22. Part III of the draft Bill includes measures intended "to assist law enforcement agencies in making intelligible lawfully obtained stored or intercepted data which has been encrypted."[53] We recognised in our first Report on electronic commerce that encryption will increasingly be a source of advantage to criminals and we supported the introduction of a new power to require decrypted data or private encryption keys to be provided where appropriately authorised to the law enforcement agencies.[54] Although we thought that "the proposed new power may not prove a powerful means of acquiring decrypted material from criminal suspects" we thought that it would facilitate lawful, covert surveillance.[55] The proposed new power is intended to be used only when encrypted data has been lawfully obtained by the law enforcement agencies — for instance, as a result of an interception of communications authorised by the Home Secretary or during a search authorised by a judicial warrant. Whichever authority had authorised the encrypted material to be obtained would, under the new power, be able to serve a written notice for disclosure of the relevant private encryption key or deciphered text on whoever was thought to be in possession of either. New offences are proposed of failing to comply with such a written notice and of tipping-off others — for example, the subjects of surveillance — that a notice has been issued. Various safeguards are proposed in connection with the use the law enforcement agencies can make of private encryption keys, as well as a code of practice and Commissioner and Tribunal, modelled on the provisions of the Interception of Communications Act 1985 and the Police Act 1996.[56] The Government told us that it was considering adding the functions of the proposed Commissioner and Tribunal to those of the existing interceptions Commissioner and Tribunal.[57]

23. Many respondents were critical of aspects of the proposed new power and associated offences and penalties, as we outline below, but there was a consensus that the law enforcement agencies need new powers of some sort to deal with encrypted material.[58] We have considered the arguments by respondents to the DTI's "Building Confidence in Electronic Commerce" consultation paper, which gave an outline of the proposed new power, and we have now seen the reaction of respondents to the Government's detailed proposals in the draft Bill.[59] We have seen nothing that would substantiate some hysterical comment to the effect that the Government's proposed new power to require decryption represents a major assault on our rights;[60] subject to our recommendations below, we see no reason to depart from our earlier conclusion that the proposed new power would prove a useful addition to the armoury of the law enforcement agencies.

Timing

  24. A common theme amongst respondents, both to the March 1999 consultation paper and to the draft Bill, was that the law enforcement aspects of the draft Bill should be removed and incorporated with the on-going consultation on reform of the Interception of Communications Act 1985 (IOCA).[61] The Government's view is that "the powers proposed in part III of the draft Bill are designed to maintain the effectiveness of existing statutory powers including IOCA...without pre-empting the wider conclusions of the IOCA review, there is a need to address the threat posed by encryption and to protect the effectiveness of the existing interception regime".[62] We recognise that the law enforcement agencies are keen for the new power to be brought into force as soon as possible, so that they can immediately deal with any encrypted material that comes into their possession, but the case for the Government to take urgent action is open to challenge. The evidence that the law enforcement agencies are currently caused difficulties by encryption is limited;[63] relatively straightforward changes to the Police and Criminal Evidence Act 1984 could help the law enforcement agencies deal with encrypted material recovered by operations other than interceptions of communications and would not require oversight by a Commissioner and Tribunal;[64] and a powerful case can be made against asking Parliament to give the Home Secretary the power to demand the decryption of encrypted material recovered as a result of interceptions of communications in advance of the completion of the fundamental review of the interceptions regime. There is an evident risk that the new powers will prove to be an expensive burden on business,[65] subject to potential replacement in a matter of a few years at most, and of only limited real assistance to law enforcement.[66] There have been examples in the recent past of new powers and offences being created which are presented at the time as an essential addition to the armoury of law enforcement but which then rest unused on the shelf. If Home Office Ministers wish to proceed with part III of the draft Bill they must explain in more detail than hitherto why the proposed new power should be introduced with such urgency.

Interception of Communications

  25. Several of the objections made to the proposed new power apply to the interception of communications regime as a whole. These included that:

• warrants for the interception of communications and, subsequently, for decryption should be judicial, rather than signed by the Secretary of State for Home Affairs on behalf of the executive[67]
• there should be a requirement on the law enforcement agencies to provide notification that covert interception and decryption have taken place, after an investigation has been concluded[68]
• safeguards, such as the Commissioner and Tribunal, should be strengthened.[69]

We have heard significant expressions of dissatisfaction with the present regime for interception of communications, particularly concerning the lack of judicial oversight including from the Data Protection Registrar in evidence to us in March 1999.[70] We would expect these concerns to be addressed fully by the Government when it responds to the consultation exercise on the future of the interceptions regime.

COSTS

  26. The Government is seeking to broaden the interception of communications regime to encompass internet service providers for the first time. It has proposed that internet service providers must "pay for the provision and maintenance of the basic intercept capability defined in the requirements issued by the Secretary of State".[71] That intercept capability is likely to involve intercepting individual data messages and collating communications data.[72] Requiring internet service providers to satisfy written decryption notices will also have cost implications.[73] We accept that there is a need for the interceptions regime to be updated to take account of the proliferation of telecommunications networks since 1985 but we are concerned about the cost burden this may place on internet service providers.[74] The cost of providing the capability for the interception of communications is, at present, effectively a tax on public telecommunications operators. The cost of extending the scope of the interception of communications regime could, if continued to be borne by telecommunications network operators, prove detrimental to smaller internet service providers. We recommend that the Government seek ways of alleviating the cost burden on smaller internet service providers of extending the scope of the interception of communications regime, and requiring decryption of intercepted encrypted messages, if necessary by ensuring that the burden is shared on a proportionate basis.

Law Enforcement Agencies

  27. The authorities which would be capable of issuing decryption notices under clause 10 of the draft Bill include Ministers of the Crown, the Commissioners of Customs and Excise and "every chief officer of police". The Government's definition of "every chief officer of police" overlooked non-Home Office police forces, such as the British Transport Police and the United Kingdom Atomic Energy Authority Constabulary, omissions which the Government were grateful we had noticed.[75] We recommend that the legislation address the issue of the extent to which all or some non-Home Office police forces should be given the powers and duties proposed in part III of the draft Bill.

Plain Text or Private Key

  28. Respondents to the draft Bill continued the debate, began after the publication of the March 1999 consultation document, about whether the law enforcement agencies should ever be able to demand a private encryption key, rather than simply the plain text of encrypted data in which they are interested. Arguments against a private encryption key being demanded have included:[76]

• technical considerations, for instance that a private key might be created only in order to encrypt one message and then be discarded, rendering ineffective the power to demand the key
• the possibility that the law enforcement agencies will use private keys in their possession to decrypt more data than was indicated by the written notice served to the key holder
• suspicion that the law enforcement agencies might begin gathering up private keys, in order to undertake monitoring of data traffic on a large scale, particularly in relation to the proposal that keys can be demanded before encrypted material comes into the possession of the law enforcement agencies.[77]

29. The Government has stated only that "the disclosure of plain text rather than a key may be acceptable in all cases unless the written notice specifies that only the disclosure of a key itself is sufficient". There is a clear danger that, in practice, written notices will routinely state that only the production of a private key is sufficient, particularly in relation to the proposal that keys can be demanded before encrypted material comes into the possession of the law enforcement agencies.[78] This is particularly of concern given the broad definition of key offered by the Government in the draft Bill, which the Data Protection Registrar warned might include "mechanisms such as 'passwords' and even physical keys storing electronic data, such as those for gaining access to a computer room".[79] While there will be occasions when the law enforcement agencies will have legitimate reason to require encryption keys rather than plain text, particularly in relation to real-time interception of data messages, we believe that these should be kept to an absolute minimum.[80] A number of respondents to the draft Bill argued that if demands for private keys became common place then this would have the effect of requiring TSPs to offer key escrow and related services.[81] In our first Report on electronic commerce we recommended that Parliament should be given an indication of the criteria which will be used to decide whether written notices require the production of private keys or plain text.[82] The Government has told us that such criteria will be included in the proposed code of practice.[83] We recommend that the Government make available to Parliament before second reading of the Bill the criteria concerning the circumstances in which a written notice for decryption will be able to require the production of a private key.

Privileged Material

  30. Several respondents to the March 1999 consultation document cautioned that the disclosure of private encryption keys could lead to privileged material, such as private legal and medical files, and other information which would not normally be released, such as journalists' notes, coming into the possession of the law enforcement agencies.[84] The draft Bill contains no provision for such material to be exempted from the scope of written decryption notices, generating repeated demands for privileged material to be recognised in the legislation.[85] We recommend that the legislation explicitly addresses the question of the exemption of privileged material from the scope of written decryption notices.

Burden of Proof

  31. There may on some occasions be legitimate reasons why a private key or plain text could not be handed over to the law enforcement agencies. A key might be destroyed after the data it was used to encrypt was transmitted, or it could be lost or corrupted. The Government has proposed that failure to comply with a written notice requiring decryption would, on conviction on indictment, lead to imprisonment for up to five years or an unlimited fine or both, and, on summary conviction, to imprisonment for up to six months or a fine of up to £5,000 or both.[86] Various defences are outlined in clause 12 of the draft Bill, whereby those required to produce plain text or a key can argue that it was not reasonably practicable for them to do so. A number of respondents to the Government argued that it would not be possible for the subject of a decryption notice to provide proof that they did not possess or have access to a key or plain text. Skygate Technology said that it was "a logical impossibility...[to] prove that you don't possess something". The British Computer Society suggested that the law enforcement agencies should be required to prove that a suspect possessed a key before he or she could be found guilty of non-compliance with a decryption notice.[87] It would, of course, be for the courts to decide whether they were convinced by a defendant's reasons for not being able to satisfy the requirements of a written notice. The prospect of users of encryption being fined or gaoled despite having genuinely lost their private keys is, however, a legitimate concern which the Government must address during the passage of the Bill. We recommend that the Government give some indication as to how it is envisaged that those served with written notices requiring plain text or encryption keys can successfully demonstrate that they cannot comply with the notice.

Tipping Off

  32. The proposed tipping-off offence, which would make it illegal for information about a written notice to be disclosed to a third party, was heavily criticised during the March 1999 consultation exercise. It was suggested that some computer programmes would automatically change the private keys it used if a private key was disclosed, for instance to the law enforcement agencies, raising the prospect of computer users inadvertently falling foul of the law.[88] The defences from prosecution for the new offence outlined in the draft Bill includes one for disclosure "effected entirely by the operation of software designed to indicate when a key to protected information has ceased to be secure" intended to deal with this major concern, although its effectiveness was questioned by Vodafone and the Law Society suggested that if this defence were effective then it would be extremely difficult to secure convictions at all.[89] Some respondents to the draft Bill remained critical of the tipping-off offence as a whole, claiming that it could undermine the security of communications and penalise innocent information sharing about decryption notices, for instance between an employee served with a written notice and his or her employer.[90] The Government told us that the offence was modelled on section 53 of the Drug Trafficking Act 1994 and was intended to target "deliberate and intentional action" aimed at "frustrating statutory procedures and assisting others to evade detection".[91] We agree with the underlying aim of the tipping-off offence, but seek assurances that it will be used against only those people who deliberately and intentionally seek to subvert the work of the law enforcement agencies.

Penalties

  33. The Government told us, in response to our written queries, that the penalties it proposed for the tipping-off and failure to comply offences were in line with those relating to similar offences.[92] Some respondents described the penalties as too harsh, however, and it has been suggested that innocent computer users might face long gaol sentences and hefty fines for losing private encryption keys, or inadvertently releasing information to third parties about written notices to decrypt, if the legislation was enacted.[93] On the other hand, there were calls during the March 1999 consultation for the penalties associated with the tipping-off and failure to comply offences to be increased, for instance because a paedophile could serve a much shorter custodial sentence for refusing to decrypt images of child pornography than for possession of the images, if they were decrypted.[94] Simultaneous criticism that the proposed penalties are both too harsh and too lenient might suggest that the Government has got the balance about right. Attention will need to be paid in future to whether the penalties are appropriate, in the light of experience. We recommend that, once the legislation is in force, the Government keeps under review the penalties for the offences of tipping-off and failure to comply with a written notice.

Code of Practice

  34. Provision has been made for the Secretary of State for Home Affairs to issue a code of practice "in connection with the exercise or performance by persons (other than proposed Commissioner and Tribunal) of their powers and duties" under part III of the draft Bill.[95] Such persons are to "have regard for the code of practice" when performing their duties; but it is expressly provided that failure to comply with any provision of the code will not of itself lead to criminal or civil proceedings against the person concerned. The proposed code of practice may prove to be toothless. It is not clear how compliance with the code of practice will be monitored, or how information about compliance, and non-compliance, will reach the public domain. The impression is given by the legislation that infringements of the code of practice will go unpunished, reflected by the criticisms of some respondents to the draft Bill that the proposed safeguards are inadequate.[96] The March 1999 consultation exercise, and the consultation on the draft Bill, have both demonstrated that there is a serious lack of trust in the Government's intentions with respect to law enforcement access to encrypted material amongst many users of encryption. It is essential, therefore, that every opportunity is taken to reassure users of encryption that law enforcement access to encrypted material will be rigorously controlled and that proper procedures will be followed at all times. Consequently, we recommend that:

• any person exercising or performing any power or duty under part III of the legislation should have an enforceable duty to follow the requirements of the proposed code of practice at all times
• procedures are established to report, independently monitor and publish details of breaches of the proposed code of practice, possibly through the good offices of the proposed Commissioner.

54   HC187, paragraphs 80, 98 Back

55   HC187, paragraph 98 Back

56   And see HC187, paragraphs 92-3; and also response to Government from the Law Society p5 Back

57   Ev, p5, part III, Q5 Back

58   For instance see responses to Government from Interforum p2, ICL p7, the Post Office p5, Motorola paragraph 4 and the Association of British Insurers paragraph 3.12, C. E. Sundt p4; and Foundation for Information Policy Research press notice 23 Jul 99 Back

59   HC187, paragraphs 91-9 Back

60   For instance, Express, "Danny Penman on the hidden threat to our liberty", 23 Sep 99; also Express, 10 Sep 99 and Times, 11 Aug 99 Back

61   Responses to Government from Skygate Technology, British Computer Society p1, EDS, EURIM p3, ICL p8, Intel pp2-3, Corporation of London, Cable and Wireless Communications p4, Sun Microsystems p2, Association of Payment Clearing Services pp2, 7, Association of Unit Trusts and Investment Funds, Computing Software and Services Association p3, Legal and General p6, Association of British Insurers paragraph 3.11, Barclays p2, British Bankers' Association p4, John Brazier p4, CyberNotary Association (UK) p3; and for similar suggestions see Kaltons, Interforum p2, Berwin Leighton p4, Association for Electronic Business, IBM, the Law Society p10, Licensing Executives Society pp2, 5 and C. E. Sundt p1 Back

62   Cm4417, p11 paragraph 39 Back

63   HC187 paragraphs 80-1 Back

64   For instance see response to Government from Liberty paragraph 16 Back

65   On cost issues see responses to Government from the Post Office p6, British Telecommunications paragraph 14, Energis paragraph 3.5 and the London Investment Banking Association p6 Back

66   For instance responses to Government from MacRoberts p8 and Cyber-Rights and Cyber-Liberties (UK) p1 Back

67   For instance see responses to Government from Liberty paragraph 21, the Data Protection Registrar p6, Association of British Insurers paragraph 3.12, the Law Society p6, Institute for the Management of Information Systems paragraph 6, Thus Ltd p7 Back

68   Response to Government from Liberty paragraph 36 Back

69   Responses to Government from EURIM p8, Liberty paragraphs 14, 32, 34, the Law Society pp6-7, British Bankers' Association p4 and the Internet Service Providers' Association p10 commented on the proposed Tribunal and Commissioner Back

70   HC187, Q480 Back

71   Interception of Communications in the United Kingdom: a consultation paper, Home Office, Jun 99, Cm 4368, paragraph 5.7 Back

72   See ibid chapter 10 Back

73   For instance see response to Government from Thus Ltd p5 Back

74   See response to Government from Institute for the Management of Information Systems paragraph 10 Back

75   Ev, p5, part III, Q4 Back

76   HC187 paragraph 96; and see responses to Government from Association of Payment Clearing Services p6, Vodafone p2, Skygate Technology, Corporation of London, British Bankers' Association p4, the Post Office p10, EURIM p6, C. E. Sundt pp4-5, Reuters p4 Back

77   Ev, p4, part III, Q1 Back

78   Cm4417, p11 paragraph 38 and see Ev, pp4-5, part III, Q2; also see responses to Government from British Telecommunications paragraph 16, Energis paragraph 3.2, Thus Ltd p5 Back

79   Responses to Government from Data Protection Registrar p3. C. E. Sundt p6 and Charles Lindsey p3 Back

80   HC187, paragraph 96; and also see response to Government from National Criminal Intelligence Service p3 Back

81   Responses to Government from British Computer Society p4, London Investment Banking Association p4; and also Intel p1, Microsoft p1, European Electronic Signatures Working Group p3 Back

82   See responses to Government from ICL p9, Energis paragraph 3.2 and Liberty paragraph 19 on this point Back

83   Ev, pp4-5, part III, Q2 Back

84   HC187 footnote 309 Back

85   Responses to Government from the Law Society p10, the Law Society of Scotland, Taylor Joynson Garrett p3, ICL p9, MacRoberts p8, Allan Toombs; and see the CyberNotary Association (UK) p3 Back

86   Clause 14(1) of the draft Bill and Ev, p5, part III, Q3 Back

87   Responses to Government from Skygate Technology, British Computer Society p3, EURIM pp3, 7, Kaltons, Liberty paragraph 25, Berwin Leighton p4, Internet Service Providers Association p7, Association of Payment Clearing Services p6, Cyber-Rights and Cyber-Liberties UK pp2-3, Real Time Club p6, C. E. Sundt p5, Thus Ltd p6 Back

88   HC187, paragraph 99 Back

89   s13(3)(a); and responses to Government from Vodafone p3, the Law Society p9 and Berwin Leighton p5; and see response from British Telecommunications paragraph 3.18 questioning the necessity of the offence Back

90   Responses to Government from Skygate Technology, Liberty paragraph 28, Data Protection Registrar p4, Foundation for Information Policy Research p10, Internet Service Providers' Association p8; and see the Post Office p9, Berwin Leighton p4, Association of Payment Clearing Services p6 Back

91   Ev, p5, part III, Q3 Back

92   Ev, p5, part III, Q3; although the response to Government from the Association of Payment Clearing Services questioned why the maximum penalties proposed for tipping-off exceeded those for non-compliance with a written notice Back

93   Responses to Government from Skygate Technology, Post Office p9, A. Millward, C. E. Sundt p6; also see Times, 11 Aug 99 Back

94   HC187, paragraph 94 footnote 304 Back

95   Clause 16 Back

96   Responses to Government from British Telecommunications paragraphs 21, 24, EURIM p7, the Data Protection Registrar p8, Internet Service Providers' Association p9, Real Time Club p6, C. E. Sundt p6, Thus Ltd p7 Back