HC Deb 31 March 1995 vol 257 cc1290-308

'Schedule 4 to the 1988 Act (Offences in respect of which magistrates' courts may make confiscation orders) shall be amended by inserting at the end of Part I—

"and insofar as they are tried summarily:

Enactment Description of Offence
Copyright Designs and Patents Act 1988 (c. 48)
Sections 107 offences relating to the infringement of copyright
Section 198 making, dealing with or using illicit recordings
Trade Descriptions Act 1968 (c. 29) Section 1 offences relating to false trade descriptions
Trade Marks Act 1994 (c. 26) Section 92 offences relating to the unauthorised use of trade marks etc.".'.
—[Mr. John Greenway]

Brought up, and read the First time.

9.36 am
Mr. John Greenway (Ryedale)

I beg to move, That the clause be read a Second time.

There has been much talk in the news this week about the film industry. Indeed, during recent months there has been a great movement towards supporting the British film industry with funding from, perhaps, the national lottery. That has certainly been very much in the minds of many hon. Members. Today, I believe that we could take steps significantly to help the British film industry by adding my new clause to the Bill. It deals with the growing problem of the counterfeiting of videos, films and, as I shall show, many other items of intellectual property.

The new clause would make counterfeiting and copyright infringement, under the Copyright, Designs and Patents Act 1988, the Trade Description Act 1968 and the Trade Marks Act 1994, offences that courts could take into account when making confiscation orders under the Bill and under the Criminal Justice Act 1988. The offences would be added to schedule 4 of the 1988 Act.

My hon. Friend the Minister has been extremely helpful when considering this matter, as has been my hon. Friend the Member for Exeter (Sir J. Hannam). However, my hon. Friend the Minister will doubtless say that my aim could be achieved not by adding my new clause to the Bill, but by statutory instrument. As I understand the position, part I of schedule 4 to the 1988 Act lists all the relevant Acts and the offences to which that Act applies. Part II says that the list can be amended by statutory instrument. Is that the best route or should we add the new clause to the Bill? As I understand it, if we add the new clause to the Bill, all the offences could be dealt with by any magistrates court or Crown court, but if we deal with them through a statutory instrument under part II of schedule 4 to the 1988 Act, offences could be dealt with only in a magistrates court. That is the advice that I have been given. I know that my hon. Friend the Minister and others who may be listening to the debate will want to reflect on that point.

Piracy of videos, music cassettes and compact discs is a growing problem in the United Kingdom. The Federation Against Copyright Theft—FACT—and the British Phonographic Industry estimate that, every year, the cost in lost sales to their industries amounts to £250 million and £20 million respectively—a staggering amount of money.

It is widely recognised that, when bootleggers are caught, the punishments do not fit the crimes. The fine is often £100 and can be as little as £20 for a first offence. Video piracy is a low-risk, high-reward business. Approximately 20 per cent. of the illicit material that is seized in raids conducted by FACT consist of videos that have not received a certificate from the British Board of Film Classification because they are deemed unsuitable for home viewing. Those videos include two films in particular—"The Exorcist" and "Driller Killer". That is another feature of the sorry tale with which we must deal. Such films are unsuitable for home viewing and they are available at car boot sales and Sunday markets. I suspect that no one is choosing who should be allowed to buy those videos.

The scale of the operation is mind boggling. From various raids that FACT has undertaken with the police, the industry has discovered that, for a typical counterfeit operation, 100 duplicating machines might be working 24 hours a day, producing 6,000 videos a week, from which the revenue amounts to about £60,000, or £3 million per annum. When that information was first presented to me, I misread it. I thought that about 100 video machines were being used to duplicate videos around the country, so we were talking about 6,000 videos a week and £3 million worth of counterfeit goods nationally. I thought, "What is the problem" until it came home to me that those figures related to one operation.

I do not wish to fall foul of the rules of the House, but I want to show you, Madam Speaker, this photograph of a raid in Kent, which my hon. Friend the Member for Thanet, North (Mr. Gale) attended with Kent police. You can see all the machines. Another photograph shows all the counterfeit video covers. Another one shows a garage and boxes full of all the copies ready to be shipped out to the Sunday market. There are more pictures of the video machines. They were part of just one counterfeiting operation. Those photographs show the scale of the problem.

Lady Olga Maitland (Sutton and Cheam)

We are suitably horrified by what my hon. Friend has shown us. He told us about one operation, but has he any idea how many other operations of a similar nature are going on around the country? Can he give a guesstimate?

Mr. Greenway

I shall make a guesstimate later, but, if I do not stick to the order in which I want to present all the facts, I might miss something out and there is much important information. I share my hon. Friend's concern. She is right to point to the fact that such activities are taking place on a wide scale.

9.45 am

Another factor causes grave concern. I want to dispel the myth we are dealing only with a few out-of-work young lads operating in what we might call the Del Boy economy around London or in some of our inner cities, and that they are doing nobody much harm by making a few bob on the side pirating the odd video or cassette. It is well known that such operations have strong links with organised crime, especially pornography, drug rackets and even terrorist activity. They all have proven links with video piracy.

Last night, I was speaking to my right hon. Friend the Member for Westminster, North (Sir J. Wheeler) about that matter. You will recall, Madam Speaker, those halcyon days of the Select Committee on Home Affairs when my right hon. Friend was the chairman, and how we discovered, for example, on our visits to Northern Ireland, how such operations were helping to fund IRA terrorist activity. I pay tribute, in particular, to the tremendous work that the Royal Ulster Constabulary has undertaken in trying to stop those rackets and the proceeds of crime going towards terrorist activities.

Where does one obtain pirate videos and material? Sometimes, one can pick them up in retail outlets because dealers are tempted by the low prices, but the majority of pirated or counterfeit videos are sold to the public through the non-retail trade, especially car boot sales and Sunday markets. It is just a little aside, but that is an another example of why we need—and I say this passionately to my hon. Friend the Minister, who I know shares my concern—to reconsider the law on car boot sales and some Sunday markets. I hope that we will be able to return to that matter before the year is out.

Mr. Gary Streeter (Plymouth, Sutton)

Does my hon. Friend agree that some of the confiscated proceeds of crime that he has mentioned could be put towards more stringent criminal enforcement so that we could crack down on Sunday markets and car boot sales and nip such crime in the bud?

Mr. Greenway

My hon. Friend makes a valid point. Whether there should be some hypothecation—if that is the right word—of where the proceeds of crime go is a more general matter for the Bill.

Again, I am delighted that you are in the Chair this morning, Madam Speaker, because you were with us in Washington when we were shown the 12-seater tourer bus that had been seized by the Washington drugs squad from drug traffickers, and how it used the bus in its campaign against other drug traffickers. I know that such solutions do not go down well with Home Department officials, but it is a tempting thought that we should be able to use such equipment and especially, as my hon. Friend the Member for Plymouth, Sutton (Mr. Streeter) said, some of the proceeds to help crack down on crime. I hope that, when the Bill that my hon. Friend the Member for Exeter (Sir J. Hannam) has introduced is put on the statute book, and when confiscation of the proceeds of crime significantly increases, that will help my right hon. and learned Friend the Home Secretary in fighting the Treasury over his budget to cut crime. That is an important matter.

I deal now with the point raised by my hon. Friend the Member for Sutton and Cheam (Lady Olga Maitland). She asked how big the problem was. In 1994, the Federation Against Copyright Theft seized 1,020 video recorders, 156,500 tapes, 500,000 inlays and 61 television sets in 1,747 searches. Inlays are vital because they are the picture sleeves that make the buyer think how terrific it is that he can buy a copy of "The Exorcist", "I Spit in your Groove" or "Driller Killer". When one thinks that not all searches are successful because the counterfeiters get to know that the police or the federation are coming and shift their stock accordingly, one gets some idea of the scale of the problem.

The federation works closely with the police and trading standards officers and institutes about 150 criminal actions a year at its own expense. The majority of these actions are undertaken by way of a summons under the Copyright, Design and Patents Act 1988.

It is FACT's experience that penalties in the Crown court average about £1,000 a summons, although the maximum penalties available under the Act are unlimited fines and/or two years' imprisonment. Under the Video Recordings Act 1984, the maximum fine available is £20,000. These sums must be viewed as derisory when compared with the value of infringing material that may be seized during a raid because it is not uncommon for that material to be worth more than £1 million.

What is the point even of a maximum fine of £20,000 if the counterfeiters have made £1 million from their operation? They pay the £20,000 and then go and start all over again. We have to seize the £1 million, which is why it is right that this matter is being discussed in connection with this worthy Bill.

The federation, trading standards officers and local Members of Parliament are all constantly applying pressure on the judiciary to enforce the maximum penalties available to make their efforts more effective in combating video piracy, but the fact is that even the maximum penalties are not enough—we have to get after the loot.

The British Video Association and the British Phonographic Industry, which deals with the record business, strongly support the Bill and especially the new clause which would certainly make the Bill more applicable to the bootleggers and the pirates who damage their industry. The BPI is the trade association that represents the majority of United Kingdom record companies whose recordings are widely pirated. It estimates that piracy costs the United Kingdom record industry about £20 million a year. The BPI is active in fighting such piracy and took more than 900 actions against pirates last year.

Whereas a dozen or perhaps 20 films are extremely popular at any one time—of course, they have been financed by the film industry, which is a big business—there are many hundreds, if not thousands, of recordings available on the high street, but a great many copies are not necessarily sold. We should think of the musicians, some of whom are barely scratching a living or trying to make a future in the industry, whether in popular music or in performing the classical repertoire which, I have to say, is more to my taste. The pirating of copies is a serious problem for them.

What I am saying, in effect, is that this is not a victimless crime as some people suggest. The victims are often young musicians who are trying to make a career and for whom the royalties from the proper sale of recordings are so important.

Mr. Oliver Heald (Hertfordshire, North)

Does my hon. Friend agree that record and film companies spend part of their profits on encouraging young talent and enabling people to make their mark in those industries? If those profits are reduced because of pirate copies of recordings, might it not mean that opportunities for young talent could be diminished?

Mr. Greenway

I entirely agree with my hon. Friend, but, in fact, it is worse than that. The extent of pirating and counterfeiting might make record companies decide that it is not worth making certain records in the first place. This is, I understand, a particular problem in some categories of popular music. I do not know enough about it to say which categories, but I understand that some are of very narrow interest. I suspect that the people who might like to listen to such music—those in the 18–30 age group—frequent Sunday markets and car boot sales.

I shall now detail what happened when a major bootlegger was prosecuted. I am told by the BPI that one of the major known criminals working in this area pleaded not guilty when tried in a magistrates court but was found guilty and given a 12-month suspended sentence for two years. The counterfeit stock in his possession at the time of his arrest was forfeited, which is fair enough, but he was not fined. He was simply ordered to pay £500 towards legal costs, despite the fact that a conservative estimate of his annual turnover was in excess of £500,000.

The man had been dealing in bootleg product for a number of years, and it has recently come to the attention of the BPI—I am grateful to Sarah John, its director of legal affairs, for giving me this information—that this character is now back in business. That is the heart of the problem. If the courts had the powers to confiscate what they estimate to be the proceeds of crime as set out in the Bill, it would have been much more difficult for that person to have got off so lightly.

I must explain that this problem does not apply only to the film and music industries. This week, I had a letter from Gillette Management Inc. which reads as follows: I am writing to confirm that, as a major UK manufacturer of consumer products, Gillette fully supports the new clause which, it says, will help it enormously in combating counterfeiting. It continues:

As a leading UK manufacturer of shaving products (through its operating subsidiary, Gillette UK Limited with factories in Isleworth and Reading) and writing instruments (through its operating subsidiary, Parker Pen Company with a factory in Newhaven), Gillette has suffered frequently in the past from the importation of counterfeit products into this country. Counterfeiting has the effect of seriously undermining our UK manufacturing base and any strengthening of the law … which increases the penalties for counterfeiting and discourages the import of counterfeit products, is to be encouraged and has the full support of The Gillette Company. When one thinks of the areas in which Gillette and Parker Pen operate, one can immediately see that such behaviour must apply right across the board. Throughout the entire commercial and industrial life of this country, people are counterfeiting products or pirating products before they are released. I understand that not long ago there was a scam about ladies' perfume. My hon. Friend the Member for Sutton and Cheam and the hon. Member for Hornsey and Wood Green (Mrs. Roche) will no doubt be able to tell us a little more about that when they speak. The case for action is abundantly clear.

10 am

I shall mention two other important features which are a cause of grave concern. If I deal with the less serious issue first, it will whet the appetite of the House for the second point, which is infinitely worse. The lesser case gives a clear indication of the sort of people with which we are dealing and, as I have already mentioned, the contact that they have with organised crime. The premises of the Federation Against Copyright Theft, FACT, in Middlesex were recently fire-bombed and it is constantly being threatened by some bootleggers.

The second matter of grave concern arises because of information supplied by my hon. Friend the Member for Thanet, North. I pay tribute to him for the way in which he has brought the matter to our attention. Indeed, he apologises to you, Madam Deputy Speaker, for being unable to attend today's debate. My hon. Friend tells me that bootleggers often copy over violent and pornographic films, which they will then sell to anyone with cash. Just imagine a two or three-hour video of a pornographic film, on which 1 hour 40 minutes of "The Lion King" was recorded, that a video sleeve of "The Lion King" was put on the box and that it was sold at a Sunday market for a fiver to some kid who had just been paid for his paper round. He would take the video home, pop it in the machine and 1 hour 40 minutes later, when "The Lion King" finished, he would be watching the most horrendous pornography and bestiality.

Were he present, my hon. Friend the Member for Thanet, North would tell the House that he had seen this material with his own eyes as a result of a raid. While we in the House may plead on behalf of British business, British commerce, film makers and musicians who are losing out to pirates and bootleggers, such irresponsibility in the distribution of filth which youngsters may see is the most overwhelming reason why we need to take action.

The House has a chance this morning to put the matter right, to say to the pirates and the bootleggers that the final curtain is coming down, the videos are being switched off, it is the end of the show and that we shall take away their money and ensure that their dreadful business is brought to a sudden end.

Mrs. Barbara Roche (Hornsey and Wood Green)

At the beginning of his speech, the hon. Member for Ryedale (Mr. Greenway) said that we were discussing the new clause at a particularly appropriate time in the film world. I think that he was referring to this week's Oscar ceremony. Perhaps I may take this opportunity to mention that in my constituency we have a British Oscar winner, Peter Capaldi, who has also made a great contribution to our life locally. He has accompanied me to a local school where he encouraged young people to consider the possibility of a life in acting, film and theatre. I pay tribute to his tremendous achievement and to that of all our British Oscar winners. They deserve our congratulations.

I very much welcome the manner in which the hon. Member for Ryedale introduced this most important subject. There is no doubt that the illegal bootlegging industry is causing a tremendous problem and is making a huge amount of money. I shall pursue a number of the points that the hon. Gentleman raised. When he spoke of some of the videos that have been seized, he said they were unsuitable for home viewing and mentioned some of the work in which the Select Committee on Home Affairs had been involved—some of it when you, Madam Deputy Speaker, were a member of that Committee. I was also a member of the Committee, although, sadly, not at the same time as yourself.

I was reminded of some of the related inquiries that the Select Committee made into the link between video violence and juvenile crime and also—it is closely related because it sometimes involves the same individuals who are definitely involved in organised crime—into computer pornography. The hon. Member for Ryedale gave the graphic example of events in Washington and some of the sophisticated proceeds of crime that the industry has wrought.

I shall take this opportunity gently to remind hon. Members and the Minister that one of the amendments tabled by the Opposition to the Criminal Justice and Public Order Bill—in fact, I tabled it—related to confiscation and forfeiture with regard to computer pornography. It would have facilitated the confiscation, when convictions were made, of the very computers used by criminals to make their appalling computer videos and images. The amendment would have donated that sophisticated equipment to the police, who frequently—I have heard this from senior police officers—have to use equipment which is not as sophisticated as that of the criminals that they are rightly pursuing. I hope that Minister will again consider our plea and not reject it as, sadly, he did during the passage of the Criminal Justice and Public Order Bill.

The hon. Member for Ryedale was right to talk about some of the discrepancies. The maximum fine under the Video Recordings Act 1994 is £20,000, which is a derisory sum when one considers that £1 million worth of products may be seized during a raid. That is why we should use our best endeavours to stop such activity. The hon. Gentleman was also right to mention the effect on business and, sometimes, on children as a result of this trade.

I understand that the Minister may suggest that the Bill does not the need the new clause to enable the pursuance of this illegal activity and that we may approach the problem through another means, perhaps by statutory instrument. I shall certainly listen to that very carefully. I shall also be interested to hear the comments of the hon. Member for Exeter (Sir J. Hannam), the promoter of the Bill. Clearly there is cross-party support for the fact that something has to be done about this deplorable trade. At this stage, we must probe and pursue the question of what is the best method. We and, I am sure, the hon. Member for Ryedale would need strong assurances from the Minister that there was a way in which to achieve our aim if he did not accept the new clause. We shall listen carefully to what the Minister and the hon. Member for Exeter have to say.

Mr. Streeter

I welcome the opportunity to make a few comments on this important new clause. The House owes my hon. Friend the Member for Ryedale (Mr. Greenway) a debt of gratitude for tabling it. He described graphically the Del Boy economy. I am tempted to say, therefore, that only fools and horses would vote against the new clause, but I shall resist that temptation.

The important message that we must send out from the House this morning, especially to young people, is that crime must not pay. Too many young people believe that crime does pay. The Bill, on which I congratulate my hon. Friend the Member for Exeter (Sir J. Hannam), is sending a clear message that we will hit criminals where it really hurts—in their pockets—by confiscating the proceeds of their crimes.

My hon. Friend the Member for Ryedale described the losses of more than £250 million per annum to the huge film and recording industry. He is right to table the new clause in an attempt to deal with the perpetrators of these crimes. I take the point that the money would be spent, at least in part, by the film and recording industry on encouraging young talent to come forward and on encouraging the creative people in our midst. How much better it would be for the money to be spent on them rather than on the life-style criminals who cock a snook at the system and perpetrate those offences.

I want now to develop the point which I made in an intervention about the way in which we could use the money that we confiscated from those who commit offences. There is a powerful argument for ensuring that the proceeds confiscated are used in law enforcement. That is an especially powerful argument because we recognise that the outlets for pirate videos and pirate recordings of all kinds are car boot sales, Sunday markets, and so on. It is difficult to police such outlets because they are so widespread.

There has been a great explosion of car boot sales in all our constituencies. On Sunday mornings, it is difficult to drive along certain roads because there are so many cars parked. Understandably, people enjoy the opportunity to buy a bargain; no one begrudges people obtaining a bargain. These markets are difficult to police because there are so many of them. Would it, therefore, be appropriate to ensure that the cash that may be taken from these criminals under the powers in new clause 1 is used to ensure that more officers are made available to go around the markets and car boot sales so that they can confiscate some of the pirate material and trace it back to source?

We cannot blame ordinary members of the public for purchasing this material and for trying to buy a bargain. My hon. Friend the Member for Ryedale made the point that many purchasers are young people. My own children enjoy going with their hard-earned pocket money to Plympton market and to the car boot sale on Peacock meadow in Plympton. They sometimes come back with videos and recordings which they have bought for a few pounds. They do not know whether those purchases are pirate recordings. We cannot blame young people. We must apprehend at source those who sell these items and we must trace them back to those who are creating them.

My hon. Friend the Member for Ryedale gave graphic illustrations of the dens of iniquity which produce the recordings. He described the racks of video recorders and copying machines. Once access is gained to the garages, basements and cellars where the machines are kept, there can be no argument about what the machines are used for. The difficult point is locating them in the first place. Here again, there is a powerful argument for more resources being made available so that we can track down these places of subterfuge—the underground recording studios.

I hope that we can think seriously about ensuring that the confiscated proceeds are used for further and better law enforcement. I recognise that some will squeal that we are hitting people too hard through the Bill. They will say that the families of criminals will suffer. I believe that we can judge whether we are getting our law enforcement measures right by the amount of squealing from the libertarians. Unless the libertarians and the wishy-washy do-gooders are squealing and protesting, we have not gone far enough. That is one of the ways in which we can judge a measure. I am delighted to hear that one or two people are beginning to voice their concerns about the Bill. If we do not yet hear the usual cacophony of noise from the wishy-washy do-gooders, we may not have gone far enough. Perhaps my hon. Friend the Member for Exeter will consider that point.

I am keen to ensure that the confiscated proceeds of crime are used to crack down on crime; the money should be used for law enforcement. I hope that we see an end to the despicable trade which my hon. Friend the Member for Ryedale described so graphically. I am concerned about the fact that people record over existing porn videos. A few weeks ago, there were cases in the newspapers of families whose children were watching videos, only to see at the end some disgraceful material, which had no doubt come in from the continent. We do not want that to happen. I believe that the House will get behind the new clause as it has got behind the Bill.

10.15 am
Mr. John Greenway

My hon. Friend has reminded me, with his reference to the fact that the original videos may come from the continent, of a point that I did not make earlier. Some people may wonder why people copy on to pornographic videos. As I understand it, it is cheaper to buy the pornographic videos than to buy blank video cassettes. The quantities are so great that the pirate operators can pick them up for almost nothing. Alternatively, there is no market in which the porn videos can be got rid of.

Mr. Streeter

I am grateful to my hon. Friend for that intervention. It may be a reflection on the value of the material recorded on the cassettes that it makes them worth less than new, empty cassettes. My hon. Friend makes a valuable point. I am grateful to him for the new clause. It has my full support and, I am sure, the support of the House generally.

Mr. Piers Merchant (Beckenham)

The wishy-washies, mentioned by my hon. Friend the Member for Plymouth, Sutton (Mr. Streeter), seem to be coming on to our side. I understand that one of the original suggestions for confiscation came from the Howard League for Penal Reform.

I strongly support the new clause. I listened to the debate on Second Reading with great interest. In retrospect, I am surprised to discover that the categories included in the new clause were not included in the original Bill. We may hear later whether there was a good reason for that.

Crime must not pay in any circumstances and crime must be seen not to pay. The idea that we can continue to read stories about criminals disappearing and going to live the high life on the Costa or in even more exotic places is unacceptable, not just in itself but because of the appalling example it sets which gives the impression that crime can pay.

The hon. Member for Tooting (Mr. Cox) made points on Second Reading about the professionalism of crime today and the extent to which money can be made. The areas covered by the new clause are those in which a large amount of money can be made—what might be called business-style crime which the Bill aims to restrict. It is a sort of white-collar crime—or, more accurately, grey-collar crime, because of the shady characters and racketeers involved, who use pseudo-business techniques but deliberately stray on to the wrong side of the law.

Crimes such as those covered by the new clause are, or should be, at the centre of the Bill. That is because copyright crimes of all varieties are often closely linked with more mainline crime—crimes of violence, gangsterism, syndicates and international crime such as money laundering. They are all interconnected, and it would be fatal to imagine that copyright crime is somehow set apart from the rest and is not so bad, or that it is merely carried out by a few men straying into unacceptable business practices. It is far more than that. There is a seamless link between all those forms of crime.

Indeed, it could be said that copyright crime is more heinous in its effect and in its links with the worst forms of crime than the old-fashioned idea of the safe blower, or even street crime, which is often isolated from the huge sums of money connected with international crime syndicates such as the Mafia. The crimes that we are discussing are certainly not like that.

Many people who go to a market or buy a video from under a service station counter—that is another way in which counterfeit videos are often sold—might think that they are doing no more than involving themselves with the output of a form of minor crime. They may have in their minds a picture of some fellow with a video recorder who has bought another, linked them together and copied a film from one to the other. They assume that there has been only a minor technical breach of the law, involving only small amounts of cash.

If someone thinks that, he has not looked deeply into the "business" practices behind such crime. Huge distribution networks are often built up and massive amounts of money are involved. My hon. Friend the Member for Ryedale (Mr. Greenway) mentioned the sum of £250 million, and even that is an estimate; there could be even more money involved in such improper activity.

It is easy for a small group of people to set up a bank of video recorders, and one does not have to use one's imagination to work out where many of the recorders may have come from. They then link them together and start reproducing videos at a phenomenal rate. The machines run automatically and can be left to run for 24 hours a day. The raw material—the second-hand videos on which the counterfeit material is recorded—is also easy and cheap to get hold of. The challenge is not the technical side, though to some people that may seem the difficult part, but the distribution, and we have heard examples of how easy that is, too. There are massive profits to be made from counterfeiting. If the Bill does not thoroughly ensure that those profits are liable to confiscation, there will be a gaping hole in it.

I want also to draw the attention of the House to software counterfeiting. I am not an expert in copyright law, and I am not sure whether the statutes specified by the new clause catch software counterfeiting. I hope that they do. If it is not covered, it should be brought within the Bill in one way or another, for the simple reason that it is even easier than video counterfeiting. It is far quicker to copy a programme from a computer or a disk on to another disk. That can be done in a matter of seconds, or at least minutes, and it can also be done imperceptibly.

When one video is copied on to another, there is bound to be some loss of quality, unless one has access to a digital machine, and those are hardly available today. The more one copies, and the further the generation of copy, the lower the quality is; with software, there is no loss of quality whatever, so, for forgers and counterfeiters, it presents an even more attractive possibility. It is easier, cheaper and quicker and one can go on doing it for ever.

There is not yet as big a market for software as for counterfeit videos, but potentially the market is much bigger. There are means of distribution that can even do away with the need to market a physical product. Material can be sold down telephone lines—downline, as it is called. That sphere of activity must be brought firmly and definitely within the scope of the Bill.

Finally, there is the illicit use of trademarks. All hon. Members must know that it is easy to buy counterfeits of expensive jewellery and watches—the name Cartier comes to mind, and I mentioned that a few weeks ago in another debate. In the far east, one can walk into virtually any watch shop and buy for less than £20 a perfect replica of a Cartier watch, the original of which would cost £7,000 to £8,000.

There is a whole industry in the far east producing such material, and I do not doubt that there is probably a whole industry in this country too, if it could be found. The products are counterfeit—beautifully done, but illegal. There are huge profits to be made there, too. It is a matter of considerable concern to proper manufacturers. A few months ago, I saw a wonderful photograph of a steamroller running over a massive mountain of confiscated fake Cartier watches. The thought of all those beautiful watches being squashed under those huge wheels was rather frightening, until one realised that luckily they were not genuine.

That mountain was only the tip of the iceberg—if I may mix my metaphors. It is vital that no holds are barred in the battle against such crime, for crime is what it is. A huge industry would receive a hammer blow if it were absolutely clear that counterfeiters and others responsible for the crime would have their assets confiscated so that, at the end of the day, there was no profit in it.

The new clause will toughen a law that, rightly, is tough anyway, and will strengthen its purpose. It will inflict another hard blow on the criminals who profit by breaking the law at the expense of others. For my constituents and for me, that blow cannot be hard enough.

Mr. Heald

I am glad to have the opportunity to make one or two remarks on this important new clause. My hon. Friend the Member for Ryedale (Mr. Greenway) made an important point when he said that people often think of bootlegging and similar offences in the recording industry as a Del Boy crime—something reasonably comfortable, but the sort of offence that falls into the category of "something that fell off the back of a lorry".

Mr. Alan Duncan (Rutland and Melton)

Like a Labour party policy.

Mr. Heald

Yes, or perhaps like some of the more Gump-like remarks made by the people on the Opposition Front Bench.

There is more to the crime than that, because bootlegging is stealing from our most important industries. It is also stealing from the people who benefit from the profits of those industries and from the consumer. Since the 1960s, popular music has probably been one of the most successful British industries—[Interruption.] One of my hon. Friends is muttering that he would not listen to all of it, but groups such as the Beatles, and now Take That, are well-known popular music artistes—[HON. MEMBERS: "Trendy."]

Mr. Streeter

Or the Bay City Rollers.

Mr. Heald

I think that the Bay City Rollers are a bit passé. Those groups have done tremendously well for Britain, which has gained thousands of jobs and great credit from the music industry.

In the film industry, we may only have occasional winners, but what good films they are, such as "Four Weddings and a Funeral" and "Chariots of Fire".

Mrs. Roche

The hon. Gentleman points to some of the wonderful achievements of the British film industry. Does he agree that it is disgraceful that the Government have not given the industry much more support? If the Government listened to the British film industry—

Madam Deputy Speaker (Dame Janet Fookes)

Order. I suggest that the hon. Member for Hertfordshire, North (Mr. Heald) does not follow the hon. Lady down that road, as it is very wide of the new clause we are debating.

10.30 am
Mr. Heald

I am grateful to you, Madam Deputy Speaker, for not allowing me to be tempted down that route.

People may wonder why Conservatives are making such a fuss about bootlegging. Although the Conservative party is the party of freedom, free expression and freedom of trade—it is also the party of freedom from high taxes, which may explain the point made by the hon. Member for Hornsey and Wood Green (Mrs. Roche)—it has always been the party of freedom under the law, and that is pertinent to the new clause.

Mr. John Greenway

If bootlegging and piracy were stopped, the film industry would be financially secure, and the question of Government support would not arise.

Mr. Heald

That is an extremely good point. It is not just the industry and the performers who benefit if profits are left in the company, but the consumer. The effect of taking all that money out of the record and film industries must be that the prices of videos and recordings are unnecessarily high. Everyone suffers from bootlegging.

There are many young artists in all fields who may be waiting for a talent scout to find them, but the record industry may not be able to afford pay for talent scouts. If the industry cannot pay for training, recording, making samples, quality assurance, marketing, and having the best producers in Britain, the country, British trade, businesses, individuals and consumers suffer.

Bootlegging is one of the worst offences in a way, because it not only undermines something which is extremely good in Britain but permeates our society when people start to talk about it in Del Boy terms. It is corrupting to think that that sort of theft—which is stealing from all of us—is acceptable, and it is time to put a stop to it.

Part of the concept behind the Bill is that if a person continues to commit offences, the law will come down on him like a ton of bricks. In America, that is described as "three strikes and you're out", and the same principle must apply here. It must be right for life-style criminals who continue to offend and damage Britain are hit, and hit hard. I welcome the new clause, as it is doing something extremely important to protect us all.

Lady Olga Maitland (Sutton and Cheam)

First, may I give a warm welcome to the introduction of the Bill as a whole? I was delighted that my hon. Friend the Member for Exeter (Sir J. Hannam) decided to choose the Proceeds of Crime Bill as his private Member's Bill. This is the first opportunity that I have had to make remarks on the Bill. This country is crying out for something to be done about criminals who are living off the fat of their proceeds—

Madam Deputy Speaker

Order. I am sorry to interrupt the hon. Lady, but her remarks may be anticipating the Third Reading of the Bill. We are looking at one simple new clause.

Lady Olga Maitland

I thank you, Madam Deputy Speaker, for your remarks, but I felt that it was essential to point out the broad picture before moving on to specific points—

Madam Deputy Speaker

Order. I have specifically told the hon. Lady that that is not acceptable.

Lady Olga Maitland

I stand corrected. The new clause is welcome and important. All of us are proud of the British film industry, and also of the music industry which has produced excellent classical and popular work and we will not stand to see those valuable industries undermined by crime.

I have had some personal experience of the availability of counterfeit videos. Before Christmas, my 13-year-old son decided to go to Camden market to trawl for Christmas presents. On a stall at the market he found an array of videos, including—for £5—"Four Weddings and a Funeral". He brought it home, and was pleased as punch—so pleased that he decided to go back the next day to get some more copies. The stallholder had bunked off with the profits, but other stallholders were around. He bought more copies, wrapped them up and gave them as Christmas presents.

We watched one of the videos. I suspected that it had been suspiciously cheap, but how was a young child or any purchaser to know of the source of the video? When the picture came up on the screen, it was clear that it was not a first-class, first-print video. The opening shots were rather awkwardly presented, and there were black margins on the screen before the film finally got into full cry. It was clear that we had been cheated and conned. There is no way in which a customer can get compensation after being diddled in that way.

I was lucky that my son was not distracted by another kind of video that he could have bought. The availability of pornography is terrifying, and it corrupts everybody—not necessarily the young. We do not need it in our society, and I wish that there was some way in which we could stop it. We did manage to put a stop to pornography coming over the television airwaves through the control of the Red Dutch television programme—

Mr. Duncan

Red Hot Dutch.

Lady Olga Maitland

Red Hot Dutch. None the less, it is not just pornography that I am concerned about. I am also concerned about the spread of counterfeit videos which promote violence. These cheap and violent videos are extremely damaging to our society. They have a particularly damaging effect on emotionally vulnerable people who may be easily disturbed. In the end, society pays a heavy price as such a person could lose control.

I congratulate my hon. Friend the Member for Ryedale (Mr. Greenway) on giving a graphic description of how counterfeit videos are produced. I had been aware of the method following discussions with police, but his remarks were a salutary lesson in the ease with which counterfeits can be produced and the amount of profit involved. To think that one producer alone can make £3 million out of one lock-up garage is terrifying. It is impossible to estimate the full scale of the industry in the United Kingdom—it is beyond belief.

Another important point that my hon. Friend made was that behind those innocent-looking videos—some are less than innocent-looking—there are serious racketeers at work. As my hon. Friend pointed out, IRA-Sinn Fein in Northern Ireland has funded its terrorism with such racketeering. I have had several conversations with the Royal Ulster Constabulary in Belfast on just that point. If we could find a way of clamping down on such crime, we would be saving people's lives in the long run. We should not work on the basis that as we now have a ceasefire in Northern Ireland the urgency is not so great. The urgency is always there. When we see how the money goes into weapons and arms, we must realise just how serious and important the new clause is.

Counterfeiting has funded killing machines not only in Britain but throughout the world. I was worried to read in the Home Affairs Select Committee report on organised crime just how international counterfeiting has become and how it has invaded Britain. An interesting submission was made to the Select Committee on just that point by the Association of Chief Police Officers, the Police Superintendents Association and the Police Federation.

The Committee examined some of the principal threats that have come from organisations such as the Chinese triads, who operate in Britain. The Committee was told that it was extremely difficult to assess the real extent of their activities, but that it was known that the triads had a high degree of responsibility for counterfeiting. The problems that have to be countered in trying to beat the Chinese triads include the insular nature of the Chinese community, the wall of silence that exists, the distrust of anyone who is not Chinese which makes the organisation impenetrable, the background of fear over many generations about the triads so that no one dares talk about them and the vicious and public nature of the attacks or retribution which promulgate the fear of triad societies. But the triads are just one organisation promoting counterfeit crime which the police are trying to crack.

The Select Committee also looked into the Caribbean criminals, who have caused great concern. In other countries such as Japan, criminal gangs are rich with illicit funds. Such gangs have invaded our country. The Italian Mafia—

Madam Deputy Speaker

Order. I am sorry to interrupt the hon. Lady for a third time, but I must return her to the substance of the new clause under consideration.

Lady Olga Maitland

With the greatest respect, I am trying to illustrate how important the new clause is. I am also trying to show that counterfeit crime is not only endemic in Britain but is being introduced from overseas and is operated here from just such sources. If you will just give—

Madam Deputy Speaker

Order. Passing reference is one thing, but a general and thorough review of these matters is not germane to the new clause.

Lady Olga Maitland

Obviously, I bow to your judgment, Madam Deputy Speaker.

We should take the international aspects of counterfeit crime seriously because they have a bearing on counterfeit crime in Britain. The point was made earlier that counterfeit crime is not merely a harmless little boyo activity in Sunday markets. That boyo working at a Sunday market is often part of a nationwide organised criminal gang. For that reason, we have to take it very seriously.

On the more general point, counterfeiting is not just about films and recordings. My hon. Friend the Member for Beckenham (Mr. Merchant) talked about other forms of counterfeiting. He was right. Whether we are talking about cheap reproductions of clothing—designer clothes, for instance—perfumes, watches and a whole host of different things, we have to recognise that it is a major crime which should have been included in the Bill in the first place. Now is the time to make sure that it is given the due consideration that it deserves.

The Minister of State, Home Office (Mr. David Maclean)

I have considerable sympathy with the new clause. I, too, am well aware of the concern that trade organisations and others have expressed about counterfeiting and copyright infringement. While a tremendous amount of the debate has concentrated on videos and the record industry—the music industry, I suppose we should call it now that there are CDs, tapes and so on—I am glad that my hon. Friends have mentioned other counterfeit products such as watches and designer clothing and shoes.

Many colleagues have also mentioned that counterfeiting is not—I shall have to use the expression so as not to be the only one not to use it in the debate—just a Del Boy type of crime. It is not just people who make a few copies for their friends and run off another few to sell to someone else. I suspect that many people think like that because most people start in that way, before it becomes heavy and organised, making just a few copies or a copy for their own use.

10.45 am

What Member of the House or what child these days does not buy a CD or album, as we used to call it, of greatest hits and inevitably find that they like only half, if they are lucky, or even just a third of it? So if one wants to listen to some music in the car, one ends up making a compilation tape. I suspect that every youngster has started on the first step of what could be a counterfeiting career by doing something perfectly legitimate—namely, copying music for personal pleasure. I cannot imagine anyone in the House who has not made a compilation tape. Well, I imagine that my hon. Friend the Comptroller of Her Majesty's Household does not sit with the headphones on listening to a compilation tape of Wet Wet Wet.

It is probably because counterfeiting has such innocent beginnings that people tend to think that it cannot be a real crime. In every home in this country it is possible to reproduce music on to a tape. Those whom we are trying to get at today are those who massively reproduce material to sell it on and pass it off as something else. I was interested to read in one of my woodworking magazines last year about the man who invented the wonderful Black and Decker workmate. With its corporate muscle, Black and Decker has spent about £10 million worldwide trying to protect the copyright of that simple but brilliant machine from counterfeiters throughout the world.

When children cry out for the latest designer clothing or those designer shoes or trainers which cost £70 or £80 and still last no more than a month, it is no wonder that many parents are tempted, with screaming children in hand, to go to the market and pick up a £10 pair of apparently designer trainers. We can all have great sympathy with parents in those circumstances. If I read today's press correctly, I suspect that there will be a big market in Manchester United counterfeit strips as it has changed its strip for the seventh time in three years and charges £70 a time. That is good for Manchester United, but not so good for the parents who will feel obliged or pressured to buy a new one each time.

There is a large industry out there. We are also aware that America is concerned that some countries in the far east have massive state-run factories which mass-produce counterfeit equipment. The message that must go out is that this is a crime. I liked the way in which my hon. Friend the Member for Ryedale (Mr. Greenway) described it: it is theft—theft from the consumer, from the people who invented the original product and from the businesses involved. There can be no doubt that such activities represent a significant threat to legitimate businesses and, as we have heard disturbingly today, that they are a source of income to professional criminals. It is because I am concerned about the links with pornography and organised crime that I have initiated an on-going interdepartmental consultation exercise.

As my hon. Friend the Member for Ryedale will understand, the Home Office is not primarily responsible for the legislation that has a bearing on this problem. Clearly, it is sensible to ascertain an estimate of the number of cases that would arise from this proposal and whether the additional court costs and other costs can be met. I agree with my hon. Friend that the best way forward is probably not by means of an amendment to the Bill, which could create an unwelcome precedent. I am grateful also to my hon. Friend the Member for Exeter (Sir J. Hannam) for making the matter clear in the Standing Committee on Wednesday when I was not able to be present. The use of an order made by the Secretary of State, which is already anticipated in part II of the Criminal Justice Act 1988, is probably the best way forward.

My hon. Friend the Member for Ryedale asked some questions about the powers of the Crown court and magistrates courts. The Crown court has the power to make a confiscation order in respect of any offence listed in schedule 4 to the 1988 Act or, if it is not listed, in respect of any indictable offence—that is covered by section 71(9) of that Act. Magistrates courts can make a confiscation order only in respect of schedule 4 offences. They cannot make an order for any summary, or triable-either-way offence unless it is included in schedule 4. If we make an order and include summary or triable-either-way offences, which we could do, it would mean that the Crown court could still make a confiscation order if a triable-either-way offence is heard in the Crown court.

The interdepartmental consultation exercise is under way, considerable progress is being made, and I should be in a position to make known the outcome of our deliberations shortly. I certainly expect to be able to do so before the Bill completes its parliamentary passage. I know that my hon. Friend the Member for Ryedale will consider that an important safeguard from his point of view and a measure of my good faith. I assure him that the Government will consider very sympathetically the addition of these offences to schedule 4 by means of an order.

I am afraid that, for the reasons that I explained, it would be better to use existing order-making powers. Since I have assured my hon. Friend that I am looking sympathetically at the matter and since I should be able to inform the House before the Bill has completed its parliamentary stages—with that important safeguard built in—I ask him not to press the new clause to the vote, but to leave the matter to the order making powers.

Sir John Hannam

This debate has touched chords in the House and will do so throughout the country. The scale and extent of the offences that my hon. Friend the Member for Ryedale (Mr. Greenway) identified are known to pretty well every family in the country because of the measures that he pointed out and the examples that my hon. Friends have given in the debate.

I recall the pornographic videos that were displayed to Members of Parliament representing the Devon and Cornwall constabulary area, including my hon. Friend the Member for Plymouth, Sutton (Mr. Streeter), before we introduced legislation to deal with that type of obscenity. As has been described today, people are using the old pornographic videos, which no longer have any value, as cheap material for recording children's videos. That is a very disturbing example and the sort of thing that we really must deal with.

The thread running through the debate is that we are dealing with big crime and that is the sort of crime with which the Bill seeks to deal. Criminals are able to get away with it. They might have to pay a small fine or serve a short prison sentence, but until my Bill is enacted, any confiscation orders that might exist can be expunged.

This is an important debate and my hon. Friend the Member for Ryedale introduced it in the manner to which we are accustomed from him. He covered all the important areas. I listened to the remarks of all my hon. Friends and of the Opposition spokeswoman, the hon. Member for Hornsey and Wood Green (Mrs. Roche), with considerable interest because I have been involved in copyright matters. I am very sympathetic to the view that we must take action to close that gap.

The motives that underlie the new clause certainly have my support. Like my hon. Friend the Minister, however, I have reached the conclusion that the Bill is not the best forum for dealing with the matter. It is a question, not of whether the offences should be included in confiscation orders—there is no doubt about that—but of how best that can be achieved. As hon. Members will know, specified offences can be brought within the reach of confiscation powers under the Criminal Justice Act 1988 by adding them to schedule 4, as my hon. Friend pointed out. The 1988 Act lays down a procedure for amending schedule 4 by statutory instrument, which is a quicker and more straightforward way to amend it than an amendment by primary legislation, which the new clause is.

In 1990, schedule 4 was amended by statutory instrument to deal with the problem of acid house parties, from which large illicit profits were being made. Given that precedent, and the simplicity of established procedures for amending schedule 4 by statutory instrument, I am inclined to think that that is the right way to deal with this type of counterfeiting and copyright infringement offence.

Mr. John Greenway

This is the Bill of my hon. Friend the Member for Exeter, but it is clear from what we have heard this morning—and from the support that I have received from my hon. Friends—that there is support throughout the House, but particularly on the Conservative Benches, for ensuring that the provisions of his Bill cover the types of crime that we have been discussing. He will want the Bill to cover such offences. Is he satisfied, from the discussions that he has had with our hon. Friend the Minister, that we shall get that statutory instrument and that when we leave the House today we shall be able to tell people in the film and record industries that we have been successful and that although the legislation will not be on the face of this Bill the Government are going to act?

Sir John Hannam

I can certainly assure my hon. Friend that I have every confidence that the outcome will be the same for the serious offences under discussion as for other types of crime that have been brought within confiscation law through the statutory instrument procedure, such as acid house parties.

Some months ago, when I was first acquainted with the problem, I brought it to the notice of my hon. Friend the Minister. He responded immediately and encouraged me by saying that he would be considering the matter and that a review would take place. I can assure my hon. Friend the Member for Ryedale (Mr. Greenway) that that would be the best route for dealing with the problem. I hope that it will not take too long.

I was pleased that my hon. Friend the Minister announced that we are to have a clear statement on this important matter before the Bill completes its passage through Parliament. While I commend my hon. Friend the Member for Ryedale for exposing this important subject, I hope that he will feel that the right way forward is to seek leave to withdraw his new clause.

Mr. John Greenway

We have had an interesting and thoughtful debate on the matter and I am most grateful for the support from my hon. Friend the Member for Exeter, other hon. Friends and the hon. Member for Hornsey and Wood Green (Mrs. Roche) for the proposal that I brought before the House. Without question, the issues must be resolved quickly.

My hon. Friends the Minister and the Member for Exeter have given an assurance that they want those matters covered in legislation. I have listened carefully to their commitment and their assurance that those matters can be dealt with satisfactorily through a statutory instrument. I urge my hon. Friend the Minister to introduce that statutory instrument as quickly as possible so that those offences are listed in part I of schedule 4 of the 1988 Act.

With the benefit of those assurances and the considerable airing that we have given the subject this morning, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

It being Eleven o'clock, MADAM SPEAKER interrupted the proceedings, pursuant to Standing Order No. 11 (Friday sittings).

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