HC Deb 05 March 1999 vol 326 cc928-9W
Mr. Coaker

To ask the Secretary of State for Trade and Industry what progress he has made in preparing legislation to promote electronic commerce. [75548]

Mr. Byers

The way we do business in the future is set to change dramatically. It is essential that Britain is at the forefront of these changes and building trust is crucial. The Government have set the ambitious goal of developing the UK as the world's best environment for electronic trading by 2002. I will shortly be appointing an e-envoy to push forward our strategy for achieving this. An important part of our strategy is the proposed legislation on Electronic Commerce, which I intend to present to Parliament later this session. I am publishing a consultation paper on the Bill today, and have placed copies in the Vote Office. I am determined to get this legislation right by developing it in consultation with industry and other interested parties, to provide a clear, consistent and predictable legal environment for business.

Developing trust on-line, building public confidence in "electronic signatures" and clarifying their legal status are essential if we are to promote electronic commerce. Our proposed legislation will do this. It will start removing the legal barriers to using electronic means, instead of pen and paper, in everyday dealings—for example between people and Government, between businesses and customers, or between companies and their shareholders. It will also enhance confidence in the technologies which people can use to ensure that others cannot read their credit card data when they shop on line and businesses can use to ensure that sensitive information is not being read by competitors. Encryption is vital to this as a way of supporting electronic signatures as well as protecting the confidentiality of documents.

However encryption poses a serious threat to the effectiveness of the agencies tasked with combating crime and threats to national security, who rely on legal access to both stored and communicated data. As, increasingly, such data become encrypted, they need access to the keys to unlock any material they lawfully obtain. We therefore intend to give those agencies legal powers to obtain encryption keys, under properly authorised procedures and on a case by case basis, wherever they are held. The powers will apply only to material which itself has been, or is being, obtained under lawful authority and will not extend the range of material to which agencies are allowed access. The procedures will contain strong safeguards.

Much of what the Government have proposed has been broadly welcomed. However, there has been much debate about key escrow and third party key recovery—essentially ways of storing confidentiality keys or of recovering encrypted data. They allow critical data to be recovered both for business and other users of encryption for themselves or in response to authorised requests from law enforcement agencies. However, industry has argued that making this a requirement under the licensing scheme could hinder the development of electronic commerce in the UK.

The Government have therefore decided to consult on the basis that this will not be a requirement for licensing. But law enforcement faces a serious problem. Government and industry have a common interest in fighting crime. The Prime Minister is therefore establishing a partnership with industry to identify ways of meeting law enforcement requirements while promoting the growth of electronic commerce. The Government are seeking ideas on how these dual objectives might be promoted via the licensing scheme or otherwise.

Topics on which we are seeking views also include: legal recognition of electronic communications, exactly how the voluntary licensing scheme run by OFTEL for providers of cryptographic services licensing will work, the liability of service providers towards their customers and others, other possible changes to legislation to promote electronic commerce and the way the law enforcement provisions will affect licensed providers, unlicensed providers and other people.

Taken together, the proposals in this paper, which will form the basis of our Electronic Commerce Bill, will give the UK the most attractive legal framework in the world for doing electronic business. The paper is available at:

http://www.dti.gov.uk/CII/elec/elec-com.html