3.1 The Government believes that to achieve leadership in the digital economy, the UK needs to excel in all three areas identified in the model at Figure 7:

• we need consumers who provide strong and sophisticated demand for digital products and services
• we need IT, electronics and communications supply sectors which are innovative, dynamic and growing
• and we need a market framework which both empowers consumers and encourages competition and innovation from the industries which serve them.

3.2 The Competitiveness White Paper(8) sets out a strategy to equip the UK for the digital economy, through action in all of these areas. The purpose of this section is to summarise the key policies from the White Paper - many of which implement recommendations of the Information Age Partnership and the Information Age Competitiveness Working Party.

A champion for change
3.3 To equip the UK for the digital economy we need co-ordinated action in Government and international agreement. The Prime Minister will appoint a Special Representative on the Digital Economy for the UK (the e-Envoy) to achieve this. He or she, overseen by the Secretary of State for Trade and Industry, will drive forward the following agenda.

Modernising the market framework
3.4 The UK's early lead in introducing competition to the communications market has played a key role in developing the world-class ICT infrastructure highlighted by the analysis in the appendix to this report. The Government is committed to keeping up-to-date the regulatory framework for telecommunications and broadcasting. It is therefore going to reform telecommunications legislation. The reforms will take account of the responses to the Green Paper on Convergence(9) published earlier this year.

3.5 But it is also essential that the wider regulatory framework - from copyright to consumer protection, from contract law to taxation - is one which encourages UK businesses to exploit this world-class infrastructure to the full.

3.6 Existing laws were developed for the trade of physical goods. Yet, as discussed above, electronic commerce is on most estimates set to reach $350-500 billion worldwide by 2002. The countries that are quickest to adapt their legal, fiscal and regulatory framework to the requirements of this new form of trade will reap significant "first mover advantages". That is why the Government has set the goal of creating in the UK the best environment in the world in which to trade electronically by 2002.

3.7 The Government has tasked the new Performance and Innovation Unit in the Cabinet Office to lead a cross-departmental review of the detailed changes which are needed to achieve this goal. The review, to be completed by Summer 1999, will inform the work plan of the new e-Envoy.

3.8 But initial consultation with industry has already identified a wide range of issues on which action is needed now. The Competitiveness White Paper therefore announced new measures in the following areas.

Building trust in e-commerce
3.9 Markets only work when they are trusted by buyers and sellers. Many people fear that personal information such as credit card details given over the Internet could be misused. In fact technology now allows the recipient of an electronic message to be sure who sent it and that it has not been read by others. To build trust in electronic commerce, the Government will introduce an Electronic Commerce Bill to establish a voluntary licensing scheme for organisations providing secure message services.

3.10 Many businesses and consumers are unclear about how consumer protection laws can be enforced when an electronic transaction takes place across borders. The UK is playing a leading part in international discussions on the way forward. Within Europe, moves are under way to ensure that consumers involved in cross-border disputes about electronic transactions are treated in the same way as those buying by more traditional means such as mail order.

3.11 The Government will also work with consumers and businesses trading electronically to draw up a code of conduct by Summer 1999. This would enable traders committed to best practice to use an on-line digital hallmark, and give consumers help with effective complaint and redress procedures at the click of a mouse.

3.12 The Government's strong preference is for self-regulation. But it will consider changes to the law if they do not provide the reassurance customers need.

Clarifying the ground rules in the digital market place
3.13 As well as helping to create confidence in the market, the Government will remove obstacles that stand in the way of electronic commerce. For example, some aspects of existing law discriminate against electronic documents, and the legal validity of electronic signatures is unclear. Proposals in the Electronic Commerce Bill will be designed to ensure that electronic documents and signatures will become the legal equivalent of pen and paper.

Removing barriers to international e-commerce
3.14 We cannot allow international trade on the Internet to be smothered by red tape. There is now international agreement that no "bit tax" should be imposed on Internet trade. The Government is determined to ensure that on-line products are treated as services, attracting no customs charges, and that import and export procedures can be completed electronically.

Promoting demand: in the community...

3.15 People need to feel confident using digital technology to make their living in the new economy. The White Paper sets out a comprehensive programme of action:

• Effective delivery of digital technologies within the National Curriculum - by 2002, most school leavers will be able to use digital technologies.
• Creating the National Grid for Learning - all maintained schools should be connected to a state-of-the-art computer network by 2002.
• Preventing the creation of a class of "information-have-nots" - the Government is working with Business in the Community to extend "IT for All" to the most socially disadvantaged.
• Ensuring community access to digital technologies - by investing in a major programme to wire up all public libraries as "information hubs" for their local communities by 2002.

...in business...

3.16 The Government is setting a new goal, to triple the number of UK small businesses which are wired up to the digital marketplace, from about 350,000 at the end of 1997 to 1 million by 2002.

3.17 Significant action is already in hand.

• The Government's Information Society Initiative (ISI) Programme for Business has worked with Business Links and their equivalents in Scotland, Wales and Northern Ireland to develop a network of 80 Local Support Centres, giving smaller businesses access to independent advice on the use of digital technologies.
• TradeUK at www.tradeuk.com offers every small business in the UK which exports or is thinking of doing so an electronic shop window on the World Wide Web free of charge.
• The Government has set up Action 2000, with a budget of over £20 million, to advise businesses on the Millennium Bug, which will cause many IT and electronically-controlled systems to malfunction as the year 2000 approaches unless action is taken. It is also providing £26 million to train "bug-busters" able to help small businesses identify and fix their Millennium Bug problems.
• The University For Industry will target ICT skills in business as a key priority.

3.18 In addition, the Government plans to invest some £20 million extra over three years.

• It will complete national coverage of ISI Local Support Centres by Autumn 1999, accompanied by an enhanced promotional campaign.
• It will back a private-sector initiative to ensure that all advisors to small business, in the public and private sectors, can deliver consistent and integrated advice on IT and business best practice. The Advisor Skills Initiative, being piloted by Microsoft, Intel, Compaq and BT in partnership with DTI, will create a network of quality-accredited SME advisors.
• It will launch a new fund for partnership action to increase use of ICTs at local level and through supply chains.
• It will develop, in partnership with the private sector, an "E-Commerce Resource Centre" on the Internet, available through the Enterprise Zone. This will provide businesses with the information, tools and advice needed to exploit the opportunities of electronic commerce.
• It will launch a national award to recognise excellence in digital business.

...and in Government

3.19 One of the major contributions Government can make to the development of e-commerce is through the way it organises its own work. The Government has therefore set itself stretching targets for digital government:

• By March 2001, 90 per cent by volume of routine procurement of goods by central Government will be conducted electronically.
• By 2002, 25 per cent of Government services will be accessible electronically. The Government will publish details of Departments' performance against this target from Spring 1999, and review whether it is sufficiently challenging to ensure that the UK is at the forefront of international best practices.

Promoting competitive supply industries

3.21 The Competitiveness White Paper sets out a major programme of reform to modernise the supply side of the economy. The Government will work with the UK's IT, electronics, communications and content sectors to ensure that they take full advantage of the initiatives announced in the Competitiveness White Paper, in particular those aimed at promoting high-growth SMEs, innovation and effective exploitation of knowledge generated by the science and engineering base.

3.22 The Government has asked the Information Age Partnership and the National Skills Taskforce for England to produce a national strategy to meet the skills needs of these sectors. The Government will publish proposals for action by Easter 1999.