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Google's ethics and its close relationship with the British government came under scrutiny in Parliament yesterday.

The Culture, Media and Sport Select Committee is conducting an inquiry into the creative industries. When a small indie label, which happens to have Adele on its roster, is paying more tax than Google and Amazon combined this year in the UK, it was only a matter of time before the business conduct of Silicon Valley's giants came up.

Music publisher Andy Heath, the chairman of umbrella group UK Music who also invests in startups, told the committee the government's hostility to copyright is scaring away investment.

"There's a view that intellectual property is a barrier to growth. That's a lie, and unfortunately one bought by influential people," he told the panel on Tuesday. Potential investors believe the UK "government hates copyright", according to Heath, who added that he too had witnessed "a bewildering ambivalence, if not hostility, to copyright".

Labour shadow secretary for culture Ben Bradshaw asked how large technology companies influence the government.

"It's very effective lobbying from the technology industries. So far as those companies are concerned, we're an obstruction to their rapacious business practices," said Heath. "But if the only thing you create is advertising revenue, then it's a very poor world. I think it's pure commercial greed.

"There's a lot of influence at senior levels of government. There are policy advisors at [Number 10] who have been known to have a very cosy relationship. I've talked to [Number 10] and being told, 'you don't know how much pressure we're under from Google'."

It's not just top Conservatives who are apparently at odds with copyright enforcement: Whitehall's civil servants too are hostile to making digital copyright work.

"It's taken a very long time for [regulatory] codes to be issued," said Geoff Taylor of the BPI. "Four years from the passage of a piece of primary legislation is very difficult to explain."

Even when the Digital Economy Act is eventually implemented - some time around the heat death of the universe, if Whitehall gets its way - it will be more expensive than France's HADOPI law to protect creative works online - or the voluntary anti-piracy agreement thrashed out in the United States.

No one wants to hear problems, only solutions

Alison Wenham, the boss of The Association of Independent Music, said the Hargreaves Review into intellectual property - launched by David Cameron with the famous Google quote that never was uttered - was an example of a predetermined conclusion, and that tech companies promote "a copyleft agenda across the world".

Many politicians hate to hear this kind of thing - it makes creative industries sound like whiners. So the industry reps are damned if they point it out - which they should - and damned if they don't.

The representatives were fairly united in their concern about extending the private copying exemption - which permits individuals to make copies of copyrighted work for their personal use - to the cloud, but MPs appeared to find it difficult to understand the issue.

John Whittingdale, chairman of the select committee, was puzzled as to why it was wrong for him to upload music he'd already bought.

"The engine room of any intellectual property is that a licence covers transfers of value. Apple and Google are not creating the cloud for fun - they're doing it for immense profit," said Heath. "It's completely immoral for a transfer of value to occur without any compensation."

The music industry had been able to tolerate private copying without compensation - almost all European countries throw something back to rights-holders - he added. "But you want to replace one illegitimate action [uncompensated copying] with another that we won't be able to tolerate."

Music industries are struggling to get MPs to comprehend that they want copying of copyrighted work to be legal, just not without compensation.

They got a more sympathetic hearing on taxation: it was typical, said Heath, of how large technology companies see themselves as above the law. Labour MP Gerry Sutcliffe noted Google's people had visited the government 22 times.

"We suffer from double taxation treaties and enormous administration costs," said Wenham.

Politicians are often the last to notice what's going on - although slightly ahead of most bureaucrats - and most still believe the internet oligopolists know a valuable secret of growth; if only the web firms could share it with us, we'd have a Bong-powered economic miracle. In reality, what little activity there is at London's Silicon Roundabout either has nothing to do with the web or is kept alive by trust funds and subsidies.

Jo Dipple for UK Music pointed out that 92 per cent of music companies have fewer than ten staff. And Wenham added that when capital is invested into these SMEs, it's done so in the hope they'll grow - not "exit" as so many web upstarts appear to do so. ®

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