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2.46 pm

The Minister for Small Business and E-Commerce (Ms Patricia Hewitt): I congratulate my hon. Friend the Member for Milton Keynes, North-East (Mr. White) on securing the debate. As he rightly says, TrustUK is a new organisation, a new initiative, and he has done the House and TrustUK a great service by bringing his concerns to the attention of the House at this early stage, so that we can ensure that they are taken on board and that TrustUK continues to fulfil its early promise and overcome any difficulties that there may be.

I strongly agree with my hon. Friend's point about the importance of getting implementation right. It is not enough to get the policy design right; we must execute it well, too. That is well understood in the Department and well put into practice.

Electronic commerce is bringing enormous benefits to consumers, learners, and people who simply want to keep in touch with friends and family. Consumers have access to a wide range of products and services. Convenience is increasing rapidly as use of the internet spreads. Of course, consumer confidence is vital to that process.

My hon. Friend referred to my right hon. Friend the Prime Minister's goal of making the United Kingdom the best place in the world for electronic commerce. Before I deal with his comments about TrustUK, I shall outline a few of the advances that we have made over the past year--perhaps I should say in the past four or five internet years--in achieving the goal set by the Prime Minister.

We have, for example, held the world's first auction for the allocation of spectrum for third-generation mobile services, which will make us one of the leading nations

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of the world in the next generation of the internet--the mobile internet. We have worked with Oftel to drive down the cost of internet access, and we have rolled out a national network of UK Online for Business centres and advisers.

As a result, we are now the cheapest country in Europe, and one of the cheapest in the world, for internet access. One third of the UK population is now online. There has been a 50 per cent. increase since September last year. We remain the largest e-commerce market in Europe, with retail e-commerce alone estimated at well over £1 billion.

However, there is continuing evidence that consumers still do not trust the new medium. Recent figures from the National Consumer Council show that about a third of the public felt that the internet was the riskiest way to shop, compared with only 3 per cent. who felt that high street shopping was particularly risky.

Consumer confidence depends on a number of factors. It depends on having access to the technology, having the skills to use it, and feeling comfortable doing so. Once people are on the internet, they need to be able to get clear, unbiased information, to pay safely, and to know that any personal data that they give, particularly credit card data, will remain confidential. Consumer confidence also depends on people receiving what they ordered, and getting things put right if they go wrong.

The Government have a responsibility to help build consumer confidence, as do business, the consumer organisations and the regulatory bodies. Our general approach to regulation for consumers is to favour a flexible system of co-regulation, in which the Government set policy objectives and charge business and consumer organisations with achieving those goals through codes of practice and voluntary systems for dispute resolution. Where necessary, we will back that with legislation. The Data Protection Act 1988 and the Data Protection Registrar, for instance, set and enforce the rules on the use of personal data. Of course, existing consumer law applies online, just as it applies offline. In addition, we have just introduced new regulations governing distance selling, including protection against the fraudulent use of payment cards.

That is the context within which TrustUK operates. I welcome my hon. Friend's support for TrustUK because, as the information age partnership recently told us, it is hugely important in helping to build consumer confidence and making the UK one of the best places in the world in which to do electronic business.

TrustUK is a good example of co-regulation. It is a private sector body set up by the Alliance for Electronic Business and the Consumers Association. As my hon. Friend said, its job is to approve codes of practice for retail e-commerce. Those approved codes meet good practice standards on advertising, transaction information, contracts, fulfilment, privacy, security, children and selling to children, redress mechanisms, monitoring and enforcement. The TrustUK logo indicates to consumers that a trader is committed to good practice and subscribes to a worthwhile code of practice. In particular, the scheme will give small and medium-sized businesses a way of generating confidence in their services, enabling them to gain recognition and break into new markets.

Of course I understand my hon. Friend's concerns about the early roll-out of TrustUK. On the question of a possible conflict of interest, I stress to the House that the approvals committee is independent and separate from the management of TrustUK. The approvals committee,

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which approves the codes of practice, has a secretary provided by the Department of Trade and Industry and is chaired by the former Director General of Fair Trading, Lord Borrie QC. I am sure that my hon. Friend agrees that he is an excellent chairman.

I understand my hon. Friend's concerns about the role of the Consumers Association.

Mr. White: Some people in the industry have expressed concern about the transparency of the separation of the approvals committee. Will my hon. Friend look at ways of ensuring that the industry has confidence in that transparency?

Ms Hewitt: I readily undertake to look into that matter. When I launched TrustUK, I stressed to industry and the media the separation of its management from the approvals committee and from the role of Lord Borrie. However, I shall certainly see whether we can do more.

The Consumers Association is a private sector organisation with its own commercial interests. I am confident that it takes care to ensure that those interests do not compromise its hard-won reputation for impartiality and its role as a consumer advocate. It is important that we involve consumer organisations in TrustUK and similar co-regulatory schemes.

The main issue raised by my hon. Friend concerned TrustUK's requirements for the vetting and monitoring of traders. I am grateful to him for the considerable research that he has undertaken. I know to my own cost that I never have enough time to research websites, and I am grateful for the amount of work that he has put in. I hope that he will pass on to me the details of the traders' sites that he looked at and to which he referred, as I shall draw them to the attention of TrustUK and the approvals committee.

The underlying issue is whether we need a greater element of independent third-party vetting and more consistent monitoring and review. We are aware of those issues, having listened carefully to those who have raised such concerns, and we will keep looking for the best way of solving them.

However, the problem is to strike a balance between the rigour of the code owner procedures--and, indeed, those of TrustUK--and the cost that they impose, especially on smaller firms. I do not want to establish complicated procedures, whose hurdles only large, highly profitable businesses can jump. That would undermine the purpose of TrustUK, which is to enable more small businesses to offer their goods and services on the internet--that is part of the value of e-commerce.

Of course, the code owners vet their members. I think that more than 100 traders have now been approved. My hon. Friend referred specifically to the Association of British Travel Agents and asked whether it had approved any traders. I understand that it is now processing and considering the operations of its members, who number around 2,300. The vetting process takes time, but I hope that it will go at least some way towards reassuring my hon. Friend that the code owners take the process seriously. I understand that the approvals committee has considered the question of monitoring carefully, and as a result, there may be scope for more consistent monitoring. TrustUK will need to assess the results of the quarterly monitoring reports, which will be considered by the committee next week.

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One of the great virtues of self-regulation and co-regulation is that they can be flexible. Clearly, improvements can and will be made as TrustUK develops. The Government will listen carefully not only to my hon. Friend, but to what others, such as the information age partnership, are telling us.

I agree with my hon. Friend that one of TrustUK's priorities must be to extend its coverage to more codes and e-commerce retailers. In order to do so, it must build recognition of the TrustUK brand. I understand that the Alliance for Electronic Business will invest in a promotional campaign in the new year. If the trade associations are to deliver their members, as my hon. Friend puts it, there must be demand from those members to join a well recognised name and brand.

We are also encouraging the development of alternative dispute resolution--ADR--through TrustUK. That welcome move means that code owners and traders approved by them will not be able to ignore consumers' complaints. TrustUK requires approved codes of practice to provide access to an ADR scheme. One result of that was that the Consumers Association decided to set up an ADR scheme as part of its Which?webtrader code. That was a nice example of spreading best practice. I shall certainly pursue my hon. Friend's point about the use of ombudsman schemes in some trade association codes.

My hon. Friend also asked whether TrustUK was too UK-centric. I am pleased to say that it is not at all inward looking. We were concerned that it should not be. It will approve codes from other countries. Indeed, it is about to approve its first one. In Europe, the Commission and a group of stakeholders, including TrustUK, are already developing European principles for codes of practice--a nice example of Europe following a United Kingdom lead. I understand also that TrustUK has received inquiries from the Australian National Office of the Information Economy, and has established contacts not only in Europe but in Japan, the United States and Canada. Of course, the Government are closely involved, through the Organisation for Economic Co-operation and Development and through bilateral talks with many countries.

In the run-up to Christmas, when more consumers are likely to venture into internet shopping for the first time, it is especially important for consumers to follow sensible dos and don'ts. First, people should shop with sites that they trust--the ones that they know because they know the shops, and those that might have been personally recommended or are members of approved codes and display the TrustUK brand. We would advise consumers to shop around for the best deals, and the internet makes it much easier to do that. We suggest that consumers check refund policies and remember that in most cases, thanks to the distance selling directive, they now have the legal right to cancel within seven days. Of course, consumers should check delivery times and find out whether there are any extra charges on top of the delivery charge, such as VAT or customs duties. They should also pay by credit card and look for the padlock symbol at the bottom right of the screen--

The motion having been made at half-past Two o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

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