House of Commons
Wednesday 18 March 1998
The House met at half-past Nine o'clock
PRAYERS
[Madam Speaker in the Chair]
Internet
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Betts.]
9.34 am
Mr. Derek Wyatt (Sittingbourne and Sheppey): Before I open the debate, I should like to declare an interest. I hold two software consultancies--neither is internet-based--with Integrated Communication Projects and with Channel Dynamics.
A copy of my speech will be placed on the website www.iwks.com later this morning. Sadly, that is not my constituency website, which is in preparation.
Mr. Andrew Miller (Ellesmere Port and Neston):
It will be on the House of Commons website, as well.
Mr. Wyatt:
I am sure that it will be there soon.
The internet is the most important peacetime invention this century. We should consider four events that have taken place in this country and across the Atlantic since 1 May 1997. First, the general election results were posted first on the internet. Secondly, following the death of Diana, Princess of Wales, thousands of websites were set up as people around the globe shared their grief; indeed, the worldwide web became for three weeks the worldwide wake. Thirdly, in the Louise Woodward case, Judge Hiller Zobel put his judgment on the internet first. Fourthly, in the Monica Lewinsky affair, the Drudge Report website reported on the alleged problems in the White House before all other media.
The internet's ubiquity continues at a pace that has never been experienced by any industry. If we fail to understand that, and fail to educate and enable our citizens equally, we shall concede economic, social and political advantages to other countries--particularly to America--for ever.
I am pleased that we are holding this debate, and I wondered which Minister would reply to it. At first, I thought that it might be my right hon. Friend the Secretary of State for Culture, Media and Sport, because what travels on the internet is a software issue, and his responsibility. Music sales on the internet in 1997 topped $52 million, and book sales through the likes of amazon.com are set to reach $2.2 billion by 2002.
Then I thought that my right hon. Friend the Chancellor of the Duchy of Lancaster might reply, because he is charged with producing information legislation, which must be internet-friendly, and with delivering electronic services to our citizens, which is just as important. I then suspected that my right hon. Friend the Home Secretary
might reply, because encryption and pornography come under his wing, and he would be interested in Oracle's work with the American Department of Defense--but no.
I thought that my right hon. Friend the Chancellor of the Exchequer might be present. How people do business on the internet, and where, if at all, they pay taxes is crucial, and electronic commerce is vital. E-commerce business will be worth £20 billion in Europe by 2001. Moreover, and more worryingly, President Clinton wants no taxes on e-commerce. However, my right hon. Friend is understandably busy this week.
As we are putting together a national grid for learning via local internet providers, a university for industry, and lifelong learning initiatives, I thought that my right hon. Friend the Secretary of State for Education and Employment might be present, but I see him not.
Finally, I expected my right hon. Friend the Secretary of State for Social Security to be present. If she is to issue more than 15 million smartcards, which must be internet-friendly, it would be smarter for her to be present so that I could tell her about the new cards that use radio frequency technology. I do not see her.
The Minister for Science, Energy and Industry has been fielded, because the Department of Trade and Industry is in charge of regulation of the internet. I welcome him, and look forward to hearing his reply to the debate.
Mr. Ian Taylor (Esher and Walton):
I am listening with great interest to the list of Departments that could have taken responsibility. Under the previous Government, the issues that the hon. Gentleman raises were focused on by the Department of Trade and Industry, where I was a Minister. I am delighted that my successor is here today. The former Chancellor of the Duchy of Lancaster was responsible for the Government on-line system, which is continuing under this Government.
Mr. Wyatt:
I thank the hon. Gentleman for his intervention. I accept that, in this instance, he probably knows more about the subject than I do.
Mrs. Cheryl Gillan (Chesham and Amersham):
Will the hon. Gentleman give way?
Sadly, I do not think that it is possible to regulate the internet. It is possible to regulate the 250 United Kingdom internet service providers, but only if they are connected via a telephone line. Hughes Olivetti, Astra, Eutelsat, Motorola and Teledesic provide satellite services that can deliver the internet with their own return path. It is difficult to know how they will be regulated.
It is also not possible to make some non-European providers pay VAT. We have failed to regulate that, and have therefore failed to provide a level playing field for our own industry. Moreover, while books and newspapers are zero-rated for VAT, internet services, including electronic books, incur VAT at 17.5 per cent. Why is that? Incidentally, the converse is true of regulating broadcasts. As BT has admitted, many thousands of viewers now view UK television via a telephone line through their personal computers, which is actually illegal.
The internet may be hidden in cyberspace, but, as this overview demonstrates, it is all-pervasive. It may be hard to tie down, and extremely hard to tie down within
Government, but that is not an excuse for no action, and it is not an excuse for the existing scenario in Whitehall, which, frankly, is farcical. Because no single Department is in charge of the internet, it falls into the black hole of cyberspace. Few Cabinet Ministers understand it: many still have no e-mail addresses, and they clearly do not look regularly at their own departmental websites, which are woefully inadequate and make us look like bumbling amateurs.
The editorial in the February edition of a magazine that I know that we all read avidly, Government Computing, put it another way:
The internet is not new. As an academic and political tool, it is more than 30 years old. It has been rebooted over the past five years, for two reasons. A Briton, Tim Berners-Lee, working in the CERN laboratories in Switzerland, created the underlying protocol for the worldwide web as early as 1991. In any other country, he would be a folk hero, but we hardly know him in this country, and--sadly for us--he now works in the media laboratory at Harvard.
A year later, in 1992, Marc Andreessen, a mere student at the university of Illinois, helped to create Mosaic at the university's national centre for supercomputing applications. Mosaic is what we now call an internet browser. In 1994, Andreessen took his idea to Silicon Valley, and helped to start the company Netscape.
In 1995, a young hopeful by the name of Bill Gates said that the internet would not work; in 1995, a young hopeful by the name of Bill Gates told his senior vice-president of Multimedia, Rob Glasher, that the idea of putting radio stations on the internet was simply nuts. Today, Real Networks, Rob Glasher's company, is listed on the Nasdaq. It parks 650 radio stations--including, I am proud to say, Invicta in Kent--30 broadcast companies, and 35 record labels. Already, 40 million RealPlayers have been downloaded directly from its website. Indeed, as I talk, my speech, with pictures, could be seen across the world--not via cable television in the UK, because only cable viewers in the UK can watch, but via the internet. But hon. Members have guessed: we have no facilities for radio or for broadcasting Parliament on the internet.
Mr. John Maxton (Glasgow, Cathcart):
In fact, the BBC's website broadcasts Prime Minister's Question Time live.
Mr. Wyatt:
I am aware of that.
It is to the immense credit of Bill Gates and his brilliant team at Microsoft that he has travelled the road to Damascus and changed his mind about the internet. The pity is that his company now seeks to control every living form that breathes on it.
The UK statistics given by the Internet Service Providers Association are revealing. At the end of 1997, 1.5 million people had access to the internet at home, and 3 million had access to it at work. At the end of this year, the figures will be 2.7 million and 3.7 million respectively. At the end of 2000, they will be 4.2 million and 4.7 million respectively.
The UK market is growing at a rate of 80 per cent. annually. By the end of this year, when four separate companies--BSkyB, British Interactive Broadcasting, British Digital Broadcasting and Cable and Wireless--launch digital television in some form or other, more people in the UK will be on the internet than already watch the existing analogue satellite and cable channels. That social change has been almost totally ignored, especially by BDB, whose set-top box has no internet access.
The internet is what Andy Grove, the chief executive of Intel, called a 10X force for change. Intel was formed 26 years ago, when two men wrote a statement of intent a page and a half long and with it raised $2.3 million. Two businesses were born: Intel, which has become the fourth largest company in the world, and Venture Capital, which now accounts for 30 per cent. of all new businesses in California. The UK is the seventh largest economy in the world; California is the eighth largest. The venture capital market in the UK is worth less than 2 per cent. of our businesses, and much of that is composed of management buy-outs rather than start-up companies.
The internet makes it possible for a virtual venture capital market to develop. As the structure and ownership of the internet is still largely American, the Americans will hear of the opportunities first, and will invest first. As one who lobbied the Chancellor on a venture capital fund, I was pleased to hear in yesterday's Budget statement that £50 million had been allocated. That is a start.
We are late to the dance floor. The Singapore Government have already set about making sure that they lead the world by creating the first internet-based society. Likewise, the Norwegian Government have announced a desire to give their businesses the edge by ensuring that theirs is the first pan-European country to follow Singapore's example, through an initiative termed the public sector network--a joint venture by the Ministry of National Planning and Co-ordination and the Norwegian Association of Local and Regional Authorities.
If we are not careful, the internet will create the biggest brain drain, virtual or otherwise, that Europe has ever experienced. The consequence will be much higher levels of unemployment throughout Europe, especially in the UK.
"Making the red box electronic without looking at how ministers and their senior civil servants work is like putting satellite positioning on a buffalo cart."
Why is Whitehall not like Silicon Graphics? Silicon Graphics has about 22,000 employees, each of whom has a website. At the end of the day, wherever they are in the world, they leave a short note of their activities. While they are at play or asleep, a series of intelligent agents moves through the sites, reads them and decides who else in the company needs the information. When the decision has been made, the notes are deposited in the relevant website, so that, when a Silicon Graphics employee next logs on, he or she has a fast-track business opportunity. How do we even start to emulate that scenario?
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