Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

Moved by

[Lord Stevenson of Balmacara]

6: Clause 1, page 2, line 2, after “services” insert “and mobile network coverage”

[Lord Stevenson of Balmacara (Lab)]

My Lords, I start by drawing attention to the National Infrastructure Commission report that came out recently, which I am sure the Minister is well aware of, in particular to its references to the future of communications and mobile networks. This was central to the request by the Government for a review, so that the commission could come back with some recommendations which the Government might build into future plans. The report starts by saying that,

“the UK lacks the level of coverage … to offer … mobile services ubiquitously. In rural areas 3% of the population do not have any coverage outside their homes”,

which it calls “complete not-spots”, and that,

“25% do not have coverage offered by all the main mobile networks (partial not-spots). Coverage on our road networks is poor even for voice coverage … 17% of A and B roads are in complete not-spots and an additional 42% have only partial coverage”.

The Committee will probably have to read Hansard carefully afterwards to get exactly what I am trying to say on the not and have-not spots. However, the picture is pretty poor.

The commission’s report goes on to say:

“The UK performs poorly in comparison to other countries”.


We do not seem to have an overall plan for what to do. It also says that,

“government has agreed with operators that they should deliver 90% geographic coverage for voice and text by 2017”,

but that,

“it is not clear that this will meet consumer service expectations”—

a point which has already been made in earlier debate. It continues:

“As it stands, gaps in current 4G networks mean that around 20% of urban premises and almost 80% of rural premises are in a not-spot for 4G coverage”,


which is surely unacceptable. It then comes to the point that bears on the amendment we have tabled in this group:

“The next generation of mobile connectivity will need to deliver the right type of networks, in the right places, for the services that people and business need. This means that 5G networks cannot be thought of in isolation but must be considered as part of a wider ecosystem of mobile connectivity. Delivering the connectivity we require for the future must start by ensuring that we have the networks we need for today—this will not only provide a basic level of service to consumers … but … the backbone of the network infrastructure we need for the new services of the future”.


These points are relevant to Amendment 6. I think that we are agreed that a USO will have some value although we are not that agreed on what it will be and how much it will bite—we might be able to make some progress on that. If we have a USO, Amendment 6 addresses whether it is just for the provision of wi-fi and wire-to-premises services or will include the additional services that will probably be necessary to achieve full coverage.

Everybody hopes that the USO will deliver 100% coverage. As the report from the National Infrastructure Commission makes clear, we would not be able to reach that coverage without some element of mobile telephony. Therefore, while we shall be regulating for the wires and the fibre to take the signal by a conventional route, we shall be stuck with unmet need. We shall not be covering the last 5% or 10% of people who will probably need supplementary provision. Indeed, the Minister himself said that the only way that he could satisfy his children’s need for proper access to the internet was to provide microwave technology in addition. Therefore if the USO is to be effective, it will need to cover forms of technology other than simply communication down wires or through fibre.

Amendment 6 simply suggests that the Government should take a step forward along the lines set out by the National Infrastructure Commission. They should add in the mobile coverage that would be required to complete what would be the first widely acceptable USO at whatever level it is meant to be. That is necessary if we are to make the progress set out in that report.

Amendment 19 concerns the vexed question of roaming. A number of issues seem to arise whenever anybody picks up a contract for a mobile phone and tries to use it. First, if in the shop you ask whether you will be able to use a phone throughout the United Kingdom, a promise will almost certainly be made that will not be honoured in the detail. It is quite clear to anyone who does any travelling that service from the various network providers varies considerably. I think that the Government will argue that this is a good thing because only by having competition between the mobile network operators will one get the maximum coverage sought. However, since it patently does not achieve that, one has to ask whether this is the right way forward.

From time to time the suggestion is made that even if you could get the coverage that you wanted from the network and contract to which you signed up, it would not be sufficient. This is because there will always be a point at which the income to be generated from additional coverage will be less than the investment in new masts and equipment. Therefore there will always be not-spots, even with mobile and not just internet connections. As the National Infrastructure Commission said, voice coverage will be patchy and not be fully efficient unless we can do something to make it more possible to receive any signal, not just the signal from the contracted operator. It is going to be mixed—if we are to reach 100% we will need to have more than the current incentive for services to include that.

This amendment proposes a national roaming provision at certain points. Without this we will not see the coverage that the National Infrastructure Commission wishes, which common sense dictates and which usage will demand. Consumer pressure may well be the final straw on this point. We will need to make sure that there is a possibility of reaching out to whichever mast is nearer and whichever services are appropriate to needs. Roaming may be the answer. I beg to move.

[Lord Gordon of Strathblane]

My Lords, my Amendment 17 is along similar lines. Perhaps because of my comments at Second Reading, I have had various meetings with mobile phone operators. They take me to task for contrasting their performance with my experience of broadcasting where for 50 years ITV and the BBC have been sharing masts. They correctly point out that broadcasters can differentiate their product by content, whereas they cannot. Their business model is based entirely on one provider owning one mast and providing that signal to its subscribers alone. In fairness, it is not the ideal way to build infrastructure. For water, the equivalent would be three water mains running into the average house and three sewage pipes taking waste away. It is a pretty silly way to organise things, but it is the way they have been organised and—as everyone says nowadays with a degree of resignation about quite a lot of subjects—we are where we are.

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[Lord Ashton of Hyde]

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

[Lord Stevenson of Balmacara]

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

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

Amendment 6 withdrawn.

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Moved by

[Lord Stevenson of Balmacara]

14: After Clause 2, insert the following new Clause—
“Bill limits for mobile phone contracts
(1) A telecommunications service provider supplying a contract relating to a handheld mobile telephone must, at the time of entering into such a contract, allow the end-user the opportunity to place a financial cap on the monthly bill under that contract.(2) A telecommunications service provider under subsection (1) must not begin to supply a contracted service to an end-user unless the end-user has either—(a) requested the monthly cap be put in place and agreed the amount of that cap, or(b) decided, with the decision recorded on a durable medium, not to put a monthly cap in place.(3) An end-user may, after the start of the contracted service—(a) contact the service provider to require a cap to be put in place and agree the amount of that cap, or (b) require a cap to be removed, with the requirement recorded on a durable medium.(4) The end-user should bear no cost for the supply of any service above the cap if the provider has—(a) failed to impose a cap agreed under subsection (2)(a) or (3)(a); or(b) removed the cap without the end-user’s express consent, provided on a durable medium as required under subsection (2)(b) or (3)(b).”

[Lord Stevenson of Balmacara]

My Lords, as we reach the end of this first part of the Bill we have a bit of a conglomeration of amendments in one group. I think we will need to just go through them slowly to get the sense of them.

Amendment 14 is also in the name of the noble Lord, Lord Foster, and I am grateful to him for his support. It tries to deal with an issue that we probably all agree in this Committee is one of the most complicated areas of domestic expenditure—trying to work out what you owe for your mobile phone. I have never understood the tariffs. I certainly do not understand the various little odds and ends to opt in and opt out of, and I find it hard to get my mind round which bits are prepaid and which are costed at a rate that I do not recognise. Nevertheless, the bill comes in regularly and has to be paid. However, for some people this can be a source of worry and, as with other universal provisions, there may be some danger of vulnerable customers getting into difficulty. We therefore thought it might be interesting to suggest that the mobile operators should be encouraged, either voluntarily or if necessary through some form of statutory provision, to set caps or work on a system under which customers could set caps—more correctly—so that if expenditure was getting out of control on their mobile phone they were not being taken for a ride, even if it was for a relatively short period. Therefore, the idea of a financial cap, which is not uncommon in other areas of consumer expenditure, occurs. The suggestion in the amendment, which I hope the Minister will find of interest, is that it might be a way to make sure that there is a more secure arrangement for this important part of our everyday lives.

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[Baroness Buscombe]

My Lords, I am sorry if the noble Lord finds it extraordinary. However, I think that he has made a reasonable request and I will make sure that we write to him in detail, giving a full reply.

Amendments 16 and 18 seek to make additions to Clause 3 to ensure that compensation is paid within a reasonable timescale and that, for mobile phone services, compensation is payable where the provider fails to meet a specified standard or obligation. Also, one of those standards must be satisfactory mobile coverage.

The drafting of the clause already allows for Ofcom to consider timescales for compensation, as well as what service standards are within scope. In the spring of this year Ofcom plans to publish a full consultation setting out how automatic compensation could work. Thus, we do not see the need for these amendments.

Amendment 22 seeks to establish a code of practice on business broadband speeds. In January 2016, Ofcom published a voluntary code of practice on business broadband speeds, and it came into force in September 2016. The code gives businesses clearer, more accurate and transparent information on broadband speeds before they sign up to a contract. Signatories to the code also commit to manage any problems that businesses have with broadband speed effectivity and to allow customers to exit the contract at any point if speeds fall below a minimum guaranteed level. Ofcom will continue to work with the industry to ensure full transparency. With such a code already in existence, we see no need for there to be a power for the Secretary of State to prepare one.

Amendment 233 would amend the Consumer Rights Act 2015. I am grateful for the response of the noble Lord, Lord Clement-Jones, to this amendment, as I have to hand the transcript of the debate on that legislation—it makes quite enjoyable reading—when he referenced the consequences of an amendment which is the same as the one before us tonight. He said that,

“the consequences of this amendment could be quite unforeseen and extremely contrary to the interests of the strong and vibrant software industry that we have in this country”.—[Official Report, 19/11/14; col. 507.]

We entirely agree with the noble Lord that things have not changed that much, and they certainly have not changed in that regard. The rights set out in the Consumer Rights Act were designed to achieve a workable balance to reflect consumers’ reasonable expectations while not imposing unnecessary and potentially damaging requirements on our vibrant, growing and technically innovative digital content suppliers. We believe that this amendment would undermine those rights.

When formulating the Consumer Rights Act, we concluded that providing for a short-term right to reject was not necessary in the context of digital content. Unlike physical goods, digital content can on the whole be fixed rapidly and with little effort on the part of the consumer. Consumers accept that it is the nature of digital content that it may be released with minor errors and incompatibilities which come to light in use and which will be fixed to ensure that the product is satisfactory. A short-term right to reject digital content and impose strict limits on the number of repairs and replacements would not be practical in this context. In the digital environment, a fault in one copy of digital content may be replicated in all copies, or the fault may not be the result of an action by the trader at all. That is why a repair is a more equitable solution in the first instance than a full refund.

Many digital content producers are micro-businesses and start-ups, and we need to maintain an environment in which they can flourish and provide innovative products, while ensuring appropriate protections. Enabling rejection as an immediate remedy could cause the industry to be more conservative in its product offerings, reducing our competitiveness and chilling innovation, to the detriment of both business and consumers.

As we know, the Act has been in force since October 2015 and the Government have received no evidence or representations to the effect that it is not working as intended. With that further explanation, I hope that the noble Lord will agree to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the noble Lord, Lord Foster, for joining me on Amendment 14 and I welcome the contribution from the noble Lord, Lord Clement-Jones, with whom we can agree on one thing and disagree on another. I am sure that that will continue—he is a contrary sort of chap and it is sometimes difficult to work out where he is coming from.

I like the phrase “bill shock”—I had not come across it before. It is an issue that might be dealt with in the forthcoming Green Paper and therefore I accept that at this stage we need not progress further on that amendment. However, I should like to reflect on my experience of trying to deal with accounts from my provider of mobile telephony. It is complicated by the fact that I also, stupidly, pay my children’s bills. I should not do that because, if I can never work out what their bills are, I certainly cannot work out my bills, and the combination is almost impossible.

The only way that you can interrogate your bill from that particular provider, whose name begins with a “V”, is by going on to the website and logging in. That is fair enough, but you cannot access your account until the provider sends you a text message on your mobile phone with a number that you have to enter in. That methodology is now becoming common among the banks. However, it does not work in a not-spot, so I cannot reach my account. I cannot interrogate it, I cannot set caps and I cannot do all the things that the noble Baroness talked about in her full and very interesting response. Therefore, there is an issue there with some of the technology that is still being used. I do not think that it is anti-competitive or anti-consumer but it borders on the “difficult to use”. I think that there is an issue there that we might want to come back to, although a Green Paper may well be the right way forward.

If we could have a letter on gainer provider-led switching, that would be very helpful. This is an area where I do not think there is any doubt about where we are trying to get to, but the pace seems glacial and I do not understand what the barriers are.

On the two points on payment, I accept that a paper offering a consultation on that would be useful. If I am correct about the timescale, it seems a little unfortunate that it will appear later than the completion stage of the Bill. The Minister mentioned the spring, but if she could give us some detail in writing about when it is likely to be available, that will be helpful.

With regard to the voluntary code of practice, we come back to the point that we raised on Amendment 1 regarding what the USO will be if it does not have teeth. In some senses, an aspiration is fine and a floor is also fine, but if the code is to be used to make real progress in this area, we have to try to make sure that the ISPs that try to operate it find that it contains something that they have to deliver on. I will look carefully at the Minister’s response and we may come back to that point.

Finally, I turn to my Amendment 233 on digital content. The debates are obviously very familiar. Indeed, I think that the Minister may have been present at one or two of the previous ones and therefore what we say will ring even more loudly in her mind. The noble Lord, Lord Clement-Jones, was quick to pick up the main point, but time is moving on. So much more material is now downloaded and not supplied in hard copy, and at some point we will have to look at this again. The more the Minister talks about a strong and vibrant software industry, the more that speaks to me of customers being put at the bottom of the priority list, and I do not think that that is right. It is difficult to operate in a digital environment without the proper digital legislation. I am not sure that we know yet what that is and I accept that we may need more time to go through it. I signal that this is something that we may have to come back to at some point but, in the interim, I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for his introduction of the Bill and welcome all noble Lords who have put their names down to speak. It is going to be a very rich debate and we are looking forward to it. It is the season of awards; it would be wrong to let pass the very successful innovation from the Minister’s department of a book of the Bill. It is the best thing I have read since I came into your Lordships’ House and I recommend it to any of those who have not been lucky enough to be on the Minister’s—obviously very private—circulation list. It is a wonderful innovation and I found it most useful as I prepared for this speech.

The Digital Economy Bill before the House includes some very sound ideas which this side can support, not least because some of them have surfaced in previous Bills in your Lordships’ House. However, we by no means consider it a good piece of legislation as a whole. Indeed, its weaknesses lie as much in what it omits as what it contains. To start, a Labour version of the Bill would properly recognise the importance of the digital economy to our country and, in so doing, would be much more ambitious about delivering both ultrafast broadband and secure mobile network coverage to everyone who needs them, wherever they live. In fact, Labour called for a USO to be introduced back in 2010, with a fully costed plan for it to be achieved by 2012. We are still not there. The 10 megabit speed promised in the Bill is less than half what is needed to achieve superfast broadband, and it will not be sufficient to bring the benefits outlined by the Minister. There are also significant doubts about the pledge to extend coverage to the entire country, particularly in rural areas, along with no detail from the Government on how this is to be achieved or at what cost to local residents. At the moment, we do not even have the proposed standards to be legislated for, as we wait for Ofcom to complete a report on this issue, but I hope this will be published before we begin Committee stage. In Committee, we will be pressing for a much higher standard to be set for the universal service obligation, with fibre to the premises as standard and a minimum speed of 1 gigabyte.

Where are the policies to complement this welcome initiative? There is nothing in the Bill about improving the teaching of digital skills in schools, nothing about training or apprenticeships and nothing on conditions of employment for those using these technologies to forge careers in the creative industries or across industrial sectors more generally. We will probe these issues in Committee.

There are welcome measures in the Bill about access to digital services, with Ofcom gaining powers to set conditions for automatic compensation to be paid to users where providers fail to meet a specified standard or obligation. We welcome the proposal to help consumers switch communications provider—something we proposed in the 2015 Consumer Rights Bill, but which the Government turned down at that time. We would like consumers to have more ability to access mobile signals across the country and to be able to set a financial cap on those services. We welcome the proposal to improve consumer rights against nuisance calls and wonder whether the Government would be prepared to go further and pick up our suggestion—again from the Consumer Rights Bill—of a default-off proposition for cold marketing calls.

The Bill also seeks, albeit belatedly through a Commons Report stage amendment which was hardly discussed in the other place, to deliver the Conservative manifesto pledge to introduce robust online age-verification checks. We share the objective of protecting children from viewing harmful material on the internet but it is unclear how the Government’s proposals would work in practice. We also wonder whether the regulatory oversight issues have been properly thought through. This is a difficult area, but we are very concerned by the idea that, under the new clauses, the designated age-verification regulator appears to be given powers to censor material that is not illegal, and to have powers to take down websites even though they may have satisfactory age-verification procedures in place. This cannot be right. Children have to be protected, but censorship is not the way to do things in this country. We also take the view that age verification is only part of the story and Ministers should use the Bill to make provision for effective sex and relationship education for young people. In addition, we will put pressure on the Government to introduce measures to deter internet trolls, and to ensure effective prosecution and penalties for those who engage in this illegal behaviour.

The Bill contains ambitious proposals to enable data sharing for a public benefit, as part of a wider aim to deliver public services in a digital by default mode. We welcome the general approach, but there are legitimate concerns about privacy and the security of personal data, in response to which we want to be sure that not only will Ministers be held to account for what personal data are being shared, and for what purposes, but that the scope and scale of this change is subject to challenge by those affected. We are also interested in reviewing how consumers can be better briefed about cybersecurity affecting their personal details held by commercial and charitable bodies. At present, there seems to be no requirement for such bodies to notify customers when their security is breached.

We were pleased to see the fintech section in the Bill, and welcome the proposal to support broader access to electronic payment systems for non-banks, which might just mark the first appearance of real competition in the banking sector. I am also glad to see the section about personal debt, and the late but welcome recognition by HMRC that its current approach needs to do much more to tackle unmanageable personal debt. We may have some proposals in this field about a breathing space and a need for parity between formal and informal debt solutions for the Government to consider.

Following the signing of the BBC’s royal charter, the Bill contains details of Ofcom’s new role as regulator, along with clauses that would put into law the Government’s wish that the BBC take over responsibility for providing free TV licences for the elderly, along with any future policy responsibility. As debates in the other place showed, this is a controversial proposal that raises issues about the independence of the BBC now and in the future. Is it right that the BBC, which should be focusing all its efforts on making great programmes, has also to take on a social policy brief? Is it not time to make the independence of the BBC a reality by ring-fencing its funding requirements and preventing future Governments undertaking the sort of dawn raids that we saw in 2010 and 2015?

We are looking to add a number of provisions to the Bill. There is now all-industry support for action to prevent secondary ticket operators using computerised systems—so-called bots—to snap up seats at concerts and sporting events as soon as they go on sale, before then releasing them at premium prices. We want to introduce restrictions on the current practice of search engines promoting links to pirate sites, and we want to deal with the problem of illegal streaming through IPTV boxes. We will propose better accessibility for on-demand services—I was pleased to hear the Minister mention that this was in the Government’s thinking—and we will also press for a review of the prominence regulations and the listed events regime. We welcome the announcement just made of extending public lending rights to e-book lending but might wish to push further to check whether a tax on reading should continue to be paid on books that are downloaded, since this seems very unfair.

Finally, I return to my opening point about the need for the whole country to prepare for the digital economy. As the Minister said, there is a section in the briefing documents relating to Clause 87, about a new entitlement to digital skills training to help consumers make use of new digital services as well as to improve their chances in the employment market. This is, of course, a proposal we welcome but the devil is in the detail. The main thrust of this clause is simply to amend the Apprenticeships, Skills, Children and Learning Act 2009, with the intention of creating a duty that will work in a similar way to the current entitlement for basic literacy and numeracy. However, the factsheet goes on to point out that that funding will come from the existing adult education budget, administered by the DfE. We will want to probe what this will provide in practice. In particular, we are concerned that there may be no new money for this. Indeed, the document says that, as the AEB is finite, training providers will decide how to allocate resources to meet demand. I sense here the familiar problem posed by “wicked issues”—one department wants to will the ends of a policy but is not able to will the means because it has failed to bring on board the funding department.

We look forward to working with the Government on these issues and to hearing the contributions of other noble Lords this afternoon.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Stevenson of Balmacara (Lab)]

I am sorry, my Lords, but I am in some disarray, because my noble friend Lord Grantchester is about to walk in and take over.

Clause 4 agreed.

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[Lord Ashton of Hyde]

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

Amendments 47 and 48 relate to points made by—

[Lord Stevenson of Balmacara]

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

[Lord Ashton of Hyde]

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

[Lord Stevenson of Balmacara]

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

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

[Lord Ashton of Hyde]

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

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

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

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Moved by

[Lord Stevenson of Balmacara]

50: Clause 8, page 6, line 5, after “make” insert “written”

[Lord Stevenson of Balmacara]

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

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

[Lord Ashton of Hyde]

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

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

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

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[Lord Stevenson of Balmacara]

I am grateful to the noble Lord for his comments. I am sure that the Scottish Law Commission stayed up to listen to them and we will be getting a pigeon at any minute. In the circumstances, I beg leave to withdraw the amendment.

Amendment 50 withdrawn.

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Moved by

[Lord Stevenson of Balmacara]

54: After Clause 8, insert the following new Clause—
“OFCOM power to impose caps upon wireless telegraphy licenses
In paragraph 3 of Schedule 1 to the Wireless Telegraphy Act 2006 (information to be provided in connection with applications), at the end insert “, or(b) that the applicant owns more than 30% of the total useable mobile phone spectrum in the UK and OFCOM has a reasonable belief that the award of further licences would have a damaging impact upon competition in a given electronic communications market.””

[Lord Stevenson of Balmacara]

My Lords, this is an interesting issue which has been drawn to our attention, and we thought it would be worth putting a probing amendment down. I am grateful that grouped with it is a more substantial amendment in many ways tabled by our colleagues from the Liberal Democrat Benches. Both bear on much the same thing.

It is quite common in commercial arrangements to find that there are limits set on ownership and control in proportions which are often around 30%, to reflect the ways in which people might control a market. Yet the way in which the Governments of the day have set up regulations to control the spectrum has not introduced any official cap. Amendment 54 suggests that it might be time now, given the intensity of concern about how much the spectrum is valued and how it is used, to have some form of competition cap, of about 30%. This probing amendment is there to invite the Government to comment on that.

Having said that, I am sure the Minister will want to cover another point, which I think will be the subject of other amendments later. We will come back to this, but I want to flag up now that the spectrum is not a single thing—I cannot think of the right word—and its value depends on which part of the spectrum we are talking about. Lower frequencies and higher frequencies are different, so to impose a 30% limit on the spectrum that any company can own would be slightly perverse, but the issue is important enough to raise the point. Future amendments may deal with the dispersion of the higher-value spectrum among operators, particularly in mobile telephony, where there is concern—I am sure that the Minister expects us to raise this at the appropriate point in the Bill—over the current way in which spectrum has been allocated among the existing players in this field, so that the larger ones tend to have more of the higher-value spectrum. This is an issue we will need to come back to, but it is not the subject of this amendment, which deals with a general concern about the possibility of a monopoly operating within this area, which might be dealt with perfectly properly by a regulator, but where it might also help if there was a specific cap. I beg to move.

[Lord Fox (LD)]

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

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

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

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

[Lord Ashton of Hyde]

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

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

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

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

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

[Lord Stevenson of Balmacara]

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

Amendment 54 withdrawn.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

Moved by

[Lord Stevenson of Balmacara]

71A: After Clause 26, insert the following new Clause—
“Independence of the British Board of Film Classification
(1) The BBFC is to be a body corporate which is independent from the Government.(2) All appointments to the BBFC are to be subject to fair and open competition.”

[Lord Stevenson of Balmacara (Lab)]

My Lords, we spent a considerable amount of time earlier in Committee on the question of the powers that would be allocated to any regulators appointed under the Bill. We did not spend much time on who the regulators would be, although some concerns were raised. However, over the weeks and even today, we have increasingly gathered that the Government’s intention is that the British Board of Film Classification, the BBFC, should be given a major role in the work discussed in this particular part of the Bill.

I will start with the report of the Delegated Powers and Regulatory Reform Committee, which has already been extensively referred to in the debate. It raised questions about what the position would be of any regulator appointed under the powers being taken in the Bill. It said, for example, that the age verification regulator—without naming that regulator—will have powers including,

“to require the provision of information … impose substantial civil penalties … take steps to direct internet service providers to block access to material … and … publish guidance”.

Of course, there is a quite a lot in the report that we have already discussed about how and under what conditions a body such as the regulator that will be appointed should be able to publish guidance, particularly if it is on behalf of the Secretary of State and has not been subject to discussion within Parliament.

Without having any expert knowledge of the work of the committee, I think that, had they known directly who the regulator would be, they might also have raised the issue in my amendment: the status and constitution of the body that is likely to be appointed. I assume that the comments made by the Minister earlier in this Committee session that the BBFC is to be appointed will be carried forward in due course. If I am wrong, obviously the points I make are still valid—although they may apply to a different regulator of a different nature.

The issue I want to pick up comes in paragraph 15 of the DPRRC report, which talks about a memorandum exchanged between it and the department in relation to the powers that would be applied to the regulator. It starts by saying where those powers are found: in Clause 17. It explains that the department feels that it is important to retain flexibility as to who is to be appointed to ensure that the right person or persons are appointed as a regulator. Of course, that point has probably now been overcome by time. It also makes the point that the functions could be regulated. Indeed, we had earlier recommendations that suggested quite persuasive arguments for the regulatory burden to be carried by more than one body. I hope that we will be able to make progress on this as we move through the Bill.

It is clear that if the regulator is to be the BBFC, the work of which is really the basis for the classification system that will be relied on in the legislation, it has a designation to do only part of its work under the Video Recordings Act 1984. It is important to pause here. The amendment that I am putting forward asks the Government to think hard about the correctness of a decision to appoint as a regulator a body that is only partially covered by statute at present. Does the Minister think it right that a private company over which the Secretary of State has limited powers in relation to who is appointed to that body should take on the sorts of responsibilities on civil penalties and the blocking of activity, as well as regulatory functions?

As the amendment suggests, does he not think that it might be more appropriate to look carefully at the body that takes on these responsibilities and to propose, as I do, that it should be either a body corporate or subject to more extensive powers of direction as to who is appointed and how any appointments are made? If that were the case, we could have more confidence in the ability of that body to make the right decisions in relation to all the functions that it has, which extend quite widely, and in particular to age verification, which is the subject of the Bill.

The British Board of Film Classification is a private company. Its number is 00117289. I checked today on the company’s register and, limited as the information is, it is quite revealing. It was first incorporated on 17 August 1911. So for nearly 107 years it has been a monopoly operator in a private capacity, acting in some senses on behalf of the Government in some of its functions. As I said, there are statutory functions in relation to video and now DVD, but none to any great extent in relation to film classification, which is the basis of the work that is being carried on in the Bill.

It is well known that, in its original form, the BBFC was called the Incorporated Association of Kinematograph Manufacturers Ltd. It was created by the then manufacturers of projection equipment to protect the investment that they made in cinemas up and down the country against the watch committees, which had sprung up before but were now displaying an active concern about the impact of films on the morals of the population. This still exists. Technically, films are licensed for exhibition in the United Kingdom only through the local authorities. They normally take the advice of the BBFC. That was a clever move by the manufacturers of the equipment, which was at risk, to ensure that they stepped in ahead of the possibility of moral outrage by creating a situation in which they said and alleged that people would not be shocked by the sorts of thing that might cause alarm and despondency around the country. At that stage they could not have anticipated that Life of Brian is still banned in Glasgow—I think that I am right in saying that. That may or may not be of interest to anybody in the Committee, though perhaps it woke your Lordships up a bit. That is the kind of thing that can come from this rather unfortunate arrangement.

I will recap slightly. This private company last year made a profit of approximately £1.5 million on a turnover of £5.4 million. It owns freehold property not a million miles from here worth quite a lot of money. It has a board appointed by itself and a membership that is not disclosed in the company’s records. It operates in an area of considerable complexity and certainly some moral concern—and it is about to be given additional statutory responsibilities. Those are the main points that I want to make in this amendment.

I do not know whether what I propose in this amendment is right. It is an issue that should be thought carefully about before we move further. For instance, within the BBFC structures at the moment there is no appeal system. The regulatory functions of the Secretary of State are limited; they are mainly related to video and not to film. The powers that are about to be referred to it are mentioned by the Delegated Powers Committee as being of concern, so we need to find a way through that. We have yet to see how that will happen because we have not yet had the Minister’s response. I beg to move.

[Lord Paddick]

My Lords, I support the amendment but not necessarily for the reasons articulated by the noble Lord, Lord Stevenson. Our concern is that if the Government started to appoint members of the British Board of Film Classification and therefore it was not independent of government, we would have a situation in which the Government would potentially be involved in deciding which films or material should be censored or not, which is not a path we would like to go down, particularly in the current climate of populism and the historical issues that that raises.

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[Lord Stevenson of Balmacara]

I thank those who have contributed to the debate. I should make it very clear that I was not in any sense suggesting that the Government should take a closer or more direct action in relation to the work that we are talking about. The Minister made it very clear that the case was for an independent body. I had in mind a not dissimilar situation that arose in a Bill that the noble Lord and I debated only recently, when it was decided that an organisation set up as a private company, which was operating in the public interest, should move from that position and be given company status under a royal charter. The National Citizen Service Trust emerges very shortly from that chrysalis, and it struck me that there were parallels—the Minister is smiling, so I think he gets the point I am making.

The response was also interesting in that the Minister was making the same point that I was making, but from a slightly different direction. It is inevitable that the Government and the regulator so appointed—probably the BBFC—will have to think very closely together about these matters. I think the Minister said they had to be on a “deconfliction” basis—a new word that I have not heard before, although I think I get the message. I think it also means that they have to be of similar mind and aiming in the same direction. In time, the need to ensure that this work is done properly and effectively, in accordance with broad principles already set out in statute law elsewhere, will inevitably mean that the Government should take the steps I am suggesting here, even if it may not be appropriate yet to do so. In saying that, I am not aware of any evidence that would convince the noble Lord who spoke from the other Benches that there is need for urgent action here. I just feel uncomfortable about any body that has responsibilities of a statutory nature not being subject to statutory control. That is really the basis of this, but in the meantime I beg leave to withdraw the amendment.

Amendment 71A withdrawn.

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Moved by

[Lord Stevenson of Balmacara]

71B: Clause 27, page 28, line 8, at end insert—
“( ) In section 107 (criminal liability for making or dealing with infringing articles, etc.), after subsection (1) insert—“(1A) A person commits an offence who—(a) manufactures for sale or hire,(b) imports into the United Kingdom otherwise than for his private and domestic use,(c) in the course of a business—(i) sells or lets for hire;(ii) offers or exposes for sale or hire;(iii) advertises for sale or hire or otherwise promotes;(iv) possesses in the course of business with a view to committing any act infringing copyright;(v) installs, maintains or replaces;(vi) distributes; or(d) distributes otherwise than in the course of a business to such an extent as to affect prejudicially the copyright owner,any article or related software which is primarily designed, produced, or adapted for, or which is primarily used for, the purpose of enabling or facilitating copyright infringement and which he knows or has reason to believe will be used (whether alone or in conjunction with another article or service) to infringe copyright.”

[Lord Stevenson of Balmacara]

My Lords, this moves us into Part 4 and intellectual property. We start with rather a narrow but quite important point about the way technology is moving forward in this area and the need to make sure that the statutory basis under which we look at issues relating to broadcasting and television is kept up to speed. I am joined in Amendment 71B by the noble Lords, Lord Clement-Jones and Lord Foster, for which I am very grateful. I am sure they will give more examples of and more detail on the topic that we are discussing in this group, about devices and services that infringe copyright.

These amendments look at digital TV piracy, which is a relatively new phenomenon but has come about because of the growing amount of close-to-live retransmission of broadcasts—and indeed of live broadcasts themselves—and the services that provide on-demand access to films, television series and other audio-visual content, including music. The categories are slightly different, but they are both very damaging to rights holders. Devices normally feature a mixture of both categories of services, and you can buy them readily on the open market and install them yourself, so it is a growing problem for those who control content and wish to make sure that rights holders earn from it.

These amendments suggest changing two sections of the Copyright, Designs and Patents Act. Amendment 79A relates to Section 297A and transmissions, while Amendment 71B relates to Section 107 and on-demand services. I beg to move.

[Lord Clement-Jones]

My Lords, as the noble Lord, Lord Stevenson, has said, we strongly support this amendment and I am grateful to him for having tabled it. I shall go into a little more detail than he was able to do in order to illustrate some aspects that very much concern the creative industries. A substantial and growing threat is posed to the creative industries by a combination of faster broadband speeds and the widespread availability of cheap plug-and-play devices offering access to infringing software. These devices can be simply plugged into TV sets, offering viewers increasingly easy access to pirated digital content. The Government’s IP enforcement strategy recognises this threat.

The creative industries are deeply concerned about the growing scale of digital TV piracy and have noted a significant increase in the levels of illegal streaming, which inevitably undermines business models within these industries and threatens investment in new content creation. Clearly, the challenge needs to be met on multiple levels, including education campaigns, use of technology, increased enforcement activity and, crucially, clearer laws which are simpler to enforce.

There are a variety of ways that users access infringing content. Typically, this involves a device such as a USB stick or small android box which is plugged into a TV set using a standard connection. The device can be “fully loaded”, meaning it has software and add-ons preconfigured, giving access to thousands of streams, or users can purchase boxes with software such as Kodi installed—an open-source software platform—and then source and configure their own illegal add-ons. The Government’s own statistics highlight the significant growth in the use of this technology, and research by the Industry Trust for IP Awareness shows worrying signs that such behaviour is becoming normalised and socially acceptable.

The scale of the problem is very significant. Listings on Amazon give the boxes a legitimacy—the Industry Trust study revealed that 44% of people assume that if they buy a box or stick from a retailer such as Amazon, it must be legal. An Amazon search for “Kodi” just yesterday auto-completed with “Kodi box fully loaded” and “Kodi fully loaded TV box with Sky Sports and Movies”. That “Kodi” search produces 4,554 results. The first listing is highlighted as an Amazon best-seller and is on offer through Amazon Prime, despite the Q&A under it saying rather different things. IPTV boxes, as they are called, are widely available, with more than 14,000 listings across 511 online marketplaces, equating to more than 4 million items in stock globally. There are more than 200,000 videos on YouTube providing a step-by-step guide on how to install and use Kodi add-ons in order to stream free TV.

Given the rapid growth of such devices, it is not unreasonable to suggest that illegal IPTV boxes could become the second largest pay-TV operator in the UK within 18 months. Despite the IP enforcement strategy identifying the problem, there appears to be a reluctance to make the law simpler and more effective. At present, law enforcement has to rely on general provisions, such as aiding and abetting offences under the Fraud Act, or encouraging offences under the Serious Crime Act. This is because the Copyright, Designs and Patents Act does not address today’s or future issues, and the various offences in it do not include what is by far the most prevalent offence today: the supply of devices intended to commit digital piracy. A specific offence is much needed and was proposed in the other place as an amendment to the Bill.

There are examples of law enforcement agencies such as trading standards and PIPCU being unable to pursue strong cases due to the lack of an appropriate offence. As a result, despite the industry dedicating considerable resources over a long period to protecting its intellectual property through existing enforcement mechanisms, there has been insufficient success and what limited progress has been made has taken far too long. Now, a fit-for-purpose enforcement regime is needed which is kept up to date with technological advancements and new risks posed. This requires the creation in the CDPA of a specific offence relating to devices used for IP infringement.

We have been told that over the past year, the Sky security team has identified more than 100 cases involving digital TV piracy, but they have been extremely difficult to pursue through trading standards or, indeed, through PIPCU. The industry has gone to the extent of seeking counsel’s advice on whether anything in existing law adequately covers the offences involved. It is clear that, while there has been a recent successful five-week private prosecution of a complex case involving pan-European organised crime, this is not the most efficient way to deal with a new challenge. The CDPA, originally written in 1988, needs to be updated to reflect new technology and the subsequent risks posed. New legislation would help trading standards to prosecute those preloading and distributing IP devices.

I very much hope that the Minister will take this opportunity to support this important amendment.

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[Baroness Buscombe]

My Lords, we are talking about taking on the seriously important issue of all illegal access. That is part of the problem with primary legislation, as it is very often not otiose but an anachronism before it has even begun. So often primary legislation leads to us being behind the curve. In fact, I remember so well sitting where noble Lords opposite are sitting when the then Communications Bill was taken through the House in 2003. I remember asking officials why there was no mention of the internet in 2003 given that a certain person called Mark Zuckerberg was developing Facebook and the new world of social media. I was told privately, “Because it’s too difficult”. We are dealing with complex areas of law but I have history in this regard. I look at the noble Lord, Lord Gordon of Strathblane, who, of course, was sitting on this side of the House in those days. I think he will attest to the fact that we were grappling then with issues which almost immediately turned out to be behind the curve when that enormous piece of legislation was introduced. I hope noble Lords will accept that it is much more important to try to get these issues right than enshrine our hopes of tackling these serious problems in primary legislation in ways that will not work almost immediately.

[Lord Stevenson of Balmacara]

This has been a very useful exchange and I think that we have moved forward a little. I think the noble Baroness would accept that the point on which we ended was really the point that the noble Baroness, Lady Kidron, made—that there is a way of getting into this argument which tries to embrace that point about the technology. We may not have the flexibility or the ability to work the technology as well as our children and grandchildren do. It may be a generational issue. The problem may lie more in enforcement than in changing the law because, as the noble Baroness pointed out, the Fraud Act, the inchoate offences legislation and the CDP Act all contain provisions which can probably be used to tackle this issue. However, there is a lack of fit with that movement forward and the technology and the use being made of it by younger generations who do not see the issue in quite the same terms as we do.

Intellectual property as a business model is not well served by traditional models involving traditional economics. The whole point about a patent is that it gives you the monopoly that most of competition law seeks to remove, albeit for a limited period. Copyright is no different in that sense. This is not perhaps the time to argue this, certainly not at this stage in the proceedings, but it could be argued that by going to a “life plus 70 years” model for copyright—noble Lords who are earning money out of this should close their ears—we are probably making a mistake which future generations will want to come back to, because the incentive to invest in innovation has to be matched against the right to exploit that at some point. Arguably, life plus 70, particularly as people live longer, is probably not the appropriate model and a more restricted term, which would also be subject to additional requirements to make material available, might be the way forward. In that sense, some of this stuff might not therefore be a problem today as opposed to when we are a long way into it.

However, I welcome the investigation that the noble Baroness mentioned. The timing seems rather rapid for government; I was surprised to hear it but, if that is the case, who are we to say no to it? If the commitment is there and the Government are prepared to bring forward legislation to tackle this issue—I am sure that she said this, as I wrote it down—we could not be more happy. I beg leave to withdraw the amendment.

Amendment 71B withdrawn.

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[Lord Black of Brentwood (Con)]

My Lords, I should like to say a few words in support of Amendments 73 and 235, to which I have added my name, and in doing so draw attention to my media interests as listed in the register. Like the noble Lord, Lord Clement-Jones, whose summary of the issues was excellent and which I wholeheartedly endorse, I warmly welcome Clause 29 and the Government’s decision to scrap Section 73, but I urge them to get on with it straightaway rather than having any form of transitional period, as time really is of the essence.

There is a good reason for that. No one can be in any doubt about the speed of change right across the media. A technological tsunami is overwhelming all those involved in content production, while the pace of development in the sector is relentless and punishing. It is the clear responsibility of any Government who believe in the creative economy—and this Government certainly do—to do all they can to support them through it, in this case by allowing the commercial television sector to invest more in world-class content. The question of retransmission fees is one where the Government can be a real help or, indeed, a real hindrance.

The legislation that is being repealed is nearly 30 years old. When it was put on the statute book, the fax machine was a technological novelty and there is simply no rationale for it continuing a day longer than it has to. Like the noble Lord, Lord Clement-Jones, I cannot see any reason for there to be a transitional regime, especially as all those involved have had fair warning of something which, as he said, we have been discussing since 2008. A further delay of up to two years is a lifetime in the creative industries and Section 73 is doing real harm now. If we are committed to a successful commercial public sector broadcasting industry and want to see investment in brilliant content, we should make sure that Section 73 goes as soon as the ink is dry on this legislation. Any law that is out of date and doing positive harm should go straightaway and not linger. It would be a real boost right across the whole of the UK’s creative economy and ensure that it gets an immediate benefit from this very important Bill.

[Lord Stevenson of Balmacara]

My Lords, this has been a good debate on a topic that has been well rehearsed in this House. I have stood at this Dispatch Box and in the Moses Room trying to support the Government in their attempts to get to the root of this issue over a number of years and I sense that we are reaching the end of a journey. At this stage I am not opposing the decision by the Government that is reflected in the Bill to remove Section 73, but when the noble Baroness responds I hope she will be very clear about some of the thinking behind it. I do not think the issue is as uncomplicated as some other contributors to the debate have said.

In the first place, I understand that the primary reason is the abuse that has been exercised by non-cable operators in recent years, referred to by the noble Lord, Lord Clement-Jones, in relation to using Section 73 to try to gain access to PSB material for retransmission on iPad and other devices, but not on cable. Obviously, the review carried out by the Government was important, but the conclusions seem to reflect the fact that the thinking is still that the “must offer, must carry” provision will interpose itself into any negotiations about value. That is because if you must offer and there is a “must carry”, that will not make it a free and open negotiation about what the price should be. So I shall be interested to hear what the noble Baroness thinks. I understand that the Government have decided that although the repeal should go ahead, it should not result in significant fees flowing from cable operators to PSBs so, as I say, I should like to know what the thinking is on that.

While I agree with the way the Government are going forward, I worry about the risk of blank screens. If negotiations are to take place but result in a failure to agree, a very large number of people who have signed up in good faith to cable channels might not be able to watch the programmes that primarily drove them to sign up; that is, those of the PSB channels. In that sense it is important that we get absolutely the right story on that.

Our Amendment 73A, which I am delighted to hear is supported by the noble Viscount, Lord Colville, the feeling is that if money is to be paid for carrying this material, it is important that it should be recirculated into original British production and not used simply to repay shareholders and others.

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[The Duke of Somerset (CB)]

My Lords, I intervene briefly to support this amendment, which seeks to rebalance the need for public access to all types of books against authors’ rights to some modest payment for their work. The PLR gives authors a small income where their books are sold mainly to libraries. The main point is that the PLR was extended to audiobooks in the 2010 Act for on-site loans but the need here is to extend it to remote loans, an area quickly increasing in popularity where items are downloaded to a computer situated away from the library.

We heard that zero remuneration is now illegal after the European Court of Justice ruling last November, so I expect that the Minister will have no difficulty in accepting this simple but important amendment. However, that ruling also drew attention to the difficulty of ensuring that only one copy is downloaded and that after expiration of the lending period no further listening can be enabled. Could the Minister indicate how this might be enforced or will it probably just be ignored?

[Lord Stevenson of Balmacara]

My Lords, briefly, I apologise to the House for the brevity of our Amendment 79B. We ran out of time and did not have the skills or ability to write an amendment that should properly have been in the Budget. We also lacked the temerity to do that. It is an aspiration not a probing amendment; it does not even qualify for that. It is a flag-waving exercise as we ought to think harder about the tax on knowledge. As the noble Earl, Lord Clancarty, said absolutely rightly, it is ridiculous that we believe that books in physical form somehow transmit knowledge and are worthy of having a VAT-exempt regime but when they are downloaded they must be subject to VAT. That seems unfair. We support Amendment 74 in the name of the noble Lord, Lord Clement-Jones, and look forward to hearing the responses from the noble Baroness.

[Baroness Buscombe]

My Lords, I thank all noble Lords for this important debate and for this proposed new clause. It seeks to extend the public lending right to include remote lending of e-books and e-audiobooks by public libraries. This would allow authors of these to receive payments from the public lending right fund, as they do for public lending of printed and audiobooks. It would also amend the definitions of e-books and e-audiobooks so that these works could be lent by public libraries only if they have been licensed by publishers on agreed terms for library lending.

The Government support recognising authors for e-lending by libraries. We committed in our manifesto to work with libraries to ensure the public can access e-lending, and to appropriate compensation for authors that enhances the public lending right scheme. As the Minister in another place confirmed, we intend to legislate to extend the public lending right to include remote e-lending. In response to the noble Lord, Lord Maxton, I say that our intention is to include all e-books regardless of technology.

This proposal is supported across the sector, including by libraries, authors, publishers and booksellers. I am therefore pleased our commitment is also supported by noble Lords in this House. Public libraries increasingly provide e-lending to support reading and literacy in response to the needs of their communities. Most library loans remain of printed books, with over 200 million such loans in Great Britain in 2015-16—so not everyone has given up the printed word, as has the noble Lord, Lord Maxton. However, e-lending is growing, with 4 million e-book and 1 million e-audiobook loans in Great Britain in the same period.

In considering how to legislate to extend the public lending right to include e-lending, we are engaging with representatives of authors, libraries, publishers and booksellers to understand their views. A number of these have raised points that need careful thought before the Government table their own clause.

One point made by representatives of authors and publishers is that an amendment to the legislation should include protections for the commercial market. The proposed new clause seeks to do this by specifying that e-books and audiobooks could be lent out from public libraries only if they had been licensed by publishers on agreed terms for library lending. However, others had raised concerns about whether such a provision might impact on public libraries’ ability to acquire and lend e-books.

This is an important issue. Officials have therefore met sector representatives to allow us to consider carefully the views and decide on the appropriate way to proceed with our commitment. I understand that the discussions in recent days have been promising and that the respective parties have been considering whether they can agree a settled view on the issues. We want to continue to work together to support a strong book sector that helps promote opportunities for reading and learning by the public, so we intend to table our own proposals for the necessary legislative changes as soon as possible. We will carefully consider these views in deciding how to proceed. I hope therefore that noble Lords will not press this proposed new clause.

Amendment 79B requests that e-books be exempt from VAT. Issues affecting taxation are a matter for the Chancellor of the Exchequer. It would therefore be inappropriate to include this amendment in this Bill. There are other difficulties, however, in accepting such an amendment. VAT is an EU-wide tax and is applied by member states within agreed structures. While we remain in the EU we are bound by our international obligations. This amendment would cut across those obligations in respect of VAT. EU VAT law, agreed unanimously by member states, currently specifically requires the standard rate to be applied to all electronically supplied services. This includes e-books, which are services, not goods. Because of this, if we accepted the amendment we would be in breach of our obligations. To make the change proposed in this amendment a change of EU law will be necessary, supported by all 28 member states. While a proposal is currently on the table there have been a variety of different reactions from member states and no unanimous agreement. I hope that the noble Lord will therefore not move his amendment.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is extremely kind of the noble Lord, Lord Foster of Bath to introduce my amendment for me, saying that he was not going to speak to it and then covering all the points I was going to make. That means we will move a little faster than we would otherwise have done. I think I can limit my speech to three points, in the sure and certain knowledge that the noble Lord, Lord Clement-Jones, will cover any points that I do not cover in great detail.

We understand that there is a voluntary code in circulation that has been offered to all parties, and it is thought that it might be signed some time this week—at least, that is the deadline that the Government have given. If that is the case, as the noble Lord, Lord Foster, says, then that is obviously good news and takes us a step down the road, but my amendment would be necessary if not everyone who has been offered this signs up to it, which I think is quite likely. There may be new entrants and other companies that participate in this area for which the activities that facilitate copyright infringement by users will remain a problem, and of course there may be changes in technology that we cannot even anticipate at this stage that may make it necessary, as adumbrated by the amendment, for the Secretary of State to return to this issue in future. For all the reasons given by the noble Lord, Lord Foster, this is a helpful amendment, intended to ensure that this long-running problem gets solved. I hope very much that the Government feel able to accept it.

[Baroness Buscombe]

My Lords, on Amendment 77, over recent years the UK has made great strides in the enforcement of intellectual property, and we are now judged to have one of the best IP enforcement regimes in the world. This is definitely a position that we are keen to maintain, and the Bill sends a clear signal that the Government believe copyright infringement is a serious matter, irrespective of whether it is online or offline. This includes measures to increase the penalty for online copyright infringement from two years to 10 years. We understand that there are concerns in the music industry particularly that online intermediaries need to do more to share revenues fairly with creators, which the amendment seeks to tackle. However, we need to find balanced solutions that provide clarity without undermining basic freedoms or inhibiting the development of innovative digital models.

As the e-commerce directive is EU single-market legislation in origin, we will in effect have to wait until after we exit the EU and then possibly initiate a debate as to whether this regime, or indeed the e-commerce regulations as a whole, is still fit for purpose. We are also wary of making piecemeal changes to this important regime that has helped to foster the development of online services and has been helpful to the development of the UK’s burgeoning tech sector without a proper debate involving all parties.

That said, the current law, including the exemptions from liability, has fostered an open and innovative internet, giving online services the legal certainty required to start up and flourish. This has been good for creators, rights holders, internet businesses and consumers alike. Platforms, like all businesses, have a role to play in helping to remove copyright-infringing material, and there is no place for a system that encourages copyright infringement online. However, the UK Government are fully committed to ensuring that our creative industries receive fair remuneration for their work. We want to see creators remunerated fairly, while encouraging investment in new content and innovative services. We will carry forward these principles when engaging at policy level with the EU while considering our own UK-based solutions.

The Government are clear that we must maintain our rights and obligations as members of the EU until we leave. That means that we carry on making arguments within the EU concerning our preferences for EU law. Once we leave the EU, we may choose to reconsider a range of issues, including the limited liability regime, but for now, government policy remains unchanged. The European Commission has recently published a series of copyright proposals in that area, and we are in the process of carefully considering those proposals. While we remain a member of the EU, we will continue to engage with policy development in this space, alongside considering the development of our own copyright framework.

Amendment 79 would mean that the Government take a power to impose a code of practice on search engines, to dictate how they should work to prevent copyright infringement. The return of that suggestion, which was also discussed in another place, gives me an opportunity to update noble Lords on progress in this important area. Since the idea was last discussed in the other place, IPO officials have chaired a further round-table meeting between search engines and representatives of the creative industries. While there are still elements of detail to be settled, the group is now agreed on the key content of the code and I expect an agreement to be reached very soon. All parties have also agreed that the code should take effect, and the targets in it be reached, by 1 June this year. The search engines involved in this work have been very co-operative, making changes to their algorithms and processes, but also working bilaterally with creative industry representatives to explore the options for new interventions, and how existing processes might be streamlined. I understand that all parties are keen to finalise and sign up to the voluntary agreement, and so we believe there is no need to take a legislative power at this time.

Surely it is better to act on a co-operative basis now, and start tackling this serious issue right away. If, however, a voluntary deal cannot be achieved, we will re-evaluate our options. I hope therefore that the noble Lord is reassured, and feels able to withdraw the amendment.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for a very well-read response to the questions we all had about these technical amendments, although some of them were not quite technical of course. In terms of the four categories, I listened to three very carefully, and I will read what she said in Hansard, but we have no further comments to make on them at this stage.

She touched on the issue in relation to which we have two amendments down. I am grateful to the Government for responding so quickly to the discussion in another place on this issue, because as originally drafted, the Bill would have criminalised disclosures by whistleblowers and investigative journalists revealing matters of legitimate public interest. The point was picked up and discussed at some length, and had attracted interest from a wide range of people such as Sir Peter Bottomley and Helen Goodman, who raised it. The Minister in another place undertook to take it back, and we have now had the amendments put forward.

Those of your Lordships who have bothered to read the amendments in Clauses 50 and 51 will recognise that the wording is very similar in both cases. The difference, narrowly put, is that the amendment that we were advised would take the trick in this area included not just print journalism but also broadcast journalism. I am not certain whether that is necessary or not, but the Government have come forward with a slightly narrower point of view. I think we agree the aim, and it may just be a question of the correct wording, so unless there is any particular issue, we can do this either by correspondence or perhaps in a quick meeting, and I do not think there is anything on this point that need detain the Committee further. We are agreed and are delighted that the Government are making the move. It is just a question of trying to use what time we have to make sure that we have absolutely nailed it down completely.

Having said that, what has proved difficult in other pieces of legislation is how one defines whistleblowers. There is no attempt to do that here; the test is simply whether or not what has been disclosed was in the public interest. Again, there might just be something around that where we might look at other discussions and come back on it. But for the moment, I will leave it.

[Baroness Buscombe]

I thank the noble Lord for that. The opposition amendment makes specific reference to broadcast transmission when the government amendment on this topic does not. However, the word “publication” in our view can be construed sufficiently broadly to cover broadcast media. Section 32(6) of the Data Protection Act 1998 provides that:

“For the purposes of this Act ‘publish’, in relation to journalistic … material, means make available to the public or any section of the public”.


The ICO guidance on this indicates that publication for these purposes would therefore cover broadcast. As a result these additional changes are not necessary.

[Lord Stevenson of Balmacara]

It is quite an interesting point. The world has moved on since those original drafts, and we have to think a bit more carefully about what happens on YouTube and whether disclosure on social media will be covered by this. I do not dissent from what is being said but would just like to be certain that we have used this opportunity, which may not come again, to make sure we have this nailed.

[Baroness Buscombe]

I thank the noble Lord for what he has said and absolutely understand where he is coming from.

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Moved by

[Lord Stevenson of Balmacara]

117A: After Clause 41, insert the following new Clause—
“Data sharing for the purpose of supporting better debt management
In addition to the purposes set out in section 41(3), information about debt may be shared by specified persons under this Chapter for the purpose of helping individuals to manage their debts, including by provision of a breathing space.”

[Lord Stevenson of Balmacara]

My Lords, in an idle moment, a moment of complete frivolity, I looked up GOV.UK to check facts—I thought that would be a useful contribution to the debate. The date we have all been searching for is 1837: the General Register Office is part of Her Majesty’s Passport Office and contains records dating back to 1837. I thought that would be useful.

I beg to move Amendment 117A in my name. This stems from my period of service as chairman of a wonderful charity called StepChange, which deals with individual debt owed by ordinary people. In the time I was there—I resigned about two years ago—we had about 600,000 people a year contacting the telephone helpline or going online to try to seek solutions to their debt problems, so it is a very significant problem in British society and something we must take a great deal of care about. Most people who came to us were struggling with multiple debts; in other words, they owed money to a variety of different sources, ranging from local authorities, mobile phone companies, debt collection agencies, Revenue & Customs, payday lenders, utility companies and catalogue lenders—there is a very large number of them.

A median client would be aged about 45, female and owing about £20,000 to eight different creditors, so it is a significant problem that people get into. Within that, with a tremendous requirement now for debt advice, with lots of people struggling with debt, one worrying trend has been how bad central and local government have been in dealing with people, particularly those with multiple debts. A recent survey of about 1,000 StepChange clients found widespread aggressive enforcement from local authorities even when people were asking their authority for help. Clients were more than twice as likely to be threatened with court action or bailiffs than to be offered an affordable payment option. This is despite guidance being issued by central government about how debts should be treated.

Of course, what happens when people face strong demands, very often from central or local government, is that they tend to go to people who can lend them money quickly, probably from an existing credit line, almost certainly, until recently—but even today it is still happening—taking out a payday loan. They try to borrow more to try to pay back original debts and get themselves into a worse situation than they were before. The same survey asked clients to rate what their creditors had done to them and whether they treated them fairly or unfairly. I am afraid to say that public sector creditors came out very badly, occupying three of the top six places in the unfair treatment table. It is interesting to note that HMRC, for instance, scored no better than payday lenders, which the Government, through the FCA, have spent a lot of time trying to sort out over recent years.

That is the background of our concern. We welcome the provisions in the Bill to think again about how debts owed to the public sector are collected. In that light, these amendments are put forward for suggestion, they are probing amendments at this stage, and I hope that they will elicit a response, because it is not just StepChange, the debt charity, that has been concerned about this. Citizens Advice has also raised concern about public sector debt collection practices, finding that public sector creditors are,

“mostly out of step with financial services and utilities companies when it comes to setting affordable repayment rates, and that our clients can suffer detriment when public bodies have uncoordinated and inconsistent approaches to debt collections ... central government debt collection lags behind the higher standards expected of other creditors”.

This is focused on individuals who have problems with their debts, but of course there is a wider cost to society as a whole which, through relationship breakdown, homelessness and difficulties with maintaining concentration at work, et cetera, has been estimated at about £8 billion a year. The Bill contains clauses that relate to this and they seem to suggest that central government as a whole—but in this case HMRC—are thinking about how the data-sharing powers that are coming should be used to allow them to collect several debts at once, but also to do it in a slightly different way. I hope that is the case. We are back with our old friend, the code of practice, because what is said in the code of practice will determine whether this will work.

I have, then, four things I invite Ministers to respond to. First, Clause 45 is limited to departments that seek data-sharing powers and says only that they should “have regard to” the code of practice. This has, I think, been picked up in other amendments that we have considered today. It would be good if the code of practice were also embedded in a much stronger statutory provision, to give it real bite. We have seen examples of guidance—I mentioned one involving central government issuing guidance on council tax collection methods—but such guidance does not work, because it is non-binding and only advisory. If there is a code, it should be embedded in the statute and people affected by it should be able to refer back to it to make sure that it works properly.

Secondly, the public body itself must believe that this is the way in which it needs to operate. Within the amendments are a range of issues that central government bodies might pick up that would match the best practice in utilities, banks, credit cards and store cards—all of which have been through the cycle of trying to get money out of individuals who owe them and other people money, and have recognised that you have to deal with people with multiple debts in a completely different way from those who just owe money directly. That is gradually changing the way people operate. There is further to go, but it is a lesson that should be learned. I hope that the codes can be adapted to reflect that.

Thirdly—this may be too much of an ask, but it should be recognised—this Bill applies only to public bodies, and their creditors, when they are seeking to use the data-sharing powers. The problem is, of course, wider than the data-sharing powers. Problems with central and local government debt collections are widespread: practices need to be reformed and this is not likely to relate only to places where data sharing is used. The Government should think ahead about this and try to set out an understanding for all their agencies that poor debt-collection practices can harm the rate at which they get their money back and the time it takes, and it will also harm the financially vulnerable people. Taking account of that across all their practices would be a very good thing.

These amendments, therefore, try to raise those points, but there is one other thing that the Government should try to do, which is in the first amendment. It is to take a lesson from Scotland—I am sure that the noble and learned Lord from Scotland will wish to pick this up and think harder about it—where, when you have a private or a public debt and seek guidance from the state agency that operates that scheme, you are given statutory protection from excess charges and your interest rates are frozen, providing you stick to your debt repayment plan. That means that people get a breathing space, time to organise their finances, think about their budgets and work out what they are going to do, without the terrible pressure from those who are owed money to start repaying it. It is only when all those issues have been brought together, and an agreement reached between the creditors and the agency, that repayment begins. That has a very much higher rate of success than any other scheme. England lags way behind on this, and it would be no skin off the Treasury’s nose if it took a leaf out of the Scottish Government’s book and brought in their procedures—with a statutory breathing space that gave some hope to people who want to repay their debts but cannot do so because the practices are not as good.

[Lord Keen of Elie]

My Lords, I acknowledge the point made by the noble Lord, Lord Stevenson, that this is a significant issue, and I understand that this is a probing amendment to allow us to consider some of the wider issues that he has touched on in the debate.

Amendment 117A seeks to include in the Bill an additional purpose: to enable debt information to be shared under the powers provided by Clause 41. It seeks to state explicitly that debt data can be disclosed,

“for the purpose of helping individuals to manage their debts”.

There is also a reference to the breathing space, and I will come back to that point in a moment in response to the questions posed by the noble Lord.

In the first instance, we would venture that the amendment is not necessary. The provisions as drafted enable information to be shared,

“for the purposes of the taking of action in connection with debt owed to”,

a public authority or the Crown. This includes but is not limited to, for example, identifying or collecting debt. The provision is sufficiently broad to enable sharing for the purpose set out in this amendment. That is the position of the Government. The Government are considering the recommendations that have been made following work to look into the merits of introducing a breathing space for customers, which we are aware is available in other jurisdictions. While the Government are considering these recommendations, it would be premature to incorporate a reference to this initiative in the Bill at this time. I hope the noble Lord will accept that the matter is being looked at.

--- Later in debate ---

I understand the desire to ensure that the codes are effective; it is the desire of the Government as well. As the noble Lord observed, you can press so hard in the matter of debt recovery but, as banks and others have discovered in the past, if you press too hard something breaks and nothing is returned. We suggest that the codes provide a strong safeguard for the use of the powers, backed up by real consequences if they are not adhered to. There is a power there to ensure that although the Bill says “have regard to”, it is a legal obligation and suitably flexible in the context of these powers. While we continue to consider the recommendations of the Delegated Powers Committee, which also touched upon this, I invite the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister very much for his considered response. I am grateful to him for that. The breathing space proposal has been around for some time, so I was hoping to get a bit of an edge on it but we will clearly have to wait and see. It would provide a very big step forward for how public debts are organised. As I said, how the code of practice is framed is the main issue and I am grateful for the Minister’s thoughts that there might still be opportunities to influence it. What was said today might do that trick but we will certainly look at it carefully. With that, I would like to withdraw the amendment.

Amendment 117A withdrawn.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Baroness O’Neill of Bengarve (CB)]

My Lords, I share the view that the noble Lord, Lord Clement-Jones, has expressed, that the amendment probably is not the way to go about this. Algorithms are too ubiquitous, useful and powerful in this case. I do not know what we could do instead, but I note that one of the things we are looking at, together with the problem that the noble Lord, Lord Lucas, has identified, is that the internet service providers and the big media companies are supposedly platforms, not publishers, and they do not have the responsibilities of publishers for that reason. Facebook will say that it merely hosts the material that individuals post. When individuals post material, they ought to think that it reaches an indefinite number of people because the algorithm spreads it through the echo chambers. It is the cyber silos that we are going to have to think about. With the greatest regret, I do not think the amendment would do that, but I very much support the principle of looking into this matter.

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very interesting debate. We, particularly those of us of a certain age, often get to a point where we are scared of the technology that we are expected to use. We are in the hands of our children, who shout things like, “It’s intuitive! Just do it!”, but we do not have the faintest idea what we are trying to do. However, we should not be scared of technologies. History should tell us that the reason why Shakespeare’s Globe is outside the city walls of London is that people like us in those days felt that they were dangerous plays that should not be seen by too many people. Video nasties and indeed concerns about some of the issues that are in the Bill are examples of the same thing. We have to be careful that this is not just another “penny dreadful” story but a serious issue.

I was not that concerned about this matter in my own consciousness until I came across it personally and in relation to something that has already been mentioned in the debate. I work with a small charity that relies entirely on a website presence in order to try to help people who suffer from the condition that it serves. For the first seven or eight years of the charity’s life, we were ranked number one on a search engine—let us call it Google—so when you searched for the condition, we came up top. In the last six months, we have gone from top to, I think, 44th in the rankings for this condition, which means that no one now uses our services, rings up or communicates with us. We are now on page four of the search results and that turns out to have been achieved by a change in the algorithm, which prunes out the people who apply. The ISP put in a particular search term that managed to knock down the efficacy of the inquiries that were coming to us at our charity. So the charity, which was doing good work and reaching 2,000 or 3,000 people a year, is now reaching no one, and we cannot change that because the algorithm is behind a commercial confidential situation. So I pick up the points that are being made all round the Chamber about the need for us to get more clued up about this without being scared of it, and I support the amendment for that reason.

The second point that has been picked up, which slightly goes against the wise words of the noble Baroness, Lady O’Neill, is that, where an algorithm is helping to achieve a relatively straightforward systems approach, it is probably not as much of an issue as where it is substituting its judgment for yours. It is not knowing what that judgment is that is the problem, and that is where the points that have been made need to be picked up. That is something that we would all benefit from. Whether or not this is the right amendment, there is an issue here that will need to be pursued, and I look forward to hearing the Minister’s response.

[Baroness Buscombe (Con)]

My Lords, I thank noble Lords who have taken part in this very interesting debate. Clearly there is a principle upon which everyone is agreed, and that is that this is a serious and growing issue. It is certainly an issue that the Government take very seriously.

As my noble friend Lord Lucas has set out, the basis of the amendment aims to understand the impact of algorithms on users of digital services. As we have already heard, algorithms play an important role in modern life, from making recommendations for books you might like to read, to more important matters such as credit ratings and detecting fraud. Indeed, there is a real debate here on the extent to which the public are willing to compromise on what is termed privacy for a better service. Transparency itself is incredibly important in terms of knowing how information about oneself is used, for what and with whom it is being shared, and having some control over that.

--- Later in debate ---

[Lord Lester of Herne Hill (LD)]

My Lords, I support these amendments, which seem a very good compromise. They ensure fairness and balance and avoid the very narrow approach of judicial review regardless of merit in any circumstances, without going into the substance of matters in a way that would turn the review into a whole general appeal. For those reasons, I am glad that the noble and learned Lord, Lord Keen, is taking part in this debate. He will know a great deal about the subject from his private practice as well as his public practice. This is a good compromise. It may be that the Government can come up with something better, but this is certainly better than Clause 75 as it stands.

[Lord Stevenson of Balmacara]

My Lords, I am not a lawyer—I feel a bit uncomfortable joining this debate; I am sure there are issues it is much beyond my abilities to deal with. But I say to the Minister before he responds, the point made about the degree of concern in the industry is important. This is a big and complicated Bill with many different aspects. It reaches far into aspects of our digital world. This clause, however, is the one that has generated the largest number of responses and—to judge from the meetings I have had with people—the most anger.

In a sense, so what? If it is the right decision, it should go ahead. However, it is clear that there is a lot of support for the current situation, even though there are arguments against it. The point was made time and again that the existing arrangements seem to work well, so why are we changing them? The industry, as I said, is pretty well united against it. One or two are speaking up for it but they do not represent the majority of voices we have heard.

There is also a real danger that—particularly at a time of uncertainty over technological change and regulatory positioning—having a period when we deliberately create confusion and delay until the new guidelines, or baselines, are established, is probably not the best way of making progress. Uncertainty over a long period will affect investment, which is not what we want. So there are reasons for asking the Government to be very clear that this is the right way forward.

We all share the same wish: we want an efficient and trusted regulator that can deal with this complicated, fast-moving and complex area. But it would be quite improper to have a situation in which there was a very limited right of appeal on any case determined not to have been carried out correctly—not so much about the judicial aspects, but on the merits of the case; in other words, where the evidence does not support the decision that has been taken.

I do not understand quite what the difficulties are. I have looked back over comments made by the noble and learned Lord when he was Advocate-General for Scotland. He is on the record in a number of places and a quick search with an algorithm of some complexity, which I could not possibly describe, reveals him to have said several things about judicial oversight. As it has developed, he says, it has,

“provided us with a flexible standard of oversight, which in many senses is wide-ranging”.

However, judicial oversight is the issue and that is what we have to emphasise. He might like to reflect on that in relation to what has been said. There are other things—I will not quote them as I am sure he is embarrassed enough already, or perhaps not. But the issue needs bottoming out—there is a serious point at its heart. There are issues that will affect the whole nature of the business we are regulating in this manner which need to be resolved.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I am obliged to the noble Lord, Lord Clement-Jones, for raising this matter because it has generated a great deal of heat and debate in the context of the Bill. I appreciate the point made by the noble Lord, Lord Stevenson, with respect to the number of responses there have been. I just emphasise that judicial review is a form of judicial oversight, and a very effective one, but I will elaborate on that in a moment.

We are aware that the major telecoms operators in particular, and their agents, have lobbied vigorously and in detail on this point. Indeed, the noble Lord, Lord Clement-Jones, brought out many of the points that have been made by their agents in the course of that vigorous and detailed lobbying. I shall not go into the detail of Ofcom’s position on this. It has expressed its position very clearly and we understand it. What I would say is that there is no single position for all utility sectors, and both judicial review and appeals on the merits may be used in the same sector for different kinds of appeals. It is not a black and white situation.

The Government’s case is not that this change is needed to ensure consistency with other utility sectors but that the public interest will be best served in the communications sector by an appeals regime that focuses on errors which Ofcom is alleged to have made, rather than asking the court to reach a different conclusion. Let us remember that Ofcom is a qualified regulator and its decisions are entitled to respect. They are informed decisions and they are not irrational. They are not determined on the toss of a coin. That is why judicial review is an appropriate approach.

The noble Lord, Lord Clement-Jones, also talked about consumers. I find that interesting. Perhaps I may refer briefly to the Which? response to Clause 75. It sees this measure as one of the most important currently contained in the Digital Economy Bill, saying that it will give the regulator the power and confidence to take the necessary actions to protect consumer interests without fear of costly and lengthy litigation procedures. Introducing a judicial review standard for appeals in telecoms will mean that decisions made by Ofcom in the interest of consumers should be easier to implement and quicker to take effect. That is a reflection of Ofcom’s own view of the matter. This is not necessarily about coming to the aid of Ofcom but about recognising these matters from the perspective of the consumer. That is extremely important.

Currently, appeals brought under Sections 192 to 196 of the Communications Act against Ofcom’s regulatory decisions are decided “on the merits” by the Competition Appeal Tribunal. That exceeds and, as the noble Lord, Lord Clement-Jones, acknowledged, effectively gold-plates Article 4 of the EU framework directive, which requires that the merits of the case are duly taken into account in any appeal. That is not quite the wording of the proposed amendment.

The result of this over-implementation is an unnecessarily intensive and burdensome standard of review that can result in very lengthy and costly appeals litigation, which in turn can hinder timely and effective regulation. Some of the appeals that have taken place have done so over extraordinarily lengthy periods. Of course, the very large communications operators are in a position to fund that sort of appeal process. Clause 75 will change the standard of review so that the Competition Appeal Tribunal will decide appeals against Ofcom’s decisions by applying the same principles as would be applied by a court on an application for judicial review and, in particular, judicial review of other administrative actions. This will focus appeals on the key questions of the legality and reasonableness of Ofcom’s decision-making.

The noble Lord, Lord Stevenson, suggested that there might be cases in which there was simply no merit in a decision. If that was so, and if Ofcom proceeded without reliance on the facts of a particular case, that would be amenable to review under a judicial review standard.

--- Later in debate ---

Moved by

[Lord Stevenson of Balmacara]

222E: After Clause 76, insert the following new Clause—
“Impact of Royal Charter and Agreement on radio production
The Secretary of State must report, within a year of the passing of this Act, on the impact of the BBC Royal Charter and Agreement, on—(a) the balance of in-house and independent production of programmes for BBC radio broadcast;(b) the extent to which training and development of production staff may have been affected;(c) the numbers of staff active in radio production compared to 2016, including details of gender and other indicators of diversity; and(d) the impact the changes have had on the salaries and conditions of radio production staff.’’

[Lord Stevenson of Balmacara]

My Lords, I was slightly surprised at the way the Minister rebuffed concerns about the way in which Parliament engaged with the royal charter process last time. It might be because he joined us halfway through, to a little bit of shock but quite a lot of pleasure. Looking back on it, I do not think it can be said that Parliament was as engaged as it wished to be in the process. The ability to speak on two occasions when Statements were graciously made by Ministers, and to speak in one debate focusing, at that stage, on the draft charter, with the agreement as yet not finalised, can hardly be described as participating actively in the process. I think we can agree to differ on that point. I am sure that noble Lords who spoke in the earlier debate had a very different version of how that might have gone, including involvement by Select Committees and involvement in the detail, which would have resulted in proper and effective scrutiny of the Government’s proposals and the eventual outcome.

This amendment, by serendipity, actually deals with some of the fall-out of the rather deficient process we are going through. When charters are drafted, considered and debated, they are never alone: there are lots of other things going on. Many people present will be able to give witness to that effect. One of the things that sometimes gets missed out is the detail in the agreement. The agreement, of course, is really the mechanics of how the arrangement between the Government and the BBC works in practice. One was brought in in such a way and at such a time that it was never discussed in your Lordships’ House or in the other place. It only really became an issue once the charter was about to be sealed. The issue was the changes to the way national radio output was to be operated in future, which were being imposed on—although not necessarily resisted by—BBC management. That is the subject of this amendment.

Amendment 222E is a probing amendment, asking the Government to conduct a review of an important sector of the creative economy. It does not specifically relate to the BBC—although it is cued into something that is happening there—but it would provide useful information and detail that would be of interest to the Committee. If the review were carried out in the way I suggest, with a report covering a range of topics related to radio production, I hope it could be brought to your Lordships’ House and generate a good discussion.

In short, about 60% of BBC national radio output is going to be put out to competitive tender over the next few years, to 2020. Over the past 20 years, BBC radio has actually increased its external commissioning from zero to around 20% of output. That is quite a slow rate of progress, but that is not unconnected with the fact that we are talking about a very fragile sector of the creative industries. Radio production does not involve a very large group of people. The independents are usually quite small and not in the habit of operating on a scale that would enable them to take over the huge increase in the proportion of radio that we are talking about.

The proposal would mean an extra 3,000 hours of national radio output being put out to tender every year. That, of course, does not come free of charge, but with the cost of a commissioning process in-house at the BBC. Therefore, it is not all a one-way process: there will be additional costs. Those costs will not be funded by any additional funding from the licence fee or any other process, so there is bound to be a squeezing of radio budgets, and neither external nor in-house producers will be able to rely on getting any increase. It is going to be a rather difficult situation, affecting the people involved. Current in-house BBC radio producers will find that their jobs are largely going to disappear, because, although a significant number of programmes will be retained in-house, the 60% figure means that the majority will be produced externally.

The question of how the BBC will continue to operate as a major trainer in this area must be raised, because without the numbers, that training might well be at risk. Who else is going to do the training to ensure that radio has a flow of qualified people coming forward? Smaller independent production companies might not be able to scale up either quickly enough or with sufficient range to compete against those that will, perhaps, sweep the pool.

This is a really big change in an important part of our national life—a real adjustment—and it has not been given sufficient scrutiny. Given that it was not discussed in Parliament as far as I am aware and was hardly raised externally, the Government have a duty to think harder about the issues arising. The allegation was made that this proposal did not emerge from any consideration of the needs and purposes of BBC radio production, or indeed the independent radio production sector. In meetings I had with those involved, I was told that the ask for the independent sector was to get from the current 20% of output to 25% by 2020—in other words, a marginal increase on the existing arrangements. To go from 20% to 60% reflects what I think must have been external pressures. That rather makes the point that we need to know more about what is going on, and transparency would help.

The main purpose of the amendment is to focus on the situation that will emerge after 60% of national radio output is put out to competitive tender, and the benefits that will flow from that. I beg to move.

[Lord Foster of Bath (LD)]

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

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

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

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

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

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

--- Later in debate ---

[Lord Stevenson of Balmacara]

I thank the noble Lord, Lord Foster, for his not unqualified support. It was useful to have another voice in the debate and he raised good points, which I broadly support. He is right that, on reflection, one would perhaps want to look at the issue of timing in more detail.

I would like to depart from the Minister’s comments on one issue: the focus of the amendment. The amendment is not really about what is happening in the BBC; it is an attempt to focus on what might happen in the broader ecology of radio production. In that sense, I was not straying into encouraging him to interfere in what must be an operational matter for the BBC—I absolutely agree with that. I do think, though, that there will be consequential waves of impact across the whole of radio production, which ought to be of interest to the Minister and to the department.

I still think that there will be strong changes here in matters such as conditions of service for staff. It is nice to hear that the RIG group is encouraged to match BBC conditions, but the likelihood of it doing so is very slim. That in itself may not be the biggest issue, but it is still going to have an impact and we should know about that. For all the reasons previously given, I still think that this would be a good idea.

However, the underlying point that will cause us the greatest concern as we go forward is that this seems to signal a change of approach. I think the Minister said that he strongly supported what was being proposed by the BBC in these measures—I will check in Hansard. Whether or not it was something that originated in the BBC or something it picked up in the negotiations and felt that perhaps it ought to do is a matter we can talk about later. The point is that, as a result of these and other changes, the BBC is moving inexorably from being a producer and broadcaster to a broadcaster that largely commissions work. That in itself has to be of concern. It may or may not be the right thing to do in the circumstances; it may be inevitable, given the way that technology is moving; but it is a change. Unless we mark and measure that in order to assess what is happening, we will all be the losers. That is perhaps for another day; in the meantime, I beg leave to withdraw the amendment.

Amendment 222E withdrawn.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Baroness O'Neill of Bengarve (CB)]

My Lords, I support this amendment. I remember well—and the noble Lord, Lord Puttnam has reminded us of it—that, in 2003, we had quite dramatic discussions in your Lordships’ House about the dual duties of Ofcom to the citizen and to the consumer. There was a bit of a wobble after Ofcom was set up, but since then it has properly seen itself as defending these two separate interests and not, as was initially suggested, merging them into the interests of a fictitious character called the citizen-consumer. That was an unfortunate, but brief, episode.

I believe the noble Lord, Lord Puttnam, hit the nail on the head when he said that this pair of amendments is highly congruent with the Government’s policy. Not merely has the Prime Minister spoken about acting in the interests of “you rather than the few”, she has also started to refer to “issues of corporate governance”. This is basically what this is about—the standards that we think are relevant in corporate governance.

This has been a very unhappy decade in which there have been failures of corporate governance in many sectors. I am a member of the Banking Standards Board, looking at the culture of the banks. I read every day about this culture and realise how vital is the requirement that only those who have passed fit and proper person tests come into positions of leadership and influence in the banking sector. I realise how important this also is for the media sector—indeed, it is perhaps more important.

As we have seen clearly in the last few weeks, with the presidential campaign in the United States, the media have changed hugely in this decade. We can get spiralling misinformation that is extremely difficult to stem once it gets a hold in social media; once it spreads with the rapidity which the greediest of proprietors could never have imagined. In this world, more than ever, serious corporate governance has to take account of the ethics, as well as the law, of the fitness and propriety of leadership, as well as the adequacy of regulation. I support the proposal that Ofcom get a clear grip on the fitness and propriety of those who lead the broadcasting industries.

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very important debate on a very big issue. Its sharpness has been reinforced by the fact that we are currently in a process involving all the issues that have been referred to. Obviously, this will be reflected in the fact that the response will not be made by a Minister in the department which might have to deal with some of the results of the current proposals for a merger, and we respect that and understand the reasons for that.

The wonderful speech by my noble friend Lord Puttnam, which took us back to the origins of the Ofcom regime that we now have and reflected on points along the way, including the dark shadows cast by the events of 2011, gave a texture to this that makes it much more important. The noble Baroness, Lady O’Neill, spoke about the need to think about how all this interfaces into descriptions of the sort of country we want to live in and the sort of society that we can enjoy. The necessary handles on both policy and the implementation of that policy are very important.

At heart, the amendments are simple. They draw out in more detail and focus on issues which have been live ever since they were first introduced. Indeed, I recall discussions in your Lordships’ House on two Bills which dealt with issues that bore on this and for which we had debates of this type. That does not mean to say that this is ground that no longer needs to be tilled. It does, because in thinking about this we have to recognise some of the issues that have already surfaced in Committee today and throughout the Bill—that when we are talking about the media, particularly but not restricted to the digital media, we have to think very carefully about the pace of change and the adjustments that have to be made to the policy framework in order to achieve what will be proportionate and appropriate regulatory functions later on down the line.

The good thing about the amendments is that they make us think about the words that were used, which seemed appropriate at the time, in relation to the twin requirements: that we look at plurality in relation to media but also at control. If this were a simple case of looking at how a monopoly might influence outcomes and how consumers are treated, it would not be necessary, perhaps, to delve so deeply. The issues that are currently addressed by the CMA, for instance, are largely economic. They deal with prices. They deal with the way in which consumers are treated, but they are basically around whether or not the price has been artificially moved in order to favour the producer against the citizen. In that sense, we do not need to think too hard about some of the issues, although we can regret them, as we did in the debate in the dinner hour, which I was able to participate in, which focused almost exclusively on why consumers have disappeared from government, consumer interests are rarely referred to and there are not even consumer panels on the CMA. But that debate can be read in Hansard, and I am sure it will be of much interest to those who are interested in this point.

The amendments would go back over the grounds on which a PIIN is issued and make it clearer than it is currently that simple questions of plurality, which are readily gamed in terms of corporate structures these days—this issue was perhaps not so resonant at the time that the legislation was drafted—need to have a little bit more bite if they are to look at some of the detail that we want in this area. We have to look not just at the question of ownership and control in relation to a market-facing issue but at the way in which such an agglomeration can distort and change that market, which is not in the public interest. It is very important that we do that. There may well be a way of dealing with this under the existing legislation, but it would be so much easier if the amendment was accepted because it would take us down a line that was more focused on the particularity of the media arrangements.

Then there is the question of the fit and proper person test for those who have broadcast licences. The basic structure is there. Again, on reflection, it could be argued—and I think it has been demonstrated today—that without more concern about the issues which arise out of the merger, without more concern about how the operation will work in terms of who activates it, what exactly the issues are that will be looked at, what the proprieties are that we are concerned about, and where the ethical concerns are and all that, then it will not be as effective. I look forward to hearing from the Minister.

[Baroness Buscombe (Con)]

My Lords, I thank all noble Lords who have taken part in this important debate. It is good to have this debate.

This group of amendments seeks to make extensive changes to the broadcast media public interest considerations that may be relied upon to intervene in certain media merger situations and the fit and proper test that Ofcom has a duty to apply to all those who hold a broadcasting licence in the UK.

Before I get into the detail, the debate has included views from across the House about the parties to the Fox/Sky merger. There is a proposed merger currently in train, which it is very likely the Secretary of State will need to consider under her existing powers. As the Secretary of State noted in her written statement of 10 January, any decision will be a quasi-judicial one. It is important that she is able to act independently and that the process is scrupulously fair and impartial. As a result, neither I nor any Minister can comment on the merits of this specific case. I will have to restrict my comments to the substance of the amendments themselves.

I have noted carefully the views of noble Lords, and of the noble Lord, Lord Puttnam, in particular. I have a transcript here of some of the debate of the then Communications Bill, in 2003. Of course, the noble Baroness, Lady O’Neill, remembered the key issue about citizen and consumer. Indeed, Lord Puttnam and I met outside this Chamber to try to come to terms with our approach to this issue—I was part of Her Majesty’s Opposition in those days. A lot was achieved. Of course, it was a government amendment on Third Reading which created the plurality and public interest test. It was my noble friend Lord Lansley, who is unfortunately unable to be in his place tonight, who sat on the draft legislative committee on that Bill, and who retains that interest.

Drawing all the contributions together brings us to a single question: do the Government believe they have the necessary powers to allow them to deal with complex media mergers and a concentration of ownership that would be damaging to media plurality?

In our view, the tests introduced in 2003 are wide-ranging and provide the Secretary of State for Culture, Media and Sport, who is responsible for media mergers, with a wide discretion to intervene. For example, in cases where there are concerns about media plurality, or where a bidder does not have a genuine commitment to the UK’s well-established rules on content standards and cross-promotion, which are overseen by Ofcom, the Secretary of State can consider those concerns as part of her deliberations as to whether to intervene in the proposed merger.

Turning to the amendments themselves, given the discretion to intervene based on the existing media public interest considerations, we do not believe it is necessary to add the additional requirements set out in Amendment 229ZA and would argue that these are matters that can already be considered under the existing tests. In addition, the matters set out are considered by Ofcom on an ongoing basis in its regulatory role.

There are three existing broadcast media public interest considerations that the Secretary of State can take into account in deciding whether or not to intervene in a merger. The first is the need for a sufficient plurality of persons with control of media enterprises—I stress, plurality of persons. The second is the need for a wide range of broadcasting which is both high quality and appeals to a wide variety of interests. In other words, the focus must be on content and plurality of content. The third is the need for persons carrying on media enterprises to have a genuine commitment to broadcasting standards. Together, these powers give the Secretary of State discretion to consider a wide range of matters in deciding whether the specified public interests may be relevant, and whether or not to intervene in a particular merger.

Amendment 229ZA, which inserts new Section 58(2D) into the Enterprise Act, would allow the Secretary of State to intervene in a media merger based on the need for those holding broadcasting licences to be a fit and proper person, as noble Lords have said today. The issue of who is a fit and proper person to hold a broadcasting licence is a regulatory matter for Ofcom. Ofcom is under an ongoing duty to remain satisfied that those holding broadcasting licences are fit and proper to do so, under Section 3 of the Broadcast Act 1990 and Section 3 of the Broadcast Act 1996. Ofcom’s assessment of these matters will consider the conduct of those who have material influence or control over broadcast licensees and will consider a wide range of factors in assessing who is fit and proper, including the matters set out in the amendment.

The amendment also proposes a new Section 58(2E), which is aimed at allowing intervention on the basis that the governance of broadcast media enterprises providing news needs to include sufficient safeguards for editorial freedom in the provision of full and accurate news services. I entirely accept—and the Government entirely agree with noble Lords on this—that the issue of governance is crucial, although we discussed in earlier debates today that the issue of accurate news is becoming a very difficult one and will exercise all our minds in the coming months. It is a long-established condition of broadcast licences in the UK that news is reported with due accuracy and impartiality, as set out in Ofcom’s broadcasting code. Ofcom, as the regulator, governs compliance with this requirement of the code.

The matters set out in the amendment at proposed new subsection 58(2F) would be dealt with by licence conditions and Ofcom’s broadcasting code, including provisions on fair and effective competition and the cross-promotion code, as well as matters that would be considered as part of the fit and proper person test.

[Lord Stevenson of Balmacara]

I thank the Minister for going through this in so much detail. The issue raised in the first part of the amendment on the fit and proper person test was not whether the powers exist but how they would be triggered. The worry is that they would be triggered post hoc rather than anticipatorily with regard to a merger. Do the Government accept that there is a difficulty here?

[Baroness Buscombe]

The Government do not accept that there is a difficulty in this. The important issue is that the powers remain broad in their application. To the best of my understanding, though, there is no difficulty regarding when they are triggered.

--- Later in debate ---

Moved by

[Lord Stevenson of Balmacara]

229ZC: After Clause 84, insert the following new Clause—
“OFCOM: regulation of digital publications
Within one year of the passing of this Act, the Secretary of State must report to each House of Parliament on the arrangements that would need to be made by OFCOM if it were to assume the responsibilities of an independent regulator for digital publications.”

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, this amendment deals with the preparations that will need to be made should we be in the unfortunate situation that was animadverted by Sir Brian Leveson when he finished his part 1 report, if the press self-regulation proposals made in it are not fulfilled.

The current situation is complex, and it may be slightly premature to assume that everything is going to fail, but I think that, of the two types of problem that he identified, the first—that no recognised regulator was appointed within a year of the recognition panel’s being established—has not come through. We have a recognised regulator, and it was approved very recently, within a year of the recognition panel’s being established. That is a good thing, and we should bank on that.

The second problem, however, remains. His feeling was that there would be no value in the self-regulatory proposals he was advocating if significant news publishers remained outside the recognised regulator. That has happened in spades. There is a body established by the industry and largely for the industry, IPSO, which is not seeking recognition under the existing procedures. Therefore, that would, I think, represent a failure in terms of Leveson’s original proposal. We also have a situation in which the recognised regulator is not attracting significant support from the press which might be regulated by it, although it does have some support, and that is good, and we support that. It is not, however, operating at the scale or encompassing sufficient of the broad press, which was the focus of the original report, to be considered a success.

We are facing a problem. The problem was anticipated, and the solution proposed by Lord Justice Leveson at that stage was a backstop regulator. Therefore this amendment—which is limited in terms of the exact wording to the digital media, although it could, I think, be read as more appropriate for the wider situation—is almost certainly going to be required because of the situation I have outlined. Obviously, we regret that. We wish, as we always have, that a properly self-regulatory system could be established. However, it is extraordinary that the press, as Lord Justice Leveson says, benefits from considerable support in statute for the activities that it wants, including a provision in an amendment to this Bill to protect journalists who wish to break stories that were in the public interest and who might otherwise be caught by concerns about data leakage. That is an example of the sorts of ways we have often legislated for and supported the press because everybody believes in a free press and believes that the press should be able to operate within the law and without any constraint. However, we also believe—this is particularly true of those who have been victims of press intrusion into their private lives—that the public will not settle for a situation in which the press escapes standards regulation altogether.

We will therefore face a situation within a few months where it is likely that it will not be possible that the Leveson proposals have been brought in and there is a need for a standards regulator. The standards regulator proposed by Leveson in his report is Ofcom, and there is much in the report which shows and explains why that would be a good thing. My amendment, which I hope the Government will accept, says that it is time to start to think about how this will impact on Ofcom’s work and to bring forward proposals under which that should operate. I beg to move.

[Lord Foster of Bath (LD)]

My Lords, it is four years after the Leveson inquiry, and I certainly believe that Section 40 of the Crime and Courts Act 2013 should be implemented, and should be implemented now. I voted for it in your Lordships’ House last October and I certainly support the amendments today, which have much the same effect. I also support the fail-safe amendment moved by the noble Lord, Lord Stevenson, although I hope that it is not necessary and that Section 40 will be brought in.

Some incredibly misleading statements have been made about the impact of Section 40. Most of the newspapers, as we know, do not support its implementation and have featured some quite amazing one-sided editorials. To the best of my knowledge, none of them has permitted a right of reply. I am the former Member of Parliament for the wonderful city of Bath, which is included in my title, so I am sure that noble Lords will not be surprised that I take a particular interest and am an avid online reader of the Bath Chronicle. Three weeks ago it published one of these anti-Section 40 diatribes. I wrote a rebuttal and asked the Bath Chronicle to publish it. I have not even had an acknowledgement so far—so much for a free press.

Perhaps to explain why I support these amendments, and to ensure it is published—albeit in Hansard rather than in the Bath Chronicle—I will read what I wrote, because it sums up exactly where I stand:

“I am a strong supporter of local newspapers and the Bath Chronicle in particular. But I was surprised by your recent editorial suggesting that measures being considered by parliament will mean that ‘Any investigation in the public interest could be silenced by anyone with a vested interest’. This is a complete misreading of the proposals made by Lord Justice Leveson after the Public Inquiry which followed the appalling phone hacking scandal.


Few could deny that in the past the press had a shocking track record of setting up its own toothless regulators which failed to protect the public. Leveson has proposed that the press should now establish a truly independent regulator whose independence is checked and then ‘recognised’ by a body which is itself impartial and independent from government or the press.


This is what the public want as shown by a YouGov poll just last week. When asked ‘Do you think it is important that any newspaper self-regulator undergoes an audit to ensure it is effective and that it is genuinely independent of both politicians and the press?’ nearly three-quarters (72%) said yes and just 6% said no.


The ‘regulator’ under which the Bath Chronicle operates—called IPSO—doesn’t meet this test. It is not only funded but controlled by the newspapers it regulates.


Were the Chronicle to join a ‘recognised’ regulator, or were IPSO to demonstrate through getting recognised that it met proper standards of independence and effectiveness, the funding issues you describe would not happen. Moreover, the public would be protected and you”—


that is, the Chronicle—

“would receive protection from wealthy and powerful local figures if they tried to bully you into withholding stories about them by threatening you with unaffordable court costs”.

My article ended:

“I hope Parliament will agree to support the public and back Leveson’s proposals”.


I certainly hope the Government will accept the amendments before us today.

--- Later in debate ---

That may not meet all the concerns that have been expressed on the matter, and I appreciate in particular the concern that centres on the implementation of Section 40. However, as I said at the outset, it respectfully appears to us that it would be premature to go down this road at this stage. I respectfully invite the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the noble and learned Lord for his full response. I am sorry that he guessed the plot rather early on in the game: I am guilty as charged. It was very hard to get anything on this into the scope of the Bill. There seems to have been a change of management upstairs in the Public Bill Office and they are much tougher than they used to be, and we will have to have a think about that.

Anyway, the reason for including the amendment was to have the debate that we have just had to find out a little more about the Government’s thinking, and to flag up that it is worth thinking about how we can recapture some of the cross-party spirit that informed the process leading up to the original Leveson proposal and, out of that, the statutory position we are now in. However, as the noble and learned Lord says, we may be a bit premature on that. You can never plan too far ahead, but it is cautious optimism to think that the department has begun thinking about these things. That is as far as we want to get on this. Following this good exchange, which can be read in Hansard, and the sense that we are at least on the same page, if not the same sentence, I beg leave to withdraw the amendment.

Amendment 229ZC withdrawn.

--- Later in debate ---

Moved by

[Lord Stevenson of Balmacara]

230: After Clause 87, insert the following new Clause—
“Offence of using digital ticket purchasing software to purchase excessive number of tickets
(1) A person commits an offence if he or she utilises digital ticket purchasing software to purchase tickets over and above the number permitted in the condition of sale.(2) A person commits an offence if he or she knowingly resells or offers to resell, or allows to be resold or offered for resale on a secondary ticketing facility, a ticket that the person knows, or could reasonably suspect, was obtained using digital ticket purchasing software and was acting in the course of a business.(3) For the purposes of subsection (2) a person shall be treated as acting in the course of a business if he or she does anything as a result of which he or she makes a profit or aims to make a profit.(4) A person guilty of an offence under this section shall be liable on summary conviction to—(a) imprisonment for a period not exceeding 51 weeks,(b) a fine not exceeding level 5 on the standard scale, or(c) both.(5) In this section—“digital ticket purchasing software” means any machine, device, computer programme or computer software that, on its own or with human assistance, bypasses security measures or access control systems on a retail ticket purchasing platform that assist in implementing a limit on the number of tickets that can be purchased, to purchase tickets;“retail ticket purchasing platform” shall mean a retail ticket purchasing website, application, phone system, or other technology platform used to sell tickets.”

[Lord Stevenson of Balmacara]

My Lords, before I introduce the amendment, I wonder whether we could reflect on the fact that we are missing rather an important person from the debate. The noble Baroness Heyhoe Flint was a keen and active Member of your Lordships’ House. She had several special interests apart from cricket and a wonderful raconteur’s skill of telling stories of her exploits at the crease. She was rather good at it. Whatever it was, it was always a delight to hear. She had a special interest in secondary ticketing, and in many of the debates held in your Lordships’ House on this issue, she was present and often contributed. She was responsible, along with the noble Lord, Lord Moynihan, whom I see in his place, for getting changes made to the Consumer Rights Act 2015, which brought in the first of what we hope will be a series of measures to improve and clear up this issue.

The amendment to the Consumer Rights Bill that we inserted in 2015 raised from a secondary legislation provision to a primary legislation provision a series of measures to improve and clear up the secondary ticketing market. It was done primarily to ensure that those who buy tickets for sports, arts and music events can do so in the sure and certain knowledge that their tickets are valid, that they will be able to gain access to what they want to see and that they are not being ripped off in the process.

It is fair to say that we got this only after a considerable struggle—and the noble Lord, Lord Moynihan, might wish to share with us some of the difficulties that he experienced—but one of the things that was necessary in order to achieve that victory was to agree to a report on secondary ticketing to be carried out by a distinguished person. That person was Professor Waterson. He has now done that and the report has come out. Those involved are entitled to take a moment to reflect on the fact that what we were saying in Committee on the Bill and what we did in moving amendments and getting them inserted into what became the Act was brought out by the professor’s report, which was a comprehensive piece of work that showed that the scale of the issue was as we described it and that there was a need for further action.

The Bill before us is an opportunity to do more work, and the group of amendments that I am introducing—and for which I am hoping to get support from the noble Lords, Lord Moynihan, Lord Clement-Jones and Lord Foster of Bath, and others as we go through it—is a mixed bag because there are still things that need to be sorted out. An issue that arose in the other place and which was very nearly accepted by the Government was the question of an offence caused by using digital ticket-purchasing software—so-called bots. They are a scourge of many people who organise and run events—particularly in the music industry, but they apply right across the piece. Automated software operated by a number of individuals creates a situation where virtually no tickets are available on the first release of an event, but they then appear very quickly at very much higher prices through secondary ticket outlets. This amendment would, we hope, stamp this out. It has been tried in a number of territories, including New York very recently, and it does seem to work, so we recommend that.

The other amendments deal with changes that we would like to see to improve the broader approach taken in the Consumer Rights Act which, in practice, needs to be taken to another stage. They are basically to do with greater transparency and accountability in how the secondary ticket market works. It is really important, however, that we get clear at the start that nothing in these amendments would stop the resale of tickets once purchased by an individual who wished to sell them because they could not attend the event or that they wanted to sell them on to other people in a closed circle. This is not about private purchases or operations. It is about those who go into the ticket market on a commercial basis, very often making huge amounts of money by exploiting people who do not understand and cannot get to the heart of the issue and therefore pay ridiculous prices. It also would help stamp out what is clearly a fraudulent activity that has been partially stopped by the changes made in 2015 but has not stopped completely. People buy what look on the surface to be valid tickets, but when they turn up at the venue they discover that they are not valid and are refused entry. This is fraud on an industrial scale, and probably the source of much money laundering and illegal activity, which was referred to by the police in their Podium report prior to the 2012 Olympics.

These amendments should be taken as a batch; they build on work in which this House has already been involved and they are the right changes to make this stage. I beg to move.

[Lord Moynihan (Con)]

My Lords, I support the seven amendments in this group spoken to by the noble Lord, Lord Stevenson. I echo that it is particularly appropriate in many ways, albeit very sad, that we debate the often malicious and pernicious use of bots on the sad day of the funeral of my very close friend Lady Rachael Heyhoe Flint. One afternoon, she was purposefully striding down the Corridor outside the Peers’ Guest Room, and said, “I need you”. I jumped to attention and we headed off to the Department for Business, Innovation and Skills. I was totally unaware of why I was accompanying her on that occasion, or indeed the matter proposed for discussion. Rachael launched into a thinly veiled, front-foot attack on those in and around the secondary market, who fleece consumers to no benefit to cricketers, musicians, sportsmen and sportswomen, who are the ones who entertain them. Through her hard work and persuasive skills, I was galvanised into action. I thank the Government for the progress that we made in the Consumer Rights Bill at the time, as well as the Opposition and noble Lords from all sides of the House.

That was just a first yet important step. Today is the second opportunity to make further progress. I was very sad not to be at Rachael’s funeral today to pay my close personal, political and sporting respects, but she would have been the first to admonish me. She would have said, “Why on earth are you not down in Westminster putting on your pads, your gloves and picking up your bat, and going into the centre of the parliamentary wicket to hit those bots for six?”. I will do my best, captain. I will do my best. In paying tribute to her, because she was absolutely instrumental in the work that we undertook during the passage of that Bill, I must also pay tribute to Nigel Adams, Member of Parliament in another place, who has taken this to his heart and has done so much good work.

The whole issue of bots goes right to the heart of the disappointment of thousands of music and sporting fans who have on occasion faced the reality of having their credit card ready in their hand with minutes to go before the sale of tickets for a particular gig or match but no sooner do they go on sale than they sell out. Minutes later, tickets can be spotted on reselling websites. The new, hidden threat that is snatching tickets from under the noses of genuine fans is ticketing bots.

Music and sports fans have always battled against touts buying up tickets to make a quick buck by selling them on again at inflated prices. But now touts have a new cyberweapon that allows them to step up their game. These ticketing bots are software; they buy up huge numbers of tickets for events as soon as they go on sale. Buyers then use the secondary websites to sell them on. Reg Walker, who has done an enormous amount of good work on this at the O2, stated:

“They then harvest tickets at high speed and that effectively blocks out genuine fans from being able to purchase tickets at face value. These tickets are then immediately resold on secondary ticketing platforms”.


What then happens is that those who are sitting in their garages using bots programmed with all this information press the button immediately and get their 200 tickets, and sell them on to one of the four secondary platforms where nearly 80% to 90% of resale now takes place. In so doing, they do not necessarily always get all the tickets they want. Their preferred status and good relationship with the platform is critical to their next sale. So, if necessary, they will have the income on a very high-price ticket with a high margin to go out and counterfeit tickets to make up the gap between those they have committed to supply and the actual number that they have. That is why the wholesale harvesting of tickets by touts not only incentivises these individuals to create relationships with the main providers of the secondary market tickets, the providers even develop power-seller programmes to encourage the delivery of mass tickets.

This is all at the same time that you are trying to type in your name in order to get a couple of tickets, as the true fan of a music show at the O2 or a sporting event. The reality is that you have no chance. We have all tried it; I have tried it on many occasions and cannot believe that they have sold out before I have got down my name, address, credit card number and so on. It is no surprise, though, when bots are available purely for the benefit of the profit of the individual. No artists, no sportsmen and no fans benefit. That mark- up goes straight into the pocket of the individual who has got the ticket and the secondary sales platforms that provide those tickets at inflated prices to consumers.

--- Later in debate ---

[Lord Ashton of Hyde]

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

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

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

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

[Lord Stevenson of Balmacara]

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

[Lord Ashton of Hyde]

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

[Lord Ashton of Hyde]

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

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

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

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

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

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

[Lord Stevenson of Balmacara]

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

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

[Lord Ashton of Hyde]

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

[Lord Stevenson of Balmacara]

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

Amendment 230 withdrawn.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

Moved by

[Lord Stevenson of Balmacara]

17: After Clause 8, insert the following new Clause—
“OFCOM power to impose caps upon wireless telegraphy licenses
In Schedule 1 to the Wireless Telegraphy Act 2006, for paragraph 3 (information to be provided in connection with applications) substitute—“3 The grounds on which a licence may be refused by OFCOM include—(a) a failure by the applicant to provide information which OFCOM reasonably require in order to satisfy themselves that the applicant is able to comply with terms, provisions or limitations to which the licence may be made subject, or(b) where the applicant owns more than 30% of the total useable mobile phone spectrum in the UK and OFCOM has a reasonable belief that the award of further licences would have a damaging impact upon competition in a given electronic communications market.3A Where an applicant already owns more than 30% of the total usable mobile phone spectrum in the UK, and OFCOM has a reasonable belief that the holding of these licences may have a damaging impact upon competition in a given electronic communications market, OFCOM may request that the holder of the spectrum must divest a proportion of its spectrum holdings until such a competition issue no longer exists.3B Within six months of the day on which the Digital Economy Act 2017 is passed, OFCOM must commission an evaluation of the distribution of radio spectrum suitable for use for the purpose of mobile telephony and present a report to the Secretary of State.3C The evaluation under subsection (3B) must consider—(a) the impact on competition in the mobile telephony market of the current distribution of spectrum;(b) the impact on consumers, both financial and in terms of coverage;(c) the efficiency of current spectrum usage; and(d) the impact of preventing any one licence holder from owning more than 30% of the total spectrum useable for mobile telephony.3D The Secretary of State must lay the report of the review before each House of Parliament by 1 July 2018.””

[Lord Stevenson of Balmacara (Lab)]

My Lords, we return to an issue which we discussed in Committee. At that time my proposed amendment received support from the noble Lord, Lord Fox, for which I was grateful, and I know that he again supports the amendment today. The reason for returning to this is that I sense that we did not prosecute the amendment to the full extent possible at the time—that may have been our fault, but it was quite late in the evening—and, on reflection, there may be an issue here that needs a little more care and concern from Ministers before we leave it.

To go back over the issue, we are talking about the development of spectrum, which is a valuable national resource that—although there always seems to be more of it—is finite. Therefore, as a national resource, it is important that the Government have a firm grasp on how it should be distributed and the prices that should be paid for it. Currently, it is for Ofcom to introduce the necessary regulatory framework, which it does by considering how and on what basis additional spectrum can be made available and on what basis it can be released to operators who wish to use it. That has taken the form of auctions, which have been of varying types over the years—some have been spectacularly successful and some less so—and have been done under different rules.

The nature of the Government’s engagement with this is through Ofcom, and the amendment in no way aims to make a change to that basic structure. However, there is a question about whether we have reached the point where the Government should pay more attention to the issues concerned in this area than they have in the past. Why is this? It is because we have gone from a situation of having reasonably equitable spectrum holdings to having quite a significant imbalance in spectrum. This is partly because of the growth in one or two of the companies concerned. Some of that has been organic, but one of the main reasons has been the allowing of the merger between BT and EE, which has created a group that has been described as a,

“behemoth in the communications market”.

Therefore, we are not now in a situation where there are four companies competing for customers using broadly the same rates and amounts of spectrum; we are talking about only three companies—and possibly a fourth—and the problem is that two of those are very large indeed compared to the others. For example, BT/EE, the combined behemoth, has the largest proportion of all available spectrum, with 39%, while Vodafone has a significant but smaller 27%, Three has just 14% and O2 has only 13% of available mobile spectrum. In responding to this amendment, could the Minister reflect on whether this situation represents an optimum position for the market and, if it does not, whether the powers that he has are appropriate for how it goes forward?

However, it gets more complicated. There are, as one might expect, different sizes of companies and the individual spectrum bands are also of different value. It is therefore important not to look only at the overall figures but to be concerned with how the bandwidths that have the highest capacity—and therefore the best ability to offer innovative services to consumers—are going to be dealt with.

We have the prospect of a further auction this autumn, for which Ofcom is currently consulting on what will be the rules for auctioning off a total of 190 megahertz of high-capacity spectrum in the 2.3 gigahertz and the 3.4 gigahertz bands, which are particularly suited to higher-speed mobile broadband services—a topic that we have just been discussing. Clearly, for the future of UK plc and for the future of businesses and individuals in this country, how the spectrum is made available, how much of it is made available and on which bandwidths will be a crucial issue that we must get a handle on.

In this amendment we are proposing that more attention should be paid than in the past through a cap of, say, 30% on the individual holdings that any one company may have of the usable mobile phone spectrum. This is a figure which has been broadly discussed, and which Ofcom has been using in some of its discussions and debates around this issue, so it would not represent a very different approach.

However, before we go to the auction for this high-value additional spectrum, which will be crucial for 5G and further services going forward, there must be an evaluation carried out by the Government, not by Ofcom. This should look at: the impact on competition in the mobile telephony market of the current distribution of spectrum; the impact on consumers, who are often neglected, both in financial and coverage terms; the efficiency of the current spectrum usage; and the impact of preventing any one licence holder from owning more than 30% as a broad-brush approach. If this review is to be effective, it must be done quickly and brought to the House. I beg to move.

[Lord Maxton]

My Lords, I shall be brief. I have in my pocket a mobile phone owned by Virgin Media. Virgin Media uses the EE spectrum. As far as I know, there is no financial connection between Virgin Media and EE, but Virgin uses the EE network. Could the Minister explain that to me?

[Lord Ashton of Hyde]

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

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

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

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

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

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

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

[Lord Stevenson of Balmacara]

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

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

--- Later in debate ---

[Lord Maxton]

My Lords, I too welcome the amendment; it is well worth while, but it is worth making a point I made earlier. Of course, there are now books that are written entirely as e-books and not published at all in printed form; they are published for the Kindle or similar devices. Does this amendment cover these as well? Does it give the author of such books exactly the same rights as the author of a book published in printed form?

Of course, e-books are now lent not just by public libraries. Amazon has its own public service—well, a service anyway; it is not public; you pay for it—whereby it can lend you a book that you can read on your Kindle for a limited time and that is available only as an e-book and not in printed or any other form. Do the same rights extend to authors whose books are lent in this form? Are these the same rights you would get through a public library?

My last point is also one I have asked about before. Public libraries in Scotland, of course, come under the local authorities, and local authorities in Scotland come under the Scottish Parliament. Is this a devolved matter or will it now be covered by the UK as a whole?

[Lord Stevenson of Balmacara]

My Lords, we welcome the Government’s tabling their amendment on this issue, as promised. In Committee, the Minister said she wanted to work with the sector groups involved to support a strong book sector that helps to promote opportunities for the public to read and learn, and she intended to table her own proposals for the necessary legislative changes as soon as possible. We sometimes hear that and then have to wait ages, but this time she has been able to get the Whitehall system to work to her agenda, and I congratulate her on that.

[Baroness Buscombe]

I thank all noble Lords who have spoken in this short debate. I shall refer to Amendment 23, tabled by the noble Lord, Lord Clement-Jones. When moving this amendment in Committee, the noble Lord explained that interested parties representing the sector had since proposed a different wording from that used in the amendment. The Government have considered the suggested wording from the sector and our amendment seeks to reflect stakeholder views, although we have achieved the intention of enabling terms to be applied by rights holders to e-books and e-audiobooks for lending through an amendment to the Copyright, Designs and Patents Act 1988. Rights holders will therefore be able to make e-books and e-audiobooks available with clear terms about whether these are available for lending and, if so, what conditions on library lending would apply, such as one loan to one user at a time or that the book will be available to lend for a limited overall lifespan.

I am also delighted that the proposed extension of the public lending right to include remote e-lending has cross-party support, as was made clear in Committee. This amendment will maintain protections for rights holders, while enabling authors to rightly receive public lending right payments for the increasing remote lending of their works, as they do for the lending of books from library premises. I hope the noble Lord, Lord Clement-Jones, will therefore not press his amendment but support the Government’s new clause.

In response to the noble Lord, Lord Maxton, I can confirm that, as I think we discussed in Committee, the provision covers all books, including purely online, digital books. It is also UK-wide, so it is not a question of devolved powers. However, it is all to do with public lending rights and lending through public libraries, not with the example he raised regarding Amazon.

--- Later in debate ---

Moved by

[Lord Stevenson of Balmacara]

20: Clause 28, page 29, line 23, at end insert—
“(7) If it appears to the Secretary of State that the extent of the manufacture of unauthorised decoders or similar equipment for sale or hire imported into the United Kingdom (otherwise than for private and domestic use) or distribution otherwise than in the course of a business has reached a level which is likely to affect prejudicially the owners of copyright works, the Secretary of State may bring forward regulations made by statutory instrument which prohibit such activities.(8) A statutory instrument containing regulations made under subsection (7) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

[Lord Stevenson of Balmacara]

My Lords, when this matter appeared in Committee during our discussions on the intellectual property section of the Bill, I was supported by the noble Lords, Lord Foster of Bath and Lord Clement-Jones. I am grateful to those noble Lords for agreeing to support this amendment this time.

We had quite a good debate on a concern that is relatively new in the sense that we have not seen much evidence of it before. For those who were not involved, the problem involves a small device, such as a USB stick, that is plugged into a TV set using a standard connection. The problem is that the device can be loaded so that it has software and add-ons which are preconfigured to give access to thousands of streams; or that users can purchase boxes of software giving them access to material that would otherwise not be available to them because of copyright. Of course, they do not pay for that material. There will clearly be a threat to rights owners from the impact on their earnings streams if these unauthorised decoders or similar equipment become widely used. The scale of the problem—which the noble Lord, Lord Clement-Jones, illustrated in his speech—is beginning to cause concern for those who have rights that are being abused in this way.

In responding to the debate on this amendment, the Minister said that the matter had registered on the Government’s agenda and that,

“illicit streaming and the infrastructure and devices that enable it pose a very serious threat to legitimate copyright owners”.

She said that the Government,

“share the wish of those behind these amendments to ensure that this harmful activity is properly tackled”.

However, she also said—quite rightly, I suppose—that we should not,

“jump immediately to introduce new criminal provisions”,

but take time to make sure that the legislation in place is not sufficient and, if it is not, discover what would be the right way forward. She also said that there would be action relatively quickly and that:

“Officials at the Intellectual Property Office are working with the Crown Prosecution Service”,


to develop new guidance, and that they would run,

“a public call for views over the coming … weeks to ask investigators, prosecutors and industry representatives whether they think the existing legislation is providing all the tools that are needed”.—[Official Report, 2/2/17; cols. 1387-88.]

This was action on a scale almost unprecedented in government. I gather that the invitation has already gone out to the bodies I have just referred to, that people are responding and that some action is therefore gathering pace. The problem, I suspect, will be that although the Bill is progressing slowly, it is still on a relatively quick pace and we may reach the conclusion of our proceedings on it before all that discussion and debate has concluded.

It seemed to us that, rather than the very specific offences listed in the original amendment we tabled in Committee, including the particularities of the types of equipment and possible penalties that might apply to them, it might be sensible to equip the Government with powers to bring forward appropriate action if it appeared, after the conclusion of discussions and debates, that it was necessary.

It is unusual for opposition parties to offer Henry VIII powers to Ministers, and I shall probably be struck down as I leave the Chamber this evening for having done so, but on this occasion there is clearly an injustice being perpetrated by manufacturers and distributors of this equipment. It is clearly already affecting rights holders—there are figures to show that that is the case. I suspect that the IPO’s conclusion will be that action is required. If there are not sufficient remedies within the existing statutory framework, clearly the Government will have to seek an opportunity to create them. As we move into the penumbra of Brexit, it seems unlikely that there will be Bills floating around that we can hijack for this purpose, so it seems eminently sensible for the Government to take the power that is offered in Amendment 20. I beg to move.

--- Later in debate ---

[Baroness Buscombe]

I thank all noble Lords who have taken part in this important debate on an issue that we take extremely seriously. It is very much on the Government’s agenda, and I am happy to confirm that again.

Amendment 20 seeks to provide the Secretary of State with a regulation-making power in order to prohibit the manufacture, sale or hire of unauthorised decoders. We have discussed previously in the House the pressing threat to subscription broadcast services caused by illicit set-top boxes, especially those which provide IPTV functionality. These IPTV boxes can in certain cases be considered unauthorised decoders, although that may vary depending on how they are set up to function.

As noble Lords will be aware, to better understand this area and what new legislation might be needed, the Government have committed to conducting a call for views on IPTV boxes, which I referred to in Committee. When we were last discussing this topic, I promised that the call for views would be published within a few weeks, and I am very pleased to announce that we have secured a publication slot for the document for 23 February—tomorrow. The purpose of the call for views is to help the Government understand where further action is needed to address the problem. If there is evidence to support changes to legislation, then we have promised to bring forward proposals in due course.

This information-gathering exercise will enable us to properly respond to the most pressing current threat caused by IPTV boxes. If there are other issues specific to unauthorised decoders that fall outside of the scope of this work, I would very much welcome details. We can then consider whether we need a further exercise to look at those distinct areas. The call for views runs for six weeks, until 5 April 2017, at which time the Government will assess the responses and determine the best course of action. The Government fully understand the harm done by illegal set-top boxes and IPTV, which is why it is crucial that we have a robust evidence base for effectively tackling this problem.

With regard to the manufacture of the hardware devices specifically, as your Lordships may expect, this usually happens outside the UK. That is why the IPO is working with partners across the world, including the Government’s IP attaché in China, to explore what can be done in source and transit countries.

Having said all that, I very much take on board what noble Lords have said this evening, including the noble Lords, Lord Clement-Jones and Lord Stevenson. The noble Baroness, Lady Kidron, of course has talked, quite rightly, several times in your Lordships’ House now, about young people and their digital habit, which starts frighteningly young. This is something we have to confront, and we sense the urgency with which we have to deal with this very real problem. Although I cannot make any commitment tonight, I hope that noble Lords will allow me to take this back and see if we can think of something more that we might be able to do. On that basis, I would be grateful if the noble Lord would withdraw the amendment.

[Lord Stevenson of Balmacara]

Before the noble Baroness sits down, could I just tease out what she has just said? Could that be read as a commitment to bring this back at Third Reading, so that we could spend a little time working out exactly what was required?

[Baroness Buscombe]

I cannot make a commitment that we will bring this back at Third Reading. We would certainly think more about it between now and then, but I can make no commitment that we would bring it back.

[Lord Stevenson of Balmacara]

I thank the Minister for her comments. I am sorry she is not minded to use the opportunity afforded by the fact that the Bill will go on until the end of March, which seems awfully close to the time by which she was suggesting that responses would be back, to enable us to make some progress on this. The points made by the noble Baroness, Lady Kidron, and the noble Lord, Lord Inglewood, are both right and bear on the same issue. It is clear that something is happening here that we could nip in the bud very quickly if we were able to take the appropriate powers. We are not specifying what those powers have to be, so we are not constraining the Government in how they might wish to take this forward, but quick action might prove more effective in the long run. Shutting this down would save us from the threat of it becoming a pest and a menace across all areas. I think it is worth testing the opinion of the House.

--- Later in debate ---

Moved by

[Lord Stevenson of Balmacara]

25: After Clause 30, insert the following new Clause—
“Code of practice on search engines and copyright infringement
(1) The Secretary of State may impose by order a code of practice (“the code”) for search engine providers with the purpose of minimising the availability and promotion of copyright infringing services, including those which facilitate copyright infringement by their users.(2) Any order made under subsection (1) must include appropriate provisions to ensure compliance with the code by the providers.(3) Before imposing the code under subsection (1), the Secretary of State shall publish a draft of the code and consider any representations made to him or her by—(a) search engine providers,(b) rights-holders and their representatives, and(c) any other interested parties.(4) The Secretary of State shall regularly review the code to ensure that it provides the most appropriate mechanism to satisfy the purposes set out in subsection (1).”

[Lord Stevenson of Balmacara]

My Lords, I move Amendment 25 and am grateful for the support of my noble friend Lady Jones and the noble Lords, Lord Clement-Jones and Lord Foster.

This is a rerun of an amendment that we tabled in Committee. At the time, discussions were in place between rights holders and those who operate the search engines, which are the focus of the amendment, and we were not sure how that would play out. We were promised much, and the Government have again delivered—which is becoming too much of a refrain for my liking. A voluntary code has been agreed between the parties, signed up to and issued—there has been press notification about it, so it must be true. The question is: what will it do? That has not been answered. We have discussed what it might do, but we have not yet seen the wording of the voluntary code. I ask the Minister to circulate to those participating in the debate what is in the much-vaunted code, so that we have a sense of whether it will achieve its purpose.

My concern from what I have heard is in three parts. First, it is large copyright-owners and large inquiry systems such as Google that are involved. That begs the question of whether those who are less able to exercise their rights—particularly those who have individual or small parts of rights in small productions—will have any voice. The reporting that I have read talks about rights holders and search engines working promptly on receiving responses about infringing content to ensure that these things are taken down.

Secondly, there is much talk of expanding efforts,

“to more effectively use such notices to demote domains demonstrated to be dedicated to infringement, and to work collaboratively with rights holders to consider other technically reasonable, scalable avenues empirically demonstrated to help materially reduce the appearance of illegitimate sites in the top search rankings”.

I could read that again, because you would probably need to hear it again to have the faintest idea what we are talking about. I fear that it smacks of either a lowest common denominator approach or some hard arm-wrestling in the corridors where the discussion took place to get something that looks reasonable on paper. It does not smack of a real commitment to scourge out the terrible way in which search engines have referred people who should have known better to material that was not cleared for copyright and should not have been made available to them through that route. There is also talk about,

“work to prevent generation of Autocomplete suggestions which lead consumers towards infringing websites”.

It says that work will be done to prevent it, not that it will be stopped.

“Search engines will provide, or continue to provide, processes to promptly remove advertisements”,


linked to searches. So my second point is that this all looks pretty good on the surface, but will it work in practice? I have my doubts.

Thirdly, it will be run by the Minister of State for Intellectual Property, who,

“will oversee the implementation of this Code of Practice, supported by quarterly meetings of all parties, and set requirements for reporting by search engines and rights holders on any matter herein, including in particular those matters where the Code of Practice calls for ongoing discussion”.

At last, we get it:

“The Minister shall review the effectiveness of the Code with the parties after one year, and ensure continuing progress towards achieving the Shared Objectives”—


which is, rather nicely, in my copy, in capital letters, so they must be really important.

It is easy to lampoon this. I am sure it is a good step forward in the right direction, and we wish it well, but I wonder whether it will take the trick on this issue. As we said in a previous discussion, should there not be a backstop power; should these powers not be taken now by the Government to ensure that they can do something if it does not work, if some people move away from it, or if new entrants to the market feel that they have no responsibility to be part of it? These are open questions. There may be a way through, there may not, but we have no way to resolve that because this is a voluntary process.

It took a long time to get to the voluntary code: the working group has been meeting on and off for three or four years, so we know that this is not an easy nut to crack. It is an issue that causes a lot of annoyance and concern. It also affects the earnings of those who have rights that have been abused in this way. There is a feeling—I put it no stronger than that—among those who perhaps know more about this than I do that the search engines do not want to go any further because they fear statutory provision. In other countries and territories—indeed, in America—there is statutory provision, and that has made the difference over there. Why are we not doing that here?

There are a lot of questions about this. The amendment would give a solution to the Government if they wished to take it. I hope that they will consider it, and I beg to move.

[Lord Foster of Bath (LD)]

My Lords, I am delighted to support the amendment in the names of the noble Lord, Lord Stevenson, and others. I am sure that all Members of the House recognise that there is a serious problem that needs to be addressed, although fewer people are accessing illegal material on the internet as a result of the growing number of relatively cheap and easily accessible alternatives. We should welcome that and the fact that in this country we probably provide a wider range of alternative legal sources—for the downloading of music, for example—than any other in the world. Nevertheless, there continues to be a problem, with about 15% of UK internet users—about 6.7 million people—continuing to download and access illegal material. I therefore welcome any measures that can be taken to introduce ways to prevent that. Of course I welcome the voluntary agreement that has been reached. I congratulate the Minister for Intellectual Property, who I know has worked very hard with the relevant parties, including the IPO, to secure the voluntary code. As the noble Lord, Lord Stevenson, said, the details have still to be worked on and there will be a review in 2017.

I ask the Minister to reflect seriously on this key point. In opposition, I have spent a lot of time moving amendments to various proposals that the Government “may” do something to delete “may” and insert “must”. On this occasion, I am delighted to support the amendment, which says that the Government may do something, if the need arises.

The Department for Culture, Media and Sport is rarely given credit for the important role it plays in the life of this country. As a result, it rarely has opportunities to have legislation before the House. While the Minister may tell me, as she did in a previous debate, that should the voluntary code not work, the Government will consider taking legal action at some point, she would find it difficult to find a legislative peg on which to hang that action.

The Intellectual Property Alliance and others have suggested that we need a backstop mechanism in the event that the code, which we welcome, is unsuccessful in future. For that reason, I hope that the Government will be willing to accept what is a simple amendment giving them power in future if they need it.

[Baroness Buscombe]

My Lords, Amendment 25 returns to the topic of search engines and copyright and would give the Government power to impose a code of practice on search engines to minimise the visibility of copyright-infringing websites in search results.

As we have discussed previously, this is an area in which we have been seeking a voluntary agreement between search engines and rights holders, and I am pleased to be able to confirm that we now have that agreement and have finalised the text of a code of practice. This newly agreed code sets out clear targets for reducing the visibility of infringing websites in search results. The code also specifies a number of areas where rights holders and search engines have agreed to work together with the general aim of supporting legitimate content and reducing piracy. We have always been clear that action is needed in this area and it is a manifesto commitment. But we have also been clear that a voluntary agreement would be quicker, more flexible and, most importantly of all, more collaborative than a legislative intervention. We now have that voluntary agreement and the parties to the code are already working to deliver on the commitments it contains. All parties to the agreement have engaged in these negotiations and the work to date in good faith. They are continuing to work in good faith and I am confident that that will also be the case for work going forwards.

The noble Lord, Lord Stevenson, questioned whether it would be possible to have sight of the code. We do not plan to publish the code in full because details about the number of copyright infringement reports a site can receive before it is demoted might allow pirates to game the system. We are, however, very happy to share the commitments in the code in more general terms.

We understand where noble Lords are coming from in seeking a backstop power, but I return to that word “collaborative”. We have come a very long way in what we have achieved thus far. I can remember working and having discussions with search engines in years gone by, trying to encourage them to respect and accept responsibility for what they do and the impact they can have on others. In that sense, we believe very strongly that we should continue with that collaboration and not consider a backstop power. We do not believe it is necessary. With that explanation, I hope the noble Lord will accept that a statutory power is not needed at present and thus feel able to withdraw the amendment.

[Lord Stevenson of Balmacara]

Although I am grateful to the Minister for her robust comments about our amendment, I profoundly disagree with them. I cannot see this agreement lasting and believe that there will have to be a backstop power at some stage. Surely the truth is that if it was necessary in America to introduce legislation to get that system to work, it is bound to be necessary in other places where those with the large rights holdings may feel they can operate in a way that is not necessarily in the best interests of consumers in the United Kingdom. I still think, as the Minister touched on at the end of her peroration, that this is something that we will have to drag the search engines towards, because it is not their business model. Their concern is to make sure that they get as many people coming to them and through them to other portals in other areas that they can get to. Their interest in engaging in that is something we will return to in future legislative arrangements. I think that they will be unable to sustain a position in which they act as neutral transferors of other people’s issues and wishes, because it does not work. They will have to accept that they have responsibility to work to make sure that the worst excesses at the moment are resolved in a way that does not hurt rights holders.

At the moment, it is a “large copyright holders against large search engines” agreement, and on that level it might operate. I do not think it will be effective. I do not think it is sustainable because there will be new people coming in and business models and practices will change—we cannot foresee that. Power will be necessary. If the Government will not seize a gift that is worth a lot of future pain and help them avoid the difficulties they will face in trying to find the legislative time—as the noble Lord, Lord Foster, said—to put this in, we cannot make them do it. I beg leave to withdraw the amendment.

Amendment 25 withdrawn.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Aberdare (CB)]

My Lords, I should like to speak briefly in support of Amendment 29A. Removing merit-based appeals, as Clause 80 would do, seems both unfair to appellants in cases where Ofcom may make decisions that are materially wrong even if they reflect due process, as will inevitably occur on occasion, and undesirable, potentially harming consumers and deterring investment. This seems precisely the opposite of what is needed in such an important, strategic, high-value, fast-changing, innovative and growth-oriented sector.

I will not try to restate the arguments made in Committee, or those made by the noble Lord, Lord Foster. I just make two points in response to the helpful letter from the noble Lord, Lord Ashton, on 14 March. The letter describes the merits appeal as,

“akin to a retaking of the whole decision”,

but an appeal will normally be made only on specific grounds where an appellant believes there is a clear error. So the amendment would not require whole decisions to be re-examined, only those aspects specified in the notice of appeal.

Secondly, I accept that the judicial review process is,

“perfectly able to meet the current EU law requirement that the merits of the case are duly taken into account”

if the judges so decide in a given case. Rather than leaving it to judicial discretion, however, why not spell out in the Bill that they should be taken into account even after they are no longer banned by the EU framework directive, thereby future-proofing it for the post-Brexit world?

Ofcom decisions are of crucial importance for both consumers and telecom providers, and indeed for investors. As we have heard, the change to a judicial review standard is strongly opposed by the great majority of industry participants, from the major incumbents such as BT and Virgin to much smaller, newer market entrants, such as CityFibre, along with the CBI and techUK, the latter representing 900 tech sector companies, the majority of them SMEs.

I claim no specific expertise on judicial review, and I am no great fan of BT, but it is important that the relatively modest requirement set out in Amendment 29A should be incorporated into the Bill.

[Lord Stevenson of Balmacara (Lab)]

Briefly, the ground has been well covered by the noble Lords, Lord Foster and Lord Aberdare, and I have little to add. Three things strike me. I recalled in Committee that this was one of the areas where we had received the most external notifications and correspondence. It is still something that we need to take carefully. As has just been said, it is surprising that almost the entirety of the industry affected by the judgments of Ofcom have joined up to make the case.

Following on from both speeches, what is required is a statement from the noble and learned Lord. I am sure he is straining at the leash to give us all another compromise solution that will do the trick. He is shaking his head; maybe there are other things he has to cover as well. However, the situation seems to hinge on whether Article 4 of the EU directive applies sufficiently well after this Bill goes through, as before. Yet, as has been mentioned, there will be an opportunity, presumably in the great repeal Bill, to cover exactly this point. So what is the hurry?

[Lord Keen of Elie]

My Lords, I am obliged to noble Lords. As the noble Lord, Lord Stevenson, observed, there have been quite a lot of external communications on this. Indeed, I notice that the quotation that the noble Lord, Lord Foster, gave on my observations in Committee was identical to that quoted in a letter from Towerhouse LLP to the Department for Culture, Media and Sport on 17 March. Everybody seems to be singing from the same hymn book.

At present, Section 195 of the Communications Act 2003 requires that appeals against Ofcom’s regulatory decisions are decided by the Competition Appeal Tribunal on the merits. I shall come back to “on the merits” in more detail in a moment.

Appellants argue that appeals “on the merits” should allow for a bottom-up review of the decision, inviting the tribunal to substitute its own view for that of the regulator—in effect, two tiers doing the same thing. Appeals are therefore seen as an opportunity to rerun arguments that were considered and rejected by Ofcom in reaching its decision, or to put forward swathes of new evidence to persuade the tribunal to reach a different decision. Such appeals can lead to extremely lengthy and costly litigation, with extensive cross-examination of experts and witnesses. This depletes the regulator’s resources and means that other regulatory action by Ofcom is inevitably delayed, allowing for the potential for providers to frustrate the regulator with speculative or even spurious appeals, causing considerable uncertainty in the market and delay to other regulatory decisions.

The Government consider that appeals in the communications sector need to be rebalanced to ensure that Ofcom is held properly to account for its decisions, but also enabled to regulate in an effective and timely manner in the interests of citizens and consumers, as it is required to do. Clause 80 does just that; it requires that instead of merits appeals, the tribunal must decide appeals against Ofcom’s decisions by applying the same principles as would be applied by a court on a judicial review. Judicial review is generally a well-understood standard of review against which very significant decisions made by most public bodies are tested. Importantly, this will ensure that appeals are focused on identifying errors in Ofcom’s decisions, rather than simply seeking to persuade the tribunal to reach a different conclusion.

Those affected by Ofcom’s decisions will remain able to challenge them effectively. In Committee, the noble Lord, Lord Clement-Jones, said that judicial review was,

“solely concerned with whether the decision is unlawful in a technical sense—that is, was the correct process followed?”.—[Official Report, 8/2/17; col. 1734.]

I hope I can reassure him that this is simply not the case. First, appellants are able to argue that Ofcom’s decisions are based on material errors of fact or law. Material errors will therefore be identified and corrected in a judicial review process. Secondly, judicial review is a flexible standard of review, which allows the court to decide on the appropriate intensity of review according to the individual circumstances of the case. For example, there may be more intensive review processes in the context of matters pertaining to human rights. In particular, Ofcom has various statutory duties to ensure that its decisions are proportionate—in other words, that they go no further than is appropriate and necessary to attain a legitimate aim. In reviewing whether a decision is proportionate, the courts can carry out a closer and more rigorous review of the decision.

Of course, appeals in the communications sector are required to ensure that,

“the merits of the case are duly taken into account”,

as a matter of EU law under Article 4 of the EU framework directive. That will remain the case under a judicial review standard. I understand that there is uncertainty about the extent to which requirements in EU law may become a part of UK law after the United Kingdom leaves the EU, but that will be a matter for Parliament to determine when the great repeal Bill is introduced, as the noble Lord, Lord Stevenson, observed, and will be looked at in the context of the overall future regulatory framework for electronic communications, including the appeals regime, once the UK has left the EU.

A number of Ofcom’s regulatory decisions are already appealable only by way of judicial review, and the Court of Appeal confirmed as long ago as 2008 that judicial review is capable of taking account of the merits of the case, as required by EU law and, in particular, by Article 4 of the EU directive. Lord Justice Jacob in the Court of Appeal in the T-Mobile case in 2008 said that it,

“is inconceivable that Art. 4 in requiring an appeal which can duly take into account the merits, requires Member States to have in effect a fully equipped duplicate regulatory body waiting in the wings just for appeals. What is called for is an appeal body and no more, a body which can look into whether the regulator had got something material wrong”.

He also held that,

“there can be no doubt that just as JR was adapted because the Human Rights Act so required, so it can and must be adapted to comply with EU law and in particular Article 4 of the Directive”.

Indeed, in a more recent case involving judicial review and Article 4 in 2016, Mr Justice Cranston observed that, as the Competition Appeal Tribunal had said:

“Ofcom enjoys a margin of appreciation on issues which entail the exercise of its judgment”,


and that,

“the Tribunal should apply appropriate restraint”.

It is not a second-tier regulator, and the fact that it might have preferred to give different weight to various factors in the exercise of a regulatory judgment would not in itself provide a sufficient basis to set aside Ofcom’s determination. It should not interfere with Ofcom’s exercise of a judgment unless satisfied that it was wrong.

These are the relevant judicial review standards that will be applied in these circumstances. We do not want a complete retrial—if I can call it that—or a situation in which, at two levels, we begin at the beginning and end at the end with an entirely different opinion and approach to the evidence, and, perhaps, entirely new arguments being advanced evidentially in support of the merits of a case. That is a never-ending process and is not common to any other area of regulation by a public authority.

The judgments I have referred to have been considered in a number of subsequent cases and it is clear that a judicial review standard is consistent with the requirements of Article 4 of the framework directive. In these circumstances, it is not considered that there is any real need for this amendment. It is appropriate that we proceed with Clause 80 and I therefore invite the noble Lord to withdraw the amendment.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Fox (LD)]

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

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


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

[Lord Stevenson of Balmacara (Lab)]

My Lords, rather like the last speaker, I welcome this measure but am a bit nervous about it. The idea that the Government of the day should be able to set out their forward thinking in a way which is helpful to the regulatory functions is a good one. However, as other external viewers have sought to point out, it raises worries about whether the regulator is truly independent of government in that mode, and whether the Government might be accused of setting an agenda which would then be imposed through a well-respected regulator which everyone thinks is doing a good job in a way that might not have been the case had the process of primary legislation followed by regulations been the approach taken. I hope that when the Minister responds he will confirm that there is no intention for this measure to circumvent the clearly established arm’s-length relationships between the regulator and government. It would be helpful if he could do so.

In another Bill—I sometimes get confused, so I hope that I am discussing the right one—we talked about how the Secretary of State for Education has responsibilities in relation to the new body that is to be set up in higher education, the Office for Students. However, we think that it should be called the Office for Higher Education. In that Bill, the words “have regard to” the instructions given by the Minister are very much part of the way in which that system operates. However, that situation is different in the sense that the measure replaces an existing arrangement for a body which was not a regulator—HEFCE—and for which the only mechanism whereby higher education policy could be created was by letters of instruction. That usually takes the form of an annual letter to HEFCE which sets out the Government’s wishes for the future year, sometimes for several years ahead. I make that point simply because it would be helpful if the Minister could make it very clear that the model here is one of improving an arrangement which will be for the benefit of the exercise of the powers that already exist, and does not add new layers of bureaucracy or new powers, and that the intention is not to set an agenda or to curtail the independence of Ofcom, as I think the system would not work without it. Otherwise, I welcome what is proposed.

--- Later in debate ---

[Lord Pendry (Lab)]

My Lords, many of us have been around this block many times before, and here we are again discussing the negative impact that secondary ticketing has on the sport and entertainment sectors. I therefore willingly support the amendments standing in the name of the noble Lord, Lord Moynihan, who, as we have all heard, has so ably spelled out his reasons for tabling them.

It is a particular pleasure for me that these amendments carry his name because many years ago we were old sparring partners in the days when he was Minister for Sport and—if noble Lords can believe it—I was his shadow. I could not keep up with all the Ministers for Sport whom I shadowed but certain names spring to mind: Atkins, Tracey, Key, Sproat and Spring. I wrestled with them all but, a priori, the best by far was Colin Moynihan MP, who now carries a different hat in tabling this amendment. However, because his tenure in office was a short one before he moved onwards and upwards to become a Minister in the Department of Energy, I did not receive his wise words on the vexed question of ticket touting at that time. I did, however, receive volumes of advice from other Ministers, telling me that it was not the time to enact legislation to curb the touters. Even as early as 28 September 1992, the then Prime Minister, John Major, wrote to me:

“Although committed to give effect to the recommendations of Lord Justice Taylor … because of the lack of parliamentary time”,


it was not the time to proceed with legislation on ticketing.

So progress has been slow. With the exception of legislation on football, not much has been achieved in the field of eliminating ticket touting. However, progress now seems to be at hand, thanks to the noble Lord and his colleagues, who I am sure will be the first to recognise the work of the late and lamented Lady Heyhoe Flint, who worked alongside them and did so much to give us the opportunity to debate the issue this evening. They are giving the Government the opportunity to embrace the need to protect consumers’ rights and to call for a thorough study into secondary ticketing. These are important measures.

I am sure that, by now, noble Lords will have recognised why I am adamant that these amendments should be passed. As shadow Minister for Sport from 1992 to 1997, I worked on a blueprint for sport for the Labour Party which was brought together for the 1997 general election. That manifesto, Labour’s Sporting Nation, was endorsed by the then Prime Minister-elect, Tony Blair. Of course it was an important time for me personally, as the one who wrote that document, as I believed that we were in sight of ensuring a breakthrough in this ticket touting problem. In particular, the passage on touting concluded with these words:

“A New Labour Government will make touting at all major sporting events illegal and therefore eliminate it”.


I do not want noble Lords to bring out their handkerchiefs and tissues in sympathy for me at this moment but, as the House knows, as the author of that dictum I was not given the opportunity to bring that commitment into legislative form. But seriously, the then intention was to introduce explicit legislation that directly dealt with the problem of ticket touting. But the world has moved on, as we all recognise, and we are in a different age. One has to recognise that the world of 1997 is not the world of 2017. A lot has happened since, which has been acknowledged by the noble Lord, Lord Moynihan, and his colleagues who submitted these amendments. We must also acknowledge the way that they have gone about that in the months preceding this debate.

By supporting these measures we will be giving further power to protecting consumers and ensuring that effective enforcement takes place. This will give greater choice and information to sports fans and help in the fight against those who commit fraud and seek to exploit the pockets of hard-working families. Like others, I have received correspondence from a number of bodies which usually support what we are doing this evening. The UK stages some of the world’s greatest sporting events. If we want them to flourish and for the country to continue to be open for business, we must protect those events from the profiteering of those committing fraud.

Organisations involved in rugby—both rugby league and rugby union—tennis, and cricket in England and Wales already do good work. We need to empower them to do more. The amendments before us give us that opportunity. They would give them the right to take civil action in a court if they so wished. The Minister will no doubt tell us when he replies about the importance of enforcement. I would like him, ideally, to accept the amendment before us. By accepting that progress has been slow, we have arrived at an important time when this House can endorse the amendment before us and people such as Lord Justice Taylor, Professor Waterson and those who have done so much in the past will, I am sure, benefit from what we do today.

[Lord Stevenson of Balmacara]

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

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

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

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

[Lord Ashton of Hyde]

My Lords, I am grateful to all noble Lords and I will try to be quick because I want to move on to the dinner break business. I pay tribute to my noble friend Lord Moynihan for his persistent campaigning on the subject. His work has influenced today’s government amendment, as has the work of other parliamentarians and particularly Nigel Adams MP and Sharon Hodgson MP.

Amendment 33ZLZA would amend the Consumer Rights Act 2015, by inserting a duty to provide the ticket reference or booking number when reselling tickets. This was specifically considered by Professor Waterson in his report. So I start by reminding noble Lords of the reasons that Professor Waterson gave for rejecting the same proposal that we now have before us in Amendment 33ZLZA. I refer to page 170 of his 226-page report. The first was cost. The amendment would require a system for the potential buyer to check a reference number, and in a manner that could be done quickly enough to facilitate internet sales. That requires infrastructure changes in both the primary and secondary market. The primary market would be asked to pay for changes to allow customers to authenticate tickets on the secondary market, for which they receive no additional income. Ultimately, the cost will be added to ticket prices.

Secondly, there is practicality. The secondary ticketing industry would need to establish a standard interface to enable cross-checking. There is strong competition between the platforms and no appropriate industry body to help bring such a system about. In such circumstances, it may be easier and possibly more productive for the secondary platforms simply to chase more exclusive authorised resale deals. Further, there is little evidence of there being the trust between the primary and secondary markets necessary to enable such verification.

Thirdly, my noble friend has mentioned the legal reasons. The EU consumer rights directive, which is the basis of the secondary ticketing information requirements in the Consumer Rights Act, prohibits member states going further in national law than the directive requires. My noble friend mentioned his telephone conversation with the European Commission. There are differences of opinion on the legal interpretation and clearly, at the very least, there may be litigation ahead if we go down this road.

The Government agree with Professor Waterson. We cannot see how Amendment 33ZLZA would actually benefit anyone. Even if those problems were overcome and the primary sellers would offer a consumer confirmation that a reference number was real, how do we know that the real ticket is available for sale? Might it have already been resold? Consumers who buy tickets online, only to be disappointed, will be even angrier having gone to the effort to “verify” yet still being left in the lurch.

Professor Waterson preaches caution in further legislating with good reason. Amendment 33ZLZA is untested and offers false hope. While ticket reference numbers do not offer a solution, we agree with the proposal to require consumers to be informed of the terms of resale. Indeed, we have already legislated to do just that in Section 90(3)(b) of the Consumer Rights Act. Rather than amending the Consumer Rights Act, we believe that the existing law should be tested.

The need for better enforcement was also the overwhelming view of those who gave evidence to the Culture, Media and Sport Select Committee last week, and the Competition and Markets Authority’s enforcement investigation is ongoing. In addition, National Trading Standards and Trading Standards Scotland have been tasked with investigating potential enforcement cases against sellers on secondary ticketing websites that do not comply with the legislation.

I turn to Amendment 33ZLZC. While injunctions are already possible, the amendment would introduce a new element into consumer law by seeking to shift the responsibility for enforcement to the primary ticket seller. This could risk putting an undue onus on event organisers regardless of their capacity to act because public enforcement bodies could use it as grounds to prioritise other areas for enforcement action. The amendment also requires us to trust primary sellers to self-regulate and self-enforce, yet to date the sector has often been too unwilling or unable to take action. There have been notable exceptions, but the strides that we are making, as I set out at the start of the debate, have been achieved by bringing together the parties, including law enforcement agencies, and we need to build on that.

Although Amendment 33ZLZB is similar to the one the Government have tabled on the use of bots, it goes further by attempting to ban the resale of tickets purchased by bots. I acknowledge my noble friend’s kind remarks along with those of the noble Lord, Lord Stevenson, so to save time I will not comment in detail as I understand that my noble friend is content with the government amendment.

In conclusion, the Government recognise that it is hugely frustrating for fans who miss out on tickets sold on the primary market only to see them appear on the secondary ticketing market at increased prices. The Government are acting—working with industry and law enforcement agencies. We need to let these developments grow and allow time to harvest the results of the legislation that we agreed in this House only two years ago. I would respectfully ask my noble friend to withdraw his amendments and noble Lords to support government Amendment 33ZL in their place.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Clement-Jones]

My Lords, I would not expect the Minister to make commitments at this stage, just to listen to the arguments that we have already made and will no doubt make again in the meeting. I am very grateful to the Minister. We have Third Reading where we can—

[Lord Stevenson of Balmacara (Lab)]

I am abusing the system. I apologise for interrupting. I am grateful to the noble Lord for giving way. My question is directed at the Minister through the noble Lord, to maintain some semblance of protocol. I think the question my noble friend was trying to ask was, given that the Minister has committed to bringing back an amendment which covers much of the ground that has been discussed today, because there are issues he wishes to solidify, the assumption is that the points that have been raised may be raised again at Third Reading. He is not asking him to concede any additional work. I make it absolutely clear, because of the need for the clerks to be sure about this, that there will be a discussion at Third Reading on the substantive points that have been made so far.

[Lord Ashton of Hyde]

What the noble Lord, Lord Collins, asked me to do was to meet to discuss these issues before Third Reading. I agreed to meet him and the noble Lord, Lord Clement-Jones, if he wants to do that. I said that we were going to bring forward two amendments and we will continue to do that. I think it is the other one, where we have agreed not to do that, that he wants to talk about, but I am happy to talk about all of them. We will bring forward the two amendments at Third Reading. Obviously, I can make no commitment about any extra amendments but I am happy to talk about it.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, it is clear that we have saved the best till last. It has been a terrific debate. The hour is late and I shall not delay the House too long, but it is worth reflecting that a 14 year-old speech can be brought out, dusted down, given the once-over and realised to be fit for purpose and continue to have relevance today.

I support the amendments tabled by the noble Lords, Lord Lansley, Lord Puttnam and Lord McNally. They are absolutely right; they are on the mark. They are matters that need to be addressed now but also for the long term. The Government need to take them away and come back with some proposals as soon as possible.

The noble Lord, Lord Lansley, was right that the existing legislation, stemming from a variety of sources but crystallising around the Enterprise Act 2002, is strong, but it needs to be looked at in light of technological change, of developments and of the new way in which the world receives its information. Many things have not changed. We want to be sure that by moving around some of the architecture, we do not lose something, but it is clear that we need to widen the definition of a media enterprise—as the noble Lord said, broadcasting is far too narrow a definition for the way in which we consume and rebroadcast our information today. Ofcom needs powers equal to those of the CMA, in terms of getting papers and material in front of it so that it can have exactly the same authority in its work. It is not clear that it has those at the moment.

We need to think about the term “broadcasting standards” and make sure that it is fit for purpose in respect of the various companies now operating, which are definitely media companies and not technology companies, as many would argue. Certainly, all those involved in the current merger arrangements need to be considered closely in terms of the impact both of individuals and of the corporate structures which they employ.

The questions raised in our amendments to Amendment 33J, as was picked up by the noble Lord, Lord Lansley, are based closely on the model offered by the FCA in its fit and proper person test. If the noble Lord detected a similarity, it is because 90% of the words are the same—and well spotted. However, it shows that there is a commonality of approach which would repay some discussion and debate. Everyone will say that it is different in financial regulation, but some of the words copied out in Amendment 33L, for instance, which are taken straight from the FCA with only a couple of points lost, are appropriate. There are other examples and I commend them to the Minister when she comes to consider this matter, perhaps away from this sitting.

A point well made by the noble Lord, Lord Lansley, was that the work done in 2010 and 2011 is worth revisiting in some detail. In particular, a section on page 15 of the Report on Public Interest Test produced by Ofcom and published in 2011—to no significant media comment at that time because, by that stage, the Milly Dowler case had broken and the merger then in proposal had gone, so the public’s attention moved away—deals with:

“Concerns about wider market developments and sufficient plurality”.


It is incredibly relevant for today—I shall not read it all; I want to touch on just a few things. The point is made that,

“the current statutory framework may no longer be equipped to achieve Parliament’s policy objective of ensuring sufficient plurality of media ownership”.

The market developments have changed so much and some consideration of that broader issue must be given. The report identifies the problem that, at present, the regulations require that,

“a public interest consideration can only be triggered by a specific corporate transaction”,

such as merger proposals, but that can be done by organic growth and change. It is important that we have something in the regulations which allows Ofcom to use judgment over whether it is time to intervene, particularly on the fit and proper person test.

The report expresses concern about the differential arrangements for remedying competition concerns. Such concerns are not carried forward into considerations about whether transactions are operating in the public interest depending on plurality. In other words, the narrow competition concerns largely operated through the CMA are on one side of the calculation, but those that deal with media mergers are not given the same weight. Therefore, there is a discrepancy of approach.

Finally, the point is made that,

“a more fundamental review and possible reform of the current … framework”,

is probably necessary. This was said in 2010 and published in 2011. I do not think much work has been done on this since then. It is overdue time for us to look at it.

Specifically on Amendment 33L and the questions it raises, it is important that we think harder about what this phrase, a “fit and proper person”, should aim for. As I said, the wording of Amendment 33L is not necessarily perfect but it points us further down this track. I have heard it said that the problem with the fit and proper person test and the work operated under Ofcom is that precedents in relation to media come from earlier times under earlier regimes, such as the old ITC regime, which must be nearly 30 years old. Since it is not used very often, there are only occasional examples of it. We have a problem in ensuring there is a join-up between the considerations that should be brought into play today and what happened in the past. It was said—perhaps slightly light-heartedly but it makes the point—that it would be difficult in today’s world if one were using the tests provided by the ITC in the early 1980s and 1990s, as you would be able to prove that someone was not a fit and proper person to hold a broadcasting licence only if they had been not only charged with a crime of murder but also put away for it. That is probably too high a standard. Generally, most people would accept that. If it is true, there is a bigger question here.

It may be that the territory is such that we must be a bit more concerned about fit and proper persons in a more generic sense. In a time of fake news and with what is happening across America, we have difficulties enough coming our way. We also read in today’s papers that Andy Coulson, no less, is about to be hired as the PR consultant for a well-known daily newspaper on the very far right of the political spectrum. If it is right that his brief is to make people believe that the paper is authoritative and truthful, we have problems.

[Baroness Buscombe]

My Lords, I agree that the best is left until last. I start by thanking my noble friend, Lord Lansley, and the noble Lords, Lord Puttnam and Lord McNally, for the constructive way they engaged in discussions with the Secretary of State and me, and with the department’s officials, on seeking a common understanding on the very important issues raised in this debate.

As noble Lords said, in particular the noble Viscount, Lord Colville, the Secretary of State issued a European intervention notice in relation to the Fox/Sky merger on 16 March. She did so on two grounds: media plurality and commitment to broadcasting standards. Ofcom also announced on 16 March that it will conduct its fit and proper assessment at the same time as it will consider the public interest considerations raised in the intervention notice.

It is now time to leave the independent regulators, Ofcom and the Competition and Markets Authority, to carry out their reviews as set out in legislation. Under the terms of the intervention notice, both will report back to the Secretary of State within 40 working days—by 16 May. For the avoidance of doubt, the Secretary of State’s quasi-judicial role in respect of that merger continues and it would therefore be inappropriate for me to comment on the merits of that case. I am able to address the important issues raised by these amendments on future mergers.

As my noble friend Lord Lansley made clear, the purpose of these amendments is to future-proof the issue when it comes to media mergers. I listened carefully to the noble Lord, Lord McNally, talk about the changes over the past 14 years in terms of social mores and societal changes. The noble Lord, Lord Puttnam, referenced the need to talk about trust in each other, truthfulness, justice, compassion and tolerance. Of course, there was the reference to my noble friend Lord Crickhowell, whom I well remember speaking in those debates on foreign ownership. They were controversial at the time. There were some real difficulties in accepting what my noble friend sought to achieve but times have changed. We have moved on and learned a lot, and we have built a great deal of trust in the ability of Ofcom to do its work and do it well.

The first point I want to deal with is the amendment on Ofcom’s powers. In a phase 1 assessment of any media merger, Ofcom’s role is not to conclusively decide whether concerns about the merger have been established but rather to advise on whether or not they warrant a more thorough, phase 2 review. In our view, the timing and nature of Ofcom’s phase 1 review simply do not necessitate the powers that Amendment 33G is proposing. Phase 2, if this is needed, is a more in-depth review that the CMA carries out over a longer period of 24 weeks. At this stage in the process, the CMA does need more extensive powers and this is already provided for under the Enterprise Act 2002. It is at the end of this review that a decision is made by the relevant Secretary of State on whether the merger operates against the public interest and whether it should be able to proceed.

If a party to a merger does not co-operate with Ofcom in its phase 1 review, Ofcom can, and indeed should, draw out that point—and the behaviour of the parties—in its report and conclusions, which will be published. The provision of false or misleading information by anyone to Ofcom or the CMA is a criminal offence under Section 117 of the Enterprise Act. Our conclusion, therefore, is that extending the powers to Ofcom in phase 1, as Amendment 33G seeks to do, is not necessary and indeed changes the nature of what is a first-phase review to decide whether a fuller, much more thorough investigation is warranted.

As noble Lords have said, the media landscape is changing at a faster and faster rate and the tests set down in 2003 may no longer fully cover all the public interest considerations needed in media mergers. We have heard arguments throughout the passage of the Bill that the fit and proper assessment needs to be baked into the media public interest test. As the Secretary of State made clear in her Statement of 16 March, Parliament has given Ofcom a duty to assess on an ongoing basis the question of fit and proper for all organisations applying for broadcast licences. For corporate bodies, Ofcom’s assessment will cover controlling directors and shareholders.

Both the Secretary of State and Ofcom have said that while many of the same issues will be relevant to both the assessment of the commitment to broadcasting standards’ public interest ground and to an assessment of the fitness and propriety of licence holders, it is right that the latter—the fit and proper test—sits with an independent regulator. The current grounds for intervention in media mergers are all linked to the important public interest consideration of media plurality: plurality of ownership, plurality of content, and a commitment to standards that support plurality of views and content.

Although I acknowledge that, in a quasi-judicial role, political considerations do not come into play, adding fit and proper as a ground of intervention goes beyond the plurality test into questions of character and fitness, and puts the ultimate decision on those questions in the hands of a politician. Notwithstanding what the noble Lord, Lord McNally, said about the Government having a duty to protect the ecology of our media, this is a different position. We are very clear that the decision on fit and proper should be made by an independent authority; that is, Ofcom. This cuts entirely across what is generally the role of an independent regulator and, in my view, takes the grounds of intervention a step too far.

On the general premise that the media merger public interest consideration may not fully capture future shifts, we agree that it is time to consider this. Amendment 33F seeks to broaden the definition of media enterprise to take account of new forms of delivery and distribution. Amendment 33J, although introducing a media public interest test around fit and proper in proposed new subsection (2CC), adds a new media public interest test to cover access to cultural and performing rights, talent and other expression available to UK audiences in terms of media plurality.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

3rd reading (Hansard): House of Lords
Wednesday 5th April 2017 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

1: Clause 3, page 3, line 26, leave out “switch” and insert “roam”

[Lord Stevenson of Balmacara (Lab)]

My Lords, this is a technical amendment in the sense that it seeks to correct an error which seems to have been made inadvertently in the run-up to Report. As a result— for no particular purpose, these things just happen— Clause 3(1)(b) states,

“allow the end-user to switch (at no extra charge) to another provider”,

whereas it should state,

“allow the end-user to roam (at no extra charge) to another provider”.

Those noble Lords who are not conversant with the Bill may find these words rather strange and may feel that we are making a mountain out of a molehill. However, I assure the House that this is a significant change. The issue that we are trying to address—and the reason that I am spending a little time on this, although it is a technical amendment, and I know that the Minister would like to make a few remarks in response—is that there are in this country, despite the considerable investment, care and concern of those responsible for the infrastructure, a large number of what are called not-spots. These are places within which one’s mobile phone dies and one is unable to access anything, let alone the emergency services. The reasons for this are probably more complex than I need to go into at this stage, but in essence our amendment seeks to suggest that in areas of not-spots—not across the whole country—it might be feasible for those who have mobile phones with one provider to hook on to the signal provided by another, which would provide the roaming commonly found when one goes abroad but not in the UK. The counter-argument I am sure we will hear from the Minister is that this would interfere with the current arrangements for good competition which will drive forward much better and quicker coverage of the whole country, and that therefore our proposal is the wrong way to go. However, we beg to differ.

The wording of our previous amendment may have been deficient but, given the brilliant arguments put forward by my noble friend Lord Mendelsohn and our colleague on the Liberal Benches, the noble Lord, Lord Fox, we won a vote on this issue. We therefore seek to change “switch” to “roam”, as I said. I hope this will be accepted as a technical change and that the Government will accept the amendment. However, I have just been alerted to the possibility that the current wording may still be deficient and may require further action following Third Reading. Having had a quick word with the clerks, I am pretty confident that a simple cross-referencing issue is involved, and that that can be picked up as we go forward. However, we may have to return to that if we have ping-pong on the Bill. I beg to move.

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

My Lords, I have just been informed by my noble and learned friend that all amendments lead to Rome. We accept that a genuine mistake was made in tabling the original amendment. Therefore, we will accept this amendment today. However, the Government have set out the arguments against requiring network operators to offer domestic roaming before, and I will try to be clearer this time as we did not have the opportunity to address those on Report. I will try to be brief.

First, domestic roaming is not mandated but it is not prohibited. Mobile networks could voluntarily enter into agreements with each other but they do not because it is costly and prevents them differentiating from competitors on the basis of coverage. As the noble Lord, Lord Stevenson, reminded us, the noble Lord, Lord Mendelsohn, told us on Report about the benefits he receives from his chosen provider, which permits roaming. This is, of course, a provider based outside the UK and the EU. However, he did not highlight the cost of that. The advertised price is £100 for one gigabyte of data and voice calls are £100 for 1,000 minutes, which is 10 times more expensive than the going rate for a standard domestic contract. That premium arises because operators have to pay other operators network access charges. Networks should be entitled to recover the cost of their investment. If one relies on another to provide coverage, it is only reasonable that fees should be paid, and those fees are of course passed on to the consumer.

Secondly, as the noble Lord, Lord Stevenson, anticipated, there is the question of the impact on investment. Our strategy has been to grow investment in infrastructure, and that has worked. It has locked in £5 billion of investment since 2014. Some 89% of UK premises are now covered by all four operators, and that percentage is growing. More importantly, this investment is closing not-spots. Ofcom forecasts that by the end of this year the number of not-spots will have more than halved since 2014. Roaming might make it easier for some people where only a single operator exists, subject to cost, but it does not do anything for those in not-spots. Extending coverage remains our priority and that needs investment.

--- Later in debate ---

The Government will now consider further Clause 3, as amended by this amendment, when it returns to the other place. In the meantime, as I said, we accept Amendment 1 in the names of the noble Lords, Lord Stevenson and Lord Fox.

[Lord Stevenson of Balmacara]

I am very grateful to the Minister for that response. I sense that we may be seeing this issue again, so I will not delay the House further. I just want to put on the record that, if there has been a reduction in the number of not-spots, it must have taken place in every conceivable part of the United Kingdom apart from the ones I travel to, because I have not noticed anything.

Amendment 1 agreed.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, in moving this Motion, I express grateful thanks to all noble Lords who have contributed to the Bill’s passage and shared their knowledge on the wide variety of subjects covered by it. It seems a long time since December, when we referred to Christmas tree Bills. As we now approach Easter, I express my gratitude to both Opposition Front Benches for their openness and co-operation, especially to the two ringmasters, if I may call them that, the noble Lords, Lord Stevenson and Lord Clement-Jones, but also to the other noble Lords: the noble Baronesses, Lady Jones, Lady Bonham-Carter and Lady Hamwee, and the noble Lords, Lord Mendelsohn, Lord Collins, Lord Grantchester, Lord Wood, Lord Foster, Lord Fox and Lord Paddick, all of whom have led on various parts of the Bill. I am very grateful to them.

Most importantly, I pay tribute to and thank Andrew Elliot, Patrick Whitehead and all the other members of the Bill team, and to my private office, Matt Hiorns and Martha London, who have shown tremendous resilience, patience and humour over the last four months while the Bill was in this House. I am very grateful to all of them. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, a few years ago I used to complain to my colleagues that I had drawn a short straw in the sense that many of my other colleagues were in departments that were constantly dealing with meaty legislation, while we shadowing the DCMS had to make do with the occasional debate and even sometimes a rather thin Question, usually organised by the indefatigable noble Earl, Lord Clancarty, from the Cross Benches. Is it a coincidence, I asked myself, that since the Minister took over the brief we have had not only the BBC royal charter to deal with, but three and a half Bills? The half was the Law Commission’s Intellectual Property (Unjustified Threats) Bill, which was a bit of a mixed bag between the DCMS and BEIS. It was really introduced under the last regime, but we have had to keep a close watching eye on it and on the other place, even though it was a Law Commission Bill. It is of course exhilarating to be at the very heart of public policy-making and it has been great fun, but it is also absolutely exhausting.

At pride of place in this canon of interesting Bills is the Digital Economy Bill. As the Minister said, it has generated a considerable amount of interest across the House. With its many disparate parts, it allowed the House to play a very full and important role as it scrutinised every clause and virtually every line, as it should. It is what we do and we do it well.

I thank the Minister, the noble Baroness, Lady Buscombe, and the noble and learned Lord, Lord Keen, for their very full participation in the Bill. They were engaged on all the issues. We were able to get hearings and discussions with them when we wanted them. I am only sorry that they had to stand down the Deputy Leader of the House on one amendment that was not moved. I am sure that he would have added considerably to the debate and given us a full hand of stars. The tone throughout has been one of unfailing courtesy. While the willingness to write to us on matters of detail was not up to the high standards set by the noble Viscount, Lord Younger, who is in his place—how could it be?—it is much appreciated. We also appreciated the direct involvement of the Minister in the other place, particularly on Part 3.

I believe the House should be willing to put on record exemplary service when it comes across it. I award this year’s prize for Bill support, if there is any justice in this world, to the Digital Economy Bill team, whose opening gambit of a neatly bound and very substantial pack of all the documents you could possibly want set the gold standard for work of this type. They were very helpful in letting us know what was going on, even when I suspect they would have rather remained silent. We appreciate that they were always willing to organise meetings, even on occasion tracking down Ministers who had gone AWOL.

My Front Bench team has been superb. I am very grateful to my noble friend Lady Jones of Whitchurch, who led on the difficult and ongoing work to do with age verification. My noble friend Lord Collins of Highbury relished the chance to lead on an issue—horseracing—unrelated to his usual stomping grounds, and coined the phrase “function creep”, which I am sure will be adorning your Lordships’ debates in years to come. My noble friend Lord Grantchester led on the rather dull, but it turns out rather rewarding, area of the electronic communications accord, which paid dividends in a number of amendments that we were able to secure. My noble friend Lord Mendelsohn, who I am sorry is not with us today, dealt very capably with the USO and related issues. My noble friend Lord Wood helped us with the amendments consequent on the BBC charter renewal.

Our legislative assistant, Nicola Jayawickreme, has been a class act and has kept us going with the background material so necessary for effective observation as well as dealing with the Public Bill Office and drafting so many amendments, even one on the day her flat was flooded and she had to move out all her belongings.

As I approach the end of my active Front-Bench responsibilities in your Lordships’ House, working on this Bill will be one of the memories I most cherish.

[Lord Ashton of Hyde]

My Lords, I should feel awful, but I neglected to mention my noble friend Lady Buscombe and my noble and learned friend Lord Keen, who helped enormously. I had written it down on my notes, but, as usual, I did not pay any attention to them. I want to pay tribute to them and thank them very much.

[Lord Clement-Jones]

My Lords, I am sure that they would have been mentioned fulsomely by other Benches as well. I have not laboured in the vineyard quite as much as the noble Lord, Lord Stevenson. I have not had multiple Bills simultaneously to deal with—and one can only admire that kind of stamina—but, still, the passing of this Bill carries a sense of relief given the variety of subject matter that we have had to deal with during the past few months. The Minister said that it was from Christmas to Easter; these Bills are seasonal in their nature.

We certainly have not achieved everything that we wanted, but I believe that the Bill is leaving this House in much better shape than that in which it arrived. As the noble Lord, Lord Stevenson, implied, it is certainly a very meaty Bill. It is also a disparate Bill, covering a huge range of issues most of which are unified only by the word “digital”. That was quite a challenge for all those who were trying to cover the whole subject matter of the Bill.

I want to thank my own colleagues, particularly my noble friends Lord Paddick, Lord Fox, Lord Foster, Lord Lester, Lord Storey, Lord Addington, Lady Bonham-Carter, Lady Hamwee, Lady Janke, Lady Benjamin and Lady Grender. I thank our adviser team, particularly Elizabeth Plummer, Rosie Shimell and Vinous Ali. I want also to thank the Opposition Front Bench—the indefatigable noble Lord, Lord Stevenson, the noble Baroness, Lady Jones, and the noble Lords, Lord Collins, Lord Wood and Lord Grantchester—for their collaborative approach. Of course, I thank many others on the Cross Benches, including the noble Lord, Lord Best, with his successful amendment, the noble Viscount, Lord Colville, and the noble Baroness, Lady Howe—indefatigable is too small a word for her.

[Lord Stevenson of Balmacara]

Indestructible.

[Lord Clement-Jones]

“Indestructible” is suggested to me by the Opposition Front Bench.

Finally and very sincerely, I thank the noble Lord, Lord Ashton, the noble and learned Lord, Lord Keen, the noble Baroness, Lady Buscombe, and the Bill team. I echo what the noble Lord, Lord Stevenson, had to say about the Bill team for their willingness to engage constructively, explain, amend and give what assurances they could throughout the passage of the Bill. We welcomed considerable movement during that time: changes in definition of “extreme pornographic material”, appeals on site blocking, the incorporation of many of the DPRRC amendments and new Ofcom powers—my noble friend Lady Benjamin is not in her place; she is probably celebrating somewhere the fact that Ofcom has new powers in respect of children’s programmes. There were amendments on remote e-book lending and listed events—the list goes on, which demonstrates that the Government were listening.

Of course, we anticipate ping-pong with great delight. I think that some six amendments to the Bill were passed. I hope that the Government will give consideration to them and not just bat them back to this House. They were all carefully thought through. I hope that we will see some changes as a result of those amendments in this House.

Of course, we did not get everything on our shopping list as the Bill went through. On Ofcom appeals, the noble and learned Lord, Lord Keen, stood fast on Clause 85. I hope that in the future we might find some change on compulsory anonymisation for age verification, and I think that IPTV is something that may come back to haunt us. I hope that the consultation will demonstrate the absolute need for amendments in the future. I am sure that my noble friend Lord Lester will also be returning by popular demand to the question of the statutory underpinning of the BBC charter. In the meantime, I thank the Minister and look forward to the passing of the Bill.

Digital Economy Bill

Lord Stevenson of Balmacara Excerpts

Ping Pong (Hansard): House of Lords
Thursday 27th April 2017 Lords Chamber

[Lord Fox (LD)]

My Lords, as someone who has renovated a Victorian house, I know one thing to be true. It is all very well stripping off the anaglypta and the woodchip, slapping on some Farrow & Ball, improving the coving and putting up a dado rail, but if you do not tackle the fundamentals you are pretty soon raising the floorboards again. It is the roof, the electricals and the plumbing that call you out. I had hoped that the Bill would tackle the fundamentals of the nation’s digital plumbing. I hoped that it would put in train a really revolutionary revolution for our digital network and enable the whole country to participate in the digital economy I believe the Bill sets out to achieve. I still hope that is true, but I have my doubts.

Without a requirement for a fast digital delivery and a date for the arrival of that fast digital network, we will struggle. The notion of having a 75% threshold of subscription is a tricky way of going about this. We will have to use the reporting requirements that Ofcom is now obliged to follow—that is a move forward—to get it to report on how it is driving broadband usage. We are using the commercial arms of the same companies being asked to deliver broadband to promote the use of broadband itself. We have a closed loop that does not necessarily have an incentive to drive up to the 75% threshold. I would be more confident in the progress of this country in delivering this network if there was not a dominant player that sits on a Victorian asset of copper wire which it wants to sweat, and quite understandably. It has to be up to the Government and Ofcom to drive their desire to really move forward. We are closing the door on a fresh, shiny new Bill which still smells of new paint, but, just as with my house, I cannot help thinking that we will be raising the floorboards on this issue time and again in Parliaments to come.

[Lord Stevenson of Balmacara (Lab)]

My Lords, we welcome the amendments in lieu in the Motion moved by the Minister. Having said that, I think we are at liberty also to regret that they do not go further.

The issue that we are dealing with here, which I think has been well picked up by the noble Lord who has just spoken, is that 59% of rural Britain has no proper access to the internet and large parts of the country have not-spots. It is a cause for major concern. The root of the problem is that, while a USO sounds good and is an effective way of getting across the argument that the service should be for everyone, the reality is that, unless there are sanctions to make sure that it happens and an incentive in terms of investment to make sure that the funding is available for it to take place at an appropriate time, it will never happen. It is therefore only part of the story.

The narrative that we are unfortunately locked into appears to be one where the Government were initially unwilling even to have anything in statute which provided a floor for the activity here—we now have that with this amendment, although it is a very low floor—but they do not yet have the aspiration, embodied in amendments that this House agreed, to get the speeds up and widen the coverage as quickly as they can. We are stuck in a situation where the spirit may be willing but the flesh is certainly very weak. We are not in a position where we can say that we will be able to look forward to this in an immediate future.

The root of the problem has another source, which is the reliance on the European Commission’s requirements in this area. The Government have made great play of this, but the only legislative framework under which Europe is operating here, which will fall away in 2019 if the new Government get their way, is that there should be non-binding guidance on what constitutes a universal service, yet the Government have chosen to interpret that as a limit on what they do rather than an opportunity to go further. While we welcome what is here, we do not think that the mechanics chosen will do the trick, particularly when Ofcom has recommended a faster basic speed and a cheaper way of doing it, which would be at 30 megabits per second. As we have just heard, we may be back looking at this in very short order.

On mobile bill capping, which will help consumers who get themselves in trouble with their bills, we are delighted that the Government have accepted the amendment made by the Lords at an earlier stage.

[Lord Ashton of Hyde]

My Lords, I am grateful for those remarks by noble Lords. The noble Lord, Lord Fox, talked about the fundamentals. They are what we have tried to address in this Bill to increase digital connectivity in the country. Measures in the Bill which have been accepted, on the Electronic Communications Code and those relating to spectrum, are part of that. The USO is slightly different. It was never intended to drive increased speeds. We have said separately that we share the ambition of the noble Lord to increase those and stated that we see fibre to the premises as the way forward, but the USO is there to tackle to social exclusion. I can reassure noble Lords that the response to Lords Amendment 1 is not about delaying superfast connectivity or pandering to the communications providers. To the contrary, it is because we do not want to be involved in protracted legal disputes. The fact is that the House can legislate for whatever speed it likes, but it will make a difference to people up and down the country only if it is implemented properly. That means that the Bill must be legally watertight and realistic.

Government Amendment 1A will put our money where our mouth is. As the noble Lord, Lord Stevenson, mentioned, we have now put in legislation that the broadband USO will be set at a minimum of 10 megabits per second and we will ensure that if the minimum has not already been raised to 30 megabits per second by the time take-up of superfast broadband has reached 75% of premises a review must be triggered. That is practical and, interestingly, will give this country the fastest USO in Europe. I hope we concentrate on the benefits we receive from this.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, I very much hope that the Minister will take the threat from my noble friend Lord Lester extremely seriously and will rise to the challenges that he put to the Minister on the questions of funding, independence and carrying out the activities of the BBC.

I agree in particular with the noble Lord, Lord Best, in his disappointment with the Minister’s Motion today. As the noble Lord mentioned, my noble friend Lady Bonham-Carter added her name to what we saw as a very important amendment in this House. That was the product of the report of the Communications Select Committee, Reith Not Revolution, which urged a much greater level of transparency and independent oversight in the setting of the licence fee. Of course, the Minister pushed back in Committee, on Report and at Third Reading by talking about the licence fee being a tax. However, it is a rather exceptional one: a hypothecated tax paid by the public to fund the BBC. So it is entirely correct that there should be a different mechanism for the setting of that licence fee. This arises because of the midnight raids—the hijacking—by the Treasury of the licence fee process on at least two occasions recently. One of the worrying phrases that the Minister used was that the Government want a free hand following negotiations with the BBC. That is exactly what the original amendment was designed to prevent.

The nub of the concern is about assurances. The Minister gave assurances and used new language on this. However, we have seen what assurances given by the Government are worth when it comes to snap elections. Assurances can be given by government one minute and broken the next. However carefully we scrutinise the Minister’s wording today, if his Government are in a position in future to negotiate the licence fee, we have no absolute assurance that those words will be followed. I share the deep disappointment that I am sure is felt all around the House.

In many ways, Motion E is even more disappointing. It was perfectly valid for the noble Viscount, Lord Colville, to express some support for the Ofcom review, but given that the Government could say that whether or not to have a BBC licence fee commission is a political decision, this is much more a question of the facts and perception. On at least two occasions we have had Secretaries of State for Culture, Media and Sport—Jeremy Hunt and Maria Miller—saying that the position of the public service broadcasters is very important and EPG position is a very important way of safeguarding it. The Minister has said that a review will be undertaken by Ofcom, but Ofcom already knows that there is a problem. It recommended in its 2015 PSB review that policymakers should reform the rules for on-demand. Why are we asking Ofcom to do the work all over again? That does not seem a particularly constructive way forward, despite appearances.

A number of questions arise from Motion E. Can the Minister confirm that statutory change will be necessary to bring on-demand PSB content and the connected EPGs, where they are found, into the scope of Ofcom’s EPG code? In conversations, the Minister has claimed that it is not possible to have a Henry VIII power that would implement Ofcom’s recommendations for on-demand, so I assume that there is no current statutory power and that therefore we would be talking about primary legislation in that respect, but it would be helpful to have that confirmation.

Will the Minister give us an assurance that the Government will act on those Ofcom recommendations? We would not have tabled amendments on EPGs unless we thought that this was a real and present issue that needed to be tackled. This was not a frivolous amendment, but the Government seem to have a completely different view. The earnest of their intentions on this provision is rather important. The amendment sets a 1 December 2020 statutory deadline for the review and the revision of the EPG code, but does the Minister not agree that actually it would be desirable to commence work rather earlier, given the need for statutory changes beforehand, probably, to bring on-demand content into scope?

Finally, it appears that there is a statutory power to ensure the prominence of PSB children’s channels on EPGs. Does the Minister agree with that? Does he agree that if Ofcom so recommends, that could be brought in at a much earlier date than the on-demand provision? I very much hope that the Minister can answer those questions.

[Lord Stevenson of Balmacara]

My Lords, taken together, these two amendments were traps for the Government and, with predictable certainty, they have fallen into both of them.

The amendment that has just been spoken to by the noble Lord, Lord Clement-Jones, on the need for Ofcom to have powers to make sure there is a proper rule about prominence that applies not only to the linear but to the offline world of iPlayer and others, was a test of whether or not the Government believed in public sector broadcasting, in that if they believed in public sector broadcasting they needed to come forward with proposals that allowed the channels that were funded by the public or in a not-for-profit way to have access on a fair and equal basis to commercial channels. By tabling an amendment that is for just a report, without the requirement that there should be legislation in three primary legislative areas, which I think we agree needs to happen, I think they have failed this test.

However, we welcome where they have got to. I support the idea of a further review. I hope it will bring out the complexity of this issue—the changing technology and the difficulties of assessing this—in a way that will make it easier for the Government to honour their commitment given in the other place and repeated here today that if the report does make it clear that there is a problem in this area and it can be fixed only by legislation, the Government will bring that legislation forward as soon as possible. I give the commitment from this side of the House that, if elected, we will do the same.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, I join the noble Lord, Lord Moynihan, in welcoming the government amendment. I want to make only a very brief intervention to congratulate the noble Lord, Lord Moynihan, and Sharon Hodgson on their persistence in achieving what we have achieved so far, which is considerable. A great deal of progress has been made in restricting the activities of secondary ticketing sites. We all look forward to the Competition and Market Authority’s report, which may well suggest further changes to legislation and will certainly give us a very good idea of whether the provisions of the Consumer Rights Act are being properly enforced. That will be extremely illuminating. I hope the Minister will be able to answer the question asked by the noble Lord, Lord Moynihan, about whether it is really duplication or whether we have thrown something out with the Commons amendment.

Let me end by saying that in the Digital Economy Bill we have not, in the words of my noble friend, taken up the floorboards today, but we have certainly given it a decent lick of paint in the process. It is not a very ambitious Bill, and many of us could argue at length about what other aspects it should have covered, but I thank the Minister for his unfailing helpfulness throughout the course of the Bill and I thank the Bill team. I very much welcome not only the movement today, which is perceptible—that is not always the case with wash-up or ping-pong—but some of the movement that was made in the course of the Bill. The noble Lord, Lord Moynihan, talked about the outlawing of mass online purchasing with bots, which is a very significant change, as are the site-blocking appeals, the new Ofcom powers in respect of children’s programmes, which are particularly welcome to my noble friend Lady Benjamin, remote e-book lending and the amendment on listed events. There has been movement in this House as a result of amendments in this House and the discussions we have had. I am grateful, and I look forward to a new digital economy Bill before too long.

[Lord Stevenson of Balmacara]

My Lords, this marks another stage in the campaign led by the noble Lord, Lord Moynihan. It was led until her death by Lady Heyhoe Flint whom we all want to recognise because she played a huge part in this and her memory is still fresh today. Wherever she is playing cricket, I am sure she is scoring a hundred as we speak.

The noble Lord, Lord Clement-Jones, and the Minister mentioned bots. We should not ignore the fact that that will make a huge change to the secondary ticketing market. The solution the Bill team came up with is very creative, and I hope it works as well as they intend it to. A first step has been taken, and this will crack down on the worst excesses of secondary ticketing.

I hope the Minister will answer directly the question asked by the noble Lord, Lord Moynihan, about whether the conditions apply because they are not drafted quite like that in the original legislation.

In its original formulation, Amendment 246 simply inserted the words,

“and any unique ticket number”.

The final version before us states,

“any unique ticket number that may help the buyer to identify the seat or standing area or its location”.

That raises the question of what “may” means. Does it in some sense imply a voluntary obligation? If it does, it would be very unfortunate. Could somebody argue that they did not include the unique ticket number specified because in their view it did not help the buyer identify a seat or a standing area or its location? Or is it a variation on the word “must” so that it is a requirement that a ticket number that could help a buyer identify seats or standing areas or their location must be included? I will be grateful if when the Minister responds he will mention that.

[Lord Ashton of Hyde]

My Lords, I am very grateful to, especially, my noble friend Lord Moynihan and other noble Lords. We have to some extent overcome the great disappointment of the noble Lord, Lord Clement-Jones, on the previous group.

Noble Lords have been very clear in this debate that they want to see tougher action to deal with the serious problems in the secondary ticketing market, and the Government are taking action. That is why we have provided funding for National Trading Standards to take further enforcement action, as the noble Lord, Lord Clement-Jones, mentioned. We have facilitated the ticketing industry’s participation in joint industry-government cybersecurity networks, and the CMA has launched an enforcement investigation into suspected breaches of consumer protection law in the online secondary ticketing market. I am sure that the noble Lord, Lord Moynihan, and other noble Lords will continue to keep this issue under the spotlight, and we will make progress together on protecting consumers and supporting our national sporting and cultural assets.

The noble Lord, Lord Moynihan, asked a specific question about that. As my right honourable friend the Minister in the other place made clear, the Government are firmly of the view that, under the Consumer Rights Act, when a secondary ticket seller offers a ticket for sale they must give the buyer clear information about certain conditions attached to the ticket. We said the proposal was duplicative because that is what our advice told us. I would say in particular to my noble friend Lord Moynihan that the Explanatory Notes to the Consumer Rights Act 2015, referring to Section 90(3)(b), make clear that,

“the buyer must be given information about any restrictions that apply to the ticket”.

In respect of the following wording in the amendment,

“any unique ticket number that may help the buyer to identify the seat or standing area or its location”,

the noble Lord, Lord Stevenson, asked whether the “may” makes this voluntary. The answer is no, it is mandatory. This is technical language to link this to the previous subsection in Section 90 of the Consumer Rights Act. We have merely used the same language that was in there before. I hope that answers the question.

I reiterate what the noble Lord, Lord Clement-Jones, said about some of the advantages and gains that the Bill has had from your Lordships’ House and indeed from the opposition amendments and suggestions in the other place as well. I say this to acknowledge their input into it but also to show that we have been flexible in many things. We have made progress in areas suggested by the Opposition in both Houses: on the extension of public lending rights to e-books; on children’s television, as the noble Lord mentioned and as was proposed by the noble Baroness, Lady Benjamin; on the accessibility of on-demand services, including subtitles; on maintaining the capability to retain listed events, which was first tabled in the Commons; on bill limits for mobile phones, as we talked about earlier; on the code of practice for social media; on supporting the separation of BT from Openreach with the Crown guarantee amendment; on internet filters, which protect children; and on the review of the electronic programme guide, although not quite to the extent that some noble Lords wanted.

The Opposition have also supported things that will allow great advances in the digital economy, such as: the Electronic Communications Code, which is very technical but a crucial change; age verification for online pornography, where we listened and adjusted the regime to address the concerns of the Opposition; the extension of age verification for pornography on on-demand television, so that 18-certificate material is kept away from children; government data sharing, which will enable us to deliver better services to the vulnerable; and the repeal of Section 73 of the Copyright, Designs and Patents Act, which I think was accepted all round the House as a very good thing.

I mentioned my thanks to many noble Lords at Third Reading, and I repeat those, especially to the noble Lords, Lord Stevenson and Lord Clement-Jones, who headed their various and quite large teams in the House. I am very grateful to all those noble Lords.