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The noble Lord, Lord Crickhowell, asked about President Medvedev’s statement two days ago in which he called for a new security approach embracing both sides in an agreement around security principles of mutual non-interference and guarantees of the independence of the countries of the wider Europe and Russian region. Similarly, we have heard other initiatives, such as the Swedish-Polish initiative. The response to all these is to say that we are seeking more information on both those initiatives. There will be extensive discussions of them in the coming weeks, but we should remain open to them regarding suggestions on NATO and weigh everything against our goal, which is to secure a set of borders that allows countries to enjoy full independence within them and reduces any prospect of action by neighbours against each other of the military kind that we saw in August. It is a little early to conclude the best way of bringing Russia back into such an arrangement, but we need to be open-minded to suggestions from all quarters.

We remain committed to the EU-led Geneva talks, which are, as was mentioned, due to start next week, on 15 October. It is extraordinarily important that Russia demonstrates real commitment to this process and to the unresolved questions, because, for all the progress that we have made on observers, there has not been progress on refugees and internally displaced persons, or on property rights of those who have been displaced by the conflict. There remain outstanding humanitarian issues and profound questions of human rights and their breach. Beyond providing that lasting security and stability, we need to redress the events of the past weeks and months and their real cost to individuals. We all know that, when people are displaced and their rights to their previous homes are left unresolved, that can be a source of tension and conflict that can run through generations and decades. We have seen it in too many other places, from Cyprus to the Middle East, to want to leave these issues unsolved, somehow setting firmly in concrete as time elapses. We need to solve them now.

On 1 September, the council unanimously decided to suspend negotiations on a successor to the EU-Russia partnership and co-operation agreement. That assurance, which the noble Lord, Lord Astor, sought, remains in place. While, as the report argues, a successor agreement is enormously important, negotiations on it will resume

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only when the issues of August have been satisfactorily resolved. It was also agreed that we would conduct a comprehensive review of EU-Russia relations and intensify efforts to ensure the EU’s long-term energy strategy. We remain committed to the PCA negotiations, but in good time, when the circumstances are right. The agreement to an audit of EU-Russia relations, which has already begun and will run up to the next EU-Russia summit in Nice in mid-November, will allow us to take a considered decision about the future of relations between Europe and Russia.

The committee can in one regard take some comfort from the events of the summer: if it had felt that there had been some complacency in the Government’s views on the energy question, nothing has concentrated minds more than the events of August. We certainly believe that a long-term energy strategy will require support for infrastructure that diversifies energy resources, renewables and energy efficiency, as well as measures to improve the internal market. The Prime Minister has made it clear that we would support Europe giving increased support for the development of the Nabucco pipeline as a critical part of such a strategy.

I make a broader point, which I know is slightly disputed in this House, about who depends on whom in terms of energy security. While the European Union is of course highly dependent, particularly in a cold winter, on Russian energy, the EU remains by far the largest market for Russian energy. Gas exports to the EU provide a significant proportion of Russia’s annual GDP. Russia needs the EU and, in particular, UK investment and technology to develop its natural resources. Without investment in new infrastructure that will link Russia to new markets, not only will we continue to be the natural trading partner as a region for Russian energy, but also Russia will remain as dependent on us as we are on it.

I apologise for not being able to respond to every issue raised today; I will return to some of them where appropriate in letters to noble Lords who raised them. Let me conclude. What ultimately is our best defence against a Russia that is in some ways resurgent and in some ways seems unwilling to accept all the rules of international behaviour and law? NATO remains a vital prop. However, as many noble Lords have observed, an equally important part of our strategy is the expansion of not just markets but the values that underpin those markets. The security of Georgia and Ukraine rests much more on drawing them into a strengthened and deeper democracy and drawing their economies into links with Europe, as they start to share the benefits of us as customers and trading partners. Russia’s long-term stability and value to us as a partner rests on its coming to terms with the need for the rule of law in its commercial dealings and its internal human rights arrangements, as well as how it deals with its neighbours. What is often called the “soft-power strategy” of expanding economic, cultural and political ties, not only with Russia’s neighbours but with Russia itself, must not be disrupted or thrown off course by recent events.

As many noble Lords have said, we must deal with Russia through engagement and by drawing it into the orbit of markets, values and mutual interests, because

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that is the long-term path to peace. Russia has seen the cost of defying that in what has happened to its markets. This may not seem the best week ever to make the case for how the expansion of markets can bring prosperity and peace, but we should not be shaken in understanding that the same circumstances that brought the end of the Cold War, the fall of the Berlin Wall and the expansion of those values of democracy and free markets remain our best weapon in dealing with Russia.

12.55 pm

Lord Roper: My Lords, I begin by thanking all those who have taken part in this debate, particularly the Minister. I agree with him that we have been fortunate in the timing of this debate, even if it has been slightly hijacked by the events that have occurred since the publication of the report. It has been a very useful debate; I am particularly grateful to my colleagues on the sub-committee—the noble Lords, Lord Truscott, Lord Crickhowell, Lord Anderson and Lord Hamilton of Epsom—who were able to develop and extend parts of the report. I am glad that we have had the time to consider parts of the report because, as the Minister said, the analysis is valuable.

I was particularly pleased that the noble Lord, Lord Hamilton, had the chance to make the case for his amendment. He enriches the diversity of the committee as he has enriched the diversity of this debate. We appreciated particularly the powerful speeches by the noble Lord, Lord Skidelsky, and the noble and learned Lord, Lord Morris of Aberavon, dealing with some of the wider aspects beyond the question of the European Union’s relations with Russia. Of course, our report was produced before the June decision of the NATO council, which is why the subject is touched on only tangentially in the report.

I very much appreciated the kind words of the noble Lord, Lord Judd, who was able not only to give us a historical perspective but, from his experience as the Council of Europe’s rapporteur on Chechnya, brought to our attention that important part of the matter.

The noble Lord, Lord Sheikh, raised serious problems that can be justly put to the European Union, but we should note that the European Union has had one important logistic success. We usually talk about how slow it is for the European Union to get operations into the field, so to get the 200 members of the European Union monitoring mission into the field quite so quickly, with such a diversity, is something of which it can be justifiably proud. As the noble Lord, Lord Sheikh, hinted, it is also important that we have a common analysis of Russia among the member states of the European Union if we are to get common reactions and actions from the member states. Therefore, the work to which the Minister referred is of great importance.

I was grateful for the support from the various Front Benches for the general thrust of the report. What my noble friend Lord Wallace said about our needing to look at the other frozen conflicts is particularly important and I hope that that is something that the EU with its special representatives in the south Caucasus

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and elsewhere will be able to take forward. The noble Lord, Lord Astor of Hever, as I might have expected, raised one or two issues about the future role of the European Union, but I was pleased that he recognised that there were a number of areas in which it can play a useful part.

To the Minister, I would only say that I had not really thought about the curse of Sub-Committee C. Whatever subject we choose for our report then experiences a deterioration in its situation. We must be more careful in future. The point that he made about Russian reactions is important: international relations are often more about perceptions of what is happening than about the reality. We refer in our report to how Russia has perceived some developments over the past 20 years.

The Minister replied slightly obliquely on the timing of the return to negotiations; he said that it would happen when circumstances are right and when we are satisfied with various developments. We will obviously watch this carefully. There may well be more than one view, both in the General Affairs and External Relations Council and perhaps at the European Council meeting next week. I totally share his conclusions on the importance of bringing Russia into the wider economic and political communities of which we are part. Developing a common European foreign policy with Russia is a great opportunity and a great challenge. It may not be something that we succeed in, but I am sure that Members of this House will watch what happens with great interest.

On Question, Motion agreed to.

Internet: Personal Security (S&T Report)

1 pm

Lord Broers rose to move, That this House takes note of the reports of the Science and Technology Committee on Personal Internet Security (5th Report, Session 2006-07, HL Paper 165-1) and Personal Internet Security: Follow-up (4th Report, HL Paper 131).

The noble Lord said: My Lords, those of us who are regular computer users—I think that we are now a majority, even in this House—have for some years been watching with alarm the increase in the criminal use of the internet, and have been especially worried about the impact that this has had on non-expert users.

In 2006 that concern led the Science and Technology Select Committee to decide to conduct an inquiry into personal internet security. The report from the inquiry was published in August 2007. In October 2007, we received the Government’s response to our report, which we were disappointed to find was extraordinarily complacent. Few of our recommendations were accepted and, indeed, the Government did not even agree with us that abuse of the internet was a significant problem.

As the committee was not satisfied with this response, a follow-up inquiry was launched in February 2008. It was chaired by my noble friend Lord Sutherland. As part of this follow-up, the committee asked those who had given evidence in the original inquiry to comment on the Government’s response. After receiving these

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comments it took evidence from two Ministers involved in policy on internet security: Mr Vernon Coaker, then Parliamentary Under-Secretary of State for Crime Reduction in the Home Office—I would like to congratulate him on his recent promotion—and the noble Baroness, Lady Vadera, Parliamentary Under-Secretary of State for Business and Competitiveness at BERR.

We were gratified to learn from the Ministers that the Government’s view had changed and that they were now taking a more positive view on our recommendations. Mr Coaker acknowledged that the follow-up report had prompted them to rethink their response. He said that the report had helped to drive the agenda forward and that reconsideration of the evidence had reinforced progress.

However, it was clear from the input we received from the witnesses that there was still much to be done. In this connection we were pleased that Mr Coaker offered to keep the committee informed every two months. We were grateful that he held to this commitment and the committee was pleased to receive his reports in July and September. On behalf of the committee I would like to thank Mr Coaker and the noble Baroness, Lady Vadera, for working so constructively with the committee.

Before moving to the substance of my remarks, I would like to thank those who supported our inquiry. First, I acknowledge and thank Dr Richard Clayton, our specialist adviser, who is one of the world’s leading authorities in this field and who has the added talent that he can explain the complexities of the internet in terms that non-experts can understand. His advice and his contacts were invaluable to us.

I also thank Christopher Johnson, who was clerk to the original inquiry, and Christine Salmon, who was clerk to the follow-up inquiry, and the staff of the committee who expertly co-ordinated the taking of evidence and organised our visits, especially the very valuable visit we made to the USA, and who wrote the clear and concise drafts from which the final report has emerged. I also acknowledge the contribution of committee members who participated in these inquiries and who brought a broad range of expertise to bear on the issues, some of which were of a highly technical nature.

I do not intend to go through all our observations and recommendations—they are laid out clearly in the report—other than to say that we still support all of them. I will instead concentrate on those I consider most important and that remain outstanding. Last week the committee was pleased to learn that the Government were going ahead with our recommendation to establish a specialist e-crime police unit, although it is not clear how the £7 million that is to support this unit is to be spent. We would appreciate the Minister telling us more about that. I seek reassurance that the important expertise that this unit will provide will be available to police throughout the UK, and that something along the lines of the regional centres of expertise set up by the FBI in the USA will be replicated here.

Important issues remain unresolved, such as the responsibilities of the banks. It is anomalous that the banks in the UK are not obliged by law to refund

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those who have been defrauded by electronic means. The banks set up schemes to avoid fraud, but when these fail they determine whether you have been defrauded. It is true that in the majority of cases they refund the money of people who have been defrauded, but they do this only under the voluntary Banking Code. Why are they not obliged to do this by law? In effect, we are being asked to put the banks in the special category of trusted institutions. In today’s environment this is scarcely appropriate. I suggest that we should watch them closely and regulate their responsibility to pay up when their anti-fraud schemes fail. We should introduce legislation equivalent to the Bills of Exchange Act 1882, which specified that if a bank honoured a forged cheque, the bank, not the customer upon whose account the cheque had been drawn, was liable.

The Government tell us that when we are defrauded we should report not to the police but to the banks. This is aimed, apparently, at reducing police bureaucracy. However, it is not in the banks’ interests to draw attention to the fact that their anti-fraud systems have failed, so they hope that the volume of fraud will not be too high and that they can absorb the losses. They remain silent and the crime is seldom, if ever, reported to the police.

I tabled a Question for Written Answer on this topic that was originally aimed at discovering the fraction of cases of electronic fraud reported by customers to banks that the banks had passed on to the police for investigation. I was told that this Question could not be answered because the Government grouped together online credit card and cheque fraud and did not separate out fraud reported by banks from that reported by individuals and merchants. Therefore, the noble Lord, Lord West, gave me the total number of cases of fraud from all sources reported to the police, thereby revealing that the Government have no comprehensive data on online or credit card fraud.

If you are defrauded via your credit card in the USA, your bank will not consider your case until you have reported it to the police and have sent it a copy of the police report. This enables the police to record and collate the information. If it is established that you have been the victim of fraud, under law the bank must refund you all but the first $50. In practice, they refund everything. The bank sends the information to the Federal Trade Commission, thereby ensuring that the Government have a record of all such electronic crimes and can monitor their growth or decline.

The Government rejected our recommendation that a cross-departmental group, bringing in experts from industry and academia, should be established to help gather and classify all forms of e-crime. In practice, data exchange over the internet and the storage of data are highly technical matters; they are so technical that very few people understand all the complexities of routing, encryption and decoding, and are therefore in a position to predict where the criminal experts are likely to practise their art.

Why are the Government resisting our recommendation? Do they think that they can do it themselves? The number of cases in which there have been losses of data from government and military

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organisations has been so large—there has been yet another today—that surely, had it occurred in the 1880s, it would have been the plot for a Gilbert and Sullivan opera. Do they really think that they can cope without advice? Why have they not accepted our recommendation to set up the expert group? I reinforce our recommendation that a data security breach notification law be introduced. The Government, fortunately, seem eager to admit their losses, but this is not the case with the banks and with industry. They, too, should be required under law to inform people when their personal data have been lost and they are therefore put at risk.

Finally, I will talk about the responsibilities of the network providers and the internet service providers. We recommended that the Government and Ofcom engage with the network operators and the ISPs to develop higher and more uniform standards of security in the industry. In particular, we recommended the development of a BSI-approved kitemark for secure internet services. Their response was that kitemarks were for products, not services, an out-of-date distinction in my mind, and went on to say that in any case this was up to industry, not government, and besides it was clear that the review of the EU regulatory framework for communications providers would address security and consumer issues and it would be unwise to do anything before the requirements of the European legislation had been clarified. Has there been any progress in Europe? How long are we prepared to wait before we do something ourselves?

Another aspect of the responsibilities of ISPs is whether they should be held responsible for the consequences of passing on false and damaging information. Sir Timothy Berners-Lee recently expressed concern over such misuse of the web. He was troubled by its use to spread fears that flicking the “on” switch of the Large Hadron Collider could create a black hole that would swallow up the earth. He had also been troubled by the misinformation that had been spread over the web that the MMR vaccine was harmful. He told BBC News that there needed to be new systems that would give websites a label of trustworthiness once they had been proved to be reliable sources. The label sounds rather like a kitemark to me.

He went on to discuss the difficulties that this would present, but none the less he felt that it was important to find a solution to this problem. Sir Tim’s World Wide Web Consortium, which has been strongly opposed to any controls being placed on the web, has changed its position on this. This is another example of how the headlong pace at which the web is growing challenges existing norms and requires new mechanisms for control. Can the Minister reassure us that the Government are putting in place the capability to react in time to threats that the relentless increase in the use of the internet presents, both with regard to the spreading of misinformation and ensuring that personal data are held securely? I beg to move.

Moved, That this House takes note of the reports of the Science and Technology Committee on Personal Internet Security (5th Report, Session 2006-07, HL Paper 165-1) and Personal Internet Security: Follow-up (4th Report, HL Paper 131).—(Lord Broers.)

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1.13 pm

Lord Mitchell: My Lords, the response of Whitehall and of the Government to the Personal Internet Security report demonstrates a fundamental weakness in our system of government. The Members of your Lordships’ House who sat on the investigation are highly experienced, and the witnesses who we saw, both here and particularly in the United States, have tremendous knowledge and expertise. The costs that we incurred and the time that we spent in our deliberations were significant. We produced an outstanding report on a crucial topic, of which all of us should be proud. Yet the Government’s response to our original report was hugely disappointing. I would be the first this afternoon, but certainly not the last, to thank our chairman the noble Lord, Lord Broers. He has a powerful CV and he led us with great skill, determination and technical insight. I must also thank him for pushing hard to secure this debate.

The Government’s response lacked depth and urgency. It failed to address many of our recommendations. Indeed, from their first response, I began to wonder whether Ministers had even read the report. My view is that government pay scant regard to parliamentary Select Committee reports, especially those from your Lordships’ House. I have encountered Whitehall departments which are almost totally ignorant of the work that we do in this House. I suspect that in many cases attendance before a Select Committee is regarded as a nuisance—an irritating distraction to the Minister’s very busy and no doubt important day. This dismissive attitude diminishes the role of Parliament.

The noble Lord, Lord Broers, was correct not to accept the Government’s tepid response and to encourage the follow-up that the whole committee recommended. Eventually the Government started to take us seriously, and my noble friend Lady Vadera, to her credit, has shown a complete grasp of the subject. I hope that she is now on our side. I am sorry for my rant but this subject truly bothers me.

I would like to try to inject a sense of urgency into this subject. The IT industry is like no other. It moves dazzlingly quickly. When I re-read the report this week, I became aware of how much was missing, not because of any omission on our behalf, but simply because much has happened in the 16 or 17 months since publication. I wish to highlight a development that my right honourable friend the Prime Minister announced in his conference speech two weeks ago. He stated that £300 million would be made available to enable underprivileged children to have personal access to laptops and the internet. This will enable all children in this country to have access to their school work at school and at home. The objective is to make Britain’s children fully trained in the use of this crucial 21st-century technology. The digital divide, as it is called, separates children across class barriers and the announcement goes a long way to redressing the balance.

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