BRIEFING PAPER Number CBP 7799 24 November 2016

Digital Economy Bill - By Lorna Booth Ed Potton Committee Stage Report John Woodhouse

Contents: 1. The Bill 2. Second Reading 3. Committee Stage 4. Part 1 – Access to Digital Services (Broadband) 5. Part 2 -Reforming the Electronic Communications Code and mobile coverage 6. Part 3 - Online pornography 7. Part 4 - Intellectual property 8. Part 5 - Digital government and data sharing 9. Part 6 – Broadcasting, Direct Marketing and other new clauses

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2 Digital Economy Bill - Committee Stage Report

Contents

Summary 4 1. The Bill 5 2. Second Reading 6 3. Committee Stage 8 4. Part 1 – Access to Digital Services (Broadband, clauses 1-3) 9 Provision of Broadband to New Build Homes 12 5. Part 2 -Reforming the Electronic Communications Code and mobile coverage 14 Mobile Coverage 15 Leaving mobile contracts 16 Wholesale infrastructure and stand part debate 17 New clauses – strategic reviews 18 6. Part 3 - Online pornography 20 1. Clause 15: Requirement to prevent access to online pornography by people aged under 18 20 2. Clause 20: Enforcement of sections 15 and 19 23 3. Clause 22: Age verification regulator’s power to give notice of contravention to payment service providers and ancillary service providers 25 4. Clause 23: Exercise of functions by the age verification regulator 27 5. Government announcement on blocking non-compliant websites 27 7. Part 4 - Intellectual property 29 1. Clause 26: online copyright infringement 29 2. Clause 28: retransmission by cable 30 8. Part 5 - Digital government and data sharing 32 1. Public service delivery: data sharing 33 Clause 29: Disclosure of information 33 Clause 32: Further provisions about disclosure 35 Clause 33: Confidentiality of personal information 36 Clause 35: Code of practice 36 Other data protection issues 37 2. Civil registration: data sharing 39 Code of Practice 39 Clause 38: disclosure of information by civil registration officials 39 3. Debt owed to the public sector: data sharing 41 Clause 40: Disclosure of information to reduce debt owed to the public sector 41 Clause 44: Code of practice 44 Clause 45: Duty to review operation of chapter 45 4. Fraud against the public sector: data sharing 45 5. Research purposes: data sharing 45 6. HMRC: data sharing 46 7. Official statistics: data sharing 47 9. Part 6 – Broadcasting, Direct Marketing and other new clauses 48 1. Clause 76: TV licence fee concessions 48 2. Ofcom appeals 51 3. Clause 77: Direct marketing code 53 4. Digital Skills 54 5. Financial Technologies 54 3 Commons Library Briefing, 24 November 2016

Contributing Authors: Lorraine Conway, Catherine Fairbairn, Sally Lipscombe, Daniel Rathbone, Antony Seely, Philip Ward

Cover page image copyright Superfast Cymru Cab5 by btphotosbduk. Licensed under CC BY 2.0 / image cropped

4 Digital Economy Bill - Committee Stage Report

Summary

The Digital Economy Bill implements a number of policies broadly related to the digital economy. This paper covers the key issues debated at Committee Stage. The Bill: • creates a ‘Universal Service Obligation’ (USO) for broadband services; • introduces a revised Electronic Communications Code (which governs how mobile communication infrastructure is built); • introduces age verification for online pornography; • updates intellectual property rules for digital industries; • allows for greater data sharing between public bodies for specific reasons; • introduces a new statutory code for direct marketing; and, • updates OFCOM regulation of the BBC and transfers responsibility for TV licence age-related concessions to the BBC. The Bill was introduced in the House of Commons on 6 July 2016, with Second Reading on 13 September 2016, Committee Stage between 11 October and 1 November, with Report and Third Reading scheduled for 28 November. The majority of the Bill applies to the whole of the UK. The contents of the Bill have been relevant to a number of Government announcements since Second Reading and the Government introduced a number of amendments in Committee; a number are also proposed at Report. At Committee Stage a number of areas of the Bill were debated and subject to amendment: • On the USO and Broadband a number of amendments sought to refine the USO, deal with mobile contracts and mobile coverage, particularly in rural areas, but the Bill was not changed; • The Government tabled amendments to the Electronic Communications Code; • There was significant debate and proposed amendments around the role of Internet Service Providers (ISPs) and whether they should be required to block sites that do not implement age verification; there was also debate around the regulator’s powers. On 20 November 2016 the Government announced amendments would be tabled at report stage to allow for the regulator to direct ISPs to block sites not complying; • Government amendments were made to the data sharing elements; other amendments, whilst unsuccessful, sought to query levels of data protection and levels of transparency of data sharing; • The transfer of age-related licence fee concessions to the BBC was challenged but was not amended; • New clauses were proposed, but unsuccessfully, on the prominence of TV channel menus and allowing the Information Commissioner to take action against individuals (rather than companies) in breach unsolicited communication regulations. In the second case the Government planned to make their own changes here, which have since been announced; • New Government clauses were introduced successfully on free basic digital skills training and expanding financial regulation to support non-bank payment firms. 5 Commons Library Briefing, 24 November 2016

1. The Bill

The Digital Economy Bill 2016-17 [Bill no. 87] was published on 6 July 2016 and its First Reading in the House of Commons took place that day. Its Second Reading took place on Tuesday 13 September 2016. It is scheduled to complete its progress through the Commons with Report and Third Reading set for 28 November 2016. The Bill, as amended in Committee, and its explanatory notes, are available on the Parliamentary website. Factsheets and impact assessments are available from the .Gov website. The Bill would implement a number of Government policies, broadly related to the digital economy. It: • covers the provision of fast broadband services through a new ‘Universal Broadband Obligation’ entitling consumers to a minimum speed, enhances switching and compensation for communication services, and a new Electronic Communications Code to deal with phone and internet infrastructure, making the roll-out of new infrastructure cheaper and subject to simplified regulation; • provides for greater data sharing between public bodies for certain purposes and in certain circumstances. Datasets may be shared to support public service delivery and in relation to public sector debt and fraud, and to produce research and official statistics. There are also specific provisions for sharing data related to civil registration; • updates intellectual property rules for digital industries; • introduces age verification for online pornography with penalties for non-compliance; • introduces a new statutory code for direct marketing to strengthen enforcement action; • updates the regulation of the BBC by making OFCOM responsible for the regulation of all BBC activities; the Bill also transfers to the BBC from the Secretary of State the ability to make concessions on TV licences relating to age (following the transfer of the cost of free over-75 licences). A Commons Library Briefing Paper provides an overview of the Bill for second reading: Commons Library analysis of the Digital Economy Bill The Bill extends to the whole of the UK with two exceptions: sharing data in relation to civil registration does not apply in Scotland and Northern Ireland, while the provisions for sharing energy supplier data do not apply in Northern Ireland.

6 Digital Economy Bill - Committee Stage Report

2. Second Reading

The Bill had its Second Reading on 13 September 2016. The Secretary of State for Culture, Media and Sport, Karen Bradley, opened the debate noting that: We live in a digital economy. Almost £600 billion of online sales were made in the UK in 2014. That is the largest per capita online sales figure in the world, of all the major economies, at just over £1,500 per head. To put that figure in context, it is more than 50% higher than that of the United States, which is the next highest valued market. The rate of job creation in digital industries is nearly three times as fast as in the rest of the economy; it was 1.56 million in 2014, and it is growing. Supporting the digital economy was core to our manifesto, and that is why this Bill is a central plank of the Government’s legislative programme in this Session…1 After setting out each of the key parts of the Bill: broadband speed and mobile coverage, protection from online pornography and nuisance calls, intellectual property protection, public sector data sharing and pensioner TV licences, the Secretary of State concluded:2 The Bill is good news for all. It is good for people wanting to get online, for telecommunication companies wanting to grow their sector and build consumer confidence and for creative industries wanting to protect their property and have an economy to sell into. It is good for families wanting to help their children with homework on the internet, without stumbling across harmful material. It is also good for civil servants who want to be entrepreneurial and deliver better services and for people who want to transact with the Government efficiently, without burdens and bureaucracy. We will grow the economy and we will grasp the future. I commend the Bill to the House. Chi Onwurah, speaking for the Opposition, welcomed some measures in the Bill but argued that it was not ambitious enough in developing the UK’s digital economy and raised concerns with the data sharing elements. She also raised concerns over funding levels for the BBC.3 Speaking for the SNP, Calum Kerr welcomed ‘several measures in the Bill’, but noted that a number of areas needed greater clarification at committee stage and ‘more ambition’.4 Areas for concern included the data sharing provisions, as well as interest in mobile and broadband coverage. Other Members raised that cyber security should have played a larger part in the Bill, while future technology, and developing the digital economy, both the industry and skills should have featured.5 A number of Members such as Chi Onwuah and Calum Kerr noted concern over the possible loss in public sector income from the changes

1 HC Deb 13 September 2016 c771 2 HC Deb 13 September 2016 c777 3 HC Deb 13 September 2016 c778-782 4 HC Deb 13 September 2016 c786-791 5 HC Deb 13 September 2016 c794-6 7 Commons Library Briefing, 24 November 2016

in the electronic communications code, and indicated an interest in returning to it at Committee Stage.6 Others, such as Rishi Sunak, noted that the gains from rural coverage would outweigh the losses to small rural businesses and landowners.7 Mobile and Broadband coverage was picked up by many Members, particularly noting issues with coverage in rural areas and, for Broadband, in some city areas. Farmers were regularly cited as an example of rural customers who received poor coverage but that their work increasingly demanded access. Equally, there were calls for mandatory broadband infrastructure for new build housing. A query raised by a number of Members was whether the 10 Mbps proposed for the USO was sufficiently high enough, while one Member asked whether the upload speed should also be part of the USO.8 Mobile contract rights were also raised, with some Members arguing, for example, that customers with poor coverage should have the right to cancel their contract.9 Members spoke to support the provisions around online age verification, although there concerns that the measure may not be effective enough in stopping access to inappropriate content and some, such as Maria Miller and Sarah Champion, raised the more general issue of social media abuse and whether further provisions were required.10 The ability of the legislation as proposed, to effectively target overseas websites using financial measures, was questioned, but in summing up the Minister, Matt Hancock, argued the measures were designed to ‘have an impact’ on overseas sites.11

6 For example, HC Deb 13 September 2016 c788 7 HC Deb 13 September 2016 c828 8 For example see HC Deb 13 September 2016 c812 and c819 9 HC Deb 13 September 2016 c819 10 HC Deb 13 September 2016 c803-5 11 HC Deb 13 September 2016 c827 and c860 8 Digital Economy Bill - Committee Stage Report

3. Committee Stage

The Public Bill Committee stage began on 11 October 2016 and concluded on 1 November 2016. It held eleven sittings. The membership of the Committee was as follows:

Chairs: Mr Gary Streeter Graham Stringer Members: Nigel Adams (Selby and Ainsty) Kevin Brennan (Cardiff West) Mims Davies (Eastleigh) Thangam Debbonaire (Bristol West) Vicky Foxcroft (Lewisham, Deptford) Louise Haigh (Sheffield, Heeley) Matthew Hancock (West Suffolk) Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) Nigel Huddleston (Mid Worcestershire) Graham Jones (Hyndburn) Calum Kerr (Berwickshire, Roxburgh and Selkirk) Scott Mann (North Cornwall) Christian Matheson (City of Chester) Mark Menzies (Fylde) Claire Perry (Devizes) Chris Skidmore (Kingswood) Graham Stuart (Beverley and Holderness) Rishi Sunak (Richmond (Yorks)) The Public Bill Committee (PBC) received a number of written submissions and took oral evidence at the first three sittings. The written evidence and transcripts of the Committee’s sittings are available on the Digital Economy Bill 2016-17 page of the Parliament website. The clauses of the Bill not mentioned in this paper were those that were generally accepted and supported by all parties and which did not generate a large amount of discussion or debate. The clause numbers refer to those from the Bill as first introduced in the House of Commons, Bill 87 of 2016-17.

A tracked changes version of the bill showing changes made in committee has been published on the Parliament website. 9 Commons Library Briefing, 24 November 2016

4. Part 1 – Access to Digital Services (Broadband, clauses 1- 3)

The Government’s policy is to provide funding to support the roll-out of superfast broadband to those areas of the UK where commercial roll- out is not economically viable. This is mostly, but not entirely, in rural areas. This roll-out has provided superfast broadband to 90% of UK premises as at the end of March 2016 and is on course to meet a target of 95% of premises by the end of 2017.12 Improving the speed and availability of broadband was a manifesto commitment of the Conservatives in 2015.13 In order to ensure the final 5% have access to fast broadband connections the Government has stated that it will introduce a broadband Universal Service Obligation (USO) to act as a “safety net” allowing those with poor connections the legal right to request a fast connection.14 The Bill contains enabling powers for a USO to be specified in secondary legislation. The download speed for the USO will be specified in this secondary legislation and is currently expected to be 10Mbps. The Government intends for the USO to be in place by 2020 at the latest.15 For background on broadband policy and coverage see the Library briefing paper Superfast broadband coverage in the UK (CBP-6643, 18 August 2016). At second reading, the Minister for Digital and Culture, Matt Hancock, stated that Ofcom would consult on the design of the USO in the autumn and that he viewed 10 Mbps as a minimum speed.16 In evidence to the Committee Sean Williams, Chief Strategy Officer at BT Group, stated that BT are willing to provide 10 Mbps to every UK premises without further public funding and without a USO: [BT] have made clear our willingness to deliver 10 megabits to every premises in the country by the end of 2020 without any further public funding and without even really progressing the USO regulations.17 Baroness Harding of Winscombe, CEO of TalkTalk, stated in evidence to the Committee that she did not think that a download speed of 10

12 ‘UK hits the 90% superfast broadband coverage target’, thinkbroadband, 8 April 2016 [accessed on 7 June 2016] 13 Conservative Party Manifesto 2015, p15 14 DCMS, ‘Government plans to make sure no-one is left behind on broadband access’, 7 November 2015 15 DCMS, Digital Economy Bill Factsheet – Broadband Universal Service Obligation [accessed on 6 July 2016] 16 HC Deb 13 September 2016 c860 17 PBC Deb 11 October 2016 c5 10 Digital Economy Bill - Committee Stage Report

Mbps was ambitious enough and that it was also important to consider reliability and consistency: I think we all try to summarise in the form of speed, but actually consumers and businesses would say that reliability and consistency are every bit as important as speed. The small businesses that are customers of TalkTalk would say, “It’s not the headline speed I need. I need it to work every single second when my customers are using the chip and pin machine in my small corner shop”, for example. So while speed is a useful proxy, it is not perfect.18 At second reading access to Broadband for farmers was raised by a number of Members. In written evidence to the Public Bill Committee the NFU stated that it believes the minimum upload and download speed for the USO should be set at 30 Mbps and that this and other technical aspects of the USO should be specified on the face of the Bill: Specifically for the farming sector, the Bill needs to provide the legislation to ensure digital infrastructure is provided at a cost farmers and growers can afford and at a speed that makes sense for competitive businesses in 2016. We believe that that should be targeted at a minimum of 30mbps with technology that would allow this to be increased. For a farmer this means sufficient speed to access cloud technology, map data and to monitor animals and crops. Many operators advertise this speed now. European Union governments are committed to providing this speed universally by 2020, with EU targets now of 100Mbps by 2025. If the Broadband USO is only intended to be a ‘safety net’, this means currently there is nothing offered in this Bill for the 5% of all premises, which have no access to the Government’s superfast broadband programme.19 The Government published a statement of intent on the broadband USO on 11 October 2016. It states that a range of factors will affect the design of the USO and these include technical aspects over and above just a download speed such as “upload speed, latency and capacity”. 20 The Scottish National Party tabled amendment 56 to Clause 1 that would mean both upload and download speeds would need to be considered in the specification of the USO. Following debate in committee, the amendment was withdrawn.21 In debate the amendment was supported by the Shadow Minister, Louise Haigh MP. While speaking in support of amendments 56 and 83 (a probing amendment on whether the USO could cover mobile coverage) she stated that: [W]e believe that there is coalition of support for a much more ambitious USO. That is why we were pleased to hear that the USO can be amended in secondary legislation later when it becomes outdated. However, I fear that, by the time it is introduced, it will already be becoming seriously outdated and, indeed, by 2020, it may feel like a relic of a bygone age when superfast and ultrafast

18 PBC Deb 11 October 2016 c8 19 Written Evidence: National Farmers' Union (NFU) (DEB20) 20 DCMS, A new broadband Universal Service Obligation Statement of Intent, 11 October 2016 21 PBC Deb 18 October 2016 c125 11 Commons Library Briefing, 24 November 2016

broadband, even in rural areas, will be readily accessible. That is the subject of our new clause, which we will consider shortly. On amendment 56, it is absolutely right to specify upload and download in the Bill. As we have seen all too often, businesses and residences see a particular speed advertised with no correlation between what they can download and upload. For someone with a business and working from home, accessing online services and transferring files to them can take a lot of time if the upload speed is not up to scratch. That is an obvious cost to businesses. It is not merely an irritant, but a loss in pounds and pence, and in productivity to the UK economy. There is no mention in the Bill of upload speeds in the USO. That leads to a broader problem of lack of ambition throughout the Bill. Factors such as distance from the telephone exchange and other considerations such as old household wiring can slow down speed. That is why the USO, although welcome, will seem extraordinarily dated in just half a decade, when the roll-out of the USO will have been completed and there will be little appetite for providers or the Government to return to those hard-to-reach places for some time.22 Amendment 57 (to clause 1) was tabled by the SNP and would require the Secretary of State to consult the devolved Administrations in setting the terms of the broadband USO. The SNP spokesperson, Calum Kerr, stated that previous consultation with the devolved Administrations had been “tokenistic” so therefore it was necessary to insist on it in the Bill.23 In response the Minister stated that the existing provisions of the Communications Act 2003 s.65(4) already require that the Secretary of State consult with appropriate persons, which in the case of the USO would include the devolved Administrations, and so the amendment was unnecessary.24 The amendment was pushed to a vote and defeated on division (9-8). Amendments 58 and 59, tabled by the SNP, and amendment 82, tabled by the opposition, would require that reports on the operation of the USO must be presented to Parliament. Calum Kerr, the SNP spokesperson, spoke to amendments 58 and 59: Amendments 58 and 59 would put into the Bill something ensuring a proper evaluation of how this USO is implemented and how it is borne out. There is a real concern that, as I have heard, the USO could follow similar lines to the telephony USO. If we remember what the telephony USO is, people have the right to demand a phone line up to a certain cost; I think it is £3,400, but I stand to be corrected if that is wrong. Thereafter, they pay the difference If we really mean universal broadband, what we must not have is a scenario whereby, although there is a USO, people in rural areas still end up paying more for a lesser service, which is what we have today. I am sure that we have all had complaints from constituents that, “I pay the same amount per month as someone else in an urban area for an on-the-surface 10 meg service, but I get only 1.5 or 2 meg.”

22 PBC Deb 18 October 2016 cc120-121 23 PBC Deb 18 October 2016 c125 24 PBC Deb 18 October 2016 c127 12 Digital Economy Bill - Committee Stage Report

Let us accept that that is the reality on the ground—that people pay different amounts for different levels of service—but let us also put something in the Bill that actually means that stock is taken and a review is conducted. It should seek to ensure that in the future such problems do not happen and that people in rural areas—in fact, any people with a poor broadband service—get a fair speed with a fair price and all the other measures that the Government are introducing, as a result of the USO. I should say at this point that we also support amendment 82, which puts rather more meat on those bones that I have just outlined.25 Amendments 58 and 59 were withdrawn, while amendment 82 was defeated on division. The Autumn Statement 2016 announced that the Government would spend an additional £1 billion supporting the development of ‘full-fibre’ connections and 5G networks.26 Provision of Broadband to New Build Homes Several members raised the issue of the lack of provision of superfast broadband to new build homes at second reading, which has been an ongoing issue, and suggested that the Bill should make it a statutory requirement for developers to install superfast broadband connections in new properties.27 It was raised again in the stand part debate on clause 1. In response the Minister, Matt Hancock, stated that:28 We have a new commitment that any development of more than 30 homes, rather than more than 100 homes, will have fibre connections and, as of 1 January, building regulations will require superfast connections in new buildings. The sensible suggestion from both sides of the House that new houses should be built with what is needed for the future has now been enacted. This refers to the Building (Amendment) Regulations 2016 laid in April 2016, which implement the requirements of EU directive 2014/61/EU. The Circular Letter issued to local councils by the Government stated that these regulations have made it a requirement that all new build homes have the infrastructure required to support a superfast broadband connection: Part R requires that all new buildings are adequately equipped with the necessary infrastructure to support a connection to superfast broadband rather than provide the connection itself. The requirement only considers internal physical infrastructure required for the building, and not any infrastructure that may be placed within the site curtilage or boundary, as this is outside of the scope of [Directive 2014/61/EU]. Any site-wide infrastructure

25 PBC Deb 18 October 2016 cc130-131 26 HM Treasury, Autumn Statement 2016, Cm 9362, November 2016, para 4.7 27 Maria Miller (HC Deb 13 September 2016 c771), Edward Vaizey (HC Deb 13 September 2016 c801), Scott Mann (HC Deb 13 September 2016 c812), Fiona Mactaggart (HC Deb 13 September 2016 c814), Claire Perry (HC Deb 13 September 2016 c820), Chris Elmore (HC Deb 13 September 2016 c829), Kit Malthouse (HC Deb 13 September 2016 c849) 28 PBC Deb 18 October 2016 c147 13 Commons Library Briefing, 24 November 2016

that may be required should be installed by the developer in consultation with their preferred telecoms provider.29 The Government brokered a voluntary agreement between BT Openreach and the Home Builders Federation in February 2016 with the aim that fibre broadband is installed in new housing developments either at no cost to the developer or co-funded by the developer and Openreach.30

29 DCLG Circular, Building Regulations (Amendment) Regulations 2016, 13 April 2016 30 DCMS, New build homes to have superfast broadband connectivity, 5 February 2016 [accessed on 23 September 2016] 14 Digital Economy Bill - Committee Stage Report

5. Part 2 -Reforming the Electronic Communications Code and mobile coverage

Box 1: Electronic Communications Code The Electronic Communications Code facilitates the installation and maintenance of electronic communications networks, (including mobile and fixed line telephone and broadband networks). It does so by giving network operators certain rights. Under the Code, telecommunication operators are permitted to construct infrastructure on public land (e.g. streets) and have rights to install equipment on private land. With regards to private land, the Code requires that operators contact the land owner before installing equipment but also provides that when permission is not given by the land owner an operator can apply to the County Court (or the Sheriff in Scotland) to allow them to undertake the work. The idea behind these powers is that communications networks can be constructed without landowners being able to demand unreasonable sums from communications operators for allowing telephone wires to cross their land or allowing apparatus to be placed on it. Rights under the Code are far reaching, and it underpins the physical networks of apparatus that support and provide electronic communications across the UK.31 The Code was initially enacted in 1984 to regulate landline telephone provision.32 The Communications Act 2003 Section 106, which amended Schedule 2 of the Telecommunications Act 1984 to reflect the changes in technology and the need to support the infrastructure networks which support broadband, mobile internet, landlines and cable television.

For information on the Electronic Communications Code and previous attempts at reform see the Library briefing paper Reforming the Electronic Communications Code (CBP-7203, 1 June 2016). Clause 4 of the Bill repeals the existing Electronic Communications Code and inserts the new Code (Schedule 1) as a Schedule to the Communications Act 2003. Schedule 1 sets out the new code. Government amendments 12 to 45 made minor drafting and clarifying changes to Schedule 1 and also inserted a new paragraph providing that an owner or occupier of neighbouring land has a right to remove apparatus for other land when it obstructs access. These amendments were accepted without division in Committee. Schedule 2 of the Bill contains the arrangements for the transfer of agreements made under the existing Code to the new Code. A number of technical Government amendments were made in Committee to Schedule 2. Schedule 3 contains consequential amendments to other acts as a result of the new code. It was replaced by a new schedule at committee stage.

31 The Law Commission, ‘The Electronic Communications Code’, 27 February 2013, p1 32 ibid. p69 15 Commons Library Briefing, 24 November 2016

While the new Code was accepted as part of the Bill in Committee without division a number of issues were raised at both Second Reading and in the Bill Committee. Mobile Coverage Mobile coverage was discussed here and under part 1 of the Bill. The opposition raised concerns that while the provisions in the Bill, in particular the new Electronic Communications Code, would reduce costs for mobile network operators there were no provisions in the Bill to ensure these savings are invested in infrastructure and further mobile roll-out. The opposition tabled amendment 83 to Clause 1 that would mean the USO (in part 1 of the Bill) would have to include mobile network coverage. The Shadow Minister, Louise Haigh, stated that amendment 83 was a probing amendment because the opposition believe the Bill does not go far enough in supporting universal mobile coverage: Amendment 83 is a probing amendment to test the Government’s ambition, which certainly needs to be tested throughout the Bill. It is based on a simple principle. We are at the start of a digital revolution that will transform how we work and how we communicate and interact with one another. Access to water and electricity in the home bookmarked our evolution to a more civilised society, so the essentials of the modern era should be similarly guaranteed. The Bill does that in part for broadband and we strongly believe it should cement further ways to roll out universal or near universal coverage for mobile communication. Evidence to the Committee suggested that the Bill could reduce the cost of site rental for mobile network operators, which make up a substantial portion of their costs at 40%. With the operators receiving effectively all they have asked for—no one blames them with such a complex and restrictive code—it is clear that our sights must be set firmly on delivery and the Government should not set their ambitions too low. That is what our probing amendment covers and why it is important that, during the passage of the Bill, we receive at least some commitment to improved targets on mobile network coverage. We are slightly dismayed that the industry will benefit from such a clearly beneficial piece of legislation and that the Government will impose few or no conditions on them beyond what has already been agreed. We are aware that the £5 billion investment and the statutory target were tied to changes to the code, but we are not convinced that the benefits for consumers are greater than the benefits that are being approved for mobile network operators and we would certainly welcome greater reassurance on that from the Minister.33 In response to these amendments the Minister, Matt Hancock MP, questioned whether there was a case for a mobile coverage USO because of agreement the Government reached with mobile operators in 2014 for increased mobile coverage and other steps the Government has taken: In any event, as the hon. Lady [the Shadow Minister] said, through the use of licence conditions we have delivered on a commitment

33 PBC Deb 18 October 2016 c121 16 Digital Economy Bill - Committee Stage Report

to near universal mobile coverage. I would question, therefore, whether there is a case for a USO for mobile, because of those commitments. The licence obligations to which the hon. Lady correctly referred are part and parcel of a deal that included the reform to the electronic communications code—so everything that she asks for was covered in that deal. It is precisely because the two are linked that they are fair, both to the industry and, more importantly, to consumers. As she said, the mobile network operator roll-out plans provide for £5 billion of investment, as a result of that deal and commitment. […] The deal is to be delivered by the end of 2017. We will hold the MNO’s feet to the fire, because it has a legal and contractual requirement to deliver on that by the end of next year. I know the area of the country that the hon. Member talks about very well— it is where I spent the first 18 years of my life. There are some parts where the mobile signal is no better now than it was back then. In Suffolk this weekend, I found large swathes of my own constituency to be without a mobile signal, so I feel the hon. Gentleman’s pain. That is why delivery on this commitment by the MNOs is so important. The deal as agreed, which is a legally binding commitment, will result in nearly 100% of UK premises receiving 3G/4G data coverage, and 98% coverage to the UK landmass by the end of 2017. That includes the new emergency services contract, which is being delivered by EE. That has to have a huge spread over the geography of the UK, and the same infrastructure will be available to customers of that provider. The deal sufficiently provides for the demands that were eloquently put by Opposition Front Benchers and, more importantly, clause 10 will enhance Ofcom’s powers to enforce the licence conditions, which we all agree are sensible, against the MNOs.34 The amendment was withdrawn. Leaving mobile contracts Following concerns raised at second reading amendments were proposed to allow the termination of mobile phone contracts on coverage grounds. Amendment 60 (to clause 3) and new clause 2 were tabled by the SNP. The SNP spokesperson, Calum Kerr, stated that they would make it clear that if a consumer cannot receive mobile signal in their home they would be entitled to cancel their contract: There are huge chunks of the country, not least the highlands but also the equally beautiful Scottish borders in my constituency, where there are notspots—in fact, it feels like there are more notspots than onspots most of the time, as I found on my summer tour. My hon. Friend brought forward proposals, which were put to the then Minister and Ofcom, to allow individuals who have signed up for a mobile service and then found that they cannot get proper service at home to be allowed out of their contract. Some providers—I think Vodafone was mentioned in the evidence session—have started to offer that. I hope that—hope is not a strategy, as we always used to say, but sometimes it is all we have—the Government will accept the sense of the amendment and new clause and put it in the legislation, to make it absolutely

34 PBC Deb 18 October 2016 c124 17 Commons Library Briefing, 24 November 2016

clear that, if I sign up for a mobile service and cannot use my device in my home, I am entitled to cancel that contract.35 In response the Minister stated consumers are already able to cancel their contracts if they are mis-sold a service and therefore the amendment and new clause are not necessary: Before purchasing a contract, consumers can use Ofcom’s coverage checker, and if a contract is purchased online or over the phone, and the consumer finds that the coverage is a problem, they can cancel during the statutory cooling-off period—the first 14 days. Some companies offer extended periods, such as a 30- day network guarantee, during which customers can test the coverage and, should they be dissatisfied, cancel without penalty. Customers are entitled to leave a contract if they are mis-sold a service—if they are advised that they would get coverage in a certain location, but subsequently discover that they cannot.36 The amendment was defeated on division. New Clause 36, proposed by Labour, would have allowed for a mobile phone user to be allowed to set a financial cap on the account at the start of a contract. The aim of this clause was to prevent consumer receiving unexpectedly high bills, with the reason for the new clause being that “mobile phone tariffs are complex, particularly on data”. The Minister did not believe the best way of dealing with this issue was through primary legislation. The new clause was defeated at division by 10 votes to 8.37 Wholesale infrastructure and stand part debate Wholesale or independent wireless infrastructure is infrastructure that is owned by third party companies and not by the mobile network operators. It is then made available on commercial terms to all mobile operators. Scott Coates, CEO of the Wireless Infrastructure Group, a wholesale infrastructure provider that operates communications towers, stated in evidence to the Public Bill Committee that the new Code should not apply to wholesale infrastructure and they need to be carefully carved out of the new Code or there is a risk that it would undermine investment in wholesale infrastructure.38 During the stand part debate Louise Haigh (Lab) explored the role of independent infrastructure in widening access to mobile from a range of operators in rural areas and investment:39 We would also like to explore what consideration has been given to how we can ensure that independently-owned infrastructure can have a significant role in the sector and, if possible, make up a larger proportion of our infrastructure in line with the global market. The much-discussed difficulties of the broadband roll-out highlight the issues when infrastructure is owned by a private monopoly. We should seek to break up this market as much as possible. For that to happen, investment incentives for

35 PBC Deb 18 October 2016 c152 36 PBC Deb 20 October 2016 c162 37 PBC Deb 1 November 2016 cc454-7 38 PBC Deb 11 October 2016 c50 39 PBC Deb 20 October 2016 c165 18 Digital Economy Bill - Committee Stage Report

independent infrastructure need to be maintained as they are under the current ECC. The assets of these small infrastructure providers, which are a valuable part of the market, are dependent on land. We would like a commitment from the Minister that further inevitable redrafts continue to carve out electrical communications apparatus from the definition of land. The benefit of independent infrastructure is the much higher capacity available for all networks to use on an open and non-discriminatory basis. Operators in this space filled more substantial towers, which send signals much further than an average mobile operator-owned mast. That is particularly important in rural areas, where more than half their investments have been made. More networks operating from better infrastructure enable transformational improvements in capacity.40 Loss in income by public authorities was raised by Calum Kerr (SNP):41 As I said on Tuesday, what the Government have essentially done is to make a deal with operators, and the people who will pay for the increased coverage are our local authorities—our fire services, which host these masts, or in Scotland the Forestry Commission Scotland. So we are taking from one public pot of money, which can arguably ill-afford to lose it, and giving it to mobile operators. Levels of mobile coverage were also raised, particularly the benefits of the Emergency Services contract (which potentially extend coverage, but only with the contract provider, EE). During the debate the Minister argued it was right for costs of mobile infrastructure to come down to encourage the roll-out of equipment, acknowledging there could be a cost to the public sector.42 The Minister concluded by covering the issue of land and apparatus:43 …On the distinction between land and apparatus, we think that there is one, and we want to ensure that the revised code delivers access to viable sites. That is fundamental to the legal framework underpinning the deployment of electronic communication apparatus, and it must be the case regardless of whether it is on land owned by the operator or any other market player. There is clearly a delicate balance to be achieved when considering what must be left purely to commercial agreement and what should be regulated in the code. Restricting the scope of legislation too far is likely to be counterproductive to ensuring that viable land remains on the market. We believe that the revised code achieves that balance effectively. I hope that I have made the case effectively for the revised code, and I hope that it helps ensure that we can roll out wireless infrastructure more widely across Britain. I commend the clause to the Committee. New clauses – strategic reviews Two new clauses introduced by the SNP and Labour, 1 and 20 respectively. These would have required strategic reviews of the sharing of telecommunications infrastructure and of mobile network coverage, both commissioned within six months of the bill coming in to force and both reporting to Parliament. The new clauses were withdrawn after the

40 PBC Deb 20 October 2016 c165 41 PBC Deb 20 October 2016 c163 42 PBC Deb 20 Oct 2016 c168 43 PBC Deb 20 Oct 2016 c169 19 Commons Library Briefing, 24 November 2016

Minister responded that Ofcom has been given “a statutory duty to provide a report to the Secretary of State every three years on the state of the UK’s communications infrastructure, including the extent to which UK networks share infrastructure” with the next report due in 2017. The Minister also confirmed that he expected Ofcom to publish reports on mobile coverage against Government targets, with a ‘connected nations’ report expected by the end of the year.44

44 PBC Deb 27 October 2016 cc415-7 20 Digital Economy Bill - Committee Stage Report

6. Part 3 - Online pornography

Part 3 of the Bill would introduce a requirement for commercial providers of online pornography in the UK to have age verification controls in place. A regulatory framework, underpinned by civil sanctions, would monitor and enforce compliance with the law. In October 2016 the Government announced that the British Board of Film Classification (BBFC) would be designated as the age verification regulator within the proposed framework.45 The BBFC gave evidence to the Public Bill Committee on 11 October 2016.

1. Clause 15: Requirement to prevent access to online pornography by people aged under 18 Clause 15(1) of the Bill would require commercial providers of online pornography in the UK to have age verification controls in place. A number of Members queried whether the reference to “commercial” would mean that freely available online pornography would not require age controls.46 Matt Hancock, the Minister for Digital and Culture, said that the Bill’s measures would apply to all commercial providers, “whether their material is paid for directly or appears on free sites that operate on a different business model…”47 Video-on-demand services Ofcom regulates video-on-demand services such as TV catch-up and online film services.48 Access controls to verify that a user is aged 18 or over must be in place for video-on-demand services that include: • any material that has been, or would be, classified as R1849 by the BBFC • other material which “might seriously impair the physical, mental or moral development of persons under the age of 18” Louise Haigh (Shadow Minister for the Digital Economy) claimed there was a loophole in the Bill because clause 15(5)(a) excludes on-demand programme services and moved amendment 8550 to address this: (…) Explicitly excluding any on-demand programme service available on the internet in the Bill—although we are aware that they are regulated by Ofcom—risks on-demand programme services being subject to a much looser age verification requirement than the Bill would enforce on other pornography

45 Gov.UK website, Exchange of letters between DCMS and BBFC on the BBFC’s role in the proposed age verification framework, 6 October 2016 46 See, for example, Louise Haigh (PBC Deb 20 October 2016 c188); Kevin Brennan (PBC Deb 20 October 2016 c190); 47 PBC Deb 20 October 2016 c198 48 Ofcom website, Guide to video on demand [accessed 16 November 2016] 49 R18 material includes “Sex works containing clear images of real sex, strong fetish material, sexually explicit animated images, or other very strong sexual images” 50 PBC Deb 20 October 2016 c186 21 Commons Library Briefing, 24 November 2016

providers. We do not believe that the legislation intends to create two standards of age verification requirements for online content, regardless of whether it is separately regulated…51 Claire Perry (Conservative) also spoke about video-on-demand. She pointed out that the 18-certificate guidelines “permit the depiction of explicit sex in exceptional justifying circumstances, so it is perfectly feasible for children to view 18-rated content that we would all consider to be pornographic”.52 She agreed with the sentiment behind Louise Haigh’s amendment but claimed it would cause “confusion” as “video- on-demand services would be regulated by Ofcom for the majority of the time but for age verification matters would be regulated by the BBFC and Ofcom, which raises the question of who has precedence and how enforcement would work”.53 Claire Perry tabled new clause 754 that would amend the current regulatory framework - i.e. s368E of the Communications Act 2003 - for video-on-demand services to ensure that children are protected from 18-rated as well as R18-rated on-demand material: (…) It is not a big step to require 18-rated pornographic material, which is the subject of much of this part of the Bill, to be included within the scope of that section. That would effectively create a legal level playing field. It would remove the issue of parity and precedence and would give us parity on the fundamental issue of the protection of children.55 In response, Matt Hancock said that Louise Haigh’s amendment and Claire Perry’s new clause 7 would result in the “double regulation” of on-demand audio-visual services: (…) On-demand audio-visual media services under UK jurisdiction are excluded from part 3 of the Bill because they are regulated by Ofcom under part 4A of the Communications Act 2003…other on-demand services that are not currently regulated in the UK will be caught by the Bill regime. The amendments and new clause 7 would apply the Bill’s age verification requirements to on-demand audio-visual media services under UK jurisdiction, meaning that we would end up with a double regulation. They would also amend the existing age verification requirement that applies to providers of those services to cover material that the British Board of Film Classification would describe as “18 sex works”, as well as R18 and equivalent. I want to be crystal clear about the aim: it is to have complementary regimes as between on-demand material regulated by Ofcom and material to be regulated by the BBFC, so that although the regulator may be different, the result is the same.56 Louise Haigh said that the distinction between Ofcom and the BBFC was not clear but withdrew her amendment.57

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Internet service providers (ISPs) and their obligations Claire Perry moved amendments 66 and 67 to clarify the Government’s thinking on ISPs in relation to commercial content providers in the drafting of clause 15. She wanted to ensure that the requirement to implement age verification would fall on commercial sites and not on ISPs.58 Claire Perry also tabled new clause 8.59 This would place a statutory requirement on ISPs to limit access to adult content by persons under 18. The new clause would ensure that ISPs would be able to continue providing family friendly filtering once EU net neutrality rules60 come into force in December 2016. In response, Matt Hancock said: (….) it is our clear position that parental filters, where they can be turned off by the end user—that is, where they are a matter of user choice—are allowed under the EU regulation. We believe that the current arrangements are working well. They are based on a self-regulatory partnership and they are allowed under the forthcoming EU open internet access regulations61 Amendments 77, 90 and 91,62 tabled by Louise Haigh, were considered at the same time. These would broaden the Bill’s definition of “ancillary service provider” to specifically include ISPs. This would “put ISPs in the same bracket as payment service providers, which will be required to withdraw their services if other [enforcement] measures have been exhausted. In the case of ISPs, they would be required to block offending sites”.63 Louise Haigh also tabled new clause 11.64 This would give the Secretary of State the power to introduce regulations enabling a court to grant a blocking injunction. The injunction would require an ISP to prevent access to a site not complying with the age verification requirements. It would only be used where the other enforcement powers (such as fines) in the Bill had not been effective.65 Louise Haigh said that the new clause was needed because “as it currently stands, the Bill provides fairly feeble powers to an enforcer to give notice to a payment service or ancillary service provider that a site has contravened clause 15(1).”66 On ancillary service providers and ISPs, Matt Hancock said: (…) This is a fast-moving area, and the BBFC, in its role as regulator, will be able to publish guidelines for the circumstances in which it will treat services provided in the course of business as

58 PBC Deb 20 October 2016 c201 59 PBC Deb 20 October 2016 cc202-3 60 On net neutrality see: Body of European Regulators for Electronic Communications, All you need to know about Net Neutrality rules in the EU [accessed16 November 2016] 61 PBC Deb 20 October 2016 c208 62 PBC Deb 20 October 2016 c201 63 PBC Deb 20 October 2016 cc203-4 64 PBC Deb 20 October 2016 cc202-3 65 PBC Deb 20 October 2016 cc203-4 66 PBC Deb 20 October 2016 c206 23 Commons Library Briefing, 24 November 2016

either enabling or facilitating, as we discussed earlier. Although it will be for the regulator to consider on a case-by-case basis who is an ancillary service provider, it would be surprising if ISPs were not designated as ancillary service providers…67 On new clause 11, Matt Hancock said that the Government was “yet to be persuaded that blocking infringing sites would be proportionate”: (…) it would not be consistent with how other harmful or illegal content is dealt with. There is also a question of practicality: porn companies would be able to circumvent blocking relatively quickly by changing URLs, and there is an additional risk that a significant number of sites that contain legal content would be blocked. We would need to be convinced that the benefits of ISP blocking would not be outweighed by the risks.68 Louise Haigh said she could not understand why the Government was ruling out blocking as a “final backstop power” and that she would push new clause 11 to a vote at the end of the Bill.69 Claire Perry withdrew her amendments and said she was prepared to withdraw her new clause on the basis of what Mr Hancock had said on parental filters and neutrality (but would like his assurances in writing).70 She would return to the issue of blocking in a series of amendments to clause 20 (see below).71

2. Clause 20: Enforcement of sections 15 and 19 Under clause 20(1) of the Bill, the age verification regulator would be able to impose a financial penalty where a commercial provider of online pornography is contravening the requirement in clause 15(1) to have age verification controls in place. Under clause 20(2), the regulator would be able to give an enforcement notice where it determined that a commercial provider was contravening clause 15(1). Claire Perry moved a series of amendments (amendment 68 and amendments 69, 70, 71, 72, 73 and 74) to clarify what the regulator (the BBFC) would be able to do and how it would deal with providers based outside the UK.72 The amendments – supported by Louise Haigh - would require the regulator to impose fines where a UK person has contravened clause 15(1) unless the contravention has ceased; or to issue an enforcement notice to a person outside of the UK who has contravened clause 15(1). Matt Hancock resisted the amendments. Although he understood that they were trying to “strengthen the imposition of financial controls”, he said they would “reduce the regulator’s discretion by obliging it to apply

67 PBC Deb 20 October 2016 c208 68 PBC Deb 20 October 2016 c209 69 PBC Deb 20 October 2016 c210 70 PBC Deb 20 October 2016 cc210-11 71 PBC Deb 20 October 2016 c210 72 PBC Deb 20 October 2016 cc213-14 24 Digital Economy Bill - Committee Stage Report

sanctions when they are available, and they would remove the power to apply financial penalties to non-UK residents”: (…) We want to be able to fine non-UK residents—difficult as that is—and there are international mechanisms for doing so. They do not necessarily reach every country in the world, but they reach a large number of countries. For instance, Visa and other payment providers are already engaged in making sure that we will be able to follow this illegal activity across borders. Therefore, while I entirely understand where my hon. Friend is coming from, the amendments would inadvertently have the effect of removing the ability to apply an enforcement notice to a UK resident, although I am certain that that is not what she intended. So I resist the amendment but I give her the commitment that we have drafted the clause in such a way as to make it as easy as possible for the enforcement regulator to be able to take the financial route to enforcement…73 Claire Perry withdrew her amendment.74 Calum Kerr (SNP) moved amendment 62.75 This would require the Secretary of State to commission a review of the effectiveness of the enforcement measures within 12 months of the Act coming into force. A report of the review would be laid before Parliament.76 At the same time, amendment 81 was considered. This would mean that part 3 of the Bill would come into force a year after the Bill received Royal Assent, rather than though regulations made by the Secretary of State.77 When speaking to amendment 62, Mr Kerr said he was “dismayed at the Government’s unwillingness to move” on the issue of ISP blocking. He said this should be added to the Bill and that the Government – not a Select Committee - should take responsibility for reviewing the effectiveness of part 3 of the Bill.78 Louise Haigh supported the amendment.79 Matt Hancock said that the Government expected to commence part 3 of the Bill within 12 months of Royal Assent. This “renders the SNP amendment slightly impractical”: (…) it would require a review within 12 months of Royal Assent, but if the Act commences only 12 months after Royal Assent, a review at that point might not show as much progress as we would hope.80 The Committee divided on amendment 62. It was defeated by 10 votes to 7.81

73 PBC Deb 20 October 2016 cc216-17 74 PBC Deb 20 October 2016 c217 75 PBC Deb 20 October 2016 c219 76 PBC Deb 20 October 2016 c219 77 PBC Deb 20 October 2016 c219 78 PBC Deb 20 October 2016 c219 79 PBC Deb 20 October 2016 cc219-20 80 PBC Deb 20 October 2016 c220 81 PBC Deb 20 October 2016 c221 25 Commons Library Briefing, 24 November 2016

3. Clause 22: Age verification regulator’s power to give notice of contravention to payment service providers and ancillary service providers Clause 22 of the Bill would enable the age verification regulator to notify payment service providers and ancillary services of persons who do not have age verification controls in place or who are making prohibited material available to customers in the UK. Claire Perry moved a number of amendments and new clause 6 to “clarify and strengthen the enforcement process”.82 Amendment 75 would give the regulator the power to issue a notice under clause 22 when an enforcement notice has been issued and the contravention has not ceased.83 Amendment 76 would place a requirement on the age verification regulator to give notice to payment or ancillary service providers that a person has contravened clause 15(1) or is making prohibited material available.84 Amendment 79 would require the age verification regulator to publish guidance under clause 22(6), rather than having discretion to publish it.85 New clause 6 would require payment and ancillary services to block payments or cease services made to pornography websites that do not offer age verification if they have received a notice of non-compliance under section 22(1). This provision would only apply to websites outside the UK.86 Ms Perry said she wanted to press the Minister on the issue of blocking: (…) If somebody does not respond to an enforcement notice—if, for example, the fine is not sufficient to make them stop —how can it be that we are not considering blocking? Of course, we do that for other sites. I know it is not applicable to every form of illegal content, but I am very struck by copyright infringement, which generates take-down notices very swiftly, and upon which the entire provision of internet service providers and ancillary services act. I would be really interested to hear from the Minister why blocking has been rejected so far. Could it be put in place as a backstop power? I worry that, without it, all of this amazing progress will not have teeth.87 Matt Hancock said: The provision of pornography without an age verification in the UK will become illegal under this Bill. There is a vast panoply of financial regulation requiring that financial organisations do not engage with organisations that commit illegal activities, and it is

82 PBC Deb 20 October 2016 c223 83 PBC Deb 20 October 2016 c222, 224 84 PBC Deb 20 October 2016 c223 85 PBC Deb 20 October 2016 c223 86 PBC Deb 20 October 2016 c223 87 PBC Deb 20 October 2016 c233 26 Digital Economy Bill - Committee Stage Report

through that well-embedded, international set of regulations that we intend to ensure that payment service providers do not engage with those who do not follow what is set out in the Bill. Rather than inventing a whole new system, we are essentially piggybacking on a very well-established financial control system.88 Louise Haigh supported Claire Perry’s amendments and moved her own new clause 18.89 This would oblige the regulator to ensure that all age verification providers were approved by the regulator and to perform a data protection impact assessment: The new clause is designed to address some of the concerns about the practicality of age-verification checks, ensuring that only minimal data are required, and kept secure; that individuals’ privacies and liberties are protected; and that there is absolutely no possibility of data being commercialised…90 In response, Matt Hancock said that online personal identity techniques were developing all the time and that the Government was one of the “leading lights in developing identity-verification software that also minimises the data needs for that verification…”91 He also referred to the existing UK data protection framework and the fact that “significant fines” can be imposed for data protection breaches.92 Mr Hancock also said that the requirements for the regulator to publish a code of practice (under new clause 18) and guidance under clause 22(6) (amendment 79) were unnecessary: (…) the regulator has the power to publish guidance about the circumstances in which it will treat services as enabling or facilitating, and going further is not necessary given the BBFC’s commitment to creating proportionate and robust regulatory regimes. Also, decisions on age verification method or tools, which are an important part of the debate, are a very significant part of what we are putting forward. The regulator is required under clause 15 to publish guidance setting out the types of arrangements that it will treat as compliance. Therefore, I do not think that it is necessary to insert such arrangements into clause 22 as well.93 Louise Haigh said she was disappointed that the Government did not believe new clause 18 was necessary and that she would return to the issue on Report.94 Claire Perry did not press her amendments or new clause to a vote.

88 PBC Deb 20 October 2016 c236 89 PBC Deb 20 October 2016 cc223-4 90 PBC Deb 20 October 2016 c228 91 PBC Deb 20 October 2016 c233 92 PBC Deb 20 October 2016 c233 93 PBC Deb 20 October 2016 c235 94 PBC Deb 20 October 2016 c236 27 Commons Library Briefing, 24 November 2016

4. Clause 23: Exercise of functions by the age verification regulator Under clause 23(1) of the Bill, the age verification regulator would be able to exercise its powers “principally in relation” to persons who, in its opinion: (a) make pornographic material or prohibited material available on the internet on a commercial basis to a large number of persons, or a large number of persons under the age of 18, in the United Kingdom; or (b) generate a large amount of turnover by doing so Louise Haigh queried the wording of clause 23 and whether it would limit the regulator to only targeting the largest providers of online pornography. She pointed out that the Conservative Party’s 2015 Manifesto said that age verification would be required for “all sites”.95 Matt Hancock said the clause was not an attempt to “wriggle out” of the manifesto commitment: (…) The clause provides discretion for the regulator to exercise its functions in a targeted way. It is needed so that the regulator does not break its statutory duties if it goes after the big providers first…96 Louise Haigh also tabled new clause 12.97 This would give the age verification regulator the power to introduce a statutory code of practice for internet content providers. This would be based on BBFC guidelines and the principles of the ICT Coalition for Children Online. The code would: (…) lay out how content is managed on a service and ensure that clear and transparent processes are in place to make it easy both for children and parents to report problematic content. It would also set out what providers should do to develop effective safeguarding policies—a process that the National Society for the Prevention of Cruelty to Children has supported…98 Matt Hancock said that guidance was already available through the UK Council for Child Internet Safety. He also said that it would be “very difficult” to police statutory guidance and that “it is better to have non- statutory guidance that we encourage people to follow”.99 The Committee divided on clause 23 which was passed by 10 votes to 7.100

5. Government announcement on blocking non-compliant websites On 20 November 2016, the Government announced that it would be tabling amendments to the Bill at Report Stage to give the age

95 PBC Deb 20 October 2016 c240 96 PBC Deb 20 October 2016 cc241-2 97 PBC Deb 20 October 2016 cc237-8 98 PBC Deb 20 October 2016 c239 99 PBC Deb 20 October 2016 c240 100 PBC Deb 20 October 2016 c243 28 Digital Economy Bill - Committee Stage Report

verification regulator (the BBFC) the power to direct ISPs to prevent access to any site that doesn’t have age verification in place: (…) If sites won’t take the step to ensure children can’t access their content, this new power will make sure they can’t by preventing viewers accessing the site. The amendment will allow the age verification regulator, BBFC, to issue a notice to ISPs, and those that cover mobile network operators, to prevent access to websites that have no or inadequate age-verification for pornographic material. The regulator will have flexibility with a range of options and which one they use will depend on the circumstances of any given case. However, once they have been instructed to act, ISPs will prevent access to the whole pornography site.101 The requirement to block websites would apply to all sites in the UK and overseas. The Government’s proposed new clauses 28 and 29 have generated controversy. Critics claim that the clauses would result in the censorship of “non-conventional” sex acts.102

101 “New blocking powers to protect children online”, DCMS news story, 20 November 2016 102 See, for example, “UK to censor online videos of 'non-conventional' sex acts”, Guardian, 23 November 2016 29 Commons Library Briefing, 24 November 2016

7. Part 4 - Intellectual property 1. Clause 26: online copyright infringement Clause 26 would amend the maximum sentence for online copyright infringement as well as the definition of the offence. Kevin Brennan moved two probing amendments (92 and 93) intended to explore the impact of clause 26 on consumers. The clause is concerned with maximum sentence for online copyright infringement, and Mr Brennan wished the Government to clarify the distinction the clause makes between “the owner of the copyright” and “the owner of the right”. He also passed on stakeholders’ concerns that the phrase “risk of loss” could capture a wider range of behaviour than the Government intends. He hoped that the Government would put on record that the law is intended to prosecute networks and businesses rather than individual file sharers.103 In response, the Minister, Matt Hancock, explained that the phrase “owners of copyright” relates to the offence of communicating to the public, whereas “owners of the rights” relates to the performer’s right of making available: “This is a legal distinction: they are two separate offences but there is no substantive difference in the meaning of the two”. He said that, although it will be for the courts to decide about criminal infringement on a case-by-case basis, a person who accidentally shares a single file without the appropriate licence, particularly when the copyright owner cannot demonstrate any loss or risk of loss, is not expected to be caught by the clause 26 offence.104 Mr Brennan also spoke to New Clause 3. This Opposition amendment would have offered a way to enforce a code of conduct for search engines in relation to sites that infringe copyright, He drew attention to a commitment in the Conservative Election manifesto to reduce copyright infringement and voluntary initiatives by the industry. However, the new clause would go further by providing a “legal backstop to prevent search engines from refusing point-blank to co- operate in discussions”.105 Nigel Adams (Con) also spoke in support of this new clause. Quoting figures on the scale of the online piracy problem, he emphasised that the power conferred by the proposed clause could only be used in the absence of a voluntary code; it would not automatically create new legislation.106 In response, Matt Hancock said that he hoped the present voluntary negotiations and voluntary code of practice would come to fruition; now, he felt, was not the “right time for a broad reserve power”.107 Kevin Brennan then spoke to New Clause 33. He quoted the annual intellectual property (IP) crime survey which reported 33% more illegal

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TV programming downloads in March to May 2015 than in the same period in 2013—a rise from 12 million to 16 million. The report highlights as a major concern the proliferation of internet protocol TV (IPTV), which offers viewers increasingly easy access to pirated digital content.108 The new clause would amend the Copyright, Design and Patents Act 1988: it would add new wording to cover the supply of IPTV boxes clearly being marketed or sold for the purpose of enabling or facilitating copyright infringement, recognising that many devices may not themselves infringe copyright, but are supplied in conjunction with information which enables users to infringe copyright. The proposal, he said, had a “long list of supporters in the industry”.109 Responding for the Government, Matt Hancock said that this form of copyright infringement was already covered by criminal law, and there was a danger, in his view, of legislating for a specific technology as opposed to legislating for the offence in a “technology-neutral” way.110 The amendments and new clauses were withdrawn, although the Opposition indicated their intention to return to the issues raised at Report stage. In particular, Kevin Brennan said he was “not satisfied” with the Minister’s response on New Clause 3 and expected the Government to “concede” on this point later in the Bill’s passage.111 Towards the end of Committee proceedings, the Opposition introduced New Clause 15 on the storage of uploaded works. It was a probing clause (later withdrawn) designed to clarify when a digital service was deemed to be an active provider of copyright-protected content. Kevin Brennan voiced concerns expressed to him by the music industry that the hosting defence provided in existing regulations112 acts as a “safe harbour” and allows some services, including user-uploaded services such as YouTube, to circumvent the normal rules of licensing. Matt Hancock responded that the Bill already sent a “clear message” about copyright infringement by way of the increased penalties. He said that the change proposed by the New Clause was already the position in European Court of Justice (ECJ) law and, whatever the outcome of ‘Brexit’ negotiations and their consequences for domestic IP law, he considered the development of ECJ case law in this area had been “helpful”.113

2. Clause 28: retransmission by cable Clause 28 would repeal s73 of the Copyright, Designs and Patents Act 1988. The result would be that cable providers would no longer be exempt from paying copyright fees when they retransmit the core public service broadcaster channels. There were several probing amendments (63, 64, 94) designed to establish a timeframe for the proposed repeal of section 73 of the

108 Intellectual Property Office, IP crime report 2015/16, 2016 109 PBC Deb 25 October 2016 cc257-8 110 PBC Deb 25 October 2016 c267 111 PBC Deb 25 October 2016 c270 112 Electronic Commerce (EC Directive) Regulations 2002, reg 19 113 PBC Deb 1 November 2016 cc435-7 31 Commons Library Briefing, 24 November 2016

Copyright, Designs and Patents Act 1988. Nigel Adams (Con) was critical of the current state of affairs which, he argued, allows online service providers to make money from public service broadcaster (PSB) channels by re-transmitting their content while selling their own advertising around it. The PSBs invest in content but they are “effectively subsidising global cable giants”. Hence the urgency of repealing the present concession for cable operators, which had already been the subject of “extensive consultation”.114 Kevin Brennan (Lab) also saw no reason for delay, especially in view of the fact that the European Commission has launched infraction proceedings against the UK Government, on the basis that section 73 denies PSBs their intellectual property rights for their content, which is guaranteed under the 2001 copyright Directive.115 In response, Matt Hancock said that the consultation exercise had highlighted a recognition of the potential impacts of repeal on the underlying rights market. The Government had therefore decided that a further technical consultation should be run by the Intellectual Property Office.116 He expected the repeal to come into force before the start of the summer recess 2017.117 Amendment 189 called on the Government to produce a report on the implications of repealing section 73. Speaking to the amendment, Kevin Brennan recalled the official response to the public consultation exercise, in which the Government said that they did not expect to see PSBs charging cable operators for their main channel content. He warned that if a dispute arose between a major PSB such as ITV and a major TV platform such as Virgin, it could only be to the detriment of viewers.118 In his response, Matt Hancock said that he saw no reason to publish another report, since the consultation published on 5 July was just such a report.119 He also said that do not expect PSB content to be withdrawn because of the existence of contractual arrangements for PSB content replacing section 73: In the event of a PSB and a platform failing to agree terms for the carriage of a service, it is for Ofcom to consider whether the proposal of the PSB was compliant with the must-offer obligations in its licence. Were Ofcom to conclude that it was not, it would expect the PSB to submit a revised offer to the platform. Until now, Ofcom has not had to intervene, because no disputes have arisen presenting any real risk of refusal to supply by PSBs or to carry by platform operators.120

114 PBC Deb 25 October 2016 cc274-5 115 PBC Deb 25 October 2016 c284 116 A four-week consultation starting on 24 October 2016 117 PBC Deb 25 October 2016 cc287-8 118 PBC Deb 25 October 2016 c276 119 DCMS, The balance of payments between television platforms and public service broadcasters consultation report: Government Response, 5 July 2016 120 PBC Deb 25 October 2016 cc286-7 32 Digital Economy Bill - Committee Stage Report

8. Part 5 - Digital government and data sharing

Part 5 of the Bill deals with data sharing in, by, and with the public sector, for a variety of purposes, such as improving research and statistics, preventing fraud and helping people who are in fuel poverty. The focus of much of the debate on this part of the bill was on safeguards for data, proportionality and transparency of data sharing. The public bill committee took oral evidence on data sharing from: • Jeni Tennison, CEO of the Open Data Institute, and Mike Bracken of the Co-operative Group121 • Dr Edgar Whitley, co-chair of the Cabinet Office’s privacy and consumer advisory group.122 • Jim Killock, executive director of the Open Rights Group, and Renate Samson, chief executive of Big Brother Watch123 • Hetan Shah, executive director of the Royal Statistical Society, and Professor Sir Charles Bean of the London School of Economics.124 • Peter Tutton, from StepChange Debt Charity, Dr Jerry Fishenden, co-chair of the Cabinet Office’s privacy and consumer advisory group, and Alistair Chisholm, from Citizen’s Advice.125 • Elizabeth Denham, the Information Commissioner for the UK, and Steve Wood, the Deputy Information Commissioner. 126 Written evidence on data sharing submitted to the Committee is available on the Digital Economy Bill documents page on the Parliament website, as is a letter from Chris Skidmore MP, Parliamentary Secretary at the Cabinet Office, following up on various issues raised during the committee’s scrutiny of this part of the Bill.127 On 19 October 2016 the Government published draft Codes of Practice, with an accompanying statement. Intended to “give clarity and transparency over how the powers in the Bill will operate”, they cover:

• A code of practice on Public Service Delivery, Fraud and Debt;

• A code of practice for civil registration officials; • A code of practice and accreditation criteria for access to data for research purposes; and

• A statement of principles and procedures and code of practice for changes to data systems.

121 PBC Deb 11 October 2016 c30-36 122 PBC Deb 11 October 2016 c49-60 123 PBC Deb 11 October 2016 c61-71 124 PBC Deb 11 October 2016 c81-89 125 PBC Deb 13 October 2016 c94-102 126 PBC Deb 13 October 2016 c109-114 127 Letter dated 02/11/2016 from Chris Skidmore MP to Louise Haigh MP regarding issues raised during the Public Bill Committee 33 Commons Library Briefing, 24 November 2016

The contents of these Codes are not legally binding, though the provisions of the Bill would require that public bodies have regard to the Codes when making use of these powers.128

Box 2: Government amendments to Part 5 of the bill The Government made a significant number of amendments to Part 5 of the bill. These included several sets of identical amendments made in relation to data sharing for a range of purposes: • Government amendments 109 to 117, 120 to 128, 131 to 139 and 154 to 158: ─ create a further exception to the bars on further disclosure of information disclosed under Part 5 of the Bill, allowing disclosure for the prevention or detection of crime or the prevention of anti-social behaviour. ─ remove provisions stating that a criminal investigation or legal proceedings may be within or outside the United Kingdom. ─ make the disclosure of personal information an offence only if the person knows that the disclosure contravenes certain provisions in the bill or is reckless as to whether it does so. These amendments apply to data sharing in relation to public service delivery, debt owed to the public sector, fraud against the public sector and sharing for research purposes (see below for further detail). They are discussed under Clause 32 below. • Government amendments 118, 119, 129, 140, 161 and 188 require that codes of practice and a statement of principles be consistent with the data sharing code of practice issued by the Information Commissioner. These amendments apply in relation to sharing for public service delivery, civil registration, debt owed to the public sector, fraud against the public sector, research purposes and statistics. They are discussed under Clause 35 below.

1. Public service delivery: data sharing Clause 29: Disclosure of information Clause 29 allows specified persons to share data for a specified objective. In doing so, the clause lays out that they will be required to ensure the secure handling of information and to have regard to the Codes of Practice. Opposition amendments (96, 98, 99, 100, 105) sought to strengthen this and to ensure that anyone involved in the sharing of data under these new powers was in full compliance with (rather than simply “having regard to”) the Codes of Practice. Speaking to the amendments (which were later withdrawn), Louise Haigh referred to a report by the Information Commissioner setting out the circumstances in which the public are happy for their data to be shared. Ms Haigh – who was speaking for Labour – was concerned that part 5 of the Bill appeared to give the Government considerable powers to share data, “but there are essentially no safeguards built in to ensure privacy, data protection, proportionality and a whole host of other principles that should sit alongside data sharing”. She was also concerned to know how non- public sector organisations that fulfil a public function were to be brought within scope of the powers, as the Government intends.129

128 See the discussion of clause 29 (below) for Opposition amendments attempting to strengthen adherence to the Codes of Practice. 129 PBC Deb 25 October 2016 cc302-6 34 Digital Economy Bill - Committee Stage Report

In her general remarks on part 5, Louise Haigh went on to question how the Bill’s elements conform with the EU General Data Protection Regulation (GDPR), due to take effect in May 2018. The GDPR includes stronger provisions than existing UK law on processing only the minimum data needed, consent, requirements on clear privacy notices, explicit requirements for data protection by design and by default, and on carrying out data protection impact assessments. For example, she was unclear how data sharing as provided for under the Bill would comply with the GDPR obligations on informed consent and the ability to revoke consent. She also wanted to see audits of data sharing arrangements across Government, a requirement for the Minister to establish a review that consults the Information Commissioner and the public on the effectiveness of the measures in part 5, and a right for individuals to access and correct their own data.130 In his response, the Minister, Chris Skidmore, rejected the suggestion that the new powers eroded citizens’ privacy rights. He said that they would operate within the existing data protection framework. The Codes were consistent with the Information Commissioner’s data sharing code of practice.131 He was resistant to the proposal to write the Codes (and associated privacy impact assessments) onto the face of the Bill because it would have “the chilling effect of ossifying the practice“ and “would impact on our ability to adapt and to be able to look at new technology”. On audits, he said that the Information Commissioner’s Office already had a general power to conduct compulsory audits of Government Departments and other organisations to check their compliance with data protection law. In addition, data- sharing agreements entered into under part 5 powers would set out a governance structure of how audits will take place. On the wording of the clause, Mr Skidmore insisted that “have regard to” was preferable to “comply with”. This was the phrase used in other legislation and it allowed for maximum flexibility in how the powers would operate in future. Speaking about amendments requiring that only the minimum and necessary information be shared and that data subjects be allowed to request and correct personal information disclosed under the public service delivery powers, he said that these rights were already guaranteed under the Data Protection Act 1998.132 Clause 30: Disclosure of information to gas and electricity suppliers This clause enables the person specified in regulations to disclose information to gas and electricity suppliers, for the purpose of reducing energy costs, improving energy efficiency or improving the health or financial wellbeing of those living in fuel poverty, and it must be in connection with one of the fuel poverty support schemes listed in the clause.

130 PBC Deb 25 October 2016 cc307-11 131 ICO, Data sharing code of practice, May 2011 132 PBC Deb 25 October 2016 cc315-16 35 Commons Library Briefing, 24 November 2016

Louise Haigh said that Labour “support the objective behind the proposals in clause 30—to identify the individuals most in need of warm home funding and any other grant or benefit that will alleviate fuel poverty” but raised: concerns about disclosing personal data to gas and electricity suppliers, again with no detail on what personal information might be disclosed or how. There is none of the legal or technical detail essential to ensure data security, the ethical use of data and the necessary trust framework essential to protect the rights, privacy and security of citizens.133 In response, the Minister said that sharing arrangements would be the same as under a current warm home discount scheme: Under current data-sharing arrangements for the warm home discount, suppliers are given a simple “yes”, “no” or “unknown” answer as to whether their customers were in receipt of state pension credit and so eligible for the core group rebate under the scheme. We would simply look to expand those disaggregated data. If wider data-sharing arrangements are put in place for fuel poverty schemes, we would expect only Government data to be shared with suppliers under those arrangements, which would have a similar yes or no answer as to whether the customer was eligible for support. The existing warm home discount core group of pensioners already receive automatic support through data sharing. It is a popular scheme and serves as proof that this model works and is safe.134 Government amendment 108 was also agreed. Fuel poverty is a devolved matter and this would allow devolved administration schemes – Nest and Arbed in Wales, and Scotland’s home energy efficiency programme – to be covered by the clause, as requested by devolved administration officials.135 Clause 32: Further provisions about disclosure Clause 32 provides that a person receiving information can only use it for the purpose for which it was disclosed, unless it meets one of the exceptions set out in the clause. Various Government amendments (109 to 117, 120 to 128, 131 to 139 and 154 to 158) were discussed here. They relate to information sharing in relation to public service delivery, debt, fraud and research: • creating an additional exception to the bars on the further disclosure of information disclosed under Part 5 of the Bill, permitting it for the prevention or detection of crime or the prevention of anti-social behaviour. ─ The Minister described this as a technical amendment, to “avoid any risk that by failing to refer explicitly to antisocial behaviour we cause ambiguity about whether certain information on antisocial behaviour can be shared. That ambiguity would have a chilling effect on multi-agency responses to antisocial behaviour”.

133 PBC Deb 25 October 2016 c320 134 PBC Deb 25 October 2016 c322 135 PBC Deb 25 October 2016 c319 36 Digital Economy Bill - Committee Stage Report

• removing provisions stating that a criminal investigation or legal proceedings may be within or outside the United Kingdom. ─ The Minister said that this was for consistency, including to align with other pieces of legislation, and on the basis that a reference to a criminal investigation or legal proceedings covers an investigation or proceedings overseas in any event. • amending offences applying to the disclosure of personal information, so that these would apply only if the person knows that a disclosure contravenes the restrictions in the bill or is reckless as to whether it does so. ─ Whilst, in the Minister’s words, the introduction of criminal sanctions showed how seriously the Government took its responsibility to protect personal information, he admitted that the drafting had been “slightly overzealous”. Government amendments would ensure that criminal liability arose only where there had been intent to disclose information, not where it happened in error.136 There was no further debate on this clause itself.137 Clause 33: Confidentiality of personal information Clause 33 provides safeguards to ensure personal information is only disclosed to appropriate persons and used for appropriate purposes. Opposition amendment 101 sought to restrict the onward disclosure by public authorities to only those purposes required by existing legislation, rather than those permitted by existing legislation. Louise Haigh argued that this would be consistent with the “need to know” principle promulgated in the Information Commissioner’s data sharing code of practice and in the Data Protection Act itself. She made a similar case for amendments 102 to 104 which sought to place a stricter requirement to reduce the risk of non-compliance with data protection.138 In response, Chris Skidmore said that amendment 101 “would, at best, introduce a degree of uncertainty as to whether a proposed data share is legal and, at worst, place a bar on existing permissive information sharing gateways for a range of important purposes”. The other amendments, he said, would create legal uncertainty by potentially inhibiting public authorities from disclosing information, or delaying them from disclosing it until they were satisfied that it was “necessary” to do so. The amendments were defeated at division by 9 votes to 7.139 Clause 35: Code of practice Clause 35 sets out that a code of practice must be issued by the Minister about the disclosure and use of information under the part 5 powers.

136 Digital Economy Bill 25 October 2016 c323 137 PBC Deb 25 October 2016 cc323-4 138 PBC Deb 25 October 2016 cc325-6 139 PBC Deb 25 October 2016 cc326-7 37 Commons Library Briefing, 24 November 2016

A set of government amendments (118, 119, 129, 140, 161 and 188) were discussed here. They require that codes of practice and a statement of principles in this part of the bill be consistent with the data sharing code of practice issued by the Information Commissioner. These amendments apply in relation to sharing for public service delivery, civil registration, debt owed to the public sector, fraud against the public sector, research purposes and statistics. In oral evidence to the Committee, the Information Commissioner had asked that the codes of practice in Part 5 of the bill be subordinate to her data sharing code of practice: Our other main recommendation in the written evidence is to reference directly our data sharing code of practice, which was drafted in 2011, and to require other data sharing codes of practice to be subordinate to that data sharing. This will assist the practitioners in better understanding the framework and lead to more harmonisation and consistency. 140 The Information Commissioner later wrote to the Committee to welcome the government’s amendments, which she said had taken this recommendation on board.141 The Opposition also moved amendment 106 requiring a 12-week Labour said that it consultation period before the issue or reissue of any code of practice. would revisit Chris Skidmore responded that this was unnecessary, since the clause concerns about lack already required the Minister to consult the Information Commissioner of transparency at a and others. He promised a full public consultation before any significant later stage. revision, such as before implementation of the General Data Protection Regulation (GDPR) in 2018. Louise Haigh was concerned that there was no mention of the GDPR in the Bill or the Codes and warned that the Opposition would revisit concerns about lack of transparency in the codes of practice at a later stage.142 Other data protection issues At later sittings, the Committee considered other data protection issues. The Opposition introduced New Clause 19 which would have created a general obligation on data controllers to notify the Information Commissioner and data subjects in the event of a breach of personal data security. The proposed obligation would have been similar to that imposed on electronic communication service providers by the Privacy and Electronic Communications (EC Directive) Regulations 2003. Louise Haigh explained that the Data Protection Act 1998 already deals extensively with the protection of personal data, but unlike the General Data Protection Regulation (GDPR) recently agreed by the European Union it does not provide for a general obligation on all companies to report breaches to regulators and customers. Matt Hancock responded that the Government had announced that the GDPR will apply in the UK from May 2018. Since this will introduce new

140 PBC Deb 13 October 2016 c109-114 141 Letter from the Information Commissioner to the Public Bill Committee, 19 October 2016 142 PBC Deb 25 October 2016 cc328-30 38 Digital Economy Bill - Committee Stage Report

measures on breach notification, he believed that the bringing into UK law of the GDPR was the appropriate way to make the changes proposed in the new clause. Louise Haigh was concerned for cyber- security in the eighteen months until then but agreed to withdraw the clause.143 Another New Clause proposed by the Opposition (31) would have required the Government to commission an independent review of information and data ownership under chapter 1 of part 5 of the Bill. Such a review “would seek to establish the direction in which the Government’s stated policy intent for individuals to have control over their data is heading”. For the Government, Chris Skidmore rejected this on three counts: First, it would delay the delivery of significant public benefits; secondly, it seeks more consultation on measures where there has already been a long and broad-ranging consultation effort over Labour said that many years; thirdly, it is asking for even more Parliamentary time, might return to its when the scheme, future pilots and data-sharing measures are proposal to have an already subject to significant and continued Parliamentary independent review scrutiny. of information and data ownership, at Louise Haigh withdrew the clause but warned that if the Government Report stage. did not amend the data protection provisions later in the Bill’s passage, the Opposition would raise this matter again at Report stage.144 In the course of debating clause 40, the Committee also considered the Opposition’s New Clause 35. Under this clause, no disclosure by a public authority under part 5 of the Bill would have been lawful unless it was detailed by an entry in a public register. Louise Haigh expressed concern that the term “data sharing” was not defined, either legally or technically, in the Bill or in the codes of practice to be issued under it. Did it mean data duplication—copying and distribution—or did it mean data access, or alternatives such as attribute exchange or claim confirmation? “These are all quite different things, with their own very distinct risk profiles,” she observed. If data sharing arrangements were collected in a single place, she argued, the public could “see and trust how their data are being used and for what purpose”.145 In reply, Chris Skidmore said that the definition of “data sharing” is to Labour said that it be found in the Information Commissioner’s Code of Practice and the would return to the same definition was adopted in the draft Code(s). He stressed that issue of Government already keeps registers of data sharing by Department and transparency of the public can view these by making requests under Freedom of data sharing at Information law. Turning to the proposed New Clause, he said that its Report stage, after requirements would inevitably create a new set of administrative redrafting their burdens, which in turn would carry significant cost implications. Indeed, amendment. the requirements might have an unintended consequence. For example, it is possible that including information on the specific data to be disclosed “would raise difficult questions about whether the public register would interfere with the duty of confidentiality or breach the

143 PBC Deb 1 November 2016 cc440-5 144 PBC Deb 1 November 2016 cc450-2 145 PBC Deb 27 October 2016 cc346-8 39 Commons Library Briefing, 24 November 2016

provisions of the Data Protection Act”. Unconvinced, Ms Haigh said that the Opposition would return to this issue at Report stage.146 In a wide-ranging speech during the debate on clause 38, Graham Jones regretted that part 5 of the Bill legislated for “public bodies” but neither this clause nor any other addressed “the fact that private corporations hold enormous amounts of personal data on people and the ownership of that lies with them, not with the individual”. Confining his remarks to the clause and amendments under discussion, the Minister responded by referring to the requirements of the Data Protection Act 1998 and restrictions on onward disclosure of data under the new code(s) of practice.147

2. Civil registration: data sharing Code of Practice The Registrar General would be responsible for reviewing annually the Data Sharing Code of Practice for civil registration officials, and this would involve consulting the National Panel for Registration. Chris Skidmore set out how the Code would act as a safeguard: The code of practice will act as a safeguard by explaining how discretionary data-sharing powers should be used. The code will require data-sharing agreements to be drawn up, which will includes safeguards on things such as how data will be used and stored and for how long they are to be retained, and forbidding data to be cross-linked in any way.148 The Code would also provide for privacy impact assessments. Chris Skidmore said that these would ensure compliance with data protection obligations and would meet individual expectations of privacy. He added: “We want to ensure transparency so that members of the public understand why it is necessary for those data to be shared”.149 Clause 38: disclosure of information by civil registration officials Louise Haigh moved an amendment (Amendment 97) intended to require civil registration officials or other authorities to specify the reason for requiring information to be disclosed, and to ensure that the information disclosed could not be shared beyond those specified purposes. Louise Haigh agreed that the stated policy intent of the clause, to confirm civil registration information electronically, would support the modernisation of public services. However, she considered that, as drafted, the legislation would also allow the entire civil registration database “to be copied over to arbitrary locations for arbitrary purposes”.150

146 PBC Deb 27 October 2016 cc350-4 147 PBC Deb 27 October 2016 cc338, 340 148 PBC Deb 27 October 2016 c344 149 PBC Deb 27 October 2016 c345 150 PBC Deb 25 October 2016 cc331 40 Digital Economy Bill - Committee Stage Report

Ms Haigh was also concerned about the lack of compliance with the Data Protection Act 1998. She referred to civil registration documents being shared in bulk to improve service delivery if there was a “clear and compelling need”, which, she said, was a lower test than the DPA’s “necessary and proportionate” test.151 Louise Haigh also spoke to an amendment (Amendment 107) intended to require data subjects to have given consent to their data being disclosed.152 The wording of the Bill, she said, suggested that consent to disclose data was to be moved from citizens to officials, “leaving the latter to decide when to share personal data, even if the data were not provided by the citizen for that purpose”.153 Louise Haigh said that her amendment would prevent bulk disclosures and sharing “simply enabling the sharing of information relevant to the task at hand”. In response, Chris Skidmore spoke of the Government’s intention to ensure that citizens could access future Government digital services effectively and securely, while removing the current reliance on paper certificates. He said that this would provide more flexibility and would modernise how services were delivered. Chris Skidmore confirmed that data should not be disclosed if to do so would be incompatible with the DPA, the Human Rights Act 1998 or part 1 of the Regulation of Investigatory Powers Act 2000. He said that the words “clear and compelling” would not challenge or change the interpretation of and compliance with the DPA. The Minister said that registration officials were required to be aware of the reasons for a disclosure request, and felt that the intention behind Amendment 97 would already be achieved. He also said that disclosures under the power would be restricted to the specified public authorities listed in proposed new section 19AB(1) and that personal data would be shared only in accordance with the power and the DPA. In addition, he said, under the proposed code of practice, data-sharing agreements could place restrictions on onward disclosures of data.154 With reference to Amendment 107, Chris Skidmore said that personal data must be processed fairly but that, in practice, “it will sometimes be necessary to share information in the public interest, where it is impractical or inappropriate to seek or rely on the consent of the individual concerned”. This, he said, was already permitted under the DPA, adding that disclosure would take place without consent only where that was consistent with DPA rules on fair disclosure.

151 Louise Haigh referred to the “clear and compelling” test as being in the Bill, whereas this wording was in the Government’s response document, Better Use of Data in Government: Consultation—A Government Summary of Responses, June 2016, paragraph 60 152 PBC Deb 25 October 2016 cc330 153 PBC Deb 25 October 2016 cc332 154 PBC Deb 27 October 2016 c340 41 Commons Library Briefing, 24 November 2016

The Minister gave as examples of when the powers might be used: allowing registration officials to disclose birth data to other local authorities, which would assist healthcare, school and wider local authority planning; and allowing data to be shared with the local authorities to help reduce blue badge fraud. Chris Skidmore also spoke of the benefits of having a wider platform for data sharing “so that local authorities and Departments can work together to help to prevent unwarranted and unwanted mail from being sent to the family of a deceased person, which can often cause a great deal of distress”.155 Mr Skidmore said that the code of practice would make it very clear that authorities could be removed from the list of potential recipients of data if they were responsible for any data breaches or if they did not follow the code. In response to a question about why there was no requirement in the Bill for civil registration officials to disclose why they were sharing information, as in all the other chapters in part 5, Chris Skidmore referred to the proposed code of practice: The registration codes of practice clearly set out that the purposes will need to be defined and that a business case will need to be made. None of that can take place until we ensure that there is a specified public function defined on the face of legislation, particularly when it comes to the code of practice that registrars will have to follow and which will be reviewed yearly. I believe that measures are in place to ensure that any data-sharing is done through a due process that is incredibly tight, restrictive and respectful of the use of individuals’ data.156 Louise Haigh said that the requirement should be on the face of the Bill as in other chapters, and pressed for a vote on Amendment 97. The amendment was defeated by nine votes to seven. A government amendment (119) was also made, as discussed in the box and under clause 35 above.

3. Debt owed to the public sector: data sharing Clause 40: Disclosure of information to reduce debt owed to the public sector Louise Haigh moved an amendment to Clause 40 (Amendment 190) which was intended to impose an obligation to comply with, rather than have regard to, codes of practice and other requirements. She spoke to similar amendments to Clauses 52, 60, 67 and 82. Her intention, she said, was to make the codes of practice legally binding. Louise Haigh pointed out that the code itself stated that its contents were not legally binding and instead recommended “good practice to follow when exercising the powers set out in the Bill.”157 She also said that “data sharing” was not defined in the Bill or in the codes of

155 PBC Deb 27 October 2016 c341 156 PBC Deb 27 October 2016 c342 157 PBC Deb 27 October 2016 c347 42 Digital Economy Bill - Committee Stage Report

practice, either legally or technically, which made the term ambiguous, at best. Louise Haigh questioned how people would prove their identity and their entitlement to access specific personal data, adding “Without this, it is impossible to share data securely, since it will not be possible to know with whom data are being shared and whether they are an appropriate person or organisation to have access to those data”.158 She asked for more details about the audits mentioned in the code of practice and where data-sharing agreements would be kept. Chris Skidmore said the Government would comply with ICO’s best practice “which of course means keeping careful records of all data- sharing agreements”, and that data would not be shared with a public authority which did not have appropriate systems in place. He said that debt and fraud data-sharing pilots would be set up, and the UK Government was establishing a review group to oversee UK-wide and England-only data sharing under the fraud and debt powers: The review will be responsible for collating the evidence that will inform the Minister’s review of the operations powers as required under the Bill after three years. Devolved Administrations will establish their own Government structure for the oversight of data-sharing arrangements within their respective devolved territories.159 Mr Skidmore went on to set out how requests for pilots under the debt and fraud powers would be handled: Following that, a request to initiate a pilot under the debt and fraud powers must be sent to the appropriate review groups in the territory, accompanied by a business case. The business case must detail its operational period, the nature of the fraud and debt recovery being addressed, the purpose of the data share and how its effectiveness will be measured. Absolutely rock-solid requirements need to be put in place. For instance, the public service delivery debt and fraud powers require a number of documents to be produced as part of the case for a pilot. Those documents will be a business case for the data-sharing arrangement, which can be collated by all the organisations involved; data-sharing agreements; and a security plan. Furthermore, as part of any formal data-sharing agreements with public authorities that grant access to information, security plans should include storage arrangements to ensure that information is stored in a robust, proportionate and rigorously tested manner and assurances that only people who have a genuine business need … to see the personal information involved in a data-sharing arrangement will have access to it; confirmation of who will notify in the event of any security breach; and procedures in place to investigate the cause of any security breach.160 Chris Skidmore said that the Government wanted to ensure “that public confidence is taken forward with the pilots”. He added that security was not discretionary and did not consider that amendment 190 would reinforce the requirement. He said that there must be adequate systems in place and that Ministers must have regard to those systems to ensure

158 PBC Deb 27 October 2016 c347 159 PBC Deb 27 October 2016 c350 160 PBC Deb 27 October 2016 c350-1 43 Commons Library Briefing, 24 November 2016

they met the essential security specifications demanded by the Government. The Minister said that the Government wanted to ensure flexibility in how the powers would be operated, and to adapt the code as necessary. If bodies failed to adhere to the code, he said, regulations would remove their ability to share information under the code of practice.161 He spoke of possible “exceptional reasons” why it might be reasonable to depart from the requirements of the code, and said that the Bill employed “standard drafting language”. Amendment 190 was withdrawn. In the general debate on the clause, Louise Haigh said that the Opposition broadly supported the objectives outlined in the clause, but called for those objectives to be set within strict safeguards “to enable the better management of services”.162 Their concerns, she added, were not related to the broader principle but to the practicality of the measures and their use. Louise Haigh considered that, if the new powers were used appropriately in the management of debt, they could help put a stop to aggressive, uncoordinated approaches from Government agencies to debt. She said that there was “little doubt that debt collection for central Government Departments leaves a lot to be desired”, and that vulnerable citizens were being pursued in a way which was detrimental to the overall policy of reducing debt: The Government’s haphazard approach often compounds matters and creates perverse outcomes, whereby thousands of individuals who are claiming exactly what they should be claiming are targeted in profiling exercises, which amount to nothing short of a mass Government-sponsored phishing exercise. Such an exercise has no place in necessary Government efforts to reduce error. Ms Haigh pointed to two problems with the Government’s proposals: that the Government’s debt collection process was flawed and suffered from a lack of trust; and, that the clause would extend the Government’s power in matching data when there had already been problems with other attempts at this.163 The Shadow Minister raised concerns that subsection (3)(a) of Clause 40 would give an authority the power to take action not only to collect debt but to identify it, which, she said, extended the power of the Crown. She asked for Government assurance that data would be shared only when debt had already been identified and said that the Government should rule out the type of profiling which led to the targeting of individuals based on erroneous data. Chris Skidmore replied that good debt management was a key part of achieving the Government’s fiscal policy objectives and set out how Clause 40 would operate:

161 PBC Deb 27 October 2016 c352 162 PBC Deb 27 October 2016 c354 163 PBC Deb 27 October 2016 c354 44 Digital Economy Bill - Committee Stage Report

Clause 40 provides a permissive power that will enable information to be shared for the purposes of identifying, collecting, or taking administrative or legal action as a result of debt owed to the Government. With more than £24 billion of debt owed to the Government, the problem is clearly significant. Public authorities need to work together more intelligently to ensure that more efficient management of debt occurs. We believe that the new power will assist in achieving that. By enabling the efficient sharing of information to allow appropriate bodies to draw on a wider source of relevant data, informed decisions can be made about a customer’s circumstances and their ability to pay. Sharing information across organisational boundaries will help the Government to understand the scale of the issues individuals are facing, and where vulnerable customers are identified, they can be given appropriate support and advice.164 The Minister said that the Government had worked with non-fee paying debt advice agencies to develop fairness principles to accompany the power (included in annex A of the code of practice). In response to a question from Louise Haigh, Chris Skidmore confirmed that the pilots and the powers enabled in the Bill would apply only to individuals already identified as being in debt, and that they would not seek to profile individuals who may or may not be in debt.165 He added that current data-sharing arrangements were time-consuming and complex to set up, and significantly limited the ability of public authorities to share debt data. He set out how the new power would improve the position: This power will help facilitate better cross-Government collaboration that will help drive innovation to improve debt management. The clause will provide a clear power for specified public authorities to share data for those purposes, and will remove the existing complications and ambiguities over what can and cannot be shared and by whom. A series of further government amendments were agreed to clauses 41 and 42; see box above and under clause 32 commentary. Clause 44: Code of practice Government amendment 129 was agreed here – it is discussed in the box and under clause 35 above. In the general debate on the clause, Louise Haigh spoke of evidence from Citizens Advice on the detriment suffered by debtors when public bodies have overly aggressive, uncoordinated and inconsistent approaches to debt collection. She also said that there was “fairly substantial evidence that central Government debt collection lags behind the high standards expected of other creditors”. Ms Haigh asked the Minister to consider extending the common standard financial statement to set affordable payments, as the energy, water, banking and commercial debt collection sectors do.

164 PBC Deb 27 October 2016 c356 165 PBC Deb 27 October 2016 c357 45 Commons Library Briefing, 24 November 2016

Chris Skidmore said that Government had started to look into the common financial statement and standard financial statement alongside non-fee-paying debt advice agencies, with a view to deciding whether the CFS/SFS could have benefits for Government, and would not make a commitment on this point until the work was completed. The Minister spoke of the non-contractual nature of Government debt which made it different from private sector debt, and of the Government’s aim to ensure that customers are treated fairly.166 Clause 45: Duty to review operation of chapter Chris Skidmore spoke to Government Amendments 130 and 141, which The government were not moved. The amendments were intended to require the said that there were relevant Minister to obtain the consent of the Scottish Minsters, problems with its Welsh Ministers or Department of Finance before making regulations amendments 130 which, following a review under clause 45, would amend or repeal and 141 as drafted Chapter 3 of Part 5 and make provision relating to Scotland, Wales or and that it will Northern Ireland respectively. Chris Skidmore said that technical flaws return to them at a had been discovered and that the Government would return to this later stage. matter at a later stage.167

4. Fraud against the public sector: data sharing Clauses 48 to 55 of the Bill, which would permit data sharing “for the purposes of the taking of action in connection with fraud against a public authority”, were uncontroversial. There were government amendments to this section (131-140) in line with those made in earlier sections – see the box above and the discussion under clauses 32 and 35 for information on these.

5. Research purposes: data sharing This chapter would permit the sharing of information for research purposes. Personal information must be stripped of information that would allow a person’s identity to be deduced. This part of the bill also allows for processing of personal information by a ‘trusted third party’, included so that data from more than one source can be linked together. This must be done in a way that would mean that the researcher ultimately receiving the information cannot see personally identifiable information. There will be a code of practice for sharing, processing and use of data under these powers, drawn up by the UK Statistics Authority (called the Statistics Board in law). The UK Statistics Authority will also accredit research, researchers and those processing personal data under these powers. The code of practice and accreditation criteria have now been published.168

166 PBC Deb 27 October 2016 c360 167 PBC Deb 27 October 2016 c361 168 UK Statistics Authority, Data Sharing Code of Practice and Accreditation Criteria: Research, 19 October 2016 46 Digital Economy Bill - Committee Stage Report

As well as amendments common to various chapters of this part of the bill (154 to 158 and 161, discussed in the box above and under clauses 32 and 35), there were a number of specific government amendments (142 to 153, 159, 160 and 162 to 170) to: provide clarity on the conditions that must be met when information provided by public authorities for research purposes is processed, as set out in clause 56. They also require public authorities to obtain accreditation to process personal information with that power, and they provide further clarity on the exclusion of health and adult social care information in clauses 56 and 63.169 Speaking for Labour, Louise Haigh welcomed these amendments. There was little further debate on this chapter of the bill. Louise Haigh said that: There is little need to dwell on this chapter of the Bill because of the safeguards that, as we have heard, are already in place and are well tried and tested. I was greatly encouraged that the Royal Statistical Society said in our evidence session that there needs to be a clear and well understood framework for the sharing of such information, as proposed in this part of the Bill. As we have said at length, we support that.

6. HMRC: data sharing HM Revenue & Customs may only disclose the information they hold on taxpayers under certain limited circumstances – for example, to comply with a court order, or if the person to whom the information relates has given their assent. It is a criminal offence for HMRC officers to deliberately disclose information without lawful authority.170 Clause 64 of the Bill would allow HMRC officials to disclose “non-identifying information”, provided that, in their view, the disclosure was in the public interest.171 The clause was agreed, unamended, without a vote in Committee. The Minister was asked by Louise Haigh why separate provision had been made in the Bill regarding HMRC as, in her view, “the safeguards in the rest of the Bill are sufficient.” Mr Skidmore said: The clause relates to the current legal constraints for HMRC on the disclosure of non-identifying information, allowing the UK tax authority to share information for purposes in the public interest. It deals with information that does not reveal a person’s identity: either general information that is never related to a taxpayer or information aggregated to such a degree that it does not reveal anything particular to a person ... The Bill introduces a permissive power allowing HMRC to decide on a case-by-case basis whether to share information, based on assessment of the benefits and risks of disclosure and taking into account the impact of HMRC’s resources and the delivery of its

169 Digital Economy Bill 27 October 2016 c364 170 Under s18 & s19 of the Commissioners for Revenue & Customs Act (CRCA) 2005. The department’s Manual on Information Disclosure sets out these provisions in detail; see from para IDG4000 onwards. see also, HC Deb 10 July 2014 cc389-90W. 171 See, DCMS, Digital Economy Bill Factsheet – Digital Government: Research and Statistics (clauses 56-68), 5 July 2016 47 Commons Library Briefing, 24 November 2016

business objectives. The clause will also address the current anomaly whereby HMRC could be legally obliged to provide aggregate, non-identifying information under the Freedom of Information Act, yet its statutory framework might not allow HMRC to disclose the same information to Government Departments … The clause will enable HMRC to support policy development and research analysis in important areas not linked to its function, such as social mobility and education, and will help to provide added transparency through the greater potential to contribute to open data.172

7. Official statistics: data sharing The powers in this bill would give the UK Statistics Authority – and in particular its statistics producing arm, the Office for National Statistics (ONS) – easier access to data. They would give clear authority for public authorities to share data with the Statistics Authority and would give the Statistics Authority the power to require that public authorities and businesses provide them with data. The legislation requires that the UK Statistics Authority publish a Statement of Principles and Procedures governing the way they will use the framework for access to data, along with a Code of Practice for Changes to Data Systems. Drafts of these have now been published. 173 In line with changes to earlier chapters, there was a government amendment (188) to bring the statement of practice in line with the Information Commission’s data sharing code of practice – see the discussion under clause 35 above. There were also number of government amendments (171-176) – that were described as minor and technical changes to definitions. Debate on this chapter was relatively brief. 174 Louise Haigh MP had previously praised the Statistics Authority and Office for National Statistics’ approach to handling and safeguarding data.175

172 PBC Deb 27 October 2016 cc375-6 173 UK Statistics Authority, Data Sharing Statement and Code of Practice: Statistics, 19 October 2016 174 PBC Deb 27 October 2016, c378-9 175 PBC Deb 27 October 2016, c369 48 Digital Economy Bill - Committee Stage Report

9. Part 6 – Broadcasting, Direct Marketing and other new clauses

1. Clause 76: TV licence fee concessions The Government successfully moved a series of amendments (178 to 181). The intention was to remove any uncertainty about the relationship between the Secretary of State’s power to set concessions and the BBC’s power to set concessions for those aged 65 and over. The amendments make it clear that the power of the BBC from June 2020 to determine age-related concessions for people over 65 extends to any such concession as previously provided for by the Secretary of State, with the exception of the current residential care concession. Louise Haigh explained that Labour opposed this clause altogether and sought to replace it with New Clause 38, which would ensure that the entitlement and cost of over-75s TV licences remain with the Government. She commented that the Conservative Election Manifesto included a commitment to maintain all existing pensioner benefits, and by transferring responsibility for this benefit to the BBC, the Government could no longer honour that promise. She recognised that a “deal” had been struck in summer 2015 between BBC and Government – compensating the BBC for this new financial burden by allowing it to collect licence fee revenue on iPlayer use – but she questioned whether this had been a negotiation between equals.176 She went on: This is a point of principle for the Opposition. We cannot accept a policy that takes the responsibility for even a tiny part of our social security system and gives it to an organisation with no direct accountability to the electorate.177 Calum Kerr expressed the SNP’s support for the new clause, regretting that the BBC was being asked to take over “welfare policy”.178 Graham Jones (Lab) spoke at length against the original clause and predicted problems ahead for the Government, since many of those entitled to the concession were the constituents of Government members.179 However, Mark Menzies (Con) defended the Government position, saying: “Is the BBC, under the current settlement, out of pocket? No, it is not because the licence fee is being increased and top-slicing is ending”.180 In his response, the Minister, Matt Hancock, said that the transfer of responsibility was part of the funding settlement agreed by both parties

176 On the events of summer 2015, see Library Briefing Paper 3416, BBC Charter renewal, section 4 177 PBC Deb 27 October 2016 cc390-3 178 PBC Deb 27 October 2016 cc395-6 179 PBC Deb 27 October 2016 cc397-8 180 PBC Deb 27 October 2016 c399 49 Commons Library Briefing, 24 November 2016

and something the BBC had “asked for”. To reject the clause would be to “vote against financial stability” and “ultimately voting to put the free TV licence at risk”.181 Clause 76, as amended, was ordered to stand part of the Bill. New Government clauses Two new clauses were introduced by the Government and added to the Bill without debate:182 • New Clause 27 would require Ofcom to seek to prevent digital television additional services183 enabling access to seriously harmful content that does not form part of the service, for instance by linking to content streamed from the internet. Ofcom could do this by imposing licence conditions in relation to such services. • New Clause 28 would give Ofcom power to suspend immediately, and subsequently revoke, the licence of any licensed radio service if material is included that is likely to encourage or incite crime or lead to disorder. It replaces a power applying only to satellite and cable services. New Opposition clauses During proceedings on clause 28, the Committee considered two new clauses tabled by the Opposition. The first, New Clause 14, called on the Government to produce a report exploring the options available for future-proofing the Listed Events regime, which helps ensure that sporting events such as the Olympic Games remain universally and freely available on television.184 Speaking to the amendment, Kevin Brennan argued that the present regime was unfit for the digital age. Under current rules, the benefits of the listed events regime are restricted by statute to channels that are first, free, and secondly, received by at least 95% of the UK population. Those criteria are becoming increasingly outdated as the number of homes giving up their TVs for other media devices begins to rise. The BBC, he explained, prefers the option in which the 95% reception criterion could be updated and replaced with a measure testing whether the channel is widely watched. That would require a qualifying service to have reached at least 90% of the public in the last calendar year.185 The SNP supported this amendment. In response, Matt Hancock said that the Government had seen no evidence to suggest that recent developments, with more online viewing, would put the BBC or other PSBs at immediate risk of failing to meet the qualifying criteria. He said he had had discussions with the BBC and Ofcom and would keep the matter under review, but he was “not convinced there is a risk in the near term at all”.186

181 PBC Deb 27 October 2016 cc400-2 182 PBC Deb 27 October 2016 cc412-14 183 This term is defined in Broadcasting Act 1996 s24 184 See Commons Library Briefing Paper 802, Listed sporting events 185 PBC Deb 25 October 2016 cc289-90 186 PBC Deb 25 October 2016 cc298-9 50 Digital Economy Bill - Committee Stage Report

New Clause 17 would have modernised the PSB prominence regime – as recommended by Ofcom in its 2015 PSB Review.187 Provisions in the Communications Act 2003 currently only apply to traditional public service TV channels on traditional TV channel menus (“EPGs”). The clause would have extended the law to on-demand services such as catch-up TV and to the connected TV on-demand menus where such services are found. Kevin Brennan argued that the present regime had not kept up even with a multi-channel environment, let alone the proliferation of other delivery platforms. Connected TVs, he said, “are increasingly relegating the TV guide, and thus access to the nation’s TV channels, to a far less prominent position than their own top picks, box sets or movies”. This change would be consistent with TV licensing regulations, which were updated from September 2016 to include BBC on-demand services.188 The Minister’s response was that it is a matter for Ofcom to issue guidance on ensuring that electronic programme guides (EPGs) work to everyone’s advantage. In a shifting technological landscape, he was resistant to trying to define “sub-menus and user interfaces” in regulation.189 Towards the end of Committee proceedings, the Opposition introduced a New Clause 21 on the Code of Practice for audiovisual services. Under the Communications Act 2003, broadcasters must ensure that access services – subtitles, audio description or sign language – are available on TV that is watched at a prescribed time and on a prescribed channel. Ofcom issues a Code of Practice to direct this.190 However, people are increasingly viewing television ‘on-demand’ (e.g. via BBC iPlayer) and such viewing is not caught by the statutory targets in the Code. The New Clause would have extended the existing regime for linear TV and apply it to on-demand, to the benefit of those with sensory loss. In response, the Minister agreed that his predecessor under the Coalition Government had undertaken to consider future legislation. Mr Hancock said that Ofcom already had powers to encourage on-demand providers to offers such services and he was resistant to making the Code too prescriptive. However, Ofcom was now indicating that its powers were insufficient and so the Government was minded to consult further on this matter. Louise Haigh withdrew the clause but said the Opposition may return to the issue on Report.191

187 Ofcom, Public Service Content in a Connected Society: Ofcom’s third review of public service broadcasting, December 2014, para 6.12f. The Communications Act 2003 (s310) requires Ofcom to maintain a code of practice for the provision of electronic programme guides (EPGs). This must ensure that EPG providers give the listing and/or promotion of the programmes on public service channels an appropriate degree of prominence, as determined by Ofcom. This obligation also applies to the means of selecting and accessing the programmes on these channels from an EPG. 188 PBC Deb 25 October 2016 cc291-3 189 PBC Deb 25 October 2016 c300 190 Ofcom, Code of Practice on television access services, 13 May 2015 191 PBC Deb 1 November 2016 cc445-8 51 Commons Library Briefing, 24 November 2016

2. Ofcom appeals The Communications Act 2003 sets out the rights of appeal against Ofcom’s decisions regarding the regulation of electronic communications networks, services and spectrum. Appeals are often made by communication providers, for example BT or a mobile operator. Appeals are heard by the Competition Appeal Tribunal (CAT) on “on the merits” grounds. On the merits means a complete review of the decision based on the evidence provided to the tribunal. The Government believes that this standard of review is overly burdensome and the delays caused by continuing litigation can hinder effective regulation.192 Clause 74 of the Bill amends the Communications Act 2003 so that a judicial review standard will apply for appeals of Ofcom decisions instead of the existing ‘on the merits’ standard. The Government states that the change will ensure that Ofcom’s decision can still be challenged but that complete reappraisal of Ofcom’s decisions will not be possible.193 A number of people who gave evidence to the Public Bill Committee, including Baroness Harding, CEO of TalkTalk, David Dyson from mobile operator Three and Pete Moorey from Which?194, supported the provisions in the Bill to change the appeals process for Ofcom. Pete Moorey, head of campaigns at Which?, stated that he thinks proposals from Ofcom on switching, for example, go through repeated consultation “really out of a fear of being appealed by the companies”.195 Ofcom also supports changes to the appeal standard. Lindsey Fussell, Director of the Consumer Group at Ofcom, stated that Ofcom wants an appeal standard that allows bad or wrong decisions to be overturned but also allows it to take forward important regulation.196 However, Sean Williams stated that BT are strongly against reforms to the Ofcom appeals process: Ofcom is an extremely powerful regulator that is accountable to nobody but the Competition Appeal Tribunal. No one in the Government can tell it what to do. It has extremely wide discretion. You will not get better decisions out of Ofcom if you reduce the standard of appeal to judicial appeal standard. Is it reasonable, is it fair, is it just that Ofcom can take £3 billion of shareholders’ equity value away from them on a judicial review standard? It is not. It is thoroughly unjust. To keep Ofcom accountable, to keep its decisions high quality and to comply with the regulatory scheme, it is of the utmost importance to require an appeal on its merits. It is required across the communications sector across the whole of the European Union. It is not by any means unique. Ofcom makes many very

192 Digital Economy Bill Explanatory Notes 193 Digital Economy Bill Explanatory Notes 194 PBC Deb 11 October 2016 c8, PBC Deb 11 October 2016 c28 195 PBC Deb 11 October 2016 c28 196 PBC Deb 13 October 2016 c104 52 Digital Economy Bill - Committee Stage Report

impactful decisions and that is why it gets many of its decisions appealed to the Competition Appeal Tribunal, very often by the small players in the industry. The Internet Service Providers’ Association (ISPA) also stated that its members have concerns about the changes to the appeals process.197 At Committee stage Louise Haigh (Lab) was supportive of the aims of this clause in changing the appeal standard for Ofcom, she raised concern that a number of large communication providers had raised concerns, how the proposed system compared to other industries and the impact of judicial review on small companies.198 The Minister responded to some of these concerns: Matt Hancock: We heard the evidence from Three and TalkTalk, who are in favour of this change. That is no surprise, as they are essentially the insurgents in the infrastructure market, and the incumbents were less keen on this change. We also heard from Which? and Citizens Advice, which explained that it is no surprise that large companies want to keep the status quo. […] On the SME point that techUK specifically raised, that was covered in the impact assessment that the hon. Member for Sheffield, Heeley asked about. It was published on 12 May; on page 15 it sets out the concern that, if we had a separate system for SMEs, we would end up with a yet more complicated process, as opposed to a simpler one, which I think would be an overall benefit. Louise Haigh: I completely accept that we should not have separate regulatory systems for SMEs and larger providers. Will the Minister confirm that the new judicial review process will not unduly hinder SMEs, in contrast to the current “on the merits” appeal process? Matt Hancock: I have looked at that specific point and I am satisfied that the new process does not, because a judicial review can take into account those sorts of concerns but is a more efficient process of appeal. On the point raised by the hon. Member for Berwickshire, Roxburgh and Selkirk, I should say that we have considered using the language of the directive but we do not believe that it materially changes our approach. I said I would get back to the hon. Gentleman; I was a bit quicker than even I expected. On that basis, I hope that the use of the well-tried and well-tested judicial review will prove a more efficient regulatory basis in future. Louise Haigh: The Minister has not addressed a couple of points: the potential loss to consumers that the industry claims the new system will create and the cases that would not have been brought under the existing system; and the mixed messages we have heard about whether the Bill brings Ofcom into line with other utilities regulators. Matt Hancock: On the first point, I am convinced that this change will act in the benefit of consumers, because we will have

197 Written evidence submitted by the Internet Service Providers’ Association (DEB 27) 198 PBC Deb 27 Oct 2016 c383 53 Commons Library Briefing, 24 November 2016

a quicker regulatory approach. The big incumbents will not be able to hold up a regulatory decision through aggressive use of the appeals process. Instead, we will have a more efficient appeals process. I am convinced that this will improve the situation for consumers. Of course, it is possible to pick out individual cases that may have gone the other way or may not have been able to be considered under the new approach. First, it is not possible to know whether that is the case without testing them. Secondly, looking at individual cases out of context does not allow us to step back and look at the effective operation of the system as a whole. I am sure the hon. Lady agrees with that approach. The clause stood part of the bill without division.

3. Clause 77: Direct marketing code The Privacy and Electronic Communications Regulations 2003 (PECR) set out rules relating to unsolicited electronic marketing messages sent by telephone, fax, email or text. Direct marketing without consent from targeted consumers is an offence under the PECR. The Bill would place Direct Marketing Guidance (updated May 2016) produced by the Information Commissioner’s Office (ICO) on a statutory footing by amending the Data Protection Act 1998. This guidance sets out how direct marketing companies can comply with the PECR. The Opposition tabled a series of amendments (195 to 197) which attempted to broaden the definition of the new direct marketing codes, so that the law would cover not only direct consumer marketing but also “consumer engagement”. Louise Haigh explained: Direct marketing uses personal data and demographic insights relating to residence and the habits of people previously to market to people individually and directly. Consumer engagement is much broader and involves the use of personal data to engage with customers for a broad set of business processes, which include, but are not restricted to, direct marketing. TV advertising, for example, is not considered to be direct marketing, but TV advertising campaigns can be designed with information derived from consumer data and used to target broad groups of consumers based on data derived from individuals.199 In response, Matt Hancock pointed to the definition of “direct marketing” in the Data Protection Act 1998 and said that it was essential that the definition of direct marketing in the Privacy and Electronic Communications Regulations 2003 remains aligned with that in the 1998 Act, so that the Information Commissioner’s Office’s powers of enforcement for nuisance calls remain effective and enforceable in law.200 Calum Kerr (SNP) spoke to New Clause 34. This new clause sought to allow the Information Commissioner’s Office to take action against company directors for breaches not only of the Data Protection Act 1998, but also of the 2003 EU regulations on unsolicited

199 PBC Deb 27 October 2016 c403 200 PBC Deb 27 October 2016 c404 54 Digital Economy Bill - Committee Stage Report

communications. The Minister said that he agreed with the principle of moving liability on to individuals rather than on to companies. However, as he proposed to table a Government amendment to that effect, he would not accept the New Clause; there would be consultation on the exact details.201 In the stand-part debate on clause 77, Graham Jones urged the Government to consider introducing mandatory pro formas in all forms of direct marketing, so that the consumer can always identify who is contacting them and how to opt out of such communications. Matt Hancock replied that it would be open to the Information Commissioner to require such pro formas in her statutory guidance.202 On 23 October 2016 the Government announced that it would be amending the PECR through secondary legislation (separate to the Bill) to allow the ICO to fine directors personally if their company breaches the PECR.

4. Digital Skills New Clause 26 was introduced by the Government at Committee Stage and was not subject to debate. It applies to England only. The clause allows for publically funded basic digital skills training to be offered free of charge to adults. It requires the Secretary of State for Education to ensure that a specific qualification is made available free of charge with a minimum level required by “persons aged 19 or over in order to be able to operate effectively in day-to-day life”.

5. Financial Technologies New Clauses 29 and 30, and New Schedule 2, were introduced by the Government and added to the Bill without debate. The clauses deal with non-bank payment firms such as MoneyGram and WorldPay. The Government states that these clauses will allow these firms to “reduce their costs and compete more directly with banks, increasing competition and encouraging new payment FinTechs (innovative financial technology firms) to enter the market”.203 New clause 29 provides for the Treasury to amend the Settlement Finality Regulations, which will then allow non-bank firms to be added. New Clause 30 amends the Banking Act 2009 to allow a non-bank payment system to be supervised by the Bank of England following designation by the Treasury. .

201 PBC Deb 27 October 2016 cc404-5 202 PBC Deb 27 October 2016 cc406-7 203 DCMS Letter to Chairs of Public Bill Committee, 19 October 2016

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