§ Not amended (in the Standing Committee), considered; reported, without amendment.
§ Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. William Powell.]11.46 am
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher)
May I begin by observing one of the usual courtesies of this House and explain to my hon. Friend the Member for Corby (Mr. Powell) that I have a pressing engagement in the midlands and therefore will not be present to hear his comments in summing up the debate. However, my hon. Friend the Under-Secretary of State for the Home Department will occupy the Front Bench and will take note of any new ideas and new issues that may emerge in the debate in order to feed that information back to the Department of Trade and Industry and to the Home Office.
I thought that it might be helpful to place before the House for the first time the results of the first comprehensive survey which has been undertaken by statisticians in the DTI into the size and performance of the computer software industry. On Second Reading, we all recognised the crucial and growing importance of the industry, but I thought it might be helpful to put that information before hon. Members so that we may have a framework against which to judge the economic implications as well as the implications for fair play and for proper protection for authors of software as proceedings are conducted through this House and the Upper Chamber.
The first survey of the computer services industry, including small as well as larger firms, shows a 20 per cent. increase in turnover in 1984, and that provisional estimate suggests that the industry—which is concerned with the development and application of software—increased its turnover from £1,750 million in 1983 to £2,120 million in 1984. The industry consists of approximately 15,000 firms, but 200 larger companies accounted for more than half its total sales. The statistics were collected from the DTI's regular quarterly survey of larger firms in the computer services industry, but during 1984 it was supplemented by a sample survey, including the smaller firms, taken from the Business Statistics Office's register.
It is interesting to note that about 30 per cent. of the firms regarded manufacturing as their primary market, 20 per cent. were mainly concerned with the distributive trades, and 20 per cent. with financial services. Of the remaining 30 per cent., about half saw the public sector as the main market for their services. A further £180 million-worth of software is also produced by companies whose main activity is in another branch of the economy —computer manufacture, computer games or computer-aided design machinery.
The combined output of computer services inside and outside the industry is therefore about £2,300 million. About £1,000 million is attributable to what can be broadly described as systems analysis, software and software maintenance. Data processing and database services represent rather more than a quarter of the total, and the balance includes consultancy, hardware maintenance and training.
555 I am delighted that that information came forward only this week. This debate has provided an excellent opportunity to place it before the House, not least because there are among hon. Members, including my hon. Friends and the hon. Member for Motherwell, South (Dr. Bray), several enthusiasts who favour the industry as one of the growth points in the British economy.
Needless to say, the Bill has no enemies in the House, to the best of my knowledge. The only enemies it may have are among the pirates themselves who, no doubt, if the Bill is passed, will not be looking forward to the implementation of measures similar to those that have been so effective for video piracy.
§ Dr. Jeremy Bray (Motherwell, South)
Can the Under-Secretary tell us where the detailed results of the survey will be published? Can he assure us that they will be published in full? His Department has an extraordinarily bad record of publishing summary reports—for example, in January after a report on research and development—whereupon there is a two-year lag before the publication of the full report.
§ Mr. Butcher
I note what the hon. Gentleman has said. Obviously he cannot expect me to agree with the import of what he has said. However, I hope that he will recognise that this information, as a result of an internal survey by Department of Trade and Industry statisticians, has been placed before the House before anyone else has had a chance to see or comment upon it. That is proper, and should be the case. Of course, we are prepared to provide the background to the survey, the headlines of which I have given the House this morning. A copy will be put in the House of Commons Library so that hon. Members can check its validity, the basis on which the statistics were collected, and so on. I am happy to discharge that obligation as a believer, in the case of statistical analysis, in the principles of open government.
§ Mr. Butcher
I should be surprised if it were not published in British Businessin the usual way. It is a survey of major importance and significance. I do not think that I am on weak ground in predicting that the survey could figure in British Business at the earliest opportunity. However, I hope that the best way of proceeding is to make it available to hon. Members who have an interest in the industry.
I commend my hon. Friend the Member for Corby (Mr. Powell) for introducing a Bill of major importance. It is of major economic importance, and is important to those who hitherto have been penalised for deploying their ingenuity and brain power in this growth industry. I repeat that, to the best of my knowledge, the Bill has no enemies other than among the pirates.
§ Mr. Nicholas Lyell (Mid-Bedfordshire)
I am delighted to congratulate my hon. Friend the Under-Secretary who, I know, must depart, and my hon. Friend the Member for Corby (Mr. Powell) and his supporters on piloting the Bill so successfully towards its Third Reading.
I was interested to hear the up-to-date figures on the size of the computer industry and the fact that the computer 556 software portion is now at or approaching a billion-dollar industry. Copying in breach of copyright—as it will be — of computer software by electronic means is extraordinarily easy and profitable. It has attracted to itself the same type of wide boy and fast buck operator who, in the past, has been attracted to the video nasty and video piracy. The Bill makes it clear beyond doubt that computer software will be covered by the Copyright Act 1956 and provides for adequate criminal provisions so that pirates who indulge in that nefarious activity get their deserts. Their pirated material can be searched, they can be brought before the courts, and adequate punishments will be available.
As my hon. Friend the Minister said, computer software itself, whether for business purposes or computer games, is the result of a great deal of time, trouble, investment and ingenuity by those who take part in this important and fast-growing industry. It is quite wrong that their efforts should be stolen by those who, for example, equipped with a twin-disc drive mini-computer, can run off a copy of a floppy disc on to a blank costing £1 or £1.50 for word processing purposes, which retails at about £300. They can sell it off cheap for £100, £150 or £175 and make a fast buck for themselves. It is equally wrong that some people in legitimate activities in the computer industry should use that pirated software as loss leaders for their hardware. I am sure that the moral effects of the Bill will help to stamp that out. If it continues, they too can be brought to book under the new provisions.
I congratulate once again the Federation Against Software Theft on the careful way in which it has marshalled the evidence that has convinced my colleagues—my hon. Friend the Member for Corby and my right hon. and hon. Friends in the Department of Trade and Industry and the Home Office—and myself that this is another example of where Parliament should act swiftly. It has acted swiftly. I hope that within minutes the Bill will obtain its Third Reading. I wish it a speedy passage in another place and on to the statute book.
§ Mr. Andrew Hunter (Basingstoke)
If I recall correctly, two or three of the four or five of us now present in the Chamber sat through the heat of the debate on Second Reading on 22 February. My further recollection, which the Minister has just borne out, is that there was an all-pervading spirit of unanimity in our dealings that day. As my hon. Friend said, there was unanimous acceptance of the dire problem of software theft. There was a unanimous welcome for the Bill and congratulations, I must confess that I am somewhat tainted by personal envy of the powerful and persuasive way in which my hon. Friend the Member for Corby (Mr. Powell) presented his case. There was unanimous hope that the Bill would enjoy a speedy passage through Parliament. The reality of that hope exceeded my expectations. Delayed by the London traffic, I arrived for the Committee four minutes late to find that the proceedings had been completed.
Just as the Bill meets with widespread approval in the House so, not surprisingly, as we have heard, it meets with widespread and general support in the industry itself. On Second Reading we heard much about how software theft is a serious and immediate problem to the industry. In the intervening weeks, fresh evidence has come my way from the industry in my constituency which underlines the necessity for urgent and speedy action.
557 In the computer industry throughout the United Kingdom, software theft threatens innovation, jobs and investment. On Second Reading we heard how the phenomenal sum of nearly £150 million was lost by the industry last year—a breathtaking statistic that demands an instant and urgent response. During that debate we heard much about the various forms that the theft takes. To the Jay mind, it is hard to distinguish between the terminology of that theft. There is counterfeiting, replication without permission, production of look-alike copies and so on. However, the basic point is that every aspect, area and category of a software business is affected by theft — games and micro-business software and commercial software packages. We were left in no doubt that there is a very serious problem that must be dealt with, and dealt with effectively.
In introducing the Bill, my hon. Friend the Member for Corby set it in the context of the computer software market in western Europe and Britain. He analysed the development of Government and public policy over the past decade or so to show why it is necessary to deal with the problem on its own rather than wait for more general Government legislation. Of equal if not greater significance was my hon. Friend's analysis of some of the difficulties under the present law. He spoke at length of the consequences for the industry of the present state of the law. It is that legal uncertainty that makes the present situation unacceptable and provides the justification for the Bill.
However, we must not delude ourselves that legal action on its own will solve the entire problem. Legal change is perhaps the most essential step, but there is also the whole area of technical deterrents to illicit copying. Perhaps we heard less about that on Second Reading than we should have done. I take up what my hon. and learned Friend the Member for Mid-Bedfordshire (Mr. Lyell) said, partly because it gives me another opportunity to praise the work of the Federation Against Software Theft. FAST has made much of the need for technical deterrents. I quote from one of its publications:No technical protection method, of itself, will prevent a determined thief from copying computer programmes and then selling them copyright-unpaid for his own profit. As the law stands there is small risk in this criminal activity. Instead, all the risk is borne by the Author and Publisher, who have made a substantial investment of skill, time and money. Unlike the thief, the Author and Publisher are potential sources of future software for the Consumer... FAST will not recommend an industry standard in this field, partly because that would concentrate the attention of would-be 'code-breakers'. However FAST is urging Authors and Publishers to investigate whether a technical protection system could reduce the vulnerability of their products, without causing an unacceptable reduction in user value or unacceptable increase in cost.An industry that takes self-help seriously is doubly entitled to ask for the normal legal protection accorded to other forms of intellectual property. Technical deterrents clearly have a part to play, but all hon. Members who took part in the Second Reading debate acknowledged the urgent need for clarification and strengthening of the law.
The serious problem of software theft will be reduced significantly by the proposed amendments to the 1956 Act, and the effectiveness of the remedies will be increased. That is why we need the legislation. It is straightforward and not contentious, and I am sure that the House will accept it.
Clause 1 contains the simple assertion: 558The Copyright Act 1956 shall apply in relation to a computer program …as it applies in relation to a literary work".Nothing could be much more direct than that. In one fell swoop the clause removes all doubt, uncertainty and ambiguity. It is what the industry wants. It provides the legal protection that will help to save the industry the £150 million a year that it is currently losing. In essence, clause 1 seeks to protect the software business in the same way as the Copyright (Amendment) Act 1983 sought to protect the video business. There is evidence that the video amendment legislation has provided considerable protection.
Clauses 2 and 3 bring into effect the provision of the 1956 Act for computer software programmes. Under the legislation it will be possible to apply to magistrates for a search warrant. That is a crucial power of law enforcement. It is the same as the power now available to deal with video piracy under the video amendment legislation. That legislation appears to have been immensely successful. It is estimated that two thirds of video piracy has been eliminated. If that statistic can he duplicated in computer software, there will be many smiling faces except among the pirates, and there is every reason to hope that the Bill will have a comparable impact on computer software theft.
Clause 3 provides for the penalties. I understand that at the moment there are no criminal penalties for computer software theft. Under the Bill, the penalties will be the same as those for any other breach of the Copyright Act — imprisonment for a maximum of two years and unlimited fines. Those are substantial deterrents. We are moving a long way from the days of the £40 fine under the Trade Descriptions Act 1968. I apologise in his absence to my hon. Friend the Member for Teignbridge (Mr. Nicholls) for referring by implication or innuendo to one of his constituents without giving him prior notice.
I am still as fervent in my support of the Bill as I was on Second Reading. Reduced to the barest essentials, it provides the industry with the legal protection that it wants. It is our job to give the industry that protection. On Second Reading, I made much of the importance of the computer industry to Basingstoke. It is partly because the computer industry features so prominently in my constituency that I wish it to flourish. The Bill will help the industry to flourish, and it has my total support.
§ 12.7 pm
§ Dr. Jeremy Bray (Motherwell, South)
I, too, should like to congratulate the hon. Member for Corby (Mr. Powell) on his introduction and handling of a Bill that seems likely to receive the early agreement of the House. It will make a useful contribution to tackling the problems of copyright and software theft. Simply by doing so, however, it will highlight the remaining software problems.
The hon. Member for Basingstoke (Mr. Hunter) was right to draw attention to the question of technical deterrents, but I would be sceptical about how far that will contribute to the solution of the problem. It is only likely to have an effect at a somewhat low technical level. High-grade protection of systems will be extremely difficult to provide. We shall need to seek a change in practice and organisation within the software field much more akin to the openness of the results of scientific research which is an acceptable and necessary part of technical progress in other areas. We have found that, in the patent system, 559 much of the problem lies in getting at information, not in locking it up. Thinking that the software solution lies in locking it all up so that it is not accessible is probably the wrong direction.
As for the size and growth of the industry, I think that the Minister was anxious to help by referring to the statistical survey, but he has probably thrown in a great deal of confusion by infringing what seems to me to be the best practice of Ministers when handling the results of statistical surveys. Guidelines were set out by Sir John Boreham, the head of the Government's statistical service, in a recent issue of Statistical News. They firmly advise separation of the first announcement of a survey's results, which should be done by officials without any comment from Ministers, any comment by Ministers should be the subject of a separate press release. That separation is intended to prevent Ministers from picking up the plums which suit them politically and because the information is in danger of being misunderstood and misrepresented if not presented properly as a professional statistician would do. The key importance of this particular information is in planning manpower policy in the computer industry, especially manpower for the software industry.
I shall examine the figures that the Minister gave more carefully, but it seems that as he presented them they offered no guide by which it would be possible to judge the adequacy of the plans that the Government have announced for the production of qualified scientists and engineers in software. The supply has been miserably inadequate. So far, the increases in expenditure have been achieved by bleeding Department of Trade and Industry Votes, and others, to support the Department of Education and Science spend on the training of computer staff. I hope that the Minister will write to me and ensure that the full results of the survey are published as soon as possible so that we have better information on which to judge Government policy, especially on the supply of manpower to the software industry.
There will have to be a substantially increased effort by the Government in the development of major software systems and standards which are freely available publicly for common use as the framework in which application areas can develop. The Government rightly turned down the proposal of British Telecom and IBM to develop their own value added network.
§ Mr. Deputy Speaker (Sir Paul Dean)
Order. I am sorry to interrupt the hon. Gentleman, but he is getting wide of the Bill. I have allowed a little latitude because I realise that the Minister wished to make a statement which was relevant to the background to the Bill. I therefore allowed the hon. Gentleman to comment as well. Strictly speaking, however, a Third Reading speech should deal with the contents of the Bill.
§ Dr. Bray
I apologise, Mr. Deputy Speaker. I was about to make the link with the problem of copyright in common user systems. The problem with the common user systems is to maintain their integrity in a form in which they can be properly described, developed and applied by a wide variety and level of user. Copyright has a part to play in that in maintaining the consistency of the different standards as they are produced. If a standard is offered by different manufacturers in their equipment, a necessary part of ensuring that software will run on different types 560 of equipment is that it operates precisely, to the nearest bit of information, the same system that others use so that common additional software will operate reliably. I am not sure that we shall get from this Government a coherent scheme for the development of software which will provide those wider standards which can be used in value added systems and common user systems of the future.
I hope that the industry will turn its attention to the positive aspects of copyright—means by which unwise conformity to standards can be observed in the rapid spread of computer applications.
I hope that the Bill will not run into any problems in another place and that it will provide a foundation on which the wider problem of intellectual property in computers will be tackled by the Government. I hope, however, that it will not get too lost in the general problems of intellectual property, because computers will deserve continuing attention. It is right to tackle a problem with a private Member's Bill in this case, but I suspect that when the subject next comes up in the House it will have to be dealt with in a Government Bill. I have great pleasure in supporting the Bill on behalf of the Opposition and wish it a speedy passage.
§ Mr. William Powell
With the leave of the House, I should like to comment on what has been said. I thank those who have spoken on what has turned out to be an easy passage for the Bill so far. I thank the hon. Member for Motherwell, South (Dr. Bray) for giving the Bill the wholehearted support of the official Opposition and for what he has said in our debates. I listened with interest to and agreed with a great deal of what he said today about the future of the software industry and the developments that must occur.
I should like to thank the hon. Member for Yeovil (Mr. Ashdown), who was kind enough to tell me that he would be unable to attend this morning, for wishing the Bill rapid progress to the statute book. I thank my hon. and learned Friend the Member for Mid-Bedfordshire (Mr. Lyell), who was the first Member to take up the cause of extending copyright law to cover computer software in his ten-minute Bill in July last year, which initiated the parliamentary process which has led to this Third Reading.
I also thank my hon. Friend the Member for Basingstoke (Mr. Hunter), who made a major speech today, as he did on Second Reading, and whose interest in and knowledge of the computer industry and its ramifications is second to none.
I thank my hon. Friend the Minister, whose assistance and co-operation has enabled the Bill to be produced in a widely acceptable form. He, my hon. Friend the Minister for Information Technology and officials in their Department have been of major assistance.
None of this would have been possible without contributions from many quarters in the House and, as has been stressed, from within the industry. There has been unanimous agreement in the industry that such a Bill is necessary to secure its survival and prosperity.
This is, of course, an interim measure because in due course it will have to take its place within the context of the wider revision of copyright law which is now being contemplated and which we analysed on Second Reading. It is also an interim measure because in itself it will not be sufficient to deal with all the many problems facing the industry as it develops.
561 One of the most important tasks is to educate the public to respect copyright. In an age in which the copying of materials is so easy, it is all the more important to ensure that authorship and the legitimate proceeds of authorship should be respected in computer software as much as in literary authorship and in video, to which the law was extended two years ago.
We had a very full Second Reading debate, which no doubt assisted the Bill's progress in Committee. My hon. Friend the Member for Basingstoke was, alas, all too right when he said that, due to unavoidable circumstances, he was late, but it never occurred to him that just a few moments delay would rule him out of the Committee stage which lasted all of seven seconds.
If the Bill receives a Third Reading today it will go to another place and, all being well, it will become law. But it is only a beginning. No one in the House or in the country should imagine that this is the end of the problem. I hope that the message will go forth from both Houses to pirates here and abroad that their behaviour will not be tolerated any longer. They have done immense damage to the industry and they are causing immense damage to our economy. They are doing immense damage to firms with a future that will be felt throughout the world.
This is a short, private Member's Bill, but it is surely also a major Bill which demands the approbation of the House.
§ Question put and agreed to.
§ Bill accordingly read the Third time, and passed.