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Lords amendment: No. 12, in page 14, line 15, at end insert
("(3A) A person shall not be liable to have an obligation imposed on him in accordance with an order under this section by reason only that he provides, or is proposing to provide, to members of the public a telecommunications service the provision of which is or, as the case may be, will be no more than—
§ Mr. Charles ClarkeI beg to move, That this House agrees with the Lords in the said amendment.
Mr. Deputy SpeakerWith this it will be convenient to discuss Lords amendments Nos. 13 to 19 and 125.
§ Mr. ClarkeI am afraid that I need to give slightly more time to this debate, as it reflected a very serious discussion in the other place. I need to explain why these amendments are before the House.
The purpose of amendment No. 12 is to clarify those commercial and other organisations that provide a telecommunications service as a means of accessing a further service of theirs will not be subject to any order under clause 12. For example, a bank may decide that it 1187 will offer a telecommunications service to its customers as a means of providing access to its banking service. As a result, customers can communicate with that bank. Where such a service is provided, the amendment will exclude its provider from any obligations that might otherwise be imposed under clause 12 to develop or maintain an interception capability. That measure was in response to the submissions made to us as we considered the issue. The amendment also puts outside the scope of clause 12 a telecommunications service that is necessarily incidental to a different service.
Amendment No. 15 is the outcome of our consideration of how best to ensure that the interception commissioner and his staff are able effectively to scrutinise any interception equipment designed and maintained in obedience to a notice served under clause 12. Amendment No. 15 will mean that notices served on an Internet service provider will specify what should be done to provide the commissioner with reliable and verifiable technical means of fulfilling his duties. It also applies to any orders made under clause 12.
Amendments Nos. 13, 14, 16 and consequential amendment No. 125 deal with a technical advisory hoard. Whether to set up a statutory body such as a technical advisory or approvals board has been much discussed not only in both Houses of Parliament but within Government and between Government and industry. Opinions have differed as to whether such a body was necessary, whether it should be a statutory body, whether it should have an advisory role or be an approvals board as originally suggested, what its composition should be and what its remit should cover.
We consider that the amendments, which have been accepted in another place and are before us for consideration are a sensible and reasoned compromise as a result of all the discussions and debates that this issue has engendered. I hope and believe that they will be welcomed by hon. Members on both sides of the House, particularly as they were jointly tabled by all parties in the other place.
The amendments achieve the following: first, they set up in statute a technical advisory board. Secondly, they introduce an element of flexibility as to the constitution and membership of that board. That is important, as we live in a rapidly changing environment. Thirdly, they clarify the function of the board when considering a notice that has been referred to it. Fourthly, they provide that a notice is effectively suspended pending consideration by the board. Finally, they make it clear what may happen when a reference is made.
I know that the membership of the board is an important issue. The current intention is that it will consist of representatives from industry and the agencies. There have been suggestions that membership of the board should extend beyond those of the communications industry and law enforcement. I am not entirely convinced that that would be appropriate. However, the order-making power proposed in amendment No. 16 allows for some flexibility in this area and thus allows us to look at the situation as it proceeds.
On costs and clause 13, which are dealt with by amendments Nos. 17, 18 and 19 relating to the drafting of clause 13, prior to these amendments, the obligation on 1188 the Secretary of State under subsection (3) was stronger than the discretion under subsection (1). The effect of those amendments will be to introduce an obligation under subsection (1). Since both subsections now impose an obligation to pay contributions or to ensure that contributions are paid, it is right that they should now be wrapped up into a single duty.
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Amendment No. 18 describes the "arrangements" to ensure that contributions will be paid, since that will allow other means of payment than direct payment from the Home Office. For example, contributions to the marginal costs for telephone interception may well come from the National Criminal Intelligence Service. However, the issues for which payments can be made, which are listed in subsection (2), remain unchanged. Amendment No. 19 removes subsection (3) to make way for amendment No. 18.
Amendment No. 17 specifies that considerations of "fairness", rather than "appropriateness" as previously drafted, should be taken into account when considering the particular circumstances of the case in question. In other words, particular notice should be taken of the circumstances of the service provider on whom the obligation is being imposed. I emphasise that point given that every service provider will have to deal with different circumstances. I would expect the particular notice to be taken of those circumstances to include consideration of a wide variety of factors, such as comparisons with international practice, the nature of any additional burden and the size of the company in so far as that may be related to the ability of the company to absorb the burden.
I should like to conclude by recognising the legitimacy of the debate during the past few months about the issue of costs, even if at times the figures bandied about in the press by opponents of the Bill bore little resemblance to reality. There were silly and seriously misleading and damaging figures in the media. That was not the Opposition's responsibility, nor even that of those who commissioned the reports that were published if one judges by what they say, but the fact is that those figures distorted the debate in a seriously damaging way, whereas the debate about costs is genuine, and we tried to take it seriously at every juncture in considering the Bill, in the Chamber, in Committee and in bilateral meetings and so on.
We have endeavoured to assuage the concerns of industry at every opportunity. It is not now, and has never been, our intention to impose unnecessary burdens on industry in particular or the economy in general. We have absolutely no motive whatever to do that. We believe that the worry that the Bill will cause financial crises for particular companies is unfounded. The Government have not only no intention, but no ability under the Bill, to create such burdens.
I am confident that the assurances that we have given in Parliament, together with those amendments, should provide sufficient reassurance that we wish to work with industry at all times—not just in considering the Bill, but during its implementation—to ensure that the regime that we implement enjoys the confidence of all parties concerned. I hope that the House will agree to these Lords amendments.
§ Mr. HealdI shall start with amendment No. 12, as the Minister did. Amendment No. 12 is the result of concerns 1189 that commercial organisation have raised about telecommunications services provided to their customers that are incidental to their business, rather than being telecommunications businesses themselves. The Government rightly tabled that necessary amendment in the other place, which supported it, and we support it now.
The Minister will recall—as you may, Mr. Deputy Speaker, from the debates on Report—that there has been something of a battle royal about whether a technical board should exist. We thought it important to reassure business partly because of the procedures that have been adopted in the Bill, which pre-date the current Minister, but which have not been entirely satisfactory. For example, no technical specification of the equipment that could be used for interceptions was obtained at an early stage. It was only in January this year, when the Minister took the matter seriously in hand, that such a request was made to the Smith group.
I believe that many fears have been generated by the fact that business has not known what is expected of it. Therefore, we have tried to include confidence-building measures in the intercept capability provisions to make it clear to industry that it is negotiating with the authorities not from a position of entire weakness, but from one where it can have recourse to an independent body if it is dissatisfied with the measures it is asked to take. We are happy with the technical body that is proposed, although it is slightly different from the original proposal.
Internet service providers may be served with a notice that requires them to take detailed technical measures to provide an intercept capability. If they think that those measures are disproportionate or that the matter can be dealt with more easily, they can ask for the technical board's view on the matter and have an independent view taken. The Minister was very dismissive when we discussed that matter in Committee. He described such a board as an expensive
quango to give technically sensitive information to competitors.—[Official Report, Standing Committee F, 28 March 2000; c. 206.]
§ Mr. Charles ClarkeThe hon. Gentleman may correct me if I am wrong, but I think that, at that time in Committee, he was talking about a technical approvals board. That matter exercised us strongly for the reasons stated in Committee. We are now talking about a technical advisory board, which will have much more power and effect in what he perfectly reasonably seeks to achieve.
§ Mr. HealdYes, the essential ingredient of both systems is that there should be an independent body to which such cases can be taken. As the Minister will recall, I tabled several amendments, all of which provided different solutions to that problem. One possibility was that people could go to court. Another route was a review by the technical approvals board. I had two or three other ideas, although I have forgotten them.
§ Mr. ClarkeThey were creative.
§ Mr. HealdI am grateful to the Minister for describing them as creative. It is welcome that, in the other place, it has been possible to find a solution that provides business with that extra reassurance. That reassurance is in the Government's interests, as much as it is in those of the industry. It will not now just be a case of the Secretary of 1190 State introducing an order and a whole series of black boxes springing up in appropriate parts of the economy; there will be an element of independent advice and the ability to put such cases to the board to find out whether it agrees that what is proposed is right.
It has been said that no one in the industry supported the idea of having a technical board. On Report, I read out a list of bodies that supported that idea—they are shown in Hansard. It was made clear to my noble Friend Lord Cope that various bodies supported that idea, including the Internet Service Providers Association, the London Internet Exchange, the Confederation of British Industry, the Federation of the Electronics Industries and the Alliance of Electronic Business, and others. That shows that there are sometimes misunderstandings about such issues. However, I welcome the fact that there will be a technical board, but it is a pity that it was necessary to defeat the Government in the other place to achieve that. [Interruption.] The Minister laughs, but that is true.
In Committee and on Report, we said that it should be a requirement that the Government shall make a contribution to the costs of Internet service providers who have to provide such facilities. That was strongly resisted until a defeat in the other place. Again, it is good that the Minister now accepts the decision taken in the House of Lords that he shall make a fair contribution. That will build confidence in the industry, which the Government need if they are to implement the legislation effectively. It is good to talk, as the saying goes—[Interruption.] It is good to talk, and we appear to have an amendment with which we may all be content.
§ Mr. Ian BruceMy declaration of interest will probably last longer than my speech, in that I advise the Telecommunications Managers Association and a company, Trevor Gilbert and Associates, which, at the periphery of its business, runs telephone exchanges. Both organisations were concerned that the Bill was originally too widely drawn and that people who work in the field peripherally or those who have large telephone exchanges as part of their normal business might be dragged in. Therefore, I welcome amendment No. 12, which sets that aside.
I rose simply to ask the Minister what he expects the Bill to cost. He was right to say that many of the figures bandied about were extraordinarily high. That does not let him off the hook, however, of how much he thinks the Bill will cost and how much he has asked the Chancellor to provide. Out of the £43 billion, has he asked for £500 million, £250 million or £5 billion? How much will the Government have to pay? We should not agree with the Lords amendment until that figure is on the record in Hansard so that we may later measure whether the Minister was correct.
§ Mr. Simon Hughes (Southwark, North and Bermondsey)I feared that I would left stranded without my cavalry when we reached the amendments. My hon. Friend the Member for Sheffield, Hallam (Mr. Allan), who knows most about these matters, has had to depart, and my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who also served on the Committee, had not quite arrived when we began. I have been rescued by his arrival: more than one of us will now deal with the amendments and we have the benefit of some of the expertise that went into the Committee stage.
1191 I shall make one preliminary point so that I will not have to make it later. It reflects the words of the Minister and the hon. Member for North-East Hertfordshire (Mr. Heald). The Bill's process in the Lords was a model of intelligent co-operation, and I pay tribute to the Conservative spokesman, Lord Cope of Berkeley, and his colleagues, to the ministerial team, and to my colleagues, Lord McNally and his team. The huge amount of co-operation that occurred is evident in the fact that the technical advisory board proposal came originally from Lord Cope. We worked happily with him to support it as a positive improvement and the Minister has been glad to accept it.
When the Bill left the House of Lords, I asked my colleagues what remained for us to do to make the Bill even better. I was told that there were three outstanding matters—overlapping warrants, tipping off and authorisation when the key was converted into plain text. My senior researcher, Steve Bradford, my hon. Friend the Member for Hallam, Lord McNally and I talked to the Clerks, but found, by one of the paradoxes of this place, that those are the very matters on which we were technically unable to table amendments—we can amend only what has been sent to us as Lords amendments.
That is why there are no amendments to the Lords amendments, and I am sure that the hon. Member for North-East Hertfordshire and his team have been through the same process. I make no complaint, but we are limited to considering only what has been sent back from the Lords, all of which improves the Bill.
Amendment No. 12 improves the Bill for the reasons given by the Minister, and amendments Nos. 9, 14 and others will produce a board sufficiently flexible and encouraging to give the industry the confidence that it did not have when the Bill went to the Lords. Even though there may have been some hype from industry—certainly, we all had an avalanche of correspondence from people who saw the Bill as the most draconian and awful piece of legislation—matters have been reappraised and industry has been reassured that the process can be called in so that it may give its expert opinion. The amendments are welcome and make the Bill more satisfactory to industry and commerce. We welcome it.
§ Mr. MacleanAll that talk about the cavalry arriving and Lord Cope reminded me of the words of a Jacobite song following the battle of Prestonpans. It seems on this occasion that the English general, Johnny Cope, was wide awake in the morning, got his drums a-beating and got down his amendments on the technical advisory board. Lord Cope seems to have been more successful than his predecessor of more than 200 years ago. One naturally supports the technical advisory board. [Interruption.] Some Labour Members, of Scottish ilk, will appreciate the importance of the battle of Prestonpans.
I recall that the technical advisory board was raised in Committee, and I am pleased that, following the normal parliamentary processes, the Government are willing to accept it. It is a good idea and everyone agrees. I make no criticism of the Government for being slightly nervous of the concept in Committee. If a Government accepted every suggestion made in Committee, goodness knows 1192 what would be in a Bill by the time we reached the final stages of the parliamentary negotiations. All is as it should be, and the Minister has wisely accepted the amendment.
My only small quibble with the technical advisory board is with the view that it should be precisely balanced. It will not be so: the Minister is bound to ensure, using amendment No. 16—"that such other persons"—that he includes a couple of people so that the Government side and the agencies that want warrants will always have a small inbuilt majority in case the industry people become a little troublesome.
There should be no need for that. The Government are not making policy, and as the board is merely advisory the Government should not have to ensure that it is stuffed with their people in case other members come up with some crazy idea that the Government do not like. The Government can draw up terms of reference to ensure that the board does not have draconian powers that the Government will not like. They could then pick the best people to serve on the committee, and if nine out of 10, 11 or 12 turn out to work in private industry, so be it.
Of course, the Government must have an input to the board via those who seek the warrants, but the bulk of expertise lies beyond Government circles. The Government should not feel that they must have a majority on the technical advisory board, which will not stitch up the Government on a policy that they wish to avoid.
My other point relates to clause 13 and the amendments proposed to it. It concerns the cost. I accept that adding the words
a fair contribution towards the costsis an improvement on "an appropriate contribution" but what is a fair contribution? Let us say that the Government get cast-iron audited accounts from an internet service provider to prove that it has incurred a total extra cost of £5,000 in the course of the year providing the interception service. That may not be much in the overall scheme of things, but it has been an additional cost and there is no quibble about it.In those circumstances, if a business has had to pay out £5, 000 purely to do something that it would not normally do but that the Government have asked it to, what would be a fair contribution towards the cost? I believe that it would be £5, 000, and if a company had to spend £10, 000 doing what the Government want, the fair contribution would be £10, 000.
I appreciate that the Government have not wanted to pick a form of words that would amount to, "We will pay whatever it costs". That would create a difficulty. Some companies would do the gold-plated version and ensure that the Government picked up a heavier tab than necessary. Of course, the Government must reserve the right to say, "No, we are not going to pay every penny in case you try to rip us off. It will be a fair contribution and in most circumstances we anticipate that it may be 100 per cent."
I would like to hear a statement from the Minister tonight. No Minister wants to comment on a hypothetical scenario, such as, if I give him a bill for £5, 000, how much of it will he pay—[Interruption.] If I were an internet service provider, I would give him a bill for £5, 000.
1193 We need to find out the Government's thinking as to what is a fair contribution in the case of a small provider who proves legitimately that the bill is not a rip off or fiddled, but that his costs were £5, 000. Roughly what percentage would the Government anticipate paying?
My final quibble or criticism is that while the amendment deals with a fair contribution towards the running costs, we are still stuck with the old wording in clause 13(3) for the capital costs. Those who are forced to put in equipment or machinery under clause 12—what my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) referred to as the "black box"—will be under an obligation to install some equipment that may make interception easier, and will receive only such contributions as the Minister thinks appropriate towards the cost involved.
I confess that I did not read the debate on this matter in the other place. I do not know why their lordships did not table a similar amendment there. For the running costs of operating an interception system there will be a fair contribution, but the company will get only what the Minister thinks appropriate for the capital costs incurred. I want to hear the reason for that distinction from the Minister. For example, if a company proves beyond any doubt that the equipment that it has installed cost £50, 000—the bill is not fiddled, the auditors have gone through it and everyone agrees that the additional equipment that the Government have demanded cost X—what amount does he think it would be appropriate to pay?
Given those few words, I generally welcome the amendments.
§ Mr. Charles ClarkeI will try to deal with the questions directly in responding to an interesting discussion, which has been the subject of substantial debate in the media and elsewhere.
First, the hon. Member for North-East Hertfordshire (Mr. Heald) made an important point when he said that one of the problems was that business was not clear what was expected of it throughout the process. In saying that, I do not think that he was criticising business, Government or anyone else. This is an evolving process and it is difficult to get the expectations right.
There is no doubt in my mind that a lack of clarity in that discussion has led, not unreasonably, to fears and concerns being abroad that, although not justified, are understandable. That has certainly been a major influence in persuading the Government to make the changes that we are considering, to ensure that fears and concerns about those aspects could not be inflated wrongly or unreasonably.
Perhaps I ought to place it on record that, through the codes-of-practice process and so forth—the subsequent process of implementing the Bill—we are committed to precisely what the hon. Gentleman focused on, which is giving everyone involved absolute clarity about what is expected of them and how to deal with the situation. He was correct in making that point, which was insightful. That problem has been the cause of much of the discussion around the Bill. We have worked extremely hard to deal with it in dialogue and in a variety of ways. Nevertheless, there is still a distance to go.
That is the context in which I wish to deal with the arguments about the technical board. As the hon. Gentleman said, we were sceptical about the necessity for 1194 setting up a statutory body at the outset, but that was because there was also initial scepticism in industry about the virtue of the consultation process taking place through a statutory body. Many people said at the time that they favoured a non-statutory advisory group rather than a statutory body. We were also seriously sceptical about having technical approvals rather than a technical advisory board, owing to the different functions of the board.
Once we were clear that we were talking about an advisory process, there was a lot of discussion on the best form of that process, which was mentioned, quite reasonably, by the hon. Member for North-East Hertfordshire. We are content with the arrangement that we are agreeing this evening, but, to be frank, there are alternative formulae that might have been appropriate and with which we would also have been content. The key matter is to establish a flexible structure that can deal with the situation.
I take issue with what the right hon. Member for Penrith and The Border (Mr. Maclean) said. I accept his point about the inbuilt majority, but I do not think that it will come to that in this body or any other body, for exactly the reason that he gave. The Government will rely profoundly on the private sector's knowledge of the issues. We will do that, as we will need to know. Equally, the private sector will need to know from the Government what we have in mind. The purpose of the structure that we are setting up is to establish a body of dialogue through which we shall reach clarity about such matters and take them forward. A situation in which voting takes place will not arise, and would be a disaster if it did. It would be a poor state of affairs if the Government voted one way and business, whether through a committee, board or any other structure, voted another, so we would work very hard to try to avoid that.
§ Mr. HealdAs the Minister will know, we insisted that there should be a balance between agencies and the involvement of the private sector in the body so that there is not an imbalance that makes it impossible for them to work together effectively as a team. Certainly, our hope is that, over a period, they will work together and understand each other's concerns, which is the key to making the arrangement work. I hope that the Minister agrees that it is important to have a fairly close balance at least.
§ Mr. ClarkeI completely agree, and was taking issue only with the idea that a couple of votes either way were important. We need the kind of co-operation described by the hon. Gentleman, and are committed to it. As I have said in Committee and on the Floor of the House, a general criticism that I would make of Government, both Conservative and Labour—although we are working to improve the situation, given the appalling inheritance that we had to deal with—concerns the difficulty of getting proper partnership in these areas. In many areas, I still feel that we do not have a proper dialogue between the Government and industry. We welcome the new structure, as it will help that process, and I believe that it will work positively and effectively
I come to the issue of money and costs, and shall deal first with the points made by the right hon. Member for Penrith and The Border. Clause 14(2)(b), which deals with running costs, and clause 14(2)(c), which deals with 1195 capital, set out the fact that the Bill's requirement for fairness applies to both capital and running costs. The right hon. Gentleman would be right in what he said if the fairness did not apply to both, but the intention behind the provision's wording is that it does.
The right hon. Gentleman made an important point about criteria. I hope that we can offer him some reassurance, as the same criteria will be applied to all service providers, regardless of the position, in considering what costs should be paid. The first criterion is the question of whether a new requirement is being imposed on the service provider and the second is the significance of the cost in relation to the overall size and turnover of the company. Those are both serious considerations. For example, many people have said a requirement of some kind could be extremely damaging for a small Internet service provider that is in the process of starting up. We would not impose such burdens on them, so it is important to look at the costs in relation to the company's overall size and turnover. The code of practice that sets out the way in which we will do that will provide the reassurance sought by the right hon. Gentleman.
The hon. Member for South Dorset (Mr. Bruce) made a financial point and put forward some figures. Throughout, we have estimated that costs to those communication service providers who are not covered at present, but who will be covered under the Bill will not exceed £20 million over three years. That estimate was published in the regulatory impact statement when the Bill was first introduced in the House. We stand by that estimate, and none of the research since has caused us to alter our view. We are of course aware that alternative estimates have been made and we certainly do not claim a monopoly of wisdom on this complicated and different area. When the United States implemented such measures, albeit of a different character, great claims were made about the amount of money that would be needed. In practice, however, much less was needed to deal with the situation.
Our best estimate, therefore, is the one that we made in the regulatory impact assessment. As with all these things, the proof of the pudding is in the eating. My right hon. Friend the Chancellor of the Exchequer has been positive in dealing with this matter because he shares our concern to ensure that nothing that we do will damage our position.
I now realise that I made a mistake in responding to the right hon. Member for Penrith and The Border (Mr. Maclean). I was referring to what will be clause 14 once the Bill is amended; it is clause 13 in the Bill before the House. I apologise for misleading him through my lack of numeracy. Thirteen may be unlucky for some.
§ Mr. MacleanI apologise to the Minister for being obtuse earlier by not studying the amendment properly. If subsection (3) of the clause—whatever its number—is deleted, I assume that subsection 2(c) deals with the capital costs. I see nodding coming from those seated to the Minister's left. My point was wrong: the word "fair" applies to capital and to running costs, in which case I am content.
§ Mr. ClarkeThe right hon. Gentleman is correct. As he said, subsection (2)(c) deals with capital. I do not 1196 criticise him for being wrong on this matter, as this is one of the most complicated pieces of legislation that I have seen. Moreover, he does not have the advantage that I have of a dedicated Bill team, who have tried throughout the Bill to serve all parts of Parliament in a positive way.
§ Lords amendment agreed to.
§ Lords amendments Nos. 13 to 19 agreed to, some with special entry.