Digital Economy Bill (First sitting)

Matt Hancock Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 11th October 2016 Public Bill Committees

[Calum Kerr]

Q Mr Williams, do you think that a tactical, on-demand USO only provided by BT can really provide the strategic outcome—a direction toward “gigabit Britain”—that I think we all agree is a matter of when and not if? If we continue to do this in a piecemeal fashion surely all we are going to do is cement the digital divide, rather than close it.

Sean Williams: To get these networks out to as many premises as possible, by as many providers as possible, through competition and commercial market action is exactly the right solution. To get good networks out to everybody, both mobile as well as fixed, it is important that everybody has an incentive to invest. Through competition and commercial investment, we will get to the answer.

[The Minister for Digital and Culture (Matt Hancock)]

Q I welcome the commitment from BT to reach 100% of premises by 2020, but I ask for a point of clarification on language. Mr Williams, you referred in the percentages to “fibre” and, separately, to “fibre to the premises”. Can you confirm that by “fibre” you mean a combination of fibre and copper and that by “fibre to the premises” you mean pure fibre? The use of the term “fibre” reflects statistics that I understand mean fibre to the cabinet, so I find confusing the offer to households being “fibre plus copper”. I would be grateful if you clarified that.

Sean Williams: I am happy to. When I use the term “fibre broadband”, I mean fibre to the cabinet, which is a combination of rolling out fibre further into the network but with copper into the end premises. When I use the term “fibre into the premises” I mean fibre all the way into the building. I apologise for being unclear.

When I say we will deliver fibre broadband, it will largely be, in my view, through a combination of fibre and copper, but we are also very positive about fibre to the premises and typically deploy fibre to the premises in all new building sites and in lots of Broadband Delivery UK areas. We are developing fibre to the premises solutions that are particularly targeted at small and medium-sized enterprises. We have made a commitment that we will get ultrafast broadband speeds, which is both fibre and copper, and also fibre-to-the-premises solutions to 1 million SMEs by 2020. We have heard the prioritisation that the Government have put on getting very good broadband speeds to small and medium-sized enterprises and we have made a commitment we will get that to 1 million of them by 2020 as well.

[Claire Perry]

Q I am conscious of what Baroness Harding said about perhaps not setting a quantum, but do you think there should be a separate quantum for SMEs? One of the challenges we have is that there is not enough. We do not have separate legislation or, indeed, powers for cabling to new business parks. If I may ask a supplementary question, in my experience the issue with the USO is often with the broadband speeds in the household; it is not just a question of getting the cable to the front door or the bricks. What could the process be for dealing with those claims and helping householders realise that that might be a problem?

One final question: we would like the USO to be an average speed, rather than being achieved 15% of the time, or whatever the current average regulations are. What are your views on that? Are you prepared to commit to our offering an average USO of 10 megabits per second?

Baroness Harding: At the risk of being dangerously technical, I think we all try to summarise in the form of speed, but actually consumers and businesses would say that reliability and consistency are every bit as important as speed. The small businesses that are customers of TalkTalk would say, “It’s not the headline speed I need. I need it to work every single second when my customers are using the chip and pin machine in my small corner shop”, for example. So while speed is a useful proxy, it is not perfect.

The Minister gets to the nub of the issue: when you have a proper fibre network that goes all the way to the premises, you have upgrade potential. You just change the card in the rack of computers back at the exchange and you can go from 1G to 100G. You also have a much, much more reliable network. When it rains, water does not get into the copper and it does not stop working.

The small businesses that we talk to are very cross that the fibre-to-the-premises roll-out has missed out a lot of business parks—not necessarily because they want speed, but because they want a reliable service where they can upload as much as they can download and customers can always buy things from them.

I would therefore support being clearer in the detailed regulations that I presume Ofcom would set in specifying the service requirements for small businesses as opposed to consumers.

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[The Chair]

Can I remind Members and witnesses to be as brief as possible? I call the Minister.

[Matt Hancock]

Q No—I was going to ask for more details on which bits of the Bill could help.

[The Chair]

I will come back to you.

[Kevin Brennan]

Q I remember one of your predecessors in a predecessor company, Mr Butler, explaining to me why they were digging my street up in the 1990s. They basically said, “We are installing a straw to suck money out of people’s houses”, which I think is the best explanation I ever received of what was involved. On the electronic communications code, how can you assure us that its reform will actually benefit consumers principally and not just allow you to keep more of the money that you suck out of people’s houses?

Daniel Butler: The reforms that are envisaged will transform the economics of roll-out. The figures discussed in the previous session were a 40% reduction in the cost of roll-out. The primary way in which that benefits consumers is that that allows us to build to more premises on a commercial basis.

Virgin Media currently plans to build to 4 million premises by 2020. Wayleaves are a considerable line item on the balance sheet for that investment, and also it takes a lot of time to get agreement, so anything we can do to reduce the cost and improve the efficiency of getting those will have the consumer benefit of allowing us to connect up more premises. I mentioned that Government could be more ambitious in this regard. In effect, the Government’s reforms will deal with the worst abuses of the systems—that is communications providers’ exposure to ransom rents—but Ministers and the Secretary of State increasingly talk about broadband being equivalent to a utility and the reforms do not quite go that far. Water companies have the most advantageous wayleave regimes under their statutes. They do not pay what is called in the valuation jargon “consideration” and, as are result, they pay 60% less—these are Government’s figures—than communications providers.

[Matt Hancock]

I think the explanations coming from the witnesses are excellent. I did not have any other questions.

[Nigel Huddleston]

Q Are the switching proposals in the Bill, which make it easier for customers to switch and give them more power and information, a step in the right direction?

David Wheeldon: They clarify Ofcom’s existing powers, so to that extent they are a welcome clarification. We have some concerns about the direction of travel that Ofcom is going in, not least because we see and operate in a market where there is already extensive switching and all the customer satisfaction surveys suggest that the vast majority of customers are happy with it.

What we are worried about is that Ofcom might go down a direction that tries to mandate a certain type of switching between networks that do not have any obvious need or reason to engage with each other. It is one thing in telecoms where you have to exchange customer information and data, but in TV, where you do not have any need to speak to a different TV network or operator, the idea of putting in place a new system where we are required to talk to each other could end up being quite burdensome and bureaucratic.

I hope that, as we engage with Ofcom, we avoid doing that. In the end we want to make this as easy as possible for customers, because that is in all our interests. We compete pretty ferociously with each other on a day-to-day basis, so a system that works for customers is in all our interests. The provisions in the Bill that clarify Ofcom’s role are fine.

[Matt Hancock]

Q Could you remind me what proportion of the market Sky has?

David Wheeldon: In the overall broadband market we are below 40%, I believe. In TV, it is 60%—I am not sure quite what the breakdown between us and other pay TV providers is. We compete not just with Virgin and BT and others but increasingly with Netflix and free-to-air. Many of our customers will go to take a free-to-air package from us. So the market is pretty dynamic and I think that at the moment it seems to be working pretty well for customers.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Q I want to go back to the average speed, which we were talking about earlier. When you provide businesses with average services, and you give them average speed—give them the minimum they need to be average—you are locking them into being average businesses; you are not giving them the opportunity to be more ambitious. How do you square that with a programme of ambition for the 21st century, taking people forward? What do you do to encourage devolved Administrations such as the Scottish Government, and councils, where they want to go further and have faster speeds?

Paul Morris: We have got to figure out a way, and this is going to be a combination of things. We talked about the code earlier; that is part of it. How do you build the network? How do we make that easier? How do we focus on support that, frankly, has been there for more traditional infrastructure? We have talked about some of the other areas, such as how we ensure that Openreach serves its customer base better and has more ambition. That would get you to a point.

As you know, the Scottish Government have been thoughtful in this area. What do we do after that? I know you have got the 100% ambition, and there I think it is a case of a mixture of things. A better Openreach that is more independent, serves its customers better and is more ambitious gets you to a point. You then have either USO or some kind of intervention potentially in some areas where the industry can look at support and how that works across technologies.

So I think it is a combination of commercial roll-out, see how far we get—we will not know that until we reform the market—and then look at what is left and see where we go from there. I agree with you. I note that there is not a speed limit in the Bill and I think we do need to be more ambitious. Of course, we cannot solve this tomorrow, but we need to recognise that the data usage trajectory is upwards and we need to think in those terms. We do not build a little bit of a better railway; we build a much better railway. We need to think like that.

David Wheeldon: I absolutely concur with that. We look at this as a national service provider. We want to sell our TV services to every customer in the country if we can. We are agnostic about the kind of technology that we use, but increasingly using broadband services to do that is the way we are going. Therefore, if we are going to be ambitious, to enable companies like ours to continue to grow, invest and innovate, we need a national solution, and a national solution will depend upon the national network owner, which is Openreach. In the end, all these roads lead back to Openreach. That is why the structure of the industry does matter; the ability to get capital into the industry to invest in the kinds of future networks we need is critical. That is why we have made such a big noise about the structure of the industry and the Ofcom review. We really believe that it matters, not so much as a broadband provider, but as a user of the network. We want to be able to have a national solution.

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[Christian Matheson]

There needs to be,

“clarity over the new system of valuation for site rents that is fair and equitable as well as a robust Code of Practice to ensure landowners, infrastructure providers and mobile phone operators are clear”.

Is there not a danger of conflict between looking after the needs of large landowners to get fair wayleave agreements on their properties and potentially preventing the roll-out of broadband and infrastructure services to other rural residents because we are keeping costs higher to benefit the landowners?

James Legge: I think we recognise that the new communications code must reduce the cost of putting in the infrastructure, both on public and private land, and must also encourage the sharing of masts and access to infrastructure. There is a difference between saying that we will do it and, say, paying a private landowner nothing, and paying them something that is reasonable and fair, taking account of the way in which we treat other utilities. I know that our view differs slightly, though, from some of the other landowning organisations that are focused on land ownership. We are very much focused on delivery to the consumer, but we think it should be fair, equitable and clear.

[Matt Hancock]

Q May I clarify that? You said that the new communication code must do those things. Did you mean by that, that it does do those things and that that is right, or that you do not think it fits what you set out? What you set out is entirely concurrent with the Bill.

James Legge: Yes, and we are supportive of that. We support the fact that we have got to start seeing broadband on the same par as a utility, as opposed to something where there is a premium cost to the provider, which limits provision—

[Matt Hancock]

Q I was seeking clarification on whether you are looking for something more than is in the Bill. You were saying that that is what is in the Bill and it is right that that goes through.

James Legge: Not at this stage.

[Nigel Adams]

Q I suspect that the Bill is not going to be subject to the most detailed discussion around the country. However, as a question to both of you, having had an opportunity to analyse the Bill, if we were all pitching this to our constituents across the country, what do you see as the key benefits for consumers?

Pete Moorey: The telecoms sector needs to catch up with where consumers are. That is part of what the Bill is trying to do: we need to recognise that people increasingly see their mobile phones and broadband as essential items. Yet we know that customer satisfaction is very low and that people are increasingly frustrated about their inability to get a signal or to get the broadband speed they are paying for.

There are critical things in the Bill that will start to bring the telecoms sector kicking and screaming into the 21st century. For me, those elements include switching—I think it is incredible that we do not have provider-led switching in the telecoms sector. Automatic compensation is very important. With water, electricity and gas, if we lose a connection we get a compensation payment, but that is not the case in telecoms. The appeals process, which we have heard a lot about this morning, has had a chilling effect on the regulator’s ability to introduce measures that would both improve competition in the sector and better protect consumers.

The final area, for us, is nuisance calls, which we know are some of the biggest bugbears that people face—they are sick to death with receiving annoying calls and texts. To put the ICO guidance on nuisance calls into statute is another step towards tackling that everyday menace.

James Legge: Yes, I think that switching and compensation are important: it is important to hold the feet of the telecoms companies to the fire. But there is possibly an opportunity in the legislation to empower the consumer. At the moment, we have a sort of opaqueness around data and provision. We do not have address-level data. If I want to decide where I am going to get my mobile or broadband from, I cannot just put in my address and find out that the company that provides the best service is x. I have to sign up to someone. Then I can test the level of my service through their internet connection as a customer.

If there was more transparency, and if people had the information to hand, they would be able to make better choices. The market would also be more competitive for mobile or broadband providers, because if they do not provide the coverage, they will lose customers. It is no good waiting for someone to sign up and then find out that switching is jolly difficult, so customers say, “Well, I’ll just put up with this and complain”. We do that terribly well.

We should be able to say, “No, sorry. You didn’t tell me this. I didn’t have the data. Your service is appalling. I’m switching, and it is easy.” The level of switching at the moment is extremely low. A previous witness suggested that there was general contentment, which is not my experience.

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[Chris Skidmore]

You were closely integrated into this approach.

Mike Bracken: Of course. The first thing is to recognise the positive sentiment in the Bill. There is much in it to admire and applaud and I believe it builds on some of the sentiment for providing better public services that certainly ran through my time in Government, pressed by various Ministers in the Cabinet Office, one of whom is sitting next to you now.

As I said earlier, I think the concern is not the sentiment and support, but in the lack of detail and the operational change that goes with that. Much of the work done previously, to date, has centred around things like single, canonical sets of data, so that there are accurate datasets about individuals, about place, about location, and that they are used within Government. That sentiment too often flies in the face of Whitehall’s demand to own its own data, or what it perceives to be its own data, in every piece of Government. That leads to the current sharing agreements around Whitehall, which are opaque at best and create friction for our members, friction for members of society and friction for business. It is harder to find accurate data, it adds an economic downside to people dealing with Government. The Bill currently seems to move away from the sentiment of sorting that problem out. It seems to reinforce the primacy of Whitehall’s willingness to share more data in ways that it has been sharing data over time. So while the sentiment of the Bill overall is positive, this area of how data are shared does not seem to be looking at the sort of open registers, those single approaches, that we started to look at in the latter part of the previous Parliament.

[Matt Hancock]

Q Do you agree that those areas in addition that you are looking for are essentially administrative rather than legal changes? That is to say, the Government need to move in that direction, I would argue that they are moving in the direction that you set out, but you would not put that in a Bill; you need to make it happen.

Mike Bracken: Yes. Absolutely, Minister. Too often, there was an assumption that those things would need regulatory or Bill backing. My experience was pretty much 100% that that was not the case; these are largely about administrative and operational management of data across Whitehall and across Departments. Clearly, there are some areas, security being an obvious one, where you need more legal oversight, but primarily it is not so much about a Bill.

[Kevin Brennan]

Q First, I agree with what Jeni said about Citymapper; it has changed my life, it is absolutely fantastic—I actually use the bus now. However, either witness, will the Bill in any way help to avoid another care.data type of scandal?

Jeni Tennison: I will go back to what I was saying around transparency and public trust. For me, the important part of any dealing with private, personal data has to be that we drive towards trust by being open about what is being done with those data, by being transparent about how they are being used, what decisions are being made with them, whom they are being shared with and under what circumstances. Those principles of having openness around the handling of personal data are what will drive public trust in their use. We are in a very difficult space here between trying to balance the right to privacy of an individual with the public good we can get from the use of data. It is a fuzzy and difficult one, one we are going to be working through for many years, but having transparency and openness about it enables us to have an informed debate about where we are making that balance.

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[Chris Skidmore]

Q The research power for data sharing, as presented, has been welcomed by many academics and civil society groups as a means of unlocking data for research for public benefit. Looking particularly at that data sharing with non-public bodies, do you recognise the benefits of that power? In terms of your point about communicating the value of the Bill, we have the research power and other things. Looking at vulnerable groups, such as troubled families, we have other powers that are there for public benefit. How do you feel we should express that public benefit?

Jeni Tennison: The benefits of each of the individual pieces of the Bill are different kinds of benefits to different kinds of people. I think they need to be separated out in some ways and not be muddled up together. That is one of the challenges with the Bill.

[Matt Hancock]

Q Can you set out what some of those might be?

Jeni Tennison: The benefits?

[Matt Hancock]

Yes.

Jeni Tennison: The research power enables us to provide data to researchers and academics who can then draw broad conclusions about, for example, the state of our economy, or who can give more accurate and up-to-date information about the way in which we are functioning as a society in general. Having those is of great benefit to society. The pieces around fuel poverty and so on are more specific benefits to both individuals who would be touched by that and to the efficiency of the public sector.

[Matt Hancock]

Q And in terms of the data measures to tackle fraud?

Jeni Tennison: I have not looked at the detail of the individual measures for those kinds of benefits.

[Louise Haigh]

Q Is the point not that these benefits cannot be achieved unless the risks are tackled head-on, which is exactly what happened with the care.data issue in the last Parliament? That health data could not be shared because the public did not trust the Government or insurers with that risk. I worked in insurance at the time and that came as quite a blow. Is the point not that the Government need to take on the issues around transparency and trust in this Committee? Mike, on your point about data access, do you think Government are currently geared up to allow that, rather than bulk data sharing?

Mike Bracken: “Government” is a very broad organisation. There are promising moves around registers of data and around reinstating an address register. I do not know quite where that is now. There was a promising move but that now seems to be a little on the backburner—I am not sure. The point is that that question needs to be asked to 20-plus Government Departments and more than 300 agencies and non-departmental public bodies, each of which has a different answer. It is hard to summarise where “government” is at any one point without any open standards between those and without any clear framework under which Government data are already being shared.

Digital Economy Bill (Second sitting)

Matt Hancock Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 11th October 2016 Public Bill Committees

[Nigel Huddleston]

Q In terms of skills and resources, are you confident you will be able to get the right people in to do the job properly? I am sure that it is quite a disturbing job in some cases.

David Austin: Yes. We already have people who have been viewing pornographic content for a number of years. We may well need to recruit one or two extra people, but we certainly have the expertise and we are pretty confident that we already have the resources. We have time between now and the measures in the Bill coming into force to ensure that we have a fully effective system up and running.

[The Minister for Digital and Culture (Matt Hancock)]

Q I just want to put on the record that we are delighted that the BBFC has signed the heads of agreement to regulate this area. I cannot think of a better organisation with the expertise and the experience to make it work. What proportion of viewed material do you think will be readily covered by the proposed mechanism in the Bill that you will be regulating the decision over but not the enforcement of?

David Austin: I am not sure that I understand the question.

[Matt Hancock]

Q I am thinking about the scale of the problem—the number of views by under-18s of material that you deem to be pornographic. What proportion of the problem do you think the Bill, with your work, will fix?

David Austin: So we are talking about the amount of pornography that is online?

[Matt Hancock]

Q And what is accessed.

David Austin: Okay. As you all know, there is masses of pornography online. There are 1.5 million new pornographic URLs coming on stream every year. However, the way in which people access pornography in this country is quite limited. Some 70% of users go to the 50 most popular websites. With children, that percentage is even greater; the data evidence suggests that they focus on a relatively small number of sites.

We would devise a proportionality test and work out what the targets are in order to achieve the greatest possible level of child protection. We would focus on the most popular websites and apps accessed by children—those data do exist. We would have the greatest possible impact by going after those big ones to start with and then moving down the list.

[Matt Hancock]

Q So you would be confident of being able to deal with the vast majority of the problem.

David Austin: Yes. We would be confident in dealing with the sites and apps that most people access. Have I answered the question?

[Matt Hancock]

Q Yes. Given that there is a big problem that is hard to tackle and complicated, I was just trying to get a feel for how much of the problem you think, with your expertise and the Bill, we can fix.

David Austin: We can fix a great deal of the problem. We cannot fix everything. The Bill is not a panacea but it can achieve a great deal, and we believe we can achieve a great deal working as the regulator for stages 1 to 3.

[Louise Haigh]

Q My question follows on neatly from that. While I am sure that the regulation will tackle those top 50 sites, it obviously comes nowhere near tackling the problems that Mr Wardle outlined, and the crimes, such as grooming, that can flow from those problems. There was a lot of discussion on Second Reading about peer-to-peer and social media sites that you have called “ancillary”. No regulation in the world is going to stop that. Surely, the most important way to tackle that is compulsory sex education at school.

Alan Wardle: Yes. In terms of online safety, a whole range of things are needed and a whole lot of players. This will help the problem. We would agree and want to work with BBFC about a proportionality test and identifying where the biggest risks are to children, and for that to be developing. That is not the only solution.

Yes, we believe that statutory personal, social and health education and sexual relationships education is an important part of that. Giving parents the skills and understanding of how to keep their children safe is also really important. But there is a role for industry. Any time I have a conversation with an MP or parliamentarian about this and they have a child in their lives—whether their own, or nieces or nephews—we quickly come to the point that it is a bit of a nightmare. They say, “We try our best to keep our children safe but there is so much, we don’t know who they are speaking to” and all the rest of it.

How do we ensure that when children are online they are as safe as they are when offline? Of course, things happen in the real world as well and no solution is going to be perfect. Just as, in terms of content, we would not let a seven-year-old walk into the multiplex and say, “Here is ‘Finding Nemo’ over here and here is hard core porn—off you go.”

We need to build those protections in online so we know what children are seeing and to whom they speaking and also skilling up children themselves through school and helping parents. But we believe the industry has an important part to play in Government, in terms of regulating and ensuring that spaces where children are online are as safe as they can be.

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[Calum Kerr]

Q So that is a, “Yes, if possible, please.” It is okay; do not answer that. You have already answered. My final quick question is this. Although this is not retrospective, is there any case for excluding existing sites, if this is really about building out more network, in terms of the valuation element, given that a lot of those sites are actually on publicly owned land?

Scott Coates: There is certainly a difference in the substance of a transaction when you are approaching a farmer, a sports club, a university or whatever and asking for access to build a new piece of infrastructure where there is new coverage, and you are having that negotiation in the context of a new communications code that has tighter reference points on pricing. You will have more leverage for that conversation. You will still end up, I believe, paying them a rate way in excess of what zero value would be because that is just how you have those conversations, but it will be less than what is paid today, that is for sure, because you have got this new reference point. The substance of that is very different from the substance of a voluntary agreement you entered into with a firm six or seven years ago and that comes up for renewal in two to three years and the infrastructure is already there.

I think it is important that we have a robust set of tools as an industry but, as I mentioned earlier, it is equally if not more important that the industry acts responsibly and avoids behaviour such as forcing situations where they need a new compulsory purchase tool, even though they have already got access today. There is definitely a way of engaging on existing sites that should be a bit different from new sites, as part of a package of trying to maintain the voluntary support of the land and property sector for our industry.

[Matt Hancock]

Q Could you set out in more detail—you have already gone into this a bit—about what you mean when you say that the code should include land owned by the infrastructure providers but not the apparatus, and the distinction there in the written evidence?

Scott Coates: It comes back to this. Under UK property law, anything that affixes to land could be considered land. At the moment, the code effectively is to regulate land coming into the telecom sector, not to regulate the relationships between telecoms companies. It carves out from land the apparatus.

I am advised that there is a risk of ambiguity. That is probably the best way I could describe it. It may be challenged down the line. This is an evolving and dynamic industry where we don’t exactly know the physical things we are going to be deploying in future. There is a risk that some of the things we do might receive a challenge that it is land not apparatus. I do not know.

Is a new runway at Heathrow infrastructure or land because it sits on top of land? Is the national grid transmission network an infrastructure asset or land because it sits on land? It is a fairly technical point. Like all these things, once the lawyers are running around looking at them, they will find concerns.

All we are saying is that we invest over 20 to 30-year horizons. The more clarity that can be provided is helpful. We acknowledge and clearly appreciate the intent behind Government policy to protect investment and passive infrastructure but more clarity around that will only help the investability of what we do.

[Matt Hancock]

Q Thanks. I am also grateful for what you said about the team at DCMS, who will have picked up on your kind words I am sure. I wanted to follow up on 5G. You talked earlier about the 5G roll-out. This is a bigger-picture question. What do think the Government need to be doing now to ensure that we are in the lead when it comes to the roll-out of 5G?

Scott Coates: People must be exhausted with hearing about the challenges with Openreach and what can be done there. The key thing is to help facilitate our competitive market for infrastructure. So 5G has the ability to be driven by the mobile operators, by the fibre players, by independent infrastructure companies. If you look at the US, half the small cells that power 4G and 5G are actually going in by independent infrastructure players; mobile operators as well as fibre players are in there, too.

It comes down to helping to facilitate as competitive a market as possible. We have started deploying infrastructure in at least one city in the UK: 4G initially, but it will lead to 5G. We would love to be able to get a competitive basis of access, or any access, to BT ducts. We cannot do that, despite the fact that they can access every single piece of our infrastructure.

That is one thing. The other thing is around the planning permissions for affixing equipment to lampposts. We are working in Aberdeen and I have to say that we have had a fantastically positive experience with the local council, which has been amazing and very supportive in everything we have been trying to do there. That experience is not shared across other councils in the UK.

[Matt Hancock]

Q Thanks very much. Dr Whitely, would you say that, done right and should the codes come out right, the clauses in the Bill have the potential to improve public services through better use of data?

Dr Whitley: Absolutely. You could have a side question about whether, for example, focusing on subsidies from energy providers is the best way to deal with fuel poverty, but in terms of that specific focus—if it is done right—then, absolutely. Our concern is that we just do not have the detail as to whether or not it is going to be done right. That has been the frustration over the last three years.

[Drew Hendry]

Q I want to talk about the spectrum licensing issue. We spent a lot of time in earlier sessions talking about the minimum average speed, particularly for SMEs, as being 10 megabits per second and whether or not that was ambitious for the future.

You talked about the outside-in licensing regime that could be possible—and is possible in other countries since it is being deployed, particularly for new tech and for the 700Mhz and the 5G licensing that will come. If that approach is adopted by the UK Government in terms of licensing, is it your belief that it would make that inequality almost go away and that it would deliver much greater equality across the pace of speeds for people to access business and other methods that they need?

Scott Coates: If a policy objective is to ensure that rural areas get a high quality mobile signal, then forcing the industry to invest in rural areas—and effectively funding that by allowing them to pay less money for the licences that they acquire—is the most efficient way to deliver that. It would have positive outcomes, for sure.

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[Nigel Huddleston]

Q I am not sure whether we got a clear answer there. The Commons Library published a briefing, which includes statistics from an Ipsos MORI survey that you have probably seen before. The things that get public support are things such as:

“Creating a DNA database of cancer patients…Using data from electronic travel cards…to improve the scheduling of buses or trains…Using police and crime data to predict and plan for crimes that might take place in future”.

There is a clear public upside for some of the most vulnerable and hurt people in society; are we ever going to reach a point where you are satisfied with the use of data?

Renate Samson: You took evidence this morning from two witnesses whom you asked a very similar question, and I support the answers that they gave. People are happy to share data if they understand why and are asked. I believe that the answer you were given earlier referred to the individual. If you ask me whether I am happy to share my data to cure cancer, I go away and I make the decision about whether or not I am happy to do that. As you have pointed out, the majority of people are probably going to say, “Yes, of course.” Big Brother Watch has no desire to restrict that. We are asking for information that we feel is lacking from part 5 of the Bill. We are asking for information for the individual so that they can give their consent based on proper guidance. That is going to be a key part of data protection law going forward.

This is about the way the questions are being asked. Similar questions have been asked throughout the day. We are not trying to say no. We have never said no. We are just trying to say, “Please present us with as much information as possible, so that we can see how.”

Jim Killock: It is really in the interests of Government to get this right, because in the long term it is a matter of trust. We know that accidents happen. If at least the safeguards are in place and as many accidents are avoided as possible, and if people are not left embarrassed at either data leaks or programmes that turn out to be intrusive or prejudicial against people, then you have won. That really was the purpose of the open policy process: to ensure that the risks were understood so that the Government could legislate on the basis of dealing with the complex risks rather than heading straight into a situation where they got a huge backlash and/or stored up problems for the future.

Renate Samson: May I add something quickly? The first line of Big Brother Watch’s submission says that we support data sharing across Government. I want to be very clear on that.

My second point is about individuals doing well out of this. The Bill, well, the factsheets accompanying the Bill, refer to wellbeing. I direct you all to the Supreme Court’s review of the named persons scheme in Scotland, where it was deemed that wellbeing was not a high enough bar—it did not meet the bar of “vital”, which the Data Protection Act requires. We want to do this properly so that people can benefit, but let us ensure that it is proper—that is not perfect, but the best it can possibly be.

[Matt Hancock]

Q A couple of questions. Would you be happy to share your blood type data to help cure cancer?

Renate Samson: I do not even know what my blood type is. To answer your question, I don’t know. I would have to give it serious consideration, just as I would seriously consider whether I would be prepared to donate organs after I die. It is not something to which I can give you a snap answer.

[Matt Hancock]

Q Okay. You referred to the open policy-making process, which was a big process with lots of people involved, and the large majority are content with that process. Have you read all the individual responses to the consultation?

Renate Samson: No, because I do not know where they are published. I looked for them but I could not find them.

[Matt Hancock]

Q They are on the internet, so you are very welcome to have a look at them.

Renate Samson: My understanding is that I would have to go into every single organisation’s website separately to look at them. They are not collated on the consultation’s website itself.

[Matt Hancock]

Q No, they are all published online.

Renate Samson: On the consultation’s website itself?

[Matt Hancock]

Q They are all published online. In an earlier exchange, you talked about the broad purposes of the Bill and the problem with parliamentary scrutiny of those purposes. I would just like to understand a bit more about what you meant.

Renate Samson: Sorry. Could you repeat that?

[Matt Hancock]

Q In an earlier exchange with Louise, you talked about the broad purposes of the Bill and how they are defined. You said that those purposes are very broad, and I think you said something like, “and therefore it can mean whatever the Government wants it to mean”. I do not understand that, because any sharing of data must be for purposes very specifically set out, for instance supporting troubled families and supporting families in fuel poverty. I think it would be very hard to be against those goals.

Renate Samson: Forgive me, I do not recall that being quite as you have said; I know that Dr Whitley said something very similar to what you just said. Our concern is that I cannot give an answer, because I do not feel as though the Bill has defined clearly what data sharing is or what are personal data. I cannot give an answer without being able to understand what the Government intend to do with regards to data sharing. Troubled families and the retuning of televisions are not included in the Bill, they are referred to in the factsheet accompanying the Bill.

[Matt Hancock]

Q They are referred to in secondary legislation, which will be scrutinised by Parliament.

Renate Samson: I feel—I can only say how I and Big Brother Watch feel—that having looked through the Bill in great detail, we have more questions than answers. If the codes of practice had been published, it might not have been necessary for me to be sitting here, because I would probably know exactly what is the intention. However, based on what has been published so far, I do not feel that it is clear.

Jim Killock: Future secondary legislation is quite a weak way of Parliament safeguarding a process like this, because essentially you then need to ensure that civil society, Parliament and everyone make sure that all the relevant safeguards are included in each statutory instrument.

[Matt Hancock]

Q No, the safeguards are in the Bill. It is the purposes that are in the statutory instruments. It is interesting—

Jim Killock: I do not think that the safeguards are in the Bill.

Renate Samson: Could you explain where they are and what they look like? I cannot see them other than the reference to the misuse of data, and we absolutely support the proposal that those guilty of that could be subject to a prison sentence.

[Matt Hancock]

Q Okay. I want to refer to another point that I did not understand. You said that the problem with the Bill was that it referred to RIPA and the Data Protection Act 1998.

Renate Samson: Because that is current legislation.

[Matt Hancock]

Q But what exactly would you propose?

Renate Samson: My concern, and this is not a telling off, is that a large chunk of RIPA will no longer be applicable by the end of year when the Investigatory Powers Bill comes in, and the Data Protection Act is about to be replaced with the general data protection regulations. Of course it cannot say that on the face of the Bill and none of the supporting documentation even refers to those two pieces of legislation.

[Matt Hancock]

Q It just seems a totally odd point, because the Investigatory Powers Bill is not yet law and, as you can see from the screen, it is being debated in the Lords today. GDPR is not in domestic law yet.

Renate Samson: We were trying to be “assistive”—if that is a word—in that there are elements of the Bill about which not just Big Brother Watch but other individuals and organisations are concerned that if it passes, when the general data protection regulations come in, it will not adhere to that law. It was merely a note of what is coming down the line so we have legislation that has longevity.

[Matt Hancock]

Q I do not think it is possible to legislate on the basis of other legislation that has not yet passed.

Jim Killock: GDPR is passed; it is just not implemented.

[The Chair]

Thank you to our two witnesses. Thanks very much indeed for your evidence. We release you.

Examination of Witnesses

Sarah Gold, Chris Taggart and Paul Nowak gave evidence.

[The Chair]

Q We will now hear oral evidence from Projects by IF, OpenCorporates and the TUC. We have three witnesses, so, colleagues, could we have more concise questions and I am sure concise and expert answers? Could the witnesses please introduce themselves for the record?

Chris Taggart: My name is Chris Taggart. I am the CEO and co-founder of OpenCorporates, which is the largest open database of companies in the world.

Paul Nowak: My name is Paul Nowak I am the deputy general secretary of the TUC. We represent 52 affiliated unions who in turn represent about 5.7 million workers.

Sarah Gold: I am Sarah Gold, director and founder of Projects by IF: a design studio that helps companies understand privacy and security by making products and services that empower people.

[Matt Hancock]

Thank you very much for coming. I want to put on the record something relating to what happened at the end of the last session. For anyone who is interested and has not yet had the chance to find the responses to the consultation on data sharing, they are available on gov.uk/government/consultations/better-use-of-data-in-government. All the responses to the consultation are there.

[The Chair]

We are better informed.

--- Later in debate ---

[Louise Haigh]

Q As you say, Mr Shah, for Government data sharing to work requires public trust, and digital government and the use of your statistics absolutely requires trust that the Government will handle data with due purpose and cause.

Hetan Shah: Another thing is that the UK Statistics Authority is directly accountable to Parliament, not the Government. That actually makes the statistics and research strand more accountable compared with other parts of the Bill. I remind you of that, which is very important.

[Matt Hancock]

Q I would be interested if you could explain and put on the record some of the consequences you see of having this Bill and the underlying secondary legislation on the statute book. What impact will that have on the areas in which you are experts?

Professor Sir Charles Bean: The key thing is that it greatly improves the gateways that enable the Office for National Statistics to use administrative data—tax data and the like—in the construction of official economic statistics. We are well off the pace compared with many other countries. Scandinavian countries, Canada, the Irish and the Dutch make very heavy reliance on administrative data and only use surveys to fill in the gaps. Here, the Office for National Statistics is essentially an organisation that turns the handle, sending out 1.5 million paper forms a year and processing those. Essentially, you are acquiring the same information again that you have already got in some other part of the public sector, where the information is being collected for other purposes.

The key gains here I see as twofold. First, because you access something close to the universe of the sample population rather than just a subset, which would normally be the case with a survey, you potentially get more accurate information. It is potentially also more timely, which for economic policy purposes is important.

The other side of the coin is that by enabling you to cut back on the number of surveys you do, there is a cost gain, which I should say would probably not mainly be a gain to the ONS, because they have to do the processing of the administrative data, but a gain to the businesses and households who are currently spending time filling in forms that they would not need to do if more use was made of administrative data.

[Matt Hancock]

Q Mr Shah, what do you see as the impact of the data sharing clauses?

Hetan Shah: I completely agree with Charlie Bean that we are really in danger of being left behind compared with where other countries are on this agenda. The European statistics peer review, which happened last year, said that this was the key weakness in our statistical system. If you look at bodies like New Zealand, Finland and Canada, they all have this ability to access, so we have got to have it. We are spending £500 million on the census and you have got a lot of that data that you could be using through administrative data.

Similarly, on inflation, which is a critical economic indicator, at the moment we send out people with clipboards to take price points of 100,000 items in 140 locations around the country every month, but there is scanner data that tells you the price that people paid. This could really revolutionise. It is not statistics for statistics’ sake; it is to answer the questions that parliamentarians and policy makers have on issues about social mobility and productivity. For all these questions you are asking yourselves, we need the data. And if we are criticising the ONS about not being quick enough, we need to give them the powers to be quicker.

[The Parliamentary Secretary, Cabinet Office (Chris Skidmore)]

Q In terms of the provisions in the Bill on sharing data for research purposes, could you shed a bit more light on how that will benefit the wider research community? I was also wondering what the immediate priorities will need to be for the UK Statistics Authority as the accrediting body for the infrastructure provided by the research powers in the Bill.

Hetan Shah: The Bill creates a permissive power and it really streamlines what at the moment is quite a complex legal environment for researchers accessing Government data. This makes it much clearer that if a researcher meets a set of conditions—the research is in the public interest, the researcher is accredited and it will use the research in a safe haven, as it were, and so on—they are able to access that Government data.

We gave some case studies in our evidence of research that is obvious, such as what affects winter mortality and understanding the productivity gap. Those are questions that researchers want to investigate, but they cannot get hold of the data from Government Departments. To be fair to the Government, there is concern from their side about handing over data when the legal framework is not clear enough. I think this process will really streamline that.

One caveat is that it is slightly odd that health data are out of scope. Most of the biggest concerns that researchers have are in trying to build the relationship between survey data and, often, the health outcomes in certain areas. I understand the reasoning behind this: because of care.data there were some concerns. Health is very important. Our view is that the Bill should build in the scope for health data and then allow for future legislation to say how that will be dealt with, in particular once Fiona Caldicott, the national data guardian, has consulted on her framework, which is happening right now.

Professor Sir Charles Bean: I would endorse a lot of that. I should say that in Canada, where I spent some time talking to Statistics Canada in the course of doing my review, they have exactly this model. There are clearly defined criteria under which researchers can get access, with a sort of prescribed laboratory where they can use it. I think there is something like 30 requests a year to use information, so it is quite heavily used.

Certainly when I was talking to people here during the statistics review, the issue was raised during the consultation process by people such as the Institute for Fiscal Studies, who wanted access to the microdata to be able to study the impact of tax structure on decisions and so forth. The difficulty of getting that microdata inhibited good research. I am sure the demand is there.

Digital Economy Bill (Third sitting)

Matt Hancock Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 13th October 2016 Public Bill Committees

[Thangam Debbonaire]

Q Could you say a bit more about what safeguards are in place for that public service duty and role?

Tony Close: Currently the BBC is still regulated by the BBC Trust. There is a job for us to ensure that there is a framework in place by 3 April or shortly after, to ensure that the BBC is held properly to account. That has many component parts. I suspect that it has a set of metrics. There is an element where you would be looking for consumer feedback on how the BBC is delivering to consumers in their view—whether it is genuinely distinctive or considered to be distinctive by members of the public and whether the audience themselves believe that the BBC is delivering on its obligations and its public purposes.

[The Minister for Digital and Culture (Matt Hancock)]

Q We have had some debate, which you may or may not have followed, on the electronic communication code, and about whether the changes in the Bill, which are designed to reduce the cost of rolling out mobile infrastructure, should go further and mirror the rules around the water industry. I would be interested in your reflections on what the consequences would be, should we make that change.

Lindsey Fussell: Ofcom very much supports the Bill’s provisions on the electronic communications code, because we believe that they will assist with the faster roll-out of mobile infrastructure and its maintenance. We do not have particular expertise to offer on the precise provisions in the Bill, particularly on land valuation. What we are doing is working collaboratively with a very broad range of stakeholders to draw up a code of practice on the way that negotiations should work going forward.

[Matt Hancock]

Thank you; so you do not want to go further on the details, but you are working on implementation.

Lindsey Fussell: I am afraid I do not think I have anything helpful to offer on that.

[Matt Hancock]

Q Okay. The other area where we have had questions is on Ofcom appeals. It would be very interesting to hear your take on why it is necessary to make the changes to the appeals that are set out.

Lindsey Fussell: Yes, of course. As I said to a member of the Committee earlier, Ofcom absolutely welcomes its decisions being challenged. It is actually vital, for an independent regulator, that that happens, because it goes to the very heart of our credibility; but we believe that it is entirely appropriate for us to be held accountable to the same standards as almost every other public authority.

The need for robust challenge clearly needs to be balanced against the need for us to be able to take forward measures such as switching and auto-compensation in a way that is rapid and can meet consumer interests. Our concern with the current arrangements is that while Ofcom has a pretty good record on its success in appeals we are the most appealed-against regulator, and in particular our appeals come from the largest providers with, frankly, the deepest pockets. We want to have an appeal standard that absolutely enables any bad decisions or wrong decisions we take to be overturned, but also enables us to take forward the really important regulation and changes that consumers want, as quickly as possible.

[Mark Menzies (Fylde) (Con)]

Q All our constituents are victims of nuisance calls. Do you think the law as it currently stands is sufficient to protect them? What measures in the Bill do you think will offer enhanced protection, and when we are dealing with companies that are out to drive a coach and horses through the law, what measures do you think we can put in place to provide protection for customers? If I could lead you down a path, at the moment, if you want to lodge a complaint against a company you have to have the phone number and the website address. When I have asked nuisance call companies, “Can I have your phone number; can I have your website address?” guess what? They have neither of those things.

Lindsey Fussell: We absolutely recognise that nuisance calls remain a huge concern to consumers. We estimate that consumers in the UK will receive about 4 billion nuisance calls this year. If I sit, as I have, and listen to calls coming into our contact centre, I know how distressing and frightening some of them can be to consumers.

As I mentioned earlier, the provisions in the Bill relate to the powers of the Information Commissioner, relating particularly to direct marketing calls. That forms a substantial proportion of the concerns that I know consumers have, and it is great to see the Information Commissioner being given more power to enforce against companies that break the rules, including companies that either do not have consent, or have very aged consent, if I can put it that way, for those calls to be made.

Ofcom’s specific interest is in silent and abandoned calls, which can be especially frustrating and frightening for more vulnerable consumers, particularly. We believe that the best way—because of the nature of the companies, as you have been saying, that are now making the majority of the calls—is to encourage more network blocking of those calls before they reach the consumer. That is something that we are making good progress on with a number of companies. You may have seen recent announcements from Vodafone in this space.

We also encourage companies to roll out software—and BT, again, is doing so shortly—free of charge to consumers to give consumers more power to block calls themselves. It is a really difficult problem but we are absolutely not complacent about trying to tackle it.

Digital Economy Bill (Fourth sitting)

Matt Hancock Excerpts

Committee Debate: 4th sitting: House of Commons
Tuesday 18th October 2016 Public Bill Committees

[Louise Haigh (Sheffield, Heeley) (Lab)]

I rise to support amendment 83, which stands in the name of my hon. Friend the Member for Cardiff West and I, and amendment 56, tabled by the hon. Member for Berwickshire, Roxburgh and Selkirk.

All members of the Committee agree that we must do everything we can to ensure that individuals have access to superfast and, soon, ultrafast broadband. It is not only important but, in an ever more connected age, an absolute necessity for both businesses and residences. That is why we support the Government’s tacit aim to designate broadband effectively as a utility in the same way that water and energy are classed as a must-have in the modern world.

We will speak later about our concerns about the universal service obligation, but broadly we believe that there is coalition of support for a much more ambitious USO. That is why we were pleased to hear that the USO can be amended in secondary legislation later when it becomes outdated. However, I fear that, by the time it is introduced, it will already be becoming seriously outdated and, indeed, by 2020, it may feel like a relic of a bygone age when superfast and ultrafast broadband, even in rural areas, will be readily accessible. That is the subject of our new clause, which we will consider shortly.

On amendment 56, it is absolutely right to specify upload and download in the Bill. As we have seen all too often, businesses and residences see a particular speed advertised with no correlation between what they can download and upload. For someone with a business and working from home, accessing online services and transferring files to them can take a lot of time if the upload speed is not up to scratch. That is an obvious cost to businesses. It is not merely an irritant, but a loss in pounds and pence, and in productivity to the UK economy.

There is no mention in the Bill of upload speeds in the USO. That leads to a broader problem of lack of ambition throughout the Bill. Factors such as distance from the telephone exchange and other considerations such as old household wiring can slow down speed. That is why the USO, although welcome, will seem extraordinarily dated in just half a decade, when the roll-out of the USO will have been completed and there will be little appetite for providers or the Government to return to those hard-to-reach places for some time.

On tackling upload and download speeds, we would have preferred the USO to be under the superfast designations from the beginning. An example of the impact of superfast roll-out on one small business demonstrates this perfectly. Within the first year of having superfast broadband, the business reported a 30% increase in sales. We should be ambitious for our small businesses. Instead, this USO potentially condemns them to distinctly average speeds for a decade.

Amendment 83 is a probing amendment to test the Government’s ambition, which certainly needs to be tested throughout the Bill. It is based on a simple principle. We are at the start of a digital revolution that will transform how we work and how we communicate and interact with one another. Access to water and electricity in the home bookmarked our evolution to a more civilised society, so the essentials of the modern era should be similarly guaranteed. The Bill does that in part for broadband and we strongly believe it should cement further ways to roll out universal or near universal coverage for mobile communication.

We broadly support the changes to clause 2 and the amendments to the electronic communications code. Assisting mobile network operators in some of the challenges facing them is obviously important. That includes access to land and knocking down some of the absurd hurdles they must jump through to make what most people would consider sensible adjustments to infrastructure to update existing technology with little visual impact.

The Bill contains changes to a highly complex piece of legislation, which the industry has been seeking to change for some time. Indeed, the Law Commission commented that the legislation is not one of Parliament’s finest efforts. We recognise that. It clearly is not. However, although simplification and amendments to the code are important, there can be little doubt that mobile network operators will receive a substantial boon. That is why this amendment is so important and it is puzzling that the Government did not include it.

Evidence to the Committee suggested that the Bill could reduce the cost of site rental for mobile network operators, which make up a substantial portion of their costs at 40%. With the operators receiving effectively all they have asked for—no one blames them with such a complex and restrictive code—it is clear that our sights must be set firmly on delivery and the Government should not set their ambitions too low. That is what our probing amendment covers and why it is important that, during the passage of the Bill, we receive at least some commitment to improved targets on mobile network coverage.

We are slightly dismayed that the industry will benefit from such a clearly beneficial piece of legislation and that the Government will impose few or no conditions on them beyond what has already been agreed. We are aware that the £5 billion investment and the statutory target were tied to changes to the code, but we are not convinced that the benefits for consumers are greater than the benefits that are being approved for mobile network operators and we would certainly welcome greater reassurance on that from the Minister.

Let us look quickly at the targets set out in the binding agreement in 2014, signed by the then Culture Secretary, the right hon. Member for Bromsgrove (Sajid Javid). They were: guaranteed voice and text coverage by each operator to 90% of the population and full coverage to 85% by 2017. Currently, only 46% of premises have access to 4G from all mobile network operators and a substantial 7% of the population—1.5 million homes nationwide—do not have basic voice or text coverage across the three networks.

The failed Mobile Infrastructure Project, supposed to reach the final notspots, closed in 2015-16. It had erected only 76 of 100 masts, leaving a substantial number of homes without the prospect of having complete voice and text coverage. Given that 71% of businesses rated mobile network access as “critical” or “very important” to their business we believe that mobile network coverage, as broadband is tacitly designated in this Bill, should also be considered a utility. That is what our probing amendment seeks to test.

Clearly, everyone in the country, if asked, would agree. Businesses that rely on mobile networks, local authorities and individuals that use them to communicate would welcome a right to have mobile network coverage within their place of work or at home. This is extremely achievable but the Opposition are concerned that institutional defensiveness from the major network operators is getting in the way of full or near universal coverage for consumers. More than 99% of residents in the UK have access to 2G or 3G of some kind and 90% have access to 4G of one kind. However, for all operators, the figure drops to just 46%.

The infrastructure is in place and it understandably infuriates people working in an office or at home when their colleagues can get network coverage and access to data services while they cannot. While we recognise the concerns around commercial incentive, surely it is right that, once the current phase of the roll-out is complete and significant gaps in full coverage across all mobile network providers still remain, we at least reconsider the case for national roaming and national infrastructure, as is commonplace on the continent.

We are a relatively small island and it should not be the case that commercial defensiveness makes the aspiration of near universal coverage far from a reality. That is why we will table another new clause relating to this part of the Bill to test it before the whole House. It will establish a review of the roll-out of mobile network coverage, which is a critical piece of infrastructure for businesses, residents, and emergency services. As yet, due to what appears to be institutional wrangling and commercial defensiveness, this coverage is not being extended to the entire population in a way they would expect.

As we know from evidence given to the Committee last week, currently more than 60% of communications towers globally are held in an entity separate from the networks that use them. The review will have to take another look at greater diversity in mobile infrastructure and national roaming in order to deliver a universal service. In countries such as the United States, the figure for independent infrastructure is more like 90%. In the United Kingdom, as the Committee knows, it is more likely that that infrastructure is erected on an economic case for the network and operated for the benefit of the network that makes the investment. That is fine up to a point, in that it undoubtedly encourages competition among network providers in areas where they can receive a substantial return, but it makes universal network coverage more difficult to achieve when there is 90% of coverage for 4G of some kind, but only 46% for all kinds.

Our review will also look at open data and how, by routinely publishing costs, location of masts, service quality and plans for roll-out, consumers, particularly in rural areas, but also in urban “nearly and notspots” can make better decisions about which network operator to use.

Throughout the Bill, Labour Members will look to the Government to turn the £l billion concession, however welcome, for the mobile industry into something approaching a near universal service for the country. We should be ambitious about the kind of mobile network coverage we can deliver and not shy away from the challenge.

[The Minister for Digital and Culture (Matt Hancock)]

It is a pleasure to get going on the Bill proper and to respond to the first amendments. It is undoubtedly true that reliable fast broadband is now seen as the norm and not the nice-to-have—that unites the whole Committee. We are committed to ensuring that everyone can enjoy the benefits of decent broadband connectivity. It was in our manifesto and it is one of the core purposes of the Bill.

Amendment 56 seeks to ensure that the guidance around the characteristics of the connection is in the Bill—for instance, that the USO can include both upload and download speeds. I entirely understand the intent and the clause as drafted is sufficiently flexible to allow for that. The statement of intent that the hon. Member for Berwickshire, Roxburgh and Selkirk referred to, which was shared with the Committee last week, outlines a broad range of factors that need to be considered in designing the USO, including the level of service. That includes not just download and upload speeds, but the appropriateness and level of other parameters such as latency and capacity—and potentially customer service.

Ofcom has been commissioned to provide detailed technical analysis and recommendations to support decision making on the design of the broadband USO. Allowing Ofcom to do that work and ensuring that it is specified in detail is better than putting that on the face of the Bill, because it will allow us precisely to future-proof the design of the USO in the way that the hon. Gentleman demands. The decisions on the scope of the USO, the technical specifications, including download and upload speeds, and any service standards need to be taken in the light of Ofcom’s advice, which is to be provided by the end of this year, before the Bill concludes all its stages.

Amendment 83 seeks to include mobile coverage within the scope of the guidance on the broadband USO. The hon. Member for Sheffield, Heeley made many good points and put them eloquently and powerfully. The position is that the universal service directive, which currently provides the regulatory framework for the broadband USO, is about the provision of a fixed internet connection of an appropriate speed to a fixed location. Depending on who is designated as the universal service provider or providers, and on the specification of the USO, there is scope for the USO connection to be provided using mobile technology. However, the directive does not require the USO to include mobile geographic coverage.

In any event, as the hon. Lady said, through the use of licence conditions we have delivered on a commitment to near universal mobile coverage. I would question, therefore, whether there is a case for a USO for mobile, because of those commitments. The licence obligations to which the hon. Lady correctly referred are part and parcel of a deal that included the reform to the electronic communications code—so everything that she asks for was covered in that deal. It is precisely because the two are linked that they are fair, both to the industry and, more importantly, to consumers. As she said, the mobile network operator roll-out plans provide for £5 billion of investment, as a result of that deal and commitment.

[Christian Matheson (City of Chester) (Lab)]

When we talk about notspots, we are not just talking about parts of the highlands of Scotland. Indeed, parts of rural Cheshire, just a few miles from Chester, are not covered. Does the Minister honestly think that the deal he is talking about is working well?

[Matt Hancock]

The deal is to be delivered by the end of 2017. We will hold the MNO’s feet to the fire, because it has a legal and contractual requirement to deliver on that by the end of next year. I know the area of the country that the hon. Member talks about very well—it is where I spent the first 18 years of my life. There are some parts where the mobile signal is no better now than it was back then. In Suffolk this weekend, I found large swathes of my own constituency to be without a mobile signal, so I feel the hon. Gentleman’s pain. That is why delivery on this commitment by the MNOs is so important. The deal as agreed, which is a legally binding commitment, will result in nearly 100% of UK premises receiving 3G/4G data coverage, and 98% coverage to the UK landmass by the end of 2017.

That includes the new emergency services contract, which is being delivered by EE. That has to have a huge spread over the geography of the UK, and the same infrastructure will be available to customers of that provider. The deal sufficiently provides for the demands that were eloquently put by Opposition Front Benchers and, more importantly, clause 10 will enhance Ofcom’s powers to enforce the licence conditions, which we all agree are sensible, against the MNOs.

[Calum Kerr]

We welcome anything that increases mobile coverage commitments. The Government have done a deal with mobile operators for increased coverage, but the people who will pay for that increased coverage are the local authorities, the Forestry Commission and the landowners—they will suddenly find their rents drop through the floor to nothing. The Government could have revisited the annual licence fees that they collect from the mobile operators and done a deal on that basis, rather than making someone else pay for the increased coverage.

[Matt Hancock]

The hon. Gentleman leaps ahead to the next clause, and no doubt we will have that debate, but I think it is entirely fair for landowners and those on whose land the infrastructure is provided to get a similar return on the value of the land to them, rather than on the value once the land has this infrastructure. That is the change that we will be making because, ultimately, we have put in place a deal to get better service for customers, to get more geographic coverage and to reduce the costs of rolling that out, which is the right deal for the country.

As the hon. Member for Sheffield, Heeley calls for exactly what is to be delivered and as there are other clauses in the Bill to ensure that that delivery happens, I hope that the hon. Member for Berwickshire, Roxburgh and Selkirk will withdraw his amendment.

[Calum Kerr]

I am willing to withdraw the amendment because the document that came out last week provides a level of clarity. There remains a concern that the Bill is light and passes off the detail, which is both an opportunity and disconcerting. This is an opportunity to do something transformational with broadband, but the Bill is not transformational in itself. It will come down to the detail. We were keen to see more specific clarification in the document, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Louise Haigh]

New clause 10 would require the Secretary of State to ensure that there is a completely open procurement process, and an alternative dispute resolution role to arbitrate in instances of disagreement over the designation.

We welcome the Minister’s clarification last Wednesday about the statement of intent in relation to the USO. However, we want to mention—I am sure it will not be the first time in this Committee—how rushed and unsatisfactory the publication of Bill documents has been. Some of the documents that should accompany the Bill are yet to be published. I know from talking to people in the industry that that is their concern as well.

I was pleased to note from the statement of intent that the Minister intends the USO to act as an effective complement to commercial, community and publicly-funded roll-outs of broadband, and that it will not displace any planned roll-out of higher speed broadband. There is an argument that there should be a combination of the USO and Broadband Delivery UK to fulfil the last 5%, given that the work of BDUK is still ongoing.

The industry has raised concerns that a USO could risk distorting the UK’s broadband market and potentially hamper the goal of universally available good quality broadband access, if it is not designed in the right way, with the industry and consumers in mind. I note what the Minister said earlier about Ofcom’s being better situated for future-proofing, and I agree. I will discuss that on clause 1 stand part if that is acceptable, Mr Streeter. It is important that there should be parliamentary scrutiny of Ofcom’s role in the consultation.

The USO should not displace any planned roll-out of higher speed broadband. I mentioned the industry’s concerns that it could distort the UK broadband market. If it is done badly, there is a risk that it will undermine commercial investment, in hard-to-reach areas where industry is able profitably to deliver good quality broadband at competitive prices, or by passing on to existing users any rising costs that come about as a result of the USO.

For example, TechUK has argued that the Government should strictly limit the USO to the most remote areas of the UK. Failure to limit the availability of a USO tightly means there is a risk that commercial investment will be diverted, and that there will be wasteful intervention. It is suggested that urban areas, and any rural areas where there is a prospect of market investment, should be explicitly excluded from the USO. It would be helpful to hear the Minister’s thoughts on that and on how Ofcom will take forward the consultation.

Furthermore, satellite connectivity should be considered in scope for the most remote households. It is already available to virtually all households in the UK, and it can be the most cost-effective route to providing superfast broadband. Essentially, we believe—and I hope that this is the Government’s intention—that the USO should be seen as a safety net to prevent social exclusion, facilitate access to online public services, and encourage social and economic development.

The question is whether we need a more transparent and competitive regime for that to happen. Smaller providers are currently put off, because they do not know whether BT currently has plans for, or is working in, any place at any given time. There are allegations from other players in the industry that when smaller providers move into areas where BT is not investing or working, it swoops in, purely to crowd out the competition.

The Government’s statement of intent cites thinkbroadband estimates that suggest about 4% of premises are unable to receive speeds above 10 megabits per second. That really should be open data available to the public and all service providers. We clearly need to know where the assets are, who can do the work and where the cabinets are. There should be a register that contains all that information and is available to make the market more competitive and efficient.

For the process to be trusted, transparent and fair, all the information should be in the open and part of the procurement process, allowing as many providers as possible to participate to ensure that the playing field is as level as possible. It was therefore also welcome that the Government’s statement of intent included consideration of different types of providers, such as regional providers and smaller ones using innovative technologies.

Clearly, it was less than desirable that the BDUK process ended up with only one contractor. We do not believe that we can lay the blame for that entirely on the design of the contracting process, but we think that much greater care needs to be given in the future to ensuring that a richer diversity of providers is catered for in the process.

We should also ensure that the Government are not effectively blackmailed by providers to protect their market position. The mess-up around the procurement process for the roll-out of the broadband framework in 2012 left BT as the only supplier, after Fujitsu pulled out. That was condemned by the Public Accounts Committee for failing to deliver meaningful competition or value for money.

It is also important that the Government consider different tenders for the different problems we are faced with in the last few per cent. For example, we could have one contractor for the rural areas and another for the inner-city areas, as they obviously present different challenges. We could do with some further clarity from the Minister on that.

The amendment is merely designed to be probing. Does the Minister genuinely envisage that anyone other than BT will implement the universal service obligation? How will the tender process be designed? Given the Government’s commitment to encouraging SMEs and community providers to tender, will the likes of Broadband for the Rural North be considered? If the Minister can provide some clarity on that either now or later in writing, I will not press the new clause to a vote.

[Matt Hancock]

I will try to respond to all the points as briefly as I can, because the hon. Lady in particular raised a huge number of pertinent points. The two Front Bench teams are very much on the same side on this matter, so I want to give her the reassurance I can, but as quickly as I can, given that she asked a huge number of very good questions.

First, amendment 57 is about ensuring that devolved Administrations are consulted. Section 65(4) of the Communications Act 2003 already imposes a requirement to consult with Ofcom and other such persons as the Secretary of State considers appropriate. Since the broadband USO is an extremely important consumer measure that will benefit all parts of the United Kingdom, I cannot conceive of a situation where the devolved Administrations would not be consulted as plans to introduce a broadband USO are put in place, so I do not think the amendment is necessary. We would expect wide and extensive consultation across a wide cross-section of stakeholders.

We will consult on proposals for secondary legislation once we have considered Ofcom’s report. The second consultation will cover the detail of the USO and provide an opportunity to comment on the design of the USO and how it is implemented. I hope that that takes into account the concerns of the hon. Member for Berwickshire, Roxburgh and Selkirk.

New clause 10 would require the Secretary of State to ensure that there is an open procurement process for the designation of universal service providers. Again, that is covered under section 66 of the 2003 Act, which enables Ofcom to set out the procedure for designation in regulations and requires that the procedure

“be efficient, objective and transparent; and…not to involve, or to tend to give rise to, any undue discrimination against any person”.

I think that addresses the concerns as directly set out in the new clause.

It was music to my ears to hear a Labour Front Bencher talk about the need for a competitive regime, which clearly puts her at odds with her leadership. I agree in principle that the USO is designed as a safety net. Some people want much greater broadband speeds and connectivity, and it is not unreasonable for people to pay if they want very high connectivity speeds, but we believe there is a public service in having a universal service so that everyone is given the opportunity to have decent connectivity on which to live their lives. As the hon. Lady said, that could involve communicating with the Government, which is increasingly done online, or engaging in communications around healthcare and basic banking, and 10 megabits per second allows for that.

The hon. Lady mentioned satellite technology. Satellite is in scope—in fact, all technologies are in scope. The legislation is purposely designed to be technology blind. What people care about is connectivity. The technology is for the implementation, the policy makers and the engineers. Citizens care about how good, reliable and quick their connectivity is.

The hon. Lady made one error and I want to bring her up to speed. It is not true that there is just one contract in BDUK. Its open competitions have now been won by BT, Gigaclear, Call Flow Solutions, Airband, UK Broadband and Cotswolds Broadband. There has been progress since the Public Accounts Committee report that she mentioned and a whole plethora of providers have now successfully bid into the BDUK contracts.

[Louise Haigh]

I am aware that in phase 2 other providers have been successful in tendering, but in phase 1, as the Minister is well aware, there were problems and Fujitsu pulled out, leaving BT as the only contractor. That is why our new clause goes further than the law currently enables Ofcom to go, by ensuring the appointment of a body to undertake an alternative dispute resolution role, so that we can learn the lessons from BDUK. I appreciate that the Minister may not be able to commit to that today, but will he at least take it away and consider it for the USO?

[Matt Hancock]

I think that those lessons were learned about three or four years ago, so I do not think that the new clause is needed. That is why, in the second phase of the BDUK contracts, we managed to succeed in getting six different providers to bid successfully, precisely because we learned the lessons from what I agree was an unsatisfactory outcome of the first contract. So the hon. Lady is right; it is just that I think that that work has been done and so it is not necessary to legislate on it.

The hon. Lady also made the point about open data on where cabinets have been put in place and part-fibre broadband or superfast broadband has been delivered. BT has given me a commitment that it will make those data openly available. I have yet to see them, but I look forward very much to their being made public very soon; I was given that commitment some weeks ago by BT and I am surprised that they are not yet public. I will take that up with BT immediately after this—I wonder whether it might have heard what I have just said.

Given those assurances both on consultation with the devolved Administrations and on delivery of a competitive regime, with distortions to competition taken into account by Ofcom, I hope that hon. Members will withdraw or not press the amendments.

[Calum Kerr]

I thank the Minister for his words and I take on board his comments, but I will not withdraw the amendment. The challenge is the degree to which consultation is effective and actually feeds into the process. I know from personal experience, having met Ofcom and spoken to the Scottish Government, that much of the engagement to date between the Scottish Government and Ofcom on areas such as the USO has been tokenistic. It needs to go much further.

I have myself facilitated a workshop with the Scottish Government, the Scottish Futures Trust and Ofcom. Sharon White has met Fergus Ewing, the Minister responsible for these matters in Scotland. I think that we have to be far more explicit in legislation, because that will ensure not just a tokenistic consultation but proper engagement in the process so that in areas where the Scottish Government have set a higher target—30 megabits, superfast, for 100% of the Scottish population—the USO is designed in a way that supports and helps that. If it is done in a UK-wide, pragmatic sense, that will not help, so I will press the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Nigel Adams (Selby and Ainsty) (Con)]

Before I make a brief remark, I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests.

I fully support the spirit of the amendments and new clause, but I am not entirely sure whether the Committee should support it. Surely it is the Culture, Media and Sport Committee’s job to hold BDUK and the Department to account for their progress. I told you I would be brief, Mr Streeter.

[Matt Hancock]

We have had support of spirit throughout this sitting. The amendments and the new clause are all about reviews of and reports on progress. I have reviewed my broadband this weekend, and I can report that while I was looking at myself discussing the importance of broadband in East Anglia on a local TV programme, I was actually under my desk because my broadband went down. I know how frustrating it is when one’s broadband goes wrong. I am very grateful to the BT engineers who are working to fix it right now. That is my report.

The best comment was made by my hon. Friend the Member for Selby and Ainsty about the Select Committee. Reports and reviews are important, but the Select Committee is there to ensure that Parliament has its say. More than that, as Ofcom carries out its consultations, it will of course report on progress.

I wish to pick up on a few of the comments that were made. The hon. Member for City of Chester, which is a great city and the city of my birth—the Bill is all about connectivity and we have been making all sorts of connections in this sitting—made the argument very strongly for the importance of not only getting better connectivity, but describing it right. I will have no truck with people who say they are providing a fibre solution when, in fact, it is a part-fibre solution. Fibre-to-the-cabinet is not fibre and anybody who says so is taking people for fools. We should talk about fibre when we mean a full fibre connection that goes all the way from the fibre backbone into the premises. Anything short of that is merely part-fibre.

That point demonstrated some of the confusion from Opposition Front Benchers and shows why it is so important to get these things right, instead of just calling for a report when that is already going to happen. The hon. Member for Sheffield, Heeley called for use of G.fast, which is an important interim technology. However, she then said, “and therefore, it is important we have more fibre.” G.fast is not a fibre technology; it is a copper-based technology. While it is important and useful interim technology that will undoubtedly increase speeds, it is not full fibre.

[Calum Kerr]

The Minister is slightly taking liberties there. The reality is that G.fast is distance-constrained to about 300 to 400 metres, so fibre will have to be pushed much further. I am sure that the hon. Member for Sheffield, Heeley is aware of at. It comes ack to the same principles: we need more ambition and we need to push fibre further. Yes, G.fast will have a place, but it will not fix my or my colleagues’ rural challenges.

[Matt Hancock]

Exactly, absolutely right. We are seeing the long-feared Labour-SNP alliance in action. The hon. Gentleman is right that G.fast is a useful technology but it is not a full fibre technology and is, by physics, distance-constrained, although BT continues to do important work on driving as much delivery out of copper as possible.

There is one other point that it is important for the Committee to consider: there was a simultaneous call from the Opposition for the statement of intent to be included in the Bill and for there to be flexibility in the speed of the USO. These two things are inconsistent; it takes time to change primary legislation. It is incredibly important that we can revise the USO potentially—and hopefully—upwards. It is wrong to set a USO speed now for several years hence. I think we agree on that. We should not, therefore, put the speed on the face of the Bill.

The Scottish Government have said they want 30 megabits per second by 2021. We, of course, want the USO before then and we want the speed to reflect the reality of the time. Demands are increasing very quickly, so I would not want to put a figure on it for five years hence, as the Scottish Government have done. That is a mistake and it is far better to do it as we are planning in this Bill.

[Louise Haigh]

The Minister is slightly misinterpreting what I said, which is particularly cruel given that I have only been a week in the job. I did not say G.fast was equivalent to fibre. I said that BT would be pushing it out to 60% to 70% and that was why we need much more ambitious targets from the Government on fibre for that final third, in order to deliver coverage for the entire UK.

With regard to the statement of intent, I have said several times that we support its being in secondary legislation, but we want to see elements of it, including the design of the USO, the procurement process and review, to be in the Bill, to avoid being asked to vote blindly on details we do not yet have.

[Matt Hancock]

I am delighted to have that clarification. I am also glad that the hon. Lady welcomed the fact that Ofcom is doing the consultation, which is necessary before we can put those details in place. The way the provisions are structured in the Bill is the right way to proceed.

In ensuring that we get the best possible broadband connectivity, we must make sure that we have both a vision of the future with high-speed and superfast—and then ultrafast—connectivity, and flexibility to get there in the most cost-efficient way possible. That unites the Committee in purpose, and the Bill as it stands provides for it.

Finally, following the mention of the Labour Government by the Opposition, I will not rise to any partisan points other than to note that in 2003, the then Labour Government legislated to set a USO. They set the USO in stone in legislation and instead of including a review clause, they set it at 28 kilobits per second. Let that be a lesson to anyone who wants to put more on the face of the Bill. It is far better to ensure that we can constantly keep pace with technology, as the Bill does.

[Calum Kerr]

I am enjoying this; the debate is getting a little more spirited. I hope that some Government Committee members will vote the wrong way for their party and the right way for the people of this country and their connectivity. We are not advocating that a figure is put in the Bill. At no point have we suggested that. We have been advocating greater ambition and a desire to ensure that the USO is designed and rolled out to meet the demands of our constituents and the expectations of the country. Unless the Minister or anyone else can tell me that this place is particularly good at doing perfect legislation that always gets the desired outcome, it seems eminently sensible that we put in place a review process. On that basis, I am happy to withdraw the amendment and instead support amendment 82.

--- Later in debate ---

I have constituents who are trying to sell confetti, for example, and they are doing a great job online. I even have an abbey in my constituency that is selling incense online and, again, it could not have done that if not for broadband. We need improvements, and we are seeing significant improvements. We need to recognise that a universal service obligation is pivotal in changing the lives of many of our constituents. It is not just inconvenient not to have a decent broadband or mobile signal; it is life changing in some cases because it inhibits economic productivity and affects our constituents’ livelihoods. I therefore thoroughly support the universal service obligation and applaud the measures in this clause.

[Matt Hancock]

We all agree that broadband is a modern necessity, and I am delighted at the Committee’s tone in supporting the goals we have set out to drive connectivity across the whole of Britain. The legal framework for introducing a USO seems to have been warmly received on both sides of the Committee. I will respond to the individual points that have been made.

First, on the ambition, thankfully we now have a Bill to introduce the framework for delivering the high level of connectivity that we need. Baroness Harding told us in our first evidence session that

“I think it is a great thing.”––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 10, Q15.]

We also heard the Bill described as an “incredibly important step”. As Pete Moorey from Which? said:

“There are critical things in the Bill that will start to bring the telecoms sector kicking and screaming into the 21st century.”––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 24, Q47.]

That is support for the importance and direction of the Bill.

On the specific point, Ofcom’s consultation on the market structure, which the hon. Member for Sheffield, Heeley mentioned, closed on 4 October and Ofcom will respond shortly. The timing is a matter for Ofcom, and it would be improper of me to pre-empt it. She is right that the threshold will be determined by the consultation, and it is wrong to try to pre-empt that consultation process. Instead, we should do things properly.

The hon. Lady will no doubt welcome an update on new homes. We have a new commitment that any development of more than 30 homes, rather than more than 100 homes, will have fibre connections and, as of 1 January, building regulations will require superfast connections in new buildings. The sensible suggestion from both sides of the House that new houses should be built with what is needed for the future has now been enacted.

[Christian Matheson]

I am pleased to hear that building regulations are changing. Will the Minister also have conversations with his colleagues in the Department for Communities and Local Government to change planning regulations so that newly built premises, properties and estates are ducted and cabled ready for connection?

[Matt Hancock]

I will look into that. I will be surprised if that does not happen already, but I will take it up.

[Claire Perry]

Will the Minister make representations that the threshold of 100 houses for the mandatory provision is perhaps a little high, certainly for those of us in rural constituencies?

--- Later in debate ---

[Matt Hancock]

I repeat what I have just said: the floor of 100 homes has come down to 30 homes for fibre connections, but all new buildings will be required to have access to a superfast connection from 1 January. Those points have been taken on board.

[Calum Kerr]

Will the Minister clarify, especially given his comments earlier about what fibre means, whether that is fibre to the premises or access to superfast over copper?

[Matt Hancock]

To channel the Prime Minister, fibre means fibre. If hon. Members want to know what fibre means, it means fibre.

On the point about measuring BT and BDUK on take-up not access, both BT and BDUK are measured on take-up as well as access. Both are important. In fact, the contracts have take-up embedded in them, because the clawback from higher take-up allows money to be spent on further roll-out. The contracts that are being rolled out at the moment are from that clawback. The hon. Lady is therefore absolutely right that both take-up and access are important, and in the county-by-county figures from BDUK we have both take-up and access.

I also strongly agree with the hon. Lady on advertising. The Advertising Standards Authority has consulted for some time on descriptions of both “up to” speeds and pricing arrangements, both of which can be wholly misleading. I very much hope that the ASA will come out with new rules shortly—it has been working on that for some time. However, advertising is policed on a non-statutory basis and I think it would be a significant step for us to legislate on that matter because we do not want political interference in the rules around advertising. That is a step that I do not want to take. I do want the ASA to come to its conclusions as soon as possible. I hope that that answers all the questions that were asked on that point.

[Louise Haigh]

I appreciate that the Minister may not want to pre-empt the Ofcom consultation, but will there be any parliamentary scrutiny of the proposals that Ofcom will bring forward, or will we leave it to Ofcom and accept what it brings forward in terms of design, cost threshold and everything else we have debated this morning?

[Matt Hancock]

Of course there will be parliamentary scrutiny, because the Bill provides for the USO details to be put in place via secondary legislation. There will be scrutiny then and, as my hon. Friend the Member for Selby and Ainsty pointed out, there will also be the opportunity for Select Committees to scrutinise in their usual way. I hope that without reading the rest of my speech, which is all about how important and wonderful broadband is, the Committee will accept what I have said as a full response.

[Calum Kerr]

Perhaps the Minister missed my request. Will he reassure me that the schemes put in place will be designed to support national commitments such as the Scottish Government’s 30 megabits and other regional commitments? The issue is all down to how the USO is designed. If it is simply put out as a 10 megabit service—take it or leave it—it will not help, whereas a regional, flexible model such as the voucher scheme that BDUK has done before could provide the foundational funding.

[Matt Hancock]

In short, although the precise design is subject to the Ofcom consultation, my view is that the potential in the Bill for the USO is more ambitious than the Scottish Government’s, because theirs is to be delivered later and has already specified a speed. Instead, we have proposals coming in sooner and with uprating built in from the start.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

General conditions: switching communications provider

Question proposed, That the clause stand part of the Bill.

[Louise Haigh]

The Opposition are happy to support the clause. As we know, there are currently extremely low levels of switching in the market, with 5.9 million mobile users having never switched owing to concerns with the process and 2.5 million people saying they have experienced a major difficulty such as the amount of time it took or loss of their number. Every year, more than a million people are either double-billed or lose service in attempts to switch.

I understand that Ofcom has been considering how to make switching work for over eight years, and I am informed that the decision on switching has been delayed because of previous appeals and the current appeal regime, which we will come on to later in the Bill.

The powers for Ofcom to introduce gainer provider-led switching are welcomed by Opposition Members, as the figures clearly show there is little appetite to switch mobile provider at present, despite the clear lack of trust in mobile service providers themselves. In the last year, almost half of consumers have not switched providers; of those who have switched, 46% of them did so more than a year ago.

As Members are aware, at the moment switching providers is beyond arduous. Individuals have to contact their own provider and then the provider they wish to switch to. They have to terminate their old contract and then activate their new contract. This creates additional costs, time and hassle, and means that consumers are not able to compare all the deals available to them easily.

These proposals are welcome, but do the Government intend gainer provider-led switching to cover both mobiles and bundles? Clearly, many mobile networks also operate in other areas, such as internet and television, so would it not make it even easier for consumers if they could switch all at once if a better offer was provided? We look forward to hearing the Minister’s comments on that.

It would also be helpful if the Minister could put on the record what discussions he has had with Ofcom and mobile providers about the range and depth of information that will be available. Clearly, the lack of open data in this market holds back switching, but as we discussed earlier it also holds back investment and competition. It is very welcome to hear that BT has offered that information, but we would be grateful to hear exactly what data it is making available. Data on internet availability—such as costs, product offerings, location of cabinets and masts, access method, service quality, service faults, and planned network upgrade and dates—would all be enormously beneficial if they were published as open data.

That would be a considerable step towards creating a more effective market. It would not only help with switching but would enable an operator, community group or local authority to decide whether to build a new network for an area if there were no other plans to do so.

Nevertheless, these measures are very welcome and we on the Labour Benches are pleased to support them.

[Matt Hancock]

Consumers should be able to benefit from choice and competition in the UK communications markets, and I am very grateful for the cross-party support for these measures.

The central case is that changing suppliers should be quick and easy, and can benefit all. However, the reality is that no matter how attractive a deal may look, or how dissatisfied a customer may be with their current service, the rigmarole or the perceived rigmarole involved in changing provider deters switching. This clause makes it explicit that Ofcom has powers to facilitate easier switching in the communications sector.

It will be for Ofcom to consult on and define which communication services will be subject to switching processes. Ofcom is consulting on triple play—so fixed line, broadband and pay TV switching—with a view to simplifying the processes to switch multiple services as well. The clause will help to cement Ofcom’s power and will put in place processes to instil in consumers the confidence to shop around. That is the purpose of the clause.

There are ongoing discussions with Ofcom about the range and depth of information that is provided. Of course, the measure complements the information powers given to Ofcom in part 6 of the Bill, which we will come on to. So, once consumers have better information to hand about the services on offer, they can then switch to the service that is most suitable for them with confidence and the minimum of fuss.

Ofcom has existing powers to set conditions on electronic communication service providers, and this clause makes it explicit that Ofcom may set general conditions to facilitate switching. Such conditions could require providers to comply with defined processes, such as gaining provider-led switching. This approach would mean that consumers would no longer need to contact their existing provider when they want to move, and of course the gaining provider has the incentive to make these things as easy as possible.

I hope that all these things will help to boost switching and therefore make this market more competitive.

I beg to move that the clause stand part of the Bill.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3

Automatic compensation for failure to meet performance standards

Digital Economy Bill (Fifth sitting)

Matt Hancock Excerpts

Committee Debate: 5th sitting: House of Commons
Thursday 20th October 2016 Public Bill Committees

[The Chair]

The Minister has asked for and been granted the Chair’s permission to take his jacket off. If other right hon. or hon. Members also wish to take their jackets off, they have permission to do so.

[The Minister for Digital and Culture (Matt Hancock)]

I beg to move,

That the Order of the Committee of 11 October be amended as follows—

(1) In paragraph (1), after sub-paragraph (f) insert—

“(g) at 9.25 am on Tuesday 1 November;”.

(2) In paragraph (4), for “5.00 pm on Thursday 27 October” substitute “11.25 am on Tuesday 1 November”.

On Tuesday night, the House approved a motion to extend the Committee. This amendment will provide the additional time required thoroughly to scrutinise the Bill.

[Louise Haigh (Sheffield, Heeley) (Lab)]

I thank the Government for replacing the sitting that we lost on Tuesday because of the debate that they scheduled on the BBC motion. We do not oppose this amendment, but the Government have tabled more than 130 amendments to the Bill since we agreed the programme motion, in good faith, on the basis that the Bill has 84 clauses. It is now clear that the Bill was not ready to come to Committee.

Not only have the Government tabled more than 130 amendments but they have made significant announcements about who the regulator will be. We welcome the significant publication of the codes of practice that will accompany part 5, but we should have had them earlier in the process. It is the job of Her Majesty’s loyal Opposition to scrutinise the Bill and table amendments, and we will not accept any criticism if the Committee does not get through the whole Bill. The Government should be prepared to add time if we do not make that progress.

[Matt Hancock]

We have been very accommodating on the timings. Not only did we remove the Tuesday afternoon sitting at the request of the Labour party, but we added another sitting at the end. We cancelled the sitting last Thursday afternoon at the request of the Labour party, despite the fact that we wanted it to happen. In fact, the amount of scrutiny in Committee will be less than we originally proposed, at the request of the Labour party. We will not have any truck with that one.

[Kevin Brennan (Cardiff West) (Lab)]

How many amendments has the Minister tabled?

--- Later in debate ---

[Matt Hancock]

Amendments have been tabled by Members on both sides of the Committee. The argument that we should not table amendments in Committee is an argument for having Bills come out of the parliamentary process in exactly the same form as they go in. Even the Government would not make that case. The central point here is that we offered plenty of time, which was agreed on a cross-party basis, and the Labour party has asked to reduce that time. In considering whether there has been enough time in Committee, those who read the transcript in the weeks and months to come ought to recognise that the Government have been as accommodating as possible, but that we had to give way to the Labour party’s request for less time and scrutiny in Committee.

[Claire Perry (Devizes) (Con)]

We have a Minister who is engaging with the nuts and bolts of a Bill that was prepared long before he came to office. I, for one, am delighted that we have an active Minister who is determined to make this exceptionally important Bill as good as it can be. I do not accept this criticism. It is excellent that the Government are tabling these amendments and allowing time to consider them.

[Matt Hancock]

I obviously agree.

[Kevin Brennan]

I note that the Minister has not answered my question, and I am not sure that he even knows how many amendments he has tabled. Of course it is appropriate to table amendments, but it is not appropriate to introduce a Bill that is so unready that the Government have already tabled more than 130 amendments. That is not good practice, and he knows very well that it is not; I do not know why he is contesting that fact. We want to proceed with the business, but we put our point on the record. I hope that he and his officials take note.

[Matt Hancock]

People reading the transcript will notice that we have eaten up another five minutes discussing the process.

[Kevin Brennan]

You were two minutes late when we started.

[Matt Hancock]

No. I want to get on to the scrutiny of the Bill, but I will take on board the Labour party’s point that it does not think amendments are a good idea. I think the whole point of the parliamentary process is to make amendments. With that, I hope that we can get on with the Bill.

[Kevin Brennan]

On a point of order, Mr Stringer. If the Minister thinks that that is the attitude he should adopt in Committee to the Opposition when they are making a legitimate point about how ready the Bill can be for scrutiny if he has to introduce more than 130 amendments, he has got a lot to learn about how this place works. I put it clearly on the record that we think it is vital that amendments to a Bill are discussed, but the purpose of Committee is mainly is to ensure that the Opposition have that opportunity.

--- Later in debate ---

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I will not repeat the comments I made previously, but I want to focus again on new clause 2. I was explaining that consumers often face an impossible position. I gave an example from my constituency of something that happens around the UK. Indeed, uSwitch produced a report this morning that shows that across the UK nearly a third of consumers have either patchy or no signal inside their home, which is a real deficit in the product that they thought they were buying. Some of that will be down to there being no reasonable coverage in the area, and some of it will be down to other factors, but it is often down to a failure of the telecoms company that provides the service.

I will repeat the example that I gave from my constituency, because I think it is important. In Fort Augustus, my constituents had to do without their mobile telephones between January and May 2015, even though they had contracts, because the operator could not fix a problem. They were told that the only way to deal with that was to pay £200 to cancel the contract. That is flatly unacceptable. I have listened carefully to what has been said this morning; the Government stated clearly that they want to make the Bill as good as it can be, so let us make sure that we put in the new clause.

I first raised this issue with the UK Government in July 2015, and I was told at that time that there was merit in what I was saying. Ofcom accepted that, and said that it, too, felt that something should be done. The Minister’s predecessor, the right hon. Member for Wantage (Mr Vaizey), said in November 2015:

“We have a number of principles when we look at this market. One is that consumers should not be trapped in contracts in which they are not getting the coverage they expected to get. Ofcom is discussing with mobile providers the possibility of their offering redress, which would include allowing customers to leave a contract when service was unacceptable.”—[Official Report, 24 November 2015; Vol. 602, c. 1335.]

Let us please ensure that we do something about that, and put the new clause into the Bill.

[Matt Hancock]

The clause is all about making it easier for customers to claim compensation for service failures. This is all part of the fact that broadband is now a utility rather than a “nice to have”. Amendment 60 seeks to make it explicit that Ofcom can set general conditions to require communication providers to allow an end user to terminate a contract when a service repeatedly fails. New clause 2, which we have just been talking about, would specify that consumers can terminate a contract if mobile coverage is substandard at the main residence. There are already a number of options available to consumers who wish to cancel a contract due to poor coverage or connection, and we do not think that those additional options are necessary.

Before purchasing a contract, consumers can use Ofcom’s coverage checker, and if a contract is purchased online or over the phone, and the consumer finds that the coverage is a problem, they can cancel during the statutory cooling-off period—the first 14 days. Some companies offer extended periods, such as a 30-day network guarantee, during which customers can test the coverage and, should they be dissatisfied, cancel without penalty. Customers are entitled to leave a contract if they are mis-sold a service—if they are advised that they would get coverage in a certain location, but subsequently discover that they cannot.

[Drew Hendry]

I am listening carefully to the Minister. Those protections are important, and if somebody is mis-sold a product at the point of sale, a cooling-off period is valuable. However, the Minister is not addressing situations such as that in the Fort Augustus example that I gave. The people who got that contract were not able to get the service after the cooling-off period. That is happening across the UK.

[Matt Hancock]

It is reasonable that the period in which people can cancel be limited, because companies have to know, once they have entered into a contract, that it is valid. I think that the way that is done currently, through cooling-off periods, is appropriate. There is also a broadband speed code of practice, which is about the speed that people get. As of the end of September, seven providers have implemented the business broadband speeds code of practice, which allows business customers to exit a contract without penalty if download speeds are not at the guaranteed minimum.

[Drew Hendry]

I hear very clearly what the Minister says, but this is about people who have bought into mobile contracts and are not able to get coverage. Does the Minister think it is acceptable that somebody who is without a service for four months has to pay £200 to cancel their contract?

[Matt Hancock]

No, I do not, but I do think it is useful for the period in which contracts can be cancelled to be limited. The law currently provides for that.

Amendment 84 seeks to define the parameters of any general condition that Ofcom sets regarding compensation to customers. It is our intention that providers should offer prompt and proportionate compensation when their services do not meet agreed standards. It is right that any decision by Ofcom to set general conditions needs to be based on evidence drawn from its consultation process and applied proportionately. In June, Ofcom issued a call for input on the aim and scope of the automatic compensation scheme, and it will consult on the introduction of the regime in early 2017. We support Ofcom in that approach. I think that the way the clause is drafted is the right way to drive the policy, but until we have the benefit of Ofcom’s consultation, it would be wrong to constrain the parameters of a general compensation condition.

With that explanation, and given my point that there is already a time-limited period in which contracts can be cancelled, I hope that hon. Members will withdraw their amendments.

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

I am disappointed but not surprised that the Minister will not consider the change. There seems to be an unwillingness to amend the Bill other than by adopting one of the hundreds of Government amendments. I hoped that we might enter into a more constructive spirit.

We agree that the clause itself is a good move. As I said in my opening remarks, there is an opportunity to go to a high level of granularity—I contrasted the black-and-white, binary nature of telephony to the complex world of broadband—and I would like the Minister to assure us that the devolved Administrations will play a key role in that. Scotland is a disproportionately rural environment, and we must ensure that the rural voice is heard, although these issues are not unique to Scotland, or to my constituency, or that of my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey. This must go to a granular level and incentivise good performance, rather than provide compensation, as is currently set out in the Bill. All that our constituents want is a good level of service, rather than some money back for poor service.

I encourage the Government to provide reassurance about engagement with devolved Administrations and, where applicable, regions of England and Wales. The Government like to point to other areas where certain points are already covered, but I do not see the harm in putting these things in the Bill. Perhaps the Minister can tell me why he thinks that is a bad idea, given that he says that the issues are already covered in other ways. We support the clause, but we will press our amendment 60 and new clause 2 to a vote.

[Matt Hancock]

I hope I can give assurances that might prevent the hon. Gentleman from pressing his amendment to a vote.

Ofcom’s consultations will of course include the Scottish Government, as well as rural areas of the rest of the United Kingdom. My explanation for not wanting to legislate through the Bill for redresses already provided for in law is that it is generally good practice for a particular redress to be covered in law just once. We might otherwise end up with a problem of overlap, which can make it harder to claim redress. That is why I have set out where I think redress is already available. Although of course we want to ensure that people who cannot get coverage or do not get good enough broadband speeds through the contract that they have signed up to have the opportunity to come out of that contract, we should not double legislate.

Question put, That the amendment be made.

--- Later in debate ---

Question proposed, That the clause stand part of the Bill.

[Matt Hancock]

Clause 3 will make it easier for customers to claim compensation for service failures and, we hope, help improve customer satisfaction and drive the sector to deliver on its service commitments. The clause is about providing not only compensation but incentives that we hope will make such compensation unnecessary. The clause makes explicit Ofcom’s power to set general conditions on communications providers, requiring them to adhere to automatic compensation regimes as defined by Ofcom. It is part of Ofcom’s remit to protect the interests of end-users.

Telecommunications customers increasingly view their digital connectivity as essential, just as power and water are essential. The clause helps to deliver on those higher expectations. According to research by Ofcom, customers suffering from a loss of broadband service incur on average a direct financial cost of £18, spend an average of four hours trying to resolve the issue, and have to contact their provider an average of three times. Automatic compensation will mean that customers will receive standardised compensation for specific service failures, either without having to complain directly or through a streamlined process.

Ofcom has made a call for inputs and will be consulting with customers, customer groups, industry and all parties that want to enter the consultation, including devolved Governments. It will define which services and service quality issues will be eligible, how much the compensation will be, and the fault-identification and payment processes. The consultation process will ensure that the compensation scheme is fair and proportionate, mitigating the risk of additional costs being passed on to customers.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

The electronic communications code

Question proposed, That the clause stand part of the Bill.

[Louise Haigh]

Clause 4 contains changes to the highly complex electronic communications code, as we heard earlier in the debate. We recognise and support the amendments tabled in the Minister’s name, which seek to clarify the web of legal technicalities and ensure that it interconnects with the existing legal landscape; that the new code does not infringe on access to land where the person does not agree to that access being obstructed; and that subsisting agreements continue in place.

Our primary concern is to ensure that the significant savings that the clause will clearly create for the mobile industry are invested in their entirety into infrastructure and roll-out for the public benefit.

We would also like to explore what consideration has been given to how we can ensure that independently-owned infrastructure can have a significant role in the sector and, if possible, make up a larger proportion of our infrastructure in line with the global market. The much-discussed difficulties of the broadband roll-out highlight the issues when infrastructure is owned by a private monopoly. We should seek to break up this market as much as possible. For that to happen, investment incentives for independent infrastructure need to be maintained as they are under the current ECC.

The assets of these small infrastructure providers, which are a valuable part of the market, are dependent on land. We would like a commitment from the Minister that further inevitable redrafts continue to carve out electrical communications apparatus from the definition of land. The benefit of independent infrastructure is the much higher capacity available for all networks to use on an open and non-discriminatory basis. Operators in this space filled more substantial towers, which send signals much further than an average mobile operator-owned mast. That is particularly important in rural areas, where more than half their investments have been made. More networks operating from better infrastructure enable transformational improvements in capacity.

The sector also unlocks significant new inward investment with a low cost of capital from the same funds that invest in UK energy, transport and utility assets. Clearly, significant investment is needed in the UK’s wireless infrastructure. Improving mobile connectivity needs substantial and sustained investment. New communication masts are needed in rural and suburban areas to improve coverage. In urban areas, to support the exponential growth in mobile data usage and provide ubiquitous high-speed connectivity, 5G networks will need hundreds of thousands of small cells connected with a dense network of fibre.

Analysis from Ernst & Young highlights that independently operated towers across Europe and North America host, on average, twice as many networks as vertically-owned towers. The UK is now lagging behind competitive telecoms markets around the world in respect of adopting the more efficient independent model; more than 60% of global and 80% of US masts are now operated independently of the networks that use them. Independent infrastructure can deliver investment in a way that maximises its productivity and enables the greatest level of connectivity.

Furthermore, we are aware that the industry has concerns about the clause given what is known as “stopping up”. That is the procedure that highway authorities use to decommission stretches of public highway. Under the new code, when streets are stopped up, the occupier of the land can give notice to quit and mobile operators would not then be able to cover the cost of relocation.

As I understand it, unlike the other reforms, this reform is intended to apply retrospectively, so we would be interested to hear the Minister’s thinking. More broadly on the clause, clearly the Minister and officials are attempting to make revisions to this enormously complex code, which obstructs or interferes with the means of access to this land.

There is a broader point. Despite the additional powers that the Bill provides to telcos over the landowners, in practice there absolutely must remain a solid working relationship between the two. As we heard in evidence last week, if good relationships are not continued, the industry might as well just go home for the next four to five years and forget about further expanding the network, such is the importance of good relationships and access to allow for upgrading and installing new infrastructure.

Industry evidence suggests that, on average, infrastructure facilities will need to be accessed every 12 days, so we must ensure that the legislation strikes the right balance between increasing access, which will help to upgrade the network, and maintaining a good relationship with the landowners who will help that roll-out.

The clause is intended to improve mobile coverage, so I will go back to something that the Minister said on Tuesday in Committee:

“That is why delivery on this commitment by the MNOs”—

that is, by the mobile network operators—

“is so important. The deal as agreed, which is a legally binding commitment, will result in nearly 100% of UK premises receiving 3G/4G data coverage, and 98% coverage to the UK landmass by the end of 2017.”—[Official Report, Digital Economy Public Bill Committee, 18 October 2016; c. 124.]

Those figures were not immediately familiar to me at the time. As I understand it, they were not in the legal agreement between the Government and the mobile network operators, which only requires guaranteed voice and text to each operator by 2017 to 90% and full coverage to 85% by 2017.

I believe that the Minister may have been referring to the new emergency service contract, which is being delivered by EE. That is exactly the point I was making: that is only one operator. Furthermore, is it not the case that currently only 46% of premises have access to 4G from all mobile network operators and that there remains a substantial 7%, or 1.5 million homes nationwide, that do not have basic voice or text coverage across the three networks?

The roll-out of this vital infrastructure by EE for the benefit of emergency services is obviously welcome and the coverage figures for the UK landmass are impressive. However, that does not constitute universal coverage, as it will be only for the benefit of EE customers, unless some kind of agreement that we are not aware of has been reached. Clearly, although that means that data coverage is reaching all corners of the UK, there is no parity of provision across the mobile network operators and that near-universal coverage, which is so needed, is still far from a reality.

New clause 20, to which we will return later, seeks to do something about that. It would empower the Secretary of State to commission a strategic review of mobile network coverage and to consider measures to enable universal coverage for residences across all telecommunications providers. That would enable the Government to take a second look at ways, including national roaming, genuinely to extend coverage across 3G and 4G to all network providers, because, as the Minister said in Committee on Tuesday, it is no good having full coverage with one provider if the others are not covered.

--- Later in debate ---

My final point is that although there has been some consultation with the Scottish Government, that should continue and deepen. I am sure that in this room we are all aware—one does not have to be an expert, as the right hon. Member for Surrey Heath (Michael Gove) would put it, to know—that Scots law is different from English law. Yesterday, he did not know that education, the NHS and other matters were devolved, but that is by the bye. With Scots law, we have to be particularly careful, so I ask the Department and the Government to ensure that they continue that dialogue and that, in areas where there is an impact on Scots law, we are properly and fully consulted so that it works as we intended.

[Matt Hancock]

Clause 4 amends the Telecommunications Act 1984 and the Communications Act 2003 to give force to the new electronic communications code, which is in schedule 1 to the Bill. That includes repealing the existing code, which is currently set out in schedule 2 to the 1984 Act and schedule 3A to the 2003 Act. So in a sense the clause is short because it gives effect to a lot of detail set out elsewhere.

I will answer some of the questions. Of course we consult the Scottish Government on many of these matters, just as we consult local authorities all around England and the Welsh and Northern Ireland Governments. Communications are a reserved matter, but obviously how they are delivered in each jurisdiction is important.

Let me address the point about 5G and the importance of fibre. Fibre is the future. A very strong fibre backbone is very important for the roll-out of 5G; hon. Members on both sides of the Committee agree on that. However, that does mean that getting down the cost of sites is important. I agree with the hon. Member for Berwickshire, Roxburgh and Selkirk that this is not about single mobile phone providers having sites. Wireless infrastructure providers make up one third of the market. That is lower than in other countries, but it is important.

This comes down to the question of cost. It is wrong to argue that because some of these sites are hosted by the Forestry Commission and other parts of the public sector, we should not reduce the cost and make it easier to roll out infrastructure; you can’t have your cake and eat it. We want to make it easier to roll out infrastructure. That is why we think it is good that the costs come down. However, most of these deals will remain commercial deals. What we are putting in place is a lower backstop, which I think is the right approach.

On the points made about the MNO deal for coverage, the hon. Member for Sheffield, Heeley is precisely right in her analysis of what I said. The figures that I gave on Tuesday are for the expected national result of the individual contractual requirements. I agree with her, of course, that it is better to have all MNOs available in one place, but having one rather than none is the first and most important step.

Dealing with notspots is the most important stage; the next is dealing with partial notspots: areas of the country covered by some but not all providers. That is why there is a difference between particular contracts and the figures that I gave, although EE’s contract—partly because it has the emergency service contract, which will come into force at the end of next year—has the widest expected future coverage of all the MNOs. The hon. Lady is exactly right. I would just say that we must not let the best be the enemy of the good; let us keep the roll-out going.

On the point that the hon. Lady made about stocking up, we are engaging with stakeholders to consider the concerns, and we will ensure that there is no retrospective effect. On the distinction between land and apparatus, we think that there is one, and we want to ensure that the revised code delivers access to viable sites. That is fundamental to the legal framework underpinning the deployment of electronic communication apparatus, and it must be the case regardless of whether it is on land owned by the operator or any other market player.

There is clearly a delicate balance to be achieved when considering what must be left purely to commercial agreement and what should be regulated in the code. Restricting the scope of legislation too far is likely to be counterproductive to ensuring that viable land remains on the market. We believe that the revised code achieves that balance effectively. I hope that I have made the case effectively for the revised code, and I hope that it helps ensure that we can roll out wireless infrastructure more widely across Britain. I commend the clause to the Committee.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.



Schedule 1

The electronic communications code

[Matt Hancock]

I beg to move amendment 12, in schedule 1, page 82, line 29, leave out “and keep”.

The code will deal with cases where apparatus has already been installed on land. Amendments 12, 13 and 14 therefore provide for installing apparatus and keeping apparatus on land to be treated separately, and for rights described in sub-paragraphs (c), (ca) and (d) to be described consistently with this.

[The Chair]

With this it will be convenient to discuss Government amendments 13 to 45.

[Matt Hancock]

This is a series of Government amendments to improve the new code. Amendments 12 to 14 are minor drafting amendments to clarify that the new electronics communications code will allow already installed apparatus to be kept on land, and to ensure consistency of terminology in paragraph 3 of the code. The remaining amendments are to part 6 of the new code, which deals with the right to remove electronic communications apparatus from land and related rights.

Amendment 24 inserts a new paragraph 36(a) into the code to provide that an owner or occupier of neighbouring land has a right to remove apparatus from other land where it obstructs access. If apparatus is installed on land A, the owner or occupier of land B can require removal where it obstructs or interferes with access to their own land. Amendment 25 inserts another new paragraph into the code to provide that an owner or occupier of neighbouring land also benefits from the right to require an operator to disclose whether it owns the apparatus, as it is important for neighbours to know that.

Amendments 15, 18, 26 to 30 and 32 to 35 are consequential on amendment 24 and 25. Amendment 37 inserts new paragraphs 38(a) and (b) to provide that the right to require removal of apparatus applies not only to those with an interest in land but also to a person whose right to require removal of apparatus arises from statute or other legal basis. It is necessary to establish the procedures by which such parties can require the removal of the electronic communications apparatus.

Amendments 16, 23, 40, 41, 43 and 45 are consequential on amendment 37. Amendment 38 clarifies how a person with an interest in the land can, when there is no longer apparatus on that land, ask the court to restore the land to its original condition, and amendments 19, 20, 39, 40 and 44 are consequential on that.

Amendment 31 clarifies that a landowner or occupier can require the removal of apparatus only in accordance with the procedure set out in the code. Amendment 36 ensures that proceedings before a court to enforce removal cannot finally be determined until any application for new rights made by the operator has been concluded, and amendment 17 is consequential on that.

Paragraph 36 of the new code provides for conditions that must be met before a landowner has the right to require the removal of apparatus from their land, and amendment 21 clarifies paragraph 36(2). Amendment 22 clarifies that a person whose code agreement was not subject to part 5 can apply to remove electronic communications apparatus when the code rights have ceased to apply to them.

Amendment 12 agreed to.

Amendments made: 13, in schedule 1, page 82, line 30, at end insert—

(aa) to keep installed electronic communications apparatus which is on, under or over the land,”.

The code will deal with cases where apparatus has already been installed on land. Amendments 12, 13 and 14 therefore provide for installing apparatus and keeping apparatus on land to be treated separately, and for rights described in sub-paragraphs (c), (ca) and (d) to be described consistently with this.

Amendment 14, in schedule 1, page 83, line 2, leave out from “installation” to end of line 4 and insert

“of electronic communications apparatus on, under or over the land or elsewhere;

(ca) to carry out any works on the land for or in connection with the maintenance, adjustment, alteration, repair, upgrading or operation of electronic communications apparatus which is on, under or over the land or elsewhere,”.

The code will deal with cases where apparatus has already been installed on land. Amendments 12, 13 and 14 therefore provide for installing apparatus and keeping apparatus on land to be treated separately, and for rights described in sub-paragraphs (c), (ca) and (d) to be described consistently with this.

Amendment 15, in schedule 1, page 86, line 26, leave out

“The reference in sub-paragraph (2)”

and insert

“A reference in this code”.

This applies the extended meaning of “means of access to or from land” across the code. It is consequential on amendment 24.

Amendment 16, in schedule 1, page 95, line 2, after “36” insert

“or as mentioned in paragraph 38A(1)”.

This is consequential on amendment 37.

Amendment 17, in schedule 1, page 95, line 10, leave out “or” and insert “and”.

This is consequential on amendment 36.

Amendment 18, in schedule 1, page 102, line 1, leave out

“with an interest in land”.

This is consequential on amendment 37.

Amendment 19, in schedule 1, page 102, line 3, at end insert

“or the restoration of land,”.

This is consequential on amendment 38.

Amendment 20, in schedule 1, page 102, line 6, after “removal” insert

“of apparatus or restoration of land”.

This is consequential on amendment 38.

Amendment 21, in schedule 1, page 102, line 14, after “never” insert

“since the coming into force of this code”.

This provides for a condition for having a right to require removal of apparatus to be met if the only right there has been to keep the apparatus on the land was a right that came to an end under the code that Schedule 1 to the Bill replaces, or that ceased under that code to be binding on the landowner.

Amendment 22, in schedule 1, page 102, line 24, at end insert “, or

( ) where the right was granted by a lease to which Part of this code does not apply.”.

Part 5 of the code (termination of agreements creating code rights) does not apply to certain leases governed by landlord and tenant law. The amendment provides for the ending of code rights under such a lease and under Part 5 to be treated in the same way for the purposes of rights to require removal of apparatus.

Amendment 23, in schedule 1, page 103, line 17, at end insert—

‘( ) This paragraph does not affect rights to require the removal of apparatus under another enactment (see paragraph 38A).”.

This is consequential on amendment 37.

Amendment 24, in schedule 1, page 103, line 17, at end insert—

“When does a landowner or occupier of neighbouring land have the right to require removal of electronic communications apparatus?

36A (1) A landowner or occupier of any land (“neighbouring land”) has the right to require the removal of electronic communications apparatus on, under or over other land if both of the following conditions are met.

(2) The first condition is that the exercise by an operator in relation to the apparatus of a right mentioned in paragraph 13(1) interferes with or obstructs a means of access to or from the neighbouring land.

(3) The second condition is that the landowner or occupier of the neighbouring land is not bound by a code right within paragraph 3(f) entitling an operator to cause the interference or obstruction.

(4) A landowner of neighbouring land who is not the occupier of the land does not meet the second condition if—

(a) the land is occupied by a person who—

(i) conferred a code right (which is in force) entitling an operator to cause the interference or obstruction, or

(ii) is otherwise bound by such a right, and

(b) that code right was not conferred in breach of a covenant enforceable by the landowner.

(5) In the application of sub-paragraph (4)(b) to Scotland the reference to a covenant enforceable by the landowner is to be read as a reference to a contractual term which is so enforceable.”.

New paragraph 36A makes provision for a landowner or occupier of neighbouring land to have a right to require removal of apparatus that obstructs or interferes with a means of access to that land.

Amendment 25, in schedule 1, page 103, line 27, at end insert—

‘(1A) A landowner or occupier of neighbouring land may by notice require an operator to disclose whether—

(a) the operator owns electronic communications apparatus on, under or over land that forms (or, but for the apparatus, would form) a means of access to the neighbouring land, or uses such apparatus for the purposes of the operator’s network, or

(b) the operator has the benefit of a code right entitling the operator to keep electronic communications apparatus on, under or over land that forms (or, but for the apparatus, would form) a means of access to the neighbouring land.”.

This is consequential on amendment 24. Paragraph 37(1A) provides for a landowner or occupier of neighbouring land to have the rights in paragraph 37 to require an operator to disclose whether it owns apparatus or has code rights relevant to the neighbouring land.

Amendment 26, in schedule 1, page 103, line 33, after “(1)” insert “or (1A)”.

This is consequential on amendment 25.

Amendment 27, in schedule 1, page 103, line 34, after “landowner” insert “or occupier”.

This is consequential on amendment 25.

Amendment 28, in schedule 1, page 103, line 37, after “landowner” insert “or occupier”.

This is consequential on amendment 25.

Amendment 29, in schedule 1, page 103, line 38, after “landowner” insert “or occupier”.

This is consequential on amendment 25.

Amendment 30, in schedule 1, page 103, line 47, after “landowner” insert “or occupier”.

This is consequential on amendment 25.

Amendment 31, in schedule 1, page 104, line 2, leave out from beginning to “requiring” in line 9 and insert—

(1) The right of a landowner or occupier to require the removal of electronic communications apparatus on, under or over land, under paragraph 36 or 36A, is exercisable only in accordance with this paragraph.

(2) The landowner or occupier may give a notice to the operator whose apparatus it is”.

The amendment clarifies that a landowner or occupier can require removal of electronic communications apparatus only in accordance with the procedure set out in paragraph 38.

Amendment 32, in schedule 1, page 104, line 23, after “landowner” insert “or occupier”.

This is consequential on amendment 24.

Amendment 33, in schedule 1, page 104, line 33, after “landowner” insert “or occupier”.

This is consequential on amendment 24.

Amendment 34, in schedule 1, page 104, line 40, after “landowner” insert “or occupier”.

This is consequential on amendment 24.

Amendment 35, in schedule 1, page 104, line 41, after “landowner” insert “or occupier”.

This is consequential on amendment 24.

Amendment 36, in schedule 1, page 104, line 42, at end insert—

‘( ) On an application under sub-paragraph (6) or (7) the court may not make an order in relation to apparatus if an application under paragraph 19(3) has been made in relation to the apparatus and has not been determined.”.

This provides that the court cannot order removal of apparatus under Part 6 of the code if there is an outstanding application under paragraph 19 (to keep the apparatus installed) that has not been determined.

Amendment 37, in schedule 1, page 104, line 42, at end insert—

“How are other rights to require removal of apparatus enforced?

38A (1) The right of a person (a “third party”) under an enactment other than this code, or otherwise than under an enactment, to require the removal of electronic communications apparatus on, under or over land is exercisable only in accordance with this paragraph.

(2) The third party may give a notice to the operator whose apparatus it is, requiring the operator—

(a) to remove the apparatus, and

(b) to restore the land to its condition before the apparatus was placed on, under or over the land.

(3) The notice must—

(a) comply with paragraph 85 (notices given by persons other than operators), and

(b) specify the period within which the operator must complete the works.

(4) The period specified under sub-paragraph (3) must be a reasonable one.

(5) Within the period of 28 days beginning with the day on which notice under sub-paragraph (2) is given, the operator may give the third party notice (“counter-notice”)—

(a) stating that the third party is not entitled to require the removal of the apparatus, or

(b) specifying the steps which the operator proposes to take for the purpose of securing a right as against the third party to keep the apparatus on the land.

(6) If the operator does not give counter-notice within that period, the third party is entitled to enforce the removal of the apparatus.

(7) If the operator gives the third party counter-notice within that period, the third party may enforce the removal of the apparatus only in pursuance of an order of the court that the third party is entitled to enforce the removal of the apparatus.

(8) If the counter-notice specifies steps under paragraph (5)(b), the court may make an order under sub-paragraph (7) only if it is satisfied—

(a) that the operator is not intending to take those steps or is being unreasonably dilatory in taking them; or

(b) that taking those steps has not secured, or will not secure, for the operator as against the third party any right to keep the apparatus installed on, under or over the land or to re-install it if it is removed.

(9) Where the third party is entitled to enforce the removal of the apparatus, under sub-paragraph (6) or under an order under sub-paragraph (7), the third party may make an application to the court for—

(a) an order under paragraph 39(1) (order requiring operator to remove apparatus etc), or

(b) an order under paragraph 39(2) (order enabling third party to sell apparatus etc).

(10) If the court makes an order under paragraph 39(1), but the operator does not comply with the agreement imposed on the operator and the third party by virtue of paragraph 39(5), the third party may make an application to the court for an order under paragraph 39(2).

(11) An order made on an application under this paragraph need not include provision within paragraph 39(1)(b) or (2)(d) unless the court thinks it appropriate.

(12) Sub-paragraph (9) is without prejudice to any other method available to the third party for enforcing the removal of the apparatus.

How does paragraph 38A apply if a person is entitled to require apparatus to be altered in consequence of street works?

38B (1) This paragraph applies where the third party’s right in relation to which paragraph 38A applies is a right to require the alteration of the apparatus in consequence of the stopping up, closure, change or diversion of a street or road or the extinguishment or alteration of a public right of way.

(2) The removal of the apparatus in pursuance of paragraph 38A constitutes compliance with a requirement to make any other alteration.

(3) A counter-notice under paragraph 38A(5) may state (in addition to, or instead of, any of the matters mentioned in paragraph 38A(5)(b)) that the operator requires the third party to reimburse the operator in respect of any expenses incurred by the operator in or in connection with the making of any alteration in compliance with the requirements of the third party.

(4) An order made under paragraph 38A on an application by the third party in respect of a counter-notice containing a statement under sub-paragraph (3) must, unless the court otherwise thinks fit, require the third party to reimburse the operator in respect of the expenses referred to in the statement.

(5) Paragraph 39(2)(b) to (e) do not apply.

(6) In this paragraph—

“road” means a road in Scotland;

“street” means a street in England and Wales or Northern Ireland.”.

New paragraphs 38A and 38B provide for a right to require removal of electronic communications apparatus to be available to not only to a person with an interest in land (see paragraph 36(1)) but also to a “third party” whose right to require removal of apparatus arises pursuant to an enactment, or on some other legal basis.

Amendment 38, in schedule 1, page 104, line 42, at end insert—

“When can a separate application for restoration of land be made?

38C (1) This paragraph applies if—

(a) the condition of the land has been affected by the exercise of a code right, and

(b) restoration of the land to its condition before the code right was exercised does not involve the removal of electronic communications apparatus from any land.

(2) The occupier of the land, the owner of the freehold estate in the land or the lessee of the land (“the relevant person”) has the right to require the operator to restore the land if the relevant person is not for the time being bound by the code right.

This is subject to sub-paragraph (3).

(3) The relevant person does not have that right if—

(a) the land is occupied by a person who—

(i) conferred a code right (which is in force) entitling the operator to affect the condition of the land in the same way as the right mentioned in sub-paragraph (1), or

(ii) is otherwise bound by such a right, and

(b) that code right was not conferred in breach of a covenant enforceable by the relevant person.

(4) In the application of sub-paragraph (3)(b) to Scotland the reference to a covenant enforceable by the relevant person is to be read as a reference to a contractual term which is so enforceable.

(5) A person who has the right conferred by this paragraph may give a notice to the operator requiring the operator to restore the land to its condition before the code right was exercised.

(6) The notice must—

(a) comply with paragraph 85 (notices given by persons other than operators), and

(b) specify the period within which the operator must complete the works.

(7) The period specified under sub-paragraph (6) must be a reasonable one.

(8) Sub-paragraph (9) applies if, within the period of 28 days beginning with the day on which the notice was given, the landowner and the operator do not reach agreement on any of the following matters—

(a) that the operator will restore the land to its condition before the code right was exercised;

(b) the time at which or period within which the land will be restored.

(9) The landowner may make an application to the court for—

(a) an order under paragraph 39(1A) (order requiring operator to restore land), or

(b) an order under paragraph 39(2A) (order enabling landowner to recover cost of restoring land).

(10) If the court makes an order under paragraph 39(1A), but the operator does not comply with the agreement imposed on the operator and the landowner by virtue of paragraph 39(5), the landowner may make an application to the court for an order under paragraph 39(2A).

(11) In the application of sub-paragraph (2) to Scotland the reference to a person who is the owner of the freehold estate in the land is to be read as a reference to a person who is the owner of the land.”.

New paragraph 38C makes provision about restoration of land where restoration does not involve the removal of apparatus.

Amendment 39, in schedule 1, page 105, line 2, at end insert—

‘(1A) An order under this sub-paragraph is an order that the operator must, within the period specified in the order, restore the land to its condition before the code right was exercised.”.

This is consequential on amendment 38.

Amendment 40, in schedule 1, page 105, line 3, after “landowner” insert

“, occupier or third party”.

This is consequential on amendments 24 and 37.

Amendment 41, in schedule 1, page 105, line 15, after “landowner” insert

“, occupier or third party”,

This is consequential on amendments 24 and 37.

Amendment 42, in schedule 1, page 105, line 15, at end insert—

‘(1A) An order under this sub-paragraph is an order that the landowner may recover from the operator the costs of restoring the land to its condition before the code right was exercised.”.

This is consequential on amendment 38.

Amendment 43, in schedule 1, page 105, line 16, after “paragraph” insert

“on an application under paragraph 38”.

This is consequential on amendments 24 and 37.

Amendment 44, in schedule 1, page 105, line 24, after “(1)” insert “or (1A)”.

This is consequential on amendment 38.

Amendment 45, in schedule 1, page 105, line 25, after “landowner” insert

“, occupier or third party”.—(Matt Hancock.)

This is consequential on amendments 24 and 37.

Question proposed, That the schedule, as amended, be the First schedule to the Bill.

[Matt Hancock]

This schedule is the reformed electronic communications code, which is to be inserted into the Communications Act 2003. The debate we have just had on clause 4, which repeals the previous code, explains precisely why the new code is important. This is all about making sure that the law is up to date. The code was established by the 1984 Act and has not been substantively amended since then. The legal framework just has not kept pace with rapid changes. Our debate on clause 4 demonstrates why it is important to get this right.

The revised code forms part of a series of measures to improve this country’s communications infrastructure. We have worked closely with the devolved Administrations to make sure that the code will work effectively in all jurisdictions. The code has 17 parts, each dealing with the rights and responsibilities of site providers and operators, and I will quickly go through each part.

Part 1 is about the concepts in the code, including some of the definitions. Part 2 sets out how code rights are conferred and on whom they are binding. Part 3 sets out the automatic rights to assign code rights and addresses the upgrading and sharing of apparatus. Part 4 sets out the circumstances in which a court can impose an agreement where one cannot be reached between the parties—that is a crucial element of the code—including the procedures to be followed in such circumstances.

Parts 5 and 6 address how parties can bring an agreement to an end and how landowners can have apparatus removed. Parts 7 to 10 address the regime in place for land that requires distinct treatment due to its particular characteristics, such as transport land. Parts 11 and 12 provide rights for third parties to object to apparatus. Part 13 addresses the right to lop trees. Parts 14 and 15 make provision for compensation notices under the code. Part 16 provides for enforcement and dispute resolution, and it introduces the power for the Secretary of State to make regulations to transfer jurisdiction on code cases to the Upper Tribunal (Lands Chamber). Lastly, part 17 contains supplementary provisions, including on general interpretation, and addresses the definition of “land”.

The crucial reason for the changes is that part 2 is structured to underpin consensual agreements for code rights. As we discussed, consensual agreements are important, but, where agreement cannot be reached, part 4 means that a court has the power to impose code rights against a site provider in favour of an operator. The court can calculate the price an operator should pay a site provider for code rights.

--- Later in debate ---

The electronic communications code: transitional provision

[Matt Hancock]

I beg to move amendment 46, in schedule 2, page 138, line 17, leave out “under paragraph 2(1)” and insert—

“for the purposes of paragraph 2 or 3”.

This provides that the subsisting agreements covered by the transitional provisions in Schedule 2 include agreements under paragraph 3(1) of the existing code (agreement to confer a right to obstruct access) as well as paragraph 2(1).

[The Chair]

With this it will be convenient to discuss Government amendments 47 to 54 and Government amendment 1.

[Matt Hancock]

This is a group of technical amendments. Amendments 46 to 54 are to schedule 2, which contains transitional arrangements for moving from the existing code to the new code introduced by the Bill. The amendments will clarify and simplify the transitional provisions in the schedule. Amendment 1 is a drafting change to make clear that the power in clause 5 to make transitional provision in connection with the new electronic communications code includes the power to make saving provision.

Amendment 46 agreed to.

[The Chair]

With the leave of the Committee, I propose that we combine the questions on Government amendments 47 to 54 as a single question.

Amendments made: 47, in schedule 2, page 138, line 28, at end insert—

‘(2) A person who is bound by a right by virtue of paragraph 2(4) of the existing code in consequence of a subsisting agreement is, after the new code comes into force, treated as bound pursuant to Part 2 of the new code.’

This provides that a person who was bound by a right pursuant to a subsisting agreement (see paragraph 2(4) of the existing code) continues to be treated as bound by that agreement, under the provisions of Part 2 of the new code (see paragraph 10 of the new code).

Amendment 48, in schedule 2, page 138, line 31, after “are” insert “— (a)”

Amendments 48, 49 and 50 are consequential on amendment 46 and provide for references in the new code to a “code right” in relation to a subsisting agreement to have the corresponding meaning depending on whether the agreement was for the purposes of paragraphs 2(1) or (3(1) of the existing code.

Amendment 49, in schedule 2, page 138, line 31, leave out “the agreement” and insert—

“an agreement for the purposes of paragraph 2 of the existing code”

Amendments 48, 49 and 50 are consequential on amendment 46 and provide for references in the new code to a “code right” in relation to a subsisting agreement to have the corresponding meaning depending on whether the agreement was for the purposes of paragraphs 2(1) or (3(1) of the existing code.

Amendment 50, in schedule 2, page 138, line 33, at end insert—

‘(b) in relation to land to which an agreement for the purposes of paragraph 3 of the existing code relates, a right to do the things mentioned in that paragraph.’

Amendments 48, 49 and 50 are consequential on amendment 46 and provide for references in the new code to a “code right” in relation to a subsisting agreement to have the corresponding meaning depending on whether the agreement was for the purposes of paragraphs 2(1) or (3(1) of the existing code.

Amendment 51, in schedule 2, page 139, line 11, leave out sub-paragraph (1) and insert—

‘5A (1) This paragraph applies in relation to a subsisting agreement, in place of paragraph 28(2) to (4) of the new code.

(2) Part 5 of the new code (termination and modification of agreements) does not apply to a subsisting agreement that is a lease of land in England and Wales, if—

(a) it is a lease to which Part 2 of the Landlord and Tenant Act 1954 applies, and

(b) there is no agreement under section 38A of that Act (agreements to exclude provisions of Part 2) in relation the tenancy.

(3) Part 5 of the new code does not apply to a subsisting agreement that is a lease of land in England and Wales, if—

(a) the primary purpose of the lease is not to grant code rights (the rights referred to in paragraph 3 of this Schedule), and

(b) there is an agreement under section 38A of the 1954 Act in relation the tenancy.

(4) Part 5 of the new code does not apply to a subsisting agreement that is a lease of land in Northern Ireland, if it is a lease to which the Business Tenancies (Northern Ireland) Order 1996 (SI 1996/725 (NI 5)) applies.

6 (1) Subject to paragraph 5A, Part 5 of the new code applies to a subsisting agreement with the following modifications.’

The amendment provides for the interaction of landlord and tenant law and Part 5 of the new code (termination and modification of agreements) in the case of subsisting agreements (see paragraph 1(4) of Schedule 2).

Amendment 52, in schedule 2, page 140, line 17, leave out

“the following provisions of this paragraph” and insert “sub-paragraph (3)”

This is consequential on amendment 53.

Amendment 53, in schedule 2, page 140, line 21, leave out sub-paragraphs (4) to (10)

This relates to applications under paragraph 5(1) of the existing code (power of court to dispense with need for required agreement). The effect of the amendment is that, if an application has been made to the court before the new code comes into force, the procedures under the existing code apply, but any resultant order takes effect as an order made under the new code.

Amendment 54, in schedule 2, page 142, line 7, leave out paragraphs 19 to 22 and insert—

‘19A (1) This paragraph applies where before the repeal of the existing code comes into force a person has given notice under paragraph 21(2) of that code requiring the removal of apparatus.

(2) The repeal does not affect the operation of paragraph 21 in relation to anything done or that may be done under that paragraph following the giving of the notice.

(3) For the purposes of applying that paragraph after the repeal comes into force, steps specified in a counter-notice under sub-paragraph (4)(b) of that paragraph as steps which the operator proposes to take under the existing code are to be read as including any corresponding steps that the operator could take under the new code or by virtue of this Schedule.’—(Matt Hancock.)

The amendment replaces transitional provisions for requiring the removal of apparatus. It provides for paragraph 21 of the existing code to continue to apply if a notice under that paragraph has been given, but treats an operator seeking rights to keep the apparatus installed as seeking rights also under the new code or transitional provisions.

Schedule 2, as amended, agreed to.

Schedule 3

The electronic communications code: consequential amendments

Question proposed, That the schedule be the Third schedule to the Bill.

[The Chair]

With this it will be convenient to discuss Government new schedule 1—Electronic communications code: consequential amendments.

[Matt Hancock]

Schedule 3 contains consequential amendments that accompany the electronic communications code found in schedule 1. They amend existing legislation to ensure that implementation aligns and is consistent with other existing legislation. Since the introduction of the Bill, a number of additional necessary consequential amendments have been identified. New schedule 1 substitutes a new, revised and more comprehensive schedule, which contains an expanded list of necessary consequential amendments. I will therefore move new schedule 1 at the appropriate point in our proceedings.

Schedule 3 disagreed to.

Clause 5

Power to make transitional provision in connection with the code

Amendment made: 1, in clause 5, page 3, line 23, leave out “or transitory” and insert “, transitory or saving”—(Matt Hancock.)

The amendment adds power to make saving provision in connection with the coming into force of the new electronic communications code.

Clause 5, as amended, ordered to stand part of the Bill.

Clauses 6 and 7 ordered to stand part of the Bill.

Clause 8

Regulation of dynamic spectrum access services

[Matt Hancock]

I beg to move amendment 2, in clause 8, page 8, line 16, leave out “imposed” and insert “specified”.

This amendment reflects the fact that a notification under new section 53E of the Wireless Telegraphy Act 2006 will specify a penalty rather than imposing it.

[The Chair]

With this it will be convenient to discuss Government amendments 3 to 6.

[Matt Hancock]

Amendments 2 to 6 are all technical amendments, to enable Ofcom to register dynamic spectrum access service providers and to set out what Ofcom can do where there is a contravention of the restrictions or conditions of registration.

Amendment 2 agreed to.

Amendments made: 3, in clause 8, page 8, line 19, at end insert—

‘( ) The amount of any other penalty specified under this section is to be such amount, not exceeding 10% of the relevant amount of gross revenue, as OFCOM think—

(a) appropriate, and

(b) proportionate to the contravention in respect of which it is imposed.”

This amendment ensures that the penalty based on the relevant amount of gross revenue applies only where the daily default penalty specified under new section 53F(4) of the Wireless Telegraphy Act 2006 does not apply.

Amendment 4, in clause 8, page 9, line 21, leave out subsection (1).

This amendment is consequential on amendment 3.

Amendment 5, in clause 8, page 9, line 25, leave out “this section” and insert “section 53F”.

This amendment is consequential on amendments 3 and 4.

Amendment 6, in clause 8, page 12, line 21, after “penalty” insert “specified”.—(Matt Hancock.)

This amendment brings new section 53L(5) of the Wireless Telegraphy Act 2006 into line with new section 53F(5) of that Act.

Question proposed, That the clause stand part of the Bill.

[Louise Haigh]

As the Committee is aware, spectrum which covers the electromagnetic frequency range from 3 kHz to 3,000 GHz is a central ingredient of all forms of wireless technology. The Opposition agree that making better use of spectrum is obviously essential to facilitate the development of the UK’s digital communications infrastructure. This is a national asset and it is important that the Government are constantly reviewing the way in which we can make better use of spectrum, particularly white space, which are used parts of the allocated spectrum.

It is also clearly important for Ofcom to have the power to police—for want of a better word—spectrum and it is important that, for instance, mobile network operators are achieving the coverage set out in their licence. We therefore support the specification of financial penalties if coverage requirements are not satisfied.

However, we would like reassurance on two issues: first, that amendment 2 does not water down the penalties that Ofcom can impose. The explanatory notes are not entirely clear and at present it seems as if, rather than allowing Ofcom to impose a penalty if coverage requirements are not satisfied, it simply must have regard to a potential penalty. We would welcome clarity from the Minister on that point.

My second, wider point is that, in the aftermath of Britain’s exit from the European Union, it is important that we continue to maintain influence in the allocations and regulation of spectrum. As the Minister will know, at present the EU member states harmonise spectrum access conditions EU-wide to ensure an efficient use of radio spectrum. In cases where there are conflicts between different usages of spectrum, they establish policy priorities. This is especially important with new and emerging technology, where the EU will ensure that fair allocation and reallocation of frequencies is harmonised across the European Union. In the aftermath of our exit from the EU, we must continue to communicate effectively with our European partners, as a pan-European strategy will still be in our interest. Will the Minister ensure that he continues to work closely with those partners, particularly as our loss of influence is unlikely to be compensated by our involvement in international forums?

[Matt Hancock]

I am very grateful for the Opposition’s support of the reforms to the way that spectrum is allocated. Spectrum is a finite asset and it is incredibly important that our digital communications, and especially wireless communications, increase so that we make best use of it. It is very good to see cross-party recognition of the importance of that management and that Ofcom play an excellent role in adjudicating on this.

I shall take the hon. Lady’s second specific question on the EU first. Of course we will continue discussions with neighbours about allocations. Ultimately, there are many spectrum frequencies that are dealt with on a global basis—for instance, those that are used in aviation. It is therefore important that we have international discussions, both in the EU and around the rest of the world. I can assure the hon. Lady that those discussions and that collaboration will continue. Indeed, some of it is going on as we speak.

On the hon. Lady’s first point about watering down the penalties, the way in which this is structured does not require a penalty, in case there are reasons not to have one, but allows for penalties. I think that gives Ofcom the necessary wiggle room, should it need it.

Question put and agreed to.

Clause 8, as amended, accordingly ordered to stand part of the Bill.

Clause 9

Statement of strategic priorities

Question proposed, That the clause stand part of the Bill.

[Louise Haigh]

We are grateful for the Minister’s reassurances in response to our concerns about clause 8. However, given those concerns, we think it is important that the statement of strategic priorities is updated in the aftermath of Britain’s exit from the EU and that consultation should begin right away. The statement of strategic priorities becomes much less clear after Brexit, when the Government will be required to take on significantly more of the burden and have much greater regard for the international element of spectrum access, as we will not be able to rely on European policy.

Clearly, Brexit will significantly alter the policy priorities of the Government in the operation of spectrum. We know that Ofcom is an international thought leader in this area, which may aid the Government. However, we believe that the statement must be amended to avoid any confusion and that that should be done in full consultation with industry.

[Matt Hancock]

The hon. Lady is dead right that we have to ensure that the strategic priorities take into account our exit from the European Union. Of course, some parts of spectrum that have very short distances can be set domestically, not least because there is a physical boundary of a minimum 26 miles between the UK and any other country. There are longer frequencies that have a bigger range, where minimising interference is important. Some are used on a global basis, in which case global agreement is required.

The issue has to be taken into account, and we will take on board the hon. Lady’s suggestion about ensuring that we have a statement of Government priorities post-Brexit that is appropriate to the UK outside the EU needing to engage with the EU, as well as with the rest of the world, and that domestic priorities are set where possible.

[Calum Kerr]

Spectrum licensing is our most effective tool for ensuring we get the coverage model we want. The form of the code will help, but it is through licensing that we will drive the level of coverage we want. Will the Minister confirm that the Government will leave nothing off the table in that? One option might be taking back spectrum where appropriate—for example, in rural areas that cannot be covered, as has happened in the US.

[Matt Hancock]

Of course, the management of spectrum needs to be as efficient as possible. The new dynamic spectrum management in clause 8, which we just agreed to, will help to deal with white space—spectrum that is not used but could be. New technology allows that to be used far more efficiently. I am delighted that we got unanimous support for clause 8. On clause 9 and setting out a set of strategic priorities, I am sure that the hon. Gentleman’s comments will be taken on board.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clause 10

Penalties for contravention of wireless telegraphy licences

[Matt Hancock]

I beg to move amendment 7, in clause 10, page 16, line 7, at end insert—

‘( ) In Schedule 8 to that Act (decisions not subject to appeal), at the end of paragraph 44 insert “for a relevant multiplex contravention”.

This allows an appeal to the Competition Appeal Tribunal against a penalty imposed by OFCOM under section 42 of the Wireless Telegraphy Act 2006 for a breach of a wireless telegraphy licence, except where the breach relates only to broadcast content (in which case, as at present, an appeal to the Tribunal will not be possible).

[Matt Hancock]

Amendment 7 provides Ofcom with powers to impose a financial penalty for contravention of a wireless telegraphy licence condition. It will allow an appeal to be made to the Competition Appeal Tribunal against a decision by Ofcom to impose a penalty under section 42 of the Wireless Telegraphy Act 2006 except, as is currently the case, where the penalty is imposed for contravention of a condition relating to broadcast content.

Amendment 7 agreed to.

Clause 10, as amended, ordered to stand part of the Bill.

Clauses 11 to 13 ordered to stand part of the Bill.

Clause 14

Time limits for prosecutions under Wireless Telegraphy Act 2006

[Matt Hancock]

I beg to move amendment 8, in clause 14, page 17, line 10, leave out “and (8)”.

This is consequential on amendment 11.

[The Chair]

With this it will be convenient to discuss Government amendments 9 to 11.

[Matt Hancock]

The amendments will amend the Wireless Telegraphy Act 2006 to extend the time limit for bringing prosecutions for some summary offences—for example, those relating to unauthorised use of wireless telegraphy equipment. Amendment 10 makes provision about when proceedings in Scotland are deemed to have commenced for the purposes of the extended time limits. Amendments 8, 9 and 11 make minor changes to clarify the drafting.

[Calum Kerr]

Some of the amendments specifically relate to the law in a way that goes back to my earlier point. Will the Minister confirm whether the Scottish Administration have been consulted on this issue, given that it is clearly a devolved matter?

[Matt Hancock]

Yes—although I have had no discussions with them at a ministerial level about the amendments, I understand that discussions have taken place between officials. The effect of the amendments will be to make the law work better, so I hope they will have cross-party support.

Amendment 8 agreed to.

Amendments made: Government amendment 9, in clause 14, page 17, line 18, leave out “Subsections (3A) and (3B)” and insert

“Section 41(7) and subsection (3B) above”.

Subsection (3C), inserted in section 107 of the Wireless Telegraphy Act 2006 by the clause, lists enactments displaced by the time limits mentioned in subsections (3A) and (3B). Subsection (3A) merely refers to section 41(7), and the amendment substitutes a direct reference to that provision for the reference to subsection (3A).

Government amendment 10, in clause 14, page 17, line 26, at end insert—

“(3D) In relation to proceedings in Scotland, subsection (3) of section 136 of the Criminal Procedure (Scotland) Act 1995 (date when proceedings deemed to be commenced for the purposes of that section) applies also for the purposes of section 41(7) and subsection (3B) above.”.

The amendment adds provision about when proceedings in Scotland are deemed to be commenced for the purposes of the time limits in section 41(7) and new subsection (3B) of section 107 of the Wireless Telegraphy Act 2006.

Government amendment 11, in clause 14, page 17, line 31, at end insert—

“() for subsection (8) substitute—

“(8) For further provision about prosecutions see section 107.””.—(Matt Hancock.)

Existing section 41(8) of the Wireless Telegraphy Act 2006 applies to section 41(7) and is superseded by section 107(3C) inserted by the clause (see amendment 9). Amendment 10 also inserts provision applying to section 41(7) into section 107. Amendment 11 therefore substitutes a subsection referring the reader to section 107.

Clause 14, as amended, ordered to stand part of the Bill.

Clause 15

Internet pornography: requirement to prevent access by persons under the age of 18

[Claire Perry]

I beg to move amendment 65, in clause 15, page 18, line 15, at end insert—

“(d) how persons can make a report to the age-verification regulator about pornographic material available on the internet on a commercial basis that is not complying with subsection (1).”.

This amendment places a requirement on the age-verification regulator to provide guidance as to how persons can report non-compliant pornography websites to the age-verification regulator.

I am extremely glad to have tabled a series of amendments to the vital provisions in part 3 of the Bill. As I said on Second Reading, we have come such a long way, and the enormous cross-party consensus to make the internet safer for young people has been crucial to that. We have seen some very effective sponsorship and responses from the previous Minister and his Department under the leadership of the last Prime Minister. Without his championship of this issue, we would not be where we are today.

My intention in tabling the amendments was to make provisions that are already good somewhat better, in the spirit of trying to encourage the Government to think hard about the line-by-line drafting. It has been made clear to me in meetings with organisations such as the British Board of Film Classification that there are ways to enhance the role of a regulator. I am delighted that the BBFC has been given the role, because it is truly a trusted brand; it is innovative and it does brilliant work to define age-rating boundaries. I have listened carefully to it.

What I am looking for is a clearer understanding of how the Government envisage the process of regulating websites and apps that provide access to material defined as pornographic in the UK. In his evidence session last week, David Austin referred to

“stages 1 to 3 of the regulation.”––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 39, Q84.]

I would be interested to hear the Minister’s explanation of how those different stages might work and to understand better how the enforcement element will work in practice—perhaps we will touch on that today but return to it in a later sitting.

I was struck by evidence given by those who do not support the changes; they feel that the issue is important but they argue that we should not be bringing in the new rules because we will not be able to make them stick. I must also mention my gratitude to the many organisations that have provided information and support on part 3 of the Bill. In particular, I note the contributions of Christian Action Research and Education, the Digital Policy Alliance, the National Society for the Prevention of Cruelty to Children and the Centre for Gender Equal Media.

My first amendment is to clause 15, which sets out the extremely welcome requirement that age verification should be introduced by websites and apps that are making commercial pornography available in the UK. Amendment 65 would add a new paragraph to clause 15(3) to strengthen enforcement by allowing the public and industry to provide intelligence to the regulator about the sites that do not have age verification.

I have always been struck by what we do not know about the internet. We all know that there is a massive proliferation of sites. I do accept what is said about much of the pornographic traffic concentrating around particular sites, but it grows like a Hydra every day. One of the BBFC’s most effective acts has been to allow effectively self-regulation and allow people to report and comment on a particular posting, which is, if you like, a sort of self-rating scheme. That would be extremely valuable. Clearly, the regulator cannot be expected to scrutinise the entire world of sites. Allowing members of the public and industry to notify the regulator that information is there that should be regulated would be helpful.

I note that the Digital Policy Alliance recommended in one of its parliamentary briefings back in April that this power should be available. It would be an excellent way to ensure that the public can feel involved in protecting their children. One of the messages I have heard over the past few years is how much families feel disempowered in the process of keeping their children safe. Of course, people accept the notion of parental responsibility and of course schools have become involved in this process, but we have made it uniquely difficult for families effectively to keep their children safe on a digital platform.

We have other rules and regulations around broadcast and written media that make it much easier for families wanting to be involved in that process. The amendment, allowing the BBFC to provide notice that these referrals can be made, would be very helpful. I note that David Austin of the BBFC said last week that he does intend to take referrals from the public.

Will the Minister please confirm that it is also the Government’s intention to promote the involvement of the whole community in championing online targeted child protection, and how this referral mechanism can be guaranteed? I hope he will consider this small change to the Bill.

[Matt Hancock]

Our intention is to establish a new regulatory framework and new regulatory powers tackling the viewing of adult content by minors. I pay tribute to the work of my hon. Friend over many years in getting us to this point. It has already ensured that there is voluntary activity, and that there are now legislative proposals is in many ways largely thanks to her campaigning. I am delighted that we have reached this point.

I am also delighted that, as we heard last week, the British Board of Film Classification will be designated as the age verification regulator. That is undoubtedly the best body in the land to do that job. It has the capability, as we heard at the evidence session. It will be responsible for identifying and notifying infringing sites. That will enable payment providers and other ancillary services to withdraw services from those providers that do not comply as soon as possible. Proceeding in that way will allow us to work quickly and effectively with all parts of the industry to ensure that they are fully engaged—indeed, that engagement has already started. We need to ensure the system is robust but fair and the providers of pornographic material are encouraged to be compliant by the processes in place.

I have every confidence, as I think we all should, in the BBFC’s ability to deliver on this. We heard from David Austin, the chief executive, in evidence that he is already working on this. He said that the BBFC would create something, and that it has done so with mobile operators. I think that its commitment to enable members of the public and organisations such as the NSPCC to report a particular website is the best way forward. That is a sensible approach for the regulator to take.

We should take a proportionate approach to the regulator’s role and allow the BBFC to do the job at which it is expert. We have required the regulator to issue guidance in circumstances where it allows the subjects of regulation to understand how the regime applies to them, but I think that going further and requiring this level of specification is not necessary, given the BBFC’s commitment and the uncontroversial nature of the need. That will give us flexibility as well as a clear commitment to make this happen. I hope that given that explanation, my hon. Friend will withdraw her amendment.

Digital Economy Bill (Sixth sitting)

Matt Hancock Excerpts

Committee Debate: 6th sitting: House of Commons
Thursday 20th October 2016 Public Bill Committees

[Thangam Debbonaire]

I thank the hon. Lady for that clarification. I understand from an intervention made by my hon. Friend the Member for Cardiff West that the reason why we were not allowed to remove the words “on a commercial basis” was that they were deemed out of scope. As I understand it, the word “economy”, if we stick to the letter of it, includes transactions for which there is no financial payment. There are transactions involved, and the word “digital” is in the title of the Bill, so I think it unfortunate that the amendment was not agreed to. Taking out the words “on a commercial basis” would have done a great deal to make consistent across all platforms and all forms of pornographic content available online the restrictions that we are placing on commercial ones.

I support the amendments proposed by my hon. Friend to the wording of clause 15(5)(a) and (6), for reasons that have already been given, and I want to add to the arguments. Hon. Friends and Members may have read the evidence from Girlguiding. As a former Guide, I pay tribute to the movement for the excellent work that it has done. It has contributed a profound and well-evidenced understanding of what young women are saying about online pornography. I will pick out a couple of statistics, because they make arguments to which I will refer in interventions on later clauses. That will make my speeches less long.

In the 2016 girls’ attitudes survey, half of the girls said that sexism is worse online than offline. In the 2014 survey, 66%, or two thirds, of young women said that they often or sometimes see or experience sexism online. It is a place where young women routinely experience sexism, and part of that sexism is the ubiquity of pornography. In 2015, the survey found that 60% of girls aged 11 to 21 see boys their age—admittedly, some of those are over the age of 18, but they are still the girls’ peers—viewing pornography on mobile devices or tablets. In contrast, only 27% of girls say that they see girls their age viewing pornography. The majority of those young women say from their experience that children can access too much content online and that it should be for adults only. In the survey, we see a certain degree of concord among young women in the Girlguiding movement, Opposition Members and the Government manifesto, which pledged, as my hon. Friend said, to exclude children from all forms of online pornography.

The 2015 Girlguiding survey also found that those young women felt that pornography was encouraging sexist stereotyping and harmful views, and that the proliferation of pornography is having a negative effect on women in society more generally. Those young women are the next generation of adults.

I have worked with young men who have already abused their partners. In my former job working with domestic violence perpetrators, I worked with young men of all ages; for the men my age, their pornography had come from the top shelf of a newsagent, but the younger men knew about forms of pornography that those of us of a certain age had no understanding of whatever. They were using pornography in ways that directly contribute to the abuse of women and girls, including pornography that is filmed abuse. I shall come back to that point later, but we need to recognise that young men are getting their messages about what sex and intimacy are from online pornography. If we do not protect them from online pornography under the age of 18, we are basically saying that there are no holds barred.

The hon. Member for Devizes and my hon. Friend the Member for Sheffield, Heeley mentioned loopholes. When we leave loopholes, it creates a colander or sieve for regulation. Yes, the internet is evolving and, yes, we in this Committee Room probably do not know every single way in which it already provides pornography, and certainly not how it will in future, but that is a good reason to provide a strong regulatory framework when we have the chance. We have that chance now, and we should take it. If it remains the case that removing the words “on a commercial basis” is deemed outside our scope, which I find very sad—I think it is a missed opportunity, and I hope the House can return to it at some point and regulate the free content—we must definitely ensure that we are putting everything else that we possibly can on a level playing field. That means that the regulation of video on demand has to be consistent and that we have to close any other loophole we can spot over the next few days.

I hope Opposition amendments will make the Government think about the manifesto commitment they rightly made—I am happy to put on the record that I support it—and take the opportunity to stick to it. Young women want that; young men need it, because my experience of working with young men who have abused their partners and ex-partners is that they felt that they were getting those messages from pornography; and we as a society cannot afford to ignore this problem any longer. We have a chance to do something about it, so let us take that opportunity.

[The Minister for Digital and Culture (Matt Hancock)]

It is great to hear that outbreak of support for the Conservative party manifesto.

[Thangam Debbonaire]

I must have it clearly on the record that I supported that commitment only: not the whole Conservative manifesto, just the bit that says “We want to protect all children from all online pornography.”

[Matt Hancock]

I am sure our powers of persuasion will extend that support in the future. The outbreak of support for our manifesto is welcome; this is an incredibly important area, and I am proud to lead the Front-Bench effort to deal with underage people’s access to adult material by introducing age verification. I want to respond in detail to the points made, because it is important we get this right.

Before I come to the specific amendments, I will deal with commercial providers. The measures in the Bill will apply equally to all commercial providers, whether their material is paid for directly or appears on free sites that operate on a different business model. “Commercial” has quite a broad meaning, as my hon. Friend the Member for Devizes said. If a provider makes money from a site in any way, whether or not it makes a profit, it can be caught by the legislation. That is the right distinction, because it targets those who make money and are indifferent to the harm their activities may cause to children.

[Louise Haigh (Sheffield, Heeley) (Lab)]

Will the Minister give way?

[Matt Hancock]

If the hon. Lady will hold on, I want to explain this in full, rather than in part, before I give way. The age verification regulator must publish guidance on the circumstances in which it will regard a site or app as commercial. It will be for the regulator to judge whether a site is commercial, and there is no definition that states which website platforms are covered. Crucially, the regulator will also be able to take a view if specific social media and other types of sites are ancillary service providers—a person who appears to be facilitating or enabling the making available of pornographic material by non-compliant persons. I think that the capturing of others as ancillary service providers is an important part of making sure that we fully deliver our manifesto commitment, as I believe this Bill does.

[Louise Haigh]

We are aware that “commercial” is not limited to sites that require payment. It includes online advertising and other business models, as the Minister has said. However, it is unclear how the regulator will be able to enforce these measures given that the only enforcement available to them is notifying other payment service providers and ancillary services.

[Matt Hancock]

No doubt we will come on to enforcement. A number of clauses and amendments are on enforcement. The point is that other social media sites can be classified by the regulator as ancillary service providers for facilitating or enabling the making of available pornographic material. Our view is that enforcement through disrupting business models is more powerful because you are undermining the business model of the provider. However, I do not want to get too distracted, in an out of order way, into enforcement which is rightly dealt with in later clauses.

[Louise Haigh]

If the Bill is clearly designed to enable the regulator to focus on social media sites and other ancillary service providers, why was that term “on a commercial basis” included in these sections?

--- Later in debate ---

[Matt Hancock]

The principle is that there is a distinction between those who are making money by targeting and are indifferent to potential harm and those whose services facilitate the provision of porn to those who are under age. I think it is a reasonable distinction. We are trying to deal with the mass of the problem. By its nature, it is very difficult to get to 100%. I think that leaving the Bill in this way, with flexibility for the regulator to act, has a big advantage over being overly prescriptive in primary legislation and too specific about the way in which the regulator acts, not least because disrupting the business model is the goal of trying to provide enforcement.

[Claire Perry]

I support the Minister’s point about over-prescription, but perhaps he could help me by talking about a particular case. Let us take Tumblr hosting a stream of content which is 18. Who would the regulator target if it issued an enforcement notice? Would it be the content provider, or would it be the social media platform that is hosting that content?

[Matt Hancock]

In that case, the platform—I do not want to get into individual platforms, but I am happy to take my hon. Friend’s example—would likely be an ancillary service provider and therefore captured. This is a very important distinction. There is a difference between somebody who is actively putting up adult material and choosing not to have age verification, and a platform where others put up adult material, where it is not necessarily impossible but much harder to have a control over the material. There is an important distinction here. If we try to pretend that everybody putting material onto a platform, for example, the one that my hon. Friend mentions, should be treated the same way as a porn-providing website, we will be led into very dangerous territory and it makes it harder to police this rather than easier. That is my argument.

On the specific amendments, I understand entirely where the argument on demand is coming from. I want to give an assurance which I hope will mean that these clauses will not be pushed to the vote. On-demand audio-visual media services under UK jurisdiction are excluded from part 3 of the Bill because they are regulated by Ofcom under part 4A of the Communications Act 2003. As my hon. Friend the Member for Devizes said, other on-demand services that are not currently regulated in the UK will be caught by the Bill regime.

--- Later in debate ---

[Thangam Debbonaire]

Forgive me, but the Minister just gave a lot of information, and I want to clarify something. Whichever regulator is doing it, will the effect of the legislation as he would like to see it put R18 films and 18-rated films on on-demand services at the same level of age verification? I am not clear on that point.

[Matt Hancock]

The aim is that even though the regulator may be different in those two cases, the result would be the same. I can give the hon. Lady that assurance. The Bill will do that without having double regulation. As we discussed earlier with regard to a different part of the Bill, having double regulation in the same area can lead to confusion and worse outcomes, rather than clarity and better outcomes.

A service that falls within part 4A of the Communications Act 2003—that is to say, one that is outwith the proposals —must not contain any specially restricted material, unless that material is made available in a manner that secures that persons under the age of 18 will not normally see or hear it. Specially restricted material includes R18 material and other material that might seriously impair the physical, mental or moral development of persons under the age of 18. Our intention is that such other material should include material that the BBFC would describe as 18 sex works. I think that answers precisely the point that the hon. Lady was making.

[Kevin Brennan (Cardiff West) (Lab)]

This is a genuine inquiry: did the Minister consider not having double regulation but awarding regulatory oversight of all this to a single regime, possibly the BBFC, thereby taking it away from Ofcom? If he considered that idea, why did he reject it?

[Matt Hancock]

Partly because the regulation of areas currently covered by Ofcom is considered to be working well, so I did not want to throw that regime up in the air. I did want to deal with the additions and make provisions additional to the existing regime.

[Kevin Brennan]

The Minister’s response prompts the question: if that is the case, why did he not give the responsibility to Ofcom?

[Matt Hancock]

Because I think the BBFC is best at making the very nuanced distinctions between different types of material and their regulation that are required. The way it has landed, with the two regulators sitting side by side, but with the aim that the result of the regulation is the same, is the better way of doing it.

[Christian Matheson (City of Chester) (Lab)]

May I seek clarification from the Minister? Is there scope for a mechanism whereby the two regulatory authorities can pass items between each other if one is better suited to judge an item that has been referred to the other?

[Matt Hancock]

There is clarity in the Bill about what is under the jurisdiction of one regulator and what is under the jurisdiction of the other. I will, though, take that away and seek to give an assurance that the two regulators will work together to ensure that that boundary is dealt with adequately. There is flexibility in the Bill to ensure that that can happen. I cannot speak for Ofcom or the BBFC, but it would seem to me to be perfectly reasonable and obvious that the boundary has to work properly. I would not like to over-specify that in the Bill because of the nature of changes in technology. The distinction between broadcast and on-demand services is changing as technology develops, and it is better to leave it structured as it is. I am sure that both regulators will have heard the hon. Gentleman’s important point that the boundary between the two needs to be dealt with appropriately and that they need to talk to each other.

[Nigel Huddleston (Mid Worcestershire) (Con)]

Is the Minister reassured, as I am, by the fact that in the evidence sessions there was enthusiastic support from the BBFC for embracing the role, as well as very clear guidance that it had the competence to do so? We have not necessarily heard that from anybody else. The support and enthusiasm for taking on that role is very telling.

[Matt Hancock]

My hon. Friend has just given the final paragraph of my speech. With those assurances and the broad support from the BBFC and its enthusiasm to tackle the need for age verification in that way, I hope that the hon. Member for Sheffield, Heeley will withdraw the amendment.

[Louise Haigh]

Quite a lot of clarification is needed, and I hope it will come during the Bill’s passage. I do not think that the distinction between Ofcom and the BBFC is clear in this part of the Bill or in later clauses on enforcement. However, given that it states elsewhere in the Bill that the proposal is subject to further parliamentary scrutiny, and as the BBFC has not yet officially been given the regulator role—as far as I am aware—I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Claire Perry]

Mr Stringer, I assume that, like me, you sometimes have the feeling that you have sat down before you have finished what you are saying. I apologise to the Committee. I am rarely short of words, but in this case I was.

I want to respond to the point made by the hon. Member for Bristol West and clarify exactly what we have asked and should be asking internet service providers to do. In doing so, I shall refer to the new EU net neutrality regulations, which, despite the Brexit vote, are due to come into force in December. They cause many of us concerns about the regime that our British internet service providers have put in place, which I believe leads the world—or, at least, the democratic free world; other countries are more draconian—in helping families to make these choices. We do not want all that good work to be unravelled.

Our current regime falls foul of the regime that the European Union is promoting, and unless the Government make a decision or at least give us some indication relatively quickly that they will not listen to that, we may have an issue in that all the progress that we have made may run out by December 2016. I would be grateful if the Minister told us what the Government are doing to get the new legislation on the statute book in line with the schedule set out by his colleague Baroness Shields last December.

We have an effective voluntarily filtering arrangement. I believe—I think that this point is in the scope of ancillary service providers—that we intend to capture internet service providers as part of the general suite of those responsible for implementing over-18 verification, but I want the Government to make crystal clear that they are aware of the responsibilities of internet service providers and intend for the regulator to include them in the basket of those that they will investigate and regulate.

The big missing link in all this has been getting content providers that provide material deemed to be pornographic to do anything with that material. The difference is that content providers of, say, gambling sites have always been required to have age-verification machinery sitting on their sites.

The hon. Member for Bristol West is quite right that we want ISPs to be captured under this regulatory regime, but I am keen to hear from the Minister that all the work that we have done with ISPs that have voluntarily done the socially and morally responsible thing and brought forward family-friendly filters will not be undone by December 2016, when the EU net neutrality regulations are intended to come into place.

[Matt Hancock]

Quite a lot of points have been raised, and I seek to address them all. Clause 22 is an important provision containing the powers at the heart of the new regime to enable the age-verification regulator to notify payment service providers and ancillary service providers that a person using their services is providing pornographic material in contravention of clause 15 or making prohibited material available on the internet to persons in the UK.

Amendments 66, 67, 77, 78, 90 and 91 would provide that the requirement to implement age verification does not fall on ISPs and further clarify that ISPs are to be considered ancillary service providers. Amendment 91 would clarify that as well as ISPs, domain name registrars, social media platforms and search engines are all to be considered ancillary service providers for the purposes of clause 22, which makes provision for the meaning of “ancillary service provider”.

This is a fast-moving area, and the BBFC, in its role as regulator, will be able to publish guidelines for the circumstances in which it will treat services provided in the course of business as either enabling or facilitating, as we discussed earlier. Although it will be for the regulator to consider on a case-by-case basis who is an ancillary service provider, it would be surprising if ISPs were not designated as ancillary service providers.

New clause 8 would impose a duty on internet service providers to provide a service that excludes adult-only content unless certain conditions are met. As I understand it, that measure is intended to protect the position of parental filters under net neutrality. However, it is our clear position that parental filters, where they can be turned off by the end user—that is, where they are a matter of user choice—are allowed under the EU regulation. We believe that the current arrangements are working well. They are based on a self-regulatory partnership and they are allowed under the forthcoming EU open internet access regulations.

[Claire Perry]

I think I understand the Minister to be saying that in cases where companies have introduced filters that are on by default, the fact that the users can choose to turn those filters off in the home means that they would not be captured by the net neutrality rules. Is that correct?

--- Later in debate ---

[Matt Hancock]

That is exactly what I am saying. On that basis, with the Government’s position having been put clearly on the record, I hope that my hon. Friend will not press new clause 8 to a vote.

New clause 11 would empower the Secretary of State to introduce regulations in relation to backstop blocking injunctions. We have looked carefully at the option of blocking by ISPs and have talked to a lot of stakeholders about it. We take the problem seriously, and we think our measures will make a real difference. We are yet to be persuaded that blocking infringing sites would be proportionate, because it would not be consistent with how other harmful or illegal content is dealt with. There is also a question of practicality: porn companies would be able to circumvent blocking relatively quickly by changing URLs, and there is an additional risk that a significant number of sites that contain legal content would be blocked. We would need to be convinced that the benefits of ISP blocking would not be outweighed by the risks.

[Louise Haigh]

I am a little confused about how the Minister envisages the provisions being enforced against the free sites we discussed in the previous group of amendments without that additional power, which indeed has been requested by the regulator that the Government have designated.

[Matt Hancock]

As the regulator said, the proposals here mark a huge step forward in tackling the problem. We have to make a balanced judgment: there is a balance to be struck between the extra powers to block and the need to ensure that they are proportionate. The powers are not a silver bullet; sites that were actively trying to avoid the Bill’s other enforcement measures would also be able to actively avoid these measures. It is questionable how much additional enforcement power they would bring, given those downsides.

[Thangam Debbonaire]

I must press the Minister to consider that children’s charities have told us that this is one of the most important amendments to the Bill. The Minister says that porn sites could simply move their URLs, but that is not a reason not to take a stand by giving the regulator the power that it has asked for and that children’s charities have particularly asked for.

[Matt Hancock]

Children’s charities and the regulator have asked for action to solve the problem of needing age verification. That is what the Bill delivers. The question of how to enforce that is incredibly important; there are different considerations to be made, and I think the Bill has ended up with the correct balance.

[Louise Haigh]

The BBFC witness explicitly said last week that

“we suggested, in our submission of evidence to the consultation back in the spring, that ISP blocking ought to be part of the regulator’s arsenal.”––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 41, Q91.]

The BBFC says that notification of payment providers or ancillary services providers and fines may not be sufficient. I appreciate that porn sites might well use different URLs to evade it, but why has the Minister explicitly removed ISP blocking as a further backstop power? We are not talking about blocking too many sites; we have been very clear that it is intended as a backstop power when other measures fail.

[Matt Hancock]

David Austin of the BBFC said:

“We see this Bill as a significant step forward in terms of child protection.”––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 42, Q94.]

We think, on balance, that the regulator will have enough powers—for example, through the provisions on ancillary service providers—to take effective action against non-compliant sites. For that reason, I think this is the appropriate balance and I ask my hon. Friend the Member for Devizes to withdraw her amendment.

[Claire Perry]

I think that we are running through two definitions of ISPs: one relating to ancillary service providers and the other to enforcement and blocking. If we include ISPs in the definition of ancillary service providers, we want to make sure that they are captured, either explicitly or as a service provider. Is the Minister saying that he is comfortable with the enforcement regime without blocking? Would it require further legislation for blocking to be carried out if the regulator felt it was an appropriate measure? Are we ruling that out in this legislation?

[Claire Perry]

I apologise. I would like to conclude my speech by inviting the Minister to respond.

[Matt Hancock]

I thank my hon. Friend for giving way. I would like to provide a point of clarity on the speech she has made. Treatment of an ASP will not lead to blocking. I think that is the answer to her question.

--- Later in debate ---

[Louise Haigh]

In this and related clauses, we seek to strengthen the proposals that the Government have put forward. We have said that the regulation needs to be beefed up to require internet service providers to be notified about non-compliance. We would like to see an injunction power to take down any content which a court is satisfied is in breach of the age-verification legislation, as soon as possible, at the start of the four-tier regulation process the Government have identified in their amendments and letters published to the Committee last week.

That would require a regulator with sufficient enforcement expertise and the ability to apply that injunction and push enforcement at an early stage. As we are aware, however, the BBFC heads of agreement with the Government do not cover enforcement. Indeed, they made perfectly clear that they would not be prepared to enforce the legislation in clauses 20 and 21 as they stand, which is part 4 of that enforcement process, giving the power to issue fines. The BBFC is going to conduct phases 1, 2 and 3 of the notification requirements, presumably before handing over to a regulator with sufficient enforcement expertise, but that has not been made clear so far.

While we welcome the role of the BBFC and the expertise it clearly brings on classification, we question whether it is unnecessarily convoluted to require a separate regulator to take any enforcement action, which will effectively have been begun by the BBFC and which so far has not been mentioned in the legislation. This goes back to the point my hon. Friend the Member for Cardiff West made earlier about the two separate regimes for on-demand programme services.

As I understand it, although it is not clear, the BBFC will be taking on stage 3 of the regulation, meaning it will be involved in the first stage of enforcement—in notification. That is fine, but it will then have to hand over the second stage of enforcement to another regulator—presumably Ofcom. The enforcement process is already incredibly weak and this two-tiered approach involving two separate regulators risks further delays in enforcement against non-compliant providers who are to protect or take down material that is in breach of the law. In evidence to the Committee, the BBFC said:

“Our role is focused much more on notification. We think we can use the notification process and get some quite significant results.”—[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 41, Q83.]

We do not doubt it, but confusion will arise when the BFFC identifies a clearly non-compliant site that is brazenly flouting the law, and it does not have power to enforce quickly but will have to hand it over.

We would also like to hear when the Government are planning to announce the regulator for the second stage and how they intend to work with the BBFC. As far as I can see, this will require further amendments to the Bill. If it is Ofcom, it would have been helpful to have heard its views on what further enforcement powers it would like to see in the Bill, rather than being asked to fill in after the Bill has passed through Parliament. There is a clear danger that the enforcement regulator could be asked to take over enforcement of age verification, which it thinks requires more teeth to be effective.

We therefore have very serious concerns about the process by which clause 17 will be have effect. Although we will not vote against the clause, we want to make it very clear that we would have preferred to have seen an official announcement about who will carry out the enforcement provisions in the Bill before being asked to vote on it.

[Matt Hancock]

The debate on clause stand part is about the set-up of the regulatory structure and making sure that we get designation and funding right. It is our intention that the new regulatory powers and the new regulator or co-regulators will deliver on this. As the hon. Lady says, the BBFC has signed up to be designated as the age verification regulator responding for identifying and notifying. This will enable the payment providers and other ancillary services to start to withdraw services to sites that do not comply as soon as possible.

[Louise Haigh]

In what kind of timeframe does the Minister envisage the payment service providers acting from notification from the BBFC?

[Matt Hancock]

We intend formally to designate the BBFC as regulator in autumn 2017 and expect to be in a position to commence the provisions requiring age verification within 12 months of Royal Assent.

[Louise Haigh]

That was not quite my question. How long does the Minister anticipate that ancillary service providers or payment service providers will take to act on receiving notification from the BBFC that a site is non-compliant?

[Matt Hancock]

I would expect that to happen immediately. The question of the designation of the backstop enforcement regulator does not stop or preclude the BBFC from getting going on this. As we have heard, it is already working to put in place its own internal systems. As I have just said to the Committee, we have a new commitment that we expect to commence the provisions in terms of getting the system up and running within 12 months of Royal Assent; after that, if the BBFC has designated that there is a problem, I would expect action to be immediate, because I expect the BBFC to ensure through good relations that systems are in place.

I see enforcement very much as a back-up to good behaviour. As we have seen with the taking down of child pornography and material related to terrorism, many providers and platforms respond rapidly when such material is identified. It will be far better if the system works without having to resort to enforcement. We will set out in due course who is best placed to be the regulator for enforcement, but the system is new, and the approach provides the level of flexibility that we need to get it right. I have every confidence in the BBFC’s ability and enthusiasm to deliver on these aims, so I commend the clause to the Committee.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Clauses 18 and 19 ordered to stand part of the Bill.

Clause 20

Enforcement of sections 15 and 19

[Claire Perry]

I beg to move amendment 68, in clause 20, page 21, line 5, at beginning insert

“If the person in contravention of section 15(1) is resident in the United Kingdom,”.

This amendment and amendments 69, 70, 71, 72, 73 and 74 place a requirement on the age-verification regulator to impose fines where a UK person has contravened clause 15(1) unless the contravention has ceased; or to issue an enforcement notice to person outside of the UK who has contravened clause 15(1).

--- Later in debate ---

[Thangam Debbonaire]

I will return to the evidence on this point to make clear why I support what the hon. Member for Devizes is trying to do. In his evidence last week, the NSPCC’s Alan Wardle—I think I have got that right—said quite clearly:

“I think that is why the enforcement part is so important…so that people know that if they do not put these mechanisms in place there will be fines and enforcement notices, the flow of money will be stopped and, crucially, there is that backstop power to block if they do not operate as we think they should in this country. The enforcement mechanisms are really important to ensure that the BBFC can do their job properly and people are not just slipping from one place to the next.”––[Official Report, Digital Economy Public Bill Committee, 11 October 2016; c. 47, Q108.]

So what my hon. Friend the Member for Sheffield, Heeley has just said is summed up very well by the NSPCC in its official evidence, and I hope that the Minister will have an answer for the NSPCC as well as for this Committee.

[Matt Hancock]

I am thankful for the opportunity to respond. I will actually respond to the points made about these amendments, which were tabled by my hon. Friend the Member for Devizes, rather than the reiteration of the blocking debate, which we have had and will no doubt have again on further clauses.

First, clause 17 clearly makes provision for the Secretary of State to designate more than one person as a regulator. Secondly—a crucial point—the complexity in regulation is deciding who is satisfying the rules and who is not, and that is for the BBFC to determine, whereas issuing fines is essentially a matter of execution and could be fulfilled by a variety of bodies. We will come forward with more detail on that in due course.

I think the whack-a-mole analogy inadvertently made the point, which is that when we are trying to deal with a problem on the internet, where people can move about, we can deal with the mainstream of the problem, which comes from reliable providers of adult material, who are already engaged and want to ensure they comply with the law. In future, once this measure becomes law, refusing to put age verification on adult material will be illegal, so we will be dealing with illegal activity. That will mean that the vast majority of people will comply with the law, and we heard that very clearly in the evidence session. The question then is how to deal with non-compliance and on the internet we know that that is very difficult. The proposals are to deal with non-compliance by disrupting business models and by imposing financial penalties.

I understand what my hon. Friend is trying to do. She is trying to strengthen the imposition of financial controls. Inadvertently, however, her amendments would reduce the regulator’s discretion by obliging the it to apply sanctions when they are available, and they would remove the power to apply financial penalties to non-UK residents.

We want to be able to fine non-UK residents—difficult as that is—and there are international mechanisms for doing so. They do not necessarily reach every country in the world, but they reach a large number of countries. For instance, Visa and other payment providers are already engaged in making sure that we will be able to follow this illegal activity across borders.

Therefore, while I entirely understand where my hon. Friend is coming from, the amendments would inadvertently have the effect of removing the ability to apply an enforcement notice to a UK resident, although I am certain that that is not what she intended. So I resist the amendment but I give her the commitment that we have drafted the clause in such a way as to make it as easy as possible for the enforcement regulator to be able to take the financial route to enforcement.

On the point made by the hon. Member for Berwickshire, Roxburgh and Selkirk, the provisions do extend to Scotland, with necessary modifications to Scottish law. I am sure that he, like me, will have seen clause 17(5) and clause 20(11)(b), which refer to modifications needed to be consistent with Scottish law. On the basis of that information, I hope that my hon. Friend will withdraw the amendment.

[Claire Perry]

I thank the Minister for that clarification and for the mention of support. The intention was to help to provide a practical solution rather than cut off aims. He has persuaded me that I do not need to press the amendment to a vote. Although I take the point about shared regulation, I would ask him to consider in setting up the BBFC as the primary regulator that it is working reasonably well in the video-on-demand world, but this may be having them stray into a new sphere of expertise in terms of finding, identifying and sending out enforcement notices or penalties, particularly for foreign-based companies. I think the whack-a-mole analogy is entirely consistent—they will shut their doors and reopen in another jurisdiction almost overnight. Given the anonymity principles, it is sometimes almost impossible to know where they actually are. If the Minister is assuring us that everyone is aware of the problem, he believes the powers allow the regulator to be flexible, and it is something that his Department will consider, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Louise Haigh]

This group of amendments goes even further—they have the straightforward intention of continuing the process of strengthening the powers and, crucially, of speeding up the enforcement period, to help the Government achieve their manifesto commitment. The Bill would give the regulator the power to set a lengthy, if not indefinite, period for ending the contravention of section 15. The amendment would speed up the enforcement, requiring the regulator to issue an enforcement period of one week. Given that we do not anticipate that the BBFC will be the official regulator or have these powers for another 12 months on Royal Assent, we do not anticipate that a one-week enforcement period would be too onerous on content providers.

The group should be seen in tandem with our other amendments providing a backstop power requiring ISPs to block a site, and would send a clear message to content providers that the Government would treat any contravention of section 15 with the utmost seriousness and that continuing to provide content without age verification for a prolonged period of time would not be tolerated. We believe that, if the enforcement powers under clauses 20 and 21 are toughened up, the message will spread throughout the industry and it will make it clear that age verification is not an optional extra, but a central requirement in the effort to tackle what under-18s can see.

[Matt Hancock]

I am sympathetic to the purpose of this group of amendments. We think that decisions on when and how to enforce should be left to the regulator, but I see the point of trying to put a week into the Bill. However, it is overly prescriptive to do so in primary legislation. Our aim is for a proportionate regime, where the regulator can prioritise and deal with problems in a way that is aligned with its goals of protection, rather than having to fulfil legal requirements that might lead to unintended consequences.

[Louise Haigh]

Can the Minister give us any example where a one-week enforcement period would not be doable?

[Matt Hancock]

No, but I cannot—and she cannot—foresee all the circumstances that the regulator will have to deal with. It is far better to have a regulator with flexibility to respond and clear aims and intentions, rather than it having to fulfil an arbitrary timescale because that is in primary legislation.

[Louise Haigh]

Can the Minister confirm whether the legislation enables the regulator to set a time limit for enforcement?

[Matt Hancock]

Yes, it will allow the regulator that flexibility. I would rather have that flexibility at the level of the regulator than in primary legislation. I think that is a reasonable approach. The regulator will then be able to act in the way that it is clear from this debate is intended. I hope that on that basis, the amendment may be withdrawn.

[Louise Haigh]

It is useful to have on the record the Minister’s agreement that one week is a suitable enforcement period. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Louise Haigh]

Given that the Government have been so intransigent on the sensible suggestions for how their proposals could be strengthened, certainly on the issue of internet service provider blocking, I completely agree with the hon. Gentleman. The Minister keeps saying that he does not want to be too prescriptive, but we argue that the phrase “on a commercial basis” is too prescriptive and limits the powers of the age-verification regulator. Given the broad support for additional powers, we want the age-verification regulator and any other regulator involved in enforcement to come back to the House and tell us what additional powers they need to make this work. There are significant loopholes in the Bill and it could have serious unintended consequences for our young people. We completely support the SNP amendment.

[Matt Hancock]

I entirely understand the enthusiasm for commencement, and I have given the commitment that we would expect it within 12 months of Royal Assent. I hope that that deals with the demand for a timing of commencement to be put on the face of the Bill. Unfortunately, that renders the SNP amendment slightly impractical, because it would require a review within 12 months of Royal Assent, but if the Act commences only 12 months after Royal Assent, a review at that point might not show as much progress as we would hope.

[Calum Kerr]

I like the way the Minister is engaging. Is he telling me that he likes the idea, but it is just that we have worded it slightly wrongly? If that is the case, I would happily move the review 12 months on, if that is what he is suggesting.

[Matt Hancock]

Unfortunately, the hon. Gentleman has lost his opportunity for that because the deadline for tabling amendments has passed. We should have an enduring assessment of the effectiveness of the Bill and an ongoing review of how effective the policy is. Select Committees have an important role to play in doing that. I resist the amendment on the grounds that it is impractical, because of the timings I have discussed, and because it is far better that such matters are reviewed constantly, rather than just on a one-off.

[Thangam Debbonaire]

In my experience, ongoing reviews tend to mean never. If you do not have a deadline or target, that gives you the scope just to say, “We are doing it and will carry on doing it for some time,” without there ever being a point at which you say, “Here’s a review.” An annual review is such an easy thing to which to commit; why not do it?

[Thangam Debbonaire]

I apologise.

[Matt Hancock]

We thought you might be the regulator for part 4, Mr Stringer.

I suppose this is the difference between the two sides of the House: for the Opposition, an ongoing review means never; for the Government, an ongoing review means always.

[Calum Kerr]

My background is in telecoms, latterly as a global consultant coaching front-line leaders. People always said to me, “Oh yeah, we always have reviews,” but unless there is a cadence on it and it is put down in black and white, it is not done properly. They would not do it in the business world, and Opposition Members would not do it; perhaps Government Members are a bit more blasé than we are.

[Matt Hancock]

That tells us all we need to know about consultants. There we are. I commit that we will keep the effectiveness of the legislation under review. I know that that will happen anyway because I know that my hon. Friend the Member for Devizes is not going to let this one go.

[Christian Matheson]

How might the Minister review the ongoing review to ensure that progress is being made?

[Matt Hancock]

We will have a continuous review of the ongoing review. With that, I urge the hon. Gentleman to withdraw the amendment.

Question put, That the amendment be made.

--- Later in debate ---

[Louise Haigh]

I am grateful. I heard the BBFC or the Open Rights Group say that the incidence was very low, but it would do no harm to build an appeals process into the legislation to ensure that where sites that should not be blocked or require age verification have fallen through the cracks, that can be resolved at the behest of the regulator.

[Matt Hancock]

The hon. Lady is absolutely correct that there needs to be an appeals process. That process is provided for in clause 17(4):

“The Secretary of State must not make a designation under this section unless satisfied that arrangements will be maintained by the age-verification regulator for appeals”.

I agree with everything else she said. It is worth remarking on the recent announcement that gay and bisexual men will now be pardoned over abolished sexual offences—that is not in the Bill, so that remark was completely out of order, but I still think it was worth making. Appeals are important; I hope she is satisfied that they are provided for.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Clause 21 ordered to stand part of the Bill.

Clause 22

Age-verification regulator’s power to give notice of contravention to payment service providers and ancillary service providers

[Claire Perry]

I beg to move amendment 75, in clause 22, page 23, line 28, at end insert; “and

(c) the person has been the subject of a enforcement notice under section 20(2) and the contravention has not ceased.”

--- Later in debate ---

[Claire Perry]

Then I will carry on, because it definitely is. I think I misspoke at the beginning when I talked about new clause 7. I was actually referring to new clause 6; it was just my note-taking.

I was trying ensure that we put in place series of protections, including enforcement notices that are acted upon, financial penalties that make a difference and the ability to stop income streams moving from the payment providers to the various content providers. I want to press the Minister on the question of blocking, because it comes back to the issue of why anyone would care. If somebody does not respond to an enforcement notice—if, for example, the fine is not sufficient to make them stop —how can it be that we are not considering blocking? Of course, we do that for other sites. I know it is not applicable to every form of illegal content, but I am very struck by copyright infringement, which generates take-down notices very swiftly, and upon which the entire provision of internet service providers and ancillary services act. I would be really interested to hear from the Minister why blocking has been rejected so far. Could it be put in place as a backstop power? I worry that, without it, all of this amazing progress will not have teeth.

[Matt Hancock]

It is sometimes said that Parliament skates over matters and does not get under the skin of things, but in the discussion we have just had Committee members displayed a great deal of analysis, experience and wisdom, and our debate on the Bill has been enriched by it. I am very grateful to hon. Members on both sides of the Committee who made very good contributions to help us get this right.

Exactly as the hon. Lady the Member for Sheffield, Heeley said, getting this right involves walking a tightrope between making sure that there is adequate enforcement and appropriate access for those for whom it is legally perfectly reasonable to access adult content. We must get that balance right. With that mind, we have drafted the clauses, particularly clause 22, to allow the regulator to operate with some freedom, because we also need to make sure that, over time, this remains a good system and is not overly prescriptive. It was ironic that in a speech about privacy, the hon. Lady started to speculate about which MPs enjoyed watching porn. I am definitely not going to do that.

The truth is that age verification technology is developing all the time. Online personal identity techniques are developing all the time, and indeed, the British Government are one of the leading lights in developing identity-verification software that also minimises the data needs for that verification and does not rely on especially large state databases to do that, and therefore does it in a relatively libertarian way, if I can put it that way. Providing for verification of identity or of age, because age without named identity is what is really being sought here, but is difficult to achieve, is an incredibly important issue. A huge amount of resource is going into that globally to get it right, and it ties closely to cyber security and the data protection requirements of any data.

The UK Data Protection Act has a broad consensus behind it and follows the simple principle that within an institution data can be shared, but data must not be shared between institutions. The institution that holds the data is responsible for their safekeeping and significant fines may be imposed for their inadvertent loss. The forthcoming General Data Protection Regulation increases those fines. Rather than reinventing data protection law for the purposes of age verification in this one case, it is better to rest on the long-established case law of data protection on which the Information Commissioner is the lead.

We had a very informed debate on the role of search engines. The regulator will be able to consider whether a search engine is an ancillary service provider. Although we do not specify it, I would expect ISPs to be regarded as ancillary service providers, but that will be for the regulator.

On the name of payment providers who are already engaged, rather than enforced engagement, we already have engagement from Visa, MasterCard, UK Cards Association and the Electronic Money Association, and clearly there a lot more organisations that can and should be engaged.

[Kevin Brennan]

It is interesting that the Minister feels able to say that he would expect ISPs to be regarded as an ancillary service provider, but he did not use the same terminology when talking about search engines. To press him on that, would he expect search engines in some cases, or may be in all cases, to be considered as ancillary service providers?

[Matt Hancock]

I do not draw any distinction between the two, but the decision is for the regulator. The legislation provides that they could be, and it depends on the circumstances whether they would be. Of course, obviously, they play different roles.

[Kevin Brennan]

Just to clarify, I think the right hon. Gentleman is saying that in making no distinction, he would be able to apply the word “expect” to search engines as well as to ISPs. That is what I was probing him to find out.

[Matt Hancock]

I am choosing not to use that word because I want to leave it to the regulator, rather than leaving an implication that it should move one way or the other. The regulator should define what is an ASP according to the legislation.

[Kevin Brennan]

The Minister is therefore making a distinction between the two. In one case he clearly has an expectation that it will happen, and in the other case he does not. The Committee will be interested to know why he is making that distinction, which he denies he is making, because it is important to our understanding the reluctance in the Bill to involve search engines in some of these regulations.

[Matt Hancock]

They should be treated the same in that the same provisions in the Bill should be applied to each, but each performs a different role and ISPs are inevitably more closely connected to the provision of content because the content goes through an ISP, whereas a search engine may or may not be the route through which content is found. For implementation, it is clear that that is for the regulator to decide within the provisions set out in the Bill.

[Thangam Debbonaire]

I refer the Minister to the point made by the hon. Member for Devizes, who mentioned the murder of April Jones and the fact that her killer was able to type certain words into a search engine that I cannot bear to repeat. Search engines have the power to change their algorithm—we know they do.

--- Later in debate ---

[Matt Hancock]

The point that my hon. Friend the Member for Devizes was making is that, owing to her work, the search engines made precisely those sorts of changes on a voluntary basis. At the request of the Government and others, they now undertake millions of changes to their algorithms and millions of take-downs for both child porn and terrorist-related purposes. That system is working well, and it does not need to be underpinned by regulation.

There is then a wider question. I am straying to the limits of order to discuss this, but my hon. Friend very effectively argued that the principle that the internet should provide the freedom that it provides within the framework of a regulated structure. We agree with that, and we are providing for some of that regulated structure in this Bill. There is a first amendment-type argument, if we are thinking about it in an American way, that the internet is free and laissez-faire and that we should not regulate it. There are people who say, for instance, that we should not recreate national jurisdictional boundaries on the internet and that we should not regulate it, that it should be completely free. We reject that argument, which is why we are prepared to introduce legal requirements on age verification for the provision of information over the internet in the UK jurisdiction. We reject the argument because, at a principled level, the freedoms that we enjoy are freedoms that do not harm others, which applies offline just as much as it applies online. Because the internet is relatively new, we are still in the early days of applying such a principle to the internet. That is a much bigger debate than in clause 22, and therefore I should not go into further detail.

[Thangam Debbonaire]

I believe that the Minister has just answered the question of my hon. Friend the Member for Cardiff West on whether a search engine is an ancillary service provider. The Minister acknowledges that search engines, as well as ISPs, should be considered as such.

[Matt Hancock]

All I did was set out the principles behind the Government’s response to the amendments to clause 22. The Committee must know those principles in order to understand the direction that we are taking on regulation.

I will move on to some of the other points that were made. I will respond to new clause 18 and amendment 79.

--- Later in debate ---

[Claire Perry]

I thank the Minister for that response. I would have liked to hear him say a little bit more about how the payment service providers are involved in the game and whether we are relying on them to do the right thing because they are large corporate companies, or whether, as new clause 6 proposed, there was an opportunity to strengthen the wording of the Bill.

[Matt Hancock]

I apologise; there were so many interesting points made that I did not get to that one.

The provision of pornography without an age verification in the UK will become illegal under this Bill. There is a vast panoply of financial regulation requiring that financial organisations do not engage with organisations that commit illegal activities, and it is through that well-embedded, international set of regulations that we intend to ensure that payment service providers do not engage with those who do not follow what is set out in the Bill. Rather than inventing a whole new system, we are essentially piggybacking on a very well-established financial control system.

[Claire Perry]

That is a very reassuring reply and I thank the Minister for it. We have had a very good debate. I know that his officials will be listening and thinking hard about what has been said, and I do not think it would serve the Committee any purpose to press my amendments or my new clause to a vote.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Louise Haigh]

It was interesting to hear the Minister refer to financial regulations. I was not present on Second Reading because I was not then in the position that I occupy now, but having read that debate I do not believe that there was any such reference. So we would like some clarity on who will be the regulator of the payment service providers and what work has already been done with the Financial Conduct Authority—I assume it will be with the FCA in this circumstance—to ensure that it will be regulating those providers, to make sure that they act with speed and due diligence on receiving notification from the age verification regulator under clause 15.

It is disappointing that the Government do not consider new clause 18 necessary to amend the Bill. I appreciate that the BBFC has been given powers to establish a code of practice, but given the very serious consequences that could result from that not being done correctly, some basic principles need to be embedded into the process, based on the issues that I raised earlier in our discussion.

I will just add that we will return to this issue on Report.

[Matt Hancock]

We have been engaging directly with payment service providers, although—no doubt as and when necessary—engagement with financial authorities will be made. Payment service providers can withdraw services from illegal activity under their existing terms and conditions, so the provision is already there for the measures to take effect.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Clause 23

Exercise of functions by the age-verification regulator

[Claire Perry]

I beg to move amendment 80, in clause 23, page 25, line 1, at end insert—

‘(3) The age-verification regulator must consult with any persons it considers appropriate, about the option to restrict the use of its powers to large pornography websites only.’

This amendment requires the age-verification regulator to consult on whether, in the exercising of its function, it should restrict its powers to large pornography websites only.

--- Later in debate ---

[Louise Haigh]

New clause 12 would give the power to the age verification regulator to introduce another code of practice—the Opposition are very fond of them—for internet content providers. [Interruption.] And reviews, we are very fond of reviews.

We have made it clear throughout that we want enforcement to be as tough as possible and for all loopholes to be closed, but we also want to ensure that children are as safe in the online world as they are offline. There absolutely needs to be that parity of protection. That is one reason why we are disappointed, as I mentioned, that these measures came forward in a Digital Economy Bill, where it was incredibly difficult to look at the issues of child protection online in a thoroughly comprehensive way.

The new clause proposes that the regulator should work with industry to create a statutory code of practice, based on BBFC guidelines for rating films and the principles of the ICT Coalition for Children Online. The code would establish a set of minimum standards that would apply consistently to social networks, internet service providers, mobile telecommunication companies and other communication providers that provide the space and content where children interact online.

This is not intended to be an aggressive, regulatory process. We envisage that it will be the beginning of a much broader debate and conversation between regulators and content providers about just how we keep our children safe on the web. This debate will encompass not only ideas such as panic buttons, but education about the online world, which must run in parallel for any process to be effective.

A statutory code would work with providers to lay out how content is managed on a service and ensure that clear and transparent processes are in place to make it easy both for children and parents to report problematic content. It would also set out what providers should do to develop effective safeguarding policies—a process that the National Society for the Prevention of Cruelty to Children has supported.

As I said, this will clearly be a staged process. We envisage that in order to be effective, the development of a code of practice must involve industry, child protection organisations such as the NSPCC and, crucially, the children and families who use online services. But this code of practice would be based on existing industry and regulatory minimum standards and would require providers to ensure that the safety and wellbeing of children is paramount in the design and delivery of their products and services. The new clause would also empower the Secretary of State to make regulations to ensure effective enforcement of the minimum standards in the code of practice.

The online world can be an enormously positive force for good for our children and young people. It makes available a scale of information unimaginable before the internet existed and there is compelling evidence that that constant processing of information will lead to the most informed generation of children the world has known, but it needs to be made safe to realise that potential. The new clause would give assurance to Opposition Members that we will enable that to happen.

[Matt Hancock]

I am grateful to my hon. Friend the Member for Devizes for saying that she will not press her amendment and for what she said about the BBFC. Anybody reading the transcript of this debate will see the universal support for the BBFC and its work.

On the point about statutory guidance, through the UK Council for Child Internet Safety we have made guidance available to providers of social media and interactive services to encourage businesses to think about safety by design and help make platforms safer for children and young people under the age of 18. The amendment would make something similar into statutory guidance. I see where the hon. Lady is coming from, but the scale and scope of the internet makes this an unprecedented challenge. Some of the biggest sites have over 2 billion visits per year and UK audiences make up a very large proportion of those. It would be very difficult to have statutory guidance that would be policeable in any complete way. Rather than statutory guidance that could not be dealt with properly, it is better to have non-statutory guidance that we encourage people to follow.

[Louise Haigh]

On that point, does the Minister share my concern about the levels of discontent among those children who are trying to report online through social media? Some 26% received absolutely no response at all and of those that did receive a response, only 16% were satisfied. What more can we do to strengthen that?

[Matt Hancock]

I do recognise that. My point is that making non-statutory guidance statutory will not help in that space, but there is clearly much more to do. I hope that, with that assurance, my hon. Friend the Member for Devizes will withdraw the amendment.

[Claire Perry]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

We are very concerned by the intent behind the clause. Is it inserted as a semi-admission by the Government that they will simply be unable to enforce clause 15 on “all” sites, as their manifesto promised, and so gives them an excuse to wriggle out of their commitment?

[Matt Hancock]

I hope I can provide some assurances to the perfectly reasonable questions from the hon. Lady. The clause is not an attempt to wriggle out of our manifesto commitment. We will deliver our manifesto commitment in full, and the Bill does that.

The clause provides discretion for the regulator to exercise its functions in a targeted way. It is needed so that the regulator does not break its statutory duties if it goes after the big providers first. As it set out in evidence, the regulator wants to go for the big providers first, and then move on to the smaller and then move on to the next. I want to allow for that to happen, so we need a clause such as this.

[Thangam Debbonaire]

If I am not mistaken, the Minister just said “in a targeted way”. I fail to understand how phrases such as “a large number” or “a large amount” are in any way targeted.

[Matt Hancock]

The clause gives discretion to the regulator. If the regulator went after the big porn sites first, it would not have the vires to distinguish and go after those who do the most harm earliest. It is important that it has the ability to make the legislation work in practice.

[Kevin Brennan]

That sounds pretty thin. It is almost like saying that the police would be acting in an ultra vires manner if they did not go after murderers ahead of shoplifters in terms of devoting their resources to their duties. Is that really the reason why this provision is in the Bill? If it is, it is a novel innovation by the Minister that is not often seen in legislation setting up a service.

[Matt Hancock]

As I have just mentioned in the discussion on the previous clause, some of the biggest sites on the internet have more than 2 billion visits a year. As the hon. Member for Sheffield, Heeley said, many sites are involved. Allowing discretion for a targeted approach is important. The clause also allows the regulator to

“carry out, commission or support…research…for the purposes of exercising, or considering whether to exercise”

the powers. That is important, too, because we want the regulator to have the power to conduct research to inform its views. Both those things are important parts of the execution of age verification.

[Louise Haigh]

The Minister said just now that the clause will stop the BBFC—we are to assume that it will become the age verification regulator—from being in breach of its statutory duties if it goes after the largest pornography providers first. Putting aside the analogy that my hon. Friend the Member for Cardiff West made, which was absolutely right, is it not the case that the age verification regulator does not have many statutory duties? That was the whole purpose behind the amendments of the hon. Member for Devizes. The regulator is required only to—well, it is not required to; it may—give notice to any payment services or ancillary service provider. I fail to see how targeting any content provider first, last or in any other way would put the regulator in breach of any requirement under the Bill.

[Matt Hancock]

I want to make it clear that it can target in order to work as effectively and as soon as it can. I am slightly surprised to find Opposition Members against that principle.

[Claire Perry]

Part of my reason for withdrawing my amendment was that I was encouraged by the word “principally” on line 35 of this page. It is not a restriction; the regulator certainly has the power under the clause to go after it. My issue is that there is a worry, although not with this regulator, that success will be defined by the number of websites or the number of enforcement notices issued. It is not about the number of websites; it is about the number of eyeballs going to them, so it is absolutely right that the regulator focuses on larger sites first. The wording of the Bill allows the regulator discretion to go after any site.

[Matt Hancock]

On the basis that I agree with that explanation also, I commend the clause to the Committee.

Question put, That the clause stand part of the Bill.

--- Later in debate ---

Question proposed, That the clause stand part of the Bill.

[Matt Hancock]

I will speak to the clause, just in case we have an unexpected hiccup. Clause 24 sets out requirements to apply where the regulator wishes to seek information or send a notice of infringement to an infringing website, payment services provider or ancillary service provider. The designation is to do so by post or email. We will work with the BBFC in its new role to ensure that the system is effective. Due to the nature of the sector, of course there will be times when notices are not seen or purposefully ignored. In the case of unco-operative non-compliant sites, the clause will allow us to disrupt their business regardless through the withdrawal of supporting services by payment and ancillary providers. I commend the clause to the Committee.

Clause 24 accordingly ordered to stand part of the Bill.

Clause 25 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Graham Stuart.)

Digital Economy Bill (Seventh sitting)

Matt Hancock Excerpts

Committee Debate: 7th sitting: House of Commons
Tuesday 25th October 2016 Public Bill Committees

[Thangam Debbonaire (Bristol West) (Lab)]

I rise to speak in support of these amendments and new clauses, and to add a bit of colour and flavour to some of the arguments that have already been made. We often talk about rights holders, but we need to be aware that behind those rights holders are individual artists, musicians and technical people. It is not just about my hon. Friend the Member for Cardiff West; it is about the technical people involved in any recording, film or e-book. Many people are involved in those processes, and every time we deny their right to be paid, we are denying them the right to continue working in the way that we would want them to work.

Which of us here has not skipped gaily around the Palace of Westminster, at least in our imagination, with a song in our heart or a tune in our head? Maybe that is just me. Most of us have a favourite film, and we have music at special family occasions. A poem will be read at a funeral and a song will be danced to at a wedding, and all the people involved in producing them need to be paid properly for their work.

There should not be this wild west of a shopping mall where people can access whatever they want for free, without proper provision for reimbursing those involved. Unfortunately, search engines in particular, but also other providers, are allowing that illegal shopping mall to exist, and so artists, writers and others involved in the creative industries are not getting their proper deserts. That is important.

The hon. Member for Selby and Ainsty and my hon. Friend the Member for Cardiff West both mentioned economic value. I emphasise that according to the Government’s own website, the creative industries are contributing £9.6 million an hour to the UK economy. Since we sat down to work, the creative industries have contributed £9.6 million. UK music alone contributes £4.1 billion each year, which is something to think about. The creative industries are growing at twice the rate of the UK economy, at 8.9%, and we want them to continue to grow. We do not want to deny them part of their income—admittedly the minority, but it is still significant.

We tabled these amendments because we need to harmonise copyright and ensure that licensing laws work across the online and offline world. We want to help Conservative Members to fulfil their commitment in the Tory party manifesto, and new clause 3 would help

“the Government to fulfil its manifesto commitment to reduce copyright infringement and ensure search engines do not link to the worst-offending sites.”

We seem to have a degree of cross-party unity on the value of that measure. I look forward to hearing what the Minister has to say, because there is otherwise an absence of a specific provision in the Bill to achieve this.

I want us to make sure that the good examples, such as Get it Right from a Genuine Site, are taken up and followed, to avoid the unfortunate misdemeanours of others, such as search engines that can remain nameless—we can all guess who they are and others may have already mentioned them. It is not okay for search engines to drive—wittingly or unwittingly, but they should reasonably have known—towards illegal sites.

Consumers do not want musicians, film makers and others to be robbed of their just deserts. Mostly, we want to be able to be sure that when musicians have made a piece of music we love, they get properly paid for it. It is incumbent on search engines and others to make sure that that happens, and to use the power we know they have to create their algorithms to work properly in this respect. We would not tolerate a shopping mall in which signs and property space were given to illegal shops selling illegal goods. This is the equivalent.

I am absolutely convinced that the Minister would want to honour the commitment in the Tory party manifesto to rectify that. On Second Reading, the former Secretary of State, the right hon. Member for Maldon (Mr Whittingdale) said,

“there may well be a case for including a legal provision encouraging providers to establish a voluntary code.”

He also said:

“we cannot allow Google and other search providers to go on allowing people access to illegal sites.” —[Official Report, 13 September 2007; Vol. 614, c. 785.]

I am convinced that the Minister will want to take up the mantle he has been thrown by the former Secretary of State and I urge him to do so.

[The Minister for Digital and Culture (Matt Hancock)]

What a pleasure it is finally to stand to respond to the long interventions and speeches from Labour Members. It is a joy to hear that at least some of them understand and believe in property rights. Conservative Members certainly do.

The discussion has turned into a debate not only on amendments 92 and 93 and new clauses 3 and 33 but essentially on clause stand part. I therefore hope that Committee members will understand if I explain the whole clause in my response.

[Kevin Brennan]

The Minister is seeking to chair the Committee now as well as being the Minister.

[The Chair]

And he is doing it extremely well but it will be my decision.

[Matt Hancock]

It is a team effort.

The amendments are to clause 26, which increases the maximum sentence for online copyright infringement from two to 10 years, which is equal to the sentence for physical copyright infringement. The case for this has been made powerfully by Government and Opposition Members and it is an important change. Whether online or offline or a combination of the two, copyright infringement is IP theft and it is right that the maximum sentence is the same.

This sends a clear message that copyright infringement of either kind will not be tolerated and affirms that creators who produce the content that we all enjoy are valued. Furthermore, enforcement agencies will now have proportionate sanctions to tackle this serious criminality, whether offline or online.

We recognise that the maximum sentence of 10 years, even if only for the most serious cases, must be carefully targeted. Consequently, clause 26 also makes changes to the existing offence of online copyright infringement to make it clearer when that offence is committed and who should be considered liable. The amendments speak to some of those points.

The concept of prejudicial effect in the existing legislation will be replaced with a requirement that the infringer intends to make a monetary gain for themselves or knows or has reason to believe their actions will expose the rights holder to a loss or risk of loss in money. I will come to the debate around definition of that in more detail.

The point of this clarification is to act as a safeguard to ensure that the increased maximum penalty is applied only to serious criminals who deserve it and will not apply to those who share material accidently or without knowledge of the consequences.

Turning to the points made by the hon. Member for Cardiff West, or at least the ones that were pertinent—

[Kevin Brennan]

On a point of order, Mr Streeter. Am I right in saying that as the Chair of the Committee, had I made any points that were not pertinent, you would have ruled me out of order?

[The Chair]

I can certainly confirm that you were in order all the way through your comprehensive speech.

[Matt Hancock]

Undoubtedly in order and sometimes very broad ranging. A person who accidentally shares a single file without the appropriate licence, particularly when the copyright owner cannot demonstrate any loss or risk of loss, is not expected to be caught by this offence. I hope that gives the hon. Gentleman assurance on that point. However, of course, criminal infringement will be dealt with on a case-by-case basis and a court must be satisfied beyond reasonable doubt that all elements of the offence have been made out.

[Kevin Brennan]

We are getting to the crux of the matter: the words the Minister uses are very important. All joking and jibing aside, which he enjoys, there is a serious reason for laying these matters firmly on the record in Committee—that is our serious purpose here and our constitutional role. He said, “is not expected to be caught by this offence”. I fear that that is not really strong enough in response to my points. We need to understand whether it is possible for individual consumers to be captured by it. If so, the Minister should tell the Committee.

[Matt Hancock]

As I said, it is for the courts to decide about criminal infringement on a case-by-case basis, but I am making clear that that is unlikely and not the expected outcome in the case of a person who accidentally shares a single file without the appropriate licence. The reason I do not go further and make it absolute is to ensure that the court can make a fair judgment on this, rather than be bound. I want to go further, because there is another important point here about the impact of this on activities that are currently lawful. We do not expect things that are currently lawful to be caught by this change. This is a change in the scope of the sentence rather than in the definition of the offence. I want to make that very clear.

On the second point that the hon. Member for Cardiff West made about the legal distinction between “owners of copyright” and “owners of the rights”, “owners of copyright” relates to the offence of communicating to the public, whereas “owners of the rights” relates to the performer’s right of making available. This is a legal distinction: they are two separate offences but there is no substantive difference in the meaning of the two. The reason has to do with the legal drafting of the offence rather than the lay understanding of the meaning of the two.

The hon. Gentleman also raised the issue of trolls. I want to be clear that while we understand that some people may receive threatening letters from so-called trolls, we are not aware of any successful court case by these so-called trolls in this area. We do not endorse such aggressive tactics and we understand that this tactic is not widespread, but we will keep it under review.

Going more broadly into the debate that we have just enjoyed, since 2002, when the maximum custodial sentence for copyright infringement was changed, this has clearly been wrong. I am glad that there is all-party agreement on the change to 10 years, but in addition to increasing the maximum sentence, we have recast the relevant offences to include an additional element to the offences, which must be proved before an offence is made out, namely that the infringer intends to make a monetary gain for themselves or another person, or knows or has reason to believe that their actions will cause loss to the rights holder or a risk of loss in money. Amendments 92 and 93 would remove this additional element, but there are several reasons why it should be retained. We should remember that serious incidents of online copyright infringement or infringement of a performer’s making available right already fall within the scope of criminal law, as I mentioned.

It is right that the courts should be able to apply serious sanctions where they are warranted and apply the equivalent sanction to that available for physical copyright infringement, but it is our view that it is important to include the words, “risk of loss” to capture cases where the loss has not yet materialised. We believe that these same scenarios would fall within the current drafting of the offences, which relies on the prejudicial effect, but we have tightened the notion of prejudicial effect following consultation, to be more precise and targeted in the wording being examined today. I hope that satisfies the understandable request by the hon. Member for Cardiff West for clarity to be put on the record as to the intent of clause 26.

I now wish to turn to new clause 3 on search engines. We had a serious debate on the impact of search engines. We come from a position of being strong believers in the protection of property rights, and we want to ensure that the UK retains one of the best IP regimes in the world. Without content, there is no IP to protect, so I pay tribute to the BPI’s work: to support take-downs and to make the eloquent case for stronger IP protection. I also pay tribute to Get it Right from a Genuine Site, which does important work in making sure that culturally it is unreasonable—and seen as unreasonable—to take IP without paying for it.

I turn to my hon. Friend the Member for Richmond (Yorks) who made an important point on newspaper articles that appear in search engines. We support fair remuneration and we encourage content providers and online platforms to work together on this. This is an issue that has been raised with me directly, and it is pertinent to the debate. We want to encourage investment in new content, and we support returns for investigative journalism and other kinds of journalism, and I hope we come to a resolution on fair remuneration between content providers and online platforms, in the first instance. However, my hon. Friend’s intervention is noted.

In relation to clause 3, as the Committee knows from the discussion, the Minister for Intellectual Property, Baroness Neville-Rolfe, has been working closely with search engines and representatives of the creative industries. We are fulfilling our manifesto commitment to ensure that there is a fair return, and the group is currently considering a voluntary code of practice. I agree with the thrust of the arguments made by my hon. Friend the Member for Selby and Ainsty, who put the case strongly. Our intention is for the voluntary negotiations and the voluntary code of practice to come to a successful fruition, and the people involved in those negotiations will doubtless have heard the argument and understood the strength of feeling on this Committee. Given this ongoing work and the existing remedies for removing or blocking infringement content, I hope that hon. Members will agree that now is not the right time for a broad reserve power.

[Kevin Brennan]

Surely now, when we have a legislative vehicle in front of us that could not have been better designed for this very purpose, is exactly the right time. Committee members would have a right to be annoyed if, in making this broad assertion that now is not the right time, the Minister were subsequently to concede on this point at a later stage in the Bill’s progress, in another place and in an unelected House. Will he tell us truthfully what the Government’s intentions are on this point?

[Matt Hancock]

I care about the substance of getting this Bill through right. There are, of course, important parts of parliamentary process both here and in the other place. Given that the round-table discussions are ongoing, including a meeting next week, now is not the right time for the broad reserve power.

New clause 33 seeks to expand the criminal liability to include the supply of IPTV boxes for criminal infringement. As hon. Members will understand from the tone of my remarks, as a strong believer in property right protection, I understand the concern. The hon. Member for Cardiff West referred to the Copyright, Designs and Patents Act 1988 and the fact that the Minister for Intellectual Property had committed to making sure that we looked at this, and we have done so. This activity is already covered by criminal law under the Fraud Act 2006 and the Serious Crime Act 2015. The City of London police force is investigating cases. It seized over 500 set-top boxes earlier this year and arrested a man for fraud and IP offences.

There is a danger in the digital world of legislating for a specific technology as opposed to legislating for the offence in a technology-neutral way. I strongly prefer the latter. As the law is already in existence in the two Acts that I mentioned, the best thing to do is to prosecute under the existing Acts, rather than try to chase a particular technology, which may well be out of date. Our strategy for tackling IP crime includes a specific commitment to developing an understanding of the challenges posed by IPTV. We now need an approach that tackles the problem, rather than just current IPTV set top-box technology, which will no doubt be superseded in due course by future technologies. The existing criminal offences provide a legislative framework that is broad enough to protect our creative industries. However, I will of course keep this area under review.

I hope Members have been reassured of the work we are doing to make sure we apply the existing criminal law and make sure that intellectual property is protected. I concur with all the remarks made by Committee members about the importance of the creative industries, the importance of supporting content providers and the importance of intellectual property. I hope that with these explanations, the hon. Member for Cardiff West will feel able to withdraw the amendment.

[The Chair]

Before I call Mr Brennan, it may help the Committee to know that it is not my intention to allow a wider debate on clause 26. We have had a good old canter around the course.

[Kevin Brennan]

Thank you, Mr Streeter, for letting us know your decision—not influenced at all, I am sure, by the efforts of the Minister to chair the Committee as well as leading for the Government. I will take into account in my response that you are including clause stand part in this part of our debate.

I made it clear at the outset that amendments 92 and 93 were probing amendments and I am very grateful for Minister’s explanation of the meaning and intention of the wording. As I have made clear, it is not our intention to push the amendments to a Division, but I think we need to cogitate a little further before Report and the latter stages of the Bill and perform a more careful exegesis of what the Minister said when he used the phrase “not expected”.

[Matt Hancock]

I can go yet further on that. The reason this is rightly done on a case-by-case basis is that we are talking about an existing offence. It is important to remember that. We are not making something illegitimate which is currently legitimate; we are adding to what is required to make out an offence. We are not making something that is currently legitimate now illegitimate. That is why it is reasonable to proceed on that basis, with the language that I used.

[Kevin Brennan]

I am grateful for the further clarification and for the Minister engaging in the discussion. We will think further about what he has said. I think it has been a very helpful exploration of the issue. I am not sure that he is right when he receives advice that the trolling issue is not widespread, which was the phrase he used. Obviously we can dig into that a bit further as we progress with scrutinising the Bill, but I welcome the fact that he said he would keep that under review. This is a very real issue and the fact that there may not be many prosecutions around it is often related to the fact that such activity is not necessarily illegal—the point I made in my contribution. Nevertheless, it can bring great distress to vulnerable individuals. We all know that the issue of vulnerable individuals being targeted by unscrupulous individuals, organisations and networks online is growing.

[Matt Hancock]

The challenge, though, is to ensure that reasonable protection of intellectual property is not ruled out by stopping any such speculative activity. There is a genuine policy challenge in how to support the protection of intellectual property. We are not aware of any successful legal cases by the trolls. People should therefore be reassured.

--- Later in debate ---

[Kevin Brennan]

In a nutshell, that is the reason for new clause 3, and I am sure that was exactly the thinking of the hon. Member for Selby and Ainsty when he tabled it.

It might help if the Minister indicated when he expects the talks to conclude. He says he hopes there will be a positive outcome to them and that this is not the right time for new clause 3. He likes to talk softly; if new clause 3 were incorporated into the Bill, he could carry a big stick while talking softly about this matter. If he is not prepared to amend the Bill, perhaps he could tell the Committee when he believes the talks should conclude, as that would help to focus minds a bit. Perhaps he could put it on record that he is not happy to allow the talks to drift on and on inconclusively, as they have for many years.

We are not satisfied with the Minister’s response on new clause 3, and I repeat that it is my belief that at some point during the progress of the Bill the Government will concede on that point. It would be a terrible shame if they did not concede to the hon. Member for Selby and Ainsty—one of their own elected Members here in the Commons, who has tabled a sensible amendment—but did so in another place, giving the credit, yet again, to the unelected House for being a wonderful House in revising legislation. There is plenty of expertise right here in the Committee and in this House, among elected Members who know about the subject and know that this is the right thing to do. I urge the Minister to change his mind about new clause 3, if not now, perhaps on Report, when we will no doubt return to the issue.

Finally, I hope it is helpful to you, Mr Streeter, to be aware that it is not my intention to divide the Committee on new clause 33. As for the Minister’s response, I think I referred to the shortcomings of the current offence. I did not say we did not think that people could currently be prosecuted, under the Fraud Act 2006 or the Serious Crime Act 2015; in fact, I specifically mentioned those Acts—it might have been while the Minister was searching for something online. I also mentioned why the Acts were inadequate, and the Minister did not respond. First, they require a great deal of expertise in the area on the part of the police, which is not necessarily a resource that is sufficient to meet the growing size of the problem. Secondly, by amending the Copyright, Designs and Patents Act 1988, my new clause would have not just allowed but compelled trading standards to get involved and would have allowed the body to take action.

It would be useful to hear from the Minister why he does not think it a good idea that trading standards should be brought into play in that way, rather than simply relying on a police force that is under pressure and has many things to investigate—an ever-growing problem. Is it the Government’s position that is it wrong that trading standards would be the right body to involve? It would be extremely useful if the Minister felt able to clarify that. He said that he would keep the matter under review. I welcome that, and I hope he will be able to tell us more about the issue at a later stage, but if he told us at this stage why trading standards is not the right body to involve, that would be helpful.

We have had a fairly comprehensive debate. I do not think I need to add much on clause stand part, apart from that the latest data, published by the IPO, demonstrate the need for Government action. The research found that 15% of internet users—6.7 million people—still access copyright-infringing content, so it is absolutely right that the Government should act. I hope that the Minister feels able to add a bit more, in light of what I have said.

[Matt Hancock]

Very briefly, I mentioned that one of the meetings in the negotiations with search engines is next week. We expect the meetings to conclude over the next few weeks, and that is why the timing is appropriate.

[Kevin Brennan]

Perhaps I am speaking against what I said earlier, but if the Government do not give way on that point and the talks conclude unsatisfactorily before Christmas, while the Bill is still before Parliament, will they consider amending the Bill at a later stage?

[Matt Hancock]

I do not want to get into answering conditionals that are dependent on some future action. I have made the case for why now is not the right time and I have given the hon. Gentleman the timeframe over which discussions are taking place.

The hon. Gentleman made the case against new clause 33 very well. These are criminal activities, and it is the police’s role to police them. There are increased resources for the police in this area and I look forward to their taking it on. Our principle is not to legislate for specific offences based on an individual technology when offences already exist that can be used to prosecute the illegal activity.

For instance, many IP TV boxes are sold without any software on them; some have it inbuilt and some do not, and the ones that do not can be used for legitimate and illegitimate purposes. It is far better to have an in principle criminal measure on the statute book and to prosecute with that. Everybody can see the united strength of purpose to ensure that such IP theft does not go unpunished.

[Calum Kerr]

I thank the Minister for his explanation. I know that he and the Government are not fans of amendments that would oblige them to do a report to see how they are doing in the area. However, is there a way of looking at it on an ongoing basis, so that progress can be monitored and we can see how many prosecutions are actually occurring under the current legislation?

[Matt Hancock]

That would be an excellent idea, if the Culture, Media and Sport Committee chose to take it up. That is what Select Committees are for; I know the hon. Gentleman does not like them, but I think they are excellent at scrutinising the Government and everything that is going on. With that response, I ask the hon. Member for Cardiff West to withdraw his amendment.

[Kevin Brennan]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 ordered to stand part of the Bill.



Clause 27

Registered designs: infringement: marking product with internet link

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

Can the Minister confirm in his response whether that assessment of the clause’s purpose is reasonably accurate? Has any assessment been made of the impact on the costs of design registration? Can he give us any practical examples of how the current law is causing problems—in other words, the problems that the clause seeks to rectify? Practically, how could the clause have prevented such problems, and how will it prevent them in future if approved by the Committee?

[Matt Hancock]

First, that was an extremely good and unusually succinct description of the clause. The hon. Gentleman asked about costs; we think that it will reduce costs to business. In terms of the current problems, physically changing the required registration details on products imposes a cost. For instance, some businesses produce labels that must be applied to every single product. Such costs are unnecessary if a single label or web address can be built into the design and the update can then be done digitally rather than physically. It is, after all, illegal to claim that a product is registered when it is not. Therefore, the changes are required by law, and it is far cheaper for everybody if they are made on a website that is referenced on the physical product, rather than on labels, or sometimes labels stuck over labels. I am glad that there is cross-party understanding of and agreement on the clause, and I commend it to the Committee.

Question put and agreed to.

Clause 27 accordingly ordered to stand part of the Bill.

Clause 28

Copyright etc where broadcast retransmitted by cable

[Nigel Adams]

I beg to move amendment 63, in clause 28, page 27, line 31, leave out subsections (3) to (5).

This amendment, together with Amendment 64, are probing amendments to identify a timeframe for the repeal of section 73 of the Copyright, Design and Patents Act 1988 as it is not clear when the repeal will come into force. The amendments would mean that repeal of section 73 of the CPDA would come into force as soon as the Bill receives Royal Assent.

Digital Economy Bill (Eighth sitting)

Matt Hancock Excerpts

Committee Debate: 8th sitting: House of Commons
Tuesday 25th October 2016 Public Bill Committees

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

I feel that I should thank you for your chairmanship, Mr Streeter; I feel a bit left out, given that the Opposition spokesperson did it. Thank you so much for your chairmanship. It is nice to see a smile at the top table.

I will add a couple of brief points. I am surprised the hon. Member for Cardiff West earned only £10.60. I thought he displayed some creativity. I have never heard so many song lyrics or titles; I do not know if he is on commission for that. Hopefully, journalists across the country are googling—that is appropriate, given what we are discussing today—for what content he has earned £10.60, so that number may go up.

[The Minister for Digital and Culture (Matt Hancock)]

Other search engines are available.

[Calum Kerr]

Indeed—I thank the Minister. There is an interesting point here about the importance of parity across channels. The Scottish National party is clear in supporting the repeal of section 73. The hon. Member for Cardiff West made a point about the many different ways in which people can access content, which he articulated well, and the importance of being consciously competent across all areas when making legislative change. I am interested in hearing the Minister’s remarks on that.

We noted earlier the concerns specifically in relation to Virgin as a large cable company, but I want to put on the record very clearly that we absolutely support the Government in repealing section 73. As these models change and people access content in different ways, the ability for them to earn revenue from the content they produce becomes all the more important, because they cannot necessarily rely on its being consumed in a way that ensures that advertising revenues naturally flow. I emphasise that we support this, we welcome the Government’s bringing it forward but we would like a bit more clarity from the Minister around the broader picture.

[Matt Hancock]

I am delighted to respond to these points. I take this opportunity to commend the Opposition Front Benchers and, in particular, the hon. Member for Sheffield, Heeley, for how she proved, earlier in Committee, how it is possible to put points with great clarity and precision, such that on Thursday we rose early—somehow that seems unlikely today.

[Kevin Brennan]

Will the Minister give way?

[Matt Hancock]

No. The Government are committed to repealing section 73 of the Copyright, Designs and Patents Act 1988, following public consultation which ended this year and concluded that section 73 is no longer relevant. Amendments 63, 64 and 94 seek to ensure that the repeal will be brought into force rapidly following Royal Assent and amendment 189 would provide for the Government to produce a report on the implications and a consultation on the future of television content distribution and public service broadcasters. I should say that after today’s Committee session I think that my hon. Friend the Member for Selby and Ainsty will be known as “the IP king”. He has been the most ardent defender of intellectual property and its protection and he made very strong arguments.

On the case for a report and a consultation, Opposition Front Benchers asked the Government to face up to the challenges of new technology and its impact on public sector broadcasting and more broadly, and it is absolutely true that there is a huge impact of technology, both in distribution methods and in software, in terms of how we are watching content. Indeed, I understand that in China more films are watched on a hand-held than on a fixed device, and the trend is in the same direction here. This is clearly a very big issue and I am glad that all members of the Committee are alive to it.

I would say, though, that in response to amendment 189, we did just hold a public consultation precisely on the balance of payments between television platforms and the public sector broadcasters which considered the regulatory framework. It considered these questions and came forward with the proposal to repeal section 73. So I gently say to Opposition Front Benchers that, although I can see the point of the amendment, the report that they seek and the consultation that they are asking for by way of what I accept is a probing amendment is what we delivered through that consultation earlier in the year. The changes that we are seeking to make in legislation are a conclusion of exactly the sort of consultation that they have been looking for. The consultation was published on 5 July. I am glad that its conclusions have cross-party support.

We strongly support public service broadcasting in the UK. We believe that it has a long, vital and sustainable future and we will ensure that it does. I cannot give a clearer commitment to public service broadcasting. Even through these changes in technology, the evidence on viewer habits shows that public service broadcasting remains valued and valuable, and we support it.

I turn to some of the detailed questions. I was asked about the TPS regulatory regime. That was also considered as part of the consultation. We decided that different regulatory regimes are still appropriate, given the differing technical requirements of different TV platforms. There is a big change: an amalgamation of different delivery platforms for broadcasting from the old cable, terrestrial and satellite, and increasingly things are moving to broadband and fibre.

Following our discussion last week, I note that today TalkTalk has announced a full roll-out of full fibre to the whole of York, so there is progress in the full fibre drive that we are looking for in this country. However, there remain different technologies, so we think that it is still appropriate to have different regulatory regimes for them, although clearly the interoperability between them is important. I hope that that explanation addresses the point.

[Kevin Brennan]

Does the Minister have any concerns, or did the review reveal any concerns, about the point that I made about the opaqueness of the kind of deal now done under the TPS regime? That makes it impossible to judge whether it is truly fairer to public service broadcasters.

[Matt Hancock]

I will come to that and answer it alongside the question about the impact of removing section 73 where there are must-offer obligations. In truth, there are a huge number of commercial deals between the public service broadcasters and those that carry the PSB content to a wider distribution network. Whether it is through the TPS regime or the regime that we are discussing, many PSB broadcasters have contractual arrangements for their non-PSB content. That happens perfectly reasonably, whether it is through that regulatory regime or through a non-PSB deal delivered using non-satellite transmission.

We do not expect PSB content to be withdrawn because of the existence of contractual arrangements for PSB content replacing section 73. Indeed, there are contractual arrangements for lots of non-PSB content, so I do not see why those contracts cannot be entered into, but the issue does lead to the question whether there should be a transitional regime to ensure that there is no interregnum.

In the event of a PSB and a platform failing to agree terms for the carriage of a service, it is for Ofcom to consider whether the proposal of the PSB was compliant with the must-offer obligations in its licence. Were Ofcom to conclude that it was not, it would expect the PSB to submit a revised offer to the platform. Until now, Ofcom has not had to intervene, because no disputes have arisen presenting any real risk of refusal to supply by PSBs or to carry by platform operators.

The timing question was raised by my hon. Friend the Member for Selby and Ainsty and by the Opposition. The consultation report included an assessment of the implications of repealing section 73, and there was recognition of the potential impacts on the underlying rights market, meaning that the Government have decided that a further technical consultation should be run by the Intellectual Property Office.

I assure the Committee that the Government have every intention of bringing into force the repeal of section 73 rapidly; we plan to do it before the start of summer recess 2017. Repealing section 73 immediately could impact rights that have previously been exempt from remuneration in relation to the underlying copyright content in cable retransmissions, such as those held by scriptwriters or musicians whose intellectual property forms part of the relevant broadcast content. Our approach is to ensure an orderly transition.

Some respondents to the original consultation said that there could be disputes between the cable platform and the underlying rights holders when trying to agree terms and that a transitional period may be helpful. The Intellectual Property Office is currently running a brief technical consultation, as has been mentioned, to examine the extent of those issues and to assess whether any transitional measures are required.

I do not want to prejudice the outcome of the consultation, but in terms of whether a transitional period would be required, the IPO’s consultation seeks views on options ranging from no transitional period to a transitional period of up to two years following Royal Assent. Even if the full transitional period is decided on as a result of that consultation, and assuming that the Bill receives Royal Assent in spring 2017, we expect the repeal of section 73 to come fully into force by spring 2019 at the latest.

[Kevin Brennan]

The Minister talked about bringing the repeal into force rapidly before the summer recess in 2017, and then issued further caveats and talked about 2019. Will he clarify that for the Committee?

[Matt Hancock]

Yes. We will bring the repeal into force before the start of the summer recess in 2017. There may then be a transitional period, depending on the current IPO consultation, but the maximum transitional period, should there be one, will be two years. I added two years on to the summer recess of 2017 to get to what the Government call spring 2019—it will probably be the warmer end of spring.

[Nigel Adams]

Will the Minister give some indication of the potential timescale of the IPO’s technical consultation?

[Matt Hancock]

It is a four-week consultation and it started yesterday, so it has three weeks and six days to run, if my maths are right.

[Kevin Brennan]

I am grateful to the Minister for clarifying that timetable as he envisages it. In addition to that, during the course of my remarks I talked about the possibility of a dispute arising between a public service broadcaster and a platform following the repeal of section 73. What is the Minister’s view on how that sort of dispute could be resolved without consumers being affected?

[Matt Hancock]

That could easily be resolved by a contractual agreement, as the two parties in such cases have in many other examples. For example, Channel 4 has a PSB element and non-PSB channels. The non-PSB channels are not covered by section 73, so the PSB element of Channel 4’s broadcasting will be in a similar position to its non-PSB element in future. Since those contractual arrangements exist between the parties covered by section 73, I see no reason why they cannot pretty quickly put in place similar contractual arrangements, not least because the decision to repeal section 73 was taken some months ago and the companies have had some time to prepare.

The final point raised was about the impact of the repeal on Virgin Media’s broadband roll-out. I see absolutely no link between the two. I am delighted that Virgin Media is looking at a broader, full-fibre roll-out, in the same way that TalkTalk has announced further progress today. Nobody at Virgin Media has raised this link with me, and given that Virgin Media is owned by one of the most well-capitalised companies in the world, I cannot see any crossover between the two—and I think it is disingenuous to suggest there is. With that, I hope hon. Members will withdraw the amendments so we can proceed.

[Kevin Brennan]

As I made clear, it is not our intention to put our amendments to a vote at this stage. The debate was extremely interesting, important and useful, despite the Minister’s seeming resentment of having debates that go into the detail of the Bill and despite his remarks about rising early. He should be careful about making such remarks, given that he was late for the first sitting of the Committee.

There is an important issue at stake here: in our proceedings, the Government get their way because they have a majority, but the Opposition have their say. That is the constitutional principle on which we are all here and it is the role that we play. The Minister’s continual grumpiness about that is not helping his cause. I thought it was a useful debate that has revealed and drawn out more clearly some of the Government’s thinking on the timetabling of the repeal of section 73. We are not going to put our amendments to a vote at this stage, but these are matters we might revisit later.

--- Later in debate ---

[The Chair]

I call Calum Kerr.

[Matt Hancock]

Hear, hear!

[Calum Kerr]

Oh, the curse of a word of praise from the Minister! I thank him none the less.

I support these two excellent new clauses tabled by Labour Members. I was delighted to hear the Minister say in response to the debate on the last clause, “We strongly support public service broadcasting.” Hot on the heels of that, the Opposition have provided him with an opportunity to put his money where his mouth is and show that he truly does. I think—at least, I hope—that we all support public service broadcasting, but there has been a lot of chat in this place about the PSB funding settlement and about it not encroaching on competition. Let us push beyond that to consider how to support public service broadcasters. Let us find a way to ensure that they maintain their place in an adapting world.

I will touch briefly on both clauses. New clause 14, on the review of listed events, is close to my heart. I note that the football World cup is one of them; I do not know whether we can table an amendment to ensure that Scotland has a chance of getting there—

--- Later in debate ---

Returning to the retransmission charges, it is important we have a level playing field. Virgin will be charged and I believe Sky will not be—there is nothing in the Bill to suggest that Sky will be forced to pay retransmission charges, but perhaps the Minister has something—

[Matt Hancock]

I will come to that later.

[Graham Jones]

Okay. If the Minister has any proposals, can he provide some clarity? There does not appear to be any and there are many people out there raising questions about this.

The guidance seems to suggest there will be no material change to the relationship between Virgin and public sector broadcasters, despite the repeal of section 73 of the 1988 Act, so I look to the Minister for some advice on where we are with that. The Government expect the relationship to be neutral, with no cost transfer. Will the Minister clarify that and confirm that he is not giving with one hand and taking away with another, but is in fact allowing public service broadcasters, such as the BBC licence fee payer, to receive payments for programmes produced by the BBC and the other public service broadcasters?

I want to pick up on the comments made by my hon. Friend the Member for Cardiff West about new clause 17 and perhaps add my own thoughts. The Government have taken their eye off the electronic programme guide. I would ask them to cast their eye back over it, as my hon. Friend suggested. Eleven clicks to S4C is just ridiculous, but we all see now—when people are reminded and it is pointed out to them, they say, “Oh yes, that is true.” Sky has put the electronic programme guide on the second tier, where there is Sky Box Office, Sky products and Sky everything else. We are seeing a diminution of the electronic programme guide and Ofcom unable to act in the public interest.

This is important because we are talking about a huge commercial space and, very quietly, Sky has clearly adapted that space for the benefit of the Sky platform. Other people are going to come along and we will see that contested. Companies such as Netflix in particular, which wants to enter the market in an assertive manner, want a big presence and are willing to spend a lot of money. Only in the last week, we have seen the amount of money that it has been suggested that Amazon is spending on Jeremy Clarkson’s latest foray into high-speed petrol-head motoring. Is it £160 million? There is a considerable amount of money in the marketplace from these other organisations and broadcast providers, and we are going to start to see the electronic programme guide being contested. In fact, it is already being contested, as Sky has already snatched the front page of the EPG on its platform.

I raise the following points with the Minister: Ofcom currently seems to be behind the curve on this issue and the guidance needs to be updated. We do not want to see public service broadcasters relegated in any way, shape or form. We do not want to see the design or architecture of the EPG manipulated so that maybe the BBC is number one but somehow Netflix catches people’s eye more prominently, with small letters for the first five and big graphics for some of the more commercial providers, such as Amazon. It is not just about having slots one to five; Ofcom should be mindful of the actual graphic presentation.

We do not want to see adverts creeping into the EPG either, so Ofcom needs to be absolutely clear in the regulations and guidelines about the type of space that the EPG is. The Government should be mindful not only of platform providers such as Sky, but of TV manufacturers, which will come over the hill and see the space. Someone will turn on their television and, after “LG—Life’s Good”, the first thing they will see is Netflix in the top corner, before they even click on an EPG. Technology is moving fast and the presentation of available services must have some framework and clearer guidance from Ofcom, because it is important that we do not end up in a world where public service broadcasters are relegated several clicks away from primacy—ITV needs the commercial return and Channel 4 also has a commercial element and needs the returns on advertising. That scenario should not be allowed, as it would affect the broadcasters as a business, along with their funding model and audience figures and therefore their advertisers and advertising revenue. We absolutely must be clear about what the graphical interface and its parameters should be—no adverts—and also about which broader platforms might seek to enter the market, such as TV manufacturers.

I welcome new clause 17. The Government have a lot of work to do on EPG guidance, because this legislation will go down for the next 10 years and in that time we will see incredible technological advancements, with companies wanting to capture that prime retail space. It is incumbent on the Government to step in, not just to make the situation better and more consistent for the viewer but to protect the public service broadcasters, as not only the licence fee payer but the advertiser on the commercial channels is affected. We have a national interest, therefore, in protecting that space. It is important that the Government revisit the EPG guidelines.

I am interested in hearing the Minister’s comments on my questions, particularly his clarification regarding Sky and the 2003 Act—I cannot find anything on that in the documentation—and also some reassurance on the EPG.

[Matt Hancock]

Terrific! I am delighted to respond. As we know, clause 28 will repeal section 73 of the Copyright, Designs and Patent Act 1988, which currently provides that copyright in a broadcast of public service broadcasting services, and any work in the broadcast, that is retransmitted by cable is not infringed when the broadcast is receivable in the area of the retransmission. In effect, that means that cable TV platforms are not required to provide copyright fees in relation to core public service broadcasting channels. The provision was brought in at the onset of the cable industry in the UK to provide for the industry to compete with terrestrial by providing PSB content. However, that was a long time ago and technology, as everyone has noticed, has moved on a long way.

Last year we consulted on the repeal of section 73, and I am glad that there is cross-party agreement on it. The conclusion that the Government reached, and which has been agreed to by the Committee, is that the section is no longer relevant. There are a wide variety of platforms that ensure that virtually everyone in the UK is able to receive public service broadcasts and, following the completion of the digital switchover in 2012, digital TV services are now available to more than 99% of customers, whether through terrestrial, satellite, cable or fibre platforms. The cable market has moved from a large number of local providers in the 1980s, when section 73 was introduced, to one big one, and it has also gone up massively in scale, from hundreds of thousands to more than 4 million subscribers.

We are satisfied that the objective of ensuring that PSB services are available throughout the UK has been met. Therefore, section 73 is no longer required. Moreover, as my hon. Friend the Member for Selby and Ainsty pointed out earlier, this also closes a loophole, because live streaming services based on the internet are broadcasting TV programmes and relying on section 73 to exploit PSB content by retransmitting channels and selling advertising around the service without any of the benefit flowing to the PSBs. I think we all agree that is wrong, so I am glad there is cross-party support for the change.

Let me respond to some of the questions that were put, looking first at new clause 14. I am a strong believer in the listed events system. Major events such as the Olympic games and the FA cup final draw huge audiences. The listed events regime has worked well. The status of these events, as listed events, boosts them and their broadcast to the nation brings us together. I am delighted that the SNP supports the listed events regime as well. I fear I am going to have to resist the SNP’s suggestion that we should use the listed events regime to ensure that Scotland is always in the World cup finals, in the same way that we cannot legislate for the tide never to come in or the sun never to set, but it is very important and it is close to people’s hearts.

The right to broadcast listed events must be offered to qualifying channels, defined as those that are received without payment by at least 95% of the UK population. Ofcom is responsible for publishing the list of channels that satisfy those criteria. We have no evidence to suggest that recent developments, with more online viewing, will put the BBC or other PSBs at immediate risk of failing to meet these qualifying criteria. I know that concern has been raised, but I have discussed it with the BBC and Ofcom, I have gone into the details, and I am not convinced there is a risk in the near term at all.

[Kevin Brennan]

I did say that, because of the criteria’s increasingly outdated nature, the 95% threshold will probably not be met by any TV channel at some stage during this Parliament. Is the Minister telling the Committee that that is categorically wrong?

[Matt Hancock]

Yes; I disagree with that analysis. Were that to become the problem, then we would need to act, because we support the listed events regime. However, we do not agree with the analysis that the hon. Gentleman has put forward, not only because of the measurement on the existing, most restrictive definition of the 95%, but because the definition of qualifying channels are those that are received without payment. There are many ways to receive a channel without payment, including online, so viewers moving from terrestrial TV to online does not necessarily—and in my view does not—remove them from that 95%.

[Kevin Brennan]

The Minister has made the point, and I thank him for making it categorically: he believes that that will not happen during this Parliament. However, he also said that if it were to happen, the Government would have to act. Is that not the very reason why he should support the new clause? It would give legislative backing to the Government to produce a report to examine what ought to be done in those circumstances.

[Matt Hancock]

No, because I do not think that is going to happen. The hon. Gentleman also raised the question of what we should do if the legislative underpinning of the regime were to collapse. He came up with a specific proposal. I think that the proposal is itself flawed because it was to switch the measure from channels received without payment to those that are viewed, and that changes its nature significantly: from channels that are received, so can be viewed by somebody, to those channels that are viewed, which would be far more restrictive in terms of the channels that could then provide listed events. It is not a surprise to me that it is incumbents who want to make that argument because they are the ones that are watched, as opposed to those that can be watched.

[Kevin Brennan]

The Minister alluded at the end to the fact that we are not making that proposal in our new clause. We were rehearsing that argument during discussion of the new clause. Obviously he does not agree with it, but it is important to put on the record that that particular proposal is not in the new clause. It asks for a report.

[Matt Hancock]

I am grateful for that clarification. We will obviously keep the matter under review. It is important that the listed events scheme continues to operate. I could not be clearer in our assessment of the definition of qualifying channels based on the existing statute. A specific review within 12 months of the legislation’s coming into force is in my view not necessary, but we will keep the situation under close review.

New clause 17 would amend the public service broadcaster prominence review. The hon. Member for Hyndburn made a powerful and eloquent speech with some incredibly good points in it. The new clause would extend the prominence provisions to on-demand services such as catch-up TV and connected TV on-demand menus. The matter was considered in the balance of payments consultation. We have very strong support for S4C and some of the other channels mentioned in the debate, but our conclusion was that we have not seen compelling evidence of harm to PSBs to date, so we decided not to extend the EPG prominence regime at this stage.

In a way, the debate has brought out the challenges in this area. The hon. Gentleman started talking about the description of the graphical representation on an EPG, and the discussion can easily get into acute micromanagement of an EPG when the increasing integration of TV and internet services makes that more rather than less redundant. I therefore caution against an attempt at extreme micromanagement of the interface.

[Graham Jones]

The Minister flags up a cautionary point, but I again ask him a question I asked earlier: if he had a graphical interface with tiny letters that fulfilled its obligations, but at the bottom it said, “Amazon” and “Netflix”—it effectively had some commercial advertising —would he be happy to see that? Would that satisfy his current position? Alternatively, would he reflect and think, “That is not quite right”?

[Matt Hancock]

The hon. Gentleman is a great man who is worried about my happiness, but this is not about my happiness; it is about what is best for public service broadcasting and the PSB compact. My response is that it is for Ofcom to issue guidance on ensuring that the EPG works. It is better done that way, so that it can be proportionate, flexible as technology changes over time and not micromanaging things. The guidelines do that and pull that off. That is why when we considered the proposal as part of the consultation, we decided not to go there.

[Graham Jones]

I welcome the opportunity to engage in the issue, but when the Minister looks at Sky taking over the splash screen and relegating the EPG to the second tier—obviously Ofcom cannot act in that case, or it would have done already—is he happy?

[Matt Hancock]

Again, my happiness is secondary really, but my problem with the proposition being put forward is that trying to define sub-menus and user interfaces in regulation, especially statutory regulation, is incredibly hard. The technological landscape is shifting quickly. It is best left to the Ofcom guidance to answer such questions. We looked into the matter in some detail in the consultation, so I hope that the hon. Gentleman will withdraw his support for the new clause.

[Kevin Brennan]

The Minister is saying that it is up to Ofcom to decide, but is not the point that what we are trying to do here is exactly what Ofcom is proposing?

[Matt Hancock]

No, because it is for Ofcom to issue guidance on linear EPGs. Ofcom is required as a duty to make the system work. Rather than going further down this route, having considered it, we do not want to be over-prescriptive, given the technological changes that are happening. With that, I hope that hon. Members will withdraw their amendment and then vote that clause 28 stand part of the Bill.

[The Chair]

We will, of course, be voting on any new clauses not today but later in our proceedings. Does Mr Brennan have any remarks to make?

[Kevin Brennan]

Yes, briefly. As you say, Mr Streeter, we will come to the new clauses later in the Bill. I do not think that it will necessarily be our intention at this point—we will cogitate further—to push them to a vote, but there are issues here to which we might want to refer on Report. One of my colleagues has pointed out that the Minister did not answer a question about Sky. Rather than making another speech, does he want to intervene during my brief remarks?

[Matt Hancock]

As I said in the discussion of the previous set of amendments, Sky is subject to a different regulatory regime. There are conditional access charges for satellite within that regime, which must be fair, reasonable and non-discriminatory for all channels. We considered that as part of the balance of payments consultation and came to the conclusion that it did not need to be changed, because of the requirement set out in the DPS code.

[Kevin Brennan]

I am grateful to the Minister for saving us time with that helpful intervention.

[Kevin Brennan]

We discussed this issue, and the nature of that regime, earlier today. My observation was that the situation was extremely opaque, which is why we proposed earlier amendments to the Bill to suggest that the whole area should be reviewed—for that very reason. My hon. Friend makes an extremely pertinent point. It will be worth reading his remarks, and those made earlier today by Government and Opposition Committee members, on that point.

When we discussed new clause 14, which deals with listed sporting events, I worried that there is a degree of complacency in the Government. People will have heard what the Minister said about the issue, and we will be interested to hear what others have to say about his response. We should lay down a marker to say that we do not think that the Government are really listening or hearing what we are saying about this subject, and they are not sufficiently attuned to the dangers to listed sporting events. I know that the Minister is a keen and successful sportsman in his jockeying activities, on which I congratulate him. I am sure that he would want to see—

[Matt Hancock]

Not the Grand National, though.

[Kevin Brennan]

National hunt or flat? I cannot remember.

[Matt Hancock]

Flat.

[Kevin Brennan]

He is a flat racing jockey—and, from what I have seen, a very good one—but he should be concerned about the possible future of events such as the Grand National, which, as he rightly said, bring the country together and are meaningful and important cultural events as well as sporting ones.

On new clause 17 and PSB prominence, again, the Minister says that he has not seen compelling evidence of harm, but I think that we supplied him with plenty of compelling evidence of the potential for harm, which is what the Bill is about. It should be about the digital future, as we have said. I take his point about extreme micromanagement—that is valid—but we are not talking about that; we are talking about setting clear parameters to ensure that public service broadcasting prominence remains across all platforms. Although we are unlikely to press the new clause to a vote later, we reserve the right to return to these issues.

Question put and agreed to.

Clause 28 accordingly ordered to stand part of the Bill.

Digital Economy Bill (Tenth sitting)

Matt Hancock Excerpts

Committee Debate: 10th sitting: House of Commons
Thursday 27th October 2016 Public Bill Committees

[Louise Haigh]

I welcome the other Minister back to his place, and I look forward to the lengthy correspondence that the Cabinet Office Minister and I will be having. The Minister for Digital and Culture and I also had lengthy correspondence when he was at the Cabinet Office, and I look forward to that continuing.

Will the Minister lay out what the clause seeks to achieve? What reports would Ofcom publish under this power that it currently cannot? Would this extend to requesting and publishing information that was referenced in an earlier debate—right at the beginning on part 1—potentially in relation to existing broadband and communications infrastructure and to where Openreach and other providers are rolling out broadband in order to ensure a more effective market? The Opposition welcome all attempts by regulators and Government to make as much data open as possible, so we very much welcome the powers in the clause.

[The Minister for Digital and Culture (Matt Hancock)]

Clause 69 allows Ofcom to prepare and publish reports on underlying data at times it considers appropriate as opposed to at specified times, as is currently the case. The short answer to the hon. Lady’s question is yes. Before the end of the year, Ofcom will publish a “Connected Nations” report, for example, which typically goes into detail about the connectivity of the infrastructure, but there are restrictions at the moment on when these can be published. We think it is better to allow Ofcom to prepare and publish reports at times that it considers appropriate.

Question put and agreed to.

Clause 69 accordingly ordered to stand part of the Bill.

Clauses 70 and 71 ordered to stand part of the Bill.

Clause 72

Provision of information to OFCOM

[Matt Hancock]

I beg to move amendment 177, in clause 72, page 70, line 15, after “135”, insert “of the Communications Act 2003”.

This amendment makes it clear that the Act amended by clause 72 is the Communications Act 2003.

The amendment corrects a minor error to clause 72. We omitted the words

“of the Communications Act 2003”.

I consider this to be a pretty technical amendment.

Amendment 177 agreed to.

Clause 72, as amended, ordered to stand part of the Bill.

Clause 73

Information required from communications providers

Question proposed, That the clause stand part of the Bill.

[Louise Haigh]

I would like to put on the record again that this Bill was clearly not ready for Committee. We have just seen another example of an amendment that was completely uncalled for. In the last part, amendments had to be withdrawn that were incorrect. I hope that the proposals are properly examined in the Lords and that this is not a recurring theme throughout future legislation that this Government introduce. It is very disappointing to see the lack of preparation for this Bill.

--- Later in debate ---

[Matt Hancock]

Amendment 177, which was agreed on a cross-party basis, corrects what was in fact a printing error. I hope that the hon. Lady will withdraw her rather pernickety point. I am glad that the Committee has had the opportunity to correct the problem.

[Louise Haigh]

It is good to hear that it was the 177th amendment that the Government have had to table to this Bill.

Let us move on to clause 73. The Minister will be pleased to hear that we welcome the clause, which has clearly been drafted with consumers at its heart. The clause provides Ofcom with powers to require information that will enable and empower consumers to switch, thereby creating a much more efficient and open market with fewer barriers to entry.

Ofcom does not currently have powers to require communications providers to provide information on quality of service, such as how they are doing on customer service, complaints, fault repairs or the speed of installation, and it does not have the power to specify how it would want that information to be provided. We welcome these new powers, which will make it much easier for Ofcom to publish this important comparative information that will help consumers.

I would be grateful if the Minister expanded on the points raised in relation to clause 69. He said that BT is about to be forthcoming with information on its existing infrastructure and on the roll-out of broadband. Can he confirm whether that information has been provided? If not, when does he expect it to be provided?

Subsection (5) of proposed new section 137A of the Communications Act 2003 states that the power conferred on Ofcom

“is to be exercised by a demand, contained in a notice served on the communications provider”.

Prior to that, a draft notice will stipulate a reasonable notice period. Can the Minister give us some examples of what he would consider to be a reasonable notice period for a particular dataset? Will that be in negotiation with a provider, or will it be set by Ofcom? What will be the consequence for communications providers that refuse to comply? Finally, how quickly would he like to see Ofcom publish the publishable data after receiving them from a communications provider?

We are happy to support clause 73 stand part.

[Matt Hancock]

Clause 73 paves the way for greater access to information to help consumers make more informed decisions. The hon. Lady has set out exactly why that is needed. The clause will also enable Ofcom to require providers to collect, retain or generate data for these purposes and to ensure that consumers are easily able to access information that is most relevant to their decision. The power will enable Ofcom to require information in machine-readable formats, for example, so that third parties can mash it and provide it in a usable, meaningful and accessible way for the consumer, thereby helping things such as comparison websites, which we strongly support.

On the hon. Lady’s specific questions, the data will form part of Ofcom’s data publication before the end of the year. She asked about a reasonable notice period, which will be for negotiation with providers. It is for Ofcom to decide when it is appropriate to make a publication, and it will endeavour to do so as soon as possible. On the consequences for providers that do not supply the data, these are highly regulated markets in which Ofcom has significant powers, some of which we are enhancing elsewhere in the Bill, so there will be very serious consequences for a provider that does not abide by a requirement from Ofcom to publish. I hope that answers the questions.

Question put and agreed to.

Clause 73 accordingly ordered to stand part of the Bill.

Clause 74

Appeals from decisions of OFCOM and others: standard of review

Question proposed, That the clause stand part of the Bill.

[Louise Haigh]

The clause will reform the appeals process against Ofcom decisions, speeding up the process and ensuring that consumers’ interests are better prioritised. The Communications Act 2003 states clearly that Ofcom’s principal duty is to further the interests of citizens and consumers, but clearly there are issues with how the current appeals process works.

The current process is that Ofcom makes a decision following full consultation with the industry and the public; under the Competition Appeal Tribunal rules, an affected body can then appeal against the decision. Ofcom has six weeks to lodge its defence, and a month later substantive appeals are considered in a court case management conference, at which procedural and substantive points are raised. Third parties can then intervene, after which the appellant can lodge a reply. About a month before the hearing, the parties can lodge skeleton arguments. The hearing then takes place, and judgment is usually reserved. That judgment can take anything from weeks to up to a year. Parties then have about three weeks to decide whether they want to go to the Court of Appeal.

Not only is that process incredibly cumbersome, but it allows for considerable new evidence and new parties to the appeal, of which Ofcom had no knowledge at the consultation phase, to be brought forward mid-process. Under the new system, both the process of gathering evidence, including for the cross-examination of witnesses and experts, and the general treatment of that evidence are designed to be slimmed down. The system will still allow for an appeal, of course—that is only right for the sake of justice—but it will ensure that the appeals process does not unduly benefit those who can afford to litigate. It is alleged that it is currently those with the deepest pockets who bring forward the greatest number of appeals; indeed, most appellants have far deeper pockets than Ofcom has to defend itself with.

I have heard the concerns of some within the industry about the changes, as I am sure the Minister has. Although we are in favour of the Government’s proposals, I would appreciate the Minister’s response to some of those concerns. In a submission to the Committee, a group of the largest communications providers has claimed that the current appeals regime works well for consumers and has delivered consumer benefits to the tune of hundreds of millions of pounds.

[Louise Haigh]

I agree, and although I support the Government’s objective, it is of concern that such a wide range of communications providers—the biggest investors in communications infrastructure in the UK—are so vehemently opposed to the changes. This is exactly what the Committee stage of any Bill is designed for: to test out arguments and make sure that the right thing is being done. Will the Minister confirm what impact assessment of the proposals has been made, and what benefit he anticipates the changes will bring to consumers?

The submission that I mentioned claims that if the proposed regime had been in place, the mobile call termination case in 2007 would have led to a £265 million loss to consumers over the two-year period from 2010 to 2012. It states that

“in each of the cases cited, the Tribunal’s decision was that Ofcom’s decision had not gone far enough in consumers’ favour. The quantifiable financial impact of these appeals totalled a net benefit to consumers of around £350-400m.”

It says that the merits review

“enabled these errors to be corrected, the finding of the Government’s 2013 research was that on a JR”—

judicial review—

“standard, each of these decisions would have stood unadjusted.”

No one is saying that Ofcom will get things right 100% of the time—clearly, it will not. The new appeals process is not saying that either, but it will substantially raise the bar for appeals by allowing only regulated bodies to contest how a decision was made. Is the Minister confident that the decisions cited in the evidence from BT and the other providers would still be corrected under the new regime? The providers claim that they would not.

We have heard mixed messages about whether the proposals will bring the communications regulator in line with other utilities regulators. Ofcom told us in evidence that they would do just that, but is it not the case that the price control decisions of both Ofgem and Ofwat are subject to merits review by the Competition and Markets Authority? Will the Minister confirm why that is the case for other industries but not for communications?

On SMEs, techUK is particularly concerned that the higher bar of judicial review will have a disproportionate impact on smaller providers, which brought 17% of appeals between 2010 and 2015. I would be grateful if the Minister assured us that his Department has fully considered the impact these changes will have on SMEs, and particularly on new entrants to the market.

I understand that there will always be winners and losers in any regulatory change. The Minister will no doubt enjoy basking under the adoring gaze of TalkTalk and Three, but he will have to live with the fact that he is in BT’s and Virgin’s bad books for now. What is also clear is that for most people this appeals regime is far from well understood, as the industry claims. In fact, they would find it very difficult to understand why changes that could benefit them are being held up, sometimes for years on end, and why big communications providers are spending millions of pounds on litigation when they should be ploughing that money into helping their customers.

That is no basis on which to continue an appeals regime that leads to excessive litigation and smothers changes that may help—indeed, in some cases, may transform—consumers’ relationships with their communications providers. Clearly, during the exercise of that duty, Ofcom will be required to intervene and make a ruling, which sometimes the industry may not like.

If the broad contention on this side is that Ofcom should be given further powers to ensure that the industry acts in the best interests of consumers, there is little point in allowing an appeals process to continue that is so lengthy that it can render any changes useless. One particularly compelling example given in the evidence session was about the need for far greater switching for consumers. The chief executive of Three remarked that we are at the bottom of the class in terms of switching, and that despite nearly a decade of campaigning little has been done to get rid of provider-led switching. That was because when Ofcom tried to legislate on it, to enable consumers to switch, one of the major mobile providers was able to litigate and push the matter into the long grass, from where it has not emerged until today.

With all that in mind, and pending answers to the questions that I have put to the Minister, we are happy to support the clause.

[Matt Hancock]

That was an excellent assessment of the pros, cons and challenges around the proposed changes to appeals. Much of the analysis and thinking that the hon. Lady has just set out is what we went through in coming to the same conclusion that it is sensible to change the appeals process.

I will set out some of the detail of the changes and then I will answer the specific questions that were put. The clause alters the standard review applied by the Competition Appeal Tribunal when deciding appeals brought under the Competitions Act 2003 against decisions made by Ofcom. This is in order to make the appeals process more efficient. The changes will not apply to appeals against decisions made by Ofcom using powers under the Competition Act 1998 or the Enterprise Act 2002.

Currently, appeals can be brought and decided on the merits of a case, and this exceeds and effectively gold-plates article 4 of the EU framework directive that requires that the merits of a case are taken into account in any appeal. The result of this over-implementation is an unnecessarily intensive and burdensome standard of review that can result, as the hon. Lady set out, in very lengthy and costly appeals litigation, which can hinder timely and effective regulation, and risks Ofcom taking an overly risk-averse approach to regulating the sector properly.

[Christian Matheson (City of Chester) (Lab)]

Would it also not give Ofcom much more credibility in the eyes of the organisations that it regulates, because they would realise that they had much less ability to overturn its decisions?

[Matt Hancock]

That is right. We heard the evidence from Three and TalkTalk, who are in favour of this change. That is no surprise, as they are essentially the insurgents in the infrastructure market, and the incumbents were less keen on this change. We also heard from Which? and Citizens Advice, which explained that it is no surprise that large companies want to keep the status quo.

It is not my job to bask in the reflected glory of the appreciation from Three or TalkTalk, nor is it to have undue concern, rather than due concern, for the complaints of those who disagree with this change.

[Calum Kerr]

The briefing we received recognises the Government’s line on the current approach but disagrees with the contention. It actually puts forward a form of words that it believes, if inserted, would not risk any issue with the relevant European directive. Have the Government considered that? I am happy to forward that form of words if the Minister does not know what I am referring to; it is in the latest briefing.

[Matt Hancock]

Again, I am happy to look at any detailed representation, but we have had significant and extensive discussions about this, including with techUK and others. On the SME point that techUK specifically raised, that was covered in the impact assessment that the hon. Member for Sheffield, Heeley asked about. It was published on 12 May; on page 15 it sets out the concern that, if we had a separate system for SMEs, we would end up with a yet more complicated process, as opposed to a simpler one, which I think would be an overall benefit.

[Louise Haigh]

I completely accept that we should not have separate regulatory systems for SMEs and larger providers. Will the Minister confirm that the new judicial review process will not unduly hinder SMEs, in contrast to the current “on the merits” appeal process?

[Matt Hancock]

I have looked at that specific point and I am satisfied that the new process does not, because a judicial review can take into account those sorts of concerns but is a more efficient process of appeal.

On the point raised by the hon. Member for Berwickshire, Roxburgh and Selkirk, I should say that we have considered using the language of the directive but we do not believe that it materially changes our approach. I said I would get back to the hon. Gentleman; I was a bit quicker than even I expected.

On that basis, I hope that the use of the well-tried and well-tested judicial review will prove a more efficient regulatory basis in future.

[Louise Haigh]

The Minister has not addressed a couple of points: the potential loss to consumers that the industry claims the new system will create and the cases that would not have been brought under the existing system; and the mixed messages we have heard about whether the Bill brings Ofcom into line with other utilities regulators.

[Matt Hancock]

On the first point, I am convinced that this change will act in the benefit of consumers, because we will have a quicker regulatory approach. The big incumbents will not be able to hold up a regulatory decision through aggressive use of the appeals process. Instead, we will have a more efficient appeals process. I am convinced that this will improve the situation for consumers.

Of course, it is possible to pick out individual cases that may have gone the other way or may not have been able to be considered under the new approach. First, it is not possible to know whether that is the case without testing them. Secondly, looking at individual cases out of context does not allow us to step back and look at the effective operation of the system as a whole. I am sure the hon. Lady agrees with that approach.

[Louise Haigh]

But is it not the point that those decisions were made by Ofcom and were incorrect, according to the tribunal? They were not made with consumers’ best interests at heart and they would not have been appealed under the new system because the method by which they arrived at those decisions was correct. Is there any scope in the proposals to allow certain examples, such as those put forward by the industry, to be given a merits-based review, as with price control reviews by Ofgem?

[Matt Hancock]

The cases that the hon. Lady and the industry cited have been assessed, and we believe that judgment under a JR system would have gone the same way as under the old system—but quicker. I hope that deals with that concern. JR is used in a large number of other areas. Of course there are specific other cases in which it is not, but it is a strong basis of appeal that is regularly used in public sector decisions. If material error is present, it can then be addressed by judicial review. I hope I have answered the hon. Lady’s questions.

Question put and agreed to.

Clause 74 accordingly ordered to stand part of the Bill.

Clause 75

Functions of OFCOM in relation to the BBC

Question proposed, That the clause stand part of the Bill.

[Louise Haigh]

We do not wish to oppose Ofcom’s new role in regulating the BBC, for which clause 75 provides—as the Minister knows, we supported the BBC charter agreement last week in the House—but we have some concerns, which are shared by the BBC, about how Ofcom’s new role will work out in practice.

Distinctiveness is an absolutely vital characteristic of the BBC and its services. It is one of the things that justifies its public funding. The BBC should deliver its public purposes and mission, and it should serve all audiences, through distinctive services. Critically, distinctiveness should be judged at the level of services, rather than programmes. That does not mean that the BBC should focus on “market failure” programming or never make a programme that the commercial sector might make. Instead, the test should be that every BBC programme aspires to be the very best in its genre. Overall, the range of programmes in the BBC services should be distinguishable from its commercial competitors. There is a concern that Ofcom could be too prescriptive in the standards it expects of the BBC. For example, it might focus on quotas, such as the number of religious or news hours, rather than a substantive, qualitative assessment, and rather than a standard, such as high-quality journalism.

Evidence shows that BBC services are distinctive and have become more so in recent years. Audiences agree: more than 80% of the people responding to the Government’s charter review consultation said that the BBC serves audiences well, almost three quarters said that BBC services are distinctive and about two thirds said that they think it has a positive impact on the market.

The definition of distinctiveness in the agreement and the framework for measuring it are therefore critically important. The section of the charter agreement that relates to the new powers that will go to Ofcom requires Ofcom to set prescriptive and extensive regulatory requirements, which must be contained in an operating licence for BBC services. Ofcom must have a presumption against removing any of the current requirements on the BBC—there are about 140 quotas in the BBC’s existing service licences—and seek to increase the requirements overall by both increasing existing requirements and adding new ones.

Ofcom has been given detailed guidance about what aspects of distinctiveness it must consider for the BBC’s TV, radio and online services. That follows an old-fashioned approach to content regulation based on prescribing inputs, rather than securing audience outcomes, such as quality and impact. The BBC is concerned that it will introduce a prescriptive and inflexible regulatory framework that could restrict the BBC’s editorial independence and creativity.

Clarity about the definition of distinctiveness would be welcome. It should be applied to services, not individual programmes. The extensive content quotas in clause 2 of the charter should be a response to a failure to be distinctive, not the starting point.

[Louise Haigh]

That is a very great concern. There is a serious risk of confusion about how the new regulatory regime is going to work for both Ofcom and the BBC. To be frank, I do not think quotas are appropriate in this respect. I have got nothing against quotas—I was selected on an all-women shortlist, which aim to increase the number of women in the parliamentary Labour party.

[Matt Hancock]

You’d have got through anyway.

[Louise Haigh]

The Minister is absolutely correct that I would have won it on an open shortlist. It is very kind of him to say that.

But quotas in this respect restrict creativity and innovation, which are prerequisites of distinctiveness. Ofcom, as an independent regulator, should have the freedom to determine how best to regulate the BBC to secure policy goals. I would be grateful if the Minister confirmed what consideration has been given to the impact this will have on the quality programming we have come to expect from the BBC.

Finally, there is a concern that Ofcom may prejudice value for money over public interest. It would significantly reassure the BBC and the public, and would provide a greater degree of certainty over how Ofcom will behave in its enhanced regulatory role, if the same principles applied to the BBC charter—that there must be parity between public interest and value for money—were applied to Ofcom as well.

[Matt Hancock]

I am glad we have cross-party support for the clause, as we do for the BBC charter. It is incredibly helpful to the BBC’s role that it knows that the basis on which it operates and is regulated is supported on a cross-party basis.

It is very important—I will read this clearly on to the record—that distinctiveness as set out in the framework agreement is about BBC output and services as a whole, not specific programmes. Ofcom has the capability to make judgments about the overall distinctiveness of BBC output and services as a whole. That is the basis on which we expect it to operate under this legislation.

The hon. Lady asked whether there should be guidance underneath that. As she set out, there is existing guidance, and the public are very happy in large part with the result of that. I reject the idea that we cannot have any detail underneath the basis that distinctiveness should be decided on BBC output and services as a whole. At the moment, as she set out, there is detail, and it works well.

This is essentially an incremental approach. The BBC already faces this guidance and operates successfully. The clause is not prescriptive in that regard. Ofcom needs to operate in a reasonable way and exercise its judgment to ensure that we get the much-loved BBC operating as well as it can, as it has in the past and as it should in the future.

Question put and agreed to.

Clause 75 accordingly ordered to stand part of the Bill.

Clause 76

TV licence fee concessions by reference to age

[Matt Hancock]

I beg to move amendment 178, in clause 76, page 74, line 24, at end insert—

‘( ) In subsection (4)(a) after “concession” insert “provided for by the regulations”.”

Section 365A(4) inserted by clause 76(6) gives the BBC power, where they determine that a TV licence fee concession is to apply, to provide how entitlement to the concession may be established. This amendment makes a consequential amendment to the Secretary of State’s power to make similar provision.

[The Chair]

With this it will be convenient to discuss Government amendments 179 to 181.

[Matt Hancock]

Clause 76 will transfer policy responsibility for the concession that provides for free TV licences for those aged over 75 to the BBC. These technical amendments clarify the relationship between the Secretary of State’s power to set concessions and the BBC’s power to set concessions for those aged 65 and over. The amendments provide clarity, making it clear that the power of the BBC from June 2020 to determine age-related concessions for people over 65 extends to any such concession as previously provided for by the Secretary of State, with the exception of the current residential care concession. That was always the intended effect of the clause, and the amendments merely provide greater clarity in the drafting and remove any ambiguity.

Amendment 178 agreed to.

Amendments made: 179, in clause 76, page 74, line 26, after “section” insert “or section 365A”

This extends the definition of “concession” given in section 365(5) of the Communications Act 2003 to section 365A inserted by clause 76(6).

Amendment 180, in clause 76, page 74, leave out lines 28 and 29 and insert—

‘(5A) Regulations under this section may not provide for a concession that requires the person to whom the TV licence is issued, or another person, to be of or above a specified age, unless—

(a) the age specified is below 65, and

(b) the requirement is not satisfied if the person concerned is 65 or over at the end of the month in which the licence is issued.

(5B) Subsection (5A) does not apply to—

(a) the concession provided for by regulation 3(d) of and Schedule 4 to the Communications (Television Licensing) Regulations 2004 (S.I. 2004/692) (accommodation for residential care), or

(b) a concession in substantially the same form.”

This amendment allows the Secretary of State to continue the existing concession in relation to accommodation for residential care, including its age-related element, after May 2020, but after that date any other age-related concession would be a decision for the BBC (see amendment 181).

Amendment 181, in clause 76, page 74, line 33, leave out from “apply” to end of line 39 and insert—

‘(1A) Any concession under this section must include a requirement that the person to whom the TV licence is issued, or another person, is of or above a specified age, which must be 65 or higher, at or before the end of the month in which the licence is issued.

(1B) A determination under this section—

(a) may in particular provide for a concession to apply, subject to subsection (1A), in circumstances where a concession has ceased to have effect by virtue of section 365(5A), but

(b) may not provide for a concession to apply in the same circumstances as a concession within section 365(5B).” —(Matt Hancock.)

This amends the power of the BBC from June 2020 to determine age-related concessions for people over 65, to make clear that it extends to any such concessions previously provided for by the Secretary of State, with the exception of the current residential care concession (see amendment 180).

Question proposed, That the clause, as amended, stand part of the Bill.

[The Chair]

With this it will be convenient to discuss new clause 38—Responsibility for policy and funding of TV licence fee concessions—

After section 365(5) of the Communications Act 2003 insert—

“(5A) It shall be the responsibility of the Secretary of State to—

(a) specify the conditions under which concessions are entitled, and

(b) provide the BBC with necessary funding to cover the cost of concessions,

and this responsibility shall not be delegated to any other body.”

This new clause seeks to enshrine in statute that it should be the responsibility of the Government to set the entitlement for any concessions and to cover the cost of such concession. This new clause will ensure the entitlement and cost of over-75s TV licences remain with the Government. It would need to be agreed with Clause 76 not standing part of the Bill.

--- Later in debate ---

[Mark Menzies]

I hope the hon. Lady will forgive me; I have given way to her several times. The BBC will have more resources as a result of this. The over-75 licence fee will become the responsibility of the BBC, but the indications from the Government are clear: we are committed to free licences for the over-75s, as we promised in our manifesto.

[Matt Hancock]

It was going so well and we were having such a rational debate until that sudden outburst. Let me respond to the points that were made. I am proud to support clause 76, which safeguards the TV licence and delivers on our manifesto commitment to maintain free TV licences in this Parliament. Until that speech right at the end, we heard an awful lot of bluster but saw little light, so I will remind the Committee of a few facts.

First, transferring the responsibility for the free TV licences to the BBC as part of the funding settlement was agreed with the BBC and is what it says on the tin: it is part of a funding settlement. The question of who pays is part of the funding of the BBC. In July last year, Tony Hall, the Director General of the BBC, said:

"I think we have a deal here which is a strong deal for the BBC. It gives us financial stability."

I suggest that anybody who votes against clause 76 votes against financial stability of the BBC and is ultimately voting to put the free TV licence at risk. I will be saying to all 8,853 of my constituents who get a free TV licence that we are safeguarding the free TV licence.

In the run-up to the 2015 general election, during which we committed to protecting the TV licence in this Parliament, who was it that wanted to do away with it? Who was it? A certain Mr Ed Balls, who is now more famous for being on the TV than for talking about TV policy. When he was questioned about whether the universal free TV licence should stay, while he was saying that the universal winter fuel payments should not, he said:

“I think you have to be pragmatic”

about the TV licence. It was the Labour party that put the free TV licence at risk and we are proud that we supported it in our manifesto.

The director-general did not stop there. He also said:

“The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC.”

Unfortunately for those who seek to cause a fuss about this, their view on funding seems to go against the view of the director-general of the BBC.

[Kevin Brennan]

Will the Minister give way?

[Matt Hancock]

I will give way if the hon. Gentleman can explain why he disagrees with the director-general of the BBC.

[Kevin Brennan]

The Minister does not understand parliamentary procedure. That is not a reason to give way. He should give way to allow me to ask him a question, to avoid my having to make a speech. My question—a straightforward question, which does not require anything but a straightforward answer—is on what principle he thinks that this is the right move.

[Matt Hancock]

On the principle that the BBC is responsible for the funding of the BBC according to the licence fee negotiations agreed with the Government. This is a funding decision, and funding issues are for the BBC.

I have given the Opposition a couple of quotations from the head of the BBC about why he agrees with the policy. Let me give them another quotation:

“The Labour party welcomes the fact that the charter provides the BBC with the funding and security it needs as it prepares to enter its second century of broadcasting.”—[Official Report, 18 October 2016; Vol. 615, c. 699.]

Not my words, but those of the boss of the hon. Member for Sheffield, Heeley, the shadow Secretary of State for Culture, Media and Sport, the hon. Member for West Bromwich East (Mr Watson). Well, I agree with her boss—he was absolutely right.

[Louise Haigh]

Will the Minister give way?

[Matt Hancock]

Of course I will give way—if the hon. Lady can explain why she disagrees with her boss.

[Louise Haigh]

I made it clear that we support the BBC charter, but my boss—as the Minister calls him—and I also made it clear that we do not support this element of it.

I have two more quotations to put to the Minister. In the Lords debate on the charter two weeks ago, the assessment of the former BBC director-general, John Birt, was that

“the impact…will be—over the span of a decade—to take almost exactly 25% out of the real resources available to the BBC for its core services. A massive reduction in programming is therefore simply unavoidable.”—[Official Report, House of Lords, 12 October 2016; Vol. 774, c. 1950.]

The former chairman of the BBC Trust, Chris Patten, then said:

“I agree with what the noble Lord, Lord Birt, said about the licence fee settlement—not just the finance on the table but the way it was done. It was a scandal to do it like that”.—[Official Report, House of Lords, 12 October 2016; Vol. 774, c. 1954.]

The Opposition absolutely agree.

--- Later in debate ---

[Matt Hancock]

That is not related to clause 76. What is related to the clause is the fact that the BBC agrees it has the funding it needs, as I set out and as agreed by the shadow Secretary of State for Culture, Media and Sport.

My next point is about why we are transferring the power and why it would be wrong to adopt new clause 38, which would undermine the BBC’s funding settlement. The reason is that the BBC asked for it. It is incumbent on those who propose new clause 38 and oppose clause 76 to explain why they disagree with the BBC, with this strong settlement and with all those who say that we have provided a good funding settlement for the BBC. Instead of pressing the new clause, I suggest that the hon. Lady should support clause 76, to put the BBC’s funding on a sustainable footing for years to come.

[Louise Haigh]

The hon. Member for Fylde said that he opposed our new clause on two grounds, of which the first was that the BBC provides free TV licences. It does, but we have absolutely no guarantee that it will continue to do so.

The Minister is correct that the BBC asked for this, but as I referred to earlier, the BBC asked for the policy on who should and should not get a free TV licence because the funding was forced on it. It asked for that funding because it wants to reduce the number of people who get free TV licences in the future—it as much as said that to us. We do not want the BBC to have that policy; nor do we want it to have the funding settlement. It is a principle that we fundamentally oppose, so we intend to test the will of the Committee.

--- Later in debate ---

[Louise Haigh]

Thousands of individuals are plagued by nuisance calls every day. I will turn to that in my remarks on clause stand part, but I shall speak to the amendments and new clause first. We welcome the inclusion in the Bill of a direct marketing code. If it works effectively, it will contain practical guidance and promote good practice in direct marketing activities. It will help to guide the experiences of companies and individuals, but direct marketing, as we know, is fairly narrowly defined and refers to the direct selling of products and services to the public. It is covered under the Data Protection Act 1998 and the privacy and electronic communications regulations. The rules cover not only commercial organisations but not-for-profit organisations such as charities and political parties. The rules for direct marketing are very clear and are becoming —absolutely rightly—increasingly tougher.

There are two types of nuisance call: live marketing calls—unwanted marketing calls from a real person—or automated marketing calls, which are pre-recorded marketing messages that are played when someone answers the phone. They are covered by a raft of legislation and regulation attempting to clamp down on that type of behaviour. Our amendments attempt to broaden the definition of the new direct marketing codes, so the law will cover not only direct consumer marketing but consumer engagement.

Direct marketing uses personal data and demographic insights relating to residence and the habits of people previously to market to people individually and directly. Consumer engagement is much broader and involves the use of personal data to engage with customers for a broad set of business processes, which include, but are not restricted to, direct marketing. TV advertising, for example, is not considered to be direct marketing, but TV advertising campaigns can be designed with information derived from consumer data and used to target broad groups of consumers based on data derived from individuals.

In our view, the direct marketing code, which we very much welcome, and the Information Commissioner’s guidance in this field should cover this broader use of individuals’ data. As we have said throughout, we want data to be used responsibly, and this simple amendment would extend the code to apply to all uses of data in consumer marketing, and not just the kind that is used to directly target people.

[Matt Hancock]

What a welcome return to sense from the Opposition. The amendments tabled to clause 77 relate to the definition of direct marketing, which, as defined in the Data Protection Act, is

“the communication (by whatever means) of any advertising or marketing material which is directed to particular individuals.”

The definition captures any advertising or marketing material, not just commercial marketing, which is a point that the hon. Lady made, as well as all promotional material, including material promoting the aims of not-for-profit organisations. It also covers any messages that include some marketing elements, even if that is not the main purpose of the message.

The privacy and electronic communications regulations put direct marketing by electronic means into the scope of the definition, thus making it applicable to telephone calls, both live and automated, faxes, emails, text messages and other forms of electronic communication. It is essential that the definition of direct marketing in the PECR remains aligned with the definition in the Data Protection Act, so that the Information Commissioner’s Office’s powers of enforcement for nuisance calls to remain effective and enforceable in law.

New clause 34 is intended to amend the PECR, to extend to company directors and other officers liability for breaches when those officers have allowed breaches to occur or when breaches have happened because of something they have failed to do. In that way, the Information Commissioner could impose fines on company officers rather than just on companies as at present. The proposal relates to nuisance calls made by organisations. They are a blight on society, causing significant distress to elderly and vulnerable people in particular.

[The Chair]

It may be helpful for the Minister to know that, because of a miscommunication between Mr Kerr and myself, Mr Kerr will speak to new clause 34 when the Minister sits down, so the Minister may want to save his comments until later. Please continue.

[Matt Hancock]

I hope that I will still agree with new clause 34 then; I think I will, because I am so enthusiastic about it.

[Calum Kerr]

Feel free to carry on, Minister, if you are enjoying yourself.

[Matt Hancock]

I thank the hon. Gentleman.

I hope that, having answered the hon. Lady’s questions in relation to amendments that I think are intended to probe and in anticipation of our coming on to new clause 34, she will be able to withdraw her amendment.

[Calum Kerr]

I am sorry for the miscommunication; it was my fault. Actually, having read the newspapers at the weekend, I think that the Minister may be in agreement on extending the penalties in relation to nuisance callers to company directors; I certainly read a number of quotes about the importance of doing that. What I am unclear about—perhaps he will enlighten me—is whether he intends to accept our new clause or whether he has another vehicle by which he intends to make this change. I would be grateful to him if he intervened, because there is no point in my—

[Matt Hancock]

We agree with moving liability on to individuals rather than on to companies, because sometimes those companies will be closed down, bought up and restarted under a different name very quickly. We propose to do that by tabling a Government amendment.

[Calum Kerr]

I thank the Minister for that intervention. I had thought that I might have done his homework for him already with new clause 34. Perhaps he might consider embracing the cross-party consensual nature that might return after the BBC fun and games—except on tobacco ads, which certainly go too far.

[Matt Hancock]

Before I was stopped by Mr Streeter, I was going to say precisely that—namely that I have just announced that we intend to introduce such measures. We need to consult on the exact details of those measures, which is why I do not propose to accept the new clause, but we intend to put into place something of similar substance.

[Calum Kerr]

Excellent. I thank the Minister for that and given that comment, rather than outlining the full case for why I think accepting new clause 34 is a good idea, I will embrace the positivity and happily sit down, without pressing my new clause, knowing that the Government will introduce a similar measure.

--- Later in debate ---

On the marketing code, I urge the Minister to take on board the point made by the hon. Member for Hyndburn about looking at the ability to capture and identify people who are making illegal and unsolicited marketing calls, often to very vulnerable people. As we heard in evidence, it is very difficult to identify and pin those people down. Some of the things required are the website address, telephone number and company name. These people are professional crooks and shysters. They are disreputable and know exactly how to inveigle their way round the law to take advantage of vulnerable people. I urge the Minister, when is he looking at this measure in its totality, to consider ways in which we can strengthen the ability to capture and identify people who target the vulnerable and the elderly.

[Matt Hancock]

The hon. Member for Hyndburn made an impassioned plea. I recognise the long-standing interest of my hon. Friend the Member for Fylde in this issue and the work he has done.

[Graham Jones]

A Lancashire alliance!

[Matt Hancock]

There is a real Lancashire alliance to ensure people do not get pestered. The clause will place a statutory duty on the Information Commissioner to publish a direct marketing code of practice. I am sure that the Information Commissioner will have heard the plea for a pro forma, which could appear in such statutory guidance.

We all know, from being sent emails that we are not interested in, how powerful it is almost always to have an “unsubscribe” link at the bottom; we can get rid of a lot of junk by clicking that. Nuisance calls continue to blight people’s lives, particularly the vulnerable, who rely on their phones as a main point of contact. So far in 2016, the Information Commissioner’s Office has issued fines totalling £1.5 million to companies behind nuisance marketing. Those firms were responsible for 70 million calls and more than half a million spam text messages. That should give the Committee a feel of the scale of the problem.

We think that the new code will support a reduction in the number of unwanted direct marketing calls by making it easier for the Information Commissioner to take effective action against organisations in breach of the direct marketing code under the Data Protection Act and the privacy and electronic communications regulations. In response to the specific question whether this applies also to snail mail, the answer is yes. The mail preference service to which individuals can subscribe to prevent direct marketing mail already exists but is also covered by the statutory code of practice.

[Graham Jones]

Does the Minister agree that it would bring not only function but pleasure to have a return mailing address on the front, so that we could take no more and shove this mail back in the red box?

[Matt Hancock]

I am sure the Information Commissioner will have heard the hon. Gentleman’s plea. There is such logic and force behind it that I am sure it will be taken into account.

[Kevin Brennan]

We very much support the concession that the Minister made following the evidence session and the amendments tabled. Does he think that anything more could be done where the origin of these calls is overseas, as with very many of them?

[Matt Hancock]

I propose after consultation to bring in measures to ensure that the liability is on the individual. That will significantly strengthen the hand of the regulator here, alongside the code of practice, but I am open to working with the hon. Gentleman and others to see what else we can do for calls that originate from overseas. I entirely understand the problem. Ultimately, we are trying to stop as much spamming as possible, while allowing people to communicate and use modern means of communication.

[Calum Kerr]

Last week I had a call from a director from Ofcom, who had just returned from south-east Asia, discussing nuisance calls. As the Government go around the world setting up their new trade agreements, perhaps they might consider this one of the clauses they build in around nuisance calls.

[Matt Hancock]

That is an interesting suggestion. Of course, this will apply to overseas companies; it is just that, as we have discussed in other parts of the Bill, that is harder to enforce against.

Finally, there was discussion about charities making nuisance calls. Charities, and agents on their behalf, were covered in the Charities (Protection and Social Investment) Act 2016, which introduced a new regulator specifically for charities in this space. With those explanations, I urge that the clause stand part of the Bill.

Question put and agreed to.

Clause 77 accordingly ordered to stand part of the Bill.

Clauses 78 to 81 ordered to stand part of the Bill.

Clause 82

Commencement

[Matt Hancock]

I beg to move amendment 182, in clause 82, page 80, line 3, at end insert—

“() section (Power to apply settlement finality regime to payment institutions);”

This provides for new clause NC29 to come into force on royal assent. By convention regulations made under the section inserted by that clause would not be made so as to come into force earlier than two months after royal assent.

[The Chair]

With this it will be convenient to discuss the following:

Government amendment 184.

Government new clause 29—Power to apply settlement finality regime to payment institutions.

Government new clause 30—Bank of England oversight of payment systems.

Government new schedule 2—Bank of England oversight of payment systems.

Government amendment 187.

[Matt Hancock]

We are committed to creating a more competitive financial services sector. Like many other parts of the Bill, this one covers the private sector. Greater competition in financial services creates better outcomes for consumers and lowers the cost and broadens the range of services available. These measures pave the way for a broader access to payment systems, driving competition in them.

New clause 29 allows the Treasury to extend the benefits of the existing settlement finality regime to non-bank firms that provide payment services, such as Worldpay, through statutory instrument. The existing regulations provide that payments initiated in these systems by banks cannot be unwound if a bank becomes insolvent while it has an unsettled transaction in the system. This is important for the integrity of payment systems, but currently does not extend to payments initiated by non-bank payment institutions, which are a growing part of the financial services system. Extending coverage to transactions initiated by non-bank payment institutions will therefore enable those institutions to obtain direct access to payment systems.

New clause 30 and new schedule 2 amend the Banking Act 2009 so that the Treasury can formally recognise a non-bank payment system for regulatory oversight by the Bank of England. Currently, the Bank of England may only supervise interbank payment systems. Without this change, if a non-bank system were to grow rapidly, the Treasury and the Bank of England would have limited tools to address any financial stability risks stemming from a non-bank system in a timely manner. This is required now, as a systemically important non-bank system is made more likely by broadening access to payment systems, as it creates the conditions that make non-bank systems more likely to grow.

Together, the two measures enable broader access to payment systems. The impact assessments for both are with the Regulatory Policy Committee and we expect them to be non-qualifying on the grounds that they are pro-competition, support financial stability and have a low regulatory burden.

Amendment 182 agreed to.

[Matt Hancock]

I beg to move amendment 183, in clause 82, page 80, line 14, leave out “section” and insert “sections (Suspension of radio licences for inciting crime or disorder) and”.

This provides for new clause NC28 to come into force 2 months after Royal Assent.

[The Chair]

With this it will be convenient to discuss the following:

Government new clause 27—Digital additional services: seriously harmful extrinsic material.

Government new clause 28—Suspension of radio licences for inciting crime or disorder.

[Matt Hancock]

We take very seriously the responsibility to ensure that the broadcasting regulatory framework is as robust as possible. As part of the cross-Government strategy to ensure we are doing all we can to counter the pernicious impact of extremism and extremist narratives, we and Ofcom have carefully assessed whether consumers are fully protected from the most harmful content on TV and radio. That work identified potential anomalies in the current broadcasting legislation, which the amendment and new clauses seek to address.

Ofcom requires broadcasters to hold a licence to broadcast on TV or radio in the UK. The licence regime has developed over time and in response to technological developments. Different licence regimes apply depending on the way in which broadcast content is received.

New clause 27 relates to a subset of Ofcom licences known as digital television additional services licences—in effect, a catch-all for the range of services that do not fall under the more usual licences required to broadcast directly via satellite and cable or the digital television platform. There are two DTAS licenses, or portal channels, which provide viewers using connected or smart TVs on the freeview platform with access to internet-streamed television channels by first going through the electronic program guide.

A potential anomaly we want to address arises because one of the portal channels has begun contracting with internet-streamed channel providers based outside the European economic area, which could potentially give rise to a situation where that internet-streamed channel includes seriously harmful content without Ofcom or any other regulator having recourse to act. I want to absolutely clear that there is no suggestion that any of the current DTAS licensees would purposefully provide access to seriously harmful content, but I am sure the Committee will agree that having that happen inadvertently, and finding regulators are unable to act, is not a position we would like to be in. The amendment puts it beyond doubt that Ofcom is able to set conditions to act.

New clause 28 concerns radio. At present, there is a limitation in Ofcom’s ability quickly to deal with the exceptional circumstance of a terrestrial radio station, whether analogue or digital, repeatedly broadcasting harmful material that incites listeners to crime or disorder. We are acting to prevent such an outcome.

Amendment 183 agreed to.

Amendment made: 184, in clause 82, page 80, line 14, at end insert—

“() section (Bank of England oversight of payment systems) and Schedule (Bank of England oversight of payment systems).”—(Matt Hancock.)

The amendment provides for the new clause and Schedule about the Bank of England’s oversight of payment systems (NC30 and NS2) to come into force 2 months after Royal Assent.

Clause 82, as amended, ordered to stand part of the Bill.

Clause 83

Extent

[Matt Hancock]

I beg to move amendment 185, in clause 83, page 80, line 31, at end insert—

‘( ) Section (Qualifications in information technology: payment of tuition fees) extends to England and Wales only.”

This amendment is consequential on NC26.

[The Chair]

With this it will be convenient to discuss the following:

Government new clause 26—Qualifications in information technology: payment of tuition fees.

Government amendment 186.

[Matt Hancock]

This is one of the clauses I am most excited about. We are committed to public investment in skills and learning to ensure everyone has the chance to master the basic skills required to get on in life and work. We are very clear that, in addition to numeracy and literacy, that now includes digital. Our workplaces and homes are increasingly integrated with digital technologies, so we are clear that a sound grasp of basic digital skills is as important as numeracy and literacy.

Too many adults are unable effectively to use the digital technologies that allow them to keep in touch with friends and family, find the cheapest offers for goods and services, search for jobs online and work effectively and productively in those jobs. All too often, the digitally excluded come from the least advantaged parts of our society—the less well paid, the older and the more geographically remote. We are committed to making society work for everyone, and we take the issue of digital exclusion very seriously. That is why we intend, in this amendment, to create a duty on the Secretary of State for Education to ensure that, where specified, digital skills qualifications are made available by providers and that they are free of charge to people aged 19 and over who need them and do not already have the relevant qualification.

This duty will measure the duties for maths and English provision for adults. The justification is clear: people who can effectively use digital technology pay less for goods and services, save time on routine tasks, can more easily connect with society and can attract a wage premium in the labour market. We want to enhance social mobility and give everyone the opportunity to acquire the skills they need to succeed in the modern workplace.

--- Later in debate ---

[Calum Kerr]

We seem to have raced through this final section, for which I commend all right hon. and hon. Members. We do not need the gift of foresight to know that the Minister will tell me, “We do not do reviews in this Government. We expect someone else to do them for us.” Let me briefly explain why I support new clause 1, which I will not press to a vote, and I will then touch on new clause 20.

We heard an excellent articulation in the evidence sessions of the value of third-party infrastructure as an effective means of maximising communication roll-out across the country. Today, about a third of the UK’s 27,000 masts are independently operated, and that contrasts with about 60% of masts globally. In EU countries, it is 80%. Independent analysis has shown that independently operated towers across Europe and North America host at least twice as many masts as when those towers are operated by the mobile companies themselves. As we map a new digital future—we are all excited to see what the new Minister does with his digital strategy for the country—we should be conscious of the fact that we will need a lot more masts. We know that he knows that. Technology such as 5G is higher frequency and covers shorter distances. Unless we want our country to resemble the back of a hedgehog, we need to look at effective ways of minimising the number of masts while maximising the coverage we need.

With the approach in the new clause, we are looking to encourage the Government to be consciously competent and to come forward with a model or measures that will enhance the further deployment of shared infrastructure, so that as we deploy 5G and embrace the technology of the future, we minimise the impact on our environment.

New clause 20 is certainly a different take on this area. It is well meaning but not quite right, to be honest. I do not think the idea of a universal service applies in the same way for mobile as it does for wired. It is probably something we will evolve to as the worlds of wired and wireless networks intertwine and overlap going forward. I would be happy to support the new clause, but I would welcome some more discussion.

I hope the Government and the new Minister and team recognise that third-party infrastructure will be central to driving the coverage model in rural and urban areas as we look to put a lot more masts out there to deliver the potential speeds and capability of the technology in the future. If the Minister will not give me a review, perhaps he will at least throw me a bone or two that things are beyond, “Hopefully the Select Committee will do a review.” The Select Committee has only so much bandwidth to do it.

[Matt Hancock]

I can do better than merely asking the Select Committee, although I do think that Select Committees do important reports and should not be denigrated. Ofcom has also been given a statutory duty to provide a report to the Secretary of State every three years on the state of the UK’s communications infrastructure, including the extent to which UK networks share infrastructure. That is precisely what the new clause asks for as a one-off. I assure the hon. Gentleman that the reports will happen regularly. The next three-yearly report is due in 2017, which is the same time that new clause 1 specifies for its review.

Moving on to new clause 20, we recognise the importance of improving mobile coverage. I support the intention behind it, but I do not think a statutory review is necessary at this time. We already have building blocks in place to deliver extensive mobile connectivity, and it is happening. The changes that we have debated today will give Ofcom the ability to provide data to ensure that we know how effective mobile connectivity is. We have legally binding licence obligations to ensure that each mobile operator provides voice coverage to at least 90% of the UK land mass. Taken together, 98% of the UK will have a mobile signal by the end of 2017, according to the agreements.

[Louise Haigh]

Does the Minister envisage, then, that Ofcom will gather data to produce reports on the extent of mobile coverage against the Government targets set with mobile network operators?

[Matt Hancock]

I do expect that. I can confirm my expectation that that is what Ofcom will do.

[Louise Haigh]

How often does the Minister expect Ofcom to produce those reports?

[Matt Hancock]

We just changed the rules so that instead of being restricted to producing such reports three times a year, Ofcom can do so whenever it thinks it appropriate. That will provide for Ofcom to be able to do so as much as possible, but I committed earlier today to having a connected nations report before the end of this year. I hope that that provides for what the hon. Lady seeks in new clause 20 and that the hon. Members will not press their new clauses.

[Calum Kerr]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Graham Stuart.)

Digital Economy Bill (Eleventh sitting)

Matt Hancock Excerpts

Committee Debate: 11th sitting: House of Commons
Tuesday 1st November 2016 Public Bill Committees

[The Minister for Digital and Culture (Matt Hancock)]

I want to respond to a powerful and impassioned speech by the hon. Member for Bristol West and set out why, while agreeing with much of the substance of what she says, we think that many of the issues are covered by existing legislation and why we think that enforcement is the biggest part of the challenge, as she pointed out. There are also some technical deficiencies with the proposed clause. I will deal with all those issues in the context of strongly supporting the thrust of her argument and the desire to protect vulnerable women.

New clause 5 seeks to make it a criminal offence to

“make available on the internet pornographic material on a commercial basis to persons in the United Kingdom if they know or ought to know that the production of the pornographic material involved exploited persons.”

The language is similar to that used in other parts of the Bill, but it covers quite different ground in terms of the substance. I do not want to see people exploited in this way; the question is about what is provided for through existing law and how the new clause would affect that.

The offence is targeted at persons “making available” material that may have involved exploitation, rather than the exploitation itself. We are committed to ensuring that people are not subject to exploitation; this is a technical difference in respect of the way that the law applies. Tackling exploitation is the existing basis of the work of, for example, the National Crime Agency’s child exploitation online protection command and the violence against women and girls strategy as well as the Modern Slavery Act 2015. Making sure that we implement the 2015 Act—recent legislation—and enforce it is a critical part of the work of the Home Office at the moment.

[Thangam Debbonaire]

I am grateful to the Minister for reassuring me that the 2015 Act could cover what I am talking about. My concern relates to whether that is actually happening. Could the Minister expand further on that point?

[Matt Hancock]

Of course. The expansion of enforcement in respect of the 2015 Act is an important part of the work of the Home Office at the moment. The Minister who took that legislation through Parliament is now the Secretary of State at the Department for Culture, Media and Sport, so Ministers at that Department have a good understanding of not just the legislation, but the need for enforcement.

Existing legislation, including the Criminal Justice and Immigration Act 2008, clearly makes it an offence to be in possession of “an extreme pornographic image”—which includes images depicting non-consensual sex—and to possess and distribute indecent images of children. In addition, the independent Internet Watch Foundation works to identify and remove child sexual abuse, which we discussed earlier in Committee, as well as criminally obscene content hosted anywhere in the world. We are able to take down criminally obscene content, and the approach has started to work effectively. The organisation works closely with Government, at national and local levels, and policing agencies to support investigations and prosecutions.

There are a couple of technical reasons why the new clause is deficient. First, the scope of the offence is unclear; there is no definition as to what constitutes pornographic material. It is not made clear whether the definition at clause 16 of the Bill is to be used. Similarly, it is not clear what is meant by “make available” on the internet: would that capture internet service providers who host the material or just the individual who actually uploaded it to a specific website?

Secondly, the proposed classification of the offence is summary only and the corresponding maximum penalty of six months’ imprisonment, a level 5 fine or both, is incongruous for an offence dealing with this kind of conduct. Other sentences for offences in this area are much more serious. For example, the proposed maximum is much lower than for other offences relating to coercive conduct, such as trafficking for sexual exploitation, which carries a maximum of life imprisonment, and the possession of extreme pornographic images, which carries a maximum of three years’ imprisonment, an unlimited fine or both.

I am also concerned that the offence as drafted could be difficult to prosecute. In practice, it is difficult to show that a person making material available online actually knew, or should have known, that an individual featured had been exploited. There may be no link, or a very tenuous link, between these individuals and those engaged in the exploitation itself. Lastly, there are also potential territorial difficulties involved in prosecuting this offence. In the absence of any express provision to the contrary, it is presumed that any criminal offence is subject to the jurisdiction only when it is perpetrated in the UK. This is an issue that we have dealt with elsewhere in the Bill.

I applaud the hon. Lady’s intentions and have given assurances about the ongoing work in prosecuting other offences. I invite her to withdraw the motion.

[Thangam Debbonaire]

I thank the Minister for his responses. My understanding is that the implementation of the Modern Slavery Act does not cover this area of work so I will be following that up with the Minister and his colleagues. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 13

Offence to use digital ticket purchasing software to purchase excessive number of tickets

‘(1) A person commits an offence if he or she utilizes 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 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 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—

(a) “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.

(b) “retail ticket purchasing platform” shall mean a retail ticket purchasing website, application, phone system, or other technology platform used to sell tickets.”

(6) Subsections (1) and (2) shall apply in respect of anything done whether in the United Kingdom or elsewhere.’—(Nigel Adams.)

This new clause creates an offence to use digital ticket purchasing software to purchase tickets for an event over and above the number permitted in the condition of sale. It also creates an offence to knowingly resell tickets using such software.

Brought up, and read the First time.

--- Later in debate ---

[Louise Haigh (Sheffield, Heeley) (Lab)]

I rise briefly to support the new clause. My hon. Friend the Member for Cardiff West and I were proud to put our names to it. I commend the hon. Member for Selby and Ainsty for bravely revealing his devotion to Green Day. I stand in solidarity with him—I, too, am a big fan.

This issue has been a problem for too long for fans of musicians of all descriptions. It prices people out of access to their favourite bands and acts and thereby entrenches a class barrier to culture, which cannot be allowed to continue. For as long as there have been ticketed events, there have been people making money out of the fact that demand for live sports or music outstrips supply. As my hon. Friend the Member for City of Chester pointed out, the development of technology has escalated the problem. Punters simply do not stand a chance against digital ticket purchasing software. The new clause would kick away one of the legs that ticket touts rely on.

The current legislation contained in the Consumer Rights Act 2015 is extremely patchy. It can compel ticket resale sites to publish information such as seat number and face value, but it is not enforced sufficiently and tickets are routinely sold at a high mark-up. Unless Parliament gets tough now, resale sites will continue brazenly to flout the law. It is high time that Parliament closed the legal loophole. That is what the industry, musicians and fans are calling for. I take the opportunity to thank my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), who has been calling for this change for some time. We wholeheartedly support new clause 13.

[Matt Hancock]

I recognise the strength of feeling across the Committee on this matter. I will certainly do the bidding of the hon. Member for City of Chester and pay tribute to the work of my hon. Friend the Member for Selby and Ainsty, who is a long-standing supporter of live music and has made his case. Last week, he introduced me to Josh Franceschi in the House of Commons, who was able to make his plea very directly.

I match my hon. Friend’s Green Day ticketing problem and raise him my Paul Simon ticket problem. I had a similar experience when buying tickets to see Paul Simon next week at the Royal Albert Hall, to which I am looking forward enormously. I had to pay an eye-watering amount for the tickets—much higher than the face value.

[Claire Perry (Devizes) (Con)]

If even the Minister cannot obtain tickets, given the strings he can pull, what hope is there for the ordinary punter?

[Matt Hancock]

I stress that I bought my tickets to see Paul Simon completely off my own bat, as a fan. My wife and I are enormously looking forward to going. I am prepared to pay the very high price because it will be such an amazing concert, but it would be far better if I could pay the face value or something close to it. I went online immediately the tickets were released and a huge number had gone already. Secondary ticketing sites were the only way that I could get the tickets. Like my hon. Friend the Member for Selby and Ainsty, I was bent over my laptop pressing the button trying to get the tickets as quickly as possible. I only say that to explain to the Committee that I feel the pain of all those who end up having to pay far more than face value because of automated bots.

The Committee will know that we asked Professor Michael Waterson to review secondary ticketing. His very good independent report makes a number of points relevant to the new clause. The offences set out in the Computer Misuse Act 1990 have broad application and the Waterson review concludes that unauthorised use of a computerised ticketing system to avoid ticket volume constraints may give rise to breaches of that Act. Such breaches need to be reported, investigated and case law then established.

Having said that, I recognise the very clear sense in the debate that there remains a problem to be solved. I reiterate the words of the Secretary of State, who said last week that

“the advice has always been that the Computer Misuse Act applied. I want to look carefully at that and see how best we can get to a robust position on this matter”.

She proposed to convene a meeting of all interested parties. If we can get it scheduled, we will have that meeting within a month; if not, I commit to holding it before Christmas.

[Kevin Brennan (Cardiff West) (Lab)]

It is welcome to have a deadline, but would it not be better if that meeting took place before Report, so that the Commons has an opportunity to consider the points made at it?

[Matt Hancock]

We will seek to have it before the Bill reaches Report, but I will commit to having it before Christmas. Consideration of the Bill will still be ongoing after Christmas in the other place. At the same time, we need to work on making sure that, should we make progress in this area, we get the details and technicalities right and consult appropriately.

There are some technical deficiencies in the new clause. I ask my hon. Friend the Member for Selby and Ainsty to withdraw it, with that clear commitment to making progress in this area while there is still an opportunity—should that be the outcome—to amend this Bill.

A series of non-legislative work is also needed to tackle the problem. As my hon. Friend says, this is not a panacea. Today, we are announcing the new national cyber-security policy and that includes support, through the National Cyber Security Centre, for further action. The centre is in touch with ticketing organisations to enable this and I suggest that we also invite them to attend the meeting to see what progress can be made.

With those assurances, I ask my hon. Friend to withdraw the motion and I look forward to working with him and others to see what we can do to tackle this problem.

--- Later in debate ---

[Nigel Adams]

Indeed, there is a sound of silence on this particular review response.

I am delighted that the Minister has committed to following up the Secretary of State’s pledge to hold a meeting before Christmas. With something as technical as this, it is crucial to get all the players round the table: primary, secondary ticketing sites, representatives of both the fans and artists and, dare I say it, the Minister could probably do with me there as well.

[Matt Hancock]

On the response to the Waterson report, it will be published in due course. The question is whether it is best to hold back publication until after the work I have just committed to is done, to incorporate fully the views of the fans, artists, the ticket-selling industry and, potentially, even my hon. Friend.

[Nigel Adams]

It would be a sensible move. Perhaps it is not a bad idea to have this round-table and take soundings from the industry before the Government respond to the review; I do not think that the Waterson review goes quite far enough in tackling bots, although there is plenty of good work in there for the Government to consider.

I am happy to withdraw my new clause at this stage, following the Minister’s clear commitment to solve the problem. I am hopeful that the issue will be resolved at some stage during the passage of the Bill. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

--- Later in debate ---

[Nigel Adams]

I rise briefly to speak to the new clause tabled by the hon. Member for Cardiff West. I understand that it seeks to clarify a rule that already exists. As has been mentioned previously, I chair the all-party parliamentary group on music. Earlier in the year, we held a dinner with representatives from the industry and services such as Spotify and Apple Music. The intention of the dinner was better to understand the growing music-streaming market and what measures are needed to help it flourish further for the benefit of creators, fans and those services. I was taken by the agreement across the room about the existence of a value gap between rights holders and some digital services, and the need to ensure fairness in the way music rights are valued and negotiated.

The Government’s response to the EU’s digital platforms consultation, published at the beginning of the year, stated:

“Clarification of terms used in the Directive would, we believe, help to address these concerns.”

I hope the Minister and the Government remain committed to that view and the intention behind the new clause to clarify existing law.

[Matt Hancock]

As we have debated, the Bill sends a clear message about copyright infringement, not least because we are increasing the penalty for online copyright infringement from two to 10 years. Of course, I know about the concern in the music industry and elsewhere that online intermediaries need to do more to share revenues fairly with creators. That is what this new clause seeks to tackle, and I agree with that concern.

The hon. Member for Cardiff West mentioned the interaction of the Bill with EU law. The change proposed by the new clause is already the position in European Court of Justice case law, and we support that position in the UK. That provides some clarification to the existing position.

Let me answer the specific questions. First, we are heavily engaged in the digital single market negotiations and the discussions ongoing in Europe. While we are a member of the EU, we will continue to do that. The issue of the value gap, which the hon. Gentleman mentioned, is important, and the development of ECJ case law in that direction has been helpful.

That brings me to Brexit because, as the e-commerce directive is EU single-market legislation, we will have to consider what the best future system will be as we exit the European Union. We will have to consider how the e-commerce regulations as a whole should work in the future. That will be part of the debate about leaving the European Union. For the time being, ECJ case law supports the intentions in the new clause, and I would be wary about making piecemeal changes to the regime. I acknowledge the need, through the Brexit negotiations and the process of setting domestic law where there is currently European law, to take into account the important considerations that have been raised.

[Kevin Brennan]

The new clause was a probing amendment, and I thank the Minister for his response. It is important to have the Government’s response on the record.

We debate this issue in the context of the UK music industry’s growth: over a four-year period, it has grown by 17%. During that same period, there has been a massive shift from consumers owning music towards the streaming of music. The value of subscription streaming services has jumped from £168 million in 2014 to £251 million in 2015. So there is a model, if you like, in the market, which can produce value for the industry, but it is being undermined by the value gap that is created by the different treatment of these different types of services.

I accept that the Minister has put on the record the Government’s current position and said that there will be a positive engagement with this issue. On that basis, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 16

E-book lending

‘In section 43(2) of the Digital Economy Act 2010, leave out from “limited time” to “and loan.”’

This new clause aims to extend public lending rights to remote offsite e-book lending.—(Kevin Brennan.)

Brought up, and read the First time.

[Kevin Brennan]

I beg to move that the new clause be read a Second time.

This new clause would enable the consideration of public lending right for remote e-lending from libraries. That would be achieved by amending section 43(2) of the Digital Economy Act 2010, which sets remote loans outside the definition of lending under public lending right.

I do not know whether the Minister, like me, is a bit of a dinosaur and prefers his books to come in physical form—I am currently reading Bruce Springsteen’s autobiography, which I recommend, as well as Ed Balls’s book on politics, which is also very good. However, in this Digital Economy Bill we should acknowledge the increasing role of e-books and their impact on the income of authors. The spirit of the Bill is that we should better reflect how technology has changed our economy, so it is important that we go further in some places to acknowledge where technological change has outpaced legislation in relation to the arts.

Our approach here should be informed by the fact that we have the Digital Economy Act 2010. At the time that it was passed, some opportunities were missed. We should keep that in mind as we discuss this Bill and make sure that we do not allow those opportunities to pass by again as the Bill completes its stages in the House of Commons and afterwards in the other place.

The Digital Economy Act 2010 made some progress but it failed to forecast how our relationship with books would change. In particular, the 2010 Act touched on the subject of e-books, but its wording ignored the main way libraries would end up lending e-books: remotely, over an internet connection. Of course, remote lending is a natural continuation of the function of e-books. One of the main benefits of e-books is that they escape physical constraints such as location and storage.

However, under current legislation, authors receive no payment when a public library loans their book remotely, which is different from any other form of book loan. Last year, 2.3 million remote loans were made, but they were not counted at all towards authors’ payments because the 2010 Act allowed only for on-site loans of e-books, of which there was a negligible number—who will go to a library when they can borrow the book remotely? That is the whole point of e-books. There is no reason in principle why the distinction should exist; that is what the philosophy of this Bill is supposed to be. Nevertheless, as a result, the public lending right—a right for authors established in 1979—has not been honoured, due to the failure of the 2010 Act to keep up with technological change.

I hope that we can take the opportunity today to avoid repeating that mistake. The Society of Authors, the Association of Illustrators, and the Authors’ Licensing and Collecting Society all support the new clause. Public lending right is designed to balance the social need for free public access to books against an author’s right to be remunerated for the use of their work. Indeed, public lending right provides a significant and much-valued part of many authors’ incomes, particularly those authors whose books are sold mainly to libraries and those whose books are no longer in print.

The recent opinion of the Advocate General, relating to a case on rental and lending in respect of copyright works that is currently before the Court of Justice of the European Union, asserted that the lending of electronic books is the modern equivalent of the lending of printed books. I am aware that the Government expressed a desire to reflect this technological change in their March 2013 response to the independent review of e-lending in public libraries in England, but for some reason—perhaps the Minister can tell us why—they have neglected to take the opportunity presented by this Bill to put the matter right.

Furthermore, figures from March this year show that 343 libraries in the UK have been shut down in the past six years, with another 111 closures planned for 2016, which will result in the loss of almost 8,000 jobs. So it is particularly nonsensical not to apply PLR to remote e-book lending, given that it is becoming increasingly hard to visit a physical library. PLR is a legal right and a keystone of a society in which authors receive reward for their considerable cultural contribution. While we can all benefit from technological change and new ways of accessing creative works, it is important that the obligation to remunerate authors fairly is acknowledged and honoured.

Having acknowledged this loophole and the difficulties it causes, it is vital that the Bill addresses the issue, so that right-holders are treated equitably. Will the Minister take action on this issue and accept the new clause—and if not, why?

[Matt Hancock]

I wholeheartedly support the hon. Member for Cardiff West in his analysis of the increasing range of digital services at libraries across the country and the importance of those digital services to the communities they serve. I also agree with what he said about the increasing range of e-books and the importance of e-book lending. I am touched by his care for our delivering on the Conservative party manifesto and can tell him that we will deliver on this one too.

Libraries are increasingly providing remote e-book lending, so readers have the opportunity to borrow physical and audio books. Over the last year, 2 million e-book loans were made, which shows how important this is. We have been carefully looking at options for how to implement the manifesto commitment and appropriately compensate authors for remote e-lending, including by extending the PLR to e-books. In doing so, we have engaged with representatives of authors, libraries, agents, publishers and booksellers as well as the Public Lending Right Office. The collaborative input is very valuable and helps to ensure that we achieve an outcome that will be supported by all.

Like the hon. Member for Cardiff West, I am a mixed book reader. I am reading “Down and Out in London and Paris”—a well-thumbed hard copy. I am reading “King Lear” on an e-book, although I would say it is more studying than reading, because it is quite hard work. I bought a Kindle book at the weekend. I fully appreciate all types of books: hard copy and soft, hardback and soft.

The hon. Gentleman will understand how keen we are to implement our manifesto commitment. However, we want to take the time to get it right. Furthermore, we need to ensure that the measure is compatible with the copyright directive while we remain within the European Union. In doing so, we are also paying close attention to a relevant court case, again in the European Court of Justice, where we expect a ruling later this year that will have a bearing on how any clause to bring this into place would be drafted.

For those reasons, we are taking our time to get this right. With that explanation, I hope the hon. Member will withdraw his new clause.

[Kevin Brennan]

I will, but I do not think that there is any real need for the Minister not to commit carrying the measure out in the Bill. It simply extends what is already available. If someone borrowed an e-book by turning up at a library, the author would receive their public lending right, but if they did so remotely through the same library service, the author would not. Clearly that is an unacceptable injustice and anomaly.

The Minister has said that the Government need to take their time. It was March 2013 when they said in their response to the independent review that they intended to reflect that technology change. Three years and eight months later, we have a Bill in Committee in the House of Commons and still the Government say they need to take their time to get it right. This Bill is the right time to get it right. I hope the Minister will reflect further on the raft of amendments to this defective Bill that will be introduced in the House of Lords if we do not put this right in the House of Commons. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 19

Personal data breaches

‘(1) The Data Protection Act 1998 is amended as follows.

(2) After section 24 insert—

“24A Personal data breaches: notification to the Commissioner

(1) In this section, section 24B and section 24C, “personal data breach” means unauthorised or unlawful processing of personal data or accidental loss or destruction of, or damage to, personal data.

(2) Subject to subsections (3), (4)(c) and (4)(d), if a personal data breach occurs, the data controller in respect of the personal data concerned in that breach shall, without undue delay, notify the breach to the Commissioner.

(3) The notification referred to in subsection (2) is not required to the extent that the personal data concerned in the personal data breach are exempt from the seventh data protection principle.

(4) The Secretary of State may by regulations—

(a) prescribe matters which a notification under subsection (2) must contain;

(b) prescribe the period within which, following detection of a personal data breach, a notification under subsection (2) must be given;

(c) provide that subsection (2) shall not apply to certain data controllers;

(d) provide that subsection (2) shall not apply to personal data breaches of a particular description or descriptions.

24B Personal data breaches: notification to the data subject

‘(1) Subject to subsections (2), (3), (4), (6)(b) and (6)(c), if a personal data breach is likely to adversely affect the personal data or privacy of a data subject, the data controller in respect of the personal data concerned in that breach shall also, without undue delay, notify the breach to the data subject concerned, insofar as it is reasonably practicable to do so.

(2) The notification referred to in subsection (1) is not required to the extent that the personal data concerned in the personal data breach are exempt from the seventh data protection principle.

(3) The notification referred to in subsection (1) is not required to the extent that the personal data concerned in the personal data breach are exempt from section 7(1).

(4) The notification referred to in subsection (1) is not required if the data controller has demonstrated, to the satisfaction of the Commissioner—

(a) that the data controller has implemented appropriate measures which render the data unintelligible to any person who is not authorised to access it, and

(b) that those measures were applied to the data concerned in that personal data breach.

(5) If the data controller has not notified the data subject in compliance with subsection (1), the Commissioner may, having considered the likely adverse effects of the personal data breach, require the data controller to do so.

(6) The Secretary of State may by regulations—

(a) prescribe matters which a notification under subsection (1) must contain;

(b) provide that subsection (1) shall not apply to certain data controllers;

(c) provide that subsection (1) shall not apply to personal data breaches of a particular description or descriptions.

24C Personal data breaches: audit

‘(1) Data controllers shall maintain an inventory of personal data breaches comprising—

(a) the facts surrounding the breach,

(b) the effects of that breach, and

(c) remedial action taken

which shall be sufficient to enable the Commissioner to verify compliance with the provisions of sections 24A and 24B. The inventory shall only include information necessary for this purpose.

(2) The Commissioner may audit the compliance of data controllers with the provisions of sections 24A, 24B and 24C(1).

(3) In section 40 (Enforcement notices)—

(a) in subsection (1)—

(i) after “data protection principles,” insert “or section 24A, 24B or 24C”;

(ii) for “principle or principles” substitute “principle, principles, section or sections”;

(b) in subsection 6(a) after “principles” insert “or the section or sections”.

(4) In section 41 (Cancellation of enforcement notice”)—

(a) in subsection (1) after “principles” insert “or the section or sections”;

(b) in subsection (2) after “principles” insert “or the section or sections”.

(5) In section 41A (Assessment notices)—

(a) in subsection (1) after “data protection principles” insert “or section 24A, 24B or 24C”;

(b) in subsection (10)(b) after “data protection principles” insert “or section 24A, 24B or 24C”.

(6) In section 41C (Code of practice about assessment notices)—

(a) in subsection (4)(a) after “principles” insert “and sections 24A, 24B and 24C”;

(b) in subsection (4)(b) after “principles” insert “or sections”.

(7) In section 43 (Information notices)—

(a) in subsection 43(1)—

(i) after “data protection principles” insert “or section 24A, 24B or 24C”;

(ii) after “the principles” insert “or those sections”;

(b) in subsection 43(2)(b) after “principles” insert “or section 24A, 24B or 24C”.

(8) In section 55A (Power of Commissioner to impose monetary penalty)—

(a) after subsection (1) insert—

“(1A) The Commissioner may also serve a data controller with a monetary penalty notice if the Commissioner is satisfied that there has been a serious contravention of section 24A, 24B or 24C by the data controller.”;

(b) in subsection (3A) after “subsection (1)” insert “or (1A)”;

(c) in subsection (4) omit “determined by the Commissioner and”;

(d) in subsection (5)—

(i) after “The amount” insert “specified in a monetary penalty notice served under subsection (1) shall be”;

(ii) after “Commissioner” insert “and”;

(e) after subsection (5) insert—

“(5A) The amount specified in a monetary penalty notice served under subsection (1A) shall be £1,000.

(5B) The Secretary of State may by regulations amend subsection (5A) to change the amount specified therein.”

(9) In section 55B (Monetary penalty notices: procedural rights)—

(a) in subsection (3)(a) omit “and”;

(b) after subsection (3)(a) insert—

(aa) specify the provision of this Act of which the Commissioner is satisfied there has been a serious contravention, and”;

(c) after subsection (3) insert—

“(3A) A data controller may discharge liability for a monetary penalty in respect of a contravention of section 24A, 24B or 24C if he pays to the Commissioner the amount of £800 before the time within which the data controller may make representations to the Commissioner has expired.

(3B) A notice of intent served in respect of a contravention of section 24A, 24B or 24C must include a statement informing the data controller of the opportunity to discharge liability for the monetary penalty.

(3C) The Secretary of State may by regulations amend subsection (3A) to change the amount specified therein, save that the amount specified in subsection (3A) must be less than the amount specified in section 55A(5A).”;

(d) in subsection (5) after “served” insert “under section 55A(1)”;

(e) after subsection (5) insert—

“(5A) A person on whom a monetary penalty notice is served under section 55A(1A) may appeal to the Tribunal against the issue of the monetary penalty notice.”

(10) In section 55C(2)(b) (Guidance about monetary penalty notices) at the end insert “specified in a monetary penalty notice served under section 55A(1)”.

(12) In section 67 (Orders, regulations and rules)—

(a) in subsection (4)—

(i) after “order” insert “or regulations”;

(ii) after “section 22(1),” insert “section 24A(4)(c) or (d), 24B(6)(b) or(c),”;

(b) in subsection (5)—

(i) after subsection (c) insert “(ca) regulations under section 24A(4)(a) or (b) or section 24B(6)(a),”;

(ii) for “(ca) regulations under section 55A(5) or (7) or 55B(3)(b),” substitute “(cb) regulations under section 55A(5), (5B) or (7) or 55B(3)(b) or (3C),”.

(13) In section 71 (Index of defined expressions) after “personal data |section 1(1)” insert “personal data breach |section 24A(1)”.

(14) In paragraph 1 of Schedule 9—

(a) after paragraph 1(1)(a) insert—

“(aa) that a data controller has contravened or is contravening any provision of section 24A, 24B or 24C, or”;

(b) in paragraph 1(1B) after “principles” insert “or section 24A, 24B or 24C”;

(c) in paragraph (3)(d)(ii) after “principles” insert “or section 24A, 24B or 24C”;

(d) in paragraph (3)(f) after “principles” insert “or section 24A, 24B or 24C.””

This new clause seeks to create a general obligation on data controllers to notify the Information Commissioner and data subjects in the event of a breach of personal data security. The proposed obligation is similar to that imposed on electronic communication service providers by the Privacy and Electronic Communications (EC Directive) Regulations 2003.—(Louise Haigh.)

Brought up, and read the First time.

[Louise Haigh]

I beg to move, That the clause be read a Second time.

New clause 19 would provide a general obligation on companies to report personal data breaches. This crucial amendment gets to the heart of the regulatory system around cyber-security. Cyber-security is one of the greatest challenges we face as a country. Despite the Government’s multi-million pound strategy and their further welcome announcement today, we do not believe they have faced up to the challenge yet. Some 90% of large UK firms were attacked in 2014. That is an astonishing figure, and yet only 28% of those businesses reported their cyber-attack to the police. As the Minister knows, national crime statistics rose for the first time in 20 years last year, because scams and cybercrime are now included.

Throughout discussion of the Bill, we have made it clear that we feel it does nothing to address the real challenges facing the digital economy. The Bill should have equipped the sector for the digital future—a future as replete with challenges as with opportunities. None of those challenges could be greater than cyber-security. That security says to consumers and individuals that, in this coming century, when data will be the lifeblood and the exchange of personal data the currency, nothing is more critical to ensure that that runs smoothly than their trust.

This multi-billion-pound sector, which now amounts to 11% of our GDP, is utterly reliant on the mutual trust fostered between consumers and producers, which is why the new clause is so critical. It would establish for the first time a duty on all companies to report any breach of cyber-security. The legislation as it stands is simply inadequate. The Data Protection Acts deal extensively with the protection of personal data, but there is no legal obligation on companies to report data breaches. The privacy and electronic communications regulations include an obligation to report data breaches, but that only applies to telecommunications companies and internet service providers and, at that stage, only requires companies to consider information customers.

Clearly, however, it is not only communications providers that hold sensitive data about people that carry the potential to be commodified. Insurance companies have had their data stolen, to be sold to claims management companies; banks are hacked, as J.P. Morgan was in 2014; and TK Maxx suffered the largest retail hack to date with the loss of credit and debit card information. Yet none of those examples had a duty to report to their customers to ensure that further harm was not done with their information.

The net impact of the lack in existing legislation is that the vast majority of attacks go unreported, and people are left in the dark when their personal data have been hacked, leaked, stolen or sold. If we are to talk meaningfully about data ownership, we cannot allow that to continue. We welcome yesterday’s announcement that the Government will be implementing the general data protection regulation. As the Minister knows, the GDPR provides for a general obligation on all companies to report breaches to regulators and customers. Will he make it clear how he expects to fulfil that obligation and whether he is willing to accept the new clause?

Fundamentally, we are keen that the UK’s digital economy is not seen as a soft touch on cybercrime. That is why the new clause would impose a general obligation on data controllers to notify the Information Commissioner and data subjects in the event of breaches of personal data security. We believe that that would be a major step forward, and we look forward to the Minister’s comments.

[Matt Hancock]

I hope that we can deal with this new clause fairly quickly. I strongly support the hon. Lady’s assertion that cyber-security is vital, and I appreciate her welcome for the national cyber-security strategy that the Chancellor of the Exchequer set out today. People say that there are two types of company: those that have had a cyber-attack and know about it; and those that have had one and do not know about it. It is vital that cyber-security is a priority for all companies that use the internet.

As the hon. Lady said, we have announced that the general data protection regulation will apply in the UK from May 2018. That new regime will introduce tough measures on breach notification, making it a requirement for all data controllers and processors to report data breaches to the Information Commissioner if they are likely to result in a risk to the rights and freedoms of individuals. Breaches must also be notified to the individuals affected where there is a high risk to their rights and freedoms. Under the GDPR, the sanctions available will be worth up to 4% of total global annual turnover, or €20 million, so it will be strongly in the interests of organisations to comply with the requirements.

I suggest that the bringing into UK law of the GDPR is the appropriate place to make the change that the hon. Lady suggests in her new clause. I therefore ask her to withdraw the motion.

[Louise Haigh]

If the Government intend to implement regulations in May 2018, I am not convinced why they cannot amend this legislation now.

[Matt Hancock]

The implementation of GDPR is a much bigger piece of work than simply this change. It is better to bring the whole thing in properly and in good order, rather than piecemeal.

[Louise Haigh]

It is highly unsatisfactory that, for the next 18 months, companies receiving cyber-attacks will still not be reporting them to customers that have had their data stolen, hacked or lost, but it is welcome that the Government will be implementing the general data protection regulation. The Opposition will continue to scrutinise the implementation of their cyber-security strategy, so, with the Minister’s assurances, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

--- Later in debate ---

[Louise Haigh]

I beg to move, That the clause be read a Second Time.

The new clause is a very simple amendment, one that I hope the Committee will agree is long overdue. The Communications Act 2003 ensured that access services—subtitles, audio description or sign language—are available on TV that is watched at a prescribed time and channel.

The way in which we watch and consume television has changed considerably since 2003; it is worth remembering that once the Communications Act 2003 reached Royal Assent, it would be a full five years before BBC iPlayer launched online. Similar on-demand services launched in the same year. Although subtitling is at or near 100% across the public service broadcasters, 76% of the UK’s 90 on-demand providers still offer no subtitles at all—despite the fact that, according to Ofcom’s figures, some 18% of the UK population use them.

The principles behind the Communications Act 2003 recognise that those with sensory loss should not be denied access to the information and services that many of us take for granted. Obviously, that principle still applies, yet, because of changes to technology, those with sensory loss cannot keep up.

In July 2013, the then Minister for the Digital Economy acknowledged this paradox, saying:

“If it is clear that progress isn’t being made in three years’ time…we will consider legislation.”

We say that time is up. That is why the Opposition have helpfully brought forward a new clause to remind the Government of their commitment. The clause would merely update the existing regulatory regime that has worked so well for linear TV and apply it to on-demand.

There is no reason to believe that a burden will be imposed. The current code has a sliding scale for access services provision so that new and smaller broadcasters are either exempt or have gradually increasing targets. No linear broadcasters are ever required to spend more than 1% of their relevant turnover on access services. The new clause would be subject to public consultation. It is eminently reasonable and long overdue. It is clearly time the Government acted to reflect the digital world in which we live and allowed those with sensory loss to play a full and active part in it.

[Matt Hancock]

The creation of a digitally inclusive society is a crucial commitment for this Government. If somebody is not able to enjoy and exploit the benefits and convenience afforded to able bodied people, it is for us to better understand why and to work with interested parties to identify and implement a remedy.

The current statutory targets for subtitling, signing and audio description—collectively known by domestic TV channels as “access services”—cover 83 channels, over 90% of the audience share for broadcast TV. Over the years, the provision of access services has increased. Most notably, the number of service providers reporting subtitles grew from seven channels in 2013 to 22 in 2015. However, there is still clearly room for improvement.

We have become a society that wants to watch TV at a time and place convenient for us. As with much of the Bill, changes in technology outgrow the underpinning regulatory framework. It is not unreasonable to expect that content should have subtitles when it is made available at a time and place that are convenient for the viewer—even more so if access services were present at the scheduled broadcast time.

Ofcom currently possesses the power to encourage the 116 on-demand services providers in the UK to provide these services, but it does not have the power to require them. We have been considering what can be done—as the hon. Lady might imagine, given the previous commitment. We have been engaged in discussion with Ofcom to determine how we can address the shortcoming so that an increase in the provision of access services for video on demand can be achieved. We will continue that engagement with Ofcom. It made its position clear in evidence to the Committee, having previously argued that the law as it stood was what was needed.

I urge the hon. Lady to withdraw the new clause. It would require a code of practice that would be too prescriptive and would get into the micromanagement that we talked about earlier in our consideration of the Bill. Also, I would want the clause to specify that it is for Ofcom, not the Secretary of State, to make such a code.

[Louise Haigh]

I would be grateful if the Minister gave us a firm timeframe for this work with Ofcom; this is yet another area that could easily have been addressed in the Bill. He is saying, “Work is ongoing. We might come back to it later.” There are so many areas of the Bill that could have been addressed by ongoing work. It all shows yet again that the Bill should have been delayed and brought forward when it was fit for Committee and ready to tackle all the issues.

[Matt Hancock]

The hon. Lady is clearly wrong about that, for two reasons. First, I do not want to delay the other measures in the Bill; she seems to want to delay a whole series of things that will improve mobile roll-out and broadband roll-out and will put age verification in place, and I think that would be a mistake.

Secondly, in the Committee’s consideration of the Bill, we have had opportunities for further debate that have not been taken up. That shows that there has been full and proper scrutiny of the whole Bill. In this case, after the publication of the Bill, Ofcom said that it thought there was a need for the change in the law. We should take that seriously, consult Ofcom and consider exactly what needs to happen.

[Louise Haigh]

I repeat that in July 2013, the Minister’s predecessor said:

“If it is clear that progress isn’t being made in three years’ time…we will consider legislation.”

The Government have had more than three years to do this. It is not that Ofcom came forward after the Bill was published. The Bill presented a perfect opportunity, so will he commit to the exact timeframe for giving Ofcom the powers?

[Matt Hancock]

Ofcom previously said that it had all the necessary powers, but its position has changed. When the regulator changes position, it is reasonable to take that into account and to consult on ensuring that we can get the powers into place.

I make no bones about it: the support for access services for video on demand has not been in place before. We made big strides in the previous Parliament. We are committed to doing more to ensure that the support is more widely available. Instead of the tone of delay that is coming from those on the Opposition Benches, we should have a tone of support. That is what I propose, so I ask the hon. Lady to withdraw the new clause.

[Louise Haigh]

It is completely outrageous to suggest that we are the ones arguing for delay.

--- Later in debate ---

[Louise Haigh]

The digital economy is the fastest growing area of the UK economy. We are very proud that, as a proportion of GDP, it is the largest in the G20. It employs more than 1.3 million workers, of whom a significant proportion—many more will not be categorised in that figure—are employed in the so-called gig economy. As we heard following the Uber ruling on Friday, many of those people do not enjoy very basic workers’ rights. The London employment tribunal found that Uber was a transportation business and that the drivers who work through the app do work for Uber. The judgment against Uber was hailed as a landmark by the union that brought the claim, GMB, and rightly so. I am a proud member of that union.

Friday’s landmark ruling should have ripple effects across the entire digital economy. At its best, the disruptive force of technology is reframing our relationship with each other and the world around us, whether that is farmers using millimetre-accurate GPS to guide their crops or technical experts in safety-critical industries using live data to monitor the manufacturing process. While the digital economy is heralding an unprecedented opportunity for many, the reality can be very different for the more than a million workers employed within the industry. Too often they will find themselves overworked, underpaid and exploited by bosses they never meet, and who do not even fulfil their basic duties as an employer.

Uber is the totemic example. Their “workers”—who pay Uber commission for every taxi ride completed—are not guaranteed breaks, holiday pay or even the minimum wage. Astonishingly, Uber did everything they could to argue to the tribunal that these people were not employees or workers. The judgement states that

“Any organisation (a) running an enterprise at the heart of which is the function of carrying people in motor cars from where they are to where they want to be and (b) operating in part through a company discharging the regulated responsibilities of a PHV [private hire vehicle] operator, but ( c) requiring drivers and passengers to agree, as a matter of contract, that it does not provide transportation services…and (d) resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism.”

We could not agree more, and it is a bitter irony that a force that is making this era one of the most inter-connected in history has left many workers more isolated than ever before. The Government—who have promised to look out for those that are “just managing”—seem to have been blindsided by the challenges faced by the most enterprising of workers in our economy. There are few workers who would better match that description of “just managing” than the taxi drivers who work upwards of 60, 70 and 80 hours per week and still struggle to pay their bills.

The new clause goes further than the Uber ruling; it would require drivers and other workers to be treated as employees of digital intermediaries. In so doing, their rights to sick pay and holiday pay would be protected as well as the right to paid breaks and the right to the bare minimum wage. When companies such as Uber inevitably try to wriggle out of their responsibilities by appealing against this recent decision, they will have nowhere to go.

We hope that the Government will step into the breach and move to enshrine the rights of workers employed in this emerging sector in law. This decision applies solely to Uber, but the principle should surely hold across the economy. It could affect many tens of thousands of people. So far, the Government’s only announcement has been a two-sentence press release issued on a Friday afternoon referring to a review that has no end in sight. If that is all that the Government can muster, it is hard to believe that they have grasped the scale of the challenge. This will be creating considerable insecurity for both the businesses operating in the digital economy and the workers involved.

I hope that the Minister is acutely aware of both the urgency and the importance of new clause 21 and why it was wholly inadequate for there to be no mention of workers and their protections in the Digital Economy Bill. Hopefully, the Minister will go away and consider measures that will fill the legal vacuum now created, and provide reassurance to the burgeoning digital workforce who, by virtue of a technological sleight of hand, are denied the rights that many of us take for granted. That is clearly an injustice of the first order.

[Matt Hancock]

The hon. Lady asks for us to act, and then sets out the way in which we are acting. That demonstrates that this important area is being considered by the Government.

Technology is indeed changing employment patterns, and the system must keep up with it. Clearly, employers must take their employment law responsibilities seriously and they cannot simply opt out of them. This means making sure that workers are paid properly and enjoy the employment rights to which they are entitled. As a very strong supporter of the living wage and the national living wage, which we introduced, I am a great proponent of ensuring that the labour market operates fairly. Part of that fairness is making sure that it is also flexible. That needs to be considered too, alongside the rights.

--- Later in debate ---

[Christian Matheson]

Will the Minister tell us which trade unions are actively involved in the review?

[Matt Hancock]

I have no doubt that Matthew Taylor will get in contact with lots of trade unions. It is a good idea to take a cross-party approach. The review will last for about six months and among other things it will consider security, pay and rights, skills and progression, and specifically the appropriate balance of rights and responsibilities of new business models and whether the definitions of employment status need to be updated to reflect new forms of working such as on-demand platforms. It will tackle some of those issues. With that explanation, I hope that the hon. Lady will see that we are taking a sensible, reasonable approach and will withdraw her new clause.

[Louise Haigh]

The Opposition have been nothing but reasonable in Committee. The Minister refers to righteous anger; for those taxi workers in London, Sheffield and across the country who are working and not guaranteed paid breaks or the minimum wage, it is not righteous anger but justifiable anger on their behalf. We are arguing not against all flexibility but for those basic rights to be enshrined in law. They should never be compromised for anyone’s convenience.

We are pleased finally to see a timeframe and have a commitment that the review will report back in six months. We will keep a close eye on the review and hope that it will take note of today’s debate. With that, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 31

Review of information disclosure and data ownership

‘(1) The Secretary of State must commission an independent review of information disclosure and data ownership under Chapter 1 of Part 5 of this Act.

(2) In conducting the review, the designated independent reviewer must consult—

(a) specialists in data sharing,

(b) people and organisations who campaign for the rights of citizens to privacy and control regarding their personal information, and

(c) any other persons and organisations the review considers appropriate.

(3) The Secretary of State must lay a report of the review before each House of Parliament within six months of this Act coming into force.

(4) The Secretary of State may not make an order under section 82(4) bringing the provisions of Chapter 1 of Part 5 of this Act into force until each House of Parliament has passed a resolution approving the findings of the review mentioned in subsection (3).’.—(Louise Haigh.)

Brought up, and read the First time.

--- Later in debate ---

[Matt Hancock]

We have made it clear that the UK needs a competitive and effective market in telecoms, and I have made it clear that fibre is the future. Fibre means fibre. The amendment seeks to ensure Ofcom has the power to impose structural separation on BT Openreach if Ofcom considers it necessary. There is already a process available to Ofcom to pursue structural separation should it be considered necessary. The Committee knows that Ofcom is currently considering how Openreach should be structured. We have made it clear that Ofcom should take whatever action it considers necessary and that structural separation remains an option.

Of course, in a rapidly moving sector such as communications, circumstances can change. We regularly review whether Ofcom has the right powers. We will need to do that in the context of our exit from the European Union, but at present Ofcom has the appropriate powers that it needs and it will continue to have them. With that explanation, I hope the hon. Gentleman will withdraw the amendment.

[Calum Kerr]

I thank the Minister for his comments, but the position in relation to having the powers is a weak answer. If there were a separation, we would enter into uncertainty without explicit powers. I will not press the motion to a vote, but I encourage the Government, as the picture on the EU evolves, to be clearer, and if they think it necessary to introduce something specific, so that we have a measure available.

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 36

Bill caps for all mobile phone contracts

‘(1) A telecommunications service provider supplying a contract relating to a hand-held 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, on a durable medium, not to put a monthly cap in place.

(3) 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),

(b) introduce, or amend, a cap following the end-user’s instructions under subsection (2)(b), or

(c) removed the cap without the end-user’s instructions or has removed it without obtaining the consumer’s express consent on a durable medium under subsection (2).’—(Louise Haigh.)

Brought up, and read the First time.

[Louise Haigh]

I beg to move, That the clause be read a Second time.

This new clause would mean that mobile phone service providers must give all consumers the opportunity to put a financial cap on their monthly mobile phone bill and that a mobile phone service cannot be provided until the service provider has put in place a cap of the agreed amount, if the consumer has made an express request. The new clause would be welcomed by many who have found that, when they receive an email or check their bank balance at the end of the month, their monthly mobile phone bill has come in much higher than expected.

The reason for the new clause is clear: mobile phone tariffs are complex, particularly on data. Few of us understand how much data we need for an average month, and consumers of all kinds can find that they use much more data than expected. Citizens Advice has provided me with an example that reveals the problem. One man changed his shift patterns and started using his phone to watch films during the night. His network sent a text message to tell him that he had gone over his monthly allowance, but he did not think too much about it until he received a bill for more than £2,000 at the end of the month. His service was subsequently cut off. Research suggests that as many as one in five consumers finds it difficult to keep track of how much they spend on data. The average unexpectedly high bill is usually double the cost of the original monthly fee.

Citizens Advice has received more than 60,000 inquiries about telephone and broadband debt, with its in-depth specialists dealing with nearly 27,000 individual mobile phone debt cases. Mobile phones have become a staple of our everyday life, and a voluntary cap would help consumers, particularly those who can ill afford an occasional doubling of their bill. Consumers support the measure, with more than 77% welcoming the idea.

This is not the first time that the proposal has been considered. In 2012, Ofcom considered introducing regulations but could not overcome the objections of providers, who argued that it would be too costly. Since then, two mobile phone providers have led the way and proved that it can be done. With the Bill’s new provisions on Ofcom appeals, I hope the Government will now consider our new clause.

[Matt Hancock]

The new clause seeks to place a mandatory obligation on mobile phone service providers to agree a financial cap on monthly bills with the customer at the time of entering into the contract, or to secure an agreement from the customer that they do not wish to have a financial cap. Consumers can avoid bill shocks in a number of different ways, so this additional measure is not necessary.

Before purchasing a mobile contract, consumers can already calculate their normal usage based on their last couple of bills. Once a consumer has established their monthly usage, Ofcom-accredited comparison websites are available to them. In fact, the Bill makes further progress on switching. Mobile phone providers are also taking steps to protect their customers from bill shock. As the hon. Lady says, many providers alert customers when they are close to reaching usage allowance limits and offer apps that enable consumers to monitor that usage.

[Drew Hendry]

I hear what the Minister is saying, and he is right that mobile phone operators have put measures in place, but none of them actually caps the amount paid so that people can avoid the situation where, for example, a child runs up exorbitant bills by overriding those limits.

[Matt Hancock]

I do not think that is true. There are examples of contracts that have caps or prepayment. Such contracts exist and they would not be complemented by the new clause, which is about ensuring that information and agreement are available at the start of a contract. The new clause proposes that such an agreement is available or that the person explicitly chooses not to have a cap, which in substance is the same position as now—it would just change what is in the vast quantities of small print at the bottom of these contracts.

[Louise Haigh]

The provisions in the new clause will not be a negative process, as the Minister has just outlined; they will require people to request a cap, rather than to agree that a cap is not put in place. Does the Minister honestly believe that enough information is provided when customers negotiate a contract with a telecoms provider about how much data are going to cost and how much additional data—over the agreed limit—will cost? Does the law currently guard against the example I provided of the gentleman who was watching films, completely oblivious to the fact that he was running up a bill of hundreds of pounds?

[Matt Hancock]

I think that that information has to be provided. Further, it is Ofcom’s job to ensure that that sort of information is provided in a reasonable way, and it has the capability to do that.

Can we guard against anybody using a mobile phone in a way completely different to their own intention at the point of signing the contract, having not taken into account the impact of that behaviour on the price? It is very hard to do that. I also do not see how the new clause would do that. It would simply change the way that a contract is written in the first place, giving the same options of either a capped or non-capped contract. It still provides for the two, so I do not think it would make a substantive difference.

That is not to deny that there is not always a challenge here to make sure that people get the best possible information, and crucially that switching is available and, as is provided for, that if somebody enters into a contract and wants to change that contract shortly after entering into it, they have the ability to do so. One provider now gives new customers the ability to put on a block on outgoing calls after they have reached their allowance, which they can turn on and off via their account, for example. There are dynamic ways of dealing with this within contracts, and I think that is probably the best way to do it, rather than with primary legislation.

Having said all of that, I of course recognise that this is an important and challenging area, but I hope that with that explanation the hon. Members will withdraw the new clause.

[Louise Haigh]

The Minister has not given us a good enough reason for why consumers should not have the ability to put a financial cap on their monthly bills. He has laid out some voluntary mechanisms that various communications providers have implemented, which is all well and good for their customers, but I am sure he will accept that that is a very haphazard way to deal with this issue.

[Matt Hancock]

The proposal in the new clause is itself a voluntary proposal, because it provides for the agreement from a customer should they not wish to see a financial cap. In substance, that is exactly what the new clause provides for.

[Louise Haigh]

It is voluntary for the consumer but not for the telecoms provider. The Minister, in his typical, patronising way, is trying to put this differently from how the Opposition is putting it.

--- Later in debate ---

[Matt Hancock]

It is highly appropriate to end this sitting with the new clause because the intent behind it has cross-party support from both parts of the Opposition represented here. Government Members not only recognise, but are enthusiastic and passionate about getting better wi-fi on trains. My hon. Friend the Member for Devizes, as a Transport Minister and more specifically a Rail Minister, was instrumental in getting Britain to where we are with wi-fi on trains. It is something all MPs understand as we travel around the country. Our frustration is shared by the great British travelling public and the demands for better and faster free wi-fi on trains will continue until they are sated.

Requiring free wi-fi on trains has been undertaken through new franchises and implemented also in existing franchises. The obligation to provide free wi-fi is now secured in 10 of the 15 franchises and we forecast that more than 90% of passenger journeys will have access to wi-fi by the end of 2018 and almost 100% by 2020. There have been further programmes, such as the superconnected cities programme. The hon. Member for Sheffield, Heeley says she wants to press us to achieve all we can, and we accept the challenge.

For all new franchises, the current specifications will require a minimum of 1 megabit per second per passenger, which allows for web browsing, basic email and social media activity. Crucially, this is set to increase by 25% every year with a focus on ensuring that it is reliable and consistent because dropped calls or frequent breaks in ability to access wi-fi are seriously frustrating.

There are even stronger bids in some competitions. For example, the East Anglia franchise, which I use a lot, will provide up to 100 megabits per second to the train by 2019, then 500 megabits per second by 2021 and 1 gigabit per second by the end of 2021 on key intercity routes, not least the Norwich in 90 and Ipswich in 60 plans. That is totally brilliant and I pay tribute to my hon. Friend the Member for Devizes for making it happen.

Wi-fi was previously dependent on mobile coverage that trains went through, but train operators have started to innovate and have done deals with mobile operators to make sure they have enough 4G coverage down the track. Chiltern is an example. It agreed a deal with EE to provide 100% coverage from London to Birmingham. This is happening. Specifying a particular technology in legislation is likely to provide more problems than solutions. Our changes in driving wi-fi through contracts with operators is more likely to be successful in getting more connectivity faster. That is the approach I propose.

In a moment, I will ask the hon. Member for Sheffield, Heeley to withdraw the motion, but first I want to pay tribute to all the people who have helped to make this Committee happen, including the Opposition. We have had cheerful and sometimes forthright debates, but in the best spirit of improving the digital economy for all the citizens we serve. I pay tribute particularly to the hon. Member for Sheffield, Heeley who, in her first performance in her new position, has shown the rest of us how to do it. She has been charming and brilliant. I can only say, thank goodness for Jeremy Corbyn.

I thank you, Mr Stringer, and Mr Streeter for chairing the Committee so effectively and efficiently, and for ensuring that I made fewer mistakes than I otherwise would. I thank the Clerk and the staff of the Public Bill Office, who have helped enormously to keep us on the straight and narrow. I thank the Doorkeepers for holding the doors open long enough for my Whip to ensure that we had all our people here when necessary. I thank the Hansard reporters for no doubt capturing us accurately, in sometimes quite complicated language. I thank the police, my officials in DCMS—in particular the Bill team—and also those from across Government, because the Bill has measures in it from many different Departments. There has been great cross-Government collaboration and I put on record my thanks to my policy officials, the Bill team and my private office team. I thank all those who have given oral or written evidence to the Committee, which has improved our ability to scrutinise the Bill. With that, I hope that the hon. Member for Sheffield, Heeley will withdraw this final new clause and we can report to the House a well-scrutinised Bill.

[Louise Haigh]

It is very welcome to hear that all new franchise agreements—the Minister is nodding—will contain a requirement for wi-fi. I am happy to withdraw the motion.

Before I do, I add my thanks to you, Mr Stringer, and to Mr Streeter. You have both kept us in order and guided us through, particularly me in my first time on the Front Bench in a Bill Committee. I was put in this job two days before the Committee proceedings began, when I had not yet read the Bill. To say that this was being thrown in at the deep end is something of an understatement. I add particular thanks to the Clerk, who has been incredibly helpful in getting our last-minute amendments together, to the Hansard writers, to the police and Doorkeepers, and of course to all the civil servants who have been in and out of here through a revolving door as we have cantered through the various clauses. I also thank all my hon. Friends who have contributed, SNP Committee members and Government Committee members. I thank both Whips who have kept us to time—we are going to get there eventually.

It has been unsettling to agree with the Minister on so many things but I have been very relieved to find that he still manages to infuriate me. I believe we have stress-tested the Bill pretty roundly. We have found it wanting in several areas and I am confident that it will receive amendments in the other place. I am disappointed to see it emerge relatively unscathed from Committee, but I am confident that it will return from the other place in better shape. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Schedule 1

Electronic communications code: consequential amendments

“Part 1

General provision

Interpretation

1 In this Part—

“the commencement date” means the day on which Schedule 3A to the Communications Act 2003 comes into force;

“enactment” includes—

(a) an enactment comprised in subordinate legislation within the meaning of the Interpretation Act 1978,

(b) an enactment comprised in, or in an instrument made under, a Measure or Act of the National Assembly for Wales,

(c) an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and

(d) an enactment comprised in, or in an instrument made under, Northern Ireland legislation;

“the existing code” means Schedule 2 to the Telecommunications Act 1984;

“the new code” means Schedule 3A to the Communications Act 2003.

References to the code or provisions of the code

2 (1) In any enactment passed or made before the commencement date, unless the context requires otherwise—

(a) a reference to the existing code is to be read as a reference to the new code;

(b) a reference to a provision of the existing code listed in column 1 of the table is to be read as a reference to the provision of the new code in the corresponding entry in column 2.

(2) This paragraph does not affect the amendments made by Part 2 of this Schedule or the power to make amendments by regulations under section 6.

(3) This paragraph does not affect section 17(2) of the Interpretation Act 1978 (effect of repeal and re-enactment) in relation to any reference to a provision of the existing code not listed in the table.

Table

Digital Economy Bill

Matt Hancock Excerpts

3rd reading: House of Commons & Legislative Grand Committee: House of Commons & Programme motion No. 3: House of Commons & Report stage: House of Commons
Monday 28th November 2016 Commons Chamber

[The Minister for Digital and Culture (Matt Hancock)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss Government new clause 29—On-demand programme services: specially restricted material.

New clause 1—Power to require the blocking of access to pornographic material by internet service providers—

“(1) Where the age-verification regulator determines that a person has made pornographic material available on a commercial basis on the internet to persons in the United Kingdom—

(a) in contravention of section 15(1), and

(b) the person has been the subject of a financial penalty or enforcement notice under section 20 and the contravention has not ceased,

the age-verification regulator may issue a notice to internet service providers requiring them to prevent access to the pornographic material that is provided by the non-complying person.

(2) A notice under subsection (1) must—

(a) identify the non-complying person in such manner as the age verification regulator considers appropriate;

(b) provide such further particulars as the age-verification regulator considers appropriate.

(3) When the age-verification regulator gives notice under this section, it must inform the non-complying person, by notice, that it has done so.

(4) An internet service provider who fails to comply with a requirement imposed by subsection (1) commits an offence, subject to subsection (5).

(5) No offence is committed under subsection (4) if the internet service provider took all reasonable steps and exercised all due diligence to ensure that the requirement would be complied with.

(6) An internet service provider guilty of an offence under subsection (4) is liable, on summary conviction, to a fine.

(7) In this section “internet service provider” has the same meaning as in section 124N of the Communications Act 2003 (interpretation).”

This new clause gives a power to the age-verification regulator to require internet service providers to block pornography websites that do not offer age-verification.

New clause 3—Safety responsibilities of social media sites—

“(1) This section applies to a person who operates an internet site for commercial purposes which requires a user to create a personal account to fully access the internet site.

(2) A person under subsection (1) must—

(a) undertake and publish an online safety impact assessment in respect of their account holders,

(b) inform the police if they become aware of any threat on its internet site to physically harm an individual,

(c) remove any posts made on its internet site that are deemed to be violent or that could incite violence.”

New clause 10—Internet pornography: requirement to teach age requirement and risks as part of sex education—

“After section 403(1A)(b) of the Education Act 1996, add—

“(c) they learn about the risks and dangers of internet pornography, and the legal age requirement to access internet pornography under Part 3 of the Digital Economy Act 2017.””

This new clause would mean that the Secretary of State would have to include in guidance to maintained schools that pupils learn as part of sex education the risks and dangers of internet pornography and the legal age requirement to access it, as provided for under Part 3.

New clause 13—Code of practice for commercial social media platform providers on online abuse—

“(1) The relevant Minister must issue a code of practice about the responsibilities of commercial social media platform providers in dealing with online abuse.

(2) The code of practice must include guidance on—

(a) how a commercial social media platform providers shall respond to cases of a person being victim of online abuse on its internet site;

(b) quality service standards expected of the commercial social media platform providers in determining, assessing, and responding to cases of online abuse; and

(c) the setting and enforcement of privacy settings of persons aged 17 or under, where deemed appropriate.

(3) A commercial social media platform providers must comply with the code of practice.

(4) The relevant Minister may from time to time revise and re-issue the code of practice.

(5) As soon as is reasonably practicable after issuing or reissuing the code of practice the relevant Minister must lay, or arrange for the laying of, a copy of it before—

(a) Parliament,

(b) the Scottish Parliament,

(c) the National Assembly for Wales, and

(d) the Northern Ireland Assembly.

(6) In this section “commercial social media platform providers” means a person who operates an internet site on a commercial basis on which people can interact.”

New clause 32—Approval of Age-verification providers—

“(1) Age-verification providers must be approved by the age-verification regulator.

(2) In this section an “age-verification provider” means a person who appears to the age-verification regulator to provide, in the course of a business, a service used by a person to ensure that pornographic material is not normally accessible by persons under the age of 18.

(3) The age-verification regulator must publish a code of practice to be approved by the Secretary of State and laid before Parliament.

(4) The code will include provisions to ensure that age-verification providers—

(a) perform a Data Protection Impact Assessment and make this publicly available,

(b) take full and appropriate measures to ensure the accuracy, security and confidentiality of the data of their users,

(c) minimise the processing of personal information to that which is necessary for the purposes of age-verification,

(d) do not disclose the identity of individuals verifying their age to persons making pornography available on the internet,

(e) take full and appropriate measures to ensure that their services do not enable persons making pornography available on the internet to identify users of their sites or services across differing sites or services,

(f) do not create security risks for third parties or adversely impact security systems or cyber security,

(g) comply with a set standard of accuracy in verifying the age of users.

(5) Age-verification Providers must comply with the code of practice.

(6) To the extent that a term of a contract purports to prevent or restrict the doing of any act required to comply with the Code, that term is unenforceable.”

Amendment 27, in clause 15, page 18, line 7, after “material” insert “or adult material”.

This amendment and amendments 28, 29, 30, 31, 32, 33 and 34 would require all providers of internet content which is not suitable for children to put in place a robust age-verification system. In the offline world, children are not allowed to view material which the BBFC has classified to be only suitable for adults. This amendment ensures that these restrictions apply equally to the online world.

Amendment 28, page 18, line 11, after “material” insert “or adult material”.

See explanatory statement for amendment 27.

Amendment 29, page 18, line 18, after “material” insert “or adult material”.

See explanatory statement for amendment 27.

Amendment 30, page 18, line 24, after “material” insert “or adult material”.

See explanatory statement for amendment 27.

Amendment 2, page 18, line 36, at end insert—

“(7) The Secretary of State must make regulations to ensure that the definition of specially restricted material in section 368E(5) of the Communications Act 2003 is amended to reflect the definitions in this Part.”

The amendment requires the making of regulations to ensure that there is a parity of protection for children using different online media. The regulations would amend the definition of specially restricted material for UK based video on demand programming and extend it to 18 material as well as R18 material.

Amendment 31, in clause 16, page 19, line 17, at end insert—

“16 (1A) In this Part “adult material” means any of the following—

(a) a video work in respect of which the video works authority has issued an 18 certificate;

(b) any other material if it is reasonable to assume from its nature that any classification certificate issued for a video work including it would be an 18 certificate; and

(c) any other material if it is reasonable to assume that the video works authority would determine that a video work including it was not suitable for a classification certificate to be issued in respect of it.”

See explanatory statement for amendment 27.

Government amendments 35 and 36.

Amendment 32, in clause 19, page 21, line 9, after “material” insert “or adult material”.

See explanatory statement for amendment 27.

Amendment 1, in clause 20, page 22, line 26, at end insert—

“(13) Where a person is—

(a) based in a country outside the United Kingdom, and

(b) refusing to comply with the requirements of the age-verification regulator, the age-verification regulator shall notify Ofcom that the relevant person is refusing to comply with its requirements.

(14) Following a notification made under subsection (13), Ofcom shall direct internet service providers in the United Kingdom to block public access to the material made available by the person on the internet.

(15) An internet service provider that fails to comply with subsection (14) within a reasonable period would be subject to financial penalties imposed by the age-verification regulator under section 21.”

Amendment 33, in clause 22, page 24, line 33, after first “material” insert “, adult material,”.

See explanatory statement for amendment 27.

Government amendment 37.

Amendment 34, in clause 23, page 25, line 5, after first “material” insert “, adult material,”.

See explanatory statement for amendment 27.

Government amendments 38 to 42.

New clause 7—Bill limits for all mobile phone contracts—

“(1) A telecommunications service provider supplying a contract relating to a hand-held 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, on a durable medium, not to put a monthly cap in place.

(3) 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);

(b) introduce, or amend, a cap following the end-user’s instructions under subsection (2)(b); or

(c) removed the cap without the end-user’s instructions or has removed it without obtaining the consumer’s express consent on a durable medium under subsection (2).”

New clause 14—Impact assessment of macro not-spot roaming—

“(1) Within three months of this Act coming into force, the Secretary of State must commission an impact assessment of enabling a system of macro not-spot roaming in the UK, and shall lay the report of the impact assessment before each House of Parliament.

(2) In this section “macro not-spot roaming” means the ability for hand-held mobile telephone users based in relatively large areas of non or partial broadband coverage to access coverage from networks other than their own.”

This new clause calls for an impact assessment of macro not-spot roaming in the UK, in line with the recommendations of the British Infrastructure Group report on mobile coverage.

New clause 20—Ability of end-user to cancel telephone contract in event of lack of signal at residence—

“A telecommunications service provider must allow an end-user to cancel a contract relating to a hand-held mobile telephone if, at any point during the contract term, the mobile telephones is consistently unable to obtain a signal when located at the end-user’s main residence.”

New clause 21—Use of emergency serve network wireless telegraphy infrastructure by multiple network providers—

“After section 8(4) of the Wireless Telegraphy Act 2006, insert—

“(4A) A licence issued in respect of a wireless telegraphy station or apparatus that is used for the purposes of emergency service network shall stipulate that more than one network provider can use the station or apparatus.””

New clause 22—OFCOM power to enforce structural separation of BT Openreach—

“After section 49C of the Communications Act 2003 insert—

“(49D) OFCOM has the power to enforce the structural separation of BT Openreach, should OFCOM consider this necessary.””

New clause 25—Ability of end-user to cancel mobile telephone contract in event of lack of signal at residence and place of employment—

“A telecommunications service provider must allow an end-user to cancel a contract relating to a hand-held mobile device if, at any point during the contract term, the mobile device is consistently unable to obtain a signal when located at the end user’s main residence or main place of employment.”

New clause 26—Wireless telegraphy licences and medical or hearing technology—

“After section 14(4) of the Wireless Telegraphy Act 2006, insert—

“(4A) Before granting a wireless telegraphy licence, Ofcom shall carry out tests to identify the risk of any interference with any medical or hearing technology and publish its findings.

(4B) Ofcom shall not grant a licence if tests carried out under section 14(4A) have found there is a risk of interference with medical or hearing technology unless—

(a) action is taken to eliminate the risk; or

(b) a fund is set up to meet the costs of replacing all medical or hearing technology affected by the interference.

(4C) Where a fund is set up under section 14(4B), Ofcom shall require that any person who is granted a licence takes action to inform its customers of the risk that its devices may lead to interference with medical or hearing technology.””

This new clause would place a duty on Ofcom to carry out tests in advance of the sale of radio frequencies to ensure that any interference identified with medical or hearing devices is made public. Where a risk of interference is identified, Ofcom shall not grant a wireless telegraphy licence unless action is taken to remove the risk of interference or a fund established to cover the cost of replacing medical or hearing technology affected. This new clause is supported by the National Deaf Children’s Society.

New clause 27—Introduction of broadband connection voucher scheme as alternative to universal service order provision—

“The Secretary of State shall introduce a broadband connection voucher scheme to allow an end-user to access broadband other than that supplied by the provider of the universal service order, under Part 2 of the Communications Act 2003.”

Although most individuals are likely to choose the standard universal service order offering, this new clause would provide individuals with the option of a voucher scheme that empowers them to take up an alternative solution.

Government amendments 23 and 24.

[Matt Hancock]

The Digital Economy Bill will help to connect modern Britain, support the digital economy and keep people safe online. The measures in this group are about strengthening the enforcement of protections for children, improving access to online media, and addressing consumer protection in telecoms. I will take in turn those three sub-groups of your excellent grouping, Mr Speaker.

Turning first to child protection, I am delighted by the cross-party support for delivering the Conservative manifesto commitment to require age verification to access online pornography. During the Bill’s passage through the House, my hon. Friend the Member for Devizes (Claire Perry), who is in the Chamber, ably supported by my hon. Friend the Member for North West Hampshire (Kit Malthouse), has led debate about this by powerfully expressing the view that the enforcement proposed in the Bill is not strong enough—she is right. We have listened to the case that she and others have made. They have advanced the argument that some companies, especially those based overseas, simply will not abide by the law that is enacted by this House, so it is clear that there is a case to direct a UK internet service provider to prevent access.

We all want the internet to be free, but freedom operates within a framework of social responsibility, norms and the law. The approach set out in Government new clause 28 will protect the freedom of adults to watch pornography online, but provide adequate protections by giving children the same sorts of safeguards online as they have offline. We have worked closely with the industry and I am confident that it will take a responsible position. I therefore envisage the regulator needing to use this power only sparingly, because the vast majority of companies will want to obey the law. We will work through the technical detail with the regulator—it is expected to be the British Board of Film Classification—and others to understand the broader implications and make the new system work as we take the proposals through the other place.

We have been persuaded of another argument that was made powerfully on Second Reading. The provisions we have discussed today will see children protected by one of the most robust and sophisticated regimes globally but, as my hon. Friend the Member for Congleton (Fiona Bruce)—I see her in her place—has said, supported by my hon. Friend the Member for St Ives (Derek Thomas) and the hon. Member for Upper Bann (David Simpson), the protections have resulted in a disparity between UK-based on-demand services on the one hand, and overseas-based on-demand services and online commercial providers of pornography on the other. We have carefully considered that and concluded that we do not want disparate regimes. Government new clause 29 will ensure that children are protected from pornographic content from wherever it is derived. I am grateful to my hon. Friend the Member for Congleton for making her case; I believe that we will have a stronger system as a result.

New clause 3 proposes a legal requirement to undertake an online safety impact assessment. I understand the intent behind the new clause, but I think that the measure is unnecessary, because leading social media companies already report on their online safety practices voluntarily as part of the safety framework of the ICT Coalition. We work closely with social media companies to ensure that they take down content that is violent or that incites violence, and to flag terrorist-related content. The system is important and is working well. Since 2010, we have secured the voluntary removal of more than 220,000 pieces of content. A requirement for a safety assessment is likely to be difficult to apply in practice because of the extraterritorial organisations that are involved in this space, and it would be almost impossible to target individuals who run small online websites for commercial purposes.

[Helen Goodman (Bishop Auckland) (Lab)]

I am grateful to the Minister for agreeing to amend the Bill in this important area. As he is addressing the responsibility of social media sites, what action is he thinking of taking to prevent what happened recently, when Facebook refused to give the police information that it had relating to a missing child?

[Matt Hancock]

It is incredibly important to get the framework that operates in that sort of space right, as is the case for terrorist material and child protection online. The system that we have in place—it is essentially non-statutory, although it is underpinned by online and offline offences—is working well. Social media organisations’ collaboration with the police and others is incredibly important, and I urge them to collaborate with the police whenever they are asked to do so. We have taken the view that the effective and rigorous enforcement of rules relating to age verification is an important step to get that system up and running. The system is working well, with 220,000 take-downs since 2010, so we want to leave it in place. In all such instances, there might be difficult individual cases, but overall the system is, on the whole, working effectively. That is why we have taken different approaches for the two different areas.

New clause 10 would introduce some very specific requirements around online education. I maintain that the measure is not necessary, because e-safety is already covered at all stages in the new computing curriculum that was introduced in September 2014. From primary school, children are taught how to use technology safely, respectfully and responsibly, how to keep personal information private, how to recognise acceptable and unacceptable behaviour, and how to report a range of concerns. As hon. Members will see, we care deeply about protecting children online both through direct rules for the internet and through education. The new clause is not necessary, and I worry that putting in place a more static system would risk making the task at hand harder.

When it comes to broader protection, we expect social media and interactive services to have in place robust processes that can quickly address inappropriate content and abusive behaviour on their sites. It would be difficult to make the sort of statutory code of practice proposed in new clause 13 work, as there is not a one-size-fits-all solution. The way in which to deal properly with inappropriate content and abuse will vary by service and by incident. Technological considerations might differ by platform as innovation changes the way in which the internet operates. Legislating in this area is difficult because of the pace of change, and users will benefit most if companies develop a bespoke approach for reporting tools and in-house processes. Existing arrangements and the action taken by social media companies provide the best approach to tackling this problem.

[Mrs Maria Miller (Basingstoke) (Con)]

Will the Minister tell us which companies and sectors already have a code of practice in place? How he is monitoring whether such codes of practice are being brought up to date?

[Matt Hancock]

We are working on codes of practice in a series of different areas. About 10 days ago, as my right hon. Friend will have seen, Twitter—one of the main players in this space—brought forward work towards a code of practice on online abuse. There is more to do in this area, but it is better that we have codes of practice that the organisations themselves can buy into and that can change with the times as the usage of social media changes. My goodness, we all know how social media changes over time—not always in a good way—so we need to make sure that we keep pace with that. I worry that putting something static into legislation would get into the way of such efforts. However, I agree with my right hon. Friend that it is incumbent on social media companies to play their part in establishing and rigorously enforcing norms and social responsibility in this area if we decide not to go down, or not yet to go down, the legislative route.

[Rob Marris (Wolverhampton South West) (Lab)]

I quite understand that the Minister wants buy-in from the commercial social media platform providers. In response to the right hon. Member for Basingstoke (Mrs Miller), he sketched out a position that appears to be that there is no actual code of practice, but that codes are being developed. Perhaps I misunderstood the Minister because I thought he had said before the right hon. Lady’s intervention that codes of practice are in place and working well.

I will quickly mention the changing circumstances. The Minister is quite right that this is a fast-changing world. Subsection (4) of new clause 13 states:

“The relevant Minister may from time to time revise and re-issue the code of practice”,

so the very flexibility that he is praying in aid would be delivered by the new clause.

[Matt Hancock]

Let me be clear: when I said that there are codes of practice, I was talking about taking down online terrorist and child abuse material, on which there have been clear codes of practice for a number of years. Regarding social abuse online, we are working with the companies involved to make further progress.

[Ian C. Lucas (Wrexham) (Lab)]

The Minister is being very generous in giving way. He mentioned the computing curriculum, which I assume relates only to England. What discussions has he had with the devolved nations about these issues?

[Matt Hancock]

The Government have had significant discussions with the devolved nations on these questions. They, of course, treat these questions differently—there is a different system in Scotland and Wales, and in Northern Ireland in fact—and it is a matter for them. The hon. Gentleman is quite right that the response I gave about the computing curriculum is a matter for England, although most of the Bill involves UK matters. I am very happy to clear up that point.

The Public Bill Committee considered the subject matter of new clause 32, which calls for the regulator to approve age-verification providers and to publish a code of practice with which the providers must comply. As I said in Committee, such a measure is not necessary because clause 15 requires the regulator to publish guidance about the types of arrangements it will treat as being in compliance. That may include the characteristics of age-verification controls that would be considered acceptable. I have been made aware of a number of proposed technical solutions for age-verification controls during the passage of the Bill. Clause 15 already takes into account the need for guidance in that area.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The Minister will be aware that such age verification will inevitably require the companies concerned to hold a lot of data. What assurances can he give the House that those data will not be liable to being hacked, as happened in the Ashley Madison case?

[Matt Hancock]

That is incredibly important. We will come on to the data protection provisions later, but this whole area operates within the scope of the Data Protection Act 1998, which provides for very strong safeguards that are set to get stronger. The Government have said that we will opt in to the forthcoming general data protection regulation, which includes stronger enforcement measures than the current Data Protection Act. All the data measures in the Bill, and all the consequences of the age-verification process, will be covered by the Data Protection Act, which has a very broad consensus of support behind it and has operated effectively over a number of years. That means that companies are responsible for the security of their data, including their cyber-security.

[Mr Carmichael]

Will the data therefore be held in an anonymised form that will not allow the people who have provided them to be identified, should the data be stolen? The best security in the world can still be breached?

[Matt Hancock]

It will be a requirement that the data are held in such a way that they are secure and not made available. It is a common principle across swathes of life that data must be held safely. The Data Protection Act is in place to make sure that that happens.

Returning to new clause 32, it is likely that a requirement on the regulator to approve providers would be unnecessarily restrictive. However, I understand of course the need to ensure that the age-verification process is of high quality.

As I have stressed, these measures are part of a broader effort to protect children online. For instance, parental control filters are an important tool to protect children from harmful online material. They were introduced by industry after the efforts of my hon. Friend the Member for Devizes in the previous Parliament. In Committee, we discussed the concern that EU net neutrality regulations will render such controls, which have worked well, illegal. I am clear that our interpretation of the EU regulations is that filters are allowed when they can be turned off, as they are therefore a matter of user choice. I know that there is still uncertainty about this matter, as well as concerns that filters could be challenged. I am happy to confirm to the House that, to put this issue beyond doubt, we will table an amendment in the other place to the effect that providers may offer such filters.

Amendments 27 to 34 have been tabled by my right hon. Friend the Member for Basingstoke (Mrs Miller), the former Secretary of State. The introduction of a new law requiring appropriate age-verification measures for online pornography is a bold step involving many challenges. It represents the first stage in ensuring that commercial providers of pornographic material are rightly held responsible for what they provide and profit from. While the internet brings incredible and unlimited opportunities, it has the potential to change the way in which younger generations grow up to understand and experience healthy relationships.

Delivering on our manifesto commitment to stop children and young people from accessing online pornographic sites remains our priority, and we want to get that right. I believe that the provisions in the Bill will enable us to do that. Our measures will protect children from exposure to material that is clearly inappropriate for them and that would be harmful to their development. Of course, pornography is not the only online content that may be harmful to children, but AV controls are part, not all, of the approach to protect children from possibly harmful content online.

The inclusion of other adult material within the scope of the Bill, as proposed in amendment 27, might not be the most effective way to address these issues. Most importantly, we must be careful to take a proportionate approach to ensure the success of our proposals. I assure my right hon. Friend the Member for Basingstoke that we will continue to work to make sure that we take all action necessary on all fronts where children are at risk of harm. I look forward to continuing discussions with her and others. I believe our approach is a targeted and effective way of protecting children from accessing or stumbling across the pornographic material that is most readily available and potentially harmful, and that the Bill fulfils our manifesto commitment.

[Mr John Whittingdale (Maldon) (Con)]

My right hon. Friend will be aware that one means by which young people are, more and more, accessing pornography is social media and sites such as Twitter. How will his age verification requirements apply to Twitter?

[Matt Hancock]

The age verification requirements apply to the commercial provision of pornography. That is not only the paid-for but that which is provided for a commercial return. There is a difference between websites that provide commercial pornography and platforms on which others can upload images. Getting this right with regard to that second group is much harder than it is with regard to the first. We are therefore proposing to put forward the measures in the Bill to deal with the larger swathe or mainstay of the problem, get them working properly and then see how they are working.

I appreciate that there is a big challenge in stopping those who really want to access porn online, but all the evidence suggests that children’s first interaction is often by accident. We are legislating to prevent as much as possible of that inadvertent viewing by those who are not desperately actively seeking to do so. I appreciate that the Bill is not a utopia, but it is a very important step forward. I hope my right hon. Friend will accept that.

[Mrs Miller]

The Minister is being very generous with his time. Is it not fair to say that four years ago providers such as Twitter told us it was impossible to take down visual images of children being sexually abused, but now, as he says, there is quite rightly a code of practice in place? Surely where there is a will there is a way. He has already proved that he can make significant progress, so should he not put more pressure on organisations like Twitter?

[Matt Hancock]

Yes is the short answer. The Bill does so, and we will best achieve that pressure by delivering on its proposals and then working with the platforms on the issue of platform-based pornography, because that is a much more difficult technical nut to crack.

[Fiona Mactaggart (Slough) (Lab)]

The Minister has spent more time in the past few weeks thinking about children and pornography than I am sure he wanted to. The Bill deals with the publication of pornography, but we also need to help children to be more resilient and understand that those images are not normal sexual behaviour and are the kind of violence that should not be part of relationships, because research by the NSPCC and others tells us that children, and boys in particular, think it is normal. What discussions has he had with the Department for Education to try to build greater resilience among children to some of the images that, despite the efforts in the Bill, they will see?

[Matt Hancock]

I agree with every word of the right hon. Lady’s intervention—both the first part and the second. Yes, working with the DFE is incredibly important in building resilience and actively ensuring that people’s health through relationships is taught effectively. The Secretary of State for Culture, Media and Sport and I have both been in discussions with the DFE on that point. That said, the right hon. Member for Slough (Fiona Mactaggart) makes an important point about the broader circumstances that should be taken into consideration, as well as the clarity in the amendment, which I hope she welcomes.

Turning to mobile phone contracts—a bit of a shift—new clause 7 seeks to place a mandatory obligation on mobile phone service providers to agree with the customer at the time of their entering into a contract a financial cap on their monthly bill. Since the new clause was first tabled in Committee, we have had further contact with mobile network operators, and providers already offer consumers ways to manage their usage: apps that allow customers to turn financial caps on and off, warning text messages when customers are approaching their allowance limits, dedicated phone numbers that tell the customer their usage, and online tools that explain how much data is needed to carry out different online activities. I expect providers to continue to take steps to minimise bill shock and ensure that their customers are sufficiently equipped to manage their usage, but I am sure that the hon. Member for Sheffield, Heeley (Louise Haigh) will agree that legislation is not currently necessary, although the movement in this direction is.

On new clause 14, I understand the frustrations of people whose mobile experience does not live up to their expectations, but while roaming appears to offer a quick fix, it risks doing more harm than good, because it could undermine the incentive for operators to invest in new infrastructure. This is particularly damaging in areas with no coverage from any provider at all. There is no incentive to invest capital in a new mast if operators can by law simply piggyback off others’ investment. The Government considered roaming in 2014, but for the above reasons it was rejected in favour of licence conditions to drive increased coverage by all mobile operators.

That agreement locked in £5 billion of investment to deliver improved coverage across the UK, and we now have 4G coverage to 97.8% of UK premises. I can confirm that this is happening: a mast was turned on just last weekend in my own constituency, and coverage on the road to Newmarket from my house is now better than it ever has been—so I have seen it for myself. The House will also have seen the recent announcements from mobile providers that they are expanding coverage to meet their 90% landmass requirements, which they must now meet under the contracts in their licence agreements. The Bill strengthens the fines they face if they miss those agreements. Of course, however, we want further improvements. Last week, new planning laws came into force to allow taller masts, and we are reforming the electronic communications code in the Bill to help operators to extend their networks, making mast-sharing easier and infrastructure deployment cheaper. These reforms have been widely welcomed by industry, and Ofcom will hold providers to account for the delivery of wider geographic coverage.

New clauses 20 and 25 seek to place mandatory obligations on mobile phone service providers to allow an end user to terminate their contract upon their being unable to obtain a mobile signal at their main residence or main place of employment. Existing consumer protections are already in place, while the automatic compensation measures in clause 3 strengthen Ofcom’s powers to require automatic compensation when there is a complete failure to provide a contracted service. I think that the ability to break a contract when one’s signal is not good enough at home is already dealt with, as contracts purchased at distance can be cancelled under the statutory 14-day cooling-off period, while for “in shop” purchases there is often a “check your coverage” cooling-off period for the first two weeks after sign up. Some providers also offer extended periods to ensure that the service meets needs, with the option of cancellation without penalty.

[Grant Shapps (Welwyn Hatfield) (Con)]

Does my right hon. Friend accept that this must be the only product that someone can buy and end up not being able to use? People do not just move house during the first 14 days of a contract; it can happen at any time during the two years of a contract. Will he look again at this?

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[Matt Hancock]

I want to tackle this problem primarily by achieving universal mobile phone coverage for UK properties, and we are on track to hit 98%. By comparison, the universal broadcasting service requires 98.5%. We are getting to the point where we have near-universal service, but that is not necessarily good enough. With the forthcoming Green Paper on consumers and markets in mind, I propose to work with my right hon. Friend to make sure that it addresses the issues of concern, so that we ensure that consumers get a good deal from their mobile phone contracts and that those contracts will work.

[Chris Bryant (Rhondda) (Lab)]

I hear all these statistics about the level of coverage there is meant to be here, there and everywhere, but they never seem to match the reality on the ground or in the living room or in the shop. I live in the town of Porth in the Rhondda, and through the main street almost right through the town there is absolutely no mobile coverage from any of the companies, so it does not matter whether one of them is providing a good enough service—none of them are.

[Matt Hancock]

No doubt the hon. Gentleman will share my deep frustration over the fact that when mobile phone 3G licences were auctioned in the early 2000s, in order to get a big return to the Treasury they were auctioned without geographic coverage requirements. I think that was a serious mistake for this country. We have since engineered into the licence agreements mobile phone geographical coverage of 90%. The geography that is being covered is rising rapidly at the moment. For instance, one provider had 50% coverage last year; it is 75% now, and it has to get up to 90%. That shows how it is increasing. It is pity that from the period of the 3G licence in the early 2000s up to 2014, there were no requirements for geographic coverage, which meant that we fell behind. Thankfully, we are now catching up. As the head of Ofcom has confirmed to the Select Committee, we are in discussions with the mobile operators about getting to a universal 100% geographical coverage in the next licence period.

[Chris Bryant]

I am not trying to make a partisan point, but I think the Minister was trying to there. All I am saying is that even with the changes to the electronic communication codes that are in the Bill, I do not think we will be able to achieve that 98% or 100% coverage, because it is still too easy for an individual landholder to make it difficult for significant improvements to be made to the infrastructure in the area. Surely we should now be seeing access to mobile telephony as the same as access to water.

[Matt Hancock]

I am not making a partisan point at all. In fact, after cheering on Ed Balls on Saturday night, I am feeling about as unpartisan as I ever have! I send him my condolences.

I am speaking out of a deep frustration over the lack of geographic coverage by mobile phones in the UK. If I may say so, my constituency is significantly more rural than the hon. Gentleman’s, and this is a real problem in constituencies up and down the country. I look forward to my campaigning visit to the shortly marginal seat of Rhondda.

[Damian Collins (Folkestone and Hythe) (Con)]

Will my right hon. Friend give way?

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[Matt Hancock]

Yes, thank you!

[Damian Collins]

I, too, was pleased to hear Ofcom say in front of the Select Committee that it and the Government were looking at a universal service obligation for 3G and 4G phone signals. Does the Minister agree that there is sometimes a real frustration in communities where the statistics suggest that they have been covered, but local topography means that the mast signal does not reach homes? If the Minister visited Elham Valley in my constituency, he would meet people who suffer in that way.

[Matt Hancock]

Well, I have news for my hon. Friend. Next month, Ofcom will publish data for both fixed-line broadband and mobile phone coverage at the premise level for each individual premise. If the supposed coverage is different from what Ofcom says, there will be a mechanism to feed that back so that we get a proper map of coverage in both those respects. I look forward enormously to that happening, and I am sure that the Select Committee will investigate that data with great aplomb.

[Simon Hoare (North Dorset) (Con)]

I ask the Minister to ensure that proper discussion takes place with the Department for Communities and Local Government so that the most sensible, but liberal, planning regime for new mobile telephone masts is in place in order to provide what amounts to a basic technological requirement.

[Matt Hancock]

Yes, and the new rules came into place last week. Nobody prayed against the statutory instruments in either House, so there was unanimous support for a more liberal planning regime. If my hon. Friend would like to work with me on what steps might be needed to improve the planning regime further, I am all his.

[Rob Marris]

The Minister is being very generous, but may I caution him and press him a little on the methodology of the “premises by premises” survey? I live in a dense urban area. The coverage is nominally 4G, but I check my phone periodically, and I see that sometimes I get 3G and sometimes I get 4G. What will the premises survey say about properties like mine? I am paying for 4G, and it is the future, but I am not getting it all the time.

[Matt Hancock]

I would say that 5G is the future. As for the hon. Gentleman’s substantive point, I do not want the debate to turn into a seminar on mobile connectivity, but those in the industry have a wonderful phrase for the phenomenon that occurs as more people use data over a particular mast: they say that the coverage “breathes”. In other words, it comes in and goes out as other people use the data. Of course, at any one point in time the coverage may be different. The very best people to conduct the analysis are those at Ofcom, and they are conducting it, so I think it best for us to engage in this particular debate once they have published the “premises by premises” data.

[Grant Shapps]

I am grateful to my right hon. Friend for his offer to incorporate some of the issues raised by the new clauses in the Green Paper. He says that those at Ofcom are the best people to make the decisions. No one in the House, indeed no one in the country, will believe Ofcom’s claim that nearly 98% of UK premises are covered. It does not stack up with reality, and it does not stack up with what the British Infrastructure Group of Members of Parliament found either. I appeal to the Minister to ensure that he does not himself start to believe this nonsense.

[Matt Hancock]

I am looking forward to seeing the data for exactly that reason. In my rural constituency, I can drive for 10 minutes without getting a signal at all—that includes driving past houses—and the same probably applies to many other people. The lived experience is critical to judging whether the figures are broadly correct. I am entirely with my right hon. Friend on that. My job, and our job in the House, is to hold the mobile network operators to account and ensure that they deliver high-quality geographic coverage, whether it is in Rhondda, Welwyn, in Suffolk or, indeed, in Buckinghamshire, Mr Speaker.

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

Will the Minister give way?

[Matt Hancock]

I will take one more intervention on this subject.

[Calum Kerr]

May I make what I hope is a quick, constructive point? May I urge all Members to encourage their constituents to download the Ofcom android app, which is specifically designed to gather data so that we can be better informed, and to publicise it in their constituencies?

[Matt Hancock]

Quite so. As you may say yourself, Mr Speaker, I am not sure that that is entirely a matter for the Bill, but the hon. Gentleman has made his point.

New clauses 21, 22 and 27, tabled by Plaid Cymru and Scottish National party Members, are not necessary, because they call for what is already the position. New clause 21 is not necessary because it is already a requirement that when emergency services network sites are used to provide coverage for the public, they must be made available to all mobile network operators. New clause 22 is not necessary because Ofcom already has the power to impose structural separation on BT Openreach if it considers that that is required. New clause 27 is not necessary because there is already a universal service obligation in the Bill to take high-speed broadband to all premises. I hope that we can use that as the means to deliver the goals that we no doubt share.

As for new clause 26, the Government take the issue of interference with assistive listening devices very seriously, and we will work with Ofcom to take appropriate action when harmful interference with such devices has been identified. I have met representatives of the National Deaf Children’s Society, and I can tell the House that further testing will begin next month and Ofcom will publish its findings by April 2017. I hope that we are making some progress on that important matter.

[Richard Fuller (Bedford) (Con)]

I am very encouraged by what the Minister has said about gathering further information. There is a particular issue for deaf children because of the way in which they learn. Interference from the spectrum can have a deleterious effect on their education. Will the Minister pay particular attention to the impact on children in schools?

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[Matt Hancock]

Of course I will. I have discussed that precise issue with the National Deaf Children’s Society, and I will continue to work on it.

Government amendments 23 and 24 are detailed technical amendments concerning the installation of electronic communications apparatus on tidal land owned by the Crown.

I hope that, following my explanations and the commitments I have given, Members will withdraw their amendments and new clauses.

[Kevin Brennan (Cardiff West) (Lab)]

I rise to speak to new clauses 10, 32 and 7, which stand in my name and those of my hon. Friends, the Government new clauses, which the Minister has outlined, and new clause 1, tabled by the hon. Member for Devizes (Claire Perry), whom the Minister mentioned. I will also refer to some of the other amendments in the group.

In Committee, Labour Members, and indeed the hon. Lady, made it clear that we could not see how age verification could operate without a backstop power to block sites that failed to comply. In Committee, the Minister resisted that strongly. He said:

“The powers are not a silver bullet; sites that were actively trying to avoid the Bill’s other enforcement measures would also be able to actively avoid these measures. It is questionable how much additional enforcement power they would bring, given those downsides.”

He went on to say:

“I think the Bill has ended up with the correct balance.” —[Official Report, Digital Economy Public Bill Committee, 20 October 2016; c. 209.]

Clearly, the Secretary of State disagreed with him on that. She has now overruled her junior Minister by tabling new clauses 28 and 29 in her name, as we can see on the amendment paper. The new clauses tabled by the Secretary of State, who unfortunately is no longer in her place, represent significant changes at quite a late stage in the passage of the Bill in the Commons, confirming our contention that the Bill as published was not ready to leave home when it was allowed to do so.

[Kevin Brennan]

I am grateful for that intervention. All I can say is that I have just given the Secretary of State credit for the change, as the hon. Lady suggests I should.

The new clauses introduce significant changes at this late stage in the consideration of the Bill. We support blocking, but concerns have been raised in the press that the new clauses go beyond a backstop power to block sites to under-18s and could be used in practice to extend internet censorship to adults. The Government need to be clear whether that is the intention of the new clauses.

[Matt Hancock]

I have also seen those reports. I think that they misread the Bill. That is neither our intention, nor our understanding of the working of the new clauses.

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[Kevin Brennan]

My hon. Friend makes a valuable point. I am a former teacher—from the analogue age, I hasten to add—and I have no doubt that many teachers who started their careers around the same time as I did would fall into that category.

Statutory online education could work in tandem, as I have said, but protecting our children is a major challenge and it cannot happen without education. That is why I was disappointed that the Minister chose not to support our proposal. I believe that it represents the other side of the coin to what the Government are trying to achieve through age verification. We contend that our measures are necessary, and we will therefore divide the House on this matter if we have to.

Our new clause 32 would oblige the age verification regulator to ensure that all age verification providers—the companies that put the tools on websites to ensure compliance—were approved by the regulator. It would also oblige those providers to perform a data protection impact assessment and to make it publicly available, as well as to perform an array of other duties. The new clause is designed to address concerns about the practicality of age verification checks. It would ensure that only minimal data were required, that those data were kept secure and that individuals’ liberty and privacy were protected.

We have not been reassured by the Minister’s comments, either in Committee or today, that the fact that age verification software is improving is enough. We should be able to guarantee the privacy of an individual before the verification tool comes into force. We are not asking anything unreasonable of the regulator or of the age verification providers. The principles of privacy, anonymity and proportionality should underpin the age verification tool, but as far as I am aware, they have not as yet featured in any draft guidance, codes of practice or documents accompanying the Bill.

If anyone thinks I am being partisan, I can tell them that the Information Commissioner agrees with me on this. In its response to the Department’s consultation on age verification for pornography, the Information Commissioner’s Office stated:

“The Commissioner’s concern is that any solution implemented must be compliant with the requirements of the DPA and PECR.”

That refers to the Data Protection Act 1998 and the Privacy and Electronic Communications (EC Directive) Regulations 2003 that sit alongside it.

[Matt Hancock]

rose—

[Kevin Brennan]

I will finish the quote, then I will give way. The Information Commissioner’s response went on:

“The concept of ‘privacy by design’ would seem particularly relevant in the context of age verification—that is, designing a system that appropriately respects individuals’ privacy whilst achieving the stated aim. In practical terms, this would mean only collecting and recording the minimum data required in the circumstances, having assessed what that minimum was. It would also mean ensuring that the purposes for which any data is used are carefully and restrictively defined, and that any activities keep to those restricted purposes. In the context of preventing children from accessing online commercial pornography, there is a clear attribute which needs to be proven in each case—that is, whether an individual’s age is above the required threshold. Any solution considered needs to be focussed on proving the existence or absence of that attribute, to the exclusion of other more detailed information”—

[Interruption.] I will go on for a lot longer if the Minister keeps making gestures at me. The quote concludes:

“Any solution considered needs to be focussed on proving the existence or absence of that attribute, to the exclusion of other more detailed information (such as actual date of birth).”

[Matt Hancock]

I am grateful to the hon. Gentleman for giving way; I just want to clear up this point. When this question was asked while I was on my feet, I responded by saying that the Data Protection Act, as cited by the ICO, is the legal framework for delivering this. The further quotes that the hon. Gentleman read out outline how the Act would operate in this case. In a sense, therefore, those quotes prove the point that the required legislation for ensuring protection of data already exists in the Data Protection Act and other measures.

[Kevin Brennan]

We will see whether the Information Commissioner agrees. She made it clear that she would have

“significant concerns about any method of age verification that requires the collection and retention of documents such as a copy of passports, driving licences or other documents (of those above the age threshold) which are vulnerable to misuse and/or attractive to disreputable third parties.”

The Minister gave no real reason in his intervention about why he does not support new clause 32, which would provide that reassurance.

The risks of creating databases that potentially contain people’s names, locations, credit card details—you name it—alongside their pornographic preferences are clear. Our priority here is the protection of children and that is agreed across the House, but one consequence of the recent hack that was mentioned by the right hon. Member for Orkney and Shetland (Mr Carmichael) was the number of suicides. We should take things seriously and proceed with caution before creating anything that would result in the storing of data that could be leaked, hacked or commercialised that would otherwise be completely private and legitimate. That is the reasoning behind our reasonable, straightforward new clause, which the Minister rejects. It would place a series of duties on the age verification regulator to ensure that adequate privacy standards were applied, that any data obtained or stored were not for commercial use and that security was given due and proper consideration.

New clause 7 would mean that mobile phone service providers give all consumers the opportunity to place a financial cap on their monthly bill and that a mobile phone service cannot be provided until the service provider has put in place a cap of the agreed amount if the consumer has made an express request. Again, the Minister’s arguments, both in Committee and today, were nowhere near sufficient. The new clause would be welcomed by the many who have found that when they receive an email or check their bank balance at the end of the month, their mobile phone bill has come in much higher than expected. Mobile tariffs are complex, particularly on data, and few of us actually understand how much data we need for an average month. Consumers of all kinds can find that they use much more data than they expected.

Citizens Advice provided an example that reveals the problems. One of its clients changed his shift pattern and started using his mobile phone to watch films. He then received a text message saying that he had gone over his monthly allowance. He did not think too much about it until he received a bill for more than £2,000 at the end of the month. Unsurprisingly, his service was subsequently cut off. Research suggests that as many as one in five consumers find it difficult to keep track of how much they spend on data. The average unexpectedly high bill is often double the cost of the original monthly fee.

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[Calum Kerr]

I absolutely do agree. I will come on to that point later.

I would contrast the USO measure with last week’s announcements. We have heard the Government say that fibre is the future, but our record in this country on fibre-to-the-home, or fibre-to-the-premises, is pretty woeful. The broadband investment fund announced in a previous Budget had some money put into it, and hundreds of millions of pounds were committed to 5G trials and fibre backbone. All that is welcome, if slightly unambitious, but we have not seen anything specifically for rural areas. We are talking about a fibre and gigabit future in urban areas while telling rural areas that they should settle for 10 megs and a USO. That is not closing the digital divide—it is turning it into a gaping chasm of inequality. A badly implemented USO will not fix the issue but might, through legislation, cement this digital divide.

My new clause aims to address this issue. From the start, as I have looked at potential solutions, the one that I kept coming back to was a voucher alternative. At the Broadband World Forum, a representative from the Independent Networks Cooperative Association said that if we introduce a voucher scheme, we turn a universal service obligation into a universal service opportunity. In our constituencies we have highly motivated groups of people who will, yes, okay, maybe on day one, be happy with 10 megs because if they have been living with 1 meg it will be transformational, but quickly see that they are being left behind and be very unhappy about it. Although the Bill includes provision to revisit this, it does not specify when, and these people will be left further and further behind. The idea of a voucher scheme was endorsed by INCA chairman David Cullen, who said:

“The principle of a Universal Service Obligation is an outdated concept in a sector focused on significant growth and could well translate into a ‘ceiling’…a voucher scheme for premises could be far more effective.”

The Minister did not deal with this new clause in his opening remarks. I urge the Government to embrace the option of a voucher alternative to empower our rural communities, who, as I know from my own community, want to go further. They understand technology. They will put in fibre-to-the-home, providing a much faster solution. This is not a one-size-fits-all—

[Matt Hancock]

I did address this point. I said that the USO contained in the Bill will get high-speed broadband everywhere. Furthermore, a broadband voucher scheme does not require legislation. In fact, we have had one in the past without legislation. This new clause is therefore unnecessary.

[Calum Kerr]

I thank the Minister for that intervention. He makes a point that I forgot to make, which is that there is previous history in this area. Broadband Delivery UK managed a voucher scheme that was phenomenally successful. Perhaps I have become a cynic far too quickly in this place, but if the Government do not put this in the Bill, I do not believe it will happen. I will therefore press the new clause to a vote. We should ensure that as the Government say that fibre—

[Matt Hancock]

As an example of the fact that we can do this through non-legislative means, not only did we have such a scheme in the past, but at the autumn statement last week we announced that we are to consult on a new one. I think that that takes care of the concerns behind the new clause.

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[Helen Goodman]

The hon. Gentleman is right.

Under the Bill, publications made in the media that are in the public interest are not on the list of exceptional circumstances in which information to combat fraud against the public sector and related personal information can be disclosed. For example, if a whistleblower were to leak the records of a private company to a journalist without authorisation and the journalist ran a story based on this, both parties could receive criminal sentences. This is particularly pertinent to clause 50, which states that a person who discloses personal information not in one of the stipulated excluded situations will be committing an offence.

This is quite technical and complex, so if the Minister cannot respond in this debate today, I would like him to write to me about the definition of the information covered and of the public sector here. Let me give an example to explain why. I was given information that Coutts—which is currently owned by the taxpayer; it is a subsidiarity of one of the banks we bought in 2008—was selling tax avoidance schemes in Switzerland. I spoke about that in the House, but if I had instead given the information to a journalist and it had been printed in a newspaper, it would appear that under these provisions the journalist or newspaper would be criminalised.

This cannot be the Government’s intention. I am sure the Government do not like leaks about Concentrix or about sustainability and transformation plans in the NHS, but I am equally sure the Government are not trying to clamp down on the effectiveness of the media in our country to such an extent that we cannot use these leaks about these sources.

[Matt Hancock]

I can confirm that it is neither the intent, nor our understanding of the Bill, to do those things, but it is our intent to protect personal information.

[Helen Goodman]

I am glad that is not the Minister’s intent—I did not think that it was—but the Media Lawyers Association highlighted in its written evidence that it thought there was a problem. So if the Minister wants to avoid his colleagues in another place having to have this debate again in two months’ time, perhaps he could write to me with a full explanation of what he thinks is going on, because I think that there might be a problem with the Bill in this respect.

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[Matt Hancock]

I rise to answer the points made so far, but I hope there will be time afterwards for others who still want to speak. We have had a broad debate on the amendments relating to copyright, broadcasting, ticketing, data and intellectual property, and I will speak as quickly as I can and take as many interventions as I can. There are a total of 36 proposed new clauses and amendments, and I propose to address each in turn in broadly the same order.

On copyright, new clause 15 proposes that the Government take a power to have a code of conduct on search engines to dictate how they should work to prevent copyright infringement. This new clause was also proposed in Committee, and I would like to update the House on the progress. Since then, the Intellectual Property Minister, Baroness Neville-Rolfe, has chaired a further round-table among search engine and creative industries representatives. As my right hon. Friend the Member for Maldon (Mr Whittingdale) said, that group is now making some progress towards agreeing an outline code of practice, but much more needs to be done. Following the round-table, a revised draft code will be prepared by the IPO for consideration by the group before its next meeting on 10 January. Our position on online platforms is that they must act responsibly and work with rights holders to help enforce IP rights. We are clear on the importance of getting things right and do not rule out legislation, but given the progress being made it is not necessarily the right time for legislative intervention.

We also discussed new clause 30 in Committee, where I set out the range of criminal provisions that apply to the sale and use of devices that infringe copyright. This matter relates to the IPTV devices that my right hon. Friend the Member for Maldon, the former Secretary of State, spoke about so powerfully. Following a number of investigations across the country, there are pending prosecutions relying on a number of offences. I am sympathetic to the intent behind the new clause, but it does not in and of itself offer any greater legislative protection to rights owners than the existing offences that target this type of behaviour. If the existing legal provisions are shown to be deficient when the pending prosecutions have concluded, we will bring forward proposals for legislation.

New clause 16 is another of the helpful proposals from the shadow Front-Bench team to deliver on a Conservative party manifesto commitment—this time on e-book lending. I am grateful for the degree of support that our manifesto has received from all parts of the House during the Bill’s passage.

[Kevin Brennan]

Then why don’t you implement it?

[Matt Hancock]

Just you wait. We of course agree that authors should be recognised for e-lending by ensuring appropriate compensation for them in an enhanced public lending right. I need to correct an omission. I belatedly declare a potential interest which I should have mentioned in Committee—at least, I hope that I can declare an interest, as I have a book that is available for borrowing in this way, although I have no idea whether it has ever been borrowed. As I said in Committee, we have been carefully considering the options for delivering the manifesto commitment. We had to wait for the conclusion of a court case, which ended earlier this month, before setting out the proposals, but I can confirm today that we intend to legislate to extend the public lending right to include the remote lending of e-books. It is important that we get that right and ensure that any changes are compatible with the copyright directive. We will therefore bring forward legislation as soon as possible.

Turning to broadcasting and subtitling for video on demand, new clause 6 was also considered in Committee. As I said then, we are keen to address this shortcoming and want to ensure that the requirements that are placed on on-demand programme service providers are appropriate and proportionate. Since then, we have discussed how best to increase the use of subtitles in video on demand with charities, broadcasters, Ofcom and others and have worked further on the best way to address the concerns that the new clause intends to address. Through working collaboratively with all interested parties, I hope to reach a resolution in the other place that results in an increase in the provision of access services for video on-demand services.

Let me turn to new clause 8, on TV licence fee concessions, a subject we discussed at length in Committee. Government Members are clear that we support the free TV licence for the over-75s, we committed in our manifesto to keeping it and we are glad that it is protected as part of the BBC charter and licence fee settlement, which has been debated extensively in this House and is delivering on our manifesto commitment. The new clause attempts to unpick that settlement and, in so doing, undermine the stability of the BBC. This funding settlement, which the new clause would undermine, was described by the director general of the BBC as a “strong deal” for the BBC and one that “gives us financial stability”.

[Kelvin Hopkins]

I have already covered that point, but surely asking the other BBC licence fee payers, staff and programmers inside the BBC to pay for what is a welfare benefit is nonsense.

[Matt Hancock]

The point is that it is not a welfare benefit; it is about funding policy, and the BBC asked for this policy to be determined by the BBC. Indeed, the shadow Secretary of State said that

“the charter provides the BBC with the funding and security it needs”—[Official Report, 18 October 2016; Vol. 615, c. 699.]

As part of that “security it needs”, we kept, in this Parliament, the free TV licence. The BBC itself has asked for this and only this morning the BBC said that

“the overall funding settlement reached with the government provides the financial stability for a strong creative BBC. The BBC is concerned that”—

this amendment—

could reopen the whole deal and make the BBC worse off.”

So we have here an 11-year charter renewal, a strong and stable financial settlement praised by the Labour party and a clause that has been requested by the BBC, whereas the new clause could, in the BBC’s words, make the BBC worse off. Supporting new clause 8 would undermine the BBC and undermine its finances. This measure is expressly against the wishes of the BBC, and I urge anyone still considering supporting it to ask themselves how they will explain this attempt to undermine the BBC—Government Members will not do that.

New clause 17 deals with the issue of public sector broadcaster prominence, an important matter on which we consulted in the spring. In Committee, the point we reached was that a detailed, over-prescriptive regulation of the detail of the PSB prominence rules would be a mistake, and having not seen compelling evidence of harm to PSBs to date, we have decided not to extend the electronic programme guide—EPG—prominence regime for PSBs to on-demand. When PSBs make excellent content, audiences generally follow.

Finally on broadcasting, new clause 18, on listed events, was also discussed in Committee, and I have seen no evidence to change our view that the current listed events regime is not under threat—we will not let it be under threat. The range of our most loved and important sporting events will remain on free-to-air channels. Even if there were a problem, it would be undesirable to fix it in the way the new clause suggests, as it would lock in the incumbents’ positions, as the requirement to be watched by 90% of the population would narrow considerably the number of channels that could qualify. So I suggest that the problem does not arise; that were it to arise, we would legislate; and that if we were to legislate, this would not be the way we would do it.

In this Bill, we have shown that we are open to being persuaded by good argument, and we have tabled amendments 20, 21 and 22 to ensure that Ofcom is able effectively to enforce requests for information from third parties in relation to its new functions as regulator of the BBC. I hope that these provisions have broad support.

I now turn to the much discussed issue of ticketing. New clause 31 seeks to deal with bots that harvest tickets for resale in the secondary market. We have heard very powerful explanations of the scale of the problem and its breadth, and I can confirm that I had great difficulty in buying Paul Simon tickets. Initially, I failed to buy them despite having my finger hovering on my mouse the moment they went on sale, and so I had to buy them at a much greater price in the secondary market. They were worth every penny, but that in a way makes the point that my hon. Friend the Member for Weston-super-Mare (John Penrose) makes: the gap exploited is between the level at which the artists wants to sell their tickets and the amount that they represent in true value to the customer. I was still happy to pay hundreds of pounds for my Paul Simon tickets, but the point is that they were meant to be on sale for £75 so that everybody could get them. I am persuaded by the arguments and we shall be holding a roundtables meeting on Wednesday to discuss the best way to tackle the problem.

The Government will give full consideration to what is said at these roundtables, in Parliament and in the Waterson report on the issue of ticketing bots and the harvesting market. I pay tribute to my hon. Friend the Member for Selby and Ainsty (Nigel Adams), who has made a huge amount of the running on this issue. He has made the argument powerfully and, as has been said, the Olympics showed that this can be done.

[John Penrose]

I am not normally reassured by the advent of a roundtable, but I am enormously reassured in this case because the Minister is a very persuasive man and I am sure that he will have around that table representatives from the sportsmen’s agents groups, from Equity, the actors’ union, and from all sorts of UK music organisations and various others. I am talking about the people who represent the talent, who are currently being ripped off because they are getting only the face value when these things go on sale, when they are bought by the bots, and not the eventual secondary market value. They are the people with a huge interest in getting this done so that they get a larger proportion of the eventual value and customers are not getting ripped off, too.

[Matt Hancock]

Yes, we have representatives of all sides coming to the roundtable, including my hon. Friend the Member for Selby and Ainsty—I am not sure that that will reassure my hon. Friend the Member for Weston-super-Mare. Although we would not want to close down the secondary market for tickets altogether, clearly the automatic harvesting of tickets sold below market price—so that fans can afford them—for resale at a higher value is wrong. I want to build a bridge over troubled waters, listen to the points made at the round table and bring forward legislation in this Bill if this is found to be necessary.

On digital government, amendment 3 and new clause 19 concern data-sharing powers in education and health. They address the same issue from the opposite end, and it is a bit of a surprise to find that they have been submitted by the same people. Not only can people’s health and education data be incredibly powerful in improving lives, but they are very sensitive and need to be carefully handled. These two proposals from the Opposition represent amendments both to open up data sharing and to close it down. This is a slightly confused approach, but neither of the proposals is necessary, because the concerns expressed at the root of each are already addressed in the Bill. New clause 19 would open up more data sharing in education, and it is good to see this direction of travel supported by the Opposition Front-Bench team, because data sharing can improve people’s lives, for instance by making sure that we better identify eligibility for free school meals. The right hon. Member for Birkenhead (Frank Field) has made this argument strongly. This is a laudable aim, but it is already provided for in the Department for Education’s electronic eligibility checking system. Indeed, the Bill sets out how aspects of data sharing can be expanded through secondary legislation in due course.

[Frank Field]

I am grateful to the Minister for his comments, but would he tell us what is in the Bill to make local authorities that seem to have no interest in sharing data obtain the numbers of children eligible for free school dinners, and thus increase the pupil premium to act in the interests of those children?

[Matt Hancock]

The proposals in the Bill are permissive, rather than requiring action. I would be concerned if we required the sharing of data, because of their sensitivity, especially when they are not anonymised, which they would not be if the aim was to find children who are eligible for free school meals. We want to make sure that the person receiving the data has the necessary assistance to handle them, and it is incredibly important that the law should make it clear that that data sharing is permitted, as that removes a reason not to share data.

[Frank Field]

May I ask the Minister to keep a close eye on this, because in Wirral the number of families who have the right to opt out could be counted on the fingers on one hand, so there is a willingness for data to be shared so that schools and children can benefit?

[Matt Hancock]

I am glad that there is a willingness for that data to be shared, because I share the right hon. Gentleman’s passion to improve the use of data to improve people’s lives in Wirral and elsewhere. Given that passion, I hope that the clarity that we will achieve, not least as a result of this debate, will ensure that the data are indeed shared.

Clarity is supported by the Data Protection Act 1998, because all the data shared under powers in the Bill will continue to be protected under the firm boundaries of that Act, which rightly enjoys a broad consensus of support. We are strengthening in the Bill the sanction on the purposeful reidentification of data to make that a criminal sanction. The hon. Member for Cardiff West expressed concerns about the details, but the protections are important and strike the right balance. New clause 19 seeks to strengthen data sharing, but amendment 3 seeks to weaken it and put barriers in place. The amendment is not needed, as health bodies in England are not within the scope of the public service delivery power. For the rest of the UK, health is devolved. The Labour Administration in Wales and the Scottish National party Government in Scotland have signalled that they will seek the consent of their legislatures on the grounds that the amendment is not in place. The Labour party in Wales and the SNP in Scotland support this sort of data sharing for the precise reasons set out by the right hon. Member for Birkenhead, so I hope to persuade hon. Members not to divide the House on these matters. They should be reassured that we value data sharing as well as its protection and safekeeping. I therefore urge Members on both sides of the House to resist the amendments.

New clause 5 would impose obligations on organisations to report data breaches, as has been said. That is covered in the general data protection regulation, which will come into force in May 2018, so it is not necessary to legislate here. New clause 11 deals with data-sharing registers. Part 5 includes a number of commitments to transparency and proportionality in the disclosure of information by public authorities. We are committed to the transparency of information shared under part 5, and I think that the new clause is aimed at testing that. However, there are a number of problems with it, not least the fact that setting the requirement in primary legislation reduces the flexibility to learn from and adapt to the consequences of publishing a register.

New clause 12 requires that the Government commission an independent review of the collection and use of data by Government and commercial organisations. The Royal Society and the British Academy are currently undertaking such a review to consider the ethical and legal frameworks that are needed in the UK as data technologies advance. I agree with the hon. Member for Cardiff West that it is important that we develop those ethical and legal frameworks to make sure that they are ahead of the use of data and data science, not behind, so that we can take the public with us. We will consider the findings of the review when it is published.

New clause 23 was tabled by Plaid Cymru. We are firmly committed to ensuring that the needs of Welsh language speakers are recognised and met. For example, gov.uk now publishes its frequently used web content in Welsh. The Government Digital Service has helped to produce exemplar Welsh language versions of new digital services such as the register to vote service. The GDS and the Wales Office have discussed with the Welsh language commissioner how they can help Departments meet their requirements under their Welsh language schemes. Dwyn cefnogwyr brwd o S4C—I support strongly the Welsh language is, I think, a rough translation.

Government amendments 4 to 19 apply the duty to review set out in clauses 45 to 53 of the fraud and debt chapters, which require the relevant Minister after three years to review the operation of the powers. The amendments are consistent with the devolution settlements and ensure that appropriate consent for any proposed changes is sought from the affected territories.

On the illicit online trade and internet sales of counterfeit electrical appliances, we take this very seriously. The Intellectual Property Office has recently published its IP enforcement strategy for the next four years, which I think takes into account the concerns raised.

[Helen Goodman]

Before the Minister sits down, will he commit to write to me about the amendments that I tabled?

[Matt Hancock]

Yes, of course. I will happily write to the hon. Lady about the detail of the concerns—I think they are unfounded, but we want to ensure that they are indeed unfounded—that journalists might be caught by increasing the criminal penalty for the intentional disclosure of information under the data-sharing powers, which are intended for the protection of data, especially in the bulk transfer of data around the system, rather than to militate against whistleblowing of the type that the hon. Lady described.

I appreciate the intention behind new clause 34, which was tabled by my hon. Friend the Member for Boston and Skegness (Matt Warman). Here and around the world, the media landscape is changing rapidly and the emergence of new digital platforms has impacted on a wide variety of sectors, including news. Ensuring that citizens have access to a full variety of news sources is essential, and it is vital that our media are vibrant and sustainable. There is a huge challenge in maintaining high-quality journalism when advertising revenues increasingly go to the platform, but the costs fall on the content provider or the newspaper. The Government are actively engaged in examining this, and I am meeting the News Media Association later this week to discuss this very issue.

Ofcom publishes an annual report on news consumption across the UK. It includes the sources and platforms used in news consumption and the role of intermediaries, such as Facebook and Google. Ofcom undertakes ad hoc reviews where appropriate and we will explore whether this is an area where such a review is needed. Although I acknowledge the importance of the issue, I urge my hon. Friend, who has a lot of experience in this area, to work with us under existing powers to seek a solution.

I ask that hon. Members do not press their amendments and new clauses to a Division, but support the Government amendments.

[Several hon. Members rose—]

--- Later in debate ---

Finally, I want to back up what was said on a separate point about the public interest defence for journalists. If I am the P who is mentioned several times in the various clauses on disclosure, and I am a journalist who discloses some knowledge that I have that should not have been disclosed to me, and it is in the public interest that it should be printed, then that, to my mind, should be a defence against any prosecution.

[Matt Hancock]

I can confirm that any public prosecution has to be in the public interest. The public interest is not covered in this Bill, but that is because the nature of a public prosecution is that it has to be in the public interest. I hope that deals with my hon. Friend’s concern.

[Sir Peter Bottomley]

I am grateful to my right hon. Friend. That may be the test of whether the prosecution is brought, but if it is brought because the prosecution is thought to be in the public interest, and the journalists want to say that the public interest defence is why it has been done, then the Government ought to think again. If I may, I ask them to do so.

--- Later in debate ---

[Madam Deputy Speaker (Mrs Eleanor Laing)]

We have a whole minute to spare.

[Matt Hancock]

Since the Secretary of State will open the Third Reading debate, may I take this opportunity to thank the House for all the comments we have heard, especially those from Opposition Front Benchers? It has been a very collaborative effort, especially on this group of provisions, but also more broadly. I hope that the Bill leaves the House in better shape than it entered it, as it goes off to be considered in the other place. I thank everybody involved, from the officials in the Box to all the stakeholders more broadly. I ask the House to support the Government’s proposals.

Question put and negatived.

--- Later in debate ---

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I can now inform the House of my decision about certification. For the purposes of Standing Order No. 83L(2) and on behalf of Mr Speaker, I have certified clause 85 of the Digital Economy Bill as relating exclusively to England and within devolved legislative competence. Copies of the certificate are available in the Vote Office. Under Standing Order No. 83M, a consent motion is therefore required for the Bill to proceed. Does the Minister intend to move the consent motion?

[Matt Hancock]

indicated assent.

The House forthwith resolved itself into the Legislative Grand Committee (England) (Standing Order No. 83M).

[Mr Lindsay Hoyle in the Chair]

Motion made, and Question proposed,

That the Committee consents to the following certified clause of the Digital Economy Bill:

Clauses and schedules certified under Standing Order No. 83L(2) as relating exclusively to England and being within devolved legislative competence

Clause 85 of the Bill (Bill 87).—(Matt Hancock.)

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

The debate will take place now. Come on in, Mr Wishart.

--- Later in debate ---

[The Chairman]

In that case, I call the Minister.

[Matt Hancock]

I shall not detain the House for long. All I can say is that the hon. Member for Perth and North Perthshire (Pete Wishart) had an opportunity to talk about clause 85 on Second Reading. Did he do so? No, he did not. There was spare time during the Committee stage. The hon. Gentleman could have joined the Committee, enjoyed our company, and talked about clause 85. Did he do so? No, he did not. On Report, he could have tabled any sort of amendment to clause 85, or, indeed, tried to vote against it, but he chose not to. I think we can see through all his bluster.

Question put and agreed to.

The occupant of the Chair left the Chair to report the decision of the Committee (Standing Order No. 83M(6)).

The Deputy Speaker resumed the Chair; decision reported.

Third Reading

Queen’s and Prince of Wales’s consent signified.