Good morning, Mr Caton. I welcome you to the Chair and the Minister to his place. I know that hasty rearrangements have been made to allow him to plug a few gaps this morning. I am grateful to you and the Minister for coming along, and I hope that our little chit-chat about intellectual property will be intellectually stimulating. I refer to my entry in the Register of Members’ Financial Interests.
I thought that it would be interesting and opportune to examine intellectual property issues and economic growth, because there is so much stuff going on. It has been several months since publication of the Hargreaves review, which made several recommendations, and the Government’s response. In the past few weeks, the Intellectual Property Office has embarked on consultation on how those recommendations can be implemented, as well as doing us the favour of introducing a few new recommendations of its own, which I will touch on. Also in the past few weeks, the Government have appointed Richard Hooper to lead the new digital copyright exchange. He is consulting on the best way to take the new body forward, and I want to encourage as many people as possible to give evidence to both consultations to ensure that we get both issues right as far as possible.
We are getting into the awards season when the cream of the intellectual property-supported industry and artists will be celebrating at events such as the British Academy of Film and Television Arts awards and the BRITs. I have a ticket for the BRIT awards ceremony. I do not know whether you have, Mr Caton, but I would be happy to tell you about it the following morning. I know that some of my colleagues here today are looking forward that great event.
I am grateful to the hon. Gentleman for reminding me of that. I must ensure that I book accommodation for my trip to Salford, which I am looking forward to.
It is worth reminding the Chamber of the contribution that the intellectual property-supported industry makes to the general economy. It is massive. Around 8% of our gross domestic product is predicated on the intellectual property-supported industry, and it is responsible for around 2.8 million jobs. As the hon. Gentleman’s intervention cleverly but not discreetly emphasised, my major interest is music. As well as the fantastic folk awards, the BRIT awards will take place in the next couple of weeks, when we will celebrate again that, outwith the United States, the United Kingdom is the second largest exporter of music worldwide. It is a huge, successful and fantastic industry, which has gone from strength to strength. Last year, we saw incredible success for UK artists, particularly in the US market.
Not just music is involved; every part of the creative range and everything that we do in this country produces a fantastic conveyor belt of imagination and talent, and we have been able to ensure that it has been successful. We have been able to do that mainly because we have fantastic imagination, talent and creativity within the UK. Moreover, we have built up a world-class infrastructure—the sector or the industry—that has been able to ensure that emerging talent has been identified, supported and mentored. We have ensured that that talent has been able to come through, and that is predicated on the real and important issue that those who have been prepared to invest in their talent have been rewarded for their contribution in bringing that talent through.
We must do nothing to threaten that incredible conveyor belt of talent, support and nurturing. However, we are beginning to observe a few danger signs. There are a few clouds on the horizon that are worth examining, because the threat comes from an unusual place. That threat and the clouds in the distance are being brought forward by the Government in the drift of some of their thinking and some of their policies. We must ensure that the industry continues to be supported. I have spoken in such debates for 10 years. I think that I have managed to speak in all debates on intellectual property and creative industries. I have never known a time when those who speak on behalf of the sector and all the different disciplines in the creative economy feel that they have been undervalued and misunderstood and that their voice is not being heard.
There is a feeling in the sector of being under siege because of the tone and drift of the Government’s thinking about how we look at our creative economy. There is an emerging view that the Government might even be devaluing our whole attitude towards intellectual property. There is a sneaking suspicion—I have heard this from people throughout Europe—that the Government might be approaching something that could be described as anti-copyright. That is not a good place to be. It is not where we want to be if we want to grow this remarkable sector. The Government must hand out an olive branch to those who speak on behalf of the industry and the sector and try to get some of the issues resolved now.
There is also a feeling that that is happening because of the work of the Intellectual Property Office. Its very name suggests that it is about enabling and supporting intellectual property. One would think that that is what it is for, and that that would be its sole and exclusive responsibility. Some of the new thinking about devaluing intellectual property, and the drift and concern about copyright seems to come from within the IPO. We must be wary of that, because we might be creating an office that is supposed to support a particular sector, but instead is becoming a bureaucratic front to devalue the people whom it is supposed to support. We must get to grips with that.
The emerging view is that the Government are more interested in pursuing the rights of those who live off the content of others, and who perhaps abuse it, rather than those who produce it in the first place. That view contends that the artist, the creator and those who are prepared to invest in a talent have become a massive inconvenience and that they are an afterthought and must be grudgingly accommodated and managed. The idea that the inventor or creator is the owner of important intellectual property rights is barely recognised. Whatever links they want to assert must be collectivised for the greater good.
I appeal to the Government to get a grip on the issue, to take charge of it and to prevent the drift because it is not helpful. They must exercise and demonstrate effective political control. They have allowed us to drift over the past few years, and there has not been the leadership that this important sector—8% of GDP—requires. We have a haphazard arrangement, which is not in the interest of the whole sector. The IPO resides in the Department for Business, Innovation and Skills. The creative industries, the artists and the inventors are managed by the Department for Culture, Media and Sport.
We have a Minister who is not accountable to the elected House of Commons; she is a member of the House of Lords. This is my second debate on intellectual property and these issues. I gave evidence to the Select Committee on Business, Innovation and Skills, but I have not even had a meeting with that Minister, such is her accountability to elected Members of Parliament. I respectfully suggest how to resolve the matter. We need one dedicated Minister of State in the Department for Culture, Media and Sport, where we could have the IPO and the artists, creators and the whole sector. Putting the IPO within that Department might lead to better understanding and more sympathy for the people whom it is nominally and notionally there to serve. A Minister of State who oversees the whole digital economy could pick up issues such as intellectual property, supporting artists and major legislation such as the Digital Economy Act 2010.
What we have now is totally unsatisfactory. There is no effective political control, and no leadership is given to the IPO, so it has started to develop its own agenda and come up with the notion that copyright and intellectual property must be constrained for the benefit of users. Close attention at ministerial level has not been paid to such issues over the past few years, and that has created a vacuum that has been occupied—possibly rightly—by the IPO, which has come on board and decided that such matters are its concern. The Minister is relatively new to these issues, but I urge him to get a grip and take control. Government agencies advise; Ministers decide. The Intellectual Property Office may sound like a grand organisation, but it is an instrument of government and should be subject to ministerial control and guidance.
When industries supported by intellectual property rights and those who speak for the sector come to Whitehall to put their case to Ministers, they are dismissed almost arrogantly. Their evidence, which at times the Government have charged them to produce, is dismissed as what Ian Hargreaves called “lobbynomics.” What a ridiculous thing to say to an industry and sector that tries to produce work on behalf of the Government so that it is better understood. People are also told, in a patronising and sneering manner, that they do not understand the business environment in which they are working.
Those who now have the Government’s ear are not particularly helpful. Some have become self-serving protectionists and are telling the Government their views. Self-appointed digital rights champions seem to rule the roost when informing Government opinion, and everything that the Government do is predicated on the support for and desire to please massive multi-billion dollar west-coast United States companies such as Google.
I do not know why Google has the Government’s ear, but I do not contend that it has a particular lobbying influence inside No. 10. I do not even suggest that Steve Hilton, the special policy adviser, has a special relationship with Google. I do not suggest such things or contend them today. For some reason, however, Google has the ear of the Government, and it was no surprise that, when Ian Hargreaves initiated his review, many people called it the Google review.
I would never suggest that there is a special relationship between No. 10 and certain key individuals in a company called Google, and I am grateful to the hon. Gentleman for reasserting the fact that I do not allege that today.
I congratulate the hon. Gentleman on securing this important debate. Let me declare an interest at the outset. I have spoken to Allison Coleman, my former law tutor at the university of Wales, Aberystwyth, who advises the Welsh Government, the National Library of Wales, the National Museum Wales, the Royal Commission on the Ancient and Historical Monuments of Wales and the People’s Collection Wales on access to orphan works. Her concern is that it is possible that national institutions with vast collections of works whose copyright owners are unknown will be charged a licence fee when they digitise those items and publish them on the web. As Hargreaves argues and almost everyone accepts, it is in the national interest that tremendous resources are held by our libraries, archives, museums and galleries. If those public institutions have to pay a fee to digitise each item—
I am grateful to the hon. Gentleman; he had a lot to say, and he said it eloquently and concisely. He is right, although unfortunately I do not have much time to discuss orphan works. He will know, however, about the great concern that exists. It is an issue that emerged in the Hargreaves report and seemed sensible and the right thing to do, although as soon as we started to unravel some of its complexities, we noticed difficulties such as the one that he described. He will also know about the great unhappiness about orphan works that currently exists, especially among photographers.
The Government must consider such issues seriously, and I thank the hon. Gentleman for bringing the matter to the attention of the House.
Is the hon. Gentleman disappointed at the attitude taken by Consumer Focus on such issues? It is a Government-funded organisation that exists to defend the consumer, although it seems more interested in defending things such as illegal downloading than in genuinely protecting consumers and dealing with rip-offs.
Once again, the hon. Gentleman is spot on. I saw the report by Consumer Focus, and disappointing is hardly the word that I would use to describe it. We are talking about illegal activity, which is what happens when people pirate the work of others and try to give it away for nothing.
I congratulate the hon. Gentleman on securing the debate, and I speak today in support of Ulster Scots music. When getting UK intellectual property accepted in other countries, especially the US, there is a large differential when it comes to patents because they cost between three and five times more than in any other country.
The hon. Gentleman makes an important point about the value of patents to the UK economy. Hargreaves described patents in several choice words and phrases, and I am sure that the hon. Gentleman has paid close attention to the drift of Government policy. The attitude and policy towards patents that we are beginning to observe is alarming.
Let me say a little about why I have called this debate. I remember turning on the BBC news and thinking that it was great that the Prime Minister was taking an interest in intellectual property—I do not think that I had ever heard a Prime Minister hold a press conference on the issue. He was alleging that restrictive practices in our intellectual property laws would stop the emergence of something similar to Google in the United Kingdom, and he tasked Ian Hargreaves to look at intellectual property laws and our copyright regime to see if something could be done to amend the laws and regulations.
Ian Hargreaves was notionally in charge of that process, but having observed evidence being taken, and the report and recommendations be delivered, I suggest that the hand of the Intellectual Property Office was all over it. I believe that Ian Hargreaves was perhaps a figurehead, because the IPO seems to have driven the agenda. We will discuss some of the exceptions to copyright that the IPO proposed as part of its consultation, but it has been steering the process all the way through.
What is that predicated on? It is predicated on the belief that economic evidence should be at the heart of every initiative and everything that we do concerning intellectual property law. Ian Hargreaves has been perhaps a little cavalier when it comes to intellectual property, and we could say that he has made heroic assumptions about the value of some of the proposed recommendations and exceptions. Perhaps his most heroic statement claimed that if the Government implemented all the recommendations, GDP would increase by 0.6%. That is a huge figure.
I do not know whether the Minister thinks that such assumptions are based on reality. I think—I am not absolutely sure—that the Business Secretary described such figures as “ballpark.” If that is ballpark, the ball has not only been hit for six but has gone right out of the stadium, such is the relationship to reality of some of the economic assumptions and analyses made by Professor Hargreaves.
Let me give the Minister a couple of examples that I find funny—one cannot look at Hargreaves’s economic assumptions and analyses without needing a good sense of humour, and I will get on to parody later in the debate. The first assumption that we should consider—perhaps the Minister can write to me if he thinks that it comes anywhere close to reality—relates to an exception for private copying for format shifting. It is incredible. We are told that implementing the recommendation for an exception for format shifting for private use would bring some £2 billion per annum to the UK economy by 2020. That extraordinary figure is arrived at by assuming that the absence of a private copying exception has been responsible for restraining lots of UK technology firms that have been bursting with ideas for new pieces of hardware. I think the contention is that the iPod could have been invented in this country if it was not for that pesky copyright rule, which everyone ignores anyway. Seemingly, if format shifting was dealt with, the UK would be flooded with innovations. Lots of brand-new and fantastic products would materialise; the iPod would be reinvented; and millions and millions of pounds would flow into the economy. That is evidence and economic analysis Hargreaves and IPO-style.
Then there is the real rib-tickling one—parody. It is said that an exception for parody would be worth £600,000. Do you want to know what that figure was predicated on, Mr Caton? This is quite funny. The figure is arrived at by first taking the total value of the global entertainment market, which I think the IPO reckoned was $2 trillion. It estimated that, with a parody exception, the UK’s share of that market could grow by up to 0.05%, translating into annual growth of £130 million to £650 million.
I am glad that the hon. Gentleman has mentioned that, because I intend to give an example of something that is really rib-tickling. I will explain how things work without an exception. Say that you wanted to parody the work of some famous group, Mr Caton. Let us take one at random. Let me see. How about the world’s only parliamentary rock band, the fantastic MP4? Say that you wanted to parody one of its fantastic works—perhaps even one penned by Kevin Brennan. If you were intending to do that parody, you would come to me and the hon. Gentleman and ask us, and we, being reasonable folks, would agree to you doing that. If it became a worldwide hit—with your involvement, Mr Caton, there would be a very good chance of that—we would get our share and you would get your share. It would be absolutely fair. That is what professional parodists do now, and it works. Any suggestion that somehow our parody industry, our comedy industry, is being restrained and constrained by the lack of an exception is utter nonsense.
The IPO tells us that an exception will be worth £600,000. That is what the whole of the UK television industry reckons is the value of new parody each year.
Again, it is a nonsensical figure. That seems to be the case through the whole of the Hargreaves review when we look at the economic assumptions. Those economic assumptions disappear as quickly as snaw off a dyke when put under any sort of challenge or assertion. For the benefit of my good friends in
, that is what we say in Perthshire for snow off a wall.
I am greatly enjoying the hon. Gentleman’s speech. He obviously has great knowledge, so it is with some trepidation that I ask him this question. I understand the points that he is making about the financially driven aspects of some of the Hargreaves report, but would he not welcome other aspects of it, such as the digital copyright exchange, minimum standards for transparency, and extensive collective licensing?
I am grateful to the hon. Lady for her intervention. I did not mean to come across as being so hard on the good professor. Yes, the hon. Lady is right: of course there are things in the Hargreaves review that have to be welcomed. She is right to mention the digital copyright exchange. Under the leadership of Richard Hooper, we now have an opportunity to make that a fit-for-purpose exchange, but that will have to come through hard work. It will have to come through proper discussion and consultation with the sector and the industry.
There are things in the review that could be made to work, but I am not going to resist some of the bonkers economics behind the creation of a DCE. What figure was given for the value of a DCE? Was it £4 billion? That is based on one report from Copenhagen Economics, which assumes a number of things coming together—European directives and European institutions. Once again, we are talking about something that could be useful, but the economic analysis is woeful.
With regard to digitisation and access to orphan works, does the hon. Gentleman agree with this point? If public institutions must pay a fee to digitise each item, not many public institutions will be doing that, and therefore we have to review that overall aspect and say that if there is to be a fee, it must be minimal; otherwise it will be a case of no fee.
Again, I am grateful to the hon. Gentleman. I can tell that he is passionate about the issues to do with orphan works, and he makes that point well. However, we must be careful about how we progress this agenda.
I want to touch on the exceptions that were not dealt with in the Hargreaves report. Some exceptions have just emerged as part of the IPO’s consultation and have caused immense concern, anxiety and grief. Those exceptions have to do with educational copying. This is a fundamental and very difficult issue. I am almost having to address this point to the IPO, because there is a sense that there is very little ministerial control when it comes to these things, but will the Minister please get in touch with these guys and get them to have a look at what they are doing with educational exceptions, because they are very dangerous? We could see no money whatever going to the people who provide educational materials, whether they are published works or programming—no money being collected on behalf of the people who produce that work for schools and other places of education. If there was to be no reward for people supplying that material to schools and colleges, why on earth would they do that? They will not do it for nothing. We are in real danger here. It is not only the authors and the people who make those programmes who will lose out. The schoolchildren and students will lose out, too, unless we resolve the issue, so will the Minister please examine that?
I apologise to you, Mr Caton, and to the other hon. Members, but as Pete Wishart knows, I have to leave the Chamber in a few minutes. I am slightly disappointed that in an excellent speech, the hon. Gentleman has not made it absolutely clear what option 5 from the IPO with regard to educational exceptions means. It means in effect that an author could write a textbook, one copy could be printed and thereafter multiple copies could be made in schools throughout the land for children in those schools to use, with no reward going to the author and therefore not a cat in hell’s chance of that author ever bothering to write again.
I am grateful to the right hon. Gentleman for his intervention. That is why I did not make that point. I just knew that he was bursting to make it on my behalf, and he made it so much better than I ever could have, so I am grateful to him.
Nowhere in the Hargreaves report is there a real economic impact assessment. No assessment is made of the threat to existing businesses and existing business models from the recommendations. I am conscious that I have been speaking for almost half an hour. I want other hon. Members to be able to speak, so I will just say a couple more things.
What are we doing about the Digital Economy Act 2010? When will the recommendations be implemented? We need to get a move on. I know that it is not this Minister’s responsibility; it is down to the DCMS. That goes back to the problem that I was trying to explain earlier of the responsibility being split being Departments. That is of no use or value whatever. However, we need now to address the Digital Economy Act. We need to implement the recommendations. I am sure that the Minister saw the fantastic report done by the film industry that said that we are losing out by not tackling piracy effectively. We have seen the example of France. We know that measures similar to those in the DEA work. France has been able to direct traffic towards legal downloading sites, and there has been a decrease in pirated works, so we know that that works. The UK is falling behind countries such as New Zealand, France and Italy. We need to get on with implementing the recommendations in relation to the DEA.
I know that there is still work to be done with regard to Ofcom’s assessment, but the Minister should be on the phone to Ofcom daily, saying, “What’s going on? Come on, Ofcom. Get a move on. Make sure you put this code of practice in place.” We are still in the appalling situation in which very powerful internet service providers are, through various court actions, thwarting and frustrating the implementation of the DEA recommendations. Let us get on and ensure that we fix that.
This is an important sector. We need to fix or resolve a number of things. We need effective political control. We need to ensure that the IPO is properly managed, with ministerial authority and control over what is going on. We should remember that there is no content without the creator, the artist or the inventor. If we predicate our whole approach to the digital economy on the idea that those who abuse or use that content are of more concern and interest to the Government than those who create it, we will be in serious trouble, and we will cause serious damage.
We are at a crossroads with some of the consultations I mentioned. We could still have world-class creative industries; we have the greatest creative sector in the world, and we export more content per head of population than any other nation, so let us do absolutely nothing that threatens that. I trust that the Minister will take these points away with him and ensure that we continue to do everything we can in the best interests of our creative industries and our creative sector.
I congratulate Pete Wishart on securing this important debate. As Members will gather, these issues are close to his heart and, given his interests, perhaps his wallet. As for a parody of MP4, however, I fear that the world is not ready quite yet for a remake of “This is Spinal Tap”, but perhaps the hon. Gentleman has other ideas.
I am afraid the hon. Gentleman is bursting the bubble of a man who thought of himself as a serious musician.
I want to put the issue into a broad economic context, before talking specifically about some of the intellectual property issues we have touched on. We rather easily forget that, amid all the west’s gloom and doom, economies across much of Asia, Australasia, south America and Africa are growing at a steady pace, and thank goodness, because where there is growth, there is opportunity. Unlike in the 1930s, when the global economy was shrinking, even the most pessimistic scenarios for economic growth worldwide today suggest that there will be 3.3% growth this year and that growth in 2011 was more than 4%. However, we still lack any overall strategic vision and message regarding the UK’s role in the new world that is unfolding before us. I appreciate that, in the face of such colossal difficulties, it sometimes sounds a little naive to talk just about wide-eyed optimism. All too often, however, the criticism of this country’s entire political class, going back some years, is that it seems almost to be in the business of managing decline, rather than of looking at Britain’s potential.
Over the past decade and a half, roughly three fifths of domestic expansion in the economy has arisen courtesy of the financial services, through the public sector or in the property and construction fields. The present squeeze will, of course, be most profound in those areas, and that will be the case for some time to come. If we discount those key drivers of the last boom, it is understandably difficult to predict with any confidence the precise economic activity in which the necessary supercharged levels of growth will come. We all pay lip service to boosting traditional manufacturing, and indeed new high-tech, high-resolution manufacturing, but we will face great competition in that respect. At the core of this debate, therefore, is what our strategy will be in an area where we continue to maintain a distinct reputation and a great competitive advantage—the export of intellectual property.
Let me take an example from close to home, in my constituency. Like the previous Government, the coalition has pinpointed the creative industries as a sector that offers a great prospect for future growth. Yet, in the two years I have been trying, as patron of Animation UK, to negotiate a tax credit for the animation industry, I have faced intransigence. The televised animation sector may appear to be only a small slice of the national economic cake, but as the hon. Member for Perth and North Perthshire has said, 0.6% here or there makes quite a big difference in the entirety of our GDP. In almost every other nation, however, the animation industry deems the reward of Government subsidy well worth the initial outlay.
British animators are losing work from these shores at an alarming rate because they cannot compete with the lure of Government-backed incentives elsewhere, which make it so much easier to put together the necessary funding packages for programme-making. One local animation business in my constituency, for instance, has recently taken calls at ministerial level from the Governments of Trinidad and Tobago and South Africa, advising it of the carrots on offer if it moved to those jurisdictions. In the case of South Africa, the carrots included free office space for three years and the waiving of particular local taxes.
It is fair to say that our DCMS team understands the problem, but over the past two years, the Treasury has seen only the up-front cost, rather than the longer-term, revenue-positive outlook. I do not blame the Treasury, given the problems with film benefits unravelling almost year by year. There must also be a sense that we need to think about not only the volume of product, but the quality. I also understand that the financial constraints we are under mean it is difficult to make the case for any tax breaks. Most critically, however, we seem to be ignoring an issue that explains why I, as a believer in free and open markets, support a targeted tax credit. Naturally, it would be good if a tax credit helped to keep animation jobs on these shores, but the real golden egg is the retention in this country of intellectual property rights.
The money generated annually worldwide from unimaginably successful franchises such as “Thomas the Tank Engine”, “Wallace and Gromit” and “Peppa Pig”, especially when it comes to all the secondary branded products, massively exceeds that brought in by high-profile films such “The King’s Speech”—a massive Oscar winner last year, which was, of course, helped along by the tax credit for films. To give some perspective, “Thomas the Tank Engine” tots up worldwide sales in excess of £1 billion every year, with his tales broadcast to more than 1 billion households in 185 countries each and every day. By contrast, “The King’s Speech”, which was hailed as the most successful British independent film ever, grossed just shy of £374 million, and that was essentially a one-off payment.
The issue is similar for the video games industry, which seeks comparable tax incentives to keep business on these shores. In addition to offering the revenue benefits that I have cited, the video games and animation industries are young industries. That is an ever more crucial factor at a time of rising youth unemployment. We need to give our brightest and best a reason to stay in this country. It is no good just offering them specialised creative university courses when the only jobs in the relevant industries are abroad.
Instead of tinkering temporarily with little pots of money here and there to boost shrinking sectors, it is time we started thinking more strategically about how we can—not just via the tax system—promote the sectors of our economy that offer potential growth. I entirely endorse what the hon. Gentleman said: intellectual property is one of the relatively few areas where we hold an historical advantage, and the market for many of our creative industries—partly because of the strength of the English language—is in the fast-growing territories outside the area of the north Atlantic economic downturn.
I want to end with a couple of important warnings for the future, which are slightly more general than my observations about particular industries in my constituency. First, there is no room for complacency about the west’s domination, as we see it, of the knowledge economy. Within the next 20 years, and perhaps rather sooner, I suspect that the IP rights that have underpinned the west’s competitive advantage—whether licensing, copyright or patents—will be due for a radical, philosophical shake-up. For example, an ever more assertive China will argue that traditional IP structures are no more than the west’s attempt to impose its own form of protectionism to suit its particular demographic. We cannot assume that the dominance of our values in determining global trade will remain unchecked. We should look out for China putting forward a more forceful argument along those lines during what might be increasingly fraught World Trade Organisation negotiations in the years ahead. With so many of our Government bonds being mopped up by sovereign wealth funds from the east, our bargaining hand may prove much weaker in the face of that apparent logic. We should look out, too, for the terms of Chinese investment in our companies. Alas, that is nothing new, but I suspect requests for technology transfer will be written into more and more deals as the price for eastern funding.
Finally, I want to highlight a concern that has been in my mind as a result of my work as a member of the Intelligence and Security Committee. Malicious cyber-activity requires much greater vigilance. Such activity can take the form of online fraud, espionage or terrorism, but of relevance to this debate are the ongoing and daily attempts to steal British-owned intellectual property—patents, ideas and designs. This occurs most obviously, but by no means exclusively, in the IT, technology, defence, engineering and energy sectors, and it is of course carried out primarily to gain competitive commercial advantage. Such attempts, I fear, are commonplace, and we must do all we can to educate businesses about the substantial risks that lie ahead.
Mark Field has reminded me of the extraordinary genius that produced “Peppa Pig”. In the past fortnight I have seen Père Cochon and Maman Cochon, watching on Gallic television, as I do frequently—and there is a Dada Moch and a Mama Moch—in versions of “Peppa Pig”. Why should young children including my many grandchildren be fascinated by a mutant pig with both eyes on one side of her face? That, I presume, is explained by the nature of errant genius.
I speak with a special interest in the matter, because the Intellectual Property Office has the great good luck to be located in the wide open spaces of Newport West. When it was the Patent Office, its relocation was cited in the Lyons report as the exemplar of a splendid, profitable and intellectually successful relocation. I remind the House that the role of the office, which is very difficult and taxing, is
“to help manage an IP system that encourages innovation and creativity, balances the needs of consumers and users, promotes strong and competitive markets and is the foundation of the knowledge-based economy.”
That is a difficult task at the best of times, but it is near impossible to balance those priorities in the amazing world we are in, of technologies that extend our horizons in so many ways. While such tumult is going on, it is difficult for any of us to tell what the outcome will be or what the rules should be.
The hon. Member for Perth and North Perthshire discussed the use of parody. There is a lesson there. You may recall, Mr Caton, a parody of a song called “Empire State of Mind”, by Jay-Z and Alicia Keys. It was parodied by a group from, of all places, Swindon. That parody was called “Ymerodraeth State of Mind”, and contained the immortal line, “Newport, Newport”; it was then also parodied. A parody of the parody was made by the staggeringly talented Goldie Lookin Chain—a group with immense chutzpah. They made a version subtitled “You’re Not From Newport”—which of course is the most deadly insult one could offer anyone, particularly Cardiffians. It is the most withering thing one can say, as it exposes their deficiencies. Perhaps I should declare an interest, as whereas the original parody drew attention to bigging up the Welsh Assembly, the authentic version, sung in the cadences of Newport, suggested bigging up local Members of Parliament. Clearly that is a message of great value, and I wonder whether I should have mentioned any profits that the band made in my declarations of interest. The parody of a parody had 910,000 hits on YouTube, which is very impressive—nearly 1 million. However, the original version by Alicia Keys had 127 million on YouTube alone, let alone the rest of the world.
We must see such things in context. We want the fun of mockery in songs. The one in question gave many of my constituents great pleasure. When there is a clash between the interest of the small-scale creative industries and creative individuals, and huge businesses, with their almost infinite resources enabling them to persuade, buy access and get the ear of Prime Ministers and others, I think most of us instinctively know where our interest lies. We should also consider those who get great pleasure from the availability of music now, and the way it can be downloaded. It is impossible to put that genie back in any bottle. That will continue, and we cannot make rules to stop it.
In support of what the hon. Member for Perth and North Perthshire was saying in defence and promotion of the creative industries, I would say that the suggestion that the future patent court should be sited in the overcrowded cities of Paris, Munich or London is regrettable, when there is wonderful habitat waiting for it in the city of Newport. It seems extraordinary that that is not being considered. I congratulate the hon. Gentleman on securing the debate, and I hope that the voice and interests of the creators of property from which many others make huge sums of money will have the primary consideration in the difficult and bewildering decisions before us.
I have some brief remarks. I congratulate Pete Wishart on his speech, much of which I agreed with, and some of which I did not. Mark Field made an important and powerful point about China and the implications for the way business is done. That is not to say that we must yield to the way business is done in China and places like it, but that is an important part of the way things are done across the world. The market is huge, and that will unquestionably have implications for the way we do business, for copyright and for many business practices. We must accept that the way business is done elsewhere has implications for the creative industries. Sometimes we are slow to recognise that.
I agree with all hon. Members who have spoken that the importance of creative industries and intellectual property is enormous. The Publishers Association, the Authors Licensing and Collecting Society and others have produced some good briefs. However, I want to make a few counter-comments. There is a general trend in debates such as this to laud the importance of intellectual property, and, sometimes—as at the beginning of the speech of the hon. Member for Perth and North Perthshire—to see the counter-argument as a matter of big bad Google lobbying No. 10 in a somehow illegitimate way. I have no idea what the hon. Gentleman is referring to in saying that kind of stuff about special contacts inside Downing street.
I shall try to speak about this later if I catch Mr Caton’s eye, but the issue is not the fact that anyone has access to No. 10, because everyone should be able to have input into the political system; the fear is of the disproportionate influence that some people have.
I hear what my hon. Friend says, but in debates about intellectual property and copyright, as we have seen today—with one exception, on the matter of parody—the traffic all goes one way. It is quite easy to understand the importance of copyright, intellectual property and the creative industries. Conversely, it is easy to label people who copy things without paying for them as pirates and say they are committing illegal acts. However, without lauding that, it is a fact that the internet is a fantastic copying machine, and that is what happens. If we want to criminalise everyone who does it, we are on a hiding to nothing. We are criminalising everyone’s children to start with.
People sometimes say, “It’s exactly the same as theft. People download a record track and don’t pay for it. That is money that the industry forgoes.” That is a highly debatable and questionable proposition. Frequently, people want their stuff to be spread around the place and be copied, because it encourages other revenue streams.
Of course my hon. Friend makes a valid point about criminalising everyone’s children, but is not the issue that powerful business interests effectively direct those who are searching for something on the internet to illegal sites that do not just copy the odd thing, but are factories for ripping off people’s intellectual property rights; and that if companies such as Google were more responsible and had some corporate social responsibility they would not be directing people, effectively, to the illegal end of the market?
Again, I entirely agree with my hon. Friend. Let us consider the propositions that Google polices the entire internet or the realm that it can police, and that internet service providers make their own judgments about what they should close, and let us imagine that they close down domains and that people cannot access all sorts of things out there on the basis of judgments made by commercial entities. There is a trend in the governance of the internet by some countries to want heavily to regulate its use. Looking across the world, such Governments tend to be those who are not particularly democratic. In democratic states, the trend is to say that the internet should have a degree of laissez-faire and, as Vint Cerf and Bob Kahn said—in many ways, they instigated the internet back in the ’60s and ’70s—it should be impartial as to its use and there should be no state governance.
That is the general assumption in theory in western and democratic states. However, we have heard the recent comments by the EU Justice Commissioner on the data protection directive on the right to be forgotten—that people should be able to take down accurate, legitimate data if they do not like having them up there and that they should be able to scrub out bits of history. Commercial interests want ISPs to police the internet and to take stuff down based on their commercial judgments, or that some Government-led body should make judgments about what is on the internet. The general trend is to have a high degree of directorial control by Governments over the internet and that sometimes extends to such corporate arguments.
That is exactly the point I am making about censorship of the internet. The problem is that that is the way it is. In due course, industries will have to adapt to that way. The fact is that things will continue to be copied and industries with current business models will have to adjust. Of course, we have to do what we can within the realms of possibility to protect those industries but, inevitably, there will be a degree of evolution. Each time we have such a debate, the overwhelmingly dominant argument is for the protection of current business models, but people in those industries must know that things have to change.
Things will continue to be copied, and I would not advocate the degree of censorship of the internet that my hon. Friend seems to do. Essentially, it is straightforward for mirror sites to pop up, and it is virtually impossible to close down a site and prevent another one opening up to sell the same stuff. Yesterday, I thought that it would be quite interesting to set up an experiment with a page, with some people trying to keep the page alive and with the ISPs trying to close it down. I absolutely guarantee that those trying to keep that page up somewhere on the internet—it would inevitably appear in a Google search—would always win the day. The ISPs can close a site, but they cannot prevent the existence of the ideas in the site.
I am grateful to my hon. Friend for giving way once again. May I clarify that I am not advocating censorship, as he put it, of the internet? I am simply saying that the corporate social responsibility of a large corporation would surely require it to ensure that its algorithms and systems generate a search that directs people to legal sites. Such corporations are perfectly capable of doing that, even if illegal searches appear way down in the list of pages. The fact that those sites are listed at the top—often in the paid advertising part of a Google search, so contributing to Google’s profitability—does not show corporate social responsibility.
I am not sure that my hon. Friend is right about paid advertisements for illegal sites. I entirely understand the frustration at the Google algorithm producing sites that have unlawful content—we are talking about unlawful rather than illegal content—but he is advocating censorship of the internet. Google would have to censor hundreds of thousands or millions of sites out there.
I am currently on the Joint Committee on Privacy and Injunctions. It is interesting that its members are sometimes tempted to say, “Hang on, we could censor that, because that is done in China or because Twitter now has a new business model so that it can constrain certain types of tweets—especially those with references to religion or politics—for regimes in certain parts of the world.” It is true that Twitter could do that and that Google could constrain what is said on the internet, but we have to look at the flipside and ask whether that is particularly healthy in a democratic society.
The hon. Gentleman is making a very interesting contribution to this debate. It strikes me that he is overly pessimistic, given his view, which is absolutely right, that the interest is essentially a slightly chaotic and libertarian organisation. As he made it clear in his example, the power of the individual will overcome the influence of even the biggest and best-funded international organisations. However, does he not have the slight concern that the crime is not entirely victimless? Much high-profile organised crime and terrorism is funded through the abuse of copyright and patents, and through the lucrative sale of DVDs and the like. It would make more sense to try to address that directly, rather than to look just to uphold intellectual property laws.
I agree with the hon. Gentleman. I may sound as if I am making a polemical argument against copyright, but I am not. Of course it is true that many bad organisations can profit and that money can go to ropey or even to dangerous things at one end of the spectrum, but at the other end is a fat bloke in Australia who is buying cars and boats. I suspect that much of the fraud is not done by those committing heinous acts.
I shall start to conclude, because my hon. Friend Jim Dowd wishes to speak. The root fact is that, however powerfully one lobbies to protect copyright, Hargreaves has tried to look in an intelligent, evidence-based way at copyright law and the existing rules. He did so in a limited way, because sovereign states in Europe are constrained in what we can do. I do not agree with the assessment of the IPO made by the hon. Member for Perth and North Perthshire, although I agree with some of his points about the DCMS and BIS. As we know, that originated with an unfortunate comment about the very odd structure by the Secretary of State for Business, Innovation and Skills. The IPO and Hargreaves are endeavouring to have a proper evidence-based assessment. The consultation that is currently under way is entirely in earnest.
Hargreaves has urged the Government
“to ensure that in future, policy on Intellectual Property issues is constructed on the basis of evidence”.
That is not an unreasonable claim. It is true that the exceptions raised, including about education and data-mining, are possibly entirely valid, but until we see evidence and figures, we cannot tell. It is therefore important that people come forward not only with emotive arguments—they are often based simply on retaining the status quo and without any movement, regardless of technological shifts—but with evidence.
We have had the Hargreaves review and the Hooper review on the digital copyright exchange, against which I have no doubt that the hon. Member for Perth and North Perthshire will rail in a future debate. They are genuine efforts by good people to get to the root of a complicated issue. Within the copyright industry and among High Court judges—I have spoken to judges at all different levels, including those in the High Court—everyone recognises that copyright law is very old and outdated, and that it is difficult to make it fit into a modern context. Essentially, Hargreaves was trying to resolve that, as will Hooper.
To conclude, the doom and gloom with which the hon. Gentleman presented the Hargreaves review and the consultation is not a fair reflection on the efforts of Hargreaves and the IPO. I have every respect for creators who want to retain the maximum benefit for themselves—of course they do—but we must set that in the realistic context that people will copy stuff. That is the way it is, and criminalising everyone is not a particularly constructive way forward.
Mr Caton, I will meet your requirement—indeed will attempt to exceed it, by finishing before then. I am sure everybody would like to hear from the Front-Bench speakers, particularly the Minister in his first outing in this guise. I am sure he wants to practise his skills in this area.
I congratulate Pete Wishart on initiating the debate. He has a well-deserved reputation in the House for his attention to these matters, and his encyclopaedic knowledge of them. It is a great opportunity for the rest of us. Since the last debate we had in Westminster Hall on the matter, things have changed somewhat. As far as I can recall, my hon. Friend Eric Joyce sat here and I sat there. Beyond that, the arguments seem to be running in very similar fashion.
It is fitting that we should have this debate today, as it is the 200th anniversary of the birth of Charles Dickens, one of the most prolific, creative and productive writers of 19th-century Victorian Britain, who had quite a few struggles himself over the rights to his own material in the days when ideas about copyright were somewhat primitive, to put it mildly.
I say to Mark Field that, as others have echoed, China’s attitude to intellectual property, patents and copyright is changing, I believe, although it is different from our own. I remember many years ago—I think I am probably the oldest person in the room—that under the first Wilson Government, de Havilland, as it then was, sold two Trident aircraft to the Chinese Government. For those of shorter memory, Britain used to make quite a few aircraft on its own in the 1960s. It sold two Tridents and said it was the great breakthrough into the far east, China and the burgeoning Chinese market. However, the Chinese used one for training crews and dismantled the other one to replicate it. At that time their internal airlines were totally crude: I think they were called The East is Red airline or something. They produced an aircraft that bore an astonishing similarity to the Trident, and de Havilland never sold an extra single plane to them. There are different views about copyright in the world.
Others have mentioned the importance of creative industries to Britain in particular and the knowledge-based economy we are in. It is not only innovation and creativity in the arts and literature that we have to encourage. Even though we have a declining manufacturing base, it is more productive than ever, and we need innovation and adaptation in the field of manufacture as much as anywhere else. Governments have to construct and encourage an environment that nurtures and rewards originality and innovation.
The Intellectual Property Office, as the hon. Member for Perth and North Perthshire mentioned, seems to have one particular idea of its role in trying to do that. However, it is not just about that. I have a document saying that its view is:
“Copyright should only limit the use of creative works to the extent necessary for it to fulfil its central objective—the provision of incentives to creators.”
It is not just an incentive, that is true, but it is a reward for effort, for work done. This makes it sounds as though it is doing them a favour by offering them something. I do accept from my hon. Friend the Member for Falkirk that there is undeniably a consumer interest. The whole matter does not revolve solely around the consumer or the producer. The challenge for any Government is to work out where the best balance lies. One might say that is the essence of politics—working out where the balance lies on an issue. There are benefits.
However, I want to pick up what my hon. Friend the Member for Falkirk said about the almost anarchic nature of the internet and web. It is not just that it is difficult, which is true. Some people feel that we are being lulled into a position where people say that nothing can be done, and therefore do not even try. That is not true. On the matter of illegal sites, I read yesterday about a site whose name I cannot immediately remember—my hon. Friend Kevin Brennan can probably Google it while I am talking. NewBiz, an illegal download site, has been taken off the BT ISP and just this week Sky announced it is doing that. I accept what my hon. Friend the Member for Falkirk says: one is chasing one’s tail in many respects. However, just because one cannot do everything does not mean one does not do anything. One makes the effort one can. There must be a reward for behaving properly, just as there must be a penalty for behaving badly or, in some cases, criminally.
I want to spend a couple of minutes referring to an issue raised by the hon. Member for Perth and North Perthshire and Mr Foster, who is no longer in his place. That is the matter of the IPO’s exercise of extending copyright exceptions for educational use. That has certainly caused a lot of concern and dismay in various parts of the creative community, because of the thrust of the consultation. I know the consultation is open until the middle of March and is still trying to amass information. The policy options outlined start with option zero, which is to do nothing, followed by:
“Option 1: Expand the types of works covered by education exceptions…Option 2: Increase the proportion of a copyright work that can be copied under the education exceptions. Option 3: Expand the definition of current education exceptions to enable distance learners to access educational materials over secure networks. Option 4: Widen the definition of an ‘educational establishment’. Option 5: Remove the ability of licensing arrangements to restrict the use of exceptions.”
That is the one we discussed earlier and essentially ignores the rights of all copyright holders and says it is for the benefit of educational establishments. The tone of the document is very much slanted to that option. In fact, in the evidence base, it says that that is the option closest to Government policy. That in particular is what is disturbing writers.
I confess an interest—not a pecuniary or financial one, but because it is a matter that interests me. I am an officer of the all-party parliamentary intellectual property group and of the all-party parliamentary writers group, and this matter is important to writers.
Having set out the options, the document states at the end:
“We do not have a preferred option at this stage (see page 22 for reason why).”
Everything in the evidence base shows that that is where it is pushing the consultation, to make it more liberal, almost to the point where it is a free-for-all. What worries a lot of writers and those in the community is that there is no clear indication as to where the pressure has come from to undertake the review and to undermine the position of the Copyright Licensing Agency and the Educational Recording Agency. There is no indication why it is being undertaken. There is no information stating that the current system, as it is operating, is not satisfactory. Nobody, no identifiable educational institution, nobody operating in that field has come forward and said that this is a major encumbrance to using whiteboards or other material that we need for our studies.
Where has the impetus for this come from, other than a desire for deregulation? That may be a useful thing in some circumstances, but when it becomes the object of the policy, it needs to be examined. It is a good servant but a poor master. That is where I tend to agree more with the hon. Member for Perth and North Perthshire, that this is what the IPO thinks the Department for Business, Innovation and Skills now wants to hear. I am sure the organisation’s being in Newport is a major benefit but has nothing to do with it. The fact is that there is little or no political control apparent.
I tabled a few parliamentary questions about how the report was compiled and, in particular, the impact assessment. I received a reply that the impact assessment had been
“prepared…using publicly available data, including evidence provided to the Intellectual Property Office by interested parties.”—[Hansard, 30 January 2012; Vol. 539, c. 459W.]
In the evidence base, it states that evidence is being called for as part of the assessment of which option to follow, so it looks as if someone got the inside track. I will not suggest who that might be; I have no evidence. All I am saying is that the exercise should be concluded as rapidly as possible, with the minimum possible change required, because otherwise the destabilisation of those writing for the educational community will be complete.
I abide by your exhortation, Mr Caton, and leave my remarks there.
It is a pleasure to serve under your chairmanship, Mr Caton. I congratulate Pete Wishart on securing the debate, which is his second on this subject during this Parliament. He certainly is a champion of the creative industries’ property rights, and does all he can to ensure that the Government are held to account.
We have had an interesting and lively debate. Mark Field made an eloquent call for an industrial policy for the creative industries, and I look forward to the Minister’s response. My hon. Friend Paul Flynn, who is no longer in his place, gave a very interesting example of musical innovation through parody. My hon. Friend Jim Dowd reminded us that today is Dickens’s birthday, which should inspire us all, and my hon. Friend Eric Joyce bravely did us all a service by putting forward what he termed the alternative view of internet freedom.
Today’s debate shows that intellectual property is a complex area, and that it arouses passionate responses because it affects the livelihoods of well-loved artists as well as the business models of very large companies. We have heard how important the creative industries are to this country, and I want to emphasise that. We are world players—indeed, world leaders—on the creative stage. Our musicians are top of the world’s charts, our films win Oscars as well as British Academy of Film and Television Arts awards, or BAFTAs, and the release of many a British computer game is a major event across the world. But I also want to emphasise that IP is not only a matter for the creative industries. It includes patents, designs, trademarks and copyright, and is therefore the basis of almost all the non-tangible assets of the vast mass of industry, including very real world industries, such as manufacturing, and service industries, such as consultancy and advertising.
IP is an important part of the economic base for innovation, because it recognises and rewards the successful new idea, process, invention or song, and therefore provides an incentive for innovation, be it musical or technological. Innovation has been the engine of progress throughout history, and it continues to be a key part of growth. Recent analysis from the Harvard Business School suggests that 80% of growth is driven by innovation. The contribution of intellectual property to economic growth cannot therefore be doubted, especially now, when the internet is becoming such an important platform for commerce and for ensuring that there is greater and greater opportunity to exchange ideas creatively. We must do all we can to ensure that our intellectual property system guarantees that the right rewards are available to promote innovation, and thus economic growth.
As I said, intellectual property is also, however, a complex affair, and from the very start of a legal framework for copyright and patent law there have been those who have argued against it on the basis that it limits the free expression of ideas and therefore limits innovation. The wrong kind of intellectual property environment can certainly act as a barrier to innovation, and therefore to economic growth. I regularly speak to business people up and down the country, who complain that universities’ too protective attitude to their own intellectual property is making it more and more difficult for businesses and universities to work together effectively in the translation of intellectual property into technical products and services. Small companies can, of course, have their IP stolen by larger companies, which are better armed with more and better-paid lawyers. We need to ensure that the IP trolls are encouraged to free their IP, to enable genuine innovation and commercial success.
Technological advances have made certain types of intellectual property more difficult to protect. We have the recent example of megaupload.com. Its owners—if that is the right word—became multimillionaires through effectively supporting the illegal downloading of films and other creative content, and it is good to see that the international legal framework has worked to ensure that the site has been closed down. Illegal file sharing is certainly costing the creative industries dearly, given their current business models, and the previous Government set out ways of addressing that in the Digital Economy Act 2010.
We should not forget, however, that there are companies that are thriving under the existing copyright system, particularly those born digital. The Association for UK
Interactive Entertainment, which represents the video games industry, tells me it has huge success in providing creative content through a wide variety of business models tailored to meet the needs of different demographics. This is a global industry predicted to be worth £50 billion by 2014. Many interactive entertainment companies have had huge success with the freemium business model, in which games are initially free but then users pay for additional content and features. I recently met Moshi Monsters—not the actual monsters, but their chief executive officer. Based on London’s Silicon roundabout, the company has used the freemium model to go from a tiny start-up to a $200 million business with 50 million users worldwide.
Intellectual property is a complex area, and it is essential to get the incentives right. That no doubt explains the long list of reviews carried out over the past few years, including Gowers, Byron and Hargreaves, and that is without considering all the work undertaken at the European level, such as with the European copyright directive and more recently the proposals for a unified patent court. Although I recognise that complexity, I am increasingly concerned that the Government are not taking the action necessary to get to grips with this. The rumours that the Hargreaves review was initiated because the Prime Minister had his ear bent by Google did not help its credibility, and although the report was generally well received, some of the evidence on which its conclusions were based has been questioned. So I am anxious to receive clear signs from the Minister that the Government are leading from the front on intellectual property, and not dithering as we saw with the 4G auctions. Certainly, when Labour was in office we did not want for reviews or action, but it is in the nature of such a fast-moving environment that the policy responses need to evolve.
Can the Minister tell us when the Government plan fully to implement all the measures in the Digital Economy Act, and if measures such as the public lending right in relation to electronic publications, and the content-blocking provisions, are not to be implemented, can he explain why? Do the Government have any plans to look more widely at intellectual property issues, such as patent law and the role IP plays in standardisation, particular regarding the proposals for a unified patent court? What are their thoughts on that? With regard to the Hargreaves review proposals for the digital copyright exchange, can the Minister update us on when he expects that to be in place, and on the measures being taken to address the concerns of the collecting agencies and the educational establishments? What steps is he taking to ensure that university intellectual property incentivises working with businesses, rather than against them? Finally, does abolishing the strategic advisory board for intellectual property policy, which provides independent and, importantly in the context of the debate, evidence-based advice to Government on IP, mean that they think a strategic approach to IP is no longer necessary?
I congratulate Pete Wishart on securing the debate, or as he delicately put it, this “little chit-chat”. He has a long-standing interest in a wide variety of music—I will be polite about MP4, as two of its esteemed members are here today. I say that as a parliamentary chorister, albeit a rather ropey baritone at the moment. He also has a strong interest in the broader issue of intellectual property and copyright.
The debate is important and timely. Questions have been asked about the nature of the proposals that the Intellectual Property Office put into the consultation, but the point is that it is a consultation. The debate is useful, and I am sure that some of the questions asked—I will come to option 5 and schools and universities in a moment—will be incorporated into Ministers’ thinking.
The hon. Gentleman raised concerns about the Government’s commitment and co-ordination, and I can honestly tell him that all the engaged Ministers, Ministries and the IPO work very closely together. We recognise that the matter needs to be looked at from both the cultural and social sides—our music, language and literature—as well as, of course, the economic side. In a sense, striking that balance effectively is what really lies at the heart of much of the debate, challenging though it is in many senses. Consulting and raising options—which, as Jim Dowd pointed out, range from option 1, doing nothing, to option 5, which some would see as the radical option—in no way demonstrates a bias against copyright. The Government do not hold that position. We want to ensure that we strike the right balance.
My hon. Friend Mark Field rightly highlighted the danger of believing that on our own we can simply continue as was. We would be ignoring the coming and growing challenge to the nature of what we think is the right structure for IP. That does not mean that we need to acquiesce, but it does mean that we need to be proactive.
On the broad context, the Government have made it very clear that growth is a priority. To achieve that, we need a robust and flexible intellectual property framework. As we have heard, it must be robust enough to encourage investment in new creative works and technologies and in building brands and designs, as Chi Onwurah pointed out. Yet the system also needs to be flexible enough to evolve as technologies change and so support innovation across the economy. That applies to not only high-tech sectors, but high-tech processes. If I had told you 20 years ago, Mr Caton, that vacuum cleaners would be at the heart of new technology, you might have been forgiven for thinking that I had lost any sense of normality, and yet Sir James Dyson has demonstrated that a whole market can be changed through IP and innovation. We need to ensure that we do not confuse process with sector.
Hon. Members on both sides have referred to the economic importance of IP, which is absolutely right and illustrated by the fact that as a country we now invest more than 30% more in intangible assets, such as IP, than in conventional machinery and computers. Most recent developments in technology have depended on IP, and such developments have in turn affected its management and use. These things are interwoven and we need to understand their interaction. In this continually changing technological environment, particularly looking at access to markets and illegal downloads, the Government must think about how we get the balance right for both the creators and the consumer.
We need an IP system that helps business and consumers to realise all the opportunities presented, which is why we are actively supporting the UK’s creators and the creative industries and why, to benefit creators, we voted in Europe to extend the term of protection for sound recordings from 50 to 70 years—a really important step for originators of music and other sound recordings. It is also why we brought charities within the scope of music licensing rules and pressed to introduce measures to tackle online infringement of copyright through the Digital Economy Act 2010.
In response to questions from several hon. Members, I can say that we are closely considering whether to block access to websites that infringe copyright. We will have something to say about that shortly, but, as I would like to continue to have a positive working relationship with my ministerial colleagues in the Department for Culture, Media and Sport, I shall not pre-empt what they are about to say. An announcement is imminent, and I think that it will be welcomed.
The other half to ensuring that creators are supported is IP enforcement. We are just as serious about ensuring that individuals breaching the law will be brought to justice and sending that signal. To be fair, we saw an improvement between 2006 and 2009—the latest statistics that we have to hand. There was effectively a doubling of the number of criminal cases brought under the previous Government, and we welcome and support that pattern. In 2009, 75% of all copyright cases resulted in a conviction and 80% of all criminal IP proceedings ended with a guilty verdict. That is an important signal to send. My ministerial colleague, Baroness Wilcox, recently joined an enforcement team in Manchester to see what happens on the ground. The raid secured large quantities of counterfeit products and seven arrests were made.
We need a more concerted approach, which is why we launched the IP crime strategy. It renews the focus on getting the legal framework right, co-ordinates IP crime enforcement and, most importantly, supports intelligence-led enforcement. That touches on the point that my hon. Friend the Member for Cities of London and Westminster made about the international and online issues.
On the review and strategy, will the Minister look at access to orphan works, public institutions and, in particular, imposing no fees for projects of national importance?
Archives, to which he referred, are part of that and we welcome its contribution. The tricky thing is how to best encourage digitisation and ensure that the rights owners are paid a fair rate, and we are looking at that balance with orphan works. I am sure that the representations from the National Archives that he talked about would be welcome.
I shall briefly come on to copyright in the time that I have remaining. We need to ensure that we strike a balance, so that, yes, in a world in which we can all create and use works, we also recognise that many people can be destructive, intentionally or otherwise—a good point raised earlier. We therefore have to consider whether the rules created before the digital transformation still fit the world that we live in today. Through the consultation, which is quite broad, we are trying make it easier for people to understand and use copyrighted materials, to remove bureaucracy and to boost innovation and growth. Some people have concerns about the framework that we have identified, and I have mentioned orphan works.
I shall briefly mention schools, because several hon. Members raised the issue. We must recognise that most schools operate with electronic whiteboards, broadband-delivered homework and other multi-media tools. Therefore, today’s classroom is a potential legal minefield, as the law lags behind modern teaching practice. We have had representations from universities and the Association of Colleges, and Eric Joyce also alluded to the problem. Let us be clear: we have no intention of dismantling copyright licensing schemes for education. Schools, colleges and universities will still need licences for many of their activities, including photocopying books. With specific regard to the concerns raised about option 5 in the consultation, that option relates to short extracts only. I hope that gives some clarity to the discussion. We are considering how we can make it easier for teachers and lecturers to use copyrighted materials practicably, so we are seeking further evidence on the costs and benefits of current copyright licensing arrangements in the educational sector.
In the final moments, I shall just say that the issue is very complex, but we are determined to move steadily forward using the good evidence available and balancing it with effective consultation. Many right hon. and hon. Members recognise that it is an awkward balance, and we must recognise the international context as well. The Government’s proposals for copyright will not endanger the health of our creative industries.