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The noble Baroness referred to visas. We believe that we get more efficiency and more flexibility, and that the system has more integrity, by delivering Jamaican visas from the United States. The visa system has to have quality and consistency and it was discussed with the Prime Minister at the meeting that I mentioned earlier.

Lord Howell of Guildford: My Lords, does the Minister share my view that last week's Commonwealth Heads of Government Meeting was a successful and significant one and that the Commonwealth became much more outward-looking? I hope that it brings benefit to the Caribbean Commonwealth countries and to their own efforts through CARICOM, et cetera. Does she also note that the group in Trinidad decided to invite Rwanda into the Commonwealth? It is probably a good idea-particularly since I gather that they have taken up cricket in Rwanda-but was either House of Parliament consulted before it became the British Government's policy to back that membership?

Baroness Kinnock of Holyhead: My Lords, the decisions made by the Commonwealth are made by all Commonwealth members and not by the British Government, and that was the case with Rwanda's application to join the Commonwealth and the agreement which the Commonwealth as a body gave to that position. It appears in the communiqué and there was a very firm belief, as has been in the case in the past-for example, with Mozambique-that it is a way of ensuring that you draw into the Commonwealth those countries that can benefit from the relationship that we have on human rights, democracy and other issues. I sensed a real consensus around the Commonwealth meeting of Ministers on the application and the success of Rwanda in joining.

Lord Howarth of Newport: My Lords, has my noble friend assessed the co-operation that our Government are receiving from the Government of Jamaica and from other Caribbean Commonwealth countries on the efforts to interdict the illegal trade in drugs?

Baroness Kinnock of Holyhead: I thank the noble Lord. As he suggests, we are concerned about rising levels of crime throughout the region. We have invested

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a great deal in reducing drug trafficking and associated crimes, working with the Serious Organised Crime Agency and collaborating with the Governments in the region. During my visit, I went on board HMS "Iron Duke", a ship working in the Caribbean mostly on disaster issues, which has developed a very important and significant counternarcotics role in the region. The collaboration and co-operation are good, but we concede that there are huge concerns since we know that 30 per cent of the cocaine found on the streets of the United Kingdom is transhipped through the Caribbean.

Lord Alton of Liverpool: My Lords-

Lord Tebbit: My Lords-

The Minister of State, Department of Energy and Climate Change (Lord Hunt of Kings Heath): My Lords, may we hear from the Cross Benches?

Lord Alton of Liverpool: My Lords, following the welcome decision of the Commonwealth to admit Rwanda to its membership, can the Minister tell us whether we are engaging with President Paul Kagame and Rwanda about Rwanda's involvement in the continuing conflict within the eastern part of the Congo where, as she is well aware, millions of people have died over the past 15 years?

Baroness Kinnock of Holyhead: My Lords, we should recognise, acknowledge and welcome the fact that there has been a rapprochement between Rwanda and the Government of the DRC. It is a very positive advance on what we have seen in the past. The noble Lord's concerns would have been commendable in the past, but we have now seen some serious progress.

Lord Tebbit: My Lords, the noble Baroness may have not quite heard the question put to her by my noble friend. As I understood it, he was asking when Parliament had had the opportunity to debate the proposal that Rwanda should be admitted to the Commonwealth. That, it appears, was government policy. Did we all know that it was government policy?

Baroness Kinnock of Holyhead: My Lords, those of us who follow issues relating to the Commonwealth were very well aware that this was being discussed. I am very surprised that the noble Lord seems to be unaware that this has been discussed for two years or more. It is not the practice to ratify such a decision made by the Commonwealth in national parliaments, whether that of the UK or of any other Commonwealth member.

Lord Wallace of Saltaire: The noble Baroness may be aware-

Baroness Howells of St Davids: Was the tax on travel to the Caribbean discussed at the Heads of Government meeting? Will the Government think again, because it is an unfair burden? We have lost bananas,

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we have lost sugar et cetera, and now we are told that tourism is our only means. This will definitely put a ban on tourism and certainly will not help Caribbeans in this country who are trying to get there to see their relatives.

Baroness Kinnock of Holyhead: I can certainly confirm to my noble friend that the issue of air passenger duty was raised many times with all of us. We are all conscious-I am conscious-that this is a cause of concern. I am aware of what has happened to the banana industry, the sugar industry and the rum industry. Now there are threats to tourism, not just from air passenger duty but due to the economic situation across the world. I cite what the Prime Minister said at the meeting in Port of Spain, when he was asked a question. He said:

"The UK is keen to ensure that these measures are not discriminatory and have asked the Treasury to look urgently at the issue. Strong solidarity with Caribbean economies as they, too, weather the global downturn, is very important to us".

I hope that those words are reassuring.




Asked By Lord Clinton-Davis

The Financial Services Secretary to the Treasury (Lord Myners): My Lords, Sir David Walker has recommended that remuneration paid to high earners, which Sir David defined as those receiving more than £1 million per annum, should be disclosed in aggregated bands. The Government are now working to implement that recommendation, but have already indicated they will go further than Walker, in narrower salary bands and a lower starting threshold. These regulations will be fully consulted on and debated in Parliament and will complement and improve on the current disclosure framework.

Lord Clinton-Davis: Does my noble friend agree that there is widespread public concern that the banks have, in the main, depicted little evidence that they are prepared to undertake the radical reforms required since the banking crisis? Does he further agree that the Walker report's conclusions are woefully inadequate?

Lord Myners: I think that Sir David Walker has done an excellent job in his work on risk management and the role of the boards and, in particular, on the issue that he describes as stewardship-which is that the shareholders, the major investing institutions, must take their responsibilities as owners much more seriously than they have.

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I share my noble friend's concern that there is precious little evidence that those at the top of our banks appreciate the concern about those extraordinary levels of income. I would estimate that at least 5,000 people working in the banking industry in the UK will, if nothing is done, receive remuneration in excess of £1 million this year. The real responsibility must lie with the shareholders. Accordingly, I have written to the NAPF, the CBI and the TUC, urging them to use their influence to persuade trustees to ask their fund managers: "What are you doing to stop these unreasonable and unjustifiable levels of remuneration?".

Lord Newby: My Lords, I note that the Minister has considerable sympathy with the Question asked by the noble Lord. Will he refer to his colleagues in the Treasury the fact that there is a widespread view that naming bankers and what they earn is an essential part of bringing transparency to the industry? Would that not play a small part in returning some level of trust to an industry whose name is still in the mud?

Lord Myners: I am not convinced that naming is a significant step forward. It is far more important to understand the architecture of remuneration within banks and how that is linked to performance and risk management. In early August, I suggested that David Walker needed to push the envelope a little further in a number of areas and suggested that he consider the issue of identifying people by name. He considered it, but he did not think it would add a great deal, and I am minded to conclude that he was correct. As I said, it would involve naming more than 5,000 people-all of whom, of course, would qualify for mansion taxes.

Lord Renton of Mount Harry: My Lords, I thank the Minister for what he has just said. Surely one of the problems of relying on shareholders more is that the individual small shareholder-a shareholder who has perhaps 1,000 shares and goes to an AGM-has no chance of making his ideas move forward against the pension funds which own much the largest quantities of shares and which often, frankly, do not wish to rock the boat.

Lord Myners: My Lords, the noble Lord, Lord Renton, speaks with considerable experience of the corporate world. From my own perspective, private shareholders are often the most effective of all shareholders because of their ability to stand up at shareholder meetings and occasionally to prick the pomposity of the directors by asking questions in the open. The institutions often do not do that. However, the power of the vote lies with the institutions and they must take action. They must take action now because although they vote on the remuneration committee report, they do so after the act of payment. The decisions about bonuses will be made over the next six to eight weeks and it is important that our major institutions engage now with the companies and say: "We will not support grotesque payments. If you persist in paying them, we will exercise our votes to remove from the board the people who authorise them".

Lord Lea of Crondall: My Lords, in strongly welcoming my noble friend's announcement about going beyond what Walker recommended, I wonder if he can indicate

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whether we are talking about investment banks and retail banks or about just one category or the other?

Lord Myners: My Lords, most of the people to whom we are referring here work in the investment banks. I find it quite extraordinary that Mr George Osborne, in his speech on 26 October, suggested that the pressure needed to be borne down on retail banks. The vast majority of people working in retail banks-in branches, call centres and service centres-only dream of these rewards. The real problems lie in the investment banks. But perhaps Mr Osborne is again evidencing his commitment to transfer wealth from the poor to the rich.

Lord Taverne: My Lords, will the noble Lord consider taking up the Bill which was introduced in this House by the noble Lord, Lord Gavron, and received widespread support from all sides, which calls for the prominent display of the ratio between the highest paid executive or director and the average total remuneration of the bottom 10 per cent of employees?

Lord Myners: I had much sympathy with my noble friend Lord Gavron's Bill, and I believe that the Walker recommendations will throw much more light on these issues than has previously been available. However, one needs to put David Walker's definition of £1 million a year as the starting point for disclosure in the context of national average earnings being just over £20,000. I think that that shows the extent to which the space that those in banking live in is completely different from the world that the rest of us occupy.

Arrangement of Business


3.38 pm

The Chancellor of the Duchy of Lancaster (Baroness Royall of Blaisdon): My Lords, it is that time in the parliamentary year when there are a number of debates on the Order Paper. Indeed, we have one this afternoon: the Second Reading of the Digital Economy Bill. This may therefore be a good time to remind noble Lords of the guidance in the Companion about attendance at debates. The Companion is clear that a Member of the House who is taking part in a debate is expected to attend the greater part of the debate. Members who become aware in advance that they are unlikely to be able to stay until the end of the debate should remove their names from the list of speakers. It goes without saying that noble Lords participating in a debate must always be present for the opening speeches.

Digital Economy Bill [HL]

Main Bill Page
Copy of the Bill
Explanatory Notes

Second Reading

3.39 pm

Moved By (Lord Mandelson)

The First Secretary of State, Secretary of State for Business, Innovation and Skills and Lord President of the Council (Lord Mandelson): My Lords, when we talk about the digital economy, we are talking about

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every business that runs a website or transfers data digitally; every firm that sells goods online or whose creative or intellectual property is represented by digital content; and every business that enables these business models to exist.

The Digital Britain White Paper set out our plans to upgrade the UK's legal and physical digital landscape. Digital Britain includes plans, which are already being implemented, to ensure the availability of broadband to practically every home and business in the UK.

The Bill is an important part of the wider Digital Britain agenda. It is a broad legislative agenda that stretches from new rules that for the first time make it an offence to sell 12-rated video games to children under 12, to a strong new commitment to public service news. I do not aim to be comprehensive or to touch on every aspect of the Bill today. I will focus on three key things: where the Bill takes us in modernising our digital infrastructure, in particular charging Ofcom to create new capacity for radio and mobile telephony and internet services; the measures that we propose here to update our copyright regime for a world in which we use digital content in radically new ways; and, finally, how we will protect and strengthen public service content both nationally and locally.

I stress that the Bill and the wider Digital Britain agenda are about adapting our infrastructure, our copyright laws, our support for public service media content and the regulator that oversees all these things to quite revolutionary technological change. At the heart of what we are discussing today are the British creative and communications industries, which produce £125 billion a year and employ just fewer than 2 million people. Vital as they are, the Bill is not just about the communications and the creative industries; it is about the wider legal frameworks and infrastructure of an entire knowledge economy. It is therefore about future readiness in the economy, competitiveness and growth.

A digital economy, just like any other economy, is built on infrastructure. We think of infrastructure as tying two places together across distance, but the digital economy collapses distance into nothing. Its infrastructure is more about spectrum, speed and capacity than geography, but, just like any infrastructure, it has to be in place for innovation and growth to happen. For that reason, the Bill creates a new obligation on Ofcom to report every two years on the state of Britain's communications infrastructure. It also requires that Ofcom adapts its principal focus on promoting competition and the interests of citizens to the need to promote investment in infrastructure in the UK.

The short-term goal of lowering prices for consumers has to be balanced with the necessary long-term goal of constant investment in the network itself. The Bill makes changes that will support the recommendations of the independent spectrum broker that we will implement to ensure that we have the mobile network capacity that we need. This will include arrangements for applying new pricing arrangements to already auctioned spectrum to make sure that it is used as efficiently as possible. We have also set out our vision for the future of digital radio, which will see the

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country shift to digital, when transmission coverage and audience numbers are wide enough, by the end of 2015.

The Bill also represents a major evolution in our copyright system in Britain. That shift is a reflection of the unique challenge that digital content poses to industries whose survival depends on protecting content and rewarding creativity. I recognise that this House is probably the one place in Britain where peer-to-peer file-sharing is associated more with passing notes in the Lords' tea room than with piracy, but, joking aside, this is a major problem for Britain's creative industries. Our copyright regime is 300 years old this year, which means that our copyright infringement problem is also 300 years old. But the dimensions of the problem have been exponentially changed by digital technology. The ease with which data can be transferred and shared is the most powerful transformative force in the digital economy. For creative businesses, it is also its Achilles heel.

An effective copyright strategy for the digital economy has to do a number of things. It has to make a compelling case, an educative one, to an internet-literate generation that protecting the creativity it enjoys means rewardingcreativity, and that means protecting copyright. But it also means recognising that copyright infringement is the market's way of telling us that we need to develop new business models that make digital content legally available at reasonable prices. This is a market challenge for content providers who need to reconnect with their customers.

But this does not replace the need for government and for the law to protect the rights of content holders, so we are creating two new obligations on internet service providers: first, to send letters to their subscribers linked with an alleged online copyright infringement; and secondly, to record the number of these notifications with which each subscriber is associated, and to provide anonymised lists to copyright owners on request. This allows copyright owners to apply for a court order to get access to the names and addresses of serious infringers and target legal action. If, following a period of assessment, such warnings are not deterrent enough, we are also proposing a reserve power for the Secretary of State by secondary legislation to direct ISPs to impose technical measures and for Ofcom to consult on a code to regulate this obligation. The measures could include temporary account suspension and would be targeted only against the most serious infringers. These tougher technical measures will be exceptional and a last resort. Our central goal is for users to reconnect to a legitimate market for this content, not disconnect from it. Infringers would have clear and ample warning of the risks they appear to be taking and will have been advised clearly on how to access material legally. There would be a clear and independent route of appeal, including to a first-tier tribunal.

I realise that people expect these measures to be proportionate-and they are. ISPs already have and use the power to disconnect in appropriate circumstances. Critics have suggested that this policy focuses on coercion, but that is quite wrong. We are clear that there is a primary role for education about the value of copyright, and a very clear obligation on the creative industries to get their act together and build business models that

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provide access to content at a cost that makes the risk of breaking the law an unattractive option. But I do not accept that the difficulty of defending creative content from piracy in a digital economy should become an argument for not even trying. There will be no creative economy if we cannot preserve the value of creativity by protecting what it produces.

To reflect the ever-changing nature of this market, the Bill includes a power to amend the Copyright, Designs and Patents Act 1988 in future, to reflect fast-changing technology. Such a power should not and will not be used lightly. That is why any use of the power would require full public consultation followed by approval of both Houses of Parliament, and it is why we have provided explicitly that the power may not be used to create or modify criminal offences.

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