Intellectual Property (Hargreaves Report)

Thursday 7th July 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Goodwill.)

14:30

[Pete Wishart (Perth and North Perthshire) (SNP)]

I refer to my entry in the Register of Members’ Financial Interests. I welcome you to the Chair, Mr Chope, and hope that you find our little chit-chat about intellectual property intellectually stimulating. The Minister for Further Education, Skills and Lifelong Learning is not a regular at our get-togethers about the creative industries and intellectual property, but we welcome him to the debate. I saw him in action yesterday. He was particularly robust in his response then, and I am sure that we will get a comprehensive response to the many issues that will come across his desk in the next few hours.

This debate gives me a sense of déjà vu and Groundhog day. I remember standing here, probably on this same spot, some five years ago responding to a Government-commissioned report and review into intellectual property, which was described as groundbreaking and eagerly anticipated, and as the panacea for all the difficulties and problems that we have with the intellectual property laws. That was the Treasury-commissioned Gowers review, and around the Chamber I can see other veterans who carry the scars of that review. Five years down the line, fewer than half of Gowers’ recommendations have been implemented.

Gowers, and now Hargreaves, follow a long, honourable and noble tradition of Government reviews and reports on intellectual property. Since Gowers, and before Hargreaves, there was the “Digital Britain” report and the Digital Economy Act 2010. In fact, 25 pieces of work on intellectual property or copyright laws have been commissioned from either Brussels or Whitehall, including Green Papers, White Papers, formal consultations, informal consultations and the inevitable round-table discussions. The Government have proven very efficient and effective in initiating such reports, reviews and commissions, but a little less so in implementing the many recommendations that have come across their desk. We wait to see whether Ian Hargreaves will be more successful with his recommendations, but I have a sense and a suspicion that once again, in a few years’ time, we will all be sitting around this table looking at another Government-sponsored review on intellectual property, which once again will have been eagerly anticipated and presented as some sort of panacea for the problems with our intellectual property laws.

My little bit of advice to the Government is that they expend a bit more energy on doing something with the creative industries and less on indulging in this continual and consistent review-itis. We need action from them to support our creative industries, to ensure that they continue to develop and grow. Perhaps the Government could consider some of the financial matters. Finance and funding are a critical factor, and small and medium-sized enterprises in particular are looking just now to the Government for assistance with that, so that they can develop. The Government should also help creative industries to deal with their online market, as that will help with the new digitalisation that is a massive challenge to so many of the industries, and the Government should do something about the corrosive online piracy that eats away at our creative industries, depriving them of profit, investment and growth. The Government can do more than continually and consistently have reviews, so let us get together and do something.

Of course, it is good to see that the Government take an interest in their intellectual property and copyright laws. So they should. Intellectual property and copyright are fundamental to the well-being of the UK economy, accounting for about 8% of our total gross domestic product. Some £65 billion was invested in intellectual property in the UK in 2010, and the creative industries alone account for 2.7 million jobs here. My particular interest is in music, and music—particularly exports—has been a massive success over the past few years. In the United States, in 2010 alone, 9.8% of all album sales were from UK artists. It looks like 2011 will be an equally bumper year, with one artist, Adele, practically owning the US charts just now, such is her phenomenal success. That has helped to maintain the UK’s position as the No. 2 exporter of music worldwide.

It is not just music; we excel in all creative exports, and do well in all sectors. Being creative is just something we do well, and over the years the UK has produced the most innovative and diverse range of creative talent imaginable. We have been successful because we have ensured that artists, creators and those who invest in our talent have been properly rewarded for the work they produce. What we must carry on doing, by way of our intellectual property laws, is ensure that that continues, and resist the ever-constant desire and temptation to tinker with legislation. As we consider the Hargreaves report and wait for the Government’s response, it is worth while reminding ourselves that our intellectual property and copyright laws have not done not too badly in the face of some serious challenges over the past decade, most notably from the online market and the technology that develops almost daily.

So, what does the Hargreaves report bring to the table? What innovations does it have to offer? In considering the report, it is almost impossible to set aside how it was conceived and initiated. This time around, it was the Prime Minister himself, after, I think, a very good lunch with his friends at Google, who posed the question: do our intellectual property and copyright laws get in the way of the emergence and development of a Google in the UK? He then got Ian Hargreaves and his team dispatched to find the answer. The review was perhaps unfairly christened the “Google review”, and those of us who care passionately about our creative industries observed all this with varying degrees of horror.

The question behind the review was: what can be done to help search engines and social networking sites such as Google develop in the UK? Not one shred of evidence, however, has ever been produced to support the initial prime ministerial contention. We must remember that the UK has some fantastic search engines and social networking sites, not least Friends Reunited, which could even be credited with starting the whole social networking revolution. Compared with where Google comes from—silicon valley in mid-California—the UK is an altogether different cultural and economic environment. The set of conditions that exist in silicon valley are unique—they do not even exist on the east coast of the United States, let alone in the UK, or anywhere else in Europe or the rest of the world. Nevertheless, Ian Hargreaves was discharged to bring mid-California to a business park off the M25 in Shoreditch.

A number of us were concerned about all the talk of Google, because Google has not been a great friend of intellectual property over the years, and I think it would be fair to say that it has been a bit cavalier in its approach to IP rights. Mr Chope, if you were to put one of your favourite artists into the Google search engine you would be directed to a number of sites that totally disregard and ignore the intellectual property rights of the artist. Having Google as an inspiration for such a review did not so much set alarm bells ringing as put whole fire departments on stand-by.

To be fair, however, Ian Hargreaves did his job diligently. All talk of good will was quickly abolished, and we had a report that considered economic growth and its inhibitors. The professor approached his task professionally and was not too consumed by the almost baffling inception of the review that he was tasked to pursue. At first, it was all about, “Will he or won’t he recommend a system of fair use, as championed in the US?”. We were able to find out what the good professor was thinking, because he produced a blog that we could follow while he did the review. Looking at all the air miles that were being clocked up in the States, a number of us feared that he was considering adopting fair use as a central recommendation in his report, but he decided that fair use was not for us because, as the report said, it was

“unlikely to be legally feasible”.

What we do not know, Mr Chope, is whether if it was legally feasible you would be looking at fair use coming soon to a creative industry near you. Fair use would have been an absolute disaster for our creative industries, and I think a collective sigh of relief was exhaled when that proposal was dropped.

So what does the Hargreaves report recommend? There are 10 recommendations, and Professor Hargreaves makes the bold assertion that if all 10 were adopted in full, UK GDP would increase from 0.3% to 0.6%. We in politics say that that is a courageous statement, but it was the claim that Hargreaves made. I will not list all the recommendations. Some of them are uncontroversial and are generally supported, some are hangovers from previous reports, and some come directly from the Gowers review. Some are new, some are interesting and some have excited all sorts of concerns and anxieties.

The major underlying recommendation—the one that tops the chart at No. 1—is that all future regulation should be based on evidence. The importance of economic evidence is inarguable—I do not think that anybody could disagree that economic evidence is required for any future regulation on IP laws and copyright—but it is one thing to say that evidence is required and another to act on it, rather than dismissing it if one does not happen to like it. For example, the report does not fully acknowledge the economic case for the current copyright framework, and has little to say about the huge amounts of investment in, and profitability already being derived from, innovative digital products and services. Given the success of creative UK plc, that omission is baffling. The report casually dismisses crucial research and evidence, because it comes from industry, as though it were mere lobbying, even though the Government charge industry time and again with providing evidence and doing research to help shape future policy.

Other recommendations that have received attention include proposals to set up a digital copyright exchange, permit the licensing of orphan works and create further exceptions to copyright. If anything in the report counts as a big idea, it is the creation of a digital copyright exchange. The report describes it as the digital opportunity: the means of unlocking the UK creative industry’s economic potential and solving the problems of rights clearances that Hargreaves maintains give copyright law such a bad press.

The report says of the DCE:

“The prize is to build on the UK’s current competitive advantage in creative content to become a leader in licensing services for global content markets; in short to make the UK the best place in the world to do business in digital content.”

Who could argue with that? But what exactly is the DCE and what is envisaged for it? Is it to be a virtual content megastore in UK cyberspace for rights owners, traders and users, or is it more of a brand name to describe a collection of rights registries and rights databases across the internet? More fundamentally, what will it look like, who will pay for it and how, and who will run it?

In many respects, a DCE already exists, based on a variety of technical standards developed by the music, film and publishing industries and other sectors of the creative industries, which have rapidly developed comprehensive databases with ownership data and online functionality. In such a critical matter, Government must be careful not to duplicate or replicate work already being done within the sector and to work hand in glove with the industry if they are minded to accept the recommendation on a digital copyright exchange.

The DCE must be voluntary and recognise that different industries license content in different ways and for different purposes. Hargreaves hints that non-participation in the exchange might lead to penalties for rights holders, such as being exempted from some of the measures in the Digital Economy Act 2010. That is definitely not welcome. It could create a two-tier approach to rights holding, run counter to international copyright treaties, and discriminate against smaller rights holders.

The report recommends a Government-led approach involving the appointment of some public figure as a digital champion, almost a digital tsar. There are hints that the Government’s delay in responding to the Hargreaves report is due to difficulty finding that digital champion. We wait to see who it will be. I think that all of us would like to see the job description.

[Mr Don Foster (Bath) (LD)]

Before the hon. Gentleman leaves the issue of the digital copyright exchange, will he comment on the use of the word “exchange”? An exchange implies a place where one goes to do business. How does he feel about that?

[Pete Wishart]

I am grateful to the right hon. Gentleman for bringing that up. There are many models for exchanges. An exchange for the creative industry will be difficult to conceive and create. There will be issues categorising work. The report recommends a digital champion. We must know who it will be and how he will be found.

Another issue is orphan works. The idea is that if an owner cannot be identified, a standard statutory licence would be obtained and the payment would go into a fund to pay the owner if they are ever identified, or towards general social use. Hargreaves suggests that if a work cannot be found on the DCE, it should be declared orphaned and become available for licence. I hope that before the Government consider and conclude on that recommendation, they will re-examine the legal situation and take time to consider the British Copyright Council’s proposals on the issue.

Other recommendations, such as those dealing with format shifting and parody, are also hangovers from the Gowers review. On format shifting, Hargreaves wants to proceed without compensation to creators. That is likely to run contrary to the copyright directive and would put the UK out of line with the vast majority of European states. I hope that when the Government consider that recommendation, they will put the interests of British musicians, creators and artists before anything else. The proposed exception for parody is more mystifying. There are countless examples online, for example on YouTube, of parody being enjoyed as part of UK entertainment. If the Government are minded to accept such an exception, they must give us evidence that parody is a problem. Examples have been highlighted, but we need evidence.

The report’s acknowledgement of the importance of an effective rights regime is welcome and puts the report in the context of the Digital Economy Act 2010. The Act is the other weighty piece of work sitting in the Government’s in tray, and it is time that they got down to work and started to implement all the measures agreed in it. We appreciate that there have been difficulties with the DEA, including the judicial review and ongoing work by Ofcom, and we know that tensions remain in the coalition, but it is time to implement what has been agreed.

The Government have it in their hands to help our creative industries significantly and substantially. The DEA was established to reconnect the public with legitimate means of purchasing online materials, and it is time to get on with it. One big theme in the Hargreaves report is economic growth and removing the barriers to development. Illegally taking creative works for nothing is the biggest barrier to growth confronting our creative industries, and that more than anything threatens jobs and investment. The DEA contains real, available and tangible measures to deal with the biggest inhibitor of growth in our creative sector.

[Mr Foster]

I apologise for interrupting the hon. Gentleman a second time during his excellent speech. He says that the Government should get on with the DEA. Is he aware—I know he is—of the problems discovered involving site blocking? Not least because of outstanding court cases, the Government are unable to implement the Act in its current form.

[Pete Wishart]

I have seen the early-day motion to which I think the right hon. Gentleman is referring; it was kicking around just now. I have certainly received correspondence on the issue. That seems to be one of the great misconceptions about the DEA. People are always referring to disconnection, but nowhere in the DEA is there any mention of disconnection. If any technical measure were to be enforced, as he knows, numerous measures would have to be agreed by Government and Ofcom before anything like that could be considered. What would happen is that people would receive a polite letter asking them to stop taking music for nothing and directing them towards legal sites. I am glad that he mentioned the subject.

[Jim Dowd (Lewisham West and Penge) (Lab)]

Before the hon. Gentleman moves away from the point about illegal downloading, has he seen today’s BBC report showing that the problem not only persists but continues to grow year on year? Does he agree that regardless of all the sophisticated arguments that can be advanced, it is nothing short of theft?

[Pete Wishart]

I did see the BBC piece. It was done for “Newsbeat”, and it showed the effect of illegal downloading on the film industry. It is not just film studios but people who work in the film industry—carpenters, caterers and all the other ancillary staff—who are taking a direct hit to their ability to earn a living working in the creative industry. The piece was a great example of the impact on the creative industries of the scourge of illegal downloading, and it shows why the Government must get their finger out and start dealing with the problem, using the measures agreed in the DEA.

When will the Government’s response be published? We were promised a response before the recess, which is now only 10 short days away. I presume that we will not get a response to the Hargreaves report before the recess, so when will it be published? What is it likely to include? Will the Government ensure that a thorough cost-benefit analysis is undertaken by whomever they appoint to study the issue? Will they ensure that existing activity is properly assessed? How will the Government ensure that IP laws remain protected in the light of changes to consumer law and the proposed organisational change to consumer protection?

If we want a successful and vibrant creative sector, IP has to be respected and valued, and not seen as something that people have the right to access for free just because technology enables them to do so. We cannot continue to give away our great recorded works for nothing, threaten our film industry, compromise our publishing houses, and leave our artists and creators without reward and protection, just so that some people can illegally take their work for nothing. Our creative industry is one of the most dynamic parts of the economy and the provider of hundreds of thousands of jobs. We have not done too badly so far with our IP and copyright laws, and nothing must be done to compromise our success and creativity. The Government have it in their power to ensure that the UK can become the world hub for creative industries. It is now time to stop the reviews and get on with the work.

14:50

[Mr Don Foster (Bath) (LD)]

I am delighted to follow the hon. Member for Perth and North Perthshire (Pete Wishart), who made an excellent speech. I agree with nearly everything that he has said. He rightly began by talking about the importance of the creative industries. Many of us believe that, given the right support and the right environment, they could become as important in this country as financial services are at present. It is critical that we give them the right support and the right environment. That is the climate in which the Prime Minister made remarks that led, in due course, to the Hargreaves report. I share some of the hon. Gentleman’s concern about the language used by the Prime Minister at the time and about the thought that we may end up going down the American fair-use route, which he has described. I want to clearly state on the record that I am very pleased that the Hargreaves report did not conclude that we should take the American fair-use approach.

I also join the hon. Gentleman in agreeing with one critical thing that appears at the beginning of the Hargreaves report, namely the importance of making decisions on the basis of clear evidence. Although I am the first to admit that the evidence is mixed on some of the issues, such as the impact of piracy on the creative industries, I nevertheless believe that the report goes too far when it dismisses some of the information, data and research—it calls them “lobbynomics”—from the industry. The one thing that I think we can learn from that is that getting this information right is really important. I am therefore delighted that discussions are now taking place between the UK Intellectual Property Office and the creative industry sector about the basis of research methodology and the presentation of data. That will help us all in making judgments about how we progress.

Notwithstanding the Hargreaves report’s perhaps overly critical view of the degree of concern about issues such as piracy, I am pleased that it recognises that there is a problem and that we have to address it. I am delighted that the three things it says that we need to do are enforcement, education and the development of new business models, and I accept that those are the three key things that we need to do. On enforcement, it is important that hon. Members acknowledge that, unless we are prepared to recognise the importance of the intellectual property rights of creators, we can never be said to be supportive of the creative industries. It is therefore vital that we find ways of ensuring that we provide much-needed protection in those areas.

During his excellent contribution, the hon. Gentleman said that the Government need to get on with the measures in the Digital Economy Act 2010. I do not fundamentally disagree with him, but it is important that we are aware that a number of problems must be addressed, particularly in relation to the use of illegal websites. During the passage of the 2010 Act through Parliament, I made clear—the hon. Gentleman was present in the House at the time—my concern that sections 17 and 18, which deal with those issues, are unworkable. Although we have not yet seen the report, I understand that Ofcom has looked at the matter and reached a similar conclusion. Therefore, if we are to move ahead, we will have to find other ways to address illegal activity on the internet. I know that productive discussions are taking place between the industry and internet service providers to find a way forward. I welcome those discussions and hope that they will be fruitful. We will also have a look at a number of other measures coming out of Europe, which might also inform our decision.

The hon. Gentleman has rightly referred to peer-to-peer file sharing. It is crucial that every hon. Member is clear that the 2010 Act gives ample opportunity for further discussion, research and debate before any of the actions about which some people are concerned—the so-called technical measures—take place. The legislation already enables us to do that, so I hope that we will be able to implement and progress with those measures as quickly as possible.

I said earlier that Hargreaves said that we also need to address education, which is critical. Far too many people in this country simply do not understand the damage that they are doing to the creative industries by obtaining the intellectual property of other people without making any contribution towards it. If we cannot have a situation in which people are creating material and being rewarded for it, the creative industry simply cannot grow, which is the key thing that the Hargreaves report is concerned about. It is critical that we recognise that and educate people so that they understand that they could be damaging the very creators of whom they are supportive and whose works they enjoy.

The third issue is the development of new business models. I agree entirely with the Hargreaves report that that is important, but it ought to be placed on the record that the picture is nowhere near as gloomy as the report perhaps suggests. For instance, while I acknowledge that it made a very slow start, the music industry has got its act together, and the UK now has 72 different business models for people to easily and cheaply access the music that they are keen to hear. It is already further ahead of the game than the rest of the country in that respect. Other parts of the industry—the film industry, computer games and others—have to try to improve what they are doing. I broadly support what the Hargreaves report says about enforcement, education and the development of new business models. I also broadly support the hon. Gentleman in saying that we need to get on and address those issues as quickly as possible.

One of the kernel ideas in the Hargreaves report is, as the hon. Gentleman has said, the digital exchange. I accept the hon. Gentleman’s argument that it is an exciting idea and that it offers the opportunity to improve the growth of the creative industries. He was right to say, however, that many problems still need to be addressed. First, I am concerned about the use of the word “exchange,” which is why I intervened on him. I do not believe that we are anywhere near developing all the things that we need even to think about having a single port of call where business is transacted. We ought to be looking much more at helping each sector of the creative industry—video games, film, books, magazine publishing, the music industry and so on—to ensure that they are developing their systems, but in such a way that they can work together to develop interoperability.

The music industry is advanced in its thinking on this. Not only is it well advanced in the UK, but it is working with colleagues throughout the rest of Europe. Collectively, they are pulling together the sort of database that Hargreaves talks about. I hope that the industry will be willing to share its data sets with other sectors of the industry, so that we can find some commonality. Commonality is absolutely vital, even simply on the number labelling of an item. Let us imagine a bit of film for which there is some music and a script, and where stills and bits of other people’s films have been used. All those things need different access, but they all need to be coded in the same way, so that we know where they all come from. We need to work at interoperability.

If we acknowledge that different parts of the sector are developing their own databases and their own licensing systems—in some cases, they have had such systems for a long time—it seems somewhat perverse to suggest that we might get rid of all that. As a first step at least, I would prefer the exchange—or whatever it might be called—to be a front page or a signpost to ways of finding this material and establishing how people can get a licence for the use of it for commercial purposes.

We must then address the issue of the digital champion. I apologise to the author if I have got this wrong, but the report seems to be saying, on the one hand, that finding a digital champion should be industry led and, on the other hand, that the Government should appoint someone to do it. That does not mesh together very well. Initially, someone should do a scoping exercise of what is needed. We should consider using somebody who is, for example, a project manager and who gets the support of all sectors of the industry. We could do that very quickly, which would deal with the issue raised by the hon. Member for Perth and North Perthshire about getting on with things. I urge the Minister to consider whether that could be a way forward.

[Jim Dowd]

On that aspect, the report uses the precise expression “a highly respected figure” in the industry. I am not sure that that takes us much further forward in defining how respected they are and by whom.

[Mr Foster]

That is why there are so many problems. The hon. Gentleman is right to raise his concern about the matter. We need to find a way of making progress. I am suggesting that if we can downgrade the issue of what we are looking for and be clear about the job spec, it might be easier for the industry to come together and find a way of doing it.

Finally, on the digital copyright exchange, I agree with the hon. Member for Perth and North Perthshire about its being voluntary. It seems totally wrong to suggest that if I am the creator of something—a piece of music, a film, a book or whatever it might be—I should be automatically forced to place my work on that particular platform. That is not the sort of liberal society in which I want to live. It would also be totally wrong to have a situation whereby if I do not put my piece of work on to the exchange, I will somehow be exempted from access to the law that applies to everybody else. After all, if somebody nicks my work, they should be punished for it and the full force of the law should apply, whether or not I have chosen to put my work on a particular exchange.

The hon. Gentleman also mentioned the important matter of orphan works. Sadly, clause 43 of the Digital Economy Act 2010, which covered those issues, was ditched at the last minute during the wash-up at the end of the previous Parliament. I am concerned about what the Hargreaves report suggests is a possible way forward. In effect, the report says that we should allow an orphan work, of which the creator is unknown, to be licensed and used by somebody in a commercial or possibly a non-commercial venture for a nominal fee. The problem with that is twofold. First, someone has to do some level of due diligence to get that licence and demonstrate that they have tried to find the author. However, I am sure that they will not go any further than they need to if all they have to do is pay a nominal fee. A nominal fee does not provide any additional money to do more diligent searches to try to identify the author or creator of the work.

The second problem is that if by chance a particular piece of work of which the creator is unknown suddenly becomes a worldwide best seller and generates vast sums of money for the person or organisation that obtained the licence, surely we must have a system in place whereby the creator, if identified, has the opportunity to benefit from that worldwide success. The report does not cover real issues that we must address adequately.

I know that other hon. Members want to contribute, so I will briefly make one final point about exceptions. Again, there are real issues surrounding the sort of exceptions proposed in the Hargreaves review. I shall talk about the exception in relation to parody as an example. We all enjoy a parody of something. However, the truth is that if someone takes something, parodies it and achieves an enormous commercial success, that parody is based on somebody’s creation. I am absolutely convinced that the person whose creation has led to the commercially successful parody must be able to benefit from it. The creator must also be able to say that they are unhappy with their work being used in that particular way. We must consider the issue of exceptions more closely and in more detail. That applies to the use of material and so on. There will no doubt be an opportunity for consultation once the Government come forward with their response to the Hargreaves report.

The Hargreaves report mentions many other issues, which I am sure other hon. Members will cover. I may have seemed critical of the report, so I will end by saying that it was important to have such a report to kick-start the debate. What matters is how that debate develops and the action that the Government take. I hope such action will support the creators, who are so critical to our creative industries.

15:07

[Jim Dowd (Lewisham West and Penge) (Lab)]

I believe that this is the first time I have served under your sagacious direction, Mr Chope, and I am delighted to do so. I was also delighted to support the hon. Member for Perth and North Perthshire (Pete Wishart) in his application for the debate, and I am pleased that Mr Speaker saw fit to grant it. The hon. Gentleman has been a true champion of creators, authors and performers for many years. He brings not just enthusiasm to the issue, but a detailed personal knowledge.

I agree with the hon. Gentleman strongly. We have seen a number of such reports over time, and this is the latest in a long line of them. The most recent was the Gowers report in November 2006. He said that he hoped that the Government would adopt the entirety of the report in some form or that they would at least respond to it. I will be surprised if they do, because my experience is that that is not what happens. My experience has shown that things move ahead incrementally by a percentage each time and that, the next time a report is written, we are still dealing with many of the older issues while trying to address the newer ones.

I welcome this report, however, because the issue is critical for the country and for the industry. It was published just before the end of May. At almost the same time, the EU directive on orphan works was introduced, to which the Government will clearly have to respond. I imagine that the one will inform the other in the fullness of time. Like other hon. Members who have spoken, I am interested to know when the Government intend to produce their proposals, but I accept that it is better to get the matter right than to deal with it quickly. The issue is so important that we should be prepared to take such an approach.

Like the right hon. Member for Bath (Mr Foster), I shall outline a few items without going through the whole report. I broadly welcome the report’s thrust because it addresses a number of significant issues. In November 2006, the foreword to the Gowers report stated:

“For many citizens, Intellectual Property…is an obscure and distant domain—its laws shrouded in jargon and technical mystery, its applications relevant only to a specialist audience. And yet IP is everywhere. Even a simple coffee jar relies on a range of IP rights—from patents to copyright, designs to trade marks.”

Hargreaves has addressed that issue, and he recognises its significance not only for UK plc, but for many of our citizens who are involved in the creative industries.

I welcome the thrust of the report and its concentration on not only copyright, but patents, designs and other, broader issues with a relevance to IP rights. As the hon. Member for Perth and North Perthshire said, adopting all the elements of the report could be worth about £750 million to our GDP. I strongly doubt that they will all be adopted, but even the adoption of a significant number of them will have a significant benefit if they have the effect envisaged.

Both the hon. Member for Perth and North Perthshire and the right hon. Member for Bath mentioned the digital copyright exchange, which deserves to be applauded for one reason above all others: it is at least an attempt to look at a new way of doing things and to look forward. Far too many reports and too much Government legislation fight the last war, not the next one, but the report is an attempt, albeit a faltering one, to move matters forward. However, some groups in the creative industries have told me that the digital copyright exchange was not necessary and that current market mechanisms adequately deal with some of the problems that the report describes. Their fear is that the net effect would simply be to add a not inconsiderable amount to current transaction costs without an appropriate benefit.

The exchange proposal is a response to complaints made during the report’s compilation that the complexity of navigating rights clearance processes is a barrier to innovation and growth, notably for new-tech and start-up organisations. There is a problem in that respect, but the digital exchange proposals are perhaps somewhat heavy-handed and bureaucratic, and I would need some convincing that they could be effective.

The report says that the long-term aim is to create

“the best…licensing system in the world”,

and who on earth would disagree with that? I doubt whether anybody here today would say that we should have only the second-best or third-best system. The objective must be to have the best regulatory regime, which balances the rights and responsibilities of those who are involved. I doubt whether the digital copyright exchange is the mechanism to do that, but it at least addresses the future, without necessarily being future-proof.

On digital libraries, there is a proposal to use the system that is broadly in existence and to adopt the extended collective licensing model that exists, with varying success, in other parts of Europe. In effect, that would extend the licence granted by a licensing body for certain works to include copyright owners of the same class of works who are not members of that body, provided that the body represented the majority of copyright owners for that sector, and subject to the right of non-members to withdraw from the scheme. An assurance on that last point would be most welcome. That is a reasonable way to make progress.

Clearly, any modification of current copyright principles that creates new rules for a particular designation of work needs to be examined most carefully. One of the key elements of a workable system, particularly for orphan works, is a robust system of diligent search, rather as the right hon. Member for Bath said, to avoid any prejudice to authors or rights owners. We must better understand what that due diligence is, how it is to be implemented and what it looks like to ensure that orphan works can be dealt with fairly and without the risk of losing the opportunity that they provide.

I broadly welcome a number of the other recommendations on copyright exceptions. The hon. Member for Perth and North Perthshire and the right hon. Member for Bath were critical of the US fair-use law, and the great fear that we all had as Hargreaves was unfolding was that that is what we would wind up with. The report correctly identified two broad problems with the operation of the current copyright exceptions regime: first, the failure to remove barriers to innovation and, secondly, a discrepancy between the law and most people’s reasonable expectations and behaviour in the light of the rapidly expanding development of new digital services. I am glad, however, that the report rejected the fair-use approach adopted in the US, because there are, as it notes, legal and political impediments to imposing such a regime in the UK. Instead, it outlines a series of new exceptions to achieve specific goals, and that is the right way to approach personal use, parody, data mining and what are termed “Gowers exceptions”.

I welcome the recommendation to promote greater uniformity in the operation of collective management organisations. The report proposes that such organisations adopt codes of practice, which should be approved by the IPO, and I very much welcome that. The other issues that were addressed include enforcement, the awareness of rights, piracy, an IPO review and the next steps in the progress of the report.

I therefore welcome much of the report, although I have reservations about parts of it. It builds on the steps that were partly adopted in the wake of Gowers. The foreword to Gowers stated:

“In the modern world, knowledge capital, more than physical capital, drives the UK economy. Against the backdrop of the increasing importance of ideas, IP rights, which protect their value, are more vital than ever.”

As we move from a manufacturing-based economy to what some people call a knowledge-based economy, the protection of IP rights becomes more important than ever if we are to ensure that rights holders receive adequate reward for their activities and that we have an environment conducive to originality and innovation.

15:17

[Damian Collins (Folkestone and Hythe) (Con)]

It is a pleasure to serve under your chairmanship, Mr Chope, and to have heard the contributions of the previous speakers, who have a great deal of knowledge and expertise in this subject, particularly as a result of the work done in previous Parliaments and in passing the Digital Economy Act 2010.

I come to the debate not only as a member of the Culture, Media and Sport Committee, but as someone whose work and business background was largely in the creative economy, given that I worked in the advertising industry. As I can see from my constituency, the creative economy plays an important role in the regeneration of our economy. I entirely agree with the right hon. Member for Bath (Mr Foster) that it has fantastic scope and potential as one of this country’s great industries. In many sectors, we truly lead the world, and they can be part of the growth of our economy as it recovers.

However, we are talking not just about an economy of large businesses or about multinational companies seeking to purchase, use and benefit from the rights to creative content, but about a complex web of different businesses, large and small, which are interdependent and which rely on one another. In the creative quarter in the old part of Folkestone, which is very much part of the town’s regeneration, 200 to 300 people are employed in the creative economy as artists, web designers, website creators and games makers. Many of their businesses are simple partnerships of two or three people or small stand-alone businesses. Their ability to make things, sell them in a fair and open financial market place and benefit from them is incredibly important to their survival.

It is a particular pleasure that the debate is taking place in the Grand Committee Room. About six months ago, I organised an event for about 70 art students from colleges right across the country, from the south-west to London, Lincolnshire and Leeds. The group was organised by Graham Fink, the creative director of M&C Saatchi, who runs a free service for art students. He brought them into this room to run a creative workshop, hoping that they would be inspired by being in the Palace of Westminster and in this great forum for debate and ideas. It was fantastic to see the work and enthusiasm of those young people seeking to break into the industry, although it would be remiss of me to say whether they generated more original thinking and ideas in an hour than we will manage in the next hour. It was certainly a great pleasure to see their work and their enormous enthusiasm. Everyone with a knowledge of and passion for the creative industries understands its scope as a business and knows that young people want to work in it; they want to bring their ideas and be part of it. They have a right to expect a fair recompense for their ideas and work, and for the effort they put in.

Technology has changed the marketplace dramatically, but it can also be the great hope of the creative industries. I am thinking of the internet’s ability to supply what is referred to as the long-tail supply chain, in which the owners of niche works that would otherwise struggle to get listed can sell them in an open marketplace. The ability to search for and find work through search engines and the internet is a great advantage, but there must be rules of engagement. The direction in the finding of materials should be fair. Websites and search engines should direct people to places where works can be legitimately purchased. Many people have concerns that instead of directing people to legitimate places where they can buy works, predictive search, in particular, directs them to places where they can be obtained by piracy.

[Mr Brian Binley (Northampton South) (Con)]

My hon. Friend is making an interesting and important speech, but I am concerned about the direction by search engines to sites where the creators of material can be recompensed. Does he agree that search engines should be more able to act in that way? Should the Government think more about a little nudging and forcing in that direction?

[Damian Collins]

My hon. Friend makes a compelling point, which will have been heard by Ministers and search engine owners. I attended a briefing with the BPI, which represents the music industry, to talk about that very issue and was given a live demonstration, in which typing “download music” into Google meant that the predictive search came up with “download music for free”.

If we believe that technical measures should be used to restrict people from downloading content illegally, we should consult those who run search engines about the priority and ranking that they give to sites that direct people to sources where they can do that. That is a legitimate part of the debate, and search engine representatives should welcome it and be open to consultation with Government about it.

[Mike Weatherley (Hove) (Con)]

Is my hon. Friend aware of the traffic light proposals by the BPI and others that may go some way towards what he suggests?

[Damian Collins]

Yes, I am. It sounds like a sensible way forward. Those things are always best achieved in dialogue with the industry, through Ministers. That is often a much better approach than regulation and direct legislation, which, as we know from other remarks that have been made, can often be difficult to accomplish successfully. That dialogue is important. The companies concerned will have heard the remarks of my hon. Friends the Members for Hove (Mike Weatherley) and for Northampton South (Mr Binley).

Going back to my time in the advertising industry and to a case brought to me by a constituent, I can think of issues on both sides. A gentleman who runs a television business in Cheriton, Folkestone thought that a good way to sell the latest high-definition televisions would be to run an old-fashioned television next to a high-definition one, to show how that set revealed the improvement in the quality of the broadcast. Someone told him that he might need an entertainment licence to do that and that, for that simple demonstration in his shop, he would be charged several thousand pounds. He suggested that he would not do that, and a frank exchange of words was had—after which the problem seemed to go away. Nevertheless, he was potentially running foul of copyright laws.

Many people, if not in this room then elsewhere, will have put together a presentation for their work with images found on Google or elsewhere, and they will not have had a copyright licence to use them. I am sure that people of my generation can think of times when a friend lent them a tape-to-tape copy of some new musical work for their enjoyment, and they, too, would have been in breach of copyright regulations. Those issues have always existed. In some ways the digital economy brings them to a head. In the days when people made cassette copies for each other, peer to peer, the quality of reproduction was relatively poor. However, when the reproduction quality is almost perfect and a reproduction can be transmitted at any time at virtually zero—or actually zero—cost to people, with no effort, the market is changed dramatically. The ability of an owner to own, control and sell the perfect rendition of the work is changed. The rules of the game change, and we should consider what that means for the law.

I was interested in the Hargreaves recommendations on private use. I suppose that copyright and licensing have always respected the idea that the value of a work is based not on the time and effort taken to produce it, but in many cases on the value to the user. In the advertising industry, if music or a photograph or other image is used for a campaign that will run around the world, the cost will be much greater than for the insertion of a stand-alone image in one newspaper, or a radio advert on one local station. There is a recognition of the benefit to the user as well. That is important. If some relaxation of the rules on private usage, where there is very limited commercial value, if any, to the creator, would simplify people’s ability to use work for their own entertainment and for their and their family’s pleasure, I think that it would be reasonable and sensible to consider it. As the Secretary of State for Culture, Olympics Media and Sport has said, we do not necessarily want a system in which someone can be sued for using a piece of Beatles music on a video of their cat on YouTube. That does not mean an open licence system without any attempt at regulation and control.

I am sure that many people would hope that a simplified version of rights clearance and the purchase of rights will mean that older materials—old pieces of film and programming—might be more readily available on services such as BBC iPlayer and elsewhere online. That might bring into play the rich archive of material that broadcasters such as the BBC own, which it is currently difficult to licence and use.

I agree almost entirely with the remarks of my right hon. Friend the Member for Bath about the digital exchange. The idea put forward by Hargreaves is interesting and compelling. There are already clearance houses for rights—PPL and PRS for music in particular—so I wonder what that new exchange would mean for them. I support the view that it would be wrong to compel people to register their works at the digital exchange with the back-door threat that otherwise they might not be covered by any of the legal protections in the Digital Economy Act 2010. Such compulsion would be cause for concern.

When I was a candidate for Parliament, like many other candidates at the time, and many hon. Members of the previous Parliament who were part of the debate on the 2010 Act, I met photographers who were concerned about the proposed legislation on orphan works. Not only should a way be found to pay a nominal licensing fee for orphan works such as images that people want to use, but if that use brings substantial financial gain—particularly if a found image is used in an advertising campaign, which brings great commercial benefit to the company using it—there should be a way to assess what the real value would have been if a proper licensing agreement had been in place. Clearer guidance is also needed on the commercial value of orphan works, in cases where the person in question comes forward after the image’s use.

The issues present a great overall challenge. Our responsibility is to protect the industry and the rights of the content creators, so that they know that they are in an industry where their endeavour and work receive a fair price and are fairly used, and they have incentives to carry on producing their work. One of the challenges that we face, in addition to an uncertain regulatory playing field, is the public’s attitude towards the illegal use of content, particularly in the music industry. Research demonstrates that, on the whole, the problem is not that people do not think they will be caught downloading material illegally, but that they do not think that there is anything wrong in it. The problem is that people do not necessarily understand the impact of piracy and the illegal use of works and the knock-on consequences for the creative industries. That is a communications and attitude-change challenge for the industry.

Part of the solution should be effective resolution using ideas in the Hargreaves report, a better framework for licensing works and understanding how those things work; but there is also a challenge for the industry to make the legitimate means of getting access to music and purchasing content so attractive, simple and easy to use that people would on the whole be deterred from using illegal sources, as the quality of the product and the method of delivering it would be so inferior and the potential consequences not worth the risk.

I welcome the report and hope that we shall not be back here in two years discussing yet another Government report on the issue, but that we shall instead be celebrating some progress on the matter.

15:29

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on securing, with support from others, the debate.

I hate to be a bit cheesy, but I think that the Abba song sums it up very well:

“Thank you for the music, the songs I’m singing,

Thanks for all the joy they’re bringing.

Who can live without it, I ask in all honesty?

What would life be?

Without a song or a dance what are we?

So I say thank you for the music, for giving it to me.”

Sadly, it is the last bit of the chorus that I disagree with, because I do not think that the intention of the writers of that song is to say that they want simply to give away their copyright.

Everybody here is aware of how wonderful the creative industries are, both in our country and worldwide. What has changed dramatically is that people believe that just because something is on the internet, it is theirs for free by right; they may not understand the industry that they are harming. If somebody goes to the cinema, they do not expect to take a digital camera and film the entire film so that they do not have to buy the DVD when it comes out. There are other examples of where, simply because the experience is different in the physical world and the online world, we need better education. Other hon. Members have called for that already.

One thing that we can do is make it easy. I would like to echo what the right hon. Member for Bath (Mr Foster) said about the expansion of the number of business models in the past two or three years as the industry has reacted to the criticism that it was not easy to access digital versions to keep and own, or rent as a one-off, or use for a limited time, or similar. The industry has responded well to that. People can see films for free with ad-funded services. There is no need to buy them if the consumer is prepared to put up with a bit of advertising. That is true of music and some other access models, such as subscription, where there is not just pay-per-go; it is a case of “cram in as much as you like in a month”, or for the duration of the subscription. It is important to recognise that that is now so easy for people to do that we should not necessarily look benevolently on those who persistently refuse to be prepared to pay a price.

Whom does it hurt when people do not pay? It hurts new talent. The amount of new talent coming into the industry has declined, especially in music, in the past few years. Frankly, out of the top 10, nine people broke into platinum status, and half of them probably came from some of our well-known talent shows on television. People then point to the Radiohead example. That is a dangerous precedent. I do not believe that Radiohead ever repeated that experiment of allowing people to pay whatever price they wanted for its product, including zero. It does not help new talent coming into the industry when established players do that kind of thing.

Search engines have been alluded to. On Google, it is very easy to be pointed to sites that encourage and facilitate illegal behaviour. Dare I say it, but I would like Google, instead of trying to be crusaders for freedom, to work with the creative industries, and with other people such as Microsoft and Apple, to make something like a digital contract exchange work. That should be not a Government or state thing, but something on which industry takes the lead again, as it has done, to ensure that it is making it as easy as possible for people to do the right thing and behave in the right way, and to ensure that it is protecting value for people who generate creativity. There is an opportunity for Google to be good for both the industry and consumers, and use its expertise in a particular way. I note that when one tries to get certain sites taken down or content removed, very high-tech Google does not allow people to actually e-mail it—one has to write to it in California. That seems a bit bizarre.

On the challenges for the Government, with the advent of superfast broadband, they should look to South Korea, where piracy escalated dramatically as it became easier and easier to access peer-to-peer files and other technologies. South Korea imported its own version of the Digital Economy Act 2010, which has had some impact, but I would say that piracy is still a problem. The hon. Member for Lewisham West and Penge (Jim Dowd) spoke about financial loss; I would echo what he said. I am surprised that the Treasury has not cottoned on to the amount of tax revenue that we are losing. I would hope that by supporting the creative industries, the Treasury might receive more revenue in the bank.

The issue of orphan rights has been discussed. The right hon. Member for Bath was on the right lines: if someone can establish ownership of their works, a share of the proceeds would be appropriate. I think of it almost like dormant bank accounts; banks can effectively put the money to good use, but if anyone reclaims the account, they are entitled to their money back, so there is a precedent.

On new exceptions to copyright, I will provide a physical example. Many people may not realise that cat litter is also very good for putting in pots and tubs to grow flowers in. The properties that one would want cat litter to have include absorbing liquid very quickly and releasing it gently into the atmosphere. Thus cat litter can be used as a way of preventing soil drying out and releasing moisture slowly. It took a bizarre incident for someone to realise that this was another way to use cat litter, but it is now marketed for that use—but not as cat litter. As one can imagine, there is more money to be got by marketing it as plant protection. That is an example of a creative way of using a product in a new way. In a digital situation, one could look at a map online. All the data that support that topographical map should be allowed to be given to somebody else. If they come up with something creative, they give the person whose map it is nothing for all those data and all the effort that was put into the map, but plenty of money can be made elsewhere.

I do not want to rubbish Hargreaves entirely, although it may sound as though I do. There is stuff to build on, but frankly I feel that he derides our creative industries when he says that there is almost hysteria and lobbynomics. Research shows some of the challenges for the creative industries, and shows why aspects of the Hargreaves report will damage, rather than promote, those industries. Ian Hargreaves needs to reflect that the issue is about trying to have something that is appropriate for the 21st century. We need something flexible that, most important of all, does not kill our creative industries, but instead sets a scene in which they prosper and grow. Long may that continue in cool Britannia.

15:37

[Lorely Burt (Solihull) (LD)]

It is a pleasure to speak under your chairmanship, Mr Chope. I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) and all those who were successful in securing this important debate.

I would like to address my remarks on the Hargreaves report to its effect on small businesses and patents. We have had plenty of discussion on copyright, but I would argue that Hargreaves does not concentrate adequately on the effect of copyright, particularly as it applies to small businesses. Does that matter? Well, it matters to businesses, for many of which patents are far more of an issue than copyright, according to the Hargreaves report in figure 2.1. Figure 8.2 also shows that patent enforcement is more of an issue to small businesses than copyright enforcement.

Taking small businesses first, I would contend that their interests and views, I am sorry to say, have been systematically and consistently ignored in the report. For example, the panel was composed solely of academics and corporate representatives who, in turn, supported a team of 10 intellectual property officers—the same people who are immersed in the day-to-day operation of the system. So how, one might ask, can a department independently review itself? I would not go so far as to say that it is like asking Rebekah Wade to review the activities of News International, but I think hon. Members will get my point. In particular, in response to Hargreaves, large and small companies have frequently criticised poor patent quality. The panel did not include a single representative of small business, although the report acknowledges, in paragraph 1.5, that

“Over the last decade the majority of productivity growth and job creation has come from innovation…primarily by small and young firms.”

It seemed strange, therefore, that the panel did not think the views of those firms important enough to be represented. Indeed, IBM—an American corporation, which you might have heard of, Mr Chope—was the sole member of the panel with direct knowledge of the patent system.

When small businesses submitted evidence, including solutions to their day-to-day problems with the patent system, some of that evidence was not only ignored but not even acknowledged as a submission to the report. I refer to the SME Innovation Alliance’s paper, “The Economic Failure of the Patent System”, which Hargreaves received. Hargreaves stated that a survey of small and medium-sized enterprises had been done, but that survey is not published, so we do not know the findings.

One of the recommendations of the report is that patents should not be issued for non-technical computer programs. One can have some sympathy with that view, and indeed a constituent of mine who designs software maintains that it is nigh-on impossible to get one. However, Hargreaves does not define “technical”, although he does suggest that “general application programs” should not obtain patents, and he includes word processing under that umbrella definition. But what if a general application program has a technical effect? For example, as of last night, 17,436 word processing patents had been granted in the USA, and they can also be obtained in the EU. By saying that we should continue not to issue similar software patents, we are preventing UK competition in the software industry.

Hargreaves also talks about thickets, which are blockages in the IP system caused by a boom in applications in a specific area. He maintains that, to reduce the thickets, it would be necessary to increase the “renewal costs” of the patent. Who, though, would be disproportionately disadvantaged by that? Would it be the IBMs of this world, or the little guys with less money, less support and fewer clever lawyers? However, we could increase the application fee to get a proper service from the Intellectual Property Office in the first place. The fee currently stands at £200, whatever the size of the company. America has separate fees for large and small companies. Why not, for example, have a £10,000 fee for a small company and a £100,000 fee for a large company?

[Mr Binley]

I have listened to my hon. Friend’s comments, which are always immensely constructive and helpful, but I was concerned when I heard mention of the £10,000 fee for a small company. Many of the small companies operating in software creation are one-man bands, for whom that would be a large amount, even if that one-man band was immensely successful. Would she temper that cost a little?

[Lorely Burt]

My hon. Friend makes an important point. I merely used the figure as one that would allow a patent to be properly researched before it was granted. A two-tier system, with a larger fee for larger companies, would stop some abuses. For example, IBM—I am sorry to use it as an example again; I promise I do not have anything against it—took out a patent for the optimal way to queue for the toilets on an aircraft, which is hardly earth-shattering.

On patent submissions, the review failed to deal head-on with poor patent quality and patent backlogs. As I said earlier, patents can be challenged as soon as they are issued, but once they have been issued, there is no mechanism for enforcement except through recourse to the courts. By taking out a patent, a company could be doing itself a disservice by drawing attention to its innovation and attracting the predatory attention of large companies with big lawyers, which can steal the idea and line up the fancy lawyers and see what the small company is prepared to do about it.

That brings me to costs and damages. Let us look at what happens when a patent holder finally takes an alleged infringer to court. Costs awarded to the loser used to be open-ended but, since 14 June, they have been limited to £50,000, which is a step in the right direction. That was not the result of Hargreaves, and he did not mention it in his report. However, that £50,000 is £50,000 more than in America, and the limit forms a substantial deterrent to a small company taking on a large corporate with resources and lawyers. Also, the award for damages is limited to £500,000, so if someone has a multi-million-pound idea and a big company comes in and steals it, the big company can infringe the patent, knowing that the maximum it will have to shell out is £500,000—a bargain. Compare that with America, where Dyson won damages of £6 million after the expiry of its patent because other companies were too quick off the mark in marketing bagless vacuum cleaners. Hargreaves seems to think that the UK garden is rosy, because fewer UK companies went to court than EU companies, but the reason is not because they are happier, but because too many barriers are in the way.

Hargreaves also ignored the SME Innovation Alliance’s request for a UK penalty for infringing a patent. Is that believable? We are the only country in the G8 that has no penalty. The worst that can happen to infringers is that they might end up paying a hypothetical royalty, as if nothing untoward had happened. By the time an SME has spent years, and money, pursuing infringement, it ends up losing substantial resources—and that is if it wins. As Sir James Dyson put it, it is a bit like having the family silver stolen, with the best result being getting some of it back. Why was the fundamental need for the introduction of a penalty for infringing a patent totally ignored?

The SME Innovation Alliance also complained about difficulties enforcing patent rights abroad, an area on which most SME growth and job creation is dependent. Hargreaves and the IPO have been made fully aware of that, and the IPO acknowledged the difficulties, but Hargreaves did not tackle the subject. All in all, I am sorry to say that SMEs—the main source of UK innovation—believe that Hargreaves has failed them. The Government have to take note of the real needs of UK SMEs, instead of setting up a review that has had the perhaps unintended consequence of pandering to the needs of foreign corporates. In Hargreaves’s favour, he recommends adopting the European patent system, but the total maximum damages of £500,000, covering the whole of Europe, hardly make the game worth the candle for many companies.

I welcome the patent box, an idea that SME Innovation Alliance officers are discussing with the Treasury at the moment. The patent box provides a £1.1 billion tax break for innovative industries. That has been extended to existing industries, and there are proposals to simplify research and development tax credits, but we need that now, not in 2013, if we are serious about job creation.

[Philip Davies in the Chair]

If the patent system does not protect British companies, we are making it harder to innovate in the UK than perhaps anywhere else in the G20, and far easier for others to steal our UK innovations. The SME Innovation Alliance has a number of ideas to improve the system greatly, and I would very much like our Government to take them seriously. Otherwise, all they can do is criticise Ministers for not providing a workable patent system for SMEs, the main source of UK innovation. I therefore conclude by asking the Minister to meet me and the SME Innovation Alliance to sort out the current mess in the patents system.

15:51

[Mr Brian Binley (Northampton South) (Con)]

I welcome you to the Chair, Mr Davies. It is a pleasure to serve under your direction. This is the first time that I have had that pleasure, and I promise that I will do my best not to cause you difficulties.

I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on instigating this debate, which is opportune and important. His knowledge of the creative industries is second to none in the House, and his work on that does him and those industries great credit. We are all happy to support him.

I welcome the Hargreaves review as a start, but like the hon. Member for Lewisham West and Penge (Jim Dowd), I have some reservations. However, it is an opportunity to support intellectual property in the business sector, which is especially important for the creative industries. The case for those industries has been made very well in other contributions to the debate, and they might be starved of the oxygen of finance if we do not do something quickly. That is why I urge the Government to get on with the job of putting the report into effect. It is good that they have agreed to consult, but most of us want early notice of a Bill to support both business and the creative industries.

In a developed economy, intellectual property rights are fundamental to economic growth. If we lose sight of that fact, we do considerable harm to business and commerce in this country. I urge the Minister to recognise the needs of industry in that respect. It is vital that intellectual property rights are enhanced, protected and supported, and that the creators of those rights get their fair and just return. That cannot be said with confidence to apply at the moment, and therein lies the problem, as some contributors have said, which is why I urge the Government to act quickly.

We must get the matter right. If we fail to recognise and reward the value of creativity and innovation, we risk a reduction in the quantity and quality of new output, which is vital to the well-being of this nation. We have lost many of our rust-bucket industries and our young people are finding it difficult to get jobs, but creativity and innovation can be a vital spark to inspire many of those young people to become aspirational. I need only mention the games industry to show how inspirational creativity and innovation can be. Many young people have played a leading role in that and created a sizeable export industry for this country. We must take that into account.

The concern is felt particularly by the Authors’ Licensing and Collecting Association, which has 80,000 members who make a considerable contribution to the well-being of this nation culturally, educationally and technically, to say little of their contribution to GDP. We must recognise those creative people as small businesses, because every one of them makes a contribution in the way I have described.

The current copyright system has failed to remove barriers to innovation. There is a gap between the law and reasonable expectation, and the behaviour of many people today regarding digital access. There is a lack of understanding that creativity must be paid for. As the hon. Member for Lewisham West and Penge has said, to steal creative material is exactly that—it is stealing. If I produce something, I expect to be paid for it. That lies at the basis of a society that believes that hard work should have its reward. There is more to that in the spirit of our nation than often meets the eye. I have met young people who think it is their right to steal other people’s intellectual property, and that is the sort of culture that we have created. We must put an end to it, if we are to deal with the issue properly.

I welcome the single multinational regime, which offers the prospect of eliminating wasteful duplication and increasing the potential for cross-border commerce. That is a welcome innovation that the Government should think seriously about and get right when they draft a Bill. The Minister’s Department has estimated that that could increase income to the nation by at least £2 billion a year by 2020, and it could be considerably more than that if we released the potential that I believe exists.

The concept of IP attachés for emerging economies, such as China and India, is interesting, and I would be grateful if the Minister will give further information on that intriguing proposal. I want to know how he feels about the idea, which I believe is a good one. I recently led a delegation to China on behalf of the Select Committee on Business, Innovation and Skills. There is a view, rightly held in many areas, that China culturally sees knowledge as the birthright of all the peoples of the globe. It is a cultural concept that many of us admire, except that it means that they believe that they can have other people’s intellectual property.

To be fair, on that visit we found that the Chinese were genuinely getting down to the business of dealing with the issue, and they told that they have 60,000 inspectors on the ground. But I also saw a shop in Peking—sorry, Beijing, I am an old chap, as the Minister knows—selling CDs for £1 in our terms, which were clearly pirated and on open display. I am sure the hon. Member for Perth and North Perthshire who secured this debate will be horrified by that. He had worked on one of the CDs that I found, and he would probably like slightly more of a return from that particular enterprise.

I also want to talk about the impact of intellectual property on small businesses. I come from a county in which 94% of private sector work is in SMEs. I pay tribute to my hon. Friend the Member for Solihull (Lorely Burt) who has battled hard for the SME sector and suggested a meeting with the Minister. I know that he will want such a meeting to take place, and I am sure that a lot can come from it. Small and medium-sized enterprises are, without doubt, the main engine behind the Government’s growth agenda and behind wealth creation and the creation of more jobs in this country. Talking to those businesses about a matter that impacts so considerably on our young people has real import, and I look forward to hearing from my hon. Friend about the outcome of her meeting with the Minister.

The Hargreaves report deals with small and medium-sized businesses and recognises the importance of that sector, which I welcome. There is a symbiotic relationship between large and small firms on innovation and research and development, and supply chains are a large part of that. There are, however, complexities in the regime that are more challenging for small firms to navigate, and they need special understanding and help. I hope that the Government will recognise that when they introduce the legislation.

As my hon. Friend the Member for Solihull and others have said, small firms need help with costs and with the law. A large company has the resources to promote understanding within the organisation about the impact of the law on a certain area of activity. Small businesses, however, do not have such resources. I have appealed again and again for the Government to recognise that the impact of a demanding regulation on large companies is multiplied 30 times in the SME sector in terms of cost and effort. The Government need to recognise that when they frame the legislation.

Small businesses want an integrated source of advice that combines commercial and technical insight with legal expertise. We need to understand how we can provide such a resource for the many small businesses that work in IP development, and we must enable them to commercialise as well as protect their intellectual property. I would, therefore, be grateful if the Minister were to expand on what action the Government propose to ensure that the regime is friendlier and more accessible to small and medium-sized businesses.

The Minister will not need telling that digitisation offers the prospect of democratising many of the written works in our language, which will spread economic, cultural, and educational benefits more widely. It is bizarre that researchers from Europe who seek to access material from before 1923 have to travel to the United States to view it. Although that material is readily available on the internet in the United States, it is not available in the United Kingdom. Ironically, much of it was produced and written in this country or in Europe, and it should be made available. It is a matter for the Minister to look into—I am talking specifically about material created up to 1923; I do not want the Minister to think that I seek to create a loophole to enable people not to pay their dues under copyright.

Digital material should be treated in the same way as other formats, offering the prospect of a simpler regime and architecture that commands greater compliance, respect and understanding. Copyright law should be technology-neutral, and contract law should no longer obstruct acts permitted by statute. Sadly, such acts are currently obstructed, and I want to draw that issue to the Minister’s attention.

In conclusion, I welcome the Government’s proposals on the patent box and on research and development credits. Applying a 10% corporation tax to profits attributed to patents would create a far more conducive environment in which innovators could operate. We need to retain our position as a world leader in patented technologies, and using the tax system to encourage that would be a positive measure for the Government to consider.

The Hargreaves report makes a vital and interesting contribution to the debate on intellectual property. We must, however, recognise that it is only a platform for debate,. The report needs genuine Government drive to translate into a Bill that will benefit the whole of our nation and, more specifically, be of import to small and medium-sized businesses. We need to be positive about encouraging innovation and growth, and we need to configure our policy and tax frameworks accordingly. As we gradually shift away from the economic woes of the past few years, above all else such innovation offers the prospect of sustained prosperity and success. My advice to the Minister, which I am sure that he will heed, is to get on with it.

16:07

[Mike Weatherley (Hove) (Con)]

It is a pleasure to serve under your chairmanship, Mr Davies, and I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on securing this exceptionally well-timed and vital debate. I also draw the attention of hon. Members to my published declaration of interests. Intellectual property is suddenly popular, not only via my “Rock the House” project, but also in terms of Government attention. Intellectual property seems to have had more reviews than a west end show, and after 300 years, copyright is rightly back on centre stage.

As we have heard many times in this debate, intellectual property is the bedrock of a modern economy. Our traditional manufacturing base has gone, and industries that create new wealth are few and far between. There is one notable exception: we are very good at creating intellectual property in the creative industries. The figures speak for themselves—we heard some numbers earlier and I will introduce others. Global trade in IP licences alone is worth more than £600 billion a year. We are a major exporter of IP. In the UK, investment in intangibles has now outstripped investment in tangible assets by £137 billion to £104 billion. Our creative industries are world class and punch well above their weight.

Lara Croft was born in Wimbledon, and “The King’s Speech” dominated the Oscars. Adele is in the middle of a record-breaking run at the top of the US charts. Other countries envy the talent in this country, and as we heard earlier, our youngsters are queuing up to get a job in the creative industries. Some 2 million people already work in creative businesses. We want that number to grow, as do our youngsters who are looking for jobs now—that includes two of my children, who hope to join the creative industries shortly.

In recent years there have been 26 reviews into intellectual property. Who will invest in a country that is constantly reviewing its legislation and cannot decide whether to protect IP? Who will invest in a country that claims to value IP, yet turns a blind eye to theft on an unprecedented scale? Will the Minister confirm that there will be no more reviews of IP this Parliament? Will he unequivocally state whether the UK will protect IP or allow it to migrate elsewhere?

One example of the problem is the unauthorised reproduction of magazine and periodical publications online. If professional publishers are to continue to make significant investments in new applications for online publications, illegal copying and distribution must be more effectively addressed. That requires support for the enforcement of rights, and support from consumers for the use of legitimate services. Growth will not be promoted by removing or reducing rights that act as incentives for investment.

[Mr Foster]

I thank the hon. Gentleman very much for drawing attention to magazines. Often in these debates, we talk about music, film and video games; rarely do we mention magazines. However, the figures show that there is huge piracy of magazines. Future Publishing in my constituency is in real difficulty because of what is happening.

[Mike Weatherley]

I thank the right hon. Gentleman for his intervention. Future Publishing has pointed out to me a website—I think it is in Poland—that reproduces all its magazines online to as high a quality as it can. That is the type of thing that we need to shut down, so I welcome the intervention.

[Mr Foster]

I apologise for intervening again, but the hon. Gentleman is absolutely right. I, too, have seen that website. Pornographic material is included on the same site. The interesting thing is that it purports to be a genuine site, in that people have to pay a small amount of money to use it, so it is misleading consumers. It also contains advertising from reputable firms. We must deal with that.

[Mike Weatherley]

The right hon. Gentleman is exactly right. I think that the charge is equivalent to $10 a month, the payment of which allows unlimited downloads. Zero cents of that $10 goes back to the publishers.

As we come out of the recession, there is much talk of rebalancing the economy. Where will the growth come from? We cannot compete on labour costs and we do not want to. Our strength is in pharmaceuticals, high-end engineering, brands, bioscience and, of course, the creative industries. Our education publishers are No. l in the world. Our music industry is at No. 2. Our games industry used to be at No. 3—the position is under threat as other countries adapt and offer incentive packages that we are not matching. Surely we should be as proud of our creative industries and their podium positions as we hope to be of our athletes next summer.

To be fair to the present Government, the Hargreaves review is their first review of IP. I should also point out that there is a duty on those in the creative industries to adapt their business models far more quickly than they have done in the past. That includes reduced pricing models for the prime product and a changed emphasis on secondary income streams, such as live music and merchandising.

The Government’s response to the Hargreaves report is a tailor-made opportunity to celebrate our creative industries, and to confirm that we are open for IP business on a global scale. Will the Minister reassure banks in the UK that we are the best place in the world to invest in IP businesses? Will he confirm to creative businesses in this country that their assets will be protected by legislation? Will he encourage new talent with the message that people’s rights in respect of what they have created will not be reduced by exemptions and undermined by unnecessary regulation?

Let me turn to the Hargreaves report. It is better than I was expecting; I know that many other hon. Members have said the same. I have to admit that my heart sank when I met Professor Hargreaves and he hinted to me that he wanted to introduce US-style fair use here. His argument was that our IP laws were preventing internet companies from launching, yet I remember many search engines and social networks starting here. Some, such as Mumsnet and Friends Reunited, have been extraordinarily successful. They were not held back by our IP laws; they just did not have access to the same funding as Google and other silicon valley giants. Introducing fair use here would help only the likes of Google—established players with deep pockets that can fund the legal test cases that are such a feature of the US system. It was therefore with some relief that I read in the Hargreaves report that he rejected fair use for the UK. That is a sensible recommendation, and I urge the Minister to endorse it.

However, the report goes on to recommend a range of new exemptions. Let us be clear about what an exemption means for a creator. On the one hand, with our 300-year-old copyright tradition, we say that an author owns his work when he writes something. It is his property; he created it, and it is his. On the other hand, with an exemption, we say that he does not own his work any more in certain circumstances. Of course, there are situations in which the public interest must outweigh a property right, but we should be wary of taking away someone’s property, especially their own creation.

One example involves text and data mining. No case is made in the report for a text and data mining exemption. Such mining is simply described as making it easier to crawl the internet for material. Surely that is what Google and other search engines do on a commercial basis. Do we really need an exemption to make Google’s life easier? Should it not be obtaining licences if it wants to use other people’s material?

Parody, as we have heard, is another example. Parody is almost the hallmark of British comedy. It can hardly be argued that there is a shortage of parody in the UK. However, the Hargreaves report seems to think that there is a problem. The report concludes, with seemingly no evidence, that we should have a parody exemption, but should someone be allowed to take someone else’s work just because they are making fun of it? I do not see how parody justifies removing a creator’s basic rights in their work. Then there is research. Of course there is value in building on the work of others, but does that mean that the original researcher should get nothing for their work? I strongly urge the Minister to reject those recommendations in the report. This goes to the heart of copyright as a property right. Arguably, something that someone has created is even more precious than property. Our legislation gives creators ownership of their work. We should not take those rights away without good reason.

There are two areas where there is justification for an exemption, and that is broadly accepted by creators. The first is archiving. We have some unique collections of film and music in this country; indeed, I understand that film originated in my constituency of Hove. The British Library, for example, has the national sound archive, with millions of recordings going back to the birth of the gramophone, mostly donated over the years by record companies. Making digital copies is an obvious way of preserving those for future generations. When the Government consulted on an archive exemption three years ago, industry backed it. We should implement it now.

[Mr Christopher Chope in the Chair]

The second area is format shifting. That is copying CDs to MP3s, or DVDs to an iPhone or similar—something that millions of people do, despite its being illegal at the moment. Having just parted with cash for both a CD and their new MP3 player, consumers rightly expect to be able to copy music and films across without paying any extra, as they in effect paid for that in the purchase price.

The sticking point was whether musicians should get some recompense for that format shift. In the rest of Europe, that takes the form of a levy on copying devices. I do not like the idea of a levy. It is a blunt instrument that does not necessarily follow the market. Surely some form of licence could be allowed, provided that the material is solely for the private use of the purchaser. If it turns out to be impractical to stop internet file sharing, we could revisit the idea of a levy on equipment, as that would get some revenue to the rights holders and is attractive for its ease of use. In the meantime, I urge the Government to reject the idea of a levy on equipment and to allow personal-use format shifting, provided that an original licence has been purchased—in most cases, that would simply be someone paying for the CD for their own personal use.

On exceptions, the Hargreaves report gets some things right, but not others. The challenge for Government will be working out what to embrace and what to ditch.

[Ian Lucas (Wrexham) (Lab)]

I would like clarification. Is the hon. Gentleman saying that the licence would be bought at the same time as the CD, as part of the price?

[Mike Weatherley]

I thank the hon. Gentleman for his intervention. Yes, my belief is that once someone has bought a CD, they should be able to shift the music to another format to listen to it in their own home, for their own private use; that becomes an infringement only if the material is used for other purposes. The industry got that wrong years ago. It is making illegal users out of millions of people in this country. They tend to ignore the law on copyright protection because they see it as a ridiculous law, and once people see something as a ridiculous law, they throw away other laws. We should allow format shifting for personal, private use once someone has bought a full legal copy.

I was saying that the Hargreaves report got some things right, but not others, and that the challenge for Government would be working out what to embrace and what to ditch. The same is true of the idea of a digital copyright exchange and the recommendations on licensing. The report identifies licensing as underpinning creative businesses. Indeed, licensing is now central to almost every business model, whether we are talking about a direct licence from a rights holder for a specific repertoire, or a collective licence covering an entire catalogue. The report recommends that the collective licensing bodies adopt a code of practice to facilitate efficient markets. That is a good suggestion, but does it need legislation and, if so, how intrusive should it be? The British Copyright Council is already producing a template code, and all the collective licensing bodies in the UK have agreed to sign up to it. If the industry is adopting good practice voluntarily, we do not need more regulation.

Perhaps the most high-profile recommendation in the report is the one for a digital copyright exchange. In essence, that is a good idea. Indeed, many parts of the industry are already developing databases. Phonographic Performance Ltd, for example, has a database of 5 million recordings, and the database includes record company ownership and performer line-up. That is essential for its licences with the BBC and others, so that the broadcasters know what is in their licence and the right musicians can be paid. Book, newspaper and music publishers, along with photographers and others, are developing similar facilities. There may even be a role for Government in co-ordinating those efforts and encouraging greater co-operation between databases.

However, the Hargreaves report certainly goes a step too far. It recommends that the digital copyright exchange become a licensing platform, with flat-rate pricing available at the click of a mouse. Far from encouraging growth, that is anti-market. It is extraordinary that a review about growth should recommend a trading platform where prices are static and there is no room for negotiation. How on earth could any rights holder be expected to set a price in advance for a totally new service that at the time exists only in the mind of the creative entrepreneur? That is a recipe for stagnation.

As if that was not enough, the report also proposes introducing penalties for rights holders who do not participate in the digital copyright exchange. Such wrongdoers would be denied access to their rights under the Digital Economy Act 2010, creating a two-tier system for copyright, and that must be resisted. Effectively, it is compulsory registration by the back door, and we should not allow it. One of the great strengths of copyright is its flexibility, and the fact that it is available to all creators, big and small. The principle of not requiring formal registration to enjoy copyright is enshrined in international treaties. We should uphold that principle, not undermine it.

We then come to the report’s suggestion that Government should appoint a digital champion to sort everything out. This is perhaps the most extraordinary of the report’s recommendations. The review rightly concludes that, if it is to work, the digital copyright exchange must be industry-led and must respond to the business needs of the creative sector. It then recommends that Government appoint a tsar to direct that industry initiative. “Industry-led” means led by the industry, not by a digital champion appointed by the Government. Will the Minister reject the idea of a digital champion, and allow the digital copyright exchange to be led by the industry from the start—or at least by a digital champion who is advisory rather than dictatorial?

In conclusion, I urge the Minister to be selective in his response to the Hargreaves report. Will he say yes to protecting our creative industries and the property owned by the creators? Will he say yes to archiving, private format shifting and some form of central rights database? Will he say no to the exemption of text and data mining for research and of parody, and will he be selective in exemptions linked to the national interest? Will he say no to fair use and to a centralised pricing model in the central rights database? Such confirmations and rejections would confirm this country’s commitment to ensuring that IP gives world-class support to business, and to the talent that drives it.

16:21

[Eric Joyce (Falkirk) (Lab)]

I apologise for not being here at the start of the debate, Mr Chope. I was at another event, which I shall mention briefly in a moment.

I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart)—his constituency was the place of my birth—on securing the debate, which is incredibly timely. He has committed himself to this subject for some time, and he regularly makes important contributions, as have many others here today.

Before coming here, I was chatting to Prime Minister Odinga of Kenya, and we spoke about this very matter. In the developing world, mobiles are being used much more and new services are becoming available. Those countries are looking to us to see how we deal with the emerging issues, and they are likely to follow the same principles, tenets or philosophical underpinnings, if that does not sound too grand. It is very much a current issue in Kenya—aside from piracy of the other type, which he is also particularly keen to address. These issues are at the forefront for countries in the developing world, especially in countries such as Rwanda. That country has mobile coverage across the country—it is better than in London. It also has fibre-optic cable, surprisingly good services and lots of new possibilities for creators. We must not forget that what we say now will have a powerful influence on people across the world, particularly those in the developing world.

I listened to the hon. Member for Northampton South (Mr Binley) with great interest. I thought that he struck exactly the right balance. On such matters, from the Digital Economy Act 2010 to the Hargreaves report, there tends to be a bit of polarisation, with the creators on one side and the distributors on the other. It is a false dichotomy, because one could easily argue that record labels are both creators and distributors. We tend falsely to put people in particular boxes. The hon. Gentleman was absolutely right to point out, as Hargreaves did, that our copyright law is elderly. It was intended for an entirely different purpose from how it is used today, and the way that people live now—I wish that I could remember exactly what he said, so I paraphrase—is very different from what the copyright law assumes.

The review is timely. Although no study undertaken on behalf of the Government, or of anyone else, is perfect, Hargreaves suggests some intelligent incremental steps. In broad terms, I think that we should support it. I listened carefully to the hon. Member for Hove (Mike Weatherley), and I completely understand his concerns. He is a champion of creators, and I do not pooh-pooh the important concerns that he expressed. However, it is important to realise that Hargreaves has attempted to pull together two disparate positions and has created a reasonably consensual outcome, which is difficult. When the Minister, and more significantly the Government, decide what to do, I hope that the changes to corporate law will reflect the general spirit of what Hargreaves has been trying to achieve.

We all agree with the hon. Member for Hove on format shifting—it is common sense that we should do something about it. Most people—probably most of us—have format shifted without realising that it was unlawful. That is a point of some consensus. For my own part, however, when I listen to debates on this subject, I still get the sense that some people are defending one position and others are defending a position on the other side. However, when we to talk to people in the industry, we find much more intelligent discussion and debate.

If we talk to record labels, we hear something different from what is said by the BPI. Much as I love, respect and admire the BPI—this is not to say that we should give in wholesale to what we have already heard happens in China—record labels will say, “Well, three or four years down the line things will be shifting a little bit; business models will shift a little bit.”

At the centre of Hargreaves is the recognition that creatives not only create the things they do, but create new solutions to problems. The hon. Member for Solihull (Lorely Burt) mentioned small and medium-sized businesses. Small software companies are less concerned about patenting and are more interested in keeping people with good ideas. They are sometimes more reluctant to patent specific things, because it can give away their secrets, but the secret in parts of the software industry is hanging on to those clever creative minds. It is much like the House of Commons.

I will briefly jump to the digital copyright exchange, which is potentially contentious. It looks like a common-sense idea—it is a common-sense idea—but how will it work? As soon as the recommendation is made, people in different industries will say, “This looks fine, but what is the meat of it? How should it work?”

One line that I have not heard mentioned—it may have been mentioned before I arrived—which one hears reflected outside this place is the almost theological point that when someone creates something it is theirs for good and theirs to control. Some would say that that is not the case and that, as the hon. Member for Northampton South said about the Chinese view of knowledge, it is out there for people to use and manipulate. We should certainly give the benefit to the original creators. At the extreme, one way to interpret the possible function of the digital copyright exchange is that it should be compulsory, because if the creation is not registered, the creator will not receive the cash, which would be tough on the creators. On the other hand, I am not completely convinced that those who create things should necessarily be able to control them.

[Damian Collins]

One observation from my time in the advertising industry, based on the hon. Gentleman’s remarks, is that that could work against younger creative people. They do not have experience of the industry or the muscle to demand a higher price for their work at the initial point of sale and will therefore lose control of it for the future. Does the hon. Gentleman share that concern?

[Eric Joyce]

I absolutely agree. Indeed, the advertising industry is one of our more successful creative industries. I know a number of people who work in it or who have done so. The hon. Gentleman said earlier that the advertising industry often takes something that looks like an original idea from elsewhere, uses it imaginatively and creates something new, adding value to it.

The hon. Gentleman said something about orphan works that struck me; I had not reflected on the matter before. I do not have a great problem with orphan works. I was lobbied on the subject by photographers during the passage of the 2010 Act. It could be the case that something has been forgotten by the creator and is long-gone but is used in an advertising campaign, such as that famous kiss picture by Robert Doisneau. Such things could be completely forgotten, but if they are used in advertising campaigns and seen all over the place, the creator will not benefit from it. I see the logic of revisiting that aspect.

[Damian Collins]

I am grateful to the hon. Gentleman for giving way again. I might be wrong, but I cast my mind back to the 1997 general election campaign and the famous demonised poster of Tony Blair. The original photograph was an orphan work.

[Eric Joyce]

That is absolutely fascinating. I think Tony Blair might have put the original up in one of his many houses. Perhaps he has put one up in each. I will not continue to wax rhapsodic, as I was late for the start of the debate.

Let me turn briefly to the internet service providers. There are hundreds of thousands of ISPs, many of which are small and fill a niche. In the UK, there are lots of ISPs serving local geographical areas. That may seem counter-intuitive, but that is the way it is. They provide a good service in their niche market. I am not saying, “Yah-boo sucks to all the creators and the ISPs are all fabulous.” However, we tend to forget that ISPs have to invest a great deal of money in infrastructure. We all want superfast broadband, but if we are not careful we could end up loading costs on to ISPs and slow down the superfast future that we all want. It is not the case that Google commands everybody and fair use will be next. As the hon. Member for Hove has said, fair use has essentially been rejected by Hargreaves, but I am sure that that will not happen in the UK. I understand that it was primarily a legal argument that did not fit terribly well into the European legal structure.

Let me just blow the trumpet for ISPs. The sector is not terribly big or sexy, and we understandably tend to speak a lot about our success in the music industry. However, the corporate debate goes much wider than the music industry. For instance, it involves software, as I have mentioned. There are all sorts of creative responses in the movie industry. We can see release dates being brought closer together, so that people are less likely to pirate. Often, if new technological solutions, creative ideas or new ways of selling a product are found, problems can be solved.

In his report, Hargreaves emphasises that enforcement and education have a limited effect. Instead, he says we need to find new ways of facilitating new creative ideas. He recommends the creation of a digital copyright exchange. I am not sure exactly how it will work and do not think that it will necessarily involve compulsion, but there are some interesting debates around it. The report states:

“Government should pursue an integrated approach based upon enforcement, education and, crucially, measures to strengthen and grow legitimate markets in copyright and other IP protected fields.”

That goes to the heart of what Hargreaves has tried to do. It is not perfect, but it recognises that we can make incremental steps at this stage. I hope that the idea does not get knocked off track for some technical reason that we cannot get round.

Hon. Members spoke at length with Professor Hargreaves, who made himself and his team available to them. I deduce that he and his team are a little concerned that the whole thing will be knocked off track by heavy lobbying. The hon. Member for Northampton South perfectly captured the problem. We recognise that we need to change; we accept what Hargreaves recommends as sound common sense; and we can get the copyright laws that we need not only now but for things that might be coming along in the future.

[Dr Coffey]

I hear what the hon. Gentleman has said about Professor Hargreaves and about his concern that everything might be put to one side. As my hon. Friend the Member for Solihull (Lorely Burt) said earlier, if he had broadened the panel to include not only academics and intellectual property officers but people from the industry, he might have had a more willing audience.

[Eric Joyce]

The hon. Lady makes a good point. I am always up for broadening the membership of panels. I did not select the panel. She may well be right. I do not deny that it was a tightly focused group. We all have small and medium-sized businesses in our communities, and we all get lobbied by the Federation of Small Businesses. I often get lobbied by small businesses that say that the corporate holders are too aggressive in pursuing their rights and interests. I am not sure what I feel about that, but the hon. Lady is right in what she says.

In conclusion—I was almost at my peroration before the hon. Lady intervened—Professor Hargreaves has produced a pretty good piece of work. It is not perfect, but it recommends good incremental steps forward. We need to reflect on the fact that ISPs are being relied on to contribute greatly to the roll-out of superfast broadband. We all want that. It is coming. When is it going to come? We will see what it looks like when it comes. This report is a small but significant part of the chain.

16:34

[Ian Lucas (Wrexham) (Lab)]

It is a pleasure to be here this afternoon under your chairmanship, Mr Chope, and to have listened to such an interesting and intellectually challenging debate. I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on securing the debate. We all know about his musical talents from Runrig to the heady heights of MP4. He slips in a bit of politics from time to time. His insights have illuminated our discussion of the Hargreaves report. There were not too many surprises in his contribution. We have met on a number of occasions, and we have discussed these issues in different forums with many of the people who are here today. In particular, I remember an interesting tea that we had with Ian Hargreaves. Before I go into that, let me first say that I found Ian Hargreaves to be very accessible. To produce a report within such a short period of time was a demanding job. He has done that, and we are here debating the content of that report, which is positive.

That tea that I have referred to was pretty influential. It became clear to Ian Hargreaves then, if he had not known before, that there was a strong view among parliamentarians that the direction set out by the Prime Minister last November when the review was announced was not one with which many agreed. With the exception of my hon. Friend the Member for Falkirk (Eric Joyce)—I am glad that he contributed today—many parliamentarians here agree with the general view that fair use is certainly not what we need. We should ensure that our artists are suitably supported for their artistic and creative contributions. That is the view that comes across in most debates in Parliament, which is interesting because most of the e-mails that I receive on this subject say exactly the opposite. That is something that we should be very conscious of and that we should discuss in more detail with our parliamentary colleagues. Some of the people who need to be educated on this issue are fellow parliamentarians. When we were candidates before the last general election, we all had the happy task of responding to hundreds of e-mails on the Digital Economy Act 2010. There are heavy lobbies in this area, and I have received a number of them in connection with this debate.

The contributions today have been very helpful. I have already referred to the hon. Member for Perth and North Perthshire. We learned a lot from the excellent contributions of the right hon. Member for Bath (Mr Foster), who has such tremendous experience in the area, and of my hon. Friend the Member for Lewisham West and Penge (Jim Dowd). The hon. Member for Folkestone and Hythe (Damian Collins) made some interesting observations about search engines.

I want to raise one further matter, the vertical integration of search engine companies. Search engines do not always disclose their interests in the results of a search. They increasingly tend to acquire other companies that provide services and that are then linked to the search engine, so they are directly benefiting from their business. We need increased disclosure, so that the consumer is well aware of what is going on.

I enjoyed the contribution from the hon. Member for Suffolk Coastal (Dr Coffey) who quoted Abba. I was deeply disappointed that she did not give us the music to go with it. Perhaps she will do so on another occasion.

The hon. Member for Solihull (Lorely Burt) told us about small business, and she emphasised its importance in this field. I am disappointed that the group to which she referred feels it was not taken into account in the review, but of course it was the Government she supports who selected the people for the review, so perhaps she should take it up with them. She obviously took it up with the Minister, and I am sure that he will respond in due course.

It is always a delight to hear from the hon. Member for Northampton South (Mr Binley), who told us about visiting CD shops in Beijing; I am sure he did not buy one. We also heard from the hon. Member for Hove (Mike Weatherley) who has great experience in this field. He has shown the benefits of someone who comes not from a political background but from a business background. He has the experience to talk knowledgeably about this issue, and it is very refreshing to hear someone who is clearly at odds with his Prime Minister being able to speak out so frankly and openly on an issue such as this. Long may he do so; I myself have done so in the past. My hon. Friend the Member for Falkirk has a slightly different perspective, but it is important that it forms part of our debate.

I begin by discussing an important issue that we have not raised. When the Hargreaves report was commissioned last November, it was launched by the Prime Minister. The Secretary of State for Business, Innovation and Skills was charged with dealing with the issue, and the Minister with responsibility for culture, communications and creative industries in his Department is the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Wantage (Mr Vaizey). The Minister for Further Education, Skills and Lifelong Learning clearly loves a debate. As a junior Minister, however, he does not have the same communication with the industry in connection with the internet, the media, culture and communications as the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Wantage, who is now also a Minister in the Department for Culture, Media and Sport. That is a major problem. It is important that the industry has a close relationship with the Ministers who are actually dealing with this issue on a day-to-day basis. That is not happening at the moment, because in Parliament there is a great deal of confusion about who is responsible for this particular area. We know that telecommunications was shifted away from BIS as a result of the discussions that the Secretary of State for Business, Innovation and Skills had with some of his constituents. This is a serious issue as far as the industry is concerned.

[Pete Wishart]

The hon. Gentleman is making an important and powerful point. I think Siôn Simon will go down in history as possibly the last creative industries Minister. Having someone as a central point of contact that the industry could go to was very useful. We have not even got the Minister with responsibility for the matter here, because she is in the House of Lords. There needs to be a get-together on all this to have one Minister whom industry and we as MPs can go to, and I hope that the hon. Gentleman will continue to press the Government to create that one individual post.

[Ian Lucas]

I am grateful to the hon. Gentleman for making that point and for his support. We all want this area to move forward, because we want jobs and growth in this sector. We all know and appreciate that this is a hugely important sector for the UK. We have heard the 8% of GDP statistic and the fact that we are No. 2 in the world in exports in this field, and we want the sector to progress. Under this Government at the moment, I am afraid that we are not making the progress that we should. On 18 May, the Secretary of State said that there would be a response within weeks to the Hargreaves review, and I want to hear from the Minister when the response will actually come. We have still not made progress on the Digital Economy Act 2010. We are not clear about the Government’s position on enforcing rights. We still have a spectrum consultation going on, and we are awaiting announcements on broadband funding allocations. In the context of a very serious economic position, with growth flatlining generally over the past few months, we need to have one of the most important and positive sectors in the UK in a position of certainty and stability.

When a new Government are elected, a sector always gives them some time, because it is clearly in their own interests to have a good relationship with Government. I am afraid that the sector is running out of patience, and it needs to have support from Government to take matters forward as quickly as possible. It is important that the Minister understands that the industry wants action in this area, and it wants it as quickly as possible.

I want to thank all the organisations which sent me submissions in connection with the Hargreaves review. I have met many of them, and I have discussed in detail what is a very complex area for anyone who comes to it for the first time, as I did about nine months ago. There are many different groups within the sector who lobby well. When I was reading the papers in connection with this debate, I was struck by the common ground, despite the fact that the different groups are often presented as having a great deal of disagreement. The first common issue is that everyone wants growth. We are good at this sector, and we need to do better. We know that we can compete with anyone in music, drama and computer games, and we know that with the right background and the right framework, we can do better. We need to get more people involved in the creative industries, because we still draw from too limited a pool, but I think that we can make real progress. We all agree that investment and talent need to be rewarded, or there will be fewer people working in the sector, and the growth that we want will not happen.

In its submission to me, Google stated that it

“will continue to help content creators to generate new revenues and take control over their online products.”

I deliberately selected Google as supporting the rights holders in that way. When I read that, I was reminded of an interesting discussion that I had recently with the poet Wendy Cope at a meeting. She is well worth reading, although she is often read online without payment. Not surprisingly, she is frustrated by this, because, like everyone else, she has to pay for her Sunday dinner, too. We need to ensure that all original artists are paid. We all agree that artists need to be paid, and we all agree that their work needs to be disseminated more widely.

Obviously, no artist or creator wants fewer people to see their work. No artist will object to format shifting, provided they are paid for it in some way. I was pleased to hear the hon. Member for Hove make his position on format shifting clear. That is an area that needs to be sorted out. Frankly, I am not clear why it has not been done before. I was struck that it was not an issue for virtually every group that I have met. The fact that we have this format shifting that nobody seems to support is a barrier to growth. The example used by the Secretary of State for Business, Innovation and Skills when publishing the Hargreaves review was the case of Brennan, the format shifting company that first came to my attention in the New Statesman in the very convincing advert that it ran over a number of months, basically indicating that it is a company that is at a competitive disadvantage because of the position of format shifting at the present time. We all agree that the current position is not acceptable, and that we need progress, but no one can agree on a way forward, and in that respect copyright is a bit like House of Lords reform.

So, what can we do? There seems to be a consensus that the matter is best dealt with and led by the industry, but there is disagreement about what precisely should happen next, as has been reflected in the debate today. We have had, for example, a discussion about the digital copyright exchange, and part of the reason for the uncertainty, or disagreement, about that is that no one is exactly sure what is being proposed. If we are simply talking about a one-stop shop where someone goes initially and is then directed to existing registers somewhere else that can cope with the matters, that seems to be largely acceptable, but there is great resistance to any sort of compulsory system and to penalising artists if they do not take part in the digital copyright exchange.

The timetable for the Hargreaves review was so tight that the review was never really going to come up with a detailed and convincing response, but we need the matter to be taken forward and an agreement to be reached—within the industry, I think. There are lots of experts in this field, and it is better that they sort out a way forward themselves. I was very encouraged by the setting up of the Creative Industries Council, which is a good model. We have the Automotive Council UK in the very competitive automotive industry, and the different industry parties sit around the table and devise with the Government a strategy to take forward the UK automotive industry. The Creative Industries Council should perform a similar role in areas such as the Hargreaves report, and one of its first tasks should be to find a way forward through discussion within the industry and compromise. Sometimes, to make progress it is also necessary for the Government to knock a few heads together, but in all the discussions that I have had there has been a desire to establish stability and progress in the sector, and the industry in the UK would benefit as a result of that.

It cannot be beyond the wit of the creative industries to put this together; we know about their capabilities and the fact that they have devised structures and new models of working. The Government must, however, play their part too, and I am afraid that at the moment they are letting the side down. We have delay, confusion and a lack of clarity in the relationship between the Government and the industry, and the Government need to step up to the plate, act as quickly as possible—I hope that we will hear some dates for their responses to the review—improve their relationship with the sector and take matters forward from there.

[Mr Foster]

On a point of order, Mr Chope. Given that we are discussing media matters, would it be appropriate for me to inform the House that I have just received the news that the first major casualty of the appalling behaviour at the News of the World is that the newspaper will close after this Sunday?

[Mr Christopher Chope (in the Chair)]

That is not a point of order. The right hon. Gentleman could have made the same point in an intervention on the Minister. I am sure that the Minister will now be eager to deal with that point, as well as all the others, in his summing up.

16:53

[The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)]

I am delighted to be able to respond to this important debate, and I congratulate the hon. Member for Perth and North Perthshire (Pete Wishart) on securing it. He spoke with knowledge and commitment on a subject that I know is dear to his heart. I have, in fact, spoken on the subject on two consecutive days; I was in this Chamber debating with him just yesterday. As I shall explain later, the Minister in my Department with responsibility for intellectual property is Baroness Wilcox, so I am not here as the Minister with responsibility for the subject but am pleased to speak on it. I pray in aid my professional background in the IT industry. I had a small business, which I subsequently made bigger, and was heavily involved with many but not all of the topics that have been debated today.

The Government are acutely aware that there have been previous reviews and consultations on intellectual property, and I understand the point the hon. Gentleman made at the outset: this is a challenging area, not least because of the changing character of the industry and the technology, and consequent events. He is probably right that we will return to the matter time and again, because of that dynamic quality. The Government are equally acutely aware of the need to facilitate growth. That theme has punctuated this debate, and there is a close relationship between how far we intervene in some of these matters and how we catalyse or, conversely, inhibit growth. That has been the perhaps unspoken dynamic at the heart of today’s considerations.

I am mindful of the words of the late Sir Hugh Laddie, a distinguished commentator on such matters and a judge who presided over many intellectual property cases. He said:

“If patents had been applied from the start we would still be on very early operating systems”—

in the IT industry. He continued:

“To give a business method example, if Ford had patented the concept of the assembly line, the US’s industrial development would have been held up”

altogether. So there are, of course, tensions between how we protect intellectual property and how we facilitate the growth that we need to deliver prosperity.

The economic importance of intellectual property is clearly profound and growing, and it has been said this afternoon that the creative industries are critical in delivering the growth that we seek. I have regular interface with those industries in my role as the Minister for Further Education, Skills and Lifelong Learning and am anxious that we tie the development of skills policy to growth, by identifying the sectors, including the creative industries, high-end manufacturing and the information systems industries, in which skills gaps and shortages might limit what we can achieve. Through that dialogue, I have gained some understanding of how we protect innovation. Innovation and growth are intimately linked by nature—a point made by successive speakers—and we need to make critical decisions about how we facilitate innovation and take advantage of its effect on business activity and employment.

This is a complex environment, and it will continue to change, perhaps even more quickly than at the moment. When people think about macro-economics and economic change, they often say, as has been said today, that as economies advance they become more high tech. I do not dismiss that by saying that it is often said—perhaps it cannot be said too often. What is less frequently cited, however, is the increasingly dynamic need of economies as they advance. Increasing dynamism requires public policy makers to be ever more responsive, and nowhere is that more true than in our handling of licensing, patents and copyrights. That is particularly significant in industries that are at the cutting edge, many of which have been cited. They are not all the same of course, and part of the problem with this debate is that we are dealing with an extremely diverse range of sectors and all kinds of innovation, with different pressures and opportunities.

To support growth, we certainly need an intellectual property system that helps business and consumers realise the opportunities that technology and change create. That is why, as the hon. Member for Wrexham (Ian Lucas) said, the Prime Minister commissioned the Hargreaves review in November. Professor Hargreaves was asked to develop proposals on how the UK’s intellectual property framework can further promote entrepreneurial activity, economic growth and social and commercial innovation.

The Prime Minister asked the review to identify barriers to growth in the IP system, how to overcome them and how the IP framework could better enable new business models appropriate to the digital age. The review considered intellectual property and barriers to the growth of new internet-based business models, including information access, the cost of obtaining permissions from existing rights holders and fair use exceptions to copyright and how they might be achieved in the UK. It also considered the cost and complexity of enforcing IP rights within the UK and internationally, the interaction of the IP and competition frameworks and the cost and complexity to SMEs of accessing IP services to help them protect and exploit IP.

The review issued a call for evidence and undertook a programme of stakeholder meetings and events, to engage with a broad range of organisations. The review team also travelled internationally, visiting the USA to share experiences on managing patent systems and discuss the role of fair use in the US copyright system. There were more than 300 responses to the call for evidence, from a wide variety of sources. More than half came from representative organisations such as the Creative Coalition Campaign and the Open Rights Group that represent hundreds of firms and thousands of individual members.

My hon. Friend the Member for Northampton South (Mr Binley) will be pleased to know that 20% of responses came from small and medium-sized enterprises. He was right to point out that some of our most innovative companies are SMEs, perhaps because innovation often springs from the mindset of an individual or small group of people, as I experienced in my own career. I emphasise, as did he, that the interaction between small businesses and larger corporations can be immensely positive in protecting small businesses’ interests.

I do not want to disagree with the hon. Member for Solihull (Lorely Burt), but having worked with IBM for many years, I think that the partner networks established in that industry by organisations such as Microsoft, Oracle and IBM can be positive for SMEs, although I am not complacent about that. I think that my hon. Friend the Member for Northampton South was right to say that those interactions can be a useful means of protecting the interests of small firms, rather than limiting or damaging them. It is not the time to debate that issue, as it is tangential to the thrust of what I want to say, but it is an important matter that perhaps we can debate on another occasion, when I will be more than happy to avail the House of my insight into such matters.

As I said, 20% of the responses came from SMEs. They are usually hard to reach, which is why it is so important that we proceeded on a consultative basis. Small businesses often have fewer resources available to get involved in Government consultations and reviews. We often hear from big representative organisations, and sometimes from large corporations, but ensuring that we have a dialogue with small businesses seems critical. The high response rate from SMEs tells us how important IP issues are to them. The hon. Member for Wrexham is right that the amount of correspondence and information that Ministers, shadow Ministers and MPs have received on the subject reinforces the level of commitment and proper concern felt.

[Lorely Burt]

Given all that the Minister is saying about the importance of submissions from small businesses, I am sure that he is as mystified as I am that the submission from the SME Innovation Alliance was never alluded to or listed among the submissions. Will the Minister confirm that he is prepared to meet me and the SME Innovation Alliance to rectify the Hargreaves report’s failure to take certain things into account?

[Mr Hayes]

The hon. Lady made both those points earlier. With her usual assiduity, she has taken advantage of this opportunity to intervene on me to amplify them. I will deal with them in turn. First, that submission was indeed received and considered, and it played a part in informing the review’s recommendations, although it was not listed because, as I understand, it was received informally rather than through the formal process. Secondly, I am more than happy to commit my noble Friend Baroness Wilcox to meet her. My right hon. Friend the Minister for Universities and Science will want to be involved, too, and will be happy to join that meeting. The Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey) was also mentioned, and I shall deal with him later in my remarks. Given his Department’s involvement in the digital industries, an interface with him would be desirable, too. Having committed three of my colleagues’ diaries, I had better end on that point. However, we will have the meeting. I will insist that it happens.

Professor Hargreaves delivered his report, “Digital Opportunity”, to Ministers and the Government in May. Members know that the Government are considering that report and will not expect me to anticipate our response, but—it is right that the hon. Member for Wrexham raised the issue in his role as shadow Minister—I again make a clear commitment that the Government will publish our response within a month. There is another commitment made by a Minister who is not responsible for these matters; that is one of the virtues of being in this position.

[Pete Wishart]

When presented with the Hargreaves report, the Government said that the response would be published by the summer recess. What is the reason for the delay? It was a clear commitment to respond by the summer recess. Now the Minister is saying that it will take a month. Why the delay?

[Mr Hayes]

The Government need to consider such things carefully. The issues are complex. The hon. Gentleman made the point that they are challenging, and the Hargreaves review’s recommendations are wide-ranging. He knows the report well; I have it here. The volume of responses to the consultation was large, and they were wide-ranging in terms of both the ideas presented and the organisations that contributed. It requires serious and studious work. He might have wanted an early response, but better to have something satisfactory than something quick. I make the commitment that it will be published in a month, and I assure him that it will be a studious and carefully considered piece of work. I cannot go further than that. I am unable to give an account of the response’s contents before its publication, but I reassure the House that the Government recognise fully the seriousness of the matters raised in this debate and during the review and its publication, as well as the value of the industries that rely on intellectual property as their life blood.

Professor Hargreaves suggested that in some areas the UK’s intellectual property framework, especially with regard to copyright, is falling behind what is needed to meet new opportunities. That point has been made repeatedly today. The argument is that if we do not fix the framework, our economy will enjoy less innovation and lower growth. It is certainly true—I will comment this far on what we might say—that the UK needs open, contestable and effective markets in digital content and a setting in which copyright enforcement is effective. Copyright provides the legal framework to sustain and protect creative value. It needs to fit current conditions, and it should warrant, and get, the respect of consumers. In other words, while not anticipating our response, I think it is reasonable and fair to say, given that we have had such a serious debate, that we feel that changes will need to be made to bring the system in line with current conditions.

We need copyright content and technology working together, as has been said repeatedly. They should be in harmony, not in conflict. There should be a happy union between changing technology and copyright. We need an environment in which new businesses and technologies can compete fairly with existing ones. I accept the point made by the hon. Member for Solihull. Although I qualified her argument about the relationship between SMEs, partner networks and large players, it is certainly true that there is a risk unless we get the balance right. The law in that respect is important. I mentioned the late Sir Hugh Laddie earlier. The hon. Lady will remember that he made a point, following the Gowers report I think, that the legal system militates against smaller businesses and against individuals purely on the basis of cost. The hon. Lady has reinforced that, and I think that my hon. Friend the Member for Northampton South made the same point. Therefore, there are issues to be considered, and as I have said, we take them seriously.

The review recommends that the Government ensure that the IP system is based on evidence. The right hon. Member for Bath (Mr Foster) was right to insist that the Government’s response should also be evidentially based, and I assure him that it will be. Economic considerations should play a stronger role in assessing the nature and perhaps even the limits to rights, which is another point that he made. It is critical that we take an empirical view, inasmuch as one can in this dynamic and complex area. We will prioritise that kind of evidential approach.

On international priorities, the report recommends that the UK pursue international interests in emerging economies and prioritise the EU patent. We will, of course, look at that too, given some of the comments that have been made during the debate.

To improve the environment in copyright licensing, the Hargreaves review recommends the establishment of a digital copyright exchange. That has been mentioned several times, including by my hon. Friend the Member for Hove (Mike Weatherley). Although he will know that that argument has been made by many people over a considerable period, the nature of the exchange, which we are considering alongside other recommendations, must be founded on consent. The idea that we have a state-driven, compulsory system that dictates and determines from the top is probably not compatible with the arguments that have been made by almost every contributor to the debate. It must be based on a collaborative and co-operative model.

The appointment of a champion for the digital copyright exchange has also been raised. I think it was my hon. Friend who said that the champion must not be a dictator, which is of course true. The champion would have to work closely with the industries concerned. The consultative nature of how the Government have gone about getting to where we are would need to characterise the subsequent arrangements that we put in place.

The review also recommends that the Government legislate to enable licensing of orphan works. I want to say more about that in response to the comments of the right hon. Member for Bath. It is important to design a scheme that prevents reappearing rights holders from losing control of their work. Any scheme proposed will have to involve a diligent search for rights information. That must surely be essential if such a scheme is to be fair to all parties. Perhaps I can put it in these terms: if the creator of a bestseller were to come forward, the work would no longer be an orphan work.

The right hon. Gentleman should welcome and not be fearful of the emergence of a missing great creative work. Occasionally, such things happen. Not long ago, an important work by Mozart was discovered, which is surely a cause for celebration. Mozart was perhaps the greatest of the baroque composers, but let us not go down that road or we will have a longer and perhaps less relevant debate. The character of genius is very interesting, but let us not talk about it here.

[Mr Foster]

I am slightly confused about the response given on orphan works. I apologise if I have misunderstood, but does the Minister agree with the basic principle that, if the creator of a work is unknown and that work is licensed by a separate body for use by a third party and subsequently becomes a commercial bestseller, the creator, if found, should be entitled to fair recompense based on the success of that work—yes or no?

[Mr Hayes]

I would never, in these circumstances and on such complex matters, want to reduce my answer to a yes or no, because that would be most unsatisfactory to the right hon. Gentleman and to the Chamber. Surely, he knows that.

[Mr Foster]

I would be happy with such an answer.

[Mr Hayes]

I think that the right hon. Gentleman is underselling himself. He wants a much more sophisticated response than that. I think that there is an absolutely reasonable case to say that, if the person who authored a work is found in the way that he describes, they should receive some recompense or reward. We will need to look at that in our response to the review. The right hon. Gentleman makes a powerful argument, and it seems to me to be not without merit. That is not bad for someone who was not going to give him a direct answer, as I am sure he will be happy to acknowledge with his typical—characteristic, one might say—generosity.

As my hon. Friend the Member for Northampton South has argued, we also need to ensure that we are influencing effectively what is happening overseas and supporting, again, positions based on evidence. We need not only to look at relationships with key partners, but to encourage other states to develop IP frameworks and enforce them appropriately, which is the point that my hon. Friend made. He will be pleased to know that we recently announced, jointly with the Chinese Government, that we will host an IP symposium. It will take place later this year with the appropriate Chinese authorities. It will seek to find a better mechanism for British businesses to raise and have addressed IP-related issues.

I will visit China next week and have no doubt that, among the many issues that I will discuss with the Chinese authorities, this may come up. I will certainly be able to refer to this debate. I give my hon. Friend my pledge that I will reflect on what he has said and, where appropriate and with all the due diligence and courtesy that is fitting to a Minister of the Crown, raise these issues with my Chinese counterparts. Ministers and officials regularly raise IP issues in that way with their counterparts in other countries. It is important that we build on the good relations that we have established to deal with these issues straightforwardly.

[Mr Binley]

Will my hon. Friend the Minister give way?

[Mr Hayes]

I will give way to my hon. Friend in a moment, but I want to give him one other piece of good news first. The UK recently announced that it will appoint IP attachés in countries including India and—my hon. Friend will be delighted to know—China. We expect them to be in place by the end of this financial year. They will work with host Governments on IP policies and with UK businesses to help to ensure that they can exploit and protect their IP effectively overseas.

[Mr Binley]

That is the quickest response for action I have every had from any Minister. I am most appreciative. I congratulate the Minister on taking on a very difficult brief that is not primarily his own. I understand that he does not want to say too much before the Government consultation has finished but, on the basis of our long friendship, will he talk to the Minister concerned about the use of search engines? The need to ensure that the creative arts get well recompensed for their product is vital and increasingly urgent.

[Mr Christopher Chope (in the Chair)]

Order. That is a long intervention.

[Mr Binley]

I shall sit down, Mr Chope. Your guidance is welcome, as it is based on experience.

[Mr Hayes]

My hon. Friend is right about the matter that he raises, and I will certainly do as he asks. He has some professional expertise in this field. Other hon. Members may not know that, but I have been pleased to visit Northampton with him many times, including this week. He brings some expert understanding to the subject. As I said, I share his background in the information systems world. He is right about search engines. I will draw his comments to the attention of both my noble Friend Baroness Wilcox who has responsibility in this area and, indeed, the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage. If he had been asked to respond to the debate, contrary to what the hon. Member for Wrexham said, he would have been a peg below me; hon. Members are getting a Minister of State dealing with the matter, rather than an Under-Secretary. I think that that is a bonus. My hon. Friend the Member for Northampton South makes a fair point and, as I say, I will pass on his comments.

[Ian Lucas]

rose—

[Mr Hayes]

I give way to the hon. Gentleman. I did not mean to be unkind to him.

[Ian Lucas]

No, not at all, and I did not mean to be unkind to the Minister. I want to make that absolutely clear. This is not in any sense a personal criticism of him. As he knows, in November, the Under-Secretary of State for Culture, Olympics, Media and Sport, the hon. Member for Wantage (Mr Vaizey) was a Minister within BIS and he would have been responding to this debate if that situation had continued. He stopped being a BIS Minister because of the Secretary of State’s discussions with his constituents and he is now a Minister in the Department for Culture, Media and Sport. That has a real impact on this area. I am making a serious point about a problem that the Department needs to address.

[Mr Hayes]

That is a point about the Government’s structure, which is a matter well above my pay grade, as the shadow Minister knows. I understand why he has made the point and it is his absolute right to put it on the record.

My hon. Friend the Member for Folkestone and Hythe (Damian Collins) spoke about orphan works in his thoughtful contribution. As he knows, a number of details need to be worked out on that, including the matter of remuneration. If that recommendation were accepted, we would need to work out a protocol and system for dealing with the matter in more detail than Hargreaves understandably gives us. I would be interested to hear my hon. Friend’s further thoughts on that. If he wants to develop his argument following this debate rather than on the hoof, I am sure that the Government would be happy to take into account that further insight.

[Damian Collins]

rose—

[Mr Hayes]

My hon. Friend is going to give me a further insight now.

[Damian Collins]

In response to the Minister’s invitation and following the comments of the right hon. Member for Bath (Mr Foster), if there were a system for recompense—a protocol, as the Minister suggested—would it include an escalator? Would that just include the lost licence fee not paid, or would it reflect the value of the use of the work to the person who used it?

[Mr Hayes]

That is exactly what I was alluding to. My hon. Friend implied that in his earlier remarks; but for the reasons he has just given, the matter is complicated. The system would need to be thought through carefully to get the balance right. As I said, if he wants to give that more thought, I would be happy to receive representations on the matter. I will then pass them on to my noble Friend Baroness Wilcox and my hon. Friend the Member for Wantage.

[Pete Wishart]

I simply remind the Minister that I have five minutes to sum up at the end.

[Mr Hayes]

That is very generous of the hon. Gentleman.

[Jim Dowd]

As there is a spare slot for an intervention, can I ask whether the protocol for orphaned works will include a description of due diligence, if the Minister follows such a path?

[Mr Hayes]

That is another interesting point. Again, that will form part of what we say when we respond to the report. The review did not deal with the subject in the detail that the hon. Gentleman refers to. The review recommendations do not come to a definitive conclusion on that subject, as he will know from having read them, but the proposal seems to be a useful addition to those recommendations and is certainly something that we will cover in our response. I am more than happy to give him that assurance.

[Mr Christopher Chope (in the Chair)]

Order. I remind the Minister that it is customary in these general debates to leave five minutes at the end for the hon. Member who initiated the debate to respond and that we have to finish by 5.30 pm.

[Mr Hayes]

I am happy to allow that, Mr Chope. In fact, I was just about to conclude by saying that the debate has been helpful and shown the House at its best. It has been technical, informed and non-partisan. In part, that is because of how it was introduced by the hon. Member for Perth and North Perthshire, whom I should be delighted to hear from further.

17:26

[Pete Wishart]

I am grateful to the Minister for those remarks. I agree with them entirely. This has been a well-informed and useful debate. I hope that some of things that he has heard during the past three hours will inform the response to the Hargreaves report. I have seen the officials sitting at the back taking copious notes, so I hope that some of the helpful things raised by hon. Members from all parties will be listened to and reflected in the Government’s response when we see it, which I believe will be in the next month.

I hope that you have been intellectually stimulated by the debate on intellectual property, Mr Chope, because some fine contributions have been made. We heard from my colleagues from the all-party group on intellectual property. The elder statesman—or the young prince—of creative industries the right hon. Member for Bath (Mr Foster) raised many pertinent points, particularly about orphan works. I hope that his comments will be listened to. The hon. Member for Lewisham West and Penge (Jim Dowd) is right to say that the report has been generally supportive but that we must be careful about how we consider some of the issues.

It was fantastic to hear from the hon. Member for Folkestone and Hythe (Damian Collins). I think it is the first time I have heard him speak in one of these debates. I hope that he comes back again to give us the benefit of his vast experience in advertising. His comments were very useful. He was right to say that we must ensure that we tackle illegal activity and recalibrate the public to ensure that they go to legal sites and that artists and creators are rewarded for their work.

Unfortunately the hon. Member for Suffolk Coastal (Dr Coffey), who is no longer in the Chamber, gave us the lyrics without the music—it would have been good to have had the music. We also received some useful advice about cat litter, which I took a note of. I will see what I can do with it when I get home. She is right to say that there must be recompense to artists. She also mentioned search engines, which are critical to the matter—Google was the inspiration for all this. It was good to hear from the hon. Member for Solihull (Lorely Burt), too. She is right to remind us that patents are important. That subject did not get the coverage that it required or deserved from Hargreaves, but now the Minister has listened to her comments I am sure that patents will be covered in the response.

The hon. Member for Northampton South (Mr Binley) made a pertinent speech. I will be checking out that place in China to make sure that I get my royalty from those CDs. He was right to raise that as a real issue.

It was good to hear from the hon. Member for Hove (Mike Weatherley). We perhaps disagree a little bit about format shifting. It is right that the matter should be resolved. This has been going on since the time of the cassette tape. If there is going to be an exception for format shifting, I hope that the Government look at compensation for artists and creators. The UK would be in bad company if it were not going to give any compensation to artists, given that most of Europe is doing so.

It was also good to see the hon. Member for Falkirk (Eric Joyce). We do not agree on all the issues, but it is good that he is here. On some of the language in the early-day motion he has signed, nobody talks about disconnection in the Digital Economy Act 2010. It is about reconnecting the public with the legitimate means to secure that music. I sometimes wish that we could achieve greater consensus on the language that is used.

It has been a good debate. I thank the Minister for his robust response. We look forward to seeing the Government’s response to the Hargreaves report in the next month, as we have heard today.

17:30

Sitting adjourned without Question put (Standing Order No. 10(11)).