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House of Commons Hansard

General Committees

06 March 2018

    Delegated Legislation Committee

    Draft International Tax Enforcement (Bermuda) Order 2017 Draft Double Taxation Relief and INTERNATIONAL TAX ENFORCEMENT (KYRGYZSTAN) ORDER 2017

    The Committee consisted of the following Members:

    Chair: Stewart Hosie

    † Afriyie, Adam (Windsor) (Con)

    Coffey, Ann (Stockport) (Lab)

    † Debbonaire, Thangam (Bristol West) (Lab)

    † Grant, Peter (Glenrothes) (SNP)

    † Hair, Kirstene (Angus) (Con)

    † Johnson, Dr Caroline (Sleaford and North Hykeham) (Con)

    Lammy, Mr David (Tottenham) (Lab)

    † Lewis, Clive (Norwich South) (Lab)

    † McCabe, Steve (Birmingham, Selly Oak) (Lab)

    † Morris, David (Morecambe and Lunesdale) (Con)

    † Powell, Lucy (Manchester Central) (Lab/Co-op)

    † Prisk, Mr Mark (Hertford and Stortford) (Con)

    † Rutley, David (Lord Commissioner of Her Majesty's Treasury)

    † Stewart, Iain (Milton Keynes South) (Con)

    † Stride, Mel (Financial Secretary to the Treasury)

    † Walker, Thelma (Colne Valley) (Lab)

    † Watling, Giles (Clacton) (Con)

    Nehal Bradley-Depani, Committee Clerk

    † attended the Committee

    First Delegated Legislation Committee

    Tuesday 6 March 2018

    [Stewart Hosie in the Chair]

    Draft International Tax Enforcement (Bermuda) Order 2017

  • I beg to move,

    That the Committee has considered the draft International Tax Enforcement (Bermuda) Order 2017.

  • The Chair

    With this it will be convenient to consider the draft Double Taxation Relief and International Tax Enforcement (Kyrgyzstan) Order 2017.

  • May I say, Mr Hosie, what a pleasure it is to serve under your chairmanship? The draft orders deal with a replacement tax information exchange agreement with Bermuda and our first double taxation agreement with Kyrgyzstan. Both statutory instruments bolster the United Kingdom’s long-standing network of international tax agreements.

    The UK has had a tax information exchange agreement with Bermuda since 2007. That arrangement has allowed for the exchange of information on request between Her Majesty’s Revenue and Customs and the Bermudan tax authorities. Under a further agreement, signed in 2013, certain financial account data are received automatically by HMRC directly from Bermudan financial institutions. The draft order will supersede that further agreement and replace the tax information exchange arrangement from 2007.

    The new instrument allows for automatic exchange of bulk financial data. This important change ensures that the UK continues to align with current international tax transparency standards. Bermuda will provide HMRC with an increased amount of information on UK taxpayers. Bermuda has the status of a UK overseas territory, but it is a separate jurisdiction, with its own elected Government, and is responsible for its own domestic fiscal policy. Thanks to UK leadership, Bermuda is committed to global tax transparency standards. This instrument is an important part of Bermuda’s commitment to those standards and will enhance HMRC’s ability to check the compliance of UK taxpayers who have financial affairs in Bermuda.

    There are no other substantial changes between the old instruments and the one proposed. It, too, reflects the model developed by the OECD. This Government are committed to maintaining an extensive network of tax information exchange partners and agreements, which are an essential aspect of securing UK tax revenues.

    The fluid exchange of information between jurisdictions is a key tool in the arsenal of international tax co-operation. Since 2010, HMRC has secured more than £2.8 billion from those trying to hide money abroad to avoid paying what they owe. The arrangement under consideration will assist HMRC in maintaining its strong track record of countering tax avoidance and evasion.

    The UK has not had a double taxation agreement with Kyrgyzstan since it gained independence from the former Soviet Union in 1991. It was Kyrgyzstan that suggested we rectify that situation. It first requested talks in 2008 and repeated that request to us in 2013, citing a desire to open up its economy to promote economic development. For our part, we were keen to close a gap in our DTA coverage in the region and ensure that UK businesses could compete on an equal footing with businesses in comparable countries that had already concluded DTAs.

    The agreement reached will improve the business conditions for UK companies and individuals operating and investing in Kyrgyzstan, while reflecting that nation’s status as a developing country. The rates of withholding tax are reduced to 5% for interest, royalties and dividend payments to direct investors; the rate under domestic law in Kyrgyzstan is 10%. In addition, the agreement permits the taxation of services where they are performed in a country over an extended period—a feature of the UN model tax treaty. However, there are no unwelcome provisions permitting the taxation of leasing payments on a gross basis that either impede commercial activity or increase costs for consumers. The resulting treaty is therefore a good compromise that will encourage investment in Kyrgyzstan by UK businesses, to the benefit of both economies.

    I trust that the explanations I have given are helpful. The orders strengthen the UK’s taxing framework on many fronts, and I commend them to the Committee.

  • It is a pleasure to serve under your chairmanship, Mr Hosie. I welcome the opportunity to participate in scrutinising these two tax enforcement orders. Work that has contributed to ensuring that the UK overseas territories have adopted the common reporting standard a year earlier than other parts of the world is to be commended. It is vital that tax that is rightly due is paid and any avoidance promptly investigated and, where appropriate, prosecuted. However, we should be cautious in assuming that tax treaties between wealthy and low-income nations are without problems.

    We know that low-income countries rely more heavily on tax revenues than their rich counterparts, and the revenues can be assumed to be more urgently needed to provide public services such as health and education. Treaties have historically been one of the elements of the global tax system that have stood in the way of low-income countries collecting the tax revenue that is fair and just—undermining the ability of local companies to compete on a level playing field. It is therefore vital that we get this right.

    With regard to the Double Taxation Relief and International Tax Enforcement (Kyrgyzstan) Order, I ask the Minister why the treaty does not include the provisions against tax treaty abuse that were agreed as minimum commitments by the UK and all states participating in the G20/OECD project on base erosion and profit shifting, also known as BEPS. Those anti-abuse provisions are included in the multilateral instrument on BEPS, and would be imported into a treaty if both parties to that treaty list it as a covered agreement. The proposed agreement with Kyrgyzstan was not listed as a covered agreement by the UK when it signed the MLI in June 2017, although the one with Lesotho, tabled a few weeks ago, was. Are the Government content to proceed with the treaty without ensuring that it contains the anti-abuse provisions accepted as a minimum commitment under the BEPS project?

    In addition, why does the treaty not include a provision for the arbitration of disputes in article 24, while the recently considered treaty with Lesotho did include such a provision, despite the fact that developing countries have, through the UN committee of tax experts, opposed inclusion of such arbitration provisions in tax treaties? If the UK is willing to sign a treaty with a country such as Kyrgyzstan without an arbitration provision, why was it included in the Lesotho treaty? Why has there been a delay in bringing the treaty to the House? It appears that the treaty was signed in Bishkek in June last year. Why was it not considered here earlier? Is that a result of the greater than average scrutiny to which the Lesotho treaty was subject?

    With regard to the International Tax Enforcement (Bermuda) Order, will the Minister tell us whether the Government have arrangements in place for the automatic exchange of tax information? I think the Minister did mention that, but if he could clarify it once more, that would be really helpful. Finally, the explanatory note to the order states:

    “The 2017 Arrangement replaces the 2007 Arrangement and makes provision for automatic exchange of tax information, which was not provided for in the 2007 Arrangement.”

    Paragraph 6 of the 2017 arrangement provides for automatic exchange. It states that that will be done under procedures to be determined “by mutual agreement.” The UK-Bermuda agreement of 2014 to improve tax compliance stated that

    “the Parties are committed to promoting a new single global standard in the automatic exchange of tax information and will look to align this agreement to that new global standard in due course”.

    Has that been done, and can the Minister provide details?

  • It is a great pleasure to serve under your chairmanship, Mr Hosie. I will not repeat what the hon. Member for Norwich South said in relation to the inadequacies or incompleteness of the legislation. We all welcome any move that makes it harder for people to hide their gains—ill-gotten or well-gotten—from the rightful tax authorities. I believe that it is a fundamental principle, particularly for people who are making money out of developing countries, that any tax that is due on those profits should be retained within the country where the money has been raised, so that it can be invested to help it to develop its economy.

    Although the exchange of information is a big help in that, such information can be used only to demonstrate whether somebody is acting within the existing legislation. If that legislation allows a country to be used as a tax haven, exchanging information so that HMRC knows that somebody is using it as a tax haven does not get us an awful lot further forward. Although I welcome the intention of the legislation, I am puzzled, like the hon. Member for Norwich South, as to why it has taken so long. If it is such a good piece of legislation, why have Bermuda and Kyrgyzstan not had the benefit of it much sooner? Why have we not had the benefit of it much sooner?

    As well as enforcing the legislation that we have, I hope the Government will do a lot more to ensure that we use every means at our disposal to tighten up tax loopholes. That is not so that people can be taxed beyond what is reasonable, but so that tax revenues from the labours of developing countries are reinvested in their schools, hospitals, housing and communities. They cannot afford to subsidise the City of London—let us be brutal about it—but their resources, the skills of their people and the efforts of their local populations very often work on behalf of UK-owned companies. I welcome the legislation and I hope we will see much more being done in future.

  • Perhaps I can respond to the speakers in reverse order and start with the hon. Member for Glenrothes, whom I thank for his comments. I am pleased that he welcomed appropriately the greater transparency and provision of information to HMRC that will flow from the order in the case of Bermuda. He raised the issue of tax transparency, but Bermuda is a sovereign country with a democratically elected Parliament that makes its own decisions in those contexts.

    However, we have worked closely with Bermuda, particularly in respect of the work carried out by the European Union, to ensure that we further that transparency process. Most recently, the EU confirmed that sufficient progress is being made in that regard. Bermuda has embraced common reporting standards, which both Members on sides of the Committee welcome, to ensure that information is provided to other tax jurisdictions.

    The hon. Member for Norwich South made a number of points. I was pleased that he welcomed common reporting standards and its early adoption across the overseas territories, as we do. He raised the general issue of low-income countries and the benefits or otherwise of entering into such agreements when they are negotiated with a high-income country.

    I would point out that Kyrgyzstan requested the arrangement after all, and was under no compulsion to enter into any agreement as negotiated. The big benefits to a country such as Kyrgyzstan are in the medium to longer term. Various studies, such as one conducted by Vienna University, have looked at the economic impact of withdrawing withholding taxes, of lowering taxes, and of providing the kind of certainty that businesses require when they consider where to invest internationally. That is an important medium to longer-term consequence for those countries of this kind of arrangement.

    The hon. Gentleman also talked about the anti-abuse provisions in the order and made specific reference to the BEPS project. The treaty was concluded before the BEPS arrangements came into effect, but there are anti-treaty shopping elements in the order to ensure that those anti-abuse provisions are robust.

    The hon. Gentleman is right that there are no mandatory arbitration provisions in the treaty, because constitutionally Kyrgyzstan is not permitted to enter that kind of arrangement. We have respected that. He is right to say that there have been some delays. It has taken time to go through the stages of the negotiation, partly because the Kyrgyzstan Government requested various technical changes along the way. There were also some issues about language and translation because the agreement had to be very, very precisely translated into three languages.

    On that basis, I hope the Committee will agree to these orders.

    Question put and agreed to.

    Draft Double Taxation Relief and International Tax Enforcement (Kyrgyzstan) Order 2017


    That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Kyrgyzstan) Order 2017.—(Mel Stride.)

  • Committee rose.

    Draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2018 Draft National Employment Savings Trust (Amendment) Order 2018

    The Committee consisted of the following Members:

    Chair: Mr Adrian Bailey

    † Amesbury, Mike (Weaver Vale) (Lab)

    † Blackman, Kirsty (Aberdeen North) (SNP)

    † Djanogly, Mr Jonathan (Huntingdon) (Con)

    † Dromey, Jack (Birmingham, Erdington) (Lab)

    † Foxcroft, Vicky (Lewisham, Deptford) (Lab)

    † Howell, John (Henley) (Con)

    † Jayawardena, Mr Ranil (North East Hampshire) (Con)

    Kendall, Liz (Leicester West) (Lab)

    † Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)

    Leslie, Mr Chris (Nottingham East) (Lab/Co-op)

    † Opperman, Guy (Parliamentary Under-Secretary of State for Work and Pensions)

    † Patel, Priti (Witham) (Con)

    Shah, Naz (Bradford West) (Lab)

    † Shapps, Grant (Welwyn Hatfield) (Con)

    † Shelbrooke, Alec (Elmet and Rothwell) (Con)

    Western, Matt (Warwick and Leamington) (Lab)

    † Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)

    Robert Cope, Committee Clerk

    † attended the Committee

    Fourth Delegated Legislation Committee

    Tuesday 6 March 2018

    [Mr Adrian Bailey in the Chair]

    Draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2018

  • I beg to move,

    That the Committee has considered the draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2018.

  • The Chair

    With this it will be convenient to consider the draft National Employment Savings Trust (Amendment) Order 2018.

  • It is a pleasure to serve under your chairmanship, Mr Bailey. The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order aligns the lower and upper limits of the qualifying earnings bands for automatic enrolment with the respective national insurance thresholds of £6,032 and £46,350, ensuring stability and consistency in the way ahead. The order does not change the earnings trigger, which remains at £10,000. That strikes a balance between bringing in those most likely to benefit from pension saving with affordability for employers. The decision to maintain the alignment of the lower and upper earnings qualifying bands with those for national insurance contributions maintains simplicity and consistency and minimises burdens on employers.

    The National Employment Savings Trust, commonly known as NEST, was established to support automatic enrolment by ensuring that all employers have access to a low-cost workplace pension scheme to meet their duties. NEST was specifically designed for and targeted at low to moderate earners and smaller employers that the wider pensions market had historically failed to serve adequately. It has a public service obligation to admit any employer that wishes to use the scheme to meet their automatic enrolment duties. It is a success. It has more than 6 million members, in excess of 554,000 participating employers and more than £2.4 billion of funds under management. All the measures in the order will improve the way in which the scheme operates for participating employers and members.

    There are four minor and technical changes that I will briefly outline. First, there is a change to contractual enrolment. The order will make it possible for participating employers to enrol their workers in NEST whether or not the automatic enrolment duties apply to the employer. Secondly, the order will require the NEST Corporation to carry out research with scheme members and participating employers or their representatives in connection with the operation, development or amendment of the NEST pension scheme. Thirdly, the order will give NEST the ability to remove a member with an empty account from the scheme where certain conditions are met, including if the account has been empty for at least 12 months. These accounts are of no value to the member and incur administrative costs for other members. Finally, the order allows an individual to join NEST in the event of a bulk transfer with consent.

    All the changes are deregulatory and positive for employers, but they are minimal. They are not expected to have a material impact and they will mitigate NEST scheme inefficiencies. I commend the order to the Committee.

  • The Minister will forgive me if I say what I said in a debate in Westminster Hall this week: auto enrolment was the creation of a Labour Government, but this continuity in public policy is very welcome and is supported across the House. The proposals are entirely unobjectionable and we will not oppose the two orders.

    As is appropriate on occasions such as this, I will briefly set out some issues and ambitions for the next stage. First, auto enrolment does not cover the self-employed or workers in the gig economy. Female workers with disabilities and black and minority ethnic workers are over-represented among low earners, the self-employed, those with multiple jobs and carers. Self-employment and bogus self-employment are becoming increasingly prominent in the modern economy, so tackling the issue at the next stages will be of the highest importance.

    Secondly, the advent of auto enrolment has increased the number of workers saving for retirement. More active savers are now in defined contribution pension schemes, rather than defined benefit schemes. While having a greater number of savers is a positive move, we do not want to threaten good DB schemes.

    Thirdly, the rise in the number of pension savers is a step in the right direction, but DC plans must continue to evolve to provide savers with an adequate pension. A report by the Pensions Policy Institute in 2016 found that the median saving of DC scheme members could yield only £3,000 a year as an annuity, which is not a lot of money. Eight per cent should not be the summit of our ambitions and the sooner the age threshold is reduced, the better.

    In conclusion—and fourthly—more workers having access to a pension pot is welcome, but the public’s awareness and knowledge of their pensions needs to increase at the same time. As one of the proposals put forward, and referred to by the Minister, carrying out research is welcome as, in different ways and on different fronts, these are issues that need to be addressed at the next stages. Having made those points for the record, we will not oppose the orders.

  • It is a pleasure to take part in this Delegated Legislation Committee at this early time in the morning. On NEST, the Scottish National party has no concerns to raise about that part of the discussion. Our position on automatic enrolment and particularly the earnings trigger is that the scheme should be expanded so that as many employees as possible can take part. This has been our long-standing position and the Minister would expect me to put this forward today.

    I am slightly concerned that the Minister seems to be slanting the decision-making process around both the earnings cap and the qualifying earnings band towards benefit and simplicity for employers, rather than the widest possible benefit for employees. I am sure that is not necessarily what he meant; it was just the way it was put across in this relatively short debate this morning. I understand what the Minister says about simplicity and consistency around the qualifying earnings band but, again, it should be the best possible deal for employees and those taking part in this deal, rather than one that is simply the easiest for businesses to administer.

    The Minister did not seem to provide much evidence for keeping the earnings cap at £10,000. We believe that it should be expanded to cover those earning less than that amount. To add a point, if there were more people earning a real living wage that people could live on, it would be less of a concern that they would have to divert possible savings money into day-to-day spending.

    Our major concern is that the Department has been unable to show a significant level of consultation around the decisions that have been made. I cannot see evidence for consultation with a wide range of people to decide the best possible level for either the earnings cap or the qualifying earnings trigger. I know the Government are busy dealing with Brexit—as we all are—but this is particularly important for those earning very little and who are most likely to be in poverty when they hit pension age. It would have been better if the Government had done more in the way of consultation and providing evidence about why they have suggested these figures as the most appropriate levels, rather than just some arbitrary level that happens to have been chosen.

    Having said all of that, we will not oppose the measures at this stage. However, it would be useful for the Minister to give us a little more information on the decision-making process and, if possible, a commitment to wider consultation next year or the year after—or the next time this is discussed—so that we can see the evidence for the decisions that are made.

  • I will address those points. In relation to my friend, the hon. Member for Birmingham, Erdington, it is fair to say that we all wish to have larger numbers of the self-employed signing up to automatic enrolment. That is a manifesto commitment by this party and it is being pursued. A number of pilot projects are on the go, and the hon. Gentleman will know from the debate we had on this particular issue last week that he is welcome to attend the two-day seminar at the Association of British Insurers on 26 March to explore the specifics of how we involve greater numbers of the self-employed. We will be using the private sector to assist us on that particular point.

    In relation to the present limit of 8% of savings under automatic enrolment, it is entirely the case that we wish to get 8% over the next two years. However, we all accept that is not sufficient in the longer term and there is a commitment across the House of Commons to push beyond that 8%, because the savings required on a longer-term basis are clearly going to come to more than that.

    The hon. Gentleman knows—and referring to the points made by the hon. Member for Aberdeen North—that the auto enrolment review that reported to the House in December last year set out the reasons why long-term considerations should include a reduction to the first £1 people earn, bringing the qualifying age down from 22 to 18, and addressing the lower earnings limit. I am pushing back on the consultation on that, given that there was a review throughout pretty much all of 2017 across the entire sector. We then received information independently from a number of different experts as to why we should go down to 18 and why we should start from the first pound.

    The main objective for the Department and the Government is to ensure that the April rises in 2018 and 2019 proceed in the appropriate way. If the hon. Member for Aberdeen North feels that there has been insufficient consultation, I take that on board. I propose to look at the documentation and write to her in detail. I take on board her point that there has to be consultation in future. I believe that I can provide quite a detailed explanation and I am happy to do so in writing.

    Question put and agreed to.

    draft national employment savings trust (amendment) order 2018


    That the Committee has considered the draft National Employment Savings Trust (Amendment) Order 2018.—(Guy Opperman.)

  • Committee rose.

    Draft Electronic Commerce Directive (Miscellaneous Provisions) Regulations 2018

    The Committee consisted of the following Members:

    Chair: Ian Austin

    † Adams, Nigel (Lord Commissioner of Her Majesty’s Treasury)

    † Aldous, Peter (Waveney) (Con)

    † Beresford, Sir Paul (Mole Valley) (Con)

    † Byrne, Liam (Birmingham, Hodge Hill) (Lab)

    † Clark, Colin (Gordon) (Con)

    † Coyle, Neil (Bermondsey and Old Southwark) (Lab)

    † Duguid, David (Banff and Buchan) (Con)

    † Elmore, Chris (Ogmore) (Lab)

    † Evans, Chris (Islwyn) (Lab/Co-op)

    † Green, Kate (Stretford and Urmston) (Lab)

    † Huddleston, Nigel (Mid Worcestershire) (Con)

    † James, Margot (Minister of State, Department for Digital, Culture, Media and Sport)

    † Newlands, Gavin (Paisley and Renfrewshire North) (SNP)

    † Seely, Mr Bob (Isle of Wight) (Con)

    Smeeth, Ruth (Stoke-on-Trent North) (Lab)

    † Smith, Royston (Southampton, Itchen) (Con)

    † Woodcock, John (Barrow and Furness) (Lab/Co-op)

    Kenneth Fox, Committee Clerk

    † attended the Committee

    The following also attended, pursuant to Standing Order No. 118(2):

    Bowie, Andrew (West Aberdeenshire and Kincardine) (Con)

    Fifth Delegated Legislation Committee

    Tuesday 6 March 2018

    [Ian Austin in the Chair]

    Draft Electronic Commerce Directive (Miscellaneous Provisions) Regulations 2018

  • I beg to move,

    That the Committee has considered the draft Electronic Commerce Directive (Miscellaneous Provisions) Regulations 2018.

    It is a great pleasure to serve under your chairmanship, Mr Austin. The regulations, which were laid in both Houses on 30 January, seek to implement two parts of the electronic commerce directive, or e-commerce directive, in relation to various offences: the country of origin principle and provisions relating to the liability of intermediary service providers. When new legislation is introduced in a particular policy area and an element of it relates to offences or requirements that could apply to an information society service, such as intimate images on an online platform, the directive must be implemented to apply the rules. That must be done for the UK to be compliant with European Union law.

    The statutory instrument does not create new policy; it is a technical measure to ensure that the offences are consistent with the e-commerce directive. The directive has already been implemented into UK law for 34 offences, along with regulations where that has been necessary to comply with EU law. The regulations under discussion implement the directive in relation to various offences, including those concerning extreme pornography and restricting the publication of material by which a child involved in an inquiry may be identified. The Committee should be aware that my Department worked closely with officials in the Scottish Government and the Northern Ireland Assembly on the draft instrument, and the Scottish Government are keen to see it come into law.

    I will go into a little more detail about what the e-commerce directive is and what the statutory instrument aims to achieve. The directive seeks to contribute to the proper functioning of the internal market by ensuring the free movement of information society services within the European economic area. The SI implements the country of origin principle in relation to the offences, where relevant. For example, articles 3(2) and 3(4) of the directive, which relate to the extreme pornography offence, were implemented in the Extreme Pornography (Electronic Commerce Directive) (Scotland) Regulations 2011. Under the country of origin principle, information society services should be under only the jurisdiction of the member state in which the service is established, not the European area country that the service targets. The country of origin rules are described in more detail in paragraph 4.2 of the explanatory memorandum. The implementation also allows for the prosecution of a UK-based provider if it carries out the offences in the statutory instrument in another European economic area state.

    Finally, the statutory instrument also implements articles 12 to 14 of the directive where relevant, which limit, in specified circumstances, the liability of intermediary service providers that carry out certain activities essential for the operation of the internet, namely those that act as mere conduits and those that cache or host information.

    I emphasise that the sole intention and outcome of the statutory instrument is to implement the parts of the EC directive in relation to various offences where it has not been done before. It will not create or set new policy; it is a technical measure to ensure compliance with EU law. I hope that the Committee will allow the statutory instrument to become law.

  • This is the first time I have had the privilege of serving under your chairmanship, Mr Austin, and it is a moment of note that we have not only a Chairman from the west midlands but two Front Benchers as well.

    I am grateful to the Minister for her speech. It was almost as long as her speech last night in winding up five hours of debate on the Data Protection Bill. I am sorry that we none the less managed to stretch business to 10 o’clock.

    The regulations are important, but the e-commerce directive is hopelessly outmoded and outdated. It regulates internet service providers, but was written before most of them came to enjoy the force and stature they do today. None the less, it is what we have, and if we can use regulations attached to it to make progress, in particular in the defence of children and their safety online, we must seize those opportunities with both hands. We will not, therefore, divide the Committee today. However, I ask the Minister to reflect, in her winding-up remarks, on why it has taken so long for those necessary defences to be brought to the House, and invite her to look to the future and tell us how long we will have to wait for proposals for the e-commerce directive to be modernised. Now that we are leaving the European Union, there are all sorts of opportunities to modernise laws in a way that maintains a degree of regulatory harmony, and therefore trade, with our biggest continental market and that also brings regulation of this important industry up to date.

  • It is a pleasure to see you for the first time in the Chair, Mr Austin.

    As the Minister pointed out, the Scottish Government support the measure, so I will comment only briefly. We have no problems with the statutory instrument, but one of the offences it would affect in Scotland is in the Offensive Behaviour at Football and Threatening Communications (Scotland) Act 2012, which the Scottish Opposition has, sadly, decided to repeal, for reasons that pass understanding, to be perfectly honest—that is just an aside. We look forward to implementing EU rules and regulations for many years to come, but with that I will sit down and let us get on with it.

  • I will first respond to the comments made by the right hon. Member for Birmingham, Hodge Hill. I agree that parts of the e-commerce directive, particularly in respect of its limiting the liability of service providers, are out of date. It was passed long before the services providers had the power they now have. It is important to note that it limits their liability in three categories, but I agree with him about the limits on hosting services’ liabilities. Perhaps there is also a measure of agreement with him elsewhere in the EU, in that the German Government’s regulation requiring internet hosting services to take down within 24 hours content that is agreed to be illegal, as far as the Germans are concerned, is not considered to be an infraction.

    On the question why this has not been done before, I agree with the right hon. Gentleman: when I read my brief, I too was mystified by the timing. In answer to his question, in 2016—almost two years ago—the Scottish Government requested that we implement the EC directive in relation to the intimate image offence. Although we would like to have done this sooner, the process has been delayed in part by last year’s general election and in part by the Scottish Government subsequently coming to the UK Government with a list of additional offences to be included.

    On proposals to modernise the EC directive, the right hon. Gentleman should probably address those questions elsewhere in Government, possibly to the Cabinet Office or the Department for Exiting the European Union. It is not my place to comment on that, although I watch with great interest what has happened in Germany, as we propose to respond to our consultation on internet safety. The Government are determined to make the UK the safest place to be online and there is clearly a lot of work to be done to realise that ambition.

    I am grateful to the hon. Member for Paisley and Renfrewshire North, who represents the Scottish National party, for his support of the proposals. I had better not comment on the particular offence of football—that is definitely a Scottish matter for the Scottish Government and the SNP in the Scottish Parliament.

    These regulations will provide legal certainty to online services to enable them to trade across the EU with confidence and I commend them to the Committee.

    Question put and agreed to.

  • Committee rose.