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7.30 pm

With the greatest respect, the Government have not been awfully good on the quantification of costs, which is the subject of new clause 4. They have not shed much light on the real cost to small, medium-sized and large companies in this sector. The technical advisory board that would be set up if new clause 2 were accepted would give the industry and the Government much-needed information and a proper quantification of the costs to UK industry. That would enable Ministers to decide what is a reasonable technical requirement under the clause.

My hon. Friend the Member for North-East Hertfordshire has rehearsed the arguments on that, so I will not develop them. I had the privilege of serving on the Committee considering the Bill, and I merely wish to register concern on behalf of the many operators who have contacted me and who have reiterated such anxieties since the Committee proceedings. I urge the Minister, who was diligent in Committee, and is also reasonable and exceedingly courteous, to give us further explanation, if possible, as to why the Government find a technical advisory board so objectionable--or, indeed, to say why it is otiose, irrelevant, unnecessary or redundant. Whatever words he chooses, will he explain why the board is, if not objectionable, unnecessary? If it is, why do so many operators take the contrary view and support our amendment?

I shall quickly rehearse an explanation of the regime that a technical approval board would put in place. There would be six representatives from the industry, who would be likely to be subject to the technical obligations under this clause; there would also be, as new clause 2 states,

which, typically, means the regulator.

New clause 2 should be accepted because it would result in the Secretary of State having his or her feet held to the fire in relation to determining what is reasonable under clause 12(1). The Minister intended to satisfy us

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with an assurance that he would consult. However, the consultation requirement of which he spoke in Committee is not in the Bill; it does not appear in clause 12 or anywhere else in relation to the obligations under that clause. That is not good enough.

The new technologies coming on line will result in Ministers imposing obligations, but, as has been said, without the benefit of our amendment, there is no proper guarantee that those obligations will be technically competent or proportionate. Let me pre-empt the Minister by suggesting that he will say that the technical approval board would be another quango, and will then ask how much it would cost. We have already heard the answer to that: it should cost nothing, and indeed, might save the Government money.

In the fast-moving world of the future, the Secretary of State or his successor will have to ask his civil servants for detailed technical advice before deciding what a reasonable obligation is and whether to impose it. With the greatest respect to civil servants in Whitehall, the technical advice that they are able to give the Secretary of State will not be as good as the advice that players in the industry can give him. People who are running businesses that require them to be on top of the subject, day in, day out, have technical ability and expertise that must be far in advance of what civil servants have at their command. No matter how technically brilliant such civil servants may be, they will never be as good as the players in the industry running businesses, who know the subject inside out.

Such individuals would be on our board, and would give advice to the Secretary of State at a minimal cost--lower than the costs that he would incur by having civil servants trained up to give technical advice of comparable quality. We made that point in Committee, but the Minister did not, I fear, give an adequate response to it. I trust that he will give a slightly better answer in this debate, and that it will involve his acceding to new clause 2.

I turn now to costs--the subject of new clause 4, which would oblige the Government to produce an annual report for Parliament, detailing grants made to compensate operators who have had to comply with the technical capability requirements in clause 12. That involves a big problem, to which the Government are alive, as they talk at great length about the need to cut regulatory and cost burdens on small and medium-sized enterprises in this country. There are units in the Cabinet Office that seem to do little else but talk about that important subject. In this debate, the Minister has an opportunity to put his money where his mouth is and deliver a Bill that reduces--or at least does not increase--the costs and regulatory burden on small businesses in the sector that it covers.

As has been hinted, and as was discussed at great length in Committee, the costs imposed by clause 12--which are the subject of a compensatory grants system in clause 13, to which new clause 4 relates--are not one-off costs. Continuing costs will be imposed on the providers who are under such obligations, relating to the cost of software, hardware, extra staff and their training, the time that must be spent talking to law enforcement agencies, month after

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month, year after year, not to mention the legal advice that such companies must seek to ensure that they are complying with the legislation.

Clause 13 is a permissive measure, allowing the Secretary of State to make contributions in the form of grants for costs incurred by providers, but not requiring him to make such grants. Other amendments in this group deal with that concern.

I shall finish by raising a serious concern about the basis on which the Minister has argued that we should not bother too much about those costs, contending that clause 13 is adequate to cover them. I believe that the Government think that those costs are marginal. Their consultation document certainly seemed to state that the costs were marginal. In Committee, the Minister provided an estimate of £20 million for the additional costs imposed on the industry as a result of clause 12, but I fear that that was only a wild stab in the dark. The changes that providers will have to implement will not be a one-off; changes may be required five or six times during the next decade, as technology moves on. More than one set of intercept capabilities might have to be introduced--for all we know, one a year, or even one a month, could be required. The costs could be massive, and £20 million is not a realistic estimate, given the fast-changing nature and rapid pace of technological innovation in the industry.

The London Internet Exchange has underlined that point, arguing that

specifically, internet--

to think that any changes and upgrades will be one-off actions, given that networks are

Therefore, £20 million cannot be an adequate quantification of the costs in years to come.

I hope that the Minister will reflect on that. Even if he does not resile from the £20 million figure, I hope that he will at least acknowledge that it cannot be a proper final estimate of the costs to which the industry will be subject. We require some assurance that the compensation system will be not subject to the Secretary of State's discretion, but that he will be under a duty to make payments to those who suffer huge hits, especially small and medium-sized enterprises. Given that the costs will not be one-off and that there could be myriad changes over the next decade, the Government should accede to our request that Parliament should, in years to come, be told what the costs are and what grants are being made to cover those costs.

An annual mechanism for accountability to Parliament is the best way in which the House can protect the interests of this country's small and medium-sized enterprises. In that spirit of honest inquiry, we are willing the Government to listen to the operators that have lobbied the Opposition Members who have spoken about these matters. Ministers must do the right thing by an important world-class industry: they must make sure that it remains a world-class industry and is not driven offshore by uncertainty and ridiculous cost impositions.

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Mr. Charles Clarke: I am delighted to respond to the debate. I should first like to emphasise an important point that ran through the debate in Committee and that has been raised again this evening: that is, the Government's strong desire in everything we do in this sector to co-operate with industry. I repeat that we acknowledge that the arrangements and the apparatus established by the Bill will not succeed if that co-operation does not take place.

These amendments deal with four main issues, the first of which is whether an order made under clause 12 should be subject to the negative or affirmative resolution procedure. Secondly, the amendments propose that a technical approval board should be set up to oversee the duties placed on communication service providers. Thirdly, they propose that users of communication services should be consulted about the technical requirements that will be imposed on service providers. Fourthly, the amendments are designed to provide greater clarity regarding the cost of interception and who will pay.

All those issues were debated at length in Committee, at which time I indicated that I was sympathetic to the first of the amendments--the one dealing with the negative or the affirmative resolution procedure. I am pleased to report that, as the hon. Member for North-East Hertfordshire (Mr. Heald) and other speakers graciously acknowledged, the Government have introduced amendments Nos. 24 and 28, which will have the effect of making a clause 12 order subject to the affirmative, rather than the negative, resolution procedure.

In Committee, I made it equally clear that, although I fully agreed that any requirements placed on industry by part I should be properly considered and reasonable, I was not sympathetic to the concept of a technical approval board, which remains the most substantive issue dividing the House. I explained at length in Committee why I believe that the existing provisions of the Bill achieve the desired aim, but I shall attempt to do so again now, albeit without subjecting the House to the extensive debate that the Committee enjoyed, both on that subject and on matters closely related to it. I am happy to summarise the Government's position.

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