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Viscount Goschen: My Lords, I endorse the comments of the noble Lord, Lord McNally, and my noble friend Lord Cope. The stakes are extraordinarily high at this point in the development of the e-commerce industry, an industry in which the United Kingdom takes a strong leading role.

The Minister has asserted on a number of occasions that he feels that the United Kingdom is taking a view towards e-commerce security which will be followed

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by other countries. I am not entirely sure that that is true. Indeed, I would be surprised to see wide international agreement surrounding the approach that the United Kingdom has taken. But we on these Benches have always said that the more international agreement we have, the better. However, if the Government are determined to push ahead with this Bill on their own, there is a danger, as the Minister will be tired of hearing, that this business could evaporate. It is extremely mobile internationally. The Minister simply does not have the power to control. If he puts excessive regulation on the business in this country, it will move overseas. We have already seen those indications.

Amendment No. 14--it is difficult to argue that it is unreasonable--adds a layer of comfort to the Bill. At least with the technical advisory board there will be an avenue of appeal; there will be an area to which ISPs can go and discuss the technical obligations being imposed on them by government. As the noble Lord, Lord McNally, said, it is clear that industry knows a huge amount about its business, unlike the Government. The Government, by definition, cannot move as fast as the e-commerce industry. I believe it will be of great assistance to the departments and agencies for which the Minister is responsible to have that level of input.

If companies do not wish to use the board; if they prefer to have private discussions with the agency looking to impose this burden, then so be it. But at least they have an alternative avenue.

Clearly the fact that my noble friend includes "financial consequences" in the amendment is extremely important. When we come on to later amendments to Clause 13 we will discuss the financial burdens--they may be very high--which may be imposed by the Bill. We look forward to the Minister giving us more clarity about the Government's approach towards co-operating with industry. There is little for the Government to lose. They may say it is another layer of bureaucracy. That is true. But if the Government are determined to drive ahead on their own, they need this safeguard. If they do not accept this safeguard, there could be substantial losses to our economic well-being.

Lord Desai: My Lords, I wish to speak briefly on Amendment No. 17. But before I do so perhaps I can say something on Amendment No. 14.

In moving the amendment the noble Lord, Lord Cope, said that BT was worried about these notices being public rather than being used individually. I understand that there are issues of commercial confidentiality, but that will have a bearing on how the proposed technical advisory board operates. If the users are to fall under paragraph (a) of Amendment No. 17, some of them may be competing ISPs. Such matters will have to be taken into consideration when the composition of the board is decided.

As I said in Committee, among those defined as persons affected by Clause 12 I hope to see mention of ordinary citizens, not just ISPs. It is bad enough to

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have all the users of interception as regards paragraph (b) of Amendment No. 17, but if they got into cahoots with all the ISPs I would be even more frightened. That would just be a ganging up on ordinary consumers and citizens. Whatever happens to the amendment and whatever shape the technical advisory board takes, I hope that it will look after the interests of ordinary citizens because they should be protected.

Lord Howell of Guildford: My Lords, the noble Lord, Lord Desai, has made a very pertinent point upon which I hope that the Minister will be able to reassure us. I strongly support the comments made by my noble friends Lord Cope and Lord Goschen about the need for a board of this kind. It would give some reassurance as regards meeting the problems raised by the legislation.

I apologise for not taking part in the Committee stage; indeed, I regret it. However, the Report stage will allow me to express fears that I suspect are increasingly widely shared, as the general public become aware of what is proposed and how the whole slant of the Bill, which I recognise has been accepted by parties on both sides of the House and in the other place, is really in favour of a bureaucratic hierarchical order of the kind that is actually being swept away by technology. We are moving into a network world in which this kind of attempt by such central authorities will, in five years' time, look as absurd as did the attempts of the old authoritarian governments of the 1960s and 1970s who tried to keep a grip on their societies in eastern and central Europe. In the end, they were swept away not only by politics but also by technology. I believe that technology will carry this whole process along far faster than government officials or bureaucrats recognise.

It is perfectly obvious that this is a global phenomenon. The e-mails that everyone is involved in sending and in dealing with, the operations of the ISPs and of the Internet portal and vortal providers, and so on, are done on a global basis. Every day millions and millions of e-mails travel across the Atlantic and into other parts of continental Europe, as well as into Asia. Who will advise on the interface, the link-up and the logic of a link-up between what this Bill attempts to do and what is going on elsewhere in the world? It is not merely a question of finding that if we do not have the proper interface we shall fall behind as an island. In fact, this technology does not take any notice of borders, nations, islands or national boundaries.

If we attempt to provide the kind of control and authoritarian intervention which is hinted at by the Bill and we are not in line with what is going on in the United States, in the rest of Asia or, indeed with what our continental partners are doing, we shall look a crowd of fools. Indeed, we shall look absurd. We shall find our efforts both ineffective and damaging. Therefore, it seems to me essential that such a board should at all times examine very closely what is going on in the rest of the global system of which we are just a part. We are just an individual element--a cluster, if you like--in the network system, which is the global Internet web. Unless we have a body of this kind

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keeping its eye on such matters, we shall be in grave danger of passing legislation that is not only damaging locally but also highly ineffective. Indeed, it may interfere with the general advance of the global information system, which, if properly understood and harnessed--although it has its dangers--could be of great benefit to all mankind.

6.15 p.m.

Lord Stevenson of Coddenham: My Lords, I had not intended to speak during the Report stage and must apologise to the House for doing so because I did not speak in Committee. That can be put down partly to inexperience as I am very new in this place and partly, quite frankly, because I had not understood some of the implications of this Bill as regards some of my activities. I must declare an interest at this point in that I chair two of our top 20 companies, both of which are huge investors in Internet-driven companies, spending about £2 billion this year. I personally invest in a number of rather smaller companies.

However, those companies all have in common--this is most important--the fact that they will ultimately be paying for this regulation. I suspect that the Minister has been lobbied by the people immediately affected. I have to admit that large companies like the ones I run have not really understood the implications involved. Despite all the publicity, I believe that that is an important point that Her Majesty's Government should take on board.

I should make it plain that I am hugely supportive of the purpose of the Bill. I believe that the UK is an extremely good place in which to do e-commerce. With the odd exception, I think that this Government have been pretty darned good at maximising and optimising that development. However, I have a real worry that a miscalculation on costs could lead to accidents that we would really regret. Since I became all worked up about this, I have read very widely. I have read the debates that took place on the subject both here and in another place. I have also read as many of the lobbying documents as I could find. It seems to me that there is complete disagreement about the cost implications of the legislation. It is my judgment that no one knows what the cost to the economy will be. I strongly support the view expressed by the noble Lord, Lord Cope, that, in any event, it will be different this time next year: the technology will have changed and goodness knows what it will be like!

Having declared my interest, I should like to share with noble Lords how this legislation will affect my businesses. It is possible that it will be all right and that the Home Office, with the help of the Government--I am not being at all sarcastic--has got the costs in perspective; in other words, there will be a marginal addition to the cost of doing business, and that is fine. However, some people may not feel confident about that. It is not a case of either of the businesses that I run suddenly saying, "Hey, unless this changes, we will be leaving the country and going to America". It will not be like that.

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One of my businesses is a very large international business and the market leader in its field world-wide. A majority of its profits and activities lie outside the UK, but the UK gets a huge benefit from its British domicile. But if we have a relative cost disadvantage in this country, the business will melt away into other countries. Indeed, not even the chairman will know about it. It will happen in the process of doing business and the Government will not have the luxury of any warning.

My other business is a largely UK business in the financial services industry. It is a business that is poised to internationalise. The situation there would be rather more abrupt and spectacular if the people working for me suddenly realised in six months' time that there would be huge cost implications as a result of this legislation. There would be more formal moves outside the UK because we are already discussing with partners in different countries how we operate. At present, the UK will get the benefit of that; but if we are loaded with cost, the chances are that we shall relocate certain activities abroad.

I have to be honest and say that I do not know whether the proposed technical advisory board is the right way to deal with this issue. Although it would add another level of bureaucracy, I must say that it sounds rather sensible. However, unless the Minister and the Government are really confident, on advice, that they have the costs in perspective, I urge them, please, to find a way to ensure that, when they are gone and other people are gone, there is flexibility to control the situation. Indeed, they should do that if they have a scintilla of doubt that there could be huge costs involved. The suggested technical advisory board could be one way of achieving that aim.

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