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Lord Lucas: My Lords, I shall speak to Amendment No. 57. Why should not the Government pay for the interception equipment? They will get the benefit of it, and through them we will all get the benefit of it, so why should not we pay for it? Why should the ISPs pay for it? There seems to be no reason why the unquantified burden of this possibly very expensive interception equipment should fall on ISPs. I propose that it should fall on the Government instead. After all, they are specifying what the equipment should be, so logically they should take responsibility for the cost.

There is no reason for anyone in this country to use an ISP in this country. All that we need is some form of communication leading to wherever in the world the ISP may be that is fast and broad enough to take the data rates that we want. If we impose significant costs on our ISPs beyond those that have to be borne in other countries, the business will move overseas. It is not a high margin business. It is a very competitive business and there is no reason for it to stay in this country if companies have to face higher costs and, as a result of this and other aspects of the Bill, offer lower security.

In a part of the Bill where such provision is not adequate, the amendment would also be a useful constraint on the ambitions of the Government. If they have to pay for the equipment--which, given the pace of technological change, will be out of date in a couple of years--they may think twice before they go overboard on interception capability. Under the Bill, the Home Secretary's activities do not have to be visible to anyone else. My amendment would at least provide some measure of rationality and reasonableness to ensure that what he is up to stays within bounds.

6 p.m.

Viscount Goschen: I share the concerns expressed by both my noble friends who have spoken to their amendments. It is clear to all of us that there is the potential for a major burden to be imposed on industry, although there is considerable dispute about the cost of that burden on a snapshot basis if the Bill were enacted now. The Government have come up with a relatively low figure, in the tens of millions of pounds, and industry has produced a figure in the region of £650 million. It is right that the Government should come under pressure to explain how they arrived at their figure and on what basis they disagree with the higher figures put forward by industry.

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However, that is relevant only up to a point. As my noble friend, Lord Lucas, said, as time goes on, new technologies will require new monitoring equipment. We do not know what that equipment will be or what it will cost. It is right for the Government to be put under pressure to avoid spending industry's money willy-nilly. They should at least recognise that if they impose a major burden on industry, there should be a direct link with the Government.

The Bill is very loosely worded. To say that the Secretary of State should make such payments as he considers

    "would represent an appropriate contribution towards costs incurred"

is virtually meaningless. If a court was challenged on the subject, it would have to put itself into the mind of the Secretary of State, and it is difficult to challenge what the Secretary of State considers to be appropriate. Surely that phrase borders on the meaningless.

The Bill gives very wide powers and has the potential to impose very high costs. I should be grateful if the Minister could answer the direct point put by my noble friend Lord Lucas and tell us whether the Government accept that the ISP business can easily be transferred overseas. Does the Minister accept that if substantial costs were placed on the industry, it could simply move overseas? Or does he have a back-up argument--I hope that the information reaches him shortly--and a magic solution to prevent that? It is very hard to keep this increasingly international business within national boundaries. Citizens of the United Kingdom will be able to access international services beyond the reach of the Minister. The Government might not like the situation, but it exists and they should be cautious about putting high costs on industry that could divert this valuable business overseas.

Baroness Thornton: My Lords, I have listened to many contributions during this Committee stage. I am struck by a recurrent theme in the opposition contributions. They keep saying that they do not want any change and they do not think that the industry should bear any responsibility for the change.

Viscount Goschen: My noble friends can defend themselves, but I have never heard anyone from the Opposition say anything of the sort. There is a widespread consensus that something needs to be done. The Bill has the right intentions, but the devil is in the detail. We cannot ignore that. We are facing the possibility of creating legislation that will not work.

Baroness Thornton: I thank the noble Viscount for that, but I should like to develop my argument. The Opposition agree that something should be done, but not this. Those in the Internet industry say the same. I am concerned about the creation of a safe environment in the industry. Those who speak on behalf of the industry in this House are not telling the companies that they have a civic responsibility. They must take these issues seriously rather than simply

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acknowledging the need for change but asking for a different sort of change. The industry must say what it wants. If the industry took its civic responsibility seriously, it would be applying itself to solutions instead of always saying that any proposals were not what was required.

I am reminded of arguments we have heard about safe food. We expect those who supply our food to provide safe food. It is reasonable to expect those who supply us with our Internet services to take some responsibility for providing a safe industry. The Government are clearly recognising their responsibility and making a contribution. I wish that I could hear a recognition from the industry that it has a responsibility to give us a safe Internet.

Lord Phillips of Sudbury: My Lords, maybe I can give some minor solace to the noble Baroness. She is unfair to the Conservatives. There is a spirit of acceptance of the measure and we are acting as a revising House, trying to improve it.

There may be a via media between the absolutism of the amendment in the name of the noble Lord, Lord Lucas, which would put the full cost of the operation of equipment on the Government, and the position adopted by the Home Office Minister in the House of Commons, Mr. Clarke, on 6th March, when he mentioned a government contribution of £20 million. There is bound to be some special pleading from the industry, but from what we have heard £20 million does not seem like a reasonable compromise for the costs incurred by companies in undertaking the duties thrust on them by the Secretary of State.

Lord Bassam of Brighton: The figure of £20 million that the noble Lord has quoted is based on the Bill's regulatory impact assessment. It is not a sum that the Government have committed. Having looked at the facts and how the legislation will be interpreted and worked out, that is our estimate of the cost of the regulatory burden to be imposed.

Lord Phillips of Sudbury: I am grateful to the Minister for that information. Nevertheless, that seems to be a conservative amount. I was going on to say that in the USA, under the Communications (Assistance for Law Enforcement) Act--an even more unwieldy title than that of this Bill--the government provide 500 million dollars.

Perhaps I may add in defence of the amendments being put forward here that that is not on all-fours with the health and safety situation governing food supplies, for example, where, plainly, the supply of hygienic food and safety equipment is something to which the consumer is entitled. In this circumstance, the state is asking an industry, which happens to be in a milieu where fraud, crime and terrorism uses its own instruments of proper commercial activity, to bear some of the costs of the state protecting us--drawing it into the policing system. In broad terms, that seems to me a proper situation in which industry

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can ask the state to come some way towards meeting the costs which it must incur because of the requirements of the Bill.

Baroness Thornton: Does the noble Lord accept that it is in the industry's best interests to create a safe environment?

Lord Phillips of Sudbury: Of course I do, but I think it is rather tough to say that it is in the interests of the industry to stop terrorism. The industry has no more interest in stopping terrorism than lawyers or fishmongers. That applies to paedophilia too. As I said, it happens to be a milieu in which those wickednesses traverse their own systems. I believe that there is a difference as regards the analogy which the noble Baroness drew.

On these Benches, we are entirely supportive of Amendment No. 55 and I regret to say that we are dubious about the absolutism of Amendment No. 57.

Lord Desai: I want to make one small comment about the drafting of the amendment. It says that the Secretary of State,

    "may, if he thinks fit",

make such payments, and so on. If I remember correctly, in the Scotland Bill, the entire Barnett formula is dealt with under a weak expression like that. That is the way draftsmen deal with such matters. The amount of money may be £5 or £5 million. But there is a precedent and I am sure that my recollection is correct.

On an earlier amendment, the noble Lord, Lord Cope, said that we do not know how many ISPs must accept that black box. It seems to me that every ISP must have a box. That can be the only answer. Otherwise, as soon as it became known that an ISP did not have a black box, every criminal would divert to that ISP. So quite clearly, there will have to be a black box on every ISP which is a national provider. Of course, that still leaves international providers out of the loop, but I do not believe that there is any choice in that regard.

6.15 p.m.

Lord Blackwell: I support the spirit of the amendments proposed by my noble friends. As this is the first time that I have intervened on this Bill, I should declare an interest in a number of companies which have interests in this area.

Does the Minister accept that the costs referred to are unlikely to be one-time costs incurred at the moment at which the order is imposed? Because of the ongoing nature of technology development, ISPs, telephone companies and others are likely to incur costs every time they update or develop their systems or introduce a new transmission technology or new encryption technology. Therefore, the costs which companies may face will stretch out as a stream going into the future. In fact, because of the complexity of such matters, those costs are likely to increase.

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Recognising those additional dimensions, the Government need to find some way of ensuring that those costs do not become penal on the industry.

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