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The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville): I am grateful to the noble Baroness for explaining the purpose of her amendments. I remind the Committee that we are debating the Government's second choice option, an option which we hope to hold in reserve because we hope that self-regulation will achieve the objectives of this part. Nevertheless, we need to ensure that the powers we hold in reserve are adequate should we need to use them.

The first amendment to remove what the Secretary of State considers appropriate from the publicity arrangements would reduce his discretion to publicise the register and changes to it as he saw fit. It is right that the Secretary of State should have some discretion. The register will be for the benefit of customers of cryptography service providers to guide non-experts; and to help them trust and choose a service provider. If the Secretary of State is running such a scheme, it is right that he should choose how best to publicise it. He should be accountable to Parliament for such decisions, but the amendment might make his decision open to legal challenge, which is unnecessary in this case.

I also think that the specifics of the second amendment, which provides for regular consultation on the operation of the register, are unnecessary. The drafting of the amendment means that it would be very narrowly focused. On a more general point of consultation, we are already committed to consulting on the approvals criteria. When consulting on the draft Bill last July the Government said that:

"The Government is committed to developing the approvals criteria in consultation with potential applicants for approval, and users of their services, and will consult formally on all such regulation."

In the spirit of co-operation which usually characterises our debates, I am announcing that I intend to move amendments on Report to write this

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commitment onto the face of the Bill. That will take the consultation onto a broad rather than the narrow basis of consultation in this case, which would simply refer to consulting on allowing members of the public to inspect the contents of the register and securing that publicity is given to any withdrawals. That seems a very narrowly defined basis for the consultation. But I shall write that on to the face of the Bill.

We will shortly discuss the amendments that I have tabled to ensure that the first use of the regulation-making power under this part will be subject to the affirmative resolution procedure. Service providers will also be interested in the operating costs of the scheme. The fact that the scheme will be self-financing and voluntary will provide incentives for keeping costs down In view of that, it is not necessary to have statutory consultation on the operation of the register.

The fourth amendment is related and specifies the publication of an annual report. We shall obviously inform Parliament and others periodically of those matters . There are many well-established mechanisms for doing so, including the annual report of the Government and of each department and through Questions put to the Government by Peers. It is not necessary to create yet another formal reporting mechanism.

The third amendment is intended to ensure that the scheme is established and maintained, consistent with international best practice--a sensible aim on which we would no doubt all agree in principle and one that is consistent with the Government's desire to make the UK the best place in the world for electronic business. It is not appropriate, however, to write this on the face of the Bill. We shall discuss the international aspects in greater depth later this afternoon under Amendment No. 6 and the interaction with the EU directive and with non-EU countries. Clearly, no one would dispute the need for benchmarking against international best practice but there is nothing to be gained from putting that into legislation. I hope that with those clarifications, the noble Baroness will withdraw her amendments.

Baroness Buscombe: I thank the Minister for his response. In relation to Amendment No. 1, my interpretation is that, while he recognises the need for some discretion, the clause as it stands gives total discretion as he deems appropriate in this regard. I am disappointed, therefore, that he will not move on this.

In relation to the second amendment, I am pleased that he has confirmed that he will be bringing a broader approach to the consultative process in terms of amendments on Report. With regard to the third amendment and international best practice, again I am pleased with the Minister's response. I am glad that he appreciates the importance of enunciating the need for that, notwithstanding that it is difficult to put such an important aim on the purpose of the Bill.

In relation to the fourth amendment, it is regrettable that there is not going to be--as there are in all other regulatory schemes of this kin--the delivery of an annual report to show that there is proper accountability for the approval scheme. Despite that,

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I am pleased with the Minister's response, particularly in relation to the consultative measures which will be on the face of the Bill as we shall see at the next stage of its passage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 2 to 4 not moved.]

Clause 1 agreed to.

Clause 2 [Arrangement for the grant of approvals]:

Lord Sainsbury of Turville moved Amendment No. 5:
Page 2, line 13, leave out ("subsection (3) applies in that person's case") and insert ("the condition for the grant of an approval to that person is fulfilled in accordance with subsection (3)").

The noble Lord said: In moving Amendment No. 5, I shall speak also to Amendments Nos. 7, 9 and 17. These amendments would clarify the meaning of the clause and thereby fulfil an undertaking given in another place by my honourable friend Patricia Hewitt, to consider whether the clause could be simplified while preserving the necessary powers of the approval authority.

They do that in two ways: first, by expanding on the cross references between subsections (2) and (3). It has been pointed out also that the description in Clause 6(3) of cryptographic support services being provided in the UK in fact relates only to Clause 2. It therefore seems sensible that it should be moved from Clause 6 to Clause 2, which is accomplished by the amendments. They would not change the legal effect of the clause in any way. I beg to move.

3.45 p.m.

Lord Razzall: If the Minister is also addressing his remarks to Amendments No. 7 and 9, would it be appropriate for me to raise one point which I have raised with him in the discussions we have had on the Bill? This is in regard to Clause 2(3)(d)--lines 37 and 38 on page 2. The Minister will be aware that concern has been expressed in another place regarding the protections that are given. Albeit the nature of the register here is a voluntary one, nevertheless, if somebody is determined to be a fit and proper person to be approved in respect of the services to be provided, concern has been expressed as to whether it would be appropriate, bearing in mind the opprobrium that would be attached to that individual organisation, for an appeal procedure of some sort to be built in to the section. The Minister indicated that he would look at this point with his officials and I wonder whether he has had the opportunity to do so?

Lord Sainsbury of Turville: The scheme would, of course, be genuinely voluntary in that providers would only apply to be approved if they assessed the benefits of being approved as outweighing the costs. Also, the Bill does not provide for any specific legal consequences to flow from being approved by the scheme. Parties to transactions may, however, place a higher weight on electronic signatures backed by certificates issued by approved service providers. That decision would flow from the value that the market places on the approval, not from the statute.

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The scheme would be genuinely voluntary and providers would apply to be approved only if they assessed that the benefits of being approved outweighed the costs. The scheme's value comes from setting standards at appropriate levels and rigorously assessing compliance against them--it does not come from statutory privileges.

I have set out that background because, while I can see that there might have been a case for creating a special appeals system in the case of a mandatory statutory scheme, which the previous government proposed, having a special procedure to appeal against a decision to reject an application to be approved seems unnecessarily cumbersome for the voluntary scheme at issue here.

As a statutory function, the decision whether to approve would be subject to the usual procedure of judicial review. If an unsuccessful applicant for approval applied for judicial review of the decision, the court would be able to examine whether the approvals authority had acted reasonably in coming to its decision. Given the genuine voluntary nature of the system, this is all that is necessary. The proposed amendment would make the system more complicated without any corresponding benefits.

Lord Lucas: The Minister said there would be no statutory consequences to being on the register--indeed not--but would it not be the case that the Government might, in secondary legislation, say that signatures were required to be verified by someone on the register, or that Government departments might make it a practice to require that signatures were verified by someone on the register? Would there not, therefore, be a de facto imposition of the requirement to register?

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