ARM: Foreign Acquisition

Daniel Zeichner Excerpts

Monday 21st September 2020 Commons Chamber

[Daniel Zeichner (Cambridge) (Lab)]

Earlier this evening, BBC Look East reported that this was a debate worth waiting up for, so we surely must not disappoint. I am very grateful for the opportunity to raise an issue vital to my constituency, but also important for the future of the wider UK economy. I declare at the outset that I am a member of Unite the union, and I am very grateful to it for giving me the opportunity to hear directly from members employed at the company.

This urgently needed debate is to secure answers on the future of one of the UK’s most successful tech companies, ARM, which is based in my constituency. It was confirmed last Monday that it was being sold to the American tech firm Nvidia. Since it was founded in 1990 in Cambridge, ARM has become one of the UK’s best home-grown technology success stories, with huge global reach. It now designs and licenses the basic blueprints of chips used in around 90% of the world’s smartphones, as well as countless sensors, smart devices and cloud devices. Hundreds of global companies license its designs, including Apple, Samsung, Huawei and Qualcomm, putting the UK firmly at the centre of global technological development. ARM employs around 2,700 people in the UK, many in highly skilled, high-tech jobs. They work in its headquarters in Cambridge and across the country in Belfast, Manchester and Warwick.

[Jim Shannon (Strangford) (DUP)]

First, I congratulate the hon. Gentleman on securing this Adjournment debate. I share his concern, as I have a number of high-tech and modern manufacturing companies in my constituency. Does he agree that the proposed sale will be against the national interest and the UK’s ambitions to be a European technological powerhouse? It is important for us in the UK to look after our own.

[Daniel Zeichner]

The hon. Gentleman anticipates my arguments, because there can be little doubt that this home-grown tech star is a great national asset for the country. Back in 2016, alongside many in Cambridge and across the UK tech sector, I was hugely disappointed to see ARM sold to the Japanese conglomerate SoftBank. I warned then that we were losing control of this important national asset, and I fear we are now seeing that warning borne out.

ARM’s sell-off in 2016 was backed by this Government with conditions that its headquarters would stay in Cambridge and its staff would be maintained, and so far that guarantee has been honoured, but we are now faced with a new situation with the news of the sale last Monday. Back in 2016, the then Chancellor, Philip Hammond, considered it so significant that he announced the deal personally and legally binding guarantees enforceable by the Takeover Panel were secured. This time there has been silence from Government—a silence that I hope will be broken this evening. Although I recognise the sensitivities around commercial confidentiality, the same applied back in 2016. We need to know what the Government’s view is on the transfer of a key UK- based technology giant, particularly in such uncertain times.

[Darren Jones (Bristol North West) (Lab)]

I thank my hon. Friend for securing this important debate. Does he agree with me that in assessing the risks of the takeover bid, we need to understand the possible repercussions for British jobs and industry if trade sanctions are put in place by President Trump, for example, as the Nvidia parent company is based in the United States?

[Daniel Zeichner]

I thank my hon. Friend the Chair of the Business, Energy and Industrial Strategy Committee. He makes an important point that I will come on to, but I return to the Government’s position, because I find their silence slightly ominous. It has only been breached by briefings to selected journalists and, frankly, that does not seem good enough to me.

It would be astonishing if this Government, with all their talk of world-beating test systems and taking back control, considered allowing us to lose further control of one of the only areas of technology in which we are genuinely world-beating and world-leading. It is particularly astonishing that the Government might be prepared to throw away British influence when it represents such a key bargaining chip in trade talks in a post-Brexit era. I do not think any other country in the world would allow such a jewel in the tech crown to be handed over in this way, so I urge the Government to scrutinise the deal carefully and to step in and use powers available to them to impose strict, legally binding conditions.

The sale raises a range of questions and issues of local, national and international significance. I have been raising them for many weeks now, as have trade unions and the co-founders of ARM. We have received little substantial response from Government, although I was pleased to have a direct discussion with Nvidia today. I invite the Minister to provide some answers from the Government’s perspective.

Since the announcement, Nvidia has made promises to keep ARM based in Cambridge, to hire more staff and to retain ARM’s brand, but without any legal guarantees, I fear those remain just promises—doubtless genuinely made—not guarantees. Will the Minister confirm whether the Government are seeking legal assurances in this deal to ensure that ARM’s headquarters remain in Cambridge and it retains the some 2,700 jobs it supports in my constituency and across the country? I am sure the Minister will say that it is hardly likely that Nvidia would ditch highly sought-after engineers, but members of Unite have told me that many jobs, particularly in IT, are much more vulnerable. Similarly, I am told that some 300 people in Cambridge work on graphics processors, an area in which Nvidia works. It could be a perfect match, or it could mean rationalisation and job cuts. 

There is little sign of much meaningful consultation with those who work for the company. Having followed the media commentary, it has struck me that those who work for ARM hardly seem to have a voice—a doleful consequence, I fear, of a largely non-unionised workforce. The money may be good, but when it comes to times such as this, the value of having professional negotiators acting on one’s behalf becomes apparent. I am grateful for the strong interventions from not only Unite but Prospect, which also has members at ARM. I have a further question: will the Minister confirm that Cambridge will continue to be the company HQ and explain how promises will be enforced? Anyone can make promises, but will they be kept? How will they be enforced? The deal will affect jobs not just now but in the future, and could have serious ramifications.

ARM’s current business model has been highly successful. It is based on remaining neutral in the tech market and licensing chip designs to any chip maker that wants them. ARM’s co-founder Hermann Hauser has warned that although SoftBank was able to maintain ARM’s neutrality, Nvidia is different: it is a chip maker itself, so companies using ARM will now find themselves as competitors with its parent company. Some could start to seek alternatives. Nvidia has said that it will maintain ARM’s neutrality, but we have no legal assurances. Will the Government be seeking assurances that ARM’s unique business model—and so its success—will be secured?

The sale has implications both internationally and diplomatically. If ARM becomes a subsidiary of the American company Nvidia, we will in effect be handing over control to the current US Government, as it could become subject to their foreign investment regulatory committee, the Committee on Foreign Investment in the United States. The Trump Administration will then ultimately hold the reins over which countries use the technology—which is used in almost all mobile phone chips in the world—and where it will be possible to export it.

It is quite clear that Trump has no qualms about interfering in the operations of tech companies to pursue his own foreign policy goals. Chinese tech companies have already voiced concerns that American ownership of ARM could jeopardise access to ARM technologies for their businesses. Some may not be bothered about that, but it highlights the real role that this UK-located tech giant plays in the international struggle for technological sovereignty.

We need guarantees that ARM is not going to be embroiled in American trade wars and that decisions over this key technology are not completely lost to us. As the Chair of the Foreign Affairs Committee said:

“The sale of @Arm raises questions of sovereignty. Control of tech is an essential element of independence and @UKParliament will have no say on the CFIUS decisions that go to the US President alone.”

I agree. To safeguard the UK’s interests, we need clear conditions on the takeover to exempt ARM’s tech from intrusive US regulations.

The takeover comes more than a year after the Government’s telecoms supply chain review report, in which the Government committed to diversifying the UK telecommunication supply chain. Since then, a plan to do just that has repeatedly been promised and repeatedly been delayed. Will the Minister explain just how selling this UK-headquartered, world-leading telecoms supplier to a competitor supports the diversification of the supply chain?

I understand that the Government say they are looking into the takeover and that Ministers are considering whether to refer it to the Competition and Markets Authority. I also appreciate that Government policy is in a state of flux, with a pattern of tech businesses being taken over, the status of the industrial strategy unclear, and the national security and investment Bill yet to be published, so we have to use what we have. The Government have the power to impose conditions on such takeovers if they threaten national security or financial stability, which the selling of ARM to Nvidia clearly does.

I appreciate that the Minister who will respond to this debate is the Minister for Digital and Culture, not a Minister from the Department for Business, Energy and Industrial Strategy or the Minister for Security—that serves to highlight the complexity of the issue. Last time, the Chancellor took ownership; we need the same again. We need a coherent, cross-Government response, led from the top. I urge the Minister to consider such issues carefully, make the case to her colleagues and wake up to the threat that the deal poses unless strict, legally binding conditions are applied.

In conclusion, will the Minister confirm today whether it is the Government’s intention to refer the takeover to the Competition and Markets Authority? Do the Government intend to place clear conditions on the deal to guarantee that ARM’s HQ will stay in Cambridge; that jobs will be protected; that its unique business model will be secured; and that its technology will not be a lever in future trade negotiations that this Government have handed to our competitors?

[Andrew Griffith (Arundel and South Downs) (Con)]

rose—

[Mr Speaker]

Order. It is a half-hour debate. I have not been told that you wish to speak and I am not sure whether the person who is holding the debate has either. You can intervene, but I have not been given notice of anybody else. Have you been told, Daniel Zeichner?

[Daniel Zeichner]

Only of one other Member.

[Mr Speaker]

Has the Minister been told? Three people are meant to know in an Adjournment debate: the Minister, the Chair, and the person whose debate it is.

--- Later in debate ---

[The Minister for Digital and Culture (Caroline Dinenage)]

I start by thanking the hon. Member for Cambridge (Daniel Zeichner) for securing this debate on an important matter, to which he is right to bring the attention of the House. His constituency is a vital part of our nation’s tech environment, and I fully understand that many of his constituents’ jobs are in the sector.

The Government are incredibly passionate about protecting a vibrant, successful and growing tech sector in the UK, and about remaining at the cutting edge of innovation. A key part of that is the design of microprocessors, which are crucial for building reliable and predictable chips for worldwide customers. ARM is at the heart of that semiconductor ecosystem. As one of the largest tech companies in Europe, it is hard to overstate ARM’s significance to the wider sector, as the hon. Gentleman articulated beautifully. It has massive potential to give our country an advantage in a wide range of sectors and technologies.

The Government closely monitor all acquisitions and mergers. When a takeover may have a significant impact on the UK, we will not hesitate to investigate further and take appropriate action. In this case, we are working hard to understand the full impact of the move and the potential impact it may have on the future. From there, we are able to consider what steps we may wish to take.

[Daniel Zeichner]

Will the Minister give way?

[Caroline Dinenage]

I will in a moment. I will make a bit of progress, then I will be happy to take the hon. Gentleman’s questions.

The Enterprise Act 2002 allows the Government to call in transactions on four public interest grounds: financial stability, national security, media plurality and public health emergencies. When a Secretary of State decides to intervene under the Act, they declare a public interest intervention notice. That triggers a deadline for the Competition and Markets Authority to conduct what it calls a phase 1 investigation. The CMA will then engage with the parties while it gathers the information and publishes an invitation to comment notice. That invites views from the merger parties and other interested third parties on the transaction under review. At the end of that phase 1 stage, the Secretary of State can: clear the merger, clear the merger with undertakings, or refer the merger to a phase 2 investigation. At the conclusion of the phase 2 investigation, the Secretary of State would consider if the transaction meets the threshold for intervention on public interest grounds under the Enterprise Act, and therefore make a decision on the necessary steps if and when it would be appropriate to do so.

The reason I am explaining that to the hon. Gentleman is that I think it is really important to articulate the number of very careful steps we would have to take in that process. In this instance, the Secretary of State for Department for Digital, Culture, Media and Sport would be the final decision maker. It is obviously extremely critical that he does so with an independent mind, having received all the relevant information and without prejudice. I am sure he will understand that while I am very happy to stand at the Dispatch Box and answer as many of his questions as possible, I have to be very careful not to say anything that could in any way prejudice that decision or any future moves. However, I will try to answer as many of his questions as I can.

As the hon. Gentleman will know, on Monday 14 September Nvidia and Softbank Group announced a definitive agreement under which Nvidia will acquire ARM Limited from Softbank in a transaction valued at $40 billion. The announcement stated that Softbank will remain committed to ARM’s long-term success through its ownership stake in Nvidia, which is expected to be under 10%. Furthermore, the statement said that ARM will remain headquartered in Cambridge. Nvidia and Softbank have made statements to the media expressing their commitment to maintaining ARM as a successful business in the UK. They have suggested that they will build on ARM’s R&D presence here by establishing a global centre of excellence and will create a platform for global innovation with industry partners across multiple fields. We will consider all those statements incredibly carefully.

--- Later in debate ---

[Caroline Dinenage]

I think that that would depend on which aspect, of the four that are under consideration, the Secretary of State was looking at.

As the hon. Member for Cambridge and others know, the UK is a global leader in tech, with a proud history of innovation and invention. Our world-leading universities, financial sector and regulatory environment have produced pioneering researchers, scientific institutions and research projects, and the UK tech sector has the world’s highest proportion of overseas customers, driving our ability to forge global partnerships and attract the very best talent from around the world. From artificial intelligence to biotechnology, the UK has made huge breakthroughs, generating more billion-dollar tech firms than any other country in Europe. Nationally, we now have 82 companies that are worth more than $1 billion—more than France, Germany and the Netherlands combined.

We will, of course, continue to invest in science and technology and R&D-intensive emerging sectors such as artificial intelligence, quantum technologies and robotics. We will also continue to promote the UK as the very best place to start and grow a tech business. We have the skills, the location and the language, alongside a business-friendly environment, strong access to finance and a long-standing reputation for innovation.

[Daniel Zeichner]

I am grateful to the Minister for taking a further intervention. I just want to clarify who the Government have been talking to. She said that there have been conversations with the company—is that ARM or Nvidia? It is a key difference. I understand the point she makes about the sensitivities, but the same was true in 2016, and it was possible then for the Government to secure guarantees. Why not now?

[Caroline Dinenage]

Ministers and officials have spoken to various parties in recent days, and we will continue to do so as we seek to understand the full implications of this transaction from every angle.

The hon. Gentleman will know how diverse our tech sector is in the UK. I know that Cambridge has a greater proportion of people in tech than any other city in the UK besides Belfast, so I fully appreciate the worry that this causes for him and his constituents. Well over 2,000 people are based in ARM’s Cambridge headquarters, and we are determined to see that continue. I thank him for his continued interest. I am sorry that I have not been able to answer all his questions as fully as he would have liked me to or as I would have liked to, but I promise that I will keep him closely abreast of this issue as it develops.

Question put and agreed to.

Internet of Things: Regulation

Daniel Zeichner Excerpts

Thursday 3rd October 2019 Westminster Hall

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I beg to move,

That this House has considered regulating the internet of things.

It is a pleasure to serve under your chairmanship, Mr Gapes, in a debate on such an important subject. I am a tech evangelist. I believe that technology is an engine of progress. Growing up in the north-east, in Newcastle, the home of the first industrial revolution—although I know that some from the north-west may debate that—gave me a love of science, technology and innovation. The achievements of local greats such as Armstrong, Stephenson and Parsons—that is Rachel Parsons, the world’s first female naval engineer—inspired me to study electrical engineering and embark on a two-decade career as a chartered engineer working in telecoms all over the world.

Newcastle’s experience of the industrial revolution was captured in the excellent BBC series “A House Through Time” with David Olusoga, which showed a mixture of life-changing technological progress and huge social problems, as in many other cities. We are now in the midst of what some consider to be the fourth industrial revolution—although how to count them is not agreed—powered by data and renewable energy, instead of labour, discipline and steam.

Last week the Prime Minister made what I can only call an interesting speech to the United Nations on technology, with this historical analysis:

“When I think of the great scientific”—

I cannot pretend to do his way of speaking, so I will just quote—

“revolutions of the past—print, the steam engine, aviation, the atomic age—I think of new tools that we acquired but over which we—the human race—had the advantage”.

The industrial revolution radically changed society, but it is a mistake—one, if I may say, of privilege—to say that the human race had the advantage. The steam engine rapidly increased productivity but also powered factories and mills with brutal working conditions that produced textiles from slave-milled cotton. Those new tools brought benefits, but the benefits were not equally shared. Of course, that happened before the United Kingdom had universal suffrage or a labour movement and a Labour party, and when many in the world were colonial subjects. Our opportunity, and our duty, in the fourth industrial revolution is to make those technologies work for the many, not the few. In that context, I will today set out what the internet of things is, the benefits it brings, the concerns and the current state of regulation.

What is the internet of things? I was surprised to see that in the Prime Minister’s speech on the gov.uk website, the internet of things was in inverted commas. I am sure that the Minister is aware that IOT is not sci-fi, but a reality of our daily lives. I was the first Member of Parliament to mention the internet of things, in my Westminster Hall debate on machine-to-machine communication in June 2011, just a year after I entered Parliament. One of the Minister’s predecessors, the right hon. Member for Wantage (Mr Vaizey), responded, so I think he was the second MP to mention it.

I called that debate because my experience as a chartered electrical engineer and as Ofcom’s head of telecoms technology had brought home to me, even then, the opportunities and threats that the internet of things represented. At the time, Ericsson estimated that 50 billion things would be connected to the internet of things by 2020. In fact, that was a bit of an exaggeration, because we have about 7 billion. However, global spending on IOT is forecast to reach $745 billion by the end of this year, Ericsson now estimates that by 2023 we will have 31 billion things connected to the internet, and the Government’s own estimate is that there will be 420 million internet-connected devices in the UK within the next two years.

The internet of things is basically things connected to the internet—it does what it says on the tin, for once. That allows everyday objects to talk to each other and to people. In fact, the first internet-connected toaster was revealed in 1989. While there has been speculation for years about how the internet of things will change our lives, it is now that we are really beginning to see its full implications for how we live, work, play and do everything in between.

Smart homes and connected appliances are perhaps the most commonly understood applications. Smart meters mean that we can turn our heating on when we leave work, whatever time that is. A fridge can tell someone when they are out of milk. More poignantly, a child’s teddy bear could record their first words and share them with the whole family.

However, IOT is about much more than household gadgets and cuddly toys. Scaling up IOT will bring us smart cities, where bins can signal when they are full, parking spaces can tell us when they are empty, and traffic lights can tell an autonomous car how fast to drive, so that it never has to hit a red light. Every time I wait at a bus stop—despite the ridiculously high cost of bus travel in Newcastle, that is still quite often—I look forward to an IOT-enabled and truly integrated public transport system, which will mean buses stopping when and where people want them to, and not stopping if there is no one at a bus stop. That means a saving in fuel efficiency, and a saving in all our time.

IOT is also transforming industry. The fourth industrial revolution has at its heart smart factories, and intelligent and flexible automation, making manufacturing cheaper, quicker, more efficient, more personalised and more reliable. Indeed, the smart factory might be in someone’s home—3D printing plus IOT could equal home manufacturing.

I am an internet of things believer. I have studied it, lived it and effectively built bits of it all over the world. It has huge economic and social benefits, as well as environmental benefits, ranging from energy management to tracking endangered species. We cannot address climate change without the internet of things. It allows the monitoring of energy usage but also enables a smart grid. IOT can literally save the planet, which is just as well now that it accounts for 8% to 10% of European electricity consumption.

However, I hope that the Minister will agree that people, and not technology or things, must be at the heart of the internet of things revolution. An IOT that works for everyone requires action—action that this Government seem unwilling to take. IOT will be as pervasive as electricity, and found in every home and handbag. And, like electricity, IOT is an enabling technology, only the enabler is not electric current but data—people’s data—and right now we have no idea who owns that data.

Take personal health tech. A company called OrCam has developed discreet camera glasses for the visually impaired, which can read text and recognise people, while the L'Oréal UV sensor, which detects ultraviolet exposure, is small enough to be worn comfortably on someone’s fingernail. However, who owns and controls the data gleaned by these devices? I hope that the Minister can tell us that, and say why it is not the people who generate that data.

As companies bring more IOT devices to market, this is a pressing issue. Although the GDPR represented progress, it is already years out of date: it addresses privacy, not control; it barely takes account of artificial intelligence and algorithmic management; and it ignores completely the internet of things. The Information Commissioner’s responsibilities over IOT are unclear.

The more interconnected things are—which in itself is a good thing—the bigger the potential for cyber-attack, which is already a huge area of concern. In 2018 there was a 500% increase in the average size of a botnet attack. There are more than 7 billion IOT devices in circulation, and that number is only going to grow. Given that each IOT device is always on, it is possible to build and deploy large-scale attacks within minutes.

In 2017 the US Food and Drug Administration recalled almost half a million pacemakers due to fears that they were vulnerable to hacking, while a Chinese IOT firm recalled 4 million cameras for the same reason. November 2018 saw the first scaled botnet attack using smart TVs. Other household appliances can also be used not only to bring down internet platforms such as Spotify, Amazon and Twitter, as happened in 2016, but to take control of our homes or any networked utility. Back in 2010 an Iranian nuclear facility was targeted by a malicious computer worm, which led to the shutdown of multiple gas centrifuges, and in 2015 blackouts in Ukraine were caused by cyber-attacks. Although we call them “cyber-attacks”, they have very physical consequences. In 2017 the Federal Network Agency, the German communications regulator, told parents to destroy a talking doll called Cayla, because its smart technology can reveal personal data. A couple of years ago I wrote about the implications of internet of things security for sex toys, but today I will spare Members’ blushes.

The lack of security on IOT devices is not only a risk to the individual user; it threatens huge economic and social damage. Importantly, security for IOT devices does not just need to be built in at the start, even though that in itself takes time and money; it needs to be upgradeable over time as threats evolve. However, producers of IOT devices are simply not incentivised to consider security concerns, with global supply chains competing mainly on costs for devices that can be sold for only a few cents or even less. Of course, the lowest-cost device is, inevitably, the lowest-security device. This is one problem that the market cannot and will not solve on its own, which means that it is up to Governments to correct.

In his speech, the Prime Minister used quite lurid language on the issue of internet of things surveillance:

“But this technology could also be used to keep every citizen under round-the-clock surveillance. A future Alexa will pretend to take orders. But this Alexa will be watching you, clucking her tongue and stamping her foot”.

The Prime Minister shows both his lack of respect for women and his lack of understanding of technology in caricaturing it as a nagging housewife arguing with an unfaithful husband. That sort of gendered view is, sadly, far from uncommon. Technology is far too often the creation of well-off men and, unsurprisingly, it reproduces their biases and prejudices.

There is an important issue of surveillance to address, both in the private and public domain. The recent book by Shoshana Zuboff, “The Age of Surveillance Capitalism”, addresses the ways in which data is used not just to monitor us but to direct and control what we do. We see it already in the practices of Amazon, Sports Direct, Uber and Deliveroo, to name just a few, where the companies’ control of data can control work life.

Research by Defend Digital Me shows that the internet of things has an increased presence within our classrooms, from direct monitoring through biometrics to facial recognition and tracking technologies as part of a smart campus project, in some cases run by the Office for Students. Many of the applications that are marketed claim noble aims around improved health or scholastic performance, but they are rather less clear when it comes to consent. When we consider how the internet of things can be used to monitor children in compulsory education, how can the child or parent be said to consent if it is a generalised practice?

The Government have repeatedly ignored warnings on cyber, much less done anything to ensure that small businesses and citizens, as opposed to big businesses and national security agencies, are protected. There are no current regulations that require a security standard for internet of things devices. About 30 groups are developing security standards for the internet of things, but if we have 30 standards, we do not have a standard. Our public response needs to be as joined up as our networks, but it is not. Responsibility for cyber-security lies across several disconnected Government silos. The Home Office publishes cyber-security stats; the cyber-security strategy comes from the Cabinet Office, although it was launched with a speech by the then Chancellor; the Department for Digital, Culture, Media and Sport takes care of cyber-skills for young people; and the cyber-essentials scheme sits in the Department for Business, Energy and Industrial Strategy. Responsibility for cyber-security is defused across Government. There is a lack of leadership and, even worse, a lack of concern. The policies seem largely to ignore mobile devices and the internet of things.

At the same time, and for some years now, the Government have been encouraging us to take up smart meters, for example, without a regulatory framework to protect us from attack. Personally, if a device is called smart, I do not buy it, at least not without a one-hour technical interrogation, which few customer service agents can pass.

[Daniel Zeichner (Cambridge) (Lab)]

My hon. Friend is making a very important speech. I, too, have spent time reading the Zuboff book, and the more I read it, the more alarmed I became. Does she agree with me that the real issue is the one she started with: whose data is it? Without that being resolved, there is an inevitable drift towards big tech companies using it for profit. Why wouldn’t they? But it is our data, and on every one of these issues, if we could pin that down, it would completely disrupt their business model. That is why it is a tough thing to do, but it would ultimately resolve the issue.

[Chi Onwurah]

My hon. Friend, who is a great champion of innovation and technology—coming from the constituency that he represents, it is appropriate—makes a critical point. I could not have put it better. Although this debate is about regulation of the internet of things, it is impossible to talk about protection and security in the internet of things without talking about the data that is its lifeblood: the flows of data that both drive and enable the internet of things. We are in a confused state about who owns and controls the data and how it can be shared. The Government, for example, had at the last count at least 80 different ways of sharing data with themselves. As long as that is the case, we cannot have real security or integrity within the internet of things.

Last year the Government finally took some action with their Secured by Design voluntary code of practice on the security of the internet of things, as well as guidance for consumers, which was later codified as ETSI TS 103 645. In May this year, the Government announced a consultation on the introduction of some mandatory legislation on labelling. For example, retailers would have to label internet-of-things products as complying with varying levels of the Secured by Design code. Labelling is necessary because the Government will not decide what is secure and make it mandatory—if everything were secure, it would not need to be labelled. We await the outcome of the consultation. However, there are at least five major issues, and many others besides.

First, the tone of the consultation is, “Regulation is very, very bad and stops innovation, so let’s just have as little as possible.” Secondly, there is no enforcement or sanction. Thirdly, while some mandatory requirements are proposed, they would simply be a declaration of adhering to standards. That approach puts a major emphasis on the consumer to understand these increasingly complex problems and does not account for the use of the devices in public spaces.

The fourth major concern is that the regulations deal only with consumer things. The clue is in the name: it is an internet of things. We need an architecture of standards and a regulatory framework that enables security and interoperability across the internet and also considers the lifeblood of the internet of things—data. Fifthly and finally, there are billions of insecure old-generation IOT devices already enmeshed in our digital infrastructure. The regulations do nothing to address them.

The Government need to recognise that technology is not something that happens to us; it is something that we actively participate in, or should do. That does not mean stifling innovation. Instead, it means using Government influence to look forward to the impact of technologies and to shape them for the public good. The Government must understand technologies in terms of social purpose, rather than just profit margins. That must be done with the tech sector, but the Government must recognise that it is their job to protect the interests of the people. During the first and second industrial revolutions, it was the trade unions, organised workers, the nascent Labour movement, feminists, abolitionists and former slaves who pushed law makers into putting legislation in place that would direct the use of technology to more egalitarian ends. I fear that it will be for a Labour Government to ensure that that is what happens here.

Technology can be used for good or ill. My hope is that intervening now to set up a framework for data and the IOT will mean that we do not face problems and resistance further down the line.

Last year, I was at CES, which is the largest computer electronics show in the world, in Las Vegas. An American start-up literally begged me to put in place security regulations for IOT devices, so that it could compete on a level playing field with the cheap but totally insecure exports from less reputable manufacturers. It is cheap and, frankly, lazy to set up a sort of binary choice between regulation and innovation. A clear regulatory framework and strong governance allows good companies that are making socially useful products to succeed without markets being flooded with poor quality and potentially dangerous products that threaten security.

I want to say a little on Labour’s plans as I understand them—I know that the shadow Minister, my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne), will set them out in more detail—and I want to put that in context. I am a technology evangelist. Before becoming an MP, I worked all over the world building out the networks that now form the internet. One of my proudest moments was when I rolled out the first global system for mobile communications network in Nigeria and saw how mobile communications could really make a positive difference to people’s lives. Fisherman in the delta could now know the market price in Lagos and could not be cheated out of the right price for their fish; pregnant women could phone for a doctor instead of having to send vital requests on foot, which took hours. The internet of things will bring more and better benefits.

I have also seen the flip side of new technology. When I worked for Ofcom, I was asked to report to the board on internet security in 2005. When I came back with stories of bot attacks, honey traps, distributed denial of service, white hat wizards, Trojans, worms, phishing and pharming, it was as if I was describing a war in a galaxy far, far away. More than 10 years on, however, those threats are very real. They are part of everyone’s daily lived experience. Online fraud is the most common crime in the country, with almost one in 10 people falling victim to computer misuse or one sort of fraud or another. The same may happen with the internet of things—in fact, to an even greater extent—and we must not allow that.

I talk about the internet of things for everyone, because I believe that technology can be democratising and enabling, but just as cyber-crime seemed so foreign only a decade ago, we do not yet fully understand the new risks posed by the internet of things. To fully realise its benefits, we need to be able to deal with the increasingly pervasive security threats it presents. To address them, we need regulation as well as action in other areas. For example, we need to invest properly in skills and adult learning to help people to become digitally literate citizens. Labour’s pledge to create a free truly universal national education service, the NHS for the innovation age, will help everyone to become part of an innovation nation in which everyone is a creator, not simply a user, of technology.

We also need the power of Government to address our creaking infrastructure, and close the productivity gap at the same time, by enabling businesses across the country to invest in the internet of things. Our national transformation fund will do what it says on the tin—transform our infrastructure to bring it up to OECD levels.

We need to address a critical part of the tech sector that I referred to earlier, which is a lack of diversity. Diversity is not an optional add-on; it is an economic imperative. It needs to be at the heart of economic and technological policy, because we cannot build a more prosperous economy without making use of everyone’s talents. We need a more comprehensive sector-wide approach to diversity, particularly in the tech sector. It is key that the creators of new applications for the internet of things come from diverse backgrounds, so we have technologies that work for all and make use of the full array of talent in our society.

Finally, an internet of things requires the right digital rights and responsibilities to exist across our nation. That is why Labour plans to introduce a bill of digital rights that will provide strong and easily understood protections for citizens and will give us all rights and control over our own data.

As I draw to the end of my comments, I want to make sure that the Minister understands the questions that I am asking, so I will list the ones to which I would like him to respond. First, as I have mentioned, who owns and controls the data flowing to and from internet of things devices? Why is it not the people who are generating the data? The Prime Minister said that data is the new oil, but we have seen what the corruption around the oil industry did to many developing economies. Our citizens deserve to be in control of their own data.

Secondly, what steps is the Minister taking to ensure that insecure internet of things devices cannot be sold? Thirdly, will the provisions of the online harms legislation, specifically the duty of care, apply to the internet of things? I asked his predecessor that question, but the answer was not clear. Fourthly, when the internet of things is combined with facial recognition to monitor people, whether in education or on our streets, what requirements are there on consent? Fifthly—this was raised by TechNorthWest—internet of things devices take data for one stated purpose. What prevents its being used for various others? How does consent work in that case? Is the general data protection regulation sufficient?

Sixthly, I believe that all our critical national infrastructure is connected to the internet of things. I have mentioned the blackouts in Ukraine and attacks on an Iranian power station. What regulation is there of the internet of things in critical national infrastructure?

Seventhly, what analysis has been made of how the Government should respond to the misuse of internet of things devices? What scenarios are being considered and what plans are in place?

Eighthly, for the purposes of internet of things regulation, what is the nature of the relationship between the Department for Digital, Culture, Media and Sport, the National Cyber Security Centre, the Cabinet Office and the Information Commissioner’s Office?

I expect the Minister to respond to the five criticisms of the current consultation.

[Chi Onwurah]

We have an hour and a half, which will be more than adequate. I should perhaps have said that the Minister has a background in technology, as a tech correspondent, so I am sure that he has the answers to all the questions.

[Daniel Zeichner]

Loth as I am to interrupt the exam paper, which I am sure will come to an end soon, a practical application of the questions came up not long ago with the facial recognition monitoring of my constituents at King’s Cross station. I hope that the Minister will be able to explain how they can be protected in future.

[Chi Onwurah]

That is another excellent intervention from my hon. Friend. I look forward to the Minister’s response about facial recognition technology and consent.

I have asked the Minister nine questions and here is the 10th and final one: can we have a comprehensive forward-looking review of digital rights and responsibilities to deliver a regulatory framework fit for the future, which encompasses data rights and delivers an internet of things security architecture in which citizens can have confidence?

I hope that the Minister noted that when US presidential candidate Elizabeth Warren talks of regulating the tech giants for the benefit of consumers Facebook trembles—so much that Mark Zuckerberg has promised to “go to the mat” and fight her over it. However, when the Prime Minister talks about “pink-eyed terminators” the world laughs. That matters, particularly as the Minister advocates a hard Brexit, after which we would not have the support of our European friends and colleagues in establishing internet of things regulation.

The internet of things could represent a more profound technological change than anything since electricity, as I have said. To make it work we need to understand the problems that it raises, and lay out a clear framework for technology companies to work in. However, to take advantage of the changes, we need a Government who understand the opportunities of the internet of things, and who work with industry to mitigate the threats. That is a question not primarily of technology but of standards, interoperability, protocols, control, industry co-operation, self-regulation, legislation and enforcement. If we get that right we can look forward not just to a future of the internet of things but to a prosperous future of innovation that works for all, and things that have yet to be thought of, the benefits of which will be shared by everyone.

--- Later in debate ---

[Matt Warman]

That is a philosophically interesting question but it is also obvious that at the moment data is readily given up in exchange for a service. I am not sure whether the right hon. Gentleman would therefore seek to put a value on the service and say, “That service, whether offered by Facebook or whoever, should not be worth less than a certain amount.” That seems to be the logical conclusion of his argument, which is why I say it is perhaps more an interesting philosophical question than a practical one.

[Daniel Zeichner]

Will the Minister give way?

[Matt Warman]

I am conscious of the time, but this is all very interesting, so I am happy to give way.

[Daniel Zeichner]

It is more than interesting. It is critical. Is the Minister assured that people are involved in a free exchange, and that there is transparency—that they understand the terms and conditions of all the things that capture data on their devices? I am certainly not. I think most people who look at it are convinced that people do not know, so they are not getting the economic benefit of that behavioural data.

[Matt Warman]

Essentially I agree with the hon. Gentleman that it is obvious that not everyone reads the terms and conditions of every single thing they have signed up to for any website; but it seems to me that Government’s role in this space is not to stop people making those decisions. It is to make sure that people have a better understanding of the decisions they make, and that they trust the companies that are doing whatever it may be with their data. That obviously requires us to put certain constraints on the behaviour of companies, as we do in every other circumstance. However—and I do not think the hon. Gentleman is suggesting this—it should surely not be for us to say that people should not be allowed to make certain decisions. I think that on the Government side of the House we would be keen to free people up to make whatever decisions they reasonably want to make.

Oral Answers to Questions

Daniel Zeichner Excerpts

Thursday 3rd October 2019 Commons Chamber

[Daniel Zeichner (Cambridge) (Lab)]

T1. If she will make a statement on her departmental responsibilities.

[The Secretary of State for Digital, Culture, Media and Sport (Nicky Morgan)]

As I said earlier, this is my first oral questions since I was appointed, and I am thrilled to be holding this role and working to make the country better connected and more creative.

This week, the Government announced £5 billion further to support the roll-out of gigabit connectivity, delivering greater connectivity to those who need it. Hon. Members will be aware of our ongoing work to keep people safe online and our proposals around age verification for online pornography. I wish to notify the House that the standstill period under the EU’s technical services and regulations directive expired at midnight last night. I understand the interest in this issue that exists in all parts of the House, and I will update the House on next steps in due course.

Finally, I am sure that the whole House will want to congratulate Dina Asher-Smith, who won a 200 metres gold medal at the World Athletics Championships. She is the first British woman to win a major global sprint title and the first Brit to win a world or an Olympic sprint title since 1993.

[Daniel Zeichner]

The Government have been taking out full-page newspaper adverts, including in the Cambridge News, to warn businesses of the issues ahead. On data issues, they have been inviting businesses to take out standard contractual clauses. One business in my constituency tells me that they will have to take out 72,000 such clauses, so will the Secretary of State tell us how many clauses will have to be negotiated for the entire economy and how many are actually in place?

[Nicky Morgan]

The hon Gentleman is right that, if we are not able to reach a deal with the European Union, one of the ways—the recommended way—to handle the transfer of personal data is to insert standard contractual clauses in relevant contracts, and the Information Commissioner’s Office has full details. We have tried to make that as easy as possible. Inevitably, many private businesses are, of course, reliant on, or focusing on, running their business, but I refer really to what my ministerial colleague, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), said earlier on: if we want to avoid any of these problems, the best way is to have a deal and for Members to vote for that deal when, hopefully, it is presented to them.

Oral Answers to Questions

Daniel Zeichner Excerpts

Thursday 4th July 2019 Commons Chamber

[Mr Jim Cunningham (Coventry South) (Lab)]

13. If he will make it his policy to maintain free TV licences for the over-75s after 2020.

[Daniel Zeichner (Cambridge) (Lab)]

14. If he will make it his policy to maintain free TV licences for the over-75s after 2020.

[The Secretary of State for Digital, Culture, Media and Sport (Jeremy Wright)]

The Government are disappointed with the BBC’s decision on the licence fee concession for the over-75s. Taxpayers want the BBC to use its substantial licence fee income in an appropriate way, to ensure that it delivers for UK audiences. The Government expect the BBC to consider further ways to support older people, and I recently met the BBC management to discuss what more it could do.

--- Later in debate ---

[Jeremy Wright]

The hon. Gentleman is right to raise the issue of loneliness, and I will repeat the points I have just made. The Government have done a huge amount to combat this very substantial social problem. The truth is that we still expect the BBC to do better in this area, but it is the BBC’s responsibility. The responsibility was transferred to the BBC in 2017, after it was agreed with it in 2015. The BBC itself has made it clear that this is now its responsibility.

[Daniel Zeichner]

In the London Evening Standard on 11 June, there was a very interesting headline on page two, stating:

“Tax campaigners defend axing of free TV licences for wealthy OAPs”.

Wealthy old-age pensioners? Will the Secretary of State join me in condemning the slippery language used by the editor of the London Evening Standard, an architect of this debacle? My 5,000 pensioners who risk losing their free TV licence in Cambridge are not wealthy.

[Jeremy Wright]

As the hon. Gentleman says, wealthy pensioners are not the only ones who will lose their TV licence. That is certainly right. That is exactly why we continue to say to the BBC that it needs to do better than it is doing at the moment.

There are some very interesting statistics that I should perhaps share with the House at this point. Last year and this financial year, the BBC has been sharing with the Government the cost of the over-75 licence concession. Last year, the cost of the concession was £677 million. The Government paid £468 and the BBC paid £209 million. This financial year, the cost is £700 million. The Government paid £247 million and the BBC paid £453 million. The cost of the concession as the BBC intends to operate it from 2020 onwards is, by its estimate, £260 million. That is substantially less than the BBC is paying towards to the concession this financial year. The BBC would say, and I would agree with it, that it is able to supply a good service this year while still paying £453 million towards that concession. That seems to be an interesting statistic.

Online Harms White Paper

Daniel Zeichner Excerpts

Monday 8th April 2019 Commons Chamber

[Jeremy Wright]

I hope this House will have a role not just in holding the regulator to account but in the design of codes of practice. We will consult on, among other things, how that might be done. We look forward to the hon. Gentleman’s contribution to that process. It is of course worth saying—the hon. Gentleman and others have expressed a concern—how judgments on individual pieces of content might be made. It is much more likely, in my view, that the regulator will be deciding whether or not the systems that an online platform puts in place are adequate or not in protecting their users from harm, than it is that the online regulator will be making a judgment on individual pieces of content. One only has to think about the sheer volume of material being considered to realise how impractical it would be for the online regulator to decide in each and every instance. So this is really about whether online companies have in place systems to keep their users safe in the majority of cases. The regulator will have to determine that when it looks into the matter and speaks to online companies individually.

[Daniel Zeichner (Cambridge) (Lab)]

The Secretary of State mentioned the Furman review earlier. The White Paper references it, but does not take a view on some of its recommendations. Does the Secretary of State agree that getting more control for individuals over their personal data, so that they control where it is stored, would alter the balance of power between individuals and tech companies? That would have a range of benefits, including tackling internet harms.

[Jeremy Wright]

The hon. Gentleman will recognise, because he is a fair man, that the Furman review was produced only in the past few weeks, and it is important that the Government take the time to look properly at its conclusions. He is right, however, that one of the significant aspects that Professor Furman and his panel picked up on was the potential advantage of users having more control over their data and the impact that that might have on the competition questions he was concerning himself with. The hon. Gentleman has my assurance that we will look carefully at the recommendations and respond to them fully.

Centre for Data Ethics and Innovation

Daniel Zeichner Excerpts

Tuesday 20th November 2018 Commons Chamber

[Margot James]

This centre will play its part, but I also draw my hon. Friend’s attention to the AI Council—recently launched, and chaired by Tabitha Goldstaub, founder of CognitionX—which is charged with taking forward the AI sector deal so we have an industry that lives up to its potential.

[Daniel Zeichner (Cambridge) (Lab)]

I too welcome the new centre, but will it be accountable to the Government, or perhaps to Parliament through the Digital, Culture, Media and Sport Committee? Will the Minister also tell us a little more about its relationship with the ICO and rerun the answer to the question from my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) on DeepMind, because to suggest that because these are private companies there is no role for Government is, frankly, a complete abrogation of responsibility?

[Mr Speaker]

There were three inquiries there, but just one aggregated response is required.

Oral Answers to Questions

Daniel Zeichner Excerpts

Thursday 1st November 2018 Commons Chamber

[Daniel Zeichner (Cambridge) (Lab)]

I have a major internet-based hotel and travel-booking company in my constituency. In the absence of an adequacy deal, it will have to strike 72,000 separate contractual agreements with hotels across Europe. Does the Secretary of State understand that if Brexit means Brexit, no deal means no holiday?

[Jeremy Wright]

I think that is ever so slightly on the alarmist side. It is important for us all to bear in mind that the starting point is that we comply with all the data adequacy measures that the EU requires and we have implemented the general data protection regulation, so we are in a very good position as we begin the discussions and can therefore be optimistic about their outcome.

Gaming Machines

Daniel Zeichner Excerpts

Thursday 17th May 2018 Commons Chamber

[Tracey Crouch]

I am grateful to my right hon. Friend, who started on this journey with me three years ago. We received a significant amount of evidence. The Gambling Commission actually recommended a cut to between £2 and £30, and we have gone to the lowest end, because that is what we think will most reduce harm.

[Daniel Zeichner (Cambridge) (Lab)]

The Minister has told us that when new evidence comes to light, we need to act to target any gambling products that cause concern. Will she look at the problems of online gambling emerging through young people playing video games and third-party websites selling items from so-called loot boxes? Belgium is the latest country to take action. What are the Government doing to work with the industry to tackle this issue?

[Tracey Crouch]

Quite simply, what is illegal offline should be illegal online. The Gambling Commission is live to this issue and is looking at it closely. We expect it to maintain close sight of the emerging issues regarding vulnerability and gambling being targeted at children.

Oral Answers to Questions

Daniel Zeichner Excerpts

Thursday 10th May 2018 Commons Chamber

[Matt Hancock]

I thoroughly enjoyed my visit to Stirling, where I saw on the ground the leadership my hon. Friend has shown in making sure that Stirling is a fully connected, future-facing city. He has lobbied me endlessly to make sure that we can get the strongest possible connectivity, including full-fibre connectivity, in Stirling. He is doing a sterling job.

[Daniel Zeichner (Cambridge) (Lab)]

T2. The Secretary of State will be aware of the recent in-depth report by the highly regarded Lords Committee on Artificial Intelligence. Among its recommendations, it calls on the Government, with the Competition and Markets Authority, to proactively review the use and potential monopolisation of data by big tech companies in the UK. What is the Secretary of State doing about its recommendation?

[Matt Hancock]

We are studying those recommendations closely. That report by the Lords Select Committee was one of the best reports by a Lords Select Committee I have ever read, so we are taking it extremely seriously.

Data Protection Bill [Lords]

Daniel Zeichner Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Wednesday 9th May 2018 Commons Chamber

[Sir Edward Davey]

The right hon. Lady is absolutely right, and it is the Windrush generation who should be in our minds above all.

The right hon. Lady mentioned the need—this will be dependent on the EU negotiations—to ensure that we have access to data for national security and for fighting crime. That is in the Government’s interests as they negotiate Brexit, in particular with respect to the rights of EU citizens. I am fairly convinced that when the Commission really wakes up to the implications of paragraph 4 in schedule 2, it will say that this is acting in bad faith. The Government have agreed a settlement for the 3 million EU citizens in this country and the EU citizens who may wish to come to this country in the years ahead. The Bill will take away the rights they thought they would have. I therefore say to Ministers on the Front Bench and those on the Back Benches that they have just a few minutes or so to think again before it is too late.

[Daniel Zeichner (Cambridge) (Lab)]

I want to endorse new clause 4, which was so ably set out my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) from the Opposition Front Bench. I went on the Bill Committee with a sense of optimism and excitement, perhaps naively, because it seemed that so much needed to be done at the moment. Almost every day new issues arise—I hardly need to say that for me, “Cambridge” and “analytics” is an unfortunate combination. In the past few days, there have been facial recognition issues in the Welsh police and Amnesty International has raised the issue of gang lists. I hoped that we could rise to the challenge. However, I fear that although the Bill is hundreds and hundreds of pages long—in the pre-digital age, it would probably have been described as being the size of a telephone book—as Members have observed, does anyone really know what it means? That is why we needed a simple set of rights that people could understand. The sad thing is that people in the wider world are doing such good work and we should be looking at it. Look at what Tim Berners-Lee and Nigel Shadbolt are doing to try to transfer the data away from the big tech companies to make it our data. That is key, and it is the underlying principle of the GDPR, but I am not sure that we have been able to translate it into legislation.

I make two final observations. First, the golden thread running through much of this is data adequacy, which was referred to by the Chair of the Home Affairs Committee, my right hon. Friend the Member for Normanton, Pontefract and Castleford. In too many places there are genuine concerns, not just from Opposition Members but from Members in the other place, about our being tripped up on data adequacy, which is so important.

Finally, on the Information Commissioner’s role, a huge amount is being passed to her. We can have every confidence in her, but does she really have the resources, power and expertise? Most importantly, we are outsourcing some huge, really important judgments to the Information Commissioner, but I think it should be the role of this place to make those judgements in future, and I fear that we will come back to those points later in the day.

[Dr Paul Williams (Stockton South) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Cambridge (Daniel Zeichner). I also pay tribute to the hon. Member for Totnes (Dr Wollaston), who is an extremely capable Chair of the Health and Social Care Committee and has shown real resolution and persistence on new clause 12.

In the sanctity of the consulting room, patients tell doctors, nurses and NHS staff all kinds of things. I have had all kinds of private and confidential issues disclosed to me in the 22 years that I have worked as a doctor, but the protection that the NHS gives to this information is absolutely fundamental. For years, the NHS has, on request from the Home Office, been sharing the address details of some patients that have ultimately been used to deport an unknown number of people over many years.

I recently visited a clinic run by the excellent charity, Doctors of the World, in Bethnal Green. I heard stories there of vulnerable people being afraid to approach NHS services because they cannot be certain that the information that they are asked to give will be treated confidentially. I heard about pregnant women not going for antenatal care, people with HIV not getting treatment and people who are afraid to take their children to the GP. The bond of trust between the NHS and its patients relies on the truth being told in both directions. Sadly, people have been avoiding the NHS because they do not trust it. That is bad for the reputation of the NHS, bad for the health of individual patients and bad for public health.

Doctors, nurses and other health professionals do not want information that is given to the NHS by patients to be shared except in the most extreme cases, when there is a significant risk to individuals or to the public. I am pleased that the Government have found a way to assure the House this evening that NHS information will be shared only in the event of a conviction or an investigation for a serious crime. This is the only way to preserve the integrity of the NHS and the immeasurable, vital and precious bond of trust between NHS staff and their patients.