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We have had a lot of comment today on how the creative industries are being wrecked. The games industry grosses more than the cinema industry now. I said to the managing director of Nintendo, which after all is one of the biggest games things in the world, "What are your views on illegal activities?" I was privileged-I got number one interpreter, I could have had number one, two, three or five but I got number one for this important question. He said, "Could you do something about Spain and China?" I did not like to tell him that my influence in the United Kingdom is pretty abysmal, but when you get to China it is absolutely sub-zero. However, they said that because it is illegal in these countries and we are putting in provisions like these, they sell enough to make the whole thing work. Therefore, from his point of view-I am not saying whether he was right or wrong-he was not worried.

As my noble friend Lord Lucas said, ultimately the only thing that will stop all this is the right goods being supplied at the right price, so that there is no incentive to get hold of illegal copies and illegal things. I am told that it will not stop those who try to get the new movie out, because for them the game is to get it first. It is not commercial: the fun is to get it first. I am told that if you go to screenings-the noble Lord, Lord Puttnam, will know this much better than I do-for previews of films for BAFTA or something like that, there are people standing in the room with infrared detectors to see whether anybody is filming and to try and stop this game from happening.

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It may be that we are seeing an evolution. Far be it from me to say, but apparently young people now go and visit the same film four or five times. It is an outing, and that is what gives this impetus to films such as "Avatar" which are getting these huge grosses: people go and it is their form of fun.

Lord Lucas: My Lords, I should be very grateful if the noble Lord could enlarge on why he thinks the solutions to this problem lie in the Copyright, Designs and Patents Act. It seems that copyright is quite clear on this: somebody is either making copyright material available for purchase without payment or permission of the copyright owner, or they are acquiring material knowing that the copyright owner is not to be paid. Dealing with that effectively is all about the sort of mechanisms we are putting into the Communications Act, which seems a sensible place to have a power to vary what we can do by way of enforcement under the Act. Why are we meddling with copyright? What changes to copyright can be imagined that help the sort of things that might happen?

As the noble Lord, Lord Triesman, said, Napster came up and was a surprise to us all, but the principle was the same. We would not have needed to change copyright to deal with Napster or anything like it. We do not need to go at copyright in a big way, nor have we been, to deal with peer-to-peer. The fundamental human actions are the same. All we need to do is make them clearly illegal and find ways of preventing them in the world outside. The copyright remains the same.

Lord Triesman: My Lords, I appreciate the noble Lord giving way just before sitting down. I think the point I have tried to make has been misconstrued. It is not that you cannot capture some of these activities using current copyright law; it is that the rate of technical advance produces circumstances which may make that very cloudy and difficult to enforce. They are also difficult to project.

Lord Whitty: My Lords, I promise not to repeat what I said in the previous debate. There are two issues here.

First, if Clause 17 stays as it is, it is a matter of great controversy in this House. Whether the noble Lord, Lord Clement-Jones, moves his amendment tonight or a debate is staged I would have to support it if the Bill stays the same. However, I was comforted by what the Minister said in response to the previous group of amendments. He said that he would look at the point again. I would suggest that he looks at it again in two forms and promises to do that at the end of this debate.

The first aspect is that the way in which Clause 17 is drafted in relation to the Copyright, Designs and Patents Act is very wide. Part 1 of the Act itself is very wide and subsection (4) of this clause makes it even wider by referring to other enactments "whenever made". That needs to be narrowed down very significantly. Even if we accept that to some extent we have to future technology-proof the provisions we have here, the provision could be narrowed significantly and it would then be more acceptable to the House, particularly with a super-affirmative resolution.

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The other aspect is the fundamental approach. I say to my noble friend Lord Triesman and to the noble Lord, Lord Fowler, who is no longer in his place, that the long-term health of the creative industries depends on us moving to a legal form of access to the copyright which they control. Clampdowns, crackdowns and prosecution through the civil courts or through the new system will not return a penny to the copyright holders.

The whole purpose of any change ought to be to move to legal systems and new, legal business models. If we could change the copyright law or any other law to enable that system to be slotted in more easily, perhaps we could use something like Clause 17 to do so. However, if Clause 17 is concerned only with extending crackdown provisions on unlawful file-sharing arrangements to other prospective and actual technologies, I still will not be able to support it. If it was more positive and narrower, then when the Minister comes back with a revised clause he might meet with less hostility. For the moment, I would have to support opposition to the clause were it pursued and the Minister did not give me the comfort I seek.

Lord Razzall: My Lords, I rise briefly in support of what was said by my noble friend Lord Clement-Jones.

I have listened with great interest to this debate on what we ought to do. I was waiting to hear from the experts we have in this Chamber exactly what perils they think could be dealt with by the technological developments that are going to be covered by the operation of Clause 17, if it is implemented. I was very interested that the noble Earl, Lord Erroll, and the noble Lord, Lord Lucas, both of whom are experts in this debate, came down on the side of my noble friend Lord Clement-Jones and do not think that this is necessary. If there were perils that we ought to look forward to in the future, I am sure that, having listened to the noble Earl and the noble Lord, Lord Lucas, over the past three, four or five days of a lifetime, they would have brought them up, but they have not done so. They feel that such perils cannot be forecast.

I hesitate to go against-I almost said my noble friend Lord Triesman, having just placed money on England winning the World Cup. I hesitate to go against him, because if he was wrong about Napster-as of course he was, as the noble Earl demonstrated-perhaps he is wrong about England winning the World Cup. He was certainly wrong about Napster, because as everybody has indicated, Napster, as an example of such a peril, would have been caught by the existing law.

I want to make a very straightforward point. I do not have to declare an interest, but over the years I have been involved in advising media companies. For years those companies have wanted legislation to be passed to deal with the perils with which this Bill deals. What has happened? The Tory Government did nothing; the Labour Government did nothing. Now, right at the end and shortly before the election, the Government come up with a Bill to deal with a problem that has been there for years and years. Suddenly, surprise, surprise, they want to put a clause in that says, "By the way, if we have got it wrong, we want to be able to make a statutory instrument to amend it in

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the future". This is not a new problem. All these perils around technological developments and breaches of copyright have been going on for years. No Government have done anything about them, but suddenly the Government say, "We are going to do something about it now, but we want also to take the power to change it".

I tell the Committee something else. The Constitutional Reform and Governance Bill has been going on for years and years. Why do the Government not put a clause in the Bill that says, "Oh, by the way, we are going to amend the constitution, but we might get it wrong so let us put in the power to amend it again by the affirmative resolution process?". Why do the Government not do that? That is the point of this Bill and that is why we oppose Clause 17.

Lord Young of Norwood Green: My Lords, we have had another interesting debate. Given the time, I will do my best to address the points that were made without going on for too long. I shall try not to repeat much of what we have covered on a previous occasion, but some repetition will be inevitable.

The noble Lord, Lord Clement-Jones, suggested that the amendments we are proposing will not help at all and that the Constitution Committee's report said that the government amendments would widen the scope of Clause 17. We do not agree with that assertion. Clause 17 enables the Secretary of State to make provision to amend Part 1 of the 1988 Act,

Government Amendment 211A provides that the Secretary of State can act only if he is satisfied that the infringement in question is having a serious adverse effect and that making the amendment is a proportionate response. There would, of course, have to be evidence to validate and support that. It was further suggested that Clause 17 would allow the definition of "copyright" to be amended. I make it clear that this is not a power to make sweeping changes to the nature of copyright or to what constitutes copyright infringement. The limitation not to amend any criminal offence means that no change can be made to what constitutes infringement, but the measure could be used to help us to protect creators of all types from having their work unfairly exploited without their permission. This power will be used only where new technologies or new services are being used in such a way as to cause serious adverse effects to the rights of others which cannot be tackled under the existing legislation or by the mechanisms in Clauses 4 to 16. The power cannot be used to change what is and is not considered an infringement under copyright law. Therefore, consumers need not worry; behaviour which is considered reasonable and lawful now will not be restricted in the future.

Recently, I read a biography of Samuel Johnson which contained a gem of information; namely, that the first copyright Act occurred in 1709, so just over 300 years have passed since then. Further, the journal of his Journey to the Western Isles was very popular and five editions were produced fairly quickly. However, noble Lords will be pleased to hear that it was pirated almost immediately in Ireland, so plus ça change in this matter.

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The noble Earl, Lord Erroll, took chunks out of the wonderful work of the noble Lord, Lord Puttnam. "Chariots of Erroll" is a frightening concept. My noble friend Lord Triesman gave some good examples. Noble Lords may not have liked the example that was given of the Napster case. However, it demonstrated that the passage from concept to mass usage-and mass usage on a global scale-was exceedingly fast. That is the point there. The noble Lord, Lord Razzall, said that this measure was not necessary because we cannot forecast what will happen. However, a number of potential threats have been forecast in this debate; for example, from cyberlockers, streaming or torrents. We know that such phenomena are developed very quickly.

My noble friend Lord Whitty asked me to consider the issue of narrowing. I have already given a commitment to look at that concern. Can we narrow this down significantly? Can we change the system to enable new legal business models to develop? Of course, we want to encourage that. However, I am not sure whether we can incorporate it in legislation. The noble Earl, Lord Erroll, said that we cannot use legislation to send messages. However, we do intend to send messages. I thought we were agreed on that. We said that we were trying to change behaviour and that we agreed on a graduated response. That graduated response means that, in the first instance, we will be sending messages and trying to change behaviour. If people do not respond to that, we shall move to the deterrent element. However, we do not want hundreds of thousands of people to go to the courts and become involved in an expensive and unnecessary procedure. Therefore, I am puzzled by the notion that we cannot send a message.

As I said, I am conscious of the time. I do not want to try to cover everything that we covered last time. However, the noble Lord, Lord Clement-Jones, once again referred to draconian measures for internet service providers. The Secretary of State cannot just dream this up. First, we shall look to Ofcom to provide a report. We will look for a basis of evidence. Whether or not we think that the super-affirmative procedure is exactly right, if the Secretary of State wants that to go through both Houses, there will have to be evidence to sustain that.

I reiterate the assurance that we will see what we can do with regard to Clause 17 because if it is to be successful we will have to address some of these underlying concerns about what is seen as its breadth and the ability to ensure that there is effective parliamentary control. I thank noble Lords once again for contributing to this debate. I trust that they will support the clause.

7.45 pm

Lord Clement-Jones: I thank the Minister for his response and all those who have expressed opposition to the clause. We may need to have further debates on this clause at the Report stage, depending on the Government's approach. I appreciated the Minister's reference to Samuel Johnson. When a man is tired of the Digital Economy Bill he is tired of life. I am sure that this show will run and run.

When I heard the comments of the noble Lords, Lord Puttnam and Lord Triesman, both of whom I respect enormously and both of whom have great

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experience, I was reminded of the phrase that Harold Wilson used: the white heat of the technological revolution. He used that phrase to inspire us all in thinking that this was the future, that things were changing at an incredible pace, that we could not keep up and that we needed firm guidance from No 10, DCMS, DBIS, or whatever government department was involved. We were given the impression that we were powerless in the face of this changing technology. The fact is that we have seen enormous changes in technology over the past 10 to 20 years. How much has copyright law changed in that period? The principles of copyright law are as applicable now as they were then. Frankly, this is an attempt to corral us into a constitutionally inappropriate way of changing the law. We have the fast track, which has now been validated by the Video Recordings Bill, and was referred to by the Constitution Committee. Why can we notuse that? I did not feel that the Minister answered that properly.

Throughout our discussions on the Bill, I have heard very clearly what the noble Lords, Lord Triesman and Lord Puttnam, had to say. Of course, we cannot tell what the future will hold in terms of technological changes. The point is that it is much more about enforcement than it is about actual infringement and underlying copyright. We may have talked at length about the precise form of Clauses 4 to 16 but they will give copyright owners and creative industries far more leverage over internet infringement than they have ever had before. Changing copyright is not necessary. Until the Minister can demonstrate why cyberlockers are not covered, why all the other technological changes and ways of delivering and infringing are not covered by current copyright, I do not think that he has made the case.

I thought that what the noble Earl, Lord Erroll, said about Clauses 4 to 16 effectively being a new substitute for the civil courts was entirely right. It is pioneering stuff and that is why we have spent so long over it. That is the essence of this Bill. Clause 17 is quite irrelevant to all that. The point was made that we can argue about orders; we can have debates about them; we can have the super-affirmative; we can have 60 days consultation or 90 days consultation. When I tabled my Motion of Regret, which made sure that the casino in east Manchester was not built, the Conservative Front Bench-I give credit to the Conservative Back Benches-was advised that it was constitutionally inappropriate for it to support my Motion. I understood that and I luckily was able-with the aid of the most reverend Primate the Archbishop of Canterbury whose assistance does not come very often, at least not to me-to persuade a large number of Back-Benchers in the cause. That was highly unusual. I do not believe that the position would change in the future. It is one of those things. The Front Benches are very reluctant to put their weight against a properly consulted over order. They cannot amend it, but nevertheless those are the constitutional proprieties. I am afraid that this nowhere matches primary legislation.

I will not go on any further. I am sure everybody needs their dinner hour. I do not believe that the case

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has been made. If this clause is designed to send a message, I think the Post Office is a much better way of doing it.

Clause 17 agreed.

House resumed. Committee to begin again not before 8.53 pm.

Financial Services Bill

First Reading

7.53 pm

The Bill was brought from the Commons, read a first time and ordered to be printed.

Charities Act 2006 (Changes in Exempt Charities) Order 2010

Motion to Approve

7.54 pm

Moved By Baroness Crawley

Baroness Crawley: My Lords, the two statutory instruments before us today form part of a package of changes to the regulation of exempt charities, following on from the Charities Act 2006. While the general law of charity applies to exempt charities, they, unlike other charities, are exempt from many provisions of the Charities Act 1993. Notably, they cannot register with the Charity Commission and are outside the scope of its supervisory powers. There is currently no specific regulatory mechanism in force to promote or ensure their compliance with charity law.

The 2002 Strategy Unit Review on charities and not-for-profits found that the position of exempt charities was anomalous, confusing for the public and a threat to the integrity of charitable status. It made recommendations for improving the regulation of exempt charities as charities-including the proposal that existing "main regulators" should be sought where possible to take on a charity oversight role in addition to their existing regulatory role.

On public consultation, the majority of respondents agreed with the principle that exempt charities should be regulated as charities. The Government considered it appropriate that in return for the significant benefits of charitable status all charities should be regulated as charities. The key issue was how to achieve this while recognising that many exempt charities were already sufficiently regulated in one way or another-albeit not as charities.

In accepting the Strategy Unit's recommendation, the Government set out their aim of establishing arrangements that would impose the minimum of extra bureaucracy, but at the same time secure greater accountability of, and charity law compliance by, exempt charities. We sought, in line with the Strategy Unit's

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recommendation, to do this by identifying for each group of exempt charities an existing main regulator that could become principal regulator. The principal regulator would be under a new duty to promote charity law compliance by those charities.

Some have questioned the principal regulator approach, suggesting instead that all exempt charities should lose exempt status and come directly under the Charity Commission's regulation. However, we need to balance this view against the additional regulatory burden that would result-many consultation responses were from exempt charities which were concerned about being over-burdened by regulation, or answering to multiple regulators. Most of the concerns raised during debate on the exempt charities provisions of the Charities Bill were seeking to minimise the burden of regulation of exempt charities. The principal regulator approach was well supported as a means of doing this. That is why we have pursued the principal regulator approach.

Where a suitable principal regulator could not be identified, exempt status would be removed from the relevant charities. These charities would be required to register with the commission if their gross annual income exceeded a specified financial threshold-currently £100,000. Parliament agreed to the making of these changes by passing the Charities Act 2006.

In the 2006 Act, Parliament also agreed to increase the Charity Commission's powers in respect of exempt charities. Importantly, the Charity Commission must consult the relevant principal regulator before exercising any regulatory powers in relation to an exempt charity.

These provisions of the 2006 Act will be implemented and changes made under them in several tranches. The two SIs being debated tonight form part of the first of those tranches. The provisions are being implemented in tranches to recognise the readiness of different groups of exempt charities and principal regulators, and to help the Charity Commission manage the registration of charities ceasing to be exempt.

The draft Charities Act 2006 (Changes in Exempt Charities) Order will remove exempt status from certain groups of exempt charity. The groups affected are: the colleges and halls in the Universities of Cambridge and Durham; the colleges in the University of Oxford; higher education institutions in Wales which are currently exempt charities; charitable institutions connected with the institutions that I have just mentioned which are currently exempt charities; and the Board of Governors of the Museum of London. These changes are made because a suitable principal regulator could not been identified. The changes do not affect the charitable status of these institutions. Separate regulations will be made to ensure that, subject to the £100,000 threshold, they are exempted from the requirement to register with the Charity Commission.

The order will also confer exempt status on certain charities connected with the British Library Board. This change is considered desirable to ensure that they are appropriately regulated for charity law compliance. It will mean that their charity law compliance will be promoted by the same person who promotes it for the British Library Board; namely, the Secretary of State for Culture, Media and Sport.

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