You can't cut off the Internet when you want all government services to move onto the Internet. It's quite simple. And, fortunately, it will be the eventual death of laws like this.
You can either cut costs by putting government services online, or you can start cutting people off willy-nilly for a comparatively minor offence against a corporation, not the government (and much more easily dealt with - fine for the price of the item downloaded + 100% legal fee, done). It's like cutting off someone's phone line because they once told a friend how to open their car without a key using it. In *EXTREME* circumstances where they are persistently a nuisance / danger, you could potentially get a court order that stops the PERSON accessing the 'net (a standard ASBO-condition), but to cut off a connection that may be entirely unrelated to the offender? And even then, you know what the human-rights issues are that crop up from that.
The Internet is fast becoming a "utility" like any other. And though you can cut off my water, gas, electricity, etc. you really need to have a good reason to do so. And does cutting off mean I can, for example, just put a new PAYG SIM in my 3G phone and carry on using it as a "new" connection that you can't trace? If not, then surely an ABSO or similar on the *person* would be more effective? And putting people on an "Internet blacklist" is like saying they can't be trusted to have electricity supply brought into their house. Doing so because they downloaded 3 songs is like saying that you did so because they blew a couple of fuses with their Christmas lights. The response has always been, and will always be, disproportionate while you're literally severing people's connections.
And that just isn't compatible with "smart meters", online government services (taxation, benefits - hell, just looking up what bins you have to put out), online banking, and a myriad other things. It's like saying that someone can't have mail delivered to their address - not because they bite the postman, but because they once sent a photocopy of a school photo of their child through the post.
Governments saving money is actually the thing that will kill off this law. It generates no money for them (they see zero increased tax revenue from the music industry, I imagine), no money for their citizens, yet costs a fortune to implement, is ineffective, punishes the wrong person and stops people being able to be reliant on their cheaper "online" services, rather than having to cause more problems in person / on the phone / etc.
And in the end, you reap absolutely zero benefit as a government (except possibly the odd backhander). When the backhander's stop or people ask questions, it's quite obvious that you'll never achieve anything by this method.
You want effective copyright protection? Fine identified users the value of the copyright infringement plus legal costs. Like everyone has done for CENTURIES. And then you find out that the problem is you can't without identifying users and you can't do that without penalising legitimate users (i.e. cutting off a flat of students because ONE pirated something) or some sort of vastly draconian Internet ID laws that will never pass. So give it up.
P.S. Where does the law stand on VoIP phones? Do they get cut off too, even if they're your only phone? What about if the user has an contractual obligation to be connected to the Internet (e.g. smart meters, etc.)?
Biting the hand that feeds IT
