Select Committee on Delegated Powers and Deregulation Fifth Report


The members of the Select Committee are:

L. Alexander of Weedon (Chairman)

L. Ampthill

L. Dahrendorf

L. Goodhart

L. Hogg of Cumbernauld

L. Mayhew of Twysden

L. Merlyn-Rees

L. Prys-Davies

L. Waddington



Memorandum by the Department of Trade and Industry


1.  The Electronic Communications Bill was brought from the House of Commons on 25 January 2000. This Memorandum -

  • summarises the main provisions of the Bill,
  • identifies the delegated powers in the Bill, and describes the purpose and proposed use of those powers,
  • explains why the matters have been dealt with by creating delegated powers, and
  • explains the degree of Parliamentary control on the exercise of those powers.

Main provisions

2.  The Electronic Communications Bill contains 15 clauses. The Bill deals with three distinct matters within the field of electronic communications in England and Wales, Scotland and Northern Ireland. The main purposes of the Bill are to -

  • help build confidence in electronic commerce and the technology underlying it by providing for an approvals scheme - a voluntary register - for people and firms supplying cryptography services such as electronic signature services and confidentiality services (Part I of the Bill);
  • promote electronic commerce and electronic government by facilitating the use of electronic communications and electronic storage of information, to be achieved by providing for the admissibility in court proceedings of electronic signatures and related certificates and by modifying legislation and other instruments to permit the use of electronic communications or electronic storage of information as an alternative to traditional, usually paper-based, means of communication or storage (Part II); and
  • change the mechanism by which certain telecommunications licences can be modified by the Director General of Telecommunications (clauses 10 and 11 in Part III).

Overview of the delegated powers

3.  The delegated powers relating to the approval of cryptography services providers are dealt with in paragraphs 5 to 12 below. The power to modify legislation is dealt with in paragraphs 14 - 23. Paragraphs 24 and 25 deal with supplemental issues connected with delegated powers.

4.  In considering whether matters should be specified on the face of the Bill or allocated to delegated legislation, the Department has had regard to the need:

  1. to avoid too much technical detail and limit the length of the Bill,
  2. to ensure flexibility in a field where the technology is changing rapidly in ways which cannot be anticipated at present, so that it is not necessary to seek primary legislation to reflect the changed technology;
  3. to allow detailed administrative arrangements to be provided for without taking up valuable Parliamentary time by including it in primary legislation,
  4. to permit detailed consultation on the necessary statutory instruments which will be particularly important in relation to the technical matters dealt with.

Particular issues arise in relation to the power to amend legislation which are dealt with in paragraphs 11 and 14 to 23 below.


Outline of the provisions in Part I

5.  Clause 1 provides for a voluntary register of approved providers of cryptography services which the Secretary of State must establish. A person who does not seek or gain approval may still provide services. The intention is to encourage confidence in electronic communications and storage technology and its providers without imposing a regulatory straight-jacket. The Government would prefer self-regulation, that is regulation by the industry itself, and has said that Part I will be brought into force only if a satisfactory self-regulatory scheme does not develop. It has published the criteria[7] which it believes any scheme whether statutory or voluntary should meet. Part I is subject to a provision (clause 15(3)) which repeals the Part if no order commencing it has been made under clause 15(2) bringing it into force within five years of the passing of the Bill. Clause 2 provides for the arrangements which the Secretary of State must secure to be in force for granting approvals. Clause 3 provides for the delegation of any of the Secretary of State's powers under clauses 1 and 2 (other than the power to make regulations) to another person. Clause 4 provides for restrictions on the disclosure of information. Clause 5 makes provision about the regulations made under Part I and clause 6 defines and explains terms used in Part I.

Delegated powers in clause 2

6.  Clause 2 is about the arrangements which must be in force for granting approval. Certain requirements of the approval arrangements are to be prescribed by regulations (see subsection (3)(a) and (b)), and by virtue of clause 5 those regulations are subject to negative resolution procedures in each House of Parliament. The regulations may frame a requirement by reference to the opinion of a person specified or chosen in accordance with the regulations. The usual supplementary provisions permit regulations to be made making different provision for different cases, and making incidental, supplementary, consequential and transitional provisions. In addition the fees payable in connection with the approval system are to be prescribed by regulations (see subsection (8)), also with negative resolution procedures. Clause 5 permits the making of regulations which provide for the manner in which the matter in question is to be determined, so to that extent sub-delegation is authorised.

Reasons for delegated powers in clause 2

7.  The matters proposed to be dealt with by delegated powers are appropriate for subordinate legislation because:

  1. the market for offering cryptography services to the public is immature, so the exact approvals criteria cannot yet be specified and will need to be the subject of consultation,
  2. the services offered may change over time as the market develops and the technology is offered in different ways,
  3. the technology itself is fast-moving, so the approval criteria will necessarily change over time,
  4. the criteria used to approve a person and the technology to be used by such a person will need to be consistent with those specified for the purposes of the EU Electronic Signatures Directive (OJ L 13, 19.1.2000, p.12) which are not yet finalised and for the reasons already given are also likely to change over time.

The ability to make regulations by reference to the opinions of another person will be needed in order to permit the appropriate industry standards bodies to approve technical standards.

8.  The scheme is intended to be self-financing; the Government intends to use the flexibility given by subsection (8) to set fees at a level to achieve this.

9.  The Committee's attention is also drawn to the fact that by virtue of clause 2 approvals are to be granted subject to conditions imposing requirements. While the content of some of these conditions will be prescribed by statutory instrument for the reasons given above, others will be at the discretion of the Secretary of State (or other person exercising powers by virtue of clause 3) and some of these may be framed by reference to the opinions of other persons, and to that extent sub-delegation is permitted.

Delegated powers in clause 3 and reasons for them

10.  Clause 3 permits the Secretary of State to appoint a person to carry out functions under clauses 1 and 2 (but not any power to make regulations). Such a person might be an existing statutory body or office-holder, and subsection (4) provides that the enactments in relation to the functions of that body or office-holder are to be read as if they included the delegated functions under this part. In addition subsection (5) allows the Secretary of State to make an order making appropriate modifications to the enactments relating to such a body or office-holder. The order is subject to affirmative resolution procedure in each House (subsection (6)).

11.  The function of approving a body for the provision of cryptography services is technical and requires specialist knowledge and skills or access to them. The Government announced in October 1998 that it intended the Director General of Telecommunications to carry out these functions, initially, and has not ruled out delegation to a different body which may not be non-statutory. Where the functions were to be delegated to an existing statutory body or office-holder, it might be necessary to ensure that the legislation conferring functions on that body or person did not hamper or conflict with the exercise of the functions under Part I. To the extent that the provisions in subsection (4) do not achieve alignment of existing and new functions, it may be necessary to amend the relevant legislation. It is not yet possible to say from which sector the body or office-holder would come, and therefore to anticipate the extent to which there might be a conflict between existing and new functions. The Government would want to have the flexibility to deal with this by order. In view of the fact that significant changes to primary legislation could be made by an order under subsection (5), it is proposed that the order should have affirmative procedures.

Delegated powers in clause 4 and reasons for them

12.  Clause 4 imposes restrictions on the disclosure of certain information obtained under the Act, and subsections (2)(a) and (c) authorise the making of regulations which prescribe functions of the Secretary of State (or his delegate under clause 3), or any other prescribed person, for the purpose of which information may be disclosed. There will be circumstances where information, which should otherwise remain confidential, needs to be disclosed - for example, to other regulators. It seems likely that companies from different sectors (such as banking, financial services, telecommunications, utilities) and trade associations may apply for approval and it may be necessary to ensure that information is available from and to statutory regulators of those other sectors.


Outline of provisions

13.  Clause 7 provides for the admissibility in legal proceedings of electronic signatures and certificates supporting such signatures.

14.  Clause 8(1) contains a power for the appropriate Minister to modify legislation and other instruments in such manner as he thinks fit for the purposes of authorising or facilitating the use of electronic communications or electronic storage instead of any other form of communication or storage. Subsection (2) lists the purposes for which the power may be exercised. For example, they would enable the power to be used in relation to enactments and instruments which at present require things to be done in writing or with a written document, require the use of post or particular means of delivery, require authorisation by signature or seal, require a thing to be a deed or to be witnessed, or require publication or the making of a payment. Subsection (3) places a duty on the Minister not to make such an order unless he considers that authorising the option of electronic communication or storage will not result in arrangements for record keeping that are less satisfactory than before.

15.  Subsection (4) particularises the things that can be done by an order under clause 8. They include, for example, the power to make provision -

  • for the communications or storage to be in a particular electronic form,
  • for conditions to be imposed on use of the electronic communications or storage,
  • for intermediaries to be used to establish the authenticity and integrity of data,
  • for records to be kept or produced,
  • for certain matters - such as the time, date or place on which a thing was done - to be determined in a particular way.

16.  Subsection (6)(a) provides that an order under this clause cannot require the use of electronic communications or electronic storage. However, when someone has previously chosen the electronic option, the variation or withdrawal of such a choice may be subject to a period of notice specified in the order.

17.  Clause 9 deals with various aspects of the orders made under clause 8:

  • how the appropriate Minister is identified,
  • appropriate Ministers acting jointly,
  • Parliamentary procedure for the orders,
  • framing of conditions or requirements by reference to certain persons,
  • exercise in relation to matters in Scotland, not being reserved matters.

Reasons for delegated powers in clause 8

18.  The power to amend in clause 8(1) is in some respects a very wide one. It relates to enactments passed after the enactment of the Bill, as well as those passed before, and the Government is not able to identify the statutes which currently require the actions specified in subsection (2) and which could or should be amended. But there are limits to the power:

  • an order cannot require use of the electronic means: it can only provide for an electronic means alongside the conventional one,
  • it is only enactments and instruments which call for the doing of something listed in subsection (2) which can be amended,
  • the purpose of the order must be to authorise or facilitate the use of electronic communications or storage instead of the conventional alternative,
  • the appropriate Minister must consider that records of things done using electronic communications or storage are no less satisfactory than are required if conventional alternatives are used.

The power could also be used to amend enactments and instruments which already make provision for electronic communications or storage.

19.  There has been widespread support for the Government's intention, embodied in clause 8, to amend legislation to permit electronic transactions between Government and citizens, and citizen and citizen, and to allow required records to be kept electronically. Many have advocated other options - first the amending of primary legislation in the Bill itself, or secondly, the inclusion in the Bill of a general proposition permitting anything which is required to be done by conventional - usually written - means to be done electronically.

20.  The first option would delay the passage of the Bill unacceptably while the cases are researched. For example, the Society for Computers and Law has estimated that there may be as many as 40,000 references to "writing" and "signature" alone in legislation. In addition, other words, such as "document" and "deliver", may in practice prevent the use of electronic means, and in these cases it is not always clear what electronic alternative is appropriate in the context. The Government takes the view that encouragement to electronic communications and storage brought about by clause 7 of the Bill and the opportunity to make early orders under clause 8, should be brought forward now, without waiting for the more obscure and less frequently used cases to be dealt with.

21.  The second option - an across the board authorisation of electronic alternatives - perhaps by amending the definition of "writing" in the Interpretation Act 1978 and including one of "signature", was recommended by many of those responding to the Government's consultation. A variant proposed was to specify a period of time at the end of which electronic alternatives were automatically authorised, and during which period cases which the Government wishes to continue to be carried out in traditional manner could be specifically excluded by statutory instrument. Although some other countries are intending to adopt such an approach, the Canadian Government has abandoned an across the board approach and is now proposing to do what the United Kingdom Government intends. The Government considers that the disadvantages are:

  1. the sheer number of statutory references to be researched, which could mean the period in question elapsing before all legislation could be reviewed;
  2. enforced concentration on more obscure cases, rather than devoting resources on those which can be brought forward early - such as the Companies Act cases (see paragraph 22);
  3. uncertainty about the effect of such a rule, once in force, if the legislative reference had not been specifically modified; this could occur, for example, if the legislation required witnessing or attestation of a document or the use of a deed;
  4. administrative chaos if statutory notices and notifications were authorised to be sent electronically, but the recipient, which could be a private person or a government department or local authority, did not have an electronic address or computer capacity to cope, or if the notice was to be accompanied by a document, such as a birth certificate, for which no electronic equivalent had been provided.

22.  Having carefully considered all the arguments put forward, the Government has concluded that an order making power is the right way forward. It is likely to lead to straightforward cases being dealt with faster than would be possible in primary legislation, but avoids the dangers of introducing the electronic option automatically across the board. Annexed to this Memorandum is a draft order [not printed] which shows how the Companies Act 1985 might be amended to provide for electronic communications or storage. The draft order has not yet been finalised and will be subject to consultation. It may therefore change and is annexed for illustrative purposes only. As it is likely to be one of the first orders, it is drafted for affirmative procedure.

23.  Clause 9 provides for a choice of affirmative or negative procedure in both Houses for orders under clause 8. The Government intends that the first order will be made by affirmative procedure, to allow general principles to be debated. As people become more familiar with the technology, and its relationship with the legal concepts, clause 8 orders are likely to be used for cases which raise no new issues. In view of the number of enactments and instruments which may need to be modified over time, the Government believes that the negative procedure should be available as an alternative to the affirmative procedure.


24.  Clause 13 does not confer any delegated powers but it is relevant because it limits the powers conferred elsewhere in the Bill. As the shoulder note to the clause says, the clause prohibits "key escrow" requirements. "Key escrow" is the practice by which a key (defined in clause 13(3)) to decode electronic data is given to another person, perhaps for safe-keeping or for authorising permitted access by others. Within a trusted relationship it can be valuable, but it can have significant implications for security, and many in industry and those concerned with civil liberties have sought to be reassured that the enabling powers under Part I and clause 8 cannot be used to require the deposit of keys with another person. Subsection (1) precludes such a provision, but subsection (2) allows two cases (neither of which would normally be described as key escrow) -

  • it is permitted to require a key for electronic data to be deposited with the intended recipient,
  • it is permitted to require a person to make arrangements which secure that data, the keeping of which is required by or under an enactment or subordinate legislation, does not become unintelligible or inaccessible if the key is lost or unusable.

Delegated power under clause 15 and reasons for it

25.  Clause 15(2) contains a power to bring certain provisions (Part I and clauses 7, 10 and 11) of the Bill into force by order. As is usual, there is no Parliamentary procedure.

2 February 2000

7   See "Promoting Electronic Commerce" (CM.4417), page 9, paragraph 28. This document is available on the DTI website at: Back

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