Online Safety Bill (Eleventh sitting)

Maria Miller Excerpts

Committee stage
Thursday 16th June 2022 Public Bill Committees

[Barbara Keeley (Worsley and Eccles South) (Lab)]

It is a pleasure to serve with you in the Chair again, Sir Roger. I add my tribute to our former colleague, Jo Cox, on this sad anniversary. Our thoughts are with her family today, including our colleague and my hon. Friend, the Member for Batley and Spen.

We welcome the “polluter pays” principle on which this and the following clauses are founded. Clause 70 establishes a duty for providers to notify Ofcom if their revenue is at or above the specified threshold designated by Ofcom and approved by the Secretary of State. It also creates duties on providers to provide timely notice and evidence of meeting the threshold. The Opposition do not oppose those duties. However, I would be grateful if the Minister could clarify what might lead to a provider or groups of providers being exempt from paying the fee. Subsection (6) establishes that

“OFCOM may provide that particular descriptions of providers of regulated services are exempt”,

subject to the Secretary of State’s approval. Our question is what kinds of services the Minister has in mind for that exemption.

Turning to clauses 71 to 76, as I mentioned, it is appropriate that the cost to Ofcom of exercising its online safety functions is paid through an annual industry fee, charged to the biggest companies with the highest revenues, and that smaller companies are exempt but still regulated. It is also welcome that under clause 71, Ofcom can make reference to factors beyond the provider’s qualifying worldwide revenue when determining the fee that a company must pay. Acknowledging the importance of other factors when computing that fee can allow for a greater burden of the fees to fall on companies whose activities may disproportionately increase Ofcom’s work on improving safety.

My hon. Friend the Member for Pontypridd has already raised our concerns about the level of funding needed for Ofcom to carry out its duties under the Bill. She asked about the creation of a new role: that of an adviser on funding for the online safety regulator. The impact assessment states that the industry fee will need to average around £35 million a year for the next 10 years to pay for operating expenditure. Last week, the Minister referred to a figure of around £88 million that has been announced to cover the first two years of the regime while the industry levy is implemented, and the same figure was used on Second Reading by the Secretary of State. Last October’s autumn Budget and spending review refers on page 115 to

“over £110 million over the SR21 period for the government’s new online safety regime through the passage and implementation of the Online Safety Bill, delivering on the government’s commitment to make the UK the safest place to be online.”

There is no reference to the £88 million figure or to Ofcom in the spending review document. Could the Minister tell us a bit more about that £88 million and the rest of the £110 million announced in the spending review, as it is relevant to how Ofcom is going to be resourced and the industry levy that is introduced by these clauses?

The Opposition feel it is critical that when the Bill comes into force, there is no gap in funding that would prevent Ofcom from carrying out its duties. The most obvious problem is that the level of funding set out in the spending review was determined when the Bill was in draft form, before more harms were brought into scope. The Department for Digital, Culture, Media and Sport has also confirmed that the figure of £34.9 million a year that is needed for Ofcom to carry out its online safety duties was based on the draft Bill.

We welcome many of the additional duties included in the Bill since its drafting, such as on fraudulent advertising, but does the Minister think the same level of funding will be adequate as when the calculation was made, when the Bill was in draft form? Will he reconsider the calculations his Department has made of the level of funding that Ofcom will need for this regime to be effective in the light of the increased workload that this latest version of the Bill introduces?

In March 2021, Ofcom put out a press release stating that 150 people would be employed in the new digital and technology hub in Manchester, but that that number would be reached in 2025. Therefore, as well as the level of resource being based on an old version of the Bill, the timeframe reveals a gap of three years until all the staff are in place. Does the Minister believe that Ofcom will have everything that is needed from the start, and in subsequent years as the levy gets up and going, in order to carry out its duties?

Of course, this will depend on how long the levy might need to be in place. My understanding of the timeframe is that first, the Secretary of State must issue guidance to Ofcom about the principles to be included in the statement of principles that Ofcom will use to determine the fees payable under clause 71. Ofcom must consult with those affected by the threshold amount to inform the final figure it recommends to the Secretary of State, and must produce a statement about what amounts comprise the provider’s qualifying world revenue and the qualifying period. That figure and Ofcom’s guidance must be agreed by the Secretary of State and laid before Parliament. Based on those checks and processes, how quickly does the Minister envisage the levy coming into force?

The Minister said last week that Ofcom is resourced for this work until 2023-24. Will the levy be in place by then to fund Ofcom’s safety work into 2024-25? If not, can the Minister confirm that the Government will cover any gaps in funding? I am sure he will agree, as we all do, that the duties in the Bill must be implemented as quickly as possible, but the necessary funding must also be in place so that Ofcom as a regulator can enforce the safety duty.

[Dame Maria Miller (Basingstoke) (Con)]

I have just a short comment on these clauses. I very much applaud the Government’s approach to the funding of Ofcom through this mechanism. Clause 75 sets out clearly that the fees payable to Ofcom under section 71 should only be

“sufficient to meet, but…not exceed the annual cost to OFCOM”.

That is important when we start to think about victim support. While clearly Ofcom will have a duty to monitor the efficacy of the mechanisms in place on social media platforms, it is not entirely clear to me from the evidence or conversations with Ofcom whether it will see it as part of its duty to ensure that other areas of victim support are financed through those fees.

It may well be that the Minister thinks it more applicable to look at this issue when we consider the clauses on fines, and I plan to come to it at that point, but it would be helpful to understand whether he sees any role for Ofcom in ensuring that there is third-party specialist support for victims of all sorts of crime, including fraud or sexual abuse.

[Chris Philp]

Let me start by associating myself with the remarks by the hon. Member for Worsley and Eccles South. We are in complete concurrence with the concept that the polluter should pay. Where there are regulatory costs caused by the behaviour of the social media firms that necessitates the Bill, it is absolutely right that those costs should fall on them and not on the general taxpayer. I absolutely agree with the principles that she outlined.

The hon. Lady raised a question about clause 70(6) and the potential exemption from the obligation to pay fees. That is a broadly drawn power, and the phrasing used is where

“OFCOM consider that an exemption…is appropriate”

and where the Secretary of State agrees. The Bill is not being prescriptive; it is intentionally providing flexibility in case there are circumstances where levying the fees might be inappropriate or, indeed, unjust. It is possible to conceive of an organisation that somehow exceeds the size threshold, but so manifestly does not need regulation that it would be unfair or unjust to levy the fees. For example, if a charity were, by some accident of chance, to fall into scope, it might qualify. But we expect social media firms to pay these bills, and I would not by any means expect the exemption to be applied routinely or regularly.

On the £88 million and the £110 million that have been referenced, the latter amount is to cover the three-year spending review period, which is the current financial year—2022-23—2023-24 and 2024-25. Of that £110 million, £88 million is allocated to Ofcom in the first two financial years; the remainder is allocated to DCMS for its work over the three-year period of the spending review. The £88 million for Ofcom runs out at the end of 2023-24.

The hon. Lady then asked whether the statutory fees in these clauses will kick in when the £88 million runs out—whether they will be available in time. The answer is yes. We expect and intend that the fees we are debating will become effective in 2024-25, so they will pick up where the £88 million finishes.

Ofcom will set the fees at a level that recoups its costs, so if the Bill becomes larger in scope, for example through amendments in the Commons or the Lords—not that I wish to encourage amendments—and the duties on Ofcom expand, we would expect the fees to be increased commensurately to cover any increased cost that our legislation imposes.