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Dr. Palmer: As I am sure my hon. Friend is aware, efforts in the United States to develop some sort of kitemark have run into difficulty, because a great many websites display some form of kitemark, but do not fulfil the functions envisaged for it. Does he have views on how we should tackle that problem, so as to prevent our kitemark from being discredited?
Mr. Wyatt: That is a tough problem, and I do not think that there is a technical solution to it.
The first part of the Bill, entitled "Cryptography service providers", is the most interesting. However, I have a problem, and I hope that the Minister will be able to ease my concerns. The internet is global, but in the Bill, we are agreeing a UK signature scheme inside a European framework. Fifty-eight per cent. of our business is in Europe and 12 per cent. in America. What is the validity of a UK signature on the one hand, and an American signature on the other, on an electronic document?
In addition, we have to take into account enlargement of the EU, which currently encompasses 15 countries, but which might include as many as 28 in future. Not all those countries are internet friendly or internet savvy, so what will be the legal position in respect of the directive in countries other than the current 15?
I struggle with the question of where in the world we are to draw up a global standard. I am not sure it will be the United Nations and I doubt it will be UNESCO; it might be the G8, but that might not be fair; I hope it will be the World Internet Forum, but I might be prejudiced. We have to consider the issue, because signatures must be uniform; otherwise, America will determine the rules by default, based on the fact that 90 per cent. of all servers are American and 92 per cent. of all traffic is either American or goes to America. We do not want America to take all the trade, and thus all the tax.
I know that OECD committees are struggling with that issue and with ways in which to account for VAT and corporation tax. My hon. Friend the Minister for Small Business and E-Commerce referred my attention to a commendable Customs and Excise paper that she received on Friday. I hope that it is more reassuring than the telephone conversations I have had with representatives of Customs and Excise.
Let me explain the problem. When ordering CD-ROMs from Amazon.com, one is allowed to order only £18 pounds' worth before becoming liable for purchase tax or VAT. However, the orders go through at such an alarming rate that Customs and Excise would have to treble or quadruple its staff to measure how much VAT was leviable. Hundreds of pounds worth of goods can be delivered to one's home, but one will not be asked to pay any VAT. Where is tax to be paid? How is it to be collected?
Mr. Gibb:
When goods are ordered from abroad by phone or by post, if they come in a parcel--as physical goods--Federal Express or whoever delivers the parcel independently and charges the buyer VAT and duty on the goods. There is no difference if the goods are ordered via new technology.
Mr. Wyatt:
That is not the case--I have talked the issue through with Customs and Excise. It ought to be so, but it is not.
The other EU-related problem arises from its attempt to base its regulations on country of origin. How big a police force would the EU need to police the net when trillions of deals are done on it every day?
I support the unmetered calls brigade. I know that my hon. Friend the Minister for Small Business and E-Commerce also favours such a move, and I wonder whether she can give us a clue as to how it can gradually be introduced, initially to socially excluded people. A gradual approach, extending over the next two years, should be taken to the introduction of unmetered calls, so that poorer families receive the benefit first.
I have led the campaign in the House to end BT's local loop monopoly. It should be broken up sooner than Oftel recommended. Mention has been made of the Oftel culture, an example of which is that Oftel agreed that the local loop should be broken up, but gave BT 18 months to gets its opposition in first. However, there is no logical reason why the local loop cannot be broken up tomorrow.
I hope I can persuade Ministers to consider how we can become a smarter nation, even though the matter is not covered by the Bill. In 1951, we gave a tonic to the nation, and I hope that in 2001 we can give a present to the nation. The Millennium Commission ceases on 31 December 2000, giving us an opportunity to reallocate the lottery money. I am making a pitch for infrastructure to become something on which lottery money can be spent. It would be wonderful if, on 1 January 2001, we could give every home an internet machine, thus becoming the smartest community in the world. We can afford it, the lottery money is there, and it would be a fantastic gesture.
The explanatory notes to the Bill state that the Government
Mr. St. Aubyn:
I was interested to read the hon. Gentleman's comments, published on the BBC news website. He said:
Mr. Bob Russell (Colchester):
Deny it.
Mr. Wyatt:
I should never deny that--it was on the web. It is a serious point that many Labour Members of Parliament have come from the public service sector, and many of those who were elected in 1983, 1987 or 1992 missed the introduction of the internet in their place of business or their public service office. As for the e-tsar and the e-commerce Minister, I have been on record since October 1997 as saying that they should form part of the Cabinet Office.
During our first debate on the internet, in March 1998, I stated my belief that we needed a new Government department of communications; I still believe that. The hon. Member for Esher and Walton (Mr. Taylor) referred to this matter in his speech, but did not seem to know where to take it. The internet would enable services to be delivered better, quicker and cheaper, but it also challenges us with a fundamental question: what is the future of government? As a culture, we have not yet addressed the question of what the internet will do to us, to government and to Whitehall. Massive Departments are not needed if the medium of the internet is understood and utilised to its fullest potential.
Mr. David Ruffley (Bury St. Edmunds):
The Bill addresses a subject of monumental national economic self-interest. The significance of e-commerce is difficult to overestimate. The statistics supporting that proposition are certainly worth repetition. It is estimated that in 1998 business-to-business e-commerce amounted to about
It is clearly the Government's duty to ensure that UK plc is in pole position on the information superhighway rather than having to pull over into the information superlayby. Having read the Bill and having listened to my hon. Friend the Member for Rutland and Melton (Mr. Duncan), I am not convinced that the Bill will do much to put us in the first category rather than in the second.
It is a truism that e-commerce is developing so rapidly that legislators throughout the world are finding it difficult to keep up with the pace of change. It is said by some commentators that in a perfect world it would be best for companies if every country had the same law regulating e-commerce transactions. We know that in the real world that would take years to negotiate, if that ever proved possible. We know also that ratification on an international treaty level would be very much a pipe dream. The Opposition have faith in the market and we have faith also in light and effective legislation, as my hon. Friend the Member for Rutland and Melton observed, only where legislation is absolutely necessary.
The Minister for Small Business and E-Commerce said that the industry had welcomed much of the Bill, and followed that up with some selective quotation. She should not get carried away. We have only to read what the Select Committee on Trade and Industry stated in its report, which was published at the time of the draft Bill in the summer. It made many criticisms of the Government but the one that caught my eye was in paragraph 34, which referred to
It has taken the Government two-and-a-half years to get the Bill into the Chamber. We had a draft Bill in the summer which was manifestly a false start. We now have a deeply flawed Bill which has not been completely cleaned up following the draft Bill. I wish briefly to speak about the Bill's defects.
In part I, the Government propose a kitemarked self-regulated approval scheme covering all companies offering cryptographic services. That replaces the original proposal to require all such providers to have a licence, a
condition of which was that cryptography providers would have to hold copies of customers' private encryption keys and provide law enforcement agencies with access to such keys in certain circumstances. That so-called key escrow proposal has been dropped, and I think sensibly. We have heard comments from hon. Members on both sides of the House to that effect. Instead, we now have a self- regulatory scheme which purports to ensure minimum standards of quality and service. A register of approved providers of cryptography support services will be established.
I agree with the Law Society and with my hon. Friends--even the Liberal Democrats chipped in with support on this point--when they say that part I could properly have been dispensed with. In the interests of a lighter and more punchy Bill, we could have done without it.
Part I purports to allow people to check who has sent an electronic message, ensure that it has not been tampered with and that no one has had access to it in any other way. The register will be voluntary. No provider is obliged to apply for approval and the provider who is not on the register is at liberty under the clauses within part I to provide cryptography services. I think that the Minister pats herself on the back by saying that there is a sunset clause in relation to the implementation of a statutory scheme as a last resort. She seems to hope that that will not be necessary within the five-year period.
That does not get away from the fact that there are unanswered questions on part I. First, there is no indication how we can tell whether the self-regulatory regime works. My hon. Friend the Member for Rutland and Melton has asked about that on two occasions. How will it be judged? When the Minister for Competitiveness replies, I hope that he will explain why Ministers could not publish a timetable in advance of this evening's debate for the establishment of the industry-led voluntary scheme. The Department has had a couple of years to get to grips with the matter. I would have hoped we could have more details by now.
The second unanswered question in relation to part I is the thorny issue of fees for certification, which has not been debated very much so far this evening. Fees under the industry-led scheme are still murky. The Department of Trade and Industry said that the scheme should be run on a non-profit-making basis. In its draft regulatory impact assessment, the DTI talked about the difficulties of estimating the scale of fees that approved service providers were likely to be charged. Its excuse was, "We have not determined the standards, therefore we cannot work out accreditation costs." I fail to understand why the Minister cannot give us an indication of the fees that are likely to be charged to approved providers under the industry-led scheme. It is particularly important that service providers which are small or medium-size enterprises are not deterred from seeking accreditation by the level of fees charged.
If the fees are set at a commensurate cost of accreditation--in other words, a flat rate--they may be heavily disproportionate for smaller businesses. Have the Ministers done any work at all on the case for a sliding scale of fees to be set for accreditation so as to reducethe barriers to entry for very small companies? The Department is keen to emphasise how pro-business and
pro-small business it is. Let us have some answers about what it will be doing to help smaller enterprises that seek to enter the market, once the scheme is up and running.
I shall deal next with part II and the admissibility of electronic signatures. The Bill seeks to clarify the admissibility of electronic signatures in legal proceedings, while leaving it to the courts to decide what weight to assign to those electronic signatures at law. That is sensible in principle and we support it.
However, clauses 8 and 9, which introduce that, are rather a dog's breakfast. They empower Ministers through statutory instruments to amend existing statutes to allow for the use of electronic signatures and records, but the decision to allow electronic signatures and records to fulfil paper and writing requirements in existing UK statute depends on individual Ministers across all Whitehall Departments, in their own sweet time, when they feel like it, reviewing all the relevant statutory provisions under their departmental territorial jurisdiction.
As the Society for Computers and Law observed, there are an estimated 40,000 references in existing British legislation to the words "writing" and "signature". The Bill gives no indication of the time scale by which all that will be reviewed by all relevant Ministers across Departments. That is why the Government should ensure now that each Department publishes its priorities for using secondary legislation to update the definition of those words in law. The Government should also be encouraged to publish a timetable by which the review is carried out by each Department. This is too important a matter to rest on the individual priorities of Ministers--many of them hard-working, I am sure. I urge the Minister to consider the matter without delay.
Unless the Government follow the suggested course of action, businesses will be confronted with great uncertainty. They will have the regulatory burden of monitoring the haphazard introduction of amendments to existing statutes, in order to find out which statutory requirements can be satisfied by electronic writing.
In offering that modest proposal, I have the Alliance for Electronic Business on my side. The alliance was prayed in aid by Ministers earlier in the debate, and I know that the Minister for Competitiveness has a great deal of time for it. With regard to clause 8, the alliance states that statutory instruments must be put before Parliament rapidly. It goes on:
Has the Minister for Competitiveness done any work at all to examine the adoption of the approach which, I believe, is found in the draft Irish Electronic Commerce Act, the Uniform Electronic Transactions Act in the
United States, and the Uniform Electronic Commerce Act in Canada? Those statutes apparently allow all written and paper requirements found in law to be satisfied electronically, except for a limited carve-out relating to documents representing quasi-public legal acts such as deeds and wills. Can the Minister tell us whether any work has been done by the Department which would meet the concern that I flagged up, and which the alliance has also flagged up.
Finally on part II, I am concerned about the way in which the Government view businesses' applications for Government licences or permits, when those businesses make the application using electronic writing. The Government's suggestion is that different fees might be charged for electronic communications, compared with non-electronic communications, because as we know, electronic handling of data is typically less expensive than the use of non-electronic systems. The implication from the Government is that firms and individuals who are able to communicate electronically with Government will benefit from lower fees than those reliant on pen and paper.
From a glance at last year's Finance Bill, we already know that the Revenue proposes a financial concession to those Inland Revenue taxpayers who are able to submit their tax return electronically. Do the Government propose to charge different fees for electronic and non-electronic communication? Will disadvantaged groups, who are not IT-literate or do not have access to IT, be penalised as a result? The Bill is strangely silent on that, but it is a topic that we need to discuss, if not tonight, then in Committee.
In addition, can Ministers clarify the Government's policy regarding discounts for those who use electronic communications when dealing with Government Departments--for instance, in connection with a VAT return or a corporate tax return?
The DTI stated in evidence to the Select Committee:
"has set itself targets for making Government services available electronically: 25 per cent. by 2002, 50 per cent. by 2005 and 100 per cent. by 2008. The Government has also set a target for 90 per cent. of its routine procurement of goods to be done electronically by 2001."
29 Nov 1999 : Column 85
Over the past two years, my right hon. Friend the Leader of the House, who has ultimate responsibility for dealing with the millennium bug, and I have engaged in friendly debate. I asked her to produce a league table of Departments to enable us to assess risks from the bug Department by Department. Eventually, a sort of league table was agreed.
In the same spirit, I ask my hon. Friend the Minister for Small Business and E-Commerce to designate a single Minister to be responsible for procurement delivery systems--it would be helpful if it were she. May we also be told the name of the Minister in each Department who is responsible for procurement? As was done in respect of the millennium bug, would a quarterly report to the House be possible, to enable the House to know how each Department was implementing the electronic delivery system?
"The trouble is that many traditional Labour people come from the public sector and they are the last people to understand where we are on this."
Will he confirm that those were his comments? Does he think that the necessary talent to fulfil such a role is available on the Labour Back Benches? Did he not also say that the Government's approach--to establish an e-tsar and a Minister in the Department of Trade and Industry--was mad?
"inadequate political control being exercised over the development and determination of cryptography policy. The policy . . . has been allowed to drift for too long. It is imperative that Ministers take a firm grip of the issues from now on."
In her opening speech and in her press notice launching the Bill, the Minister was voluble in her near-breathless enthusiasm and excitement about Britain leading the world in the first industrial revolution. She was keen for us to be leading the new revolution. She talked about how important it was to modernise--a key new Labour word--so that we could lead the world again. She said that she was determined "to get e-commerce law right and get it in fast." She also spoke approvingly of how the Bill would become one of the UK's first 21st century Acts.
"Industry would be disappointed if the deadline were set later than the end of 2000. This probably means that work must begin immediately, in anticipation of passage of the Bill."
The alliance continues--and this is the key point:
"Our member companies have a number of electronic commerce initiatives that depend upon a legal framework for electronic signatures being in place."
Most importantly, the Alliance for Electronic Business states:
"Unless the statutory instruments are laid quickly, those initiatives cannot be implemented, reducing the growth of electronic commerce in the UK and risking the leadership that our industry currently holds in European and global markets."
Conservative Members endorse the concerns of the alliance.
"In the case of a service designed to cover its costs rather than to raise revenue, it might be appropriate for the Government to pass on its cost savings expected from the electronic handling of data to the fee payer."
That is hugely important. Should we take that to mean that the Government will not treat that regime of differential discounts for those who use electronic writing in their dealings with Departments as a revenue-raising exercise? Many Opposition Members are suspicious of the Government and are worried that that may be a ruse for more Government stealth tax in this area, and that any cost savings will not be passed back to the fee payer, but will be trousered or pocketed by the Government in the process of levying fees. We will watch carefully how the Government handle the fee regime.
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