Thursday, 4 August 2011

Revealed: the Costs of the Digital Economy Act Judicial Review

Royal Courts of Justice
Image courtesy Carl D. Patterson
The Digital Economy Act 2010 was signed into law on 8 April 2010 following just two hours of debate in the House of Commons.

Including such provisions as the notification scheme commonly known as ‘three strikes’ and website blocking, the Digital Economy Act has been very widely criticised as an ill-developed piece of legislation pushed through during a parliamentary wash-up as the result of extensive lobbying of parliamentarians and with no genuine evidential basis of any economic benefit (the plans said to cost more for ISPs to implement than the total financial damages the music industry claims to suffer from piracy in the UK).

In particular there was disapproval of the twice-forced-to-resign Lord Peter Mandelson, at the time the Secretary of State for Business, Innovation and Skills – who pushed the Bill following dinner with copyright lobbyist and DreamWorks billionaire David Geffen.

It has also since become apparent that the public ‘consultation’ on the then Digital Economy Bill was a sham, Mandelson having decided to approve the Act before the consultation was complete.

In fact, as early as November 2009 BIS was receiving emails from an individual that had responded to the consultation, pointing out the disparity between the consultation replies and Mandelson’s public comments:
15 November 2009
Dear Michael Klym / Adrian Brazier,

I, along with many others, wrote to you in September replying to the department's public consultation on legislation to address illicit peer-to-peer file-sharing.

I note that last month Lord Peter Mandelson made some public announcements regarding planned legislation in this area. For example see:

Can you please confirm if Peter Mandelson has yet seen the complete consultation and the relationship between his statements and the responses to this consultation.

Can you please additionally confirm when the official government response to this consultation and the replies to the consultation document will be published.
20 November 2009
Dear Michael Klym / Adrian Brazier

I see that the responses to your department's consultation on legislation to address illicit peer-to-peer file sharing have today been published.

I have reviewed these. It now occurs to me why you did not comment in your previous email replies to my questions, as to the relationship between Peter Mandelson's public statements and the responses to this consultation. His, and your department's, announcements appear not to have been shaped, influenced or informed on any level by the public's responses to this consultation.

I note that there are 116 files consisting of replies from the public most of which are exceptionally salient, and a very significant number of which have been provided by very well informed and intelligent individuals arguing excellent points. A good number could be considered experts. There are 77 files related to responses from companies and organisations - a significant number of these are ISPs and Consumer Rights Groups and these replies do not correlate at all to the stance made clear in the response your department has chosen to publish. A fair portion, but probably less than 50 of the 'corporate' responses are from the Creative Industries which stand to gain increased powers and profit from the legislation proposed. They are far in the minority of the responses and yet appear to have carried disproportionate sway with the outcome of the consultation.
It has now also become clear that of two of the most controversial measures in the Act, neither is likely to be effective. It has been realised that one - website blocking – would have been likely to have little, if any, effect. The ease of circumvention of website blocking is known to the Department for Culture, Media and Sport (the Government department now responsible for the DEA); in fact, this week they inadvertently published instructions for doing so. Website blocking has therefore been ditched.

The lack of efficacy of ‘three strikes’ can be seen in France’s implementation of the similarly flawed ‘Hadopi’ – their own flavour of the scheme.

But - to business. In November 2010 two UK ISPs, BT and TalkTalk, were granted a judicial review of the Digital Economy Act by the High Court. The review found in favour of the Government on the majority of the issues raised.

The Government’s use of five defence barristers was commented on by several of those that attended the review and I thought it might be interesting to see just how much public money the Government was prepared to wager on defending this flawed, unjustifiable and likely to be largely ineffectual Act.

A few days ago I got the answer to the FoI request I made to BIS (which was subsequently answered by DCMS). Their response is below:

The information you sought is given below. Please note that some of these are “best estimates”, particularly relating to time of civil servants spent on the work, as it is not possible to provide accurate and definitive answers to some of the information you requested.

The total expenditure by the Department for Business, Innovation and Skills in the period 1 July 2010 until the current date [14 May 2011], including any outstanding invoices or other liabilities yet to be met, on legal counsel and other costs directly incurred in defence of the Government’s position in the judicial review of the Digital Economy Act 2010.

The total expenditure on legal counsel and other costs directly incurred in the defence of the Government’s position in the Judicial Review of the Digital Economy Act 2010, from 1 July 2010 to 14 May 2011, as far as we are able at this point in time to calculate it, was £115,482 (excluding VAT) on legal fees on matters involved in the judicial review.

Please note that these are our best estimates and consequently merely indicative figures. They should not be regarded as definitive, as not all costs have yet been calculated, but we are not currently aware of any particular costs that would fall within this definition that are not included here.

The breakdown of actual legal costs to date (being the date of this letter) is set out below:
Counsel’s fees (ex VAT)                     £71,548
Law stationer’s fees (ex VAT)             £ 1,934

To date, we estimate that the costs payable to Treasury Solicitors (TSol) for their services to be approximately £42,000 (ex VAT).

Consequently, based on the information we have located to date, we estimate that BIS has paid at least £115,482 (ex VAT) on legal fees and other costs directly incurred in R (on the application of British Telecom and TalkTalk Telecom Group) v the Secretary of State for Business, Innovation and Skills [2011] EWHC 1021 (Admin).

It is important to note that this figure merely reflects external costs and does not include the internal cost of BIS staff’s time spent on work surrounding the judicial review.

We estimate that the time spent by internal BIS staff from 1 July 2010 to 14 July 2011 on all the work involved in the Digital Economy Act, including the Judicial review to be as follows:
Legal staff                                 0.5 full time employee
Policy staff                                1.5 full time employees
Communications staff                Less than 0.1 full time employee

These are estimated figures, given in good faith and should not be regarded as definitive or binding.

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