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Stephen Timms MPEMAP Retail IT Directors Club |
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Thank you. I am delighted to be here and I do I regard it as a privilege to be able to address such a distinguished group of IT leaders from the best known and actually most admired organisations in the country. I am also glad to be renewing my acquaintance with Emap because for a couple of years before the 1997 General Election I had a placement through the Industry and Parliament Scheme with Emap and I enjoyed very much over that period getting to know the company. "No end to High Street Boom" was the headline in yesterday's Times, and by any measure, retailing is an engine of growth in today's economy. A month ago today Tesco opened a big new store at Beckton in my constituency near the existing Staples superstore, and I think on the same day Waitrose opened its big new store nearby at Canary Wharf. Retail has been a fast moving environment anyway, and to meet head on as well the challenges of new technology must have made extraordinary demands on everybody in this room. Figures published last week by the Office for National Statistics show that online trading in the non-financial sector increased by over 40% last year, so that it now accounts for 1% of all purchases. It is interesting also that Internet take up in households, which plateaued towards the end of last year picked up sharply again this year, with three percentage points increase in take-up in the first quarter and again in the second quarter of this year, taking the total up to close to 50% of households. And I know that you will be able to point to a lot of success stories in what you have been doing in turning all this to your advantage, and to the achievements of creating better and more effective relationships with both your customers and your suppliers. I would like to focus this morning on the challenges which arise from the recent Retail Overview report, itself the culmination of a series of e-commerce impact assessments for us by Pricewaterhouse-Coopers examining a range of consumer goods and services sectors. E-commerce has been an important focus of our policy since 1997. We knew when we were elected that we could not afford to stand still. In a single day last year, there were as many e-mails as during the whole of 1990, or more remarkably still as many telephone calls as during the whole of 1983. In 30 years IT has grown from 5% of total business equipment spending to more than 50%. In sectors like insurance and banking, IT now accounts for more than 80% of all equipment purchases. You will be able to tell me the picture in retail. We have a strong starting base in the UK. English is the language of the internet. We have excellent technical skills, a good business infrastructure, a flexible labour market. So we ought to be able to do well, although we are under no illusions about the challenge involved in achieving our goal of making the UK the best place in the world to trade electronically. We have set ourselves demanding targets in order to achieve this goal. For the consumer, e-business is effectively eradicating geographical barriers and creating a global market in which to purchase products. It has enabled your companies to develop sales channels beyond solely 'bricks and mortar' and to reach world-wide markets faster and cheaper than ever before. This new technology allows industry to tailor products and services to its customers' needs and to increase efficiency and innovation across business. The result, according to retailers in the Pricewaterhouse Coopers survey, is improved service provision – increased responsiveness, a better 'pre-shop' experience and improved customer relationship management. Retailers have also learnt from their recent experiences and are increasingly adopting a multi-channel approach to reach their customers, aiming for consistency of message and brand across channels. But e-Commerce is more than just B2C. We are committed to helping business move beyond having a web site. In particular, there is great potential for e-commerce to improve supply chain management: reducing costs, increasing operational efficiency; developing online ordering and stock management; and collaborative forecasting, planning and replenishment – many of the areas I know many in this room intensely focusing on. Key to realising the B2B potential of e-commerce, however, is the need to address the incompatibility of different transaction systems and a proliferation of different standards across the retail supply chain. These serve to increase costs – the most important issue for many retailers. There are many other issues, which pose direct challenges for Government, as set out in the PricewaterhouseCoopers report. It highlights the diversity of UK retailers from global leaders to those who have not even begun to think about e-commerce – a 'digital divide'. The key challenge as identified in the report is to promote best practice to retailers of all sizes. So my Department is working closely with the report authors to develop a retail benchmarking tool which will enable smaller retailers in particular to evaluate their market position in terms of technology take up. We hope this will be launched later in the Autumn. One of the main priorities of my department is the UK Online for Business programme, a partnership between industry and government, focussing on three strands of activity:
We are also working in partnership with the British Chambers of Commerce and others in the eBusiness Clubs Initiative. The Clubs are designed to provide UK businesses with the essential information they require to integrate e-business practices into their processes, and are a good example of Government and the private sector working in partnership Legal/Regulatory Framework A major part of our work is to ensure the UK has a competitive market framework and a regulatory environment that allows e-commerce to flourish. We are working with other countries in the EU and beyond to set common standards and remove barriers. In 2000 we introduced the Electronic Communications Act removing barriers to the use of e-mail and other electronic communications in commercial transactions. We have put through the Office of Communications Act – the first step towards creating OFCOM – a converged regulator for telecoms and broadcasting. Sitting at the heart of these converging industries, OFCOM will be able to take a strategic overview and I hope give Britain a real competitive advantage as a regulator. In August this year we brought in the UK's implementing Regulations for the E-Commerce Directive – an important step towards breaking down barriers across Europe and boosting consumer and business confidence in trading online. The Regulations include provisions on:
The Regulations follow extensive public consultation and were significantly changed in response to the excellent responses we received which we were very grateful for. We may need further regulation to secure business and consumer confidence, we need to make sure that any regulation helps e-commerce and doesn't hinder it. So we have introduced a set of 'E-Policy Principles' – obliging everyone preparing new legislation to ensure that it is friendly to the online environment. We have also persuaded our European partners to adopt a similar approach. Consumer Confidence The PricewaterhouseCoopers report says that a key challenge facing the Government is how to promote the take up of new e-commerce technology by consumers through increasing levels of trust in the internet. Trust is vital. Customers are concerned about the security of transactions, about fraud and privacy of information. We are establishing an up to date market framework, with modern rules. We are investing, for example, in easier dispute resolution – in the shape of the European Extra-Judicial Network. And we are tackling global internet scams with partners in the US and other major countries. Perceptions are key. Consumers need to know they are protected through, for example, our award winning Consumer Gateway website (www.consumer.gov.uk). There is also an important part for business to play, and we are especially keen to work with others on our Safe Internet Shopping campaign. Please let us know if you can help. Consumers must feel that E-commerce is a perfectly safe way to buy, so it is also vital that industry takes the time to implement security safeguards and to deliver in fact the assurances that we all hope are true. Promoting Skills We must also ensure that companies like yours are able to recruit the skilled people you need with adequate supply of advanced IT skills. I was an education minister until May and I can confirm that we're putting in £100 million over the next three years to develop further education centres of excellence in high tech specialisms. And we are looking to expand specialist ICT learning programmes in the further and higher education system so that they reach 10,000 students by 2004-05. Getting the Infrastructure Right – Broadband Broadband is key to ensuring an effective infrastructure. There are still too many people in remote parts of the country – and some in urban areas – about one third of households all told – who don't yet have access to an affordable and reliable broadband service. So we have established a £30 million pound fund for Regional Development Agencies and the Devolved Administrations to stimulate innovative ways of extending broadband networks. We want it to enable the extension of networks to parts of the country where they would not otherwise be available. The key now I think will be public sector use of broadband. Over the next few weeks I shall be meeting with my ministerial colleagues in the Department of Health, the Department for Education, the Criminal Justice system and in local government – all of them will want to use broadband to improve the services they are delivering and they have now following July's spending announcements the resources to do that. And I want them to use that funding in the smartest possible way both to improve the services and to extend the reach of broadband services to areas which don't have it yet. The UK is one of the most connected economies in the world and we want the UK to achieve high levels of broadband connectivity as well. Last week we were able to mark the one millionth UK broadband connection – that is a threefold increase since the beginning of the year, and an estimated 20,000 homes and businesses are being connected each week. Thanks to thriving competition between the suppliers we can also boast some of the lowest prices in the world. Its worth remembering it took five years for the UK to see a million people using mobile phones. This is going faster than mobile did. With mobile also there were at one stage concerns about reaching rural areas and disadvantaged customers, and what happened was that competition between the service providers spurred innovation both in technology and in marketing which delivered the ubiquitous mobile communications we benefit from today. I am optimistic the same will happen with broadband, and at this pace, the UK is well on the way to our goal of being the most extensive and competitive market for broadband in the world. Rate of Success
So how is the UK performing against these various targets? We have in fact made excellent progress. We are now one of the most connected economies in the world and the initial target set out in 1997 to get 1.5 million businesses on line has been met. But we can't be complacent. Accessibility to knowledge and information on ICTs is vital to the successful adoption of e-commerce. Knowledge sharing is vital in this information society. Against a plethora of literature on e-commerce, the PricewaterhouseCoopers report provides a guide for UK retailers of the opportunities, challenges and best practice to the further adoption of e-commerce by UK retailers. Do take the time to read it. When the Prime Minister appointed me to this position he emphasised to me that it is the economic benefits of e-commerce to which he attaches the greatest importance – that we need to exploit the new capabilities to boost productivity and competitiveness in the UK economy. We all share a common interest in making the UK a leader in e-business. We are very keen in Government to work with you to achieve that and I will be interested now to know your observations on what more we need to do and where our priorities should lie. Thank you. |
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Other speeches by Stephen Timms MP
(the following are available from the archive) |
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