The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)

My Lords, the Government take the security of public telecoms seriously. As noble Lords know, the Telecommunications (Security) Act 2021 received Royal Assent on 17 November 2021. The Act established powers to introduce a new telecommunications security framework and introduced new vendor security powers. It is these vendor security powers that are relevant to this statutory instrument. The Act allows the Secretary of State to issue a designation notice to a vendor whose presence in the UK networks poses national security risks, and designated vendor directions to public communications providers placing controls on their use of equipment or services by a designated vendor. The Act also gives the Secretary of State powers to impose a penalty on a public communications provider that does not comply with a designated vendor direction issued to it. That penalty can be up to 10% of a provider’s turnover. The Act states that the Secretary of State must set out rules for how they intend to calculate a provider’s turnover. That includes what relevant business the Secretary of State will take into account when calculating that turnover. The Electronic Communications (Networks and Services) (Penalties) (Rules for Calculation of Turnover) Order 2003 sets out rules for Ofcom to calculate a provider’s turnover when it contravenes conditions set under the Communications Act 2003. The statutory instrument makes changes to the 2003 order so that rules in that legislation apply when calculating turnover for the purposes of determining a penalty for enforcement of designated vendor directions. It also defines what is to be treated as a network service facility or business by reference to which the calculation of turnover is to be made. The Secretary of State could have relied on the 2003 order for the purposes of enforcement of a designated vendor direction. However, this SI removes any ambiguity and provides legal certainty and absolute clarity on the rules that apply. Turnover will be calculated in line with accounting practices and principles generally accepted in the United Kingdom and will be limited to the amount derived by that provider after the deduction of relevant taxes. In conclusion, this is a narrowly focused but important statutory instrument through which we are ensuring legal certainty and clarity. It makes clear the Secretary of State’s approach to calculating turnover, which will underpin any decision to penalise a provider in relation to the designated vendor directions. I beg to move.