The data bill debate must move beyond terrorists and Orwell

It is wrong to define the argument over the bill as one between security and liberty.

For almost a decade, the intelligence and policing community has been worried that changes in modern communications – mainly the shift from telephones to more varied devices and networks – would make their work more difficult. And each government of the day has tried (and failed) to push through legislation to update capabilities in the face of staunch opposition.

The latest attempt is the draft Communications Data Bill. To recap, the Bill aims to improve government access to internet "communications data" (who, when, and where you communication with someone, but not what you say to them). Communications data are vital for law enforcement, intelligence work and the Crown Prosecution Service. When these agencies needed this information, they used to go to the small number of telecommunications companies who collected it. Now of course we communicate via e-mail, social media messaging, phone apps, game platforms and more - so now communications data are being generated by all sorts of companies who don’t routinely collect or save it, and so it's not always there when needed. The Bill is asking/demanding/paying relevant companies to collect and retain it, so that such data is available on request.

Such was the furore when it was announced back in April that a pre-legislative joint committee was scrambled to calm the maelstrom and review the proposals. Today it published its report. Anyone familiar with the Bill would not have been surprised by its findings. To sum it up as briefly as possible: yes, the government needs to improve access to communications data, but the Home Office did not make the case well enough, nor consult widely enough. The powers contained in the Bill are too broad in scope - and greater oversight is needed. Go back and re-draft it. The committee has been extremely diligent (and I hope David Davis MP will apologise to the chair, Lord Blencathra, whom he had little faith in). But I think there are three big lessons from this whole affair.

First, the bitter rancour surrounding this Bill is caused by a fundamental problem. State surveillance needs to be proportionate and necessary, but these words are losing all meaning, because no one really understands the technology and the possible risks and benefits that come with it as internet-enabled devices become ever more ubiquitous, least of all our law makers.  When critics protest the measures will not work, or 'we're the only country that does this', the Home Office are unable to respond with technical details for obvious reasons. And the government wants to make the legislation broad – ‘future proofed’ - because the technology will have moved on again soon, and they don’t want to go through this again in two years. This Civil liberty groups, understandably, weren’t too pleased about that. This is going to get worse in future.

Second: terrorism and paedophiles do not automatically trump digital rights. The Home Secretary, Theresa May, has consistently argued the new Bill is essential to tackle terrorism, serious crime and paedophilia. She may have believed that any law strengthening powers to do that would be more or less accepted. In that, I believe she may have underestimated how important digital freedoms and data sovereignty are to people today. Surveys consistently show that data and privacy are among the top concerns citizens have. The online and privacy community – often tech savvy, networked, and highly defensive of internet freedom – are a powerful lobby group.  

Third, any legislation about security powers tends to degenerate quickly into a debate about terrorists versus an Orwellian dystopia. Last Monday, in an interview with the Sun, the Home Secretary said that anyone against the draft Bill is putting politics ahead of people’s lives; and came close to saying anyone opposed to the Bill is taking the side of those criminals, terrorists and paedophiles. It was an unfortunate and inaccurate charge levelled against the Bill’s many thoughtful and principled opponents. But the Bill’s opponents have also been alarmist by (inaccurately in my view) calling it a "snoopers' charter" and claiming it represents mass internet surveillance. Suggestions that this Bill would put us alongside China, Iran and Khazakstan are wholly inaccurate. When giving evidence to the committee, the Observer journalist Henry Porter (who also called the Bill the "megalomaniac dream" of a senior civil servant) said that these measures could become "the structure for a police state" – something the Crown Prosecution Service and others that have actually used communications data dismissed.

Ignore the papers this morning: the committee’s response is a sober and careful one. At core, it recognises that the philosophical pros and cons of the Bill are not really about security versus liberty, but the more nuanced debate of pro-active data collection (collecting and retaining data so it’s there if you need it) against a more limited one (using what you have), and whether we need to ‘future proof’ law of this kind (it thinks not). It realises that modern communication has changed dramatically, and law enforcement must keep up, including in designing a regulatory system that reflects the changing concerns people have about privacy. It recognises this is not easy and will ultimately fall to Parliament.

This means going back and re-drafting a Bill that trades a bit of operational secrecy for clarity about when and where the measure will be used. Above all, the Home Office should consult more widely, and then set about some improved drafting to eliminate worrying ambiguities, give a tighter clarity of purpose, and include tougher scrutiny and oversight. A revised Bill could keep both sides content.  This is all less interesting than terrorists and Orwell, of course, but then making law usually is.

Jamie Bartlett is the head of the Violence and Extremism Programme and the Centre for the Analysis of Social Media at Demos.

Home Secretary Theresa May warned MPs who oppose the bill: "Do not put politics before people’s lives." Photograph: Getty Images.

Jamie Bartlett is the head of the Violence and Extremism Programme and the Centre for the Analysis of Social Media at Demos.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation