Kidron and Lady Bennett of Manor Castle, and the noble Lord, Lord Clement-Jones. The amendment would add specific greenwashing claims to the list of banned practices in Schedule 19. Misleading consumers about the environmental qualities or impact of goods and services so that it leads them to take a different purchasing decision is already against the law. Further, initiatives are under way, including the CMA’s draft guidance on sustainability agreements between businesses, which are aimed at helping to achieve environmental goals. The CMA has also published guidance on environmental claims on goods and services to help businesses understand how to communicate their green credentials without misleading consumers.

Part 3 of the Bill will strengthen consumer protection enforcement by allowing public enforcers to make applications to the court, which will not only stop the infringing conduct but allow the imposition of financial penalties. In addition, the Bill introduces new powers for the CMA to take action more quickly against bad business practices, without needing lengthy court action, and to give penalties of up to 10% of turnover for those breaking consumer law.

In summary, given that greenwashing is already prevented in law, our priority is to keep these existing interventions under review to observe their impact before rushing into further legislative action. For these reasons, I hope that noble Lords will feel comfortable not to press this amendment.

[Baroness Bennett of Manor Castle (GP)]

My Lords, before the Minister sits down, I come back to his response to Amendment 109 about not meeting our net-zero targets. I can probably paraphrase what he said as, “It’s all fine here and everything’s on track”. How would he align that with the statement from the Committee on Climate Change yesterday that there are significant delivery gaps for our NDCs for 2030?

[Lord Offord of Garvel (Con)]

I thank the noble Baroness for that. This is not a perfect science. We are on a journey to net zero and will get there by 2050. We have been very clear on the milestones that we need to hit along the way. As far as the UK is concerned, there is absolutely no going back on our commitment to hit that target, but it is a transition, and it will take a generation. I am very clear that we will get there.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords for their support for my amendments on achieving net zero, tackling those who get in the way of it and tackling greenwashing. I must say that the noble Baroness, Lady Bennett, had a wider interpretation of my Amendment 109 than I had intended. As I said at the outset, it was only a probing amendment, and she has given me good cause to go away and look at the wording of all that again, because it certainly was not going that far. It has provoked a good debate, and we had some genuine issues out on the table on it.

I also thank the noble Baroness, Lady Hayman, the noble Lord, Lord Holmes, and others for making the case so eloquently on the right of repair. We have had a really good debate on this, and I cannot possibly hope to acknowledge all the important points that noble Lords made. Those who know me will know that I have long been an advocate for the circular economy and for the right of repair as an essential part of that strategy, but it feels that action is painfully slow: it is estimated that there are enough unused cables in UK households to go around the world five times, along with 20 unused or redundant electronic items in each. But, instead of having a policy to repair and reuse, electronics manufacturers continue to use up the earth’s scarce resources producing new products, the latest models, which often replace perfectly functioning earlier models.

We cannot go on consuming at this level, as we will run out of the materials needed to produce the goods in the first place, so we need to go back to the design phase and product manufacturing, tackle the scourge of built-in obsolescence, and make spare parts and repair services the norm rather than the exception. The Government’s latest eco-design standards are a step forward, but they deal with only one part of the market. That is why a more comprehensive action plan is needed.

On this issue and others, the Minister said not to worry as they are already covered by current legislation. But it is obvious to all of us that, whatever the wording in the legislation, this is not working in practice. He gave the example of Defra having a policy on, or aiming for, the circular economy, but it has been aiming for this for a long time now. What it needs is action to ban the practice of firms deliberately preventing repair. Consultation, which is what is being proposed, is really not enough. I hope that the Minister can understand our frustration on this. These issues have been around for a long time. They are not new, and it does not feel that sufficient action is being taken.

The Minister said that this is a burden on business, but I do not think it is. It is an opportunity for innovation and new jobs, and an opportunity to save materials and money. We need to ensure that we do not have more waste and that we use the resources we have to best effect. A lot of businesses understand that but not all, and that is the problem.

I also thank the Minister for his response to my amendments. I genuinely believe that he understands and supports the environmental challenge but, again, that is not enough: we need to address the regulatory failings that are allowing greenwashing and global warming to continue. Whatever the current regulations and laws, it is quite clear that those regimes are not properly addressing their responsibility in these areas. Again, we need to look further at that. There is huge frustration that policies are not being translated into action and leading to enforcement. Where are the examples of these policies being enforced?

Post Office Network Subsidy Scheme (Amendment) Order 2024

Lord Offord of Garvel Excerpts

Wednesday 31st January 2024 Lords Chamber

Moved by

[Lord Offord of Garvel]

That the draft order and regulations laid before the House on 11 December 2023 be approved.

Relevant document: 8th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 30 January.

Motions agreed.

UK-EU Trade: Small and Medium-sized Enterprises

Lord Offord of Garvel Excerpts

Wednesday 31st January 2024 Lords Chamber

[Baroness Quin]

To ask His Majesty’s Government what plans they have, if any, to meet representatives of small and medium-sized enterprises to discuss non-tariff barriers to trade between the United Kingdom and European Union.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank the noble Baroness for her Question. We engage extensively with representatives of small and medium-sized enterprises and trade associations across the UK. This includes engagement that I and my fellow Ministers undertake. As Minister for Small Business, Minister Hollinrake routinely meets these representatives and business leaders. As Minister for Exports, I spend a lot of effort meeting SME exporters. We are leading a whole-government effort to break down barriers, including non-tariff barriers with our partners in the EU and across the world.

[Baroness Quin (Lab)]

When the former Prime Minister, Boris Johnson, announced his trade deal with the EU in 2020, he said there would be no non-tariff barriers to trade between us and the EU. That claim has turned out to be spectacularly false, given the extra bureaucracy and costs that many businesses, particularly small businesses, are facing as a result of that deal. As we know, these burdens are due to get worse, not better, in the coming months. Given that in a supplementary question I cannot list all the businesses that I know have been badly impacted, I ask the Minister whether, if I send the details of those firms, his department will look at these things urgently and see in what ways the burdens can be reduced or removed.

[Lord Offord of Garvel (Con)]

I thank the noble Baroness. There is no question that there has been friction in our trade, especially with the EU 27. We have tariff-free trade; a lot of the friction is not of our doing, but we must deal with it.

[Noble Lords]

Oh!

[Lord Offord of Garvel (Con)]

There is a huge amount of effort going on in the department to break down these trade barriers. We have already removed 178 trade barriers—48 of those are worth £6.5 billion alone. Within all our country embassies we have a team working directly with our SMEs to remove these barriers. This will ease the process.

[The Earl of Kinnoull (CB)]

My Lords, the trade and co-operation agreement has a structure of 24 committees, trade specialised committees included, which are meant to work together to produce mutually beneficial improvements in the process of trade. The snappily named Trade Specialised Committee on Technical Barriers to Trade looks into this area, I assume. That committee met only once last year. I realise that committees can work when they do not meet, but will the Minister comment on the fact that it met only once? Can he assure the House that all of the mechanics of the trade and co-operation agreement are sweating hard to try to improve the situation?

[Lord Offord of Garvel (Con)]

I thank the noble Earl. Yes, indeed, there are many committees in Europe—it is one of the reasons we decided to come out. Where we are working most effectively is country by country, and we are finding that, for example, when we deal with Belgium we can solve the problem with British lawyers working in Belgium. We can do the same in Luxembourg. With Sweden we work hard directly with its team on our chilled and frozen food. With Austria we are working on training permits for our staff to move there. We are much more effective on a country-by-country basis than at the higher committee level.

[Lord Fox (LD)]

My Lords, the Minister will have seen yesterday’s reports in the FT that average businesses are facing extra costs of £100,000 to navigate this friction. The Minister has painted a very optimistic and active picture of what his department is doing, but the effects do not seem to be working through. The British Chambers of Commerce and Make UK say that nine out of 10 organisations have seen little progress over the last three years. Does the Minister accept that more has to be done and that perhaps he does have to engage with those committees he just derided?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. We have 5.5 million companies in the UK, of which 3 million are sole traders which operate underneath the VAT threshold. We have 2.5 million SMEs, of which 300,000 export. I meet exporters regularly and what I find when I do the Made in the UK, Sold to the World roadshows in Cardiff, Belfast, Lisburn, Glasgow, Dundee, Birmingham and around the country is that the SMEs are the most innovative when it comes to selling internationally. They are getting around these problems. DBT is working with them. We have a network of international trade advisers who come to their businesses regularly. We have the in-house teams in the embassies. We are working through these issues and, when we move through it, trade will be greatly expanded.

[Lord Lilley (Con)]

My Lords, does my noble friend recall that when the single market began in the early 1990s, the Secretary of State for Trade and Industry at the time—it was me—made many bullish speeches about the beneficial impact this would have on our exports to the EU. Sadly, over the ensuing quarter of a century, our goods exports to the EU stagnated, growing by less than 1% per annum. By contrast, our exports under WTO terms to the rest of the world grew by 90%. Would it not be surprising if, given that membership was not a great benefit to our exports, leaving would do us much harm? Indeed, the Library figures show that our exports to Europe have held up better than our exports to the rest of the world since the referendum.

[Lord Offord of Garvel (Con)]

I thank my noble friend for sharing his great expertise in this area. As we discussed yesterday, Europe’s share of global trade is declining: it has halved from one-third to 16%, and it is heading towards 10%. That is why we are striking trade deals around the world, such as the CPTPP and with India, which we could not do when in the EU. SMEs are enthusiastically taking full advantage of that. I met a company recently that sells high-end tennis wear to US consumers; when it was built during Covid, it could not sell to Australia because it was too expensive and difficult. Now that we have signed a free trade agreement with Australia, the margins have gone up, the time limit has come down and it is trading successfully there.

[Lord Leong (Lab)]

My Lords, small businesses have reported that access to export markets has been hindered lately by import licences and EU regulations and they have either retreated or considered retreating to domestic markets. In addition to the Minister’s meetings with exporters, have the Government made any assessment of the impact of such decisions, and what consideration have they given to possible ways of maintaining access to European markets for these businesses?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. As I said yesterday, Europe remains a massive part of our trade—41% with the EU 27 and 48% with the euro 34—and that will continue to be the case. However, the growth areas for our markets will be the US and the rest of the world. SMEs recognise that and are pivoting to the Indo-Pacific region. DBT is putting a lot of effort into helping them get there fast and profitably.

[Baroness McIntosh of Pickering (Con)]

Will my noble friend make sure that there is complete fairness between exports of food and agricultural products from Great Britain to the EU and those from the EU to this country? Will he update the House on the position of seed potatoes? Can we export them directly to the EU at this time?

[Lord Offord of Garvel (Con)]

I thank my noble friend. Seed potatoes are a specialised area so I will need to write to her on that.

[Lord Watts (Lab)]

My Lords, the Minister says that trade with Europe is as important today as it was three years ago, and it is. However, the Government’s refusal to negotiate positively with the European Union is causing major problems for many industries. Is that not what we are hearing from every source other than the Government?

[Lord Offord of Garvel (Con)]

The reality, as we said yesterday, is that our economy is 80% services and 20% goods, but our exports are 50/50, because our goods are good. We make things that people, especially in Europe, want to buy. European countries are coming to us and saying that they want to get rid of these barriers because they want our goods imported. We are working on a country-by-country basis and it is improving all the time.

[Lord Purvis of Tweed (LD)]

My Lords, yesterday the Minister admitted to me that UK trade with the EU has declined but said that UK trade in services and goods with the rest of the world was going “gangbusters”. I looked up two things this morning. First, UK trade with the EU has declined by 1.4%, which is regrettable, but UK trade with the rest of the world has also declined, by more than 4%. The second thing I looked up was the definition of “gangbusters”, which means “very well”. Would he like to correct the record? Given that EU trade with the rest of the world has gone up while ours has gone down, why does he think that that is the case?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that stat-fest. I said yesterday that the most difficult part of the pie chart is the 24% of our manufactured goods to the EU 27, but the other 70% is increasing in particular services, which have gone up by 19% over the last five years, relative to inflation. That is why I said that the rest of our exports are trading very well.

[Baroness Meacher (CB)]

My Lords, will the Minister reassure the House that we will now spend far more time working with the European Union to enhance our trade with our closest trading neighbours, particularly bearing in mind that the EU represents a pretty high proportion of our trade?

[Lord Offord of Garvel (Con)]

I can absolutely assure the noble Baroness of that. My DBT colleague in the other place, Minister Hands, is putting a huge amount of effort into breaking down these barriers with individual European countries, getting faster access and getting rid of the friction in Europe.

Post Office Network Subsidy Scheme (Amendment) Order 2024

Lord Offord of Garvel Excerpts

Tuesday 30th January 2024 Grand Committee

Moved by

[Lord Offord of Garvel]

That the Grand Committee do consider the Post Office Network Subsidy Scheme (Amendment) Order 2024.

Relevant document: 8th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

My Lords, under Section 103 of the Postal Services Act 2000, the Secretary of State for Business and Trade has the power to make payments to support the provision of the Post Office network. This power is subject to conditions, one of which includes a cap on the total amount of funding that can be given to the Post Office in any given financial year. The current cap, set in 2011, is £500 million, and we are proposing to increase this to £750 million per annum.

Raising the legislative cap on funding that can be provided to the Post Office does not reflect a funding commitment but is simply an enabling power to allow the Government to provide appropriate funding to the Post Office when needed. The rationale for the increased cap is simple: we must avoid a situation where the Government cannot legally provide the funding that the Post Office needs for its essential activities.

As all noble Lords will be aware, the Government currently provide funding support to the Post Office in a number of important areas, enabling it to maintain its delivery of key services across the UK.

First, funding is provided for compensating victims of the Horizon scandal. The scandal was one of the biggest miscarriages of justice in living history, and the victims must get the justice that they deserve. As part of this, it is essential that impacted postmasters are compensated fairly and as quickly as possible. The Government are contributing funding for a number of compensation schemes, as well as funding associated with delivering the compensation schemes. It is essential that this process is not held up at any stage of the process.

Secondly, the Government provide significant and vital funding to support the Post Office network. Post offices are the beating heart of communities. Through its network of over 11,500 branches, the Post Office delivers essential services across the United Kingdom. There are currently over 6,000 rural branches, representing 54% of the total network. Over 3,000 of these are described as being the last shop in the village, providing vital retail, mail and banking services together in one space and helping to sustain thousands of rural economies. These services are highly valuable to both individuals and SMEs in urban and rural areas across the UK. It will come as no surprise that, in the Association of Convenience Stores’ recently published annual local shop report, Post Offices were identified as the type of service considered by the public to have the most positive impact on a local area.

The Government have provided significant financial support to sustain the nationwide network: over £2.5 billion in funding in the past decade alone. The Government remain steadfast in their support for the network and have committed to maintaining the annual £50 million subsidy to safeguard services in the uncommercial parts of the network until 2025. Without that funding, most of these Post Office branches would be unsustainable.

The Government provide targeted investment funding to the company. The retail sector is facing challenging conditions. It is still feeling the effects of changing consumer behaviours arising from Covid-19 and the impact of cost of living pressures on consumer confidence arising from a range of factors including inflation and high energy and supply chain costs. As such, the Post Office is experiencing pressures as the business attempts to operate within this challenging commercial environment, while meeting the costs to right the wrongs of the past.

Further pressures have also arisen through the work to replace the outdated Horizon IT system. Although this is a Post Office-led programme, it is essential for the future of the company and the network, and the Government have already committed to providing £103 million to support the development of the replacement system and to ensure that the Horizon system is maintained before the replacement is rolled out. We have provided funding to meet the company’s immediate needs for this programme, and we are working closely with the Post Office to understand what funding may be required beyond that.

These three areas are critical to the future of the Post Office, and the current legislative cap risks the Government not being able to provide the Post Office with the funding it needs for essential activities. Having taken into account the current forecasts and inflationary context since the previous cap was set in 2011, the Government consider a new cap of £750 million to be reasonable, sensible and proportionate. I beg to move.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for outlining this SI. It is one of the shortest statutory instruments that I have had to deal with. I aim to give it a bit of colour. We on these Benches will not oppose it, but it raises a number of questions, which I will run through, giving the civil servants in the Box a bit of time to answer them and to help the Minister if needed.

A cap has been set at £500 million since 2011—so for quite some time now—and has not risen with inflation over the years. Pre the scandal and having to pay and settle some of the problems—let us deal with the scandal completely separately—has the money from the Government to the Post Office come close to that cap over the last four or five years?

The only question to the DBT from the Secondary Legislation Scrutiny Committee, in paragraph 54 of its eighth report, was not really answered. If this £750 million is not enough, will the DBT come back to Parliament with another SI to uplift it? That is purely in the context of the scandal, because in normal times £750 million should be adequate. It is an uplift of 50% from the previous cap limit, so my expectation is that the cap was never hit. However, the department did not answer the SLSC’s question about whether the Government would return to it. I think the department’s answer was that it was confident that £750 million would be enough. It is worth asking whether, if there is a need to come back for more, the Government would seek to do so.

In dealing with the scandal and the payments from it, is there a gross figure that the Government are expecting or looking to pay across all the compensation schemes? We have individual sums—there is the £600,000, and bits and pieces across different schemes—but is there an expected overall compensation figure on the back of the Horizon scandal?

Also, if I remember correctly, one of the senior executives at Fujitsu commented at Davos that, as a business, Fujitsu would be looking to make some recompense. Do we know what level of financial recompense it is looking to make towards the scandal? Would that money be paid to Post Office Ltd or to the Government, since they are basically underwriting any and all of the compensation payments?

A number of questions have arisen on the back of this very short SI. This will come back to the Floor of the House through Oral Questions and Statements or via Written Questions, so I am more than happy for the department to write to me or put a letter in the Library on some of the detail of my questions, if the Minister does not have them to hand.

[Lord Offord of Garvel (Con)]

I thank the noble Lord for those questions, all of which are perfectly reasonable.

The first question was about the £500 million limit from 2011. Of course, up until 2022 we did not have inflation, so it has not been an inflationary environment. Part of the increase is recognising the inflationary hike that we have had and part of it is recognising that significant compensation has to be paid out. I do not know the precise amount of spend against that £500 million; it has not been above it.

To give some idea of this number, we know that, for example, in the last 10 years we have spent £2.5 billion just supporting the network. If you divide that by 10—although it has not been £250 million a year—you get the idea that that is over or under as a scale. Some £50 million has also been given to support the loss-making branches that we want to keep open, of which there are 3,000 in rural areas. There have also been the IT costs: another £100 million to build the new IT system to replace Horizon.

All of that has been within and is manageable within the £500 million, but now we move to the new world of compensation. So far, £153 million has been paid out. That has, therefore, been within the £500 million cap. On the question of how much will ultimately be paid out, guidance has been given that this could, shockingly, end up being £1 billion, but that would be over a number of years. We expect that to be accommodated within the increase to £750 million. That is how it has been budgeted.

Fujitsu has expressed that it has a “moral obligation”. That has not yet been tested as to amount and recipient. That will now be negotiated. I can see a situation where the Williams inquiry establishes the facts and a lot of repercussions come out of that, as we have said in the Chamber. One of those will be a discussion with Fujitsu about the right amount that it needs to contribute. My ministerial colleague in the other place has been very clear that it should not just be the taxpayer who has to foot this bill. Therefore, Fujitsu will need to off-set that. Quite how that will happen and where it will go is not yet decided, but that will be a significant part of that off-set.

I hope that answers in the main the noble Lord’s questions. Clearly, we all knew the Post Office to be a valuable asset in our own communities, but our awareness of this issue has been raised considerably following the TV series. Therefore, this is effectively a mechanism to ensure that the Post Office is in funds to allow the compensation to be made quickly, as we have indicated many times. We need to right the wrongs of the past in this Horizon scandal. This is an important part of that. This order therefore ensures that the Government can provide appropriate levels of funding to the company over the coming years. I urge noble Lords to support it.

Motion agreed.

Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024

Lord Offord of Garvel Excerpts

Tuesday 30th January 2024 Grand Committee

Moved by

[Lord Offord of Garvel]

That the Grand Committee do consider the Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

My Lords, these regulations were laid in draft before the House on 11 December 2023. They are being introduced using powers inserted into the Employment Rights Act 1996 by the Protection from Redundancy (Pregnancy and Family Leave) Act 2023. I was pleased to note that the latter, as a Private Member’s Bill, attracted support from all sides both here and in the other place. I thank the noble Baroness, Lady Bertin, and Dan Jarvis MP for bringing that important Act forward.

According to research published in 2016 by the then Department for Business, Innovation and Skills and the Equality and Human Rights Commission, one in nine mothers reported that they were dismissed or made compulsorily redundant where others in their workplaces were not, or treated so poorly that they felt they had to leave their job. If scaled up to the general population, that could mean as many as 54,000 mothers a year. Although that data is from some time ago, we know that the problem persists.

Under the Maternity and Parental Leave etc. Regulations 1999, which we call MAPLE for short, redundancy protections are already in place for a mother on maternity leave. These regulations put a mother on maternity leave in a preferential position in a redundancy situation. There are parallel negotiations that have the same effect for parents taking adoption leave or shared parental leave. Under MAPLE, before making an employee who is on maternity leave redundant, employers have an obligation to offer them a suitable alternative vacancy if one is available, not just to invite them to apply for one.

The regulations we are debating will extend that existing redundancy protection so that it is available during pregnancy and for a period after returning to work from relevant parental leave. That is maternity, adoption and shared parental leave. This will help to address the issues that the research identified. We hope it will alleviate some of the anxiety about job security that a pregnant woman or new parent may face.

The new regulations will amend the existing regulations covering relevant parental care. This means that MAPLE-type protections could be in place from the point when a woman tells her employer she is pregnant and continue for 18 months after the birth of the child, which will include the period of relevant parental leave.

The 18-month protection period has two main purposes. First, it ensures that a mother returning from 12 months of maternity leave will receive six months’ additional redundancy protection when she goes back to work. This meets the commitment that the Government made in the consultation response. Secondly, a single, consistent and clear period of protection is a simple way of accommodating the flexibility of shared parental leave, as well as the interaction between it and other types of parental leave. Creating a bespoke approach for these and other scenarios would have introduced considerable complexity into the regulations, which is why we have opted for the simplicity and clarity of a single period of protection.

The period of protection from redundancy on return to work is activated immediately when someone returns to the workplace following a period of maternity or adoption leave. However, the regulations introduce a minimum qualifying period for those taking shared parental leave alone; by “alone”, I mean that they would have previously not taken a period of maternity or adoption leave. This is to avoid the situation where a parent who has taken just a few weeks of shared parental leave receives 18 months’ additional protection in a redundancy situation.

When we spoke with the stakeholders, they considered that it would be disproportionate to extend this level of protection to someone who had taken only a short period of shared parental leave. For this reason, the regulations require a parent to have taken a minimum period of six continuous weeks of shared parental leave to activate the additional redundancy protection once they have returned to work.

These measures will provide valuable support and protection for pregnant women and parents after parental leave. The Government are pleased to have supported the Private Member’s Bill and have delivered these regulations.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly in an unusual situation. We Greens in your Lordships’ House are sometimes accused of not giving the Government credit where it is due, but I want to congratulate the Government on this statutory instrument and applaud the progress that is made in it.

We should also applaud the fact that behind this has been a huge amount of campaigning of public concern. I note that the charity and campaigning group, Pregnant Then Screwed, which took four awards at the Third Sector Awards last year, has been campaigning on these issues for a very long time and is making real progress. This is a real demonstration that campaigning works; we have seen something happen here, so I can only congratulate the campaigners and the Government on this.

I want to put a couple of questions to the Minister. What are the Government going to do to ensure that employers and employees know about this change in the law? What kind of publicity campaign will there be? The Minister referred in his introduction to the fact that the figures that the Government were relying on were quite old. Are there plans to update and take assessment both of the current situation and of what happens in the months and years after this statutory instrument comes into effect? What reporting back will there be to the House and the other place so that we can continue to monitor this important area, given that it is important to individuals and households, but also important to ensure that people are able to remain in the workplace?

[Lord Leong (Lab)]

My Lords, this is the second time that we are meeting across the Dispatch Box. If it continues, people will start talking. I thank the Minister for the overview and explanation of this statutory instrument, which builds on the Protection from Redundancy (Pregnancy and Family Leave) Act 2023. I fondly remember the debate on this Bill last spring. It was the first time I had the honour of speaking from the Front Bench in the main Chamber. Not only did the noble Baroness, Lady Bertin, praise the work of the TUC in the development of this legislation but we agreed to have a massive group hug.

Pleasingly, almost exactly nine months after this group hug, are now delivering additional legislation through this statutory instrument. It provides similar rights in a redundancy situation to pregnant women and new parents who have recently returned from a period of maternity, adoption or shared parental leave lasting six weeks or more. Additionally, the protection will now start when the employee tells the employer about the pregnancy.

This legislation is supported by my friends and colleagues in the trade union movement. In fact, some of these measures were discussed in the preparation of the Bill last year, which, at the risk of disrupting this very collegiate atmosphere, I remind noble Lords was a Private Member’s Bill from my friend, the honourable Member for Barnsley Central.

As supportive as we are of this change, it does not come without implications for employers, especially those who may be considering restructuring shortly after the instrument comes into effect on 6 April, as mentioned by the noble Baroness, Lady Bennett. What steps are the Government taking to make sure employees are prepared? Additionally, is there any additional monitoring for the implementation period where employees may not be abreast of the new law?

Among other possible difficulties with implementation, women may now feel under pressure to inform their employer of their pregnancy very early if there is an impending redundancy exercise. What consideration have the Government given to this likelihood and potential steps to help protect women from this? Another potential difficulty comes from the notification requirements and record keeping. The regulations are not clear as to the form of the notification required. Can the Minister shed any light, or would this be a matter for the courts? Would oral notification suffice, and what would then happen if accounts varied?

Since 2019, we have been promised more than 20 times an employment Bill that will

“protect and enhance workers’ rights as the UK leaves the EU, making Britain the best place in the world to work”.

Will the Minister finally accept that this long-promised Bill is a mirage and will not be delivered? I look forward to his responses to our various questions. Other than that, we are very supportive of these regulations.

[Lord Offord of Garvel (Con)]

I thank the noble Lord and the noble Baroness for their contributions.

I come first to the noble Baroness, Lady Bennett. I appreciate her support on this matter. I know that she is close to the campaigning charities; it is good to be able to report that their campaigning results in meaningful change in legislation. That should be noted. I agree that the big issue now is communication. On many of these matters, it is now all about how we work closely to get the message out. We will work closely with the Pregnancy and Maternity Discrimination Advisory Board on the guidance and on basic ITJ promotion. We will also work with the board to work out how best to monitor and measure a more up-to-date labour workforce in this area. We expect to see great improvement in this area with the legislation passed, but it will be down to the communication.

I turn to the points made by the noble Lord, Lord Leong. I welcome his support for the regulations, which shows that we can work together when we have common interests. It shows that more unites us than divides us, especially when it comes to helping the more vulnerable members of our society. Clearly, there are philosophical differences between the two sides of this place when it comes to employment matters and the employment Bill, which was referenced by the noble Lord, Lord Leong.

We think that employment law in this country is in good shape, as proven by the fact that we now have 33 million people, out of a population of 65 million, in work—a record number—and by the protections that they have cascading down while they are employees. From the self-employed through to parallel workers, all now have legislation affecting and contributing to their safety and rights. We would therefore say that the focus for our Government should be to help the 5 million people who are economically inactive, have fallen out of the workplace and need a pathway back to work. We need to focus our efforts on helping that cohort back to work, because we know that there is a lot of talent in that cohort that is currently being wasted.

Putting those philosophical differences aside, I believe that we have consensus on this matter. The Government are pleased to be able to deliver these stronger redundancy protections for pregnant women and those returning from parental leave. We want to see these regulations succeed, because we have an opportunity here today to make a real difference to the lives of those who may rely on this protection in future. Supporting these measures is in line with our ongoing commitment to supporting workers and building a highly skilled, high-productivity and high-wage economy.

Motion agreed.

Post Office Ltd

Lord Offord of Garvel Excerpts

Tuesday 30th January 2024 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I will follow up on the questions asked in the other place yesterday. When responding to a Post Office Question last week, the Minister said that this whole debacle and scandal had shown the Post Office in a good light—not Post Office Ltd but the postmasters and postmistresses. We agree with that. What changes was the Secretary of State looking to achieve in the removal of the chair, and what is the timeline for rebuilding trust in Post Office Ltd?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank the noble Lord for that question. To clarify, the question was whether the Post Office brand was damaged. Many people would say that it was a toxic brand. My argument was simply that if one believes that the real Post Office is actually the postmasters, they are the heroes of the day. If anything, their brand has been enhanced but there is no doubt that the management and oversight of the Post Office has been seriously compromised over many years.

Perhaps we should remind ourselves how this company operates, which is on an arm’s-length basis. It is owned by the Government—the taxpayer—and there is one shareholder: HMG. Yet, like many of our public bodies, it is now managed on an almost separate, arm’s-length basis. In doing so, a board is created that looks like a public company, but when is a public company not a public company? It is when there is a board that does not do the job it is meant to be doing.

There was an executive management team, and the role of non-executive directors is to challenge that team. The role of the chairman is, principally, to represent the shareholders and to call the executive management to account. Clearly, that has not happened here. Since 2015, a whole new set of executive managers has been put in place, as well as a new board. In 2023, there were three new independent directors. We have the chair, and through the increased scrutiny resulting from the Government perhaps being more interventionist, some disagreements within the board have come to light. The Secretary of State believes that the current arrangements are not working, so it was agreed by mutual consent to part company. We have taken decisive action to change course and improve, rather than to wait and hope that the situation improves.

[Lord Fox (LD)]

The Minister’s answer is really helpful, because the question is, when is arm’s-length not arm’s-length? It is clear that it has ceased to be an arm’s-length operation, rightly or wrongly. His Majesty’s Opposition asked for a timetable, and it would be helpful if the Minister gave it to us. How much leeway will the new chair have to do what he or she needs to do, in their mind, to achieve the objectives, and how much will that arm’s-length relationship be pulling the chair back?

[Lord Offord of Garvel (Con)]

To clarify, the Post Office is constitutionally set up to be arm’s-length and will remain so. We are now talking to the Secretary of State about tightening the governance of that. The key position is the chair, who runs the board and is accountable to the shareholders. We will appoint an interim chair as soon as possible, with a view to getting a new person in post this year. That will coincide, I hope, with the inquiry coming through at the end of the year.

[Lord Sikka (Lab)]

On 22 January, I tabled a Written Question about possible conflicts of interest associated with the position of Henry Staunton, the former chairman of WH Smith, which operates Post Office franchises. I have yet to receive and Answer. Mr Staunton has now gone—nothing to do with me, I am sure. First, can the Minister publish the conflict-of-interest assessment made when Mr Staunton was first appointed as chair of the Post Office? Secondly, can the Minister explain how it is that Simon Jeffreys is a director of the Post Office and the Crown Prosecution Service? How did that happen?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for those questions. The removal—the resignation by mutual consent—of the chairman, Mr Staunton, is clearly an ongoing HR issue and we have been clear that we are not going to comment on that in public. That will now take place and no compensation will be paid, but that is still in process in terms of taking action. As far as the rest of the board is concerned, we are happy with the three new non-executive directors who came in in 2023. We have two sub-postmaster representatives, and we are looking for a senior independent director, which will further strengthen the board.

[Baroness Brinton (LD)]

In the Commons on 10 January, the Prime Minister promised that postmasters would be cleared and compensated swiftly. That same day, Minister Kevin Hollinrake said at the Dispatch Box that all compensation should be paid by August, which is encouraging after many years of delay. However, last Sunday, the Secretary of State Kemi Badenoch said on the BBC that setting a deadline is “not a priority” and that getting the money out and sorting out the governance of the Post Office is the critical thing. Which is it—that the compensation should be paid by August, or that a deadline is not a priority?

[Lord Offord of Garvel (Con)]

I thank the noble Baroness for her question. We have to clarify that what we are doing here is separating their compensation, so that it is done as immediately and expeditiously as possible. Then we will do fact-finding through the inquiry and accountability will follow. The Prime Minister and Secretary of State have said that there will be no deadline put in place, partly because this is a complex process that requires the postmasters to co-operate and come forward. Of the 2,417 postmasters in the HSS scheme, 100% have received offers, of which 80% have been accepted. We are making great progress.

[Lord Browne of Ladyton (Lab)]

My Lords, on the issue of how long the arm between the Government and the Post Office was, in 2020, following a High Court decision against the Post Office, experts on electronic evidence were invited by the Government to suggest changes to the legal presumption that computers are reliable. That lies at the heart of this case. To whom did those experts report, was the Post Office consulted about whether the recommendations should come into force and why have the recommendations never even surfaced, let alone been put into force?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for his question. I know that he is well versed in these matters. As we have discussed in the House before, there will be many ramifications from this case when the facts come out, one of which, as the noble Lord highlighted, is this presumption that the computer is always right, which clearly was not the case. I would have to refer to MoJ colleagues to find out exactly what happened in that case. The judgment was given in the Appeal Court in 2019 and the inquiry was set up in 2020. In 2021, when the convictions were overturned, the inquiry became a statutory inquiry. Under a statutory inquiry, we will get to the bottom of those questions.

[Lord Watts (Lab)]

My Lords, the chairman oversaw this scandal. Can the Minister assure us that he will not be given a compensation package that demonstrates that, if you fail, you get paid?

[Lord Offord of Garvel (Con)]

The chairman who is just leaving was not the chairman pre-2015 and he is not receiving any compensation.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, I am perplexed: the Statement said that the chairman left by mutual agreement, the Minister spoke earlier about his resignation, but the Secretary of State made it clear that she sacked him. Which was it? Henry Staunton was appointed by a Conservative Secretary of State, so presumably that was a mistake, for which the Minister is apologising. How can the Government make sure that, when they appoint a new chairman, they will not make the same mistake again?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that. A key part of making these appointments is to make sure that we have the right people, in the right place, and the right leadership. In this case, we agreed to part company by mutual consent. The point is that there are issues with the governance of the Post Office beyond Horizon. There needs to be further reform of the Post Office and we have to start with the chairman to move that forward.

[Lord Fox (LD)]

My Lords, the Minister said that it was hoped that the appointment would be made as soon as possible, hopefully this year. In the meantime, this organisation is a burning platform; it needs leadership. Where does the Minister expect that leadership to come from until the appointment is made?

[Lord Offord of Garvel (Con)]

The assessment at the moment is that, with the strengthening of the non-executive directors and the current executive team in place, we have a team that can continue to manage the Post Office. We believe that we have a situation that is stable, but it now needs to be improved. That is the challenge before us.

UK-Canada Trade Deal: Suspension of Negotiations

Lord Offord of Garvel Excerpts

Tuesday 30th January 2024 Lords Chamber

[Lord Foulkes of Cumnock]

To ask His Majesty’s Government what assessment they have made of the effect of the suspension of negotiations for a trade deal with Canada.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank the noble Lord for his Question. The pause in negotiations does not impact our existing trade agreement with Canada, which underpins £26 billion- worth of trade per annum. The UK has decided to pause negotiations towards a new UK-Canada FTA in response to actions taken by Canada that reduce our current market access. Negotiations were launched with public commitments to increase and improve trade. Recent additions by Canada do the opposite. It is right, therefore, to pause the negotiations.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, post-Brexit trade negotiations are in total chaos. George Eustice, who was Environment Secretary in the Cabinet at the time, described the deal with Australia as a “failure”. Now we have pulled out unilaterally from the Canadian deal. Is that because the Secretary of State is too busy plotting, or perhaps because we do not have enough qualified people to negotiate with Canada? On what basis and terms do we crawl back in to ask Canada to restart negotiations?

[Lord Offord of Garvel (Con)]

I fundamentally disagree that we are in chaos; quite the opposite. We are making great progress. The first thing that we did when we left the EU was do a trade deal with Europe that involved rolling over trade deals with 65 countries. We have now improved that with a further seven deals. When I was in Canberra two months before Christmas, the Australia deal was held up as one of the best deals it had ever signed. As we move through, because our economy is 80% services and 20% goods, we have now got trade deals that encompass services, digital and innovation.

We wanted to do the same deal with Canada, but Canada crossed one of our red lines. The negotiations have not failed. The noble Lord and I have done many negotiations together—we sometimes have moments of pause. The Canadians have crossed a red line where they know we would never accept the hormone beef trade deal that they want to do with us. We have said no to that, which is why we have stopped.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate the Government on the position they have taken by pausing the trade talks at this time, reflecting the high production standards that our farmers have to meet in this country. Could my noble friend explain what the position is specifically on exports of British cheese to Canada, including the excellent cheese produced in north Yorkshire? I understand it now suffers from a 245% tariff on export to Canada.

[Lord Offord of Garvel (Con)]

Cheese is now a pawn in the game, and that has now become the focus of attention. When we were in the EU, we had 2,000 out of 14,000 tonnes of cheese allocated to us. That has now been taken away and allocated to Europe—France and Germany, mostly. We are now allocated 6,000 for the rest of the world. Canada knew that we had a right to roll that over to 2,000 within the WTO trade agreement. We do not have that now. That is £18 million of trade. Out of £26 billion, one might say that is a small number, but we know that the farms in Somerset and Wales in particular, which produce incredible quality cheese, have built up a superior market share in Canada. The Canadian consumer wants this cheese and has been buying and stockpiling it for six months in advance of this happening. This has only happened because the Canadian farmers want to send hormone beef to the UK and we refuse to drop our standards, as some people said we would do when we left the EU.

[Lord Purvis of Tweed (LD)]

My Lords, among the letters I received from Ministers after every trade negotiating round with Canada, saying everything was on track, the letter telling me that things had gone off the rails—sorry, “paused”—must have gone astray. That information that the Minister gave is not new information. I warned the noble Lord, Lord Johnson, last summer, after I led a CPA delegation on trade to Ottawa and Toronto, of the difficulties—but he ignored them. That is compounded by the fact that businesses are now paying £100,000 more per business for trade with Europe and new checks will be coming into place tomorrow. So when does the Minister forecast that we will have frictionless trade with Europe?

[Lord Offord of Garvel (Con)]

With Europe, as the noble Lord knows, when we agreed to join what was then the European Common Market, Europe accounted for one-third of global trade. We all know that, when we left in 2019, that was 16% of global trade. In 2050, the OECD says it will be 9% of global trade. So the UK has tilted to where the market is. The market is in the Indo-Pacific, which is why we joined the CPTPP. The last time I looked at the map, Britain was not anywhere near the Pacific. We managed to get America’s place in the CPTPP, which is 40% of the world’s fastest-growing consumers. As we sign those trade deals and go around with Vietnam, Indonesia, Korea and Japan, we are building out a trade base for our farmers and manufacturers which is far greater than they had in Europe.

[Lord Wigley (PC)]

My Lords, I recognise the importance of the safeguards on beef, which I am sure are of concern to everyone. However, does the Minister not accept the point made by the noble Baroness a moment ago about the impact on cheese manufacturers? It is not only the extent of the charges that will hit them but the speed with which they may come in, and there could be very serious cash flow implications for many manufacturers. Can the Government please look at some possible relief for such companies, which may be suffering as a direct consequence of these changes?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that question. We fundamentally agree with that. We have been talking with the cheese manufacturers all the way through this. We send £200 million-worth of food to Canada and it sends us the thick end of £600 million back, mostly wheat, maize and lobster. However, we do not want to take the hormone beef. That is where the beef is. The issue, therefore, is that we have £18 million of trade that we need to try to support, and we will do our best to support those impeccable farmers, especially in the West Country and in Wales.

[Lord Hannan of Kingsclere (Con)]

My Lords, Canada is notorious for gearing its trade policy around its dairy sector, which is particularly strong in Quebec. However, is not the wider issue here whether Britain will always follow EU rules on sanitary and phytosanitary standards? According to the WTO, SPS measures must never be economic and can be justified only by science. The EU’s ban on these various kinds of beef has been condemned by its own scientific advisory agency and by the WTO. Is it the view of my noble friend the Minister that our SPS regime, as long as it is tied to the Brussels one, it is compatible with WTO regulations?

[Lord Offord of Garvel (Con)]

This is the issue. Canada has been in a recent—2016—deal with the EU and understood the SPS rules of the EU. It understands fundamentally that we are not reducing our rules on SPS, but it has seen an opportunity, and you go for the gap when you see the opportunity, do you not? If you are a trade negotiator, you think to yourself, “Where can I get my point of advantage?” On our two outstanding issues, the cheese and the rules of origin—where, again, we are pretty much sorted with a rollover from the EU—Canada has seen an opportunity to cross that line. It is a pause in negotiations and we will get back round the table as soon as it comes back over the red line.

[Lord Leong (Lab)]

My Lords, the Institute for Government has warned that the Government’s failure to set out red lines on key issues in trade talks is a “recipe for disaster” and could delay new trade agreements. They now need to move urgently to put them in place, otherwise they will find themselves losing control of trade negotiations to better-prepared partners. What assessments have the Government made of the size and experience of negotiating teams as part of the recent machinery of government changes?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that. That is one of the reasons why we split up BEIS and put it into different, independent departments. However, my department, the Department for Business and Trade, is now well equipped to lead these negotiations. As I say, we have done the 65 country rollovers; we are now up to 73 countries and we have another 12 in the pipeline. We have a chief negotiator, Crawford Faulkner, who came in from New Zealand— I declare an interest in that he was born in Greenock, around the corner from me—who is doing an excellent job. The issue here is that our economy is now 80% services and 20% goods, but our exports are 50:50, which is because our goods are good. They go around the world and everyone wants to buy them. However, the direction of travel will be two-thirds services, one- third goods, which is why we need new trade agreements that cover services—not just goods—digital and innovation. That is exactly what we have with Australia, and that is what we are trying to achieve with Canada. I am hopeful that we will be able to get the show back on the road with Canada.

[Baroness Quin (Lab)]

My Lords, following the comments made by the noble Lord, Lord Purvis, will the Minister at least assure us that trade with our nearest and biggest market is still important to us? Will he perhaps also reflect on some of the problems of trading with countries very far away, both in terms of environmental impact and of course recently in terms of the very worrying security situation in the Red Sea?

[Lord Offord of Garvel (Con)]

I thank the noble Baroness for that. Indeed, the EU 27 still account for 40% or 41% of our exports. If you expand that to the euro 34, it is 49% of our exports. So 50% of our trade is still with Europe, 20% is with America and 30% is with the rest of the world. But the direction of travel is that the growth will come from the rest of the world, not just in Europe. Europe will remain important. In terms of our goods, the sticky part of our pie chart has been our manufactured goods to Europe, which is 24%. That has been difficult—but the other 76% is going gangbusters.

Digital Markets, Competition and Consumers Bill

Lord Offord of Garvel Excerpts

Committee stage
Monday 29th January 2024 Grand Committee

Moved by

[Lord Offord of Garvel]

73: Clause 107, page 67, line 4, leave out subsection (7)
Member's explanatory statement
This amendment would omit the definition of “data protection legislation” in Clause 107, as my amendment to Clause 328 would define that term for the purposes of the whole Bill.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

My Lords, I am delighted to speak on the third day in Committee. I reiterate the sentiment articulated in the first session by my noble friend Lord Camrose that the Bill, importantly, will drive growth, innovation and productivity and ensure that businesses and consumers in the UK reap the benefits of competitive markets. I thank noble Lords for their contributions throughout the passage of the Bill and for their continued scrutiny and debate.

I turn to a number of miscellaneous amendments put forward by the Government that affect different parts of the Bill. Amendments 214 and 219 introduce a new clause and schedule into the Bill that make amendments to other pieces of primary legislation, consequential to provisions in Parts 2, 3, 4 and 5 of the Bill. The consequential amendments fall into three groups. The first amends sectoral legislation that applies, with modifications, the information-gathering power given to the CMA for its merger control functions in Section 109 of the Enterprise Act 2002. Where that power is applied for non-merger related purposes, the changes made by Part 2 of the Bill—which make express provision about the extraterritorial reach of the power and strengthen the civil sanctions regime that supports its enforcement—are not to apply. The schedule makes provision accordingly.

The second group of amendments is in consequence of Part 3, and the repeal of Part 8 of the Enterprise Act 2002 and its replacement with Part 3 of this Bill. The third group is in consequence of provision in Chapter 1 of Part 4 and Chapter 2 of Part 5, to amend legislation which otherwise restricts disclosure by regulators and others of information relating to individuals and businesses. This will permit them to disclose information for the purposes of the enforcement of consumer protection law, unfair trading and the provision of investigative assistance to overseas regulators.

Amendment 223 amends the commencement provision in Clause 334, so that the new clause and schedule can be commenced alongside the substantive provisions to which they relate.

Amendment 213 will ensure that information that comes to a UK public authority in connection with its power to provide investigative assistance to an overseas authority in Chapter 2 of Part 5 of the Bill will be covered by the information disclosure restrictions and gateways in Part 9 of the Enterprise Act 2002. This ensures that a public authority can share the information that it has collected on behalf of an overseas authority with that overseas authority. This will be in line with relevant safeguards, including personal data protection and safeguards for commercially sensitive information. To help ensure that the investigative assistance regime operates efficiently, the amendment will also enable UK authorities that hold information to which Part 9 applies to disclose that information to another UK authority to facilitate the provision of investigative assistance by that UK authority.

I turn to data protection override. Amendments 73, 206, 207, 208, 216 and 217 are minor and technical amendments which will make provision in relation to data protection across the Bill. Amendment 217 adds a new clause that clarifies that no provision in the Bill would require or authorise the processing of data that would contravene data protection legislation. Amendments 73, 206, 207, 208 and 216 remove provisions that previously applied only to some specific powers and insert a definition of data protection legislation that applies across the whole Bill.

On pre-commencement consultation, Amendment 218 adds a new clause to clarify that:

“A duty to consult under or by virtue of this Act may be satisfied by consultation that took place wholly or partly before the passing of this Act”.


The provision clarifies that the CMA has the flexibility to begin consulting before Royal Assent to ensure that the full set of reforms in the Bill can be implemented as soon as possible.

I hope that noble Lords will accept these amendments. I look forward to addressing any questions or points that they may have about them. I beg to move.

[Lord Clement-Jones (LD)]

My Lords, this is quite a set of amendments and the Minister rather rattled through his speech, but I have only one question: why are they now being included in the Bill here in Committee? Why were they not in the original version of the Bill? What is the motivation behind these new amendments? I am always a little suspicious. With the data protection Bill coming down the track, we will have hours of endless excitement. The words “data protection” and “government” are sometimes a bit of a red rag, so one always has to kick the tyres quite hard on any provision that appears to be opening a door to disclosure of data and so on. Obviously, in a competition context, it is most likely to be commercial confidential information, but the Minister needs to explain what kind of information we are talking about and why we need to have these provisions included at this stage.

[Lord Leong (Lab)]

My Lords, I thank the Minister for his overview and explanation of the various government amendments. I look forward to his response to the question from the noble Lord, Lord Clement-Jones: why now? These are mainly technical and tidying-up amendments and we are in broad agreement with most of them in this group.

Amendment 217 makes it clear that any imposed or conferred duties to process information do not contravene data protection legislation. That is welcome. Amendment 213 ensures the disclosure of information under Chapter 2 of Part 5 of the Bill, which allows UK regulators to provide investigative assistance to overseas regulators. This is in line with the restrictions on the disclosure of certain kinds of information found in the Enterprise Act 2002, which is fine. I ask the Minister what assessments are in place to safeguard the sharing of such details with autocratic regimes, which may not have robust governance and accountability systems in place and whose values we do not share? On Amendment 218, I ask the Minister whether the intent is similar to that of Amendment 1, as set out so eloquently by my noble friend Lady Jones of Whitchurch on the first day of Committee?

Finally, I refer to Amendment 216, which replaces the definition of data protection legislation for the whole of the Bill, so the definition in Amendments 73 and 208 are removed. Can the Minister confirm that such a definition is consistent with Article 8 of the European Convention on Human Rights and the Enterprise Act 2002? I look forward to the Minister’s response and comments.

[Lord Offord of Garvel (Con)]

I thank the noble Lords for their questions. I will first address the question from the noble Lord, Lord Clement-Jones. I do not see the shadows that he sees within the amendments. Unlike in the first part of the Bill, which introduces new bodies, units and legislation, we are here looking back consequentially at the Enterprise Act and Consumer Protection Act and building on them. The amendments simply improve the Bill while maintaining the overall policy intent and approach and the procedure, which is technical in nature. For example, we will go through the whole list of consequential Bills to which data protection applies to make sure that we have got a single concept of data protection across all the various Bills that consequentially apply.

The data protection amendment does not change but merely clarifies the application of existing data protection legislation across the Bill, as mentioned by the noble Lord, Lord Leong. Information of relevance will mostly be commercially sensitive information, as the noble Lord suggested. In answer to the second question of the noble Lord, Lord Leong, about international information disclosure, it will be governed by Part 9 of the Enterprise Act, which ensures appropriate safeguards.

I look forward to discussing more of these substantive measures later today and in future sessions. However, having answered the questions, I hope that the amendments can now be accepted. I beg to move.

Amendment 73 agreed.

--- Later in debate ---

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who have contributed to this debate. I will refer first to Amendment 73A, which my noble friend Lord Knight of Weymouth set out so succinctly. Let us remind ourselves that the digital regulation co-operation forum, the DRCF, was founded by the CMA, the Information Commissioner’s Office and the Office of Communications—Ofcom. The FCA subsequently joined as a full member the following year. As mentioned by the noble Lord, Lord Clement-Jones, the purpose of the DRCF is to ensure coherent, informed and responsive regulation of the UK digital economy. When this is achieved, we can serve citizens and consumers better, reduce regulatory burdens for industry where appropriate and enhance the global impact and position of the UK.

The noble Baroness, Lady Kidron, and my noble friend Lord Knight have said that workers are really important in the competition space. The noble Baroness reminded us that workers are also users and citizens; they should be involved in any regulation. Having conversations with them would make a better competitive environment.

The noble Baroness, Lady Harding, and the noble Lord, Lord Ranger of Northwood, cautioned us that we should not allow regulators to stifle innovation. We really need to let innovators do their thing and the old saying “Do not kill the goose that laid the golden egg” is so true in this respect. We need to ensure that the right framework is in place so that the regulators are not overburdened with too much regulation that would stifle innovation, so we really support Amendment 73A. It would empower the CMA to co-operate with other government bodies which may have the power to obtain information relevant to its regulatory functions.

I refer now to Amendment 93A, tabled by the former chair of the CMA, the noble Lord, Lord Tyrie, who has a deep understanding of the relevant issues in this area. Whistleblowers with insider knowledge who provide assistance to the CMA can be a powerful tool in helping to uncover cartels and other anticompetitive practices more swiftly than might otherwise be possible. Since cartels often operate in secrecy, individuals or companies with insider or market knowledge can play a crucial role. They can bring issues to the CMA’s attention or gather information that will allow it to start an investigation.

The primary legal protection for whistleblowers in such situations comes from the Public Interest Disclosure Act—PIDA—which won praise when it was first introduced in 1999. More recently, it has been criticised for not protecting the majority of whistleblowers from suffering retaliation with little or no legal recourse. In January 2023, the Minister for Security said that

“what the country needs is an office for whistleblowers, and what we need to do is ensure that we have the updates to the legislation”.—[Official Report, Commons, 25/1/23; col. 1094.]

Can the Minister update your Lordships’ House on whether any primary legislation to that effect is forthcoming?

[Lord Offord of Garvel (Con)]

Amendment 73A, tabled by the noble Lord, Lord Knight of Weymouth, would require the CMA to co-operate with regulators and bodies with responsibility for matters relating to employment and working conditions. I thank the noble Lord for his amendment, for raising the importance of regulatory co-ordination, and for once again highlighting the direct and indirect impacts of digital activities and competition policy on workers.

On the first day of Committee, a number of noble Lords argued that the CMA should take a wider view in considering impacts on work and work environments in its regulatory functions. The CMA can already consider these issues where they relate to competition. Indeed, although competition authorities in the past focused primarily on competition in product markets, we are seeing them take an increased and welcome interest in labour markets. The CMA’s annual plan sets out how it will prioritise investigating businesses engaging in anti-competitive labour market practices. It is already using its powers to take enforcement action against firms that break the law by fixing wages.

However, the amendment would go beyond the scope of the competition remit of the CMA, potentially creating new burdens and additional complexities. It would therefore detract from the aims of the UK competition regime, and it would be inappropriate for the CMA to assess impacts unrelated to competition, which is its area of expertise and jurisdiction.

The noble Lord, Lord Knight, mentioned the director of labour market enforcement, who is an independent public appointee with a statutory responsibility to prepare an annual strategy for Home Office and DBT Ministers, setting out their assessment of the scale and nature of non-compliance in the labour market. In this way, there is already an independent assessment of the labour market and enforcement, so this amendment could infringe or duplicate the director of labour market enforcement’s remit.

The noble Lord, Lord Clement-Jones, mentioned the report by the Competition and Market Authority’s microeconomics unit. This takes a deep dive into the trends in the UK labour market, focusing on the impact of competition and employer market power. Where labour market issues are relevant to competition, the CMA already looks at this.

On co-operation between regulators, I agree with the noble Lords, Lord Knight and Lord Leong, and the noble Baroness, Lady Kidron, that this is essential. Part 9 of the Enterprise Act facilitates exactly that. The CMA works closely with bodies, regulatory and otherwise, both when delivering its own regulatory functions and when supporting others in theirs.

I agree with my noble friend Lady Harding that we should not provide the CMA with additional roles and duties that risk undermining the careful balance between effective enforcement and preventing overenforcement and overregulation, which risk stifling innovation. It would further confuse the regulatory landscape to require the CMA to consider labour market issues in this way, beyond its remit and expertise. Nothing in legislation prevents the CMA and other regulators from co-operating on these important issues, subject to necessary information-sharing safeguards. We do not need to legislate to achieve this.

The DMU specifically will be required to consult the regulators whose remits have the most interaction with the digital markets regime. It can, and will, engage with other authorities, including labour market regulators, where appropriate.

I will touch briefly on regulatory functions analysis. While the CMA works closely with other regulators and authorities, it would not be appropriate for it to conduct an analysis of other regulators’ functions as a regulator itself. For these reasons, I hope the noble Lord will withdraw his amendment.

--- Later in debate ---

[Lord Tyrie (Non-Afl)]

On this point, can the Minister say whether he supports the cross-subsidy that currently exists? Given the fact that a lot of mergers of a very large size will be coming through, as he has pointed out, does he think that a logical way of dealing with the problem to which he has alluded—that of the small dynamic mergers that do not want to be discouraged by excusive scrutiny costs—would be to extend that cross-subsidy?

[Lord Offord of Garvel (Con)]

The noble Lord will know that, on the current pie chart of activity undertaken by the CMA, 80% is for mergers with companies with a turnover north of £100 million, while 20% of it is for companies with turnovers below that. The 80:20 rule always works in life, so there is obviously scope to charge the larger companies more if that is the decision taken. I refer to the reassurance given that this can be amended in secondary legislation if that is deemed appropriate.

Let me move on to media merger public interest interventions. Amendment 93 in the name of the noble Lord, Lord Clement-Jones, would expand the list of public interest grounds for the Secretary of State to intervene in a merger case to include the need for free expression of opinion and plurality of ownership of media enterprises in user-to-user and search services. I am grateful to the noble Lord for raising this issue. Media mergers are particularly sensitive, as they could have an impact on how the UK public access and consume information.

The Government are currently reviewing the recommendations on changes to the media public interest test in Ofcom’s 2021 statement on media plurality. Ofcom did not recommend that online intermediaries or video and audio on-demand services should fall within the scope of the media mergers regime, which this amendment would provide for. We are considering Ofcom’s recommendations carefully and, as we do that, we will look closely at the wider implications on the industry. The Government have not proposed pursuing substantive changes to the grounds for public interest interventions in mergers in this Bill. The changes recommended in Ofcom’s review can be addressed directly via secondary legislation under the made affirmative procedure, if appropriate.

For these reasons, I hope that the noble Lord opposite will not press this amendment.

[Lord Clement-Jones (LD)]

What is the timescale within which all this will be decided?

[Lord Offord of Garvel (Con)]

I do not have a detailed timetable. I understand this is being looked at currently. I am happy to confirm in writing when we have a detailed timetable.

I move now to Amendment 93A and protection for whistleblowers. I again thank the noble Lord, Lord Tyrie, for his informed contribution to the scrutiny of this Bill. I also thank the noble Lords, Lord Clement-Jones and Lord Leong, for their contributions on this topic. Amendment 93A would introduce a new requirement for the CMA to carry out a review of protections and support available for whistleblowers under the UK’s competition and consumer law.

The noble Lord will know that the Government consulted on the important issue of incentives and protections for whistleblowers in the competition regime. However, no clear evidence or support was put forward by respondents that would support making changes to the existing framework. Therefore, the Government do not propose to introduce reforms to whistleblowing protections. In taking this decision, we also considered that the courts can already give due weight to the importance of anonymous whistleblowing in competition law enforcement. This could, for example, justify a court restricting how the identity of a whistleblower is disclosed depending on the circumstances of the case.

As the noble Lord mentioned, in 2023 the CMA increased the compensation cap for informants in cartel cases from £100,000 to £250,000. This will support the CMA to investigate effectively and, where appropriate, enforce against criminal cartels, which can cause serious harm to consumers and businesses within the UK.

Any whistleblower worker who faces victimisation in the UK can also seek additional compensation from their employer in an employment rights tribunal. This compensation can be awarded uncapped and can reflect the costs of some whistleblowers being unable to work in their chosen profession again.

The Government, therefore, have not proposed reforms to the compensation for whistleblowers in the Bill. However, I stress that we recognise the importance of whistleblowing in uncovering wrongdoing and will continue to ensure whistleblowers are not discouraged from coming forward under the current framework.

At this time, we do not think that a review in the form that the noble Lord’s amendment calls for would be merited, nor that it would be appropriate to place a new and binding obligation on the CMA requiring it to conduct such a review within a specific timeframe. For these reasons, I hope that the noble Lord does not push this amendment.

[Lord Leong (Lab)]

Can the Minister share whether there is any update on the office for whistleblowers, as mentioned by the Secretary of State?

[Lord Offord of Garvel (Con)]

I need to write to the noble Lord on that.

I now speak briefly to the government amendments in this group, all of which are minor and technical in nature. First, Amendments 90, 91 and 92 ensure that extensions to the statutory deadlines for phase 2 merger investigations under the new fast track procedure for mergers operate correctly within the existing legal framework for deadline extensions under the Enterprise Act 2002.

Secondly, government Amendments 94, 95, 97, 98, 99, 100 and 102, will clarify that, in the civil penalty provisions introduced and amended by Schedules 9 and 10 to the Bill, references to maximum amounts of daily penalties are maximums per day and not in total.

Thirdly, Amendments 96 and 101 update cross-references in Section 120 of the Enterprise Act 2002, so that decisions made under the civil penalty provisions in Part 3 of that Act, as amended by the Bill, are carved out from that provision. Section 120 allows persons to seek a review of a CMA decision in the CAT on judicial review principles. Such a review is not required because penalty decisions are appealable on a merits basis.

Fourthly, Amendment 103 makes the equivalent amendment to Section 179 in relation to civil penalty decisions made under Part 4 of the Enterprise Act.

Finally, Amendments 104 and 105 have been introduced to take account of an amendment made by the Energy Act 2023 to Section 124(5) of the Enterprise Act 2002, which is also amended by the Bill.

I hope noble Lords will support these government amendments.

[Lord Knight of Weymouth (Lab)]

My Lords, we have had a useful debate. I was very much persuaded by the noble Lord, Lord Tyrie—far more so than the Minister was—and I thought that the noble Lord, Lord Clement-Jones, made some useful points around asymmetry in respect of search and media.

I am very grateful to all noble Lords who responded to my amendments. I kind of feel that my friend, the noble Baroness, Lady Harding, and the noble Lord, Lord Ranger, were in many ways responding to last week’s debate—I think as the noble Baroness admitted. It is perfectly possible to argue that it is an encumbrance to extend the remit as we were arguing last week; that is a perfectly reasonable position. Indeed, just yesterday in the Observer, I read Torsten Bell from the Resolution Foundation responding to the CMA chief executive’s speech around the labour market and competition, saying that this is not a case for minimum labour standards nor a case for extending regulatory reach. They have friends in all sorts of places.

The EU announced a fine of £27 million against Amazon for oversurveillance of workers. These are real problems, and there is a regulatory gap that would be best addressed, I am sure, by having a single powerful labour market regulator. At the moment, we have a multiplicity of relatively weak regulators. That might solve some of the regulatory gap problem.

The debate this week was much more about collaboration between regulators. I feel that the Minister failed to really address and respond to the point. He might want to follow up by having a meeting just to sort out whether, in essence, Margaret Beels, the director of labour market enforcement, is wrong. In her letter to the BEIS Select Committee on 6 April 2023, under the bullet point on regulation, she said that:

“There is a need for cross-cutting collaboration with regulation in this space to bring different aspects together both within the UK and across the international playing field. There is also a need to learn from each other. There is no vehicle or champion for doing this”.


If the Minister had been listening, I said that earlier. He performs his notes brilliantly, but one of these regulators is saying that there is “no vehicle or champion” for regulatory co-operation in respect of AI. We need to fill that regulatory gap, and this Bill is an opportunity for us to do so. It is urgent because of the exploitation of some workers. We need to get on with it and I hope that, as this Bill proceeds, we find an opportunity to do so. I would be delighted to do so in collaboration and co-operation with the Government Front Bench.

On that basis, I beg leave to withdraw my amendment.

--- Later in debate ---

Moved by

[Lord Offord of Garvel]

74: Clause 110, page 69, line 10, after “administration” insert “and payment”
Member's explanatory statement
This amendment clarifies that the levy rules must include provision about how the levy is to be paid.

--- Later in debate ---

Moved by

[Lord Offord of Garvel]

78: After Clause 115, insert the following new Clause—
“Restriction on disclosure orders(1) This section applies for the purposes of—(a) digital markets proceedings, or(b) competition proceedings.(2) A court or the Tribunal must not make a disclosure order requiring the CMA to disclose or produce information where the court or the Tribunal is satisfied that another person would be reasonably able to provide the information.(3) A court or the Tribunal must not make a disclosure order requiring the CMA to disclose or produce digital markets investigation information before the CMA gives notice of the closure or outcome of each investigation to which the information relates.(4) In this section—“competition proceedings” has the meaning given by paragraph 2(4) of Schedule 8A to the Competition Act 1998 (further provision about claims in respect of loss or damage before a court or the Tribunal);“digital markets investigation information” means information—(a) prepared by a person other than the CMA for the purpose of a digital markets investigation;(b) sent by the CMA in connection with such an investigation to a person that is the subject of the investigation;“digital markets proceedings” means proceedings under section 101 (rights to enforce requirements of Part 1 of that Act) or proceedings on appeal from such proceedings.(5) Paragraphs 7 and 27 of Schedule 8A to the Competition Act 1998 (other definitions; disclosure orders) apply for the purposes of this section as they apply for the purposes of Part 6 of that Schedule.(6) In Schedule 8A to the Competition Act 1998—(a) in paragraph 7 (other definitions), after sub-paragraph (2) insert—“(2A) “Digital markets proceedings” means proceedings under section 101 of the Digital Markets, Competition and Consumer Act 2024 (rights to enforce requirements of this Part).”;(b) in paragraph 28, after “competition proceedings” insert “or digital markets proceedings”;(c) in paragraph 29, after “competition proceedings” insert “or digital markets proceedings”;(d) in paragraph 30(1), after “competition proceedings” insert “or digital markets proceedings”.”Member’s explanatory statement
This amendment would prevent a court or the Tribunal from making a disclosure order in respect of certain material held by the CMA.

Alan Bates and Others v Post Office Limited

Lord Offord of Garvel Excerpts

Wednesday 24th January 2024 Lords Chamber

[Lord Sikka]

To ask His Majesty’s Government, following the December 2019 High Court judgment in the case of Alan Bates and Others v Post Office Limited, how many Post Office directors have been charged for breach of statutory duties under the Companies Act 2006, or for conspiracy to pervert justice.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank the noble Lord for his Question. I can confirm that no prosecutions have been brought against Post Office directors to date. The Horizon inquiry will establish the facts of what went wrong. It would be wrong to take action before we have all the evidence. Punishing people without looking at all the evidence first is how this scandal started. We should not repeat that error.

[Lord Sikka (Lab)]

My Lords, I remind the Minister that the Government have the sole responsibility for law enforcement. It is no good saying that they are relying on some committee to turn up evidence; they have had 49 months, and in that time little has happened. The Government need to take steps to charge people for violation of the Companies Act, false accounting, lying under oath and conspiracy. After six years, they have not even yet managed to deal with the directors of Carillion. That does not inspire much confidence that they will be able to deal with the Post Office directors. The whole thing is being kicked into the next decade. Rather than hiding behind this inquiry, will the Minister now publish a schedule showing a timetable for the Government’s actions?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that. I know that there is a lot of frustration in this House and the other place on the timelines. This has been going on for a very long time—almost one generation. However, we have been very clear that we have to separate the two elements of this sad story. The immediate action we are taking is to overturn convictions and give compensation. We then come to accountability. A statutory inquiry is in place, and it will look at all the facts of the matter. At that point, a cascade of actions will be taken by the various bodies concerned. We need to understand the role of directors, the ministerial oversight and the role of Fujitsu and the auditor, EY. All that will be done once the facts are established and the Williams commission has reported.

[Lord Forsyth of Drumlean (Con)]

My Lords, that is all very well and good, but is it not obvious that there was a catastrophic failure of governance on the part of the Post Office? This is a government-owned business. It is inconceivable that the board did not read the newspapers and was not aware of this. The Post Office is still operating. Should there not at least be a review of the standards of governance on that board?

[Lord Offord of Garvel (Con)]

The Post Office is publicly owned and set up as a limited company with a sole shareholder, which is the Government. Its governance is as an arm’s-length body with its own board, where the Government have a shareholder representative. It is clear that, over the years, not enough inquiry was made—particularly by non-executive directors—about what was going on. Why was it not asked why, pre-Horizon, prosecutions were between five and 10 per annum and then moved to between 80 and 100 per annum? The question is obvious: what happened here? As a High Court judge said at the 2019 appeal, the faith in the Horizon system was the modern-day

“equivalent of maintaining that the earth is flat”.

There has been a massive failure of corporate governance. Once we have the outcome of the inquiry, steps will be taken to make improvements to ensure this will not happen again.

[Lord Stirrup (CB)]

My Lords, is it sensible for the Post Office to even continue in business as presently constituted? Is it not now a totally and irredeemably toxic brand? I personally would not trust the Post Office if it told me that today is Wednesday. As well as holding individuals to account, as owners, should the Government not look at a fresh start with a new brand, new leadership and a new business model incorporating the appropriate ethical principles?

[Lord Offord of Garvel (Con)]

I thank the noble and gallant Lord. That is exactly what the outcome will be. No prosecutions have been brought since 2015. The board has been reconstituted. There is a new chief executive, a new Postal Minister and new oversight. I take issue with the view that the Post Office brand is irredeemably damaged, because I believe the Post Office brand is based on the 11,500 postmasters and, if anything, their reputation has been enhanced by this. The reputations that have been damaged are those of management, directors and perhaps Ministers.

[Baroness Butler-Sloss (CB)]

My Lords, did the shareholder member of the board report to government what was happening? The board must have known about the faults of Fujitsu. If that shareholder member did not, has government asked why?

[Lord Offord of Garvel (Con)]

I thank the noble and learned Baroness. This is exactly the issue we need to get to the bottom of. It goes back over a large number of years. We will be going back through files, ministerial appointments and meeting notes to find out exactly what notice was given and when. A ridiculous level of faith was given to the Horizon computer. Fujitsu has acknowledged culpability in this matter. Once the Williams report establishes the facts, we will be able to take necessary action to hold people accountable.

[Lord Fox (LD)]

My Lords, to date, all the talk has been around what happened to sub-postmasters, but we should remember that Horizon was being used in the Crown offices, the branches that Post Office Ltd managed, so it would have seen the shortcomings of this system through its own management. It is not just a question of having to read the papers, as the noble Lord, Lord Forsyth, said; it was happening to its own businesses, and it was covering it up. Is this not further evidence that things should be done now, rather than waiting for some far judgment?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for his question. The Horizon system has been upgraded—and upgraded again since 2017—and we now have a reasonable audit that it is now working satisfactorily. It will now be further replaced by a cloud system that will run alongside the current system, so I think there is now a feeling that there is efficacy in that system. What the noble Lord refers to is why there was an unshakeable belief in the computer system that went on for so long. We need to understand exactly how that happened, what the role of Fujitsu was in that, whether this was corporate malfeasance or the role of one or two individual bad actors, et cetera. We need to get to the bottom of that, and that is what the Williams inquiry will do.

[Lord Browne of Ladyton (Lab)]

My Lords, the reference my noble friend Lord Sikka made to the comparative inaction in respect to the directors of Carillion is but one of a number of scandals of which the Post Office Horizon scandal is the latest. It is another example of how poorly equipped the UK is to deal with corporate abuses.

Let us look across the Atlantic to New York. At the instance of Manhattan’s District Attorney, 17 of the Trump Organization’s many corporations were convicted of criminal offences, including tax fraud. Its chief financial officer pleaded guilty, was fined the maximum in compensation, and went to jail for five months. Now, the Attorney General of New York is asking a court to ban Trump and his three eldest children from ever running a corporate business in New York again, and to fine them $250 million. Can the Minister point me to any similar type of prosecution in this country, or tell me how that could ever happen here? I believe it could not.

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that question. The Financial Reporting Council is the UK body that deals with accounting failures. It had a considerable review following the failure of Carillion and British Home Stores—the Sir John Kingman review in 2018. A number of Carillion’s previous directors have been disqualified and other cases are still under way. The FRC is now much more effective as an audit regulator—it has had a change of personnel, and the relationship between the FRC and the audit companies has been removed at further arm’s length. There is still a long way to go, but the FRC is now in a position to take more stringent action.

[Lord McNicol of West Kilbride (Lab)]

My Lords, this is not a new question. Noble Lords from across your Lordships’ House have been asking it, and I first raised it in 2019 after the court case. As a sole shareholder, His Majesty’s Government have both a right and a responsibility, so I take the Minister back to those original questions. What are we going to do to hold to account the board members who failed in their Companies House and directors’ duties when the Williams report comes?

[Lord Offord of Garvel (Con)]

The noble Lord is right to say that it is for the members of a company to take action against directors who have breached their statutory duties. In this case, the sole shareholder is the Government. Therefore, once the inquiry has finished, the Government will be in a position to take action specifically against any directors who have failed in their duties.

Post Office (Horizon System) Compensation Bill

Lord Offord of Garvel Excerpts

2nd reading & Committee negatived & 3rd reading
Tuesday 16th January 2024 Lords Chamber

Moved by

[Lord Offord of Garvel]

That the Bill be now read a second time.

The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con): My Lords, we had positive debates last week in relation to the Post Office Horizon scandal, in what proved to be a watershed moment in this appalling scandal’s story. I was pleased to be able to update the House in reply to the Oral Question from the noble Baroness, Lady Chakrabarti, and through my Urgent Question repeat.

As noble Lords are aware, last Wednesday, the Prime Minister announced that the Government will bring forward legislation to overturn the convictions of all those convicted on the basis of Post Office evidence during the Horizon scandal. We discussed this in your Lordships’ House last week and I have since written to noble Lords setting this out in more detail. The Government will continue to keep noble Lords informed as progress is made on the new legislation over the coming weeks.

The Post Office (Horizon System) Compensation Bill is a small Bill of just two clauses, which will provide a continuing legal basis for the payments of compensation to victims of this appalling scandal, specifically in this case the trail-blazing members of the group litigation order, or GLO, who took on the Post Office all the way to the High Court and exposed the Horizon scandal.

Compensation payments made under the GLO scheme are currently paid under the sole authority of successive Appropriation Acts. Parliament requires all such payments to be made within a two-year period. The first payment of interim compensation was made on 8 August 2022, meaning that with the law as it stands, no GLO payments can be made beyond 7 August 2024. This Bill removes that deadline.

Let me be clear on this point. This does not mean we are taking our foot off the gas. We still want to pay compensation as quickly as possible. My department is now committed to making an initial offer of compensation in 90% of cases within 40 working days of receiving a fully completed GLO claim, and many claims can be dealt with much more quickly.

However, as Sir Wyn Williams, chair of the independent statutory inquiry, noted, the resolution of compensation claims requires action by postmasters, their advisers and third parties, as well as the Government. In his interim report provided to Parliament in July, Sir Wyn expressed concern that the August 2024 deadline could leave some postmasters timed out of compensation or rushed into making decisions. The Government have agreed that that must not happen, and the Bill ensures that it will not happen. All GLO postmasters will get full and fair compensation; they will get it promptly, but without being unduly rushed.

Good progress has been made in paying compensation to GLO members and those in the other two compensation schemes. As of 11 January 2024, approximately £153 million had been paid to over 2,700 claimants across the three schemes. Noble Lords and the public can rightly continue to hold the Government to account on this important issue of compensation. Figures relating to the number of claims received and processed, and the compensation issued, are updated each month on the dedicated GOV.UK page.

The Government are hopeful that the announcement of an upfront offer of £75,000 that we made last week will save those affected having to go through a full assessment. This will not only allow the department to focus its resources on the larger cases but will allow the claimants’ lawyers to do the same. The pace at which we can get claims into the scheme is the key constraint on how quickly we can settle them. The upfront offer is smaller for the GLO scheme than for the overturned convictions because the claims tend to be smaller. We estimate that perhaps a third of GLO claimants may want to consider this route.

I turn now to the other pressing matter of truth and accountability. The cases of Alan Bates, Jo Hamilton, Lee Castleton, Lisa Castleton, Saman Kaur, Noel Thomas, Michael Rudkin and Pam Stubbs—to name just a few of the more than 3,000 people who have suffered in some way as a result of his appalling scandal—have been powerfully played out in the gripping ITV drama “Mr Bates vs The Post Office”. Naturally, it has drawn much greater public attention to the issue than before. I am pleased to see a much wider awareness of the scandal among the public. The Government previously set up the Post Office Horizon IT inquiry in 2020 and have provided compensation funding since 2021, but there is no question that the TV drama has brought the issue to the forefront of the nation’s attention.

For those portrayed in the drama and many others, it meant paying the Post Office money that they did not owe. For others, it meant the loss of their livelihood, home, mental or physical health, or family relationships. Too many have died before getting justice. Saddest of all, some of those deaths were suicides prompted by the scandal. Each Horizon victim is a personal tragedy. It is imperative that each and every person gets the justice and compensation that they have waited far too long for.

This Government are committed to delivering justice for all Horizon victims. Part of that justice will come from making sure that everyone knows the truth about what happened. That is why the Government set up the statutory inquiry into the scandal, chaired by Sir Wyn Williams. The work of the inquiry to date is commendable; it is doing great work in exposing that truth.

From that truth will follow corporate and individual accountability; I know that there is a strong appetite for that in this House and beyond. I sympathise with noble Lords’ desire to see accountability right now, but finding people guilty without looking at all the evidence is how we got into this mess. It is how postmasters were prosecuted without proper disclosure. We must not commit the same mistake when it comes to holding people accountable for the scandal, however tempting that might be.

In conclusion, until everyone has fair compensation, the truth is known and the guilty are held accountable, noble Lords in this House and others will rightly continue to raise issues about this scandal. I assure your Lordships’ House that this Government are on the side of the postmasters, and we will continue to give these issues our full attention and do our best to resolve them. The Bill is a further example of that, and I commend it to the House.

--- Later in debate ---

[Lord Offord of Garvel (Con)]

My Lords, it is with great responsibility that I stand to conclude what has been a respectful debate. We have heard many insightful and personal contributions from noble Lords across this House. I particularly echo the numerous and heartfelt tributes paid to my noble friend Lord Arbuthnot, who has been a long-time champion of those affected by the Horizon scandal. A key part of this is that the noble Lord, plus Kevan Jones MP in the other place, are members of the Liaison Committee, where my colleague Minister Hollinrake is dealing directly with them on a daily basis. That is an important part of the architecture of this, and something that the sub-postmasters and sub-postmistresses have expressed confidence in. Again, that is a great tribute to my noble friend.

I will start by picking up on the remarks of my noble friend Lord Arbuthnot. Yes, this will be a simple piece of legislation, but it will encompass the question raised by the noble Baroness, Lady Chakrabarti, who asked whether this will be a blanket exoneration. The answer is yes: this is a blanket exoneration to be given to the sub-postmasters—those who have had convictions —and speedy compensation will be given to all on the basis that, as was mentioned by the noble Lord, Lord Palmer, these folks are presumed innocent rather than guilty. So I can start by saying that this Bill exactly achieves what my noble friend Lord Arbuthnot was going to be pitching for; that has been delivered with the support of the Prime Minister and Minister Hollinrake.

In terms of speed of compensation, I reassure the House that our plan is to keep going, not to go more slowly. The delay here is not a delay of time: it is just allowing the due process to move through. Alongside the Bill, we have made a commitment to make offers on 90% of cases within 40 working days of receiving the GLO application, and we will publish monthly updates about the number of cases submitted and settled. In fact, to answer the question raised by my noble friend Lord Arbuthnot, it is actually the Government’s aim not to require a technical extension. The aim of the Government is to actually have this compensation made by 7 August, within the original timetable. Technically, that is not entirely within the Government’s gift because, clearly, claimants are underrepresented and need to give some evidence on their claims. They want each of their claims to be assessed on an individual basis, which is the right thing to do, and that is often not a simple process. They are telling us that it takes time, and they are saying that they want sufficient time to bring in their claim.

There are a number of folks who are affected but do not want to do that, which is why we are giving them the opportunity to go straight to up-front compensation within the GLO scheme. If you are just done with lawyers and completely scunnered by the process, and you feel that you want to take the £75,000, those who choose that route can take that straight up front and therefore get away from the lengthy claims process. We want to ensure that no one is timed out of compensation or rushed into making decisions. That is what the statutory inquiry, chaired by Sir Wyn Williams, has recommended, and we have taken action to address that.

I will turn now to a number of the points raised in the House this evening by noble Lords. The key objective of this Bill is that we have redress—that is a very good word that we should be using; compensation is compensation, but is it not the idea that we have to provide restitution for people have been wronged, to put them back in the position that they were in before?

The noble Lords, Lord Browne and Lord Sikka, and a number of other noble Lords, mentioned some of the paltry sums that have been quoted in terms of individual claims. In fact, when one looks at the overall Horizon shortfall scheme—the main HSS scheme, which is for those 2,500 claims for people who were not convicted—the average on that is £42,000 per sub-postmaster. That gives you an indication that there is quite a wide range of claims. It is quite right that there is not one single number for everybody, because each claim needs to be assessed on its merits. That gives some context to the £75,000 being offered to the GLO claimants who consider that they have a further claim to process.

Then, in the hierarchy of compensation, for those 983 people who have been wrongly convicted, of whom 95 have had their wrongful convictions overturned, there is an immediate ability to claim £600,000—again, without access to lawyers and without having to go through any process. That is your right as a claimant to take that. Again, however, if you feel that you deserve and should be compensated for more than that figure, there is no limit. There is no upper limit—to answer the noble Lord, Lord Sikka—to what can be claimed.

We are dealing with a cohort of individuals who, as my noble friend Lord Arbuthnot mentioned, are quite traumatised by this process. They watched the first GLO court action being successful and three-quarters of the money going to the lawyers, the claim administrators or the investors in the litigation, so there is deep scepticism within this cohort and community about the process being run.

Again, to answer the question from the noble Lord, Lord Sikka, the GLO scheme is being run by DBT, not the Post Office. The Post Office is running the Horizon scheme. Therefore, that is crucially where the advisory committee comes into play to make sure that there is a clear, independent voice for those who are feeling uncomfortable with that. In terms of the overturned convictions, the retired High Court judge Sir Gary Hickinbottom has been placed in to make sure that claimants feel they have an independent person to refer to.

I think in terms of process and redress the Government are making steps now to go fast, but it is up to each claimant to work out the process they want to go through. It is not right for me to comment on individual cases, but obviously the most egregious example given in the drama was that of Lee Castleton. I think his claim was about £26,000 but he ended up with a £320,000 bill. Again, I am not commenting on that case, but it does inform the £600,000 that can be claimed immediately against a case such as that. Indeed, if he felt he wanted to take that further, he could do that. That is a private matter for him.

[Lord Forsyth of Drumlean (Con)]

I know my noble friend the Minister does not want to comment on the particular case of Lee Castleton, but the point I was making about him was there were £325,000 of court costs. First, normally when you win you do not pay costs. The effect of saying that he is not guilty surely means that those costs should be returned. That has nothing to do with the compensation that is paid to him. So will costs be remitted? That is the key point. Secondly, in respect of that case, what do the Government mean when they say that things should be restored to where they would have been had this not happened? What does that mean because £600,000 is an arbitrary number? Some people lost their business, their house and their position. How will that principle, which I think is greatly to the Government’s credit, be delivered?

[Lord Offord of Garvel (Con)]

I commend my colleague the Postal Minister Mr Hollinrake for pushing through hard on the £600,000 because it is not for us to judge what any individual has lost; it is up to that individual claimant to make the decision about whether they want to go through the due legal process. The word “compensation” has perhaps been misapplied here. What we are actually talking about is a monetary sum to be given back which gives redress to individuals. In any particular case—for example, the case of Lee Castleton—it may well be that one can actually identify separate buckets, one of which might in fact be court costs be repaid, but within the overall settlement there will be an amount which should take account of all losses. If you have paid for someone else’s legal fees, that is a loss which needs to be repaid, so this will be tied up within each individual claim, the point being that if you do not as a postmaster want to go through the heartache and process of doing that, there is a route for you to receive a substantial sum and you can close the matter and get on with the rest of your life.

[Lord Arbuthnot of Edrom (Con)]

I would not want anyone to be confused in an already confusing situation. The £600,000 is not actually relevant to Lee Castleton because it is a sum that applies only to those who have overturned convictions. Lee Castleton was sued rather than prosecuted. I am sure he will get a lot more than that, which will include the legal costs that he had to pay and also all the issues about the bankruptcy that he went through and the horrors his family went through, and he will deserve a lot more than that.

[Lord Offord of Garvel (Con)]

I thank my noble friend for that clarification.

Moving onto another theme, there has obviously been a lot of comment on Fujitsu and we have all been horrified by the extent of what would appear to be its collusion in the matter. Again, we have to be very careful here to allow this inquiry to run its course. Sir Wyn Williams is very focused on this, and he will get it done through the course of this year. We will get answers to these questions.

Sir Wyn has been very clear, as indeed has Minister Hollinrake in the other place, that the cost of this must not fall solely on the taxpayer. We have now had the statement today from the European chief executive, effectively putting his hand up to say that he knows there is going to be a large bill to pay, and that it goes beyond moral to legal and financial. Again, that will be determined when we get through the inquiry.

The reality is that Fujitsu is embedded in all aspects of government, in many departments. We all feel nervous about that at this moment and I am sure that all departments will be reviewing that; but, again, we have to discover the extent of culpability. The company knows that it will have a large bill to pay. We have to allow that process to run its course. I am sure that there will be full accountability and from that—there is no question my mind—will cascade many levels of scrutiny of that company in every government department. I think we will be hearing more about that as we go.

The other theme brought through was governance of the Post Office. The noble Lord, Lord Forsyth, was very clear in asking how this works in respect of being a limited company with a board. The noble Lords, Lord Palmer and Lord Sikka, mentioned the whole accounting scenario. With respect to the current governance of the Post Office, it remains an arm’s-length statutory body; we are all now asking different questions about how that works.

[A noble Lord]

With shorter arms.

[Lord Offord of Garvel (Con)]

Shorter arms, yes. There has been quite a big overhaul in terms of organisation, some of which is pretty obvious when you look at it. There is now a huge amount more central support and training given to postmasters. There are 100 new area managers, creating a buffer zone between the manager and the board. Two postmasters have now been appointed to the board as non-executive directors. There is an appointment of a current postmaster in a director role concerned with the day-to-day relationship with the postmasters. All of it should have been done a long time ago.

As we look at public bodies, those of us who have been in the private sector understand how boards work. We understand the role of non-executive directors, which is to challenge management. It is not to nod and pass, or to wave through. It is to be intellectually curious and, if you find something that does not stack up, to probe it and question it. That has not happened here. We have had an organisation that looks and feels like a plc. It has renumeration committees, audit committees, auditors, a board of directors, non-executive directors and a non-exec chair. All of these, when they are put into businesses, are put in for checks and balances, as the noble Lord, Lord Sikka, said. What we have had here is a mirror image of this architecture without any checks and balances. I think this requires us to look quite hard across quite a wide range of arm’s-length bodies.

[Lord Sikka (Lab)]

I am glad that the Minister has clarified that relationship, but my concern is that, for as long as I can remember, the Government have been preaching shareholder activism. What happened to that when it came to the shareholder—the Government —in the Post Office being active? Did nobody notice the pile of newspaper clippings about the cases? I do not remember any Minister standing up and saying “Right, we’re going to look at this” until after the High Court judgment. Why did the Government fail on their own so-called shareholder activism?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that searching question. Of course, this covers about three or four different Governments and more than half a dozen Ministers; that is just a fact. The reality is that the shareholder of the Post Office is the taxpayer. The share is owned by the Secretary of State for the Department for Business and Trade. Under the current structure, that is effectively subcontracted to an independent board. If that independent board had acted on an independent basis, this would not have happened. In fact, if Ministers had slightly more inquiring minds, this would not have happened.

I look at myself in my role as a Minister. I look at the advice that I am given and at the decisions I have to make. There is a lot coming through on a daily basis. I ask myself this question: if I had been in this role and prior to Horizon there had been an average of, say, 10 convictions per year in a bad year—maybe five on average—and that went up to 80, even though I was very busy, doing a lot of things, and even though I said I had an independent board looking at this for me, would not that raise some inquiry? This fundamentally is the shocking scale—we are all embarrassed about this—of the abuse here. The accountability piece of this will absolutely come through the Wyn Williams inquiry. That will then move us to the next stage of the lessons that we learn from it.

Next is the theme of legal process, brought up by the noble Lord, Lord Cormack, as well as the noble Lords, Lord Forsyth and Lord Weir, and also in relation to the Scottish angle. The noble Lord, Lord Cormack, says that the lawyers have some disquiet about the idea of Parliament overruling courts, but we have had the counterbalancing argument from William Blackstone. I think the House agrees that that overrides that particular issue.

In Scotland and Northern Ireland we have different jurisdictions. There were 77 prosecutions in Scotland and 24 in Northern Ireland. To speak from a Scottish point of view, those prosecutions were brought not by the Post Office but by the Crown Office. That is a separate legal jurisdiction in Scotland. Yes, we are one United Kingdom, but in the UK we respect the legal jurisdictions of the devolved nations. The Lord Advocate has reported today to Holyrood, the devolved Parliament in Edinburgh, saying that she is not currently in favour of a blanket rescinding of convictions because, she says, not every case involving Horizon will be a miscarriage of justice. She wishes to go through the appeal court—the Scottish Criminal Cases Review Commission. From a legal point of view, she is saying that these convictions were made by a court and therefore should be undone by a court.

We are at an early stage of that dialogue. There are letters and communication going between the MoJ in London and the Lord Advocate and the Crown Office in Scotland, and there is communication between the First Minister and the Prime Minister on this. That just highlights that there are some legal complexities here. The reserved matter remains reserved. Compensation will be the same for all jurisdictions, but there are some issues to be resolved regarding the actual legal process—certainly north of the border.

[Lord Browne of Ladyton (Lab)]

How on earth does a court challenge the evidence that the information coming from this computer is to be treated correctly because of the presumption? How on earth does the court overcome that? Only we can overcome that. We need to change the law. Unless we do so, we will always have this problem. The fact of the matter is that everywhere on this island the courts are not fit to deal with these cases. There were miscarriages of justice everywhere. The courts were not fit to test the evidence.

[Lord Offord of Garvel (Con)]

That is exactly the position that has been taken here by the Lord Chancellor for England and Wales, and that is now the conversation that has to be had in Scotland and Northern Ireland. We are dealing with a legal complexity that was confronted earlier this week by the Lord Chancellor, who now needs to run through the process with the Lord Advocate.

We come to the accountability issue. There have been comments from the noble Lords, Lord Sikka and Lord Palmer, about the role of the auditors. Again, you will get technical answers back that this is a separate statutory body that does not account to the National Audit Office because it has its own auditors, but then we find that that the auditor, EY, has signed off on the accounts. This is what we need to get to the bottom of. There needs to be a full inquiry to bring this to light. We will get the answers to these questions. Out of this, as I said, there will be a cascade of inquiry taking us into the fundamental territory of how the Government operate alongside quangos, arm’s-length bodies and so on. We have not heard the last of this. Its repercussions will come down through Whitehall.

Lessons will be learned, but right now our responsibility is to get the blanket exoneration that the noble Baroness, Lady Chakrabati, was asking for, and which my noble friend Lord Arbuthnot is now satisfied will be given, and getting the compensation—whatever that means; let us say financial restitution—to the claimants as quickly as possible.

This is a sorry saga and, as my noble friend Lord Forsyth said, we are all deeply embarrassed by it. It has taken so long; it has been going on for 20 years. How people did not ask more basic questions is something that we all need to reflect on. All of us Ministers are looking at that. From my own personal point of view, I am certainly looking at things quite differently through the lens of, “Where’s my sniff test on what I’m hearing, as opposed to just what I’m told by officials?”

I commend the noble Lord, Lord Weir, on his personal reflections on this and his story about his father being a postmaster. Is that not the essence of what we got from the series, and from our personal experience in the towns and villages where we live, that these folks are the salt of the earth? How could they as a group suddenly become criminal? How could we go from half a dozen convictions a year to 80? It just does not make any sense. So I thank the noble Lord for that contribution. That is what is turbocharging our response to this matter.

I say in conclusion to noble Lords that, as far as my department is concerned—and my colleague Mr Hollinrake is working very hard to ensure this—those who are affected by this awful scandal will receive the full and fair compensation that they are owed, and we will do that as quickly as possible. Postmasters have suffered for too long. That said, with their having waited so long for justice, the Bill ensures that the Government will not need to force victims into unduly rushed decisions on the complex and emotive issues of compensation.

I repeat my thanks to all noble Lords for their contributions today. I know the House takes a strong interest in this scandal and wider Post Office matters. I hear what the noble Baroness, Lady Brinton, said about where this takes us on previous scandals, and I am sure there is more to be said about that. This Bill is just one part of the extensive action that the Government are taking to defend the interests of postmasters, and I commend it to the House.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.