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Volume 806: debated on Monday 12 October 2020


Asked by

To ask Her Majesty’s Government what steps they are planning to take (1) to protect third party sellers from the dominance of Amazon, and (2) to ensure that Amazon does not benefit from passing on the costs of the Digital Services Tax to sellers.

My Lords, the Government are committed to ensuring that digital markets work for all—businesses, consumers and society as a whole. Promoting dynamic and competitive digital markets will be key to maintaining a world-leading digital economy in the UK. That is why we accepted the six strategic recommendations of the Furman review and established the digital markets task force to advise on the potential design and implementation of pro-competitive measures in digital platform markets.

My Lords, I appreciate that the DST was always intended as a stopgap while the OECD comes up with a more global solution, possibly imminently. But it was brought in with the background of Amazon paying just £4.6 million in corporation tax in 2017. The DST does not achieve its objective of yielding more revenue from the likes of Amazon, as it is simply passed on to its suppliers in the marketplace, which have to absorb this tax in their margin. Would the Minister be prepared to set up a meeting with me, some interested parties and HM Treasury to consider this much more carefully?

The Government expect the digital services tax to raise about £2 billion over the next five years, which will go some way to addressing the issues that my noble friend raises, but I am delighted to commit to meeting him and other interested parties.

My Lords, in spite of what the Minister said, many are concerned about the abuse of market power by Amazon. If the Prime Minister wants to “build back better”, we need a commission that recognises and promotes good company behaviour and standards, in the same way that the Low Pay Commission does for pay. A good place to start would be the increasingly popular environmental, social and governance investing and reporting framework. Will the Government set up such an organisation?

The noble Lord raises an important point, but I remind him that the Government have established a number of groups and reviews, starting with the Furman review, which reported in March 2019, and most recently the digital markets task force. One of the recommendations we have accepted is the development of a code of conduct, just as the noble Lord suggests.

My Lords, the chief executive of the CMA described the market position of some of the major US online platforms as “unassailable”. The Government are clearly going to give in to the US on food standards in any trade deal; will they do the same with the digital sales tax and competition regulation?

The Government remain determined to create the most innovative pro-growth economy that we can. That is dependent on effective competitions in all markets, particularly digital markets, so that is where our focus remains.

My Lords, I am delighted to hear the replies of my noble friend, and that the Government now recognise that the likes of Amazon and Google are not our friends. They are entities that we need to extend ourselves to control to make sure that we create, in this country, an environment that is supportive for our own businesses. In that context, does she recognise how important it is for HMRC to ensure that all entities pay a proper level of tax? Failure to do so, as has been the case with VAT for many years, leads to great suffering by UK businesses.

I know that my colleagues in HMRC spend every day trying to make sure that businesses pay a proper level of tax, but I hope that my noble friend agrees that that is one side of the equation. The other is to promote pro-competitive policies, on which we are also working hard.

My Lords, the Minister will be aware that last week the United States Congress published a 449-page report, after reviewing millions of documents and taking testimony from hundreds of witnesses, including Amazon’s CEO. The report concluded that

“the totality of the evidence produced during this investigation demonstrates the pressing need for legislative action and reform.”

Does she agree with or dispute the findings of the report? How soon will the Government introduce their own draft reforms to stop these predatory and harmful treatments of third-party sellers and consumers?

I cannot claim to have read every page of the US report, but I have looked at the headlines. There is a great deal of overlap with the principles that we have already accepted, both on anti-trust measures and on data interoperability and portability. Where the report differs, if I have understood correctly, is in its promotion of structural separations within the industry.

My Lords, the Government recently said that they could scrap the digital services tax to facilitate a trade agreement with the United States. Is that still our negotiating position? Can the Minister tell us whether the Government support the challenge that India and South Africa are making to the WTO moratorium on customs duties on goods transmitted electronically?

We are keen to have a free trade agreement with the US that strengthens our economic relationship with our largest bilateral trading partner. Once a global digital solution is in place, we will remove the DST. I will write to the noble Lord on the second part of his question.

My Lords, the digital services tax is a mouse of a measure compared with the huge profits made by this American big tech monster. Should the Government not co-operate very closely with the European Union, which is devising an international tax with much greater teeth, so that big tech companies pay their fair share of tax?

The Government are working closely at an international level with the OECD and the G20. We were pleased to see the publication of the OECD inclusive framework on the tax challenges of digitalisation of the economy, which has come out today. Good progress is being made on those negotiations, and once we reach common ground we can remove the DST.

The people pay for the information superhighway and the roads that Amazon and others are using to profiteer during this crisis. Does the Minister agree that people would be dismayed should Amazon be allowed drones in this country if it was not taxed at least as much as each of us is whenever we take a flight?

The noble Lord is right that the people of this country want a fair system. That is why we are pushing very hard on competition legislation, but this is also where we have great evidence of success in our technology industry, with more tech unicorns in this country than any other European nation.

My Lords, I confess that I buy things from Amazon, but I hate doing so because it is singlehandedly destroying the United Kingdom high street. Will my noble friend the Minister make strong representations to the Treasury that the trivial amount of business rates paid by Amazon is an absolute disgrace? Its giant warehouses are rated like an empty farmer’s barn, rather than the ruthless mega retail operations they are. Its failure to pay business rates is a greater scandal than its failure to pay corporation tax.

The Government and the Treasury absolutely recognise the importance of our high streets. That is why the Treasury announced a fundamental review of the business rates system earlier this year.

My Lords, has the Minister read the report by the TUC and the GMB this morning on Amazon’s dire employment practices? In this Covid period, Amazon has received a lot of government and public sector contracts. Why are the Government not using their leverage over those contracts to ensure that Amazon improves its employment conditions?

We are working across the piece to protect jobs in all parts of the economy and to clamp down on any abuses that we are aware of.

Sitting suspended.