23 Oct 2014 : Column GC265

23 Oct 2014 : Column GC265

Grand Committee

Thursday, 23 October 2014.

Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014

Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 20146th Report from the Joint Committee on Statutory Instruments

Motions to Consider

2 pm

Moved by Baroness Neville-Rolfe

That the Grand Committee do consider the Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014.

Relevant document: 6th Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con): My Lords, I shall speak to these regulations and the Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014 together. They introduce two ways in which orphan works can be copied lawfully and therefore made much more accessible to many more people. One is a UK-only licensing scheme, the other implements the EU directive on certain permitted uses of orphan works—the orphan works directive, as it is called.

There are literally millions of culturally valuable objects held in museums, libraries and archives that the public cannot get to see. Orphan works are creative works such as photographs, diaries, oral history recordings or documentary films that are in copyright but for which one or more copyright owner cannot be located. As copyright for published works generally lasts for the life of the creator plus 70 years, orphan works, which cannot be reproduced without permission, can remain unseen for a long time. At present, copyright for unpublished works can extend back to the Norman Conquest.

Being able to copy such works is important because otherwise the public have to travel to the archive where the work is held. A museum cannot make a copy to exhibit or to display on its website without the risk of legal action if the right holder reappears. Yet the taxpayer has to cover the cost of preserving these works.

The orphan works directive, which must be implemented by 29 October this year, will make it possible for cultural and heritage organisations to copy certain types of orphan works to display on their websites. It will give us access to Europe’s hidden cultural treasures from anywhere in Europe—for example, the German National Library. It does not allow commercial use, nor does it apply to photos or other standalone images at present.

The UK licensing scheme, provided for in the first set of regulations, will allow anyone to apply for a licence to use any type of orphan work, in any medium, for commercial or non-commercial use within the United Kingdom—for example, orphan documents

23 Oct 2014 : Column GC266

and images in new books and orphan film clips in documentaries. Both these schemes have important safeguards built into them to make sure that they are fair to the owners of the orphan works if they are eventually found. They also allow for the use of so-called partial orphans, where only some right holders can be identified, with these regulations applying to those who cannot be found and permission gained from those that are known in the usual way.

To give a sense of how these measures will work in practice, I will look at an example from the National Records of Scotland collection of more than 150,000 maps and plans. The archive has an ink and colourwash plan of the village and harbour of Sandend dated 1893, part of a private collection from the Earls of Seafield. The surveyor, Hugh C Lowe, is not listed in the Dictionary of Scottish Architects and does not appear in death records. Without knowing when he died, the archive could not be sure that the work is out of copyright. If Mr Lowe died after 1943, the works could still be in copyright. Indeed, a large number of plans relating to Victorian engineering projects, such as the Forth bridge, cannot be copied.

As these orphan works are standalone images—not embedded in another work such as a book—the archive could not use the copyright exception provided by the orphan works directive. However, it could apply to the UK’s new licensing scheme. The archive would apply to the IPO for a licence online. Its application would show what it had done to find the right holders—what is known as a “diligent search”. This is an issue which has been much debated in this House. Merely stating that the work was found on the internet, without reasonable efforts to find right holders, would not be sufficient. The IPO will check that diligent searches are adequate.

To return to my example, if the museum wanted to adapt the Sandend plan, the IPO would consider whether this adaptation might be thought derogatory to the creator’s reputation. It is unlikely in this example, but if it were thought to be derogatory, the IPO would refuse a licence. Details of the work and a watermarked copy of the image—if it is a still image such as the Sandend plan—will be shown on the public register. This will enable right holders to check whether any of their works are being considered as orphans. Many orphan works are unpublished works created by non-professionals, and right holders are often unaware of having the copyright. That is why potential licensees need to look for the copyright owner, not the other way round.

Your Lordships have also debated fees in the past. In my example, the museum must pay a fee when it submits the application. This covers the cost of running the scheme. If its application is successful, it will have to pay a licence fee, which is passed on to the right holder should they reappear. The principles of transparency are important, and applicants will be able to see the cost of the licence fee before proceeding with the application. The licence fee will reflect the price of a similar non-orphan work being used in a similar way. For genuinely non-commercial use, such as display on a museum website, this will be minimal. Once the licence fee is paid, a licence for the specific use or uses requested will be issued in the name of the

23 Oct 2014 : Column GC267

applicant. The entry on the orphan works register will be updated to reflect this. When the work is used, the IPO must be referenced as well as the creator, if their name is known.

Licences of varying lengths will be available as for equivalent non-orphan works. However, the longest term will be seven years. A reappearing right holder can claim the licence fee that has been held in trust for him or her by the IPO and no further orphan works licences will be issued for the work in question. If a right holder does not reappear, the licence may be renewed. Right holders can claim their fees up to eight years after a licence has been issued. After eight years, unclaimed fees will be used to offset the costs of setting up and running the orphan works scheme. Any surplus must be used for social, cultural or educational activity. Prospective licensees can appeal to the Copyright Tribunal about the licence conditions, the fee charged or a refusal to grant a licence. If the right holder feels that the IPO has acted improperly, he or she can appeal to the First-tier Tribunal.

Some potential users of both the directive and the licensing scheme would have liked to stretch further to other parts of Europe and indeed beyond—a sentiment that I share. Obviously, the EU can make laws only for its member states and the UK Government can offer licences for use only within the UK. Users are responsible for checking the legal position in any other jurisdiction if they wish to publish beyond these territories. I know that this is frustrating for cultural and commercial organisations, but the new measures are better than the current position, where no such lawful use is possible at all. Moreover, other countries are developing mechanisms to allow the use of orphan works, so licences or exceptions may be available elsewhere. The IPO is also exploring the possibility of reciprocal agreements with other jurisdictions to make this process easier, particularly among English-speaking countries. Constructive discussions are ongoing with Canada and with the United States.

Some noble Lords have expressed concern that the UK scheme ought not to crowd out non-orphan works. For example, there was a concern that people would use orphan works instead of non-orphan ones or commission new works because they thought that they would be free or cheaper than non-orphan works. This will not be the case because most users of the scheme will be looking to reproduce works of often unique historical interest for which there is no substitute.

The key point is that to license an orphan work you will need to conduct a diligent search, pay an application fee to the IPO—whether you are granted a licence or not—and pay a licence fee at market rate if you are successful. These safeguards mean that it will be easier to use non-orphan works instead of the orphan items. There is no application fee there and the price may be negotiable because there is a right holder to negotiate with.

I should perhaps comment on photographs. The Government are aware that the details of the right holder and other metadata can all too easily be stripped from a photograph on the internet, whether with intent to circumvent copyright or not.

23 Oct 2014 : Column GC268

The existence of legal means of reproducing orphan works does not itself cause this problem. It happens now and may be a criminal offence if done deliberately by a business. There are now swifter and affordable legal remedies in place to deal with such infringements, including the small claims track of the Intellectual Property Enterprise Court, previously the Patents County Court. For example, in the case of Sheldon v Daybrook last year the infringer agreed to pay £20,000 to the photographer for the continued and repeated unauthorised use of an exclusive photograph. The Government also continue to support the work of the Copyright Licensing Steering Group and the Copyright Hub, which are working on a voluntary code of practice for dealing with metadata.

Orphan works licensing could make things better for photographers, not worse. The requirement for and checking of diligent searches; the need to pay a licence fee; the ability to search the orphan works register; and the requirement to credit orphan works with the name of the creator—where known—and details of the IPO will make some unlawful use more obvious.

On pricing, the IPO has analysed a wide range of prices for non-orphan works being used in a wide range of ways. From these, it has calculated average prices which it will charge and has developed a pricing matrix that covers more than 5,000 different combinations of type of work and type of use. To give a couple of examples: the price of putting the Sandend plan on to the National Records of Scotland website would be 10p, as that is a non-commercial use. The price for publishing a 15-line orphan poem in an anthology with a print run of up to 500 would be £77.15, excluding value added tax. The IPO’s methodology was devised by a financial analyst and checked with the Competition and Markets Authority. These market-based prices ensure that orphan works do not distort the market for non-orphans, which I know has been a concern.

Another concern that has been raised by some is privacy. The introduction of the two orphan works measures should not impact on the privacy of living individuals. The directive allows unpublished works to be displayed on a cultural heritage organisation’s website only if they hold the work in their collection and if there is no reason to believe that the right holder would object. That means that the website can show only those works which are available to see if one visits the institution in person.

To conclude, the two measures before noble Lords are complementary, enabling different uses of culturally valuable orphan works: from striking photos in the RAF Museum, to films of life in India in the Northamptonshire Record Office, to the British Library’s unique sound recordings of oral history, which I have been involved with, to the scientifically valuable reports at institutions such as the Medical Research Council.

The measures respect copyright, protect right holders from likely and significant risks, and are trailblazing in offering the first online application system. They are good for right holders, cultural organisations and businesses, and good for citizens and consumers, who will be able to access more, and much more easily. I commend these regulations to the Committee.

23 Oct 2014 : Column GC269

Lord Howarth of Newport (Lab): My Lords, I welcome the order which would implement the European Union directive, transposing it into our domestic law. It is something that libraries across the European Union have worked towards for at least eight years, and I anticipate that libraries in this country will certainly wish to avail themselves of the opportunity to make new uses of orphan works that the EU directive allows. An example would be the British Library’s programme to digitise orphan works from the First World War period.

I also welcome, in principle, the domestic policy initiative to introduce a wider licensing scheme for orphan works. I very much welcome the noble Baroness’s recognition of the potential value of enabling much wider access to orphan works. However, there are questions as to whether the scheme as it has been devised will be used. I put it to the Committee that it is excessively bureaucratic and expensive. The regulations are not clear about precisely how bureaucratic and expensive, but they point ominously in that direction. As things are at this stage, there is doubt as to whether the British Library and other cultural and research institutions in this country will use the domestic scheme on a significant scale. Why should there be these doubts?

2.15 pm

Regulation 4(2) states:

“A diligent search must comprise a reasonable search of the relevant sources to identify and locate the right holders of the relevant work”.

There is a question as to whether the requirements will in practice be “reasonable”. A somewhat alarming form of words is to be found a little further on in the same regulation. Paragraph (4) states:

“The authorising body may issue guidance on what sources may additionally be relevant in the case of different relevant works”.

We can see the genesis here of a very complex system.

As I understand it, the regulations will require item-by-item diligent search, regardless of the type or class of orphan work. This will be labour-intensive and laborious. The whole process will then have to be repeated after seven years. The impact assessment assesses that the cost of diligent search could be of the order of £176,000 a year, which is in the context of very low expectations of take-up.

Licensing is to be for specific purposes only, as I think I understand, but I would be grateful if the Minister would clarify what the impact assessment states on page 7—I am probably misunderstanding it. We are told at one point that,

“it should be noted that the domestic scheme provides for the licensing of individual orphan works for specific purposes, rather than permitting any mass licensing of works”,

but then the impact assessment tells us that the National Museum Directors’ Council, which represents major national and regional museums, has called for the use of a blanket/umbrella licence for non-commercial uses because that is the only way in which the scheme would be affordable. The impact assessment goes on to state:

“In light of the consultation responses, the IPO will develop a blanket licence to ensure that the scheme is affordable for non-commercial use of orphan works”.

23 Oct 2014 : Column GC270

I am not quite clear what is to be allowed and what is not, so it would be helpful if the Minister could clarify that.

Under the domestic scheme, as opposed to the European scheme, there are also to be fees for processing applications, which the impact assessment predicts could be £59,700 a year. Licensing fees will have to be paid upfront and the money that comes from them will be put into an escrow account. We are told that the licensing fees—and the Minister just repeated it—will be minimal for non-commercial uses of orphan works. She went on, I think, to suggest a range of between of 10p and £77 in her illustrative examples. The impact assessment also tells us that the conservative estimate of the number of orphan works in collections in this country is of the order of 91 million. If you multiply a minimal fee by millions, you arrive at a sum which could be very substantial. Moreover, if those licensing fees do not prove to be necessary to pay royalties to rights holders who turn up, they will not be returned to the institutions that have paid them at the end of eight years. This strikes me as being a kind of tax that the business department is levying on our cultural institutions. It is an odd thing to be doing. I just wonder whether in Whitehall the left hand knows what the right hand is doing. How can it be that the business department imposes a tax of this kind on organisations that are publicly funded through the Department for Culture, Media and Sport? Indeed, in the case of universities, it is taxing the very institutions that it itself funds. I am puzzled by this merry-go-round and not very happy about it.

Under the European scheme, there will be no upfront payments. The scheme produced under the EU directive is less bureaucratic than the scheme produced by our own Government. For example, the directive leaves the responsibility for defining and satisfying the requirements for diligent search with the organisations that are using the works; it trusts their good faith. The European Union scheme is more sensible and less burdensome than our own Government’s scheme.

I am also less than convinced by the estimate in the impact assessment that the running costs of the scheme to be operated by the Intellectual Property Office will be in the order of only £33,000 a year. As the authorising body, the IPO will have to set and collect administrative fees; it will have to process applications; it will have to verify that a diligent search has indeed taken place; it will have to set the licence fees; it will have to grant licences, with or without conditions; it will have to operate a searchable register of orphan works; it will have to verify that rights holders are indeed genuine and arrange to make payments to them; it will have to administer the escrow account containing the unclaimed licence fees; it may have to make its case to the tribunals that the Minister mentioned; and it will have to produce an annual report. Are we really to believe, as the impact assessment tells us, that all this work will be carried out by one full-time executive at EO(B2) level and that it will cost only £33,000? I find that implausible. If it could conceivably be correct, it must be because the department expects very little business of this kind to come the way of the IPO.

23 Oct 2014 : Column GC271

Indeed, the impact assessment is pessimistic. It anticipates that there will be only 1,500 to 3,000 applications each year and it obligingly does the sum for us and tells us that that represents 0.0017% to 0.0033% of the 91 million orphan works. Of course it is right to protect creators’ rights and artists’ rights but it must also be right—this is the balance we have to seek in policy—to encourage and facilitate cultural organisations to digitise the orphan works in their collections and thus to democratise access to them.

We seem here to be presented with gratuitous bureaucracy, which is very ironic in view of the Minister’s zealous commitment against excess bureaucracy. I wonder why her department and the IPO have not in the domestic scheme replicated the model provided by the directive, or indeed why they have not adopted a different kind of business model which would make it possible for cultural institutions to take out insurance against future claims by rights holders or to put aside contingency funds, and to be able to use the orphan works legally provided that they took those measures to ensure that they would be able to pay rights holders. In addition, why is there to be the same fees regime for non-commercial and commercial use? The Minister just told us that orphan works will not be in competition with non-orphan works. Why should there not be a discount or indeed an exemption from fees for the cultural institutions? Why not just allow, as the directive would, cultural institutions to demonstrate that they have applied a diligent approach to the collection containing orphan works that is in their hands? If any of those approaches had been adopted, the Government really would be facilitating mass digitisation.

We were told during the passage of the Enterprise and Regulatory Reform Bill that this scheme, once introduced, would be reviewed after a one-year period. That is a very good thing. We look forward to the review, which may be carried out by the noble Baroness’s successor but will none the less be valid and valuable. As it is, I worry that we risk forgoing the cultural and economic benefits of enlarging access to orphan works that we might have had.

Lord Clement-Jones (LD): My Lords, I welcome the implementation of the EU directive, but I want to talk exclusively to the domestic version of the orphan works regulations, which originated in Section 77 of the Enterprise and Regulatory Reform Act. I am sure we all recall with nostalgia the passage of that Bill through this House. Perhaps, in the light of his remarks, the noble Lord, Lord Howarth, should have backed my amendment to the European directive implementation in the Bill.

The Minister’s examples of the types of work that could be licensed and authorised have been extremely interesting, but—strangely enough—like the noble Lord, Lord Howarth, I wonder whether there will be a great take-up of these provisions. It seems that the volume of licences issued through the rather similar Canadian scheme is extremely low. I am told that only 42 licenses have been granted under Hungary’s orphan works scheme since it started in 2009. The revised impact assessment goes into great detail and downgrades the original estimates of use. Like the noble Lord,

23 Oct 2014 : Column GC272

Lord Howarth, I wonder whether the contribution of these provisions will be worth even the modest cost of setting up and running the authorisation process, or the cost of initially obtaining authorisation. I share his doubts about the costs that are set out in the impact assessment.

Under Section 116A(3) of the Act, a work cannot qualify as an orphan work unless the owner of the copyright,

“has not been found after a diligent search made in accordance with the regulations”.

Indeed, the regulations lay on the authorising body an obligation to take reasonable steps to ensure that the search relied on by the orphan licensee satisfies the requirements for a diligent search, while the licensee is required to demonstrate that a diligent search has been carried out. These are very necessary safeguards to protect against error and abuse. Alongside the regulations, the IPO has issued guidance notes to assist someone who wants to satisfy the authorising body that he is undertaking a diligent search.

Perhaps I am being unfair, but it seems to me that the IPO, as the authorising body, has gone to considerable lengths to disclaim some of its responsibilities. When the noble Viscount, Lord Younger, was the responsible Minister, he assured the Committee on 28 January 2013 that the UK scheme includes a requirement that any diligent search is verified by an independent authorising body, but surely the current proposals do not constitute such a verification process. I understand that the IPO has said that it would not “police” applications. Moreover, it is stated in the Intellectual Property Office guidance on diligent search that the applicant is required to submit no more than a completed checklist of sources from which they have sought information. Although applicants are instructed to retain evidence in the form of letters, e-mails and so on, they are not asked to submit this with their application. This cursory procedure is consistent with the estimated size and budget of the scheme set out in the impact assessment. Perhaps that explains the very low figure.

It seems that a view has been taken by the authorising body that because of the provisions of the Data Protection Act it would be precluded from disclosing relevant details of an applicant’s search, such as the identity of the people who had been contacted. Surely the provisions of the Data Protection Act are disapplied in circumstances where they would inhibit the proper exercise of statutory functions. What is the argument for preventing disclosure? Are licences to be awarded on the basis of a few ticked boxes? By contrast, I understand that the Canadian and Hungarian schemes both require the submission of evidence so that proper verification of the searches can be conducted by the authorising body.

That is all very puzzling: a prospective user of an orphan work would be infringing copyright by going ahead and exploiting a work without obtaining a licence. An authorising body surely has an obligation to satisfy itself that what has been done by each applicant meets the due diligence standard—in other words, that the applicant has looked for answers in the right places, not the wrong places—and it is very difficult to see how an authorising body might satisfy itself on that score without actually having looked at what had been done and considering what might have

23 Oct 2014 : Column GC273

been done. This could not be a box-ticking exercise. Over and above the question of whether the authorising body undertakes to give thorough and critical scrutiny to what an applicant has done so as to be able to make a judgment about what might or should have been done, there is the question of the oversight of the authorising body. The authorising body fulfils a statutory function. Who is entitled to see that it is doing its job, and how would that be done?

2.30 pm

Moreover, in the absence of a requirement to disclose the nature of a search, as I have mentioned, how is anyone to ascertain whether the authorising body is doing its search? The IPO appears to be of the view that the only person with an interest here is a revenant rights owner. Is that the Minister’s view of the position? If so, can she say how proper scrutiny can be exercised? Especially in the light of this, I and outside bodies affected are very keen to clarify who or what is to be held legally responsible for improperly issued licences. It would seem appropriate for the author or performer to have the right to take action against the body issuing the licence, not least because it is accessible and issues of collecting judgments against it should not arise, as they will, almost by definition, with any party that has obtained an improperly issued licence. Will a claim lie against the authorising body as one would against any other infringer, including a small claims track? There is the possibility that an application is fraudulent in the sense that an applicant knowingly seeks to obtain a licence by deceiving the authorising body. In that case, I take it that the licence is voidable. Can my noble friend confirm that that is the case? Are there any sanctions for deliberate or negligent misidentification? Another possibility is that a bone fide applicant turns out to be an incompetent searcher. Can we assume that an applicant who has put a lot of misdirected effort into looking in all the wrong places should not be granted a licence? The guidance note made it plain that the process of seeking to clear copyright material can be time-consuming and tricky. A revenant rights owner could, I presume, apply to have a licence set aside on the basis that the search did not comply with the due diligence requirement. Can my noble friend confirm whether that is correct?

These points, I believe, go to the fundamental basis of the regulations. However, there are other issues, such as how long a period, if any, a revenant rights owner has at the initial stage to challenge a grant of a licence in respect of a work. Is renewal of the licensing period after the initial period always to be no more than seven years? What will be the relationship between the public register and the Copyright Hub? Surely this is potentially of considerable importance. Has any agreement with stakeholders been reached as to the kinds of search technology that should be used to constitute a diligent search? Some of the fears expressed by the noble Lord, Lord Howarth, might be allayed if there were clear search mechanisms that could be used by institutions. There has been some criticism of the wording of paragraph 3(6) and the fact that works where there is no subsisting copyright can be swept into these provisions but are not dealt with adequately. What can my noble friend say about that?

23 Oct 2014 : Column GC274

My noble friend helpfully outlined the safeguards that rights owners will have, particularly photographers, against the stripping of metadata to create orphan works. What does she know about the current take-up of the voluntary code on metadata? It is clear under the regulations that no sub-licensing is possible, and I welcome that, but what are the circumstances in which the authorising body will allow transfer? Finally, can back remuneration be claimed during the renewal period? I look forward to the Minister’s reply.

Lord Scott of Foscote (CB): My Lords, I rise simply to make clear my complete agreement with the remarks that have just been made by the noble Lord, Lord Clement-Jones. One is talking here of the expropriation of valuable property, valuable assets—the product of the labour of the creator of the copyright in question, whether it is music, art or literature—and often the means by which the creator makes his or her living. The creator may have become somnolent and may not be using the creation in question, but that is no ground, normally speaking, for expropriating the asset.

Compulsory expropriation has to be safeguarded properly. The safeguard in the present case depends upon the diligent search. What is a diligent search? It is almost as long as a piece of string. What might seem diligent to one person might not seem diligent to another. It is essential, in my respectful opinion, for the diligence of the search to be verified before action can be taken on the basis of it. Without that verification—without proper attention being paid to the genuineness of it—grave injustice may be done and this House should not lend itself to such a possibility.

Baroness Buscombe (Con): My Lords, I will speak briefly. I will not echo the words of my noble friend Lord Clement-Jones—it would be otiose to do so—but my concern is in relation to diligent search.

I feel that we are coming to the end of a long journey. This is something that some of us debated at length when discussing the Digital Economy Bill. Those discussions never came to fruition, but I remember that we had a number of assurances from the then Government about the importance of diligent search in relation to orphan works.

As the noble and learned Lord, Lord Scott, said, we are talking in many cases about very valuable assets. My noble friend the Minister and her department have been right to create what may be, in the words of the noble Lord, Lord Howarth, an intensive, laborious and bureaucratic process, but it is important that these assets are handled with care by whoever they may be dealt with in the years ahead. I congratulate both my noble friend the Minister and her predecessor, my noble friend Lord Younger, who have spent many hours on this subject trying to get it right.

Listening to noble Lords, I feel that the Minister is between a rock and a hard place in trying to please everyone. But I feel strongly that it would help if my noble friend could explain a little more about the process for diligent search and what is meant by “reasonable” before we come to a close on this, because there are many outside these walls who remain concerned about the future of these valuable assets.

23 Oct 2014 : Column GC275

Viscount Bridgeman (Con): My Lords, I declare an interest as a non-executive director of the Bridgeman Art Library, where the use of orphan works is a not inconsiderable part of its business.

The library has in fact benefited from, shall we say, the slightly relaxed attitude that has been so eloquently referred to by my noble friend Lord Clement-Jones and the noble and learned Lord, Lord Scott. My noble friend mentioned Canada and Hungary, where admittedly a very low number of licences are issued, but proper, diligent verification schemes are in progress there. We look to the Minister for reassurance.

Lord Stevenson of Balmacara (Lab): My Lords, I thank the Minister for introducing the orders and noble Lords for their contributions to this debate. It is a bit of a reunion. I have been missing our regular fixes of IP craft and lore—and the pain that goes with having to read up on all this stuff again and trying to remember where we were the last time we were here. I hope there will be other opportunities, perhaps not in the immediate future, where we might get together. Maybe we should form a dining club or something and we could all go off and talk about it.

Like other noble Lords, I had some difficulty in disentangling the two orders. They point in slightly different directions, they do not take the same approach and the regulatory frameworks are rather different. But it seems a bit of a missed opportunity not to have had a single order, for the benefits of rights holders at least, which dealt with what the rules were and how they varied according to the domestic or the EU side. I can understand the logic for what the Government have done but it would have been possible, I think, to have had a go at that and come up with something that would have been easier to do.

Other points have already been raised in the debate, which I was going to touch on. However, again, we make a mistake if we try to think of this initiative, which was of course foreshadowed in earlier primary legislation, in the absence of considering how it impacts on the Copyright Hub. We all wish that well and think that it will be a huge step forward as regards the operation of the creative industries in this country—which must inevitably be dealing with exactly the same material as we are talking about here. If there is to be an effective Copyright Hub, it must also go to the 91 million pieces of information held in an orphan state.

Isn’t “orphan” a wonderful word? It makes you feel all warm and cuddly. You want to embrace these statutes and take them forward, because orphans must be helped. On the other hand, the reality is somewhat different.

I will make only a couple of points on the certain permitted uses of orphan works regulations, one of which is about the money. Like my noble friend Lord Howarth, I am not exactly clear what is happening as regards the fund that has to be created—if it has to be created—on behalf of revenant right holders when the relevant body operates to bring forward material that has previously been orphaned. It would be helpful if the Minister could respond to that so that we have a clear arrangement.

23 Oct 2014 : Column GC276

Given the amounts concerned—the quotations for examples that have been given already—they are so low that it is not reasonable to expect these bodies, many of whom are strapped for cash, to hold an escrow of moneys that could have been used to maintain and do this activity, particularly when it is likely that the payments out would be reasonably small and/or insurance could be obtained for it. A fair compensation is presumably trivial relative to the overall running costs of many of the institutions—certainly to the ones that I have been familiar with—and I would have thought that there is some room for flexibility. Perhaps that can be noted and picked up when we see the annual report or the first report on this.

My second point is that again, like a number of previous speakers, I am not sure what the logic of having a time-limited area is. If it is true that we are talking about material that is very unlikely to have revenant rights holders, and that an initial licensing period—which is certainly what we discussed when we talked about the primary legislation—is the appropriate thing to do, just in case it flushes out those things, then second and subsequent licences could easily be indefinite, particularly if there is a provision. I understand that the order says that if the right holder presents themselves and is clearly the owner of the work, the licence can be stopped immediately. I do not get the point of having excessive, burdensome bureaucracy over what would be a very small number of licences anyway at very low cost, which would cause both the institution and probably the IPO considerable additional work.

Other points apply to varying parts of both the regulations, and some of them are quite detailed, so I do not expect the Minister to respond to them all today; I look forward to one of her wonderful letters. First, there is the position of the revenant right holder. Is this person sufficiently considered by the scheme, and if so, is the treatment fair as a whole? The Government’s rather brave assumptions are that there will not be many revenants. I looked that up on Google and it turns out that it is a word for zombie—so there will not be many zombies. “Revenant” is probably a more technical term. Those that reappear, according to the Government, will be happy that their works have been uncovered, subjected to diligent search and licensed, and that the terms of the licences already granted—which cannot be varied—are fair. We do not know whether those assumptions are correct. However, I worry that a right holder who would have refused to grant a licence had he or she been located is unlikely to be pleased with the outcome, as the material is licensed and goes on the register as an orphan work, possibly with a licence that might be set to run for as long as seven years.

Stakeholders representing various right holders have already pointed out that the flow charts which the IPO had prepared made no reference to the possibility of a right owner who had not been identified by the applicant as part of the diligent search process coming forward once the application appeared on the register. The stakeholders suggested that it would be sensible to have a pause in the process once the application had appeared on the register, just for a short time before

23 Oct 2014 : Column GC277

the licence was granted, to avoid the licence coming into force and the right holder shortly thereafter discovering that his or her work was being licensed.

The IPO has partially taken this concern on board but only to the extent that the flow chart now identifies the possibility of a right holder coming forward when the application is placed on the register, but before the licence has been granted. If that were to happen, the licence would not be granted under the terms of the scheme at all. It would be up to the right holder to determine whether a licence should be granted. However, the IPO has not been willing to allow for any specific period to elapse before a registered licence came into force. That is worth considering.

2.45 pm

For works that have already been published, this might be a reasonable position, even though, with published material, the possibility obviously exists that a search judged by the IPO to be diligent fails to locate a rights holder, as has proved to be the case with similar schemes overseas.

The regulations for the domestic scheme, unlike the regulations implementing the directive, are gold-plated in that they cover photographs and unpublished material. As we all know, photographs are a very difficult area, particularly ones where metadata can be stripped off—there are many cases on record of this. We are all aware that photographers are very concerned about this regulation. The Minister helpfully drew out the legal processes that are available in such cases, but, as with all these things, I do not think that this will do the trick. We need a system that better meets the reasonable concerns of photographers. I hope that when we come to see the annual report, we will have better evidence to take on that, because there may be overclaims on both sides.

I think that the Minister accepted that unpublished material gives rise to concerns about privacy. Many of the arguments around this seem to rely on the fact that if material has been placed in a public archive that should be taken into account as a relevant consideration. I declare an interest as a former director of the British Film Institute. I know from my direct experience of the national film archive that people offering to make a deposit of material are not usually, if ever, required to declare that they are the owner of the copyright in such material, as opposed to the owner of the physical material. Indeed, the BFI experience is that the reverse is usually the case. We had a huge archive of British film and television programmes where there was no ownership of the copyright but simply ownership of the material.

If executors of an estate decide to offer a dead person’s archive of correspondence to a local authority, the deposit will probably include letters whose copyrights are the property of third parties who may never have seen the letter in question. As others have said, this all depends on how successful the scheme will be in setting a standard for “diligent search”. My noble friend Lord Howarth and the noble Lord, Lord Clement-Jones, expressed puzzlement as to exactly what role the IPO was playing in this. Again, it would be helpful if the Minister could respond on that.

23 Oct 2014 : Column GC278

The lack of any standard being set may be attributable to the fact that there will be varying standards across the varying types of material that we are talking about, but it would be helpful to have in the statutory instrument some sense of what we are looking for here. Without that, all options are open. At least Clause 43 of the digital copyright Bill required advertisement in the press as part of the “diligent search”, but that has been dropped, so far as I can see, from the regulations. So what is a “diligent”—or as the notes say in places “diligence”—search? It would be helpful to have more examples.

We have touched on exactly how much material will be exposed to orphan works licensing, particularly under the domestic scheme. The legislation when we first heard of it was being talked up as an “open sesame” to Ali Baba’s cave of treasures in which millions of works worth thousands of millions of pounds were locked up. The most recent impact assessment paints a much more sober picture of a scheme that will make a small contribution to economic growth. There may be a treasure trove of millions of orphan works which will drive economic growth, but the truth is that we simply cannot know. As most of the material seems to be either newspapers or unpublished letters and correspondence, I rather doubt it. It will of course materially assist scholars and researchers, but it is unlikely to be a huge income generator. It would be helpful if the Minister could spend some time talking about the way in which reports on this activity will be presented to us. It is clear that we need raw numbers of diligent searches; the number of revenant rights holders who have emerged; the number of licences issued; and the number of appeals to the First-tier Tribunal and the Copyright Tribunal. We also need to know what else will be available. There will be an annual report, but there was also a commitment made to Parliament at Third Reading of the Bill to review the operation of the scheme after one year. I agree with other noble Lords that this might be too soon, but I think that we should have it because it will give us more detail of what we are talking about.

I want to put on record my thanks to Mr Tom Rivers who has helped with briefing for this debate. He mentioned to me in passing that he had spotted some infelicitous drafting in the regulations. Can the Minister indicate whether that was picked up in the final versions?

Finally, I turn to the commencement date. The regulations state that they will come into force on 29 October 2014; that is, in six days’ time. Clearly, the EU directive requires the EU scheme to be implemented on or before that date—which I presume is why the date is stated—but since we must have known that for at least five, if not 10, years, I wonder why the regulations were not readied in time for one of the common commencement dates, either 6 April or 1 October.

According to the better regulation framework guidance for officials, which I have already quoted in similar debates, the new,

“domestic measures (both regulatory and deregulatory) must come into force on a common commencement date—either 6 April or 1 October”.

23 Oct 2014 : Column GC279

It does seem to me that the business department, of all government departments and agencies, should reflect the guidance to officials which says:

“By requiring regulatory changes to occur at set times, Common Commencement Dates (CCDs) inform business and other stakeholders about forthcoming regulatory changes, helping them to plan and budget for new measures and to minimise any additional costs”.

That seems to be a good approach. Why did it not happen in this case?

Baroness Neville-Rolfe: My Lords, I thank noble Lords for their valuable contributions and comments. We always have lively debates on these intellectual property issues, partly because of the balance that one has to try to strike on the whole series of measures we have taken.

The noble Lord, Lord Howarth, welcomed the EU directive, as did I, and I in turn welcome the work he has done with the British Library. He is of course the noble Lord, Lord Howarth of Newport, which is where the Intellectual Property Office is located, so he is a friend for that reason as well. It was also good to hear of the interests of my noble friend Lord Bridgeman, who introduced a family perspective into this debate to complement and assist the perspective of national collections such as the British Library.

The noble Lord, Lord Howarth, argued that the scheme did not meet the needs of museums and that the balance was wrong. Clearly, I respect his view, but I disagree. We must protect copyright owners as well as the cultural sector, which was a point made by the noble and learned Lord, Lord Scott.

The noble Lord, Lord Howarth, also felt that the UK scheme was bureaucratic and expensive. As he said, I care a lot about regulation and bureaucracy and will be keeping a beady eye on this. As we have heard, there are views on both sides. As my noble friend Lady Buscombe said, we are slightly between a rock and a hard place. We have to find a balance and move forward on these important intellectual property issues. There were many years of debate when little was done, and it is good that we have moved forward in recent times. We now have a policy on orphan works coming into effect.

We are mindful of the need to make the scheme affordable to cultural institutions. We have developed the orphan works licensing scheme, including the approach to pricing, in consultation with museums, libraries and archives. However, the needs of potential users of orphan works need to be balanced with the rights of copyright holders.

The noble Lord, Lord Howarth, also argued that the diligent search requirements were onerous. I will come on to talk about those in a little more detail in view of the other points that were raised, but I say at this point that it is a fundamental principle of diligent search that it needs to be a diligent search for all relevant rights holders of any given work. That is only fair. Of course, many libraries, museums and archives are already doing this. The difference will be that when those searches do not result in rights holders being found, the search will not have been wasted.

23 Oct 2014 : Column GC280

Of course, the EU directive covered only the heritage and cultural orphan works, not commercial works. The UK scheme also covers a broader field than the original EU directive. Despite our efforts to make the directive wider during its negotiations, it does not allow us to regulate commercial use. That also partly answers the question of the noble Lord, Lord Stevenson, about why we had to have two statutory instruments, one under Section 2(2) and the other under domestic legislation, but we are of course debating them together.

The noble Lord, Lord Howarth, asked about licence fees. He said that if you multiply a minimal fee by millions of works, you get large sums.

Lord Stevenson of Balmacara: To go back to diligent search, if I am picking this up correctly from what the noble Baroness has said, the irony will be that the position in the order reflecting the incorporation of the EU measure has got specified minimum requirements for a diligent search, but there are no such requirements in respect of the commercial work. That is, I think, the cause of the unease that we all feel. Does she not recognise that unless a similar or even greater level of scrutiny is required, the danger will always be in the minds of the rights holders that they are not being dealt with fairly in the domestic issues?

Baroness Neville-Rolfe: I thank the noble Lord for his intervention. I think in fact that is not right. There will be rules for diligent search and indeed we have published guidelines on diligent search, which I am very happy to make available to the Committee. For exactly this reason, we are very aware of the interplay between the two schemes and that is something that we have been concentrating on during the extensive period of implementation and thinking about exactly how to implement this.

I would say that licence fees are not a tax. They are the price owed to the copyright holder. It is fair to pay for this, given that copyright is, in a sense, a property right, as has been said.

Lord Howarth of Newport: If the copyright holder does not turn up, why would the money not go back to the institution that has paid for a licence fee? After all, the institution is incurring the costs of conservation, cataloguing—all the overhead costs of preserving these orphan works—and it seems that it would be a more fruitful use of the money to let it rest with or return to the cultural organisation rather than simply be pocketed by the IPO and BIS.

Baroness Neville-Rolfe: I will come on to address that point, if I may. I thank the noble Lord for repeating it.

Going back to the other points made by the noble Lord, Lord Howarth, he talked about mass digitisation and blanket licensing because that, obviously, would help museums. In respect of the impact assessment, the non-commercial licence covers all non-commercial uses of a single work. The scheme is not intended for mass digitisation, as I think he knows, because it is only fair to search for all rights holders. He mentioned the review after a year. Of course, I hope I will be around on one side of the House or the other to assist

23 Oct 2014 : Column GC281

in that review. Finally, he argued that we should consider an insurance approach. I am afraid that the insurance approach would not be lawful under EU law and there is no power provided under the Enterprise and Regulatory Reform Act, as I understand it, for that option.

The noble and learned Lord, Lord Scott, rightly talked about the property rights underlying copyright and the expropriation of property that could be at risk. I agree that the verification has to be proportionate.

The noble Lord, Lord Clement-Jones, raised a number of points. Perhaps I could take some of them in turn. He asked about the contribution to growth. We believe that a modest contribution to growth is likely. The estimates in the impact assessment are based on licensing twice the number of works in the Canadian scheme, which licensed 12,000 works. This is because we have roughly twice the population of Canada. That scheme covers unpublished works; our scheme covers unpublished works. Of course, our cultural, heritage and creative sectors are, happily, larger than Canada’s. Ours will be an online process, which I hope will be more efficient. The consultation respondents such as the CBI suggested that benefits are expected but they were not able to quantify them at this stage. The IPO’s running costs are, we believe, likely to be in the range estimated in the impact assessment and not too low for those reasons.

The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Buscombe, asked about the diligent search process—I think that was the main thing that people were concerned about. I have already referred to the guidance, which is available. It is right that the main burden of diligent search is borne by the user and not the state. We are taking a proportionate approach, asking not just about where applicants have searched but what the results were, where they found the work and why they want to use it, as well as having the ability to ask to see evidence of that search.

The noble Lord, Lord Clement-Jones, wondered why details of the searches could not be available for us all to see. Again, we have to be proportionate. Details could include the personal addresses of the descendants or the creator. Publishing such data about individuals is not justified as a default option. It would be a bit like demanding to see passport applications in full in case your identity was being stolen. However, the registry of orphan works will contain sufficient details for a rights holder to check. Search technologies—this was another question—are set out in the diligent search guidance that was drawn up with stakeholders. Electronic means are not useful if the work has not been digitised, which may often be the case with old works.

3 pm

My noble friend Lady Buscombe asked if we could explain a bit more about what reasonable and diligent research represents. I can do no more than send her a copy of the booklets that have been prepared by the IPO—very good booklets, in my opinion. I was asked whether, if the diligent search is not up to standard or where there is a deliberate or negligent misidentification by the applicant, no licence will be issued. That carries its own penalty; the time and cost of making the application will have been wasted, so there is a penalty

23 Oct 2014 : Column GC282

of that kind. Someone with a history of poor diligent searches would be more likely to be asked for additional evidence by the IPO.

My noble friend Lord Clement-Jones went on to ask about oversight so that we can check that the IPO is acting properly—a key question. As IP Minister, I will be accountable to Parliament for the running of the scheme as a whole. The IPO must produce an annual report under Regulation 11, as we have discussed, and at a minimum that has to set out the total revenue from licences, the total costs of running the scheme, the number of rights holders who have emerged and the payments made to them, and it may be that there is scope for putting extra things into that report. As a public body, the IPO is subject to all the usual controls, including oversight by the NAO and standards of public conduct, so it is a good home for this function. In any event there needs to be a balance in this whole area, as I think the different views expressed show.

The noble Lord, Lord Clement-Jones, queried how long a rights holder had to check the register once an application had been made. Rights holders should not need to do this; a diligent search will find them in most cases. If the rights holder chooses to monitor the orphan works register, they will see the applications as they are received. They could come forward when the application was being considered. The noble Lord will know that Canada does not operate a waiting period. Indeed, some things need to be done quite quickly; if, for example, you are a television company seeking to use one of these works, you do not want to be bogged down in bureaucracy.

I turn to licences and when they might be transferable. Orphan works’ licences will not be fully transferable. The IPO can allow a licence to be transferred if there are compelling reasons to do so—possibly, for example, where a business that owns the licence has been taken over. On the question of what safeguards photographers have against the stripping of metadata, I repeat that this is a general problem and not caused by this licensing scheme. The voluntary code of practice on metadata was published only last year. Therefore, unfortunately, we do not have information on its voluntary uptake. However, diligent search and information on the provenance of the work will help to ensure that only genuine orphan works are licensed. Photographs licensed under the scheme are likely to be older works held in archives, often created by non-professionals, rather than professional works being exploited by the creator.

Lastly, my noble friend Lord Clement-Jones asked whether remuneration could be claimed during the renewal period and whether the renewal will ever be for more than seven years. The renewal of an orphan work’s licence will be limited to a maximum of a further seven-year period. Where a licence is renewed, a further licence fee will be payable. This will be held for the rights holder in the same way as in the initial fee. To answer another question that was asked—and I made this clear in my own opening remarks—if there are surpluses, they are allocated for heritage, cultural and educational use.

I think that I have largely responded to the concern of the noble Lord, Lord Stevenson, about whether there should be one scheme, but I have not answered

23 Oct 2014 : Column GC283

the question of why we have an order coming in on 29 October without fuller warning. Obviously, the EU directive needs to come in on 29 October, which I think he accepts. We believe that having the UK and EU schemes coming in on the same date helps to avoid confusion. There has been extensive consultation with stakeholders. The last consultation paper was published in January 2014. As he will know, the common commencement date does not apply inflexibly to the implementation of directives, although he will also know that I am very keen on common implementation dates. I share his concern but it seems right not to use it on this one. The Government have already made it clear that they will review the scheme after 12 months. I have talked a little bit about what that could and might cover.

The noble Lord, Lord Stevenson, asked about unclaimed fees. Under the EU scheme there is no payment in advance, so there is no issue. However, under our scheme they will be kept by the IPO for eight years and then used to the fund the scheme. As I have said, any surplus will go to cultural or heritage uses. The noble Lord also argued that we should stop a licence immediately when an orphan work reappeared. That would create an undue element of business uncertainty. The process that we have developed is a better way forward.

To conclude, we will have an annual report, which we can of course debate. We are committed to a review at the end of 2015. I appreciate the range of views on this issue. Some argue that we have been too strict in protecting the creators; others say we have done too much to help our cultural institutions. As I said at the beginning, I believe we have found a good balance between the many interests. On that basis, I commend these regulations to the Committee.

Motion agreed.

Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014

Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 20146th Report from the Joint Committee on Statutory Instruments

Motion to Consider

3.06 pm

Moved by Baroness Neville-Rolfe

That the Grand Committee do consider the Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014.

Relevant document: 6th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Legal Services Act 2007 (Approved Regulator) (No. 2) Order 2014

Legal Services Act 2007 (Approved Regulator) (No. 2) Order 20144th Report from the Joint Committee on Statutory Instruments

Motion to Consider

3.07 pm

Moved by Lord Ashton of Hyde

That the Grand Committee do consider the Legal Services Act 2007 (Approved Regulator) (No. 2) Order 2014.

23 Oct 2014 : Column GC284

Relevant documents: 4th Report from the Joint Committee on Statutory Instruments

Lord Ashton of Hyde (Con): My Lords, the purpose of the order is to designate the Chartered Institute of Legal Executives—CILEx—as an approved regulator under the Legal Services Act 2007 for the reserved legal activities of reserved instrument activities and probate activities. This will allow its members to conduct these activities without the supervision of solicitors and, once appropriate regulatory arrangements are in place, to establish its own practices to conduct these services.

By way of background and to give a complete picture, the Legal Services Board, which is the oversight regulator for approved regulators and licensing authorities under the 2007 Act, made a recommendation to the Lord Chancellor on 19 September this year that he make an order under Section 69 of that Act to modify the functions of CILEx. If the order is made it will provide CILEx with powers to allow it to make rules to provide for a compensation fund and also give it intervention powers via seeking an order of the High Court to intervene in a regulated entity.

The Lord Chancellor accepted the recommendation on 7 October and the Section 69 order was laid on 13 October, with the intention of it being commenced by the end of the year. If granted, it will allow CILEx, through ILEX Professional Standards, CILEx’s independent regulatory arm, to regulate entities as well as individuals. If both these orders come into force they will enable increased competition and innovation in the legal services market.

The Legal Services Act 2007 governs the regulation of legal services in England and Wales and established a new regulatory framework for legal services. The intention of the 2007 Act was to put the consumer at the heart of legal services and deliver a more effective and competitive market. It established a number of regulatory objectives that the Legal Services Board and approved regulators must promote, including the requirement to protect and promote the public interest and the interests of consumers, encouraging an independent, strong, diverse and effective legal profession and promoting competition in the provision of legal services by authorised persons.

The 2007 Act enabled the widening of the legal services market to allow for different regulators to regulate legal services and for different types of legal businesses to provide those services. Under the 2007 Act, only a person who is authorised by an approved regulator or licensing authority may carry on a reserved legal activity, unless they are covered by one of the limited exceptions. Approved regulators are responsible for ensuring that the persons authorised by them act in a way that is consistent with the regulatory objectives set out in the Act.

The Chartered Institute of Legal Executives offers one of the most flexible routes into the legal profession, allowing people from a variety of backgrounds to enter the legal profession, a fact that is reflected in its diverse membership. CILEx is already an approved regulator under the Act and has been able to authorise chartered legal executives to administer oaths and exercise rights of audience since the commencement

23 Oct 2014 : Column GC285

of the Act. CILEx was also designated as an approved regulator for the conduct of litigation in May 2011 and is a designated qualifying regulator for immigration advice and services.

CILEx applied to the Legal Services Board in March 2013 to be designated as an approved regulator for reserved instrument activities and probate activities. The LSB then tested CILEx’s proposals against the criteria set out in the 2007 Act and they assessed that CILEx has both the capacity and the capability to undertake an extended regulatory role in the legal services sector. The LSB took advice from the mandatory consultees, as required by the Act: the Lord Chief Justice, the Legal Services Consumer Panel and the Office of Fair Trading.

The LSB is satisfied that CILEx has met the requirements of the Legal Services Act in that it has appropriate internal governance procedures in place so that regulatory decisions will be taken independently of representative ones; that CILEx will be competent and have sufficient resources to perform the role; and that CILEx’s regulatory arrangements make appropriate provision for the regulation of those it wishes to authorise and that provision has been made to prevent regulatory conflicts. Furthermore, the LSB is satisfied that appropriate complaints procedures will be in place, including mandatory co-operation with the Legal Ombudsman, and that CILEx will promote the regulatory objectives set out in Section 1 of the Act.

The LSB is satisfied that there will be no lowering of standards or lessening of consumer protection. It is satisfied that ILEX Professional Standards will be a capable and effective regulator in the legal services market. Its expansion in this field will help to contribute to the growth of the legal services market and bring further innovations, leading to benefits to the consumers of legal services. Following its consideration, the LSB made a recommendation to the Lord Chancellor on 9 December 2013, and earlier this year my honourable friend Shailesh Vara MP agreed in principle to make the present order designating CILEx as an approved regulator for the reserved legal activities of reserved instrument activities and probate activities under the 2007 Act.

Following the draft order being laid on 23 June of this year, the order was debated in the House of Commons on 8 September and gained committee approval. The order has been brought before this House at the earliest opportunity. This order will provide a greater choice of regulator for properly qualified and trained practitioners to carry on the reserved legal activities of reserved instrument activities and probate activities. It will pave the way for the continuing widening of the legal services market. I therefore commend the order to the Committee and beg to move.

Baroness Buscombe (Con): My Lords, I very much welcome this order granting the Chartered Institute of Legal Executives, through the regulator, ILEX Professional Standards, the power to authorise individual practitioners to provide probate and conveyancing activities under the Legal Services Act 2007. As we have heard from the Minister, there are many reasons to support this order. What will it change? It will cut red tape and

23 Oct 2014 : Column GC286

enable suitably qualified and competent CILEx members to be authorised to provide probate and conveyancing services. This will mean that businesses employing CILEx practitioners can be more efficient and flexible and can cut the unnecessary bureaucracies in place to sign off their work.

IPS currently regulates individual CILEx members. The order will enable them to regulate entities as well, meaning that CILEx members will be able to set up their own businesses and provide legal services to the public across the full range of reserved and regulated activities.

3.15 pm

The benefits are numerous. First, the cutting of bureaucracy that prevents CILEx’s specialist lawyers from competing on an equal footing with other practitioners will enable existing firms to operate more effectively and less bureaucratically by freeing up their workforce. Specialist CILEx lawyers who are considering applying for these rights are already well experienced in these areas. Many of them have trained and qualified in these areas from the outset.

Perhaps more important is the consumer interest. Consumers will have greater choice over legal service providers. Consumers will be able to provide direct feedback to IPS on the quality of service that CILEx lawyers provide through the IPS’s consumer-focused website. All CILEx practitioners will be rigorously assessed against the challenging qualification and practice criteria set up for their specialism by IPS.

We heard from the Minister on the issue of diversity and social mobility. CILEx has been facilitating a flexible and adaptable route into law for 50 years. Its diverse members will be able to practise independently at more senior levels, running their own businesses if they wish. This cannot but increase diversity in the legal sector. In addition, I emphasise the greater choice over legal service providers and for many, I hope, a reduction in costs.

The two issues of probate and conveyancing that this raises are extremely important to the consumer. First, I will deal with probate. This challenge comes into people’s lives always at a very difficult and upsetting time and has to be dealt with at a very emotional time. Frankly, they get precious little sympathy from the Inland Revenue, which tends to make most of us feel that we are in the wrong before we even begin the process. The process of obtaining probate and understanding it is difficult, complex and bureaucratic in itself. There are too many consumers out there who are afraid of picking up the phone to get qualified help for fear of the costs involved. So I welcome this measure because it will make a difference to that, and it will provide more competition in the marketplace.

In relation to conveyancing, exactly the same applies. Frankly, this has not come soon enough. I have very current experience of conveyancing, in what you might call the old-fashioned way, which is proving very frustrating, slow and expensive. In the purchase of a flat without encumbrances, a purchase that in theory could be quick and straightforward, unfortunately the vendor has retained a solicitor, probably a very expensive one, from one of the inner circle firms, who has been

23 Oct 2014 : Column GC287

extraordinarily slow to produce elementary information and has proved inaccessible and out of reach, using the old excuse that lawyers use—I say this as a member of the Bar—that they are “busy in court all day”, when we know that courts tend to sit between 10 am and 4 pm. Amazingly, the same solicitor calls himself a conveyancing solicitor but does not even do e-mail. It is ironic that the same firm—which is not far from your Lordships’ House—was enormously helpful to me when as a shadow Minister I took the Land Registration Act 2002 through your Lordships’ House. In particular, the firm assisted in shaping the framework for e-conveyancing.

So it is good that we are moving on. I welcome more competition among service providers, including the many very able, skilled legal executives who will be able to operate without a solicitor’s oversight. I have one question for the Minister relating to paralegals, and I speak as the founder patron of the Institute of Paralegals: is their position also being considered in relation to these rights?

Lord Phillips of Sudbury (LD): My Lords, I declare an interest as an honorary vice-president of CILEx and as someone who started working with what used to be called managing clerks as long ago as 1957. I think I learnt most of my law from managing clerks of the old variety, who learnt on the job and did not have a CILEx qualification because there were not any then. I am strongly in favour of this statutory instrument for all the reasons that the Minister has set out.

I have a slight divergence of view from CILEx—although I suspect one could sort it out if it was here—over the idea that competition in these matters is always in the public interest. It certainly is not. Some of us are fearful that the changes in the legal services market in the past decade will prove to deliver some disastrous consequences in the next. I have no hesitation on that score relating to this statutory instrument, though, because the Legal Services Board is a proper, well staffed body that has made a thorough investigation of the fitness of CILEx and its subsidiary company to undertake the task allowed them by this change in the law. For those reasons, I am entirely in favour of the order. The Lord Chief Justice was absolutely right to raise the impact on standards of the competition that will be unleashed by this change in the law but, as I say, a very proper investigation has been undertaken. I strongly hope that it will be in the public interest.

I will mention a point that has not yet been mentioned. Reserved instrument activities, which form the subject of paragraph 2(a) of the order, are defined in paragraph 5 of Schedule 2 to the 2007 Act as:

“preparing any instrument of transfer or charge for the purposes of the Land Registration Act 2002”.

There is then some detail relating to that. This is not a massive breach in the status quo but still a very important one, for the reasons just mentioned. I have no doubt that many frustrated buyers and sellers of property in this land will be greatly helped by what is happening today, because I have no doubt that legal executives will set up their own firms to do just this sort of work. They will do it well, swiftly and at a very fair price, and they will be overseen by CILEx, which

23 Oct 2014 : Column GC288

is an excellent body with high standards. It is driven not by the profit motive but by public interest concerns. That is all I wish to say.

Lord Clement-Jones (LD): My Lords, both my noble friends have been extremely eloquent in their support for the order. I will be extremely brief because I agree with every word that they have said, with some qualification regarding my noble friend Lord Phillips’ comments. I declare an interest as a member of the Law Society and as a partner in a major law firm. I have never been an advocate or supporter of a closed solicitors’ shop. I very much favour diversity and competition, particularly in the case of chartered legal executives. I welcome their ability to carry out a wider degree of work, as envisaged by the order. This is very consistent with the continued opening up of the legal market that I have generally supported. I did not hear the words “alternative business structures” in what my noble friend had to say at the outset, but I assume that this is consistent with the alternative business structures, which, again, I have always supported since their introduction because I believe that they are for the benefit of both business and consumers. I think, and my noble friend Lady Buscombe made this point extremely well, that in terms of both probate and conveyancing this will make a major difference to the competitiveness of that market.

Lord Kennedy of Southwark (Lab): My Lords, I do not intend to detain the Grand Committee for very long. I agree with many of the comments that noble Lords have made so far in the debate. The Opposition fully support the proposal and endorse the reasons outlined by the Minister why it is necessary and welcome.

The Chartered Institute of Legal Executives provided me with a very helpful briefing that makes clear the benefits of the proposal, and I am grateful to them for that. I agree with the comments by the noble Lord, Lord Phillips of Sudbury, about what a good organisation CILEx is. It has done excellent work on a variety of areas, particularly on broadening the diversity of the legal profession, and I pay tribute to it for that.

Allowing CILEx to become a regulatory body in the areas of conveyancing and probate is welcome. It will help to cut bureaucracy and red tape and help to make things simple for everyone. However, it would help if the Minister could comment on the remarks made by the former Lord Chief Justice, the noble and learned Lord, Lord Judge, as referred to by the noble Lord, Lord Phillips. He expressed concern that regulatory competition would have a detrimental effect on standards, that the variation in standards between regulators was inappropriate in principle and that a variation on standards may bring about a drive to the bottom.

I also noted that the former Lord Chief Justice had one matter of concern across the board—parity of standards when one has a proliferation of regulators—and he had further concerns as to whether the instrument deals with contentious or non-contentious probate. It would be helpful if the Minister could give us his views on those points as well. Having said that, this measure helps to encourage an independent, strong, diverse

23 Oct 2014 : Column GC289

and effective legal profession, and consumers will have much greater choice. That is very welcome and I am very happy to agree the order.

Lord Ashton of Hyde: My Lords, I thank all noble Lords who have spoken in this brief debate. It has been helpful to identify concerns and I hope that I will address them—although there did not actually seem to be that many, as far as I could understand it. I have been able to set on record why the Government have decided to designate CILEx as an approved regulator, and I am pleased to hear what I think was the universal approval of CILEx as a suitable regulator for the reserved instrument activities and probate activities.

A number of questions and points were raised. My noble friend Lady Buscombe asked about paralegals. I am not 100% sure what the definition of a paralegal is so I will write to her to ensure that I have all the details. There are currently no proposals to extend the regulation to paralegals as a group, but obviously if a paralegal wanted to undertake a reserved activity, they would need to seek authorisation from one of the approved regulators, such as CILEx, and would have to undertake the correct test to ensure that the regulator could approve them.

My noble friend Lord Phillips of Sudbury talked about the issues surrounding the Legal Services Act in the context of competition. The Act has been passed by this House. Whether or not competition will be improved—I think that most people, and certainly the Government, feel that it will—in terms of this order, which appoints CILEx as an approved regulator, I think he was happy to agree that it is a satisfactory regulator for these two extra activities.

3.30 pm

My noble friend Lord Clement-Jones said that I had not mentioned alternative business structures. One of the reasons I mentioned the background to the extra order that is going to be laid in the next few months was to explain that, under Section 69 of the Act, when that is laid before the House, and if it is agreed, CILEx would be able to authorise entities as well. This would be an example of where authorised business structures could come into effect. Both orders need to be laid. The two go together, which is why I brought that in.

In his supportive speech, the noble Lord, Lord Kennedy, asked about the comments of the former Lord Chief Justice, who was one of the mandatory consultees on this. The LSB is fully aware of the specific concerns that the former Lord Chief Justice had and had them in view when considering applications. Parliament legislated clearly in the Legal Services Act 2007 about the objectives of the Act, which include, among other things, encouraging an independent, strong, diverse and effective legal profession and promoting competition in the provision of services provided by authorised persons under the Act. The 2007 Act therefore aims, among other things, to achieve a more effective and competitive market. Having CILEx extend its regulatory powers will help this.

23 Oct 2014 : Column GC290

This order will allow CILEx to regulate its members to conduct those activities as authorised persons in their own right. In addition, once further regulatory arrangements are in place, which I mentioned, CILEx members will be able to establish their own practices to conduct these services. This order, combined with the forthcoming Section 69 order, will facilitate the widening of the legal services market, thereby increasing competition and innovation in the legal services market while maintaining high standards. Consumers will receive greater choice, higher standards and competitive prices.

Motion agreed.

Judicial Appointments (Amendment) Order 2014

Judicial Appointments (Amendment) Order 2014 6th Report from the Joint Committee on Statutory Instruments

Motion to Consider

3.32 pm

Moved by Lord Ashton of Hyde

That the Grand Committee do consider the Judicial Appointments (Amendment) Order 2014

Relevant documents 6th Report from the Joint Committee on Statutory Instruments

Lord Ashton of Hyde (Con): My Lords, the order before us today amends the judicial appointments criteria to enable registered patent attorneys and registered trademark attorneys to be appointed persons able to review the decisions of the Intellectual Property Office as part of the appeals process. Section 10(2) of the Intellectual Property Act 2014 inserted new Section 27A in the Registered Designs Act 1949 under which the Lord Chancellor appoints an appointed person to hear appeals against decisions of the Intellectual Property Office in relation to design rights.

This instrument amends the Judicial Appointments Order 2008 to include an appointed person in the list of those offices for which registered patent attorneys and registered trademark attorneys can satisfy the judicial appointment eligibility condition. The purpose of this draft order is to support the Intellectual Property Act 2014 and its aim to introduce a quicker and more cost-effective route of appeal against design decisions of the IPO. At the moment, the route of appealing against decisions of the IPO in relation to designs is via a dedicated tribunal, which has been used only twice in the past 10 years. It offers no flexibility or route for further appeal. The Government’s aim is to have a process in place for design rights that mirrors the appeals process already in place for appeals against trademark decisions

The decisions of the IPO in relation to trademarks can be appealed to a person appointed by the Lord Chancellor—an “appointed person”—based on a recommendation of the Judicial Appointments Commission. This gives the appeal process some degree of independence from the IPO. To do this in relation to decisions on designs, the IPO has amended Section 27A of the Registered Designs Act 1949 to include similar provisions to those in the Trade Marks Act.

23 Oct 2014 : Column GC291

I will give the Committee some background. Following the Hargreaves review of intellectual property and growth, the Government have been carrying out a programme of work to determine how to improve the designs legal framework. This has resulted in changes to design legislation included within the Intellectual Property Act 2014, including those I referred to earlier in relation to determining appeals.

The Government’s aim has been to improve access to justice for businesses using the UK designs registration system by allowing them to choose a low-cost, reliable and efficient appeals route system. The changes make the system easier to understand for users of different forms of intellectual property by simplifying the appeal framework and aligning it with the trademark appeal route. This draft order seeks simply to support that aim by allowing a registered patent attorney or registered trademark attorney who holds a relevant qualification to be eligible to be a person appointed under Section 27A of the Registered Designs Act 1949.

The principles of the Intellectual Property Act 2014 have already been approved by this House. This order seeks merely to support the implementation of that Act by allowing the appointment of appointed persons to hear appeals against design decisions of the IPO. I therefore commend this draft order to the Committee and I beg to move.

Lord Kennedy of Southwark (Lab): My Lords, I thank the noble Lord, Lord Ashton of Hyde, for setting out the details of the draft order. The order provides a technical amendment to the Judicial Appointments Order 2008 and will allow the Lord Chancellor to appoint registered patent attorneys and registered trademark attorneys as appointed persons, allowing them to hear appeals against decisions of the Intellectual Property Office.

The Opposition have no issues with the proposal. I have two brief questions that I hope the Minister will be able to answer. As he is aware, the majority of the provisions of the Intellectual Property Act 2014 are set to commence in April 2015. The part of the 2014 Act amended by the order enables the appointment of appointed persons who meet the new criteria. Will the Minister explain why the order is due to take effect before the Act comes into force? Why can we not just wait until the relevant legislation has come into effect? Secondly, the law in this area is highly specialised and complex. Will the Minister confirm to the Grand Committee that he has confidence that the Judicial Appointments Commission has the necessary capacity and expertise to make appointments in this area? However, I put on record the Opposition’s support for the order and look forward to the reply from the noble Lord.

Lord Ashton of Hyde: I thank the noble Lord, Lord Kennedy, for his questions. He first asked why we were making this change when the commencement date for the Intellectual Property Act 2014 has not passed. The order was laid before Parliament on 7 July 2014. The Department for Business, Innovation and Skills, the department with oversight for the Intellectual Property Act 2014, enacted the relevant parts in respect of the

23 Oct 2014 : Column GC292

new appeals process on 15 July 2014. The statutory instrument was considered by the Joint Committee on Statutory Instruments on 16 July 2014 and by the Secondary Legislation Scrutiny Committee on 21 July 2014. The relevant parts of the Act have been put in place and this statutory instrument will allow the appeals process to be in place in time for the Intellectual Property Act commencement date of April 2015.

The other question asked by the noble Lord was whether we are confident that the Judicial Appointments Commission has capacity. The answer is yes.

I believe this to be a reasonable amendment which aims to support the Intellectual Property Act 2014 and help UK businesses. I hope that noble Lords agree with me that this is a proportionate and sensible measure.

Motion agreed.

Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2014

Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2014 6th Report from the Joint Committee on Statutory Instruments

Motion to Consider

3.40 pm

Moved by Lord Wallace of Tankerness

That the Grand Committee do consider the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2014.

Relevant document: 6th Report from the Joint Committee on Statutory Instruments.

The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD): My Lords, I beg to move that the draft order laid before the House on 7 July now be considered. It might be helpful if I provide the Committee with a brief summary of what the order seeks to achieve. The order is made under Section 63 of the Scotland Act 1998, which allows for an order to provide for any functions, so far as they are exercisable by a Minister of the Crown in or as regards Scotland, to be exercisable by the Scottish Ministers instead of by the Minister of the Crown.

Section 70(3)(a) of the Child Support, Pensions and Social Security Act 2000 makes provision for the Secretary of State for Work and Pensions to set the cap on the amount that local authorities may spend on discretionary housing payments in a financial year. Pursuant to this, the actual cap is set out in the Discretionary Housing Payments (Grants) Order 2001.

This Section 63 order will transfer that function of the Secretary of State for Work and Pensions to the Scottish Ministers instead. This will enable the Scottish Ministers, by order, to determine the limit on the total amount of expenditure that may be incurred by a Scottish local authority in making discretionary housing payments in the financial year 2014-15—that is, the current financial year—and onwards.

The order allows the Scottish Ministers to decide at which level the cap on discretionary housing payments, to be made by local authorities, is to be set. This will give local authorities and Scottish Ministers increased

23 Oct 2014 : Column GC293

flexibility to support claimants with their housing costs in this way, as they deem appropriate. The order demonstrates the United Kingdom Government’s continued willingness and commitment to working with the Scottish Government to make the devolution settlement work.

As noble Lords will be aware, the commission under the chairmanship of the noble Lord, Lord Smith of Kelvin, has been established to look at additional powers for the Scottish Parliament, and welfare issues may well be a significant part of its deliberations. However, these measures relate to the current financial year and I am sure that noble Lords will agree that it is right that we take them forward at this time.

The order was considered by the Scottish Parliament’s Welfare Reform Committee and was then passed without a Division in the Scottish Parliament on 20 August. It was considered, too, by the Delegated Legislation Committee in the other place on the 14th of this month and passed the following day. If your Lordships’ House approves this order, it will then proceed to the Privy Council. I therefore commend the order to the Committee and beg to move.

Lord McAvoy (Lab): My Lords, I thank the Minister for explaining the order to the Committee. I want also to express my usual thanks to the Minister’s staff for making sure that I was briefed. I would be at quite a loss without those briefings and I want to put on record that appreciation.

The Labour Party supports this order, made under the Scotland Act 1998. As the Minister said, it transfers certain functions of the Work and Pensions Secretary to Scottish Ministers. The transfer concerns the ability to cap the entire amount of expenditure that may be required by a local authority in awarding discretionary housing payments. This amendment to the Scotland Act is supported, as it demonstrates the delivery of further devolution pledges and grants control to Scottish Ministers over a payment that they requested. There is total agreement between the two Front Benches on that.

3.45 pm

However, one aspect of the order is worth mentioning for a couple of minutes, which is the two words, “bedroom tax”. I know that Ministers are trained to call it—what is it again?—discretionary housing payment or something like that, which is some cover-up for what is basically a bad tax on a lot of poor people. It is interesting that a Liberal party Minister is putting forward this measure because, quite frankly, it would not have survived without the Liberal Peers and MPs marching into the Lobbies to support the Conservative Government on the bedroom tax. I am very pleased that the Labour Party in Scotland played a very prominent role in putting pressure on the Scottish Government to come forward with something like this so that we can take the pressure off ordinary people in Scotland at least. As a unionist I express regret that the same situation cannot apply in England and Wales. However, having made that very slightly acrimonious comment—having a Liberal Minister in front of me, I just cannot

23 Oct 2014 : Column GC294

seem to resist it—once again, I thank the Minister for his demonstration and commitment to devolution, which I suppose is in the long run a bigger subject.

Lord Wallace of Tankerness: My Lords, I thank the noble Lord, Lord McAvoy, for his support for this order, and the support of his party. I did not think that he would resist the temptation to refer to the removal of the spare room subsidy—of course, it is the removal of a subsidy; it is not a tax. However, as I know that he is a keen follower of Liberal Democrat policy, he will know the position that my party has expressed in recent weeks with regard to that proposal. I will not abuse the Committee by elaborating on that here, but he will be well aware of it. However, he is right; this is an illustration of how the devolution settlement works and its flexibility I think I am right to say that this is the first Section 63 order in this Parliament—I think some of the earlier orders were debated under Section 104—and it shows that the Scotland Act has a number of different measures with which we can make the devolution settlement work, not only for the people of Scotland but also for that of the United Kingdom as a whole.

Motion agreed.

3.48 pm

Sitting suspended.

India: General Election 2014

Question for Short Debate

3.52 pm

Asked by Lord Dholakia

To ask Her Majesty’s Government what assessment they have made of the outcome of the 2014 general election in India.

Lord Dholakia (LD): My Lords, I take this opportunity to wish all colleagues in this House a happy Diwali. This is probably the most festive season for us, and the right day on which to open a debate on this subject.

This debate is timely. The election of Narendra Modi and the BJP majority Government is a unique opportunity for the United Kingdom to reinvigorate momentum in its relationship with India. We were right to re-engage with Narendra Modi in 2012 after the 10 years of diplomatic isolation of the Gujarat Government where he was the Chief Minister.

Let me first declare my interest. I was honoured to be appointed as Deputy Prime Minister Nick Clegg’s business adviser. We led the first UK trade delegation to India since its landmark election in May. This gave me a first-hand opportunity to see why India matters to the United Kingdom.

Britain is in a unique position to work more closely with India because we have educational, historic, cultural and people-to-people ties between our two nations. The Prime Minister, David Cameron, has visited the country three times since 2010, and many Ministers

23 Oct 2014 : Column GC295

have followed. As I said, the Deputy Prime Minister, Nick Clegg, led the first UK trade delegation in September. Only last week we had the visit of India’s Foreign Minister, Sushma Swaraj, to the United Kingdom.

We also have the distinction of having here one of the largest populations of the Indian diaspora, estimated at 1.5 million. However, let us not underestimate India’s position worldwide. Narendra Modi has already visited Japan and the United States. There is a positive dialogue with China and a renewed relationship with neighbouring countries and the Middle East. We cannot continue to plead our special relationship with India. We have to work hard to build renewed confidence in our bilateral relationship.

Evidence of this is that our diplomatic network in India has become the largest in the world, and credit must go to High Commissioner James Bevan for this. There is now increased co-operation on foreign policy and a genuine understanding on matters of defence and security. There are still irritants in the field of education, where there is a drop in the number of students coming to the United Kingdom for further education. Bilateral trade is likely to double by next year, and there is a renewed co-operation on matters of research and innovation.

Prior to the BJP’s victory, India had gone through a period of stagnation with a declining economy. A decade of Congress rule had failed to combat corruption or enact major policy measures. The economic reform had not materialised. The BJP’s election win was the logical outcome. The country was crying out for a strong Government and the BJP provided that. It is to Mr Modi’s credit that it is the first time in 30 years that any single party has secured an absolute majority. I well remember that the Conservative Party’s election slogan during the Macmillan Government was, “You have never had it so good”. The BJP’s slogan had a similarity: “Good days are coming”. We now have the most powerful Prime Minister that India has had for many years.

People’s expectations are great and we have to wait to see how these are delivered. So far we have seen clarity in Mr Modi’s vision of domestic matters. His Independence Day speech on 15 August set out his vision on governance, which included a plea for a unified, selfless, skilled and peaceful India. He was not afraid to identify issues that have featured prominently in the past years. These included concerns about rape, equality, and the safety of women and girls. There was emphasis on reform, which involved more devolution of power and control which would result in more economic liberalisation and less central control. Mr Modi launched his flagship programme aimed at tackling poverty by ending financial untouchability. Under his project, bank accounts would be provided to millions without access to formal banking facilities.

There are, of course, challenging times ahead. It is estimated that at least 60% of India’s population is below the age of 35. It is further estimated that 10 million to 15 million young people enter the labour market each year. A high percentage of this number is employed

23 Oct 2014 : Column GC296

in informal sectors. The emphasis has to shift towards the organised sectors. This gives the BJP Government a unique opportunity to reform labour laws and rebuild the industrial sector. The problem is massive but the BJP Government in Gujarat can point to its economic growth, which has continually exceeded that of other states in India. Then there are areas such as the agricultural sector, where securing income for farmers and improving the outdated infrastructure are essential. This will also require the co-operation of state government, which has not been easy in the past.

So what has Britain to offer India? It was obvious during our delegation’s visit that the new Government have placed economic development high on their agenda. India needs investment, and the UK is already its biggest G20 investor—and we can do more. The EU is India’s largest trading partner and India is a strategic partner of the EU. However, India wants more trade. Our bilateral trade is over £16 billion and we can certainly improve on this. In addition, India is looking for capital, and the City of London is the world’s biggest financial centre and well placed to provide expertise and advice. We have the investment, expertise and experience to make that happen.

In the field of education, some of our leading universities and colleges already have offices in India, attracting thousands of Indian students to the UK every year. The Minister is well aware that despite 85% of applications to the British high commission being approved within two weeks, there is a drop of nearly 20% in students coming to the United Kingdom. We need to examine our immigration policies to ensure that there are no detriments here. In addition, we should promote more student exchanges, joint research projects and learning partnerships both here and in India. I would welcome the Minister’s action in this matter.

There are issues of regional priorities, and the international community is looking to see how India intends to continue strengthening regional ties. Prime Minister Modi’s first act on his inauguration was to invite SAARC countries, including Pakistan’s Prime Minister Nawaz Sharif. This good start was halted in its tracks with the cancellation of the India-Pakistan talks. India did not take kindly to the Pakistan high commissioner meeting Kashmir separatist leaders. India’s position on Kashmir is well established, and the state is an integral part of India. Evidence of that fact is that successive Indian Governments have made efforts to ensure that a free and fair democratic process is followed in this state. Prime Minister Modi’s election campaign talked about Hindu-Muslim unity and invited both countries to join the fight against poverty. Evidence from a recent poll found that more than 68% of Indian Muslims felt safer under the Modi Government than under previous Governments. Over the years, the plight of the Kashmir Pandits cannot be ignored. There has been systematic cleansing of Kashmiri Hindus and terrorist activities from across the border have continued. India’s position on Kashmir has been consistent. It expects Pakistan to tackle extremism and cross-border terrorism. It demands justice against the Mumbai suspects. The prize for co-operation is high. Full trade normalisation will benefit both countries.

23 Oct 2014 : Column GC297

I welcome the UK’s position. India is a mature democracy. There are political upheavals in Pakistan. It is not for Britain to mediate between India and Pakistan. Nawaz Sharif has to take steps to demonstrate to India that he is sincere in wanting to improve relations. Terrorism from across the border is unacceptable. We need to exercise care that in debates and discussions, particularly in this country, we should not support those who are determined to undermine the world’s largest democracy’s process of economic development.

4.02 pm

The Earl of Sandwich (CB): My Lords, the noble Lord, Lord Dholakia, has done us great service in introducing this debate, and I am honoured to be among so many Indian friends. We know that the noble Lord has done this country a service as the Deputy Prime Minister’s adviser. We give him full credit for what he has achieved.

I acknowledge Prime Minister Modi’s success in the election. I fully accept that he has made an excellent start in both foreign and domestic policies. I am sure his support for the business community will have attracted a lot of admirers in this country, although I take the point made by the noble Lord, Lord Dholakia, about our immigration rules possibly keeping out some of those people. In his Independence Day speech, Prime Minister Modi made some impressive and even moving promises. He said he comes from a poor family and wants dignity for the poor. He spoke up for gender equality and the low castes. He expressed disgust with poor sanitation and the condition in which millions have to live in his country.

Last year, the noble Lord, Lord McColl, and I took part in a march in Nepal for better water and sanitation and in a conference attended by MPs from all over South Asia. I know how important the WASH programme is worldwide and how seriously it is being taken by India. I know Prime Minister Modi’s visit to Kathmandu went down well in Nepal and it should mean greater co-operation between the two countries, not least on energy.

Prime Minister Modi was not elected for promising these things but because of the business sector’s confidence in him since the Gujarat miracle as well as the electoral failures of Congress and, even more, perhaps, the momentum of the BJP in building support over many years. He also stands before the vast majority of the electors as one of the poor. They will identify him with themselves and expect him to live up to these promises. On the global scale, despite its economic advance under Manmohan Singh, which has now faltered, India remains one of the poorest countries yet one of the most influential. With its membership of the BRICS group, the post-2015 agenda coming up and the setting of new UN sustainable goals, Modi is going to have to deliver a range of promises both to the world at large and to his own people. As he says, good days are coming.

The stakes are, as usual, very high. The report of the high-level panel, on which the UK played a leading role, states that the new order must “leave no one behind”, transform economies, build peace and effective institutions and forge a new global partnership. No

23 Oct 2014 : Column GC298

one will be surprised that, when you come closer down to earth, India falls very short of these aspirations, especially when it comes to the situation of the low caste and the minorities. The fact is that there are atrocities and examples of hatred or prejudice every day against the lowest caste, the Dalits, and no one is stopping or reporting them except a fairly small number of NGOs that have the power to attract law enforcement agencies to these cases. I have personal experience of this in Rajasthan and Uttar Pradesh. Only last week the


reported that a 15 year-old Dalit boy was set alight with petrol for allowing his goat to stray into a neighbouring landowner’s field. One extraordinary recent case is of the newly elected Chief Minister of Bihar, himself a Dalit, who visited a local temple, after which the whole temple was disinfected by high-caste Hindus.

A European Parliament library note says that there are 112 newly elected MPs in the Lok Sabha with a serious criminal record; that is one in five. Many of them, perhaps most, are of course in the ruling party. Against that background, can we expect legislation any time soon? In fact, there is a positive move by the Indian Government to translate the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Ordinance 2014, enacted by the previous Government, into a new Bill. Many human rights organisations are hopeful that the new legislation, which is under consideration now, will be passed at the earliest opportunity and be able to fix many loopholes in the existing law to protect the excluded communities. I also assume that our own DfID will do its best to support the NGOs working in this field, and perhaps the Minister could confirm that on the record.

I would also be grateful to hear the Minister’s analysis of the Muslim vote. Here we have a country with a vast Muslim population—the world’s third largest—grossly underrepresented in the Lok Sabha with only 20 MPs, its lowest ever number, with no seats among the ruling party. I am told, and indeed have read, that there were Muslim families, especially those who had admired the BJP’s success among the business class in Gujarat, who were not only sympathetic to but actually voted for the BJP. This seems extraordinary in the light of the terrible events in Gujarat in 2002, when hundreds died, mainly Muslims. Everyone remembers the Prime Minister’s long involvement with the RSS/Jan Sangh movement. However, it also perhaps shows the depth to which traditional Muslim support for Congress has fallen over the years.

According to one source, there was one Muslim group that completely turned a blind eye to anti-Muslim violence in 2002 because “as a thriving business community they didn’t want principles to come in the way of their market share in goods and commodities”. Having said that, I know from talking to Muslim friends before and since the election that the BJP still inspires fear among many Muslim minorities in several states, especially in Gujarat, Maharashtra and UP. There are deep divisions in many urban communities, amounting in some places to ghettoes. Basharat Peer, a well known Kashmiri journalist, writing in the New York Times earlier this year just before the election, described the situation in Ahmedabad. I will not quote

23 Oct 2014 : Column GC299

the whole story, but it provides an example. He writes that he rode around Juhapura—the city’s largest Muslim ghetto at about 400,000 people—

“on the back of a friend’s scooter … The deeper we went into the neighborhood, the narrower the streets, the shabbier the buildings, the thicker the crowds. The edge of the ghetto came abruptly … ‘This is The Border,’ my friend said. Beyond the field was a massive concrete wall topped with barbed wire and oval surveillance cameras. On the other side, we could see a neat row of beige apartment blocks with air conditioners securely attached to the windows—housing for middle-class Hindu families”.

He quotes a 41 year-old resident, Mr Pathan, who says,

“‘The sun is allowed into Juhapura. The rain is allowed into Juhapura. The wind is allowed into Juhapura … I get a bill for water tax and pay it, but we don’t get piped water here.’ The locals rely on bore wells, which cough up salty, insalubrious water”.

Mr Pathan explained:

“‘My father said, ‘When the storm comes, you don’t get more than 10 minutes to run’”—

a clear reference to the threat of sectarian violence.

I quote that story because a friend of mine lives in Ahmedabad and he knows it to be true. He says that there are two very separate real estate markets, originally arising from the Disturbed Areas Act, which prevents Hindus from selling property to Muslims. That was originally intended to prevent communal violence, but in practice it is a recipe for apartheid.

Finally, another concern of Muslims is that, whatever assurances are given, the Prime Minister refuses to condemn his own MPs and senior leaders when they indulge in inflammatory rhetoric. I quote no less an authority than Siddharth Varadarajan, former editor of the Hindu, who has regularly described the BJP’s demonisation of Muslims and its dirty tricks during political campaigning in UP. It being Diwali, I wish the new Indian Government continuing success, but the point is that, however many promises the Prime Minister makes, he has to live down a long record of prejudice and discrimination in his own party. More importantly, he has to carry out and implement the legislation that he is proposing so that minorities can all see and believe what they are hearing.

4.12 pm

Lord Paul (Non-Afl): My Lords, I commend the noble Lord, Lord Dholakia, for providing us with this opportunity to focus on an issue that is timely and important. The relationship between Britain and India is unusual and remarkable: unusual because we have moved without rancour from an imperial association to a lasting friendship of equals; remarkable because it is rare that great nations with such different cultural wellsprings share unshakeable common commitments to democracy and the rule of law.

As we reflect on these affinities and how they flow into our assessment, we should note that this is a very special year for India. In May, India engaged in the largest democratic happening in human history. Its 16th national election embraced an electorate of more than 800 million voters, a larger number than all the combined electorates of the European Union and North America. It takes more than 30 separate national elections to produce the governing institutions

23 Oct 2014 : Column GC300

of the European Union and North America; it takes just one election to produce the Government of India.

The election of 2014 was also marked by a new maturity in voting. At these polls, Indians transcended old divisions of caste and religion, largely leaving behind sectarianism, to vote for national concerns such as employment and anti-corruption. A new leader—we must congratulate Mr Narendra Modi—was able to secure a one-party majority and a stable Government after many years of minority or coalition rule. In these days of political turmoil, times when democracy often seems so unstable and fragile, this bodes well for the future of India.

When I speak of affinities and common commitments, I am well aware that Britain and India have many differences and many divergent interests. Yet, after a lifetime linked to both societies, I am deeply conscious that the things that unite us are far greater than those which divide us. This is why I am concerned, and share the disquiet that so many Indians feel, about the stream of ungenerous and often ill-informed advice that is directed from this country to India, generally offering unsolicited counsel on how India should conduct its democracy and manage its affairs. I shall provide a few instances.

On human rights, there are cases of abuse in India but they are invariably investigated through independent judicial enquiries and the outcomes are inevitably taken very seriously. Ill founded allegations are made over and again, suggesting Indian indifference to these situations.

On corruption, there are serious issues, but the Modi Government have addressed this with unprecedented vigour and seem to be making progress on this hugely complex problem, a problem that your Lordships well know is not confined to India. Even Britain is not exempt. Little, if any, credit is given to the determined efforts now under way to correct this situation.

On Kashmir, there is a cascade of intrusive comment, instruction and advice. India is in constant discussion with Pakistan and has made it clear that Kashmir is an integral part of India.

Most Indians, irrespective of whether or not they support Mr Modi, were profoundly upset when a few years ago some Governments refused him a visa, or were reluctant to issue him with one. The issue was sectarian riots in the state of Gujarat and the very sad loss of life on both sides. However, twice thereafter Mr Modi was democratically re-elected as the Chief Minister of that state, and the Supreme Court cleared him of any blame. These are just some random examples of the continuous and irritating admonitions that are endlessly repeated, sometimes by those whose irresponsibility is surprising.

The point I am making is not that transgressions should be overlooked or excused, but that the needless pursuit of ill-informed criticism and unfair comment can only damage the good relations that characterise the Indo-British nexus. The haranguing of proud and independent countries is not conducive to discourse between democratic nations. I am sorry to see the slow decline of the Indo-British relationship over the past decade. When I ended my five-year term as co-chair of

23 Oct 2014 : Column GC301

the UK-India round table in 2005, relations between the two countries were about the best they had ever been, although I am not claiming any personal credit for that. Now is the time to re-establish those links and welcome honest dialogue between us. India has an unparalleled opportunity to progress in a way that will provide opportunity for all its people. As Finance Minister Arun Jaitley said this week, we are for,

“a market economy but with a social conscience”.

Let us do what we can to assist India’s advancement, as I am sure the Indian people will respond with great vigour and that will be a win-win situation for both countries.

Before I close, I would like to raise one small point. When the Foreign Secretary and the Chancellor of the Exchequer visited India in July, they announced with great fanfare that a statue of Mahatma Gandhi would be erected in Parliament Square as a sign of the concord between our two nations. Initially the Indian people were delighted by this generous gesture, but I am afraid that a degree of doubt has crept in because the funds are going to be raised by public subscription. The Chancellor himself has said that the British economy is in great shape, so I find it rather surprising that Her Majesty’s Government are unable to fund this modest project.

Today is a day of sublime importance in India. As the noble Lord, Lord Dholakia, said in his opening, it is Diwali, the festival of lights, which symbolises the victory of good over evil, of knowledge over ignorance and of hope over despair. It is a metaphor that I hope will inform the perceptions and assessments that this debate concerns.

4.21 pm

Lord Bach (Lab): My Lords, it is a pleasure to take part in this Short Debate, not least because it has been obtained and opened by the noble Lord, Lord Dholakia. I congratulate him and the other speakers, and we look forward to the Minister’s reply to the important Question that the noble Lord has asked—namely, the Government’s assessment of the outcome of the 2014 general election in India. I thank the noble Lord for his Diwali wishes. As he knows, I come from Leicester, where we are proud to have the largest Diwali celebrations anywhere outside the subcontinent.

I start by restating what all of us believe, that India is a magnificent and great country which, placed in the modern world, is growing in strength and influence year after year. In this country, we are obsessed by a general election next year in which roughly 50 million citizens will have the right to vote and perhaps 30 million will vote. It is worth repeating that the general election in India involved 815 million eligible voters, of whom 551 million voted—that is over 66%—to elect a new Lok Sabha and Government of India. It was a brilliant logistical exercise but, much more significantly, it was a demonstration of the principles of democracy in action that no other country in the world can come near to. In a world full of one-party Governments, dictatorships and phoney elections, for almost 70 years India has stood out as the world’s largest functioning democracy, in spite of political, military and economic difficulties that might well have destroyed democracy in a lesser country.

23 Oct 2014 : Column GC302

The result of the election surprised the world, not because it was not widely believed that the BJP would win and that Mr Modi would become Prime Minister but because of the extent of that victory. A majority for one party of members of the Lok Sabha is a rare event. When the BJP achieved it and could have governed alone, that it chose not to do so but preferred to be the dominant party in a coalition Government, with 337 seats out of 545, was no doubt in the tradition of modern Indian politics but also with the awareness that it achieved its majority of seats with 31% of the total vote.

All elections everywhere are called watershed elections, but the 2014 general election in India can genuinely be described by that name. It seemed as though the Congress party coalition Government had perhaps run out of steam, having enjoyed a successful first five years of its 10-year term. From afar, it seems as though the country wanted change. Perhaps a rather loose comparison with British political history in 1979 and—dare I say it—in 1997 is not too far-fetched.

Commentators have argued with some force that Mr Modi’s appeal was not what has been described as his “bold Hindu nationalism” but rather expressed the view that a liberalisation of the Indian economy to increase growth rates, an attack on what was perceived as being too much corruption, plus an appeal to the vast and growing youth vote and across caste as well, were more significant factors in his victory.

In the five months that have passed—which is an incredibly short time to make any sweeping judgments—it is clear that Mr Modi is the dominant figure in his Administration. At home and abroad, it is he who makes the news, and of course it is by his actions that his Government will eventually be judged. From the BJP victory in state elections this week in Haryana and Maharashtra, both states unused to BJP leadership, it is clear that the Prime Minister’s honeymoon period is far from over. There has been some impatience about the pace of economic reform, and some criticism of the July budget. However, only this week a series of announcements involving labour laws, diesel prices and the Indian coal industry have led commentators to argue that the pace of reform is being stepped up.

Mr Modi has also been busy in foreign affairs, with considerable publicity concerning his visits to Brazil, the United Nations and Japan. As we have heard in this debate, Britain is tied closely to India on so many fronts: history, a belief in democracy, a very large number of British citizens with Indian backgrounds, the trading relationship and the investment in each other’s countries, to name but a few. The present Government in Britain, as much as the previous one, have made the relationship a priority for this country. We of course support the work done by current Ministers, who no doubt supported us when we were in power as well. India is too important a country as far as British interests are concerned for there to be any party-political point-scoring. However, the decline in the number of Indian students who study in the United Kingdom, which was mentioned by the noble Lord, Lord Dholakia, is a matter that needs responding to, and needs some quick action.

23 Oct 2014 : Column GC303

This country has much work to do with India on climate change, where the Indians have a huge role in global climate talks, particularly the Lima climate change conference in December, and in Paris in 2015. India was this week re-elected to the UN Human Rights Council, which of course we also welcome.

The next few years will be an exciting time for India—but when is it not an exciting time in India? A former British high commissioner once told me, when I was lucky enough to visit India as a Minister, that if you look out of a window on a car journey in India, anywhere and at any time something interesting is always going on. He was absolutely right—India is permanently interesting. I am proud to have spent some of my early years in Chennai—of course, when I was young it was called Madras—and of course I was also lucky enough to represent many British Indians as a councillor in Leicester for many years. We on this side wish the new Government well in their difficult and important work.

4.29 pm

Lord Wallace of Saltaire (LD): My Lords, it is a great pleasure to wind up this debate, particularly as it was opened by my noble friend Lord Dholakia, who first took me to India some time ago and from whom I have learnt a great deal about the sub-continent. I thank him for initiating today’s debate and for his loyal and continuing interest in relations between Britain and India. I was glad that the Indian Government recognised this when they awarded my noble friend the Pravasi Bharatiya Samman some time ago. I thank other noble Lords who have participated in this debate.

Perhaps I should first say a few words on the terrible storms that hit India’s eastern coast several days ago. I extend on behalf of the UK Government our deepest condolences to all those who have lost family and loved ones after Cyclone Hudhud hit the eastern Indian states of Andhra Pradesh and Odisha. The cyclone caused devastating damage to life and property, and our thoughts are with those who died. The Indian Government are working well to manage the situation, and the UK will continue to monitor the evolving situation there and stand ready to assist where it is appropriate to do so.

The noble Lord, Lord Bach, asked how the British Government see the outcome of India’s election. We all watched as India undertook this massive, open, democratic election, an enormous feat of organisation and a peaceful transfer of power—something which many Governments and states in the world are sadly not yet very capable of doing. More than 500 million people voted and the election saw the Indian people give the BJP an absolute majority in the lower House—an amazing shift. In doing so, the Indian people gave their new Government a strong mandate for reform and economic growth. As I understand it, it was to some extent a vote of confidence in Modi as a reformer more than in the BJP as a party. The noble Lord rightly commented that two recent state elections have further strengthened the position of the BJP. I notice that we debate constitutional reform in Britain. The United Kingdom has still an entirely unitary constitution

23 Oct 2014 : Column GC304

based on parliamentary sovereignty, but it has always been very good at giving states which were formerly in the empire and Commonwealth highly devolved and federal constitutions, India being a good example.

The Indian Prime Minister, Mr Modi, has made a very good start in office. He has made positive moves, already mentioned, to engage the region such as inviting the leaders of India’s neighbours to his inauguration, and his statement to work through consensus in Parliament is equally admirable. His ambitious plans to develop India, through energy for all by 2020, heavy investment in infrastructure and, importantly, improved governance, will all be key in supporting India’s development. The noble Earl, Lord Sandwich, mentioned the MPs in the Lok Sabha who have interesting backgrounds. This is not a new problem; it has been there ever since India became independent. We believe that Mr Modi’s plans open up bright new prospects for the relationship between our two countries across the board, including in trade, foreign policy and people-to-people issues. We have made a positive start in engaging the new Indian Government, with the Chancellor, the Deputy Prime Minister and the former Foreign Secretary all having met Prime Minister Modi since the election and through Indian Foreign Minister Sushma Swaraj’s visit to London on 17 October. We have made a total of nine ministerial visits so far, mostly with substantial groups accompanying the Ministers who went. I understand that a tenth will shortly be led by Greg Clark which will concentrate precisely on the areas of research, co-operation and student exchange—I am happy that my wife, as an officer of the British Academy, will be part of that party—talking about the Newton Fund and how we can assist in co-operation between Indian and British universities. We want to build on what we have achieved and our already strong ties with India to bring real warmth to the relationship. We are not letting the grass grow under our feet.

Trade and investment is a priority of the new Indian Government and it is important in driving the growth and development that India wants. India wants to modernise its infrastructure, boost manufacturing and release the potential of young Indians through better education. Prime Minister Modi has also revealed plans to clean up the Ganges, which is of huge significance to the Indian people. By investing in that growth, stabilising prices and developing the infrastructure to improve services and connectivity, he will do much to kick-start the economy across the country after years in which the Indian economy has grown more slowly than its potential.

However, to achieve this, India needs investment. The UK is already the biggest investor among the G20 countries in India, and more Indian investment comes to the UK than to the rest of Europe combined, but there is more that we intend to do. For example, when visiting India in July, the Chancellor announced that the UK will make available £1 billion of export finance to support the development of Indian infrastructure that has a UK element. He also announced, as part of the UK-India Economic and Financial Dialogue, a partnership between India and the City of London to work collaboratively in areas such as the potential to float the rupee in London, and opportunities for further

23 Oct 2014 : Column GC305

raising of capital. We are roughly on track to achieve the Prime Minister’s target of doubling bilateral trade with India between 2010 and 2015, and we will keep pushing to remove barriers for British companies to trade in India and vice versa, and to ensure that we make the best of the opportunities that are available.

We are also, of course, pressing the Indian Government to complete the agreement made in Bali which will enable us to take the World Trade Organization through to another level of opening up trade. We understand the Indian Government’s concern about food security but we are confident that a compromise can be agreed that will allow the world trade round to go ahead.

An important part of our delivery of and success in achieving our aims with India is the strength of the people-to-people links our two nations have, with our extremely successful Indian diaspora—1.5 million people—who contribute to every aspect of our society and have the potential to be a cornerstone in our bilateral relationship. Last week we saw the Indian Government’s flagship regional diaspora conference, the Pravasi Bharatiya Divas—I hope I pronounced it moderately correctly—take place in London for the first time. We were honoured to be the host city for this event and it demonstrated the power of the people-to-people links. Equally, things such as the Dadabhai Naoroji awards, which celebrate those individuals who have helped strengthen UK-India bonds and which were handed out for the first time last week at the FCO’s Indian diaspora reception, show how much the diaspora can and does contribute.

Those ties will be highlighted during the centenary of the start of World War I. We will be honouring the more than 1 million Indians who served to defend Europe’s freedom, so that their courage and sacrifice are not forgotten. I was very happy to go to the exhibition on the role of Sikhs in World War I at the School of Oriental and African Studies this summer. I very much hope that my noble friend Lord Dholakia is involved in preparations in Brighton to commemorate all those Indians who were sent to Brighton as wounded soldiers to recover or, in some cases sadly, to die there of their wounds. I speak as a member of the advisory board on the commemoration of World War I, and we want to ensure that the Indian dimension is very much part of our memorial.

The noble Lord, Lord Paul, suggested that we were being a little ungenerous in asking for the Gandhi memorial to be funded by public subscription. I think it is the case that most of the statues he sees in London have been funded by public subscription. I spoke at a

23 Oct 2014 : Column GC306

meeting of the Chinese community in London last month to commemorate the role of the Chinese Labour Corps in World War I and to launch the fund that will get a public subscription to pay for a memorial. This is the normal way in which these things happen in London. I look forward very much to seeing the Gandhi memorial, we hope in Parliament Square.

We have not mentioned energy co-operation, although the noble Lord, Lord Bach, mentioned climate change. One of the new Prime Minister’s priorities is indeed to improve India’s energy security. Britain is a world leader in renewable energy and we see that as very much part of the partnership in which mutual interest will enable us to go a great deal further.

The noble Earl, Lord Sandwich, spoke about the treatment of minorities, both Dalits and Muslims. We all recognise that that remains a severe problem in India and that, indeed, some of those problems overlap into the diaspora community in Britain. We—or, at least, non-governmental organisations—are engaged in this. It is very much a deep cultural issue, as of course is the position of women in Indian society, on which we all need to work, and on which the diaspora community in Britain needs to work, to improve that particular aspect of Indian society.

The noble Lord, Lord Paul, also talked about the problems of corruption, which are of course deep-seated in traditional Indian culture, as they were in traditional British culture until a century and a half ago. Again, we look forward to the new Government working on this. The noble Lord also talked about a slow decline in UK-Indian relations. Well, we are now doing our utmost to reverse that and to ensure that we can build a positive new relationship with the new Government.

Finally, there was mention of the relationship with Pakistan, and with other neighbours. We are of course actively concerned about the relationship between India and Pakistan; that, too, is a relationship which overlaps into the United Kingdom. We welcomed the invitation for the Pakistani Prime Minister to attend Mr Modi’s inauguration, and we shall do everything that we can to encourage that relationship to unfreeze, which is certainly what it needs to do.

This has been a very useful debate. I hope that I have made it clear that Her Majesty’s Government see the election of the Modi Government as an opportunity to strengthen relations with India and for India to grow, reform and change more rapidly than in recent years. We look forward to cultivating that relationship over the coming years.

Committee adjourned at 4.42 pm.