Hospitality Sector
Sarah Olney Excerpts(3 weeks, 5 days ago)
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Sarah Olney (Richmond Park) (LD)
The economic landscape is extremely difficult for many businesses and industries, and hospitality is one of the sectors facing the most acute challenges. Pubs, restaurants, cafés and hotels are dealing with huge pressures—unfair taxes, soaring energy bills, skills shortages, and a broken business rates system. The Labour Government have had more than a year to address these issues, but instead of throwing businesses a lifeline, their policies have only made it harder for businesses to keep their head above water. Changes to employers’ national insurance, the reduction in business rates relief and the absence of any meaningful action to bring down commercial energy prices are all factors contributing to job losses, business closures and stagnant economic growth.
Although this Government’s decisions have made things worse, business sentiment certainly was not rosy during the last Parliament. Years of dire economic mismanagement by the previous Government forced business owners to make cuts, hike prices and work longer hours. Even though we Liberal Democrats are supportive of today’s motion, we feel obliged to point out that the Conservative Government’s chaotic approach caused so many of these problems, including soaring energy costs, a staffing crisis, and the vast increase in regulation and red tape brought about by their dismal Brexit negotiations.
According to UKHospitality, the measures in last year’s autumn Budget delivered a hit to the sector worth a cumulative extra £3.4 billion annually. Meanwhile, data from the Office for National Statistics shows that the hospitality sector has shed nearly 70,000 jobs since last October. That works out as an astounding 3.2% of all jobs in the sector, and it is 266% higher than the number of jobs lost in the overall economy. Those figures lay bare the slow dismantling of the hospitality sector as a direct result of this Government’s policies. A recent survey conducted by UKHospitality found that since the autumn Budget, a third of hospitality businesses are now operating at a loss, with 60% cutting jobs, 75% having increased prices, and two thirds reducing staff hours. These cuts are a last-ditch attempt by businesses just to stay afloat as they cry out for support. Small businesses are the beating heart of our economy.
John Milne (Horsham) (LD)
This morning I received a letter from Kelly Mariner, the manager of an independent coffee shop in my constituency of Horsham. She said:
“Since the last Budget I have been unable to hire new staff and cannot grow my business. I am spending every day doing the job I love in front of the customers, but it means I can’t develop or follow up new ideas. Paperwork is a juggling act and I spend very little time with my family.”
She asked to meet me. Does my hon. Friend agree that meeting those in the hospitality industry is exactly what the Chancellor needs to do before digging her budgetary hole any deeper?
Sarah Olney
My hon. Friend gives a striking example of exactly what I was saying about the pressures faced by the hospitality sector. He is absolutely right that the Chancellor needs to hear these calls from the hospitality sector as she puts together her Budget, which we now expect at the end of November.
Small businesses are the beating heart of our economy. They are at the centre of our local communities, and they create the jobs we all rely on. We are glad that raising the employment allowance will shield the very smallest employers, but thousands of local businesses, including many in the hospitality sector, will still feel the damaging impact of the national insurance increase. My Liberal Democrat colleagues and I have voted against the Government’s misguided jobs tax at every opportunity, and I once again urge them to scrap these measures, but I also press the Minister to at least spare our treasured pubs, restaurants, café and hotels by exempting the hospitality sector from this tax rise. Whether they were aware of it or not, the Government’s decision to raise the rate of national insurance contributions while reducing the salary threshold at which it is levied has significantly increased the cost of employing part-time workers, delivering a disproportionately large blow to the hospitality sector.
Monica Harding (Esher and Walton) (LD)
The Minister has talked about social mobility. Does my hon. Friend agree that when a company cuts hours, it is those who work part time—some of the most disadvantaged members of society—who lose out, and lose their jobs?
Sarah Olney
My hon. Friend is exactly right. That is why this jobs tax has been so damaging, not just to the hospitality sector but to the many people who rely on the sector for flexible work that can fit in with their caring demands or other issues that they are experiencing.
Dr Andrew Murrison (South West Wiltshire) (Con)
The hon. Lady is trotting out a whole load of helpful suggestions, of which the hospitality Minister is no doubt taking careful note for the time when he makes his representations—which he said he would not be making—to the Chancellor. Does the hon. Lady agree that he could also make recommendations to the Deputy Prime Minister, especially in relation to the Unemployment Bill, that would have no particular cost attached? I am thinking of the “banter ban”, which even the Equality and Human Rights Commission has said is absolutely bonkers, and is likely to make hospitality venues even less attractive to those who need to use them.
Sarah Olney
I thank the right hon. Gentleman for his intervention, but I entirely disagree with him about the banter ban. The Liberal Democrats agree with the concerns expressed in the motion about the challenges facing the hospitality sector, but we do not agree with the part of the motion that expresses regret about measures in the Employment Rights Bill on workplace harassment, which we do not believe have been accurately represented. As is clear from what has been said by my hon. Friend the Member for Torbay (Steve Darling) and the significant work done on this issue by my hon. Friend the Member for Bath (Wera Hobhouse), we welcome the introduction of reasonable and workable measures to protect employees from harassment in their place of work.
The Government must take steps to boost the hospitality workforce, and that includes showing much more urgency in introducing a youth mobility scheme. It took nearly a year for them to listen to calls from the Liberal Democrats and others for the negotiation of a youth mobility system, and I hope that Ministers will not continue to drag their feet on an agreement that will truly benefit the hospitality sector. Changes implemented in April 2024 that increased the minimum salary threshold for skilled worker visas shrank the talent pool from which businesses can recruit, contributing to greater staff shortages, and in a 2024 survey of nearly 1,700 employers from a range of sectors, including hospitality, almost 40% of employers with hard-to-fill vacancies said that a reduction in the availability of overseas talent was one of the main causes of staffing issues. At a time when so many businesses are considering whether they can remain viable, we must give hospitality businesses the tools they need to grow and help boost the wider economy, and access to global talent is part of that. I therefore ask the Minister once again whether the Government will finally set out a timeline for the introduction of a youth mobility scheme.
We also need serious action from the Government on boosting the domestic workforce by supercharging apprenticeships and investing in skills and retraining opportunities. Can the Minister assure the House that Skills England will function as a properly independent body, with employee rights at its heart?
Businesses across the country continue to struggle with sky-high energy costs, and I recognise that the recent industrial strategy provided some welcome measures on that front, particularly for the manufacturing sector, but as the motion points out, there was very little in the strategy to help support hospitality firms with their soaring energy bills. Liberal Democrats have long campaigned for energy market reform, which would include reducing our reliance on expensive fossil fuel imports by investing in home-grown renewable energy. In recent months we have set out a plan to cut energy bills by half within 10 years by breaking the link between gas prices and electricity costs, so that households and businesses can see the benefits of cheap, clean power in lower energy bills.
Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)
May I intervene, please?
Mr MacDonald
It is difficult to get a word in. [Laughter.] I am married; I know about these things.
I have 100 staff members in the hospitality industry in the highlands, and I can say that all is not well in hospitality by any means. Those who are not on mains gas are paying for electricity, by and large, and we are paying four times as much for energy as people in the city. Moreover, we in Scotland do not receive the same business rates relief as the rest of the UK. [Interruption.] I thank my Scottish National party friends, who are sitting next to me. Our staffing costs, including employers’ national insurance contributions, have increased by 12.4%. So we have real problems, and I must say to the Minister that all is not well.
Sarah Olney
Well, I think I thank my hon. Friend for his intervention. He is, of course, absolutely right about the cost of energy and the difficulties that it presents for businesses up and down the country. His point about Scotland in particular is well made. Will the Minister consider the proposals put forward in our plan, which could help to truly ease the burden not just on the hospitality sector, but people across the country?
Finally, I turn to business rates. Today’s motion rightly reflects many of the economic mistakes made by this Government. However, it is important to highlight that it was the last Conservative Government who broke their manifesto promise to reform business rates, leaving small businesses trapped in an outdated and unfair system. Of course, the current Government have also pledged to replace the system, with no action taken thus far. The Liberal Democrats will continue to hold Ministers accountable for their pledge, because there is a need for a fundamental overhaul of the unfair business rates system. It penalises manufacturers when they invest to become more productive and energy efficient; it leaves pubs and restaurants with disproportionally high tax bills; and it puts our high-street businesses at an unfair disadvantage, compared with online retail giants. In too many places, pubs, restaurants and shops are being forced to close, taking with them jobs, opportunities and treasured community spaces.
More broadly, the outdated tax system inhibits business investment, job creation and economic growth, holding back our national economy. These problems have persisted for too long, and it is high time the Government took action. Our proposals for fair reform would cut tax bills, breathe new life into local economies and spur growth. Equally importantly, they would provide long-term certainty for businesses, which in today’s commercial environment is needed more than ever.
The value of our hospitality sector goes beyond economics. Pubs, restaurants and cafés are the beating hearts of our towns; they brighten our high streets and bring our communities together. The economic landscape created by the last Government did so much to damage them, and this Government continue to push many to the brink of collapse. I hope today that Ministers will listen to the Liberal Democrats’ calls and reverse the jobs tax, bring forward plans for business rate reforms, and seriously consider our plans to cut energy bills for people and hospitality firms across the country.
Madam Deputy Speaker (Caroline Nokes)
There is now a five-minute time limit.
Oral Answers to Questions
Sarah Olney Excerpts(3 months ago)
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Chris Bryant
One of the issues that is undoubtedly at the heart of AI and copyright is how we ensure that the policy we advocate in the UK works with other countries’ around the world. I assure my hon. Friend that we are working closely with our European allies to ensure we do precisely that.
Sarah Olney (Richmond Park) (LD)
Chris Bryant
I am afraid the shadow Chancellor came in during the question. I have known him for a very long time, and I would not cheer him quite so enthusiastically myself—[Interruption.] As charming a man as he is, it meant that I did not hear the question asked by the hon. Member for Richmond Park (Sarah Olney), so I am happy to write to her afterwards to confirm.
The Deputy Prime Minister
My hon. and gallant Friend speaks with great authenticity and authority on this matter. The attack on RAF Brize Norton was disgraceful, but what was even more disgraceful was Reform blaming the commanding officer—an accomplished woman who has served her country—rather than the criminals who were responsible. That is not leadership, but we should not expect anything better from the party of the Putin apologists.
Sarah Olney (Richmond Park) (LD)
The Deputy Prime Minister
We are fixing the foundations of local government after the 14 years of austerity that were inflicted on local government, with the aiding and abetting of the hon. Lady’s party. We have put record funding into local government, with multi-year settlements: we are helping local government, where the last Government ruined it.
Data (Use and Access) Bill [Lords]
Sarah Olney Excerpts(4 months, 3 weeks ago)
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James Naish (Rushcliffe) (Lab)
As all hon. Members in the Chamber know, data is the DNA of our modern life. It drives our economy, our NHS and our public services, often silently but ultimately powerfully. For too long, outdated data infrastructure across the British state has held us back, costing us billions and draining frontline resources. This ambitious Bill sets out to change that, so it should be welcomed.
For our NHS, the Bill will mean faster and safer care. More transferable and accurate patient data could save 140,000 hours of staff time annually, reduce duplicate lab tests, prevent up to 20 deaths each year from medication errors and improve overall patient safety and outcomes—that is real impact. It will also free up 1.5 million hours of police time, letting officers spend more time on our streets, not behind desks. The national underground asset register, as has been mentioned, could bring £4 billion to our economy by preventing costly infrastructure delays and accidents. The Bill will seek not just to cut red tape, but boost research, protect personal data and allow scientists and online safety experts to better access information to keep us all safer. I welcome that.
On Government amendment 16 on artificial intelligence and the creative industries, we have all seen the potential of AI, but that promise must not come at the expense of those who create. In that regard, I thank the dozens of constituents who have contacted me about their concerns. I welcome the Government’s recognition of the complex intersection between AI and copyright, and the need to get this right. It is clear that we must tread carefully and base any changes on robust evidence. I am therefore pleased that the Government are committed to publishing a full economic impact assessment and reporting to Parliament on key concerns, such as how AI developers access copyrighted materials, the transparency of their methods and licensing. I will also continue to support Equity with its work on the principle of personality rights.
New clause 21 proposes mandatory recording of sex at birth across all public authorities. The new clause would require all public authorities, whether the NHS, which I could potentially understand, or the Driver and Vehicle Licensing Agency, which I certainly could not, to record and retain people’s sex at birth even when someone has a gender recognition certificate. The new clause would seemingly require that regardless of context, purpose or relevance. That feels neither proportionate nor respectful of existing legal frameworks or the trans community at this difficult time.
It is important that we acknowledge that transgender, non-binary and intersex people already face considerable barriers in public life, and many of my constituents have shared with me in recent weeks just how much fear and uncertainty they are experiencing. Rushed amendments and changes, without dialogue with those impacted, are not in any way welcomed and could have very negative consequences.
Finally, on the theme of privacy, proportionality and protecting vulnerable people, will the Minister say whether any steps will be taken by his Department to end the collection and sharing of sensitive personal data when people use police, public, university or other websites to report crimes or abuses and the subsequent sharing of that data with third parties through tracking pixels? The use of such tools means people inadvertently share information with advertisers. I hope the Government will look into that and take it seriously.
Sarah Olney (Richmond Park) (LD)
I was glad to add my name to new clauses 1 to 6, tabled by my hon. Friend the Member for Harpenden and Berkhamsted (Victoria Collins).
I speak to new clause 1 on the age of data consent. Currently in the UK, the minimum age of digital consent—the age at which children can consent to having their data processed—is 13. The new clause would raise the minimum age for social media data processing to 16, meaning social media companies would not be able to process the data of children for their algorithms. I hope that that would allow children to enjoy many of the educational benefits and relevant services that social media can offer, as well as continuing to enjoy the freedoms of engaging with friends but without the risks of addictive algorithmic content.
The mental health issues associated with social media use in young people, particularly children, should be treated as a public health crisis. The Government are missing a vital opportunity with this legislation to reform how social media is used by not including provisions around children’s online safety. The Bill offers an important opportunity to start the process of removing harmful social media mechanisms and, as such, I urge the Minister to support the new clause.
New clauses 2 to 6 would ensure transparency in how AI systems are trained and give rights holders more control over the use of their works. Concerns about the impact of AI on the creative industries have been raised hundreds of times by my constituents and I have been raising those concerns in Parliament for years. In my Westminster Hall debate back in February 2023 on artificial intelligence and intellectual property rights, I raised my concerns about the bypassing of copyright laws in relation to AI and intellectual property with the former Conservative Government. However, the former Minister blamed the lack of the former Government’s action to introduce regulation for creatives, associated with the rise of AI, on the political turmoil in the Tory leadership at that time, and their neglectful attitude towards leadership was mirrored in their attitude towards introducing protection for creatives in this space.
Their conclusion from my Westminster Hall debate was
“not to legislate in periods of political turmoil”—[Official Report, 1 February 2023; Vol. 727, c. 163WH.]
and the need for “more deep consultation”, which did not materialise. I think we can all be glad that the chaos of that Government is in the past. However, we are yet to see the introduction of thorough and robust copyright laws relating to artificial intelligence, which is fundamental to the success of the UK’s world-leading creative industries. I hope this Government will act upon that today by accepting the new clauses.
I wish to reiterate the importance of these new clauses in ensuring that AI models are bound by existing copyright law, increasing data and identity transparency for crawlers and models, and empowering creators to take legal action against developers who fail to comply. The creative industry, like all sectors, will have to adapt to accommodate AI, but the industry is capable of and already making progress with that. Creatives have largely accepted that AI-generated content will have its place in the market, and they are already using AI to enhance their work by driving efficiencies and extending their reach to new markets. However, a solid regulatory framework, which could be created with the addition of these amendments, is essential to protect their rights and ensure that they can take part in value creation and retain control over their work. My colleagues and I believe that existing copyright law should be enforced to protect the UK’s creative industries, which are a world-leading British export.
Tourism Industry
Sarah Olney Excerpts(6 months, 1 week ago)
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Sarah Olney (Richmond Park) (LD)
It is a pleasure to serve under your chairmanship, Sir Edward. I thank the hon. Member for Mid Bedfordshire (Blake Stephenson) for securing this debate. I am sure my husband, who is a Bedfordshire native, would have very much enjoyed his hymn to Bedfordshire. It has been a real pleasure to be a part of this debate, and to listen to Members from across the United Kingdom speak with such pride about their communities and extol the virtues of a visit.
Estimates show that visits to the UK are set to rise to above pre-pandemic levels, but in recent years the growth and prosperity that the tourism sector provides to our economy have been hampered. The pandemic is, of course, the primary explanation of the huge reduction in the number of people visiting the UK, but another key factor is Britain’s exit from the European Union. In response to a survey asking individuals why they would not consider travelling to the UK, around 60% of respondents identified political uncertainty as a deterrent, and around 45% cited potential increases in post-Brexit travel and accommodation costs.
The UK tourism sector directly employs approximately 3.1 million people, and businesses reliant on tourism-generating revenue have reduced hiring rates since 2016. That has impacted people’s livelihoods: individuals reliant on the tourism industry have experienced heightened job insecurity due to the uncertainty caused by the pandemic and Brexit. During a cost of living crisis, it is so important that people feel secure in their fields of work.
My constituency is home to a number of popular tourist destinations, including Richmond Park, after which my constituency is named. The decline of tourism to the UK has been felt by businesses around my constituency, because the park itself hosts 5.5 million visitors every year. Many of the hospitality businesses in the area rely on the footfall that the park attracts, and I have already received multiple emails from constituents saying how concerned they are about rumoured cuts to the park’s police department, which will detract from the tranquillity and safety of Richmond Park.
The park police conduct excellent work in the Royal Parks across London, ensuring that criminal activity and antisocial behaviour are kept to a minimum. The service they provide ensures that Richmond Park remains one of London’s top tourist destinations. The tourism industry is tied to so many different sections of our society, and that is just one example of how insufficient funding for an important department can have a knock-on effect.
I am also the proud representative of Kew Gardens which, according to the Association of Leading Visitor Attractions, is the 13th most-visited attraction in the UK, with just under 2 million visitors in 2023. If anyone is thinking of something to do this weekend, I recommend a visit to Kew Gardens, particularly to see the blossom and magnolia in their peak season—I swear that it is the best place in the UK to be this weekend. At the moment, they are accompanied by a musical soundscape from students of the Royal College of Music, so it is well worth a visit.
If people are looking for something to eat or drink afterwards, I can recommend a visit to the Original Maids of Honour tea room, just over the road. It is named after the dainty little tarts that have been baked since Tudor times. Henry VIII was allegedly so taken with the recipe that he kept it under lock and key at Richmond Palace, which can unfortunately no longer be visited because it burned down in the 15th century.
Kew Gardens has been suffering from the continued suspension of rail services. The District line and the Mildmay line have seen repeated cancellations and suspensions of services, particularly over the past year. I have heard directly from the director at Kew Gardens how those have affected visitor numbers, not just to Kew Gardens itself but to all the nearby businesses and services. That goes to show how cuts to transport or railway maintenance impact our tourism sector.
Tourism plays a huge role in ensuring the viability of our businesses, and we want the Government to reflect that role by upgrading its status with a dedicated Minister of State for tourism and hospitality. They could provide a holistic view across Government Departments and help to resolve not just some of the issues in my constituency, but issues raised by hon. Members throughout the debate. Promoting our tourism sector should be a focus for the Government. The appointment of a dedicated Minister would provide much-needed oversight and forward thinking to drive tourism and investment in the UK.
In addition, the UK’s rich and vibrant cultural heritage is a national treasure, and our creative and tourism industries contribute billions of pounds to our economy and employ millions of people. Our globally renowned creative industries attract visitors to the UK, and we are proud to be home to some of the most visited galleries, theatres and sports venues in Europe. Many of the creative industries intersect with tourism, and the Liberal Democrats support measures that allow creative industries to flourish, which means making tourism more accessible.
We want to ensure that people everywhere can enjoy the benefits of sport, music and the arts. One such measure would be to rejoin Creative Europe. The creative industry is one of the many sectors that was severely damaged by the catastrophic Brexit deals patched together by the last Conservative Government. The increased red tape, unnecessary bureaucracy and increased costs associated with travel, trade and hiring have left many creative industries struggling. Will the Minister commit to bolstering our tourism and supporting our cherished creative industries by committing to rejoin Creative Europe?
Tourism does not just enrich us economically. The benefits of expanding our horizons would allow for opportunities more broadly. As the Minister will be aware, the previous Government accepted an agreement that allowed EU member state nationals visiting the UK to benefit from a six-month visa waiver, while UK nationals are limited to a 90-day visa waiver when they visit the Schengen zone. That makes tourism challenging for more people—a further example of the appalling deal that the previous Conversative Government secured. By addressing this inequality and bringing forward a more reciprocal agreement, we could encourage more people to travel and explore, broadening opportunities for all British people—that should be central to any Government policy.
I take this opportunity to renew Liberal Democrat calls for the Government to consider entering into a UK-EU youth mobility scheme. We have been talking about this a lot in Parliament—
Sarah Olney
We have! We have had countless debates and I have mentioned it on many occasions at Cabinet Office questions—my more usual home. Indeed, a Petitions Committee debate is scheduled in this very Chamber for Monday afternoon, when we will doubtless raise the issue again. I urge the Government to consider such a scheme and the opportunities it would create for young people. Some of the recruitment pressures the tourism industry faces could be alleviated by considering the merits of a UK-EU youth mobility visa.
To summarise, the tourism industry in the UK has been blighted by Britain’s exit from the European Union and the catastrophic deal the previous Government reached with our neighbours. This has impacted the viability of our businesses and the job security of millions of people. I encourage the Government to take the steps outlined in my speech to help to bolster our tourism sector.
Copyright and Artificial Intelligence
Sarah Olney Excerpts(9 months, 1 week ago)
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Chris Bryant
Again, this is another false dichotomy being presented to us between opt in and opt out. That is why we have landed on the term “rights reservation”. A lot of the material out there is not copyright. That is either because it is long out of copyright—the law for most works lasts for 70 years after the death of the author or the first publication of the work—or because some artists have categorically decided not to retain their copyright. Tom Lehrer, the author of many satirical songs from the 1980s and 1990s, such as “The Vatican Rag” and “The Masochism Tango”, has deliberately surrendered his copyright.
This is a world where we want to make sure that the vast majority of rights holders, whether they be the record label, the individual photographer, the artist or whatever, have the right of control over their copyright—over whether it is used and how it is used—and if it is going to be used, they should be remunerated. I urge my hon. Friend, who I know has a great interest in this subject in his role on the Select Committee, to make sure that that false dichotomy between opt in and opt out is abandoned. We talk about rights reservation, because then, opt out might look remarkably like opt in.
Sarah Olney (Richmond Park) (LD)
In July of this year, it was revealed that 173,000 YouTube videos, including material created by globally recognised British musicians, news channels and artists, had been scraped into a dataset used to train AI models. Content from over 40,000 creatives has been found in this dataset, yet I do not believe that consent was sought from a single impacted creator to use their copyrighted works. It is clear that AI offers a fantastic opportunity for our economy, but it must supplement and grow industries rather than replace them wholesale. Creatives deserve to be compensated for their work. AI companies will happily pay the electricity bill for their data centres and wages for their staff, so why should they not also pay to access the creative content on which their models depend?
Chris Bryant
I completely agree with the hon. Lady. Of course those companies should pay for the content that they are using. I think she is referring to LAION-5B, which is the dataset that was produced in Germany. Interestingly, a court in Hamburg has decided that this is already covered by the exemption for data and text mining for non-commercial purposes for research. Subsequently, though, this has been used not just for research, but for other purposes, which is precisely the kind of area where there is a legal dispute. That is why we are trying to provide legal certainty in the UK as to what can and cannot be used, when it can be used, and how we can make sure that people’s creative rights are protected.
Digital Markets, Competition and Consumers Bill
Sarah Olney ExcerptsMonday 20th November 2023
(1 year, 10 months ago)
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Sarah Olney (Richmond Park) (LD)
The Liberal Democrats welcome many aspects of this Bill. We are pleased that the Government are finally acting on the Competition and Markets Authority’s recommendations in bringing forward measures to prevent the tech giants from putting our digital sector in a stranglehold. We want to see a thriving British tech sector in which start-ups can innovate, create good jobs and launch innovative products that will benefit consumers. A strong competition framework that pushes back on the tech giants’ dominance is essential for that.
For too long a small number of big tech firms have been allowed to dominate the market, while smaller, dynamic start-up companies are too often driven out of the market or swallowed up by the tech giants. New rules designed by the CMA will ensure that these large companies will have to refrain from some of their unfair practices, and they give the regulator a power to ensure that the market is open to smaller challenger companies. The Liberal Democrats are pleased to see changes to the competition framework, which will allow the CMA to investigate the takeover of small but promising start-ups that do not meet the usual merger control thresholds. This change is particularly important for sectors such as artificial intelligence and virtual reality while they are in their infancy. The benefits of these changes will filter down to the end users, the consumers, in the form of more choice over products and services, better prices and more innovative start-ups coming to the fore.
While we are glad that most of the CMA’s recommendations are in this Bill, we have concerns about certain aspects, such as the forward-looking designation of SMS firms and the definition of countervailing benefits that SMS firms are able to claim. The countervailing benefits exemption allows the CMA to close an investigation into a conduct breach if an SMS firm can demonstrate that its anti-competitive practices produce benefits for users that outweigh the harms. There is some concern that big tech may seek to exploit this exemption to evade compliance with conduct requirements and continue with unfair, anti-competitive practices. It could also create scope for tech firms to inundate the CMA with an excessive number of claims of countervailing benefits, diverting the CMA’s limited resources away from essential tasks. Amendment 209, tabled in my name, seeks to strengthen the Bill and to curtail the power of large tech firms to evade compliance by tightening the definition in the Bill of what kind of benefits are valid.
The Liberal Democrats also have concerns about several of the Government amendments, particularly those relating to the appeals standard, as they risk watering down some of the CMA’s most powerful tools. There is now a real danger that powerful incumbents will use their vast resources to bog down and delay the process, leaving smaller competitors at a disadvantage. These amendments show that the Government are taking the side of these established firms at the expense of smaller, growing firms, and at the expense of economic growth and innovation as a whole.
The Liberal Democrats are keen to ensure that big tech is prevented from putting the British tech sector in a stranglehold. We hope that the Government will be robust on the defensive measures in the Bill. It is important that they reject any attempt to water down or weaken this Bill with loopholes, and that they ensure there is no ambiguity that could be exploited. Although competition is crucial for Britain’s tech sector, we hope the Government also move to tackle some of the fundamental issues holding it back, such as the skills gap, the shortage of skilled workers and weak investment.
Saqib Bhatti
With the leave of the House, I would like to address some of the points that have been made today.
I am grateful to Members across the House for their contributions to this debate and, of course, throughout the development of this legislation. I am similarly grateful for the cross-party support commanded by the digital markets measures. Members will find that I agree with points raised on both sides of the House, and I am confident that this Bill addresses those points.
I thank the hon. Member for Pontypridd (Alex Davies-Jones) for kindly welcoming me to the Treasury Bench, for her amendments and for her commitment to getting this legislation right. She asked about the countervailing benefits exemption, and I reassure her that the wording change maintains the same high threshold. SMS firms must still prove that there is no other reasonable, practical way to achieve the same benefits for consumers with less anti-competitive effect. This makes sure consumers get the best outcomes, whether through the benefits provided or through more competitive markets.
The hon. Lady also asked about appeals, and it is important that decisions made by the CMA can be properly and appropriately reviewed to ensure that they are fair, rigorous and evidence-based. We have considered strong and differing views about appeals from a range of stakeholders, and judicial review principles are the appropriate standard for the majority of decisions under the regime, as we have maintained with the additional clarification on the DMU’s requirement to act proportionately. We have, however, aligned the appeal of penalty decisions with appeals under the Enterprise Act 2002, so that parties can challenge these decisions on their merits to ensure that the value of a penalty is suitable. Penalty decisions have less direct impact on third parties, and the amendment will provide additional reassurance without affecting the regime’s effectiveness.
The significant changes we are making will provide more clarity and assurance to firms on the need for the DMU to act proportionately. They also bring the regime in line with the relevant CMA precedent. Parties will have greater scope to challenge whether the interventions imposed on them are proportionate or could have been achieved in a less burdensome way. When financial penalties are imposed, parties will have access to a full merits review to provide reassurance that the value of the fine is appropriate.
The hon. Lady also asked about the implementation of guidance, and I can assure her that we are working at pace to ensure the regime is operational as soon as possible after Royal Assent. Guidance must be in place for the regime to go live, and the Government will be working with the CMA to ensure timely implementation. The Secretary of State will, of course, review all guidance for all future iterations.
The hon. Lady also talked about amendments 187 and 188, which seek to replace the countervailing benefits exemption with a power for the CMA to consider benefits to users before finding a breach of a conduct requirement. The exemption will ensure that there is a rigorous process to secure the best outcomes for consumers, and removing it would jeopardise clear regulatory expectations and predictable outcomes. In turn, this would make it more likely that consumers lose out on the innovations developed by SMS firms, such as privacy or security benefits. Government amendments 13 and 14 clarify the exemption while, crucially, maintaining the same high threshold and clear process.
The hon. Lady also mentioned amendments 194 and 196, and the Government agree that it is important that the DMU’s regulatory decisions are transparent and that the right information is available to the public. We understand that these amendments would require the DMU to send decision notices to third parties that it assesses to be most affected by those decisions. However, under the current drafting, the DMU is already required to publish the summaries of key decisions. Requiring the DMU to identify appropriate third parties and send them notices would introduce a significant burden on the DMU, to limited benefit, and I argue that it would undermine the flexibility and quick pace that we expect from the DMU. We believe the current drafting strikes the right balance, providing transparency and public accountability on DMU decisions.