Baroness Humphreys (LD)

My Lords, we on these Benches support the draft regulations. They represent a crucial step in implementing the Online Safety Act, aiming to foster a safer online environment. The principle that the financial burden of regulating the vast and complex online landscape should fall on those service providers that generate substantial qualifying worldwide revenues, rather than the UK taxpayer, is one that we wholeheartedly endorse. In our view, Ofcom has articulated a robust and pragmatic rationale for basing fees and penalties on global rather than UK-only revenues. This approach, defining qualifying worldwide revenue as the total revenue referable to the regulated parts of a service, is designed to ensure that major multinational operators are appropriately deterred from non-compliance and contribute their fair share to user safety. We believe that such a model strengthens enforcement and promotes regulatory fairness. However, we also acknowledge the concerns raised by industry stakeholders and examined by the Secondary Legislation Scrutiny Committee. Issues such as the aggregation of revenues across complex business groups, while providing consistency, may create anomalies for certain providers. Questions persist regarding the calculation and apportionment of revenue, especially when services are bundled or operated internationally, and how Ofcom will assess the provider’s just and reasonable approach to apportionment. Furthermore, the practical impact on smaller providers if fee thresholds are set too low is a significant consideration, despite the current expectation that small and micro-businesses, charities and public sector bodies are unlikely to be affected. I therefore seek assurance from the Minister regarding the practical impact of these regulations. Specifically, is he satisfied that, when setting the crucial fee thresholds for providers required to notify their qualifying worldwide revenue, the regime will remain proportionate and workable so the burden falls primarily on major enterprises and not disproportionately on smaller providers? Furthermore, is he satisfied by Ofcom’s core rationale for adopting a worldwide revenue approach as vital for effective deterrence and regulatory fairness? I also urge the Government to commit to ongoing review of this framework, particularly given Ofcom’s intention to provide further guidance on just and reasonable apportionment. We support these regulations but expect further scrutiny, coupled with the Government’s commitment to address these assurances.