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The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Financial Services and Markets Bill
Wednesday 1st February 2023
(1 year, 3 months ago)
Grand CommitteeRead Full debate Financial Services and Markets Act 2023 View all Financial Services and Markets Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 80-III Third marshalled list for Grand Committee - (30 Jan 2023)
The Earl of Kinnoull
“(4B) The FCA must monitor and measure to what extent it has advanced the competitiveness and growth objective in various ways, including but not limited to—(a) the PRA’s responsiveness to entities that are regulated or seeking to become so,(b) its consistency of approach to entities that are regulated or seeking to become so, and(c) the proportionality of its approach to the regulation of entities that are regulated or seeking to become so.”Member’s explanatory statement
This amendment seeks to provide some measurable ways in which the competitiveness and growth objective can be monitored and subjected to scrutiny.
The Earl of Kinnoull (CB)
My Lords, in moving Amendment 45 in my name, I will speak also to Amendment 63. I apologise for being unable to contribute at Second Reading; the opening speeches were at the same time as a major evidence session for the European Affairs Committee. However, I sat through much of the debate and have my well-thumbed copy of Hansard here. I declare my relevant interests, as set out the register, as a shareholder of Hiscox Ltd and Schroders plc and a director of Alpha Insurance Analysts.
In my commercial career, I was a director, chief executive or chair of regulated financial services businesses in eight different major jurisdictions. I dealt with the regulators in those jurisdictions and regulators in other EU jurisdictions because of the passporting regimes, and with regulators in places where we decided not to set things up.
However, this amendment has nothing to do with that. Its genesis was in the report of the European Affairs Committee from June last year, The UK-EU Relationship in Financial Services. That report was a major piece of work; we took evidence from a galaxy of stars, including two of the four deputy governors of the Bank of England. The report was settled in the usual House of Lords way, on a unanimous basis.
Paragraph 145 of our report begins a section titled “A competitiveness objective”. In considering this, the committee was trying to form a better view on four real issues: first, the wisdom or otherwise of a competitiveness objective; secondly, what it actually meant; thirdly, how a regulator might implement such a thing; fourthly, how Parliament might scrutinise it. We will come to the fourth issue when we discuss later amendments, particularly those to Clause 36.
We put the problem of the competitiveness objective to our galaxy of star witnesses, including both of the deputy governors of the Bank of England. It was quite difficult for us to form a view on the wisdom of it because, throughout our evidence generally, there were considerable differences among all the witnesses as to what a competitiveness objective amounted to. That difference in the set of views, which were honestly held, was quite difficult for us to reconcile. While the committee generally felt that it was a good idea, it was a bit like how I took the mood of the Second Reading debate to be. There was an interesting set of differences in what it meant; if you do not know what it really means, it is jolly difficult to implement it consistently across a regulator. How will you do that not only between regulators but within a regulator when the FCA has several thousand employees? We were a bit dubious about that. In terms of scrutiny, if it is all unclear above you, scrutinising it is jolly difficult.
The committee tried to assist in this. We wrote various descriptive paragraphs; in paragraph 151, the first of our two conclusive paragraphs on this—not on actual scrutiny—we said:
“The Committee notes that, as a result of the Future Regulatory Framework Review, the Government is considering introducing an additional, secondary ‘competitiveness’ objective for the Financial Conduct Authority and the Prudential Regulation Authority. However, it is equally important for the UK’s overall economic competitiveness for the Government and regulators to work together to develop a broader regulatory culture that is responsive, consistent, and proportionate”—
I emphasise those words.
Noble Lords will have noted that the words “responsiveness”, “consistency” and “proportionality” appear in Amendments 45 and 63. These amendments are designed to give effect to what we as a committee wanted to do, which was to give some directional help to regulators as to how they would be able to implement a competitiveness thing and to have measurable things before them. I must say that I have played the refrain of “responsiveness, consistency and proportionality” to various market associations since the report and I have heard nothing but a feeling that that is at least a start in finding a way of being able to help to define this elusive thing of the competitiveness objective.
It is worth quoting our second paragraph of conclusions:
“We ask the Government, in its response to this report, to explain in further detail how a secondary ‘competitiveness’ objective would be applied by the regulators in practice and how success will be measured.”
The Government’s response to our report was, in general, a very good one. I worked out that I have been in receipt —either as a committee chair or member—of well over 50 government responses, and I can promise noble Lords that this one was pretty good. On this particular bit, however, it was very weak. The response on this area had a quite a lot of paragraphs, but most simply repeated the question. The operative sentence is:
“The regulators will be responsible for operationalising their new objectives.”
I must say that my spellcheck is not modern enough for “operationalising”, so I am not quite sure what that means. But I am sure that the Government are washing their hands of that, which I feel is a mistake.
I submit that the European Affairs Committee’s view on this—remembering, of course, that the committee is cross-party and this was, as usual, an entirely unanimous report—is that there are three benefits to having clarity in this area. First, as a client—either an existing client or a prospective new client who wants to come in to be regulated in the United Kingdom—it provides some clarity. It is jolly good, let me say, if you are thinking of moving capital or business to a jurisdiction, to feel that the regulator will be responsive and consistent and will take a proportionate view of things. Those are all things that are directly relevant to any decision to set up in that jurisdiction or to maintain yourself in that jurisdiction.
Secondly, it is good for the regulators, because they will then know what they are meant to be doing. As I said, we asked regulators about that in our evidence sessions and we heard different answers as to what the thing meant. Thirdly, it is good for scrutineers. We, as scrutineers—I have jumped over the fence now; I am a solid scrutineer and do not do any business at all—will be able to ask the right questions and to have metrics given to us to see whether the regulators are doing a good job. That, I would submit, is a win-win-win scenario.
These two amendments build faithfully on the work of a major committee of this House and should, I feel, properly be part of this Bill. I beg to move Amendment 45.
Lord Naseby (Con)
My Lords, I will not repeat what the noble Earl has said, but I thank him for the depth of his proposal and the work that he has done in tabling these amendments.
I remind the Committee that I have chaired two quoted companies. I have been chairman of one friendly society and seen through both Houses the Mutuals’ Deferred Shares Act, so I think that I have some heritage, in particular in the mutual movement, which I think is really important to our society and our economy. I take a deep interest in that mutual movement and, indeed, I know that my noble friend on the Front Bench and the Government are particularly concerned about helping the mutual movement move forward. This group of amendments is there to help that.
For me, these two amendments are central to the Bill. I have said this before and will say it again: growth in financial services is dependent on, and an extension of, what is happening in the financial world. There are some really exciting new developments happening, but they need help and occasionally a little persuasion. The FCA has a major challenge on its hands. I welcome that, as I am sure it does, but there is an understandable danger that having an increased spectrum of activities is new to the FCA. It should be reminded to look around the corner, do a little investigation and find out what is happening underneath and therefore what is coming forward. I am sure it will do that, but it needs prompting and these amendments do that.
I say finally to my noble friend on the Front Bench that the mutual movement, both the friendly societies and the credit unions, is looking for new ways to raise capital. That is fundamental to both those mutuals. I therefore hope the Government will look at the noble Earl’s amendment with an open mind and accept it.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to take part in day 3 of Committee. In doing so, I declare my financial services interests as set out in the register. I will speak to Amendments 66, 115, 116, 196 and 222 in my name. Before doing so, I give more than a nod to the amendment in this area that has already been so eloquently and eruditely set out.
Amendment 66 is on reporting on competitiveness, which is essential. As drafted, Clause 26 in effect enables the regulators to mark their own homework—“in its opinion”. Does the Minister agree that it would be far better for accountability to government and Parliament for there to be a criterion for measurement of adherence to the competitiveness objective? Amendment 66 sets this out. I would be grateful for her thoughts on each of the paragraphs proposed in Amendment 66.
Amendments 115 and 116 look at reporting the regulators’ activities in making authorisations for new and existing firms. There are many elements set out in these amendments and I would be grateful for the Minister’s response on all of them because we are really talking about the time and cost to firms and prospective firms. We need a lot more transparency and clarity, and Amendments 115 and 116 are focused in that direction.
Amendment 196 looks to reporting on determinations. Significant concerns have been raised on this issue across the industry. I point the Minister to the joint report of the City of London Corporation and HMT on the state of the sector. Does she agree with its conclusions on declining levels of responsiveness and the need for the regulator to up its game in this respect?
Similarly, when this Bill was in Public Bill Committee in the Commons, we heard of it taking nine months for an overseas CEO to receive authorisation and that it has been 15 years since a new insurance firm was established in the UK—a sector in which we have such heritage and past success. That evidence to the Public Bill Committee is a clear indication that heritage and past success are no guarantee of future performance. The regulator has played a key role in that being the current state of affairs.
I think we need to revisit the timelines for determinations and have a greater level of specificity and streamlining. A number of concerns have been expressed about the appropriateness of questions that people have found themselves on the end of. Rather than just seeing the 90-day statutory time set out, would it not be better to revisit this whole process and see how we could have a far more effective and efficient means of determination related to the type of determination that was being sought?
Baroness Bowles of Berkhamsted (LD)
My Lords, there are many good suggestions in this group of amendments. Indeed, they are all good and they are all very supportable. It is particular pleasure to follow the noble Lord, Lord Holmes, because with the amendment on the determination of authorisations he has put his finger on a specific problem that interferes with the day-to-day running of businesses, or those hoping to run new businesses, and is at the heart of competitiveness. So without addressing those kinds of issues, we will not get anywhere. This lies behind similar amendments in my name, in a later group, relating to efficiency.
I hope that, given the number of amendments, and no doubt contributions, from noble Lords from all sides, the Government and the regulators will acknowledge the need and the parliamentary appetite for further accountability through formal reporting and, as I point out in my Amendment 121, for independent performance metrics. I thank the noble Lord, Lord Naseby, for signing that amendment. Of course, it is a probing amendment directed at the FCA. To be thorough, there would need to be another one replicating it for the PRA, but I had tabled enough amendments already. I am conscious also that the noble Lord, Lord Bridges, has proposed a more fully developed model, with an amendment in a later group creating an office for financial regulatory accountability. I have signed that amendment.
My amendment suggests that the FCA report its performance against a set of statistics developed and periodically updated by the National Audit Office, in consultation with consumer representatives, through which the FCA’s achievements and progress may be objectively evaluated. The idea for the amendment developed out of discussions that we had in your Lordships’ Industry and Regulators Committee when we were looking at competitiveness in financial services, particularly in the insurance sector, as well as the wider discussion about competitiveness.
The issue with reports by the regulators is that, even within a given topic, they are setting their own exam questions and then grading themselves on how well they have passed. There is a constant need to get different specifics and granularities as new issues arise, and that is not necessarily being done—for example, reporting on authorisations, as I have mentioned. The committee had some discussions with the NAO, finding it very helpful and astute, and there are always lots of interesting things in its report that at times already challenge what the regulators have said about themselves and how they have spent their resources. It sheds light on things that—shall we say?—have certainly been exaggerated by the regulators in the past.
It is clear from the number of amendments in this group and elsewhere that to address problems comprehensively within the structure of FSMA is quite difficult and convoluted, needing many amendments that make it ever more difficult and convoluted. That is one reason to have an external body that can look over everything and cut through some of the obfuscation and difficulty one has in trying to put something comprehensive into FSMA and needing about eight amendments to do it. My fundamental question is: does the Minister recognise that need for an independent body of substance that can update what is reviewed and measured around regulatory performance and is free from the regulators’ own glossing, and if not, why not?
I need touch only briefly on my other two amendments in this group, Amendments 157 and 158. They simply suggest that when respondents to consultations do not wish to be named—that is perfectly reasonable—there should nevertheless be an indication of the nature of the respondents so that we can see how many have come from industry and how many from elsewhere. That is done sometimes; it is done routinely in some departments but in others it is never done. It is just good governance because, without revealing the identity of individuals or companies, you can nevertheless see what the universe of respondents truly looks like.
Baroness Noakes (Con)
My Lords, I have Amendments 83 and 84 in this group and I have added my name to Amendments 66, 115 and 116 in the name of my noble friend Lord Holmes of Richmond. I did not add my name to some of the other amendments in this group but I think a pattern of considerable agreement is emerging from all parts of this Committee as to the things that we need to address. Perhaps we have not quite honed in on how to find the one solution to that, but the purpose of Committee is to explore these things.
My noble friend Lord Holmes of Richmond’s Amendment 66 aims at much the same target as Amendments 45 and 63 in the name of the noble Earl, Lord Kinnoull. I support what both said in introducing their amendments. I understand what the noble Earl, Lord Kinnoull, is seeking to achieve but it is not enough just to tell the FCA or the PRA to monitor and measure what they are doing in certain areas. We need to go further, and into regular and focused reporting, which is why I particularly wanted to support my noble friend Lord Holmes’s Amendment 66. Of course, the two issues are not mutually exclusive, and I can see the start of a way forward to an amendment on Report that encapsulates many of the issues arising in respect of the competitiveness and growth objectives.
I am particularly concerned that the regulators will pay lip service to the new objective: we will get pages of elegant words in their annual reports but whether they will amount to anything useful in terms of information is something of a moot point. I also believe that relatively few people actually read the annual reports of the regulators, much as not many people read the annual reports of listed companies. If noble Lords are in any doubt about the capacity of the PRA to write a lot of words without saying much of substance, they need only look at the PRA’s discussion document on how it will respond to this new competitiveness and growth objective. It runs to 70 pages but there is virtually no meat in there at all. We need hard data in a regular report which will get attention in Parliament and elsewhere, which is the other main theme that will emerge from our Committee: how we can start to build a proper system of accountability. However, reporting by the regulators is an important building block in there.
My Amendments 83 and 84 also concern the competitiveness and growth objective, but this time in the context of consultation on new rules. These amendments amend new Sections 138I and 138J of FSMA, as inserted by Clause 29, so that the PRA and the FCA have to include an explanation of the impact of how the competitiveness and growth objective has affected whatever new rules are brought forward. Whenever new rules are proposed, there is an important opportunity to consider their potential impacts on competitiveness and growth. As we know, regulators do not need many excuses to create new rules, but every time they respond to real or perceived risks with another addition to the rule book, they will end up imposing costs, and costs are ultimately borne by consumers. They can also have the effect of slowing down or hampering innovation, so it is important that, at the point before new rules are introduced, we have the opportunity to review the impact of those rules on competitiveness and growth in the UK. I like ex poste reporting, but I also like ex ante analysis and, if necessary, action to change rules before they have an adverse impact.
I have also added my name to my noble friend Lord Holmes’s Amendments 115 and 116 because they would give hard data on how speedy the regulators are in handling new approvals, which is an important area. Amendment 116, which would require information on various kinds of regulatory decisions made by the FCA, could usefully be extended to the PRA because it, too, seems to drag its feet on those areas.
Anybody who has worked in a bank will have a story about how long it took to get directors and key executives approved. Last week the Financial Times reported that a digital asset technology company was forced to register in Switzerland because the FCA was too slow to deal with its UK authorisation application. We really must have regulators in the financial services sector that work efficiently and effectively if the UK is to remain a successful financial centre. We need the kind of reports covered in these amendments to form part of a suite of information on which Parliament can start to hold these regulators to account more effectively.
Viscount Trenchard (Con)
My Lords, I declare my interests as stated in the register. The noble Earl, Lord Kinnoull, is right in his Amendment 45 to bring the Committee’s attention to the need to ensure that the regulators take seriously the new objectives which may be given to them under the Bill. As your Lordships are aware, the Bill strengthens rather than weakens the regulators. My worry is that, if it is not made explicit, the regulators may not give enough importance to the new competitiveness and growth objective. Rightly or wrongly, the regulators are considered by much of the industry to be set on ensuring the stability of the graveyard and the protection of the investor against any possible risks. I entirely support the FCA’s new strategy to become more assertive and agile in detecting and taking action against scammers, but I wonder how, in practice, it can measure its advancement of the new objective in terms of consistency and proportionality and how it will balance that against its strategy to halve by 2025 the number of consumers who invest in higher-risk products.
The noble Earl’s amendment would also place a duty on the FCA to measure the PRA’s responsiveness to regulated entities. Does this not indicate clearly the additional complexity—especially for dual-regulated firms—that the well-intentioned but misguided decision to split the FSA into two regulators has caused? What proportion of the FCA’s time and costs will be spent on monitoring the PRA, and vice versa? Will my noble friend commit that, in the medium term, the Government will conduct a review of the effects on regulatory standards and the City’s competitiveness that have resulted from having two principal financial regulators?
Baroness Kramer (LD)
My Lords, I take serious note of the comments of the noble Viscount, Lord Trenchard, because they reflect my fear that the amendments in the names of the noble Earl, Lord Kinnoull, and the noble Baroness, Lady Noakes, and the first amendment in the name of the noble Lord, Lord Holmes, could easily be interpreted as pressure to raise the international competitiveness objective and the growth objective very close, if not equal to the financial stability objective. Frankly, that should be a major concern to us all. I do not want to put the regulators on the back foot when they prioritise financial stability.
In many ways, that is how it was in the 1980s and the 1990s, and we saw how the industry responded to that set of priorities and arrangements. The industry was blithe about risk as long as it generated short-term profit. In discussing the new international competitiveness and economic growth objectives, I have heard from many in the industry that they want them not only to be given greater weight but even to be primary objectives and to stand entirely equal with financial stability. That is such dangerous territory.
At Second Reading, I quoted Paul Tucker, a former deputy governor of the Bank of England, who lived through all that turmoil of 2007-08 and after, who urged Parliament not to give the regulators—particularly the PRA—an international competitiveness objective, praying in aid former governors of the Bank of England, who knew the very soul of the industry and knew that that would be dangerous and unadvisable. Those were not his exact words—his were more excoriating.
Risk in the financial sector is asymmetric, as we saw in 2007. The profits of risky behaviour go to the leading figures in the industry, and they typically keep those proceeds, despite the failure of the sector and the organisation and, in many cases, despite the fact that if you were to go back and unpick it, one could say that such proceeds were based on false profits.
The taxpayer then had to come in and rescue the sector with £137 billion in 2007-09. Much of that has been recouped, but what has not, even to this day—and which we and the country live with—is the damage to the wider economy. We had more than a decade of austerity, and it is a price we are still paying to this day. At our peril do we put ourselves in a position where there is increased likelihood of a repeat of that cycle.
I remember from his memoirs that Alistair Darling was shocked that banking chiefs uniformly showed no gratitude for the massive rescue package that kept their businesses afloat after the 2007-08 crisis. I sat on the Parliamentary Commission on Banking Standards, but have yet to find one to take any significant responsibility, not only for their institution but for the broader sector.
On competitiveness, let me quote from the report of the Parliamentary Commission on Banking Standards, because this was central to its findings of why the industry had become so out of control and behaved as it did:
“There is nothing inherently optimal about an international level playing field in regulation. There may be significant benefits to the UK as a financial centre from demonstrating that it can establish and adhere to standards significantly above the … minimum. A stable legal and regulatory environment, supporting a more secure financial system, is likely to attract new business.”
That was the consequence of nearly two years of taking evidence.
I turn to other amendments. Those in the name of the noble Lord, Lord Tunnicliffe, in this group focus the need for mutual and co-operative financial services. I wholly support that. I very much support the proposals of the noble Lord, Lord Holmes, on the establishment of regional banks. Local services focused on geography or a specific group are often treated as an afterthought or a Cinderella part of the sector today in the UK, but they can be the best way to deliver opportunity to ordinary people, including those presently excluded, and to help small businesses, especially in difficult times. We shall return to some of these issues in later amendments that we will discuss today.
I also support the amendments of the noble Lord, Lord Holmes, which, in essence, are on efficiency. They seem to mesh very well with the amendments of my noble friend Lady Bowles, which are about transparency and mechanisms to evaluate the performance of regulators.
I return to my additional theme: I introduced a discussion on financial stability, almost out of shock that we now have such an intense focus on enhancing international competitiveness and economic growth—as if, somehow, financial stability were not the absolutely fundamental delivery that we expect from our regulators. Without that, frankly, everything else is worth nothing.
The Earl of Kinnoull (CB)
Before the noble Baroness sits down, I would just like to ask her a question about her very interesting speech. This also allows me to say that, in Amendment 45, the first “PRA” should read “FCA”—a good spot by the noble Viscount, Lord Trenchard. But I do not quite understand how financial stability is threatened by a regulator being responsive, consistent and proportional. Could the noble Baroness explain that again?
Baroness Kramer (LD)
The noble Earl may find that this is already a requirement of the regulator, but this is not about that. If the amendment were taken in the way that I suspect the noble Earl reads it, I might feel reasonably comfortable with it. However, as we listened to the discussion, we saw where this was going. The noble Viscount, Lord Trenchard, captured that: the industry is looking at these kinds of amendments as a mechanism by which it can find leverage to enhance the status of the international competitiveness and economic growth objectives. If we could find a balance, in asking for the kind of language that the noble Earl, Lord Kinnoull, is after, but making sure that that does not become weaponised and potentially raises those objectives to an equal status to financial stability, I would feel much more comforted.
Lord Tunnicliffe (Lab)
My Lords, we are on day three of six. I cannot possibly envisage the seventh day, so I will make short speeches. Our amendments in this group are 118 and 119. Amendment 118 would give the FCA a duty to report on mutual and co-operative business models, covering how it considers the specific needs of credit unions, building societies, mutual banks, co-operative banks, regional banks, mutual insurers and co-operative insurers. Amendment 119 would do the same for the PRA.
Following Second Reading, I read the Minister’s letter on this topic with interest and was pleased with her assurances on the matter. However, a letter has little substance; virtually nobody knows about it, to start with. Therefore, as a minimum, I hope the Minister will repeat the assurances in that letter about mutuals, et cetera, and get them on the record in Hansard.
I hope the Minister will assure me that the department takes a keen interest in the growth of the mutual and co-operative sector. The UK has a smaller industry than some international economies, particularly in Europe. I would be interested to know what the direction of travel is in government on this. If we are committed to consumer choice and a diverse, dynamic financial services mix, a strong mutuals and co-operatives sector is surely an important part of it.
There are many amendments in this group and, in general, I like the direction they take. I hope the Government will look at the thrust of these amendments and, as the debate on the Bill develops, try to come back with proposals that take the best of them.
I am very interested in the introduction of the word “proportionality”. My career has been in aviation, in railways, in nuclear and, indeed, even in the military. Proportionality, done well, is undoubtedly the optimal way of introducing and managing regulation. Of course, it is a dynamic concept. As things change, if you really do believe in proportionality, your interpretation of proportionality has to change with the changing facts.
The problem with this is that it needs very able and mature regulators. That is why so much of safety regulation and, in a sense, financial regulation is prescriptive. One knows how to interpret prescriptive regulation: you do what it says and, when you cannot agree, you go to a court. I hope that we persist with proportionality, but I feel that we will need a very special regulator to do it. If that can be achieved, it will give a dynamism to the regulation in this Bill.
Baroness Lawlor (Con)
My Lords, I support this group of amendments to improve and tighten arrangements to monitor, scrutinise, measure, consult on and report on the competitiveness and growth objective. As matters stand, I fear that the Bill’s provisions here are without clear and precise external measures against which the regulators’ success can be assessed and scrutinised.
Yet, as noble Lords across the Committee have pointed out, we are giving the regulators greater powers in the new regime than under the old and, with the Treasury, are responsible for the legacy of retained EU law for deciding which rules will be kept, which are adapted and which are modified, and how they will be applied. The operation of the new system will be critical to the sector’s competitiveness and growth and how the regulator objective works will be central to that operation. If it is to be anything other than a vague aspiration under the heading of Chapter 3 in Part 1 of “Accountability of regulators”, all who want or need to know must know what, in practice, is being done to achieve it and how well it is being done against clear criteria.
These amendments for reporting on the numbers and metrics of market entrants, rules simplified, new regulations, performance measures or the time taken to process the various stages of authorisations will make things more transparent and give an outline of how, and how well, the new objective is working. I think particularly of Amendments 66, 115, 116, 121 and 196, although that is not to say that I do not welcome the support of the noble Lord, Lord Tunnicliffe, and other noble Lords for strengthening the mutual sector.
These amendments would serve another, vital purpose: they would help the regulators to focus on outcomes—tangible measures in assessing and defining the regulator objective of competitiveness and growth. This is particularly important, given that regulators will now be on a steep learning curve, having, for the most part, trained in an EU approach to rule-making, influenced by the precautionary principle in devising rules to cover every potential situation in a system based on process. They will now have to change course to the UK approach—the outcomes-based approach—which is indeed facilitated under UK law, which accommodates innovation and develops case law in the courts.
These amendments indicate a range of outcomes on which success can be measured. If such specific measures are included in this Bill, the regulators will be helped to make the change and to adapt from the EU law approach to one designed for UK markets in a way that builds on the UK’s own approach—an approach that, in practice, over many centuries, has facilitated and encouraged international competitiveness and growth.
I therefore support these amendments and urge the Minister to accept the strong case made by noble Lords.
Lord Remnant (Con)
My Lords, I declare my interest as a director of Prudential and chairman of Coutts.
I apologise to the Committee that I was unable to attend the first two days of this debate, but I spoke at Second Reading. I said then that I was very much in favour of the additional reporting requirements introduced to the Bill at that stage but hoped that they could be strengthened further. Many of these amendments do just that. I will not repeat the eloquent arguments of those noble Lords advancing them—indeed, there seems to be a large amount of consensus in this Committee—but I would like to emphasise my support in two areas.
First, on Amendments 45 and 63, in the names of the noble Earl, Lord Kinnoull, and my noble friend Lord Naseby, and Amendment 66, in the names of my noble friends Lord Holmes of Richmond, Lady Noakes, Lord Trenchard and Lord Naseby, I regard as of paramount note the introduction of the secondary objective for our regulators to promote the sector’s international competitiveness to support long-term growth. As this is a new objective, it is critical that the regulators should account to Parliament for their performance against this objective and against a clear set of reporting and performance metrics, measurements which are indeed measurable, verifiable and independently set.
Secondly, I especially support Amendments 115 and 116, in the names of my noble friends Lord Holmes of Richmond and Lady Noakes. I have direct experience, both personally and at firms with which I am involved, of how long it can take for seemingly eminently well-qualified individuals to gain authorisation. For the avoidance of doubt, I exclude myself from that category. Businesses have choices about where they place capital and people. The burden and cost of regulatory supervision really can damage London’s ability to attract talent and capital. I do not for one moment suggest that there should be any diminution in the rigour with which applications should be assessed, merely that in pursuance of their competitiveness objective, our regulators should give enhanced emphasis to the speedier clearance of the applications before them. These amendments should help them do just that.
Lord Bridges of Headley (Con)
My Lords, I will make a brief intervention. I declare my interests as an adviser to and shareholder in Banco Santander in Madrid. I have a lot of sympathy with some of the amendments in this group, especially those in the name of my noble friends Lord Holmes of Richmond and the noble Earl, Lord Kinnoull.
I will take a quick step back. The Bill needs to be improved in three key ways. First, we need to improve the reporting by the regulators. Secondly, as the noble Baroness, Lady Bowles, said, we need to make sure that the regulators are not marking their own homework, which is why it is important that we create a form of independent analysis. Thirdly, we need to improve parliamentary accountability. The amendments clearly address the first point on reporting. I will not repeat the number of points made very eloquently by the noble Earl and others, especially my noble friend Lady Noakes. However, I strongly believe that, as has been said, this will help regulators define their actions and, in so doing, help address confidence in the regulators that they are meeting those objectives.
I listened to the noble Baroness, Lady Kramer—I was about to call her my noble friend; she is a good friend—and she is absolutely right. We absolutely have to get right the balance between competitiveness and stability here. I do not think anyone here is arguing for a race to the bottom; that would be a disaster for our financial services sector. A strong financial services sector is based on robust, proportionate and simple regulation, so I completely heed that concern. However, I look at some of the amendments, especially some of the metrics being quoted here, and the data that they would provide would be exceptionally valuable to us as Parliament when we come to assess the performance of our regulators in a critical sector for our economy, and we can then judge them on those actions. I look at the consultation that the PRA set out, which states that it will include its performance in meeting this new objective but it does not say how. It is important that we send a signal, and at least have a very thorough debate as to what that might be.
I end on this point: does the Minister seriously think that the current reports we get from our regulators are satisfactory and adequate, especially in the light of the new powers and the new objective that the Bill confers on them and the concern that I think many on both sides of the Committee have about what that means for their powers and their accountability? That is a simple question.
Lord Ashcombe (Con)
My Lords, I declare my interest as an employee of Marsh & Co, the insurance broker. I too support Amendments 66, 115 and 196 in the names of my noble friends Lord Holmes of Richmond, Lord Naseby, Lord Trenchard and Lady Noakes. Since Second Reading the Bermuda authority has reported that it saw the highest number of new insurance-broking companies registered in more than a decade as 84 new companies were set up in 2022, but not one has been set up in the UK for 15 years. This is the reality of international competition that the UK is facing as it competes with jurisdictions around the world for investment, capital and jobs, but we note that we depend on high standards of regulation. It seems that a number of key changes are needed to address this to improve the accountability of UK regulators, making them more consistent in their approach and more responsive in ultimately ensuring that they act more proportionately, as mentioned by the noble Earl, Lord Kinnoull.
Amendment 66 requires that the FCA and the PRA each publish an annual report setting out how they have facilitated international competitiveness and growth against a range of data and analysis requirements. Clause 26 currently allows regulators to decide for themselves how they believe they have met the requirements of their new competitiveness, as already mentioned. For example, the clause states that the FCA can decide “in its opinion” how to report on the objective and therefore decide solely for itself how it has met the objective’s requirements. The objective must therefore have alongside it a clear reporting criterion so that the Government and Parliament can properly hold the regulators to account. It is unclear whether the regulators will consider metrics specific to international competitiveness, not simply domestic competition. The criteria set out in the amendment can be measured and targets created to ensure that the regulators are operating effectively.
The Bermuda Monetary Authority takes a different approach and has different classes of insurers and reinsurers, together with authorisation criteria and KPIs that match the level of risk that the entity poses to the system. This allows it to undertake an authorisation of an international reinsurer with clients that are solely other insurance companies in less than one week—can you imagine?—thereby freeing resources to focus on entities serving individual retail customers.
Clause 37 gives Ministers a power over the regulators’ reporting requirements by providing them with a mechanism through which to direct information to be published. The danger is that this clause becomes more of a backstop measure, rather than something embedded in our new regulatory framework. While the clause is welcome in demonstrating the Government’s recognition of issues around needing to improve regulatory culture, it asks more questions than it necessarily answers. It is unclear how the Government will decide the criteria for requesting a report and whether they will seek input from industry and Parliament or the new bodies that the Bill creates, such as the cost-benefit analysis panels, in understanding where there is a demand for information. It is unclear whether, as part of its report, the regulator will undertake comparative analysis of its performance against the UK’s competitor jurisdictions as well as analysis of product and service innovations taking place in key markets. This is how Parliament will best understand whether the UK is performing well globally.
What we need are mechanisms in the Bill that help ensure that accountability becomes part of the day-to-day operation of the regulators, not something used ad hoc. That is the only way that we will get culture change and deliver the kind of culture change that we in Parliament and industry want, as addressed by my noble friend Lord Hunt of Wirral at Second Reading. That is why measures set out in these amendments are so important. I hope we can look at further changes along these lines.
The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)
My Lords, there is a large number of amendments to cover in this debate, so I aim to be succinct. While these amendments cover a range of issues, they all relate to reporting requirements on the regulators to enable effective scrutiny and oversight of their work.
First, on Amendments 45 and 63, in the name of the noble Earl, Lord Kinnoull, and Amendment 66, in the name of my noble friend Lord Holmes, the Government agree that it is vital to have appropriate public metrics to ensure that the operationally independent regulators can be held to account for all aspects of their performance, including against their new growth and competitiveness objectives. FSMA establishes multiple channels for this, including annual reports. The regulators also voluntarily publish a range of data—for example, on operating service metrics. Specifically, Clause 26 will require the FCA and the PRA to report on their performance against the new growth and competitiveness objective, as part of their annual reports. That sets out for my noble friend Lord Bridges the existing reporting done by the regulators—but the Government recognised the need to go further in requiring the regulators to publish information, which is why we added Clause 37. It provides an additional mechanism for the Treasury to require the regulators to publish information, including performance data, on a more regular basis, where the Treasury considers it necessary to support scrutiny of performance.
The broad approach is that FSMA requires the regulators to report on how they have discharged their functions and that the decisions on publishing operational metrics are appropriate for the operationally independent regulators to determine, working with government, where appropriate. It is impossible to predict how the power in Clause 37 requiring regulators to publish information on a more regular basis may be used, but I reassure noble Lords that the Treasury will work with stakeholders, industry, consumers and Parliament to understand the evidence base for whether it is in the public interest to exercise this power and the kinds of situations in which it would be desirable to do so. That power also includes a number of safeguards to ensure that it is exercised appropriately.
However, locking specific, detailed metrics into primary legislation would result in a static framework unable to adapt and respond to wider changes, and impose fixed requirements which may not be possible or appropriate for the regulators to report on. Clause 37 provides a more flexible—and therefore future-proofed—mechanism for ensuring appropriate scrutiny. Similarly, Amendment 121, tabled by the noble Baroness, Lady Bowles, seeks to impose a requirement to report against metrics determined by the National Audit Office, along with consumer representative bodies. Again, embedding this in primary legislation would not be the most effective approach. The NAO is already able to examine and report on the value for money of spending by public bodies, including the FCA and the PRA, and it reports its findings to Parliament. The Government consider that the setting of specific reporting requirements for these bodies goes beyond the scope of the NAO’s remit.
Baroness Bowles of Berkhamsted (LD)
May I interrupt the Minister? The whole point of my amendment—whether it be the NAO or otherwise—was specifically to address the fact that the criteria might need to be changed, so it would not be a fixed list but would develop depending on circumstances. Perhaps the Minister does not think that the NAO is the body, but the question I posed was about this in general. There is a difference between it being an independent body and it being the Government. Given all the other powers that the Government have to direct the regulators, it could look like a conflict of interest if it is not done with a greater degree of independence. The fact that the Minister said that Clause 37 needs to be used with discretion seemed to recognise that that potential tension and conflict might be wrong. Would it not be better to have an independent body involved?
Baroness Penn (Con)
I thank the noble Baroness for teeing me up to answer the question that she posed at the end of her remarks. I understand her point about trying to have a more flexible framework of criteria and the NAO being one idea for an independent organisation that can do that. She will know that the Government considered this as part of the future regulatory framework review and found that there are substantial practical costs and resourcing obstacles to overcome in making such a body operationally effective. Such a body would also duplicate existing accountability structures and potentially undermine the regulators’ operational independence.
In considering that question, the Government concluded that the existing avenues for stakeholders to provide input, feedback and challenge through public consultation are appropriate, supported by strengthening the statutory panels, independent challenge and cost-benefit analysis.
In addition, the Treasury and Parliament will continue to assess the work of the regulators in their oversight role, strengthened by a number of the measures in the Bill. That position was supported by the TSC report The Future Framework for Regulation of Financial Services, which said:
“The creation of a new … body … would not remove the responsibility of this Committee to hold”
the FCA and the PRA
“to account, and it would also add a further body to”
the regime that Parliament would need to scrutinise. The Government therefore concluded that the Treasury, as the department responsible for financial services policy, is best placed to assess whether, as a backstop, further reporting is required by the regulators and to direct them to publish this if necessary and appropriate.
I fully appreciate that the Committee will want to continue to explore this question in discussing these amendments and further amendments as we reach them, but I think it is helpful to set out that the Government considered this question as part of their consultation and work in the development of the Bill. Careful thought has been given to it. We have been open to making improvements: indeed, I believe Clause 37 was an improvement made when the Bill was in the House of Commons, so we are open to further thoughts, having already given this quite a lot of consideration.
Turning to Amendments 83 and 84, I hope I can reassure my noble friend Lady Noakes that Sections 138I and 138J of FSMA already require the FCA and the PRA to provide an explanation of how their draft rules advance their objectives as part of their public consultations. The Government’s policy intention is that this requirement extends to the new secondary objectives. However, I thank my noble friend for raising this issue. We will consider whether the legislation could be made clearer on this point before Report.
I move to Amendments 113 and 114, tabled by the noble Baroness, Lady Kramer. The Government recognise that the Bill represents significant reform, and it will be important to provide an assessment of its effects on the system. However, we think it would be inappropriate to task the regulator with this assessment. In line with Cabinet Office guidance, within three to five years of Royal Assent, the Government will submit a memorandum to the Treasury Select Committee with a preliminary assessment of the impact of the Act in practice, to allow the committee to decide whether it wishes to conduct further post-legislative scrutiny.
Turning to Amendments 115, 116 and 196, tabled by my noble friend Lord Holmes, I am aware that the speed and effectiveness with which the regulators process applications for authorisation and other regulatory approvals remains an area of concern for both Parliament and industry, and the Committee has reflected that to me again today. I welcome the report published by TheCityUK last week about this important issue and, just as importantly, the constructive way in which the regulators have engaged with that feedback from the sector.
The Government share these concerns. In December, the Economic Secretary wrote to the CEOs of the PRA and the FCA setting out the importance of ensuring that the UK has world-leading levels of regulatory operational effectiveness. In their replies, both CEOs committed to publishing more detailed performance data on authorisation processes on a quarterly basis going forward. The FCA, in particular, has an extensive programme of activity under way to improve the timeliness of its approvals. It recruited almost 100 new authorisation staff in the last financial year, streamlined its decision-making processes and is digitising its application forms to make the process smoother for firms. The power in Clause 37, which I mentioned earlier, for the Treasury to require additional reporting from the regulators could be used to hold the regulators to account on the important issue of authorisations raised by these amendments, but, as I say, there is a commitment by the regulators to publish more detailed quarterly information on this matter. However, the Government will continue to engage in discussions with the regulators on continuing to improve operational efficiency.
Lord Carrington of Fulham (Con)
On a point of clarification, my noble friend talks about mutual societies, which are very important. Mutual firms have many characteristics that are similar to those of so-called Islamic banks—banks that are sharia-compliant. Do her comments also refer to that slowly growing part of the economy?
Baroness Penn (Con)
They refer to organisations that were formed under the legislation to which I referred. We are taking forward work to look at amending the Building Societies Act, the Co-operative and Community Benefit Societies Act and the Friendly Societies Act. The definition of who I am talking about is driven by those Acts.
Amendments 157 and 158 are on transparency over who has responded to the regulators’ consultations. While promoting transparency is important, confidentiality must be respected. If a respondent has not consented to the publication of their name, they may be deterred from responding by the knowledge that a category description will be published, which risks making them identifiable. This is particularly the case in areas where only a small number of firms are affected. It could therefore reduce the number and scope of responses, which would weaken the effectiveness of the consultation process as a way for the regulators to receive challenge and feedback on their proposals. This would be contrary to the Government’s aims and, I believe, to the intentions of noble Lords, including the noble Baroness, Lady Bowles.
This brings me to the conclusion of my remarks—
Lord Holmes of Richmond (Con)
Before my noble friend sits down, would she care to spare a few words on Amendment 222?
Baroness Penn (Con)
I believe I have just addressed Amendment 222. We are supportive of the establishment of regional mutual banks in the United Kingdom, but they are currently still establishing themselves and are not yet trading. So it is a little too early for us to report on the current regime and any possible limitations of it for regional mutual banks.
Lord Tunnicliffe (Lab)
Does the Minister intend to make any response on the concept of proportionality?
Baroness Penn (Con)
As the noble Lord himself noted, proportionality is already within the regulators’ objectives and operating principles. It is a concept that the Government support in how the regulators undertake their business. I believe that it is provided for within the current framework.
I hope, therefore, that the noble Earl, Lord Kinnoull, will withdraw his amendment and that other noble Lords will not move theirs.
The Earl of Kinnoull (CB)
I thank the Minister. It has been a fascinating hour and 20 minutes on reporting requirements. The common themes, I think, have been clarity and independence. I associate myself with the remarks of the noble Lord, Lord Bridges, and his very good way of expressing the problems with the Bill. Coming from the insurance industry, I was of course very worried by what the noble Lord, Lord Ashcombe, had to say about the number of insurers being set up in Bermuda versus the number being set up here. Bermuda overtook the UK in 2004 in size of market; we remain number two but we are going backwards, and this needs to be addressed.
I feel that many of the amendments in this group need to be discussed with the Minister. I hope I will see her nod her head. My amendments derive from a big committee of this House which thought a long time and took a lot of evidence on this. The amendments tabled by the noble Lord, Lord Holmes, have a lot of merit in them as well. When we sit down, we will certainly hear the warnings issued by the noble Baroness, Lady Kramer, in our ears, but I hope that she agrees to discuss those well before Report so that we attain some additional clarity and some independence for the data that comes to whatever it is that will scrutinise all this. In the meantime, I beg leave to withdraw the amendment.
Lord Lilley
“(4B) When discharging its general functions in the way mentioned in subsection (1) the FCA must, so far as reasonably possible, act in a way which, as a secondary objective, advances the predictability and consistency objective (see section 1EC).”Member’s explanatory statement
This amendment and Lord Lilley's other amendments to Clause 24 require the FCA and PRA to maintain high standards of clarity, predictability and certainty in exercising their general functions and applying their rules and guidance.
Lord Lilley (Con)
My Lords, I rise to address the amendments in this group standing in my name and those of my noble friends Lord Moylan, who is currently speaking on the Online Safety Bill, and Lord Trenchard.
The Bill gives the regulators the responsibility for replacing retained EU law and regulations with more user-friendly common-law rules. That greatly enhances their already considerable power to make as well as to apply regulations. That has led to demands from across your Lordships’ House to increase the accountability of the regulators to Parliament, which I support. However, parliamentary scrutiny is inevitably broad-brush and largely ex post facto so it cannot alone provide effective accountability. Legal accountability is also needed—above all to ensure predictability and consistency in the way that regulators develop and apply their rules.
The amendments standing in my name and those of my noble friends attempt to achieve that. I am not a lawyer, so I am grateful to those distinguished legal practitioners who have drafted these proposals and whose glove puppet I am. The overall aim is to ensure that regulators act predictably and consistently: first, by giving them that explicit objective; and, secondly, by enabling more case law to develop on the meaning of the regulators’ rules through the application of legal reasoning to disputes between financial institutions and SMEs, consumers and others.
We have sought to achieve that aim subject to two constraints: first, the revised system should not generate unnecessary litigation or legal costs; and, secondly, SMEs and consumers should retain all their existing rights. That is most relevant to the amendments in a subsequent group, which mainly concern the Financial Ombudsman Service. Today’s set of amendments deals with the higher-level regulators: the Financial Conduct Authority and Prudential Regulation Authority.
Amendments 54 and 64 would set predictability and consistency objectives for the FCA and PRA, respectively. Amendments 46 and 57 would require them to act in accordance with those objectives. Amendment 82 would require them, when making rules, to ensure that they meet the objectives of predictability and consistency. Amendment 85 would then oblige them to use a common-law approach in interpreting regulatory rules. This is the usual and powerful way that we achieve predictability and consistency in other legal contexts.
Regulators have increasingly taken to laying down general principles; inevitably, the detailed implications of such principles may not be predictable. Amendment 85 would therefore allow regulators to continue to make rules with such a high level of generality, but they would be able to enforce such rules only if either the rule itself or the guidance issued by the regulator made the implications of such general rules clear. Otherwise, general principles may be used to interpret and apply more concrete rules laid down by the regulators.
I hope that the objectives of predictability and consistency are self-evidently desirable, but let me briefly deal with issues that arise from making them a statutory objective. First, concerns have been raised about adding additional objectives in other contexts, such as the growth, competitiveness and net-zero objectives. However, those objectives greatly widen the responsibilities of the regulators and add to their burdens. The predictability and consistency objectives would not expand the regulators’ responsibilities; they merely spell out the way in which those responsibilities should be exercised. Nor would they conflict with other objectives; indeed, predictability and consistency contribute to competitiveness, growth and stability.
The second question that these objectives raise is: why are these objectives so important? Clearly, predictability and consistency are an end in themselves and make life easier for business in the financial markets. That is a feature of our markets that has attracted businesses from across the globe, and reinforcing it will restore and enhance that attractiveness. I recall that, post big bang, London has been able to boast more American banks operating here than in New York and more European banks than in any European centre. But there are further benefits to the economy: the more predictable and consistent the regulatory environment, the less the burden of compliance. Compliance costs have been the fastest increasing cost faced by most firms in recent years. That, in turn, will remove the dampening effect that unpredictable regulation has on enterprise and innovation.
I mentioned at Second Reading that the seminal conclusion of studies of the economics of regulation was that, in the absence of accountability, regulators regulate in the interests of regulators. A number of financial institutions that have contacted me in support of these amendments—and I am glad to say that they do seem to have considerable support in the City—have reinforced that point. They say that the amendments would not only result in better regulation but, equally important, help to change the culture of the regulators. At present, our largely unaccountable regulators tend to be bureaucratic and negative. They prioritise box-ticking and find it easiest to say “No”. Moreover, companies admit that this culture feeds back into their own compliance departments, often staffed by people from the regulators who bring the same bureaucratic negativism with them. That dampens companies’ enterprise and initiative from within.
I also mentioned at Second Reading that it is no coincidence that the four greatest global financial centres are all based on common law, as are the new ones starting up in the Middle East and elsewhere. Part of the reason for the dominance of common law in finance is that it provides the maximum predictability and consistency with the maximum freedom to innovate. These amendments are designed to strengthen those attributes. I hope my noble friend the Minister will give them serious consideration.
Viscount Trenchard (Con)
My Lords, I support my noble friend Lord Lilley’s Amendment 46, to which my noble friend Lord Moylan and I have added our names. It adds a further objective to ensure that the regulators discharge their duties in a manner which maintains high standards of predictability and consistency. Noble Lords might ask why this is necessary, given that the competitiveness and growth objective obviously requires them to act in a predictable and consistent manner. As I have already remarked, it is hard to be confident that this secondary objective will have enough effect on how the regulators exercise their functions.
I agree with what the noble Baroness, Lady Kramer, said on the previous group: it is necessary to find the right balance between different objectives. However, I fear that defining an objective as secondary and placing it lower in the hierarchy will in reality lead the regulators to apply an anti-competitive balance. These amendments provide a necessary safeguard against the lack of certainty currently worrying many market participants due to the very great transfer of powers to the regulators. As my noble friend has explained so well, this additional objective should make our financial market rules more predictable, increasing the attractiveness of our markets as the best place to introduce new and innovative products.
I also support Amendment 70 from the noble Baroness, Lady Bowles, and my noble friend Lady Noakes and its intention to introduce a principle to require the regulators to exercise their functions in an efficient manner. I also support Amendment 72 from my noble friend to promote proportionality as something that the regulators must apply in exercising their general duties. I am not advocating a race to the bottom, but it is widely believed that much of our current regulatory regime is applied in a less than efficient manner; it is often disproportionate in that the benefit, if any, is often smaller than the cost of achieving it.
Amendment 74 from my noble friend Lord Holmes of Richmond also seeks to strengthen the existing regulatory principle when the regulators are considering a new restriction but, on balance, I prefer the amendment from my noble friend Lady Noakes, which has wider application. In considering all these amendments, we should not lose sight of the need to question what the regulation is for. Amendment 77A in the name of my noble friend Lady Noakes ensures that we constantly ask ourselves this question. If there is no evidence that a regulation is needed or brings any benefit, we should not introduce it, or if it exists, we should abolish it. I hope my noble friend the Minister will accept these amendments and look forward to hearing her response.
Lord Naseby (Con)
My Lords, I will speak briefly to Amendments 54 and 64. They are vital to the future planning of existing companies, but they seem even more important to people entering a financial market, whatever it may be. When they are doing their planning, they must recognise—it must be self-evident to them—that there is consistency and objectivity. Most of my commercial life has been in the creative world and bringing it into the ordinary world—for want of a better description.
It may be that there is a difference between what is required for growth, which is the primary objective behind the Bill, and the competitive nature. They are two distinct objectives.
Lord Sandhurst (Con)
My Lords, I first apologise for not having spoken at Second Reading. I speak in support of Amendments 46, 54, 57, 64, 82 and 85 tabled by my noble friends Lord Lilley, Lord Moylan and Lord Trenchard. When effected, they will provide a much-improved basis for regulation. These amendments introduce an additional statutory objective, consistent with the existing objectives—namely, predictability and consistency.
Amendment 85, as we can see, obliges the FCA and PRA to apply common-law techniques of interpretation to regulations. These are to be interpreted in the same way as a court would look at them. That is critical for the promotion of predictability and consistency. Here I speak, as noble Lords know, as a lawyer, not a financier. By Amendment 85, rules of high-level generality will be used by the FCA only to assist in interpreting specific rules, not as stand-alones, as a general principle.
The context of these amendments is important. First, the ombudsman can award as much as £375,000—that is a lot of money—in an individual case and there might be 50 claims. Secondly, its determination is in respect of a vast body of technical rules with which the financial companies have to comply. Thirdly, as we have heard, the ombudsman decides a dispute on the basis of what is “fair and reasonable”, but is under no obligation to be predictable or consistent, nor to explain its reasoning. Indeed, the ombudsman is
“free to make an award different from that which a court applying the law would make”
when applying a rule. Lack of consistency results in unpredictability. We need legal accountability and predictability. We are dealing here with complaints about potentially large sums of money.
Lack of predictability means that firms must build compliance programmes based, in part, on guesswork about how the regulator might react when applying its rulebook. This is particularly so when considering the vaguely drafted rules known as “principles”. To take one example, it will be a principle for there to be a new vague duty to
“act to deliver good outcomes for retail customers”.
That is a rule with a high level of generality, which our amendment will address. It should not stand alone.
To apply such concepts to specific fact situations, without case law precedent, can be contentious. It is hard to challenge the assertions of the regulators as to how their rules are to be applied. Lack of definition in the rules cannot be good for entrepreneurs or for the competitiveness of the United Kingdom. Compliance activity becomes materially inefficient where there is lack of clarity and certainty in drafting and where there is lack of predictability and consistency in application. Costs are driven up; ultimately, the consumer pays.
We seek to introduce a new approach which produces predictability. Having established the principles set out in the amendments in this group, there will follow in later groups the means to give them practical effect through properly conducted adjudications. The gain for all concerned will be consistency and predictability, flowing from having to apply the regulations consistently and in accordance with ordinary legal principles of interpretation. Everyone concerned will know where they stand.
It will be simple, therefore, for the regulator to see whether a regulation is being applied—by adjudication or on appeal by the courts—as it would wish. It can then make changes based on hard evidence. Consumers and financial companies, meanwhile, will know where they stand. We invite my noble friend the Minister to acknowledge the need to incorporate these new objectives and the need for consistent, predictable application of the rules.
Baroness Noakes (Con)
My Lords, I have added my name to Amendment 70 in the name of the noble Baroness, Lady Bowles of Berkhamsted, because any way that we can reinforce the need for the regulators to be efficient is welcome. I look forward to hearing what she has to say when she speaks to her amendment.
I also have two amendments of my own in this group: Amendments 72 and 77A. Amendment 72 deals with proportionality, which the noble Lord, Lord Tunnicliffe, referred to in the discussion on the first group of amendments. My amendment seeks to raise proportionality from a regulatory principle to a general duty. I have to say that I have always found the hierarchy of what the regulators have to follow rather difficult. They have general duties, strategic objectives, operational objectives, secondary objectives and a number of statutory “have regard” duties, which include regulatory principles. On top of that are the so-called recommendations from the Treasury to which they also have to have regard.
The regulatory principles in Section 3B of FSMA are a list of eight motherhood and apple pie things about which I am sure there is little debate, but there should be a debate about whether all or any of them have any practical impact on the way in which regulators behave. For example, one of the principles is that consumers should take responsibility for their decisions, but the FCA’s direction of travel is the opposite. Indeed, I do not think that caveat emptor has any part in the FCA’s thinking. There are other principles on value for money and transparency, but if we thought that they had any impact, we would not have the amendments that we have in today’s Marshalled List.
I am sceptical about regulatory principles not because they are bad things but because they appear to be ineffective. With Amendment 72 I have sought to elevate the proportionality principle, which is one of the eight, into a duty so that it has more meaning in how the PRA and the FCA go about their business. In case anybody has any doubt about whether proportionality concerns are real, I will give a few examples.
The first is PEPs, which we will be debating later in Committee, but, for today, both Houses of Parliament are full of people who have faced wholly disproportionate action by financial services providers. Of course, at the end of the day, it is the financial services firms—the providers—which apply the rules, but the FCA has done nothing of substance to ensure that the firms act in a way that is proportionate. Had it done so, the aggravation that we and, importantly, our family members have had to face would have been considerably reduced. It is obvious that we present no more risk than the general UK population, yet enhanced due diligence is still required—and is often extremely officiously applied.
Baroness Kramer (LD)
If I could just interrupt, the noble Baroness might want to go back and take a look at the MREL rules. It is in the UK that smaller banks got loaded up with the MREL requirement. I do not have the exact numbers in front of me but I could easily get them for the noble Baroness. She will discover that within the EU, small banks do not have to deal with the MREL issue. This was the particular interpretation by the UK PRA and has long been a battle that I have every time I meet PRA officials.
Baroness Noakes (Con)
I thank the noble Baroness for that. Of course, I got carried away by my usual desire to knock the EU and lost sight of the essential principle, which is that the PRA is in fact applying the MREL rules disproportionately. I think that on that, the noble Baroness and I will agree.
So the PRA is applying a system that is designed for systemic bank failure to smaller banks, which present no systemic risk at all. While some modifications were made in 2021, medium-sized banks still end up having to issue MREL-compliant capital, which adds to their cost of capital, and this in turn reduces their capacity to lend. A number of mid-sized banks told the Treasury late last year that this reduction in the capacity to lend could amount to £62 billion over the next five years. Everyone loses—except the larger banks, who see smaller competitors facing considerable competition barriers. I believe that the regulators need to focus more on proportionality, which is the aim of my amendment.
Earlier I said that I was sceptical about the regulatory principles in FSMA, but they exist and we need to make sure that they are comprehensive. My Amendment 77A introduces an additional regulatory principle of being evidence-based. We have inherited all those EU rules, which were drawn up in the context of the EU’s well-known precautionary approach to regulation. I can see how easy it is to slip into the habit of regulating in the UK in the same way, just because we had to regulate that way in the past.
On our first day in Committee, we had a short debate on short selling. There is no evidence that short selling is or has been a problem in the UK, and yet the Government and the FCA are lining up to carry on regulating it. We need a shift of mindset in financial regulation in the UK, because the regulators should regulate only where the evidence points to the need for regulation, and we should not be regulating on the basis of hypothesis or speculation. That may well mean stepping back from regulating in areas where there is a possibility of a problem but no evidence that problems actually exist.
If we have a nimble system with agile and responsive regulators—I accept that that might be a rather big assumption—we should have no problem in stepping back, because we can act when a problem emerges. I certainly do not recommend or seek the widespread dumbing down of our regulation, because good regulation is part of the strength of our financial services sector. However, I believe that we are failing to take advantage of our Brexit freedoms to liberate our financial services businesses where there is no evidence that it is not safe to do so. That is what lies behind my seeking to add an additional regulatory principle.
Lord Tyrie (Non-Afl)
I declare my interests as in the register. I was not intending to begin with these remarks but I think the one thing we can all agree on is the fundamental weakness of the Bill, which is that it repatriates considerable powers to UK regulators from the EU without giving any meaningful consideration as to how these powerful bodies will be scrutinised and held accountable.
The noble Lord, Lord Bridges, has made a detailed proposal; there are others around. Somewhere in that area we have to put something on to the statute book to accompany these measures. I think that is relevant to the consideration of the amendments in the name of the noble Lord, Lord Lilley. One task such a body can be asked to accomplish is to evaluate and make suggestions for more far-reaching reform. A number of the amendments in the noble Lord’s name might fall into this category and they may have quite profound effects on the way that we are regulated.
As for competition—which I also was not intending to speak about but I cannot resist it—I spent an enormous amount of effort and time, with the noble Lord, Lord Flight, and others, when we were in the other place, trying to get competition and competitiveness built into FiSMA; this was in 1998-99. We largely failed and even now we have not succeeded as much as we would like. I strongly agree with what the noble Baroness, Lady Noakes, said about these multi-tiered objectives and principles—operational objectives, strategic objectives, et cetera. The consequence, of course, is that they are gamed by regulators, which implement the bits that they most like and leave behind the bits that they do not like if they are all too difficult.
These two first points I have made are interlinked. Currently nobody holds regulators to account for that gaming. If we did have a more powerful body, if Parliament could have at its disposal more effective expertise—something akin, perhaps, to the NAO but much smaller and specialising in regulatory scrutiny; we will come on to this in more detail next week—we might find that the regulators stopped picking and choosing.
When I first read the amendments in the name of the noble Lord, Lord Lilley, I thought they were easy to support. They have some of the character of motherhood and apple pie about them. What could be more reasonable than that the regulator should be given the additional statutory objective of predictability and consistency? But, having thought about it a bit and discussed it with quite a few people, now I am not so sure. I am becoming concerned that, taken together—the noble Lord’s amendments are interlinked—and notwithstanding his good intentions, they could have a major effect on the conduct of financial regulation in the UK, and not altogether necessarily for the public good.
Perhaps I could step back for a moment and explain why, in the context of some of the work we did on the Parliamentary Commission on Banking Standards. The current regulatory framework derives directly from that commission, which I chaired, and from the Vickers commission. These proposals have largely been put on to the statute book and implemented, where appropriate, in the rulebook, with many of those rules being implemented only recently.
When the PCBS and subsequently the Treasury Select Committee were trying to work out how to improve the regulatory framework, which had so manifestly failed in 2008-09, we had several core purposes in mind. Among these were, first, to challenge and, where possible, expunge the box-ticking, back-covering culture which had grown up in both the regulators and the regulated community, often in the search for safe harbours—safe harbours for both of them, incidentally. In doing so, we hoped to bear down on regulatory capture—the dangerous community of interests between the regulators, the regulated and the sponsor departments, which develops at the least opportunity. I strongly agree with what the noble Lord, Lord Lilley, said about what regulators will regulate for if no one keeps an eye on them at all.
A second purpose we had in mind was to try to safeguard market entry; that is, in particular, to develop a regulatory framework that did not discourage challenger banks: regulation to competition, not from it. I mention in passing that this is very much unfinished business, to put it mildly. There are barriers to entry everywhere.
A third purpose, and closely related to the second, was to bear down on excessive legalism. Access to the law is rarely cheap and usually favours large incumbents. Regulatory barriers to entry suit them and they are difficult and expensive for small firms to deal with. Big firms can certainly look after themselves. Tracey McDermott—I am almost quoting; I tried to look up the quote just before I came in this afternoon but could not quite find it—once suggested in evidence that we catch the small fry, the big fish get away.
A related point on excessive legalism is that legal scrutiny can provide greater certainty, but after a certain point it comes at the price of effective regulation. Markets are themselves inherently uncertain. Risk-making is of its nature forward looking. It will therefore always be imperfect for the conditions in markets at any one time. Regulation can be a lot better than nothing, but there will always be regulatory failure, and there will always be some legal uncertainty.
The fourth purpose we had in mind was to limit the FCA to a narrow range of objectives and to expect it to explain in much more detail than prior to the crash how they should be applied. This lies at the heart, at least in theory, of principles-based regulation supported by guidance. Multiple objectives, as I said a moment ago, will always be gamed by the regulator. Generally, the fewer the objectives, the better.
Others may disagree with everything I have said, but I still think that those purposes, which were not the only purposes that we had in mind, were probably on the right track. What concerns me about these amendments is that, among other effects, several of them will strike at some of these core purposes. For example, building on Amendment 54, Amendment 85 seems to suggest that the regulator can make new rules only if, or will find it difficult to make new rules unless, they are fully consistent with existing rules and that they are capable of prediction. At the least, even if the regulator can make rules, can they be enforced? This is what I understand proposed new subsections (1) and (2) in that amendment to say. It seems to me that it is how the objectives of consistency and predictability will be satisfied in law. My concern is that this will restrict adaptation and enforcement by the regulator. Fast changes in markets and the creation of new markets are features of much of the financial sector. We want to encourage dynamism and creativity and it seems to me that this proposed new requirement of predictability could make it more difficult for a regulator to enforce rules to address new market developments. It certainly seems likely to make regulators more cautious about enforcement.
I heard calls on the radio today for regulation of the cryptocurrency markets. I offer no view on the merits of cryptocurrency market regulation at the moment, but if they are to be regulated and enforced, does that have to be done in a way that could have been predicted from current regulation; for example, from the regulation of securities markets? I hope not, and I may have misinterpreted. I certainly do not think that was the intention of the noble Lord, Lord Lilley, but I hope it is not the effect of his proposal.
Lord Roborough (Con)
My Lords, I declare my interests on the register as a shareholder in an FCA-regulated asset management company. I should add that I have worked for 30 years within investment banking and investment management, including five years as a designated senior manager, and in that role I had direct experience of the FCA. I also apologise that I did not contribute at Second Reading.
I speak in support of my noble friend Lord Lilley’s Amendments 54, 85, 46, 57, 64 and 82, which require the regulator to act with predictability and consistency. I believe these also tie in neatly with a number of amendments, yet to be discussed by my noble friend and others. Those address oversight, accountability and right of appeal, and following precedent will be important to those functions—fundamental to our legal system but not necessarily to our regulation at present.
I think all would agree that predictability and consistency of rule interpretation and enforcement are desirable, but they are not always in evidence, and I do not believe that the Bill addresses that. Indeed, by placing on the FCA secondary objectives around economic growth, international competitiveness and UK net-zero emissions, I agree with my noble friend that the Bill is likely to reduce predictability, defeating those secondary objectives by making the UK a more difficult place to do business.
From my own experience, I believe that the FCA is an effective and informed regulator, but there can be a fear of the unknown when interacting with it. Dealing with the FCA often requires legal intermediaries to try to understand what that body is currently thinking about interpretation of the rules. Enforcement actions frequently happen in the shadows and are surrounded by rumour. The legal intermediaries have the only access to these precedents that are established by those actions. There is also pressure on senior managers to enforce these unspoken interpretations under threat of personal liability if they fail to implement them in line with the FCA’s thoughts. Who would want to be a senior manager?
To address the noble Lord’s points on legal uncertainty, I believe this can be avoided by dynamic communication from the FCA on emerging issues and how those rules will therefore be enforced in future. That appears to remain perfectly possible under the amendments proposed.
These amendments would force the FCA to be clearer about how it interprets and enforces rules, leading to greater disclosure around the precedent being established in its recent actions—where information is confidential, perhaps anonymised. That in turn will also allow for more effective oversight of the FCA, as greater disclosure will allow more informed investigation of whether these rules and interpretations are consistent with the mandate of the regulator. Greater regulatory certainty would reduce barriers to innovation and entrepreneurialism. It would reduce the cost and complexity of doing business in the UK by removing unnecessary precautionary compliance expenditure. We need the regulator to demonstrate that it is acting with predictability and consistency to free our finance industry to focus on creating wealth for this country within a transparent regulatory framework.
These are excellent amendments, and I would have put my name to them had I known how.
Lord Holmes of Richmond (Con)
My Lords, I rise to speak to Amendment 74 in my name, but before I do so, I give my wholehearted support to the amendments in the name of my noble friend Lord Lilley and those in the name of my noble friend Lady Noakes, particularly Amendment 72, which is excellent.
My Amendment 74 can be summed up in one word: proportionality—simply that—no more, no less. Disproportionality does not reduce risk or increase consumer protection, and it certainly has nothing to say about optimising the resources of any organisation. Amendment 74 seeks to simply insert the proportionality concept, as does Amendment 72 in a broader sense—rightly. I hope my noble friend the Minister will respond positively when she comes to sum up.
Lord Thomas of Cwmgiedd (CB)
My Lords, I will make three brief observations. First, in this context, we are looking at the mandate that we are giving the regulator. One obviously could look at rules by some ex ante supervision, but that is not how this will work. Leaving it all to accountability after the horse has bolted is not the right way to proceed. It is very important that we give attention to the scope of the mandate.
Secondly, there is an obvious illustration as to the scope of the mandate in the proposal from the noble Baroness, Lady Noakes: proportionality. I would be astounded if anyone disagreed with that proposition, because only a fool would argue that you should make disproportionate legislation.
It seems to me that, in looking at this, we ought to know how the people given the mandate by Parliament intend to operate. Do they intend to produce consistent and predictable rules? I would imagine that they do intend to. They may agree with many of these objectives, but it is very important for the Committee to know the Government’s view of the form of regulation—the mandate—before we decide on what should happen. We also need to know how they are going to do it, because you always ask your agent how they will do something. If we were informed, there might be much less dispute.
Baroness Bowles of Berkhamsted (LD)
My Lords, I have Amendment 70 in this group, which was also referenced by the noble Baroness, Lady Noakes, who supported and signed it. It would insert a regulatory principle of efficiency that the PRA and FCA must ensure that their supervisory and approval interactions are efficient from the perspective of the regulated entities and in comparison with regulators in comparable countries. Clearly, it overlaps with some of the issues that we have already discussed, but it gets to the heart of the matter as to how and for whom the regulators are thinking, and whether they recognise what their impact is.
My Amendment 122 establishes that a corresponding report is required, which must include how they have undertaken this efficiency comparison, including the periodicity of the comparison and its outcome.
Amendment 144 is another go at inserting the same principle into the bank’s supervisory roles. It will not have escaped the notice of those who have read all the amendments that a similar amendment also appears in other places and formats, in part as a response to the layering of objectives to make sure that they actually happen. The point is really to find the best place for this, not to keep repeating it, but I had several bites at the cherry.
As I said, the substance of my amendment has already been discussed in the previous group, but I wanted to bring out the perspective point. The regulator itself might be very efficient at the expense of the industry it regulates—for example, by using the same template letter at the start of institutional approval processes, without any regard for proportionality or without saying anything useful about what might already have been presented at an extensive, exploratory, preliminary meeting. I recognise the traps that the regulators are trying not to fall into, but this has to be looked at from the other side.
As I said before, when the Industry and Regulators Committee was looking at competitiveness, there was a constantly repeated complaint from industry about delays over routine approval matters, including staff appointments, which caused delay and costs in day-to-day matters. These issues keep coming up, both in real life and in the amendments from noble Lords from around the House, including from the Government’s side. I therefore hope that the Minister and Government will help us to address them as we proceed on the Bill. It is obviously a matter to which we will return on Report, probably in more than one way. Therefore, some preliminary discussions with the Minister would be very useful.
I must also comment on the proposals from the noble Lord, Lord Lilley. If you look at all his amendments, you will see that he is also a victim of the need to insert the same thing all over the place in FSMA in order to make it happen—and I appreciate that there are bigger and more developed amendments to come. My concern is whether the amendments achieve the objectives they set out to. I see the attractiveness of predictability, but I think that some of the concepts underlying these kinds of amendment are about reintroducing thinking in the regulator and in industry. By having layer on layer of complex rules, starting at the top, drilling down, then making the next one slightly different and providing lots of tick boxes, you can get certainty. But everybody says they want principles. I thought the idea was to have principles and then to discover that, if you did not take some reasonable precautions, there may be some regulatory actions against you. I have had these kinds of conversations with some of the authors of these proposals.
This almost goes back to where it used to be, when there was unlimited liability, but you took a little more care, because you might be for the high jump. You had to think about what you would do and consider the harm, instead of looking at a set of rules, against which you could put a little compliance tick that took away the thought and judgment that should be going into what you are doing in such an important industry. This cannot be tick-box. I fear that this is driving in the same direction. If I heard correctly, even the noble Lord, Lord Lilley, talked about these broad principles needing more detail underneath.
These amendments do not solve what some of those who have spoken in this group have told me that they want them to solve. I fear that this will be static rather than agile, yet after Brexit we keep saying that we want our regulators to be agile to new things and able to adjust. One cannot be both agile and wholly predictable, because you have to respond to new circumstances.
Baroness Kramer (LD)
Thank you. We are desperately trying to work out what we do to remain winding speakers but, thanks to the flexibility, that is allowed in Committee. It disappears at Report, but it has been very useful.
I wanted to make a few comments because I want to ensure that we focus strongly on the issues raised by my noble friend Lady Bowles: looking at the international competitiveness objective through the lens of efficiency of the regulator. When I talk to the industry, its beef is typically not with the regulation but with the way it is applied. It is the endless paperwork, delays, time-wasting, and everything else. The amendments that she has tabled get us laser-focused on that and tell the regulator, “This is unacceptable. It may mean that you need more resources, but then open your mouths and ask for them, because I think you would find that Parliament would row in behind you to ensure that you have that capacity to deliver that effective, efficient regulation.”
I was slightly taken aback by the example of a one-week approval authorisation in the Bahamas only because I am very conscious that the 2007-08 crash was finally tipped over the edge by AIG, the major US insurance company, saved at the last minute by a bailout of $150 billion. It has rectified itself today. I would hope that our regulators would take more than four or five days to look at authorisation for company with the capacity to bring down a very large part of the world’s economy. I just turned pale for a moment. I hope that we will not take that as a continuing example.
I also do not see the regulators as typically capricious—inefficient, but not really capricious. I am therefore concerned about the amendments from the noble Lord, Lord Lilley, to the extent that they would remove agility. All of us who work in some way or other in relation to the financial services industry recognise that we are in a period of the most extraordinary change. Technology and globalisation are driving it, and all kinds of innovation are out there. We need a regulator that can cope with the pace of change that is taking place and does not come late to the table.
When I first got involved in politics, fintech was new. I remember asking every member of the fintech industry to meet me, and there were 12 people around the table. Now the leading figures associated with fintech would not fit in the Royal Albert Hall. That is brilliant—but I remember the difficulty then in trying to explain to the regulators that we needed a completely different regulatory environment, if fintech was going to develop. It wanted regulation. Being without regulation led the industry to fear that rogue players would suddenly enter that would disgrace the industry and cause a regulator to come on to its lawn with tanks blazing. There was a real desire to get appropriate and sensible regulation in place, but it had to be different and innovative and had to recognise the features of the industry.
When it comes to the word “predicted”, it seems to me that for a court it would be very hard to go through that kind of analysis, and to understand the business issues and the differences and risks in various industries, to understand whether or not predictability applied. When I looked at this issue, I thought, “My goodness, I bet this was drafted by lawyers because it looks rather like a lawyers’ charter.” I do not think that providing additional business to some of the law firms in the City is one of the purposes of the Bill. I have some real concerns, and they centre very much on that area. I hope we will think this through extremely carefully. Anyway, I consider that I have wound up, and I will sit.
Lord Tunnicliffe (Lab)
My Lords, we have no amendments in this group. I have listened to this interesting debate. It comes back to the classic dilemma in all parts of life, from family dilemmas right through to how you manage an industry, and it comes right to this proportionality issue. It is very easy to create rules so simple that you cannot see what they are trying to achieve. It is very idealistic to try to create some ideas that the industry should contain. I look forward to listening to the Minister’s reply, but I have enormous sympathy with her, and I hope she might perhaps give some thought to whether we might try to develop some mechanism between now and Report to see if we can create common ground on this extraordinarily important issue.
Baroness Penn (Con)
My Lords, the Government agree with noble Lords that the efficiency, predictability and proportionality of financial services regulation are a particularly important issue, and one that the Government and Parliament should continue to hold the regulators to account on. We have heard in this discussion many different approaches and ways of getting at this issue and seeking to advance it. I hope that in my response I can set out how the Government have had those concepts at the forefront of our mind when looking at the framework, and I shall seek to support the points that have been made by noble Lords today.
Put together, Amendments 46, 54, 57, 64 and 82 from my noble friend Lord Lilley seek to introduce a new effective for the PRA and the FCA relating to predictability and consistency. As I have said, the Government agree that predictability and consistency are an important component of an effective regulatory regime. As observed by IMF studies, when independent regulators make judgments on the design of regulatory standards, they are more likely to deliver predictable and stable regulatory approaches over time, and thus the centrality of the independence of our regulators at the heart of our regime seeks to support those objectives.
As we have discussed in previous debates, the FCA and the PRA are required to advance their objectives when discharging their general functions, as set out in FSMA. The Government’s view is that the regulators’ objectives should be focused on the core outcomes they should seek to achieve. The Government agree that, where possible, the regulators should advance their objectives in a predictable and consistent way. The framework already addresses this through the regulatory principles, as set out in Section 3B. These regulatory principles aim to promote regulatory good practice. The statutory requirement in FSMA for the FCA and the PRA to consult on rule proposals seeks to ensure that there is a predictable approach to rule-making. As part of this consultation, the regulators must explain why the making of the proposed rules advances, and is compatible with, their objectives as set by Parliament in legislation and how the proposals are compatible with their obligation to take into account the regulatory principles. These requirements are designed to ensure that consumers, market participants and wider stakeholders have a meaningful opportunity to scrutinise and feed into the development of regulator policy, guidance and rules. It also ensures that stakeholders are aware of planned changes to rules and can engage in their development.
In addition to seeking to introduce the new objective, Amendments 54 and 64 would also insert a provision that would prohibit the FCA and the PRA from taking retaliatory action against firms that challenge regulatory decisions. While I understand that firms may be concerned about how an appeal or judicial review may impact their relationship with the regulator, the Government consider that it would be wholly inappropriate for a regulator to treat a firm differently simply because it had chosen to challenge a decision. The Government would expect a regulator to respond to any such challenges appropriately and professionally. I am not aware of any evidence that the regulators have taken such alleged retaliatory action, and firms already have avenues available to them to contest and appeal enforcement decisions. The Government therefore do not believe that an amendment is required in this area.
Amendment 85 seeks to restrict the regulators from enforcing rules made at a “high level of generality”, except in certain circumstances. The FCA’s approach to regulation involves a combination of high-level principles and detailed rules. We discussed this balance and the benefits of those different approaches earlier in Committee and I am sure that we will continue to do so. Through its Principles for Businesses, the FCA aims to encourage firms to exercise judgment about, and take responsibility for, conducting their business in line with those principles. When conducting the future regulatory framework review, the Government reviewed over 100 responses to two separate consultations, which concluded that the provisions concerning enforcement and supervision remained appropriate. Enforcement decisions are specific to the firm and the rules concerned, and the FSMA model requires independent supervision and enforcement.
Amendment 85 would also require that regulator rules are interpreted according to common-law methods of interpretation. The Government are repealing the prescriptive provisions in EU law though this Bill so that they can be replaced with domestic legislation and regulator rules made under FSMA. I reassure my noble friend that it will be up to the UK courts to determine how that domestic legislation and rules are interpreted.
I turn to Amendments 70, 72, 74, 77A, 122 and 144, which in various ways aim to ensure that the regulators act proportionately. Again, I emphasise that the Government agree about the importance of proportionality and agree with the words of my noble friend Lord Holmes when he spoke to his amendment on this. A number of the regulatory principles already address the themes of good policy-making that these amendments seek to embed. These include principles of efficiency and economy, proportionality, and requiring the regulators, where appropriate, to exercise their functions in a way that recognises differences in the nature and objectives of different businesses subject to requirements imposed by or under FSMA. The Bill also introduces these principles for the Bank of England in its regulation of central counterparties and central securities depositories.
Lord Thomas of Cwmgiedd (CB)
Would the Minister be able to get the views of the FCA and the PRA on this matter? It would be interesting, in examining consistency and all these issues, to see if—hopefully—they could do that in no more than two pages.
Baroness Penn (Con)
Is the noble Lord referring to their views on the question of proportionality and efficiency, or on a specific case?
Lord Thomas of Cwmgiedd (CB)
On the specific question of drafting rules, what do they think their mandate is? Do they accept that the rules have to be proportionate and clear? It would just be very useful to know how they see their new approach to things. I think it can be done in two pages, but that is a good test.
Baroness Penn (Con)
I am sure that the regulators have provided some of those views already. For example, they gave evidence during the Commons Committee stage of this Bill. I do not want to speak for them but I absolutely undertake to the Committee to seek that from the regulators, and obviously it will be down to them as to how they wish to deal with the request. With that, I hope that noble Lords will not press their amendments.
Lord Lilley (Con)
My Lords, this has been a fascinating and valuable debate, the highlight of which was obviously the agreement between my noble friend Lady Noakes and the noble Baroness, Lady Bowles, on the disproportionality of the PRA. Another common feature of the whole debate was that everyone seemed to express concern about the lack of accountability of the regulators. I was encouraged by the Minister’s remark that she would look positively at the debate.
I am grateful for the support of my noble friends Lord Trenchard, Lord Naseby, Lord Sandhurst, Lord Roborough and Lord Holmes for the amendments that stand in my name. I am also grateful to the noble Lord, Lord Tyrie, and the noble Baroness, Lady Bowles, for applying their critical faculties to the amendments that we tabled. I will consider carefully what they said. It will be easier for me to respond when I can actually read the text rather than doing so immediately now—anyway, I only have time for a few words now—but I think I can assure them that the amendments would not require new rules to be predictable from old, existing rules, nor would they forbid new rules that were inconsistent with existing rules; it would just have to be explicit that they overrode an existing rule—although I may have misunderstood what they said.
The noble Baroness, Lady Bowles, mentioned that she is worried about excessive powers to lawyers and litigation. I am in the unusual position of being in alliance with lawyers. I got into trouble early in my parliamentary career by quoting
“let’s kill all the lawyers”
in a debate in which it turned out that I was the only non-lawyer. I think we have to recognise that the only alternative to the common law approach which we seek to entrench here, which is the purpose of the Bill, is the codified approach, which is very much more rigid and unable to respond quickly to the rapidly varying world to which the noble Baroness rightly referred, or simple discretion which may not lead to being capricious, but does mean that it is very unpredictable for practitioners who do not know how rules are going to be applied. I will, of course, withdraw the amendment, but I hope we will return to these issues on later groups and perhaps on Report.
The Deputy Chairman of Committees (Lord Beith) (LD)
Before I call Amendment 47, I advise the Committee that if it is agreed, I cannot call Amendment 48 by reason of pre-emption.
Amendment 47
Baroness Noakes
Member’s explanatory statement
This amendment probes what “relevant international standards” are and their relationship with the competitiveness and growth objective.
Baroness Noakes (Con)
My Lords, I shall speak also to Amendment 58 in my name. The new competitiveness and growth objective, which I strongly support, is rather curiously drafted, as the FCA and the PRA are mandated to pursue competitiveness and growth
“subject to aligning with relevant international standards”.
My Amendments 47 and 58 remove this from the formulation for both the FCA and the PRA on a probing basis to try to understand what the Government mean by it.
International standards come in all shapes and sizes and it is far from necessary for the UK to adhere to everything which claims to be an international standard. The term is not defined in this Bill nor, I think, in FSMA. Part of what I am seeking is to understand what is a “relevant standard” and what kind of standards can in effect trump the competitiveness and growth objective. I hope that my noble friend will be able to explain this when she winds up.
The competitiveness and growth objective is already circumscribed by its status as a secondary objective. Using the PRA as an example, this means that it has to act only
“so far as reasonably possible”
in a way which advances its competitiveness and growth objective. Its primary objective—promoting the safety and soundness of PRA-authorised persons—will always trump a secondary objective. In this respect, I am not sure that Amendment 65 from the noble Lord, Lord Tunnicliffe, is necessary. That is certainly the view of the PRA, which has been clear about the primacy of its prime objective.
Although some of us might have preferred competitiveness and growth to be a primary objective, which could then raise different issues, the Bill does not go that far and the secondary objective is therefore secondary to the primary objective. I completely understand if the PRA choses to follow international standards because it believes that this advances its primary objective, and that would trump the secondary objective. On that basis, there is no need to refer to international standards in relation to the competitiveness and growth objective because if the PRA thinks that they are necessary, they are already absorbed within its primary objective. However, if an international standard is not necessary for the primary objective, I do not understand why any such international standard should crowd out the competitiveness and growth objective.
There may well be a presumption that standards promulgated by bodies such as the Financial Stability Board or the BCBS will be followed, but that is accommodated within the primary objective. However, even in that context I think we have to remember that, for example, the Basel capital standards have not always been followed universally, most notably by the USA, which pursued its own course for a considerable period of time. International standards are not matters of international law. Their implementation is always a matter of judgment for the home regulators and therefore needs to be considered in the judgments they make on their primary objective.
I believe that the words
“subject to aligning with … international standards”
give too much weight to policies developed outside the UK and could damage our competitiveness and growth. The regulators should not be allowed to ignore the secondary objective on the grounds that they are following international standards if those standards are not core to their primary objective.
I look forward to hearing the noble Baroness, Lady Bowles of Berkhamsted, on her Amendment 49, but my initial view is that it is right to keep the reference to financial services in the competitiveness and growth objective. Whether we like it or not, the financial services sector contributes around 12% to the UK economy and 7% of all UK jobs, according to the City of London Corporation. The regulators that can have the biggest impact on the financial services sector are clearly the financial services regulators: the PRA and the FCA. It seems to me only right to emphasise that their new secondary objective should specifically refer to the financial services sector. I beg to move.
Viscount Trenchard (Con)
My Lords, I support Amendments 47 and 58 in the name of my noble friend Lady Noakes, to which I have added my name. I also appreciate the support of my noble friend Lady Lawlor.
The FCA is influential in the formation and development of standards, and states on its website:
“We contribute to and implement international standards, and supervise and enforce rules based on them in the UK.”
The principal international standard-setting body for the industry is IOSCO. Will the Minister confirm that the UK is already using its enhanced influence in that body resulting from our having a seat at the table in our own right rather than through the EU? IOSCO’s key strategic goal is to be accepted as the recognised standard-setter for securities regulation. The International Association of Insurance Supervisors seeks to play the same role for the insurance industry. Its mission is to promote effective and globally consistent supervision of the insurance industry to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders and to contribute to global financial stability.
Nevertheless, international standards are a very subjective concept, and the introduction of this concept does not assist the need for clarity and predictability, besides the question of whether international standards will assist or impede the advancement of the competitiveness and growth objective. I am unable to support the proposal of the noble Baroness, Lady Bowles, to include sustainability in addition to relevant international standards because I think that sustainability is an even more subjective concept and that this amendment would reduce clarity and predictability.
I do not understand Amendments 49 and 59 from the noble Baroness; I think the financial regulators’ responsibility for financial services does not extend to different spheres of activity, although I, too, question why this limitation is included in the Bill anyway. The amendments in this group are really important because the Bill provides for rather limited supervision of regulators, and I believe it is necessary to improve parliamentary oversight.
Baroness Bowles of Berkhamsted (LD)
My Lords, I have several amendments in this group. Amendment 48, which has already been referred to, seeks to add “sustainability” in as a sort of foil to the international aspect. Amendments 49 and 59 seek to remove the bits in brackets relating specifically to financial services, which is more of a comprehension issue. Amendments 51 and 60 propose another placing of the efficiency amendment in case it might sit better within the competitiveness and growth objective.
There is another very dangerous thing going on here, on which I agree with the noble Baroness, Lady Noakes—we agree more often than people would think. To some extent I support her Amendment 47, as I will explain later.
As has already been said, my Amendment 48 seeks to add in “sustainability” so that the competitiveness and growth objective would be “subject to sustainability and aligning with relevant international standards”. We have been talking about the need for balance and I felt that that, potentially, was a balance that we wanted. That also seemed a suitable place in which to write sustainability into the Bill. Perhaps we could choose other words, because I meant it to cover sustainability in financial terms and in a humanitarian and environmental context, too. I am not clear that some of the things which are said to be covered actually are covered.
When we were talking about position limits, I believe that the Minister said that taking humanitarian matters into account was something that the FCA could do. I cannot see anywhere among its objectives or anywhere else where that comes about. I can see that there can be market integrity things on position limits, but not whether you want to think about whether you are causing people to starve. There are things that we expect to be taken into consideration—it is not a subliminal matter, but just by implication—but they are not there if you look for the words. From experience of looking at things when they have gone pear-shaped and the regulators want an excuse, it seems to me that they will be asking where it says those things.
Returning to the competitiveness and growth objective, the more I look at it, the less I like it, not from the point of view of the competitiveness and growth bit but for all the other drafting around it. This is where I agree: what on earth is this “subject to international standards” doing there?” It gets sprinkled around quite liberally in legislation. When I was an MEP, I learned very soon after I got to Brussels that the Treasury wanted “alignment with international standards” put liberally into EU legislation as a way to try to cut down EU degrees of freedom. Now, here we are, post-Brexit, trying the same trick on ourselves and handing it to unelected bodies. Much as I did not object to the EU system, we are where we are. I do not think it is right. If we think recently in terms of LDI and so on, we hear the Bank of England saying, “Until we have the international rules on non-bank financial institutions, we have not done anything”, when something that is a complete viper’s nest is going on that is completely within everything to do with the United Kingdom. That shows us—we will come to this later on with some of my financial stability amendments—that it is looking for support and to hugger-mugger together with the rest of the regulatory organisations rather than putting the UK first and thinking clearly about what we want.
Are we now trying to control the regulators as we tried to tie the EU? We do not need it to control the regulators because they largely control what goes into the international standards, and those international standards have far less parliamentary scrutiny than anything done by UK regulators for the UK. I accept that the Treasury has a seat at the table and therefore knows what is going on, but it is very difficult to scrutinise what goes on at Basel and the other international organisations. You can get our regulators to explain what they agree with and claim victories where they put things in, but to get any explanation in time to be able to react to it and to influence it is extremely difficult. I tried this while I was chair of ECON in the European Parliament when we were doing the capital requirement rules. We forced one or two meetings with them, but they did not really want to know, and we are going to be in even more difficulty trying to follow those kinds of things within the UK’s parliamentary system.
Here we are signing up blind to something rather than signing up after scrutiny. That is what happens in other countries, notably the EU and the US, which have a whole system, including parliamentary procedure, to determine whether they are going to sign up to the international rules.
There is nothing wrong with political statements being made which say that the broad expectation is for us to be in alignment with the international standards, but I do not see what that does without any kind of caveat around it within primary legislation. It makes a mockery of us trying to scrutinise anything when we know that what we will be getting is just what the regulators have decided with other regulators, at a different level over the UK’s head.
As I mentioned on the last group, I also put my amendments on efficiency here, so I will not go into those again. We can discuss among ourselves where they fit best.
My final point relates to the words in brackets, which I address in my Amendments 49 and 59. Simply, when I read this part of the Bill, it did not read as if the financial services references were in there because that was the bit that the regulators were empowered to do; I thought that it was possible to make it read as if some kind of preference could be given to financial services over and above other things. I know that that is not the intention, so my only objection to these words is to ask whether the Government are absolutely sure that they read properly. I am not suspicious of the motives but, if one of my assistants had written this back in my patent attorney days, I would have been thinking that it was not quite right and asking if we could rephrase it. So there is nothing more suspicious to it than that.
I do not think that those words are actually needed because, as the noble Baroness, Lady Noakes, said, they can only influence financial services. Financial services must serve the economy and must serve other businesses. So you could, theoretically, enhance the economy within financial services by putting up all your charges to the rest of industry. One hopes that competitiveness and competition laws would stop that from happening, but you could have that interpretation. Somebody might be able to hang something on those words if they are still there.
That explains my amendments. I do not think there is anything too untoward; I would be interested to hear from the Minister about international standards. I accept that we have them in other pieces of legislation, but if we have got it wrong somewhere else, we do not need to keep repeating it.
Lord Holmes of Richmond (Con)
My Lords, I speak briefly to give full-throated support to the amendments in the name of my noble friend Lady Noakes. This tying to international standards seems odd, at best, for at least two reasons: first, this is attached to the competitiveness objective and not run through all objectives, not least the primary objectives; and, secondly, this objective, even before it has been launched, is fettered and shackled through this connection to international standards and the ISSBs that they are under. That seems curious, in that it seems to run counter to the espoused purpose and intention of the Bill. I would be very keen to hear my noble friend the Minister’s comments when she comes to sum up on those points.
Baroness Hayter of Kentish Town (Lab)
My Lords, I declare my interest as a board member of the Association of British Insurers. I apologise that I was not able to speak at Second Reading. I had my name down, but unfortunately had to scratch because of a commitment from the committee that I chair.
I speak very briefly on Amendment 65 in the name of my noble friend Lord Tunnicliffe—I was not going to, because I am sure that he will explain it, but as it has sort of been challenged already, I thought it would be useful to bring the Committee’s attention to the view of TheCityUK. On the secondary objective, it says that economic growth and competitiveness would remain subordinate to the regulatory primary objective of promoting competition, preserving stability and protecting consumers. TheCityUK thinks that is the proper place for it. I think my noble friend may explain that his was more of a probing amendment, but certainly I hope that the Committee is of the view, along with many of us, not just TheCityUK, that primary means primary and secondary means secondary, and therefore that the primary will always trump the secondary.
Lord Sikka (Lab)
My Lords, I and the noble Baroness, Lady Bennett of Manor Castle, oppose the Question that Clause 24 stand part of the Bill.
As I read the Bill, I wondered why growth and competitiveness as a regulatory objective appear at all. A friend in the City reminded me that the Government have been unable to deliver any Brexit benefit and have to show that they are doing something; therefore this had to be tagged into the Bill—although I understand that this clause was written at the behest of TheCityUK and UK Finance, which wanted to sponsor it.
The secondary objectives of growth and competitiveness cannot be reconciled with the main role of ensuring financial stability and consumer protection. If there is growth because of financial stability and consumer confidence, that is fine, but to go out of your way and say that the regulators must somehow grow the finance industry and promote international competitiveness is something else. Unless the Minister points me to it, I could not find anything in the Bill which indicates exactly what kind of weight is to be attached to each of those four conflicting objectives.
How much growth are the Government trying to secure in the finance industry? Are there any limits, and what are the economic and social costs? What would be the opportunity cost of more graduates going into the finance industry and shunning other careers, whether in manufacturing, chemicals or any other industry? How will the regulators ensure that somehow the UK has a greater supply of graduates? How will they ensure that there is adequate infrastructure? I could not see that any of these issues were answered in the long and hefty impact assessment.
The promotion of competition is an existing aim of the financial regulators. Here we can see that the FCA has persuaded some challenger banks to enter the market, although it has been utterly unable to tame the major banks that dominate the market; they have not been broken up and have reduced people’s access to the market—for example, by closing bank branches. Is taming the banks and breaking them up a matter for the FCA or for the CMA? The regulatory architecture continues to become more and more complex. Each regulator already passes the buck to somebody else, saying, “It’s your job to secure competition”, and that is domestically. When we move on to the bigger picture, it becomes even more complicated.
The common understanding is that the notion of competition relates to the state of the market and access to it. That is very different from the notion of competitiveness, which as a discourse does not have any permanent meaning in any sense; its meaning is always constructed and needs to be given. Essentially, however, it relates to the industry as a whole. That is a task for the Government, not for the regulators at all.
International competitiveness, as many noble Lords have already said, is about the ability to attract business from other financial centres. In the words of the former Business Secretary, Vince Cable,
“chasing ‘competitiveness’ really means … a race to the bottom—watering down standards in the hope of attracting more dubious sources of money to an industry.”
That is quite an indictment of the government objectives by a former Minister. Similar principles—that is, the principle of competitiveness—and approaches were behind the 2007-08 crash that hammered the whole economy. We are yet to recover from that folly, but they are being brought back. The Governor of the Bank of England, Andrew Bailey, said that before the last crash the regulator
“was required to consider the UK’s competitiveness, and it didn’t end well, for anyone”,
yet we are embarked on exactly the same course again.
There was an unprecedented bailout of the finance industry. No other industry in British history has needed that kind of state support, and we continue to be plagued by all kinds of scandals, even in an environment where regulators are not pursuing international competitiveness. We have had nearly £1 trillion of quantitative easing to the finance industry. The result is that there is asset price inflation and real wages are still down, yet it is hard to see any reflection of that in the Government’s impact assessment.
Competitiveness, as we all know, was specifically removed from financial regulation in 2012, but it is being unceremoniously smuggled back in. The Government are clearly opting for a race to the bottom for a sector that has been a serial offender and has actually eroded growth. The finance industry has mis-sold numerous financial products over the years, including pensions, endowment mortgages, precipice bonds, split capital investment trusts, payment protection insurance, mini-bonds and much more. It has led the field in international tax abuse, money laundering and sanctions busting. Is that what the Government really want to grow? Is that what the regulators are supposed to be growing?
Rather than cleaning up the industry, this Bill should have been preceded by a public inquiry into the finance industry to see what exactly needs to be cleaned up, but that never happened. Rather than cleaning up the industry, the Government, the Bank of England and other regulators have actually colluded with the UK banks over the consequences of their own criminal conduct. I have given examples, and I will repeat one here. HSBC was fined $1.9 billion in the US for facilitating money laundering. It admitted in writing that it had been engaged in “criminal conduct”. The then Chancellor, George Osborne, in collusion with the Bank of England and the head of the FSA, secretly wrote to the US regulators to say that they should go easy as HSBC was too big to jail and too big to fail. The result is that HSBC continues to commit financial misdemeanours.
Is that an example of the regulators somehow managing to balance growth and competitiveness? There is certainly growth in dirty money; that has continued. As for competitiveness, all the banks are still charging us roughly the same fees for overdrafts, and they are engaged in other nefarious practices as well. I provided that example regarding HSBC in the previous debates on the Bill.
Scholarly research carried out at the University of Sheffield, where I am emeritus professor, shows that between 1995 and 2015 the finance industry made a negative contribution of £4,500 billion pounds to the UK economy, yet the Government are weakening what modest regulation there is under the guise of the pursuit of growth and competitiveness. Just how bloated does the finance industry have to be before anyone recognises the danger signs flashing all over it? What evidence is there to show that the financialisation of everything is a positive development?
At the next crash, which will come if these objectives are implemented, not just banks but the whole high street will be in trouble, because organisations such as Morrisons, Asda and many others are under the control of private equity, which is utterly unregulated but meshes into the sector that we are trying to regulate. I hope the Minister provides us with some evidence to show that the financialisation of everything, which is inevitable if we grow this sector, will somehow be positive. I look forward to that reply.
The Government have provided no evidence to show that the finance industry has turned a new leaf. Since the 2007-08 crash, there have been scandals galore, whether London Capital & Finance, Blackmore Bond, the Woodford fund, banks forging customers’ signatures or numerous others. What are regulators going to do when faced with multiple objectives?
Do the Government and the regulators even know what the finance industry does? Mini-bonds came as a shock to the FCA; when people told it about them, it did not pay much attention. After the Kwarteng Budget, the gilt market declined because neither the Government nor the regulators knew anything about the impact of market yields on liability-driven investments and pension funds. Just yesterday, the Work and Pensions Committee was told that that Budget resulted in a £4 billion loss to pension funds. The Bank of England earmarked £65 billion of expenditure to bail out that market. As a result, some people made fortunes, but many innocent people made huge losses. There were huge wealth transfers from City speculators to pension funds.
How is the regulator going to adjudicate which kind of wealth transfer is good and which is bad? Regulators have no mandate to do that; only Parliament has that mandate and only the Government can act on behalf of Parliament to do that. Financial stability, growth and competitiveness cannot be reconciled, because there are too many contradictions and the Government are not willing to deal with them.
These kinds of losses are part of the reason why our economy is in the doldrums. The IMF is telling us that we are a basket case in terms of economic growth, yet we are piling on more and more of exactly the same. Ministers have not explained what the competitiveness and growth objective will do to regulators’ duties. We have about 41 regulators in the finance industry; will they all be required to promote competitiveness? How will their efforts be measured? There are 25 anti-money laundering regulators; how will they promote growth? Will they encourage more money laundering and bring in more hot money? Will they object? What will they actually be doing? Perhaps the Minister can spell that out.
We have a real patchwork of enforcement. We have the FCA, the Serious Fraud Office, the Crown Prosecution Service, HMRC, the Bank of England and others. How will they be promoting competitiveness and growth? Will they be lax? Will they copy Chancellor George Osborne, secretly intervene and say to somebody, “Please do not prosecute HSBC, even though it has been caught laundering money and admitted to it”? The Government have provided no answers to these questions and there is nothing about in in the Explanatory Notes. The Government are, in effect, laying the foundations of the next crash, just as the Conservative Government’s light-touch regulation laid the foundations of the 2007-08 crash.
Experienced voices are telling us to change course and not to go down the line that the Government are pushing. For example, Howard Davies, who served as chair of the Financial Services Authority between 1997 and 2003, said that
“he was ‘not keen on’ the competition clause, which went further than the guidance laid out prior to the financial crisis. At that time, he said the FSA only had to prove that issues such as competitiveness were ‘taken into account’ and were not something ‘you were trying to achieve directly’.”
So that is a warning. He added:
“In my view, to give the regulator the objective of promoting competitiveness, could be the thin end of a rather peculiar wedge. I mean, why would … the regulators not come in and tell us to cut our cost-income ratio? That would improve our competitiveness. And if they had a competitiveness objective, it seems that would give them an ‘in’ to the way we run our business, which I think would be a bit tricky, really, and that is one reason why the regulators aren’t really keen on it either.”
Baroness Kramer (LD)
My Lords, I start by speaking to my own two amendments in this group and will then move on to winding for the Liberal Democrats.
In a sense it is quite pertinent that I follow the noble Lord, Lord Sikka, because, as members of this Committee will know, I have some real concerns about the competitiveness objective and its effect and implications. It comes from people who are very much founded on the experience of the financial crash of 2007-08 and a fear at the time that lessons would be learned very briefly but the industry would very quickly push back as it is now, hoping that the crisis has been forgotten. I notice that all the speakers who are in favour of the competitiveness agenda seem very careful not to go back to that time, and they describe in some way why this is inherently different from then. If that cannot be done, or if they have all forgotten exactly what the experience was in that period, we are moving into difficult territory.
My amendments are quite specific and are very definitely probing—I hope that the Minister will disabuse me. When talking with a leading player in the industry, who was encouraging me to support the competitiveness objective, I took the government and regulators’ line: “It is a secondary objective—financial stability is clearly the priority.” I was told, “No, you haven’t read the Bill. You need to look at the section that refers to mutual recognition agreements. You have to read the two together. When you look at mutual recognition agreements, that gives us the leverage, combined with the competitiveness objective, to force the regulator to always adopt for the UK whatever is the standard that is embedded in that mutual recognition agreement.”
I am extremely troubled by that strategy, but from reading the language I can see where that thinking comes from. The attractiveness of the mutual recognition agreement to this individual was that it was an arrangement—in effect a treaty or an agreement—that was not negotiated by regulators. They might have a discussion with regulators and there might be input from regulators, but ultimately it was negotiated by businesspeople, and therefore that would be the guiding principle, not concerns about financial stability—those are not the concern of a trade negotiator—but arrangements, while measures within a trade negotiation contain a lot of compromises and trade-offs. This disturbs me hugely, and I would like the Minister to explain how those concepts and clauses work together. I was talking with someone who was using their imagination, but there was a lawyer present who was confirming what was being said, so I am really quite concerned about that interaction. We need to understand how that works as we proceed with this Bill.
I very strongly support my noble friend Lady Bowles. I am not going to repeat the arguments that she made, which were really important, but I want to pick up on the issue of relevant international standards. Like others, I am troubled by the idea that we might have slavish adherence to a set of rules that are made elsewhere, but on the other hand I am trying to trade off in my mind what we do if we do not have international standards in significant areas of financial services. We may say, as the Americans often do, that we know better than everybody else, that the way we structure our industry means that international standards do not really apply to us and that their capital requirement standards veer quite considerably away from the standards that were agreed at Basel and were largely adopted within the EU. But how do we turn to other places and say that they need to use international standards or that they should not fall below them if we say that that is allowed to us? I am trying to work my way through that thinking process because we live in a very globalised world.
The financial crash of 2007-08, which essentially exposed huge weakness, abuse and mismanagement in the UK, was triggered by events in the United States—the way in which subprime mortgages there had been packaged up and sold as collateralised debt obligations. As I mentioned earlier, subprime mortgages brought down the largest insurance company in the world, AIG, which was rescued by the American Government who, when Lehman Brothers began to collapse, said “Wait a minute. Enough. Suddenly we’ll have to rescue everybody if we’re not careful. We draw the line here.” The consequences reeled not so much through the United States but through the UK, exposing all our various weaknesses.
With this globalised world, what happens in one country, what is done by one regulator, impacts others. How do we manage this unless we have some sort of standing for international standards? I am not arguing against the amendment tabled by the noble Baroness, Lady Noakes; I am just saying that we somehow need to think this through, how it works, how we scrutinise it and how we consider it. It seems to me that it ought to be on only an exceptional basis that we decide that we do not apply those standards in the UK, but we need a mechanism for that and it seems to me that this should be largely something that Parliament determines, because it has significant consequences and would fit with much of the parliamentary accountability agenda that we have talked of today.
I want to pick up on the sustainability issue. Forgive me if I have the wrong person, because I had done that before, but I think it was the noble Lord, Lord Naseby, who mentioned sustainability and said, “How vague can you get?” As far as I remember, we have used sustainability in a lot of prior legislation, so I think there is a body of understanding. Some of the energy legislation that we dealt with certainly had the word “sustainability” in it, so there is a body of definition that sits behind that. I am one of those who would very much like to see sustainability attached to the words “economic growth”. I am not so concerned by the secondary economic growth objective, but I want growth to be sustainable. For me, that encompasses sustainability in every sense, both environmental—as it is often used—and economic.
As I say, I remain concerned about the competitiveness objective. We need to be very clear about its implications. If there are other levers that I have missed in the loan agreement that provide it in a non-obvious way with additional power and strength and the ability to get court rulings in its favour, I hope the Minister will explain them to us because I would find that very necessary for our future discussion.
Lord Tunnicliffe (Lab)
My Lords, I do not wholly associate myself or my party with my noble friend Lord Sikka’s comprehensive description of the finance industry, but I go back to one important area. I mentioned earlier that my previous career had a lot to do with safety. One of the things that it brought out was that people readily forget the catastrophic because the catastrophic occurs so rarely that attention drifts away and they get on with the day to day.
We broadly support the growth and competitiveness concept, although its impact will be modest. It would be a miracle if it added 1% per annum to the growth of the UK. If we read Alistair Darling’s autobiography—and yes, I am aware of the Mandy Rice-Davies test, “He would say that, wouldn’t he?” but it reads pretty convincingly—we see just how close we came to a totally catastrophic situation. It was only saved by a number of individuals, including Alistair and Gordon Brown, taking the very brave decision to do what had never been done before, which was essentially to throw the whole economy at a guarantee of the banking system. That is a pretty dodgy thing to do and, frankly, if you look at the timeline, it got very close to a catastrophic situation.
When one is looking at catastrophic risk—a low probability, perhaps, but catastrophic—you have constantly to bear that in mind. I do not think that the average practitioner in the finance industry works like that; I feel that day to day they are making trades and so forth. The sense of the primary objective is that that should be the salient thought behind all their decision-making: “We must not create another catastrophic situation.” To be fair to the Government, over the past decade or so quite a lot of sensible legislation has been introduced to protect ourselves from catastrophic risk. The Bank of England has a department working away at the regulation of financial institutions to make sure that they are orderly, safe and so on.
I have forgotten what the words are, but the concepts of stability, security and probity must be there in the primary objective and must be well-defined and clearly prime—the top objective. After that, competitiveness, growth and so on would be great.
Our Amendment 65 was a probing amendment and it has worked very well. The noble Baroness, Lady Noakes, assured me—perhaps the Minister will use similar words—that there is no question about the primacy of the objectives, that it is set in other rules and that if I looked at all the rules together, I would not be worried about it. I think that is basically what she said, and I hope it is right, because it is absolutely right that we bear in mind protection from catastrophic risk.
I note the assurances that the Minister gave in her letter following Second Reading, but I am still not clear about the specific mechanism whereby the primary objectives are expressly meant to take precedence in FSMA. To me, it appears that they are indeed split up, but there is nothing to define what it means to be primary. I may be wrong in that concern, and I am here to be persuaded that I am wrong. The more effort that is put into persuading me, the more will go on the record and form the environment in which financial services are delivered. I feel concerned that there is nothing in legislation, in the regulators’ rulebook or elsewhere to guarantee the primacy of the FCA’s and the PRA’s most important objectives. However, as I said, that is an open question, and this debate has been good.
Regarding the international dimension, I see the concerns being expressed about giving it too much primacy—although I do not want to use that word, because it has the wrong effect. My memory is useless but, about two years ago, we had what I will roughly call the Basel III Covid legislation. Many of us were there to debate it. If I remember rightly, it took out the EU law and made space for the regulators to create the situation we are talking about now. My recollection is that aligning with Basel III and the FSB—or whatever it is called—became an objective within that. I see the Minister is nodding, so my memory has some fragments of it.
Once again, it is clearly a good idea to be that bit looser if we are to be innovative. The probing worked brilliantly, as I far as I am concerned. The noble Viscount, Lord Trenchard, quite openly said that competitiveness and growth should be equal to the regulators’ concern about stability and safety. Arguably, that is a properly viewed position, but it is not my position. Failure must be avoided—not quite at all costs but, wherever there is a debate between bigger risk and modest profit, the bigger risk should be avoided.
Baroness Penn (Con)
My Lords, I will speak first to Clause 24 before turning to the other amendments in this group. The Government consider that, alongside their core responsibilities, it is right that the regulators can act to facilitate medium to long-term growth and international competitiveness, reflecting the importance of the sector as an engine of growth for the wider economy and the need to support the UK as a global financial centre. Therefore, Clause 24 introduces new secondary objectives for the FCA and the PRA to provide for a greater focus on growth and international competitiveness. This will ensure that the regulators can act to facilitate long-term growth and competitiveness for the first time.
For the FCA, this objective will be secondary to its strategic objective to ensure that markets function well and to its three operational objectives: to ensure consumers receive appropriate protection; to protect and enhance the integrity of the financial system; and to promote effective competition. For the PRA, this objective will be secondary to its general objective to ensure that UK firms remain safe and sound and its insurance-specific objective to contribute to the securing of an appropriate degree of protection for those who are, or may become, policyholders.
This is a balanced approach. By making growth and competitiveness a secondary objective, the Government are ensuring a greater focus by the regulators on growth and competitiveness. However, by making these objectives secondary, the Government are giving the regulators an unambiguous hierarchy of objectives, with safety and soundness and market integrity prioritised.
As set out in Clause 24(2) and (4)(b) and in paragraphs 215 and 216 of the Explanatory Notes, Clause 24 does not permit or enable the regulators to take action that is incompatible with their existing primary objectives. It is therefore clear that the FCA’s strategic and operational objectives and the PRA’s general and insurance-specific objectives are prioritised ahead of the secondary objectives in the regulatory framework. I hope that that provides further reassurance to the noble Lord, Lord Tunnicliffe, on his Amendment 65 that, in instances where the regulators’ primary and secondary objectives are incompatible, their primary objectives will take precedence over the secondary objectives.
I turn to Amendment 49, tabled by the noble Baroness, Lady Bowles, which seeks to ensure that, when facilitating the new growth and competitiveness objective, the FCA does not consider the financial services sector specifically. The Government are committed to ensuring that the financial services sector is delivering for businesses and consumers across the UK. It is therefore right that the objectives of the financial services regulators reflect the Government’s view that the UK financial services sector is not just an industry in its own right but an engine of growth for the wider economy. The Government are confident that the current drafting recognises that the levers with which the regulators can act are specific to the markets that they regulate—the financial services sector. We believe that this is a helpful clarification, and expect the new objectives to benefit the growth and competitiveness of the wider economy as well as of the financial services sector specifically.
I now turn to Amendments 51 and 60, tabled by the noble Baroness, Lady Bowles, concerning the efficiency of the regulators’ operations. I believe that we have discussed this in Committee before, so perhaps we will move on if the noble Baroness permits me.
That brings me to Amendment 48, also tabled by the noble Baroness Lady Bowles, which seeks to amend Clause 24 to include consideration of sustainability. The new secondary objective is clear that the regulators should seek to facilitate sustainable growth by specifically mentioning growth of the economy in the medium to long term. The Government do not want the PRA or the FCA to act in a way that benefits short-term competitiveness at the cost of long-term growth. However, the Government are aware that, increasingly, and particularly over recent years, “sustainable” has also been taken to mean green or environmental considerations by some stakeholders.
As discussed in previous groups, Clause 25 introduces a new regulatory principle to require the FCA and PRA, when discharging their general functions, to have regard to the need to contribute towards achieving compliance with the Government’s net-zero emissions target. Therefore, the current drafting of the objective is clear that economic growth should be pursued sustainably, and the Government are already strengthening the requirements for the regulators to consider environmental sustainability targets in undertaking their duties.
On Amendment 50, tabled by my noble friend Lord Altrincham, the Government agree that high-quality infrastructure is crucial for economic growth, boosting productivity and competitiveness. More than this, it is at the centre of our communities: infrastructure helps connect people to each other, people to businesses, and businesses to markets, forming a foundation for economic activity and community prosperity.
In the Chancellor’s recommendation letters to the FCA and PRA, of December 2022, he set out that the supply of long-term investment to support UK economic growth, including the supply of finance for infrastructure projects, was a key aspect of the Government’s economic policy to which the regulators should have regard. Therefore, the Government already expect that, when advancing their new growth and competitiveness objectives, the FCA and PRA should include investment in infrastructure among their considerations. There are a number of other aspects in this Bill, such as reform to Solvency II, which will remove barriers to private investment in infrastructure.
I turn to Amendments 47, 52, 58 and 61. Robust regulatory standards are the cornerstone of the attractiveness of the UK’s markets. Including a reference to international standards in the growth and competitiveness objective demonstrates the Government’s ongoing commitment for the UK to remain a global leader in promoting high international standards and maintaining its reputation as a global financial centre.
The noble Baroness, Lady Kramer, expressed the importance of those standards well. Many of the issues that regulators need to address require international co-ordination and co-operation. To address the Committee’s concerns, the Government also recognise that it will not always be appropriate to fully consider international standards—for example, if it is best for UK markets to go beyond the international standard or where nuances of the UK market mean that the international standard is not appropriate. Those international standards operate on a comply-or-explain basis, recognising that individual jurisdictions will sometimes need to tailor standards to their own markets.
No standard trumps the objectives, and the clause does not constrain pursuit of the objective in relation to standards that we have not signed up to or that the regulators do not think are relevant in pursuing their objectives. It is there to acknowledge the importance and role of international standards, but we appreciate this nuance, where we may need to look at those standards and either go beyond them or adapt them to the UK market. I appreciate that this is difficult to navigate, but I hope we have done so successfully.
I also reassure the noble Baroness, Lady Kramer, that the Government do not consider MRAs to be international standards. To expand on this further, we consider international standards to be those set by specific standard-setting bodies listed in the Financial Stability Board’s compendium of standards. These standards are internationally accepted as important for sound, stable and well-functioning financial systems, and include those from organisations such as the Basel Committee on Banking Supervision and the International Organization of Securities Commissions. To reassure my noble friend Lord Trenchard, we are using our seat on those organisations to influence those standard-setting bodies effectively.
Alternatively, MRAs are international agreements subject to international law and based on the principle of deference, where the UK and another country agree to mutually defer to each other’s regulatory, supervisory and enforcement regimes. MRAs are therefore simply a vehicle to recognise where another country meets equivalent regulatory standards to those already established in the UK. They provide a mechanism to reduce barriers to cross-border trade and facilitate greater market access between the two jurisdictions.
Baroness Kramer (LD)
Would an MRA covering these issues be enabled only if an equivalence decision had already been provided by the Treasury? In other words, are these only for countries whose financial services industries are already covered by equivalence decisions or could they be in agreements where that standard has not been met in the eyes of the Treasury?
Baroness Penn (Con)
I suggest that I triple-check that for the noble Baroness and write to her. The provision to enable the implementation of MRAs included in the Bill does not enable the Government to change the clear hierarchy of the regulators’ objectives, only to specify the areas in which regulators should make rules to give effect to an MRA. If, after I have written to the noble Baroness, she wants to discuss the Government’s interpretation of international standards, or if my noble friend wants to discuss her points further, I will happily meet them if that would be helpful.
I hope that the noble Baroness, Lady Bowles, can withdraw her amendment and that other noble Lords will not move theirs when they are reached. The Government, of course, support Clause 24 standing part of the Bill.
Baroness Noakes (Con)
My Lords, I think my noble friend is confusing me with the noble Baroness, Lady Bowles.
Baroness Penn (Con)
When the noble Baronesses sign up to each other’s amendments, it can be confusing.
Baroness Noakes (Con)
I thank all noble Lords who have taken part in this debate, which has turned out to be a rather more interesting one than I thought we might have on this subject. It has raised a lot of very interesting points. The noble Baroness, Lady Kramer, challenged us on why we do not keep referring back to the financial crisis. There is a very simple reason: we are in a different world now. As we know, financial regulation was overhauled both in the UK and internationally. The banks have far more capital but, more importantly, significant changes have been made to ensure that they can fail safely. We are not talking about carrying the inherent risks which came to fulfilment in the early part of this century. Constantly harking back without recognising the huge changes that have happened since then is just not helpful.
I thank my noble friend the Minister for explaining which standards are intended to be covered by this. That is a helpful statement to have on the record. However, I confess that, while I completely accept the notion that we will want generally to comply with international standards—we lead them quite a lot of the time—as far as I can tell, the regulators spend at least half their lives on airplanes to exotic parts of the world to have meetings about international standards. I am not sure that that is a very good use of their time.
It could be that we do not wish to follow particular standards, even though being in a leadership position would imply that we would generally do so. It continues to trouble me that the wording says
“subject to aligning with relevant international standards”,
as if we align with them automatically, not merely as our default position. I am not entirely convinced that my noble friend has explained to my satisfaction that this wording gives sufficient flexibility to allow international standards to be ignored when relevant to the UK. I completely accept that whether or not international standards are followed will be primarily determined by our regulators, in the light of what is necessary. I may well want to revisit this on Report but, for this evening—which has gone on for rather a long time—I beg leave to withdraw.
Baroness Bowles of Berkhamsted (LD)
Before the noble Baroness sits down, I mentioned that I wrestled with this in the EU. There it says “having regard to”, which I would have thought was the appropriate wording: we have regard to it and usually do it, but do not have it in binding language.
House of Lords
Football: Illegal Entry to Matches
(1 year, 3 months ago)
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Lord Bassam of Brighton
To ask His Majesty’s Government what consideration they have given to introducing new criminal sanctions in England and Wales for those tailgating to gain illegal entry at football matches; and what other measures they are planning to take further to The Baroness Casey Review: An independent Review of events surrounding the UEFA Euro 2020 Final ‘Euro Sunday’ at Wembley, published in December 2021.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, the Government keep tailgating under review. Any disorder associated with attempting to gain unauthorised entry may be a criminal offence, with a football banning order imposed following conviction. The safety of spectators at sporting events is of the highest importance. We continue to work closely with all the relevant authorities to ensure that football fans can continue to enjoy the sport safely. The review by the noble Baroness, Lady Casey of Blackstock, was commissioned by and reported to the English Football Association. The Government were referred to in four of the recommendations. Our approach to these is outlined in evidence to the DCMS Select Committee, a copy of which can be found in the Library.
Lord Bassam of Brighton (Lab)
My Lords, I am conscious that I have asked this Question before and also that the Minister has responded before. Would it not be of value to consider making this an offence, to deal with the issue of tailgating, as the review from the noble Baroness, Lady Casey, suggested? This is against the background of a worrying increase in disorder at football grounds this season, evidenced by the recent increase in pitch invasions. We can never be complacent about disorder at football games, and we should never be complacent about crowd safety.
Lord Parkinson of Whitley Bay (Con)
Absolutely—and we are not. As I have explained to the noble Lord before, we have taken action to implement a series of changes to the football banning order legislation with which he was associated when he was in government to help ensure safety at football matches. That included adding football related online hate crime to the list of offences, amending the threshold for the imposition of a banning order, extending the legislation to the women’s domestic game and adding football-related class A drug crimes to the list of offences. We continue to work with the police and football bodies to review disorder and consider whether any further action is necessary.
Baroness Berridge (Con)
My Lords, in relation to tailgating, could my noble friend the Minister outline whether the Government are considering making this an offence and making it slightly broader? This happens a lot on the Tube. Particularly as a woman, being tailgated through a barrier by somebody trying to come in behind you means you virtually are assaulted. TfL’s policy is not to do anything, probably because it is not an offence. Could the Minister review this to see whether it should be made an offence not just in football but on the Tube?
Lord Parkinson of Whitley Bay (Con)
My noble friend is right to point to the impact on people being followed through ticket barriers. Fare evasion is a criminal offence and Transport for London publishes its revenue enforcement and prosecutions policy. If convicted, people face a criminal record and a fine of up to £1,000, as well as compensation for the fares they have avoided, a victim surcharge and prosecution costs—so this is something that should not be done.
The Lord Speaker (Lord McFall of Alcluith)
My Lords, we have a remote contribution from the noble Baroness, Lady Brinton.
Baroness Brinton (LD) [V]
My Lords, one of the most shocking parts of the review from the noble Baroness, Lady Casey, was, yet again, the lack of information sharing and joined-up working between key bodies. That has been an issue at a number of serious and tragic events, including the Manchester Arena bombing. What are the Government doing to ensure that all relevant responsible bodies—whether statutory, voluntary or, as in the case of football, business—including the police, share information before, during and after events to keep people safe and to learn lessons after each event?
Lord Parkinson of Whitley Bay (Con)
The noble Baroness is right that the report from the noble Baroness, Lady Casey, had recommendations for a number of parties, and the Government have indeed spoken to the other parties for whom the recommendations were made. We will not respond on behalf of others, but we are working with them, not least the Sports Grounds Safety Authority, which we commissioned to conduct, and act on, research related to stewarding capacity in the events sector.
Baroness Armstrong of Hill Top (Lab)
My Lords, given that we know that there are increasing problems at football matches, what are the Government going to do to make sure that they address those issues now? We have an outstanding review of football governance, et cetera—to which the Government have not responded and on which they have not come out with their proposals—as well as the review from the noble Baroness, Lady Casey, on safety and security. We also know, if nothing else from yesterday’s mind-boggling figures for money spent in the transfer market, that there is a lot of money awash in the Premier League. In their response to the report of the Minister’s honourable friend in the other House, Tracey Crouch, perhaps they can look at how football itself improves stewardship, which was also one of the recommendations in the noble Baroness’s report. Will they make sure that they properly look after fans on a Saturday, on a Tuesday, on a Wednesday or whenever they go, by spending their money properly?
Lord Parkinson of Whitley Bay (Con)
The noble Baroness is right that there is action for everybody throughout football to ensure that people can enjoy the game safely. We should not overstate it; the vast majority of people who go to matches do so in a law-abiding way and help people do that. There is a minority of people who want to spoil that. As I have said, we have taken action to toughen football banning orders. The football authorities themselves have taken action, with the FA, the Premier League and the English Football League announcing tougher sanctions, including automatic reporting to the police of anyone participating in anti-social or criminal behaviour. On the fan-led review commissioned by my honourable friend Tracey Crouch, we will be coming forward in the coming weeks with our response.
Lord Birt (CB)
My Lords, it was an absolute miracle that there was no major loss of life at last year’s Champions League final at the Stade de France. It was a terrifying experience for many Liverpool fans who attended, of whom I was one. Four English teams have now reached the last 16 in this year’s Champions League, so one or more may very well reach the final. It is a matter of regret that UEFA’s own inquiry into last year’s events has yet to report. None the less, will the Minister undertake to approach UEFA to seek reassurance that all the many glaring operational failures seen in Paris will not be repeated at this year’s final in Istanbul?
Lord Parkinson of Whitley Bay (Con)
I am grateful to the noble Lord, who has provided some insights from his own experience of attending that match. We were all appalled to see the terrifying and potentially dangerous scenes that occurred there. The French Senate published its report on the final, which rejected the initial response from French Ministers to blame Liverpool FC fans. UEFA’s inquiry is ongoing, but a full report is due to be published soon. We are in close contact, at ministerial and official levels, with both the French Government and UEFA to ensure that their investigations align with experience and point to future matches, as the noble Lord suggested.
Lord McLoughlin (Con)
My Lords, a lot of support was given to the report from my honourable friend Tracey Crouch in moving her suggestions, and the overall governance of football, further forward. What progress are the Government making and when can we expect an announcement?
Lord Parkinson of Whitley Bay (Con)
The Government published their response to the recommendations made by the fan-led review in April last year. We remain committed to publishing a White Paper following up on that, which we will do in the coming weeks.
Lord Addington (LD)
My Lords, to return to the original Question, tailgating here or anywhere else is presumably already an offence. What briefing is given to both stewards, who should now be better trained as a result of this, and police, who are there to take action when it takes place? Also, are we looking at one of the other major areas in the Casey report—interference in the disabled access entrances, which were stormed at this event?
Lord Parkinson of Whitley Bay (Con)
The noble Lord is right: disorder associated with attempting to gain unauthorised entry may indeed be a criminal offence, and criminal punishment can follow. The Sports Grounds Safety Authority commissioned a review of stewarding, following the noble Baroness’s report, which looked at these issues. It is now working with football’s governing bodies to follow up on the points that were identified there. The noble Lord is right to draw attention to the way that disabled fans were particularly affected by people trying to follow them into matches—that is deplorable.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, I declare an interest as one of over 8,000 members of the Foundation of Hearts, which owns the largest fan-owned club in the whole of the United Kingdom. I have also had the great responsibility of writing a report for the Council of Europe on all the aspects of football that were raised by my noble friend Lady Armstrong. I know that, with his many responsibilities, the Minister may not have had an opportunity yet to read my report. Can I ask him to do so and write to me with responses from the Government—or I can table another Question to allow him to answer?
Lord Parkinson of Whitley Bay (Con)
I suspect the noble Lord might table another Question even when I have. But I will gladly read his report and ensure that my honourable friend the sports Minister, Stuart Andrew, does so as well, and one of us will write to him.
Afghan Citizens Resettlement Scheme
(1 year, 3 months ago)
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Baroness Hodgson of Abinger
To ask His Majesty’s Government how many people were evacuated from Afghanistan to the United Kingdom under the Afghan Citizens Resettlement Scheme in 2022; and how many of these were women.
Baroness Hodgson of Abinger (Con)
I beg leave to ask the Question standing in my name on the Order Paper. I draw the attention of the House to the fact that I co-chair and run the All-Party Parliamentary Group on Women, Peace and Security, and set up and run the Afghan Women’s Support Forum.
The Parliamentary Under-Secretary of State, Home Office (Lord Murray of Blidworth) (Con)
Operation Pitting was the largest UK military evacuation since the Second World War. About 15,000 people were evacuated to the United Kingdom. Since then, a further 6,000 people, including those under ACRS pathway 1, have arrived via neighbouring countries. The Home Office is working to assure information on its caseworking systems. This includes reporting on total volumes by gender. Once this work concludes, the Home Office will include all Afghan resettlement statistics, including gender breakdown, in its quarterly immigration statistics publications, the next of which is due on 23 February.
Baroness Hodgson of Abinger (Con)
I thank my noble friend for his Answer, but I am disappointed that he cannot give me specifics on the Afghan citizens resettlement scheme. I gather that there is no application process for this and the slow speed, lack of communication and transparency creates a feeling of abandonment for the Afghan people. How are eligible people identified for this scheme? Under pathway 3, there is provision for those who are particularly vulnerable; I am talking about the women and girls at risk. Does my noble friend realise that some vulnerable women who either held significant positions or were related to those who did have been on the run and hiding since the Taliban took over? Can he imagine what it feels like to be hunted down in this way? We have only to remember the murder of the ex-Afghan MP Mursal Nabizada a few weeks ago. What steps are His Majesty’s Government taking to ensure that those women human rights defenders are able to access the ACRS? How many do they hope to accept this year?
Lord Murray of Blidworth (Con)
I agree with much of what my noble friend says. By way of context, the Afghan citizens resettlement scheme was divided into three pathways, to which she alluded, the first of which concerned those evacuated during Operation Pitting and those on the removals list. Pathway 2 is the principal method; it concerns referrals from the UNHCR. Pathway 3 is administered by the Foreign, Commonwealth and Development Office. That is the pathway envisaged for Chevening scholars, GardaWorld employees and those who work for the British Council. I understand that the Foreign Office has received some 11,500 expressions of interest that are being worked through at the moment. In relation to her question on vulnerable women and children, I say that the principal focus of the ACRS has been to protect the vulnerable. Since the events in Afghanistan last August, thousands of women and girls have been brought to safety in the UK, including female judges, women’s rights activists and a girls’ football team. Of course, in pathway 2 the UNHCR makes referrals based on an assessment of protection needs, including vulnerabilities.
Baroness Coussins (CB)
My Lords, at the end of December there were an estimated 150 Afghan interpreters still in Afghanistan, eligible but unprocessed under either the ACRS or ARAP. Given that many of them would already have been eligible under the previous ex-gratia scheme or the intimidation policy designed primarily for interpreters, can the Minister commit to fast-tracking these cases for a group of individuals to whom the UK owes an incalculable debt of gratitude, and who remain extremely vulnerable to Taliban threats and violence?
Lord Murray of Blidworth (Con)
I entirely understand the point the noble Baroness makes. Obviously, those who were employed by the British Government are entitled to be relocated under the Afghan relocations and assistance policy. The Ministry of Defence is working with the Home Office in relation to the assistance provided for those people. I am happy to look further into the 150 people whom she indicates. I hope that I might be able to obtain some further details and then look into that for her.
Baroness Smith of Newnham (LD)
My Lords, like the noble Baroness, Lady Hodgson, I am disappointed that the Minister was not able to give us any meaningful statistics today, beyond a figure of 6,000 people. I have had conversations with the noble Lord, Lord Ahmad of Wimbledon, who has spoken to the officers of the APPG on Afghan Women and Girls. Would it be possible for the Minister to undertake for similar meetings to be held with the Home Office, ideally on a cross-party basis, and with DLUHC? Many of the issues about bringing in women and girls, and indeed British Council contractors, link to visas and the provision of accommodation. However hard the FCDO and the MoD are working, those departments cannot deal with these issues alone. Will he agree to a meeting?
Lord Murray of Blidworth (Con)
Pathway 3 applications, as I have said, are led by the FCDO and its engagement will be the principal point of contact. Of course the Home Office works closely with the FCDO and will continue to do so. I will keep the question of a meeting under review and, if it becomes necessary, certainly.
Lord Singh of Wimbledon (CB)
My Lords, does the Minister agree that our intervention in Afghanistan directly led to the strengthening of the hands of extremists in the Taliban, causing huge difficulties for ordinary Afghan citizens, and that we have a linked moral responsibility to look to the well-being of those who we have caused to be refugees? Does he also agree that if we wish to reduce the flow of immigrants that has worried so many people, we should be much more careful in thinking first about embarking on such interventions?
Lord Murray of Blidworth (Con)
I fear that this is not the correct place for me to discuss the causation of the return of the Taliban to power in Afghanistan. But in relation to the point the noble Lord raises about the United Kingdom’s obligation to those who helped UK forces and staff, diplomatic and otherwise, during our period in Afghanistan, then I agree. That is something which the two Afghan schemes are designed to address.
Lord Swire (Con)
My Lords, some people put the amount of Afghan refugees in Pakistan at up to half a million, some of whom are extremely vulnerable, particularly young women, former judges and former politicians. They live under a constant threat of being returned to Afghanistan, where they would certainly meet with jail or possibly worse. What conversations have the Government had with the Government of Pakistan to lift this threat of being returned to Afghanistan?
Lord Murray of Blidworth (Con)
I am afraid that I cannot answer my noble friend’s question. That is probably a matter for the Foreign, Commonwealth and Development Office but I can no doubt ask the relevant Minister to write to him.
Lord Coaker (Lab)
My Lords, as the noble Baroness, Lady Hodgson, reminds us, in discussing the Afghanistan resettlement scheme and the help we rightly give to some, we should never forget the continuing persecution of women and girls across the world. Of the three pathways under the Afghan scheme we are accepting at-risk people from three groups: British Council, GardaWorld and Chevening alumni. Within this, is it only those who worked for the UK who are considered, or is any other priority given to women and girls?
Lord Murray of Blidworth (Con)
As I hoped to make clear in an earlier answer, the first pathway relates to those removed during August 2021 and those who should have been removed. The second pathway relates to those referred by the UNHCR to us, and the third pathway contains the three categories that the noble Lord just identified. The short answer to the question is no, it is not just people who worked for the United Kingdom Government in various forms; it is broader than that because the UNHCR refers refugees to us who have applied.
Lord Stirrup (CB)
My Lords, how many Afghan refugees resettling in the UK are still being housed in hotels? What mechanisms do the Government have in place for tracking the successful integration of such refugees, particularly in housing, education and employment?
Lord Murray of Blidworth (Con)
Forgive me; although I have a lot of knowledge about the situation with hotels, I am afraid I do not have those statistics with me today, given the topic of the Question. I will need to write to the noble and gallant Lord about that.
Employment Rights Legislation
(1 year, 3 months ago)
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Lord Woodley
To ask His Majesty’s Government what plans they have to retain employment rights legislation contained in retained European Union law beyond the end of 2023.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, we are proud of the UK’s record on employment standards, having raised domestic standards over recent years to make them some of the highest in the world. Our high standards were never dependent on us mirroring the same rules as the EU. We are seizing the opportunities provided by Brexit to review all retained EU law and ensure that our regulations are tailored to the needs of the UK economy.
Lord Woodley (Lab)
My Lords, I am pleased that the Minister recognises the importance of employment rights to workers in Britain. But as he will remember, last week I asked, as did my noble friend Lord Watts, whether he would guarantee that no employment rights will fall off the statute books at year end. Not surprisingly, the Minister did not answer the question, which in my mind speaks volumes. Let us try again, please. Contrary to the impression given last week, at least 13 such legal protections, categorised as EU retained laws, are at risk. Let me name just one: TUPE, which protects pay and terms and conditions in the event of company takeovers. This right will be lost at the end of the year unless the Government actively save it. Again, I ask the Minister: can he guarantee that the TUPE protections will not be scrapped and are not for the chop?
Lord Callanan (Con)
As I have said to the noble Lord on this issue before, our workers’ rights, of which we are very proud, do not and did not depend on our membership of the EU. We have standards far in excess of those provided by the EU. Regarding the regulations the noble Lord mentions, as with all retained EU law we will look at that and see whether it is appropriate for the UK economy, and if necessary we will modernise, update or replace it.
Baroness Ludford (LD)
My Lords, when this came up in Questions on 23 January, the Minister, in response to the noble Baroness, Lady Wheatcroft, said that he had not seen the comments of CBI director-general Tony Danker, reported in the FT that day. He surely now has, but I will remind him. Mr Danker said that the plan to scrap EU laws wholesale is creating huge uncertainty for UK firms and risks throwing industry into some chaos; that companies are asking whether we are really going to erode maternity and paternity regulations and health and safety standards; and that he concluded that we need to recognise that divergence will often shrink our market size and add a skipload of red tape. Will the Minister recognise that business does not want this scrapping of EU laws?
Lord Callanan (Con)
We will no doubt have this debate at Second Reading of the rule legislation on Monday. If those are the comments of the director-general of the CBI, then he is wrong. Our paternity and maternity regulations are far in excess of those guaranteed by EU minimums. We are proud of that and will continue with them.
The Earl of Kinnoull (CB)
My Lords, when the rule Bill was introduced in the Commons in September, the Explanatory Notes said that there were 2,400 bits of rule legislation. When the notes appeared here on 19 January, that number had risen to 3,200. I have just accessed the dashboard, and that refers to 3,745 bits; that is an increase of more than 40 bits of rule legislation a day in the last 13 days. Can the Minister tell us how many of the 1,345 bits of rule legislation added since September are about employment rights?
Lord Callanan (Con)
As the noble Lord said, they are all available on the dashboard for him to refer to.
Lord Callanan (Con)
Noble Lords are confused: just because there is an item of retained of EU law, it does not mean it is necessarily still valid for the UK. It has been a very useful exercise to go back through the history books to find out about some of this stuff. Much of it is no longer applicable—some of it refers to sugar prices in the 1970s. My favourite bit is a regulation referring to the movement of reindeer between Denmark and Sweden. I am sure noble Lords do not believe that this is something we should retain on our statute book.
Lord Balfe (Con)
My Lords, does the Minister realise that many people are a bit worried that the end product might be the relaxation of some of the standards they have got used to, and that he could end this concern very easily by saying that whatever is changed, it will not worsen the protection currently in place?
Lord Callanan (Con)
I say to my noble friend that we have made it clear that we have no intention of weakening workers’ rights. I know this is a common refrain from the Opposition but let me repeat: UK standards did not depend on EU law. Let me give noble Lords an example. UK workers are entitled to 5.6 weeks of annual leave, compared with the EU requirement of four weeks. We provide a year of maternity leave, with the option to convert parental leave to enable parents to share care. The EU minimum maternity leave is 14 weeks. Our standards are far in excess of those provided by the EU.
Lord Watts (Lab)
The Minister is quite wrong: some protections are better than the European average, but lots more are not. The Government are very fond of rolling over trade deals; why can they not roll over the protections British workers have now, so that they will not worry about their future conditions?
Lord Callanan (Con)
Perhaps the noble Lord could write and tell me what parts of British law have worse standards than are provided by the EU, because as far as I am concerned the vast majority of our standards are in excess of those offered by the EU. We will take the opportunity of reviewing retained EU law to update and modernise it to make it fit for the UK economy.
Lord Hannay of Chiswick (CB)
Will the Minister recognise that his reply to the noble Baroness, Lady Ludford, showed that he had not read the article by the director-general of the CBI very carefully? The main point he made, which the noble Baroness raised, was that the uncertainty created by this Bill and the inability of Ministers at the Dispatch Box to say how many measures are going to be struck down, what they are going to put in their place and when they are going to do it is damaging inward investment. Will the Minister now reply to that point?
Lord Callanan (Con)
We are providing certainty. The sunset date provides certainty: a target by which departments can look at their body of retained EU law and decide whether it needs replacing, retaining or updating.
Lord Cunningham of Felling (Lab)
My Lords, why are the Government intent on diminishing scrutiny in this House, as is strongly suspected by many Members? Why are Members of this House being denied the opportunity to question Ministers on these changes, and why is Parliament itself, which apparently is in the Minister’s mind, being refused the opportunity to discuss these things?
Lord Callanan (Con)
Parliament is not being refused the opportunity to discuss these things. We will no doubt have many days of debate on the retained EU law Bill. All the regulations that are updated or changed will come back to Parliament for approval, in precisely the same way as the EU regulations were introduced in the first place—in fact, they were subject to a lesser degree of scrutiny. I would have a little more support for the position of some noble Lords if they had objected to the way this legislation was introduced into UK law in the first place.
Lord Prentis of Leeds (Lab)
My Lords, in the very short time I have had the honour of being part of this House, I have witnessed the concerns many noble Lords have about the increasing use of statutory instruments. I have seen the potential for the use of SIs in the Retained EU Law (Revocation and Reform) Bill to reverse a half-century of progress on basic rights for women. I would like to—
Lord Prentis of Leeds (Lab)
I bring to your Lordships’ attention the Part-time Workers (Prevention of Less Favourable Treatment) Regulations, which were passed in 2000. These EU regulations enabled the trade unions to win a court case on behalf of more than 100,000 part-time teaching assistants and school meal staff, 95% of whom were women, who had been denied access to the local government pension scheme. Can the noble Lord confirm that His Majesty’s Government have no intention of letting these vital regulations end on 31 December 2023?
Lord Callanan (Con)
I am pleased that the noble Lord finally got round to a question. We are proud of our record on workers’ rights, particularly women’s rights. I quoted earlier the figures on the maternity leave provisions that are applicable in the UK as opposed to the EU; we want to see that happy state of affairs continue.
The Lord Speaker (Lord McFall of Alcluith)
My Lords, before I call the fourth Oral Question, I remind noble Lords of the sub judice ruling, which currently covers the case of David Carrick. Noble Lords should therefore avoid discussion of any issue related to sentencing in that case.
Metropolitan Police: Criminality
(1 year, 3 months ago)
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Lord Lexden
To ask His Majesty’s Government what assessment they have made of the extent of criminality within the Metropolitan Police.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, the Home Office publishes regular statistics on criminal proceedings against police officers and has commissioned HMICFRS to review countercorruption arrangements, including those of the Metropolitan Police. Part 2 of the Angiolini inquiry will look at tackling the causes of police criminality and misconduct and, more broadly, police culture. The Home Secretary is clear that the Metropolitan Police must redouble its efforts to root out corrupt officers to prevent the kinds of shocking cases we have seen recently.
Lord Lexden (Con)
My Lords, are we not agreed across the House that urgent action is needed to enable Sir Mark Rowley, the courageous Metropolitan Police Commissioner, to boot out the many criminals and incompetents in the Met, while acknowledging, of course, the dedicated service provided by the majority of officers? How can this urgent action be reconciled with a leisurely four-month Home Office review, whose terms of reference took several weeks to be agreed? The department says it needs evidence; is not the evidence provided by the continuing supply of shocking cases that emerge? Sir Mark has said that
“we have hundreds in policing who shouldn’t be here”.
Give him the means to clean up the Met, and give it to him now.
Lord Sharpe of Epsom (Con)
My Lords, my noble friend refers to the review of police officer dismissals that was announced by the Home Secretary on 17 January, when she published the terms of reference. That will include a consideration of the merits of a presumption for disciplinary action against officers found to have committed a criminal offence while serving in the police. Of course, the review was set up partly in response to the comments that Sir Mark has previously made, and partly in response to the interim review of the Casey report. It would be irresponsible not to collect the appropriate evidence before making these very important decisions.
Lord Hogan-Howe (CB)
My Lords, the noble Lord, Lord Lexden, is quite right to raise the urgency of these terrible cases. Will the Minister reassure us that the review being carried out will consider the most radical measures? One thing that I have become convinced of over the past 15 years is that the office of constable is more a bar to excluding the bad than it is about protecting the good. A constable’s employment rights are protected by secondary legislation, which includes the ability of lawyers in the employment tribunal process within the police. Home Office guidance establishes that when dismissing an officer the standard of proof should not be just the balance of probabilities but should travel towards beyond reasonable doubt. Both those measures do not help to get rid of the difficult officers that the noble Lord and Sir Mark have mentioned. Both those things should change. By all means, give officers access to employment tribunals, which, frankly, they can get through other means anyway.
Lord Sharpe of Epsom (Con)
I thank the noble Lord for that and defer to his extensive experience. One of the things that the review is doing is looking at whether the current three-stage performance system is effective, which will obviously have to take into account some of the things that the noble Lord has just raised. I should have said in my earlier answer that the review has a time limit of four months on it. Obviously, that time is ticking, and the terms of reference were announced a couple of weeks ago.
Lord Mackenzie of Framwellgate (Non-Afl)
My Lords, your Lordships’ House will share the views of most right-thinking members of the public in condemning the crimes committed by the officers who were mentioned in the debate—the abhorrent crimes of David Carrick. There are clearly faults in the vetting system and in the complaints investigation system. Will the Minister say whether in the case of an officer in force X who is found to have had an allegation made against him in force Y, where he lives, there is a duty on force Y to inform his employer—that is, force X— of the complaint?
Lord Sharpe of Epsom (Con)
I am afraid I do not have the answer to that question and will have to find out and come back to the noble Lord. I would say that the IOPC is capable of investigating these allegations without having been notified by the officer’s force.
The Lord Bishop of Manchester
My Lords, this is more than a series of bad apples; I am sure that there is something rotten in the culture and structures in policing that comprehensively and immediately needs to be addressed. We have the nine turnaround priorities that the new police commissioner has set out. Can the Minister set out how the Government will assist with and ensure those priorities are realised as a matter of urgency?
Lord Sharpe of Epsom (Con)
In my original Answer, I referred to part 2 of the Angiolini inquiry. I met Lady Angiolini last week and she made it clear that police culture will form a critical part of her investigations in part 2. The formal consultation on the terms of reference for part 2 opened earlier this month and will conclude, I think, on 24 February. Noble Lords are welcome to contribute to that consultation process. I am sorry for the long answer, but I shall go on a little. The inquiry will consider whether vetting and recruitment processes do enough to identify those in policing who are not fit to serve. It will investigate the extent to which misogynistic and predatory behaviour exists in police culture and look at whether current measures do enough to keep women safe, particularly in public spaces.
Lord Addington (LD)
My Lords, will the Minister give us a firm undertaking that any investigation will not be hampered by a lack of resources? If we do not have that, it does not really matter what we do.
Lord Sharpe of Epsom (Con)
I am happy to give that undertaking.
Lord Coaker (Lab)
My Lords, given the important Question asked by the noble Lord, Lord Lexden, which concerns us all, and the concerns that have been raised in this Chamber, how on earth is it possible to read in the papers this morning the headline: “Retired rogue police invited to come back and fill vacancies”? Reported figures show that 99 recently retired officers who had retired under investigation for misconduct had been invited back; and 253 officers who had received warnings at misconduct hearings were invited to return. How on earth does that restore public confidence in the police?
Lord Sharpe of Epsom (Con)
I have not read the story to which the noble Lord refers, so I cannot comment specifically, but certainly superficially, I agree it does not restore confidence.
Lord Bellingham (Con)
My Lords, at a time when public confidence in policing is at this low level, will the Minister examine the role of the 200 or so staff networks, many of which are blurring the line between policing and politics? I refer not to the Police Federation but to organisations such as the Green Police Network, the police vegan network and the National Association of Muslim Police, which has been known to criticise the Government’s Prevent programme. Is it not critical that police officers stick to operational duties rather than interfering in politics, and leave the latter to politicians?
Lord Sharpe of Epsom (Con)
My Lords, policemen should be able to express their opinions on these matters, as we all do, but I will certainly take my noble friend’s points away, do some more investigating and reflect on them back at the department.
Lord Morse (CB)
My Lords, does the Minister recognise that there is a significant cultural dimension to this issue? Understandably, as a body, the police have a deeply defensive and internally focused culture. Simply picking malefactors out of that body will not solve the fact that there is a deep-rooted cultural issue. In my view, deep-rooted cultural change is needed to change the culture of the police force so that it is not as defensively minded as it appears to be at the moment.
Lord Sharpe of Epsom (Con)
The noble Lord makes a good point. I have already expressed that the Angiolini inquiry will look into all aspects of that culture. This is also a useful time to remind all of us that the vast majority of serving policemen do an exceptional job and deserve our thanks and praise.
Baroness Jones of Moulsecoomb (GP)
My Lords, the “spy cops” undercover policing inquiry that is going on at the moment has taken years. It is a classic case of police forces covering up former crimes. What makes the Minister think the inquiry he mentioned will be any different?
Lord Sharpe of Epsom (Con)
There are very specific circumstances surrounding the undercover inquiry to which the noble Baroness refers. She is right that it has gone on for too long; unfortunately, it looks like it is going to continue to go on for quite a long time. As regards this inquiry, I have every confidence that Lady Angiolini—as I say, I met her last week—will be rigorous; she has been up to now.
Lord Hutton of Furness (Lab)
My Lords, can the Minister tell us how many more criminal prosecutions are pending against serving Metropolitan Police officers?
Lord Sharpe of Epsom (Con)
I am afraid that I do not have that statistic to hand, but I do have some others.
Lord Sharpe of Epsom (Con)
I promise noble Lords that this is a better answer than it sounds. The latest data shows that 83 criminal proceedings relating to police officer misconduct were finalised in 2021-22, but of misconduct cases commenced after 1 February 2020, when new regulations came into effect, 68 resulted in the officer being found guilty; there was a change to the way in which the statistics are collected.
Civil Contingencies Act 2004 (Amendment of List of Responders) Order 2023
(1 year, 3 months ago)
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Baroness Neville-Rolfe
That the draft Order laid before the House on 6 December 2022 be approved.
Relevant document: 24th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 23 January.
Civil Legal Aid (Housing and Asylum Accommodation) Order 2023
(1 year, 3 months ago)
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Lord Bellamy
That the draft Orders laid before the House on 30 November and 9 December 2022 be approved.
Considered in Grand Committee on 23 January.
Trade (Mobile Roaming) Regulations 2023
(1 year, 3 months ago)
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Lord Parkinson of Whitley Bay
That the draft Regulations laid before the House on 15 December 2022 be approved.
Relevant document: 25th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 31 January.
Health and Safety and Nuclear (Fees) Regulations 2022
Lord Evans of Rainow
That the Regulations laid before the House on 20 December 2022 be approved.
Considered in Grand Committee on 31 January.
Lord Evans of Rainow (Con)
My Lords, on behalf of my noble friend Lord Younger of Leckie, I beg to move the Motion standing in his name on the Order Paper.
Plant Health and Trade in Animals and Related Products (Amendment) Regulations 2022
(1 year, 3 months ago)
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Lord Benyon
That the Regulations laid before the House on 19 December 2022 be approved.
Considered in Grand Committee on 31 January.
Energy Bill Relief Scheme (Non-Standard Cases) Regulations 2023
(1 year, 3 months ago)
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Lord Callanan
That the Regulations laid before the House on 11 January be approved.
Considered in Grand Committee on 31 January.
Domestic Premises (Electrical Safety Certificate) Bill [HL]
Wednesday 1st February 2023
(1 year, 3 months ago)
Lords ChamberRead Full debate Domestic Premises (Electrical Safety Certificate) Bill [HL] 2022-23 View all Domestic Premises (Electrical Safety Certificate) Bill [HL] 2022-23 Debates Read Hansard Text
Baroness Williams of Trafford (Con)
My Lords, I have it on command from His Majesty the King to acquaint the House that His Majesty, having been informed of the purport of the Domestic Premises (Electrical Safety Certificate) Bill, has consented to place his interest, so far as it is affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Lord Berkeley (Lab)
My Lords, I wonder whether the Minister could help us: why does His Majesty believe that it is necessary to give consent to this very important Bill so that, when he sells his properties in the private sector, he has to have an electrical certificate? Is it not time that we got rid of this ridiculous procedure of seeking the King’s consent?
Baroness Williams of Trafford (Con)
My Lords, the King’s consent is needed because Clauses 1 and 4 of the Domestic Premises (Electrical Safety Certificate) Bill may affect the interests of the Crown.
Arrangement of Business
Baroness Williams of Trafford (Con)
My Lords, before we take questions on last week’s Statement in the House of Commons from Ministers at the Department for Environment, Food and Rural Affairs, I want to ensure that the House is aware that the time for questions from Back-Benchers has been extended. In recognition of noble Lords having the opportunity to discuss two Statements concurrently, the usual channels have agreed that they should have an extra 10 minutes, so there will be 30 minutes available for Back-Benchers. The time for Front-Bench contributions will remain at 20 minutes, as usual. I would also like to reiterate—the Companion is clear on this—that this is an opportunity for questions, not speeches. My noble friend is very keen to answer as many questions as possible.
Baroness Williams of Trafford (Con)
Look how enthusiastic he is. I encourage short and focused contributions. I thank noble Lords.
Agricultural Transition Plan
(1 year, 3 months ago)
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Baroness Hayman of Ullock (Lab)
My Lords, I shall first speak to the Statement on the agricultural transition plan. We know from the Statement that Defra is moving away from the direct payment schemes that farmers have been receiving for many years from the EU, such as the basic payment scheme, and is instead moving to a system where farmers are paid to make improvements to the environment, animal health and welfare, and to reduce carbon emissions and pollution. We welcome this. Farmers will get grants to improve productivity, including new robotic equipment.
Our one concern around this is that funds will need to be matched, which will make them unaffordable for many. The Government claim that farmers will, within seven years, produce healthy and profitable food in a sustainable way and without subsidies. Therefore it is important that the Government keep a close eye on progress to ensure that it is achievable, because we know that farmers have been struggling with the increased cost pressures on fertiliser, fuels and labour supply, for example. For upland farmers, such as in Cumbria where I live, the withdrawal of the basic payment support is going to make life much harder. What reassurance can the Minister give to upland farmers that they will have access to sufficient funds for their farms to continue to be viable?
We also know that tenant farmers have raised concerns: for example, how will the new environmental payments work in practice? How will the value of income streams be possible for tenants? How would tenant farmers go about claiming them, and how can the length of tenure be accommodated within this? We also know that they are concerned that the loss of BPS could have an impact on rents. The Rock review raised the issue of access to the various schemes, so I would be grateful if the Minister could provide further clarity and reassurance in these areas.
The other concern we have is that, despite the many schemes on offer, some of them are quite complex. We would be grateful if there was more attention paid by the Government to ensure strong take-up of the new schemes. Our concerns arise from the figures on the sustainable farming incentive from the last year: just 224 applications were paid out, a far lower number than the number that received BPS, which was over 80,000. It is clearly important that these schemes are successful, both for our farming and rural communities but also for the environment. If the Minister is able to provide any information on the projected take-up over the next 12 months and what Defra is doing to encourage that maximum level of interest, we would be very grateful.
Moving on to the Statement on crustacean mortality in the north-east of England, I am sure that many of us are aware of the extremely distressing scenes of thousands of dead and dying lobsters and crabs that have washed ashore on beaches there. We also know that fishing crews have reported a drop of up to 95% in their catches and continue to report high levels of dead shellfish, a situation which has been described as catastrophic for their livelihoods.
We do not understand why this mass die-off has happened, and I appreciate that it is understandably very difficult to identify exactly what the cause is for such incidents. But as the Statement says, the independent crustacean mortality expert panel reports that a novel pathogen was the most likely cause. In making this Statement to the House of Commons on 26 January, Mark Spencer, the Minister, said:
“I am considering carefully whether further analysis by the Centre for Environment, Fisheries and Aquaculture Science can ascertain conclusively the cause of this unusual mortality.”
Since then, Sir Robert Goodwill, the chairman of the Environment, Food and Rural Affairs Committee, has written to the Minister asking for a study to be carried out as “a matter of urgency.” The letter also states:
“The Committee believes that further work should be undertaken to identify this novel pathogen, given the importance of determining its origin, its vectors of transmission, its transmissibility, its virulence and other factors related to it.”
I have two questions for the Minister. First, how is Defra working with the local fishing industry to support it during this crisis? Secondly, will the Government take note of the Select Committee’s letter and act on its request to get this mystery solved, so it is prevented from happening again?
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the farming Statement in the other place on 26 January has been generally welcomed. Farmers are keen to move forward with ELMS, but sufficient detail to allow them to plan ahead has been sadly lacking in the past. This current announcement provides more information, which should give some reassurance. The rollout of the sustainable farming incentive is overdue. There appear to be six strands to this, and it provides for paid actions by farmers to manage hedgerows for wildlife, plant nectar-rich wildflowers and to manage crop pests without the use of insecticides.
I particularly welcome this last one as there were amendments and debates during the passage of both the Agriculture Act and the Environment Act on the very harmful effect of pesticides. Can the Minister tell the House the extent of the regulations around the proposed use of insecticides?
The six additional standards to the sustainable farming initiative allow farmers to receive payments for actions on hedgerows, grasslands, arable and horticultural land, pest management and nutrient management. This adds to the existing standards on soil health and moorlands. Can the Minister give more detail on these standards?
There do now seem to be a plethora of ways in which farmers can access money. Farmers are busy people and their workload is heavy, especially in bad weather. The larger farm businesses will employ staff, including farm managers, to look at the detail of the schemes and assess what is best for them. The smaller farmer is unlikely to have the time to look into the detail of the myriad schemes available in order to make the best choices for his or her land. The Minister is aware that there have been complaints about the complexities of applying for existing schemes, and has said on previous occasions that the process is being simplified. Can he give us reassurance that these new schemes will be easier to apply for and less complicated than those already running? It is vital to increase the uptake of sustainable farming initiatives and Countryside Stewardship schemes, and crucial that the schemes are easily understood and that the forms are not overly complex, so that the smaller independent farmer is able to participate.
I am concerned about tenant farmers generally. Countryside Stewardship Plus encourages farmers to work together with their neighbours and landowners. How will the tenant farmer fit into this pattern?
I welcome the new ambition for local nature recovery to include managing flood plains and maintaining peatlands. How will that assist farmers on the Somerset Levels, where flooding is a way of life and water management an everyday part of life? This year, as in others, large tracts of land have been under water for a considerable time. I look forward to the Minister’s comments on this.
My final comment is about the overall thrust of the transition plan, which is towards improving the land, increasing biodiversity, carbon capture, and enhancing and managing woodlands. This is a vital part of managing the land. However, there is insufficient mention of the production of food. The growing of crops, the husbandry of animals and the production of food is essential, both for the sustainability of the British farming industry and as part of the process of feeding the nation. Agriculture cannot be about only biodiversity and carbon capture. Food production must have equal billing for farming to survive. Can the Minister provide reassurance that there is a balance in the transition plan?
My noble friend Lord Teverson, who led on the then Fisheries Bill from these Benches, will speak on the north-east crustacean Statement.
Lord Teverson (LD)
My Lords, I will be very brief. Exactly as the noble Baroness, Lady Hayman, said, the images of this incident are quite something. Given its importance, I would be very interested to understand from the Minister why Professor Gideon Henderson, the main scientific adviser to Defra, was not involved at the beginning to make sure that the first inquiry was well managed and actually dealt with the real issues. That, perhaps, would have made the second inquiry unnecessary. In fact, we have had two inquiries now but we still do not know what the answer is. I would be interested to learn from the Minister what happens next.
I am particularly interested to understand whether we have samples in cold storage of the original crustacean victims so that we could actually go back and look at pathogens. As we all know, invasive species, whether they are pathogens or larger organisms, are potentially extremely dangerous and expensive to our economy. This was a major incident and I would like to know what will happen next, and exactly how this should move from here. We have had very few answers from those two inquiries.
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
My Lords, I will try to give noble Lords as much time to ask questions as possible. I thank noble Lords on the opposition Front Benches for their questions. I thank the noble Baroness, Lady Hayman, for her support for this transition. I know that this announcement has been long awaited, not least by farmers but also by this House. I hope that a look at GOV.UK will reveal the depth we have gone into and the easy accessibility for farmers to find out more.
The noble Baroness asked what other measures we are taking. We are offering a range of one-off grants to improve farm productivity. That perhaps answers also the point the noble Baroness, Lady Bakewell, made. We want farmers to produce food and to do so sustainably. We want them to look at natural capital as something to grow, because it will improve the productivity of their businesses in the long term. Many farmers are doing that, but we want to help them to do it better. For example, we are giving grants for slurry management, animal health and welfare, and environmental and access features, and to support the innovation, research and development the sector needs. We are reforming our approach to farm regulation to make it clearer, fairer and more effective for farmers. We will develop a new entrants scheme to encourage the next generation of farmers to bring their necessary skills into managing their businesses.
The noble Baroness, Lady Hayman, raised a concern for uplands that I entirely share. Over recent decades, farmers have had to put up with a system that is skewed against the small farmer. Over 50% of basic farm payments would go to the largest 10% of farms. We want to ensure that that money is distributed more fairly. Upland farmers can be paid for actions on moorland, grassland and upland peat, with more than 130 actions in all schemes applicable to them.
All the standards we are introducing in the SFI in 2023 are open to upland farmers. We have tried to make SFI as simple as possible. A very good point was made that smaller farmers tend not to have either the resources of a land agent or the time necessary to do this. Most early applicants to SFI have been very complimentary about the ease with which it can be done. In less than 45 minutes—perhaps the most valuable 45 minutes that they will spend this year—they can access these schemes. The menu is now being rolled out, with lots of different things that are applicable to their farms. Rather than having it done to them, as happened under the system we are transitioning from, they will be able to select what suits their land and business, and to improve their way of working.
Again on upland farms, I am delighted to say that, within the EIP, we have announced an extension of the farming in protected landscapes grant—the first bespoke grant scheme we have introduced since Brexit and, by all measure, the most popular; the money has gone out of the door very quickly. Some 74% of national parks are in upland areas, and farmers in those areas have been able to access more than 1,800 schemes that have seen 84 kilometres of hedgerow planted, large numbers of stone walls repaired, and lots of environmental benefits.
I hope we will see a transition to a scheme that will not only be popular for the wider public, who want to see government support to uphold farmers’ drive to sustainability and environment benefits, but assist farmers to continue to produce food, and to do so sustainably. We want at least 70% of farmers to be in SFI. I hope we will see a big surge in numbers as people see the six new standards we have produced being rolled out.
I will answer the points from the noble Baroness, Lady Bakewell, on this and then turn to the crustaceans issue. One of the six standards is an integrated pest management standard. It will provide farmers with at least three things. The first is advice on how to transition their production from one that is reliant on chemicals, both herbicides and insecticides. It will also give them advice on companion cropping, so that they can plant different crops at the same time, the insects and other measures from which can help to control pests on the other crop. This has had considerable success; I have seen it for myself. The last is perhaps the most relevant to the noble Baroness’s question, which is on insecticides. It will give arable farmers help in transitioning away from using insecticides on their farms.
There are plenty of ways for farmers to achieve finance. We have ring-fenced the £2.4 billion that we are spending on BPS, and, as the transition tails off for BPS payments, we are now seeing the environmental land management schemes kick in. Farmers will start to see how they can fill the gap that is being created by the phase-out of BPS.
As I say, we want to make sure we are helping smaller farmers. I think the future is very good, once we can get over this transition period. Undoubtedly some farmers are worried, and some may not survive because of a whole range of extraneous circumstances, not least the spike in commodity prices, but I can see a future for them. They are more adaptable than many bigger farms, and we want to see them having access to a simplified system.
One of the most exciting developments I have seen is the surge of interest in countryside stewardship. Countryside stewardship has increased by over 90%, and more people are participating. We want to see that continue. We have three tiers now. It is easy to migrate from existing schemes to the new schemes, and many farmers are looking at the potential of that.
I know the Somerset Levels well. I remember being the floods Minister and having to go down there during the floods of 2011, 2012 and 2013. It was devastating. The flooding that takes place on the Somerset Levels comes from the Mendip Hills, which the noble Baroness knows better than me. Farming activity up there can slow the flow of water on to the levels. We are trying to encourage farmers in their water and soil management and in other methods that can be accessed through these schemes, so we can stop the surge of water, Such water often brings with it topsoil, particularly from maize being grown higher up the hill, which floods down into the Somerset Levels. Sometimes after heavy rainfall you can see in an aerial photograph a plume of soil going out into the Bristol Channel. Better soil management will prevent that.
I turn now to the important questions raised by the tragic situation on the north-east coast of England, with the deaths of crustaceans. I entirely agree with noble Lords in their concern about this. It is a great shame that we do not know precisely what has caused this extraordinary die-off of crabs. To condense very quickly a detailed scientific report, it is as likely as not that a pathogen new to UK waters has caused this. It is unlikely that it was a harmful algal bloom causing a loss of oxygen in the water resulting in crab deaths. It is very unlikely that pyridine or another toxic pollutant caused the crab deaths. It is also very unlikely that maintenance dredging, as required to keep the port open, or capital dredging for the new freeport, was responsible.
What do we do now? That’s the point noble Lords rightly raised. The Environment Secretary has considered carefully whether further analysis by the Centre for Environment, Fisheries and Aquaculture Science can ascertain conclusively the cause of this unusual mortality. We are continuing to monitor wash-ups in the area and encourage local people to report findings. The North Eastern Inshore Fisheries and Conservation Authority has created an online reporting tool for local people to use.
There is currently no evidence to suggest that there has been another mass die-off event or that any is occurring in wash-ups that are currently in line with what we would normally expect to see. While a novel pathogen—a disease or parasite—has not been identified, the experts concluded that it could explain the key observations, including mortality, over a sustained period along 70 kilometres of coastline. A particular feature was the unusual twitching of dying crabs and the deaths being predominantly of crabs rather than of other species. That is what ruled out some of the suspected causes. The report was clear in its conclusion that a novel pathogen is as likely as not to be the cause.
We support the local fishing industry in a great many different ways. It is a fact that crab catches across the whole of that area are roughly normal. Some local vessels fishing in particular parts have seen the number of crabs they are able to catch drop off significantly, and we have to find ways of supporting them until populations recover. I do understand that it is very difficult for them, but we have provided a lot of finance to the inshore fleet right around the coast. We want to make sure that that is adaptable and can be used in circumstances such as these.
Lord Cromwell (CB)
My Lords, I declare my farming interests. I very much enjoyed the Minister’s upbeat presentation on the situation in agriculture, but I know that, from his own farming experience, he will empathise with the fact that any farming business is a complex series of ecosystems that interact with each other, and a decision on one will affect others in many different ways. Therefore, can he help me by explaining why the Defra strategy appears to be to drip out bits of the environmental programme, for example, piece by piece? One month it is soil, the next month it is hedgerows. Farmers, who are trying to feed the nation and improve the environment, find it impossible to plan a business when these bits of information are dropped out on a fragmentary basis, as I understand it, right out until 2025.
Lord Benyon (Con)
There are two reasons for that. First, we have a programme of tailing out the basic payment scheme and replacing it with ELMS. That requires us to manage the public money properly. Secondly, we want this to be an iterative—a wonderful Civil Service word—process that responds to our understanding of real life. We have had our tests, trials and pilots and have learned from them. In the autumn we had a serious tyre-kicking session on this, which drew some criticism. I can understand why; people were very nervous that we were going to do a screeching U-turn, but we have not. Out of that has now come the announcement of six, as opposed to three, new standards—because farmers wanted to know precisely what the noble Lord said.
It takes time to get this right because, as he says, it is about people’s livelihoods and businesses, and they want to be able to plan for the future. I think farmers much prefer that—or will in hindsight, when they look back on this era—to some big bang moment where we stop one scheme on 31 December and go into another on 1 January. By and large, when Governments have tried that across a whole range of different reforms in different departments, it has been a disaster. We have tried to do this over many years, and in time farmers will understand that they have been able to migrate from one system to another. As a farmer, that is certainly what I want; I understand if other farmers have different views. I want a Government who listen to farmers and change accordingly, and that is what we have tried to do.
Lord Deben (Con)
My Lords, I declare my interests as laid out in the declaration of interests. How will the Government make farmers confident in this excellent report when they are signing contracts with other countries that will allow people to export into this country and compete with our farmers when they do not have to meet the same high standards we are asking? It is impossible to ask for their confidence unless we stop this activity.
Lord Benyon (Con)
I am grateful to my noble friend for reminding me that I should have drawn noble Lords’ attention to my entry in the register as a farmer. As he knows, and as I have said frequently from this Dispatch Box, it is the Government’s policy that all trade deals should reflect our own high standards in environment and animal welfare, and that remains the policy of the Government.
Baroness Jones of Whitchurch (Lab)
My Lords, the Minister said that the Government were ring-fencing the £2.4 billion for ELMS, but the fact is that the basic payment scheme has been going down much more quickly than the sustainable farming incentive has been going up, so there is an inevitable gap in farmers’ incomes as a result of all that.
So I ask the Minister: how much of the £1 billion cut from farmers so far will they be able to get back this year through the ELM scheme? If he finds that the take-up is not the 70% that the Government aspire to, at what point will they go back and look at whether or not the factors are right and whether or not the payments are right? We all want it to be a success, but there is an awful lot of finger in the air at the moment, and we need to make sure that all that money does go back to the farming community to have long-term, sustainable farming enterprises in this country. So how much will they get, and at what point will the Government reconsider whether the amount should go up further?
Lord Benyon (Con)
We have tried to help farmers in as many ways as possible. For example, we have brought forward to a half-yearly payment what they are currently receiving in the basic payment scheme, so what they were receiving in one lump sum they now receive six- monthly. That has helped their cash flow.
There are other things, such as the extra money we have put into Countryside Stewardship, which has drawn many more people into the scheme and front-loaded some of that money. The fact that we are setting six new standards now as opposed to the original three that we were going to announce is another example of how we are pulling the money forward. We want to make sure that it is going into farmers’ pockets as quickly and as easily as possible, keeping the application for it simple and getting the money to them through the Rural Payments Agency as quickly as possible.
I cannot answer the noble Baroness precisely, for the simple reason that it is different for every farm. As a farmer looks at the proposals that we have announced, they will be able to see on each standard that there are different things that they can do that fit in with the ecosystem that they farm in—the water management that they want to achieve and the wildlife that they want to encourage, while still producing food—and every single farm will be different. We are also helping through the announcement we made on landscape recovery, allowing farmers to work together in clusters to bring forward schemes. That has been really effective at drawing people into that scheme as well. So I cannot tell her precisely because every farm is different, but that amount is ring-fenced and farmers will be supported through the scheme.
Baroness McIntosh of Pickering (Con)
My Lords, I welcome the further update on the transition plan. When the Agriculture Bill was going through this place, pleas were made to the Minister’s predecessor to allow us to amend the two agricultural Acts that are the foundation of the tenancies. Will my noble friend take that away with him and urgently ensure that the tenancy agreements can be amended so that they will benefit? Who will advise the farmers on which applications they can make? Will it be Natural England?
On a positive note, I welcome the eight new agricultural attachés the Government have announced. Can the Minister say in what way they will actually help, for example, farmers in the north of England to reach export markets many miles away?
On the issue of crustaceans, he will be aware that this has had a devastating impact on those who fish for crabs off the north Yorkshire coast. What compensation can they look for, and what foreseeable future in this area of fishing will they have?
Lord Benyon (Con)
I am grateful to my noble friend, first, for reminding me that I did not answer the points made by the noble Baronesses on the Front Benches about tenants. I absolutely agree that we want to make these schemes as accessible as possible to tenant farmers. They are a fundamental part of the tenure of land that we have, from owner-occupiers, statutory tenants under the Agricultural Holdings Act, farm business tenancies, grazing rights and grazing on commons; there is an array of them. I agree with my noble friend that the legislation is a bit out of date. We have an organisation called TRIG, which is bringing together people across farming businesses to try to find a way of reform, although there is not agreement on that. My noble friend Lady Rock’s report has brought forward some measures that have already found their way into the Environmental Land Management Scheme and into Countryside Stewardship. We want to make these as accessible as possible for tenants, and I hope that the changes we made will please them.
I am grateful for the noble Baroness’s points on exports. I am pleased to see that we have recently agreed exports of pig meat to countries such as Mexico. This fills the gap created when markets were cut off for China. Our attachés, embassies and high commissions abroad will be working hard to secure better export opportunities for high-quality British food, so I hope that we will see a better future for that.
Lord Beith (LD)
My Lords, the north-east fishing industry, despite the great popularity of its crab and lobster products in mainland Europe, has faced a series of challenges. The one the Minister described today has been the most devastating. Alongside that, the industry has had to find ways of getting products to market in Europe, which has proved far more complicated as it has to be done within 24 hours in most cases. In the case of Holy Island, new problems, of which he is aware, may be posed by marine protection zones. Is there a focus in his department on ensuring that we continue to have a north-east of England fishing industry, given all these difficulties?
Lord Benyon (Con)
Absolutely. Regarding Holy Island, as he knows, we are holding a consultation, which is causing great concern. I have had letters from a variety of people, including the Archbishop of York, on this matter. I know it is causing serious stress to individuals, and we want to resolve it as soon as possible; that is the point of a meaningful consultation. The people managing that fishery need to know that we are listening to them. We will make an announcement very soon, which I hope will set their minds at rest.
The noble Lord and my noble friend also asked about support for that fishing industry. We want to see more biomass in the sea, so fishermen in the north-east of England feel that they can have a sustainable stock of fish to exploit in years to come. Everything we are doing is about driving towards sustainability. The greatest friends of protected marine areas should be fishermen. As we saw in a report I wrote for the Government before I took this position, in other parts of the world the greatest supporters of marine protection are fishermen. Outside those areas, they see biomass moving into an area, which they can then exploit. We want to see a good future for fishermen all around our coasts.
Baroness Bloomfield of Hinton Waldrist (Con)
We have plenty of time. I think it is the turn of the Cross- Benchers, and then Labour.
Lord Carrington (CB)
My Lords, I declare my interests as a farmer, as set out in the register. I also express my thanks to the Minister and his department for the progress on and development of ELMS so far. I emphasise “so far” because there are still some areas of concern, and my two principal ones are as follows.
First, the implementation of biodiversity net gain becomes a legal requirement at the end of this year. We need to know how land set aside for BNG relates in terms of payment to land incorporated in ELMS, as this could be a major income opportunity for farmers. Secondly, there is a need for immediate clarity from Defra and the Treasury on income and capital tax treatment and reliefs, as well as the possibility of VAT on BNG and other aspects of ELMS, including woodland. I would be greatly relieved if the Minister could respond on these two points.
Lord Benyon (Con)
The noble Lord is right that the biodiversity net gain target becomes effective from November this year. We are working hard with other departments to ensure that that rollout is happening. I know that contracts and covenants are already being worked up by famers and their advisers. We see this as an income source from which they can benefit, and we want to ensure that it happens. This absolutely dovetails with what they are doing with environmental land management schemes. In addition to the noble Lord’s point, next month we are due to publish our green finance strategy, which will try to create the right degree of regulation in a market which some people refer to as “the wild west”, because you see all sorts of players offering farmers and land managers enormous sums of money, some of which is greenwash. We want to focus that, so we are working effectively to get ESG money and other funds invested in our natural environment through farmers and land managers in a meaningful way. As the noble Lord said, there are also tax concerns. We are in discussions with the Treasury on that, and we will ensure that we keep your Lordships abreast of those developments.
Baroness Armstrong of Hill Top (Lab)
My Lords, tempted as I am to put the case of the challenge for upland farmers in County Durham, I actually want to concentrate on the crab deaths. First, I thank the Minister for the correction I have just received to the Parliamentary Answer he sent me yesterday. I understand that all these issues are challenging, including this one. It is challenging because we do not yet know, and the Government must admit in their report that they do not yet know, the precise nature of what has caused this awful problem. I know the Government want to rule out dredging, but they are not yet in a position to do that, so can he assure me that any future dredging will be monitored very carefully? When the steelworks closed in Consett, we saw the results of processes that nobody had thought about. I am sure that will also be the case around the Redcar works, where stuff got into the river from both the steel and chemical works. Will the Minister ensure that the Government continue to monitor the effects of dredging and that they come up with a firm plan to restore the health of the sea, so that not just fishermen but tourists have confidence to go to those magnificent beaches again?
Lord Benyon (Con)
I entirely accept the point that the noble Baroness makes, and her passion for that area is well known. In doing his survey, the Chief Scientific Adviser, Professor Henderson, pulled together 12 leading experts in their field. They are listed in the report, and they have looked at this in the way scientists do. It is sometimes frustrating that you cannot ever get a clear, black-and-white answer to a scientific question, and sometimes there are mysteries, but I hope that this is not one of the mysteries that will always elude us. However, when talking to the scientists and really pushing them to find out whether we gave them the right remit, all the answers I received satisfied me that Professor Henderson, who is a deeply respected public servant and scientist, pulled together the most effective group possible, and they have produced a report that indicates what is very unlikely to be the cause.
Two types of dredging have gone on in that area. One is maintenance dredging, whereby very small amounts of the depths of sediment are removed. We tested that sediment before it was put in a licensed part of the sea, and the levels of pyridine were absolutely inconsequential in terms of its ability to cause the crab deaths. The other one is capital dredging for the new port, and the dates for that are interesting. In December 2020 capital dredging took place, but not actually on the freeport; the deaths occurred in October 2021, some months afterwards; and in September 2022 there was capital dredging in the freeport, after which there were no deaths. The fact that, largely, only crabs have been washed up is really extraordinary, so we want to ensure that we keep an open mind. I absolutely give the noble Baroness the assurance that we are also willing to look at other—
Baroness Jones of Moulsecoomb (GP)
My Lords, I have two questions about the agricultural transition. First, the Minister is very enthusiastic about the number of farmers who would take it up. Does he have any estimate or is that too difficult to find? Secondly, what happens about monitoring practices of farmers who do not sign up? Is there a process for that?
On the crabs, Gary Caldwell, a senior lecturer in applied marine biology at Newcastle University—so, a well-respected expert—says that there is no direct evidence for disease among the crabs, and that very high levels of pyridine were found in the crab carcasses. The next stage of dredging will move a million cubic metres of riverbed seven miles out to sea. The noble Baroness asking the previous question asked whether there will be very careful monitoring of that so that we do not have a repeat occurrence.
Lord Benyon (Con)
On the farmer situation, about 2,200 have entered the sustainable farming incentive to date. That is not particularly surprising, because the amount of money that was available was between £22 and £60 a hectare, and now there will be considerably more. There will be farmers who will not join the scheme because they can farm profitability without support, or for whatever reason. We monitor or collect data from farms right across the country. It is vital that we do, so that we know what crops are being planted and where. It will feed a very important piece of strategic work that I am sure the noble Baroness will support: the land use framework, which is coming forward.
The noble Baroness referred to Dr Gary Caldwell. Professor Henderson has been in touch with him on a number of occasions. There was a rumour that he had somehow been excluded. There is a paper trail of emails between Professor Henderson and Dr Caldwell. I can only rely on the evidence we have seen, in the report from the 12 eminent scientists, that indicated that the levels of pyridine were “very unlikely” to be responsible—we have to be very precise in our language here. We will keep our minds open and make sure that developments in that area address the points the noble Baroness makes.
Lord Jopling (Con)
My Lords, I draw attention to my farming interests in the register. Does the Minister agree that perhaps the most susceptible group of farmers in these difficult times are those on marginal land which is rather too good to be supported through the upland support schemes? Those are very often smaller farms on not good land. Is there anything in the Government’s proposals tailored specifically for this particular group in the margins?
Lord Benyon (Con)
I thank my noble friend. His knowledge and interest in this subject are of course really helpful. We want to make sure that precisely those farmers are able to access these schemes. In fact, they are the people most often able to deliver the kind of benefits we want, in reversing the decline of biodiversity, hitting our net-zero targets and hitting our tree-planting targets. There is something in there for them, particularly in the upland areas. If they are farming areas that have either upland or lowland peat, there is a standard that would be of particular value to them. I also draw farmers’ attention to the hedgerows standard. Farmers are used to hedgerows, and they are restoring their number to deal with those that were taken out with government grants in the 1970s. They know that if they can manage those hedgerows in a different way, it can have enormous benefits, both in carbon and biodiversity. I really hope they will benefit from these new standards.
Lord Watson of Wyre Forest (Lab)
My Lords, the Minister said that there were no other deaths, but independent marine experts claim that there have been deaths of bivalve shellfish, octopuses, barnacles and algae and there is growing evidence that seal populations were affected. If the assumptions in this new report are accurate, it suggests that we have a discrete, pathogenic, multi-species serial killer committing ecocide. That is significant because it is also in an area that is coterminous with the blast radius of the explosion of the Teesside furnace, which was demolished by explosion with the dust cloud scattered across the sea. I am sure the Minister must be worried about that level of death in the sea. Can he at least try to challenge the notion that there is a multi-species element to this, because I think the report focused just on crustaceans?
Lord Benyon (Con)
I absolutely accept the noble Lord’s point. I want to make sure that my language is correct, because there are a lot of conspiracy theories at the extremes; then there are the absolutely genuine points made by people such as the noble Lord, who want, quite rightly, to ensure that they are addressed.
Although a novel pathogen—a disease or parasite—has not been identified, the experts concluded that it could explain the key observations, including mortality, over a sustained period along a 70-kilometre coastline. The report makes clear the unusual twitching of dying crabs and the deaths being predominantly among crabs rather than other species, and it concluded that a novel pathogen is as likely as not to be the cause.
That leads us to ask, “What now?”, which is why we are talking to Cefas to make sure that we are monitoring this issue. We are also talking to the IFCA about the measures that it brought in and making sure that we are drawing on the evidence of citizen science and other scientific organisations—some of which have understandably been taking part in campaigns on this. We recognise that, as yet, we do not precisely know what the cause is, but we want to.
Viscount Thurso (LD)
My Lords, on the hypothesis that the cause is indeed a novel pathogen, the Minister will know that in respect of red belly disease in salmon the original hypothesis was a novel pathogen, but the hypothesis now is an existing pathogen with a novel stressor. Has the review looked at the possibility of an existing pathogen caused by a new stress element? If not, why not? Does the Minister agree that that should be looked at?
Lord Benyon (Con)
The noble Viscount makes a very good point. One of the things that the review looked at was what was going on in the sea at the time. He is absolutely right that there are factors that can affect species and their ability to withstand a pathogen if such a pathogen exists. Those factors can include storm and tide effects and other human effects; they were certainly considered as part of the review and will be considered in any future reviews of this work.
The Earl of Caithness (Con)
My Lords, during the passage of the then Environment Bill, my noble friend’s predecessor as Minister, the noble Lord, Lord Goldsmith of Richmond Park, promised the House that there would be a soil health action plan and that it would be a “key plank” of the Government’s policy. When is that promise going to be honoured?
Lord Benyon (Con)
I am not sure, because I was not involved in any commitments made at the time of that Bill, but I will certainly look into it and contact my noble friend. I should say that soil is absolutely at the heart of our agricultural reforms. We want farmers to use it in a way that means we are protecting it. There are certain areas, such as lowland peat, where the soil is being depleted at an alarming rate. We want to make sure that the measures we have introduced are used to protect and maintain soils; and that soils can be used for all the things we want, such as cleaning up rivers and protecting our environment.
Baroness Masham of Ilton (CB)
My Lords, can I ask the Minister—[Inaudible]—the crabs are safe to eat —[Inaudible]—or are they poisonous?
Lord Benyon (Con)
I can absolutely assure the noble Baroness that they are safe to eat. The FSA advice is that they are safe to eat and that there is no zoonotic effect on human health from crabs that have been found dead and have been examined.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, it is the turn of the Labour Benches. There will be time for the noble Lord, Lord Inglewood, to speak afterwards.
Viscount Stansgate (Lab)
In the light of the answer that the Minister gave to my noble friend, can he tell the House whether his own adviser, Professor Henderson, has recommended to him further action or research that should be undertaken? The Minister also referred to a wider group of interested people who will want to know what has happened in this tragedy; sometimes, things occur in nature and we do not understand them. Will the action taken involve a wide range of scientific societies, including, for example, the Royal Society of Biology?
Lord Benyon (Con)
Absolutely, in addition to the organisations I listed earlier. The initial views are that finding something to which we can attribute the cause is unlikely, but Professor Henderson has suggested that the university sector will be well placed to extend research in this area, and he is working with it to see what further research can be done.
Lord Inglewood (Non-Afl)
My Lords, I declare my agricultural interests as in the register. I would like the Minister to return to the reply he gave to the noble Lord, Lord Deben, when he explained that British agriculture and those engaged in it would not be, with their products, competing against people who operate under lower environmental and welfare standards. How does that square with the remarks of his noble friend, the noble Lord, Lord Johnson of Lainston, on the Trade (Australia and New Zealand) Bill, where he told the House that the standards in Australia were lower than those in this country?
Lord Benyon (Con)
Our policy is that agricultural products taken in as part of a trade deal cannot be imported into this country if they fall beneath our standards of animal welfare and environmental protection. That is the policy in the agricultural chapter of the Australia deal; it is the first time such a chapter in a trade deal has said that.
Genetic Technology (Precision Breeding) Bill
Wednesday 1st February 2023
(1 year, 3 months ago)
Lords ChamberRead Full debate Genetic Technology (Precision Breeding) Act 2023 View all Genetic Technology (Precision Breeding) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 83-I Marshalled list for Report - (23 Jan 2023)
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
My Lords, I have it in command from His Majesty the King to acquaint the House that His Majesty, having been informed of the purport of the Genetic Technology (Precision Breeding) Bill, has consented to place his interest, so far as it is affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Lord Benyon (Con)
It is my privilege to move the Third Reading of the Genetic Technology (Precision Breeding) Bill in this House today. As we have discussed in debate, it is essential that we forge ahead with the Bill now to help address the many challenges we are facing across our food system and environment.
During the Bill’s passage through the other place, we saw record-breaking heat and drought and now, as it nears the end of its journey, we are managing the impacts of winter flooding. Precision-breeding technology is one of the tools we can use to develop plants that are more productive, more resilient to extreme weather, and less reliant on fertilisers and pesticides. This technology will help support our farmers to grow and harvest better, improve the health and welfare of animals, and provide healthier and more nutritious foods for consumers.
We have some of the best scientists and research institutes in the world, and we want to encourage this exciting research and translate it into tangible benefits. I recently had the pleasure of visiting Professor Jane Langdale at the University of Oxford, where I learned about her cutting-edge work developing high-yielding rice varieties for smallholder farmers. I heard how you can precision breed drought-resistant varieties. That is exactly the kind of work we want to see. I know that this is happening across the country, including at the John Innes Centre at Rothamsted, the Roslin Institute and many more places. I left Oxford with the warm glow—no doubt some noble Lords might feel that it was naive but I felt it was genuine—one gets from the belief that we have actually done something good here, which will benefit people in not just this country but abroad.
By introducing a more proportionate and science-based regulatory framework, we want to encourage innovation and enable new breeds of plants and animals to be released for field trials and brought to market more easily. We want to encourage this innovation responsibly. Following the Bill’s passage, we will continue to work with experts and other stakeholders to develop measures to safeguard animal welfare before we bring the measures in the Bill into force in relation to animals.
I thank all those who have supported the Bill and those who put it through its paces to ensure it will deliver on its vision of proportionate and safe regulation of precision-breeding technologies. The specialist expertise that the noble Lords, Lord Krebs, Lord Trees, Lord Winston and Lord Cameron of Dillington, have brought to the debates has been invaluable. As we are all aware, this is a scientific policy area with which some of us do not always feel at ease. It was a truly extraordinary experience to hear the level of understanding and knowledge in some of the exchanges. I really thank many noble Lords for their wisdom and for ensuring the appropriate direction of debates.
I also thank noble Lords on the Front Benches for their invaluable contributions. The noble Baroness, Lady Hayman of Ullock, has led well-considered scrutiny, and I thank her for her debate on this legislation. The noble Baroness, Lady Bakewell of Hardington Mandeville, has provided extensive input to these debates, for which I am grateful. I thank other noble Lords from all sides of the House for their interest and engagement, which has undoubtedly improved the Bill. I know that we had some arguments and that not everyone will have been happy with precisely where we ended up, but it was an enormously beneficial experience to have the debates that we did.
Finally, I want to thank the Bill team, who were led by Fiona White, Emily Bowen, Elizabeth Bates and Elena Kimber, and the Bill policy team, parliamentary counsel and the Food Standards Agency, which worked so hard on the Bill. I thank noble Lords for their support and input into these important debates. I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I realise that the Chamber is filling up and getting ready for the next debate, which is very important, but I would like to thank the noble Lord, Lord Benyon, for his good humour, patience and flexibility during the passage of the Bill. I also thank the Bill team for their help in answering our queries, along with the noble Baronesses, Lady Hayman of Ullock and Lady Jones of Whitchurch, and all those on the Labour Benches, including the noble Lord, Lord Winston, who made a very valuable contribution to the Bill.
As the Minister has said, the expertise of the noble Lords, Lord Krebs, Lord Trees and Lord Cameron of Dillington, was absolutely invaluable. I really enjoyed the exchanges across the Chamber on this very technical Bill. I cannot sit down without mentioning the noble Baroness, Lady Bennett of Manor Castle, who also brought a great deal of expertise to it. My noble friend Lady Parminter supported me brilliantly; we could not have got where we are without her, so I thank her for that.
There were excellent cross-party debates and we reached a reasonable conclusion. We did not get everything that we wanted but we got a satisfactory result and I thank the Minister for that.
Lord Benyon (Con)
In adding to the noble Baroness’s thanks to noble Lords, I forgot to mention my noble friend Lord Harlech, without whom chaos would have ensued.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the noble Baroness, Lady Bakewell, for her comment and want briefly to pick up one point from the Minister on Report. He gave the assurance
“that I will be open to any suggestions”
for
“a forum or fora for a wider conversation with the public”.—[Official Report, 25/1/23; col. 278.]
I hope the Minister will confirm that; I am hoping to outreach with him in the coming weeks to do that. The Minister did not refer to the fact that the Welsh and Scottish Governments have both rejected the legislative consent Motions for the Bill to apply to their countries. Can he provide any more information on where the Government are going forward with that?
Two things have happened since we finished Report. The European Patent Office has revoked an EU patent for heme proteins in plant-based meat alternatives, an issue which was also the subject of litigation in the US. In Committee, we talked a lot about patent issues. We did not go back to them on Report but that certainly raises lots of those issues from Committee. Finally, since our debate we have had a statement from the Advisory Committee on Novel Foods and Processes on so-called precision-bred organisms. Many people are reaching out to me to say that it does not resolve the issues of labelling and other regulatory issues, so I draw that response to the Minister’s attention.
Baroness Hayman of Ullock (Lab)
My Lords, this was at times a very complex and sometimes challenging Bill, particularly for a non-scientist such as myself; I think both the Minister and I were on a steep learning curve. I thank everybody who provided detailed information and support during the course of this Bill. It really was invaluable as we moved through its progress.
I also thank all noble Lords who took part in the debate. A lot of people spent a lot of time going into detail and depth on this, which was really important when you consider its nature. In particular, I would like to thank: my noble friends Lord Winston and Lady Jones of Whitchurch; the noble Lords, Lord Krebs, Lord Trees and Lord Cameron; the noble Baronesses, Lady Bakewell and Lady Parminter, with whom I worked closely, on the Opposition Benches; and the noble Baroness, Lady Bennett. There was a lot of very clear insight and knowledge that came through noble Lords’ contributions on this Bill, which is one of the reasons why this House is so good at improving legislation—I think this Bill really demonstrated that.
I would also like to thank the officials for their time and their patience with me and my many questions. It was very much appreciated from the Opposition Benches. Finally, I thank the Minister for his time and the constructive way he worked with those of us on the Opposition Benches. It is very much appreciated.
Lord Benyon (Con)
I thank the noble Baroness for her kind thanks.
To answer the question asked by the noble Baroness, Lady Bennett—and I thank her for her challenge in this debate and this Bill—I am very keen to continue a conversation about how we raise people’s awareness about how this technology can help, or unravel some of the mystery that might surround people who are concerned about it at times. I assure her that will be the case.
On the question of Scotland and Wales, I hope in time they will see what we are doing and the direction in which the EU is moving on this. I hope they will listen to farmers and institutions like the Roslin Institute, Bangor and Aberystwyth universities, and the James Hutton Institute, and understand that this is an area where it is possible to develop technologies and where, if we all work together, Britain can be a leader. With that, I beg to move.
Online Safety Bill
Wednesday 1st February 2023
(1 year, 3 months ago)
Lords ChamberRead Full debate Online Safety Act 2023 View all Online Safety Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 17 January 2023 - large print - (17 Jan 2023)
Lord Parkinson of Whitley Bay
That the Bill be now read a second time.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, I am very glad to be here to move the Second Reading of the Online Safety Bill. I know that this is a moment which has been long awaited in your Lordships’ House and noble Lords from across the House share the Government’s determination to make the online realm safer.
That is what this Bill seeks to do. As it stands, over three quarters of adults in this country express a concern about going online; similarly, the number of parents who feel the benefits outweigh the risks of their children being online has decreased rather than increased in recent years, falling from two-thirds in 2015 to barely over half in 2019. This is a terrible indictment of a means through which people of all ages are living increasing proportions of their lives, and it must change.
All of us have heard the horrific stories of children who have been exposed to dangerous and deeply harmful content online, and the tragic consequences of such experiences both for them and their families. I am very grateful to the noble Baroness, Lady Kidron, who arranged for a number of noble Lords, including me, to see some of the material which was pushed relentlessly at Molly Russell whose family have campaigned bravely and tirelessly to ensure that what happened to their daughter cannot happen to other young people. It is with that in mind, at the very outset of our scrutiny of this Bill, that I would like to express my gratitude to all those families who continue to fight for change and a safer, healthier online realm. Their work has been central to the development of this Bill. I am confident that, through it, the Government’s manifesto commitment to make the UK the safest place in the world to be online will be delivered.
This legislation establishes a regulatory regime which has safety at its heart. It is intended to change the mindset of technology companies so that they are forced to consider safety and risk mitigation when they begin to design their products, rather than as an afterthought.
All companies in scope will be required to tackle criminal content and activity online. If it is illegal offline; it is illegal online. All in-scope platforms and search services will need to consider in risk assessments the likelihood of illegal content or activity taking place on their site and put in place proportionate systems and processes to mitigate those risks. Companies will also have to take proactive measures against priority offences. This means platforms will be required to take proportionate steps to prevent people from encountering such content.
Not only that, but platforms will also need to mitigate the risk of the platform being used to facilitate or commit such an offence. Priority offences include, inter alia: terrorist material, child sexual abuse and exploitation, so-called revenge pornography and material encouraging or assisting suicide. In practice, this means that all in-scope platforms will have to remove this material quickly and will not be allowed to promote it in their algorithms.
Furthermore, for non-priority illegal content, platforms must have effective systems in place for its swift removal once this content has been flagged to them. Gone will be the days of lengthy and arduous complaints processes and platforms feigning ignorance of such content. They can and will be held to account.
As I have previously mentioned, the safety of children is of paramount importance in this Bill. While all users will be protected from illegal material, some types of legal content and activity are not suitable for children and can have a deeply damaging impact on their mental health and their developing sense of the world around them.
All in-scope services which are likely to be accessed by children will therefore be required to assess the risks to children on their service and put in place safety measures to protect child users from harmful and age inappropriate content. This includes content such as that promoting suicide, self-harm or eating disorders which does not meet a criminal threshold; pornography; and damaging behaviour such as bullying.
The Bill will require providers specifically to consider a number of risk factors as part of their risk assessments. These factors include how functionalities such as algorithms could affect children’s exposure to content harmful to children on their service, as well as children’s use of higher risk features on the service such as livestreaming or private messaging. Providers will need to take robust steps to mitigate and effectively manage any risks identified.
Companies will need to use measures such as age verification to prevent children from accessing content which poses the highest risk of harm to them, such as online pornography. Ofcom will be able to set out its expectations about the use of age assurance solutions, including age verification tools, through guidance. This guidance will also be able to refer to relevant standards. The Bill also now makes it clear that providers may need to use age assurance to identify the age of their users to meet the necessary child safety duties and effectively enforce age restrictions on their service.
The Government will set out in secondary legislation the priority categories of content harmful to children so that all companies are clear on what they need to protect children from. Our intention is to have the regime in place as soon as possible after Royal Assent, while ensuring the necessary preparations are completed effectively and service providers understand clearly what is expected. We are working closely with Ofcom and I will keep noble Lords appraised.
My ministerial colleagues in another place worked hard to strengthen these provisions and made commitments to introduce further provisions in your Lordships’ House. With regard to increased protections for children specifically, the Government will bring forward amendments at Committee stage to name the Children’s Commissioner for England as a statutory consultee for Ofcom when it is preparing a code of practice, ensuring that the experience of children and young people is accounted for during implementation.
We will also bring forward amendments to specify that category 1 companies—the largest and most risky platforms—will be required to publish a summary of their risk assessments for both illegal content and material that is harmful to children. This will increase transparency about illegal and harmful content on in-scope services and ensure that Ofcom can do its job regulating effectively.
We recognise the great suffering experienced by many families linked to children’s exposure to harmful content and the importance of this Bill in ending that. We must learn from the horrific events from the past to secure a safe future for children online.
We also understand that, unfortunately, people of any age may experience online abuse. For many adults, the internet is a positive source of entertainment and information and a way to connect with others; for some, however, it can be an arena for awful abuse. The Bill will therefore offer adult users a triple shield of protection when online, striking the right balance between protecting the right of adult users to access legal content freely, and empowering adults with the information and tools to manage their own online experience.
First, as I have outlined, all social media firms and search services will need to tackle illegal content and activity on their sites. Secondly, the Bill will require category 1 services to set clear terms of service regarding the user-generated content they prohibit and/or restrict access to, and to enforce those terms of service effectively. All the major social media platforms such as Meta, Twitter and TikTok say that they ban abuse and harassment online. They all say they ban the promotion of violence and violent threats, yet this content is still easily visible on those sites. People sign up to these platforms expecting one environment, and are presented with something completely different. This must stop.
As well as ensuring the platforms have proper systems to remove banned content, the Bill will also put an end to services arbitrarily removing legal content. The largest platform category 1 services must ensure that they remove or restrict access to content or ban or suspend users only where that is expressly allowed in their terms of service, or where they otherwise have a legal obligation to do so.
This Bill will make sure that adults have the information they need to make informed decisions about the sites they visit, and that platforms are held to their promises to users. Ofcom will have the power to hold platforms to their terms of service, creating a safer and more transparent environment for all.
Thirdly, category 1 services will have a duty to provide adults with tools they can use to reduce the likelihood that they encounter certain categories of content, if they so choose, or to alert them to the nature of that content. This includes content which encourages, promotes, or provides instructions for suicide, self-harm or eating disorders. People will also have the ability to filter out content from unverified users if they so wish. This Bill will mean that adult users will be empowered to make more informed choices about what services they use, and to have greater control over whom and what they engage with online.
It is impossible to speak about the aspects of the Bill which protect adults without, of course, mentioning freedom of expression. The Bill needs to strike a careful balance between protecting users online, while maintaining adults’ ability to have robust—even uncomfortable or unpleasant—conversations within the law if they so choose. Freedom of expression within the law is fundamental to our democracy, and it would not be right for the Government to interfere with what legal speech is permitted on private platforms. Instead, we have developed an approach based on choice and transparency for adult users, bounded by major platforms’ clear commercial incentives to provide a positive experience for their users.
Of course, we cannot have robust debate without being accurately informed of the current global and national landscape. That is why the Bill includes particular protections for recognised news publishers, content of democratic importance, and journalistic content. We have been clear that sanctioned news outlets such as RT, formerly Russia Today, must not benefit from these protections. We will therefore bring forward an amendment in your Lordships’ House explicitly to exclude entities subject to sanctions from the definition of a recognised news publisher.
Alongside the safety duties for children and the empowerment tools for adults, platforms must also have effective reporting and redress mechanisms in place. They will need to provide accessible and effective mechanisms for users to report content which is illegal or harmful, or where it breaches terms and conditions. Users will need to be given access to effective mechanisms to complain if content is removed without good reason.
The Bill will place a duty on platforms to ensure that those reporting mechanisms are backed up by timely and appropriate redress mechanisms. Currently, internet users often do not bother to report harmful content they encounter online, because they do not feel that their reports will be followed up. That too must change. If content has been unfairly removed, it should be reinstated. If content should not have been on the site in question, it should be taken down. If a complaint is not upheld, the reasons should be made clear to the person who made the report.
There have been calls—including from the noble Lord, Lord Stevenson of Balmacara, with whom I look forward to working constructively, as we have done heretofore—to use the Bill to create an online safety ombudsman. We will listen to all suggestions put forward to improve the Bill and the regime it ushers in with an open mind, but as he knows from our discussions, of this suggestion we are presently unconvinced. Ombudsman services in other sectors are expensive, often underused and primarily relate to complaints which result in financial compensation. We find it difficult to envisage how an ombudsman service could function in this area, where user complaints are likely to be complex and, in many cases, do not have the impetus of financial compensation behind them. Instead, the Bill ensures that, where providers’ user-reporting and redress mechanisms are not sufficient, Ofcom will have the power to take enforcement action and require the provider to improve its user-redress provisions to meet the standard required of them. I look forward to probing elements of the Bill such as this in Committee.
This regulatory framework could not be effective if Ofcom, as the independent regulator, did not have a robust suite of powers to take enforcement actions against companies which do not comply with their new duties, and if it failed to take the appropriate steps to protect people from harm. I believe the chairman of Ofcom, the noble Lord, Lord Grade of Yarmouth, is in his place. I am glad that he has been and will be following our debates on this important matter.
Through the Bill, Ofcom will have wide-ranging information-gathering powers to request any information from companies which is relevant to its safety functions. Where necessary, it will be able to ask a suitably skilled person to undertake a report on a company’s activity—for example, on its use of algorithms. If Ofcom decides to take enforcement action, it can require companies to take specific steps to come back into compliance.
Ofcom will also have the power to impose substantial fines of up to £18 million, or 10% of annual qualifying worldwide revenue, whichever is higher. For the biggest technology companies, this could easily amount to billions of pounds. These are significant measures, and we have heard directly from companies that are already changing their safety procedures to ensure they comply with these regulations.
If fines are not sufficient, or not deemed appropriate because of the severity of the breach, Ofcom will be able to apply for a court order allowing it to undertake business disruption measures. This could be blocking access to a website or preventing it making money via payment or advertising services. Of course, Ofcom will be able to take enforcement action against any company that provides services to people in the UK, wherever that company is located. This is important, given the global nature of the internet.
As the Bill stands, individual senior managers can be held criminally liable and face a fine for failing to ensure their platform complies with Ofcom’s information notice. Further, individual senior managers can face jail, a fine or both for failing to prevent the platform committing the offences of providing false information, encrypting information or destroying information in response to an information notice.
The Government have also listened to and acknowledged the need for senior managers to be made personally liable for a wider range of failures of compliance. We have therefore committed to tabling an amendment in your Lordships’ House which will be carefully designed to capture instances where senior managers have consented to or connived in ignoring enforceable requirements, risking serious harm to children. We are carefully designing this amendment to ensure that it can hold senior managers to account for their actions regarding the safety of children, without jeopardising the UK’s attractiveness as a place for technology companies to invest in and grow. We intend to base our offence on similar legislation recently passed in the Republic of Ireland, as well as looking carefully at relevant precedent in other sectors in the United Kingdom.
I have discussed the safety of children, adults, and everyone’s right to free speech. It is not possible to talk about this Bill without also discussing its protections for women and girls, who we know are disproportionately affected by online abuse. As I mentioned, all services in scope will need to seek out and remove priority illegal content proactively. There are a number of offences which disproportionately affect women and girls, such as revenge pornography and cyberstalking, which the Bill requires companies to tackle as a priority.
To strengthen protections for women in particular, we will be listing controlling or coercive behaviour as a priority offence. Companies will have to take proactive measures to tackle this type of illegal content. We will also bring forward an amendment to name the Victims’ Commissioner and the domestic abuse commissioner as statutory consultees for the codes of practice. This means there will be a requirement for Ofcom to consult both commissioners ahead of drafting and amending the codes of practice, ensuring that victims, particularly victims and survivors of domestic abuse, are better protected. The Secretary of State and our colleagues have been clear that women’s and girls’ voices must be heard clearly in developing this legislation.
I also want to take this opportunity to acknowledge the concerns voiced over the powers for the Secretary of State regarding direction in relation to codes of practice that currently appear in the Bill. That is a matter on which my honourable friend Paul Scully and I were pressed by your Lordships’ Communications and Digital Committee when we appeared before it last week. As we explained then, we remain committed to ensuring that Ofcom maintains its regulatory independence, which is vital to the success of this framework. As we are introducing ground-breaking regulation, our aim is to balance the need for the regulator’s independence with appropriate oversight by Parliament and the elected Government.
We intend to bring forward two changes to the existing power: first, replacing the “public policy” wording with a defined list of reasons that a direction can be made; and secondly, making it clear that this element of the power can only be used in exceptional circumstances. I would like to reassure noble Lords—as I sought to reassure the Select Committee—that the framework ensures that Parliament will always have the final say on codes of practice, and that strong safeguards are in place to ensure that the use of this power is transparent and proportionate.
Before we begin our scrutiny in earnest, it is also necessary to recognise that this Bill is not just establishing a regulatory framework. It also updates the criminal law concerning communication offences. I want to thank the Law Commission for its important work in helping to strengthen criminal law for victims. The inclusion of the new offences for false and threatening communications offers further necessary protections for those who need it most. In addition, the Bill includes new offences to criminalise cyberflashing and epilepsy trolling. We firmly believe that these new offences will make a substantive difference to the victims of such behaviour. The Government have also committed to adding an additional offence to address the encouragement or assistance of self-harm communications and offences addressing intimate image abuse online, including deep- fake pornography. Once these offences are introduced, all companies will need to treat this content as illegal under the framework and take action to prevent users from encountering it. These new offences will apply in respect of all victims of such activity, children as well as adults.
This Bill has been years in the making. I am proud to be standing here today as the debate begins in your Lordships’ House. I realise that noble Lords have been waiting long and patiently for this moment, but I know that they also appreciate that considerable work has already been done to ensure that this Bill is proportionate and fair, and that it provides the change that is needed.
A key part of that work was conducted by the Joint Committee, which conducted pre-legislative scrutiny of the Bill, drawing on expertise from across both Houses of Parliament, from all parties and none. I am very glad that all the Members of your Lordships’ House who served on that committee are speaking in today’s debate: the noble Baroness, Lady Kidron; the noble Lords, Lord Stevenson of Balmacara and Lord Knight of Weymouth, who have very helpfully been called to service on the Opposition Front Bench; the noble Lord, Lord Clement-Jones, who speaks for the Liberal Democrats; as well as my noble friends Lord Black of Brentwood and Lord Gilbert of Panteg.
While I look forward to the contributions of all Members of your Lordships’ House, and will continue the open-minded, collaborative approach established by my right honourable friend the Secretary of State and her predecessors—listening to all ideas which are advanced to make this Bill as effective as it can be—I urge noble Lords who are not yet so well-versed in its many clauses and provisions, or who might be disinclined to accept at first utterance the points I make from this Dispatch Box, to consult those noble Lords before bringing forward their amendments in later stages of the Bill. I say that not to discourage noble Lords from doing so, but in the spirit of ensuring that what they do bring forward, and our deliberations on them, will be pithy, focused, and conducive to making this Bill law as swiftly as possible. In that spirit, I shall draw my already too lengthy remarks to a close. I beg to move.
Baroness Merron (Lab)
My Lords, like many in your Lordships’ House, I am relieved to be finally speaking on the Second Reading of this important Bill. I am very grateful to the Minister for his introduction. Despite being central to a recent manifesto and having all-party support, it has taken nearly six years to get us to this moment, as the Minister alluded to. A revolving door of four Prime Ministers and seven changes in Secretary of State have not exactly been conducive to this process.
But it is also fair to say that the Bill has been strengthened by consultation and by the detailed pre-legislative scrutiny carried out by the Joint Committee, to whom I pay tribute. It means that this version of the Bill bears a very welcome resemblance to the Joint Committee’s report. I also thank the Communications and Digital Select Committee for its ongoing work and warmly acknowledge the long-term campaigning work of the noble Baroness, Lady Kidron, and others in and outside this House.
It seems that every passing week reminds us why stronger online regulation is needed. Just today, we read that the influence of Andrew Tate, despite his being in custody in Romania, has whipped up a storm of rape and death threats directed to my colleague in the other place, Alex Davies-Jones. And writ large is the damning verdict of the inquest into Molly Russell’s death. I want to pay tribute to the determination of her father, Ian, who is present with us today.
In today’s digital age, social media is everywhere: in our homes, workplaces and schools. With the rise of virtual reality, it is also in our heads. It is a central influence on what we buy and think, and how we interact and behave. The power and money at stake are enormous, yet the responsibilities are minimal and accountability lacking.
The focus of this long and complex Bill is on reducing the seemingly ever-increasing harms caused by social media services and search engines, whose algorithms generate detailed pictures of who we are and push us towards certain types of content, even if it impacts on our physical and mental health. As we know, Molly Russell tragically took her own life after having been bombarded with material relating to depression, self-harm and suicide.
Many platforms have upped their game since, but the need for this legislation has not diminished: there remain too many cases of children and vulnerable adults being exposed to digital content that is simply not appropriate. I welcome the arrival of the Bill, but it is too late and, due to recent changes, arguably too narrow. We must now do what we can to get it on the statute book as soon as possible.
The Government have committed to changes in your Lordships’ House, but we need to see the detail, and soon, not least because of the significant public and stakeholder interest. It has become fashionable to leave major changes to legislation until Report stage, leaving noble Lords unsighted and limiting the scope for improvement. I hope the Minister will commit to bucking this trend and give noble Lords early sight of the Government’s thinking.
On these Benches, we will, as always, work constructively with colleagues across the House, and hopefully with the Minister too, as we have already been doing. But, in so doing, we must acknowledge that this Bill is unlikely to be the last word. A future Labour Government will want to return to these issues, to tidy up any deficiencies that are identified once the Bill becomes law.
I now turn to some of our priorities. I am in no doubt that other noble Lords will add to this list. There is a legitimate concern around the decision of Ministers to take powers of direction over what is supposed to be an independent regulator and to leave so much to secondary legislation. The need for flexibility is indeed understood, but Parliament must have an active role, rather than being sidelined.
On the protection of children, despite notable progress by many platforms, too many failings exist. Several children’s charities have put forward important recommendations. The NSPCC has called for user advocacy to influence future regulation, while Barnardo’s wants restrictions on access to online pornography, holding the Government to their previous promises.
The scrapping of legal but harmful provisions means a lack of protection for vulnerable adults. The Samaritans, for example, is keen to ensure that self-harm provisions properly capture vulnerable adults as well as children. We understand that defining the term is difficult, but a solution has to be found.
On anti-Semitism, racism and general abuse, the Government shifted policy in response to a former Conservative leadership hopeful who said that we cannot legislate for hurt feelings. We believe in free speech, but it is not clear that DCMS has found the right balance with its triple shield. The toggle system may prevent users from seeing categories of harmful material, but it will still exist and influence others unless the Government compel an auto-on setting.
On violence against women and girls, I welcome the commitments made in relation to cyberflashing and making controlling behaviour a priority offence. I hope the Minister confirms that there will be work with an extensive range of relevant stakeholders to build on the amendments already made, and to identify and close potential loopholes in forthcoming text.
We find it unacceptable that the Government have stripped back the Bill’s media literacy provisions at a time when these skills are more important than ever. I am grateful to organisations such as Full Fact for highlighting the need to equip people of all ages, but particularly children, with the skills necessary to identify misinformation and disinformation. We have all seen the damage caused by vaccine disinformation, not only on Covid but on HPV. This extends to other areas; social media is awash with misleading material on nutrition, breastfeeding and natural health remedies, to name but a few. Once again, we acknowledge that some platforms perform well in response to such issues, but the recent takeover of Twitter has highlighted how swiftly and radically that can change.
I know that the Minister has been working on this agenda for some time and that he wants to get it right. We can all share our own experiences or those of friends or family in respect of online harm and abuse. We can also all cite ways in which technological innovation has improved our lives. We therefore all have a stake in improving this legislation. We have a long and complex process ahead of us, but uniquely there is no political divide on the Bill. Therefore I hope that in the finest traditions of your Lordships’ House we will work together to improve what is before us, while recognising that this is unlikely to be the last word.
Lord McNally (LD)
My Lords, it is a pleasure to follow the noble Lord, Lord Parkinson, and the noble Baroness, Lady Merron, and the spirit of co-operation they have both shown in introducing the Bill. On our side we will be led by my noble friend Lord Clement-Jones, who is keeping his powder dry for the summing up.
I was pleased that there was praise for the pre-legislative scrutiny, which is a very useful tool in our locker. I was a member of the Puttnam committee, which in 2002 looked at what became the last Communications Act, and I took two lessons from that. The first was the creation of Ofcom as a regulator with teeth; it is important that we go forward with that. The other was the Puttnam amendment adding the protection of citizens’ interests to that of consumer interests as part of its responsibilities. Those twin responsibilities—to the consumer and the citizen—are valuable when addressing this Bill.
It is worth remembering that, although it may be a future Labour Government who deal with this, my experience is that this is not a dress rehearsal; this is the main event and we should seize the day. It has been 20 years since the last Bill, six years since the Green Paper, and five years since the White Paper, with a cavalcade of Secretaries of State. This House is entitled to stress-test and kick tyres in today’s debate and in Committee to see if the powers and scope meet the threats, challenges and opportunities posed by this technology.
We will play our part in delivering a Bill which is fit for purpose, but the Government must play theirs by being flexible in their approach in response to legitimate concerns and sensible amendments addressing them. The noble Baroness, Lady Merron, has already voiced concerns about powers left in the hands of future Secretaries of State. We will study what has been said this afternoon on those matters.
We welcome the Bill’s focus on protecting children. I do not think anybody who went to the presentation on the evidence in the Molly Russell inquest could have left with anything other than a determination that something must be done about this. Equally, the concerns of End Violence Against Women and other groups pose questions on whether this legislation goes far enough in the protections needed, which will have to be tested. There are real worries about the lack of minimum requirements for terms of service and the removal of risk assessment for adults. The noble Lord, Lord Bethell, has been raising very pertinent questions about age verification and access to pornography. The noble Lord, Lord Lipsey, and I intend to raise questions in Committee about the free pass given to newspapers by this legislation, although much of their activity is now online. There is no specific commitment, as has been said, to expand media literacy, despite it being a major recommendation of the Puttnam committee 20 years ago.
The internet has been an amazing catalyst for change, innovation and creativity. But those benefits have come at a price of targeted actions designed to cause harms to individuals and institutions. On all Benches we believe that freedom of expression is important, but liberal democracies have a right to provide a framework of protection against those who seek to harm it. Much will depend on the response to legislation and regulation by the internet companies. The public are not stupid; they can differentiate between tick-box exercises and compliance, between profit maximisation and social responsibility. The noble Lord, Lord Grade, is also not stupid and I wish him well as chair of Ofcom.
My work on the Puttnam committee 20 years ago was among the most satisfying of my parliamentary life. I hope we will all have similar feelings when we complete our work on this Bill.
Baroness Kidron (CB)
My Lords, I declare my interests as chair of 5Rights Foundation and the Digital Futures Commission, my positions at Oxford and LSE and at the UN Broadband Commission and the Institute for Ethics in AI, as deputy chair of the APPG on digital regulation and as a member of the Joint Committee on this Bill.
As has already been mentioned, on Monday I hosted the saddest of events, at which Ian Russell and Merry Varney, the Russell family’s solicitor, showed parliamentarians images and posts that had been algorithmically recommended to Molly in the lead-up to her death. These were images so horrible that they cannot be shown in the media, so numerous that we could see only a fraction, and so full of despair and violence that many of the adult professionals involved in the inquest had to seek counselling. Yet in court, much of this material was defended by two tech companies as being suitable for a 14 year-old. Something has gone terribly wrong. The question is: is this Bill sufficient to fix it?
At the heart of our debates should not be content but the power of algorithms that shape our experiences online. Those algorithms could be designed for any number of purposes, including offering a less toxic digital environment, but they are instead fixed on ranking, nudging, promoting and amplifying anything to keep our attention, whatever the societal cost. It does not need to be like that. Nothing about the digital world is a given; it is 100% engineered and almost all privately owned; it can be designed for any outcome. Now is the time to end the era of tech exceptionality and to mandate a level of product safety so that the sector, just like any other sector, does not put its users at foreseeable risk of harm. As Meta’s corporate advertising adorning bus stops across the capital says:
“The metaverse may be virtual, but the impact will be real.”
I very much welcome the Bill, but there are still matters to discuss. The Government have chosen to take out many of the protections for adults, which raises questions about the value and practicality of what remains. In Committee, it will be important to understand how enforcement of a raft of new offences will be resourced and to question the oversight and efficacy of the remaining adult provisions. Relying primarily on companies to be author, judge and jury of their own terms of service may well be a race to the bottom.
I regret that Parliament has been denied the proper opportunity to determine what kind of online world we want for adults, which, I believe, we will regret as technology enters its next phase of intelligence and automation. However, my particular concern is the fate of children, whose well-being is collateral damage to a profitable business model. Changes to the Bill will mean that child safety duties are no longer an add-on to a generally safer world; they are now the first and only line of defence. I have given the Secretary of State sight of my amendments, and I inform the House that they are not probing amendments; they are necessary to fill the gaps and loopholes in the Bill as it now stands. In short, we need to ensure that child safety duties apply to all services likely to be accessed by children. We must ensure the quality control of all age-assurance systems. Age checking must not focus on a particular harm, but on the child; it needs to be secure, privacy-preserving and proportionate, and it must work. The children’s risk assessment and the list of harms must cover each of the four Cs: content harm, conduct harm, contact harm and commercial harm, such as the recommendation loops of violence and self-hatred that push thousands of children into states of misery. Those harms must be in the Bill.
Coroners and bereaved parents must have access to data relevant to the death of a child to end the current inhumane arrangement whereby bereaved families facing the devasting loss of their child are forced to battle, unsuccessfully, with tech behemoths for years. I hope that the Minister will reiterate commitments made in the other place to close that loophole.
Children’s rights must be in the Bill. An unintended consequence of removing protections for adults is that children will now cost companies vastly more developer time, more content moderation and more legal costs than adults. The digital world is the organising technology of our society, and children need to be online for their education and information to participate in civic society—they must not be kicked out.
I thank all those who have indicated their support, and the Secretary of State, the Minister and officials for the considerable time they have given me. However, I ask the Minister to listen very carefully to the mood of the House this evening; the matters I have raised are desperately urgent and long-promised, and must now be delivered unequivocally.
While millions of children suffer from the negative effects of the online world, some pay with their lives. I am a proud supporter of a group of bereaved parents for online safety, and I put on the record that we remember Molly, Frankie, Olly, Breck, Sophie and all the others who have lost their lives. I hope that the whole House will join me in not resting until we have a Bill fit for their memory.
The Lord Bishop of Manchester
My Lords, that is not an easy speech to follow, but I begin by declaring my interest as a Church Commissioner, as set out in the register. We have substantial holdings in many of the big tech companies. I am also vice-chair of the Church of England Ethical Investment Advisory Group. I commend the attention of noble Lords to our recent report on big tech that was published last September. There, we set out five core principles that we believe should guide our investment in and engagement with big tech companies: flourishing as persons, flourishing in relationships, standing with the marginalised, caring for creation and serving the common good. If we apply those principles to our scrutiny of this Bill, we will not only improve lives but save lives.
I will focus my remaining remarks on three areas. First, as the noble Baroness, Lady Merron, and the noble Lord, Lord McNally, have noted, the powers granted to the Secretary of State to direct Ofcom on its codes of practice and provide tactical and strategic guidance put Ofcom’s independence at risk. While I recognise that the Government have sought to address these concerns, more is required—Clauses 39 and 157 are not fit for purpose in their present form. We also need clear safeguards and parliamentary scrutiny for Secretary of State powers in the Bill that will allow them to direct Ofcom to direct companies in whatever we mean by “special circumstances”. Maintaining Ofcom’s autonomy in decision-making is critical to preserving freedom of expression more broadly. While the pace of technological innovation sometimes requires very timely response, the Bill places far too much power in the hands of the Secretary of State.
Secondly, while the Bill encompasses activity within the remit of regulators beyond Ofcom, it is largely silent on formal co-operation. I encourage the Government to introduce a general duty to co-operate with other regulators to ensure a good and effective enforcement of the various regulatory regimes. I would be grateful if the Minister could confirm whether the Government will commit to looking at this once more.
Finally, I turn, as others have done, to the protection of children. The noble Baroness, Lady Kidron, has just spoken powerfully. Can we really claim that this Bill serves to mitigate the harm that children face online when consultation of children has so far been lacking? I welcome the Minister’s remarks about the Children’s Commissioner in this regard, but we can and should go further. In particular, we should centre our decisions on promoting children’s well-being rather than on simply minimising harm. My right reverend friend the Bishop of Durham regrets that he is unable to be in his place today. I know he plans to raise these questions as the Bill progresses.
Related to this, we must ensure that any activity online through which children are groomed for criminal exploitation is monitored. A reporting mechanism should be brought in so that such information is shared with the police. My right reverend friend the Bishop of Derby is unable to speak today, but as vice- chair of the Children’s Society, she will follow these issues closely.
This Bill has arrived with us so late and so overcrowded that I had begun to think it was being managed by my good friends at Avanti trains. However, here at last it is. I look forward to working with noble Lords to improve this important and welcome legislation. It is my hope that, as we continue to scrutinise and improve the Bill, we will move ever closer to fulfilling those five core principles I set out: flourishing as persons, flourishing in relationships, standing with the marginalised, caring for creation and serving the common good.
Baroness Morgan of Cotes (Con)
My Lords, I draw attention to my interests as a trustee of the Loughborough Wellbeing Centre, director of Santander and the Financial Services Compensation Scheme, chair of the Association of British Insurers and board member at Grayling. In fact, I could draw attention to all my interests, because what we are debating today, with online search engines and online platforms, are organisations that reach into every corner of our lives now. I want to thank current Ministers for getting us to this stage. We have heard that this is long overdue regulation. I plead guilty to being one of the “cavalcade” of previous Secretaries of State mentioned by the noble Lord, Lord McNally, but I am pleased that I have played my part in keeping this Bill on the road.
When we have passed this legislation, the UK will be world leading. That needs to be recognised, but it also means that this legislation is new and not easy, as we have heard. Polling from More in Common has said that in a list of six comparative European countries, the British are most likely to say that the Government are not doing enough to regulate social media platforms. In the brief time available, I want to set out some key themes and amendments which I hope to raise in Committee.
I welcome the criminal offences relating to violence against women and girls added to the Bill, but the whole environment of these platforms, where such online violence has become normalised and misogyny allowed to flourish unchecked, needs to change. I am afraid that adding selected offences is insufficient, and I will be calling for a specific code of practice, to be drafted by Ofcom, that the platforms and search engines will need to follow to show that they are taking the proliferation of violence against women and girls seriously.
We will hear today many arguments about freedom of speech and expression, but what about the right to access and participation online without being abused and harassed? Online violence against women and girls curtails women’s freedom of expression. The advice to avoid social media—which I myself, as a Member of Parliament, received from the authorities and the police—respects no one’s freedoms. As we have heard, women and girls are 27 times more likely to experience harassment online.
We have also heard from Luke Pollard in the other place a mention of incels. While this is a complicated topic, unfortunately what is true is that data from the Center for Countering Digital Hate has found that visits to incel websites are only increasing every day, and the content on them is getting more extreme. Many small platforms hosting incels set their own terms and conditions, allowing for violent and misogynistic discussions. How the Bill tackles those issues will be of great importance and a subject of discussion in this House.
I was disappointed that the legal but harmful restrictions were dropped, but I understand why Ministers chose to do so. However, I agree that, as we have already heard, the user empowerment toggle should be set to “on” by default. Just because a user decides not to see abusive and harmful content does not mean that it is not there, either influencing others or, where it is unfortunately necessary, for the user to see so that they can provide evidence to the authorities, including the police. I include my own experience of having seen that abuse, gathering it and then sending it to the authorities. If we have the toggle set to “off”, in relation to violence against women and girls the onus will yet again be on women to protect themselves, rather than the abuser being compelled to cease their abuse. Related themes to explore in Committee will be the minimum standards needed for risk assessments, as well as minimum standards for platforms’ terms and conditions; the publication of risk assessments to create a culture of transparency on the part of service providers; and further detail on how the information gathered by Ofcom under Clause 68 is to be used.
We will hear discussion—we already have—about the welcome creation of the offence of sending communication which encourages serious self-harm. However, as we have heard, Samaritans has pointed out that all such content needs to be regulated across all platforms for all users. Turning 18 does not stop young people being vulnerable to suicide or self-harm content. I also support the calls by Vicky Ford and others to specifically include eating disorders within the self-harm clause.
It was my pleasure last year to chair this House’s special committee on the Fraud Act 2006 and digital fraud. Time is short, but there will be more to say on the issues of fraud, as well as independent researchers’ access to information. My noble friend the Minister has mentioned senior manager liability. We will wait to see what the clause introduced says, but it needs to be sufficiently tough to change the culture.
I will absolutely support the amendment proposed by the noble Baroness, Lady Kidron, and that proposed by my noble friend Lord Bethell, on age verification for online pornography.
I was recently at an event in this building with tech companies, including a major search engine, who complained that, via the Bill, the Government are experimenting on them. I put it to them then, and I say now, that these companies have experimented on us, particularly our children and vulnerable adults, for years without facing the consequences of the illegal and harmful material across their platforms and search engines. The Bill is long overdue. I look forward to the debates and amendments.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, it is a privilege to follow the noble Baroness, Lady Morgan—and slightly intimidating. I draw the House’s attention to my register of interests: I am a director of the Antisemitism Policy Trust and a director of HOPE not hate, and I remain the chief executive of Index on Censorship. I have also had appalling experiences online. In all these capacities I have been intimately involved with the passage of this legislation over the last two years. Like every one of your Lordships, I desperately want to see a better and safer internet for all users, especially children and the most vulnerable, but I worry about the unintended consequences of certain clauses, particularly for our collective and legal right of freedom of expression.
There are certain core premises that should guide our approach to online regulation. What is legal offline should be legal online. We need secure and safe communication channels to protect us all of us, but especially dissidents and journalists, so end-to-end encryption needs to be safeguarded. Our ability to protect our identities online can be life-saving, for domestic violence victims as much as for political dissidents, so we need to ensure that the principle of online anonymity is protected. Each of these principles is undermined by the current detail of the Bill, and I hope to work with many of your Lordships in the weeks ahead to add additional safeguards.
However, some of my greatest concerns about the current proposals relate to illegal content: the definition of what is illegal, the arbiters of illegality and, in turn, what happens to the content. The current proposals require the platforms to determine what is illegal content and then delete it. In theory this seems completely reasonable, but the reality will be more complicated.
I fear what a combination of algorithms and corporate prosecution may mean for freedom of expression online. The risk appetite of the platforms is likely to be severely reduced by this legislation. Therefore, I believe that they are likely to err on the side of caution when considering where the illegality threshold falls, leading to over-deletion. This will be compounded by the use of algorithms rather than people to detect nuance and illegal content.
I will give your Lordships an example of an unintended consequence this has already led to. A video of anti-government protests in Lebanon was deleted on some current platforms because an algorithm picked up only one word of the Arabic chants: Hezbollah, an organisation rightly proscribed in the UK. But the video actually featured anti-Hezbollah chants. It was an anti-extremism demonstration and, I would speculate, contained anti-extremist messaging that many of us would like to see go viral rather than be deleted.
Something is already twice as likely to be deleted from a platform by an algorithm if it is in Urdu or Arabic, rather than English. This will become even more common unless we tighten the definition of illegality and provide platforms with a digital evidence locker where content can be stored before a final decision on deletion is made, thus protecting our speech online.
The issue of deletion is deeply personal for me. Many of your Lordships may be aware that, as a female Jewish Labour Member of the other place, I was subjected to regular and vicious anti-Semitic and misogynist online abuse—abuse that too often became threats of violence and death. Unfortunately, these threats continue and have a direct effect on my personal security. I know when I am most vulnerable because I see a spike in my comments online. These comments are monitored—thankfully not by me—and, when necessary, are referred to the police, with the relevant evidence chain, so that people can be prosecuted.
Can the Minister explain how these people will be prosecuted for harassment, or worse, if the content is automatically deleted? How will I know if someone is threatening to kill me if the threat has already gone? I genuinely believe that the Government wish to make people safer online, as do we all, but I fear that this Bill will not only curtail free speech online but make me and others much less safe offline. There is significant work to do to make sure that is not the case.
Baroness Campbell of Surbiton (CB) [V]
My Lords, the internet is a double-edged sword. It enables people to connect with work, education, information and social activities. It gives visibility to those often hidden from society. But it can be a dangerous place for many, especially disabled people, many of whom are vulnerable to attack merely for who they are. I want to focus on the indiscriminate abuse that disabled people face online.
In January 2019, the Petitions Committee published its report Online Abuse and the Experience of Disabled People, following a petition by Katie Price about her son Harvey. The committee heard evidence of extreme levels of abuse, not only on social media but in online games, web forums and in media website comments. As one disabled poet and writer wrote:
“I’ve been called an ‘it’ many times—‘What is IT doing?’ … I’ve had remarks about how I look in my wheelchair, and a few times the statements, ‘You should have been aborted’, and, ‘You don’t deserve to live’”,
and, “Why are you online?” The committee rightly concluded that the law was not fit for purpose.
The Bill does not do enough to address such abuse. The other place recently weakened the protections for disabled people, replacing the provisions on legal but harmful content with a triple shield of duties to remove illegal content for adults and harmful content for under-18s, and to empower adult users.
Under Clause 12, social media companies must now tackle content which is abusive or incites hatred towards disabled people. That is encouraging, but it is the companies that decide that, so in practice it may not change anything. We know that moderating social media is the Wild West. There is no consistency between platforms. It depends on the algorithms they use and the discretion of their moderators.
Clause 18 adds to those problems, requiring platforms also to consider freedom of expression and privacy issues. They will be in an impossible position, caught between competing claims for protection from abuse and freedom of speech. At the very least, the legal but harmful provisions must be restored.
Greater control for disabled people using social media is laudable. They must be consulted on the best way to achieve that. The Bill says that terms of service must be “clear and accessible”. It should provide for Ofcom to give guidance with input from disabled people. It should not be left to social media services to set their own standards.
Consistency is also vital for the way the verification process works. Clause 57 refers to “verification … of any kind” and “clear and accessible” explanations. Ofcom’s guidance will be crucial on both issues, with disabled people’s input essential. It should be mandatory to follow the guidance.
Will the Minister assure me that he will address these matters before Committee? Will he meet me and disability organisations which have expertise in this field for guidance? This is a landmark Bill and very welcome. Let us ensure that it works for everybody, especially those who need it most.
The Lord Bishop of Oxford
My Lords, it is an honour and privilege to follow the noble Baroness, Lady Campbell, and all those who have spoken in this debate. As a member of your Lordships’ Committee on Artificial Intelligence and a founding member of the Centre for Data Ethics and Innovation, I have followed the slow progress of this Bill since the original White Paper. We have seen increasing evidence that many social media platforms are unwilling to acknowledge, let alone prevent, harms of the kind this vital Bill addresses. We know that there is an all too porous frontier between the virtual world and the physical world. The resulting harms damage real lives, real families, and real children, as we have heard.
There is a growing list of priority harms and now there is concern, as well as excitement, over new AIs such as ChatGPT; they demonstrate yet again that technology has no inherent precautionary principles. Without systemic checks and balances, AI in every field develops faster than society can respond. We are and for ever will be catching up with the technology.
The Bill is very welcome, marking as it does a belated but important step towards rebalancing a complex but vital aspect of public life. I pay tribute to the Government and to civil servants for their patient efforts to address a complex set of ethical and practical issues in a proportionate way. But the job is not yet fully done.
I will concentrate on three particular areas of concern with the draft Bill. First, removal of risk assessments regarding harm to adults is concerning. Surely every company has a basic moral duty to assess the risk of its products or services to customers and consumers. Removal can only undermine a risk-based approach to regulation. Can the Minister explain how conducting a risk assessment erodes or threatens freedom of speech? My second concern, mentioned by others, is the Secretary of State’s powers in relation to Ofcom. This country has a record of independence of our own media regulators. Others have touched on that, so I will not elaborate. The third area of concern I wish to raise is the Bill’s provision—or rather lack of provision—over disinformation of various kinds. I currently serve on your Lordships’ Environment and Climate Change Committee; climate disinformation and medical disinformation inflict substantial harms on society and must be included in user empowerment tools.
Other right reverend Prelates will raise their own concerns in the forthcoming Committee. My right reverend friend the Bishop of Gloucester believes that it is imperative that we prevent technology-facilitated domestic abuse, as well as bring in a code of practice to keep women and girls safe online. To help young people flourish, we should look at controlling algorithmically served content, restrictions on face and body-editing apps, as well as improving media literacy overall. She is unable to speak today, but will follow these issues closely.
The Bill is vital for the health of children and adults, and the flourishing of our whole society. I look forward to progress being made in this House.
Lord Vaizey of Didcot (Con)
My Lords, I refer to my registered interests, in particular my work with Common Sense Media, a US not-for-profit that is focused on internet safety for children. What a pleasure it is to follow the right reverend Prelate the Bishop of Oxford—my local bishop, no less. I always find it a great thing that it is our Bishops who read their speeches from iPads; we have iBishops in this Chamber who are far more technologically advanced than the rest of us. What a pleasure it is to see our national treasure the Arts Minister on the Front Bench; yesterday he launched the 2021 report of the Portable Antiquities Scheme, which displays ancient treasures dug up from many centuries ago. I thought he might be presented with the first consultation paper on the Online Safety Bill, because it has taken so long to get to the stage where we are today.
A dozen years ago, when we talked about the impact of the internet, we were actually focused on copyright infringement; that was the big issue of the day. It is quite instructive to think about what happened there; it was a combination of technology, but also business solutions, licensing and the creation of companies such as Spotify that had an impact. But piracy remains with us, and will continue to remain with us because of the internet.
I like to think that the Jurassic journey of the Online Safety Bill began with an Adjournment debate by the then Member for Devizes, Claire Perry, who began a debate about protecting children from adult content on the internet, which is one of the most important issues. That led to her being commissioned to do a review by the then Prime Minister, David Cameron, and that began the ball rolling. But Prime Minister David Cameron’s biggest intervention, which I remember well, was to tackle Google on the issue of child sex abuse. At the time the prevailing mood, which still prevails, was that politicians do not understand technology—you cannot regulate the internet, “Get your tanks off our lawn”. But Cameron said, “We will legislate unless you do something”, and Google, which said it was impossible, eventually came up with something like 150,000 search terms which would give a non-search return and refer the searcher to get some help, frankly—that is what the page would come up with.
That was instructive because it was a combination of government action, but in tackling child sexual abuse we had relied on not-for-profits, such as the Internet Watch Foundation. As we debate a piece of legislation and call on the Government to do this or that, it is important to remember that the internet has always had many governors, if you like—civic society, business, not-for-profits and charities—all of which must continue to play an important role in internet policing, as must the platforms themselves, where technology has improved in leaps and bounds. We have heard some of the criticisms of the technology they use and the impact it has on the people who are relied on by some of these technology companies to police content. Nevertheless, they have made progress. We must also remember that the platforms are not publishers or broadcasters; they are still new technology.
I unequivocally support the Bill—frankly, in whatever form it takes once your Lordships have fully considered it. It must be passed because it is time to regulate the internet. Ofcom is absolutely the right regulator to do this. I have been hugely impressed by the amount of work it has put into preparing for this role. The overall approach taken in the Bill is the right one: to police not every piece of content but the terms and conditions. This week, Ofcom published a very important document pointing out that transparency, holding the platforms to account and exposing how they regulate their content will make a massive difference.
The Government have made the right compromise on legal but harmful. I counsel against the Christmas tree effect of wanting to hang every single different concern on to the Bill; let us keep our eye on the prize. Having said that, I will fully support my noble friend Lord Bethell in his points on age verification and the noble Baroness, Lady Kidron, with her amendment.
This is the end of the beginning. The Bill will not eradicate all the nasty things we see on the internet but, for the first time, the platforms will be accountable. It is very important to support this legislation. The Minister did not mention the European Union’s important legislation on this issue, but we are beginning to make progress across the world.
Baroness Ritchie of Downpatrick (Lab)
My Lords, it is a pleasure to follow other noble Lords on this issue. This legislation is undoubtedly long overdue. Without doubt, the internet has changed the way in which we live our lives. For many this change has been positive. However, the internet, in particular social media, has created a toxic online world. We have only to listen to the noble Baroness, Lady Kidron, and my noble friend Lady Anderson to realise that. As a result, the internet has become abusive, misogynistic and dangerous. Many noble Lords from across the House have personal experience of this toxic world of online abuse. Any measures that seek to place curbs and limits on that type of content are to be welcomed.
While it is important to protect adults from abuse online, it is more important that we get the Bill’s protections right for children. I welcome its provisions in respect of age verification, but for many across the House it is a surprise that we are even debating age verification. Legislation was passed in 2017 but inexplicably not implemented by the Government. That legislation would have ensured that age verification was in place to protect children over five years ago. While the Bill includes age assurance measures, it is disappointing that its provisions are not as robust as those passed in 2017. Also, it is concerning that age verification is not uniformly applied across Parts 3 and 5. What actions and steps will the Minister and his colleagues take in Committee with government amendments on this issue?
As this Bill makes progress through this House, it will be important to ensure that age verification is robust and consistent, but we must also ensure that what happened to the Digital Economy Act cannot be allowed to happen to this legislation. The Government cannot be allowed to slow down or even abandon age verification measures. This Bill, while welcome, needs to be amended to ensure that age verification is actually implemented and enforced. This must happen as quickly as possible after the Bill becomes law. I believe that age verification should be in place no later than six months after this Bill is passed.
The need for robust age verification is beyond any reasonable argument. Children should be protected from viewing harmful content online. The law in this regard should be simple. If a platform contains pornographic content, children should be prevented from viewing it. More than that, pornography that is prohibited offline should be prohibited online. Reading the provisions of this Bill carefully, it is my belief that the Bill falls short in both regards.
I look forward to the passage of this Bill through the House and, while it is a very welcome development to be discussing and having this Bill, it is important that the provisions and clauses within it are totally strengthened.
Lord Allan of Hallam (LD)
My Lords, I have two observations, two pleas, one offer of help and four minutes to deliver all this, so here goes.
Observation one is that this Bill is our answer to the age-old question of “quis custodiet ipsos custodes?” or, in the vernacular, “Who watches the watchmen?” With several thousand strokes of the pen, Parliament is granting to itself the power to tell tens of thousands of online services how they should manage their platforms if they wish to access the UK market. Parliament will give directions to Ofcom about the outcomes it wants to see and Ofcom will translate these into detailed instructions and ensure compliance through a team of several hundred people that the platforms will pay for. In-scope services will be given a choice—pay up and follow Ofcom’s instructions or get out of the UK market. We are awarding ourselves significant superpowers in this Bill, and with power comes great scrutiny as I am sure will happen in this House.
My second observation is that regulating online content is hard. It is hard because of scale. If regulating traditional media is like air traffic controllers managing a few thousand flights passing over the UK each day, then regulating social media is more like trying to control all the 30 million private cars that have access to UK roads. It is hard because it requires judgment. For many types of speech there is not a bright line between what is legal and illegal so you have to work on the basis of likelihoods and not certainties. It is hard because it requires trade-offs—processes designed to remove “bad” content will invariably catch some “good” content and you have to decide on the right balance between precision and recall for any particular system, and the noble Baroness, Lady Anderson of Stoke-on-Trent, has already referred to some of these challenges with specific examples.
I make this observation not to try and elicit any sympathy for online services, but rather some sympathy for Ofcom as we assign it the most challenging of tasks. This brings me to my first plea, which is that we allow Ofcom to make decisions about what constitutes compliance with the duties of care in the Bill without others second-guessing it. Because judgments and trade-offs are a necessary part of content moderation, there will always be people who take opposing views on where lines should have been drawn. These views may come from individuals, civil society or even Ministers and may form important and valuable input for Ofcom’s deliberations. But we should avoid creating mechanisms that would lead to competing and potentially conflicting definitions of compliance emerging. One chain of command—Parliament to Ofcom to the platforms—is best for accountability and effective regulation.
My second plea is for us to avoid cookie banner syndrome. The pop-ups that we all click on when visiting websites are not there for any technical reason but because of a regulatory requirement. Their origins lie in a last-minute amendment to the e-privacy directive from Members of the European Parliament who had concerns about online behavioural advertising. In practice, they have had little impact on advertising while costing many millions and leaving most users at best mildly irritated and at worst in greater risk as they learn to click through anything to close banners and get to websites.
There are several elements in this Bill that are at risk of cookie banner syndrome. Measures such as age and identity verification and content controls can be useful if done well but could also be expensive and ineffective if we mandate solutions that look good on paper but do not work in practice. If you see me mouthing “cookies” at you as we discuss the Bill, please do not see it as an offer of American biscuits but as a flag that we may be about to make an expensive mistake.
This brings to me to my final point, which is an offer of technical advice for any noble Lords trying to understand how the Bill will work in practice: my door and inbox are always open. I have spent 25 years working on internet regulation as poacher turned gamekeeper, turned poacher, turned gamekeeper. I may have a little more sympathy with the poachers than most politicians, but I am all gamekeeper now and keen to see this Bill become law. For those who like this kind of thing, I share more extensive thoughts on the Bill than I can get into four minutes in a blog and podcast called “Regulate Tech”.
Baroness Hollins (CB)
My Lords, I thank Mencap and the Royal College of Psychiatrists for their briefings. I will speak against the change in the other place which waters down the protections offered to adults, and focus in particular on adults without capacity.
The original Bill included protections for adults under the umbrella of “legal but harmful”, which gave robust directions to platforms on what content to remove. These protections must be reinstated; the triple shield is not enough. Your Lordships are presented with a system where social media platforms must filter only
“to the extent that it is proportionate to do so”,
assuming that all adults are capacitous all of the time and that they will be responsible for making their own choices to avoid seeing harmful content.
I recognise that there is an intended new duty for services to undertake a risk assessment on the impact of certain material on children, and to tackle the promotion of sites which share harmful content and to prevent children witnessing it, but this applies just to children. I agree with my noble friend Lady Kidron that tech companies must design for safety, just as we expect in the physical environment.
My main point is that there is no clear distinction between childhood and adulthood when it comes to mental health. I am concerned about the mental health consequences for anybody, whether child or adult, of seeing some of the images, messaging and push notifications which relentlessly pursue anyone who has ever engaged with one of the horrific sites like those seen by 14 year-old Molly Russell. These images are harmful to 14 year-olds; they are harmful to 24 year-olds; and they are harmful to 74 year-olds. Once seen, it is very hard to unsee them.
Misinformation and negative messaging are harmful to anyone who may struggle to belong and feel valued, whether at a vulnerable moment in their lives or as part of an ongoing struggle with depression. One in 20 Google searches is for health-related information. People in the UK apparently make 27 searches a minute for “depression”, 22 a minute for “stress”, and 21 a minute for anxiety. Given the waiting times for mental health support in the community, perhaps it is unsurprising that people seek help online. This Bill must have an emphasis on prevention. The Bill places duties on regulated providers but, as of June 2022, more than 500 hours of video were uploaded to YouTube every minute. This is content created and viewed by its users at a rate where any reactionary approach is doomed to fall quickly behind.
As legislators we must think of society as a whole, not just those who are fully engaged and economically productive citizens who currently feel invulnerable. Making sure that legislation works for people with a learning disability and those who may not have the understanding needed to protect themselves from harmful content should not be an add-on. Could the Minister suggest how the Bill could deliver greater protections to people with a learning disability or other cognitive or mental health reason for increased risk of online harm?
As I have said before, if we could get it right for people with learning disabilities, we could actually get it right for everyone.
Baroness Stowell of Beeston (Con)
My Lords, I am humbled to speak in this debate among many noble Lords who have spent years involved in or campaigning for this landmark legislation. I salute all of them and their work.
Like many, I support some parts of this Bill and am sceptical about others. The tension between free speech, privacy and online safety is not an easy one to resolve. We all accept, however reluctantly, that one Bill cannot cure all social ills—indeed, neither should it try. In fact, when it comes to online regulation, this is not the only legislation that is urgent and necessary: the digital markets, competition and consumer Bill is a critical, yet still missing, piece of the jigsaw to us achieving a strong regulatory framework. I hope the Government will bring it forward swiftly.
As my noble friend Lord Vaizey has already said, I see this Bill as the beginning of online regulation and not the end. I see it as our opportunity to make a strong start. For me, the top priority is to get the regulatory fundamentals right and to ensure we can keep updating the regime as needed in the years ahead. With my chair of the Communications and Digital Committee hat on, I will focus on key changes we believe are needed to achieve that. As I cannot do that justice in the time available, I direct any keen readers to our committee’s website, where my letter to the Secretary of State is available.
First, the regulator’s independence is of fundamental importance, as the noble Baroness, Lady Merron, and others have already mentioned. The separation of powers between the Executive and the regulator is the cornerstone of media regulation in western Europe. Any government powers to direct or give guidance should be clearly defined, justified and limited in scope. The Online Safety Bill, as it stands, gives us the opposite. Future Governments will have sweeping powers to direct and interfere with Ofcom’s implementation of the regulations.
I will come, in a moment, to my noble friend the Minister’s proposed remedy, which he mentioned in his opening remarks, but I stress that this is not a general complaint from me or the committee about executive overreach. Many of the Bill’s executive powers are key to ensuring the regime is responsive to changing needs, but there are some powers that are excessive and troubling. Clause 39 allows the Secretary of State to direct Ofcom to change its codes of practice on regulating social media firms. That is not about setting priorities; it is direct and unnecessary interference. In our view, the Government’s proposed amendment to clarify this clause, as my noble friend described, remains inadequate and does not respect the regulator’s independence. Clause 39 also empowers the Secretary of State to direct Ofcom in a private form of ping-pong as it develops codes of practice. This process could in theory go on for ever before any parliamentary oversight comes into play. Other powers are equally unnecessary. Clause 157 contains unconstrained powers to give “guidance” to Ofcom about any part of its work, to which it must have regard. Again, I fail to see the need, especially since the Government can already set strategic priorities and write to Ofcom.
Moving on, my committee is also calling for risk assessments for adult users to be reinstated, and this has already been mentioned by other noble Lords. That would have value for both supporters and critics of “legal but harmful”, by requiring platforms to be transparent about striking the balance between allowing adult users to filter out harmful content and protecting freedom of speech and privacy.
Finally, given the novel nature of the Bill, I hope the Government will reconsider their unwillingness to support the setting up of a Joint Committee of Parliament to scrutinise digital regulation across the board. This would address many general and specific concerns about implementation and keeping pace with digital developments that have been raised recently. Parliament needs to properly discharge its responsibilities, and fragmented oversight via a range of committees will not be good enough in this new, modern world.
Overall, and with all that said, I commend my noble friend and his colleagues for getting us to this point. I look forward to, and will support him in, completing the passage of this legislation in good order.
Lord Knight of Weymouth (Lab)
My Lords, it is a pleasure to follow the noble Baroness, Lady Stowell, and so many other fine speeches today. I should remind your Lordships of my interests. In particular, I have been working with GoBubble, which provides social media filtering technology. I was also a member of the Joint Committee on this Bill and was previously on the Select Committee on Democracy and Digital Technologies, chaired by the noble Lord, Lord Puttnam.
Right at the heart of this Bill are just two interrelated factors. First, there are bad actors: people who deliberately or carelessly do harm to others both in the real world and virtually, both physically and mentally. Our problem is how content from these bad actors interacts with the systems and processes in the online world that personalise and amplify that content. In 2021, 44% of all global spending on advertising was with Meta and Alphabet-owned businesses. Their platforms, such as Facebook, Instagram and YouTube, are machines with the objective of maximising engagement time on the platform in order to sell more advertising.
The machines have no ethics; they have business objectives. If that means feeding outrageous, disturbing or harmful content, so be it. If that means pushing at Molly Russell content that has now been implicated by the coroner in her death, so be it. If that means the corruption of children, self-harm or fraud, so be it. Whatever turns you on, keeps you engaged and keeps you on the platform is what the machines will push your way. This week, the Children’s Commissioner for England reported that one in five boys watch porn at least every day; that more than half of frequent users seek out violent sex acts; and that Twitter is the site where the highest proportion report seeing explicit sexual content.
The platforms are not all bad but the harms of manipulation and corruption are real and urgent. We must, and will, work together to get this Bill improved and passed by the summer. In doing so, our job with this Bill is to impose ethics on the algorithms used by platforms. This is less about bad content and more about systems. It is about content takedown and content suppression. It is as much about freedom of reach as freedom of speech. For too many people—especially women and girls, as the noble Baroness, Lady Morgan, mentioned—their freedom of expression is constrained by platforms because they are shouted down and abused. They need better protection.
Without change, vulnerable adults with learning difficulties will not be protected by this Bill. Without change, the corruption of truth and democracy by the likes of Trump and Putin will continue. Without change, the journalistic and democratic exemptions in the Bill will be exploited by the likes of Tommy Robinson to spread bile. Without change, content from the likes of Andrew Tate will continue to be amplified. His videos have been viewed more than 13 billion times on TikTok alone, including by any of our children whom we have allowed an account. Teachers, parents and grandparents cannot keep up with what is going on with children online; they need ongoing education and help. I am afraid that Ofcom is not cutting through with its media literacy duty. We must use this Bill to change that. We need to constrain the Secretary of State’s powers over Ofcom so that it is properly independent and give young people themselves more influence over the regulator.
There is much to do. This is as important a job of work as any I have been a part of during my 22 years in Parliament. I look forward to working with all Peers to deliver a Bill that prevents harm, criminalises abusers and overlays human ethics on to these machines of mass manipulation.
Baroness Finlay of Llandaff (CB)
My Lords, I thank my noble friend Lady Kidron for her tenacious moral leadership on this issue. I remind noble Lords that, when we passed the Tobacco Advertising and Promotion Act, none of us predicted tobacco companies’ development and marketing of vapes with higher and more addictive nicotine content than that in cigarettes. It was a simple lesson.
A gap now in this Bill is the difficult issue of “legal but harmful”. We should not focus on the difficulty of defining this, but rather on the design and standards of algorithms that internet platforms use to commercial advantage, dodging any responsibility for what happens and blaming the end user.
Before the Government amended Clauses 12 and 13, category 1 service providers would have been forced to risk-assess across their sites and provide information on this in their terms of service, including how harmful content was to be managed. But this is now gone and as a result, the digital environment will not be detoxified as originally intended. What pressures, if any, were exerted on government by commercial and other sources to amend these clauses?
It matters that the Bill now treats people under 18 and over 18 very differently, because the brain’s development and peak addictive potential from puberty does not stop at 18. Those in their 20s are at particular risk.
The social media platforms act commercially, pushing out more content, including online challenges, as their algorithms pick up a keyword—whether spelled correctly or incorrectly—a mouse hovering over an image or a like response. Currently, platforms judge addiction and profit by the time spent on a platform, but that is not how addictions work. Addiction is the reward-reinforcing behaviour that evokes a chemical response in the brain that makes you want more. Hence the alcoholic, the gambling addict, the drug addict and so on keep going back for more; the sex addict requires ever more extreme images to gain stimulation; the user will not switch off access.
Those whose emotional expression is through abuse and violent behaviour find more ways to abuse to meet their urge to control and vent feelings, often when adverse childhood experiences were the antecedent to disastrous destructive behaviour. The unhappy young adult becomes hooked in by the images pushed to them after an internet search about depression, anorexia, suicidal ideation and so on. The algorithm-pushed images become compulsive viewing, as ever more are pushed out, unasked for and unsearched for, entrapping them into escalating harms.
Now, the duties in Clause 12 are too vague to protect wider society. The user should be required to opt in to content so that it can be followed, not opt out. The people controlling all this are the platform companies. They commission the algorithms that push content out. These could be written completely differently: they could push sources of support in response to searches for gambling, eating disorders, suicidal ideation, dangerously extreme sex and so on. Amending the Bill to avoid escalating harms is essential. Some of the harms are ones we have not yet imagined.
The platform companies are responsible for their algorithms. They must be made responsible for taking more a sophisticated, balanced-risk approach: the new technology of artificial intelligence could detect those users of their platforms who are at particular risk. In daily life offline, we weigh up risk, assessing harms and benefits in everything, filtering what we say or do. Risk assessment is part of life. That does not threaten freedom of speech, but it would allow “legal but harmful” to be addressed.
The Bill presents a fantastic opportunity. We must not throw it away.
Lord Frost (Con)
My Lords, I declare my interest, as set out in the register, as a member of the advisory council of the Free Speech Union.
This is an important Bill. It has taken time to get to us, and rightly so. Many important requirements have to be balanced in it—the removal of illegal material, and the protection of children, as we have heard so movingly already today. But, as legislators, we must also have an eye on all elements of public policy. We cannot eliminate every evil entirely, except at unacceptable cost to other objectives and, notably, to free speech.
The Bill, as it was developing last summer, was damaging in many ways to that objective. At times I was quite critical of it, so I welcome the efforts that have been made by the new broom and new team at DCMS to put it in a better place. It is not perfect, but is considerably better and less damaging to the free speech objective. In particular, I welcome the removal of the so-called legal but harmful provisions, their replacement with a duty to empower users and the decision to list out the areas that this provision applies to, rather than leaving it to secondary legislation. I also welcome the strengthening of provisions to protect the right to free speech and democratic debate more broadly, although I will come on to a couple of concerns, and the dropping of the new harmful communications offence in the original Bill. It is clear, from what we have heard so far today, that there will be proposals to move backwards—as I would see it—to the original version of the Bill. I hope that the Government will be robust on that, having taken the position that they have.
Although the Bill is less damaging, it must still be fit for purpose. With 25,000 companies in its scope, it also affects virtually every individual in the country, so it is important that it is clear and usable and does not encourage companies to be too risk averse. With that in mind, there are areas for improvement. Given the time constraints, I will focus on free speech.
I believe that in a free society, adults—not children but adults—should be able to cope with free debate, if they are given the tools to do so. Noble Lords have spoken already about the abuse that they get online, and we all do. I am sure I am not unique in that; some if it drifts into the real world as well, from time to time. However, I do not look to the Government to defend me from it. I already have most of the tools to turn that off when I want to, which I think is the right approach. It is the one that the Government are pursuing. Free speech is the best way of dealing with controversial issues, as we have seen in the last few weeks, and it is right for the Government to err on the side of caution and not allow a chilling effect in practice.
With this in mind, there are a couple of improvements that I hope the Government might consider. For example, they could require an opt-out from seeing the relevant “legal but harmful” content, rather than an opt-in to see it, and ensure those tools are easy to use. There is otherwise a risk that risk-averse providers will block controversial content and people will not even know about it. It could be useful to require providers to say how they intend to protect freedom of speech, just as they are required to say explicitly how they will manage the Clause 12 provisions. Without that, there is some risk that freedom of speech may become a secondary objective.
To repeat, there has been considerable improvement overall. I welcome my noble friend the Minister’s commitment to listen carefully to all proposals as we take the Bill through in this House. I am happy to support him in enabling the passage of this legislation in good order soon.
Baroness Healy of Primrose Hill (Lab)
My Lords, I welcome the Bill, but regret the time it has taken to arrive. To make the UK the safest place in the world to be online, it must be strengthened, and I will support amendments that would ensure greater protection for children through proper age assurance. The damage to children from exploitation by social media cannot continue. The state must regulate, using severe penalties, to force platforms to behave with greater responsibility as they cannot be trusted to self-regulate. The rise in suicide and self-harm and the loss of self-esteem are ruining young lives. The platforms must take greater responsibility; they have the money and the technology to do this but need stronger incentives to act, such as the promised executive criminal liability amendment.
Ofcom faces a formidable challenge in policing companies to adhere to its terms and conditions about content moderation. Heavy fines are not enough. Ofcom will need guidance in setting codes of practice from not only the three commissioners but NGOs, such as the Internet Watch Foundation, and an advocacy body for children to continually advise on emerging harms. A new regulatory regime to address illegal and harmful content online is essential but, having removed legal but harmful from the original Bill, we lost the opportunity to detoxify the internet.
Concentrating on the big platforms will miss the growth of bespoke platforms that promote other harms such as incel culture, a threat to women but also to young men. Incels, involuntarily celibates, use mainstream platforms such as YouTube to reel in unsuspecting young men before linking them to their own small, specialist websites, but these are outside the scope of category 1 provision and therefore any minimum standards. These sites include not only sexist and misogynistic material but anti-Semitic, racist, homophobic and transphobic items, and even paedophilia. One of the four largest incel forums is dedicated to suicide and self-harm. HOPE not hate, the anti-fascist campaign, has warned that smaller platforms used by the far right to organise and radicalise should be under the same level of scrutiny as category 1 platforms.
User empowerment features, part of the triple shield, such as options to filter out content from unverified users and abusive content, put the onus on the user to filter out material rather than filters being turned on by default. Ofcom must ensure a statutory duty to promote media literacy by the largest platforms as part of their conditions of service. The Bill should make children’s risk assessment consistent across all services, and should tackle the drivers of harm and the design of the service, not just the content.
I welcome the new offences targeting harmful behaviour, including epilepsy trolling, cyber flashing and the sending of manufactured deepfake intimate images without consent. Despite the Bill adding controlling or coercive behaviour to the list of priority offences, more needs to be done to protect women, one in three of whom has experienced online abuse. Ofcom must add a mandatory code of practice regarding violence against women and girls so that tech companies understand they have a duty to prioritise their safety.
The Bill must prevent the relentless promotion of suicide and self-harm that has destroyed the lives of young people and their families. I commend the bravery of Ian Russell, who is campaigning to prevent other deaths following the tragic suicide of his daughter, Molly. I back the amendments from the noble Baroness, Lady Kidron, to ensure that coroners and bereaved families can access social media content. I applaud all those campaigners who want to see the Bill implemented urgently, and I will work with other noble Lords to strengthen it.
Baroness Benjamin (LD)
My Lords, I support this important Bill, but with some concerns. As drafted, it does not go far enough to fully protect children and young people online. The consequences of the policies we decide in this Bill will affect the whole of society in decades to come.
I have been working on the online pornography issue for the last 10 years. In April 2017, this House passed legislation that required age verification for pornography websites to prevent children accessing them. We were promised that social media platforms would be included later on, but that did not happen. It is hard to believe that almost six years ago this House passed the Digital Economy Act, whose Part 3 was never implemented by this Government. So here we are, still debating age verification for pornography. This is simply unacceptable—a shocking failure of society. It is now time to act fast, and we must make sure that we do it right.
I am concerned that the Bill does not go as far as what was passed in 2017. Even if the Bill is passed, I do not believe that it will deliver age verification quickly. If Ofcom’s road map on the implementation of the Bill is to be believed, it could be three years before enforcement proceedings are issued against pornography websites that allow children to access them.
Research by the BBFC found that children as young as seven are innocently stumbling across pornography online and that 51% of all children aged 11 to 13 have watched pornography online—according to Barnardo’s, 54 million times. We are creating a conveyor belt of children addicted to porn, which will affect their long-term well-being and sexual behaviour.
A fundamental problem with the Bill is that it does not deal with pornography as a harm. The Government state that it is designed to ensure that what is lawfully unacceptable offline would also be unacceptable online. However, in respect of pornographic content, the Bill as drafted does not meet that goal. Material that is extreme and prohibited offline is widely available online. Evidence shows that consumption of extreme and prohibited material, such as content that sexualises children—and that includes adults dressing up as children—can lead on to the viewing of illegal child sexual abuse material and an interest in child sex abuse. It is not only children who are at risk: men who watch extreme and prohibited material online are more likely to be abusive towards women and girls.
What is needed is a stand-alone part of the Bill that deals with all pornographic content and sets out a clear definition of what pornography is. Once defined, the Bill should require any website or social media platform with content that meets that definition to ensure that children cannot access that material, because porn can be a gateway to other harms. Contrary to what some people believe, technology exists that can accurately age-verify a user without compromising that person’s privacy. The groundwork is done, and as more countries implement this type of legislation, the industry is becoming increasingly equipped to deal with age verification. France and Germany are already taking legal action to enforce their own laws on the largest adult websites, with several already applying age checks. There is no reason why this cannot be implemented and enforced within six months of the Bill becoming law. If that is too hard for the social media platforms, they can simply remove porn from their pages until they are ready to keep that harm away from our kids.
Childhood lasts a lifetime, and we have the opportunity to ensure that pornography is not a harm inflicted on our children. We owe it to them. I declare an interest as vice-president of Barnardo’s.
Viscount Colville of Culross (CB)
My Lords, I declare an interest as a series producer of online and linear content. I, like many noble Lords, can hardly believe that this Bill has finally come before your Lordships’ House. It was in 2017, when I first joined the Communications and Digital Committee, that we started to look at online advertising. We went on to look at regulating the internet in three separate inquiries. I am pleased to see some of those recommendations in the Bill.
It is not surprising that I support the words of the present chair of the committee, the noble Baroness, Lady Stowell, when she said that the Secretary of State still has far too many powers over the regulator. Draft codes of practice, in which Ofcom can give the parameters and direction for the tech companies, and the review of their implementation, are going to be central in shaping its terms of service. Generally, in democracies, we are seeing regulators of the media given increasing independence, with Governments limiting themselves to setting up their framework and then allowing them to get on with the task at hand. I fear the Bill is not doing that. I understand that the codes will be laid before Parliament, but I would support Parliament having a much stronger power over the shaping of those regulations.
I know that Labour supports a Select Committee having the power to scrutinise this work, but having served on the Communications and Digital Committee, I fear that the examination of consultations from Ofcom would monopolise its entire work. I support the pre-legislative committee’s suggestion of a Joint Committee of Parliament, whose sole job would be to examine regulations and give input. I will support amendments to this effect.
I am also worried about Clauses 156 and 157. I listened to the Minister when he said that amendments to the Secretary of State’s powers of guidance will be brought before the House and that they will be used only in exceptional circumstances. However, the list of subjects on which I understand the Minister will then be able to intervene is still substantial, ranging from public safety through economic policy and burdens to business. Are the Government prepared to consider further limiting these powers to intervene?
I will also look at risk assessments in the Bill. They need to go further than illegal content and child safety. The empowerment lists in Clause 12 are not risk assessed and do not seem to have enough flexibility for what noble Lords know is an ever-changing world of harms. The volume of online content means that moderation is carried out by algorithms. During the inquiries in which I was involved, we were told repeatedly that algorithms are very bad at distinguishing humour and context when deciding on harmful content. Ensuring that the platforms’ systems moderate correctly is difficult. There was a recent case of that: the farcical blocking by Twitter of the astronomer Dr Mary McIntyre, whose account was suspended because her six-second video of a meteor shower was mistaken by the Twitter algorithms for a porn video. For weeks, she was unable to get any response from Twitter. Such mistakes happen only too frequently. Dr McIntyre’s complaint is only one of millions made every year against the tech companies, for being either too keen or not keen enough to take down content and, in some cases, to block accounts. So the Bill needs to include a risk assessment which looks at the threat to free speech from any changes in those systems. Ofcom needs to be able to create those risk assessments and to produce annual reports which can then be laid before a Joint Committee for Parliament’s consideration. That should be supported by an ombudsman.
I would also like to see the definition of safety duties on platforms to take down illegal content changed from “reasonable grounds” to the platform being aware that the content is “manifestly illegal”—and, if possible, for third parties, such as the NCA, to be involved in the process. That will reduce the chance of chilling free speech online as much as possible.
I am also aware that there has been concern over the duties to protect news publishers and journalistic content. Like other noble Lords, I am worried that the scope in respect of the latter is drawn too widely in the Bill, and that it covers all content. I would support amendments which concentrate on protecting journalism in the public interest. The term “in the public interest” is well known to the courts, is present in Section 4 of the Defamation Act, and is used to great effect to protect journalism which is judged to be in the public interest.
I welcome the Bill after its long journey to this House. I am sure that the hard work of fellow Peers and collaboration with the Minister will ensure that it leaves this House in a clearer, more comprehensive and safer state. The well-being of future generations of internet users in this country depends on us getting it right.
Baroness Harding of Winscombe (Con)
My Lords, it is an enormous privilege to follow so many powerful speeches. My second daughter was born in the year Facebook launched in the UK and Apple sold its first iPhone. Today she is 15; she has lived her whole life in a digitally enabled world. She has undoubtedly benefited from the great things that digital technology brings, but, throughout that life, she has had no meaningful legal protection from its harms.
A number of noble Lords have referenced the extraordinarily moving and disturbing briefing that Ian Russell and his lawyer, Merry Varney, gave us on Monday. When I went home from that briefing, first, I hugged my two teenage girls really close, and then I talked to them about it. My 15 year-old daughter said, “Mum, of course, I know about Molly Russell and all the awful content there is on social media. Didn’t you realise? When are all you adults going to realise what’s going on and do something about it?” The Bill is important, because it is the beginning of us doing something about it.
It is also a huge Bill, so we need to be careful not to let perfect be the enemy of the good. Like other noble Lords, I urge this House to focus on the critical areas where we can improve this already much debated and discussed Bill and try to resist the temptation to attach so many baubles to it that it no longer delivers on its core purpose of protecting our children online. So, like others, I will focus my remarks on three structural changes that I hope will help make the Bill more effective at driving the positive changes that, I think, everyone in this House intends: first, the consequences for senior managers of not complying with the legislation; secondly, how compliance is defined and by whom; and, finally, which services are included.
To change digital platforms and services to protect children is not impossible—but it is hard, and it will not happen by itself. Tech business models are simply too driven by other things; development road maps are always too contested with revenue-raising projects, and competition for clicks is just too intense. So we need to ask ourselves whether the incentives in the Bill to drive compliance are strong enough to counter the very strong incentives not to.
It is clear that self-regulation will not work, and relying on corporate fines is also not enough. We have learned in other safety-critical industries and sectors that have needed dramatic culture change, such as financial services, that fines alone do not drive change. However, once you name an individual as responsible for something, with serious consequences if they fail, change happens. I look forward to the government amendment that I hope will clearly set out the consequences for named senior managers who do not deliver on their overall online safety responsibilities.
The second area I highlight is how compliance is defined. Specifically, the powers that the Bill grants the Secretary of State to amend Ofcom’s proposed code of conduct are far too wide. Just as with senior tech managers, the political incentives not to focus on safety are too strong. Almost every Minister I have ever met is keen to support tech sector growth. Giving the Secretary of State the ability to change codes of conduct for economic reasons is asking them to trade off economic growth against children’s safety—the same trade-off that tech companies have failed to make over the last 15 years. That is not right, it is not fair on the Ministers themselves, and it will not deliver the child protections we are looking for.
The third area I will cover—I will be very brief—has been highlighted by the noble Baroness, Lady Kidron. It is important that we capture all the services that are accessed by children. If not, we risk creating a dangerous false sense of security. Specifically, I am worried about why app stores are not covered. In the physical world—I say this as an erstwhile retailer—retailers have long come to terms with the responsibilities they bear for ensuring that they do not sell age-restricted products to children. Why are we shying away from the same thing in the digital world?
There are many other things I would support, not least the amendments proposed by the noble Baroness, Lady Kidron. I finish by simply saying that the most important thing is that the Bill is here. We need to do this work—our children and grandchildren have waited far too long.
Baroness D'Souza (CB)
My Lords, this is indeed a huge, complex and courageous Bill which deserves widespread support. Despite some welcome government amendments during its passage in the other place, there are residual concerns about guarantees of freedom of expression and access to information, as well as the degree to which the regulator, Ofcom, is independent of government control.
It is widely acknowledged by the Government themselves and the majority of those who have spoken to the Bill that the right to free speech is a fundamental aspect of our democracy, and that any restriction must be fully justified in the public interest. Public interest includes the freedom to access unwelcome, unpopular and even offensive material, if only to be able to refute it. It is also accepted that a functioning democracy needs new ideas and robust debate. That said, it is a fine and difficult line to draw between offensive material and illegal content. In their efforts, the Government have sought to protect above all the safety of children.
I start with a presumption in favour of free speech and a multiplicity of voices. Clauses 18 and 28 state that providers must
“have particular regard to the … users’ right to freedom of expression”
and to protecting users from breaches of any laws relating to privacy. This would be achieved by rigorous impact assessments of safety measures and policies, any infringements of which must be made publicly available. However, the definition of democratically important material as information
“specifically intended to contribute to democratic political debate in the United Kingdom”
remains vague, and other strict requirements on protecting children in the Bill could condemn offensive but necessary democratic content.
Clause 160 refers to false information intended
“to cause non-trivial psychological or physical harm”.
It may, in many cases, be entirely obvious when such harm is intended, but not in all cases. On whom does the burden of proof lie and what recourse does an individual have to appeal false accusations?
The stricture that democratically important content be preserved is by no means fully guaranteed by the following powers set out in the Bill. There is a potential danger of undue restriction that lies in the degree of control from the Secretary of State and his or her relationship with Ofcom; the terms and conditions of service for category 1 providers; the options, or lack of them, for user control of online material; and the role of Parliament.
Draft codes of practice are to be submitted to the Secretary of State, who could require Ofcom to modify codes in the interests of national security or public safety. The Secretary of State will pass any statement on strategic priorities to Ofcom, but parliamentary approval would be by means only of the negative resolution procedure.
The Secretary of State can issue guidance and directions to Ofcom, which in turn has a crucial role in acting against a provider that is not complying with the requirement to fulfil duties under the Act, including the imposition of fines of up to £18 million and “business disruption measures”—in other words, outright censorship. Although such drastic action could occur only in the case of a breach of the terms of service, there would be no restriction on taking down content to comply with other duties—for example, if it was judged that the content might be “likely” to be accessed by children. This, it is feared, would encourage providers to play safe. Furthermore, the terms and conditions can be altered at will by the provider.
The age verification process would necessarily require the user to register with a provider, preventing any casual access by adults. Furthermore, to remove unnecessary barriers to information, the controls available to the user should be a genuine option and not imposed by default.
This is a truly important Bill and I congratulate the authors and campaigners, as well as the Government, on bringing it to this advanced stage. I nevertheless believe that it could be further improved to ensure that the most liberal interpretations of online freedom of expression remain at the heart of our democracy.
Baroness Fox of Buckley (Non-Afl)
My Lords, the Secretary of State, Michelle Donelan, has acknowledged that protecting children is the very reason that this Bill exists. If only the Government had confined themselves to that crucial task. Instead, I worry that the Bill has ballooned and still could be a major threat to free expression of adults. I agreed with much of what the noble Baroness, Lady D’Souza, just spoke about.
Like some other noble Lords here, I am delighted that the Government have dropped the censorious “legal but harmful” clauses. It was disappointing to hear Labour MPs in the other place keen to see them restored. In this place, I have admired opposition resistance to assaults on civil liberties in, for example, the Public Order Bill. Perhaps I can appeal for consistency to be just as zealous on free speech as a foundational civil liberty. I urge those pushing versions of censoring “legal but harmful” for adults to think again.
The Government’s counter to many freedom of expression concerns is that free speech is protected in various clauses, but stating that service providers must have regard to the importance of protecting users’ rights of freedom of speech is incredibly weak and woolly, giving a second-class status whencontrasted with the operational safety duties that compel companies to remove material. Instead, we need a single comprehensive and robust statutory duty in favour of freedom of expression that requires providers to ensure that free speech is not infringed on by measures taken to comply with other duties. Also, free speech should be listed as a relevant duty for which Ofcom has to develop a code of practice.
The Bill requires providers to include safety provisions for content in their terms of service. However, no similar requirement for free speech exists. It seems ironic that a Bill that claims to be clipping the power of big tech could actually empower companies to police and censor legal material in the name of safety, via the commercial route of terms and conditions.
The Government brush off worries that big tech is being encouraged to limit what UK citizens say or read online by glibly asserting that these are private companies and that they must be free to develop their own terms of service. Surely that is disingenuous. The whole purpose of the legislation is to interfere in private companies, compelling them to adhere to duties or face huge penalties. If the Government do not trust big tech with users’ safety, why do they trust them with UK citizens’ free speech rights? Similarly, consider the user empowerment duties. If users ask that certain specified types of legal content are blocked or filtered out, such as hate or abuse, it is big tech that has the power to decide what is categorised under those headings.
Only last year, amendments put forward in this House on placing convicted sex-offending trans prisoners on the female estate were labelled online as hate-fuelled, transphobic abuse. However, with the ability to hear all sides of the debate online, and especially in the light of recent events in Scotland around the Gender Recognition Act, more and more people realise that such views are not hate but driven by concerns about safeguarding women’s rights. Would such a debate be filtered out online by overcautious labelling by big tech and the safety duties in its Ts and Cs?
Finally, like others, I am worried that the Secretary of State is given too much power—for example, to shape Ofcom’s codes of practice, which is a potential route for political interference. My concerns are fuelled by recent revelations. In the US, Elon Musk’s leaked Twitter files prove that, in the run-up to the 2020 election, Joe Biden’s presidential campaign routinely flagged up tweets and accounts that it wanted removed, influencing the suppression of the New York Post’s Hunter Biden laptop exposé. Here in the UK, only this week, a shocking Big Brother Watch report reveals that military operatives reported on online dissenting views on official Covid lockdown policies to No. 10 and the DCMS’s counter-disinformation unit, allowing Whitehall’s hotlines to giant media companies to suppress this legal content. Even the phrase “illegal” in the Bill can be politically weaponised, such as with the proposal to censor content allegedly promoting small boat crossings.
Free speech matters to democracy, and huge swathes of this Bill could threaten both unless we amend it appropriately.
Lord Kamall (Con)
My Lords, I begin by thanking the House of Lords Library and various organisations for their briefings on the Bill. One of the ways I want to approach this discussion is to talk about where I think there is consensus and where there will need to be further debate. Of course, as many noble Lords have said, there will be incredible trade-offs, and there are many issues people feel strongly about.
There is consensus on the issue of protecting children, and I pay tribute the noble Baroness, Lady Kidron, for her work over many years on this, as well as that of other noble Lords. There is consensus on making sure that, where companies have terms and conditions, they actually enforce them. We have to be aware of that. There is obviously consensus on tackling sites promoting suicide and other self-harm measures.
Where there are concerns on my part is around freedom of expression. Quite often, everyone says that they are in favour of freedom of expression until they are offended, and then they find a reason not to be. There are also concerns about the Secretary of State’s power to intervene and influence the online safety regime. I agree with other noble Lords that Ofcom should remain independent from the Secretary of State but I am aware of public choice theory; institutions could be captured by political bias, so we have to be careful about that.
Noble Lords will submit amendments to bring back into the Bill the issue of harm to adults, but I would add a note of caution: how subjective is “harm”? A quick example is how Muslims reacted to the Danish cartoons. Some would have found them distasteful; some would have said they were harmed by them. Does that mean they should have been banned or taken down? How do we face these challenges in a free society? Can we be as technologically neutral as possible? Can we be careful of rent-seeking by organisations that will peddle their products and claim that they have the best age-assurance technology or something like that? Although we want the solution, let us make sure there is a thriving market to ensure that we get the better solutions. Regulation always lacks developing technology; we will want this Bill to be as dynamic as possible, but that may require some secondary legislation, which I know many noble Lords are often sceptical about.
I really want to focus on unintended consequences, not because I am against the Bill but to warn of the difficult issues we are going to have to look at. First, companies will be acting as police but may take an overcautious approach. In the other place, and here, people talked about criminal liability with some of the directives, but think about the impact of criminal liability on other legislation—for example, financial companies when it comes to politically exposed persons. We all know the unintended consequences of that from being overcautious.
Adult verification is another issue. Whatever we think about pornography, it is legal. What people will be concerned about is whether they can verify their age in an anonymous way. They will be concerned whether their data will be used later to blackmail them; will verification drive users to the dark web? Not everything on the dark web is illegal. Some authoritarian regimes such as Russia, China, Saudi, Iran and Venezuela have tried to ban the Tor Browser, but are we going to follow them? There are also ways around it. One way that terrorists have been known to share information was to create an email account, share the password and username, and leave messages for each other in the drafts folder. How do we tackle that without impacting on all users of the internet? How do we also make sure that firms enforce their terms and conditions and, in doing so, do not water them down?
I know that there are many questions, but I hope that we will work through them, and others that have been raised, so that we have a Bill that is proportionate, workable and effective, and that protects children, women and girls, and vulnerable adults.
Lord Brooke of Alverthorpe (Lab)
My Lords, I generally welcome the Bill and I pay tribute to the noble Baroness, Lady Kidron, for the great work she has done. In the Bill, I particularly welcome the movement towards greater protection for children than we have had hitherto. I share the concern of the noble Baroness, Lady Benjamin, that there may be difficulties, including the age-verification system, which was raised by the noble Lord, Lord Kamall. I am in favour of age verification and I would like to see it implemented quickly. I would also like the Minister to assure us that, having waited so long, if we find that there are loopholes in it, we can find some mechanism to fill those loopholes fairly quickly—perhaps a commitment to using secondary legislation rather than having to wait for so long, as we have done in the past.
My second concern relates to Clause 12, which the right reverend Prelate the Bishop of Oxford raised and which the nobles Baronesses, Lady Hollins and Lady Finlay, also spoke to, on the protection of adults from risk and harm. I do not think enough attention has been paid to what is happening with pornography and with mental health. Here I declare an interest as the founder and vice-chair of an All-party Group for the Twelve Steps Recovery Programme from Addiction. Addiction is not just about alcohol. AA started the 12-step programme but it has been extended over the years to a whole range of other addictions—not least drugs, gambling and overeating, and in particular it is growing quite extensively in the sexual field. We have a range of 12-step programmes operating, including for SLA—sex and love addiction—and sexual addiction. As to the latter, an ever-increasing number of people are in grave trouble due to the effects of pornography, not just solely on themselves but consequently the rest of their family in a whole range of different ways.
It is quite interesting that of the number of people watching pornography—mainly men—between midnight and 4 am is the time when most porn sites are being visited. These are affecting people mentally, affecting their work and affecting their relationships. The Bill as it stands does not address that issue sufficiently well. They had a go at it in the Commons and were persuaded that the approach was incorrect. Pornography is growing. We must protect the freedom of speech and what we circulate, but equally we must protect standards. In turn, we must make sure that we are not creating in certain areas a decadence that we have not had before that is damaging to society.
I hope that we might look again at Clause 12 and try to find a way for some accommodation to be found between the Government’s viewpoint and the views being expressed by people such as the noble Baroness, Lady Finlay. It is important that we do so; if not, we will have to start campaigning privately. If we cannot get it through law, we will have to bring together those concerned about pornography and look for ways to bring to the attention of people that it must be drawn to a halt or at least diminished, given the extent and pace at which it is growing at present. I think it can be done. We have a dry January; why should we not, in the month of December, encourage people not to engage in pornography? At least it would capture attention. If we want to have a better society, we should be diminishing this practice rather than growing it.
Lord Hastings of Scarisbrick (CB)
My Lords, it is an honour to follow the intriguing suggestion of the noble Lord, Lord Brooke, about December—which I will not repeat at this moment. I declare my interest as a former head of public affairs at the BBC who heavily lobbied this House in 1995 and 1996 to bring about the Broadcasting Act which set BBC online on its way. I am proud to say that BBC online remains a beacon of responsible content to show the rest of the world. I am also co-chair of the all-party group on media literacy and patron of Student View, which works in over 100 schools around the country to deliver media literacy.
In the original draft Bill, media literacy was not a central point but an important point of commitment. It has since been removed from the final legislation in front of us. As the Minister said in his introduction, there are multiple provisions in the legislation which cater for enabling adults to make sensible use of their media journey. However, there is very little, other than protections for children, to enable children to make intelligent understanding of their media journey.
According to the National Literacy Trust, in its assessment a few years ago, only 2% of children had the critical thinking skills necessary to be able to distinguish between fact and fiction online, and 90% of teachers say they are in favour of media literacy but feel that they do not have the skills to be able to teach it. They also feel that the vast majority of children they teach who discuss media issues consistently in the classroom do not understand the difference between truth and misinformation.
I want to keep it simple and say two things to the Minister and one to the Opposition. First, to the Minister, given the level of fines which should become apparent as a response to abuse of this legislation, money will be available to empower media literacy programmes inside and outside of schools. There should be no excuse that there is no money; the money in fines should go not just towards Ofcom’s costs but towards improving the capability of the next generation to navigate the media landscape. Will the Minister and the Government consider that?
It is obvious that media literacy is not in this Bill now because the Government argued it was essentially an education matter. In that case, will the Minister commit the Government—as he speaks for the Government —to bringing forward a media literacy education Bill before the next election? If it is not possible and there is to be a Labour Government after the next election, will the Labour Front Bench commit to bringing forward a media literacy education Bill, rather than simply letting this issue drift into the long grass? The noble Lord, Lord Stevenson, can answer that directly at the end and make a commitment on behalf of the Labour Front Bench we can all hold him to account on.
There also needs to be substantial support for teaching teachers to understand and navigate a forest that they do not necessarily know how to enter or exit. That should be part of teacher development and support. Can we also consider the costs of misinformation and how it is damaging our social fabric? Can the Minister request of the Treasury that it brings forward cost assessments of the damage of misinformation?
Baroness Chakrabarti (Lab)
My Lords, the internet is in so many ways a wonderful new continent, discovered only in my adult lifetime. But like older territories it has not been the unadulterated bastion of freedom and equality that its pilgrim and founding mothers and fathers would have dreamt of. While it has created enormous opportunities for expression, interconnection and learning, it has also allowed the monetising of hate and abuses of power up to and including serious criminal offences to the detriment of children and other vulnerable people.
To a large extent, big tech corporations with monopolistic power have become the new imperium, colonising this new continent without the desire, expertise, independence or accountability to properly regulate of police it. Further, as the technology has moved at a breath-taking pace, national Parliaments and Governments have lagged behind in even fulfilling their basic duties to resource the enforcement of existing criminal law online or, indeed, to ensure sufficient tax raising from the new emperors who can employ former senior politicians for their lobbying, influence national elections via their products and seek to further their hegemony even beyond our shrinking, burning planet.
Alongside corporate and governmental neglect, there have been abuses of people’s rights and freedoms by state and non-state entities around the world. It is very possible to be too permissive in allowing private abuse and simultaneously too interventionist so as to abuse political power. Noble Lords would be wise to hold on to that duality as they undertake the most anxious line-by-line scrutiny of this Bill. With that in mind, given the length, novelty and complexity of this draft legislation, I regret the short time allocated today. The sheer number of speakers should have justified two days of Second Reading, if only to prevent de facto Second Reading speeches in Committee.
Legislation is required and the perfect should not be the enemy of a first attempt at the possible. However, given the fast developing and global landscape, further legislation will no doubt follow. Ultimately, I believe that His Majesty’s Government should seek to pioneer a global internet and AI treaty in due course—or at least, a Labour Government should. For one thing, the black boxes of advanced algorithms must be made transparent and subject to legal control so as not to entrench inequality, discrimination and hate.
That may sound ambitious, but it will take that kind of ambition—the kind of ambition that we saw in the post-war era to establish some notion of an international rule of law and fundamental rights and freedoms in the real world truly to establish a proper rule of law with protected human rights in the virtual one. At the very least, what is already criminal should be policed online. However, we should be wary of outsourcing too much of that policing role to corporations without at least binding them more directly to the free expression and personal privacy protection duties that bind Ofcom, police and prosecutors under the Convention on Human Rights.
Furthermore, we should look again at tightening up over-broad public order offences, such as causing alarm or distress under Section 5 of the Public Order Act, before allowing them to constitute priority illegal content for proactive removal. Conversely, will the Minister confirm that, for example, euphemistic sex for rent adverts targeting poor, vulnerable women, in particular, will be a priority under Section 52 of the Sex Offences Act? As this experiment in national regulation of an international phenomenon develops, the power of the Executive to direct Ofcom sets a dangerous politicising precedent for regimes elsewhere. They should be removed.
Baroness Newlove (Con)
My Lords, I am pleased to add my name to the Second Reading of such an important but complex Bill. There is very little time to speak on such positive and necessary legislation—200-plus clauses and 17 Schedules. But I know from experience of this Chamber that we will scrutinise every full stop to make it far better than when we received it.
While we must recognise that companies should have safeguarding policies and penalties in place, we should also never forget the lives of our young children, those who have been taken and the voices of bereaved families. They should be in the veins of this Bill right through to the end.
I say this as I remember that, in the trial following my husband Gary’s murder 15 years ago, some of the evidence shown was horrific violence downloaded on the offenders’ phones. The content was so horrific that the judge laid it on file for whenever they had parole hearings. It showed injuries identical to those Gary received—kicking and punching injuries that those on trial thought were very funny, even when they watched it in the courtroom from the dock. I now have three daughters who suffer from post-traumatic stress disorder. I have to ensure that they never forget their father, and do not just remember him lying on the ground that August evening.
In my role as Victims’ Commissioner, for seven years I had the pleasure and honour of listening to many victims and survivors of horrific crimes. Time is short but I would like to mention the mother of Breck. Her son was beautiful, bright and bubbly, only to become removed from any emotion and from his family. Breck was groomed online by an 18 year-old man who ran the internet gaming server that Breck and his schoolfriends used every day. Our children are most likely using Xbox consoles and have contact with these people from their own homes. The groomer used lies, manipulation and false promises to gain Breck’s trust. Despite many attempts by the family to stop Breck’s communication with his groomer, he ignored the safety advice he had been given by his family and was sadly lured to the groomer’s flat. On 17 February 2014, Breck was brutally murdered by this online groomer. So, the noble Baroness, Lady Kidron, and all those bereaved families who have worked tirelessly to make sure that the Bill has teeth and power to protect their loved ones, have my full support.
I thank Barnardo’s, the NSPCC, Refuge and the Centre for Women’s Justice for their briefing. My interest will be in the work and roles of the Victims’ Commissioner and the Domestic Abuse Commissioner, and the code of practice to protect the VAWG sector in light of women being 27 times more likely to be abused and harassed. I will be supporting my noble friend Lord Bethell’s amendment on age verification, regarding pornographic content that children can access. We must also ensure that, while this is for the professionals and absolutely about penalising the guilty, we must never forget the families who have to live, every day, through the hardship and heartbreak of losing a loved one. We must ensure that there is a channel to protect their families and support them to have a better life in memory of their loved ones.
Lord Morrow (DUP)
My Lords, I welcome the Bill but it is very long overdue. The Second Reading of my Private Member’s Bill was on 28 January 2022. It sought to commence Part 3 of the Digital Economy Act 2017. This would have ensured that age verification of pornography was applied to pornographic websites. It is disappointing that the Bill has not progressed and Part 3 of the Digital Economy Act—a vital tool that could have prevented children accessing online pornography —is still not being implemented.
I remind your Lordships that in February 2016—now seven years ago—the Government said:
“Pornography has never been more easily accessible online, and material that would previously have been considered extreme has become part of mainstream online pornography. When young people access this material it risks normalising behaviour that might be harmful to their future emotional and psychological development.”
Nothing has changed in seven years; the threat is still as real today as it was then. All that has changed is that, during that seven-year delay, more children’s lives have been harmed. This cannot be allowed to continue.
I welcome that the Government have listened to the concerns about access to commercial pornographic websites and have, as a result, introduced Part 5 of the Bill. However, I believe more changes are needed to make it effective. Today, I raise only three of them. First, the Bill needs a more robust definition of pornography, based on the 2017 Act. Secondly, the Bill needs to cover all pornography services. Clause 71 says that only if “a service has links” with the UK will it be required to comply with the duties in Part 5, where “links with” means only pornographic websites which have a significant number of UK users or have the UK as a target market.
I ask the Minister: what will be considered significant? Is it significant in terms of the total UK adult users who could use the service, or significant in terms of potential global users? Either way, it seems to me that there could be pornographic websites accessed in the UK that are not required to have age verification to protect those aged under 18 from accessing this content. I doubt that this is what parents expect from this flagship Bill.
Finally, the Bill needs a commencement clause for age verification. Far too many young people have grown up without the protection that age verification could have brought in, if the 2017 Act had been implemented. We have heard others refer to this. There should be no further delay and the Government should demonstrate the urgency that they spoke of when they announced in October 2019 that they would not be implementing the 2017 Act. Age verification needs to be implemented as soon and as quickly as possible, and that is why a commencement date clause is needed in the Bill.
We cannot countenance these measures not being brought into force, or even a long delay of three or more years. The children’s charity Barnardo’s, which has already been referred to, has estimated that children have accessed pornographic content almost 55 million times since the Government announced in 2019 that they would be bringing forward the Online Safety Bill as an alternative to Part 3 of the Digital Economy Act. This cannot be allowed to continue. That is why we need to get the Bill right and ensure that robust age verification, that applies to all websites and social media accessed in the UK, is brought in as quickly as possible. I look forward to exploring these issues further in Committee.
Baroness Bennett of Manor Castle (GP)
My Lords, I begin with a brief refection on my 26 years or thereabouts on the internet, which saw me hand-coding my first website in 1999 and sees me now, I believe, as one of the few Members of your Lordships’ House with a TikTok account. I have had a lot of good times on the internet; I have learned a lot, made a lot of friends and built political communities that stretch around the world in ways that were entirely impossible before it arrived. That tells you, perhaps, that I think we should be careful in this debate about the diagnosis of the source of undoubted issues that the Bill seeks to address. It appears that some would like to wave a magic wand and shut it all down if they could—to return to some imagined golden age of the past, perhaps when your Lordships’ House was harrumphing loudly about the damaging effects of this new-fangled television.
While we are talking about young people, I have serious questions about the capacity of this House to engage with this debate. Yes, we did well in getting online during lockdown, even if we sometimes caught a glimpse of the grandchildren or great-grandchildren pressing the buttons so that their elders could speak in the House. They are the same generation; we are looking to take control over what they are doing right now. I invite noble Lords to keep that in mind as this debate proceeds.
I put it very seriously to your Lordships’ House that before we proceed further, we should invite a youth parliament into this very Chamber. We should listen to that debate on this Bill very carefully. On few subjects is the obvious need for votes at 16, or even younger, more obvious—the need for the experts by experience to be heard. They have the capacity to be the agents and to shape their own world, if their elders get out of the road.
I have no doubt that those young people would tell us that they suffer harm on the internet, with awful violent pornography and dangerous encouragements to self-harm and suicide. There need to be protections, while acknowledging that young people cannot be walled off into a little garden of their own. But I am sure young people would also say we need to address much wider issues, to build resilience and provide an education that encourages critical thinking rather than polished regurgitation of the facts. I would associate myself with the remarks of the noble Baroness, Lady Merron, and, indeed, the noble Lord, Lord Hastings of Scarisbrick, among others, about the need for media education. But how do we encourage critical thinking about the media when we are also encouraging regurgitation of the right results for the exam—that you have to repeat these 10 points? The two things do not fit together.
In a stairwell discussion with a Member of your Lordships’ House who is not a digital native—and I point out that nobody in this debate is a digital native—but is certainly someone with much experience over decades, they reflected on the early hopes of the internet for democracy, for access to information and for community. They suggested it was inevitably a lost age; I do not agree. Political decisions and choices allowed a handful of multinational companies—mostly tax dodging, unaccountable to shareholders, now immensely rich—to dominate. That is not unique to the internet; that is what the political decisions of neoliberalism over the past decades have done to our food supplies, our retailing systems, our energy, our medicines and, increasingly, our education system. Far right, misogynistic, racist, homophobic and transphobic voices have been allowed to take hold and operate without challenge in our mainstream media, our communities, our politics and on the internet.
Financial fraud is a huge problem on the internet and, hopefully, this Bill might address it; but financial fraud and corruption is a huge problem across our financial sector, as indeed is the all-pervading one of gambling. The internet is a mirror to our society, as well as a theatre of interaction. The idea that we can fix our societies by fixing the internet is a fallacy; for many with commercial and political interests, it is a comfortable one that deflects political challenges they would rather not face.
Lord Bethell (Con)
My Lords, if a child goes to the Windmill club, the most famous strip club in Soho, the bouncers will rightly turn them away, no ifs, no buts: no entry, full stop. If a child tries to buy a knife on Amazon or to place a bet on Bet365.com, it will be the same story: you need proof of age. But every day, millions of children in this country watch pornography in their homes, at schools, on the bus, on devices of all kinds, without any hindrance at all. The Children’s Commissioner makes it really clear that this is not just raunchy pornography like in the old days of Razzle magazine. These are depictions of degradation, sexual coercion, aggression and exploitation, disproportionately targeted at teenage girls. As Dame Rachel de Souza said:
“Most of it is just plain abuse”.
The effects of this failed experiment are absolutely disastrous. The British Board of Film Classification says that half of 11 year-olds have seen porn, and according to the NSPCC, a third of child abuse offences are now committed by children. The answer is straight- forward in principle: we need to apply the rules on age verification for porn that exist in the real world to the online world. We need to address this harm immediately, before any more damage is done—before there is any metaverse or any more technology to spread it further.
I know that the Minister, the Secretary of State and the Prime Minister all broadly agree with this sentiment, and that is why the Bill has:
“A duty to ensure that children are not normally able to encounter content that is regulated provider pornographic content in relation to the service (for example, by using age verification).”
But this vague power simply starts a long process of negotiation with the porn industry and with tech. At a very minimum, it will require a children protection consultation, a child’s access assessment, a guidance statement, an agreement on child protection guidance and codes, secondary legislation, parliamentary approval of the Ofcom child protection code, monitoring and engagement, engagement on the enforcement regime, test cases in the courts—and so on.
I appreciate that we are creating laws flexible enough to cope with technological evolution and I totally support that principle, but we should not reinvent the wheel. We tried that 30 years ago when the online porn industry started, and it failed. We need one regime for the real world and for the online world. This is an opportunity to send a message to the tech industries and to the British people that we mean business about protecting children, and to put Britain at the vanguard of child protection regulation.
I want to see this Bill on the statute book, and I am very grateful for engagement with the Minister, the Bill team and all those supporting the Bill. I look forward to suggestions on how we can close this gap. But if we cannot, I will table amendments that replace Part 5 of the Online Safety Bill with Part 3 of the Digital Economy Bill—a measure that has considerable support in another place.
Baroness Grey-Thompson (CB)
My Lords, I draw attention to my interests as in the register, and I thank all those who have sent briefing notes. I do not think any of us underestimates the scale of what we have to achieve in the coming weeks.
Just this morning, I read an article in which Dame Rachel de Souza was quoted as saying that this Bill is an “urgent priority”. The article described a 12-year-old girl being strangled by her boyfriend during her first kiss:
“He had seen it in pornography and thought it normal.”
This afternoon, many figures have been quoted on children’s access to pornography, and each figure is deeply disturbing. I listened very carefully to the words of the noble Lord, Lord Bethell; he made a compelling argument, and I will strongly support any amendments he brings forward.
Along with age verification we need better education for children on the use of the internet, and on appropriate relationships. We have to be very aware of content that pushes weight loss, body image and appearance, appearance-improving ads, and images that have been altered.
I would like to concentrate on violence against women and girls, and I thank all the women who have been in touch with me. We must recognise the threat that women are under. Women are 27 times more likely to experience abuse—that is one in three women. Some 62% of young women have experienced abuse. Four out of five cases of online grooming involve girls, and 120 cases are being reported every week. To bring that closer to home, 93% of female MPs have experienced online abuse just for doing their job or having an opinion. I am not trying to stifle free speech. Yes, we have to accept criticism and challenge, but not abuse and threats. I really worry about us developing a social norm of trying to shut down women’s voices. I am mindful that we in this Chamber and in another place have a high degree of protection that women in the outside world do not. We live in a world where a rape threat against a woman can potentially remain online, but a woman talking about menstruation can be told that it breaches guidelines. The balance is not yet right.
I offer my support to my noble friends Lady Hollins and Lady Finlay regarding vulnerability; it does not end at the age of 18. We have to think about those who are vulnerable. The empowerment tools do not go far enough, and we need to explore that in more detail in Committee.
Finally, I pay tribute to my noble friend Lady Kidron. I thank her for her work and for arranging a meeting with the Russell family, and I thank Ian Russell for being here today. That meeting fundamentally strengthened my view on what we need to do. It was shocking to hear what various platforms deemed to be acceptable. I naively expected them to be better. It completely ignores those who are in a vulnerable position, who can be constantly bombarded with abusive images. I have spent the last couple of days trying to put into words my feelings on listening to what Molly went through. It is horrendous, and while we applaud the resilience and bravery of the Russell family, this is our chance to do so much more and to protect internet users.
Lord Davies of Brixton (Lab)
My Lords, I want to talk about the link between online financial scams and mental health. People who have problems with their mental health are, for a variety of reasons, more vulnerable to such scams. They are three times more likely to be the victims of online financial scams than those people without such problems and, in reflection, people who are victims of online scams are much more at risk of having mental health problems.
I understand and have been impressed by the contributions to this debate about the problems faced by children and women, but I think, given the opportunity of the Bill, it is important that this issue is addressed. The results of such scams lead to much misery. They destroy families and, in all too many cases, lives. So the question is: can, and how should, the Bill address this problem? This is the Bill on the stocks and the one in which we must address this issue.
There is no doubt that scams are a big and growing problem. Anyone can fall victim to such a scam, but people with mental health problems are more at risk than others, so we have to do what we can, first, to improve scam prevention and, secondly, to ensure that when people fall victim they get the support that they need.
I have to pay tribute to the work being undertaken by the Money and Mental Health Policy Institute. It has drawn attention to how online harm can arise in a variety of areas: gambling, retail and financial offers. A number of recurring themes have emerged where action is needed, such as where people all too easily lose control of their transactions. There is also advertising and the way in which tools and techniques are developed that pressurise people into falling victim. The institute has concluded and demonstrated how, all too often, this behaviour goes unchecked, with regulation lacking or being poorly matched to what actually happens online.
While I understand the other issues that need to be addressed in the Bill and that led to the Bill, the problems of online financial scams are sufficient to deserve attention in the Bill.
Lord Browne of Belmont (DUP)
My Lords, it is beyond any doubt that an Online Safety Bill is needed. The internet has been left uncontrolled and unfettered for too long. While the Bill is indeed welcome, it is clear that more work needs to be done to ensure that it adequately protects children online.
There is a substantial body of evidence suggesting that exposure to pornography is harmful to children and young people. Many have spoken in this debate already about the harm of easy access to pornography, which is carried into adult life and has a damaging impact on young people’s views of sex and relationships. For many young men addiction to pornography, which starts in teenage years, can often lead to the belief that women should be dehumanised and objectified. Pornography is becoming a young person’s main reference point for sex and there is no conversation about important issues such as consent. That is why the Bill needs to have proper and robust age verification measures to ensure that children cannot access online pornography and are protected from the obvious harms.
Even if the Bill is enacted with robust age verification, experience tells us this is no guarantee that age verification will be implemented. Parliament passed Part 3 of the Digital Economy Bill in 2017, yet the Government chose not to implement the will of this House. That cannot be allowed to be repeated. Not only must robust age verification be in the Bill, but a commencement date must be added to the Bill to ensure that what happened in the past cannot be allowed to happen again.
I know that some Members of the House are still fearful that age verification presents an insurmountable threat to privacy: that those who choose to view pornography will have to provide their ID documents to those sites and that their interests may be tracked and exposed or used for blackmail purposes. We live in an age where there is little that technology cannot deliver. Verifying your age without disclosing who you are is not a complex problem. Indeed, it has been central to the age verification industry since it first began to prepare for the Digital Economy Act, because neither consumers nor the sites they access would risk working with an age verification provider who could not provide strong reassurance and protection for privacy.
The age verification sector is built on privacy by design and data minimisation principles, which are at the heart of our data protection law. The solutions are created on what the industry calls a double-blind basis. By this, I mean that the adult websites can never know the identity of their users, and the age verification providers do not keep any records of which sites ask them to confirm the age of any particular user. To use the technical terms, it is an anonymised, tokenised solution.
The Government should place into the Bill provisions to ensure robust age verification is put in place, along with a clear time-limited commencement clause to ensure that, on this occasion, age verification is brought in and enforced. I support the Bill, but I trust that, as it makes its way through the House, provisions in it can be strengthened.
Lord Black of Brentwood (Con)
My Lords, I declare my interests as deputy chairman of the Telegraph Media Group and director of the Regulatory Funding Company, and I note my other interests in the register.
I welcome the Bill as the first rung on the ladder, ensuring that the unregulated, untransparent and unaccountable platforms begin finally to be subject to the legal strictures of regulation, accountability and transparency. In 1931, Baldwin famously said the press exercised power without responsibility. Now, the press is subject to intense regulation and tough competition laws, and it is the platforms exercising power without responsibility. This vital Bill begins the journey to rectify that.
It was an honour to sit on the Joint Committee and a huge pleasure to work with colleagues from across the House under the exceptional chairmanship of Damian Collins. In particular, the noble Baroness, Lady Kidron, brought such insight and energy to our work. I believe that, as a result of its work, the Bill strikes an appropriate balance between platform regulation, freedom of expression and the protection of quality journalism.
I will make just two points about the policy backdrop to this legislation. While regulation is crucially important, it is just one side of the coin: it must go hand in hand with competition. What is vital is that legislation to deal with digital markets and consumer protection follows swiftly. It is time—to coin a phrase—to level up the playing field between platforms and publishers.
For years, news publishers have operated in a deeply dysfunctional digital market, hampering efforts to realise fair returns for their content. Local and regional publishers continue to be hardest hit. Platforms generate a huge portion of advertising revenue from news media content: figures calculated by Cambridge professor Matt Elliott estimate UK publishers generate £1 billion in UK revenues for Google, Facebook, Apple and others each year.
The news consumption trend from print to digital means digital markets must function in a fair and transparent way to secure the sustainability of quality journalism. Google has more than a 90% share of the £7.3 billion UK search advertising market. That means platforms take news content for free and the bulk of advertising, which would pay for it in the analogue world, at the same time.
I welcome the fact that the Government will bring forward legislation to deal with this by giving the Digital Markets Unit statutory powers and tough competition tools. It will be a world-leading digital regulator alongside this world first in online safety, paving the way for a sea change in how platforms operate and ensuring the sustainability of journalism.
As a new age of regulation dawns, I join my noble friend Lady Stowell in urging the Minister to ensure speedy implementation of changes that are the vital other side of the coin. The Joint Committee said in its report that this should happen as soon as possible. Indeed, these two pieces of legislation will feed off each other. As a joint report by the CMA and Ofcom concluded:
“Competition interventions can … improve online safety outcomes.”
My other point is the fluid nature of the legal ecosystem surrounding the platforms, which the noble Baroness, Lady Chakrabarti, mentioned. For almost 30 years the US tech giants have benefited from the protection of Section 230 of the Telecommunications Act of 1996. Passed while the internet was in its infancy, it provided platforms with safe harbours in which to operate as intermediaries of content without fear of being liable for it, which is why we now have the manifold, terrible problems of social media we have heard about today, which the Bill is rightly addressing. But times have changed, and that backbone of internet law is under intense scrutiny, above all from the US Supreme Court, which has for the first time in quarter of a century agreed to hear a case, Gonzalez v Google, challenging the immunity of companies that host user content online. The court’s decision will have a significant impact on the internet ecosystem, especially taken alongside anti-trust legal actions in the US and the EU. They are issues to which we will inevitably have to return.
The Bill—along with many other developments that will have a profound effect on competition, on regulation and on the protection of children—ushers in an era of radical change, but is, as we have heard a number of times today, only part of the journey. Let us now move forward swiftly to finish that job.
Baroness Featherstone (LD)
My Lords, the power to amplify, together with the volume and speed of the online world, has put power in the hands of individuals and organisations, for better or for worse. While we seek to control the worst, we also have to be aware that we now have the most extraordinary communication tool for ideas, gathering others to our cause and getting information around the world in a flash, as well as providing avenues for those in countries that do not have the miracle of free speech to contact the outside world, because their media, and they, are state-controlled.
Of course, what is illegal offline is illegal online. That is the easy bit, and where my preference undeniably lies. The new offences, dealing with what were some of the “legal but harmful” issues, cover off some of the most egregious of those issues.
In our last debate on freedom of expression, I said:
“I want maximum controls in my own home. Put power in my hands”.—[Official Report, 27/10/22; col. 1626.]
The user empowerment now in the Bill will target things such as suicide content, eating disorder content, abuse targeting race, religion, sex, sexual orientation, disability and gender reassignment, and the incitement of hatred against people with those characteristics. But I will argue, as others have, that a default setting must be in place so that such material is not available unless chosen. Thus the algorithmic onslaught of content that follows a single search can be averted. More importantly, vulnerable adults, who may not be capable of selection and exclusion, need that protection. We do not have to view what we do not want to see, but let that be our choice before we are fed it.
Equally absent with the removal of legal harms is violence against women. The onslaught of misogyny, bullying and worse at women is dangerous and totally unacceptable. A whole raft of organisations are behind this push to amend Clause 36 to require Ofcom to develop a VAWG—violence against women and girls—code of practice. I hope and trust that noble Lords across the House will be in support of this.
I want cyberflashing—sending pictures of genitals, which thankfully is now an offence in the Bill—to be amended so that it is about not whether there was intent by the sender to cause harm, as in the Bill now, but that the sender must have consent. Women are sick and tired of being made responsible for male misbehaviour. This time, let it be on the men to have that responsibility.
On children, age verification is nowhere near strong enough in the Bill in its current form. I trust that this will change during the Bill’s passage. Like probably everyone in this House, I pay tribute to the noble Baroness, Lady Kidron, for all the work she does.
In our legislative endeavour, we must guard against authoritarian creep, where the prohibition against what is truly harmful oversteps itself into a world where we are to be protected from absolutely anything that we do not like or agree with—or, worse, that the Government do not like or agree with. As others have said, the powers of the Secretary of State in the Bill are Orwellian and need to be pushed back.
Free speech presents challenges—that is the point—but the best way to challenge ideas with which you disagree is to confront them by marshalling better ethics, reason and evidence. Life can be dangerous, and ideas can be challenging. While we must not submit our intellect and freedoms to the mob, we must protect the vulnerable from that mob. That is the dividing line we must achieve in the Bill.
Lord Inglewood (Non-Afl)
My Lords, like other contributors to the debate, I support the Bill, but that does not mean that I think that it is perfect; we must be aware of letting the best be the enemy of the good. I declare my interests as a trustee of Full Fact and the Public Interest News Foundation.
I was very glad that the noble Lord, Lord Hastings, referred to the Broadcasting Act 1996, because, during its passage as a Bill, I was fulfilling the role that the Minister is performing today. I remember that, before coming to address your Lordships, I looked at the draft speech that had been prepared and which described the Bill at length. It was incredibly boring, and I said, “No, I am not going to do that; I want to describe to the House what the world that the Bill will bring into effect will look like”. I told your Lordships that I was taking them into a world of science fiction. In fact, I may have misled your Lordships on that occasion, because I underestimated the impact of the technology that was evolving. Also, I do not think that anybody realised quite to the extent that we do now that you cannot disinvent technology: things have happened which are here for ever from here on out.
While technology has changed, sadly one thing has not changed: human wickedness. Rather, human wickedness has been innovative. The Government tell us that they are great believers in innovation, but I do not think that they believe in innovation in this context. History suggests, and the contemporary world corroborates, that countering wickedness and vice is never easy, particularly when it is complicated by issues of jurisdiction, geography and technology.
My view is that this simply cannot be done by primary law or, indeed, secondary legislation. As the noble Baroness, Lady Stowell, touched on, we need all kinds of soft law and codes of conduct to complement that. She was right that we have to move on from the kind of legislative approach we have now, which I call “stop and start”. We have a period of intense debate in Parliament about a piece of legislation and then, as has been heard this evening, it is all forgotten for five years—and then you find that the piece of legislation you passed does not really meet the problems of the day. We must find a way of passing what I like to describe as “living legislation”, so that it is possible, in an ongoing way, to allow those things to evolve in response to the problems that the world is presenting. It is not simply a matter of a cosy relationship between the Government, the regulator, media companies, pressure groups, charities and so on; Parliament must be involved in doing what is, after all, its real job: law-making. I think that the public, too, need to know what is going on.
If I am right in saying so, and I think I am, this kind of static approach to law-making cannot really be what is needed in circumstances of the kinds we are talking about now. Parliament, this House and the other place together, should somehow take the metaphorical bull by the horns and evolve ongoing procedures to complement the technological evolution of the internet, which changes every day—indeed, things will have changed during the duration of the very debate we are having. I dare say that the same is true elsewhere, including in other sectors about which I know very little. If we, as parliamentarians, do not grasp this particular nettle, the consequence will be that the citizens of this country will materially lose control over quite a lot of what surrounds their daily lives.
Baroness Wyld (Con)
My Lords, I am sure I have been annoying my noble friend the Minister for the last year by asking him when the Bill is coming. Today is one of those days when everything happens at once: two of my daughters are out of school because of industrial action, and I spent most of this morning arguing with them about whether they could go on the internet and how long they could spend on it. They said it was for homework, and I said that it was not and that they should read a book; you can imagine it.
There is a point to that slightly grumpy anecdote. First, I take issue with the suggestion by the noble Baroness, Lady Bennett, that your Lordships’ House does not engage with the next generation. More to the point, there is a fundamental tension that millions of parents up and down the country face. Our children are online a lot and sometimes we want them to be online. Do not underestimate the way that lockdown accelerated their online lives through home-schooling, necessarily—I declare my interest as a non-executive at Ofsted. Sometimes this was to their advantage, but I suspect on the whole it was probably not.
My concern is that while children should be able to get on and do their homework, we have allowed big tech to mark its own homework. The really appalling evidence that we have heard today underlines the urgency to get this Bill right.
The noble Lord, Lord Knight of Weymouth, hit the nail on the head—he usually does—about the speed and complexity of the technology; it is just so fast. Most parents that I know certainly do their best to keep their children safe. It is a bit like Sisyphus rolling the boulder up the hill; it just comes back down, because it is so much easier now for our children to be deceived, abused and bullied and to view the stuff of nightmares. When this includes pornography sites, which many others have talked about, with characters from children’s TV such as “Frozen” and “Scooby-Doo”, I do not think it is particularly dramatic to wonder what we have become as a society to allow this sort of thing to happen. I welcome the consensus that we have heard around the need to protect our children, although it tragically is too late for many. I am sorry that the process has dragged.
I will work across the House at Committee stage and beyond to make sure that the Bill is sufficiently stringent, that the scope is correct and that it is workable, because we cannot risk giving parents and young people false reassurance or weak new systems. The noble Baroness, Lady Harding, was very clear on this and I share her concerns about app stores not being in scope.
Going back to pornography, I know my noble friend the Minister takes these things extremely seriously, but I do not see how anybody can feel reassured unless the Government commit to robust age verification, as set out by my noble friend Lord Bethell.
In the time I have left, I want to address cyber flashing. I am very glad the noble Baroness, Lady Featherstone, did so too. I completely agree that it should be based on consent. I felt weary having to have these sorts of conversations again: about victims having to somehow prove that they are not overreacting, or if it was a bit of a laugh then it does not really matter. It makes no difference to their experience. I do not want to be presumptuous, but I think there is cross-party impetus to ensure that the new offence is based on a principle of non-consent, and I hope the Government will be prepared to listen. This is no criticism of my noble friend the Minister, who is an excellent Minister with an excellent team at DCMS, but it seems to me that these issues have been left in the “too difficult” pile for far too long and we must not miss our chance now that it is here.
Baroness Kennedy of The Shaws (Lab)
My Lords, I do not think anyone in this House would disagree with the idea that freedom of expression is a very precious freedom. We have only to look around the world to see that authoritarian Governments almost invariably go after free speech as one of the first things that they do. We know that media freedom is a vital part of any democracy, as indeed is the rule of law, but as the noble Lord, Lord Black and the noble Baroness, Lady Chakrabarti, said, law has been pretty absent in this whole arena, even where it could have been used. I am glad that we are now addressing the complicated issue of regulating the internet and these platforms.
I do not want to see journalists’ privacy invaded so that their sources are exposed. I do not want any possible chilling effect on investigative journalism exposing corruption and abuse of power. It is vital to our democracy. However, we have to think very seriously about the kind of regulation that we have been discussing in this House, because it has been part of our tradition. Unlike the United States, we have not fetishised freedom of expression. We have seen that there have to be occasions when we restrict freedom of speech to protect people from serious harm. That is what this discussion today is really about and will be in the course of the Bill.
I declare that I am a trustee of 5Rights, which is the foundation created by the redoubtable noble Baroness, Lady Kidron. As a lawyer who is pretty well versed in the need for law, I have learned so much from her, and I believe that the major priority of this Bill has to be the protection of children. There are still gaps, and when the noble Baroness comes to put her amendments through, I will be there speaking in support of them. I hope that all noble Lords will come onboard, because those gaps definitely still exist.
I want to speak to your Lordships about women, because last year I chaired an inquiry in Scotland into misogyny. It was a very powerful experience to hear from women and women’s organisations about the extent to which women are abused on the internet. It was absolutely overwhelming that these were not only women in councils or parliaments, or women who were journalists or campaigners, but in schools and universities, women were being traduced and abused. Threats to rape, sodomise or sexually assault women, and to facially disfigure them with acid, would take place online and then you would find people piling in. The pile-on is something this House should know about. It is where, because of algorithms and because of people having followers, huge numbers of people then jump on the bandwagon and add their bit of insult and abuse to what has gone before. Or you get “likes”. I once saw a television documentary saying that the man who invented the thumbs-up “like” regrets it to this day because, of course, he now has children and knows how painful that can be. Also, that business of liking is telling women that there are hundreds and thousands of people out there who think that these things should be done to them.
I really regret to say that, of course, it is not policed. There are not prosecutions, or only very rarely, because of the cover of anonymity, which is problematic. We are going to have to discuss this during the course of this Bill because it gives a veil over those who do it. As well as the pile-on, one of the difficulties is—and I say this as a lawyer—the thresholds you have to pass for criminal prosecution. People have learned that you do not say, “I’m going to come and rape you”; they say, “Somebody should rape you. You deserve to be raped.” The message to women, therefore, is not, “I’m coming to get you”, but “Somebody out there just might”. It has an incredible effect on women.
We have to have that in mind when we come to Committee. We have to recognise the urgency, in relation to children particularly, but we also have to be alert to the ways in which women and girls are finding their lives made wretched. They are made fearful because of threats. Prosecutions and criminal prosecutions should be brought more regularly, because if there is anything that will stop this, it will be that. We have to be very vigilant about media freedom—I agree entirely—but we also have to make sure that we keep the Secretary of State out of this. I do not want to see politicians having their fingerprints on it, but the idea of a Joint Committee to monitor the way in which regulation takes place and to watch developments, because technological developments happen so quickly, is a good one.
We have to address algorithms. We heard from the Russell family that, even after Molly Russell had died, there on her technology she was receiving—it was being pushed at her—stuff about suicide, and the child was no longer alive. This is not about soliciting information; this is it being pushed in the direction of people. I urge this House, with all its usual great expertise, to make this Bill the best we can make it, certainly just now; but the priority first and foremost must be children.
Baroness Gohir (CB)
My Lords, it is a huge honour to speak immediately after the noble Baroness, Lady Kennedy. She is one of my sheroes; she did not know that but she does now—and it will be recorded in Hansard. I declare my interest as CEO of the Muslim Women’s Network UK. Let me start by saying that the speech from the noble Baroness, Lady Kidron, was heartfelt; I will support the amendments that she plans to put forward.
I will focus on four areas of concern: the abuse of women and girls; pornography; extremist and misogynistic content; and digitally altered body images. First, I share the concerns that have been raised many times today by noble Lords on the gaps in this Bill to tackle the online abuse and harassment of women and girls sufficiently. I therefore support the call from the noble Baroness, Lady Morgan, to introduce a code of practice.
Secondly, on pornography, I strongly support the recommendations from the noble Lord, Lord Bethell. I will also support any amendments that he plans to table. Inaction by successive Governments to tackle easy access to pornography by children has led to harmful sexual behaviour towards women and girls. This Government must go further to strengthen age verification. There is plenty of technology to do this. It can and should be implemented without delay.
Thirdly, there is a lack of accountability when it comes to publishing extremist and misogynistic online content. I am concerned that, according to the vague definition in the Bill, any online platform can call itself a recognised news publisher and then be exempt from complying with any requirement in the Bill. This will result in online platforms being free to promote harmful hate speech, including misogynistic content, and not having to remove it.
Finally, another urgent concern is the digital alteration of body images and sizes in advertising. Although boys are exposed to digitally altered images of men, girls are exposed to a far greater number of images of women that are highly manipulated and altered. Editing images of models involves taking inches off bodies and faces. The manipulation of images in this way is causing serious long-term harm, contributing to low self-esteem, anxiety, depression and self-harm and driving young people to cosmetic surgery. Given that advertisers are promoting an unattainable body size, this type of online communication is fraudulent and harmful; it therefore can and should be addressed in this Bill.
Earlier, the noble Baroness, Lady Merron, raised concerns about disinformation and misleading material being widely available and causing harm. This is a prime example of that, but it is often overlooked. I know that Luke Evans has introduced a Private Member’s Bill in the other place; however, this Online Safety Bill provides a prime opportunity to tackle this issue now. I urge the Government to listen to the serious concerns being raised by many campaigners, including Suzanne Samaka, founder of the campaign #HonestyAboutEditing. Other countries, such as Israel, France and Norway, have already taken decisive action by legally requiring altered images to carry a label. The UK has been left behind the curve. How will advertisers be held accountable? Will the Government consider legally requiring advertisers to label digitally altered images? Can the Minister inform the House of any alternative plans to tackle this harmful practice by advertisers, such as introducing a code of practice?
There is a common thread in all the concerns that I have shared today: how the weaknesses in this Bill will have a disproportionately negative and harmful impact on the lives of women and girls. If this Government are serious about protecting women and girls from harm, they must take a more holistic, robust approach to their safety.
Baroness Fall (Con)
My Lords, finally, the long-awaited Online Safety Bill arrives. The noise preceding it has been deafening. It is noise that we should be proud of because it is the sound of a healthy democracy deliberating on some of the most crucial issues in our society; between privacy and security, sensitivity and freedom of speech, it goes to the integrity of our democracy.
These are not new issues at all, but the context is. Online safety is as broad as the landscape it inhabits, making this Bill of great complexity. I support it. Most of us in this Chamber grew up without the internet—something that our children find a total anathema. Now, it equates itself with something as common as the air we breathe. However, it is not as universally available, for access is controlled by a small number of tech companies that have for years declared themselves platforms and dodged responsibility for content. So a sort of terrifying social anarchy seems to have emerged, where no one is accountable or responsible for anything. This offers a free space for terrorists, easy access to pornography, hate speech and bullying. Social media is available 24/7, 365 days a year, which has driven some of our children to despair. We face growing concerns about how our democracy is being undermined and manipulated—about what is real and what is a Russian bot. Regulation was always coming, but the question is: what sort? We should always be mindful that we do not want the sort of highly censored internet we see in China.
How do we effectively regulate something like the net, which shifts like sand? I have a few points. First, I support the establishment of a duty of care for legal but harmful content for children. In my mind, censorship around only what constitutes legal content falls woefully short of creating the sort of nurturing and safe environment we strive to create elsewhere in society for our children, whether in family units, at school or within the wider community. It is said that it takes a village to bring up a child, but now that village is online. However, we must be transparent about how we do this.
That brings me to my second point: we must avoid censorship with no transparency—whether it is by a government or a tech company—for it is only transparency that guarantees accountability.
Next, I turn to the point about anonymity, which the noble Baroness, Lady Kennedy, also raised, among others. It is my belief that the assumption in favour of anonymity on the web encourages people to be the worst, not the best, version of themselves. It gives disguise to trolls and bullies, and allows no off button and no shame. I support steps to encourage platforms to verify users’ identity. I understand that there will be some who cannot, such as victims or dissidents, but they can be drawn to sites that are known to protect them. Then there are those who will not, who can seek less mainstream sites, which we, as users, can choose not to use.
Fourthly, we should be doing more to address the challenge of the health of our democracy and the quality of discourse that underpins it. The insidious power of algorithms is driving us to echo chambers and polarising debate. We have lost a sense of a common truth, and with it what forms a lie. This is especially concerning around election campaigns, where fraudulent advertising or disinformation may be difficult to judge and may sometimes come from foreign agents. And what of spending limits? We carefully constructed these through Electoral Commission rules, yet there is a free-for-all on the web. I believe there is more we should do to secure the integrity of the poll online.
Some of the smartest people in the world created the internet; there is no reason why they cannot fix some of its worse characteristics. This is the first of what will surely be many Bills about online safety and how we regulate the internet. While we must strive to protect, we must also be mindful of the boundaries between privacy and security, and freedom of speech and censorship. These are questions which have run for generations through our democracy and always will. We must understand and be honest with ourselves that, while this is a battle worth fighting, it is a battle we will never entirely win.
Lord Storey (LD)
My Lords, I speak in this Second Reading debate with little detailed knowledge of the digital world. I will probably be taking up my noble friend Lord Allan’s offer. I am not on Facebook, TikTok, Instagram or Snapchat; I have occasionally dabbled on Twitter. What I do have is 40-plus years’ experience as a teacher and head teacher. I have seen first-hand how children can have their lives turned upside down and how they have been physically and emotionally scarred by the effects of social media and the online world.
Yesterday, we heard from a study by the Children’s Commissioner for England how children as young as nine are being exposed to online pornography; how a quarter of 16 to 21 year-olds saw pornography while still at primary school; and how, by the age of 13, 50% had been exposed to it. You might say, “So what?” Do we want to hear that 79% of 18 to 21 year-olds have seen pornography involving sexual violence while they were still children? Do we want to hear that a 12 year- old boy had strangled a girl during a kiss because he thought that was normal? Do we want to hear that half of young people say girls expect sex to involve physical aggression? This all comes, by the way, from the Children’s Commissioner’s report.
The Online Safety Bill, as we have heard, has been a long time coming. The Government’s aim in introducing the Bill is to make Britain the best place in the world to set up and run a digital business, while simultaneously ensuring that Britain is the safest place in the world to be online. But does the Bill really achieve that for children? Childhood is about loving and learning. It is about innocence and enjoying the wonders of life. It is not about having that innocence and wonder shattered by some perverse online content.
My interest in this Bill is how we as a society can restore childhood to our children. The Bill, as the noble Baroness, Lady Kidron, said, must cite the UN Convention on the Rights of the Child, and General Comment 25 on children’s rights in relation to the digital environment. Citing this in the Bill would mean that regulated services would have regard to children’s existing rights. The limited scope of the Bill means that, as the 5Rights Foundation points out, children will still be exposed to harmful systems and processes, including blogs and websites that promote and encourage disordered eating, online games which promote violence, financial harms such as gambling, and parts of the metaverse which have yet to be developed. The Bill will not be future-proofed. Regulating only certain services means that online environments and services which are not yet built or developed are likely not to be subject to safety duties, which will quickly make the Bill out of date.
Turning to age verification, as a teacher it always worries me that children as young as seven or eight are on Facebook. In fact, 60% of UK children aged eight to 12 have a profile on at least one social media service. Almost half of children aged eight to 15 with a social media profile have a user age of 16 plus, and 32% of children aged eight to 17 have a user age of 18. Without age assurance, children cannot be given the protections needed to have an age-appropriate experience online. Some 90% of parents think that social media platforms should enforce minimum age requirements. We should do whatever we can to protect children from harm. The Bill will establish different types of content which could be harmful to children:
“primary priority content that is harmful to children … ‘priority content that is harmful to children’ and ‘content that is harmful to children’”.
I say that any content that is harmful to children should be dealt with.
As the noble Lord, Lord Hastings, has said, media literacy is hugely important to this Bill and should be included. Media literacy allows children to question the intent of media and protect themselves from negative impacts, be it fake news, media bias, mental health concerns or internet and media access. Media literacy helps children and young people safely consume the digital world. I was a bit disappointed that the noble Lord, Lord Hastings, did not ask what a Liberal Government would do, but I can tell him that we would be dealing with this issue.
Yesterday, the Princess of Wales launched a campaign to highlight the importance of childhood. Children need to enjoy their childhood and grow up in a supportive, caring environment. They need good role models, not influencers. Children are very vulnerable, innocent and susceptible. We must do all in our power to ensure that online is a safe place for them, and to be able to say to the daughter of the noble Baroness, Lady Harding, that we did finally do something about it.
Lord Austin of Dudley (Non-Afl)
My Lords, it is clear from the last speech that we must do much more to protect impressionable young people from the torrent of racism, extremism and dangerous conspiracy theories online. Sites like Facebook and Twitter fuel division, anger and extremism, which can lead to threats and violence. Small sites like 4Chan, Odysee and Minds do not even have the third layer of the so-called triple shield. People are routinely targeted, intimidated, bullied and harassed, as we have heard in so many speeches during this debate. This has a terrible impact on public debate, let alone mental health.
Research by the Antisemitism Policy Trust revealed that there are two anti-Semitic tweets per year for every Jewish person in the UK. That report was before Elon Musk’s takeover relaxed the rules. As we have heard from the noble Baroness, Lady Anderson, women get it worse, with all sorts of disgusting abuse and even rape threats. Yet the Government have so far not accepted calls for an Ofcom code on violence against women and girls. Anyone of any age can set up a Twitter account with just an email address, giving them access to hardcore pornography. Future generations will be amazed that we allowed this lawless wild west to develop.
Sites like Twitter allow the repeated publication of completely false, defamatory and made-up images, making completely unfounded allegations of the most vile behaviour. It ignores complaints, and even when you to try to take them up and can show clearly how posts break its rules, it will not do anything about it. Twitter’s entire business model is based on fuelling argument, controversy and anger, which obviously leads to abuse and in some cases threats of violence. This can become addictive, leading to a terrible impact on people’s mental health.
People abroad are making billions out of poisoning public debate and making the mental health of vulnerable people worse. Imagine it: who would be allowed to set up a business to deliver anonymous hate mail about other members of the public through people’s front doors, which is essentially what Twitter is able to do? Why are we allowing billionaires abroad to decide what young people in the UK are subjected to, instead of Parliament, which is accountable to the public, setting rules that are properly understood?
You do not need to be paranoid to ask why hostile countries might use social media to undermine western societies with extremism and violent argument. This is not about limiting free speech or censorship—remember, these sites already curate what we see anyway—but implementing proper systems of age verification and holding the executives to account when they break the rules.
I share the concerns of the noble Baroness, Lady Fall, about whether we really need anonymity on social media in the UK. Freedom of speech should not allow threats of violence or rape, or disgusting abuse. In any event, people have the freedom to say what they like, within the bounds of the law, but that does not mean they should not be held responsible for it. Nor is it true to say that this would affect whistleblowers in countries like ours. The people who make rape threats or publish violent abuse are not whistleblowers.
Finally, as the noble Lord, Lord Black, said, the boundaries between newspapers, broadcasters and social media companies are becoming more blurred all the time. Twitter and the rest of them are clearly publishers. They should be held to account for the material on their sites, in the same way as newspapers.
We need to see small, high-harm platforms brought into the scope of category 1 platforms; the re-introduction of risk assessments for legal harms; and a reversal of the current fudge on anonymity, with at the very least fines for platforms that are unable to know who their customers are. We need to look again at the status of these companies as publishers. Finally, we need to see action on search engines, including Google, which largely escape any actions in this Bill.
Baroness Prashar (CB)
My Lords, we are privileged to live in an age of internet technology, which gives us greater access to information and means of communication than at any point in human history. But to get the most out of this online world it must be safe and effectively regulated to counter harm and misinformation. I fully support the Bill. It is a good start, but it needs to be improved in a number of areas.
I begin by paying tribute to the noble Baroness, Lady Kidron, for her tireless work in this area, and for educating and helping us to focus on some of the core and fundamental issues. I will underline some of the amendments she proposes that I intend to support.
As the noble Baroness said, the Bill primarily focuses on user-to-user services and search engines, as defined in Part 2, but harmful content published on websites such as blogs falls outside the Bill’s scope. The noble Baroness’s amendment to include within the Bill’s scope any internet service likely to be accessed by a child is crucial. I strongly support it.
The Bill must also address business models that drive users to this content. As we know, this occurs through platforms, algorithms and push notifications, which amplify and perpetuate access to this content, as illustrated by the tragic death of Molly Russell. I support the noble Baroness’s amendment to Clause 10, which would ensure tough regulation in this area and assessments to tackle drivers of harm, including the design and features of the platform.
Furthermore, online safety should apply not just to children. The 2019 White Paper said that content that actively harmed any user should be tackled. It is deeply regrettable that the Government removed adult safety duties from the Bill, arguing that this would undermine free speech. On the contrary: online safety for all has the potential to enhance free speech, as people can engage on platforms without being exposed to harmful content. I urge the Government to reverse this decision.
The importance of balancing privacy online with the need for public safety is of course crucial. Encrypted messaging services such as Facebook Messenger or WhatsApp are right to keep private messages confidential, but the Government have argued that there are situations where law enforcement agencies must have access to messages on these platforms. Can the Minister explain how they intend to balance privacy and online safety with regard to encrypted messaging services?
Age-verification regimes need to be strengthened to ensure that children are not exposed to pornography. The noble Lord, Lord Bethell, made a very powerful case for that, and I strongly support the amendment which he will bring forward. His proposed amendment, he said, would bring Part 3 of the Digital Economy Act into Part 5 of the Online Safety Bill. As he said, this offers a very neat solution to addressing the significant gap in the Bill, and would make the definition of pornography online consistent with regulation of content in the offline world. I also support the amendment of the noble Baroness, Lady Kidron, to Part 4, which would task Ofcom with producing statutory guidance for age assurance. I also support her amendment to Part 7, requiring platforms to provide a point of contact to bereaved families or coroners when they have reason to suspect that a regulated service holds relevant information on a child’s death, and an amendment requiring social media platforms to share information with coroners in cases like Molly Russell’s.
While this Bill is about the online safety of children, this is an opportunity to include online fraud provisions in legislation, which predominantly affect the elderly. We need a regime where law enforcement, financial services and tech platforms collaborate to reduce online fraud. Would the Government be willing to entertain an amendment that encouraged such collaboration, to ensure that user-to-user platforms and search engines are accountable for fraudulent advertising on their platforms?
The Government have signalled that they will put forward an amendment that will classify videos of people crossing the channel which show the activity in a positive light, which I of course support. Can the Minister assure the House that this amendment, intended to target those who encourage people smugglers, will not criminalise those who show sympathy online for asylum seekers?
Finally, civil liberties groups have described social media as a modern town square. To make sure that this town square is used positively, we need robust provisions for media literacy. A new media literacy duty in the draft Bill has been dropped; now it is mentioned only in the context of risk assessment, and there is no active requirement for internet companies to promote media literacy. There is a wide media literacy gap which leaves many at risk of harm. I agree with Full Fact that a stronger media literacy duty should be reinstated with Ofcom in this legislation to produce a statutory strategy.
Finally, this is a fast-changing area, as others have said. While we can improve this Bill, we cannot make it perfect. I therefore strongly urge that a commitment is given by the Government to subject this legislation to post-legislative scrutiny after three years.
Lord Balfe (Con)
My Lords, this debate has attracted a lot of attention: some 60 speakers, nearly all of whom have run over their time. I will just make one or two observations. First, it is a long time that we have been waiting for this Bill, so we had better make a good job of it, because I doubt that the Government will let legislation through again for a good five or six years. The second point—I pick up something that my noble friend Lord Inglewood said—is that we need more flexibility in the law. The speed at which the internet has developed is not appropriate for the procedures that we have. It is no good saying that you can have a Henry VIII power, give it to a Minister and then forget it; we need to devise a method of reviewing laws on a regular rolling basis, such as they have in the United States, because the law will be out of date whatever we do.
I am fully behind the amendments of the noble Baroness, Lady Kidron, and my noble friend Lord Bethell. I think that they are excellent amendments, and I look forward to us discussing them. We do not need to do that now.
I would add into the procedures that we need to give careful thought to the idea of anonymity on the internet. I am against it, personally. I am a member of the Conservative Home page and I am there as “Richard Balfe”. Some people are there with very odd names, such as “Brussels Hater” and other handles which do not reveal who they are. I notice that the more obscure the name is, the more violent the contribution is. We need to look very carefully at anonymity; the people who need to hide behind anonymity are probably not the sort of people that we, in considering this Bill, would see as the best people to do things.
My next point is about penalties. The penalties look fine—for example, 10% of world turnover—but of course these are not penalties on the firms; they are business expenses, and that is how they will be seen. I am not a great admirer of the American system but I will say one thing that came out of a visit I paid to Washington. I talked to legislators about how they enforced legislation—in this case it was against financial firms—and the Congressman I was speaking to said, “It is very simple: you imprison them”. He said that if a Bill has a possibility of imprisonment, it puts the fear of God into directors in a way that no fine, however big, does, because that is a business expense and can be planned for. We need to look carefully at whether there should a custodial element in the Bill for severe breaches. I think that would help to get it implemented. Otherwise, the danger I see is that we are in competition with lawyers based in Hollywood rather than with people based in London.
I look forward to the Bill passing; I hope we will do it carefully and considerately—I am sure we will—and take onboard the amendments of my noble friend Lord Bethell and the noble Baroness, Lady Kidron, and the other improvements which have been mentioned.
Lord Dodds of Duncairn (DUP)
My Lords, I want to focus primarily on the safeguarding of children. I support the general provisions and intent of this Bill; it is clearly going to be a very important tool in keeping children safe online.
While the internet has so many benefits, it exposes children to myriad harmful content, such as pornography and content promoting self-harm and suicide, as well as targeted abuse and grooming. Molly Russell’s name has become synonymous with the Bill, and it is important that we get this legislation right so that harms online, such as those Molly encountered, are not just reduced but eliminated. We need to make the online world as safe as it can be for our children.
We know that young children are able to sign up for accounts on social media platforms with little or no protection from the harms they face; they are able to freely access pornography without restriction. It is shocking that over 60% of children under 13 have accessed harmful content online by accident. To safeguard children and young people thoroughly, we need to ensure that the protections for children offline are mirrored online. I fully endorse what the noble Lord, Lord Bethell, said and I will be supporting him in the amendments he brings forward. I also support those that will be brought forward by the noble Baroness, Lady Kidron.
In the offline sphere, under the Video Recordings Act, the British Board of Film Classification, for example, is responsible for classifying pornographic content to ensure that it is not only not illegal but meets established standards. None of these offline standards is applied online at all.
The online pornography industry has developed and evolved without any—never mind robust—regulatory oversight. But, given what is available online, much of which is illegal, oversight is greatly needed and overdue. The Bill provides the opportunity to put that right, and we must not miss this opportunity because, as we have heard, this may not return for some years.
Age verification was supposed to be implemented under the Digital Economy Act. As a result of the Government’s decision not to implement Part 3 of that Act, children have had unfettered access to pornographic content. Therefore, in my view, age verification needs to be implemented as swiftly as possible. A coalition of charities are proposing that Ofcom must prepare and issue a code of practice within four months of Royal Assent and that age verification should be implemented within six months. That is the very minimum that we should expect. We owe it to our children that they are not exposed to any more harm than they have been already.
Much of the debate in the other place on the issue of free speech focused on the Bill’s provisions to regulate what is legal but harmful. It is important that we ensure that the provisions of this Bill protect free speech, while at the same time protecting vulnerable people against deeply damaging material and content. The Bill now places a duty on user-to-user services
“to have particular regard to the importance of protecting users’ right to freedom of expression within the law”.
We need to examine the operation of this duty very carefully. The Bill must reflect the principle and the law must reflect the principle that whatever you can say offline on the street should be protected online. Large internet companies should not have the power to decide what is said and not said online. If a company removes speech that would be legal offline, it must be placed under an obligation to give reasons why that speech was removed and be held to the highest standard of accountability for removing it.
Social media companies are enormous cartels that dominate our culture. The Government, in bringing forward this Bill, have concluded that they cannot be trusted with users’ safety. They cannot be trusted to keep their platforms safe, and equally they should not be trusted with free speech. I want also to endorse those noble Lords and Baronesses who have called for action to be taken against the awful abuse and trolling of women and girls online, and particularly the use of anonymous accounts. This issue needs to be tackled, and I look forward to working with others in Committee to strengthen the Bill in all these safeguards.
Lord Mitchell (Lab)
My Lords, they say that there is no such thing as a free lunch. When it comes to the social media companies, that is certainly true. Google Search is free, as are Facebook, Twitter, Instagram, WhatsApp, YouTube, TikTok and a host of other online services. All of them are great products, hugely popular and used by billions of people every day throughout the world. So it begs the question: why are they free? It is because the mass of data that the internet companies hoover up on their billions of users is a treasure trove. They collect data such as location, shopping, searches, medical records, employment, hobbies and opinions. It is said that Google alone has more than 7,000 data points on each one of us. In our innocence, we all thought that we were searching Google; little did we realise that Google was searching us.
What do they do with this hoard of data? They synthesise it through algorithms. They sell their results to advertisers. Traditionally advertisers spend huge amounts on newspapers, television and other media, struggling to target their markets. It was imprecise. Today, using the data provided by the social media companies, advertisers can personalise their message and pinpoint it accurately. It is hugely cost effective and it generates hundreds of billions in revenue. Data truly has become the new oil.
Of the five largest companies in the world by market value, four are big tech: Apple, Microsoft, Alphabet/Google and Amazon. Indeed, Apple alone has a market value equal to the combined value of all the companies on the FTSE 100 Index. Big tech is bigger than most countries. The big tech companies are richer than us, they move faster than we do, they are aggressive, they are litigious, they are accountable to no-one, they have enormous power, and they make their own rules. They employ the smartest people in the world, even including a previous Deputy Prime Minister of our country.
The Zuckerberg shilling can buy a lot of influence. Let us take a look at Facebook. Its platform has allowed the most unspeakable acts of violence, hate and perversion to go viral, pretty much unchecked. It says that it moderates content, but it is not enough, and usually too late. Now we learn that Mr Zuckerberg is spending $10 billion a year on developing his metaverse. Already we have read of examples of virtual reality sex orgies, and participation in gruesome violence, all viewed through a Meta headset, where the avatars are quasi-people and it becomes almost impossible to distinguish reality from fiction. Imagine where that is all going. Frances Haugen, the Facebook whistleblower, had it right when she said that only profit motivates the company.
This is a landmark Bill. We have to get it right, and we have to make it tough, with no room for loopholes or ambiguities. I have tried to paint a picture of the participants. I have worked and been involved in the digital industry for over 50 years. I know the nature of the beast. They will fight to the last to preserve their business model. Do not underestimate them. These people are not our friends.
The Earl of Erroll (CB)
My Lords, several Peers have mentioned the Digital Economy Act 2017 and the sadness of the constitutional impropriety when the Executive refused to implement the will of Parliament. That really concerned me because, if it had been implemented, so many children would have been protected, for several years by now. We learned some useful things during its passage that could very much be applied in this Bill.
The first was on enforcement. This is always the big problem: how do you make them comply? One of the things that will work is the withdrawal of credit card facilities. If a Government or authority ask credit card companies to withdraw facilities from a company, they will, probably internationally. In fact, this happened not that long ago, a few months ago, to one of the big porn sites. It soon fell into line, so we know it works.
The other thing is that anonymous age verification is possible. At the time I chaired it, the British Standards Institution issued PAS 1296 on how to do it, and several companies implemented it. The website itself does not check; it is done by an external company to make sure that it is right. The noble Lord, Lord Browne, has just explained exactly how it works. It was a very good explanation of the whole thing. About a year ago, they were intending to elevate it to an international standard because other countries wanted to use it. Certain European countries were very keen on it and are already implementing stuff.
The other thing that struck me is this: what is meant by “legal but harmful”? It is an expression that has sort of grown up, and I am not sure whether it means the same thing to everybody. In terms of pornography, which I and a lot of us are worried by, we do not want to be a modern Mary Whitehouse on the one hand, so you do not want to regulate for adults. But the noble Baroness, Lady Benjamin, who worked on this, explained all the dangers very well, as did several others. It is not just that children get addicted; they also do not learn how to treat each other and get completely the wrong impression of what they should do. In fact, horrifyingly, I heard that throttling, for instance, is on the increase because it has apparently been appearing on porn sites recently. It does not take long to corrupt the next generation, and that is my real concern: we are destroying the future.
To future-proof it, because that is the other worry, I would suggest quite simply that access to any website, regardless of size, that has any pornography must have anonymous age verification. It is very simple. We may not want to prosecute the small ones or those that do not matter, but it allows us to adapt it to whoever is successful tomorrow—because today’s success may disappear tomorrow, and a new website may come up that may not fall within it.
The other thing I want to mention quickly is that anonymity is necessary because it is not illegal, for instance, for any of your Lordships’ House to go and access pornography, but it is severely career limiting if anyone gets to know about it—and that is the trouble. The same thing applies if you are a Muslim leader and wish to buy some alcohol online. That is why we need to have this. It is perfectly possible, it is out there and lots of companies can do it.
Finally, what is misinformation? It is really the opposite opinion of what you yourself think, and I think there are huge dangers in how we define that.
Lord Farmer (Con)
My Lords, like every noble Lord today I welcome the arrival of this Bill after such a long wait. Like many others, I will focus my remarks on pornography. Standing back and looking at what has shaped and is shaping our society, we cannot ignore the fact that never in the history of humankind have we been so deluged by pornography. Graphic sexual activity is accessed through the internet on the push of a button and is almost impossible not to stumble across.
What we have been missing up to recently is the data on what this deluge is doing to us all. We have heard a lot about the Children’s Commissioner and her report yesterday. Her research found that most young people have seen pornography on Twitter, Instagram or Snapchat. Moreover, online pornography is not the same as the blue magazines previously available only by reaching up to the top shelf of the newsagents for those who had the chutzpah in those days to do it.
The adult content accessible in our youth is, she says, “quaint” compared to today’s online pornography displays. Pouting page three-type nude stills have given way to video portrayals of degrading, sexually coercive, aggressive, violent, pain-inducing and exploitative acts being perpetrated particularly against teenage girls and, of course, younger children. The title of her report published this week—'A Lot of it is Actually Just Abuse’—says it all. She highlights the dangers of the normalisation of sexual violence and the template this provides for children’s understanding and expectations of sex and relationships.
Her stats are a litany of innocence despoiled. Half of children have seen pornography by age 13; some 10% by age nine and more than a quarter by age 11. Some 79% see violent pornography before age 18 and frequent users are more likely to engage, as we have heard, in physically aggressive sex acts.
While I am most concerned about the impact of pornography on children and young people, we cannot ignore its prolific use by adults. International studies show high frequency of pornography use is associated with poor semen quality and reproductive hormone quantity, as well as erectile dysfunction with flesh-and-blood partners. Meta analyses show pornography use is never positively associated with relationship quality.
So, while the Bill has been much strengthened, I will support noble Lords, such as the noble Lord, Lord Bethell, who table amendments requiring that: first, all pornography websites and social media platforms implement third-party age verification; secondly, that there is a Bill-wide definition of pornographic content; thirdly, that online pornographic content is regulated in the same way as offline; and, fourthly, that all pornographic sites must ensure actors are genuinely over 18 so they are not facilitating child sex abuse.
To reiterate, the pornification of society is skewing our values and practices towards cruelty and selfish gratification in intimate relationships. It is undermining efforts to tackle abuse and violence, particularly against women and girls. Not bringing Part 3 of the Digital Economy Act 2017 into force was a dereliction of duty. I was involved at Report stage, and strong forces were clearly at work to preclude hampering adult access to pornography—even to material that would have been illegal offline. The priority then seemed to be securing adults’ continued access to violent, misogynist, racist and degrading material and protecting their privacy.
Almost six years on, my and others’ plea is that we strike a better balance: introduce an age-verification regime at the speed befitting this public and mental health emergency. Third-party providers can give adults the privacy they crave and children the protection to which they are entitled in a civilised society. For too long, we have bowed a knee to cyber libertarian ideology that says internet regulation is impossible, unworkable and unwanted. This Bill must take big, bold, well-evidenced steps to reverse the decades of harm this ideology has caused.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, I am very thankful to be in this House to discuss this Bill. I know many Lords have commented on the Bill being rather late but, being a relatively new Peer, I am pleased to be able to contribute to this debate—it is something I have been active on, in another place, for quite some time. So I congratulate the Minister on bringing the Bill to the House.
Everything that a person sees on social media is there as a result of a decision taken by the platform that runs it—a point very powerfully made by the noble Baroness, Lady Kidron—and we have heard the tragic outworking of that for children in this debate. In an article in the Daily Telegraph on 13 December last year, it was reported that Meta knew it was prompting content harmful to teenagers—that was in an internal document leaked to CBS News. It suggested that Meta knew Instagram was pushing girls toward dangerous content.
I will not repeat the many valuable points that have been made on the safety of children—I support them all and will be supporting the amendments from the noble Baroness, Lady Kidron—but I want to make a number of further points, some of which are unfortunately born from personal experience, somewhat like those the noble Baroness, Lady Anderson, made earlier. Women and girls are disproportionately affected by abuse online. While I do acknowledge the user empowerment duties in Clause 12 and the triple lock, I am concerned that the Government’s proposals do not go far enough to protect women and girls. They put an onus on individual users to protects themselves, and while the individual can choose to opt out, it does not protect millions of others from being able to see the content.
As well as fearing for vulnerable women and girls who see such content, I am concerned at the chill factor to women and girls getting involved in public life. Many potential political candidates have said to me that they could not go through what I endure online, and so they do not. That is not good for democracy and not good for encouraging women to come forward. Therefore, I support the proposal to produce a code of practice on violence against women and girls modelled on Carnegie UK’s previous work on hate speech, and that it should be introduced as an amendment to Clause 36. I thank Carnegie UK for its work, over a long period of time, on these issues.
Additionally, it has to be said that some of the trolling against politicians and people who speak out on issues is undoubtedly orchestrated. I hope that that level of orchestration by vicious online mobs—the pile-on that the noble Baroness, Lady Kennedy, referred to—can be looked into as well. I hope the Minister will be cognisant of that point.
I am pleased that anonymity has been raised in the Chamber this evening. The argument goes that if everyone had to be identified and verified online, this would prevent whistleblowers and others, such as the victims of violence, coming forward and speaking out, so they need anonymity. I understand that argument but, given that the majority of abuse and criminal activity comes from anonymous accounts, surely there could be a way to protect genuine free speech users from those who overstep the line and threaten violence. I believe this could be achieved by platforms holding the ID of users behind a firewall that could be breached only if there were reasonable grounds to suspect that a criminal offence had been committed. There are those who use anonymity as a cloak of protection from criminal law. That needs to be challenged. I recognise that this is a cross-jurisdictional issue. However, it is one we need to tackle in this House.
Finally, I support and endorse the amendments being brought forward by the noble Lord, Lord Bethell, on those under 18 accessing pornography, particularly on robust age verification and a clear definition of pornographic content. I commend the work of the noble Lord and the coalition of NGOs that have been working with him. I thank them for their clear papers on this issue.
I support the principle of the Bill, but we will have a lot of work to do to strengthen it. I look forward to taking part in that.
Lord Russell of Liverpool (CB)
My Lords, I shall attempt to be brief but, based on previous experience with other speakers, that may be difficult. At least it gives the Whip on the Front Bench the chance to do some agile body moves.
I welcome this overdue Bill. I think the Minister got it slightly wrong when he congratulated us on waiting patiently for it. Judging by every single contribution around the entire House today, patience has been rather wanting. We want to get on with it. Like many government Bills, this has grown like Topsy. It has grown sideways, downwards and upwards. We need to beware of going around in circles. Above all, we need to expedite this and get it on the statute book.
I will focus on three key areas. Unsurprisingly, the first will be children. Here I declare that I am a governor of Coram, the oldest children’s charity in the United Kingdom. I will certainly support amendments such as those that the noble Lord, Lord Bethell, was talking about to try to bring in proper age verification.
Like many other noble Lords, on Monday I had the privilege of sitting in on the briefing that the noble Baroness, Lady Kidron, arranged. Ian Russell, the father of Molly Russell, was present, together with one of her sisters. What we saw was truly shocking. In some ways it was particularly shocking to me because, as Ian shared some of his daughter’s diary—what she had actually written in the days and weeks before she died—I had a sudden jolt of recognition. What 14 year-old Molly was saying was almost identical to the transcript of the suicide note that my father wrote to my mother, which I have in my desk at home. It has the same self-loathing, the feeling of worthlessness and the belief—completely wrong—that you would better serve those you love and live with by departing from this life. My father was a Second World War veteran who had won the Military Cross. He was suffering from manic depression and was clearly in a depressed state, but I cannot even begin to imagine the effect it must have had on Molly to have the deluge of filthy, negative, awful, harmful content that she was deluged in 24 hours a day. Perversely, the more she looked at it, the more excited the algorithm got and the more she received.
Particularly disgraceful is that it took no less than five years for the family and their lawyer finally to get some of the platforms Molly had been watching to disgorge and show some of the content she had been viewing. Five years is wholly and utterly unacceptable.
I take the point that the noble Baroness, Lady Bennett, made about young people being involved. It would be a good idea for Ofcom in some way, shape or form to have access to young people advising it. I support in principle the idea of a Joint Committee of Parliament. Again, I think it would be very helpful to have young people advising that.
The second area is supporting the wonderful noble Baroness, Lady Kidron. I declare quite openly that I am a Beebanite. I think there are quite a few of us in the House, and we will do everything we can to support the wonderful noble Baroness in everything she does.
Lastly, I come to the companies. I speak as somebody who was a head-hunter for 30 years. A large part of our business was in North America and—surprise, surprise—a lot of our most wonderful clients were some of these new tech giants. I know a lot because of that about what I would call the psychology of attraction and repulsion. I can tell the House that for many years, on going to a candidate and saying, “Would you like to join Facebook? Would you like to join one of these other companies?”, they would get pretty excited, because it is new technology, there is a lot of money, it is sexy, it is probably in California—what could be better?
We have to change the paradigm in which people look at potentially being employed by those companies. We have to create a frisson of fear and forethought that, if they do join forces with those companies, not only might their personal reputation suffer but the reputation of the company will suffer, shareholders will suffer, and those who provide services to that company, be they banks or lawyers, will also suffer. That is what we need to change. I will do everything I can, working with others who probably know rather more about this than I do, to concentrate on getting into the minds of those companies, which have huge resources, legal and financial, to resist whatever we do. We have to get inside their minds, find their weak points and go for the jugular.
Baroness Fraser of Craigmaddie (Con)
An offence in this Bill is an offence under the law of any part of the UK. There is a complex interplay between online safety, which is reserved, and devolved matters such as child and adult protection, education, justice and policing. I realise that the legislative differences between Scotland and England are quite topical. The offence, for example, protecting people with epilepsy does not cover Scotland as Scottish law already covers this behaviour, as is the case with the new cyberflashing offence.
However, the Bill does give Scottish Ministers the powers to amend regulations relating to priority offences in Part 2 of Schedule 6. I think government amendments in the other place mean that Scotland’s hate crime Act will not affect what people can and cannot say online in the rest of the UK, since it was passed by a devolved authority without the Government’s consent. But I believe a loophole remains whereby a future Government could simply approve that or any other law that has been passed in Holyrood, so Nicola Sturgeon could still become the content moderator for the whole of the UK. How should online providers therefore respond where there are differences in legislation across the four nations?
Access to data is clearly essential to ensure that the dynamic landscape of online harms is understood in the Scottish context. I am thinking of issues for rural and remote communities, how online platforms respond to sectarian content, or understanding the online experiences of people with drug or gambling addictions. Are there any differences across the UK? In terms of the transparency reports required by the Bill, will Ofcom be able to see that data in a nation-specific way?
Scotland has a thriving gaming industry, but it is unclear if there is industry awareness or involvement in this Bill and its implications for gaming platforms. I declare an interest as a board member of Creative Scotland. Will the Minister elaborate on what consultation there has been with gaming companies across the UK, including in Scotland?
The Bill rightly recognises that children are a vulnerable group, but has thought been given to the definition of a child throughout the United Kingdom, because in Scotland it varies. The 2014 Act includes all children up to the age of 18, but there are instances where someone aged 16 may legally be treated as an adult, and other circumstances where disabled or care-experienced children can be included in children’s services until their 26th birthday. As other noble Lords have mentioned, people with physical disabilities, learning disabilities or mental health issues, people in care, people with addictions and many more of all ages could be classed as being vulnerable online. What is the data on looking at online harms from purely an age perspective?
I note that there is an obligation to consult disabled people on decision-making, but should not all those within the CRPD definition of disabled be within the scope of the consultation requirements of the Bill? I would like to see the consultation duties under Clauses 36 and 69 strengthened. I also support calls from other noble Lords for requirements to be placed on providers to risk-assess their customer base, and to provide basic safety settings set to “on” by default.
However, I do welcome the Bill. It is, as others have said, a landmark piece of legislation. We will be far better off with it on the statute book than we are now, but I hope we can get some of the details right as it makes its way through your Lordships’ House.
Lord Hay of Ballyore (DUP)
My Lords, I very much welcome the Bill to the House, late as it may be. Like the noble Lord, Lord Storey, I know very little about the internet. I certainly know less about the sites we are talking about tonight, but I know that some of those sites are destroying our young people and poisoning their minds.
Age verification in terms of safety for children online was first debated in 2016. It is remarkable that a child who was eight years old when this proposal was first put forward will be an adult when the protections that they deserve will finally be in place. Many children will have been allowed to live through their formative years being exposed to untold harm online. A child who was eight in 2016 could be potentially in the grips of addiction by the time that age verification is made a legal requirement. This did not need to be the case. The harms suffered by many teenagers over the last seven or eight years could have been avoided. As the noble Lord, Lord Dodds, indicated, if the Government had only done what they were supposed to do and implemented age verification through Part 3 of the Digital Economy Act, children could have been protected.
According to research by DCMS, 80% of children aged six to 12 have viewed something harmful online, while over 50% of teenagers believe that they have accessed illegal content online. We cannot allow children to continue to be let down. We need to ensure that robust age verification is in place, but, more than that, we need to get it right. While the Bill is a step in the right direction, I think there is a lot more work to be done. This is an important Bill, but it is also important for this House to get it right.
First, we need to ensure that age verification on pornography sites will be brought in on this occasion. The Government cannot be allowed to sidestep this issue. A clear commencement clause needs to be placed into the Bill.
Secondly, we need to ensure that age verification is in place, not just for children accessing pornography; the age of those acting in content must also be verified. User-to-user pornography websites are simply a hotbed of illegal material and children surviving sexual abuse that need to be stopped by the Bill. If it includes clear age verification for those involved in the content, it will be a valuable tool in ensuring that children are not exploited online.
Thirdly, we need to move to protect women and girls from the effects of online pornography. Harmful pornography content promotes violence against women and girls. Evidence shows that excessive consumption of some legal pornography material can result in offenders viewing illegal child sexual abuse material. As increasingly extreme pornography becomes available on mainstream sites, the threshold of what is acceptable is very much lowered.
There is much to support in this legislation: it offers an opportunity to ensure that we can protect women and children. I look forward to working with others to ensure that we can deliver on these important protections.
Baroness Jenkin of Kennington (Con)
My Lords, I welcome the Bill’s commitment to protecting children online, yet, like many noble Lords, I fear that it is not yet robust enough. I am extremely concerned about the current unfettered access that children have to online pornography—pornography that is violent, misogynistic, racist and deeply disturbing in its content. For example, analysis of videos recommended to first-time users on three of the most popular porn sites, Pornhub, Xvideos, and xHamster, found that one in every eight titles described sexual activities that constitutes sexual violence as defined by the WHO. In most cases, that violence is perpetrated against women, and, in those videos, the women respond to that violence either with pleasure or neutrality. Incest was the most frequent form of sexual violence recommended to users. The second most common category recommended was that of physical aggression and sexual assault. This is not the dark web, or some far corner of the internet; these are mainstream porn sites, and they are currently accessed every month by 1.4 million UK children.
Research released yesterday by the Children’s Commissioner states that the average age at which children first see pornography is 13. Accessing this brutal and degrading content has a devastating impact on their psychological, emotional, neurological and sexual well-being. I recommend a YouTube video called “Raised on Porn”, if noble Lords want to see the damage it can do. Boys grow up to believe that girls must enjoy violent sex acts, and girls are growing up to believe that they must enjoy painful and humiliating acts, such as anal sex and strangulation. Anecdotal evidence shows that the 5,000% increase in the number of girls going through puberty now wishing to identify as male is at least partly driven by seeing this vile porn and coming to the conclusion that they would rather not be women if that is what sex involves. Yet the Online Safety Bill does little to address this. While it includes regulations on age verification, pornography will not be defined as a primary priority content until secondary legislation. Furthermore, according to the Ofcom implementation road map, multiple consultations and processes also need to be undertaken. As we have heard from other noble Lords, it may not be until 2027 or 2028 before we see robust age verification. We cannot wait that long.
Mainstream porn consists of acutely hardcore content, which, although it does not meet the narrow definition of illegal content, is none the less extremely harmful, especially when viewed by children. Depictions of sexual coercion, abuse and exploitation of vulnerable women and children, the incest porn I have already mentioned, humiliation, punishment, torture and pain, and child sexual abuse are commonplace. In the offline world, that content would be prohibited under the British Board of Film Classification guidelines, yet it remains online with no provisions in the Bill to address the staggering gap between the online and offline worlds. That is despite the Government recognising in their own research that
“there is substantial evidence of an association between the use of pornography and harmful sexual attitudes and behaviours towards women.”
Amending the Bill to protect women and children need not be a difficult task. As many noble Lords have mentioned, provisions were made to address those issues in the Digital Economy Act, although they were not implemented. We must not make those mistakes again and allow the Bill to pass without ensuring robust protections for children and society at large.
Baroness Parminter (LD)
My Lords, like other noble Lords, I welcome the Bill and the opportunity it presents, if it is strengthened, to address the many online harms which have been so eloquently outlined by colleagues around the Chamber. My starting point is ensuring that we do all we can to minimise the harms to those at risk of, or with, eating disorders. I declare an interest as the mother of a young adult daughter with anorexia, which is, as many noble Lords will know, the deadliest of any of the mental health diseases.
The evidence is clear of the harm that online content can do to people at risk of, or with, eating disorders and to exacerbate their conditions. Beat, the leading eating disorder charity, undertook research last year of 255 people with lived experience of eating disorders and their carers, which found that 91% of people with lived experience of eating disorders have encountered content which was harmful to their eating disorder condition. This includes sites that are innocuously called “pro-ana” and “pro-mia”, which encourage extreme starvation and extreme bulimic behaviours by people, and content for which there is no warning if you see an image or a video of body checking or of people being fed by naso-gastric tubes, as though that were something to be applauded.
As the noble Baroness, Lady Gohir, said, there are images which have been digitally enhanced to present pictures of people’s bodies that are completely unrealistic but are not labelled as digitally retouched—unlike in France, where the law states that those commercial images do have to be if digitally retouched. It was good that the celebrity influencer Kylie Jenner, who may not be known to all noble Lords in this place, was called out last week in the media for digitally editing pictures of her body on social media. That is the right thing to do and this Government should be doing more on that, including in the Bill.
It is not just that those images are out there. Other noble Lords have made the point that there are algorithms which constantly pump them at people. People with eating disorders feel bombarded by a constant stream of triggering images, content and advertising which feeds eating disorder behaviours and conditions. Obviously, you can recover from eating disorders; that is good news for those of us who know sufferers. But having talked to my daughter Rose about it, I know that what happens on TikTok is that your feed page—I think it is called a “for you” page—obviously is based on the content you have been looking at over the last period. It will suck you back down into an eating disorder, just when those people with mental disorders are trying to get out. For the reasons given so well by other noble Members, algorithms need to be touched on.
I fully support what the noble Baroness, Lady Hollins, said about the insufficiency of the protections for adults. I cannot get my daughter to put food in her mouth to nourish her; how on earth am I going to get her or other vulnerable people to opt out in a different way from the social media content which is harming them?
It was excellent that Vicky Ford promoted this issue in the other place, as the noble Baroness, Lady Morgan, mentioned. She had some suggestions about ensuring that eating disorders were treated on a par and that the obligations on social media companies applied regarding those disorders. I support that entirely and hope that I can work with other Members from around the House to ensure that we can shut that loophole down, so that people with eating disorders, and their carers, are given another tool in the fight against these vicious and deadly diseases.
Viscount Camrose (Con)
My Lords, no Bill that we can devise now can ever offer a complete solution to every online risk while balancing all the competing priorities. But I welcome this Bill as a critical early step down a hard road, because it sets up an adaptive structure to respond to emerging technologies and needs. We heard the phrase “living legislation earlier”, and that expresses it very well.
I would like to offer three examples of what some of our future challenges in this space are going to be. The first is AI: given the sheer quantity of content and genuine difficulty of some decisions that have to be made about that content, no platform can make the delicate judgments at the huge speed and scale we are looking for without automated algorithmic solutions. That inevitably comes to mean AI overseeing our activity and, given the vast behaviour-modification capabilities of the large platforms, AI coming to modify our collective behaviour in ways we are unlikely to understand or control. However benignly intended, the results of such developments are far-reaching and unknowable.
Secondly, there is digital identity. We have heard some brilliant contributions about this and I think we can all agree that a cornerstone of dangerous behaviour online is anonymity. Age-verification checks are easily circumvented today and I wholly support, of course, the analysis and proposals of my noble friend Lord Bethell in this area. There is a broad principle here: that online behaviour should be guided by the same constraints as behaviour in real life. In my view, the only real way to bring that about is by requiring a digital identity for everyone. That is not to say that everybody has to identify themselves at all times, but they should be identifiable if the need arises and should criminal or dangerous behaviour take place.
Thirdly, and lastly, there is the issue of enforcement, particularly in Web 3.0. We can foresee the enforcement of compliance by well-known platforms led and owned by household names, but we are increasingly going to see more and more online services provided by much larger numbers of decentralised platforms, run by so- called DAOs—decentralised autonomous organisations. These are organisations without boards and managers; they do not necessarily have employees or even bank accounts. They are going to require very different levers of enforcement. Put simply, you cannot easily apply criminal sanctions with neither owners to arrest nor real assets to seize. I am pleased that the Minister and his team have already started thinking about these organisations, as discussed at the briefing that he kindly arranged last week.
Of course, worrying about these future problems in no way diminishes the very real challenges of the present, which have been covered so movingly in our debate today. However, none of the risks to online safety is going to get any easier to manage. The growth of malicious activity and extremism will be multiplied by the greater emotional intensity of the immersive experience that will be enabled by some of the virtual reality technologies that we are now starting to see come on to the market. With this Bill, we are making a bold and important start, which I welcome, but I fear that the harder part of our journey lies ahead of us.
Lord Londesborough (CB)
My Lords, as a former journalist and online publisher, I welcome this Bill. It is imperfect, of course, but it is much needed, as can be seen by the deeply disturbing data around online media and its impact on the young and vulnerable.
I believe that the free-for-all nature of the digital age requires us to build far more rigorous layers of protection and regulation than ever before. I say this having benefited myself hugely as an entrepreneur both from freedom of expression and information and from the extraordinary reach of online media. However, in this digital era of business to consumer as well as consumer to consumer—whether via social media or user-generated content—we cannot let freedom of expression trump all else. Users need protection from not just unscrupulous organisations but each other.
This is about addressing damaging behaviour and unhealthy lifestyles that the digital world has engendered, especially among the young—and not just in the well-documented areas of online hate, abuse and bullying but around increasing obesity, falling levels of exercise, declining levels of academic performance and, some argue, lower economic productivity. The need for teaching media literacy could not be any more clear.
As the noble Baroness, Lady Benjamin, pointed out, children come across pornography online from as young as the age of seven and more than 50% of 11 to 13 year-olds in the UK have accessed pornography. Even more staggering to me is that, by the age of 18, 79% of young people have been exposed to violent porn. Such exposure has contributed to surging increases in mental ill-health, child abuse, bullying, violence and sexual assault. The evidence is overwhelming—just read the research from the NSPCC, Barnardo’s, Parent Zone and many others.
This issue is so serious and widespread that, like the noble Lord, Lord Bethell, the noble Baroness, Lady Ritchie, and many others, I believe that, although it is well intentioned, the tightening regulation and guidance in Part 5 of the Bill do not go far enough. We must grasp the nettle and insist that all pornography sites, without exception, adopt robust, and ideally standardised, age-verification technology, as we have for online gambling. Given the nature of many of these sites, can we really trust them to abide by a new code of practice and expect Ofcom to enforce it effectively?
I accept that social media is a much more complex beast, but here too I believe the time has come for age verification. TikTok claims to have a minimum age requirement of 13, yet Ofcom reports that 42% of our eight to 12 year-olds are on that platform. Much of the content is unsuitable for children, but TikTok monetises traffic whatever your age. Elon Musk take note: more than 40% of young people in this country have accessed porn via Twitter.
The majority of our children and grandchildren are being exposed to a barrage of disturbing content at the most formative stages of their lives. They need protection. Yes, the implementation of mandatory AV will depress audiences and revenues. It will raise privacy issues and there will be loopholes. But in my view the social benefits far outweigh the costs.
Lord Sarfraz (Con)
My Lords, I declare an interest as an investor, adviser and entrepreneur in the technology industry, as set out in the register. I welcome the Bill, although it is big, complicated and difficult to understand. However, there is a real risk that we are regulating the past instead of thinking about the imminent threats of the future. I will focus on two very narrow issues.
First, as immersive environments—metaverses—become more and more popular, we have the issue of actions in these environments. This is not content, photos, videos and texts but actions. Anyone can buy a haptic glove and touch inappropriately a child in a metaverse. The child would not even know that he or she was being abused. In fact, you can buy a vest with 30 different sensors so that it feels real.
There is a whole community around age play, where adults play the role of children. This is happening right now. There are virtual reality brothels with child avatars. What if that avatar has the likeness of a real child? How much of a likeness is a likeness? What if it has the name of a real child?
This industry, particularly the immersive industry, needs guidance, and it has said that it does. I hope the Minister can elaborate on the guidance that will be provided to it. On this note, I express my support for my noble friend Lord Bethell’s amendment on mandatory age verification. The technology exists and it works. There is no reason why it should not be implemented.
Secondly, the Bill defines user-generated content very clearly, but it is completely silent on machine-generated content. What if an AI chatbot was to groom or abuse a child? Who is responsible: the owner of the dataset on which that AI has been trained or the server on which that data has been transmitted? I thought: why not ask a chatbot? I did. It said, “Yes, an AI bot can abuse a child but liability for abuse by AI bots is a complex issue.” So AI bots are already trying to get out of liability for future abuse. That is what the machines are telling us today.
There are a lot of great things in the Bill and I support it very much, but we cannot always play catch-up with technology. I hope the Minister will tell us how this guidance will be provided as it relates to emerging technologies.
Baroness Uddin (Non-Afl)
My Lords, what a privilege it is to follow so many distinguished noble Lords, and in particular the speech of my noble friend Lord Sarfraz.
Our deliberation is ever more imperative, given the latest heightened and explicit concerns stated in the Children’s Commissioner’s report on young people and pornography. As a social worker, I have witnessed first hand the devastating aftermath and the lifelong impact of child sexual abuse and violence, long before children possessed the internet in their hands and pockets, and big tech companies used algorithms for content, evidently enticing children towards dangerous cycles of harm.
The backdrop of this Bill is the aim to make Britain a global leader for digital business while ensuring that it is the safest place online, and to navigate the balance between protecting consumers and stimulating innovation in a fast-moving digital world that can preserve safety and enhance freedom of speech without compromising one or the other. At a time of deepening and detrimental public services cuts, achieving best outcomes for the legislation will require considerable financial resources, impactful monitoring and skilled oversight. The Bill will address many of the anomalies and flaws that plague the current system and stop its preventing harms, as authoritatively detailed by my noble friend Lady Kidron. I salute her and acknowledge the presence of Mr Ian Russell. I too was horrified on hearing the briefing.
I welcome this opportunity to ensure that platforms are held accountable for their interactions with users, even chatbots. I also value innovations, emerging technologies and the right to freedom of expression, but, cognisant of the evident danger presented by many platforms, government cannot be the protector of profits to the detriment of young minds and lives. Big tech platforms have resisted remedies, including identity assurance and age verification. Therefore, I will definitely be supporting my noble friend Lady Kidron and the noble Lord, Lord Bethell—unless Government concede beforehand. I cannot support preserving anonymity as a shield of protection for any subscribers, content-makers and users. If we end anonymity, it will be a huge leap in monitoring harmful content and traceability.
As co-chair of the APPG on the metaverse and web 3.0, working with stakeholders in this space, I recognise the power of innovative technology as a force for good. At the same time, as a social worker, I want to scream out loud its threat. If we do not address the gravity of harmful content that normalises children viewing extreme material on violent pornography, diet, sexual exploitation, self-harm and revenge porn that shapes their young minds, we will have abdicated our role as protector of standards. Statistics from the NSPCC, Barnardo’s, Big Brother Watch and the Internet Watch Foundation, on unprecedented and worsening levels of online access to material on grooming, sexual abuse, self-harm, bulimia and millions of unfiltered pieces of content, make horrific reading.
Many NGOs are fearful that Ofcom is not fit to address these complex matters without incorporating children’s views into regulatory decision-making and, more importantly, to counterbalance the big tech lobbyists, their infinite resources and proficiency at skewing available data on child safety. I agree that Ofcom needs strengthening and must work with safeguarding experts to uphold standards, but it must also identify and respond to the evolving nature of harms across multidimensional interconnected platforms and a plethora of small, less well-moderated operators to ensure that children’s safety and voices are not drowned out by large tech companies whose business models are not predicated on protection and thorough risk assessment.
The APPG on the metaverse and web 3.0 wants to see children’s views prioritised, and we intend to incorporate them into our reports and programmes. Our partners are also considering the balance between safeguarding and the opportunity for increasing diversity within social media companies, recognising the historical disfranchisement and exclusion prevalent within the first wave of the social media revolution platforms. There is promise on the horizon from the newcomers —the smaller, emerging generation of conscientious organisations and companies that are proactive in engaging local communities, and inclusive in their approach. Widening participation will require institutions to consider workforce training in this sector.
Finally, the online safety Bill may not prevent all children accessing harmful content as this new virtual space becomes more sophisticated within the infinite metaverse and artificial intelligence space. We will need to respond smartly to this rapidly shifting national and international digital environment of emerging technology, placing the safety of children at the forefront of our consideration.
Baroness Bull (CB)
My Lords, no one who has heard Molly Russell’s story can be in any doubt about the need to better protect young people online, and I join others in paying tribute to her family for their tireless campaign.
As we have heard, vulnerability online does not evaporate on turning 18. Some adults will be at risk because mental illness, disability, autism, learning disabilities or even age leaves them unable to protect themselves from harm. Others will be vulnerable only at certain times, or in relation to specific issues. The “legal but harmful” provisions were not perfect, but stripping out adult safety duties—when, as the Minister himself said, three-quarters of adults are fearful of going online—is a backward step.
With category 1 services no longer required to assess risks to adults, it is hard to agree when the Minister says this will be
“a regulatory regime which has safety at its heart”.
Without risk assessments, how will platforms work out what they need to include in their terms and conditions? How will users make informed choices? How will the effectiveness of user empowerment tools be measured? Without the real-time information that risk assessments provide, how will the regulator stay on top of new risks, and advise the Secretary of State accordingly?
Instead, the Bill sets out duties for category 1 services to write and enforce their own terms and conditions—they will be “author, judge and jury”, to quote my noble friend Lady Kidron—and to provide tools that empower adult users to increase control over types of content listed at Clause 12. Harms arise and spread quickly online, yet this list is static, and it has significant gaps already. Harmful or false health content is missing, as are harms relating to body image, despite evidence linking body shaming to eating disorders, self-harm and suicide ideation. Smaller sites that target specific vulnerabilities, including suicide forums, would fall outside scope of these duties.
Describing this list as “content over which users may wish to increase control” is euphemism at its best. This is not content some might consider in poor taste, or a bit off-colour. This is content encouraging or promoting suicide, self-harm and eating disorders. It is content that is abusive or incites hate on the basis of race, ethnicity, religion, disability, sex, gender, sexual orientation and misogyny, which evidence connects directly to violence against women and girls.
And yet tools to hide this content will be off by default, meaning that people at the point of crisis, those seeking advice on self-harm or starvation, will need to find and activate those settings when they may well be in an affected mental state that leaves them unable to self-protect. The complexities of addiction and eating disorders disempower choice, undermining the very basis on which Clause 12 is built.
We heard it said today that all adults, given the tools, are capable of protecting themselves from online abuse and harm. This is just not true. Of course, many adults are fortunate to be able to do so, but as my noble and expert friends Lady Hollins and Lady Finlay explained, there are many adults who, for reasons of vulnerability or capacity, cannot do so. Requiring the tools to be on by default would protect adults at risk and cause no hardship whatever to those who are not: a rational adult will be as capable of finding the off button as the one that turns them on.
Last week, Ministers defended the current approach on the basis that failing to give all users equal access to all material constitutes a chilling effect on freedom of expression. It is surely more chilling that this Bill introduces a regime in which content promoting suicide, self-harm, or racist and misogynistic abuse is deemed acceptable, and is openly available, harming some but influencing many, as long as the platform in question gives users an option to turn it off. This cannot be right, and I very much hope Ministers will go back and reconsider.
When the Government committed to making the UK the safest place in the world to be online, I find it hard to believe that this is the environment that they had in mind.
Lord Moylan (Con)
My Lords, it is hard to think of something new to say at the end of such a long debate, but I am going to try. I am helped by the fact that I find myself, very unusually, somewhat out of harmony with the temper of the debate in your Lordships’ House over the course of this afternoon and evening. I rather felt at some points that I had wandered into a conference of medieval clerics trying to work out what measures to take to mitigate the harmful effects of the invention of moveable type.
In fact, it probably does require an almost religious level of faith to believe that the measures we are discussing are actually going to work, given what my noble friends Lord Camrose and Lord Sarfraz have said about the agility of the cyber world and the avidity of its users for content. Now, we all want to protect children, and if what had come forward had been a Bill which made it a criminal offence to display or allow to be displayed to children specified harmful content—with condign punishment—we would all, I am sure, have rallied around that and rejoiced. That is how we would have dealt with this 50 years ago. But instead we have this; this is not a short Bill doing that.
Let me make three brief points about the Bill in the time we have available. The first is a general one about public administration. We seem to be wedded to the notion that the way in which we should be running large parts of the life of the country is through regulators rather than law, and that the independence of those regulators must be sacrosanct. In a different part of your Lordships’ House, there has been discussion in the last few days of the Financial Services and Markets Bill in Committee. There, of course, we have been discussing the systemic failures of regulators—that is, the box ticking, the legalism, the regulatory capture and the emergence of the interests of the regulator and how they motivate them. None the less, we carry on giving more and more powers. Ofcom is going to be one of the largest regulators and one of the most important in our lives, and it is going to be wholly unaccountable. We are not going to be happy about that.
The second point I want to make is that the Bill represents a serious threat to freedom of speech. This is not contentious; the Front Bench admits it. The Minister says that it is going to strike the right balance. I have seen very little evidence in the Bill, or indeed in the course of the day’s debate, that that balance is going to be struck at all, let alone in what I might consider the right place—and what I might consider the right place might not be what others consider it to be. These are highly contentious issues; we will be hiving them off to an unaccountable regulator, in effect, at the end.
The third point that I want to make, because I think that I am possibly going to come in under my four minutes, is that I did vote Conservative at the last general election; I always have. But that does not mean that I subscribe to every jot and tittle of the manifesto; in particular, I do not think that I ever signed up to live in a country that was the safest place in the world to be on the internet. If I had, I would have moved to China already, where nothing is ever out of place on the internet. That is all I have to say, and I shall be supporting amendments that move in the general direction that I have indicated.
Lord Weir of Ballyholme (DUP)
My Lords, I also welcome this belated Bill, particularly its protections for children. All of us, I think, very sadly over the last number of years, have witnessed the outcome of inquiries into a litany of horrific crimes against children, through decades of historic institutional abuse. That abuse, sadly, was facilitated by inaction. That might have been motivated by ignorance and complacency rather than by being complicit, but nevertheless society as a whole let down those generations of children. We must make sure that history does not repeat itself.
I am the first to admit that the internet can be a great tool for value. We saw during the recent pandemic, for example, the contribution that the internet was able to make to education, in a way that would have been inconceivable a decade ago. But there is also no doubt that there is a very negative side to the internet, through body-shaming, trolling, misogyny, anti-Semitism, racism and incitement to violence—among many other things—and most particularly, the damage that occurs to our young people and the tragic loss of life in cases such as Molly Russell and others. That is why I particularly support the amendments that will be brought forward by the noble Baroness, Lady Kidron, and by the noble Lord, Lord Bethell.
We know that early exposure to pornography, particularly violent pornography, leads to degrading and destructive attitudes and actions, especially towards women, as has been highlighted by the Government themselves in their reports on violence against women and girls. Therefore, we must take definitive action to be able to counteract that.
As the noble Lord, Lord Bethell, has indicated, there are three particular areas on which we have to intervene when it comes to amendments. First, we need robust age verification, both for users and—as has been highlighted by a previous speaker—for those involved in the porn industry itself and are producing it. We know that the porn industry, and many within it, are not exactly protective of those whom they employ, and we must make sure that everything is done to protect everyone who is underage.
Secondly, I believe that, in regulations, we need to have what is clear and consistent: consistent in a single definition of pornography; consistent that what is illegal offline is mirrored by what is illegal online; and consistent in ensuring that high standards apply across all platforms. I join with a number of speakers today who have been highly critical of large, conglomerate tech companies and the approach that they take, but that should not blind us to the fact that some of the vilest imagery, some of the vilest abuse and some of the vilest actions happen on small platforms as well. We must make sure that we hold all platforms equally to a high standard.
Thirdly, we must ensure, particularly in terms of age verification, that we see swift and early implementation. I agree that, in terms of the detail of regulation, Ofcom is best placed to be able to deliver that. However, we also know that the full package of regulations that Ofcom will produce might be three, four or five years away. We cannot allow that level of destruction to take place in the meantime. That means, particularly in regard to age verification, that we need to see that early and swift intervention.
In conclusion, I think we have a good Bill, but it could be a better Bill. Collectively, we must ensure that it is the best Bill that is possible, so that we do not face a situation in which, for families and for children—either of the current generation or of future ones—we let them down in the way that the previous generations have been let down.
Lord Strathcarron (Con)
My Lords, it has been well observed that the social media companies and YouTube are now the public square—only, of course, they are not public at all but privately owned companies whose primary concern is to earn profits for their shareholders in the normal way. Against this, the reality is that we have effectively outsourced our censorship to Silicon Valley AI bots, and, faced with the prospect of enormous fines for breaching the new laws, these private companies are going to programme the AI bots on the side of caution. The bots, after all, have no way of knowing the legal cut-off point of mature teenagers and immature adults, and, of course, the censoring bot has no sense of irony or satire or parody or context.
The threat to free speech will therefore now come from two sources. First, as we have seen from the Twitter files, from Big Brother Watch’s Ministry of Truth report and from Matt Hancock’s diaries, Governments covertly lean on the platforms to suppress dissent from the official line. Secondly, the threat will come from these private companies instructing the bots not to go anywhere near anything that might upset the Governments. In this sense, both have crossed the line between attacking disinformation and attacking dissent, and the ability to express dissent is at the core of freedom of speech. We therefore now have the reality of big government and big tech working together to suppress freedom of expression.
I am looking forward to initiating or supporting any amendments that will check the power of government or big tech to shut down legitimate questioning voices, which, from the Great Barrington declaration to the Wuhan lab-leak theory to the ineffectiveness of masks to the collateral damage caused by the lockdowns, over and over again have often proved to be closer to the truth than the official government line at the time.
I would like to use the few moments left to support resistance to restricting end-to-end encryption, to support the initiatives of the noble Lord, Lord Bethell, on age verification, and to follow the lead of the noble Baroness, Lady Kidron, on child safety initiatives.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for his detailed introduction and his considerable engagement on the Bill to date. This has been a comprehensive, heartfelt and moving debate, with a great deal of cross-party agreement about how we must regulate social media going forward. With 66 speakers, however, I sadly will not be able to mention many significant contributors by name.
It has been a long and winding road to get to this point, as noble Lords have pointed out. As the Minister pointed out, along with a number of other noble Lords today, I sat on the Joint Committee which reported as far back as December 2021. I share the disappointment of many that we are not further along with the Bill. It is still a huge matter of regret that the Government chose not to implement Part 3 of the DEA in 2019. Not only, as mentioned by many, have we had a cavalcade of five Culture Secretaries, we have diverged a long way from the 2019 White Paper with its concept of the overarching duty of care. I share the regret that the Government have chosen to inflict last-minute radical surgery on the Bill to satisfy the, in my view, unjustified concerns of a very small number in their own party.
Ian Russell—I pay tribute to him, like other noble Lords—and the Samaritans are right that this is a major watering down of the Bill. Mr Russell showed us just this week how Molly had received thousands and thousands of posts, driven at her by the tech firms’ algorithms, which were harmful but would still be classed as legal. The noble Lord, Lord Russell, graphically described some of that material. As he said, if the regulator does not have powers around that content, there will be more tragedies like Molly’s.
The case for proper regulation of harms on social media was made eloquently to us in the Joint Committee by Ian and by witnesses such Edleen John of the FA and Frances Haugen, the Facebook whistleblower. The introduction to our report makes it clear that the key issue is the business model of the platforms, as described by the noble Lords, Lord Knight and Lord Mitchell, and the behaviour of their algorithms, which personalise and can amplify harmful content. A long line of reports by Select Committees and all-party groups have rightly concluded that regulation is absolutely necessary given the failure of the platforms even today to address these systemic issues. I am afraid I do not agree with the noble Baroness, Lady Bennett; being a digital native is absolutely no protection—if indeed there is such a thing as a digital native.
We will be examining the Bill and amendments proposed to it in a cross-party spirit of constructive criticism on these Benches. I hope the Government will respond likewise. The tests we will apply include: effective protections for children and vulnerable adults; transparency of systems and power for Ofcom to get to grips with the algorithms underlying them; that regulation is practical and privacy protecting; that online behaviour is treated on all fours with offline; and that there is a limitation of powers of the Secretary of State. We recognise the theme which has come through very strongly today: the importance of media literacy.
Given that there is, as a result of the changes to the Bill, increased emphasis on illegal content, we welcome the new offences, recommended in the main by the Law Commission, such as hate and communication crimes. We welcome Zach’s law, against sending flashing images or “epilepsy trolling”, as it is called, campaigned for by the Epilepsy Society, which is now in Clause 164 of the Bill. We welcome too the proposal to make an offence of encouraging self-harm. I hope that more is to come along the lines requested by my noble friend Lady Parminter.
There are many other forms of behaviour which are not and will not be illegal, and which may, according to terms of service, be entirely legal, but are in fact harmful. The terms of service of a platform acquire great importance as a result of these changes. Without “legal but harmful” regulation, platforms’ terms of service may not reflect the risks to adults on that service, and I was delighted to hear what the noble Baroness, Lady Stowell, had to say on this. That is why there must be a duty on platforms to undertake and publish risk and impact assessments on the outcomes of their terms of service and the use of their user empowerment tools, so that Ofcom can clearly evaluate the impact of their design and insist on changes or adherence to terms of service, issue revised codes or argue for more powers as necessary, for all the reasons set out by the noble Baroness, Lady Gohir, and my noble friend Lady Parminter.
The provisions around user empowerment tools have now become of the utmost importance as a result of these changes. However, as Carnegie, the Antisemitism Policy Trust, and many noble Lords today have said, these should be on by default to protect those suffering from poor mental health or who might lack faculty to turn them on.
Time is short today, so I can give only a snapshot of where else we on these Benches—and those on others, I hope—will be focusing in Committee. The current wording around “content of democratic importance” and “journalistic content” creates a lack of clarity for moderation processes. As recommended by the Joint Committee, these definitions should be replaced with a single statutory requirement to protect content where there are reasonable grounds to believe it will be in the public interest, as supported by the Equality and Human Rights Commission.
There has been a considerable amount of focus on children today, and there are a number of amendments that have clearly gained a huge amount of support around the House, and from the Children’s Charities’ Coalition on Internet Safety. They were so well articulated by the noble Baroness, Lady Kidron. I will not adumbrate them, but they include that children’s harms should be specified in the Bill, that we should include reference to the UN convention, and that there should be provisions to prevent online grooming. Particularly in the light of what we heard this week, we absolutely support those campaigning to ensure that the Bill provides for coroners to have access to children’s social media accounts after their deaths. We want to see Minister Scully’s promise to look at this translate into a firm government amendment.
We also need to expressly future-proof the Bill. It is not at all clear whether the Bill will be adequate to regulate and keep safe children in the metaverse. One has only to read the recent Institution of Engineering and Technology report, Safeguarding the Metaverse, and the report of the online CSA covert intelligence team, to realise that it is a real problem. We really need to make sure that we get the Bill right from this point of view.
As far as pornography is concerned, if we needed any more convincing of the issues surrounding children’s access to pornography, the recent research by the Children’s Commissioner, mentioned by several noble Lords, is the absolute clincher. It underlines the importance of the concerns of the coalition of charities, the noble Lord, Lord Bethell, and many other speakers today, who believe that the Online Safety Bill does not go far enough to prevent children accessing harmful pornographic content. We look forward to debating those amendments when they are put forward by the noble Lord, Lord Bethell.
We need to move swiftly on Part 5 in particular. The call to have a clear time limit to bring it in within six months of the Bill becoming law is an absolutely reasonable and essential demand.
We need to enshrine age-assurance principles in the Bill. The Minister is very well aware of issues relating to the Secretary of State’s powers. They have been mentioned by a number of noble Lords, and we need to get them right. Some can be mitigated by further and better parliamentary scrutiny, but many should simply be omitted from the Bill.
As has been mentioned by a number of noble Lords, there is huge regret around media literacy. We need to ensure that there is a whole-of-government approach to media literacy, with specific objectives set for not only Ofcom but the Government itself. I am sure that the noble Lord, Lord Stevenson, will be talking about an independent ombudsman.
End-to-end encryption has also come up; of course, that needs protecting. Clause 110 on the requirement by Ofcom to use accredited technology could lead to a requirement for continual surveillance. We need to correct that as well.
There is a lot in the Bill. We need to debate and tackle the issue of misinformation in due course, but this may not be the Bill for it. There are issues around what we know about the solutions to misinformation and disinformation and the operation of algorithmic amplification.
The code for violence against women and girls has been mentioned. I look forward to debating that and making sure that Ofcom has the power and the duty to produce a code which will protect women and girls against that kind of abuse online. We will no doubt consider criminal sanctions against senior managers as well. A Joint Committee, modelled on the Joint Committee on Human Rights, to ensure that the Bill is future-proofed along the lines that the noble Lords, Lord Inglewood and Lord Balfe, talked about is highly desirable.
The Minister was very clear in his opening remarks about what amendments he intends to table in Committee. I hope that he has others under consideration and that he will be in listening mode with regard to the changes that the House has said it wants to see today. Subject to getting the Bill in the right shape, these Benches are very keen to see early implementation of its provisions. I hope that the Ofcom implementation road map will be revised, and that the Minister can say something about that. It is clearly the desire of noble Lords all around the House to improve the Bill, but we also want to see it safely through the House so that the long-delayed implementation can start.
This Bill is almost certainly not going to be the last word on the subject, as the noble Baroness, Lady Merron, very clearly said at the beginning of this debate, but it is a vital start. I am glad to say that today we have started in a very effective way.
Lord Stevenson of Balmacara (Lab)
My Lords, I start by apologising for having absented myself during part of the debate. I promise those noble Lords whose speeches I missed that I will read them very carefully. The reason is slightly self-serving: I decided to tear up my speech, for two reasons. First, I suddenly realised that the noble Lord, Lord Clement-Jones, being the brilliant lawyer he has been and still is, would probably say everything I was going to say but better—and indeed that has proved to be the case. There is not much point in me boring noble Lords by trying to repeat what he said. The list of items I had is almost exactly identical. I did not give it to him, but we had an exchange of views before the debate, so I was not surprised by that. I will come on to that point.
Secondly, I want to deal with the noble Lord, Lord Hastings, who challenged me in my very junior position as an acting Front-Bencher to commit the Labour Government to a future policy on media education. I am sure the noble Lord opposite will not out-trump me on this one, but I cannot do that. I will, however, get back at him, because I will say that the BBC has never been in better shape than when he was the PR person operating at the front of it. In fact, I do not think it has recovered since he left, so there you are. I think that what he said was quite important.
One of the big, strange things about media education—in fact, this is true of most education policy—is that it is very hard to get changes in the education system. That is partly because it is now so disparate and uncoordinated in many ways, through policy, that you cannot say that there is a core curriculum, or that it will include media education and that that will be examined on the following days, as they might do in other countries such as France. The Government should think very hard about how they might take forward the idea from the noble Lord, Lord Hastings. My answer is that you have to examine media education or assess it in some way, otherwise schools will not care about it. This is really a question for Ofsted, not Ofcom. In a sense, the Government have got it right there, but if we could put some pressure on Ofsted to include in its assessment of all schools—indeed, all education at that level—some form of ability to assess whether media education is meeting the needs of Ofcom or the needs of society, we might make some progress. Let us work on that together.
I declare an interest as a member of the Joint Committee on the pre-legislative scrutiny of the Bill. That was a wonderful experience and has been mentioned by others. I am also a former member of the Communications and Digital Committee. I should also drop in that I am veteran of the Digital Economy Act—much mentioned today—so I have been there, got the scars and am aware of the issues very clearly.
The second reason why I wanted to tear up my speech was that it seemed to me that, as the noble Lord, Lord Clement-Jones, said, there has been an extraordinary amount of agreement on the issues facing the House in trying to get this Bill right. They are not fuelled in any sense by party-political points, because we have no political issue in this, and I do not think the Liberal Democrats or Cross Benches have. We are talking about an issue that we want to do together. I will come back at the end with a proposal, which I think is slightly novel, for how we might take advantage of that. I do not think we want to get ourselves into a situation of antagonism—firing amendments across the Dispatch Box during Committee —because we are broadly agreed about where we want to go. Yes, there are difference of detail, but we have to think about it. I want to come back to that as an issue—and that was what I was doing while I was away.
I want to go back to the introduction to the Joint Committee report, as I would have done in my original speech, because it says so much about what we have been doing in the last two or three years. Self-regulation of online services had failed. While the online world has revolutionised our lives and created many benefits, underlying systems designed to service business models based on data harvesting and micro-targeted advertising shape the way we experience it. Algorithms, invisible to the public, decide what we see, hear and experience. For some service providers, this means valuing the engagement of users at all cost, regardless of what holds their attention. This can result in amplifying the false over the true, the extreme over the considered, and the harmful over the benign. The human cost can be counted in mass murders in Myanmar, intensive care beds full of unvaccinated Covid-19 patients, insurrection at the US Capitol, and teenagers sent down rabbit holes of content promoting self-harm, eating disorders and suicide. As we have learned, we do not just mean teenagers—there are others involved in that. As the noble Baroness, Lady Kidron, and others have reminded us, too many children have suffered from infractions of this type. I pay tribute, again, to Ian Russell—who is still with us—for his campaign and for his extraordinary willingness to share his story. We all owe him a great debt.
These points, already made in other speeches, are important; they are at the heart of what this is about. This is about finding a way of organising what we all value, want and need, in a way that will allow us to get the benefits from it without paying the price that we already are. This debate, in the best traditions of this House, has brought a lot of views to bear on this, but, as I have tried to explain, it seems to me that a lot of them are very similar. There are differences and one or two outliers, but the points made broadly point in one direction: that the Bill is nearly there. It needs a little work and a bit of polishing and it will get over the finishing line.
The Bill needs to be in its best shape—there is no doubt about that—but we could identify alongside it the other issues that we will need to return to in future. We should not worry about that; I think we have all agreed that there will be other opportunities to do so. As we were reminded by the noble Lord, Lord Black, and others, there are other elements that also need to go ahead, and we should be thinking harder about them—the DMU and the need for competition in this whole area. As I said, the noble Lord, Lord Clement-Jones, gave a very good summary of all the issues; I will not run through them again because it was exactly what I would have said myself.
We are in a very strange situation. There is no political divide and we all want the same things: we want the Bill improved and we want to see it pass as soon as possible. I am assuming that the Government will work with us on that—that is an assumption, because that is not the normal way it goes. I am assuming also that they recognise that there are one or two quite sensible compromises to be made—again, that is not a given, but I am getting a few nods that suggest that it might be the case. From this side, I cannot think of any issue that I have heard today, or in any of the discussions we have had recently about this Bill—and they have gone on for a number of years—that we would push to ping-pong. That is very unusual.
I suggest that we try to work together on getting the best Bill we can—while, of course, going through the various stages, because these things all eventually have to go back into the Bill—avoiding the war of attrition approach that so often bedevils the work we do here. Such an approach is important when there are big political issues at stake, but there are not, so let us use that and try to move forward. I would like to get together quite quickly and identify the policies we can move on together, and to take a route forward which will minimise the votes and the dissent and yet deliver the Bill, let us hope, by Report. That is a big ask; I do not think it has been done, except during wartime. But we are at war—at war with these people who are trying to run our lives, and we should try to get together and defeat them. It is unusual, but we live in unusual times. I look forward to hearing from the Minister.
Lord Parkinson of Whitley Bay (Con)
My Lords, I am grateful to the very many noble Lords who have spoken this afternoon and this evening. They have spoken with passion—we heard that in the voices of so many—about their own experiences, the experiences of their families and the experiences of far too many of our fellow subjects, who have harrowing examples of the need for this Bill. But noble Lords have also spoken with cool-headed precision and forensic care about the aspects of the Bill that demand our careful scrutiny. Both hearts and heads are needed to make this Bill worth the wait.
I am very grateful for the strong consensus that has come through in noble Lords’ speeches on the need to make this Bill law and to do so quickly, and therefore to do our work of scrutiny diligently and speedily. I am grateful for the very generous and public-spirited offer the noble Lord, Lord Stevenson, has just issued. I, too, would like to make this not a party-political matter; it is not and has not been in the speeches we have heard today. The work of your Lordships’ House is to consider these matters in detail and without party politics intruding, and it would be very good if we could proceed on the basis of collaboration, co-operation and, on occasion, compromise.
In that spirit, I should say at the outset that I share the challenge faced by the noble Lords, Lord Clement-Jones and Lord Stevenson. Given that so many speakers have chosen to contribute, I will not be able to cover or acknowledge everyone who has spoken. I shall undoubtedly have to write on many of the issues to provide the technical detail that the matters they have raised deserve. It is my intention to write to noble Lords and invite them to join a series of meetings to look in depth at some of the themes and areas between now and Committee, so that as a group we can have well-informed discussions in Committee. I shall write with details suggesting some of those themes, and if noble Lords feel that I have missed any, or particular areas they would like to continue to talk about, please let me know and I will be happy to facilitate those.
I want to touch on a few of the issues raised today. I shall not repeat some of the points I made in my opening speech, given the hour. Many noble Lords raised the very troubling issue of children accessing pornography online, and I want to talk about that initially. The Government share the concerns raised about the lack of protections for children from this harmful and deeply unsuitable content. That is why the Bill introduces world-leading protections for children from online pornography. The Bill will cover all online sites offering pornography, including commercial pornography sites, social media, video-sharing platforms and fora, as well as search engines, which play a significant role in enabling children to access harmful and age-inappropriate content online. These companies will have to prevent children accessing pornography or face huge fines. To ensure that children are protected from this content, companies will need to put in place measures such as age verification, or demonstrate that the approach they are taking delivers the same level of protection for children.
While the Bill does not mandate that companies use specific technologies to comply with these new duties, in order to ensure that the Bill is properly future-proofed, we expect Ofcom to take a robust approach to sites which pose the highest risk of harm to children, including sites hosting online pornography. That may include directing the use of age verification technologies. Age verification is also referred to in the Bill. This is to make clear that these are measures that the Government expect to be used for complying with the duties under Part 3 and Part 5 to protect children from online pornography. Our intention is to have the regime operational as soon as possible after Royal Assent, while ensuring that the necessary preparations are completed effectively and that service providers understand what is expected of them. We are working very closely with Ofcom to ensure this.
The noble Lord, Lord Morrow, and others asked about putting age verification in the Bill more clearly, as was the case with the Digital Economy Act. The Online Safety Bill includes references to age assurance and age verification in the way I have just set out. That is to make clear that these are measures which the Government expect to be used for complying with the duties where proportionate to do so. While age assurance and age verification are referred to in the Bill, the Government do not mandate the use of specific approaches or technologies. That is similar to the approach taken in the Digital Economy Act, which did not mandate the use of a particular technology either.
I think my noble friend Lord Bethell prefers the definition of pornography in Part 3 of the Digital Economy Act. There is already a robust definition of “pornographic content” in this Bill which is more straightforward for providers and Ofcom to apply. That is important. The definition we have used is similar to the definition of pornographic content used in existing legislation such as the Coroners and Justice Act 2009. It is also in line with the approach being taken by Ofcom to regulate UK-established video-sharing platforms, meaning that the industry will already have familiarity with this definition and that Ofcom will already have experience in regulating content which meets this definition. That means it can take action more swiftly. However, I have heard the very large number of noble Lords who are inclined to support the work that my noble friend is doing in the amendments he has proposed. I am grateful for the time he has already dedicated to conversations with the Secretary of State and me on this and look forward to discussing it in more detail with him between now and Committee.
A number of noble Lords, including the noble Baronesses, Lady Finlay of Llandaff and Lady Kennedy of The Shaws, talked about algorithms. All platforms will need to undertake risk assessments for illegal content. Services likely to be accessed by children will need to undertake a children’s risk assessment to ensure they understand the risks associated with their services. That includes taking into account in particular the risk of algorithms used by their service. In addition, the Bill includes powers to ensure that Ofcom is able effectively to assess whether companies are fulfilling their regulatory requirements, including in relation to the operating of their algorithms. Ofcom will have the power to require information from companies about the operation of their algorithms and the power to investigate non-compliance as well as the power to interview employees. It will have the power to require regulated service providers to undergo a skilled persons report and to audit company systems and processes, including in relation to their algorithms.
The noble Baroness, Lady Kidron, rightly received many tributes for her years of work in relation to so many aspects of this Bill. She pressed me on bereaved parents’ access to data and, as she knows, it is a complex issue. I am very grateful to her for the time she has given to the meetings that the Secretary of State and I have had with her and with colleagues from the Ministry of Justice on this issue, which we continue to look at very carefully. We acknowledge the distress that some parents have indeed experienced in situations such as this and we will continue to work with her and the Ministry of Justice very carefully to assess this matter, mindful of its complexities which, of course, were something the Joint Committee grappled with as well.
The noble Baroness, Lady Featherstone, my noble friend Lady Wyld and others focused on the new cyberflashing offence and suggested that a consent-based approach would be preferable. The Law Commission looked at that in drawing up its proposals for action in this area. The Law Commission’s report raised concerns about the nature of consent in instant messaging conversations, particularly where there are misjudged attempts at humour or intimacy that could particularly affect young people. There is a risk, which we will want to explore in Committee, of overcriminalising young people. That is why the Government have brought forward proposals based on the Law Commission’s work. If noble Lords are finding it difficult to see the Law Commission’s reports, I am very happy to draw them to their attention so that they can benefit from the consultation and thought it conducted on this difficult issue.
The noble Baroness, Lady Gohir, talked about the impact on body image of edited images in advertising. Through its work on the online advertising programme, DCMS is considering how the Government should approach advertisements that contribute to body image concerns. A consultation on this programme closed in June 2022. We are currently analysing the responses to the consultation and developing policy. Where there is harmful user-generated content related to body image that risks having an adverse physical or psychological impact on children, the Online Safety Bill will require platforms to take action against that. Under the Bill’s existing risk assessment duties, regulated services are required to consider how media literacy can be used to mitigate harm for child users. That could include using content provenance technology, which can empower people to identify when content has been digitally altered in ways such as the noble Baroness mentioned.
A number of noble Lords focused on the changes made in relation to the so-called “legal but harmful” measures to ensure that adults have the tools they need to curate and control their experience online. In particular, noble Lords suggested that removing the requirement for companies to conduct risk assessments in relation to a list of priority content harmful to adults would reduce protections available for users. I do not agree with that assessment. The new duties will empower adult users to make informed choices about the services they use and to protect themselves on the largest platforms. The new duties will require the largest platforms to enforce all their terms of service regarding the moderation of user-generated content, not just the categories of content covered in a list in secondary legislation. The largest platforms already prohibit the most abusive and harmful content. Under the new duties, platforms will be required to keep their promises to users and take action to remove it.
There was rightly particular focus on vulnerable adult users. The noble Baronesses, Lady Hollins and Lady Campbell of Surbiton, and others spoke powerfully about that. The Bill will give vulnerable adult users, including people with disabilities, greater control over their online experience too. When using a category 1 service, they will be able to reduce their exposure to online abuse and hatred by having tools to limit the likelihood of their encountering such content or to alert them to the nature of it. They will also have greater control over content that promotes, encourages or provides instructions for suicide, self-harm and eating disorders. User reporting and redress provisions must be easy to access by all users, including people with a disability and adults with caring responsibilities who are providing assistance. Ofcom is of course subject to the public sector equality duty as well, so when performing its duties, including writing its codes of practice, it will need to take into account the ways in which people with protected characteristics, including people with disabilities, can be affected. I would be very happy to meet the noble Baronesses and others on this important matter.
The noble Lords, Lord Hastings of Scarisbrick and Lord Londesborough, and others talked about media literacy. The Government fully recognise the importance of that in achieving online safety. As well as ensuring that companies take action to keep users safe through this Bill, we are taking steps to educate and empower them to make safe and informed choices online. First, the Bill strengthens Ofcom’s existing media literacy functions. Media literacy is included in Ofcom’s new transparency reporting and information-gathering powers. In response to recommendations from the Joint Committee, the legislation also now specifies media literacy in the risk-assessment duties. In July 2021, DCMS published the online media literacy strategy, which sets out our ambition to improve national media literacy. We have committed to publishing annual action plans in each financial year until 2024-25, setting out our plans to deliver that. Furthermore, in December of that year, Ofcom published Ofcom’s Approach to Online Media Literacy, which includes an ambitious range of work focusing on media literacy.
Your Lordships’ House is, understandably, not generally enthusiastic about secondary legislation and secondary legislative powers, so I was grateful for the recognition by many tonight of the importance of providing for them in certain specific instances through this Bill. As the noble Lord, Lord Brooke of Alverthorpe, put it, there may be loopholes that Parliament wishes to close, and quickly. My noble friend Lord Inglewood spoke of the need for “living legislation”, and it is important to stress, as many have, that this Bill seeks to be technology-neutral—not specifying particular technological approaches that may quickly become obsolete—in order to cater for new threats and challenges as yet not envisaged. Some of those threats and challenges were alluded to in the powerful speech of my noble friend Lord Sarfraz. I know noble Lords will scrutinise those secondary powers carefully. I can tell my noble friend that the Bill does apply to companies that enable users to share content online or interact with each other, as well as to search services. That includes a broad range of services, including the metaverse. Where haptics enable user interaction, companies must take action. The Bill is also clear that content generated by bots is in scope where it interacts with user-generated content such as on Twitter, but not if the bot is controlled by or on behalf of the service, such as providing customer services for a particular site.
Given the range of secondary powers and the changing technological landscape, a number of noble Lords understandably focused on the need for post-legislative scrutiny. The Bill has undoubtedly benefited from pre-legislative scrutiny. As I said to my noble friend Lady Stowell of Beeston in her committee last week, we remain open-minded on the best way of doing that. We must ensure that once this regime is in force, it has the impact we all want it to have. Ongoing parliamentary scrutiny will be vital in ensuring that is the case. We do not intend to legislate for a new committee, not least because it is for Parliament itself to decide what committees it sets up. But I welcome further views on how we ensure that we have effective parliamentary scrutiny, and I look forward to discussing that in Committee. We have also made it very clear that the Secretary of State will undertake a review of the effectiveness of the regime between two and five years after it comes into force, producing a report that will then be laid in Parliament, thus providing a statutory opportunity for Parliament to scrutinise the effectiveness of the legislation.
My noble friend and other members of her committee followed up with a letter to me about the Secretary of State’s powers. I shall reply to that letter in detail and make that available to all noble Lords to see ahead of Committee. This is ground-breaking legislation, and we have to balance the need for regulatory independence with the appropriate oversight for Parliament and the Government. In particular, concerns were raised about the Secretary of State’s power of direction in Clause 39. Ofcom’s independence and expertise will be of utmost importance here, but the very broad nature of online harms means that there may be subjects that go beyond its expertise and remit as a regulator. That was echoed by Ofcom itself when giving evidence to the Joint Committee: it noted that there will clearly be some issues in respect of which the Government have access to expertise and information that the regulator does not, such as national security.
The framework in the Bill ensures that Parliament will always have the final say on codes of practice, and the use of the affirmative procedure will further ensure that there is an increased level of scrutiny in the exceptional cases where that element of the power is used. As I said, I know that we will look at that in detail in Committee.
My noble friend Lord Black of Brentwood, quoting Stanley Baldwin, talked about the protections for journalistic content. He and others are right that the free press is a cornerstone of British democracy; that is why the Bill has been designed to protect press and media freedom and why it includes robust provisions to ensure that people can continue to access diverse news sources online. Category 1 companies will have a new duty to safeguard all journalistic content shared on their platform, which includes citizen journalism. Platforms will need to put systems and processes in place to protect journalistic content, and they must enforce their terms of service consistently across all moderation and in relation to journalistic content. They will also need to put in place expedited appeals processes for producers of journalistic content.
The noble Baroness, Lady Anderson of Stoke-on-Trent, spoke powerfully about the appalling abuse and threats of violence she sustained in her democratic duties, and the noble Baroness, Lady Foster, spoke powerfully of the way in which that is putting off people, particularly women, from going into public life. The noble Baroness, Lady Anderson, asked about a specific issue: the automatic deletion of material and the implications for prosecution. We have been mindful of the scenario where malicious users post threatening content which they then delete themselves, and of the burden on services that retaining that information in bulk would cause. We have also been mindful of the imperative to ensure that illegal content cannot be shared and amplified online by being left there. The retention of data for law enforcement purposes is strictly regulated, particularly through the Investigatory Powers Act, which the noble Lord, Lord Anderson of Ipswich, is reviewing at the request of the Home Secretary. I suggest that the noble Baroness and I meet to speak about that in detail, mindful of that ongoing review and the need to bring people to justice.
The noble Baroness, Lady Chakrabarti, asked about sex for rent. Existing offences can be used to prosecute that practice, including Sections 52 and 53 of the Sexual Offences Act 2003, both of which are listed as priority offences in Schedule 7 to the Bill. As a result, all in-scope services must take proactive measures to prevent people being exposed to such content.
The noble Lord, Lord Davies of Brixton, and others talked about scams. The largest and most popular platforms and search engines—category 1 and category 2A services in the Bill—will have a duty to prevent paid-for fraudulent adverts appearing on their services, making it harder for fraudsters to advertise scams online. We know that that can be a particularly devastating crime. The online advertising programme builds on this duty in the Bill and will look at the role of the whole advertising system in relation to fraud, as well as the full gamut of other harms which are caused.
My noble friend Lady Fraser talked about the devolution aspects, which we will certainly look at. Internet services are a reserved matter for the UK Government. The list of priority offences in Schedule 7 can be updated only by the Secretary of State, subject to approval by this Parliament.
The right reverend Prelate the Bishop of Manchester asked about regulatory co-operation, and we recognise the importance of that. Ofcom has existing and strong relationships with other regulators, such as the ICO and the CMA, which has been supported and strengthened by the establishment of the Digital Regulation Cooperation Forum in 2020. We have used the Bill to strengthen Ofcom’s ability to work closely with, and to disclose information to, other regulatory bodies. Clause 104 ensures that Ofcom can do that, and the Bill also requires Ofcom to consult the Information Commissioner.
I do not want to go on at undue length—I am mindful of the fact that we will have detailed debates on all these issues and many more in Committee—but I wish to conclude by reiterating my thanks to all noble Lords, including the many who were not able to speak today but to whom I have already spoken outside the Chamber. They all continue to engage constructively with this legislation to ensure that it meets our shared objectives of protecting children and giving people a safe experience online. I look forward to working with noble Lords in that continued spirit.
My noble friend Lady Morgan of Cotes admitted to being one of the cavalcade of Secretaries of State who have worked on this Bill; I pay tribute to her work both in and out of office. I am pleased that my right honourable friend the Secretary of State was here to observe part of our debate today and, like all noble Lords, I am humbled that Ian Russell has been here to follow our debate in its entirety. The experience of his family and too many others must remain uppermost in our minds as we carry out our duty on the Bill before us; I know that it will be. We have an important task before us, and I look forward to getting to it.
Online Safety Bill
(1 year, 3 months ago)
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Lord Parkinson of Whitley Bay
That the bill be committed to a Committee of the Whole House, and that it be an instruction to the Committee of the Whole House that they consider the bill in the following order:
Clauses 1 to 3, Schedules 1 and 2, Clauses 4 to 31, Schedule 3, Clauses 32 to 37, Schedule 4, Clauses 38 to 53, Schedules 5 to 7, Clauses 54 to 68, Schedule 8, Clauses 69 to 71, Schedule 9, Clauses 72 to 80, Schedule 10, Clauses 81 to 85, Schedule 11, Clauses 86 to 97, Schedule 12, Clauses 98 to 130, Schedule 13, Clauses 131 to 169, Schedule 14, Clauses 170 to 174, Schedule 15, Clauses 175 to 185, Schedule 16, Clauses 186 to 187, Schedule 17, Clauses 188 to 212, Title.