I thank colleagues for the points raised in this debate and for the high level of technical expertise that they have shared with me, so new to the Dispatch Box. First, I will address some of the points made by the noble Lord, Lord Stevenson. As noble Lords know, the Government support growth of the creative industries in multiple ways. I am a new and passionate advocate for doing this broadly and through intellectual property. We recently announced £16 million funding from the Employer Ownership of Skills pilot to boost skills in the creative industry sector. We have welcomed the launch of the Creative Content UK scheme and have provided £3.4 million to co-fund the Creative Content UK educational campaign. The campaign will help to reduce online copyright infringement and to promote the use of legal digital content, which is an important theme of this debate.
The Government have welcomed the industry-published creative industries strategy and will continue to work with industry to help to achieve the growth and export success outlined in the vision and strategy for 2020. The IPO, along with other government departments, is fully involved with this strategy. In thanking the noble Lord, Lord Stevenson, for his kind words about my potential role as the Minister for the IPO, I remind the House that my friend in the other place, Ed Vaizey, now is also a Minister of State in the business department as well as at DCMS. On arriving in the department, he gave me helpful suggestions about who I should see and talk to. Joined-up government can work and it is our determination that we will make it work.
The noble Lord, Lord Stevenson, expressed his regret, as did some others, as to why the Government were using secondary legislation rather than primary legislation for these measures. I repeat the point—that he indeed has made—that changes have been carefully developed with wide and extensive consultation. We have also published the draft regulations for technical review and have welcomed many debates in this House and the other place.
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The fact that these regulations are affirmative has afforded us the opportunity to have this debate today and I welcome that. The two regulations were indeed unbundled to allow the opportunity for this important
debate, which as a new Minister I very much welcome. I agree that copyright is valuable and sometimes misunderstood so it is right for us to debate it, to talk more about it and to emphasise its economic contribution to our country. You go right round the world and you find people’s admiration for our creative industries.
The measures in these SIs, in the SIs that have already passed and in the Intellectual Property Act, which my predecessor helped to facilitate through this House, have long been fought. Much time has been devoted to going, to some extent, this way and that way. I think we should now press ahead with the full package of measures. We need to bring our legislation in this area up to date, as the noble Baroness, Lady Morris, very helpfully said and to bring some common sense, as the noble Earl, Lord Erroll, said. Obviously we will continue to review the arrangements but it is important that this set of changes come in and together can be communicated to all the important stakeholders on 1 October.
The noble Lord chided me for not covering the question of contract override in my opening remarks but I wanted to hear what he was going to say on this important issue. The presence of the contract override clause gives users, consumers and businesses certainty and clarity that the exceptions apply in all circumstances regardless of the detail of a contract. Without such clauses restrictive contract terms could prevent the uses permitted by the exceptions, thus preventing benefits from being realised. This is not merely a hypothetical fear. Many responses to the various consultations have told us that contracts permitting access to copyright works frequently contain terms that prevent users from carrying out activity that otherwise would be permitted by law.
The noble and learned Lord, Lord Scott of Foscote, in an interesting intervention talked about retrospection. When we say a law is retrospective we mean that it takes effect in the past and therefore could affect the legality of an action that took place in the past. Obviously we are not allowed to do that with this legislation and we do not intend to. However, that does not mean that the new law will apply only to new contracts. The law will apply to contracts regardless of the date on which they were formed but will take effect only after the new law comes into force. The contract override provisions simply ensure that, where the law provides for an exception to copyright, people are able to rely on that law without having to work out whether there is a contract term to the contrary creating a whole patchwork of different legal situations.
Ensuring that the personal copying exception cannot be overridden by contract terms will mean that consumers are given clarity and certainty over what they can do with the media they buy. Most people assume that the law already allows them to make the type of personal copies covered by our legislation. Very few people read the detailed licensing terms that accompany digital downloads. We want the goods so we just tend to accept the terms. Ensuring that the new law on personal copying applies in all circumstances, regardless of contract and licensing terms, will bring much needed clarity to the law and fairness for consumers, which I welcome.
The noble Lord mentioned the cost to the industry of £58 million and asked me to comment. That report is based on assumptions that do not seem to take account of the status quo, where we know a large proportion of the public already copy music for personal use. The report also appeared to compare this to a situation where unlimited copies could be made, whereas the Government’s private copying exception is for personal use only and so does not permit unlimited copies. Therefore, the Government have a number of doubts about the robustness of the research report’s conclusions and that figure of £58 million per annum. The Government’s impact assessment was based on a number of sources, including independent economic research and consumer surveys.
While I am on the subject of impact assessments, perhaps I could turn to the points made about that by my noble friend Lord Clement-Jones. He raised a number of points and asked about the figures on the total benefit to the UK economy of £500 million over 10 years. My predecessor spoke in this place on 14 May on the other exceptions in the package and gave a detailed breakdown of the figures. I will not repeat those today, but the predicted impact of the regulations in the two statutory instruments is £260 million over 10 years, mainly from the personal copying exception. A small benefit of £3 million over 10 years is also predicted from the quotation exception. That is the net present value figure, discounted to today’s terms, in line with HM Treasury guidance.
My noble friend Lord Clement-Jones also asked why the impact assessments were not updated. When credible new evidence has been provided relating to any of the exceptions, the impact assessments have been updated. For example, the personal copying impact assessment was updated, as I have said, following the submission of new evidence by the music industry.
In his helpful and detailed speech, my noble friend Lord Clement-Jones addressed a number of other questions which I will try to answer. If I am not able to answer them all, perhaps I can follow up in writing. He referred to the Padawan case on private copying and questioned whether the outcome means that a compensation mechanism must be included. As my noble friend Lord Younger said in his letter at the time, the exception before us today is,
“different to the one considered in the Padawan case”.
As the letter says:
“The Padawan case confirmed that compensation is due when a private copying exception causes harm to copyright owners which is more than minimal”.
A payment obligation does not arise where harm is minimal, something which I will come back to in a minute.
The noble Lord, Lord Stevenson, and my noble friend Lord Clement-Jones asked whether the change would apply to existing contracts. From October 2014, if you undertake an act that is permitted by a copyright exemption, you will be able to do that without fear of copyright infringement, regardless of the contract terms. As the noble Lord, Lord Howarth, observed in the debate on 14 May, contract override clauses are not uncommon in other legislation and it is therefore
entirely reasonable that legislation, in the public interest, should modify the enforceability of existing contracts in the field of copyright.
My noble friend Lord Clement-Jones asked why there was no separate consultation on contract override and whether the impact on inward investment had been fully considered. Again, as my predecessor stated in the December debate, contract override has been fully consulted on and considered, including in respect of the impact on inward investment.