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Lord Cope of Berkeley: My Lords, I am sure that all Members of your Lordships' House with Scottish links

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will be very glad that the Government have at last recognised the differences and have included them in this.

On Question, amendment agreed to.

Lord Bassam of Brighton moved Amendments Nos. 11 and 12:

    Page 7, line 17, at end insert ("; and

"state hospital" has the same meaning as in the National Health Service (Scotland) Act 1978.").

    Page 7, line 19, after ("institution") insert (", young offenders centre").

On Question, amendments agreed to.

Clause 12 [Maintenance of interception capability]:

Lord Bassam of Brighton moved Amendment No. 13:

    Page 14, line 23, at end insert--

("( ) A person shall not be liable to have an obligation imposed on him in accordance with an order under this section by reason only that he provides, or is proposing to provide, to members of the public a telecommunications service the provision of which is or, as the case may be, will be no more than--
(a) the means by which he provides a service which is not a telecommunications service; or
(b) necessarily incidental to the provision by him of a service which is not a telecommunications service.").

The noble Lord said: My Lords, the Government have sought at every opportunity to emphasise that interception is a method of last resort, and is used sparingly. The purpose of Amendment No. 13 is to clarify that commercial and other organisations which provide a telecommunications service as a means of accessing a further service of theirs will not be subject to any order under Clause 12.

I give an example to explain what that means in practice. A bank may decide that it will offer a telecommunications service to its customers, as a means of providing access to its banking service. As a result, customers are able to communicate with that bank, perhaps by e-mail, and make transactions or check the balance of their account. Where such a service is provided, the effect of the amendment is to exclude its provider from any obligations imposed under Clause 12 to develop or maintain an interception capability.

The amendment also puts outside the scope of Clause 12 a telecommunications service that is necessarily incidental to a different service. There may be businesses now, or in the future, which offer a telecommunications service only as part of a wider, non-telecommunications operation. The telecommunications aspect might be an integral part of the business; but only as a necessary off-shoot of the non-communications business. Clause 12 will not cover such a service.

With regard to the specifics of what the order made under Clause 12 will contain, my honourable friend Mr Clarke explained in another place that there was a three-stage process towards reasonable intercept capability. The Bill is the first stage. It sets out the principle that some service providers should maintain

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an intercept capability. This is an established principle that has been long adhered to by public telecommunications operators.

The second phase will be an order laid before Parliament for the establishment of a reasonable capability. That order can be made only after consultation with those likely to be affected and must be approved by each House. It will set out what kind of businesses are proposed to be covered. The order cannot go beyond the meaning of "public telecommunications services" in the Bill. In particular, it can apply only to telecommunications services that are

    "offered or provided to a substantial section of the public".

And it will oblige the Secretary of State to come to Parliament and to justify the interpretation that he places on those words. Within the class of businesses that could be covered in theory, the order will reveal exactly which parts of the communications sector are to be covered.

The third phase will be the serving of individual notices on communication service providers. Those will state the capability that they are expected to provide and the time-scale for provision. The individual notices will result from a dialogue between the Government and the service providers themselves. The notice will take account of the circumstances of each provider and will be consistent with the order passed by Parliament.

I hope that this amendment will be welcomed by all sides of the House. I beg to move.

Lord Lucas: My Lords, I am happy to see this amendment. It removes the question as to whether ATM networks and other such matters would be liable under the Bill. Perhaps the Minister, now or later, can satisfy my curiosity as to which side of the line JANET falls.

Lord Bassam of Brighton: My Lords, I shall have to satisfy the curiosity expressed by the noble Lord later!

On Question, amendment agreed to.

Lord Cope of Berkeley moved Amendment No. 14:

    Page 14, line 23, at end insert--

("( ) The person to whom a notice is given may refer the notice to the Technical Advisory Board to consider the technical requirements and the financial consequences and the Board shall report their conclusions on those matters to that person and to the Secretary of State.").

The noble Lord said: My Lords, in speaking to Amendment No. 14, in my name and that of the noble Lord, Lord McNally, I shall also speak to Amendments Nos. 15 and 17. To some extent we discussed this matter in Committee, but I have no hesitation in returning to it.

We propose that there should be a technical advisory board and that the board should consist of six representatives, chosen by the Secretary of State, of the kind of companies affected by this legislation such as Internet service providers and others, and importantly some of their customers, banks and so on. There

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should also be six representatives of what one may describe as the users of interception: the police, Customs and Excise, the security service and others. It is intended that the board should be balanced.

In Committee we suggested that the interception commissioner should be a member and should chair the board. We have not retabled that proposal, but equally we have not necessarily abandoned it. Speaking for myself, I am not desperately concerned about the details of the board. The figure of six may be varied--certainly upwards--although I do not believe that it should be too large. Who should chair the board is also a matter for consideration. What is important is the principle.

We have in mind two jobs for the technical advisory board. The first is to consider the technical aspects and feasibility of orders put by the Secretary of State, under Clause 12, on the basis of which black boxes will be inserted in Internet service providers and others. That is a highly technical matter. The Government commissioned the Smith report from external consultants in order to look into the matter and to open it up. Within the industry that report has been quite widely criticised, but the great value of it to all of us who have taken an interest in such matters, is that it has exposed this difficult and continuing problem. One thing that we can be certain about is that technology will develop at a rapid rate in the future.

It is not just a matter of the Secretary of State laying down an order and a whole series of black boxes springing up in the appropriate parts of the economy; on the contrary, I believe that successive Secretaries of State will find themselves having to propose to Parliament further orders as time goes on. I believe that it would be in the interests of all if a small group, such as the technical advisory board that we propose, should have the statutory duty, as suggested in our amendment, to consider this matter on a continuing basis. As a result I believe that a much greater understanding would grow up between those in the electronic communications industry and the users that I have described--the police and other authorities. Each would have a much greater understanding of what should be achieved and the best ways in which to do that.

The second job of the board would be to consider what may be called appeals from individual Internet service providers or others who are required by a notice following a statutory instrument to install a black box within their set-up. The amendment that we tabled in Committee suggested that all such notices should be vetted by a technical advisory board--or as we then called it, a technical approvals board--and that all such notices should be approved. It was said to us, particularly by BT, that people would not want such a notice to be seen by others in the industry. That is understandable and, in due course, that view may be shared by others. As a result we have made it an appeals procedure so that the ISP can, if it wants, ask the technical advisory board to look at its notice to see whether it is technically feasible and sensible to do it in a particular way.

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Internet service providers and others who will be affected by this point differ greatly in their size, their technical capacity, and so on, and in future they will differ even more. As a result, every notice will be quite different.

In Committee, the Minister's view seemed to be that no one in the industry was supportive of this idea. If that was his view, I hope he has been thoroughly disabused of it now. The Internet Service Providers Association and Linx, the London Internet Exchange, have confirmed to me that they are in favour of a technical advisory board, along the lines suggested in the amendment, as have the CBI, the Federation of the Electronics Industries and others who have considered the matter. They all favour it because of the potential complexity and obtrusiveness of the black boxes as a method of looking at e-mails and other traffic. It is sad to say, but the Government have succeeded with this Bill, and particularly with this black box proposal, in frightening a large section, not only of the electronics industry, but also of the whole of the economy, including banks and others involved in international business.

From the start we have all accepted, as do those who comment from outside, that it is valuable and important for the police and others to be able to tap telephones and now to tap e-mails to capture criminals, terrorists, paedophiles and others. But it is a question of balance and a question of how far we go with the regulatory framework. I am sure the Minister will recognise the phrase,

    "If our regulatory framework is excessive or poorly conceived, we all suffer from the resultant red tape".

That comes from the Prime Minister's foreword to the White Paper on regulation and regulatory impact. The Prime Minister went on,

    "I have therefore decided that no regulatory proposal which has an impact on business, charities and voluntary bodies should be considered by the Government without a thorough assessment of the risks, costs and benefits, a clear analysis of who will be affected",

and so forth. He made clear that that applied to both primary and secondary legislation.

I realise that a sort of impact assessment was done in the case of this Bill. But it has been hugely criticised and was certainly not discussed in the way intended as far as I can gather from the White Paper. So this remains an extremely important matter for the whole future of e-commerce in this country. If we do not succeed in reassuring electronic business in this country--and that is every business these days--e-commerce will not have a future in this country, certainly not the future the Prime Minister and others in the Government envisage for it.

We all want our country to be in the forefront of e-commerce. This proposal is perceived as threatening that. The Minister may say it is only a perception. But it is the way in which the Bill is drawn and the lack of reassurance in it that gave rise to that perception. And that perception continues to grow the more we discuss the Bill. In the end, it is perception that matters. It is the perception of these

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things that decides whether or not companies invest here and whether or not companies here expand their e-commerce business.

We have all read--I am sure the Minister has--of companies even in the past day or two saying that, if this Bill is not amended, they will move the centre of gravity of their operations overseas. Those are serious companies and I believe that there are others who hold the same view who have not gone public. It is those perceptions we must change. One of the important amendments which would help to change that perception is the introduction of the technical advisory board on the lines set out in Amendment No. 14. I beg to move.

6 p.m.

Lord McNally: My Lords, the noble Lord, Lord Cope, eloquently and pertinently explained the reasons for this amendment. I can think of no better way of changing the external perception of the Government's attitude to this Bill than if the Minister were to stand up and accept this amendment. It is over 50 years since the late Douglas Jay suggested that the man in Whitehall knows best. If ever there was a Bill that proved that the men and women in Whitehall may not know best, it is this one. There is no doubt that if the Government had got closer to industry and used the great expertise that is out there earlier, this Bill would have been in a better shape earlier.

What strikes me about Amendment No. 14--I confirm the assertion of the noble Lord, Lord Cope, that industry wants such a statutory body--is that it gives the Government the opportunity of repairing earlier omissions. Instead of wasting money on external consultants, they have the opportunity of obtaining the advice of industry experts.

Like so many, I started out with a vague idea of what was being proposed. But when it became clear that the Government had almost a blank cheque for the technical impositions that they could place on service providers, that seemed to me to be extremely unfair and reckless. It was a question of one side thinking up requirements and the other side having to pay for it and work out how to implement it. That is not the way to obtain technical co-operation. However, the proposal for a technical advisory board offers the Government two great prizes. First, it offers industry expertise in ensuring that effective measures are introduced. Secondly, it wins industry confidence. I should have thought they were two worthwhile prizes for the Government to seize now.

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