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Lords Chamber

Volume 716: debated on Tuesday 26 January 2010

House of Lords

Tuesday, 26 January 2010.

Prayers—read by the Lord Bishop of Liverpool.

Banks

Question

Asked By

To ask Her Majesty’s Government what further measures they propose to take to restore confidence in British-based banks.

The Government’s interventions to stabilise the financial system have been decisive in restoring confidence in the banking sector. To underpin this improvement in confidence, regulatory reform is also necessary. The Government, in conjunction with the FSA and the Bank of England, have already made progress in improving financial institutions’ corporate governance, remuneration practices and risk management, and are working with international partners significantly to strengthen capital and liquidity requirements.

My Lords, I thank the noble Lord for his interesting Answer. I greatly appreciate the time that he has spent in recent days on this very important issue, but—there always has to be a “but”—does he agree that there is a strong sense of frustration that, after 18 months of talk, nothing has really changed? Goldman Sachs is back making huge profits and is having difficulty restraining its bonuses from being too large. I have two quick points on this very difficult issue. Will the noble Lord follow up the proposition that there must be a fundamental divorce between retail deposit banking and what is politely called investment banking, but in fact has often simply meant taking large and obscure risks in derivatives whose profit was based on the growth in house prices? Secondly, will the Minister persuade his colleagues to declare, as President Obama has done, that never again will the British taxpayer be held to ransom by a bank that is too big to fail?

I thank the noble Lord very much. The answer to his first question is no, and to the second yes.

Does my noble friend agree that what would really restore confidence among the public at large, not least those who have lost their jobs as a result of the bankers’ ramp, would be to make positive use of taxpayers’ money to create jobs and to ensure that the investment banks, from Goldman Sachs downwards, are part of that? The public at large will no longer put up with the national scandal of banks paying themselves billions of pounds of money which is not theirs.

I thank my noble friend for his question. The support we have given to the banking system is evident in the fact that the economy is now coming out of recession and has done so with much less damage in terms of unemployment, business failure or people losing their homes than was the case in previous Tory recessions. The support we have provided to the banking system has undoubtedly helped to support the extension of credit to achieve that goal. We continue to use the pressures of the FSA, other legislation and international engagement to bear down on bonus costs in banks, but ultimately these questions must be determined by the shareholders of those banks.

My Lords, does the Minister agree that one of the best ways to restore trust in the banking sector is to split off the more risky elements of banking from the more utility functions? Has not President Obama shown how that might be done? Why will the Government now not follow suit?

The observation made by the noble Lord does not accord with the facts. The failures that we have seen in the banking system have not come through the co-joining of utility banks and investment or casino banks. Lehman Brothers and Bear Stearns were pure investment banks. Freddie Mac, Fannie Mae, IndyMac, Northern Rock and Bradford & Bingley were pure retail banks. It is not the conflation of the two that was the source of the error. I have spent a lot of time looking at this and I have concluded that the answers lie not in architecture but in behaviour. The reason why these banks failed was because they were atrociously managed.

My Lords, that may well be the case, but is the noble Lord not aware that the risk taking was an integral part of the atrocious management and it was risk taking on the knowledge that the taxpayer would bail them out? Are not my noble friend Lord Renton, the noble Lord, Lord Newby, and Mr Paul Volcker, who knows a great deal about this, more likely to be right than the Minister?

I do not think so. It is a very challenging question that the noble Lord, Lord Lawson, puts to me. When I say atrociously managed I mean atrocious management of risk as that is what lies at the heart of banks. It was the failure through traditional bad lending that lay at the heart of the collapse of the Bank of Scotland, part of HBOS, and of Royal Bank of Scotland.

We will have to see the detail of President Obama’s proposals. They lack detail at the moment but there is nothing in them that we see which accords with continuing concerns we have about the UK banking system. Proprietary trading, hedge funds and private equity were not at the heart of the problems that were faced by the UK banking industry. These are complex issues, as the volte-face of George Osborne over a matter of a few hours on Thursday night and Friday morning evidenced.

My Lords is not the real reason for any loss of confidence the appalling judgment of the bankers—who are still there—on lending? There is no guarantee that they will not still be there on any changes that will be made later. May I clarify my noble friend’s policy on this? Unlike the President of the United States, is he saying that because those bankers are still going to be there, whether they are running small or large banks, the only way to get round the problem is by having some kind of compulsory insurance fund so that it cannot happen again and taxpayers and others are protected?

The truth is that the senior management of Royal Bank of Scotland and HBOS has changed almost entirely since the failures so there has been a complete re-engineering of leadership with new people brought in from other more successful organisations. It is axiomatic that a failed bank must see the shareholders suffer and the management must be removed. That is what we have done in the case of failed banks.

As for levies, as the House is no doubt aware, I chaired a meeting in Downing Street yesterday which looked at contingent capital and risk-based systemic levies in order to assist the world banking system become more resilient and to feed into the work of the IMF and the G20 when they meet later in the year.

My Lords, the Question of my noble friend Lord Renton was about confidence. Can the Minister not accept that what the Government have done so far has failed to restore confidence in UK banks? Why is the Minister so stubbornly refusing to accept that President Obama’s solution could add to that? Does he not agree with the Governor of the Bank of England who told the Treasury Select Committee in another place this morning that structural reform is needed?

Again, I wonder where the noble Baroness gets her information from, because the share prices of our major banks have in some cases quadrupled since their low point. That is a real sign of improved confidence, as are lower interest rates, a lower OIS spread, the fact that a bank such as Lloyds Banking Group can launch the largest-ever rights issue in this country, and the decline in the credit default swap rates. This is real evidence of returning confidence. I could go on for much longer; I shall not, but I can assure the noble Baroness that if she wants to ask fact-based questions we will have a better dialogue.

Unemployment

Question

Asked By

To ask Her Majesty’s Government what is the latest quarterly figure for total unemployment in the United Kingdom; and what is the latest monthly total number of claimants of unemployment benefit.

My Lords, in the quarter to November 2009, 2.46 million people were ILO unemployed, which is down 7,000 on the quarter. In December 2009, 1,606,500 people were claiming jobseeker’s allowance, which is down 15,000 on the month.

My Lords, the falls in the total and claimant figures are a welcome relief—temporary though they may be. Does the noble Lord agree that there is still real cause for concern about the fall in the employment rate to 72.4 per cent, the lowest since the winter of 1996-97, and the increase to November 1997 levels in the number of those unemployed for more than 12 months? Does the noble Lord agree that today’s announcement of 0.1 per cent growth in the last quarter of last year hardly holds out much hope to the record number of 8 million economically inactive people in this country?

My Lords, there was a host of questions in there. As regards today’s news on the economy, the Chancellor has always said that it would return to growth by the end of the year. The estimate makes clear that the Government are right to be confident but cautious about the prospects for the economy. There are now clear signs that the impact of the recession on the labour market is easing. The level of redundancies has fallen significantly since the spring. As regards jobseeker’s allowance, the December on-flow figure of 328,000 was the lowest for a year, but more than 350,000 people left JSA, which is the highest figure for 15 years. On the inactivity figures, I suggest that you need to unpick the raw data, because you need to take account of the fact that the population has increased. If you extract the number of full-time students in that data, you will see that the proportion of the working-age population that is inactive is actually 2.3 per cent lower even than in 1997, let alone previous Tory recessions.

My Lords, I should like to ask a fact-based question, if the noble Lord, Lord Myners, would allow me to; 1,034,000 people have been made redundant over the past year, an increase of a third over the previous year. How many of them have been able to find new full-time jobs?

My Lords, the latest figure of 182,000 redundancies for the quarter is down on the previous quarter and is certainly down on the peak during spring 2009. The noble Lord is correct to raise issues around full-time and part-time employment. If the import of his question is that there has been an increase in part-time employment, he is right. However, just under 14 per cent of the total are looking for full-time, rather than part-time, employment.

My Lords, does my noble friend agree that the investment in skills that this Government have made over the past two or three years has made a big difference to the unemployment figures, and has most definitely made a difference when comparing redundancy figures and the number of people being placed in other jobs?

My Lords, yes, I very much agree with my noble friend and it allows me the opportunity to remind noble Lords of the announcement yesterday that from 25 January every young person who is unemployed for six months will be guaranteed the offer of a job, training or work experience, supported by up to 470,000 opportunities over the next 15 months through the Government’s young person’s guarantee.

My Lords, during the past half century the north-west had some particularly high levels of unemployment. Given that the Manchester city region is currently the strongest economic engine outside London, is that reflected in the regional breakdown of the current figures, or does unemployment in the north-west remain disproportionately high?

My Lords, I think it is right to say that the impact of the recession has been felt across the UK. I was trying to seek the regional breakdown of the data, which I have, and it might be easier if I write to the right reverend Prelate specifically on that. The key point, however, is that action the Government have taken through local employment partnerships, through Backing Young Britain, through the jobs guarantee, impacts across our country and is not just concentrated in certain areas.

My Lords, will the Minister, provide us with the Government’s projections for ILO unemployment when it peaks, as we hope, in 2010? He has acknowledged that the convention not to provide these figures ended last autumn.

My Lords, I would refer the noble Lord to the Statement made on the Pre-Budget Report, where for purposes of openness the Government set out projections of the claimant count over the next few years, consistent with the other projections that were made in the PBR. I would refer him to that document. If memory serves, I think it showed the claimant count peaking at 1.75 million but the projections made by outside commentators in current times have been way over the out-turn.

Redundancy Payments Order

Question

Tabled By

To ask Her Majesty’s Government what is the cause of the delay in adding the Traffic Director for London, abolished by the Greater London Authority Act 1999, to the list of bodies covered by the Redundancy Payments (Continuity of Employment in Local Government, etc.) (Modification) Order 1999 (SI 1999/2277).

My Lords, I beg leave to ask the Question standing in my name on the Order Paper on this Australia Day.

My Lords, responsibility for the redundancy payments modification order was formally transferred from the Department for Business, Innovation and Skills to Communities and Local Government in November 2009. Officials are considering the content of an amending order and I can confirm that the former Traffic Director for London will be one of a number of bodies or organisations to be included in a statutory instrument that CLG aims to make in the spring.

I thank the Minister for that half-encouraging answer. Will he say why it has taken so long, passing from department to department over all these years, and can he promise that the order will be laid before the general election?

My Lords, I cannot promise the latter because I do not know when the election is to be. The reason why the Traffic Director for London was not included in the original 1999 order is, I am afraid, shrouded in a bit of mystery and it seems to have been overlooked when subsequent orders were made, both in 2001 and in 2004. There is now a clear commitment to make sure that it is included and the proposal is for the order to be laid in spring. Timing is not very precise, but it is anticipated that it would be in late March or early April.

My Lords, one of the principal concerns of the Traffic Director for London when he was in post was congestion in London caused by roadworks, which Transport for London now estimates cause 37 per cent of disruption to traffic in London. The Minister will be aware that the Mayor of London has recently adopted Liberal Democrat proposals to charge utility companies. Can he say what more central government can do to get London moving?

My Lords, I will have another try. When the Traffic Director for London arrives, could he be invited to undertake a review of the PPG13 planning guidance from the Minister’s department, which requires councils to increase parking charges and reduce the number of parking spaces? Will the Minister confirm that his noble friend the Secretary of State for Transport, in a Written Answer on 7 December 2009, said that government chauffeurs had incurred £17,000 in parking fines last year? He added that parking restrictions in London make it impossible to avoid fines. Is this not precisely what councils and businesses have been telling the Minister and will he now act to review this damaging measure?

My Lords, I say to the noble Lord that his understanding of the Traffic Director for London seems to be profound. The Traffic Director for London was set up as a corporate sole in 1991. It ceased to exist about eight years ago. Some of the individuals who were employed by the Traffic Director for London—it was not a post but an organisation—have gone back to local councils. That is what this order and issue are all about. Therefore, it no longer exists as a body and has no responsibility for the areas that the noble Lord is probing.

The Minister’s answer to the last supplementary question was helpful. Is it clear to him and to the House that the Traffic Director for London was not just one person but something called a “corporate sole”? I understand that the Clerk of the Parliaments is a corporate sole, which is both an individual and a body of people. The number of staff members working for the Traffic Director for London whose rights might have been affected by this if they had been made redundant was 26.

The noble Baroness is absolutely correct. The inclusion of the Traffic Director for London in the next amending order means that all the staff members will be protected should they be made redundant at any stage in the future.

My Lords, in the light of an earlier answer, do the Government maintain a best estimate of how many other things lost in antiquity and the mists of time may suddenly rise up to surprise them?

Terrorism: Stop and Search

Question

Asked By

To ask Her Majesty’s Government what are their plans for adhering to the ruling of the European Court of Human Rights on the police’s power to stop and search under the Terrorism Act 2000.

My Lords, the decision of the European Court of Human Rights is not final. The United Kingdom courts have found the exercise of the powers pursuant to Section 44 of the Terrorism Act 2000 to be ECHR-compatible. That is a view with which the Government concur. The Home Secretary is giving careful consideration to the judgment and will request a referral to the Grand Chamber.

I thank my noble and learned friend for her very interesting reply, but I am sure that she is aware that the removal from the statute book of the outdated Vagrancy Act was the result of the adverse effect that it had on young black males, some as young as seven. It caused a great problem to this country. In reintroducing the measure under Section 44 of the Terrorism Act, the Government gave some interesting reasons. Perhaps my noble and learned friend can tell the House whether any of those reasons have been satisfied. Could she say how many acts of terrorism and criminal activity have been thwarted in the past 12 months by the Act and whether it has reassured the public?

My Lords, I do not have the precise figures for the number of acts of terrorism or criminal activity. Noble Lords will know that part of the reason why stop and search was used was to act as a deterrent. It has been an effective tool and it has been honed. I say to my noble friend that the criticisms made by the community about Section 44 and the way in which it was operated have been taken very seriously. As a result of the work done with the community and the Metropolitan Police, which has responded to the community’s concern, from mid-2009 we have seen a drop in its use in the capital of about 40 per cent.

My Lords, the Metropolitan Police has already reviewed the use of Section 44 powers and now is deploying them only at pre-identified significant locations when specific operations have been agreed for specific areas. If that is the case, rather than appealing, why do the Government not amend the Terrorism Act immediately to reflect that change in the use of the powers?

My Lords, the noble Baroness is quite right about the more targeted use to which the power has been put. I am sure that she will have seen the erudite judgment made by the House of Lords about the structure of Section 44 and the way in which it can be used proportionately. What she has described is the proportionate and appropriate use of the law as it currently stands. As I said, my right honourable friend the Home Secretary is looking at the judgment carefully and considering whether to refer this matter to the Grand Chamber. We shall have to await the outcome.

My Lords, Section 44 of the Terrorism Act was intended to deal with exceptional situations. Does the decision of the European Court of Human Rights not underline the ever present danger of allowing the exceptional to become normal and a matter of everyday practice?

My Lords, I understand what the noble and learned Lord says, but the tragedy for our country is that, at the moment, we live in exceptional times. To be under severe threat from terror is the exception and I hope that we in this country never get to the stage when we accept it as the norm. To respond to those exceptional circumstances, we have to make exceptional effort to defeat the terrorists, which is what we are doing.

My Lords, does my noble and learned friend agree that most members of the British public, provided that they are dealt with reasonably, courteously and fairly, are quite prepared to give up a little bit of liberty in the interests of fighting the scourge of terrorism?

My Lords, I can certainly assure my noble friend that I have found that the normal, good people in this country understand absolutely the threat with which they are faced. They are responding with remarkable British phlegm and courage and helping to make sure that we stay as safe as we possibly can.

My Lords, perhaps I should declare an interest as a normal, good person who has been stopped and searched; the Security Minister, too, is a normal, good person who has been stopped and searched. The Secretary of State has a role in confirming authorisations. Can the noble and learned Baroness tell us, of course without disclosing any operational or secure information, what criteria the Secretary of State uses?

My Lords, the police will do an assessment, identifying the risks that are posed and setting out the reasons why they believe that a particular site needs to be subject to protection. A detailed report will be made and then there will be a decision about whether there should be an affirmation of the order.

My Lords, I thank the noble and learned Baroness for her exposition of the true position in this country under the decisions of the Strasbourg court. We retain in our Supreme Court the right to make our own decisions, a matter that was not referred to in yesterday’s debate.

My Lords, the noble Lord is absolutely right. The Supreme Court retains the right and the duty to express itself on our law. It has done so cogently and well. Of course it is similarly the right of the European Court of Human Rights to express what it thinks the position is and the Grand Chamber usually has the final say.

My Lords, will the noble and learned Baroness confirm that what concerned the European Court of Human Rights were the absence of any guidance as to when an authorisation could be issued and the absence of any guidance to individual police officers as to when they should consider exercising these powers? Would it not be better for the Government, rather than appealing to the Grand Chamber, to concentrate on bringing forward proposals to remedy these undoubted defects in our law?

My Lords, there is an issue as to whether the European Court of Human Rights understood the impact of the guidance that is provided under PACE and otherwise. The noble Lord will know that the Supreme Court identified the guidance and the support that enabled it to come to the conclusion that the powers were compatible. The European Court took a different view. That is quite an interesting difference.

My Lords, in declaring an interest that my son is a freelance photographer, may I ask the Attorney-General whether she is satisfied that the behaviour of the police in relation to both professional photographers and tourists who are taking photographs, particularly around London, is in accordance with the stop and search powers that they have at their disposal?

My Lords, guidance has been provided that, if used correctly, makes sure that those powers are proportionately and appropriately used. There is always a question, of course, as to whether good guidance is followed on every occasion.

European Union Committee

Membership Motion

Moved By

That Lord Carter of Coles be appointed a member of the Select Committee in place of Baroness Symons of Vernham Dean, resigned.

My Lords, would the Chairman of Committees say how this leaves the gender balance on the European Union Committee?

Motion agreed.

Marriage (Wales) Bill [HL]

Third Reading

Bill passed and sent to the Commons.

Digital Economy Bill [HL]

Committee (5th Day)

3.08 pm

Clause 10: Obligations to limit internet access: assessment and preparation

Amendment 157

Moved by

157: Clause 10, page 13, line 6, after “(1)” insert “must”

My Lords, I am moving Amendment 157 in the absence of my noble friend Lady Miller, whom I was hoping would return to these Benches. I do so without a particular brief, while Members of the House disperse in good order, and as slowly as I possibly can. This is to allow some debate to be had on this amendment in the name of my noble friend, which of course is on a matter of considerable importance. I know that the Minister will give a full reply. I beg to move.

The noble Lord need not have worried; I am capable of carrying on at considerable length, although, in the hope that we may make some progress with the Bill today, I shall try to keep it relatively short.

The first two amendments are, to my mind, quite clear in their intent: that is to make sure that the three options that the Government have given themselves actually happen. I cannot see any circumstances in which it would be desirable for any of the events in paragraphs (a), (b) and (c) of subsection (4) not to take place, so the purpose of Amendments 157 and 158 is to ensure that they do.

I will speak also to Amendment 160. The intention there is to ensure that people who are representative of subscribers are consulted too. All that is presently proposed is that they are a possible group of consultees. Those, who, at the end of the day, will bear the impact of the Bill and the sanctions under this part of it, should be consulted ahead of, and certainly as well as, those who are merely conduits for the punishment which the Government intend.

We on these Benches agree with the amendments concerning paragraphs (a) and (b). It would be quite wrong to proceed with an assessment of a technical measure without consultation on an assessment or how effective it would be. I must admit that I do not understand why paragraph (c) is there at all. The power to take initial steps is already in subsection (1), so it is not clear why it needs to be repeated in subsection (4).

Turning to the amendments of the noble Lord, Lord Whitty, and my noble friend Lord Lucas, we on these Benches agree with a requirement to consult groups representing subscribers and consumers. However, I am unclear on the value of consulting the judiciary. I worry about the provisions becoming a pseudo-penalty, which certainly would require the involvement of the judiciary. However, there would be an appeal, so presumably the body administering the code will be able to handle complaints about wrongful imposition of measures up to a certain point. The measures should not be used to punish. If the noble Lord intends the provisions to allow the imposition of a penalty, or the withdrawal of a service to such an extent that it would be seen as one under the law, the Government need to go back to square one and draft in the proper protections that such a step would require.

My Lords, I can see the purpose of the amendments; we should use “must” rather than “may”, because we must consult everyone and leaving too much to discretion can be dangerous. Sadly, the noble Lord, Lord Whitty, does not appear to be here. I can see a possible point in consulting the judiciary, despite what the noble Lord just said, because copyright law is extremely complex, and it could well be that inadvertently the code is not realistic in terms of the actual law of copyright, particularly when we are dealing with it internationally. Some people who are serving up files for unlawful download will be using foreign-based servers within areas which come under the Berne convention. There may be a legal level to this which should be consulted. To ignore that could be unwise, so I can see good purpose in that. In general, I support the amendments; they are eminently sensible.

My Lords, Clause 10 allows the Secretary of State to require Ofcom to prepare in advance against the need for technical obligations, to require Ofcom to assess the need for technical obligations generally and the likely efficacy of particular technical obligations on particular types of networks, and to require Ofcom to develop a code of practice to underpin any such technical obligations.

It may well be desirable for those powers to be used one at a time rather than in parallel. The Secretary of State might want an assessment of whether any measure is needed and, if so, which is the right one before asking for a code to be drawn up. This would make sense since the detail of the code is likely to be heavily influenced by the nature of the measure. This suggests that it is not sensible to make all of paragraphs (a) to (c) a requirement in relation to every direction that the Secretary of State might make under new subsection (1) of new Section 124G of the Communications Act 2003 in Clause 10.

Imposing technical obligations is something a Secretary of State would decide only if he were sure it was the only way to deal with the problem of online copyright infringement and if the initial obligations have failed to deliver the expected results. I stress that because we are all committed to ensuring that the initial obligations have an opportunity to deliver the expected results before we think about technical measures. An assessment of whether technical obligations should be imposed will be informed by consultation of relevant groups, including consumers—there is an explicit assurance on that—which in this context includes subscribers. The noble Lord, Lord Lucas, for example, expressed concern about that. Adding the phrase “consumer groups” does not add anything.

The amendment also calls for the addition of “the judiciary” to the list of those to be consulted. Such a statutory obligation would be highly unusual and is unnecessary. I share the view of the noble Lord, Lord Howard of Rising, that it is also undesirable in this context.

Finally, on Amendment 160, I explained in relation to the previous amendment why I think this is unnecessary. I accept entirely the need for consultation with consumers and consumer groups before any technical obligations are imposed, but the Bill already provides for that. I think it was the noble Lord, Lord Howard, who asked why we need paragraph (c). We believe that paragraph 4 provides the necessary detail.

I hope in the light of this explanation, the noble Lord will agree to withdraw the amendment.

That was a very interesting response and no doubt we will give it due mature consideration. In the mean time, on behalf of my noble friend, I beg leave to withdraw the amendment.

Amendment 157 withdrawn.

Amendments 158 to 160 not moved.

Amendment 161

Moved by

161: Clause 10, page 13, line 10, after “likely” insert “proportionality, objective justification and”

I shall speak to Amendment 166 as well. Amendment 161 tries to beef up paragraph (b). It looks at not just the efficacy of the technical measure—in other words whether it will bite—but also the proportionality and objective justification for it. It introduces something of the subscriber’s point of view as well as considering the copyright owner’s point of view that is in the current wording, to make sure that we are treating our citizens in a justified way. That is echoed in Amendment 166, which asks us to make sure that,

“measures that OFCOM recommends are compatible with the Human Rights Act 1998, show due respect for the principle of presumption of innocence and the right to privacy, and guarantee a prior fair and impartial procedure”.

We have been over this track a bit and I hope that each time we revisit it we get closer to understanding what will really happen. I had a very helpful letter this morning from ACS:Law Solicitors which, combined with what the Ministers were saying on the last occasion we discussed this, leads me to a greater understanding of their reluctance to deal with the practices that ACS:Law Solicitors is pursuing. They expect these practices to become standard. They expect this to be the way that our citizens will be treated. If people fall foul of this Bill, they will have a couple of warning letters, but after that they will get a typical ACS:Law Solicitors standard letter saying, “Pay us £500 or we will take you to court”. If they do not pay the £500, they will end up in court, there will be technical evidence against them, and they will have no ability to provide a technical defence. That is the difficulty that people faced with ACS:Law Solicitors have at the moment. There is this inequality of arms. They are in a civil court, with a 50:50 balance-of-probability judgment, and must contemplate risking thousands of pounds in mounting a defence when it is not easy to do that.

We should think extremely carefully before we make it acceptable for mainstream copyright owners to pursue this sort of course because we have talked it through carefully and have sanctioned it in the Bill. This is not a comfortable or pleasant procedure for people. Thousands of people feel that they have been done in by ACS:Law Solicitors. They have been unjustly accused and are finding it extremely difficult to satisfy ACS:Law Solicitors that they are innocent. These things rarely seem to come to court. None the less, the process appears to be entirely within the recognised arrangements of the law, and there is as yet no sanction or judgment against the practice from the SRA or any other organisation. We must accept that tens of thousands of citizens are going through this experience at the moment, and that hundreds of thousands or a million or more citizens will do so once the Bill is passed. This is producing extreme worry and unhappiness because of the lack of ease in dealing with it.

As the Bill goes through Parliament, we really must decide what is proportionate and reasonable and how we balance the interests of copyright owners with our duty to our citizens to ensure that they are not put in fear and made to worry over something that they find extremely difficult to comprehend or defend themselves against. They have a deep feeling that they have been wronged because they know that they have not done what they are accused of.

The Government have not got the balance right, and the amendments suggest how we might start to tackle this. Somewhere in the Bill there must be a real understanding of the need for balance between copyright owners and citizens and that this is not a matter of heinous and absolute liability, such as sticking a knife into a person. This can be done unawares and can be extremely difficult to tackle in court. I beg to move.

The noble Lord, Lord Lucas, has made some very important points. We debated this at some length on the previous day in Committee, but I should point out to the Minister that, having put various statements on the record on that day, I was inundated with correspondence. The impression was that the Solicitors Regulation Authority had received no complaints about the activities of ACS:Law Solicitors, and, it now transpires, of Davenport Lyons. In fact, there has been a torrent of complaints to the SRA, and I sent the Minister an e-mail, which I hope he has received, setting out at some length the material that I have received.

This is clearly a matter of great importance. Just as the noble Lord, Lord Lucas, has said, some of these firms are using some extremely unjustified and unpleasant ways against perfectly innocent people. I hesitate to use the word “innocent”, but in a sense they are because they have not breached copyright. What that makes them, I do not know, but certainly they have not been acting illegally or are guilty of any criminal offence. The SRA is apprised of the matter, although perhaps it is not moving fast enough. The Minister and his colleagues in the business department and the DCMS should be fully aware that this is a hot topic and that there have been complaints of professional misconduct against the firms involved.

My Lords, as regards those who produce material which is shared without any remuneration to the originator, I am in favour of them being properly compensated for that which is downloaded. I speak as someone who, for the first time, has received a letter about ACS:Law Solicitors, which I found pretty disturbing, as I do the fact that ACS:Law Solicitors has up to six years to keep this correspondence hanging around. Even though the SRA has been contacted again, the matter does not seem to have moved on particularly fast. Of course, one is hearing only one side of the story, so I cannot say more than that.

It is worrying and I assume that the Minister will address this issue seriously in his reply. I gather from the shaking of his head that he is aware of at least some of the complaints that have been coming in his direction.

My Lords, the amendments in this group build on my noble friend’s suggestions of other useful criteria that should be included in any assessment by Ofcom. I have already mentioned briefly the cost of any measure and I should like to emphasise how important it is that proper scrutiny is given to the cost that will fall on internet service providers forced to implement the technology necessary to impose a technical measure.

Amendment 163 touches on a point raised much earlier in these debates. If technical measures are imposed crudely and in large numbers, perfectly legitimate internet companies might suffer. I can easily imagine a company setting up a lawful file-sharing site, notwithstanding the implementation of Clauses 4 to 9. If a technical measure is imposed on large numbers of subscribers that bans access to any file-sharing sites, rather than just those that provide unlawful material, a promising alternative could be strangled at birth.

Amendment 164 is self-explanatory. It seeks to tie the assessment under Clause 10 specifically to the progress reports under Clause 9. At the moment, one of the greatest weaknesses of these clauses is the lack of read-across from Clause 9 to Clause 10. This amendment would improve that.

Amendment 167 is essentially a summary of the points that have already been raised. I am sure that the Minister will be pleased to see that it is only a guideline for Ofcom to follow and not a prescriptive list. However, all the matters outlined in it are fundamental to whether a measure will be successful. The possibility that one of these matters might be overlooked in a hasty assessment or completely ignored in the rush to implement the necessary steps is worrying. I hope that this amendment will do much to promote a considered approach.

I, too, have received correspondence about these people who are sending out bullying letters. I add my plea to the Minister, if only for it to appear in Hansard for the benefit of those people who have corresponded with us pointing out this appalling behaviour.

My Lords, these are extremely important amendments. They must be there to guide Ofcom in its deliberations. My noble friend said that the copyright resides with the originators, but usually it does not. It is owned by six large rights holders—copyright holding companies—because they have the originators under contract from day one. Only a very small amount of money filters out to the creators the work. Most of it is rental on the back catalogue owned by large rights holders. We have to keep that in the back of our minds when we are told that this will kill creativity—it is not necessarily so.

The main point I want to make is about the unintended consequences that may arise when we implement the technical measures and why Ofcom must take into account wider considerations The sort of thing that could happen is that a company sets up and sensibly wishes to deliver most of its stuff over the internet. It is selling into a market that also happens to coincide with people who have an age profile in the group that tends to download music—music being the easy one to catch as it is the most popular in this area. You could stop their market and bankrupt them overnight. It is a bit like secondary picketing by the trades unions: the same principle of trying to prevent one evil while actually creating another. The same applies to the Government in their delivery of services electronically to reduce costs to taxpayers. If we end up having to intervene to make this effective, by cutting off a tiny proportion of infringers, say 100,000, it could have an impact. If we tackled just 10 per cent of the infringers, which is not an enormous proportion, 700,000 people would be unable to use the internet properly. That is a significant part of the market.

Funnily enough, it would probably also penalise those with good, innovative methods of distributing music and film. At the other end of these connections will be subscribers who both download to sample stuff unlawfully and buy stuff lawfully. So it may have an effect on the market that we should be developing. This needs to be considered incredibly carefully. A final thing is proportionality and the EU. The European Parliament, in saying that people’s internet could be cut off only by going through judicial procedure, recognised that these days it is almost a basic human right to have access to the internet. Our legislation must be proportionate or it will fall foul of EU legislation. On those grounds alone, proportionality must be put in it somewhere.

My Lords, I want to clarify something that the noble Earl, Lord Erroll, just said. He rightly pointed out that the bulk of copyrights are owned by a limited number of very large corporations. We in the copyright world call them investors. They supply the capital that makes the production of intellectual copyright possible. I have been following this Committee for several days, and for me, the elephant in the Chamber is the requirement to have capital markets with sufficient incentives and a clear, visible marketplace in which they can invest to ensure that the creative people can make products that we want and that we can circulate in the marketplace. I am afraid that it is nonsense to assume that we can allow the well to dry up by doing nothing or taking insufficient action on copyright abuse. Should we do so, investment will withdraw and eventually the entire creative process will dry up.

My Lords, new subsection (4)(b) allows the Secretary of State to direct Ofcom to carry out an assessment of the likely efficacy of a technical measure in relation to a particular type of internet access service. Amendment 161 would add “proportionality” and “objective justification” to the assessment. While I have sympathy with the view that these are important criteria, I do not think it is necessary for Ofcom to do this because they are points that the Secretary of State will have to consider as part of the decision whether to make the order to impose technical obligations, and on what terms.

On the other amendments in the group, new subsection (4) in Clause 10 sets out the steps that the Secretary of State might particularly direct Ofcom to carry out as part of conducting an assessment of whether technical obligations should be introduced, or taking steps to prepare for them. As such, it identifies the main things we consider it will be important should be done: proper consultation, an assessment of measures which would work and early preparation of a code. We are not suggesting that these are the only things that the Secretary of State might ask Ofcom to do as part of making an assessment, nor yet all the things that Ofcom would expect to include in an assessment in order to do it properly. I do not think it would be helpful to try to do that.

There is also a risk of duplication here. For example, the issues raised in Amendments 162 and 163 are likely in any case to be captured under the existing reference to an assessment of efficacy. So while there might be much benefit in the Secretary of State asking Ofcom to consider these and other issues, I do not think that they need to appear in the legislation. I hope noble Lords will take that into account.

On the much-discussed and debated ACS:Law, I am glad that it has at least been reported to the SRA but regret that no action seems to have been taken to date. I am not sure whether I have fully understood the point made by the noble Lord, Lord Lucas. I thought he was welcoming the Bill in that our process might well be described as taking a graduated approach. In the first instance, people will be sent a letter saying, “It appears that there has been an infringement. If it has been done unwittingly or by someone else, here is what you can do to remedy the situation”. We are laying down what I think is a proportionate, reasonable and fair procedure. We have to ensure that it is all reflected in the code and that we build in all the rights of appeal and so forth, as we have discussed in our debates here in Committee. We like to think that that will influence the process that will eventually end up in the courts; that is certainly our presumption. I repeat my assurance to write to the Ministry of Justice.

I stress that so far as we are aware, firms are operating within the existing legal framework, a point which to a certain extent was confirmed by the noble Lord, Lord Lucas. It may not be a procedure that everybody likes, and in some cases I presume that people have been guilty of the offence, but we are saying that this Bill cannot be the vehicle to deal with it. As we have said, it provides a graduated response that seeks to change the culture and the behaviour.

I am glad that the noble Baroness, Lady Howe, is with us at least in principle and thus is in favour of proper compensation—that is what we are trying to achieve. The noble Lord, Lord Howard, asked about the costs to internet service providers. We share his concern because this has to be something that they are capable of dealing with and does not undermine their normal operating procedures. The costs associated with any technical measure will therefore be the subject of a separate statutory instrument and a new or revised code. All this will be subject to scrutiny and I take entirely the noble Lord’s point that we keep control of it.

The noble Lord also talked about a rush to implement necessary steps. We are not going to rush this, and I hope that a future amendment will demonstrate our response to concerns that sufficient time is provided to see whether the first set of technical measures has had an effect before contemplating the need for further ones. We shall come back to that.

I listened carefully to what the noble Earl, Lord Erroll, said about the law of unintended consequences, but I do not think that we are in any way likely to stop legal markets operating overnight. There was a presumption that, assuming we did catch 700,000 people in our first attempt, all of them will carry on with their misbehaviour—assuming that they are misbehaving. I do not take that view; I think that we will be able to change them.

If we want to introduce some balance into this debate and an overall assessment about what we are trying to do, then I thank my noble friend Lord Puttnam for doing just that. These are not just minor infringements, and they apply not only to music, as my noble friend Lord Puttnam knows, because films are also very much affected by them. I quoted a case the other day in which the film “Avatar”, on the very day that it was released, was downloaded, including the 3D version. We should not kid ourselves that these are just minor downloads of the odd piece of music.

My Lords, I just point out to the Minister that “Avatar” is the second-highest grossing film in history, so a few downloads has hardly affected it. I do not think that we can say that they are completely bankrupting the film industry. The fact that it has a technical aspect, the 3D, which makes it far more enjoyable to see in a cinema perhaps points the way that the industry should be looking.

My Lords, I must admit that I struggle with the analysis of the noble Earl, Lord Erroll. He seemed to be saying that it does not really matter if people steal the copyright. I must say that it does matter. It does not matter that they managed to gross a profit on “Avatar”: if we are serious about the principle of rewarding copyright owners for their investment, then we have to treat infringements seriously and we cannot dismiss them. I am afraid that we are never going to reach agreement on that perspective on copyright.

On the question of the telecom framework directive raised by the noble Earl, Lord Erroll, we believe that the provisions in the Bill are consistent with the final outcome of Amendment 138. That requires a fair and transparent prior process that allows the consumer the right to be heard. I have dealt with this issue on many occasions so I shall not take any more time. I hope that, in the light of the explanation and assurances that I have given, the amendment can be withdrawn.

My Lords, I suspect that we are not going to agree on “Avatar”. It seems to me that the industry is being peculiarly stupid about it—it got 300,000 free advertisements. “Avatar” is something that you cannot consume sensibly on a small screen: you need the big-screen experience to appreciate all the work that they have put into it. The immediate consumption of it created an enormous demand for going to the cinema, which has benefited the film enormously. That is the fundament of this—we must get the industry to see this as an opportunity and not as a threat.

We must get the industry to be in there selling these downloads. If the industry had been in there selling at a dollar a time, it would be better off for it and it would still get the advertising. Its refusal to deal with the way that the world has moved on and with what technology makes possible, and its attempt to stick to old ways of doing things and to the idea that you can release a film in the United States today and wait six months to release it in the UK, is a looking-backwards attitude which we should not support through legislation. Yes, we should support copyright, but we should direct ourselves at real losses and not imagined losses. I do not believe that the makers of “Avatar” have lost a dollar; in fact, I think that they have gained a great deal from the piracy. We should not seek to punish people for losses that have not occurred.

When we come back to the question of what is going to happen on the Bill, after what I agree are shaping up to be quite reasonable preliminary procedures, we must have something to make sure that Norwich Pharmacal orders are not given, willy-nilly, to people who have not gone through this procedure. We have produced some comfort for the citizen in the Bill; we must at least make sure that judges consider whether or not this procedure should be used before Norwich Pharmacal orders are granted.

We must also do something about the quantum of damages that is being sought. In a civil procedure on a technical matter, it amounts to blackmail; the cost of defending one of these things is reckoned to be £10,000. You can get away with asking for £500 or £1,000 and be paid on most occasions without any effort having to be made to really establish guilt. It is straightforward legal blackmail, and we should do something about it by making sure that where damages are asked for, they are, at least for first offenders, at a rational level.

That said, I do not think the Minister addressed the phrasing of either of my amendments. I did not hear a reference to the Human Rights Act aspect. I apologise; I am going deaf.

I referred to the telecom directive. We have said numerous times—as the noble Lord said, we have been over this ground on many occasions in this Committee—that we will be compliant with the Human Rights Act as well as the telecom directive. I was trying to save the odd amount of time by not going over the same issue. As a noble colleague of mine once said, reiteration does not always enhance the value of the point.

No, my Lords, but eventually it seems to draw useful answers out of the Government. The fact that one has to ask the same question five or six times to get the answer that one is seeking is, I am afraid, just a characteristic of the way that Governments work sometimes.

The word “proportionality” in my Amendment 161 is important. I understand that the Government resist its inclusion. Since I was arguing yesterday against the inclusion of the word “proportionality” in a Bill and was successful in that, I suppose I should be content to be consistent. I hope that this means at least that the Government are converted as a result of the reverses they suffered yesterday. I beg leave to withdraw the amendment.

Amendment 161 withdrawn.

Amendments 162 to 167 not moved.

Amendment 168

Moved by

168: Clause 10, page 13, line 12, at end insert—

“( ) OFCOM may make a recommendation that the Secretary of State consider introducing a technical measure identified in this section.”

My Lords, I move Amendment 168 on behalf of my noble friend Lady Miller. I shall speak also to Amendment 174.

In the course of our debates, the Minister has reassured us that the technical measures will not be imposed without demonstrable failure of the initial obligations and that there will be a graded response. The question is: what will be the empirical evidence that the initial steps have failed to cure what is clearly an issue? I am not at all at odds with what the noble Lord, Lord Puttnam, had to say in that respect. We wish to see the proper upholding of copyright, but it has to be done—to use the word that the noble Lord, Lord Lucas, has almost but not quite resiled from—in a “proportionate” way.

On what basis will that be done? We do not believe that it should done purely on the basis of the Secretary of State’s decision. Pure whim, the length of thumb of the Secretary of State—we have talked about this in earlier debates. It should be done on the basis of a proper report by Ofcom, whether a regular report or a special report. That applies to both Clause 10 and Clause 11.

I hope that the Government will look again at this aspect because, in order to create confidence, technical measures are an important step. As we know, and to repeat what I said earlier, they have caused a great deal of controversy, but if they are to be introduced then that must be on the basis of proper evidence that the steps taken to date have been a failure. The only institution that will carry confidence and will be regarded as being sufficiently objective in those circumstances is Ofcom. That is the reason for Amendments 168 and 174. I beg to move.

My Lords, I entirely agree with Amendment 168; my Amendment 173 tackles the same question in different words.

Amendment 172 is intended to make sure that the industry has looked after its side of the bargain. In return for passing this Bill, we should be requiring that the industry moves ahead and makes product easily available on the internet in proper volume, at a proper price. Its failure to do this is the reason for the whole problem. This market developed and the industry refused to address it—it turned its back on it. People, particularly young people, said, “We are not having that. If they will not give us this stuff in the way that we want it we are going to get it”. I have an enormous amount of sympathy with that. I agree that we must tackle the problem and deal with the piracy that has developed, but we should not allow the industry to continue to create the conditions where piracy flourishes. We should not allow it to continue to encourage people into piracy because it will not provide its product in the way and at the time that people want it.

Certainly, people ought to be able to hold product back: I am not at all saying that someone who comes up with something which is not public should be protected in some way. But at the moment the industry is refusing to license additional outlets for the internet availability of music, and although the wholesale price of a music track is somewhere around 20p—not the retail price, of course, the wholesale price—it is trying to run vastly inflated prices on new entrants trying to come into the market and compete with iTunes. That is pure monopoly behaviour and we are creating the monopoly for the industry in this Bill. We are giving it additional defences. We must require that the industry, as well as ourselves, address the problem, or else it will merely occur in another and more difficult form.

We already know that there are technical ways around this Bill—that is why Clause 17 is sitting in there, not that I think it is satisfactory. We already know that people will use cyberlockers or encryption. The only answer to this is to make sure that the industry keeps its side of the bargain and makes product easily available at a sensible price so that people do not have to go down the piracy route, and so that they do not go down this route because they cannot get at the stuff that they want, but because they do not want to pay the proper price for it. Under those circumstances the sanctions we have in this Bill are justified. However, if the industry refuses to make product available—“Avatar” is a very good example of a refusal to make product available when customers want it—why should we defend it? It does not seem to be part of the copyright bargain that we should allow that.

My Lords, this group of amendments has one overriding theme: when is it appropriate for the Secretary of State to use these powers, and who is the best person to assess whether they are being used correctly?

I am not entirely comfortable with Amendment 168 and its suggestion of giving Ofcom such an explicit advisory role. I agree entirely that Ofcom is well-placed to make an accurate assessment as to the efficacy of any, or a particular, measure, and I agree with my noble friend’s Amendment 172 that the wider market should be taken into account. However, there is an important difference between setting out the pros and cons of a step in an impartial manner, and actively seeking to influence government policy. Ofcom should participate enthusiastically in the former but stay well away from the latter.

My Amendment 171 would impose a level of parliamentary scrutiny on the process. The Minister has accepted the Delegated Powers and Regulatory Reform Committee’s report on the standard of parliamentary scrutiny that would be appropriate for a Clause 11 order. My amendment seeks to ensure that Parliament will be properly informed when debating the order.

It is unavoidable that there will be considerable controversy over the imposition of technical measures. We have all received arguments and counterarguments over the past few weeks from internet service providers, copyright owners, other online companies and subscriber groups in relation to Clauses 4 to 9. It will be no different if Clauses 10 to 16 are ever implemented.

An impartial assessment of the measures being discussed will be an invaluable tool for weighing up these arguments. The Minister will surely appreciate how continuing uncertainty over the actual cost of implementing the earlier provisions has complicated debates on the apportionment of costs. In just the same way, ensuring that Parliament is fully informed with the best available data will help to ensure that scrutiny is effective.

My Lords, before the Minister responds, it might be helpful if I bring to the Committee’s attention the excellent report published yesterday that was produced by the House of Lords Communications Select Committee, under the chairmanship of the noble Lord, Lord Fowler, entitled, The British Film and Television Industries—Decline or Opportunity? Pages 39 and 40 of that report, which I commend to the Committee, contain a very sensible and well thought-through analysis of this issue. It would be enormously encouraging if the rest of this debate could take place within the framework set out in that report. It is sensible, forward looking and demonstrates an understanding of these complex problems. I hasten to add that I was not on the committee, but an enormous amount of time, trouble and energy have gone into producing the report, and it seems extraordinary to me that it is not informing this Committee’s deliberations.

On Amendment 168, Clause 10 is intended to give the Secretary of State the power to ask Ofcom whether it recommends the imposition of one or more technical obligations on internet service providers, and to give Ofcom the tools needed to reach such a recommendation. I am not sure what this amendment could add to that.

I agree with the noble Lord, Lord Clement-Jones, about the need for empirical evidence. However, his language was a little hyperbolic when he talked about the Secretary of State making a decision on a whim. We will not allow that. We have made it clear that this matter will require an affirmative resolution. We understand the importance of ensuring that we have the right evidence and of giving ourselves the opportunity to see whether the obligations change the climate sufficiently as to remove the need for the technical measure. There is no debate between us on this. I keep reiterating these assurances, mainly because I understand the concern that has been expressed, and because I hope that they will be accepted. The noble Lord, Lord Howard, expressed a similar concern in relation to the Secretary of State. I again point out that we are talking about an affirmative resolution.

The noble Lord, Lord Lucas, talked about product availability. Of course, there are products out there. We will certainly not create a monopoly. Again, that is hyperbole. ITunes is not the only provider; there is Spotify and plenty of other examples. I am sure that the market will continue to expand. However, I am still puzzled by the fact that the noble Lord and the noble Earl, Lord Erroll, seem to believe that somehow it is perfectly okay for illegal downloads to take place. I do not share that view. I shall not mention the A-word again because we have had far too much debate on that, but I do not understand why we should be happy for people to go into cinemas with camcorders and illicitly download material, and why we should wish to protect that. We believe that there is an obligation on the market to—

The noble Lord mentions camcorders. I agree with him entirely. It was for that reason that we made a proposal in the Select Committee report, which the noble Lord, Lord Puttnam, has just mentioned, that there should be a specific offence covering camcorder crime. Some of the arguments that are being put forward on freedom I regard as pretty phoney. However, there is no argument whatsoever on camcorder crime. It is absolutely deliberate crime. Why do the Government not put forward a specific offence as far as that is concerned?

I was hoping that I would inspire the noble Lord to make a comment and I thank him for his assessment. I do not feel that I can respond as to why we are not doing that, but I will take that point away. I thank him for that part of the analysis, which reinforced the point that my noble friend Lord Puttnam made in relation to the framework of this debate.

I say to the noble Lord, Lord Howard, that I have a lot of sympathy with Amendment 171. The assessments that Ofcom carries out will clearly be of significance in the Secretary of State’s decision whether technical obligations should be imposed on internet service providers. They will be of interest to both Houses of Parliament and more widely. I also take the point that he makes about the apportionment of costs. We gave an indication of that, but it is not set in stone. We understand the importance of this.

On Amendment 168, there may be a need to ensure that confidential or other sensitive information is protected. I suggest that this is something that we should take away and consider.

On Amendment 173, I do not think that this is a responsibility that Ofcom should take on. Imposing technical obligations would be a serious matter and likely to be controversial. I again agree with the assessment made by the noble Lord, Lord Howard—I am fearful of this concurrence, but when it is right, it is right—that such a decision should be taken by a Minister rather than delegated to the regulator, as the decision is one for which the Minister can be held to account. It is significantly quicker for a Secretary of State to reach a decision and act through an order subject to the affirmative procedure.

As for Amendments 174 and 174A, there is no doubt that the report produced by Ofcom will be highly relevant to the decision on whether to impose technical obligations. However, I do not think that we should allow the Secretary of State to consider only Ofcom’s assessment. He must have the ability to consider other factors, such as initiatives emerging at a European level. I also understand the wish for the decision to be taken on the basis of assessments from Ofcom. However, Amendment 174A might weaken the wording, as “following” merely suggests a sequence of events.

I understand what noble Lords are seeking to achieve, but on balance there is more to be said for keeping a degree of freedom for the Secretary of State—at the same time as he is accountable to Parliament through affirmative resolution—to take the full range of considerations into account when recommending an important decision, which should remain his responsibility. On the basis of that explanation, I trust that the noble Lord will feel able to withdraw the amendment.

My Lords, I entirely agree with the noble Lord that my noble friend Lord Howard of Rising has won the argument on Amendment 171 and that I should not pursue Amendment 173. However, I want to set the noble Lord straight on where I am aiming at in this Bill as a whole.

I do not think that any of us is defending illegal downloading. We are all trying to produce a system that gets copyright owners, of whom I am one, a proper return for the product that is sold over the internet, of which I do a good deal. My concerns arise as I do not believe that there are acceptable technical measures that will deal with the methods that illegal downloaders will resort to if we do not make it possible for them to obtain the product that they want, in the way that they want, easily and at a sensible price. If we support the industry in its backwards-facing approach, we will merely get the illegal downloaders adopting methods to which the only solution is deep packet inspection. That essentially means that we will allow officialdom to see our entire internet traffic. I do not think that that is what the Government intend or what any of us would find acceptable, particularly as a measure just to protect copyright. Protecting copyright to the extent that the law requires it must be in the context that the industry is doing its bit, too.

I shall take the approach that protecting my own copyrights is best done by enhancing the user’s experience, whereby cheating and copying will result in a less fulfilling experience than paying the price that I am asking. It is perfectly possible for the industry to do that; indeed, parts of it are doing that. Regarding those who need only copyright protection, we should not continue to refuse to make material available. I return to the example that the noble Lord gave about “Avatar”. As soon as there is a buzz out there about a film, people want to see what it is about, have something to satisfy that curiosity, know what they should be going to and be part of this great experience—although they have not yet been to the cinema. We should require the industry to deal properly with its customers.

All my amendments are aimed merely at trying to get the industry to recognise that we are in a new century and that there are new ways of doing things and making money out of copyright. That is what the industry should be pursuing. I entirely agree with the noble Lord that no one in the Committee is saying that we should not defend copyright or that we should in some way promote or allow illegal downloading.

My Lords, I thank the Minister for his reply and I thank those who have taken part in this debate. Further to the remarks of the noble Lord, Lord Lucas, I do not believe that copyright owners are the only ones with the moral high ground. We are trying to find a balance; that is what these debates have been about. We may have been kicking the Minister but we have actually been kicking the tyres of the Bill. We have heard some interesting responses and interesting aspects have been raised.

The noble Lord, Lord Puttnam, mentioned the report of the Communications Committee of this House. It was a very good report, which was given considerable coverage, but none of us is unaware of the need for better copyright protection. The noble Lord, Lord Fowler, made a perfectly apposite point that further amendments to protect copyright need to be made. Many of them relate not to codes or the civil law but to the criminal law. The recent OiNK case is probably an illustration of that. The use of camcorders is another area where the criminal law could be brought to bear. However, the Government have shied away from inserting such provisions in the Bill. It will be interesting to see whether they will introduce them in the future, or whether any future Government will do so. Such provisions will be the real heavy artillery for the protection of copyright.

I heard what the Minister said about the need for empirical evidence and I was cheered by his agreement. I was not cheered by his disagreement with my amendments, but we are philosophical about these matters. I am sure that his words will be read with enormous care in years to come when people see the Secretary of State, by edict, imposing technical measures. Nevertheless, in the mean time I beg leave to withdraw the amendment.

Amendment 168 withdrawn.

Amendment 169

Moved by

169: Clause 10, page 13, leave out lines 13 to 15

My Lords, the amendment is a straightforward attempt to bring the Minister out of his lair to debate subsection (5). It seems extremely broad in the context. It states:

“Internet service providers must give OFCOM any assistance that OFCOM reasonably require for the purposes of complying with any direction under this section”.

That seems to impose a very broad duty. It would be useful to hear how the Minister believes that will operate and the kinds of duties and liabilities that it will impose on ISPs in the circumstances. I beg to move.

My Lords, I speak to Amendment 170. Although ISPs have the major role to play, copyright owners have a crucial role to play, too. It is they who generate the evidence on which the whole process is based. How they do that, the methods and technicalities of the systems that they are using and the quality of the evidence that they are generating are an enormously important part of moving to a system where the justice is more summary than that which is available through the civil courts. It seems to me that they cannot black-box this stuff; they cannot say, “This evidence is true but we aren’t going to tell you how we got it”. They have to disclose to Ofcom the exact methods that they are using and they have to expose those methods to a critical analysis, so that Ofcom can be sure that that part of the process is working well enough to justify the rest of the process. I think, therefore, that they should be included in this clause.

My Lords, the amendment tabled by the noble Lord, Lord Lucas, is extremely important. We have to be balanced. If we are going to require certain things of the ISPs, then the other side—or the other party involved—must also have the duty to provide them, otherwise the process is hugely imbalanced. I take this opportunity to say to the Minister that this is not a “them and us” situation. One is not trying to be against the copyright holders. I endorse entirely what the noble Lord, Lord Lucas, said about the last amendment.

These last three groups of amendments have been about trying to ensure that Ofcom and the Secretary of State have sufficient information to make a properly balanced decision. The challenge on the first group was that the Minister said, “You don’t need Ofcom to have this information because the Secretary of State will take it into consideration after he sees the report”. On the second group, we heard that Ofcom was going to advise the Secretary of State primarily, so that what Ofcom says will be hugely important and it should be doing the wider, earlier investigation; if it does not, a report will be produced that is rubbished by the Minister and the Government will get egg on their face.

The Minister should take all this back and think about what will inform the decision of the Secretary of State to go further into the technical measures. It is when the technical measures start getting implemented that whichever Government are in charge will have a huge outcry from the general populace. If widespread technical measures are put in place, businesses will react and possibly relocate out of the UK and there will be huge effects on the market. If that does not happen, then all well and good, but I would rather look on the gloomy side than say, “We just hope people will respond”.

We have to work out whether Ofcom will produce a complete report, in which case we need the provisions of the earlier amendments, or whether it will be the Secretary of State, in which case we can downplay the importance of the Ofcom report. Either way, Amendment 170 is essential for us at least to get balance at this stage in this requirement.

My Lords, I am concerned about the level of information that Ofcom might be able to require from an internet service provider under this subsection. I am partly reassured that “reasonably” is included in the drafting but would very much like to hear a little more on the exact meaning of that word in these circumstances.

I agree with my noble friend and the noble Earl, Lord Erroll, that there could be circumstances in which the involvement of copyright owners might be very useful. For example, as we have discussed, one measure that a subscriber might take to prevent another person from breaching copyright on his account would be to block sites known to provide unlawful material. It would not be inconceivable that a technical obligation might consist of a list of similar sites that the internet service providers must block to certain subscribers. If this is the case, the copyright owners would be a useful resource to keep an up-to-date list of websites that qualify for blocking.

My Lords, I thank all noble Lords who have contributed to this short debate. We have already discussed a wide range of issues that the Secretary of State might want Ofcom to look at in any assessment under Clause 10. It seems self-evident that on a great number of them, in particular those involving the cost of operating technical measures and the ability of the ISPs to impose specific obligations, Ofcom will require help and information from ISPs. We therefore believe that new subsection (5) in Clause 10 is a very important provision. I disagree with the suggestion of the noble Lord, Lord Clement-Jones, that it could be deleted. If Ofcom were not able to call on ISPs to provide information in this context, there is a risk that any Ofcom assessment under Clause 10 would be lacking in vital information and could lead to the wrong conclusion.

From the perspective of Amendment 170, tabled by the noble Lord, Lord Lucas, nothing on the long list of things that noble Lords have drawn to our attention as needing consideration in these assessments would require technical or commercial information from copyright owners. If we are wrong and it transpires that some do, Ofcom will have the power to require it under Section 135 of the Communications Act by virtue of the amendment to the Act in Clause 16(2).

I would like to be able to give the noble Lord, Lord Howard of Rising, the definition of “reasonable” that he sought. Perhaps during the course of proceedings I will be able to do that, but I cannot for the moment. In the mean time, I hope that the noble Lord, Lord Clement-Jones, will agree to withdraw his amendment.

My Lords, I know that the Minister is intent on being brief and efficient in his responses today, but I fear that his response was a little too brief. He talked about the information and help that internet service providers may be asked to, and should, give and referred to a long list. I must have missed this somehow. Certainly in his response he did not list anything. I asked what kind of assistance would be required and what kinds of liabilities would be undertaken by the ISPs, but I did not receive any answer. A little recapitulation would be extremely helpful.

I can help the noble Lord to some extent. One thing that the ISPs might need to provide Ofcom with is technical help in areas such as participating in technical workshops. We do not take the view—here I revert to the amendment tabled by the noble Lord, Lord Lucas—that copyright owners are likely to have to provide that sort of practical help.

My Lords, “participating in technical workshops” sounds a bit thin. This is a very wide clause to ensure that internet service providers take part in technical workshops. I hope that when the amendment comes back on Report, as I fear it must because the reply has been so thin—

My Lords, perhaps I may pick up on the reply given to my amendment, now that I have had time to research it. If this applies and a reference in Clause 16 brings copyright owners, who are fairly peripheral people, within Ofcom’s ambit, why do we need this subsection, because surely internet service providers would be there too?

That had occurred to me as well. It seemed to me that the clause was either otiose or not. On the technical workshops bit, at a previous stage of the Bill the Minister pointed out that the rights owners have their own organisations monitoring this traffic and that monitoring will supply the information to the ISP to start logging against a particular subscriber to find out how many infringements there are, and then one goes further on to the Norwich Pharmacal order. The rights owners will have to respond to various privacy enhancing technologies which will appear: the “dark net”, which started last autumn, is already here and then there are things like Tor, proxy servers and so on. There will also be quite a lot of technical things that the rights holders’ monitoring organisations will have to respond to. The concept that they will not be involved at a very technical level in trying to monitor is very weird to me.

I can help the Committee a little more. The copyright owners download material, or part of it, and as they do so they note the exact date and time and the IP address being used. That enables the ISP to associate that with a particular subscriber. It is part of the audit trail through which one is able to track the downloading of copyright material.

The two technologies which I have just mentioned mean that the IP address received is not the IP address of the subscriber; it is another IP address supplied by an intermediary. Therefore, they will have to find technical ways around that and that is when it becomes interesting as regards the efficacy of the technical measures proposed. You have to talk to this part of the rights owners’ organisations or you will not find out whether what they have is effective.

In response to the noble Earl, I make the point that we would certainly be prepared to talk to the rights owners if it is necessary to amass that sort of technical information.

This is getting curiouser and curiouser. Although the noble Lord has been helpful in giving me something extra as regards the information which might be required from an internet service provider, it seems to me that he has made the case for the amendment in the name of the noble Lord, Lord Lucas, because these are quite technical things. In those circumstances, the copyright owner is intertwined with the ISP and, in terms of the information which needs to be obtained to ensure that these technical measures are effective, they will need to talk to the copyright owners as well. The noble Lord, Lord Lucas, has not had an answer to his point that if copyright owners are dealt with by another section of the Communications Act, why not the ISPs. Surely what is sauce for the goose is sauce for the gander.

Many questions are still unanswered. As this is at the core of the Government’s proposals, it is somewhat surprising that the Government have not laid out their stall rather more successfully. Before the next stage of the Bill, I hope that the Government will give this further consideration. In the mean time, I beg leave to withdraw the amendment.

Amendment 169 withdrawn.

Amendments 170 to 172 not moved.

Clause 10 agreed.

Clause 11 : Obligations to limit internet access

Amendments 173 to 174A not moved.

Amendment 175

Moved by

175: Clause 11, page 13, line 25, leave out “or” and insert “and”

Amendments 175 and 176 focus on the reasons that the Secretary of State may give for imposing a technical obligation. They raise a number of points so, while being as brief as I can, I shall try to set out my concerns as clearly as possible.

Amendment 175 was intended to highlight the fact that by allowing paragraph (a) or (b) to provide justification for the imposition of technical obligations, the Bill in fact allows the Secretary of State to avoid any assessment by Ofcom. This is clearly not desirable. I hope that the Minister will agree with me that it would be irresponsible to impose such potentially drastic demands on ISPs without a proper assessment. No order should be made under this section without Ofcom being asked to undertake that necessary preparation. Unfortunately, Amendment 175 is not sufficient as currently drafted and I apologise for this. Since putting it down, I have realised that the phrasing,

“assessment carried out or steps taken”,

would allow once again for no assessment to be undertaken. Indeed it seems possible for the Secretary of State to direct Ofcom to start the necessary steps under new Section 124G and then to use that direction as the reason why an order needs to be made under new 124H. Surely this is not the Government’s intention, so we look forward to the Minister’s explanation.

Amendment 176 is very much a probing amendment, I hope that the Minister will be able to give us rather more detail about the intention behind paragraph (b). By putting down this amendment I do not mean that I am entirely opposed to the inclusion of a similar paragraph. After all, the Secretary of State should be able to take into consideration any relevant circumstances that might not be covered by an assessment. However, as drafted, this paragraph makes the entire section completely meaningless. At the very least, the section surely needs to be tightened up to ensure that an assessment is not merely an option but must be undertaken before an order is made. Furthermore, I think it would be extremely helpful if the possible circumstances that might be considered relevant, but which would fall outside an assessment, were made clear. I beg to move.

My Lords, I rise early to see whether I can assist the Committee with some helpful comments. On the face of it, this is not an unreasonable thing to require the Secretary of State to do. It would ensure that an assessment of steps by Ofcom would have to be taken into account by the Secretary of State, as well as whatever else seems most pertinent to him when deciding on the appropriateness of requiring technical obligations to be imposed. In practice, the Secretary of State is always likely to want to have had a report from Ofcom before making such an order, and therefore we are willing to agree to consider this change.

However I do not think we should restrict the Secretary of State to taking into account only an Ofcom assessment of technical obligations, or the steps taken by Ofcom to prepare for them, as proposed in Amendment 176. I do not think that it would be at all sensible to circumscribe the Secretary of State in this way. Inevitably—I think the noble Lord, Lord De Mauley, acknowledged this in his contribution—there are going to be wider societal or macro-economic factors or, for example, developments in Europe, that a Secretary of State is going to want to take into account. It is right and proper that he should do so. I hope that the Committee will recognise that Ofcom would not welcome being the sole source of advice which the Secretary of State has to take into account.

In the light of my assurance that we shall certainly take away Amendment 175 and agree positively to consider it, and with my subsequent explanation, I hope that the noble Lord will feel able to withdraw the amendment.

My Lords, I am very grateful to the Minister for his comments. It is quite a complicated area. I think we probably both need to take each other’s words away to reconsider them. As I said, Amendment 175 is certainly not perfect. On that basis, I beg leave to withdraw the amendment.

Perhaps I may intervene before the noble Lord withdraws the amendment. I would have added my name to Amendment 176 if it had not already had four names on it.

I should like to have some legal advice. I know that when matters reach the courts it is what is in the Bill that counts, not what the Minister says at the Dispatch Box. I do not know how much the context inside the Communications Act matters to the interpretation in the courts. New Section 124H(1) states:

“The Secretary of State may at any time by order impose a technical obligation on internet service providers if the Secretary of State considers it appropriate in view of ... any other consideration”,

because the provision contains an “or”. We must be very careful that we do not leave it as “any consideration” —I do not see that it is related to anything to do with copyright, even. I have no idea whether the context of new Section 124G means that it must be restricted to issues of copyright and copyright infringement, or whether the Secretary of State could use it for any purpose he liked—because he did not like someone's face, or whatever. I am being ridiculous and extreme there. I am very worried that we might inadvertently give a huge power to the Secretary of State. I know that it is very easy to make mistakes like that in law.

My Lords, I very inappropriately failed to make a short contribution on the amendment, which was also signed by those of us on these Benches. The noble Lord, Lord De Mauley, made such a good fist of it that it needed no further addition. The Minister has partly answered on Amendment 176—sadly, because he is insistent that the Secretary of State should take other considerations on board, whereas Amendment 176 is designed to try to ensure that the pure channel of empirical evidence is via Ofcom and that Ofcom is the one to gather the appropriate information. The amendment was dealt with well by the noble Lord, Lord De Mauley.

Taking into account the comments of both noble Lords, we are happy to wait for the Government to come back with their proposed wording. On that basis, I beg leave to withdraw the amendment.

Amendment 175 withdrawn.

Amendment 176 not moved.

Amendment 177

Moved by

177: Clause 11, page 13, line 28, at end insert—

“( ) An order under this section must not be made until at least a year after the digital Economy Act 2010 has been passed.”

I shall speak also to Amendment 180. The Government have already made certain concessions on the process to be adopted for technical measures in their response to the Delegated Powers Committee, but I do not think that they have done so on the matter covered by my Amendment 177. We believe that a chance must be given for the initial obligations code to bed down before any new measures are adopted. Earlier, we tabled an amendment about waiting until Ofcom had issued its first annual report. This is very similar in import. I should be interested to hear what assurances the Minister can give. We certainly do not believe that it would be appropriate to act hastily in this respect. It would be an extraordinary set of circumstances for the situation to have got so bad that the Government felt that they had to introduce technical measures within a year. A year and then an assessment seems about right.

Funnily enough, the noble Lord, Lord Maxton, has been answered by the Minister in previous debates. The Minister was insistent that preparations could take place before Ofcom had actually proposed that measures be taken. Although that did not satisfy me, it may satisfy the noble Lord.

As regards Amendment 180, one of the key issues is how such a code should be introduced. This is simply an attempt to ensure that consultation takes place and that the affirmative process is used in those circumstances. We have not put on all the knobs, bells and whistles that the Government have put on to Clause 17, which forms a useful precedent for anybody wishing to make sure that an order is virtually unpassable. This is a rather modest amendment. I beg to move.

My Lords, the Minister may feel that my Amendments 179 and 207 cover ground which has already been sufficiently discussed. I would agree with him.

The noble Lord nearly gave me a nasty turn.

I will start with Amendment 177. I listened with interest to the concerns of the Committee last week that this part of the Bill is unclear about the order in which actions should happen and the timescales involved. I recognise that there are genuine concerns in this area. I have always made it clear that the Government intend to introduce technical obligations only if the initial obligations do not work. I agree, however, that it would be helpful to provide more clarity on the face of the Bill about the intention that technical obligations should not be introduced unless or until the initial obligations have been tried and found not to be sufficiently effective. For this reason it is our intention to propose, on Report, an amendment to Clause 11 to require a minimum period of 12 months following the coming into force of an initial obligations code before an order imposing technical obligations may be made. I hope that this will meet the concerns of the noble Lord and others with similar concerns that this will not be a rush to judgment. There will be a decent period of time; as I have said, our proposal is to have a period of 12 months following the coming into force of an initial obligations code on which there will be a consultative process.

On Amendments 179 and 207, we have set out in the draft SI our views on how the costs of the initial obligations should be handled. The noble Lord, Lord Lucas, appeared to be satisfied in that respect so I will not dwell on that.

Turning finally to Amendment 180, we discussed last week an amendment tabled by my noble friend Lord Mandelson to ensure that an order under this section is to be made by the affirmative procedure. I hope that that achieves what noble Lords want.

Given my explanation, I hope that the noble Lord will feel able to withdraw the amendment.

My Lords, these are two pieces of marvellous news; with regard to the second, although I could not find the Government’s amendment in the right place, I knew intuitively that the Government had agreed to that. I thought I had better speak to my amendment nevertheless to make sure the point was dealt with.

I am pleased by the Minister’s promise of further amendment to make the point absolutely clear and I look forward to seeing what the Government produce. In the mean time, I beg leave to withdraw the amendment.

Amendment 177 withdrawn.

Amendment 177A not moved.

Amendment 177B

Moved by

177B: Clause 11, page 13, line 33, at end insert—

“( ) No order is to be made under this section unless a draft of the order has been laid before Parliament and approved by a resolution of each House.””

Amendment 177B agreed.

Amendments 178 to 181 not moved.

Amendment 182

Moved by

182: Clause 11, page 13, line 33, at end insert—

“(4) An order made under this section shall expire three years after it comes into force, unless it is renewed.

(5) At any time prior to the expiry of an order made under this section the Secretary of State may direct OFCOM to make—

(a) an assessment of the effect of an order made under this section; and(b) a recommendation as to whether the order should be renewed.(6) When directing OFCOM to carry out an assessment or make a recommendation under subsection (5), the Secretary of State may also direct OFCOM to—

(a) consult copyright owners, internet service providers, subscribers or any other person;(b) carry out an assessment of the likely efficacy of a technical measure in relation to a particular type of internet access service; and(c) take steps to prepare a proposed technical obligations code.(7) In making an assessment under subsection (5)(a), OFCOM shall include in its report an assessment of any directions given under subsection (6)(b).

(8) The Secretary of State must lay before Parliament a report made under subsection (5) as soon as practicable after it is received.

(9) At any time prior to the expiry of an order made under this section the Secretary of State may renew that order for successive periods of three years following a recommendation from OFCOM.”

My Lords, I am surprised that Amendment 181 was not moved. Amendment 182 is merely an amplification of Amendment 181 but I would be interested to hear what the Government have to say. I beg to move.

I agree entirely with the amendments, although I preferred the first amendment in the group, Amendment 181, which has not been moved. It is short, simple and to the point, as opposed to Amendment 182, which is rather tortuous. We do not know what the effect of the powers will be. The pressure on parliamentary time can be incredible, and the three-year point is the stage at which Governments think of the next election and busily try to bolster their credibility with the public, so it may not be the best time to revisit something that is not working terribly well. The amendment would be a very good way of forcing the Government to revisit this. I think that the power is more draconian than the Minister does, but let us think of the worst picture. A sunset clause would be a good idea.

I sympathise with the concern that a technical obligations order does not just run and run without any further assessment of its impact or effectiveness. Having a clear expiry date would also ensure that Parliament had an opportunity to assess whether the replacement order was still justified. We would object to ISPs continuing to bear a technical obligation to restrict the subscription of certain subscribers, even when technology subscriber behaviour or copyright law has moved on so as to make it irrelevant. That would be ridiculous, so there needs to be a quick and easy way to remove burdensome regulation when it is no longer applicable. I am therefore slightly disappointed that the noble Lord, Lord Clement-Jones, did not move his amendment.

My noble friend’s amendment is rather more detailed. It has the advantage of allowing the rapid renewal of an order to ensure that there is no break in its effect, while still ensuring proper ongoing assessment and scrutiny. I am sure noble Lords will also have noted the inconsistency between the detailed and almost excessive assessment of the impact of Clauses 4 to 8, as laid out in Clause 9, and the complete lack of any such reporting duty on the technical measures. We would not want to insist on three-monthly reports in perpetuity, as Clause 9 does, but some level of reporting is essential.

My Lords, I hope the Committee will forgive me if I do not speak to Amendment 181, as it was not moved. I am very happy to speak to Amendment 182, which is very interesting, and we can see the logic of what it proposes. However, while I suspect that in practice we will look at time limits, or at least review the continuing relevance and necessity of the measures, we do not think that it would be a good idea to set this in stone in the legislation. A shorter period may be preferable, and, while that would not be precluded by the amendment, it is inevitable that a time limit that is set in legislation becomes the default setting.

Moreover, while the idea of requiring an assessment from Ofcom to be laid before Parliament is attractive—I am sure that we would all endorse basing decisions on evidence—we should not underestimate the resource that such an assessment would require. Ofcom would quite rightly regard it as a major task, and the cost, which would be borne by members of the industry, could be considerable.

The Committee will not be surprised to hear that I also do not agree that the Secretary of State’s ability to renew any such time-limited application of technical obligations should be on the basis of a recommendation from Ofcom, even though we highly regard that organisation. In the same way that we do not think it is right to restrict the initial decision to an assessment by Ofcom, we do not think that it should apply here. In practice, the view of the regulator will have force, but it should not be the sole arbiter of whether technical measures are needed, and I doubt very much whether Ofcom would wish to be put in that position. On balance, I hope that the noble Lord will agree that what I have said is reasonable and will withdraw his amendment.

Amendment 182 withdrawn.

Clause 11, as amended, agreed.

Clause 12 agreed.

Clause 13 : Contents of code about obligations to limit internet access

Amendment 183

Moved by

183: Clause 13, page 14, line 32, at end insert—

“( ) that it makes proper provision for rights of appeal by subscribers concerning notifications (see subsection (1A));”

My Lords, we discussed this in the context of earlier parts of the Bill, and I hope the Minister will bear in mind our various conversations on the exact wording of these amendments. I am not trying to restart any of the arguments which the Government won, or which I persuaded them to accept, on what appeals should look like; I am just trying to address the basic requirement that a proper method of appeal should be available in these circumstances. It is not sufficient to leave this as a “maybe”. It ought to be a requirement and spelt out in the Bill. I beg to move.

My Lords, I agree with my noble friend that the scope of any appeal process relating to the imposition of technical measures should be at least as wide as for the measures in Clauses 4 to 8. A similar argument holds for the division of costs. If the Minister disagrees, I should be interested in his reasoning: infringement reports and technical measures are imposed on a subscriber on the basis of allegations made by a copyright holder and are implemented by an internet service provider. If anything, the appeal process should be tilted more in favour of the subscriber because of the more serious consequences of having technical measures imposed.

As to the amendment in the name of the noble Lord, Lord Razzall, I hope very much that the Minister will not fall back on his desire for endless flexibility. But if he does not accept this amendment, I hope that he will give us an example of when it would not be absolutely necessary to include these measures in a code.

My amendment probes a little further the question of whether a technical measure stands while an appeal is ongoing. It is our view that a technical measure should not be imposed until all avenues for appeal and objection have been exhausted. After all, a technical measure will have a significant impact on a subscriber and, if the measure is proved not to have been justified, it will be time-consuming, and possibly expensive, to compensate for the unjustified impact.

Of course, there is the view that delaying the technical measure while a protracted appeal case is concluded merely allows for more copyright infringement, but if ever there was an incentive to establish a low-cost, effective and, above all, rapid appeal system, this is it. By postponing technical measures until the appeal system is over, an efficient system is to everyone's benefit.

My Lords, I speak to Amendment 191, which was ably referred to by the noble Lord, Lord Howard. I thought that he made the point entirely appropriately that in some cases of parliamentary drafting the word “may” means “must”. It is perfectly reasonable not to have a great debate about the use of those words. But in this case, there is an important point to be made about the contents of the code. It is important to get certainty from the outset.

When we talked about the initial obligations code, we talked about what needed to be included and Clause 13(4) is an important element of that. The signpost should be “must” rather than “may”. If no provision for the payment of a penalty to a person is specified in the code and there are no provisions requiring a copyright owner to indemnify an internet service provider or for postponement in the case of appeal, the code would be extremely deficient. Although this amendment is innocuous on the face of it, it is significant and I look forward to the Minister’s reply.

My Lords, I agree with Amendment 191, which would change the word “may” to “must”. Clause 13(4) does not include payment to the subscriber should it turn out to be an unjust disconnection, which could be extremely serious in the case of a small business. There could be a huge knock-on effect and it could bankrupt a small business. People are compensated for wrongful arrest and I would treat this situation in the same way. There could be extremely serious consequences on someone’s livelihood; it is not that it “may” be taken into consideration but that it “must” be taken into consideration.

My Lords, I agree absolutely that it is vital that there should be proper and fair provision for appeals for those subscribers who may find themselves subject to technical measures. The current text of Clause 13 already properly provides for an appeals mechanism, including to a first-tier tribunal if necessary. I appreciate the fact that the noble Lord, Lord Lucas, and other noble Lords, have expressed concern in previous Committee sittings that the Bill does not contain enough detail on the appeals mechanism and the protection that the subscriber should have. It is our intention to think hard about providing greater clarity on how the appeals mechanisms will work in relation both to the technical measures and the initial measures, the defences that the subscribers may rely on and how they can bring evidence to defend themselves. Those points have justifiably been raised previously. I cannot promise changes to the Bill, although they may be necessary, but I very much take the noble Lord’s point that we need to think further about this, so we will be returning to it.

I am not so happy to agree to Amendment 191, but I can bring good news on Amendment 193, tabled by the noble Lord, Lord Howard. We are prepared to consider it and I am happy to confirm here in Committee that it is the Government’s intention that the full appeals process should be completed before any technical measure is imposed. Since it goes with the grain of the Government’s thinking, perhaps we can take the amendment away and consider it further. I hope in the light of these explanations the noble Lord will feel able to withdraw the amendment.

Amendment 183 withdrawn.

Amendment 184

Moved by

184: Clause 13, page 14, line 39, at end insert—

“( ) that regard is had to the nature of any service made available by a subscriber that is a library or an educational or cultural establishment, to its staff, members or users, and the degree of control that such organisations have over their internet access”

My Lords, I shall speak also to Amendment 196. In another part of the Bill we discussed the whole area of wi-fi and library services. The Minister was very clear, eventually, in saying which side of the line libraries and wi-fi providers fell. I do not wish to prolong the agony of that debate unduly because we have dealt with the principles involved to a large extent, but there is considerable dismay particularly among cultural and educational institutions that they will fall on that side of the line. Many of them feel that they will have to rethink on whether they can continue to provide these kinds of services to students and so on. The Minister has been saying pretty consistently that they will have to take responsibility for all illegal downloading of those who use their service. That is a heavy responsibility for those institutions.

The two amendments have a similar purpose, as did the previous amendments relating to the initial obligations code. I do not know whether the Minister has had time to reflect on these matters, but it seems extraordinary that we will be placing such a burden on these institutions. I heard what the Minister said about the kinds of things they could do in terms of installing software and so on, but this is not the family home. We are talking about university colleges and the young people who use the services are free agents. I hope that the Minister will think again about this. Certainly the correspondence that I have received since these debates began has been considerable. The cultural and educational sectors are very concerned about these matters.

I hope that the Minister will think again about this. Certainly the correspondence I have received since we last had these debates has been considerable, and I can say that the cultural and educational sectors are very concerned about these matters. Perhaps the Minister will take the opportunity, on this second time around, to be rather more reassuring than he was the first time. I beg to move.

My Lords, I would be grateful if the Minister felt able to enlarge on what he said last time about the measures that libraries and similar institutions can take to avoid the consequences of this Bill, given how their facilities are likely to be used and the nature of their customers.

My Lords, I endorse everything that has just been said. What is not in this amendment, but probably should be, is the position of local authorities providing free wi-fi as a public service, which is extremely useful in the modern digital world. The Minister might want to consider that before the next stage—indeed, I am sure that he will do so.

My Lords, like other noble Lords, I have a lot of sympathy with the noble Lord’s amendments. It is quite right that libraries and educational establishments might have particular conflicts between their founding principles of allowing users access to as broad a selection of material as possible and the Government’s desire that none of those users should ever abuse the service. It is only common sense to require the Secretary of State to have regard to these difficulties when imposing a technical measure.

Indeed, having regard to the feasibility of an order should be a concern across the board. Educational establishments might have difficulties with their principles, but other organisations might have difficulties on purely practical grounds. If a local shop is providing free wireless access, something that is of great benefit to the public, there is a limit to how effective any preventive measures they take will be, and there are some very technically expert people out there. It would be quite unreasonable to expect every service provider to counter every attempt to infringe copyright through their service.

My Lords, as has been acknowledged by the noble Lord, Lord Clement-Jones, we have previously debated the issue covered by Amendment 184 at length: the position of libraries and other cultural institutions and their subscribers under the provisions of the Bill. As I have said, but it bears repeating, we value highly the service that such bodies provide in the community, but we think that so long as they take pragmatic and proportionate measures to protect their systems and deter copyright infringement, they have nothing to worry about. I do not agree that we should make them a special case within the legislation, or that their position makes them particularly deserving of special treatment within the technical obligations code over and above more commercial networks or, indeed, the position of the general public. I simply do not believe that a university or a library either should or would want to give people free rein to act unlawfully simply because the institution serves a cultural or educational purpose. That must be wrong.

I also cannot accept the point about young people made by the noble Lord, Lord Clement-Jones. I do not want to paraphrase him, but I think he referred to young people as “free agents”. They might be free agents in many respects, but not when they enter the library and not when they participate in the university system. There are codes of behaviour that they have to accept. What we are discussing, in ensuring that they do so, is how libraries and universities can take what we would consider to be reasonable and proportionate measures.

Amendment 196 goes further and would allow anyone using anyone else’s connection with or without their permission to infringe copyright with impunity. That does not stand up to scrutiny. It is only right that people should be expected to take responsibility for what happens via the connection they pay for, which almost invariably would be provided under contract with a prohibition on using the service or allowing it to be used for unlawful purposes.

I want to try to address the question of libraries and universities, so I shall read certain points into the record. We should consider how libraries currently prevent unlawful behaviour. Where library internet access is offered on fixed machines, those machines would not have peer-to-peer software and are set up to block attempted downloads and installation of the software. For fixed library terminals, it is therefore unlikely that they would or could be used for peer-to-peer copyright infringement. Furthermore, library networks have firewalls which do not allow access to a number of sites, such as those containing Flash technology. These firewalls are generally for security rather than file-sharing reasons. In addition, libraries will have a filter system which should block access to known illegal sites. Obviously this is not a foolproof option since it would depend on the sites blocked.

In common with commercial services, all library services should have a conditions-of-use policy which users have to agree to before getting access to the network. This will state that, for example, no unlawful activity including copyright infringement is permitted. Policy usually stipulates that legal liability for unlawful activities sits with the individual, not the library service.

I have not yet got as much information as I would like on universities, but we are pursuing this and I will make this information available to noble Lords in-between these debates. The situation in universities is more complex than in libraries, not least because, generally speaking, they need and operate networks with much higher bandwidth. In principle, we do not see any problem in adopting the same approach as outlined for libraries, but we are currently involved in discussions with JANET, the UK’s education and research network, and some educational establishments on how their networks operate and the actions they currently take.

The noble Earl, Lord Erroll, mentioned a particular university; we will try to pursue that one. I hope that with the assurances and the explanation I have given, noble Lords will feel able to withdraw the amendment.

My Lords, the Minister mentioned fixed terminals in libraries having software to prevent peer-to-peer file-sharing, but universities are a very different case in that many students have their own laptops which they simply plug into the university’s system. As the Minister has said that he does not think that universities merit an entirely different approach, have he and his department explored whether there is a way of framing the clause so that a different approach could be taken, or will he explore that before Report? I did not hear him say either of those things.

My Lords, I do not think that my noble friend replied to the point made by the noble Earl, Lord Erroll, about local authorities providing free internet access in their area, which is a much broader concept than that of universities or libraries, particularly as it will be wireless and therefore possibly more difficult to monitor. Unless there is an answer to this, it might clash with the Government’s commitment to provide broadband internet to all areas. There may very well be rural areas where the only way to provide broadband is to provide a wireless point and then have the rest of the community picking up that free wireless access, or even paid wireless access. It would be very difficult, in my view, to monitor the legality or otherwise of that usage.

My Lords, I shall try to address these points. I was trying to give the noble Baroness, Lady Miller, an assurance on universities when I said that we had not got all the information that we needed. We certainly do not think that we can exempt them, but I want to come back when we have fuller information. We will make that information available prior to Report.

There are reasonable steps that institutions such as libraries can take on wireless connection to make it harder for people to access and use peer-to-peer sites and software. We do not pretend that such measures are 100 per cent effective and we do not require this. It is more a case of ensuring that the would-be infringer has to make a conscious decision and some effort to continue to infringe. We have written a letter in which we set out the types of measures that we would deem “reasonable”. I do not know whether everybody has seen that letter, but we have made it available.

On wi-fi supplied by local authorities—the Swindon example is the one that comes to mind—we think that it would be much more difficult in those circumstances for significant downloading to take place, because of bandwidth restrictions. If I can supply more information on that, I shall do so in trying to assuage the concerns of my noble friend Lord Maxton.

The Minister talked about taking reasonable steps. I seem to remember that at an earlier stage we proposed that the steps should be laid out and that there should be a defence that you had taken the reasonable steps as laid out by Ofcom in the code. The Government rejected that, saying that it was unreasonable, because then there could be all sorts of other defences. I presume that this means that the Government will rethink their attitude to the earlier amendments.

My memory of that is slightly different. I do not think that we have ever said that, if we were advising people on what we regarded as reasonable measures and they took those measures, that would not in itself be a reasonable defence.

My Lords, I thank the Minister for his reply on those amendments. We are making some progress. The Minister’s reply was a deal more informative than it was last time. There is still a problem with the boundary being set where it has been placed, but if the Minister is saying that duties are going to be different depending on the ability of the subscriber to control the activities of the individuals using the service, then we are making some progress. He has acknowledged that it is probably more difficult for a university system to control what their users do than it is for a library in a fixed position, so to speak.

The local government example is fraught with difficulties and I look forward to seeing what the Minister’s letter says. I suspect that it will become more and more difficult to distinguish between the different types of service that are provided and to come up with different types of duties depending on whether it is proportionate or not for that service to take a particular action. It will be so ad hoc that it will be impossible for the administrators of these services to gauge whether what they are doing is reasonable in those circumstances. That is what worries me; this will be a precautionary block on the expansion of these services, particularly the kind of municipal service that the noble Lord, Lord Maxton, talked about. That is what some of us fear. We want to see a flourishing of these services, not a constriction.

Little by little, we are teasing out more information from the Minister. He says that he is doing more research into how universities block access or are able to control the activities of their users. I hope that he will come back with more in his letter. He will also address the issue of local authority services, which is an important factor as well. All in all, we await his letter with bated breath. In the mean time, I beg leave to withdraw the amendment.

Amendment 184 withdrawn.

Amendment 185 not moved.

Amendment 186

Moved by

186: Clause 13, page 14, leave out lines 41 to 45

I shall speak also to the other amendments in this group. I apologise to the Committee for not being here for my previous amendments, although that was no doubt some relief to my noble friend the Minister.

I declare my chairmanship of Consumer Focus. My concern here is for the consumers of digital services and the process that this whole part of the Bill will put them through. My noble friend will know that I fundamentally disagree with the approach that the Government are taking in this respect. If the issue of the user abusing the system were classified as theft under the criminal law, the user would have to be taken to court and normal court procedures would apply. If it were a civil wrong, as indeed this is under copyright law, the proper process of righting that wrong against the abuse by a user would be through the civil courts.

My main reason for tabling these amendments is that they would effectively delete the right of the system administrator to require ISPs to impose technical measures, subject to an appeals process, and substitute something that is closer to the normal process when a wrong is alleged through our legal system. That is to say that technical measures—sanctions—would not be applied until the courts system had agreed that they should be applied.

I have never denied that there are rights accruing to the rights holders and that some process is needed in order that those rights are recognised. What I object to is the process, where it is only once the sanction has been agreed to be applied that there is an appeals process. I recognise that these clauses say that, if the appeals process is triggered, the sanction should not be applied, but that is a second-stage process as compared with the normal law.

What I really want on record from the Government, and what I still do not understand about the attitude of the Government and the industry, is why the normal rule of law cannot apply to this form of copyright infringement, whereas it does apply to all other forms of copyright infringement. If somebody is complaining about a breach of patent, for example, they go to the courts. I want a clearer explanation from the Government of why that should not apply in this case. If we are to take this forward, we need that on the record and we need to know whether public opinion is prepared to accept it. There are serious problems at the point where this comes to be imposed, particularly if it is imposed against individuals rather than, as I would accept was necessary, against people who are making serious commercial money out of this process. I think that the Government will be faced with a serious backlash. I say to the opposition Bench that that may be an alternative Government, so all three Front Benches should take note of the politics of this. Part of the backlash will be about the fact that due or normal process has not been observed.

I have no hope that my noble friend the Minister will accept my amendments, but they raise a fundamental principle, on which I find it difficult to defend the Government’s position and which I think the Government, certainly at the point of application, are going to find difficult to explain to the British people once these measures are put into place and enforced. I beg to move.

My Lords, I strongly support the amendment tabled by the noble Lord, Lord Whitty. He has eloquently explained it and asked the Minister why there is not due process in the case of the digital economy approach that this Bill sets out. Everything that the noble Lord, Lord Whitty, has said underlines the glaring omission from this Bill of any rights given to users of the digital economy—the citizens. The Government could have chosen to draft a clause setting out the rights of internet users, because the digital economy should bring lots of rights to those who use it. Among those would be the right to have all the ways that fraud can take place on the internet explained. We have discussed that issue in the context of cybersecurity: people are not given good guidance about online security. Starting from that, there should be a whole hierarchy of rights that people should be given in this Bill but which are missing from it. It would be helpful if the Government were able to draft a clause like that, ready for Report, to insert the rights of citizens using the internet. Some of that would encapsulate the points made by the noble Lord, Lord Whitty.

My Lords, some of these amendments mirror the discussion that we had on a similar point on the earlier provisions. Others go a little further into the form of the appeals system. I sympathise with the noble Lord’s attempts to ensure that appeals against technical measures are sent into the courts system. They are, after all, potentially of a completely different order from infringement lists and notifications. I shall be particularly interested to hear the Minister’s response to the points made by the noble Lord, Lord Whitty.

These amendments essentially propose that there should be a judicial ruling before any action under the technical obligations is taken. We of course accept the need to ensure that people’s rights are protected, but we believe that the appeals arrangements in the Bill do this. In practice, this means ensuring that the process is based on very firm evidence—I have previously stressed the point about having a clear audit trail—and that there is a clear and accessible way for subscribers to appeal, should they feel that they have been identified wrongly.

I stress for the benefit of my noble friend Lord Whitty, whom I am pleased to see back in the Chamber, that I have already confirmed that it is our intention that the full appeals process should be exhausted before any technical measures are imposed on a subscriber—that was one of his major concerns, and I give him an explicit assurance on it. That means that, if a subscriber considers that the measure should not be applied and chooses to appeal, they will have the opportunity to have the appeal heard by a First-tier Tribunal, which is a judicial body, before a technical measure is imposed. Given those rights that we have identified, the fact that the appeals process has to be exhausted before any measure is applied and the fact that the appeal will be heard by a First-tier Tribunal, which is a judicial body, I do not believe that there will be a backlash. I say to my noble friend that the whole process is about ensuring that we educate and change behaviour before we arrive at that point. We have talked about the initial letters bringing people’s attention to obligations of which they may not be aware.

I shall see what I can do to assuage the concerns of the noble Baroness, Lady Miller, in relation to explaining online security measures to subscribers. I do not think that that is captured in the code at present, but it is clear that we want it to be part of what accompanies the initial obligations in the first letter. As regards the point that my noble friend Lord Whitty made about a court hearing, there is a real danger of moving more people into the courts system than we need to if we take that road. We want a fair, open and transparent process. We do not want to impose any technical measures until we know whether the initial obligations about which we have talked will succeed or fail. In the event that they fail, we want to ensure that, as I said, we exhaust the appeals procedure and keep people out of the courts.

I know that this is a measure that my noble friend Lord Whitty considers to be fundamental, but I do not think that it is appropriate or practical. On the surface, requiring a court to make the decision whether or not to apply technical measures may seem a reasonable safeguard for consumer interests; certainly we have a duty to ensure that the position of the ordinary subscriber is properly protected. However, in practice, we believe that this would be slow, cumbersome and expensive, causing unacceptable delay when speed is needed, and probably causing additional stress to subscribers—after all, a court ruling is no small thing. It would also risk putting a burden on the courts. We believe that we have established a procedure that is open, transparent and fair. It ensures that the full appeals process is exhausted before any technical measures are imposed on a subscriber and that, when they make their appeal, it is heard by a First-tier Tribunal, which is a judicial body, before any technical measure is imposed. Although we may not agree on this, I trust that, in the light of my explanation, my noble friend will feel able to withdraw the amendment.

Can the Minister explain a little more about the costs involved? He referred to the costs of going to a court of law being expensive, which I would have thought is a very accurate comment. Are we right to assume that, before that point is reached, the Bill provides for an adequate place where a defendant, if you like, can raise the whole issue and have what he has to say taken into consideration without having to pay vast amounts? That is important at that stage.

I thank the noble Baroness for that question. We have been down this road before but it is worthy of a quick repetition. We have said that we do not want to deter people from making an appeal. There should be a fee but it should not be a deterrent fee. It should deter frivolous appeals. If appeals are successful, the fee should be refundable. It would be a lot less in our view than involving the courts in the process.

Can the Minister confirm my understanding of how the process will work once we are in the technical measures regime? My understanding is that we will still have the first stage of the old regime. In other words, when a subscriber first trips over the threshold, they will receive the explanatory warning letter, which is contained in the first sections. It is only when they commit a subsequent infringement that they will be into the technical measures section. Technical measures are not part of the first notice that a subscriber receives.

The noble Lord talks about the appeal process being exhausted. Does that mean that, if the appeal has failed, technical measures will be imposed or that, from that point on, technical measures can be imposed? As I understand it, it is the first of those. I also want to ask whether the Minister has thought any further about what assistance will be given to citizens in terms of the technical aspects of their defence in front of a tribunal. How will they be assisted to show that their computer contains no infringing material or that their network has not been used in ways that are inappropriate? I will understand if the Minister has nothing further to say, but if he has something further to say, it would be helpful.

I am just trying to see what detail I have. The initial obligations procedure has to be gone through, so there may be a first, second or even third letter before we reach the technical measures. We are clear about that. In those initial letters, we will be advising people of the security measures that they can take. We have debated whether it would be a reasonable defence in an appeal if they validate that they have taken those measures. In our view it would be. I do not think that I can give a more detailed explanation at this juncture. I hope that, in the light of my explanation, the amendment can be withdrawn.

My Lords, I will in a minute withdraw the amendment, which I did not have any great hope of the Government accepting. There are some principles involved here. The Government have to take on board the fact that the users have no rights under this Bill. If the Government were prepared to engage and alter copyright law, possibly even using Clause 17, which we shall be debating in a minute, to create a fair-use clause in copyright law in this country—such a defence exists, albeit not in an entirely satisfactory form, in United States law—the consumer would clearly have some protection. At the moment, all the rights are on the part of the copyright holder. The obligations are on the ISP, with some protections, and there are no rights for the user. Normally, those rights would have been protected by the courts, but instead we are inventing a new tribunal system, which my noble friend says is judicial. In almost all other circumstances, the court would be used for that process; enforcers go to a court to obtain a sanction for their moves to be imposed. I still do not believe that there is a clear case for having a judicial process separate to what applies in all other forms of copyright law.

I accept where the Government are, but essentially the balance in the Bill does not give any rights to the user. As the noble Earl, Lord Erroll, said, the Bill does not even indicate how subscribers can protect themselves with what would be regarded as a reasonable defence. The balance is almost entirely on the side of the copyright holder. I am not convinced that this is the right approach, as my noble friend knows. If the Government persist in their approach, they need to explain it better and much more clearly.

My noble friend denies that there would be a backlash. Without a more balanced Bill, there will be a backlash. I remind leaders of political parties, so far as they are represented in this House, that in the Swedish elections after the piracy case nearly a quarter of all voters under 25 voted for the Pirate Party. Their votes were completely wasted, but the mainstream parties had alienated those voters. There are bigger social and political issues involved in this than the Government are facing up to.

We want to alter behaviour. The aim must be to get the majority of people on to legal systems, but to do that will require time and investment in developing those systems, making them more appropriate and getting rights holders to work through them, rather than resorting to an abnormal method of imposing sanctions.

I shall return to this issue at a later stage, perhaps in a more comprehensive way, taking on board some of what my noble friend the Minister said about the Government’s determination to set up a separate tribunal system. At the moment, even with that tribunal system and even accepting what the Minister said about the processes of that system being equivalent to those of a court, I do not think that the balance is right. It would be appropriate to return to this matter at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment 186 withdrawn.

Amendments 187 to 193 not moved.

Amendment 194

Moved by

194: Clause 13, page 15, line 36, at end insert—

“( ) provision requiring a copyright owner to indemnify an internet service provider for any loss or damage resulting from the owner wrongly accusing a subscriber of an infringement of copyright;”

My Lords, this amendment could easily have been grouped with an earlier amendment to Clause 8, because it is similar in form. At the moment, there is a requirement for a provision for such an indemnification resulting from the owner’s,

“infringement or error in relation to the code or the copyright infringement provisions”.

This greater injustice would need to be rectified. The technical measures would have been more drastic than anything envisaged in the initial obligations code. This is more vital in the technical measures code than it would have been in the initial obligations code. I hope that the Minister will consider this very carefully because it seems to us to be something which would prevent trigger-happy behaviour by copyright owners. They would have to think quite carefully in those circumstances as fairly drastic action—particularly temporary account suspension—would be available to them through the technical measures code. I beg to move.

My Lords, the amendment would provide for indemnification of internet service providers against any damage they might suffer from a wrongful accusation made against a subscriber by a copyright owner. We understand and share the concern of the noble Lord, Lord Clement-Jones, in relation to this. I would suggest, however, that this is already properly catered for within the Bill, and indeed within the preceding text. This allows the code to provide for indemnification for an internet service provider for loss or damage from a breach or error by the copyright owner in relation to the code or the Bill’s provisions. In my view this would cover an error in relation to the identity of an infringer. To reinforce this further, the code allows for copyright owners to be made to indemnify ISPs in the event that the ISPs suffer loss as a result of a failure by the copyright owner. In producing the code it would be an option for stakeholders to require other undertakings by copyright owners if it was deemed appropriate.

I share the concern of the noble Lord but I hope that in the light of my explanation and assurances he will feel able to withdraw the amendment.

My Lords, I thank the Minister for that reply and I am delighted that he shares my concerns. His clarification was very helpful and is on the record. I hope that the code and the provisions of the Bill will be interpreted accordingly. I beg leave to withdraw the amendment.

Amendment 194 withdrawn.

Amendments 195 to 197 not moved.

Clause 13 agreed.

Clause 14 : Enforcement of obligations

Amendment 197A

Moved by

197A: Clause 14, page 16, line 9, leave out “£250,000” and insert “£10,000”

My Lords, this amendment is designed to probe and clarify the basis for and the amount of the penalty under Clause 14. The wording of the Bill appears to be based on the enforcement regime currently in place for regulation of premium rate services. This is not a relevant or appropriate basis for enforcement in relation to Clauses 4 to 17. The initial penalties provided in the Communications Act for premium rate services regulation were much lower and have been changed following evidence-based consultation justifying the rationale for increasing the amount. It is wrong to set penalties relating to this entirely new and different purpose by reference to what may now be appropriate for premium rate services regulation following bedding in and operation of that regulation over many years.

It would be wrong also for internet service providers to be subject to such massive fines given that their involvement in any copyright disputes can be only as bystanders to actions between copyright owners and subscribers. We have had that debate about ISPs and their duties as a communications channel.

This amendment is also designed to probe for information from the Government as to how Ofcom is to be able to apply the Communications Act powers invoked here—and throughout the Bill—to copyright owners who are not themselves communications service providers and so not obviously subject to Ofcom’s jurisdiction. We understand that the provisions relating to enforcement obligations in this clause are not relevant to copyright holders but wish to highlight the absence of any powers for Ofcom to regulate copyright owners within this whole process. I beg to move.

My Lords, the sum in the Bill seems to be an enormous amount of money. I think that the £10,000 set out in the amendment is more proportionate. It would be helpful if the Minister could say in his reply how this sum was arrived at—it may be there is some justification for it. I will await his reply before coming to any conclusion.

My Lords, this is an enormous sum for small internet service providers. The market has some very big players and I am quite sure that £250,000 will be neither here nor there to them. They will just pass it on to their people. However, there are some very small people in this market who are very dedicated and who provide very select services and this will just wipe them out. The Minister may say that Ofcom would not dream of levying that scale of fine, in which case we should make it conditional that fines must be proportionate to turnover. Given the power, people end up bullying people and that would be very dangerous. If we leave this enormous sum in the Bill, it will be misused.

My Lords, my amendment in this group removes the power of the Secretary of State to raise the maximum penalty by statutory instrument. As has been said, £250,000 is a great deal of money. It is hard to imagine that this sum will not be a sufficient deterrent against an internet service provider breaching the obligations of the code. If such a sum turns out to be inadequate in enforcing compliance, the priority should be to examine what is so hard to follow in the code. For an internet service provider to take a £250,000 hit rather than implement technical measures or send notification letters suggests there is something very wrong with the process. That is where the Government should seek a solution.

My Lords, I thank those noble Lords who have taken part in this debate but I am afraid we do not agree with any of the points that have been made. We do not think that Amendment 197A would be regarded by anyone as one which reinforces the seriousness of what this legislation is trying to achieve including, I suspect, most internet service suppliers if they were being frank. We must take into account the sheer scale of the companies involved. They will range from medium-sized companies to some multinational corporate giants.

A point to be borne in mind is that this is the maximum penalty. We would not expect it to be applied too often—perhaps not at all—to any smaller bodies which find themselves in contravention. The text makes it clear that this has to be both appropriate and proportionate to the contravention. However, it must be right to retain the deterrent effect of a significant sum.

Amendment 198 would effectively set the maximum penalty in stone for all time. We do not believe that it would be appropriate to do that either. The maximum penalty is a significant one of £250,000, but against that must be set the huge scale of the bodies being regulated and the need to provide a route through which such maximum penalties will remain an appropriate deterrent into the future. What is certainly a hefty figure now may not seem so in 10 or 20 years and we should take care when a specific sum is mentioned to allow that sum to be changed as circumstances change.

The noble Lord, Lord Clement-Jones, claimed that the £250,000 penalty was out of line with penalties for similar offences elsewhere. We would not agree with that. It is in line with other penalties within the Communications Act 2003 and is the same as the maximum penalty for breaching a condition relating to premium rate services. It is true that there are other penalty levels in the Communications Act, including the £10,000 suggested by the amendment. There is also in the Act the much steeper maximum penalty for breach of a Section 45 condition—these are conditions of entitlement to provide networks or services—of 10 per cent of annual turnover. We agree that such a penalty would not be appropriate here. However, I am satisfied that we have got it just about right. It is a maximum penalty and Ofcom is required to take into account appropriateness and proportionality.

The noble Lord raised the question of Ofcom’s jurisdiction over copyright owners. He is right that Ofcom is a communications regulator and does not have jurisdiction over copyright owners. In this instance, the jurisdiction that it has is over ISPs. It is in that respect that the Act will apply.

On the amendment of the noble Lord, Lord Howard of Rising, we take the view that any future changes to penalty levels should be made by statutory instrument subject to affirmative procedure and therefore will be approved by Parliament rather than set in stone. I hope that, after what I have said, the noble Lord will feel able to withdraw his amendment.

Perhaps I could make one point to the Minister. If there is a maximum penalty of £250,000, it is not set in stone for all time; it is set until such time as Parliament chooses to have a different figure. There will be nothing to stop the Minister introducing primary legislation to change the figure if that is thought appropriate. We will come to this point when we discuss Clause 17. My amendment states that this decision should be left to Parliament and not to the Minister.

My point, my Lords, is that changes in the level of penalty will be the subject of an affirmative instrument, so Parliament will have a say.

My Lords, perhaps I may pick up on one thing that the Minister said, which was that Ofcom does not have jurisdiction over the rights holders. However, rights holders are the trigger for this process, while Ofcom is the regulator. One can conceive of situations where rights holders would abuse their position by putting responsibility for behaviour either on the ISP or on the subscriber who is the target of intervention. If Ofcom has no power over them, who does? We are talking about changing behaviour, but where in the Bill is the control over the behaviour of the rights holders?

My Lords, I thank the Minister for his reply. It is interesting that we had his velvet glove when he talked of a graded response, but now we get the mailed fist of the £250,000 maximum penalty. It reminded me of a Home Office debate about the deterrent effect of a £250,000 fine. To my ears, it sounds wholly disproportionate. We will take away the Minister’s hard-line rhetoric and consider it carefully. It seems out of kilter with the aim of creating a scheme that is acceptable across a disparate industry, including to ISPs and copyright owners, and that builds consensus, certainly within the code. This extremely heavy penalty will not induce good behaviour; indeed, I suspect that it may induce bad behaviour. Time will tell. In the mean time, I beg leave to withdraw the amendment.

Amendment 197A withdrawn.

Amendment 198 not moved.

Clause 14 agreed.

Clause 15 : Sharing of costs

Amendment 199

Moved by

199: Clause 15, page 16, leave out lines 31 to 34

My Lords, I will try to be brief on this group. Most noble Lords agree that costs should not fall unnecessarily on internet service providers. It is the copyright owners who seek these provisions and it is right that they should pay the bulk of the costs. That is doubly true because of the likelihood that any costs falling on internet service providers will be passed directly to their customers. I hope that, when deciding on the cost division, either initially or when any future orders are made, the Secretary of State will have regard to any evidence suggesting that subscription rates are rising as a result of the regulatory burden falling on the internet service providers. I also hope that the Minister will be able to tell us whether the cost division eventually decided on in the statutory instrument for the initial obligations code will be the same as for the technical obligations code. Are there any considerations that make him think that internet service providers or rights holders should pay a higher or lower percentage in any cases? I beg to move.

My Lords, should the amendment be agreed, I would not be able to call Amendments 200 to 202 inclusive, or Amendments 206A and 207.

My Lords, Amendment 206 refers to,

“provision to prevent costs being passed onto subscribers in the form of higher subscriptions”.

It was tabled by the Conservative Front Bench and I can quite see why. Someone has to pay for this. We have an interesting situation where the rights holders will benefit and hope to receive more money, but the internet service providers, who will have to do much of the enforcement, including sending out letters, and who will carry the costs, will receive no benefit. There is no suggestion that the rights holders should divvy up the benefits that will come from the Bill.

The ISPs will have to recoup the extra cost. They are in the business of business and are not making hugely disproportionate profits. It is a competitive market, so costs have been kept down. Therefore, we will see the monthly cost of internet service provision going up. That will be broadcast in bright lights to subscribers. If the Opposition hope to come to power, they do not want this happening on their watch. They do not want it said that they supported the passing on of these costs. It will be an unpopular measure. I would not quite liken it to the poll tax, but it is amazing what can bring people down—there is nothing like being dramatic about these things. My point is that the cost will be passed on to subscribers: one cannot expect the ISPs to absorb it. I entirely agree that we must protect copyright; I am not against copyright and rights holders. However, this is not the right way to proceed, because the unintended consequences are far more wide-reaching than people have allowed for.

My Lords, it is worth setting out why Clause 15 is part of the Bill. The apportionment of costs is, not surprisingly, one of the most contentious parts of the process for industry; it is an area where it is not realistic to expect the different industry parties to agree. Both copyright owners and internet service providers are adamant that their view of who should pay is the right one and there is little common ground between them. That is why we decided to include the sharing of costs as part of the Bill, rather than leave it as a matter for the code, which might have made reaching agreement on the code an intractable problem.

We have already discussed in Committee Amendments 200 to 206 and the principle of cost sharing. The draft statutory instrument with which we provided your Lordships set out our working assumption that copyright owners should meet 75 per cent of the costs—both those incurred by ISPs in complying with the initial obligations and the other costs that will arise for Ofcom and in relation to the appeals processes. We are quite clear that the bulk of the cost should apply to the copyright owners. Before the Horsemen of the Apocalypse ride in with somewhat melodramatic comparisons with the poll tax, I stress that in this working assumption ISPs would meet the remaining 25 per cent of those costs. We have been clear that in our view the bulk of the cost should be met by the copyright owners as the main beneficiaries of the process, while leaving internet service providers—I stress this—with a strong incentive to ensure that they keep their costs to the lowest effective level.

Finally, let me address the point about seeking to prevent internet service providers from passing costs on to their subscribers. This just is not practical. It is not appropriate for the Government to dictate how any of the industry parties should cover their costs or to prohibit any particular route. I suggest that the amendment would, in practice, be virtually impossible to police and could lead to endless disputes.

I shall spend some time on how this will be paid for. It will be paid for by industry through a flat-rate fee that copyright owners will pay, which will be set in a way that incentivises both copyright owners and ISPs to keep the process efficient and cost-effective. It is only right that copyright owners should bear the cost of infringement identification and any court action that they choose to take. They will also have to pay a flat fee to an ISP for each notification that the ISP has to process. However, the fee will be set at such a level that it will not cover all the ISP’s costs. Placing part of the costs on ISPs should ensure that the systems that they put in place to comply with these obligations are both effective—in other words, delivered rapidly—and cost-efficient. It will also provide ISPs with incentives to minimise the number of notifications that they receive either through commercial content deals or by taking voluntary action to limit file-sharing on their network. In light of that explanation, I hope that the noble Lord will withdraw the amendment.

I think that trying to limit file-sharing on the network is totally unfair. File-sharing is a very good technology for offloading load from certain servers. It is only when it unlawfully breaches copyright that it matters. The concept that file-sharing should be limited on your network—given, for instance, that Skype traffic can look like file-sharing traffic—is a very dangerous one to have in this Bill.

I thank the Minister for his reply. I was interested to hear the comments of the noble Earl, Lord Erroll. I am not sure that we would have demonstrations in Trafalgar Square about this, with people being thrown into fountains, but who can tell? The Minister said that he did not think that costs would be passed on to the public by internet service providers. I think that that is unrealistic. If you increase a business’s overheads, sooner or later they will be passed on. Of course, a business might decide to absorb them initially, but over the longer term that cost will be paid by someone and it will not be the business; it will be paid by those paying for the service. I hope that the Minister will bear that in mind and perhaps comment on it briefly before I withdraw the amendment.

Far be it from me to make an absolute prediction—“Never say never”, they say. I stress that internet service provision is a highly competitive environment. We are not dismissing the fact that copyright owners should bear the bulk of this. We are saying that there should be an incentive on internet service providers to ensure that their part of the bargain should be to have the most efficient and cost-effective process. Which way this will go is an even bet. It is reasonable to say that we do not think that these costs will be passed on, although we do not think that we could find a way of prohibiting that. Our view is that, in a competitive environment, ISPs are capable of absorbing those costs, although I confess that in reality only time will tell. In return, I ask that the noble Lord, Lord Howard, reflects on the fact that this is a very competitive market.

Maybe we can get together in a few years’ time to see what has happened. In the mean time, I beg leave to withdraw the amendment.

Amendment 199 withdrawn.

Amendment 200 not moved.

Amendment 200A

Moved by

200A: Clause 15, page 16, line 34, at end insert—

“( ) Any provision specified under subsection (1) must relate to payment of contributions by one or more of the following only—

(a) copyright owners;(b) internet service providers;(c) in relation to copyright infringement disputes or subscriber appeals within the meaning of section 124E or 124J, subscribers.”

Amendment 200A agreed.

Amendments 201 to 206 not moved.

Amendment 206A

Moved by

206A: Clause 15, page 17, line 7, at end insert—

“( ) No order is to be made under this section unless a draft of the order has been laid before Parliament and approved by a resolution of each House.”

Amendment 206A agreed.

Amendment 207 not moved.

Clause 15, as amended, agreed.

Clause 16 : Interpretation and consequential provision

Amendment 208 not moved.

Amendment 209

Moved by

209: Clause 16, page 17, line 14, at end insert—

““copyright infringement” and “infringement of copyright” has the same meaning as in the Copyright, Designs and Patents Act 1988”

This is an attempt to be helpful, as are all my amendments, but this one purely so. I beg to move.

I can be as helpful as the noble Lord, Lord Lucas. The amendment would specify that “copyright infringement” and “infringement of copyright” would have the same meaning as in the Copyright, Designs and Patents Act 1988. However, those two terms are not defined in that Act, so nothing can be gained by accepting his amendment. At any event, if a copyright owner decides to take civil action against a person who has infringed his copyright, he will do so in the context of that Act. I hope that the noble Lord feels that those are reasonable grounds for his withdrawing the amendment.

Amendment 209 withdrawn.

Amendment 210

Moved by

210: Clause 16, page 17, line 36, leave out “entirely or mainly”

This is a brief probing amendment to highlight a possible drafting confusion. The drafting of the definition of “internet access service” has led to concern that mobile operators might be excluded permanently from these provisions. Limiting the provisions to impact only on those “entirely or mainly” providing internet access will surely discount mobile providers which primarily provide telephone services. If it is the Minister’s intention that the definition should apply only to the internet service part of a telephone service, when would the “or mainly” flexibility be needed? I beg to move.

The amendment would remove the qualifying words “entirely or mainly” from a definition of an internet access service. Although it appears to be a simplification, it could have the effect of excluding organisations that offer such a service as the main part of their business as opposed to their entire business. We do not think that we should facilitate that situation. The current wording is designed deliberately to apply only to electronic communication services whose business is wholly or predominantly the provision of internet access—in effect, ISPs. The amendment would make the obligations apply only to an electronic communications service that provides a service to subscribers that involves only access to the internet and the allocation of an IP address. That risks exempting ISPs from the obligations if acting as an ISP is not the sole activity in which they engage. We do not think that that is right. We have no intention of catching organisations or businesses that happen, as part of their normal operations, to allocate IP addresses to their staff, for instance, but we think that it is right that those organisations that, as a business, provide internet access and allocate IP addresses should be covered by this legislation. I suggest that we should focus on where the problem is likely to reside on those networks operated by internet service providers whose business either wholly or mainly consists of access to the internet. I hope that, on the basis of this explanation, the noble Lord will feel able to withdraw his amendment.

Before we move on, may I just ask a quick question? Does that therefore solve the problem of the libraries, the local authorities and everyone else, because their business is not mainly to do with providing services—oh, this is about the obligations in the code, is it not? I think that I am talking off the point. Sorry.

Well, the noble Earl has produced a most interesting point and I shall look forward to hearing what the Minister says about it before I withdraw.

I do not think that the noble Lord will hear the answer immediately, as I will need to take advice, but my understanding is as the noble Earl admitted at the end. He was a little bit off the point with his intervention, but if I am wrong I will of course correct myself and inform the Committee.

Amendment 210 withdrawn.

Amendment 211 not moved.

Clause 16 agreed.

Clause 17: Power to amend copyright provisions

Amendment 211A

Moved by

211A: Clause 17, page 18, line 19, leave out from “reducing” to end of line 22 and insert “any infringement of copyright by means of the internet if satisfied that—

(a) the infringement is having a serious adverse effect on businesses or consumers, and(b) making the amendment is a proportionate way to address that effect.”

My Lords, we move now to government Amendment 211A which is grouped with Amendment 211B and other amendments to the eagerly anticipated Clause 17. Before speaking to the government amendments, I thought it would be worth while highlighting why this clause is included in the Bill, and what we hope to achieve with it. Clause 17 introduces a power to amend the Copyright, Designs and Patents Act 1988 by means of secondary legislation. If it is considered—and I stress considered—that such an amendment is necessary to address problems around online infringement of copyright, this power is a necessary tool to provide future proof supplementary to the action that is being taken in Clauses 4 to 16 that this House has already debated.

Illegal peer-to-peer file-sharing is—I say this for the benefit of the noble Earl, Lord Erroll—the biggest problem facing our creative industry today, but it may not be the biggest problem tomorrow. We need to be able to respond quickly and flexibly if new methods of infringement grow in significance and start to damage those industries. Clause 17 aims to provide this important flexibility. As with any delegated power, Clause 17 has attracted significant interest from parliamentarians and committees of this House. As I will explain, however, the Government have listened to the concerns that have been raised by noble Lords and committees, and we have proposed some substantial amendments to address these. These government amendments clarify the scope of the power, and strengthen the safeguards that surround its use. I shall explain these by moving onto the detail of the amendment laid in the name of the noble Lord, Lord Mandelson.

First, we propose the introduction of a clear threshold that must be met before the power in Clause 17 may be used. This threshold requires that the power may be used only if the infringement in question is of a sufficiently damaging nature as to warrant intervention. That intervention must be proportionate to the threat it is intended to address. This assessment must form part of an explanatory report which will be laid before Parliament for 60 days under the so-called super-affirmative resolution procedure.

Secondly, the amendment will make it crystal clear that all persons likely to be affected by an order under this power should be consulted. The results of that consultation and an assessment of why proposed action is proportionate will also form part of the explanatory report which will be put before Parliament.

Finally, the super-affirmative resolution procedure requires that the Government cannot continue with any proposed use of the power if a committee of either House recommends that they do not. Such a recommendation would have to be overturned by a vote of the House before—and I stress before—the order could progress any further. These amendments will ensure that Parliament has sufficient time to consider the implications of any order made under this power, while still enabling the Government to respond quickly and flexibly to developments that affect our valuable creative industries.

In conclusion, I would like again to reassure the House that we have listened to the points raised, including those by a committee of this House. I hope your Lordships will agree that the amendments we propose here address their concerns in a very serious way. I beg to move.

Perhaps I may speak to my Amendments 211C to 211J, as amendments to government Amendment 211B, and Amendment 212 in the same group. Some while ago, my noble friend Lord Bragg and I looked very carefully at what was originally proposed by the Government, and considered that we were perpetually trying to sail between Scylla and Charybdis. Scylla is, frankly, turning a blind eye to file sharing and letting it continue much as it is, with all the damage that is consequent; and Charybdis is the original proposal from the Government that we did not feel we could happily go along with.

The utilisation of the super-affirmative resolution procedure is not that usual, but I would commend it to the House. It is a very effective piece of legislation. We used it during the passage of the Communications Bill 2003. It offers significantly greater safeguards than the normal affirmative resolution procedure and has other advantages. The purpose of the amendments that my noble friend Lord Bragg and I put down is to increase the period of time for consultation from 60 to 90 days, which we feel is appropriate. These are complex issues in a difficult and diverse industry and we feel that a 90-day period is more suited. Amendment 212 is in the same spirit.

I could speak at some length about this. A lot of work has gone into it. I think that the industry for the most part sees this as an acceptable resolution to what has been a very vexed problem. I hope only that my noble friend Lord Whitty, the noble Lord, Lord Lucas, and others I respect in this House will see this as a genuine attempt to come up with an answer to an almost implacable problem.

My Lords, as I see it, there are two areas of concern about this clause—policy and procedure. I shall address policy first. Her Majesty’s