Thank you for ensuring that the record is accurate, Mr Chope.
This reform will remove a power from the Digital Economy Act 2010 to make regulations containing site blocking provisions. The Act gives courts the power to grant injunctions requiring service providers to block access to specified sites to prevent the infringement of copyright. That power was included in the Act to enable copyright owners to tackle sites based outside the UK that offer their copyright material illegally. Copyright owners were unable to take action against the sites in the UK, and found it difficult to pursue them in their home territory. Therefore, it was considered reasonable to provide the ability to block access via internet service providers.
After the Act came into effect, the Government asked Ofcom to carry out a review of the efficacy of such site-blocking injunctions if they were to be made. Ofcom concluded that, in practice, such injunctions were unlikely to be effective, so the Government announced that they had no intention of making such regulations. Subsequently, copyright owners began to utilise the pre-existing provisions in section 97A of the Copyright Designs and Patents Act 1988 successfully to apply for site-blocking injunctions, rendering the regulation-making powers in the 2010 Act unnecessary.
Since section 97A of the Copyright Designs and Patents Act now provides remedies for copyright owners, and in the light of the Ofcom review’s doubts about the practical usability of the power in the Digital Economy Act, there is clearly no need for the power to be in the 2010 Act. I commend the clause to the Committee.
I am rather stunned by the brevity with which the Minister sets out his limited case for the withdrawal of the sections. This is a hotch-potch of a Bill; online copyright infringement comes immediately after marine accident investigation. Fortunately, we are at last coming to a subject with which I have some familiarity. This is a complex issue, Mr Chope, and I hope you will allow me to say something about the Digital Economy Act, which the clause seeks to amend, and the report on which it was based.
I must declare an interest. As head of telecoms technology at Ofcom prior to the previous election, I was involved in the development of the “Digital Britain” report, which gave rise to the Digital Economy Act. I worked with Lord Carter’s team in the Department for Business, Innovation and Skills to provide the technical basis for some of the provisions in the resulting report.
“Digital Britain” was not without its critics. It is hard to deliver a comprehensive assessment of the country’s digital infrastructure, digital future, barriers, opportunities and priorities without disappointing at least some people. However, a comparison of the previous Labour Government’s record with the total lack of digital vision from the Government, of which the Minister just gave an excellent example, makes even those who objected to some of the report’s recommendations look back at that time with rosy nostalgia—
Mr Chope, thank you very much for that direction. It is central to digital industries, and the provisions on digital copyright should be part of an overarching approach to copyright. It is extremely important to understand that were sections 17 and 18 of the Digital Economy Act 2010 to be removed, that would have a significant impact on other areas for which the Government have not legislated and on which they have not even set out a vision.
Under the previous Government, the Communications Act 2003 set out a 10-year vision that brought together the existing communications regulators for telecoms, television and radio to address the then new concept of convergence. After that, we had another review in 2009, which looked forward a further 10 to 15 years. We wanted to ensure that, as far as possible, legislation kept pace with technology. That is a key point in terms of the clause under consideration, because the opportunities and challenges of technology lie at the heart of the malaise that is attacking the value of online copyright. We wanted legislation to keep pace, not to prevent change or innovation—a motive that the Government often ascribe to all regulation—but to provide the certainty and the legislative framework in which competition could flourish, new businesses could be established and innovation could be harnessed to put us in the first place in the global digital economy.
If Committee members agree to delete sections 17 and 18 from the Digital Economy Act 2010, are they confident that they are putting in place the necessary legislative framework to enable our digital economy to grow, reliant as it is on online copyright? One might expect a vision of our future digital economy and the role of online copyright within it to be set out in a communications Green Paper. It is true that we were promised such a publication. Indeed, we had an epic in which the publication of that paper was promised every month of almost an entire year. It is true that in that time, the unhappy comments of the Secretary of State for Business, Innovation and Skills led to a change of responsibilities, and the then Secretary of State for Culture, Media and Sport was moved to replace the damaged Secretary of State for Health. All that ministerial movement could not disguise the void at the heart of Government when it came to copyright, the most critical component of a critical industry, which is even more important as a platform for innovation and value creation throughout many different sectors of our economy, and of our society.
For almost a year, the communications Green Paper was awaited in a plan that was so badly managed that the due publication date lost a month every month. Finally, last August, a White Paper was published, after plans to publish a Green Paper were abandoned. We might have hoped that that would address the concerns of the music and creative industries about online piracy, but no, “Connectivity, Content and Consumers: Britain’s digital platform for growth” simply cobbled together a few existing initiatives and said that the Government would work with industry to develop a strategy by the end of 2014.
Will the Minister tell us where we are with this long-term strategy for connectivity, content and consumers, so that we might place this attempt to remove these sections in the context of an overall strategy and approach to safeguarding creative industries through strong enforcement of digital content?
Why does this matter, and why do I want to spend time on these two important sections and the clause that would remove them? It matters because without some kind of vision, the future of our digital economy remains clouded and therefore it is impossible accurately to judge the impact that the removal of those two sections would have. The Government are repealing a provision that they promised to work to replace, although the Minister did not refer to that in his opening remarks. We are in need of another point of clarification. He seemed content with the current workings of the injunctions. As we will hear, I understood there were promises to undertake further work to put in place a more acceptable alternative.
Copyright is a key part of the creative industries and the digital economy that drives them. It is worth remembering just how important the creative industries are. They provide an estimated 1.5 million jobs, 10% of the economy and more than £36 billion of gross value added. However, it would be wrong to think that intellectual property is the preserve only of specific creative industries such as music and broadcasting. As my hon. Friend the Member for Hartlepool (Mr Wright) said during the Committee stage of the Intellectual Property Bill:
“Our value as an economy—our arguably unique value, or second perhaps only to the US—is in the difficult-to-define juxtaposition between creativity and innovation and the impact on production and manufacturing. The fact that we have a strong creative industries sector combined with a strong science and research base and world-beating manufacturing sectors, including automotive, construction, aerospace and pharmaceutical, means that our economic model and future prosperity is very much dependent upon IP.”––[Official Report, Intellectual Property Public Bill Committee, 28 January 2014; c. 44.]
I echo my hon. Friend’s comments and not, by the way, those of the Prime Minister who recently said at CeBIT in Hanover that the future was about UK software and services combined with German manufacturing. We still manufacture in this country and I ask Government Members to recollect that and support measures that seek to protect the important IP that there may be in manufacturing processes, just as in music and pharmaceutical production.
I was talking at lunchtime with a Pfizer employee who emphasised the impact that counterfeit medicines, often obtained online, have on its business model and on the health and well-being of many citizens across Europe and the world. The proper protection of IP is critical for many sectors of our economy; it is not just about one business model but about incentivising creativity and innovation by allowing an appropriate reward for the risk that the inventor, creator, musician or performer takes in generating that IP.
It is in the nature of disruptive new technologies such as the internet that they change how companies need to do business as value chains are disrupted. We certainly we would not want to be in the position of trying to protect obsolete business models or entrench vested interest.
Before the interruption, we were discussing the nature of the disruption that new technologies often make to the way in which businesses work, and I was saying that protection of IP is not about protecting obsolete business models, but about protecting new and emerging business models from what is effectively criminal activity. As the Library briefing sets out, an industry survey, admittedly published in 2010, found that 29% of a sampled population of internet users were engaged in some form of unauthorised music downloading. The music industry estimated that 1.2 billion tracks were downloaded unlawfully in the UK each year; there were legitimate online sales of 370 million tracks at that time.
Studies by the film and television industries indicate that more than 10% of UK adults consume infringing content online, and that piracy costs those industries more than £535 million per year in the UK. We have more recent evidence from Ofcom, which estimates that in the last three months, 280 million music tracks, 52 million TV programmes, 29 million films, 18 million e-books and 7 million games were illegal downloads. This involves 20% of households. The BPI estimates that this costs the industry £250 million a year. It is worth putting this in the context that half of all musicians earn below £20,000 a year. The industry estimates that over the whole Parliament, the Government’s delay in effectively enforcing online IP will cost it over £1 billion.
Despite how it may appear to the contrary, it is my understanding that this Government also believe in protecting IP. However, without an overarching strategy and clear approach, how can we understand how they propose to protect IP? They propose to repeal these provisions in the Digital Economy Act, but give no indication of what they will do to protect IP in consequence. As the Minister said, clause 27 repeals the power to make provisions for blocking injunctions in sections 17 and 18 of the Digital Economy Act. These sections contain powers to make regulations that would grant courts the power to order internet service providers to block websites that enable illegal downloads or host significant material that is not copyright or copyright-infringing.
The court would need to be satisfied that such websites are used, or are likely to be used, to infringe copyright. Section 18 then specifies that any such regulations would be subject to the super-affirmative procedure. That means that the Secretary of State must have regard to representations, House of Commons and House of Lords resolutions, and Committee recommendations that are made within 60 days of laying, before deciding whether to proceed with the order, and if so, whether to do so as presented or in an amended form. An order dealt with under that procedure therefore must be expressly approved by both Houses of Parliament before it can be made. I set all that out to make it clear that there are protections within the sections as they stand to ensure the maximum amount of scrutiny by both Houses.
By the way, Mr Chope, I checked the wiki entry for the Digital Economy Act 2010 before coming to the Committee. It says that the sections in question have already been repealed. I do not know whether it is in order to rely on the evidence of an entry in Wikipedia, but either it shows the faith of the wiki authors in the Government’s ability to carry through their legislative programme, such as it is, or perhaps it shows the need for more authoritative internet sources, which can be held accountable for the information provided on them, and which can be rewarded by the maintenance and protection of their copyright.
The clause would repeal sections 17 and 18. I understand that a Liberal Democrat peer introduced the provisions in question into the 2010 Act. However, we cannot expect to hold the coalition to Liberal Democrat commitments. The websites I am concerned with are generally ad or payment-funded. They are a lucrative business. I do not want hon. Members to take away the impression that we are talking about amateur, unpaid enthusiasts. Often they run lucrative businesses that infringe copyright on a criminal scale and pay nothing to musicians and songwriters. It is also more than likely that there will be hardcore pornography alongside such content, as well as malware and trojans, which will infect the devices that access the site.
I am sure that the Minister will address the fact that any proposal to block websites raises concerns about freedom of expression. It is right and proper in that context to consider blocking such proposals. However, we should also recognise that there are circumstances where, for public policy reasons, the Government need to become involved in blocking sites that are no better than organised crime. Indeed, the police already do so in partnership with the content industries. It is no longer generally accepted that the internet is some kind of wild west where the laws of the real world do not apply, as the Home Secretary, I think, has agreed in remarking that the laws of the physical world apply in the virtual world and that citizens have the right to be protected from online harm just as much as from physical harm.
The Government have, however, chosen not to use the relevant sections to set up procedures to enable sites to be blocked. Because of that, the industry has used injunctive relief—which sounds interesting—under section 97A of the Copyright, Designs and Patents Act 1988, to which the Minister referred, to block 24 websites by applying to the High Court. The BPI said in a letter to the shadow Culture Minister, my hon. Friend the Member for Bishop Auckland (Helen Goodman), that industry believes that that has been effective in reducing piracy in the UK and has thus been shown to be justified. However, it is not necessarily effective. Perhaps I misunderstood the Minister, but he implied that the existing practice of using injunctive relief was an acceptable and effective way of blocking access to the websites I have described. Certainly, industry does not think so. Industry believes that there is a need for a quick, cost-effective way to stop illegal websites from trading. Particularly for pre-release music or live sport, a fast process is needed because the damage to the copyright holders happens very quickly.
The Minister briefly alluded to the then Culture Secretary, the right hon. Member for South West Surrey (Mr Hunt), asking Ofcom to review the practicability of the provisions in, I think, 2011. Ofcom noted that none of the blocking techniques
“is 100% effective; each carries different costs and has a different impact on network performance and the risk of over-blocking…All techniques can be circumvented to some degree by users and site owners who are willing to make the additional effort…The location of infringing sites can be changed relatively easily in response to site blocking measures, therefore site blocking can only make a contribution if the process is predictable, low cost and fast to implement…To be successful, any process also needs to acknowledge and seek to address concerns from citizens and legitimate users, for example that site blocking could ultimately have an adverse impact on privacy and freedom of expression.”
Those were the concerns raised by Ofcom, which also acknowledged that
“site blocking could contribute to an overall reduction in online copyright infringement”,
but Ofcom concluded that sections 17 and 18 of the 2010 Act would not be effective in generating lists of sites to be blocked. Effectively, Ofcom said that they were not the full solution.
“There are test cases being fought in the courts, so we're looking at other ways of achieving the same objective, the blocking objective to protect intellectual property in those cases, but in a way that’s legally sound.”
That is where I find what I hesitate to call a disagreement between what the Business Secretary said and what the Parliamentary Secretary said in his introductory comments, where he seemed to imply that the Government were not searching for better ways to achieve the objective of sections 17 and 18 but believed that it had been achieved through existing legislation enabling blocking injunctions.
What is the legally sound, effective way of protecting intellectual property that the Government have found? The House of Lords Communications Committee was invited by the Joint Committee that scrutinised the draft Bill to comment on clause 27. It noted what it described as the Government’s undertaking in 2011 to do
“more work on what measures can be pursued to tackle online copyright infringement…Whilst we make no comment on the merits of sections 17 and 18 of the Digital Economy Act 2010, we are not aware of any further work which the Government has done to identify other measures which could be pursued to tackle online copyright infringement. It seems to us that there might be merit in the Joint Committee on the draft bill firstly ascertaining what further research the Government has carried out on this issue and second exploring with witnesses the merits or otherwise.”
At the heart of this is the question whether the Government have done any further work. Are they intending to do any further work? Those questions arise because we have no view of an overarching approach from the Government for securing the future of our digital economy, specifically by tackling online copyright infringement.
I beg your indulgence, Mr Chope. I want to remind the Committee of the other areas in the Government’s approach to the digital economy that are under criticism. The National Audit Office’s report published last July revealed that the delivery of the Broadband UK programme will be 22 months later than planned. The project has been criticised for not promoting any market competition; BT was the winner of all 44 contracts put out to tender.
In the absence of a vision for the future of the digital economy, and having abolished our commitment to universal broadband coverage, broadband coverage is being rolled out more slowly than even the Government intended. That increases the uncertainty suffered by the industry. In that context, repealing sections 17 and 18 might have detrimental consequences in terms of both perception and reality for the digital economy.
Before coming to this debate and hearing the Minister’s remarks, I had believed that the Government were promoting a voluntary code to address blocking—or at least that a voluntary code was under discussion. The Minister made no reference to that. There have not even been so much as smoke signals from the Government to set out where we are with the voluntary code or what it contains. Perhaps the Minister’s silence points to the fact that those discussions have failed, or that the Government are no longer engaging with the matter.
Given the disarray in the Government’s approach to the digital economy, and the ad hoc series of measures that are put forward and then suggested for repeal, we would find it difficult—indeed impossible—to support the repeal of sections 17 and 18. The contrast between the Labour Government, seeking out the future, looking forward and acting in advance of the technology to secure and protect jobs in the valuable digital economy, and this Government, waving the banner of deregulation to hide their inability to act, could not be greater.
There are quite a few points to respond to. The first is the hon. Lady’s complaint about the brevity of my opening remarks. I would prefer to see that as being about relevance to the debate before us.
I know that you, Mr Chope, would not have allowed the hon. Lady to stray from clause 27, but she seemed to have succumbed to talking a little more widely about her party’s vision. I would like to touch briefly on that subject.
The hon. Lady also complained that the Bill was a hotch-potch. I suppose that, almost by definition, when the Government go and identify areas of redundant regulation, it is not necessarily going to be placed in one specific Department; clearly, the exercise would be cross-departmental. I am afraid that she will have to get used to that.
I think my hon. Friend the Member for Newcastle upon Tyne Central was quite right to describe the Bill as a hotch-potch. It is a question not just of the variety of measures in the Bill, but of their quality, which is rather poor.
I am sorry that the hon. Gentleman thinks that. If he thinks that reducing burdens on businesses by £300 million over 10 years and on the public sector by £30 million over 10 years is not worth the Government doing, that simply reflects the rather profligate attitude that his Government had to spending taxpayers’ money and on impositions on business.
I know that the Minister is well aware that the process of identifying legislation and regulation that is out of date or obsolete is of course varied, which is why the Law Commission does that as part of its remit, and when it brings regulations to Parliament to be removed and repealed, it does so successfully without the need for so much debate, because that is its role and its expertise. It is the fact that the Government have resorted to spending so much time on identifying items that could have been identified by the Law Commission that has created such a hotch-potch.
I thank the hon. Lady for that intervention. Obviously, I am aware of what the Law Commission does in relation to legislation, but she might want to reflect on how long it might have taken it to address the issues that we have identified. The commission has a very detailed programme of activity, which we welcome, but I suspect that it might have taken it a number of years to pick up all the items that we have identified in the Bill.
The hon. Lady accused the Government of lacking a digital vision. No doubt she had in mind the sort of vision that the previous Government had, which, if we focus specifically on IT, was a vision that gave us NHS projects on which the Government spent, depending on the newspaper reports, £10 billion, £11 billion or £12 billion, which then had to be abandoned because they did not work. If that is her vision, I would certainly not like this Government to adopt it. I am afraid that although her party’s Government may have shown vision, they certainly lacked on the delivery front. They were apparently “seeking out the future” when they were in government in relation to the digital economy. I do not know whether they found the future when they were looking for it, but she might want to update the Committee now on what that future looks like.
I am talking about the Communications Act 2003, which was passed under the previous Government. It looked 10 years into the future and predicted the trend of convergence, and it created the regulator Ofcom, which is one of the most admired in the world precisely because it has converged powers to regulate such a rapidly changing industry. That is what I meant by seeking out the future. We can contrast that with the current Government, who cannot even produce a White Paper that looks more than a year ahead.
All I can say is that it is a pity that when the Labour Government were seeking out the future, they did not identify, for instance, that boom and bust had not in fact been abolished. I will not continue along this line of argument, because I am sure that you will bring me to order, Mr Chope.
I was on the pre-legislative scrutiny Committee, and it became clear to me that the Law Commission does an excellent job of getting rid of redundant legislation that is sometimes decades, possibly even hundreds of years old, about which there is no controversy. Its Bills, which are typically introduced every couple of years, generally pass through the House without opposition. The Government are now trying to pretend that some of their proposals are uncontroversial, like those dealt with by the Law Commission. They are not; they are things that should be debated and legislated upon, and indeed opposed by us if we feel inclined to do so.
I thank the hon. Gentleman for those comments. As I understand it, the Bill is a deregulation Bill, and only schedule 17 contains any Law Commission-type work. We are quite rightly using the Bill to deregulate in a way that will be of benefit to business, local authorities and others, and I welcome that fact.
The hon. Member for Newcastle upon Tyne Central rightly talked about the benefits of the creative industries, which the Government support. We welcome the jobs that are created in those industries and the fact that, as we have seen with the film “Gravity”, they are world leaders. We want that to continue. She also mentioned the software industry. Having done her studies at Imperial, she went on to join, to some extent, the technology world. Our paths are parallel, as I did so as well. I welcome the role that the software industry, in which I was involved before being elected, plays in providing jobs and being a world leader.
The hon. Lady made a number of specific comments to which I would like to respond by clarifying some of the things that the Government are doing. She referred to the fact that the Government are seeking a voluntary arrangement with industry to supplement what is already happening in legislation. That is certainly the case, because that situation would be more responsive to the technological challenges to which she referred. She will be aware that any process that requires the Government to update legislation to keep up to date with technological changes is challenging. Anything that the industry can do on a voluntary basis is therefore welcome, such as a voluntary copyright alert programme. That is likely to be able to act more quickly than any alternative approach.
The hon. Lady suggested that what I referred to in my opening remarks was the only thing the Government had in mind in order to address copyright infringement and IP issues. That is clearly not the case. As she would expect, the Government are pursuing criminals, educating consumers and encouraging new business models. We work closely with industry, as is appropriate for the Government to do.
Contrary to what the hon. Lady says, we think that section 97A of the 1988 Act is working well. We have financed a follow-the-money approach via the City of London, in which we have invested £2.5 million. She referred to 26 sites having been blocked, but my figures suggest that 40 sites have been blocked through that approach. I am sure that would be welcomed by the businesses whose copyright was being infringed.
The hon. Lady also suggested that the Government’s action would remove protections from all manner of companies with regards to IP. It will not. The legislation is not in force, and there would not have been any additional value to it due to the slow court processes that would have been needed for injunctions to be granted. That is why we—and, I think, industry as a whole—are confident that section 97A is the right approach.
Is the Minister planning to say a little bit more about the voluntary copyright alert or code of conduct that is being worked on? Otherwise, we will be left with the conclusion that, although the Minister said that the implication was wrong, the Government is relying entirely on section 97A, at least in terms of legislation.
Clearly, we are not relying only on section 97A to take action. We want the voluntary copyright alert programme to be introduced and to be successful. As I stated earlier, we believe that it will be quicker, more flexible and cheaper than anything introduced by the DEA. As the hon. Lady must and did acknowledge, the technology moves at such a pace that a voluntary arrangement, by which those who are most affected by infringement can respond almost instantly, is likely to deliver an effective, immediate response. It is difficult for legislation to respond with that degree of speed.
Finally, the hon. Lady accused the Government of not having a vision, as I briefly referred to earlier. The Government strategy paper, “Connectivity, Content and Consumers”, was published in the summer and is being taken forward by the Government. It will provide the sort of vision that this country needs to ensure that the digital economy continues to grow and that businesses specialising in that area make a significant contribution to UK plc.
Division number 10 - 11 yes, 8 no