The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2026
(2 days, 22 hours ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Digital, Culture, Media and Sport (Lisa Nandy)
I beg to move,
That the Committee has considered the Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2026 (S.I., 2026, No. 1075).
The order was laid before the House on 12 October. Colleagues will know that on Monday 5 October 2026, BT Group plc announced that it had acquired TalkTalk Telecom Group out of administration. As has been widely reported, TalkTalk had been seeking a buyer for its consumer and wholesale businesses for some time, but no deal was reached. TalkTalk has been responsible for, among other things, running telecare services to vulnerable customers. This created potential risk to life, in addition to potentially serious disruption to the continuity and stability of our telecommunications supply, with impacts on livelihoods, the wider economy and national security.
That is why, following the announcement that BT and TalkTalk were to merge, I intervened to ensure that the Government act proactively to prevent any sudden disruption to these vital broadband and phone services, affecting millions of people. On 5 October, I issued a public interest intervention notice under the Enterprise Act 2002. This begins a process in which the Competition and Markets Authority investigates the sale and reports back to me on the effects of that sale on competition. I can then weigh up those considerations against other considerations, specified in the public interest intervention notice, before deciding whether the merger must be considered further or can proceed.
The considerations that I specified in the public interest intervention notice of 5 October were, first, the need to maintain in the United Kingdom the capability to combat and to mitigate the effects of public health emergencies and, secondly, the need to maintain in the United Kingdom continuity of the supply of telecommunications services, for the purposes of preventing disruption to the economy and society of the United Kingdom, including, in particular, disruption to public services, critical national infrastructure and supply to customers who are or may be vulnerable. The first of those, relating to public health emergencies, is already specified in section 58 of the 2002 Act, whereas the second, relating to the need to maintain continuity of the supply of telecommunications services, is a new consideration, which I believe ought to be specified in the Act.
If Parliament agrees, this will allow me to consider, alongside the effect on competition, the impact on society and the economy of widespread or significant prolonged disruption to connectivity. I believe it is right to consider the potential for disruption that would affect businesses, work and Government services and result in significant difficulties across the country. I also believe that Government must be able to fully consider the impact on vulnerable people, such as those who rely on telecare services, people with disabilities and health conditions, older people and people dependent on communication services to access emergency assistance.
I believe that our legislative framework should reflect the importance of telecommunications in society and allow us to guard against the serious consequences that widespread disruption of this kind could have. In this age above all, the resilience of the public services that we all rely on, on which lives, livelihoods and critical national infrastructure depend, must be taken seriously by Governments across the world, and we intend to live up to that responsibility.
The Competition and Markets Authority has now reported to me with an assessment of competition considerations and a summary of representations received on public interest considerations. In the coming days, I will consider its report alongside wider evidence on the public interest considerations, and on the basis of that evidence I will then decide whether to refer the case for a more detailed investigation on competition or public interest grounds, or both, or to clear the transaction without further investigation.
The Government are committed to promoting competition in the broadband market as a route to protecting customers and driving investment. However, we also believe it is right to ensure that we have the ability to protect the public by stepping in in circumstances in which we believe it is necessary to prevent disruption to vital public services. By taking seriously our responsibility to safeguard the infrastructure that we depend on to keep us connected, we are enabling people to live their lives and keep working, and protecting our families, our communities and our country. I commend the order to the Committee.
James Wild (North West Norfolk) (Con)
As the Secretary of State set out, the order introduces a new public interest test for mergers, enabling Government intervention where a transaction could threaten continuity of telecoms services. I think the objectives to protect critical infrastructure, safeguard public services and ensure that vulnerable customers are not left without connectivity will be supported across the Committee. However, the context for the order is a specific case concerning BT, TalkTalk and the 2.5 million customers involved—including, BT informs me, 5,000 in my North West Norfolk constituency. It also highlights regulatory gaps when a company in this sector may simply fold, and the need to protect customers. We will not oppose the order, but it raises important questions about the speed of the process, the potential impact on competition and, importantly, investor sentiment. I welcome the fact that the Secretary of State thought it appropriate for her to come to the Committee, which underlines the concerns that are shared across parts of the sector.
Let me turn first to the speed at which the intervention notice and the statutory instrument have come forward. As the Secretary of State said, she issued the notice on 5 October. The Competition and Markets Authority was then given only 10 working days to consider the transaction. Interested parties in a dynamic sector had only a few days to make representations on a detailed transaction. There is a concern that the transaction will further entrench BT’s significant role in the retail and wholesale markets. The Competition and Markets Authority has completed the phase 1 report, but we do not know what is in it or whether the Secretary of State will judge that a phase 2 study is appropriate. Can the Secretary of State confirm that adding this intervention power to the Enterprise Act through the order will provide the Government with a basis to override any competition concerns raised by the CMA or other parties?
Of course, vulnerable consumers and public services need to be protected. Having worked in the telecoms sector a little while ago, when T-Mobile was still a retail brand in the UK, I am a little surprised that existing legislation, general conditions and other Ofcom powers could not have been used in this scenario. Can the Secretary of State assure the Committee that all alternatives were looked at? Outwith the order, is she looking further at this point and at how a supplier of last resort regime could be introduced, with reference to models from other essential services?
Clearly, the transaction raises competition issues. Given the comments that were made when the intervention notice was issued and the approach taken with the order, the Government risk creating the impression that the outcome has effectively been decided in advance, limiting the ability of the competition authority to discharge its role in full. We should be very careful before setting aside competition implications for wider public interest considerations, particularly when the goal set by the Secretary of State—avoiding the loss of service—has been achieved. Clearly, we want to avoid any precedent where financial distress enables further market consolidation without appropriate scrutiny.
How do the Government intend to reassure inward investors that the principle of encouraging competitive markets and investment remains to the fore? Can the Secretary of State assure other players in the sector that she will consider seriously the competitive impacts that may have been raised by the CMA—they have certainly been raised by a number of companies that have spoken to me—when she decides what the next steps are? Is she confident that the CMA had sufficient opportunity, in only 10 working days, to fully assess the implications of the transaction? Can she indicate when she might respond to the referral?
We support the objective of the order in protecting consumers and maintaining vital telecoms services; however, we also support effective competition, proper scrutiny and confidence in the independence of the process. I therefore look forward to the Secretary of State’s response to the concerns and questions I have raised.
Dame Caroline Dinenage (Gosport) (Con)
It is a pleasure to serve under your chairmanship, Mrs Barker. I will speak briefly in my role as the Chair of the Digital, Culture, Media and Sport Committee. Telecoms is very new to our Committee’s remit, and indeed to that of the Secretary of State. I am very pleased to see her in her place today, and we look forward to scrutinising the Government’s work in this important area.
With that in mind, I have a few broad questions for the Secretary of State about the order. First, there are protections for vulnerable people and national infrastructure under previous legislation. I wonder if she could expand a little further on why she felt that they are insufficient for what she is seeking to achieve, in particular the protection of vulnerable customers.
Secondly, what assessment has the Secretary of State made of how frequently this provision is likely to be used beyond the particular circumstances of TalkTalk? Does she assess that there are any other issues with the overall financial resilience of broadband providers and potential future use for this legislation? Further to that, will she consider publishing guidance setting out the circumstances in which this new provision might be applied? What evidence of a risk to continuity of service would she expect to see before she was to intervene?
The continuity of telecoms services is obviously vital for consumers, but so are effective competition and opportunities to attract investment. Consumers rely on healthy competition to keep costs and bills down and to improve the quality of their broadband services, so how will the Secretary of State balance those objectives when assessing a merger? In particular, how does she assess the implications for competition of the BT-TalkTalk deal given that BT has a share of almost 40% of the broadband market alongside its ownership of Openreach? Without prejudicing the outcome of the investigation, does she think that the nexfibre-Netomnia deal raises similar questions about continuity of service and financial resilience, or does she see that there are important differences between the two cases?
Can the Secretary of State tell us what mechanisms exist to protect consumers in cases where a provider fails and no buyer can be found? She mentioned that that might have been an issue in this case, so I wonder whether the Government have the powers and tools needed to maintain continuity of service in those circumstances, and whether this legislation will actually help to offer that.
Finally, this process has been very fast. I understand that the CMA has now reported to the Secretary of State on BT and TalkTalk, but the pace of the process has been really unusual, with a very short window, in particular, for comments. Does she know on what basis the CMA decided on such a short window, and will she indicate when she expects to announce whether the matter will be referred for a more detailed investigation?
I look forward to the Secretary of State’s answers today and to her ongoing engagement with the Select Committee on the resilience and competitiveness of the telecoms sector.
Lisa Nandy
I will try in the short time available to give comprehensive answers to those questions, but I will of course make myself available to all Members of the House to discuss this matter in further detail should they wish to do so.
First, the shadow Minister, the hon. Member for North West Norfolk, asked whether the order gives me grounds to overrule the Competition and Markets Authority. It gives me additional considerations that I can take into account when I weigh up the competition issues that may be raised by the Competition and Markets Authority against other public interest considerations. I already have grounds, should I require them, to overrule competition concerns in the public interest, but it is my belief that the considerations that I am allowed to look at are too narrow for this case and potentially for many others in the future.
The shadow Minister asked whether this outcome has been predetermined. I want to say to the Committee that it absolutely has not. Not only does the law preclude me from doing that, but, as was set out very well by the Chair of the Select Committee—I know the view will be shared by those on the Opposition Front Bench—there are of course risks of this deal unravelling, but there are also risks of harming the competitiveness of the sector where that competition has helped to drive down bills, protect consumers and drive investment into the industry, and helped protect the resilience of the industry. This is a genuine attempt to make sure that the Government can consider all these considerations in the round and come to a conclusion that is in the interests of the public as a whole.
The shadow Minister asked whether we have interrogated to the fullest extent whether existing powers could be used. We absolutely have. The relevant Minister and I, and a specialist team in the Department, have looked at every different power available to us. What we found, having—a bit like the Chair of the Select Committee—had responsibility for this area for only a matter of weeks, was a great big gaping hole in the legislation. The order will not fill it in its entirety, but it will enable us at least to come to a good judgment, whatever that judgment may be, about what is in the public interest when it comes to this particular deal and deals like it.
The shadow Minister asked whether we have considered introducing a supplier of last resort, and the hon. Member for Gosport asked a very similar question about whether we would consider new legislation where a provider fails and a new buyer cannot be found. There is nothing that we can find in existing legislation that allows the Government to intervene or to facilitate an intervention in that instance. I believe that is a problem. It is something that I am sure the Select Committee will want to look at, but I would be very happy to discuss it with the shadow Minister and the shadow Secretary of State as well. Telecoms is increasingly important to the way that we live, our national security, our energy infrastructure, and people’s lives and livelihoods. I think we do need a new approach to regulation in this area, not to be overburdensome and certainly not to harm competitiveness, but to make sure that we have the resilience that we need in a critical industry.
The shadow Minister asked about the speed of the process, and whether the CMA had sufficient opportunity to consider the matter. I recognise that the speed with which we are doing this is not the way that we would normally seek to legislate. Those across the House who know me will know that I like to give Parliament time to fully consider what we are proposing, and there have been a number of instances when we have changed our approach as a consequence of the views of Members of both Houses, who have pointed out both technical deficiencies and policy issues with some of our original proposals.
However, we did discuss this with the CMA. Obviously, it was acutely aware that the timing was very tight, but it felt that the time we gave it was manageable in order to give us a preliminary view that would enable me to proceed to the next stage and make a decision about whether further investigation was warranted. I intend to respond as quickly as possible; I would not have brought the order to the House with the urgency that I have done if I did not believe that we also need to act with urgency. I have to make the right decision, I have to balance all those considerations, and I have to fully consider the impact on the competitiveness of a market that is underpinned by decent competition. I cannot act with haste, but I can act with as much speed as is possible.
The Chair of the Select Committee, the hon. Member for Gosport, asked why the existing legislation is deficient. Put simply, it is because in this case there was only one ground on which we could intervene: the public health emergency provisions. That may cover the existing telecare customers, but we do not believe that it would cover customers who are vulnerable and rely on being connected in order to access emergency services outside of that system. In any case, it would not cover the 1.5 million customers, many of whose livelihoods depend on this, or the critical national infrastructure that I talked about.
The hon. Lady asked about the overall financial resilience of the sector. I am concerned about the fragility of the sector. Although we have a telecoms industry in this country to be proud of, and we have, over successive Governments, managed to drive investment into it, to retain competitiveness and to keep bills for consumers lower than in many comparable countries, I do think it warrants a fresh look from us all, collectively, as a House, at whether we have the resilience in the sector that we need.
On whether we will consider setting out a framework for how this measure is used, I think that framework already exists. I would be happy to discuss that further with the hon. Lady, but I think the framework is already quite tightly defined by the process in the Enterprise Act under which I am required to operate. What are too tightly defined, in my view, are the considerations that a Government can take into account, which would have precluded me from taking into account a number of key areas of public interest and public benefit in this case.
The hon. Lady asked what evidence I would need to see in order to intervene further. There are certainly circumstances in which the dominance of one player in a market could have major implications for the viability of that market. In those circumstances, I would need to be satisfied that, if a deal was detrimental to competition, that would not in itself lead to the outcomes that have driven me to bring these additional public interest considerations before the House. I want to be clear— I gave this commitment to the shadow Minister—that this is not in any sense a done deal or a predetermined outcome, but I do think we owe it to the public to ensure that, in coming to that decision, we take into account things that are of great interest and importance to them.
On how I will assess competition issues, I will take account of the report handed to me just last week by the Competition and Markets Authority. I should say to the Committee that I have not yet had an opportunity to digest it, because officials are reading through it in technical detail and providing me with advice on it, but I will look at the report in full later this week, along with the advice I have been given, and do my best to come to a decision quickly. The hon. Lady asked about other current cases. I cannot comment on those currently, but I would be very happy to discuss with her the framework as a whole and how we ensure that it is as robust as possible.
Finally, I reiterate that the pace with which we have acted is unusual. I do not believe that is an ideal way to legislate in ideal circumstances, but these are not ideal circumstances. We do not have the resilience in the legislation that we need to enable us to live up to our responsibilities, as a Government and as Parliament, to protect people and act in the public interest. The expanded scope will give me the opportunity to look at all these issues in the round and come to the right determination.
I sincerely thank the House for its willingness to engage with us over the past couple of weeks since we laid the order to ensure that we have the powers we need to act in the public interest, and I welcome the opportunity to have a much more thorough debate and discussion about how we collectively shape the legislation surrounding this critical industry in the future.
Question put and agreed to.