eMinister outlines the future for eBusiness UK

Patricia Hewitt answers Computing readers questions regarding IR35, skills shortages, and free internet access.

Skills shortage

The Government's Competitiveness White Paper (available at http://www.dti.gov.uk) recognised that there were significant and growing skill shortages in the IT, communications and electronics (ITCE) industries which could undermine the UK's ability to exploit the opportunities of the Information Age.

The Secretaries of State for Trade and Industry and Education and Employment therefore established the ITCE Skills Strategy Group to advise government on the development of a strategy to address the skill needs of the ITCE industries.

The group's final report will be published shortly. Its recommendations are expected to cover the way ITCE businesses recruit, train and retain skilled people and how industry and the education system can work together to ensure education and training provision meets the needs of businesses.

The government will work with business and education providers to translate the group's recommendations into action.

The National Skills Task Force has addressed the general IT literacy of the workforce as a whole. Its second report `Delivering Skills for All' (available at http://www.dfee.gov.uk/skillsforce) contains a number of recommendations to improve workforce IT competence.

In addition, the recent Cabinet Office study on e-commerce called for new national targets to be set for IT literacy."

Internet access charges

The Government is strongly committed to ensuring the wide availability of fast and affordable Internet access. We believe that competition, not regulation provides the most powerful mechanism for delivering this, by driving operators to provide creative solutions to their customers' needs.

This approach has been bringing some welcome results. For example, vigorous competition in the UK has led to the emergence of subscription-free ISP's and falling telecommunications prices.

But I am conscious that prices need to come down further, and we will continue to drive forward competition in order to achieve this - as demonstrated, for example, by OFTEL's recent announcements on opening up BT's local loop to competition (available at http://www.oftel.gov.uk).

Since taking up my post as eMinister, I have received a number of representations pointing out the advantage which some parts of the US, and some other countries, have with so-called "free" local calls. Of course, nothing is ever free.

The cost of such calls has to be recouped somewhere, for example through higher standing charges or higher long distance call rates. The congestion in the network that would result from unmetered Internet access in the UK would require added investment in telecommunications networks to meet the increased demand. The cost of this investment would have to be recovered from customers somehow.

Nevertheless, even though average costs for typical Internet users in the UK and the US are very close, it is clear that the zero marginal cost of Internet use has been a factor in driving ecommerce growth in the US.

The Performance and Innovation Unit (PIU) report (which is available at www.cabinet office. http://www.gov.uk/innovation/1999/ecommerce) therefore sets out our strategy for ensuring UK customers have the flexibility of low or zero marginal cost pricing packages, by identifying any regulatory barriers to innovative tarriffing packages which may exist and by encouraging BT and other operators to take much greater advantage of the wide scope for such packages which already exists.

The introduction of several new tariff packages for calls to the Internet on freephone numbers during the evening and at weekends is a welcome sign that competitive pressure is already making this happen. BT has recently announced significant price cuts which will include limited access time in the rental cost and lower price evening calls. I welcome this, but I and the Telecommunications Regulator will continue to encourage BT and other operators to introduce yet further tariff flexibility.

IR35 proposals

Dawn Primarolo has recently announced a revised approach to the IR 35 proposals. This revised approach responds to concerns expressed in consultation, and the new rules will not prevent the use of intermediaries. Under the revised approach, there is no certification scheme requiring clients to identify intermediaries who could continue to receive gross payments, and small companies can continue with the flexible arrangements they currently enjoy.

Further details of the revised approach, including the press notice which accompanied the announcement on 23 September, are available from the Inland Revenue web site at http://www.inlandrevenue.gov.uk/ir35/index.htm.

The Inland Revenue will be working with representative bodies to develop detailed guidance for publication before the proposals come into effect in April 2000.

Difficulties in obtaining merchant status

I share concerns about current difficulties which are encountered by small businesses in obtaining merchant IDs for clearing credit-card transactions online.

This issue is raised in the report ecommerce@its.best.uk (available in portable document format (pdf) from the Cabinet Office website at http://www.cabinet-office.gov.uk/innovation/1999/ecommerce), which was published by the Prime Minister on Monday 13 September and sets out the government's vision and strategy for ebusiness in the United Kingdom.

The specific issue of on-line credit-card processing facilities for SMEs is discussed in recommendation 7.4 on page 35, and although we have not yet resolved the issue I hope that you will be reassured to see that it is firmly in our agenda and that action is in hand to address it.

Secure transaction facilities

It is essential that transactions across the Internet, especially where payments are concerned, are trusted by business and the public alike.

This point is expanded upon in the recently published Performance and Innovation Unit report e-commerce@its.best.uk (available from the Cabinet Office website at http://www.cabinet-office/innovation/1999/ecommerce), and is one of the reasons I am very keen to introduce the Electronic Communications Bill in the next session of Parliament.

It will give legal certainty to the use of electronic signatures (which will in themselves greatly contribute to user trust) and will encourage the provision of approved services; such as the provision of public key certificates. But I recognise that governments can only do so much: we can provide a degree of legal certainty and encouragement, but it is for the market to bring forward the products (which they are doing) for securing financial information."

Support to IT companies implementing electronic commerce

Support for IT companies providing ecommerce related services is provided by to the Software Business Network (SBN) which is run by CSSA (the trade association associated with the IT and software sector) and is sponsored by DTI. The SBN offers a range of services to software companies at all stages of growth, and may be contacted on (0171) 404 4119. Alternatively you may visit their website at http://www.sbn.org.uk

Availability of venture capital in the UK

The Government attaches great importance to small and medium sized firms gaining access to the investment funding they need to grow and succeed. It is for that reason that the consultation document on the financial promotion regime under the Financial Services and Markets Bill, published in March, sought views on possible ways to liberalise the regime governing the raising of informal capital from individuals.

The consultation paper proposed an exemption from the regime for promotions made to a defined category of investors so as to help small business raise the capital they need.

Many consultation responses favoured an exemption for such persons, although there was considerable discussion on how the exempt individuals should be defined, whether on the basis of financial sophistication or high net worth or some combination. We are currently considering the details carefully and in particular the need to ensure adequate safeguards and procedures, but, as was said in Commons Standing Committee during the debate on clause 19 in July, we are reasonably confident that we will be able to devise an exemption that will have a beneficial impact in this area.

Raising IT awareness at a boardroom level

I share a concern about the level of IT awareness at a boardroom level in the UK, and indeed only recently the Institute of Directors (IoD) published research showing that: only 2% of UK board directors believe that the internet poses a serious competitive threat, compared with 23 % in Norway, 17 % in Germany and 14 % in the US.

There is clearly a definite need to improve IT awareness at a boardroom level, and this need has been recognised by the Performance and Innovation Unit (PIU) in their recent report on electronic commerce e commerce@its.best.uk (available from http://www.cabinet-office.gov.uk/innovation/1999/ecommerce).

The authors of the PIU report note that UK businesses tend not to appoint senior directors to manage e-commerce activities, citing IoD research which revealed that only 8 % of UK businesses have an IT director working at boardroom level compared with 67 % in the US. Following publication of the PIU report, DTI has been tasked with developing a campaign aimed specifically at senior management in larger companies, details of which we hope to announce shortly.

Best wishes,

Patricia Hewitt