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Lord Randall of St Budeaux: My Lords, my noble friend's speech is fascinating. However, one matter that bothers me is that so far the Minister has referred only to solutions. I just wonder whether the Government have focused sufficiently closely on the whole market opportunity. Out there one has the single market which, with enlargement, will be twice that of the United States. However, for example, SMEs have made very poor progress, if one breaks them down into various sub-sectors. I just wonder whether in their policy the Government should devote far more attention to market opportunities and to clearing the road specifically to facilitate access to the single market at the level of SMEs.

Lord Sainsbury of Turville: My Lords, I am very grateful for that intervention. I believe that in answering the question it is easier to start with the UK and then move on to the European situation, which is obviously a further dimension. However, I believe that it is the role of government to provide solutions. Businesses must seize the opportunities and it is for government to create the framework in which they can do so. Therefore, as appropriate, I shall talk about creating the right framework, not about the particular opportunities at which individual business need to look.

The Government see their role as being to define goals from a public interest perspective and to ensure that there is an adequate and up-to-date framework of law where necessary. Wherever possible government should look to those closest to the market, both providers and users, to implement agreed goals

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through non-legislative arrangements, such as codes of practice, guidelines and voluntary schemes for dispute resolution. Those generally provide a more rapid and flexible means of responding to changing market needs and achieving international consensus than is possible through legislation.

I believe that the third major area of the report is the UK e-commerce environment. The Government have three clear targets: to be the best place in the world to trade online by 2002; to enable universal access to the Internet for everyone who wants it by 2005; and to get all government services online by 2005. Our role as the Government can be described in three parts: we must enable modern markets by providing a light-touch regulatory and tax framework through the guiding principle of co-regulation. We must also work with industry to drive down access costs and roll-out key enabling technologies. We have to help to develop confident people and businesses, and we must make government itself a leading-edge user of new technologies. That is why the Government are investing £3.8 billion under the UK online programme to ensure that people, businesses and government are in a position to take advantage of the online world.

The key elements of the programme are: first, the setting up by 2001 of 600 UK online centres. They will provide people with access to new technologies and the Internet, and help them to develop the skills necessary to seize the opportunities provided. I refer, secondly, to UK online for business--a network of advisers to help business to succeed online by offering independent support and advice. Thirdly, UK online government services will deliver services electronically. Later this year we shall set up a UK online citizens portal to allow a single online point of access to government information and services.

The noble Lord, Lord Brooke, referred to the Government being in a position to meet the targets to put government online. We are making good progress towards that target. That progress includes such key services as National Health Service Direct, Company House returns and searches, and Foreign Office travel advice. Later this year, the UK online citizens portal will offer a single online port of entry to government information and services 24 hours a day, seven days a week.

In his spending review the Chancellor set aside £1 billion for electronic service delivery, and all departments have been asked to submit e-business strategies to the e-envoy by the end of the month. As far as concerns co-ordination by government, the Prime Minister announced in the UK online annual report that he would hold special six-monthly Cabinet sessions on e-government to ensure that all Cabinet Ministers were directly involved in implementing the Government's strategy. We are putting in place solid foundations, such as the Government Secure Intranet and key framework policies, and I believe that we are making good progress on it.

I turn to e-commerce at European level. We cannot, and should not, pursue a national strategy in isolation. The Select Committee makes an eloquent case for a

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broader global approach, which I support. We are taking a leading part in moving forward the EU agenda with some success. The foundation stone is the e-commerce directive. In recognition of just how fundamental it is, the European Parliament adopted it unamended earlier this year. The directive ensures that contracts can be concluded electronically, determines the liability of intermediaries for illegal or harmful information, and sets out information to be given by the seller to raise the confidence of the consumer. Above all, it establishes the principle that electronic transactions are generally governed by the law of the home state of the seller.

The noble Lord, Lord Brooke, referred to the creation of a competitiveness council. As is clear from the Government's response, we agree that a competitiveness council would be desirable as a forum for micro-economic issues and to take forward the conclusions of the Lisbon Summit. Some progress was made following a review under the Portuguese presidency earlier this year when a decision was made to combine the Internal Market Council with the Consumer and Tourism Councils, and the Industry Council with the Energy Council. We hope that under the Swedish presidency further progress will be made.

The Government strongly support the general thrust of the EU's overall policy towards e-commerce, in particular the development of specific action plans with demanding targets, the development of a robust and competitive single market and the adoption of minimum effective intervention and, wherever possible, to do it through co-regulation.

The noble Baroness, Lady Noakes, and the noble Lords, Lord St John of Bletso and Lord Watson, referred to stock options. It is clear that the Government have listened carefully to industry on this matter. For that reason, we have taken measures which enable companies to come to an arrangement with employees about payment. If the national insurance contribution is paid by employees, the taxable gain on the share options comes to about 47 per cent, which is very close to the position in California or New York. In announcing these changes the Financial Secretary said that he wished to continue the dialogue. Therefore, I shall continue to pass on the concerns of this House on that particular matter.

I say to the noble Lord, Lord St John of Bletso, that we should not over-respond to the market reaction to the valuation of companies. I believe that this is an example of the market working as it should to correct over-valuation, and it does not, and should not, reflect on companies which have some form of competitive advantage and obey the normal laws of economics about future revenue flows. We are working on Internet mentoring and incubation and are producing a scheme to that end.

We have tended to concentrate in this debate on those areas where the UK or Europe are behind America. We should not forget that in the case of mobile telephones we actually lead in Europe. That is a reflection of the way that regulation should be done. It was led very much by the DTI on an informal basis

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to get a European standard on mobile telephony. It is our ability to do that in Europe, and the failure of the Americans yet to achieve that, which has led to the extremely good performance in this country.

The noble Lord, Lord St John of Bletso, raised the question of training. That remains an enormously important issue. Where one has such significant change, it is inevitable that one will see significant skill shortages. There are numerous reasons which lead to that. Both the DfFE and the DTI are taking action on that and support the implementation of a skills strategy for information technology, electronics and communications. For the most part, that is led by the ITEC strategic group of national training organisations--taking forward such work; developing a better understanding of the labour market for ITEC occupations; improving the image of careers in ITEC-- particularly targeting children and women--improving recruitment; retaining work-based training practices and supporting a better dialogue between business and education providers over ITEC skills.

The noble Lord, Lord St John of Bletso, raised the effect of the sums paid for the third generation licences. The effect of that will be to encourage operators to roll out their services rapidly. The intensive competition between them should ensure that services are priced so as to be attractive to consumers.

The noble Lord, Lord Chadlington, raised the question of Internet access through digital TV. This is a difficult area. There are difficulties in getting the same level of services in access to the Internet and making certain that these show up to good effect on the TV. This is a competitive situation. It will be for people to decide which is the best way to get these services. I take the noble Lord's point that if this area could be developed, it would have a great impact on widening access. The Government strongly support the work of the Internet Watch Foundation in the whole area of harmful content. I think that is the right way to approach that particular area.

Perhaps I may say to the noble Baroness, Lady Buscombe, that IR35 is not about inclusion or exclusion. It is about the question of the application of rules about how people are defined for self-employment. The issue here is that IR35 ensures that the normal rules of self-employment apply to workers who operate as service companies but who generally work for one company. I cannot see under what grounds of equity different rules should apply to people in IT from the rest of the population across the country.

The committee's report is a comprehensive manual for government, the private sector and any other organisations engaged in EU e-commerce policy development and co-ordination. The Government will base a great deal of their future approach to this on the principles identified by the committee in its report. I should like to thank all noble Lords who contributed to it and who have spoken so thoughtfully in this debate.

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1.34 p.m.

Lord Brooke of Alverthorpe: My Lords, we have had an interesting debate on our report which was produced on an all-party basis; namely, where we seek to avoid dividing on party lines. That perhaps is the strength of the work that we undertake in the EU sub-committees. We have had an excellent maiden speech from the noble Baroness, Lady Noakes. I, too, add my congratulations on her brilliant contribution.

I thank the Minister for his reply. I sense from looking and listening to the whispers from my noble friends that there may still be some differing interpretations on facts between the Government and ourselves. I may be writing to the Minister on two or three of the issues. No doubt the Minister will be pleased to receive such a letter from us.

I should like to thank everyone who has participated in the debate. There has been an enthusiastic--almost evangelic at one stage--approach to the subject. It has raised some new issues worthy of deep consideration. The Government still have a good deal of work to do in a number of areas. We shall endeavour to ensure that the momentum is maintained. I conclude, as noble Lords will not wish to hear another long speech from me at this late time of the day.

On Question, Motion agreed to.

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