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Lord Sainsbury of Turville: If subsequent legislation were in some way to make this more of a statutory or essential feature, then it would be appropriate to review it in that context. However, in the context of the voluntary scheme we are talking about here, it seems inappropriate.

On Question, amendment agreed to.

Baroness Buscombe moved Amendment No. 6:
Page 2, line 26, at end insert--
("( ) make provision for the recognition of approvals granted under other jurisdictions where the Secretary of State has agreed to recognise compatible registration procedures").

The noble Baroness said: I am sure we all agree that mutual recognition will facilitate the growth of international best practice; in which case, should a more attractive, high quality regime exist elsewhere in the world, businesses will not be deterred from setting up in the United Kingdom by our legislation. We would like to see the Government take a lead, indeed to be the vanguard in crafting the international accord that will come to promote the free market approach to this nascent industry, to benefit British companies and boost the prominence of British expertise in this area. International best practice will eventually supersede the Bill. In the meantime, there must be procedure for

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fast-track recognition of international standards and legislation of a suitably high quality, so that businesses based on other jurisdictions are not faced with the local burdens of re-registration when establishing operations in the United Kingdom. I beg to move.

The Earl of Erroll: I should like to say a few words, because this is a very sensible amendment. One point about the Internet is that it is global. There are no national boundaries and, as electronic documents become legally admissible, electronic signatures carry more weight. Where I disagree with the Minister in his previous reply is that, just because the scheme is voluntary it does not mean to say that it will not carry weight in the courts. If the voluntary scheme is successful, there is no need for a statutory scheme, so the voluntary scheme will have the weight of a statutory scheme in another country. It is therefore very nai ve to suggest that there is a big difference between a voluntary scheme and a statutory scheme if you expect the voluntary scheme to succeed. This mutual recognition of standards at a national level will be essential to facilitate electronic commerce and contracts internationally.

Lord Sainsbury of Turville: While I wish to thank the noble Baroness for this amendment and for her helpful explanation, I am afraid that we are not disposed to accept it. The main point is that recognition of an approval in another jurisdiction does not have any direct legal consequences. In undertaking to recognise approvals in other jurisdictions, the Secretary of State would be solely involved in elaborate negotiations which would not necessarily benefit businesses or citizens. The recognition of certificates from other countries is best left to industry and the market. For business, the importance is that their certificates will be recognised by their counterparties and other certification service providers. The former is down to the reputation and standing of the certification service provider, while the latter depends on technical cross-certification arrangements being in place between the respective providers. Those are matters that are primarily for the market and international standards bodies rather than for government to determine. On that basis, perhaps the noble Baroness will withdraw this amendment.

Lord Lucas: I return again to the subject I raised before. If that is the case, will the noble Lord say now that it is not the Government's intention for their own operations, or in second legislation, to demand that it has to be certification on the UK register that allows a signature to be in electronic form. In other words, they are quite happy if they, for instance, allow electronic certification to be the case for transfer of property, that certification by a company under the US register will be just as satisfactory as one under the UK register. Otherwise we are imposing a system of multiple registration on companies, which will be immensely inefficient.

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Lord Sainsbury of Turville: No decisions have yet been taken about what sort of signatures will be required for different services and there is no intention to exclude good quality foreign providers from this process. Therefore, I believe that this can be dealt with administratively.

The Earl of Erroll: Before the Minister sits down, I have probably misunderstood the whole thing. I thought that the purpose was eventually to make electronic documents admissible in the courts because signatures would be recognised and it would not be just between two companies. At some point there will be a row and it will be tested in the courts. Will every single service provider of certificates have to be tested for quality individually in each court case? I thought the whole idea was to have some sort of national certification, in general, of these service providers so that one would know which service providers one can trust on a more national level instead of having to test every single one in the courts which, it seems from what the Minister is saying, is going to happen.

Lord Sainsbury of Turville: The whole purpose of the clause is that there will be a national register of providers of cryptographic services which will have a kitemark that can be relied upon. The question of whether a particular electronic signature is valid before a court will have to be decided by that court. However, there will be a national register of cryptographic services to acceptable standards, and that is what the clause is about.

Baroness Buscombe: I believe that I have understood the Minister's response. However, I am concerned that it does not deal with the question of re-registration, to which noble Lords have referred. Without the proposed amendment there will necessarily be a situation in which there are multiple registrations when overseas companies establish operations in the United Kingdom. I shall read what the Minister said in Hansard and possibly return to this subject on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sainsbury of Turville moved Amendment No. 7:
Page 2, line 27, leave out from beginning to ("the") and insert ("The condition that must be fulfilled before an approval is granted to any person is that").

On Question, amendment agreed to.

Baroness Buscombe moved Amendment No. 8:
Page 3, leave out lines 23 to 25 and insert--
("( ) is a small enterprise or company as defined by the Secretary of State,
shall be remunerated by the Secretary of State for the time committed to the registration process on a sliding scale which recognises the disproportionate burden placed by such procedures on the smallest businesses.").

The noble Baroness said: I rise to move Amendment No. 8 which reflects a serious need to consider the recognition of the disproportionate burden placed upon small businesses for lost time, increased costs

14 Mar 2000 : Column CWH9

and more red tape. Over the past three years the smallest businesses have faced a burden of red tape that has increased by two hours per week according to the Current Small Business Research Trust/National Westminster survey. Additional burdens cost those one to five-employee firms up to £1,700 per annum according to the accountancy profession.

It is interesting to note that the noble Lord, Lord Haskins, in his capacity as Chairman of the Government's Better Regulation Task Force, said only last week when launching the report of the task force that,

"The Government should recognise the additional burdens it is placing on employers and consider some form of financial support." The electronic communications revolution encourages many new businesses and, most importantly, those that do not have to put up with our regulatory burdens in order to survive; they can exist elsewhere. We want them to thrive here in the United Kingdom. We want the United Kingdom to remain ahead of its European partners in e-commerce. We thought that the Government were beginning to recognise the need for wealth creation as the source of prosperity for all. Increased burdens as proposed in the clause will only compromise that aim. I am compelled to add that the prospect of IR35 is bound to drive those businesses away from these shores altogether. I beg to move.

Lord Sainsbury of Turville: I am sure that the noble Baroness tables the amendment with the intention of helping small businesses, or at least making a speech about the problems that they face. However, despite what the noble Baroness says, as drafted the amendment would have bizarre consequences. It would have the effect that all those persons who applied to be approved would have to be paid by the Secretary of State for the efforts that they expended in registering rather than pay the Secretary of State fees consistent with the benefit that approval conferred. I would hope that the noble Baroness did not intend that effect. It is a normal principle that the cost of regulation should be borne by those who are being regulated, and I see no reason why part of these costs should be borne by the taxpayer.

The other point, however, concerns the fee structure for small firms. I assure the noble Baroness that both in any statutory scheme and in the T Scheme, which we hope will be introduced by industry, the fee structure will reflect the size of the business applying to be approved according to the cost of approving and monitoring businesses of various different sizes. On that basis perhaps the noble Baroness will withdraw her amendment.

4 p.m.

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