Legislative Reform (Patents) Order 2014

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 9th July 2014 Grand Committee

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for his comprehensive introduction of this order. It is an important one and I recognise the case that is being made. I should like to cover three issues because in essence I do not have any objections to what is being proposed; indeed, quite the reverse. I compliment the team responsible on a good job well done because it was a joy to read the order. I understand fully what is being done and therefore my questions are really rather trivial, which I am sure the Minister will be pleased to hear.

It is good to see that the LRO system is working well. It was introduced by the previous Government precisely for the sorts of purposes that are being envisaged today. There are hurdles in the way of its use, but they can be jumped over easily in the way that has been expressed today, and I understand why the LRO route has been taken. I have already touched on my second point, which is that this is a well-explained document which I enjoyed reading.

The issue as I understand it is that it is unfortunate that the way in which the original exception for research set out in Section 65(2) of the Patents Act 1977 has been to some extent subverted by judge-led changes in the sense that what the document refers to as a very “narrow interpretation” of that in terms of what constitutes research has been brought forward. My first question turns on this issue. I wonder whether the Minister has thought about reforming the Patents Act 1977 so as to introduce a broader definition of “research”. In saying that I am minded to think about other areas where the narrowing of what constitutes research may cause problems. One can see where this is going: research is obviously done for experimental purposes related to the subject matter of an invention, and that is a clear and important definition. However, we live in the real world where people who are doing what is called research do it in an applied environment in which one may be testing the efficacy and effectiveness of what was originally discovered or developed. I worry slightly that we might be stumbling down a cul-de-sac in terms of other policy areas in the future. I think that the Minister is in a good position to reflect on that and give us his thoughts. Having said that, I think that the LRO route is the correct one, but I would be interested to know what arguments were used within the department, if they can be shared with us, as to why it was taken.

I understand the noble Viscount’s position on ensuring that clinical trials, field trials and health technological assessments can be carried out in the future without any risk of infringing a patent. He explained with care what the benefits would be not only to UK pharma, which we obviously support, and to UK plc in terms of economic developments but, more importantly, to future patient health that will benefit from new medicines and technologies that preserve lives and extend people’s ability to enjoy a good life.

My questions, apart from the principal one that I have already asked, are really about the consultation process; I was intrigued by the worries that seemed to be behind the idea of not one but two consultations. Governments are pretty bad at consulting. They do not like to do it; it slows things up and sometimes they get results that they do not want, so perhaps the Minister can reflect and let us know why, in October to December 2012, the same sort of questions were repeated that were asked in June to July 2011. One consultation would seem to be enough; two seems somewhat otiose. I am interested to know whether there is an answer to that.

Secondly, despite the fact that this is an important change and obviously one that will have good economic and, indeed, health outcomes, why did it take so long from the decision arising from the Plan for Growth report to get to this point—which is, after all, July 2014? Given that, as I understand it, the consultees were ranked in the tens rather than the hundreds or thousands, one would have thought that things could have been done better. Was there a particular issue that needed to be resolved, given that the consultation seemed to go well and the results were very clear?

My third and really very trivial point—which the Minister may dismiss and not answer—is that I have a slight whinge about consultations involving very small numbers being summarised in a numeric rather than qualitative way, so that on page 7 of explanatory document we initially get a response to the informal consultation that talks about “almost unanimous agreement” and the “majority of responses”. Given that we are talking about—as I think it says in the note—something like 16 responses, I find the terms “unanimous” and “overwhelming” a little underwhelming. That approach is taken again in paragraph 2.12 on the second, formal consultation, which refers to the “overwhelming majority” of responses. In this case, in notes 26 and 27, we again discover that there were 16 responses. I wonder whether they are the same ones that came up with an “overwhelming” figure. It is a trivial point, but I think you demean the quality of the response if you try to overclaim for what was happening. It would have been interesting just to see the formal responses that the Government got, even though the number of respondees listed later on in the document shows that very few actually did respond. However, the responses clearly were of very high quality and allowed for a decision.

To conclude, I simply wish to record that this is a very good document. It is well expressed and the right route has been chosen for it. The reasons for it have been so well explained that I have no wish to delay further the implementation of the order.

[Viscount Younger of Leckie (Con)]

My Lords, I start by thanking the noble Lord, Lord Stevenson, for his general support for this particular order. I note, and thank him for, his complimentary comments on its drafting, which will be very much appreciated by the officials involved. A number of questions were raised, although I may not be able to answer all of them. I also have questions of my own that I will answer myself in the process, which may help to round off this short debate.

The first question raised by the noble Lord concerned the definition of research and its scope. That was a fairly strong question and I will write to him with an answer. The second question was about the consultation. He will know that he mentioned that there were two consultations required; needless to say, they were to try to clarify the exact scope of legislative change and to gather evidence from industry. It is fair to say—and the noble Lord may have read—that there were issues in trying to get enough evidence. We were determined to push the evidence base and that is why we needed to go for the second consultation. It was a challenging process but that may give him an answer which satisfies him.

However, I want to raise a point that was made in the other place concerning the Regulatory Reform Committee, which had raised concerns about the lack of monetised evidence for the change. That links in with the consultation. We have considered very carefully the points made by the RRC and we did the best that we could to obtain evidence from the industry and apply the current guidance. We note, however, that at the end of the day the RRC recommended that the order be approved, although I imagine that it would be in its gift not to approve it.

A further issue that was raised in the Commons and which I thought might be helpful for the noble Lord and for the Committee is whether a patentee can have access to data generated on their own drug. The aim of the legislative change is to remove the need for companies to carry out assessments of infringement risk prior to running clinical trials. For this reason, it is entirely possible that the patent holder will not be known. To require sharing of data would simply replace one burden with another—that is, replacing assessing the infringement risk with identifying the rights holder. That would go against the aim of simplifying the patent landscape in relation to clinical trials. However, clinical trials regulation will require clinical studies to be properly acceptable.

I should like to answer a point raised by the noble Lord, Lord Stevenson, concerning the Patents Act, which needs to balance the rights of the patentee with benefiting legitimate research. To define the term “research” in legislation—this comes back to the point that I was going to write to him on, and I believe that I will still write to him—may cause some difficulty in the future. We have attempted to clarify the research exception in a proportionate way to target a specific problem. However, I will write to the noble Lord with a fuller answer.

I think that there were a couple of other questions. I will revert to Hansard, which no doubt in its usual way will report accurately what the noble Lord said, and I will then respond to the final question, if not two questions, that he raised. In the mean time, I commend the order to the Committee.

Small and Medium-sized Enterprises: Late Payments

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Thursday 19th June 2014 Lords Chamber

[Viscount Younger of Leckie]

The noble Lord raises an important point. This is very much a question for the companies and the contracts that they enter into. The Government can certainly produce a framework and, indeed, from the UK angle, the small business Bill will take matters forward to give greater clarity and transparency.

[Lord Stevenson of Balmacara (Lab)]

My Lords, in August last year the Daily Telegraph reported that Vince Cable was considering a late payment levy. In October it reported that Michael Fallon was “going to war” on the issue in the context of a report that outstanding bills to small businesses had reached a record £37 billion. The Minister mentioned the small business Bill but was a bit light on detail. Why does it not include a late payment levy? Further, why does it not consider representations made from this side, including banning bad payers receiving public sector contracts?

[Viscount Younger of Leckie]

I have already commented that we do not think that it is right to legislate on that at the moment. However, we are taking a number of important actions, including incentivising fair and transparent payment practices by requiring large companies to report, which I have mentioned, strengthening the Prompt Payment Code, working with industry to establish codes of best practice on fair payment, making further reforms to increase prompt payment in the public sector and increasing access to alternative finance options.

Copyright (Public Administration) Regulations 2014

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 14th May 2014 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank all those who have contributed to this short but important debate today, which goes to prove that this is an interesting area of activity. As the noble Lord, Lord Clement-Jones, said, it bears on one of our key industrial sectors, which we must be careful to ensure is given protection and support. In some of the earlier debates on these issues in other places, where perhaps not so many people would crowd in as have done today, we had thought that we were a lonely band, a small group of complete nerds who were interested only in the very detailed minutiae exemplified by the brilliant speech from the noble Lord, Lord Clement-Jones, on the wide issues relating to copyright contracts, to which I will leave the Minister to respond. Of course, I am wrong; many issues are coming up now that we will return to with pleasure as we go through the other statutory instruments, and indeed as we wait for further measures to come forward as a result of the ERR Bill, particularly extended collective licensing and orphan works. Those who do not know these things might want to get themselves ready for it, because that too will be great fun.

The argument that we have heard today from the Minister is that these “small” changes to the UK’s copyright regime are vital to supporting innovation and growth in the UK. In fact, to my mind they bear more on individuals, particularly those with disabilities, and on the not-for-profit libraries and archives in the digital age, helping them to serve their patrons more effectively and to reduce costs. It is therefore likely that they will lead to greater efficiency, innovation and improved research, which is a good thing, and there seems to be no independently validated evidence that any of the proposed new exceptions will damage the legitimate commercial interests of rights holders.

Rights holders often claim, as the noble Lord, Lord Clement-Jones, suggested, that exceptions are or soon will be rendered unnecessary by the existence of licensing schemes. That argument has some merit and good progress has been made on this, particularly through the copyright hub, but consumers will not be well served if the licensing system is overly complex or expensive or withdraws works and therefore makes them inaccessible. It is also true, at least at present, that many copyright works are not, and in some cases cannot be, covered by licensing schemes. There is, for instance, no scheme for unpublished literary works such as private letters, or one for private films or photographs. It may be, as I have mentioned, that the mooted extended collective licensing schemes and action on orphan works will address many of these issues, but until then archives and libraries have no choice but to rely on exceptions in order to provide a service to the public.

My first point is that I do not think that the impact of these SIs will be quite as significant in the wider economy as the noble Lord makes out. In any event, it is important that both sides in this argument do not overclaim. We should also bear in mind that if, in a digital world, citizens do not feel that the law appropriately supports their own personal and educational needs, it will simply be ignored, which is in no one’s interest. Indeed, the noble Earl, Lord Erroll, rather hinted that that was the way in which he approached matters.

The Government believe that the changes contain safeguards to ensure that a reasonable balance is maintained between the interests of creators, owners, performers, consumers and users of copyright works. We have some concerns on this point. What is important is that we have a balanced copyright system that respects the legitimate interests of both the rights holders and the users of copyright works. Copyright law should work for everyone. There should be incentives for people to invent and create, appropriate protection for the output that they produce and a right to a reasonable return on that investment.

These instruments update the framework of exceptions to copyright in performance and expand the freedoms in copyright law to allow third parties to use copyright works for a variety of purposes without permission from copyright owners. We broadly agree with this approach and have supported the Government through this seemingly endless and tortured process. However, I should put on record that we wonder whether utilising exceptions is in itself the best way of making changes to a regime that in some respects is creaking and, as the noble and learned Lord, Lord Scott, suggested and my noble friend Lord Howarth agreed, may be in need of some serious recalibration.

We should recall that in Modernising Copyright Ministers stated:

“The Government will publish draft legislation for technical review in 2013. It intends to introduce the measures in the smallest possible number of statutory instruments to minimise disruption to stakeholders, make best use of Parliamentary time and ensure that the revised system is implemented in a clear and consistent manner. The intention is that measures will come into force in October 2013”.

I observe October as a rather crucial date. It is one of the two CCDs referred to by the noble Lord, Lord Clement-Jones. Well it is May 2014, and we have only three SIs, although, of course, there are actually six exceptions contained in them and, as we know, there are more to come. It is fair to say that the Government have had a bumpy ride on this, and I think it is partly because they seem to have difficulty in opening up to proper debate and discussion with the industry and consumers not only about the principles under which they are operating but on the detailed drafting. As has been said, there is more to come in terms of public explanations of what is being proposed. However, there has been a public consultation, there was also a very brief general discussion on a QSD in your Lordships’ House, and further work and technical reviews have been undertaken. We are where we are.

I have only one substantive point to make about the regulations, although there are a number of questions I should like to put to the Minister. The question that underlies some of the points that have already been made is about the exchange in the Secondary Legislation Scrutiny Committee when the Minister was adamant that this packet of measures involved minor changes. In introducing the exceptions today, he said that they are “small changes to existing provisions”. However, the committee stated in its report:

“We pressed the Minister on his statement to us … that the changes proposed were ‘relatively minor’: we are not persuaded that this is an accurate assessment of their impact”.

I should be grateful if the Minister could expand on that when he responds. I struggle with his description “relatively minor”. I probably agree that they are quite small, but I do not know what reference point he is taking on this. What is the relativity?

I now turn to the exceptions themselves, the first of which is disability. It must be right that all print-disabled learners should have the right to have information provided in an accessible format. Indeed, this is required under Section 20(6) of the Equality Act 2010. Amending the existing exceptions for visually impaired people so that they cover all impairments that prevent a person accessing and making use of all types of copyright work will achieve this. We agree with what the Government are trying to do here and support it.

The public administration regulations will allow more public bodies proactively to share online unpublished third-party material from businesses and members of the public. We agree that the Government are doing the right thing here, and we support it.

The third SI is a bit of a plum pudding of an exception because the Government have tried to wrap a controversial issue—to overcook my metaphor—in the middle of three brown-bread and apple-pie proposals—sorry about that. This was the issue that got the most flak during the consultation process, and it continues to worry a number of industry personnel, as we have heard today. It is said that a new text and data-mining exception will dramatically boost non-commercial research by allowing computers to read material that consumers have already purchased or have legal access to. It is also said that the lack of such an exception means that UK research continues to lag behind countries such as the United States, which already allow text and data mining. My main concern is that the exception is designed to assist people who wish to make use of copyright works for the purposes of non-commercial research and private study. Non-commercial research I can sort of understand, and that seems to be an appropriate way to provide an exception, but what exactly is private study? The Government’s position on this seems vague and may well be open to legal challenge. I should be grateful if the Minister could return to this when he responds. I have looked at the accompanying information booklet, which says that this exception is not restricted to those studying at school, college or university. The guidance states that,

“this also applies to those carrying out their own private study but you must be genuinely studying (like you would if you were studying for a college course) to qualify. An example of this could be when you are learning to identify birds in your garden or simply learning more about a particular hobby”.

We seem to be quite a long way away from malaria. One can empathise with copyright holders who fear that a qualification such as,

“simply learning more about a particular hobby”,

might be seen to be driving a coach and horses through this provision. I should be grateful if the Minister could explain the position a little better when he comes to reply.

On the other exceptions within this SI, I particularly welcome the exceptions for libraries and archives and declare my interest as a former director of the British Film Institute, whose national film archive will benefit considerably from these changes.

Finally, I turn to common commencement dates. According to the Better Regulation Framework Manual, new domestic measures, both regulatory and deregulatory, must come into force on a common commencement date, either 6 April or 1 October each year. The guidance says that by requiring regulatory changes to occur at set times, CCDs inform business and other stakeholders about forthcoming regulatory changes, helping them to plan and budget for new measures and to minimise any additional costs. That seems a good and sensible suggestion. I point out that this is advice to officials but presumably also to Ministers. It goes on:

“You should always assume that your policy will be implemented on a CCD unless you have received explicit RRC”—

Reducing Regulation Committee—

“clearance for a waiver on one of the grounds below … clear emergencies … anti-avoidance measures … measures which remove significant risk or detriment from business … instances where the costs of timing a measure to meet a CCD would be wholly disproportionate to the public purse and … orders which commence other measures on a CCD”.

Can the Minister explain to the House into which particular category these exceptions fall? There is mention of,

“limited flexibility for deregulatory measures to come into force on a date other than a CCD if there would be demonstrable benefits to business”.

However, it says:

“This would require agreement to a waiver by RRC at write-round”.

Can the Minister confirm that his department has obtained this waiver? If so, perhaps we could have sight of the letter? It would be interesting to read it.

Finally, I draw the Minister’s attention to paragraph 1.10.9 of the guidance, which states:

“If an unanticipated delay means that your measure will not be ready for the planned CCD”—

which seems to be the sort of case we have here—

“you should wait until the next CCD”.

However, the Government are trying to introduce three of the five SIs on 1 June. The next CCD is 1 October. Can the Minister at least confirm that the two delayed exceptions will be scheduled to come into force on 1 October? If it is not 1 October, can we please be allowed to know why?

[Viscount Younger of Leckie]

First, I will say how pleased I am that so many people have contributed today. What the noble Lord, Lord Stevenson, said is true: there is a greater number of noble Lords here than there has been for many of the copyright debates. I should quickly say that, although I did not agree with all the comments that were made, I greatly appreciate your Lordships’ presence.

As I said at the outset, this is a package of reasonable and common-sense changes to copyright exceptions, which will deliver significant benefits to the UK. I am sure that the noble and learned Lord, Lord Scott of Foscote, will understand when I say that I will not be focusing on private copying, parody and pastiches, as we are not ready for those particular SIs at the moment.

I also thank the noble Lord, Lord Howarth, for his kind words. He spent quite a bit of time focusing on the consultation process. It is true that, rather unprecedentedly, we engaged with a great number of people across the spectrum, looking at the rights-holders and consumer-and-user ends of the copyright process. In my case, it involved more than 250 meetings, so what the noble Lord said is true: we really have engaged. I hope that, as the noble said, this has been helpful. He was also right to say that there comes a time when the consultation process, which has been extremely long, has to come to an end. I think, again, that he is right that we need to move forward with that.

A lot of questions were raised today; I hope that I can get through them all. I will address a couple of them to begin with. The first was raised by the noble Lord, Lord Berkeley of Knighton, who asked about the amendments to public guidance in relation to copying sheet music for exam use, which is an extremely interesting point. I thank him for his kind words and the recognition of the changes that the Government are making. We have welcomed the written submissions from some stakeholders setting out their thoughts on the guidance; these will be considered in due course.

The second point was raised by the noble Lord, Lord Walton, who I notice is not in his place. I beg the noble Lord’s pardon; he is now in his place. He asked whether schools and universities would now not need any photocopying licences. He used the example of the ALCS to this effect. I can reassure him that schools and universities will still need to hold photocopying licences. It would not be right to allow schools to copy textbooks without payment in order to get them for free. Authors will still be properly remunerated. However, where works are not licensed, a teacher will be able to make photocopies without worrying about copyright infringement, so I hope that that clarifies the point.

Intellectual Property Bill [HL]

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 2nd April 2014 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for his introduction to this group of amendments and, indeed, for his oral and written briefings while the Bill was going through the Commons. It was most helpful to have a blow-by-blow account of the amendments as they were put forward by the Government.

I do not want to appear churlish, and I will not be pressing the matter to a vote, but the amendments cause some considerable concern. The inclusion of the phrase,

“features that differ only in immaterial details from that design”,

as inserted by Amendments 5, 7 and others, give me particular cause for concern. I and organisations such as ACID, which represents smaller designers, are concerned that this change drastically narrows the offence to such an extent that it will apply only to the production of counterfeits. Given wider consultation, a much better form of words would have been achieved—something on the lines of “to make a product exactly to that design or to a design which does not produce on the informed user a different overall impression”. In the circumstances, that would have been far preferable.

The provision will put in place a deterrent to protect registered designs against absolutely slavish copying, but the new wording, as it stands, will allow someone to make sufficient small changes which are not “material” changes to avoid the offence. The intent to copy is still there whether they are immaterial or material changes, and I have grave doubts about whether the newly amended provision will be effective in protecting designers, particularly small designers.

At this point, I want to quote from the noble Viscount’s letter of 5 March, which was very heavily directed towards explaining why these amendments had been adopted in the way that he has described. However, it goes into rather greater detail. In his last paragraph dealing with Clause 13, he says:

“Some have inferred that because the term ‘substantial’ is used in copyright legislation, and therefore in the context of criminal sanctions for copyright offences, that this provides a suitable precedent for using it in registered design sanction”.

Truer words were never spake. That is exactly the case that many of us have been making. However, I do not believe that the remainder of that paragraph holds water in the context of copyright law and the ability to enforce it in relation to substantial copying in these circumstances. The term works for the criminal offence in copyright and I see no reason why it should not also work for registered design criminal liability.

I also regret that unregistered designs have not been given greater protection under the Bill. BIS figures, which were very recently welcomed by the Minister, demonstrate that UK investment in intangible assets now totals some £137.5 billion. Of that, some 46% is protected by copyright, 21% by unregistered design rights and 21% by trademarks. That demonstrates why throughout the passage of the Bill I have supported the case for extending criminal sanctions for registered design infringement to unregistered designs. Those are vital matters of national investment. If anything, the addition of the word “intentionally” by the Government in the Commons, as reflected in Amendments 4, 6 and others, has strengthened the case for that protection under the criminal law.

I believe that the amendments relating to intentionality introduce unnecessary additional mens rea to the offence. It is a belt-and-braces approach to what I believe was already there. However, I do not see how, given its inclusion, the Government can still refuse to extend criminal penalties to unregistered designs. If someone has “intentionally”—that is, deliberately—set out to copy someone else’s work for their own commercial gain, it should not matter whether that work is protected by a registered design right or an unregistered design right. It has still been deliberately stolen. I repeat that these rights are extremely important for our national investment. I still live in hope that sense will prevail at some stage in the future and that our designers will be properly protected by the criminal law, as are trademark and copyright owners.

The one bit of good news for designers is the European Court of Justice Advocate-General’s decision today on the Karen Millen v Dunnes case. As we know, the majority of the UK’s designers rely on unregistered rights, so this has provided clarity and will strengthen the unregistered design right in that it is the totality of the design one holds which the law protects, not by eliminating individual parts of a design. There is some good news coming out of the ECJ but not out of the House today.

[Lord Stevenson of Balmacara]

My Lords, in Committee, we opposed the criminalisation of the unauthorised copying of a registered design and the dealing with unauthorised copies. We also opposed any possibility that that might be extended to unregistered designs. To that extent, I disagree with the noble Lord, Lord Clement-Jones, who has just spoken at length and with passion about these issues, as he has throughout the passage of the Bill. I understand where he is coming from but we simply do not agree on this point.

On Report, although we lost in Committee in terms of these discussions, we decided that the best thing to do was to come back with a series of amendments which would try to moderate where the Government were trying to get to. When I introduced the first of these, I quoted the noted British designer, Sir James Dyson, who had written to many noble Lords on that occasion. He said:

“In the law relating to copyright, acts of unintentional infringement are excluded from criminal sanctions. In the proposed clause of the Intellectual Property Bill relating to registered design … the same is not true. If this Bill is passed unamended, innocent designers will be threatened with criminal proceedings. It is wholly wrong that a designer should go to prison for unintentional infringement. The current wording of the Bill does not exclude that possibility”.

He continued:

“I have spent decades fighting to protect my ideas; taking on competitors who have flagrantly copied my patents and designs. I abhor intellectual property infringement. It is something I feel passionately about. But the Intellectual Property Bill’s inclusion of proposals to criminalise infringement of registered designs is a serious mistake”.

Our argument on this issue is, in essence, that the legislation would open a Pandora’s box of unintended consequences, potentially discouraging the very kind of legitimate, competitive risk-taking that policymakers have been very keen to encourage as a driver of growth. In particular, I said that this could be a deterrent to inward investment in UK design, which may not only result in an innovation drought but threaten the future employability of UK designers. I thought then, and I still believe, that the Government had failed to make their case.

However, notwithstanding the reservations, we also argued that if criminal sanctions were to be introduced we wanted to raise the bar to criminal proceedings by making it clear that they would be commenced only if it was clear beyond reasonable doubt that the action taken had been persistent, calculated and motivated by evidence of an intention to exploit the original registered design.

In that debate, the Minister said he would give serious consideration to the concerns that we expressed, and he brought forward an amendment at Third Reading which would introduce a defence of reasonable belief that the design in question was not infringed. While we were happy to sign up to that amendment, which raised the bar as we wished, we said that it did not go far enough.

We are therefore very pleased that with these new Commons amendments the Government have returned to what is in effect the original IPO consultation document, which for example promised that the criminal offence would contain defences,

“against unintentional infringement of registered design rights”.

We are therefore pleased to agree with the new amendments to Clause 13, which specify intentionality—that the act of copying must be a considered act—and define how close to the original the copied design would need to be by reference to terms currently used in the relevant legislation. We continue to oppose the introduction of criminal sanctions for registered design infringement as a matter of principle. However, we will support the changes to the Bill.

[Viscount Younger of Leckie]

My Lords, I am grateful for the contributions to this short debate on these government amendments by my noble friend Lord Clement-Jones and the noble Lord, Lord Stevenson. I shall begin with a brief summary and then I fully intend to answer the questions, particularly those raised by my noble friend Lord Clement-Jones. These amendments make it absolutely clear that the criminal offence will apply to only those who intentionally copy a design in the full knowledge that it belongs to somebody else. They introduce more clarity for users in describing how two potentially conflicting designs are compared. They seek to ensure that legitimate follow-on innovation by business will not be caught under the offence, but also ensure that those who get too close to existing registered designs are rightly caught by the offence. I believe that we have got the balance right in setting the boundaries of protection for design rights.

Economy: Business Investment

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Thursday 27th March 2014 Lords Chamber

[Viscount Younger of Leckie]

My noble friend is right to highlight the excellent news that Siemens is to invest £160 million in the Hull area. Hitachi’s announcement that it will move its global rail headquarters to the UK is a further vote of confidence in companies investing in the UK. Among other actions, the Government recently announced a new college to train the next generation of world-class engineers working on the construction of High Speed 2, and we hope that it will train up to 2,000 apprentices. This will provide further opportunities for young people to have secure, long-term careers.

[Lord Stevenson of Balmacara (Lab)]

In response to an earlier question, the Minister said that GFCF was a narrow measure. However, is it not true that it also includes expenditure on buildings, including houses for rent? Therefore, the figures conceal a considerable loss of money in terms of the productive economy.

[Viscount Younger of Leckie]

I am not sure that I agree with the noble Lord on that. What matters is the decisive action that the Government are taking to protect the economy in this period of global uncertainty. Our economic policy objective overall is to achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries, and that has a focus on property, too. We want to create the most competitive tax system in the G20, make the UK the best place in Europe to start, finance and grow a business, and create a more educated workforce that is the most flexible in Europe.

Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 26th March 2014 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, I was making two points about issues contextual to the order. One was the question of whether the CRM directive would have an impact and, if so, whether the Minister could outline either how well his proposals in the draft SI fit into it or any gaps that he has already perceived in it. A monitoring period before the regulations will take place in 2016, just at the time that the CRM directive will be introduced. We therefore need to be careful that we are not overburdening the industry or those who draft the orders by having to do all that at the same time.

My second point was an issue which we raise from time to time in debates on intellectual property, which is the progress of the Copyright Hub and the impact that this secondary legislation could or would have on the operation of the hub. I suspect and hope that they have been designed to be complementary, but the issues of collecting societies fit closely with those who are operating the hub. The hub, which is trying to widen access, clearly has interesting feedback into the work of the collecting societies.

My other points have largely been touched upon. It would be helpful to have some comments on the question asked by the noble Lord, Lord Razzall, about the timescale. On the question of how penalties will apply, I note that in the impact assessment on the statutory instrument we are told that during the consultation, there was consideration of whether fees should apply to the organisations only—as has been said, some of them are quite small and voluntary—or whether it would also apply to the individual offices of those operations. It is not clear to me from reading the regulations which way that has come out. If it is the latter, issues were raised during the consultation. The report states that the relevant licensing bodies objected to the provisions for sanctions against offices, but the provision has not been amended because of the overwhelming evidence from an earlier consultation and the desire of the Government to have robust protection in place for those who deal with the relevant licensing bodies, especially as they often have the choice to shop elsewhere. Again, I want clarity about who could be subject to the fees and how that could operate in practice.

Finally, I put it on record that although we support this operation, it is intriguing to us that the policy adopted is effectively to legalise a number of monopolies operating in this area. In any situation where monopolies are recognised, there is a sense in which competition must be the right answer. Here, we are choosing a different route because it is understood that the processes going on in the collecting society area are different in both quantum and quality to those which might apply under a more vigorous competition arrangement. That having been said, we should recognise that that is what is happening. These bodies cannot have competition. They will be operating as monopoly suppliers of copyright licences in particular circumstances. Although, on behalf of the Opposition, I am happy to support the proposal, we think that we have to keep that point in mind.

[Viscount Younger of Leckie]

My Lords, I thank all noble Lords who have taken part in this short debate for their valuable and broadly supportive comments.

We intend to use these powers where self-regulation fails, as has been mentioned. This power is light touch, as my noble friend Lady Buscombe mentioned, and is important to guarantee minimum standards. These powers are proportionate and designed to act as a deterrent. I think there is general agreement in the Committee on that.

We recognise that collecting societies play an important role in facilitating legal access to copyright works. They bring together rights holders and users to enable them to do business efficiently. The Government have worked with the collecting societies to develop the co-regulatory framework so that they continue to operate effectively, while ensuring that there are protections in place for their members and licensees.

I should like to emphasise again that the Government’s preferred option is self-regulation. This is why these regulations are designed to allow licensing bodies to remedy matters themselves in the first instance before recourse to statutory intervention. We are confident that collecting societies can self-regulate effectively. However, when needed, these regulations will provide robust, proportionate measures.

The regulations also contain provision for financial penalties, which are designed to deter non-compliance. They can be used only should self-regulation fail. This gives members and licensees the comfort of knowing that the standards that are set out in the collecting societies’ self-regulatory code of practice are guaranteed.

I hope that I have made it clear that the Government are serious about self-regulation and it is important that collecting societies have every opportunity to put their own house in order. Equally important, if they fail to do so there should be no way to avoid the consequences. If the Secretary of State is concerned about a collecting society’s behaviour, there is an opportunity for him to act, using the three-step process in the regulations. The fallback position is to impose a statutory code if collecting societies have not taken up that opportunity. While it appears unlikely at the moment that that point will be reached, it is important that the statutory power is available so that there is a deterrent to ensure that collecting societies face consequences if they do not act in a proper manner.

My noble friend Lord Razzall raised a number of points relating to a letter received by the PRS. I will attempt to answer them. The first issue was on information and timing. The collecting society concerned should have all the relevant information to hand anyway, and therefore be able to meet the 14-day deadline. The timeframe for supplying information to the statutory licensing code ombudsman and code reviewer are included in the regulations to ensure that any investigation can be conducted as swiftly and efficiently as possible. The licensing code ombudsman will require information to effectively investigate disputes between a collecting society and the licensee or member. The code reviewer’s power relates to the information needed in order to undertake an effective review of the codes of practice adopted by collecting societies and their compliance with their provisions. If a collecting society has concerns about meeting the deadline, it is open to it to notify the licensing code ombudsman or code reviewer as soon as possible. Finally, where the collecting society concerned can show that it has made every effort to comply with any request, the Secretary of State can take these arguments into consideration when deciding whether to impose a financial penalty. If such a penalty is imposed, there remains the option to appeal against its imposition and the amount. I rather laboured that answer but I hope it provides a full response to my noble friend.

My noble friend also raised the issue of cost recovery. Where the Secretary of State has incurred costs by having to intervene, it is right that he should be able to cover the costs of that intervention, but they should not be borne by the taxpayer. Where a collecting society has had a statutory code imposed on it and/or has failed to appoint an ombudsman or code reviewer, as required, the associated costs of regulation should be borne by the collecting society concerned. Where the Secretary of State needs to appoint a statutory ombudsman or code reviewer when the self-regulatory appointment has failed, it is right that all the collecting societies which will use the new system should bear the costs of that appointment and any ongoing costs. I should state that this would have gone way down the line before that point was reached, so it would be in extremis that this provision would be realised.

My noble friend Lord Razzall raised the issue of the legal basis. The gist of his question was: what legal power enables the Secretary of State to request information from collecting societies under Regulation 9? The provisions in Schedule A1 to the Copyright, Designs and Patents Act 1988 allow for the Secretary of State to request information, as outlined in Regulation 9.

Paragraph 7(1)(a) includes the power to make incidental, supplementary or consequential provisions and paragraph 5(3)(a) allows for provisions for determining whether there has been a failure to comply with the requirement of a code of practice. The provisions in Regulation 9 will enable the Secretary of State to request the information necessary to enable them to discharge their duties equitably under the regulations.

Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 26th March 2014 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, in moving the Motion on the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014, I shall also speak on the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014. I am afraid that these are rather dry subjects for debate, as your Lordships may have ascertained from my introduction. They are highly technical pieces of legislation, characterised by various consequential and transitional provisions. However, debate them we must and my challenge is to make this an interesting and rewarding experience for us all.

That gives me the chance to place these orders in the context of our much wider and far more interesting reforms to competition law, because the real significance of these orders is to serve as the two final pieces in the legal jigsaw that creates the Competition and Markets Authority, or CMA, within a reformed competition regime from 1 April.

Noble Lords will recall—how could any of us forget?—the Enterprise and Regulatory Reform Act, which I had the pleasure of taking through this House last year. I hope that the Committee will permit me to refer to it as the 2013 Act for the purposes of this order. In its competition elements, the 2013 Act laid the foundations for the establishment of the CMA and a major reform of the UK’s competition regime. The CMA will be responsible for promoting effective competition in markets across the UK economy and for delivering major benefits for consumers. It will have strengthened responsibilities and powers, taking on the work of the Competition Commission and a number of the responsibilities of the Office of Fair Trading. This afternoon’s brief debate gives me the opportunity to provide noble Lords with an update of what has been achieved since the 2013 Act received Royal Assent.

The CMA was launched in shadow form in October last year. The Government have appointed a well respected board for the new organisation. We have also published our strategic steer for the CMA, setting out the key benefits that it should bring for consumers, and a performance framework that explains how we will measure its impact. We are on course for the full launch of the CMA next week, on 1 April.

Both the orders that we are debating today are, as their titles suggest, largely concerned with consequential and technical amendments to other legislation. These amendments are required to give full effect to the range of administrative and legal changes to the competition regime that Parliament enacted in the 2013 Act, so it is important to stress that there is nothing novel or unexpected in what we are asking your Lordships’ approval for today.

To be clear, the changes that these orders make were both foreseen and intended by the 2013 Act. By way of a very brief recap, Part 3 of the 2013 Act abolishes both the Office of Fair Trading and the Competition Commission and creates the new CMA to assume their competition functions from 1 April. Part 4 of the 2013 Act makes various changes to those competition functions. It amends the provisions on mergers in Part 3, on market studies and market investigations in Part 4, and the definition of the cartel offence in Part 6 of the Enterprise Act 2002. It also amends the anti-trust provisions in Part 1 of the Competition Act 1998. I hope that noble Lords are all still with me, because this is where it gets slightly more complicated.

First, the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order, as its name suggests, makes consequential amendments to a wide range of primary legislation. Many of these amendments are simply replacing references to the OFT and the Competition Commission with references to the CMA. Others ensure that changes in the 2013 Act to the regime for market investigations apply across the regulated sectors, such as gas, water and rail. Where the sector regulators share powers to refer markets for investigation with the national authorities, they ensure that the streamlining and modernisation in the 2013 Act apply as appropriate to the regulators.

I should add that the order also amends the Enterprise Act 2002 to reflect the CMA’s role in the enforcement of consumer legislation. The CMA will have primary expertise on unfair contract terms. This will enable it to take enforcement action where there are structural market failures. The CMA will also have access to other enforcement powers to ensure that consumer choice is not restricted. That being said, the great majority of consumer law enforcement will continue to be done by trading standards services, with the National Trading Standards Board responsible for co-ordination and prioritisation under the chairmanship of the noble Lord, Lord Harris. As competition is a reserved matter, the order also makes similar amendments to Scottish, Welsh and Northern Irish legislation. Article 3 and Schedule 2 make transitional and saving provision in connection with the transfer of functions from the OFT and the commission to the CMA.

All of that is pretty straightforward when compared with what I am about to cover—namely, the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order. This amends a previous order of the same name from 2003. Again, many of its changes reflect the abolition of the OFT and the Competition Commission and the transfer of their competition functions to the CMA. The order relates to one of the three situations under the Enterprise Act 2002 in which the Secretary of State may intervene in a merger case that raises potential public interest concerns. Specifically, it sets out when the Secretary of State may issue a European intervention notice—or EIN, for short—to repatriate elements of merger cases that otherwise fall under EU jurisdiction. This may arise in merger cases where competition jurisdiction falls exclusively to the EU but where the case raises potential public interest concerns in the UK.

The changes in the order to this EIN process replicate those already made in the 2013 Act to the other two public interest regimes. These are the public interest intervention notice, or PIN, regime, which enables the Secretary of State to intervene in merger cases where the CMA has jurisdiction, and the special public interest intervention notice, or SPIN, regime—noble Lords should perhaps insert their own punchlines here—which enables the Secretary of State to intervene in a merger case on particular public interest grounds where the threshold for CMA jurisdiction is not met. Changes have been made to the powers available to deal with pre-emptive action. Powers to accept undertakings have been repealed and powers to make orders have been strengthened.

Allow me to leave your Lordships with a closing thought. It is true that these orders are unremarkable in themselves but, by approving them today, we are reflecting Parliament’s will to establish the Competition and Markets Authority and the new competition landscape that it will oversee from 1 April. I am confident that these reforms will enhance the competition regime and deliver greater benefits for consumers. I therefore commend these orders to the Committee.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thought for a moment that we had doubled our numbers and increased the interest in the dry but very important issues raised by the noble Viscount, but I was wrong. He rather threw me at the end by saying that he was expecting us to approve the orders today. Perhaps he could very quickly give me an answer on that, as I do not think that that is what we are doing today; I think that we are considering them. The approval comes later and, of course, one cannot bind what I and my colleagues might wish to do when the orders are put to the House for consideration, so we may have to go through all this again. The noble Viscount should not get too carried away at this stage with his rhetoric, which I did enjoy.

The noble Viscount mentioned the pleasures that he had had on the ERR Bill and I was, again, slightly confused by that, as there were occasions where the Minister was distinctly uncomfortable about some of that Bill and may remain so deep in his heart, given the way it was taken over into other areas under his direct responsibility. Some of the points that were brought in remain, in our view, poorly drafted and badly exercised in terms of consultation and process and not up to the standards that we would expect in this House. However, we are where we are. It was always a pleasure to debate the issues with the Minister and I pay tribute to him not only for being a model of what is required at the Dispatch Box but also for being able to generate a vast number of letters that inflect, add to and complete the questions that are sometimes asked but are not able to be answered in the process. For that I thank him very much. To have that on an almost regular basis makes my days in the office much more exciting.

The noble Viscount challenged us by saying that he would make these speeches exciting; I am afraid that I cannot do that myself. I have a number of questions but, as he said, these are not novel or unexpected statutory instruments. We knew that they were coming down the line, but what is novel and unexpected is that they are so close to the start of the CMA to which they refer, which comes into force in a matter of days rather than weeks, as would normally be the case. I suspect—although I have no evidence of this—that the fact that so many colleagues from the department are here suggests that there has been a bit of a problem in getting some of the details of this correct and that it has come close to the wire. Maybe I am wrong on that but, as the noble Lord went through it, it was clear that the orders are very detailed indeed and that there must have been some difficulty in getting them right.

The points that I want to make are very limited. One question on the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014 is whether the Minister can explain a bit more for the benefit of the Committee the discussions that took place with the devolved Administrations. Although this is a reserved matter and therefore not a matter of competence in those areas, the impact that it will have and the suggestion that the Government were legislating at a time that might impact on the devolution and independence discussions going on in Scotland raise the question of what exactly would happen. I understand that there were no Sewel requirements but I would like to have a sense of that, if others have some thoughts on it.

--- Later in debate ---

[Viscount Younger of Leckie]

My Lords, first, I apologise to the noble Lord and the Committee in relation to the consideration of the order. For clarity, the Motion before the Grand Committee today is that the Grand Committee do consider the instrument. The instrument is then subject to a separate Motion to approve on the Floor of the House, usually without further debate, after Oral Questions, as is the norm. I realise that I will have to move the Motion on the next order formally at the end.

I thank the noble Lord, Lord Stevenson, for his comments in this brief debate, albeit between just two noble Lords. I, too, have greatly appreciated the discussions and debates that we have had in my office, in the Chamber and outside, as well as—if I may put it this way—his general congenial interactions. I hope that that will continue. As for the letters that I write, I rather hope that that may not continue, for the noble Lord’s sake, but my aim will be to inform and communicate to him as necessary.

A short closing speech addressing the noble Lord’s questions—I hope that I shall be able to address them all—is also a welcome opportunity to provide noble Lords, just days before it becomes a reality, with an update on the establishment of the CMA and to expand on what I said in my opening remarks. This provision will enable the CMA to fulfil its mission, which is to make markets work well in the interests of consumers, businesses and the economy.

The interests of consumers are at the heart of the CMA’s mission. We have given it a target over three years of demonstrating direct financial benefits to consumers of at least 10 times its relevant costs to the taxpayer and we are requiring the CMA to report annually on how it is delivering those consumer benefits. It will have primary expertise on unfair contract terms legislation and will have additional consumer enforcement powers to tackle practices and market conditions that make it difficult for consumers to exercise choice in an otherwise competitive market. The OFT super-complaint mechanism will be transferred to the CMA, so designated consumer bodies can continue to expect fast-tracking of issues that significantly harm the interests of consumers.

The CMA will co-ordinate its efforts with trading standards on both enforcement and the sharing of research and intelligence. We believe that there is a strong case for reform. We have created the CMA to improve the effectiveness of competition enforcement, to streamline processes by improving the quality of decisions and by taking forward the right cases and to improve speed and predictability for business. This is not to denigrate the outgoing competition bodies. That is an important point that I want to make, given the debate that we had some time ago during consideration of the ERR Bill. They had excellent reputations both at home and abroad and the CMA intends to build on that and, indeed, the leadership.

The CMA will be a non-ministerial department with full operational independence. It will have a mission to make markets work well in the interests of consumers, businesses and the economy. It will be obliged to report annually on the delivery of consumer benefits and the wider benefits in terms of growth, business and consumer confidence, compliance and the deterrence of anti-competitive behaviour.

Finally, the CMA has five strategic goals: first, to deliver effective enforcement, making strong and effective use of its powers; secondly, to extend competition frontiers proactively to identify and address markets where competition is not working well; thirdly, to refocus consumer protection, working with consumer protection partners; fourthly, to achieve professional excellence with robust decisions and effective and proportionate remedies; and, fifthly, to develop integrated performance and demonstrate improved efficiency.

I should like to attempt to answer a number of questions. The noble Lord, Lord Stevenson, asked about the reason for the delay. There have been no problems at all in getting the details correct. The timing is more a result of a proper public consultation that has been required and the scheduling of the business of the House, so it is much more of a process issue.

[Lord Stevenson of Balmacara]

I cannot find the exact reference. The Minister referred to extensive consultation but I think that I read somewhere that neither of these documents required much consultation. If I have got that wrong, I should be grateful if the Minister could clarify it.

--- Later in debate ---

[Viscount Younger of Leckie]

That is a fair question. Although there has not been a formal consultation, there was a need to consult a wide range of bodies. I will double-check that and write to the noble Lord if that needs to be corrected or expanded on.

The noble Lord also raised the issue of whether there had been discussions with the devolved Administrations. I can reassure him that drafts of the order were shared with the devolved Administrations, who were able to consider the provisions to amend the legislation and make some comments. He also raised the issue of errors corrected by the protection of legitimate interests order. The corrections made by the order include Article 16(7), which corrects a typo. Article 18(2)(a) is a revocation consequential on the repeal of Section 69 of the Enterprise Act 2003; the same applies to Article 18(3). Article 18(16) deals with a missed consequential amendment when Section 118(1)(aa) was added to Section 118 of the Enterprise Act. I know that this is a serious matter. Perhaps the noble Lord is attempting to compete with me on the dryness of the issues, but I hasten to add that they are important.

The noble Lord also raised the issue of who leads in different areas. Trading standards are more devolved across different nations. Competition law and enforcement is a reserved matter, however, so I can confirm that the CMA, under the leadership of the noble Lord, Lord Currie, will look across the UK. To clarify a point that I made earlier about the consultation, there was in fact a public consultation on the protection of legitimate interests order—it was on that specific order.

[Lord Stevenson of Balmacara]

I am sorry; I have now found my reference. The point that I was trying to make was that, in relation to these instruments being so late relative to the formation of the CMA, which we welcome, the Minister used the reason that the Government had to do extensive consultation. I would not say that it was an excuse, as that is a terrible thing to say. However, that consultation closed in July 2013 and there was plenty of time to absorb anything that came out of it, particularly as this goes on to say that there were no substantive comments.

[Viscount Younger of Leckie]

As I said earlier, and say again, I will definitely now write to the noble Lord to clarify the process and the element of consultation in as much depth as I can.

To conclude, these orders represent the final stage in the parliamentary process, which began with the Enterprise and Regulatory Reform Bill, to create that new competition landscape. They give effect to policy objectives and provisions that Parliament enacted in that Bill. I therefore commend these orders to the Committee.

Trade: Import Substitution

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 19th March 2014 Lords Chamber

[Viscount Younger of Leckie]

Yes, indeed. The announcement that has been made today will very much help the trade balance, and exports, which I have mentioned already on this Question and on the previous PQ, will benefit.

[Lord Stevenson of Balmacara (Lab)]

My Lords, the Government will be aware from the recent CRESC report that the UK pigmeat supply chain is in crisis. The national pig herd has declined by around 50% and the UK has gone from 80% self-sufficiency in bacon sandwiches to less than 50%. Would the noble Lord the Minister—sorry, the sagacious noble Lord the Minister—agree with me that the Government need to take action urgently to encourage the horizontal integration of producers, to support the creation of farm co-operatives and to provide assistance with marketing?

[Viscount Younger of Leckie]

The decisions that we are taking, particularly in the light of today’s Budget, will lead to a better climate and to more jobs being created and greater security in that sector.

Automotive Industry

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 19th March 2014 Lords Chamber

[Viscount Younger of Leckie]

That is certainly true and I welcome the challenge. We established the Automotive Investment Organisation with up to £3 million-worth of funding over the next two years. It aims to double the number of jobs created or secured in the automotive supply chain through foreign direct investment over the next three years to 15,000. The Government certainly support investment, R&D and skills. For example, we fund an industry-led project with £13.4 million for training to help improve the competitiveness and capability of automotive supply chain companies.

[Lord Stevenson of Balmacara (Lab)]

Does the Minister agree that at the heart of the excellent news that he just gave about the automotive industry is the ongoing strategic collaboration between government and industry through the Automotive Council—a simple Labour innovation bringing together the modern face of engaged and flexible trade unionism with management and the Secretary of State? What plans has the Minister to introduce this to other sectors of our economy?

[Viscount Younger of Leckie]

There is much going on across government in all sectors. I will write to the noble Lord with details of that particular issue. At the moment, we are focused on the automotive car sector and supply chains.

Children and Families Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 29th January 2014 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I hope it has been very clear that this side of the House strongly supports the main thrust of the measures in this part of the Bill in relation to parental leave, and we do not want to do anything to withhold any form of approval for what is happening. We have tried to express our support for that. The amendments tabled today are a reflection of two things. First, that the broad thrust of the way in which the Government have taken forward this agenda is exactly as we would like to see it. Indeed, I might almost say that they have done a little bit more than we would have considered had we been in power and had to take forward this responsibility. Secondly, in so doing they have thrown into sharp relief a number of areas in which measures could be taken which would level up kinship carers to the position that is now being adopted for parental leave.

I sympathise with the Minister responding to the debate, but we should reflect on the fact that, during the passage of the Bill, we have moved from the original position we found ourselves in when we opened up discussions on this part, which was that nothing could be done in this area, to a situation where a number of reviews and considerations of particular issues are now taking place. The purpose of these amendments is to invite the Minister to reflect upon and read into the record the decisions that he has been able to reach in relation to kinship and friendship care, some of which were mentioned by my noble friend Lady Drake, and to ask him whether he will use this opportunity to reflect a little more on the gaps that remain.

I do not think it would require a lot to do the sort of work required, but the important point, as has just been said, is to get some sense of the timescale, so that those who might not be given first priority this time round have something to look forward to so that they can work towards a better achievement of the objectives that they want, particularly in the areas that we have just been talking about.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I intend to keep my remarks as brief as possible while aiming to respond effectively to the substance of the amendments.

Noble Lords will remember our discussions on this very important area of support for family and friends carers during Grand Committee. I welcome this debate and reaffirm our commitment to supporting kinship and friendship care. I appreciate the broad support for these measures from the noble Lord, Lord Stevenson, and Members opposite. I commend the noble Baronesses, Lady Massey and Lady Drake, on their tireless work in this area.

Where family and friends carer policies are applied effectively, the aims expressed in Amendments 58 and 59 will already be met. For this reason, the Government have in place a programme of work to improve the practice of professionals in this area. It is our belief that the key issue in this area is improving quality of practice on the ground rather than changing the legislation which already exists for this group of carers.

First, on Amendment 58, it is already a requirement of the Children Act 1989 that local authorities should support the upbringing of children by their families wherever possible if the child cannot return to live with the birth parents and if it is the most appropriate way to safeguard and promote their welfare. This legislative position is re-enforced by Volume 1 of the Children Act 1989 statutory guidance, which outlines that the local authority should have,

“considered family members and friends as potential carers at each stage of its decision making”.

That guidance is currently being revised to reflect the legislative changes in this Bill and to align it with the new Public Law Outline. The revised version will include strengthened content on good pre-proceedings practice and will re-emphasise the importance of early work with families. It will also provide information on the key elements of good pre-proceedings practice and the use of family group conferences.

I know that officials in the Department for Education have been in regular contact with interested parties, including the Family Rights Group, during the drafting of this guidance and have listened carefully to their concerns. A working group made up of expert practitioners, including directors of children’s services and social workers, has also been formed to act as a critical friend to the department and comment on early drafts. The guidance will be published for public consultation in mid-February and we would welcome any further views from noble Lords as part of that process.

The Government remain committed to the use of interventions at the pre-proceedings stage, which is why we are now funding the rollout of an accreditation scheme of family group conferences and the further use of this service at the pre-proceedings stage. Practice in this area will be monitored and inspected by Ofsted under the new single inspection framework for children’s services, which is designed to assess local authority practice and decision-making at all stages of a child’s journey.

On Amendment 59, we have discussed at length the valuable contribution of family and friends carers and it was with that in mind that in March 2011 we issued statutory guidance for local authorities on families and friends who are carers. That guidance makes it clear that wider family members should receive appropriate support to bring up a child in their care, regardless of whether those children are looked after by a local authority or not:

“The range and level of family support services which may be provided under section 17 is wide … As well as practical support, family and friends carers may need advice, guidance or counselling about how to manage issues such as those arising from contact or from caring for children with emotional or behavioural difficulties due to their earlier experiences. Such services may be provided by local authorities to support both formal and informal family and friends care arrangements”.

Therefore, non-looked-after children can already be included in such care arrangements under Section 17 of the 1989 Act. The 1989 Act does not impose a limit on the amount of support which may be provided under that section.

As I mentioned earlier, we are aware that the quality and quantity of local authority policies is not always at the level it should be. That is why we currently have a programme of work to reduce the variation in practice within and across local authorities. The Department for Education will continue to look at the barriers to implementing the policies and will be looking to take forward work that clarifies the role of the local authority and the importance of good support systems for this group of carers.

We understand that many family and friends carers could do with extra help with the parenting of these children, particularly when dealing with children with behavioural problems. That is why the Department for Education continues to fund initiatives like the Keep programme, which is a group programme which provides family and friends carers and mainstream foster carers with specialist training and support.

While we agree that support and services are sometimes not of the quality that they should be for family and friends carers, we feel that improvements need to be made not by changing current legislation but, as I said earlier, by improving practice on the ground. We will improve the lives of these dedicated and inspirational carers by empowering them to have the information they need to ask for services when they need them and by ensuring that each local authority is aware of their responsibility and has the tools to deliver it. That is exactly what our current programme of work aims to accomplish.

Finally, on Amendment 63, I fully understand the sentiment behind what is proposed, but it is essential that we take the time fully to understand how becoming a kinship or friendship carer affects an individual’s labour market attachment before proposing policy interventions. For this reason, I announced in Grand Committee that the Department for Business, Innovation and Skills will lead a research project into those issues. Officials met recently with the noble Baronesses, Lady Massey and Lady Drake, and representatives from a number of interested organisations such as Grandparents Plus and the Family Rights Group to discuss these issues, and I know that the officials found that very useful.

We will hold a further research scoping event for relevant stakeholders in the coming weeks to gain a fuller understanding of the issues and research challenges and to harness the extensive knowledge and expertise of these organisations. I hope that we will continue to build on these productive discussions and that noble Lords will encourage interested parties to attend the scoping event. It is essential that we properly understand the labour market issues faced by these individuals before deciding whether further policy interventions aimed at strengthening labour market attachment may be the most effective intervention. The research that I have outlined will help government to gain a better understanding of the evidence base, which is the important first step that is needed.

I know that the noble Baroness, Lady Drake, raised at least three questions, and I will write to her to answer them. However, on the point about timing, this is a very urgent matter, but it will depend on the scoping nature of that research. I will write to her on that point, but I want to clarify that we on this side regard this as an urgent matter and will endeavour to move as fast as we possibly can.

In the mean time, I hope that I have given noble Lords sufficient reassurance that the Government are committed to supporting family and friends carers. I therefore urge the noble Baroness to withdraw her amendment.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Tuesday 21st January 2014 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, first, I take this opportunity to thank all noble Lords who have provided thoughtful and constructive contributions to debate throughout the passage of Part 3 of the Bill. I personally understand how sensitive many of these issues—some of which the noble Lord, Lord Monks, has iterated just now—are to some noble Lords. In particular, but by no means exclusively, I thank the noble Lord, Lord Stevenson of Balmacara, for his kind words earlier; the noble Lords, Lord Monks, Lord Whitty, Lord Beecham and Lord Lea of Crondall; and the noble Baronesses, Lady Donaghy, Lady Turner and Lady Drake. I also thank my noble friends Lord Tyler and Lord Balfe and, in particular, my noble friend Lord Cormack, whose brief contribution I failed to acknowledge on Report. Finally, I give my sincere thanks to the Bill team for all their hard work.

I know that the intention behind the amendment of the noble Lord, Lord Stevenson, is to probe the Government’s plans for commencement of Part 3 and to ensure that trade unions are given sufficient time to be able to comply with changes requiring them to report annually on their membership registers. On Report, I offered to meet the noble Lords, Lord Stevenson and Lord Monks, to discuss this matter in more detail. Indeed, as they alluded to, that meeting took place two days following Report, on 15 January. Noble Lords may like to be reminded that, on Report, I suggested that the earliest the provisions would be commenced was October 2014. I am pleased that I was able to say at the meeting last week, and can confirm to the House today, that commencement will not occur before April 2015. This follows careful consideration of what has been said during the parliamentary stages and concerns raised during the BIS consultation, as well as discussions between the Secretary of State for Business, Innovation and Skills and Frances O’Grady, the general secretary of the TUC.

Commencement in April 2015 would mean that the very earliest any trade union would be required to submit a membership audit certificate to the certification officer would be August 2016. In practice, it is likely to be later than that for many unions, as many have a calendar reporting year and would not be required to submit their first certificate until June 2017. Noble Lords will recall that this is because unions will submit a membership audit certificate for the first full reporting year after the changes become law. The 17-month period that I referred to on Report is a combination of the union’s 12-month reporting period and the five months that is allowed after that period to submit the annual return.

I hope that this thoroughly reassures noble Lords as, in the meeting that I had with the noble Lords, Lord Stevenson and Lord Monks, I was led to believe that the reassurances that I personally gave were accepted. However, we will continue to work closely with trade unions as we head towards commencement, in particular by discussing with them the guidance that will be needed as well as consulting on the draft order that identifies eligibility to be an assurer. I believe that an April 2015 commencement date will give trade unions the time that they need to prepare and to amend their rules, and understand that the general secretary of the TUC agreed that this was achievable. I have written to the noble Lords, Lord Stevenson and Lord Monks, and placed copies in the Libraries of both Houses confirming this. The Secretary of State has written in similar terms to Frances O’Grady. I hope therefore that the noble Lord is reassured and that he will withdraw his amendment.

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for his very full response to our amendment. I am obviously sad that he will not accept the amendment as laid, as it seems to exactly mirror what he has announced, but maybe these are days when the Government do not want to see too many concessions being scored, so I understand the problems. Assuming that what he has said is exactly what we think it is, and given that we have letters and documentation to support that and that letters are also being written separately to the TUC confirming it, I beg leave to withdraw the amendment.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Monday 13th January 2014 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

I declare an interest as a retired member of a large union. As the noble Baroness has just said, it is common ground that the unions in Britain play a significant part in the modern economy. They should be cherished, not castigated. As has been mentioned, if the Government had brought forward such a burdensome set of duties on any other section of civil society, there would have been an outcry. Well, there is an outcry and the Government should listen.

For many employees, their membership or lack of membership of a trade union is a private choice, and one which they desire to keep confidential for what may be very legitimate reasons. The knowledge that under these new powers, trade unions could be required to provide their membership register to a government-approved official for “good reason” may act as a disincentive for workers to join unions, particularly in light of the current concern over union blacklisting. As my noble friend Lord Monks said, the Government are introducing this series of measures at the same time as the full extent of the scandal of blacklisting in the construction industry is gradually coming to light. This is by no means the only industry in which members of a union may wish to keep their membership confidential for fear of being subject to discrimination.

These measures clearly go beyond what is necessary and they are certainly not proportionate if they are to achieve any legitimate aim behind the proposals, if indeed there is one.

[Viscount Younger of Leckie (Con)]

Before I address the amendments I would like to say a few words about blacklisting, which was raised by the noble Lords, Lord Monks and Lord Morris, and my noble friend Lady Williams, because at each stage of this Bill we have sought to emphasise how seriously this Government take any allegations of blacklisting. The Trade Union and Labour Relations (Consolidation) Act 1992 makes it unlawful to refuse to employ a person because they are a member or not a member of a trade union or because they refuse to join or leave a trade union. This position was strengthened in 2010, when in response to the Consulting Association blacklist uncovered in 2009, the Government introduced anti-blacklisting regulations and increased the penalties for unlawful processing of data. Data controllers can now be fined up to £500,000 for serious offences. There have been several allegations of new evidence of blacklisting to date, but no evidence of this practice recurring. The Scottish Affairs Select Committee and Information Commissioner are both currently investigating the potential for ongoing offences, and the Government continue to take a close interest in this issue. Therefore, the provisions that we are considering today do not increase the risk of blacklisting, because of the protections in place around the treatment of membership data.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, it is interesting that the questions we are left with keep coming back and keep being unanswered. What is the serious public policy issue behind this proposal? What exactly is the problem? What will this Bill achieve that current legislation does not achieve? Will the measures being proposed do more than simply increase the regulatory burdens on trade unions? We have all those questions and very few answers.

We know that union membership is already regulated by the Trade Union and Labour Relations (Consolidation) Act. Section 24(1) puts a duty on unions to maintain an up-to-date register of members’ names and addresses so far as reasonably practicable. This legislation has stood the test of time since the days of Mrs Thatcher. As has been said already, we are not aware of any calls having been made to the Government to extend this provision. BIS, the certification officer and ACAS have confirmed under freedom of information requests that they have received no representations for such a measure.

As my noble friend Lord Whitty said, it may be that a better self-certification system could be an advantage. I say “it may be” because we do not know what the problem is but cloaking the issue in some spurious idea that there is some public concern out there that would be remedied by having an additional checking arrangement is simply not sufficient.

[Viscount Younger of Leckie]

My Lords, I turn to two amendments which seek to drastically reduce the effect and extent of the provisions as drafted. This would in practice undermine the Government’s key policy objective, which is to introduce a proportionate and effective reporting and enforcement mechanism alongside the existing duty of unions to maintain an up-to-date membership register so far as is reasonably practicable.

Amendment 29 would remove Clause 37 and the role of the independent assurer from the Bill altogether. Clause 37 gives credibility to the assurance process by requiring independent scrutiny, which is in line with the Government’s overarching aim to provide greater assurance of the maintenance of trade union membership registers for the benefit of members, employers and, importantly, the wider public. As some unions become large organisations representing members across a variety of employers and workplaces, their administrative requirements become more complex. As a consequence of the prevalence of very large unions in recent years, there is also now an increased public perception of a union’s scope of influence.

This may be an appropriate moment for me to restate what I said in Committee: I am not minded to comment on the media coverage of particular industrial disputes, such as the Grangemouth refinery or, more recently, the issue affecting Howdens. Instead, as I should, I will focus on the separate issue at hand relating to the obligation of unions to maintain up-to-date membership registers. Perhaps this can also be described as playing a straight bat. I hope so.

The nature of union membership data means that they decay easily—for example, addresses can quickly become out of date. About 2 million people move in and out of union membership every year, which equates to around one in four union members. The register for a union which has a 25% turnover in membership could theoretically be entirely out of date in four years. Unions are already required by statute to maintain a register of the names and addresses of their members. What we are introducing is annual reporting on the compliance of unions with this duty where currently there is none. I believe—

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, I have never in my long life met a Conservative member of a trade union. It is very nice to be introduced to one and to hear him speak. It has been very evident from the speeches we have heard, both in this small debate and previously, that if the Bill is to progress and be brought into law it must operate with the best chance of success otherwise it will not have been worth a candle doing it. As my noble friend Lord Monks said in an earlier intervention, the right way to do this is to give the unions—particularly the larger unions—adequate time to comply with the Act in a way that is cost effective, economical and practical, but also from their point of view. Unions are, after all, independent self-governing bodies. As the noble Lord, Lord Balfe, said, they rightly have procedures for making complex changes in their constitutions and it will be necessary, as the Bill recognises, that the unions will make some changes through rules conferences and the like. This is not to say in any sense that there is not anything wrong with what is currently in the Bill, but I detect in some of the comments made that we are still not absolutely clear about how the procedures will operate and the timescales that will be on and that will interfere a little bit with transparency.

When he responded to this point in Committee, the Minister said that he shared the sentiment that,

“trade unions should be given sufficient time to prepare”,

and he hoped he could,

“offer a positive and emollient answer”,—[Official Report, 11/11/13; col. 596.]

to allow time for the bedding down of the new legislation. I take it from that that he is still interested in trying to make sure that this works well. Picking up on what has just been said, I get to 17 months from the comments that were made during Committee if I follow two tracks. The first is that a union whose reporting year ends on a fiscal basis—that is, 31 March—would not need to submit a report for the year ending 31 March until the end of August 2015, which I think is 17 months if I do my maths correctly. However, a union that reports on a calendar-year basis would have a little more time. It would not have to submit its report for the year ending 31 December 2015 until the end of May 2016.

That is the sort of level of complexity which we are operating on. If we are going to fit a 17-month period, which I think was mentioned earlier as being appropriate, combining it with a Royal Assent, possibly by March 2014, and a period of consultation on the question of how assurers are going to be both defined and appointed, that suggests that it would be sensible to have one further round of discussions before it is finalised. Will the Minister consider having a short meeting with me and a few colleagues to try to run over this so that we can get some absolute clarity on it? Thereafter, we can all work together, not in any sense to shake the principles which are part of this part of the Bill, but to make sure that they work effectively.

[Viscount Younger of Leckie]

My Lords, Amendment 33A could delay commencement of the provisions in Part 3, as they would not come into effect until the certification officer knows that all trade unions with more than 10,000 members have changed their rules to provide for the appointment and removal of an assurer. I know that noble Lords have been concerned that unions should have sufficient time to prepare for these new arrangements. In particular, we have been told that many unions do not routinely have an opportunity to make rule changes—I think the noble Lord, Lord Monks, alluded to that earlier. I am happy to offer reassurance to the noble Lord, Lord Stevenson, and other noble Lords that unions will have the time that they need. They will have at least 17 months to comply from the point at which the legislation takes effect, because the provisions will not apply retrospectively.

Unions will be required to submit a membership audit certificate alongside their annual return for the first full reporting year after the changes become law. The 17 months is the combination of the 12-month reporting period plus the five months that is allowed after that period to submit the annual return. The earliest that the provisions will take effect is October this year, which would depend on Parliament granting Royal Assent next month. That being the case, unions would have a minimum of 25 months from Royal Assent. In practice, many unions will have much longer.

Unions have different reporting years: many work on either a calendar or a financial year, which the noble Lord, Lord Stevenson, mentioned. Were the legislation to take effect in October 2014, a union with a calendar reporting year would first provide the membership audit certificate by the end of May 2016; for a union with a financial reporting year, it would be the end of August 2016. The noble Lord, Lord Monks, raised the issue of allowing unions sufficient time to meet the new requirement. I entirely sympathise with that and have said something about it just now. I have to confess that this is not the most straightforward of timetables to set out and I would be very happy to meet the noble Lords, Lord Stevenson and Lord Monks, and any other noble Lords to clarify the timings and state why we think this would be sufficient for trade unions to make the transition. That reflects the discussions that we have had with the TUC and others.

I take this opportunity to warmly welcome the noble Lord, Lord Balfe, and the experience that he brings on union matters, something I mentioned earlier in respect of the noble Lord, Lord Monks; it is only fair to acknowledge the experience that the noble Lord, Lord Balfe, has as well. I have had some discussions with him, at his request, on the question of whether the £10,000 threshold is set at the right level. Our primary objective is to supply assurance to union members, and to the wider public, about the existing statutory requirement to maintain an up-to-date register of members. The requirement to maintain a register applies to all unions, no matter what size. However, at the same time, the Government do not want to unnecessarily prohibit the creation of trade unions or undermine their ability to operate. We believe that it is possible for a union to be confident in the accuracy of all its records where its membership is small. We also believe that the wider public will think it reasonable that special provision is made for the smaller union and accept that where numbers are smaller it is reasonable to rely on the union’s own assessment.

Self-certification means a union officer assuring that every individual record is up to date, so far as is reasonably practicable. We think that this is achievable for unions with 10,000 members or fewer, but it becomes much more challenging where there are more members than that, which was part of the debate that we had earlier. The union official would have to be confident of the position and union members and the wider public would have to have trust that this was reasonable—a point, again, that I made earlier. By contrast, independent assurance focuses on whether the system in place for monitoring records is satisfactory, as opposed to making a statement about the accuracy of individual records. I therefore believe that this amendment is unnecessary and I ask the noble Lord to withdraw it.

Businesses: Employee-shareholder Scheme

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Thursday 9th January 2014 Lords Chamber

[Viscount Younger of Leckie]

My Lords, it was not unexpected that this issue would return to your Lordships’ Chamber, and the noble Lord, Lord Mitchell, has obliged—although perhaps slightly earlier than I might have hoped. The status has only been introduced recently, so the phrase “early days” springs to mind.

In terms of the point that the noble Lord made about the freedom of information response given to the Financial Times, it was on the number of inquiries that the Government had received on the status. I know that the noble Lord submitted a Written Parliamentary Question to me relating to the number of people who had become employee-shareholders. There were two distinct questions that required different answers.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I wonder, when the history of this period is written up, whether this rather shoddy episode might not be taken as representative of the very low quality of policy-making by this coalition Government. This policy was commissioned from a party funder—though not, as far as I know, a hairdresser. It was based—by his own admission—on his private views and published without supporting evidence. It was announced by the Chancellor as the centrepiece of an otherwise empty and vacuous Budget, foisted on the Business Department and pushed through this House by the plucky noble Lord. It is widely derided in this Chamber and openly rubbished by the deputy leader of the coalition, but—and people will remember this—it was voted through by these people on a whipped vote. So I ask the Minister: what is his next trick?

[Viscount Younger of Leckie]

It was interesting to listen to the noble Lord opposite on that. We are doing more than the previous Government did to encourage employee-stakeholders in businesses. This particular scheme is one of several that are geared towards helping, and giving some flexibility to, young, innovative companies starting up. I am pleased to say that there were 270,000 business start-ups in the UK in 2012, the highest annual figure since 2007. In 2012, there were 15,000 more business start-ups than business closures—the second year in succession that this has occurred. Clearly, there is some success coming through, so I do not agree with the tenet of the argument.

Copyright

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Thursday 5th December 2013 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I am most grateful to my noble friend Lady Buscombe for initiating this debate. Of course, I have had the pleasure of debating copyright issues with her on a number of occasions, most recently on the Enterprise and Regulatory Reform Bill. Although we have not always been able to agree on some points, I have always found her interventions to be thoughtful and considered, and today was no different.

The Government have done much to ensure that interested parties have their say. Copyright is important for the creative industries and for the country—a point made by many noble Lords, particularly my noble friend Lord Stoneham. Copyright exceptions are no different, so the Government are taking proper account of rights holders’ concerns.

The Hargreaves process has been about listening, and listening carefully. Professor Hargreaves himself sought and received a wide range of views that informed his proposals. The Government then consulted fully on their own proposals, and these built on the work of Professor Hargreaves.

The Government considered the responses carefully and made changes before setting out their policy. The digital copyright exchange concept, for example, was further refined. The policy on exceptions was set out in December 2012. The Government then consulted interested parties on the draft regulations through its technical review and have continued to listen. However, the process has to conclude at some point. The Government cannot consult endlessly, but I continue to listen today.

My noble friend Lady Buscombe commented on the number of meetings that the Government have held with stakeholders over the past 18 months. Over the course of the year, I have had detailed discussions with creative industry representative bodies, creators, broadcasters, research institutions and others on this important topic. I have also been keen for Parliament to debate these issues, and I am glad that we have heard a number of viewpoints today.

A number of questions were put to me during the debate and I will, as ever, try to respond to all the issues raised. To begin, I would like to make a few general points. The Government know that in this area views are divided and that not everyone will be pleased all the time. The focus must continue to be on what we believe is good for industry, consumers and growth. The copyright system supports growth by offering incentives to creators and investors. This serves the public interest by stimulating the creation of new copyright works. At the same time, the system needs to serve the reasonable needs of the whole range of businesses and individuals affected by it. Everyone has an interest here, and the Government have done their best to hear everyone’s views.

The creative industries are a vital part of the UK economy and its culture. We have heard today about some of their concerns. The exceptions we will ask Parliament to approve are designed not to undermine business-to-business licensing. They will not harm the ability of content-owners to provide additional services to consumers in new and exciting ways. For example, the licensing of services such as UltraViolet and Tune Match will be unaffected.

What we have heard suggests that the copyright system has simply not kept pace with the digital revolution. My noble friend Lady Buscombe mentioned this. Copying is at the heart of many new technologies being used by consumers, teachers, academics, curators and researchers. As a result, a great many innocent, reasonable activities are illegal or questionably legal, simply because they involve some element of copying. The law needs to change. For example, a teacher should be able to put a quote on an interactive whiteboard in order to illustrate a point to the class; a museum should be able to make a copy of a film in order to preserve it for posterity; and somebody who has bought a CD should be able to copy it to their MP3 player in order to listen to their music in the gym. Changes are needed if users and creative industries alike are to make the most of technology. The Government have proposed relatively small but important changes that will apply to all technologies, including technology yet to be invented. We do not want out-of-date laws to restrict people’s use of new technologies and services.

We have also listened to concerns about complex copyright law. The proposed changes will remove up to 45 pages of unnecessary rules and regulations from the statute book while maintaining the essential protections that creative industries need and want. These changes should make copyright works more valuable to all by giving users clarity about their rights and building respect for copyright in the process. Creators stand to gain from these changes, particularly where they are innovating. Users will have new de minimis rights, but if they want to do more than those rights allow, they will need a licence.

We believe these are modest changes that together would contribute more than £500 million to the UK economy over 10 years. Additional benefits of around £290 million are predicted, along with positive effects on innovation, competition, education, research and, of course, respect for copyright law.

Let me now move to address the main points made and questions raised during the debate. I shall start by answering a question asked by my noble friend Lady Buscombe and the noble Lord, Lord Stevenson, on the timetable and the next steps. Following the technical review, the next iteration of the regulations is with parliamentary counsel, which is where we are now. They will then be subject to approval by me and the Secretary of State Vince Cable. The Government’s aim is to lay regulations in time for the common commencement date in April 2014. This means that it is likely that regulations will be laid before Parliament in February 2014. The noble Baroness, Lady Warwick, asked when the exception for text and data mining will be in place. On that question of timing, as with the rest of the package, the Government intend to put this exception in place in 2014.

I turn now to the issue of contract override.

[Lord Stevenson of Balmacara]

Can the Minister confirm whether he has yet decided how many individual exceptions will be introduced and if they are to be bundled in more than one group or separately?

[Viscount Younger of Leckie]

The noble Lord makes a good point about bundling. We are not in a position yet to be able to give an indication on that. I have indicated on several occasions how I would like to have as many of the SIs as possible unbundled, to allow further debate; but I am not in a position to give a full answer.

On the question of contract override, the Government want to see these benefits delivered in full. This is why they believe that, where a copyright exception has been established, restrictions should not be reimposed by contracts. My noble friend Lady Buscombe raised this subject, asking why the contract override provisions had not been subject to their own separate consultation and discussion. The contract override provisions were initially proposed in the Hargreaves review, and were subsequently consulted on explicitly by the Government’s copyright consultation which ran, as I mentioned earlier, between December 2011 and March 2012. Following that process, the contract override provisions were also discussed at each of the open meetings held during the technical review period. Given the attention and consideration that has been given to these provisions—in multiple sessions and consultations—the Government believe that this element of policy has been properly and thoroughly discussed.

My noble friend Lord Clement-Jones asked why the existing wording in Section 50 of the CDPA was not used. The existing wording in Section 50A, which must be read together with Section 296A, allows the making of backup copies of computer programmes. This provision declares void any contract terms that seek to prevent this activity. Our approach to this issue in the present context is slightly different. It does not void contract terms, but instead renders the terms unenforceable and only does so to the extent that they restrict a permitted act. Taking the approach from Section 50A of rendering the term void would be a disproportionate measure in many cases, and we believe is unnecessary here.

My noble friend Lord Clement-Jones also asked whether I was confident that the proposed contract override provisions were fully consistent with the Government’s obligations under the information society directive. The answer to that is in the affirmative; the directive is clear that the ability of member states to implement domestic provisions affecting contract law is unrestricted. My noble friend Lord Clement-Jones also asked in the same context why such a fundamental change to the application of UK contract law was being made by secondary legislation. This is not a new concept in British copyright law: contract override clauses exist already in relation to a number of exceptions and we believe that this is a sensible and proportionate approach that has no broader impact beyond allowing the use of these copyright exceptions by their intended audience.

I now turn to the important subject of impact assessments. The Government have worked hard to ensure that the proposed changes were based on evidence. The impact assessments were based on the best evidence available and were reviewed and validated by the independent Regulatory Policy Committee. My noble friend Lord Clement-Jones asked whether I stood by the proposed benefits of the exceptions, and the headline figure in Hargreaves included patents and the digital copyright exchange, which has been misunderstood in some criticisms.

On the numbers relating to exceptions, the Government have refined them to take into account further evidence, which is explained in the impact assessments. We stand by the estimates that are in the impact assessments, and these assessments have been validated, as I say, by an independent body.

I move on quickly to the important subject of private copying, which was raised by a number of noble Lords, including the noble Lord, Lord Berkeley. The noble Lord asked for clarification about the exception for private copying for personal use. This measure will give consumers greater freedom to enjoy creative content that they have bought, by allowing them to make copies for their own use. We believe it is a commonsense change which is widely supported by consumers and aims to build public confidence in the copyright system.

The noble Lord, Lord Berkeley, and my noble friend Lord Stoneham suggested that the private copying exception should not extend to cloud storage, and that that would be “a step too far”, I think was the expression used. We say that this is intended to be a technology-neutral measure and that it should be fit for the future. Consumers make little distinction between local and remote storage, and it makes little sense to do so in this legislation.

Briefly, in my final minutes, the important matter of text and data mining was raised, not least by my noble friend Lady Buscombe, who asked in this context about the meaning of the term “lawful access”. It is access that is legitimate based on a proper application of the UK’s legal framework law and, where applicable, relevant contract terms.

I fear that there are many other questions I have not had time to answer, and I pledge to write to noble Lords on their questions, and particularly on this important subject. To conclude, I reiterate that the UK Government—as noble Lords will already know—is committed to maintaining the incentives that copyright offers to all types of creator. These changes will achieve that, while also allowing consumers, researchers and many others to make reasonable use of the copyright works they have paid for.

Children and Families Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 20th November 2013 Grand Committee

[Lord Stevenson of Balmacara (Lab)]

My Lords, we have moved on to Part 6 which has been greatly anticipated on my side of the House and, I am sure, with equal enthusiasm and excitement by my noble friend the Minister. We have a substantial number of amendments to get through and I know there is pressure on all sides to try to complete this within the time. We will do what we can to achieve that but there are still some very important issues that we want to pick up and I make no excuse if we spend some time debating them. Having said that, I reassure the Minister that, by and large, the Opposition are very pleased to see many of the measures that are proposed in these parts of the Bill. We have comments for discussion and we will do our obvious constitutional duty to scrutinise those things that are there, but we are not making major objections to them. We seek to refine, occasionally to add and perhaps to probe the Government a bit more on some of the reasons why things do not appear as we would like them to. I am also grateful to the Minister for allowing us a chance to talk to him and the Bill team which was very useful.

Amendment 266AZA would ensure that there is flexibility in the legislation for exceptional circumstances. The purpose is to ensure that if children need to be looked after in exceptional circumstances, the parental leave enabled by the substantive clauses can be allocated to someone else such as a grandparent, an aunt, an uncle or even the father if he would not ordinarily qualify.

It does not take much to imagine how devastating exceptional circumstances could be. It may be that the mother becomes incapacitated, very ill or even dies in childbirth, or that there is some other complication such as a late-pregnancy stillbirth—something that my mother suffered—that will require urgent and immediate assistance but also longer-term assistance over the period covered by the shared parental leave. At present they would be able to take only a limited amount of time—almost certainly unpaid time off for dependants—if indeed it were granted by their employer.

Similarly, there may be circumstances in couple families where the mother is unwell but the father does not qualify for shared leave to care for the new baby. The Bill should make provision for exceptional circumstances when shared parental leave and pay could be transferred in such difficult and, as I have said, exceptional circumstances. Surely we ought to be doing everything that we can to support families in these circumstances.

We had a previous meeting with the Minister in which we had a brief discussion on this point, and I have read the response of his honourable friend in the other place. I understand that he may feel that the amendment could distract from the main thrust of the Bill and that his initial position may be that the Government do not expect parties who are not parents or partners to share parental leave. I also fully understand, to anticipate other amendments due to come up shortly, that the Government do not want to weaken the engagement of fathers in raising their children. We accept that there is strong evidence that the early engagement of fathers in caring for their children leads to positive outcomes for children. However, the amendment is really about exceptional circumstances, already outlined, in which other statutory provisions may just not work or, if they did work, would not be sufficient, as in the case of a late stillborn child, where of course by definition shared leave cannot be invoked.

If the Government cannot accept this amendment—although I hope that they will—perhaps the Minister will acknowledge that they might consider using the provision under the new sections in the Bill to make regulations for these sorts of extenuating circumstances. I beg to move.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I thank the noble Lord, Lord Stevenson of Balmacara, for bringing this matter to the attention of the Committee, and for his broad support for the shared parental leave provisions.

The noble Lord’s Amendment 266AZA proposes that in certain prescribed circumstances, other family members or related parties should become entitled to shared parental leave. The circumstances that he has outlined include where a mother is incapacitated, where a medical practitioner prescribes that the mother is unable to care for her child, and where the mother dies in childbirth.

Nobody would wish for any family to have to deal with these difficult and sometimes tragic situations. Unfortunately, many families have no choice. The challenge of looking after a very young child in these situations may be overwhelming. Often relatives or family friends step in to help those concerned, and it is important that we recognise the extremely important contribution that these individuals make, often in particularly challenging circumstances.

However, it is essential to remember what the introduction of a new system of shared parental leave and pay is aiming to achieve. This policy aims to facilitate shared parenting. This means encouraging greater paternal involvement. Many fathers want to be more involved in the upbringing of their children, and there is clear evidence that this brings real benefits not only to the parents but to children and young people themselves.

In the circumstances that have been raised during this debate, shared parenting—in a very literal sense—is not possible. The amendment tabled by the noble Lord, Lord Stevenson, would enable the sharing of leave with another family member or related party when the mother is unable to care for her child, either through incapacity, illness or death.

The way in which shared parental leave may be taken in circumstances where the mother dies will be set out in regulations. For the benefit of the Committee, I will outline how the Government envisage that this will work. If the mother dies before the parents have opted in to the new system—for example, if she dies during childbirth—an eligible father or partner will become entitled to the full balance of shared parental leave and pay. If the parents have already opted in to the new system, any outstanding leave and pay for which the mother was eligible will become available to the father or partner, if he is eligible.

The Government do not intend to make equivalent provisions where the mother is incapacitated or where a medical practitioner prescribes that a mother is unable to look after her child. This is because the mother may need to remain on maternity leave, or may make a recovery and wish to use the balance of her shared parental leave in the way in which she had originally envisaged. It may not always be possible to determine how permanent a change in situation is.

The Government recognise the extremely valuable contribution that relatives and friends make to support families at a difficult time. However, we do not believe that these individuals should become entitled to shared parental leave and pay. It is essential that we send the right message to fathers that their role as a parent is as important and valued as that of the mother.

I am grateful for the opportunity to discuss these issues with the Committee and I ask the noble Lord to withdraw his amendment.

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[Lord Stevenson of Balmacara]

I support my noble friend Lady Lister in her amendment and have added my name to it. I thank the noble Baroness, Lady Tyler, for her contribution to this debate. This matter seems central to the thrust of this section of the Bill and it seems odd that the logic set out in the original consultation paper and impact assessment has not been brought to a proper resolution within the Bill.

Two issues are clearly at play here. It seems perverse not to permit people who may have a complicated and difficult transition between full-time caring and going to work to do that in chunks of less than a week. Although this has been explained to me by two notable experts, I still do not quite get why it is so difficult to calculate pay in terms of less than a week. I understand the complications of doing it on a shared-parenting basis, because there are two sets of employers and two sets of payments to be looked at and, obviously, the Government are the third person in the room. Even so, when I was last involved in serious payroll work, we had pretty good figures for what it cost to operate in terms of an hour, a day or a week. That came up particularly in relation to strike action. I am sure that the noble Viscount will have been in similar situations, although I am sure that workers in his businesses were never on strike against him. However, when workers go on strike and you have to deduct pay for it, you have to work out exactly what it is, otherwise you get into trouble. In the systems that I was operating, we had a clear view of what the cost was at that level. If you can calculate what it costs per hour to employ somebody, you can presumably also make the system flexible enough to allow them to work in less-than-week blocks, which is one of the proposals in the amendment. On part-time leave, all the points have been made and I support them.

[Viscount Younger of Leckie]

My Lords, the Government understand the intention behind the amendment and I am glad of the opportunity to have this short debate on the issue today. Before I respond to this specific amendment, I should like to take a moment to set out the rationale behind the introduction of shared parental leave and the importance of these changes for families. Bearing in mind the tenor of the comments made earlier by the noble Lord, Lord Stevenson, about brevity, I shall attempt to be brief.

The restrictions in the current maternity and paternity system are outdated and do not reflect the way in which modern families want to raise their children. They compel mothers to take the bulk of the time off and give fathers no choice but to stay at work in the early stages of their child’s life. This approach maintains the outdated perception that a mother’s place is in the home and a father’s place is at work. It is known to damage women’s career prospects, because employers expect young women to take large amounts of time out of the workplace to raise children. It can also mean that mothers feel unsupported in caring for a child, and fathers do not feel involved in their child’s upbringing.

It is right that mothers are able to take all the leave that they need to recover from birth and to bond with their new baby. However, they should be able to return to work without sacrificing the rest of their leave. This should be available to the family to use in whatever way they choose. For some families, this will mean that the father takes on the majority of the caring responsibilities very shortly after birth. For others, it will mean mixing periods of work with periods of leave to share childcare. This Bill will make this possible for the first time. The introduction of shared parental leave and pay aims to give families flexibility in how they share childcare when they have a baby. The current arrangements are rigid and inflexible, enabling only one parent to take leave at a time and allowing parents only to “take it in turns” to care for their child.

The changes introduced by the Bill will enable parents to take leave in blocks as small as one week and will remove the restriction on parents taking leave together. The Modern Workplaces consultation, which the Government published in May 2011, set out the Government’s ambition for leave to be taken in blocks of less than a week to allow parents to take leave on a part-time basis. Unfortunately, in this instance, this worthy ambition has not been possible. I will explain why.

The UK has one of the most flexible labour markets in the world. UK employment legislation gives employers and employees freedom to agree individual contracts between themselves, without restricting them to set working hours or working patterns. Shared parental leave is flexible. It will allow parents to choose how to share it between themselves and to take leave as an individual right, in discussion with their employer. This variation in working arrangements creates a difficulty when trying to allow shared parental leave and pay to be taken in part-week blocks.

Here, I disagree with the noble Lord, Lord Stevenson, over the mathematical calculations. One parent may have a standard working week of 37 hours a week, or 7.2 hours per day, and their partner may work 16 hours per week working two eight-hour days. Calculating the ratio of the weekly entitlement to shared parental pay that should be paid when an individual takes one day off would be complex for an employer. However, this is magnified when a parent decides to transfer their remaining part-week entitlement to their partner for them to use. It would be even harder for small businesses, without access to an HR resource, to administer. The Government are mindful that shared parental leave and pay will be an innovative system. To add into the new system the facility to take leave and pay in periods of less than a week risks creating significant additional costs and burdens for employers.

The Government instead propose to allow shared parental leave to be taken on a part-time basis, using a principle that is already well used and understood by employers. Under existing maternity leave provisions, mothers are able to return to work for 10 individual working days without ending their maternity leave or losing their entitlement to maternity pay for that week. These are called keep-in-touch, or KIT, days. The Government propose to give parents on shared parental leave additional keep-in-touch-style days to allow part-time working on shared parental leave without affecting entitlement to statutory shared parental pay. It is intended that these days will have a different name in the context of shared parental leave, which I hope addresses one of the points made by the noble Baroness, Lady Lister, because the intention for shared parental leave would be different from the intention for maternity leave. The name would reflect the fact that these days can be used to achieve a part-time working pattern or a staggered return from shared parental leave.

The Government are aware that some interested parties, such as the TUC, are concerned that there is no requirement on an employer to pay an employee more than their statutory payment when they are taking a keep-in-touch day. The Government will provide guidance to employers on how to use these provisions and will strongly encourage employers to pay an employee their full contractual rate if they work on a keep–in-touch day.

The Government believe that it is important to maintain the flexibility in keep-in-touch days to allow parents to return to the workplace for short visits. The Government do not wish to discourage these sorts of visits by forcing an employer to pay an employee’s contractual rate. However, where an employee is undertaking work, it is appropriate that that employee is paid accordingly. Keep-in-touch days are entirely discretionary for both an employee and employer to use. An employer cannot insist that an employee uses a keep-in-touch day and an employee cannot insist that their employer allows them to work part-time by using a keep-in-touch day.

As I have mentioned, shared parental leave and pay is an innovative system and will need time to bed down. It is right that proposals for leave and pay to be taken in periods of less than a week should be considered alongside any review of the shared parental leave system. The noble Baroness, Lady Lister, asked why we do not take powers in the Bill to allow shared parental leave to be taken on a part-time basis, to be set out, in effect, in regulation. The Government are sympathetic to this proposal but without a clear policy to enable the shared parental leave to be taken part-time, regulations cannot be designed at this time. My department has explored this fully and will continue to consider it as part of the review of shared parental leave.

I hope that reassures the noble Baroness that the Government share her ambition and I ask her to withdraw her amendment.

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[Lord Stevenson of Balmacara]

My Lords, Amendments 266AB, 266AC and 266C in this group stand in my name. Taken together, these would ensure that existing protections in relation to redundancy and leave are not lost by requiring rather than permitting regulations regarding redundancy during shared parental leave to be made and to include provision requiring an employer to offer alternative employment.

Amendment 266C would enable a parent who has taken a period of leave of 26 weeks or less to return to the same job, and not just a job within the same employer. My noble friend Lord Touhig has set out the general case for where these amendments would take us. I would like to pick up a particular aspect of that which is the growing concern about discrimination. Maternity rights and employment regulations that enable parents to balance work and family responsibilities have been key drivers in giving women greater access to work and, importantly, an independent income. Over the past few decades, thanks in no small part to changes to workplace protections, women have entered and stayed in the labour market in unprecedented numbers. However, there is still far to go. Our workplaces have not adapted to meet the needs of this changing and gender-diverse workforce. Women pay a penalty in the workplace as a result of spending time away from the labour market to have and care for children, and this time away often negatively affects future career prospects and earnings. This “motherhood penalty” helps hold the glass ceiling intact and reproduces gender stereotypes about women as the “caring sex” that fuel occupational segregation, to which the Minister referred in a previous debate. People often talk about jobs being characterised as men’s or women’s work. For too many women, this still culminates in pregnancy discrimination more generally in the workplace.

One of the cumulative impacts of the effects of the “motherhood penalty” is that it ultimately leads to a lack of women in positions of power at the top of all quarters of political, public and professional life. We surely all feel that that is out of date. Even before the recession began, it was estimated by the Equal Opportunities Commission that up to 30,000 women lost their jobs due to pregnancy discrimination each year. There has been no similar research into the incidence of pregnancy discrimination following the economic downturn, but all the indications are that it has increased significantly. In times of austerity, when employers cannot afford to take any perceived risk to making profit and growing business, discrimination against women in the workplace is likely to rise as women, particularly of child bearing age, appear to be the riskier and less affordable choice for employers.

Working Families, which has been helping us with research in this area, has evidence that many women are subject to discrimination while pregnant or on maternity leave. Its helpline report provides evidence of a hardening of attitudes among employers and more blatant discrimination taking place. This includes women being sidelined or left out when promotions are being considered, demoted on return from maternity leave, and in some cases women suffer harassment and pregnant workers are sacked. These are unacceptable practices and these amendments would help to remedy them.

[Viscount Younger of Leckie]

My Lords, I am glad that these amendments give us the opportunity to debate the detail of how shared parental leave will work in practice for families. Shared parental leave will offer families new choice and flexibility about how they manage their childcare arrangements in the first months of a child’s life. It is true that this opportunity will be used by parents only if they feel confident that they will continue to be treated fairly in the workplace when they return.

Current maternity and additional paternity leave provisions provide protections to parents against dismissal; additional support when parents are absent from the workplace during a redundancy process; and the right to return to work into the same job, or in certain cases if that is not reasonably practicable, a similar job that is suitable for them and of equal standing. These protections are important to parents and will directly influence the decisions they make in whether to take maternity or paternity leave. Mothers on maternity leave and fathers taking additional paternity leave currently have protection from detriment while taking leave. Parents taking leave also have the right to be offered a suitable alternative vacancy in a redundancy situation, where there is one available. This alternative must be suitable and appropriate for the individual.

The Government recognise that it is important to provide employees with protection from discrimination and detriment when they are absent from the workplace for parental reasons. I am grateful to the noble Lord, Lord Stevenson, for raising this. I believe that we think alike on this important issue. Furthermore the Government believe that pregnancy discrimination and discrimination against parents taking leave to care for their children is unacceptable in any form. This is why the Government have recently announced new research into the attitudes of employers on pregnancy and maternity leave as well as the prevalence and causes of pregnancy discrimination in the workplace. This research will be jointly funded by the Commission for Equalities and Human Rights, the Government Equalities Office and my department, the Department for Business, Innovation and Skills.

I would like to reassure the Committee that the Government intend to make regulations to provide appropriate protections for employees in the case of shared parental leave. The Government recognise that it is important to provide protections for parents who are absent from the workplace on parental leave and are currently considering the most appropriate way to protect parents taking shared parental leave from being disadvantaged in a redundancy situation. The Government intend to publish draft regulations in the coming months on all key elements of the shared parental leave policy. This will include the details of the protections while on shared parental leave. The Government’s approach will recognise the difficulties that parents may face when taking shared parental leave. Any protections will be proportionate to support parents in an effective way, enabling them to take leave with confidence that they will not be disadvantaged. This will be balanced with the needs of employers to be able to manage their employees effectively.

I turn now to the right to return to the same job. Mothers returning from a period of ordinary maternity leave have the right to return to the same job. This protection is also applied to fathers taking additional paternity leave. Where mothers return to work after a period of additional maternity leave they have the right to return to the same job, or where this is not reasonably practicable, the right to return to a similar job which is suitable and appropriate, the point that the noble Lord, Lord Touhig, made earlier. The Government consulted on how to apply these important protections to parents taking shared parental leave in an appropriate manner. Shared parental leave will create different challenges for employers. An employee will be able to take short, discontinuous absences from the workplace under shared parental leave and this means that employers will have more opportunity to engage an employee in any reorganisation at work while they are in the office.

The Government are currently carefully considering the responses to the consultation on the administration of shared parental leave. This includes how to apply the right to return to the same job to parents taking shared parental leave. I am grateful to the noble Lords, Lord Stevenson and Lord Touhig, for bringing this important matter to the attention of the Committee, but I hope they are reassured that the Government intend to provide protections for parents taking shared parental leave, and the commitment that the details of this will be set out in regulations in the coming months. In the mean time, I ask the noble Lord, Lord Touhig, to withdraw his amendment.

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[Lord Stevenson of Balmacara]

My Lords, this is a long group, with a large number of amendments. It breaks into two parts. As I listened to my noble friend Lord Touhig’s very eloquent contribution on the question of multiple births, I wondered whether it might have been better to have a separate debate on each of them because the points he makes are very interesting and we do not want to lose them in consideration of other areas. I will plough on and hope that the Minister will deal with this group of amendments in two parts, even though I will be mixing them up in what I say.

The amendments in my name in this group remove the limit on fathers’ or secondary adoptive parents’ time off to attend antenatal appointments, which is currently restricted to two occasions of six and a half hours each. Amendments 267F and 267H introduce an alternative of “reasonable” time off for fathers or secondary adoptive parents. Amendment 267K proposes that additional time off should be provided for fathers or secondary adoptive parents where the pregnancy is of twins or multiple births, so in that sense it reaches out to the points that my noble friend Lord Touhig was making.

The introduction of time off for fathers and adoptive or surrogate parents to attend antenatal appointments is very welcome. However, the Bill not only limits the unpaid time off to just two appointments but prescribes the maximum amount of time that fathers can spend away from work to six and a half hours per appointment. The time limits should be determined by regulations—if at all—and should not be in the Bill.

I know it is a rule of thumb that Governments try to take Henry VIII powers whenever they can in legislation and Oppositions traditionally oppose them but I am afraid I am turning the cart round this time. I think the Government are being too detailed here. This area requires a sensitive regulatory approach; for example, the amount of time you need to go to an antenatal appointment largely reflects the complexity of the pregnancy and, indeed, whether it is a single or multiple pregnancy. If it is multiple, we know that that requires more scans. Having the time to do that is not just about the forthcoming child but is a chance for the other parent to be involved in looking after existing children.

We have a complicated situation here. We think it would be more sensible to try to find a formulation—which we have tried to set out in the amendments but we quite accept might need to be refined—under which fathers and secondary adoptive parents are allowed reasonable time off rather than only two appointments. After all, it is the case already that pregnant women are entitled to reasonable and paid time off to attend antenatal appointments, so we are looking for a bit of symmetry in that.

When we were having our second child, we had a rather complicated pregnancy, which took a lot of time, not just in travel to and from hospital but in the hospital and waiting times. I have personal experience of this and I understand the complications. I was lucky in that I was in charge of my own time and I could take the time off, but I recognise that if I had been responsible to another employer it might well have been difficult to get the sort of time that I felt was important to spend with my partner. I have a personal interest in that but it is not the determinant of my thinking. There is a broader issue here that the regulations would be a better place to do that.

I know that there will be arguments about the cost of absence and that employers may feel that, if nothing is put down, employees will take “sickies” and try to take more time than is required, but pregnancy is a complicated time. We should accept that there may be some rough edges to what one might want to do here, but the Government should try not to overspecify something that, by its very nature, will be more complicated and more reflective of the needs of the individuals concerned. I hope that these points will be taken into account.

[Viscount Younger of Leckie]

My Lords, I thank noble Lords for raising these important issues. Like the noble Lord, Lord Stevenson, I shall deal with the amendments in two parts.

I shall speak, first, about antenatal appointments and the amendments tabled by the noble Lord, Lord Stevenson, and my noble friend Lady Brinton. The Government wish to encourage the involvement of fathers and partners in pregnancy from the very earliest stages. Attendance at antenatal appointments forms a key part of this involvement. Research demonstrates that the greater the involvement of the father in the pregnancy, the more likely he is to remain an active father when the child is growing up.

Antenatal appointments are essential in all pregnancies to care for mother and baby. In cases where there are complications, they are particularly important. Complications during pregnancy may be associated with specific circumstances such as multiple pregnancies or existing health conditions.

Any pregnancy, however, can develop complications. This can happen at any stage and is always distressing for the parents involved. It is also likely to mean that the pregnant woman will need to attend additional antenatal appointments, often at short notice. Many fathers will wish to accompany their partners to these appointments to give practical and moral support. The Government wish to encourage them to do so.

Fathers and partners currently have no statutory right to time off to accompany their partner to an antenatal appointment. The changes that the Government are making in this Bill will enable all fathers who are employees or agency workers to take time off to attend antenatal appointments on two occasions. Equivalent provisions are also being introduced for adopters and certain intended parents in surrogacy arrangements. This is a significant step forward. It is important to emphasise that this provision is intended to provide a minimum standard to enable all fathers to take some time off to attend antenatal appointments with their partner.

Sixty-seven per cent of fathers currently take time off to attend antenatal appointments. Some are able to come to an informal arrangement with their employer; others may, for example, take annual leave or attend the appointment in the morning and make up time later in the afternoon. It is the Government’s hope that this right will encourage more fathers to take time off in addition to the time allowed.

The right to time off is capped at six-and-a-half hours per appointment. The Government want the amount of time off to which an employee is entitled to be reasonable to attend an appointment in their home area. Six-and-a-half hours represents half of the maximum working day under the terms of the working time directive. It is important to have a cap in order to be clear about what the maximum entitlement is and to avoid an employer having to go through a bureaucratic process to determine what is reasonable in the circumstances of their employee.

The introduction of this entitlement should help to create a culture change that makes more commonplace fathers taking time off to attend antenatal appointments. In turn, this will mean that more employers accommodate provisions beyond the statutory minimum. The impact of these provisions will be reviewed alongside the package of reforms in this Bill that introduce shared parental leave.

[Lord Stevenson of Balmacara]

I am grateful to the Minister for giving way. I did not detect the softening that I was hoping for in that response. Is the Minister really saying that a 6.5-hour standard for attending appointments will be in the Bill? Where does that place people who live in the Highlands of Scotland or remote parts of Wales, whose hospital will be several hours’ journey there and back? It seems ridiculous to specify something which the Government must know could not possibly be the standard applied in certain areas of the country.

[Viscount Younger of Leckie]

Of course, the noble Lord makes a fair point but this is the minimum requirement that is laid out. We feel it is fair that this should be done on the case of the maximum entitlement. There is every hope, particularly for those employees who work in the Highlands, for example, that the employer will take a reasonable view and will allow more time off if necessary, but we feel that six and a half hours is pretty reasonable.

I turn to the amendments tabled by the noble Lord, Lord Touhig. These relate to additional maternity provision for mothers who have multiple births. The early months after the birth of a child are often a joyful and exciting time, but I think everyone in this Committee would agree that they can also place great demands on parents. These demands are amplified when there is not just one new baby to care for, but two or more. Straightforward tasks such as feeding, changing nappies or leaving the house can pose enormous challenges. Multiple pregnancies often result in premature births, bringing additional health complications for the babies and stress for the parents.

Financial pressures on families with more than one baby increase as well. Having a baby is expensive, but when the costs double or triple it can be very daunting for the individuals involved. I can understand the desire of the noble Lord, Lord Touhig, to ensure that parents who have multiple children from the same pregnancy receive support at this challenging time. I applaud the fact that he produced some interesting statistics to support his comments. It is important, however, to bear in mind that the period of maternity leave to which women are entitled in Great Britain is one of the longest in the world. The purpose of this leave is to enable the mother to recover from birth and to bond with her new baby or, in the case of a multiple birth, her new babies. The amount of time off work that mothers take will vary depending on the needs and wishes of the individual.

The current maternity leave entitlement is 52 weeks per pregnancy, to which all employed women are entitled. The Government believe that this leave entitlement allows all women sufficient time to recover from all birth circumstances and care and bond with the baby or babies prior to returning to work. The vast majority of mothers choose to return to work before the end of the maternity leave period. Eligible mothers are also entitled to up to 39 weeks of statutory maternity pay or maternity allowance. Statutory maternity pay is paid at 90% of earnings for the first six weeks of maternity leave, and at the lesser of 90% of salary or £136.78 per week for the subsequent 33 weeks. Maternity allowance is paid at the lesser of 90% of earnings or the flat rate of £136.78 for the full 39 weeks. As with statutory maternity leave, this entitlement is per pregnancy rather than per child born.

Multiple babies will mean additional expenditure for families. It is important to emphasise, however, that statutory maternity pay and maternity allowance are not intended to go towards the additional costs of new babies. They are intended to provide a measure of earnings replacement to enable the mother to be absent from the workplace on maternity leave. The financial needs of different families will vary. The level of a mother’s income while she is absent from the workplace may also depend on contractual pay enhancements that are available to many women for part or, in some cases, all of their maternity leave. The eligibility of an individual for these statutory payments is underpinned by their labour market attachment and their relationship with an individual employer. The Government do not therefore consider it appropriate to link the amount of pay available with regards to any statutory pay following birth or adoption to the number of children in a pregnancy or adoption arrangement. I hope that noble Lords are reassured by this explanation and ask the noble Lord to withdraw the amendment.

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[Lord Stevenson of Balmacara]

My Lords, in speaking to Amendment 267E and also Amendment 268A, I can be brief because the ground we have covered today has been leading up to a number of the points that I would have made if I had had more time and needed to break new ground. The essence of much of what we have heard from the Minister is that the spirit is willing but the flesh is weak. Often, as I anticipated in my opening remarks, he accepts the arguments for the direction in which we want to travel but he does not feel that the economic circumstances or alternatively the particularities of the individual point are absolutely in tune with the willingness of the Government to move on the point. I am not sure that metaphor will read well in Hansard but you will understand where I am trying to get to. This amendment therefore provides an opportunity for the Government to sign on to what we hope would be a narrowly focused and specific review, not general but tied to the various pinch points that we have encountered in our journey through these amendments today.

For example on the question of paternity pay, could we have a review that picked up the particularity of the point that was made in another place? The Minister’s counterpart in the other place said that the although the powers to allow the extension to paid paternity leave would be in the Bill, there would be a delay in making the extension until flexible parental leave had been fully embedded and we could assess the impact on shared parenting. Okay, let the review assess both whether parental leave has been fully embedded and the impact on shared parenting, tying it in to that arrangement. The question would follow naturally for the review as to whether the objective of encouraging more fathers to take leave had worked, and whether the amount of paid leave available to fathers in their own right was suitable in the light of the objective.

The Government have also said that they will consider making arrangements for working parents who do not meet the qualifying criteria to receive statutory payments, but this provision could not be introduced before 2018 to allow time for development and—a very important point—to ensure that it interacts appropriately with the new universal credit system. As we all know, the new universal credit system is not moving along at quite the pace that its originators would perhaps wish, so that may impact on the timing of the review, but I hope that it will not. Again, it would be appropriate to tie this review in to those things.

There are a number of particularities within the debate that we have had today which I offer to the Minister as being exemplars of the reasons to do a targeted review so that we can continue the sort of debates that we have been having here. We have a joint purpose of trying to make this legislation better, and it would be greatly informed if we could agree on the format of a review that would answer the questions that we should like answered.

Amendment 268A is slightly different. It is to try to inculcate a change in culture—we have talked about culture a lot in today’s discussions. This is about the move from a labour market scene that is largely dominated by fixed hours and fixed-time contracts to one that would be based on the starting assumption that all employment contracts, in time, could be flexible. If that were to be the case, we would have a situation where a number of the issues that we have raised again in discussing today’s amendments would fall away because the flexibility that would be innate in any job would allow for care concerns, problems around bereavement, issues around changes such as the onset of disability, or the tragedies that happen in families. All those things would be easier to deal with if the basic paradigm for employment were flexibility.

In the sense that this is something where we have a shared purpose that this would be a good thing—indeed, there are many examples I could give of employers that have set out to say that they are filling all future posts on a flexible basis—we would like to see flexible working become the norm, which would allow a number of good things to flow from that. The question is: how would we do that? Could we have a campaign? Could the Government put all posts within government services on a flexible basis? Could they set themselves as a standard bearer for this new approach? The amendment seeks to probe whether there is willingness within the operations of government, and more broadly within the workplace, to get on this bandwagon of moving towards flexible working, which seems to carry with it the seeds of much of what we have discussed today, which we would all find desirable. I beg to move.

[Viscount Younger of Leckie]

My Lords, the introduction of shared parental leave and the extension of the right to request flexible working are significant steps forward in creating the right environment for modern workplaces. This Government have committed to a policy of regular review of legislation to ensure that laws operate in the way in which they were intended and that they are still relevant. Shared parental leave will be no exception. This review will take place at the earliest opportunity when appropriate data are available. The Government will have to look at the take-up of the policy and the impact it has had on achieving one of the key policy aims of enabling shared parenting in the UK.

I make the commitment in this Committee that the Government will review shared parental leave as soon as appropriate data become available. The review will consider whether shared parental leave has gone far enough to encourage fathers to take a more active role in the care of their children in the early months following birth. As I mentioned earlier, the Government are taking powers in this Bill to allow for the extension of paternity pay, which would enable the Government to extend paternity leave and pay at a later date through secondary legislation.

Alongside reviewing the take-up of shared parental leave by fathers, the review will also look at whether the shared parental leave provisions are supporting all families in the most effective way. This may include parents of multiple births, provisions for self-employed parents and whether shared parental leave and pay can be made to work on a part-time basis.

Amendment 268A would require an annual review of the promotion of flexible working to employers and employees. The right to request flexible working was first introduced in 2003. That right has been very effective in encouraging employers to adopt flexible working practices within their businesses. It also reassures employees that their request for flexible working will be taken seriously.

The Government believe that flexible working should no longer be seen as a concession to families and those with caring responsibility. The benefits of flexible working are experienced by businesses, regardless of why an employee wishes to work flexibly, and I applaud the work that the previous Government did in promoting flexible working. Survey data show that, thanks to the existing right to request flexible working, 90% of employees have access to at least one flexible working arrangement. I hope that this will prompt a certain glow on the face of the noble Lord, Lord Stevenson, opposite.

Many businesses across a variety of sectors recognise the benefits that flexible working can bring. The Government have been working with a number of organisations to promote the benefits of flexible working, and will continue working with businesses to increase the awareness of flexible working arrangements.

Clause 106 requires the Secretary of State to review the effectiveness of changes to flexible working legislation made in the Bill and the extent to which the changes achieve the objectives of the policy. The Government will conduct this review within seven years of the implementation of the flexible working provisions of the Bill. The review will include reviewing the effectiveness of communicating with employers on the benefits of flexible working and make recommendations on whether additional communication of the right is needed.

I recognise that seven years is a longer period than the amendment would require. The legislation on flexible working aims to encourage a cultural change in the way that employers and employees work together. Much reference has been made to the question of culture this afternoon. Experience tells us that cultural change does not happen overnight and certainly not within one year. Culture change is best measured through survey data on how employee behaviour and attitudes are changing. For this reason it is right that any review of flexible working promotion gives the legislation the opportunity to change cultural behaviours before it is reviewed.

Nevertheless, I am grateful to the noble Lord, Lord Stevenson, and the noble Baroness, Lady Lister of Burtersett, for the opportunity to discuss this in Committee. I hope that the commitment for review I have made today will reassure them, and I ask the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for his comments. The timescale seems incredibly long—seven years is too long—but I will read Hansard carefully and reflect on what he has said, and we will consider our position. In the mean time, I beg leave to withdraw the amendment.

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[Lord Stevenson of Balmacara]

I find this very unsatisfactory. As the noble Baroness said, we are all losing our marbles, if not our words. Trying to get through the Bill at this late hour when there are still two very substantial amendments to go is not what was agreed through the usual channels and certainly was not the basis on which we came into this discussion. I continue, but I do so with the feeling that this is not in the spirit of the best use of our time, and your Lordships’ House will be the worse for having to debate late into the night issues that should have seen the fresh light of day—perhaps next Monday, when of course there will be time.

Clause 104 was in my mind when I started the debate earlier—it seems a long time ago now but was in fact earlier this afternoon—by saying that while the Opposition were broadly happy with the measures contained in Parts 6, 7 and 8 of the Bill, there were one or two bits of grit, and this is one of them. Amendments 267L and 267M and the clause stand part Motion are grouped together in one place so that we can have a debate about them. While they all bear on the same area, they obviously have different impacts. My preference would be for the clause to stand part because I believe that what the Government are trying to do here is antipathetic to the very spirit of British law, which has always recognised the need for a person with a legal case to have the chance to make that case in a court of first instance but, where there have been problems or difficulties with that, the person would then have the right of appeal against decisions taken in the first instance. However, the Bill as it is drafted removes the process by which an employer must respond to an employee’s flexible working request and replaces it with a requirement to respond in a reasonable manner and within a timeframe of three months. We had a debate earlier about the word “reasonable”, and on that occasion the Minister felt unable to accept that word because he felt it was not appropriate for the context in which we were discussing it, although it has come back several times since and he has been quite happy with it. We have a situation here where reasonableness, which in the earlier amendments was a burden on employers, is now okay for employers to use.

The current processes include the provision for an appeal by an employee, and this obviously provides a useful opportunity to discuss why things have not worked out in terms of the process, but the Bill removes that. The history to this is interesting. ACAS consulted on a draft code of practice for the extended right to request flexible working, and employer bodies such as the CBI, the FSB, recruiters, the TUC, EHRC, Opportunity Now and Working Families acted as advisers on the draft code. The group agreed, and the draft code recognised, that an appeal is important. The draft code said:

“If you reject the request you should allow your employee to appeal the decision. It can be helpful to allow an employee to speak with you about your decision as this may reveal new information or an omission in following a reasonable procedure when considering the application”.

Anybody reading that would recognise its antecedents in criminal law and civil law where clearly those who have cases—as I have said—can make them in the first instance and then, if there are difficulties, can appeal against some of the decisions in order that they can be better refined and reconsidered. We believe it is important that the Bill and the code are consistent to provide clarity to employers and certainty to employees that appeals are to be allowed. The amendment would make it clear on the face of the Bill that appeals remain an important part of the process of considering flexible working requests.

In Committee in the Commons, the Government argued that the amendment would mean that an employee always had a right of appeal, and that this would be burdensome and bureaucratic in a very small organisation. If it was an absolute right of appeal, that might be the case, but appeals are usually constrained by matters of fact or law and one would expect that normal processes would be applied. We argue that a very small organisation would be able to deal swiftly with an appeal, but allowing an appeal is important for procedural fairness and may reduce the use of grievance procedures instead. Sometimes employers do not give a statutory business reason for refusing a request, and that could give rise to an appeal. In addition, once the employee understands the employer’s business reasons for refusing a request to work flexibly, they may be more able to negotiate a solution, so it is a win-win all round.

I would ask the Minister to think again about this issue. It is important to retain what we normally expect as the right approach towards consideration of these quasi disciplinary matters. I beg to move.

[Viscount Younger of Leckie]

My Lords, I welcome the debate on the new arrangements for considering a statutory request for flexible working. Even at this late hour, I recognise the importance that the noble Lord, Lord Stevenson, attaches to this amendment and I hope that my reply attaches the same degree of importance to it.

The current right to request flexible working has been a success, with 80% to 90% of requests being accepted. However, that does not mean that the right cannot be improved. Clause 104 will remove the statutory procedure for dealing with applications for flexible working and replace it with a duty on employers to consider applications in a reasonable manner. Many employers like the structure and confidence that the current procedure gives them when considering applications. Those employers will be able to continue to use this procedure even when it is not compulsory and can be confident that in doing so they will be likely to be acting in a reasonable manner. Many other employers, however, would like to consider applications in innovative and effective ways which are currently not allowed by the statutory procedure.

The Government have asked ACAS to develop a statutory code of practice to explain to employers what will be considered to be reasonable when considering a flexible working application. ACAS consulted in February this year on the contents of the statutory code of practice. The consultation version of the code of practice states:

“If you reject the request you should allow your employee to appeal the decision. It can be helpful to allow an employee to speak with you about your decision as this may reveal new information or an omission in following a reasonable procedure when considering the application”.

The Government want to encourage employers to allow their employees to appeal a decision where it is appropriate. However, it may not always be appropriate. This extension to the right to request flexible working aims to encourage more employers to consider how flexible working could work within their business. It is not about creating or maintaining a process and procedure for employers to follow. I would like to reassure the noble Lord, Lord Stevenson, that while the Government do not believe that offering an appeal will be appropriate in all circumstances, we anticipate that the statutory code of practice and the supporting guidance issued by ACAS will encourage employers to offer their employee an appeal and to explain the benefits that offering an appeal can bring. Accordingly, I ask him to withdraw his amendment.

[Lord Stevenson of Balmacara]

Perhaps the noble Viscount could run through that last bit again. I am sorry, it is late and I am not working quite to my maximum efficiency. One of the points I made in my speech was the discontinuity between the code and what is being said in the legislation. If the code is going to say that the reasonable expectation is that employers shall provide an appeal, why is it not also appropriate to ensure that the statute says the same thing?

[Viscount Younger of Leckie]

We believe that the supporting guidance issued by ACAS will be enough to act as a nudge factor to encourage employers to offer an appeal. Together with the guidance that we will be providing, we believe that this will explain the benefits that offering an appeal can bring. I hope that this provides reassurance, short of bringing in legislation. The code is statutory, so it should be read alongside the legislation.

[Lord Stevenson of Balmacara]

All right, I think I am getting there. There will be a code which will have statutory backing. The code will make it very clear that an employee making such a request which has been turned down, perhaps for no sufficient reason, will have a statutorily underpinned right to appeal that because that is what the code, which is expected to be applied by employers, will say. The noble Viscount does not need to come back on that but perhaps he can write to me on the point.

I am missing my letters—I have not had a letter from the noble Viscount for at least a week. For those of your Lordships who may think that this is a rather recherché, arch exchange across the Committee Room, we have a running joke between us because of the number of times we have to appear opposite each other. The noble Viscount has gained an enviable reputation for being a prolific letter writer. Whenever there is a doubt, we get a letter, so on this occasion, may I have my letter and I will consider it? The noble Viscount is going to speak again, so I cannot.

--- Later in debate ---

[Viscount Younger of Leckie]

I can reassure the noble Lord that I would be delighted to furnish him with yet another letter and I will make sure that the reference is clearly written on it. The noble Lord mentioned the word “grit” earlier this afternoon and I hope that I can reassure him that the grit in the code is the statutory backing, and that the code is to be read alongside the legislation.

[Lord Stevenson of Balmacara]

Not all grit is bad grit. An oyster produces pearls. Perhaps on this occasion the pearl has been provided. On that basis, I am happy to withdraw the amendment.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Monday 11th November 2013 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, during the break I had a look back over the points that we have been making to the Government. A bit like my noble friend Lord Monks, I am slightly surprised that the Government have taken such an aggressive line towards what we are saying. If the Minister recalls my contribution to the debate on the group before this, I was saying—I thought in as conciliatory a manner as possible—that we were trying to offer a series of improvements to what we think is a bad Bill. However, not a single one of them was taken up.

In our opening two debates, I asked a total of, I think, 14 questions. I have not had answers to any of them and I am under pressure from my colleagues here to keep pushing the Minister to come back with at least some general responses if he cannot give detailed ones. However, I can hope—because I know that he is an honourable and decent person—that I will get a letter at a later date that perhaps covers them. I hope that that will be the case.

On the ACAS amendment, which was meant in the spirit of support—there was no particular difference of principle here—all we got was, “I can’t really understand why the Opposition would bother putting up this amendment”. When some of these amendments were put forward in the other place, we at least had a decent reply from the Minister. Although he did not accept all of them, he did accept one or two points, and at least there was a sense of dialogue and debate. I am very disappointed at the way that this session has gone today. I hope very much that, when he comes to reply, the Minister will make a considered response to the points raised by my noble friend.

[Viscount Younger of Leckie]

Perhaps I may attempt to lower the temperature slightly. There was certainly no intention of being peremptory, particularly with the short response that I gave on the previous group of amendments. I can only say that, if it would be helpful, I would be more than happy to write to the noble Lord and indeed to the noble Lord, Lord Monks, with some further details on that reply, which I took as read as being rather short. There was absolutely no intention of dismissing it, if that was implicit in the noble Lord’s reply.

As for the questions that the noble Lord, Lord Stevenson, has raised during the debate today, which I much enjoyed, I have already pledged to write to him to answer any questions that he has raised. Indeed, he has raised quite a few, so I hope he will accept the fact that I write letters and like to get into the detail. The very least I can do is answer the questions clearly and fully, and also address some of the concerns of the noble Lord, Lord Monks. I hope that that is very clear to the House today.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, as has been made evident from the speeches that we have heard, this is about ensuring that, should the Bill progress and be brought into law, it will operate with a reasonable chance of success. As we have heard, it puts additional red tape on a number of bodies which are technically independent. They are part of civic society admittedly, but not those which are necessarily controlled by any one group. They are self-governing or self-operating, so it will take time for it to be absorbed.

There are new procedures and assurers—if that is what they are to be called, it is an ugly name—who will need to be nominated on a list to be promulgated. There have to be appointments made, new reporting processes brought in and inspections, and all sorts of procedures relate to that. We have a plethora of activity and burdens on trade unions that need to be bedded in. If the Government were thinking about the effectiveness and efficiency of the operations, it makes sense to give it time to bed in and get the best chance.

We have also heard from those who know—and perhaps they know a lot better than those who are advising Ministers—about the practical difficulties of trying to get changes into all these independent bodies in sufficient time and on an appropriate scale in order that the legislation can be made to work effectively. What does a bit of a delay cost us? We might return to that.

This is also about trying to do legislation properly. I made plain in my earlier remarks that the Minister’s letter-writing needs will prey heavily on his mind over the next week or two, because of all my questions. About seven of them were about the report from the Regulatory Policy Committee on the impact assessment. I will run over one or two of them, because they raise issues that are not susceptible to the timescale to which we are told the Bill is being progressed. In effect, what was called for was a new impact assessment. I asked the Minister whether we will have one, but he did not respond.

Will there be new figures? Will the RPC be able to look at and make comment on them? Will the figures do what the RPC requests of the Government and involve those stakeholders and others who were not properly consulted before? Will there be an opportunity for the Bill to be refined, to answer the question that the RPC asked about how accurate an updated membership register would have to be for a union to be considered compliant with the new recommendations? Unless that is made clear, it is very hard to assess or even guess whether the costs that will be placed on the trade unions are worth the additional assurances available to those who will in time wish to depend on that register.

All this is criticised to a great extent in the impact assessment report and, therefore, we assume a new report will need to be put in. The Minister said that part of the blame for this was because those carrying out the impact assessment did not get sufficient responses from the trade unions. That may be because trying to consult with a body in a four-week period starting at the end of July and finishing before the end of August is not likely to maximise the chances of getting a good response.

There may be other reasons, but it is more that there is a lack of understanding about how independent bodies such as trade unions operate and how to get the information that is available within them for compliance. It does not exactly fill one with confidence to read in the report from the RPC that the impact assessment provides figures in relation to small unions that seem to have been based on one respondent. The Government could do better than that. That will take time and compete with the other issues that we are talking about and, therefore, again plays to a suggestion in the amendment that there should be a delay in commencement until such time as the Secretary of State has placed in the Libraries a review of the burden of regulatory responsibility. That is just one proposal but others that have been discussed by my noble friends suggest a date that would allow sufficient time for the legislation to bed in. I recommend that proposal also because it would provide an alternative approach.

This point regarding commencement will come back, as my noble friend Lord Whitty mentioned. There are other commencement issues regarding Parts 1 and 2. Other amendments in the group technically relate to Part 4 and we will therefore have an opportunity to debate them again. I invite the Minister to give us a considered response, unless he feels that behind all this the “drop dead” date of May 2015 will suffice, and stating anything other than what he previously said would therefore merely be provocation.

[Viscount Younger of Leckie]

My Lords, Amendments 178, 179 and 180 would amend Clause 41 to delay Part 3, either in whole or in part, from coming into force. I have assumed that the noble Lords intend the amendments to be applied together to delay implementation to 1 January 2016 at the earliest.

Noble Lords are clearly anxious that trade unions should be given sufficient time to prepare. I entirely share this sentiment. I hope that, to this extent, I can offer a positive and emollient answer to the noble Lords, Lord Monks, Lord Lea of Crondall and Lord Whitty. I agree with the noble Lord, Lord Stevenson, that it makes sense to allow time for bedding down or bedding in—I am not sure which but we will go for both for the moment. Unions will be required to amend their rules, which will need agreement from their members. They will also have to identify an eligible assurer and contract with them. Again, agreeing those contractual arrangements will take time. I am sure that noble Lords opposite will agree with me on that.

Moreover, many unions will be part way through a reporting year if the provisions were to come into effect immediately. This would mean deviating from standard legislative practice whereby provisions are not applied retrospectively. That is why the measures in Part 3 will not be applied retrospectively. Unions will be required to submit their certificate for the first full reporting year after the changes become law. Given that unions can have different reporting years, the point at which the changes take effect on each individual union will vary. However, all unions will have up to five months from the end of their reporting year to submit their certificate to the certification officer.

Noble Lords may wish to note that should the provisions in Part 3 come into effect in March 2014, a union whose reporting year ends on 31 March would not need to submit a report for the year ending 31 March 2015 until the end of August 2015. A union that reports every calendar year would have even more time to prepare; it would have to submit its report for the year ending 31 December 2015 by the end of May 2016. Furthermore, even if Parliament granted Royal Assent by March 2014, it is likely that the provisions in Part 3 may come into effect later. The Minister for Employment and Consumer Affairs in the other place has given an assurance to consult on the order for the eligibility of the assurer, which will take time.

I turn to Amendment 156A. A copy of the impact assessment prepared by BIS was placed in the Libraries of both Houses on 11 September. This was mentioned earlier by the noble Lord, Lord Monks. It drew on responses to a targeted consultation in the summer when we sought evidence of the impact. We engaged specifically with trade unions on this point at a meeting arranged by the TUC with some of its affiliates and BIS officials. We are continuing to work with the Regulatory Policy Committee to consider how to improve the evidence base. Should unions or anyone else have any further information, we should be pleased to receive it. We will place a revised copy of the impact assessment in the Libraries before the legislation is commenced.

[Lord Stevenson of Balmacara]

Can the noble Lord repeat that last phrase? Before which date will a copy of the impact assessment be placed in the Libraries?

[Viscount Younger of Leckie]

Before legislation is commenced.

[Lord Stevenson of Balmacara]

I am being particularly dense and time is moving on but we are in Committee. Are we saying that this impact assessment may not be available to us before we conclude discussion of this part—in other words, that the Bill may have passed through its proceedings in the Lords before the impact assessment is placed in the Libraries? The noble Lord said it was the commencement date.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Monday 11th November 2013 Lords Chamber

[Lord Stevenson of Balmacara]

That was interesting. What have we learnt? We have made two rather important steps forward down the path of trying to understand why we are here today and why the Bill is being considered. The first is the Minister’s, I think off-the-cuff, but rather interesting comment, that he resisted the idea that he had planted tanks on our lawn—presumably the trade union lawn—but that the wheels were on the lawn, even if the whole tank was not. I know about tanks, and they can fire very large and rather dangerous weapons; they do not have to be on your lawn to do damage but, if they are on your lawn, it shows real intent. I am afraid that that cat is now out of the bag, so we have that logged.

I thank the noble Lord, Lord Tyler, so much for being present for at least part of the debate, and for being able to enlighten us as to what exactly is going on in the corridors behind the party front that we call the coalition. As my noble friend Lord Whitty said, he has given us the answers to the questions that we have been asking the Minister all evening and to which we have not had responses. I asked 14 questions in my speech and got not a single direct answer to any of them. We now know that this is the set-up for the battle still to come on the question of party funding.

Well, well, well. Here we were thinking that we were talking about important issues such as rights, civil liberties, and so on, when the real debate was about trying to establish a hegemony in terms of party activity that would perpetuate the Conservatives and possibly the Liberal Democrats—I have my doubts about that—against the opposition party as it is presently constituted. Presumably, that gives credibility to the theory that I have heard advanced around the place, which is that this part of the Bill was originally considerably longer and dealt with the question of party funding in relation to the unions, but because of the demarche by the Leader of the Opposition. Mr Edward Miliband, it had to be changed considerably, and all we have left is a warming pan in the political bed that we are addressing. It keeps the issue on the table so that, when and if the parties opposite get their act together, they will move in on party funding in a way that, as we have heard from the noble Lord, Lord Tyler, is so crucial to the future of both his party and, presumably, the Conservatives. Okay, they can change the rules—but at least that is helpful to us in knowing how to address the Bill in more detail when we come back to it on Report.

The amendments tabled in my name and that of my noble friend Lord Monks were difficult for us to frame because, like my noble friends Lord Whitty and Lord Lea, we felt very strongly that what was proposed in Clause 37 was not appropriate and did not satisfy the test of being in response to significant public concern, which we put to the Minister in Clause 36, but which he failed to answer. We felt that it was appropriate in the spirit of this House to table amendments in an attempt to ameliorate some of the harm that would be done otherwise. Our hearts are with clause stand part on Clause 37, and we will consider very deeply over the pause whether to come back to it.

As my noble friend Lord Whitty said, nobody has ever heard of an assurer. It is not a term that appears in any dictionaries that I have consulted. We do not know what it is. It is obviously important that jobs are created in our economy. We are grateful to the Treasury for thinking that they should do this, and the fact that there will be 10, 15, 20 assurers is obviously a great blow in support of the economic policies that the party opposite are trying to put forward. Really, the job is not worth the candle. As my noble friend Lord Whitty said, it would be much better if we were discussing practical things that could address a particular public policy.

It may be that a better self-certification system could be an advantage; it may be, because we do not know what the problem is. That would at least give a frame to the debates we are having. It may be that additional powers for the certification officer would also be of use. These things are matters that we could discuss. Cloaking them, as we have had already in Clause 36 debates, in some spurious idea that there is some concern out there that would be remedied by having an initial arrangement, is simply not sufficient. The Minister and the Government more generally should think again about this whole area.

During the debate, we raised questions about whether the confidentiality of the material made available to the assurer would be sufficiently robust to satisfy the points raised by my noble friend in other parts of the debate about recruitment and retaining members. I am sure that the Minister accepts that, for the confidentiality of trade union registers, these are really important issues. For many employees, their membership, or lack of membership, of a trade union is an extremely private choice, and one which they desire to keep confidential for many legitimate reasons. Indeed, the strength and legitimacy of these concerns was recently underlined by HMRC’s decision to back down in a dispute with Equity about providing personal information relating to its members following a strong response by the union, supported by Liberty, calling in aid Article 11 of the ECHR protections. The knowledge that under the new powers, trade unions could be required to provide their membership register to a Government body for any “good reason” may act as a disincentive for workers to join unions, particularly in light of the current concern over union blacklisting.

As this test is highly subjective, there is the potential for the power to be subject to abuse. For example, the Government may decide they have a good reason beyond that of ensuring public confidence in accurate records—their present argument—for wanting to know whether particular individuals have joined unions, and under proposed wording will be legally entitled to inspect registers under the guise of checking whether the register has been properly updated to include the suspected new members. Can the Minister guarantee that this will not happen? It is evident that the stated aim of ensuring public confidence in the status of union registers is already adequately addressed by the current system, which gives members the power to challenge registers at any time and requires the appointment of independent scrutineers at the key points when ensuring accuracy of the registers is important. Introducing wide-ranging powers of investigation by Government bodies and third parties that do not owe any duty of confidentiality to trade unions, coupled with a second layer of external auditing, is surely an overly intrusive measure, which will have an unwarranted detrimental effect on the members’ trust in the confidentiality of the union registers. These measures clearly go beyond what is necessary and proportionate to achieve any legitimate aim behind the proposals, if indeed there is one at all, and may constitute a breach of Article 11 of the convention.

It should be remembered that the Government are introducing this series of measures at the same time as the full extent of the scandal of blacklisting in the construction industry is gradually coming to light. This is by no means the only industry in which members of a union may wish to keep their membership confidential for fear of being subject to discrimination. On another Bill, the Minister was forthright in his condemnation of blacklisting. Does he not recognise the possibility of double standards here? Will he comment on that?

[Viscount Younger of Leckie]

My Lords, I will now respond to the group of amendments tabled to Clause 37, focusing on the role of the independent assurer, their appointment and removal, and the assurance process. I will deal with the question that the clause stand part of the Bill at the same time.

The Bill will provide greater visible assurance of the maintenance of trade union membership registers to members, employers and the wider public. Clause 37 gives credibility to that assurance by requiring independent scrutiny. Increasingly, a number of unions have become large organisations, serving a membership that frequently covers a variety of employers and workplaces. With this comes administrative complexity, as well as increased public interest in a union’s scope of influence. The nature of union membership data means that they decay easily, as has been mentioned. It is reasonable to think that someone moving house might forget to notify their union, for example. This is recognised in the existing duty for a union to maintain an accurate membership register,

“so far as is reasonably practicable”.

--- Later in debate ---

[Viscount Younger of Leckie]

In answer to the noble Lord’s first question, I went some way forward in attempting to define what the role of the assurer will be. We have made it clear that the assurer is a new role and we should stick with that. The noble Lord’s point was that it should be commuted in with the role of an auditor, but they have distinctly different roles. The best thing is for me to write to the noble Lord to clarify the position of the assurer. I should re-emphasise that the union has a say in choosing the assurer from the approved list, which is originally approved by the Secretary of State. The role is currently being drafted and put together. We have some clear key powers and safeguards that are laid out as part of that role, but it is work in progress and I owe the noble Lord a letter to provide further clarification.

On his second question, I do not wish to go any further—and there is no need to go any further—other than the reply that I have given him. I hope that it has reassured not only the noble Lord but noble Lords opposite in terms of the position.

[Lord Stevenson of Balmacara]

We have had a very clear statement from the noble Lord, Lord Tyler, about what he thought this Bill was about. If the Minister cannot give a specific answer to the question of the noble Lord, Lord Whitty, will he turn to the noble Lord, Lord Tyler, and give him a straight rebuttal of what the noble Lord alleges?

[Viscount Younger of Leckie]

I intend to stick exactly to what I have said.

Intellectual Property Bill [HL]

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Tuesday 23rd July 2013 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, I found a lot of what the noble Lord, Lord Clement-Jones, said very convincing and want to hear how the Minister will respond. The noble Lord made a very good case for taking the situation that we have currently, under which copying registered designs will be subject to criminal penalties, and asking why the very large number of unregistered designs that are lodged in a different register from the registered designs—with the IPO—cannot be given a similar sort of protection. I think that the arguments comparing that with copyright and trademarks are very persuasive. The noble Earl, Lord Erroll, made the point about 3D printing, which of course begins to muddle all our previous conceptions of what 2D and 3D design were about. Again, that will require some movement, if not now, in the very near future, in order to keep pace with the way that technology is changing.

Our Amendment 20 departs from the principles articulated by the noble Lord in moving Amendment 9 because we think that we have to take the situation as it is on the ground. As I have said before, there are 350,000 designers in the UK and UK businesses spend around £35.5 billion annually on design. These are substantial figures and make up a significant slice of our creative industries. However, the vast majority of designers rely on unregistered rights. There are 4,000 registered designs against 18,000 unregistered designs. Something like 99% of designers in the country rely on unregistered designs, and there has to be a question about how the Government will provide an appropriate framework for that development.

Our amendment suggests to the Secretary of State that there is another possible route to think about, which makes clearer what the effect would be of having a register of unregistered designs, even if that is perhaps a contradiction in terms. If it was possible to have within the government machinery some system that allowed a way to evidence the existence of the design right, and document its existence on a particular date, that would go some way to giving us certainty about cases, whether they were criminal or not, affecting the unregistered design right. We could perhaps use the copyright harm analogy to find a way for metadata to be applied to designs that would allow them to be picked up and trailed.

The noble Lord, Lord Clement-Jones, asked why there was a growing discrepancy between the registered and unregistered design right routes. Presumably, the Government have made a decision that they are going to bulk up what is available to those who have registered designs and give them more in the hope that that will persuade designers to sign up to the registered design route. But what will happen if they do not? The problems and difficulties will still be there, particularly in the fashion industry, where unregistered design is the mode that is used.

We need to do something and our Amendment 20 tries to make some suggestions that we hope the Government will listen to. Although we cannot support the proposal to criminalise the copying of unregistered designs as a matter of principle, we would be very interested in hearing how the Minister will respond.

[Viscount Younger of Leckie]

My Lords, the effect of Amendment 9, moved by my noble friend Lord Clement-Jones, would be to extend the proposed criminal sanctions to unregistered design rights. I thank my noble friend once again for presenting the Government with his strong views on unregistered design right protection. I can assure him that the Government are absolutely convinced of the value of the unregistered right and are very aware of its role in protecting small design businesses. That is why, following consultation, the UK right and its current term of protection was retained in the face of calls by some to remove it as a means of simplifying design law.

The United Kingdom has a very successful design industry and we tinker with the success of the industry at our peril. I am particularly concerned to ensure that any changes proposed in the Bill do not act as an additional burden on industry but enhance its accomplishments. As with all intellectual property systems, there is a delicate equilibrium between a reasonable return for creators and, on the other hand, access to the creation so that competitors can shape future innovation. This is the balance the Government have to be mindful of in the changes proposed. There is a real fear that extending criminal sanctions to unregistered rights will distort this balance for the following reasons.

First, the existence of the register represents a public database, which can be searched with relative ease. Third parties can quickly assess what has been registered and what has not. This means that they can take due notice of designs protected by registration with some degree of certainty. In particular, they will know accurately when it will be possible to copy a design with no degree of legal risk. With unregistered designs, there is the problem of not knowing exactly when the design right came into existence and the duration of its protection. This means that it is more difficult for third parties to discover when they can legally copy or exploit a design. Where information about the design of an article is limited but copying it attracts a criminal sanction, it is entirely possible that industry will become risk-averse. As I stated in Grand Committee, against the background of a threat of a criminal conviction, third parties are more likely to wait longer than necessary to be sure that a design is in the public domain before building on it, therefore extending the unregistered design right beyond its term and delaying potential innovation.

I will give your Lordships an example. A furniture manufacturer is aware of a rival’s design that is successful in the marketplace and knows that it is not protected by registration. That is easily discovered by a swift inspection of the registry. He is also aware that the unregistered design right is now protected by a criminal sanction. The manufacturer will have no ready knowledge of when the item was first protected—for example, when it was in a design document, made into an article or first marketed. These all affect the term of protection. To be on the safe side, it is likely that the manufacturer will avoid copying or even engaging in reasonable follow-on innovation until he is certain that the product is out of its term of protection. With registered designs, any potential chilling effect is much reduced by the certainty of facts on duration, scope of protection and ownership, which registration creates.

Secondly, the nature of the UK unregistered right magnifies the uncertainty problem. Unregistered right in an article can relate not only to the overall design but to the individual elements of the design. The unregistered design right can therefore be seen as a basket of individual rights. For example, a kettle may have design protection in its overall shape and configuration but also in its individual parts, such as the spout, the handle and the lid. The kettle may be one of a series of kettles, so different design components may have different timelines of protection. The handle may have 10 years of protection to run because it is new, the spout may have three years as it was used in an earlier version of the kettle, and the lid may be out of protection because it is an old design. None of this information will be readily available to a business which wants to use the design or aspects of the design itself. This creates a cumulative uncertainty about the rights, which is not shared where a design appears on the public register.

Thirdly, a chilling effect is likely to be more serious in particular industries. Some designers, such as those in the fashion trade, thrive on novelty, speed of change, imitation, and rapid turnover of seasonal ranges. It is in these industries where the Government have real concerns that criminalisation of unregistered designs, which are often relied on, would have a freezing effect.

Fourthly, the potential inhibiting effect on innovation that has been identified is likely to be a particular problem in relation to functional designs, which the UK unregistered right also protects. This problem does not apply to registered designs that specifically exclude functionality. I also remind noble Lords of a further issue that relates to functional designs, which could cause difficulties in criminal proceedings. Such technical complexity should be avoided in criminal proceedings if possible.

Finally, I will say something about the protection for unregistered rights holders and, at the same time, consider Amendment 20, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, which would place, in effect, a reporting duty on the Secretary of State. I can assure noble Lords that the Intellectual Property Office is already aware of its responsibilities to SMEs and fully recognises the difficulty that designers face in enforcing their rights. The IPO will continue to work with representative groups for the design sector to help improve the situation for designers. There are many ongoing projects. For example, the IPO and the European design and trade mark office—OHIM—are working together to consider approaches to IP enforcement. This includes the costs of searching for prior rights.

The IPO currently funds IP audits to SMEs that are enrolled on one of our partner business support programmes. From next year, a number of these will be specifically allocated to design SMEs within the Design Leadership Programme run by the Design Council. This will help design-focused SMEs effectively to manage their rights, including unregistered designs, and the creation of audit trails. Such information is readily available from organisations such as the IPO and ACID.

I hope noble Lords will agree that by accepting this amendment the Government would be duplicating information already available. I have already referred to private companies such as ACID, which provide access to highly successful unofficial databases. The amendment would place the Government in direct competition with these companies.

The amendment also raises a number of questions. For example, would an official government-run unregistered designs database be compulsory for designers to use? What about the design rights that exist in other parts of the EU? These can have an effect on rights in the UK so would all European design rights owners be required to record their unregistered designs with the IPO?

These questions may warrant further thought. However, the Government do not believe that it is wise to legislate at this stage without more consideration, particularly given the ways in which the UK IPO is already working hard to ensure that designers are as informed as possible when making business decisions about their intellectual property. For example, the IPO will provide training to the Design Council’s business advisers, to help understand IP and the value of design rights, and to direct SMEs towards the audit programme. On that basis, I am not persuaded of the need for the noble Lord’s Amendment 20.

However, I would not want noble Lords to gain the impression that, in not extending the criminal sanction to the UK unregistered design, the Government regard unregistered rights as second-class rights. The Government recognise that the introduction of criminal sanctions for designs is an important issue that is subject to strong opinions. We believe that the sanction as drawn is the best option to maintain and enhance the success of the UK design industry.

My noble friend Lord Clement-Jones and the noble Earl, Lord Erroll, raised the issue of the discrepancy between protection for 2D and 3D works. There was some debate on this in Committee and it is worth reiterating a number of key points. In the view of the Government, this is a consequence of copyright protection vesting in the “work” that consists of a design drawing, and there is no direct protection of the 2D representation of the design per se. The protection arises as a by-product of the copyright in the work. As noble Lords will know, copyright will protect against the reproduction of the drawing where the defendant knows or has reason to believe that the reproduction is an infringement of the drawing. This is merely a coincidence, caused by the fact that the drawing is a literary or graphic work and nothing more, and is a result of the existence of parallel IP regimes that coincidentally overlap in this case.

It is questionable that the existence of this anomaly, which is hardly unique in IP law, counsels equalisation or harmonisation by criminalisation of unregistered design right. As the noble Lord, Lord Howarth of Newport, who I see in his place, stated in Grand Committee:

“My Lords, consistency is not necessarily a virtue and I think that we should be very careful in the field of intellectual property. We legislate not simply out of tidy-mindedness or a desire to achieve a satisfying consistency by transferring rules and regulations that may have applied relatively successfully in one area to another”.—[Official Report, 13/6/13; col. GC 392.]

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[Lord Stevenson of Balmacara]

My Lords, I would like to pick up on the points made by the noble Lord, Lord Clement-Jones, about metadata. I endorse his feeling that good work is going on in this area in the Copyright Hub, which I think will bridge a gap between where everybody would like to be and where photographers think we are. I think that a number of steps still need to be taken on that but if the Government will keep a close eye on it and help where they can there is a reasonable expectation and hope that we will find something of lasting good coming out of that. As regards the amendment proposed by my noble friend Lord Howarth, he makes his point with great elegance. I look forward to hearing from the Minister.

[Viscount Younger of Leckie]

The first amendment in this group from my noble friend Lord Clement-Jones would require that the annual report from the Secretary of State to Parliament include specific mention of,

“progress … made in protecting metadata”.

As I said in Committee, this report will have value to the extent that it addresses issues pertinent to the year in which it is published. While some issues such as innovation and growth are bound to endure, other issues may rise and fall in their topicality.

My noble friend Lord Clement-Jones talked about the work being carried out currently by the industry-led Copyright Licensing Steering Group to develop a voluntary code of practice on the handling of metadata. The Government support the voluntary approach being taken by industry to look at this problem, and we welcome the consultation that was published on 27 June. This consultation exercise, which is indeed good news, ends on 28th August, and I would encourage anyone working in this area to contribute their thoughts. I am sure that noble Lords join me in hoping that this work by industry will mean that metadata stripping is not a significant problem in years to come, and as such I hope they will also agree that although it is topical today, it would not be right to require the Secretary of State to report on progress with the issue every year. Of course, that does not mean that the Secretary of State cannot include such information in the annual report at his discretion while it is both topical and of interest. It is fair to say that, for the initial report at least, that will be the case. Accordingly, I am happy to commit today that the first report will contain an assessment of progress made on this issue.

Amendment 14, tabled by the noble Lord, Lord Howarth of Newport, is intended to require the Government to report on how the activities of the IPO impact on the interests of wider society and the economy. The amendment returns us to the debate which we had during Grand Committee on the detail of what should be included in the Secretary of State’s annual report on innovation and growth. Indeed, the noble Lord tabled a similar amendment at that time. In Committee, I explained:

“I entirely agree with what I believe is the principle behind the noble Lord’s amendment, that the wider interests of society are important in the context of IP rights. I can assure the noble Lord that the report will indicate where other policy objectives have been taken into account, alongside economic considerations—for example, where, say, freedom of speech, public health, or international development considerations have taken priority over economic ones”.—[Official Report, 18/6/13; col. GC 51.]

However, as the noble Lord has returned to the issue today, I return to the Hargreaves review to which the report responds. The review stated that the IPO should focus,

“on its central task of ensuring that the UK’s IP system promotes innovation and growth through efficient, contestable markets”.

The intention of the report is to sharpen the focus of the IPO on this core objective. Broadening the scope of the report would reduce its effectiveness in clearly setting out what the IPO is doing to promote innovation and growth.

However, I reassure the noble Lord that the Government take very seriously the need to balance the protection of intellectual property with the promotion of the wider interests of society and the economy, both in the UK and throughout the world. I was delighted to see that international negotiators, including representatives from the IPO, came to an agreement last month on a new treaty to improve access to books for millions of people who are blind, visually impaired or print disabled.

Also last month, the World Trade Organisation Trade-Related Aspects of Intellectual Property Rights Council decided to extend the transition period for least developed countries to comply with the TRIPS agreement until 30 June 2021. This has been government policy since 2011 and is about balancing the potential value of IP policy to least developed countries with the real-life priorities in those countries. The report will include such examples where the interests of wider society have been balanced with economic objectives.

The noble Lord, Lord Howarth of Newport, said that the Government should not rest on the achievements of international agreements. The Government are determined to improve the global IP system so that it benefits the UK and the global economy. I reassure him that we are certainly not resting on our laurels. Whether it is reducing patent backlogs or agreeing transitional periods for least developed countries in TRIPS agreements, we take a global view and seek continuous improvement. In the light of this, I hope that the noble Lord will feel able to withdraw his amendment.

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[Lord Stevenson of Balmacara]

My Lords, the noble Lord, Lord Clement-Jones, has gone through the case originally made in Committee together with the Minister’s response. He has done it in some detail, so I do not want to delay the House going forward further. I should just like to pick up on two points.

It is certainly true that, as the noble Lord said, lookalikes are to a large extent already unlawful in the United Kingdom because they are contrary to a variety of measures introduced by previous Governments—in particular, the Consumer Protection from Unfair Trading Regulations 2008. The point that he made—and I think that it is important—is that these regulations are of little effect if the responsible authorities, such as trading standards, do not have the resources to take action against those breaching the regulations. Therefore, the point that the noble Lord makes, and I support it, is that we need a bit more detail from the Minister when he responds on whether it is true that trading standards are able to deliver on this point.

The noble Lord also mentioned that there was a fine line between confusing packaging on the one hand and the use of generic cues to signal to customers. This was something that the Minister gave us examples of when he spoke in Committee. However, the point here is that, if similar packaging prompts mistaken purchases and creates false assumptions, there must be a sales effect. If there is a sales effect, then it is surely right for the Government either to strengthen the existing powers so that they are effective or to introduce new legislation.

[Viscount Younger of Leckie]

My Lords, the effect of the amendment put forward by my noble friend Lord Clement-Jones would be to protect the distinctiveness of product packaging. Noble Lords will be aware that the amendment reflects the one tabled by my noble friend Lord Jenkin in Committee, which was mentioned by my noble friend. I thank my noble friend Lord Clement-Jones for his detailed and eloquent introduction to the amendment. Indeed, his and other noble Lords’ contributions in Grand Committee caused me to reflect at some length in the interim. This reflection has reinforced my understanding that the Government are committed to protecting intellectual property.

Like my noble friend, the Government recognise the importance of brands. In recent years the Government have held two brands conferences and established the Brands Industry Forum—a vehicle for brand owners to discuss directly with the Government the policy issues that matter to them. The research on lookalike packaging, which I spoke about when we discussed this issue during Grand Committee, was commissioned by the Government in response to concerns raised by brand owners. This demonstrates that the Government are receptive to the needs of brand owners and willing to explore their concerns. However, we also have a duty to the public and wider economy. It is on this basis that the Government will be resisting the amendment. We consider that it would impact on competition and risk damaging future growth.

I now propose to set out the key issues in more detail. First, as I said during Committee, protection for brands already exists through the IP rights of trade marks and registered designs, and through the tort of passing off. A trade mark is a very powerful monopoly right—the most important identifying feature for any brand. It can last in perpetuity. The first ever trade mark registered in the UK, the Bass red triangle and motif, is still in use nearly 130 years later. If packaging is distinctive, it can be protected as a trade mark.

Secondly, registered design rights protect the appearance of a product if it is novel, has individual character and is not dictated by technical function, which I hope my noble friend agrees would be necessary elements of distinctive packaging. Thirdly, passing off protects one trader’s goods from being represented as those of another. An act of passing off requires existing good will in the goods, a misrepresentation causing confusion as to the origin of the goods and likely damage to the good will from this misrepresentation. These three aspects address the issues that lookalike packaging is suggested to cause, so it is logical that redress is sought through this existing mechanism.

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[Lord Stevenson of Balmacara]

My Lords, despite the points made by the noble Lord, Lord Clement-Jones, Section 73 of the CDPA 1988 is but one component of a complex web of regulations that provides equilibrium in the UK broadcasting market. It is true that Section 73 is relatively old, created when the cable industry was in its infancy. It is also true that the cable industry is in a different position now. I certainly acknowledge that the catch-up TV case referred to by the noble Lord, Lord Clement-Jones, raises legitimate concerns about the use of Section 73 as a defence for the retransmission of free-to-air channels online.

However, the point surely is that this amendment points out the need to look again at the objective of Section 73 and to ask whether the outcomes it delivers today are still relevant to the Government's public policy objectives. I understand that the Government are currently looking at how Section 73 might be amended and tightened to ensure that the beneficiaries of the clause are the intended platforms that are acting within the law. Perhaps when he responds, the Minister will let us know what progress is being made in that review and indeed, as has been mentioned, what progress is being made on the communications White Paper, which has been promised on a regular basis since 2010.

While the recent catch-up TV case may require an adjustment to the current law, abolishing the clause entirely, as the noble Lord, Lord Clement-Jones, proposes, seems entirely contrary to the interests of 4 million cable customers who access public service content, at no cost to those broadcasters, through the cable platform. The right thing to do is to ensure that this issue will be considered in some detail when the Government eventually publish their communications White Paper. In these circumstances, the amendment proposed by the noble Lord, Lord Clement-Jones, seems somewhat previous, as well as being contrary to consumer interests. I hope that the Government will resist this amendment.

[Viscount Younger of Leckie]

My Lords, I note the continuing interest that my noble friend Lord Clement-Jones shows in this area. The legislative framework that supports our vibrant and successful TV industry is incredibly important and is deserving of our time and attention. This amendment would repeal Section 73 of the Copyright, Designs and Patents Act 1988. This would remove the copyright exemption for the retransmission by cable of certain public service broadcasts, or PSBs. This issue will be addressed shortly when the Department for Culture, Media and Sport sets out its approach to digital connectivity, content and consumers. I reassure my noble friend that we still anticipate publication of the strategy paper by the end of this month.

This is an area where many competing interests must be balanced. As such, it is of vital importance that the Government proceed carefully, giving each of the opposing views due consideration. I can assure my noble friend that it will be consulted on fully to ensure that the views of all those affected are taken into account. I hope that I might be able to help the development of this debate by setting out some of the key points of discussion and their relationship to key pieces of legislation, including Section 73.

Discussions about Section 73 tend to focus on two key areas. First, they are concerned with the impact on the relationship between PSBs and cable platforms. Secondly, they relate to the use of the Section 73 exemption by internet-based television streaming services. I will look at each of these areas in turn.

This piece of legislation affects the relationship between PSBs and cable platforms by providing cable platforms with an exemption for the retransmission of certain PSBs. This means that PSBs are not able to charge cable services for the inclusion of certain channels on their services. However, this piece of legislation fits within a much wider framework that supports the availability of TV and investment in television programming in the UK. This framework consists of a variety of rules and regulations that affect the production, availability and ease of discovery of public sector programming and its relationship with the services or platforms that carry it. These include the obligations on PSBs to offer their content to all relevant platforms, the rules governing payments by broadcasters for technical platform services, and the powers for regulators to compel these services to carry PSB content.

The Government have been clear that their objective is to ensure that, for the core PSB channels, there is an overall zero balance of payments between the PSBs and the services or platforms, regardless of whether these are based on cable or satellite. This is a fair and pragmatic approach that ensures the wide availability of PSB content and allows PSBs to continue their high level of investment in high-quality UK content. The current framework, including Section 73, is delivering this outcome for TV delivered by cable, and we want to see this continue. However, there is still a way to go before we see net zero fees on satellite, and we want to investigate how net zero fees can be achieved across the main platforms. Therefore, it is right and proper that any proposal will be consulted on with the relevant stakeholders and interested parties.

The second issue at stake is the use of the Section 73 exemption by internet-based television streaming services. This issue is the subject of ongoing legal proceedings and, as such, it is not appropriate for me to comment on the specifics. However, I can say that the Government are concerned about the use of this exemption in this way, and will address it when we set out our approach to connectivity, content and consumers by the end of this month. This proposed amendment to the CDPA would pre-empt the Government’s approach to this area. A complex framework governs the balance of payments between platforms and broadcasters, so we need to consider any changes in the round or risk unintended consequences.

In view of the fact that the Government are actively looking at this matter, I would be grateful if my noble friend would withdraw the amendment. Just before I sit down, I will answer a question raised by my noble friend Lord Clement-Jones and the noble Lord, Lord Stevenson, about when the communications paper will be published. To reiterate, the Government still anticipate that this will be published by the end of July.

[Lord Stevenson of Balmacara]

Before the Minister really sits down, perhaps he could unpick that a little. “Connectivity, content and consumers” is to be the title of what? Is that a strategy paper, as the noble Viscount mentioned in reply to the noble Lord, Lord Clement-Jones, or is that the White Paper?

[Viscount Younger of Leckie]

To clarify for the noble Lord, it is indeed the strategy paper, which is due to be published by the end of July.

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[Lord Stevenson of Balmacara]

My Lords, this group is in two quite separate halves. Amendment 18—to which the noble Lord, Lord Clement-Jones, spoke first —is the continuation of a debate that was held in Committee. It will be interesting to hear how the Minister wishes to respond to it. There is a good case here for trying to unpick some of the discrepancies between the various regimes, and in particular to try to anticipate the way in which technology is moving forward.

In Amendment 19, which has been linked in this group, we are hearing a different debate, which is about the Hargreaves exceptions which are currently in consultation. As the noble Lord obviously anticipated, some changes may well occur as that debate goes forward. However, I do not think that it fits well into this Bill and confidently expect the Minister to say that it is a matter for another time. The question, of course, is when.

At the conclusion of the Committee stage the Minister offered—and we gratefully accepted his invitation—to have a broader-based debate around the sort of issues that the noble Lord, Lord Clement-Jones, has been raising. We felt that the recourse to secondary legislation for this important issue in itself makes it difficult for the House to exercise a broader view on these matters. In particular, as there are so many of these exceptions, there is a need for what might be considered a more general debate around the overall balance and overall approach which the Government could have taken in this matter. The noble Lord made that offer and we look forward to hearing whether he has had any success in finding time for that debate. It would be helpful, for exactly the reasons that the noble Lord, Lord Clement-Jones, has given, to have a broader-based discussion around some of the more far-reaching ends of these 11 different exceptions so that when the time comes for both Houses of Parliament to consider these matters—as they will in the secondary legislation process—we are better informed and can make better decisions about how to respond to them. I look forward to hearing the Minister’s response.

[Viscount Younger of Leckie]

My Lords, Amendment 18, tabled by my noble friend Lord Clement-Jones, would increase the maximum penalty for online copyright infringement to 10 years. Under the Copyright, Designs and Patents Act—CDPA—the current maximum penalty that can be incurred by online copyright infringement is two years, while for physical copyright infringement, the maximum penalty available is 10 years. This is not a new proposition. A similar recommendation was made by Andrew Gowers in the report he wrote for the previous Government. At the publication of the Gowers report, the previous Government indicated their intention to implement all of its recommendations. However, after a consultation, they decided to increase the financial penalties to £50,000 but left the maximum custodial sentence untouched. I am sure that they did not reach their conclusions on this matter lightly.

This issue is sometimes presented as if there is a gap in the fabric of criminal offences which apply in this area, and that this change will plug that gap. I am not entirely convinced. The statute in question is not the only way in which criminals can be charged for copyright infringement. There is already a range of options for prosecutors looking to obtain a conviction for such activities. Many of these require a lower evidential burden than copyright offences, require less specialist knowledge and offer the sort of sentencing options which my noble friend seeks to add to this offence. Indeed, I am told that prosecutors would usually prefer to charge under the Fraud Act 2006, which carries a maximum penalty of 10 years, or use “conspiracy to defraud”, which also carries a penalty of 10 years. The Fraud Act in particular seems to have met the challenges posed by developments in technology and internet crime, helping industry to report crime as fraud, and has garnered praised from the City of London Police, among others.

There is another issue here of sentence length, by which I mean convictions and sentences actually handed down, rather than those that are theoretically available. The average custodial sentence given for physical copyright infringement under CDPA offences in 2011 was 12.7 months, the highest for five years. So the questions that occur to me are these: is this a necessary change? Is it a useful change to make? I would like to reflect on this matter further, and perhaps have the benefit of views from experts and practitioners in the field. I therefore ask my noble friend if he would be prepared to withdraw his amendment in return for an assurance that I will set in hand a study of this question, the timing of which I will confirm following the Summer Recess. If there is a need for a change to the law then I will, of course, look for a suitable legislative opportunity.

I turn now to the private copying exception, to which Amendment 19 relates. This is a measure that the Government are preparing to introduce under secondary legislation, separate to this Bill, as the noble Lord, Lord Stevenson, pointed out. I remind noble Lords of the lengthy Committee discussions which have already been held on copyright exceptions, and of the detailed information already provided to this House on the Government’s ongoing technical review process. Noble Lords will recall my invitation for contributions to that process from all interested parties. I am very grateful for the contributions we have received to this review process so far. I also remain committed to having further debate on these issues prior to the draft regulations being laid before Parliament. The noble Lord, Lord Stevenson, asked when the exceptions debates might take place and about the timing. I believe that we agreed that the timing would need to be agreed through the usual channels. I would like to await the results of these discussions first before I commit to a particular time.

In light of all this—and I am sorry to strike a rather discordant note—I will admit that I am surprised, and slightly disappointed, to see that my noble friend Lord Clement-Jones has chosen to lay this amendment on private copying, on Report, on one of the proposed changes to copyright exceptions. It is rather late in the day for an amendment that would add a new clause to the IP Bill, and appears to ignore the many opportunities there have been to debate the private copying exception. However, I will endeavour to provide my noble friend with some reassurance in the interim.

Intellectual Property Bill [HL]

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Tuesday 18th June 2013 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, I thank all speakers in this shortish debate. It was of high quality and we covered a lot of ground. It was particularly good that the noble Lord, Lord Jenkin, was able to stay for it. My noble friend Lord Young quipped that in these modern times perhaps the noble Lord, Lord Jenkin, given his skills, might clone himself and appear in two places at once. I quipped back immediately that that would almost certainly be, if it is not already, a crime under the intellectual property Act. It probably will be shortly and he could go to prison for trying it. We decided that that was not worth pursuing. I am sorry about that.

The debate raised a lot of issues. I thank the Minister very much indeed for his response—it was one of the best that I have heard in this Committee or in many others. He covered the ground extremely well, picked up every point and answered most of our questions in a very satisfactory way. In terms of what we are doing—trying to probe and get a sense of where the report will be coming from—I think that we are well satisfied.

However, the point is that the legislation does not quite say what the Minister said in his response. In the Explanatory Notes are simply two lines on the report in paragraph 91, which states:

“The report will cover new legislation and policy developments, including those related to copyright licensing, as well as the services delivered by the IPO”.

Given that the Minister spoke for some 10 minutes about what the report also contained, I wonder whether there is a bit of a gap between the written word and what we have heard. It may be possible to come up with a better formulation in the Bill, and we may want to come back and work further on that on Report. However, we are not far apart on this and, clearly, if the report does cover all the issues that the Minister listed, we would be well satisfied with that, in so far as it goes.

However, underlying the response was the nagging doubt about authorship. Who holds the pen in this report? That is the question we have to look at. The Minister, several times, said that it was okay because the Secretary of State would respond, not the noble Lord himself—as the Minister responsible for IP—or even the chief executive of the IPO. Later on, he changed that and said that it was “a” Secretary of State. However, there is not only one Secretary of State in the Cabinet and the Government. There is another Secretary of State, who currently has responsibility for the DCMS—although, if the rumours are to be believed, not for much longer—and who of course speaks for creators, appears at meetings speaking on intellectual property and sometimes appears with the Minister when the Minister is in his guise as intellectual property tsar. It is fairly obvious from those who attend these meetings, and I have heard a number of reports of them, that a differential approach comes across. It is impossible for the Government to have a single voice on this when the responsibilities are split. One point that has come through, in all the presentations that we have had this afternoon, is that the Government are not currently speaking for the balance of the two aspects. There is a sense here of an uncompleted need to address this issue. We might well come back to it.

The second point is that, within our debate, we picked up on a theme that has emerged in all our Committee sessions and which may run through to the end of this Bill. There is a growing unease about the way the balance is struck between the needs and rights of creators against those of wider society and between the rights of creators and of those who wish to exploit that creativity. I do not think we have settled it. I do not think it is possible to settle it in this Bill or without a lot more thought. I simply log that as being something about which we all hoped more would maybe come out in the report. This is an issue that we will have to address—if not now, then very quickly—in order to make the best of the way in which any future Government deal with intellectual property as an important sector of our economy.

As my noble friend Lord Howarth said, the most difficult question is about what our approach will be in terms of the economic return that can be earned by inventors, such that it does not squeeze out the benefits that will flow to those who wish to use and exploit those inventions. Are we thinking about intellectual enclosures or about commons? That is a very good formulation for a very complex problem, which I know that my noble friend has been dealing with for some time.

A third point comes out of this short debate. I apologise for going on at length but it is important to get it on the record. We are now satisfied that the sort of report that the Minister talked about would document very well what has happened in the Intellectual Property Office work over the year. But will it be sufficient for us to be able to address the issues of what it should be doing in future years? In other words, we have a simple written report and Written Statement—as the noble Lord, Lord Jenkin, said—simply landing in Parliament. Without the opportunity to interrogate, question and come up with ideas about what further work it might stimulate, the job will not be complete. Might the Minister think again about the point raised in the amendment of the noble Lord, Lord Jenkin, and the need not just for a report but for a Statement that could be debated? I know it is true that we can, as ordinary Members of your Lordships’ House, ask for a debate, but that is not the same as having a proper timetabled slot to look forward to, where we can consult with those outside, bring forward thoughts and events, and discuss the issue properly.

Finally, the question about how intellectual property is dealt with is so firmly in our minds that we need to think hard as we go through the rest of the Bill how we can better secure the debates that will be necessary around the wider context for this. It is true, as the Minister said, that BIS has the lead on this matter. However, without the wider community of Ministers also being engaged in it, that will not be sufficient. These are very important points to consider.

[Viscount Younger of Leckie]

The noble Lord’s question about who holds the pen on this report shows that everything is in the definite or indefinite article. I clarify that the Secretary of State for Business, Innovation and Skills will have the duty to report. However, the report will cover any relevant cross-cutting issues or activities, including work with DCMS or regulators such as Ofcom. I hope that that clarifies that point.

[Lord Stevenson of Balmacara]

I thank the Minister for picking up that point. Does it clarify it? No, but with that I withdraw the amendment.

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[Viscount Younger of Leckie]

My Lords, I will set out why the Government have tabled minor and technical amendments to this clause. The Committee will be relieved to know that my speech will be brief on this occasion.

Clause 21 is intended to simplify the way in which the UK currently meets its international obligations to extend copyright protection to works from other countries and their citizens, delivering clearer information for users. This need arises from the fact that the UK is a signatory to a number of international copyright conventions and treaties. This obliges the UK to extend copyright protection to works and performances created by citizens of other member countries, or to works that originate in other member countries. These obligations are reciprocal: UK copyright holders benefit from the same protection in those countries.

However, it became clear after the Bill was introduced that the clause as drafted would not provide the Government with the flexibility to extend as much, or as little, of the Act as is appropriate. The policy behind Section 159 is for protection to apply only where it is offered in return. This very much depends on which international agreements those other countries have signed up to, and whether they have opted out of some elements. The purpose of the Government’s technical amendments to this clause, therefore, is to better define the powers to extend only parts of the provisions of the Act to citizens and works from other countries, and where the United Kingdom is obliged to do so.

Amendment 28K is consequential and removes text that has become redundant, because the Bill will automatically ensure protection in future for works from the Channel Islands and the Isle of Man. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I am sure that there will be little response to the Minister’s brief but adequate explanation of these amendments. He also tried to write to us to explain what he was doing, but unfortunately the letter did not reach us until this morning. However, I have had the benefit of a brief read of that. It seems to us a sensible amendment, and we wish it well.

[Viscount Younger of Leckie]

I am grateful for the brief contribution from the noble Lord, Lord Stevenson. I have nothing further to add.

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[Lord Stevenson of Balmacara]

My Lords, I declare no current interest in this matter, although I was director of the British Film Institute when the Copyright, Designs and Patents Act was enacted. I was also author of a minor monograph that is still in print.

The amendment troubles me. Section 73 of that Act is only one component of a complex web of regulation that provides equilibrium in the UK broadcast market. It ensures that consumers who have already paid for PSB content through the licence fee or indirect taxation can get access to publicly funded content through a cable platform at no additional cost. It is true that Section 73 is a relatively old provision created when the cable industry was in its infancy. It is also true that the cable industry is in a different position than when Section 73 was conceived. However, the age of something should not determine value. Attempts to delete old things from existence can surely give no Member of your Lordships’ House much comfort.

However, the amendment gives the Government a chance to look again at the objective of Section 73 and to ask themselves whether the outcomes it delivers today are still relevant to their public policy objectives. I acknowledge that the recent TVCatchup case referred to by the noble Lord, Lord Clement-Jones, raises legitimate concerns about the use of Section 73 as a defence for the retransmission of free-to-air PSB channels online.

I understand that the Government are currently looking at how Section 73 might be amended and tightened to ensure that the beneficiaries of the clause are the intended platforms that are acting within the law. Perhaps when he responds the Minister will again put on his DCMS hat and let us know what progress is being made in that review, and indeed what progress is being made on the communications White Paper—another of the vanishing opportunities for the Government to intervene in these areas, which has been promised since 2010. It seems that we are no nearer to a publication date.

However, apart from the TVCatchup issue, I understand that Section 73 continues to provide PSBs and consumers with the most efficient route to access the PSB channels that most cable subscribers want and who equally do not want to have to pay twice for. Some noble Lords may be aware of the ongoing row between the PSB community and the Sky platform about the level of fees paid to broadcast on the commercial satellite platform. Indeed, one of the major gripes that PSBs have at the moment—and I understand that they been lobbying for this through the communications review process—is that they want to see an end to fees that they have to pay to platform providers to carry their content.

However, when setting out the Government position in his speech to the Oxford Media Convention in January 2013, the Culture Minister said:

“I welcome the steps Sky have taken so far to reduce retransmission fees to a much lower level. But we want them to go further, taking into account the undoubted value that PSBs offer to satellite platforms and their viewers, so that there’s a level playing field: zero fees either way”.

This would, indeed be a good outcome for consumers. However, the question remains of how to draft a clause to ensure that there is a level playing field between all platforms, with zero fees either way.

Unlike publicly funded platforms and unlike BSkyB, cable has never charged PSB channels to carry their content. Given that this zero charge/zero pay policy is the policy outcome required by the Government, and we understand that this issue will be considered in some detail by the Government when their communications White Paper is eventually published in the summer, the amendment seems somewhat previous, as well as contrary to consumer interests.

While the recent TVCatchup case may indeed require an adjustment to the current law, abolishing the clause entirely, as the noble Lord, Lord Clement-Jones proposes, seems entirely contrary to the interests of 4 million cable customers who access public service content, at no cost to those broadcasters, through the cable platforms. I hope that the Government will firmly resist the amendment.

[Viscount Younger of Leckie]

My Lords, the amendment would repeal Section 73 of the Copyright, Designs and Patents Act 1988—in short, the CPDA—and thereby remove the copyright exemption for the retransmission by cable of certain public service broadcasts, known as PSBs. The UK television industry is a great success story. We are world leaders, producing great programmes and formats that are then sold the world over. We want to see the continued success and growth of this vibrant, important sector of the economy.

Section 73 of the CDPA is just one part of the overall framework that supports the availability of TV and investment in television programming in the UK. This framework consists of a variety of rules and regulations that affect the production and availability of public service programming and its relationship with the services or platforms that carry it. These include the obligations on PSBs to offer their content to all relevant platforms, the rules governing payments by broadcasters for technical platform services, and the powers for regulators to compel these services to carry PSB content.

Intellectual Property Bill [HL]

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Thursday 13th June 2013 Grand Committee

[Viscount Younger of Leckie]

The noble Lord is quite right. I think it is best if I write to him on a number of the points that he has raised about Scotland. I could say something now, but I think a full answer is required. The noble Lord raised a number of questions, and we should give a holistic response.

The Government have sought to create a balance between protecting the rights of design owners and ensuring that innovation is not restricted. We believe that in this clause we have drawn the right balance. I commend the clause to the Committee.

[Lord Stevenson of Balmacara]

My Lords, I thank all noble Lords who have spoken on this topic, in particular my noble friends Lord Howarth and Lord Browne. Between us, including one or two of the points made by the noble Lord, Lord Clement-Jones, we have raised a sufficiently significant question about the desirability of this step being taken by the Government for us to think again before we return to this on Report. On the one hand, there is the question about whether the right approach to protecting the desirable end of making sure that those who design are able to proceed to the manufacture and exploitation of their designs without being ripped off by others is by some simplification of the overall system that might arrive at a better system or whether the criminalisation element will provide the necessary bulwark.

The argument is finely balanced. My noble friend Lord Browne said that he is uncertain about which is the right way, and I join him in that. I was not taking horses out for a trot on this point. I was, to change the metaphor, casting a fly on the water and seeing what would come up. I went fishing last weekend, which is why it is in my mind. I caught myself with my own fly and fell in, which was not a very successful outcome, but I was struck by the efforts of those with rods make to attract unwilling objects, such as fish, to come to the surface and bite the fly. You have to be careful what you are casting for sometimes, and my unease is that the simplicity of the central point—whether to introduce criminal sanctions—is becoming obscured by the complications of what might emerge if it happens. There is the question of the cost of the engagement of the police, trading standards and prisons and the impact on public spending, which my noble friend Lord Howarth raised. My noble friend Lord Browne was supportive in the sense that the criminal courts can easily take this on, as they have taken on many other things that Parliament has opined should be criminalised in the past several hundred years. On the other hand, it is a real change—from a specialist court dealing with well rehearsed topics, with practitioners who are knowledgeable in this area, to the hurly-burly of a magistrates’ court, or a sheriff’s court in Scotland, and then coming up through the system.

This is all quite a big step and I do not feel that the arguments have been as well marshalled as they could have been. The Minister brought forward some evidence but there may be more in his letters. I am looking forward to having many of those as we proceed through this, particularly my one on Bugs Bunny, which I can hardly wait for as the excitement is so intense. Germany is not necessarily the right model for this. We would have been happier if we could have seen more evidence from right across the design community. It is not a small community—we know the numbers, and there are lots of them. The danger in consultations of the type the IPO has carried out is that you hear from those who shout the loudest but do not hear from those who are going to have to make the thing work when the dust is settled. With those reservations in mind, we might have to return to this on Report.

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[Lord Stevenson of Balmacara]

My Lords, although we come at this matter from a slightly different angle in trying to amend the clause to bring out a particular point, our intention is very similar to that of the noble Lord, Lord Clement-Jones. The points I would make on the narrowness of our amendment would rather duplicate what he is doing. It is better to simply say that we associate ourselves with what he said. I agree with what he is trying to do here to unpick a wrong turning proposed by the IPO. Where we are in terms of opinions on patents is well respected, understood and supported across the industry. To add this additional function, or change one of the existing pillars of the operation, would in fact change all the natures of the way it operates and is not to the benefit of where we are. With that, I support the amendment.

[Viscount Younger of Leckie]

My Lords, Amendments 25A and 25B relate to the patent opinions service. Amendment 25A, tabled by my noble friend Lord Clement-Jones, seeks to remove the power that will allow the Intellectual Property Office to initiate revocation proceedings where an opinion concludes that the patent is invalid. Amendment 25B, tabled by the noble Lords, Lord Stevenson and Lord Young of Norwood Green, seeks to insert the word “clearly” into the clause so that revocation will be initiated only when novelty or inventive step is clearly not satisfied.

Clause 15 allows a limited extension of the IPO’s existing powers to initiate revocation proceedings. It will help in particular SMEs and lone inventors who may simply be unable to afford to bring revocation action themselves. More broadly, it will be in the public interest to allow the IPO to seek the removal of certain invalid patents from the patents register. I reassure noble Lords that the IPO will only initiate such proceedings in clear-cut cases—where there is no reasonable argument to be made that the invention is new or not an obvious replacement of what has gone before. However, in those cases which are not clear cut there will be no revocation action.

I also wish to clarify that initiation of action will not always result in revocation. The patentee can submit observations that may demonstrate that his patent is valid. Alternatively, amendment may reduce the monopoly afforded by the granted claim. The patent holder will also be able to appeal any decision to revoke to the courts. The Explanatory Notes accompanying the Bill make it clear that the power to revoke will be exercised only in the most clear cut of cases. Therefore, I do not feel it is necessary to insert the word “clearly” into the legislation itself, as suggested by noble Lords in Amendment 25B.

Inserting the word “clearly” into the legislation may also lead to argument about what that word means, thus adding an unnecessary further strand to the dispute. For example, if the patent holder disagrees with the revocation and appeals to the courts, the court should not have to decide whether a patent is “clearly invalid” but should instead be free to decide the core question of whether the patent is or is not valid. The IPO is already able to seek revocation of a patent under certain circumstances. Experience shows that its officers would be well placed to assess whether revocation proceedings should be initiated following an opinion that concludes that a patent is clearly invalid.

Before answering a number of questions, I will finish by sharing with you the story of one SME which responded to the consultation in support of the government position. Shortly after it was set up, this SME became aware of a competitor’s patent for a similar product to that which it intended to sell. The SME requested an opinion on the patent, which concluded that the competitor’s patent was invalid. However, despite this alleged invalidity, the competitor continued to contact potential customers of the SME, warning them of possible infringement of their patent, and as a result customers stopped placing orders with the SME. The SME was therefore faced with the stark choice of either closing down or bringing revocation proceedings against the patent. It was apparently told it would cost £100,000 to bring such proceedings, and it simply could not afford to do so. In the end, the SME was fortunate in that it received backing from a much larger company, which enabled it to carry on trading and, indeed, to significantly grow the business. However, I am sure noble Lords can appreciate that such support cannot be guaranteed for all SMEs. As the example demonstrates, it is important that intellectual property does not become the preserve of only those with deep pockets. The clause as it stands, limited as it is and with the necessary safeguards to protect legitimate patent holders, will, I believe, further help to ensure that does not happen.

In his usual perceptive way, my noble friend Lord Clement-Jones raised a goodly number of questions. I will attempt to answer them all. First, he asked whether the procedure was TRIPS-compliant. The proposed legislation mirrors legislation already in place for revocation under Section 73(1) of the Patents Act 1977. The process of revocation will also mirror the process of revocation under Section 73(1). This process means that the revocation will also be considered by a more senior official than the examiner who issued the opinion. He will look at the details afresh and will not be bound by the conclusions of the examiner’s opinion when deciding whether revocation proceedings should begin. The patentee will then have the opportunity to address the alleged invalidity by way of amendment of his patent or by argument. He will also be able to appeal any decision to revoke his patent to the High Court. Further appeals are still possible, and this ensures that the procedure is TRIPS-compliant.

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[Lord Stevenson of Balmacara]

The noble Viscount has just misquoted the section of the Act to which he was referring. If I heard him correctly—I will check Hansard—he referred to the comptroller issuing an opinion under Section 74A that Section 1(1)(a) or (b) is not clearly satisfied, which, indeed, was the intention behind our amendment. I take the point that the noble Viscount said earlier that the notes clearly say that it is envisaged that this additional power to strike off a patent will be exercised only in the clearest of cases where it is indisputable that the patent invention lacks novelty or inventive step. We are not very far apart on this. As I and the noble Lord, Lord Clement-Jones, said, the industry argues that the current phrasing is too bland to get across the sentiment which I think the noble Viscount is expressing—namely, that there has to be a clear exceptionality about the nature of the opinion. I hope that the noble Viscount will reflect on that matter and come back to it at a later stage. We need to get across the concept that the power will be exercised only in the clearest of cases where it is indisputable that the patent invention lacks novelty or inventive step. It is fine in the notes, but the notes are not the law, and the law needs to be right.

[Viscount Younger of Leckie]

It may be helpful if I clarify for the noble Lord that I was speaking in relation to the IPO’s practice and policy, as stated in the response to the consultees’ comments, in other words, as part of the consultation. However, I will reflect further on the need to tackle the point that he has made, as he has asked me to do.

Finally, my noble friend Lord Clement-Jones asked why patentees cannot recover their costs. If the patentee appeals to the court following a revocation by the IPO and is successful, he may be able to recover costs, but only if the court thinks that that is right.

I hope that I have managed to answer all the questions. If I have not, I will certainly follow up with a letter. I thank my noble friend Lord Clement-Jones for putting so much effort and thought into his range of questions on this important subject. I hope that in the light of my comments, the noble Lord will not press the amendment.

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[Lord Stevenson of Balmacara]

My Lords, Clause 17 relates to the exchange of information with other patent offices. The idea behind this provision is, we suppose, to allow the exchange of search and examination results for unpublished applications, as information about published applications is already exchanged. The current exchanges increase efficiency, save duplication and unnecessary work, and are in every way admirable. Perhaps such exchanges are contemplated only with major offices, such as the USA, Europe, Japan and Korea.

The effect of the proposals is much less clear. The new power given by the section is extremely broad. Any information that the other patent office requests may be sent subject to the working arrangements made with the other patent offices, of which only protecting confidentiality is said to be essential. Any patent office, which is quite broadly defined, may request the information. Possibly in the case of smaller countries the information provided from the UK could substitute for a local search or examination, which is not unreasonable, unless such requests would make too much extra work for the UK office.

The working arrangements are completely at the discretion of the comptroller. They do not have to be approved by Parliament, unlike many other powers proposed under this Bill. There is no limitation on the type of information that may be exchanged or the form in which it might be requested. For example, a request might be for details and copies of all applications in the name of company X relating to technology Y. Our amendment suggests that the provision should be substantially limited, in the following ways. Information to be exchanged should be limited to search and examination results. Information should be provided about UK applications only, designated by a UK filing number, from which priority has been claimed in the country of the patent office seeking information. No information should be provided earlier than one year from the date of the UK filing unless the applicant agrees otherwise. The UK applicant should be informed of the request and the information provided. Information should be provided to patent offices of countries on an approved list only, to be added to from time to time by statutory instrument. I beg to move.

[Viscount Younger of Leckie]

My Lords, Clause 17 will allow the Intellectual Property Office to share patent information on unpublished patent applications with patent offices outside the United Kingdom on a confidential basis for their use in processing similar patent applications filed with them. This will help speed up international patent processing. I hope that noble Lords will bear with me, as I have much to say in speaking to this amendment.

Amendment 25E would place various restrictions on the circumstances in which information may be sent to a patent office outside the United Kingdom. First, the amendment would introduce a requirement that the other patent office must quote the application number of a UK patent application when it requests information. It is absolutely the intention that information will be shared with other offices only where they have specified what information is required and in relation to which patent application, identified by the application number. It is for this reason that Clause 17 applies to such information as that office requests and only in accordance with the agreements made by the Intellectual Property Office. This is the approach taken when the IPO provides information to the European Patent Office in accordance with Section 118(3)(a) of the Patents Act and the European Patent Convention.

Secondly, the amendment would restrict the arrangements so that information could be shared only when an application had been filed abroad following a UK application. In practice, it is only when the other office is dealing with an application, which follows on from a UK application, that it will be able to gain any benefit from seeing the results of the UK work.

Intellectual Property Bill [HL]

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Tuesday 11th June 2013 Grand Committee

[Viscount Younger of Leckie]

I thank my noble friend for that comment. I think that I said earlier that I would copy in all noble Lords who are in Committee. I can certainly confirm that. The noble Lord, Lord Borrie, made some valid comments. Again, they are on quite a technical question and aligned with what the noble Lord, Lord Howarth, said. It is a difficult equation to get right because there are so many variables. I imagine that it would depend on the type of product being considered; I am sure that there are various other variables. It is therefore better to write a substantive response to cover all these issues. Existing protections have worked for many years and industry seems content with 15 years and, indeed, with three years. Having said that, I accept that there is a discrepancy between the two. In relation to the unregistered design right, a mark has to be copied, but I think the answer is that your Lordships who are in the Committee deserve a full reply. I would be interested to learn more myself.

[Lord Stevenson of Balmacara]

My Lords, with his usual incisiveness, the noble Lord, Lord Clement-Jones, immediately spotted what I was up to. Far from frightening the horses, which is not in my nature—it may be the first time that that appellation has ever been suggested, as it is usually the other way around, with me running away from the horses—my point was to try to get up a debate about some of the underlying themes. We have just had that, so there has been success.

I would cavil at only a couple of the points made in the initial response. I did not entirely rely on professors, wonderful though they are in supplying us with information. I quoted extensively from the Bench. I would not want in any sense to choose between the two contributions, but I think that their sum was rather powerful. I simply lay that on the table.

The noble Lord, Lord Clement-Jones, ended on an interesting point, which is that it is true that, when analysed back, the unregistered design right is in essence copyright by another name. However, it provides in the design production capacity the same sort of protections that we were debating on the ERR Bill in relation to 3-D objects, which the Government have taken powers to turn away from. I think that, under that design regime, copying more than 50 of an artistic design that was turned into a 3-D object and manufactured gave protection for 25 years. I might be getting mixed up between the rights. Yet that 25-year period has been replaced by the life of the designer plus 70 years. One could ask, but one would immediately run up against the points made by my noble friend Lord Howarth, why they have chosen to retain the design approach—a limited period of five years then five years, plus a further five—for unregistered designs and not taken what might be the logical step of saying, “If it is copyright by another name, why did we not move that way for the whole of this area?”.

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[Lord Stevenson of Balmacara]

My Lords, this is more in the nature of a helpful suggestion than a probing amendment, although I would be grateful for comments from the Minister when he responds.

In their response to their consultation process, the Government rejected an earlier proposal to amend the Registered Designs Act 1949 to incorporate joint ownership provisions similar to those provided for unregistered design rights in the CDPA. However, they highlighted a related issue about how joint ownership should be treated and enforced and said that they would give greater consideration to the idea of introducing provisions similar to those that exist for patents, which would allow one party to exploit the design independently of the other. However, the Bill does not contain this provision, even though the consultation document states that the Government see merit in the proposal and that they intend to explore the option further. Will the noble Viscount explain what is happening? Is exploration continuing? If so, where have the intrepid explorers reached? May we have a status report on progress? To save a lot of time and fruitless further exploration, our amendment, which is loosely based on Section 36 of the Patents Act 1977, would, if accepted, introduce these provisions. We would like to debate whether the Government are now in a position to consider moving on this.

At present, the joint owners of a patent can each work the invention separately from the others, whereas joint owners of copyright cannot. There is no clarity as regards UK registered designs on this point. For unregistered design rights, Section 259 of the CDPA deals with joint designs and states:

“In this Part a ‘joint design’ means a design produced by the collaboration of two or more designers in which the contribution of each is not distinct from that of the other or others … References in this Part to the designer of a design shall, except as otherwise provided, be construed in relation to a joint design as references to all designers of the design”.

This would be helpful, although I think that in practice it means that the permission of all design rights owners are needed before one can exploit a design, which might be somewhat unsatisfactory and may need further consideration. Again, I would be grateful for the Minister’s response on that point. With that, I beg to move.

[Viscount Younger of Leckie]

My Lords, the suggested amendments to Clauses 2 and 6 would introduce detailed requirements to set out the legal position for joint owners. The proposed provisions would apply to unregistered and registered designs.

As noble Lords will be aware, the Government’s design consultation asked stakeholders whether the Registered Designs Act 1949 should be amended to incorporate joint ownership provisions similar to those already provided for unregistered design rights in the Copyright, Designs and Patents Act 1988. Although most respondents agreed with this in principle, responses were mixed when it came to the question of whether it was necessary. A number of well respected intellectual property judges who responded to the consultation suggested that existing provisions were sufficient to allow for joint ownership. In light of this and our exploration activities, the Government decided not to change the law in this area.

In addition to our considering it unnecessary at this time to change the law on the issue, there is a legal reason why we cannot accept the amendment tabled by the noble Lord. The amendments as drafted seek to amend or reproduce EU design rights. This is not possible under EU law, as EU regulations directly apply here and the ability of member states to take action is limited. As a result, it would not be possible for the Government to accept these amendments even if they wished to. In light of this, I ask the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for his response. I think we are agreed in principle that this is something that would be desirable but, contrary to earlier debates and discussions, he feels that the points made by the judges in responses are sufficient and that there is a way round this. I suspect that that is because he is relying on European legislative procedures, and that point is noted.

I accept that what we are proposing may not be satisfactory in relation to that but it still does not remove a lacuna in terms of the provisions for simplification of the processes that the Minister said were at the heart of the Bill. Having said that, I do not wish to pursue this further at the moment and I beg leave to withdraw the amendment.

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[Lord Stevenson of Balmacara]

My Lords, again, this is a probing amendment that emanates from points made in the response provided by the Government to the extensive consultation carried out before the Bill was prepared. Section 53 of the CDPA currently states that acts carried out with the permission of the owner of a UK registered design do not infringe any artistic copyright that might also exist in the article in question. The Government are extending this to community designs but not to unregistered designs. The question therefore is: why is this happening? Can the noble Viscount explain why this decision has been taken and what its implications are?

It is worth recording that the proposal to apply the approach that I have just outlined to the unregistered design right was opposed by a number of respondents. The CIPA stated:

“Firstly, UDR and UK copyright are more or less mutually exclusive at present, so there is no real need for the provision. Secondly, we think it should refer only to registered designs and not unregistered designs, since the presumption arises from the public register which acts as prima facie proof of title”.

The ITMA stated that,

“a registered design is a monopoly right and unless successfully challenged on the basis of an earlier right such as copyright, remains a monopoly. This does not apply to unregistered designs so extension appears inappropriate”.

For completeness, the Government’s response states:

“Given the inherent distinction between UK unregistered right and UK copyright, it is not appropriate to extend the defence to cover UK unregistered right. The alternative of including the EU unregistered right within the defence would seem to add another point of difference, and therefore complexity, in dealing with UK and EU rights. Taking these points into consideration and, as another response mentioned, that the current defence arises through the public register which acts as prima facie proof of title, the Government does not intend to extend the defence to cover any unregistered rights”.

This is a not uncomplicated area and I therefore appeal to the Minister to provide the necessary clarity and lightness that will allow us to follow it through.

However, I should point out that the City of London Law Society, perhaps stimulated by the noble Lord, Lord Clement-Jones, who may wish to speak on this point, referred to the possibility of split ownership in relation to this issue. Indeed, the IP judges who we quoted earlier said that:

“The Consultation asks if there is any reason why section 53 should be extended to unregistered design right, but does not ask if there is any reason why not. Why should the logic be different, at least if UK unregistered design right continues to be substantively different to Community unregistered design right?”,

which of course it would under the Bill.

It seems that there is something in this. It can be unclear whether a design falls to be protected by copyright or unregistered design right. The boundary turns in part on whether the design is for an “artistic work” or for something other than an artistic work, which is rather a narrow point of difference. Identifying whether something is an artistic work such as a sculpture, which, as we now know, does not include a stormtrooper helmet from the “Star Wars” films but which might, I am told, include toy soldiers, engravings—including car floor mats—and works of artistic craftsmanship is a concept over which there is much confusion. This illustrates the points behind the difficulty here.

Section 236 of the CDPA states it is no infringement of UDR to do an act which infringes copyright. If ownership is in the same hands and a person has permission to use the unregistered design right but it turns out that the design is an artistic work, they infringe—although a court might fashion an implied licence with respect to copyright. If the ownership is in different hands, the same problem might arise and there would be no possibility of such a licence. The matter varies, too, with whether Community unregistered design rights are involved. Here there is a closer overlap, as there is no equivalent of Section 236 since a person can infringe both copyright and Community unregistered design right at the same time. One could imagine a grant of a licence to use Community UDR and then issues arising as to copyright infringement, especially as copyright remains national in character and ownership is more readily divided. We would be grateful if the Minister can steer us through some of the issues here and explain why the Government took the view they have. I beg to move.

[Viscount Younger of Leckie]

My Lords, the amendment seeks to provide an exemption against accusations of infringement of UK artistic copyright for UK and EU unregistered designs. Currently, Clause 5 extends the exemption only to registered Community designs. The amendment concerns the complex issue, which the noble Lord, Lord Stevenson, alluded to, of the balance between the rights of the assignee and the interests of the copyright holder. In general, the copyright holder is entitled to assert his rights against any infringement. However, Section 53 overrides that ability but is currently restricted to registered rights. The exemption is restricted to registered rights because they are in the public domain and therefore already open to public scrutiny and challenge, including by the copyright holder.

The exemption does not include unregistered rights because they are not open to public scrutiny in the same way, there is no official register of rights and therefore copyright holders do not have the same opportunity to see what rights are being claimed and to challenge those rights when they deem necessary. In light of this, the Government do not believe it is appropriate to provide an equivalent exemption of the kind suggested by this amendment.

The noble Lord, Lord Stevenson, asked whether we should just extend this clause to unregistered rights anyway. In addition to the public policy reasons already elaborated upon, there are also difficulties in ensuring that the exception is being applied correctly. For example, one of the conditions is that the person relying on the exception has to be acting in good faith on the basis of the registration. There is no registration for unregistered designs, so this condition cannot be fulfilled.

As a general point on the comments of the noble Lord, Lord Stevenson, Professor Hargreaves in his review of intellectual property identified the complexity of the designs legal landscape as a problem for business. There is an overlap between UK artistic copyright, which covers photographs, sculptures and paintings, and registered design, but sometimes permission is given to use one and not the other. The defence makes sure that businesses that have permission to use a registered design can defend themselves against accusations of infringement of UK artistic copyright. The noble Lord is correct that it is a complex area. I do not know whether I have shed any light on the matter but I ask him to withdraw the amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for his comments. When we were debating some of the Hargreaves exceptions in the ERR Bill, I was at pains to try to draw out the Minister on various issues raised of a popular culture mode. In the exception on parody, I was able to suggest to him that he needed to update his knowledge of Gangnam issues. I almost demonstrated to him, but of course Hansard is not very good at picking that up. However, I still treasure the moment. I did not get much of a response and therefore thought that today I would try a different angle with a “Star Wars” reference, but again I am afraid he did not pick it up.

The “Star Wars” case was fascinating because it wound its way up through the various levels on what seemed to be a narrow point about whether you could claim that the helmet—I see the noble Lord, Lord Clement-Jones, nodding in his place; I am sure he would be able to enlighten us further on this point—created for the stormtroopers in “Star Wars” was simply a registered design or a sculpture. Coming from a film background, I can imagine even props as being of extreme artistic importance, and I can take the point both ways. I do not think the Minister responded to my jibe that this might be enough to get him going, so perhaps he can write to me.

I understand that the unifying theme here, if there is one, is that the Government wish to go with the market, as it were, reflect the UDR as the decision of choice of most designers and make that regime as simple as possible. As I have said several times, we are not doing our overall regime enough service if we ignore some of the points of comparability and dissonance that exist between registered designs and unregistered rights and the Community moves that are going forward. I would be grateful if the Minister could write to me on this point because this is something to which we might wish to return. I beg leave to withdraw the amendment.

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[Viscount Younger of Leckie]

My Lords, this amendment would place a duty on the Secretary of State under this provision to report to both Houses of Parliament six months after the commencement of the Bill. The aim of the report would be to notify Parliament what plans the Government had put in place to educate business users about the changes to the law this clause brings about.

I agree with what I believe is the principle behind this amendment: that when changes to the law are made which could impact on businesses or consumers, the Government should provide guidance to users. The Government have already engaged with all key stakeholders through their consultations on the changes now set out in the Bill. I am grateful for the words from the noble Lord, Lord Stevenson, who mentioned that he was aware of this.

This engagement continues as the Bill progresses through Parliament. In addition, the Government will be producing a plain English guide to the Bill, particularly aimed at small and medium-sized businesses, which will be issued before Report. The Intellectual Property Office continues to work through the representative bodies for the design sector to ensure that their members have the guidance they need on the new legislation, if it comes into force.

The noble Lord, Lord Howarth, asked how we can further penetrate the myriad businesses that may be affected. In the letters that we have pledged to write, we will add some information on publicity and distribution, which I hope will be helpful. He also asked further about this issue. I can reassure him that over the past year, almost 18,000 businesses benefited from face-to-face advice from the Intellectual Property Office, which also used online engagement extensively. I am proud to say, as the IP Minister, that it now has 18,000 Twitter followers, more than any other intellectual property office in the world.

The noble Lord, Lord Stevenson, asked whether we could provide more information on what plans there were to educate as well as to inform business. These plans will build on the extensive work that the Intellectual Property Office already carries out through its business outreach programme and through schemes such as the training for business advisers across the UK. I hope these answers help to give some substantive responses to the questions raised by the noble Lord, Lord Stevenson, and the noble Lord, Lord Howarth.

The Intellectual Property Office, on behalf of government, already reports on the support and guidance that it provides to businesses through its annual corporate report and chief executive’s report. Therefore, the Government are not persuaded that a commitment to Parliament to report on this specific area of business support needs to be set out in the Bill. Accordingly, I ask the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for his contribution and my noble friend Lord Howarth for making additional points in relation to the proposal in the amendment. Behind this short debate lurks the proposal later in the Bill to have an annual report to Parliament on IP work, and it is helpful that the Minister finished on that point. To anticipate that debate, we will be arguing that to draw the report in the rather narrow terms currently specified in the Bill may be too tight, so perhaps we can come back to this issue when we get to that clause because the recent exchange gave us examples of that. It would be helpful to have a better understanding of how engagement with the wider group involved in the creative industries and in design, in particular, is going. Simply reporting on the economy and growth will not get across that engagement in sufficient detail, so this may be something to which we will return.

This matter also raises whether, as was argued during our discussions on the ERR Bill, having an IP Minister is sufficient in relation to intellectual property work and the support of the creative industries more generally or whether something more grandiose than even a noble Viscount, such as a tsar, will be required. I can see the noble Viscount reaching out across Whitehall and drawing things together much in the style of the films of Eisenstein.

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[Viscount Younger of Leckie]

My Lords, Amendments 14 and 15 relate to the role of the registrar. I will first address Amendment 14, which would remove a power granted to the Secretary of State to specify circumstances where a document could not be inspected online, and the discretion in considering such cases.

Clause 9 is designed to allow users to access information on registered designs electronically whenever they want to—an idea fully supported by businesses in the recent consultation. There may indeed be circumstances in which publication of documents could cause harm, and it is in the interests of applicants to apply an exception in such cases. An example might be where material is commercially sensitive or otherwise confidential. Such exceptions are best made explicit in rules because they can be changed more easily and quickly to reflect the needs of business. The report of the Delegated Powers and Regulatory Reform Committee made no recommendations for changes in relation to the clause.

The power to make such changes will be limited to the circumstances that arise in this clause—for example, if the registrar’s opinion disparages any person in a way that is likely to cause harm or if material were considered immoral or likely to cause offence. This power will be subject to the general requirements of administrative law, and the scope of any rules relating to the registrar’s capacity to withhold electronic publication of documents will be subject to consultation.

I turn now to Amendment 15, which introduces a specific modification to an official form. It allows the registrar to give directions specifying that the form shall include a statement indicating whether or not any associated unregistered design right has been assigned to the same assignee. The Government recognise that this requirement might encourage businesses involved in such assignments to consider ownership of all the potential rights associated with their design, and it may help third parties to more readily track any changes in unregistered designs.

However, Amendment 15 places an additional burden on those seeking to register an assignment by requiring them to go through additional checks on the status of the unregistered design, to establish whether the unregistered right still exists or has expired, and whether it has previously been assigned to a different party. It could, in fact, delay updating the register if those details needed to be checked. Part of the rationale for removing Section 19(3A) was for records to be kept up to date more easily. It does not seem appropriate to require additional information to be supplied instead.

I hope that noble Lords agree that the sobriquet “Ivan the Terrible” does not entirely fit my character. The Intellectual Property Office is always seeking to provide the best service it can to its customers, which includes the amendment and deletion of official forms where these are proposed to the office. This is why Clause 12 on the use of directions removes the requirement to use secondary legislation in relation to forms and instead enables the use of directions, thereby mirroring existing powers relating to similar procedural matters for both patents and trade marks. To refer in the Act to a form in the manner described would undermine the purpose of Clause 12 and the wishes of stakeholders.

However, the noble Lord, Lord Stevenson, raised the issue of the huge majority of rights that are unregistered, which is a fair point. Perhaps there needs to be a better register with greater information included. We welcome these comments. We believe that as far as possible the register should provide more information. As the noble Lord knows, there is a balance to be struck between this and not placing too much burden on business.

In the context of these comments, I hope that the noble Lord feels able to withdraw his amendment.

[Lord Stevenson of Balmacara]

My Lords, I thank the noble Lord, Lord Clement-Jones, for his support for my second amendment. My noble friend Lord Borrie warned me that he was going to raise this point, so I was not surprised and he is of course right. In an attempt to focus on an issue, we have become too specific in the amendment and I would accept the noble Viscount’s rebuke.

Nevertheless, there is an understanding, certainly in relation to the second amendment, Amendment 15, that there is a balance to be made that will be most effective and helpful in terms of those who wish to understand better where the rights lie in relation to an invention or design and the bureaucratic necessity that would follow. I am a little sad that the IPO felt, on balance, that the voluntary system, which could have helped to build up a register of some robustness and depth, was not taken up. However, I recognise that this is probably not the time to discuss that. Indeed, if we are to return to this issue, as we will at some time, we can further consider the matter. I beg leave to withdraw the amendment.

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[Viscount Younger of Leckie]

My Lords, the amendment places a duty on a court to consider a relevant design opinion issued by the Intellectual Property Office if it is awarding costs and damages to a party in a dispute.

The intention of the design opinions service is to provide businesses with access to an impartial view of the strength of their case in a potential design dispute, helping them to decide whether to pursue more formal and potentially costly proceedings. As with the patent opinions service, the Government have established that the service is non-binding. Although, in practice, the opinion may be used as part of a submission to the courts in support of an argument such as expert evidence, it will not hold a legal status. This will help ensure that the courts are not fettered in any subsequent legal actions.

The effect of this amendment would be to change the status of an opinion issued by the IPO and make it more likely to be binding on the parties involved. Having said that, I appreciate the spirit in which the noble Lord, Lord Stevenson, raised the opportunity to debate this matter. I agree that it could be seen to be a fine line. The amendment could place the decision, however, within the jurisdiction of civil law. This is at odds with the policy intention of the service, which is to provide an informal opinion on a design question. Therefore, I ask the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for his comments. I understand the dilemma that I have posed and why the Government have chosen to be where they are. I have some regrets about it because in some ways this is a good idea which could mean that what the Government are offering through the IPO is of greater value. I will add it to the list of things that I think need to be considered in a broader review of this aspect of intellectual property law and the wider concepts that we have been referring to that need to be picked up and given a broader context within which future policy can be made. With that, I beg leave to withdraw the amendment.

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[Viscount Younger of Leckie]

My Lords, Amendment 21 would place a duty on the registrar to encourage the use of online tools and digital platforms in the conduct of design registration. I welcome the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, raising this issue as it is an objective the Government already take seriously. IPO customers have indicated a genuine preference for the convenience offered by such services, and the IPO has further sought to incentivise such behaviour, for example by the use of lower fees for the electronic filing of trade mark applications. Currently more than 80% of trade mark applications occur online and therefore the Government see no reason why this figure cannot be achieved for online design applications. The IPO has recently migrated trade mark registrations to a fully electronic document management system and is starting to develop a similar system for design registration. The latter forms a commitment in the published corporate plan of the Intellectual Property Office, which I signed off earlier in the year.

Given the efforts that the office is making in this regard, I remain to be convinced that a specific duty needs to be set out in primary legislation. I understand the comments and the question raised by the noble Lord, Lord Howarth. The noble Lord, Lord Stevenson, raised this issue too, in terms of ensuring that we can have confidence in the security of the Government’s digital services. I can assure noble Lords in the Committee today that the IPO’s policies for keeping information secure and for maintaining them in line with the Government’s wider commitments in this area are in place.

I hope this will provide sufficient reassurance to the noble Lord and that he will withdraw the amendment.

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for his comments, and I am happy to confirm to him that his words provided sufficient assurance. I beg leave to withdraw the amendment.

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[Lord Stevenson of Balmacara]

My Lords, in rereading my notes for this amendment, I realised that I managed to commit another solecism by specifying a form. I hope that will not prompt my noble friend Lord Borrie to leap to his feet and decry me again.

The drafting leaves something to be desired, but the intention is clear. There is a reference in the consultation document to the way in which applications for registering a design have associated with them a possibility of a limitation or a short period of time before the form is published. This is for commercial and other reasons and works well; there is no reason to change it. However in the consultation the Government floated the idea that it should be 30 months, not 12 months, which is a substantial increase. It was interesting to read the responses to that consultation because the Government felt that they could do that and were suggesting that it would be done in the future. However, it is not in the Bill, and therefore the arrangements are going to be left for secondary legislation. I would be grateful in this concluding amendment in this afternoon’s business if the Minister would give us more and better information about what is intended, the rationale for allowing an extension beyond the 12-month period, if there is to be one, and the conditions under which individuals or companies can request such a deferral of publication so that we can better understand the way in which this operates. I beg to move.

[Viscount Younger of Leckie]

My Lords, this amendment, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, would place a power in primary legislation for the registrar to amend the period of deferment of design applications from one year to up to 30 months.

When a design is registered, the applicant is issued with a certificate and the design is published in the Official Journal. The deferment period allows applicants for registered designs to delay the date of registration where they might want to keep the design confidential. There could be good commercial reasons for this; for example, a business might not be quite ready to market a product and would want the registration, and therefore publication, to coincide with the entry of its product on to the marketplace.

The powers under Section 36 of the Registered Designs Act 1949 enable rules to be made prescribing time limits, including for the purposes of Section 3(5) of the 1949 Act to which this amendment is addressed. In addition, Clause 12 removes the requirement to use secondary legislation to make minor changes in the way the IPO functions. This will enable the IPO to specify by means of directions any necessary changes to the content and layout of forms relating to registered designs. A note explaining what these directions are expected to contain has been made available and placed in the Libraries of both Houses. The note sets out that one anticipated change will be to extend the period of deferment for publication of design applications for up to 30 months. The detail contained in this amendment is more appropriately dealt with in rules or directions. I hope this will provide sufficient reassurance to the noble Lords such that this amendment can be withdrawn.

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for his comments. In giving an answer, I do not think he picked up the point I was making, which was that it is not clear why the jump from 12 to 30 months is justifiable. I understand the process, and I am grateful to him for confirming that there will be secondary legislation. Indeed, I had noted reference to that in the document that was circulated prior to the Minister meeting Peers. However, 12 months to 30 months is such an enormous gap. Will the Minister write me a short note about it? Perhaps he can respond now.

[Viscount Younger of Leckie]

I apologise to the noble Lord because the question of why it is 30 months is important. The answer is that it is to conform to EU law. The general principle is aligning UK law with EU law in this respect.

Companies Act 2006 (Amendment of Part 18) Regulations 2013

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Monday 25th March 2013 Grand Committee

[Viscount Younger of Leckie]

My Lords, first, I thank the noble Lord, Lord Stevenson, for his earlier comments. I hope that this will be a short sitting, in marked contrast to the rather livelier sittings that we experienced in the main Chamber together last week. I also thank him for his comments and questions about this issue. Just to reassure him, where concerns have been expressed, we will keep matters under review and evaluate them at the time of the post-implementation review. This will include implications for taxation, which is an important point raised by the noble Lord, Lord Stevenson.

While the regulations have merit in themselves, they are part of a wider package of measures that implement the recommendations of the Nuttall review of employee share ownership. They simplify the company law provisions on the buy-back of a company’s own shares in a manner which reduces administrative burdens and increases the flexibility available to companies to administer and finance buy-backs in a way that best suits their needs. The proposals in the regulations were endorsed and enhanced by the consultation process, and, as I mentioned earlier, are mainly targeted at private limited companies that undertake buy-backs pursuant to, or for the purposes of, an employee share scheme. The measures are not only deregulatory but enabling.

Picking up the point about costs raised by the noble Lord, Lord Stevenson, he may be reassured that the independent Regulatory Policy Committee, the RPC, confirmed that these changes are deregulatory and impose little or no cost to business. Having said that there are no costs to Government from the measures, I can make no other substantive comments on costs, but it may help the noble Lord if I also mention the question of savings. It is not possible to quantify the potential savings to business, as these will vary greatly depending on a range of factors, including the size of the business, the scale of the share scheme and the quantity of the shares bought back over a given period of time.

For example, a company which has several buy-backs during the course of a year could benefit from being able to approve these buy-backs in advance, rather than having to focus on approval each time the buy-back is effected individually. I regret that it is not as yet possible to quantify this.

[Lord Viscount Stevenson of Balmacara]

I am sorry to press the noble Viscount on this, but I remind him that paragraph 18 of the impact assessment states:

“In the current consultation … an attempt has not been made to monetise any of the costs and benefits associated with the policy”.

This is an alarming point. If this is going to be standard practice for the department, what is the department there for? These are not major changes. I accept the Minister’s point that everybody seems to welcome them, but some evaluation of what they cost and of the benefits would have been helpful. The impact assessment goes on to state:

“The intention is to utilise the consultation period as an opportunity to obtain further information from stakeholders”.

However, the report from the consultation states that it was not possible to obtain any information on costs or benefits from the consultation. One has to ask: what sort of consultation was that?

[Viscount Younger of Leckie]

The noble Lord makes a fair point, but it remains the fact that there are no costs to define or describe. It was looked at in great detail. However, given that the noble Lord has raised the issue twice, if I can produce further information to satisfy him, I will certainly do so in a letter.

The noble Lord, Lord Stevenson, also asked what else the Department for Business, Innovation and Skills is doing to promote employee ownership. There has been much discussion in the Chamber about this matter. BIS is developing a programme of work, overseen by my honourable friend in the other place, Jo Swinson, including developing model articles for employee ownership of companies. To respond to the question raised by the noble Lord, Lord Stevenson, about the tax implications, I can also confirm that work is ongoing on capital gains tax relief. I will be pleased to write to him with further details—in the same letter, I hope, rather than in a separate one. Further questions were raised and I will be more than delighted to round them up afterwards and be sure that there is a full response to the noble Lord, Lord Stevenson.

In conclusion, the Government state that these regulations meet the requirements of the Act and I commend them to the Committee.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 20th March 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, the amendments in this group make consequential provisions on the clause that the House agreed on royal charters and make some minor and technical improvements. Following the Government’s acceptance of the amendment of the noble Lord, Lord Stevenson, earlier this week in relation to royal charters, we have brought forward a clause dealing with the extent of this provision. We have by that amendment limited the extent to England and Wales.

The Government have been clear that they respect the right of the Scottish Government and Northern Ireland Executive to consider how they wish to respond to the recommendations of the Leveson report. Only last week, the noble and learned Lord, Lord McCluskey, presented the report of his expert panel on how Lord Justice Leveson’s recommendations could potentially be implemented in Scotland. The body created by the royal charter would be capable of operating throughout the United Kingdom, including Scotland and Northern Ireland, should the devolved Administrations want it to. The Government have been clear that whether it does so is a matter for discussion with the Scottish Government and the Northern Ireland Executive. However, it is important that we observe the boundaries between our respective powers, and it is for this reason that the extent is limited to England and Wales. This is because the measures, were they to have UK-wide extent, would also prevent Scottish Ministers or Northern Ireland Ministers from exercising their royal prerogative to make recommendations to Her Majesty in Council in respect of these devolved matters. It is therefore an issue that should be discussed more fully with the devolved Administrations to allow them the opportunity to comment.

It is important to note that nothing in this clause prevents the charter from operating across the United Kingdom, if that is desired. If the Government are asked by the Scottish Government or Northern Ireland Executive to extend the provisions, we will consider doing so.

As the Prime Minister announced in the House of Commons on Monday, the Secretary of State for Culture, Media and Sport and the Advocate-General for Scotland will shortly have discussions with Scottish Ministers. Such discussions will also be held with Ministers of the Northern Ireland Executive. Those discussions will consider whether the extent of the new clause should be amended to go beyond England and Wales, during consideration of amendments in the other place. The amendments before us also amend the Long Title of the Bill to reflect inclusion of the new clause, and provide that the clause will come into effect on Royal Assent.

Amendments 1 and 2 are minor technical amendments relating to the UK Green Investment Bank which seek to improve the drafting of Part 1 of the Bill. Amendment 1 ensures that references to greenhouse gases throughout Part 1 of the Bill—not just in Clause 1(1), as previously—are given the same definition as in Section 92(1) of the Climate Change Act 2008. Amendment 2 clarifies that the activities referred to in Clause 5(2)(b) have the same meaning as those referred to Clause 5(2)(a).

Moving on to competition, Amendment 14 is a technical amendment to Schedule 4. It has two purposes. First, it will enable us to provide for the appointment to the CMA panel of individuals who have already served eight years on the Competition Commission panel but require temporary appointment to the CMA panel to see out an existing inquiry. Secondly, it will enable us to make clear that other Competition Commission panel members who are appointed to the CMA panel can subsequently be reappointed to the CMA panel to see out an inquiry which began when they were members of the Competition Commission panel. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I am grateful to the Minister for introducing these amendments. We are broadly happy with the majority of them. I have just a couple of points concerning the territorial issues he talked about in relation to the royal charter, which may have eluded me. I am sure that he will be able to put me right.

As I understand it, the royal charter will operate across the whole of the United Kingdom but the intention of government Amendment 12 is to restrict the effect of the entrenchment clause—which was passed in this House on Monday—to England and Wales. However, if it is subsequently decided that the measures should be enacted for Scotland and Northern Ireland, what are the Government’s intentions? I think the Minister said that he expected that these discussions would be concluded by the time we were in receipt of any comments that the House of Commons might want to make on the Bill. If my arithmetic is correct, that is only three or four weeks away so we are putting rather a tight timetable on it. In the unlikely event that these discussions continue beyond that date, can the Minister speculate on how it would be possible to amend the Bill once it has received Royal Assent, or does he have other plans that would allow us to take that forward?

My second point is a rather narrow one. We are dealing with royal charters and therefore the territories to which they apply. While Her Majesty has been gracious in allowing her prerogatives on this point to be surrendered to Parliament, what happens to other territories, such as the Channel Islands and the Isle of Man, where the royal charter will clearly have effect but the clause of the Bill will not run because it is limited to England and Wales specifically?

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[Lord Stevenson of Balmacara]

My Lords, I echo the initial comments of the noble Lord, Lord Clement-Jones, on this. The Minister has again shown his willingness to listen to some of the concerns that have been expressed on this matter. I welcome the two amendments in this group, although I note the points recently made, which may bear further thought. However, the Government are in the right place on this. It is a question of sticking to where we are and recognising that.

We should also recognise that this has been a complicated journey through these legislative clauses. Copyright is never an easy issue to get into. I am sure that the noble Lord would recognise that; he has always looked a bit punch-drunk when we have had discussions on it but has come up smiling, which is one of his nice characteristics. However, there are a number of difficult and complex issues underneath this. They are not going to be resolved by what is in the Bill, although we have caught up in a number of areas and that is good. This is really about setting up discussions that we will have to have in this House and another place as the various changes that are being provoked by the Hargreaves report are brought forward as what are in generic terms called “copyright exceptions”. They of course deal with a large number of issues that could have been, as we have argued, contained in this Bill but have been left deliberately to secondary legislation. That is not to say that we will necessarily agree with everything that we see when that comes through. There have to be a lot of complicated discussions on some of these points. We welcome the opportunity to have those, based on where we are now. On that basis, I am happy to agree with these amendments.

[Viscount Younger of Leckie]

My Lords, I will make a few brief comments. I thank those who have contributed to this short debate: the noble Lord, Lord Stevenson, the noble Earl, Lord Erroll, and my noble friend Lord Clement-Jones. I am pleased that the amendments have been accepted, in general, in the spirit in which they were intended. To take up the comments of the noble Lord, Lord Stevenson, it is true that copyright is a complex issue. There are polarised views from both sides. We all recognise that.

I listened intently to the comments of the noble Earl, Lord Erroll. It would be good if I wrote extensively to him concerning the point of extending the provisions beyond normal photographs, to put it crudely. The noble Earl asked whether photographers’ concerns could be addressed regarding Amendment 9. A relatively small number of photographs are covered by the 2039 provisions: as he may know, it is only those taken between 1957 and 1969. Those who want to use those photographs could seek a licence or use orphan work for business. However, I will follow this with a more thorough response to the noble Earl.

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[Lord Stevenson of Balmacara]

My Lords, my noble friend Lord Howarth, when introducing this amendment, mentioned that in Parliament as a whole there was a genuine sense that issues to do with copyright were dealt with in a non-partisan way, and he explained some of the background to the CDP Act 1988 and to the Digital Economy Act. This debate has shown that the spirit lives on. I stress that I do not think that this is a partisan issue; we are all very interested in this new and broadly welcome provision, which anticipates the EU directive and perhaps gold-plates it a little. However, there is no doubt that we need an orphan works scheme. It is right that it should be introduced and we are backing it all the way. Within that it is absolutely clear that rights holders must be remunerated if they wish. However, as many of them will not be easy to find, a diligent search of a high standard must be carried out. I recognise that the way to prove all that is to create this escrow account approach, and that that should be done for a reasonable period. However, the more one listens to the points that are made round here, the more one feels that this is going in the wrong direction in this respect. As virtually all speakers have said, surely it cannot be in the best interests of the Government to tax the institutions that are expected to carry out this work and mainly benefit from it. That cannot be right. The Minister was reported in Hansard as saying that if the escrow funds were building up and not being used, they could be used to defray the costs of running the licensing body, to pay for preservation costs and for training. However, that escrow funding is the money that would be paid to rights holders, so it does not really belong to the licensing body to do with it as suggested.

We are at the fringe of moving in the wrong direction here. It would be sensible if the Government were to pause and think about this again. This is a good scheme and is the right thing to do, but perhaps there is a way in which one can retain the funds that are going to be held for potential rights holders within the original institutions. At least then they would have the benefit of the money even if they could not allocate it, and the sensibility that this somehow was a taxation scheme would be avoided because it would not work. It would be the worst of all possible worlds if, at the end of this process of trying to get these proposals scheduled and incorporated in legislation, the whole scheme was stillborn because people could not see how it could be financed. I very much want to hear what the Minister has to say on this matter. Some movement towards the position of the noble Lord, Lord Howarth, would be much appreciated.

[Viscount Younger of Leckie]

My Lords, I thank the noble Lord, Lord Howarth, for his amendments. They raise important issues and I trust that I can provide some satisfactory assurances. I say at the outset that I very much welcome his support for an orphan works scheme and, indeed, for the principle that creators should be paid. He recognises that there is a balanced approach to this issue in this respect.

Regarding Amendment 10, the Government agree that there will need to be a full and proper evaluation of the effectiveness of the orphan works scheme, and its impact on users and rights holders. That is why the Government have committed to a review of the functioning of the scheme one year after it is fully functional. This post-implementation review would be undertaken by the orphan works authorising body and would include, for example, data on the number of orphan works registrations, and permissions issued by the authorising body. The scope of any review, as determined by discussions with stakeholders, would be incorporated into the authorising body’s regulations. I assure the House that the outcome of the review will be reported to Parliament.

Separately, the Government have committed to another impact assessment of the orphan works scheme in April 2015: that is, one year after the scheme is fully operational. According to government guidance, the first review of regulations,

“should in most cases be carried out and published no later than five years after the relevant regulation comes into force”.

In undertaking to do a post-implementation review after one year, with accompanying impact assessment, the Government’s plans will be fully consistent with these principles and guidance.

Amendment 11 would require regulations to make provision that unclaimed fees paid for the use of orphan works were returned to the licensee within a five-year period. Under the proposals currently in the Bill, in the event that fees remain unclaimed for the licensed use of an orphan work, a variety of options are possible: for example, unclaimed fees could be used to help creators; subsidise the cost of running the orphan works scheme—I believe that that point was raised by the noble Lord, Lord Howarth—pay for preservation costs in public institutions; or pay for industry training. I know that there are wide-ranging views on the appropriate use of unclaimed fees. This is why the wording in the Bill is permissive; it requires regulations to deal with this issue but does not rule any particular option in or out. It does not rule out the return of the fee to the licensee. The current wording allows for further consideration of all these options, with the input of all relevant stakeholders.

The noble Lord, Lord Howarth, supported by the noble Earl, Lord Erroll, raised the issue of the money going to the Exchequer. The use of the funds will be the subject of a full consideration. I hope that gives some reassurance to noble Lords. In other words, all options are open and there will be no presumption that the money will go to the Treasury under this scheme. I hope that that also reassures the noble Baroness, Lady Brinton. The noble Baroness raised a related matter concerning how long the money would sit in bona vacantia. As a general principle, money falling into bona vacantia is dealt with by the Treasury Solicitor, and there is no time period as such. I do not know whether that helps. I hope the House will agree that this is the right way forward. I again assure the noble Lord that it is the Government’s intention that the licence fee for the use of an orphan work should be proportionate to the type of use. However, particularly where orphan works are used commercially, the Government believe it is vital that the conditions of use do not inadvertently undermine the market for known works, particularly, for example, where we are concerned with the livelihoods of creators such as photographers.

The noble Lord, Lord Howarth—

[Lord Stevenson of Balmacara]

I am sorry to interrupt the noble Viscount but this is a crucial point. Will he go back over what he said as I was slightly confused by the wording? Is he saying that before any decision is taken about how the money held in the escrow account is to be utilised if no claims are taken up in the five-year period—that money is held against potential claims—there will be full consultation about that? He used the word “consideration”. If he could confirm that it is a consultation process and that all options are on the table for that, we would be very reassured.

[Viscount Younger of Leckie]

The word I used was “consideration” rather than “consultation” but there is a fine line between the two. I must stick with “consideration” but I think the best thing to do is to define precisely what is meant by “consideration”. My understanding—I give this commitment today—is that “consideration” does indeed mean consultation. However, I would like to follow up with yet another letter to confirm that.

On Report, the noble Lord, Lord Howarth, concluded that a search would be required for each and every rights holder. The orphan works scheme never intended to promise mass digitisation without a prior diligent search. If we wanted to do this, we would have to find another means of achieving it as the scheme we are now considering could not do so. That might be achieved using ECL, but that depends on the existence of the relevant collecting societies. Those are all questions that we cannot answer at this point.

My noble friend Lord Clement-Jones asked whether there could be a review of orphan works produced as part of an annual report. This seems to be a sensible suggestion. I will certainly consider this idea, along with my officials. He also asked about sublicensing and whether it would be permitted. Every act will require a licence. If someone wishes to use an orphan work—for example, in a television documentary—the licence will need to cover all the issues envisaged. The licensing body will not be able to delegate its powers to license to another person. The provision for orphan work licensing will be construed restrictively by the courts.

On this basis, I hope that the noble Lord, Lord Howarth, feels able to withdraw his amendment. As he considers his reply, and before I conclude, as this is the last group of amendments, I would like to take this opportunity to thank all noble Lords who have participated in our many and varied debates on the important issues covered by the Bill during its passage through this House. As ever, they have brought considerable experience to our debates. In particular, the noble Lord, Lord Stevenson, has led the opposition Front Bench in an insightful and wise way and has rightly subjected the detail to a constructive challenge. We sing in harmony in the Parliament choir—he is more harmonised than me—and we have managed to find a pretty good degree of harmony on this Bill.

It is certainly the case that the Bill is better for the scrutiny that it has received in this House. I should like to place on record my thanks in particular to my noble friend Lady Stowell for her able support on the equalities provisions. I thank the House officials, the Hansard writers and especially the Bill team and all officials who have been deeply involved in supporting me so ably.

[Lord Stevenson of Balmacara]

My Lords, it would be wrong of me to let the noble Viscount’s concluding remarks pass, particularly as I was named. I also thank him for his considerable work on the Bill, his courtesy during debate, and his incredible letter-writing abilities. I have never been in receipt of so many letters, both by e-mail and by hand. Sometimes people actually checked up whether a letter had arrived that I had not even received. It was helpful to know that it was on its way. We even received three further letters overnight in anticipation of this debate. It shows the quality of the service that we received. I am sure that the noble Viscount will accept that that was not entirely his work.

I also thank the Bill team, although not all of them are present. I hope that my words will go back to those who are not here. The team has been extremely helpful in giving us information and facilitating meetings. I also thank my Front Bench team, the noble Baronesses, Lady Worthington, Lady Hayter and Lady Thornton, and the noble Lords, Lord Young, Lord Whitty and Lord McKenzie, who, along with our legislative support team, have taken much of the load off my shoulders and done a brilliant job in scrutinising the legislation. It has been four months—a considerable amount of one’s time—since we began consideration of the Bill. That explains why the choir has been bereft of our support during that time.

The Bill runs to 266 pages, which, as the noble Lord, Lord Clement-Jones, reminded us, is a bit more than when it was first published. That represents a fair number of trees. This was never going to be an easy job. It is also important to put on record that the Bill did not come to us sanctified by work in another place. A lot of changes were added just as the Bill left the House of Commons, and the Government have added a number of measures while we have been considering it. There will presumably be further consideration in another place on matters such as health and safety, abolition of the Agricultural Wages Board and Midata, which were never discussed in the House of Commons. I should be interested to see what happens when the Bill comes back after Easter.

As the Minister said, the Bill is in a better shape from its time here. It was amended and concessions were offered on 27 major points, which is pretty good. I do not claim credit for them all but in the spirit of bipartisanship, I think we can agree that in most cases the changes were of benefit. There are one or two matters on which we divided, but I am sure that the Government will want to reflect carefully on whether they wish to change the will of the House, which was expressed in many cases narrowly, but nevertheless firmly. I hope that those matters will weigh heavily on the Government.

It has been a most enjoyable time, made better by the good responses that we have received, and I hope that the Bill will fulfil its purposes, even though in some areas it never quite lived up to its name.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Monday 18th March 2013 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, the amendment is jointly in my name and that of the noble Viscount, Lord Younger of Leckie.

Although the words are overused almost to the point of lacking any meaning, today is, I believe, a historic one. In signing up to this amendment and agreeing to support its inclusion in the Bill, the Government are joining with the Opposition in putting in place an agreed, all-party, Leveson-compliant solution to the long-standing problem of how to regulate the press.

Taken together with the royal charter, which will recognise and certify an independent regulatory body for the press, this means that we are seeing the conclusion of 70 years of inaction, despite seven major reports. It is now up to the press to make this system work, in the full and certain knowledge that all political parties have agreed the proposals, that the victims are content and that polls continue to show that this is what the people of this country want.

In his report, Lord Justice Leveson proposed a framework that provided for the continuation of self-regulation by the press, but with a legal guarantee that self-regulation would be effective, independent and continue to meet high standards. However, the role of the law, the legal underpinning, was to be limited to setting up a body whose task would be to recognise the self-regulatory system and check it once every three years. Lord Justice Leveson said that that was essential to ensure that, despite all the protestations of a willingness to change and countless expressions of good intentions, the press did not once again slip back into their old ways, as they have done after all the other inquiries and reports.

There is no doubt that some parts of the press are attempting to derail these proposals, despite the fact that they deliver the Leveson principles, ensure that those who are wronged have an effective and cheap route to redress, and ensure a free and vibrant press. However, implementing the Leveson proposals does not censor the press. There is no recommendation for pre-publication regulation. It would not create “a slippery slope” to “a government-controlled press”. It would not restrict reporting or investigative journalism in the public interest. Quite the reverse. As Nick Davies, the Guardian investigative reporter who largely uncovered the phone hacking story, wrote after the report was published:

“From a reporter’s point of view, there is no obvious problem with the core of Leveson’s report, his system of ‘independent self-regulation’ ... There is a nightmare here, but it is for the old guard of Fleet Street. To lose control of the regulator is to lose their licence to do exactly as they please”.

The families who suffered press intrusion and gross violations of their privacy have been pressing for the changes that will in future protect people from what happened to them. The harassment and character assassinations laid bare before the Leveson inquiry were not mere technical breaches of the rules or victimless crimes. For many of the victims, appearing at the inquiry meant reliving the pain and trauma of their abuse by the press, but they did so with enormous courage and determination; and the stories they told made many people feel moved, incredulous, appalled and very, very angry. They included people such as: the McCanns who were falsely accused of murdering their missing child; the parents of Milly Dowler, who were given false hope that their daughter was still alive; John Tulloch, the 7/7 bomb survivor who was tricked into giving an interview; Christopher Jeffries, who was falsely accused of the murder of Joanna Yates; and the noble Baroness, Lady Hollins, whose daughter Abigail was hounded for stories following her tragic stabbing while out walking with her son.

It is important to remember that the voices heard in the inquiry represented just a small sample of press harassment and misrepresentation that became commonplace, week in and week out, for those struggling with tragedies in their lives who never sought to become the story. We should also remember that the public overwhelmingly support the establishment of an independent regulator, backed by law. That was borne out by a series of polls conducted prior to the publication of the report by the Media Standards Trust, Hacked Off, the Carnegie Trust and the IPPR. YouGov’s latest survey for the Sunday Times finds that 90% want a system that forces newspapers to print corrections when they say things that are not true. A smaller but still substantial majority wants to punish newspapers that opt out of a new system of regulation; and 62% want such papers to face damages of up to £1 million when they are found guilty of libel.

The sad fact is that the Leveson inquiry should never have been necessary, and the catalogue of incidents that were described and the many more that they represent should never have been allowed to happen. At the end of the day, we in Parliament have to be able to say to these victims that we have seen them right.

Your Lordships’ House has earned a justifiable reputation for keeping the recommendations of Lord Justice Leveson in the forefront of political thinking. Indeed, the former Leader of your Lordships’ House said on the occasion of the publication of the report in November 2012 that if the central recommendations of the report,

“can be put in place, we truly will have a regulatory system that delivers public confidence, justice for the victims, and a step-change in the way the press is regulated in our country”.—[Official Report, 29/11/12; col. 340.]

It has been 20 months since politicians from all parties came together to set up the Leveson inquiry. It is nearly four months since the report was published and all-party talks commenced, and here we are at the brink of introducing the results of that process. The Leveson proposals received near-unanimous approval when we debated the report in your Lordships’ House on Friday 11 January, and the House voted by a majority of 131 in favour of similar amendments to those that we are to consider at Report on the Defamation Bill.

This amendment, although it is couched in general terms, ensures that the agreed royal charter on self-regulation of the press may not be amended by Ministers through the Privy Council unless Parliament has given its prior approval to the changes. It is therefore an important entrenching measure, and I very much hope that it will receive support from Members of your Lordships’ House.

The royal charter published today creates a new, independent, voluntary system of self-regulation for the press. It is a welcome step, and the amendment ensures that this can be an enduring settlement, as it underpins the royal charter with the minimum amount of legislation needed to guarantee its success and independence over time. It is worth pointing out that while my amendment ensures that Ministers cannot tamper with the new system—for example, by watering it down under pressure from the newspapers—it also ensures that they cannot introduce new measures that would threaten the freedom of the press. There must be comfort in the fact that it works both ways.

Therefore, my amendment completes the virtuous circle of an all-party solution that is Leveson-compliant and is as entrenched in our constitutional arrangements as anything can be, requiring as it does a two-thirds majority in both Houses for change. In so doing, your Lordships’ House is fulfilling its proper role in scrutinising legislative proposals and offering the other place a chance to improve on what has been proposed. As the Prime Minister said a few minutes ago in another place:

“We stand here today with cross-party agreement for a new system of press regulation that supports our great traditions of investigative journalism and free speech and protects the rights of the vulnerable and the innocent”.

He ended by sending a message to the press. He said that, “we have had the debate” and reached our conclusions, and he added:

“Now it is time to get on and make this new system work”.

I beg to move.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, in advance of this debate, it may be for the convenience of the House if I explain the Government’s position on the amendment. Following the statement made in the other place today, I want to make it clear that the Government support the amendment. This measure is part of the announcement made by the Prime Minister, the Deputy Prime Minister and the Leader of the Opposition today in relation to proposals for a royal charter to recognise and certify an independent regulatory body or bodies for the press.

I am sure that noble Lords will join me in welcoming the successful conclusion to the cross-party talks which the Prime Minister set up following the publication of Lord Justice Leveson’s report. The Prime Minister has made it clear that the amendment before us is not statutory underpinning. The Prime Minister said all along that he wanted to avoid a press law which said what the recognition body is and what it does. That has been delivered. This is not statutory underpinning but a safeguard that says that politicians cannot meddle with this.

The clause put forward by the noble Lord, Lord Stevenson, to which I have added my name, establishes requirements for royal charter bodies established after 1 March 2013 which have functions relating to the carrying on of an industry. It will have the effect that the charter can be amended only if the terms of the charter are met and both Houses of Parliament agree. Let me be clear that this means that any royal charters created to date will be unaffected and that a royal charter created in future will be affected only both if it is a royal charter with functions relating to the carrying on of an industry and if it has requirements set out within it which require the approval of Parliament.

The press royal charter will be the only such charter in existence when it comes into force. It is the Prime Minister’s intention to submit the charter to the Privy Council for Her Majesty’s approval at the Privy Council’s meeting in May. This will deliver a new system of press regulation in this country. It is a system of tough, independent self- regulation that will deliver for victims.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Monday 11th March 2013 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, this has been a very powerful debate. In contradistinction to what have been discussing in the immediate run of amendments, this seems to be a situation where the Government are trying to be a little too definitive in primary legislation. My point would be, to support the comments made on this side, to suggest that the Minister might wish to review that.

We have heard that we are talking about hundreds of millions of works, which are—in the words that my noble friend used—underused, understudied and undercelebrated. There is no contention that the repositories in which these works lie are happy to pay for the cost of the administration of the scheme that is to be used to provide access to them. The concern is that by providing a very inflexible approach to this, these institutions will effectively have been taxed to provide funds which will go to the Crown under the bona vacantia rules. This seems extraordinarily unfair and I urge the Government to think again about this issue. I am aware that it has already been the subject of some discussion and debate but, given that we have at least another 10 days until the final stages of this Bill, perhaps there is still time for the meeting or discussion that I might encourage the Minister to have. We would certainly be very willing to meet his timetable in order to progress this.

The point must surely be that there ought to be a way round this that would accept the overall architecture of the structure of the orphan fees arrangement but would not penalise or tax those who have to operate it for the benefit of the public good. We have already had some suggestions that would perhaps include something to do with digital photography, which will always be a difficulty in this area. That might be a step too far. However, there are other ideas around, such as that the escrow account might be not returned to the Crown but made available for cultural work or, more particularly, returned to the original institution if the money is not claimed by a bone fide rights holder.

There might be a case for trying a pilot scheme, which would allow us to test out a number of options. Whatever there is, there is certainly a willingness on our side to see if we can get this right. This scheme is a good scheme. It is one that we on this side want to support, but we find it very difficult to see the right way forward if the Government insist on the present wording of the Bill.

[Viscount Younger of Leckie]

My Lords, I begin by thanking the noble Lord, Lord Howarth, for his amendment. I do not underestimate the strength of his views on this particular issue and the remuneration for orphan works. I have listened very carefully today to his argument. As he well knows, I listened carefully in Grand Committee and, indeed, outside the Chamber to his views, which are well known.

It is one of the core principles of the Government’s proposals that remuneration is payable for the use of an orphan work. Making payment discretionary would risk undercutting the market. It would also risk rights holders not receiving the remuneration that they would otherwise be due. Therefore, to avoid unfair competition, it should not be cheaper to use an orphan work than a non-orphan work. Where cultural institutions are acting commercially, it seems only fair that they do not receive preferential treatment to other parties licensing in the market.

I can assure the noble Lord that in setting the tariff of remuneration the Government will ensure that, as far as possible, it reflects the appropriate tariff for the same type of use of a similar non-orphan work. Where an orphan work is not being used commercially the licence fee will reflect that. In such cases, the fee could be minimal. My officials are consulting the competition authorities about how tariffs are determined.

I will address a number of questions raised by noble Lords, in particular the noble Lord, Lord Howarth. First, he suggested that excluding digital photographs from the orphan works scheme might be a possibility. A stakeholder working group will be considering the possibility, at least initially, of excluding from the scheme photographs without an analogue context—so photographs merely taken from the internet would not qualify for an orphan works licence.

The noble Lord, Lord Howarth, suggested removing the principle of upfront payment and his views were very clear on that basis. We cannot, however, expect cultural institutions to ride over the rights of creators even in the interests of the public good. Of course we hope that there will not be returning rights holders. We hope that diligent search will identify any such people. However, the principle of upfront payment is an important one. Abandoning the principle of upfront payment is a guarantee to creators that even if their works are missed in the search, they will not be deprived of an income. The fact that rights holders may be content to allow their works to be used is not a reason for trying to reduce their legal rights. In many cases, the payments may be minimal, indeed nominal.

The noble Lord, Lord Howarth, also raised unclaimed licence fees—an issue alluded to by the noble Earl, Lord Erroll. The authorising body will hold unclaimed licence fees in an escrow account. Unclaimed fees could be used to subsidise the cost of running the orphan works scheme, or to pay for preservation costs in public institutions or industry training. There will be further consideration of these options with the input of stakeholders.

The noble Lord, Lord Howarth, raised the issue of a renewable term and the fact that he was not in favour of it. To allow for business certainty, there will need to be some limit on how long an orphan work can be used before a new authorisation would be required. Any returning rights holder would receive remuneration for this period of time and would be able to stop further use at the end of the period if they so wished. The metrics for determining the durations of licences have yet to be decided. In some cases, it might be a period of time; in others, it might be something else such as a print run. Therefore, there will be further consideration of how charges are determined but licence fees will be appropriate to the type of work and use proposed. I hope that, with those reassurances, the noble Lord will not press his amendment.

--- Later in debate ---

[Viscount Younger of Leckie]

My Lords, as I explained in Grand Committee, the idea behind the powers and Midata is simple: to give consumers the right to request their existing consumption and transaction data back from their suppliers in a portable, electronic format. I remind the House that are data already exist. We are not talking about collecting new data here.

In addressing Amendment 84AHNA, I reassure the noble Baroness, Lady Hayter, and the noble Lord, Lord Stevenson, who is speaking to this amendment, that I agree with them both that customers need to be protected from data misuse. Service providers under Midata must comply with all existing data security and protection rules. There are well-established complaint and redress schemes through the Information Commissioner’s Office in the core sectors where ombudsmen already operate. Data controllers must notify the Information Commissioner of data processing under Section 17 of that Act. Failure to do so is an offence.

However, there may be a need for further measures. This is why a consumer protection and trust work stream has been established under the Midata programme. A number of working groups made up of privacy experts, business, regulators and consumer groups are looking at a wide range of consumer issues. They have been tasked with identifying and recommending existing best practices and, where appropriate, new approaches that may be needed to ensure the security of individuals’ data. The groups are due to report in summer and any recommendations that they propose may need to be reflected in enforcement provisions made under these powers.

The role of third parties is important. Where citizens choose to provide data to a third party, or provide authorisation for a third party to request data on their behalf, the Data Protection Act applies. Under that Act, data controllers do not need to comply with a request for data unless they are satisfied that the requesting party has authority to access it. The consumer protection and trust working groups are looking at a wide range of issues that could emerge in a new Midata world and the Government will want to take their advice before acting. Their recommendations might include kitemarks, accreditation processes and complaint handling and redress schemes, as well as other proposals. The Government do not want to pre-empt any recommendations by setting out detailed protection measures in the Bill.

Turning to Amendment 84AHNB, I reassure noble Lords that the aim of our provision is to make data more accessible. We believe that Clause 75(5)(b)(ii) will have much the same effect as the limitation put forward by the noble Baroness, Lady Hayter, and the noble Lord, Lord Stevenson. The Government expect data to be provided back to consumers cheaply, and ideally for free, but businesses may initially incur additional costs in making data available electronically and the power allows businesses to charge to recoup their only cost. Noble Lords may be reassured to know that data that have been so far released under the Midata voluntary programme have been provided to customers free of charge.

On Amendment 84AHNC, I would like to deal with proposed new subsection (6A)(a) first. As I have said, businesses do not need to comply with a request for data unless they are satisfied that there is a valid claim of access under the DPA. Mechanisms that might enable this are being considered in the working groups, so this is still a matter under consideration. However, it is clear from our discussions with data controllers that they will not be willing to release data to third parties unless fully satisfied that it represents a legitimate request from an authorised party. The methodology may vary by sector but the additional measures proposed in this amendment do not appear necessary at this time.

In her proposed new subsection (6A)(b), the noble Baroness, Lady Hayter, has raised an interesting point but the Data Protection Act already affords protections in this area. I recognise the concerns in this respect, particularly around the possible actions of nefarious or rogue operators. However, access to Midata would not alter the current data protection law and any criminal activity could be dealt with appropriately, as it is now. In relation to proposed new subsection (6B), we are working with privacy experts, businesses, regulators and consumer groups in the working groups that I have mentioned. Legislation would be introduced only after a period of public consultation. Scope will exist in any regulations to place conditions on accessing data by authorised persons. Therefore, I believe the specific provisions set out in the amendment to be unnecessary.

Finally, Amendment 84AHND would extend the Information Commissioner’s powers of compulsory entry and audit to the private sector for the first time. This is primarily a matter for the Ministry of Justice and I am not convinced that such a major departure from current policy can be justified here. Its most likely effect would be to stifle innovation. As a result, services that help people to analyse their data will not be developed or may be withdrawn. The ICO already has investigation powers to require information from the private sector; we believe that these are sufficient in this case.

I would like to come back to the noble Lord, Lord Stevenson, on his assertion about claiming compensation through the courts. I think he deemed that to be unrealistic, but the power does provide for a non-court redress route. This could include empowering the ICO to address Midata complaints, if that helps the noble Lord. In the light of my responses, I ask the noble Lord, Lord Stevenson, on behalf of the noble Baroness, Lady Hayter, to withdraw the amendment that she tabled.

[Lord Stevenson of Balmacara]

I thank the Minister very much for that full response. I am glad that he recognises the issues we raised. We are probably pulling in the same direction on this. In particular, the work streams to which he referred are obviously very helpful and seem to be widely inclusive. I am glad to hear that they will report in the summer, at the point where they can inform any regulatory steps that are to be taken in consequence of this Bill. I think we were very glad to see a couple of other points but I will read them in Hansard and come back if there are any further points we need to make.

My concern is that there were a couple of times in the Minister’s response where he made great play of the fact that he felt that the companies to which requests for access to data are being made would have sufficient ability to determine whether the request was bona fide and therefore to be relied on, without having to have any other cross-regulatory approvals. I hear what he says on that but would like to read it in Hansard to be sure that I am right on it. At this stage, I would say only that that sounds a slightly unlikely premise on which to run what will be a very large amount of personal data, if this works, and be very widely spread across a number of possible providers and users. In that sense, it will therefore raise all the sort of concerns that the public have about how their data are being kept and looked after. At this stage, I would not like to push the amendment any further and I would like to withdraw it.

--- Later in debate ---

[Lord Stevenson of Balmacara]

I start by warmly welcoming the amendments tabled by the Minister, which respond in a very positive fashion to the amendment that I moved in Committee. I had no idea I was being so persuasive. That was a trick I should learn in other places. I clearly have something that I did not know I had. The points that the noble Viscount went on to make are also well taken. Even so, there are a couple of things that we would like to suggest are also taken into account.

For the reasons outlined, the necessity of IT equipment to the continuity of a business in difficulty cannot be overstated. Frankly, without this, there is no chance of any continuation, or of selling on, and thus of maintaining economic activity and jobs. IT is today as central as supplies of water and utilities. Therefore we also welcome the Government’s amendments to add on-sellers of utilities to the list of supplies that must continue. Given our desire to enhance business rescue, especially in these difficult times when banks are less than helpful, this change to prevent certain suppliers withdrawing services to struggling businesses is a significant step forward. We are delighted that the Government heard this plea.

The one area that we wish to raise, covered in the amendments that have been tabled, is the new mandatory requirement for a personal guarantee from the office holder—the insolvency practitioner—to cover essential supplies. Subsection (3) of government Amendment 84C permits the supplier to terminate the supply unless an insolvency office holder personally guarantees any charges arising from the continuation of the supply. This is a move away from the current legislation, which provides for an optional personal guarantee.

Although Section 233 of the 1986 Insolvency Act contains an optional guarantee in subsection (2)(a), when the Bank of England, FSA and HMT introduced equivalent provisions to protect financial institutions, this optional guarantee provision was removed, and there are now no provisions for such personal guarantees. This position for financial institutions is right, as we see no case for a personal guarantee from an office holder, since an insolvency practitioner should not be subject to personal liability when acting as the agent for the company.

Contrast the situation affecting directors, who are not mandatorily subject to such personal liability even though they have a similar relationship to their company. Such a requirement for a personal guarantee appears particularly inappropriate in respect of certain types of insolvency, such as for a supervisor in a voluntary arrangement who has no control over the business. The mandatory guarantee requirement in the government amendment is therefore a backwards step, and our amendments are to align the provisions with the recent regime for financial institutions, by removing the requirements for mandatory personal guarantees from office holders.

Our first two amendments also take this opportunity to amend the 1986 Insolvency Act to remove the optional guarantee from Section 233(2)(a) so that the provisions for essential services in the 1986 Act are brought into line with the protection regime for financial institutions. It is hard to understand the requirement for a personal guarantee, as there is no reason why insolvency practitioners should be subjected to personal liability when acting as the agent of the company. There is a real danger that such a requirement would reduce use of this tool with a real threat, therefore, to business rescue.

The existence of a mandatory personal guarantee would be particularly detrimental in CVAs where the management retains control of the business with the insolvency practitioner acting as supervisor. Given the limited control insolvency practitioners have over the business, with no control over the assets, they would be exposing themselves to significant risk by providing a personal guarantee. It is very unlikely that any insolvency practitioner would, in fact, go down this route. I should add that the proposed 28-day maximum credit period in subsections (2)(c) and (3)(c) of the new clauses is a reasonable compromise. Thus the demand for an additional personal guarantee seems excessive. We know the Government share our desire to maximise company rescues—often with the role of an insolvency practitioner as key. We trust they will not undermine their otherwise welcome amendments by the introduction of this counterproductive measure. I beg to move.

[Viscount Younger of Leckie]

My Lords, these amendments seek to amend the powers being introduced by the government amendments, to remove an important protection for suppliers. That protection is provided in the Government’s amendment by allowing suppliers to require a personal guarantee from an insolvency practitioner where they are prevented from exercising a contractual right to terminate supply. Not only does the amendment put forward by the noble Lord remove the protection provided by the government amendment, it also seeks to take away the right of a supplier to a personal guarantee in situations where it already exists in legislation.

I should make clear that essential suppliers who may be required to supply the insolvent business are very likely to be owed money within the insolvency. They are most unlikely to be repaid any more than a small proportion of that claim through realisations within the insolvency. Therefore the Government think it is only right that where such suppliers are obliged to continue supplying the insolvent business, they do so knowing that they will be paid.

The new powers do include other safeguards for the supplier, but none of these guarantees payment of the post-insolvency charges. We do not expect that a supplier will always require a personal guarantee, but we do think that, as is the case as the legislation currently stands, they should be entitled to one where they feel it necessary. It should be noted that the right to request a personal guarantee from the insolvency practitioner is a protection that utility providers have had since 1986, where they are requested to continue supplying the insolvent business.

Removing this right at a time when we are extending the requirement to provide supplies may send the wrong message. However, noble Lords will be aware that the powers do contain the ability to provide for exceptions to the right to request a personal guarantee. While it is anticipated that this would only be exercised in certain limited circumstances, it does provide for some flexibility in the matter.

There is a balance to be struck here. The powers provided by the government amendments will prevent essential IT and utility providers making ransom demands upon insolvency professionals. This can only help the chances of insolvency practitioners being able to rescue struggling businesses. However, they do interrupt normal contractual rights and, as such, we believe it is right to provide safeguards, of which the right to a personal guarantee is one of the most important.

I thank the noble Lord, Lord Stevenson, for his contribution. I am grateful for his comments and reassure the House that the Government take these issues very seriously. The government amendments demonstrate that the Government are committed to seeking improvements to the insolvency regime where there are clear reasons for doing so. However, the Government consider that the amendments suggested by the noble Lord would unfairly remove necessary protections for suppliers. I therefore hope that the noble Lord will agree to withdraw his amendment.

[Lord Stevenson of Balmacara]

My Lords, I agree that the Government are making good steps in this area. I do not want to in any sense take away from them the change that they are introducing through their substantive amendment. I agree that the insolvency processes in the UK generally are very good. They may be slightly better in Scotland, which is moving ahead with another Bill, and I hope that the lessons that Scotland is going to teach us are learnt in the processes in England and Wales.

It is really a question of whether it is appropriate to expose those who are trying to help companies get back on their feet and continue to operate to having to give a personal guarantee. On a very superficial level, it seems to be completely at variance with the overall process that we are trying to introduce. The fact that it may exist in legislation at present does not make it right. Given that the Government have legislated to make sure that these personal guarantees no longer exist in financial companies, it seems slightly odd that we are requiring them for SMEs and smaller companies, which often go into voluntary administration or some other form and then come out again. To hamper that by curtailing the willingness of an IP to get involved does not seem to be right.

However, there is a balance to be struck. I ask the Government to think very carefully about this and to look at it again. I am very happy to have further discussions if that would be helpful. At this stage, I beg leave to withdraw the amendment.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Thursday 31st January 2013 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, we on this side of the Room support the introduction of the measures to do with orphan works and believe that the extended collective licensing system represents a good way forward, albeit, as has been pointed out by the noble Lord, Lord Clement-Jones, that it has to be done in conjunction with the copyright hub, which provides the missing ingredient in a lot of what we have been discussing recently.

As was made clear, we have some reservations about how the Government intend to ensure high standards of operation for collecting societies which are, after all, effectively monopolies in many sectors, so we are keen to see, at a very minimum, clarity on the standards to be set for collecting societies and transparency over the way the powers that the Government are taking will operate in practice. We also want to make sure that everything that needs to be done is done to make the copyright hub work well. The new regime and the copyright hub should ideally be brought into existence contemporaneously.

However, we are confident that things are moving in the right direction, and we hope that there will be opportunities for your Lordships’ House to be regularly updated on matters such as this so that we can feed in our continuing thoughts and support. I particularly refer to the point about photography, which I absolutely endorse. There is an issue there that we will need to keep an eye on. Assuming that everything is going well, we cannot support the noble Lord, Lord Clement-Jones, in opposing Clause 68 standing part of the Bill.

[Viscount Younger of Leckie]

My Lords, the very limited extent to which orphan works can be used is not just a cultural issue, but a real economic issue. The clause will allow for commercial and non-commercial use of orphan works in the UK. The Government estimate this could lead to benefits of up to £220 million a year. Nine out of 10 respondents to the Government’s consultation were in favour of commercial use of orphan works. The UK scheme has more safeguards than the EU orphan works directive. It includes a requirement that any diligent search is verified by an independent authorising body. The authorising body will not be able to license itself.

We are also making provision for remuneration of rights holders at an appropriate rate for the type of work and type of use. The directive is less restrictive about this. Remuneration will be paid whenever a work is used. It is yet to be determined how long such money should be kept on escrow for the returning rights holder. However, after a certain period it is envisaged that unclaimed money will be redistributed. Where the money has come from publicly funded institutions, such as archives, it may be possible for that money to be returned to fund archiving, preservation and digitisation costs.

The Government are pleased that the digital copyright hub is developing but have not yet made any decisions about who will run the orphan works scheme. However, regardless of its final decision, these powers are needed to enable the chosen organisation legally to operate the scheme.

The noble Lord, Lord Stevenson, my noble friend Lord Clement-Jones and other noble Lords raised concerns about the potential impact of these proposals on photographers. The Government continue to work with the photography sectors. The working group on orphan works and extended collective licensing contains significant representation from the world of photography, including the Association of Photographers, the British Association of Picture Libraries and Agencies and Stop43.

The Government appreciate that the stripping of metadata is a real problem for photographers. As noble Lords have noted, this is a current problem, and the practice continues despite the existence of legal instruments making it an offence. I am willing to meet noble Lords, who, in the course of this Committee session, have raised concerns, to discuss possible solutions to the problem of metadata stripping. This is an issue that is also being examined by the industry-led digital copyright hub, following Richard Hooper’s July report. However, the Government do not believe that the introduction of the orphan works scheme will negatively affect photographers, because historical photographs held in museums, archives and libraries, will form the bulk of photographs licensed under the scheme. If anything, the orphan works scheme will very likely improve matters, as it will become more obvious if works are being used unlawfully. Officially licensed orphan works, whether sourced from digital or analogue sources, will carry a reference to the authorising body. Courts may also take a dimmer view of infringement, if there is a legitimate and legal means of using orphan works.

The provisions on extended collective licensing are designed as a tool to help streamline rights clearance, but only where the sector wants it. We know that some collecting societies already operate extended collective licensing-type schemes, which are unregulated and unlawful. This means that rights holders are unprotected and could be missing out on money owed to them. A statutory basis for such schemes would help remedy this. The Government know that extended collective licensing might not be appropriate for all types of works or rights, which is why it can be initiated only by a representative collecting society acting with the explicit support of its members. The Government would have no power to impose extended collective licensing on a sector. Collecting societies tend to be monopoly suppliers in their sectors, so members and licensees cannot simply shop elsewhere.

The clause and schedule introduce provision for the statutory regulation of collecting societies, where self-regulation fails. Any collecting society that fails to meet the Government’s minimum standards for self-regulation would be required to adhere to a statutory code of practice. Collecting societies would have to comply with specified criteria, including on compliance and enforcement. The Government welcome the progress that the industry has made on a self-regulatory framework. Self-regulation remains the Government’s preferred approach. The safeguard of enforceable minimum standards will help to ensure that collecting societies operate in a manner that promotes open and efficient markets. If it works effectively, the reserve power will not be used.

Noble Lords have raised a number of questions. My noble friend Lord Clement-Jones raised the issue of having to wait for the hub before undertaking extended collective licensing, and pointed out that we need extended collective licensing because we have the hub. Both schemes are designed to facilitate legal and properly remunerative use of works; they are two sides of the same coin. The fact that ECL-type schemes are already in use in the UK demonstrates that there is a need. ECL cannot be imposed on a sector; if rights holders prefer to use direct licensing through digital copyright exchange, the hub or another method entirely, that is their decision. The hub cannot act on orphan works without the legislation in Clause 68 in place.

My noble friend Lord Clement-Jones raised an issue that the noble Lord, Lord Stevenson, raised previously, on photographers suggesting that we delay the implementation of the orphan works directive until the October 2014 deadline, and then implement only to relieve any restrictions that the copyright hub failed to address. I understand the concerns behind this suggestion, but this is not an option because we need to implement the orphan works directive in full, and we cannot go outside the requirements of the directive without this clause. This means that no one, including the copyright hub, would be able to license orphan works without the power of this clause.

My noble friend Lord Clement-Jones, in a further question, raised the issue of foreign rights holders who would not be able to monitor what is going on in the UK. The collecting society must produce evidence with its application to show how it deals with those affected, including foreign rights holders. I hope that that answers his question. He also raised the question of FOCAL and BAPLA, which were unhappy with the ECL. Photographers do not have to have ECL—it is voluntary and can be initiated by the collecting society only with the consent of members, as I mentioned earlier.

I believe that my noble friend Lady Buscombe stated that extended collective licensing in Nordic countries is different and guarantees remuneration for rights holders. However, collecting societies in the UK must also show how they will find non-member rights holders and distribute money that is collected to them. I hope that that goes a little way to answering my noble friend’s question. I commend the clause to the Committee.

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[Viscount Younger of Leckie]

Noble Lords will be aware that the reforms to the debtor-initiated bankruptcy process being introduced by the Bill remove the order-making function from the court and replace it with a new administrative process. These are minor and technical amendments to the “Extent” provisions in Clause 78 relating to those reforms. Individual insolvency law is a devolved matter in Scotland and these reforms will have no substantive effect on legislation in Scotland.

The jurisdiction of the adjudicator is limited to the determination of bankruptcy applications received from debtors who meet the jurisdictional criteria of having resided or traded in England and Wales for the required period. However, certain consequential amendments made by the reforms extend to Scotland. The purpose of these amendments is to ensure that we have the legal power to make all those consequential amendments that are necessary to give effect to the reforms being made in England and Wales. The amendments make no substantive changes to bankruptcy law in Scotland, which is a devolved matter. I therefore beg to move.

[Lord Stevenson of Balmacara]

My Lords, we have read the amendments and recognised the points. Rather surprisingly, given the volume of correspondence that we received on everything else in the Bill, we received no comments from anyone on this matter and therefore have to rely entirely on our own judgments. In this case, we are happy for the amendments to go forward.

Legislative Reform (Hallmarking) Order 2013

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Tuesday 29th January 2013 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for his very clear and interesting opening remarks and for setting out the background to this order. I am also grateful to the noble Lord, Lord Hodgson, for us being not just a duet. We have not only an extra speaker but somebody who actually seems to know a little more about this. I may be taking a step in the wrong direction to say this but neither I nor my opposite number have anything like the expertise that has just been displayed. I have a number of points to make and would be very interested to hear how the Minister responds to the points made by the noble Lord, Lord Hodgson, particularly on the worry he has about regulatory capture, which I certainly recognised as a worry from reading the notes.

The noble Lord also asked about who actually benefits from this. It is apparently being done for the benefit of the four assay offices, but possibly at the cost and expense of those who design, make and sell excellent quality jewellery and related articles within the UK. We need to have regard to that. One could imagine a scenario in which this legislative reform order was not required because a strong, export-led provision of services dominated the world markets and the quality of hallmarking and assay services offered in Great Britain was sufficient to make the rest of the world take us as the standard without inventing others. However, that clearly is not happening.

It is interesting to note that hallmarking is one of the oldest forms of consumer protection. As the notes make clear, it has been in existence in the UK for some 700 years. The main thrust of my argument is about protecting consumers. As I understand it, hallmarks serve three functions: they are distinguishing marks struck on articles, such as items of jewellery, that are made of platinum, gold, silver and now palladium, which guarantee to the world the purity of the precious metal content of the article; they are an indication that the articles have been independently assayed; and, currently, they confirm that, in the UK, the assaying and hallmarking of precious metals has been carried out by one of the four assay offices, which are located in London, Birmingham, Sheffield and Edinburgh.

The law that governs hallmarking in the UK is the Hallmarking Act, as we have heard, and a number of pieces of subordinate legislation. The draft order contains a number of proposals to amend the Hallmarking Act, but the main one is to enable offshore hallmarking by the UK assay offices and for items bearing those hallmarks to be treated in the same way as items bearing hallmarks struck in the UK. It is on this issue that I wish to respond.

When the Minister responds to the debate, I would be grateful if he could answer the following questions, as well as those asked by the noble Lord, Lord Hodgson. The explanatory document provided by the National Measurement Office, dated November 2012, points out in paragraph 16 that,

“the proposed change to existing law represents a radical broadening of the hallmarking operations currently legally permitted (UK-based only) to the striking of UK hallmarks on, potentially, a global basis”.

Notwithstanding that the consultation process revealed widespread support for this change—although “widespread” has to be interpreted carefully, given the volume of consultees who were approached—the document goes on to explain that it was “the Minister” who decided that the order would be taken under Section 17 of the Act, using an affirmative resolution process, and not under the super-affirmative resolution process that is provided for in Section 18 of the Act. However, the document is rather vague about what evidence was used by the Minister to justify the decision to utilise the Section 17 procedure? Can the noble Viscount enlighten us further on that point?

One of the main risks to this proposal is that control of the hallmarks in the offshore locations will be lost, which might lead to the possibility that all UK assay office marks will be become so tainted as to be devalued. Will that not require continuing and intensive supervision by the Hallmarking Council and indeed by HM Government? Has any assessment been made of that risk? If it is thought to be a real risk, why has no continuing cost been ascribed to it? All we have is the rather small sum of £25,000 allegedly for set-up costs.

Given that hallmarking is at heart a consumer protection measure, as I said, what steps will the Government take to make sure that consumers are aware of these changes? We are, after all, talking about a global trade, worth about £4 billion per annum within the UK at present, with articles increasingly being produced and hallmarked in low labour-cost countries such as Thailand and India. Hallmarks authorised by EEA counterparts will also be sold in the UK. To compound it all, our current style of marks is being changed. It seems to me that this will call for a major, proactive consumer information programme. Who will lead on that in the absence of Consumer Focus? Will it be Citizens Advice? What sort of budget are the Government thinking of? I would be grateful for more information on that, if possible.

The main responsibility for enforcing the Hallmarking Act lies with local authorities through their trading standards departments, although often assisted by the assay masters, as the document puts it. As one of the accompanying documents says, and it puts it rather well:

“Trading Standards Departments have a wide brief, but limited resources, as a result of which the level of surveillance and enforcement activity has reduced over recent years”.

No surprise there. Clearly it is vital now, and even more so if this LRO is passed, for all concerned to ensure that hallmarking law is enforced for the benefit of consumers and, indeed, the trade.

The Minister will be aware, though his work on the ERR Bill and elsewhere, of a number of additional responsibilities that are being transferred to trading standards departments, so I would be grateful if he could confirm that the additional workload on these departments has been adequately assessed. For example, they will need to keep up to date on the number of new offshore assay offices being established, the new marks that are being introduced and the impact of the other changes in this order. It is clearly important that adequate funding and training are provided. I could not see this item in the otherwise very comprehensive impact assessment, so will the Minister spell out the situation?

Finally, there are currently four UK assay offices permitted to apply the UK hallmark. According to the document they all work independently of one another, and, being based in London, Edinburgh, Birmingham and Sheffield, they are apparently very different organisations. What steps will the Government be taking, if any, to ensure that we do not get a glut of offshore hallmarking offices around the globe, perhaps competing against each other? The mind boggles at the prospect of seeing UK assay office London, UK assay office Sheffield, Birmingham, Edinburgh—noble Lords will get the point—in direct competition in gold and silver factories across the globe, when we are in essence talking about a UK standard.

As my noble friend Lord Hodgson asked, will job losses in the UK offices—a risk pointed out in the document—not adversely affect UK-based designers and manufacturers? The British Hallmarking Council is in the lead here and we have to take its advice, but the council’s role is only to advise government on hallmarking policy and any need for legislative change, so the buck stops, I respectfully point out, with the Government. I would be grateful for the Minister’s comments.

[Viscount Younger of Leckie]

My Lords, it has been a somewhat lonely debate, but I am most grateful to the noble Lord, Lord Stevenson, and my noble friend Lord Hodgson for their considerable contributions. The paucity of contributors to the debate has been counteracted by the considerable number of questions, notably from the noble Lord, Lord Stevenson, and I will do my best to answer them all. If I cannot, I will of course follow up in writing.

I also thank the noble Lord, Lord Stevenson, and my noble friend Lord Hodgson for their acknowledgement of the risks facing the UK hallmarking regime. I am particularly pleased that the efforts of the hallmarking community in helping bring about this order have not been in vain. The Government’s task in opening up fresh opportunities for UK hallmarking is nearly complete. It is now for the UK assay offices to grasp such opportunities as they wish and as their commercial judgment deems desirable. As I see it, the most important outcome of this whole venture is that there will be a level playing field between the UK assay offices and their competitors in the European Economic Area, now that the metaphorical bonds tying the hands of the assay offices have been undone.

Also worth mentioning is the widening of choice of sponsors’ marks. This is in its own way a radical step. It is also an eminently sensible one, in that it will make life easier for sponsors, who range from craftsmen operating a small business to large manufacturers. Anything which simplifies the presentation of articles of precious metal for hallmarking is to be wholeheartedly welcomed.

My noble friend Lord Hodgson, supported I think by the noble Lord, Lord Stevenson, raised the issue of the cost benefits of this exercise and change. It is best to be frank and to make the point that it is expected that a limited number of new jobs will be created where assay offices choose to set up offshore hallmarking operations, which is good news. Having said that, the hallmarking community itself acknowledges that there are likely to be some job losses in the UK as a result of the setting up of overseas hallmarking operations.

However, my main point is that the alternative would be far worse. Failure to grasp the opportunity to tap into the demand for offshore marking of high-volume jewellery would further reduce the competitiveness of the UK assay offices, which are already losing business to those competitors who are able to hallmark offshore. For example, one assay office has already lost about a third of its core staff—15 people—with this figure likely to increase to some two-thirds of existing staff, simply because of the inability to compete. Ultimately, failure to change the UK hallmarking law could lead to the closure of one or more assay offices and even greater job losses.

My noble friend Lord Hodgson raised the important question of the potential loss of reputation, as he put it, or loss of quality, as a result of the changes. I can reassure him that different marks are required to distinguish between onshore and offshore hallmarking operations. No diminution of reputation or quality is foreseen, as the British Hallmarking Council is responsible for all hallmarking operations.

My noble friend also raised the issue of the removal of the competitive advantage of UK jewellery manufacturers. Again, I can reassure him that UK manufacturers are mainly bespoke manufacturers, whereas overseas manufacturers focus mainly on the mass produced market, so there is no removal, as I see it, of competitive advantage.

The noble Lord, Lord Stevenson, asked why the procedure was not super-affirmative. We do not consider that the changes being made by this order are of such significance as to require the use of the super-affirmative procedure. There was general agreement among consultees on the proposals. Moreover, a committee in the other place concluded that the affirmative resolution procedure was appropriate. The Delegated Powers and Regulatory Reform Committee of this House did not call for the order to be subject to the super-affirmative procedure.

The noble Lord also raised the issue of state aid and funding for change; in other words, with the changes, whether there would be some state aid. The assay offices are entirely self-financing and, as such, no government money will be used to effect this change.

[Lord Stevenson of Balmacara]

I do not think that I can let that pass. Unfortunately, I have just given away my notes, but I am sure that a close reading of Hansard will show that I never said such a thing and I did not raise that point. It is an interesting one and I am grateful to have heard it, but I did not in fact make that point.

[Viscount Younger of Leckie]

I do apologise; I was under the impression that the noble Lord had raised that issue.

The noble Lord, Lord Stevenson, raised the issue of how to inform consumers about these changes. The procedure is that a dealer’s notice is required to be displayed in all premises selling hallmarked items, and this will include both the onshore and the offshore marks.

Finally, the noble Lord asked about the representation of the British Hallmarking Council. The council consists of 19 members covering eight assay offices, 10 government appointees and one chairman. The 10 government officers include four from industry, while the others are from consumer protection and the independents. I hope that that answer helps the noble Lord.

In conclusion, although there may well be some other questions that need to be answered—

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Monday 28th January 2013 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, it has been a very good debate, and it has got us off to a very good start this afternoon in our task to whip through the various clauses on copyright. I start where my noble friend Lady Morris ended. We have to be clear that in addressing these clauses we adjust for the realities of the digital world in a way that makes sense to consumers. We have to start with where people are at present, not where we would like them to be. The points about education are really important here.

We are playing a big price for the lack of reform in recent years from schools unable to make use to libraries unable to make preservation copies of films and television programmes that they hold in the national interest. Copyright raises issues of reasonable social and cultural freedom as well as one very key issue with economic ramifications. The presence of the internet allows all sorts of new forms of creativity, so we need a copyright set-up that encourages one-click licensing for a long tail of material that is out there and which could bring economic and cultural growth. But without a well balanced and modernised framework, we will put ourselves at a big disadvantage over some other countries, most obviously the US but also other emerging players. Countries such as Singapore and Iceland are seeking roles as leading edge players in creative product licensing.

Technological change will mean that we in the UK need to keep on adapting our rules, because our fair dealing regime is part of a European system that requires us to exploit fair dealing exceptions, rather than the US fair use system that enables the regime to flex in response to changing attitudes, behaviours and court decisions. I wonder whether the time has not come to think hard about why we differ from the US on this key point.

As we have heard, the argument for the post of director-general of IP is that such a post is needed to ensure that the successful record of IP generation in the UK is properly recognised, celebrated and built on to ensure its contribution to growth, employment, culture and society. As the noble Lord, Lord Jenkin, said, the key to that is definitely education.

The noble Viscount, Lord Younger, is the newest IP Minister, and I note that he is the sixth person to hold this position since it was created about six years ago. This will undoubtedly lead to a lack of continuity and policy uncertainty for businesses. It is not an exact parallel, but before the creation of the Department for National Heritage, which is now DCMS, there was a period when there were 18 different Ministers with responsibility for films in the then sponsoring department, the DTI, over a period of 17 years. As I was working at the BFI in part of that period, I know what that does to industry. I shall leave it to the Minister, who is barely 18 days into his post, let alone 18 years, to assess whether his location in BIS makes cross-government co-ordination more difficult and sporadic, as has been rather persuasively argued.

One problem for those working on this section of the Bill is that the creative industries do not generally feel that they are being looked after properly. Indeed, there is a wide sense of unease, as the noble Lord, Lord Jenkin, called it, and of imbalance, as my noble friends Lady Morris, Lord Smith and Lord Howarth also mentioned. This is in part because of the rather unfortunate split in responsibilities between BIS and DCMS, which can sometimes—or, indeed, all the time—appear to pull in different directions. My noble friend Lady Morris put it well; she spoke from experience, and I think that she spoke the truth. IP is not well served by the current system. But it is also because there have been no real opportunities to debate in this House and the other place some of the issues in the foreground of this sector’s thinking at a time of great change in every aspect of its businesses. The occasional SI does not compensate for this—something that we will return to in other debates. That is why, to me, the idea of an annual report and a subsequent debate in Parliament seems such a good idea, which I am happy to support.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, first, as a Scot, I recognise with a little pride the Scottish historical links with intellectual property which have been highlighted today.

Amendment 28C would create a new statutory role of “Director General of Intellectual Property Rights”, with a duty to promote intellectual property rights. As Minister for Intellectual Property, I have a role to champion the IP system as a whole—a point to which I shall revert later. This system recognises the different interests of rights holders, consumers and other users—an important point raised by the noble Lord, Lord Howarth of Newport, and supported by my noble friend Lord Lucas.

A balanced intellectual property system promotes strong and competitive markets; encourages innovation and creativity; and is a foundation of the knowledge-based economy. I ask noble Lords how the proposed director-general would fit into that system. The frameworks for patents, copyright, trademarks and designs serve sets of different needs, and function in different ways. It is not clear how introducing a new duty, cutting through those distinct, complex and largely effective systems, would affect their operation.

We recognise the importance of promoting and educating about intellectual property. As my noble friend Lord Jenkin highlighted with some impressive statistics, and was highlighted by the noble Lord, Lord Smith, intellectual property is an important agenda for businesses and consumers alike, but although the Government understand the intention behind Amendment 28C, there is a need to deliver a balanced approach.

Amendment 28D would create a new obligation on the Government to report annually on the state of copyright licensing in the UK, and between the UK and our trading partners. The Government are keen to ensure that the intellectual property system as a whole works well. We have ourselves proposed that the Secretary of State will present an annual report to Parliament setting out his view on how the activities of the Intellectual Property Office are facilitating innovation and growth.

The Government agree with Professor Hargreaves that intellectual property policy should be based on reliable evidence. However, the reporting obligation created by this new clause would not be a proportionate tool to do that. Moreover, copyright licences are private agreements, and the Government do not intervene or monitor individual transactions unless circumstances are exceptional.

Collating large amounts of commercially sensitive data could also cause concern within the markets, and could have an impact on the competitiveness of UK interests. Headline figures showing the health of the creative industries are already available. It is not clear that the proposed report would add value to that existing data.

The UK’s creative industries are among the most influential and successful in the world. Our creativity is, quite rightly, highly marketable, award-winning and sought after, and creative industries contributed 2.9% of UK gross value added in 2009.

At this point, I should like to address some points raised by my noble friend Lord Jenkin and the noble Lord, Lord Smith, concerning the value of the IPO. The Government recognise the value of the creative industries, and it is worth emphasising some progress. The Government have done a lot for UK creators and are doing more. We have supported term extension for music performers; introduced charging of charities for music use; are pressing ahead with the antipiracy measures of the Digital Economy Act; and rejected the notion of introducing US-style fair use in the UK.

The Government are also supporting the creative industries abroad through our growing IP attaché network. Those attachés provide practical support to UK businesses, build relations with intellectual property agencies in host countries and improve UK influence overseas. The UK has attachés in south-east Asia, China, India and Brazil. The changes proposed in the Bill will bring the copyright framework up to date and reduce administrative burdens on both creators and users of content. My noble friend Lord Jenkin also questioned the direction and strategy of the IPO, supported by my noble friend Lord Clement-Jones, who questioned whether the IPO is indeed a champion of IP.

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[Viscount Younger of Leckie]

My Lords, Amendment 28DZA would introduce a provision into the Copyright, Designs and Patents Act 1988 that changes the legal status of rights management information attached to digital material. This would make internet service providers responsible for ensuring any rights management information contained in metadata is recognised and acted upon. I have sympathy with creators whose wishes about the use of their material, expressed through metadata, are not always complied with. There are already well-established methods to control automated use of material posted online—for example, the use of robots dot text files to prevent crawling of websites by search engines. I was grateful for the technical insight on this from the noble Earl, Lord Erroll, who I suspect knows a lot more about this than my good self.

Internet service providers are already responsible for removing infringing material when it is brought to their attention. This is in keeping with other areas of law, where we do not expect carriers of information to be held liable for the lawfulness of that information. The approach suggested in the amendment would require all aggregators, indexers and other automated hosts online to develop systems to read metadata and comply with any conditions. As noble Lords will understand, this would be no small task. It would also replicate the efforts of a number of industry-led initiatives in this area, which are making progress. These include the Automated Content Access Protocol project, and work by the industry-led digital copyright exchange to look at the related issue of automated metadata stripping.

Government have considered the amendment carefully but do not consider that legislative change is the right step at this time. Moving on to Amendment 28DZD, noble Lords will be aware that the Government have announced their intention to bring forward legislation to introduce or update a number of copyright exceptions. A new exception to allow limited use of copyright works for parody, caricature or pastiche is part of that work. The amendment of the noble Lord, Lord Stevenson, is therefore going in the same direction as the Government’s policy. Rather than amend the Bill to achieve it, I suggest that it would be better to wait for the introduction of a parody exception, with the other proposed changes to copyright exceptions, in due course.

The Government have already committed to publish draft regulations later in the year, including provisions on this subject, for technical review by any interested parties. This will be an important opportunity to hear from experts, including in this House, to ensure that the regulations will have the desired effect. I would like to pick up on a point emphasised by the noble Lord, Lord Howarth, concerning secondary legislation. To clarify, we believe that exceptions to copyright that are explicitly permitted by the copyright directive may be introduced into UK law by means of Section 2.2 of the European Communities Act. The Hargreaves changes to copyright exceptions announced in December 2012 will be introduced by secondary legislation under the European Communities Act and not under the power in Clause 66 of the Bill. Our intention is to publish draft regulations for public comment in the spring. Government have considered the amendment carefully, but I hope that in light of the above, the noble Lord, Lord Stevenson, will feel able to withdraw this amendment.

[Lord Stevenson of Balmacara]

I thank all those who contributed to the debate. I am glad we got to the heart of it very quickly. I am particularly grateful to the noble Viscount, Lord Bridgeman, and the noble Earl, Lord Erroll, for their contributions of a technical nature. Who could fail to be persuaded by the noble Baroness, Lady Brinton, who lied when she said she was simply a stage manager? Clearly there was a touch of the real authorial actor there as well and I was grateful to her for her points. My failure here was clearly to have not done my research and realise that despite his youth and clear vibrancy in terms of matters cultural, the noble Viscount had not listened to his children and worked out where “Gangnam Style” was coming from. I perhaps should have taken a leaf out of the book of the noble Baroness, Lady Brinton, and actually done my bit of what it was that does it. It certainly would have amused the civil servants behind, but I think they were laughing already so it would have perhaps wasted my time.

On metadata, this was a probing amendment and was not meant to be one that would have solved the problem. I tabled the amendment because I think we are missing a key debate, and I am still not quite clear about when we are going to get that debate. The Minister said that legislative change in this area is not right, but he failed to explain why it is not right. Perhaps he will write to me and explain in a bit more detail. There is something here. It is clearly contentious, and we are not going to be able to discuss it very well in secondary legislation. I think we are missing an opportunity here.

On parody, we are still left with a problem that was not addressed in what the noble Viscount said. The legal problem with parodies is that,

“they need to be close enough to the original to be recognised by the audience as a parody in the first place, which means that they will almost inevitably infringe copyright”.

How do we get out of that? These words are quoted by the IPO. They are from somebody commenting on a case which sets the situation here quite well: “Newport State of Mind”.

We will not solve this today, and there is no point in continuing it. I shall withdraw the amendment, but when can we have these debates? I beg leave to withdraw the amendment.

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[Viscount Younger of Leckie]

I have listened carefully to my noble friend Lord Clement-Jones on these matters and have taken note. I am not sure that I can convince him that consultation is the right way forward, but I hope that he will accept that. I doubt that he will, but I have taken a firm note of what he has said.

[Lord Stevenson of Balmacara]

My Lords, I am grateful to everyone who has contributed to this debate. We all broadly sung much the same tune. There are minor changes and I accept the point about the incidental and substantive issues and the need to be careful that we do not knock out the use of props in trying to find a better solution than the one that the Government are proposing.

I am afraid, though, that I echo the comments of the noble Lord, Lord Clement-Jones, by saying that I do not think that we got to the heart of the debate here. To be fobbed off with the idea that somehow by taking these rather extraordinary Henry VIII powers—probably on the wrong legal basis and almost certainly heading in the direction of a conclusion that almost no one else, given the same facts, would arrive at—and then to be told that we can return to this once we have experienced how the laws work does not seem to be a very satisfactory way of going about this.

This needs a bit more consideration and debate. As was said, many of the issues here are not party-political in the sense of opening up great divides between us. We all want a solution to this; I have said twice that I am not against the idea that in the medium to long term we should find a way of establishing a comparability of status for industrial designers and those in the other creative industries. On the other hand, as the noble Lord, Lord Clement-Jones, said, life plus 70 years is a very long time. To change radically, in one short clause in a Bill that is largely about other things, from 25 years to life plus 70 is a big step. We are not saying, “Don’t do it”, but we are saying, “Let’s talk about this a bit more and try to get a better sense of what the issues are”. As someone said—I think that it was the noble Baroness, Lady Brinton—we are concerned about avoiding unintended consequences. There are some already, and we have picked up several of them in the examples that we have given today.

On wallpaper, I thought that hoping that the Hargreaves report would come to the rescue was a little limp. We are not talking about the sort of designs that might be found in commercially popular suppliers of cheap paper and products; we are talking about those people who have registered designs that they have utilised in a perfectly appropriate way in their business to obtain a suitable return on their investment for a number of years. That is changing from 25 years to life plus 70 where the registered design is in the ownership of the company. That is a very large step indeed.

I used that only as an example. I did not want the Minister to be defensive about it, but it made my point well. The approach that he has taken simply does not answer the question. I am sure that we will have to return to this but, in the interim, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, given the mess that we were in on what constituted bundling and whether it was directed or undirected, I am sure that the Minister’s eyes alighted on this group, particularly the wonderful tables which he has provided for us and which we have read with interest, when he came to speak first on this. He cannot have been helped by the fact that his Chief Whip was hovering around his left shoulder as he was doing so, but he managed to cope with that and he is obviously learning fast on the job.

We have given notice of our intention to oppose the clause, because we were very concerned when reading it and seeing the wideness of the powers. The recommendations from the DPRR Committee have obviously stimulated the department to think again on that, and we are grateful for the amendments introduced by the Minister. But it tells the story that to get his narrative across he has to produce this 12 or 13-page document with tables that classify for us the conditions under which an unpublished opera whose author died in 1920 has to reduce the term by 49 years, at which point the work enters the public domain. I did not know that, and I do not think that many people did know that. Clearly a great deal of education has to be done about this area. I am still slightly uncomfortable that the analytics that have gone into this—and I can think of examples from films, which I am concerned about more directly, or unpublished monographs of engravings when the author has died—leave us with something more complicated than it needs to be, perhaps.

Nevertheless, the context of that is not the issue. The question is whether the power should exist with government to make reductions in copyright in transitional cases. That has been subsequently reduced by the comments of the DPRR, and we are now satisfied with that.

[Viscount Younger of Leckie]

I thank noble Lords who have contributed to the debate. First, I respond to the noble Lord, Lord Stevenson, to say—I am sure that he knows this, really—that the information that we produced on the illustrated works was for information. It was not our aim to beef up our argument, because we do not believe that we need to do that.

My noble friend Lord Clement-Jones asked whether there was consultation about reducing copyright on published works. I can confirm that this was in the copyright consultation exercise in 2012. An issue was raised about the published works of TS Eliot. We would need to know a considerable amount more information, and I would not be in a position to give legal advice on specific cases. The clause would not reduce the copyrights of published works. On that note, I feel that I have answered adequately the responses from noble Lords.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, I find myself in agreement with everyone except the noble Lord, Lord Clement-Jones, on this point. I am not following his line on this one and will not be saying, “Thank you”, “Oh, yes” or whatever he wishes me to say at the end of the debate.

However, there are a couple of things that are worth picking out of this very good debate. The question of photography and photographers is not yet well resolved. That is true in general terms because, in particular, the metadata problem affects photographers more than anyone else, and we have to be very sensible about that. When he comes to respond, I should be grateful to have the Minister’s comments on whether he foresees any particular difficulty there.

Like other noble Lords, I have received a number of communications from photographers in recent weeks. One of them, from Leon Neal, struck me as being of particular interest because the argument being made is that the impact that this clause will have in relation to photography is substantial. I think we take that point, but he points out that a number of the decisions that will be affected will be very dependent on whether the copyright hub works. In saying that, he wonders whether the Government have in mind giving the copyright hub a chance to get going to see whether it has a solution for the particular problems of photographers that would decrease the requirement for this legislation to be as prescriptive as it is. I am not sure whether I can agree on the basis of this correspondence, but it is something that the Minister should reflect on, and perhaps he can come back to it at that stage. Leon Neal wrote: “I request that you please support the proposal to delay the directive implementation until the October 2014 deadline and then only implement it to relieve any of the restrictions that the copyright hub has failed to address”. That seems a very sensible suggestion.

In line with that, we are aware that the way in which the Government are progressing on this is to take the powers that are set out in Section 68, which we broadly support, and work out the details of the scheme to be brought forward through, presumably, secondary legislation at a later stage. In order to help them with that, they have set up a collective licensing working group, which is presumably also looking at orphan works. The group meets regularly, I understand. It has been going for four months, so perhaps it has not got very far in its discussions. The list that I have seen includes publishers, authors, visual artists, musicians, broadcasters and potential users of the schemes, which all seems very good. Of course, there is a missing group: photographers. When he comes to reply, will the Minister give us some assurance that photographers’ interests—perhaps he should co-opt the noble Lord, Lord Greenway, to his discussions—can be taken into account?

[Viscount Younger of Leckie]

My Lords, Amendment 28LA would limit the scope of the UK orphan works scheme to that of the EU directive on orphan works. The proposed UK scheme in Clause 68 is intended to complement the EU directive. The exception provided for in the directive is more narrowly focused on enabling the cultural use of orphan works, specifically the digitisation of, and cross-border online access to, orphan works in libraries and archives. The directive does not prohibit the UK developing a domestic scheme for licensing orphan works within the UK.

The noble Lord, Lord Howarth, raised the issue of whether the EU directive can be widely used. I agree that the range of the EU directive is extremely limited. The same sentiments were expressed by my noble friend Lady Brinton. It would not be adequate for the purposes of copyright licensing as proposed by Richard Hooper’s work. Use of orphan works under the directive is limited to publicly accessible libraries, archives and public-sector broadcasters. The directive also allows for the generation of revenue to cover only the costs of digitising orphan works that are made available to the public. This does not allow any kind of distribution, such as publication in a book or TV programme. The directive also does not cover photographs, which make up a significant proportion of the orphan works held by archives, libraries and museums.

The Government’s proposals are about opening up the commercial and economic potential of orphan works. It was clear from the responses to the Government’s copyright consultation that there are many desirable uses that could be made of orphan works which would have a commercial element—for example, reproductions in exhibition catalogues, books or television documentaries.

Because the UK scheme would allow broader commercial as well as non-commercial use, we are proposing a key extra safeguard which is not in the directive. This is the requirement for the diligent search to be verified by an independent authorising body. Allowing commercial use of orphan works will not undercut the market for non-orphan works. In many cases, there is unlikely to be a comparable non-orphan work that could be used instead—for example, unique records of historical events. In any event, the Government’s proposals will provide for remuneration to be set at a rate appropriate for the type of work and its proposed use.

Amendment 28LB would remove four paragraphs from Clause 68 in respect of the proposed orphan works scheme. These paragraphs set out various issues that the regulations either must or may cover and contain the key safeguards for rights holders that will underpin the scheme. This includes the fundamental safeguard that a diligent search for rights holders must have been undertaken before a work can qualify as orphan. My noble friend Lord Clement-Jones, asked whether foreign rights holders would lose out. I can confirm that a diligent search will be needed to check for foreign rights holders, too.

Another key safeguard that the amendment would remove is the requirement that the orphan works authorising body must be independent and therefore cannot license itself to use an orphan work. The regulations could still contain such safeguards even if they were removed from the Bill. However, the Government’s view is that these safeguards are such an integral part of the proposals for an orphan works scheme that they should be set out in the primary legislation.

I pick up the point that the noble Lord, Lord Greenway, raised about the future of photography libraries. The orphan works scheme will help photo libraries because it will enable them to use orphan works legally. The noble Lord, Lord Stevenson, also raised the issue of photographers, and I can assure him that photographers’ interests will be taken into account.

The noble Baroness, Lady Blackstone, recognised that there is a difficult distinction to be made between commercial and non-commercial uses, and I thank her for that helpful intervention.

In the light of the above, I ask the noble Lord to withdraw his amendment.

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[Lord Stevenson of Balmacara]

My Lords, I shall speak to Amendment 28WA. The key issue is whether it may be necessary to broaden the remit of an existing licensing organisation and, if it is necessary, I hope the amendment will do what is required to achieve that. The background to this amendment is to try to open up the archives of the BFI, in particular, but also those of other agencies that hold film and broadcast material. The power of film to transform the way we see the world around us and understand it cannot be underestimated. Britain is one of the world’s greatest film cultures and has a heritage dating back to the very first days of the invention of film. We believe that every young person, regardless of where they live or where in the UK the archive material is actually held, should be able to access and learn from this heritage. Film has significant value as a teaching tool for many different subjects, as well as having a value in its own right in its artistic content. If it is true that the innovators and creators of tomorrow can be found in our education sector, we believe they should have access to film of all ages, much of it stored in publicly managed archives and in copyright and other related materials, just as they have access to libraries of printed words.

The Bill contains a proposal for extended collective licensing that will make it easier and more practical to mass-digitise archive material, particularly for educational access use. That is to be welcomed. However, this change to the law will not be relevant to film or the moving image more generally, as currently there is no collecting society or agency available to license film and moving image material under copyright for educational use. As the Minister will know, Section 35 of the Copyright, Designs and Patents Act 1988 provides an override to the exception which allows broadcasting material to be licensed for use by educational institutions. This scheme has been operated by the ERA since 1990, and it helps copyright owners and performers to derive an income from the licensed use of their literary, dramatic, musical and artistic works. This is extremely valuable, but the ERA’s remit is limited to broadcast material which was recorded after the commencement of the Act and does not cover film. Most educational organisations are covered under the ERA licence scheme, which is renewable annually. It allows teaching staff to record the broadcast output of ERA members for non-commercial educational use.

One simple way to introduce collective licensing to film would be to extend the remit of an existing society, which could be the ERA, to include film and also pre-1990 television broadcasts that are not covered under ERTA licensing. In the age of convergence, it makes little sense to maintain different approaches between film and television. This solution will benefit rights holders, whose interests will be protected as they see a resurgence of educational interest in their creative work and an extended shelf life for their former work, as well as a new income stream. Also, existing education users who are already paying subscriptions will see the value of their investment considerably increased through access to wider audio-visual collections.

Is the Minister confident that the existing text of the Bill will deliver this outcome? If this is not the case, could he consider what is being proposed in my amendment as a way to provide a suitable solution that covers extended copyright licensing to the audio-visual sector?

[Viscount Younger of Leckie]

My Lords, this group of amendments seeks to add further detail or limitations on the face of the Bill regarding the operation of any schemes for orphan works licensing and extended collective licensing.

Amendments 28T and 53 would prevent an ECL authorisation from applying to works where any part of the copyright was owned or controlled by the collecting society or its member. The idea behind this is to prevent a collecting society from unilaterally extending its mandate. In addition, Amendment 28SA specifies that ECL authorisations could extend only existing licences, and only for use in the UK. The Government agree that ECL should not be used to unilaterally extend existing mandates from members. We do not believe that the current drafting will permit this. This is due to the Copyright, Designs and Patents Act 1988, which provides that ownership of copyright refers to ownership of any aspect of copyright. The Government have been clear that no ECL application can proceed unless the applicant has the explicit support of its membership. It is extremely unlikely that support would be forthcoming for an application which significantly extended the mandates of a collecting society.

With regard to the reference to “owned or controlled” in these amendments, the Government understand the intent to reflect the range of arrangements that may not be captured by the word “owned”. However, the amendment could cover a range of possibilities, including voting rights in a collecting society or influence over the registered owner, and risks preventing legitimate uses of ECL arrangements.

I can confirm that the Government will consider the issues raised here through our stakeholder working group, which includes representatives of rights holders, including several photography groups, libraries, archives and other potential users of ECL schemes, as well as collecting societies. However, the ECL scheme needs to be flexible enough to respond to changing market requirements, so any provision that proves necessary should be made in regulations.

With regard to Amendment 28SA, the Government are pleased to confirm that these provisions can apply only to the exploitation of works within the UK. I also reiterate the Government’s view that ECL authorisations should be granted only as an extension of an existing mandate from a licensing body’s members.

Amendments 28U, 28W, and 54 add new conditions, which must be met before an authorisation to run an ECL scheme can be granted. These conditions accord fully with stated government policy. First, ECL schemes can be approved only where the collecting society is significantly representative of the type of rights holder affected. Secondly, the application process will closely consider the extent of existing mandates, ensuring ECL is introduced only where there is clear support for collective solutions. Thirdly, ECL schemes will require the explicit consent of the applicant’s members. This ensures that rights holders have an effective right of veto. In practice, we anticipate that a collecting society will be required to ballot its members before applying to operate an ECL scheme. This, I submit, is a more specific and effective safeguard than is offered by these amendments.

Amendment 28WA would specify that an authorisation to operate an extended collective licensing scheme could be used to grant licences for the use of audio-visual works for educational purposes. I can confirm that the power in new Section 116B is designed to enable licensing bodies to apply to operate extended collective licensing schemes for specific uses of copyright works. Nothing, including educational uses of audio-visual work, has been ruled out as long as rights holders want it. A central pillar of our policy is that it is up to the collecting society, acting with the consent of its members—the rights holders—to choose whether to initiate an application and to define what they would like to see in scope. Government have no power to do so.

In the case of audio-visual, although there is currently no single collecting society that could cover the range of rights, there is nothing in these provisions that would stop several collecting societies collaborating to offer a joint licence. Indeed, there is already precedent for such collaboration in collective licensing. For example, the Copyright Licensing Agency already offers licences on behalf of both authors and publishers. The only restriction on this would remain that, for such an application to succeed, the licensing body would need to meet the safeguards in the Government’s proposals. It would need to demonstrate that it was significantly representative of the type of rights holders affected by the scheme, and it would need to secure explicit consent from its members for the application.

For audio-visual works, these thresholds would need to be met in relation to each of the various groups of rights holders who contribute to such works. This is crucial to ensure that ECL is introduced only where it works in the interests of rights holders. The noble Lord also asked when provision could be made in relation to this power. Subject to the passage of the Bill, the Government would look to make regulations as soon as possible. It is our hope that licensing bodies that wish to apply to operate ECL schemes will be able to do so from 2014 onwards.

The second part of the amendment raises the question of whether pre-1990 broadcast works would be in scope for educational use and learning purposes. The Government believe that the exception in Section 35 of the CDPA, which this refers to, may already apply to pre-1990 works, but our legal team will be considering this in more detail when preparing the legislation on exceptions. I am pleased that the noble Lord is thinking about the benefit that extended collective licensing could have in some sectors. I hope we have assured him that the type of use he suggests would already be possible under the Government’s proposed scheme.

Amendments 28V and 55 would mean that authorisations for ECL schemes must specify the use of works allowed under the scheme. The existing proposals already address these concerns. The Bill already requires ECL authorisations to set out the types of work and the acts restricted by copyright to which they apply. In October, the Government deposited a briefing document in the House Library including further information on how ECL will work in practice. This sets out that a collecting society applying to use ECL will need to provide details of its proposed scheme. Any authorisation could then cover only the specific uses set out in the application.

Amendments 28X and 56 would require the Secretary of State to extend the right to opt out to an exclusive licensee or authorised representative. The rationale for this is understood, but further work is needed to explore how it would work in practice. This will be explored with stakeholders in the working group on ECL and orphan works. While this issue will be considered further, the Bill does not rule out such provision as it stands.

Amendment 28Y would require any collecting society operating an ECL scheme to adopt a code of practice which met certain criteria. The principle of the amendment is appreciated and government policy is for all collecting societies to adopt codes of practice that comply with minimum standards, which were published in October 2012.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 16th January 2013 Grand Committee

[Viscount Younger of Leckie]

My Lords, the amendments seek to extend the role of the adjudicator introduced by Clause 63 of the Bill. Noble Lords will be aware that the reforms to the debtor-initiated bankruptcy process remove the order-making function from the court, and replace it with a new administrative process. This provides an opportunity to introduce a modern, electronic and more efficient application process, and was indeed first consulted on by the previous Government. A similar process has been successfully operated in Scotland since 2008, as the noble Lord, Lord Stevenson, has already mentioned. The adjudicator will be required to consider each application and decide on an objective basis whether or not the criteria for making a bankruptcy order are met. If they are, the adjudicator must make a bankruptcy order.

The first four of these amendments seek to impose a requirement on the adjudicator to consider whether bankruptcy is the right option for the applicant, and whether an alternative debt solution may be more appropriate. The proposal is that the adjudicator should have a discretion to hold off making a bankruptcy order for a period if he or she feels the debtor may benefit from taking further advice.

The amendments may be motivated by a power that the court presently has to refer a debtor who has presented a bankruptcy petition to an insolvency practitioner in a case where an individual voluntary arrangement may be a viable alternative to bankruptcy. I understand, however, that the courts very rarely make use of this power.

I reassure noble Lords that before making their bankruptcy application, applicants will be strongly encouraged to take independent debt advice to ensure that bankruptcy is really the right option for them. My officials will work with the Money Advice Service and providers within the debt advice sector to ensure that applicants have the information they need to make an informed decision. Furthermore, within the electronic application process itself, we propose to include a series of warnings to ensure that applicants are made fully aware of the serious implications of bankruptcy before they make their application. We will also ensure that the process flags up any alternative debt remedies that may better suit their circumstances.

The Government consider that these safeguards are sufficient to ensure that debtors are empowered to make an informed decision as to whether or not bankruptcy is the right option for them before they take the serious step of making a bankruptcy application. The Government believe that these amendments would unnecessarily complicate the process by requiring the adjudicator to exercise discretion on a case-by-case basis. That would increase administration costs with an impact on the application fee. It would also delay access to debt relief for the debtor, who would have elected for bankruptcy in full knowledge of their other options.

Amendment 28ZKE seeks to give the adjudicator power to apply to the court for directions in relation to any matter arising in connection with the bankruptcy application. The policy intention is to ensure that the system delivers better outcomes by focusing the court’s role and resources on matters of dispute that rightly require judicial intervention and expertise. The onus will be on the debtor to show that he or she meets the relevant criteria. However, the application process will be designed to help the debtor and to ensure that the adjudicator has all the information needed to reach a decision. The adjudicator will also be able to request such additional information from the debtor as he or she considers necessary for determining whether a bankruptcy order should be made.

The Government recognise that complex issues may arise in a small minority of cases, especially around the jurisdictional criteria and where the debtor’s centre of main interests is located in England and Wales. However, persons appointed as adjudicators will have the skills they need to do the job without the need for recourse to the court. It is acknowledged that the court still has a role to play. Where the adjudicator refuses to make a bankruptcy order because the criteria are not met, the debtor will have the right to appeal to the court. That provides a route to court in those cases where it is needed. The court will also continue to determine creditor-initiated bankruptcy petitions, which are more likely to be complex and contentious.

For these reasons, the Government consider that this amendment would confer an unnecessary discretionary power on the adjudicator. In the light of these reassurances about the application process and the recourse to court for debtors, I hope that the noble Lord will agree to withdraw the amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for that response. I sense within what he has said that he shares some of my aims in tabling these amendments, and I welcome that. However, I am still a bit perplexed. If you are prepared to go down the route of ensuring that those responsible in these processes flag up the options that are available to people—as I tried to explain in my opening remarks, there are many people for whom bankruptcy is the wrong solution; in the rather overused phrase, it is the nuclear option—and you are going to ensure that appropriate warnings are put on to the application forms, we are very close indeed on this point. It therefore boils down to a question of whether there is a bit more discretion in the system than perhaps the Minister is prepared to admit. I find that puzzling.

I tried to explain in my opening remarks that there is an awful gap for a debtor who is attempting to resolve a crisis because the only two options are to trust an adjudicator, and if the decision goes against the debtor, to find, finance and pay fees for an appeal to the court. As the noble Viscount has said, there are areas where the court will be better placed to make these decisions. The other point he made was the need to make sure that, in the first instance, there is sufficient discretion in the appointment of adjudicators who have the sensibility to make sure that people are involved. The noble Viscount has hinted that further discussions may take place between his officials and the appropriate authorities. I would urge that they involve the main bodies that are actually involved in direct dealing with those who have debt problems and not with the Money Advice Service. Obviously it will have an interest in this, but I think we need to speak to the experts in this matter. Perhaps we could have a side exchange on how those discussions go and whether the right people are being consulted. I would then be less concerned about them.

We may have to come back to this issue because to me it feels too tight, but perhaps further experience will be sufficient. On that basis, I shall withdraw the amendment.

--- Later in debate ---

[Viscount Younger of Leckie]

My Lords, these amendments make minor and technical changes to the Insolvency Act 1986 and relate to the reforms to the debtor bankruptcy petition process introduced by Clause 63. The reforms will remove the existing requirement for the indebted individual to present a bankruptcy petition to court and replace it with a new administrative process. Presently, certain statutory notices are required to be filed at court during the course of a bankruptcy. Most of these requirements are presently set out in the Insolvency Rules. However, a small number of requirements are contained in the Insolvency Act and are the subject of these amendments.

The proposed amendments would ensure that Ministers, in consultation with stakeholders, are able to modernise and make more efficient all of the filing and document inspection processes governing both debtor and creditor-initiated bankruptcies without the need to amend the Act in the foreseeable future. It is anticipated that, where the bankruptcy is commenced by way of the debtor making an application to the adjudicator, documents generated will not necessarily be routinely filed at court. While the Government have no intention at present to change the current policy of filing notices at court in relation to creditor-initiated bankruptcies, it is possible that in the future the Government may be minded to extend some or all of the filing efficiencies introduced in relation to debtor-initiated bankruptcies to creditor-initiated bankruptcies.

The strong policy preference is that such detailed procedural requirements, including those relating to filing, should be in the rules and not in the Act. This is in line with a wider government agenda to consider the overall structure of insolvency legislation with a view to ensuring consistency in what is contained within the primary and secondary legislation. One of our aims is to remove detailed prescriptive requirements from the primary legislation wherever possible. The amendments also make other minor and technical changes that are consequential to the reform of the debtor petition process. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I have listened carefully to the Minister. I find that these proposals are in keeping with the general approach that has been taken and I have no particular objection to them. I mentioned in my contribution on the earlier amendments that I was much taken by the experience in Scotland; I was trying to suggest that there are lessons to be learnt from there. I make this point, which I think would be worth reflecting on. The new bankruptcy Bill that is about to go through the Scottish Parliament, which I am sure officials are well briefed about, seems to take as its starting point a slightly different perspective to those with debt problems from the one that we are taking in England and Wales. I slightly regret that. I am not overstating it when I say that there is an ambition north of the border—is there not always an ambition north of the border?—to create what is called there, possibly in correspondence rather than in the main line, a financial health service. Perhaps the Minister could reflect on whether there is some element of that in what is being proposed in the totality of the amendments that we have been considering today.

The point that I am driving at is that, if we focus only on the processes when people are already facing imminent bankruptcy or worse, we are not picking up the sensibility that I think is infusing the thinking by the Accountant in Bankruptcy and in the Scottish Parliament on these matters, which is that far greater attention should be placed on the role for public involvement in the borrowing and lending processes that affect individuals. Too many people find it very easy to borrow and extremely hard to save. That balance is completely wrong. We should have a much more balanced approach to how these things operate and how we regulate in a space within which people extend credit in order to provide the sort of services that they wish to use during their lives but at the same time acquire debts that have to be serviced and eventually repaid.

There is a bigger and better conversation to be had around whether the 19th-century and 20th-century notions of debt are as appropriate as they should be in the 21st century to the way in which people operate. At one level—I do not want to extend this debate, but I think that this is an important point to put on the record—there are many instances where we see behaviour in the marketplace that is counterintuitive and absurd. I am thinking particularly of payday lenders. The problems relate to the flow of credit to those who need it and the pressures under which they operate. The fact that people are prepared to take out these ridiculous loans at absurd interest rates and on impossible repayment terms is not a reflection of iniquity on the part of the lenders; it is a reflection of something that is going on in society. We are not tapping into that in the proposals that we are hearing today. Yes, it is sensible to take away the courts’ role as a primary source for all these bankruptcy applications but only, I would argue, if we are also aware of and alert to the other ways in which people can be assessed for indebtedness and helped to find an appropriate way forward. On that basis, I find this general approach right but possibly lacking context. I wonder whether, in his closing remarks, the Minister could make a few comments on that area.

Public Libraries

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Thursday 10th January 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

All parts of the public sector are contributing to reducing the deficit, including local government. In the circumstances, it is right and proper that local authorities look afresh at how they deliver library services. The Chartered Institute of Public Finance and Accountancy’s library statistics reflect that authorities are reviewing and reconfiguring their services with a net reduction of 74 mobile libraries and 76 static libraries in England in 2011-12. Overall, however, there are 3,243 libraries in England, which remains an impressive network.

[Lord Stevenson of Balmacara]

My Lords, first, I congratulate the Minister on his new appointment. In saying that, perhaps I may invite all Benches to regret that the noble Lord, Lord Marland, will be leaving us. With his colour and candour, he offered a lot to us and we will miss him.

According to our information, some 300 libraries closed last year across 40 local authorities. The Public Libraries and Museums Act 1964 provides the Secretary of State with powers to take action where a local authority is in breach of its duty to provide a comprehensive public library service. But, according to the DCMS website, the Secretary of State is in correspondence with a mere four local authorities. Will the Minister confirm the current situation and indicate whether the Secretary of State will be using her powers to ensure that the country retains a high-quality public library service?

[Viscount Younger of Leckie]

First, I thank the noble Lord for his kind words. I am fast learning how to multi-task, as I cover both BIS and the DCMS, but only for the next two days.

Returning to the reality of the question, I would like to reassure the noble Lord that the Government are doing much to support and develop libraries. They have taken a number of actions over recent months, including transferring responsibility for library development to Arts Council England, giving libraries access to significant funding opportunities. In addition, Arts Council England has allocated £6 million of its grants from the arts National Lottery funding. The figures presented by the noble Lord could be disputed and we will need to come back on that, but I stick by the figures that I have given in terms of library closures.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Lord Stevenson of Balmacara

Wednesday 12th December 2012 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, before I start on the detail of what has just been discussed, I welcome the noble Viscount, Lord Younger, to his Front Bench duties on the Bill. We have met on a number of other occasions across this space. I am pleased that he is now able to engage with us on this Bill, which we find of great importance. We look forward to working with him on this and other matters.

We had some doubts about whether we should join in on this clause stand part debate because we were not quite sure where it was coming from. Indeed, I am still not quite sure where the two halves conjoin. There seem to be two different discourses. We are obviously in a two-act drama. Maybe when we get to Clause 21 and hear the other part of the noble Baroness’s speech, we will be able to judge more closely how this comes together. In the debate we have had so far, as so often in clause stand part debates, we begin to distil some of the concerns that have bounced around in some earlier debates. It is worth just reflecting on what we have heard.

From the official Opposition’s point of view, as my noble friend Lord Whitty said, we are not against what is being proposed in principle but have a number of reservations that we will want to feel have been properly tested before we finally sign off on it. We will have opportunities both on Report and possibly at Third Reading to do that. At the moment, having listened to the debate on the first two groups, the jury must still be considered to be out. We have had a lot of confusing signals about what exactly is happening, how the Government wish to approach this and the timing. Very importantly—and it has been the substance of a number of contributions we have heard on this group—what exactly is happening to the functions that are not explicitly stated within the front part of the Bill? Where do they go and with what timing? Most importantly, will the funding required to deliver the functions that are currently being properly delivered be available to support that?

I was very struck by some of the points made by the noble Baroness, Lady Oppenheim-Barnes, about the problems that will come from currently having two separate bodies. The OFT and the Competition Commission have their separate focuses and cultures, one investigative and one judgmental. That careful construction of two separate operations patrolling a common area but with very different functions and levels has been judged over time to be very successful. How will they be brought together and how in particular will the phase one and phase two elements and splits work out? Like the noble Baroness, I looked at the diagram. I did not quite bring out the medical textbook or the nasty intestinal disease analogies that she did, but I can understand where she was coming from in that. It is a rather odd structure. It does not seem to fit any of the management textbooks that I am familiar with in terms of clarity of exposition or additional information that would not be provided by a textual analysis. It is jolly colourful and we should be grateful for that.

We are creating something quite different. As I said, we are not against this but we need to be satisfied about why the Government have chosen this particular route and method of doing it. As was mentioned by the noble Viscount, Lord Eccles, it includes the Public Bodies Bill but also ignores what that says about how to go about this, in creating a body which in a sense already exists. The chair of that body is available should he wish to speak. Perhaps he could share with us what he thinks of the colour diagram that we are talking about—but perhaps he will not. It would be helpful if we could get a little bit more from the Minister about some of the intertextual material that has been brought out in this discussion. I want a better feel for the timing, a sense of certainty about what is or is not being retained within the central core of the CMA and why stuff is being taken out and under what constraints that has been done. Particularly for trading standards and Citizens Advice, I want an absolute assertion from the Minister when he comes to respond that the funding will be available to deliver the sort of services to which we all aspire but which, I am afraid, will not be available in the time.

[Viscount Younger of Leckie]

My Lords, I say at the outset that I am very grateful for the comments of the noble Lord, Lord Stevenson. I am particularly grateful for the contributions from my noble friends Lady Oppenheim-Barnes and Lord Eccles, who bring a wealth of valuable experience to this debate. I also appreciate the useful meetings that they have had either with me or with officials, or indeed with both.

The UK has one of the best competition regimes in the world but in the current economic environment we need to strive for improvement and further embed conditions in which companies can operate freely in competitive markets that encourage innovation, investment and growth and in which consumers secure the benefits of competition.

Despite its world-class ranking, there are problems with the current regime. As my noble friend Lord Razzall recognises and as he said at Second Reading, the UK competition regime is among the slowest in the world. I am grateful that he has reiterated that point today. Data published in Global Competition Review show that we are one of the three slowest countries when it comes to conducting investigations into anti-competitive agreements, and in the bottom four for investigating abuse of dominance cases. The current regime has also led to problems in terms of the length of time that it takes to conduct market studies and market investigations, which prolongs consumer detriment and uncertainty in markets. For example, between 2002 and 2011, OFT market studies took between three and 21 months, and the end-to-end process of market investigation, including the time taken for the OFT to make a referral, as well as the appeals process, ranged between 33 and 67 months.

Another issue is the uneven nature of references made to the Competition Commission, making it difficult to manage resources. For much of 2006, the Competition Commission was working on five market investigations and in 2008 it was working on four, whereas no references were received in 2008 or 2009. The pattern of merger and regulatory references is also uneven, and that contributes to an overall work pattern of peaks and troughs.

This clause therefore establishes a new Competition and Markets Authority, which will bring together the Competition Commission and the competition and markets functions of the OFT into one body. Despite looking on paper like a medical student’s study sheet—a euphemism for what was mentioned by other noble Lords—the creation of the CMA will mean a single, strong voice for competition which can provide leadership for the sector regulators on competition enforcement. It will mean less duplication and greater consistency of information requests between phase 1 and phase 2, and more flexible deployment of resources and specialist expertise across all its competition tools. It will also mean prompter referrals to phase 2 where necessary, and greater certainty for business from faster and clearer timeframes and more robust decision-making. Finally, it will also mean a one-stop shop for businesses to help them to understand and comply with competition law.

The creation of the CMA has also been welcomed by business groups and practitioners, including the CBI, the Federation of Small Businesses, the Institute of Directors, the Forum of Private Business and the City of London Law Society, which all consider that it will provide efficiencies and boost business confidence. The CMA will be the UK’s premier competition authority and will have at its disposal a full range of approaches to tackle anti-competitive behaviour and make markets work better for consumers and businesses.

This clause therefore gives the CMA a duty to seek to promote competition for the benefit of consumers, both within the UK and internationally. It will be concerned with how firms interact with each other—that is, the supply side—and how firms interact with customers, which is the demand side.

In creating the CMA, we have drawn from the best of the OFT and the Competition Commission. The CMA will therefore retain the separation of decision-making between phase 1 and phase 2 in merger and markets cases, with independent expert panellists taking the phase 2 decisions. These features were highlighted as key strengths of the current regime by Sir John Vickers and some of the other witnesses to the Committee in the other place, and we shall protect those features. The provisions are set out in detail in Schedule 4.

I should like to bring up a matter raised by the noble Viscount, Lord Eccles. He asked what the relationship or distinction was between this Bill and the Public Bodies Act. Section 5 of the Public Bodies Act provides for the modification of the functions of the Office of Fair Trading and the transfer of functions to other bodies. The PBA also allows for the OFT’s functions to be abolished. Further, Section 2 of the PBA provides that the OFT and the Competition Commission may be merged. However, we will not use the Public Bodies Act to enact reforms to the competition regime or to abolish the OFT or CC. Instead, we will be relying on Clause 21, which provides for the abolition of both the OFT and the CC. This is because while the Public Bodies Act allows us to abolish both bodies, and modify and transfer their functions, it does not allow us to create wholly new competition functions and powers for the successor body, the CMA.

I should also like to address a point made by the noble Baroness, Lady Oppenheim-Barnes, on the separation of decision-making in markets and mergers—a matter also raised by the noble Lord, Lord Stevenson. The independence of the phases will be preserved, in as much as paragraph 28 of Schedule 4 specifies that unless otherwise specified, functions of the CMA are exercisable by the CMA board. Similarly to the Competition Commission’s arrangements, paragraph 36 of Schedule 4 requires that where under any enactment—the Enterprise Act or sectoral legislation—the chair of the CMA is required to constitute a group to carry out an inquiry. He must appoint members of the CMA’s panel to an inquiry group in accordance with that enactment and Part 3 of Schedule 4. I hope that that goes some way to reassuring noble Lords.

Finally, I should like to address an issue raised by the noble Lord, Lord Stevenson, about the funding of trading standards departments; this matter was brought up earlier. I covered in our previous debate the issue of where the funding will be. The noble Lord, Lord Whitty, asked specifically about trading standards funding. Perhaps I may add that in 2011-12, we allocated a total of £10.6 million for national and cross-border enforcement in England, Wales and Scotland. However, looking ahead to 2012-13, we have allocated £12.1 million. This is in recognition of the additional responsibilities that trading standards will take on as functions are transitioned from the OFT. This funding is subject to budgets being agreed and the effects which any emerging central pressures may have on the proposed levels of funding. I hope that this goes a little way to answering the comments of the noble Lord, Lord Whitty.

[Lord Stevenson of Balmacara]

I want to ensure that the record is correct. The previous figure of £10.6 million has now been superseded by £12.1 million. I think that was the sense of what the Minister said. I notice that he has not given us the comparable figures raised by the noble Baroness, Lady Oppenheim-Barnes. What exactly is the Citizen Advice component of that? It would be helpful, if he does not have them, if he could write to us and make sure that we have the figures because several have been floated. It would be nice to have them on the record.

[Viscount Younger of Leckie]

I note what the noble Lord said, and I will return to him in writing. I commend this clause to the Committee.