Examination of witnesses (Questions 60
WEDNESDAY 13 DECEMBER 2000
and MR CHRIS
60. It was said that there should be a taxation
framework. That was agreed at Ottawa. This is fundamental to international
e-commerce. The government has held itself out as being in the
lead on this internationally and I wanted to find out what had
(Ms Hewitt) The work is progressing pretty well. We
benefit from the fact that there is a British official chairing
one of the key working parties for that OECD work on taxation.
It is a matter for the Treasury and I would be delighted to arrange
for them to give you a more detailed memorandum on that if that
would be helpful. I do not deal with it day to day.
61. You mentioned that you are working with
European colleagues and with the Commission on VAT matters. At
the moment, as I understand it, there is already an agreementI
appreciate this is slightly outside your area of responsibilityon
VAT whereby if a United Kingdom supplier makes a supply in another
EC country, unless that supply is to another VAT registered trader,
VAT will be payable in the United Kingdom. Otherwise, it is payable
at the local rate by the trader in the other country. I am puzzled
why you should be involved in any further discussions with the
Commission on this unless they were on the harmonisation proposals
which were dropped at Nice, were they not?
(Ms Hewitt) I am not personally involved. I was making
a point about the government rather than myself. There is a well
established framework for the application of VAT to sales between
Member States. The Commission has made a proposal which related
to VAT on transactions for instance between the USA and a purchaser
within the European Union. That is a matter for the Treasury.
The Chancellor made his view on that very well known at the most
recent ECOFIN meeting.
62. Can I take you to the digital divide? What
is your understanding of the current scale of the digital divide?
We have had figures that suggest that 80 per cent of unskilled
or semi-skilled people have no contact with the internet.
(Ms Hewitt) There is a very real digital divide. The
figures I have seen suggest that in the poorest households fewer
than one in 20 have internet access at home. In the richest households,
it is well over half. There is a very big division there. The
changes that are taking place within the market for internet access
will help to change that picture. When we get the new survey next
week from the Office of National Statistics, we may see things
starting to change. I am thinking for instance of digital television
which can enable internet access. I am also thinking of other
devicesgames machines, for instancethat can enable
internet access. There is now an internet enabled analogue television
on the market for about £179. We will see whether that helps
to penetrate into lower income households, and also to bring the
internet within the reach of people who are completely familiar
with television but may be completely unfamiliar with the idea
of a computer.
63. Are we talking about a conceptual divide
as well as an equipment divide? How are we going to overcome that?
(Ms Hewitt) The way I look at it is that the first
generation of internet access came through the PC. The next generation
of internet access will come through digital television and through
mobile devices, particularly with the arrival of third generation.
We will get some before third generation but third generation
mobile will bring the mobile internet alive. Most industry predictions
are that by about 2003 there will be more internet access through
mobile devices than there will be through PCs. We need to look
at the full range of internet access and to realise that this
is changing very, very fast. Having said that, it is absolutely
essential that we in government also act to bring the internet
within the reach of people who do not have a PC at home and may
well not have digital television and clearly have not got third
generation. The UK onlineprogramme is now creating UK onlinecentres.
The Prime Minister announced the first 600 in September. We will
have 6,000 by 2002 including all the public libraries. Those UK
onlinecentres will offer facilities particularly to people in
low income areas and in the more remote, rural areas to use the
internet on a PC or on some other device, to get some help and
advice in using it and in some cases offer other facilities as
well like the chance to borrow a laptop, take it home and use
it. As well as that, we have the programme that Gordon Brown put
in place that Michael Wills is delivering for cheap computers
to low income families. We have the wiring up of schools. We have
all the secondary schools connected and almost all the primary
schools as well. There is a very big investment there, at least
£1.5 billion, in ensuring that everybody in every part of
the community will be able to have access to the internet and
will have a chance to get the skills and confidence to use it,
because that matters almost as much as access to the actual hardware
64. You have referred to a number of initiatives.
What specifically are the UK onlinecentres going to be doing?
How are they going to be resourced? How are you going to be monitoring
them and how are you going to see them deliver?
(Ms Hewitt) The UK onlinecentres are funded at the
capital end by the capital modernisation fund. £250 million
is available over three years within England. There are parallel
programmes in the devolved administrations. There is also revenue
funding of just over £77 million in England, available through
the new opportunities fund. We have both capital and revenue available.
Bids have been invited from a whole range of providers, private
sector and non-private sector, all over the country, to bid to
that fund which is run by Michael Wills at the Department of Education.
The Prime Minister announced the first 600. The second wave of
bids is either just about to come in or is now being considered.
We are moving on fairly aggressively. The central feature of the
UK onlinecentres is that they are designed to make internet access
available to disadvantaged communities and that they are designed
to be in places where people go. For instance, in the West Midlands,
there is a UK onlinecentre in a caravan that goes around with
a travelling fair reaching enormous numbers of people. There is
at least one in a pub; there are some in community centres, some
in libraries, some in schools and so on, but it is very much a
bottom up programme where you have local communities and private
sector providers working together with the public sector to make
internet access happen in a way that suits that community.
65. Are you going to be checking to see that
you get a good spread of access? For example, I was visiting my
local carers centre last Friday and I automatically went into
the office and said, "Can I check something up on the carers'
website?" They smiled and said, "We are going to get
a website but we have no money for it and we are hoping that we
will be able to get a grant from somewhere."
(Ms Hewitt) That was a local voluntary organisation?
66. It was the local voluntary carers support
network. You know perfectly well there is a whole range of extremely
active, self-help support groups working with extremely disadvantaged
people. How are we going to ensure that those kinds of groups
which are working precisely with those marginalised people get
(Ms Hewitt) Many of them are already exploiting the
internet. I was astonished. A couple of months ago I was doing
a street survey in one of the low income wards within my own constituency
on a social housing estate. In the first house I went to, where
both the mother and the daughter suffered from different, very
rare diseases and wanted to talk to me about medical treatment,
they had becomethe mother in particularan expert
in both her own and her daughter's condition through the use of
the internet to access self-help groups in those two conditions.
It was having a very interesting effect on her relationship with
the GP and the consultant who did not expect patients from council
estates to turn up knowing as much as they did about the particular
conditions she and her daughter were suffering from. A lot of
these self-help groups are already on the internet. The National
Health Service and the Department of Health have a very substantial
programme of internet enablement, starting with NHS Direct online,
which will make it much easier for that sort of information to
be made available to patients. One of the key criteria when the
Department of Education assesses applications for UK onlinecentres
is what they are proposing to do to develop local content. That
may be content that is of interest to a particular local geographical
community but it may also be a community of interest where there
is a particular disadvantage that needs to be served by a UK online
centre. On the other issue you raised about monitoring the effectiveness
of the centres and monitoring their reach, the E-Envoy's office
is working very closely with the Department of Education and also
DCMS who are responsible for the libraries so that we get a proper
map of the provision to ensure that we do not have lots of access
points in some places and none in others. We want to make sure
that there is a proper geographical spread as well as proper access
for different communities who may, because of language or various
disabilities, have particular trouble in using the internet.
67. Is local content happening yet or is it
just a pious hope?
(Ms Hewitt) No; it is absolutely happening through
a variety of initiatives, not simply government ones. For instance,
the Hansard Society and the Women's Refuge movement, the domestic
violence movement, recently collaboratedour colleague Margaret
Moran was very involved in thisin creating an on-line secure
site for women who were survivors of domestic violence. Two of
the first groups to be engaged in that programme who are still
using the internet were respectively a group of Irish women travellers
and, secondly, a group of Bengali, Urdu speaking women. They in
particular accessed the internet at their children's school and
one of the reasons why they became so enthusiastic about it was
because they could read Urdu language newspapers as well as meet
each other at the internet centre.
68. Can I ask you about the loan or donation
of PCs by private or public sector employees for home use, which
is a particular target of your office? The Treasury apparently
do not have any evidence from tax return forms as to how this
is growing. Have you any evidence and, if so, what sort of numbers
are we actually talking about?
(Ms Hewitt) There is a variety of different
provisions here. There is first of all the tax relief that was
introduced in the Finance Bill in 1999, which enables employers
to lend their employees computer or other ICT equipment for use
at home by the employees and by their families. There are no restrictions
on the use. In the past, that would have been taxed as a benefit
in kind. It is now tax free up to £2,000 capital and £500
income equivalent. I do not have figures on the takeup of that
but I have certainly had anecdotal comments from a number of companies
who are using that. I have also had comments from companies who
would like to use it to give their employees PCs. That is not
embraced within the scope of the Finance Act concession. There
has also been considerable interest across the public sector in
low cost leasing deals for public service employees. Those are
working and there are some operating in schools. There are more
and more LEAs and individual schools who are interested in getting
low cost leasing deals, not only for teachers but also for pupils
so that you can have one laptop per pupil on a very low cost basis
and perhaps an additional subsidy to parents who cannot afford
even the low cost. There are some good examples of that happening
but because we have a highly competitive retail market in the
United Kingdom leasing may not have taken off in quite the way
it has in some other countries. I asked John Monks at the TUC
whether he had looked at the scheme the Australian TUC runs for
very low cost, leased internet mobile computers for members of
trade unions in Australia. It has been a huge success there. John
Monks said yes; they were very keen to do it but they had not
so far found a leasing deal that offered anything as good as you
could get at Dixons. 69. Is the DTI leasing to employees?
(Ms Hewitt) No, but a growing proportion of DTI employees
have remote access at home with the use of the laptop. Of course
that is invaluable particularly for staff who want to balance
work and family and who only work part time and who want to do
some of that work at home.
70. What about the Department of Health which
has a phenomenal number of employees? We were talking abut 80
per cent who do not have access to the internet.
(Ms Hewitt) The Department of Health has a very substantial
programme to roll out effective electronic working across the
National Health Service. They have some major challenges there
because they have a legacy of different hospitals, different hospital
departments, different GP practices, using different systems.
What they are now seeking to do is to move the patient appointments
booking system on-line between hospitals and GPsthere are
pilots in that area alreadyand they are seeking to move
on-line the whole process of prescriptions so you do not go through
the business of keying-in prescription data at a central office
in order to monitor prescription patterns and so on. It is a very
significant part of the NHS modernisation plan. Just coming back
to the DTI, we are developing a purchase scheme for employees
which will give them very favourable terms, but I understand so
far other government departments have not been interested in doing
71. In terms of the digital divide in the Department
of Health, you have talked about tackling electronic systems but
in terms of the digital divide, in the number of people who do
have access, a very large number of people are excluded.
(Ms Hewitt) Indeed. I am sorry, I must correct what
I just said, I was misreading a note which had been passed. Other
departments are all interested in looking at the sort of low cost
favourable purchasing schemes we are looking at in the DTI.
(Mr Parker) To add to that, in the Office of the E-Envoy,
we are looking at helping evaluate the pilots which have gone
on in the private sector, so we can start to quantify some of
the business benefits which flow through to departments from this
sort of activity.
72. Finally can I ask about the Computers Within
Reach initiative. The Chancellor announced £15 million for
up to 100,000 PCs for low income families in March 1999. We are
told by the end of this financial year there should be 35,000
computers which will have been distributed in pilot areas. Why
has it taken so long?
(Ms Hewitt) What the Department for Education and
Employment had to do in order to put that scheme in place was,
first of all, to get partners in the private sector and voluntary
sector who would actually run the scheme, and who would have the
capacity to collect PCs and then to recycle them, to bring them
up to speed, as it were, and then could operate an effective process
of ensuring that those recycled PCs went to low income families.
Of course, that is now in place and, as you rightly say, there
will be up to 35,000 recycled PCs in various places in England
by the end of March. Now we have the partners in place, it will
be much easier to roll out the next phase of the programme. The
Department is also finalising evaluation processes so we can ensure
we can look at the scheme and the first wave of it and ensure
it is meeting its objectives.
73. £60 is an awful lot of money for someone
on a low income. What are you going to do to get rid of the £60
charge? £60 can buy a lot of meals and pay a lot of heating
(Ms Hewitt) Indeed, but we thought it was important
that families who wanted to use the recycled computers did actually
pay something towards them as a way really of expressing for themselves
the value they would place upon the service and the hardware they
were being effectively given. I do not think that is unreasonable
at all, but clearly it is one of the issues which the Department
for Education will want to look at in the evaluation.
74. So you will be giving serious thought to
affordability? £60 is a lot of money.
(Ms Hewitt) It is one of the issues the Department
will look at in the evaluation.
75. Can I ask a point on this? I will give you
the anecdotal evidence of my wife, who is a teacher in a school
which is on-line. When a computer goes funny, when something goes
wrong, it is virtually impossible to get instant response. The
schools no longer can attract the kind of staff to do the maintenance
jobs that they might have done in other technical areas. The public
sector cannot get the kind of technical support staff to enable
the on-line dreams to be realised. You mentioned en passant
this morning the skills issue, but I would like you to talk about
the rather fundamental one, there is no point in giving somebody
a computer, it goes wrong and then for three weeks there is nothing
they can do about it, or it costs them a fortune to phone up one
of the helpful help lines which charge rather more than they anticipated
when they bought the cheap computer in the first place.
(Ms Hewitt) It is an important issue and we all know
the frustrations of computer systems going down. You might want
to get more detail, and again I can arrange a more detailed memorandum
on this if it would help, directly from the Department of Education
76. I am sorry, this is the DTI. Surely it is
your responsibility to take account of the fact that the maintenance
industry is virtually non-existent? That is the point. You are
giving out computers willy-nilly, if anything goes wrong, they
go back in the cupboard because it is either too expensive or
it takes too long to get them fixed.
(Ms Hewitt) If I may, I was going to say something
first of all about the schools side of this and then more broadly
what we are doing on skills. I think, if I may say so, you are
painting much too dismal a picture of what is happening in most
of the schools, although I certainly absolutely recognise the
problem, but the Department for Education has been putting in
place both a very substantial programme of ICT training for teachers
themselves and is rolling out the National Grid for Learning,
and what we are seeing is more and more schools making very effective
partnerships, in some cases with universities, in other cases
with private sector suppliers, often to get extremely innovative
information and communications technology in the schools. I visited
one in Lancashire recently
77. I am sorry, I think we have gone over that.
What I am talking about is what happens when the thing breaks
down. Why are there not enough mechanics to come along to fix
it? Why are we not getting more of these people trained? Why are
they not better paid in the public sector to enable them to stay
there and not be poached by the other parts of the British economy?
That is something which we have to have on the record.
(Ms Hewitt) I do not think we can expect to have within
the public sector every set of skills that you need in order to
run modern ICT applications. In many cases those skills and those
maintenance arrangements will be provided by the private sector
in a partnership under a contract with the public sector. That
applies to core government departments, it will apply in some
cases in schools, it will apply in the National Health Service
and so on. The much bigger issue, which is one that DTI and DfEE
are giving very high priority to, is the much larger problem of
the shortage of skilled people in information and communications
technology and indeed in the engineering sector as a whole, and
that is a shortage of skills really from very basic skills right
up to the graduate and the post-graduate level. We have already
put in place at the bottom level free IT training for people out
of work and the 80 per cent discount on basic IT courses for people
who are in work. We are getting a very high take-up of that and
in many cases that is then the first step on the ladder of further
IT training. Similarly, with learndirect, which of course is now
rolling out across the country, the University for Industry tell
me that by far the most popular courses which people are signing
up for are related to IT and the internet. So that will begin
to give us the people with the basic skills who can then go on
to the next level of competence. The Department for Education
introduced this autumn the new Integrated ICT curriculum in schools.
That will produce a new generation of school leavers and then
college leavers much, much better equipped for the demands not
just of this sector but every sector, because indeed for almost
every job in the economy these days you need at least some level
of computer skills. I know that Stephen Byers and David Blunkett
are discussing this problem very urgently to see what more we
need to do, because we do need to do more, to ensure that at every
level, from the very basic technician right up to graduate and
post-graduate, we have the supply of people we need, because it
is not only the public sector, it is also the private sector,
who are being constrained by the lack of skills. A final point
is, of course, this is not a problem unique to the United Kingdom,
every industrialised country faces this problem. I should perhaps
as a footnote just add that the ICT funding for schools does cover
the support and maintenance as well as the initial kit, therefore
that will normally be part of the contract which the school or
the LEA has with the IT supplier.
Chairman: Thank you.
78. Following on from that, and on schools,
I think that about 14 per cent of primary schools are not connected
to the internet. I think the ratio of pupils to computers is about
12:1 in primary schools, and I do not count the recent ones which,
as the Chairman says, are going to be covered. Either way it is
not very good. What is the problem? Is it cash?
(Ms Hewitt) The Government has had a very, very fast
programme of rolling out both computers and the necessary training
for teachers. Secondary schools, as I say, we have now got completely
on-line. With primary schools, at the point where we came into
that, it was only about 14 per cent of primary schools that were
connected. So we have driven that up very, very fast over the
last three years. I have not got the target date here. In 2002
we will have every primary school connected, but we have made
huge progress since 1997-98.
79. I think that probably most of us feel that
there is maybe an unholy alliance between Microsoft perhaps and
the hardware manufacturers, in the sense that over the period
of a parliamentary term the software seems to change to such an
extent that your hardware is unusable. Is this going to give schools
a big problem in five years' time, or at some period, when there
is a big replacement cost? Are they going to be in a position
to bear that cost?
(Ms Hewitt) I know it is an issue which has been of
great concern to my colleagues at the DfEE, because clearly you
do not want to have the situation where you are making substantially
huge investments in hardware only to find that you cannot use
it. I think what will make a very big difference there is that
as schools connect to the National Grid for Learning, at higher
bandwidths, they will then be able to get the software and the
content they need from the network rather than having to hold
it within the PC itself and, to use the jargon, the PC will, in
effect, become the thin client and all the rest of the stuff will
sit upon the broadband network. That should, as I understand it,
enable PCs that would otherwise become redundant to have a happy
new lease of life as the thing develops.