A group of MPs has said the UK is losing the fight against e-crime and called on the Government to take steps to improve online security for businesses and the public.

The Home Affairs Select Committee paints a gloomy picture in its first report on the issue, saying there appears to be a "black hole" in which e-crime is committed with impunity. Online fraud is often not reported or investigated as banks simply reimburse victims without going after the criminals.

It says that banks should be required to report all e-crime to the police, the Government should set up an espionage response team, and calls on the Director of Public Prosecutions to review sentencing guidance so that e-criminals can expect the same treatment as ordinary offenders.

Number one target

Keith Vaz, Chair of the committee, said: "You can steal more on the internet than you can by robbing a bank and online criminals in 25 countries have chosen the UK as their number one target. Astonishingly, some are operating from EU countries.

"If we don't have a 21st century response to this 21st century crime, we will be letting those involved in these gangs off the hook. We need to establish a state of the art espionage response centre. At the moment the law enforcement response to e-criminals is fractured and half of it is not even being put into the new National Crime Agency."

In response, A Home Office spokesperson said: "Crime is at record low levels and this Government is taking action to tackle the cyber threat, investing more than £850 million through the national cyber security programme to develop and maintain cutting edge capabilities.

"The National Crime Agency will include a new elite National Cyber Crime unit to target the most serious offenders and provide enhanced intelligence for CEOP so they can protect even more children from harm.

"But we know we need to keep pace with criminals as they target the web and so we continue to consider ways to ensure the police and security services have access to communications data."

The Confederation of British Industry also suggested the MPs had got it wrong. Its Director for Competitive Markets, Matthew Fell, said: "Proposals to force businesses to report a cyber attack as soon as it happens when they should instead be focusing on fighting the attack privately could be counterproductive and put them at greater risk.

"Mandatory reporting would also risk cyber security becoming a tick-box regulatory requirement and stifle business-to-business information sharing."

FSB warnings

The report follows earlier warnings from the Federation of Small Businesses that small companies are not doing enough to secure themselves against online crime. The Chartered Institute for IT has also produced guidance for companies to protect themselves against security breaches.

The MPs' report also expresses alarm that the budget of the Child Exploitation and Online Protection Centre is to be cut by 10% over four years, and warns that it could lose its focus when it is merged with the National Crime Agency.

In addition, it says it is too easy for people to find internet sites that have indecent images of children, incitements to terrorism and advice on committing online crime, and that there should be stronger action to remove such content.