My Lords, I wish to speak to Amendments 56, 58 and 65, which stand in my name and that of the noble Baroness, Lady Howe of Idlicote. At Second Reading, I made clear my concerns about how Part 3 would be enforced. Given the wide-ranging scope of the Bill, I did not expect to get detailed answers to my questions when the Minister wrapped up the Second Reading debate on 13 December. However, I am disappointed not to have received any subsequent reassurances from the Minister about my concerns and I therefore raise the same points again today, in the hope of receiving some concrete answers.
Part 3 of the Bill relies on three enforcement mechanisms, one of which is IP blocking, in Clause 23, which I support but will leave others to discuss. I am concerned about the other mechanisms, which many hope will be used before IP blocking is even considered. My Amendment 56 is to Clause 20, which allows the age verification regulator to impose a fine of either a
maximum of £250,000 or 5% of the qualifying turnover. How will this power operate if the website which is not in compliance with the age verification requirements of Clause 15 is based outside the UK? I am not the only noble Lord to have this concern. At Second Reading, the noble Baroness, Lady Benjamin, said that she was concerned about how the Government would be able to ensure that overseas sites would pay these fines. The noble Earl, Lord Erroll, with all his experience chairing the Digital Policy Alliance, also said that:
“One of the things that became apparent early on was that we will not be able to do anything about foreign sites”.—[Official Report, 13/12/16; col. 1214.]
As it seems unlikely that the Government will be able to collect fines from individuals outside the United Kingdom, my probing amendment, Amendment 56, would make that position explicit by ensuring that fines can be imposed only on someone resident in the UK. I would very much like to be proved wrong, but there is no evidence yet as to how this policy will be successfully enforced.
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In another place the right honourable Matt Hancock acknowledged that fines would not always work abroad, but said that there were international mechanisms for enforcing them in some countries. I hope your Lordships will bear with me if I repeat a quotation that I also cited on Second Reading. Mr Hancock said:
“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”.—[Official Report, Commons, Digital Economy Bill Committee, 20/10/16; col. 217.]
I repeat the question I posed on Second Reading, and I hope the Minister will set out a detailed explanation of what these international arrangements are, and how they will work. I hope that he will quote chapter and verse on which jurisdictions in the world can be reached by these arrangements, and how easy it would be to use those mechanisms in relation to a site in a foreign jurisdiction to which the said international arrangements apply.
I should stress that this is a probing amendment. I am not saying that if this provision does not work in all jurisdictions it should be removed. If it works in some foreign jurisdictions it is worth keeping, although clearly in that context, the extent of its benefit will be limited by its international reach. I simply want to press the Minister to explain how it will work and in what foreign jurisdictions it will apply.
Given my concerns about the limited utility of the fines mechanism, Amendments 58 and 65 are intended to strengthen the second enforcement mechanisms in the Bill. Financial transaction blocking is set out in Clause 22, the premise of which is one of disrupting the business model of websites. The Minister in another place said:
“Our view is that enforcement through disrupting business models is more powerful because you are undermining the business model of the provider.” —[Official Report, Commons, Digital Economy Bill Committee, 20/10/16; col. 199.]
In practical terms, if a website is not in compliance the age-verification regulator can inform financial transaction providers and ancillary service providers, such as those
who support websites with services like advertising, that a website seeking access to the UK market is acting in violation of UK law, and the intention is that these businesses will withdraw their services. Admirable though that sounds, I am not convinced that Clause 22 as it stands will disrupt the business model of websites, because, as I said on Second Reading, Clause 22 does not require the regulator to relay information on non-compliance to financial transaction providers. My Amendment 58 would require this information to be provided to financial transaction providers and ancillary service providers, by amending subsection (1).
Clause 22 does not empower the regulator to require providers not to process transactions with such sites either, nor does it make any demands of the providers to take any action against a non-compliant website. My amendment would place an enforceable duty on payment providers and ancillary service providers to take action against a non-compliant website, similar to the duty in Clause 23, once they had been notified of a non-compliance.
In the Government’s response to the consultation on age verification, they said that they do not think it would be appropriate or necessary to place a specific legal requirement on these payment providers to remove services, basing this on their stated belief that they can rely on such companies to block transactions because their terms and conditions require merchants to be operating legally in the country they serve. Similar statements were made by the Minister in Committee in another place.
On Second Reading I noted that exactly the same arguments were used during the passage of the Gambling (Licensing and Advertising) Act in 2014. At the start of 2017, the evidence on the effectiveness of the reliance on payment providers is far from reassuring. According to a parliamentary answer on the detail that the Minister gave on 12 January, transactions have been blocked for only 11 gambling websites. That seems a very low number to me. One of the difficulties is that depending on terms and conditions does not lend itself to transparency. We require a much more transparent arrangement for what will become the Digital Economy Act.
I also note that no statements have been made about whether ancillary service providers are under the same obligations as the Government argue rest on financial transaction providers. I hope the Minister will tell the House the basis on which the Government believe ancillary services providers will act as part of their enforcement arsenal. I remain concerned that Clause 22 does not give pornography providers strong enough commercial incentives to comply, because they will not be absolutely certain that payments will be blocked in the event of non-compliance. My amendment would remove that uncertainty.
The need for clarity on enforcement was forcefully presented by research from the University of Oxford that I cited on Second Reading. The report Effective Age Verification Techniques: lessons to be learnt from the online gambling industry looked at how age verification on gambling websites had worked. The authors concluded that where there are strict audit and enforcement requirements, there is an incentive to invest in high
assurance identity and age verification processes, but where enforcement is patchy and uncertain, the incentives to invest in expensive authentication systems are less clear.
I am convinced that without robust enforcement, all our good intentions in relation to the protection of children will come to nothing. Many noble Lords supported the principle of Part 3 on Second Reading—but principle is not enough. We need rigorous action, and at the moment it is unclear just how the Bill will be enforced to ensure that our good intentions are met. I hope that on this occasion the Minister will respond to the questions I have raised in detail. I beg to move.