1. At its meeting on 31 January 2017, the Committee considered the provisions in the Digital Economy Bill (“the Bill”)ⁱThe latest version of the Bill is available at: https://services.parliament.uk/bills/2016-17/digitaleconomy.html that confer powers to make subordinate legislation on the Scottish Ministers.

2. The Bill was introduced by the UK Government in the House of Commons on 5 July 2016, and in the House of Lords on 29 November 2016. The Committee stage in the Lords (line by line examination) is scheduled for 31 January 2017.

3. The Bill contains some delegated powers conferred on the Scottish Ministers. Nearly all of the Bill extends to Scotland (as well as to England, Wales and Northern Ireland). However, much of it deals with matters which are reserved to the UK Parliament.

4. The Bill consists of 7 parts:

   • Part 1 introduces a broadband universal service obligation, entitling consumers to a minimum speed; provides Ofcom with powers to set general conditions that require communication providers to adhere to specified processes in order to facilitate customers changing communications providers on request; and gives Ofcom powers to require communications providers to pay compensation to consumers in certain circumstances.

   • Part 2 repeals the existing Electronic Communications Code and inserts a new code; it also provides Ofcom with powers to regulate “dynamic spectrum access”.

   • Part 3 introduces age verification for online pornography with penalties for non-compliance. It enables the regulator to notify payment service providers and ancillary services of those in breach of the provisions, and provides the regulator with the power to direct internet service providers to block access by persons in the UK to prohibited material.

   • Part 4 updates intellectual property rules for digital industries.

   • Part 5 makes provision for data sharing between public bodies for some purposes, and in some 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.

   • Part 6 introduces a new statutory code for direct marketing; makes Ofcom responsible for the regulation of all BBC activities; and transfers to the BBC from the Secretary of State the ability to make concessions on TV licences relating to age.

   • Part 7 makes provision for the commencement of the Bill’s provisions. It also sets out the territorial extent and application in the UK of each of the measures.

5. The Scottish Government lodged a Legislative Consent Memorandum ("LCM")ⁱⁱThe Legislative Consent Memorandum on the Digital Economy Bill is available at: http://www.parliament.scot/parliamentarybusiness/Bills/103079.aspx on 19 January 2017.

6. The lead committee in respect of this LCM is the Rural Economy and Connectivity Committee. The draft motion, which will be lodged by the Cabinet Secretary for the Rural Economy and Connectivity is:

   "That the Parliament agrees that the relevant provisions of the Digital Economy Bill, introduced in the House of Commons on 5 July 2016, relating to the Scottish Ministers laying down fees and rules for the Lands Tribunal for Scotland in cases concerning the Electronic Communications Code and Part 5 (Digital government), so far as these matters fall within the legislative competence of the Scottish Parliament, or alter the executive competence of the Scottish Ministers, should be considered by the UK Parliament."

7. The LCM was considered by the Committee under Rule 9B.3 of the Parliament’s Standing Orders. Paragraph 6 of Rule 9B.3 provides that where the Bill that is the subject of a legislative consent memorandum contains provisions conferring on the Scottish Ministers powers to make subordinate legislation, the Delegated Powers and Law Reform Committee shall consider and may report to the lead committee on those provisions.

8. There is no delegated powers memorandum by the Scottish Government available for the Committee’s consideration, but this is normal for UK Bills. Only the powers conferred on the Scottish Ministers are considered in this report.

9. The Department for Culture, Media and Sport has published a DPMⁱThe Delegated Powers Memorandum on the Bill is available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/573829/2016-11-28_DE_Bill_-_DPRRC_memo_-_Lords.pdf for the entire Bill (the ‘UK DPM’).

10. Given the length of the UK DPM, we refer to it in this report where it has been considered to be relevant.

11. Significantly, the House of Lords Delegated Powers and Regulatory Reform Committee has on 19 January published a reportⁱⁱThe House of Lords Delegated Powers and Regulatory Reform Committee Report is available at: http://www.publications.parliament.uk/pa/ld201617/ldselect/lddelreg/95/95.pdf on the powers contained in Parts 5 to 7 of the Bill.

12. That Report is referred to below as “the HL Report”.

    Part 2 of the Bill: Digital Infrastructure

    Schedule 1, so far as inserting paragraph 106 of schedule 3A of the Communications Act 2003 – The Electronic Communications Code - Lands Tribunal for Scotland procedure rules

    • Powers conferred on: The Scottish Ministers

    • Exercised by: Rules

    • Procedure: Laid, no further procedure

    Provisions

13. Section 3(6) of the Lands Tribunal Act 1949 enables rules to be made to regulate the proceedings of the Lands Tribunal for Scotland.

    Delegated power

14. The power in paragraph 106, inserted by schedule 1 of the Bill, appears to be a clarification provision. The LCM states that the provision is for the avoidance of doubt, and in line with the usual current practice in relation to cases heard in the Tribunal.

15. Paragraph 106 provides that the power to make rules under section 3(6) of the 1949 Act, for the purposes of the Electronic Communications Code which is contained in schedule 3A of the Communications Act 2003, or regulations under it, is exercisable by the Scottish Ministers instead of by the Secretary of State (and any reference in section 3(6) to the approval of the Treasury does not apply).

16. This also clarifies that any requirement for Treasury consent to the fees chargeable in relation to Lands Tribunal proceedings which are the subject of such rules does not apply.

17. In the absence of an express provision for a procedure in the Bill, it appears that sections 27 and 30 of the Interpretation and Legislative Reform (Scotland) Act 2010 have effect, so that the rules would be laid before Parliament, but not subject to further procedure. This procedure is confirmed in Annex B to the Scottish Government’s LCM.

Part 5 of the Bill- Digital Government

Clauses 30(2) and (6) and 38(2)(a) and (c) and 38(3) – Powers to make regulations to specify persons who may disclose information in relation to public service delivery, and objectives for which information may be disclosed

• Powers conferred on: The Scottish Ministers

• Exercised by: Regulations

• Procedure: Affirmative

Provisions

18. As the HL Report points out, Part 5 of the Bill contains new provisions which would very significantly broaden the scope for the sharing of information across government departments, local authorities and other public bodies.

19. Within Part 5, clauses 30 and 38 extend to the whole of the UK, but include powers conferred on the Scottish Ministers as an “appropriate national authority”.

20. Clause 30 provides a ‘gateway’ which enables specified persons to share information with other specified persons, for the purposes of a specified objective. The clause sets out that the definition of specified persons means a person specified, or of a description specified, which will be set out in regulations made under clause 30(2), by the “appropriate national authority”.

21. In terms of clause 38(2), the appropriate national authority making Regulations defining specified persons for Scotland is the Scottish Ministers, where the specified persons are a “Scottish body”.

22. A “Scottish body” is defined by clause 38(3) as:

    • (a) a person who is part of the Scottish Administration;

    • (b) a Scottish public authority (with mixed functions or no reserved functions, within the meaning of the Scotland Act 1998); or

    • (c) a person providing services to a person within paragraph (a) or (b).

23. Under clause 37(9), any regulations made by the Scottish Ministers are subject to the affirmative procedure.

24. In deciding whether to make regulations under clause 30(2), the appropriate national authority must consider the systems and procedures the person(s) in question have in place to ensure secure handling of information shared.

25. In deciding whether to make Regulations which remove a specified person from the list of persons permitted to exercise the power, the appropriate national authority must consider whether the person in question has had regard to the code of practice on disclosure of information, to be prepared under clause 36.

26. Clause 30(6) provides that a specified objective means an objective specified in regulations made by the appropriate national authority.

27. An objective may be specified by regulations only if it complies with two conditions laid down by the clause:

    • The first condition is that the objective has as its purpose either (a) the improvement or targeting of a public service provided to individuals or households or (b) the facilitation of the provision of a benefit (whether or not financial) to individuals or households.

    • The second condition is that the objective has as its purpose the improvement of the well-being of individuals or households.

28. (The HL Report contains further explanation of the background and relevant provisions in Part 5, at paras 2 to 27).

    Comments

29. Specifically in relation to the powers applying in Scotland, the LCM states as follows in relation to the policy intention underlying the powers: “The current legal landscape of data sharing for public service delivery is complex and inconsistent across public services and organisations. This legislation will create a single gateway to enable public authorities to share personal data for tightly constrained reasons agreed by Parliament, so long as its purpose is to improve the welfare of the individual in question. Any scheme would have to be developed but in Scotland the legislation could, for example, potentially be used to:

    • allow local authorities to find out who is eligible for free school meals and to automatically apply it to eligible families;

    • enable a targeted childcare offer to 2 year olds in Scotland. Eligibility is based on receipt of UK wide benefits” (para 24).

    “Given that data sharing in this area requires co-operation from both UK and Scottish bodies, the Scottish Ministers consider that there are good reasons for granting legislative consent. For example, the Department for Work and Pensions (DWP) and the Scottish Prison Service (SPS) may need to share data. This would enable the SPS to tell DWP in advance of individuals leaving prison so that benefits can be claimed prior to release” (para 26).

    The HL Report recommendations

30. The House of Lords Delegated Powers and Regulatory Reform Committee (“the HL Committee”) has expressed significant concerns on these powers, which apply throughout the UK.

31. The HL Committee has made the recommendations which are set out within the Committee's recommendations at paragraph 39 below. The Committee has considered that those recommendations by the HL Committee are relevant to the powers conferred on the Scottish Ministers.

32. The Committee has been afforded very limited time (one meeting) to consider the powers in Part 5 of the Bill, given that the Rural Economy and Connectivity Committee are considering the LCM on 1 February, in order to meet the timescales set for consideration of the LCM.

33. The first paragraph of the LCM also comments in relation to the timing, that “due to the technical nature of the Bill, the requirement for clarity on the effect of provisions on Scotland and consequent requirement for amendments to the Bill, there has been a prolonged discussion with the UK Government which has led to delay in lodging this memorandum.”

Clauses 31(4), 38(2)(b) and (c) and 38(3)– Powers to make regulations to amend the list of permitted recipients of information from specified persons for use in connection with fuel poverty support schemes; and to amend the second condition that must be met for the disclosure of information to gas and electricity suppliers for fuel poverty purposes

• Powers conferred on: The Scottish Ministers

• Exercised by: Regulations

• Procedure: Affirmative

Provisions

34. Clause 31 also extends to the whole of the UK, but includes powers conferred on the Scottish Ministers as an “appropriate national authority”.

35. The clause allows the persons specified in regulations made under clause 30 to disclose information to licensed gas or electricity suppliers. The disclosure must be for the purpose of reducing the energy costs, or improving energy efficiency or the health or financial well-being of people living in fuel poverty. It must also be disclosed for use in connection with an energy supplier obligation scheme. (These schemes appear to be the ‘Warm Home Discount’, made under powers in the Energy Act 2010; the ‘Energy Company Obligation’ made under powers in the Gas Act 1986 and Electricity Act 1989; and grants made by the Scottish and Welsh Governments).

36. Clause 31(4)(a) provides that the “appropriate national authority” can make regulations amending the list of permitted recipients of the information. Clause 31(4)(b) provides that the “appropriate national authority” can make regulations amending the list of support schemes for which the information may be disclosed. The purpose of the disclosure must always be to assist people living in fuel poverty.

37. Under clause 38(2), the Scottish Ministers are the “appropriate national authority”:

    • where the regulations would add or remove a person or a description of persons who is a “Scottish body”. (The same definition of “Scottish body” applies, as outlined above in relation to clause 30.)

    • Where the regulations would have the effect only of enabling a Scottish body to disclose information for the purposes of an objective which does not relate to a matter reserved to Westminster.

    Comments

38. It appears that the Scottish Government’s LCM does not specifically comment on the suitability of these delegated powers, so far as conferred on the Scottish Ministers.

39. The HL Report has also expressed concerns as to the breadth of these powers (which apply throughout the U.K.), by making recommendations which are set out within the Committee's recommendations in the following paragraph. The Committee considers that those recommendations are relevant to the powers which are conferred on the Scottish Ministers.

Clause 41(4) and 48(2)– Power to make regulations specifying persons who may disclose information in relation to debt owed to the public sector

• Powers conferred on: The Scottish Ministers

• Exercised by: Regulations

• Procedure: Affirmative

Provisions

40. Clause 41 also extends to the whole of the UK, but includes powers conferred on the Scottish Ministers as an “appropriate national authority”.

41. Clause 41 provides a further data “gateway” that enables “specified persons” to share information with other “specified persons”, for the purposes of taking action in connection with debt owed to a “specified person” or the Crown.

42. A “specified person” must be a public authority or a person providing services to a public authority. The power to make regulations laying down “specified persons” is conferred on the “appropriate national authority” by clause 41(4).

43. In terms of clause 48(2), the appropriate national authority making regulations to define “specified persons” is the Scottish Ministers, where the specified persons are a “Scottish body”. “Scottish body” is defined as outlined above in connection with the powers in clause 30 and 38.

44. Where a “specified person” is a person providing services to a public authority, its ability to disclose information is limited to the functions it exercises for that public authority.

45. In deciding whether to make regulations under clause 41(4), the appropriate national authority must consider the systems and procedures the person(s) in question have in place to ensure secure handling of information shared. In deciding whether to make regulations which remove a specified person from the list of persons permitted to exercise the power, the appropriate national authority must consider whether the person in question has had regard to the code of practice to be issued under clause 45.

    Comments

46. The Committee has also considered the relevant recommendations in the HL Report. On clause 41, the HL Report makes these observations on the powers, before making recommendations:

    “The justification for the clause 41(4) power given in the memorandum is very similar to that provided for clause 30(2). It emphasises that the list of specified persons “will need to be regularly updated, for example to reflect the transfer of functions and responsibilities between public authorities.

    “We have found it difficult to assess the appropriateness of the delegated powers contained in clause 41 and other provisions of Chapter 3 of Part 5. The Explanatory Notes and delegated powers memorandum give little or no detail as to the type of information which could be disclosed under the clause 41 gateway, and as to how that information can or should be used.

    “We assume that the Government plan to leave all this important detail to the code of practice issued under clause 45, which is not subject to any Parliamentary scrutiny. However, we observe that the gateway in clause 41(1) is drafted in very wide terms. It is not just about one authority obtaining information from another authority about specific individuals who owe money to the first authority; it would also appear to allow for the public authorities specified in the regulations, and their service providers, to engage in the sharing of bulk data, for example income tax records about persons living in a particular area, to help the recipient authorities identify debtors.” (Paragraphs 56-58 of Report).

47. The HL Report makes some further recommendations which are set out within the Committee's recommendations on this power in the following paragraph. The Committee considers that those recommendations of the HL Committee are relevant to the powers conferred on the Scottish Ministers.

Clause 49(5) and 56(2) – Power to make regulations specifying persons who may disclose information in relation to tackling fraud against the public sector

• Powers conferred on: The Scottish Ministers

• Exercised by: Regulations

• Procedure: Affirmative

Provisions

48. Clause 49 of the Bill provides a further data sharing “gateway”, which enables “specified persons” to share information with other “specified persons” for the purposes of taking action in connection with fraud against a public authority.

49. The specified persons permitted to make use of the power provided in the clause will be set out in regulations. A specified person must be a public authority or a person providing services to a public authority. The power to make regulations laying down specified persons is conferred on the “appropriate national authority” by clause 49(5).

50. By virtue of clause 56(2), the “appropriate national authority” making regulations defining specified persons is the Scottish Ministers, where the specified persons are a “Scottish body”. “Scottish body” is again defined as outlined above in relation to clauses 30 and 38 of the Bill.

51. Where a specified person is a person providing services to a public authority, its ability to disclose information is limited to the functions it exercises for that public authority. In deciding whether to make regulations, the appropriate national authority must consider the systems and procedures the person(s) in question have in place to ensure secure handling of information shared.

52. In deciding whether to make regulations which remove a specified person from the list of persons permitted to exercise the power, the appropriate national authority must consider whether the person in question has had regard to the code of practice to be prepared under clause 53.

    Comments

53. In relation to these powers, the Committee has again considered the relevant recommendations in the HL Report.

54. At paragraphs 73 to 76 of the Report, the HL Committee observes that any “public authority” again is defined in very broad terms and can be specified in the regulations, as can any person providing services to a public authority. The justification for clause 49(5) given in the memorandum is very similar to that provided for clauses 30(2) and 41(4).

55. The HL Committee found it difficult to assess the appropriateness of these powers. “In the case of this gateway too, it appears that the Government intend that all detail about what types of information should be disclosed, and in what circumstances, and how it should be used, is to be in the code of practice to be issued by Ministers under clause 53 – which is not subject to any Parliamentary scrutiny.”

    “We again observe that the gateway in clause 49(1) is drafted in very wide terms; and that it would allow bulk data sharing and matching to enable recipients of the information to detect persons who may be committing fraud against them.”

56. Annex B to the LCM outlines three further delegated powers provisions which are not powers to make subordinate legislation that are conferred on the Scottish Ministers:

    (1) Clause 67 of the Bill inserts section 45A into the Statistics and Registration Act 2007. This makes provision on public authorities disclosing information to the UK Statistics Authority (UKSA). In consequence, clause 67(3)(b) repeals a power contained in section 48 of the Statistics and Registration Act 2007, to make regulations for the purpose of authorising a Scottish public authority, so far as exercising functions which relate to matters which are not reserved, to disclose information to the UKSA.

    (2) Clauses 46 and 54 of the Bill require UK Ministers to review after 3 years, the operation of Chapter 3 of Part 5 (on disclosure of information to reduce debt owed to the public sector) and Chapter 4 of Part 5 (on disclosure of information to combat fraud against the public sector). The provisions also enable UK Ministers to make regulations which amend or repeal those two chapters.

    Clauses 46(6) and 54(6) provide that the consent of the Scottish Ministers must be obtained before the relevant UK Minister may make any such regulations which affect devolved matters, including the powers of the Scottish Ministers.

    (3) Paragraph 95 of Schedule 1 enables UK Ministers to make regulations to transfer functions under the Electronic Communications Code to the Lands Tribunal for Scotland. Under paragraph 95(5), the Scottish Ministers must be consulted before any such regulations in relation to the Lands Tribunal for Scotland are made.