Part 1 of the draft Bill

(a)  The Government has accepted our recommendation that a statutory accreditation scheme for Trusted Service Providers should be implemented only if self-regulation by the industry is seen to fail. We recommend that DTI and the Alliance for Electronic Business formulate and publish a timetable for the establishment of the industry-led accreditation scheme in time for second reading, so that Parliament can assess the likelihood of the statutory scheme being implemented (paragraphs 4 and 9).

(b)  We recommend that the Government give an early indication of the fees likely to be charged to TSPs under both the industry-led and statutory schemes. We further recommend that the Government consider the case for a sliding scale of fees to be set for accreditation, whether by an industry-led or statutory scheme, to help overcome any barriers to entry to the market (paragraphs 10 and 11).

(c)  We are concerned that the Government has yet to rid itself of its previous attachment to key escrow and related technologies. We recommend that:

• the legislation should explicitly exclude the use of key escrow as a criterion for accreditation under a statutory regime
• key escrow, key recovery or related measures should not be accreditation criteria under an industry-led regime
• if it were decided to seek to introduce key escrow, key recovery or related measures in future then the accreditation scheme should be placed on a statutory basis, if it were not already so, and there should be provision for a full public consultation exercise and parliamentary decision on the issue
• an unequivocal commitment be made that key escrow, key recovery or related measures will not be introduced through the back door as a result of the Government's participation in electronic commerce (paragraphs 13 and 14).

Part II of the draft Bill

  (d)  We questioned the rationale of the "rebuttable presumption" proposal and we are pleased to see that it has now been abandoned by the Government. We support the Government's intention to legislate to clarify the admissibility of electronic signatures in legal proceedings, while leaving it to the courts to decide what weight to assign to those electronic signatures which come before them. Ministers must ensure that legislation to clarify the admissibility of electronic signatures in court does not inadvertently restrict the existing scope for their admissibility under English or Scots case law (paragraphs 15 and 16).

(e)  The Government has accepted our recommendation that it should take powers in the Electronic Communications Bill for secondary legislation to update the definitions of words such as "writing" and "signature" in law to take account of new information and communications technologies. We welcome the new sense of urgency with which the Government is now addressing the issue of outdated definitions of words such as "writing" and "signature" in law. We recommend that, during the passage of the Bill, Government departments each publish their priorities for using secondary legislation to update the definitions of such words in law and timetables for implementation. We further recommend that, having identified immediate priorities, departments publish details within two years of all the outdated statutory definitions of words such as "writing" and "signature" they wish to update to take account of new information and communications technologies and timetables for action; and details of those statutory definitions which they do not wish to update, including the reasons why not (paragraphs 17 and 18).

(f)  We recommend that the Government consults widely on any proposal to allow oaths, seals or witnessed signatures to be performed electronically (paragraph 19).

(g)  There is a danger that those sections of society, without access to computers or the skills necessary to use them, will be required to pay relatively higher fees or other charges when dealing with Government because they may not be well placed to exploit the low transaction costs which are a characteristic of electronic communications. The Government should charge different fees for electronic and non-electronic communications and storage only if it can be shown that disadvantaged groups in society are not thereby penalised for their lack of access to computer technology (paragraph 20).

(h)  Large-scale projects to replace physical with electronic records, such as the replacement of cheque storage with electronic records in the banking sector, have already thrown up a range of new technical and legal issues. We recommend that, before orders are made for the facilitation of electronic storage, departments consult fully on the implications of replacing physical with electronic records, paying particular regard to future accessibility including by individuals with legitimate concerns or interests (paragraph 21).

Part III of the draft Bill

  (i)  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; 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. If Home Office Ministers wish to proceed with part III of the draft Bill then they must explain in more detail than hitherto why the proposed new power should be introduced with such urgency (paragraphs 23 and 24).

(j)  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. 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. We also 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 (paragraphs 25 and 26).

(k)  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 (paragraph 27).

(l)  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 (paragraph 29).

(m)  We recommend that the legislation explicitly addresses the question of the exemption of privileged material from the scope of written decryption notices (paragraph 30).

(n)  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. 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. 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 (paragraphs 31, 32 and 33).

(o)  The proposed code of practice may prove to be toothless. 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 (paragraph 34).

Part IV of the draft Bill

  (p)  Part IV of the draft Bill is wholly unrelated to electronic commerce and has evidently been tagged on to make use of a legislative opportunity. The draft Bill contains new proposals for the modification of telecommunications licences which have not previously been the subject of consultation. We recommend that, if Ministers wish to proceed with part IV of the draft Bill, they explain more clearly, including by reference to practical examples, the reasons why this particular method of reforming the procedures by which telecoms licences are modified is preferable to other, simpler methods (paragraphs 35, 37 and 39).

(q)  We recommend that a consultative draft of the order intended to set out the rules and principles which will guide the DGT's decision about what constitutes a "significant minority" in relation to objections to licence modification procedures is published before second reading (paragraph 40).

(r)  The proposed appeals mechanism relating to telecoms licence modifications lacks support from telecoms licence holders and merits re-examination before it is presented to Parliament (paragraph 41).

(s)  We are unpersuaded of the merits of the Government's proposal for the DGT to be able to make deregulatory modifications to telecoms licences despite objections, no matter how significant. We recommend that a detailed assessment of the need for the deregulatory proposal, taking account of the arguments made against it by respondents to the draft Bill, should be published, if the Government wishes to proceed with the proposal (paragraph 42).

(t)  We understand that telecoms licence holders were not sent copies of the draft Bill by DTI and many may have been unaware of its publication, and therefore failed to respond to it, because the proposals relating to telecoms licence modifications were not widely publicised. The inadequacy of the consultation on part IV of the draft Bill, and the adverse reaction to the detail and, in some cases, the overall approach of part IV by those firms which did respond, cause us some unease and we will be pursuing the matter further (paragraph 44).

Other matters

  (u)  We recommend that, during the passage of the Bill, if not before, the Government inform Parliament of legal changes likely to be necessary as a result of the EU Directive on Certain Legal Aspects of Electronic Commerce (paragraph 45).

(v)  We recommend that the Government inform Parliament of what action it will take to ensure that TSPs make clear to their customers the extent of their commercial liability (paragraph 47).

(w)  We recommend that, in the light of recent and unexpected changes in US policy on the export of cryptographic products, the Government look again at the case for a review into the rationale of export controls on such products (paragraph 48).

Legislation

  (x)  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. Both the principle and details of this legislation will require full scrutiny by Parliament (paragraphs 5 and 49).

(y)  There remains a problem with the availability to interested parties of the responses to draft Bills. 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. We recommend that a full analysis of responses to the draft Bill be published in time for second reading (paragraphs 4 and 6).

(z)  We recommend that, should the Government judge it necessary to bring a statutory accreditation scheme into force, Parliament should have the opportunity to debate and vote on the issue. We further recommend that the Government make a commitment to consult industry about any regulations made under clause 5 of the draft Bill and that such regulations be subject to the approval of both Houses of Parliament (paragraphs 51 and 52).

(aa)  We do not think it would be wise for the Government to change existing legislation to take account of modern information and communications technology without full consultation with interested parties simply because departments had decided that they had got the "general principles" of making such changes right first time. We recommend that the Government consult with interested parties before making any change to existing legislation to take account of new information and communications technologies (paragraph 53).

(bb)  We recommend that Parliament is informed of the Government's detailed plans and timetable for when the legislation would be brought into force (paragraph 54).

(cc)  Having certified that legislation does not contravene the European Convention on Human Rights, Ministers must be able to demonstrate, when challenged, that this is indeed the case. We recommend that the Government publish a detailed analysis to substantiate its confidence that part III of the draft Bill does not contravene the European Convention on Human Rights, dealing with the points made to the contrary (paragraph 56).

Conclusion

  (dd)  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 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. The Government published a draft Bill not because it wanted to subject its cryptography policy to further scrutiny but because of self-inflicted parliamentary time constraints. Our study shows, however, that it was fortunate that they felt obliged to do so, and that the Bill will be the better for it once presented. In broad terms we hope that this Bill, already announced in the 1998 Queen's Speech, will reach the statute book without undue delay (paragraphs 7 and 57).