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We can accept that new forms of online activity, including the expansion of supply chains to include systems in a multitude of jurisdictions, poses new challenges for data protection enforcement. We do not accept that the incidence of loss of personal data by companies is on an upward path and we do not accept that the Government is indifferent to the problem. The Government believes that the market incentives provided by the impact of adverse publicity surrounding breaches of security are powerful drivers to apply appropriate protection. The Government also believes that the current legislative and enforcement regime surrounding personal information is proportionate and provides a strong incentive to appropriate action by companies. The Government agrees that it cannot prescribe the technologies or processes that should be deployed to protect information but we accept the spirit of the Committee's recommendation in part. We accept that the business models being adopted by companies whereby personal information is processed by sub' contractors in various jurisdictions is proving a challenge in both management terms and in relation to the underlying principle of European legislation that equivalence of protection should be ensured. A recent report by the Information Age Partnership and BERR pointed to the need to look at this problem and move towards solutions that work with the emerging global market in online services.

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