Digital Economy Bill

Lord Clement-Jones Excerpts

Committee: 2nd sitting (Hansard - continued): House of Lords
Thursday 2nd February 2017 Lords Chamber

[Baroness Jones of Whitchurch]

My Lords, in moving Amendment 57, I shall speak also to Amendments 59, 60, 61 and 64. These amendments address the issue set out by the Minister this morning, but I make no apology for revisiting this and setting out our position so that it is on the record, although I take the point that he may not be able to answer all the points this afternoon.

Nevertheless, I should like us to have that debate. These amendments would remove the reference in Clause 22 to the regulator defining and imposing new controls on what is prohibited material on the internet. Noble Lords will know that there has been increasing concern about the implications of this wording. It is felt that it would give the regulator extended powers of censorship beyond that originally envisaged in the Bill. When our colleagues in the Commons originally raised concerns about press reports that the Bill could be used in practice to extend internet censorship for adults, the Minister, Matt Hancock, was quite clear. He said:

“I have also seen those reports. I think that they misread the Bill. That is neither our intention, nor our understanding of the working of the new clauses”.—[Official Report, Commons, 28/11/16; col. 1284.]


However, others have since put a different interpretation on the scope of the wording, so there has been ongoing concern about what can best be described as mission creep.

The purpose of Part 3 of the Bill is to provide protection for children from accessing online pornography. We all agree with this intention. However, as the wording stands, it potentially sets new limits on consenting adults accessing pornography that is not harmful to themselves or others. This is material that would not receive a film classification certificate, but neither would it be subject to prosecution. It is not helped by the fact that, by all accounts, the Crown Prosecution Service’s guidelines on this issue are out of date. There is a resulting grey area of pornography that by practice, but not by statute, is not prosecuted. We strongly contend that this is not the place to resolve these wider debates on adult consensual pornography. It is an issue for public debate and for consultation at another time.

In more recent days, Matt Hancock has met with various groups of us and has, I understand, accepted that the wording in the Bill is not as it was intended. He has proposed, albeit informally, that instead a definition of prohibited material should be based on that of extreme pornography, as defined in the Criminal Justice and Immigration Act 2008. We agree that this is a helpful proposal that could well resolve the debate.

We regret, therefore, that the Government were not able to produce an amendment along these lines in time for today’s Committee, which is really where some of these important principles should be resolved, before we get into the more formal, technical detail on Report. These amendments flag up our concerns with the current wording to urge the Government to come forward with detailed proposals before Report and, we hope, to build a consensus to go forward on this issue. Child safety is the issue here, not adult consensual pornography. I beg to move.

[Lord Clement-Jones (LD)]

My Lords, briefly, I strongly support what the noble Baroness, Lady Jones, said. That is why these Benches support the amendments. I took quite a look of comfort from what the Minister said early on in today’s proceedings. As the noble Baroness, Lady Jones, said, there are considerable concerns about the width of “prohibited material” and the very existence of that particular set of conditions inserted at a fairly late stage in the Commons.

Of course, we have talked about the site-blocking provisions but the prohibited material aspects really confuse the issue as they deal with access by adults. It was very useful having the meeting with the Minister and his colleague, Matt Hancock, to talk about these issues. Having discussed the matter, we felt that the proposed new definition of prohibited material, limited to the 2008 Act, was acceptable as that is very tightly defined. Again, I entirely agree with the noble Baroness that it was very disappointing that immediately after that meeting the wording as in this amendment was not made available or put down for the Committee. That would have been enormously helpful in settling people’s concerns about the width of the definition of prohibited material, which goes well beyond the harm test used by the BBFC under the Video Recordings Act.

That is really the essence of it—tying it back. I hope the Minister will shortly explain this in greater detail than he did at the beginning of this session to allay our many fears about something fairly extraneous being introduced into the Bill. I stood corrected earlier by the noble Lord, Lord Maxton, about the exact purpose of Part 3, which is to prevent access by children to online pornography. We must be very clear that that is what we are about, rather than trying to censor the internet on a broader basis.

[Lord Browne of Belmont]

My Lords, on Second Reading, a number of noble Lords raised concerns about censorship and the definition of prohibited material. I found this surprising as we have so often heard the mantra that what is illegal offline is illegal online. Offline, the British Board of Film Classification has operated for a long time on the basis that it will not classify certain types of video work based on the content. This principle is well established and has been in statute since an amendment to the Video Recordings Act 1984 was made in 1994 after the Jamie Bulger murder. That requires the BBFC to have special regard to any harm to potential viewers. A “potential viewer” means,

“any person (including a child or young person) who is likely to view the video work in question if a classification certificate or a classification certificate of a particular description were issued”.

Moreover, it is of course an offence under Section 9 of the Video Recordings Act to supply a video work which the BBFC decided is not suitable for classification. It is also an offence under Schedule 10 to have such a work in possession for the purpose of distribution and supply.

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[The Earl of Erroll]

Absolutely; I know what the noble Lord means. I simply meant that this is not necessarily an ID application—except, maybe, to identify yourself to the site which then gives your attribute to the other website.

I am thoroughly in favour of the amendment, and so is the industry. We hope to publish a standard on this in the not-too-distant future, which may help the regulator determine who is a fit and proper person to carry it out.

There is just one other thing I want to say. Once you have done your age verification and then go on to the website, if you then choose to subscribe, and give it your credit card number and everything else, that is up to you. I hope and trust that the sites—I know that they are pretty careful about this—will encrypt properly and guard the information with their lives, if not yours.

[Lord Clement-Jones]

I do not want to overload the Front-Bench contributions from this side, or to turn this into a mutual admiration society, but I want to say that the noble Earl, Lord Erroll, has played a blinder in educating many of us in this House about the possibilities and the technologies being developed on anonymised age verification. As the Minister probably knows, we had a very useful session with many of those developing new apps for this precise purpose. Yoti was one, VeriMe was another—one could go on. There are different types of age verification, which can be chosen by the consumer. The most recent, which is now virtually available for general use, is Yoti, which the noble Earl mentioned. These methods are now available for use; this is not a question of pie in the sky, or of things not being available for a year or so. That makes the amendment highly practical, and, as my noble friend said, it is absolutely essential for the protection of personal privacy.

[Baroness Benjamin]

My Lords, I support the amendment and congratulate the noble Earl on all the hard work he has done. Six months ago I told him to get on with it, and he certainly has. We had a presentation, and I was so impressed by the progress that has been made in this area. Congratulations, and I thank him very much for all that he and his colleagues are doing to make sure that our children are safe, and that people feel that their data are protected if they go online for age verification.

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[Lord Stevenson of Balmacara]

My Lords, this moves us into Part 4 and intellectual property. We start with rather a narrow but quite important point about the way technology is moving forward in this area and the need to make sure that the statutory basis under which we look at issues relating to broadcasting and television is kept up to speed. I am joined in Amendment 71B by the noble Lords, Lord Clement-Jones and Lord Foster, for which I am very grateful. I am sure they will give more examples of and more detail on the topic that we are discussing in this group, about devices and services that infringe copyright.

These amendments look at digital TV piracy, which is a relatively new phenomenon but has come about because of the growing amount of close-to-live retransmission of broadcasts—and indeed of live broadcasts themselves—and the services that provide on-demand access to films, television series and other audio-visual content, including music. The categories are slightly different, but they are both very damaging to rights holders. Devices normally feature a mixture of both categories of services, and you can buy them readily on the open market and install them yourself, so it is a growing problem for those who control content and wish to make sure that rights holders earn from it.

These amendments suggest changing two sections of the Copyright, Designs and Patents Act. Amendment 79A relates to Section 297A and transmissions, while Amendment 71B relates to Section 107 and on-demand services. I beg to move.

[Lord Clement-Jones]

My Lords, as the noble Lord, Lord Stevenson, has said, we strongly support this amendment and I am grateful to him for having tabled it. I shall go into a little more detail than he was able to do in order to illustrate some aspects that very much concern the creative industries. A substantial and growing threat is posed to the creative industries by a combination of faster broadband speeds and the widespread availability of cheap plug-and-play devices offering access to infringing software. These devices can be simply plugged into TV sets, offering viewers increasingly easy access to pirated digital content. The Government’s IP enforcement strategy recognises this threat.

The creative industries are deeply concerned about the growing scale of digital TV piracy and have noted a significant increase in the levels of illegal streaming, which inevitably undermines business models within these industries and threatens investment in new content creation. Clearly, the challenge needs to be met on multiple levels, including education campaigns, use of technology, increased enforcement activity and, crucially, clearer laws which are simpler to enforce.

There are a variety of ways that users access infringing content. Typically, this involves a device such as a USB stick or small android box which is plugged into a TV set using a standard connection. The device can be “fully loaded”, meaning it has software and add-ons preconfigured, giving access to thousands of streams, or users can purchase boxes with software such as Kodi installed—an open-source software platform—and then source and configure their own illegal add-ons. The Government’s own statistics highlight the significant growth in the use of this technology, and research by the Industry Trust for IP Awareness shows worrying signs that such behaviour is becoming normalised and socially acceptable.

The scale of the problem is very significant. Listings on Amazon give the boxes a legitimacy—the Industry Trust study revealed that 44% of people assume that if they buy a box or stick from a retailer such as Amazon, it must be legal. An Amazon search for “Kodi” just yesterday auto-completed with “Kodi box fully loaded” and “Kodi fully loaded TV box with Sky Sports and Movies”. That “Kodi” search produces 4,554 results. The first listing is highlighted as an Amazon best-seller and is on offer through Amazon Prime, despite the Q&A under it saying rather different things. IPTV boxes, as they are called, are widely available, with more than 14,000 listings across 511 online marketplaces, equating to more than 4 million items in stock globally. There are more than 200,000 videos on YouTube providing a step-by-step guide on how to install and use Kodi add-ons in order to stream free TV.

Given the rapid growth of such devices, it is not unreasonable to suggest that illegal IPTV boxes could become the second largest pay-TV operator in the UK within 18 months. Despite the IP enforcement strategy identifying the problem, there appears to be a reluctance to make the law simpler and more effective. At present, law enforcement has to rely on general provisions, such as aiding and abetting offences under the Fraud Act, or encouraging offences under the Serious Crime Act. This is because the Copyright, Designs and Patents Act does not address today’s or future issues, and the various offences in it do not include what is by far the most prevalent offence today: the supply of devices intended to commit digital piracy. A specific offence is much needed and was proposed in the other place as an amendment to the Bill.

There are examples of law enforcement agencies such as trading standards and PIPCU being unable to pursue strong cases due to the lack of an appropriate offence. As a result, despite the industry dedicating considerable resources over a long period to protecting its intellectual property through existing enforcement mechanisms, there has been insufficient success and what limited progress has been made has taken far too long. Now, a fit-for-purpose enforcement regime is needed which is kept up to date with technological advancements and new risks posed. This requires the creation in the CDPA of a specific offence relating to devices used for IP infringement.

We have been told that over the past year, the Sky security team has identified more than 100 cases involving digital TV piracy, but they have been extremely difficult to pursue through trading standards or, indeed, through PIPCU. The industry has gone to the extent of seeking counsel’s advice on whether anything in existing law adequately covers the offences involved. It is clear that, while there has been a recent successful five-week private prosecution of a complex case involving pan-European organised crime, this is not the most efficient way to deal with a new challenge. The CDPA, originally written in 1988, needs to be updated to reflect new technology and the subsequent risks posed. New legislation would help trading standards to prosecute those preloading and distributing IP devices.

I very much hope that the Minister will take this opportunity to support this important amendment.

[Baroness Kidron]

I too support Amendments 71B and 79A. It is perhaps worth reiterating my interests as a film maker and, therefore, often a rights holder. I share the concerns of broadcasters about the challenges of piracy and the implications for future financing of original content. The noble Lord, Lord Clement-Jones, has done justice to that point.

This is also a generational issue, as 11 to 15 year-olds are the biggest users of these devices, which are plugged directly into television sets. Technical studies of IPTV use recently conducted by the Industry Trust revealed that they often include unauthorised apps, add-ons and advertising, and totally bypass the current systems of parental control, age rating and BBFC guidance. They are not subject to the usual protections that apply to content that we normally view on our television screens. If they can be bought from legitimate retailers and paid for through legitimate payment providers, we can hardly blame people for not really understanding that they are illegal.

Contrary to the Minister’s previous suggestion that I might like to shut down Twitter—far from it. By what other means would I know what the American President was thinking day and night? I am not a huge fan of blocking or censorship.

I beg noble Lords’ patience, as I want to go back to something that we may have gone through. It is about consistency. My argument is all about consistency. I was disappointed by what the Minister said about social media companies, which seem to have picked up very few responsibilities this afternoon.

I wonder whether we have done the maths right. Surely, even a small slice of these huge companies with their billions of daily interactions is comparable with the large sites entirely dedicated to pornography. I have listened very carefully to the debate and wonder whether, if we had been using the word monetise rather than commercial, we might have got a little closer to where we need to go. I hope I will be forgiven for going back to Part 3, but I have risen to speak about consistency.

Given the ambition of Part 3 of the Bill, it seems inappropriate that unregulated content is being delivered to TV screens outside of Ofcom or BBFC oversight. I feel that every child, parent or carer should have access to the technical and regulatory protections while streaming content on their TV screens, should they elect to use them. The current legislative framework is out of date and does not make it sufficiently clear that devices adapted for digital TV piracy should not be sold by legitimate online retailers. As a result, children are watching content in an unregulated context. That should be a factor when considering the merits of these amendments.

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[Baroness Buscombe (Con)]

My Lords, Amendments 71B and 79A seek to expand the existing criminal liability for making or dealing with copyright-infringing articles and the restrictions on unlawful decoders to include the supply of devices and software—such as set-top boxes or IPTV boxes and illicit software apps or extensions—intended to be used for copyright infringement.

An amendment with the same or a similar ambition was first tabled in the other place and then withdrawn. The Government are still of the view, as they were then, that illicit streaming and the infrastructure and devices that enable it pose a very serious threat to legitimate copyright owners and service providers. We share the wish of those behind these amendments to ensure that this harmful activity is properly tackled. I agree with the noble Lord, Lord Clement-Jones, that this poses a real threat to the creative industries.

That does not mean, however, that we should jump immediately to introduce new criminal provisions to copyright law. As previously discussed in debate in another place, the Government believe that this activity is already covered by existing offences. Relevant provisions include those contained in the Fraud Act 2006, the inchoate offences in the Serious Crime Act 2007, and other provisions of the Copyright, Designs and Patents Act 1988.

In December a supplier of IPTV systems that enabled viewers to watch unauthorised content was convicted for conspiracy to defraud and sentenced to four years’ imprisonment. A second supplier received a two-year suspended sentence. This conviction shows that the courts agree that this behaviour is already illegal and must be tackled appropriately. But we recognise that court cases take time and cost money, and that this is a complex area of law where enforcement agencies may not feel well equipped to take on investigations and carry them through to prosecution. That is why we are working on a range of interventions to tackle this behaviour.

Officials at the Intellectual Property Office are working with the Crown Prosecution Service and the police to develop guidance on how the existing offences may be effectively applied, and we will be running a public call for views over the coming few weeks to ask investigators, prosecutors and industry representatives whether they think the existing legislation is providing all the tools that are needed.

IPO officials have also been meeting intermediaries, especially those platforms where these devices are sold, and others whose legitimate businesses facilitate, however unknowingly or unwillingly, this criminal behaviour. We need to work together with a broad coalition to tackle illicit streaming, and everyone in the supply chain has a part to play. This is very much an area where we want to make progress. We believe that we are making progress on a number of fronts. The Minister for Digital and Culture committed in the other place to bring forward legislation if the evidence shows that it is needed—but that case has not been made yet.

With reference to what the noble Lord, Lord Gordon of Strathblane, said, I think it is right to emphasise that the ever-changing nature of how criminals operate means that they will quickly circumvent technology-specific legislation. We have to be careful when we talk about primary legislation. The changing way in which content is consumed means that specific legislation such as that proposed may be rendered obsolete, unprosecutable or both. I hope that with this explanation, the noble Lord will feel able to withdraw the amendment.

[Lord Clement-Jones]

Before the noble Lord, Lord Stevenson, expresses his view of the Minister’s response, may I ask her a few questions? She gave a bit of a “curate’s egg” response, giving with one hand and taking away with the other. At the end of the day it might be considered that a criminal offence is appropriate—but as to the call for evidence, does the Minister have a timetable that she can reveal to the House for this to take place? Will it include the role of intermediaries?

I think that the Minister can understand some of our impatience in this area: legislative opportunities to deal with this kind of infringement are few and far between, and this is a major problem. The percentage of people using this software and these boxes is rising inexorably, and that is having a very bad impact on the business models of many in these industries. We urge urgency on the Government.

[Baroness Buscombe]

I respect what the noble Lord has just asked, but I did say—maybe I was not clear—that we would run a public call for views over the coming few weeks.

[Lord Clement-Jones]

Weeks not months?

[Baroness Buscombe]

Absolutely—weeks. We will ask investigators, prosecutors and industry representatives whether they think the existing legislation provides all the tools needed. IPO officials have also been meeting intermediaries, and I am sure that they would welcome more such meetings to see that we get this right.

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Moved by

[Lord Clement-Jones]

73: Clause 29, page 29, line 32, leave out subsections (3) to (5)

[Lord Clement-Jones]

My Lords, in moving Amendment 73 I wish to speak also to Amendment 235. It has been a longish road towards Clause 29. I seem to remember putting down an amendment similar to this clause on two previous occasions, when we had considerable debate about its merits. I am delighted that Clause 29 has finally, after much debate and discussion within government and outside, seen the light of day. I welcome the Government’s saying that they are seeking to implement repeal soon. However, there is considerable concern that they may attempt to delay effective repeal through transitional arrangements for up to two years. There is a very strong view within the television industry that Section 73 should be repealed as soon as possible in order to provide certainty for PSBs and to ensure that investment by public service broadcasters in UK content is protected.

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[Baroness Buscombe]

My Lords, I thank all noble Lords who have taken part in this important debate on the issue of retransmission fees. A number of noble Lords have tabled amendments urging the Government to get on with the repeal of Section 73 as quickly as possible.

The Government, through the Intellectual Property Office, consulted on the technical aspects of the repeal, including on the question of a transition period. The Government will, hopefully very shortly—and I say that with some strength—be publishing their response to this consultation, and I believe that the noble Lords will find this response enlightening and helpful. I therefore suggest that we return to this issue on Report, where I can fully set out the details of how the repeal will be conducted.

The noble Lord, Lord Stevenson, also tabled an amendment that would require any new fees which may flow to the public service broadcasters to be reinvested in original British content. I believe it is premature to legislate on this issue. We need to see how this new market develops after the repeal of Section 73. The British broadcasting landscape, with its steady flow of high-quality output, is envied around the world. The public service broadcasters are already pulling their weight here and face content requirements set by Ofcom. I do not believe that it would be necessary or desirable to legislate in this area that works so manifestly well for British audiences.

Clause 29 will repeal Section 73 of the Copyright, Designs and Patents Act 1988, which currently provides that copyright in a broadcast of public service broadcasting services—and any work in the broadcast—retransmitted by cable is not infringed where the broadcast is receivable in the area in which it is retransmitted. In effect, cable TV platforms are currently not required to provide copyright fees in relation to the core public service broadcaster channels. Last year, the Government consulted on the repeal of Section 73 and the balance of payments between public service broadcasters and TV platforms. The conclusion reached was that Section 73, as noble Lords have said tonight, is no longer relevant.

Today, a wide variety of platforms ensure that virtually everyone in the UK is able to receive public service broadcasts. Following digital switchover, completed in 2012, digital television services are now available for over 99% of consumers through a combination of digital terrestrial television, satellite and cable platforms. The cable market has now moved from a large number of local providers in the 1980s to one big provider and a few—very small—local platforms, and from 130,000 subscribers to over 4.5 million to date. The Government are satisfied that the objective of ensuring that public service broadcast services—as well as other TV services—are available throughout the UK has been met, and therefore Section 73 is no longer required to achieve that objective.

Moreover, the repeal of Section 73 will close a loophole used by providers of internet­based live streaming services of broadcast television programmes. These providers are relying on Section 73 to exploit PSB content by retransmitting channels and selling advertising around the service, without any benefit flowing to the PSBs.

I hope that, on that basis, noble Lords will feel able to withdraw their amendments.

[Lord Clement-Jones]

My Lords, I thank the noble Viscount, Lord Colville, and the noble Lord, Lord Black, for their comments and support for these amendments.

The noble Viscount, Lord Colville, talked about underlying rights and, of course, there should not be any anxiety about whether these have been obtained sufficiently for retransmission. Channel 4 tells us that it has a multiyear contractual arrangement in place with Virgin Media for which all the rights are cleared, so there is no impediment. The noble Viscount also made the point that the money involved in retransmission fees is a large amount for public service broadcasters but relatively small for cable operators. That is another factor.

The noble Lord, Lord Black, stressed the point about time being of the essence. I am delighted that the Minister responded to that, because we are in a context where the creation of world-class content to be competitive on the world stage could never be more important. He described further delay of two years as being a lifetime in this industry. That is absolutely true.

In the circumstances, and compared with many ministerial responses, I thought the Minister’s response extremely positive. I do not think I have ever had such a tantalising response about revealing all on Report. That is quite something.

I may be getting this wrong and the Minister can correct me, but I assume there will be some sort of revelation on Report about the timetable. I am perfectly happy to table a probing amendment to get the full benefit of her response on timing, but if she is going to table an amendment that would move things towards the kind of timing we are looking for in this amendment, as a result of the technical consultation finally being determined by the IPO, I will not quarrel with that. I am very happy to suspend judgment, but a nod is as good as a wink in Committee. If the Minister would like to say anything further about what precisely she meant by what she might do on Report, I would be open to suggestion.

[Baroness Buscombe]

My Lords, I will not be tempted at this stage, but I repeat that, when we get to Report, I think noble Lords will find my response enlightening and helpful.

[Lord Clement-Jones]

My Lords, that is even more positive than the first time around. In those circumstances, we will suspend judgment. I beg leave to withdraw the amendment.

Amendment 73 withdrawn.

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Moved by

[Lord Clement-Jones]

74: After Clause 29, insert the following new Clause—
“Remote e-lending
(1) Section 5 of the Public Lending Right Act 1979 (citation, etc.) is amended as follows.(2) In subsection (2)—(a) in the definition of “book”—(i) after “(an “audio book”)” insert “which has been licensed by the publisher on agreed terms for library lending”,(ii) after “(an “e-book”)” insert “which has been licensed by the publisher on agreed terms for library lending”;(b) in the definition of “lent out”, for paragraph (b) substitute—“(b) includes communicating by means of electronic transmission to a place other than library premises”.”

[Lord Clement-Jones]

My Lords, I am very conscious of the time and I will try to be as brief as I can. The amendment is designed to amend the Bill to extend the public lending right to remote e-book lending.

The way we access books is increasingly changing as technology offers new ways to access the written word. Libraries are now lending many e-books: 2.3 million e-book loans were made in 2015 alone and the figure in 2016 was more than 3 million. But authors are not being remunerated for those loans, despite the Government having committed in principle as long ago as March 2013 to extending PLR payments to e-books when a suitable opportunity arose.

The public lending right allows authors to be fairly paid for each loan when their work is lent through public libraries. It is designed to balance the social need for free public access to books against an author’s right to be remunerated for the use of their work. The scheme provides authors with a modest payment of around 7p each time one of their books—written or audio—is borrowed from a public library. More than 22,000 writers, illustrators, photographers, translators and editors receive PLR payments each year under the Public Lending Right Act 1979 and subsequent amendments. There is a minimum payment threshold of £1 and a maximum of £6,600. Although this does not replace the royalties authors would receive if their book had been purchased by each borrower, PLR provides a significant and much-valued part of many authors’ incomes, particularly for authors whose books are sold mainly to libraries and for those whose books are no longer in print but are still being read.

While the Digital Economy Act 2010’s extension of PLR to audiobooks was a useful and overdue reform—I remember well when we passed it—the extension to on-site loans of e-books was nugatory, as no such loans are made. By contrast, remote e-book lending has increased significantly and is increasing much faster than physical lending, particularly since reduced opening hours and the regrettable extensive library closures that the Government have taken no action to prevent mean that it is more and more difficult for readers physically to visit a local library.

Writers are keen to see the Government develop the public lending right to reflect modern media. I should stress that even though the precise wording of the amendment is not agreed across the board, its spirit is strongly supported by a range of bodies, including the ALCS, CILIP, the Booksellers Association, the Society of Authors, the Association of Authors’ Agents, the SCL Leading & Managing Public Libraries and the Publishers Association. So it has extensive support in principle.

The amendment would amend the Digital Economy Act to ensure that remuneration is received by writers for remote e-lending at the same rate per loan as for physical books. It is vital that authors receive remuneration for loans of their works, irrespective of format. The principle of remuneration that enables authors to work should not be unfairly obstructed by technical and technological change. I know that Europe is not fashionable in some quarters, but a recent opinion of the Advocate-General relating to a case on rental and lending in respect of copyright works currently before the Court of Justice of the European Union supports this view. He said:

“The lending of electronic books is the modern equivalent of the lending of printed books”.


This removes the Government’s previously expressed concern that such a change may not be compatible with the copyright directive—it clearly is.

The ability to access e-books facilitated by public libraries is a service valued by the public, and remuneration for public lending is a requirement of European law under the rental and lending directive. The current situation where millions of e-book loans receive zero remuneration is unlawful and creates significant prejudice to writers. It also places libraries in a position where works lent regularly may infringe authors’ rights.

The changes needed are achieved simply by taking measures to amend the Digital Economy Act 2010 by removing Section 43(2)(b), which sets remote loans outside the definition of lending under PLR. It would also be necessary to add a sentence to make sure that the commercial market was protected and that e-lending was put on a par with physical lending. The jargon in the trade, used by the Sieghart report which recommended that PLR be extended to remote e-lending, is “frictions”—which basically are the conditions under which digital books can be loaned to one reader at a time, just as with a physical book.

Other conditions are that a digital copy of a book can be loaned only for a limited period and that digital copies of books should be deemed to deteriorate, ensuring their repurchase after a certain number of loans. Those conditions are broadly accepted by the industry, but there was no desire to incorporate them in primary legislation so that they might be taken on board in the commercial arrangements made between publishers, authors and libraries.

The cost of this measure would be negligible, but the principle is extremely important—as was recognised by the Government in 2013. I hope that they will take this on board, because it is long overdue. It would do proper justice to our authors and writers. I beg to move.

[The Earl of Clancarty (CB)]

My Lords, I apologise for not having spoken at Second Reading. I want, however, to speak to Amendment 74, to which I have put my name, and to Amendment 79B.

I very much support Amendment 74, in the name of the noble Lord, Lord Clement-Jones, although I am delighted that there is now a firm agreement between the interested parties—including CILIP, ALCS and the Society of Authors, among others—for an amendment which is almost but not quite the same as Amendment 74. I hope that this tweaked amendment, which clarifies the nature of what is being loaned, or an amendment equally acceptable to all parties, can be brought forward by the Government and accepted on Report.

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[Baroness Buscombe]

My Lords, I thank all noble Lords for this important debate and for this proposed new clause. It seeks to extend the public lending right to include remote lending of e-books and e-audiobooks by public libraries. This would allow authors of these to receive payments from the public lending right fund, as they do for public lending of printed and audiobooks. It would also amend the definitions of e-books and e-audiobooks so that these works could be lent by public libraries only if they have been licensed by publishers on agreed terms for library lending.

The Government support recognising authors for e-lending by libraries. We committed in our manifesto to work with libraries to ensure the public can access e-lending, and to appropriate compensation for authors that enhances the public lending right scheme. As the Minister in another place confirmed, we intend to legislate to extend the public lending right to include remote e-lending. In response to the noble Lord, Lord Maxton, I say that our intention is to include all e-books regardless of technology.

This proposal is supported across the sector, including by libraries, authors, publishers and booksellers. I am therefore pleased our commitment is also supported by noble Lords in this House. Public libraries increasingly provide e-lending to support reading and literacy in response to the needs of their communities. Most library loans remain of printed books, with over 200 million such loans in Great Britain in 2015-16—so not everyone has given up the printed word, as has the noble Lord, Lord Maxton. However, e-lending is growing, with 4 million e-book and 1 million e-audiobook loans in Great Britain in the same period.

In considering how to legislate to extend the public lending right to include e-lending, we are engaging with representatives of authors, libraries, publishers and booksellers to understand their views. A number of these have raised points that need careful thought before the Government table their own clause.

One point made by representatives of authors and publishers is that an amendment to the legislation should include protections for the commercial market. The proposed new clause seeks to do this by specifying that e-books and audiobooks could be lent out from public libraries only if they had been licensed by publishers on agreed terms for library lending. However, others had raised concerns about whether such a provision might impact on public libraries’ ability to acquire and lend e-books.

This is an important issue. Officials have therefore met sector representatives to allow us to consider carefully the views and decide on the appropriate way to proceed with our commitment. I understand that the discussions in recent days have been promising and that the respective parties have been considering whether they can agree a settled view on the issues. We want to continue to work together to support a strong book sector that helps promote opportunities for reading and learning by the public, so we intend to table our own proposals for the necessary legislative changes as soon as possible. We will carefully consider these views in deciding how to proceed. I hope therefore that noble Lords will not press this proposed new clause.

Amendment 79B requests that e-books be exempt from VAT. Issues affecting taxation are a matter for the Chancellor of the Exchequer. It would therefore be inappropriate to include this amendment in this Bill. There are other difficulties, however, in accepting such an amendment. VAT is an EU-wide tax and is applied by member states within agreed structures. While we remain in the EU we are bound by our international obligations. This amendment would cut across those obligations in respect of VAT. EU VAT law, agreed unanimously by member states, currently specifically requires the standard rate to be applied to all electronically supplied services. This includes e-books, which are services, not goods. Because of this, if we accepted the amendment we would be in breach of our obligations. To make the change proposed in this amendment a change of EU law will be necessary, supported by all 28 member states. While a proposal is currently on the table there have been a variety of different reactions from member states and no unanimous agreement. I hope that the noble Lord will therefore not move his amendment.

[Lord Clement-Jones]

My Lords, I thank those who have taken part in the debate. The noble Earl, Lord Clancarty, has throughout been a doughty campaigner for the arts and for authors. I also thank the noble Lord, Lord Arbuthnot, for his contribution, and the noble Lord, Lord Stevenson, in particular for an amendment that we would all support if only it were practical. Who knows? There may be some silver lining to Brexit at the end of the day. I do not think that that is quite substantial enough for many of us but it is certainly a little glimmer. I thank the noble Duke, the Duke of Somerset, as well. Of course we always bow to the superior technological knowledge in these matters of the noble Lord, Lord Maxton. I agree with the Minister: I am still an aficionado of the printed book, and am one of the digital book. There is a place for both in one’s library.

I welcome what the Minister said. In a way she performed a political ju-jitsu on us by thanking us for supporting her government line on this, which I thought was magnificent. I accept that it is in the Conservative manifesto. The Minister in the Commons pledged to come up with a solution to this. All that we have done really is to give the Government a bit of a push today. This wording is not the agreed wording. Agreement was reached, at the final hour—not in time to include in Committee today—between the various parties involved, particularly CILIP. As the noble Earl, Lord Clancarty, said, I am delighted that there has been agreement reached between the parties and the wording about which I have been told will perhaps be the wording to which the Minister will return, having performed her ju-jitsu at Report. Perhaps I have her in an armlock now to come back at Report with a suitable amendment. In the meantime, I beg leave to withdraw the amendment.

Amendment 74 withdrawn.