Select Committee on European Union Minutes of Evidence

Examination of Witness (Questions 500 - 519)



  500. I know of 40 IPOs in the month of June for .com companies. Bearing that in mind, those companies are going public in order to raise funds.

  A. Indeed.

  501. To invest in their business. If what you have said is right, and I think it is, that institutions are taking an alternative view of these organisations, when they want to raise funds they will not be able to do so because the appetite for the paper will not be there. Do you envisage that as being likely because if it is likely the knock-on effects are very considerable indeed?

  A. The decision making process will be scrutinised much more carefully and instead of looking to projects which will not materialise a profit within four or five years—which many of the last round of IPOs have been targeted for—they are looking for projects which are much more spontaneous, which will generate a profit more rapidly, and which in fact include a platform or base of more traditional enterprise so that the .com is an important part of the business without being the sole rationale for the business itself. If you are looking at something, say, in the travel sector then we are talking about the real content which has an intellectual value of its own and is not just a framework. We are not selling the framework, we are selling the framework plus its content, real substantive value.

  Lord Chadlington: That is very interesting.

Lord Sandberg

  502. Earlier the Lord Chairman asked you who was leading in Europe and I think you said Germany, United Kingdom, France and Spain.

  A. France, Italy and Spain.

  503. Could we have some sort of a score card? I think we are all used to seeing Manchester United with 50 points and Leeds ten points behind or two points behind.

  A. Yes, indeed.

  504. It would be interesting to know just where we stand in catching up or falling behind.

  A. Baroness O'Cathain did refer to the fact that if we take the greater population of Germany we have to recalculate our figures.

  505. Slightly, yes.

  A. But in terms of the actual numbers involved, Germany will have 30 million Internet access users.

  506. How many?

  A. 30 million, whereas Britain would have 25, France would have 18, Italy a figure which we believe would be about 11.5 or 12 million, and Spain very close to that on ten. Those are the reasoned estimates collated from statistics.

Baroness O'Cathain

  507. Basically we are ahead then on a population basis?

  A. On that basis, yes, indeed. With respect, I would question whether every person in Germany has equal access to the Internet.

Lord Sandberg

  508. Can we keep those figures up to date? Are they freely available?

  A. The figures only exist by what the research houses do their cross country knowledge on.

  509. Right.

  A. It is extremely—I use the word "hairy"—hairy looking at the estimates for the growth of business over the next generation, it is extremely difficult to do forecasts.

Lord Woolmer of Leeds

  510. You touched upon the formation of business to business communities.

  A. Yes.

  511. If I understood you right you said that effectively they are more important in terms of what is driving business and future prosperity and jobs than in a sense the more interesting e-commerce to consumers. In terms of Europe compared with America, and within Europe Britain, how do Britain and Europe compare to the formation of business communities taking advantage of e-commerce and e-business and transforming business for the longer term? Within Europe how does Britain compare?

  A. The number of cross corporate projects in Britain is roughly on a par with those to my certain knowledge in Germany, in other words where we have industry-wide projects. In both Britain and Germany we have a major market site exercise, ie common trading communities running on the back of the former monopoly PTT in each case. British Telecom has one in conjunction with one of the major vendors, as does Deutsche Telekom. Both have been matched in the kind of operation that we see around. Compared with the North American communities there has been a tradition of electronic data interchange in North America which was the forerunner of modern e-business. Because America was so much further ahead in electronic interchange practices, there was greater community spirit earlier on.

  512. I just wanted a qualitative view on your part to tell us whether you think that effectively in terms of transforming industry and business, and hence in the longer run prosperity, is Europe on a par with the States or are there ways in which Europe is likely to be behind? That must affect competitiveness.

  A. Given that there is no such thing as `Europe' in this context I would argue that some countries in Europe are certainly far ahead of the US in their approach and strategy, and I would put Germany and Britain in that position, whereas there are countries, and I have mentioned Belgium, that are far behind but they are part of the European Community and part of Europe.

Baroness O'Cathain

  513. I would like to ask you to talk about Europe because we are, after all, a European Community Committee.

  A. Indeed.

  514. What should the role of the European Union be in this, the European Union or European Commission or whatever? Do they actually have a locus in this? You know the way they try to get their hands into everything, try to regiment and organise and legislate, there will be state aid for this bit and not allowed for that bit. Do you think they have a role and, if they have, what should it be?

  A. Tomorrow there is, in fact, a two day conference starting in Lisbon in which eEurope is being presented, An Information Society for All. If it comes back to any of the points it is to create an open environment across Europe which will hopefully stimulate everything from the education arena. In fact, without wishing to quote the—

  Chairman: We have seen the document, perhaps you might comment.

Baroness O'Cathain

  515. What is your view of the document? We have expressed our view already.

  A. My view of it is that many of the objectives are pious aspirations and need local and national government co-operation which is not going to be inherently forthcoming without some real incentive. That incentive usually means financial incentive. Without redefining e-business as a separate category of activity which can be supported from the centre—supported meaning stimulated from the centre—then I am very dubious that Europe as a body, ie the EU, is going to achieve very much. It is going to come down to local initiatives.

  516. The problem is we have been led to believe that the people who are going to be taking part in all of these discussions, which as you say are aspirational, motherhood and apple pie really—

  A. Yes.

  517. The real drivers of all of this do not get a look in where governments are concerned, they speak a different language and people do not fully understand what they are talking about. Do you think that the Commission should actually go about consulting these people on how to keep abreast of leading edge e-commerce development? If you have the Martha Lane-Foxes of this world stuck in with the Department of Trade and Industry, perhaps they would begin to understand it a bit better, or am I just being stupid?

  A. You cite examples like the lastminute.coms of the world, those are blips on the horizon, they do not represent what e-business is about.

  518. They are actually distracting us then?

  A. They have a marginal distracting effect, I would put it no stronger than that. They fog discussion. Where there has to be real initiative is from projects being run at the moment by one of the national newspapers. I have to declare an interest, I am involved in it myself. We are trying to encourage small businesses not just to read about e-commerce but to become commerce enabled. It is an initiative. That is where the grass roots are coming from: people reading, people wanting, people doing something about it. No matter how much sense our friend, the E-Envoy in the Cabinet Office, is talking, that is not filtered down very easily to the grass roots, to the small businessmen, the engineering supplies operation in Wolverhampton who has to sell the equivalent of a 4BA bolt across Europe and do it cost-effectively.

Viscount Brookeborough

  519. When you said that you are trying to encourage SMEs, how are you doing this, apart from just writing about it?

  A. On this particular initiative one of the national newspapers is running a glossy colour supplement written by ourselves—I have declared an interest in the matter—the moment the reader turns to the centre-spread they see a dummy website, they call upon their PC that same website and they are taught how to go through the motion of getting their own website set up—their own commerce enablement set up—and supported by a series of free seminars which help people to understand the issues at stake. It is almost like a Dorling Kindersley approach—open the book, read through it and go and do it. Words into action.

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