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Lord McKenzie of Luton: My Lords, I thank my noble friend for his questions. In relation to simplicity or complexity, in any construct of a tax system or a benefits system, there is always a challenge between getting things fair and making them simple. As regards the ability of, or the requirement for, people to understand the calculation, it is not necessary to understand precisely how the calculation works. It is important for people to understand the factors on which the calculation is based—family size, and so forth. The need to demonstrate and communicate that
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better has been recognised so that the components of the calculation are clearer. It is not beyond the capacity of most people to know the family income, the number of children and the composition of the household.

Nor do I think that we should accept that the computer systems cannot cope with those arrangements. Clearly, there were failures at the start of the process which have now been addressed, and the system is now stable. If computer systems cannot cope with this, what sort of technological world are we living in?

Recovery is important. For those recoveries that are made after the end of the year, the current code of practice says that no more than 10 per cent of the award can be deducted when people are on the maximum benefit. That increases to 100 per cent when people are on the minimum benefit. When people are in the taper, it is 25 per cent. There are more difficult concerns, which are recognised, when an overpayment is spotted during the year. Rather like the pay-as-you-earn system, the computer works to recover that immediately. But there are mechanisms in place to identify hardship and for there to be a reduction in what is claimed during the year.

With regard to suspension of recoveries until there is a positive act of the claimant to challenge, there is a balance between what is fair to taxpayers in general and what is the right construct for a system of this nature. Where there is a dispute and a recognised error, the process can be halted, but not in every case. If a recovery or an overpayment has been identified, processes to recover it, provided that they are fair, ought to proceed as a natural part of the system.

The Earl of Northesk: My Lords, is it not the case that Ministers were somewhat selective in their presentation of the November 2002 Gateway Review of the tax credits IT system, highlighting such comments as the project being,

But is it not also the case that the Gateway Review emphasised that the project was high risk? To what extent at the time did Ministers factor that into its development? Is it not also the case that by November 2003, Nick Montague, then chairman of the Inland Revenue, in evidence to the Public Accounts Committee, blamed the tax credits fiasco on a failure of the systems? Is it not surprising that, in a year, what the Government had chosen to describe as,

had become the villain of the piece?

Moreover, the Statement implies that this sorry mess is just a little local difficulty that can be ironed out with a bit of tinkering round the edges. But are not the problems very much deeper and wider than that? For example, is it not the case, as revealed by Steve Lamey, chief information officer and a board director at HMRC, that the department sends about 30 million letters to wrong addresses each year, or that
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each of 72 tax offices process self-assessment forms in different ways? Even on separate floors within a single tax office there are sometimes different processes.

Against that background, should not Ministers be a little less complacent and face the fact that, as Computer Weekly put it, the Revenue is riddled with "systemic failures"? Is it not time for a little humble pie—perhaps, even, as my noble friend Lady Noakes has suggested, an apology or two?

Lord McKenzie of Luton: My Lords, the noble Earl, Lord Northesk, raises a number of interesting points, but forgive me if I cannot immediately give a detailed answer to all of them. There was a wholly unexpected failure of the IT system, but that does not mean that the programme was badly managed overall. I do not believe that the Government have been complacent in the failures in the system. They have addressed it and have changed IT partners, as we discussed earlier. The system is now stable. Making sure that it remains so is an important part of the policy going forward.

Intellectual Property Rights

5.38 pm

Baroness Buscombe rose to ask Her Majesty's Government what steps they are taking to protect intellectual property rights for the creative industries.

The noble Baroness said: My Lords, before asking my Unstarred Question, I want to say that there is an element of Alice in Wonderland, when I look at the time allowed. The Order Paper states that we are time limited to one and a half hours, but that the time for speeches is expected to be limited to 10 minutes. There are precisely two speakers and the Minister—two times 10 makes 20, plus 12 minutes for the Minister makes 32—and we have one and a half hours. Perhaps the Government do not feel that intellectual property is important, but we do. However, sadly, I have culled my speech to 10 minutes.

I am asking this Question in your Lordships' House today because I firmly believe that we are the best in the world as creators and originators of novel and inspirational works. Currently we are in the midst of an era which presents tremendous opportunities for commercial change and development in the creative industries as a whole. Solid intellectual property protection lies at the very epicentre of sustaining and promoting vibrant and fresh new works from the talented individuals of this country. As the noble Lord, Lord Evans, said only last week in response to a debate on the arts as a tool for urban regeneration:

There is no doubt that if we are to sustain our leading edge in the creative industries and to compete successfully in global markets, we must have effective
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IP protection. In particular, copyright management and effective protection is an issue which is central to the success of the creative industries. Moreover, over the past few years copyright has taken a front seat and concerns relating to the prolific and burgeoning industry in Internet downloads have been increasingly well publicised.

The current legal framework has substance and a number of interventions from Europe has successfully modified our national provisions to cope with changes resulting from ever-improving electronic methods for sharing information. But are the Government doing enough to ensure that loopholes in the current legislative patchwork are quickly closed off and that a sensible review of potential future improvements, piracy being one such area, is being conducted in concert with the rest of Europe?

It is vital that this important area is kept under the spotlight and it is for that very reason that I first tabled this Question over a year ago. During that period the Government have made strides to improve publicity and education in intellectual property matters. I agree with at least one aspect of their current strategy; that existing creators' rights require better and more effective enforcement, particularly in view of the increase in piracy. However, a recent proposal put forward by the Minister in another place, James Purnell, that,

is too ambiguous. Is the Minister just trying to backtrack with warm words following eye-catching announcements in the media heralding stronger IP protection? If so, he must know that this strategy can actually create uncertainty and instability in the marketplace, and is potentially harmful.

While I agree wholeheartedly with any endeavour to draw out the industry's problems, my wonder is whether anything is being delivered. Moreover, are the Government paying attention to what the EU Commission is already doing? The Commission has itself launched very similar initiatives to look at the IP framework, albeit on an EU-wide scale.

On that European note, this year, as a consequence of its Better Regulation initiative, the Commission will conduct further extensive reviews of a number of areas, including copyright. The Commission intends to review the practicalities of how copyright and related rights are commercially exploited on a day-to-day basis. Essentially, the fact that copyright is still largely administered on a national level leads to certain inherent inefficiencies in the regulation of rights-rich global media such as the Internet. For example, the way in which collecting societies do business in each of the EU member states may well come under scrutiny during the Commission's review.

The Prime Minister's imminent presidency of the EU offers a gilt-edged opportunity to press our claim for stronger IP legislation and enforcement. This includes increasing the term of protection for sound recordings. Can the Minister confirm tonight that the Prime Minister will deliver on this opportunity?
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On the domestic front, the Government's announcement that they will help to fund a study to assess the viability and possible shape of a dedicated music council has been welcomed with open arms by the industry, but I urge a note of caution in that any partnership with government must not diminish the industry's freedom to question government policy and direction. I do not want to be a killjoy, but I urge the industry to ensure that this is not just another popular headline that serves to deflect genuine delivery.

Talking of delivery, surely it is now time to deal with the duration of copyright for performances and sound recordings. An appropriate duration is fundamental to the ability of the music sector in Britain to continue to take a leading role, culturally and economically, on the international stage. While performers in the United States are assured of 95 years of protection, the rights of artists residing within the UK expire after just 50 years, and during their lifetime.

How can a 50-year term be deemed proportionate when the songwriter enjoys copyright in his lyrics for a term of life plus 70 years? This obvious inequality serves to place our music industry on a weaker footing in comparison with other countries such as the USA. Even Guatemala and Honduras enjoy more extensive protection than us. The distinction in copyright term between Europe and the USA serves to confuse and bewilder artists and producers alike. The commercial impact of such an erosion of confidence in European legislation is that both performers and producers move abroad in search of better terms.

This is a well known problem and one that causes commercial concern to the industry as a whole —and that includes composers and songwriters. The value is in the creative content. A timely and certain remedy must be found.

I mention the industry "as a whole" for good reason. It is a common conception that only wealthy, multinational, commercial record companies and publishers suffer as a result of erosion in copyright value. It is this fallacy that brings about limited sympathy from the general public. However, the damage runs much deeper. The effect of reduced profits at the top of the tree means reduced budgets and tighter deals with original and creative composers, musicians and songwriters. Less chance, less opportunity and less prosperity is the harsh reality faced by this group of individuals. Funding new artists becomes harder and as a direct result talent may remain untapped, undiscovered or unfulfilled. Improvements in the extent and enforcement of copyright could very well serve to benefit everyone from the top down.

This is about looking after our innovators. Providing for the benefit of the industry's major players ensures that we are better placed to extract and exploit the benefit of our strong individual talent base.

I turn now to the infringement of intellectual property rights. In essence, it can take just one casually uploaded album or track to devastate the legal market for that recording. There is a perception that downloading music and film from the Internet is a victimless crime; this is simply not the case. There
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are essentially two aspects to consider: the first is the problem with our friends, colleagues and children downloading music from the Internet; the second is the more serious, well organised criminal syndicates which extract many millions from the music and film industries on a daily basis. Research indicates that the value of the black market in counterfeit and pirate DVDs was at least £600 million in 2004, with the figure for the music industry being very similar. Furthermore, over £320 million of music sales were lost over two years because of illegal downloading in this country.

In relation to hardcore piracy and criminal activity, an opportunity to remedy the problem is being presented by the enforcement directive, due to become law in April 2006. There are concerns that the Government are delaying implementation of the damages provisions which will allow strong and dissuasive punishment for criminal activity. Can the Minister confirm that the enforcement directive is on course to enter the statute book as planned?

But strong legislation is not the end of the problem. Effective enforcement is the last step in catching and prosecuting criminals. At present there is simply no incentive for poorly funded and understaffed trading standards offices to launch and persevere with long, drawn-out prosecutions against counterfeiters. The Government are simply not doing enough to help trading standards offices. More must be done on an urgent basis to send a message to criminal syndicates that they will be effectively prosecuted and that the risks are far from minimal. Trading standards offices must be properly funded.

Also, the planned reform of the Patent Office is crucial to achieving an efficient and robust IP framework. The unmistakable challenge will always be that of how to ensure that we get a return on our investment, be that in artists and repertoire or research and development. The value of our inventions and creativity must not be allowed to ebb away through illegal copying. A central plank of government policy for the next few months should be in reforming the Patent Office into a strong, politically led champion of intellectual property. One of its core terms of reference could fall directly under the Labour Party manifesto commitment to,

If only I was allowed the time to touch upon so many more important concerns held by the wider industries. For those who make photography their life's work, protecting their copyright goes beyond the emotive; it is their livelihood. Without adequate protection the photographic image—tomorrow's cultural heritage—and those who create it will cease to have true value, and without adequate protection a profession dies. Photographers are concerned that, in the digital age, information supplied with the digital image about copyright and the creator is stripped away, often automatically, so that in a matter of moments the world is awash with "orphan" images.
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In addition, recent changes in design law have impacted upon design rights and copyright protection for products as diverse as clothing, toothbrushes and cars.

Much of what I have said should, in an ideal world, be underpinned by a change in our consumer culture. One way of bringing that about is through better education, as the key to driving a healthy respect for intellectual property rights. We have to fund, teach and educate at an early age to enshrine the values of intellectual property as a bundle of rights that can be used as both a sword and a shield. In the words of David Arnold, Fellow of the British Academy of Composers and Songwriters and one of a new generation of exciting and innovative composers,

There is work to be done and I urge the Government to deliver.

5.52 pm

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