Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2026
(Limited Text - Ministerial Extracts only)
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Baroness Anderson of Stoke-on-Trent
That the Grand Committee do consider the Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2026.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument).
Captain of the King’s Bodyguard of the Yeomen of the Guard and Deputy Chief Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, first, I apologise that you have the B team, as I think we are referring to ourselves today. My noble friend Lady Twycross has unfortunately been taken ill and I am sure that, on behalf of the Committee, we will be sending her our best wishes.
Telecommunications networks and services underpin the modern economy and society of the UK, enabling businesses in every sector of the economy to function and grow, and ensuring that individuals everywhere are connected and digitally included. These networks support critical national infrastructure and services that people and public bodies rely on every day, including calls to emergency services, ambulance and hospital communications, and medical alarms. The Government have committed to ensuring that everyone has access to high-quality, secure and resilient digital connectivity. A sudden disruption to connectivity services would have a serious impact on individuals and businesses across the country that depend on reliable telecommunications networks.
On Monday 5 October, BT Group plc announced that it had acquired TalkTalk Telecom Group out of administration. As has been widely reported, it had been seeking a buyer for its consumer and wholesale businesses for some time, but no deal was reached. Given the possibility that the disconnection of TalkTalk’s customers could put lives at risk and disrupt the continuity of the supply of telecommunications, on 5 October the Secretary of State issued a public interest intervention notice under the Enterprise Act 2002. Under that Act, the Secretary of State may issue a public interest intervention notice where they believe that one or more of the public interest considerations specified in Section 58 of the Act may be relevant. It also allows for the Secretary of State to specify a public interest consideration that is not specified, but in their opinion ought to be. Where a new public interest consideration is specified, the Secretary of State is required to seek to have that consideration specified in Section 58 of the Act as soon as practicable.
The considerations that the Secretary of State specified in the public interest intervention notice of 5 October were: the need to maintain in the UK the capability to combat and mitigate the effect of public health emergencies; and the need to maintain in the UK the 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 the supply to customers who are or may be vulnerable.
The first of these, relating to public health emergencies, is already specified in Section 58 of the Enterprise Act 2002, while the second, relating to the need to maintain the continuity of the supply of telecommunications services, is a new consideration which the Secretary of State believes ought to be specified in the Act. Introducing this new consideration will allow the Secretary of State to have regard to a broader range of considerations and impacts that may arise within the specific context of a qualifying merger, where there are concerns about widespread and/or significant disruptions to telecommunications services. This would include considerations around maintaining critical national infrastructure connections and the impacts on society and the economy of widespread or significant prolonged connectivity disruption. Such disruption could affect businesses, employment and government services. Critically, this enables the Secretary of State to 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 communications services to access emergency assistance.
This kind of intervention is not unprecedented. New public interest considerations have been specified in this manner before to address urgent matters—for example, the public interest consideration in maintaining the stability of the UK financial system was introduced for the Lloyds TSB Group plc/HBOS plc merger in 2008.
We believe it is important that the legislative framework is now updated to reflect the importance of telecommunications in our society and to guard against the serious consequences that widespread disruption of connectivity could have. The Secretary of State’s intervention in the BT/TalkTalk merger is driven by serious concerns that there could be sudden disruption to vital broadband and phone services affecting millions of people. The Government have a responsibility to protect the public where essential services could be put at risk. That is why the Secretary of State is intervening to ensure that wider risks to the public are properly considered alongside competition concerns.
The Competition and Markets Authority has reported to the Secretary of State with an assessment of competition considerations and a summary of representations received on public interest considerations; this was provided on 19 October. The Secretary of State will consider the Competition and Markets Authority’s report alongside wider evidence of the public interest considerations. Only then will the Secretary of State 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 any further investigation. The Government are committed to promoting competition in the broadband market and our statement of strategic priorities highlights the importance of this. The UK has a strong pro-competition regulatory framework environment that has supported significant commercial investment in fibre broadband across the UK.
The order does not determine the outcome of the merger process. It will, however, serve to allow the Secretary of State to consider the potential impact of significant disruptions to telecommunications services on public services and wider society, alongside the public health emergencies consideration, also mentioned in the intervention notice, and any competition issues. I hope that noble Lords will agree with the rationale I have presented on the need for the legislative framework to be updated so that these important considerations can be accounted for going forward. I beg to move.
Lord Lansley (Con)
My Lords, I am grateful to the Minister, not least for stepping in and giving us the opportunity to hear such a clear exposition of the purpose of the order that we are debating this afternoon. Of course, the order adds continuity of telecommunications services to the public interest considerations specified under the Enterprise Act 2002. If these things are a minority sport, I am sorry to say that I have been playing it a long time, as I was on the Standing Committee on the Enterprise Bill in 2002 and was also around when, under the Communications Act, we put the news media and others into the specified considerations. I also probably participated in debates in 2020 putting public health into the specified considerations.
This is a short debate with a limited number of participants, but it is quite an important debate. In the past, adding specified considerations has always been regarded as a significant step that we should consider very carefully. This order, which puts this issue into the specified considerations for when the public interest intervention notice can be issued, is a recognition of the importance of the objective. Things such emergency calls, hospital communications, medical alarms and the activities of businesses dependent on reliable connectivity are all important and we must protect those services. Indeed, the particular point of this is to protect vulnerable customers.
However, the order also extends ministerial discretion within merger control. We should therefore examine how that discretion will be exercised, how competition will be preserved or promoted, and whether another framework for company failure could reduce the need to rely on it. The immediate context is BT’s acquisition of TalkTalk’s consumer and wholesale businesses. Ofcom has explained that failure could affect vulnerable customers served indirectly through resellers as well as people whose telephone numbers have been transferred from TalkTalk to other providers but whose services still depend on its network. Those are serious risks. Nevertheless, customers also have a lasting interest in effective competition, choice, fair prices, innovation and investment. The acquisition of a competitor by a dominant operator requires proper examination, even where the circumstances demand urgency.
I am not asking the Minister to prejudge the Competition and Markets Authority’s conclusions. Indeed, we do not know what its conclusions are. The letter was delivered in the afternoon of 19 October and the conclusions have not yet been published. I am however asking for assurance that the public interest consideration will supplement rigorous competition scrutiny and will not become a reason to dispense with it.
Under this framework, the Secretary of State determines the overall public interest outcome. Following a detailed investigation, she must accept the CMA’s finding on whether there is an anti-competitive outcome, but she may weigh that against the specified public interest considerations. The choice of remedies, therefore, involves ministerial judgment.
That distinction matters. A conclusion that an acquisition is necessary to preserve services does not establish that every competition remedy would threaten continuity. A remedy protecting wholesale access or competing providers may be entirely compatible with uninterrupted service. Any decision to reject, weaken or defer a recommended pro-competition remedy should, therefore, be specifically justified.
That brings me to the alternative approach to which I referred. On 17 March this year, during Ofcom’s analyst and investor call, Natalie Black, who is Ofcom’s group director for infrastructure and connectivity, stated:
“We don’t have a special administration regime in the UK”.
She described arrangements for protecting consumers in co-operation with the department, but she identified no statutory telecoms special administration regime.
Water legislation provides an instructive comparison. It expressly provides for continuity following a licensed supplier’s exit and allows Ofwat to direct eligible replacement suppliers to take responsibility. The eligibility requirements qualify that power, but the mechanism exists. The telecommunications industry has arrangements that it describes as the “supplier of last resort”. The published process relies on best efforts by upstream providers, envisages eventual disconnection and would be superseded by an administration. It does not, therefore, provide statutory customer allocation, as in the water industry case.
So, should we consider a framework that allows Ofcom to seek a court-appointed special administrator to maintain essential networks while a business is restructured or transferred, alongside arrangements for replacement suppliers to take responsibility for customers? Such a framework would not necessarily remove every need for this public interest consideration, but it could reduce the need to invoke continuity as a justification for accepting what might potentially be lasting competition harm. A statutory special administration regime could, therefore, address both problems by maintaining essential services during failure and ensuring that customers could be transferred in an orderly manner if the business could not be saved.
Such a regime would require legislation, appropriate funding arrangements and design. However, in the first instance, the Government could establish which elements Ofcom could introduce under its existing powers and which additional powers would then be required from Parliament. The choice should not be presented as one between continuity and competition; a properly designed failure regime could protect both. It could keep essential services operating, give regulators time to identify alternative purchases, enable orderly customer transfers and ensure that competition remedies were properly tested before any acquisition was approved.
I ask the Minister to respond on four points. First, can she confirm that the Government will treat effective Competition and Markets Authority competition remedies as a priority objective, and depart from them only where the Secretary of State publishes a clear explanation of both the continuity risk and why a pro-competitive option would not suffice?
Secondly, will she ensure that the CMA’s report on the BT and TalkTalk transaction is made available to Parliament promptly, subject to the necessary confidentiality protections? I would have liked to have seen it and read it, together with the Government’s response and the reasons for any decision affecting competition, before this debate, but, clearly, that has not happened.
Thirdly, can the Minister commit to requiring that any undertakings accepted in the public interest contain precise obligations, independent monitoring and meaningful consequences for breaches—including protections for wholesale customers, resellers and competing providers, where necessary?
Fourthly, I ask the Minister to review with Ofcom the case for a telecommunications special administration regime, including statutory customer allocation arrangements, and to publish the conclusions from such a review with a timetable for deciding whether legislation is required.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I too thank the noble Baroness, Lady Anderson, for bringing forward this order for scrutiny and for so gamely stepping in at the last minute. We wish the noble Baroness, Lady Twycross, well for a speedy recovery.
This secondary legislation would enable the Secretary of State to take into account a wider range of public interest considerations when deciding whether to intervene in takeovers in the telecommunications sector. The department has argued that this merely closes a gap in the existing framework. However, it follows the commercial decision by BT to take over TalkTalk, which was then investigated by the Competition and Markets Authority, which reported to the Secretary of State on 19 October. I agree with the noble Lords, Lord Lansley and Lord Fox, that it is a shame that this report was not available before today’s debate. Can the Minister elaborate on its findings and the next steps?
I echo the concerns of the noble Lord, Lord Fox. The Secondary Legislation Scrutiny Committee has drawn this order to the special attention of the Committee. Will the Minister confirm that this legislation is not retrospective? What will be the implication for existing mergers and how do the Government intend to maintain investor confidence? I confirm that I am happy for any of my questions, of which there are many, to be answered by the Minister in writing at a later stage.
The department claims that there is a precedent for the use of these powers to amend the public interest grounds. Can the Minister specify these precedents? We must be cautious of potential government overreach and we should allow the independent regulator to do its job properly. An overzealous Secretary of State could use these powers in such a way that fundamentally undermines the UK’s competitiveness. What safeguards will there be to prevent overuse of these powers leading to investor flight?
The order adds the need to maintain
“the 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—(a) public services; (b) critical national infrastructure; (c) supply to customers who are or may be vulnerable”.
Such changes must be tightly defined. Can the Minister say how such disruption will be measured? Can we apply the same criteria for judging the Government’s own policies? This addition will give the Secretary of State the power
“to guard against the serious consequences that widespread disruption of connectivity could have for public safety, critical infrastructure, essential services and the orderly functioning of society”.
How do the Government define and how will they assess the “orderly functioning of society”? Can the Minister indicate whether this additional consideration will be used imminently?
There are legitimate concerns over the timing and potential use of this order. I hope that the Minister will be able to give the Committee assurances on these points, even if that is in writing.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I thank noble Lords for their best wishes for my noble friend and for their indulgence of me at the Dispatch Box on this matter. I will reflect on Hansard and write regarding any points that I miss, but I hope to be able to give some substantive answers to noble Lords who have participated.
The debate shows a recognition of the importance of telecommunications services to the functioning of the UK’s modern economy and society. It is important that everyone in the UK has access to high-quality, secure and resilient digital connectivity. The new public interest consideration inserted by the order will enable the Secretary of State to have regard to a broader range of considerations and impacts that may arise within the specific context of a qualifying merger where there are concerns about widespread and/or significant disruption to telecommunications services.
I will now respond to the specific points raised, starting with the issues around competition concerns and BT increasing its market share, as raised by the noble Lord, Lord Fox. This is why the Secretary of State asked the CMA to assess the competition impacts independently. As part of the process, the wider telecoms market and other interested third parties were able to make representations to the CMA. The UK telecoms market is highly competitive. The statement of strategic priorities, designated on 27 April this year, highlights that competition in the fixed telecoms market supports investment, innovation and consumer choice. As a result, the UK benefits from relatively low consumer pricing and prices have declined in recent years when adjusted for inflation. Ofcom, as the independent regulator, plays a key role in supporting competition, including by imposing proportionate remedies on Openreach where necessary.
The UK’s pro-competition approach has driven fibre rollout, as referenced by the noble Lord, Lord Lansley, with over 100 alternative networks entering the market in recent years. According to Ofcom, as of January 2026, 77% of residential premises have access to more than one network and 61% have access to more than one gigabyte-capable network.
Lord Fox (LD)
And give a commitment that the CMA report, in full, will be published.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, you were two magic pieces of paper early. I will go straight to the issue of the CMA’s report. In line with the requirements of the Enterprise Act 2002, the Secretary of State will publish a non-confidential version of the CMA’s report once it has made a decision. All the noble Lords who participated raised that point.
I have answered the majority of the substantive points. I will reflect on Hansard and, if I have not answered something, I will write to noble Lords. I thank everyone who has contributed to this debate today, and the officials who have worked on this.