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Lord Cope of Berkeley: I entirely agree with the general points spoken to by my noble friend Lord Lucas. So far this Bill has of itself been extremely damaging to Britain's interests because of the perceived threats that it poses. Even if in the course of debates we make amendments which produce a Bill that is 100 per cent acceptable some of that damage will remain. I do not want to expand too much on that point at this stage, but I firmly believe that that is the case.

The aim of all concerned, including the Government, should be to amend the Bill so as to minimise the damage that has already been done and the damage that will arise in future. Part of the difficulty arises from the fact that the Government have been determined that we should be pioneers in this matter. I am all for Britain being a pioneer in e-commerce, and all to which that relates--the Government say that they are in favour of that too--but I am not in favour of Britain being a pioneer in threatening e-commerce. That is what the Bill as originally drafted did; and to some extent still does.

Keys, encryption and security are important to the Internet and every kind of e-commerce. At the most basic level, if I buy, as I have done occasionally, some item on the web and feed in my credit card number, I need absolute confidence that that number will not leak from the company selling to me over the Internet, otherwise I shall not buy from it; I shall use some other method. However, at the more elaborate levels of commercial and banking contracts, that concern is multiplied to a far greater importance. That is why the banks and commercial companies and organisations have been so sensitive about this section of the Bill.

I am not so alarmed by the phrase "is likely to do so" as the Liberal Democrats. If we are trying to gain information about an individual who is suspected of being, for example, a money launderer, and he is the customer of a specific bank, it is not unreasonable for the authorities to say to the bank, "We believe that you have in your possession the documents relating to the transactions already carried out by the suspect. We need to see what was said in those and future documents when he has further transactions". It is that kind of case that I believe those words cover.

The noble Lord, Lord McNally, referred to real or imagined evils to be countered by these powers. Although sometimes the suspects may prove not to have done anything wrong, I believe that there are some very real evils to be countered. That is why it is necessary to provide the correct powers which will give safeguards. Nevertheless, we need those powers.

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Because of the way in which the Bill has been prepared, this new dimension concerning the Internet, and so on, has had to be added on to the rewriting of the existing telephone tapping and surveillance provisions owing to the imminent arrival of the Human Rights Act. To disentangle them, or to put a hold on the Internet provisions until they are further refined, I believe would be desirable. Unfortunately, the powers are not in one single part of the Bill; they appear throughout. That makes it difficult to deal with them. Nevertheless, perhaps the Government could find a way to leave the Internet provisions on the shelf for only a relatively short period of months while we try to get them right. We need them, but they must be the correct provisions if we are not to destroy the British advances in e-commerce and lose the advantages that we have.

6.45 p.m.

Viscount Goschen: The noble Lord's amendment serves as an excellent introduction to the part of the Bill which has caused perhaps the most controversy. The issue of encryption goes to the heart of the Bill. It sums up the concerns of the industry.

We are not talking only about e-commerce, the new media industry, but about any international business which wants to operate, has existing operations or aims to set up business in the UK. A recurring theme has been globalisation. It is increasingly easy for companies to locate business where the environment is most conducive for them. There is no doubt that the issue of access to encryption keys causes severe worries among a number of major corporations, not only those involved in e-commerce.

At the beginning of the Committee stage, the Minister was good enough to say that he was in listening mode. He has been as good as his word--to the extent of rewriting the Bill for your Lordships' House. It will be difficult to disentangle the new provisions in the course of the Committee stage today. Direct questions need to be answered on the Minister's new provisions. We shall wish to return to a number of elements on Report.

As regards the amendment, it is important to emphasise the degree of concern which surrounds this area. We welcome the moves the Government have made in a constructive spirit. However, the measure will require further examination to see what needs to be done.

Lord Bassam of Brighton: I start with an observation on the words of the noble Viscount, Lord Goschen. Throughout the Bill I have sought to be constructive and to offer constructive opportunities to all to make intelligible and intelligent criticisms. We have invited in all sectors of business. To my knowledge, we have not said, "No, go away" to anyone. That approach has now been widely acknowledged. Therefore, when the Government are criticised for extensively rewriting the Bill, or for putting forward provisions at the very last moment, it is because we have been listening--as we

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always said we would--and there is no other time when we can make these changes. I am sure that Members of this House will recognise and understand that.

Viscount Goschen: I complimented the Minister; I did not criticise him. However, I do not extend that compliment to his colleagues in the Home Office who have direct responsibility for this legislation. This Bill should never have come to either House of Parliament in the state that it has. Now that the Bill is here, I am pleased that the Minister takes note of concerns.

Lord Bassam of Brighton: I am grateful for the compliment; I am prepared to live with it! I wish also to thank the noble Lord, Lord McNally, for imparting to us the knowledge that he still believes in parliamentary democracy. That was a valuable comment, was it not; otherwise why would we be here?

Lord McNally: There is a serious point. People out there are telling us that this new technology is so footloose and fancy free that it is beyond the powers of parliamentary democracies to control. I put forward the strongly held view that it is not.

Lord Bassam of Brighton: I entirely understand. I have heard that argument too; it is interesting.

However, there is one consistent and recurring theme: that in bringing forward this legislation we have done some fundamental damage to this industry. I find it hard to accept that. I believe the legislation has been brought forward for entirely the right reason; that is, to find a sensible system of regulation. In doing that, the Government must listen to intelligent and well-founded criticism. The Government have tried to do that.

The noble Lord, Lord McNally, referred to Vodafone's off-the-cuff criticism of the Government's moves thus far in bringing forward the amendments today. If Vodafone has further specific points it wishes to put, the Government will continue to listen. The Government do not claim that they are absolutely right, although they believe that they are. Nevertheless, the Government want to ensure the best legislation; legislation that works to the better interests of industry and government, but more particularly industry because that is wealth-generating and is for the good of the country's economy.

I turn to the amendments spoken to by the noble Lords, Lord Lucas and Lord McNally. I listened to what was said about, in particular, the comments made by the noble Lord, Lord Lucas, and I shall work through those observations. In particular, I noted the point made by the noble Lord, Lord Cope. That was a very constructive response to that particular clause.

It is understood that the objection is the futuristic element. If that futuristic element were to be removed, the Government believe it would have a detrimental effect on the practical use of decryption power. The noble Lord, Lord Lucas, asked whether the power was required at all. The Government believe that it is. The

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noble Lord probably believes it is required, but only in very tightly restricted circumstances. That is where the debate is and it is to be hoped that at the end the Government will have got it right.

If the amendments were to succeed they would very much limit the effectiveness of the decryption power. The Government resisted such amendments in another place because of that concern.

It is recognised that there is a futuristic element in Clause 46(1)(a) to (e). The concern is understood to be that that would permit what are colloquially termed "fishing expeditions" for keys, perhaps long-term keys to future information. The Government believe that there is no such effect and I shall try to clarify why. First, it is important to remember that the decryption power may be authorised only in respect of particular protective material which has been or is likely shortly to be lawfully obtained, so it is very closely defined.

The Bill does not permit the power to be used solely for speculative fishing for keys. The Government believe Clause 46(1)(a) to (e) is needed for cases where there are reasonable grounds for anticipating that, for example, a suspected criminal is using encryption to protect material, and reasonable grounds for believing that the location of the relevant key to that material is known. In such instances, the futuristic element allows an agency to apply for the power to serve a Clause 46 decryption notice at the same time as an application is made to use the underlying power to lawfully obtain the material in question.

Perhaps I may give an example. It is entirely conceivable that there will be cases where the police have very reasonable grounds for believing that an individual is using encryption; for example, a suspect in a criminal investigation. The police could apply to the court for a warrant to search his premises. Therefore, the Government believe it right that the police should be able to apply for authority to serve a decryption notice at the same time as they apply for a search warrant. Clause 46(1)(a) allows that.

Similar considerations apply in other instances as set out in Clause 46(1) where use of the decryption power may be authorised. It is conceivable that there could be reasonable grounds for anticipating that encryption will be encountered in all the circumstances where the Bill permits decryption power to be used. That is why the futuristic element is included in Clause 46(1)(a) to (e).The proposed amendments would mean that an application to the relevant authority, be it a judge or the Secretary of State, for the power to serve a decryption notice could be made only after the encrypted material had actually been obtained under the warrant. Clearly, that could lead to critically damaging delays in what might be a very fast moving investigation. It is not believed that that is the intention in promoting these amendments, but that would, nevertheless, be their effect. The Government would therefore argue that for those reasons the futuristic element is necessary. Members of the Committee who proposed the amendments are invited to take careful consideration of the impact of removing that part of the Bill.

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The Government do not say that the Bill permits fishing expeditions. That is not our intention. I want that to be clearly understood and on public record. The Government have carefully explained this to industry, not least the Institute of Directors, which quite rightly and understandably raised the query. It is hoped that with that explanation Members of the Committee who brought forward the amendments will feel able to withdraw them.

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