Office of Communications Bill [Lords]

Public Bill Committee, 5 February 2002.

Standing Committee E

Office of Communications Bill [Lords]

Ann Widdecombe (Conservative, Maidstone and The Weald)

I remind all members of the Committee that mobile phones and pagers should function silently or not at all.Clause 3 Management of OFCOM

Clause 3 - Management of OFCOM

Anne McIntosh (Conservative, Vale of York)

I regret that this is our last day, but I am sure that Committee members will contain their disappointment about the fact that we are not to convene after today.

The clause is about the management of Ofcom. We are disappointed that we did not succeed in gaining the Committee's agreement to decisions being made public, so I shall take this opportunity to examine how Ofcom should manage its affairs.

The clause and the explanatory notes—I shall quote from the clause—tell us that Ofcom shall

''in managing their affairs, have regard . . . to such general guidance concerning the management of the affairs of public bodies as OFCOM consider appropriate; and . . . subject to any such guidance and only to the extent that they may reasonably be regarded as applicable in relation to a statutory corporation, to generally accepted principles of good corporate governance''.

It is appropriate that the reference to those principles has been added.

The White Paper states in chapter 8, on page 77, that

''OFCOM will ensure that regulation is effective.''

We should take the opportunity to define and discuss what ''effective'' means and should be for the purposes of Ofcom. The White Paper continues:

''To achieve this aim it''—

Ofcom—

''will develop and maintain the necessary regulatory rules, in full consultation with industry and representatives of citizens and consumers''.

Clause 3 does not specify how that consultation will take place. We are then told that those rules will be developed

''within a broad framework of guiding principles established in statute'',

and that there are to be

''transparent and effective appeals processes.''

Good management is required to achieve all that, and the management will need to follow good management principles.

The White Paper tells us that Ofcom's

''work on content issues should take into account a wide variety of interests and reach consensual judgements. It will resolve any conflicts between its content-related objectives and its other objectives in a clear and transparent way . . . the quality of its staff will be vital to the delivery of its functions. It will require sufficient managerial and financial flexibility to retain and recruit the necessary highly skilled managerial and professional personnel in competitive labour markets.''

The Minister helpfully told us—it seems some time ago—that

''There are currently 1,111 employees among the five regulators, and the total cost is £118 million.''—[Official Report, Standing Committee E, 29 January 2002; c. 115.]

Some of the regulators are larger employers than others, with the Radio Authority being the smallest. I assume that £118 million is the figure for one year. As we are debating the management of Ofcom, I would like to question the Minister further about precisely how many staff he envisages the new regulator having. I will return to that in a moment.

At page 80, the White Paper states that Ofcom

''will operate in accordance with the best principles of corporate governance''—

as referred to in clause 3—''and better regulation.'' We should therefore consider the principles of better regulation. On page 13 of the report of the better regulation taskforce, which I obtained from the Library, the principles of good regulation are set out in a checklist. Outlining the principle of transparency—a theme that is referred to in several different reports—the taskforce's list states:

''The case for a regulation should be clearly made and the purpose clearly communicated. Proper consultation should take place before creating and implementing a regulation . . . Regulations should be simple and clear and come with guidance in plain English.''

On the principle of accountability, the list states:

''Regulators . . . should be clearly accountable to government and citizens and to parliaments and assemblies.''

The Committee has already debated those matters to some extent. The list continues:

''There should be a well-publicised, accessible, fair and efficient appeals procedure.''

On that point, the Opposition have been disappointed. The Bill does not tell us what publicity will be given to the new body's decisions, how accessible the management and the board will be, or what the appeals procedure will be. We would like the Minister to elaborate on those subjects.

Under the heading of proportionality, the better regulation taskforce states that

''Compliance should be affordable to those regulated—regulators should 'think small first'.''

That probably applies to all the activities of Government. The taskforce goes on:

''As far as possible, a light regulatory touch is used, with strict penalties when failures occur.''

The Opposition tabled a deregulatory amendment, but unfortunately it has not been selected for debate. Among those who have contacted us about the Bill there is a groundswell of opinion that it should emphasise a light regulatory touch. However, we are not told how such a light touch is to be achieved, or what strict penalties will apply when failures occur.

The better regulation taskforce also refers to consistency, stating that

''New regulations should be consistent with existing regulations.''

That is acutely important. The Bill is silent on how Ofcom, working with the existing regulators, is to ensure that the new regulations are consistent. In my view, the new regulations should replace the existing ones rather than coexist with them. The taskforce also states that

''Departmental regulators should be consistent with each other.''

The Bill fails to define the relationship between the two relevant Departments and Ofcom in terms of the management of the regulator. It is also silent on the responsibilities of the two Departments in monitoring the shadow Ofcom.

Kim Howells (Labour, Pontypridd)

I would like confirm that, as I said in a previous debate, the relationship between the Department of Trade and Industry, the Department for Culture, Media and Sport and Ofcom will be nothing less than harmonious and productive.

Anne McIntosh (Conservative, Vale of York)

That will certainly make me sleep easier at night. However, it is important not only that their relations should be harmonious but that the Bill should specify their precise nature.

The final principle that the better regulation taskforce sets out is targeting. First, it states that:

''Regulations should be aimed at the problem and avoid a scattergun approach . . . Where possible, a goals-based approach should be used, with the enforcers and those being regulated given flexibility in deciding how best to achieve clear, unambiguous targets.''

Again, we come back to consultation. Ofcom is to prepare for its main task of replacing the regulators under the shadow of the imminent communications Bill, but we are not told what the relationship between Ofcom and the regulators is to be. The Minister did not respond warmly, coolly or even lukewarmly when I expressed the fear that for a year or 18 months we will have six regulators—the existing five plus Ofcom—rather than the existing five being replaced by Ofcom.

Kim Howells (Labour, Pontypridd)

I must have tried to reassure the Committee on this point on 10 or 12 occasions. If the hon. Lady reads the Bill, she will see that the creature that we are creating will have no regulatory powers until Royal Assent is given to the communications Bill, when the transfer becomes complete.

Anne McIntosh (Conservative, Vale of York)

Is the Minister suggesting that Ofcom is to have no relationship with the existing regulators? That is what I was saying, albeit apparently not as directly or eloquently as the Minister wanted. If Ofcom is to have a relationship with the five regulators, we ought to know how it will be organised.

Secondly, on targeting, the taskforce says:

''Where possible, a goals-based approach should be used, with enforcers and those being regulated given flexibility in deciding how best to achieve clear, unambiguous targets.''

Thirdly, it states:

''Regulations should be reviewed from time to time to test whether they are still necessary and effective. If not, they should be modified or eliminated.''

I hope that the Minister will confirm that will be one of the management requirements of clause 3. The better regulation taskforce helpfully elaborates on what is intended.

The explanatory notes, at paragraph 18, state:

''Guidance on the running of public bodies includes that provided by the Cabinet Office, for example the Guidance on Codes of Practice for Board Members of Public Bodies (February 2000). Principles of good corporate governance are set out in the Combined Code published by the Committee on Corporate Governance in June 1998, which combines the provisions of the Cadbury and Greenbury codes on corporate governance with Committee's own work. Since guidance on the management of public bodies is more likely to be relevant to OFCOM, it will take precedence over principles of good corporate governance.''

That begs the question. What does the guidance on codes of practice tell us? Although the explanatory notes are helpful in other respects, neither they nor the Bill elaborate.

I have obtained from the Library a copy of ''Guidance on Codes of Practice for Board Members of Public Bodies''. It sets out a model code of practice for board members of executive non-departmental public bodies and similar organisations. It is intended to provide a framework, which the public bodies concerned should use. They should agree necessary modifications with their sponsoring Department—there are two sponsoring Departments for the Bill—to take account of their own characteristics and circumstances.

The guidance sets out several principles of good practice, the first of which relates to public service values. When the Minister sums up, will he confirm that the Government intend such values to apply in clause 3? The guidance states:

''Public bodies and their boards must at all times . . . observe the highest standards of propriety involving impartiality, integrity and objectivity in relation to the stewardship of public funds and the management of the bodies concerned''.

They should also ''maximise value for money'', a theme to which I shall return. Several of the regulators and of those regulated have said that they are less concerned that Ofcom will not give value for money, than that it will not seek the most economical and efficient way forward or apply cost-saving measures, as Opposition Members hope it will.

In keeping with the guidance, Ofcom should also ''be accountable to Parliament'' and to ''users of services''. We have had several representations from those who are not satisfied that Ofcom will be accountable to them. Ofcom should also be accountable to

''individual citizens and staff for the activities of the bodies concerned, their stewardship of public funds and the extent to which key performance targets and objectives have been met.''

The guidance goes on to say that public bodies must,

''in accordance with Government policy on openness, comply fully with the principles of the Citizen's Charter and the Code of Practice on Access to Government Information.''

The key paragraph sets out guidance on the relationship with the sponsor Department. It states:

''The Minister of the relevant department is answerable to Parliament for the policies and performance of all public bodies sponsored by the department, including their use of resources and the policy framework within which they operate. The respective roles of the sponsor department and the public body should be set out in a Framework Document, Management Statement or agreed Memorandum of Understanding. In the case of grant-aided bodies, this information should be supplemented by a Financial Memorandum specifying the terms on which the body receives and spends its funds.''

That raises an important question, especially in connection with clause 3. Does the paving Bill constitute one of the documents mentioned in the guidance? Should there be, or is there, a framework document that complies with the specification in the guidance? We require satisfaction from the Minister because although the guidance is clear on the issue, clause 3 and the explanatory notes are silent about it. I therefore welcome this opportunity to question him and to seek satisfaction.

The guidance goes on to refer to the role of the chairman, saying:

''The chairman has particular responsibility for providing effective strategic leadership''

on certain matters. He

''should ensure that the board meets at regular intervals throughout the year'',

which begs the question of how often it should meet. The guidance continues:

''Communications between the board and the Minister of the sponsor department''—

or Departments, in Ofcom's case—

''will normally be through the chairman except where the board has agreed that an individual member should act on its behalf.''

Like, I am sure, other Committee members, I have received several representations from those who are deeply concerned that the Bill does not elaborate on any of those points. The guidance states that

''The chairman should ensure that all members of the board, when taking up office, are fully briefed on the terms of their appointment and on their duties, rights and responsibilities.''

It proceeds to deal with the corporate responsibilities of board members, strategic planning and control, delegation on the part of board members who serve part-time, the responsibilities of individual board members and the handling of conflicts of interest.

The key issue is that we must know whether the paving Bill is meant to act as

''a Framework Document, Management Statement or agreed Memorandum of Understanding''.

Is there a framework document or, indeed, should there be one? Should an appropriate body, such as the Select Committees that shadow the Department for Culture Media and Sport and the Department of Trade and Industry, have the opportunity to review that provision?

I mentioned that we have received several representations from external bodies. I would like to share their concerns with the Committee. In connection with clause 3, ITV welcomes the logic of the merger of the five regulators to address the unnecessary regulatory overlap. However, it goes on to warn of the danger that Ofcom will become an

umbrella body for the existing five regulators, for the reasons that I set out last week. ITV also believes that a small board of swift and effective decision makers is a good thing in a fast-moving industry.

ITV believes that a duty should be placed on Ofcom to consult the industry about any internal working arrangements and structures that it proposes to create. Although ITV supports the need for Ofcom to have the flexibility to adapt its organisational structure, it says that it is important that the industry is given an early opportunity to comment on any initial blueprint. As I mentioned earlier, the requirement for such consultations is set out in both the better regulation taskforce report and the explanatory notes.

Kim Howells (Labour, Pontypridd)

Will the hon. Lady tell the Committee whether this new demand for a small, dynamic board came before or after the sumptuous Carlton lunch? I seem to recall that before that lunch, the hon. Lady was calling for a huge board comprising people with all sorts of expertise? The Committee deserves to know the answer to that question.

Anne McIntosh (Conservative, Vale of York)

I welcome that question. The Minister, as ever, shows a keen interest in the Opposition's modest and humble submissions. He will recall that, before the said lunch, we tabled an amendment requesting the deletion of the reference to a minimum of between three and six members of the board. I am sure that the record will show that we wanted a ''lean, mean fighting machine'' for regulating. We tabled that amendment because we believed that the Government's global power to enlarge the board to a maximum number not specified in the Bill should be limited.

The Minister will recall that, because he is a very bright chap. I am looking forward to meeting him tomorrow in different circumstances, in the Committee considering a statutory instrument on Apsley house. I shall work on that subject after this sitting.

We believed that a maximum of 10 board members fitted in with our philosophy of a small board. The Minister will have received even more representations than we have. He would have been wise to accept our amendment, which changed the maximum number of board members to 10, to put down a marker that he does not want Ofcom to have an unwieldy, unmanageable board. I am most grateful to him for that intervention.

I was talking about ITV's views on the need for Ofcom to consult. The Minister will appreciate that it is not my intention to act as an advocate for any particular company or organisation that either is subject to the present regulatory scheme or will be subject to the scheme that will eventually be introduced under the communications Bill. However, ITV has a good point. The better regulation taskforce states that

''Proper consultation should take place before creating and implementing a regulation.''

Brian White (Labour, North East Milton Keynes)

As the hon. Lady knows, I chair an organisation called EURIM—the European Informatics Market group—

of which the hon. Member for Esher and Walton (Mr. Taylor) is also a member. We have been holding discussions with the industry, civil servants and parliamentarians, bringing various aspects of the communications Bill together. Consultations have been going on for months, and companies such as ITV, Sky and the BBC are involved. Is the hon. Lady aware that what she is asking for is already happening?

Anne McIntosh (Conservative, Vale of York)

I do not have the hon. Gentleman's wealth and breadth of experience, but something must be wrong if ITV writes to us highlighting concern about the absence of consultation, when the better regulation taskforce, with which the Government are only too familiar, says that it is needed.

A further comment by ITV is that in its regulatory approach Ofcom should have an explicit duty to observe the guidelines issued by the better regulation taskforce to ensure that regulations are necessary, fair, effective and affordable and that they enjoy a broad degree of public support. Its concluding comment on the subject is that all regulatory activity undertaken by Ofcom must accord with the five principles set out by the better regulation taskforce.

As for the introduction of new regulations, given that the functions of the regulator will be conferred on Ofcom by the anticipated communications Bill, ITV is keen that the Office of Communications Bill should facilitate a more effective transition to a single regulatory framework. Its view is that the resources of Ofcom should be sufficient to recruit and retain the best staff with expertise in all necessary fields, but that Ofcom should also be required to produce clear costings and budgets, and that the regulated industries should be consulted on whether they consider the level of expenditure to be appropriate. Ofcom should also stipulate how it intends to raise funds from the regulated industries: any proposed formula should be published for consultation with affected parties before it is adopted.

The Minister must be moved by ITV's argument because it reflects all that has been said by the better regulation taskforce. The Towers Perrin report, too, refers to management practices, best practice, professional development, competition and implications. Chapter 8 of the report—which was commissioned by the five existing regulators—states, on page 27:

''There is a distinct job for OFCOM to think strategically about the communications sector and develop joined-up policy. This is an output OFCOM needs to deliver.

Communications Strategy and Policy would be small in headcount but equal in weight to the other four areas.

It would comprise no more than 25-30 people excluding its contact centre function. It would be responsible for working with all the operating units to develop a coherent strategic understanding of the Communications sector environment, its markets, consumers/audiences and technology, and in the light of this understanding and OFCOM's objectives to ensure policy is made in an integrated way across specialisms. It would develop a coherent approach to decision-making. It is this framework which will allow OFCOM, where necessary, to trade-off its more complex objectives in a clear and consistent fashion.''

Early in our consideration of the Bill, the Minister referred most eloquently to the report, which I imagine was rather expensive, that was prepared for and presented to the regulators' steering group, yet the Bill is silent on the issues that those concerned wanted raised. It is important that we consider the responses to the report of some of those who are subject to regulation.

BT said that it would be preferable to compare the five regulators and identify best practice for each process, but better still would be a zero-based approach to build new processes appropriate for a converged sector. BT believes that efficiency savings could come from many aspects of Ofcom by reviewing working practices and creating efficiencies, and especially by dealing with similar issues in the same functional area, rather than spreading expertise more thinly across directorates.

BT goes on to say that the Government introduced the Competition Act 1998 to prevent anti-competitive behaviour by the threatened use of severe penalties. However the Bill is silent about penalties. BT says that, two years on, Oftel has made little progress in deciding in what markets or market sectors the 1998 Act would be an effective substitute for such rules. BT has already said that the existence of that Act powers creates the risk of divergence between Ofcom and the Office of Fair Trading, which could lead to different standards in the application of competition law across the UK industry. It states that those concerns are greatly increased by the proposals made by Towers Perrin. I do not entirely agree with that, but it is incumbent on the Bill to pay some regard to that.

BT also says that although the report is unclear, it appears that competition law will be applied by at least three separate directorates of Ofcom. As we speak, we do not know what the structure of Ofcom will be. BT says that that will introduce a further significant risk of additional divergence between the various communications market sectors.

On professional development, BT tells us that Oftel has said that it has to do more work to define the circumstances in which competition law powers are more appropriate than central rules, and goes on to say that Ofcom will need to create an environment wherein professionals can work across a wide range of economic and competition issues, learning from each other and keeping fully up to date with both UK and European developments across the whole communications spectrum.

BT then says that secondments in both directions will benefit the UK industry, as lessons learned would be lessons shared. It recommends that institutional arrangements should be put in place to ensure a common approach to economic analysis and competition law throughout Ofcom, and between Ofcom and the OFT. BT says that that could be achieved by the creation of a new directorate inside Ofcom to deal with economic analysis and competition law, wherein major economic and

competition law analyses would be worked out. It would be interesting to hear the Minister's comments on that.

I have also received representations from NTL, which says that Ofcom will have enormous scope and power, so it will be vital to ensure the right objectives and the promotion of the long-term interest of consumers wherever possible through the promotion of competition as defined in the legislation. It goes on to say that creating Ofcom now presents an opportunity to produce a better result and to streamline regulatory decision making.

NTL supports the creation of a cross-thinking regulator that brings together the strengths of the existing regulators and drops the biases that can sometimes produce poor, inconsistent, or ill thought-out decisions. It is dismayed that there is no suggestion in the Towers Perrin report that the proposed structure will lead to any efficiencies or economies of scale.

In concluding my few preliminary remarks—[Hon. Members: ''No!''] Regrettably, the clause raises more questions than it answers. Will the Minister confirm that the management of Ofcom will meet the principles that I have described, and that there will be in-depth consultation with those who are about to be regulated as well as with the existing five regulators, which are dealt with in the next clause?

Will the Minister also confirm that there will be a framework document, which will be published separately, and that there will be an opportunity for one or both relevant Select Committees to consider it? He might like to say not only that the relationship will be harmonious, but that there will a specific relationship between the two Departments and Ofcom. Will one Minister be charged with the relationship with Ofcom, and if so, from which Department will he come? How often will we hear about Ofcom in the House?

I quote again Minister's comment at our previous sitting:

''There are currently 1,111 employees among the five regulators, and the total cost is £118 million.''—[Official Report, Standing Committee E, 29 January 2002; c. 115.]

Is it his intention that costs will be reduced and limited, even during the transitional shadow Ofcom period, before Ofcom takes over the running of the five regulators? Does he imagine that staff will be recruited on the open market, or does he intend that they will simply be seconded for a short-term contract with a view to moving to Ofcom in the long term?

Ian Taylor (Conservative, Esher and Walton)

For the Minister's benefit, I should declare a lack of interest—a lack of interest in me by Carlton. I was not invited to its lunch. There is nothing like being an ex-Minister: not only does the Mondeo stop, but lunches cease as well. I give that gentle warning so that he will ensure that he gives birth to a splendid Ofcom.

My hon. Friend the Member for Vale of York (Miss McIntosh) has excelled herself this morning. She has gone well beyond a normal probing speech and has thrown shafts of enlightenment on to the possible

management of Ofcom. The Committee should be grateful to her for the opportunity to explore one or two questions relating to the impending management.

The opening phrase of the clause is striking. It reads:

''OFCOM shall, in managing their affairs'',

although, as the Minister said , there will be no affairs in one sense until the communications Bill receives Royal Assent later this year, or next year. We are in a strange world. Clearly, the paving Bill for the ultimate Ofcom envisages affairs, but we are not to know what those will be until we have the substantive Bill later in the year.

That is an intriguing dilemma. None the less, it is right that affairs, whatever they are, are properly managed according to the right principles. Perhaps a more important question is what the culture will be. Will pulling together the existing agencies be merely a bolt-together job, with each retaining departments and offices, or will the culture of Ofcom be genuinely radical, in which case the whole culture of management and attitude will change?

Much of the Committee's time has been spent on broadcasting, but communications in their broader sense are more intriguing. What we consider to be ''broadcasting'' in the context of television is merely part of the content of communications these days. Soon, one will be able to receive video streams and get audiovisual reception via mobile phones, television sets and many other platforms. That will require a different culture, rather than merely requiring people to come from a discrete agency into a new, enlarged body, Ofcom.

There have been some differences between the agencies in the past, and I am worried that they will not gel under radical thinking. There are also some technical differences. The Radiocommunications Agency is on a separate path because it comes under the Secretary of State for Trade and Industry and is a next steps agency; that means that Ministers have more direct responsibility for it than for the ITC or the Radio Authority.

I was never a Minister in the higher echelons—or any other part—of the Department for Culture, Media and Sport, so I do not know its culture but, as the Minister said, Department of Trade and Industry Ministers have always attempted to have a good relationship with that Department. For the Minister's benefit, I stress the word ''attempted.''

Some key decisions will have to be taken when forming the management to tackle Ofcom's affairs, and I hope that the Minister ensures that the challenge is met, because I would not want Ofcom to be created as a bolting-together exercise. Unless we seize the opportunity for a radical new approach, incorporating responsibilities and seeking new opportunities to stimulate competition in communications, we shall not make the right advances, and the forthcoming communications Bill will be undermined.

Simon Thomas (Plaid Cymru, Ceredigion)

I am trying to understand how the present regulators fit into Ofcom and how we shall ensure answerability in the intervening period before the communications Bill

comes into force. When hon. Members table questions about the management of Ofcom in that intervening period, will the Minister reply or will their questions be passed on to Ofcom?

Ian Taylor (Conservative, Esher and Walton)

That is an extremely astute question, and I suspect that no one knows the answer to it.

Kim Howells (Labour, Pontypridd)

Let me assure the hon. Members for Esher and Walton and for Ceredigion (Mr. Thomas) that I will get lumbered with answering those questions.

Ian Taylor (Conservative, Esher and Walton)

That is not the answer. The Minister may be called to account at the Dispatch Box, but agency status means that a body can engage in direct communication with Members of Parliament—unless the Minister is going to tell us that the rules have changed since I was a Minister. That is why it was such a shrewd question. The Director General of Telecommunications would not have expected me to answer for him in the House of Commons, even though I had overall responsibility for competition policy in telecommunications. That is an important distinction—[Interruption.] The Minister is nodding, although I do not know whether he is nodding at me. That interesting intervention has allowed us to clarify an important line of communication and ministerial responsibility, so I am grateful to both hon. Gentlemen.

Transparency and public awareness of the decision-making process will be of interest not only to the companies involved, but to the wider public. A point was made earlier about salaries and costs. I do not want to make a public expenditure commitment, but I hope that we understand that it is best to have the best people in the regulator for the communications industry, rather than those who have not cut it in their professional or media-driven lives. Salaries will have to be commensurate with the degree of ability that we want to attract.

It will be important to have a free flow of new talent into Ofcom, rather than simply transferring staff from the existing agencies. After all, the new body will be regulating a fast-moving industry, and technical skills will be as necessary as an understanding of regulatory skills. I am not overly concerned with the size of the board—size is not everything. I am more interested in the culture and entrepreneurial spirit.

Light-touch regulation can be defined in different ways, depending on which part of the spectrum one comes from. My understanding is that it means ensuring that regulation and competition policy gel. We never really applied the competition elements of articles 85 and 86—if I am wrong about those numbers, I am sure that everyone knows which ones I mean—of the treaty of Rome to United Kingdom competition law, because we were slightly worried about the European connotations. I lost all the arguments in favour of doing so when I was at the Department of Trade and Industry. Nevertheless, the Labour Government have introduced them.

A stable competitive environment ensures that people are able to make investment decisions without finding that the regulator is trying to uplift them. It also ensures that the regulator, in its management approach, tries to stimulate investment instead of indulging in short-termist apparent protection of the consumer. For example, it will be interesting to see how Oftel reacts to any announcement that BT might make about ADSL pricing and rollout. That is a key question if we are to achieve some of the objectives of the broadband stakeholders group. I know that the Government are well aware that as a country we are slipping behind in meeting our broadband targets.

Those are interesting matters for the Minister to mull over. Will there be a real change in management culture?

Michael Fabricant (Conservative, Lichfield)

I have been following my hon. Friend's discourse with considerable interest. As he will know, I have just come from a hearing of the Select Committee on Culture, Media and Sport, which has been interviewing representatives of BT. At the interview, Sir Christopher Bland, the chairman of BT, said that he felt that Ofcom would be helped if it were responsible to just one Minister, and that the division of responsibilities between the Department of Trade and Industry was a hindrance. In light of my hon. Friend's earlier remarks that broadcasting is a part of communication and not the other way round, what is his view on the matter?

Ian Taylor (Conservative, Esher and Walton)

I happen to share Sir Christopher Bland's view. It is interesting that the portfolio that I held during the previous Conservative Government, if we can throw our minds back that far, was subsequently divided into three. That created further problems. As I hinted earlier, responsibilities for key areas have always been split between the Department of Trade and Industry and what was, in my day, the Department of National Heritage. It was a mistake that music, of which I was in charge at the DTI, was subsequently transferred to the DCMS. We could have a debate on that, but you would certainly not allow it, Miss Widdecombe. However, I hope that you will allow me to take an intervention from the Minister.

Kim Howells (Labour, Pontypridd)

I rise on a point of information. [Interruption.] However, I am told that we do not do that in Committee. I shall sit down.

Ian Taylor (Conservative, Esher and Walton)

I am open-mouthed with astonishment. I thought that the Minister was going to give me some information.

Kim Howells (Labour, Pontypridd)

The DTI still retains responsibility for intellectual property rights, and the DCMS is responsible for music. The terrible splits that occurred under the previous Administration are still here.

Ian Taylor (Conservative, Esher and Walton)

As a former DTI Minister, the hon. Gentleman will know that most DTI Ministers firmly believe that they hold all intellectual property. They are also responsible for it.

As evidenced by the intervention of my hon. Friend the Member for Lichfield (Michael Fabricant), and as I outlined in what I said about culture, in a changing world one cannot split things off and have different lines of command. Intellectual property is vital to safeguarding investment in content. Without that investment, insufficient numbers of consumers will be attracted. People will not invest in something that they feel is not secure.

It is not just a matter of ensuring stability in this country. I know that the Minister has been fighting hard through the WTO to defend intellectual property in countries that have been less than good at defending it, such as Italy, the Czech Republic, India and. until now—hopefully—China.

Kim Howells (Labour, Pontypridd)

I agree with every word that that the hon. Gentleman says. His words are important. The great problem is that, until now, the regulators have often had different views about the protection of intellectual property, despite the fact that it is the lifeblood of so many creative industries, including the new industries. The most important point about Ofcom is that it will have a single view on how we should deal with intellectual property once the Bill is enacted.

Ann Widdecombe (Conservative, Maidstone and The Weald)

Order. Before the hon. Member for Esher and Walton is tempted to reply to that in detail, I draw the Committee back to the scope of the clause, which certainly does not include the matters now under discussion. Whereas it is perfectly possible for an intervention to include the giving of information, it is not proper for interventions to lead the Committee down paths that are not under consideration. The hon. Gentleman will, I am sure, take that carefully into account.

Ian Taylor (Conservative, Esher and Walton)

Waving your glasses at me like that, Miss Widdecombe, means that I am very apprised of the dangers. Another reason why I must not attempt to answer the Minister is that it would be a slight role reversal. I shall not be tempted further.

Anne McIntosh (Conservative, Vale of York)

I would hate to tempt my hon. Friend down any path that was not strictly within order. Does he not believe that the Minister has the opportunity to specify the relationships between Ofcom and Oftel and between the DTI and the DCMS on competition policy without going down the specific route of intellectual property?

Ann Widdecombe (Conservative, Maidstone and The Weald)

Order. The issue of the relationship between Ofcom and other bodies has been thoroughly debated on earlier clauses, including debates on some of the hon. Lady's amendments. It will not be debated again.

Ian Taylor (Conservative, Esher and Walton)

I will not be tempted by my hon. Friend. However, the debates to which she refers go to the heart of our debate on management, which is the subject of clause 3.

It is crucial that Ofcom is able to conduct its affairs properly. We need to get it right because if we are merely bolting together the existing agencies with a supervisory board, I doubt that we shall ever make the

progress that the country needs in this modern digital communications era. The culture must change. We must get rid of the old demarcations and mould the agencies together. How that might affect ministerial influence and power and answerability is the subject for another debate. It is crucial that we tackle the management issue early. I hope that the Minister will respond positively.

Kim Howells (Labour, Pontypridd)

I am very grateful to the hon. Member for Vale of York for her comprehensive recitation—page after page of it—of the lobbying material sent to her by private companies that may or may not have treated her to sumptuous lunches. For example, we heard that she was prepared to snatch from the starving lips of Mr. Clive Jones and Mr. Michael Green of cash-strapped Carlton the very last crumbs that they had to offer.

I assure the hon. Lady that we made it clear in the communications White Paper that Ofcom would be expected to operate under the best principles of good governance. Clause 3 places Ofcom under a duty to have regard to such guidance on the management of the affairs of public bodies as appropriate. I emphasise that when we refer to good governance, we are thinking of the commercial principles of good corporate governance as far as they are relevant to a statutory corporation such as Ofcom, but also, and perhaps more important, to guidance on the conduct of public bodies, again in so far as they are relevant to Ofcom. It seems to us that the guidance on the management of public bodies is more likely to be relevant to Ofcom. Hence, it takes precedence in the clause.

Laurence Robertson (Conservative, Tewkesbury)

Does the Minister consider that the final words, ''as Ofcom considers appropriate'' weaken the clause? I know that the research paper is not an official document, but it says that the clause does not appear to limit Ofcom very much, since it has only to follow the general guidance on public bodies as it considers appropriate.

Kim Howells (Labour, Pontypridd)

No, I do not, and I shall try to make my case. The main source of guidance to which Ofcom will need to have regard is that issued by the Cabinet Office for the use of public bodies; in particular the guidance on codes of practice for board members of public bodies. That guidance sets out the need for board members of public bodies such as Ofcom to follow the seven principles of public life, which I shall not rehearse again.

Anne McIntosh (Conservative, Vale of York)

We have spent some time discussing the principles. We need to know how they apply to the Bill and how, in particular, clause 3 encapsulates them. I have asked about the number of staff, whether they will be seconded, whether they will be sought on the open market and whether there should be a framework document. We need an answer to those questions.

Kim Howells (Labour, Pontypridd)

If we look at the guidance on codes of practice for board members of public bodies, we shall see the answers clearly. The guidance states the need

for board members of public bodies, such as Ofcom, to follow the seven principles of public life, which many Conservative Members are keen to see applied.

As Ofcom will be a statutory corporation, clause 3 also places it under a duty to have regard to generally accepted principles of good governance, to the extent that such principles could reasonably be regarded as applicable to a statutory corporation. Those principles are currently set out in the combined code, published by the Committee of Corporate Governance, which combines the Cadbury and the Greenbury codes with the Committee's guidance.

The clause will require Ofcom to operate in a responsible and transparent way. The hon. Member for Vale of York laid a great deal of stress on the need for that. I made it clear earlier that we expect that to include ensuring that a publicly available register of members' interests is kept. That, too, is a requirement of the Cabinet Office guidance. The Committee will have noticed that the schedule contains provisions about the governance of Ofcom, including those regarding conflicts of interest, recording decisions and the publication of procedural amendments.

Clause 3 provides that Ofcom will operate in accordance with the highest principles of good management and public service.

Anne McIntosh (Conservative, Vale of York)

It is not good that we have heard the Minister repeat what I said the principles were without relating how the principles of the better regulation taskforce and the rules of the Cabinet Office should apply here. I stand by the questions that I have asked. The Government, whether in the person of the Minister or of one of his colleagues, did better in their response to Select Committee report, which said that the Government considered it vital, not least on grounds of public accountability, for the internal structure of the new regulator to be set out in the legislation giving effect to the proposals in the White Paper, rather than being left to the governing body of the new regulator to determine. That is precisely what the Minister seems to be saying he wants to do. The Select Committee recommended that the legislation establish a mechanism to provide for greater lay involvement in content regulation than in competition regulation and create a distinct body, within the new regulator, responsible for radio.

Michael Fabricant (Conservative, Lichfield)

My hon. Friend raises an interesting point. She mentioned the Select Committee. May I draw to her attention that, in written evidence, Sir Christopher Bland, the new chairman of BT, has said that he is concerned that the main provisions of the Ofcom Bill should not be developed in the closed environment of Whitehall, as they might look good on paper but fail in practice? Is this not an example of that very issue?

Anne McIntosh (Conservative, Vale of York)

I am grateful to my hon. Friend. The purpose of the short time that we have spent scrutinising the Bill is to define what mechanism there should be—in particular for the governing body and the new regulator, Ofcom—to manage itself. It is

deeply disappointing that while we have had a lively debate, the Minister fails to respond. The Government response to the conclusions in the report of the Culture, Media and Sport Committee stated:

''The Government is creating in OFCOM a convergent regulator to deal with fast-changing markets. It will operate within a clear framework of duties''.

We still do not know, after the Minister's derisory and disappointing summing up, whether there is to be a framework agreement or whether what is proposed will be subject to parliamentary approval. He is being very coy.

We are also told by the Government that the powers will be ''agreed by Parliament'', but this is the last chance that Parliament will have to agree on the management structure. Similarly, with regard to the underpinning

''by a framework of general duties''

we still do not know what those general duties will be. According to the Government,

''OFCOM as an organisation will need substantial flexibility in the way in which it implements these statutory functions, if it is to be well placed to respond to rapid changes in the market and in the public interest issues which arise from these.''

We still do not know what level of flexibility is envisaged. We are being asked to give a blank cheque with respect to its managerial role, its structure and its staffing numbers. That is not just disappointing; it is unacceptable.

The Government response continues:

''These are strong arguments for leaving the details of the internal structure of OFCOM to its Board, and avoiding unnecessary rigidity.''

How does the Minister respond to the real concerns raised by BT, NTL and ITV that I have raised today?

Glenda Jackson (Labour, Hampstead and Highgate)

Is the hon. Lady really praying in aid that same BT whose share price—like that of its most recently-formed offshoot, mmO2—we have seen consistently falling? The hon. Member for Lichfield also prayed in aid BT, and the hon. Lady prayed in aid ITV, although I understand from an earlier discussion that her party was concerned that regional ITV was losing not only its advertising share, but its audience. Perhaps the hon. Lady is looking in the wrong direction for support.

Anne McIntosh (Conservative, Vale of York)

I am sure that the hon. Lady was in the Room when I said that it was not for me to advocate these arguments, but simply to put them forward. I have put my interest in BT on the record. I am a shareholder and, as a spin-off, I now own mmO2 shares, so I have suffered a double money loss. The important point is that we are in Committee for a very short time to scrutinise primary legislation. This is the only opportunity that we shall ever have to discuss the framework of Ofcom before it departs on a frolic of its own to set up its internal structure. I understand that Parliament, whether by way of a Committee providing pre-legislative scrutiny or any of the Select Committees in this House or another place, will have no opportunity to consider that matter.

Michael Fabricant (Conservative, Lichfield)

BT gave evidence that its debt is falling, so my hon. Friend's investment in it may prove wise. Does she agree that it is better to take advice from those who work in the industry—particularly when similar advice is being given by NTSL, NTL and similar organisations that are in competition with BT—than to take advice from failed actresses?

Ann Widdecombe (Conservative, Maidstone and The Weald)

Order. Before the hon. Member for Vale of York is tempted even remotely to answer that intervention, I remind the Committee of what we are discussing. We are not discussing the investments of the hon. Member for Vale of York, or the performance of BT. We are discussing strictly how Ofcom should manage its affairs. Will the hon. Lady confine her remarks to that? The Chair is beginning to lose patience.

Anne McIntosh (Conservative, Vale of York)

I am grateful for that explanation. The Government said:

''This general approach has been widely adopted in the development of regulatory arrangements for other sectors.''

I do not understand why the Government have failed, in response to this fulsome debate, to answer our questions on what arrangements were being made to recruit staff and whether those staff would be recruited on the open market. Those are legitimate questions. They were raised by several of those who made representations to us, who, because this Committee does not operate like a Select Committee, are unable to put their arguments themselves. Pages 15 and 16 of the Towers Perrin report show the exact staffing levels. As I mentioned, the Radio Authority was found to be one of the smallest employers. The largest employer is the Radiocommunications Agency, which has 631 staff.

Angela Watkinson (Conservative, Upminster)

Does my hon. Friend agree that it is essential to establish clear lines of communication between the Ofcom board, the Minister, Ofcom management and its substructure of committees and the existing regulators, so that everybody knows exactly to whom they are responsible, to whom they are to report and whom they must keep informed?

Anne McIntosh (Conservative, Vale of York)

That is the key to the clause. It is short and very silent on the issues raised by my hon. Friend. This is the only opportunity we have to consider the interim structure. I do not believe that it is appropriate to leave the entire interim organisation of Ofcom to the new regulator itself. We will consider the costings elsewhere, but will the Radiocommunications Agency, which currently employs 631 staff, second some of them? Will Oftel, which employs 241 staff, keep a large number of its current employees because it will be working in conjunction with Ofcom? The clause is silent on that. The ITC currently employs 172 people, the Radio Authority employs 47 and the British Broadcasting Standards Commission employs 20. It is legitimate to ask how many staff Ofcom will manage overall, and to question the extent of Ofcom's scope to achieve economies in the exercise of its duties.

The Towers Perrin report assumes that all existing activities will be continued. Is that the case, or will Ofcom look for synergies and common approaches? There is a need to establish working relationships with the Office of Fair Trading. We still do not know what those relationships will be. It is also important that the existing regulators should be able to cease to perform regulatory activities that are no longer necessary. Economy should be exercised in the engagement of external consultants—

Ann Widdecombe (Conservative, Maidstone and The Weald)

Order. It seems to me that the issues that the hon. Lady is raising relate to amendment No. 66, which has not been selected for debate. I have now had to ask the Committee on several occasions to confine itself to the scope of the clause under discussion. I have given considerable latitude, but I will not do so any more. Will the hon. Lady please bring her remarks within the scope of the clause?

Anne McIntosh (Conservative, Vale of York)

I am grateful for those strictures, Miss Widdecombe. In conclusion, the debate, which covered some relevant ground, has established that the Cabinet Office rules take precedence over accepted principles of good corporate governance. I regret that Ofcom will be permitted to issue such general guidance with regard to its own affairs, without regard to Parliament or those who are regulated, and seemingly without regard to the other regulators. I conclude our debate on the clause with immense disappointment.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.

Ann Widdecombe (Conservative, Maidstone and The Weald)

Before we come to clause 4, I want to make some general comments. We have only limited time to bring our deliberations to a conclusion. I give latitude in the course of debates, because I know that it can allow for a more coherent debate if a Chairman lets one touch on matters that strictly belong to other parts of the Bill. However, the previous debate abused that latitude considerably.

We should not redebate issues. We should not debate issues that have not been selected for debate by the Chairman. If the debate on the group of amendments that I shall now call goes wider than it should, it will prejudice a stand part debate on clause 4. I ask hon. Members to be aware of that.

Clause 4 - Functions of existing regulators

Anne McIntosh (Conservative, Vale of York)

I beg to move amendment No. 43, in page 3, line 33, leave out paragraph (b).

Ann Widdecombe (Conservative, Maidstone and The Weald)

With this we may discuss the following amendments: No. 63, in page 3, line 40, leave out paragraph (c).

No. 64, in page 3, line 44, leave out paragraph (d).

No. 65, in page 4, line 27, leave out sub-section (5).

Anne McIntosh (Conservative, Vale of York)

I shall endeavour to follow your strictures absolutely to the letter, Miss Widdecombe, as even a short clause stand part debate would be valuable.

Amendment No. 43 would delete subsection (1)(b), which places on the existing regulators a duty to carry out all their functions in a manner that appears to them best to secure that Ofcom can carry out its functions, and that Ofcom will be able to carry out any functions that will become its functions as a consequence of implementation of the Secretary of State's proposals.

The Minister can help me. If that understanding is correct, we would strike the paragraph from the Bill because it would order the existing regulators forthwith—immediately—to subordinate their agendas and duties to those of Ofcom. One of Ofcom's functions is to lobby for changes in proposals; would that mean that none of the other regulators would be allowed to put up a counter-case or make any arguments against Ofcom or its proposals? If so, that would be an extraordinary arrangement; subordinating the existing duties of five tried and tested regulators to the convenience and possibly the whim of Ofcom. It would muzzle the existing regulators, preventing them from having any say in the evolution of the regulatory regime.

That is different from what the explanatory notes suggest, and from what the Minister said on Second Reading. He may like to gather his thoughts and say whether the Government's position has changed, or that our interpretation of what the Government said on Second Reading was incorrect. The explanatory notes state:

''Clause 4 provides additional functions for the existing regulators. These are in addition to those functions that they perform under the Telecommunications Act and the Broadcasting Acts.''

My understanding of what the Minister said on Second Reading was that the function of the shadow Ofcom is merely to prepare for the implementation of the new regime. We have discussed that at some length on other clauses. The implication of the Minister and the explanatory notes is that the relevant matters are rather run-of-the-mill and boring, such as setting up offices and recruiting staff; things that need to be done about which Parliament should be consulted.

Under subsection (1)(b), Ofcom will immediately have a much larger role and influence because of its duty to lobby and because the existing regulators will be subordinated to it. Is that what the Minister means? Paragraph (b) states that Ofcom will have the duty of carrying out all the regulators' functions ''in such manner'' as appears best to secure those functions. I believe that that could be better achieved if paragraph (b) were removed.

On page 78 of the White Paper, the Government set out the transitional implications with regard to double jeopardy. Under the current system, an issue could be examined in parallel by different regulators. The White Paper raised a legitimate question, which should have been answered by subsection (4) but was not.

We also learn from page 78 of the White Paper that, as with the existing regulators, the quality of Ofcom's staff will be vital to the delivery of its functions. I could

not agree more. We need to know not only that the staff will be of high quality, but whether they will be drawn from the five regulators. Will the number of staff rise above 1,111 for a short transitional period? If anything, we should see a streamlining and slimming down as the five are merged into one.

The White Paper also says that, in a competitive labour market, the office of communications will require managerial and financial flexibility to retain and recruit the necessary skilled and managerial personnel. However, it does not say what the relationship should be between the existing regulators and the new regulator. Paragraph (b) is unfortunate. We all accept that it will be difficult while the five regulators and the shadow Ofcom are working together, but does it mean that the present functions of the five regulators will be completely overtaken by Ofcom?Paragraph (b) alludes to that overlap when dealing with the functions of existing regulators. It states that they

''will be able effectively to carry out any functions which will become functions of OFCOM in consequence of the implementation of any such proposals''.

My concern is that morale will be low among the staff of the existing regulators. It is perhaps unfortunate that the Bill does not set out the relationship in more detail. Nor does it say what will be the recruitment procedures for new staff. We could have lessened some of that unease, disquiet and loss of morale by declaring a specific transitional period, and I regret that the Minister did not agree to do so.

Another reason why paragraph (b) needs to be redrafted is that it should say more about the regulators and Ofcom carrying out adjoining duties and acting together. Will they be looking to achieve economies, or will there be a complete duplication of effort? Will the Minister clarify the exact nature of the relationship?

Is it implicit in subsection (b) that the existing regulators will be asked to cease to perform certain regulatory activities that are now considered to be unnecessary, or will they cease to perform all their duties and responsibilities only at such time as the communications Bill receives Royal Assent? What will be the time scale in relation to the overlap of duties? Concern has been expressed—it strikes a chord with me—about the fact that, for a temporary period, there will be six regulators before the five are ultimately replaced with one.

Amendment No. 63 would remove paragraph (c), which gives the regulator a wide power to do various other things that it

''considers appropriate for facilitating the implementation of, or for securing the modification of, any relevant proposals about the regulation of communications''.

Before we decide whether to press the amendment to a vote, it would be helpful to know how the Minister envisaged the duties and relationships that will apply during the transitional phase. That would clarify the extent and purposes of the paragraph.

Amendment No. 64 would remove paragraph (d), which refers to

''a power to carry out the functions of that regulator in a manner that promotes the interests of OFCOM.''

It would have been far preferable had it said that the functions of the regulator should be carried out in the interests of promoting the regulation of the industry. At this stage, Ofcom's one function is to set itself up. It should not only promote the interests of Ofco; it should reflect the interests of the industry in terms of what it is trying to achieve. Those who are to be regulated have expressed great concern that the provision is not better formulated. The representations that I have read or received verbally uniformly take the view that replacing five regulators with one is a positive move. However, it is incumbent on us to ensure that Ofcom puts the interests of the communications and broadcasting industry at its heart.

Amendment No. 65 would remove subsection (5), which states:

''The functions of the existing regulators by virtue of this section are in addition to, and without prejudice to the extent of, any of their powers apart from this Act.''

That brings me neatly to the point that I have made once or twice before in relation to clause 4. The whole thrust of the Ofcom Bill is to set up a shadow Ofcom to replace five regulators with one. However, it clearly states that for a transitional phase of indeterminate length—we do not yet know if the main Bill will be published in March or April; we know only that it will be in the spring, and not even if it will be before or after the Budget on 14 April—the existing regulators will have additional functions. Will the Minister clarify the nature of Ofcom's relationship with the regulators and how it will manage that relationship? Will Ofcom have the final say, or, given that these are additional responsibilities, will the existing five regulators continue to have the last word in their field? The most deeply worrying and regrettable omission is the failure to refer to the relationship between Ofcom and Oftel.

Michael Fabricant (Conservative, Lichfield)

I rise to support the amendments, primarily for a reason that my hon. Friend the Member for Vale of York has not cited. Clause 4 (1)(b), (c), (d) and (5), which the amendments would strike from the Bill, are somewhat redundant in relation to the rest of clause 4. Without them, it would simply read:

''The functions of each of the existing regulators''—

defined in clause 6 as the Broadcasting Standards Commission, the Director General of Communications, the Independent Television Commission and the Radio Authority—

''shall (subject to subsection (4)) include—

(a) a duty to do everything that is necessary for facilitating the implementation of any relevant proposals about the regulation of communications''.

Given the all-embracing nature of subsection (1) and (1)(a), there is no great need for paragraphs (b), (c) and (d) and subsection (5); unless, of course, my hon. Friend the Member for Vale of York was right that there are additional reasons that will not necessarily help the industry.

It is useful to consider one by one the parts of the clause that the amendments would delete. Amendment No. 43 would remove paragraph (b), which, as my hon. Friend said, seeks to muzzle the existing regulators—[Interruption.]

Ann Widdecombe (Conservative, Maidstone and The Weald)

Order. The hon. Gentleman must continue his remarks.

Michael Fabricant (Conservative, Lichfield)

I am sorry, Miss Widdecombe. I have been given an interesting note by the hon. Member for Newcastle-under-Lyme (Paul Farrelly), which is extremely distracting. I suspect that it is a ploy by the Government Whips.

There will be a period of indeterminate length after which Ofcom takes over, centring on the question of when the main Bill is published and finally passes through Parliament. The uncertainty is having a detrimental effect on the morale of people in the existing regulatory bodies who do not know whether to apply for jobs with Ofcom or to stay loyal to their current employers. Paragraph (b) creates a conflict of interest. It refers to

''a duty to carry out all that regulator's functions in such a manner as appears to that regulator best to secure that OFCOM''—

and so on. In other words, it stipulates that the main role of the existing regulators should be subordinate to that of Ofcom.

The Minister has said that Ofcom will be a light regulator. Indeed, he has chastised me for using the word ''regulate''. He says that Ofcom is there to stimulate the industry, and I hope that that is precisely what it will do. However, I do not see how the existing regulators can help to stimulate the industry if they have to subordinate their activities to ensuring that Ofcom carries out its new function. We do not know when Ofcom will become operational in its main form, rather than the shell form it will take if the Bill is enacted. I have great concerns about paragraph (b), which will not only distort the industry as it presently stands, but create difficulties for the existing regulators.

Amendment No. 63 seeks to delete paragraph (c). Again, if the function of clause 4 were to ensure that the existing regulators co-operated with the shell organisation of Ofcom, paragraph (c) should not be necessary. However, it states that there should be

''a power to do all such other things as that regulator considers appropriate for facilitating the implementation of, or for securing the modification of, any relevant proposals about the regulation of communications''.

Either paragraph (c) is redundant because of subsection (1)(a) or, yet again, we are seeing a desire to give broad powers to the shell Ofcom, which is to be ready to go into action when the main communications Bill is enacted. If that is not the case and we are going to witness this behemoth—a word used earlier—of 1,111 people in a shell organisation, the whole object of having a paving Bill is defeated. Paragraph (c) is almost saying that far from Ofcom being a shell organisation, we shall see two organisations working in parallel, and possibly in conflict, with each other.

That is at a time when, as the hon. Member for Hampstead and Highgate (Glenda Jackson) has rightly stated, independent television and the communications industry are going through a period of difficulty and strain; that is happening not only in the United Kingdom, but elsewhere. Now is not the time for there to be overlap, confusion and possible tensions between two regulators operating in parallel.

The Minister will stand up at the end and say that that is a load of twaddle because clause 4 means nothing of the kind. If that is the case, why is subsection (1)(a) not sufficient in itself? What new powers do paragraphs (b), (c) and (d)—and clause 5 when I come on to it—deliver if subsection (1)(a) does not already provide the infrastructure for the existing regulators to co-operate with shell Ofcom, unless it is not going be a shell organisation? That is what I find so worrying.

Angela Watkinson (Conservative, Upminster)

I wonder whether my hon. Friend has noticed that paragraphs (a) and (b) start with the words ''a duty'', but paragraphs (c) and (d) commence with the words ''a power''. The functions of the existing regulators will include a power to do all the things described in paragraph (c), but not a duty. Does he interpret that to mean that paragraphs (c) and (d) are optional?

Michael Fabricant (Conservative, Lichfield)

My hon. Friend has noticed, with her customary eagle eye, something that my hon. Friend the Member for Vale of York and I had missed.

Paul Farrelly (Labour, Newcastle-under-Lyme)

Will the hon. Gentleman give way?

Ann Widdecombe (Conservative, Maidstone and The Weald)

Order. We cannot have two hon. Members on their feet. Is the hon. Gentleman giving way?

Michael Fabricant (Conservative, Lichfield)

No, but I shall do so in a moment. I had not noticed that the hon. Gentleman had risen because I was looking at the Bill.

Clause 4 might be badly drafted, but I do not think so; the parliamentary draftsmen usually do a good job. In that case, we must ask ourselves why paragraphs (a) and (b) are duties and paragraphs (c) and (d) are powers. It is interesting to use the word ''power'' in paragraphs (a) and (b) to see whether it makes sense, and to use ''duty'' in paragraphs (c) and (d). ''Duty'' means that there is a burden to do the work, but ''power'' confers a power on the shell organisation, which is what I find so confusing.

Time and time again we have heard from the Minister that Ofcom will be just a shell organisation, and that we are spending so much time debating a paving Bill to establish a shadow organisation that will not interfere with the existing regulators. We have been told that nothing will change until the main Ofcom is established, but suddenly we read about duties, powers and control being exerted by this so-called shell organisation on the existing regulators. To repeat the point made by the hon. Member for Hampstead and Highgate, this comes at a time when

bodies are finding it particularly difficult in commercial markets. This is not a time at which the existing regulators should be distracted because it will be a distraction to perform duties and to work with the shell organisation of Ofcom.

Amendment No. 64 would delete paragraph (d), which contains a word that worries me. It is not the lack of the word ''duty'' and it is not the existence of the word ''power'' that worry me; it is another word, ''promotes'', that worries me. It worries me because I know of other legislation in which the word ''promote'' has been used and has caused difficulties. I shall not speak about this at length because it would be out of order, but it is relevant. The word ''promote'' has already been exposed as not having a great deal of meaning in law; I am referring, of course, to clause 28.

Ann Widdecombe (Conservative, Maidstone and The Weald)

Order. The hon. Gentleman will not refer to clause 28.

Michael Fabricant (Conservative, Lichfield)

Miss Widdecombe, I will obey your command.

There have been instances in which it is clear that the word ''promote'' has many meanings in law. Whatever one might think the word ''promote'' means in the everyday world, it means something completely different in the clause that dare not speak its name—[Interruption.] My hon. Friend the Member for Tewkesbury (Mr. Robertson) says that I may not speak its name. The word ''promote'' poses difficulties not only for the teaching profession, but for the existing regulators. I would rather have seen a wording different from

''promotes the interests of Ofcom.''

In other legislation there has been confusion between the words ''promote'' and ''encourage''. The difficulty is caused by those two different meanings, and yet we know in practice what the meaning of ''promote'' was intended to be.

I shall return strictly to the Bill, rather than discussing other legislation to which I personally take a liberal attitude. I am concerned about the use of the word ''promotes''. It is bad drafting, and results in subsection 1(d) being pretty meaningless. I support my hon. Friend's argument that paragraph (d) should be deleted. There are further reasons. I believe that the whole object of Ofcom should be not to regulate, but to assist and, dare I say it, to promote the industry's interests generally.

I do not think that that is going to happen if the Bill contains paragraphs (b), (c) and (d). The industry, at a difficult time, will be hampered, and paragraph (d) will hamper it the most. The Radio Authority and the ITC should be helping television companies and radio stations. Oftel, which I have not yet mentioned, should be encouraging BT and other companies to spread out broadband communications in the UK by satellite, digital subscriber line and asymmetric digital subscriber line. I am concerned that, instead, they will spend a great deal of time concentrating on how to ensure the best interests of Ofcom, not of the industries. I support amendment No. 64.

Amendment No. 65 would delete clause 4(5), which should be deleted because I do not understand it. I have read it over and over again and it does not make a great deal of sense to me. I must confess to my hon. Friend the Member for Tewkesbury on the Front Bench that I had a very entertaining late night last night with a constituent of mine who is a pig farmer and, as a consequence, my brain cells might not be working quite as fast as usual. However, subsection (5) states:

''The functions of the existing regulators by virtue of this section''—

so far, so good—

''are in addition to, and without prejudice to the extent of, any of their powers apart from this Act.''

I do not understand ''apart from this Act''; perhaps my hon. Friend the Member for Vale of York or the Minister will explain it. I just do not understand what it means. Can someone intervene and explain? I am getting blank looks from everyone. I am getting blank looks from the Minister. I am getting blank looks from the officials. At this point, I shall give way to the hon. Member for Newcastle-under-Lyme, who has given me rather bad news.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I congratulate the hon. Gentleman. He has so anaesthetised me that I have completely forgotten what I was going to say.

Michael Fabricant (Conservative, Lichfield)

I did not mean to cause the hon. Gentleman embarrassment, although the note that he passed me earlier almost caused me to collapse. However, that is another matter.

I just do not understand what subsection (5) means. At best it is redundant and should be deleted. At worst, it is a meaningless subsection. I sit down with great anticipation and hope that the Minister will explain, when he gets the chance—I know that my hon. Friends have a great deal to say on the amendments—what it adds to the Bill. I do not think that it adds anything.

Laurence Robertson (Conservative, Tewkesbury)

I rise to make a brief contribution. I cannot follow my hon. Friend in his colour and extravagance, and his detailed knowledge of what we are discussing is to be admired; especially when he has just received such terrible news, which I have just seen, and when he had such a good night last night.

I, too, am rather confused by clause 4. At the risk of becoming monotonous through repetition, I regret that the Government have tried to do something that we do not disagree with as a whole in two Bills rather than in one. That adds to the potential for confusion and the potential to fail to set up Ofcom in the way that we want.

I am concerned about the continuing absence of any guarantee about when the main communications Bill will be introduced. I mention that again because it leaves a big gap. If we go down the route suggested in clause 4, whereby existing regulators must do this and that, and Ofcom must do this but not that, and so on and so forth, and if there is a long time until the main Bill is published, we shall run into difficulties, especially in an industry that changes so quickly.

I am confused. Clause 2(1) refers to

''the implementation of, or for securing the modification of, any relevant proposals about the regulation of communications.''

However, clause 4(1)(c) seems to give the same requirements and powers to the existing regulators. Is there potential for conflict? My hon. Friend the Member for Lichfield, who has temporarily left his place—I had better not go into the detailed reasons for that—mentioned the possibility of the existing regulators being muzzled. I do not know whether the provisions will muzzle them or do the opposite—give them the powers to determine the shape of Ofcom. I have concerns about that.

Clause 4—especially subsection 1(b), (c) and (d) and subsection (5)—seems to pass some duties from the existing regulators to Ofcom, but to keep others. I detect potential for great confusion, which I do not want. I want a very smooth transition. The White Paper correctly identified that the staffing of Ofcom and the quality of staff would be all-important. If there is to be a protracted period of transition, any confusion will serve only to undermine the position, and perhaps the employment prospects, of current staff.

It is important that the Government make clear the time scale, which I have mentioned before. They must also clear up some of the confusion that, to my mind, surrounds clause 4, about which my hon. Friends the Members for Vale of York and for Lichfield spoke at much greater length and with more eloquence than I have sought to do.

Kim Howells (Labour, Pontypridd)

Hon. Members have expressed concern today and previously about the Bill's proposal that Ofcom and the existing regulators must work closely together to ensure a smooth and speedy transition to the new regulatory regime. I agree that it is essential that the existing regulators and Ofcom co-operate closely if the transition from the current arrangements to the new regime is to be completed smoothly and efficiently, without disruption to the industry or consumers. The purpose of clause 4 is to ensure just that. The clause is essential to ensure that the existing regulators have the requisite powers and duties to facilitate the implementation of relevant proposals, and that they can co-operate with Ofcom so that it can carry out its initial and future functions effectively.

Turning to amendment No. 43, Ofcom will be preparing to take on the responsibilities of the existing regulators and their associated functions, so it is vital that all the organisations work closely together to ensure that nothing they do unintentionally creates difficulties for anyone else. The purpose of clause 4(1)(b) is to require the regulators in carrying out their functions to secure that Ofcom will also be able to carry out its functions effectively.

That need for co-operation extends first to Ofcom's initial function of preparation, and then to ensuring that it will be in a position to carry out its future regulatory functions. Hon. Members will recall that clause 2(2) places Ofcom under a duty to co-operate with the existing regulators and not to interfere with their current work. The two provisions are intended to

ensure that the regulators and Ofcom co-operate closely. Clause 4(1)(b) is an entirely sensible provision and it should be retained.

Moving on to amendment 63, in addition to the obligation placed on the existing regulators in clause 4(1)(a) to do everything that is necessary for Ofcom to prepare itself, clause 4(1)(c) enables those regulators to do such other things as they consider appropriate to implement relevant proposals or to secure their modification. It will be for the regulators to decide what other things it might be appropriate for them to do in this context. It is entirely for the regulators to decide, and Ofcom will not be able to force them to do anything they do not want to do.

In addition, just as it is vital that Ofcom should be able to secure the modification of relevant proposals, it is important that the existing regulators should be able to express views on the relevant proposals and, if they consider it necessary, to seek to secure their modification. Clause 4(1)(c) allows them to do that and should therefore be retained.

The hon. Member for Vale of York raised the question of amendment No. 64. Hon. Members will be aware that because the regulators are established and governed by statute, they are limited to doing only what statute permits. The purpose of the provision in clause 4(1)(d) is to empower the existing regulators, in addition to what they can already do under statute, to carry out their functions in a manner that promotes the interests of Ofcom. The provision provides the regulators with further flexibility to help Ofcom in its preparations. It is therefore essential to allow the co-operation that we all desire to take place.

Anne McIntosh (Conservative, Vale of York)

My hon. Friend the Member for Lichfield and I asked about the expression,

''promotes the interests of Ofcom''.

Should the purpose not be to promote the interests of the industry that Ofcom is to regulate? It is a particularly unfortunate turn of phrase.

Kim Howells (Labour, Pontypridd)

I thank the hon. Lady for giving me the opportunity to tell her that the purpose is the promotion of the whole industry. She will recall, because I have told her 20 or 30 times, that the Bill is about setting up Ofcom. The sole purpose of the provisions in clause 4(5)—perhaps this will be of help to the hon. Lady—is to make clear that the new functions that the existing regulators will have as a result of the provisions in clause 4 are in addition to, and will not be prejudicial to, any existing powers that have been conferred by other Acts.

Michael Fabricant (Conservative, Lichfield)

Will the Minister give way?

Kim Howells (Labour, Pontypridd)

No.

That provision ensures that there will be no conflict between the existing regulators' current functions and those that will be conferred on them. Amendment No. 65 is therefore not needed.

Anne McIntosh (Conservative, Vale of York)

I would not like to jeopardise the possibility of a short debate on clause 4 stand part, so I would like all four amendments to be voted for en bloc.

Ann Widdecombe (Conservative, Maidstone and The Weald)

The vote will be on amendment No. 43, not on any others en bloc.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 12.

Anne McIntosh (Conservative, Vale of York)

I am most grateful for the opportunity to debate clause 4(1). There is concern in the industry that will be regulated by the new merged body about how the subsection will be applied. The White Paper provides some assistance, stating on page 85 in paragraph 9.4.2:

''Within the limits set by existing legislation, we also see scope for the existing regulators to prepare for this transition by continuing to develop greater co-ordination and integration of their operations and greater use of common principles applied sensitively to different sectors. This will add to the progress already being made in tackling the problems of double jeopardy and inconsistent outcomes which were raised in the consultation, through mechanisms such as the current formal concordat between the BSC and the Radio Authority.''

When responding to the previous debate, the Minister said that the existing regulators and Ofcom will co-operate closely. Those who are scrutinising the Bill should know the form and structure of that co-operation. There is some difference in that one of the existing regulators—the Radio Authority, I think—operates not as an independent regulator but as part of the Department of Trade and Industry, and is therefore a special case.

Given that a whole chapter, albeit a short one, of the White Paper dwells on the process of implementation, I cannot grasp why the Government did not take the opportunity presented by the Bill to describe the form of the discussions and consultations. The Minister commented on that only in response to our probing amendments. The White Paper states that the Government

''will work with the existing regulators to ensure a smooth transition to the new regulatory regime. We will set up pathfinder groups''—

that is not such bad news as that received by my hon. Friend the Member for Lichfield in a written note—

''involving all the regulators at official level, building on the current arrangements for co-ordinating regulatory work. In preparing for that transition''

the Government will

''expect the Boards and staff of the bodies to continue to develop greater co-ordination and integration of their operations and to carry out their responsibilities in a way that will help deliver the goals we have set out.''

I accept that we not here to discuss the goals that the Government set out in the White Paper. That is a subject for debate by those hon. Members who are fortunate enough to serve on the Committee that considers the communications Bill. However, the Minister has not been called to account through the four probing amendments to the clause, so we want to take the opportunity afforded by this short clause stand part debate to establish precisely the form that the co-ordination of the existing regulators will take. In exercising their functions, will they have a duty to do everything necessary to facilitate the implementation of any relevant proposals on the regulation of communications?

That is a key point, and once the Bill leaves Committee and proceeds to the Floor of the House the amount of time in which to debate it will be even more limited. As chapter 9 of the White Paper says,

''The skills and experience of staff will be essential to ensure a smooth transition from the current arrangements until the new regulator is established and beyond.''

At this key transitional stage, we need to establish from where the staff who are to man Ofcom will come. Will they purely be staff on secondment? That is relevant to the co-ordination that the Minister mentioned. The White Paper continues:

''The new structure will not work without good quality people. Staff at the current regulatory bodies will be fully involved in considering the issues relevant to them and we shall ensure that they are kept fully informed.''

That may be so, but the Government will not keep us—parliamentarians—fully informed.

The White Paper says that:

''The pathfinder groups will examine staffing and other transitional issues and, in keeping with our commitment to an inclusive approach, will maintain close contact with industry, representatives of the regulatory workforce and citizen and consumer representatives.''

Clause 4(1) gives the Government a unique opportunity to address precisely what consultations will take place and what Ofcom's staff representation will be.

We have had lengthy discussions about whether both Houses of Parliament should be involved in the appointment of board members. It is not only disappointing, but mysterious, curious and even unacceptable that the subsection fails to address the issues that are set out in some detail in the White Paper. I urge the Government to take the opportunity to rectify that omission.

Michael Fabricant (Conservative, Lichfield)

I had not intended to speak in this debate until the Minister churlishly rejected my request to intervene, even though he could have answered my question quite quickly.

When the Minister summed up the earlier debate, he said that the point of subsection (1) is to give the existing regulators extra powers and duties to co-operate with the so-called shell Ofcom—which may be not such a shell as we had thought. Extra powers and duties mean extra work: who will do that extra work? Will it be the 1,111 people currently employed by the existing regulators, in which case there will either be a lot of overtime or a lot of work undone in the promotion and regulation of the industries to which they are attached? If not them, there will be real difficulties in carrying out the functions in clause 4. How much extra work does the Minister think will be imposed on the existing regulators to carry out those functions?

Kim Howells (Labour, Pontypridd)

Will the hon. Gentleman give way?

Michael Fabricant (Conservative, Lichfield)

I will give way to the Minister happily, in contrast to his churlish rebuttal of my attempted intervention on him.

Kim Howells (Labour, Pontypridd)

There will be as much work as is required.

Michael Fabricant (Conservative, Lichfield)

Will there therefore be as many extra people as are required, and does that mean that additional charges will be levied on independent television, Channel 4, Channel 5, the communications companies and so on? The Minister's brief answer raises a series of questions. Not only does an endless length of string have to unravel before the final enactment of the main communications Bill, we now see that the existing regulators face another endless length of string, or rather an endless amount of red tape, in undertaking all the work required to co-operate with the shell Ofcom.

Where among the existing regulators will the additional people be found? Where is the additional funding for extra people or for overtime? The Minister takes a relaxed attitude, saying that there will be as much additional work as required and it is as simple as that. I suspect, although I do not know his background, that there speaks a man who has never run an organisation in his life; otherwise, he would not be so relaxed when making such a comment. The amount of work required must be predictable, and if it is a large amount, who will do it?

The Department for Culture, Media and Sport was well described by a recently departed Minister as a dysfunctional ministry. We can see why. The Minister's answer is typical of the sort of thinking and hands-off approach that the DCMS so often adopts. We understand why it is so often castigated by the Select Committee. It seems unable to make predictions about anything.

We have just debated a whole series of probing amendments, hoping to elicit answers about the operations of the shell Ofcom, but there have been no answers. Every time a probing amendment is tabled, every time a question is asked, the Minister gives an answer such as we have just heard: there will be as much work as it takes—take it or leave it. I do not know why I put on an east end accent then, it should have been a Welsh accent, but the point is made.

That is the central point of clause 4. It places a burden on existing regulators but there is no idea, and no concern, about the practical difficulties involved. I do not think that the Minister means anything other than to encourage the existing regulators; it is just that he is completely unaware of the import of his response. If the existing regulators were in any way relaxed before this morning's debate, I suspect that they are now very concerned.

I know that there is concern. There is a steering group of the existing regulators, and I understand, because there are leaks, that when it puts questions to the DCMS, nothing is received from Department or Ministers. There is no feedback. The Minister seems unable to control his Department. Are we surprised to hear that when we get answers such as the one he just gave? I was hoping for a helpful response, but instead his answer was: there will be as much work as is required.

Clause 4(2) has not yet been debated. I defer to my hon. Friend the Member for Upminster (Angela Watkinson), who pointed out the interesting use of ''duty'' instead of ''power''. It says:

''It shall be the duty of each of the existing regulators to comply with any direction by the Secretary of State''.

Is that not worrying? What sort of directions will the Secretary of State give? We are told that the directions will be

''in relation to the carrying out''—

an interesting use of English there—

''of that regulator's functions under this Act''.

Those functions are to include the preparation of draft schemes, consultation of Ofcom about proposals, and submission of further draft schemes

''in such a form as he may require, to the Secretary of State.''.

That rather is an open obligation. What sort of draft scheme might the Secretary of State come up with to create additional burdens?

I am rarely speechless, but I am on this occasion because the Minister is unable to give any comfort to the existing regulators. He has not said what resources will be given to them. In earlier debates, we have covered the resources that will be given to the Ofcom shell, but it turns out that those resources will ultimately derive from the bodies that are to be regulated.

A loan will be given, either directly by DCMS or by the Treasury, which must be paid back with interest. We do not know what the interest rate will be, but the Minister has promised me a letter—although it has not yet appeared on my desk. Perhaps he can tell me whether he has signed off the letter, or whether there is big question mark over the interest that will be chargeable to companies such as ITV and the individual independent television companies. It is an open issue.

We now know that burdens will put on the existing regulators. How will those burdens be funded—through a loan that must be repaid, or a charge of additional levies on ITV companies, BT and NTL, all of whom are experiencing difficulties? We do not know

and, I fear the Minister has no clue; that is worrying. When he gives an answer, it will be one prepared for him by his officials; it will not address the problem, which I do not believe has been properly discussed in the DCMS. More worryingly, the existing regulators do not think that it has been discussed in the DCMS—the dysfunctional Department, as the Minister put it so well only a few weeks ago.

Kim Howells (Labour, Pontypridd)

On a point of order, Miss Widdecombe. I have never referred to the DCMS as a dysfunctional Department. The hon. Gentleman's fevered brain might want it to be that way, but that is not my view.

Michael Fabricant (Conservative, Lichfield)

I have never said that the Minister referred to it in that way—he would not keep his job for long if he had. I am referring to the hon. Member for Vauxhall (Kate Hoey), as he knows, unless he pays little attention to events on the Floor of the House. I make it absolutely clear that I am referring to that hon. Lady who did the Minister's job.

Kim Howells (Labour, Pontypridd)

She did not.

Michael Fabricant (Conservative, Lichfield)

Well, she worked in his Department—indeed, she was an important Minister in his Department. I could go through the details, but it would be pointless because it is well known how effective the DCMS has been—one need only ask the right hon. Member for Manchester, Gorton (Mr. Kaufman).

Ann Widdecombe (Conservative, Maidstone and The Weald)

Order. Would the hon. Gentleman exercise ingenuity and try to relate his comments to clause 4?

Michael Fabricant (Conservative, Lichfield)

I will now switch on the ingenuity section of my mind, and move to subsection (3). It states:

''each of the existing regulators shall have the power,''—

we see the use of the word ''power'', rather than duty—

''for the purpose of carrying out that regulator's functions under this section, to do such things as appear to that regulator to be incidental or conducive''—

the word ''incidental'' means still more burdens; how long is a piece of string? Perhaps the Minister can give us a global view of what might be

''incidental or conducive to the carrying out of those functions including''—

this is not an exhaustive list because it is ''including''—

''(without prejudice to the generality of that power) power''—

''power'' appears twice—

''to make payments to OFCOM, to second staff to OFCOM and to provide OFCOM with any information that they may request.''

So, the clause states that there are to be burdens on the existing regulators to provide whatever work Ofcom thinks fit, which means that they will be less able to do their current work regulating businesses that, for example, the Radio Authority, the ITC and the other two organisations regulate. Far from the Minister saying, ''Yes, we shall provide the resources for extra staff'', or ''Yes, we shall provide extra money to pay overtime'', we find that the existing regulators must second staff to the shell Ofcom.

Whether the Minister likes it or not, his Department must answer the question of how people will do that work. How will Ofcom be run in practice? The track record of the DCMS reveals it to be incapable of running anything, but if he does not want to face before the end of this Parliament a purge similar to the one that the Prime Minister applied to his Department at the beginning of this Parliament, his Department must address those practical problems; it is time it did so. It is no good waffling: he must say what the burden will be, from where the resources will be provided to carry out that work, and who will pay for it. Those are three questions that he must answer, and if he does not answer them it will show that his Department will deliver Ofcom like it delivered good management of the millennium dome, and everything else that it has touched with its minus-Midas touch.

Kim Howells (Labour, Pontypridd)

I have nothing to add.

Anne McIntosh (Conservative, Vale of York)

I just wanted to congratulate my hon. Friend the Member for Lichfield on a stirring speech that unfortunately did not stir the Minister to a reply. The Minister should have taken the opportunity to say how the preparations will be put into effect.

We are told in the explanatory notes that subsection (2)

''imposes a duty on existing regulators to comply with directions from the Secretary of State to prepare schemes for transfer to OFCOM of their property, rights and liabilities, so that they can be transferred with the minimum of delay when the regulatory functions are ready to be transferred to OFCOM under the Communications Bill.''

According to the explanatory notes, subsection (3)

''provides that the existing regulators have the power to do anything incidental or conducive to their functions under this Bill. This includes assistance to OFCOM by means of secondment of staff and the payment and provision of information.''

Angela Watkinson (Conservative, Upminster)

Does my hon. Friend agree that subsection (1)(d), which refers to

''a power to carry out the functions of that regulator in a manner that promotes the interests of OFCOM.''

establishes a hierarchy of interest between Ofcom and the existing regulators? If there is a conflict of interest or a problem of capacity in the existing regulators to undertake those additional functions, paragraph (d) provides that Ofcom's interests will take precedence over those of the existing regulators.

Anne McIntosh (Conservative, Vale of York)

It is a pity that the Minister could not be as clear in his response.

The power to carry out ''conducive'' functions mentioned in subsection (3)—this does not contradict the suggestion by my hon. Friend the Member for Upminster—include

''assistance to Ofcom by the means of secondment of staff, payments and provision of information. This power will be essential for the establishment of the . . . structure and procedures that will need to be put in place to allow the smooth transition of functions and property under the Communications Bill''

That has been a dereliction of duty. The Minister's responsibility was to share that with the Committee, the rightful authority to scrutinise the Bill, because there is a huge gap between that and what the White Paper suggested.

Michael Fabricant (Conservative, Lichfield)

Does my hon. Friend share my suspicion that it is not that the Minister withheld information, but that he does not have the information? He and his Department have not considered those practical details.

Anne McIntosh (Conservative, Vale of York)

I find that intervention almost unbelievable because we have been waiting for the paving Bill, let alone the main Bill, for some time. I cannot believe that the DCMS, whatever its failings, has not thought about and prepared for precisely those matters.

I repeat that there is a huge gap between the Bill and the promises made and expectations raised in respect of the implementation process by chapter 9 of the White Paper. There has been a huge failure to deliver on the part of the Government and, I regret to say, the Minister. The Committee's responsibility is to analyse and scrutinise the Bill, but we have not been able to do so because he will not share the information with us, which I find deeply regrettable.

Question put and agreed to.

Clause 4 ordered to stand part of the Bill.

Clause 5 - Winding up of OFCOM on abandonment etc.of proposals

Anne McIntosh (Conservative, Vale of York)

I beg to move amendment No. 59, in page 4, line 34, at end insert

'after consultation with and consideration by a Joint Committee of both Houses of Parliament.'.

Ann Widdecombe (Conservative, Maidstone and The Weald)

I remind the Committee of my warning about departures from the scope of the amendment prejudicing the clause stand part debate.

Anne McIntosh (Conservative, Vale of York)

The purpose of amendment No. 59 is to add to subsection (1) a provision that before the Secretary of State can decide that it is necessary to wind up Ofcom there should be

''consultation with and consideration by a Joint Committee of both Houses of Parliament.''

Such an abandonment or modification of relevant proposals on the regulation of communications would be due to the Government failing to produce the main communications Bill either before or after 14 April, or whatever date they choose. Should the circumstances in which the Secretary of State deems it unnecessary for Ofcom to continue to exist arise, the Government may by order wind up and dissolve Ofcom.

The Select Committee on Culture, Media and Sport believed most fervently that Ofcom, even in its transitional phase, should be fully accountable to both Houses of Parliament. What the best vehicle for such accountability would be is debatable, and we have debated it elsewhere. The reason why the Opposition believe that it is right and proper that there should be an alternative to a Select Committee of either this House or the other place is that we were told by the Minister that there would be a pre-legislative scrutiny committee, which would be a Joint Committee of both

Houses of Parliament. The duty of a Joint Committee on pre-legislative scrutiny should be to monitor the way in which Ofcom is set up.

Perhaps clause 5 could be described as a sunset clause. Our attempt to insert a sunset provision failed miserably through lack of support, even though I moved it vigorously--

Kim Howells (Labour, Pontypridd)

It was brilliantly moved.

Anne McIntosh (Conservative, Vale of York)

Thank you.

If the communications Bill does not appear before the House this spring, or by the autumn, or even by spring next year, it would be a right and proper for the matter to be considered by a Joint Committee of both Houses of Parliament. The composition of such a Joint Committee would be determined not by the Government, but by both Houses of Parliament, although I am not sure which House would have seniority. I had the privilege of serving on a Joint Committee of both Houses of Parliament and was told that if another similar Joint Committee was set up it would be the turn of the House of Commons to provide the Chairman. However, the Joint Committee would, no doubt, make a joint decision, so seniority would be of no consequence.

It should be for the Secretary of State to deem that it is no longer necessary for Ofcom to continue to exist. It may be necessary to prompt the Secretary of State to reach a decision, but that is not apparent in the Bill, so amendment No. 59 is necessary. Without it, primary legislation would not come before Parliament, although there is another procedure that we shall discuss in connection with clause 5 stand part, whereby a statutory instrument can be laid and prayed against. That is an unsatisfactory procedure and depends on

the vigilance of an active official Opposition in monitoring statutory instruments to ensure that they do not slip through unannounced.

Our purpose today—or on Report, or even on Third Reading—is to ensure that once Ofcom has been brought into existence, it does not continue longer than absolutely necessary. Our sunset provision—we have overcome our disappointment—would have introduced a time scale that would have helped the Minister to concentrate his Department's mind on whether Ofcom should continue for one year or 18 months, although the Opposition believe that one year would have been sufficient, from the date of the Bill's enactment.

The Bill fails to provide for the Department, having strung us along and promised a communications Bill, leaving us with only the little baby paving legislation--

Michael Fabricant (Conservative, Lichfield)

Not so much a baby.

Fraser Kemp (Labour, Houghton and Washington East)

What about the amendment?

Anne McIntosh (Conservative, Vale of York)

I thank the hon. Gentleman for reminding me of that.

Even the Government envisage in the clause that the act or failure to act, or the abandonment or modification of any relevant proposals about the regulation of communications, may obviate the necessity of Ofcom continuing to exist, in which case the Secretary of State may by order provide for its winding up and dissolution. The purpose of our concise but appropriate amendment is that that should happen only after consultation with and consideration by a Joint Committee of both Houses of Parliament. We could have gone further and suggested that that should be subject to the approval of a Joint Committee, but the Minister may think that that would be a step too far--

It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing order.

Adjourned till this day at half-past four o'clock.

Standing Committee E

Office of Communications Bill [Lords]

Roger Gale (Conservative, North Thanet)

I remind the Committee that this Chairman takes the view that we can have a stand part debate at the beginning of a clause's consideration or at the end, but not both. If I judge that the clause has been satisfactorily debated during discussion of the amendment, I shall not permit a stand part debate.Clause 5 Winding up of OFCOM on abandonment etc. of proposals

Clause 5 - Winding up of OFCOM on abandonment etc.

Anne McIntosh (Conservative, Vale of York)

Good afternoon, Mr. Gale, and welcome back to the Committee.

We tried to keep the debate on amendment No. 59 brief to allow a short debate on the clause and I was about to sum up on the amendment when the Committee was adjourned.

The purpose of the amendment is to ensure that it is not just the Secretary of State who decides whether Ofcom is no longer necessary and that its winding up and dissolution comes before Parliament in primary legislation. My hon. Friend the Member for Tewkesbury (Mr. Robertson) and I tabled the amendment because it is more appropriate to have consultation with and consideration by a Joint Committee of both Houses of Parliament, rather than allowing the Secretary of State to make that decision alone. A Joint Committee is more appropriate than a Select Committee of this House, of the other place or of both.

Michael Fabricant (Conservative, Lichfield)

I support the amendment because it would help to bring accountability back to the House of Commons. The explanatory notes to the Bill state that clause 5 allows the Secretary of State to wind up Ofcom at any time, but if that happens after 2003, she has a duty to lay a draft order before Parliament. We have heard that there is doubt about the extent and powers of the shell organisation of Ofcom and that people will be seconded to it from the existing regulators, but we do not know how long the shell Ofcom will exist because it is not clear when the communications Bill will receive Royal Assent. For that reason, I suggest that ''the end of 2003'' is an arbitrary date. In any event, there should be full consideration by a Committee, as the Select Committee on Culture, Media and Sport recommended.

I do not know whether my hon. Friend the Member for Vale of York (Miss McIntosh) will press amendment No. 59 to a Division, but it is right and proper that it should at least be discussed as a probing

amendment. I shall be interested to hear, yet again, what the Minister says. He will be aware of the Select Committee's recommendation that there should be full accountability to Parliament. However, I shall speak at greater length on this when we come to the debate on clause stand part.

Laurence Robertson (Conservative, Tewkesbury)

I, too, would prefer to speak on clause stand part if you allowed that, Mr. Gale, so my comments now will be brief.

Under the Bill, it will be quicker and easier to wind up Ofcom than to set it up. My concern is the possibility that other regulations may not be in place when that occurs, which would cause confusion and mayhem to regulation of the industry. For that reason, the winding up of Ofcom deserves more than just an order before the House. I shall expand on those words if we have a stand part debate.

Kim Howells (Labour, Pontypridd)

As we made clear previously, the Government do not anticipate the need to use the provisions to wind up Ofcom. They are there purely as a safeguard and an assurance. The Government remain committed to having Ofcom operational by the end of 2003.

Should the Secretary of State reach the conclusion that it is no longer necessary for Ofcom to continue to exist, clause 5(3) of the Bill already makes provision for any order made by her to wind up Ofcom to be laid in draft before Parliament and approved by resolution of each House. That provision was made at the behest of the Delegated Powers and Regulatory Reform Committee of another place. In its report, the Committee said that it considered it important for there to be sufficient opportunities for Parliament to discuss the fate of Ofcom before any order was made to abolish it and that it

considers the affirmative procedure would be appropriate for this power.

I agree. In the unlikely event that the Secretary of State were ever to need to use the power to wind up Ofcom, existing provisions in the Bill would allow Parliament adequate opportunity to consider whether that was reasonable. That is why the Government oppose amendment No. 59.

Anne McIntosh (Conservative, Vale of York)

I am grateful for the contributions made by my hon. Friends and by the Minister. In view of the fact that we shall, I hope, consider the procedures that, in the Minister's view, are more appropriate, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Anne McIntosh (Conservative, Vale of York)

In the very timely debate that we have just had, my hon. Friend the Member for Lichfield (Michael Fabricant) raised a point that was very supportive of the earlier argument that I made on what the transitional period should be. He helpfully referred to the end of 2003 and I agree that that should be the cut-off. I hope that we can obtain the Minister's agreement that that time scale will be strictly adhered to. I have some hesitation in accepting clause 5 as it

stands. I tabled an earlier amendment, which would have meant that the Bill would fall after one year, but the Minister felt unable to accept it and it failed. As he and the Committee will recall, he said that a period of one year from the date of the Bill being enacted was insufficient time.

I imagine that this Bill will reach the statute books in a matter of weeks but, speaking realistically, the main communications Bill might not do so until, say, June 2003. I do not think it unreasonable for my hon. Friends to seek a commitment from the Minister that, after the end of 2003, should the main communications Bill not have been introduced or should it have reached some insurmountable hurdle, he will seek to apply the draft order.

Kim Howells (Labour, Pontypridd)

Perhaps the hon. Lady will explain to me why, having failed in her first attempt to impose a time limit, she is now so insistent in trying to impose another. What would happen if a terrible disaster like the events of 11 September were to occur and the House were preoccupied with legislation that we cannot even envisage right now?

Anne McIntosh (Conservative, Vale of York)

With the greatest respect, I am only trying to help the Minister. It is his Bill that imposes a time scale, unless I am reading clause 5(2) incorrectly. It clearly states:

If . . . it appears to the Secretary of State at any time after the end of 2003.

I would prefer it to say that it should be soon after the end of 2003. However, that point has been well made and I do not wish to be repetitive. There are other issues that we wish to discuss on this final day of our proceedings.

Will the Minister clarify the affirmative procedure? I understand that to exercise any objection to an affirmative resolution, one has to enter a prayer against it within a very short time scale.

I hope that the Minister will accept those few comments in the spirit of helpfulness in which they were made.

Michael Fabricant (Conservative, Lichfield)

Of course I support the inclusion of clause 5. A mechanism to wind up Ofcom will be required if the communications Bill, which has not yet been published, receives Royal Assent. However, it is also right and proper to consider what would happen in the unlikely event of it not receiving Royal Assent. As the Minister said, unanticipated circumstances could arise—heaven forbid—that not only delayed its introduction, but prevented it from receiving Royal Assent.

Conservative Members support the establishment of a communications agency for all the reasons set out in the White Paper, which was preceded by the report of the Select Committee on Culture, Media and Sport. However, I want to pick up on a couple of points and raise a new point about clause 5. I agree with my hon. Friend the Member for Vale of York that

at any time after the end of 2003

should be rephrased. The word ''by'' should have been used. Whether 2003 is the date is another matter—it

could be 2004 or 2005—but there must be a sunset clause to provide some limitation. That is not in order to constrain us here in the House of Commons, but to give some reassurance to people in the industry that the Government have set themselves a realistic target for the establishment of the communications agency.

Everything that has come out of the Committee so far suggests that the Government are unclear about their timetable, about how Ofcom will be funded during the transitional stage and about how the regulatory bodies will be funded in terms of their providing people to be seconded to the shell Ofcom and of the extra work that will be required, which we discussed under clause 4.

Subsection (6) deals with the procedures that will apply in relation to the shell Ofcom's assets if—I accept that it is unlikely—it were to be wound up. Subsection 6(a) refers to the

power to provide for the transfer of property, rights and liabilities of OFCOM to the Secretary of State, to any of the existing regulators or to any other such person as may be specified in the order.

Who will be the arbiter where there is a dispute? If assets are owned by the shell Ofcom organisation, a dispute may arise from the ITC, the Department for Culture, Media and Sport or from the Department that is not represented here in Committee; the Department of Trade and Industry. Who will be the arbiter of where the liquidated assets are disposed? It is important that the Minister clarifies that.

Paragraph (b) refers to the power to provide for the property, rights and liabilities of Ofcom to be divided between different persons. There might be arguments from regulators, who could say that they will not accept liability. Who will be the arbiter? Similar questions relate to paragraph (c).

The part of the Bill that makes no attempt to address a particular problem—I wonder why, because it could have been anticipated—concerns compensation for the operating costs of Ofcom. I shall clarify what I mean. Earlier in Committee, it was established that Ofcom, in its shell form, would initially be funded either by the Treasury or by the Department of State.

Kim Howells (Labour, Pontypridd)

I have told the Committee on a number of occasions that the only source of funding will be loans made to Ofcom by the Secretary of State on behalf of the Department for Culture, Media and Sport. Either the hon. Gentleman is deaf, or he is forgetful.

Michael Fabricant (Conservative, Lichfield)

I thank the Minister for a customarily polite and generous intervention, for which he is known; I found it very helpful. The Minister may not be deaf or forgetful, but he has not fulfilled his promise to write me a letter, which he faithfully promised to do.

Kim Howells (Labour, Pontypridd)

I will.

Michael Fabricant (Conservative, Lichfield)

He says he will. He told me that he was going to do it quickly, and that has not happened. However, he is neither forgetful nor rude, so I will not pursue that line of argument because it would be out of order.

We established that funding would be from loans. That was teased out of the Minister like a wisdom tooth; he had not volunteered the information until my hon. Friends probed him. Eventually, he told us that the money would be a loan, but was unable to tell us at what rate of interest. However, it is irrelevant whether the loan is from the Treasury, his Department or the DTI. I am grateful to the Minister for saying that it will be from his Department, but the end of the story is that it will be a loan that must be repaid.

Despite all the drafting, clause 5 makes absolutely no reference to who will repay the loan that will undoubtedly arise from the operating costs of Ofcom. Will that be a burden on the regulatory bodies, or on the bodies that are regulated? Why has that information been omitted from the clause? Is it a drafting error from the dysfunctional Department, or is it deliberate?

I appreciate that the Minister is becoming heated because the Committee has rightly exposed inconsistencies in the Bill. Proposed legislation is never perfect, which is why we have scrutiny in Committee. However, it is important in this final sitting that the Minister finally gives us real and tangible answers, rather than brief replies that are written by his officials. How are the operating costs to be dealt with? The assets and liabilities are dealt with in detail, but the operating costs are not. Why not, and who will be liable?

Laurence Robertson (Conservative, Tewkesbury)

I shall not add much to what I said earlier about the need for the winding-up process to be seriously considered. The customarily wide-ranging speech of my hon. Friend the Member for Lichfield covered many issues that concern us. We are setting up a body that will have potentially important duties and a large role. We need clarification on the points raised by my hon. Friend, such as what will happen to the body's assets.

The Bill gives a lot of power to the Secretary of State. I shall not go over the ground covered by my hon. Friend the Member for Lichfield, but subsection (5)(b) provides

power to make such incidental, supplemental, consequential and transitional provision as the Secretary of State thinks fit.

Will the Minister clarify whether that will include only assets, or whether it will include responsibility for regulation? I am unsure what is intended, and I do not mean to trip him up by asking the question.

On the transfer of property, liabilities, rights, interests and other things that are listed, will the Minister clarify what sort of organisation and/or person those rights and obligations would be transferred to if the other regulators were no longer to exist? Because Ofcom cannot be wound up until beyond 2003, we must assume that the other regulators will not exist.

Angela Watkinson (Conservative, Upminster)

I support the clause, but the power to wind up Ofcom is too great to lie with the Secretary of State. We cannot possibly know what period of time will have elapsed—it will be beyond 2003, and could be considerably beyond that—because clause 5(2) states:

at any time after the end of 2003.

It is impossible to know what will have happened to either the industry or the former regulators by that time. They may have suffered financial loss or there may have been unforeseen developments in what is a fast-moving industry. A Committee of both Houses acting as an additional brake on such a decision before it were made would be a wise precaution because both the former regulatory bodies and the industry need that protection.

Kim Howells (Labour, Pontypridd)

Last week, the Committee discussed the need for a sunset provision in the Bill. Members of the Committee argued forcefully that such a provision was essential, and although the proposals that they made were inappropriate, we had a full discussion. Clause 5 will provide precisely what Opposition Members were arguing for. We do not anticipate having to use the powers provided in the clause, but it has been included in the Bill to provide a means by which Ofcom could be wound up should, for some unforeseen reason, insufficient progress be made.

Clause 5 gives the Secretary of State the power to wind up Ofcom. If it is no longer necessary for it to continue to exist, the duty to wind it up will be open to her after the end of 2003. The hon. Member for Upminster (Angela Watkinson) asked about the affirmative resolution procedure—[Interruption.] Sorry, it was the hon. Member for Vale of York. Clause 5(3) provides that no order shall be made unless a draft order has been laid before Parliament. A debate will have to take place in each House, followed by a resolution. I hope that that satisfies the hon. Lady. It is a strong power that we have considered carefully.

Other provisions allow property, other assets and liabilities to be transferred to the Secretary of State from Ofcom, the existing regulators or other specified persons. The Secretary of State will be able to provide compensation to persons who suffer loss or damage because of a decision to wind up Ofcom.

Laurence Robertson (Conservative, Tewkesbury)

The Minister seems to have skipped over one of my questions. After 2003, it is likely that no regulator will remain other than Ofcom. To whom would he envisage transferring assets and responsibility under those circumstances?

Kim Howells (Labour, Pontypridd)

The hon. Gentleman is right to ask that question. The regulators would remain because no transfer of power would have taken place. The present five regulators, including the Department of Trade and Industry, will remain, and no powers will be transferred because Ofcom will exist only as a body, not a regulator.

Anne McIntosh (Conservative, Vale of York)

I am missing something. I am grateful to my hon. Friends for pointing out that the Bill does not permit the transfer. The Minister says that the transfer will be provided for in the main communications Bill. Without being asked, we are told that we are going to authorise the Secretary of State to make the transfer.

Kim Howells (Labour, Pontypridd)

I am sure that the hon. Lady understands that that is not true. The Secretary of State will have the power to wind up Ofcom should it not be needed; for example, if the main communications Bill fails. That is what the hon.

Lady pressed for in earlier amendments. The Bill will allow the Secretary to State to ensure that Ofcom does not remain in perpetuity.

Laurence Robertson (Conservative, Tewkesbury)

The Minister is trying to be helpful. Is he saying that the Secretary of State will not have the power to wind up Ofcom after existing regulators have been abolished?

Kim Howells (Labour, Pontypridd)

I am saying exactly that. It will not be possible to wind up Ofcom after it takes over the regulatory functions from the existing regulators. The powers in clause 5 are confined to cases in which proposals have been abandoned or modified in a way that meant that Ofcom were no longer necessary. The provisions of clause 5 are a sensible precaution against substantial changes in the circumstances of communications regulation.

Michael Fabricant (Conservative, Lichfield)

Who will have to repay the operating costs?

Kim Howells (Labour, Pontypridd)

The hon. Gentleman knows that the regulators are in the public sector. They are paid for by Government, except where they levy fees from those they regulate. Initially, the Secretary of State will provide loans to set up Ofcom. She must ensure that assets and any moneys paid are repaid to the Department. This is not a commercial deal and does not involve an outside bank or body. The Secretary of State will have to make the decision because Government resources are involved and, ultimately, the DTI and DCMS will have to decide on how best to use those resources.

Anne McIntosh (Conservative, Vale of York)

I notice that, quite late on, an amendment has been tabled to delete clause 7(5). Can the Minister explain the relationship of that amendment to our discussion? I am worried that the Government will run into difficulties.

Kim Howells (Labour, Pontypridd)

That is not what this debate is about. It is as unlikely as could be that the provisions will be ever needed, but they provide a necessary safeguard and should form part of the Bill for all the reasons expressed by Opposition Members.

Anne McIntosh (Conservative, Vale of York)

I shall not go over the ground already covered, but the Minister and the Committee feel our anxiety.

Michael Fabricant (Conservative, Lichfield)

The Minister was helpful in his response to my intervention, but he did not explain how the shortfall will be met if disposal of the assets does not cover the cost of the loan.

Anne McIntosh (Conservative, Vale of York)

I have as much difficulty with that point as my hon. Friend and I regret that the Committee is still in the dark.

Kim Howells (Labour, Pontypridd)

The assets will not be disposed of. They are paid for by taxpayers. The Secretary of State, ultimately, is responsible for disbursal of the funds and loans. He or she will decide at the time how best those moneys and resources should be used. I hope that the hon. Lady understands my answer.

Anne McIntosh (Conservative, Vale of York)

That is clearer than the Minister's previous answer. I think that my hon. Friend the

Member for Lichfield was trying to say that the money should revert to the industry whence it came.

Michael Fabricant (Conservative, Lichfield)

No, because at the stage of the shell organisation the regulatory bodies will still exist. Taxpayers will have given money to the shell organisation for buildings and so on, but there will be operating costs also. If the shell organisation were dissolved—we accept that that is unlikely—and the assets and buildings were disposed of, but the total cost of the assets and operating costs was greater than what can be recovered from liquidating the shell organisation, there would be a shortfall. Will taxpayers ultimately pick up the bill, or will the cost be forwarded to the regulators, and thence to the people they regulate? That has not been made clear.

Anne McIntosh (Conservative, Vale of York)

My hon. Friend makes a pertinent point and I am sorry that I was so slow to get there.

Kim Howells (Labour, Pontypridd)

May I confirm for the third time that taxpayers will pick up the costs?

Anne McIntosh (Conservative, Vale of York)

Right. This is a matter to which we want to return and I give notice of that. I hoped that the Minister could give us a timetable for the transfer of the assets.

Kim Howells (Labour, Pontypridd)

The hon. Lady has tried that before.

Anne McIntosh (Conservative, Vale of York)

Yes, and I shall do so again. I shall not give up so easily. I want to know what the timetable will be for the transition phase and the final phase, but it is appropriate to return to that at a later stage.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill

Michael Fabricant (Conservative, Lichfield)

On a point of order, Mr. Gale. You are an experienced Chairman and I would like some clarification. When a husband and wife are not speaking, they may ask questions of each other through an intermediary. Is it normal in Committee for an hon. Member such as myself to have to ask the Minister questions through my hon. Friend, who then has the Minister intervening to answer them?

Roger Gale (Conservative, North Thanet)

I am not entirely sure that that is a genuine point of order. It is up to the Member who has the Floor to decide whether to give way to a Member who is seeking to intervene, and it is up to the Member who is intervening to make his point briefly. It is not up to the Chair at all.Clause 6 Interpretation

Clause 6 - Interpretation

Anne McIntosh (Conservative, Vale of York)

I do not intend to detain the Committee for long, although there is one item that I shall wish to return to at the earliest opportunity.

In responding to the previous clause stand part debate, the Minister said that the DTI currently acted as a regulator, so it is curious that it is not mentioned in the Bill. We all know what the DTI is, but it would have been appropriate to define its role for the benefit of laypersons like myself who do not have the great wealth of expertise of my hon. Friends and other

Members on both sides of the Committee. Will the Minister take this opportunity to rectify that?

I shall return to the other matter in the not too distant future.

Michael Fabricant (Conservative, Lichfield)

Clearly, the clause must be included in the Bill, but it is a sad clause, owing partly to its omissions and partly to its inclusions. As my hon. Friend said, it would have been clearer to include some definition of the functions of the DCMS and the DTI in relation to Ofcom, although it might not have been within the scope of the Bill to do so. The situation was even more disparate before 1997, when the Home Office was also involved. That is yet another argument for there being only one Government Department with responsibility for communications; a Government communications organisation.

It is a sad clause because there is no subsection 1(e) referring to the BBC. There should be, because the BBC board of governors is a regulator.

Roger Gale (Conservative, North Thanet)

Order. The BBC is not part of the Bill and we have had this debate about four times already.

Michael Fabricant (Conservative, Lichfield)

Another sad part of the clause is subsection (2)(b)(iii), which cites the Marine, &c., Broadcasting (Offences) Act 1967. That is sad for me because it made a dishonest man of me.

Angela Watkinson (Conservative, Upminster)

I rise briefly for a point of clarification. The list of existing regulators in clause 6(1) does not include the Radiocommunications Agency. My Library research paper says that there are five regulators, of which the Radiocommunications Agency is the fifth. Will the Minister elucidate?

Kim Howells (Labour, Pontypridd)

I am advised that although the clause does not cover the Radiocommunications Agency, which is currently a manifestation of the Secretary of State, the agency is expected to co-operate with Ofcom in a similar way to that set out in the clause. I hope that the hon. Lady accepts that answer.

Angela Watkinson (Conservative, Upminster)

I am grateful to the Minister for his explanation.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.

Clause 7 - Short title, commencement and extent

Kim Howells (Labour, Pontypridd)

I beg to move amendment No. 33, in page 6, line 14, leave out subsection (5).

It is unusual for me to move an amendment. Clause 7(5) was inserted in another place to avoid infringing the privileges of this House. As is usual in these circumstances, amendment No. 33 removes it.

Anne McIntosh (Conservative, Vale of York)

This is one of many amendments that were tabled in the other place. I want to press the Minister on several points arising from what he has just said and from what he said during the passage of the Bill. We are told in the explanatory notes on clause 7:

This order-making power will be used so that OFCOM can be operational by the time that the Communications Bill is brought into force.

We are also told about the financial effects of the Bill:

The Government envisages that the initial planning costs of establishing OFCOM so that it can prepare to receive its functions will be in the order of £5 million spread over the period of transition.

The notes continue:

By adding to the existing regulators' statutory functions—

Roger Gale (Conservative, North Thanet)

Order. Before we proceed down that road, the amendment, not unusually in procedural terms, is very clearly and narrowly defined. As with my standard practice as Chairman, I am perfectly happy to allow a stand part debate now to broaden the issue slightly, on the clear understanding that we have only one stand part debate and that this is it. The hon. Lady may, alternatively, wish to draw her remarks to a conclusion, allow the amendment to proceed and then have a stand part debate. I am very relaxed about which way she plays it, but she cannot have it both ways.

Anne McIntosh (Conservative, Vale of York)

I am happy to accept your invitation to have only one debate, Mr. Gale, and have a clause stand part debate now. I wish to refer only to this paragraph.

The explanatory notes state:

By adding to the existing regulators' statutory functions, the Bill will allow existing regulators to recover a proportion of the establishment cost from the communications sector. These powers will mean that the net cost to public expenditure—

I presume that that means the taxpayer—

will be significantly less than the overall gross cost of the practical transition.

I wish to allude to the remarks that the Minister made when concluding the last debate. Being a lawyer, financial matters do not come easily to me. He clearly stated, as I think the Committee was happy to accept, that there will be a cost to the taxpayer.

Roger Gale (Conservative, North Thanet)

Order. I am trying to be as helpful as possible, but even under the terms of the short title clause, which is clause 7, those matters are not covered. Even in a very broad stand part debate, I am afraid that the hon. Lady is out of order.

Anne McIntosh (Conservative, Vale of York)

I crave your indulgence, Mr. Gale. I am talking about amendment No. 33. Am I right in thinking that the Minister just moved that, or are things going so quickly that I cannot keep up? That is always possible. I am responding to amendment No. 33.

Roger Gale (Conservative, North Thanet)

I must advise the hon. Lady that the House of Lords has inserted a privilege disclaimer in the last subsection of clause 7. The scope of the debate on the amendment to remove it is confined to the question of whether the House of Commons should maintain its claim of financial privilege. That is all that is under discussion, and that is not what the hon. Lady is discussing.

Anne McIntosh (Conservative, Vale of York)

The Opposition wish to retain that very welcome subsection. Clause 7(5) is very clear and states:

Nothing in this Act shall impose any charge on the people or on public funds.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

Perhaps I can assist the hon. Lady. Subsection (5) is, in a sense, fictional; a fiction by convention. Having seen such

things before, I can assure her that there is really no need to go over it. The fiction is inserted so that the Lords can debate the Bill. It will obviously cost the public money. I do not think that any of us are under the illusion that it will not cost the public money at some point.

Anne McIntosh (Conservative, Vale of York)

I am sorry, but I think that we must have this commitment on the record. We wish to retain it, whether it is a fiction or a privilege. We can bandy the words about and discuss fiction and privilege and convention. The whole of the British constitution is a convention at the moment. This House operates by convention. We are all familiar with that concept. Having obtained clause 7(5) as an amendment to the Bill, I think it important that we retain it here. I would resist any attempt by the Government to remove it.

I am referring to the financial effects of the Bill as explained to me in what are meant to be simple, layman's terms in the explanatory notes, which say:

These powers will mean that the net cost to public expenditure will be significantly less than the overall gross cost of the practical transition.

We are still trying to establish what the transitional costs will be. I am simply trying to retain clause 7.

Simon Thomas (Plaid Cymru, Ceredigion)

As I understand it, the hon. Lady is arguing against removing the subsection; I will accept that that may be fiction for the moment. Can she explain how that stands beside her previous amendments, which sought for Ofcom to be economically efficient? This clause would refuse to allow any variance in the public charge. Surely one must set a sprat to catch a mackerel, so how will Ofcom achieve what she wants if its hands are so tied?

Anne McIntosh (Conservative, Vale of York)

As my hon. Friend the Member for Lichfield put on record, there is the question of loans, their repayment and what their net effect will be. There is no point beating around the bush, or having the same debate over again. The hon. Member for Ceredigion (Mr. Thomas) is absolutely right that I have forcibly argued throughout our discussions that we should know precisely what cost savings the Government seek to make. That request has fallen on deaf ears. We still do not know what the transitional arrangements will be and, should the Bill's provisions fail by 2003—or very shortly thereafter—we do not know what assets will have been transferred, and what assets will be transferred back to the Secretary of State. I would resist amendment No. 33 and argue in favour of keeping clause 7(5).

Michael Fabricant rose—

Amendment agreed to.

Michael Fabricant (Conservative, Lichfield)

On a point of order, Mr. Gale. I am curious as to why I was not called.

Roger Gale (Conservative, North Thanet)

Quite simply, because the debate is becoming circular, although it is narrow. The hon. Member for Vale of York has wound up from the Opposition Front Bench and the Chairman has taken a view.

Question proposed, That clause 7, as amended, stand part of the Bill.

Michael Fabricant (Conservative, Lichfield)

I agree that clause 7 should stand part of the Bill, but it does not cover what happens now that amendment No. 33 has been passed. The clause does not deal with the question of what happens to the public purse if the assets—

Roger Gale (Conservative, North Thanet)

Order. The hon. Gentleman is out of order. The clause debates the short title, the commencement and the extent of the Bill. The hon. Gentleman is not speaking to the content of the clause, and is now trying to speak to the content of a subsection that has just been deleted. He either remains in order or returns to his seat.

Michael Fabricant (Conservative, Lichfield)

I return to my seat.

Question put, That the clause, as amended, stand part of the Bill:—

The Committee divided: Ayes 12, Noes 4.

New Clause 1 - Digital television

Anne McIntosh (Conservative, Vale of York)

I beg to move, That the clause be read a Second time.

I am grateful for this opportunity to move new clause 1, Mr. Gale. Several new clauses were tabled that have not been called for debate, and I hope that we shall have an opportunity to discuss them on a future occasion.

New clause 1 speaks for itself. Paragraph 72 of the report on the White Paper ''A New Future for Communications'' by the Select Committee on Culture, Media and Sport urges the Government to consider that

Access to the Internet can be an important driver of the take-up of digital television, and the expansion of digital television services can be fundamental to achievement of the Government's objective of universal Internet access by 2005.

This debate gives us an opportunity to ask the Minister to confirm whether that is still the Government's objective. The Select Committee went on to say that it is also

concerned that these links are not readily apparent in the two separate Government policies at present.

It recommends that

the promotion of Internet access through digital television become a more prominent element in Government policy for the Internet and that the promotion of digital television by the Government and the industry lay greater stress than is currently evident on digital television as an easy and affordable gateway to the Internet.

The Government's reply to that was very positive, saying that

the digital television action plan should ensure that the synergies between Internet access, digital television and the delivery of Government services electronically are developed. Linked with a telephone line, the television (analogue or digital) can provide an easy means of gaining access to the Internet for those without a personal computer (PC). Much of the material available on the Internet, however, is designed for access through a PC, and we must be careful to see that consumers are not deterred from using the Internet by a poor early experience through the television.

The BBC told us that the take-up of digital television has been rapid. In three years, more than 9 million homes—more than a third of the country—have gone digital. The BBC reckons that nearly half of the nation's children, 46 per cent., live in a house with digital television. The vast majority of homes with digital television have chosen one of the three pay-television options, and the BBC goes on to elaborate those. The downside is that two thirds of the population remain on analogue, and most have only five channels. Among that group the story is one of overriding confusion about digital, and I would probably count myself as such a person.

Many people are unsure what digital offers or how they could go about getting it if they wanted it. The range of providers, packages and platforms is daunting. Broadly, the older people are, the less they know about digital and the less they think they want it. Just more than one third of people think that they are likely to go digital in the next five years; just under a half think that they may go digital; 21 per cent. think that they will stay analogue. A point that was made forcibly during the Christmas shopping period and the January sales was that nine out of 10 sets sold in 2001 were analogue. The Government seem to want to switch to digital, but we do not see the action to make that a reality.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

Does the hon. Lady accept that, from a technical point of view, the best option is to buy traditional television sets and then to obtain digital television access by having a separate set-top box or other device? The sale of analogue televisions is not a measure of the failure to roll out DTV.

Anne McIntosh (Conservative, Vale of York)

The hon. Gentleman will be aware from local BBC that Pace in west Yorkshire has launched a box that will be on sale for £99. [Hon. Members: ''It is already on sale.''] I accept that. The problem is that a separate box is required for each analogue set in a home. Hon. Members who have, as I do, a London flat and a constituency home would need two boxes.

Derek Wyatt (Labour, Sittingbourne and Sheppey)

In fact, you need only one box to link your other televisions sets at home. You can watch different programmes throughout the house.

Roger Gale (Conservative, North Thanet)

Order. I cannot, because I do not have digital television in east Kent. The hon. Gentleman was addressing the Chair.

Anne McIntosh (Conservative, Vale of York)

The hon. Gentleman's information is most welcome because the briefing that I received from the company that makes the set-top box suggested that one box would be needed for each television.

Brian White (Labour, North East Milton Keynes)

NEC helped to develop the box with Pace and carried out the research in my constituency. My hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) is correct. Internet access is an active occupation and watching television is a passive occupation. How does the hon. Lady reconcile those?

Anne McIntosh (Conservative, Vale of York)

I always feel that I should be involved when watching television, but perhaps that is at the end of a working day. The hon. Gentleman's intervention was helpful. The Government have made several policy statements to the effect that universal access to the internet will enable more and more people to have access to the technology that they hope will be available throughout the country. On page 32 of the White Paper, the Government envisaged people such as me, who are not as computer-literate as we would like to be. Paragraph 3.10, which is headed ''Supporting individuals in using the new communications technologies'', states that the Government

will ensure that relevant education and training programmes allow everyone to maximise the opportunities afforded by these new communications technologies—both to improve the quality of their lives and to enhance their work prospects.

Angela Watkinson (Conservative, Upminster)

Does my hon. Friend want to include in the proposals support, help and protection for the many elderly people who may not want to buy a modern television? My mother-in-law was reluctant even to change channels with the remote control and had no interest in developing technology. We do not want to cut off viewers who want to retain their analogue sets. I am sure that my hon. Friend would want to incorporate that in the proposals.

Anne McIntosh (Conservative, Vale of York)

Not only would I wish to incorporate that generation, I would like someone to tell me after the Committee how to set my video recorder when I am not in the room. Many of us will wait until our analogue sets break and we have no alternative but to change to digital television. As a Scot by birth, I can say that the price will have to fall substantially before I am moved to accept it.

The new clause is a challenge to the Government and would make it

a duty of OFCOM to make proposals to the Secretary of State on the regulatory requirements relating to analogue switch off and full conversion to digital television within one year of OFCOM's establishment.

The Opposition would like a target date of 2006. There is a discrepancy between that and this proposal. However, I hope that the Minister is minded to support the new clause.

Ian Taylor (Conservative, Esher and Walton)

The new clause is important and reasonable. I am sure that the Minister will be tempted to accept it, regardless of what he may have been advised.

The frustration caused by the digital versus analogue debate is considerable. At my instigation, the Broadcasting Act 1996 set up a timetable for guidance. Officials do not sit in Committee, but if they did, they might nod their heads, and I would have noticed them doing so at that point. I was concerned that if the timetable were not included, the concept of analogue switch-off would not be grasped. We set a five-year target of 50 per cent. That was not terribly realistic, but I wanted people to understand that the process would take place. I chide the Government for not having grasped the issue early enough, but I credit them for doing so in the last month or two.

The appointment of Barry Cox from Channel 4 to galvanise interest is a great step forward. ONdigital, now ITV Digital, raised the question of whether new sets were marked as digital. Many people purchased widescreen television sets assuming that they were digital. They then had to either adapt their existing set-top boxes or obtain separate boxes, which meant competitive giveaways for a while.

All of those factors complicate a worthwhile Government objective; the transfer from analogue to digital. That ranges more widely than television. As the hon. Member for Milton Keynes, North-East (Brian White) said, the objective effectively brings the internet into every house in the country. I think that there are about 45 million televisions in the country and the penetration rate is significantly higher than 90 per cent. I will defer to the Minister if he has up-to-date figures. There are 21 million households in this country, so the average would be two sets per house. Digital television would contribute far better than any computer in terms of the Government's target of ensuring that everyone is online. Television, cable and satellite companies are aware of that tremendous opportunity. The Government have a real interest in clarifying a date for analogue switch-off.

The spectrum that surrounds the transmitters is valuable. The analogue signal has to be kicked on each time it hits a transmitter, which causes distortion of the spectrum. Valuable radio spectrum can now be auctioned off. I hate to use the word ''auctioned'' because Ministers' eyes click up pound signs. That spectrum can be used for alternative purposes, which I do not have time to describe. Depending on the latest estimates of the worth of that spectrum, there could be a way of facilitating the buy-out of the residual owners of analogue sets, or some form of cross-subsidy, to enable the Minister to get at the people who might not wish to switch. Unless we make them switch, we will be unable to shut off the analogue transmitters across the country.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

The hon. Gentleman raises an interesting point about the value of the spectrum. I tabled a parliamentary question some time ago to ascertain that value, because I thought that any money coming in could be spent on assisting the transfer. The response came back that no calculation had yet been made in any Government Department of the potential value of that spectrum. The digital strategy is entirely altruistic, and the Government have no pounds signs

in their eyes; at least when they are giving parliamentary answers.

Ian Taylor (Conservative, Esher and Walton)

It is always intriguing that when Governments change, files do not pass across. If we return to the files that existed before May 1997, some figures emerge. Even in those days, I took an interest in what it would take to facilitate the last analogue television sets being switched off. Analogue cannot be switched off if a significant number of people in the country are still clinging to it.

Brian White (Labour, North East Milton Keynes)

Is not one of the problems in this debate that we are concentrating on televisions rather than the access methodology? It is the access methodology, whatever it is, that is important, not the number of television sets, which are simply boxes to receive the signal at the end of the process.

Ian Taylor (Conservative, Esher and Walton)

Normally, I agree with the hon. and learned Gentleman—learned in the sense of the industry, rather than of law—but I am not sure that I do in this context because of the psychological importance of the television set. Of course, broadcast in whatever form it takes in a digital age can come to any receiver. As the hon. Gentleman rightly said, that does not have to be the television set. There are active and passive aspects to this. Nevertheless, the television set is an important form and it would be an irresponsible Government who tried to switch off the television sets of people who regarded them as the main way in which they received broadcast information.

I understand the hon. Gentleman's technological point, but there is a psychological issue involved. There is also an economic issue, partly because one cannot release the analogue spectrum until one has switched off all the transmitters. We must also ask how to buy out the last percentages. I hope that now Barry Cox is there, the Government will have a massive campaign to persuade people to switch and that they will encourage set manufacturers increasingly to produce digital televisions and kitemark them.

If my memory serves me well, this country is a significant manufacturer of television sets. It would boost us in our world leadership of television manufacturing if we could generate more purchases of digital televisions. The old days in which television were hardly ever changed are beginning to alter. There is an opportunity to renew through obsolescence rather than for other reasons. If people want to change their set, we should make sure that they buy a digital one.

In any event, there will have to be some campaign to get through the critical mass. Ways must then be found to complete the removal of analogue sets, and they may well require Government funding. Patricia Hodgson, who is now at the Independent Television Commission, has been thinking innovatively—I am not saying that her proposals have my entire support—about how to arrive at an analogue switch-off, and I urge the Minister to take that very seriously.

Returning to the contents of the new clause, the timetable proposed seems to be de minimis. We should not leave things too long and at least this would place a burden on Ofcom to get its act together quickly. In

doing so—and taking into account the point made by the hon. Member for Milton Keynes, North-East that we are talking about not only the television set but a whole range of broadcasting platforms—we could find a way of reaching the objective of analogue switch-off, and of putting Britain ahead of other countries in that process.

Michael Fabricant (Conservative, Lichfield)

In some ways, we are ahead of other countries. There is already 33 per cent. penetration of digital television reception among households in the United Kingdom. To answer my hon. Friend the Member for Esher and Walton (Mr. Taylor), television penetration stands at about 98 per cent. of households. We have to applaud the BBC and the independent television companies, and latterly Castle Communications and NTL, for achieving that in a country that is not as topologically suitable for terrestrial television as, say, Holland, owing to its lumps and bumps.

The whole raison d'etre of the Bill is the acknowledgement that there is convergence between various technologies. The hon. Member for Milton Keynes, North-East rightly pointed out that this is not only about television, but about the internet and a two-way flow of digital data. However, in relation to new clause 1, it is right to talk primarily about television because that is what is involved in the analogue switch-off. If the new clause said that there should be a deadline of one or two years for analogue switch-off, I would have difficulty in supporting it, but it does not. It simply asks for Ofcom to address itself to the problem and to make proposals.

Why is there urgency in doing so? As you will know, Mr. Gale, from your past experience before coming to this place, for a long time there has been a limit to the amount of spectrum that is available to radio and television broadcasters. We cannot enjoy the situation that exists in the United States, where there is five times the population and about 50 times the land mass. You said, Mr. Gale, that digital television is not available in your part of Kent—nor is it available in Sussex and elsewhere—because of the co-channel interference that it might cause with France, Belgium and Holland. That is a real problem, given the amount of frequency that is available. Yet in this country we have, and are pleased to have, many programme production houses, and there is not sufficient channel space to enable all their programming to be made available unless we go digital.

We should continue to stimulate the digital economy to force Ofcom to come up with proposals. It is all very well for the Government to say that they would like to see analogue switch-off, but it needs to be dealt with. I wish that I could cast my mind back to the days when we switched off 405 lines—VHF transmission—and went on to 625 lines. I do not know how many television sets were still receiving black and white television on VHF, but I think that it was quite a large proportion.

I understand that members of the Committee may be worried that analogue switch-off will deprive people of being able to watch television. There has already been talk about auctioning off frequencies that would be made available by the switchover. Will the Minister

consider earmarking a small part of the money from that to provide digital set-top boxes to enable everyone to watch digital television?

I disagree with my hon. Friends the Members for Vale of York and for Esher and Walton in that I do not believe that the way forward is to stimulate manufacturers to produce digital televisions. As the hon. Member for Sheffield, Hallam (Mr. Allan) said, there are many ways of delivering digital television—as well as various platforms—such as different sample rates and so on. Technology changes. As a consequence, set-top boxes can and will change in future.

There is flexibility in having an analogue set that can be attached to different types of set-top box. If one buys a digital television, one might be quickly lumbered with old technology; different ways of delivering digital encryption to enable the picture to be shown will create real problems if decryption, or decoding, from digital to analogue is built into the television. It is not as easy as merely switching over to a set-top box.

I plead with the Minister not to get too many pound, dollar or, God forbid, euro signs in his eyes with regard to the auction. It was interesting this morning when Sir Christopher Bland, the new chairman of BT, was giving evidence to the Select Committee on Culture, Media and Sport. I asked him about the burden of debt that BT has and he was able to reassure us that it has reduced somewhat. I also asked him whether he thought it had been an effective sell-off and he said, ''Well, it was a good auction for the Treasury, but in the long term not necessarily a good auction for Great Britain Ltd., because in some ways it will restrict the actions of BT and others who have paid such an inflated rate.''

Ian Taylor (Conservative, Esher and Walton)

That is an intriguing point. As the auction was thought up by the previous Conservative Government, I find it difficult to criticise it. However, I must say that it was not the Government who upped the bidding, or who delayed the process until we hit the boom in the stock market. The then British company One–2-One delayed the whole exercise through legal processes until the bidding became frenzied. My criticism is not of the amount of money that was raised from consenting adults in companies, but of the fact that the Government did not use some of that money to reinvest in the process of analogue switch-off.

Michael Fabricant (Conservative, Lichfield)

I welcome that intervention, and I suspect that I shall have an interesting discussion on that subject with my hon. Friend outside this Committee Room. Of course, they were consenting adults working for consenting companies, but the bottom line is that the Treasury was effective in ensuring that it gained the maximum amount of money from the auction. Whether that will benefit the industry in the long term is a moot point.

There is a sad and major omission from the Bill of any discussion about analogue switch-off. I cannot recall the complexion of the Government who took the bull by the horns and made the brave decision that

there would have to be a switch-off from VHF television—bands 1 and 3—to enable UHF television, which has 625 lines, to go ahead. Perhaps it was a Labour Government. This Government must also make a decision sooner or later. If they leave it too long, a Conservative Government will make it in three, four or five years; possibly sooner, depending on industrial action.

The Government are going to have to address the question of analogue switch-off, which is a major omission that has not yet been addressed. I am now tired; I have spoken at length and shall now be seated.

Kim Howells (Labour, Pontypridd)

As the hon. Member for Esher and Walton informed us, the amendment would place a similar requirement on Ofcom to one that is in force under section 33 of the Broadcasting Act 1996, upon which his distinguished fingerprints are clear. Section 33 requires the Secretary of State to keep under review the development of digital terrestrial television, the availability of existing analogue services in digital form and the possession of digital receiving equipment in order to decide when analogue services should be switched off. For that purpose, the 1996 Act requires the Secretary of State to ask the ITC and the BBC for a report on or before the fourth anniversary of the day on which the first television multiplex was granted.

The hon. Member for Esher and Walton will be pleased to learn that I made a formal request to the ITC and to the BBC in December 2001 jointly to undertake a review into the progress towards switchover, and that report must be submitted to me within 12 months. We have heard some fascinating contributions on this important issue. During the course of the substantive communications Bill, we shall hear many more informed contributions, but in the context of the Bill, the Government oppose the new clause.

Anne McIntosh (Conservative, Vale of York)

I am most grateful for the positive contributions from all those who have participated in the debate, and I am especially grateful for the contributions from my hon. Friends.

I welcome the comments by the hon. Members for Sittingbourne and Sheppey and for Milton Keynes, North-East. As my hon. Friend the Member for Lichfield said, we are considering various types of communication such as television, internet and mobile phones. As the useful document circulated by the Parliamentary Office of Science and Technology states, using television as a monitor for viewing internet content is something that all of us would support and approve. It can only help the Government to achieve greater take-up of digital television if we can encourage digital television operators to provide full internet access through set-top boxes using the phone line to send and receive data. That is something of which we are mindful.

We can argue, although this is not the context in which to do so, what the take-up by consumers should be. My hon. Friend the Member for Esher and Walton did that when he was the Minister responsible for the Broadcasting Act 1996. It is important to place on the record that we want the Government to ensure that Ofcom has a duty to make these proposals, and we would want to proceed with the vote.

Question put, That the clause be read a Second time:—

The Committee divided: Ayes 5, Noes 8.

Roger Gale (Conservative, North Thanet)

On behalf of the Committee, I thank the Officers of the House, the police, the Hansard staff and all concerned who have facilitated the Committee's discussions.

Committee rose at five minutes to Six o'clock.