Copyright and Rights in Performances (Extended Collective Licensing) Regulations 2014

Monday 21st July 2014 Grand Committee

Motion to Consider

15:30

Moved by

[Baroness Neville-Rolfe]

That the Grand Committee do consider the Copyright and Rights in Performances (Extended Collective Licensing) Regulations 2014.

Relevant document: 4th Report from the Joint Committee on Statutory Instruments

[Baroness Neville-Rolfe (Con)]

My Lords, I am privileged to be here speaking for the first time as a Minister for the Department for Business, Innovation and Skills and moving my first piece of business in this House. I should say that I value the work of this House and its expertise very highly.

In a traditional collective licensing arrangement, the relevant licensing bodies—or collecting societies as they are otherwise known—are mandated by their members to manage their rights. Extended collective licensing—which I will refer to if I may as ECL—allows collecting societies to license on behalf of all rights holders who fall in the scope of the ECL scheme. This includes rights holders who are not members of the collecting society and have not given it a mandate to license their rights. They become part of the ECL scheme by default unless they say otherwise. This is known as opting out.

ECL can be used to simplify licensing, reduce costs and increase the amount of legally available copyright material. With an ECL scheme in place, a collecting society can issue the comprehensive licences that its customers demand, but without the risk of infringing non-members’ rights. Consequently, there should be improved compliance with copyright law, enhanced confidence in the UK copyright system and increased returns to non-member rights holders, because the regulations make clear provision for how and when money should be paid to them.

It is well known that de facto ECL schemes are already in operation in the UK. Their existence reflects market demand. Statutory ECL will allow collecting societies running such schemes to put their businesses on a legal footing and protect rights holders’ interests.

As ECL schemes allow for the licensing of non-members’ works, it is essential that they are afforded strong protections. As I shall outline, this is the golden thread that runs through these regulations—golden light dawns. An ECL application simply cannot get off the ground unless the collecting society has a mandate from its members. Not only must it prove that it is acting with the informed consent of a substantial proportion of its voting members, it must also show itself to be significantly representative of the rights holders affected by the ECL scheme. Members’ views and their informed consent are at the heart of an ECL application. They are a good proxy for non-member rights holders, who can reasonably be assumed to share the same interests.

We have been fleshing out the concept of informed consent with stakeholders in recent weeks. The elements that go to making consent informed will be outlined in the legal guidance that accompanies the regulations. It will cover who should be balloted, how they should be balloted, what information they should be given, and so on.

I pause here to say that this work with our stakeholders is but one example of the in-depth research and consultation that we have been conducting since the passage of the ERR Act, taken through under the stewardship of my predecessor, my noble friend Lord Younger of Leckie. We have convened working groups that ran until September 2013; conducted a technical consultation between November and January 2014; developed the regulations and published the government response in May 2014.

The Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014—the codes regulations, for short—which were taken through on 6 April this year, provide a further safeguard for rights holders. They require collecting societies to self-regulate with codes of practice that comply with minimum standards of governance and transparency set by the Government. The Government can act to remedy any problems in the self-regulatory framework. Collecting societies’ compliance with their codes is reviewed regularly by an independent code reviewer, whose evidence will form part of any ECL application.

In addition, these regulations make provision for a period of representations lasting a minimum of 28 days. This is an opportunity for any interested parties to comment on anything related to the ECL application, including the credibility of the collecting society. To cater for the possibility that, despite these safeguards, an ECL scheme is operating less than optimally, the Secretary of State has the power to modify or revoke an ECL authorisation.

The regulations allow for an initial, renewable authorisation period of five years. This mirrors successful ECL schemes in the Nordic countries. Libraries and archives have argued for a longer authorisation period to encourage digitisation. However, the Government feel that the soundness of an ECL scheme must be properly tested within a shorter period of time. As a compromise, if the ECL is renewed, it can continue indefinitely, subject to three-year reviews. These are light-touch unless there are grounds for further scrutiny. This should help facilitate digitisation while still protecting rights holders.

The right of a non-member to say no or opt out is absolute. This allows the non-member to withdraw from a scheme both before and after it has commenced. To facilitate opt-out, the collecting society must show how it will alert non-members to the scheme when it applies. Collecting societies have an obligation to make reasonable efforts to find and pay non-members. Their efforts will be assessed during the renewal and review processes.

I hope that these regulations provide noble Lords with the detail that they asked for and that we promised when the then ERR Bill was at Committee and Report stages. ECL schemes in the UK should benefit licensees, collecting societies and rights holders alike. The Government have put in place a flexible and balanced framework that safeguards the interests of non-members and ensures that ECL schemes are possible only where they have been demanded by the market and sanctioned by rights holders. ECL schemes will enhance respect for copyright, help rights holders get paid and allow for more streamlined licensing so that a greater number of works can be circulated and enjoyed legally. The Government believe that these regulations are a reasoned and proportionate reform and I commend them to the Committee.

[Lord Howarth of Newport (Lab)]

My Lords, perhaps I can be the first to congratulate the noble Baroness, Lady Neville-Rolfe, on her appointment and I welcome her to her new responsibilities. She will bring her experience of administration, business and politics to a fascinating, important and very difficult portfolio, and I wish her well. However, I think I can say on behalf of all noble Lords that we were very fond of her predecessor, the noble Viscount, Lord Younger. He was invariably patient, courteous and helpful in the way that he dealt with issues raised by noble Lords, and I thank him for that. I think that the noble Baroness may be the eighth intellectual property Minister in seven years, which raises a question as to whether, in the institutional life of this country and our culture of government, we organise things very sensibly. This kind of discontinuity cannot make for good-quality government. If policies are well developed, it is in spite of the system of ministerial appointment rather than because of it. It is not only the IP portfolio but a whole series of others that have been subject to these vicissitudes and prodigalities, and all parties have been as bad as each other. It is a cultural, political and governmental problem for us all.

As it clearly cannot be anticipated that the noble Baroness will still be in post beyond 7 May next year, she, too, is unlikely to have very much time in the exercise of these responsibilities. However, I am sure that in the few months allowed to her she will think radically about how we may better balance the interests of the wider public against the legitimate claims of creators, and will think about what dispositions in copyright policy may be appropriate in the digital age, when reproduction can be made at zero marginal cost. There are massive issues that I am sure she will work on, and I hope she will work on them fruitfully. However, before I am reproved by the Committee I must narrow my focus to the specific provisions of this particular statutory instrument.

I will say a few words on behalf of the British Library. I was its Minister—I had ministerial responsibility for the British Library for some years—and I continue to stay in quite close dialogue with it. As the country’s national library and one of the leading research libraries of the world, its interests and concerns ought properly to be taken into account—as I am sure they are—by the Government, and will be by this Committee. The British Library has no problem with the principle of extended collective licenses—and nor do I. We debated that principle at great length in our proceedings during the passage of the Enterprise and Regulatory Reform Act.

I will press the Minister a little further on one aspect which she touched on in her remarks. Mass digitisation of library content is very costly. Among the costs are project management, scanning, digital platforms, hosting and licensing. All those procedures and operations are expensive. The British Library enters into public-private partnerships with publishers and other collaborators, and there is an anxiety for the library and its commercial partners that it may not be possible to recoup the costs of investment in mass digitisation within the five-year timescale that the Government have set as a limit.

The Government want the regime to facilitate mass digitisation of all sorts of material that is out of print and not commercial but of great interest and potential, and which is still in copyright and cannot under the present regime be accessed by people online—you have to visit the library if you want to see that material. That is a great inhibition on education, research, innovation and creativity, so this is important in all our interests. Indeed, it is important in the interests of authors, because authors of such works may then find that their works find a wider audience, and they may indeed receive royalties through the licensing body. So it is in nobody’s interest at all that the system should not work as it is intended to work.

I am therefore puzzled that the Government have decided to set a five-year limit on the terms of licences. The British Library’s existing licensing agreements with its commercial partners last for longer than five years—usually 10 years or more. In Scandinavia, which the Minister touched on, they have been running ECLs, so far as I know, with no set time limits since the 1960s. Very recently, in France, in 2012, and in Germany, in the present year, functioning ECL regimes have been set up which allow the digitisation of out-of-commerce works—in the case of France in the period up to 2000, and in the case of Germany up to 1966. I am not aware that the European Union is asking for any limit on the duration of licences. The European Commission’s 2011 memorandum of understanding on digitisation of out-of-commerce works does not mention any duration for such licences, and the public sector information directive 2013, which is currently being implemented in the UK, also contains no maximum duration for the period of exclusive licences for the digitisation of public domain items. I am perplexed as to why the Government are out of line with European counterpart countries and have adopted an approach which is not sanctioned or encouraged by the European Union.

15:45

We are where we are, and the Government have introduced this regulation, but I ask them to consider reviewing the existing regulation after a year to see whether it is facilitating or failing to facilitate digitisation. If it is found that there has been a chilling effect on digitisation, that investments have not been made and that the new partnerships have not been formed, I hope that the Government will consider separating the limit on the duration for which a collecting society can operate an ECL from the length of the licence that the collecting society can offer its customers. In other countries, that is either longer or left completely open. I would be grateful if the Minister could explain why the Government have introduced this particular feature of the statutory instrument and indicate whether they will be flexible, if it proves not to work well in practice, in seeing whether it can be modified to overcome the unfortunate consequence that the British Library and other cultural institutions fear.

[Lord Clement-Jones (LD)]

My Lords, I warmly welcome my noble friend the Minister to her new role. I have known her in a number of previous incarnations and have no doubt that she will be extremely effective in her role as IP Minister. She will soon realise that these debates on copyright involve the usual suspects on most occasions.

I certainly hope that the Minister will continue the good work of her predecessor, our mutual noble friend Lord Younger, who was so assiduous in his work, variously in this House during the passage of the then ERR and IP Bills and otherwise in his briefing to colleagues and enthusiasm in building relations with rights holders and the creative industries, to the point where some of the bad taste left by the Hargreaves review has to a considerable degree been dispelled.

We had extensive debate on ECL during the passage of the Enterprise and Regulatory Reform Act. We have also, in the mean time, seen the passage of the Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014, to which my noble friend referred, relating to collecting societies.

The Government’s explanations always described ECL as “voluntary extended collective licensing”, but the fact is that ECL allows the licensing body to license rights without the prior authorisation of the rights holder. So ECL, as I emphasised during the passage of the Act, is potentially dangerous to rights holders. However, the fact remains that—as the Minister told us today, and as we were informed in very timely fashion in correspondence last week from the chief executive of the IPO, which I very much welcomed—the assurances about safeguards given during the passage of the ERR Act have been delivered in these regulations.

The suggestions that a number of us made on Report and otherwise during the passage of the ERR Act were essentially translations of the Nordic statutory provisions adapted to our own copyright regime. I am pleased to see that we have incorporated many of those as a result of the careful consultation process. These safeguards, taken together with the previous collecting society regulations, usefully include, as my noble friend outlined, matters such as the need to explain the type of licence being granted in terms of the types of works and uses in scope, and the need for the authorised body to be representative and acting with the approval of the membership. I agree that an absolute threshold for either is not practical and applaud the provision requiring informed consent. The safeguards also include the adoption of a code of conduct and the powers of the Secretary of State in relation to codes of conduct, especially where non-members are concerned; the ability to refer to the Copyright Tribunal where a claim is being made that the body is not representative or that licences go beyond the scope of existing copyright licences; the requirement to give details of opt-out arrangements and to publicise ECL schemes to non-members; a limitation on the term of initial authorisation to five years, with schemes being subject to renewal; a 28-day period, also referred to by my noble friend, in which representations can be made before the Secretary of State grants authorisation; and clear provisions about the ability to give notice of exclusion of a work. Although I would have preferred them in the primary legislation, I welcome the Government’s adoption of those safeguards in the regulations.

At Report stage on the Act, however, I raised a number of issues that are not, I think, covered by the regulations. There are a number of other issues involved as well. The first is the ability for rights owners to opt out in a manageable way. In Grand Committee my noble friend Lord Younger made a commitment that the working group on extended collective licensing would be asked to consider whether the right to opt out should be extended to exclusive licensees and their representatives. I am pleased to see that under the regulations they can indeed opt out. But as I said on Report:

“It will be unworkable to have an opt-out which is exercisable only by the copyright owner or exclusive licensee”.

Can we assume that authorised representatives can do this on behalf of rights holders?

As I also said on Report:

“In Hungary, one reason for the failure of being able to rely on the opt-out came from the requirement of Artisjus that the rights owner—not any representative—provide due diligence evidencing ownership of each title in question”.—[Official Report, 11/3/13; col. 35.]

In the context of ECL, the burden of challenging any opt-out must sit with the entity operating the scheme and not with the individual right owner. My noble friend Lord Younger said on Report that,

“the Government’s intention is that the burden of proof should favour the party seeking to opt out … It will be the responsibility of the collecting society to operate opt-out schemes which meet the needs of effective rights holders. They will need to demonstrate how they intend to do this when they apply to operate an ECL scheme”.—[Official Report, 11/3/13; col. 39.]

Will my noble friend give assurances that this has been translated into practice in the regulations? Will collecting societies be asked specifically about the burden of due diligence when authorisations are being considered by the IPO?

Secondly, as regards the possibility of an independent body to consider applications, I cannot discern in any of the regulations that any third party is tasked with evaluating the data emanating from collecting societies when authorisations are sought. This would help to prevent disputes with non-members. Will the IPO be doing this? Will it have the resources? Will it have the expertise? Is this the appropriate way to proceed?

Thirdly, since we first debated ECL we have seen the approval of the EU directive on collective rights management, which will not come into effect until 2016. I welcome EU regulation that moves us towards a common European digital economy but, specifically, how do these regulations and the directive potentially impact on each other? Does this mean that collecting societies can eventually go beyond the UK in their ECL schemes? Will they incorporate the same safeguards if they do? Should we not be incorporating the ability to choose collecting society that is contained within the directive? I certainly know that organisations such as the British Association of Picture Libraries and Agencies would be very keen to see the incorporation of that choice in these regulations and not to have to wait until 2016.

Finally, there is the question of the five-year initial authorisation. After discussion in the consultation and the Government’s response, it is clear that the initial authorisation period is five years, but what is the intention regarding subsequent periods? Do the Government envisage that the periods after that initial period will in fact be longer, which may meet some of the requirements that have already been debated?

At the end of the day, it will be necessary for collecting societies to demonstrate to member and non-member alike that they provide value for money in operating ECL. Given the emergence of the Copyright Hub and new technology, the question for the creator or right holder will be: what are the advantages of not opting out of an ECL scheme? I hope that all the time and effort expended on establishing an ECL regime proves worth while.

I remain an ECL sceptic, I am afraid to say, not least when I see the original 2012 impact assessment appended to the Explanatory Memorandum. It contains some magnificently speculative language on the prospective benefits, especially economic activity and growth in the form of unspecified,

“further value creation and cumulative innovation”.

However, there will be great swathes of creative content that will not be covered: film, television, photographs, news footage, footage on YouTube and so on. So rather like the Libraries and Archives Copyright Alliance—although perhaps for rather different reasons—which says in its briefing that it would like potentially perpetual licences, which I thoroughly oppose, I am not going to hold my breath waiting for ECL to have a dramatic impact. Far more significant to the successful and effective exploitation and licensing of copyright works is the Copyright Hub and its successful rollout.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I join others in welcoming the Minister to her first outing. I have rarely seen a smoother and more effective transition from Back-Bencher to Front-Bencher. She seemed to take to it as though she had been doing it all her life—indeed, so much so that the government Chief Whip, who crept in at the start of the Minister’s remarks, presumably just to make sure that she had made the right decision, left almost immediately, smirking widely. The Minister seems to have passed whatever test that was, and I congratulate her.

I also play tribute to the noble Baroness’s predecessor, the noble Viscount, Lord Younger, who, as has already been said, has been very good on this issue: patient, courteous—yes, all that—but also a fantastically good letter writer. I hope that the Minister might pick up from him his ability to find one or two issues that came up during these debates and discussions which required him to write us letters which served as a good way of catching up on what had been talked about and picking up on the points that occasionally get missed. That is not mandatory, but it was something that we all welcomed and enjoyed.

As others have done, I also thank officials for their work on this SI. It is the first time that I have ever had a briefing from no less than the chief executive of the IPO—which made me tremble slightly as I opened it up and realised what it was. It was good to have. Maybe it is not a change of view, but one of the concerns that we have had over the plethora of activity that has come out of the Hargreaves review has been a slightly defensive attitude on the IPO’s part, which I felt was manifested in meetings and correspondence. If this is the new IPO under the new Minister, she has effected change in a remarkably short time. It very welcome and long may it continue.

The Minister will already have realised that she is entering an area of deep expertise from a very small number of people in your Lordships’ House. There are usually one or two more of us than there are today—we are feeling a bit bereft of other noble Lords and Baronesses. However, we geeks like nothing better than to get our teeth into a bit of IP and feel that a day in Parliament is wasted if we have not had some meaty issue to chew over. I am delighted that we are back on track and look forward to more of these debates.

This instrument has a long pedigree, as has already been mentioned. We have been talking about the passage of the ERR Act of famous memory, during which some of the debates around the Government’s approach were rehearsed over a long period of time. Out of that has come some good, however, because I am sure that the thoughts that informed those debates have been reflected in some of the outturns that we have seen today. As the noble Lord, Lord Clement-Jones, was right to point out, this area is not free of others who might wish to make regulations. We have a European directive on this and a number of similar areas that is still to come through within a couple of years. There is also the ongoing work of the non-statutory but important Copyright Hub, which will in time prove very capable of dealing with so many of the issues that we have been looking at.

In looking at collecting societies, we should have at the front of our minds the fact that this is a process of dealing with a regulated monopoly. As such, it is important that Parliament should exercise as much scrutiny as possible in these areas. We are broadly disposed not to accept monopolies, even though they often occur and exist in many parts of the economy. However, in this area we are permitting them to exist and, indeed, encouraging them to take their work further. It is therefore important that we spend time on thinking through the implications, certainly those raised by the noble Lord, Lord Clement-Jones, and my noble friend Lord Howarth.

16:00

This measure takes the idea of monopoly further in the sense that it seeks to move into areas where rights holders are not currently obtaining the benefits that may be provided by a collecting society, and to some extent are making it more likely than not that they will join into the monopoly to benefit from what is going on. Dealing with real property rights, we clearly have to be careful about how that is done. It is therefore not a surprise that the regulations themselves are extremely complex and quite long. That is a good thing. What is a bit less good, and perhaps something that we might ask the noble Baroness to respond to, is why the detail that is already in the regulations needs to be accompanied by what is called a legal opinion, which will be circulated when these go out. What is the difference? Is there more detail that we have not had? I can guess that other noble Lords have raised points that might be part of it. Like the noble Lord, Lord Clement-Jones, I am slightly worried about there being sources of authority in relation to how this will be implemented in practice that are not being scrutinised at the moment but which are being left to come out and will, in fact, be the vehicle through which collecting societies themselves and rights holders are expected to operate. We should be grateful for the Minister’s comments on that.

However, it is extremely good to have confirmation from the chief executive and also to read in the final regulations that the regulations have been amended through the debates we have had in this House and also through discussions with the industry. That is all for the better. I sense from talking to those who have submitted comments to me that we are at a point where this has broad acceptance, even if it is not an ecstatic welcome, right across the industry. That is good.

I have four points that I want to raise. One is very trivial in that I want to record that I am pleased that the Government have now accepted that their statutory instruments should come out on the two vesting dates. This one is due to come out on 1 October. That system was departed from with two earlier SIs on this copyright area, and I think that that is to be regretted. The reasons for the entry of these new regulations are good and robust, and it requires very specific reasons not to do it. That is not the case in this area.

Secondly, the regulations touch on fees that may be charged. It is always important to have a sense of what is being talked about. There are fees in two directions, as far as I can see: the fee that will be charged by those authorising collecting societies, which are limited to the recovery of expenses; and the fees that may be charged by the collecting societies to their members in relation to the work they are doing in servicing the rights holders in respect of the remuneration that they might recover. Unfortunately, there is very little detail on that. Like the noble Lord, Lord Clement-Jones, I looked back at the initial impact assessment and could find very little about it. It is not an impact assessment in terms of money, although it does deal with some of the legal issues. I would be grateful if the noble Baroness could give us some sense of where she thinks those fees will lie. We need to have a sense of that, even though it will depend on the actual costs. Work must have been done on that. If she does not have the figures today, it would be a good topic for a letter.

Thirdly, there is the question of the mandate, as I call it. The noble Lord, Lord Clement-Jones, raised this point. Why are the regulations so coy about when it is feasible for a collecting society to start operating an extended system? We are talking about “substantial majorities”, “significant support” and “informed consent”. We are quite used to democracy in our country. Is there something being hinted at here that is not meant to be discussed in polite society? Is this some sort of code for a 75% majority? Why is it not just a simple majority of members voting in an open election perhaps run by the Electoral Reform Society, or something like that? That is the normal way to do these things. Even trade unions do that sort of thing. I cannot believe that it is so difficult for the Government to come up with a nice simple phrase that says that a majority of members voting in this will be sufficient for it to take effect. I should be grateful if the noble Baroness would respond on that.

Fourthly, like my noble friend Lord Howarth, I am also very confused about the duration point. The first time that it comes up there is a very fearsome statement that the duration will never be more than five years. Two pages further on, however, there seems to be the possibility of open-ended and permanent durations. I can see the issues that must have been in the drafters’ minds: “This is new; we are dealing with monopolies; it is difficult; therefore we will set a firm time limit”. However, all the responses we are getting are about the need to ensure that this is long term, not just for the institution itself but because contracts with private companies will need much longer terms to recoup the investment they might put in for perhaps the larger data transfers.

There is obviously a tension here. I can understand the issues, but I question having five years initially and the inability to apply for an extension until three years have passed. Incidentally, this is accompanied by what seemed quite a draconian—a sloppy word, I admit—or substantially bureaucratic requirement that review is to be on a three-year basis. For the review, there is a page of detailed requirements that ECL schemes must comply with, which suggests that the scheme is being quite heavily policed. I just wonder, like the noble Lord, Lord Clement-Jones, whether we have got the balance right. Clearly the regulations will stand as they are, but when there is an opportunity to review them, perhaps this point can be taken into account.

Having said all that, I am broadly in favour of what is happening. I do not share the concerns that the noble Lord, Lord Clement-Jones, has about the regulations. I think that they are good both for society and for the economy, although we have very little to go on except a sense among the industry that this will be, for certain big institutions, a very important change and should result in more royalty payments and therefore greater earnings for people who have rights that they currently do not exercise. I ask the noble Baroness to respond to that series of questions.

[Baroness Neville-Rolfe]

I thank noble Lords for their valuable and supportive comments and, indeed, for their very kind welcome this afternoon. I share the warm words that have been said about my noble friend and predecessor Lord Younger of Leckie. I will do my best to be an equally hard-working and successful Minister. I am also a great fan of the art of letter writing, and if I can learn from him and use that well in my departmental responsibilities and in the House more generally, I will be very pleased. There is one plus to the change, which is that there will be even more people in this House with a knowledge of and a passion for the complicated subject of IP. I assure the House that I come to this area with great passion. I was especially delighted to be offered a role in carrying forward such an important agenda.

ECL is a tool that can be used where there is market appetite for it. That appetite has to come from licensees, the collecting society and, most importantly, the rights holders. The Government cannot impose ECL on a sector; rights holders must want it. It is not possible for the Government or anyone else to force it on the rights holders. It is not possible without a significant representative collecting society acting with the informed consent of its voting members. It is not possible for a non-member to be forced to stay in a scheme. This is because there are a number of safeguards for all concerned. My noble friend Lord Clement-Jones commented positively on the safeguards, and I have gone through some of them. Their range includes: the absolute right of non-members to opt out; the ability of any interested party to make representations about any ECL proposals; and, of course, the minimum standards of good governance and transparency which an authorised collecting society must adhere to and offer.

The noble Lords, Lord Howarth and Lord Stevenson, referred to the length of the authorisation and the practice in other countries. The Government believe that, following an authorisation, it is essential that the ECL is thoroughly scrutinised within a relatively short period to ensure that it is running smoothly. This is particularly so given the additional powers granted to an authorised collecting society. The length of the initial authorisation period is not dissimilar to authorisation periods in the Nordic countries, where ECL schemes have been running successfully for many years, as has been said. The renewal process is designed to strike a balance between the business continuity and low cost, desired by some licensees, and the need to ensure that all those affected by the ECL can continue to have confidence in it.

It is therefore the Government’s view that the renewal process should be open and transparent so that representations can be invited. A renewal application would need to include evidence of the performance of the collecting society in respect of non-members and a number of other features. If the ECL is running smoothly, the renewal process should not prove a barrier. If it is not, the ECL would have needed to be revoked anyway regardless of the length of the authorisation. The Government believe that the authorisation period is balanced and proportionate, reflecting a legitimate need to look at an ECL at a relatively early stage. As I said in my opening remarks, there is a light-touch renewal period after that.

Obviously the Government have sympathy with the efforts of libraries and archives to digitise their collections. However, those efforts cannot be at the expense of safeguards to ensure that ECL schemes are functioning properly, and one of the safeguards is an initial authorisation period of five years. It should also be remembered that only collecting societies can make ECL applications. If a licensee cannot interest a collecting society in the possibilities of an ECL scheme because it makes no financial sense to the collecting society or because member rights holders oppose it, that is a matter for the collecting society and the licensee. The Government have no role to play in this process, and the regulations may not be a factor in what is essentially a commercial decision. It is the Government’s understanding that digitisation projects are not a first-order priority for collecting societies. It is therefore unlikely that there will be applications for such schemes in the first few months. For these reasons, the Government do not think it appropriate to commit to a review in a year’s time.

[Lord Howarth of Newport]

Will the noble Baroness deal with the point that a distinction can be made between the period of authorisation of a collecting society to go about its business—there may well be a very reasonable case to limit that to five years and then to see whether its performance has been good and it should be allowed to continue on the one hand and a licence that is given, for example, to a library to undertake mass digitisation? It does not follow from the need to be sure that the collecting society is doing a proper job, in general, that you have to restrict the licence that it approves to a period of five years. In fact, it can be extended beyond five years, to 10 years perhaps, or further. Can she deal with that, please?

[Baroness Neville-Rolfe]

Perhaps I may comment on the point about the EU directive and then come back to the point that the noble Lord has raised.

My noble friend Lord Clement-Jones and the noble Lord, Lord Stevenson, talked about the EU directive and the interaction between the regulations and the directive. Where relevant and where we have the powers to do so, we have in fact included the provisions from the directive in these regulations. The rest will need to be consulted on—in my view, a vital part of good legislation—and will then be incorporated in time for the coming into force of the directive in, I think, 2016. To give more detail, I should add that where there are concepts that we do not need to consult on that are relevant to these regulations and for which we have the legal power—for example, the definition of a collecting society—we have actually included that in these regulations, obviously with the objective, which I think we share, of keeping administrative and regulatory burdens in this important area to a minimum, while having proper governance.

My noble friend Lord Clement-Jones also talked about the risk of disreputable collecting societies running ECLs. Any collecting society applying for an ECL authorisation must already be licensing the types of works that are subject to the authorisation. The codes of practice regulations which became law in April 2014 are intended to support a system of self-regulation by collecting societies by giving government powers to close any gaps that may emerge in the self-regulatory framework. This should strengthen confidence in the operation of collecting societies. As part of the self-regulatory framework, the collecting society must allow for an initial independent review one year after implementation and further reviews every three years thereafter. Any collecting society applying for an ECL will need to have a code of practice in place. Any collecting society that fails to comply in all material respects with its code of practice would run the danger of having its authorisation revoked. This power can be invoked at any time during the authorisation period. Interested parties concerned about an ECL scheme can make representations to the Secretary of State at any time during its operation.

My noble friend also asked about the Copyright Hub, which he felt could be more valuable than ECL. The industry-led Copyright Hub project is a very important attempt to make licensing easier and more valuable. ECL is likely to complement the hub by allowing broader collective licences to be offered by the hub. However, both use of ECL and use of the hub are of course choices for rights holders; government is merely offering a new choice to collecting societies.

16:15

The noble Lord, Lord Stevenson, said that this involves property rights and that it is important that we get it right, which I agree with. Helpfully, he broadly accepted that we were trying in the regulations to do what we said we would do during the passage of previous legislation.

The noble Lord raised four points, the last of which I think I have dealt with. He said that he was pleased that the SI was vesting on one of two vesting dates, 1 October. As a former businessperson, I very much agree with him on this point. It has been a change that has come about in recent years that has helped business a lot, and I am proud of the fact that this regulation comes into effect on 1 October.

The noble Lord also asked a perceptive question about fees charged and expenses. My understanding is that the cost of licences is negotiated with licensees, and the obligation to do this is in the code of conduct. There is recourse to the Copyright Tribunal, which regulates the price of a licence. If I have not satisfied the noble Lord, I will very happily take recourse in this new art, the art of letter writing.

The point was made that there is not enough detail in the regulations around “informed consent” and “significantly representative”. We have deliberately not defined those concepts in the regulations because there is often a great difference in the operation of collecting societies in different sectors, as I am sure noble Lords will understand. That was strongly evidenced in the consultation, which showed that different sectors wanted and needed different thresholds to make ECL work for them. Putting the detail in the accompanying legal guidance gives us the flexibility to cater for those differences and to cope with future changes. The guidance will be available when the new regime comes into place and it is hoped that it will meet the concern raised.

[Lord Stevenson of Balmacara]

I am grateful to the Minister for rehearsing that point, but I really still do not quite get it. She said that it was possible that different collecting societies would have different thresholds at which informed consent would be deemed to have been properly researched and implemented. Can she be quite clear that we are not talking about a minority of members of a collecting society being able to impose some sort of structure on other right holders at—let us take an arbitrary point—50%?

[Baroness Neville-Rolfe]

I think that this issue merits further discussion, which might need to be the subject of the new art of letter writing.

If I may, I would like to come back to the point made by the noble Lord, Lord Howarth—that libraries do not need regular checks on digitisation projects. All ECLs, including those for digitisation, must be balanced with safeguards for non-members. It is this which has led us to the view that we need regular reviews. Libraries and archives are very important to us, as are digitisation projects, but, as I said earlier, this does not seem likely to be the main focus of use of the provision in the early stages.

[Lord Howarth of Newport]

If it turns out that this five-year limit is inhibiting investment and choking it off, and evidence is seen to that effect in a year or two’s time, would it not be sensible for the Government to take another look at this? The Government have made it clear in the impact assessment and elsewhere that they want the kind of mass digitisation projects that could be undertaken by libraries, archives and other cultural institutions to happen, but that needs very significant investment. Those who are to put up the investment capital for this need to be confident that they are going to get a return. They are saying that the timescale of five years is insufficient to get the return. With the uncertainty about licence renewal, there is a real danger that the investment will not occur. Would it not be sensible for the business department to keep an open mind on this and be willing to look at it again if there is evidence that the policy is inhibiting investment?

[Lord Clement-Jones]

Perhaps I may add a question so that my noble friend can answer them all in one fell swoop. Strangely enough, although I agree with the five-year initial term, it not clear, as the noble Lord, Lord Stevenson, pointed out, whether a subsequent authorisation can be longer than five years. The noble Lord, Lord Howarth, might be entirely delirious with a 20-year extension. I would not be very keen on that but he might think that it was a wonderful thing. But from my reading of the regulations, it is not clear whether or not that subsequent authorisation could be longer than the initial authorisation.

[Baroness Neville-Rolfe]

The noble Lords have raised good points in their passion to get this right. I would like to look at this and write to the noble Lords about what can be achieved. There is good sense in having clarity for five years to get things off the ground but the noble Lords have made the point about the period after five years and having a look at what makes sense.

I also commend the points that the noble Lords made about the part that officials have played in developing the IP regime and these regulations in particular. Perhaps unsurprisingly, my first meeting after today’s business is with the CEO of the IPO, and I shall be visiting it soon, so I will have the opportunity to pass on your Lordships’ kind words.

I have given due regard to the Secondary Legislation Scrutiny Committee’s decision and comments. We have had a good debate. The Government believe that these regulations are a fair and reasonable reform and I commend them to the Committee.

Motion agreed.