Exiting the European Union (Consumer Protection)
(5 years, 1 month ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
16:26 - The House having divided: - Ayes: 277 / Noes: 41 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kelly Tolhurst)
I beg to move,
That the draft Geo-Blocking Regulation (Revocation) (EU Exit) Regulations 2019, which were laid before this House on 14 March, be approved.
The statutory instrument will revoke both EU regulation 2018/302 and the Geo-Blocking (Enforcement) Regulations 2018 in the event of the UK exiting the EU without a withdrawal agreement. This recognises that in the event of a no-deal exit from the EU, there will be no way to enforce effectively the geo-blocking regulation on behalf of UK consumers.
Geo-blocking is the term used to describe traders discriminating against customers on the basis of nationality or of the location of the customer. The EU’s geo-blocking regulation prohibits certain forms of geo-blocking, including through mandating access to all versions of a website in the EU, preventing discrimination between EU customers when distance shopping online or otherwise, and preventing discrimination in the payment terms accepted. This regulation came into force on 3 December 2018. The geo-blocking regulation does not apply to copyrighted online content, such as movies, e-books and video games.
The Geo-Blocking (Enforcement) Regulations 2018 enabled the domestic enforcement of the geo-blocking regulation. The regulations gave powers to certain regulators and acknowledged the right of customers to bring claims directly against infringing traders. These regulations came into force on the same day as the geo-blocking regulation. In the event of a no-deal exit from the EU, the geo-blocking regulation will be transposed directly into UK law, under the European Union (Withdrawal) Act 2018, as retained EU law. The Geo-Blocking (Enforcement) Regulations 2018 will also continue to have effect after a no-deal exit, unless revoked.
It is necessary to revoke both these pieces of legislation as it will not be possible to enforce effectively the geo-blocking regulation on behalf of UK customers after a no-deal exit from the EU. This is because EU regulators will no longer be obliged to bring action against businesses through EU mechanisms for cross-border co-operation; UK civil and commercial judgments would no longer be automatically enforced in EU member states and courts; and the UK Government cannot unilaterally enforce the geo-blocking regulation across the EU.
Given that geo-blocking cannot be enforced unilaterally by the UK across the EU in the event of a no deal, it is not possible to replicate the geo-blocking regulation’s benefits for UK consumers in domestic law. The provisions of the geo-blocking regulation do not apply to transactions occurring solely within one country. Therefore, there is no benefit to UK consumers in retaining a version of the geo-blocking regulation that applies only to the UK.
Mr Jim Cunningham (Coventry South) (Lab)
I have a genuine question: will the Minister tell us how we can protect the British consumer in that particular situation?
Kelly Tolhurst
We are debating a no-deal SI, and leaving the European Union means that the law is disapplied, so by leaving the European Union we are moving out of those protections.
Furthermore, if we do not revoke the geo-blocking regulation, it would result in a competitive disadvantage for UK traders. They would have to continue giving EU consumers preferential treatment, while EU traders would not need to do the same for UK customers. To avoid this, which is in the EU’s favour, we propose revoking the geo-blocking regulation in the UK.
The effect of this statutory instrument is simple. The retained EU law version of the geo-blocking regulation and the Geo-Blocking (Enforcement) Regulations 2018 will be revoked in the event of a no-deal exit from the EU. The substantive rules contained in the geo-blocking regulation will no longer have effect in the UK after that regulation is revoked. It is important to note, however, that this legislation will continue to operate in the EU. As such, UK businesses operating in EU markets will still have to comply with the EU regulation when dealing with EU consumers.
The changes made to schedule 13 to the Enterprise Act 2002 by the Geo-Blocking (Enforcement) Regulations 2018 were undone by a separate statutory instrument, the Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2019. Those regulations were debated and approved by the House on 30 January and were made on 6 February 2019.
The Geo-Blocking (Enforcement) Regulations 2018 enable the domestic enforcement of the geo-blocking regulation. They also provide for UK customers to bring claims directly against traders that breach the geo-blocking regulation. As the intention is to revoke the geo-blocking regulation in the UK and UK customers will not be able to rely on it thereafter, such provisions would serve no purpose.
A failure to revoke the geo-blocking regulation and the Geo-Blocking (Enforcement) Regulations 2018 would not preserve UK customers’ consumer rights. Those rights will in effect be lost if the UK leaves the EU without a deal. The only effect would be to continue to impose obligations on UK traders while providing no benefit to UK customers.
The subject matter of this statutory instrument is partially devolved to Scotland, Wales and Northern Ireland. The statutory instrument has been consented to by the Welsh and Scottish Administrations, and the Northern Ireland civil service was notified in line with the protocol agreement in place during the absence of the Northern Ireland Executive. I would like to take this opportunity warmly to thank the devolved Administrations and the Northern Ireland civil service for their ongoing co-operation.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I rise as a former Chairman of the Subordinate Legislation Committee in the Scottish Parliament. The Minister has mentioned the co-operation at civil service level. May I have the safety of an assurance that there is similar co-operation at political level between those who handle statutory instruments in Westminster and those who do a similar thing in Holyrood?
Kelly Tolhurst
I would like to outline the fact that this was given political consent: the Minister in Scotland wrote to us to give his consent for the statutory instrument.
In conclusion, the statutory instrument simply recognises the practical effect of a no-deal exit from the EU. The Government are seeking to ensure that UK traders are not unfairly subject to rules that do not benefit UK customers.
Bill Esterson (Sefton Central) (Lab)
I thank the Minister for her opening remarks. She set out exactly what the existing regulations do and, to be entirely honest, what she is proposing in the case of no deal makes perfect sense. The regulations before us revoke the existing regulations that prevent undue discrimination across the European Union by the blocking of consumers in one country from accessing websites in another member state or by redirection to the member state of the consumer.
A number of questions arise from the Minister’s remarks and from at least one of the interventions she took. She spoke about the fact that these regulations are relevant only in the event of no deal. When she responds to the debate, will the Minister confirm that, if a deal is agreed, the Government have no intention of revoking these or similar regulations? She is engaged in a conversation at the moment, so I hope she heard that question.
My hon. Friend the Member for Coventry South (Mr Cunningham), who is no longer in his place, asked the Minister a very good question about how UK consumers will be protected in the event of no deal. His question highlighted just how important it is that we do everything in our power, particularly in these next 10 days, to avoid the disaster of crashing out with no deal. That is the best way in which to avoid having to revoke the regulation.
Kevin Foster (Torbay) (Con)
The shadow Minister has said that we need to do everything in our power to avoid the UK crashing out. Does he agree that voting for the withdrawal agreement would be the best way of doing that?
Bill Esterson
I think the hon. Gentleman is wandering a little from the issue under discussion.
Bill Esterson
I think he might be. Suffice it to say that that deal has been rejected three times, on the first occasion by the largest margin by which a Government have ever been defeated in the known history of Parliament. Quite apart from the undesirability of what is in that deal, I think we should probably move on. I have a sixth sense that it will come back for fuller debate on another occasion.
The Minister made a very strong case for cross-border co-operation, for maintaining the regulation and for a mutual recognition agreement so that we can maintain protections for consumers and businesses. I hope she will confirm that when she responds to the debate.
I am not able to confirm with absolute certainty that the revocation will deliver what the Government intend it to do. We have to accept the Minister’s word that it will do so. I have no reason not to accept it, but I do not have the technical expertise. The papers in front of us do not allow me to say any more than that, so I have to put on the record my reservations and those of my party. As ever with the statutory instruments we are being asked to approve, there is no impact assessment. The lack of published consultation responses also makes it that much harder for us to analyse what we are being asked to approve.
Businesses and consumers need confidence and certainty. I note from the explanatory memorandum that a number of business organisations were consulted. Perhaps the Minister could provide more detail on what they said. She has done so on previous occasions, so I look forward to hearing what was said in those consultation discussions.
The regulations that we are being asked to revoke are designed to prevent discrimination based on location. They exist to stimulate the internal market of the European Union and to support the free movement of goods and of free trade through the digital sector. They address the possible restriction on competition between businesses across the European Union market and ensure that consumers have access to the best offers, prices and conditions of sale. They do not limit trade for consumers to goods and services in their own country—that is a very important distinction—and that is precisely what has happened since the regulations were introduced at the start of last year. They also prevent website redirection away from businesses that are not in the consumer’s member state.
If we leave with no deal, the draft regulations will revoke the geo-blocking regulation completely. No deal would end the protections for UK businesses and consumers, as they would not be protected in the European Union. The Minister set that point out very well in her opening remarks. As she said, retaining the regulation in the UK would mean that we could be blocked but would not be able to block against discriminatory practices from within the European Union. Those points are well made in paragraphs 2.4 and 2.5 of the explanatory memorandum. Paragraph 2.4 makes the point that
“if we did not revoke the Geo-Blocking Regulation, UK traders would continue to have obligations to EU customers under the Regulation while UK customers are unlikely to receive any of its benefits.”
Paragraph 2.5 states:
“To avoid this asymmetry of enforcement obligations in the EU’s favour, we are revoking the…Regulation in the UK.”
I accept those points, which is why we will not oppose the revocation.
The revocation of the regulations would at least minimise discrimination, but that is a bare minimum and a low base from which to operate. It would be far better not to have to do this and to have mutual recognition after we leave the European Union and continue with an arrangement that protects our businesses and consumers against discrimination as far as possible.
The draft regulations are an example of what no deal means. After yesterday’s latest failure by Members from across the House—but from some parties in particular—to be prepared to find a compromise to avoid no deal, we are one day closer to the dire prospect of that outcome. Of course, the Government should have taken no deal off the table, so that MPs did not have to do so, to avoid what in all honesty are desperate, last-minute no-deal preparations. That is the only way to describe what we are being asked to do today, 10 days before a likely no-deal departure.
The CBI was one of the business organisations referred to as having been consulted. Although I do not have its response to the consultation—I hope to hear it shortly from the Minister—I do have what it wrote to the Prime Minister, in a joint letter with the TUC, about the consequences of no deal. Is it not refreshing to see the leaders of the employers’ largest representative organisation and the leaders of the workers’ representative organisation working so closely together, signing a joint letter to the Prime Minister? That is what leadership in this country looks like and it is a great shame that we have not seen more of it from politicians.
The joint letter makes it clear that no deal would be disastrous for the country—for businesses and for workers—and that also applies to the draft regulations, should they ever be needed. On a no-deal outcome, the CBI-TUC letter states:
“Firms and communities across the UK are not ready for this outcome. The shock to our economy would be felt by generations to come…avoiding no deal is paramount.”
They describe no deal as causing “reckless damage”—[Interruption.] It is a shame that those Members commenting from sedentary positions on the Government Benches did not support some of the alternative options available to us yesterday. The TUC and CBI call for a plan B, which has been rejected by those Members who have been heckling me for the past few seconds.
Sir Oliver Heald (North East Hertfordshire) (Con)
I do not know whether the hon. Gentleman would like to join me in welcoming the fact that the House of Lords has just passed the Animal Welfare (Services Animals) Bill, which will give protection to police dogs and police animals.
Bill Esterson
I am delighted to welcome the passing of that Bill. I was not quite sure what that intervention was going to be about. I agree that it is an extremely welcome and important piece of legislation that has made progress in the other place.
The TUC and the CBI are calling for a plan B. I hope that, as we make further progress in finding alternatives tomorrow, we do that and avoid a no deal. If that is the case, the Minister will not have to invoke these regulations.
The revocation of the geo-blocking regulation is not the largest single impact of no deal; it is a small example of the consequences, and I hope it is not needed. I hope that the Minister and all hon. Members agree with that point.
I have a couple of questions for the Minister in addition to what I asked her earlier. I understand that there are businesses in the UK that currently use hosting services from EU providers. Can she reassure them about how that access will continue if the geo-blocking regulation is revoked in the event of no deal? The impact assessment takes a very narrow view and does not comment on the number of individuals using services from the EU in this way under the regulation. I hope that the Minister can give some sense of what the impact would be, what the likely outcome is, and how the Government propose to protect businesses in the event of no deal in this respect.
Consumers currently enjoy the ability to buy services and goods from across the EU. Will the Minister indicate whether the Government have assessed what the impact on them will be in relation to access to services and registration? Will businesses in this country be able to buy services from within the EU if the regulation is revoked?
I and other hon. Members have asked questions about the damage that no deal will do on a small scale through this one set of regulations. One way to express it is to say that these regulations show that the Government have failed to prepare; another is to say that they have not prepared because it simply is not possible to prepare for no deal. These regulations, like so much else that is going on at the moment, given the looming prospect of no deal, demonstrate that. We can overcome the danger of a disaster only by avoiding no deal. I hope that hon. Members from all parties will take note of that and will try to find alternatives. The Government’s deal will not go through, so an alternative needs to be found.
Kevin Foster (Torbay) (Con)
It is a great pleasure to follow the hon. Member for Sefton Central (Bill Esterson). I want to reflect his comments about the necessity of this statutory instrument, based on whether we have a no-deal outcome. This is effectively a no-deal prep piece of legislation. He is right that we want to avoid no deal. That is the preferred outcome of virtually no one in this House. Some hon. Members might be prepared to accept it if necessary. We cannot go into a negotiation saying, “I’m going to stay here until you finally force me to accept something.” That will never be a successful strategy.
There is an easy way for no deal to come off the table: to agree a withdrawal agreement. One of the ironies of last night’s debate is that there are only two outcomes that we could have without the withdrawal agreement, and the European Union has made its views clear. The first is no deal, and the second is no Brexit—the revocation of article 50. To be fair to Scottish National party Members, with whom I often exchange opinions across the Chamber, their view is that they will not vote for the withdrawal agreement because they would prefer to go for one of the options that does not require a withdrawal agreement—in other words, the revocation of article 50. It is therefore slightly strange to get a lecture from people saying that the deal will never go through but who last night voted predominantly for two options that are based on the withdrawal agreement going through as the divorce from the EU. They are arguing about what the future relationship should be, but the withdrawal agreement is the gateway to the future relationship.
Julian Knight (Solihull) (Con)
My hon. Friend is absolutely correct. There is bemusement in Brussels about why we are dealing with something that is downstream—the political declaration—rather than the withdrawal agreement itself. As he said, it is either no Brexit or the withdrawal agreement. Take your pick.
Kevin Foster
Absolutely. Members who do not want no deal and keep coming to the Chamber and telling us, “No to no deal”—a great soundbite, but not a solution—need the withdrawal agreement to go through, unless they are prepared to stand up and say, “I would revoke article 50.” That is not the position that I will take, because I do not think it is right—the referendum settled that matter—and I am sure it is not my hon. Friend’s position. We therefore need to look at how we get the withdrawal agreement through.
I very much welcome the constructive approach to looking for compromise taken by the hon. Members for Stoke-on-Trent Central (Gareth Snell) and for Wigan (Lisa Nandy). Sadly, their amendment was not selected, but hopefully it will be incorporated into the Government Bill. I note the Prime Minister’s comments on that. That would ensure parliamentary scrutiny, and it would ensure that Parliament is not unhappy with what comes out in the future relationship. [Interruption.] I see that you want me to relate my comments to this statutory instrument, Madam Deputy Speaker. Putting the withdrawal agreement in place would mean that we would not have to enact this type of statutory instrument. This is a no-deal—in other words, a no-divorce-deal—statutory instrument, not just a no-future-relationship statutory instrument.
Julian Knight
My hon. Friend is being very generous in giving way. He is always conscious of the clock.
Does my hon. Friend agree that paragraph 2.4 of the explanatory memorandum emphasises how disadvantaged we could be by a no-deal Brexit in terms of consumer rights? It says:
“if we did not revoke the Geo-Blocking Regulation, UK traders would continue to have obligations to EU customers under the Regulation while UK customers are unlikely to receive any of its benefits.”
That seems like an absolutely ridiculous position to be in.
Kevin Foster
I have always been clear that 63% of my constituents voted for us to leave in the referendum, and ultimately we have to have no deal as a fall-back if all else fails. If Opposition Members are desperate to avoid that situation—if that is their absolute priority—they had an opportunity to do that on Friday, and I hope they will get another one in the near future. That is not ideal; having a transition period during which businesses can adapt is the right way forward.
If we do not pass something like this statutory instrument, we will end up in the rather unenviable position in which UK businesses will be required to follow a piece of legislation, yet businesses in the other 27 member states of the EU are not. In effect, they could have rules blocking access to their websites and portals based on the fact that we would no longer be part of the EU. Meanwhile, our law would say that—
Kevin Foster
If my hon. Friend just gives me a moment, I will finish responding to his previous intervention before I take another one. We would still have to keep that access, and that is why we need to look at revocation of these measures. I will briefly take my hon. Friend’s intervention, but I am conscious that I need to move on to the main body of my argument in a minute.
Julian Knight
I thank my hon. Friend again for giving way. Does this not also emphasise the fact that there are also downstream consequences? I am not talking just about the one that I emphasised from paragraph 2.4 of the explanatory memorandum. Paragraph 2.3 also states:
“UK civil and commercial judgments would no longer be automatically enforced in EU member”
states. Does my hon. Friend agree that would have downstream consequences for the premier position of UK legal services as well?
Kevin Foster
I am conscious that I could probably expand this debate widely into legal services and the impact potentially from the recognition of judgments between different jurisdictions. A lot of people forget that the EU is not a sovereign state—I do not want it to be and nor does my hon. Friend. It is a creature of treaty, and its actions and rules are therefore effective only through the structures of member states—that is, recognition of court judgments that enforce EU law between different jurisdictions. He is right that if we go out under a no-deal scenario, from Brexit day plus one, that level of co-operation and recognition is unlikely. That is why this SI is needed. Bizarrely, the enforcement of these EU regulations could be pursued in courts across the EU, or even in our own courts, and meanwhile, a judgment looking to enforce to the benefit of a British company would not be recognised at all. It would basically be a bit of paper someone would get.
We keep coming back to the fact that if people do not want this type of outcome, they have two choices. There is the Scottish National party’s choice, which is to revoke article 50—[Interruption.] We can hear the cheers coming from SNP Members. Or we can put through the withdrawal agreement. That is where we are. We can talk about whether we should be in a particular type of customs arrangement, what we would like on security and defence, and whatever. At the end of the day, the withdrawal agreement is the gateway to every relationship with the EU, other than revocation or no deal.
David Linden
I am grateful to the hon. Gentleman for giving way. Are we not facing a Hobson’s choice? The hon. Gentleman says that we need to support the deal that is before us, but one of the things that I am struck by sitting in this debate is that we were meant to leave the European Union on Friday, yet we are dealing with a statutory instrument on the subsequent Tuesday. Is not the issue that the Government have forced us into this position because the Prime Minister, through her intransigence, set her red lines—like these red lines on the floor that have kept us on this side in this House—and said, “We do not want to listen”? That is why three or four days after we were meant to leave the EU, we now find ourselves being rammed into this position by Her Majesty’s Government.
Kevin Foster
Let us be candid: we are here because there are those in this House who do not want Brexit to go ahead, who voted against the withdrawal agreement—to be fair, that is a principled position from the SNP. This is combined with those who see it as a chance to score some political points, and there are some Government Members who think—perhaps wrongly—that there might be a different type of Brexit if they resist the withdrawal agreement. I am afraid that they might find themselves with an outcome that is more pleasing to the hon. Gentleman than it is to them, if their position continues.
Let us be clear: the Scottish National party and the Government in Scotland suggested after the referendum that basically, as long as we only left the fisheries policy, they would be happy with Brexit. In terms of staying in the single market and the customs union, it would be debatable whether we would even come out of the common fisheries policy—
Kevin Foster
I will give way again in a moment. I am sure that the hon. Gentleman wants to offer a point of clarification.
That outcome would not really be about delivering any real benefits from the referendum. To be fair, I note that the SNP’s position is firmly that it wants to stay in the EU. That is a respectable point. I accept that we do not need the withdrawal agreement for that, but the nonsense comes when people say, “I want one of the outcomes where I have to have the withdrawal agreement, but I am now going to vote against the withdrawal agreement.”
David Linden
I am very grateful to the hon. Gentleman for giving way; he is one of my genuine friends in this place. He is right that in 2016, the Scottish Government said, “We campaigned for remain. We did not want to leave the European Union,” but we realised very early on that because of the democratic deficit that exists in this House, we had to compromise. That is why “Scotland’s Place in Europe” looked at membership of the single market and the customs union. We compromised in 2016 when it was very, very unpopular to do so. There has been a process of evolution: we have gone from that compromise to what I accept is a very hard-nosed reality, where the only thing that we can do to protect our economy is to revoke article 50. Does he not agree, however, that it might just have helped things in 2016 if that spirit of compromise had evolved a bit sooner in this place and that we might not have found ourselves, three or four days after the scheduled exit, debating a statutory instrument that could have profound consequences, depending on what happens over the next few days?
Kevin Foster
I thank the hon. Gentleman for his comments. We can all look back over the past three years and suggest that there were things that we might have done differently or changed.
“If? What? Could?” is great fun to play—hindsight has 20/20 vision—but the other 27 member states have their own red lines. The idea that if I or the hon. Gentleman had walked in as the UK Prime Minister, everyone would have said, “Ah, it’s you! What can we do for you? Let’s offer you a great deal” is for the birds. The other member states would still have had their own red lines.
As I said, the only things for which a negotiated deal is not necessary are a complete no deal and revoking and remaining—the latter for obvious reasons—but if we want a negotiated deal, we need the prism of a withdrawal agreement. There is a strong argument for saying that even if we did go down the no-deal route, we would find at some stage that if we wanted a free trade agreement, the first three items on the EU’s agenda would be: clarifying citizens’ rights, which is not particularly controversial across the House; a financial settlement—that might be where a debate comes in; and arrangements to keep the land border in Northern Ireland open. Whether under a withdrawal agreement now or a free trade agreement in the future, those three issues will almost certainly be the basis of any agreement, no matter which of the panoply of Brexit ideas we have been treated to over the last year or two the House, and ultimately the country, decides upon. Once the divorce process is complete, the second phase of negotiations and decision making in the House remain.
Great though it would be to settle Brexit this afternoon, it is time that I return to the substance of the SI: the geo-blocking regulation. [Interruption.] I hear shouts of joy from the shadow Front Bench. Geo-blocking sounds like something to do with a map—a rambler might find their geo-signal being blocked—but it is actually one part of making sure we have a single market online as we do for physical goods. Those of us who grew up in the late 1980s—I am not sure if my hon. Friend the Member for Solihull (Julian Knight) is old enough, and I am certain the Minister is not—will remember the debate about how much a particular CD or tape cost in the UK, the United States, Canada, Germany and other countries. Nine times out of 10 a CD produced in the same factory, with the same copyright and by the same company would be more expensive in certain countries—that excludes differing VAT rates, of course, because that could change the price in the shop; I am talking about the base cost excluding taxes.
The regulation tried to prevent different prices in different markets arising from differing charging and supply. Those of us who studied European law will know that the Commission tried to eliminate this grey market idea of trying to restrict or increase prices in particular markets across the EU single market—a single market that we will remain a part of during the implementation period, if the withdrawal agreement goes through. The regulation was about making sure the consumers had the full opportunities. Such regulations make a difference. It is eminently sensible that we revoke the regulation—I agree with the Minister’s reasoning, and, as I have said, it would be bizarre if British businesses were under an obligation that EU businesses were not but which EU businesses could enforce against us under our law—but having in place some other appropriate measure would make a difference.
I hope therefore that we could consider that in future trade agreements—and not just with the EU. I have just given the example of the US. With increasing online commerce and trading, we should look to open up to other jurisdictions that use the English language and have similar commercial standards, consumer protections and quality standards. Under future trade agreements, we should look to ensure that businesses large and small that are buying stuff in across our borders can benefit from free trade arrangements.
Kevin Foster
I will give way in a moment.
We want to be able to benefit from a single market online, given that it does not matter if someone buys from Tewkesbury or Texas—or North Dorset, for that matter—if they are sitting at their computer, and as long as the delivery charges are there. It is about that principle of giving consumers access to be best prices possible.
Simon Hoare
My hon. Friend mentioned the English language. Does he share my concern that we often forget that it is a key part of our armoury? It is the international language. It is the language of the internet and the language of the skies, and it is now the lingua franca of the world. We should never forget that it is one of our great tools of soft power.
Kevin Foster
I hope that my hon. Friend will forgive me for turning my back on him while responding to his intervention. I need to address the House, rather than face him directly.
The English language is indeed one of our great tools. When we look at any regulations relating to online businesses, we should bear in mind that the base code of computers is effectively English, because of the history of computer developments between us and the United States. The first computer, as such, was of course developed here, following the amazing theoretical work done by Alan Turing, who, sadly, was treated abysmally by this nation after the second world war in connection with matters that were never a crime. He came up with the revolutionary 01, and set the philosophical basis that would result in the very trading systems that these regulations seek to address.
This is one of our key goals. It is important that we have an effective and competent system of law relating to online transactions, because if we do not we will lose one of our biggest opportunities. My hon. Friend touched on that. Many people go online and happily access information, services and opportunities. They are able to compare prices in a way that would not have been possible before the internet era, because English is pretty much common currency on many internet platforms—although, given that the regulations relate to online shopping opportunities, it is worth noting that people can now interact with the vast majority of online retailers in the language of their choice. There are also the well-known providers’ translation services that we can now use. I used to have a bit of fun when a former Wales Minister texted to ask if I was here: I would reply in Welsh, courtesy of Google Translate.
I will move on, because I know that other Members wish to speak, and that the debate is time-limited. Some other issues on which the Minister may wish to reflect when she sums up relate to Ireland. We have had a great many discussions about the backstop and how we can keep the Northern Ireland land border open, but in these unique circumstances, someone purchasing online in, for example, County Fermanagh can be only a couple of miles away from the online business—or the business behind the online entity—which is based in, for example, County Donegal. There would of course be a different boundary, particularly in the no-deal scenario for which this measure is intended, and I should like to know how we can ensure that some sort of interaction remains. I think it is safe to say that it would be rather controversial if we did not give clear access to Irish websites.
That, in fact, makes eminent sense. There are businesses, cultural links, and supply chains and delivery networks that work across the border. One road crosses the border 15 times in two miles. If something that I had ordered online was being delivered using that road, the farmhouse involved might be in the United Kingdom and the hay barn in the Irish Republic. We need regulations that could deal with the unique situation near the Irish land border.
The Minister rightly referred to the consent of the Scottish Parliament and the Welsh Assembly, but Northern Ireland is beset by the fact its Assembly is not up and running and doing what those elected by the people of Northern Ireland should be doing. Although it is right that we are moving to ensure that Northern Ireland’s statute book is in order for a no-deal Brexit, it would be interesting to know what thought has been given to this aspect, given that the Northern Ireland Assembly is not working and that, sadly, it is unlikely to be up and running in the next couple of months, when we may see a no-deal exit. What thought is being given at Westminster to ensuring that there is appropriate legislation to cover online shopping and, bluntly, to ensure that legislation requires fairness between websites and fairness in online shopping between the Irish Republic and Northern Ireland?
Julian Knight
It is really interesting to focus on Northern Ireland in this. Does my hon. Friend agree that it would be perverse if there were such barriers in the way, given that many of the major internet retailers are domiciled in the Republic of Ireland for tax reasons?
Kevin Foster
I thank my hon. Friend for his, as always, thoughtful intervention. I suspect many of us would not particularly want to rush to help them, shall we say, pay a lower rate of tax in the Irish Republic. During my time on the Public Accounts Committee, I had the joy of discovering that a “double Irish” was nothing to do with a whiskey order and a “Dutch sandwich” was not something I would eat with it—in terms of tax avoidance work.
For me, this is a question of how we can sensibly reflect in legislation the unique position on the island of Ireland. The current geo-blocking regulation provides protection, and there is reciprocity between the two jurisdictions, to ensure that each side’s shopping outlets and businesses may trade without discrimination. The purpose of the new regulations is to prevent the establishment of an operation that charges a different price—as in my CD example—or that blocks a customer living in a particular country from buying, or applies different terms and conditions to their transaction. It is worth noting, however, that there are some exemptions around items that are not permitted for sale. For example, in Germany and Austria there are strict denazification laws to prevent the sale of certain historical items. In addition, an item such as a toy train set from the era, if sold to the German or Austrian market, must not carry certain symbols from the disastrous Nazi regime that devastated those countries in the 1940s, along with most of western Europe. So there are some tweaks that rightly reflect the law in those nations, but in general the purpose of the regulations is to prevent unfairness.
I return to the point I was making earlier. For me, the regulations are about ensuring that the system in Ireland allows trade across the whole island of Ireland, where we would want to see that type of system in place, not just for sensible economic reasons but in view of the ongoing peace process—ensuring that the single market online across the whole of Ireland may continue. It would be bizarre if we agreed a workable set of alternative arrangements that released the backstop in years to come, but put a barrier around the sale of goods online.
In services, we may well look to move on—change our position to exploit our huge advantage, particularly in financial services, across the world, with trade deals. I am particularly excited at the prospect of a trade deal with the parties to the requests for a comprehensive agreement, the Trans-Pacific Partnership; there is very strong demand there. Given that we are revoking the current arrangement with the European Union on the basis of a potential no deal, I hope the Minister is considering how, if we do not have no deal, we could look at the type of regulation that might be of benefit and might allow insurance products and so on to be continued.
I am conscious that I have been speaking for a little while. I reassure hon. Members that I do not intend to break one of my records for length of contribution. I recognise that the Scottish National party spokesperson, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), wants to speak; I have no intention of talking him out.
There are a few reasons why we need to look at approving the regulations today. I am very much a fan of free trade. It brings prosperity. It brings down barriers, interlocking economies. Let us be candid—the reason that the European Coal and Steel Community was established was to interlink economies, and the geo-blocking regulations are part of doing online just what we did with coal and steel back in the 1950s. The idea then was that if the German steelworks were dependent on French coal, there would obviously be an issue if a conflict broke out. The theory was that creating a single market and having these types of regulations would ensure that that continued online and that consumers would benefit. They could buy from the best source in the cheapest and most efficient way, or perhaps in the way that provided the best quality, rather than finding themselves blocked out because of price differentials in the markets. In many ways, that might be a slightly unfair practice. I have used the example of CDs. Why should a CD cost more than others produced in the same factory—taking out distribution costs that are very similar—just because it happens to be sold in a different place? It often becomes clear that this is being done to milk consumers where choices are more limited.
This statutory instrument is necessary, but it is sad that it is necessary. Those who keep saying that they do not want no deal also seem not to want many of the deals that are on offer, or seem to want to propose a deal that is reliant on something that they keep voting against. That is not a logical position, but this statutory instrument represents a logical position. It would be absolute nonsense to impose a burden on British companies that is not shared by the other countries in the European Union. It would be bizarre, for example, if I had to comply with legislation ensuring that my website and online shopping offer were open across 27 countries when businesses in those countries were no longer obliged to do that.
It is right that we should pass this measure today and ensure that it becomes law, so that we have an orderly statute book, but there is a better option. Rather than saying, “I don’t like no-deal SIs because I don’t like no deal”, people should come up with a clear alternative that does not require the withdrawal agreement—[Interruption.] I hear the usual cheer from the Scottish National party Benches. SNP Members would like to revoke article 50 because they see that as the way round this, and they are correct in the sense that we would not need the withdrawal agreement. Members can be consistent in voting against the withdrawal agreement while saying that they do not want no deal if the outcome would be no Brexit, but they cannot keep turning up in the Chamber each day for a groundhog day debate and saying that the Prime Minister should do everything in her power to avoid no deal if they will not do the one thing in their power to prevent no deal, which is to walk through the Aye Lobby the next time the withdrawal agreement is put to the vote.
I will support this statutory instrument because in the end I would be prepared to accept no deal rather than no Brexit. However, I hope that in the very near future we will get an agreement through the House that provides the basis for a future relationship that makes sense and can be taken forward.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
It is a pleasure to follow the hon. Member for Torbay (Kevin Foster). I actually agree with a large percentage of his very detailed contribution, particularly in relation to some of the protections that are going to be lost. Before I get started on the substance of my speech, may I draw the House’s attention to my entry in the Register of Members’ Financial Interests and my shareholding in the digital marketing company, Teclan?
I am amazed at how blasé those on the Government and Labour Front Benches have been about this statutory instrument. It is one of the instruments that will directly affect consumers and business owners across the nations of the UK almost immediately. Geo-blocking legislation is there for a purpose: to ensure that there is fairness for companies. Instituting this SI without any other provisions causes unfairness anyway: having it in place is unfair, and removing it is unfair too. It is one of those consequences of Brexit that highlights the foolishness of this whole process. There is a way to avoid the SI and a hard Brexit. We need to understand that Westminster has failed to make any kind of decision, that we should revoke article 50 and that we should get to the point where we can bring the choice to the people, with the option to remain.
Returning to the substance of the measure, the EU have introduced geo-blocking—we were in partnership on the legislation—to balance the growth of online platforms, with a need to protect small and medium enterprises and consumers. It focuses on transparency and new options for redress. In short, it treats EU citizens—currently us—and other end users in the same manner. It does not take account of nationality, place of residence or the place of establishment. The European Union’s “Notice to stakeholders: withdrawal of the United Kingdom and EU legislation in the field of geo-blocking” says that from the date of application the regulation
“prohibits discrimination based on customers’ nationality, place of residence or place of establishment, including unjustified geo-blocking, in certain cross-border transactions between a trader and a customer in relation to the sales of goods and the provision of services within the EU. In particular, it provides for the following measures protecting customers: ban of discriminatory blocking or limiting customers' access to traders’ online interfaces (e.g. a website) and redirecting them to another online interface without the customer’s prior consent”.
That is the simple right for someone to get what they are looking for. The regulation imposes a prohibition on
traders to apply, in certain defined situations, on a discriminatory basis different conditions of access for customers to goods and services…informally known as ‘shop like a local’”
across the EU. The regulation provides for
“non-discrimination for reasons related to payment. As of the withdrawal date, natural persons residing in the United Kingdom (unless they have a nationality of a Member State) or undertakings established in the United Kingdom will not be able to benefit from Regulation (EU) 2018/302”.
There are no undertakings established by the UK Government, so there is a direct inequity.
The notice says that
“such persons or undertakings who wish to access websites in the EU will not benefit from the aforementioned ban related to access to traders’ online interfaces. This means that a trader could block, limit or redirect those customers to specific versions of his/her website which might be different from the one that the customers initially sought to access.”
Again, that is a clear removal of a right that we currently enjoy. The notice says that
“such persons or undertakings will not have the guarantee to be able to ‘shop like a local’ in the EU in the situations covered by Article 4 of the Regulation, including benefitting from the same prices and conditions relating to the delivery of goods and services as the locals (i.e. the customers of the trader's home Member State). For example, the off-line and on-line sales of goods and services, such as goods delivered or picked up in the EU territory, tickets for sports events or amusement parks in Member States, and the sale of electronically supplied services, such as hosting services, are areas where those customers will be affected…such persons or undertakings using payment means from the United Kingdom will not be protected against traders applying different conditions for a payment transaction from the ones offered to EU customers, or refused to complete the purchase for reasons related to payment, when (wanting to) pay electronically for goods or services.”
The notice goes on to list the rights that we will lose as a result of not being able to participate in the legislation on geo-blocking.
David Linden
I am grateful to my hon. Friend and Romanian knight for giving way. He has outlined some of the dangers involved in pursuing this Brexit nonsense. Does he agree that none of this was written on the side of a bus, whether in Inverness or anywhere else in the United Kingdom? The only thing we can do now is revoke article 50 and stop this madness.
Drew Hendry
My hon. Friend is right that that is the only way out of the hole being dug by the infighting in the Tory party, which is trying to settle a dispute that has lasted decades. This ham-fisted approach has left us in this guddle of Brexit and has put people in their homes at risk of losing out, of paying more and of being ripped off because we are losing these protections.
The regulations, as they stand, ban the blocking of access to websites and ban rerouting without a user’s consent, and they end payment discrimination through the revised payment services directive. People across the nations of the UK use online marketplaces such as eBay and Amazon on a daily basis. I would be surprised if there is a Member in this Chamber who has not received a parcel from one of those companies, and certainly all our constituents, bar a very few, will have received something from these online marketplaces. Both third party traders and the marketplace itself are subject to these regulations. That means loopholes will now open that allow people to exploit consumers across the nations of the UK. These regulations are about treating customers in the same way across the EU, and the regulations are enforced so that people are not affected in that way.
The Minister said in her opening remarks that the regulations cannot be replicated. She said very directly that the regulations are impossible to replicate or replace, but is not the truth of the matter that there is no interest in doing so? The Government are hellbent on trying to persuade their own Members and the rest of the House to support a deal that nobody wants to support, and they are avoiding responsibility for doing anything that would protect the people who will be affected by this nonsensical situation.
That abdication is leaving loopholes all over the place. Citizens are losing their rights and, as my hon. Friend the Member for Glasgow East (David Linden) said, any promises to make that up are about as good as a Brexit handout or what is written on the side of a bus. There is nothing here that will give comfort to any of our consumers or small and medium-sized enterprises—the ones who are most likely to be directly affected by the removal of this legislation.
Based on these regulations, from 2019 the Commission will publish certain tariffs for parcel delivery services on a website so that consumers and e-retailers can easily compare domestic and cross-border tariffs between member states and between providers. The website will highlight the highest tariffs to encourage consumers and small e-retailers to look for a better deal, and national regulatory authorities will be required to assess certain tariffs that seem unreasonably high. Regulatory oversight of the growing number of parcel delivery service providers will also be increased.
I mention that because Scotland already suffers from geo-blocking under this Westminster system. I have lost count of the number of times I and other Members with rural communities have brought up the postcode discrimination in both online and distance-selling deliveries to Scotland. Some £33 million a year of unfair surcharges are paid in Scotland for deliveries. Citizens Advice Scotland says this particularly affects consumers in Scotland, with 1 million Scottish residents paying, on average, an extra £19 for deliveries. Some 72% of the extra charges for deliveries directly affect Scotland. This is a long-standing discrimination, and the removal of these regulations, which protect people, can only make matters worse, particularly for people living in rural communities.
When I say “rural communities,” believe it or not, I am talking about cities in Scotland. I am talking about areas of high population density because, as I say, we suffer postcode discrimination. For example, a constituent of mine was asked to pay an extra £90 to have a mobile phone delivered to Nairn. These protections are not being delivered by the UK Government now, so what hope do we have with this regulation disappearing? I have another good example of where the EU has been able to protect internally. A crash helmet can be delivered from London to Inverness for a £29 charge. The same item could be delivered from London to Croatia or Estonia for £9.99.
I fear that others across the nations of the UK will begin to experience some of the discrimination that we in Scotland have seen over a number of years, and not just in the highlands and islands but in the borders and across large parts of mainland Scotland, because they too will now be subject to these inequities, as other Members have admitted today in their contributions. It is a reprehensible situation.
This statutory instrument brings forward no replacement protections. It does not even address the issue. It is predicated solely on getting through the Prime Minister’s dodgy, duff, dead-duck deal. That is the sole reason for bringing this through without any attention to detail. More rights are being sacrificed on the altar of Brexit. This Government must now put this and the postcode injustices right, especially for Scotland but also to protect others across the nations of the UK who will now be affected. They should do the sensible thing and agree that it is a disaster, as the removal of this regulation shows that there is no good no-deal Brexit; it is just a calamity that should be ruled out. They should then revoke article 50 until we get an opportunity to take this back to the public and give them the choice of whether to remain in the EU, with all the protections they currently enjoy, before those are sacrificed for this wonky ambition of the infighting in the Tory party.
Of course, there is one absolutely guaranteed way for the people of Scotland to enjoy these vital European protections so that we will no longer suffer from geo-blocking, and that is for Scotland to take its place as a fully independent country in the European Union.
Kelly Tolhurst
I thank all hon. Members who have contributed to the debate. Just to recap, the geo-blocking regulation is an EU regulation that came into effect on 3 December 2018. It is important to note that, up to the end of February, no claims had come forward to the Competition and Markets Authority. It does not apply to transactions that take place entirely within one EU member state.
The geo-blocking regulation prohibits certain forms of discrimination in the single market, specifically: blocking access to, or forced redirection away from, a website on the basis of an internet user’s location in the EU; discriminatory terms of access, which include but are not limited to price offered, on the basis of a customer’s location in the EU when selling goods delivered across a border but still within the EU, wholly online services, excluding copyright materials such as e-books, streamed movies, music and video games, or services delivered in a specific location, such as hotels and theme parks; discrimination in payment terms on the basis of a customer’s location.
The geo-blocking regulation could not function properly on a unilateral basis in a no-deal scenario. Effective enforcement outside the UK would be very difficult, because the UK would no longer operate within the EU’s consumer protection co-operation network or enforcement agencies. EU regulators would no longer be obliged to bring actions against businesses through EU mechanisms for cross-border co-operation. UK civil and commercial judgments, which were alluded to in the debate, would no longer be automatically enforced in the EU member state’s court, and the UK Government cannot unilaterally enforce the geo-blocking regulations throughout the EU without help from regulators in other member states.
Even if the geo-blocking regulations were not revoked, a no-deal exit from the EU would lead to a loss of protection for UK customers while imposing the same level of obligation for UK traders. The provisions of the geo-blocking regulation do not apply to transactions that occur solely within one country, so there is no benefit to retaining the version of the regulation that applies to the UK.
Let me outline the concerns relating to not revoking the EU regulation. EU consumers would receive preferential treatment in respect of UK traders, while UK consumers would be unlikely to receive any reciprocal benefits from EU traders. That is why we are proposing the revocation of the regulation. Revoking will preserve UK rights. It will not strip consumer rights, which will be lost in the event of a no-deal Brexit, but the regulation would continue to impose obligations on UK traders, with no benefits for UK consumers.
Let me answer some of the shadow Minister’s questions. He is concerned about the effect of this statutory instrument in a no-deal situation. I say to him: please support the Prime Minister’s withdrawal agreement. We have been extremely clear that we would like to uphold and maintain the highest standards of consumer protection in the UK. If we agree to the Prime Minister’s withdrawal agreement, we will be able to satisfy our ambition as a Government to maintain high consumer protections and to be able to enter into agreements and negotiations with the European Union so that we can maintain cross-border co-operation. That is what I would very much like to do. We should not only engage in the mutual exchange of information and evidence but work on a framework so that we can work collectively with the European Union on the wider detriment to consumers.
The shadow Minister asked about the impact assessment. He has rightly expressed concerns about impact assessments throughout the no-deal SI process. I have on many occasions tried to explain to him the reasoning behind what the Government have been doing in relation to some of these SIs. On this particular SI, we assessed the impact of the instrument to be de minimis because the costs are below £5 million. As the shadow Minister will know, that means that, in line with the better regulation framework, we did not need to carry out a full impact assessment. The assessment was that the maximum impact could be £1.2 million, based on around 75,000 businesses having to familiarise themselves with the new rules.
The shadow Minister also asked about consultation. On bringing forward this regulation, he wanted to know who we had spoken to and who we had engaged with. As he alluded to, we have consulted and spoken to business representative organisations, including the CBI, the Federation of Small Businesses, the British Retail Consortium, and the Association for UK Interactive Entertainment. The feedback was that they had no strong views on these regulations. However, we did publish a technical notice on 12 October 2018, which clearly laid out our plans for geo-blocking in the event of a no deal.
Let me re-emphasise a point. We have heard a lot today about a potential loss of rights for consumers. I have always been clear in any Committee in which I have spoken on bringing forward no-deal legislation that, whatever the outcome, we are both prepared for and committed to delivering on the high standard of consumer protections that we already have in the UK. We also have a track record of consumer protection in this country and of going above and beyond; in fact, many of the consumer protections in this country go further than those of the European Union.
Drew Hendry
The Minister says that this Government go further than many others. Can she therefore address the conundrum that I raised earlier: why are consumers in Scotland paying so much more for delivery, but being treated so badly compared with other consumers? Why is that still happening if what she is saying is a fact?
Kelly Tolhurst
I was going to come on to that, but I thank the hon. Gentleman for raising it. He and many of his colleagues—as well as many of my hon. Friends—have raised the issue of Scotland’s surcharges for parcel delivery. He will know that I have been working with the Consumer Protection Partnership to see how we can ensure fairness across the British Isles, but I must remind the House that we are talking about individual parcel organisations—as opposed to the Royal Mail—using these surcharges. However, it is true that many organisations are unable to use Royal Mail to distribute their products throughout the country. I remain committed to working with colleagues across the House to resolve this issue and to enable fairness for consumers right across the UK. He is right to raise it and I do take his point.
I just want to return to the point that I was making about consumers. If we want to make sure that we are able to enter into good agreements in terms of cross-border participation and consumer protection and to work with the European Union, my view is—and I will be clear about this—that we should vote for the withdrawal agreement. [Interruption.] Hon. Members reject a no-deal Brexit, but they are not prepared to support something that is on the table that would enable us immediately to have those conversations—
David Linden
When might we have the opportunity to vote for the withdrawal agreement again?
Kelly Tolhurst
Well, I hope that the hon. Gentleman is asking me that question because he wants to support me and my colleagues on the Government Benches. It is quite right that any responsible Government would prepare for a no deal, and that is exactly what we are doing. I must remind colleagues that this regulation came into force in December last year, and, where we have had to enforce it, there have not, as yet, been any complaints.
Bill Esterson
The hon. Lady demonstrates that she and I are in agreement about the benefits of geo-blocking and the current arrangements that we have as members of the EU. This regulation is about no-deal preparation, and we will lose those benefits if we leave with no deal. Perhaps she can tell the House what preparations she and her Department have made to ensure that, if we do manage to avoid no deal, there is a mutual recognition agreement that keeps these provisions in place.
Kelly Tolhurst
The hon. Gentleman’s question suggests that he is considering supporting the withdrawal agreement, because he is asking me about the preparations that we have made in the event of that happening. We have been quite clear that we have to agree the withdrawal agreement. As we have said in our technical notices, and as I have said in many SI Committees, we will be working with our neighbours to ensure that we are able to enter into mutual co-operation agreements if the withdrawal agreement is passed.
Bill Wiggin (North Herefordshire) (Con)
As the Minister was speaking, I was mulling over the point made by SNP Members about the greater charges for having things delivered to Scotland. I can understand their point; it does seem a little unfair. But has the Department had a chance to do the maths? Is it not clear that my constituents, who are contributing to the Barnett formula, are actually paying more than the people who are receiving goodies from Amazon, eBay or any of the other excellent retailers?
Kelly Tolhurst
I thank my hon. Friend for highlighting that particular point. I have made it clear that we need to get into a situation whereby we can enter into close co-operation on consumer enforcement. What happens on geo-blocking will depend on whether we leave the European Union with a deal, but we are here today to talk about a no-deal SI.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) has disappointed me by saying that he will not support the SI this afternoon. As I have outlined today, the very act of leaving the European Union without a deal would make the EU regulation redundant. It would be perverse for us to keep a regulation that would put UK traders at a disadvantage compared with EU traders.
Patricia Gibson (North Ayrshire and Arran) (SNP)
The Minister is talking about not disadvantaging UK consumers, which is a very laudable aim; that is what we all want. Does that mean that she will align with the European Union when it brings in a standard minimum expiration period of five years for gift cards?
Kelly Tolhurst
I remind the hon. Lady that we are already going above and beyond what the European Union is doing on many consumer protection matters. The UK is working on further protections. We will always be mindful of what is coming from the European Union, and we will always be minded to go further. I will ensure that UK consumers are protected as far as possible, and I will be looking into strengthening many measures in the near future.
Patricia Gibson
The Minister is being very generous with her time. Can I take from what she has just said that she is indeed going to bring in a five-year statutory expiration time for all gift cards? I have been urging her to do so and I have not quite had a yes. Has she given me a yes today?
Kelly Tolhurst
The hon. Lady will know that we are discussing an SI related to geo-blocking, not gift cards, but I am happy to talk to her about gift cards and to make her aware when we decide to move forward with any changes or improvements in that area. I assure her that I am absolutely committed to protecting consumers in this country, and this Government will be working hard to ensure that we do that whether or not we get a deal.
This statutory instrument simply recognises the practical effect of a no-deal exit from the EU, and it is important for ensuring that UK traders are not unfairly subjected to any rules. I am therefore disappointed with the hon. Member for Inverness, Nairn, Badenoch and Strathspey for saying that he will not support the draft regulations this afternoon. Failure to revoke the geo-blocking regulation would not preserve UK customers’ consumer rights, which would effectively be lost if the UK leaves the EU without a deal. The only effect of non-revocation would be to continue to impose obligations on UK traders while providing no benefits to UK customers. I therefore commend the draft regulations to the House.
Question put.
The House proceeded to a Division.
Madam Deputy Speaker (Dame Rosie Winterton)
I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.