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20 Jan 2010 : Column 320

Mr. Watson: Thank you, Mr. Deputy Speaker. I am explaining the context in which I have produced my Bill, and I hope to bring myself back into order rapidly, with your guidance.

The creative industries, like many Members, are concerned about some of the major measures in the Digital Economy Bill. My Bill might precede it, because, depending on when the House is dissolved for a general election, the Digital Economy Bill might fall. Many content-creators are therefore worried that measures contained in clauses 11 and 17 of the Digital Economy Bill would fall-

Mr. Deputy Speaker: Order. I am afraid I shall have to emphasise my ruling to the hon. Gentleman. The procedure for ten-minute Bills is pretty well established, so I hope he will now fall in line with the gentle suggestion I made to him.

Mr. Watson: I will not test your patience any longer, Mr. Deputy Speaker.

My Bill is about how we store data digitally. The amount of digital content we can store has increased dramatically in recent years. Kryder's law-that is a mathematical law, Mr. Deputy Speaker, not one being discussed in the other place-is an almost mystical formula that says that digital data capacity will double every 13 months. It means that we can now super-process acres of data that were indigestible only a decade or so ago.

Ten years ago I had a Discman and a few hundred CDs. Three years ago my iPod held thousands of songs. If Kryder's law holds true, some time around 2013 an iPod will be able to carry a year's worth of video. By 2016 it will hold all the commercial music ever produced. By 2019 it could carry a lifetime of video-85 years' worth. Around 2024 all the content ever produced in history could be stored on a device that fits into a pocket.

When such an unprecedented technological advance is fully understood, it leads many to conclude that existing proposals to brand a generation of innate internet users as pirates is futile. What is required is a complete rethink of copyright. It should be accepted that technology now allows people to share content, crunch it, mash it and remake it. To illustrate my point with a contemporary political example, when Labour was elected in 1997, young political propagandists from all parties had to make their point by using an aerosol and a balaclava. Now they use Photoshop.

The recent experience of the website is an example of people taking an idea and reusing it to add to a discussion and make a point. Political party managers might not like it, but it has given election billboards new relevance and interest for the forthcoming general election. It is making electioneering interesting, unpredictable and, dare I say, more fun.

If colleagues do not think that digital natives will change the world of politics with their billboard mash-ups, I ask them to take a look at the voting figures for the Pirate party. In Sweden the Pirate party, an organisation dedicated to giving a generation of net users a voice in the copyright settlement, won a seat in the European Parliament. It is now one of the largest parties in
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Sweden. One in eight first-time voters supported the German Pirate party in recent elections. The message in the UK is clear. Just because they do not have the capacity to lobby Governments as easily as the British Phonographic Industry, young people will react strongly at the ballot box if their internet rights are diminished. When they are told by an army of big publishing lobbyists that the creative industries are in peril, they have the capacity to Google a strong riposte.

Yesterday, the UK Film Council said that in 2009 British cinemas saw their best admissions in seven years, with box office takings in the UK and Ireland exceeding £1 billion for the first time. In 2009, £1.7 billion was spent on video games, a big increase on the previous year-

Mr. Deputy Speaker: Order. I am afraid that the hon. Gentleman is losing me again. This precious time is to persuade the House that he should have permission to bring in his Bill. He has given an awful lot of background, but the House needs to be clear about what would be in the Bill-what is the purpose of the Bill.

Mr. Watson: Thank you, Mr. Deputy Speaker.

There are a number of cumbersome steps that our cultural institutions have to go through to meet the current requirements of copyright law when seeking to use or reproduce a copy of works held in their collections. They need to be able to preserve their works, shift formats over time and make our heritage available. My Bill will allow cultural works that are often rotting on shelves awaiting copyright clearance to be saved for digital archiving purposes.

Mr. Deputy Speaker: The question is that the hon. Member have leave to bring in his Bill. As many as are of that opinion [Interruption]-Order. I am sorry that I am giving the hon. Gentleman a bad time, but it is a fairly usual procedure, if he will bear with me.

Question put and agreed to.


That Mr. Tom Watson, Mr. Don Foster, Mr. Dai Davies, Andrew Miller, Mr. Fraser Kemp, Natascha Engel, Chris Ruane, Ms Katy Clark, Joan Walley and Mr. John Grogan present the Bill.

Mr. Tom Watson accordingly presented the Bill.

Bill read the First time; to be read a Second time on 12 March , and to be printed (Bill 52).

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Fiscal Responsibility Bill

Considered in Committee

[Sir Alan Haselhurst in the Chair]

Clause 1

initial duties

1.35 pm

Mr. David Gauke (South-West Hertfordshire) (Con): I beg to move amendment 1, page 1, line 3, after '2016', insert 'the structural element of'.

The Chairman of Ways and Means (Sir Alan Haselhurst): With this it will be convenient to discuss the following: amendment 2, page 1, line 5, after '2014,', insert 'the structural element of'.

Amendment 3, in clause 5, page 3, line 28, after 'expressions "', insert 'the structural element of'.

I should say to the Committee at this stage that in view of my selection of amendments in relation to clause 1, I am not minded to have a stand part debate on that clause.

Mr. Gauke: It is a great pleasure to be here this afternoon. I shall bear in mind your comment, Sir Alan.

The first clause goes to the heart of the Bill. It is clear from the recent Second Reading debate that this is a pretty lousy Bill. It is conceptually flawed. Nobody from the Labour Back Benches spoke in favour of the Bill on Second Reading. On the Government Back Benches today I see two hon. Members. If I am not much mistaken, both voted against the Bill on Second Reading. It is not a Bill that excites much support or interest, and there is probably very little that can be done with it to save it from itself. The right hon. Member for Norwich, South (Mr. Clarke) put it well when he described the Bill as vacuous and irrelevant. That did not stop him voting for it, but perhaps he does not have high expectations of the Bills that his Government introduce for him to support.

Mr. John Redwood (Wokingham) (Con): Does my hon. Friend think that Labour Back Benchers are not present because the Bill says that they must cut public spending by about £100 billion a year by the end of the four-year period? Presumably that means that they do not think they will be in government, so that is not their problem.

Mr. Gauke: That might be one explanation. It is probably a better explanation than the one we heard in the winding-up speech on Second Reading from the Exchequer Secretary, who speculated that the absence of Labour MPs supporting the Bill was a result of the weather and that they were stuck in the snow. I suspect that my right hon. Friend makes a better stab at answering the question. In the course of the afternoon, we may get an explanation. As there appear to be no Back Benchers who are prepared to speak on the Bill, perhaps we will hear from the Front Bench.

The Economic Secretary to the Treasury (Ian Pearson): Let me have a stab at an answer. Perhaps my hon. Friends realise that I do not have any difficulty in dealing with the sloppy, incoherent and often conflicting amendments tabled by the Opposition, so I do not need any help from them.

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Mr. Gauke: We shall see whether the Minister requires any help, but it is good to see such confidence early on. We shall see whether he can keep that up.

Having said what nonsense the Bill is-a view that the Minister is unlikely to persuade us to change-we are, through amendments 1, 2 and 3, attempting to be helpful. We are trying to bring some coherence to the Bill. They would not make it a good Bill, because it is still conceptually flawed and we do not support it, but one issue, which emerged on Second Reading, is worth exploring a little further.

My right hon. Friend the Member for Wokingham (Mr. Redwood) first made the point in an intervention on the Chancellor of the Exchequer. My right hon. Friend raised the question of what would happen if there were a recession over the period that the Bill covers. The first duty, contained in subsection (1), is that of lowering the public sector net borrowing every year from 2011 onwards to 2016; the second duty, in subsection (2), deals with halving public sector net borrowing from 2010 to 2014; and my right hon. Friend asked, "What about automatic stabilisers? What happens in the course of a recession-were one to happen?" I appreciate that the Government are not predicting a recession, but then again they did not predict the most recent recession, either.

That point was pursued by the hon. Member for Southport (Dr. Pugh), who intervened later in the debate, again on the Chancellor, and essentially asked, "What would have happened if this legislation had been in place over the last few years? Would the Chancellor have been free to bail out the banks?" Let us remember that this Bill represents a flagship policy: this is how the Government are to acquire credibility on the issue, because they are legislating to reduce borrowing. The Chancellor, in response to the question about whether he would be free to bail out the banks or be hamstrung by the legislation, said:

That seems to be a reasonable answer, but it entirely undermines the legislation that the Chancellor was advocating. Not only is it quite striking that the only people to speak in support of the Bill on Second Reading were Ministers, it seems fairly clear that even they were not exactly enthusiastic about its terms.

Mr. Jeremy Browne (Taunton) (LD): I strongly support the hon. Gentleman's sentiments. Does it not appear that the Prime Minister, having boasted that he had abolished boom and bust and then having been proved emphatically wrong, has decided that he has now abolished boom and bust for the next six years?

Mr. Gauke: The hon. Gentleman makes an excellent point. That is exactly right. We do not accept the argument that declaratory legislation in these circumstances is of value, or that the Bill adds something to the credibility of the UK's fiscal position, but if we were to be sympathetic to the Government and accept those points, we would discover a difficulty, because the Government have set themselves a target that does not get to the heart of the issue-the structural deficit.

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The point that the hon. Member for Southport made when he raised the bank bail-out issue might be regarded as a reductio ad absurdum argument, but it was helpful. If there is a crisis, the targets do not apply. That is the Chancellor's position. However, that does not quite answer the question, "What would happen if there was something not of the scale of the bank bail-out that we saw a couple of years ago, but a substantial slowing of the economy and, perhaps, a recession?" Clearly, the targets would become much harder to hit. Unemployment would go up and tax receipts would fall; and, if we look at borrowing as a percentage of GDP, we find that GDP falls so the percentage of borrowing would go up.

The Opposition recognise the need for automatic stabilisers-our argument has never been about that-but I find it hard to see how anyone who has argued consistently, as the Government have, for a discretionary fiscal stimulus when the economy slows down, can support this Bill on reading it, because the targets are focused on public sector net borrowing, not on the structural or cyclically adjusted element.

1.45 pm

Of course, that argument works the other way, too. If the economy exceeds the Government's growth expectations-admittedly, that is fairly unlikely given that their expectations are somewhat greater than that of most independent forecasters-those targets may well be met either without imposing significant discipline at all or, certainly, by imposing much less than the Government have in mind. The focus must be not on public sector net borrowing, but on the structural element.

I read the Chancellor's lengthy interview in the Financial Times at the weekend, and the full transcript was placed on the paper's website. There was an interesting section on whether the Chancellor had tried to remove the Prime Minister over the past few weeks, but the interview focused primarily on matters of fiscal responsibility. The Chancellor referred three times to getting the structural deficit down, but interestingly at no point in that lengthy interview did he refer to the Bill-suggesting that it is not exactly at the heart of his strategy to restore credibility to the public finances. Even the Chancellor does not appear to believe in it. The Bill is so discredited that he does not pray it in aid during a lengthy interview.

Mr. Andrew Pelling (Croydon, Central) (Ind): The hon. Gentleman is making an excellent contribution. Is this not a treacherous debate for all political parties, because of the creation of this straitjacket? It appears from what he is saying that he believes that any incoming Conservative Government should also have the greatest flexibility, and that they might yet not go down the-unwise-route of a significant and quick cut in public expenditure.

Mr. Gauke: I am grateful to the hon. Gentleman for his kind words and for raising that issue, because I want to make it absolutely clear that we believe that the structural deficit must be brought down and that a significant part of it must be brought down very quickly. We have said-and it remains our position-that we want to go further and faster than the Government on bringing down the deficit, and we would move earlier.

The hon. Gentleman does not agree, and he is perfectly entitled to that position, but wherever we are in the debate about trying to reduce the deficit, we should focus on the right measure. Whether one takes the view
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that Governments should spend and borrow more when the economy is slowing down, or that the automatic stabilisers should apply, the wrong measure is to aim at public sector net borrowing. We should focus on the structural element. Indeed, if we read what the Chancellor told the Financial Times, we find that he focuses on the structural deficit. So if the Bill is supposed to reflect Government thinking and, essentially, be Government policy, and the Chancellor talks about the structural deficit, why does the Bill not deal with the structural deficit? Instead, it includes non-cyclical elements.

I should point out that this is not in any way meant as some sort of Government trap. The projections that the Government have made in the pre-Budget report for public sector net borrowing and cyclically adjusted public sector net borrowing suggest that, in both cases, they should meet the targets that they have set out. Borrowing should fall in every year from 2010-11 to 2014-15. In both cases, the deficit will halve from 2009-10 to 2013-14. That does not make the duties more onerous or less onerous, as in both cases they should be met under the Government's own projections. We can have a debate about why we might need to be sceptical about those, but that does not fundamentally change the position.

Of course, the Bill still has huge weaknesses that we will debate over the course of the afternoon, including its lack of an enforcement mechanism and the fact that it is, in many respects, a fig leaf to cover the Government's failure to set out credible spending plans to address the deficit. However, we could at least introduce a relevant measurement, which would partly address some of the concerns about the Bill. We have some scepticism about the Government's actions, but if they are trying to do what they say they are, the amendments would assist them.

Mr. Jeremy Browne: The lead amendment in the next group, amendment 4, stands in my name and that of my colleagues, so I may take the opportunity then to speak slightly more broadly about clause 1 given that we are not having a stand part debate. At this point, I will limit myself briefly and narrowly to amendments 1, 2 and 3.

I share the views of the Conservative spokesman in two regards. First, as was discussed on Second Reading, the Bill is inherently flawed and there are all kinds of problems with it. Just over a week ago, I took part in a radio debate with a Labour MP who, when I raised the issue of the deficit, said, "Of course we, the Labour party, are serious about the deficit. We're legislating to reduce it-how much more serious can one be than that?" She appeared to believe that that was a sensible argument to advance, and it is, essentially, the root cause of the Government's problems-their belief that they can solve a financial problem by passing a law saying that they have solved it even if they are not taking the necessary financial measures to address the difficulties that they find themselves in. That is the inherent flaw in the Bill, and what makes it so utterly preposterous.

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