Lord Clement-Jones (LD)

My Lords, I thank the Minister for her introduction to this draft statutory instrument; it was brief and to the point. These penalties will be able to reach 10% of turnover or £100,000 per day for continuing breaches, so getting the calculations right is crucial. However, I have some concerns about the SI, the first of which is about timing. I do not understand why we are looking at a three-year gap between the enabling powers and the calculation rules. The Telecommunications (Security) Act 2021, which I worked on, was presented to this House as urgent legislation to protect critical national infrastructure, yet here we are, in 2025, only now establishing how to calculate penalties for breaches in the way set out in this SI. During this period, we have had enforcement powers without the ability to properly determine penalties. As I understand it, tier 1 providers had to comply by March 2024, yet the penalty calculation mechanism will not be in place until this year—no doubt in a few weeks’ time. Secondly, there is the absence of consultation. The Explanatory Memorandum cites the reason as the SI’s “technical nature”, but these penalties—I mentioned their size—could have major financial implications for providers. The telecoms industry has complex business structures and revenue streams. Technical expertise from the industry could have helped to ensure that these calculations are practical and comprehensive. The technical justification seems remarkably weak, given the impact these rules could have. For example, the current definition of “relevant business�� for these calculations focuses on traditional network and service provision, but modern telecoms companies often have diverse revenue streams. There is no clear provision for new business models or technologies. How will we handle integrated service providers? What about international revenues? The treatment of associated services needs clarification. Thirdly, the implementation sequence is an issue. We are being asked to approve penalty calculations before seeing the enforcement guidelines. There is no impact assessment, so we cannot evaluate potential consequences. I understand that the post-implementation review is not scheduled until 2026, and there is no clear mechanism for adjusting the framework if problems emerge. The interaction with the existing penalty regime needs clarification. There are also technical concerns that need some attention. The switch from “notified provider” to “person” in the 2003 order, as a result of this SI, needs rather more explanation. The calculation method for continuing breaches is not fully detailed, there is no specific provision for group companies or complex corporate structures and the treatment of joint ventures and partnerships remains unclear. Finally, I hope that, in broad terms, the Minister can give us an update on progress on the removal of equipment covered by the Telecommunications (Security) Act 2021. That was mandated by the Act; I know it is under way but it is not yet complete. This is about not merely technical calculations but creating an effective deterrent to the telecoms industry, while ensuring fair and practical enforcement of important security measures. Getting these rules right is essential for both national security and our telecoms sector. I look forward to the Minister’s response on these points.