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Mr. Charles Clarke: I will try to deal with the questions directly in responding to an interesting discussion, which has been the subject of substantial debate in the media and elsewhere.

First, the hon. Member for North-East Hertfordshire (Mr. Heald) made an important point when he said that one of the problems was that business was not clear what was expected of it throughout the process. In saying that, I do not think that he was criticising business, Government or anyone else. This is an evolving process and it is difficult to get the expectations right.

There is no doubt in my mind that a lack of clarity in that discussion has led, not unreasonably, to fears and concerns being abroad that, although not justified, are understandable. That has certainly been a major influence in persuading the Government to make the changes that we are considering, to ensure that fears and concerns about those aspects could not be inflated wrongly or unreasonably.

Perhaps I ought to place it on record that, through the codes-of-practice process and so forth--the subsequent process of implementing the Bill--we are committed to precisely what the hon. Gentleman focused on, which is giving everyone involved absolute clarity about what is expected of them and how to deal with the situation. He was correct in making that point, which was insightful. That problem has been the cause of much of the discussion around the Bill. We have worked extremely hard to deal with it in dialogue and in a variety of ways. Nevertheless, there is still a distance to go.

That is the context in which I wish to deal with the arguments about the technical board. As the hon. Gentleman said, we were sceptical about the necessity for

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setting up a statutory body at the outset, but that was because there was also initial scepticism in industry about the virtue of the consultation process taking place through a statutory body. Many people said at the time that they favoured a non-statutory advisory group rather than a statutory body. We were also seriously sceptical about having technical approvals rather than a technical advisory board, owing to the different functions of the board.

Once we were clear that we were talking about an advisory process, there was a lot of discussion on the best form of that process, which was mentioned, quite reasonably, by the hon. Member for North-East Hertfordshire. We are content with the arrangement that we are agreeing this evening, but, to be frank, there are alternative formulae that might have been appropriate and with which we would also have been content. The key matter is to establish a flexible structure that can deal with the situation.

I take issue with what the right hon. Member for Penrith and The Border (Mr. Maclean) said. I accept his point about the inbuilt majority, but I do not think that it will come to that in this body or any other body, for exactly the reason that he gave. The Government will rely profoundly on the private sector's knowledge of the issues. We will do that, as we will need to know. Equally, the private sector will need to know from the Government what we have in mind. The purpose of the structure that we are setting up is to establish a body of dialogue through which we shall reach clarity about such matters and take them forward. A situation in which voting takes place will not arise, and would be a disaster if it did. It would be a poor state of affairs if the Government voted one way and business, whether through a committee, board or any other structure, voted another, so we would work very hard to try to avoid that.

Mr. Heald: As the Minister will know, we insisted that there should be a balance between agencies and the involvement of the private sector in the body so that there is not an imbalance that makes it impossible for them to work together effectively as a team. Certainly, our hope is that, over a period, they will work together and understand each other's concerns, which is the key to making the arrangement work. I hope that the Minister agrees that it is important to have a fairly close balance at least.

Mr. Clarke: I completely agree, and was taking issue only with the idea that a couple of votes either way were important. We need the kind of co-operation described by the hon. Gentleman, and are committed to it. As I have said in Committee and on the Floor of the House, a general criticism that I would make of Government, both Conservative and Labour--although we are working to improve the situation, given the appalling inheritance that we had to deal with--concerns the difficulty of getting proper partnership in these areas. In many areas, I still feel that we do not have a proper dialogue between the Government and industry. We welcome the new structure, as it will help that process, and I believe that it will work positively and effectively.

I come to the issue of money and costs, and shall deal first with the points made by the right hon. Member for Penrith and The Border. Clause 14(2)(b), which deals with running costs, and clause 14(2)(c), which deals with

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capital, set out the fact that the Bill's requirement for fairness applies to both capital and running costs. The right hon. Gentleman would be right in what he said if the fairness did not apply to both, but the intention behind the provision's wording is that it does.

The right hon. Gentleman made an important point about criteria. I hope that we can offer him some reassurance, as the same criteria will be applied to all service providers, regardless of the position, in considering what costs should be paid. The first criterion is the question of whether a new requirement is being imposed on the service provider and the second is the significance of the cost in relation to the overall size and turnover of the company. Those are both serious considerations. For example, many people have said a requirement of some kind could be extremely damaging for a small internet service provider that is in the process of starting up. We would not impose such burdens on them, so it is important to look at the costs in relation to the company's overall size and turnover. The code of practice that sets out the way in which we will do that will provide the reassurance sought by the right hon. Gentleman.

The hon. Member for South Dorset (Mr. Bruce) made a financial point and put forward some figures. Throughout, we have estimated that costs to those communication service providers who are not covered at present, but who will be covered under the Bill will not exceed £20 million over three years. That estimate was published in the regulatory impact statement when the Bill was first introduced in the House. We stand by that estimate, and none of the research since has caused us to alter our view. We are of course aware that alternative estimates have been made and we certainly do not claim a monopoly of wisdom on this complicated and different area. When the United States implemented such measures, albeit of a different character, great claims were made about the amount of money that would be needed. In practice, however, much less was needed to deal with the situation.

Our best estimate, therefore, is the one that we made in the regulatory impact assessment. As with all these things, the proof of the pudding is in the eating. My right hon. Friend the Chancellor of the Exchequer has been positive in dealing with this matter because he shares our concern to ensure that nothing that we do will damage our position.

I now realise that I made a mistake in responding to the right hon. Member for Penrith and The Border (Mr. Maclean). I was referring to what will be clause 14 once the Bill is amended; it is clause 13 in the Bill before the House. I apologise for misleading him through my lack of numeracy. Thirteen may be unlucky for some.

Mr. Maclean: I apologise to the Minister for being obtuse earlier by not studying the amendment properly. If subsection (3) of the clause--whatever its number--is deleted, I assume that subsection 2(c) deals with the capital costs. I see nodding coming from those seated to the Minister's left. My point was wrong: the word "fair" applies to capital and to running costs, in which case I am content.

Mr. Clarke: The right hon. Gentleman is correct. As he said, subsection (2)(c) deals with capital. I do not

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criticise him for being wrong on this matter, as this is one of the most complicated pieces of legislation that I have seen. Moreover, he does not have the advantage that I have of a dedicated Bill team, who have tried throughout the Bill to serve all parts of Parliament in a positive way.

Lords amendment agreed to.

Lords amendments Nos. 13 to 19 agreed to, some with special entry.

Clause 14

General Safeguards

Lords amendment: No. 20, in page 16, line 15, leave out ("Chapter") and insert ("Part").

9 pm

The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Michael Lord): With this it will be convenient to discuss Lords amendments Nos. 21, 22, 156, 157 and 162.

Jane Kennedy: I am conscious that we are making good progress, and I hope that hon. Members welcome these amendments.

Amendment No. 20 recognises that the commissioner is responsible for the oversight of communications data as well as interception material. Amendment No. 21 deals with the question of intercept material that is lost or stolen. It is fairly straightforward. Amendment No. 156 is a technical amendment to the Financial Services and Markets Act 2000.

I should like to say one or two words about amendments Nos. 22, 157 and 162, which deal with some of the exceptions to the prohibition in clause 16 and--

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