Examination of Witness (Questions 179
WEDNESDAY 23 FEBRUARY 2000
PROFESSOR J NORTON
179. Good afternoon, Professor Norton. Many
thanks indeed for coming in front of us today and also for being
one of the principal authors of what is becoming a bit of a standard
practice piece of work throughout Europe. We have been down at
Wilton Park over the last couple of days and I think you would
have been very gratified indeed to have heard the number of representatives
from overseas countries who have had access to this.
(Professor Norton) Thank you, my Lord
180. They were full of compliments, saying they
wished their government was producing something similar.
A. Thank you.
181. I think you have seen the questions that
the Committee is seeking to establish in due course. We are European
Union orientated, but with a topic like this there is no way in
which we can stay solely in Europe, we have to go global and some
of our inquiries are focused solely within the UK too. I am just
wondering if you had your time over again what you might leave
out of the report or, on reflection, what you have left out that
you now regret is not there and you would wish to put in?
A. It is an interesting question, my Lord Chairman.
I was thinking about that and I think my conclusion was that I
would have been much tougher on the need to transform government
services not just in the use of technology. What I feel is missing
in the approach of government is an understanding of the way in
which the tools of e-commerce transform the processes of government
themselves. In the current two months from 1 February through
to 31 March I am doing 30 different public presentations on e-commerce
to business of various sizes. I am at pains to stress to them
that much small business in the UK and large business thinks of
e-commerce only as a way of taking cost out of the existing way
they do business. That is useful but not sufficient. The real
prize is changing the nature of the business itself, the business
model, and that is equally applicable to public service delivery.
I think I and my colleagues underestimated in the report the extent
to which Government's role as an exemplar is crucial both in terms
of its purchasing, which approaches five per cent of GDP, and
in its service delivery, which touches every citizen in this country.
If I may tell the Committee a small anecdote. As part of this
I felt it was very important to visit the different areas of the
UK. I was at a very helpful meeting in Cardiff where a gentleman
was, shall we say, politely rude to me. He said, "What on
earth do you know about this coming down from London? Why should
I worry about this? If the Government were really concerned about
e-commerce it would be doing it itself and it is not, so don't
waste my time." There was a salutary message in there, my
Lord Chairman, and one which I have certainly subsequently taken
to heart. I think there are enormous opportunities throughout
government and in the public services to change the way services
are delivered, eg the way in the Health Service internal markets
operate and use the tools of e-commerce both to improve service
and at the same time to improve efficiency significantly. It is
an interesting double act and I think it can be achieved. I do
not think Government as a rule understands the need to change
182. The report figured in the debate that was
held in the Chamber last night on the Electronic Communications
Bill. I do not know if you have spotted that yet. The observation
was made that this forms part of the deluge of recommendations
from the PIU report email@example.com which I hope
the Minister can confirm are on track. You are saying that the
track targets were probably not sharp enough.
A. I think that is right. I think there is not
yetand I have talked with other colleagues in Government
and I think they are trying to address thisan understanding
throughout the public services of the need to change the business
model in order to take advantage of those things. I think it may
get caught in a sort of ghetto of cost-cutting.
183. If I could just continue with the rest
of the quote because I must pick up on this: "In this context
perhaps the Minister can also confirm the assessment of the better
regulation task force. The 60 different initiatives that are being
worked on for IT regulation could lead to 4,000 items of legislation.
Whether this flurry of activity will be beneficial in the context
of e-commerce only time will tell. Overall, we doubt it."
That was the Conservative Party spokesperson's concluding remarks.
A. I would hate to differ with him, my Lord
Chairman, but I would be hard pressed to find much in the PIU
report that requires new legislation at all and that was the main
thrust of our thesis. The Prime Minister was good enough to accept
that for the vast majority of this business it is better to find
effective means of industry self-regulation, given the speed of
progress in your Lordships' House and in the other place. It simply
cannot operate at the speed which is required in the markets versus
business and e-commerce. So I am puzzled by the comments of the
Opposition spokesman. I certainly do not accept them. Perhaps
he is getting his figures from the use of powers by ministers
under the e-Communications Bill to change the references to signatures,
for example, but I think he underestimates it as the figures I
have heard suggest tens of thousands of references in primary
legislation. It is not quite the same as he was suggesting in
184. I would not want to be unfair to him. They
were generally welcoming the Bill. I will certainly draw to his
attention your comments from the record. Could I just come back
to this point about the performance of the public service area
and your indication that you felt that the recommendations were
not sharp enough. Do you actually believe that had you set tougher
targets there is the capacity to deliver?
A. No, I do not. I think what one needs there,
my Lord Chairman, is a change in culture and a change in thinking.
I think merely applying a set of targets would not be the right
thing to do. I think there is a need for a fundamental change
in direction and thinking throughout the public service. It is
far more a question of culture. If we impose a straitjacket of
targets without affecting the culture I think we will do more
harm than good.
185. I think the Committee would welcome further
comment on that from you because they are very anxious to see
e-commerce developed. What do you think are the strengths and
weaknesses of the e-Europe document particularly when you compare
it with the paper that you have produced?
A. Very shortly after the report was published
I had the opportunity to visit Brussels with representatives of
UKREP and visit a number of key cabinets to talk them through
this and I found that experience interesting because I believe
the one thing that is missing in Brussels in particular, even
under the new Commission, is there is still no single point of
accountability for this programme. Perhaps one of the recommendations
that I believed in most passionately here was the one of appointing
a single minister, the e-minister backed by a team led by the
E-Envoy and have a single point of accountability. I look to Brussels
and I see Commissioner Liikanen with the information society and
telecommunications, I see Commissioner Bolkestein with the Single
Market, I see Commissioner Byrne with consumer affairs, I see
Commissioner Vitorino with the Brussels and Rome Conventions.
There is no single point which drives this together as a programme.
What I and my colleagues were seeking to do from the private sector
was introduce into government the concept of programme management.
So all of these have to come together, they have to progress together,
they have inter-dependencies and I took that idea to Brussels
and it actually met with significant favour in the cabinets
of the presidency and also Commissioner Liikanen, but there was
deep suspicion in some of the other cabinets. It was very
difficult for people to accept they could have a responsibility
without direct control of all the resources. So the discussion
tended to centre around how can I take the following people from
that other directorate into mine as then I can deliver. The world
is not like that, particularly not in e-commerce where it touches
almost every activity in the Commission. So the idea you might
have a single point of accountability and targets set but delivered
through a variety of channels seemed to be alien to a number of
people but not all. I think it is a good list, but I would like
to see some single person perhaps in the cabinet of Monsieur
Prodi actually held accountable for delivering this across the
Commission and for setting priorities. I think the aspirations
are fine. I am extremely worried about the delivery.
186. What about the aspirations in general terms,
do you think they are okay?
A. I think there are too many. I am sure people
argued that about this document as well so I am on weak ground,
my Lord Chairman. I would like to see clearer priorities, that
would be my wish. There is nothing in eEurope I would disagree
with, but I would set a series of priorities there for what could
be achieved quickly, what would have knock-on benefits for the
other activities and so on.
187. What would you see in general terms as
the main priorities?
A. That is a very good question.
188. It is probably unfair.
A. It is entirely reasonable. I think it is
essential to resolve the question of home versus host country
and I believe that this is not currently being addressed by the
process in Brussels. I think the lack of meeting of minds between
the Vitorino side and the Single Market side is significant. I
believe there is wishful thinking that the Brussels Convention
can be allowed to operate in the way it is currently drafted and
that the e-commerce folk, the ISPs, will not take exception to
it. I think that is very wishful thinking. In my own personal
viewand I stress I am not a lawyer, I am an engineerI
am not even sure the Brussels Convention is a sensible starting
point and there is a serious grief there. That would be my highest
priority. Behind that I would be looking at things like intellectual
property. Again, it is not just an issue for the Commission. You
were kind enough to say there are national issues too. I think
that goes right back to our schools. If we truly believe we are
developing a knowledge-based economy we must generate respect
for knowledge and the sensible use of knowledge, its protection,
payment for that knowledge and that is a cultural issue and not
just a legal issue. We need it here and I am sure we need it across
Europe where there are interesting cultural differences on that
particular point. May I say what I think we are doing well in
Europe as well?
189. Please do.
A. I take great pleasure in irritating my American
friends, many of them I have known for years, by pointing out
that I believe that Europe will overtake the US and, in particular,
the UK will in the next few years. We have set some ambitious
targets in here and that is because Europe is driving forward
the new two key technologies, interactive digital television where
the American standard is intellectually challenged, eg it does
not work and in third generation mobile telephony where again
we have a tremendous lead. There are structural problems for the
Americans in catching up with us on both of those issues. I believe
that on the technology side and introducing new people to this
market through television, for example, we have huge advantages.
I would like to balance the criticism with some positive comments.
Chairman: I will let some of my colleagues come
in now. Lord Cavendish?
Lord Cavendish of Furness
190. Professor Norton, it is very nice to hear
your enthusiasm. Can I just press you on one thing. Being tougher
on the targets of Government and taking on these things, is it
realistic? Having been around local government and a bit of central
government, I do not hold in contempt the slowness and cumbersomeness
of Whitehall, it serves a purpose and it is driven. Is it really
realistic to suppose that it can catch up on that level?
A. Perhaps I may give an example and to the
best of my knowledge this example is true, I have not researched
it in detail. I will come to the Health Service. The Government
last summer put £300 million-worth of networking technology
into the Health Service. One question I asked was what was it
going to be used for. I have a particular interest, because my
wife is blind, in eye hospitals. I have a close interest in Moorfields
Eye Hospital in London. I asked a leading consultant there, "Do
you use digital imaging?" Typically it is used when someone
has their eyes tested and they look at the image. I said, "Beyond
a first consultation where it is clearly sensible for people to
meet, what stops you having that digital image taken in Glasgow
for someone who lives in Scotland and looking at it over the Net?"
He gave me a very simple answer. He said, "My hospital will
not get paid unless the patient comes physically over the threshold."
That was the most graphic example of needing to re-engineer. So
that patient is needlessly brought down to London, which is inconvenient
to them and so on and it is simply because we have not got the
business model right. That is not being derogatory to people in
the Health Service, it is just a recognition that the models do
not reflect the tools and technologies which are now available.
191. Following on from that, you have attached
a great deal of importance in this exercise to prudent education.
It is more than going to the Treasury and saying, "We want
£800 million for education." Finally, if we came to
the conclusion that even in a consensus of all-party committees,
like ours, the minimum level of regulation which would be desirable
is not attainable do you think enough thought is given to the
alternative like voluntary taxation, or whatever it happens to
be? There is a possibility, is there not, that one might have
to say, "We will run up the white flag".
A. On the taxation issue, in particular, I happen
to think that is one of the areas where we have an advantage over
our American friends. There was an immense chuckle in Whitehall
when our American colleagues decided to join-up en masse with
VAT working parties in the OECD. Their problems on sales tax are
far more serious than ours. I believe that even the problems we
have on the collection of VAT are likely to be soluble within
the existing framework, purely by serendipity, because I believe
the market is going to require to be effective the use of new
intermediaries. Those intermediaries acting on behalf of consumers,
for example, may well be the avenue by which Her Majesty's Customs
& Excise collect that tax. I believe we can make that model
work. I do not believe that our American colleagues are in that
happy position. I am not sure if that properly answers your question.
Lord Cavendish of Furness: It goes some way,
192. I should first declare an interest, I am
the Chairman of IPR, I am a director of the Halifax and I am also
a director of a couple of e-commerce companies. I have two areas
of questions to ask you about, the first concerns this very interesting
phrase, "ghetto of cost cutting". What I have seen in
commercial life is that is where it all started with us too.
193. We broke through it because consumer demand
was so enormous and market demand was so enormous that we had
to embrace the new technologies, otherwise the profit motive would
have meant we would have been out of business. Do you think that
the culture change, which we have been forced to welcome in commercial
life, could be moved over into organisations such as the Health
A. It is clearly easy for me to say and quite
difficult for others to do, I will give you that caveat. Culture
depends on people and by hook or by crook a suitable infusion
of people from the private sector with those skills are requirednot
to, if you like, take over the Health Service, that would be ridiculousto
be able to inject those skills and that knowledge into the refashioning
of the Health Service, recognising the very important role of
those people who are there. I do not think those skills are going
to come by any other means other than injecting people with that
194. That is my point. I think that is true.
You answered our Chairman's question on priorities and you referred
to two priorities, first of all, to home versus host countries,
I agree with that, and, secondly, the intellectual property argument,
I agree with that. I wonder if I could ask you whether or not
you felt that there was a difference in the treatment of consumer
interests from one part of the EU to another and whether there
was really enough attention being paid to that? Would you put
that as your third priority or do you not think it is important
A. I think that is what underlies the whole
debate about home versus host, so it clearly is extremely important.
I think I would pay tribute to our own Consumers Association here
who, in my personal opinion, have been much more enlightened than
many of our colleagues in Europe. A potential way forward on this
is indeed some kind of cooperation between consumer associations
and across borders to give some form of redress, which is not
simply a recourse to law, in whatever jurisdiction or whatever
country. I think there has been some interesting pioneering done
by our Consumer Association in the United Kingdom which is worthy
of a lot wider attention in the rest of Europe.
195. Are there similar organisations in European
countries which could be united?
A. There are certainly similar organisations,
however, I do not believe their focus is similar. The way in which
the Consumers Association here, for example, has embraced the
service `Web Trader' is, to my knowledge, substantially ahead
of other European Consumers Associations.
196. Are there any further examples you can
A. No, I think I am at the limits of my knowledge,
I had better stay there.
Chairman: It is just useful.
197. I must declare an interest because I am
a non-executive Director of the Hospital Trust in Belfast. It
is not only about the Health Service it is about all of the departments.
Even if you do get private sector involvement or expertise it
seems to me that it would be very difficult to fund it because
the pressures of cost-cutting between the different specialties
and hospitals is so extreme. If you had somebody within Government
responsible for the extension of IT within all departments how
do you think this could be funded? It is obviously a colossal
amount of money. Even if you take a single department it would
have to be directed in such a way that when the money was distributed
it was ring-fencing. You only have to look at the Health Service
to know that when money does go to a particular trust or a particular
area it does tend to be used for certain other things like cutting
waiting lists, which is something topical.
A. First, in response to that, I would like
to accept your point that I was using the Health Service as a
lightening rod, I could apply it to many others. The major problem
that faces administrators is simply scale. I would look to carve
out a piece as a demonstration of the future, of what could be
achieved, and then operate it on a scale which is then manageable.
How that would be done in administration terms I do not know.
All my senses are that the business points that were made by Lord
Chadlington are that you do not tackle the whole thing at once,
you tackle a piece, you establish success, you establish peer
pressure that says, "We have succeeded in this, why are you
not?", then let it domino through the service.
198. Can you give me any examples as to what
extent different departments do use e-commerce, if you take road
building or transport or whatever within Government?
A. We would probably have to agree on the definition
of e-commerce because there is a great deal of to-ing and fro-ing,
you have things like electronic payments which has been used for
many years, are they e-commerce or not? My impression, and it
can only be thatwe did not audit that during this processis
that there are many small-scale activities going on which should
be welcomed and extended. Even where there were large-scale activities
going on they were not publicly recognised. If I can give an example,
this is a public domain story, as part of this process we held
some industry round tables, including industry, consumer groups,
and charity sectors, and so on. The first of those was actually
led by Lord Falconer and he was immediately criticised at the
start because the Government were not allowing discounts on tax
returns, and things like that, to encourage their use. He looked
at me and I looked at him and we said, "The Chancellor has
already made a statement to that effect." Nobody in the room
knew, not BT or IBM. Admittedly at that stage the Chancellor had
not said how much. The principle had been considered and yet nobody
knew. I think, perhaps, the administration is its own worst enemy
here in not making clear what it has already achieved and what
could be achieved.
Chairman: The same could work the other way,
of course. I remember a lot of people did not know when self-assessment
was coming in and that they were liable to interest charges.
199. Professor, can I take you away from the
realms of government and government organisations for a second
by saying that both the Commission and this current Government
have taken it upon themselves to give what I can only describe
as oomph to the development of e-commerce, the Web, the Internet,
the lot. Given that there is already exponential growth in these
areas in business and private hands are they wasting their money
and if not why not?
A. Perhaps I can explain the context from my
point of view. I am currently pounding the country on behalf of
the IOD talking to audiences about e-commerce. In the current
two months, beginning 1st February to 30th March, I think I am
doing thirty such meetings. My perception from those isand
that is the length and breadth of the whole of the United Kingdomwhat
we are seeing is the distribution polarising between those businesses
and small companies who are recognising what is happening and
are, at least, keen to take part. However, there are those who
are determined under no circumstances to recognise the threat,
I think that is a serious worry. The statistics which the department
of Trade and Industry produced last year for the adoption of e-commerce
by small business and micro business showed in micro business
we had around one third of the adoption of comparable US businesses,
an enormous challenge. My role in IOD is to find ways, and we
have some planned, to reach those people who are actively avoiding
addressing these issues. We cannot force them to adopt but we
can, in a sense, force them to confront the issue. That is actually
my particular role.