Oral questions in the Lords today on Amazon

In the House of Lords today, Lord Leigh of Hurley (Conservative) asked the following question:

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.

Baroness Barran, Minister for Civil Society and DCMS, said the Government was committed to ensuring digital markets worked for all: businesses, consumers and society as a whole. Promoting competitive and dynamic markets was a key to maintaining a world-leading digital economy in the UK. That was why the government accepted the six strategic recommendations of the Furman Review and established the Digital Markets Taskforce to advise on the potential design and implementation of pro-competitive measures in digital platform markets.

Lord Leigh said he appreciated DST was always intended to be a stop-gap whilst the OECD came up with a more global solution, but this was brought in against a background of Amazon paying just £4.6 million corporation tax in 2017. DST did not achieve its objective of yielding more revenue from the likes of Amazon as they were simply passing this on to suppliers. He requested a meeting with the minister and interested parties to consider the matter more carefully.

Baroness Barran said the government expected DST to raise around £2 billion over the next five years, so it would go some way to addressing the issues raised. But she did commit to the meeting requested.

Lord Haskel (Labour) said many people were concerned about the abuse of market power by Amazon. A commission was needed to recognised and promote good company behaviour and standards. The minister replied that the government had established a number of groups and reviews, starting with the Furman Review that reported in March 2019 and most recently with the Digital Markets Taskforce. One of the recommendations accepted was a code of conduct just as suggested.

Lord Clement-Jones (Liberal Democrat) said the Chief Executive of the CMA had described the market position of some of the major US online platforms as unassailable. "The government is clearly going to give into the US on food standards in any trade deal. Is it going to do the same on digital sales tax and competition regulation?" Baroness Barran replied that the government remained determined to create the most innovative pro-growth economy possible. That was dependent on effective competition in all markets, but particularly in digital markets.

Lord Lucas (Conservative) was delighted that the "government recognises that the likes of Amazon and Google are not our friends; that they are entities we need to extend ourselves in controlling." Did the minister recognise how important it was that HMR should make sure that all entities paid a proper level of tax? Baroness Barran said paying tax was one side of the equation. The other side was to promote pro-competitive policies.

The Bishop of Oxford pointed out 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. The report concluded "the totality of the evidence demonstrated the pressing need for legislative action and reform." He asked if the government agreed with that conclusion and how soon it would be before we introduced our own reforms to "stop these predatory and harmful treatments of third-party sellers and consumers?" Baroness Barran said there was a great deal of overlap between Congress' report and the principles already accepted in relation to anti-trust measures and data interoperability and portability. Where the report differed was in in the promotion of structural separations within the industry.

According to Lord Stevenson of Balmacara (Labour), the government had said it could scrap the DST to facilitate a trade agreement with the US. Was that still the government position? Did the government support the challenge India and South Africa were making to the WTO moratorium on customs duties on goods transmitted electronically? The minister replied the government wanted a free trade agreement that would strengthen the relationship with our largest bilateral trade partner. Once a global digital solution was in place the DST would be removed. She promised to write to Lord Stevenson on the second part of the question.

Baroness Burt of Solihull (Liberal Democrat) called the DST a "mousse of a measure compared with the huge profits made by this American big tech monster." She called on the government to co-operate with the EU which was devising an international tax with much greater teeth. The minister said the government was working closely with the OECD and the G20.

Lord Mann (non-affiliated) said people paid for the information superhighway and the roads that Amazon and others were using to "profiteer during this crisis." People would be dismayed if Amazon were allowed drones in this country if they weren't taxed at least as much as everyone else when they took a flight. Baroness Barran agreed people wanted to see a fair system. That was why the government was pushing very hard in relation to competition legislation.

Lord Blencathra (Conservative) said Amazon was single-handedly destroying UK high streets. He called on the minister to make strong representations to the Treasury that the trivial amount of business rates paid by Amazon was a disgrace and their giant warehouses were rated like an empty farmer's barn. Their failure to pay business rates was a greater scandal than their failure to pay corporation tax. The minister said the government recognised the importance of the high streets, which was why the Treasury had announced earlier this year a fundamental review of the business rates system.

Lord Whitty referred to the report by the TUC and GMB this morning on Amazon's dire employment practises. Amazon had received a lot of government and public sector contracts, so the government should use its leverage over those contract to ensure Amazon improved those employment conditions. The minister said the government was working to protect jobs in all parts of the economy and clamp down on any known abuse.