Enterprise and Regulatory Reform Bill

Lord Clement-Jones Excerpts

Wednesday 14th November 2012 Lords Chamber

[Lord Clement-Jones]

My Lords, this summer Britain emphatically demonstrated the quality of its creative talent to the world in the opening and closing ceremonies of the London Olympics and Paralympics. The Government have done much that is positive to support the UK creative industries, not least through the new IP attachés, the new tax break for video games and high-end TV production and the extremely important work of Mr Richard Hooper in the creation of a copyright hub to simplify and improve copyright licensing, which has the enormous good will and co-operation of all rights holders concerned.

However, as a recent All-Party Parliamentary Intellectual Property Group report has demonstrated, there is real doubt about the championship of intellectual property in this country, not least by the IPO itself, which is reluctant to accept intellectual property as in reality a property right. Creativity, content and copyright are crucial for future growth and investment, yet Professor Hargreaves and others express the view that copyright is a barrier to innovation. As a result, I fear that we risk going on the wrong track with copyright reform and having an IPO which has lost the confidence of creators and the creative industries.

My noble friend the Minister, who I have every hope has assumed the role of IP champion, has been very willing to engage in discussion about Clauses 65 to 69 in Part 6 of the Bill dealing with copyright and rights in performances, but the fact is there are still a great many questions to be answered during the passage of the Bill and it is that area that I wish to focus on today. I start with Clause 65. This clause has been widely welcomed by designers. It means that copyright for works of artistic craftsmanship will now last for the usual term of copyright: that is, life of the author plus 70 years. However, others have not been so welcoming. The Minister will have seen the letter to the Times of 25 July signed by Lionel Bently, Herchel Smith, Professor of Intellectual Property at Cambridge University, and others. They asked: where is the impact assessment for this measure? Why was there no consultation?

We are assured that there will be transitional provisions and that there will not need to be a bonfire of unauthorised copies after the Bill comes into effect, but what are the specifics? Why do we have to wait until the clause is on the statute book before we know what they are? Why not outline the provisions at this stage, in particular those which will permit stock which is currently legal until this clause becomes law to be sold, and then consult on them? What about using or making images of these artistic works for illustrative purposes? Will this be a breach of copyright after this clause goes through? Publishers, galleries, museums and academic institutions need to know that.

Then we have Clause 66, which has already been the subject of some comment. Amendments that were made on Report stage in the Commons are welcome as they help to clarify that the Government cannot use the clause more widely than is permitted under the European Communities Act 1972 except as regards criminal penalties. Furthermore, it appears that the application of Clause 66 in relation to penalties will only be in respect of copyright exceptions. If that is the case, why is the clause not simply worded so that it is targeted specifically at introducing penalties greater than those permitted under the European Communities Act, as set out in the Explanatory Notes? As an aside, the Minister will, of course, be aware that there is a major doubt whether the Court of Appeal Oakley Inc v Animal Ltd case of 2005 would allow the Government to implement much of what the Hargreaves report suggests by way of extensive copyright changes by statutory instrument. Will the Minister confirm whether the Government have received legal advice on that?

Exceptions to copyright are potentially of huge economic importance to rights holders and creators. The fact is that all major previous copyright changes were enacted by primary legislation—the 1911 Act, the 1956 Act and the 1988 Act. Surely that should be the rule for all future legislation. What assurances can my noble friend give in that respect that primary legislation will normally be used? Even if my noble friend cannot concede that point, it might help if we knew exactly what the Government’s intentions were. When are we going to see, and be consulted on, the draft regulations bringing in the various exceptions recommended by Hargreaves such as format shifting, parody, data mining, right to digitise and so on? Crucial issues still remain to be resolved with the exceptions. Will there, for example, be an exception for photographs from the parody exception? Cannot the draft regulations for these exceptions be published with the relevant consultation paper while the Bill is going through the House? Furthermore, can the Minister give an absolute assurance to this House that, contrary to the fears of many, if regulations are used to introduce exceptions they will not be bundled together in a single statutory instrument and an individual impact assessment will be produced for each exception proposed?

Clause 67 enables the Government to reduce the term of copyright for unpublished works or published works which are anonymous or pseudonymous. The Minister may be pleased to know that I am not going to dwell long on Clause 67. However, there is a major problem here, too. Are the Government seriously proposing that unpublished works by Robert Graves, who died in 1985, or Christopher Isherwood, who died in 1986, should be prematurely thrust into the public domain and the owners of these rights summarily deprived of them? Is this a way of enforcing publication when authors or their estates do not want it?

Clause 68 deals with orphan works and extended collective licensing. The major question on orphan works is why we are going further than the EU orphan works directive which EU countries have to implement within two years of this September. This specifically makes provision for museums, galleries, archives and libraries, educational establishments and public services broadcasters to make use of orphan works. These are all, essentially, cultural institutions and would fulfil entirely what the noble Baroness, Lady Warwick, desired in her speech earlier. It may not be a perfect directive at this stage but, if it will apply in 27 EU countries, we should surely be building on it, not building an alternative.

The Government’s proposals under Clause 68 go much further, by permitting exploitation for commercial purposes. This is a matter of real concern to many, particularly the creators of images where the metadata has been stripped and attribution lost. This is the reason why equivalent provisions failed to get through Parliament last time in the Digital Economy Bill. Has no account been taken of the photographers’ strong concern, voiced during passage of the Digital Economy Bill and in the Hargreaves consultation? The impact assessment for these provisions sets out a ludicrous range of benefit to the economy of between £9 million and £91 million. This is hardly a credible business plan especially when, implausibly, it cites using genealogy as the example of where great commercial income might be made from the exploitation of commercial works. Furthermore, what will the “authorised body” under the proposals be? Is the copyright tribunal really suitable? What alternatives are being considered? Will it be the IPO itself? This could require an expensive infrastructure well beyond that envisaged in the European directive.

The second part of the clause deals with extended collective licensing. Without consulting a rights holder, an ECL agency would have the right to act on his or her behalf, agreeing commercial terms and financial compensation for the use of his or her content. ITN and many other news agencies such as Associated Press, Thomson Reuters, AFP, Press Association, Getty Images and DPA are deeply concerned about ECL. In their view, ECL removes the business logic for investing in digitisation and will starve the UK creative sector of valuable digital content. As Richard Hooper says in his second report, why proceed in this way when we have the digital copyright hub in the making? This is precisely what the copyright hub will do for non-orphan works. Is ECL not obviated except, perhaps, for orphan works, now that a more streamlined clearance system is being designed through the new copyright hub?

What is being proposed will, in effect, be compulsory for most people and organisations. Every creator of copyright-protected material outside the UK—and many English language creators are in other countries around the world, such as the USA, Australia, Canada and India—would need to keep themselves constantly updated about all the organisations which have been issued, and still retain, permits to operate ECLs within the UK and which might be licensing their works.

There is nothing in the impact assessment to quantify any benefits from ECL and there is no analysis of the losses that it would create. In any event, how on earth can the cost of administering the ECL be estimated at only £10,000 per annum, equating to 20% of the salary of two people on £25,000 per annum, as set out in the impact assessment? No countries operate ECL in the broad way envisaged by the Hargreaves report and the Intellectual Property Office. The use of ECL in Nordic countries is very specific and narrow. Rights holders, however, are generally very supportive of the broadcasters’ desire to open up their programme archives and appreciative of the administrative challenge that they face in doing so. That is precisely why they have been holding detailed meetings with the UK broadcasters in order to make their rights clearances both cheaper and more efficient.

The noble Baroness, Lady Buscombe, raised a number of questions about ECL. I can add others: how do we know what will make a collecting society sufficiently representative to operate ECL? What sums of money or percentages will be paid to copyright owners and what will be retained by the ECL organisations? What will be the duration of licences? With a few minor exceptions, much more straightforward identification and licensing of rights is universally thought by creators and the creative industries to be the way forward, through the proposed copyright hub and not through extended collective licensing.

Finally, I have a general question for the Minister, arising out of paragraph 168 of the second Hooper report. As Richard Hooper asks, what are the Government doing to meet the challenge of reducing the incidence of copyright infringement on the web in return for the creative industries making licensing easier? There are several avenues to explore, such as improving site-blocking court procedure and tightening up on metadata stripping, which is at the root of so much concern among image rights-holders. Will the Government examine the whole issue of moral rights in the context of giving better protection to individual creators?

In conclusion, we have a very flimsy set of ill- thought-through clauses here which risk confusion and litigation on a huge scale and risk the UK being shunned as a country to license to, produce in or license from. It is particularly sad that so little, if any, account seems to have been taken of the 471 responses to the Hargreaves consultation in framing the legislation. The clauses need a complete rethink. Will the Minister undertake to do so in Committee?

--- Later in debate ---

[Lord Marland]

I apologise. I am happy to accept that, but I thought I heard her say what I suggested, and I was there when she said it.

Business must be allowed to develop without unfair burdens. I totally agree with the noble Lord, Lord Mitchell, who said that red tape needs to be reduced, but it is a difficult balance. That is what we are trying to do here—find the balance, because that is the key to prosperity. If we take the view that none of the Bill is acceptable, we are not starting from a point of view of balance. The Bill aims to be fair for growth and enterprise and to protect workers’ rights and those of employers. It also allows small and medium-sized enterprises, unlike large companies, to develop without some of the impositions that can be absorbed by big companies but that cannot be absorbed by small ones. I congratulate the noble Baroness, Lady Greengross, on saying that employers have to be confident in employing their staff, and this Bill provides for that.

In the short time available, I shall rattle through a number of points. I apologise in advance for not speaking too substantively on them because we will do that in Committee. The noble Lord, Lord Stevenson of Balmacara, made various points. He thinks that the Bill is in bad shape, but he must remember that it is this Government who have taken on the issue of directors’ pay, not the previous Government; it is this Government who are delivering on the Green Investment Bank; it is this Government who are getting to grips with copyright and the Intellectual Property Office; and it is this Government who are getting to grips with the heritage issues, to which the noble Baroness referred. This Government are undertaking those important forward steps, although the previous Government had the opportunity.

My noble friend Lord Razzall asked a number of questions, but a key one was asking me to confirm that the cap on unfair dismissal awards will not apply to race and sex discrimination. I can assure the noble Lord that any change that we make to the cap on unfair dismissal compensatory awards will not affect the awards made in respect of any discrimination claim. I hope that deals with a number of issues raised by noble Lords.

I was very grateful to see the noble Lord, Lord Smith of Kelvin, and I wish him every success with the Green Investment Bank, and I thank him for all he is doing to get that initiative off the ground. He will take that over with his management structure. It is important to remember that it will be independent of government.

A number of noble Lords asked about whether the bank should be allowed to borrow. They also asked whether the Green Investment Bank will be a lender of last resort, and I was delighted that the noble Lord, in his excellent speech, said that definitely it will not be a lender of last resort. We in Government very much agree that the bank’s ability to borrow will be critical to its long-term success. That is why the Government are fully committed to providing the bank with the funding that it needs to become an enduring green financial institution. It is also important to recognise that any borrowing by the bank will score against the national debt targets. We have given the commitment that the Government will seek state aid approval in respect of borrowing from the European Commission before the end of this Parliament. The level of bank borrowing will need to be agreed by the Government as it is part of our future spending plans. I hope that deals with that issue for the moment.

My noble friend Lord Tugendhat and the noble Lord, Lord Gavron, make a formidable team and have raised some important issues with which I totally agree. I would like to read out some things about which I wrote to the noble Lord, Lord Gavron, on 8 November, after a very constructive meeting that we had. One of his points was that companies should disclose an audited figure for the total remuneration of each director. I am pleased to say that in future all remuneration reports will have to include a single figure for the total pay awarded to each director and that will be subject to audit. He also asked me the frequency of the new binding vote on remuneration policy. The binding vote on future pay policy will happen annually, unless companies choose to leave their pay policy totally unchanged. I think there will enormous shareholder pressure on companies that continue to leave their policy unchanged.

The noble Lord, Lord Gavron, and my noble friend Lord Tugendhat were concerned to ensure that companies cannot make payments to directors until they have been approved by shareholders. I can confirm that that will be the case under the Government’s proposals. The noble Lord made the point that shareholders should approve the specifics of pay and not just the general policy. The draft regulations which we have published will require companies to set out clearly and succinctly what type of payments directors are entitled to, how pay links to the company’s’ strategies, how performance will be assessed and how that will translate into awards under different scenarios. Even before coming to the House, we sat down and had constructive discussions which I hope noble Lords agree have made fruitful progress.

The noble Baroness, Lady Warwick of Undercliffe, gave a very good speech about orphan works. There is a lot of good stuff in the Bill about that issue.

My noble friend Lord Lester of Herne Hill has been described as the grandfather of human rights. It was interesting that there were cross-party differences on a number of things that the grandfather put forward. I do not for one moment think that the noble Lord is complacent about anything he does. I compliment him on the clear way in which he let the Government know how he felt about some of these issues. Through discussion, we will try to find a way to mitigate his concerns—and indeed the concerns of all noble Lords. However, as I said, I do not want to go into hand-to-hand combat with him or with other noble Lords at this point.

My noble friend Lady Buscombe talked passionately about the creative industries. I have just returned from Hong Kong, and the opening of the great creative campaign. In the past 18 months I travelled with representatives of the creative industries to China and Brazil. The creative industries are absolutely fundamental to the prosperity of this nation. A lot of the work that we in government are doing will support them.

I welcome back the noble Baroness, Lady Campbell of Surbiton; it was a joy to see her again. I am not entirely sure that I welcomed many of her remarks, but that is the fun of the fair. I am so glad to see that the system worked and that she was able to make a very moving and impassioned speech.

The work at English Heritage of the noble Baroness, Lady Andrews, is of the highest quality. We are very grateful for everything that she does. She has offered to correspond on a number of issues. Of course, we will take that correspondence extremely seriously, as she deserves.

I compliment my noble friend Lord Lucas on a marvellously brief speech and thank him for his support for our copyright initiatives. We want more speeches like his—although I am afraid I will have to disabuse any noble Lords who thought that I myself would be making a short one.

I had the pleasure of one-to-one meetings with the noble Lord, Lord Borrie. We discussed many issues that he spoke about today. He asked for reassurance that Citizens Advice and trading standards would be adequately resourced to take on additional consumer functions. This matter was raised by a number of noble Lords. Of course, it is absolutely fundamental that all these things are resourced properly. The Government will give the new National Trading Standards Board £9.7 million this year, with an indicative increase to £11 million next year, to help local trading standards target high-priority enforcement cases for consumers. Citizens Advice will receive £1.5 million of government funding for its consumer education role from April 2013. I look forward to further dialogue with the noble Lord, who is expert on the CMA and related issues. His input will be invaluable.

The noble Lord, Lord Low, was kind enough to give me advance notice of a question that he asked. I reassure him that we do not intend to use Clause 66 to narrow or remove the exceptions for visually impaired people provided by the Copyright (Visually Impaired Persons) Act 2002. The Government recently consulted on whether to widen these exceptions so that they would benefit more disabled people. We will issue our response to the consultation soon. The Government strongly support international negotiations on a treaty of copyright exceptions for visually impaired people, which we hope will be agreed by 2013. The noble Lord referred to the views of the General Counsel of the EHRC, John Wadham, on abolition by stealth. I will counter that with a quotation from Mr Wadham, who stated:

“This Bill reduces our powers and our remit, but not in a way that we are overly concerned about”.

So there.

The noble Baroness, Lady Ford, talked about fairness in the workplace, and about health and safety, which we have already discussed. She is completely right that there should be fairness in the workplace. The Bill does not hamper that; it creates fairness for both sides.

The noble Lord, Lord Bates, referred to the importance of small and medium-sized enterprises. I agree with him totally. The work that he does in the north-east is extremely valuable and we are very grateful for it.

It is difficult to cope with the noble Lord, Lord Clement-Jones, because he does not seem to agree with anything we are putting forward despite the fact that I and my officials have had exhaustive meetings with him over a period of time. He has a great passion for and knowledge of the subject. I have discussed many of these issues with him and we will carry on our discussions. We recognise what he is saying: we do not agree with a great deal of it but there is a way through this. I hope that he will acknowledge that from the discussions we have had so far and look forward to further discussions. I have a feeling that the noble Lord is going to get to his feet.

[Lord Clement-Jones]

I thank the Minister for that. I know that it is very difficult to deal with the questions raised during the debate, particularly in the area of copyright where a number of technical questions have been raised by myself, the noble Baroness, Lady Buscombe, the noble Lord, Lord Grade, and others. Will he undertake to write in response to some of the questions raised during the course of the debate?

[Lord Marland]

It is not that I am not prepared to write—I am always prepared to write and to get engaged in dialogue—but there a number of things are happening on the intellectual property front at the moment. I have been made recently the Government Minister responsible for it and I am holding an up-and-down review of the Intellectual Property Office as we speak. I can tell the noble Lord that a number of changes will be made, which I do not want to enunciate now. However, during the progress of the Bill I will be able to help in that regard. I am also sitting on a document about modernising copyright with a modern, robust and flexible framework. It will be my bedside reading today and tomorrow, and Government Ministers will know what a joy that is. It is big enough to fill the Red Box on its own. So, if the noble Lords, Lord Clement-Jones and Lord Grade, and the noble Baroness, Lady Buscombe, will allow me, I will deal with this in Committee. During the process I will be happy to engage in one-to-one conversations with them as it happens.

I have enjoyed greatly working in the past with the noble Lord, Lord Whitty. I am not sure I am going to enjoy the “The Good, the Bad and the Ugly”, although it is quite a good film. So far the noble Lord has always fitted in the good category as far as I am concerned and I hope he is not moving into the bad or ugly bit. I am sure he will not.

I congratulate the noble Lord, Lord Currie of Marylebone, on his important new role and on his excellent speech, which set out, in a way that I could not possible have done, the excellent work that the CMA will do. As my noble friend Lord Eccles said, it is one thing to have an inspiration to merge things but, in practical terms, it is a big task to achieve to achieve it. However, in my view, it could fall to no greater man.

The noble Lord, Lord Clinton-Davis, will be a challenge because there are many things that he does not agree with.

A number of noble Lords referred to the report by the noble Lord, Lord Young of Graffham, Common Sense. Common Safety, and the report by Professor Löfstedt, Reclaiming Health and Safety for All. We are taking on board many of the matters they have written about and produced evidence for. A great deal emerges from that and no doubt we will debate these issues more aggressively in the coming months.

The noble Baroness, Lady Dean of Thornton-le-Fylde, asked a number of important questions, but perhaps I may respond to only one of them in the time that I have available. She said that the change to the public interest test on whistle-blowing will make employees think twice about whether they should blow the whistle. We disagree with that. Where the employee has a reasonable belief that disclosure is in the public interest they will be protected. It is not a difficult evidential hurdle to satisfy. I hope that that deals with some of the points, but obviously a number have been raised.

I am grateful for the support of my noble friend Lord Teverson on the Green Investment Bank. The noble Lord, Lord MacKenzie of Culkein, quite rightly said that whistleblowing takes courage. It most certainly does, and none of what we are trying to do here seeks to prevent it. We are trying to allow people to have the courage to do it, and I think that his were wise and bold words which we agree with. The noble Lord, Lord Touhig, talked about the public interest test. It is absolutely fundamental that we get this right in the debate.

I have only two minutes to speak so I shall be very quick. The noble Lord, Lord McKenzie of Luton, shares a commonality of theme with the noble Lord, Lord Ouseley. I have referred to some of the points made by the noble Lord, Lord Mitchell, in what I thought was an excellent and balanced speech. The noble Lord, Lord Morris of Handsworth, has clearly shown a long-term interest in the rights of workers, and as I said earlier, this is all part of trying to have the rights of workers protected. I am grateful to my noble friend Lord Sheikh for mentioning sunset clauses. I am also grateful to the noble Lord, Lord Monks and my noble friend Lady Brinton for their comments about ACAS resources. It is absolutely fundamental that ACAS is properly resourced and there is a Government commitment that it will be. It is a fine service and I am glad that everyone thinks so. We will do all we can to make sure that that happens. Questions were put about Heseltine, but the Government’s response will not be ready until a bit later so I will not deal with it now. The noble Baroness, Lady Turner of Camden, again feels strongly about certain employment issues, and I look forward to her debate. I am also grateful to the noble Lord, Lord Mawson, for his view on the Green Investment Bank.

There were a number of questions about the Equality and Human Rights Commission. It is absolutely fundamental that it should retain its A-grade status and the Government are committed to that. However, it is quite difficult when an organisation does not fulfil its audit commitments and does not manage its finances as well as it should. The commission is in the position it is not as a result of government interference, but through the organisation itself. I think that under the leadership of the noble Baroness, Lady O’Neill, it will be in a very good place.

I thank all noble Lords for their contributions. This House is marvellous at revising and improving things. I know that because I have already taken a Bill through it. In the past it has been a pleasure to co-operate with noble Lords. I hope that I am thought of as a reasonable man to create a dialogue with. I am prepared to listen and we are prepared to have discussions as this complicated and complex Bill with its wide-ranging bandwidth goes through the Lords. I am looking forward to the Committee stage. I respect the views of everyone in this Chamber, as is only right. My door will always be open, as will that of my officials, to listen and provide as much information as possible.