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Mark Tami (Alyn and Deeside) (Lab): Many of these developments, like CCTV, can be very positive in picking up crime. Does my hon. Friend know whether any of the companies making the devices or any of the shops using them have had any discussions with Government to establish how they could be introduced in a way that would not infringe on civil liberties, and would have a positive effect rather than amounting to a snoopers' charter?

Mr. Watson: They have discussions with the Government, and I am sure that the Minister will answer my hon. Friend's question more fully. What I am trying to do is sound a note of caution, and perhaps persuade the industry, along with consumers and Government, to examine the issue more closely.

Earlier this month, Tesco announced that it was forming a European working group with Intel, Carrefour and the Metro Group to accelerate the adoption of this technology. Last year, Safeway ran an RFID pilot with Unilever involving 40,000 cases of deodorant, which were tracked from the factory and through the shelves of three of its stores. Safeway's own chief information officer, Mr. Ric Francis, has been so impressed with the trials that he believes RFID is key to the future of the retail sector, especially as costs continue to fall. In an interview with the website only last week, he said:

The tags could be used on billions if not trillions of items, tracking them from manufacturer to warehouse to retailer to customer, into the home and into the dustbin.

To his credit, however, Mr. Francis also recognised that people's worries and unease about their use must be addressed and common standards must be introduced

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before RFID tests can or indeed should be permitted to become as widespread as the barcode. That brings me to some specific concerns.

Like so much modern technology, RFID has the potential to be exploited in both a positive and a negative way. It can indeed be a force for good, helping stock control, tracking supplies, even tracing animals on a farm. It can help to clamp down on shoplifting and retail crime. The industry is right to want to do that: after all, the cost of retail crime to businesses, and ultimately to consumers, is—according to a recent British Retail Consortium report—some £2.25 billion a year. It is also increasingly linked to violence against shop staff, an issue that the Union of Shop, Distributive and Allied Workers and I have raised a number of times. Indeed, I have raised it in the House.

The Home Office has invested £5.5 million in pilot projects in the "chipping of goods" initiative as part of the Government's continuing efforts to combat property crime. Can the Minister tell me what other initiatives involving this technology are being undertaken or planned by the Government in partnership with industry? I should be very interested in the outcomes of such trials. Perhaps the Minister will be able to give the House some early feedback on their effectiveness. However, the technology can just as easily be exploited to track our purchases and, in the worst case scenario, our every move, in a way that was previously the preserve of science fiction and Hollywood movies such as "Enemy of the State". As Kevin Ashton, a former executive director of the Auto-ID Center who was involved in the development of the technology, has said:

The risk is that with billions of active tags on every conceivable item and hundreds of thousands of scanners, a permanent surveillance will be established. Katherine Albrecht, the founder of CASPIAN, told The Guardian this weekend:

Customers must therefore be made fully aware of the use of RFID and retailers must be completely open and transparent about what they are doing and what any information they collect will be used for, especially if the tags are used in conjunction with CCTV cameras or other surveillance devices. There should be no hidden tags and no hidden readers. We must not allow the technology to be used without any regulation. Before we know it, RFID could become ubiquitous in the retail sector—and not only to prevent theft.

Without guidelines, the potential for retailers to use RFID to monitor closely who purchases what, why, where and when is very real. Not only our buying habits but our browsing behaviour could be monitored. In the British Retail Consortium's November 2003 newsletter, Ruth Carpenter noted:

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It is also a dangerous progression. My shopping habits could be analysed by marketing departments. For example, I might pick up product A or B before choosing product C. Should supermarkets be allowed to collect such data? Linking together different databases or combining information with credit cards and store cards that also contain tags would be a huge invasion of customers' privacy, which British consumers simply will not tolerate.

Liberty has warned that RFID could allow retailers to build ever more personal and more sophisticated profiles of their customers for specific, targeted marketing campaigns. I do not always see eye to eye with that organisation, but on this occasion it has rightly kept a close watch on developments with a new unit to monitor the use of the technology in supermarkets and big chain stores.

Can the Minister give assurances that the data protection legislation can provide adequate safeguards? If not, what new legislation is needed? What steps has the Information Commissioner taken to ensure that existing laws have not already been broken?

Major concerns also arise about whether and how tags are deactivated at the point of sale. There are currently no guarantees to ensure that the tags will be removed or switched off when customers leave the shop or that they will not be tracked. Tesco have used RFID tags on DVDs at its Sandhurst store in Berkshire, but the tags were not deactivated when the customer paid at the checkout. As "Channel 4 News" demonstrated last year in a report entitled "Chips with Everything", the tags could still be read remotely.

Even if retailers have a policy of always deactivating the tags, which at present does not appear to be the case, that needs to be followed through by staff in every instance. Many people have had the embarrassment of setting off an alarm in a library or a shop after they have borrowed books or purchased goods, because busy staff had not successfully switched off security tags attached to them. With RFID tags, which are not intended to trigger loud alarms and cannot necessarily be seen by the naked eye, it would be even easier for staff to forget to deactivate them. However, the consequences could be more serious than a few seconds of red faces and beeping alarms.

The tags could be active forever and people would leave an electronic trail wherever they went. That is particularly worrying in the case of clothing, which could be tagged without people's knowledge. Marks and Spencer has been keen to trial the technology on the clothes in some of its UK stores and Benetton floated the idea of embedding tags inside the clothes themselves, only abandoning the plan after a public backlash.

Tags in credit cards, cheque books and even bank notes have also been proposed. They could prevent counterfeiting and forgery, but they also present further opportunities for the tracking of what we spend and where we spend it.

Will my hon. Friend the Minister therefore consider a code of conduct and common standards for the industry, to prevent the information collected from being abused? Strict guidelines are needed to reassure

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people that RFID cannot be misused and to protect people's privacy and rights. If the industry cannot police itself, it is up to the Government and my hon. Friend's colleagues in other Departments to lay down the law. Does the Home Office, for example, have a view on the relative benefits and dangers of using RFID technology in banknotes and credit cards?

In the absence of any enthusiasm on the part of retailers for informing customers about their increasing use of RFID, could the Government insist that where RFID is used in consumer goods, it must be done in a clear and open manner, with appropriate labelling?

Regulations on the use of RFID technology would go some way to addressing people's fears. However, more work also needs to be done to prevent the data falling into the hands of hackers and to protect tags from being intercepted over the airwaves and read by eavesdroppers. Clearly, wherever this technology is used, adequate safeguards and data encryption must be put in place.

RFID is not the only technological advance that is being used to combat retail crime. Birmingham's 800-strong retail crime reduction partnership, for example, makes use of a shared database of digital photographs. Once an offender has been banned from one shop, he or she can be banned from every store in the scheme. The Birmingham retail crime operation has helped to reduce crime in the city centre, and is helping to make the new Bull Ring a safe place for people in the Midlands to work and shop.

For the first time ever, thanks to state-of-the-art technology, retailers, pubs and clubs, the business community, car park attendants, street wardens, the police and British Waterways patrols right across the city will all be working on the same radio network for the purpose of crime prevention, and will have the ability to communicate with each other at the press of a button.

The so-called AB trunked radio system also allows its users to make group calls or one-to-one calls to individual users. Using the radios to warn each other of known thieves who are approaching, retailers have been able to save thousands of pounds every year.

A sophisticated computer database that is being used in as many as 250 town centres—the business intelligence crime system, or BICS—collects, disseminates and uses intelligence about retail crime in a new way to allow crime analysis by type of store attacked, type of merchandise stolen and its value, particulars of the offender's modus operandi and other factors. Police or CCTV photographs are also circulated along with any previous retail crime history.

The key difference between systems like those and RFID technology is that, although they can both help tackle retail crime, the latter is more discreet and can be misused by big businesses to get information about shoppers, rather than just shoplifters. So regulation and common standards are required. RFID should be used to target criminals, not customers.

I am grateful to have had this opportunity to raise the use of RFID technology in the House for what I believe is the first time. I hope that this will in some way help to open up a wider debate in the country, and indeed in Parliament.

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New technology has always presented us with both challenges and opportunities in tackling crime, and RFID is no exception. However, if we do not stay ahead of the game and regulate its use, we could find that the negatives soon outweigh the positive benefits.

Public confidence in the use of RFID for entirely honourable reasons could easily be shattered—and nobody will benefit from that. By the end of the decade RFID could become a multi-billion-pound industry, as much a part of everyday life as the internet or mobile phones have become over the last 10 years: unavoidable, wherever we go, whatever we do.

The House has an opportunity to take an early lead, before it is too late, by taking firm action against the dangers and invasions of privacy that RFID can lead to, while harnessing the technology for the fight against retail crime and for the wider public good.

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