HL Deb 19 June 2000 vol 614 cc52-81

5.50 p.m.

House again in Committee on Clause 12.

On Question, Whether Clause 12 shall stand part of the Bill.

Lord Cope of Berkeley

Before we listened to the two Statements, we had a considerable discussion about the issues in Clause 12. I believe them to be of first importance and central to the Bill. However, at this point I do not believe that there is much to be said in addition. Therefore, subject to the views of the Committee, I do not propose to debate clause stand part.

Clause 12 agreed to.

[Amendment No. 54 not moved.]

Clause 13 [Grants for interception costs]:

Lord Cope of Berkeley moved Amendment No. 55: Page 15, line 5. leave out ("may, if he thinks fit.") and insert ("shall").

The noble Lord said: This is an extremely modest amendment which, I hope, elucidates an extremely important point. At the moment, Clause 13 provides that the Secretary of State may, if he thinks fit, make a contribution towards the costs to be incurred by Internet service providers, postal services, telecommunications services and so on. A good precedent exists for the Government to pay money in this respect and there is an expectation that they will do so. However, there are no details in the Bill of exactly what proportion of the costs it is proposed that the Government should pay.

I believe it to be little more than rumour but it is said that the Government propose to make no contribution to the capital cost but to cover some of the revenue cost of interceptions required by the police and other services. I believe that it would be helpful to the Committee if the Minister could explain that in greater detail. However, I also believe that it would be helpful—this is the point of the wording of the amendment—if the Bill stated that the Secretary of State "shall" make such payments; that is, that there is a guarantee in the Bill that at least some payment will be made.

There is no doubt that enormous expense is involved. That brings us back to the issue of driving the customers of Internet service providers overseas to use foreign providers. The Government estimated the cost to be some £20 million a year; on the other hand, the report prepared by two academics from the London School of Economics and University College, London, with the assistance of several colleagues, suggested a figure of £650 million over five years, rising quite steeply. The early years cost was well below the average over five years but rose to a very large sum—£200 million or so a year—at the end of that period. That is an enormous sum to place on Internet service providers.

The issue rests on a number of assumptions: first, as to how many ISPs will be asked to carry out the duties imposed by Clause 12 to have a black box, and so on. The Home Office paper states that the number of ISPs to be covered is greatly exaggerated, as is, hence, the cost. However, in reporting to the British Chambers of Commerce the gentlemen from the LSE and University College could only look at the Bill and say what the potential cost might be. That is what we, as Members of Parliament, must do, too, in considering the cost.

The cost is extremely heavy. In my view, it is essentially a cost of policing. We do not ask householders to pay a direct contribution for the fact that a policeman passes their door (or not, as the case may be) at intervals. Of course, we pay the bill for the police as a whole mainly through our taxes, and the same is true of the other services. However, here it is proposed, in part at any rate, that those immediately concerned—the ISPs—should meet the cost. Of course, they are bound to pass it on to their customers and from that comes the danger of driving the business overseas. If that happens, the Bill will have failed.

In so far as individuals can go overseas, the Bill is likely to be ineffective. Knowing of the existence of the Bill, the sophisticated criminal is in any case likely to use an overseas Internet service provider so as to avoid the issue of costs. However, there is a severe danger, to put it no more strongly, that sophisticated criminals—those who run big rackets and who are well advised—will be missed entirely by the Bill even though a heavy cost will be imposed.

As a result of the report to the British Chambers of Commerce, two particular figures have been bandied about: one of £650 million and one of £35 billion. The latter is the best estimate that the authors of the report could make of the economic cost to the nation of driving business overseas. As the report makes clear, the figure is based on a whole series of assumptions, all of which are open to challenge, and the Home Office duly has challenged them. Neither the Home Office nor outsiders are in a position to know the absolute facts. The figures are estimates and no one will go to the stake on the precision of those estimates.

Nevertheless, the fact that an estimate of such a huge figure can be made demonstrates the importance of the Bill.

So far as concerns the amendment, we are talking primarily of the figure of £650 million. Again, that figure depends on assumptions. Obviously the Home Office has depended on other assumptions in arriving at a figure of £20 million. Either way, there is no doubt that it is a large sum with the potential to do great damage to our electronic commerce and, hence, to our commerce and finance generally. I beg to move.

Lord Lucas

My Lords, I shall speak to Amendment No. 57. Why should not the Government pay for the interception equipment? They will get the benefit of it, and through them we will all get the benefit of it, so why should not we pay for it? Why should the ISPs pay for it? There seems to be no reason why the unquantified burden of this possibly very expensive interception equipment should fall on ISPs. I propose that it should fall on the Government instead. After all, they are specifying what the equipment should he, so logically they should take responsibility for the cost.

There is no reason for anyone in this country to use an ISP in this country. All that we need is some form of communication leading to wherever in the world the ISP may be that is fast and broad enough to take the data rates that we want. If we impose significant costs on our ISPs beyond those that have to be borne in other countries, the business will move overseas. It is not a high margin business. It is a very competitive business and there is no reason for it to stay in this country if companies have to face higher costs and, as a result of this and other aspects of the Bill, offer lower security.

In a part of the Bill where such provision is not adequate, the amendment would also he a useful constraint on the ambitions of the Government. If they have to pay for the equipment—which, given the pace of technological change, will be out of date in a couple of years—they may think twice before they go overboard on interception capability. Under the Bill, the Home Secretary's activities do not have to be visible to anyone else. My amendment would at least provide some measure of rationality and reasonableness to ensure that what he is up to stays within bounds.

6 p.m.

Viscount Goschen

I share the concerns expressed by both my noble friends who have spoken to their amendments. It is clear to all of us that there is the potential for a major burden to be imposed on industry, although there is considerable dispute about the cost of that burden on a snapshot basis if the Bill were enacted now. The Government have come up with a relatively low figure, in the tens of millions of pounds, and industry has produced a figure in the region of £650 million. It is right that the Government should come under pressure to explain how they arrived at their figure and on what basis they disagree with the higher figures put forward by industry.

However, that is relevant only up to a point. As my noble friend, Lord Lucas, said, as time goes on, new technologies will require new monitoring equipment. We do not know what that equipment will be or what it will cost. It is right for the Government to be put under pressure to avoid spending industry's money willy-nilly. They should at least recognise that if they impose a major burden on industry, there should be a direct link with the Government.

The Bill is very loosely worded. To say that the Secretary of State should make such payments as he considers would represent an appropriate contribution towards costs incurred is virtually meaningless. If a court was challenged on the subject, it would have to put itself into the mind of the Secretary of State, and it is difficult to challenge what the Secretary of State considers to be appropriate. Surely that phrase borders on the meaningless.

The Bill gives very wide powers and has the potential to impose very high costs. I should be grateful if the Minister could answer the direct point put by my noble friend Lord Lucas and tell us whether the Government accept that the ISP business can easily be transferred overseas. Does the Minister accept that if substantial costs were placed on the industry, it could simply move overseas? Or does he have a back-up argument—I hope that the information reaches him shortly—and a magic solution to prevent that? It is very hard to keep this increasingly international business within national boundaries. Citizens of the United Kingdom will be able to access international services beyond the reach of the Minister. The Government might not like the situation, but it exists and they should be cautious about putting high costs on industry that could divert this valuable business overseas.

Baroness Thornton

My Lords, I have listened to many contributions during this Committee stage. I am struck by a recurrent theme in the opposition contributions. They keep saying that they do not want any change and they do not think that the industry should bear any responsibility for the change.

Viscount Goschen

My noble friends can defend themselves, but I have never heard anyone from the Opposition say anything of the sort. There is a widespread consensus that something needs to be done. The Bill has the right intentions, but the devil is in the detail. We cannot ignore that. We are facing the possibility of creating legislation that will not work.

Baroness Thornton

I thank the noble Viscount for that, but I should like to develop my argument. The Opposition agree that something should be done, but not this. Those in the Internet industry say the same. I am concerned about the creation of a safe environment in the industry. Those who speak on behalf of the industry in this House are not telling the companies that they have a civic responsibility. They must take these issues seriously rather than simply acknowledging the need for change but asking for a different sort of change. The industry must say what it wants. If the industry took its civic responsibility seriously, it would be applying itself to solutions instead of always saying that any proposals were not what was required.

I am reminded of arguments we have heard about safe food. We expect those who supply our food to provide safe food. It is reasonable to expect those who supply us with our Internet services to take some responsibility for providing a safe industry. The Government are clearly recognising their responsibility and making a contribution. I wish that I could hear a recognition from the industry that it has a responsibility to give us a safe Internet.

Lord Phillips of Sudbury

My Lords, maybe I can give some minor solace to the noble Baroness. She is unfair to the Conservatives. There is a spirit of acceptance of the measure and we are acting as a revising House, trying to improve it.

There may be a via media between the absolutism of the amendment in the name of the noble Lord, Lord Lucas, which would put the full cost of the operation of equipment on the Government, and the position adopted by the Home Office Minister in the House of Commons, Mr. Clarke, on 6th March, when he mentioned a government contribution of £20 million. There is bound to be some special pleading from the industry, but from what we have heard £20 million does not seem like a reasonable compromise for the costs incurred by companies in undertaking the duties thrust on them by the Secretary of State.

Lord Bassam of Brighton

The figure of £20 million that the noble Lord has quoted is based on the Bill's regulatory impact assessment. It is not a sum that the Government have committed. Having looked at the facts and how the legislation will be interpreted and worked out, that is our estimate of the cost of the regulatory burden to be imposed.

Lord Phillips of Sudbury

I am grateful to the Minister for that information. Nevertheless, that seems to be a conservative amount. I was going on to say that in the USA, under the Communications (Assistance for Law Enforcement) Act—an even more unwieldy title than that of this Bill—the government provide 500 million dollars.

Perhaps I may add in defence of the amendments being put forward here that that is not on all-fours with the health and safety situation governing food supplies, for example, where, plainly, the supply of hygienic food and safety equipment is something to which the consumer is entitled. In this circumstance, the state is asking an industry, which happens to be in a milieu where fraud, crime and terrorism uses its own instruments of proper commercial activity, to bear some of the costs of the state protecting us—drawing it into the policing system. In broad terms, that seems to me a proper situation in which industry can ask the state to come some way towards meeting the costs which it must incur because of the requirements of the Bill.

Baroness Thornton

Does the noble Lord accept that it is in the industry's best interests to create a safe environment?

Lord Phillips of Sudbury

Of course I do, but I think it is rather tough to say that it is in the interests of the industry to stop terrorism. The industry has no more interest in stopping terrorism than lawyers or fishmongers. That applies to paedophilia too. As I said, it happens to be a milieu in which those wickednesses traverse their own systems. I believe that there is a difference as regards the analogy which the noble Baroness drew.

On these Benches, we are entirely supportive of Amendment No. 55 and I regret to say that we are dubious about the absolutism of Amendment No. 57.

Lord Desai

I want to make one small comment about the drafting of the amendment. It says that the Secretary of State, may, if he thinks fit". make such payments, and so on. If I remember correctly, in the Scotland Bill, the entire Barnett formula is dealt with under a weak expression like that. That is the way draftsmen deal with such matters. The amount of money may be £5 or £5 million. But there is a precedent and I am sure that my recollection is correct.

On an earlier amendment, the noble Lord, Lord Cope, said that we do not know how many ISPs must accept that black box. It seems to me that every ISP must have a box. That can be the only answer. Otherwise, as soon as it became known that an ISP did not have a black box, every criminal would divert to that ISP. So quite clearly, there will have to be a black box on every ISP which is a national provider. Of course, that still leaves international providers out of the loop, but I do not believe that there is any choice in that regard.

6.15 p.m.

Lord Blackwell

I support the spirit of the amendments proposed by my noble friends. As this is the first time that I have intervened on this Bill, I should declare an interest in a number of companies which have interests in this area.

Does the Minister accept that the costs referred to are unlikely to be one-time costs incurred at the moment at which the order is imposed? Because of the ongoing nature of technology development, ISPs, telephone companies and others are likely to incur costs every time they update or develop their systems or introduce a new transmission technology or new encryption technology. Therefore, the costs which companies may face will stretch out as a stream going into the future. In fact, because of the complexity of such matters, those costs are likely to increase.

Recognising those additional dimensions, the Government need to find some way of ensuring that those costs do not become penal on the industry.

Lord Bassam of Brighton

I am grateful to all those who have contributed to the debate because—I pick up the point made by the noble Viscount, Lord Goschen—it is right that the Government should come under pressure on this to make sure that their arguments and figures stack up and that they should come under some scrutiny.

Perhaps I may try to pick up the points which have arisen as a by-product of the discussion. We are conscious of the fact that there are very real questions relating to costs which may be incurred in providing interception capabilities. We are extremely conscious also of how those costs may be apportioned between government and industry.

As I understand it, Amendment No. 55 suggests that the Secretary of State "shall" make payments to communication service providers rather than that he "may" do that. The intention behind the amendment is to require the Secretary of State to meet costs incurred both in effecting individual warrants and in maintaining a reasonable intercept capability under Clause 12. I would argue that, as drafted, it does not quite achieve that because it leaves a considerable amount of discretion for the Secretary of State. But the intention is clear and we must respect the intention.

Members of the Committee will wish to note that the Government introduced an amendment in another place, which was accepted, setting out their continuing commitment to the payment of marshalled costs. Those marshalled costs are incurred by the communications service providers in respect of processing each individual interception warrant—the ongoing costs. Those include the costs of staff and overheads and cover the cost of transporting the intercept product from an agreed hand-over point, normally within the CSP's own network to the intercepting agency. All those costs are currently, and will continue to be, met by the Government.

I do not accept that it is necessary at this stage to go any further than the commitment which we have already given. On that basis, I hope that the amendment will be withdrawn. But our commitment is clear. We introduced that amendment in the other place. We understand the issues involved. The costs will cover other matters, such as staff and overheads and the costs of transporting the intercept product. So we have gone quite a long way already in that regard.

I turn to the amendment in the name of the noble Lord, Lord Lucas. It was described by the noble Lord, Lord Phillips, as "absolutist", and I believe that that is a fair description. The amendment refers to how the costs of maintaining a reasonable intercept capability shall be apportioned between government and industry. The noble Lord, Lord Lucas, wants to see a categorical statement on the face of the Bill stating how those costs will be apportioned between government and industry. That is an unusual and novel approach which the Government cannot accept.

Clause 13 bears close reading. As it currently stands, it permits payments to be made by the Secretary of State and it imposes a duty to contribute to marshalled costs in some cases. Exactly what those payments should be will be decided after we have gone through the consultation process with industry, to which I have referred on many occasions. To assist that consultation process, we commissioned a report known as the Smith report. No doubt many Members of the Committee will have heard of it and read it. That report has been produced by independent consultants to look at the whole business of cost allocation in some detail. In a sense, it is part of the debate about how high those costs may be—whether £600 million, according to one tranche of argument, or £20 million in another. As I stated earlier, that consultation exercise will lead to secondary legislation by means of an order to be laid before Parliament.

I can offer some assurance to Members of the Committee that the allocation of costs will be addressed very clearly in that order. We shall make sure that there is more than adequate time, proper time, to take a detailed look at the issue. But I am happy also to tell the Committee that we shall take that opportunity to confirm again that the Government will contribute to costs and that we shall not impose any unreasonable burden on industry. Exactly how much we will contribute will have to be debated in detail—the devil is in the detail in this instance—when, after lengthy consultation, we introduce secondary legislation. We shall have the opportunity to talk to industry in the build-up of time to that secondary legislation. We shall consult in detail on the way in which it will work and will bring forward secondary legislation. We shall have the opportunity to give it further scrutiny in this Chamber and Members of the Committee will be able to go over it again. There will be ample opportunity for people to get to the root of the costs. Legislation does not necessarily make it easier and facilitate detailed consideration.

It is worth stressing that we are not setting out on a grand scheme that has not before been undertaken. For many years now, telecommunication companies have been required to maintain an intercept capability and have had to share the costs of so doing with the Government. I believe that it is also the case that many ISPs have begun to share the costs with Government in the current situation. This is not something new that we are demanding of business or the industry. It has not suddenly been dreamt up; it is already in existence.

At this stage of the development of the legislation I understand that there is some nervousness. I understand the concerns of industry in that regard. However, we believe that they are not well founded. Many Members of the Committee referred to the fact that there has been considerable debate about the degree of cost. We think that it is about right in the regulatory impact assessment undertaken by the Cabinet Office. Even the CBI described the figures in the BCC report as alarmist. I have no doubt that the CBI is well informed in its approach. If one looks at the history of the PTOs, they have been meeting capability costs for the past 15 years or more, providing interceptor capability at their own cost. No PTO has gone out of business as a result. We take the view that we have struck a reasonable balance and that businesses have always managed to meet a reasonable solution.

The noble Lord, Lord Blackwell, asked a question, the answer to which is along the lines that we will be looking to future costs but will start from designing in from the outset cost minimisation. That is the whole approach that will inform our strategy in this regard.

In summary, we think we have the balance about right. We believe that the consultation and secondary legislation process will flush out cost. We think that we can meet the reasonable costs on the face of the Bill. Clause 13(3) provides flexibility for the Secretary of State to address the costs issue and make a contribution. We need to get that balance right. We have no intention of pushing unreasonable costs on to the industry. We do not want to frighten it abroad. At this stage, we have no evidence that people will be frightened off from setting up and maintaining their businesses in the United Kingdom; far from it. We think that it will add extra confidence to the industry.

For those who have been critical of us, saying that we are forging ahead without other jurisdictions taking an interest, that simply is not true. My attention has been drawn to the fact that the standards we wish to adopt have been adopted by a number of member states of the European Union in the council resolution of January 1995. Those standards have been subsequently adopted by the governments of Canada, Australia and New Zealand. As the noble Viscount, Lord Goschen, aptly and ably expressed, we are working in an international field. However, we are not working on our own. We are all moving in the same general direction. It is against that background that the legislation we are setting up has to be seen.

I trust that in view of the comments I have made this evening, those Members of the Committee who have moved the amendments will feel able to withdraw them.

Lord Phillips of Sudbury

Before the Minister sits down, can he tell us whether the Government are accepting the recommendation of the Smith report that they should pay for the design and software development of the black boxes which will be crucial to this information gathering?

Lord Bassam of Brighton

In general terms we have accepted the findings of the Smith report. That level of detail is a matter which we shall consider throughout the process of bringing together the consultations and framing the secondary legislation. That is how we see things working out. In general, we accept the Smith report. It has provided us with useful background and will inform the way in which we proceed.

I need to correct a remark I made earlier to Members of the Committee. I might have suggested— I do not think I said it directly—that we might already be meeting some of the ISP intercept costs. That is not currently the case because it is not covered by the Interception of Communications Act. We do not currently cover those interception capability costs. However, that is an area which we are keeping carefully under review.

Viscount Goschen

Perhaps I may briefly pick up one point. The Minister said that he felt they had the balance about right. However, he gave the Committee precious little information about where that balance lies, and spoke in generalities. There are vast discrepancies between the figures talked about by the Minister on the one hand—I accept his caveat about the regulatory impact statement; as I understood it, he then went on to support that as being a good and sensible base case—and, on the other, the sort of figures talked about by the industry. For the Minister to suggest that the balance is about right and then give the Committee almost no information about where the Government thought that balance lies is asking it to make a large leap of faith.

On another point, I specifically asked the Minister whether he believed it would be possible for much of this business to be transferred overseas. I did not ask whether he had had any indication that that was happening, because the Bill has yet to be enacted. I asked whether it would be feasible for consumers here to use ISPs based overseas and therefore evade the impact. That, surely, is an important point to inform today's debate.

Finally, perhaps I may pick up a point made by the noble Baroness, Lady Thornton. I apologise for intervening in her remarks. As far as I am aware, no one in this Chamber is speaking on behalf of the Internet industry. I certainly am not. Noble Lords speak from their own personal perspective. They might well have listened to arguments put forward by industry or parties such as the Minister. It is our duty to weigh those up. However, it is not the case that noble Lords, certainly myself and, I believe, my noble friends, are speaking in any way on behalf of the industry.

Lord Lucas

The noble Lord, Lord Phillips, made a good point and criticised me, as indeed, did the Minister, for being absolutist in the amendment. It was tabled in that form, as much as anything else, to draw out from the Government what their position was. In that it has not succeeded.

I share the criticism of the Government of my noble friend Lord Goschen. Even in describing the process which they will adopt, they have not given a hint of what will be their opening position in the discussions which, rightly, they will have with the industry on the meaning of the word "appropriate". I understand that the Government do not want to have something set down in stone on the face of the Bill. These discussions are always ones in which the particular has to be looked at and a fair amount of detail has to he gone into. There are good arguments, such as those put forward by the noble Baroness, Lady Thornton, and others, that the industry should perhaps bear some of the cost. However, in being asked to pass this wording in the Bill, the Government are not prepared to say what will be their opening position in the negotiations. Does "appropriate" mean about half, or about nothing?

6.30 p.m.

Lord Bassam of Brighton

The noble Viscount, Lord Goschen, suggested that business may be transferred overseas. I apologise for not accepting that possibility; I do accept it. But there is no evidence as yet that that is likely to be the case. There is a deficiency in the approach adopted, not only in the debate this evening, but also in the public debate, which goes back to the comment made by the CBI. If the industry adopts an alarmist position at this stage in order to force more costs to be covered by the Government, it could be self-defeating and in neither the industry's, the Government's nor indeed the public's best interests. So, although I accept the possibility, I do not accept that that should end up being the case. We believe that we shall get the balance right. We shall have the detailed consultation to take into consideration.

The noble Lord, Lord Lucas, said that we are not providing the detail in addressing this aspect. However, we issued a point-by-point refutation on the whole cost issue. The allegation was that we would impose black boxes. But that is only one suggestion. It has not been decided. The likelihood is that we shall not expect all ISPs, for instance, to carry an intercept capability. So the burden of costs envisaged by many of the detractors with regard to this part of the legislation does not exist to the extent suggested in certain alarmist quarters.

Lord Lucas

Does the Minister mean that some ISPs will bear the cost burden and draw the short straw and others will not?

Lord Bassam of Brighton

It is not a question of drawing a short straw. As I understand it, there are 400 ISPs in the UK at the moment. The cost assessment built up in opposition to the Government's position assumes that all 400 will be obliged to possess an e-mail active intercept capability. We do not necessarily accept that that is the case; it may be far from the case. It may be that only the largest ISPs will bear part of the burden of cost.

We have to look at the detail. We have to consult the industry in order to get the balance of costs right. Trying to establish that in legislation would be unique. I am sure that the noble Lord, Lord Lucas, accepts that point. I accept that he is trying to flush us out on where we feel the balance is; but the matter is best left to the detailed consultation which all Members of the Committee have said that we should conduct and carry out. We are committed to that process.

Lord Lucas

If there are to be detailed consultations with the industry, and therefore almost with the public, why not share with us the opening position? It cannot possibly damage the Government to tell us what they intend to tell hundreds of other people, if not now then very shortly. Will not the Minister reflect that fresh in all our minds is the Government's oft-avowed accuracy in assessing the cost of building the new Scottish Parliament building? We must all recognise that estimates often bear little resemblance to the final outcome.

Lord Cope of Berkeley

I view this as a most unsatisfactory debate, particularly from the parliamentary point of view. Parliament is being devalued. We are being asked to accept a lot of highly generalised assurances from the Minister. I noted three: "We will not be unreasonable"; "Fears are not well founded"; "We have good intentions". They are all honeyed words but mean very little. The more the Minister said, the more it became clear that either the proposals are not being shared with us or, as I suspect, they are as yet unformed and loose. That is why there is this huge potential disparity in the cost which Parliament is being asked to take at face value.

Perhaps I may respond to the noble Baroness, Lady Thornton. She said that she did not feel that e-businesses were bearing their share of responsibility and that we were arguing only on behalf of such businesses. But it is not only e-businesses which are involved; it is the whole of business. After all, the chambers of commerce, the CBI and the Institute of Directors are complaining, and The Times, the Financial Times, the Observer and the Guardian, all say in different ways that these proposals, desirable as they are—we all believe it to be desirable to use this method to catch criminals—are insufficiently developed and still contain snags. Yet we are asked in this clause to support a blank cheque.

On the question of the number of Internet providers, the noble Lord, Lord Desai, said that he thought that the provision would include all ISPs. But that is what is worrying; it will not. There is nothing in the Bill about this. The general assumption was exactly the same as the noble Lord's; that is, that the provision would include all ISPs, at least over a period. The chambers of commerce report worked on the assumption that the interception regime would involve 20 large ISPs and 100 small ones—that is pretty well most of the industry. But the Home Office said that that is a gross over-estimate, perhaps by as much as a factor of 10. That is to say, only one-tenth of the ISPs will be subjected to this regime; presumably, that is one-tenth of the large businesses and one-tenth of the small ones. I find that surprising. But it shows how difficult it is to get at the cost and to know exactly what is proposed.

My noble friend Lord Lucas said that if this £20 million—the Government's estimate—is going to be imposed on only one-tenth of ISPs, it will cause grave difficulties. The others will be at a competitive disadvantage because they have not been approached.

Lord Bassam of Brighton

Perhaps the noble Lord, Lord Cope, will give way on this point. At the moment we do not require all public telecommunications operators to possess an intercept capability. If the noble Lord is saying that it is unreasonable to expect only a small proportion of ISPs to bear the cost, he must be saying also that it is unreasonable that only a small proportion of PTOs currently bear the cost. The two situations are broadly comparable. The noble Lord should reflect on that point, otherwise he misunderstands the way in which these things are intended to operate.

Lord Cope of Berkeley

I shall certainly reflect on it and ask others to do the same. After all, the vast majority of telephone traffic goes through very few hands. That may explain some of the figures given by the Minister in that respect.

The noble Lord, Lord Phillips of Sudbury, asked a simple question in this regard. No detail was given and no approach was made in principle to answer his question. "It will all be considered before we reach secondary legislation", said the Minister. Of course, there will be a further opportunity to discuss it at that stage, when the stable door has more or less shut. But we all know the difficulties of secondary legislation.

I shall not press this amendment tonight. It merely sought to probe what the Government intend. We have found out practically nothing in that regard. I am sure, therefore, that we shall return to this matter on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 56 had been withdrawn from the Marshalled List.]

[Amendment No. 57 not moved.]

On Question, Whether Clause 13 shall stand part of the Bill?

Viscount Astor

The debate on the two previous amendments was very disappointing from our point of view; indeed, we received no proper answers—answers that this House deserves—from the Government. I should like to use this debate for the purpose of asking the Minister a question. If I receive the answer that I expect, I shall then put forward a suggestion for him to consider.

It is perfectly obvious now that we do not know how many ISPs will need to have a box and what the cost will be. The Minister has said that that may not apply to all of them, but that is rather like saying that there will be intercepts only in London and the South East, not elsewhere in England. The system really does not work like that for ISPs; they are all intermingled. I do not see how anyone can know the answer. As the noble Lord, Lord Desai, suggested, they will probably all have to have one at some point or another.

We have heard nothing about what the costs will be and have received very little information. It is not just a matter of the burden of such costs for industry; unless we get this right, the situation will drive business overseas. As a simple example, let us look at the betting industry in this country. At present, the Treasury imposes what the industry considers to be a high tax on betting turnover. In almost an instant, the industry has managed to transfer a large part of its business via data communication lines to Gibraltar, Malta, the Caribbean and various other points across the globe. Such places are completely outside our law and thus no revenue is collected by the Treasury.

If the same analogy were to apply to this case, instead of being able to have the intercepts and thereby stop the pornography available through such services, as the noble Baroness would wish, we should not be able to do anything at all because it would all be based offshore. Therefore, the Government would have shot themselves in the foot because the legislation would not work—

Baroness Thornton

I do not wish to stop pornography. I wish to make sure that the Internet is safe for children. Those who wish to indulge in watching pornography, or whatever, would be able to do so, but I should like to be sure that children—and others we do not wish to have access to such services—are safe.

Viscount Astor

I entirely accept what the noble Baroness said. But if it is to be safe for children, it must be regulated. It will not be regulated if we drive it overseas.

Clause 13(1) says that the Secretary of State, may, if he thinks fit, make such payments". Thereafter, subsection (1)(b) refers to the word "appropriate". We have heard that the Minister cannot tell us what is appropriate because he does not really know. It might amount to a contribution. But will there be a limit on the cost, of, say, the net revenue of a company? What happens if there is a major disagreement between the Government, the Home Office and the industry on what is, and what is not, appropriate? Is there any form of right to arbitration or an appeals system within the Bill relating to this clause?

If we are to rely on this consultation and, indeed, on secondary legislation, it seems to me that the industry may, in effect, have to agree to a blank cheque. I suspect that there is no right of appeal beyond, I suppose, judicial review—governments are fond of saying, "Well, you can always go to judicial review"— but, in reality, we all know that such a process is so expensive, lengthy and time consuming that it often never happens. I am sure that the noble Lord, Lord Phillips, as a lawyer, will back me up on that point. Moreover, judicial review rarely works. People do not have the time or the money to make it work.

If I am right in thinking that there is no form of mechanism that the Government and the industry are going to negotiate, what would be fair for both sides? Will the Government consider some form of mechanism being added to the Bill which will then give some assurance to the industry that it will be treated fairly?

6.45 p.m.

Lord Phillips of Sudbury

I have one comment to add. We agree with Conservative noble Lords about the unsatisfactory nature of the Government's reply to the amendments within the grouping under Clause 13. Is it fair? No, I shall rephrase that: it is fair. Can the Minister tell us in time for an amendment to be tabled and, if necessary, divided upon, just what the Government's broad strategic proposals are vis-á-vis the sharing of costs under this Bill? That seems to me to be entirely proper and right. Will the noble Lord please give a commitment to do so?

Lord Lucas

I entirely support what the noble Lord, Lord Phillips, has just said. The Government have said that they will disclose this information to the industry, so they must disclose it to Parliament. If they are going to open negotiations with the industry and discuss draft secondary legislation, that must involve revealing their position as regards what they believe they will do when faced with the question of who should bear the capital costs.

I have one question to ask and two points to make. Will the Minister let us know before Report the current capital costs of telecommunications interception? The noble Lord made much of the fact that these costs are currently borne by the industry, but how much are they? As far as concerns suggestions about what to do with this clause, as I said previously, it does not fall under anyone's supervision. Might it provide a way forward if we brought the Secretary of State under the supervision of the interception and communications commissioner as regards his reasonableness? Alternatively, if we changed the word "appropriate" to "fair", would the noble Lord consider that to be fair?

Viscount Goschen

I suggest that the mood of the Committee on the matter is very clear in terms of agreement with the noble Lord, Lord Phillips, and the extremely simple and straightforward proposition that he put to the Minister. The Minister must be in a position to come to this Chamber and give, as the noble Lord, Lord Phillips, put it, his overall strategic view on the matter. We are not talking about cutting this down into fine detail; we are talking about how the Government would handle the matter. Without that information, how can noble Lords do anything but fear the worst? Indeed, the noble Lord may even find himself facing an amendment that attracts a good deal of support in the Chamber. That situation could be avoided if the noble Lord were to agree to come forward with more information.

Lord Desai

I do not wish to tackle the problem of the cost and who pays it; indeed, that does not really concern me very much. But I should like clarification on one point. As an economist, I imagine that some ISPs are fitted with intercepting machinery. It would pay any criminal to find out those concerned and then go to other ISPs. So, behaviourally, it would seem to me that you cannot have some people with intercepting equipment and not others. That would actually defeat the purpose of the legislation which is to find out where criminals are sending their messages across. They may currently go to the 10 largest, but, as soon as they are intercepted, the 90 smallest will suddenly become large. That is the logic of the situation. I am worried about that more from the point of view of meeting the purpose of the Bill, rather than on the question of how much it will cost.

I have one further technical point to make. Marginal costs have been mentioned. It will very much depend on whether or not the marginal costs include the depreciation of capital equipment. The fast obsoletion of equipment and not the cost of it may go into those marginal costs. If something becomes obsolete in two years, you could easily write off 50 per cent as a marginal cost. Marginal cost is a very tricky concept, as are many others in economics. When my noble friend enters into negotiations, I hope that he will play a cool game.

Lord Bassam of Brighton

In speaking to Clause 13 stand part, I shall attempt to address the points that have been reasonably and fairly made from all parts of the Chamber. I begin with the issue raised by the noble Viscount, Lord Astor, as to whether there is some form of independent arbitration under the Bill. The noble Viscount is right to suppose that no appeal mechanism is available. However, it is important to point out that there is the possibility of a Secretary of State's decision being judicially reviewed. It is also fair to point out that the Secretary of State can enforce that decision only through the courts. So the Secretary of State has to weigh up such issues most carefully. However, I do not think that that will happen. I repeat that we shall be reasonable and proportionate in considering how costs are apportioned.

I have read Clause 13 and subsection (3) of that clause. I can understand that the Committee does not like the term "appropriate". However, it is a flexible term and has been included for that purpose.

Lord Phillips of Sudbury

I am grateful to the noble Lord for giving way. He provokes my legal instincts. It is rare to hear a Minister of the Crown encouraging the Opposition to beat a hasty retreat to the High Court for a judicial review. I am also astonished that the Minister should hold out any hope of anyone obtaining a remedy in the High Court under Clause 13 of the Bill. The wording is so woolly that I do not think even a shepherd on the hillside would give a remedy. Clause 13(1) states: The Secretary of State may, if he thinks fit, make such payments … as [he] considers … an appropriate contribution". That provision is so heavily weighted in favour of the Minister's virtually uncontrolled discretion that I would not advise any client to pay me money to go anywhere near the High Court for a judicial review, whether it was a question of tuppence ha'penny or £200 million.

Lord Bassam of Brighton

I am disappointed in the noble Lord's lack of confidence and faith in the judicial process.

Lord Cope of Berkeley

It is a question of his faith in the Bill, not in the judicial process.

Lord Bassam of Brighton

That may well be part of it but it seemed to me that the noble Lord rather doubted that any court would give fair consideration to the case brought before it. Knowing the strength of our judicial system, I cannot believe that that would be the case.

Viscount Goschen

I am not a lawyer. I am as far from being a lawyer as it is humanly possible to be. I have listened to the discussion with great interest. However, the Minister must accept that we in this building are making the law which the courts will then interpret. I do not think that he can put the blame onto the courts for the badly worded Bill and say that the courts are no good if you cannot get the right judgment out of them. We have the opportunity in this Chamber at this and subsequent stages of the Bill to rewrite the provisions to make the wording less woolly and to enable the judicial process so beloved of the noble Lord, Lord Phillips, to work properly.

Lord Bassam of Brighton

I live with a lawyer and she always argues that these questions can be subjected to the important test of reasonableness. I intended to be a little more helpful. I ask the Committee to bear with me. I shall be unhelpful initially but I shall be helpful later.

I believe that the noble Lord, Lord Lucas, encouraged me to reveal the capital costs of telephone interceptions that are currently met by PTOs. On consideration I cannot tell him that for two reasons. First, it would compromise the commercial confidentiality of those who are involved. Secondly, from a security point of view, it would become obvious who does not have that capability. Those two points bear careful consideration and thought.

Lord Lucas

Is it not astonishing that the Government can forecast, as exactly as they have, the cost of a system which is as yet unknown and undescribed and yet be totally unable to say what the cost is of a system which is in place and working?

Lord Bassam of Brighton

I did not say that we were incapable of finding out and saying how much that cost might be. However, I said that I thought that we would be ill advised to reveal that. I believe that the PTOs would not wish us to reveal information which is commercially sensitive. That is the point I am trying to drive home. I am sure that the noble Lord will understand that. The noble Lord asked whether we would reconsider the use of the term "appropriate" in the clause. He suggested that we might like to consider using the term "fair". I am happy to give that matter reasonable, fair and appropriate consideration. I am trying to be helpful.

I believe that the noble Lord, Lord Phillips, asked about consultation on the whole issue. We shall need to consider the noble Lord's observations. I shall give careful consideration to his important comments. We shall continue to consult. I believe that that consultation will make a difference. I take seriously the suggestion he made.

Lord Phillips of Sudbury

I am terribly sorry to interrupt again. However, I asked that before the final stage of the Bill the Minister should tell us what the broad strategic parameters are. It is not a question of consultation but of decision by the Government.

Lord Bassam of Brighton

I understand entirely. That is the point I am trying to make. The noble Lord has made a suggestion. I am quite happy to give that fair consideration. If there is merit in it, we shall perhaps outline our strategy in more detail in that regard. We have tried to do that throughout the consultation and we shall continue to do so. I am happy to renew that commitment.

Viscount Astor

The Minister initiated the debate on the clause in so far as the Government could not answer the rather simple question of the noble Lord, Lord Phillips, regarding which recommendations they accept from the Smith report and which they do not accept. That has left the Committee grasping at straws. I hope that the Minister appreciates why we became so concerned over this issue.

There is a slight feeling of déjà vu because the Minister reached the point in his brief headed, "If pressed". I seem to remember that at that point the brief always refers to judicial review. However, we all know that judicial review is incredibly expensive and takes a long time. It is not always effective. Often it is not effective because the judge is not deciding whether someone has a fair case to put to judicial review; he considers the legislation and decides whether the Secretary of State has interpreted it fairly. We argue that the correct provisions should be included in the Bill from the beginning. I am afraid that the argument of judicial review does not gain much favour in this Chamber, even though it contains many distinguished noble and learned Lords. What is important is what is in the Bill.

Te Minister then reached that point in his brief headed, "If very seriously pressed". I am delighted that he made some concession in being willing to consider in a fair and appropriate way whether the term "appropriate" is preferable to the term "fair". However, the Minister should recognise that Members on all sides of the Committee are unhappy with Clause 13 as it stands. Unless the Government are able to clarify their thinking and clarify the meaning of the terms "fair" and "appropriate" and say which term should be used, some mechanism will have to be included in the Bill to ensure that everyone is treated fairly in future. I hope that the Minister will consider these issues seriously—I am sure he will—between now and the next stage of the Bill.

Clause 13 agreed to.

Clause 14 [General safeguards]:

[Amendment No. 57A not moved.]

Lord Cope of Berkeley moved Amendment No. 58: Page 15, line 32, after ("necessary") insert ("to keep confidential all the information in the intercepted material and any communications data and in particular").

The noble Lord said: We come to a different subject; namely, the importance of confidentiality. Earlier, I pointed out to the Committee that an awful lot of information, intercepted information and communications data will reach the hands of the authorities. Some of that information will be covered by warrants, but much of it will not. Much of it will be of a highly confidential nature. Amendment No. 58 attempts to put an overall duty on the Secretary of State to make sure that information is kept secure. I do not need to emphasise the importance of this. We have already discussed it in other contexts.

Amendment No. 59 also stands in my name. It inserts the words "and only if' in line 39 on page 15. In subsections (2) and (3), which are the teeth of this clause, certain requirements are set down. If they are fulfilled, then confidentiality is reckoned to have been sufficiently carried out. What the Bill does not say is that if these fairly basic requirements are not fulfilled, there is a failure of confidentiality. By inserting the words "and only if' in Amendments Nos. 59 and 61, I hope to strengthen the safeguards in subsection (2)(a), (b), (c) and (d), and later in subsection (3), and say that if they are not carried out it is clear that confidentiality has not been respected. There are various other amendments, all on a similar theme, mostly moved by other noble Lords. I beg to move.

7 p.m.

The Earl of Northesk

Amendments Nos. 61A and 61B are in this group and it may be convenient to the Committee if I take this opportunity to speak to them now.

I want to focus on the way in which the Internet operates. As has been made abundantly plain in our debates on the Bill thus far, it is a packet-switching system. I do not need to dwell on a detailed explanation of that. As my noble friend Lord Cope has explained, the consequence will be that a fair amount of communications data could be intercepted which will not be relevant for the purposes for which the authority to intercept was granted. That is the first point.

Irrespective of whether intercepted communications data are legitimate, the Bill is explicit that where there are no longer any grounds for retaining it as necessary for the authorised purposes, it should be destroyed. I am content with that. However, the difficulty is that, in either case, it is stated that only the copy should be destroyed. There is no mention of the original from which any copies may have been made.

I am, of course, conscious of subsection (7), where "copy" is defined for the purpose of the clause, but I am not convinced that this fully meets the point. The Minister will note that in the amendment I have retained paragraph 4(e) as a qualification on destruction of any intercepted communications data. I can see that there may be a statutory justification for this, although I await with interest the Minster's response to Amendment No. 62A on that point.

With regard to Amendment No. 61B, I am sure that the Committee will be aware of quite how difficult it is to destroy a file that is stored on a computer's hard disk. Even though one can delete it from within a software programme, the way in which it is stored on the hard disk via partition, clusters, and so on, means that it continues to be freely accessible to those with the skill and expertise to dig it out. To an extent, it is on this basis that forensic hacking is such a powerful aid to the forces of law enforcement. As a result, and particularly in the context of communications data, the Bill should be explicit in offering adequate protection to the law-abiding citizen that data which has been inadvertently or erroneously intercepted or, as it were, data which is past its sell-by date, really has been properly destroyed.

Lord Phillips of Sudbury

I speak to Amendments Nos. 59A and 62A standing in my name. It is common ground that Clause 14 is an absolutely crucial and central clause. It provides the general safeguards according to which the whole of the regime must be undertaken.

Amendment No. 59A deals with what seems to us to be a lacuna in the arrangements set out in Clause 14. Although there is a reference to the destruction of intercepted material and related communication, there does not seem to be any reference to the storage of the confidential information gathered under this Bill. Amendment No. 59A addresses the issue that proper storage must be one of the requirements under subsection (2), susceptible therefore of the overview of the interceptions of communications commissioner. We believe that that is quite essential.

Amendment No. 62A is in the nature of a probing amendment. It seeks to ascertain from the Government what proposals they intend to put in place to keep confidential information in public records. We are anxious to know, as I am sure the whole House is, whether full copies of warrants will be retained, together with their schedules and certificates, when and if they will be destroyed, how much detail will be recorded about the volume and nature of the material intercepted, and indeed the consequences of such interception.

One has to bear in mind that the volume of information which will come within the purview of this Bill is rising exponentially. The debate in the other place referred to the fact that daily there are over 100 million e-mail messages now traversing the wires, although I cannot even say that now. Those are huge numbers and growing. We are, therefore, anxious to know whether the Government have thought sufficiently carefully about how this rising tide of confidential information, which will be particularly intercepted under the sort of trawling certificates allowed by Clause 8 of the Bill, will be confidentially logged and secured.

Finally, Amendment No. 62A is designed to draw from the Government what plans they have vis-à-vis the historic archive of all this information—an archive which will allow those who have proper access to it the ability to analyse and appraise policy in order to refine the way in which this information is dealt with in the future.

Lord Lucas

Amendment No. 60 is in this group. It is a probing amendment to discover what the Government have to say on the subject.

Lord Bach

Before dealing with the amendments I first make the general point, already made in passing by the noble Lord, Lord Phillips of Sudbury, that the safeguards provided for material in Clauses 14 and 15 are extremely important. Not only are they extremely important, but I would argue that they are very tightly drawn indeed. I would go so far as to say—and this is a dangerous assumption—that it is unlikely that anyone would find elsewhere on the statute book such stringent requirements for data acquired by the state. This is not meant to be some sort of boast. The protection of intercept material requires no less than the highest protection available. But I hope that it will be acknowledged by the Committee that these are very stringent tests. It may address some of the rather over-the-top, hysterical suggestions that have been made about this Bill in the past few weeks—not, I hasten to add, in this Committee. I make those preliminary comments so that my subsequent comments on the amendments are put into a clear context.

I start with Amendment No. 58, which alters the current drafting so that the Secretary of State must make arrangements to ensure that intercepted material and communications data is kept confidential. We cannot see what this amendment adds to the provisions that we have already made to safeguard the uses to which this material may be put. We already state that the number of persons to whom the data can be disclosed, the extent to which the data can be disclosed or made available, the extent to which any data can be copied, and the number of copies which can be made are all limited to the minimum that is necessary for the authorised purposes set out in subsection (4). I would say much the same to the noble Lord, Lord Lucas, who has tabled Amendment No. 60—he spoke to it in a remarkably brief and welcome way—with the same intention; that is, to place strict limitations on the uses to which information obtained by means of a warrant can be put. We consider that the safeguards we have put in place should be sufficient to meet the real concerns of noble Lords. The Bill states that any intercepted material or data are destroyed as soon as there are no longer grounds for retaining them for any of the authorised purposes.

These provisions clearly place the limitations the noble Lord requires on the uses to which intercepted material or communications data can be put, and we emphasise that those limitations are subject to the authorised purposes.

Turning to Amendment No. 59A, we understand the intention behind it and we concur with that intention. However, we believe that the intention of the noble Lord, Lord Phillips of Sudbury, is met already by the requirements listed in the existing subsection. First, the number of persons to whom any of the material or data are disclosed or otherwise made available must be limited to the minimum necessary. This means, for example, that material is withheld even from fully-vetted staff in the interception agencies where they have no need to know. The noble Lord ma de a comment about storage; we believe that the extent to which material is made available is implicit in Clause 14(2)(b) and that the Secretary of State's arrangements will guarantee safe storage.

Secondly, the extent to which any of the material or data are disclosed or otherwise made available must be limited to the minimum necessary. This involves the highest levels of physical, technical and personnel security. Intercept material is among the most sensitive categories of classified material and is handled accordingly. The code of practice on interception, a draft of which will be available shortly, will contain further details of the safeguards to be applied, including specific mention of technical security.

Amendments Nos. 59 and 61 add the term "and only if" to our use of the word "if" in subsections (2) and (3) of Clause 14. With great respect, we do not see the necessity for these amendments. Subsection (1) of Clause 14 states that the requirements in subsection (2) must be satisfied; and subsection (2) specifies precisely what are those requirements. Only when each of the requirements of subsection (2) are met is the Secretary of State's duty in relation to this discharged.

Subsections (3) and (4) are different. Subsection (3) essentially provides that intercepted material must be destroyed when no longer necessary for any of the authorised purposes. Subsection (4) describes the authorised purposes, but then the extra "and only if", which is to be found in that subsection at line 9, makes it clear that there are no other authorised purposes.

As regards Amendment No. 61A, subsection (3) of Clause 14 reproduces the essence of Section 6(3) of the current Interception of Communications Act, a section which we believe has worked well over the years. The subsection requires that all copies are destroyed as soon as it is no longer necessary to retain them. This includes the initial recording or transcript made of the material or data—to which I believe the words "the original" in the noble Earl's amendment refers. Any recording of any kind produces only a copy.

So far as concerns postal interception, the postal item clearly constitutes the original material. No intercepted postal items are retained by any intercepting agency. Copies may be made but the original is put back into the postal system as quickly as possible. An interception warrant does not constitute an authority to retain or destroy a postal item.

The Earl of Northesk

Before the Minister leaves that point, can he explain how communications data will be treated, which is the point at issue?

Lord Bach

I think I have dealt with that in the reply I have given to the noble Earl.

We believe that Amendment No. 61B, which seeks to qualify the requirement that intercept material be destroyed with the additional requirement that it be destroyed in an appropriate way, would make little difference in practice. All intercept material currently intercepted under the 1985 Act is covered by Section 6 of that Act, which requires that each copy made is destroyed as soon as its retention is no longer necessary under Section 2(2). In practice that requirement—which is replicated almost word for word by subsection (3) of the Bill before us—is taken very seriously by the intercepting agencies. Material is destroyed in such a way as to ensure that there is no question of any further access to it.

The question of destruction is one in which the Interception Commissioner—now Lord Justice Thomas—has always taken a keen interest. If the committee will forgive me, I shall quote a part of the first report of the noble and learned Lord, Lord Lloyd, where he refers to the practice of Her Majesty's Customs and Excise at the time when he was the Interception Commissioner. The report stated: If the conversation appears to be relevant. he"— that is, the Customs officer— makes a note of the gist of the conversation, together with the time. If it is very important. he may make a verbatim note and check his note against the tape. The tape is made available by I3T. He will also listen to tapes of communications intercepted during the preceding night, or at any time when his desk has been empty. The tapes are always returned to BT, usually within 24 hours, and are erased at once. The officer who has listened to the conversation communicates by direct telephone line with the officer in charge of the operation, who makes such use of the intelligence as he needs. No note or copy of the intercepted conversation comes into existence, other than the original record made by the listening officer. That record is destroyed, by shredding. within a year". I have quoted that example at some length to illustrate the care to which the intercepting agencies go to ensure that the spirit as well as the letter of the law is observed. Commissioners have continued to express themselves satisfied with the safeguards arrangements in successive reports.

Amendment No. 62A seeks to prohibit the retention of any copies of intercepted material or communications data despite a requirement in either of the Public Records Acts that they be retained. Section 3 of the Public Records Act 1958 provides a power to select any records in government departments for permanent preservation. Although in practice the proportion selected is very small, some official records of interception and other forms of intrusive surveillance are, by their nature, clear potential candidates for selection and eventual public access. It is for this reason that, for example, Sections 2 and 4 and Schedule 4 to the Intelligence Services Act 1994 provide for the retention of material where the Public Records Act requires it.

I wish to make a further three short points on this issue. First, the PRO specifically asked for this provision to be included; secondly, it is in line with the Government's approach to the repeal of statutory bars on disclosure currently being carried forward by the Freedom of Information Bill; and, thirdly. I want to emphasise that this provision does not provide a loophole for intercepting agencies to have permanent access to material. Any copies retained for public record purposes are stored under the strict conditions agreed between intercepting agencies and the Lord Chancellor's Department. These conditions are designed to ensure that the agencies do not have access to them in the normal course of duty.

Turning finally to the question of the noble Earl, Lord Northesk, in regard to how communications data will be dealt with and whether there are any arrangements for it under the Bill, communications data obtained under Chapter II of Part I are not covered by Clause 14. The phrase used in Clause 14(1)(a) refers to, intercepted material and any related communications data". Communications data as such are not dealt with in this clause.

But the retention of those data, which is evidential—we shall debate this important matter in due course—unlike intercept material, is governed by the codes of practice under the Criminal Procedure and Investigations Act 1996 and, more generally, by the Data Protection Act 1998, which the noble Earl knows well. I hope that this provides a rather fuller answer for the noble Lord.

I have taken some time in responding to this series of amendments. The Government realise that Clauses 14 and 15 are important because they deal with the safeguards that the public wants to see for the unusual steps that are required here. Members of the Committee have not denied that such steps are necessary in order to secure the safety of the state and to ensure protection against serious crime. Safeguards form a very important part of this package. Having listened to my explanations, I hope that the noble Lord will consider withdrawing his amendment.

Lord Cope of Berkeley

Before I withdraw my amendment, the Minister said that the code of practice would be available shortly. Does that mean that it will be available before we reach the Report stage? I think that it is important to establish whether we shall be able to see the code before the next stage of the Bill.

Lord Bach

So far as I understand, the answer to the noble Lord's question is yes.

Lord Cope of Berkeley

The noble Lord's slightly lengthy response to these amendments has been helpful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Northesk moved Amendment No. 58A: Page 15, line 38. at beginning insert ("Subject to the relevant provisions of Schedule 1 to the Data Protection Act 1984 (as appropriate),"). The noble Earl said: I beg to move Amendment No. 58A and to speak at the same time to Amendment No. 60A.

The Minister will recall that I raised this matter in the debate on Second Reading, when he was kind enough to allude to my somewhat dubious knowledge of the Data Protection Act. The Government are adamant in their insistence that it is not their intention that the interception regime should interfere with a citizen's established human rights. Equally, it is maintained that there is nothing on the face of the Bill that would comprise such interference. But the Bill could be interpreted to mean that, notwithstanding the various exemptions, the uses to which communications data, together with the scope of their definition, are in breach of the data protection principles. In particular, it is my view—albeit that I am not a lawyer—that it could fall foul of the principle that: Personal data shall be held only for one or more specified and lawful purposes". and shall not be further processed, in any manner incompatible with that purpose or those purposes". Furthermore, Personal data shall be adequate, relevant and not excessive in relation to that purpose or purposes", for which they are processed. In so far as these may be in breach of the data protection principles, this is a ludicrous position that will undermine public trust in the regime.

In my view, it is not unreasonable that the Bill should state that the interception regime should be expressly and fully compliant with the data protection principles as set out in Schedule 1 to that Act. Perhaps the Minister will argue that that is already set down in statute and therefore the imposition of such a requirement is unnecessary. This Bill is already bound by the requirement to comply with that Act. However, I do not necessarily share that view. Its terms are such as to bring such compliance into question. Aside from that, since the implementation of the Data Protection Act, a number of abuses of the data protection regime have been identified and prosecuted.

That being so, and given the complexity of the whole area, it is my belief that there should be no ambivalence here. If we are to strike the right balance between the needs of the interception regime and the rights of ordinary law-abiding citizens to privacy and freedom of expression, it is essential that they can trust absolutely that those rights are adequately protected; that is to say, that they can rely on a presumption that the data protection principles will apply. I beg to move.

Lord Bach

Perhaps I may deal with the amendment fairly briefly.

Lord Phillips of Sudbury

I apologise to the noble Lord. I do not think that either Amendments Nos. 59A or 62A were referred to during the previous response.

Lord Bach

We have not yet reached them on the groupings list.

Lord Phillips of Sudbury

Is the noble Lord dealing with new amendments?

Lord Bach

I am dealing with the amendments as they appear in their groups and then in numerical order. Amendment No. 58A has been moved by the noble Earl, Lord Northesk, and it is to that amendment that I shall now respond. The noble Lord will be able to move Amendments Nos. 59A and 62 in a short while.

Perhaps I may return to Amendments Nos. 58A and 60A. The amendments seek to restrict the extent to which the intercepted material and communications data may be shared between government agencies. We believe that the law enforcement, security and intelligence agencies are already subject to restrictions on the degree to which they may share data either under the provisions of the Data Protection Act or under the statutory restrictions placed by the Security Service Act 1989 and the Intelligence Services Act 1994.

From October of this year—Members of the Committee will appreciate that this point is not unimportant—they will also have additional restrictions imposed by the Human Rights Act. They will then need also to consider questions of necessity and proportionality before interfering with a person's privacy. I hope that that explanation meets with the approval of the noble Earl.

The Earl of Northesk

I thank the Minister for that reply. As I said when I spoke to the amendment, my main purpose in moving it was to reduce any ambivalence. I shall read carefully what the Minister has said, but I am sure that he has satisfied me in that purpose. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 59 not moved.]

Lord Phillips of Sudbury

I should like to make one or two remarks on the helpful explanation given by the Minister as to why the Government will not accept this amendment.

Lord Bach

I hope the noble Lord will forgive me for intervening. The rules of the Committee state that the noble Lord must first move Amendment No. 59A and then withdraw it, unless he seeks to take it to a vote. I say this only by way of helpful advice. If I am wrong about procedure here, I shall be happy to be corrected.

Lord Phillips of Sudbury moved Amendment No. 59A. Page 16, line 1, at end insert— ("( ) appropriate technical security arrangements which ensure that the risk of unauthorised disclosure,").

The noble Lord said: In this 92-page Bill, I think it would be fair to say that the four key functions of the measure are, first, how to acquire confidential information; secondly, how to use it; thirdly, how to store and safeguard it; and, fourthly, how to destroy it. Given that, I feel that it is not satisfactory for the Government to declare that the issue of storage and the safeguarding of confidential information under the Bill can be dealt with by way of an implication in Clause 14(2)(b).

Aside from that, Clause 14(2)(b) does not cover circumstances where material is stolen. It refers only to, the extent to which any material or data is disclosed or otherwise made available".

I believe that the Minister will agree that one is not dealing with a disclosure or the act of making available confidential data by the Secretary of State or the Government when it is stolen, purloined or otherwise misused.

As I have said, it seems wholly disproportionate that such a crucial element of the Bill should be left to an implication that I do not in fact believe can be carried by this subsection. Perhaps the Minister could look again at this exchange.

I accept that Amendment No. 59A may be placed a little clumsily in the groupings order. It could be dealt with more naturally as an adjunct to subsection (3) of Clause 14. I beg to move.

Lord Bach

I shall of course read the report of this exchange and look at the matter again. In the meantime, I invite the noble Lord to withdraw his amendment.

Lord Phillips of Sudbury

I shall be happy to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 60 to 61B not moved.]

Lord Bach moved Amendment No. 61C: Page 16, line 15. leave out ("Chapter") and insert "Part").

The noble Lord said: I hope that we can deal briefly with this amendment. The noble Lord, Lord Cope, will, I hope, be pleased to hear that we have considerable sympathy with the intention of his Amendment No. 62, which includes retaining communications data as well as intercept material as one of the authorised purposes if it is necessary for the carrying out of the functions of the interception commissioner or tribunal. For the sake of consistency with the rest of the Bill, we should prefer to use the phrase, "this Part", as will be the case with our amendment, rather than "Chapter" and "Chapter II" which appear in the noble Lord's amendment; hence the Government have tabled this amendment, with thanks to the noble Lord, Lord Cope. I beg to move.

Lord Cope of Berkeley

As has become clear, the two amendments have an identical purpose and the Government's is better drafted. I support it.

On Question, amendment agreed to.

[Amendments Nos. 62 and 62A not moved.]

7.30 p.m.

Lord Phillips of Sudbury moved Amendment No. 63: Page 17, line 9, at end insert— ("( ) The Secretary of State shall as soon as possible after the interception notify the person or persons whose communications were intercepted of the dates and duration of that interception unless the Secretary of State is satisfied that it is in the public interest not to do so; and the Secretary of State shall have a duty to review regularly any decision of his not to so notify, and to notify as soon as it is no longer in the public interest not to do so.").

The noble Lord said: The purpose of this amendment is, I hope, relatively plain from the wording. It seeks to ensure that those who are subject to interception are notified of the fact, subject to the public interest right of the Secretary of State to refuse to do so, which is expressed in generous terms; namely, that the Secretary of State is satisfied that it is in the public interest not to do so.

We accept that the notion that notification of intercepts should be given to the subject of such an intercept is rather alarming. It may well be thought—this, indeed, may be the case—that a considerable amount of extra work will be involved on the part of the agencies and individuals concerned. None the less, we submit that the amendment is well worth consideration by the Government, despite the bureaucratic consequences, despite the fact that the police are anxious about this idea, and despite the fact that since the Birkett report of 1957, which followed the Marinnan case, the present regime has apparently worked reasonably well without this right of notification.

Our feeling is that we are in a new age. This is not the age of the good Lord Birkett; it is a very different one. It is an age when freedom of information and transparency are two of the most powerful concepts. They meet a general public need to feel that the increasingly powerful organs of the state are working as they should work and in the interest of the citizen.

It is common ground that the Bill gives tremendous powers and discretions to the state and the agencies covered by it. As we have said many times, great potential evils can be met only by great potential powers; but so too, those powers must be counterbalanced by commensurate protections. In our view, there is no more forceful protection to ensure the smooth, effective and lawful workings of this panoply of powers than the requirement in this amendment; namely, that of notification.

Unless there is notification, it is extremely hard to see how the citizen will be able to assess whether what is done covertly in his or her name is properly done. It will be difficult, too, for the intercept commissioner to do his or her job effectively. I beg to move.

Viscount Astor

The amendment causes us some concern on this side of the House. If you are to intercept someone, albeit for valid reasons—some of those reasons may be right, some may be wrong, but the intention behind them will be valid—you really do not want the person to know that you are doing it. Therefore, even with the safeguard suggested by the noble Lord, Lord Phillips, the amendment does not seem to make any sense. It would be a cumbersome duty to place on the Secretary of State without adding any real defence for the innocent and it would possibly allow those with criminal intent to discover that they were being intercepted.

Lord Bach

We understand the intention behind the amendment. However, we believe that the provisions in the Bill already provide a robust system and package of safeguards for the privacy of the individual. A number of reasons lead me to say that we shall have to resist the amendment if it is pressed.

The first and obvious reason is that the individual does have recourse to the tribunal. Were he to make an application to the tribunal and were the tribunal to find that the provisions of the Act had not been followed correctly, he would be informed of the tribunal findings by virtue of Clause 60(4) and rules made under Clause 61(2)(i). Not only that, but the tribunal will have the power to provide a variety of remedies as set out in Clause 59(6).

Lord Phillips of Sudbury

How will anyone know, in order to make an application to the tribunal, if there is no notification?

Lord Bach

If the noble Lord will be patient with me for a moment, I shall come to that. These include an order quashing or cancelling any warrant or authorisation and an order requiring the destruction of any records for information in relation to that person. These remedies are on top of the power to make an award of compensation or other order as the tribunal thinks fit. So there is undoubtedly an avenue for the individual to seek redress; and the avenue will be made much more simple and more accessible under the provisions of the Bill. So, from the point of view of reassuring the public at large, and Parliament in particular, on the use of the powers in question, we believe that the existing regime has a good story to tell. These contraventions are already published in reports laid before Parliament by the Prime Minister.

This narrows down the area addressed by this amendment to those individuals who are unaware that they have been the subject of interception. So they are not in a position to make a complaint to the tribunal. The first point I would make is that a person can make a complaint even if he or she does not know about but merely suspects interception—and, unless it is frivolous, it will be investigated. This is a significant development and an improvement in this Bill and explicitly recognises the judgment of the ECHR in the case of Lambert v. France.

It is worth pausing to note the significant improvement in this Bill. Under the 1985 legislation, the tribunal could consider a complaint from me only if my telephone was the subject of an interception warrant. Under this Bill, the tribunal will also consider a complaint from me if I have telephoned someone whose phone is the subject of a warrant. We believe that this is a significant extra protection for civil liberty which should not go unremarked, particularly in the light of some of the comments made in the past few weeks.

For those whose phones have been intercepted and who are unaware of it, where the procedures were not applied properly the interception commissioner will report these instances to the Prime Minister and will discuss them in his published report. These are the reasons why we do not believe that the amendment is required. There is a further reason why, even if we were convinced of the need, we should not want to accept it—it is not a million miles away from what the noble Viscount, Lord Astor, said a few minutes ago.

The nature of investigations is such that we can simply not be sure that there is any time, even significantly after the event, at which it will be safe to inform people that they have been the subject of surveillance. We appreciate that the amendment has a proviso and makes an exception where it is not in the public interest to do so. But when will that time come?

We are particularly concerned to minimise the opportunity for educating criminals and terrorists as to the capability of law enforcement and security agencies. If we begin routinely, or even exceptionally, informing subjects of interception after a period of time, undoubtedly we shall systematically add to the public knowledge of the modes and methods of communication that it is possible to intercept. The same argument lies behind Clause 16, to which delights we must turn after the debate on the Unstarred Question. We must protect the extremely valuable intelligence that arises from interception. We have all heard the results in terms of drugs seized. We must be very cautious about any proposal that risks undermining the effectiveness of this tool. We believe that this amendment runs that risk, and we invite the noble Lord to consider his response.

Lord Phillips of Sudbury

I am grateful for the Minister's reply. I inform Members of the Committee, if they are not already aware of it, that, as I understand it, in both Germany and the United States there is a notification procedure akin to this proposal. I am also informed that, as to the utility of the tribunal, under the Interception of Communications Act 1985 about 600 complaints have been made. Of that number only eight were investigated because in only those cases was a warrant in force and thus was it possible for the tribunal to act. I do not accept the Minister's argument that the provisions relating to the tribunal adequately address the evil that this amendment seeks to eradicate. Rather than talk in terms of "evil" and "eradication", the powerful effect of this Bill will be enhanced by a provision of this kind. However, at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14, as amended, agreed to.

Baroness Farrington of Ribbleton

I beg to move that the House be resumed. In moving this Motion I suggest that the Committee stage on the Bill begin again not before 8.45 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.