Regulation of Investigatory Powers Bill

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Mr. Heald: Will the hon. Gentleman give way on that point?

Mr. Clarke: I will finish what I was about to say, after which I will give way to the hon. Gentleman, although I think that I might be about to meet some of the points that he is about to make.

I appreciate that leaving the clause open means that it lacks the reassurances that are being sought. I can give my own guarantee that the Government's intention will always be to allow the clause to be used only by countries which operate ECHR-compatible regimes. However, I accept that this may not be enough for the law of the land. I therefore undertake to take this away and consider it further. I do not promise to be able to offer the extra reassurances simply because we are trying to ensure that provision is flexible for the future, but I undertake to report back on my deliberations. I accept the power of the point made by the hon. Members for North-East Hertfordshire and for Sheffield, Hallam. It is certainly our intention that the issue should be dealt with by respecting human rights, as suggested. I accept that the wording in the Bill does not meet the point. We will reconsider it and report back to the Committee.

Mr. Heald: On the G8, it is often said that some countries in the G8, such as Russia, might eventually make it G9 and involve another world super-power or most of China. Is the Minister satisfied that G8 should be a basis for this agreement?

Mr. Clarke: I am not. The only matter that we are currently considering, as I said this morning, is the EU mutual assistance convention. The reason that nothing else is under consideration at present is the reason implied in the hon. Gentleman's question. I gave that example this morning because I was trying to show why we might imagine agreements emerging in future other than that which we have specified. The hon. Gentleman is right to say that, in any of the agreements that one might enter into, human rights issues are critical. United Kingdom Governments, of whatever party, have always wanted to be associated with other countries. Our historic alliances-NATO, the EU and so on-have been in principle with countries that share our human rights agenda.

On the third point raised by the hon. Member for North-East Hertfordshire on amendment No. 59, Mrs Michie, I can reassure him that we shall reconsider the matter and return to the Committee to address it more effectively.

I was also asked what the generic conditions were. The purpose of the clause is to comply with the EU mutual legal assistance committee, which we have discussed. This applies to judicially authorised interception in all member states except the Republic of Ireland, which has a similar regime to the United Kingdom. We believe that clause 4(1) is unlikely to be controversial. It places no burden on industry and is intended to help communications service providers operating in an international environment to meet their obligations to provide lawful interception capability in their countries. It is explicitly limited to situations in which the target of interception is believed to be in the country carrying out the interception; therefore controversy is unlikely to play a substantial part.

Affirmative resolution, raised by the hon. Gentleman and his hon. Friend the Member for Mid-Worcestershire (Mr. Luff), is an entertaining point that makes for a great debate in the House. No one would argue that a great issue of principle is involved in affirmative or negative resolution. If the hon. Gentleman's conversation with this principal Whip is anything like my conversations with our Whips, usual channels always have something to say about affirmative and negative resolutions, according to the business of the House at a given time under any Government-and entirely reasonably. It is a natural part of the parliamentary process.

There is no great issue of principle, but there is an issue of judgment about whether the specific issues are more or less likely to excite controversy. therefore it is more or less likely that the affirmative rather than the negative procedure would be used.

Because of the relative lack of controversy that we believe there will be under the clause and with the assurances that I have given about seeking ECHR compatibility at its core, our belief is that it is on the lower level of controversy in the range of matters that arise from pieces of legislation coming before the House. That is why we have suggested the negative resolution procedure and resisted the affirmative resolution procedure.

I hope that some of what I have said in response to the third point made by the hon. Member for North-East Hertfordshire and to amendment No. 59 tabled by the hon. Member for Sheffield, Hallam will reassure them that what might otherwise have been controversial issues deserving of the affirmative resolution procedure will not be controversial. On that basis, I hope that the hon. Gentleman will not press amendments Nos. 10 and 59.

Mr. Heald: The Minister has shown good will by saying that he is prepared to reconsider the matter. We will see what he comes up with and reconsider if it is not what we want, but for now, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: I shall allow Mr. Allan to move his amendment formally if he wants to.

Mr. Allan: I shall not press it.

The Chairman: I must inform the Committee that amendments Nos. 8 and 7 have been transposed on the amendment paper.

3.30 pm

Mr. Heald: I beg to move amendment No. 7, in page 6, leave out lines 25 to 33.

The Chairman: With this we may discuss the following amendments: No. 8, in page 6, line 25, leave out from ``(3)'' to ``a'' in line 27 and insert

    `conduct by any person consisting in the interception of a communication in the course of its transmission by means of a telecommunications system is authorised by this section in so far as it constitutes'.

No. 9, in page 6, line 34, leave out ``any regulations under''.

No. 11, in page 6, line 25, at end insert

    `made under the affirmative resolution procedure'.

Mr. Heald: The amendments deal with one of the most important parts of the Bill to the business community. Clause 4(2) allows the Secretary of State to make regulations to authorise legitimate business practice in respect of the monitoring and recording of communications and other matters. Amendment No. 7 deletes that subsection, amendment No. 8 deletes the regulation-making power and adds a substantive provision, amendment No. 11 requires the affirmative resolution procedure to be adopted, and amendment No. 9 is consequential.

Subsection (2) is designed to enable businesses to intercept and record transactions in the course of legitimate business practice. Article 5 of the 1997 European Union telecommunications data protection directive provides for the exemption, and there is no doubt that it is needed. However, are regulations needed, or can the matter be dealt with by the broad principle being enshrined in legislation? If not, what generic headings would the Minister give to the regulations? If, by the adoption of a broad definition, the interception is not to be left to the courts, should the House of Commons debate the details or must we simply trust the Minister?

Various industry bodies have had something to say on the subject. EURIM has made it clear that businesses should be able to monitor customer exchanges and internal employee actions. The Alliance for Electronic Business has said that, to check on the quality of services, it is important that the monitoring of calls is allowed. A Mr. Baker of the London Investment Banking Association makes several relevant points. He says that it is important to accommodate certain practices, including

    firms' in-house taping, storing, and monitoring of telephone calls with clients, counterparties, and others; in-house monitoring for training purposes;


    exchanges' and clearing houses' taping, storing, and monitoring of communications made via their facilities.

He continues:

    The purpose of such taping, storing, and monitoring is essentially to provide evidence of the transaction or communication in case of commercial disputes or for purposes of confirmation, or for the prevention of fraud or other crime. The London Code of Conduct for principals and broking firms in the wholesale money markets states

that the Financial Services Authority

    expects by principals and brokers of all conversations by dealers and brokers together with back office telephone lines used by those responsible for confirming deals or passing payment and other instructions

The code goes on to say that

    When initially installing tape equipment, or taking on new clients or counterparties, firms should take the necessary steps to inform them that conversations will be recorded and to comply with the other relevant provisions of any telecommunications privacy legislation in force.

The financial services regulators regard taping as a means of complying with their record-keeping requirements. The rules of investment exchanges, such as the London stock exchange may also require their members to tape telephone calls, or the exchanges may tape calls themselves in accordance with their rules.

Mr. Baker goes on to explain the background to this by saying that, generally, when recording and monitoring are used for such purposes, the firm has the explicit or implicit consent of the users. He makes the point that that

    reflects the Privacy of Messages telephone licensing conditions, which require ``every reasonable effort''

to be made. He also says that customers are generally informed about taping in their written terms of transactions, so it is well known.

    Employees are informed, often in their terms of employment that calls are recorded. However, it may not always be possible or practical to obtain the consent of all parties to a communication that it is recorded or monitored.

Mr. Baker explains that the consultation paper published last year summarised the proposed changes as:

    Provision to be made allowing employers to continue recording communications in the course of lawful business practice to provide evidence of commercial transactions or any other business communication, in both the public and private sectors.

He says that that implies a restriction on employer-employee relationships and on recording. He thinks that the industry should be able to rely on the Government to make certain important provisions. First, the exemption should apply not only to recording, but to monitoring, storing and assessing records of communications. Secondly, the legislation should make it clear that the consent of users to recording or monitoring is not required for well-known practices, such as those already described. Thirdly, it must be made clear that the exemption applies to other means of electronic communication as well as to telephone calls. The exemption must be broad enough to cover recording and monitoring of communications in relation to activities that a firm has outsourced or subcontracted, as well as those that are performed by its direct employees.

Those points have been summarised best by Mr. Baker and LIBA, but they were raised by a number of other industries. Our difficulty is that we do not know the details of the regulation-making power, but we do not have the details. One way around that, as I said at the outset, is to enshrine the principle of the directive in law, by saying ``This is the general principle.'' and leaving it to the courts to establish the detail, or setting out the details in regulations. If I understand the Minister, he has not been in a position to tell us the likely detail of the regulations-I think he said that it would be dealt with by the Department of Trade and Industry.

Members are entitled to know-as is industry-the broad points that will be covered. The issues that have been raised by so many industries must be covered so that existing legitimate business practices will not be interfered with, fraud can be properly attacked, businesses can monitor and be monitored so that transactions can be proved later and essential statistical information can be obtained. If the Minister will address the points made by Mr. Baker and others, he will deal with the main thrust of the group of amendments.

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