Motion made, and Question proposed, That this House do now adjourn.—[Steve McCabe.]
I am grateful to have the opportunity to hold a short debate on the subject of occasional sales. At the beginning of the Session, I was fortunate enough to be drawn in the private Members’ ballot and although, like all who are successful in the ballot, I received a large number of approaches suggesting many worthy measures, I agreed to introduce a Bill to strengthen the law to help trading standards officers and the police tackle the problem of pirate and counterfeit goods being sold at occasional sales, which in the majority of cases are perhaps better described as car boot sales. Unfortunately, because I was relatively low in the ballot—I was 14th—and because of the controversial nature of the some of the Bills that precede mine, I have not had an opportunity to debate the Bill, and I accept that it is unlikely that I shall be able to do so. I should therefore like to use this opportunity to set out the case for such a measure and, more importantly, to obtain a response on behalf of the Government from the Minister for Trade.
I was keen to introduce the Bill for two reasons. First, as Chairman of the Select Committee on Culture, Media and Sport, I am extremely conscious of the importance of the creative industries to the United Kingdom. They contribute an estimated 8 per cent. of our national income, but because they depend on the protection of intellectual property, rather than on a physical product, they are particularly susceptible to piracy and counterfeiting. The protection of intellectual property is the biggest and most important challenge that they face, and I welcome the fact that that has been recognised by the Government through the creation of the creative industries forum and the setting-up of the Gowers review of copyright.
Secondly, I represent an Essex constituency, and I suspect that I do not have to tell you, Mr. Deputy Speaker, that Essex hosts a large number of car boot sales. I do not wish to criticise or impede in any way the operation of car boot sales which, as a Conservative, I regard as an extremely good demonstration of the free market in operation, because they bring together buyers and sellers to mutual advantage. They are a source of pleasure and enjoyment, too, for many of my constituents, for whom a visit to a car boot sale is an essential part of the weekend. However, they are subject to abuse by a small number of operators, who take advantage of them to engage in illegal sales of counterfeit and pirate goods, including branded products such as watches, jewellery, handbags, trainers and polo shirts. The most common products on sale are CDs and DVDs, which can be produced extremely cheaply and are easy to transport and, indeed, to hide.
We are not talking about a small number of dodgy dealers who flog a few DVDs from the back of a van but about a vast industry run by international organised criminal gangs whose profits are huge and whose activities threaten the survival of our creative industries. It is estimated that the total cost to industry is more than £11 billion a year, and there is an additional cost to the Government of about £2 billion in lost VAT. Last year, an estimated 77 million pirate CDs were sold in the UK, representing a criminal gain at street prices of £278 million.
The trail often begins on the other side of the world, in countries such as Russia, Pakistan and particularly China. I recently visited Beijing with the Select Committee to discuss the problem of piracy. A report in the People’s Daily three years ago suggested that China’s legal production lines could produce 600 million discs, but there was a total of 5 billion disc sales in the country. The China Audio and Video Association recognises the problem of piracy in Hong Kong and Macau, and it is doing everything that it can to stop imports from those countries into China. Disappointingly, however, it does not appear to recognise that there is huge pirate DVD manufacturing capability in mainland China. Many of those DVDs are sold in China, but many more flood into western nations, where they are distributed by organised gangs. Evidence that the Triads, the Russian mafia and the IRA are all involved in the trade was highlighted in a recent threat assessment by the National Criminal Intelligence Service and the Northern Ireland Organised Crime Task Force.
Although the trail may begin a long way away, it ends with pirate DVDs and CDs being sold in pubs, on street corners and, in particular, at car boot sales. It has been estimated that more than a quarter of pirate goods are sold through car boot sales. I have first-hand experience of the problem as a result of having visited several car boat sales and bank holiday markets in and around my constituency, and I want to thank Essex trading standards and, in particular, its operations manager, Mr. Trevor Simpson, for their help in researching it.
Last year, I accompanied Mr. Simpson’s officers in an undercover visit to a car boot sale in Boreham, where we identified two stalls selling pirate CDs and DVDs. Among the DVDs on sale were films such as “War of the Worlds” and “Batman Begins”, which had just gone on general release in cinemas in the high street and which were certainly not legally available on DVD. Beyond that, there were also films which had not yet been released in the UK but which were somehow on sale as pirate copies. I was later told by the cinema industry that there were an estimated 2.25 million illegal copies of “War of the Worlds” circulating in the UK within a few days of the film going on general release.
A few weeks after my visit in September last year, I returned to the Boreham car boot sale with trading standards officers and the police in what they kindly labelled Operation Parliament. Although we expected to find two stalls selling illegal goods, we found four, and, as a result, around 750 DVDs were seized along with more than 200 CDs, 150 watches, 80 handbags and 33 pairs of trainers. The most worrying point was that as the officers were putting the goods into bags, members of the public criticised them and said that they should leave the sellers alone because they were not doing any harm. That illustrates the huge challenge in educating the public on why piracy is damaging and why they should not buy counterfeit goods.
Although trading standards officers are doing their best to tackle the problem, the powers available to them are limited, which is why I agreed to introduce the Occasional Sales Bill to strengthen their ability to counter that menace. The Bill is not intended to curtail legitimate sales, which comprise the vast majority of activity at car boot sales. However, there are examples of irresponsible organisers, and there is anecdotal evidence that some organisers are taking substantial payments from those selling illegal goods. In one case, an organiser even sounded a loud horn that echoed around the entirety of the sale at the first sight of the police and trading standards.
The Bill is designed to tackle rogue organisers. It is based on existing legislation that covers Kent and the Medway towns, and it contains three simple measures. First, it places a duty on organisers of occasional sales to give notice of an intention to hold a sale to trading standards at least 21 days ahead of the sale taking place, which will give the authorities a chance to reach a considered view on whether they want to attend and to plan accordingly. Secondly, organisers will be required to keep a record of the names and addresses of sellers, together with a general description of the goods and their car registration number, which will be available to the authorities on demand. Thirdly, where there is repeated evidence of illegal sales taking place, the organiser can be required to take action to prevent them and can be held liable if they fail to do so.
As I have said, those provisions are already in place in Kent, and they have proved very effective in reducing the amount of pirate goods sold at car boot sales. Indeed, one of the consequences of that legislation is that it has transferred the problem to the other side of the Thames to my county, Essex. My Bill is supported by organisations such as the British Video Association, the British Phonographic Institute, the British brands group and many other trade bodies. It is also backed by Front Benchers of both Opposition parties and by Government Members, such as the hon. Members for Rhondda (Chris Bryant) and for Rossendale and Darwen (Janet Anderson).
I recognise that it is unlikely that the Bill will become law. However, I was encouraged by the answer that I obtained from the Minister last week, in which he said that the Government is seeking further evidence from the police, local authorities and others on whether the regulatory aspects of the Kent legislation have a wider application. I would be grateful if the Minister were to say whether the Government are willing to consider introducing legislation in that area.
I also want to draw the Minister’s attention to one very promising development. In April, I participated in the launch by Essex trading standards of a voluntary code of practice for markets and boot fairs. It requires organisers to agree to a number of measures, including providing trading standards with details of events to be held and the contact with whom to liaise. They must also endeavour to prevent the sale of any illegal goods by excluding anybody suspected of doing so and reporting them to the authorities, display notices warning the public against pirate goods, and provide a guide to all sellers who are attending.
This afternoon, I spoke to Trevor Simpson at Essex trading standards, and he told me that so far 26 out of 31 organisers in Essex have signed the code of practice and only one has refused to do so. As a result, there has been a noticeable decline in illegal sales. Organisers are co-operating with recent examples in Clacton, Weeley and North Weald, where market organisers have banned some sellers whom they know to have been selling pirate goods. There is no doubt that most organisers are responsible and wish to work with the authorities. Indeed, one recently pointed out the difficulties that he had in spotting fake goods and asked for the brand owners to help him to do so. I hope that even if there is not legislative time to bring in the measures in my Bill, the Government will encourage all local authorities to establish codes of practice such as the one in Essex and to persuade all organisers to sign up to them.
There are new challenges facing the creative industries, with the explosion of high-tech piracy through illegal file sharing and home burning of CDs, to give two examples. However, physical piracy remains a serious threat to these industries, which are increasingly important to the economic future of the UK. I hope that the Minister will recognise that and set out the Government’s plans to tackle it.
I thank the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) for introducing this debate. In his role as Chairman of the Select Committee on Culture, Media and Sport and vice-chairman of the all-party group on intellectual property, he has done valuable work in raising awareness of intellectual property issues, particularly intellectual property crime. Everything that he said was not only well researched but well founded. I hope that during this short debate I am able to reassure him that we are travelling in the same direction. We understand the effects on one of our major and growing industries in the global economy and the importance of our working to provide the appropriate tools to deal with organised crime at whatever level it seeks to intervene in the marketplace.
Like the hon. Gentleman, I pay tribute to Essex trading standards for introducing a voluntary code of practice in April. I am advised that it is working well at the moment. We will monitor its effectiveness and encourage other trading standards officers to use such codes. I hope that this debate helps to raise awareness and understanding and gives the subject wider coverage.
Today’s world is moving from an industrial age to a new age where creativity and innovation are the primary fuel of our economy. As a result, we are increasingly dependent on the development and distribution of creative, technical and intellectual products. The UK is undeniably a world leader in innovation, and it is clear that intellectual property is propelling our economy as never before. The intellectual property system must remain relevant and address the challenges of the knowledge-based economy of the 21st century. That is why my right hon. Friend the Chancellor of the Exchequer announced in December that the Government had commissioned Andrew Gowers to undertake an independent review of the intellectual property framework. The Gowers review is due to report later this year. I will ensure that the hon. Gentleman receives a copy.
Our creative industries, which include publishing, software, design, advertising, electronic games and fashion, as well as music, films, television and radio and the performing arts, accounted for 8 per cent. of gross value added in 2003. The creative industries grew by an average of 6 per cent. per annum between 1997 and 2003. In the summer quarter of 2004, creative employment totalled 1.8 million jobs. Creative employment is a major element in our economy. The recent BBC announcement of the proposed move of some of their production departments to Salford, in my own region of north-west England, is a powerful way of stimulating the national and regional media industry.
Innovation is vital to the economy and our future. We therefore need to ensure the existence of a safe and robust environment, which not only helps our creators to thrive, but protects their inventiveness. A key part of that environment is a strong and fair intellectual property system with effective enforcement provisions.
Major progress is often accompanied by major challenges and, like any valuable product, intellectual property has become much sought after by those who are less honest. During recent years, the scope and scale of intellectual property crime, counterfeiting and piracy has grown at rates that were previously unknown. For example, it is widely estimated that 7 per cent. of all world trade is now in counterfeit goods—a total annual value of more than £250 billion. There is no doubt that that phenomenal growth is due to several key factors. Ironically, globalisation and new opportunities in technology have contributed strongly. However, a lack of general understanding and stretched enforcement resources have also played a part.
While crimes such as drug dealing and trafficking are viewed with great concern, the perception of the seriousness of intellectual property crime has been much lower. The hon. Gentleman said that when he described the public reaction to the crime that he witnessed. United Kingdom enforcers have been unfamiliar with the laws and, consequently, enforcement priorities have been absorbed elsewhere. As a result, that “high profit, low risk” factor has meant that intellectual property crime has become an attractive criminal enterprise. That is an important point. It is an enterprise—a business—with a board of managers and driven on the ground by thousand of key workers, from their perspective. We must deal with it effectively.
Our trading standards authorities have traditionally been at the front line of intellectual property crime enforcement in the UK. Working in the local authority system, trading standards officers play a key strategic role in providing UK local government services. However, enforcement against counterfeiting and piracy is only part of a trading standards officer’s work. Fair trading activities involving labelling food, licensing, weights and measures and safety are only a few of the other activities that are carried out regularly.
Depending on the authority, between 60 and 120 pieces of primary and secondary legislation are overseen by trading standards departments. It is widely recognised that the UK has one of the most robust intellectual property legislative structures in the world. However, the Government are acutely aware that legislation needs to change with shifting demands. That is why we have introduced changes to our intellectual property legislation to combat the growing threat of intellectual property crime.
Furthermore, the Government have already supported a number of legislative changes in recent years, such as stronger penalties for copyright crime in the Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002. We updated copyright law to reflect the digital age by introducing the Copyright and Related Rights Regulations 2003, which implement the European Community copyright directive. Those regulations introduced new offences relevant to the most damaging online distribution of copyright material. In making those changes, we have sought both to promote better public protection and improve enforcement against counterfeiting and piracy. We are well aware of the threat that intellectual property crime poses and that it is a worldwide problem, as the hon. Gentleman said. In response, the Government have taken action in a number of key areas, which I shall set out.
First, in July 2004, with the full support of the Prime Minister, the Department of Trade and Industry, in partnership with the Department for Culture, Media and Sport, established the creative industries forum on intellectual property. Several work streams have emerged from that group. Raising consumer awareness and enforcement are two on-going issues. Secondly, we have implemented the Patent Office’s national intellectual property crime strategy. A multi-agency intellectual property crime group was set up involving the Government, the police, trading standards, Her Majesty’s Revenue and Customs, the National Criminal Intelligence Service, which has now been subsumed by the Serious Organised Crime Agency—that came into being on 1 April this year—and key industry sectors.
The objective of the intellectual property crime group was to deliver better targeted enforcement action. Our achievements so far include: the creation of a new creative industries focus group under the intellectual property crime group to ensure that concerns can be fed directly into the intellectual property crime strategy; a new intellectual property crime intelligence database; better training for enforcers—trading standards officers already receive practical training with the help and support of the Patent Office; greater collaboration between national and international Government agencies; annually updated assessments of intellectual property crime; and progress reports overseen by Ministers, which will ensure accountability and continuing delivery on the matter.
Thirdly, I am pleased to say that, in June last year, we published our consumer strategy, “A Fair Deal for All”. One of our commitments is that, from 1 April this year, all asset recovery agencies including the trading standards service in England and Wales will be able to get back 50 per cent. of what they recover under the Proceeds of Crime Act 2002. This will take time to dig in, but it represents a major advance not only in relation to the proceeds of crime, but to the damage that it will do to the heart of the capacity of criminal businesses to continue trading. It will also allow assets rightfully to be returned to the community and provide support for the activities of the enforcement agencies. The assets recovered could include monies related to the confiscation of pirated goods, and the scheme will be administered by the Home Office.
In addition, we highlighted the importance of intellectual property as part of our EU presidency programme by supporting the creative economy conference in London in October 2005. As part of our presidency of the G8, we agreed a specific tasking statement with our G8 colleagues on action to reduce intellectual property crime by improving enforcement. That statement is available from the Foreign and Commonwealth Office website, but I will send a copy to the hon. Gentleman. I would welcome his comments on what more we could do in this regard.
Tackling counterfeiting and piracy is vital and I agree that an essential part of the solution will involve building respect for creators’ rights. Failure to respect creators’ rights is ultimately self-defeating for consumers. The Government recognise that there have been inconsistencies in the response to intellectual property crime across the country in the past. That was often due to competing priorities and the lack of a cohesive approach between all the enforcement agencies.
The national intellectual property crime strategy seeks to provide a co-ordinated approach to combating counterfeiting and piracy. We are piloting 11 regional teams whose priority will be to tackle the most urgent issues for their locality. They will be cracking down on the real criminals, and £3 million, which will be available over the next two years, will get the teams up and running and provide for the network of regional intelligence teams essential for the focus on intelligence-led enforcement. If the hon. Gentleman or his Committee wish to meet members of those teams, once they are operational, I will arrange that for him.
The aim is to encourage a more joined-up enforcement network and to spread best practice among the trading standards services around the country. The Government are committed to improving Britain’s consumer regime. To do that, we need to foster an environment that empowers and protects consumers while supporting open, competitive and innovative markets. I think that that is how the hon. Gentleman described car boot fairs. He might like to know that my wife goes to boot fairs regularly. She raises money for my election campaigns through them. I can assure him, however, that it is all “legit”.
We are also committed to reducing crime. In short, we want to remove the market for counterfeit and pirated goods and to make it harder, riskier and less appealing for thieves to steal other people’s creativity and deprive them of their due livelihoods. There is undoubtedly a need for better co-ordination and shared intelligence between local authorities, rights owners, enforcement agencies and the Government to help to fight the growing threat of counterfeiting and piracy. However, we feel that that can best be achieved through a structured intelligence-led approach and a co-ordinated response from within the national intellectual property crime group. Again, if the hon. Gentleman’s Committee wishes to discuss this matter with the Home Office or with the new criminal intelligence agency, such a request would be met with an enthusiastic response.
The first enforcement operation carried out by the national intellectual property crime group occurred over four weekends last December. Wembley market was raided and more than £1.5 million worth of illicit goods were seized. However, that was not the only significant outcome of the operation. Further intelligence about the method of supply of counterfeit goods was uncovered from seized trader documents. Other intelligence was also uncovered and passed on to the relevant Government agencies. As a result of this operation, it is estimated that 34 people will be prosecuted, and at least two cases will be the subject of Proceeds of Crime Act 2002 investigations. There was support for this operation from the legitimate stall holders at Wembley market, who had been struggling to compete with the illegal traders. The operation demonstrates—as have the operations in Essex that the hon. Gentleman mentioned—that shared intelligence and co-operation between enforcers gives excellent results using the existing legislation.
In conclusion, proposals to improve and provide consistent and workable enforcement regulations across the country are always welcome. However, all new recommendations on legislative change must be carefully considered, and not all of them can be introduced quickly. The hon. Gentleman mentioned the Kent County Council Act 2001 and the Medway Council Act 2001, and the Home Office consultation. A report was laid before the House in December 2004. The Under-Secretary of State for the Home Department, my hon. Friend the Member for Bradford, South (Mr. Sutcliffe) has confirmed, in a written answer to the hon. Gentleman on 19 June, that he will consult on this issue. I will write to my ministerial colleague at the Home Office and ask him to write to the hon. Gentleman about when the consultation will take place and to ensure his involvement in it.
I say that for two reasons. First, I think it pretty unlikely that the hon. Gentleman will be able to get his occasional sales Bill up and running and secure a proper debate on it. Secondly, the issues that he has raised are serious, and we must grapple with them. I hope that the consultation will give the hon. Gentleman an opportunity to put his case.
As for whether I, as consumer Minister, will consider further legislation, I shall view the matter in the light of the result of my hon. Friend’s consultation. I shall be happy to meet the hon. Gentleman at a later date if that will help. We have a common cause. We may sit in different parts of the House, but one thing is certain: we believe in legitimate business and the growth of the United Kingdom’s creative industry. We are also anti-criminal and anti-crime, and opposed to the ripping off of our intellectual property. We are opposed to the ripping off of our constituents by organised crime.
I hope that my response has been sufficient to give my hon. Friend an indication of my willingness to work with him to produce some effective results. I thank him again for raising the issue.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes to Seven o’clock.