Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 960 - 980)



Lord Bradshaw

  960. Yes. Let us go on to the digital signature applications. I must admit not to understanding a great deal of this, but the digital signature is the means by which something is authenticated. You have a system in Virginia. Can I establish two things? Who actually drives that? Is it driven by the private sector?
  (Mr Upson) We have a law in Virginia that actually came out of our—We are fortunate to have a Science and Technology Committee in the House of Delegates that developed what is now a standard for electronics and is considering a law that says, in Virginia, if two things are satisfied: if the integrity of the document is guaranteed, if we guarantee that, and we can guarantee that the signatory is the signatory, then an electronic document is as legally binding as a written document. The responsibility for that rests with—or we will have—rests with the Secretary of Technology for the Virginia Government, for this reason. We do not want citizens to have to give one digital signature for D&B, another for tax, another for a boat licence, another for housing permits, what have you. We want to have a common environment, for a couple of reasons. One, it is easy for the citizen and, two, if there is some kind of security problem or technology evolution, the biggest threat to the security of our data is going to be that we have too many systems in government. So we are trying to centralise co-ordination using a model where we bring stakeholders in. It is the best way. We have to have standards so the responsibility for it rests with the Secretary.

  961. Then that digital signature is unique to that person? How widely is that then accepted in the United States or elsewhere?
  (Mr Upson) Digital signatures run the spectrum. I think we all use them every day in terms of an ATM machine.

  962. Yes.
  (Mr Upson) The question I think you are asking is, when you get to documents, then is there a notion of a public key infrastructure, which I think is very exciting: the idea of being able to put in a password. Log into the internet, execute a transaction, put in a password and have my own key that only I know that verifies it, encrypts the data and someone on the other end can de-encrypt—or whatever the word is -and literally you control the information. It is one of our pilot projects. How pervasive is it? It is not pervasive at all. It is the next generation. One of the issues I addressed to the Federal Government the other day is that the Federal Government is doing pilots all over, different kinds, and I think my point was that is a mistake. We are trying to do them along the same scale. Washington State in the United States is probably the most advanced. I would love to say we are. We look to them as a model and we are putting out a procurement for digital signatures and authentication authorities and so on, but that is the next generation. But we all use them today. It is a digital signature when you execute your driver's licence transaction.

  963. And it is a Virginia digital signature at the moment, anyway?
  (Mr Upson) Yes.

  964. The second thing really is that you refer to stakeholders. Could I just ask you to take an example of some stakeholders who you believe have benefited significantly from the changes which you have wrought?
  (Mr Upson) If I may, because my job not only is the CIO for the State, but also the person responsible for policy for business and research development and education, so you are asking me a broader question.

  965. A rather broader question.
  (Mr Upson) I can tell you, inside government it is happening all over. Let me tell you some stakeholders who have directly benefited because that is really concerning citizens. Higher education: we have 16 universities: the University of Virginia, William and Mary, Virginia Tech, a number of them. They do not work together. They have started working together. One of the other commissions we have formed is the notion of stakeholder-driven government for technology is literally the universities will tell you themselves that they have benefited greatly in terms of, one, consolidation of their administrative operations which they are doing. That is the government side. But in terms of research and development, in consolidating what we do, now that they are working together—in bio-technology. We have the University of Virginia and Virginia Tech working together, working with George Mason University, creating a collaborative environment, looking at government as an enterprise and education as an enterprise. We are able to attract more interest, more research dollars, participation by the business community, business community stakeholders that have benefited: every technology company in Virginia will tell you—some of them here—that the legal framework we put in place benefits them greatly. In terms of setting up the rules, having a default set of rules for digital products; in terms of creating an advanced awareness of Virginia's modern horse fields and tobacco farms. The Governor of Virginia came back, and I introduced him, and I said that once, and he said, "There is nothing wrong with horse fields and tobacco farms." But it is not our economy now. For us it happened in seven years.

Lord Faulkner of Worcester

  966. Good afternoon. I enjoyed your paper which I thought was very interesting. I want to ask you about the electronic government implementation initiative, and your reference to crossing traditional programme and agency boundaries. Have you found that this cross-agency funding has been met with much resistance and, if so, how do you overcome it?
  (Mr Upson) Cross-agency funding? It has all been an experiment for us. The evolution of the COTS Council, is now two years old or almost two years old. The first meeting, I mean, everyone there was— We got this new Secretary and it was, "We are not going to give up our turf". And now, it is the most collaborative system of leaders. Any COTS recommendation—it is not me, really. You know, I drive my chair, but every month that Council reviews projects over $1 million -our technology progress. We have discussions on whether there is repetition and whether we can consolidate. By the way, there is a project review that comes through my office. I have the authority to approve or disapprove any technology project over $1 million. I literally take that to the COTS Council and ask what they think, and let them force the discussions of savings and cross-collaboration, and it is working very well. The interesting issue I had this year was with our own legislature. They had concerns that the COTS Council was really just my tool, to do what I wanted it. I realised I had not done a good enough job with the legislature, and the COTS Council came in, and we are now funding a major project to operate the technology and standardise the technology on every desk-top in the Virginia government. It is called Seat Management. Part of the new government implementation plan will require every agency to submit a plan on how they are going to comply with it. We have a few challenges coming up. We are about to consolidate some major administrative travel expense, and procurement and leave systems. You know, it makes no sense that in the state government or the Federal government we should have agencies all doing their own leave system, or their own travel system. I might give you an example of that. I think you will get cooperation because I think you have the management structure, but I told the Governor. I said, "You know, I hate to say this, Governor"—and I hate also to admit it on record here—but I said, "when I fly it is United Airlines or American and one is a little bit more expensive. I am going for frequent flyer miles." And I said, "I think it is happening all over government, and there is no system in place to curb it. We can put parameters in the electronic system that require all of us very simply and easily to do that." And so those are the kinds of things. We have to come up with some savings in the next two years anyway. Those are the kind of things we are going to need. You can strike that if you want!

  967. I was going to suggest, maybe the government can tax you on the frequent flyer miles. Can I just ask you one other question. You say bandwidth—fast, accessible and inexpensive—is essential to providing the service for the citizens. Why do you say that broadband width really is a critical factor as opposed to ADSL?
  (Mr Upson) Let us talk about government and outside government too. It is critical. If we are going to really use the internet to execute transactions and to conduct commerce, whether it is an engineering project or just text transfers, people have to be able to have access to technology, have to have speed and they have to have the ability to carry the information quickly. We believe that is as fundamental as buildings used to be one hundred years ago for business. We have put in place— But again, here is the challenge, I think. History has shown us that every network—canals, railroads and highways—all had prosperity where the network was built. Our opportunity and our challenge is that this network can be anywhere, and it can be everywhere, but right now it is concentrated. In the United States it is concentrated in Silicon Valley and research triangles and urban centres, Northern Virginia, New York, Austin, Texas. How do we get it to rural parts of the state? How do we get time to serve populations? We have used state government to be a negotiator, and use its power as a buyer too, to negotiate a contract between telephone communications companies. There was a whole poker-playing component of it, I think. What we did was achieve the only state-wide contract that will allow businesses of all sizes anywhere in the state, on demand, to get high bandwidth communication services at enterprise rates, state-wide rates. What do all the businesses know about? So what? They have a pipe. The other challenge is, what do main street businesses do with it? One of my agencies—it is a unique hybrid, a private/public agency called the Centre for Innovative Technology—we are sponsoring work-shops all over the state, six of them later this year, and they will probably will continual. We are going to bring hundreds of businesses together, main stream businesses with e-stream businesses, and let them interact in a disciplined environment where we show companies how to use the bandwidth, how to use the network, for both their back room administrative operations and their business-to-business and business-to-customer transactions. I found, by the way, your comment about internet companies not making money yet—that bottom that fell out is in Virginia. We have 7,000 or 8,000 of those companies, so we are very familiar with it. That is the challenge, taking the communications technology and intersecting it ultimately everywhere—that is what we are doing.

  Chairman: We have some questions on the stovepipe mentality, but I think you have covered those already in answering the previous questions. Lord Paul would like to ask some questions about employment.

Lord Paul

  968. Mr Secretary, your testimony first of all is so good that the question-asking has become very easy.
  (Mr Upson) Thank you.

  969. You say that according to some soon-to-be-released study conducted by the American Electronics Association, Virginia's high technology industry added 50,000 jobs to its economic base between 1993 and 1998. What sort of jobs are these and were there other types of jobs which you lost, and how did you manage to create so many skilled workers?
  (Mr Upson) How did we manage to create jobs?

  970. To find so many skilled workers?
  (Mr Upson) Skilled workers? Caroline is telling me—she is my Assistant Secretary—that the American Electronics Association's study is on line now, and it is available.
  (Ms Boyd) It was released last week.
  (Mr Upson) Can I step back to Virginia just a little bit. In 1980 we had very little technology but that was the year, and that was the period, that desk top computers hit the world. And the biggest buyer in the world was Uncle Sam, and we had the best proximity to Uncle Sam, and we also had the lowest taxes and the most friendly regulatory environment in the United States. So this suddenly broke through the eighties. When the internet hit in 1993, we certainly one of the highest concentrations of information service workers anywhere. The creation of jobs: suddenly when the internet— All those people doing government technology work went out and started their own companies and literally the jobs that were created were very entrepreneurial. Companies like America-On-Line, that we all now think of as giants, were nothing ten years ago. The jobs that were created? I will give you our demographics. We have 12,800 technology companies in Virginia. One in 8,000 of them is quadrupling in size every four years, and 5,000 of them have under 9 employees. So the jobs are being created. We have become a magnet for entrepreneurs really. I think Silicon Valley is far more mature than we are—we called ourselves "The Wild, Wild East". Everyone has a business plan and everyone is going to change the world—and we have some of those companies here today, by the way. We have a company here that is opening an office in London that did not exist a year ago. So there is an incredible lot of entrepreneurial skill.


  971. There are a lot of youngsters behind you showing a lot of interest.
  (Mr Upson) And so I think we are trying to build on the fact that we were blessed with an environment by, frankly, happenstance and now we are trying to say we did some things well by happenstance, and now we want to build an environment around it to preserve it, and spread it across the state. But the kinds of jobs? They are software development jobs; they are largely software development. That is our competency. We are going to do them competently. Web management, web conversion—I call it economic conversion jobs. We have another statistic to show you. It says fourth in here, but we have the fourth highest wages of any state. That is because of the stock options that people— Wages, by the way, they measure: the total compensation is salary plus stock options that are exercised, and stock options are another currency in Virginia. I do not know if that gets to your question but actually it is an entrepreneurial environment, and I think it is unmatched.

Lord Paul

  972. And the stock options—how are they feeling at the moment for the last couple of weeks?
  (Mr Upson) Not as good as they did in March. I am feeling a little better about not having them than I did.

  973. Another question. Again, in your testimony last February, that with the cooperation of the United States Federal Trade Commission, the largest ever international law enforcement project to fight fraud on the internet, 150 organisations in 28 countries, including seven Federal agencies, 49 state and local consumer protection agencies, 34 Attorneys General, 39 Better Business Bureaux -is this a continuing operation? Could it be transferred elsewhere?

  974. Is it a continuing operation, an on-going operation?
  (Mr Upson) I saw that question, and I thought "I do not know the answer to it," so probably I should say that. But I have to tell you this. I work with our Attorney General very closely. I go back to the point that there are no precedents for this new medium that is only seven years old. I hope that. I have to believe that will be coming and I hold to that. But I will tell you that there is an organisation called the National Centre for Missing and Exploited Children. It is head-quartered in Virginia. It is a national organisation. It has now gone international. 2200 kids are reported missing in the United States every day. Until the internet, they had about 63% recovery rate, and a lot of that has been parental abductions and things, but a lot of it is not. With the internet that recovery rate has gone up to 90%. The challenge that I think law enforcement has—I talk about computers over here and education over here. The other issue is computers over here and crime fighting over here. The challenge, I think, that law enforcement has is you talk about lack of cooperation in a functioning government. I do not know what it is like in Europe, but local police do not necessarily talk to county police; state police do not— And all the way up. Then, of course, nobody likes the Federal Government. But technology is starting to break that down and in cybercrime it almost has to. We have had cooperation in Virginia, across national borders, in catching child pornographers. There is one case here, and there is another one, so it is a priority in our state. That cooperation is inevitable and I hope that conference continues. We have a meeting of State Attorneys General that I spoke at just three weeks ago in Williamsburg. So I think that cooperation is starting to occur at all levels.

Lord Sandberg

  975. My colleagues visited you two or three weeks ago. This is before we had this wonderful "I love you" on the internet. How has that affected you and your enforcement?
  (Mr Upson) A good question. In fact, I think it points to our COTS Council again. The minute that happened—we heard about the virus—we have now a reporter mechanism in the Virginia Government that I put out. It said anyone that has gotten anything: one, we put out the alert. Two, we put out the notice that any instances should be sent through to my office so we can manage it. Three, we immediately shut down all the state servers, and of course got soundly criticised by some for not allowing citizens to provide access into the government for 24 hours. But by 10.30 the next morning we had patches in place, because we had cooperation across government, and there was not a blip in Virginia. We had only a few instances. We had no service disruption other than that which we controlled.

  976. It was not started by you, obviously!
  (Mr Upson) No, no. I got scared enough, I tell you.

Lord Cavendish

  977. Thank you, Chairman, you are right, I think, in saying that the stovepipe mentality has been touched on but I would like to just add a supplementary to it. If there was a stovepipe mentality—and I do not think it is unique to the Commonwealth of Virginia—I would like to know how you incentivise people to abandon their stovepipes? And what level of government do you attack?
  (Mr Upson) Part of it, I think, it gets back—because I was thinking about the incentives. We are doing something now, so I will return to incentives in a second. But it does get to the notion when you bring people that have the authority within their organisation and give them a larger mission— I cannot tell you, the pride in the work force that implements that. In terms of incentives, where we get people to participate? let us start with out higher education. It is one of the particulars we are looking at. Not only do we have 16 universities and 23 community colleges; they all have their own data centres. We have probably seven Peoplesoft, and God knows how many Oracle contracts. We are saying now, with one of our universities leading— I do not know what education is like here, but universities are so like students. They want the money from the state, but no accountability to the state. So they do not want the state telling them what to do, and how to run their systems. We are saying, "Look, we will build the data centre. We will give it to you. You all cooperate. You will save millions of dollars That will not affect your budget. You can have the money to do whatever, to educate students." That is, I think, a real example. We are also on another initiative which the Governor is putting out today, in terms of reducing costs. Fifty per cent of the savings that we realise by putting in these systems will go back and accrue to the state, or to the respective agencies. So we are trying to upgrade our data technology. We are trying to provide incentives, but I do not think the incentives will work without a management structure.

Viscount Brookeborough

  978. Just a quick one. As your successful businesses in Virginia and as your government become more online, do you have, or do you perceive, problems in increased social exclusion in the lower income groups, accepting that whilst at school children may all have computers, and when they leave school they may even be given them, but do they have the ability to keep them up to date and to keep in touch?
  (Mr Upson) That is a very good question. It is probably the top concern of our Governor today. We have a number of proposals. Some did not get through the legislature, some we are trying to fund anyway and we are working with the private sector on. And talk about old versus new world—this is it. Governor Gilmore has proposals in his budget to provide internet to every community—community based internet access especially in poor areas. We have a comprehensive programme to do this. The libraries, of course, were modernised, but our point was that the populations we are trying reach do not always go to the library. We have to put them in boys' and girls' clubs, community centres, churches, senior citizens', homes. Senior citizens, who have the most to gain from this, are not going to go into a library and be embarrassed and try and learn computers. They will do that in a senior citizen centre. We have a whole programme and we are linking up with America's Promise and a couple of other initiatives, matching state funds with Federal funds and with private sector funds, to put internet access and computer availability everywhere. In addition, the Governor has proposed—you know, with welfare reform in the United States, states have saved billions of dollars, I think in Virginia, we have over $200 million in surplus funds because the welfare has declined so much, public assistance—what we have proposed doing is using those funds, or a portion of those funds, to give the poorest part of the population technology in a leased environment, so it is always updated. It cannot be resold or anything else. That met with resistance in our legislature because the thought was, they should have more food or housing, and this is a luxury. Our point is, it is not a luxury. So we are providing that line.

  979. And do you believe that the availability, when it comes, of interactive digital TV will it change the problem dramatically or make it a great deal easier because these classes may have more opportunity?
  (Mr Upson) Interactive digital TV? My friend here is the President and CEO of Consumer Electronics Association. Digital TV, I believe, is going to be required on every television by 2006?
  (Mr Shapiro) The model, for United States purposes, is on high definition television, which is very important for video resolution, and the interactivity you are talking about is mostly focused on the computer world. But you can have small electronic devices, and as computer prices go down every year the digital divide, as we call it, which answers your question, will be addressed, primarily by falling prices and rapid availability. Plus there is (inaudible) tax credits. We have proposed in some states tax holidays for buying computers and that way there is also a number school availability programmes for computer as well. The major computer companies have also stepped forward to provide computers for schools, and there is also a tremendous programme for schools to get digital access through a tax credit and there is a Federal Communications Commission.
  (Mr Upson) We do not find that there is a great focus on the programme. There are all these resources, but they are not focused as well as perhaps they could be. We are trying to do that in the state. The second interesting thing, I do not know what it is like in the United Kingdom, but I tell you this. We found in looking at the subscribers-to-cable TV, the highest-end packages—the ones that are $60 a month, that give you 74 movies and all that—are subscribed to by the lowest sector of the population. They are the ones that spend the most money on it. I found that interesting.

  Viscount Brookeborough: Absolutely right, yes.


  980. It is concluded, then. I promised that we would bring the session to an end by 5 o'clock so that we can take you for a cup of tea. For the record, again, on behalf of the Committee and personally, I would like to express our most grateful appreciation to you, Donald, and to Caroline, for all that you have done to assist us with our deliberations. Thank you very much indeed.
  (Mr Upson) Thank you.
  (Ms Boyd) It has been a privilege.

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