Examination of witnesses (Questions 80
WEDNESDAY 13 DECEMBER 2000
and MR CHRIS
80. If we can talk about the content, one of
the recommendations in your report is that you stimulate high-quality
on-line educational content, is it not?
(Ms Hewitt) Yes.
81. I notice that one of the milestones is for
January next year: pilot start on initiative to deliver whole
courses on Key Stage 3 maths, Japanese and Latin courses. I can
understand Key Stage 3 maths, but do you expect a big takeup on
Japanese and Latin?
(Ms Hewitt) I am afraid I do not know what takeup
the Department of Education is anticipating on Japanese and Latin,
but I am delighted to see that they were indeed piloting those
highly innovative applications. They are indeed in discussions
with various potential partners, including the BBC and also, I
think, Granada TV and some of the other private sector players,
in looking to deliver an on-line curriculum. We have seen the
huge success of the BBC with its byte-size revision. I think the
majority of GCSE students last year did at least some of their
revision using the BBC's byte-size guides.
82. I think you would probably agree, though,
that we need to see a broader range of courses?
(Ms Hewitt) These are the initial pilots. My understanding
is that DfEE's goal is to have the entire provision backed up
with internet content.
83. If I can finally look at the cultural content,
we have talked about the ability of people to access the internet,
but also I think you yourself addressed the fact that the willingness
and the motivation to address it was also important. You talk
about the relevance of much of the on-line material and how it
seems to be irrelevant at the moment. When you look at what you
are going to do, you say you will consider how the Government
might best work with the cultural sector and creative industries
to explore new ways to stimulate the development and availability
of high-quality cultural content. That sounds like a lot of waffle
to me. What is actually going to happen?
(Ms Hewitt) Since then I am happy to say that Chris
Smith has launched what is called "Culture OnLine" which
has got some funding behind it, where what he and the Department
of Culture are seeking to do is to enable much more on-line access
to the extraordinary wealth of content and cultural riches that
are within the museums and the art galleries of our countries.
We know the British Museum has already made enormous strides in
this direction, and Culture OnLine will, by the end of next year,
have developed more prototype, mock-up examples of how this can
be taken forward. There will then be in this programme the first-phase
content coming on-line from 2002.
84. Yes, but it is not very quick, though. I
think the steering group is going to be set up in February, and
the showcase website a year in December?
(Ms Hewitt) That is correct. There is a lot of work
to be done there, and there may be legislative issues, I am not
(Mr Pinder) There will need to be one or two pieces
of legislation as part of the restructuring to give us the ability
to pass some of the stuff across the internet. This is the cultural
85. Is this because of copyright?
(Mr Pinder) Absolutely right.
Chairman: Mr Hoyle, if you would like to pursue
culture, please do.
86. All the culture is in Chorley, and the Minister
was there only a week ago, so she recognises the culture.
(Ms Hewitt) Visiting an absolutely excellent school.
I should have paid a compliment to my colleague here.
Mr Hoyle: Bishop Ralston is truly a wonderful
Chairman: Sadly he was not a pupil there.
Mr Hoyle: Although my wife was, Chairman.
Chairman: Nepotism is always important.
87. Can I take you on to the tscheme? Obviously
under the Electronic Communications Act the major plank of that
was the tscheme. I wonder if you could report on the progress
of the scheme from your own perspective?
(Ms Hewitt) Indeed. It has made, I think, a good start.
What we now need to do is to see much more high-profile promotion
of the scheme. What Trust UK has done obviously is to establish
itself, to start accrediting codes of practice, particularly that
from the Consumers' Association and the Direct Mail Association.
They have also put in place an independent committee chaired by
Lord Borrie which will actually validate the codes that apply
for accreditation to Trust UK, and I think that is very helpful.
As I say, the next stage is really to get much more publicity
for Trust UK, so that we get more code owners wanting to become
part of Trust UK, but also crucially so that we get much more
consumer awareness. Certainly I have been trying, as part of the
run-up to Christmas, to get across basic advice to consumers about
on-line shopping, but also to take the opportunity to explain
about the Trust UK hallmark.
88. Is the Alliance for Electronic Business
seeking to be funded?
(Ms Hewitt) I am sorry, I was talking about Trust
UK. I do apologise, because you were talking about the tscheme,
were you not?
(Ms Hewitt) I am sorry, it is confusing having different
schemes, I have to confess. As far as the tscheme goes, yes, I
am satisfied with the progress. There are some very difficult
issues there. The Alliance for Electronic Business has had to
confront those. They have got their board in place. They are now
piloting the performance standards as well as the assessment regime
before it goes live and actually starts to deliver approvals to
the trust service providers, which it will start to do in March.
Again, there is a need to publicise that, both for the sake of
the trust service providers who may wish to apply to the scheme
for accreditation and for the sake of consumers who need to know
that approved digital certificates are available. Perhaps I could
ask Andrew Pinder to comment on this.
(Mr Pinder) Part of the problem or part of the issue
with the tscheme is that you need services which will accept digital
certificates, and therefore there is a demand side as well as
a supply side to this. The tscheme addresses the supply side,
but there is also the demand for that. As part of trying to deal
with that demand, or at least provide facilities, the Government
Gateway, which will be on-line in January, will take digital certificates;
in fact, we are still talking to Viacode, who are the potential
first accreditor through the tscheme, to take their certificates
through our Government Gateway. There are certain government services
who demand digital certificates going on line next year. Those
services are likely to be services from MAFF and Customs and Excise
to start with and later on Inland Revenue. So on the demand side
we are doing things to try to facilitate these things as well
as on the supply side.
90. Moving on to the Regulation of Investigatory
Powers Act, better known as RIPARIPA sounds much betterRIPA
(sic) of course are meeting with industry today to discuss the
presentation of that and that meeting is taking place with Charles
(Ms Hewitt) Yes.
91. I wonder if you do not feel this is a snub
and somewhat a downgrading of the E-commerce Envoy. Surely you
should have been leading these discussions? I wonder what you
feel about that.
(Ms Hewitt) I am delighted.
92. That you are excluded?
(Ms Hewitt) Far from feeling snubbed, it was my Department
and I who put in place last year the Industry Forum which got
the Home Office and the law enforcement agencies and the internet
service providers and the internet industry talking to each other
and beginning to understand each other's business. When Charles
Clarke and I were appointed in July of last year to our respective
positions, we found there were very considerable difficulties
with the proposals which were being made for the RIP Act. We initiated
that Industry Forum but always with the intention that the Home
Office, and in particular Charles, would take over chairing that
because the RIP Act is a piece of Home Office legislation, albeit
one on which my officials and I have been very closely involved
and will continue to be closely involved, but it is absolutely
right that he chairs that and ensures that the law enforcement
agencies and the Home Office draw up a new code of practice under
the RIP Act in very close consultation with the industry. We ourselves
obviously work very closely with the Home Office to ensure we
have our own input into the implementation issues and the code
of practice, just as we did into the drawing up of the RIP Act
in the first place, and of course we continue to talk directly
to the industry with whom we have a very close relationship and,
amongst other things, make sure they are content with the progress
being made on the Act.
93. Can you comment on the suggestion made by
the National Criminal Intelligence Service, GCHQ and all the other
spooks which are around, that companies should keep all their
communications for seven years. Would you agree with those comments?
(Ms Hewitt) I do not agree with the proposals. I saw
them in the press, I think, ten days ago. I have not had formal
communications with the Home Office, I have discussed it informally
with Charles Clarke and I understand it is his view as well that
that proposal should not be implemented.
94. Will that be part of the discussions today?
(Ms Hewitt) I have no doubt it will, but since the
discussions are taking place at the moment I have not yet had
a report on it.
95. Can I ask you about small businesses. You
have considerable personal enthusiasm for drawing small businesses
into electronic commerce and electronic communications. What are
you actually finding is the real role that Government needs to
play within this process?
(Ms Hewitt) A very important role, and part of it
relates to the broader issues we have been touching on, making
sure that the skilled people are there and making sure the legal
framework is right, making sure that we have cheap competitive
access to the internethugely important for small businesses.
But there is also a very specific function we are playing, which
is making sure that small businesses have an independent source
of advice on how the internet and electronic networks can actually
help their business. We now have in place 100 UK online for Business
centres across England, and there are counterparts in other parts
of the country. We have stepped up that programme of UK online
for Business centres. When they started, they were really there
to meet the needs of the small business owner/manager with somebody
who would talk in plain English, who would not try and sell them
an inappropriate product, who would not blind them with something
which did not meet their business needs. In a sense we have moved
past that because we have now got so many SMEs which have computers,
they are connected to the internet, they might be using it for
e-mail or putting up a website, and now the challenge is much
more to give them very detailed advice from the perspective of
their business as to how they can really use ICT right through
the value chain for business-to-business commerce in particular.
So, thanks to the additional funding we got from the Spending
Review 2000, we are increasing the number of business advisers
in those online centres, and we are just in the process of a pretty
large scale direct mail and radio advertising campaign and trade
press advertising campaign targeted on SMEs to increase their
use of those centres. They are proving very, very popular and
very effective in helping a lot of small businesses to get on-line.
As I said earlier, we are ahead of the game in terms of our businesses
trading on-line, but it is still a minority, we still have a long
way to go there.
96. There are two things which small businesses
constantly say to me when I am talking to them about electronic
commerce. One is fiscal measures, and they are, unsurprisingly,
very keen to have the Government sharing risk with them. The second
is something which goes back to what the Chairman was saying earlier,
what do we do when it goes wrong, because small businesses cannot
afford to pay permanent experts to be on call when they need them.
(Ms Hewitt) We put in place in the Budget of this
year 100 per cent first year capital allowances for any business
with fewer than 50 employees, and that is the vast majority, making
an investment in ICT, which was very, very warmly welcomed by
small businesses and by the Federation and other representative
bodies. In terms of how you get help, and we touched on that earlier,
not for all but for a number of SMEs the development of application
service providers is going to be very important. Instead of the
business or the organisation buying their own IT and then having
to put in place a contract with a help line or having somebody
on the staff who actually knows what to do with it, which is one
way, the alternative is that you use an application service provider
who is responsible for giving you a level of IT service that you
specify, and you then pay a fixed monthly rate accordingly. There
are pros and cons with ASPs, it is at an early stage of the market,
but some SMEs are reporting very good experience with them because,
instead of having to make the up-front investment and then learn,
sometimes painfully, what the real costs of using it are, they
can agree a package of service and pay for that on a fixed monthly
basis, so they know in advance what their costs are going to be.
So there is increasing choice for SMEs and the SMEs themselves
are becoming more sophisticated customers of ICT, and that is
hugely important as well and something where again UK online for
Business can help.
97. You have carried out sectoral studies on
e-business and you are pulling together the results. Can you let
us have some information on the outcome of those?
(Ms Hewitt) Somewhere I have a very helpful table
which I might be able to leave with you, but I will have to find
it first. We are well under way with the different sectoral studies
and perhaps the simplest thing is if I let you have a note afterwards
of which have been completed and what the completion date is for
the other ones. I certainly expect we will be publishing those.
For instance, one of the early ones, which was on the aerospace
sector, gave us a very good indication of the comparison between
our own aerospace sector and what was going on in other parts
of the world, and suggested where much greater action needed to
be taken to get right through the supply chain in aerospace the
full potential of the internet realised. In fact we have almost
completed the first wave of the studiessteel, aerospace,
motor vehicle retailing, downstream gas, telecoms services, electronics
manufacturing, chemicals, upstream oil and gas, biotechnology
and metal forming and finishingand we will publish them
on-line. It is the UK onlineforbusiness.gov.uk site.
98. Have you been able to draw any conclusions
yet about what DTI needs to do in terms of making businesses aware
of critical aspects of e-commerce?
(Ms Hewitt) The central conclusion, and we are looking
at how we translate this into implementation, is that we need
to integrate e-business with our other supply chain initiatives,
because the DTI works very closely with the different industry
sectors to help them to improve their productivity and their competitiveness.
So, for instance, in the motor manufacturing sector, we have a
very well established supply chain initiative with the Society
of Motor Manufacturers and Traders. We are putting in place a
similar industry-based supply chain initiative in the textile
sector and so on. E-business and exploiting electronic networks
right through the value chain is not a separate add-on, it is
part of a whole process of raising productivity and competitiveness
in all the firms, from the tier one suppliers right down to very
small tier four and five suppliers. We need to integrate it into
our supply chain work.
99. What are you doing about working with small
businesses to tackle fraud? I have had particular examples in
my constituency of credit card fraud, where several hits were
made on a company because they were having orders made electronically
and apparently there was a problem about authorisations being
given which then
(Ms Hewitt) Where the transaction was repudiated and
the company which had delivered the goods found the credit card
issuer was taking back the money?
100. Absolutely, but they had an additional
set of problems in that in communicating with the police, the
police did not seem to be able to understand how and where the
transactions were taking place, and were very, very slow in responding,
to such an extent that another delivery was made and the police
were not able to even be present to see who took the goods off
(Ms Hewitt) I obviously cannot comment on the individual
case, which I do not know about in detail, but there is obviously
a very serious issue of fraud and indeed other forms of crime
on the internet. We have been working with the credit card issuers,
with the British Bankers Association, and with other industry
bodies, to ensure that they put in place effective risk management
systems and effective systems for preventing and dealing with
fraud on the internet, so that you do not end up with small businesses
having to carry the liability which really they should not be
asked to carry because it was not in a sense their fault in the
first place. The Home Office has also been working with the industry,
particularly with the card issuers, to support the introduction
of address verification because there are issues around there
in terms of ensuring when an on-line order is made you need to
check whether the address is actually the right one for the credit
card holder. So we are making steps on that. As far as the police
are concerned, the Home Office has been making pretty considerable
investments in strengthening the capacity of the police really
in a technical capacity to deal with crime on the internet, including
fraud, but for some police forces this will be a very new issue
101. I wonder if you have been contacted by
SMEs who are very, very concerned about IR 35 contractors going
overseas, which would leave them with an IT skills shortage that
they do not think can be filled? I wonder if you share their worry
about what is happening?
(Ms Hewitt) I do not think I have had any small businesses
raise IR 35 with me. I have had a couple of large businesses saying
they have lost a few contractors as a result of IR 35. I recently
spoke at a main session of the CBI Conference on e-commerce generally,
a big panel discussion, and nobody raised IR 35. It is interesting,
if you look at one of the contractor's websites, you will find
a monthly survey of the number of IT contractors who have left
or are planning to leave the country. On the most recent one I
have seen, and I think it was the early December results, there
were about 78 sub-contractors who were planning to go to Germany
or had already gone, there were about 48 who were planning to
go to the Netherlands or had already gone, there were around the
10s or 20s in a handful of other countries. If you look at what
other countries are doing, you will find the German Government
is already taking steps against what they call disguised employment,
fraudulent self-employment; the Australians have introduced a
very similar law; the Americans, and many, many other industrialised
countries are taking steps to protect the integrity of their tax
system and ensure there is fairness between employees who are
paying not just income tax but also national insurance contributions
and people who, although they are doing the same thing as the
employees, have managed to route their income through a personal
service company. Of course we are monitoring the situation very
closely, we have not yet got to the end of the first tax year
in which IR 35 has been in force, and I know colleagues in the
Inland Revenue have been working very closely with the contractors
group and other parts of industry to ensure they are giving as
clear guidance as they possibly can, so people know whether they
are still in fact self-employed and able to use their personal
service company for self-employment, or whether in fact their
contract falls on to the employment side of the line.
102. Mr Pinder, have you had any other reactions
(Mr Pinder) No. My experience is the same as the Minister's.
103. I am very surprised at the Minister's comments
on that because the Professional Contractors Association has obtained
leave to pursue a judicial review against the Government on the
very basis that the Government's legislation discriminates unfairly
against small companies. I thought the Minister was sympathetic
to small companies and small IT companies in particular, but it
appears she could not care less and we will have to wait and see
what happens in the court case. I really want to ask the Minister
about e-procurement and e-tendering because, again, in the documents
there is much mention of the progress which is being made on e-tendering
and that there is going to be 50 per cent e-tendering by 2001.
What month in 2001 is that objective going to be achieved?
(Ms Hewitt) If I may just, very briefly, comment,
I care very deeply about small businesses, which is why I spend
so much time listening to them. As I say, no small business users
have raised with me the issue of IR 35. Obviously I am aware of
the concerns of the Professional Contractors Group and of the
judicial review. We will see what decision the court comes to,
but clearly the Government will be defending that action. On the
issue of e-tendering, as you have seen from the UK online Annual
Report, we have been making pretty substantial progress in different
government departments with procurement, with the Ministry of
Defence, for instance, rolling out its own e-procurement site
and several other departments doing the same. Health, for instance,
is well advanced with an e-procurement process. What Peter Gershon
at the Office of Government Commerce is now doing is testing innovative
and flexible approaches to e-procurement rather than, as was the
original idea, putting in place a sort of single catalogue right
across Government which everybody would have to use. We think
it is better to try a much more flexible and in a sense much more
market-led and innovative approach, and that is what is happening
at the moment with the pilot. Do you want to add to that?
(Mr Pinder) The Government target is to have 100 per
cent e-tendering by 2002.
104. Looking at page 8, the Government target
is first of all to have 50 per cent e-tendering by 2001 and I
wonder if you could tell me, again, in which month in 2001 you
think that target is going to be achieved?
(Ms Hewitt) December.
105. Thank you. While we are rushing ahead with
e-tenders, it seems, from a question that the Minister answered
which I put down about the payment of bills, that electronic measures
are causing delay in bill paying. In her own Department the target
of 100 per cent bill payments last year was missed and only 93
per cent was achieved and, indeed, in the Ministerial Support
Unit in her Department only 67 per cent was achieved. The Minister
said in answer to a question I put down about this, because of
a resource accounting and budgeting system being introduced, including
a new electronic measure of the bills received and paid, there
had been these delays. Does it mean that as soon as we go electronic,
we go backwards to start off instead of going forwards?
(Ms Hewitt) Mr Chope, as you will know, it is often
the case, in the private sector as well as the public sector,
that large and complex new IT systems have teething problems,
and resource accounting and budgeting is a major transformationa
long, overdue transformation, in my viewof the way in which
the public sector accounts for its capital as well as its revenue
transactions. Of course, right across the department we have had
to change the computer systems in order to deal with it. At the
same time the DTI has been rolling out a new IT system. I was
most dissatisfied with the fact that we had slipped behind on
the level of bill payments that were being achieved on time because,
of course, as the Small Business Minister, I want to see all our
suppliers paid on time, and that is precisely the target that
we have set not just for DTI but right across government. Those
problems are being fixed, and I hope we will very quickly get
back on track with prompt bill payments.
106. So when do you think you will get back
to 100 per cent of bills being paid on time?
(Ms Hewitt) I do not, I am afraid, have a date yet,
but as soon as I do perhaps I can write to you.
Chairman: Minister, thank you very much to you
and your colleagues. We shall look forward to getting the memorandum
and the other bits and pieces of paper that you promised us. Thank
you very much indeed.