I won't go into the detail of what the Bill says or how people are interpreting it here, as that has been amply done elsewhere (see for example Backlash, the group that has led the campaign against the law). I just have a couple of thoughts to offer.
Lord Hunt, Parliamentary Under-Secretary in the Ministry of Justice, said the following last night:
This is not, I suggest, a case of policing the bedroom. It is intended to target only the most extreme pornography. We believe that the number of prosecutions will be relatively small, but my understanding—from advice that I have received—is that the offence will be a valuable additional resource for officers already working on protecting the public in this area. I also give an assurance that this offence will not be commenced before a full explanation of it is given to the police and to the courts.
The trouble is that new legislation is very often subject to the Law of Unintended Consequences. In 2003, the Government fast-tracked the Extradition Act, allowing the USA (and various other countries) to extradite UK citizens more quickly and easily than under previous arrangements. The motivation given at the time was that the change in law was required in order to assist in the fight against terrorism. Three years later, the Natwest Three - a trio of English businessmen whose alleged crimes were thought by American prosecutors to have contributed to the collapse of Enron - were extradited on charges of wire fraud. Each was jailed for 37 months after a plea-bargain that saw them plead guilty to one of the charges against them; had they been convicted of all charges, they faced 35 years in prison.
What I believe worries a lot of people is not that the Government is trying to criminalise anyone who likes looking at the occasional saucy picture or video, or even that many people really will be criminalised - in the sense that they can be prosecuted and convicted. The point is rather that a lot of people might have material on their computers, or in their Internet history (which the police can compel an ISP to provide), that could arouse suspicion. Even if they don't, it only takes an allegation from one person bent on making some mischief and the police are duty-bound to investigate. It doesn't need a conviction to ruin someone's career, reputation, relationships and ultimately their life, as some of the more egregious failures of Operation Ore have shown. Arrest and investigation will do just fine and there is no standard of proof required for that.
The police have better things to do than go after every kinky adult in the UK, and the minister is probably right that the number of prosecutions will be small. But we should be fair to the police in what we ask them to do. It is not their job to tease out the likely meaning of ambiguous phrasing (in which this particular Bill is especially rich); neither is it their responsibility to enforce the law with reference to the intentions of the Government that drafted it. It will not be the police's fault if the lives of people who have committed no crime, harmed nobody and never harboured any intention of doing either are ruined. Parliament has enacted a bad law*, despite the best efforts of several courageous and eloquent dissenters in the House of Lords to temper its worst excesses (see particularly the remarks made by Baroness Miller, Lord McIntosh and Baroness Howe at the report stage and third reading - you can link to the relevant text here) . I fear that their failure will cost a few unlucky people very dearly.
*Note that only sections 63 and 64 of the Bill deal with this issue. I am not conversant with the rest of the Bill; perhaps it is otherwise magnificent.