Select Committee on European Union Written Evidence

Memorandum by Lord Puttnam of Queensgate

  1.  What needs to be done to create confidence and to stimulate e-commerce?

e-Commerce is being driven by large American corporates—eBay, and Yahoo to name just three. And, after a slow start, the Hollywood film studios are beginning to explore online opportunities in an extremely aggressive manner.

  As a result, it seems possible that the United States is set to reap the principal benefits of the new digital economy.

  If any of us outside the US are to have the remotest chance of competing on the world stage we need to create media powerhouses which have the financial muscle and the distribution capacity to take on the American giants who are already dominating the "virtual" world.

  For example, it is reported in the Financial Times of 29 July that, a subsidiary of the American online auction house eBay, is grossing £90,000 a day as opposed to QXL (the UK based auction company) which is grossing just £16,735 across the whole of Europe each day. The competitive advantage currently held by the Americans cannot be underestimated.

  This is not just about a business opportunity but also about exploiting our home-grown creativity. Outside the United States there exists an extraordinarily rich pool of creative talent—writers, directors, producers, technicians. But unless we have the means to exploit this talent pool and distribute their ideas, then both the talent and the ideas will be hoovered up by the US, with all the benefits accruing to their economy.

  The broader point should be clear; without companies the size of a merged Carlton-United, an enlarged Granada or some similar giant, we in Europe will not be able to compete for talent and ideas in the globalised, online marketplace. The size of the talent pool is relatively inelastic, so the cost of deploying it will surely rise as demand for it increases. And without companies of sufficient size we won't be able to get the finished product to market in a cost-effective manner. But at the same time, those companies must have the flexibility to respond quickly to opportunities to "turn on a sixpence" if the market place starts heading off in a new and unexpected direction—which it surely will from time to time.

2.  Does the European Commission's draft Action Plan "e-Europe: An Information Society for All" offer a realistic means of promoting e-commerce in the EU?

  My main interest in the e-Europe Action Plan naturally relates to the targets set out for education on page 7. The objectives and timetable set out are designed to ensure that teachers, pupils and schools alike all have access to the Internet and multi media resources. It seems to me to be of absolutely fundamental importance that these all have the ability and confidence to use these tools.

  3.  Unless we ensure that Europe's educational systems have the means to exploit the potential of ICT to transform the processes of teaching and learning then we cannot hope to compete in the globalised economy of the 21st century.

  For example, we must not see the impact of the computer on education as merely akin to the impact of the calculator on arithmetic; speeding up and simplifying the process, without offering any significant change to the process itself. If these technologies are sensitively and intelligently used, they have the potential to influence the development of the whole educational process—and with it, our collective futures.

4.  Will codes of conduct and co-regulation provide sufficient protection? Is there a case for intervention by national governments and the EU?

  I am not sufficiently qualified to answer on this. I believe that the work undertaken by KPMG for the 1996-97 European commission on regulation convergence provides a very useful summary of all the issues.

5.  Do the institutions of national governments, on the one hand, and the European Commission, the Council of Ministers and the European Parliament, on the other, function with sufficient flexibility and coherence to promote the EU's objectives in the field of e-commerce?

  The difficulty that confronts us is that many of the issues raised by e-commerce no longer conform to what has traditionally been the responsibility of quite separate government departments and EU institutions.

  We desperately need to find a way of making sure that solutions, once identified can be taken up and carried forward by all the relevant bodies. Only in this way will we be able to take advantage of their individual disciplines and skills so as to arrive at a solution that is correct, rather than one that is merely convenient. Businesses can accommodate this type of flexible structure but sadly government departments have, at least, in the past seemed unable to emulate them.

  We need to truly "modernise" the way we govern ourselves to adjust to the challenges and opportunities raised by the development of e-commerce. The recent Modernising Government White Paper offers some useful proposals in this respect, but we should not under-estimate the scale of the challenge that confronts us.

6.  Should existing EU institutions' internal structures be changed, or new ones created, to improve policy development and co-ordination?

  I am not qualified to answer.

7.  How can structural change be brought about fast enough to accommodate to the growth of e-commerce?

  See answer to question 1.

3 March 2000

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