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7.15 pm

Will the Minister confirm that IPSs--almost above all else--do not want the provision to be discriminatory? It should not create competitive advantages for one ISP over another. Will he confirm that active interception--as identified by the Smith Group--is a limited and cheap option? Would he be prepared to limit his ambitions to that? Will he confirm that the Smith Group has recommended that the Government should meet initial investment costs? Does he agree with that? Does the Minister agree with the cost estimate of the Foundation for Information Policy Research that ISPs will be required to pay more than £30 million?

In Committee, the Minister said that ISPs would not support the idea of a technical approval board. I replied that I would consult on that point. The advantage of such a board is that it would be an independent body that understood the issues. I do not know whether the Minister claims to understand that fully. He nods--he does understand. I admit that there comes a point when the technical difficulty is beyond me. Does the Minister agree that the advantage of a technical approval board is that it would be independent? It would consider the Minister's proposal for companies and would be able to decide whether the proposal was technically sensible; whether it was proportionate to the purpose and--in the case of a small ISP--whether it would put the ISP out of business. The board would provide an element of independent scrutiny. After all, the Government are not expert in technical matters, as every computer project over the past 10 years has shown--there has not been a successful Government computer project for a long time.

Governments are not technically proficient in such matters. An independent body could at least offer companies a review from technical experts. I said that I would consult on that matter. The Minister said that the Government would not welcome a scheme that allowed a quango to give technically sensitive information to competitors and that it would not be right to share such information. However, in a letter, he had previously told me that the only way that the Government could reduce costs would be by sharing expertise across the community.

The Minister might be interested to learn that the Federation of the Electronics Industry stated that

The London Internet Exchange stated:

Numerous other bodies have told us that no one is against the measure. Will the Minister reconsider the matter? He has thought again about many of the issues. What is wrong with appointing an independent body to consider the matter? He will have to appoint technical experts. If his statements in Committee are correct, he will have to consult on the measure. Why not do so in the way that the industry wants? Why dig in?

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New clause 4 would also build confidence. It would require the Secretary of State to

New clause 6 would give a right of appeal. That would ensure a level playing field between ISPs, so that if one seemed to be favoured over another for compensation, there would be some redress.

It is welcome that the Government are responding to amendment No. 7, which provides that the generic requirements--the general terms to be applied to ISPs--would be subject to the affirmative resolution procedure. We are pleased that they have conceded that point in Government amendments Nos. 24 and 28.

The issue is not only about whether the Government's proposal is technically feasible--the Smith report expressed concern about whether it would be feasible to apply it to all ISPs and suggested that it would not be--but about the question of money. We are pleased that the Government have listened to the suggestions that were made in Committee. They are now prepared to respond to our amendment No. 13--Government amendment No. 25 acknowledges our point--which requires that they "shall" make a fair contribution to the industry. Amendments Nos. 17 and 19 are consequential on the acceptance of the idea of a technical approval board.

The industry is obviously worried that the Government's proposal might be burdensome, especially as circumstances change with new technologies coming on stream. The Government's requirements today might not be their requirements in the future. There is evidence that companies are already responding to the proposal by moving, or by considering moving, offshore. We have built a marvellous new industry in information technology that does this country proud and it provides a future for young people in a new economy, as the Prime Minister would describe it. Therefore, it would be a tragedy to turn our back on that by being stubborn about something as sensible and well supported as a technical approval board.

I hope that the Minister will take our suggestion more seriously than he did in Committee, where he described it as an expensive quango. He will have to do the work anyway. No extra cost will be involved--a point that the London Internet Exchange makes in its correspondence with me. A board would be nothing new; everyone expected one. Therefore, the industry says, "Come on Minister. Let us see a little more reasonableness and the colour of your money."

Mr. Simon Hughes: Again, there is broad consensus among Opposition Members. It only remains for the Minister to sign up and we will be all aboard together. The industry and the people who made representations to us will be happy. The House will be happy, we will be able to move on to the next group of amendments and the Minister will be able to chalk up another success.

As the hon. Member for North-East Hertfordshire (Mr. Heald) said, the Government have already made two welcome concessions in this group of amendments. Government amendment No. 24 clearly accepts the principle of amendment No. 7, which was tabled by Conservative Members but which Liberal Democrats support. Government amendment No. 25 responds to points made in Committee, particularly by my hon. Friend

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the Member for Sheffield, Hallam (Mr. Allan), and it sensibly uses the wording in clauses 23 and 48 on the reimbursement of costs and seeks to apply it to clause 13.

All the new clauses and amendments in the group that were tabled by Conservative Members are eminently sensible given the provisions in clauses 12 and 13. Clause 12 is the substantive clause, under which the Secretary of State can order those who provide postal services or public telecommunications services, or who propose to do so, to comply with interception warrants, and we anticipate that clause 13 will provide grants to meet the costs of that. It is sensible that the additional costs should be paid for as part of the system of getting our commercial sector into a position in which it can comply with the law. It wants to do that, and there has been a positive response to the suggestions made.

We support the practical proposals in new clauses 2, 4 and 6 and in amendments Nos. 7, 8, 19, 9, 13, 10 and 11. There was considerable debate in Committee on how we would meet the concerns of industry. It is sensible to create a body such as a technical approval board, so that discussions can take place and agreement can be reached with industry. In Committee, the Minister suggested that the Government would try to reach agreement with the private sector and that they intended to proceed by consensus. That approach would be better secured by making it clear in the Bill.

There needs to be an appeals system and we are grateful for the fact that the Government appear to have conceded the point that orders must be laid before both Houses and approved after a debate on them. That will give us the opportunity to ensure that the Government get it right, which is always an additional incentive. The proposals for a certificate of technical approval and for a review are sensible, as is the definition proposed.

I welcome Government amendment No. 25 because it will ensure that the Secretary of State has the power to consider what payment is appropriate. The defect is that clause 13 contains a "may" and not a "shall" provision, and amendment No. 13 would cover that point.

Two issues relate to compliance. The first is how those in the telecommunications world comply with the provisions and the second is the need to ensure that they have the technical ability to do so. It is no good to produce a scheme that is not technically feasible, so I hope that the Government will be positive about the principles in the amendments and new clauses, which have our broad support, even if they quibble with their wording.

Liberal Democrats did not lead on this issue in Committee and we are happy that Conservative Members continue to lead on it. However, we broadly accept their arguments and people outside the House have been very positive about them.

Mr. David Ruffley (Bury St. Edmunds): Clause 12 is inadequate without the benefit of the amendments tabled by my right hon. and hon. Friends. It will provide no proper means for service providers to affect or to challenge notices served on them under the Bill. If the clause is accepted unamended, the United Kingdom industry will be subject to a regime unlike that imposed in any other developed industrialised economy.

I shall address my remarks to new clauses 2 and 4. As my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) pointed out, the industry

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believes that investors in this country will be deterred by the obligations set out in clause 12. In particular, potential investors will face technical implementation costs that are unquantified and unquantifiable. The industry's view is that those costs will constrain technical solutions and the development of technology, and that uncertainties will directly discourage investment in this country.

The Government have a way out. They can agree to the amendments and to new clause 2, which is key because it would set up a technical approval board. One does not have to look far to see the reasons for the new clause. We should all accept--as the Minister did in Committee, I believe--that technology, especially internet technology, is moving rapidly. There is no analogy between intercept regimes for fixed-line and circuit-switched operating technology, like telephony, and the new world of the internet in which service providers must operate.

It is vital that the technical requirements that authorities impose on service providers under the clause are reasonable. We contend that technical requirements will be reasonable and proportionate only if the industry provides genuine technical input to determine what the reasonable requirements of service providers are in relation to the capabilities defined in clause 12.

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