Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Wednesday 1st May 2019 Lords Chamber

[Baroness Buscombe]

I thank the most reverend Primate the Archbishop of York and the noble Lord, Lord McKenzie, for giving me a further springboard to have discussions on this with my ministerial colleagues in the Department for Education. It is something that we worked on during the passage of the Bill. We did not get as far as we would have liked. We will try again, but we will also keep talking to the Treasury about this and hope to make progress.

[Lord Stevenson of Balmacara]

My Lords, I thank all those who have contributed to this short debate. It has served its purpose and achieved what we wanted, which was a chance to reflect on the progress made since the passing of the Bill and an update on the heartening and encouraging work now going on—the listening posts, the three-year plan and the idea that out of this will come a national strategy. I cannot remember whether in the Bill we required that to be brought back to Parliament, but I am sure that an inventive Minister like the one who has just responded would be able to find a way of allowing us to have another discussion on that strategy when it is produced so that we might at least have some sense of engagement with it.

One question arises from that which does not need to be responded to today. On the programme of events that will accompany the emergence of MAPS as a fully fledged body, the breathing space can be achieved by regulation, but the statutory debt management plans require legislation, as might some of the work on pensions. I do not see many notifications of that in the forward programme, but that itself is also quite difficult to discern. When the Minister has some information, perhaps she might share it with us when we are developing that set of legislative processes, because it would give us opportunities to come back to some of the issues we have not touched on. There is an outstanding Goods Mortgages Bill which would be fantastically important in eliminating one more of the high-cost credit problems that we have; namely, that car book loans, established under Victorian legislation of 1858 and 1862, still exist and fall completely outside the current system under which the Financial Ombudsman and others can operate. They predate that and are about a thing called a bill of sale, which should be outlawed. If we cannot get that on to the statute book as part of this process, we are really failing.

I think the question of bailiffs will come up through the report of the Ministry of Justice on bailiff operation. There is a clear need for a statutory basis for bailiffs’ operations. A good code of practice and some form of redress system would contribute considerably to assisting those in trouble. Those are details to be followed up. I include in that the pensions dashboard, which the Minister did not touch on but which is also an important step forward.

The most reverend Primate the Archbishop of York was right to say that there is still too much high-cost credit around. The corollary of that is that there is still a problem about low-cost credit being available at the appropriate time and in the appropriate amount to those who, curiously, borrow the most in our society. The poorest in society borrow more than those further up the income scale because they have to. As they are paid on a short-term basis or are living on limited amounts of money, they have to borrow when big expenditure arises. The system does not provide for that—not even for basic bank accounts. We need to go back to that and think more about savings. Auto-enrolment is a huge success. A lot of thinking by the Treasury has contributed to it—under previous Governments as well as under the current one—and it is to be given great credit. When it was first proposed when I was in a think tank, I thought it was the daftest thing I had ever heard of—making people contribute to savings when there were so many other pressures on them—but it has been a huge success and I am very glad that it is there.

However, it is only part of the story. It is far easier to borrow money in this society than it is to save. Why is that? Why do we have perverse incentives about people being able to accumulate cash that would see them through? I did not cite the statistics in the StepChange yearbook, but it is still incredible that a huge number of people do not have enough money from their current income to see them through one month’s problems. We must do something to help them.

The most important strand is education. We delude ourselves if we think that by simply asserting that this is an important area that should be in the national curriculum we will achieve it. Both my noble friend Lord McKenzie and the noble Baroness, Lady Neville-Rolfe, have experience of trying to get this to work in previous Administrations and I wish the Minister well with it. Is there anything we can do to ensure not only that this is seen as a good idea but that it is taken up by those with the ability to deliver, particularly given my noble friend’s points about the new environment? The Government’s only statutory ability is in relation to the limited number of schools that are still a local authority concern, but they have no lien in terms of forcing through the curriculum for academies or those schools in private hands. There are situations where kids will not learn what we all know they need to learn. Exactly like the noble Baroness, I wish I had known at the time, when I could have done something about it, what I know now when I am in such straitened circumstances.

Financial Guidance and Claims Bill [HL]

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

3rd reading (Minutes of Proceedings): House of Lords
Tuesday 21st November 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I declare an interest as a member of the Financial Inclusion Commission and a former chair of StepChange, the debt charity. Before I get on to the nature of the amendments, which we support, I want to pick up on the tone that has already established itself around the House of a group of people with expertise and knowledge, willing to put aside any political differences they might have at the start of such a Bill, and with a fierce commitment to work together to improve what we have before us. We have just heard a series of short comments which are redolent of a much greater and more important truth: namely, that when the House does this, it really does it well. I am very grateful to all concerned who have been part of this. We are seeing today a Bill that has been transformed, not because of any particular line or argument in a political or wider sense but because people genuinely believed that there were things here that could be made better and that, as a result, the lives of people right around this country would be improved. I think it is very important that we hold on to that.

I thank the Minister, as everyone else has, for introducing this group of amendments which reorganise and expand the objectives and functions of the new single financial guidance body and set the tone for its future activities. We are pleased to support the group of amendments, as I said. It is important to get a sense of the journey we have been on: we made it clear at Second Reading that, although we agreed with the Bill, we thought it was a framework Bill and not a Bill that had the substantial and important powers that we thought were needed. We wanted to make sure that by the time it left your Lordships’ House it had been changed a lot—and of course it has.

As originally drafted, it was too narrowly focused on the near-term task of bolting together the three separate functions that were being brought together—debt advice, pensions guidance and financial capability—and on transferring the very important responsibility for claims management to the FCA. It was really short—a lot of people picked this up—on the vision that the body should have and what the sector was going to be in the medium term. It seemed to devalue the work on strategy that was so important and is now at the centre of the activities. The fact, as the noble Baroness said, that the original Clause 2 led on functions and only later referred to objectives meant that the Bill, I think unintentionally, gave the impression that the main purpose was the enactment of what would be simply a series of structural adjustments.

This, as we have been reminded, was at a time when the Government had decided to change the terms of trade in financial inclusion by creating a new Minister at the DWP, the department that is sponsoring the Bill, but had not set out clearly what they expected the Minister to do. We all agreed, I think, right around the House, that the Bill and the new functions of the SFGB would actually be about delivering a holistic financial inclusion policy. As we have already learned from its chair, the excellent Lords Select Committee that reported at about this time on a range of issues around financial inclusion made the case for extending the Bill to cover a number of specific proposals.

Towards the end of Report, when it was clear that the Bill had changed and was going to contain much more about the application of financial inclusion policies, as we will hear again later today, we suggested that Clause 2 should be revamped. What we wanted was a bit more of the longer-term vision that the SFGB should be aiming for, and we argued that putting the objectives first and then dealing with the functions at the new body’s disposal was a better way of doing that—and I think that splitting the original clause into separate groups is a concrete way of doing it. So we are very grateful to the Minister for seeing the merit of our arguments and we thank the Bill team for working very hard to get the new draft into shape. I have a reputation in your Lordships’ House for not being very good at drafting, so I was delighted when they agreed to take it away and bring it back in the form in which we now have it: it is so much better.

The noble Baronesses who spoke on the vulnerability issue did the House a great service by raising with great passion the need to make sure that the Bill, as well as generally describing the new body, focuses on vulnerable people. We are very grateful to see that amendment here today. With that, we support these amendments.

[Baroness Buscombe]

My Lords, I thank noble Lords for this short debate and for their support for this amendment. In reply to the question raised by the noble Lord, Lord Kirkwood, yes, we expect persons in vulnerable circumstances to be robustly signposted to UC and other benefits where appropriate.

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[Baroness Buscombe]

My Lords, I turn to the protection of indebted consumers, in particular the idea of providing a breathing space scheme, referred to in the amendment as a debt respite scheme. I thank noble Lords for their insightful and constructive contributions to previous debates on the subject.

I promised on Report that the Government would do further work on the issue in time for Third Reading. My officials and I have worked hard to produce an amendment that enables breathing space to be delivered quickly and effectively, a case for which noble Lords—in particular, the noble Lord, Lord Stevenson—put forward eloquent and powerful arguments. Indeed, the wording of the amendment builds on the amendment tabled by the noble Lord, to which the noble Lord, Lord Sharkey, and the noble Baroness, Lady Altmann, added their names on Report.

The best of your Lordships’ House has been on show in the development of the amendment. The way in which the Government and the Opposition have worked together to achieve consensus on a workable amendment which will enable the successful delivery of a breathing space scheme has been impressive, and it is my pleasure to introduce the amendment to your Lordships’ House. I know that there is broad agreement across your Lordships’ House that a breathing space scheme is both necessary and important. It has the potential to help thousands of vulnerable families out of problem debt, and provide a better life for individuals and their families.

I reassure the House that the Government remain strongly committed to the implementation of a breathing space scheme that is well designed and delivered at the earliest opportunity. We have already set out a clear timetable for developing the policy; the amendment provides the legislation that will allow us to implement it. Beyond enabling the introduction of a breathing space, the amendment contains many similarities with the one tabled by noble Lords on Report. For instance, it provides for details of the scheme to be set out once more detailed policy design has taken place. This is crucial, given that the Government are committed to listening to expert views put forward in the call for evidence. It also requires the Government to receive advice on the design of the scheme from the single financial guidance body, which will be important given the body’s expertise and central role in supporting indebted consumers. However, noble Lords may also notice a few differences from the amendment tabled on Report.

The noble Lord, Lord Stevenson, and I are in agreement that the Government’s amendment enables breathing space to be designed in a more effective way, building on, rather than duplicating, the work already commenced through the call for evidence, while still allowing for its introduction to take place swiftly.

I will outline a couple of the specific changes. First, the amendment enables the single financial guidance body to be involved in the design of the policy in a more suitable way. The Government plan to complete an extensive policy development and consultation process over the next year. As set out previously, we published a call for evidence last month on this topic, and intend to consult on a specific policy proposal in the first half of 2018. Through this process we will have established a robust blueprint of a breathing space scheme, informed by the expert views of the sector. Given this, we have agreed that it would not be the best use of the new body’s time and resources to require it to redo this work in its entirety once it is set up. Instead, our amendment would require the single financial guidance body to provide advice on specific issues requested by the Government.

The body must provide this advice within 12 months of its being established, which we expect to be in late 2018. On receipt of this advice, we will make regulations to set up the scheme as soon as is practicable—and certainly within 12 months of receiving the advice. This process will enable the body to supplement, rather than duplicate, the policy work the Government will have done up to that point. It could also speed up the introduction of the scheme, given that the advice is likely to be more targeted.

Secondly, we are in agreement that the amendment provides for more flexibility in designing the eventual scheme, potentially allowing for a scheme with a wider scope. For instance, our amendment enables—but does not mandate—the scheme to extend to Wales and Northern Ireland. We will assess the preferred geographic scope of the policy through our consultation, and the amendment allows us to deliver on the outcome of this process.

These are important changes, which we have reached a clear consensus on. However, after long and exhaustive discussions with House officials we have been informed that, for these changes to remain within scope of the Bill, we must take a power to make these regulations rather than a duty. I must be clear: in our view, this wording change has no practical impact. We have been clear, here and elsewhere, that we will deliver a breathing space scheme. This was a manifesto commitment and we are already midway through an intensive policy consultation process. This is simply a necessary step to give us the power we need to establish the scheme through this Bill. The Government’s position is clear. This amendment reflects the strength of our commitment to implementing a successful breathing space scheme. It sees the scheme delivered quickly and effectively and it ensures the sound design, implementation and operation of the scheme.

I turn to Amendment 33, tabled in the name of the noble Lord, Lord Sharkey. I begin by making it clear that this amendment is, with respect, neither necessary nor meaningful; it is actually entirely meaningless. As the House will have seen, the Government have tabled their own amendment to ensure that the Long Title of the Bill reflects the content following the additions made on Report. I must stress that my view remains that it is standard practice to add wording such as that tabled by the Government to the Long Title, and that it is perfectly adequate as tabled.

I also take this opportunity to remind noble Lords that the content of the Bill informs the Long Title; it is not the other way around. Indeed, the Companion to Standing Orders says that,

“amendments to the long title are not in order unless they are to rectify a mistake in the original title, to restate the title more clearly or to reflect amendments to the bill which are relevant to the bill but not covered by the former long title”.

Clearly, it is the third of these purposes which is relevant to this instance. Any amendment to the Title must therefore reflect amendments made, or being made, to the Bill. It is for this reason that we tabled an amendment to the Long Title to accompany the amendments that we tabled in respect of debt respite. The purpose is not to enlarge the scope of a Bill by amending the Long Title.

I am afraid that I must also express my disappointment that the noble Lord, Lord Sharkey, did not feel that he could discuss his original amendment, which he has now withdrawn, with me. Had he done so, I would have pointed out to him that I did not consider that it accurately reflected the contents of the Bill. His current amendment accurately reflects the content of the Bill so—in the spirit of consensus and because, as I have described, the amendment does not affect the scope of the Bill—I am prepared to accept it. On that basis, I shall not move Amendment 34 standing in my name and shall accept Amendment 33, tabled in the name of the noble Lord, Lord Sharkey.

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for introducing the amendments in this group which, as she says, will primarily establish a much-needed statutory debt respite scheme. As she also said, it is necessary and important. We have signed some of the amendments in this group and are absolutely delighted to support their inclusion in the Bill.

The failure to include a breathing space in the Bill left a substantial gap in the services which the debt charities need, if they are to offer the best support to those struggling with unmanageable debt, so we have been pursuing it through the various stages of the Bill and challenging the Government to up their game and honour their manifesto commitment. Initially, I think it was clear to the whole House that the Minister was under strict instructions to agree to nothing. But it is to her considerable credit that, after listening to the arguments and consulting widely, she decided that the case had been made. She and her Bill team then went out to bat for the proposal and, from a standing start, secured support for the amendment from her government colleagues. Only those who have witnessed the turf wars that this sort of decision—to introduce a breathing space—must have precipitated can appreciate what has been going on in Whitehall over the last few weeks. I have seen that at close quarters and it is not a pretty sight. I therefore salute the hard work that the Minister and her team have put into this, and I am lost in admiration at their ability to persuade—at ridiculously short notice—her ministerial colleagues to back this amendment today.

Financial Guidance and Claims Bill [HL]

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Report: 2nd sitting (Hansard): House of Lords
Tuesday 31st October 2017 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, I too support this amendment, which we discussed earlier and which I think has been re-presented in the expectation that it will commend itself to Ministers, and in the hope that they will look kindly at it. It is absolutely right to consider these cold-calling activities as one of the greatest nuisances of the modern age. Indeed, the Minister herself admitted that they had led her to give up her landline so that she could not be persecuted. But that does not seem to stop them; they just find your mobile phone and get on to that as well, using texts and other means. I cannot wait until they start using drones and other things to deliver their messages in the hand. Maybe at that stage we would have the Government on our side, as they might recognise aerial bombardment as taking it a step too far.

But at the heart of this is the question of trust. The noble Baroness was extremely persuasive on an earlier amendment in suggesting that she could be trusted and was a person of trust. Her work with all of us around the House—we have all had a chance to talk to her about issues of interest to us—can be seen in the amendments that she laid herself and the support she has given to other amendments coming forward. Here is a classic: she gave a commitment at an earlier stage, admittedly in slightly different circumstances, to bring something forward. She let slip that the civil servants are already working on it, which suggests that a great deal of activity has probably gone on around Parliament and departments, because she would not have mentioned it if she did not have some confidence that what was being proposed could have been seen and agreed by other Ministers who have an interest in this area. So I suspect that things are well primed. I do not like defence or guns in metaphors, but if the gun has been so charged and so primed, it seems rather odd that it has been left in a loaded position somewhere close to her office not being used. Trust is something we want to see exercised in practice, and I look forward to hearing the noble Baroness’s comments.

[Baroness Buscombe]

That is quite an interesting one: any gun should be locked in a cabinet. The amendment tabled by the noble Lord, Lord Sharkey, my noble friend Lady Altmann and the noble Earl, Lord Kinnoull, seeks to ban “unsolicited direct approaches” such as phone calls,

“by, on behalf of, or for the benefit of companies”,

providing claims management services. It also seeks to prevent these companies using data obtained through the use of such methods.

I have spoken previously about the significant steps taken by the Government to address these issues. We have increased the amount that regulators can fine those breaching direct-marketing rules. We have forced companies to display their number when calling you. As we have previously discussed in your Lordships’ House, cold calling is already illegal in certain circumstances, such as where a person has registered with the Telephone Preference Service or has already withdrawn consent.

The Information Commissioner’s Office enforces restrictions on unsolicited direct marketing. The Data Protection Act 1998 requires organisations to process data fairly and lawfully. Organisations must: first, have legitimate grounds for collecting and using personal data; secondly, not use the data in ways that have unjustified adverse effects on the individuals concerned; and, thirdly, handle people’s personal data only in ways they would reasonably expect. A serious contravention of the data protection principles could result in a monetary penalty notice being issued by the Information Commissioner. Depending on the circumstances, this could include a CMC which sought to use data that it had originally obtained through unlawful means.

However, we have listened carefully to the views of your Lordships’ House and fully agree that more needs to be done to tackle the prevalence of nuisance calls across the UK. As I previously explained, there are complex issues to work through, including those relating to EU directives. But I can reassure your Lordships’ House that the Government are working through the details of a cold-calling ban in relation to the claims management industry. To that end, I am pleased to say that I revisit the offer made in your Lordships’ House last week and repeat that the Government intend to bring forward an amendment in the other place to meet the concerns of this House. This amendment will look to ensure that the onus is no longer on the consumer to opt out of marketing calls.

Unfortunately, the amendment tabled by noble Lords would give the FCA a duty it cannot enforce under its current regime. I assure noble Lords that the Government are committed to tackling this issue properly and will consult with the FCA, the CMRU and the ICO to ensure that the government amendment addresses these issues in the most effective way. But if Amendment 42 were accepted, it would not achieve its aim. For these reasons, I urge the noble Lord to withdraw the amendment.

Financial Guidance and Claims Bill [HL]

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Tuesday 24th October 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I thank the noble Lord, Lord Stevenson, for moving Amendment 14—tabled by the noble Lord, Lord McKenzie, in Committee—and for this evening’s debate. The amendment relates to the new body’s strategic function to conduct research on the levels of unmanageable debts across England, Wales, Scotland and Northern Ireland, as well as the causes of unmanageable debt and ways to prevent it.

It is right that this House continues to take a great interest in understanding the causes of debt and how the Government can best help those who are struggling. I thank noble Lords again for their ongoing, important contributions on this matter since the introduction of the Bill and beyond. Problem debt, as the noble Lord has said, is such a serious issue, with wide-ranging consequences for those affected by it. The Bill is testament that the Government take the issue very seriously and recognise that there is more work to do to ensure that fewer households slip into problem debt. I understand the worthy aims behind this amendment: to highlight the importance of research on indebtedness and to ensure the new body gives it all the attention this important issue requires. The strategic function of the new single financial guidance body will play a fundamental role in this area. It will give the new body the responsibility to develop a national strategy to identify the most pressing issues and the most effective interventions in financial capability, personal debt management and financial education, working closely with others in the financial services industry, the devolved authorities and the public and voluntary sectors.

However, the Government’s assessment remains that to specifically reference one area of research over others in legislation is not needed. There are many topics that the new body will need to investigate and I have no doubt that it will conduct research on the very issue that the noble Lord suggests. Significant research is already being undertaken by the Money Advice Service, which is looking at the levels and causes of over-indebtedness across the UK. A great deal of the focus of MAS’s financial capability work, and the work that is envisaged for the new SFGB, will support the aim of preventing and reducing problem debt.

I refer, as I did in Committee, to my visit to MAS recently. I was tremendously impressed by the focus of those working there on research. They are trying to bottom out what it is and find out how we can tackle debt from an early age onwards and really make a difference—not just to be tactical about it, but to ask: what is it that leads to this really difficult issue of problem debt? A lot of this debt starts from an early age—as referred to in the previous debate—but it also has to do with people’s attitude to it and so on. Noble Lords should have every confidence that all these people will be very excited to take this work forward with the new body. However, specifying one issue of research in legislation—as we said earlier this evening, in terms of having lists for things—can always be problematic and could risk hindering the body’s ability to take a wide-ranging, strategic approach across the whole sector.

The legislation has specifically been drafted to enable the body to do anything that is conducive or incidental to the exercise of all its functions, and this includes conducting research. So, yes, in response to the noble Lord, Lord Stevenson, we are confident that doing research is a part of the incidental and conducive function, and I am very happy to give that assurance. This will ensure that the body is future-proof and able to have regard to any unforeseen, emerging issues—ones which we have not even begun to contemplate, I am sad to say, and which may confront us in years to come.

The whole purpose of this new body is to improve the financial capability of the public through its delivery and its strategic functions. To do this effectively, it will need to conduct wide-ranging research to fully understand the issues it is addressing, test what works best and learn new approaches. As I hope I have set out clearly today, the Government believe that the new body should have the ability to choose the specific topics it researches in relation to its function and that these should not be specified in legislation.

The noble Lord, Lord Stevenson, also asked whether the body will have the capacity to do this research on a large scale. Yes, it will have that capacity. I have talked to everybody working across the three existing bodies and they see this very much as a part of their role going forward. Therefore, I hope that, after considering these points, the noble Lord will withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for her ringing endorsement of the role of research in the work of the SFGB. I admire her confidence that it will be able to be done, and I am sure that it will be. We hope that it will be one of the things that will be read in Hansard and used as a way of building up the forward work programme. I am still slightly worried about the breadth of the research and the ability to carry it out on a very long timescale. Longitudinal studies take time and a lot of resources, and they have very few results for a long time, so a real engagement at that level will be required. However, given that that is where we are and it is what we are going to do, I beg leave to withdraw the amendment.

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[Lord Stevenson of Balmacara]

It seems rather perverse, right at the very end, to talk about a clause that we have been debating for nearly a whole day and then to propose that it should be struck out and replaced with something else. Also, I wonder whether the clerks understand what we are trying to do here. We have already amended Clause 2 as it currently stands and they have not raised a single eyebrow. Actually, two eyebrows are being raised at the moment but they were not raised earlier when we seemed to stray into the territory of constitutional confusion, although I do not wish to raise that again today.

Let us be quite clear about this. The amendment was meant to be an attempt to aid wider public understanding of what the body is about. When we went through Committee, and certainly when we talked about some of the issues relating to the Bill in meetings, it was felt that we had the wording in the Bill as published before this stage—starting as it did with functions and moving on to objectives—the wrong way round. It was felt that there would be better clarity and a better understanding of what we were about if we could rejig it in a way that focused on the long-term vision of this body, how its constitution and powers supported that long-term vision, and what functions it needed to achieve that objective in the medium term. Amendment 21, in my name, is an attempt to do that. It borrows heavily on discussions with the Bill team, for which I am very grateful, and indeed some of the wording may be rather familiar to the team. It is not far from what appears in the Bill as currently printed, except that it is in a different order. I argue that the way it now reads—and I hope that there will be support for this around the Chamber—provides a much more logical approach to what we are going to do.

In a nutshell, the problem is that if you start with the functions of the body as it may be in the future, you tend to think of those in terms of where we are at the moment with the existing constituent bodies—the MAS, Pension Wise and TPAS. If you detach that from your initial thinking and think only about what will happen to the consumer and the journey the consumer takes in trying to get the information, advice or guidance that they seek, in the appropriate way, it clears up a lot of the confusion that we ran into and the terminological difficulties that we had. They were helpful in that they brought out the problems that we faced, but unhelpful in that they brought us back to confusion about what this body was about.

In Amendment 21, the objectives, coming before functions, are listed in proposed new subsection (1). In proposed new subsection (2) they are now objectives, whereas before they were functions, and then the functions follow. The related powers come after that. It has a clarity of overall shape that commends it, but I doubt that the wording is now sufficient to cope not only with where we might want to see changes coming forward but also in light of what has happened.

I have anticipated an amendment already in the Bill, as of this afternoon, by including within the phrasing of my current amendment the “free and impartial” amendment, which we have accepted. I took a bit of a chance on that but I am delighted that we have agreed that that should go forward, as it should do. There may be others that a little bit of time and work by parliamentary draftsmen could polish up by the time we get to Third Reading. I hope that, when the Minister responds, she might feel it worth taking away this amendment and bringing back something that would substitute for the existing Clause 2 in a way that fulfils some of the objectives that I have set out here today. I beg to move.

[Baroness Buscombe]

My Lords, I thank the noble Lord, Lord Stevenson, for this amendment to Clause 2. I also want to thank all noble Lords who have spoken today in connection with the functions and objectives of the single financial guidance body. We have had a wide-ranging debate, covering matters including financial inclusion, financial exclusion, financial education, scams and fraud, and unmanageable debt. We were also going to debate, and accept as important, the resourcing of front-line services.

I also thank the noble Lords, Lord Stevenson and Lord McKenzie, for the discussions that we have had outside the Chamber in relation to this clause and how it might be reframed. As noble Lords have rightly indicated, Clause 2 is the foundation that sets the whole tone and ethos for how the single financial guidance body will operate. It provides, as we have discussed today, the framework and lens through which the body will exercise its functions and make progress, working with others towards achieving its objectives.

I think that we are all agreed that establishing the single financial guidance body with a framework of broad core functions and objectives provides a sensible and pragmatic way forward. The amendment that the noble Lord, Lord Stevenson, has tabled does four key things. It restructures the subsections in Clause 2 to bring to the fore the body’s objectives. It places an obligation on the body to consider all a person’s information, financial guidance and debt advice needs, and whether they would benefit from receiving other services that the body provides. It seeks to clarify that the body will hold the pen and have some responsibility for ensuring that all parties involved in developing a national strategy make progress on taking it forward. It also seeks to extend the strategy’s financial education element beyond children and young people. I see the value in the intentions behind this amendment.

There is a certain merit in setting out up front what the objectives behind the activities of the body should be. I also see merit in making it more apparent that the single financial guidance body will take the lead in developing a national strategy to improve people’s financial capability and ability to manage debt. These changes could clarify, not only to the body but also to all those it will work closely with, that these are the Government’s and Parliament’s expectations.

I recall that the noble Lords, Lord Stevenson and Lord McKenzie, raised a similar point in Committee about ensuring that, if a member of the public comes to the new body seeking information, guidance or debt advice from two or more different functions of the body, they will be able to access those different functions if needed, as opposed to only one function. I think we all agree that this is important. While this was one of the Government’s stated aims for the single body, I still believe that it is already encapsulated in the Bill. However, I can see that it may be useful to strengthen that point and make it more obvious in the legislation.

We discussed earlier amendments tabled by the noble Lords, Lord McKenzie and Lord Stevenson, and the noble Baroness, Lady Kramer, on matters relating to financial education which seek to extend the element of the strategic function beyond the provision of financial education to children and young people. I do not think it is necessary for me to reiterate the points which I and my noble friend Lord Young made when discussing Amendments 9, 10 and 13, but I am supportive of much of the intent behind this amendment. I feel that we agree on the broad thrust of much of what it aims to achieve. On this basis, I trust, and very much hope, that the noble Lord, Lord Stevenson, will withdraw the amendment to provide some further time for us to consider and refine it before bringing it back at Third Reading.

Financial Guidance and Claims Bill [HL]

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 4th sitting (Hansard): House of Lords
Wednesday 13th September 2017 Lords Chamber

[Lord Stevenson of Balmacara]

I rise briefly to support the noble Earl, Lord Kinnoull, in his quest for a more equitable arrangement with the powers that be in terms of the FCA. I think he would be the first to admit that this is a recurring theme in many of his contributions to debates around financial guidance and similar issues. On the surface, it seems extraordinary that a body so well resourced and organised as the FCA should be so diffident in coming forward with helpful advice to get people to work better and more constructively within the sector it is regulating.

This amendment has had to be framed to get it into a debate around claims management but it touches on a much wider issue about all the aspects of the FCA that we are talking about. Indeed, it is about an attitudinal and possibly a conduct approach, which is also part of it. I hope that there is a way to get this matter resolved one way or another because it is part and parcel of the other issues we have talked about in terms of duty of care and responsibility for consumers and the vulnerable. If the FCA—and indeed, by implication, the SFGB—took a more interactive and supportive stance, we would all be better off.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, it is my turn to rise to my feet to support my noble friend Lord Young, who has been more than a co-pilot for this part of the Bill. Perhaps I see myself more as flight observer.

The amendment moved by the noble Earl, Lord Kinnoull, aims to ensure that the FCA helps firms to interpret the FCA rules. I absolutely accept and understand his reasons for tabling this amendment in terms of the importance of that interpretation and in order to be helpful. I agree that ensuring that firms understand the FCA’s rules will be vital to the success of this new regulatory framework, and I would like to draw the noble Earl’s attention to the steps the FCA already takes to ensure that firms are well informed of regulatory requirements.

The FCA undertakes a range of communications activities, including monthly e-newsletters summarising all the main changes that have taken place over the previous month and a programme of regional events across the UK for firms to discuss regulatory issues. The FCA holds round tables and other briefings on specific issues with trade associations and firms to help them better understand how new policy may impact their business models. It also maintains a smaller business practitioner panel which represents smaller regulated firms which may not otherwise have a strong voice in policy-making. I have noticed that the noble Earl has, quite rightly, throughout our debates in Committee focused on those smaller businesses that may not have their own strong voice.

On top of this, the FCA is aware of the need to engage with firms about new regulatory provisions. Building on the approach taken in the consumer credit transfer, the FCA will develop a clear communications strategy to engage with firms as a key part of the transition process. The FCA is committed to alerting firms to changes in regulation that affect them and has several well-established channels to support this—for example, in its regulation round-up, which is a monthly e-newsletter sent to more than 50,000 recipients summarising all the main changes that have taken place over the month. That will have links to further information on the FCA website. There is a programme of monthly regional events called “live and local”, across the UK, for firms to discuss the changes, and round tables and other briefings on specific issues. In addition, the FCA sends over 500 speakers each year to talk at industry conferences and events to discuss regulatory issues, and maintains regular relationships with trade associations.

These actions will help to support CMCs through the authorisation process as they work to meet the FCA’s regulatory requirements in the provision of claims management services. The FCA’s strategic objective is to ensure that the relevant markets function well, which will ensure that the market for CMCs’ services functions well. Communication on that basis is vital. The FCA also has a competitive objective, which requires it to have regard to the ease with which new entrants can enter the market. Of course, being able to understand the rules is critical to that.

I hope that the actions that I have set out help to support CMCs through the authorisation process. This short debate with the noble Earl and the noble Lord, Lord Stevenson, will, I hope, give a nudge to the FCA that it is of critical importance that it undertakes this important issue with care to make sure that the process works. For those reasons, I hope the noble Earl will withdraw his amendment.

Financial Guidance and Claims Bill [HL]

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 3rd sitting (Hansard): House of Lords
Monday 11th September 2017 Lords Chamber

[Lord Stevenson of Balmacara]

I thank the Minister for a very full response. There were points where I felt she was in a bit of a hole and continuing to dig, and we may well have to come back to them. They were largely in response to the rather sharp questions posed by the noble Lord, Lord Deben, on which I do not think we have reached the end of the journey. We will need to come back to this.

It was very nice to see support from the noble Earl, Lord Kinnoull, and the noble Baroness, Lady Altmann, on different aspects of the same thing. As the noble Earl said, the fact that we have eight amendments in this group and a few more in the next on this area shows that this part of the Bill is not as well baked as some of the rest of it. There are areas that we have some concerns about, but I will read what was said in Hansard and we can perhaps pick up some of the points in correspondence before we come back on Report.

I wonder, however, whether we are not in a bit of a car crash—a hard word to use. I do not think the Bill has quite taken the trick here on a number of the issues that have surfaced. First, we have a body called the FCA which has responsibility for overseeing operations in the financial services area, but its remit, as we have pointed out on a number of occasions, has a different focus from that which we expect for the SFGB. With its overriding responsibility for making sure that markets are fair and that competitive markets are operating in those areas, it is not right for the Minister to say that the FCA can be relied on to have regard to the position of consumers. Indeed, our debate last Wednesday on amendments on exactly this point, which were supported right around the Committee, pointed out a number of glaring exceptions to the feeling that all was all right in this world in relation to those who are generally called vulnerable customers. These range across those not included in any financial arrangements at the moment, whether by desire, function or mental or physical disability. These people who do not currently participate, cannot currently participate and are not finding the services and opportunities for participating that they would expect to find will not be served if the end result of this operation is the FCA’s mode of operating and not what we currently have, which is much more consumer-led. We shall have to come back to that.

On what the standards are doing and how they are operating, enough has been said in Committee to feel that there is a bit of uncertainty about exactly what is being done here. In pensions, where there is direct provision, the standards are internal and operating, but they will not be the same in the debt space, where very expert bodies, which, as the Minister said, have been doing this work for some 30 years, will not take it kindly if some new body, although it has a history as a previous organisation, starts setting standards without consultation and without some sort of specification. I hope the wording is sufficient to take that point.

If we are in a situation where all the services are to be done under existing regulations, does that imply that bodies not currently in the UK might also have to be offered the chance to bid for these services? Presumably this will be done under the EU procurement directives. Is that right? Will the Minister respond to me on that point, not necessarily today, but perhaps in writing? It changes the ball game if we are talking not about Citizens Advice but about a body with a similar but different name and perhaps the German republic offering to operate it because it is able to fulfil a document that has been prepared to elicit bids at an appropriate price. We might be heading for a bit of trouble.

Finally, there is advice and counselling. I am on a bit of a journey here, I confess. I was more firmly in favour of leaving things as they are when I started my work on this Bill than I am now. I am beginning to think there is a problem here because I do not think the consumer is with us in the way the Bill is being drafted. I do not think a consumer has the same expectation about the words “information”, “advice” and “counselling” as is displayed in the Bill, and I appeal to Ministers to use the time between now and Report to reflect quite hard on this. We have to be where the consumer is. If we are saying that there ought to be a body that can deal with people’s genuine need for information, advice or counselling about their financial situation—and I agree with that—we should not set preconditions about how, in what manner and under what regulatory framework that information, guidance and advice is to be delivered. There may be necessary constraints on what can be said, but it is important that we try to align this more closely with people’s motivations when they come forward. That is the first point.

The second point is that this body will not be the success that we all hope it will be if it cannot give the information that is being sought promptly and efficiently to the person making the request. We have already established that that will be difficult in the pensions area from day one, but we also expressed our hope, at Second Reading and subsequently in amendments, that it would be looked at very closely and, indeed, that the pensions dashboard would be under the ownership and control of that body.

[Baroness Buscombe]

It is very helpful that the noble Lord, Lord Stevenson, is giving such a full reply, but perhaps I may ask one question. He made a very interesting point in day two in Committee, saying that the whole problem of debt advice and guidance would have been resolved if we had gone down the path of having two separate bodies, one giving guidance and one giving advice. Is he therefore suggesting that if there were one single financial guidance body, we should expect that one person would have the expertise—for the convenience, in a sense, of the customer—to give all kinds of guidance and advice to one person, so that they would not have to be directed to other people to talk about specific issues?

[Lord Stevenson of Balmacara]

That is a very good question. I think the answer is that yes, I am saying that; but I am also saying that it is probably impossible. I want to unpick that slightly. It would be fantastic if somebody approaching a body—let us call it the single financial body—primarily for debt advice also had embedded in their series of questions about their unmanageable debts the possibility of going in, or not going in, to an auto-enrolment situation for pensions, or has equity in a house that could be released which might resolve those things. At the moment, there is no way in which any one person could answer those questions effectively and efficiently. I think we all hope that that is where we will be at some point in the future, perhaps with much more use of automation and expert systems which would be able to take a person down a much longer and richer journey on these issues. If we build in barriers now to say, “Oh no, that’s guidance, not advice. We’re not going to go that way—we’re not even going to build a design or even think about how we might do that”, we will build in problems for ourselves further down the line.

We have a bit of time before the Bill goes to its next stages. I think I am asking whether we can use that time constructively to try to get really certain in our mind that, even if it is not the perfect solution, we are progressing with the right approach to this. As I said at the beginning of this little section, I had started on the basis that debt advice was straightforward and I understood it, and I was confident that I knew that because I had worked in the area. I am now not so sure. I have a feeling that we need a broader, higher-level definition that takes us a bit further down that route, where we think about things in terms of perhaps what is paid for and what is not paid for—anything which involves the offering up of clients’ money to be held in trust for them would need a completely different level of care and scrutiny and everything else.

Even with the simpler questions, such as whether people should join a new pension scheme or take money off an existing pension scheme—which will be real to the person asking them, although they may not be aware of the regulatory and other functions behind them—we might be making a terrible mistake. I am sorry to cast problems in what has already been a well-worked-through field—I know that a lot of this stuff has been discussed and debated ad nauseam and we should know better than this going forward—but my feeling is that we might have not quite got there yet, and we need a bit more help.

[Baroness Buscombe]

Before, I hope, the noble Lord withdraws his amendment, I should say that between last week and this week we in the department have constantly visited this issue, and we continue to do so. I do not want to test the patience of the Committee but I have further information on how this might work. I confirm that we will have meetings for all interested Peers so that we can discuss this in more detail between now and Report.

[Lord Stevenson of Balmacara]

I am grateful to the Minister for that. I think that those meetings will be helpful and useful. In the meantime, I beg leave to withdraw the amendment.

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[Baroness Buscombe]

My Lords, I thank noble Lords for Amendments 57 to 61. Clause 7 requires the single financial guidance body to monitor and ensure compliance with its standards. It requires the Financial Conduct Authority to periodically review the standards, and how the body is monitoring and enforcing those standards. After completing its review, the FCA is required to provide a report for the single financial guidance body and the Secretary of State. Once again, I reassure the Committee that the standards will not apply to all debt advice providers. These standards will apply only to the body itself and its delivery partners.

First, I shall address the Amendments 57 and 59, tabled by the noble Lord, Lord Stevenson. I have made the argument previously that the framework set out in Clauses 6 and 7—for the body to set and monitor compliance with quality standards—is the right mechanism for assuring the quality of the services provided by or on behalf of the body. I refer the noble Lord to our discussion on Clause 6, where we discussed the proposed commissioning framework for the procurement of services. There I made the point that it was unnecessary specifically to require the body to publish a commissioning framework, since we would already expect the new body to publish its requirements and expectations, with adequate time for prospective delivery partners to prepare their propositions. I also pointed out that, when contracts are above a certain value, the body will be required to comply with the public contracts regulations, including the requirements to advertise its requirements and undertake a competitive tendering exercise. We hope that those expectations and requirements on the body meet the spirit of the noble Lord’s amendments.

The noble Lord’s proposed commissioning framework would also have replaced the requirement on the body to set and monitor compliance with quality standards. I made the argument that the standards actually play a different role to a commissioning framework, in that they will assure the quality of the services provided by the body and its delivery partners. The standards therefore play the crucial role of enabling members of the public to have confidence in the services that they receive.

I disagree with my noble friend Lord Trenchard that there is a concern about the possibility of the culture of the FCA becoming similar to the culture of the body—or maybe that would be a good thing. The body would not necessarily be influenced by the culture of the FCA, because it has a statutory duty to put the consumer first, as I said under the last set of amendments.

[Lord Stevenson of Balmacara]

I am sorry to interrupt, but I think that we have had this debate before. It is not right to say that the primary purpose of the FCA is to give the consumer pride of place. That is not what it says in the statute. We had endless discussions about this when this was going through the House, and the Government were adamant that it was an economic regulator and that the main focus had to be on the efficiency of the markets that it served. I think that the noble Baroness, Lady Kramer, made the same point on Wednesday. I understand why the Minister would want to say that, and I am sure from discussions with the FCA that it has regard to consumers and their interests—but there is no consumer representative on the board of the FCA. It has a consumer panel, but it is not allowed to have a main position. I think that there is a representative with an Australian background on the board who has some expertise in consumer affairs, but that is not the same thing as building in from the bottom and ensuring throughout the work of the FCA that it focuses on the consumer, which is the impression that the Minister gives.

Financial Guidance and Claims Bill [HL]

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 6th September 2017 Lords Chamber

[Baroness Buscombe]

My Lords, I shall cut straight to the quick, as they say, with the noble Lord, Lord Stevenson, and say that I will be very happy to discuss the issue of expenditure in detail. It is covered in Clauses 8 to 10, which I think we will be covering on day three in Committee. That said, I want to address this amendment in full and in so doing will be touching on the issue of expenditure, in broad terms, in the provision of services and so on.

I thank the noble Lord for tabling this amendment. Amendment 31 proposes that, as part of its objective to ensure that information, guidance and advice be provided in the clearest and most cost-effective way, the single financial guidance body prioritise the allocation of its resources to front-line delivery services. As the noble Lord noted at Second Reading, we need to learn lessons from our experience when the Money Advice Service was set up. One of those lessons is to ensure that this body has a clear focus on front-line services and that delivery of those services should be its priority. The legislation places a duty on the body to have regard to a range of objectives in exercising its functions. The objectives as they stand collectively prioritise the body’s activities on meeting customer needs and working collaboratively with other financial guidance and debt advice providers to meet those needs.

In restructuring the public financial guidance landscape and creating the single financial guidance body, the Government want to provide a more joined-up, customer-focused approach to the delivery of public financial guidance. In the Government’s response to the consultation on creating a single financial guidance body, we were clear that:

“By rationalising the provision of services, the government expects there to be long term operational efficiencies that will mean more funding can be channelled to front line delivery of debt advice, money and pensions guidance”.


The new body will need to harness the opportunities created by bringing the three existing services together and be innovative about how resources generated by rationalisation can be utilised to best effect in delivering better services to the public.

We do not want the body to spend unwarranted sums on, for example, untargeted marketing. The Government were clear on this in our consultation response. Instead, we want the body to link up with industry, the voluntary and public sectors and the devolved authorities to promote its services in a targeted and value-for-money way.

However, this does not mean that the single financial guidance body should not look to devote resources to investing in other activities where to do so would be in the interests of its customers. For example, in discussing previous amendments, we have already been talking about investing in research that builds an evidence base on matters such as what type of front-line interventions have the highest impact for customers. This sort of activity will help the body design and target its front-line services more effectively.

We want the body to keep pace with developments in people’s financial guidance and debt advice needs. We want it to evolve and adapt in line with technological advances, so that its services continuously improve. I do not think any of us want the body to stagnate and fail to deliver what people need. Requiring the body to prioritise its allocation of resources to front-line services could do that.

Clause 2 sets a framework within which we want the single financial guidance body to use its expertise, skills and knowledge and to have the flexibility to design its services so that they meet the financial guidance needs of UK citizens now and in the future. We should also remember that the body has a strategic function to work with others to support and co-ordinate the development of a national strategy that will aim to improve the financial capability of members of the public, their ability to manage debt and the provision of financial education to children and young people.

This is not a front-line delivery service, but it is a critical function, and the body will need to allocate resources to it. The strategic function of the body will bring together the body, the financial services industry, the public and voluntary sectors, and the devolved authorities to develop joined-up plans and activities that are more likely to deliver improvements in financial capability than activities undertaken by each party individually. I hope the noble Lord, Lord Kirkwood, heard what I just said. We very much take on board that it is really important that we involve, as far as we can, devolved authorities in this and work with them. Debt advice is separate, of course, but it is very important that we all work together on guidance, for example.

I do understand the concerns of the noble Lord, Lord Stevenson. It will be important that the governance and accountability arrangements for the body are transparent and robust. It is important to keep in the forefront of our minds that, as a statutory non-departmental public body, it will be accountable to Parliament for its activities, and the Department for Work and Pensions will be the sponsoring department.

Key elements of the body’s accountability and governance arrangements are set out in the Bill, including the requirement to prepare a statement of accounts in respect of each financial year, which must be laid before Parliament. It must also inform Parliament of its activities and expenditure through an annual report that must be published. Here, I reference the question previously posed by the noble Lord, Lord Sharkey, about what happens if certain money is not spent. This should all become clear in its annual report.

The relationship between the single financial guidance body and the Department for Work and Pensions will be set out in a published framework document that will follow the principles in the Cabinet Office’s Partnerships between Departments and Arm’s-Length Bodies: Code of Good Practice and Her Majesty’s Treasury’s Managing Public Money. The framework document will also provide further details of the governance arrangements under which the body will operate, including requirements for preparing, securing approval for and publishing its corporate and annual business plans.

The single financial guidance body will deliver guidance which supports the policy of both Her Majesty’s Treasury and the Department for Work and Pensions. Although the Department for Work and Pensions will be the sponsor department, both the DWP and Her Majesty’s Treasury have responsibility for ensuring the body receives the support it needs to deliver its statutory functions in an effective and efficient manner that meets the needs of citizens.

As I said at the beginning of this debate, we will go into further detail on the funding at a later stage of Committee. On that basis, I urge the noble Lord, Lord Stevenson, to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister very much for that full and considered response. I look forward to the discussion and wait to be enlightened as to the intricacies of international and national funding across the various parts of the United Kingdom that will come together to cement the changes that have been made.

On the broader question about efficiency and effectiveness and the objectives, can I just check one point? A simple nod will suffice. Given that the body is likely to be judged to be an NDPB—because that is an objective test after the body has been set up, not something that one can assert beforehand—and given the nature of its relationship to its sponsoring department, will it in fact both be audited by and subject to periodic review by the National Audit Office? I did not get a nod—maybe we will need more information. But I get the sense that that is correct, and will be happy with a later response on that.

At some point we might also have a discussion about the role of Parliament in this, which would be helpful. Clearly, the PAC will look very closely at the NAO, but it is often necessary to make sure that the DWP Select Committee is also engaged, because Parliament’s role is most effective, as already referred to, through committee work. With that, I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Buscombe]

My Lords, I thank all noble Lords for their contributions to this debate, particularly the noble Lord, Lord Stevenson, for introducing Amendments 33, 34, 36 and 37. Straightaway, I apologise that the all-Peers note arrived at only 3.40-something this afternoon.

[Lord Stevenson of Balmacara]

According to those with better intelligence than I in the use of electronic devices, it was actually circulated at 10 o’clock but, because it was circulated to our Whips Office, which took a dim view of it, it did not get around until 3.49 pm.

[Baroness Buscombe]

I am very grateful to the noble Lord, who has mitigated the situation. Even so, it is very last-minute, and let us put the blame at my door as the Minister responsible. It is important that we try to address this to the best of our ability.

I can assure all noble Lords that we have spent a considerable amount of time this summer, when perhaps I should have been on the beach, discussing this issue with different people in the industry along with MAS and TPAS. What I hear from consumers and those involved on a day-to-day basis is a very different tale from what I hear from noble Lords this evening. The public have the ability to understand the difference between advice and guidance, but we need to convince noble Lords of that—I appreciate that.

I thank noble Lords for the opportunity to clarify the important issues raised by these amendments. I begin by discussing Amendments 33 and 34, which concern guidance and advice; I will then move on to Amendments 36 and 37, which concern collaboration with the financial services industry and the devolved Administrations. Amendment 33 would add an objective for the body to ensure that at every stage of communicating with members of the public about its services, people are clear whether they are receiving guidance or advice. It will, of course, be important that members of the public are aware whether they are receiving financial guidance or financial advice. We discussed the distinction between guidance and advice in some depth in July, and I believe our conversation has highlighted the importance of clarity in this issue. Indeed, we have taken on board the points made by noble Lords, and I have had a number of meetings with officials, who have worked on a detailed information paper, which I hoped would be helpful.

In the meantime, I do not think that the amendment as drafted is appropriate or necessary. We fully appreciate the risk that members of the public may receive guidance, take it as advice and then go on to make financial decisions when they ought to seek further assistance. However, I can reassure noble Lords that there are already appropriate measures in place to mitigate that type of risk. In fact, I can quote the exact wording currently given to customers by the Pensions Advisory Service and Pension Wise on this matter. In the case of TPAS, clients who ring the helpline will hear a message telling them that it does not provide regulated financial advice and that its service provides generic information and personalised guidance on occupational and private pension-related matters.

As Michelle Cracknell, the chief executive of TPAS, said to me:

“We give a simple disclosure: ‘We cannot tell you what to do’”.


She also said that, as debt advice is defined as a regulated activity, it would be confusing to describe it as anything else in the Bill. She has made that point very strongly, as have others in the industry. When I was sitting with an incredibly experienced, thoughtful and helpful group of people working at TPAS, giving advice to people and working through their systems on the web and on the telephone, I was hugely impressed. They have not had one problem in 34 years with people being confused or complaining about thinking that they were receiving guidance when they were actually receiving advice. It has never been a problem. So we are getting a different story outside, with the user, and we must not underestimate the public, who have the ability to understand the difference between advice and guidance. The whole purpose of this body is to provide a more seamless customer journey so that people can obtain guidance and advice without there being a problem.

Financial Guidance and Claims Bill [HL]

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 1st sitting (Hansard): House of Lords
Wednesday 19th July 2017 Lords Chamber

[Baroness Buscombe]

My Lords, I thank the noble Lord, Lord Stevenson, for his positive contributions so far on the Bill. He has raised an important issue regarding the status of current insolvency regimes available to members of the public in England and Wales.

Amendments 5 and 42 tabled by the noble Lord would introduce a new function to the body with regard to debt solutions in addition to requiring it to review the current insolvency regimes available for members of the public in England. This would also apply in Wales, as the insolvency regime is common across both nations.

The Government are committed to helping those worst affected by problem debt. I agree with the noble Lord, Lord Stevenson, that the insolvency regime for members of the public, including businesses, must be of high quality and be kept under review to ensure that it works as it should. It must provide essential debt relief for those who need it while offering those able to repay their debts the opportunity to do so. I commend the noble Lord on the work that he has done with StepChange and have listened with care to the examples that he gave, which are of course deeply concerning, in relation to debt and insolvency.

I assure the noble Lord that the Government are indeed committed to ensuring that we retain the best possible personal insolvency regime. The Insolvency Service, which is an executive agency of the business department, is charged with delivering economic confidence by, among other things, supporting those in financial distress. The service has implemented a number of changes to the personal insolvency regime to make improvements where they are required. For example, in April 2016, the Government removed the need for a person applying for bankruptcy to go to court. The Insolvency Service keeps the personal insolvency regime under review on behalf of the Government and works closely with the Money Advice Service and the wider debt advice sector.

Working with the Insolvency Service, MAS—the Money Advice Service—launched a consultation on improvements to the debt solutions regime across the country in February this year. This consultation followed a period of in-depth research with users of the main insolvency solutions across the UK and a review of each separate insolvency solution. All the major debt advice providers and many other stakeholders responded to the consultation. MAS will publish a response to the consultation later in the year. It is reviewing the responses with its debt advice steering group, which includes representatives of all the major advice providers and the largest creditors.

The single financial guidance body’s strategic function requires that it, too, works with others in the financial services industry, the devolved authorities and the public and voluntary sectors. The Government therefore expect that the SFGB will continue to work closely with the Insolvency Service to ensure that the insolvency regime in England and Wales meets the needs of members of the public.

The Government agree that the insolvency regime must remain fit for purpose and be regularly reviewed. That is why MAS, working closely with the Insolvency Service and the debt advice sector, has undertaken its consultation. However, the duty to review the regime remains the responsibility of the Insolvency Agency. Of course, there is a role for the new body to work with the Insolvency Agency on this matter, as MAS does now. My view is that this is captured by the strategic function set out in Clause 2(7). For these reasons, I ask the noble Lord not to press his amendments.

[Lord Stevenson of Balmacara]

I thank the Minister for her full response and recognise much of what she said about the work currently going on. We are back in the same territory. The body will not work as we are beginning to envisage it if at every turn blockages are put up. It will be an insolvency service behind a different departmental boundary—it is in BEIS and not in DWP—making decisions of primary importance about clients coming to the single financial guidance body and the debt advisers seeking help with a problem. I accept that it is way the world is, but if it became clear after the reviews and further consideration of the points made here—there are many other people who can send in evidence—we might want to change that, having missed the opportunity to do so in the Bill. I appeal to the Minister to think again about this and to see whether it might be sensible to have a power somewhere in the Bill giving the single financial guidance body the opportunity to make proposals at least. In my view, we have the power to change it to help the consumers that it tries to deal with, but I realise that may be a step too far at this stage. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, every journey starts with a single step. We are not able to put in as an amendment the existing scheme—which has been through another Parliament close to here, has worked for 10 years and has answered all the questions that were on the lips of the noble Baroness—because the Long Title does not encompass it. We have put down a second-order amendment, but if we have to wait for an entire financial education edifice to be created and think about a cultural revolution in the way people deal with their credit card bills on 23 January, we will never get there. I urge her to think about taking powers now, so that in the future, where she does see this as a strong possibility, it becomes more real and tangible than it is at present.

[Baroness Buscombe]

I hear what the noble Lord says, but I want to assure noble Lords that, as I said, the Government are seriously considering this issue. I take slight exception to the inference from the noble Lord, Lord Kirkwood, that the Government are not doing anything. Why would the Government put this in their manifesto if they were not doing anything? The Government believe in this in principle; they simply want to get it right.

[Noble Lords]

Oh!

[Baroness Buscombe]

Noble Lords may laugh, but I have the advantage of having been at the other Dispatch Box in opposition when noble Lords opposite were in government. We suffered continually from the inability to get that Government to introduce and think about really important measures like this. That is why the situation has become so much worse over the past 19 years that I have been in your Lordships’ House. But we want to get this right.

--- Later in debate ---

[Baroness Buscombe]

The Government take the threat of scams and the whole issue of cold calling very seriously. On the specific issue of pension scams, the Government launched a consultation in December 2016, looking at three potential interventions. These included a ban on cold calling to help stop fraudsters contacting individuals. The Government plan to publish the response to that consultation shortly, which will set out the intended next steps—but, throughout the consultation period and during engagement with stakeholders, it became clear that this is a complex area. For example, where the consultation said that the ban would not extend to existing relationships, respondents highlighted the potential difficulty in defining existing relationships and ensuring that legislation is appropriately worded.

It is clear that this policy requires careful and detailed consultation as we further develop plans. We do not propose to extend this ban to debt management cold calling. We have focused on pension scams because they can have such a detrimental impact on individuals. Pension scams can cost people their life savings and leave them facing retirement with limited income and little or no opportunity to build their pension savings back up. I should add that, at the same time, we have sought to increase standards in the debt management sector by requiring organisations to be authorised by the FCA.

I assure noble Lords again that the Government take the issue of problem debt and cold calling very seriously. Work is ongoing in these areas. I do not think that the amendments would add value to the new body’s functions—and, although I appreciate noble Lords’ intentions, this is not the right time or the right place to amend the Bill, so I ask the noble Lord to withdraw his amendment.

The noble Lord, Lord Stevenson, referred to officials in the Box. They are doing a brilliant job. I took to heart his reference to them as if they are just there to be difficult. They are doing a superb job.

[Lord Stevenson of Balmacara]

I feel humbled if in any sense what I was saying was taken as a criticism of the wonderful work that is being done to make sure that the good things in the Bill get done. I in no sense intended to say that, and I hope that the officials will accept my apology, gracefully given. I was trying to say that there is a mentality growing about the tyranny of the Bill, which is set up in part because those who have responsibility for drafting it—not always Ministers—feel very attached to it, having gone through the process, done the consultations and decided things. It is inevitable and perfectly understandable that they do not want to see it changed. I was making a light quip at Ministers. If I were in their position, I would probably be saying exactly the same thing—but it does not make it right.

Financial Guidance and Claims Bill [HL]

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 1st sitting (Hansard - continued): House of Lords
Wednesday 19th July 2017 Lords Chamber

[Baroness Buscombe]

I thank the noble Baroness for her intervention but I read it myself and I do not think it does—as she suggests—create that opportunity for the single financial guidance body to deliver the debt advice function. It says that it,

“may arrange for another person … to carry out any of the following functions on its behalf”.

The SFGB is the delivery partner. On the reference to “may” rather than “must”, from a legal standpoint it is already in the Bill that the guidance body can arrange for another person to carry out any of those functions. Indeed, it is implicit that it will.

I apologise but I have just been corrected in relation to the debt advice function. It is an option but not the plan—if that makes sense. I hope this explains what the wording of the pensions guidance function means in practice. I urge the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for her comments. “An option but not the plan” might go down in history as a rather interesting way out of a dilemma. We might return to this issue in the group after next, so I will not spend time on it now. I am afraid my worry is that “provide”, rather than some other wording, could be applied in future in a detrimental way to bodies that feel they have a role to play in this space, perhaps not so much in pensions but in other areas. For the moment, I would like to read carefully and reflect on what the Minister said before we consider how to go forward. I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Buscombe]

My Lords, I thank the noble Lords, Lord Stevenson and Lord McKenzie, for tabling these amendments. The noble Lords have tabled a number of amendments that would make changes to the single financial guidance body’s debt advice function. The approach of this legislation is to enable the body to respond to changing needs and cultural and technological development by giving it broad functions. It is our intention that the body commissions out the delivery of its service, as appropriate. Debt advice is currently commissioned, and I cannot see this changing any time soon. If we had not intended that the body should commission for its delivery services, including debt, there would have been no need for Clause 4 to specifically provide for this. That is just in relation to the whole issue of debt advice. I wanted to start off with that.

Clause 2 sets out the functions and objectives of the new body, including the debt advice function. The provision of debt advice is a core function of the new body. Problem debt can blight individuals’ lives, and it is crucial that support is available to those who need it. Amendments 11, 13, 35 and 43, proposed by the noble Lords, Lord Stevenson and Lord McKenzie, offer a substantial revision of the new body’s debt advice function. They are made up of five key parts, which specify that: first, the body must commission advice; secondly, advice must be free at the point of use; thirdly, advice must meet the needs of people in financial crisis in England; fourthly, advice must be commissioned on the basis of consultation with relevant bodies involved in the provision of information, guidance and advice on personal debt; and, finally, sufficient funds must be dedicated to the body’s debt advice function. I shall address each of these components in turn.

In the first instance, it will be important that the new body commissions other parties in its efforts to ensure that debt advice is available to members of the public when they need help. As drafted, Clause 2 and Clause 4 together enable the delivery of regulated debt advice through delivery partners. Noble Lords will know that MAS currently acts as a commissioning body for debt advice; the Government intend the new body to fulfil the same, or a similar, function.

In the second instance, the Government absolutely agree that any help funded by the new body should be free at the point of use. The Government’s intention is to ensure that help is available to those who need it, and we would not wish to prevent members of the public from accessing help on the grounds of cost. Pension Wise, the Pensions Advisory Service and the Money Advice Service currently offer free-to-client help and, as the Government have noted in their consultations, the new body will do the same. Indeed, by bringing together pensions guidance, money guidance and debt advice into one organisation, this measure allows for greater provision of free-to-client help. The Government expect that savings will be made as MAS, TPAS and Pension Wise are brought together and, as a result, we expect a greater proportion of levy funding to be made available for the delivery of front-line services to members of the public.

On the third point, on the needs of people in financial crisis, it is of course critical that those in crisis receive support. However, I am concerned that the proposed amendment restricts the activities of the new body, placing too great an emphasis on those who are already in crisis while failing to mention help that the body might give to members of the public who are approaching moments of crisis. I think of the example of Emma, who the noble Earl, Lord Listowel, referred to on an earlier amendment. As the noble Earl quite rightly said, if only it could have been possible for her to approach something earlier—that has to be an aim of this body. It must be able to help not only those who are in real crisis but those sensing that they are getting into what we might colloquially call “hot water” and need help.

On the fourth point, I agree with the intention behind this amendment, which I believe is to ensure that the new body will work closely with those it is commissioning and that there is a comprehensive strategy for the sector. The spirit of this amendment is already captured by the body’s strategic function and its stated objectives. The strategic function explicitly states that the body will be required to work with others in the financial services industry, the devolved authorities and the public and voluntary sectors, which together capture the organisations specified by the noble Lord in his amendment. The body’s five objectives, including delivering its functions to those most in need, in areas where it is lacking and in the most cost-effective way, would not be deliverable if the body did not consult others.

Finally, I turn to the final point on ensuring sufficient debt advice funding. The Government agree that it is important that the body is able to meet increasing demand for debt advice in England if it is required to do so. As drafted, the current clauses allow funding for debt advice to increase so that debt advice is available when there is increased demand from members of the public. The body will submit a business plan for approval by the Secretary of State, which will form the basis on which the Secretary of State will instruct the Financial Conduct Authority to raise funds from its levy. The Government are confident that these arrangements are robust and will give the new body the ability to ensure that its debt advice function is properly funded. Decisions about how the body should allocate its resources, including to debt advice, are best taken by the management of the body in the light of its agreed business plan. It is, after all, accountable to Ministers for its decisions, who are in turn accountable to Parliament.

I would also like to observe that the Money Advice Service is working closely with partners on the plans for an independent review of the funding arrangements for the sector. Under its strategic function, the new body will be able to continue this valuable work as part of its aim to improve the ability of members of the public to manage debt.

Having heard these explanations, I hope the noble Lords will agree that the amendments are not necessary. I therefore urge the noble Lord, Lord Stevenson, to withdraw the amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for her very comprehensive response. I would like to read it in more detail in Hansard but in the meantime I beg leave to withdraw the amendment.

Prescribed Persons (Reports on Disclosures of Information) Regulations 2017

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Thursday 30th March 2017 Lords Chamber

[Baroness Buscombe (Con)]

My Lords, there is currently no legal obligation within the whistleblowing framework for prescribed persons to investigate a disclosure made to them. The call for evidence in 2013 identified that whistleblowers did not have the confidence that their reports of wrongdoing were being investigated. The Employment Rights Act 1996, as amended by the Public Interest Disclosure Act 1998 and subsequently, provides employment protection for workers who have blown the whistle. It protects them from detriment if they have made a “protected disclosure” when they reasonably believe the disclosure tends to show wrongdoing and is in the public interest. The legislation is intended to build openness and trust in workplaces by ensuring that workers who hold their employers to account are treated fairly. Individuals should be able to report malpractice without fear of reprisal and employers should be prepared to work with them to resolve any concerns that may arise, particularly by means of effective internal procedures.

To ensure that a worker’s employment rights are protected, they must make their disclosure either to their employer or to the relevant “prescribed person” as set out in the prescribed persons order, or others, such as a Minister of the Crown or the media. Disclosures can also be made to a legal adviser. If a worker decides to blow the whistle to a prescribed person rather than to their employer, they must choose the person or body from the prescribed person list whose remit is relevant to the wrongdoing that they are disclosing. We have kept the prescribed persons list up to date with annual reviews. This will ensure that workers who are not able to go to their employers to report wrongdoing can generally find the relevant responsible body on the prescribed persons list.

There is also comprehensive guidance to assist employers and prescribed persons in handling disclosures, including guidance for employers on creating a whistleblowing policy and a code of practice. The Government are updating the guidance for prescribed persons and will publish an updated version online by 1 April. Workers also have clear information and guidance available on who they can report wrongdoing to and guidance on how whistleblowing works in practice. This will assist workers and give them the confidence—this is the most important thing about these regulations—to come forward with genuine disclosures.

In response to the concerns raised following the call for evidence in 2013, the Government sought a way to increase confidence that disclosures from workers were indeed investigated and followed through. They sought to increase transparency in the system, which might identify which prescribed persons are not as effectively discharging their responsibilities, while respecting the importance of treating disclosures in confidence. The Government introduced a power in the Small Business, Enterprise and Employment Act 2015 to enable the Secretary of State to make regulations to require certain prescribed persons to report annually on whistleblowing disclosures. The regulations before us today are laid under that power. This approach aims to increase confidence in the actions taken by prescribed persons through greater transparency about how disclosures are handled. In turn, that will also improve consistency across different bodies in the way they respond to disclosures.

I turn now to the detail of the regulations. They require most prescribed persons to report annually on a number of details. First, a prescribed person will need to report on the number of concerns that have been raised with that body in a 12-month period which it reasonably believes are qualifying disclosures. Secondly, from those disclosures they will need to report on the numbers in which a decision to take further action was made. They will also need to provide general commentary on the action taken in response to whistleblowing disclosures and how the information from whistleblowers has impacted on the prescribed body’s activity in its relevant sector.

The regulations require prescribed persons to publish their reports online so that they are available to all or, if not online, in another place which will bring them to the public’s attention. We intend to have their reports collated and to lay them before the House. To minimise the burden on prescribed persons, the reports are not required to be separate documents. For example, they may be included in a wider annual report that a body already publishes routinely. The new measures will require prescribed persons to reflect upon what they do with whistleblowing disclosures. We envisage that this in turn will encourage greater focus on the positive impact of whistleblowing in their respective sectors.

The regulations do not apply to Members of the other House. Although they are prescribed persons so that constituents can contact them about wrongdoings at work without affecting their employment protection, they are not in quite the same position as bodies with a regulatory responsibility in relation to a particular sector or type of wrongdoing. Likewise, the regulations do not apply to Ministers of the Crown.

In conclusion, in recent years the Government have undertaken significant reforms to the whistleblowing framework, working to improve the environment for whistleblowers. This includes improved guidance for individuals, employers and prescribed persons on how whistleblowing works in practice, including a non-statutory code of practice, which we will review this year; bringing the prescribed persons list up to date, including designating MPs as prescribed persons; and delivering on the commitment to review the list annually. These regulations are an important step to ensure that workers have the confidence to report any wrongdoing and ensure greater transparency in the way disclosures are handled and taken forward. I commend the regulations to the House.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am very grateful to the Minister for appearing so fresh and alert at the Dispatch Box. She certainly has the upper hand on me, given that we finished near midnight last night and we were in the same positions across the Dispatch Box. The rest of you were all sleeping soundly in your beds, but we were doing the best we could, and here we are again.

We absolutely support the regulations before us today. They come from a Bill that I was involved in and we are aware of the background, which the noble Baroness has very helpfully outlined. We want to give the regulations our full support.

I have two very small points and one slightly larger one to raise with her. I do not necessarily expect an answer today, but perhaps the noble Baroness could write to me, if she wishes. Your Lordships will be aware that I have a long-standing issue with the Government—with all Governments, in fact—for not adhering to the good practice, which I thought had support on all sides of the House, of bringing new regulations forward on set days in the year, even though they may not have a major impact, so that businesses and other persons affected by them can be aware of the fact that there will be a change. These dates are 6 April and 1 October, and they are broadly adhered to now by the Department for Business, which is good. However, I see that this one from the department with responsibility for employment is coming in on 1 April, and I think that it would not have been very difficult to defer it to 6 April. I suggest that, in future, they might think about this. Common commencement dates are important to those who have to respond to SIs. It is therefore important that we try to have a unilateral practice across government.

Digital Economy Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Report: 3rd sitting (Hansard - continued): House of Lords
Wednesday 29th March 2017 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, it is clear that we have saved the best till last. It has been a terrific debate. The hour is late and I shall not delay the House too long, but it is worth reflecting that a 14 year-old speech can be brought out, dusted down, given the once-over and realised to be fit for purpose and continue to have relevance today.

I support the amendments tabled by the noble Lords, Lord Lansley, Lord Puttnam and Lord McNally. They are absolutely right; they are on the mark. They are matters that need to be addressed now but also for the long term. The Government need to take them away and come back with some proposals as soon as possible.

The noble Lord, Lord Lansley, was right that the existing legislation, stemming from a variety of sources but crystallising around the Enterprise Act 2002, is strong, but it needs to be looked at in light of technological change, of developments and of the new way in which the world receives its information. Many things have not changed. We want to be sure that by moving around some of the architecture, we do not lose something, but it is clear that we need to widen the definition of a media enterprise—as the noble Lord said, broadcasting is far too narrow a definition for the way in which we consume and rebroadcast our information today. Ofcom needs powers equal to those of the CMA, in terms of getting papers and material in front of it so that it can have exactly the same authority in its work. It is not clear that it has those at the moment.

We need to think about the term “broadcasting standards” and make sure that it is fit for purpose in respect of the various companies now operating, which are definitely media companies and not technology companies, as many would argue. Certainly, all those involved in the current merger arrangements need to be considered closely in terms of the impact both of individuals and of the corporate structures which they employ.

The questions raised in our amendments to Amendment 33J, as was picked up by the noble Lord, Lord Lansley, are based closely on the model offered by the FCA in its fit and proper person test. If the noble Lord detected a similarity, it is because 90% of the words are the same—and well spotted. However, it shows that there is a commonality of approach which would repay some discussion and debate. Everyone will say that it is different in financial regulation, but some of the words copied out in Amendment 33L, for instance, which are taken straight from the FCA with only a couple of points lost, are appropriate. There are other examples and I commend them to the Minister when she comes to consider this matter, perhaps away from this sitting.

A point well made by the noble Lord, Lord Lansley, was that the work done in 2010 and 2011 is worth revisiting in some detail. In particular, a section on page 15 of the Report on Public Interest Test produced by Ofcom and published in 2011—to no significant media comment at that time because, by that stage, the Milly Dowler case had broken and the merger then in proposal had gone, so the public’s attention moved away—deals with:

“Concerns about wider market developments and sufficient plurality”.


It is incredibly relevant for today—I shall not read it all; I want to touch on just a few things. The point is made that,

“the current statutory framework may no longer be equipped to achieve Parliament’s policy objective of ensuring sufficient plurality of media ownership”.

The market developments have changed so much and some consideration of that broader issue must be given. The report identifies the problem that, at present, the regulations require that,

“a public interest consideration can only be triggered by a specific corporate transaction”,

such as merger proposals, but that can be done by organic growth and change. It is important that we have something in the regulations which allows Ofcom to use judgment over whether it is time to intervene, particularly on the fit and proper person test.

The report expresses concern about the differential arrangements for remedying competition concerns. Such concerns are not carried forward into considerations about whether transactions are operating in the public interest depending on plurality. In other words, the narrow competition concerns largely operated through the CMA are on one side of the calculation, but those that deal with media mergers are not given the same weight. Therefore, there is a discrepancy of approach.

Finally, the point is made that,

“a more fundamental review and possible reform of the current … framework”,

is probably necessary. This was said in 2010 and published in 2011. I do not think much work has been done on this since then. It is overdue time for us to look at it.

Specifically on Amendment 33L and the questions it raises, it is important that we think harder about what this phrase, a “fit and proper person”, should aim for. As I said, the wording of Amendment 33L is not necessarily perfect but it points us further down this track. I have heard it said that the problem with the fit and proper person test and the work operated under Ofcom is that precedents in relation to media come from earlier times under earlier regimes, such as the old ITC regime, which must be nearly 30 years old. Since it is not used very often, there are only occasional examples of it. We have a problem in ensuring there is a join-up between the considerations that should be brought into play today and what happened in the past. It was said—perhaps slightly light-heartedly but it makes the point—that it would be difficult in today’s world if one were using the tests provided by the ITC in the early 1980s and 1990s, as you would be able to prove that someone was not a fit and proper person to hold a broadcasting licence only if they had been not only charged with a crime of murder but also put away for it. That is probably too high a standard. Generally, most people would accept that. If it is true, there is a bigger question here.

It may be that the territory is such that we must be a bit more concerned about fit and proper persons in a more generic sense. In a time of fake news and with what is happening across America, we have difficulties enough coming our way. We also read in today’s papers that Andy Coulson, no less, is about to be hired as the PR consultant for a well-known daily newspaper on the very far right of the political spectrum. If it is right that his brief is to make people believe that the paper is authoritative and truthful, we have problems.

[Baroness Buscombe]

My Lords, I agree that the best is left until last. I start by thanking my noble friend, Lord Lansley, and the noble Lords, Lord Puttnam and Lord McNally, for the constructive way they engaged in discussions with the Secretary of State and me, and with the department’s officials, on seeking a common understanding on the very important issues raised in this debate.

As noble Lords said, in particular the noble Viscount, Lord Colville, the Secretary of State issued a European intervention notice in relation to the Fox/Sky merger on 16 March. She did so on two grounds: media plurality and commitment to broadcasting standards. Ofcom also announced on 16 March that it will conduct its fit and proper assessment at the same time as it will consider the public interest considerations raised in the intervention notice.

It is now time to leave the independent regulators, Ofcom and the Competition and Markets Authority, to carry out their reviews as set out in legislation. Under the terms of the intervention notice, both will report back to the Secretary of State within 40 working days—by 16 May. For the avoidance of doubt, the Secretary of State’s quasi-judicial role in respect of that merger continues and it would therefore be inappropriate for me to comment on the merits of that case. I am able to address the important issues raised by these amendments on future mergers.

As my noble friend Lord Lansley made clear, the purpose of these amendments is to future-proof the issue when it comes to media mergers. I listened carefully to the noble Lord, Lord McNally, talk about the changes over the past 14 years in terms of social mores and societal changes. The noble Lord, Lord Puttnam, referenced the need to talk about trust in each other, truthfulness, justice, compassion and tolerance. Of course, there was the reference to my noble friend Lord Crickhowell, whom I well remember speaking in those debates on foreign ownership. They were controversial at the time. There were some real difficulties in accepting what my noble friend sought to achieve but times have changed. We have moved on and learned a lot, and we have built a great deal of trust in the ability of Ofcom to do its work and do it well.

The first point I want to deal with is the amendment on Ofcom’s powers. In a phase 1 assessment of any media merger, Ofcom’s role is not to conclusively decide whether concerns about the merger have been established but rather to advise on whether or not they warrant a more thorough, phase 2 review. In our view, the timing and nature of Ofcom’s phase 1 review simply do not necessitate the powers that Amendment 33G is proposing. Phase 2, if this is needed, is a more in-depth review that the CMA carries out over a longer period of 24 weeks. At this stage in the process, the CMA does need more extensive powers and this is already provided for under the Enterprise Act 2002. It is at the end of this review that a decision is made by the relevant Secretary of State on whether the merger operates against the public interest and whether it should be able to proceed.

If a party to a merger does not co-operate with Ofcom in its phase 1 review, Ofcom can, and indeed should, draw out that point—and the behaviour of the parties—in its report and conclusions, which will be published. The provision of false or misleading information by anyone to Ofcom or the CMA is a criminal offence under Section 117 of the Enterprise Act. Our conclusion, therefore, is that extending the powers to Ofcom in phase 1, as Amendment 33G seeks to do, is not necessary and indeed changes the nature of what is a first-phase review to decide whether a fuller, much more thorough investigation is warranted.

As noble Lords have said, the media landscape is changing at a faster and faster rate and the tests set down in 2003 may no longer fully cover all the public interest considerations needed in media mergers. We have heard arguments throughout the passage of the Bill that the fit and proper assessment needs to be baked into the media public interest test. As the Secretary of State made clear in her Statement of 16 March, Parliament has given Ofcom a duty to assess on an ongoing basis the question of fit and proper for all organisations applying for broadcast licences. For corporate bodies, Ofcom’s assessment will cover controlling directors and shareholders.

Both the Secretary of State and Ofcom have said that while many of the same issues will be relevant to both the assessment of the commitment to broadcasting standards’ public interest ground and to an assessment of the fitness and propriety of licence holders, it is right that the latter—the fit and proper test—sits with an independent regulator. The current grounds for intervention in media mergers are all linked to the important public interest consideration of media plurality: plurality of ownership, plurality of content, and a commitment to standards that support plurality of views and content.

Although I acknowledge that, in a quasi-judicial role, political considerations do not come into play, adding fit and proper as a ground of intervention goes beyond the plurality test into questions of character and fitness, and puts the ultimate decision on those questions in the hands of a politician. Notwithstanding what the noble Lord, Lord McNally, said about the Government having a duty to protect the ecology of our media, this is a different position. We are very clear that the decision on fit and proper should be made by an independent authority; that is, Ofcom. This cuts entirely across what is generally the role of an independent regulator and, in my view, takes the grounds of intervention a step too far.

On the general premise that the media merger public interest consideration may not fully capture future shifts, we agree that it is time to consider this. Amendment 33F seeks to broaden the definition of media enterprise to take account of new forms of delivery and distribution. Amendment 33J, although introducing a media public interest test around fit and proper in proposed new subsection (2CC), adds a new media public interest test to cover access to cultural and performing rights, talent and other expression available to UK audiences in terms of media plurality.

Technical and Further Education Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 1st March 2017 Grand Committee

[Baroness Buscombe (Con)]

My Lords, I am grateful to the noble Lords who have put their names to this group of amendments. I shall begin with Amendments 40 and 44. I realise that the noble Lord, Lord Stevenson, also referenced Amendment 46A, regarding creditors. I will get to that but if he and other noble Lords could bear with me, it would be rather easier if I could do this sequentially.

On Amendments 40 and 44, then, as is the case with other special administration regimes, Clause 15 provides that the person to be appointed as the education administrator must be someone who is qualified to act as an insolvency practitioner in relation to the FE body. This is the only criterion that must be satisfied for appointment as an education administrator.

Amendment 40, however, would require the person appointed as the education administrator to have relevant experience and knowledge of the further education sector, as noble Lords have said, in addition to being qualified to act as an insolvency practitioner. Saving the blushes of the noble Lord, Lord Stevenson, he is a very good example of accountants who have a breadth of perspective—indeed, I should declare an interest as I am married to an accountant who has a fantastic breadth of perspective—so we should not underestimate their ability to address different sectors with the same amount of expertise.

While such experience may be desirable, it is certainly not essential. Noble Lords familiar with the company insolvency regime will know that insolvency practitioners are often appointed to administer companies in sectors where they have little or no experience. That does not prevent them carrying out their duties successfully; it is their ability to understand and apply the different options available to them in the insolvency toolkit that is of most importance, not a detailed knowledge of the sector or the company. It is no different in an education administration.

In his evidence to the Committee in another place Mr Stephen Harris, an experienced insolvency practitioner with Ernst & Young, said that:

“From an insolvency practitioner’s perspective, it is worth standing back and recognising that insolvency practitioners are not train drivers, or people who spend their life in the railway or the London Underground, when it comes to a special administration regime, nor are they specialist property developers. They come to each situation afresh. One comforting thing that insolvency practitioners bring is recognising when they need to keep in place the existing management structure in a corporate sense, or the workforce in a pastoral sense, recognising that those people have skills and qualifications that they as an office holder do not necessarily have, and also”—


this is key—in bringing,

“outside specialist help to continuing the duties of education administrator should the need arise. That is … part and parcel of any trading insolvency regime”.—[Official Report, Commons, Technical and Further Education Bill Committee, 22/11/16; col. 46.]

[Lord Stevenson of Balmacara]

What has just been said is true and I understand exactly where the Minister is coming from but, in a sense, she is talking about traditional creditor-led insolvency. That is not what we are talking about. As I am an accountant with a broad vision, I can extend to make the point that we are talking about replacing a board of governors, with expertise from all around the table, a senior management team, heads of departments, lecturers, a whole panoply of technical and support workers and everything else with one person, and that person is not doing the day job. The day job is getting the creditors into a room and banging their heads together until they settle for 10% or about that level, and then going away. This is about running an institution, perhaps for a long period and on a very complicated basis. It is not quite the same.

[Baroness Buscombe]

I accept the point, but I re-emphasise therefore the importance of that person bringing in outside expertise to support them in the process. I also ought to make the practical point that we would be hard pressed to find many insolvency practitioners who had this expertise as a matter of course. Maybe there are one or two, but I do not know how many.

Mr Harris rightly made the point that the education administrator is similar to all the other special administrator roles, and I share his view. It is not necessary for the education administrator to have direct experience and knowledge of the education sector, but I expect—indeed, I am sure that we all expect—the education administrator to avail themselves of the advice and guidance of those around them. I am being a little repetitive, but this is an important point. I mean not only the management team and staff of the insolvent college but the governors, the further education commissioner, the local authorities and others. Indeed, I cannot conceive of a situation where an education administrator would act in isolation, developing their proposals for meeting the special objective and protecting students without first discussing them with a wide range of stakeholders.

Amendment 44 provides that the education administrator should be able to request information, advice and guidance from those with an understanding of education in performing their functions for the purposes of achieving the special objective. I wholly agree with the purpose of this amendment. Of course it will be important for the education administrator to take advice from experts in the sector in carrying out their functions. As I said, this is precisely how we expect the education administrator to operate. The leadership team in the further education body will be in place to provide support on the day-to-day running of the college and to provide information to assist the education administrator in their task of achieving the special objective, if possible. So too will the further education and sixth-form commissioners and their teams, as well as the officials in the Minister’s department. The education administrator will of course be free to seek advice from any other source that they may consider. We therefore believe that there is no need to provide in the Bill for something which the education administrator is free—and encouraged—to do.

I would make the point, as I often do in situations like this, that we want to be careful not to be too prescriptive in primary legislation, particularly when the Bill, as I said on Monday, really sets out a framework for how these processes should be managed. We do not want to be too prescriptive up front. I want to respond to a number of issues but I shall leave them until I have finished replying to this group of amendments, to be clear that I can cover everything that noble Lords have asked of me.

--- Later in debate ---

[Baroness Buscombe]

I am clutching a response to the noble Baroness’s earlier question which is on point. Clauses 26 and 28 allow the Secretary of State to provide the education administrator with indemnities or guarantees where that is necessary or appropriate. The education administrator will be able to apply to be discharged from office when they believe that they have achieved the special objective.

It may also help if I move on to Amendment 46A which specifically references creditors. Although we share common ground in our commitment to ensuring that if a further education body were to become insolvent, students would be placed at the heart of the subsequent administration process through the special objective, we do not share common ground here.

Clause 5 applies existing company insolvency law to further education colleges. The long-standing insolvency regime ensures that the interests of creditors are protected when a company becomes insolvent. Without such protection, lenders would rightly change their lending behaviours, such as by imposing higher interest rates and lending lower amounts. Other businesses would also become more cautious in trading with companies they perceived to be at risk of failing. This would ultimately paralyse growth. The same is true of the further education sector. So, while we are all agreed that there is a need to protect students’ studies—and that is the purpose of the special administration regime—there is also a need to have regard to the interests of creditors.

Through the special administration regime, we are rightly placing the protection of students’ studies ahead of the interests of creditors. However, as I said, this does not mean that the interests of creditors can, or should, be ignored. That would undoubtedly damage the further education sector, and I am sure that colleges themselves would be opposed to such action.

Subsections (4) and (5) make clear, therefore, that where the education administrator has a choice between courses of action that equally meet the special objective and protect students, they must follow the approach which achieves the best result for creditors and, where the college is run by a company, the company’s members. This delivers both protection for student studies and the reassurance that creditors, particularly lenders, need to ensure that the further education sector continues to be able to grow and improve to meet the needs of young people.

I want to respond to questions about the banks. Gareth Jones of Santander said:

“Overall, from our perspective, we are still very supportive of the sector—still looking to grow our exposure to the sector and grow our lending book. On the Bill and the proposed insolvency regime, we are actually supportive of the clarity that they provide”—[Official Report, Commons, Technical and Further Education Bill Committee, 22/11/16; col. 38.]


I was asked whether we are afraid that commercial debt will dry up for colleges as banks reassess their risk profiles, which is a critical point. The answer is no. Banks make lending decisions based on many considerations, and of course we expect them to reassess the risk profile of the sector now that exceptional financial support will no longer be available, but we expect them to continue to lend, particularly in light of the good work being done through the area review to build financially stable and resilient colleges. If this means a careful assessment of an individual college, its business plan and management, that is a good thing.

I hope that I have been able to answer all noble Lords’ questions on this group of amendments. If not, I will be happy to write to noble Lords but, on the basis of what I have been able to say this afternoon, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank those who have spoken in the debate for their questions, which are at the heart of the issues we raised. As I said at the beginning, this is a group in two parts. The questions about the individual appointed were well answered by the Minister; I am happy on that. There is a big task here. While it is true that the Bill says that the education administrator would be appointed only if they have the capacity to do the work, experience may well be lacking. We may be in difficulty there. On the other hand, I also made the point that we are talking about a specialist area in which there may be some growth in expertise that will allow us to get through that.

The noble Baroness, Lady Garden, and my noble friend Lady Cohen made points about how we balance the issues in the special administration system between the ongoing requirements of the students, the priority given them in the Bill and the rather odd words that appear in Clause 22. They which relate to a subset, not all of the groups in FE—I take that point—but they nevertheless imply, on a casual reading, that creditors will not be significantly disadvantaged in the long run because the function of the administration is to be carried out in a way that achieves the best results for the company’s creditors as a whole and, subject to that, the company’s members: its shareholders or shareholder equivalents.

I do not think there is an answer to this across the table. It might be sensible to have a meeting. The noble Lord, Lord Storey, said that he had a good briefing from officials; I did not have that chance. Perhaps if I could have a relatively short meeting on some of the technical issues here. That might be helpful in trying to tease this out. I do not think we are far apart on this. It is difficult. A bit of reassurance is required and, if the experience of the noble Lord, Lord Storey, is anything to go by, that might be helpful. In the interim, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, we have an amendment in this group. I support the amendments proposed by the noble Baroness, Lady Garden, and the noble Earl, Lord Liverpool. They make a very good case for additional words in the Bill to reflect what is surely implied in much of what we have been discussing: the ability of this sector to turn out people with not only technical and apprenticeship skills but wider abilities in the pursuit of jobs and the support of UK plc.

Our amendment is based on an assumption that if all this information is going to be collected then it must be used for something and not simply stay in files in the department. It should be used to support the technical and FE sectors and make sure that people are aware of what work is being done there. The quality being provided and assured by this Bill will make a difference to what people might do and which careers they are going to have. One of the great complaints we hear is that so little is done to try to encourage people towards this sector where good and rewarding courses are on offer, out of which good and rewarding careers can be built. If that is not known, people will not apply, and we will perpetuate the problems we have had in the past. I look forward to hearing what the Minister has to say about these issues. We support the other two amendments in this group.

[Baroness Buscombe]

Amendment 59 is proposed by the noble Baroness, Lady Garden, and the noble Lord, Lord Storey. It is important that we have a comprehensive analysis of how the further education system is operating in England, including which learners are studying which courses. I agree with noble Lords that analysis of the quality—that is a word I do not think we have used this evening but which we used a lot in Monday in Committee on this Bill—of further education provision and information about learners, including diversity and their geographic circumstances, are important.

However, we believe that this amendment is not necessary. The clause already enables the Secretary of State to require such information if she chooses to do so. The clause rightly gives discretion to the Secretary of State about what information to require from provider organisations. That is the approach in the current legislation we are amending through this clause that underpins a national data system that is working well. The way we gather information is not broken and we are not trying to fix it. We already have the ability to require the information specified in this amendment and already do so. The purpose of this clause is simply to ensure that we can continue to perform a robust and comprehensive analysis of the operation of the further education system in England after responsibility for some aspects of it are transferred to certain combined authorities as part of the wider devolution deals the Government have agreed.

On Amendment 60, I entirely agree with the sentiments of the new clause that would require the Government to have regard to four important aspects of technical and further education. However, I do not believe that the amendment is necessary because they are all things already provided for in the legislation. The duty to,

“promote and support the technical and further education sectors”,

is at the very heart of the recommendations made by the noble Lord, Lord Sainsbury, in his review. In the skills plan we announced that we would streamline the technical education system by introducing a common framework of routes underpinned by occupational maps. New qualifications will be introduced that are driven by the needs of particular occupations and based on standards designed by employers and other relevant stakeholders. Many of the reforms will be taken forward by the Institute for Apprenticeships and Technical Education under amendments made in the Enterprise Act 2016 after Royal Assent which will come into effect from April this year. The reformed technical education system will be reliant on a strong network of colleges and other providers.

The Government’s area review process has supported a restructuring of the post-16 education and training sector and helped to create more financial stable and efficient providers as well as improved collaboration across the different types of institution. We have announced £170 million of capital funding for the institutes of technology to make sure that we have sufficient provision targeted at delivering high-quality technical education at higher skills levels that is tailored around the needs of local employers.

With regard to the duty to ensure high-quality apprenticeship programmes, the duty in paragraph (b) of the proposed clause is not necessary. The Government have already made a public commitment to ensure high-quality apprenticeship programmes. We will discharge this duty in a number of ways. The Government have accepted the recommendations of the Richard and Sainsbury reviews that will help ensure that the apprenticeships offered are of a high standard. As noble Lords are aware, the Institute for Apprenticeships and Technical Education—on course to be launched in April—will be an independent body, led by employers and others, which will assure the quality of apprenticeship standards and plans in England. Our apprenticeship reforms have introduced a higher bar through the end-point assessment. The holistic assessment of apprentices will give employers confidence that their apprentices are job-ready by requiring them to demonstrate full competence in their occupation in order to pass their end-point assessment.

The Government’s responsibility to ensure high-quality apprenticeships also extends to training. We are working closely with Ofsted, which has a statutory responsibility to inspect the apprenticeships that we fund. We have also created a new register of apprenticeship training providers, with an emphasis on quality. Those with an inadequate Ofsted rating are not eligible to apply. The Skills Funding Agency also ensures the quality of apprenticeship training through its minimum standards and intervention regime.

In paragraph 10 of our draft strategic guidance for the institute, we have made it clear that,

“we would expect the Institute to support employers to develop ambitious plans for good quality standards, not least in sectors where we have evidence of skills gaps and that are priorities for the industrial strategy”.

We have also made it clear that:

“Supporting greater social mobility is also a clear Government priority. Apprenticeships can play a key role in helping to deliver this, through ensuring that people from all backgrounds are able to progress”.


The next duty is to support the financial stability and good governance of further education bodies. Strong financial management and effective governing bodies are important priorities recognised across the college sector. Many governing bodies have made significant progress in ensuring that they have the relevant finance skills and expertise. A survey of governing bodies, carried out by the Association of Colleges in 2015, found that among independent governors, 17% had a professional background in finance, which was second only to those with a background in education. We know that some colleges still find it difficult to recruit governors with a financial background. This is why the Government are funding the newly launched inspiring governance service to help colleges, as well as schools, find people with the right skills to join their governing bodies. The Government are also supporting the Education and Training Foundation in developing a training programme for governors with an existing finance role.

Where colleges fail in their financial management through poor financial performance or control there is an intervention system in place which can include referral to the further education commissioner. The commissioner will assess the college and make specific recommendations for strengthening the governing body. The further education commissioner has set out lessons for strengthening governance in colleges through his termly letters to the sector.

Finally, the duty to support good-quality careers advice is contained in the proposed new clause. The Government are committed to ensuring that everyone has the appropriate advice and guidance to climb the ladder of opportunity and make the most of their talents. That is why we confirmed in the Building our Industrial Strategy Green Paper our intention to publish a comprehensive careers strategy for all ages later this year. The strategy will set out our plans to expand the quality and quantity of careers advice. We will make it easier for people to access the support they need to find a fulfilling route that is right for them, whether that is an academic or technical route or an apprenticeship.

I hope we can all agree that we share the same objectives and that I have provided sufficient reassurance about the steps that the Government are already taking to support these objectives. I therefore hope that noble Lords will not feel inclined to move Amendment 60.

I move to Amendment 62 in the name of my noble friend Lord Liverpool and the noble Baroness, Lady Garden. As set out in the Post-16 Skills Plan, the Government’s ambition is to ensure that we have young people and adults with the skills, knowledge and behaviours that better equip them for employment in the 21st century. The effect of this amendment will be to prescribe that those skills, knowledge and behaviours include soft skills. I fully understand why my noble friend has put forward this amendment, and I agree that these skills are of paramount importance. The Government are committed to ensuring that everyone has the appropriate advice to climb the ladder of opportunity and make the most of their talents, but that will not happen without these soft skills. I fully understand why my noble friend has put forward these skills, but I am not convinced that placing an express duty on the institute is the most effective way to address them.

One of the fundamental principles of the new technical education reforms will be that employers, supported by education experts, will set the standards required for specific occupations to allow them to shape the content to give students the skills, knowledge and behaviours that employers require. It will be up to employers and relevant stakeholders to determine which soft skills are required for each occupation. That said, I recognise that soft skills will be important to ensure that individuals gain the key employability and occupational skills to get them ready for the workplace, and we are already putting in place measures to encourage this. For example, the Government continue to support schools to offer a broad and balanced curriculum.

We expect all schools to offer their pupils a rigorous curriculum that is supported by activities to develop the soft skills that prepare them for success in modern Britain. For example, extracurricular activities offered by many schools help pupils develop various soft skills such as resilience, leadership, teamwork, and social and emotional skills before they leave school at the age of 16. In 2015-16, the Government invested £5 million in character education to fund grants to organisations and schools to test new approaches and to expand existing programmes, new activity to build the evidence base and the first round of character awards to celebrate those schools and organisations leading the way in developing soft skills in young people. In addition, these core employability skills could be developed through a high-quality, substantial work placement which every 16 to 19 year-old student will undertake as part of the new technical education courses.

I take on board what my noble friend has said in referring to the report, which he and I contributed to, by that EU Sub-Committee which talked about the real importance of those basic skills. One of the key words that my noble friend used was “confidence”. Confidence, communication and self-esteem are absolutely fundamental. You can have all the skills in the world, whether they are academic, technical, or whatever, but if you do not have the ability to communicate and present and accept that as an employee you will often be the first contact with that company—your employer—then it is very difficult for you to climb that ladder of opportunity.

In view of this, we will reflect on current approaches and determine what more we can do to support schools and colleges in this area. I hope that the noble Baroness will feel reassured enough to withdraw her amendment.

Digital Economy Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Report: 1st sitting: House of Lords
Wednesday 22nd February 2017 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, we welcome the Government’s tabling their amendment on this issue, as promised. In Committee, the Minister said she wanted to work with the sector groups involved to support a strong book sector that helps to promote opportunities for the public to read and learn, and she intended to table her own proposals for the necessary legislative changes as soon as possible. We sometimes hear that and then have to wait ages, but this time she has been able to get the Whitehall system to work to her agenda, and I congratulate her on that.

[Baroness Buscombe]

I thank all noble Lords who have spoken in this short debate. I shall refer to Amendment 23, tabled by the noble Lord, Lord Clement-Jones. When moving this amendment in Committee, the noble Lord explained that interested parties representing the sector had since proposed a different wording from that used in the amendment. The Government have considered the suggested wording from the sector and our amendment seeks to reflect stakeholder views, although we have achieved the intention of enabling terms to be applied by rights holders to e-books and e-audiobooks for lending through an amendment to the Copyright, Designs and Patents Act 1988. Rights holders will therefore be able to make e-books and e-audiobooks available with clear terms about whether these are available for lending and, if so, what conditions on library lending would apply, such as one loan to one user at a time or that the book will be available to lend for a limited overall lifespan.

I am also delighted that the proposed extension of the public lending right to include remote e-lending has cross-party support, as was made clear in Committee. This amendment will maintain protections for rights holders, while enabling authors to rightly receive public lending right payments for the increasing remote lending of their works, as they do for the lending of books from library premises. I hope the noble Lord, Lord Clement-Jones, will therefore not press his amendment but support the Government’s new clause.

In response to the noble Lord, Lord Maxton, I can confirm that, as I think we discussed in Committee, the provision covers all books, including purely online, digital books. It is also UK-wide, so it is not a question of devolved powers. However, it is all to do with public lending rights and lending through public libraries, not with the example he raised regarding Amazon.

--- Later in debate ---

[Baroness Buscombe]

I thank all noble Lords who have taken part in this important debate on an issue that we take extremely seriously. It is very much on the Government’s agenda, and I am happy to confirm that again.

Amendment 20 seeks to provide the Secretary of State with a regulation-making power in order to prohibit the manufacture, sale or hire of unauthorised decoders. We have discussed previously in the House the pressing threat to subscription broadcast services caused by illicit set-top boxes, especially those which provide IPTV functionality. These IPTV boxes can in certain cases be considered unauthorised decoders, although that may vary depending on how they are set up to function.

As noble Lords will be aware, to better understand this area and what new legislation might be needed, the Government have committed to conducting a call for views on IPTV boxes, which I referred to in Committee. When we were last discussing this topic, I promised that the call for views would be published within a few weeks, and I am very pleased to announce that we have secured a publication slot for the document for 23 February—tomorrow. The purpose of the call for views is to help the Government understand where further action is needed to address the problem. If there is evidence to support changes to legislation, then we have promised to bring forward proposals in due course.

This information-gathering exercise will enable us to properly respond to the most pressing current threat caused by IPTV boxes. If there are other issues specific to unauthorised decoders that fall outside of the scope of this work, I would very much welcome details. We can then consider whether we need a further exercise to look at those distinct areas. The call for views runs for six weeks, until 5 April 2017, at which time the Government will assess the responses and determine the best course of action. The Government fully understand the harm done by illegal set-top boxes and IPTV, which is why it is crucial that we have a robust evidence base for effectively tackling this problem.

With regard to the manufacture of the hardware devices specifically, as your Lordships may expect, this usually happens outside the UK. That is why the IPO is working with partners across the world, including the Government’s IP attaché in China, to explore what can be done in source and transit countries.

Having said all that, I very much take on board what noble Lords have said this evening, including the noble Lords, Lord Clement-Jones and Lord Stevenson. The noble Baroness, Lady Kidron, of course has talked, quite rightly, several times in your Lordships’ House now, about young people and their digital habit, which starts frighteningly young. This is something we have to confront, and we sense the urgency with which we have to deal with this very real problem. Although I cannot make any commitment tonight, I hope that noble Lords will allow me to take this back and see if we can think of something more that we might be able to do. On that basis, I would be grateful if the noble Lord would withdraw the amendment.

[Lord Stevenson of Balmacara]

Before the noble Baroness sits down, could I just tease out what she has just said? Could that be read as a commitment to bring this back at Third Reading, so that we could spend a little time working out exactly what was required?

[Baroness Buscombe]

I cannot make a commitment that we will bring this back at Third Reading. We would certainly think more about it between now and then, but I can make no commitment that we would bring it back.

[Lord Stevenson of Balmacara]

I thank the Minister for her comments. I am sorry she is not minded to use the opportunity afforded by the fact that the Bill will go on until the end of March, which seems awfully close to the time by which she was suggesting that responses would be back, to enable us to make some progress on this. The points made by the noble Baroness, Lady Kidron, and the noble Lord, Lord Inglewood, are both right and bear on the same issue. It is clear that something is happening here that we could nip in the bud very quickly if we were able to take the appropriate powers. We are not specifying what those powers have to be, so we are not constraining the Government in how they might wish to take this forward, but quick action might prove more effective in the long run. Shutting this down would save us from the threat of it becoming a pest and a menace across all areas. I think it is worth testing the opinion of the House.

--- Later in debate ---

[Lord Foster of Bath (LD)]

My Lords, I am delighted to support the amendment in the names of the noble Lord, Lord Stevenson, and others. I am sure that all Members of the House recognise that there is a serious problem that needs to be addressed, although fewer people are accessing illegal material on the internet as a result of the growing number of relatively cheap and easily accessible alternatives. We should welcome that and the fact that in this country we probably provide a wider range of alternative legal sources—for the downloading of music, for example—than any other in the world. Nevertheless, there continues to be a problem, with about 15% of UK internet users—about 6.7 million people—continuing to download and access illegal material. I therefore welcome any measures that can be taken to introduce ways to prevent that. Of course I welcome the voluntary agreement that has been reached. I congratulate the Minister for Intellectual Property, who I know has worked very hard with the relevant parties, including the IPO, to secure the voluntary code. As the noble Lord, Lord Stevenson, said, the details have still to be worked on and there will be a review in 2017.

I ask the Minister to reflect seriously on this key point. In opposition, I have spent a lot of time moving amendments to various proposals that the Government “may” do something to delete “may” and insert “must”. On this occasion, I am delighted to support the amendment, which says that the Government may do something, if the need arises.

The Department for Culture, Media and Sport is rarely given credit for the important role it plays in the life of this country. As a result, it rarely has opportunities to have legislation before the House. While the Minister may tell me, as she did in a previous debate, that should the voluntary code not work, the Government will consider taking legal action at some point, she would find it difficult to find a legislative peg on which to hang that action.

The Intellectual Property Alliance and others have suggested that we need a backstop mechanism in the event that the code, which we welcome, is unsuccessful in future. For that reason, I hope that the Government will be willing to accept what is a simple amendment giving them power in future if they need it.

[Baroness Buscombe]

My Lords, Amendment 25 returns to the topic of search engines and copyright and would give the Government power to impose a code of practice on search engines to minimise the visibility of copyright-infringing websites in search results.

As we have discussed previously, this is an area in which we have been seeking a voluntary agreement between search engines and rights holders, and I am pleased to be able to confirm that we now have that agreement and have finalised the text of a code of practice. This newly agreed code sets out clear targets for reducing the visibility of infringing websites in search results. The code also specifies a number of areas where rights holders and search engines have agreed to work together with the general aim of supporting legitimate content and reducing piracy. We have always been clear that action is needed in this area and it is a manifesto commitment. But we have also been clear that a voluntary agreement would be quicker, more flexible and, most importantly of all, more collaborative than a legislative intervention. We now have that voluntary agreement and the parties to the code are already working to deliver on the commitments it contains. All parties to the agreement have engaged in these negotiations and the work to date in good faith. They are continuing to work in good faith and I am confident that that will also be the case for work going forwards.

The noble Lord, Lord Stevenson, questioned whether it would be possible to have sight of the code. We do not plan to publish the code in full because details about the number of copyright infringement reports a site can receive before it is demoted might allow pirates to game the system. We are, however, very happy to share the commitments in the code in more general terms.

We understand where noble Lords are coming from in seeking a backstop power, but I return to that word “collaborative”. We have come a very long way in what we have achieved thus far. I can remember working and having discussions with search engines in years gone by, trying to encourage them to respect and accept responsibility for what they do and the impact they can have on others. In that sense, we believe very strongly that we should continue with that collaboration and not consider a backstop power. We do not believe it is necessary. With that explanation, I hope the noble Lord will accept that a statutory power is not needed at present and thus feel able to withdraw the amendment.

[Lord Stevenson of Balmacara]

Although I am grateful to the Minister for her robust comments about our amendment, I profoundly disagree with them. I cannot see this agreement lasting and believe that there will have to be a backstop power at some stage. Surely the truth is that if it was necessary in America to introduce legislation to get that system to work, it is bound to be necessary in other places where those with the large rights holdings may feel they can operate in a way that is not necessarily in the best interests of consumers in the United Kingdom. I still think, as the Minister touched on at the end of her peroration, that this is something that we will have to drag the search engines towards, because it is not their business model. Their concern is to make sure that they get as many people coming to them and through them to other portals in other areas that they can get to. Their interest in engaging in that is something we will return to in future legislative arrangements. I think that they will be unable to sustain a position in which they act as neutral transferors of other people’s issues and wishes, because it does not work. They will have to accept that they have responsibility to work to make sure that the worst excesses at the moment are resolved in a way that does not hurt rights holders.

At the moment, it is a “large copyright holders against large search engines” agreement, and on that level it might operate. I do not think it will be effective. I do not think it is sustainable because there will be new people coming in and business models and practices will change—we cannot foresee that. Power will be necessary. If the Government will not seize a gift that is worth a lot of future pain and help them avoid the difficulties they will face in trying to find the legislative time—as the noble Lord, Lord Foster, said—to put this in, we cannot make them do it. I beg leave to withdraw the amendment.

Digital Economy Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 4th sitting (Hansard - continued): House of Lords
Wednesday 8th February 2017 Lords Chamber

[Baroness Buscombe (Con)]

My Lords, I thank all noble Lords who have taken part in this important debate. It is good to have this debate.

This group of amendments seeks to make extensive changes to the broadcast media public interest considerations that may be relied upon to intervene in certain media merger situations and the fit and proper test that Ofcom has a duty to apply to all those who hold a broadcasting licence in the UK.

Before I get into the detail, the debate has included views from across the House about the parties to the Fox/Sky merger. There is a proposed merger currently in train, which it is very likely the Secretary of State will need to consider under her existing powers. As the Secretary of State noted in her written statement of 10 January, any decision will be a quasi-judicial one. It is important that she is able to act independently and that the process is scrupulously fair and impartial. As a result, neither I nor any Minister can comment on the merits of this specific case. I will have to restrict my comments to the substance of the amendments themselves.

I have noted carefully the views of noble Lords, and of the noble Lord, Lord Puttnam, in particular. I have a transcript here of some of the debate of the then Communications Bill, in 2003. Of course, the noble Baroness, Lady O’Neill, remembered the key issue about citizen and consumer. Indeed, Lord Puttnam and I met outside this Chamber to try to come to terms with our approach to this issue—I was part of Her Majesty’s Opposition in those days. A lot was achieved. Of course, it was a government amendment on Third Reading which created the plurality and public interest test. It was my noble friend Lord Lansley, who is unfortunately unable to be in his place tonight, who sat on the draft legislative committee on that Bill, and who retains that interest.

Drawing all the contributions together brings us to a single question: do the Government believe they have the necessary powers to allow them to deal with complex media mergers and a concentration of ownership that would be damaging to media plurality?

In our view, the tests introduced in 2003 are wide-ranging and provide the Secretary of State for Culture, Media and Sport, who is responsible for media mergers, with a wide discretion to intervene. For example, in cases where there are concerns about media plurality, or where a bidder does not have a genuine commitment to the UK’s well-established rules on content standards and cross-promotion, which are overseen by Ofcom, the Secretary of State can consider those concerns as part of her deliberations as to whether to intervene in the proposed merger.

Turning to the amendments themselves, given the discretion to intervene based on the existing media public interest considerations, we do not believe it is necessary to add the additional requirements set out in Amendment 229ZA and would argue that these are matters that can already be considered under the existing tests. In addition, the matters set out are considered by Ofcom on an ongoing basis in its regulatory role.

There are three existing broadcast media public interest considerations that the Secretary of State can take into account in deciding whether or not to intervene in a merger. The first is the need for a sufficient plurality of persons with control of media enterprises—I stress, plurality of persons. The second is the need for a wide range of broadcasting which is both high quality and appeals to a wide variety of interests. In other words, the focus must be on content and plurality of content. The third is the need for persons carrying on media enterprises to have a genuine commitment to broadcasting standards. Together, these powers give the Secretary of State discretion to consider a wide range of matters in deciding whether the specified public interests may be relevant, and whether or not to intervene in a particular merger.

Amendment 229ZA, which inserts new Section 58(2D) into the Enterprise Act, would allow the Secretary of State to intervene in a media merger based on the need for those holding broadcasting licences to be a fit and proper person, as noble Lords have said today. The issue of who is a fit and proper person to hold a broadcasting licence is a regulatory matter for Ofcom. Ofcom is under an ongoing duty to remain satisfied that those holding broadcasting licences are fit and proper to do so, under Section 3 of the Broadcast Act 1990 and Section 3 of the Broadcast Act 1996. Ofcom’s assessment of these matters will consider the conduct of those who have material influence or control over broadcast licensees and will consider a wide range of factors in assessing who is fit and proper, including the matters set out in the amendment.

The amendment also proposes a new Section 58(2E), which is aimed at allowing intervention on the basis that the governance of broadcast media enterprises providing news needs to include sufficient safeguards for editorial freedom in the provision of full and accurate news services. I entirely accept—and the Government entirely agree with noble Lords on this—that the issue of governance is crucial, although we discussed in earlier debates today that the issue of accurate news is becoming a very difficult one and will exercise all our minds in the coming months. It is a long-established condition of broadcast licences in the UK that news is reported with due accuracy and impartiality, as set out in Ofcom’s broadcasting code. Ofcom, as the regulator, governs compliance with this requirement of the code.

The matters set out in the amendment at proposed new subsection 58(2F) would be dealt with by licence conditions and Ofcom’s broadcasting code, including provisions on fair and effective competition and the cross-promotion code, as well as matters that would be considered as part of the fit and proper person test.

[Lord Stevenson of Balmacara]

I thank the Minister for going through this in so much detail. The issue raised in the first part of the amendment on the fit and proper person test was not whether the powers exist but how they would be triggered. The worry is that they would be triggered post hoc rather than anticipatorily with regard to a merger. Do the Government accept that there is a difficulty here?

[Baroness Buscombe]

The Government do not accept that there is a difficulty in this. The important issue is that the powers remain broad in their application. To the best of my understanding, though, there is no difficulty regarding when they are triggered.

Digital Economy Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 4th sitting (Hansard): House of Lords
Wednesday 8th February 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very interesting debate. We, particularly those of us of a certain age, often get to a point where we are scared of the technology that we are expected to use. We are in the hands of our children, who shout things like, “It’s intuitive! Just do it!”, but we do not have the faintest idea what we are trying to do. However, we should not be scared of technologies. History should tell us that the reason why Shakespeare’s Globe is outside the city walls of London is that people like us in those days felt that they were dangerous plays that should not be seen by too many people. Video nasties and indeed concerns about some of the issues that are in the Bill are examples of the same thing. We have to be careful that this is not just another “penny dreadful” story but a serious issue.

I was not that concerned about this matter in my own consciousness until I came across it personally and in relation to something that has already been mentioned in the debate. I work with a small charity that relies entirely on a website presence in order to try to help people who suffer from the condition that it serves. For the first seven or eight years of the charity’s life, we were ranked number one on a search engine—let us call it Google—so when you searched for the condition, we came up top. In the last six months, we have gone from top to, I think, 44th in the rankings for this condition, which means that no one now uses our services, rings up or communicates with us. We are now on page four of the search results and that turns out to have been achieved by a change in the algorithm, which prunes out the people who apply. The ISP put in a particular search term that managed to knock down the efficacy of the inquiries that were coming to us at our charity. So the charity, which was doing good work and reaching 2,000 or 3,000 people a year, is now reaching no one, and we cannot change that because the algorithm is behind a commercial confidential situation. So I pick up the points that are being made all round the Chamber about the need for us to get more clued up about this without being scared of it, and I support the amendment for that reason.

The second point that has been picked up, which slightly goes against the wise words of the noble Baroness, Lady O’Neill, is that, where an algorithm is helping to achieve a relatively straightforward systems approach, it is probably not as much of an issue as where it is substituting its judgment for yours. It is not knowing what that judgment is that is the problem, and that is where the points that have been made need to be picked up. That is something that we would all benefit from. Whether or not this is the right amendment, there is an issue here that will need to be pursued, and I look forward to hearing the Minister’s response.

[Baroness Buscombe (Con)]

My Lords, I thank noble Lords who have taken part in this very interesting debate. Clearly there is a principle upon which everyone is agreed, and that is that this is a serious and growing issue. It is certainly an issue that the Government take very seriously.

As my noble friend Lord Lucas has set out, the basis of the amendment aims to understand the impact of algorithms on users of digital services. As we have already heard, algorithms play an important role in modern life, from making recommendations for books you might like to read, to more important matters such as credit ratings and detecting fraud. Indeed, there is a real debate here on the extent to which the public are willing to compromise on what is termed privacy for a better service. Transparency itself is incredibly important in terms of knowing how information about oneself is used, for what and with whom it is being shared, and having some control over that.

Digital Economy Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 3rd sitting (Hansard - continued): House of Lords
Monday 6th February 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for a very well-read response to the questions we all had about these technical amendments, although some of them were not quite technical of course. In terms of the four categories, I listened to three very carefully, and I will read what she said in Hansard, but we have no further comments to make on them at this stage.

She touched on the issue in relation to which we have two amendments down. I am grateful to the Government for responding so quickly to the discussion in another place on this issue, because as originally drafted, the Bill would have criminalised disclosures by whistleblowers and investigative journalists revealing matters of legitimate public interest. The point was picked up and discussed at some length, and had attracted interest from a wide range of people such as Sir Peter Bottomley and Helen Goodman, who raised it. The Minister in another place undertook to take it back, and we have now had the amendments put forward.

Those of your Lordships who have bothered to read the amendments in Clauses 50 and 51 will recognise that the wording is very similar in both cases. The difference, narrowly put, is that the amendment that we were advised would take the trick in this area included not just print journalism but also broadcast journalism. I am not certain whether that is necessary or not, but the Government have come forward with a slightly narrower point of view. I think we agree the aim, and it may just be a question of the correct wording, so unless there is any particular issue, we can do this either by correspondence or perhaps in a quick meeting, and I do not think there is anything on this point that need detain the Committee further. We are agreed and are delighted that the Government are making the move. It is just a question of trying to use what time we have to make sure that we have absolutely nailed it down completely.

Having said that, what has proved difficult in other pieces of legislation is how one defines whistleblowers. There is no attempt to do that here; the test is simply whether or not what has been disclosed was in the public interest. Again, there might just be something around that where we might look at other discussions and come back on it. But for the moment, I will leave it.

[Baroness Buscombe]

I thank the noble Lord for that. The opposition amendment makes specific reference to broadcast transmission when the government amendment on this topic does not. However, the word “publication” in our view can be construed sufficiently broadly to cover broadcast media. Section 32(6) of the Data Protection Act 1998 provides that:

“For the purposes of this Act ‘publish’, in relation to journalistic … material, means make available to the public or any section of the public”.


The ICO guidance on this indicates that publication for these purposes would therefore cover broadcast. As a result these additional changes are not necessary.

[Lord Stevenson of Balmacara]

It is quite an interesting point. The world has moved on since those original drafts, and we have to think a bit more carefully about what happens on YouTube and whether disclosure on social media will be covered by this. I do not dissent from what is being said but would just like to be certain that we have used this opportunity, which may not come again, to make sure we have this nailed.

[Baroness Buscombe]

I thank the noble Lord for what he has said and absolutely understand where he is coming from.

Digital Economy Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 3rd sitting (Hansard): House of Lords
Monday 6th February 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is extremely kind of the noble Lord, Lord Foster of Bath to introduce my amendment for me, saying that he was not going to speak to it and then covering all the points I was going to make. That means we will move a little faster than we would otherwise have done. I think I can limit my speech to three points, in the sure and certain knowledge that the noble Lord, Lord Clement-Jones, will cover any points that I do not cover in great detail.

We understand that there is a voluntary code in circulation that has been offered to all parties, and it is thought that it might be signed some time this week—at least, that is the deadline that the Government have given. If that is the case, as the noble Lord, Lord Foster, says, then that is obviously good news and takes us a step down the road, but my amendment would be necessary if not everyone who has been offered this signs up to it, which I think is quite likely. There may be new entrants and other companies that participate in this area for which the activities that facilitate copyright infringement by users will remain a problem, and of course there may be changes in technology that we cannot even anticipate at this stage that may make it necessary, as adumbrated by the amendment, for the Secretary of State to return to this issue in future. For all the reasons given by the noble Lord, Lord Foster, this is a helpful amendment, intended to ensure that this long-running problem gets solved. I hope very much that the Government feel able to accept it.

[Baroness Buscombe]

My Lords, on Amendment 77, over recent years the UK has made great strides in the enforcement of intellectual property, and we are now judged to have one of the best IP enforcement regimes in the world. This is definitely a position that we are keen to maintain, and the Bill sends a clear signal that the Government believe copyright infringement is a serious matter, irrespective of whether it is online or offline. This includes measures to increase the penalty for online copyright infringement from two years to 10 years. We understand that there are concerns in the music industry particularly that online intermediaries need to do more to share revenues fairly with creators, which the amendment seeks to tackle. However, we need to find balanced solutions that provide clarity without undermining basic freedoms or inhibiting the development of innovative digital models.

As the e-commerce directive is EU single-market legislation in origin, we will in effect have to wait until after we exit the EU and then possibly initiate a debate as to whether this regime, or indeed the e-commerce regulations as a whole, is still fit for purpose. We are also wary of making piecemeal changes to this important regime that has helped to foster the development of online services and has been helpful to the development of the UK’s burgeoning tech sector without a proper debate involving all parties.

That said, the current law, including the exemptions from liability, has fostered an open and innovative internet, giving online services the legal certainty required to start up and flourish. This has been good for creators, rights holders, internet businesses and consumers alike. Platforms, like all businesses, have a role to play in helping to remove copyright-infringing material, and there is no place for a system that encourages copyright infringement online. However, the UK Government are fully committed to ensuring that our creative industries receive fair remuneration for their work. We want to see creators remunerated fairly, while encouraging investment in new content and innovative services. We will carry forward these principles when engaging at policy level with the EU while considering our own UK-based solutions.

The Government are clear that we must maintain our rights and obligations as members of the EU until we leave. That means that we carry on making arguments within the EU concerning our preferences for EU law. Once we leave the EU, we may choose to reconsider a range of issues, including the limited liability regime, but for now, government policy remains unchanged. The European Commission has recently published a series of copyright proposals in that area, and we are in the process of carefully considering those proposals. While we remain a member of the EU, we will continue to engage with policy development in this space, alongside considering the development of our own copyright framework.

Amendment 79 would mean that the Government take a power to impose a code of practice on search engines, to dictate how they should work to prevent copyright infringement. The return of that suggestion, which was also discussed in another place, gives me an opportunity to update noble Lords on progress in this important area. Since the idea was last discussed in the other place, IPO officials have chaired a further round-table meeting between search engines and representatives of the creative industries. While there are still elements of detail to be settled, the group is now agreed on the key content of the code and I expect an agreement to be reached very soon. All parties have also agreed that the code should take effect, and the targets in it be reached, by 1 June this year. The search engines involved in this work have been very co-operative, making changes to their algorithms and processes, but also working bilaterally with creative industry representatives to explore the options for new interventions, and how existing processes might be streamlined. I understand that all parties are keen to finalise and sign up to the voluntary agreement, and so we believe there is no need to take a legislative power at this time.

Surely it is better to act on a co-operative basis now, and start tackling this serious issue right away. If, however, a voluntary deal cannot be achieved, we will re-evaluate our options. I hope therefore that the noble Lord is reassured, and feels able to withdraw the amendment.

Digital Economy Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 2nd sitting (Hansard - continued): House of Lords
Thursday 2nd February 2017 Lords Chamber

[Baroness Buscombe]

My Lords, we are talking about taking on the seriously important issue of all illegal access. That is part of the problem with primary legislation, as it is very often not otiose but an anachronism before it has even begun. So often primary legislation leads to us being behind the curve. In fact, I remember so well sitting where noble Lords opposite are sitting when the then Communications Bill was taken through the House in 2003. I remember asking officials why there was no mention of the internet in 2003 given that a certain person called Mark Zuckerberg was developing Facebook and the new world of social media. I was told privately, “Because it’s too difficult”. We are dealing with complex areas of law but I have history in this regard. I look at the noble Lord, Lord Gordon of Strathblane, who, of course, was sitting on this side of the House in those days. I think he will attest to the fact that we were grappling then with issues which almost immediately turned out to be behind the curve when that enormous piece of legislation was introduced. I hope noble Lords will accept that it is much more important to try to get these issues right than enshrine our hopes of tackling these serious problems in primary legislation in ways that will not work almost immediately.

[Lord Stevenson of Balmacara]

This has been a very useful exchange and I think that we have moved forward a little. I think the noble Baroness would accept that the point on which we ended was really the point that the noble Baroness, Lady Kidron, made—that there is a way of getting into this argument which tries to embrace that point about the technology. We may not have the flexibility or the ability to work the technology as well as our children and grandchildren do. It may be a generational issue. The problem may lie more in enforcement than in changing the law because, as the noble Baroness pointed out, the Fraud Act, the inchoate offences legislation and the CDP Act all contain provisions which can probably be used to tackle this issue. However, there is a lack of fit with that movement forward and the technology and the use being made of it by younger generations who do not see the issue in quite the same terms as we do.

Intellectual property as a business model is not well served by traditional models involving traditional economics. The whole point about a patent is that it gives you the monopoly that most of competition law seeks to remove, albeit for a limited period. Copyright is no different in that sense. This is not perhaps the time to argue this, certainly not at this stage in the proceedings, but it could be argued that by going to a “life plus 70 years” model for copyright—noble Lords who are earning money out of this should close their ears—we are probably making a mistake which future generations will want to come back to, because the incentive to invest in innovation has to be matched against the right to exploit that at some point. Arguably, life plus 70, particularly as people live longer, is probably not the appropriate model and a more restricted term, which would also be subject to additional requirements to make material available, might be the way forward. In that sense, some of this stuff might not therefore be a problem today as opposed to when we are a long way into it.

However, I welcome the investigation that the noble Baroness mentioned. The timing seems rather rapid for government; I was surprised to hear it but, if that is the case, who are we to say no to it? If the commitment is there and the Government are prepared to bring forward legislation to tackle this issue—I am sure that she said this, as I wrote it down—we could not be more happy. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, briefly, I apologise to the House for the brevity of our Amendment 79B. We ran out of time and did not have the skills or ability to write an amendment that should properly have been in the Budget. We also lacked the temerity to do that. It is an aspiration not a probing amendment; it does not even qualify for that. It is a flag-waving exercise as we ought to think harder about the tax on knowledge. As the noble Earl, Lord Clancarty, said absolutely rightly, it is ridiculous that we believe that books in physical form somehow transmit knowledge and are worthy of having a VAT-exempt regime but when they are downloaded they must be subject to VAT. That seems unfair. We support Amendment 74 in the name of the noble Lord, Lord Clement-Jones, and look forward to hearing the responses from the noble Baroness.

[Baroness Buscombe]

My Lords, I thank all noble Lords for this important debate and for this proposed new clause. It seeks to extend the public lending right to include remote lending of e-books and e-audiobooks by public libraries. This would allow authors of these to receive payments from the public lending right fund, as they do for public lending of printed and audiobooks. It would also amend the definitions of e-books and e-audiobooks so that these works could be lent by public libraries only if they have been licensed by publishers on agreed terms for library lending.

The Government support recognising authors for e-lending by libraries. We committed in our manifesto to work with libraries to ensure the public can access e-lending, and to appropriate compensation for authors that enhances the public lending right scheme. As the Minister in another place confirmed, we intend to legislate to extend the public lending right to include remote e-lending. In response to the noble Lord, Lord Maxton, I say that our intention is to include all e-books regardless of technology.

This proposal is supported across the sector, including by libraries, authors, publishers and booksellers. I am therefore pleased our commitment is also supported by noble Lords in this House. Public libraries increasingly provide e-lending to support reading and literacy in response to the needs of their communities. Most library loans remain of printed books, with over 200 million such loans in Great Britain in 2015-16—so not everyone has given up the printed word, as has the noble Lord, Lord Maxton. However, e-lending is growing, with 4 million e-book and 1 million e-audiobook loans in Great Britain in the same period.

In considering how to legislate to extend the public lending right to include e-lending, we are engaging with representatives of authors, libraries, publishers and booksellers to understand their views. A number of these have raised points that need careful thought before the Government table their own clause.

One point made by representatives of authors and publishers is that an amendment to the legislation should include protections for the commercial market. The proposed new clause seeks to do this by specifying that e-books and audiobooks could be lent out from public libraries only if they had been licensed by publishers on agreed terms for library lending. However, others had raised concerns about whether such a provision might impact on public libraries’ ability to acquire and lend e-books.

This is an important issue. Officials have therefore met sector representatives to allow us to consider carefully the views and decide on the appropriate way to proceed with our commitment. I understand that the discussions in recent days have been promising and that the respective parties have been considering whether they can agree a settled view on the issues. We want to continue to work together to support a strong book sector that helps promote opportunities for reading and learning by the public, so we intend to table our own proposals for the necessary legislative changes as soon as possible. We will carefully consider these views in deciding how to proceed. I hope therefore that noble Lords will not press this proposed new clause.

Amendment 79B requests that e-books be exempt from VAT. Issues affecting taxation are a matter for the Chancellor of the Exchequer. It would therefore be inappropriate to include this amendment in this Bill. There are other difficulties, however, in accepting such an amendment. VAT is an EU-wide tax and is applied by member states within agreed structures. While we remain in the EU we are bound by our international obligations. This amendment would cut across those obligations in respect of VAT. EU VAT law, agreed unanimously by member states, currently specifically requires the standard rate to be applied to all electronically supplied services. This includes e-books, which are services, not goods. Because of this, if we accepted the amendment we would be in breach of our obligations. To make the change proposed in this amendment a change of EU law will be necessary, supported by all 28 member states. While a proposal is currently on the table there have been a variety of different reactions from member states and no unanimous agreement. I hope that the noble Lord will therefore not move his amendment.

Digital Economy Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

1st reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords
Tuesday 31st January 2017 Lords Chamber

[Baroness Buscombe]

My Lords, I am sorry if the noble Lord finds it extraordinary. However, I think that he has made a reasonable request and I will make sure that we write to him in detail, giving a full reply.

Amendments 16 and 18 seek to make additions to Clause 3 to ensure that compensation is paid within a reasonable timescale and that, for mobile phone services, compensation is payable where the provider fails to meet a specified standard or obligation. Also, one of those standards must be satisfactory mobile coverage.

The drafting of the clause already allows for Ofcom to consider timescales for compensation, as well as what service standards are within scope. In the spring of this year Ofcom plans to publish a full consultation setting out how automatic compensation could work. Thus, we do not see the need for these amendments.

Amendment 22 seeks to establish a code of practice on business broadband speeds. In January 2016, Ofcom published a voluntary code of practice on business broadband speeds, and it came into force in September 2016. The code gives businesses clearer, more accurate and transparent information on broadband speeds before they sign up to a contract. Signatories to the code also commit to manage any problems that businesses have with broadband speed effectivity and to allow customers to exit the contract at any point if speeds fall below a minimum guaranteed level. Ofcom will continue to work with the industry to ensure full transparency. With such a code already in existence, we see no need for there to be a power for the Secretary of State to prepare one.

Amendment 233 would amend the Consumer Rights Act 2015. I am grateful for the response of the noble Lord, Lord Clement-Jones, to this amendment, as I have to hand the transcript of the debate on that legislation—it makes quite enjoyable reading—when he referenced the consequences of an amendment which is the same as the one before us tonight. He said that,

“the consequences of this amendment could be quite unforeseen and extremely contrary to the interests of the strong and vibrant software industry that we have in this country”.—[Official Report, 19/11/14; col. 507.]

We entirely agree with the noble Lord that things have not changed that much, and they certainly have not changed in that regard. The rights set out in the Consumer Rights Act were designed to achieve a workable balance to reflect consumers’ reasonable expectations while not imposing unnecessary and potentially damaging requirements on our vibrant, growing and technically innovative digital content suppliers. We believe that this amendment would undermine those rights.

When formulating the Consumer Rights Act, we concluded that providing for a short-term right to reject was not necessary in the context of digital content. Unlike physical goods, digital content can on the whole be fixed rapidly and with little effort on the part of the consumer. Consumers accept that it is the nature of digital content that it may be released with minor errors and incompatibilities which come to light in use and which will be fixed to ensure that the product is satisfactory. A short-term right to reject digital content and impose strict limits on the number of repairs and replacements would not be practical in this context. In the digital environment, a fault in one copy of digital content may be replicated in all copies, or the fault may not be the result of an action by the trader at all. That is why a repair is a more equitable solution in the first instance than a full refund.

Many digital content producers are micro-businesses and start-ups, and we need to maintain an environment in which they can flourish and provide innovative products, while ensuring appropriate protections. Enabling rejection as an immediate remedy could cause the industry to be more conservative in its product offerings, reducing our competitiveness and chilling innovation, to the detriment of both business and consumers.

As we know, the Act has been in force since October 2015 and the Government have received no evidence or representations to the effect that it is not working as intended. With that further explanation, I hope that the noble Lord will agree to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the noble Lord, Lord Foster, for joining me on Amendment 14 and I welcome the contribution from the noble Lord, Lord Clement-Jones, with whom we can agree on one thing and disagree on another. I am sure that that will continue—he is a contrary sort of chap and it is sometimes difficult to work out where he is coming from.

I like the phrase “bill shock”—I had not come across it before. It is an issue that might be dealt with in the forthcoming Green Paper and therefore I accept that at this stage we need not progress further on that amendment. However, I should like to reflect on my experience of trying to deal with accounts from my provider of mobile telephony. It is complicated by the fact that I also, stupidly, pay my children’s bills. I should not do that because, if I can never work out what their bills are, I certainly cannot work out my bills, and the combination is almost impossible.

The only way that you can interrogate your bill from that particular provider, whose name begins with a “V”, is by going on to the website and logging in. That is fair enough, but you cannot access your account until the provider sends you a text message on your mobile phone with a number that you have to enter in. That methodology is now becoming common among the banks. However, it does not work in a not-spot, so I cannot reach my account. I cannot interrogate it, I cannot set caps and I cannot do all the things that the noble Baroness talked about in her full and very interesting response. Therefore, there is an issue there with some of the technology that is still being used. I do not think that it is anti-competitive or anti-consumer but it borders on the “difficult to use”. I think that there is an issue there that we might want to come back to, although a Green Paper may well be the right way forward.

If we could have a letter on gainer provider-led switching, that would be very helpful. This is an area where I do not think there is any doubt about where we are trying to get to, but the pace seems glacial and I do not understand what the barriers are.

On the two points on payment, I accept that a paper offering a consultation on that would be useful. If I am correct about the timescale, it seems a little unfortunate that it will appear later than the completion stage of the Bill. The Minister mentioned the spring, but if she could give us some detail in writing about when it is likely to be available, that will be helpful.

With regard to the voluntary code of practice, we come back to the point that we raised on Amendment 1 regarding what the USO will be if it does not have teeth. In some senses, an aspiration is fine and a floor is also fine, but if the code is to be used to make real progress in this area, we have to try to make sure that the ISPs that try to operate it find that it contains something that they have to deliver on. I will look carefully at the Minister’s response and we may come back to that point.

Finally, I turn to my Amendment 233 on digital content. The debates are obviously very familiar. Indeed, I think that the Minister may have been present at one or two of the previous ones and therefore what we say will ring even more loudly in her mind. The noble Lord, Lord Clement-Jones, was quick to pick up the main point, but time is moving on. So much more material is now downloaded and not supplied in hard copy, and at some point we will have to look at this again. The more the Minister talks about a strong and vibrant software industry, the more that speaks to me of customers being put at the bottom of the priority list, and I do not think that that is right. It is difficult to operate in a digital environment without the proper digital legislation. I am not sure that we know yet what that is and I accept that we may need more time to go through it. I signal that this is something that we may have to come back to at some point but, in the interim, I beg leave to withdraw the amendment.

High Speed Rail (London–West Midlands) Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Committee: 2nd sitting (Hansard): House of Lords
Thursday 12th January 2017 Grand Committee

[Baroness Buscombe]

My Lords, I am grateful to all noble Lords who have spoken to these amendments in the names of the noble Lords, Lord Berkeley and Lord Stevenson of Balmacara, and my noble friend Lady Pidding. The Government share the concerns that noble Lords have highlighted through the tabling of this amendment, and I fully acknowledge the importance of residents and businesses along the route knowing they can seek fair and independent resolution of complaints, if necessary—the word “independent” has come up several times, as it is important.

I will immediately address points made by the noble Lord, Lord Stevenson. I hope that he will recognise, as indeed he said in his speech this afternoon, that the Minister addressed a number of the issues that the noble Lord raised this afternoon during our first day in Committee on Tuesday. However, I shall quickly reference a couple of things he talked about. One is with regard to engagement on wider issues. While he is correct that the Select Committee focuses on private interests, there has been frequent consultation on the scheme at a detailed level, even as it evolved and changed through additional provisions. Consultation responses, which numbered nearly 23,000, were analysed and reported on by an independent assessor appointed by Parliament. Six reports are available in the House Library for the noble Lord to consider. In addition, the noble Lord referenced property bonds, which I shall refer to. I hope he will be reassured by the fact that we will review the full suite of HS2 discretionary compensation schemes later this year, and as part of that, I can confirm that we will consider arguments with regard to a property bond option.

I acknowledge several helpful interventions made by the noble Lord, Lord Young of Norwood Green, and my noble friend Lady O’Cathain, in amplifying, illustrating and helping us through this process by referencing so much that took place during that whole process when they sat on that Select Committee. We must be mindful of the enormous amount of work that they achieved and of course the considerable care they took to ensure that people were genuinely listened to.

The Government want to reassure noble Lords that these amendments are unnecessary, as we are already putting in place comprehensive measures to address these concerns in the guise of a construction commissioner. The construction commissioner will fulfil the requirements that noble Lords are seeking in their proposed amendments, and more besides. The commissioner will mediate in unresolved disputes between the project and individuals or bodies relating to the construction of HS2 and will be able to receive and deal with complaints about the construction of the railway on an independent and impartial basis. Furthermore, the commissioner will have a role on advising on actions the nominated undertaker and contractors can take to reduce the number of complaints they receive. The commissioner will also have a particular role in determining complaints which are made under the small claims scheme—this point makes immediate reference to the question raised by the noble Lord, Lord Rosser—which provides a simple and informal basis to recover losses up to £10,000 for each individual claim.

The construction commissioner will be independent of the Secretary of State and any nominated undertaker appointed to construct the proposed scheme. We have already appointed an interim construction commissioner, Mr Gareth Epps. A permanent appointment—to reassure my noble friend Lady Pidding—will be made following Royal Assent, when the Secretary of State will establish an independent body to appoint the construction commissioner and determine its precise terms of reference, including its regular reporting requirements. The independent body will be made up of a range of stakeholders, including representatives of local authorities affected by HS2 phase one. The commitment to appoint a construction commissioner is a binding one, made to Parliament and recorded in the register of undertakings and assurances. Given that we are already addressing this issue, I hope that noble Lords will accept that legislation is unnecessary and not press this proposed new clause.

With respect to the issue of an independent adjudicator, I note that this amendment was previously tabled during the Public Bill Committee in another place. I am not convinced on the need for an HS2 adjudicator. There are already extensive checks and balances built into the Bill, based on the regime adopted by Crossrail and the Channel Tunnel Rail Link. The regime has proved effective for those projects and we see no reason why it would not be effective for this project. This issue was raised before your Lordships’ Select Committee, which also saw no need to impose such a role. I do not believe that this Committee should either.

This amendment, as well as being unnecessary, is unwelcome, as it would effectively create a quango with all the unnecessary cost and bureaucracy that this would entail. I cannot resist citing the noble Lord, Lord Berkeley, who, at the beginning of this afternoon’s Committee, said on his second amendment that he is not in favour of creating an enormous bureaucratic nightmare. These amendments would create just that.

[Lord Stevenson of Balmacara]

I am sorry to interrupt the Minister’s peroration but, while I understand the point about the construction commissioner, who may well solve a lot of the difficulties raised today, who is going to take responsibility once construction is completed for ongoing concerns and issues? She mentioned current practices in Crossrail, which may have a resonance for us. Without having to spend too much time today, perhaps it would be possible for her to write with details of what that might contain for us.

[Baroness Buscombe]

My Lords, in response to the noble Lord’s question, it will continue to be the construction commissioner. In fact, if I could continue my response to noble Lords it would perhaps be helpful.

There are a considerable amount of checks and balances already established by the Bill and the environmental statement, which protect the natural environment and communities from the impact of construction works. The Bill sets out the detailed controls and planning approvals needed for construction works, such as the limits on land that can be taken for the railway and where and how works can be constructed. There is also a strict envelope of environmental impacts within which HS2 has to be built or it does not have planning permission. Furthermore, there are requirements for the Government to gain approval from local authorities under the planning regime on specific issues, including the approval of construction traffic routes.

Additional commitments have been made during the parliamentary process: literally thousands of individual undertakings and assurances that are a matter of public record. These commitments are either legally enforceable through the courts or matters for which the Secretary of State will be answerable to Parliament if there is any breach of them. These commitments also include those relating to the environmental minimum requirements, which have been developed in consultation with local authorities and others. The code of construction practice, which forms part of these commitments, sets out detailed standards of work that will be adopted by contractors throughout the construction period to control potential impacts on people, businesses and the natural and historic environment. This code also sets out the mechanisms that will be used to engage with the local community and their representatives throughout the construction period.

Let us not forget all the existing legislation that will continue to apply during the construction of HS2. This includes the Control of Pollution Act 1974 and the Environmental Protection Act 1990, which give necessary roles to statutory bodies that will all play a role in regulating HS2. The Freedom of Information Act and all its requirements will, of course, continue to apply to the Department for Transport and to HS2 Ltd. These existing protections will be reinforced by the dual roles of the residents commissioner and the construction commissioner. The residents commissioner ensures that the Government are communicating with affected residents in the clearest and plainest language possible. The role of the construction commissioner is to mediate unresolved disputes between HS2 Ltd and individuals or bodies and to provide independent, impartial decisions.

Enterprise and Regulatory Reform Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Thursday 31st January 2013 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, we on this side will also be interested to hear the answer to that question, although I think I gathered from remarks made previously in Committee that that is the case. We will look forward to hearing about that. Other than that, we are very grateful to the Minister for bringing forward these amendments, which, as he says, go a step further than the DPRR Committee recommended, but are none the less welcome for that.

[Baroness Buscombe]

My Lords, I add my welcome for these amendments and thank the Minister.

Enterprise and Regulatory Reform Bill

Debate between Lord Stevenson of Balmacara and Baroness Buscombe

Wednesday 16th January 2013 Grand Committee

[Baroness Buscombe]

My Lords, I rise to resist the amendment of my noble friend Lord Lucas and to support what my noble friend Lord Clement-Jones said. My noble friend Lord Lucas’s argument in relation to Amendment 28A; that if someone has a book they should be allowed to own it, enjoy it and pass it on to others sounds, emotionally, like a good thing. Indeed, I have done that on many occasions among my family and friends. But passing one book among one or two friends is a million miles from what is now possible because of the speed of technology. Because of the digital world we inhabit, the whole of the creative being of that book can be out in the ether and transmitted globally within moments. The creative right is all but destroyed rather than shared in a small and special way. While I entirely understand the emotion behind the idea that we should continue to feel that we can share something we really enjoy, it is neither wise nor sensible to do that in this world because it will deter creators from creating more wonderful books. That is the tragedy of this. It is a perverse consequence of technology.

[Lord Stevenson of Balmacara]

My Lords, I do not wish to detain the Committee, but I wish to thank the noble Lord for his introductory comments and reflect on two points. First, a number of the issues he raises will come up in other amendments and I hope that he will share his wisdom on those occasions as well. Secondly, I must disappoint him in one respect. He suggested that part of what he wanted to say was covered by the Christmas present provided by the additional copyright exceptions and other things that were coming forward and that there might be an opportunity to discuss those in a separate Bill. That will not happen because the Government are, at the moment, choosing to implement those proposals by secondary legislation, bundled in, as the note says, “as few SIs as possible”.

Unless we get a late Christmas present from the Minister, we will have to oppose that because there are very large issues within what has been proposed. Not all of them are unwelcome and we would probably want to get behind most of them. But the way in which it has been done leaves a gap in the expectation outside that there should be a lot of discussion about these things. As has just been said, they affect the very heart of what we are trying to say around our creative economy, how people create and how things are consumed. If we do not get that right, there will be a wave of concern outside. I therefore lay down a small elephant trap for the Minister to fall into then leap out of with one bound later on when we reach that point in the Bill.