Blair's new Jerusalem

Roll up, roll up, ladeez and genteel-men, for the greatest show on earth...

When technology minister Michael Wills paid an official visit to Wilkinson's Big Top Funfair in Birmingham earlier this week, he clearly did not sense any incongruity in the situation.

For the man from the ministry was there to reveal, in solemn terms, how the UK would soon lead the world in ecommerce, with the first government-funded internet centre - opened at the circus that day - destined to provide the benchmark for thousands more.

In future, Willis declared earnestly, visitors would be able to use the showground's latest attraction to check out their emails, trace their family trees or bone up on the arts. All between a spin on the dodgems. And Wills was definitely not clowning around, even if others were.

Meanwhile, not that many miles away in Loughborough, Tony Blair was doing his bit to whip up enthusiasm for Labour's new UK Online initiative, also launched on Monday and for which Willis' Big Top debut was literally a side show.

Sporting his best Labour ringmaster's hat, the Prime Minister told businessmen how the government intended to plough £1bn into delivering all of its services online by 2005, along with "hundreds of millions" more to bring internet access to every UK citizen.

Not only that, but by 2002, Labour plans to have some 6000 online centres scattered across the length and breadth of the country, in libraries, shopping centres, community centres - pubs and football grounds, too.

As political spin goes, it was as good as anything any juggler could do. Not even pausing for a roll of the drums, Blair went on to boast how the government's earlier pledge to foster unmetered internet access services in the UK had now been fulfilled.

"Last September we said we would get unmetered access, but we've done better. On international comparisons, where last year we were average, we are now the best for off-peak rates. Let me say that again - we are the best in the world," he intoned.

That legendary showman Barnaby couldn't have done better.

Where's the beef?
But a few days on, away from the funfair fanfares and the distractions of the lorry blockade, questions remain over whether Blair's latest ecommerce initiative has any real substance behind it or whether, like yesterday's circus, the tent will quietly come down as the clowns move on.

So, apart from spending taxpayers' money and lottery cash, what are the specific objectives of UK Online?

According to Blair, the answer is three-fold: to make the UK the best place in the world for businesses to undertake ecommerce; to provide its people with universal access to the internet; and, finally, to set an example by ensuring all government services are online within five years.

But businessmen listening to the Prime Minister that day see Labour's ecommerce strategy as already seriously flawed.

For starters, Royal Assent is likely to be given to the government's controversial Regulation of Investigatory Powers (RIP) Bill next month which, despite being watered down, still threatens to lead to an exodus of ISPs worried by its proposals.

One of the key concerns is that UK ISPs will be obliged by law to link their portals to a new £25m surveillance centre that is currently being built by MI5. The sole purpose of this edifice is to allow law enforcement agencies to snoop on electronic messages more readily.

Although the government insists the move is essential to fight crime, ISPs remain concerned about how they can vouchsafe user confidentiality over the net - and in particular how they can safeguard the commercial secrets of corporate customers.

Among the critics of the RIP Bill is professor Jim Norton, the former architect of the Cabinet Office's own ecommerce strategy. He has already warned that the Bill's proposals - if pushed through without substantial reform - will constitute a "classic own goal" by the government and seriously dent Blair's ambitions to put the UK in the vanguard of the internet revolution.

Although he lauds Labour's general aims, and even led the team that wrote the blueprint for the party's ecommerce strategy last year, he believes trust in the government's objectives has been undermined, not just by the Bill but by other aspects of its policies.

"I don't doubt the Prime Minister's intentions, but I do worry about the ability of the civil service teams behind him to deliver on these things," he says.

Lingering doubts
Norton believes that, while Labour has done "reasonably well" on improving internet access in the country, with OECD figures confirming that the UK is now cheapest place in the world to get online at off-peak times, he remains unconvinced that ecommerce awareness among businesses has translated into real understanding yet.

He says that figures from the Department of Trade and Industry (DTI), to be released soon, are likely to show a huge increase in the number of small companies setting up their own websites - "but when you probe beneath, you find they're not doing terribly much with them. Often the websites are little more than online brochures, devoid of trading activity," he warns.

A study by the London School of Economics has, meanwhile, calculated that the RIP Bill could cost UK industry £46bn in lost work.

Norton says: "Trust in the government's e-policies should have been a central plank. But, thanks to the damage done by this legislation, I canonly give Labour three out of 10 on that score. It's a complete disaster."

He also believes the government is wrong in its stock option policies, particularly with regard to the technology startups and dotcoms that are at the heart of the ecommerce revolution. A huge bone of contention is the 12 per cent National Insurance (NI) levy that bosses have to pay whenever employees sell off their options.

This can cost companies literally millions when shares rocket - yet awarding share options is one of the few ways that cash-starved startups can reward high-flyers.

Despite appeals to Chancellor Gordon Brown to end the NI anomaly in the last budget, nothing happened. But this, combined with the fact that a quarter of all IT jobs currently remain unfilled, and the impact of the IR35 ruling, which forces computer contractors to pay tax under the Pay as you earn scheme (PAYE), means that many employers feel the government is out of touch.

"The government might have the right sort of instincts on such things as share options, but I think they are too timid in applying them," says Norton. "They're probably too worried that if they go too far in tax reforms, they'll see a rash of stories about Fat Cats."

So much for UK Online's aims of making the country a land for ecommerce heroes then. But what about getting the nation and the government online?

False start
Ironically, the initiative has already got off to a false start in its choice of name. Earlier this year, it was revealed that UK Online was a trademark of Aim-listed telco Easynet and its managing director Geoffrey Fenton was "appalled" at the government's attempted hijacking of his subsidiary's trading identity.

Quite how that has been resolved, if at all, remains unclear. Also unclear is just how much is being spent on installing thousands of internet terminals around the country, and what incentives will be offered to pubs, clubs - and even circuses - to co-operate.

As for getting Whitehall itself online, Labour's e-envoy Alex Allan had originally insisted that all departments were to have their strategies in place by next month - although he has since stepped down from the job, citing domestic reasons.

But there is also an argument for saying that the "best place" to undertake ecommerce is in cyberspace, where it is unfettered by any regulation, political interference, boundaries or even taxation.

Here, however, Blair and his European Union colleagues have proved largely deaf to the exhortations coming from the other side of the Atlantic - even to appeals by outgoing President Bill Clinton for international trading laws to be reformed so that internet trade can flourish free of taxes or other levies.

On the positive side, Norton believes the government can take credit for creating the right competitive framework in the realm of digital TV and internet access, with the latter having led to lower off-peak charges, even if daytime tariffs need to come down further.

He also believes the promised network of 6000 government-funded terminals is a step in the right direction, although he adds: "If you look at the statistics, some two million families still don't use the conventional banking system - therefore they don't have a credit card and so it's quite hard to pay for anything over the internet. In that sense, just providing poorer families with access isn't enough."

So does Norton, now head of the Institute of Director's ecommerce unit, really believe that UK Online will ultimately make the country "the best place in the world" for ecommerce?

"Tough one," he says. "But I do truly believe that, by 2002, there will be more people online in this country than anywhere else in the world. Whether that will make us the best place to do ecommerce - pass."