Theresa May gives first hint costs may far exceed £240m estimate as it emerges even small-scale providers could be targeted

Coffee shops running Wi-Fi networks may have to store internet data under new snooping laws, Theresa May has said.

Small-scale networks such as those in cafes, libraries and universities could find themselves targeted under the legislation and forced to hand over customers’ confidential personal data tracking their web use.

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The home secretary has also given her first hint that the costs of her snooper’s charter are likely to go far beyond the official £240m estimate. May told peers and MPs that talks were under way with internet and phone companies over costs and their technical capacity to deliver the measures, after being told that Vodafone, O2 and EE had testified that each company could each spend that amount alone in implementing the proposed surveillance law.

During nearly two hours of questioning by the joint parliamentary scrutiny committee on her bill, the home secretary revealed that small-scale internet providers would not be excluded from the requirement to store their customer’s internet records for up to 12 months.

“I do not think it would be right for us to exclude any networks,” she told MPs and peers. “If you look at how people do their business these days, it is on the move.”

May rejected demands from the information commissioner and from the defence and security industries that there should be a “sunset clause” on the legislation ensuring it would be revisited within five to seven years to cope with the rapid pace of technological change. She insisted the bill was “technology neutral” and fit for a rapidly changing technological world.

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The home secretary had no answer when questioned by MPs and peers as to how she would enforce legal notices requiring overseas internet and technology companies, such as Apple, Facebook, Twitter and Google, to store their customers’ communications data records for 12 months and to hand them over to British police and security agencies on request. May said they were still examining issues of “extra-territoriality”.

She did, however, attempt to reassure the scrutiny committee that judicial commissioners, to be appointed to operate a “double-lock” authorisation process on intercept and bulk interception warrants, would have sufficient flexibility to examine decisions taken by cabinet ministers to order intrusive snooping operations.

The scrutiny committee has had only two and a half months to examine the 300-page bill which is being introduced in the wake of disclosures by the whistleblower Edward Snowden, uncovering mass surveillance and bulk collection programmes operated by Britain’s GCHQ and the National Security Agency in the US. The committee is to produce its pre-legislative scrutiny report by 9 February before the bill is given a Commons second reading.

The issue of the costs faced by the internet and phone companies in complying with the bill’s requirements to collect, store and retain for 12 months all their customers’ communications data tracking their individual use of the web, email and mobile phones could prove a serious difficulty for the Home Office.

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The Labour MP David Hanson raised the issue with May, saying that Vodafone, EE, O2 and Three had testified in evidence that they could each spend £240m alone and were troubled about their current capacity to deliver compliance with the legislation on budget and on time. O2 had said the costs involved will be “huge”, while EE said that if there was any cap or limit on the government reimbursing their costs for storing the data involved, it could make things very difficult.

May made clear that the government had agreed to underwrite the costs involved in the companies’ complying with the bill on a “cost recovery basis”. She said the Home Office was in talks with the companies but insisted that the initial estimate had not been “plucked out of the air”.

She said: “We have provided some indicative figures. We are still in discussion with individual communication service providers about ways in which these capabilities are to be provided. We will have reasonable cost recovery when we require these companies to provide these capabilities.”

May said that she had spoken to the companies about the sums of money involved and the technical feasibility and that they had been responsive.