Orders of the Day — Electronic Communications Bill

House of Commons, 25 January 2000.

Alan Duncan (Conservative, Rutland and Melton)

On a point of order, Madam Speaker. I notice, as will the House, that new clause 1 has not been selected. In no way do I challenge your ruling, Madam Speaker, or ask for an explanation because, by convention, no such explanation is provided. Given that the new clause would have covered an important part of the Bill having a significant bearing on interlocking legislation between here and the European Union, I seek your confirmation that the new clause as tabled would have fallen within the long title of the Bill.

Betty Boothroyd (Speaker, West Bromwich West)

I do not usually give explanations, but it was totally beyond the scope of the Bill.

Nick St Aubyn (Conservative, Guildford)

Further to that point of order, Madam Speaker. Will you confirm that no precedent is set in this instance, in that the proposed new clause was not considered because there is a draft European Union directive in circulation that conflicts with it?

Betty Boothroyd (Speaker, West Bromwich West)

Order. There will be no explanation of my selection of amendments. Either the hon. Member intends to move the motion or not. Is he moving the motion?

Nick St Aubyn (Conservative, Guildford)

I will be happy to move the motion, Madam Speaker. I believe that my hon. Friend will be here shortly. [Laughter.] I support the motion with him.

COUNTRY OF ORIGIN

Nick St Aubyn (Conservative, Guildford)

I beg to move, That the clause be read a Second time. This important new clause would have the effect of ensuring that taxation across borders is properly addressed by the Bill. More and more people are buying products on the internet from other countries. Where the value of a purchase is above a small threshold of about 28 ecus or £18, duty falls to be paid on it. When people buy products on the internet from a vendor in another country, their liability for duty may be made clear in the small type on the web page. Their payment by credit card, without accounting for duty, is received in the country of origin of the goods, which are then shipped. When the goods are delivered to the purchaser in this country, a claim is made by the person making the delivery or agents of the vendor to collect the duty. At that point, duty will have been paid by the importing agent of the company in the country of origin. There is no loss of revenue to the Exchequer but there is an immense problem for those making the delivery in collecting the money from the customer in the UK. 4.15 pm The result, according to industry sources and recent reports in the industry's specialist press, is that millions of pounds of duty is not being collected by those acting on behalf of vendors overseas. Vendors' agents are having to bear that cost and are doing so in the hope that the matter can be properly resolved. The Government have been approached on that issue, I understand, and asked whether they would consider raising the threshold below which no duty is levied. There is—in my view quite rightly—resistance to raising the threshold of about £18 because a much bigger loophole could be created and a great deal of revenue and customs duty that should be collected might be forgone. The onus is therefore on them—if they will not raise the threshold and expect that money to be collected—to ensure that people who purchase goods in this country have a proper mechanism for raising and paying that money.

Stephen Ladyman (Labour, South Thanet)

Will the hon. Gentleman give way?

Nick St Aubyn (Conservative, Guildford)

When I have explained the new clause fully. It says that a customer could not be made to pay duty unless he was made properly and clearly aware when purchasing the product that he may be liable to do so. Companies wishing to import goods to this country would find that no one would handle such an import unless he had a counter-indemnity from the supplier saying that he would recover the duty from that supplier. The onus to make it clear to customers in this country that they may be liable for duty would therefore be put back on the supplier. That seems to be the only practicable way by which the respective obligations of the supplier and the purchaser could be enforced through legislation in this country. If the Minister has an alternative means of tackling the mischief, the House will be keen to hear it this afternoon. If she has no alternative, will she please acknowledge that there is a real problem here? If the growth of e-commerce from one country to another is predicated on the fact that purchasers do not realise that there is a hidden charge for duty, that growth will be affected. E-commerce will get a poor reputation because customers who feel, as a matter of principle, that they should pay duties when that is asked of them and not try to evade them—as is happening in some cases—will think that they have been stung. Someone might purchase a pack of CDs at an advertised price equivalent to £30, which is a lot less than he would pay in the shops here, only to discover, when the goods come to his door, that he is liable for another £15 of duty. Clearly he would feel that the price was not quite as advertised and that he had been led up the garden path.

Andrew Miller (Labour, Ellesmere Port and Neston)

I apologise to the hon. Gentleman and the House as I have to go up to Committee in a moment. Specifically on CDs, how would he make the new clause work in the context of music that is delivered electronically? That method of delivery is becoming increasingly prevalent and, following mergers such as those announced in the past few days, it will become even more prevalent.

Nick St Aubyn (Conservative, Guildford)

The hon. Gentleman raises a good point. There are instances in which the collection of duty will be very difficult in any event. Indeed, one can imagine someone purchasing an expensive CD piece by piece to come within the £18 threshold; no single purchase would cross that threshold, which has been around for many years. I am grateful to him for showing, in another way, how the existing legislative framework is totally inadequate. The real mischief here—the real danger—is that customers will get the intelligence that buying on the net is full of risks, one of which is that they may be stung for unexpected duty. The other risk is that those who are currently building up, in the interests of a competitive market, the business of delivering these goods from one country to another will be deterred from doing so if they find that they have a mounting problem of bad debt when they pay duty to Customs and Excise and cannot recover it from the customers at that point. There are those providing the service now who are contemplating how to protect their position. They will work out ways in which they can recover the duty. In the end, if the problem grows to become just a little more severe than it is already—and we are all predicting a massive growth in the scale of this business—it will be the Exchequer that finds it is losing out. Therefore, it is incumbent upon the Government to accept the clause, accept that the principles behind it should be taken forward in another place and put, perhaps with better wording, into the body of the Bill. Alternatively, the Minister should assure the House that she understands the problems that are being raised this afternoon and come up with her own remedy in good time for another place to consider it.

Stephen Ladyman (Labour, South Thanet)

If my recollection is accurate, on Second Reading the hon. Gentleman argued that the Bill was far too complicated and needed to be much simpler, just based on what is now clause 7. Can he enlighten us as to why he wants to put this horrendously complex and unworkable piece of legislation into this Bill, which is clearly the wrong Bill for it?

Nick St Aubyn (Conservative, Guildford)

It has become evident to me that the growth of business-to-customer e-commerce will be jeopardised if a fundamental principle—that of showing that the taxation due on a purchase is clearly stated when someone makes the purchase—is not enforced at this stage; the entire business of e-commerce will rapidly be discredited. If we are passing a Bill making electronic signatures legal, we are presumably expecting that the quantity of this business will grow substantially. We do not want to see that business grow on a false premise that tax liabilities are not properly spelled out when such deals are confirmed.

Stephen Ladyman (Labour, South Thanet)

I am grateful to the hon. Member for giving way again. The point of commitment, if someone is buying something from abroad, will be at the point when they place their order. I can understand how the hon. Gentleman could impose this restriction on British businesses selling abroad, but how could he impose it on foreign businesses that we are buying from?

Nick St Aubyn (Conservative, Guildford)

I hope that I shall be forgiven if I did not explain the issue clearly enough. It is, I admit, by a backdoor route and by a transfer of responsibility; nevertheless, if the clause became law the onus on the vendor's agents would rapidly be transferred back on to the vendor himself or herself in the country of origin of the goods, because no one would be prepared to take goods into this country on behalf of a foreign supplier and find that they could not then collect the duty from the purchaser in this country. They would tell the vendor, "I must have a counter-indemnity for this." Otherwise, they would be very foolish. At that point the vendor would find, even though not subject to UK law, that it is very much in their interests to make sure that they properly display the liability to Customs and other levies in this country for goods purchased here. Otherwise, they will find that they, via their UK agents, become liable for the loss of revenue incurred from the failure to make clear to customers in this country a warning of what their liability will be.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I have some sympathy with the hon. Gentleman's intention, which is to promote electronic commerce. But I am concerned that he is just talking about goods exchanged through electronic communications. Is he proposing a different regime for when, for example, I contract to buy a book from Amazon.com than if I write off to a bookseller in New York and ask it to send me books? Is he suggesting that electronic communications should be treated differently from the other trade, which is already going on and growing as a natural feature of the globalisation of trade?

Nick St Aubyn (Conservative, Guildford)

So far as I am aware, there are no duties and levies on books, because we do not believe—at least, in our party and, I believe, in the Labour party; perhaps the Liberals are different these days—in a tax on learning. The awareness of internet trade means, of course, that the growth of conventional trade is brought along behind it, with the wind in its sails. People who opt for conventional methods of purchase from other parts of the world—because of the less convenient means of purchase—will presumably do so because they are aware of the existence of the new clause. If it brings about an awareness of liability to tax, which is what we want it to do, it will have done its job.

John Bercow (Conservative, Buckingham)

My hon. Friend is making a powerful argument. Is not the purpose of the new clause to avoid stealth taxes, and is it not that fact that has raised the hackles of the hon. Member for South Thanet (Dr. Ladyman)?

Nick St Aubyn (Conservative, Guildford)

As always, my hon. Friend has introduced an entirely new dimension to the debate. I think that, in this instance, the customs duty that the authorities seek to collect from the purchaser in this country could be described as another stealth tax. If the Bill is enacted without the protection of new clause 3 or a similar provision with the same good intention, many people in this country may conclude that the problem with buying through the internet is that the buyer is caught by a stealth tax. In this case the stealth tax is a customs duty, but time and again we see that international vendors do not make clear on the web page the liability of the customers in this country whom they are asking to buy from them. Given the technology that is available nowadays, it would be very simple to display a warning sign conveying to customers whose purchases amount to more than £18, or 28 ecu, that they will be liable for a tax. In fact, it would not be all that difficult for vendors to include a calculation of the tax: it would be good customer service, although the new clause does not require it. The law should not be too specific, and I know that we are all keen for the Bill to be technology-neutral, but citizens of this country have a fundamental right to be aware of the taxes for which they are liable. Passing a burden or liability on to the vendor's agents deals with the need for the vendor to display the message. In other instances in which business is done outside this country—there are instances in income and capital gains tax legislation—United Kingdom agents of overseas operators are made liable for taxation. I think the Minister, as a former Treasury Minister, will confirm that UK agents collecting rent for overseas property owners whose property is in this country may be made liable for the tax on that rent if it is not otherwise collected. Under this and earlier Governments, we have already endorsed the clear principle that agents of overseas operators may be made liable, in the full expectation that they will then require a counter-indemnity from their overseas counter party. We have enabled our legislation to extend further than United Kingdom citizens when the actions of overseas agents and operators affect those citizens. I am sure that Labour Members who speak today will confirm that they too are concerned about the mischief that the new clause seeks to correct. They may feel that it contains imperfections, and I would be the first to admit, as a Back Bencher without the departmental resources that the Minister has to hand, that it could be improved; but I ask them, as I have asked the Minister, to recognise the existence of that mischief and the need to deal with it before we spur the growth of this market—which the Bill will do—on the false premise that people can be sold goods without being shown the tax for which they are liable.

Alan Duncan (Conservative, Rutland and Melton)

The House should be grateful to my hon. Friend the Member for Guildford (Mr. St. Aubyn) for moving the new clause because it highlights an area of growing complication. The hon. Members for Ellesmere Port and Neston (Mr. Miller) and for South Thanet (Dr. Ladyman) have compared physical delivery of a product with what can now happen over the internet: supply of goods—perhaps sound or data—that have a commercial value, but are not wrapped or posted and so do not go through or over a border that is policed normally. Furthermore, the growth of the internet will lead to many more cross-border purchases between an individual and a company, as distinct from an individual buying from a local company that itself will enter a cross-border transaction. The new clause is essentially an attempt to introduce some consumer protection into e-commerce. Domestically, we either have an all-inclusive price—a price plus VAT—or a price saying that VAT has to be added. In commercial practice throughout the world—for example, well-established habits in shipping—something is sold either free on board, or with carriage, insurance and freight all to be paid for. Now we see the rise of a different category of trade that will not have the same clarity as conventional patterns of trade. Cross-border pricing habits and the contractual terms that govern them will not have the openness and clarity of traditional patterns. Therefore, the new clause is an attempt to introduce some clarity into e-commerce for the protection of the consumer. It calls for the consumer to be given the whole picture, wherever possible, before he is asked to enter a contract. Given the issues that I have explained, I ask the Minister to explain what her policy is in those difficult areas. I have broad sympathy with her as she tries to unravel the problem and to get to grips with it. None the less, the new clause highlights the problem and presents to the Minister a call for a clear explanation, so that I, the House and consumers will know where they stand in law.

Patricia Hewitt (Labour, Leicester West)

I was surprised to hear the explanation by the hon. Member for Guildford (Mr. St. Aubyn) of the new clause. I had thought that Conservative Members were against imposing new burdens on business, but the new clause would impose appalling burdens on British business, without securing any significant gains for British consumers. The new clause deals with who should be responsible for knowing what taxes are due in cross border e-commerce trade. The problem is that, in addition to imposing burdens on British companies that want to use electronic commerce to export their products and services, the new clause would severely damage the chances of achieving our objective of making the UK the best place in the world for commerce. As has been pointed out, the new clause discriminates against electronic commerce because it requires a vendor to disclose the purchaser's liability for tax before a contract is finalised and, if that is not done, the vendor or his agent to become liable for any undisclosed taxes. Even if that principle were sound—it goes too far—surely it should apply to all business, not only to business that is contracted through the medium of an electronic communication. The Bill seeks to get rid of barriers in existing law that discriminate against new technologies. We are not trying to impose new barriers that will inhibit the growth of electronic commerce.

Nick St Aubyn (Conservative, Guildford)

Why is it such a huge burden on a vendor who uses the electronic medium to ensure that, when someone buys something, a message splashes up on the screen saying, "Do you realise that you are liable for customs duty on this purchase? Please click on the box yes or no before you proceed." With electronic commerce, that is a light burden for any vendor. It is precisely why it is appropriate for the new clause to apply to electronic commerce. It would be harder to ensure that that sequence of questions was asked in a more conventional format.

Patricia Hewitt (Labour, Leicester West)

I find that point wholly unconvincing. If the hon. Gentleman's principle were sound, someone selling by mail order or by telephone to a consumer in another country would be equally able to say, in large letters, "You need to be aware as a consumer that you may be liable for taxes in your own country."

Nick St Aubyn (Conservative, Guildford)

Is the Minister suggesting that it is a bad idea to ask businesses to expose to customers their liability to tax?

Patricia Hewitt (Labour, Leicester West)

If the hon. Gentleman will allow me, I am coming to precisely that point. The issue we are considering is whether we should require vendors to disclose to a purchaser in a foreign country their liability to tax in their own country. The balance that we have to strike is between giving adequate information to consumers and imposing the burden on a vendor of having to warn customers in detail of the tax liabilities that they may face in their own countries under local rules. The European Union's distance selling directive will require that, prior to the conclusion of any distance contract, the consumer has to be provided with, among other things, the price of the goods or services, including all taxes and, where appropriate, delivery costs. Once that directive is in force, it will apply the underlying objective, which I think that the hon. Gentleman seeks to enforce, to all consumer contracts within the European Union. It will apply, in other words, to all contracts involving distance-selling means, not simply those that are concluded by means of electronic communication, as the hon. Gentleman is proposing. I think that that is absolutely right and that it goes far enough. The problem with new clause 3 is that it goes well beyond the scope of the distance selling directive, which is confined to the member states of the European Union, and imposes on United Kingdom vendors the requirement to explain to foreign customers outside the European Union the tax liabilities of those customers in their own country. Customers, particularly business customers from non-European Union countries, will normally be aware of their tax liabilities. In the European Union context, we are balancing the imposition of burdens on United Kingdom vendors selling to consumers in other European Union member states against the protection that we can rightly gain for British consumers when buying from vendors elsewhere in the European Union. New clause 3 would impose burdens on British businesses that are seeking to sell to consumers outside the European Union without in practice obtaining any new benefits for British consumers themselves. We want businesses to trade online. We want to get a million small and medium businesses trading online by no later than 2002 because of the enormous competitive advantage that they could gain. However, we do not want to require any British business that is trading online to be an expert on the value added tax, sales tax and duty laws in any non-European Union country that they might sell to, and then to make them liable if they get it wrong. Such a requirement would be a quite extraordinary burden on our businesses and would hardly encourage the development of electronic commerce.

Nick St Aubyn (Conservative, Guildford)

As the Minister well knows, I am not proposing that. However, will she explain why the requirement would be a burden only on United Kingdom vendors, and why the provisions of the new clause would not apply, for example, to a United States supplier to a United Kingdom consumer? A US supplier, because of the liability transferred from its UK agent, would have to disclose the UK purchaser's tax liability, which would be a benefit for the UK purchaser.

Patricia Hewitt (Labour, Leicester West)

The hon. Gentleman has misunderstood the effect of his own amendment. The provisions of new clause 3 would bite on British business. When this Parliament makes laws, those laws apply to those who are within our jurisdiction. We cannot pass a law that would require vendors in, for example, the United States—where the price in shops is exclusive of sales tax, and it is only when paying at the till that one discovers the amount of sales tax—who wish to sell to British consumers to start to price inclusively, as we tend to do in the UK. It would be impractical to try to impose that liability by means of the device of the vendor's agent. Many vendors in other countries simply would not bother to sell to British consumers. I agree with the hon. Member for Rutland and Melton about the need for transparency and clarity in pricing on websites. We are trying to encourage that by supporting codes of practice that can be agreed both in the European context and beyond. That approach is better than trying to legislate in a complex manner that would not achieve the desired ends.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

The Minister argues that one cannot expect every website in the world to be programmed with the duty rates for every country from Argentina to Uzbekistan, but are the codes of practice that she mentioned similar to those that exist already? They require websites to make it clear that consumers are liable to taxes in their own countries. How far has the Minister got towards establishing agreement at a global level that such warnings should be available?

Patricia Hewitt (Labour, Leicester West)

That is precisely what we are aiming to achieve, through the distance-selling directive in the European Union and, more generally, through the working party of the Organisation for Economic Co-operation and Development and other international forums. The hon. Member for Guildford referred to British consumers' liability for VAT and import duty on physical goods imported from outside the European Union. Such goods are liable to taxation on importation, according to their nature and value. Exceptions exist, however: for example, music downloaded on line may be bought from America but delivered digitally through the medium of the internet. In those circumstances, it would be regarded as having been taxed in the United States. The difficulty for British and other European businesses is that the same process does not operate the other way around. When a United Kingdom business sells online music to an American customer, it has to account for VAT at 17.5 per cent. The European Commission is especially keen to change the law to provide a level playing field for European businesses. We expect the Commission to bring forward detailed legislative proposals by April, and my hon. Friend the Paymaster General will respond to those proposals when they are published. However, if the new clause is pressed to a Division, I shall ask Labour Members to oppose it. It would discriminate against electronic commerce and therefore inhibit it, and it would impose unnecessary and undesirable red tape on British business.

Nick St Aubyn (Conservative, Guildford)

I find the Minister's reply cheap and disappointing. She tried to score some political points that were irrelevant to such a technical debate. The new clause does not require vendors to calculate purchasers' tax liability. The new clause simply states that the liability of the vendor shall be displayed for any duties … arising in the country of destination. It does not state that the amount has to be specified. If the warning were not displayed, the new clause would provide that the amount could not be claimed from the purchaser. That knocks the first of the Minister's arguments on the head. The Minister referred to an EU draft directive. I was sorry to see her behave as more of a little European than an internationalist on the matter. We are talking about an international business, involving people in the United States and in other non-EU countries. The idea that EU countries can create a fortress in which e-commerce can be conducted and which will keep the Yanks out is totally naive—especially in the context of e-commerce. I am very disappointed that the Minister chooses to wait for an EU directive. She should display more imagination and leadership in the matter. That is what we require from the Government, if this country is ever to become a centre for e-commerce.

Brian Cotter (Liberal Democrat, Weston-Super-Mare)

Does not the hon. Gentleman consider the European dimension to be important? Does he agree that the single currency would make intra-Community internet trading more vibrant?

Nick St Aubyn (Conservative, Guildford)

Time is short: we must not play with the hon. Gentleman's obsessions, or indulge him further. I am most concerned that the Minister dismisses the idea that we can do anything about a US-UK internet relationship. Much internet business comes from the US and it is vital that purchasers in this country have confidence in the processes according to which such sales are conducted. I totally reject the Minister's argument that the clause has no bearing on that matter, as that is precisely the matter that the new clause addresses. If US suppliers had to be told by their UK agents that they were liable for a tax that could not be collected from UK purchasers unless the purchasers' general liability for any such tax were clearly displayed, those UK agents would say, with one voice, that the suppliers should make that display clear on their screens. They would add that the suppliers should also furnish some form of indemnity—the system would not work without that. In the current environment, UK business will suffer from the Government's inaction. It is in the long-term interests of UK agents to compete for the business of US suppliers. Because of the competitive pressures and those long-term interests, they will have to bear a continuing loss of revenue. They will have to pay out duties to the Exchequer, which they will not be able to recover from UK customers because it will not have been displayed as a liability in the first place. US companies will pocket the money, but UK consumers will feel that they only just got away without being stung. The real sufferer will be UK business, as the Government have failed to pick up the challenge that the new clause represents. I am sorry that that argument has failed to penetrate the Minister's mind. That gives me little hope for the success of her e-commerce initiatives. In the circumstances, it would be wrong to press the new clause to a vote, but I assure the Minister that this vitally important matter will be raised again in another place ere long. I beg to ask leave to withdraw the motion. Motion and clause, by leave, withdrawn.

Alan Duncan (Conservative, Rutland and Melton)

I beg to move amendment No. 5, in page 2, line 7, at end insert— "(1A) In order to grant an approval the Secretary of State must be satisfied that that person— (a) will comply, in providing the services in respect of which he is approved, with such technical and other requirements as may be prescribed; (b) is a person in relation to whom such other requirements as may be prescribed are, and will continue to be, satisfied; (c) is, and will continue to be, able and willing to comply with any requirements that the Secretary of State is proposing to impose by means of conditions of the approval; and (d) is otherwise a fit and proper person to be approved in respect of those services. (1B) Regulations made by virtue of paragraph (a) or (b) of subsection (1A) may frame a requirement for the purposes of that subsection by reference to the opinion of a person specified in the regulations, or of a person chosen in a manner determined in accordance with the regulations.".

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this, it will be convenient to discuss the following amendments: No. 6, in page 2, line 8, after "arrangements", insert "for approval". No. 7, in page 2, leave out lines 12 and 13. No. 8, in page 2, leave out lines 27 to 42. No. 9, in page 2, line 44, after "conditions", insert— referenced above in subsection (2)(b)". No. 10, in page 3, line 12, leave out "(3)" and insert "(1A)".

Alan Duncan (Conservative, Rutland and Melton)

In effect, the amendments would rewrite clause 2. They would not change the clause's meaning, but would merely put it into better legislative language. It may help the House if I explain, very briefly, the origin of the amendments. All hon. Members will agree that deliberations on the Bill in Committee were constructive. No member of the Committee indulged in silly party politics, but everyone wanted to improve the Bill wherever possible. That followed Conservative Members' success in forcing publication of the draft Bill over the summer, and in arguing for and securing the removal of part III of that draft Bill. However, Conservative Members in the Committee argued their corner. The House will be grateful to the Minister for her rational approach to the debate. She said that she would examine some of the points that we made and consider some possible amendments for discussion on Report. To that end, I wrote to the Minister on 5 January, making four points which are the kernel of the amendments before the House today. She courteously wrote back to me on 17 January, essentially accepting three out of the four proposals, most of which have now been included in the Government amendments, which we shall come to later. Amendment No. 5, however, contains a proposal that the Minister did not accept, although I think it fair to say that she sympathised with what we said in Committee. We believe that the structure of the clause is very difficult to understand. The wording is such that readers of the legislation and interpreters of the language have to dart from one part of the clause to another to get the whole picture. In Committee, we moved an amendment to delete clause 2(5), which we felt to be broad-brush and meaningless. It was an example of nonsensical language—a nightmare for plaintiffs and defendants, although lawyers will make money if ever this part of the Bill is referred to in a legal case. In response to our amendment, the Minister said, quite reasonably, that she would look further at the wording of the subsections to see whether they could be simplified without reducing the necessary powers of the authority. Following our conversations, she advised me that parliamentary draftsmen had not come up with a solution, but maintained that our amendment did not quite achieve what we thought it would. However, I think that it does. The amendment would rewrite the clause. Instead of its current hotch-potch structure, we have explained the hurdles that those who wish to be registered as cryptography providers have to overcome so that they can be properly understood. We have introduced a sort of "gating" procedure, whereby anyone who wishes so to be registered can achieve one objective, then another, in succession, to the point where, clearly understood by everyone involved and by anyone interpreting the law, the end game can be reached. The order of our proposals follow a logical process. They establish what is to be proved; the required status of the applicants; the procedures to determine that status; the nature of the arrangements, including the power to impose conditions; the details of the conditions that can be imposed; the restriction on conditions that can be imposed, and the power to enforce one type of condition. They follow a logical progression so that the law, clearly understood, can be followed by anyone so applying. I hope that, even if the Minister cannot accept the amendment, she will admit that the clause is a bit of a mess. When the parliamentary draftsmen have a little more time on their hands, perhaps they can study it again so that, between us, we can make simple and clear law that will benefit everyone.

Patricia Hewitt (Labour, Leicester West)

As the hon. Member for Rutland and Melton (Mr. Duncan) has said, we had a valuable and constructive series of discussions in Committee. I think that the Bill, which had already been significantly improved through consultation, was further improved as a result. I undertook to consider whether we could simplify the clause while preserving the necessary powers of the approvals authority. I am grateful to the hon. Gentleman for tabling constructive amendments, designed to simplify the clause. They would reorder the clause and add some cross-references without changing its effect. However, whether one arrangement is clearer than another is a subjective judgment, and I doubt that parliamentary counsel would agree with the aspersions cast by the hon. Gentleman on the original drafting. I would like to consider further the way in which the amendments have been drafted, and to discuss further with parliamentary counsel whether a rearrangement of the clause, along the lines suggested by the hon. Gentleman, or in some other way, would help to clarify it. If we reach that conclusion, we shall table the necessary amendments in another place. I hope that, in the light of that undertaking, the hon. Gentleman will feel able to withdraw the amendment.

Alan Duncan (Conservative, Rutland and Melton)

It is always unsettling when sweet reason breaks out across the Floor of the House. However, on this unique occasion, that seems to have happened. Therefore, I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.

PROVISION OF CRYPTOGRAPHY SUPPORT SERVICES

Alan Duncan (Conservative, Rutland and Melton)

I beg to move amendment No. 11, in page 6, line 1, leave out subsection (2) and insert— (2) References in this Part to the provision of cryptography support services exclude the supply of computer hardware or software, or the right to use them, except where that supply is an integral part of cryptography support services supplied by the same provider.".

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this, it will be convenient to discuss the following: Government amendments Nos. 13 and 14.

Alan Duncan (Conservative, Rutland and Melton)

It would appear that the outbreak of sweet reason has hit the House once again, so the previous occasion was not unique. The amendment, once again, originated from this side of the House, and the Minister listened to the point that we were making. Our concern is that clause 6(2) is almost incomprehensible. I will not read it to the House, but anyone trying to interpret the contents of the Bill in future would have a great deal of difficulty. Amendment No. 11 would tidy up the clause and make it comprehensible. In Committee, the Minister undertook to consult ever-helpful parliamentary draftsmen further to discover whether the drafting of the clause could be simplified".—[Official Report, Standing Committee B, 14 December 1999; c. 54–5.] I recognise that the group contains two Government amendments that address exactly the same point, but in a slightly different way. In addition, the Government have the benefit of the advice of parliamentary draftsmen and the Minister's experts—advice which Opposition Members so often lack. When the moment comes, I may wish to withdraw my amendment, once I hear from the Minister exactly what the effect of the Government amendments will be. I expect them to be almost identical in effect to mine.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I, too, welcome the amendments, particularly Nos. 13 and 14. They deal with one of the areas in which we shared the concern of the hon. Member for Rutland and Melton (Mr. Duncan) in Committee. Not only was the clause confusing, but its logic was reversed. As we explored the clause in Committee, we discovered that the Government intended to ensure that the Bill referred to cryptography service providers and that hardware and software regulation should not be introduced unless that was a core part of the cryptography service. By including references to supply of hardware and software, the effect of the clause appeared to be reversed. Amendment No. 13 makes that exclusive rather than inclusive, which I think quite sensible. I shall not get into logical uses of "or" and "and", because we spent plenty of time on that in Committee. This is a deregulatory success. Amendment No. 13 adds two words; amendment No. 14 adds nine, but removes 21. By my inclusive or exclusive mathematics, I calculate that we have taken 10 words out of the Bill, which is a success in itself. However, I invite the Minister to consider whether she can go further and take out another six words. I refer to the phrase at the end of clause 6(2): not consisting in such a supply. Amendments Nos. 13 and 14 will get the clause broadly right; they make a lot of sense. But I query whether that phrase, hanging on at the end of the sentence, is really necessary. I invite the Minister to ensure that the Bill eventually has as few words as possible so that lawyers can make as little money as possible arguing about the significance of those that it does contain.

Patricia Hewitt (Labour, Leicester West)

As the hon. Member for Rutland and Melton (Mr. Duncan) said in moving his amendment, we had another very useful debate in Committee on subsection (2). As both he and the hon. Member for Sheffield, Hallam (Mr. Allan) have indicated, there was agreement across the Committee about the intention of the original clause. I said that I would reconsider the wording and have, as a result, come forward with amendments Nos. 13 and 14. Our amendments reinforce and clarify the purpose of the subsection, which is to explain that the supply of software and hardware is not included within the meaning of the cryptographic support service, unless the supply of the hardware or software is integral to the provision of the service. As the hon. Member for Rutland and Melton pointed out, the new wording proposed in the two Government amendments significantly and helpfully clarifies that extremely important subsection. 5 pm The hon. Member for Hallam asked why we cannot simply drop from the end of the subsection the words not consisting in such a supply". I asked my officials the same question when I was considering the amendments. If we abandoned those words, the problem is that we would end up with a completely circular definition of cryptography support services. I offer the House the helpful example that was provided for me by my officials—it relates to chocolates. If I were to say that references to the provision of chocolates do not include references to the supply of coffee creams, except where that is integral to the provision of the chocolates not consisting in such a supply, coffee creams would not be included unless they were supplied as part of a wider range. That is what we are doing in the measure, but if those crucial words at the end of subsection (2) were omitted, the lawyers would go round in circles. The clause, as redrafted by the two Government amendments, achieves its purpose in the simplest and most elegant form and with the fewest possible words. In the light of that explanation, I am sure that the hon. Member for Rutland and Melton will want to withdraw his amendment.

Alan Duncan (Conservative, Rutland and Melton)

I have been thinking about lots of things, but as the Minister has mentioned chocolates, perhaps, one day, I shall deliver her a box of chocolates by dramatically swinging through a window—as in the famous advert. The Minister's support, in principle, for our proposals is right. We accept that the Government's amendments meet the requirements set out in our amendment, and we support the Government' s amendments. I therefore beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Amendments made: No. 13, in page 6, line 2, after "service" insert "do not". No. 14, in page 6, line 3, leave out from "hardware" to "of in line 4 and insert— except where the supply is integral to the provision".—[Ms Hewitt.]

ELECTRONIC SIGNATURES AND RELATED CERTIFICATES

Patricia Hewitt (Labour, Leicester West)

I beg to move amendment No. 1, in page 6, line 34, leave out "certified either" and insert— made a statement confirming that".

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this it will be convenient to discuss the following: Government amendments Nos. 2 and 3.

Patricia Hewitt (Labour, Leicester West)

During the second sitting of the Standing Committee, on 14 December, I indicated to hon. Members that, with the help of parliamentary counsel, I would re-examine the drafting of subsection (3). I have done so and thus have pleasure in introducing amendments Nos. 1, 2 and 3. In Committee, the debate on this subsection focused on the certification process, under which, in public key cryptography, the public key of an individual is certified as belonging to him or her. The debate also touched on the language that was used in the subsection, especially the use of the word "certified". The amendments will help to clarify both those matters. Amendment No. 1 seeks to replace the words "certified either" with the phrase made a statement confirming that". That phrase is slightly longer, but will make it clear that we are talking about what a person will want to establish, rather than about a specific technical process. By avoiding the use of the word "certified", we shall avoid the confusion, which we came across in Committee, between the IT industry's use of the words "certified" and "certificate", and the legal, or parliamentary draftsman's, use of the words. Amendments Nos. 2 and 3 address the other issue raised in Committee in amendment No. 51—whether evidence of the certification of a public key was admissible under clause 7. The wording in the new amendments will put the matter beyond doubt. Amendment No. 2 specifically includes the verification of the signature in those matters deemed to be admissible under subsection (3)(b). That verification is, of course, performed by the public key. Amendment No. 3 makes it clear that any one of those processes or procedures is admissible in its own right, as well as when it is combined with other facts. I hope that that explanation is entirely comprehensible to Opposition Members; I commend the amendments to the House.

Alan Duncan (Conservative, Rutland and Melton)

Once again, the Government amendments support the amendments that we tabled in Committee, about which I wrote to the Minister on 5 January. As she rightly points out, the main concern arises from the fact that, as we confront new technology and try to embody in law provisions that relate to it, we run out of accurate words to describe what the legislation is supposed to mean. As the reports of the Standing Committee show, our concern is that the word "certified" became ambiguous as it was used through the Bill, and hence legally unclear. We wanted an alternative phrase or verb to replace the word "certified" in the clause so that that ambiguity could be removed. At one point, I discussed with the Minister the use of the word "validated". However, I accept that the phrasing of the amendments covers what we meant by "validated", or the meaning that we wanted to be attributed to "certified". We support the amendment; it achieves what we asked the Minister for. I hope that it will receive the support of both sides of the House. Amendment agreed to. Amendments made: No. 2, in page 6, line 36, leave out the means of producing or communicating and insert— a means of producing, communicating or verifying". No. 3, in page 6, line 38, leave out "as" and insert— is (either alone or in combination with other factors)".—[Ms Hewitt.]

PROHIBITION ON KEY ESCROW REQUIREMENTS

Alan Duncan (Conservative, Rutland and Melton)

I beg to move amendment No. 12, in page 13, line 37, leave out— deposit a key for electronic data with and insert render electronic data intelligible to the satisfaction of".

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this it will be convenient to discuss Government amendment No. 4.

Alan Duncan (Conservative, Rutland and Melton)

The amendments are crucial because of the debate that surrounded the origin of the Bill and the concerns of all those in the industry as to what the measure might entail. Those Members familiar with all the issues will know that, as people began to wrestle with the ramifications of e-trade and the revolution that is going on, they were anxious that the Government might demand that the key to the de-encryption of material be deposited with a third party. The debate on key escrow raged for some time. Foremost among the original proponents of key escrow was my hon. Friend the Member for Esher and Walton (Mr. Taylor). However, the debate has moved on—as has my hon. Friend, who has changed his mind because we have learned much more about the matter. All credit is due to him for that. It was thus crucial that key escrow should not be included in the Bill. There would be no power for the Government, or for some agency, to demand that the key—as between public and private—for the de-encryption of material could be deposited with a third party. However, we were concerned that key escrow might be introduced through the back door. We can accept that if someone is transmitting data—for example, a taxpayer who is filling in his tax return and sending it to the Inland Revenue—there must be some provision, and a reasonable expectation, that the data he is sending should be intelligible to the recipient. In the case of private information, some of that data might be encrypted—for good reasons. It would not be acceptable for the sender of that information to say, "I have encrypted the information, but don't worry it's all there. It's tough if all you get on your screen is hieroglyphics that you can't read—it's up to you to work out how to turn it into proper data, which can be read by anyone in the normal way." Therefore I quite understand that this part of the Bill places an obligation on the sender of information to send it in a form that can be properly deciphered and understood by the recipient; otherwise, staff at the Inland Revenue will find that everyone sends them hieroglyphics and says, "I am sure you could decipher it, if only you tried." However, the wording of clause 13(2)(b) looked a bit dodgy to us. It looked as though a power might suddenly be introduced, on the sly, enabling the Government to demand the deposit of a key. I accept that, if the information is intelligible to the recipient, they effectively have the key already. I also accept that, if they require, and can reasonably require, that information to be intelligible, if the key cannot be given they should be given a power to render that information intelligible. Therefore, I seek from the Minister an assurance that this is not key escrow through the back door—that the powers are very limited, and are confined to a reasonable process by which the receiver of information can establish the means of reading or deciphering the information that is being sent. We were worried that subsection (2)(b) was too broadly phrased, so the group of amendments before us contains one amendment that I have moved—I shall listen with interest to what the Minister says in response about the scope of these powers and obligations—and one tabled by the Minister, which achieves what we were asking for in subsection (2)(b). Everyone accepts that key escrow—the obligation to give to a third party the key to the deciphering of material—should not, and must not, be a power in the Bill. Therefore, I seek from the Minister an explanation of the meaning of the clause as it stands, and of Government amendment No. 4. We accept her amendment, but before deciding whether to withdraw ours, we are interested to hear what she has to say about the status of key escrow within the scope of the Bill.

Patricia Hewitt (Labour, Leicester West)

It will help if, before I address Government amendment No. 4 and amendment No. 12, I briefly remind the House of the reasoning that gave rise to clause 13, and especially subsection (2). Clause 13 puts into effect the policy that the Prime Minister has stated, with which the hon. Gentleman agrees—that no persons will directly or indirectly be required to store their encryption keys with a third party". Those are words that the Prime Minister used in Cambridge in September, when he launched the performance and innovation unit report on electronic commerce. We have honoured those words. As a consequence, we introduced a specific clause to the Bill. I believe that the clause has been welcomed both in the House and by business at large. The clause places a restriction on any conditions of an approval that might be made under part I, or regulations or orders made under any powers in any part of the Bill. No one can be required to deposit any encryption key—that protects the confidentiality of their information—with a third party. A key refers here to anything relating to electronic data which allows access to electronic data, such as a password, or allows the electronic data to be decrypted, such as a private key. The clause not only rules out a requirement for the physical deposit of a key, but prohibits a requirement for anything to be done that would have the effect of making a key available to another person. That would include the imposition of any key storage technology, which would allow someone else to recreate or gain access to one's key. Two special cases are outlined in subsections (2)(a) and (2)(b). They do not in any way limit the prohibition on key escrow, but they do make it clear that that prohibition does not preclude two common-sense requirements. 5.15 pm Clause 13(2)(b) does not reintroduce key escrow. Instead, it addresses the need to be able to insist on some alternative to key escrow, so that important information that has been encrypted remains accessible, even if the key is lost. It does so because orders made under clause 8 will enable information to be stored electronically, and we need to consider what requirements could be made for people to store information where they had opted not to store their encryption keys with another person.

Alan Duncan (Conservative, Rutland and Melton)

Who does the Minister envisage might be able to take advantage of that power under the order? Will it only be public bodies, or agencies of Government, or might it also be private corporations?

Patricia Hewitt (Labour, Leicester West)

We are dealing with situations that might arise, for instance, under orders made under clause 8, and in most cases those orders will, I think, concern other public bodies. However, let us take the situation where there is a statutory requirement to retain important records, such as records of rail safety or of nuclear power stations. If the order made under clause 8 would enable that information, where there is a statutory requirement to keep it, to be kept electronically, one must provide for the possibility that, in years to come, the key that would enable that information to be accessed and rendered intelligible would be lost. The computer that held the key might be destroyed, or the only individual who had the copy of the key might die. Under clause 13, we have prohibited the imposition, in a clause 8 order, of any requirement that the key to those data be stored with a third party. However, if the holder of the information does not choose to store the key with a third party, the clause 8 order can require him to take other steps—such as placing a second copy of the information in plain text in a bank vault. Some other security measure not involving mandatory key escrow would have to be taken, to protect future access to important data that had been encrypted. That is the point of clause 13(2)(b). Amendment No. 4 is a Government amendment that I tabled in order to meet the undertakings that I gave during the fourth sitting of the Committee, on 16 December. The amendment means that the arrangements permitted by clause 13(2)(b) relate to the information represented by the data rather than the data themselves. In other words, the requirement could be met by storing a paper copy of that information, or perhaps storing the information in a readable form on a disk, locked in a safe. In other words, there would be a range of alternatives to key escrow, from which the person holding the information could choose, in order to protect against the loss of a key or that key's becoming unusable. The amendment also confines the arrangements about accessibility to records that are provided for under a statute or subordinate legislation. That would include a paper record specified under other legislation, or electronic records covered by an order made under clause 8. It does not cover circumstances where there may be provisions about communicating data but no provision about keeping a record. I take the opportunity to clarify a related point, raised in Committee by the hon. Member for Guildford (Mr. St. Aubyn). He asked whether clause 8 could be used to impose electronic storage requirements where there was no current paper storage requirement. The answer is yes. That is reasonable because, as circumstances and processes change, it may well be sensible for people to be required to store electronic records where, in the past, there was a general understanding, but not necessarily a specific requirement, that they should store paper records. The Bill will afford flexibility, as people become accustomed to the electronic way of doing business. I hope that I can persuade the hon. Member for Rutland and Melton (Mr. Duncan) that amendment No. 12—although well intentioned—is unnecessary because the existing text addresses a perfectly common-sense need in a satisfactory way. Clause 13(2)(a) would allow an order under clause 8 to require the deposit of a key with the intended recipient of an electronic communication. That is the crucial point. It is only the intended recipient who must have the key. In other words, we are not dealing with key escrow which, by definition, involves giving a key to a third party. As the hon. Member for Rutland and Melton has said, if information were supplied in an encrypted and unintelligible form so that the intended recipient—the Inland Revenue or some other Government Department, for example—did not understand it, the communication, for all practical purposes, would have been frustrated, even though technically the individual might argue that the statutory requirement to provide the information might have been fulfilled. The Ministry of Agriculture, Fisheries and Food may want to provide that owners of abattoirs could communicate with the Ministry electronically. Because of the sensitivity of the information to be disclosed and the importance of the identity of the sender, the Ministry might insist that such communications were effected using a particular type of technology—perhaps the abattoir owner would use a smart card, or some hardware token. That might have the effect, or purpose, of transferring the encryption key on the smart card for those messages to the Ministry, so that the information could be read. Clearly, it would be odd if the Bill were not to allow such technology to be specified. I assure the hon. Member for Rutland and Melton that this is not key escrow. There is nothing sinister behind this measure. It is for the protection of the citizen that technologies sometimes may be specified in a clause 8 order that are sufficiently secure to protect the confidentiality and integrity of the information being communicated. The technology might involve encryption mechanisms where encryption keys—sometimes referred to as session keys—are shared between the counter-parties. Amendment No. 12 would have a similar effect. Since the intended recipient would need to be satisfied about how he was to render the data intelligible, the clause 8 order would have to address that need. It still would be possible to require that a person used a particular technology or went through a particular process; therefore the requirement might well be met in the most obvious way by the deposit of an encryption key with the intended recipient. I know that the hon. Member for Rutland and Melton wants to ensure that the drafting of the Bill is as simple as possible. However, in this case, the existing drafting is clearer than his amendment. On the basis of that explanation and my assurances on mandatory key escrow, I hope that the hon. Gentleman will feel able to withdraw his amendment.

Alan Duncan (Conservative, Rutland and Melton)

I am grateful to the Minister for her assurances, and I agree that the key words in the Bill are "intended recipient". On the basis of her assurances, I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Amendment made: No. 4, in page 13, line 42, leave out "of making the data" and insert— that the information contained in a record kept in pursuance of any provision made by or under any enactment or subordinate legislation becomes".—[Ms Hewitt.] Order for Third Reading read.

Patricia Hewitt (Labour, Leicester West)

I beg to move, That the Bill be now read the Third time. The Bill will help make the UK the best place in the world for e-commerce, and puts in place the right legal framework. It is fitting that this modernising Bill should be one of the first new laws of the 21st century. Just as this country led the world in the first industrial revolution, we are determined that we will be winners in the new knowledge-driven economy. The Bill will lay sound foundations for Britain to become a dynamic, knowledge-based economy. Bill Gates described the Bill as "the model for Europe". We plan, through the Bill, to be one of the first countries to implement the EU electronic signature directive, so that British firms can benefit from the emerging online single market. A few days ago, Intel announced a %150 million investment to establish a major server farm in the Thames valley to meet the growing need for internet access across Europe. That and many other such inward investments are confirming the UK's position as Europe's e-commerce hub. The Bill is the result of an extensive process of consultation with business and the IT industry.

Alan Duncan (Conservative, Rutland and Melton)

And us.

Patricia Hewitt (Labour, Leicester West)

There was some help on points of detail from the Opposition—particularly in Committee. The Government have made extensive changes to the policy inherited from the last Administration. This process of widespread consultation has resulted in a genuine partnership in this area between Government and industry. I hope to see many of the Bill's objectives being achieved by self-regulation, so that we will not need to commence part I. Part I is designed to build confidence in those offering cryptography services. Those services allow people to verify who has sent an electronic communication, or to keep commercial information or credit card details secret. The widespread availability of high-quality services to the public and to business will be crucial in building people's trust in doing business online, and allaying many people's fears of the new medium. I am working with the Alliance for Electronic Business, which has drawn up a self-regulatory approval scheme—known as the T scheme—that is designed to ensure minimum standards of quality and service. Our strong preference is for self-regulation, with the statutory powers in part I held in reserve in case self-regulation fails to deliver. I am confident that, if the Alliance for Electronic Business delivers what it is currently planning to deliver, we will not need to commence part 1. That is why these powers are subject to a sunset clause and will lapse if not used within five years. The Bill will allow people to place greater reliance on electronic signatures by making such signatures, and the processes through which they are created and certified, admissible as evidence in court. Clause 7 will enable the vast majority of contracts, where there is no specific statutory requirement as to their form, to be carried out electronically. There are many other cases—estimated to be as many as 40,000—often involving dealings with Government, where there are specific legal barriers to doing things electronically. Clause 8 will give the Government the power to sweep away the obstacles in existing laws that insist on the use of paper, postage and formalities such as sealing wherever it makes sense to do so, and to give people the electronic option. The paper option will remain for those who want it, but increasingly, people and businesses will want to take advantage of the speed and flexibility that electronic communication offers. We have set targets for delivering Government services online, and I have deposited a memorandum in the Library, giving more detail on how we intend to use this power. Finally, the Bill will improve the procedures for modifying telecommunications licences, which are increasingly outdated in a highly competitive marketplace. The Bill will modernise our legislative framework, so that the law can adapt flexibly to the extraordinary new opportunities that are opening up with electronic commerce. It is an enabling Bill which ensures that the law does not get in the way of new technology and new business. It is a Bill that has the overwhelming support of business, and does not divide us in the House, to which I commend it.

Alan Duncan (Conservative, Rutland and Melton)

We have always supported the principle of the Bill—in particular, the introduction of a proper framework of law for electronic signatures. Those of us who understand business are ready champions of the development of e-commerce. The Minister will admit that we have helped things on their way. There are issues and uncertainties which will need to be addressed, and this is not the end of the matter. As we look to EU directives, there will be many complicated areas to be studied and legislated upon, and cases to complement the Bill before us today. As the House knows, we do not want part I ever to be invoked. We would rather not have seen it in the Bill, because we want a regime of voluntary control to be introduced. I am aware that the Government want this to be the first Bill to receive Royal Assent in the new millennium. Thanks to us and the Minister, it will be. We forced its publication in draft form in the summer and, following the summer recess, we forced the removal of half its pages to make it smaller and better. We have been constructive throughout and are pleased to share in its improvement and in its progress. No single party can claim credit for the Bill. We are pleased to support it.

Brian Cotter (Liberal Democrat, Weston-Super-Mare)

We, too, welcome the Bill and the prospect of its early implementation. Unlike the hon. Member for Rutland and Melton (Mr. Duncan), I do not promise the Minister a box of chocolates, but perhaps a box of All Sorts with a few comments and plaudits here and there. Many people, including Liberal Democrats, have welcomed the concept of a light-touch Bill and we congratulate the Government on introducing one. However, along with others, I reiterate a concern that was expressed in Committee. When the Home Office makes its input into electronic communications, I hope that the Minister will, as she and the Department of Trade and Industry have promised, use a light touch rather than the heavy hand of bureaucracy. As with other Bills, the question of impact assessment has arisen, and the Minister will know that I am concerned about that. The matter was touched on in Committee when indicative costings were provided for the possible arrangements under part I. I do not want to argue strongly about the accuracy of the costs—after all, they were called indicative costs. For example, a figure of £30,000 or £50,000 was given for a medium-sized company. However, as I said in another debate, there is a feeling of dissatisfaction about impact assessments in this and other Bills. I am sure that we shall be interested to hear from the Alliance for Electronic Business, which will soon provide some costs. I should like to know when that will be. An important point was raised about part II. Departments need to examine outdated definitions, such as the words "writing or signature". On Second Reading and in Committee, it emerged that, as the Bill stands, it is up to individual Departments to update their own legislation as they see fit. That may lead to inconsistencies and confusion, so perhaps the Government should be more proactive. The Department of Trade and Industry should issue time targets and templates to ensure that Departments do what is required. I know that the Minister will consider it her duty to prod colleagues and generally to promote what the Bill stands for with all Departments. However, I appreciate that she is aware of the many problems that may be faced in order making under the Bill. Social exclusion is another important issue. The Government have stated that they are concerned to ensure that there is the widest possible access to the technologies. I applaud it when the Minister refers to IT for All, information and communication technologies learning centres, and other schemes. However, Liberal Democrats, like everyone else, are considering a changing scenario, with digital and other means being developed. I, like others, have heard about the Government initiative for the provision of low-cost computers for low-income families. How is that scheme going? Although the Minister may not be able to answer this afternoon—

Alan Haselhurst (Deputy Speaker, Saffron Walden)

Order. The hon. Gentleman must understand that, on Third Reading, he is limited to discussing the contents of the Bill. Even though he may think that other issues are connected with the Bill, he cannot raise them. He must talk about what is in the Bill.

Brian Cotter (Liberal Democrat, Weston-Super-Mare)

I stand corrected—thank you, Mr. Deputy Speaker. In conclusion, the Bill is important to ensure that we as a country address the issues of e-commerce. The Minister is aware of the points that I have made and other issues might be raised on another occasion. I hope that we can advance together to make the climate suitable for business—and small business, in particular—to conduct its affairs.

Nick St Aubyn (Conservative, Guildford)

I too wish the Bill well and congratulate the Minister on her handling of it. However, my hon. Friend the Member for Rutland and Melton (Mr. Duncan) ably assisted the Bill to reach this stage when he encouraged the removal of the inappropriate clauses that were originally in it. I express the wish that, in another place, some of the issues that have been debated and the two new clauses that could not be considered today will be taken up. If the Bill is to succeed, it must deal with the tax implications of cross-border trade. In its wider remit, it will not succeed unless that is done even if the undertakings that the Minister has given are taken on board by her colleagues in the Treasury and are dealt with in the next Finance Bill. Nor will it succeed in its objective of broadening e-commerce if the law of contract and the state in which the law applies have not been clarified. We have supported the Minister so much on the Bill because we congratulate her on her fights with the Lord Chancellor's Department and with the finance team on the issue of which country's law should apply to contracts. We are concerned by the passage of the Brussels convention and we urge her to stop any suggestion that it should apply to e-commerce. We are also worried by the idea that the country of destination should be invoked in the Financial Services and Markets Bill. Therefore, with her colleagues in other Departments, we hope that she will consider the implications of trying to change the way in which the law is applied. We believe that, almost without exception, the country of origin should be the basis on which cross-border trade is regulated. If we adopt that stance, we should do so as the United Kingdom legislature and not by following the lead from Brussels and Europe. We did not become the financial centre of Europe by following the lead from Brussels. We did that by following our own lead—deciding what we thought was best for the financial services industry. It is only by following our own sense of what is best for the e-commerce industry that we shall create the centre for e-commerce in Europe to which we all aspire. Before the Bill reaches the Lords, the Minister should consider adopting unilaterally the principle behind new clause 2. A report to the Select Committee by the Minister every year would do much to enhance her role and her negotiating power with other Departments. She would be able to tell them that she has to come to the House to defend the decisions and explain why, if they get it wrong, it will be to the detriment of the regulation of cryptography support services. She would be able to explain why new tax burdens, such as IR35, and new regulatory burdens, such as the temp-to-perm rules for temporary staff employment agencies, would add to the cost of developing e-commerce in this country. I know that that is an argument that the Minister supports and I hope that she wins it with her colleagues in the Government. That principle would also act as a spur to other Departments to implement the terms of the Bill when they try to reform and update other legislation. We were told that 40,000 pieces of legislation need updating to incorporate electronic signatures. However, there are no teeth in the Bill to ensure that the Minister's colleagues do their job to ensure that e-commerce can march ahead as fast as we all want it to.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

First, I congratulate the Minister for Small Business and E-Commerce on having accepted many of the amendments tabled in Committee. That Committee was one of the more useful that I have attended: there was genuine dialogue between both sides and Government Back Benchers chipped in—all too often that does not happen. In addition, we managed to create a relatively jargon-free environment. As a result, we have a clearer Bill at the end of the process than we had at the start of it. It has emerged clearly from Committee and Report that the legislative framework surrounding electronic communications is changing rapidly. The Bill has been referred to as the first Government legislation of the new millennium, but I wonder whether such issues will in future be dealt with by other means. For example, the Minister has referred to international agreements on taxation, which will probably be well outwith the powers of the UK Parliament. I should be interested to learn more about that dimension in the context of e-commerce and electronic communications. The Bill specifically covers the subject of industry self-regulation. The Minister referred to the T scheme, which will provide an interesting template for future progress. In Committee, it became apparent that industry self-regulation might be the only mechanism that can respond sufficiently quickly and with sufficient technical ability to achieve the objectives that we have set out. Finally, I repeat a point made by my hon. Friend the Member for Weston-super-Mare (Mr. Cotter). There are now two Home Office Ministers on the Treasury Bench—

Mike O'Brien (Labour, North Warwickshire)

Only one.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

Sorry—the Under-Secretary of State for Northern Ireland, used to be a Home Office Minister. The Liberal Democrats are concerned that, although the Bill represents one step forward, Home Office legislation to be considered later in the Session might represent a couple of steps in another direction. Crooks have always used whatever form of communication they can get their hands on, but we must ensure that we do not cut off our nose to spite our face and start blaming their medium of communication for the fact that crooks exist. The Minister for Small Business and E-Commerce wants to enhance e-commerce and does not want unnecessary restrictions imposed on it or business scared away by other domestic requirements, even those that are, quite properly, designed to further law and order. I am sure that she will enter future negotiations in that spirit, so that Britain becomes the place where server farms—a sort of farm that does not normally require subsidy—become one of this country's main import and domestic earnings providers. Question put and agreed to. Bill read the Third time, and passed.