Digital Britain — Statement

– in the House of Lords at 4:22 pm on 16 June 2009.

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Photo of Lord Carter of Barnes Lord Carter of Barnes Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Business, Innovation & Skills, Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Culture, Media & Sport, Parliamentary Under-Secretary (Department for Culture, Media and Sport) (Communications, Technology and Broadcasting) (also in the Department for Business, Innovation and Skills), Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Communications, Technology and Broadcasting) (also the Department for Culture, Media and Sport) 4:22, 16 June 2009

My Lords, with the leave of the House, I will now repeat a Statement made in another place by my right honourable friend the Secretary of State for Culture, Media and Sport. The Statement is as follows:

"Britain's digital industries are among the most successful in the world. The global technological revolution means that, if we make the right decisions now, they can continue to grow and Britain will continue to prosper from them. Today, the Digital Britain report, part of the Government's industrial activism approach, spells out how we can make the most of the opportunities today and in the years to come.

The report covers four broad themes. First, we will only make the most of the digital revolution with the right infrastructure. Just as the bridges, roads and railways were the foundations of Britain's 19th-century industrial strength, our digital communications infrastructure will help power our future success. Businesses, other organisations and individuals increasingly want access to high-capability, high-speed networks that are both fixed and mobile. This is key to Britain's competitiveness.

As a first step therefore, we are reaffirming our commitment to ensure universal access to today's broadband services, delivered through a public fund, including money that has not been used for the digital television switchover process. However, we also need to ensure that Britain has the best next-generation fixed broadband for the entire country. Many other countries around the world are already investing heavily in this. Here, in the United Kingdom, we have already seen an energetic market-led rollout of next-generation fixed broadband networks.

The economics of building what are essentially new networks, as opposed to increasing the capability of existing networks, means that, left to the market, true super-fast connectivity will only reach two-thirds of homes and businesses over the next decade. The other third would be excluded.

In the United Kingdom, largely as a result of competition and regulatory intervention, telecommunications prices for the consumer have fallen significantly in recent years and are expected to fall further as technology advances. We have concluded, therefore, that the fairest and most efficient way of ensuring that people and businesses are not left out is to use some of that saving in the form of a small levy on all copper fixed lines, to establish an independent national fund which will be used to ensure maximum next-generation broadband coverage. To complement improvements to fixed connectivity, we also need to modernise our wireless networks. This report sets out in some detail plans for the structured release of sufficient high-quality mobile wireless spectrum, Europe-wide, for the creation of the next generation of mobile networks. Those two measures together will ensure that the United Kingdom is among the earliest countries to deploy those networks and that UK consumers continue to enjoy the benefits of vigorous competition.

Today's report also sets out our intention to upgrade all our national radio stations from analogue to digital by 2015, with digital audio broadcasting—DAB—firmly placed as the primary platform. But having the right infrastructure alone will not be enough unless everyone can use and benefit from the opportunities that new technologies offer, so participation is the second big theme in today's report.

Technological progress reduces costs, so affordability is partly being addressed by the market. However, we are complementing that market progress with government action. A £300 million Home Access scheme gives children in low-income families access to computers and the internet. As well as being able to afford the technology, people need capability and skills. We address those in a number of ways in the report. I am pleased to announce the appointment today of the entrepreneur Martha Lane Fox as the new digital inclusion champion. We are also publishing the report by my noble friend Lady Morris of Yardley on digital life skills.

The third key theme of the report is about content—sustaining and strengthening our creative industries and securing plural provision of key public service UK content in the digital age. As noble Lords will know, the ease with which digitised content as opposed to physical content can be copied makes it increasingly hard to convert creativity and rights into financial reward and businesses. The Government believe that taking someone else's property and passing it on to others without consent or payment is wrong.

Developing legal download markets will best serve both consumers and the creative industries, but we will also legislate to curb unlawful peer-to-peer file-sharing. Ofcom will be given a new duty to reduce that practice significantly, including two specific obligations: the notification of unlawful activity and, for serial infringers, identity release to enable targeted legal action by rights-holders. We also propose technical measures by internet service providers, such as bandwidth reduction for serial infringers, if other measures prove insufficient. We will also implement a new, more robust system of content classification for the video games industry, building on the Pan-European Game Information system with a strong UK-based statutory layer of regulation, ensuring protection for children now and in the future.

I now turn to the evolving role of the BBC, Channel 4 and the need to protect public service content, particularly in the nations and regions of our country. In the digital age, a strong, confident and independent BBC is as important as ever. The Government support multiannual licence-fee settlements for the BBC so that it can plan ahead and act independently of day-to-day political pressures. We also believe that it is in the BBC's own interests to evolve into more of a public service partner with other media organisations and to see itself as an enabler of digital Britain. We have therefore been encouraging discussions about a joint venture between BBC Worldwide and Channel 4, which we believe would benefit both as well as securing the future of Channel 4. These talks are ongoing and we are ready to help in any way we can. Noble Lords from all parts of this House and Members of another place have repeatedly said they believe that strong local and regional news, including a plurality of provision, is essential for the health and vibrancy of our democracy.

The regulator Ofcom's recent public service review also highlighted the importance of news in the nations and regions. We welcomed its report and the BBC's response supporting partnerships. Partnerships are very welcome, but may be insufficient to meet the scale of the challenge. We believe this will require a secure and sustainable funding stream in addition to those partnerships. The licence fee is the existing major intervention for UK content. There is nothing, as noble Lords will know, in either the BBC Charter, or legislation, to say the BBC must have exclusive rights to it. Independent of the level at which the licence fee is set after 2013, we will consult on the option of sharing a small element of it post-2013 to help ensure high quality, plural provision, particularly in the regions and nations.

Subject to that consultation, we will use some of the current digital switchover under-spend to fund pilots of this model in Scotland, Wales and one English region between now and 2013. We have, however, made it clear to the BBC and others that we are open to alternative proposals should they wish to make them during the consultation. Alongside the Digital Britain report, we are publishing a range of related documents, including the outcome of the review by the Office of Fair Trading of the media merger regime and local and regional media.

The fourth key theme in the Digital Britain report is the continued modernisation of government itself. The digital revolution has huge potential to improve the services Government and public bodies provide and to reduce costs. Leave out if short on"—

I am sorry, my Lords, it says here "Leave out if short on time", which I believe I am.

"The report sets out how public services will be delivered primarily online and electronically, making them quicker and more responsive to the public while saving money for the taxpayer. This report"— even without the paragraph I have just missed—

"will help accelerate Britain's recovery from the biggest economic shock the world has seen since the Second World War. It is a central part of our industrial strategy. It will be key to our economic growth, social cohesion and well-being as a nation and I commend it to the House".

My Lords, that concludes the Statement.

Photo of Lord Luke Lord Luke Shadow Minister, Culture, Media & Sport, Shadow Minister, Defence 4:32, 16 June 2009

My Lords, I thank the Minister for repeating the Statement. He must be a little disappointed that he was not able to give the Statement himself. It is his report and his speciality, but the DCMS is one of the few departments where the Secretary of State continues to reside in the House of Commons. His introduction to the Statement has been pre-empted not only by the Secretary of State in another place but also by the Prime Minister in an article in the Times this morning. However, since the Minister also managed to insert an extensive article into the Financial Times about his report, perhaps he did not mind. I assure him that the blatant and continuing habit of this Government to press-release major Statements before they have been announced to Parliament is still noticed and deplored in this House.

Like my honourable friend in another place, I am not only disappointed by the way in which the report has been handled by the Government, but also by the content. We on these Benches were hoping that the final report would meet the promises we were given at the announcement of the interim report in January. It is clear that that has not been achieved. The report introduces another 12 consultations. In no way can that be considered a final report. We have yet to see what the Government will do on a range of matters; some of them new, some of them, like the possibility of giving Ofcom the power to tackle copyright infringement, which is familiar.

The question of illegal file sharing as a whole has been around for years. The report confirms that the Government still have little idea what to do. Once again, they have resorted to setting up another talking shop rather than finding positive steps forward to address the issue. During a debate tabled by my noble friend Lord Lloyd-Webber on the subject in April this year, my noble friend Lord De Mauley queried what a new organisation would do that Ofcom or the Government could not. The answer he received was that the whole issue was still out to consultation. I hope I will receive a fuller answer today. It has been clear for a long time that any effective enforcement of rules will have to be done, in the main, by private companies. I am glad to see that this report accepts that, to some extent. The recent announcement that Virgin and Universal Music will be launching a legal alternative to pirate downloads is a welcome indication of a possible way forward.

I find it extraordinary that the report of what the Minister's right honourable friend in the other House said differs from what he said. He said:

"The Government believe that taking someone else's property and passing it on to others without consent or payment is wrong", whereas his right honourable friend in another place said:

"The Government believe that taking someone else's property and passing it on to others without consent or payment is tantamount to theft".

I wonder why he changed that.

The Government should be focusing their attention on encouraging exactly this sort of private sector solution rather than on establishing yet another quango.

The inability of the Government to develop an effective policy is also clear in regard to the proposed joint venture between Channel 4 and BBC Worldwide. All the Minister is able to say about it is that talks are ongoing. Talks have been ongoing for months. What real progress has been made? Is there any real chance of a successful resolution to these talks? When does the Minister expect them to be concluded?

On the matter of local news provision, we feel that the Government, while initially sounding as if they had got it right, have unfortunately veered off in the wrong direction. We agree that there needs to be good public sector broadcasting provided at all levels of the UK, but why have the Government decided to focus their attention on regional rather than local news? The Conservative Party's view of regional assemblies is well known. We see them as a meaningless level of bureaucracy that further divides political engagement at a local level with national policy making and accountability. In just the same way, we see the Government's focus on regional news as an unwelcome distraction from the encouragement of genuinely local provision that would address people's local concerns and help engagement with their local government, local issues and local priorities.

Another critical question that the Minister alluded to a few times in the Statement was the cost of implementation of their proposals. It is clear that the DCMS cannot expect the Treasury to look upon expensive policies with a favourable eye and that the economic situation makes finding private sector partners to make up any funding shortfall extremely difficult and, indeed, unlikely. Nowhere is this clearer than in the Government's attempts to find a private company to bear the costs of rolling out universal broadband. BT and Virgin are focusing their efforts on the more profitable urban centres, and using satellite broadband to connect rural British households is apparently going to cost £500 million. Therefore, the Government have decided to fund universal broadband with a levy. As my honourable friend in another place pointed out, the figures on this levy are extremely murky and would seem to suggest that a 20-year levy will be needed. Has there been a more accurate analysis of how much money will be saved after all the transmitters have been switched over?

The Government have also resorted to looking for money within the licence fee. Accepting that there is surplus money within the BBC, they are contradicting everything they said recently about the absolute necessity for an above-inflation rise in the licence fee. On these Benches, we disagree that any surplus should be hived off to other projects. The licence fee has always been raised on the principle that it pays for the BBC's core services. If that is not the case, it should be returned to the licence fee payer.

I was also interested to hear the last few points of the Statement. I entirely agree that the Government's handling of data and the current purchasing of IT systems have huge potential for improvement. It seems extraordinary that it is only now that the Government have realised that the digital revolution raises questions of data security and that that should have an impact on how they operate as a major buyer of IT systems. Given the endless succession of data losses and IT disasters in recent years, one would have thought that that conclusion could have been reached rather earlier.

Finally, I should highlight that if anything is likely to throw up an impediment to the successful implementation of the type of digital economy to which the report refers, it is the constant reshuffling of responsibilities within the Government. The Minister has indicated that he will be resigning and will not therefore be available to drive this report through to its conclusion. I am not surprised by his decision. He gave a very good impression of enthusiasm when debating the interim report in January, but this report confirms what we then suspected—that this Government have run out of ideas.

Photo of Lord Clement-Jones Lord Clement-Jones Spokesperson for Culture, Media and Sport 4:41, 16 June 2009

My Lords, just to change the tone slightly, I shall start by saying that while not agreeing wholly with the content of this paper, I congratulate the noble Lord, Lord Carter, on its production and the fact that it was produced on time. He was clearly the right person for the job. Indeed, he was probably the only person, given his background. We will all miss him when he steps down as a Minister.

I want to make one point that is of a slightly negative nature. I was extremely disappointed, not to say incensed, by the late arrival of the Statement, which arrived one hour and 10 minutes before the expected time of delivery and the paper itself, which arrived 35 minutes before the expected time of delivery of the Statement in the House, and that was only because of a raid on the Government Chief Whip's office. That does not serve the Minister well; it does not reflect well on either the DCMS or the department, whose name escapes me temporarily—I think DBIS is the shortened version. It demonstrates contempt for the proceedings of this House, and it does not serve a Minister of the noble Lord's calibre at all well.

As we know, the two departments have had a little over eight months to put this Digital Britain report together. On these Benches we got half an hour to read it and to write our response. That is not acceptable and I hope that if the Leader of the House reads this, she will take due note and change the practices of the House so that we have the ability to respond properly.

I noted with great interest what the noble Lord, Lord Luke, had to say about the press. Indeed, I was extremely interested in the article of the noble Lord, Lord Carter, in the FT, which I thought gave nothing away. It was a perfectly proper article to write on the morning of the release of the report because it talked essentially about the justification for the paper on the basis of an industrial strategy. It seemed to me that that paper put the creative industries, in many ways quite rightly, on the same basis as the pharmaceutical industry, financial and professional services, and so on. The dimension that we really must not forget today is that it is not simply about industrial policy, but creative and cultural strategy, which is different in many ways. This paper reflects it. We are talking about the content, not simply the way in which that content is delivered.

The important thing about the Digital Britain experience—both the interim report and this one—is that it recognises the crucial nature of our creative industries for the future economy of the UK. We have a huge amount of ground to make up. I was recently in Hong Kong and South Korea where universally they have super-fast, one gigabit per second broadband. That is a different dimension from anything that we have in this country, which will serve them extremely well in the future.

Sadly, having invested some hope that this report would settle some of the issues, we find that this is but another interim report. Incidentally, I make it another 11 consultations which are due, not another 12. I fear that, sadly, the Minister will leave office with unfinished business. There are too many issues that remain unresolved, such as the possible Channel 4 worldwide merger or joint venture, or the inclusion of a return path on digital boxes. I had only a brief time to scan the report, but there was not enough in there about children's television support, and perhaps tax relief or some form of future support for that. The whole issue of the governance of the BBC has not been addressed in the report. We on these Benches believe that an independent PSB regulator will be essential in the future.

There are, however, some very welcome aspects. We now know that the PEGI is to classify video games—a pan-European solution that we have always favoured. A tax break for the games industry is being contemplated, which is very welcome as well. And we finally have a date for switchover to digital radio in 2015, which we on these Benches have asked for consistently. We also have shared concerns about the need to protect intellectual property; millions are being lost by creators, whether of music or film, and potentially, in the future, of books, through illegal downloading and file-sharing. Partnerships between ISPs and rights holders to create new commercial models are the way forward in many areas. Yesterday's deal between Universal and Virgin is a good example. Statutory measures, however, are also needed, and we very much welcome the steps that are proposed; they are proportionate and avoid the heavy-handed "three strikes and you're out" proposals by some countries, such as France. But what has happened to the digital rights agency that had its own paper published after the interim report? I do not see any mention of that in the Statement and I did not find any reference to it in the main body of the final report.

Overall, the proposals for broadband are far reaching and welcome, but the proposed timing means that those in remote rural areas will be disappointed at having to wait until 2017 before the benefits of super-fast broadband are likely to reach them. Should not the emphasis now be on encouraging commercial pull-through so that even more needs to be done to drive forward initiatives such as smart metering, e-democracy and digital healthcare to stimulate demand and hence investment?

Given the real fall in the costs of telecommunications, as the Minister mentioned, the proposed small levy on all copper fixed lines to pay to get near-universal super-fast broadband seems to us imaginative and acceptable. But, even though this is a small sum, it is in the nature of a regressive, fixed charge like a poll tax; I very much hope that he will consider exemptions, at least for pensioners.

We also welcome the reaffirmation of the multi-annual licence fee settlement for the BBC. We welcome the plans to support regional and local news; we have no problem with the BBC's involvement with this, anymore than with its helping the rollout of broadband.

We are, however, deeply concerned about the fact that what is initially proposed is essentially a top-slicing of the licence fee. Top-slicing sets a precedent that, in our view, undermines the BBC's independence. This form of subsidy may be fine in itself, but what guarantee can we have that a future Government will not take money from the licence fee to fund their pet projects in any area, especially when they are unhappy with what the BBC is doing? Surely the BBC should be involved at all stages by establishing a partnership fund within the BBC, as we explained on these Benches in our last debate on the BBC, and clear remit given to it to engage in such partnerships. We clearly have greater faith in these partnerships than the Government.

Clearly, there is a great deal of work to be done and further decisions to be made. It is disappointing that we are still at the stage where we have not yet got final determination on so many areas. This is a work in progress but, limited as it is, we on these Benches welcome it.

Photo of Lord Carter of Barnes Lord Carter of Barnes Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Business, Innovation & Skills, Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Culture, Media & Sport, Parliamentary Under-Secretary (Department for Culture, Media and Sport) (Communications, Technology and Broadcasting) (also in the Department for Business, Innovation and Skills), Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Communications, Technology and Broadcasting) (also the Department for Culture, Media and Sport) 4:49, 16 June 2009

My Lords, I very much thank both noble Lords for their contributions. I was perfectly content for my senior colleague in the other place to be the first person to read his Statement. I suspect, despite my gentle rewording of "tantamount to theft" to "wrong", that I was considerably happier to re-read his Statement than he was to read his.

One of the things that we see in the public domain is the public's engagement with political debate and a desire for deliberative and informed discussion about real issues as opposed to knee-jerk rejections of policy positions, whoever presents them. I would be the first to say that issues remain in this report—there clearly are—but I will try to deal with the substantive questions, most of which were asked by the noble Lord, Lord Clements.

First, I shall clarify my own position, as it is my first opportunity to do so in this House. I have not resigned; I am in the process of completing my task on entering government, which, as I think we made clear in a Statement last week, was to commission and complete this report, and we will do so. The noble Lord, Lord Clements, is correct; there are follow-on consultations. Indeed, there are 11. I make no apology for the fact that there are follow-on consultations, because that is what we are required to do by both good Cabinet Office practice and better regulation practice. However, let us be equally clear that most of those 11 consultations are about implementation, not debate. A very clear consultation document was issued today on intellectual property and digital piracy and how we will transpose the necessary powers into the hands of the sectoral regulator to do what we say we wish to do.

On the bigger question of what we are trying to say with this report today, we are trying to say three things. The first was mentioned by the noble Lord, Lord Clements. For the first time, we as a country should unashamedly endorse our creative industries as an industrial capability of real scale and international clout. We should recognise that the digital economy is central to our future industrial competitiveness, and that that requires us to make some hard decisions about the infrastructure capabilities that we have in this country.

I have many times heard members of the opposition party wax lyrical about the benefits of the liberalisation of the telecommunications market. Indeed, I was a beneficiary of that. I was also a regulator of it, and tried to solve one of its unfortunate by-products: the failure to create an access regime to create a competitive market. It is very clear that if we wish to create a future market structure, we need to make some decisions about investment in next-generation capability: hence the proposals for the levy.

Some questions do remain for us to discuss, but considerably fewer than the noble Lords have outlined. I am deeply saddened by the process point that the report and the Statement were late, and I apologise to the House. We have tried studiously to observe parliamentary primacy, and rightly so—I make no virtue of it—so there were no briefings, certainly not from me or my office, beyond the article to which the noble Lord refers. I took due care and consideration—indeed, I penned the article myself—to make it clear that we were in no way, shape or form divulging content; we were arguing a case. That is a perfectly legitimate exercise of a ministerial position. We were absolutely determined that this report would be delivered to Parliament first, and I am deeply disappointed that colleagues have not had the opportunity to review it in a way that I hope people feel it benefits from.

I have two final points to make. First, the contestability of the licence fee is not a small question. I for one in government have been insistent that there are two principles that need to be tested: one is that there is a requirement for funding for local news, regional news and news in the nations; the second is that we are for the first time asking whether the licence fee should be used for other things. The Government are clear that the time has come, but we believe that it is a substantial policy change that benefits from a clearly time-defined policy and public consultation. Again, I make no apology for that. We are both clear and open, and I, for my part, believe that that is the definition both of good government and of good policy development.

The noble Lord asked about the delivery of services to rural and remote Britain—or not so rural, because we are talking about a third of the country. I sincerely share the noble Lord's hope that our recommendations today will act as an accelerator to commercial investment in market deployment, notwithstanding that we believe that a clear case has been made for targeted, market-facing and forensic intervention. I commend the report to the House.

Photo of Lord Fowler Lord Fowler Conservative

My Lords, from what the Minister said, the idea of a full-scale merger between Channel 4 and BBC Worldwide is dead. Perhaps the Minister could confirm that. However, I want to ask about regional and local news, and I declare a past interest as a former chairman of two regional newspaper companies. I apologise for using that phrase to my noble friend, who obviously takes offence at it. If ITV, as it promised, pulls out of regional news, the BBC will have a television monopoly in this country. That would be totally undesirable. We would be going back the 1950s or even worse, because regional newspapers were once very strong and they are now fighting for their very survival. Will newspapers be able to take part in any consortiums put together to replace regional news, which is being taken away?

As for the BBC, unlike what the noble Lord, Lord Clement-Jones—which is the normal way of pronouncing the noble Lord's name—said, surely it is reasonable to divert a small part of the licence fee to help, and to ask the BBC to accept that it has a wider broadcasting responsibility than simply looking after the affairs and interests of the corporation itself?

Photo of Lord Carter of Barnes Lord Carter of Barnes Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Business, Innovation & Skills, Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Culture, Media & Sport, Parliamentary Under-Secretary (Department for Culture, Media and Sport) (Communications, Technology and Broadcasting) (also in the Department for Business, Innovation and Skills), Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Communications, Technology and Broadcasting) (also the Department for Culture, Media and Sport)

My Lords, on the last point, that is the nub of the question. If you take the same view as the Government, and I sense from the noble Lord's contribution that he does, monopoly provision of regional news and, importantly, alternative news in the nations—if you spend time in Wales and Northern Ireland, that is a critical question—would be a deeply unfortunate consequence. There is an obligation on society and therefore on the Government. We believe that the BBC Trust, as the governing body, should help facilitate a funding mechanism for that. That is why we propose what we propose; because we share the noble Lord's view that there is a clear and present danger of the emergence of a monopoly.

Monopolies are generally bad. Monopolies in the provision of news and democratic debate are profoundly bad social consequences. Will newspaper bodies be able to be part of those consortiums if they come to pass? Yes, they certainly would. Are we saying that a full merger between the BBC and Channel 4 is dead, to use the noble Lord's phrase? To be clear, I think we are saying three things. We believe that there is a clear case for the trust to look in more detail at a greater level of commercial separation of BBC Worldwide's activities from the main institutional structure of the corporation's activities in the United Kingdom. We also believe that there is an opportunity for an operating joint venture in the UK between BBC Worldwide and Channel 4, but we are equally making it clear that that is a matter for the parties. They must do that on commercially transparent terms. But if they can reach an agreement, the Government stand ready to approve that and facilitate any loan financing on commercial terms that may be needed to make that joint venture operate. I hope that that provides the noble Lord with clarity.

Photo of Lord Harris of Haringey Lord Harris of Haringey Labour

My Lords, I welcome chapter 7 in the report, which deals with digital safety and security. I have two specific questions about that section. First, there is the welcome intention of the Government to issue a cybersecurity strategy. When are we likely to see that take place? Secondly, I note in the report the support for the after-sales services provided by a number of computer retailers, such as the Geek Squad, the Tech Guys and so forth. Have the Government given any thought to the personnel who visit people in their homes and put things on their computers? What steps are being taken to ensure that those individuals are quality-assured and regulated in the same way that physical security personnel are regulated by the Security Industry Authority?

Photo of Lord Carter of Barnes Lord Carter of Barnes Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Business, Innovation & Skills, Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Culture, Media & Sport, Parliamentary Under-Secretary (Department for Culture, Media and Sport) (Communications, Technology and Broadcasting) (also in the Department for Business, Innovation and Skills), Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Communications, Technology and Broadcasting) (also the Department for Culture, Media and Sport) 5:00, 16 June 2009

My Lords, those are two very interesting questions. I am glad that my noble friend supports what we have said in this section of the report. Noble Lords will see that it tries to lay out in some detail the relationships between the security issues in an online world internationally, nationally and domestically.

The first question was when the full cybersecurity strategy will be published. My understanding is that that will be before the summer, but I will clarify that. On the second point, I do not know what checks and balances those operators put in place, but I will do further due diligence to find out. My noble friend raises an interesting question; as people's domestic IT systems become more and more sophisticated—which they will—the level of complexity, and therefore the level of security and trust that people will want to have with the providers of those services, will only increase. My view is that it will be four or five years before we have a sort of AA or RAC of the IT world providing that level of assistance at scale for many homes. It is an intriguing question.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench

My Lords, I congratulate the Minister on his report. Like other noble Lords, I am sorry, but perhaps not surprised, that it is not a bit further forward. I thank him for all the hard work he has put into it. We shall be sorry to see him go, for whatever reason.

I have two questions, both to do with children. In Ofcom's research there was a clear desire for more programming for children, with more UK content, on both TV and radio. It was not just news that was wanted. How high a priority will that be, and where will the funding come from?

The Minister mentioned the video games industry and the fact that it will be regulated. He indicates here that not only will the PEGI system apply but there will be a rather strong UK-based statutory layer of regulation, which I presume will mean that the BBFC is involved. That is a system that British families would understand. Can he confirm that that will be the case?

Photo of Lord Carter of Barnes Lord Carter of Barnes Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Business, Innovation & Skills, Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Culture, Media & Sport, Parliamentary Under-Secretary (Department for Culture, Media and Sport) (Communications, Technology and Broadcasting) (also in the Department for Business, Innovation and Skills), Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Communications, Technology and Broadcasting) (also the Department for Culture, Media and Sport)

My Lords, on the first point, the noble Baroness is right: in the Ofcom review, in its consultations and in the consultations that we had, there was a significant level of concern about the amount and quality of content for children—primarily programming, but also radio, as the noble Baroness mentioned, and online content—being produced by organisations other than the BBC.

We have thought long and hard about this, and we say three things in the report about children. First, on the point of contained contestability, we say that we see this primarily as a funding mechanism for news in the nations, in the regions and locally—a point made earlier by the noble Lord opposite—but we recognise that there are other calls on that, which could include children. Secondly, in our proposed revised remit for Channel 4 we specify an increased responsibility for the provision of children's content, not just traditional programming. Thirdly, one of the many virtues of clarity about the switchover timetable for digital radio is that, as the noble Baroness will know, digital radio is capable of infinitely greater capacity at lower cost if you can resolve the multiplex licensing and transmission costs, and we lay out how to do that. This will lead to a flowering of radio services at more affordable cost, including the potential, much discussed for a long time, of a commercially funded children's radio station.

On the video games industry, we are very clear in the report that after due consultation and debate we will opt for the PEGI system as the predominant system, but we recognise that in some areas there is a role for the BBFC, which is a statutory UK-based body. We lay out clearly how we see those interrelationships working. Much to the irritation of some noble Lords, a more detailed consultation on that question is published at the same time.

Photo of Lord Roberts of Conwy Lord Roberts of Conwy Conservative

My Lords, perhaps I may give a Welsh welcome to what is said in the Statement and the report on regional programming at the Welsh national level. I suspect that what I am saying also applies to Scotland. I speak as a founder of the first local television news service for south Wales and the West Country way back in 1958 at the time of Television Wales and the West. How will the pilots proposed for Wales and Scotland be run? Will they be run by independently financed news consortia and, if so, by whom will they be led at the local level?

Photo of Lord Carter of Coles Lord Carter of Coles Labour

My Lords, I am delighted to receive a Welsh welcome. Earlier today, I said to a colleague from Wales in another place that there is an enormous amount in this report for the nations and the rural parts of the United Kingdom. That is not just in relation to broadcasting and content, but also to the coverage of broadband service, the funding for next-generation networks, extending mobile coverage to 100 per cent, the rolling out of digital radio capabilities and the funding of pilots. I hope that one of the consequences of this will be an increase in the binding together of the United Kingdom through an extension of services to parts of the country currently underserved by these things.

On the noble Lord's specific question, it is very clearly argued that these will be commercially run consortia, notwithstanding that they will use pump-priming finance through the contestable fund process. Therefore, I suspect that they would end up having a combination of anchor tenants or anchor shareholders who would act as a way of bringing together other interested parties. We have already had some proposals from commercial operators in Scotland as to how they can put together their first pilot. I have two views: first, the Government should stay away from running it as far as possible and let the operators run it and, secondly, we should use these pilots to investigate their optimal way of working. I suspect that we will end up with a different model in Scotland to that in Wales and that in the English region, and I think that we will learn from that.

Photo of Lord Whitty Lord Whitty Labour

My Lords, I welcome strongly the broad thrust of the main part of this report, which relates to extending broadband and other digital accessibility factors to the bulk of the population. That is very commendable. However, one part of this report perturbs me greatly and I need to dissent from the Government's view and the view generally expressed here; namely, the importance of digital rights. The Government and, apparently, the opposition parties are seriously out of touch and are adopting the wrong tack. I need to declare an interest as chair of Consumer Focus.

Activities done by millions of people every day, to no profit to themselves in many cases, should not be regarded as criminal activities with sanctions enforced through private sector companies, which are reluctant to take on that role. I recognise that the Government have backed off a little from the more draconian measures urged upon them, but they are still too keen to accept the protectionism in the music industry. There are other ways to deal with this. The paper refers to new models and to developing legal download markets. I had hoped that the Government would have explored those options rather than accept even watered down sanctions, which inevitably will hit and restrict the access of millions of relatively young people engaging in this activity every day of the week. There must be better ways of doing it. I hope that before we embark on that mass criminalisation we will explore other alternatives much more fully.

Photo of Lord Carter of Barnes Lord Carter of Barnes Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Business, Innovation & Skills, Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Culture, Media & Sport, Parliamentary Under-Secretary (Department for Culture, Media and Sport) (Communications, Technology and Broadcasting) (also in the Department for Business, Innovation and Skills), Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Communications, Technology and Broadcasting) (also the Department for Culture, Media and Sport)

My Lords, as the noble Lord knows, I have enormous respect for his opinion and that of the organisation of which he is chair, which has engaged in depth and constructively on this question. I would be the first to acknowledge that this is a very difficult area. We have seen only this week the French Government's position overruled by the French high court because it was judged to have gone too far down the path that he described. I would therefore describe our approach not as a watering-down but as an intelligent balance between the rights of the rights owners and those of the users, but I am afraid that I make no apology for where the Government have clearly come out.

If we believe, as this Government firmly do, that the digital economy and the creative industries are central to our industrial capability, we must have a framework that protects intellectual property, allows it to be monetised and gives it standing in the world in which most of these transactions are going to be conducted. I entirely accept the noble Lord's point that the operators and rights holders need to change their approach. The noble Lord opposite commented that we should welcome deals such as those announced by Virgin and Universal. If he were to ask his colleagues in another place who wrote the briefing note to do their research, they would tell him that we facilitated that arrangement, largely on the basis of what we are announcing today. It is an example of the sort of new business model that will come about. That requires clarity from the Government and the regulator on what will be allowed. We are not in a position not to have an opinion on this question.

Photo of The Earl of Erroll The Earl of Erroll Crossbench

My Lords, I support the point made by the noble Lord, Lord Whitty, and would like to ask the Minister a couple of questions as a result. Does he realise that royalties usually go to the copyright holders and not to the artists? It does not encourage innovation; it encourages making money out of back catalogues. It therefore stifles a lot of new stuff done by teenagers such as mash-ups, where they use backing tracks, put them together with other stuff and put them up on YouTube. Who will get sued? Where is the copyright and who is the infringer?

The Government are going to form a rights agency, which will be a government body that enforces civil infringements. It is a bit of a departure for the Government to start putting their own body into enforcement; Parliament should debate whether that is a good principle. I should explain: peer-to-peer file-sharing is not illegal—we should make that clear. To find out when it is illegal, ISPs will have to look at the content of those communications. It is like opening people's mail. That will be quite a step forward, since people are trying to hit certain other companies for doing that very thing to try to benefit people. The Government should look carefully before they turn that into legislation. Bandwidth reduction could bankrupt SMEs. If children ride on the back of their parents' SME bandwidth, how will you respond to that when they cannot respond to government inquiries?

Does the Minister not feel that this is the time for us to be moving into the 21st century? Strong copyright can inhibit innovation. We should look at proposals that were debated at the Digital Britain conference. The Government should simplify IPs, particularly for small businesses. We should look at the Creative Commons. We need to change business models because of digital copying rather than trying to enforce stricter copyright restrictions, entrenching a dinosaur method that belongs to the last century.

Photo of Lord Carter of Barnes Lord Carter of Barnes Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Business, Innovation & Skills, Parliamentary Under-Secretary (Communications, Technology and Broadcasting), Department for Culture, Media & Sport, Parliamentary Under-Secretary (Department for Culture, Media and Sport) (Communications, Technology and Broadcasting) (also in the Department for Business, Innovation and Skills), Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Communications, Technology and Broadcasting) (also the Department for Culture, Media and Sport)

My Lords, I detect a level of disagreement. I share the noble Earl's view that there is a balance to be struck between copyright protection and innovation. I do not share the view that strong copyright automatically stifles innovation. I am conscious of the earlier criticism made by the noble Lord, Lord Clement-Jones, that we have not given noble Lords much time to read the report, but it talks about greater access to orphan works and what progress we seek to make on format shifting. There are areas where we can make progress.

The noble Earl's point about royalty allocation is important but it is not relevant to this question. The body that he refers to is not a government body. Let us be clear: we are saying that we believe that there is a role for an industry body, which would be responsible for setting a code under licence from the statutory regulator. That is no different from what happens in, for example, the advertising industry, where the Advertising Standards Authority, which is not a government body but an industry body, provides a code, a framework and a set of rules around which commercial advertisers, media owners and inventory providers operate in a way that protects us as consumers of advertising content. We are not talking about another government agency. That is another piece of nonsense that has been spread around as a means of trying to pollute the policy debate. However, the central question that the noble Earl asks is very legitimate: do we have the balance right? We believe that we have, but I entirely accept that there are alternative opinions.

Photo of Lord McNally Lord McNally Leader in the House of Lords, Spokesperson for Constitutional Affairs , Liberal Democrat Leader in the House of Lords

My Lords, the ever alert noble Lord, Lord Davies, is on his feet, but if he would sit down I could make the point that the time to read this document and the time for noble Lords to question the Minister have been totally inadequate. Will he take that back to his colleagues and suggest a full day's debate on this in government time?