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5.15 pm

The Government are in trouble over this issue. On 26 April, when he was responding to our initial debate in Committee, the Minister mentioned the fact that, while sitting on a train, the Secretary of State for Trade and Industry had been badgered about the very obvious conflict between the European directive--to which the Government, in the form of the Department of Trade and Industry, have signed up--and this legislation. However, although the Government have accidentally caught the information technology industry in the Bill, they have thus far been very reluctant to acknowledge their mistake and to do something about it.

Chapter II, article 4 of the directive is very specific. It states:

The directive specifically states that the provider "may not" be made subject to those matters, and its provisions are mandatory. Moreover, the directive--to which the Government have signed up the United Kingdom--is due to come into effect in February 2002. However, the CBI has made it clear that the Government's proposals in the Bill to require licensing of the information security industry--which is of course a key information society

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service--would be directly contrary to the electronic commerce directive. Very fairly, in responding to our debate on 26 April, the Minister did not for a moment suggest that he could positively state that the provisions and the directive were not in conflict. Indeed, it had all quite clearly taken him by surprise.

A requirement, as proposed in the Bill, for members of the information security industry to obtain licences from a regulatory authority to enable them to operate clearly would constitute requiring "prior authorisation", thereby directly contravening the directive. That article of the directive is intended, among other things, to prevent member states from introducing regulation that would stem the much-needed supply of information technology professionals. The directive is therefore intended to prevent member states from doing precisely what the Government have been seeking to do--albeit perhaps initially by accident--in the Bill. As the provision is still in the Bill, we have tabled and moved our amendment to deal with that concern.

The CBI has also pointed out that, when considering the conflict between the electronic commerce directive and the legislation, consideration should be given also to article 3 of the electronic commerce directive, which aims to free up the internal market for information society services by requiring member states to avoid any measures that might

As the CBI has pointed out, regulating the information security industry in the United Kingdom would be very difficult to do without putting practitioners outside the United Kingdom at a disadvantage--which would obviously contravene article 3 of the directive.

When we raised the issue on 26 April, there was no doubt that the Home Office had not had an opportunity fully to consider the matter. However, the Minister promised that he and his officials would do so. We shall look with interest to see whether they have done so. Nevertheless, those who are commenting on our debates--particularly, as I said in Committee, the journalists on Computer Weekly--are describing the issue, as last Friday's Computer Weekly headline did, as the

Mr. Miller: Come on.

Mr. Hawkins: The hon. Gentleman may disagree with the learned editors of Computer Weekly, but I think that I prefer their expert judgment to his sedentary comment.

Our amendment No. 2 would go further than amendment No. 3 by entirely excluding IT security consultants from the legislation. We say that given the botched nature of the consultation and the hurried way in which the Government have conducted all their dealings in respect of this legislation, the Minister and his officials should ask themselves whether the IT security sector should be included in the Bill at this stage. If the Minister wants to include it after the Bill is enacted, he can always do so by way of amending schedule 2 through a regulation taken under the affirmative resolution procedure, which would ensure that there was proper parliamentary

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scrutiny. We expect to hear some very firm answers from the Minister today. The IT security consultants will look very carefully at the Government's response.

The sector is one of our success stories. I know that from my experience prior to entering the House in 1992 and from the growth in IT security since then. I used to deal with those involved in IT security in financial services and banking and I know that it has been a UK success story. Our IT security consultants are regarded as among the most skilful and best in the world. We do not want the Government to damage their future opportunities, particularly through carelessness and inadvertence. If the Minister gets this wrong, he will be under huge pressure. The Government have already given themselves one self-inflicted wound over IR35 and destroyed a great deal of their credibility with consultants in the IT field. Labour Members know that perfectly well. The Government have suffered huge embarrassment over IR35 and it is no doubt one reason why they will lose the general election. However, I hope that even at this eleventh hour the Minister will concede that our amendments Nos. 3 or 2 would improve the matter dramatically and we look forward to hearing whether the hon. Gentleman will at long last see sense on this very important matter.

Mr. Miller: I want briefly to respond to a couple of points that were made by the hon. Member for Surrey Heath--via Blackpool--(Mr. Hawkins). This afternoon we have already identified the fact that definitions are rather difficult. Indeed, we have discussed whether or not the hon. Member for Buckingham (Mr. Bercow) is oleaginous, but I will not get drawn down that route. I tried to make this point right at the end of our proceedings in Committee, at column 229 on 1 May, but unfortunately owing to the timetable of our proceedings I was cut short in my prime. Let me try again for the benefit of the hon. Member for Surrey Heath.

It is not that there is no problem. The hon. Gentleman was absolutely right to identify the problem, but he failed to point out the fact that the Minister has offered a solution. The hon. Gentleman needs to respond to Caspar Bowden, Computer Weekly, the Confederation of British Industry and others, as I have responded to people who have contacted me, that the solution lies in secondary legislation.

Let me explain to the hon. Gentleman why his amendment fails badly and would severely damage the Bill. Let me say, in the spirit of the way in which the Committee was conducted, that there is broad cross-party agreement on the principles behind the Bill, but amendment No. 2 includes the phrase "held in electronic form". That must refer both to the intellectual property that is digitalised and held in electronic form and to the physical medium. It is impossible to separate the two. The amendment must therefore refer to both.

If the amendment were accepted, it would be impossible to distinguish between companies that should be regulated and companies that need not fall within the scope of the Bill. Indeed, it could possibly mean that provision of security to a firm with a computer--and that would cover an awful lot of firms--would not require a licence under the Bill. Clearly, that is not the intention and I accept that the hon. Member for Surrey Heath is not trying to wreck the Bill, but the logic of his position is flawed.

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It is right to draw attention to the problem, but the solution is obvious and was presented to the Standing Committee. I am sure that my hon. Friend the Minister will restate that solution when he responds to the debate, and thereby put at rest the minds of the many people in the computer industry with whom I have close contact. It is wrong to try to instil fear in an important sector of the industry with a scare story such as this.

I urge the hon. Member for Surrey Heath to withdraw the amendment, which could damage the spirit of the Bill. Debate should turn to the extremely difficult question of defining, in the context of this Bill and of future legislation, the difference between the medium in which data are held and the information itself. That matter will crop up in many debates in the next Parliament. However, I am sure that the Opposition by that time will have a new leader, and that the hon. Members for Surrey Heath and for Buckingham (Mr. Bercow) will be supporting a new tone of Toryism.

Mr. Simon Hughes (Southwark, North and Bermondsey): I apologise to the hon. Member for Surrey Heath (Mr. Hawkins) for not being here for his opening remarks, although I did manage to hear them. The announcement of the dissolution of Parliament meant that I was trying to organise Home Office business with the Government and the two Houses of Parliament.

I shall be brief. I agree that we must uphold and develop Britain's e-commerce industry and information technology sector. We must not frighten people in the sector, or allow unfair regulations and controls to drive the industry out of the country at a time when it is doing well. We must be careful that we do not legislate in part and in haste, and repent much more fully and at leisure.

Liberal Democrat Members share the Government's view that it would be wrong for the Bill to sweep in and regulate the information technology and e-commerce sectors. Some issues cannot easily be accommodated in the context of a regulatory system, even if that is an opt-in system. Those issues arise from the legislation covering data protection and the regulation of investigatory powers, which have been dealt with in other Bills.

We need to understand the Home Office's approach to this matter, and the relevance of the interests that other Departments--such as the Department of Trade and Industry--have in it. The right hon. Member for Walsall, South (Mr. George) said earlier that we need proper harmonisation and co-ordination to avoid sending the wrong signal by legislating unwisely.

If I thought that there was a clear doubt about the subject--and if I had not been satisfied by the Minister's assurances--I would be sympathetic to the amendment. The Conservative party is perfectly right to raise the issue. The hon. Member for Ellesmere Port and Neston (Mr. Miller) and I disagree only to this extent; I do not think that the Conservatives are unfairly raising an issue, and they are not frightening people. It is perfectly proper to raise the issue and to get the position on the record. We always need a balance in this place between getting certainty in legislation on the one hand and not making legislation so long that every eventuality is covered on the other.

I understand and sympathise with the genesis of the Conservative proposals, but I am relieved to say that they are not necessary. The Bill adequately deals with the

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issue. I will be keen to hear the Minister confirm, as he did in Committee, that the Government are not excluding the IT industry from their consideration and that it is on the agenda. Will the Minister confirm that the Government will make sure that there are no adverse consequences of early action?

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