Media Bill

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Lord Pannick Portrait Lord Pannick (CB)
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Again, the House cannot possibly know all the circumstances. I very much doubt it, but IPSO may have made a mistake. I am sure that there are also many complaints to the authorised regulator that do not result in the complete satisfaction of the person who is complaining. It is absurd to suggest that that is so. We have to look, do we not, at the structure—at whether there is an independent, non-authorised regulator? I do not for a moment suggest that there are not people—I am sure there are—who have complaints about the press, and perhaps even complaints about IPSO. However, there is a system, and it is a perfectly proper, effective system under independent management. In those circumstances, it cannot possibly be right that we give special legislative protection to an authorised regulator.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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I am listening carefully to what the noble Lord is saying. Is he not amply illustrating the point that this provision is highly controversial? That is the real point of discussion in this debate, that such controversial matters should not be dealt with during wash-up.

Lord Pannick Portrait Lord Pannick (CB)
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The reality of political life—the noble Lord knows this as much as I do—is that wash-up is a very difficult constitutional concept. However, that is what we have, and it is the only way of getting business through. Since the noble Lord asks me, I do not think this is contentious at all. I thought the provision of Section 40 when it was enacted was a disgrace.

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Baroness Bonham-Carter of Yarnbury Portrait Baroness Bonham-Carter of Yarnbury (LD)
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We on these Benches are in favour of these amendments and think we should proceed now.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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I would like to add something to the constitutional points which were made by my noble friend Lord Lipsey. The appropriateness of dealing with this issue in wash-up is clearly in contention. The noble Lord, Lord Hunt of Wirral, said yesterday that the abolition of Section 40 is a clear commitment of the 2019 Conservative Party manifesto. I am afraid it is not clear: the sentence starts by saying that but it then sets conditions. It provides additional text that confuses the issue, and raises issues which were dealt with in yesterday’s debate. I have read yesterday’s debate and clearly questions have been raised about the accuracy of the information in that particular quote from the manifesto—I see the Minister disagrees. Claiming that it is clear is incorrect.

The second issue arises from the Salisbury convention about manifesto commitments. It is quite clear that this cannot be an essential commitment because the Government have had more than four years to deal with the matter, and they failed to do so. Bringing it up in the wash-up period is an insult to this House and an exploitation of the arrangements which have been made.

Baroness Fox of Buckley Portrait Baroness Fox of Buckley (Non-Afl)
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My Lords, I want only to reflect slightly on some of the comments that have been made about the tone of the debate, and in particular the attack against the noble Lord, Lord Pannick. I have been shocked by the tone of the debate against the points of noble Lord, Lord Pannick. The argument seems to be that this is a Tory conspiracy theory, that the Tories are in bed with the press barons, and that there is all sorts of skulduggery going on. I am genuinely shocked that this is being allowed to pass. I want to at least mention that there are some of us who worry about an authorised regulator, and the politicisation of regulation, who are not in bed with press barons. I spend most of my time reading newspapers that write rubbish about me, so I am not keen on press barons—let me put it that way. I also happen to believe in media independence and freedom, which is an important point.

I want the Bill to get on and pass, but, first, there was an earlier discussion about local TV news channels. For the sake of the public and accuracy, one noble Lord sitting close to me said that GM News—he meant GB News—is constantly played on local TV news channels. It is not GB News; it is TalkTV that is played on all those channels, including in Liverpool. I get it and watch it, and that is what is played.

Secondly, the accusation was made that Ofcom, because it is run by evil Tories, is not doing anything about GB News and the way that it presents itself. It is worth reading the papers and the press on this, because then we would all know that Ofcom is in fact accused of overregulating GB News for exactly the things that the noble Lord mentioned it was ignoring—to such an extent that GB News is beginning a formal legal process against Ofcom, which it considers to be overly political in its involvement in the editorial independence of GB News.

I make these statements of factual accuracy because what is at stake is not which political party you are in. We talked about Reithian principles before, but has anyone explored Reith’s politics at any point? He was not a socialist or a Lib Dem, but I agree that Reithian principles matter. I do not care who is arguing for press freedom or who is trying to overturn Section 40. I do not think that it is a conspiracy to establish an independent regulator for the media, which is not a threat to the British public. The threat to the British public is a politicised, misinformed, ill-informed discussion that tries to suggest that the only people who care about press freedom are working with press barons. That is nonsense.

Charities: National Minimum Wage

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Thursday 29th February 2024

(4 months, 2 weeks ago)

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Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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My noble friend speaks with great authority as the president of the Independent Schools Association, as he mentioned. He is right to point to the valuable work that independent schools do, not just for those they educate but for the community more widely, and to dangers of the policies advanced by the party opposite.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, I am sure we all agree that workers in the charitable sector should receive decent pensions, but many charities are currently struggling with their pension provision, both financially and structurally. Will the Minister ask his officials to engage with representatives of the Pensions Regulator and the DWP to try to provide a practical way forward for charities that have this problem?

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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Yes. My right honourable friend Stuart Andrew, the Charities Minister, regularly meets charities. I will ensure that the noble Lord’s point is passed on, so that he can have those discussions.

Dormant Assets (Distribution of Money) (England) Order 2023

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Tuesday 24th October 2023

(8 months, 3 weeks ago)

Grand Committee
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I conclude by thanking the Government for what they have done, in particular for including the community wealth fund, and wish the concept of the fund every success in future.
Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, I have been following the issue of dormant assets principally in relation to the 2022 Act. My concern has always been to emphasise that this is not free money; it is somebody’s money and out there there are people—some may no longer be around—and the primary objective of restoring the money should always be in our minds. That is why I have followed closely the progress of the Act and these regulations.

I have a few questions for the Minister. First, one of the main points of the Act was to include orphan pension assets. Does this order arise because of those additional assets, or is something still coming down the road? It would be useful to have some indication of the relationship between them. I make it clear that I do not oppose the order; my concern relates to the issue of additionality. What we always want is for this money to be doing things which would not otherwise be done, but which could—and should—be done by public authorities. By way of definition, the Explanatory Memorandum says that a community wealth fund

“will give local people the power to make decisions about how to improve their neighbourhood and community”.

That is where the issue of additionality becomes difficult to assess. Are these things which the local authority, central government or other bodies should be doing in any event? Can the Minister give us some assurances on the issue of additionality?

On the question of restoring the money to the individuals who really own it, during the passage of the Act there was some discussion of the pensions dashboard. It has got bogged down and is taking much longer to appear than anticipated, but it illustrates the complexity and difficulties as to what priority the Government are prepared to give to the restoration of assets to their real owners, rather than to the orphan assets fund. Is this issue being discussed, either generally or in the context of this order?

Finally, what responsibility do the Government have? What supervision do they employ over how this money is being used? Do they just hand it over, wave it goodbye and feel they no longer have any further responsibility; or do they accept responsibility, despite the advisory bodies and the contracts they have with the bodies that distribute the money? What responsibility do the Government accept for overseeing this money? I always make that point in this context. My experience, having been responsible for distributing grants along these lines, is that it is all too easy to give capital grants but to pay insufficient attention to the revenue consequences of doing so. Do the Government recognise this issue? What responsibility do they have to ensure that we do not encounter problems?

Finally, on the issue of the reserve ratio, which was raised, during the passage of the Act I had some correspondence with the grant-giving body and I was not entirely clear about the basis on which the ratio was decided. Further explanation could be given and further time devoted by the Minister in his crowded schedule to assessing the reserve ratio, to see that it is set at a proper level.

Lord Young of Cookham Portrait Lord Young of Cookham (Con)
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My Lords, I intervene with some trepidation on this subject because, unlike the noble Lord, Lord Davies, and my noble friend Lord Hodgson, who have clearly lived with this subject for some time, my interest has essentially been dormant. Then I got an email from Big Society Capital, which I am sure we all got, which drew my attention to the SI. In one of the quieter moments during consideration of the levelling up Bill yesterday, I picked up the SI and followed some of the links.

I have no difficulty with the policy at all—it is a very successful policy—but a number of questions arose in my mind. The first was about the public consultation, referred to in Paragraph 10.1 of the Explanatory Memorandum, which in turn led to the SI before us confirming the original three objectives but adding an extra one. I read the consultation document, which was structured in such a way that it inevitably led to the conclusion we have arrived at. The first question it asked was whether it was right to continue to support the three objectives we are now supporting. Then there was a long list of some very successful projects, which no one could disagree with at all. After that was another section on what would happen if support was cut off—and then, obviously, there would be a lot of disappointment. At the end of that, when one’s mind was already predisposed towards supporting the three existing ones, was another question, asking whether wealth management should be added; and then it set out all the benefits of including wealth management. Right at the end, the document asked about other objectives. The consultation showed that there was no consensus at all about any other objectives, so it concluded that they should carry on with these three and add the extra one.

The question raised in my mind was that the original three objectives were set out in 2008, 15 years ago. Are they really the same objectives that we should be applying today? Instead of the review starting off with a preconceived notion of carrying on from where we are, should it not have started with a totally blank piece of paper? A whole lot of issues have arisen that simply were not around in 2008, such as childhood obesity and non-attendance at schools, social harms from the media and increased awareness of the environment. I was slightly worried when my noble friend said, in introducing this measure, that the objectives would go on for the next decade and beyond. I hope that there will be another review, and perhaps he will say that the next one will be slightly more open-ended than the one that has just concluded, to take account of the fact that we now live in a different world and the priorities of objectives may well have changed.

That was the first thing that struck me. The second thing was what my noble friend said about the reserve ratio. Some 40% of the money in the reclaim fund is retained. That may have been right at the beginning, when no one knew exactly what was going to happen, but all the banks and financial institutions that have signed up to this scheme voluntarily follow a protocol to identify who owns the assets—and it is quite a rigorous protocol. After 15 years, if no one has claimed it, the money goes to the reclaim fund, which then retains 40%. I was reading the Government’s response to the consultation document, which came out in May. It says that

“only a small percentage do so”—

in other words, claim the money from the reclaim fund. It went on to say that there were

“consistently low levels of reclaims following transfer”.

If so, why on earth are they sitting on 40% of the money, given that it is hundreds of millions of pounds that could go through to worthwhile causes.

This proposition may be too much for my noble friend but, if you lose the deeds of your house or your share certificates, you can take out an insurance policy, which is actually quite cost effective, to insure yourself against somebody else suddenly popping up with the deeds of the House or the share certificates that were yours. Have the Government considered insuring themselves—or the reclaim fund insuring itself—against these claims? How many Rip Van Winkles are there are out there waiting to claim their money after 15 years? If they could insure themselves against that small minority of claims, all the money could be released.

Related to that second point, the document says that a portion of the money is invested. Are the Government happy to see hundreds of millions of pounds held in gilt-edged securities to help them with their borrowing requirement, rather than having that money paid out to voluntary organisations? My noble friend may not want to go down that path, but what is done with that money, the hundreds of millions of pounds that it says is invested? What is it invested in?

I have two final points. I think the scheme was recently extended to include pension funds. Has that money started flowing in? This point was raised by the noble Lord, Lord Davies. Are there plans to extend access to the scheme to any more institutions, which would obviously require primary legislation?

I do not expect the Minister to stand up and say that we have a solution. The tech companies need to be involved. We need to look at good or best practice around the world, which probably has a lot to teach us, but we can do this only if we do it together in a joined-up way. If we try to do it in a fragmented way, we will put all the onus on Ofcom and it ain’t going to work.
Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, I spoke at Second Reading about the relationship between online safety and protecting people’s mental health, a theme that runs throughout the Bill. I have not followed the progress in Committee as diligently as I wish, but this group of amendments has caught the eye of the Mental Health Foundation, which has expressed support. It identified Amendment 188, but I think it is the general principle that it supports. The Mental Health Foundation understands the importance of education, because it asked young people what they thought should be done. It sponsored a crucial inquiry through its organisation YoungMinds, which produced a report earlier this year, Putting a Stop to the Endless Scroll.

One of the three major recommendations that emerged from that report, from the feelings of young people themselves, was the need for better education. It found that young people were frustrated at being presented with outdated information about keeping their details safe. They felt that they needed something far more advanced, more relevant to the online world as it is happening at the moment, on how to avoid the risks from such things as image-editing apps. They needed information on more sophisticated risks that they face, essentially what they described as design risks, where the website is designed to drag you in and make you addicted to these algorithms.

The Bill as a whole is designed to protect children and young people from harm, but it must also, as previous speakers have made clear, provide young people themselves with tools so that they can exercise their own judgment to protect themselves and ensure that they do not fall foul, set on that well-worn path between being engaged on a website and ending up with problems with their mental health. Eating is the classic example: you click on a website about a recipe and, step by step, you get dragged into material designed to harm your health through its effect on your diet.

I very much welcome this group of amendments, what it is trying to achieve and the role that it will have by educating young people to protect themselves, recognising the nature of the internet as it is now, so that they do not run the risks of affecting their mental health.

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, this has probably been the most constructive and inspiring debate that we have had on the Bill. In particular, I thank the noble Lord, Lord Knight, for introducing this debate. His passion for this kind of media literacy education absolutely shines through. I thank him for kicking off in such an interesting and constructive way. I am sorry that my noble friend Lord Storey is not here to contribute as well, with his educational background. He likewise has a passion for media literacy education and would otherwise have wanted to contribute to the debate today.

I am delighted that I have found some common ground with the noble Baroness, Lady Fox. The idea of sending my noble friend Lord Allan on tour has great attractions. I am not sure that he would find it quite so attractive. I am looking forward to him coming back before sending him off around the country. I agree that he has made a very constructive contribution. I agree with much of what the noble Baroness said, and the noble Baroness, Lady Prashar, had the same instinct: this is a way of better preserving freedom of speech. If we can have those critical thinking skills so that people can protect themselves from misinformation, disinformation and some of the harms online, we can have greater confidence that people are able to protect themselves against these harms at whatever age they may be.

I was very pleased to hear the references to Lord Puttnam, because I think that the Democracy and Digital Technologies Committee report was ground-breaking in the way it described the need for digital media literacy. This is about equipping not just young people but everybody with the critical thinking skills needed to differentiate fact from fiction—particularly, as we have talked through in Committee, on the way that digital platforms operate through their systems, algorithms and data.

The noble Lord, Lord Holmes, talked about the breadth and depth needed for media and digital literacy education; he had it absolutely right about people being appropriately savvy, and the noble Baroness, Lady Bennett, echoed what he said in that respect.

I think we have some excellent amendments here. If we can distil them into a single amendment in time for Report or a discussion with the Minister, I think we will find ourselves going forward constructively. There are many aspects of this. For instance, the DCMS Select Committee recommended that digital literacy becomes the fourth pillar of education, which seems to me a pretty important aspect alongside reading, writing and maths. That is the kind of age that we are in. I have quoted Parent Zone before. It acknowledges the usefulness of user empowerment tools and so on, but again it stressed the need for media literacy. What kind of media literacy? The noble Baroness, Lady Kidron, was extremely interesting when she said that what is important is not just user behaviour but making the right choices—that sort of critical thinking. The noble Lord, Lord Russell, provided an analogy with preventive health that was very important.

Our Joint Committee used a rather different phrase. It talked about a “whole of government” approach. When we look at all the different aspects, we see that it is something not just for Ofcom—I entirely agree with that—but that should involve a much broader range of stakeholders in government. We know that, out there, there are organisations such as the Good Things Foundation and CILIP, the library association, and I am sorry that the noble Baroness, Lady Lane-Fox, is not in her place to remind us about Doteveryone, an organisation that many of us admire a great deal for the work it carries out.

I think the “appropriately savvy” expression very much applies to the fraud prevention aspect, and it will be interesting when we come to the next group to talk about that as well. The Government have pointed to the DCMS online media strategy, but the noble Lord, Lord Holmes, is absolutely right to ask what its outcome has been, what its results have been, and what resources are being devoted towards it. We are often pointed to that by the Government, here in Committee and at Oral Questions whenever we ask how the media literacy strategy is going, so we need to kick the tyres on that as well as on the kind of priority and resources being devoted to media literacy.

As ever, I shall refer to the Government’s response to the Joint Committee, which I found rather extraordinary. The Government responded to the committee’s recommendation about minimum standards; there is an amendment today about minimum standards. They said:

“Ofcom has recently published a new approach to online media literacy … Clause 103 of the draft Bill”—


the noble Baroness, Lady Prashar, referred to the fact that in the draft Bill there was originally a new duty on Ofcom—

“did not grant Ofcom any additional powers. As such, it is … unnecessary regulation. It has therefore been removed”.

It did add to Ofcom’s duties. Will the Minister say whether he thinks all the amendments here today would constitute unnecessary regulation? As he can see, there is considerable appetite around the Committee for the kind of media literacy duty across the board that we have talked about today. He might make up for some of the disappointment that many of us feel about the Government’s having got rid of that clause by responding to that question.

Gambling Act Review White Paper

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Wednesday 3rd May 2023

(1 year, 2 months ago)

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Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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We have been led by a close assessment of the latest evidence on the impact of advertising, which suggests that there is little evidence to show that exposure to advertising leads directly to harmful gambling. However, we recognise that it can have a disproportionate impact on those already suffering harm, and our aim therefore is to tackle aggressive practices. Robust rules are already in place to ensure that advertising is socially responsible and that it cannot be targeted at children, as I mentioned earlier. New rules were introduced recently to strengthen protections for children and vulnerable adults. Targeted restrictions on advertising are just one part of our wider approach to protections, which also includes making products safer and introducing financial risk checks.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, there is much to be welcomed in the White Paper, but I share the concerns expressed by the previous speakers, including, in particular, the timetable. What I welcome in the White Paper—and, in doing so, I declare my interest as a member of the advisory committee of the Money and Mental Health Policy Institute—is that it recognises that the harm caused by gambling is psychological as well as financial. We need to understand better the relationship between gambling and poor mental health. It is bidirectional: gambling leads to mental health problems; people with mental health problems have problems with gambling.

The White Paper identifies the need for better research, particularly longitudinal research and research into the causal relationships involved. It is a shame that the Secretary of State did not include a reference to the psychology of gambling in the original Statement, so can the Minister say something about that? There is also the issue of treatment. If we establish the principle that the polluter pays, there must be an important role for the gambling industry to fund the development of a treatment, which is so clearly needed to help those caught in its grasp.

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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I mentioned some of the work which has already been taken forward to help vulnerable people. The noble Lord is right to point to people with mental health difficulties and the differential impact that gambling can have on them. Through some of the action we have taken on VIP schemes and other schemes, we know that when addicted people break free from the temptation to gamble, they are drawn back into the orbit of online companies with offers of free bets or free spins, so that is another area in which we are taking action. The research continues, and it will continue to inform the approach we take. The latest evidence available was fed into the review we have concluded, but, as further research is conducted, we look forward to analysing it too.

Online Safety Bill

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Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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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.

Online Safety Bill

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Monday 7th November 2022

(1 year, 8 months ago)

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Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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The Bill contains strong safeguards for freedom of expression. No platforms will be required to remove legal content and all services will need to have regard to freedom of expression when implementing their safety duties. Of course, although Ministers have met such groups throughout the passage of the Bill so far, I would be very happy to continue to do so to ensure that aspect of the Bill gets proper scrutiny too.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, as the noble Baroness mentioned, the Bill has been extended. One of the extensions was to financial harm caused online. Will the Government assure us that they remain committed to including strong measures on financial harm? This can hurt people as much as the other forms of harm that we find online.

Lord Parkinson of Whitley Bay Portrait Lord Parkinson of Whitley Bay (Con)
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The context shows the importance of preventing financial harm to people, particularly in the current economic climate. When the Bill comes forward from another place, it will be open to scrutiny by noble Lords on this aspect and many others.

Freedom of Expression (Communications and Digital Committee Report)

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Thursday 27th October 2022

(1 year, 8 months ago)

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Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, like previous speakers I thank the committee for its excellent report. As someone said, it makes good reading and is a clear exposition of the issues. The obvious question is, where are we with the Online Safety Bill, which was mentioned in the Queen’s Speech but has since disappeared from sight? We were told it would be “as soon as possible” and clearly, the emphasis is on “possible” rather than “soon”. Much of the discussion, rightly, has been on the issues set out in the report, with a focus on protection of children, which I feel strongly about. I think back to my childhood and that of my children, who grew up in a pre-internet age, and I fear for my grandchildren, faced with the issues they now see on the internet. Legislation in that area is crucial.

However, I want to expand the discussion to reflect the expansion of the scope of the Online Safety Bill, because various other priority offences have been added to it, including fraud and financial crime. This is an important aspect of online safety: clearly, protection against financial crime should be a crucial part of the Bill, and I am glad the Government have accepted that. It is not clear to me exactly how it is going to work, because there is a particular problem. They have defined it as “fraud and financial crime”, but a lot of the harm that happens on the internet might not, strictly speaking, be found to be fraud or other another form of financial crime. People can be harmed financially through reading material on the internet which, unless there is prosecution through the courts, might not be counted as criminal. I hope the Minister will say something about how such things will be defined.

The issue of a duty of care has been mentioned, and a duty of care to protect people against financial harm would be an essential pillar of the Bill. In the phrase that is used, there should be safety by design, so that people are not misled into reading material that will cause them suffering.

Dormant Assets Bill [HL]

Lord Davies of Brixton Excerpts
Baroness Barran Portrait The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)
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My Lords, on 14 June I tabled minor and technical amendments to the Bill, which are needed to ensure that it works properly. These included changes for clarity and consistency, and updates to references and consequential amendments. I set these amendments out in my letter to your Lordships on the same day.

The changes, for clarity, can be grouped into three categories. The first group includes Amendments 1, 2, 3, 5, 21, 22, 23, 24, 28, 29, 30, 31, 42 and 46. These amendments clarify that amounts owing or payable to a person include those which are not immediately owing or payable until some action is taken. The second group includes Amendments 16 to 20, as well as Amendments 75 and 77. These amendments clarify that orphan moneys would arise in the context of a sub-fund of an umbrella structure. This is because an umbrella structure is effectively a shell structure, and it is the sub-fund of it that would be authorised under the Financial Services and Markets Act. The third group includes Amendments 7, 8, 9, 13, 14, 15, 25, 26, 27, 33, 35, 36 and 44. These amendments clarify that lifetime ISA provisions apply in the context of access restrictions and to client moneys; in other words, restrictions on assets held within lifetime ISAs apply when their transfer to the Reclaim Fund Ltd would trigger a withdrawal charge payable to HMRC. With that, I beg to move.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, I was going to crave the indulgence of the Grand Committee in trying to hang on to my fast-disappearing status as a new, inexperienced Member: I wanted to provide an opportunity for a debate on Clause 1, on the overview of the scheme, and I was going to do that by stand part or by putting down an amendment—but I got the timetable wrong and I failed to do so. However, other people have come to my aid, in that there will be sufficient opportunities later in the Bill’s progress to raise the issues that I would have raised here had I got my act together.

I will mention the main issues that I have in mind. Of course, I mentioned them at Second Reading, but the ability to repeat points seems to be one of the great assets of this process that we go through. The first issue that I will come back to at an appropriate time is the whole structure that leads to this situation. We can have a lot of discussion about the process of the dormant assets scheme, but we need to address the question of why dormant assets appear in the first place. It would be wrong to have a full debate on the scheme without at least reflecting, to some extent, on that issue.

In the government consultation and in preceding debates that led to the Bill there has been a lot of discussion by various people about what the financial institutions are doing to make sure that this issue does not arise. In general terms, there has been a lot of discussion of that issue—well, perhaps not a lot—but I am not sure that it really gets anywhere. Everyone expresses intentions, but how detailed the planning is to avoid it happening is a separate issue.

However, I think there is a stage before that. Why do we have a structure that leads to this sort of end result? The fact that this can happen is something that bears investigation—not just because it has happened but what we can do about it—as does the extent to which the financial institutions seem, in one way or another, to try to shift the blame to individuals. There are questions about what we can we do so that it does not happen in the first place, and I will come back to that at a later stage, possibly this afternoon—and I will try not to repeat myself too much.

The other issue is additionality. There has not been nearly enough discussion of what exactly is meant by additionality; there is no clear structure as to how it is defined. I will take the opportunity at a later stage to raise and discuss that issue as well. So I am really just putting these issues on the table and saying that, at the appropriate time, I will raise them at a later stage of the process.

Since I am here and speaking, I will ask something. The Bill was published effectively only a few days ago, yet we end up with this extensive raft of minor technical amendments, which makes the job of understanding what the Bill is doing extremely difficult—twice or three times as difficult. The grid that we have been supplied with for today’s session is extremely useful, but getting it only an hour before the meeting reduces its value. If I had been quick, I would have ticked off which amendments fall into which of the groups that the Minister has identified. It would have been helpful if we had had it earlier and the different groups had been identified on that list. Perhaps we could have that in arrears, as it were.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, I will be exceedingly brief. As the Minister has said, these are highly technical amendments. Like the noble Lord, Lord Davies, I am frustrated by so many amendments of a highly technical nature and confess that I have been unable to spend the time to get on top of the impact of those changes. I am therefore wholly reliant on the Government’s definition of them. Even my noble friend Lady Bowles was floored by this number coming at this point. I hope for assurance from the Minister that we are done with these technical changes. This truly is an unusual number for a Bill that everyone has been aware is coming for some time. On additionality, which the noble Lord, Lord Davies, referred to, and which I agree is exceedingly important, I have an amendment tabled for Wednesday which tackles that issue. I hope that he will have some input.

I wish to talk about the various amendments to Clause 3 relating to lifetime ISAs, which, in effect, can go into the scheme only if their transfer to a reclaim fund does not trigger a charge payable to HMRC. I am slightly taken aback. HMRC would not be getting its tax payments until the point of reclaim under normal circumstances, so by allowing the assets to go into the dormant assets scheme it loses nothing, not even the timing of the payment of tax charges, because without the reclaim there would be no tax due, as far as I can tell. That strikes me as extraordinary. Why on earth can these assets not be put into the dormant assets scheme? The tax relationship would probably need amending but that is surely not beyond HMRC’s scope. Surely we could ensure that the taxable event happened only at the point of reclaim, as it does right now, meaning there was a bigger pool available for very good causes. Can the Minister give us an idea of what kind of money we are talking about? How much is being denied to the fund because of this constraint that an event which is taxable under today’s legislation is not being amended to make it clear that it is taxable on reclaim, not on transfer to the fund?

I am getting a bit fed up with HMRC. Time and again we get its very narrow focus on tax revenue generation and very little interest in some of the consequences and external impacts of its actions. We have seen it on things such as the loan change, although this is an entirely different issue. Surely it has some responsibility to ensure that the dormant asset programme is as effective and generous as it can possibly be, and therefore making the effort to sit down and draft the various clauses that would in no way deteriorate its current or its proposed tax position, but would allow those assets to be transferred, is a reasonable expectation. I simply do not understand it.

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Lord Bassam of Brighton Portrait Lord Bassam of Brighton (Lab) [V]
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My Lords, this amendment is grouped with others that will have a similar effect, which is to secure reports on the operation of the dormant assets scheme. I think that we are all fishing in the same pool here. We all want the same thing and it is always nice to be able to agree with colleagues across the piece on something such as this.

We need periodic reviews. My amendment seeks to have the first periodic review after two years and subsequent reviews every five years thereafter, and I think that there is a degree of consensus that that is desirable. Why do we want to do that? Well, clearly, it makes sense; we need to know what other dormant assets can be released into the fund and how they are consulted on when they are brought forward. We also need to ensure that mechanisms work properly and that any new additions are sufficiently worked out. That is the purpose behind the amendment.

We also need to know why other fund that are dormant are not being released—in particular, I guess, some of the pension funds. I know that concern was expressed about that at Second Reading, because many of us see dormant pension funds as having a lot of potential. I know that the Government said that the dashboard was not yet ready or bedded in, but we could use periodic reviews to ensure that we are regularly updated on this.

So, very simply, that is my introduction to this amendment. I am sure that there will be a degree of consensus in the Committee on this issue, and I hope that the Minister can be positive about it and that, between now and Report, between us we can fashion amendments to the Bill that give expression to that consensus and that the Government can be happy with as well. I am more than happy to talk to other colleagues about this, so that we get it right, because ensuring that we have regular and periodic reviews is important, as it will build up trust in the legislation and across the sector that will benefit from this. I beg to move.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, I really do not have anything extra to add to my noble friend Lord Bassam’s comments. The proposed clause is about a review of the functionality of the scheme, so it does not really get to the issues that I referred to earlier, so I think that I will leave it there. I am happy to support the amendment.

Lord Etherton Portrait Lord Etherton (CB)
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My Lords, I shall address Amendment 62. Like other amendments in this group, especially those of the noble Lord, Lord Bassam of Brighton, and the joint amendment of the noble Baronesses, Lady Bowles of Berkhamsted and Lady Kramer, Amendment 62 provides for a general review of the dormant assets scheme. Some of the other amendments are framed in rather narrower terms—for example, a review of whether further assets should be added—but I am looking at the issue of a general review in Amendment 62, as do the other amendments that I have referred to.

As a matter of principle and policy, the desirability of a review has already been recognised and provided for in Section 14 of the 2008 Act. Section 14(1)(a) provided:

“The Treasury shall carry out a review of … the operation of this Part”.


Section 14 is necessarily limited to the assets specified in the 2008 Act; it does not extend to any additional dormant assets subsequently added to the scheme under the Bill. But I would suggest that, by parity of reason and policy, there should be a provision in the Bill for a review of the scheme as enlarged by the Bill—or indeed if there are any further assets in the future to be transferred.

Now, I confess that I have made a mistake—a technical mistake, I suppose it could be called—in my amendment, in that the review under Section 14 of the 2008 Act was to be completed

“within three years from the date when a reclaim fund is first authorised.”

I have not seen that review, but I assume that it was duly conducted. Technically, therefore, I suppose, the section is spent. That is, presumably, why it is not repealed.

It would be possible, and quite easy, to extend Section 14 of the 2008 Act to Part 1, which is what I suggest by my amendment, just by extending the date for completion of the review specified in Section 14. I failed to deal with that in my proposed amendment but, having considered the other proposed amendments in this group, I agree that it would be better for there to be an initial review, as there was in Section 14, and then periodic reviews.

As the noble Lord, Lord Bassam of Brighton, said, there is minimal disagreement between people about what the time period should be. Some have suggested that there should be a general review within two years or three years and then periodic reviews thereafter every five years or three years. My alteration is minimalist because Section 14 provided for only one review, not periodic reviews, so that, if we were to extend the date for the review, as I said would be possible, there would be only one review. It seems sensible that there should be periodic reviews, whatever the period is, and I do not feel it is necessary for me today to specify whether I think it should be three, four or five years.

There is a difference between all the amendments proposed in this group about what is specially to be included in any review. The amendments I have mentioned provide for a general review and then the provisions go on to say, “bearing mind specifically x, y and z”. Section 14 of the 2008 Act is rather narrow, but it covers the identification of transferor banks and building societies.

Amendment 45, tabled by the noble Baroness, Lady Noakes, would determine whether additional assets can be covered by the scheme. I suggest, with respect, that that is too narrow. The noble Lord, Lord Bassam of Brighton, specifically addresses that purpose and the extent to which new dormant assets since the last review have contributed to meeting the underlying policy objectives. That is wider than Section 14 and is quite a wide objective. The amendment tabled by the noble Baronesses, Lady Bowles of Berkhamsted and Lady Kramer, addresses wider issues and has a structure similar to Section 14 of the 2008 Act.

I suppose this is in a sense taking up a comment made by the noble Lord, Lord Davies of Brixton. My amendment is directed in terms of mentioning certain matters that must be specifically included in the general review. It is looking at identifying where these various assets have come from, where they have gone to and what has happened to them. We need to understand that in order to see why there are dormant assets. It is quite an important process to go through to identify how many there are and what proportion of them have come from, for example, banks, pension funds, ISAs or whatever it may be, and then we want to know why. If, for example, the information reveals a great disparity between where the assets have come from, that would raise a question that is worth investigating, and then we can go down the route that the noble Lord, Lord Davies, suggested and ask why this category produces so many dormant assets. I have also said that one should identify what has been spent in relation to each category of person and activity and what assets have been successfully claimed.

In subsections (2)(a) and (2)(b) of my proposed new clause, I have sought to get together enough information to understand whether we can learn something about why there are these dominant assets so that Parliament can identify whether some policy is being pursued that is not explicitly apparent in the way that the asset is applied. Having fully admitted that my own amendment is, to the extent I have mentioned, defective—I also think it is too narrow now—I certainly support the suggestion of the noble Lord, Lord Bassam of Brighton, that, together, surely we ought to be able to arrive at a consensus as to what should be covered.

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Lord Faulkner of Worcester Portrait The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
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I have received a request to speak after the Minister from the noble Lord, Lord Davies of Brixton.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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I naively had it in my mind when I spoke that I was speaking only to Amendment 4. I cannot come back on the substance of the amendments, but I have a couple of specific questions. First, in the formal consultation, and in the previous reviews, the Government said that they recognised

“the strong interest in the ways that funds can best be spent”,

even though it was outside the consultation, and that:

“Accordingly, we will consider whether this is an area that should be reviewed”—


in other words, other ways of spending the money. Is this what the Minister just referred to or is it a separate exercise that is being considered?

In the Second Reading debate, the Minister referred to the additionality principle in her introduction. She said:

“Money must fulfil the additionality principle, so it cannot be used as a substitute for central government funding.”—[Official Report, 26/5/21; cols. 1035.]


In response to the debate, she said:

“There was a lot of discussion about the additionality principle. This is set out in paragraph 9 of Schedule 3 to the 2008 Act and remains unchanged.”—[Official Report, 26/5/21; cols. 1084.]


Of course, I turned to the 2008 Act. It is far from explicitly set out; it is actually set out only at one remove. It refers to the need for the Big Lottery Fund to cover the issue in the annual report and to say how it complied with that requirement. It does not set out explicitly what is meant by additionality, so my second question is would it not be better to have a clear and specific definition of what is meant by additionality, given the emphasis the Government place on it as a pillar of the scheme?

Baroness Barran Portrait Baroness Barran (Con)
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I thank the noble Lord for his additional questions. He talked about other ways of spending the funds. I was talking about other causes; I am not sure whether we are using different words for the same thing. In the consultation that we are proposing, we will invite the public to name the issues they care about on which these funds should be used—the aim being to have that in secondary rather than primary legislation to make it a bit more flexible—as opposed to using different types of spend organisations. I was referring to the causes on which that will be spent.

I think that issues of additionality are likely to come up quite frequently, particularly on Wednesday, when we debate some of the other amendments. Perhaps we can take that issue in the round then, if the noble Lord is agreeable.

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Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, I thank the noble Baroness for the amendment, which I support in principle. I am not saying this in jest, but I am always gravely suspicious of lists which involve alliteration, because you are left wondering whether the wish to have all the words starting with the letter E—economy, efficiency and effectiveness—overcomes the need to comprehensively describe what the audit should be doing. Where does “economy, efficiency and effectiveness” come from? Maybe it is a standard phrase which is well established and understood to be comprehensive, but reassurance on that would be helpful.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, I very much support everything that has been said so far, and I hope that we will get some clarity. Value for money is critical when we are dealing with these kinds of organisations.

I decided I would take a quick look at the financials of Reclaim Fund Ltd—which does not take very long as they are not hugely detailed—and the number that knocked me over and made me very concerned that value for money was definitely on the agenda was the remuneration of the chief executive. They may be an absolutely stellar individual and I would not wish in any way to criticise the individual personally but, according to the numbers I was looking at, there are 12 employees of Reclaim Fund Ltd, one of whom is the chief executive himself, and the chair. The median CEO salary in 2019 at the largest 100 charities was £155,000 a year, but in 2020 the chief executive of Reclaim Fund Ltd earned £217,000, if I add up simply salary and performance-related pay and leave out the pensions stuff. It struck me as prima facie rather out of line. Making sure that there is an audit that takes value for money into account would certainly give us all much more confidence that these issues were being handled appropriately. I fully understand that, as the asset base expands, there will be more complexity, so maybe there is a changing situation. But the 2019 pay packet was similar and I want to make sure that the appropriate body is focused properly on these issues and that value for money sits right at the front of the audit responsibility.

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Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, I have Amendment 53 in this group. It is very much on the theme of Amendment 51, which the noble Baroness, Lady Bowles of Berkhamsted, just spoke to. As she said, the common ground between us is that the amount of money kept back in Reclaim Fund Ltd as reserves for repayment claims is much too high. Like her, I was shocked when I found out that the company started off by holding back 60% of the funds transferred from banks and building societies. The fact that it is now 40% is no great comfort.

When the then 2008 Bill was debated in your Lordships’ House, the Government could offer no estimate of the amounts that would be held back, but the kind of figure that we talked about was 10%. Surprisingly, that is not a million miles away from the experience to date, which is between 5% and 7%. The ultra-cautious reserving policy adopted by the company has meant that around £500 million has been held back. Just think what could have been achieved in the voluntary sector if even half of that had been released.

Nothing in the 2008 Act required this to happen, but the Act did require any reclaim fund to embed in its articles of association the transfer of money for good causes being subject to ensuring that it could meet repayment claims that are prudently anticipated. The issue is about the judgments that have been made for these prudently anticipated repayment claims.

I understand that the calculation of the reserves has been made using actuarial advice. With apologies in advance to the noble Lord, Lord Davies of Brixton, I was once told that people became actuaries rather than chartered accountants because they found chartered accountancy too exciting. That may well account for the fact that an extreme version of prudence has been at work in this provision.

When the Dormant Assets Commission reported to the Government in 2017, it too was concerned about the amounts held back for both repayment claims and a capital reserve. Both appear to be ultra-prudent. So far as the repayment reserves are concerned, the Dormant Assets Commission recommended using commercial reinsurance against the tail risks driving the extent of this provision. Now that the company is firmly in the public sector, it makes little sense to carry on preparing accounts as though it were a free-standing organisation needing to guard against extreme possibilities for future payments.

The plain fact is that, if Reclaim Fund Ltd overdistributes its funds and runs out of money due to unexpectedly high repayment claims, the Treasury will have to step in. I will comment later on the problems I see with the power in Clause 27 to lend money to the company, but I believe that the crucial issue is that the Treasury now de facto stands behind the company. It should now be run from a financial management perspective in that light. It would not make sense to buy commercial reinsurance for the company’s tail risks because the public sector can bear such risks on its own balance sheet, which is why the Government rarely, if ever, buy commercial insurance.

My Amendment 53 could have tried to replicate an internal public sector reinsurance arrangement, but that felt rather artificial. Instead, it would give the Treasury power to guarantee the liabilities of the company, which it de facto does anyway now that it is in the public sector, and to tell the company how much of that guarantee can be taken into account when it makes its determinations under the 2008 Act about how much to anticipate on a prudent basis. It is now the Treasury’s responsibility to determine how much can be released for good causes. It must not hide behind an artificial construct of a limited liability company making its own judgments because, in the context of the public sector, the broad shoulders of the sector is bearing the risks anyway.

Amendment 51 in the name of the noble Baroness, Lady Bowles, basically links the power of the Treasury under Clause 27 to lend money to a reclaim fund when it calculates its provisions for liabilities. I do not think that that works in accounting purposes because, whether or not it is drawn down, the availability of a loan has no impact on the calculation of a liability. A loan is about funding—that is, cash flow—rather than the amount that is or may become payable.

In fact, I believe that the loan power in Clause 27 may be pretty useless. If the directors consider that they are unable to meet their liabilities as they fall due and there is any uncertainty about their financial forecasts, it may well be that the correct course of action for them is to place the company into liquidation. A loan would make sense only if the company had a strictly short-term need for cash but was confident that other funds would flow in from more dormant assets in the future to make up any hole in its accounts.

In any other case, liquidation is the obvious route because directors bear personal responsibility if they trade while insolvent. The Treasury would almost certainly want to avoid liquidation, with the possibility that repayment claims were not met, and would in practice have to recapitalise the company rather than lend money to it if a major loss emerged. So Clause 27 may well be a bit of an illusion, but it is certainly not the basis for reduced provisioning for repayment claims.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, I am going to live up to the caricature—I thank the noble Baroness—and will speak up for prudence. I find this a difficult issue. For me, it will be resolved only if we have access to the advice—I presume that it was made to the reclaim company rather than to the Government because this is a decision by the reclaim company—so I would be interested to know whether it is possible to see the advice that it has received.

It would also be useful to have a bit more information on the mechanics of how the reserving works. It is possible that, as the fund rolls forward, money that was required for reserving date one becomes available because of the way that the fund operates at date two and the reserve is more about when the money becomes available rather than an absolute bar on the availability of funds for charitable causes.

Public Service Broadcasting (Communications and Digital Committee Report)

Lord Davies of Brixton Excerpts
Thursday 27th May 2021

(3 years, 1 month ago)

Lords Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab) [V]
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My Lords, I welcome the report and endorse strongly its central conclusion, as expressed in its title, Public Service Broadcasting: As Vital as Ever. The report is comprehensive, dealing with the whole range of public service broadcasting in the context of what is referred to as the broadcasting market. I will focus on its application to the BBC and its independence.

Paragraph 184 of the report says that:

“The BBC has a unique funding model based on the licence fee which is intended to safeguard its independence from the Government and the market.”


That is independence from, first, the Government, and, secondly, the market. As far as the market is concerned, I see a glimmer of hope in the Government’s response. In paragraph 2 of the response we read that:

“The Government expects public service broadcasters to deliver high-quality, distinctive content for all audiences and licence fee payers across the UK. This is important in order to deliver … the wider objectives of PSB … In many cases this content would be underprovided or not provided at all by an unregulated market.”


So we are agreed that there is significant market failure that has to be addressed by public service broadcasters, although it would be good to hear from the Minister that this is still the Government’s view over a year later.

The news about independence from the Government is not so welcome. The BBC charter says in section 3, on the independence of the BBC:

“The BBC must be independent in all matters concerning the fulfilment of its Mission and the promotion of the Public Purposes, particularly as regards editorial and creative decisions, the times and manner in which its output and services are supplied, and in the management of its affairs.”


The important words there, which are particularly apposite at the moment, are those in the reference to “editorial and creative decisions”. You do not get to pick and choose what is meant by being independent; it is absolute. I would argue that the BBC’s independence extends to its ability to make its own mistakes.

This is certainly the position until the review of the charter in 2027. But what we now have is the introduction of the mid-term review of the charter, which has to be completed by 2024 and which is, in effect, being employed as a threat to the BBC’s independence. There was some indication of this in the Government’s formal response to the report, going back to February last year. Paragraph 21 says:

“The Government believes that the Charter mid-term review, due to take place by the end of 2024, is the appropriate milestone to consider whether the current regulatory arrangements for the BBC are working effectively and whether any reforms are necessary.”


That was uncomfortable enough, but now we have Oliver Dowden’s recent tweet:

“Lord Dyson’s report reveals damning failings at the heart of the BBC. We will now reflect on Lord Dyson’s thorough report and consider whether further governance reforms at the BBC are needed in the mid-term Charter review.”


Let us look at section 57 of the charter, which deals with the mid-term review. It says that

“The Secretary of State may undertake a mid-term review”,


and that

“The Secretary of State must determine the scope and terms of reference”.


So there is much power in the hands of the Secretary of State, without, it should be noted, any requirement for public consultation. Subsection (5) goes on to say that

“The review must not consider … the Mission of the BBC … the Public Purposes of the BBC; or … the licence fee funding model of the BBC for the period of this Charter.”


If you analyse that, and compare it to what is said in the charter, it is quite clear that the BBC’s role as a public service broadcaster is not up for review in the mid-term review. That is outside its terms, so why does the Secretary of State refer to it in his original comments on the report and again in his recent tweet?

It is important to note, therefore, that Lord Dyson’s report covered events only up to 17 April 1996. Since then, the present Government have significantly changed the BBC’s governance in the charter that commenced in 2016. So the Secretary of State’s tweet should have said, “Lord Dyson’s report reveals damning failings at the heart of the BBC more than 25 years ago, since when we, the Government, have made changes in its governance.” The tweet from the Secretary of State was totally out of order, a clear threat to the BBC’s independence and outside the terms of the objectives of a public service broadcaster.