HL Deb 14 March 2000 vol 610 cc1-28GC

Tuesday, 14th March 2000.

The Committee met at half past three of the clock.

[The Deputy Chairman of Committees (Lord Ampthill) in the Chair.]

The Deputy Chairman of Committees (Lord Ampthill)

Before I put the Question that the Title be postponed, it may be helpful to remind your Lordships of the procedure for today's Committee stage. Except in one important respect, our proceedings will be exactly as in a normal Committee of the Whole House. We shall go through the Bill clause by clause; noble Lords will speak standing; all noble Lords are free to attend and participate; and the proceedings will be recorded in Hansard.

The one difference is that the House has agreed that there shall be no Divisions in the Grand Committee. Any issue on which agreement cannot be reached should be considered again at the Report stage when, if necessary, a Division may be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.

I should explain what will happen if there is a Division in the Chamber while we are sitting. The Committee will adjourn as soon as the Division Bells are rung and will then resume after 10 minutes.

Title postponed.

Clause 1 [Register of approved providers]:

Baroness Buscombe moved Amendment No. 1: Page 1, line 18, leave out ("as he considers appropriate").

The noble Baroness said: I thank the Minister and his department for meeting me to discuss the Bill to consider in particular the government amendments which we shall be debating today. Amendments Nos. 1 to 4 are probing amendments designed to highlight the importance that we place upon the provision of a voluntary register of approved providers of cryptography support services, and the consultative procedures which we believe should be put in place to ensure that the register is effective as a workable accreditation scheme.

As with all aspects of this Bill, we are conscious of the fact that we are dealing with a continually evolving technology and it is therefore almost impossible to be sure here and now of covering all the possibilities which might arise in the medium to long term. This Bill reflects, albeit with a light touch—thank goodness, and thanks to the Conservative Party—a global watershed that is already changing all our lives and our thinking. That is why we must think on a global scale now, even if it is unrealistic to settle upon the right way to express this in law in this Bill. We believe that it is imperative that the Government turn to and consult with those businesses, bodies and persons interested in, and with the practical expertise in electronic communications, to assist them in guiding us forward.

With reference to Amendment No. 1 in particular, we firmly believe that it should not be a matter for the Secretary of State to define the limits of transparency of his own responsibilities. As it stands there need not be a proper consultative and inspection process, as the inspection and consultative procedures need not be defined. This situation is not, unfortunately, unique to this Bill. For example, the increasing power of the executive now mooted in the Financial Services Bill goes against both principles of natural justice, customs of common law and the advice of some of the most senior and respected members of the United Kingdom financial services industry. It is up to Parliament to hold Ministers to account and to define the proper standards of transparency to which Ministers should answer. We believe our amendment responds to that need.

With reference to Amendment No. 2, the Bill as it stands puts no obligation upon the Secretary of State to consult with the electronic communications industry, its representatives or the broader public. We have experienced through the passage of this Bill to date fundamental changes to its content; changes that have fortunately been agreed because the Government listened to business and those with practical expertise and experience, as well as to the Conservative Party, since its original draft.

The electronic communications industry has shown itself willing to support this process in terms of making available considerable expertise and financial resources. We have little doubt that a continuation of this consultative process would be welcomed. Most of the regulatory structures set up by the last Conservative government put consumer and industry consultation measures in place and there is no doubt that we have all benefited from this now seasoned partnership approach. I say "seasoned" as many of us are rather weary of hearing this Government talk about being in partnership with business as though this were a new concept. It is only new for new Labour.

Amendment No. 3 is designed to emphasise the need to ensure that the legislation and regime is developed and revised consistently in accordance with worldwide developments. We believe that the law must follow the markets and not vice versa. This Government have a high standard to live up to in this regard, given the range of nations which have adopted the free-market principles championed by the last Conservative administration.

The last government also established some of the core management and quality standards which have won international recognition in world markets; for example, competence-based management standards such as those championed by the Management Charter Initiative have been recognised as world class. The OECD has used several United Kingdom standards as part of the basis for its own best practice for global management which have been adopted by thousands of world-wide businesses.

The Government are introducing legislation into a fast-changing environment that is moving much more quickly than the thinking behind that legislation. A range of new electronic communications technologies will drive a pace of ever more rapid change. Therefore, we believe it is incumbent upon the Government to continually review the legislation in recognition of the pace of change. Furthermore, Amendment No. 4 simply amplifies the importance of accountability which should, we believe, be demonstrated by the delivery of an annual report.

The credibility of any regulatory scheme depends upon the degree of respect that it has among the major practitioners and consumers in that industry. A key factor underpinning the ability of the regulator to gain such respect is its knowledge of the key trends affecting industry development. By introducing the most effective and wide-ranging consultative structures and processes, the regulator will gain more respect. All the privatised industries possess such structures and they are used actively. The production of an annual report highlights that accountability. I beg to move.

The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville)

I am grateful to the noble Baroness for explaining the purpose of her amendments. I remind the Committee that we are debating the Government's second choice option, an option which we hope to hold in reserve because we hope that self-regulation will achieve the objectives of this part. Nevertheless, we need to ensure that the powers we hold in reserve are adequate should we need to use them.

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

I also think that the specifics of the second amendment, which provides for regular consultation on the operation of the register, are unnecessary. The drafting of the amendment means that it would be very narrowly focused. On a more general point of consultation, we are already committed to consulting on the approvals criteria. When consulting on the draft Bill last July the Government said that: The Government is committed to developing the approvals criteria in consultation with potential applicants for approval, and users of their services, and will consult formally on all such regulation. In the spirit of co-operation which usually characterises our debates, I am announcing that I intend to move amendments on Report to write this commitment onto the face of the Bill. That will take the consultation onto a broad rather than the narrow basis of consultation in this case, which would simply refer to consulting on allowing members of the public to inspect the contents of the register and securing that publicity is given to any withdrawals. That seems a very narrowly defined basis for the consultation. But I shall write that on to the face of the Bill.

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

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

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

Baroness Buscombe

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

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

In relation to the fourth amendment, it is regrettable that there is not going to be—as there are in all other regulatory schemes of this kin—the delivery of an annual report to show that there is proper accountability for the approval scheme. Despite that, I am pleased with the Minister's response, particularly in relation to the consultative measures which will be on the face of the Bill as we shall see at the next stage of its passage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 2 to 4 not moved.]

Clause 1 agreed to.

Clause 2 [Arrangement for the grant of approvals]:

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

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

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

3.45 p.m.

Lord Razzall

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

Lord Sainsbury of Turville

The scheme would, of course, be genuinely voluntary in that providers would only apply to be approved if they assessed the benefits of being approved as outweighing the costs. Also, the Bill does not provide for any specific legal consequences to flow from being approved by the scheme. Parties to transactions may, however, place a higher weight on electronic signatures backed by certificates issued by approved service providers. That decision would flow from the value that the market places on the approval, not from the statute. The scheme would be genuinely voluntary and providers would apply to be approved only if they assessed that the benefits of being approved outweighed the costs. The scheme's value comes from setting standards at appropriate levels and rigorously assessing compliance against them—it does not come from statutory privileges.

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

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

Lord Lucas

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

Lord Sainsbury of Turville

If subsequent legislation were in some way to make this more of a statutory or essential feature, then it would be appropriate to review it in that context. However, in the context of the voluntary scheme we are talking about here, it seems inappropriate.

On Question, amendment agreed to.

Baroness Buscombe moved Amendment No. 6:

Page 2, line 26, at end insert— ("() make provision for the recognition of approvals granted under other jurisdictions where the Secretary of State has agreed to recognise compatible registration procedures").

The noble Baroness said: I am sure we all agree that mutual recognition will facilitate the growth of international best practice; in which case, should a more attractive, high quality regime exist elsewhere in the world, businesses will not be deterred from setting up in the United Kingdom by our legislation. We would like to see the Government take a lead, indeed to be the vanguard in crafting the international accord that will come to promote the free market approach to this nascent industry, to benefit British companies and boost the prominence of British expertise in this area. International best practice will eventually supersede the Bill. In the meantime, there must be procedure for fast-track recognition of international standards and legislation of a suitably high quality, so that businesses based on other jurisdictions are not faced with the local burdens of re-registration when establishing operations in the United Kingdom. I beg to move.

The Earl of Erroll

I should like to say a few words, because this is a very sensible amendment. One point about the Internet is that it is global. There are no national boundaries and, as electronic documents become legally admissible, electronic signatures carry more weight. Where I disagree with the Minister in his previous reply is that, just because the scheme is voluntary it does not mean to say that it will not carry weight in the courts. If the voluntary scheme is successful, there is no need for a statutory scheme, so the voluntary scheme will have the weight of a statutory scheme in another country. It is therefore very naïve to suggest that there is a big difference between a voluntary scheme and a statutory scheme if you expect the voluntary scheme to succeed. This mutual recognition of standards at a national level will be essential to facilitate electronic commerce and contracts internationally.

Lord Sainsbury of Turville

While I wish to thank the noble Baroness for this amendment and for her helpful explanation, I am afraid that we are not disposed to accept it. The main point is that recognition of an approval in another jurisdiction does not have any direct legal consequences. In undertaking to recognise approvals in other jurisdictions, the Secretary of State would be solely involved in elaborate negotiations which would not necessarily benefit businesses or citizens. The recognition of certificates from other countries is best left to industry and the market. For business, the importance is that their certificates will be recognised by their counterparties and other certification service providers. The former is down to the reputation and standing of the certification service provider, while the latter depends on technical cross-certification arrangements being in place between the respective providers. Those are matters that are primarily for the market and international standards bodies rather than for government to determine. On that basis, perhaps the noble Baroness will withdraw this amendment.

Lord Lucas

I return again to the subject I raised before. If that is the case, will the noble Lord say now that it is not the Government's intention for their own operations, or in second legislation, to demand that it has to be certification on the UK register that allows a signature to be in electronic form. In other words, they are quite happy if they, for instance, allow electronic certification to be the case for transfer of property, that certification by a company under the US register will be just as satisfactory as one under the UK register. Otherwise we are imposing a system of multiple registration on companies, which will be immensely inefficient.

Lord Sainsbury of Turville

No decisions have yet been taken about what sort of signatures will be required for different services and there is no intention to exclude good quality foreign providers from this process. Therefore, I believe that this can be dealt with administratively.

The Earl of Erroll

Before the Minister sits down, I have probably misunderstood the whole thing. I thought that the purpose was eventually to make electronic documents admissible in the courts because signatures would be recognised and it would not be just between two companies. At some point there will be a row and it will be tested in the courts. Will every single service provider of certificates have to be tested for quality individually in each court case? I thought the whole idea was to have some sort of national certification, in general, of these service providers so that one would know which service providers one can trust on a more national level instead of having to test every single one in the courts which, it seems from what the Minister is saying, is going to happen.

Lord Sainsbury of Turville

The whole purpose of the clause is that there will be a national register of providers of cryptographic services which will have a kitemark that can be relied upon. The question of whether a particular electronic signature is valid before a court will have to be decided by that court. However, there will be a national register of cryptographic services to acceptable standards, and that is what the clause is about.

Baroness Buscombe

I believe that I have understood the Minister's response. However, I am concerned that it does not deal with the question of re-registration, to which noble Lords have referred. Without the proposed amendment there will necessarily be a situation in which there are multiple registrations when overseas companies establish operations in the United Kingdom. I shall read what the Minister said in Hansard and possibly return to this subject on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sainsbury of Turville moved Amendment No. 7: Page 2, line 27, leave Out from beginning to ("the") and insert ("The condition that must be fulfilled before an approval is granted to any person is that").

On Question, amendment agreed to.

Baroness Buscombe moved Amendment No. 8:

Page 3, leave out lines 23 to 25 and insert— ("() is a small enterprise or company as defined by the Secretary of State, shall be remunerated by the Secretary of State for the time committed to the registration process on a sliding scale which recognises the disproportionate burden placed by such procedures on the smallest businesses.").

The noble Baroness said: I rise to move Amendment No. 8 which reflects a serious need to consider the recognition of the disproportionate burden placed upon small businesses for lost time, increased costs and more red tape. Over the past three years the smallest businesses have faced a burden of red tape that has increased by two hours per week according to the Current Small Business Research Trust/National Westminster survey. Additional burdens cost those one to five-employee firms up to £1,700 per annum according to the accountancy profession.

It is interesting to note that the noble Lord, Lord Haskins, in his capacity as Chairman of the Government's Better Regulation Task Force, said only last week when launching the report of the task force that, The Government should recognise the additional burdens it is placing on employers and consider some form of financial support. The electronic communications revolution encourages many new businesses and, most importantly, those that do not have to put up with our regulatory burdens in order to survive; they can exist elsewhere. We want them to thrive here in the United Kingdom. We want the United Kingdom to remain ahead of its European partners in e-commerce. We thought that the Government were beginning to recognise the need for wealth creation as the source of prosperity for all. Increased burdens as proposed in the clause will only compromise that aim. I am compelled to add that the prospect of IR35 is bound to drive those businesses away from these shores altogether. I beg to move.

Lord Sainsbury of Turville

I am sure that the noble Baroness tables the amendment with the intention of helping small businesses, or at least making a speech about the problems that they face. However, despite what the noble Baroness says, as drafted the amendment would have bizarre consequences. It would have the effect that all those persons who applied to be approved would have to be paid by the Secretary of State for the efforts that they expended in registering rather than pay the Secretary of State fees consistent with the benefit that approval conferred. I would hope that the noble Baroness did not intend that effect. It is a normal principle that the cost of regulation should be borne by those who are being regulated, and I see no reason why part of these costs should be borne by the taxpayer.

The other point, however, concerns the fee structure for small firms. I assure the noble Baroness that both in any statutory scheme and in the T Scheme, which we hope will be introduced by industry, the fee structure will reflect the size of the business applying to be approved according to the cost of approving and monitoring businesses of various different sizes. On that basis perhaps the noble Baroness will withdraw her amendment.

4 p.m.

Baroness Buscombe

I did indeed intend what the proposed amendment sets out; that is, that this should to some extent relieve the burdens on small businesses; that small businesses should be recognised for the burdens that are placed upon them now, and that there should be remuneration for the extra time involved in carrying out the duties imposed under this proposed clause. However, it is clear that the Minister is not minded to accept this and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sainsbury of Turville moved Amendment No. 9:

Page 3, line 27, at end insert— ("(10) For the purposes of subsection (1) cryptography support services are provided in the United Kingdom if—

  1. (a) they are provided from premises in the United Kingdom
  2. (b) they are provided to a person who is in the United Kingdom when he makes use of the services; or
  3. (c) they are provided to a person who makes use of the services for the purposes of a business carried on in the United Kingdom or from premises in the United Kingdom.").

On Question, amendment agreed to.

Baroness Buscombe moved Amendment No. 10: Page 3, line 28, after ("person") insert ("or organisation").

The noble Baroness said: We believe that the Secretary of State should consider delegating this activity to an existing trade body. We have concerns about this clause as we believe it threatens the establishment of another regulator, with all the resulting problems of accountability. In the e-commerce area the case for an e-regulator has yet to be made. However, if such a regulator is to be appointed then a professional body or society is, we believe, just as capable of regulating the industry as any individual, and through its collective knowledge is likely to have a much higher level of understanding. A self-regulatory regime based on the industry's own trade body could work well.

It is one of the traits of this Government to mistrust an independent professional body or voluntary group and they would prefer to opt for external regulators whose staff often do not understand the issues involved. The extent to which it was necessary to modify the draft Bill after informed lobbying from the industry we believe shows that that is a misguided attitude. I beg to move.

Lord Sainsbury of Turville

I thank the noble Baroness for clarifying her intentions. I should however make it clear that the term "person" is defined by the Interpretation Act to include a body of persons corporate or unincorporate and "person" thus already covers organisations. There is therefore no need for this amendment and I hope the noble Baroness will be persuaded to withdraw it.

Baroness Buscombe

I am glad the Minister clarified that point, and on that basis I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2, as amended, agreed to.

Clause 3 [Delegation of approval functions]:

[Amendment No. 11 not moved.]

Clause 3 agreed to.

Clause 4 [Restrictions on disclosure of information]

Lord Sainsbury of Turville moved Amendment No. 12: Page 5, line 3, after ("prescribed") insert ("public").

The noble Lord said: These amendments to Clause 4 deal with a recommendation by the Select Committee on Delegated Powers and Deregulation, which saw the need for the power in subsection (2)(c), but considered that it was too widely drawn. Clause 4 protects regulatory information gathered under Part 1.

As with many similar provisions in other legislation, it provides that information may be disclosed only through certain gateways. The power in subsection (2)(c) allows the Secretary of State to add new gateways, which is necessary because we do not know exactly how the regulatory regime would develop if it were ever brought into force. For example, if banks applied to be approved, it would be desirable to permit the exchange of information with their regulator, the Financial Services Authority.

As the Bill stands, the Secretary of State could make regulations to permit disclosure for any functions which he prescribed. The amendments would narrow that down so that he could prescribe only public functions.

Perhaps I could mention another aspect of these gateways. The noble Lord, Lord Razzall, asked me how this clause will interact with the Data Protection Act. Both place restrictions on the disclosure of information and both permit disclosure subject to certain conditions being satisfied. They work in different ways, however, and the clause goes much wider than personal information since it also concerns information about business. These are complex issues and I will say something further about the interaction at Report stage. I beg to move.

On Question, amendment agreed to.

Lord Sainsbury of Turville moved Amendments Nos. 13 and 14:

Page 5, line 4, leave out ("prescribed").

Page 5, line 15, at end insert— ("() In subsection (2)(c) "public functions" includes any function conferred by or in accordance with any provision contained in or made under any enactment or Community legislation.").

On Question, amendments agreed to.

Clause 4, as amended, agreed to.

Clause 5 [Regulations under Part 1.]

Lord Sainsbury of Turville moved Amendment No. 15: Page 5, line 29, after ("instrument") insert (", which (except in the case of the initial regulations) shall be").

The noble Lord said: These amendments, which I anticipated at Second Reading, would meet the other two recommendations of the Select Committee on delegated powers and deregulation. They concern the degree of parliamentary control that would be exercised if the Government's preference for self-regulation could not be achieved and the Government then decided to implement the statutory regime in Part I.

Amendment No. 34 would mean that Part I could not be commenced unless each House had approved the commencement order. This amendment would write on the face of the Bill my honourable friend Patricia Hewitt's commitments in another place to return to Parliament before commencing Part I.

Amendments Nos. 15 and 16 are closely related as they would mean that the first time the Secretary of State exercised his regulation-making powers in Part 1 of the Bill, they would be subject to the affirmative resolution procedure. On subsequent occasions they would be subject to negative resolution procedure. Taken together, these amendments strike a sensible balance between ensuring parliamentary control over a decision to implement Part I and ensuring that, if the statutory approval scheme were to be implemented, it could be operated in a flexible and responsive way after its creation. I beg to move.

Lord Lucas

Can the Minister confirm my understanding that there are no regulation-making powers in this part which would be used in any circumstances other than a full-blown creation of a regulatory procedure? Can he further confirm that none of these powers would be used in any way to supplement or back up a voluntary scheme, and therefore appear rather earlier than we expect?

Lord Sainsbury of Turville

I think this has to be taken as a single part and therefore could not be used to back up a voluntary scheme.

On Question, amendment agreed to.

Lord Sainsbury of Turville moved Amendment No. 16:

Page 5, line 30, at end insert— ("() The initial regulations shall not be made unless a draft of them has been laid before Parliament and approved by a resolution of each House. ()in this section "the initial regulations" means the regulations made on the first occasion on which the Secretary of State exercises his powers to make regulations under this Part.").

On Question, amendment agreed to.

Clause 5, as amended, agreed to.

Clause 6 [Provision of cryptography support services.]

Lord Sainsbury of Turville moved Amendment No. 17: Page 6, line 6, leave out subsection (3).

On Question, amendment agreed to.

Clause 6, as amended, agreed to.

Clause 7 [Electronic signatures and related certificates]:

Lord Sainsbury of Turville moved Amendment No. 18: Page 6, line 17, after ("incorporated") insert ("into").

The noble Lord said: The three amendments to Clause 7 and the first amendment to Clause 8 simply correct the grammar. I beg to move.

Lord Lucas

I would be grateful if the noble Lord could explain Amendment No. 19 in rather more detail. I had always thought that the parliamentary draftsmen were the enemies of good grammar. They have certainly refused many amendments of mine that I thought improved the wording of statute. However, in this case I really cannot see what the effect of that is even on the grammar and I would be grateful for elucidation.

Lord Sainsbury of Turville

Where the Bill says, "an electronic signature incorporated", the amendment inserts the word "into", so that it reads incorporated into or logically associated with a particular electronic communication or particular electronic data and it just leaves out the word "with". It is correct, though not something that one would normally spot, to leave out the word "with" in that context.

Lord Razzall

On these grammatical amendments, I wonder whether this is an opportunity for me to raise two slightly more fundamental points on Clause 7, on which he indicated he would make a statement in Committee today.

First, there is what I would describe as the Microsoft point, which is, as I said at Second Reading, not necessarily a reason for rejecting it. The approach of Clause 7, as the Minister has indicated, is clearly one under which the 40,000 estimated references to writing in various statutes will be left to the appropriate Ministers—dare I say, civil servants—to deal with. That is the approach of Clause 7. It is the Microsoft argument and the argument of other computer companies that it would have been better to approach it the other way round, so that there is a general recognition that electronic signatures are substituted for writing wherever they appear in legislation, subject to a general carve-out. I believe the Minister has a very clear argument as to why the Government have taken this particular view and it would be helpful to the Committee if he were to explain it.

The second point is to ask for confirmation, also in relation to Clause 7. There has been a suggestion that Clause 7 does not comply with our obligations under the European directive with regard to electronic signatures. I know that the Minister disagrees with that view but it would be helpful if he could set out the Government's position on it.

Lord Sainsbury of Turville

We have made our position clear and the point which the noble Lord is really addressing relates to Clauses 7 and 8 together. In light of Parliament having laid down certain things in legislation there are some 40,000 references to documents written signed or delivered and so on. We should proceed by looking at these in detail rather than on a basis of saying that we shall automatically allow all those to be done electronically. That point was raised at Second Reading and is fundamental to the Bill. Indeed, we have thoroughly rehearsed the arguments for doing that.

I am also asked how Clause 7 implements Article 5 of the EU Electronic Signature Directive and perhaps I can cover that point. Article 5(1) of the directive concerns advanced electronic signatures being given the same legal effect as hand-written signatures. Clause 7 makes all electronic signatures admissible in UK courts and we do not, therefore, need to make explicit provision for advanced electronic signatures. We will, of course, in the context of orders made under Clause 8, need to ensure that the requirements of Article 5(1) are adhered to.

Article 5(2) of the Electronic Signature Directive is intended to ensure that any electronic signature, in other words even those that do not meet the standards of those considered advanced electronic signatures are not denied legal effect. Clearly, the approach taken in Clause 7 also implements this. In discussions with the Commission it has been noted that the proposed language in Clause 7 encompasses, and in some ways is broader than, the requirement for legal admissibility in Article 5(2) of the directive.

To complete the picture, Article 1 provides that the directive does not interfere with national or Community requirements of form regarding the use of documents; in other words, the directive is concerned with the admissibility of signatures, as in Clause 7, and does not deal with other barriers to the use of electronic means which this Bill deals with in Clause 8.

In summary, I am confident that we are implementing the requirements of the directive relating to the admissibility of signatures; indeed, we are going further.

On Question, amendment agreed to.

4.15 p.m.

Lord Sainsbury of Turville moved Amendment No. 19: Page 6, line 18, leave out ("with").

On Question, amendment agreed to.

[Amendment No. 20 not moved.]

Lord Sainsbury of Turville moved Amendment No. 21: Page 6, line 32, leave out second ("with").

On Question, amendment agreed to.

[Amendment No. 22 not moved.]

On Question, Whether Clause 7, as amended, shall stand part of the Bill?

Lord Lucas

This may be a convenient moment to raise some points upon which I touched at Second Reading; namely, proof of delivery and believability of signatures. I seek elucidation from the Minister as to how these matters are to be dealt with. One of the important things to know about a document is that it has been delivered. There are conventions as to when a letter has been delivered. What kinds of conventions does the Minister intend shall come into force as to the delivery of an electronic document? Is it delivered when it has left someone's PC, or does it have to be certified at a later stage in the network?

As to the believability of signatures, for example in the purchase or sale of a house there is a chain of people, each of whom is identifiable and believable. That makes the signature that is written believable to the person who must place reliance upon it. There is myself and a couple of solicitors at the end of the chain. At each point in the chain there is person-to-person recognition. That transmits the believability of the signature from one end of the chain to the other. How does the Minister envisage this will happen if it is merely an electronic process without any people evidently being involved in it? How can one place that kind of personal reliance on an electronic signature as representing real money and real people with whom one can deal at the end of the day?

Lord Sainsbury of Turville

There are two different issues here. I am grateful to the noble Lord for raising the question of delivery of documents. This is the kind of issue that is raised in a whole series of legislative measures. It makes the point exactly as to why one has to go through individual parts of the legislation and establish these facts rather than try simply to cut through the whole of this legislation by saying that electronic signatures are acceptable. We have to work through these matters and say that in certain cases some kind of proof of delivery must be given and in others not. That makes the case entirely for the way that we approach this Bill. I am grateful to the noble Lord for making that point.

As to authenticity and integrity, they are absolutely fundamental to the whole subject that we are debating here. On the one hand one has registration; on the other one has the certification by the cryptographic services. The one who certifies an individual is the relevant person in this case. The other is about whether that person, having put the signature into some kind of electronic communication, knows at the other end that there is integrity to it. These are exactly the sort of issues that certification and cryptographic service providers are there to address.

The Earl of Erroll

There is a big difference between sending out a document and receiving a document. If you have received a document which may have contractual materials in it, and it has an acceptable electronic signature from an approved and certified service provider who may also be providing cryptography services, you know you have a contract.

Sending out a document is a completely different matter, that of trying to prove that someone has received something. However, the two are totally different. It does not deny the blanket approach, saying that if you have received something that should be legally admissible, and it should be possible to use that in court in a blanket sense.

The other problem is sending something out and not knowing whether it has arrived. You may well not know. Recently a document took three days to reach me from America, having been held up on various servers. Proof of receipt from the point of view of the person sending is a different problem, but the other approach should be there. There should be blanket recognition that if you have received a document, the electronic signature should be acceptable for all documents that are otherwise acceptable in court, as an alternative to a written signature.

Lord Lucas

The question goes beyond what the noble Lord said. The noble Lord said that we agree with one another, that these are problems to be faced. However, I was hoping for some guidance from the Minister as to the way the Government are thinking these problems might be solved. Then we can understand in the course of considering this Bill that it makes proper provision for this to be done in an acceptable way. I would, therefore, be very grateful if the noble Lord could at least give a couple of examples of the sort of proof of delivery that the Government would consider acceptable in particular circumstances, and to refer again to the question of believability of signatures. If I receive a signature, and presumably it checks out, it is the signature of what? Of an electronic name and address. How do I make the connection to the person, so that I know the signature is that of a real person, rather than just an electronic identity which goes with a cryptographic signature?

We have been looking at this in Clause 8 in some detail. It is very important that there is a real person at the other end who can be sued if things go wrong. If you are transferring real property you only have the right to sue. In many circumstances you do not have the right to get your property back. It is therefore important that you know what is at the other end rather than simply that a signature is valid.

Taking that particular example, how do the Government imagine that chain of knowledge of the identity of people will be maintained? Do they think we will need a chain of solicitors to do it, which means that it will be impossible to run a totally electronic system to transfer property? Will we have to change the law of property in some way to make the position of the seller rather better than it is at the moment under a system which presumes there is this exchange of knowledge underlying the signature?

Lord Sainsbury of Turville

The noble Lord is simply reiterating the point, which is that in different circumstances there are very detailed regulations in our English law which cover exactly these issues. The question of when a document or message is said to have been delivered to a person is something that is laid down in great detail in legislation, and that is for very good reasons. Rather than simply saying that we should abandon all that legislation, we believe it is appropriate to take it subject by subject and look at the particular circumstances of each case so that these can be redefined in terms of electronic signatures. He referred to all the points that will have to be addressed as we go through the legislation outlining what we mean for delivery of this document in these particular circumstances; whether it is exchanging a house or whatever. These are precisely what need to be considered in detail and it seems impossible to produce a blanket situation to cover all those different circumstances.

The second issue is the whole nature of cryptographic services. Taking this as a process, there are three aspects to the question of electronic signatures. The first is to establish that those involved are who they say they are—a process that will have to take place in the certification procedure. The person providing the cryptographic services will then confirm their identity and provide a method of establishing that through a process of certification. The second process is to ensure that only that specific person logs into the machine—that is, someone else has not got hold of that electronic signature. The third process—and the purpose of cryptography—is to make certain that the signature in is not tampered with until it comes out at the other end.

This Bill is about the precise nature of cryptographic services and certification. It aims to ensure that the chain, from the originator establishing his or her identity through to the receiver of the electronic communication being able to check that identity by the use of the cryptographic keys and the certification provided by the cryptographic service is not broken. Assurance can thus be given that the person is indeed who he claims to be.

Clause 7, as amended, agreed to.

Lord Lucas moved Amendment No. 23: After Clause 7, insert the following new clause—


(".—(1) Any person may make an irrevocable declaration in writing to accept an electronic signature in all circumstances, or any class of circumstances, where legislation requires such signature to be in another form.

(2) A declaration under subsection (1) shall be valid for all purposes in the circumstances set out in the declaration.").

The noble Lord said: This amendment is not intended to be taken seriously as an addition to the text of the Bill, but offers an opportunity to discuss how we are to deal with what will be a long sequence of detailed and different provisions for the acceptance of electronic signatures in many thousands of different statutorily defined cases. It will be extremely difficult for the ordinary man in the street—or indeed the ordinary organisation—to know exactly where they are at any particular point in time, as to what statutory provisions have or have not been made with regard to the acceptance of electronic signatures.

I am here suggesting that an organisation—a county council or some switched-on city council—might say that it will accept anything in electronic form; that whatever the statute says it will accept an electronic signature. That way, it can run its business efficiently without worrying whether the specific regulations in a specific area have been complied with. It may decide that electronic signatures are good enough and that it will allow individuals to make the same decision so far as their own lives are concerned. It may give statutory force to such a decision, which may not be a sensible approach.

I should like to understand from the Minister how, as a matter of practicality, we are to deal with this fast and continuously changing scene and know where we are if we do not have something like this in the Bill. I beg to move.

The Earl of Erroll

That sounds like a sensible proposal. If we are not to have a system whereby electronic signatures are legally admissible as an alternative to written ones, for two parties physically to sign a piece of paper to confirm their agreement to accept each other's electronic signatures and for that to be binding sounds a very simple way to proceed in the interim. It may in fact speed things up and render a great deal of work by civil servants behind the scenes, trying to bring statute law into line, totally redundant because we will just get on with life as normal.

4.30 p.m.

Lord Sainsbury of Turville

I am very grateful to the noble Lord, Lord Lucas, for notifying me of his intention to pursue the point which he made on Second Reading. What he said follows on from his general approach to these issues. Perhaps I may clarify the complex legal picture surrounding requirements for signatures, and I hope that in the light of this, I shall be able to persuade him to withdraw his amendment.

First, I remind the Committee of a general principle of English law. The parties to any transaction should, in general, be able to decide how to carry out the transaction. Clearly both parties need to agree the terms, and there is the danger that one party might be in a position to impose his terms on the weaker party. Hence there are many exceptions to this principle, where specific requirements of form are specified in legislation or other instruments made under legislation. Updating such requirements for the electronic age is the subject of Clause 8, which we shall discuss next.

There are other transactions, generally where government are not a party, and when there is no specific piece of legislation specifying the form. In such cases, including, for example, the vast majority of contracts under English law, the parties to the transaction are free to decide how to carry it out. If they subsequently have a dispute and take it to court, the court will weigh the evidence presented to it. Clause 7, which deals with admissibility of electronic signatures, will give people much greater confidence in using electronic signatures in these cases. As is stated in paragraph 43 of the Explanatory Notes: Some businesses have contracted with each other about how they are to treat each other's electronic communications. Clause 7 does not cast any doubt on such arrangements. So people already have the freedom to choose to accept electronic signatures, or indeed unsigned electronic messages, from people they trust in specified circumstances. Many lawyers would argue that in the current absence of Clause 7, it is sensible to underpin such an understanding with a paper contract. The amendment would broaden this freedom by allowing a person to choose to make something akin to such a contract, but an open-ended one with the world at large or that part of the world satisfying a class of circumstances. I am not sure how many people would want to do this, but in any case the amendment would create other problems.

The amendment is limited to the ability to accept electronic signatures where there is a legislative requirement for the signature to be in another form. It would effectively allow parties to contract out of such a legislative requirement and would undoubtedly bring about great uncertainty. Furthermore, in many cases the barrier to accepting electronic means will be something else. Existing law has grown up over hundreds of years, mainly before e-mail, etc., was thought of. So there are many "accidental" barriers to doing things electronically—the need for a "document"; for something to be "posted"; or, in the case we were talking about, something to be "delivered". The Government intend to update those matters on a case-by-case basis, by using Clause 8. Providing the ability to accept electronic signatures across the board may not get us as far as the noble Lord, Lord Lucas, intends. However, broadening his amendment to cover other barriers to electronic means would cause the problems that we will come on to discuss in the debate on Clause 8 and what has become known as "carve-out".

The amendment may also have the effect of weakening the protection of citizens where existing legislation calls for paper-based signatures. It could have the effect of putting a person in a position to accept any type of electronic signatures whereas a subsequent Clause 8 order to allow electronic signatures to be used may well satisfy requirements that must be met with regard to the trust and security of the signatures which are used.

I hope that my assurances that people are free to choose to contract using electronic signatures in most cases and my preview of the other barriers to transacting electronically is enough to persuade the noble Lord, Lord Lucas, to withdraw his amendment.

Lord Lucas

I am grateful for the Minister's explanation, and of course I shall withdraw my amendment. But I would be grateful if the Minister could say, under the circumstances where we shall be faced with this progression of orders, how long the Government think it will take to get to the end of this process. There are many ministries and pieces of legislation to be looked at, and will entail a great deal of effort on behalf of the Civil Service. Is that something that is already timetabled into the current three-year plan, or is it something which is seen to extend beyond that?

Lord Sainsbury of Turville

We are concerned to see how this process can be speeded up, but by its very definition it is impossible to say, given the scale of this problem, how quickly that can be done, as we simply do not know all the detail that is required.

Lord Lucas

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 [Power to modify legislation]:

Lord Sainsbury of Turville moved Amendment No. 24: Page 8, line 29, at end insert ("be").

On Question amendment agreed to.

Lord Sainsbury of Turville moved Amendment No. 25:

Page 8, line 30, at end insert— ("() any such provision in relation to electronic communications or electronic storage the use of which is authorised otherwise than by an order under this section as corresponds to any provision falling within any of the preceding paragraphs that may be made where it is such an order that authorises the use of the communications or storage.").

The noble Lord said: In moving this amendment, I would also like to speak to Amendment No. 26.

These are both technical amendments to amplify the power contained in Clause 8.

Amendment No. 25 is intended to make sure that the clause works in the same way when an order facilitates electronic communication as when the order authorises electronic communication.

Clause 8 is designed to operate on a broad range of barriers to doing things electronically. In some cases there may be a clear statutory barrier, and in such a case the Clause 8 order would authorise electronic communication. But in other cases the law may be less clear cut. There may be room in existing legislation to argue that a statutory requirement could he met by using electronic means. In such cases the order could facilitate what was already authorised. The Government policy is to encourage a level playing field between electronic and traditional ways of doing things.

Where people find it possible to meet a statutory requirement using electronic means, because of the drafting of the original legislation they might have had to use electronic means in a rather roundabout way. In such cases a Clause 8 order could be used to provide a more efficient electronic process which could satisfy the statutory requirement.

Finally, many who have welcomed the Government's policy to remove barriers have urged that there should be consistency in the way different departments handle electronic communication. It will not always be possible to have complete consistency across the board, but arrangements will be made to encourage consistency where possible, and it is desirable to be able to include the facilitated cases as well as the authorised cases. There may also be cases where the existing legislation is quite explicit in authorising electronic communication, but again a Clause 8 order might be used to provide consistency.

I have spoken about electronic communication for ease of exposition, but the amendment will do exactly the same thing for electronic storage.

I will now explain Amendment No. 26. The Clause 8 power is capable of operating on both primary and secondary legislation. As it stands it is debatable whether Clause 8 could operate by modifying a power to make secondary legislation. This amendment would put it beyond doubt that it could. So, where the Secretary of State has an existing power to specify the form of such storage, which expressly or implicitly restricts the electronic option, the amended clause would allow him to modify the existing power to allow for electronic options. In some circumstances this may be more desirable than exercising the two powers concurrently or sequentially.

It may be helpful if I give a brief example. If the Secretary of State had power to make regulations in a piece of primary legislation, and that power stated that the written form of document may be prescribed by regulations, this amendment would allow the regulation-making power to be amended to allow the electronic alternative. Otherwise the power to allow the electronic alternative would derive from Clause 8 of the Bill, and would have to use this power concurrently with the power to make regulation in order to amend the regulations. This would be required every time to amend the regulations.

With this amendment a Clause 8 order could be made once to amend the primary legislation and that part could be used thereafter to amend the regulations with regard to the electronic option as and when necessary. This amendment would also pave the way for part of the new clause we are about to debate concerning conferring powers on the National Assembly for Wales. In some areas, the assembly will have a power to specify the form of some communicational storage but only Westminster, rather than the assembly, would usually be able to modify that power. Taking the amendments would allow the assembly to modify such a power subject to the safeguards in the new clause and in Clause 8. I beg to move.

Lord Lucas

I find it fascinating that the same brain which has such exquisite grammatical sensibility as to remove a redundant "with" earlier in the Bill should land Amendment No. 25 on us, which, after much study, I am only able to begin to understand because of the eloquence of the Minister's explanation. I still read it again, with very great difficulty, to know why this particular form has been chosen. I hope that some attention might be paid to render this into English before the Bill leaves us. It would certainly be helpful to any future user of the Bill.

I particularly find it very difficult to know how this wording fits with the wording at the beginning of subsection 4, which reads, containing any of the following provisions—(a) [any such] provision". It is very difficult to know how that works in logic let alone grammar, and I can see that the grammatical construction of what follows might mean what the Minister says it means but clearly it would be very helpful if it meant that in plain English.

Earl Erroll

I seem to remember there was a great deal of talk about trying to write our laws in clearer English and we debate that possibility from time to time. There is an excellent body called the Plain English Campaign which has been very good at writing all sorts of banking information and my credit card information into English which I can now understand. Would it be an idea if it looked at this?

Baroness Buscombe

I shall say a few brief words in defence of those who are drafting the Bill. From a legal standpoint it is extremely difficult to say what has to be said without it sometimes coming across as rather complex. It is only fair to make that point for those who are here today and, I am sure, find great difficulty in making legislation as clear as they can.

Lord Sainsbury of Turville

I can confirm that when I read this clause for the first time it did not strike me with an enormous, illuminating beam of light, but required a great amount of thought in order to understand it. It does what it is intended to do and I hope my explanation made that clear. However, I would not want to recommend it as a piece of prose.

Lord Lucas

Will the Minister at least promise me that he will ask his officials whether they might not see their way to render it into plain English, if such is possible, and I take my noble friend's strictures in that regard very seriously.

On Question, amendment agreed to.

Lord Sainsbury of Turville moved Amendment No. 25:

Page 8, line 30, at end insert— ("(any such provision in relation to electronic communications or electronic storage the use of which is authorised otherwise than by an order under this section as corresponds to any provision falling within any of the preceding paragraphs that may be made where it is such an order that authorises the use of the communications or storage.").

On Question, amendment agreed to.

Lord Sainsbury of Turville moved Amendment No. 26:

Page 9, line 4, at end insert— ("(8) In this section references to doing anything under the provisions of any enactment include references to doing it under the provisions of any subordinate legislation the power to make which is conferred by that enactment.").

On Question, amendment agreed to.

On Question, whether Clause 8, as amended, shall stand part of the Bill?

Lord Lucas

Following on our earlier discussions on the sort of things which will have to be tackled under Clause 8, I wonder whether we have let ourselves become too lax in the supervision which this House is going to place on the resulting orders. These could be quite deep and difficult matters, as the Minister pointed out. As I understand it, the general power in Clause 8 is that of the negative resolution, but there is a procedure to lay drafts before the House which are then approved by both Houses. Can the Minister give me some comfort as to the circumstances under which drafts would be laid, rather than leaving a final order to come before us in the negative procedure? Can we be sure that, in all cases where something fundamental is being tackled, we will have the opportunity to debate it as fully as is possible when it is only secondary legislation?

4.45 p.m.

Lord Sainsbury of Turville

The Delegated Powers and Deregulation Committee was happy with this matter on the basis that the affirmative procedure would be adopted for new issues on important subjects, but eventually when it became a matter of routine it would not be appropriate to follow that line.

Clause 8, as amended, agreed to.

Clause 9 [Section 8 orders]:

Lord Sainsbury of Turville moved Amendment No. 27: Page 9, line 6, at end insert ("and section (Modifications in relation to Welsh matters)(1))").

The noble Lord said: Amendments Nos. 27 to 29 are designed to ensure that the National Assembly for Wales can exercise the order-making power in Clause 8. Clause 9(7) already gives powers to Scottish Ministers. The principal amendment is Amendment No. 30, on which I should like to focus, the others being consequential amendments. The new clause is quite complex but I hope that, once I have explained its purpose, Members of the Committee will agree that it is desirable.

It is right that the Assembly should be able to use the order-making power in Clause 8 of the Bill to authorise or facilitate electronic communication in relation to functions which are exercisable by it. These functions may have been transferred to the assembly by means of a transfer of function order under the Government of Wales Act 1998 or via primary legislation. In essence the new clause would allow the assembly, with the consent of the Secretary of State, to make orders in any one of the circumstances set out in subsection (3).

First, the assembly could make an order under Clause 8 in relation to subordinate legislation or other powers for which the assembly was responsible by virtue of subsection (3)(a) to (c). For example, the assembly has power to make regulations under the Social Security Act 1990 to allocate grants under home energy efficiency schemes. It could, therefore, make an order under Clause 8 to provide for the electronic communication and storage of applications, works and purchase orders, and so on. Second, it could do so in relation to any notice, account, record or document sent by or to the assembly, or to or by any public bodies, subject to reform by the assembly, by virtue of subsection (3)(d). Finally, it could do so in relation to publication by the Assembly or by the public bodies under subsection (3)(e). The relevant public bodies are listed in Schedule 4 to the Government of Wales Act and include organisations such as the Welsh Development Agency, the Wales Tourist Board and the Ancient Monuments Board for Wales.

Subsection (4)(c) of the new clause allows the Secretary of State, with the consent of the assembly, to add to the list of bodies for which the assembly can make Section 8 orders in relation to subsection (3)(d) and (e); that is, the sending of notices, accounts and so on. I have written to the Chairman of the Select Committee on Delegated Powers and Deregulation to draw his attention to this new order-making power. In all other matters relating to Wales it would be for the appropriate Minister to make the order. There will, therefore, be no danger of anything being missed or Wales being left behind.

Finally, Amendment No. 32 would prevent the National Assembly from making any order under the Bill which would require a person to "escrow" any encryption key with another person. This is in line with our policy for the remainder of the UK. I beg to move.

On Question, amendment agreed to.

Lord Sainsbury of Turville moved Amendments Nos. 28 and 29:

Page 9, line 22, after ("(4)") insert ("and section (Modifications in relation to Welsh matters)(6)").

Page 9, line 36, leave out ("appropriate Minister") and insert ("person making the order").

On Question, amendments agreed to.

Clause 9, as amended, agreed to.

Lord Sainsbury of Turville moved Amendment No. 30: After Clause 9, insert the following new clause—


(".—(1) For the purposes of the exercise of the powers conferred by section 8 in relation to any matter the functions in respect of which are exercisable by the National Assembly for Wales, the appropriate Minister is the Secretary of State.

(2) Subject to the following provisions of this section, the powers conferred by section 8, so far as they fall within subsection (3), shall be exercisable by the National Assembly for Wales, as well as by the appropriate Minister.

(3) The powers conferred by section 8 fall within this subsection to the extent that they are exercisable in relation to—

  1. (a) the provisions of any subordinate legislation made by the National Assembly for Wales;
  2. (b) so much of any other subordinate legislation as makes provision the power to make which is exercisable by that Assembly;
  3. (c) any power under any enactment to make provision the power to make which is so exercisable;
  4. (d) the giving, sending or production of any notice, account, record or other document or of any information to or by a body mentioned in subsection (4); or
  5. (e) the publication of anything by a body mentioned in subsection (4).

(4) Those bodies are—

  1. (a) the National Assembly for Wales;
  2. (b) any body specified in Schedule 4 to the Government of Wales Act 1998 (Welsh public bodies subject to reform by that Assembly);
  3. (c) any other such body as may be specified for the purposes of this section by an order made by the Secretary of State with the consent of that Assembly.

(5) The National Assembly for Wales shall not make an order under section 8 except with the consent of the Secretary of State.

(6) Section 9(3) shall not apply to any order made under section 8 by the National Assembly for Wales.

(7) Nothing in this section shall confer any power on the National Assembly for Wales to modify any provision of the Government of Wales Act 1998.

(8) The power of the Secretary of State to make an order under subsection (4)(c)—

  1. (a) shall include power to make any such incidental, supplemental, consequential and transitional provision as he may think fit; and
  2. (b) shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.").

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 31: After Clause 9, insert the following new clause—


(".—(1) The Secretary of State may, by order made by statutory instrument, provide for the regulation of the use of electronic communications for direct marketing purposes.

(2) An order under subsection (1)—

  1. (a) may impose duties both on the persons using electronic communications for direct marketing purposes and on the persons providing the facilities enabling such use, and
  2. (b) shall be laid in draft before, and subject to approval by resolution of, each House of Parliament.").

The noble Lord said: Not so long ago the Government took very welcome action to deal with junk faxes. I am not quite clear whether that is yet in force, but I continue to receive such material and cannot identify anyone to advise me as to whom I should address my complaints. However, perhaps I have not been sufficiently diligent. I also receive a large quantity of junk e-mail, some of which might best be described as offensive, and certainly would be offensive if received by a minor.

It is now the law in the state of California that people sending out direct marketing by e-mail have to include markers in the title which will enable people to exclude it if they do not wish to receive it. Similar strictures are made on people providing facilities such as ISPs to ensure that anyone using their facilities to send out junk mail does so under the regulations of the state of California and not otherwise.

It seems to me that there is scope for doing something similar in our law. I shall not press too hard for the provision to be included in this Bill, but I would be grateful to know what the Government intend to do to spare us from this particular nuisance. I beg to move.

Lord Sainsbury of Turville

The new clause would enable the Government to introduce regulations with very wide-ranging effect on distance selling. I am not at all persuaded that we should go down that route. In general, the same laws should apply online as offline, and the Government are committed to a light touch approach to the regulation of electronic commerce.

People may have a concern about the whole question of Spam e-mail—the equivalent of junk mail. None of us likes to be inundated with e-mail we do not want, but we need to strike a balance between curbing such abuse and allowing the Internet to be used as a legitimate form of advertising. It is desirable to provide a degree of protection for consumers from a flood of unwanted e-mail, but in general business recipients should be able to look after themselves. The Government will regulate the sending of Spam e-mail to consumers through regulations implementing the Distance Selling Directive which we plan to bring into force in June this year. There is no evidence to show that a similar provision is needed for business-to-business communications, and I ask the noble Lord to withdraw this amendment.

Lord Lucas

I am grateful for the noble Lord's comments, which answer my question, and I am delighted to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 10 shall stand part of the Bill?

Lord Lucas

Under the question of Clause 10 stand part, perhaps I might raise a subject upon which I dwelt a little at Second Reading; that is, ASDL.

It is important when we have before us that rare thing—a Bill which enables us to look at telecommunications licences—to consider how we intend to allow for the provision of ASDL throughout the country. This must be done in a way which does not result in the social exclusion of large parts of the countryside, as it may if we are to rely on the current system of telecommunications licences. Again, amending this Bill may not be the best way to achieve that, but we ought at least to know, while we have this opportunity in front of us, that this is not the occasion on which we should be trying to do so because the Government have other plans for making sure that ASDL will be available at distances greater than three miles from BT main exchanges.

The obvious way of doing this is to carry it on the masts which already litter the countryside to provide mobile communications. If the ASDL reached them through what are mainly radio links, it could run out from them to neighbouring households who wish to pay for it. It is important, particularly as farming declines and probably will continue to decline over the long term as an employer, that we enable employment in the countryside and in remote areas which are reliant at the moment on hill farming. A crucial factor in being able to run a modern business, from Aberystwyth or the hills above, is communications. If you cannot get ASDL because you are ten miles from the nearest BT exchange, that part of the countryside is effectively going to be sterilised for business development. We need to understand now how the Government are planning to tackle this problem.

Lord Sainsbury of Turville

This is a matter which the Government take very seriously indeed, coming as it does at the heart of our plans to give everyone in the country access to these new technologies. The subject is vital, though not a matter for this particular Bill and there will be opportunities to come back to the subject over the next year. We hope then to be able to put forward some concrete ideas to deal with the issue. I should like to put on record that I am grateful to the noble Lord for raising it.

Clause 10 agreed to.

Clauses 11 and 12 agreed to.

Clause 13 [Prohibition on key escrow requirements]:

Lord Sainsbury of Turville moved Amendment No. 32: Page 13, line 29, after ("Ministers") insert (", on the National Assembly for Wales").

On Question, amendment agreed to.

Clause 13, as amended, agreed to.

Clause 14 agreed to.

Clause 15 [Short title, commencement, extent]:

Baroness Buscombe had given notice of her intention to move Amendment No. 33: Page 15, line 11, after ("appoint;") insert (";that day being not less than six months after the publication of the statutory instrument, during which period the Secretary of State shall consult businesses, bodies and persons likely to be interested in it").

The noble Baroness said: The Minister has already spoken this afternoon in relation to his intention to bring forward, on Report, an amendment which deals on the face of the Bill with the need for a broad, consultative approach to the provision of a register of approved providers of cryptographic services. In the light of his comments, I shall not move this amendment.

[Amendment No. 33 not moved.]

Lord Sainsbury of Turville moved Amendment No. 34:

Page 15, line 12, at end insert— ("() An order shall not be made for bringing any of Part I of this Act into force for any purpose unless a draft of the order has been laid before Parliament and approved by a resolution of each House.").

On Question, amendment agreed to.

Baroness Buscombe moved Amendment No. 35: Page 15, line 14, leave out ("five") and insert ("three").

The noble Baroness said: I rise to speak to Amendment No. 35. Because the technology and the marketplace are moving so rapidly, any regulations should be subject to an annual review. If the Government are unable effectively to oversee implementation of Part I and with the right safeguards in place on a voluntary basis, well within a three year period, they will have failed the industry and all who are interested in it. We should like to see the Government demonstrate their confidence in the sound and exciting development of the electronic communications environment and the ability of the e-commerce industry to self-regulate by reducing the prospect of a statutory scheme from five years to three. I beg to move.

Lord Sainsbury of Turville

I am grateful to the noble Baroness for setting out the reasoning behind her amendment. This issue is of course not new. It was raised during our Second Reading debate and in Committee in another place. I note the arguments for a reduction in the length of the period at the end of which Part I would be repealed. However, I remain convinced that five years is the most appropriate length of time. I need not reiterate the preference of the Government for self-regulation, nor our commitment to working with the Alliance for Electronic Business to help ensure that the T Scheme is a success. We are confident that this scheme can deliver but as I made clear during Second Reading, it would be foolish to assume that its success is guaranteed.

The market is immature and it is only right that we keep the possibility of introducing a statutory scheme in reserve at least for the medium term. The question is for how long the option should be retained for introducing a statutory scheme. We have good reason to choose five years as the sunset period. It is not a figure plucked at random. The AEB has estimated that the T Scheme will be operational in the third-quarter of this year. Allowing for some slippage, this could mean that the scheme is not fully operational until almost a year after Royal Assent. It may well take a year or so after that for the scheme to bed down, for sufficient service providers to seek and gain approval, for approved services providers to have sufficient customers and for any initial problems to have been ironed out.

We want to assess the T Scheme over a period of time once this bedding down period has taken place before making a considered judgment on whether the powers to set up a statutory scheme can lapse.

The amendment tabled by the noble Baroness, Lady Buscombe, would mean that we would have to take a decision on whether to implement a statutory scheme before we had given the T Scheme a chance to iron out any teething troubles. If there were initial problems the Government may come under pressure to introduce the statutory scheme, whereas with a longer period on which to assess the situation the problems may be satisfactorily addressed. On the other hand, if we ignore the early problems and, despite them, let the statutory powers lapse, then we may come to regret such a decision.

The Government's preference is to let the T Scheme and the market properly bed down. Then, as my honourable friend Patricia Hewitt made clear in another place: in 2004 we shall conduct an open review of how self-regulation is working". I hope that, in the light of this explanation, I have persuaded the noble Baroness to withdraw her amendment.


I am grateful to the Minister for his response, and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 agreed to.

Title agreed to.

Bill reported with amendments.

The Committee adjourned at two minutes past five o'clock.