The Trade and Industry Committee has agreed to the following Report:—

  1. On 23 July 1999, days before the House adjourned for the summer, the Department of Trade and Industry (DTI) published the draft Electronic Communications Bill, the latest stage in a process of public consultation about the Government's policy on the encryption and authentication of electronic data which now stretches back to June 1996.[1] The draft Bill is a successor to the DTI's March 1999 consultation document "Building Confidence in Electronic Commerce", which was the subject of our first Report into electronic commerce of this session.[2] The DTI replied to this Report at the same time as the draft Bill was published.[3]

2. We had decided earlier in July 1999 that, if a draft electronic commerce Bill were published, we would scrutinise it, following the recommendation of the Select Committee on Modernisation of the House of Commons of 1997 and drawing on our own experience of pre-legislative scrutiny of the draft Limited Liability Partnership Bill.[4] We did not invite any further written or oral evidence, having received and published a considerable volume of both with our two previous electronic commerce Reports.[5] We did, however, ask DTI a number of detailed questions about the draft Bill, which we have published with other relevant material as appendices to this Report. We were also in receipt of more than 80 responses to the draft Bill received by DTI. In the interest of brevity, we have not summarised the recent history of the Government's cryptography policy, the technical issues involved, the fierce debate generated by the proposals advanced by this and the previous Government in this area, and relevant international considerations, all of which are set out in our Seventh Report of this session.[6] We are again grateful for the expert advice and assistance afforded to us by our specialist adviser for this inquiry, Mr Peter Sommer, Research Fellow of the Computer Security Research Centre, London School of Economics.

Pre-Legislative Scrutiny

  3. In our Report into the draft Limited Liability Partnership Bill we reached a number of general conclusions about pre-legislative scrutiny by Select Committees which are reflected in this Report.[7] Again, rather than restrict ourselves to "questions of detail and transposition of policy intent into legislative form",[8] we have commented on the merits of the measures contained within the draft Bill and drawn attention to and reached conclusions about matters on which Ministers remain undecided. We were pleased to find that DTI has responded positively to several of our concerns about the ways in which draft legislation is published. In accordance with our suggestion, the draft Bill was published along with a helpful range of explanatory papers, including the reply to our first electronic commerce Report, an analysis of responses to the "Building Confidence in Electronic Commerce" consultation paper, and a draft regulatory impact assessment. Furthermore, following our recommendation, it was specifically stated in the draft Bill that responses would be copied to us, unless confidentiality was requested.

4. We were critical in our first Report on electronic commerce of the scanty analysis of responses to the March 1997 consultation paper published by DTI in April 1998. In response, DTI published a much fuller analysis of responses to the March 1999 consultation document, in July 1999. We welcome the timely publication of this more comprehensive analysis of responses, which has assisted scrutiny of the Government's recent changes in policy. We recommend that a full analysis of responses to the draft Bill be published in time for second reading.

5. There remain two aspects of pre-legislative scrutiny which we believe the Government could and should improve. The Select Committee on the Modernisation of the House of Commons noted in 1997 that "given the fairly strict time limits which would inevitably have to apply to pre-legislative scrutiny, departmentally-related committees would need to know well in advance if they were to be charged with such a task so that it could be fitted into their programmes".[9] We were told informally only in mid-July 1999 that the publication of a draft Bill on electronic commerce was being considered and as late as 15 July the then Minister for Small Firms, Trade and Industry was unable to give any guidance to the House about whether, and when, a draft Bill might be published.[10] Although, with the expertise we have acquired during our previous inquiries into electronic commerce we have been able to scrutinise the draft Electronic Communications Bill in the time available, in other circumstances Committees would be unacceptably disadvantaged by such a late and expedient decision to publish a complex piece of legislation in draft on the cusp of the summer recess. The DTI recorded with respect to the draft Limited Liability Partnership Bill that they had found this form of pre-legislative scrutiny to be "extremely valuable" and their belief that "the Bill, when it is formally introduced, will be significantly better than would otherwise be the case".[11] Draft legislation published with little or no notice, as a result of largely self-inflicted difficulties encountered in introducing Bills to Parliament, creates unnecessary obstacles to Committee scrutiny.

6. There remains a problem with the availability to interested parties of the responses to draft Bills. We drew heavily upon the responses received by DTI to the "Building Confidence in Electronic Commerce" proposals when preparing our first Report on electronic commerce, but these can be consulted only on application to the DTI's library. We also had sight of the responses to the draft Bill and DTI has stated that these "may also be shared with others, or published by Ministers, or placed in the Libraries of the Houses of Parliament".[12] We believe it is essential that non-confidential responses to the draft Bill, and a list of those respondents requesting confidentiality, are made readily available to Parliament and other interested parties, including electronically, to assist the process of scrutiny after the Bill is presented.

Rationale

  7. We concluded our Report on the "Building Confidence in Electronic Commerce" consultation paper by questioning the rationale for an electronic commerce Bill because a number of the measures proposed for inclusion in a Bill did not seem to us to be concerned with promoting electronic commerce.[13] Some respondents to the draft Bill reiterated this point, particularly in relation to part III, which deals with law enforcement issues, and part IV, which is concerned with the regulation of telecommunications firms. There is widespread support for legislation to clarify the admissibility of electronic signatures in legal proceedings and to enable the definitions of words such as "writing" and "signature" in law to be updated to take account of electronic communications. We consider the merits of the measures proposed in the draft Bill in detail later, but we are persuaded that there is a need for a Bill to sweep away existing legislative barriers to electronic commerce. We consider it imperative that such a Bill is presented during the 1999/2000 session of Parliament, not least because further delay would make the Government's objective for the UK to be the world's best environment for electronic trading by 2002 even more difficult to achieve.

2   Trade and Industry Committee, Seventh Report, 1998/99, "Building Confidence in Electronic Commerce": The Government's Proposals, HC187 (hereafter HC187) Back

3   Cm4417 pp3-15 Back

4   Select Committee on the Modernisation of the House of Commons, First Report, 1997/98, The Legislative Process, HC190, (hereafter Modernisation Committee) paragraph 91; Trade and Industry Committee, Fourth Report, 1998/99, Draft Limited Liability Partnership Bill, HC59 (hereafter LLP Report) Back

5   HC187 and Trade and Industry Committee, Tenth Report, 1998/99, Electronic Commerce, HC648, (hereafter HC648) which deals with issues other than encryption and authentication Back

6   HC187 Back

7   LLP Report, paragraph 4 Back

8   Ibid Back

9   Modernisation Committee, paragraph 23 Back

10   HC Deb, 15 Jul 99, cc560-2 Back

11   Trade and Industry Committee, Eighth Special Report, 1998/99, Government Observations on the Fourth Report from the Trade and Industry Committee (Session 1998-99) on the Draft Limited Liability Partnership Bill, HC529, piv Back

12   Cm4417, p2 paragraph 5; only a handful of responses to the recent consultation exercises were confidential Back

13   HC187, paragraph 117 Back